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                                                                    EXHIBIT 10.2

                     AMERICAN PHARMACEUTICAL PARTNERS, INC.
                             1997 STOCK OPTION PLAN

     1.  PURPOSE.
         -------

     The Plan is intended to provide incentive to key employees, directors and
consultants of the Corporation and its Subsidiaries, to encourage proprietary
interest in the Corporation, to encourage such key employees to remain in the
employ of the Corporation and its Subsidiaries or such key directors and
consultants to remain in the service of the Corporation and its Subsidiaries,
and to attract new employees, directors and consultants with outstanding
qualifications.

     2.  DEFINITIONS.
         -----------

     Unless otherwise defined herein or the context otherwise requires, the
capitalized terms used herein shall have the following meanings:

        (a)  "Administrator" shall mean the Board or the Committee, whichever
              -------------
shall be administering the Plan from time to time in the discretion of the
Board, as described in Section 4 of the Plan.

        (b)  "Board" shall mean the Board of Directors of the Corporation.
              -----

        (c)  "Code" shall mean the Internal Revenue Code of 1986, as amended.
              ----

        (d)  "Commission" shall mean the Securities and Exchange Commission.
              ----------

        (e)  "Committee" shall mean the committee appointed by the Board in
              ---------
accordance with Section 4 of the Plan.

        (f)  "Common Stock" shall mean the common stock of the Corporation and
              ------------
any class of shares into which such Common Stock hereafter may be converted
or reclassified.

        (g)  "Corporation" shall mean American Pharmaceutical Partners, Inc., a
              -----------
California corporation.

        (h)  "Disability" shall mean a medically determinable physical or mental
              ----------
impairment which has made an individual incapable of engaging in any substantial
gainful activity. A condition shall be considered a Disability only if (i) it
can be expected to result in death or has lasted or it can be expected to last
for a continuous period of not less than twelve (12) months, and (ii) the
Administrator, based upon medical evidence, has expressly determined that
Disability exists.

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        (i)  "Disinterested Person" shall mean a member of the Board who is a
              --------------------
"disinterested person" within the meaning of Rule 16b-3(c)(2)(i) promulgated by
the Commission under the Exchange Act, or any successor rule.

        (j)  "Employee" shall mean an individual who is employed (within the
              --------
meaning of Section 3401 of the Code and the regulations thereunder) by the
Corporation or a Subsidiary.

        (k)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
              ------------
amended.

        (l)  "Exercise Price" shall mean the price per Share of Common Stock,
              --------------
determined by the Administrator, at which an Option may be exercised.

        (m)  "Fair Market Value" shall mean the value of one (1) Share of Common
              -----------------
Stock, determined as follows:

             (i) If the Shares are traded on an exchange or over-the-counter
on the National Market (the "NMS") of the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), (A) if listed on an
exchange, the closing price as reported for composite transactions on the
business day immediately prior to the date of valuation or, if no sale occurred
on that date, then the mean between the closing bid and asked prices on such
exchange on such date, and (B) if traded on the NMS, the last sale price on the
business day immediately prior to the date of valuation or, if no sale occurred
on such date, then the mean between the highest bid and lowest asked prices as
of the close of business on the business day immediately prior to the date of
valuation, as reported in the NASDAQ system;

             (ii) If the Shares are not traded on an exchange or the NMS but are
otherwise traded over-the-counter, the mean between the highest bid and lowest
asked prices quoted in the NASDAQ system as of the close of business on the
business day immediately prior to the date of valuation or, if on such day such
security is not quoted in the NASDAQ system, the mean between the representative
bid and asked prices on such date in the domestic over-the-counter market as
reported by the National Quotation Bureau, Inc., or any similar successor
organization; and

             (iii) If neither clause (i) nor (ii) above applies, the fair market
value as determined by the Administrator in good faith. Such determination shall
be conclusive and binding on all persons.

        (n)  "Incentive Stock Option" shall mean an option described in Section
              ----------------------
422 of the Code.

