-----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, JJ4r0ySK/qAO7pAgH6c/kpw2MmCGykGoZLKtN543iYOTQtgJh96IcZEj/+xxdepw xUA28gG5WR9akFMrsYOReA== 0000895345-06-000457.txt : 20060501 0000895345-06-000457.hdr.sgml : 20060501 20060428211218 ACCESSION NUMBER: 0000895345-06-000457 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20060501 DATE AS OF CHANGE: 20060428 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Abraxis BioScience, Inc. CENTRAL INDEX KEY: 0001141399 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 680389419 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-78076 FILM NUMBER: 06792102 BUSINESS ADDRESS: STREET 1: 1501 EAST WOODFIELD ROAD STREET 2: SUITE 300 EAST CITY: SCHAUMBURG STATE: IL ZIP: 60173-5837 BUSINESS PHONE: 847-969-2700 MAIL ADDRESS: STREET 1: 1501 EAST WOODFIELD ROAD STREET 2: SUITE 300 EAST CITY: SCHAUMBURG STATE: IL ZIP: 60173-5837 FORMER COMPANY: FORMER CONFORMED NAME: Abraxis BioScience, Inc. (ABBI) DATE OF NAME CHANGE: 20060420 FORMER COMPANY: FORMER CONFORMED NAME: Abraxis BioSciences, Inc. DATE OF NAME CHANGE: 20060420 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN PHARMACEUTICAL PARTNERS INC /DE/ DATE OF NAME CHANGE: 20020806 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SOON SHIONG PATRICK CENTRAL INDEX KEY: 0001189020 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 11777 SAN VICENTE BLVD STREET 2: STE 550 CITY: WEST LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: 3104704222 SC 13D 1 pr13d.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 ABRAXIS BIOSCIENCE, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.001 - -------------------------------------------------------------------------------- (Title of Class of Securities) 02889P 10 9 - -------------------------------------------------------------------------------- (CUSIP Number) Steven H. Hassan Richard Maroun 10182 Culver Boulevard 2730 Wilshire Boulevard, Suite 110 Culver City, California Santa Monica, California USA, 90232 USA, 90403 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 18, 2006 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. /__/ Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 02889P 10 9 13D Page 1 of 13 - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. Dr. Patrick Soon-Shiong I.R.S. Identification Nos. of above persons (entities only). - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) X - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ---- - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization United States - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 527,948 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 133,088,093 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH 527,948 REPORTING ---------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 133,088,093 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 133,616,041 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) Not Applicable - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 83.98% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN - ------------------------------------------------------------------------------- CUSIP No. 02889P 10 9 13D Page 2 of 13 - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. Steven H. Hassan I.R.S. Identification Nos. of above persons (entities only). - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) X - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ---- - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization United States - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 119,801,233 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ---------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 119,801,233 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 119,801,233 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) Not Applicable - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 75.55% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN - ------------------------------------------------------------------------------- CUSIP No. 02889P 10 9 13D Page 3 of 13 - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. Themba 2005 Trust I I.R.S. Identification Nos. of above persons (entities only). - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) X - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ---- - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization THEMBA 2005 Trust I is established under the laws of the Cook Islands - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 39,616,143 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ---------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 39,616,143 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 39,616,143 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) Not Applicable. - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 24.98% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) OO - ------------------------------------------------------------------------------- CUSIP No. 02889P 10 9 13D Page 4 of 13 - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. Themba 2005 Trust II I.R.S. Identification Nos. of above persons (entities only). - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) X - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ---- - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization THEMBA 2005 Trust II is established under the laws of the Cook Islands - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 39,616,143 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ---------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 39,616,143 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 39,616,143 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) Not Applicable. - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 24.98% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) OO - ------------------------------------------------------------------------------- CUSIP No. 02889P 10 9 13D Page 5 of 13 - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. California Capital Limited Partnership I.R.S. Identification Nos. of above persons (entities only). - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) X - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ---- - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization California - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 37,015,318 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ---------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 37,015,318 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 37,015,318 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) Not Applicable. - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 23.34% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) PN - ------------------------------------------------------------------------------- CUSIP No. 02889P 10 9 13D Page 6 of 13 - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. Themba LLC I.R.S. Identification Nos. of above persons (entities only). - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) X - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ---- - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization California - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 37,015,318 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ---------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 37,015,318 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 37,015,318 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) Not Applicable. - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 23.34% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) PN - ------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER The title of the class of equity securities of Abraxis BioScience, Inc., a Delaware corporation (the "Company"), to which this statement relates is the Company's Common Stock, par value $0.001 per share (the "Shares"). The address of the principal executive office of the Company is 11777 San Vicente Boulevard, Suite 500, Los Angeles, CA 90049. ITEM 2. IDENTITY AND BACKGROUND (a) This Schedule 13D is being filed on behalf of Dr. Patrick Soon-Shiong; Mr. Steven H. Hassan; The Themba 2005 Trust I ("Themba I"), a trust established under the laws of the Cook Islands; The Themba 2005 Trust II ("Themba II"), a trust established under the laws of the Cook Islands; California Capital Limited Partnership ("CA Capital"), a limited partnership established under the laws of California, and Themba LLC ("Themba LLC"), a limited liability company established under the laws of California. Dr. Soon-Shiong, Mr. Hassan, Themba I, Themba II, CA Capital and Themba LLC are referred to herein as the "Reporting Persons." (b) The principal business address of Themba I, Themba II, CA Capital and Themba LLC is 10182 Culver Boulevard, Culver City, California 90232. The business address of Dr. Soon-Shiong, is 11777 San Vicente Boulevard, Suite 500, Los Angeles, CA 90049 and the business address of Mr. Hassan is 10182 Culver Boulevard, Culver City, California 90232. (c) Dr. Soon-Shiong is the Chairman and Chief Executive Officer of the Company. Mr. Hassan is an independent certified public accountant. He is also the manager of Themba LLC and a trustee of Themba I and Themba II. Themba I and Themba II are trusts for the benefit of Dr. Soon-Shiong and members of his family. Themba I and Themba II hold Shares, directly and indirectly. Themba I also holds a 49.5% partnership interest in CA Capital; Themba II also holds a 49.5% partnership interest in CA Capital. The principal business of CA Capital is the holding of Shares. The principal business of Themba LLC is acting as the general partner of CA Capital (of which Themba LLC owns a 1% general partnership interest). 50% of the membership interests of Themba LLC are owned by Themba I and 50% of the membership interests of Themba LLC are owned by Themba II. (d) None of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years. (e) None of the Reporting Persons has been, during the last five years, party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which are of the is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws on finding any violation with respect to such laws. (f) Dr. Soon-Shiong and Mr. Hassan are both citizens of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The Reporting Persons are filing this Schedule 13D as a result of the acquisition of Shares by Themba I, Themba II, CA Capital, RSU Plan LLC (a limited liability company of which Themba I, Themba II, CA Capital and other former shareholders of ABI are members and of which Mr. Hassan is the manager) and certain grantor annuity trusts (of which family members of Dr. Soon-Shiong are beneficiaries and Dr. Soon-Shiong is a trustee) pursuant to the merger of American BioScience, Inc., a California corporation ("ABI"), with and into the Company (the "Merger"). In the Merger, the shares of common stock of ABI held by these entities were exchanged for Shares. The Merger was consummated on April 18, 2006 pursuant to the Agreement and Plan of Merger, dated November 27, 2005, between the Company and ABI (the "Merger Agreement"). ITEM 4. PURPOSE OF TRANSACTION As noted in Item 3, the Reporting Persons are filing this Schedule 13D as a result of the acquisition of Shares in the Merger by Themba I, Themba II, CA Capital, RSU LLC and certain grantor annuity trusts. In connection with the Merger, Dr. Soon-Shiong, Themba I, Themba II, CA Capital, RSU LLC and those grantor annuity trusts (the "Voting Agreement Shareholder Parties") entered into the corporate governance and voting agreement with the Company, dated as of April 18, 2006 (the "Voting Agreement"), described in Item 6 below. The Voting Agreement imposes certain restrictions on the ability of the Voting Agreement Shareholder Parties to acquire beneficial ownership of additional Shares, solicit proxies opposing a solicitation conducted by or on behalf of the Company or its board of directors, or engage in business combinations with the Company and also requires those parties to vote their Shares in favor of the election of the three outside independent directors under specified circumstances. The terms of the Voting Agreement are more fully described in Item 6 below. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Dr. Soon-Shiong is the beneficial owner of, and has the sole power to vote and dispose of, 527,948 Shares, which includes 402,500 Shares issuable upon the exercise of stock options held by Dr. Soon-Shiong that are currently exercisable or will become exercisable with 60 days. Dr. Soon-Shiong is a protector of the Themba I and Themba II trusts, and is a trustee of certain grantor annuity trusts (of which family members of Dr. Soon-Shiong are beneficiaries) and, as such, may also be deemed to be the beneficial owner of, and to share the power to vote and dispose of, an additional 133,088,093 Shares comprised of the 39,616,143 Shares described below as being beneficially owned by Themba I, the 39,616,143 Shares described below as being beneficially owned by Themba II, the 34,634,704 Shares described below as being beneficially owned by CA Capital and Themba LLC., 12,472,976 Shares beneficially owned by the grantor annuity trusts and 3,553,629 Shares beneficially owned by the RSU Plan LLC. The 527,948 Shares that Dr. Soon-Shiong beneficially owns, and the additional 133,088,093 Shares that Dr. Soon-Shiong may beneficially own represent a total of 83.98% of the outstanding Shares. In his capacity as trustee of Themba I and Themba II, manager of Themba LLC (the general partner of CA Capital) and manager of RSU Plan LLC, Mr. Hassan beneficially owns, and may be deemed either to share with Dr. Soon-Shiong the power to vote and dispose of, or to have the sole power to vote and dispose of, 119,801,223 Shares comprised of the 39,616,143 Shares described below as being beneficially owned by Themba I, the 39,616,143 Shares described below as being beneficially owned by Themba II, the 37,015,318 Shares described below as being beneficially owned by CA Capital and Themba LLC and 3,553,629 Shares beneficially owned by the RSU Plan LLC. These 119,801,223 Shares represent a total of 75.55% of the outstanding Shares. Themba I is the beneficial owner of, and may be deemed either to share with Dr. Soon-Shiong the power to vote and dispose of, or to have the sole power to vote and dispose of, 39,616,143 Shares, representing 24.98% of the outstanding Shares. Themba I is the beneficial owner of, and may be deemed either to share with Dr. Soon-Shiong the power to vote and dispose of, or to have the sole power to vote and dispose of, 39,616,143 Shares, representing 24.98% of the outstanding Shares. CA Capital is the beneficial owner of, and may be deemed either to share with Dr. Soon-Shiong the power to vote and dispose of, or to have the sole power to vote and dispose of, 37,015,318 Shares, representing 23.34% of the outstanding Shares. Themba LLC, the general partner of CA Capital, is also the beneficial owner of, and may be deemed either to share with Dr. Soon-Shiong the power to vote and dispose of, or to have the sole power to vote and dispose of, those 37,015,318 Shares. The 39,616,143 Shares described above as being beneficially owned by Themba I, the 39,616,143 Shares described above as being beneficially owned by Themba II, the 37,015,318 Shares described above as being beneficially owned by CA Capital and Themba LLC., 13,286,860 Shares beneficially owned by certain grantor annuity trusts (of which family members of Dr. Soon-Shiong are beneficiaries and of which Dr. Soon-Shiong is a trustee and may be the beneficial owner) and the 3,553,629 Shares beneficially owned by the RSU Plan LLC were acquired by them on April 18, 2006 pursuant to the Merger in exchange for shares of common stock of ABI held by them. See also Item 6 below. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER MERGER AGREEMENT AND ESCROW AGREEMENT Under the terms of the Merger Agreement, the former ABI shareholders are required to indemnify, on a pro rata basis, the Company, its subsidiaries and affiliates, their respective representatives, and their successors and assigns, from and against any and all losses (subject to certain limitations and exceptions) incurred by them by reason of breaches of representations and warranties made by ABI in the Merger Agreement, the failure of ABI, Dr. Soon- Shiong and certain ABI shareholders to comply with specified covenants in the Merger Agreement and certain specified matters related to any obligation by the Company to issue equity interest to various persons. As a condition to closing the Merger, and in order to secure the indemnification obligations of the ABI shareholder in the Merger Agreement, the Company, Dr. Soon-Shiong, solely in his capacity as the representative of the former ABI shareholders, and an escrow agent entered into an escrow agreement, dated as of April, 18, 2006 (the "Escrow Agreement"). Subject to limited exceptions, the maximum aggregate amount of indemnifiable losses which may be recovered by the indemnified parties may not exceed an indemnity cap amount equal to the aggregate value of the Shares from time to time held by the escrow agent pursuant to the Escrow Agreement. At the effective time of the Merger, 2,547,884 of the Shares described above as beneficially owned by Themba I, 2,547,884 of the Shares described above as beneficially owned by Themba II, 2,380,614 Shares described above as beneficially owned by CA Capital and Themba LLC, 813,884 of the Shares beneficially owned by certain grantor annuity trusts (of which family members of Dr. Soon-Shiong are beneficiaries and of which Dr. Soon-Shiong is a trustee), 228,549 of the Shares beneficially owned by RSU LLC and 90,837 Shares beneficially owned by another former ABI shareholder were deposited with the escrow agent to create an escrow fund for the purpose of to satisfy indemnification obligations of former ABI shareholders under the Merger Agreement. Any such former ABI shareholder may elect, prior to disbursement of common stock from escrow, to satisfy its pro rata portion of any indemnification obligation by delivering cash equal to the market value of its pro rata portion of the Shares that would otherwise be disbursed from the escrow out of such former ABI shareholder's pro rata percentage of the Shares in the escrow. Former ABI shareholders are entitled to direct the voting of their Shares held in the escrow fund. The escrow will terminate on April 18, 2008. Upon termination of the escrow, all Shares then remaining in escrow will be disbursed to the former ABI shareholders, except that the escrow agent is to retain sufficient Shares to satisfy any unresolved indemnification claims made prior to the termination of the escrow. The foregoing description of provisions of the Merger Agreement is qualified in its entirety by the terms of the Merger Agreement and Escrow Agreement, which are Exhibits hereto. CORPORATE GOVERNANCE AND VOTING AGREEMENT As a condition to closing the Merger, the Voting Agreement Shareholder Parties executed the Voting Agreement as of April 18, 2006. Under the Voting Agreement, the Voting Agreement Shareholder Parties agreed not to acquire beneficial ownership of any additional Shares, except for acquisitions of Shares: (i) approved in advance by a majority of the Company's outside independent directors then in office, (ii) upon the exercise of stock options held as of November 27, 2005, (iii) as a result of the grant of stock options approved after November 27, 2005 by the Company's board of directors and the outside independent directors or upon the exercise of such options, (v) that would not cause the Voting Agreement Shareholder Parties and their respective affiliates, collectively, to beneficially own more than 83.5% of the Shares then outstanding, or (vi) pursuant