Abraxis BioScience (ABII)

Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent transfer laws, you could be required to return all or a portion of the shares received in the distribution.

In connection with the separation, Old Abraxis incurred $1 billion in indebtedness and contributed $700 million of those proceeds to us prior to the separation. If Old Abraxis is insolvent or rendered insolvent as a result of the distribution of our common stock to the holders of Old Abraxis common stock, or if any of Old Abraxis and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the indebtedness or the ultimate dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor representative) of Old Abraxis could bring fraudulent transfer claims to recover all or a portion of our common stock received in the separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It was a condition to the completion of the transactions that Old Abraxis received opinions of a valuation firm with respect to Old Abraxis and its subsidiaries’ solvency at the time it declared the distributions and at the time the distributions were made.

None.

None.

None.

None.

The exhibits are as set forth in the Exhibit Index.

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Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent transfer laws, you could be required to return all or a portion of the shares received in the distribution.

In connection with the separation and distribution, Old Abraxis incurred $1 billion in indebtedness and contributed $700 million of those proceeds to us prior to the separation. If Old Abraxis is insolvent or rendered insolvent as a result of the distribution of our common stock to the holders of Old Abraxis common stock, or if any of Old Abraxis and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the indebtedness or the ultimate dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor representative) of Old Abraxis could bring fraudulent transfer claims to recover all or a portion of our common stock received in the separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It was a condition to the completion of the transactions that Old Abraxis received opinions of a valuation firm with respect to Old Abraxis and its subsidiaries’ solvency at the time it declared the distributions and at the time the distributions were made.

If the holding company merger that was completed in connection with the separation does not qualify as a reorganization under Section 368(a)(1) of the Internal Revenue Code, then Old Abraxis and Old Abraxis stockholders may be responsible for payment of significant U.S. federal income taxes, and if the distribution does not constitute a tax-free distribution under Section 355 of the Internal Revenue Code, then New APP and New APP stockholders may be responsible for payment of significant U.S. federal income taxes.

The obligations of the parties to effect the separation was conditioned upon the receipt of a private letter ruling from the Internal Revenue Service to the effect that (i) the holding company merger that was completed in connection with the separation qualified as a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code and (ii) the contribution of New Abraxis, LLC to us, which we refer to as the “proprietary contribution,” the cash contribution and the distribution qualified as a reorganization under Section 368(a)(1)(D) of the Internal Revenue Code and the distribution qualified for nonrecognition treatment under Sections 355(a) and 361(c) of the Internal Revenue Code. Old Abraxis received the private letter ruling on October 5, 2007. The private letter ruling, however, did not address two requirements under Section 355 of the Internal Revenue Code on which the Internal Revenue Service will not rule (namely, that the distribution (a) was motivated, in whole or substantial part, by one or more corporate business purposes and (b) was not being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both). Thus, the obligations of the parties to effect the proprietary contribution, the cash contribution and the distribution also was conditioned upon the receipt of an opinion of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel to Old Abraxis, to the effect that these two requirements should be satisfied.

The private letter ruling the opinion of counsel was based, in part, on assumptions and representations as to factual matters made by, among others, Old Abraxis, Dr. Soon-Shiong, his wife, and certain Old Abraxis stockholders, as requested by the Internal Revenue Service or counsel, which, if incorrect, could jeopardize the conclusions reached by the Internal Revenue Service and counsel. The private letter ruling did not address certain material legal issues that could affect its conclusions (including whether the distribution was motivated, in whole or substantial part, by one or more corporate business purposes, whether the distribution was being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both, and whether the distribution and any acquisition or acquisitions are part of a plan or series of related transactions under Section 355(e) of the Internal Revenue Code), and reserved the right of the Internal Revenue Service to raise such issues upon a subsequent audit. Opinions of counsel neither bind the Internal Revenue Service or any court, nor preclude the Internal Revenue Service from adopting a contrary position.

On the distribution date, Old Abraxis and New Abraxis, LLC effected a holding company merger. In the holding company merger, Old Abraxis merged with and into New Abraxis, LLC. If the holding company merger does not qualify as a reorganization under Section 368(a)(1) of the Internal Revenue Code, each Old Abraxis stockholder who received New APP common stock in exchange for Old Abraxis common stock will recognize taxable gain or loss equal to the difference between the fair market value of the New APP common stock received and such stockholder’s basis in the Old Abraxis common stock exchanged therefor, and Old Abraxis will recognize taxable gain equal to the fair market value of its assets over their aggregate adjusted basis.