        (o)  "Nonstatutory Stock Option" shall mean an option that does not meet
              -------------------------
the requirements of Section 422(b) of the Code or is not intended to be an
Incentive Stock Option.

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        (p)  "Option" shall mean any stock option granted pursuant to the Plan.
              ------
An Option shall be granted on the date the Administrator takes the necessary
action to approve the grant. However, if the minutes or appropriate resolutions
of the Administrator provide that an Option is to be granted as of a date in the
future, the date of grant shall be that future date.

        (q)  "Option Agreement" shall mean a written stock option agreement
              ----------------
evidencing a particular Option.

        (r)  "Optionee" shall mean a Participant who has received an Option.
              --------

        (s)  "Participant" shall have the meaning assigned to it in Section 5(a)
              -----------
hereof.

        (t)  "Plan" shall mean this American Pharmaceutical Partners, Inc. 1997
              ----
Stock Option Plan, as it may be amended from time to time.

        (u)  "Purchase Price" shall mean the Exercise Price multiplied by the
              --------------
number of Shares with respect to which an Option is exercised.

        (v)  "Retirement" shall mean the voluntary cessation of employment by an
              ----------
Employee upon the attainment of age sixty-five (65) and the completion of not
less than twenty (20) years of service with the Corporation or a Subsidiary.

        (w)  "Section 16 Participant" shall mean a Participant who is (or, in
              ----------------------
the opinion of the Administrator, may be) generally subject to the Section 16
Requirements with respect to purchases and sales of Common Stock or other equity
securities of the Corporation.

        (x)  "Section 16 Requirements" shall mean the those obligations and
              -----------------------
requirements imposed by Sections 16(a) and 16(b) of the Exchange Act and the
rules of the Commission promulgated thereunder.

        (y)  "Securities Act" shall mean the Securities Act of 1933, as amended.
              --------------

        (z)  "Share" shall mean one share of Common Stock, adjusted in
              -----
accordance with Section 10 of the Plan (if applicable).

        (aa) "Subsidiary" shall mean any subsidiary corporation as defined in
              ----------
Section 424(f) of the Code.

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     3.  EFFECTIVE DATE.
         --------------

     The Plan was adopted by the shareholders of the Corporation and by the
Board effective as of October 1, 1997.

     4.  ADMINISTRATION.
         --------------

        (a)  Administrator.  Subject to subsection (c) below, the Plan shall be
             -------------
administered, in the discretion of the Board from time to time, by the Board or
by a Committee which shall be appointed by the Board. The Board may from time to
time remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. The Board shall appoint
one of the members of the Committee as Chairman. The Administrator shall hold
meetings at such times and places as it may determine. Acts of a majority of the
Administrator at which a quorum is present, or acts reduced to or approved in
writing by the unanimous consent of the members of the Administrator, shall be
the valid acts of the Administrator.

        (b) Powers of Administrator. The Administrator shall from time to time
            -----------------------
at its discretion select the Employees, directors and consultants who are to be
granted Options, determine the number of Shares to be subject to Options to be
granted to each Optionee and designate such Options as Incentive Stock Options
or Nonstatutory Stock Options, except that no Incentive Stock Option may be
granted to a non-Employee director or a non-Employee consultant. A Committee or
Board member shall in no event participate in any determination relating to
Options held by or to be granted to such Committee or Board member. The
interpretation and construction by the Administrator of any provision of the
Plan or of any Option or Option Agreement shall be final. No member of the
Administrator shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.

        (c)  Disinterested Administration. For so long as the Common Stock
             ----------------------------
remains registered under the Exchange Act and Section 16 Participants are (or,
in the opinion of the Board, may be) eligible to receive Options hereunder, this
Plan shall be administered by a Committee consisting of two or more Board
members who are Disinterested Persons.

