Sample Business Contracts

Services Agreement - Herbst LaZar Bell Inc. and Cheung Laboratories Inc.

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                           CHEUNG LABORATORIES, INC.

October 4, 1996

Mr. Lorin M. Spak
Herbst LaZar Bell, Inc.
355 North Canal Street
Chicago, Illinois 60606

Dear Mr. Spak:

         Please  consider this letter in substitution of an earlier letter faxed
to you on September 27, 1996.

         Following verbal discussions,  as recently as this morning, with Warren
Stearns,  Stuart Fuchs, Verle Blaha, and others,  your proposal,  your letter of
September  5th,  and Walter's  letter of the 9th;  this letter is to express our
intent  (mutually,  if  executed  in the space  provided  below) to enter into a
business  relationship  between  Herbst  LaZar  Bell,  Inc.  ("HLB")  and Cheung
Laboratories,  Inc.  ("CLI")  pursuant to which CLI undertakes to engage HLB for
certain tasks (essentially outlined in your proposal,  but most probably subject
to modest  modification  over time)  under the terms and  conditions  as are set
forth herein.

         While your letter outlines a well thought out and comprehensive program
that we intend to implement,  Verle Blaha has explained to Walter Herbst that we
underestimated  the work  necessary to get our next  financing  underway and are
consequently  delayed.  The investors are there and our paperwork  isn't.  While
this situation is both frustrating and a bit embarrassing, I know that Verle has
told Walter that it also would not be fair to you to enter into the full program
you proposed on a formally binding basis until we can assure you that we have in
hand the funds to pay the cash portion of your charges on a timely basis. We are
nevertheless  very  pleased  that  you  think  enough  of the  potential  of the
technology  array we now  possess  that you are  willing  to work  with us and I
assure you that we want to add HLB to our growing term of top flight experts.


         In this regard we agree with the arrangements set forth in principle in
your proposal and letter of the 5th as to the tasks to be accomplished  and cash
compensation  rates  to be  paid to you  (55%  of  normal  billing  rates).  The
remaining 45% will be paid to HLB in CLI common stock at $1.25 per share.  Prior
to the  delivery  of any of  such  shares,  you  will  be  required  to  execute
documentation  relating to the issuance of these securities,  all of which shall
be  consistent  with  the  documentation  required  of  any  similarly  situated
accredited  investor.  As part of  this  documentation,  you  will be  asked  to
acknowledge receipt,  review and understanding of information to be contained in
Form 10-K covering the year ending September 30, 1996.

         As indicated in our  conversation  earlier  today,  and as a completely
separate subject, we have an urgent need to deliver a "breadbox" alpha prototype
to  Oxford  University  not  later  than  December  31,  1996.  This  prototype,
incorporating  the MIT  technology  in a CLI microwave  hyperthermia  system but
lacking the LORAD table, will be used initially to conduct preclinical trials on
healthy  pigs.  These large  animal  tests must be  completed  in advance of the
clinicals to be performed at Hammersmith.

         The CLI  prototype  will then be  attached  to a LORAD  table,  and the
complete  system  for  treating  cancer in intact  human  breasts  delivered  to
Hammersmith  by April 1,  1997.  CLI will  supply HLB with one  Microfocus  1000
System  and one LORAD  table or  equivalent.  HLB's  task  would be  limited  to
upgrading the software,  designing the "marriage" of the LORAD and CLI subunits,
and  completing  the  construction  of the "animal" and "human"  configurations.
Stuart  Fuchs,  assisted  by Alan  Fenn,  will be our  project  manager.  We are
currently  reviewing a Statement  of Work  prepared by Alan Fenn to make sure it
conforms to this revised plan.

         Upon reviewing your rates and the Statement of Work mentioned above, we
estimate that this separate year-end project would run to approximately  $50,000
and have  budgeted this amount,  including the enclosed  check for an advance of
five thousand dollars  ($5,000),  as discussed  between Verle and Walter. If you
feel we are correct in our  estimate  and are in  agreement  with the spirit and
intent  expressed  in this letter,  please  execute a copy of this letter in the
space  provided and return it for our files.  If you have  additional  comments,
questions or remarks, please call me.
We want to work with you.

Sincerely,                                           Accepted:

/s/_______________________                          /s/_______________________
Augustine Y. Cheung                                 Lorin M. Spak

301650.001(BF)                                     2