If the distribution does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, New APP would recognize taxable gain equal to the excess of the fair market value of the New Abraxis common stock distributed to the Old Abraxis stockholders over New APP’s tax basis in the New Abraxis common stock. In addition, each Old Abraxis stockholder who received New Abraxis common stock in the distribution would generally be treated as receiving a taxable distribution in an amount equal to the fair market value of the New Abraxis common stock received.

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In the event that New APP recognizes a taxable gain in connection with the distribution because the distribution did not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, the taxable gain recognized by New APP would result in significant U.S. federal income tax liabilities to New APP. Under the Internal Revenue Code, New APP would be primarily liable for these taxes and New Abraxis would be secondarily liable. Under the terms of the tax allocation agreement among New APP, New APP LLC, New Abraxis and New Abraxis, LLC, New Abraxis will generally be required to indemnify New APP against any such taxes unless such taxes would not have been imposed but for an act of New APP or its affiliates, subject to specified exceptions. New Abraxis’ or New APP’s respective obligations to indemnify the other pursuant to the tax allocation agreement could have a material adverse effect on New APP and/or New Abraxis. There can be no assurance that New APP would be able to fulfill its obligations under the tax allocation agreement if New APP was determined to be responsible for these taxes. In addition, these mutual indemnity obligations could discourage or prevent a third party from making a proposal to acquire either party.

Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent transfer laws, you could be required to return all or a portion of the shares received in the distribution.

In connection with the separation and distribution, Old Abraxis incurred $1 billion in indebtedness and contributed $700 million of those proceeds to us prior to the separation. If Old Abraxis is insolvent or rendered insolvent as a result of the distribution of our common stock to the holders of Old Abraxis common stock, or if any of Old Abraxis and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the indebtedness or the ultimate dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor representative) of Old Abraxis could bring fraudulent transfer claims to recover all or a portion of our common stock received in the separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It was a condition to the completion of the transactions that Old Abraxis received opinions of a valuation firm with respect to Old Abraxis and its subsidiaries’ solvency at the time it declared the distributions and at the time the distributions were made.

If the holding company merger that was completed in connection with the separation does not qualify as a reorganization under Section 368(a)(1) of the Internal Revenue Code, then Old Abraxis and Old Abraxis stockholders may be responsible for payment of significant U.S. federal income taxes, and if the distribution does not constitute a tax-free distribution under Section 355 of the Internal Revenue Code, then New APP and New APP stockholders may be responsible for payment of significant U.S. federal income taxes.

The obligations of the parties to effect the separation was conditioned upon the receipt of a private letter ruling from the Internal Revenue Service to the effect that (i) the holding company merger that was completed in connection with the separation qualified as a reorganization under Section 368(a)(1)(F) of the Internal Revenue

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Code and (ii) the contribution of New Abraxis, LLC to us, which we refer to as the “proprietary contribution,” the cash contribution and the distribution qualified as a reorganization under Section 368(a)(1)(D) of the Internal Revenue Code and the distribution qualified for nonrecognition treatment under Sections 355(a) and 361(c) of the Internal Revenue Code. Old Abraxis received the private letter ruling on October 5, 2007. The private letter ruling, however, did not address two requirements under Section 355 of the Internal Revenue Code on which the Internal Revenue Service will not rule (namely, that the distribution (a) was motivated, in whole or substantial part, by one or more corporate business purposes and (b) was not being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both). Thus, the obligations of the parties to effect the proprietary contribution, the cash contribution and the distribution also was conditioned upon the receipt of an opinion of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel to Old Abraxis, to the effect that these two requirements should be satisfied.

The private letter ruling the opinion of counsel was based, in part, on assumptions and representations as to factual matters made by, among others, Old Abraxis, Dr. Soon-Shiong, his wife, and certain Old Abraxis stockholders, as requested by the Internal Revenue Service or counsel, which, if incorrect, could jeopardize the conclusions reached by the Internal Revenue Service and counsel. The private letter ruling did not address certain material legal issues that could affect its conclusions (including whether the distribution was motivated, in whole or substantial part, by one or more corporate business purposes, whether the distribution was being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both, and whether the distribution and any acquisition or acquisitions are part of a plan or series of related transactions under Section 355(e) of the Internal Revenue Code), and reserved the right of the Internal Revenue Service to raise such issues upon a subsequent audit. Opinions of counsel neither bind the Internal Revenue Service or any court, nor preclude the Internal Revenue Service from adopting a contrary position.

