<PAGE>

                                PUBLIC HEALTH SERVICE

                         PATENT LICENSE AGREEMENT--EXCLUSIVE

                                      COVER PAGE

For PHS internal use only:

     Patent License Number:   L-323-98/0

Serial Number(s) of Patent Application(s) that are "Licensed Patent Rights" -
licensed on an exclusive basis:

     USPA 08/776,271, entitled, "Mesothelium Antigen and Methods and Kits for
     Targeting It", inventors:  Dr. Ira H. Pastan (NCI) and Dr. Kai Chang (NCI)
     [= E-002-96/1]; and

     USPA 60/067,175, entitled "Antibodies, Including Fv Molecules, and
     Immunoconjugates having High Binding Affinity for Mesothelin and Methods
     for Their Use", inventors Dr. Ira H. Pastan (NCI) and Dr. Partha Chowdhury
     (NCI)[=E-021-98/0]

Serial Number(s) of Patent(s) and Patent Application(s) that are "Background
Patent Rights" and licensed on a non-exclusive basis:

     USPN 4,892,827 (=USSN 06/911,227), entitled, "Recombinant PSEUDOMONAS
     Exotoxin: Construction of an Active Immunotoxin with Low Side Effects",
     inventors: Drs. Ira H. Pastan (NCI), Sankar Adhya (NCI), and David
     FitzGerald (NCI), - excluding any foreign equivalents corresponding to
     4,892,827 (= USSN 06/911,227 ) [=E-385-96/0].

     USPN 5,747,654 (= USPA 08/077,252) enabled, "Recombinant Disulfide-
     Stabilized Polypeptide Fragments Having Binding Specificity", inventors:
     Drs. Ira H. Pastan (NCI), Byungkook Lee (NCI), Sun-Hee Jung (NCI), Ulrich
     Brinkmann (NC1) [=E-163-93/0].

     USPA 09/002,753 (=Division of USPA 08/077,252), entitled: "Recombinant
     Disulfide-Stabilized Polypeptide Fragrnents Having Binding Specificity",
     inventors: Drs.  Ira H. Pastan (NCl), Byungkook Lee (NCI), Sun-Hee Jung
     (NC1), Ulrich Brinkman (NCI) [=E-163-93/4].

     Licensee:      NeoPharm, Inc.
                    100 Corporate North - Suite 214
                    Bannockburn, Illinois 60015
                    Phone No.: (847)-295-8678
                    Fax No.: (847) 295-8854

<PAGE>


Cooperative Research and Development Agreement (CRADA) (if applicable):

                                         N/A

Public Benefit(s):  NeoPharm agrees, after their First Commercial Sale, to make
                    reasonable quantities of Licensed Products or materials
                    produced through the use of Licensed Processes available on
                    a compassionate use basis to patients, either through the
                    patient's physician(s) and/or the medical center treating
                    the patient.

                    NeoPharm also agrees, after their First Commercial Sale and
                    as part of their marketing and product promotion, to develop
                    written educational materials (e.g., brochures,
                    advertisements, etc.) directed to patients and physicians
                    detailing the Licensed Products and/or medical aspects and
                    the therapeutic treatment(s) of ovarian carcinomas and
                    mesotheliomas. 

_______________________________________________________

This Patent License Agreement, hereinafter referred to as the "Agreement",
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A
(List of Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), Appendix F (Commercial Development Plan) end appendix G (PHS
Incurred Patent Prosecution Costs). The Parties to this Agreement are:

     1)   The National Institutes of Health ("NIH"), the Centers for Disease
          Control and Prevention ("CDC"), or the Food and Drug Administration
          ("FDA"), hereinafter singly or collectively referred to as "PHS",
          agencies of the United States Public Heals Service within the
          Department of Health and Human Services ("DHHS"); and 

     2)   The person, corporation, or institution identified above and/or on the
          Signature Page, having offices at the address indicated on the
          Signature Page, hereinafter referred to as "Licensee".


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<PAGE>


                       PHS PATENT LICENSE AGREEMENT--EXCLUSIVE

PHS and Licensee agree as follows:

<TABLE>

<S>         <C>
1.   BACKGROUND

     1.01   In the course of conducting biomedical and behavioral research, PHS
            investigators made inventions that may have commercial
            applicability.

     1.02   By assignment of rights from PHS employees and other inventors,
            DHHS, on behalf of the United States Government, owns intellectual
            property rights claimed in any United States and/or foreign patent
            applications or patents corresponding to the assigned inventions. 
            DHHS also owns any tangible embodiments of these inventions
            actually reduced to practice by PHS.