     5.  PARTICIPATION.
         -------------

        (a)  Eligibility.
             -----------

       The Optionee shall be such persons (collectively, "Participants";
individually a "Participant") as the Administrator may select from among the
following classes of persons, subject to the terms and conditions of Section
5(b) below:

           (i)  Employees (who may be officers, whether or not they are
directors);

           (ii) Directors of the Corporation or of a Subsidiary; and

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           (iii)  Consultants engaged by the Corporation or a Subsidiary.

     Notwithstanding provisions of the first paragraph of this Section 5(a), the
Administrator may at any time or from time to time designate one or more
directors as being ineligible for selection as Participants in the Plan for any
period or periods of time.

       (b)  Ten-Percent Shareholders.
            ------------------------

       A Participant who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Corporation, its parent
or any of its Subsidiaries shall not be eligible to receive (i) a Nonstatutory
Stock Option unless the Exercise Price of the Shares subject to such Option is
at least one hundred percent (100%) of the Fair Market Value of such Shares on
the date of grant or (A) an Incentive Stock Option unless the Exercise Price of
the Shares subject to such Option is at least one hundred ten percent (110%) of
the Fair Market Value of such Shares on the date of grant and (B) such Option by
its terms is not exercisable after the expiration of five (5) years from the
date of grant.

       (c)  Stock Ownership.
            ---------------

       For purposes of Section 5(b) above, in determining stock ownership, a
Participant shall be considered as owning the stock owned, directly or
indirectly, by or for his or her brothers and sisters, spouse, ancestors and
lineal descendants.  Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries.  Stock
with respect to which such Participant holds an option shall not be counted.

       (d)  Outstanding Stock.
            -----------------

       For purposes of Section 5(b) above, "outstanding stock" shall include
all stock actually issued and outstanding immediately after the grant of the
Option to the Optionee.  "Outstanding stock" shall not include shares authorized
for issue under outstanding Options held by the Optionee or by any other person.

     6.  STOCK.
         -----

     The stock subject to Options granted under the Plan shall be Shares of
the Corporation's authorized but unissued or reacquired Common Stock.  The
aggregate number of Shares which may be issued upon exercise of Options under
the Plan shall not exceed 4,000,000.  The number of Shares subject to Options
outstanding at any time shall not exceed the number of Shares remaining
available for issuance under the Plan.  The limitations established by this
Section 6 shall be subject to adjustment in the manner provided in Section 10
hereof upon the occurrence of an event specified in that Section.

                                       5
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     7.  TERMS AND CONDITIONS OF OPTIONS.
         -------------------------------

         (a)  Stock Option Agreements.
              -----------------------

         Each Option shall be evidenced by an Option Agreement substantially in
the form of Annex A or Annex B (as applicable) to this Plan, or in such other
form as the Administrator shall from time to time determine.  Such Option
Agreements need not be identical but shall comply with and be subject to the
terms and conditions set forth in this Section 7.

         (b)  Nature of Option.
              ----------------

         Each Option shall state whether it is an Incentive Stock Option or a
Nonstatutory Stock Option.

         (c)  Optionee's Undertaking.
              ----------------------

         Each Optionee shall agree to remain in the employ or service of the
Corporation or a Subsidiary and to render services for a period as shall be
determined by the Administrator, from the date of the granting of the Option,
but such agreement shall not impose upon the Corporation or its Subsidiaries any
obligation to retain the Optionee in their employ or service for any period.

         (d)  Number of Shares.
              ----------------

         Each Option shall state the number of Shares to which it pertains and
shall provide for the adjustment thereof in accordance with the provisions of
Section 10 hereof.

         (e)  Exercise Price.
              --------------

         Each Option shall state the Exercise Price.  Subject to section 5(b)
hereof, (i) the Exercise Price in the case of any Incentive Stock Option shall
not be less than the Fair Market Value on the date of grant and (ii) the
Exercise Price in the case of any Nonstatutory Stock Option shall not be less
than eighty-five percent (85%) of the Fair Market Value on the date of grant.