to, or after the consummation of, a tender or exchange offer by one or more of the Voting Agreement Shareholder Parties that is for all of the outstanding Shares, is subject to a non-waiveable condition that a majority of the outstanding Shares be validly tendered and accepted for purchase by the offeror, and includes a commitment by the offeror to promptly consummate a merger following completion of the tender or exchange offer, in which all remaining Shares not held by them shall be acquired for the same amount and type of consideration as was paid pursuant to the tender or exchange offer. We refer to a tender or exchange offer complying with these conditions as a "qualifying tender offer." Under the Voting Agreement, at each meeting of the Company's stockholders, or in connection with any action by written consent, occurring prior to (but not including) the Company's 2007 annual stockholders' meeting at which at least three outside independent director candidates have been nominated, each Voting Agreement Shareholder Party is required to vote or cause to be voted all Shares over which such party has voting control in favor of the election of the three outside independent directors. The Voting Agreement further provides that, prior to (but not including) the Company's 2007 annual stockholders' meeting, no Voting Agreement Shareholder Party may permit any Shares over which such party has voting control (or permit any written consent to be executed with respect to such Shares) in favor of the removal of any outside independent directors, unless after giving effect to the removal of such outside independent directors and any simultaneous or nearly simultaneous election or appointment of any directors of the Company, the Company's board of directors will include at least three outside independent directors. The Voting Agreement also provides that no Voting Agreement Shareholder Party may directly or indirectly solicit, or be a participant in the solicitation of, proxies from the Company's stockholders for the purpose of opposing a solicitation conducted by or on behalf of the Company or its board of directors. The foregoing will not (a) prevent any Voting Agreement Shareholder Party, in its capacity as a stockholder of the Company, from nominating candidates for election as directors or presenting proposals for a vote or consent of the Company's stockholders or (b) restrict any Voting Agreement Shareholder Party from voting or executing consents in respect of Shares beneficially owned by it in its discretion on matters submitted for a vote of consent of the Company's stockholders. Under the Voting Agreement, no Voting Agreement Shareholder Party may, and each may not permit any of its affiliates to (a) merge or consolidate with or into the Company or any of its majority-owned subsidiaries or (b) acquire from the Company or any of its majority-owned subsidiaries, except proportionately as a stockholder of the Company, assets of the Company or its majority-owned subsidiaries having an aggregate market value equal to 10% or more of either the aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all of the outstanding Shares, unless the transaction is approved in advance by a majority of the Company's outside independent directors and, to the extent required by applicable law, by the Company's other directors. The foregoing will not apply or prevent any Voting Agreement Shareholder Party or its affiliates from merging with the company after consummating a qualifying tender offer. The Voting Agreement automatically terminates upon the earliest to occur of: (i) the date of the Company's 2007 annual stockholders' meeting, (ii) the first date upon which the Voting Agreement Shareholder Parties and their affiliates collectively beneficially own less than 65% of the then outstanding Shares and (iii) the date a qualifying tender offer and the related back-end merger are completed and all outstanding Shares are owned by Dr. Soon-Shiong or his affiliates. The foregoing description of provisions of the Voting Agreement is qualified in its entirety by the terms of the Voting Agreement, which is an Exhibit hereto. REGISTRATION RIGHTS AGREEMENT As a condition to the merger, the Company and the Reporting Persons executed a registration rights agreement with the Company (the "Registration Rights Agreement") under which the Company is obligated to register under the Securities Act of 1933 all or a portion of the Shares issued to the former ABI shareholders in the Merger. Under the Registration Rights Agreement, the ABI shareholders have the right to require the Company to file a registration statement to register all or a portion of the Shares they received in the Merger. In addition, the ABI shareholders may require the Company to include their Shares in future registration statements that the Company files and may require the Company to register their Shares for resale on a Form S-3 "shelf" registration statement. Upon registration, the registered shares generally will be freely tradeable in the public market without restriction. However, in connection with any underwritten offering, the Reporting Persons have agreed to lock up any other Shares for up to 90 days and have agreed to a limit on the maximum number of Shares that can be registered for their account under so-called "shelf" registration statements. The foregoing description of provisions of the Registration Rights Agreement is qualified in its entirety by the terms of the Registration Rights Agreement, which is an Exhibit hereto. RSU PLAN LLC AGREEMENT WITH THE COMPANY As a part of the merger, the Company assumed two restricted unit plans established by ABI prior to the closing of the merger. Under the terms of one of these plans ("Plan II"), the units granted thereunder will vest one-half on the second anniversary of the Merger and the balance on the fourth anniversary of the Merger. The units convert into the right to receive a number of Shares determined in accordance with the plan. The maximum number of Shares that may be issuable under this plan is 3,325,080. On April 18, 2006, in connection with the closing of the Merger, RSU Plan LLC entered into an Agreement ("Contribution Agreement") under which RSU LLC has agreed that prior to the date on which units issued pursuant to Plan II become vested, RSU Plan LLC will be required to deliver to the Company the number of Shares or, at the election of RSU Plan LLC cash (or a combination thereof) in an amount sufficient to satisfy the obligations to participants under Plan II of vested units. The Company is required to satisfy its obligations under Plan II by paying to the participants in Plan II cash and/or Shares in the same proportion as is delivered by to the Company by RSU Plan LLC. The foregoing description of provisions of the Contribution Agreement is qualified in its entirety by the terms of the Contribution Agreement, which is an Exhibit hereto. PLEDGE 2,214,591 of the Shares beneficially owned by Themba I have been pledged as collateral to Merrill Lynch Bank USA for a loan made to a subsidiary of Themba I pursuant to a loan and security agreement between THEMBA Credit, LLC, Merrill Lynch Bank USA and Merrill, Lynch, Pierce, Fenner & Smith Incorporated. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 1. Agreement and Plan of Merger, dated November 27, 2005, between ABI and the Company (incorporated herein by reference Exhibit 2.1 to the Current Report on Form 8-K filed by the Company with the SEC on November 11, 2005 2. Escrow Agreement, dated April 18, 2006, among the Company, Dr. Soon-Shiong, solely in his capacity as shareholders' representative, and Fifth Third Bank NA, as the Escrow Agent 3. Corporate Governance and Voting Agreement, dated April 18, 2006, among the Voting Agreement Shareholder Parties and the Company 4. Registration Rights Agreement, dated April 18, 2006, among the Companies and the other parties thereto 5. Agreement, dated April 18, 2006, between the Company and RSU Plan LLC 6. Joint Filing Agreement dated April 28, 2006, by and among Dr. Soon-Shiong, Mr.. Hassan, Themba I, Themba II, CA Capital and Themba LLC Signature After reasonable inquiry and to the best of the knowledge of the undersigned, the information set forth in this statement is true, complete and correct. Dated: April 28, 2006 /s/ Patrick Soon-Shiong -------------------------------- Patrick Soon-Shiong /s/ Steven H. Hassan -------------------------------- Steven H. Hassan THE THEMBA 2005 TRUST I By: /s/ Steven H. Hassan ---------------------------- Steven H. Hassan, Trustee THE THEMBA 2005 TRUST II By: /s/ Steven H. Hassan ---------------------------- Steven H. Hassan, Trustee CALIFORNIA CAPITAL LIMITED PARTNERSHIP BY: THEMBA LLC, ITS GENERAL PARTNER By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager THEMBA LLC By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager EXHIBITS 1. Agreement and Plan of Merger, dated November 27, 2005, between ABI and the Company (incorporated herein by reference Exhibit 2.1 to the Current Report on Form 8-K filed by the Company with the SEC on November 11, 2005. 2. Escrow Agreement, dated April 18, 2006, among the Company, Dr. Soon-Shiong, solely in his capacity as shareholders' representative, and Fifth Third Bank NA, as the Escrow Agent. 3. Corporate Governance and Voting Agreement, dated April 18, 2006, among the Voting Agreement Shareholder Parties and the Company. 4. Registration Rights Agreement, dated April 18, 2006, among the Companies and the other parties thereto. 5. Agreement, dated April 18, 2006, between the Company and RSU Plan LLC. 6. Joint Filing Agreement dated April 28, 2006, by and among Dr. Soon-Shiong, Mr. Hassan, Themba I, Themba II, CA Capital and Themba LLC. EX-99.6 2 pr13dex6.txt JOINT FILING AGREEMENT Exhibit 6 JOINT FILING AGREEMENT ---------------------- PURSUANT TO RULE 13d-1(k) ------------------------- The undersigned acknowledge and agree that the foregoing statement of Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and the completeness and accuracy of the information concerning it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that it knows or has reason to believe that such information is inaccurate. Dated: April 28, 2006 /s/ Patrick Soon-Shiong -------------------------------- Patrick Soon-Shiong /s/ Steven H. Hassan -------------------------------- Steven H. Hassan THE THEMBA 2005 TRUST I By: /s/ Steven H. Hassan ---------------------------- Steven H. Hassan, Trustee THE THEMBA 2005 TRUST II By: /s/ Steven H. Hassan ---------------------------- Steven H. Hassan, Trustee CALIFORNIA CAPITAL LIMITED PARTNERSHIP BY: THEMBA LLC, ITS GENERAL PARTNER By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager THEMBA LLC By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager EX-99.2 3 escrow.txt ESCROW AGREEMENT Exhibit 2 ESCROW AGREEMENT This Escrow Agreement (this "ESCROW AGREEMENT"), is dated as of April 18, 2006, by and among American Pharmaceutical Partners, Inc., a Delaware corporation (the "COMPANY"), Dr. Patrick Soon-Shiong, solely in his capacity as "Shareholder Representative" (the "SHAREHOLDERS' REPRESENTATIVE"), and Fifth Third Bank, as escrow agent ("ESCROW AGENT"). The Company and American BioScience, Inc., a California corporation ("ABI"), and the other parties signatory thereto are parties to an Agreement and Plan of Merger, dated as of November 27, 2005 (the "MERGER AGREEMENT"), providing for, among other things, the merger of ABI with and into the Company (the "MERGER") with the Company as the corporation surviving the Merger. In the Merger, the outstanding shares of common stock, par value $0.001 per share, of ABI, held by the shareholders of ABI are being converted into a right to receive shares of common stock, par value $0.001 per share, of the Company ("COMPANY COMMON STOCK"). Capitalized terms used but not otherwise defined in this Escrow Agreement have the respective meanings given to them in the Merger Agreement. This is the Escrow Agreement contemplated by Section 3.1(f) of the Merger Agreement. Pursuant to the Merger Agreement, the Company is depositing with the Escrow Agent a number of the shares of Company Common Stock otherwise deliverable pursuant to the Merger to the holders of the ABI Common Stock pursuant to the Merger that is equal to 10% of the New Share Number (the "FORMER SHAREHOLDERS") for the purpose of providing a fund (the "ESCROW FUND") to reimburse the Indemnified Parties for the payment of any Losses for which the Indemnified Parties are entitled to indemnification pursuant to the terms of Article IX of the Merger Agreement. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Establishment of Escrow. ----------------------- (a) Pursuant to the Merger Agreement, at the Effective Time, the Company shall, on behalf of the Former Shareholders, deposit with the Escrow Agent stock certificates representing a number of shares of Company Common Stock equal to 10% of the New Share Number to create the Escrow Fund. (b) Unless and until delivered to the Company in accordance with the terms hereof, that number of shares of Company Common Stock in the Escrow Fund (and the certificates representing such shares) equal to each Former Shareholder's Pro Rata Percentage of the shares of Company Common Stock in the Escrow Fund shall be registered in the name of such Former Shareholder. The name and address of each of the Former Shareholders and the intial number of shares of Company Common Stock included in the Escrow Fund to be registered in the name of such Former Shareholder are set forth on Schedule A hereto. Each Former Shareholder's "PRO RATA PERCENTAGE" of the shares of Company Common Stock in the Escrow Fund shall be equal to (a) the number of shares of Company Common Stock of such Former Shareholder initially included in the Escrow Fund as set forth on Schedule A hereto, divided by (b) the total number of shares of Company Common Stock of all Former Shareholders initially included in the Escrow Fund as set forth on Schedule A hereto. (c) The parties hereby designate and appoint the Escrow Agent to serve in accordance with the terms, conditions and provisions of this Escrow Agreement, and Escrow Agent hereby agrees to act as escrow agent and to hold in trust, safeguard, invest and disburse the Escrow Fund, pursuant to the terms and conditions hereof. (d) Cash, if any, or other securities (other than shares of Company Common Stock) paid, issued or distributed in respect of shares of Company Common Stock of a Former Shareholder in the Escrow Fund (as a result of a merger, consolidation, reclassification, recapitalization, dividend, distribution or otherwise) shall not be added to the Escrow Fund but shall be distributed to the Former Shareholder in whose name such Company Common Stock is registered (e) Voting and granting consents with respect to any shares of Company Common Stock in the Escrow Fund shall be as determined by the Former Shareholder in whose name such shares are registered in such Former Shareholder's absolute discretion, (provided that the foregoing shall not affect the obligation of the parties to the Governance Agreement to comply with their contractual obligations thereunder as to the voting of such shares). (f) To the extent that any portion of the Escrow Fund constitutes cash, the Escrow Agent shall invest and reinvest such cash portion of the Escrow Fund at the joint written instructions of the Company and the Shareholders' Representative. In the absence of joint written directions from the Company and the Shareholders' Representative, any cash in the Escrow Fund shall be invested in a money market account of a U.S. bank. (g) The Escrow Agent shall, upon receipt of a written instruction from a Former Shareholder (with a copy to the Company) and subject to documentation of the validity of such transfer reasonably acceptable to the Company, present to the transfer agent of the Company, to be reregistered in the name of another person the name and address of which is identified in such written instruction (the "REPLACEMENT FORMER SHAREHOLDER"), all or a portion of such Former Shareholder's shares of Company Common Stock included in the Escrow Fund as shall be set forth in such written instruction. From and after such reregistration, the Replacement Former Shareholder shall be treated as the Former Shareholder pursuant to the terms of this Agreement with respect to the shares of Common Stock reregistered in the name of the Replacement Former Shareholder. 2. Indemnification Claims. ---------------------- (a) An Indemnification Claim for Losses to be paid from the Escrow Fund pursuant to Article IX of the Merger Agreement may be made only if the Company delivers to the Shareholders' Representative (with a copy to the Escrow Agent) by the deadline for submitting such an Indemnification Claim under the Merger Agreement (the "INDEMNITY TERMINATION DATE") a Claim Notice that sets forth in reasonable detail the specific facts and circumstances giving rise to such claim and a good faith estimate of the dollar amount of the Losses for which the Indemnified Party claims it is entitled to indemnification pursuant to the terms of the Merger Agreement (the "INDEMNIFICATION AMOUNT"). If, within thirty (30) days following receipt by the Shareholders' Representative of a Claim Notice, the Shareholders' Representative gives notice (a "COUNTER NOTICE") to the Company (with a copy to the Escrow Agent) disputing the applicable Indemnified Party's entitlement to indemnification with respect to the Indemnification Claim set forth in a Claim Notice or disputing the estimate set forth in such Claim Notice of the dollar amount of the Losses for which the Indemnified Party is entitled to indemnification pursuant to the terms of the Merger Agreement, the applicable Indemnified Party's entitlement to indemnification with respect to the Indemnification Claim and the dollar amount of the Losses for which the Indemnified Party is entitled to indemnification pursuant to the terms of the Merger Agreement shall be resolved as provided in Section 2(c) below. (b) If no Counter Notice is received by the Escrow Agent within such thirty (30) day period, then the Indemnification Amount claimed in the applicable Claim Notice shall be deemed established for purposes of this Escrow Agreement, and, at the end of such thirty (30) day period, the Escrow Agent shall promptly deliver to the Company from the Escrow Fund shares of Company Common Stock with a Market Value (as defined below) as of the date of the Claim Notice equal to the Indemnification Amount as claimed in the Claim Notice. The shares of Company Common Stock so delivered to the Company from the Escrow Fund shall be disbursed from the shares of Company Common Stock of the Former Shareholders included in the Escrow Fund proportionally in accordance with their respective Pro Rata Percentages. The "MARKET VALUE" of a share of Company Common Stock as of any day shall be equal to average of the Company Stock Prices over the ten consecutive NASDAQ trading days (or, if the Company Common Stock is not traded on the NASDAQ National Market, such number of trading days on any other exchange or market on which the Company Common Stock is then trading) ending on and including the second full trading day preceding such day. (c) (i) If a Counter Notice is given by the Shareholders' Representative with respect to an Indemnification Claim, the Escrow Agent shall promptly (but in any event within two business days) disburse the appropriate number of shares of Company Common Stock from the Escrow Fund in respect of such Indemnification Claim only in accordance with (A) joint written instructions of the Company and the Shareholders' Representative, or (B) a final judgment with no further right to appeal, upon an award rendered by a court of competent jurisdiction. (ii) If the Indemnified Party