     1.03   The Secretary of DHHS has delegated to PHS the authority to enter
            into this Agreement for the licensing of rights to these
            inventions.

     1.04   PHS desires to transfer these inventions to the private sector
            through commercialization licenses to facilitate the commercial
            development of products and processes for public use and benefit.

     l.05   Licensee desires to acquire commercialization rights to certain of
            these inventions in order to develop processes, methods, and/or
            marketable products for public use and benefit.

2.   DEFINITIONS

     2.01   "Benchmarks" mean the performance milestones that are set forth in
            Appendix E.

     2.02   "Commercial Development Plan" means the written commercialization
            plan attached as Appendix F.

     2.03   "First Commercial Sale" means the initial transfer by or on behalf
            of Licensee or its sublicensees of Licensed Products or the initial
            practice of a Licensed Process by or on behalf of Licensee or its
            sublicensees in exchange for cash or some equivalent to which value
            can be assigned for the purpose of determining Net Sales.

     2.04   "Government" means the Government of the United States of America.

     2.05   "Licensed Fields of Use" means the fields of use identified in
            Appendix B.


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<PAGE>


     2.06   "Licensed Patent Rights" shall mean:

            a) Patent applications (including provisional patent
               applications and PCT patent applications) and/or patents
               listed in Appendix A, all divisions and continuations of
               these applications, all patents issuing from such
               applications, divisions, and continuations, and any
               reissues, reexaminations, and extensions of all such
               patents, excluding those patent applications and patents
               listed as Background Patent Rights;

            b) to the extent that the following contain one or more claims
               directed to the invention or inventions disclosed in a)
               above: 1) continuations-in-part of a) above, ii) all
               divisions and continuations of these continuations-in-part;
               iii) all patents issuing from such continuations-in-part,
               divisions, and continuations; iv) priority patent
               application(s) of a) above; and v) any reissues,
               reexaminations, and extensions of all such patents;

            c) to the extent that the following contain one or more claims
               directed to the invention or inventions disclosed in a)
               above: all counterpart foreign and U.S. patent applications
               and patents to a) and b) above, including those listed in
               Appendix A as Licensed Patent Rights.

            Licensed Patent Rights shall NOT include b) or c) above to the
            extent that they contain one or more claims directed to new matter
            which is not the subject matter disclosed in a) above.

     2.07   "Background Patent Rights" shall specifically mean USPN 4,892,827;
            USPN 5,747,654; and USPA 09/002,753 licensed to the Licensee on a
            non-exclusive basis as granted in Article 3 Paragraph 3.02 below
            and listed in Appendix A as Background Patent Rights and 

            a) Patent applications (including provisional patent
               applications and PCT patent applications) and/or patents
               listed in Appendix A, all divisions and continuations of
               these applications, all patents issuing from such
               applications, divisions, and continuations, and any
               reissues, reexaminations, and extensions of all such
               patents, excluding those patent applications and patents
               listed as Licensed Patent Rights;

            b) to the extent that the following contain one or more claims
               directed to the inventions or inventions disclosed in a)
               above: 1) continuations-in-part of a) above; ii) all
               divisions and continuations of these continuations-in-part;
               iii) all patents issuing from such continuations-in-part,
               divisions, and continuations; (iv) priority patent
               application(s) of a) above; and v) any reissues,
               reexaminations, and extensions of all such patents;


                                     4
<PAGE>


            c) to the extent that the following contain one or more claims
               directed to the invention or inventions disclosed in a)
               above: all counterpart foreign and U.S. patent applications
               and patents to a) and b) above, including those listed in
               Appendix A as Background Patent Rights.

            Background Patent Rights shall NOT include b) or c) above to the
            extent that they contain one or more claims directed to new matter
            which is not the subject matter disclosed in a) above.

     2.08   "Licensed Process(es)" means processes which, in the course of
            being practiced would, in the absence of this Agreement, infringe
            one or more claims of the Licensed Patent Rights that have not been
            held invalid or unenforceable by an unappealed or unappealable
            judgment of a court of competent jurisdiction.

     2.09   "Licensed Product(s)" means tangible materials which, in the course
            of manufacture, use, offer to sell, sale, or importation would, in
            the absence of this Agreement, infringe one or more claims of the
            Licensed Patent Rights, that have not been held invalid or
            unenforceable by an unappealed or unappealable judgment of a court
            of competent jurisdiction.

     2.10   "Licensed Territory" means the geographical area identified in
            Appendix B.

