Abraxis BioScience (ABII)

We may have potential conflicts of interest with APP.

Conflicts of interest may arise between APP and us in a number of areas relating to our past and ongoing relationships, including:

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Our Chief Executive Officer and Chairman of our board of directors, Patrick Soon-Shiong, M.D., owns approximately 80% of the outstanding capital stock of APP and us. He is also the Chairman of the APP board of directors. Accordingly, he may experience conflicts of interest with respect to decisions involving business opportunities and similar matters that may arise in the ordinary course of our business, on the one hand, and the business of APP, on the other hand.

Resolutions of some potential conflicts of interest are subject to review and approval by the audit committee of our board of directors or approval by another independent committee of our board of directors. We still may be unable, however, to resolve some potential conflicts of interest with APP and Dr. Soon-Shiong and, even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

We may have potential conflicts of interest with APP.

Conflicts of interest may arise between APP and us in a number of areas relating to our past and ongoing relationships, including:

Our Chief Executive Officer and Chairman of our board of directors, Patrick Soon-Shiong, M.D., is also the chief executive officer and chairman of the board of directors of APP. Our Chief Financial Officer, Lisa Gopala, is also the chief financial officer of APP. Dr. Soon-Shiong also owns approximately 83% of the outstanding capital stock of APP and us. Accordingly, he may experience conflicts of interest with respect to decisions involving business opportunities and similar matters that may arise in the ordinary course of our business, on the one hand, and the business of APP, on the other hand.

In connection with the separation and related transactions, we have entered into an agreement with APP under which we and APP have acknowledged and agreed that Dr. Soon-Shiong and Ms. Gopala will serve as officers of both companies and receive compensation from either or both companies. APP also acknowledged and agreed in this agreement that neither Dr. Soon-Shiong nor Ms. Gopala will have any obligation to present to APP any business or corporate opportunity that may come to his or her attention other than certain business opportunities relating to the manufacture or sale of products that either were manufactured and sold by the hospital-based products business prior to the separation or were the subject of an ANDA filed prior to the separation and related transactions. This agreement does not ensure the continued services of either Dr. Soon-Shiong or Ms. Gopala, restrict these individuals from resigning from our company or restrict our board of directors from terminating their employment with us. In connection with the private letter ruling, Old Abraxis has represented to the Internal Revenue Service that no person will serve as an executive officer of both us and APP one year following the distribution.

We expect to resolve potential conflicts of interest on a case-by-case basis, in the manner required by applicable law and customary business practices. Resolutions of some potential conflicts of interest are subject to review and approval by the audit committee of our board of directors or approval by another independent committee of our board of directors. We still may be unable, however, to resolve some potential conflicts of interest with APP and Dr. Soon-Shiong and, even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

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