and the Shareholders' Representative are unable to resolve any dispute within thirty (30) days of the Shareholders' Representative's delivery of a Counter Notice, such dispute shall be resolved in accordance with Section 10.9 of the Merger Agreement or by means of a settlement reached between Shareholders' Representative and the Company with respect to the applicable Indemnification Claim. (d) If the Shareholders' Representative and the Indemnified Party reach a settlement with respect to any Indemnification Claim made by the Company or if the number of shares of Company Common Stock to be disbursed in respect of an Indemnification Claim is determined through a judgment not subject to appeal as provided in Section 2(c), the Shareholders' Representative and the Company shall jointly deliver written notice of such settlement or judgement to the Escrow Agent, including (if applicable) instructions to the Escrow Agent to disburse the appropriate number of shares of Company Common Stock from the Escrow Fund to the Company, and the Escrow Agent shall act promptly in accordance with such instructions. The shares of Company Common Stock so disbursed to the Company from the Escrow Fund shall be disbursed proportionally from the shares of Company Common Stock of the Former Shareholders in accordance with their respective Pro Rata Percentages. (e) In the event that shares of Company Common Stock contained in the Escrow Fund are required hereunder to be disbursed to the Company, any Former Shareholder may deliver to the Company notice prior to the time of disbursement of such shares electing to pay cash in an amount equal to the Market Value of his, her or its Pro Rata Percentage of the shares of Company Common Stock that would otherwise be disbursed from the Escrow Fund to the Company. Upon the delivery of such cash amount by a Former Shareholder (which shall in no event occur later than two Business Days after the delivery of the notice electing to pay cash), the Company shall deliver a written instruction to the Escrow Agent to deliver to such Former Shareholder his, her or its Pro Rata Percentage of such shares of Company Common Stock that would otherwise be disbursed from the Escrow Fund to the Company in the absence of such cash payment, and the Escrow Agent shall act in accordance with such instructions. (f) To the extent the Escrow Agent is otherwise required hereunder to disburse a fractional share of Company Common Stock of a Former Shareholder, the Escrow Agent shall round such fractional share to the nearest whole share, with one half of such Escrow Share being rounded downward. (g) The Escrow Agent shall requisition from the Company's stock transfer agent stock certificates in appropriate denominations registered as appropriate to facilitate the delivery or disbursement by the Escrow Agent of shares of Company Common Stock hereunder or the reregistration of shares of Company Common Stock in accordance with Section 1(g). The Company shall cause its stock transfer agent to cooperate with the Escrow Agent in connection therewith. 3. Termination of Escrow. --------------------- (a) On the first business day following the 24 months after the Closing (the "ESCROW RELEASE DATE") and subject to Section 3(b) of this Escrow Agreement, unless any Indemnification Claims have previously been asserted by delivery of a Claim Notice in accordance with Section 2(a) and continue to be pending, the Escrow Agent shall promptly disburse the shares of Company Common Stock in the Escrow Fund to the Former Shareholders in accordance with their respective Pro Rata Percentages. (b) If any Indemnification Claims were asserted by delivery of a Claim Notice in accordance with Section 2(a) prior to the Indemnity Termination Date with respect to such Indemnification Claims and such Indemnification Claims continue to be unresolved as of the Escrow Release Date (such Indemnification Claims, "PENDING CLAIMS"), the Escrow Agent shall disburse the shares of Company Common Stock in the Escrow Fund to the Former Shareholders in accordance with Secion 3(a); provided, however, that the Escrow Agent shall exclude from such disbursement to each Former Shareholder, and shall continue to hold in the Escrow Fund hereunder, for each Former Shareholder, that number of such Former Shareholder's shares of Common Stock (the "INDEMNITY HOLDBACK SHARES") equal to the aggregate of (a) such Former Shareholder's Pro Rata Percentage, multiplied by (b) the number of shares of Company Common Stock having an aggregate Market Value as of the Escrow Release Date equal to 120% of the aggregate Indemnification Amounts of all then Pending Claims (such aggregate amount, the "INDEMNIFICATION HOLDBACK AMOUNT"); provided, however, that, any Former Shareholder may, within 10 business days of the Escrow Release Date, deliver to the Escrow Agent, cash (or with the approval of the Company not to be unreasonably withheld, a letter of credit) in an amount equal to (a) such Former Shareholder's Pro Rata Percentage, multiplied by (b) the number of shares of Company Common Stock having an aggregate Market Value as of the Escrow Release Date equal to 100% of the aggregate of the Indemnification Amounts of all such pending Indemnification Claims, in which case the Escrow Agent shall promptly disburse to such Former Shareholder all of the Indemnity Holdback Shares of such Former Shareholder. Any such cash (or letter of credit) deposited by a Former Shareholder in lieu of Indemnity Holdback Shares shall be referred to as such Former Shareholder's "ESCROW ASSETS." After the Escrow Release Date, the Escrow Agent shall disburse or continue to hold in the Escrow Fund the Indemnity Holdback Shares or Escrow Assets of each Former Shareholder, as the case may be, in accordance with the provisions of Section 3(b) of this Escrow Agreement. (c) From and after the Escrow Release Date, each Pending Claim for which an Indemnification Amount was included in the Indemnification Holdback Amount, shall be treated as follows: (i) if a Counter Notice relating to such Pending Claim was not timely delivered by the Shareholders' Representative, then the Escrow Agent shall promptly thereafter disburse to the Company, with respect to each Former Shareholder, (A) such number of such Former Shareholder's Indemnity Holdback Shares having an aggregate Market Value (measured as of the date of the applicable Claim Notice) equal to, or (B) cash from such Former Shareholder's Escrow Assets in an amount equal to such Former Shareholder's Pro Rata Percentage of the Indemnification Amount included in the Indemnity Holdback Amount and claimed in the Claim Notice relating to such Pending Claim ; and (ii) if a Counter Notice relating to such Pending Claim was timely delivered by the Shareholders' Representative, then the Escrow Agent shall thereafter either (A) disburse to the Company and each Former Shareholder, (x) such number of such Former Shareholder's Indemnity Holdback Shares having an aggregate Market Value equal to, or (y) cash from such Former Shareholder's Escrow Assets in an amount agreed by, and set forth in joint written instructions to the Escrow Agent from, the Company and the Shareholders' Representative (in which case, the date that the Market Value of the Indemnity Holdback Shares shall be calculated for purposes of paying the Pending Claims shall be specified in the joint instructions), or (B) disburse Indemnity Holdback Shares and/or cash from such Former Shareholder's Escrow Assets in accordance with any final judgment with no further right to appeal, upon an award rendered with respect to the Pending Claim by a court of competent jurisdiction (in which case the Market Value of any Indemnity Holdback Shares to be disbursed to the Company to pay the Pending Claims shall be calculated based on and as of the date of such final judgment). (d) In the event that PSS, his affiliates and any PSS Entities at any time become the beneficial owner of all of the outstanding shares of Company Common Stock during the term of this Agreement, the Shareholders' Representative and the Company shall promptly deliver a joint written notice to the Escrow Agent, instructing the Escrow Agent to distribute to the Former Shareholders all the shares of Company Common Stock or Escrow Assets in the Escrow Fund, and the Escrow Agent shall act in accordance with such instructions and thereupon the Escrow Agent's duties hereunder shall cease and this agreement automatically shall terminate. 4. Duties of Escrow Agent. ---------------------- (a) The Escrow Agent shall not be under any duty to give the Escrow Fund held by it hereunder any greater degree of care than it gives its own similar property. (b) The Escrow Agent shall be entitled to rely upon any order, judgment, certification, demand, notice, instrument or other writing delivered to it hereunder without being required to determine the authenticity or the correctness of any fact stated therein or the propriety or validity of the service thereof. The Escrow Agent may act in reliance upon any instrument or signature believed by it to be genuine and may assume that the person purporting to give receipt or advice or make any statement or execute any document in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent may conclusively presume, at any time prior to the 2007 annual meeting of the stockholders of the Company, that any two Outside Independent Directors of the Company specified on Schedule C attached hereto (acting jointly) and, at any time after the the 2007 annual meeting of the stockholders of the Company, two members of the Company's audit committee (acting jointly) have the full power and authority to instruct the Escrow Agent on behalf of the Company unless written notice to the contrary is delivered by the Company to the Escrow Agent. The Company shall provide prompt written notice to the Escrow Agent and shall deliver an updated Schedule C upon the election of successor Outside Independent Directors pursuant to the Governance Agreement, and after the 2007 annual meeting of the stockholders of the Company, the Company shall provide a schedule reflecting the members of the audit committee from time to time in office. (c) The Escrow Agent shall provide the Shareholders' Representative and the Company with quarterly reports of the status of the Escrow Fund, and shall permit the Shareholders' Representative and representatives of the Company to inspect and obtain copies of the records of the Escrow Agent regarding the Escrow Fund, during normal business hours and upon one business day's prior written notice. (d) The Escrow Agent may act pursuant to the advice of counsel with respect to any matter relating to this Escrow Agreement and shall not be liable for any action taken or omitted by it in good faith in accordance with such advice. (e) The Escrow Agent does not have any interest in the Escrow Fund deposited hereunder but is serving as escrow holder only to administer the Escrow Fund in acordance with the terms hereof. (f) The Escrow Agent makes no representation as to the validity, value, genuineness or the collectability of any security or other document or instrument held by or delivered to it. (g) The Escrow Agent shall not be called upon to advise any party as to the wisdom in selling or retaining or taking or refraining from any action with respect to any securities or other property deposited hereunder. (h) The Escrow Agent may resign as the Escrow Agent by notice to the other parties hereto (the "RESIGNATION NOTICE"). If, prior to the expiration of sixty (60) business days after the delivery of the Resignation Notice, the Escrow Agent shall not have received written instructions from the Shareholders' Representative and the Company designating a banking corporation or trust company organized either under the laws of the United States or of any state as successor escrow agent and consented to in writing by such successor escrow agent, the Escrow Agent may apply to a court of competent jurisdiction to appoint a successor escrow agent. Alternatively, if the Escrow Agent shall have received such written instructions from the Company and the Shareholders' Representative, it shall promptly transfer the Escrow Fund to such successor escrow agent. Upon the appointment of a successor escrow agent and the transfer of the Escrow Fund thereto, the duties of the Escrow Agent hereunder shall terminate. (i) In the event of any disagreement between the other parties hereto resulting in adverse claims or demands being made in connection with the Escrow Fund, or in the event that the Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent shall be entitled to (a) retain the Escrow Fund until the Escrow Agent shall have received (i) judgment upon an award rendered by a court of competent jurisdiction directing delivery of the Escrow Fund (or portion thereof), or (ii) a written agreement executed by the Shareholders' Representative and the Company directing delivery of the Escrow Fund (or portion thereof); or (b) be permitted to interplead all of the Escrow Fund held hereunder into a court of competent jurisdiction described in Section 10.9 of the Merger Agreement, and thereafter be fully relieved from any and all liability or obligation with respect to such interpleaded assets. The parties hereto other than the Escrow Agent further agree to pursue any redress or recourse in connection with such a dispute, without making the Escrow Agent a party to same. (j) The Escrow Agent shall not be liable for any action taken or omitted under this Escrow Agreement so long as it shall have acted in good faith and without gross negligence. (k) The Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. (l) The Escrow Agent shall have the right to perform any of its duties hereunder through agents, attorneys, custodians or nominees selected in good faith. (m) Any banking association or corporation into which the Escrow Agent may be merged, converted or with which the Escrow Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Escrow Agent shall be a party, or any banking association or corporation to which all or substantially all of the corporate trust business of the Escrow Agent shall be transferred, shall succeed to all the Escrow Agent's rights, obligations and immunities hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. (n) This Escrow Agreement expressly sets forth all the duties of the Escrow Agent, which shall be deemed purely ministerial in nature with respect to any and all matters pertinent hereto. The Escrow Agent shall under no circumstance be deemed a fiduciary for any of the parties to this Escrow Agreement. No implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the other parties hereto except this Escrow Agreement. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 5. Notices. ------- Any notices or other communications required or permitted under, or otherwise made or given in connection with this Escrow Agreement, shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission (but only if followed by transmittal by national overnight courier or hand for delivery on the next business day) or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by national overnight courier, in each case as follows: If to the Company, addressed to it at: American Pharmaceutical Partners, Inc. 1501 East Woodfield Road, Suite 300 East Schaumburg, IL 60173-5837 Attention: General Counsel Fax: (847) 413-2670 with a copy (which shall not constitute notice) to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071-3197 Attention: Peter F. Ziegler, Esq. Fax: (213) 229-7520 and further copies (which shall not constitute notice) to: Morrison & Foerster LLP 425 Market Street San Francisco, California 94105-2482 Attention: Charles Farman, Esq. and Michael G. O'Bryan, Esq Fax: (415) 268-7522 If to the Shareholders' Representative, addressed to him at: Dr. Patrick Soon-Shiong c/o American Pharmaceutical Partners, Inc. 11777 San Vicente Blvd., Suite 550 Los Angeles, CA 90049 Fax: (310) 826-7229 If to the Escrow Agent, addressed to it at: Fifth Third Bank 1701 Golf Road, Suite 600 Rolling Meadows, IL 60008 Attention: Frank Portner Facsimile: (857) 354-7060 6. Counterparts. ------------ This Escrow Agreement may be executed by facsimile signature and in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 7. Fees. ---- The Company shall pay the Escrow Agent the fees set forth on Schedule B attached hereto for its services as the Escrow Agent hereunder and shall reimburse the Escrow Agent for all reasonable expenses, disbursements and advances incurred or made by it in the performance of its duties hereunder (including, without limitation, the reasonable out-of-pocket fees, expenses and disbursements of its counsel). The Company shall indemnify and hold the Escrow Agent harmless from and against any and all taxes, out-of-pocket expenses (including reasonable counsel fees, assessments, liabilities, claims, damages, actions, suits or other charges incurred by or assessed against it for any thing done or omitted by it in the performance of its duties hereunder, except as a result of its own gross negligence or willful misconduct. The agreements contained in this Section 8 shall survive any termination of the duties of the Escrow Agent hereunder or its resignation. 8. Section Headings. ---------------- The headings of sections in this Escrow Agreement are provided for convenience only and will not affect its construction or interpretation. 9. Amendments; No Waiver; Enforcement. ---------------------------------- (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Shareholders' Representative, the Company and the Escrow Agent, or in the case of a waiver, by the party against whom the waiver is to be effective; provided that no such amendment or waiver on behalf of the Company shall be effective without the approval of (i) at any time prior to the 2007 annual meeting of the stockholders of the Company, a majority of the Outside Independent Directors designated on Schedule C, as from time to time amended, or (ii) at any time after the 2007 annual meeting of the stockholders of the Company, by a majority of the members of the audit committee of the Company. (b) Any action to be taken by the Company to amend, modify, waive, suspend or enforce its rights under this Agreement shall be taken at the direction of, at any time prior to the 2007 annual meeting of the stockholders of the Company, a majority of the Outside Independent Directors designated on Schedule C, as from time to time amended, or, at any time after the 2007 annual meeting of the stockholders of the Company, by a majority of the members of the audit committee of the Company. (c) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 10. Exclusive Agreement; No Third Party Beneficiaries. This Escrow Agreement and the Merger Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof. This Escrow Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and assigns, and nothing in this Agreement, express or implied is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Escrow Agreement. 