     2.11   "Net Sales" means the total gross receipts for sales of Licensed
            Products or practice of Licensed Processes by or on behalf of
            Licensee or its sublicensees, and from leasing, renting, or
            otherwise making Licensed Products available to others without sale
            or other dispositions, whether invoiced or not, less returns and
            allowances, packing costs, insurance costs, freight out, taxes or
            excise duties imposed on the transaction (if separately invoiced),
            and wholesaler and cash discounts in amounts customary in the trade
            to the extent actually granted. No deductions shall be made for
            commissions paid to individuals, whether they be with independent
            sales agencies or regularly employed by Licensee, or sublicensees,
            and on its payroll, or for the cost of collections.

     2.12   "Practical Application" means to manufacture in the case of a
            composition or product, to practice in the case of a process or
            method, or to operate in the case of  a machine or system; and in
            each case, under such conditions as to establish that the invention
            is being utilized and that its benefits are to the extent permitted
            by law or Government regulations available to the public on
            reasonable terms.

     2.13   "Research License" means a nontransferable, nonexclusive license to
            make and to use the Licensed Products or Licensed Processes as
            defined by the Licensed Patent Rights and/or Background Patent
            Rights for purposes of research and not for purposes of commercial
            manufacture or distribution or in lieu of purchase.


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<PAGE>


     2.14   "Affiliate" means a corporation or other business entity which,
            directly or indirectly, is controlled by, controls, or is under
            common control with Licensee. For this purpose, the term "control"
            shall mean ownership of more than forty-eight percent (48%) of the
            voting stock or other ownership interest of the corporation or
            other business entity, or the power to elect or appoint more than
            forty-eight percent (48%) of the members of the governing body of
            the corporation or other business entity.

3.   GRANT OF RIGHTS

     3.01   PHS hereby grants and Licensee accepts, subject to the terms and
            conditions of this Agreement, an exclusive license under the
            Licensed Patent Rights in the Licensed Territory to make and have
            made, to use and have used, to sell and have sold, to offer to
            sell, and to import any Licensed Products in the Licensed Fields of
            Use and to practice and have practiced any Licensed Processes in
            the Licensed Fields of Use.

     3.02   PHS hereby grants and Licensee, accepts, subject to the terms and
            conditions of this Agreement, a non-exclusive license under the
            Background Patent Rights in the Licensed Territory to make and have
            made, to use and have used, and to sell and have sold any Licensed
            Products in the Licensed Fields of Use and to practice and have
            practiced any Licensed Process in the Licensed Fields of Use.


     3.03   This Agreement confers no license or rights by implication,
            estoppel, or otherwise under any patent applications or patents of
            PHS other than Licensed Patent Rights or Background Patent Rights
            regardless of whether such patents are dominant or subordinate to
            Licensed Patent Rights or Background Patent Rights.


4.   SUBLICENSING

     4.01   Upon written approval by PHS, which approval will not be
            unreasonably withheld, Licensee may enter into sublicensing
            agreements under Licensed Patent Rights and under the Background
            Patent Rights to the extent necessary to practice the Licensed
            Patent Rights. Licensee has no right to sublicense Background
            Patent Rights except as necessary to effectively sublicense
            Licensed Patent Rights.

     4.02   Licensee agrees that any sublicenses granted by it shall provide
            that the obligations to PHS of Paragraphs 5.01-5.06, 8.01, 10.01,
            10.02, 12.05, and 13.07-13 .09 of this Agreement shall be binding
            upon the sublicensee as if it were a party to this Agreement.
            Licensee further agrees to attach copies of these Paragraphs to all
            sublicensee agreements.


                                       6
<PAGE>


     4.03   Any sublicenses granted by Licensee shall provide for the
            termination of the sublicensee, or the conversion to a license
            directly between such sublicensees and PHS, at the option of the
            sublicensee, upon termination of this Agreement under Article 13.
            Such conversion is subject to PHS approval and contingent upon
            acceptance by the sublicensee of the remaining provisions of this
            Agreement.

     4.04   Licensee agrees to forward to PHS a copy of each fully executed
            sublicensee agreement postmarked within thirty (30) days of the
            execution of such agreement. To the extent permitted by law, PHS
            agrees to maintain each such sublicensee agreement in confidence.

5.   STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

     5.01   (a)     PHS reserves on behalf of the Government an irrevocable,
                    nonexclusive, nontransferable, royalty-free license for the
                    practice of all inventions licensed under the Licensed
                    Patent Rights and/or Background Patent Rights throughout the
                    world by or on behalf of the Government and on behalf of any
                    foreign government or international organization pursuant to
                    any existing or future treaty or agreement to which the
                    Government is a signatory. Prior to the First Commercial
                    Sale, Licensee agrees to provide PHS with quantities of
                    Licensed Products or materials made by the Licensed
                    Processes for PHS research use and/or for PHS use in
                    conducting pre-clinical, Phase I, Phase II, Phase III
                    Clinical Trials.