         (f)  Medium and Time of Payment; Notice.
              ----------------------------------

         The Purchase Price shall be payable in full in United States dollars
upon the exercise of the Option; provided, however, that if the applicable
Option Agreement so provides,  or the Administrator in its sole discretion
otherwise approves thereof, the Purchase Price may (to the extent permitted by
applicable law) be paid (i) by the surrender of Shares in good form for
transfer, owned by the person exercising the Option and having a Fair Market
Value on the date of exercise equal to the Purchase Price, or in any combination
of cash and Shares, so long as the sum of the cash so paid and the Fair Market
Value of the Shares so surrendered equals the Purchase Price, or

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(ii) so long as at least the par value of the Shares being purchased is paid in
cash and/or Shares as above, the balance of the Purchase Price may be paid with
a full recourse promissory note executed by the Optionee. The interest rate and
other terms and conditions of such promissory note shall be determined by the
Administrator. The Administrator may require that the Optionee grant a security
interest in the Shares being purchased to the Corporation for the purpose of
securing the payment of such promissory note, and the Corporation or its
designee may retain possession of the stock certificate(s) representing such
Shares in order to perfect its security interest.

         In the event the Corporation determines that it is required to
withhold state or Federal income tax as a result of the exercise of an Option,
as a condition to the exercise thereof, an Optionee must make arrangements
satisfactory to the Corporation to enable it to satisfy such withholding
requirements before the Optionee shall be permitted to exercise the Option.
Payment of such withholding requirements may be made, in the discretion of the
Administrator, (i) in cash, (ii) by delivery of Shares registered in the name of
the Optionee, or by the Corporation not issuing such number of Shares subject to
the Option, having a Fair Market Value at the time of exercise equal to the
amount to be withheld or (iii) any combination of (i) and (ii) above; provided,
                                                                      --------
that upon exercise of an Option by a Section 16 Participant, any withholding
requirements shall be made by the Company withholding from the Shares otherwise
issuable to the Optionee that number of Shares having a Fair Market Value at
time of exercise equal to the amount to be withheld.

         The Optionee shall exercise an Option by completing and delivering to
the Corporation, concurrently with the payment of the Purchase Price in the
manner described above, an exercise notice substantially in the form attached as
Annex C hereto, or in such other form as the Administrator shall from time to
time determine.

         (g)  Term and Non-Transferability of Options.
              ---------------------------------------

         Each Option shall state the time or times when all or part thereof
becomes exercisable.  No Option, including Incentive Stock Options, shall be
exercisable after the expiration of ten (10) years from the date it was granted.
During the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee or the Optionee's guardian or legal representative and shall not be
assignable or transferable.  In the event of the Optionee's death, the option
shall not be transferable by the Optionee other than by will or the laws of
descent and distribution.  Any other attempted alienation, assignment, pledge,
hypothecation, attachment, execution or similar process, whether voluntary or
involuntary, with respect to all or any part of any Option or right thereunder,
shall be null and void and, at the Corporation's option, shall cause all of the
Optionee's rights under the Option to terminate.

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<PAGE>

         (h)  Cessation of Employment (Except by Death, Disability or
              -------------------------------------------------------
Retirement).
-----------

          If an Optionee ceases to be an Employee for any reason other than his
or her death, Disability or Retirement, such Optionee shall have the right,
subject to the restrictions referred to in Section 7(g) above, to exercise the
Option at any time within ninety (90) days after cessation of employment, but,
except as otherwise provided in the applicable Option Agreement, only to the
extent that, at the date of cessation of employment, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the applicable Option
Agreement and had not previously been exercised.

          For purposes of this Section 7(h), the employment relationship shall
be treated as continuing intact while the Optionee is on military leave, sick
leave or other bona fide leave of absence (to be determined in the sole
discretion of the Administrator).  The foregoing notwithstanding, in the case of
an Incentive Stock Option, employment shall not be deemed to continue beyond the
ninetieth (90th) day after the Optionee ceased active employment, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.