11. Governing Law. ------------- This Escrow Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without regard to laws that may be applicable under conflicts of laws principles. It is the intention of the parties hereto that the situs of the Escrow Fund is and shall be administered in the state in which the principal office of the Escrow Agent from time to time acting hereunder is located. [signature page follows] IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be duly executed as of the day and year first above written. AMERICAN PHARMACEUTICALS PARTNERS, INC. By: /s/ John F. Weidenbruck ------------------------------------------- Name: John F. Weidenbruck Title: Assistant Secretary/General Counsel /s/ Dr. Patrick Soon-Shiong - ------------------------------------------------ Dr. Patrick Soon-Shiong, as Shareholders' Representative Fifth Third Bank, as Escrow Agent By: /s/ Frank Portner ------------------------------------------------- Name: Frank Portner Title: Vice President SCHEDULE A ---------- Name and Address of Former Shareholder Number of Shares - -------------------------------------- ---------------- 1. California Capital Limited Partnership 2,380,614 Address: Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 2. Themba 2005 Trust I 2,547,884 Address: Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 3. Themba 2005 Trust II 2,547,884 Address: Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 4. The 2005 Two-Year Annuity Trust A 406,942 Address: Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 5. The 2005 Two-Year Annuity Trust A 406,942 Address: Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 6. RSU Plan, LLC 228,549 Address: Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 7. Veron International Limited 90,837 Address: Att: Joseph Leung Top Floor, Chinachem Golden Plaza 77 Mody Road, Tsimshatsui East Kowloon, Hong Kong SCHEDULE B ---------- Fees of Escrow Agent The escrow agent fees shall be $5,000 annually. SCHEDULE C ---------- Outside Independent Directors 1. Kirk Calhoun 2. Leonard Shapiro 3. David Chen 4. Stephen Nimer EX-99.3 4 corpgov.txt CORPORATE GOVERNANCE AND VOTING AGREEMENT Exhibit 3 PRIVILEGED AND CONFIDENTIAL EXECUTION COPY CORPORATE GOVERNANCE AND VOTING AGREEMENT THIS CORPORATE GOVERNANCE AND VOTING AGREEMENT (this "AGREEMENT") is entered as of April 18, 2006 by and among Dr. Patrick Soon-Shiong ("PSS"), and the other persons executing signature pages hereto (PSS and such other persons, together with any third party related to any PSS Party who hereafter becomes a signatory hereto as contemplated by Section 2.05, the "PSS PARTIES"), and American Pharmaceutical Partners, Inc., a Delaware corporation (the "COMPANY"). WHEREAS, the Company, American BioScience, Inc., a California Corporation ("ABI"), PSS, and certain other ABI shareholders have entered into an Agreement and Plan of Merger, dated as of November 27, 2005 (the "MERGER AGREEMENT") pursuant to which, among other things, ABI shall be merged with and into the Company (the "MERGER"), and all outstanding shares of capital stock of ABI shall be converted into the right to receive shares of Company Common Stock, all upon the terms and subject to the conditions set forth in the Merger Agreement; WHEREAS, concurrently with the execution of this Agreement, the PSS Parties are entering into a Registration Rights Agreement dated as of the date hereof (the "RRA") which, among other things, sets forth certain registration rights granted by the Company to the PSS Parties and certain other recipients of Company Common Stock pursuant to the Merger; WHEREAS, immediately prior to the Merger, the PSS Parties own approximately 99% of the outstanding shares of ABI capital stock and desire that the Merger be completed pursuant to the Merger Agreement; WHEREAS, as an inducement for the Company to enter into the Merger Agreement, ABI has agreed that it is a condition to the Company's obligation to consummate the Merger that the PSS Parties execute and deliver this Agreement and thereby establish (a) certain terms and conditions concerning the voting of and future acquisitions of Company Common Stock by the PSS Parties and their respective Affiliates, and (b) certain other matters concerning the corporate governance of the Company; and WHEREAS, certain terms used herein are defined in ARTICLE IV hereof. NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I STOCK OWNERSHIP SECTION 1.01. Acquisitions of Company Common Stock. Each PSS Party shall not, and shall not permit any of his or its Affiliates to, acquire Beneficial Ownership of any shares of Company Common Stock, in each case whether by tender offer, market purchase, privately-negotiated purchase, merger or other transaction, through the use of a derivative instrument or voting agreement, by joining a Group, or otherwise, except for: (a) acquisitions of Beneficial Ownership of Company Common Stock pursuant to the Merger; (b) acquisitions of Beneficial Ownership of Company Common Stock approved in advance by a majority of the Outside Independent Directors then in office; (c) acquisitions of Beneficial Ownership of Company Common Stock (i) upon the exercise of options to acquire Company Common Stock held by PSS or any of his Affiliates as of the date hereof or (ii) as a result of the grant of options to acquire Company Common Stock hereafter approved by the Company Board and the Outside Independent Directors or the exercise of any such options; (d) acquisitions of Company Common Stock that would not cause the PSS Parties and their respective Affiliates collectively to Beneficially Own more than 83.5% of the then-outstanding shares of Company Common Stock; and (e) acquisitions of Company Common Stock pursuant to, or after the consummation of, a Qualifying Tender Offer. ARTICLE II CORPORATE GOVERNANCE SECTION 2.01. Outside Independent Directors. (a) At each meeting of the stockholders of the Company, or in connection with any action by written consent, occurring prior to (but not including) the 2007 Annual Meeting at which at least three Outside Independent Director candidates have been nominated for election by the Company, each PSS Party shall vote or cause to be voted all of such PSS Party's Voting Control Shares in favor of the election of three Outside Independent Director candidates. (b) Prior to (but not including) the 2007 Annual Meeting, no PSS Party shall permit any of such PSS Party's Voting Control Shares to be voted (or permit any written consent to be executed in respect of any of such PSS Party's Voting Control Shares) in favor of the removal of any Outside Independent Directors, unless after giving effect to the removal of such Outside Independent Directors and any simultaneous or nearly simultaneous election or appointment of any directors, the Board will include at least three Outside Independent Directors. SECTION 2.02. Proxy Solicitation. No PSS Party shall, and each shall not permit its Affiliates to, directly or indirectly solicit, or be a participant in the solicitation of, proxies from stockholders of the Company for the purpose of opposing a solicitation conducted by or on behalf of the Company or the Company Board; provided, that the foregoing shall not (a) prevent any PSS Party or any of its Affiliates, in his, her or its capacity as a stockholder of the Company, from nominating candidates for election as directors of the Company or presenting proposals for a vote or consent of the stockholders of the Company or (b) restrict the ability of any PSS Party or any of its Affiliates from voting or executing consents in respect of shares of Company Common Stock Beneficially Owned by a PSS Party or any of its Affiliates (or causing such shares to be voted or consents executed in respect thereof) in their discretion on all matters submitted for a vote or consent of the stockholders of the Company. SECTION 2.03 Board Action. The Company, subject to the Company Board's fiduciary duties, shall take all necessary and desirable actions within its control (including calling special meetings of the Company Board and the stockholders of the Company) to effectuate the provisions and intent of this Agreement. SECTION 2.04. Restrictions on Business Combinations. No PSS Party shall, or permit any of its Affiliates to, (a) merge or consolidate with or into the Company or any of its majority-owned subsidiaries, or (b) acquire from the Company and/or any of its majority owned subsidiaries, by purchase, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or in a series of related transactions), except proportionately as a stockholder of the Company, assets of the Company or any of its majority-owned subsidiaries having an aggregate market value equal to 10% or more of either the aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all of the outstanding shares of Company Common Stock, unless such transaction is approved in advance by a majority of the Outside Independent Directors (and the other directors of the Company Board, to the extent required by applicable law); provided, that the foregoing shall not apply to prevent any PSS Party or any of its Affiliates from merging (or require the approval of a majority of the Outside Independent Directors in order for any PSS Party or any of its Affiliates to merge) with the Company after the consummation of a Qualifying Tender Offer. SECTION 2.05 No Circumvention. No PSS Party shall, or permit its Affiliates to, take any action, or refrain from taking any action, that would cause any Voting Control Shares to cease to constitute Voting Control Shares prior to the termination of this Agreement; provided, however, that sales or transfers of Voting Control Shares to unrelated third parties on arm's-length terms, or transfers to related third parties who as a condition to such transfer execute and deliver a counterpart signature page hereto and thereby become a PSS Party, shall not be deemed to be a violation of this Section 2.05. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 Representations and Warranties of PSS and the PSS Parties. PSS and each other PSS Party hereby jointly and severally represents and warrants to the Company, as follows: (a) Each PSS Party (if it is an entity) is duly incorporated or otherwise organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so duly incorporated or organized, validly existing or in good standing, qualified or licensed that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on such PSS Party's ability to perform its obligations hereunder. (b) Each PSS Party (if it is an entity) has all necessary corporate or other power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by each PSS Party (if it is an entity), the performance by such PSS Party (if it is an entity) of its obligations hereunder and the consummation by such PSS Party (if it is an entity) of the transactions contemplated hereby (i) have been duly and validly authorized by all necessary corporate or other organizational action required on the part of such PSS Party (if it is an entity) under applicable law or the organizational, constituent or governing documents of such PSS Party (if it is an entity), and (ii) (assuming compliance with all requirements of applicable securities laws and the rules and regulations of the NASDAQ National Market or any exchange upon which the Company' securities are listed or traded and that the consents, approvals, authorizations and permits described in Section 4.5(b) of the Company's disclosure schedule to the Merger Agreement have been obtained and all filings and notifications described in such section of the Company's disclosure schedule have been made and any waiting periods thereunder have terminated or expired) no other consents, approvals, actions, proceedings or authorizations are necessary to authorize the execution and delivery of this Agreement by the PSS Parties or the performance of their respective obligations hereunder, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on such PSS Party's ability to perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by each PSS Party and constitutes a legal, valid and binding obligation of each PSS Party, enforceable against such PSS Party in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. The trustee(s) listed on the signature page hereof with respect to the respective PSS Parties who are trusts have the full right, power and authority to cause such trusts to comply with the terms hereof without any instructions, directions, authorizations, or approvals of any beneficiary thereof or any other person, or have obtained all necessary instructions, directions, authorizations, or approvals. (c) The execution and delivery of this Agreement by each PSS Party does not, and the performance of this Agreement by the PSS Parties will not, (i) conflict with or violate any provision of the organizational, constituent or governing documents of such PSS Party (if that PSS Party is an entity), (ii) conflict with or violate any organizational documents of any Affiliate of such PSS Party, or (iii) (assuming compliance with all requirements of applicable securities laws and the rules and regulations of the NASDAQ National Market or any exchange upon which the Company' securities are listed or traded and that the consents, approvals, authorizations and permits described in Section 4.5(b) of the Company's disclosure schedule to the Merger Agreement have been obtained and all filings and notifications described in such section of the Company's disclosure schedule have been made and any waiting periods thereunder have terminated or expired) conflict with or violate any contract binding on or any statute, law or order applicable to such PSS Party or by which any property or asset of such PSS Party is bound, except as would not, individually or in the aggregate, reasonably be expected to materially limit or delay such PSS Party's ability to perform its obligations hereunder. There are no contractual, legal or other restrictions or impediments to the right, authority and ability of the PSS Parties to agree to and perform, and to cause such respective PSS Parties' Affiliates to perform, the obligations contemplated hereby, except as would not, individually or in the aggregate, reasonably be expected to materially limit or delay such PSS Party's ability to perform its obligations hereunder. (d) All shares of Company Common Stock issued to the PSS Parties pursuant to the Merger are Voting Control Shares for purposes of this Agreement. SECTION 3.02 Representations and Warranties of the Company. The Company hereby represents and warrants to the PSS Parties, as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect (as defined in the Merger Agreement). (b) The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the performance by the Company of its obligations hereunder and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. (c) The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, (i) conflict with or violate any provision of the organizational or governing documents of the Company, (ii) conflict with or violate any organizational documents of any of the subsidiaries of the Company, or (iii) (assuming that all consents, approvals, authorizations and permits described in Section 4.5(b) of the Company's disclosure schedule to the Merger Agreement have been obtained and all filings and notifications described in such section of the Company's disclosure schedule have been made and any waiting periods thereunder have terminated or expired) conflict with or violate any statute, law or order applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected. ARTICLE IV DEFINITIONS SECTION 4.01 Definitions. The following terms as used herein have the following respective meanings: "2007 ANNUAL MEETING" means the annual meeting of the stockholders of the Company held in calendar year 2007. "AFFILIATE" with respect to any person means (i) if such person is an individual, any spouse or minor child (natural or by adoption) of such person; (ii) any trust or family partnership established by such person (if such person is an individual) and/or his or her spouse for the benefit of such person and/or members of his or her immediate family; (iii) the estate of such person (if such person is an individual); or (iv) any entity that, directly, or indirectly through one or more intermediaries controls, is controlled by or is under common control with, such person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of the applicable entity, whether through the ownership of voting securities, by contract or otherwise. For purposes of Section 1.01 of this Agreement and subject to the next sentence, a person shall not be considered an "Affiliate" of a PSS Party for purposes of the provisions of this Agreement obligating a PSS Party to cause its "Affiliates" to take or refrain certain actions if that PSS Party does not possess, directly or indirectly, the power to cause such person to comply with the requirements of such provision, whether through the ownership of voting securities, by contract or otherwise. For purposes of this Agreement, neither the Company nor any person controlled by the Company or their respective officers and directors (other than PSS) shall be deemed to be Affiliates of any PSS Party. "BENEFICIAL OWNERSHIP" (and related terms such as "Beneficially Owns" or "Beneficial Owner") has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act; provided, however; that for purposes of determining Beneficial Ownership, a person or entity shall be deemed to Beneficially Own any securities which such person has the right to acquire (irrespective of whether such right to acquire such securities is exercisable immediately or only after the passage of time, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing) pursuant to any agreement or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed to Beneficially Own any securities tendered pursuant to a tender or exchange offer made by such person until such tendered securities are accepted for purchase or exchange by such person. For purposes of this Agreement, no PSS Party or any of their respective Affiliates shall be deemed to Beneficially Own any securities Beneficially Owned by the Company or any person controlled by the Company or any of their respective officers and directors (other than PSS). Under this Agreement, for purposes of calculating the percentage of the outstanding shares of Company Common Stock Beneficially Owned by any person or persons, the number of outstanding shares of Company Common Stock shall be deemed to include the total number of basic shares of Company Common Stock then outstanding plus the number of shares of Company Common Stock issuable upon exercise of stock options which are then "in the money," calculated as follows: the number of option shares to be counted in shares outstanding is calculated individually for each tranche of options (e.g. if the company has 100 tranches, a number of shares potentially issued is calculated for each), in each case by multiplying the number of shares subject to options outstanding per tranche by the difference between the current stock price and the strike price of the applicable tranche of option, and then dividing such number by the then current stock price. For all those tranches for which the strike price is higher than the current stock price, the shares subject to the options are not considered to be outstanding. "COMPANY BOARD" means the board of directors of the Company and, from and after the effective time of the Merger, the board of directors of the corporation surviving the Merger. "COMPANY COMMON STOCK" means shares of common stock, par value $0.001 per share, of the Company, and any capital stock into or for which such common stock hereafter may be converted or exchanged pursuant to a recapitalization, reclassification, merger or other similar event. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and any Rules promulgated thereunder. "GROUP" has the same meaning as described in Section 13(d)(3) of the Exchange Act. "OUTSIDE INDEPENDENT DIRECTORS" means any director of the Company (a) who either (i) qualifies as an "independent director" with respect to the Company pursuant to Section 4200(a)(15) of the Nasdaq National Market Marketplace Rules (as in effect as of the date of the Merger Agreement), or (ii) qualifies as "independent" with respect to the Company under Rule 10A-3 under the Exchange Act (as in effect as of the date of the Merger Agreement), and (b) whose nomination or appointment was approved by PSS and a majority of the Outside Independent Directors then in office (in each case such approval not to be unreasonably withheld), it being understood that, for purposes of this clause (b), each of the individuals who is a director of the Company as of the date of the Merger Agreement and who satisfies the requirements of clause (a) shall be deemed to have been approved by PSS and a majority of the Outside Independent Directors. "PERSON" means any individual, corporation, limited liability company, partnership, association, trust, unincorporated organization or other entity. "QUALIFYING TENDER OFFER" means a tender or exchange offer by PSS, one or more Affiliates of PSS and/or one or more other PSS Parties that (i) is for all of the outstanding shares of Company Common Stock (provided, that such tender or exchange offer need not seek to acquire shares of Company Common Stock Beneficially Owned by PSS, any of his Affiliates or any of the other PSS Parties); (ii) is subject to a non-waiveable condition that a majority of the then-outstanding shares of Company Common Stock (other than any shares of Company Common Stock Beneficially Owned by PSS or any of his Affiliates) be validly tendered and accepted for purchase by the offeror; and (iii) includes a commitment by the offeror (to be contained in the offer to purchase pursuant to which the tender or exchange offer is made) to promptly consummate a merger following the completion of the tender or exchange offer, in which all remaining shares of Company Common Stock not Beneficially Owned by PSS, any of his Affiliates or the PSS Parties shall be acquired for the same amount and type of consideration as was paid per share of Company Common Stock pursuant to the tender or exchange offer. "VOTING CONTROL SHARES" shall mean, with respect to any PSS Party, any shares of Company Common Stock Beneficially Owned by such PSS Party or any of its Affiliates over which such PSS Party has the power to vote or control or direct the voting thereof. ARTICLE V MISCELLANEOUS SECTION 5.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including faxes or similar writing) and shall be given, If to the Company, to: American Pharmaceutical Partners, Inc. 1501 East Woodfield Road, Suite 300 East Schaumburg, IL 60173-5837 Attention: General Counsel Fax: (847) 413-2670 with a copy (which shall not constitute notice) to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071-3197 Attention: Peter Ziegler, Esq. Fax: (213) 229-7520 and further copies (which shall not constitute notice) to: Morrison & Foerster LLP 400 Capitol Mall, Suite 2600 Sacramento, California 95814 Attention: Charles Farman, Esq. Fax: (415) 268-7522 and: Morrison & Foerster LLP 425 Market Street San Francisco, California 94105-2482 Attention: Michael G. O'Bryan, Esq. Fax: (415) 268-7522 If to any PSS Party to the address of such party set forth beneath such party's signature hereto, or such other address or fax number as such party may hereafter specify for such purpose by notice to the other parties hereto. Each such notice, request or other communication shall be effective (i) if given by fax, when such fax is transmitted to the fax number specified in this Section and electronic confirmation of transmission is received or (ii) if given by any other means, when delivered at the address specified in this Section. SECTION 5.02. Amendments; No Waivers; Enforcement. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by PSS and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective; provided, that no such amendment or waiver on behalf of the Company shall be effective without the approval of (i) a majority of the Outside Independent Directors, or (ii) if no member of the Company Board meets the definition of an Outside Independent Director, a majority of the members of the audit committee of the Company. (b) Any action to be taken by the Company to amend, modify, waive, suspend or enforce its rights under this Agreement shall be taken at the direction of a majority of the Outside Independent Directors or, if no member of the Company Board meets the definition of an Outside Independent Director, a majority of the members of the audit committee of the Company. (c) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 5.03. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 5.04. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under applicable law or for reasons of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. SECTION 5.05. Entire Agreement. This Agreement, the Merger Agreement and the RRA represent the entire agreement of the parties and supersede all prior or contemporaneous oral or written agreements and undertakings between the parties with respect to the specific collective subject matter hereof and thereof (it being understood that the execution and delivery hereof shall not affect the validity or enforceability of the Merger Agreement, the RRA and the other documents and instruments executed and delivered concurrently herewith in accordance with the Merger Agreement's terms). SECTION 5.06. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties (and, in the case of any such purported assignment by any PSS Party, without the prior written consent of the Outside Independent Directors or, if no member of the Company Board meets the definition of an Outside Independent Director, a majority of the members of the audit committee of the Company), and any attempt to make any such assignment without such consent shall be null and void ab initio. SECTION 5.07. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and assigns, and nothing expressed or implied in this Agreement is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 5.08. Mutual Drafting. Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties. As a result, the parties expressly acknowledge and agree that no principles of contractual interpretation (whether statutory or under common law) purporting to construe ambiguities against the drafter shall apply to the interpretation, application or enforcement of this Agreement. SECTION 5.09. Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury. (a) This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to its conflicts or choice of law principles. (b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby or for recognition or enforcement of any judgment relating hereto, and each of the parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Delaware State court or, to the extent permitted by law, in such Federal court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such Delaware State or Federal court and (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law. (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.09(c). SECTION 5.10. Counterparts. This Agreement may be executed by facsimile signature and in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 5.11. Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions, without the posting of any bond, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they may be entitled at law or in equity. SECTION 5.12 Termination. This Agreement automatically shall terminate upon the earliest of (a) the date of the 2007 Annual Meeting, (b) the first date upon which the PSS Parties and their respective Affiliates collectively Beneficially Own less than 65% of the then outstanding shares of Company Common Stock and (c) the date a Qualifying Tender Offer and the related back-end merger are completed and all outstanding shares of Company Common Stock are owned by PSS or his Affiliates. [signature page follows] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PSS /s/ Dr. Patrick Soon-Shiong - ----------------------------------- Dr. Patrick Soon-Shiong Address: c/o American Pharmaceutical Partners, Inc. 11777 San Vicente Blvd., Suite 550 Los Angeles, CA 90049 CALIFORNIA CAPITAL LIMITED PARTNERSHIP BY: THEMBA LLC, ITS GENERAL PARTNER By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager Address: Californian Capital Limited Partnership Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THEMBA 2005 TRUST I By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Trustee Address: Themba 2005 Trust I Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THEMBA 2005 TRUST II By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Trustee Address: Themba 2005 Trust II Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THE 2005 TWO-YEAR ANNUITY TRUST A By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Trustee Address: The 2005 Two-Year Annuity Trust A Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THE 2005 TWO-YEAR ANNUITY TRUST B By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Trustee Address: The 2005 Two-Year Annuity Trust B Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THEMBA CREDIT LLC By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager Address: Themba Credit, LLC Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 RSU PLAN LLC By: /s/ Steven H. Hassan ---------------------------- Name: Steven H. Hassan Title: Manager Address: RSU Plan, LLC Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 AMERICAN PHARMACEUTICAL PARTNERS, INC. By: /s/ Nicole S. Williams ----------------------------- Name: Nicole S. Williams Title: Exec. V.P. & CFO Address: American Pharmaceutical Partners, Inc. 1501 East Woodfield Road, Suite 300 East Schaumburg, IL 60173-5837 Attention: General Counsel Fax: (847) 413-2670 EX-99.4 5 regrights.txt REGISTRATION RIGHTS AGREEMENT Exhibit 4 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT ----------------------------- THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of April 18, 2006 by and among American Pharmaceutical Partners, Inc., a Delaware corporation (the "Company"), Dr. Patrick Soon-Shiong ("PSS") and the stockholders of ABI receiving Common Stock in the Merger (each as defined below) who execute and deliver a counterpart to this Agreement (collectively, the "Stockholder Parties"). R E C I T A L S --------------- A. The Company and American BioScience Inc., Inc., a California corporation ("ABI") have entered into an agreement and plan of merger, dated as of November 27, 2005 (the "Merger Agreement") pursuant to which holders of shares of common stock of ABI as of the Effective Time of the Merger (each term as defined in the Merger Agreement) will be entitled to receive shares of Common Stock; B. The obligation of ABI to consummate the merger contemplated by the Merger Agreement (the "Merger") is conditioned, among other things, upon the Company entering into this Agreement. AGREEMENT --------- NOW, THEREFORE, in consideration of the foregoing and of the mutual promises herein contained, the parties hereby agree as follows: 1. Definitions. Unless the context otherwise requires, the terms defined in this Section 1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined. "Agreement" means this Registration Rights Agreement. "Automatic Shelf Registration Statement" means an automatic shelf registration statement as defined under Rule 405 of the Securities Act. "Board" means the Board of Directors of the Company. "Common Stock" means the common stock, par value $.001, of the Company. "Commission" means the Securities and Exchange Commission. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" of any security means the record or beneficial owner of such security. "Holders of a Majority of Registrable Securities" means the Person or Persons who are the Holders of greater than 50% of the Registrable Securities then outstanding. "Independent Member of the Board" means a member of the Board who is an Outside Independent Director as defined in the Corporate Governance and Voting Agreement by and among PSS, the Company and certain other parties who were or will be issued Registrable Securities pursuant to the Merger to be effected pursuant to the Merger Agreement or, from and after the termination of such agreement, shall refer to members of the Board who are members of the Company's audit committee. "Initiating Holder" means any Holder of Registrable Securities. "Person" means any natural person, corporation, trust, association, company, partnership, limited liability company, joint venture and other entity and any government, governmental agency, instrumentality or political subdivision. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in substantial compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registrable Securities" shall mean (i) the shares of Common Stock issued to the Stockholder Parties pursuant to the Merger and (ii) any shares of Common Stock or other securities issued or issuable in respect of the Common Stock or the other securities referred to in clause (i) above by way of a spin-off, split-off, dividend or stock split or in connection with a combination of shares, reclassification, merger, consolidation or reorganization; provided, however, that such shares of Common Stock or other securities shall constitute Registrable Securities only so long as they have not been (x) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction pursuant to an effective registration statement under the Securities Act, or (y) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect to such Common Stock or other securities are removed upon the consummation of such sale and the seller and purchaser of such Common Stock or other securities receive an opinion of counsel for the Company, which shall be in form and content reasonably satisfactory to the seller and purchaser and their respective counsel, to the effect that such Common Stock or other securities in the hands of the purchaser are freely transferable without restriction or registration under the Securities Act in any public or private transaction. "Securities Act" means the Securities Act of 1933, as amended. "WKSI" means a well-known seasoned issuer as defined under Rule 405 of the Securities Act. 2. Underwritten Demand Registration. -------------------------------- (a) At any time or from time to time after the date hereof, any Initiating Holder shall have the right to request, by delivery of a written notice to the Company (an "Underwritten Demand Notice"), that the Company file a registration statement under the Securities Act (an "Underwritten Registration Statement") covering all or a portion of the Registrable Securities for the purpose of effecting an underwritten offering of such Registrable Securities (an "Underwritten Demand Registration"); provided, however, that no Initiating Holder shall be entitled to demand an Underwritten Demand Registration Statement during the period when the Company is exercising its right to defer a Shelf Demand Registration pursuant to Section 3(b). Any such Underwritten Demand Notice must request the registration of Registrable Securities having an aggregate market value, based on the average per share closing price of the Registrable Securities as reported by the NASDAQ National Market (or, if the Registrable Securities are not traded on the NASDAQ national market, on any other securities exchange or market upon which the Registrable Securities are then traded) over the ten (10) consecutive trading days prior to the date of the Underwritten Demand Notice, of not less than one hundred million dollars ($100,000,000). Subject to Section 6(b)(A), as soon as reasonably practicable, but in no event later than forty-five (45) days (thirty (30) days if the registration statement will be on Form S-3) after receiving an Underwritten Demand Notice, the Company shall file with the Commission a registration statement covering the Registrable Securities subject to the Underwritten Demand Notice. Subject to Sections 2(b) and 4, the Company shall use its reasonable best efforts to cause such registration statement to become effective as expeditiously as possible. Any registration under this Section 2 shall be on a form designated by the managing underwriter for such registration and the applicable registration statement shall reflect such plan or method of distribution of the applicable securities as shall be designated by the managing underwriter. (b) Notwithstanding the provisions of Section 2(a), if the Company is required to effect a registration pursuant to this Section 2 and the Company furnishes to the Initiating Holder requesting such registration a certificate signed by the Chief Executive Officer of the Company or an Independent Member of the Board stating that in the good faith judgment of the Board or a majority of the Independent Members of the Board it would be detrimental to the Company and its stockholders for a registration statement or other filing to be filed or become effective on or before the date such filing or effectiveness would otherwise be required hereunder, the Company shall have the right to defer such filing or the effectiveness hereunder for a period ending not more than ninety (90) days after the Company's receipt of the applicable Underwritten Demand Notice, provided, that the Company may not exercise its right under this Section 2(b) more than twice in any 18-month period; and provided further, that the Company may not exercise its rights under this Section 2(b) for two consecutive 90-day periods. (c) Notwithstanding the provisions of Section 2(a), the Company shall not be obligated to (i) file or effect an Underwritten Registration Statement within a period of 90 days after the effective date of any other Underwritten Registration Statement or an underwritten offering pursuant to a Shelf Registration Statement or (ii) file or effect more than a total of two Underwritten Registration Statements within any 12-month period; provided, however, that each Shelf Registration Statement filed during the applicable 12-month period will reduce by one the number of Underwritten Registration Statements the Company is obligated to file during such 12-month period. (d) The Company may elect to register in any Underwritten Demand Registration any additional shares of Common Stock (including, without limitation, any shares of Common Stock to be distributed in a primary offering made by the Company) so long as the inclusion of such Common Stock by the Company would not (i) be reasonably likely to delay in any material respect the Initiating Holder's ability timely to sell the Registrable Securities pursuant to the Demand Registration Statement or (ii) cause a reduction in the number of Registrable Securities included in the Underwritten Demand Registration as a result of the Company's election to so register additional shares of Common Stock. Such election of the Company, if made, shall be made by the Company giving written notice to the Initiating Holder prior to the effectiveness of the Underwritten Registration Statement stating (A) that the Company proposes to include additional shares of Common Stock in such Demand Registration Statement, and (B) the number of shares of Common Stock proposed to be included. 