            (b)     In the event that Licensed Patent Rights are Subject
                    Inventions made under a Cooperative Research and Development
                    Agreement (CRADA), Licensee grants to the Government,
                    pursuant to 15 U.S.C. 3710a(b)(1)(A), a nonexclusive,
                    nontransferable, irrevocable, paid-up license to practice
                    Licensed Patent Rights or have Licensed Patent Rights
                    practiced throughout the world by or on behalf of the
                    Government. In the exercise of such license, the Government
                    shall not publicly disclose trade secrets or commercial or
                    financial information that is privileged or confidential
                    within the meaning of 5 U.S.C. 552(b)(4) or which would be
                    considered as such if it had been obtained from a non-
                    Federal party. Prior to the First Commercial Sale, Licensee
                    agrees to provide PHS reasonable quantities of Licensed
                    Products or materials made through the Licensed Processes
                    for PHS research use and/or for PHS use in conducting pre-
                    clinical, Phase I, Phase II, Phase m Clinical Trials.

     5.02   Licensee agrees that products used or sold in the United States
            embodying Licensed Products or produced through use of Licensed
            Processes shall be manufactured in the United States, unless a
            written waiver is obtained in advance from PHS.


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<PAGE>


     5.03   Licensee agrees, after First Commercial Sale, to make reasonable
            quantities of Licensed Products or materials produced through the
            use of Licensed Processes available on a compassionate use basis to
            patients, either through the patient's physician(s) and/or the
            medical center treating the patient.

     5.04   Licensee agrees, after First Commercial Sale and as part of their
            marketing and product promotion, to develop written educational
            materials (e.g., brochures, advertisements, etc.) directed to
            patients and physicians detailing the Licensed Products and/or
            medical aspects and the therapeutic treatment(s) of ovarian
            carcinomas and mesotheliomas.

     5.05   Licensee acknowledge that PHS may enter into future Cooperative
            Research and Development Agreements (CRADAs) under the Federal
            Technology Transfer Act of 1986 that relate to the subject matter
            of this Agreement.  Licensee agrees not to unreasonably deny
            requests for a Research License from such future collaborators with
            PHS when acquiring such rights is necessary in order to make a
            Cooperative Research and Development Agreement (CRADA) project
            feasible. Licensee may request an opportunity to join as a party to
            the proposed Cooperative Research and Development Agreement
            (CRADA).

     5.06   (a)     In addition to the reserved license of Paragraph 5.01 above,
                    PHS reserves the right to grant nonexclusive Research
                    License directly or to require Licensee to grant
                    nonexclusive Research License on reasonable terms. The
                    purpose of this Research License is to encourage basic
                    research, whether conducted at an academic or corporate
                    facility. In order to safeguard the Licensed Patent Rights,
                    however,  PHS shall consult with Licensee before granting to
                    commercial entities a Research License or providing to them
                    research samples of materials made through the Licensed
                    Processes.

            b) In exceptional circumstances, and in the event that Licensed
               Patent Rights are Subject Inventions made under a
               Cooperative Research and Development Agreement (CRADA), the
               Government, pursuant to 15 U.S.C. 3710a(b)(1)(B), retains
               the right to require the Licensee to grant to a responsible
               applicant a nonexclusive, partially exclusive, or exclusive
               sublicensee to use Licensed Patent Rights in Licensee's
               field of use on terms that are reasonable under the
               circumstances; or if Licensee fails to grant such a license,
               the Government retains the right to grant the license
               itself. The exercise of such rights by the Government shall
               only be in exceptional circumstances and only if the
               Government determines (1) the action is necessary to meet
               health or safety needs that are not reasonably satisfied by
               Licensee, (ii) the action is necessary to meet requirements
               for public use specified by Federal regulations, and such
               requirements are not reasonably satisfied by the Licensee;
               or (iii) the Licensee has failed to comply with an agreement
               containing provisions described in 15 U.S.C. 3710a(c)(4)(B).
               The determination made by the Government under this 


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<PAGE>


               Article is subject to administrative appeal and judicial review
               under 35 U.S.C. 203(2).

6.   ROYALTIES AND REIMBURSEMENT

     6.01   Licensee agrees to pay to PHS a noncreditable, nonrefundable
            license issue royalty as set forth in Appendix C within thirty (30)
            days from the date that this Agreement becomes effective.