         (i)  Death of Optionee.
              -----------------

          If an Optionee dies while a Participant, or after ceasing to be a
Participant but during the period in which he or she could have exercised the
Option under this Section 7, and has not fully exercised the Option, then the
Option may be exercised in full, subject to the restrictions referred to in
Section 7(g) above, at any time within twelve (12) months after the Optionee's
death by the executor or administrator of his or her estate or by any person or
persons who have acquired the Option directly from the Optionee by bequest or
inheritance, but, except as otherwise provided in the applicable Option
Agreement, only to the extent that, at the date or death, the Optionee's right
to exercise such Option had accrued and had not been forfeited pursuant to the
terms of the applicable Option Agreement and had not previously been exercised.

         (j)  Disability of Optionee.
              ----------------------

          If an Optionee ceases to be an Employee by reason of Disability, such
Optionee shall have the right, subject to the restrictions referred to in
Section 7(g) above, to exercise the Option at any time within twelve (12) months
after such cessation of employment, but, except as provided in the applicable
Option Agreement, only to the extent that, at the date of such cessation of
employment, the Optionee's right to exercise such Option had accrued pursuant to
the terms of the applicable Option Agreement and had not previously been
exercised.

         (k)  Retirement of Optionee.
              ----------------------

          If an Optionee ceases to be an Employee by reason of Retirement, such
Optionee shall have the right, subject to the restrictions referred to in
Section 7(g)

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above, to exercise the Option at any time within ninety (90) days after
cessation of employment, but only to the extent that, at the date of cessation
of employment, the Optionee's right to exercise such Option had accrued pursuant
to the terms of the applicable Option Agreement and had not previously been
exercised.

         (l)  Rights as a Shareholder.
              -----------------------

          No one shall have rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.  No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such stock
certificate is issued, except as expressly provided in Section 10 hereof.

         (m)  Modification, Extension and Renewal of Options.
              ----------------------------------------------

          Within the limitations of the Plan, the Administrator may modify an
Option, accelerate the rate at which an Option may be exercised (including,
without limitation, permitting an Option to be exercised in full without regard
to the installment or vesting provisions of the applicable Option Agreement or
whether the Option is at the time exercisable, to the extent it has not
previously been exercised), extend or renew outstanding Options or accept the
cancellation of outstanding Options (to the extent not previously exercised) for
the granting of new Options in substitution therefor.  The foregoing
notwithstanding, no modification of an Option shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Option previously
granted.

         (n)  Notice of Sale.
              --------------

          Until the later of the second anniversary of the grant of any
Incentive Stock Option and the first anniversary of the issuance of any Stock
("incentive stock") pursuant to the exercise of an Incentive Stock Option, the
stock transfer records of the Corporation (whether maintained by it or by any
transfer agent of the Common Stock) shall reflect that any certificates issued
or to be issued representing incentive stock in connection with such exercise
must be registered in the name of the beneficial holder (and not in any "street
name") until transferred to a third party, and that the transfer agent shall
notify the Corporation in a case of any requested transfer of such incentive
stock during that period.  In addition, the certificate or certificates
registered in the name of the beneficial holder representing the incentive stock
issued upon such exercise will bear the following legend during such period:

          "Solely to assist the issuer of the shares represented by this
          certificate, until the later of the second anniversary of the date of
          grant of the Option under which the certificate was originally issued
          or one year from the date of original issuance of the shares
          represented by the certificate, the Transfer Agent will notify the
          issuer of the shares

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<PAGE>

          represented hereby of any requested transfer by the original
          registered holder."