3. Shelf Registration. ------------------ (a) At any time or from time to time after the date hereof and so long as the Company is eligible to register Registrable Securities under a Form S-3 Registration Statement, any Initiating Holder shall have the right to request, by delivery of a written notice to the Company (a "Shelf Demand Notice"), that (i) the Company file a shelf registration statement (a "Shelf Registration Statement") pursuant to Rule 415 under the Securities Act covering all or a portion of the Registrable Securities to enable the resale on a delayed or continuous basis of such Registrable Securities (a "Shelf Demand Registration") or (ii) if the Company is a WKSI and has an outstanding effective Form S-3 Registration Statement, the Company file a post-effective amendment to such Form S-3 Registration Statement covering all or a portion of the Registrable Securities; provided, however, that in any case the Company shall not be obligated to file or effect any Shelf Registration Statement (A) at any time that the amount of unsold Registrable Securities covered by all then effective Shelf Registration Statements equals or exceeds seventeen percent of the then outstanding shares of Common Stock of the Company or (B) if the requested Shelf Registration Statement covers a number of Registrable Securities that, when added to the amount of unsold Registrable Securities covered by all then effective Shelf Registration Statements would equal or exceed seventeen percent of the then outstanding shares of Common Stock of the Company; and provided, further that no Initiating Holder shall be entitled to demand a Shelf Registration Statement during the period when the Company is exercising its right to defer an Underwritten Demand Registration pursuant to Section 2(b). Subject to Section 6(b)(A), as soon as reasonably practicable, but in no event later than thirty (30) days after receiving a Shelf Demand Notice (or twenty (20) days if the Company is a WKSI and then has an effective Form S-3 Registration Statement), the Company shall file with the Commission a Shelf Registration Statement on Form S-3 of the Commission or, if the Company is a WKSI and has an effective Form S-3 Registration Statement, a post-effective amendment thereto. Subject to Sections 3(b) and 3(c), the Company shall use its commercially reasonable best efforts to cause the Shelf Registration Statement to become effective as expeditiously as possible and to remain effective until the earlier of (x) the time all Registrable Securities subject thereto have been sold and (y) the third anniversary of the initial effective time, including by filing necessary post-effective amendments and prospectus supplements reasonably required by a Holder, subject to any blackout periods described in subparagraph (b) below. If the Company is at any time a WKSI, it shall cause each Shelf Registration Statement to be, or shall cause any filed Shelf Registration Statement to be amended to be, an Automatic Shelf Registration Statement. The Initiating Holder shall have the right to determine the plan and method of distribution for the Registrable Securities to be reflected in the Shelf Registration Statement in respect of which it is the Initiating Holder. (b) Notwithstanding the provisions of Section 3(a), if the Company is required to effect a Shelf Registration Statement or make any filing with the Commission pursuant to this Section 3 or if the Company has a Shelf Registration Statement in effect pursuant to this Section 3, and the Company furnishes to the Initiating Holder requesting such registration or filing or to the Holders of Registrable Securities included in such Shelf Registration Statement, as applicable, a certificate signed by an Independent Member of the Board stating that (x) in the good faith judgment of a majority of the Independent Members of the Board it would be detrimental to the Company and its stockholders for a registration statement or other filing to be filed on or before the date such filing would otherwise be required hereunder or (y) sales pursuant to a Shelf Registration Statement would require the disclosure of information not otherwise then required by law (in the absence of a registration or sales thereunder) to be publicly disclosed and that in the good faith judgment of a majority of the Independent Members of the Board such disclosure would be detrimental to the Company and its stockholders, the Company shall have the right to defer such filing or the effectiveness thereof for a period of not more than ninety days after the Company's receipt of the applicable Shelf Demand Notice or prevent Holders of Registrable Securities from selling Registrable Securities pursuant to an effective Shelf Registration Statement for a period of not more than ninety days after the Company delivers a written request to the applicable Holder demanding that such Holder cease sales of securities under the Shelf Registration Statement (and during such period the Company shall not be obligated to file another Shelf Registration Period during the period such sales under an effective Shelf Registration Statement are not allowed); provided, that the Company may not exercise its rights under this Section 3(b) more than twice in any 18-month period; and provided further, that the Company may not exercise its rights under this Section 2(b) for two consecutive 90-day periods. (c) Notwithstanding the provisions of Section 3(a), the Company shall not be obligated to (i) file a Shelf Registration Statement within a period of 90 days after the effective date of any Underwritten Registration Statement or an underwritten offering pursuant to a Shelf Registration Statement or (ii) file or effect more than a total of two Shelf Registration Statements within any 12-month period; provided, however, that each filing of an Underwritten Registration Statement during the 12-month period will reduce by one the number of Shelf Registration Statements that the Company is obligated to file during such 12-month period. (d) Upon the receipt by the Company of a Shelf Demand Notice, the Company shall give prompt written notice to all Holders of Registrable Securities (other than the Initiating Holder) that a Shelf Registration Statement pursuant to this Section 3 is being effected. In the event that any such Holder delivers to the Company a written request within fifteen (15) days after the delivery of such written notice to the Holder by the Company, to include in such Shelf Registration Statement Registrable Securities of the Holder the Company shall include such Registrable Securities in the Shelf Registration Statement, including by means of a pre-effective or post-effective amendment thereto; provided, however, that if the inclusion of the Registrable Securities of such Holders in such registration statement would, in the opinion of the Initiating Holders, be reasonably likely to delay in any material respect the Initiating Holder's ability timely to sell the Registrable Securities pursuant to the Shelf Registration Statement, the Company shall not include such Holders' Registrable Securities in the Shelf Registration Statement without the prior written consent of the Initiating Holder. (e) At any time or from time to time after the date hereof, any Initiating Holder shall have the right to request, by delivery of a written notice to the Company (a "Shelf Underwritten Demand Notice"), that the Company effect an underwritten offering of all or a portion of the Registrable Securities included in an existing Shelf Registration Statement. Any such Shelf Underwritten Demand Notice must request an underwritten offering of Registrable Securities having an aggregate market value, based on the average per share closing price of the Registrable Securities as reported by the NASDAQ National Market (or if the Registrable Securities are not traded on the NASDAQ National Market, the securities exchange or market upon which the Registrable Securities are listed or traded) over the ten (10) consecutive trading days prior to the date of the Shelf Demand Notice, of not less than one hundred million dollars ($100,000,0000). Subject to Section 6(b)(A), as soon as reasonably practicable after receiving an Underwritten Demand Notice, but in no event later than thirty (30) days after receiving a Shelf Underwritten Demand Notice, the Company shall file with the Commission such amendments to the applicable Shelf Registration Statements and such prospectus supplements or other filings as are necessary in connection with the underwritten offering of the Registrable Securities subject to the Shelf Underwritten Demand Notice, subject to Sections 3(b) and Section 4. Any prospectus supplement or other filing with the Commission including a plan or method of distribution of the securities subject to an underwritten offering pursuant to this Section 3 shall reflect the plan or method of distribution of such securities as shall be designated by the managing underwriter of the offering. (f) The Company may elect to register in any Shelf Registration Statement any additional shares of Common Stock (including, without limitation, any shares of Common Stock to be distributed in a primary offering made by the Company) so long as the inclusion of such Common Stock by the Company would not (i) be reasonably likely to delay in any material respect the Initiating Holder's ability timely to sell the Registrable Securities pursuant to the Shelf Registration Statement or (ii) cause a reduction in the number of Registrable Securities included in the Shelf Demand Registration as a result of the Company's election to so register additional shares of Common Stock . Such election of the Company, if made, shall be made by the Company giving written notice to the Initiating Holder stating (A) that the Company proposes to include additional shares of Common Stock in such Shelf Registration Statement, and (B) the number of shares of Common Stock proposed to be included. 4. Underwritten Offerings. ---------------------- (a) The Initiating Holder shall have the right to select the book-running managers and the co-managers (collectively, the "managing underwriter") in connection with any underwritten offering pursuant to Section 2 or Section 3; provided, that the selection of the managing underwriter by the Initiating Holder shall be subject to the reasonable approval of the Board. In connection with such underwritten offering, the Company and the Initiating Holder shall enter into an underwriting agreement with the underwriter or underwriters selected for such underwriting, provided, that such underwriting agreement is in customary form, provides for customary compensation, expense reimbursement and indemnification, and otherwise is reasonably acceptable to the Initiating Holder and the Company. (b) Upon the receipt by the Company of an Underwritten Demand Notice or a Shelf Underwritten Demand Notice, the Company shall give prompt written notice to all Holders of Registrable Securities (other than the Initiating Holder) that an underwritten offering pursuant to Section 2 or Section 3, as applicable is being effected. In the event that any such Holder delivers to the Company, within fifteen (15) days after the delivery of such written notice to the Holder by the Company, a written request to include in such underwritten offering any Registrable Securities of the Holder, the Company shall include such Registrable Securities in the registration statement; provided that the Company need not include in an underwritten offering pursuant to Section 3 any Registrable Securities that are not then included in the applicable Shelf Registration Statement (unless the Company is then a WKSI). The right of any Holder to include Registrable Securities in any underwritten offering shall be conditioned upon such Holder's willingness to enter into an underwriting agreement with the underwriter or underwriters selected for such offering (in each case, unless otherwise mutually agreed by such Holder, the Initiating Holders and the Company). (c) Notwithstanding the foregoing, if the managing underwriter of an underwritten offering in connection with any registration pursuant to Section 2 or Section 3 advises the Company and the Holders of Registrable Securities participating in such offering in writing that in its good faith judgment the number of Registrable Securities requested to be included in such offering exceeds the number of Registrable Securities which can be sold in such offering at a price acceptable to the applicable Initiating Holder, then (i) the number of Registrable Securities so requested to be included in such offering shall be reduced to that number of shares which in the good faith judgment of the managing underwriter can be sold in such offering at such price and (ii) this reduced number of Registrable Securities shall be allocated among all Holders of Registrable Securities in proportion, as nearly as practicable, to the respective number of shares of Registrable Securities then held by such Holders. (d) Those Registrable Securities which are excluded from an underwriting in connection with any registration pursuant to Section 2 or Section 3 hereof by reason of the managing underwriter's marketing limitation and all other Registrable Securities not originally requested to be so included shall not be included in such offering and shall be withheld from the market by the Holders thereof for a period (not to exceed ninety (90) days) which the managing underwriter reasonably determines is necessary to effect the underwritten offering. (e) If the managing underwriter has not limited the number of Registrable Securities to be included in an underwritten offering pursuant to Section 2 or Section 3, the Company and, subject to the requirements of Section 8 hereof, the other holders of the Company's securities may include securities for its (or their) own account in such registration if the managing underwriter so agrees and if the number of Registrable Securities which would otherwise have been included in such offering will not thereby be limited. 5. Piggyback Registration. ---------------------- (a) Each time the Company shall determine to file a registration statement under the Securities Act (other than on Form S-4 or Form S-8 or a registration statement on Form S-1 or Form S-3 covering solely an employee benefit plan) in connection with the proposed offer and sale of any of its securities of the same class as the Registrable Securities either for its own account or on behalf of any other security holder (other than a registration pursuant to Section 2 or Section 3), the Company agrees to give prompt written notice of its determination to all Holders of Registrable Securities. In the event that any such Holder delivers to the Company, within fifteen (15) days after the delivery of such written notice to the Holder by the Company, a written request to include in such registration statement any Registrable Securities of the Holder, the Company shall include such Registrable Securities in such registration statement, all to the extent required to permit the sale or other disposition by the prospective seller or sellers of the Registrable Securities to be so registered. (b) If the registration of which the Company gives written notice pursuant to Section 5(a) is for a public offering involving an underwriting, the Company shall so advise the Holders as a part of its written notice. In such event the right of any Holder to registration pursuant to this Section 3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. Holders proposing to distribute their Registrable Securities through such underwriting agree to enter into (together with the Company and the other Holders distributing their securities through such underwriting) an underwriting agreement with the underwriter or underwriters selected for such underwriting by the Company. (c) Notwithstanding any other provision of this Section 5, if the managing underwriter of an underwritten offering in connection with the registration pursuant to this Section 5 advises the Company and the Holders of the Registrable Securities participating in such registration in writing that in its good faith judgment the number of Registrable Securities and the other securities requested to be registered (i) exceeds the number of Registrable Securities and other securities which can be sold in such offering at a price acceptable to the Company, or (ii) would jeopardize the success of the offering, then (A) the number of Registrable Securities and other securities proposed to be included in the offering shall be reduced to that number which in the good faith judgment of the managing underwriter can be sold in such offering at a price acceptable to the Company and (B) such reduced number shall be allocated: A. If the registration is on behalf of the Company: a. First, to the Company, such that all securities proposed to be registered by or on behalf of the Company are included in the registration statement; b. Next, among all Holders of Registrable Securities in proportion, as nearly as practicable to the respective number of Registrable Securities held by such Holders at the time of the filing of the registration statement; and c. Last, among all other participating holders proposing to register securities other than Registrable Securities, in the manner determined by the Company. B. If the registration is on behalf of holders of Common Stock other than any Stockholder Party: a. First, among all participating holders other than any Stockholder Party in the manner determined by the Company and among all Holders of Registrable Securities in proportion, as nearly as practicable to the respective number of Registrable Securities and other shares of Common Stock held by such persons at the time of the filing of the registration statement; and b. Last, to the Company, for such number of shares of Common Stock as may be included in the registration statement. (d) Those Registrable Securities which are excluded from the underwriting by reason of the managing underwriter's marketing limitation and all other Registrable Securities not originally requested to be so included shall not be included in such registration. 