On the distribution date, Old Abraxis and New Abraxis, LLC effected a holding company merger. In the holding company merger, Old Abraxis merged with and into New Abraxis, LLC. If the holding company merger does not qualify as a reorganization under Section 368(a)(1) of the Internal Revenue Code, each Old Abraxis stockholder who received New APP common stock in exchange for Old Abraxis common stock will recognize taxable gain or loss equal to the difference between the fair market value of the New APP common stock received and such stockholder’s basis in the Old Abraxis common stock exchanged therefor, and Old Abraxis will recognize taxable gain equal to the fair market value of its assets over their aggregate adjusted basis.

If the distribution does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, New APP would recognize taxable gain equal to the excess of the fair market value of the New Abraxis common stock distributed to the Old Abraxis stockholders over New APP’s tax basis in the New Abraxis common stock. In addition, each Old Abraxis stockholder who received New Abraxis common stock in the distribution would generally be treated as receiving a taxable distribution in an amount equal to the fair market value of the New Abraxis common stock received.

In the event that New APP recognizes a taxable gain in connection with the distribution because the distribution did not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, the taxable gain recognized by New APP would result in significant U.S. federal income tax liabilities to New APP. Under the Internal Revenue Code, New APP would be primarily liable for these taxes and New Abraxis would be secondarily liable. Under the terms of the tax allocation agreement among New APP, New APP LLC, New Abraxis and New Abraxis, LLC, New Abraxis will generally be required to indemnify New APP against any such taxes unless such taxes would not have been imposed but for an act of New APP or its affiliates, subject to specified exceptions. New Abraxis’ or New APP’s respective obligations to indemnify the other pursuant to the tax allocation agreement could have a material adverse effect on New APP and/or New Abraxis. There can be no assurance that New APP would be able to fulfill its obligations under the tax allocation agreement if New APP was determined to be responsible for these taxes. In addition, these mutual indemnity obligations could discourage or prevent a third party from making a proposal to acquire either party.

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Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent
transfer laws, you could be required to return all or a portion of the shares received in the distribution.

In connection with the
separation and distribution, Old Abraxis incurred $1 billion in indebtedness and contributed $700 million of those proceeds to us prior to the separation. If Old Abraxis is insolvent or rendered insolvent as a result of the distribution of our
common stock to the holders of Old Abraxis common stock, or if any of Old Abraxis and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the
indebtedness or the ultimate dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor representative) of Old Abraxis could bring fraudulent transfer claims to recover all or a portion of our common
stock received in the separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It was a condition to the completion of the
transactions that Old Abraxis received opinions of a valuation firm with respect to Old Abraxis and its subsidiaries’ solvency at the time it declared the distributions and at the time the distributions were made.

Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent transfer laws, you could be required to return all or a portion of the shares received in the distribution.

In connection with the separation and distribution, Old Abraxis incurred approximately $1.0 billion in indebtedness and contributed approximately $700 million of those proceeds to us prior to the separation. Old Abraxis and/or one or more of its subsidiaries also entered into a $150 million revolving credit facility. If Old Abraxis is insolvent or rendered insolvent as a result of the distribution of our common stock to the holders of Old Abraxis common stock, or if any of Old Abraxis and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the indebtedness or the ultimate dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor

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representative) of Old Abraxis could bring fraudulent transfer claims to recover all or a portion of our common stock received in the separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It was a condition to the completion of the transactions that Old Abraxis received opinions of a valuation firm with respect to Old Abraxis and its subsidiaries’ solvency at the time it declares the distributions and at the time the distributions are made.

Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent transfer laws, you could be required to return all or a portion of the shares received in the distribution.

Prior to the separation and distribution, Abraxis BioScience and/or one or more of its subsidiaries intends to incur approximately $1.0 billion dollars in indebtedness and contribute approximately $715 million of those proceeds to us prior to the separation. Abraxis BioScience and/or one or more of its subsidiaries also intends to enter into a $150 million revolving credit facility. If Abraxis BioScience is insolvent or rendered insolvent as a

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result of the distribution of our common stock to the holders of Abraxis BioScience common stock, or if any of Abraxis BioScience and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the indebtedness or the ultimate dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor representative) of Abraxis BioScience could bring fraudulent transfer claims to recover all or a portion of our common stock received in the separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It is a condition to the completion of the transactions that Abraxis BioScience receive opinions of a valuation firm with respect to Abraxis BioScience and its subsidiaries’ solvency at the time it declares the distributions and at the time the distributions are made.