          (o) Other Provisions.
              ----------------

          An Option Agreement authorized under the Plan may contain such other
provisions not inconsistent with the terms of the Plan (including, without
limitation, restrictions upon the exercise of the Option) as the Administrator
shall deem advisable.  Without limiting the foregoing, at the discretion of the
Administrator, the Corporation may reserve to itself or its assignee(s), in an
Option Agreement, (i) a right of first refusal to purchase any Shares that an
Optionee (or a subsequent transferee) may propose to transfer to a third party
and (ii) a right to repurchase any or all Shares held by an Optionee upon the
Optionee's cessation of employment or service with the Corporation or any of its
Subsidiaries for any reason (or upon other events) within a specified time as
determined by the Administrator at the time of grant at a price equal to the
Optionee's original Exercise Price, the fair market value of such Shares as
determined by the Board, or in a manner determined by the Board, in good faith,
or a price determined by a formula or other provision set forth in the Option
Agreement; provided, that in the case of any Option the issuance of which the
           --------
Corporation intends to be exempt under Section 25102(o) of the California
Corporate Securities Law, the provisions described in the foregoing sentence
shall be subject to clauses (f) and (k) Rule 260.140.41 (of the California
Commissioner of Corporations.

          (p) Substitution of Options.
              -----------------------

          Notwithstanding any inconsistent provisions or limits under the Plan,
in the event the Corporation acquires (whether by purchase, merger or otherwise)
all or substantially all of outstanding capital stock or assets of another
corporation or of any reorganization or other transaction qualifying under
Section 424 of the Code, the Administrator may, in accordance with the
provisions of that Section, substitute options under the Plan for options under
the plan of the acquired company provided (i) the excess of the aggregate fair
market value of the shares subject to an option immediately after the
substitution over the aggregate option price of such shares is not more than the
similar excess immediately before such substitution and (ii) the new option does
not give persons additional benefits, including any extension of the exercise
period.

     8.  LIMITATION ON ANNUAL AWARDS.
         ---------------------------

     To the extent that the aggregate Fair Market Value (determined as of
the date an Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Optionee during any
calendar year under the Plan and all other plans maintained by the Corporation,
its parent or its Subsidiaries, exceeds $100,000, such excess Options shall be
treated as Nonstatutory Stock Options.  For the purposes of this Section 8,
Incentive Stock Options shall be taken into account in the order in which they
were granted.

                                       10
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     9.  TERM OF PLAN.
         ------------

     Options may be granted pursuant to the Plan until the expiration of the
Plan ten years after the effective date referred to in Section 3.

    10.  EFFECT OF CERTAIN EVENTS.
         ------------------------

         (a)  Stock Splits and Dividends.
              --------------------------

          Subject to any required action by shareholders, the number of Shares
covered by the Plan as provided in Section 6 hereof, the number of Shares
covered by each outstanding Option and the Exercise Price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a subdivision or consolidation of Shares or the payment of
a stock dividend (but only if paid in Common Stock) or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Corporation.

         (b)  Merger, Sale of Assets, Liquidation.
              -----------------------------------

          Subject to any required action by shareholders, if the Corporation
shall merge with another corporation and the Corporation is the surviving
corporation in such merger and under the term of such merger the shares of
Common Stock outstanding immediately prior to the merger remain outstanding and
unchanged, each outstanding Option shall continue to apply to the Shares subject
thereto and shall also pertain and apply to any additional securities and other
property, if any, to which a holder of the number of Shares subject to the
Option would have been entitled as a result of the merger.  If the Corporation
sells or disposes of all or substantially all of its assets or merges (other
than a merger of the type described in the immediately preceding sentence) or
consolidates with or into another corporation or entity, this Plan and each
Option shall terminate, but only after each Optionee (or the successor in
interest) has been given the right to exercise any unexpired Option or Options
in full or in part, to the extent that, on the date of such sale, disposition or
merger, the Optionee's right to exercise such Option had accrued pursuant to the
terms of the applicable Option Agreement and had not previously been exercised.
This right shall be exercisable for the period of twenty (20) days ending five
(5) days before the effective date of the sale, merger, or consolidation (or
such longer period as the Administrator may specify).  Alternatively, in its
sole and absolute discretion, the surviving or acquiring corporation (or the
parent company of the surviving or acquiring corporation) may tender to any
Optionee (or successor in interest) a substitute option or options to purchase
shares of the surviving or acquiring corporation (or the parent corporation of
the surviving or acquiring corporation).  The substitute option shall contain
all terms and provisions required substantially to preserve the rights and
benefits of all Options then held by the Optionee (or successor in interest)
receiving the substitute option.  Any other dissolution or liquidation of the
Company shall cause each Option to terminate.