6. Registration Procedures. If and whenever the Company is required by the provisions of Section 2 or 3 to effect the registration of Registrable Securities under the Securities Act, (a) the Company, at its expense and as expeditiously as possible shall use its reasonable best efforts to effect such registration and agrees to: (A) in accordance with the Securities Act and all applicable rules and regulations, prepare and file with the Commission a registration statement with respect to such securities and use its reasonable best efforts to cause such registration statement to become and remain effective for a period of 120 days (unless the registration is a Shelf Registration Statement in which case such period shall extend until the earlier of (x) the time all Registrable Securities subject thereto have been sold and (y) the third anniversary of the initial effectiveness thereof, subject to the Company's rights to cause Holders of Registrable Securities to cease sales under an effective Shelf Registration Statement pursuant to Section 3(b)), and prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus contained therein as may be necessary to keep such registration statement effective and such registration statement and prospectus accurate and complete and to permit the Holders of Registrable Securities subject to such registration statement to sell such securities; (B) if an offering is to be underwritten in whole or in part, enter into a written underwriting agreement in form and substance reasonably satisfactory to the Company, the managing underwriter of the offering and to the Initiating Holder (in the case of a underwritten offering pursuant to Section 2 or Section 3) or to Holders of a majority of the Registrable Securities participating in such offering (in the case of a registration pursuant to Section 3); (C) furnish to the Holders of securities participating in such registration and to the underwriters of the securities being registered such number of copies of the registration statement and each amendment and supplement thereto, preliminary prospectus, final prospectus, prospectus supplement and such other documents as such underwriters and Holders may reasonably request; (D) use its reasonable best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Holders of Registrable Securities and underwriters may reasonably request, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified; (E) notify the Holders of Registrable Securities participating in such registration, promptly after it shall receive notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed; (F) notify such Holders of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information; (G) prepare and file promptly with the Commission, and promptly notify such Holders of Registrable Securities of the filing of, such amendments or supplements to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, when any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (H) in case any of such Holders of Registrable Securities or any underwriter for any such Holders is required to deliver a prospectus at a time when the prospectus then in circulation is not in compliance with the Securities Act or the rules and regulations of the Commission, the Company shall use reasonable best efforts to prepare promptly upon request such amendments or supplements to such registration statement and such prospectus as may be necessary in order for such prospectus to comply with the requirements of the Securities Act and such rules and regulations; (I) advise such Holders of Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; (J) at the request of any Holder of Registrable Securities covered by such registration statement, (i) furnish to such Holder on the effective date of the registration statement, upon the filing of a prospectus supplement with respect to such registration statement or, if such registration includes an underwritten offering, at the closing provided for in the underwriting agreement, an opinion dated such date of the counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and to the Holder or Holders making such request, covering such matters with respect to the registration statement, the prospectus and each amendment or supplement thereto, proceedings under state, federal and other securities laws, other matters relating to the Company, the securities being registered and the offer and sale of such securities as are customarily the subject of opinions of issuer's counsel provided to underwriters in underwritten public offerings, and such opinion of counsel shall additionally cover such legal matters with respect to the registration as such requesting Holder or Holders may reasonably request, and (ii) use its reasonable best efforts to furnish to such Holders letters dated each of such effective date, the date of the filing of a prospectus supplement and such closing date, from the independent certified public accountants of the Company, addressed to the underwriters, if any, and to the Holder or Holders making such request, stating that they are independent certified public accountants within the meaning of the Securities Act and dealing with such customary matters as the underwriters may request, or if the offering is not underwritten that in the opinion of such accountants the financial statements and other financial data of the Company included in the registration statement or the prospectus or any amendment or supplement thereto comply in all material respects with the applicable accounting requirements of the Securities Act, and additionally covering such other accounting and financial matters as such requesting Holder or Holders may reasonably request; (K) list the Registrable Securities (and to maintain such listing during the pendency of the relevant registration period) for inclusion on the automated quotation system of the NASD or list such Registrable Securities on any exchange on which the securities of the Company of the same class with Registrable Securities are listed (and to maintain such qualification during the pendency of the relevant registration period); (L) make senior executives of the Company available, upon reasonable prior notice and subject to reasonable scheduling flexibility, to assist the underwriters with respect to, and to accompany the underwriters on the so-called "road show" in connection with, marketing efforts for the distribution and sale of Registrable Securities pursuant to an underwritten offering so long as the fulfillment of this Section 6(a)(L) shall not materially impair such senior executives' management of the Company and other activities on behalf of the Company and so long as any related expenses (including, without limitation, expenses of the Company and participating senior executives) not required to be paid by the Company pursuant to Section 7(b) are paid by the Holders requesting such "road show" participation and assistance; and (M) prepare other offering materials in a form customarily used in similar transactions or on the request of any Holder of Registrable Securities or any managing underwriter. (b) Each Holder of Registrable Securities included for registration, at its expense and as expeditiously as possible agrees to: (A) provide the Company with such information and assistance as reasonably requested by the Company to effect such registration under the Securities Act; and (B) keep confidential that the Company has exercised its rights under Sections 2(b), 3(b) and any other confidential information provided by the Company in connection with this Agreement. (c) Certain legal consequences arise from being named as a selling securityholder in a registration statement and related prospectus. Accordingly, each Stockholder Party acknowledges that it has been advised to consult its own independent securities law counsel regarding the consequences of demanding or requesting registration of Registrable Securities hereunder or being named or not being named as a selling securityholder in the registration statement and related prospectus. 7. Expenses. -------- (a) With respect to each inclusion of shares of Registrable Securities in a registration statement pursuant to Section 2 or Section 3, the Company agrees to bear all fees, costs and expenses of such registration and any public offerings in connection therewith; provided, however, that Holders participating in any such registration agree to bear their pro rata share of the underwriting discount and commissions, and any the expenses associated or incurred in connection with "road show" or other marketing efforts the expenses of which are not required to be paid by the Company pursuant to subparagraph (b) below shall be paid by the Holders of Registrable Securities requesting the same. (b) The fees, costs and expenses of registration to be borne as provided in paragraph (a) above, shall consist of (i) all registration, filing and NASD fees, printing expenses, fees and disbursements of counsel and accountants for the Company, (ii) fees and disbursements of counsel for the underwriter(s) of such securities (if the Company and/or selling security holders are otherwise required to bear such fees and disbursements), (iii) all legal fees and disbursements and other expenses of the Company complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered or qualified, (iv) reasonable fees and disbursements of one firm of counsel for the selling security holders designated by the Holders of a majority of the Registrable Securities included in such registration, and (v) the expenses associated with the "road show" or other marketing efforts for the distribution and sale of Registrable Securities registered under two underwritten registration statements filed pursuant to either Section 2 or 3 in any eighteen month period. (c) Notwithstanding the foregoing, the Company shall pay the expenses of a registration statement requested pursuant to Section 2 or Section 3 only with respect to the first eight (8) registration statements so filed (and then only to the extent provided in Section 7) and all expenses related to any additional registration statements, including those fees and expenses set forth in Section 7(b), shall be paid by the Initiating Holder and/or the Holders of Registrable Securities on a pro rata basis; provided that, in the event that a registration pursuant to Section 2 or 3 is requested by an Initiating Holder and such request is withdrawn prior to the filing of a registration statement by the Company, or the Holders of Registrable Securities cause the Company to withdraw a registration statement prior to its effectiveness, then either (at the election of the Initiating Holder), (i) the Initiating Holder and other Holders of Registrable Securities requesting inclusion of their shares in such registration shall bear pro rata all fees, costs and expenses of the registration and preparation of the registration statement and such requested registration statement shall not be deemed to be one of the registration statements for which the Company is required to pay expenses pursuant to this Section 7, or (ii) such requested registration statement shall be deemed to be one of the registration statements for which the Company is required to pay the expenses pursuant to this Section 7; provided, further, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company as of the date of their request for such registration statement not known to the Initiating Holder or publicly available at the time of its request and have withdrawn their request solely on such basis and with reasonable promptness after learning of such material adverse change, then the Holders shall not be required to pay any of such expenses and such requested registration statement shall not be deemed to be one of the registration statements for which the Company is required to pay expenses pursuant to this Section 7. 8. Indemnification. --------------- (a) The Company hereby agrees to indemnify and hold harmless each Holder of Registrable Securities which are included in a registration statement pursuant to the provisions of this Agreement and each of such Holder's officers, directors, partners, members, legal counsel and accountants, and each Person who controls such Holder within the meaning of the Securities Act and any underwriter (as defined in the Securities Act) for such Holder, and any Person who controls such underwriter within the meaning of the Securities Act, from and against, and agrees to reimburse such Holder, its officers, directors, partners, members, legal counsel, accountants and controlling Persons and each such underwriter and controlling Person of such underwriter with respect to, any and all claims, actions (actual or threatened), demands, losses, damages, liabilities, costs and expenses to which such Holder, its officers, directors, partners, members, legal counsel, accountants or controlling Persons, or any such underwriter or controlling Person of such underwriter who may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus related thereto, or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement; provided, however, that the Company will not be liable to any such Person to the extent that any such claim, action, demand, loss, damage, liability, cost or expense is caused by an untrue statement or alleged untrue statement or omission or alleged omission of material fact so made in strict conformity with written information furnished by such Holder or another Holder, such underwriter or such controlling Person specifically for use in the preparation thereof; provided, further, that the Company shall not be liable to any such Person to the extent that such untrue statement or omission of material fact is subsequently corrected by an amendment or supplement to such registration statement (or an amended prospectus filed with the Commission pursuant to Rule 424(b) of the Securities Act) and such amendment or supplement (or amended prospectus) is timely delivered to the Holders of Registrable Securities. (b) Each Holder of shares of Registrable Securities which are included in a registration statement pursuant to the provisions of this Agreement hereby agrees (severally and not jointly) to indemnify and hold harmless the Company, its officers, directors, legal counsel and accountants and each Person who controls the Company within the meaning of the Securities Act, from and against, and agrees to reimburse the Company, its officers, directors, legal counsel, accountants and controlling Persons with respect to, any and all claims, actions, demands, losses, damages, liabilities, costs or expenses to which the Company, its officers, directors, legal counsel, accountants or such controlling Persons may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such registration statement, any prospectus related thereto or any amendment or supplement thereto, or are caused by the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by such Holder specifically for use in the preparation thereof; provided, however, that the indemnity agreement contained in this subsection 6(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld or delayed; provided, further, that the total amounts payable in indemnity by a Holder under this subsection 6(b) shall not exceed the net proceeds received by such Holder in the registered sale out of which such claim, action, demand, loss, damage, liability, cost, or expense arises. (c) Promptly after receipt by a party indemnified pursuant to the provisions of subsection (a) or (b) of this Section 8 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim therefore is to be made against the indemnifying party pursuant to the provisions of subsection (a) or (b), notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 6 and shall not relieve the indemnifying party from liability under this Section 6 unless such indemnifying party is prejudiced by such omission. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying parties similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party or parties). Upon the permitted assumption by the indemnifying party of the defense of such action, and approval by the indemnified party of counsel, the indemnifying party shall not be liable to such indemnified party under subsection (a) or (b) for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof (other than reasonable costs of investigation) unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time, (iii) the indemnifying party and its counsel do not actively and vigorously pursue the defense of such action, or (iv) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party shall be liable to an indemnified party for any settlement of any action or claim without the consent of the indemnifying party and no indemnifying party may unreasonably withhold its consent to any such settlement. No indemnifying party will consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability with respect to such claim or litigation. (d) If the indemnification provided for in subsection (a) or (b) of this Section 8 is held by a court of competent jurisdiction to be unavailable to a party to be indemnified with respect to any claims, actions, demands, losses, damages, liabilities, costs or expenses referred to therein, then each indemnifying party under any such subsection, in lieu of indemnifying such indemnified party thereunder, hereby agrees to contribute to the amount paid or payable by such indemnified party as a result of such claims, actions, demands, losses, damages, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such claims, actions, demands, losses, damages, liabilities, costs or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount any Holder of Registrable Securities shall be obligated to contribute pursuant to this subsection (d) shall be limited to an amount equal to the per share sale price (less any underwriting discount and commissions) multiplied by the number of shares of Registrable Securities sold by such Holder pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such claim, action, demand, loss, damage, liability, cost or expense or any substantially similar claim, action, demand, loss, damage, liability, cost or expense arising from the sale of such Registrable Securities). (e) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution hereunder from any person who was not guilty of such fraudulent misrepresentation. (f) The obligations of the Company and Holders under this Section 8 shall survive the completion of any offering of Registrable Securities in a registration statement and termination of this Agreement. 9. Stockholder Information. ----------------------- The Company may request each Holder of Registrable Securities as to which any registration is to be effected pursuant to this Agreement to furnish the Company with such information with respect to such Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing and as shall be required by law or by the Commission in connection therewith, and each Holder of Registrable Securities as to which any registration is to be effected pursuant to this Agreement agrees to promptly furnish the Company with such information. 10. Forms. ----- All references in this Agreement to particular forms of registration statements are intended to include, and shall be deemed to include, references to all successor forms which are intended to replace, or to apply to similar transactions as, the forms herein referenced. 11. Lockup Agreement. ---------------- Each Holder of Registrable Securities agrees in connection with any registration of the Company's securities that, upon the request of the managing underwriter of any underwritten offering of the Company's securities (or, if there is no managing underwriter, the Company), it or he or she shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any capital stock of the Company (other than those that included in such registration) without the prior written consent of such managing underwriter for a period not to exceed ninety (90) days. The Company may impose stop transfer instructions with respect to the Registrable Securities subject to the foregoing restriction until the end of the lock-up period. 12. Transfer of Registration Rights. ------------------------------- The rights to cause the Company to register securities granted to the Holders of Registrable Securities pursuant to this Agreement may be transferred or assigned only to (i) an affiliate or immediate family member of a Holder of Registrable Securities or (ii) an immediate or remote transferee of the Holder of Registrable Securities who, after such transfer, is the Holder of not less than 5% of the number of shares of Registrable Securities outstanding as of the date of this Agreement; provided that the transferee first agrees in writing to be bound by the terms of this Agreement. 13. Representations and Warranties of the Holder. Each Stockholder Party by execution hereof acknowledges that the Registrable Securities that such Holder may be entitled to receive pursuant to the Merger Agreement are being offered and sold pursuant to an exemption from registration under the Securities Act, based in part upon the representations, warranties, covenants and agreements of the undersigned contained below. Accordingly, he Holder hereby represents and warrants to the Company as follows: (a) The Holder both: (i) either (A) is an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act, or (B) is not a "U.S. person" as such term is defined in Rule 902(k) of Regulation S promulgated under the Securities Act (the definitions of such terms pursuant to such Rule and Regulation are excerpted in Schedule I hereto); and (ii) is acquiring the Registrable Securities for the undersigned's own account (or in the case of the undersigned who is not a "U.S. Person" and otherwise is receiving the Registrable Securities pursuant to the requirements of Regulation S, for the undersigned's own account or the account or benefit of any non-U.S. person), for investment purposes only, and not as a nominee or agent and not with the view to, or any intention of, a resale or distribution thereof, in whole or in part, or the grant of any participation therein. (b) The Holder has the capacity to protect his, her or its own interests in connection with the transactions contemplated by the Merger Agreement and is capable of evaluating the merits and risks of his, her or its investment in the Company. The Holder acknowledges that he, she or it must bear the economic risk of the investment in Registrable Securities indefinitely, unless the Registrable Securities are registered pursuant to the Securities Act or an exemption from registration is available, and that, subject to the terms and conditions of this Agreement, the Company has no obligation to register the Company common stock. The undersigned also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow the undersigned to transfer all or any portion of the Registrable Securities under the circumstances, in the amounts or at the times the undersigned might propose. (c) If the Holder is not a "U.S. person," as such term is defined in Rule 902(k) of Regulation S promulgated under the Securities Act, the Holder has satisfied himself, herself or itself as to the full observance of the laws of his, her or its jurisdiction in connection with the proposed issuance of the Registrable Securities pursuant to the Merger, and that the Company's issuance of the Registrable Securities pursuant to the Merger will not violate any applicable securities or other laws of the Holder's home jurisdiction. (d) The undersigned acknowledges that the Registrable Securities to be received pursuant to the Merger Agreement will be "restricted securities," as defined in Rule 144 promulgated under the Securities Act, and must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The undersigned is aware of the provisions of Rule 144, which permits limited resale of shares purchased in a private placement only subject to the satisfaction of certain conditions. The undersigned will comply with the Securities Act and the rules promulgated thereunder in connection with any sale, transfer, assignment or other disposition of any Registrable Securities. 