If the holding company merger does not qualify as a reorganization under Section 368(a)(1) of the Internal Revenue Code, then Old Abraxis and Old Abraxis stockholders may be responsible for payment of significant U.S. federal income taxes, and if the distribution does not constitute a tax-free distribution under Section 355 of the Internal Revenue Code, then New APP and New APP stockholders may be responsible for payment of significant U.S. federal income taxes.

The obligations of the parties to effect the transactions are conditioned upon the receipt of a private letter ruling from the Internal Revenue Service to the effect that (i) the holding company merger qualifies as a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code and (ii) the contribution of New Abraxis, LLC to us, which we refer to as the “proprietary contribution,” the cash contribution and the distribution qualify as a reorganization under Section 368(a)(1)(D) of the Internal Revenue Code and, subject to the following sentence, the distribution qualifies for nonrecognition treatment under Sections 355(a) and 361(c) of the Internal Revenue Code. Old Abraxis received the private letter ruling on October 5, 2007. The private letter ruling, however, does not address two requirements under Section 355 of the Internal Revenue Code on which the Internal Revenue Service will not rule (namely, that the distribution (a) is motivated, in whole or substantial part, by one or more corporate business purposes and (b) is not being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both). Thus, the obligations of the parties to effect the proprietary contribution, the cash contribution and the distribution also are conditioned upon the receipt of an opinion of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel to Abraxis BioScience, to the effect that these two requirements should be satisfied.

The private letter ruling is based, in part, and the opinion of counsel will be based, in part, on assumptions and representations as to factual matters made by, among others, Old Abraxis, Dr. Soon-Shiong, his wife, and certain Old Abraxis stockholders, as requested by the Internal Revenue Service or counsel, which, if incorrect, could jeopardize the conclusions reached by the Internal Revenue Service and counsel. The private letter ruling does not address certain material legal issues that could affect its conclusions (including whether the distribution is motivated, in whole or substantial part, by one or more corporate business purposes, whether the distribution is being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both, and whether the distribution and any acquisition or acquisitions are part of a plan or series of related transactions under Section 355(e) of the Internal Revenue Code), and reserves the right of the Internal Revenue Service to raise such issues upon a subsequent audit. Opinions of counsel neither bind the Internal Revenue Service or any court, nor preclude the Internal Revenue Service from adopting a contrary position.

On the distribution date, Old Abraxis, Abraxis BioScience and New Abraxis, LLC (a limited liability company wholly-owned by Abraxis BioScience) will effect a holding company merger. In the holding company merger, Old Abraxis will merge with and into New Abraxis, LLC. If the holding company merger does not qualify as a reorganization under Section 368(a)(1) of the Internal Revenue Code, each Old Abraxis stockholder who receives Abraxis BioScience common stock (which we refer to as New APP common stock after the separation and distribution) in exchange for Old Abraxis common stock will recognize taxable gain or loss equal to the difference between the fair market value of the Abraxis BioScience common stock received and such stockholder’s basis in the Old Abraxis common stock exchanged therefor, and Old Abraxis will recognize taxable gain equal to the fair market value of its assets over their aggregate adjusted basis.

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If the distribution does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, New APP would recognize taxable gain equal to the excess of the fair market value of the New Abraxis common stock distributed to the Abraxis BioScience stockholders over New APP’s tax basis in the New Abraxis common stock. In addition, each Abraxis BioScience stockholder who receives New Abraxis common stock in the distribution would generally be treated as receiving a taxable distribution in an amount equal to the fair market value of the New Abraxis common stock received.

In the event that New APP recognizes a taxable gain in connection with the distribution because the distribution does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, the taxable gain recognized by New APP would result in significant U.S. federal income tax liabilities to New APP. Under the Internal Revenue Code, New APP would be primarily liable for these taxes and New Abraxis would be secondarily liable. Under the terms of the tax allocation agreement among New APP, New APP LLC, New Abraxis and New Abraxis, LLC, New Abraxis will generally be required to indemnify New APP against any such taxes unless such taxes would not have been imposed but for an act of New APP or its affiliates, subject to specified exceptions. See “Relationship Between New APP and Us After the Separation and Distribution—Tax Allocation Agreement.” New Abraxis’s or New APP’s respective obligations to indemnify the other pursuant to the tax allocation agreement could have a material adverse effect on New APP and/or New Abraxis. There can be no assurance that New APP would be able to fulfill its obligations under the tax allocation agreement if New APP was determined to be responsible for these taxes. In addition, these mutual indemnity obligations could discourage or prevent a third party from making a proposal to acquire either party. See “Material U.S. Federal Income Tax Consequences.”