                                       11
<PAGE>

          At the discretion of the Administrator, an Option exercised in
contemplation of the consummation of the sale of all substantially all of the
assets of the Corporation or a merger (other than a merger of the type described
in the first sentence of the immediately preceding paragraph) or consolidation
of the Corporation with another corporation, may be conditioned upon such sale,
merger or consolidation becoming effective.

         (c)  Adjustment Determination.
              ------------------------

          To the extent that the foregoing adjustments relate to securities of
the Corporation, such adjustments shall be made by the Administrator, whose
determination shall be conclusive and binding on all persons.

         (d)  Limitation on Rights.
              --------------------

          Except as expressly provided in this Section 10, the Optionee shall
have no rights by reason of any subdivision or consolidation of shares of stock
of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or stock
of another corporation, and any issue by the Corporation of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or Exercise Price of Shares subject to an Option.  The grant of an
Option pursuant to the Plan shall not affect in any way the right or power of
the Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.

         (e)  Change in Control.
              -----------------

          In the event of a pending takeover bid, tender offer or exchange offer
for twenty percent (20%) or more of the outstanding Common Stock or any other
class of stock or securities of the Company (other than a tender offer or
exchange offer made by the Company or any Subsidiary or any employee benefit
plan of the Company), whether or not deemed a tender offer under applicable
federal or state law, or in the event that any person makes any filing under the
Section 13(d) or 14(d) of the Exchange Act with respect to the Company, other
than a filing of a Schedule 13G, the Administrator may in its sole discretion,
without obtaining shareholder approval, take one or more of the following
actions to the extent not inconsistent with other provisions of the Plan:

                    (i)  Pay cash to any or all holders of Options at the then-
                         current market value of the Option Shares in exchange
                         for the cancellation of their outstanding options; or

                                       12
<PAGE>

                    (ii) Make any other adjustments or  amendments to the Plan
                         and  outstanding Options and substitute  new Options
                         for outstanding options;

provided, that no acceleration payment or adjustment shall be made by reason of
--------
this subsection (e) which, when aggregated with other payments made to the
Optionee, would, in the opinion of the Administrator, result in an excess
parachute payment for which the Company (or, where applicable, a Subsidiary)
would not receive a Federal income tax deduction by reason of Section 280G of
the Code.

     11.  SECURITIES LAW REQUIREMENTS.
          ---------------------------

          (a)  Legality of Issuance.
               --------------------

          No Shares shall be issued upon the exercise of any Option unless
and until the Corporation has determined that:

               (i)   it and the Optionee have taken all actions required to
register the offer and sale of the Shares under the Securities Act, or to
perfect an exemption from the registration requirements thereof;

               (ii)  any applicable listing requirement of any stock exchange on
which the Common Stock is listed has been satisfied; and

               (iii) any other applicable provision of state or Federal law has
been satisfied.

         (b)  Restrictions on Transfer; Representations of Optionee; Legends.
              --------------------------------------------------------------

          Regardless of whether the offering and sale of Shares under the Plan
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Corporation may impose restrictions
upon the sale, pledge or other transfer of such Shares (including the placement
of appropriate legends on stock certificates) if, in the judgment of the
Corporation and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Securities Act, the
securities laws of any state or any other law.  In the event that the sale of
Shares under the Plan is not registered under the Securities Act but an
exemption is available which requires an investment representation or other
representation, each Optionee shall be required to represent that such Shares
are being acquired for investment, and not with a view to the sale or
distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Corporation and its counsel.  Stock certificates
evidencing Shares acquired under the Plan pursuant to an unregistered
transaction shall bear the following restrictive legend and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law:

                                       13
<PAGE>

          "THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933 (THE 'ACT').  ANY TRANSFER OR PLEDGE
          OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT
          UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF
          COUNSEL FOR THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR
          SUCH TRANSFER OR PLEDGE TO COMPLY WITH THE ACT."