14. Miscellaneous. ------------- 14.1 Waivers and Amendments. (a) With the written consent of the Holders of a Majority of the Registrable Securities, the obligations of the Company and the rights of the Holders of Registrable Securities under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the consent of the Company, when authorized by a majority of the Independent Members of the Board, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of any supplemental agreement or modifying in any manner the rights and obligations hereunder of the Holders of Registrable Securities and the Company; provided, however, that no such waiver or supplemental agreement shall reduce the aforesaid proportion of Registrable Securities, the Holders of which are required to consent to any wavier or supplemental agreement, without the consent of the Holders of all of the Registrable Securities. (b) Upon the effectuation of each such waiver, consent or agreement of amendment or modification, the Company agrees to give prompt written notice thereof to the Holders of the Registrable Securities who have not previously consented thereto in writing. (c) Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 14.1; provided, that in the case of the Company, that such change, waiver, discharge or termination has been approved by a majority of the Independent Members of the Board. Specifically, but without limiting the generality of the foregoing, the failure of any party hereunder at any time or times to require performance of any provision hereof by the Company shall in no manner affect the right of such party at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14.2 Effect of Waiver or Amendment. Each Holder of Registrable Securities acknowledges that by operation of Section 14.1 hereof the Holders of a Majority of the Registrable securities will, subject to the limitations contained in Section 14.1(b), have the right and power to diminish or eliminate certain rights of such Holder under this Agreement. 14.3 Rights of Holders Inter Se. Each Holder of Registrable Securities shall have the absolute right to exercise or refrain from exercising any right or rights which such Holder may have by reason of this Agreement or any Registrable Security, including, without limitation, the right to consent to the waiver of any obligation of the Company under this Agreement and to enter into an agreement with the Company for the purpose of modifying this Agreement or any agreement effecting any such modification, and such Holder shall not incur any liability to any other Holder with respect to exercising or refraining from exercising any such right or rights. 14.4 Notices. All notices, requests or consents required or permitted under this Agreement shall be made in writing and shall be given to the other parties by personal delivery, registered or certified mail (with return receipt), overnight air courier (with receipt signature) or facsimile transmission (with "answerback" confirmation of transmission), sent to such party's addresses or telecopy numbers as are set forth below such party's signatures to this Agreement, or such other addresses or telecopy numbers of which the parties have given notice pursuant to this Section 14.4. Each such notice, request or consent shall be deemed effective upon the date of actual receipt, receipt signature or confirmation of transmission, as applicable (or if given by registered or certified mail, upon the earlier of (i) actual receipt or (ii) three days after deposit thereof in the United States mail (with respect to addresses within the United States) or ten (10) days after deposit thereof in the United States mail (with respect to addresses outside of the United States). 14.5 Severability. Should any one or more of the provisions of this Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement, shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby. 14.6 No Third Parties. Subject to Section 8 hereof, this Agreement shall not run to the benefit of or be enforceable by any Person other than a party to this Agreement or, with respect to the Company, any successor thereto. 14.7 Headings. The headings of the sections, subsections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement. 14.8 Choice of Law. It is the intention of the parties that the internal substantive laws, and not the laws of conflicts, of the State of Delaware should govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties. 14.9 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 14.10 Arbitration. (a) Any and all disputes or controversies, whether of law or fact and of any nature whatsoever arising from or respecting this Agreement, shall be decided by binding arbitration in accordance with Title 9 of the United States Code and the Commercial Arbitration Rules of the American Arbitration Association (the "Association"). If the parties are unable to agree upon a single arbitrator, the arbitrator shall be a single, independent arbitrator selected by the Association. (b) Arbitration shall take place at Los Angeles, California, or any other location mutually agreeable to the parties. The decision of the arbitrator shall be final and binding upon all parties hereto and all persons claiming under and through them and judgment thereon may be entered by any court of competent jurisdiction. The fees and expenses of the arbitrator shall be paid equally by the parties to such arbitration. 14.11 Rule 144. To the extent that the Company is subject to the filing and reporting requirements of the Securities Act and the Exchange Act, and so long as there are Registrable Securities outstanding, the Company will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, and will take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 or Rule 144A under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such information and requirements and with a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration. 14.12 Entire Agreement. This Agreement contains the entire understanding of the parties hereto in respect of its subject matter and supersedes all prior and contemporaneous agreements and understandings, oral and written, between the parties with respect to such subject matter, including, without limitation, the rights and obligations of the Company, ABI and PSS under the terms of that certain First Amended Registration Rights Agreement, dated as of June 1, 1998, by and among the Company, Premier Purchasing Partners, L.P., ABI and certain Series A Investors set forth therein (except that the Investors' obligations under any confidentiality agreement with the Company shall continue in full force and effect). [signature page follows] REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed as of the date first above written. AMERICAN PHARMACEUTICAL PARTNERS, INC. By: /s/ Nicole S. Williams ---------------------------- Name: Nicole S. Williams Title: Exec. V.P. & CFO Address: American Pharmaceutical Partners, Inc. 1501 East Woodfield Road, Suite 300 East Schaumburg, IL 60173-5837 Attention: General Counsel Fax: (847) 413-2670 PSS /s/ Dr. Patrick Soon-Shiong - ------------------------------ Dr. Patrick Soon-Shiong Address: c/o American Pharmaceutical Partners, Inc. 11777 San Vicente Blvd., Suite 550 Los Angeles, CA 90049 STOCKHOLDER PARTIES: - ------------------- CALIFORNIA CAPITAL LIMITED PARTNERSHIP BY: THEMBA LLC, ITS GENERAL PARTNER By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Manager Address: Californian Capital Limited Partnership Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THEMBA 2005 TRUST I By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Trustee Address: Themba 2005 Trust I Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THEMBA 2005 TRUST II By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Trustee Address: Themba 2005 Trust II Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THE 2005 TWO-YEAR ANNUITY TRUST A By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Trustee Address: The 2005 Two-Year Annuity Trust A Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THE 2005 TWO-YEAR ANNUITY TRUST B By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Trustee Address: The 2005 Two-Year Annuity Trust B Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 THEMBA CREDIT LLC By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Manager Address: Themba Credit, LLC Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 RSU PLAN LLC By: /s/ Steven H. Hassan --------------------------- Name: Steven H. Hassan Title: Manager Address: RSU Plan, LLC Att: Steven H. Hassan 10182 Culver Boulevard Culver City, California 90232 VERON INTERNATIONAL LIMITED By: ____________________________ Name: Title: Manager Address: Veron International Limited Att: Joseph Leung Top Floor, Chinachem Golden Plaza 77 Mody Road, Tsimshatsui East Kowloon, Hong Kong SCHEDULE I DEFINITIONS "ACCREDITED INVESTOR" (as defined in Rule 501) means any person who comes within any of the following categories, at the time of the sale of the securities to that person: (1) Any bank as defined in section 3(a)(2) of the Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; insurance company as defined in Section 2(13) of the Act; investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000; or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; (2) Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; (3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000; (4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; (5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds US$1,000,000; (6) Any natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person's spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; (7) Any trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii); and (8) Any entity in which all of the equity owners are accredited investors. "UNITED STATES" means and includes the United States of America, its territories and possessions, any State of the United States, and the District of Columbia. "U.S. PERSON" means: (i) a natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. Person; (iv) any trust of which any trustee is a U.S. Person; (v) any agency or branch of a foreign entity located in the United States; (vi) any nondiscretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated and (if an individual) resident in the United States; and (viii) a corporation or partnership organized under the laws of any foreign jurisdiction and formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts). "NON-U.S. PERSON" means any person who is not a U.S. Person or is deemed not to be a U.S. Person under Regulation S. EX-99.5 6 agreement.txt AGREEMENT Exhibit 5 AGREEMENT This AGREEMENT (this "Agreement") is made and entered into as of April 18, 2006, by and between Abraxis BioScience, Inc. f/k/a American Pharmaceutical Partners, Inc., a Delaware corporation (the "Company"), and RSU Plan LLC ("RSU LLC"). WHEREAS, American BioScience, Inc., a California corporation ("ABI"), and the Company have entered into an Agreement and Plan of Merger, dated as of November 27, 2005 (as it may be amended from time to time, the "Merger Agreement"), pursuant to which, at the "Effective Time" (as defined in the Merger Agreement), ABI will merge with and into the Company (the "Merger"); WHEREAS, ABI has adopted the American BioScience, Inc. Restricted Stock Unit Plan II (the "Plan") pursuant to which Restricted Stock Units have been granted to Employees of the Company and its Affiliates; WHEREAS, following the Effective Time, on the occurrence of Vesting Dates specified in award agreements issued pursuant to the Plan, holders of Restricted Stock Units will become entitled to receive shares of common stock of the Company ("ABBI Common Stock") equal in value to the value of the Restricted Stock Units based on the then-current market price of ABBI Common Stock or cash (or a combination thereof); and WHEREAS, the Company and RSU LLC intend hereby to provide that (i) prior to each date on which Restricted Stock Units are settled under the Plan by reason of the occurrence of a Vesting Date (each such date, a "Settlement Date"), RSU LLC shall deliver, or cause to be delivered, to the Company shares of ABBI Common Stock or cash (or a combination thereof) in an amount sufficient to satisfy the obligations of the Company to Participants in respect of Restricted Stock Units that have become vested on such Vesting Date, and (ii) the Company shall satisfy its obligations under the Plan by paying the Participants cash and/or shares of ABBI Common Stock in the same proportion as such delivery by RSU LLC; NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and intending to be legally bound, the parties agree as follows: 1. Delivery by RSU LLC. RSU LLC hereby agrees that, on or prior to each Settlement Date, it shall deliver, or cause to be delivered, to the Company (i) shares of ABBI Common Stock, (ii) cash or (iii) a combination of shares of ABBI Common Stock and cash, in each case in number and/or amount equal to the aggregate value of the vested Restricted Stock Units to be settled on such Settlement Date. For purposes of the preceding sentence, the value of any shares of ABBI Common Stock to be so delivered shall be determined by reference to the valuation provisions set forth in the award agreements issued under the Plan. The Company shall give RSU LLC not less than ten business days' notice of each Settlement Date. The decision by RSU LLC of whether to deliver ABBI Common Stock, cash or a combination of ABBI Common Stock and cash in satisfaction of its obligations hereunder shall be made by RSU LLC in its sole discretion. 2. Satisfaction by the Company of its Obligations under the Plan. The Company hereby agrees as follows: (i) In the event that a delivery made by RSU LLC pursuant to Section 1 of this Agreement in respect of a Settlement Date consists solely of shares of ABBI Common Stock, the Company shall settle the vested Restricted Stock Units to be settled on such Settlement Date by delivering solely ABBI Common Stock to the holders thereof. (ii) In the event that a delivery made by RSU LLC pursuant to Section 1 of this Agreement in respect of a Settlement Date consists solely of cash, the Company shall settle the vested Restricted Stock Units to be settled on such Settlement Date by delivering solely cash to the holders thereof. (iii) In the event that a delivery made by RSU LLC pursuant to Section 1 of this Agreement in respect of a Settlement Date consists of a combination of shares of ABBI Common Stock and cash, the Company shall settle the vested Restricted Stock Units to be settled on such Settlement Date by delivering to each holder thereof a number of shares of ABBI Common Stock and an amount of cash in the same proportions as the proportions of ABBI Common Stock and cash so delivered by RSU LLC; provided, that the Company may, in its discretion, disproportionately withhold cash from a holder in satisfaction of its obligations to withhold income and employment taxes in connection with the vesting of Restricted Stock Units. 3. Miscellaneous. (a) Capitalized Terms. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan or in the award agreements issued under the Plan, as applicable. (b) Effectiveness. This Agreement shall become effective at the Effective Time and shall terminate without liability or penalty on the part of either party hereto upon termination of the Merger Agreement pursuant to the terms thereof. (c) Notices. Unless otherwise provided herein, all notices, requests, demands, claims and other communications provided for under the terms of this Agreement shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be sent by (i) personal delivery (including receipted courier service) or overnight delivery service, (ii) facsimile during normal business hours, with confirmation of receipt, to any facsimile number provided by either party hereto to the other party for purposes of receipt of notice, (iii) reputable commercial overnight delivery service courier or (iv) registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below: (i) If to RSU LLC, to: RSU Plan LLC 149 South Barrington Ave., #311 Los Angeles, CA 90049 Attention: Manager (ii) If to the Company, to: Abraxis BioScience, Inc. 11777 San Vicente Blvd., Suite 550 Los Angeles, CA 90049 Attention: General Counsel All such notices, requests, consents and other communications shall be deemed to have been given when received. Either party may change its facsimile number or its address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other party hereto notice in the manner then set forth. (d) Amendments. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against any party unless such modification, amendment or waiver is approved in writing by each party hereto. The failure of either party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. (e) Binding Effect. This Agreement shall be binding upon and inure to the benefit of both parties and their successors, legal representatives and assigns. (f) Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. (g) Counterparts. This Agreement may be executed in counterparts with the same effect as if the parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one instrument. (h) No Third Party Beneficiaries. No provision of this Agreement shall create or be deemed to create any third party beneficiary rights in any person not a party to this Agreement. (i) Integration. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and, except as otherwise provided herein, supersedes all prior agreements and understandings pertaining thereto. (j) Governing Law. This Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. IN WITNESS WHEREOF, the parties to this Agreement have duly executed and delivered this Agreement as of the date first written above. RSU PLAN LLC ABRAXIS BIOSCIENCE, INC. /s/ Steven H. Hassan /s/ Dr. Patrick Soon-Shiong - ------------------------------------- ------------------------------------- By: Steven H. Hassan By: Dr. Patrick Soon-Shiong --------------------------------- --------------------------------- Title: Manager Title: Chief Executive Officer ------------------------------ ------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----