          Any determination by the Corporation and its counsel in connection
with any of the matters set forth in this Section 11 shall be conclusive and
binding on all persons.

         (c)  Registration or Qualification of Securities.
              -------------------------------------------

          The Corporation may, but shall not be obligated to, register or
qualify the sale of Shares under the Securities Act or any other applicable law.
The Corporation shall not be obligated to take any affirmative action in order
to cause the sale of Shares under the Plan to comply with any law.

         (d)  Exchange of Certificates.
              ------------------------

          If, in the opinion of the Corporation and its counsel, any legend
placed on a stock certificate representing Shares sold under the Plan is no
longer required, the holder of such certificate shall be entitled to exchange
such certificate for a certificate representing the same number of Shares but
without such legend.

     12.  AMENDMENT OF THE PLAN.
          ---------------------

     The Board may from time to time, with respect to any Shares at the
time not subject to Options, suspend or discontinue the Plan or revise or amend
it in any respect whatsoever except that, without the approval of the
Corporation's shareholders, no such revision or amendment shall:

         (a) Materially increase the benefits accruing to Participants under the
Plan;

         (b) Increase the number of Shares which may be issued under the Plan;

         (c) Change the designation in Section 5 hereof with respect to the
classes of persons eligible to receive Options; or

         (d) Amend this Section 12 to defeat its purpose.

                                       14
<PAGE>

     13.  EXCHANGE ACT.
          ------------

     If the Common Stock is registered under the Exchange Act, the Plan
shall be amended by the Administrator from time to time to the extent necessary
or advisable, in the judgment of the Administrator after having consulted with
Corporation's counsel, to enable Section 16 Participants to obtain the benefits
of such exclusions or exemptions from the Sections 16 Requirements as may be
established by the Commission from time to time by rule, regulation,
administrative order or interpretation (whether such interpretation is made by
the Commission or staff) with respect to (i) the receipt of Options, (ii) the
exercise, modification, extension, cancellation, exchange, termination or
expiration of Options, (iii) the purchase of Common Stock upon the exercise of
Options, (iv) the sale of Common Stock received upon the exercise of Options,
and (v) the administration of this Plan.  Anything in the Plan to the contrary
notwithstanding, such amendments may be made without approval of the
Corporation's shareholders unless and to the extent that, in the judgment of the
Administrator after consulting with the Corporation's counsel, shareholder
approval of such an amendment is a prerequisite to effectuating a desired
exclusion or exemption from the Section 16 Requirements.

     With respect to Section 16 Participants, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the Plan or
action by the Administrator fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Administrator.

     14.  APPLICATION OF FUNDS.
          --------------------

     The proceeds received by the Corporation from the sale of Common Stock
pursuant to the exercise of an Option will be used for general corporate
purposes.

     15.  APPROVAL OF SHAREHOLDERS.
          ------------------------

     The Plan has been approved by the affirmative vote of the holders of a
majority of the Corporation's outstanding shares of capital stock effective
October 1, 1997.  Any amendment described in Section 12 shall be subject to
approval by the Corporation's shareholders.

     16.  GOVERNING LAW.
          -------------

     This Plan, and the Option Agreements, shall be governed by and
construed in accordance with the internal substantive laws (and not the laws of
conflicts) of the State of California.

     17.  EXECUTION.
          ---------

     To record the adoption of the Plan by the Board as of October 1, 1997,
the Corporation has caused an authorized officer to affix the corporate name
hereto.

                                       15
<PAGE>

     18.  INFORMATION.
          -----------

     To the extent required by Rule 260.140.46 of the California Commissioner of
Corporations, the Corporation shall provide to an Optionee the information
required by such Rule.

                          AMERICAN PHARMACEUTICAL PARTNERS, INC.


                          By: /s/ Patrick Soon-Shiong
                             ------------------------

                             Name:  Patrick Soon-Shiong
                             Title: President

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