     6.02   Licensee agrees to pay to PHS a nonrefundable minimum annual
            royalty as set forth in Appendix C. The minimum annual royalty is
            due and payable on January 1 of each calendar year and may be
            credited against any earned royalties due for sales made in that
            year. The minimum annual royalty due for the first calendar year of
            this Agreement may be prorated according to the fraction of the
            calendar year remaining between the effective date of this
            Agreement and the next subsequent January 1.

     6.03   Licensee agrees to pay PHS earned royalties as set forth in
            Appendix C.

     6.04   Licensee agrees to pay PHS benchmark royalties as set forth in
            Appendix C.

     6.05   Licensee agrees to pay PHS sublicensing royalties as set forth in
            Appendix C.

     6.06   A patent or patent application licensed under this Agreement shall
            cease to fall within the Licensed Patent Rights and/or Background
            Patent Rights for the purpose of computing earned royally payments
            in any given country on the earliest of the dates that a) the
            application has been abandoned and not continued, b) the patent
            expires or irrevocably lapses, or c) the claim has been held to be
            invalid or unenforceable by an unappealed or unappealable decision
            of a court of competent jurisdiction or administrative agency.

     6.07   No multiple royalties shall be payable because any Licensed
            Products or Licensed Processes are covered by more than one of the
            Licensed Patent Rights and Background Patent Rights.

     6.08   (a)     Transfer of Licensed Products by Licensee to sublicensees or
                    an Affiliated party made in other than an arm's-length for
                    no furler resale shall be attributed a value which would
                    have been recovered in an arm's length transaction of like
                    quantity and quality of products sold on or about the time
                    of the transfer of Licensed Products for the purpose of
                    calculating Net Sales.

     6.08   (b)     Transfer of Licensed Products by Licensee to sublicensees or
                    Affiliated party for furler resale shalt have attributed
                    either a value which would have been received in an arm's-
                    length transaction based on sales or like 


                                      9
<PAGE>


                    quantity and quality of products transferred on or about 
                    the time of each transfer of Licensed Products or the 
                    actual value received in a later arm's length transaction, 
                    whichever is greater, for purposes of calculating Net Sales.

     6.09   With regard to expenses associated with the preparation, filing,
            prosecution, and maintenance of all patent applications and patents
            included within the Licensed Patent Rights and Background Patent
            Rights incurred by PHS prior to the effective date of this
            Agreement, Licensee shall pay to PHS, as an additional royalty,
            within sixty (60) days of PHS's submission of a statement and
            request for payment to Licensee, an amount equivalent to such
            patent expenses previously incurred by PHS and detailed in Appendix
            G.

     6.10   With regard to expenses associated with the preparation, filing,
            prosecution, and maintenance of all patent applications and patents
            included within the Licensed Patent Rights and Background Patent
            Rights incurred by PHS on or after the effective date of this
            Agreement, PHS, at its sole option, may require Licensee:

            (a) to pay PHS on an annual basis, within sixty (60) days of PHS's 
            submission of a statement and request for payment, a royalty amount
            equivalent to all such patent expenses incurred during the previous
            calendar year(s); or

            (b) to pay such expenses directly to the law firm employed by PHS
            to handle such functions. However, in such event, PHS and not
            Licensee shall be the client of such law firm.

            In limited circumstances, Licensee may be given the right to assume
            responsibility for the preparation, filing, prosecution, or
            maintenance of any patent application or patent included with the
            Licensed Patent Rights.  In that event, Licensee shall directly pay
            the attorneys or agents engaged to prepare, file, prosecute, or
            maintain such patent applications or patents and shall provide to
            PHS copies of each invoice associated with such services as well as
            documentation that such invoices have been paid.

     6.11   Licensee may elect to surrender its rights in any country of the
            Licensed Territory under any Licensed Patent Rights and Background
            Patent Rights upon ninety (90) days written notice to PHS and owe
            no payment obligation under Article 6.10 for patent-related
            expenses incurred in that country after ninety (90) days of the
            effective date of such written notice.

7.   PATENT FILING, PROSECUTION, AND MAINTENANCE

     7.01   Except as otherwise provided in this Article 7, PHS agrees to take
            responsibility for, but to consult with, the Licensee in the
            preparation, filing, prosecution, and maintenance of any and all
            patent applications or patents included in the Licensed 


                                      10
<PAGE>

            Patent Rights and shall furnish copies of relevant patent-related
            documents to Licensee.

     7.02   Upon PHS's written request, Licensee shall assume the
            responsibility for the preparation, filing, prosecution, end
            maintenance of any and all patent applications or patents included
            in the Licensed Patent Rights and shall on an ongoing basis
            promptly furnish copies of all patent-related documents to PHS. In
            such event, Licensee shall, subject to the prior Approval of PHS,
            select registered patent attorneys or patent agents to provide such
            services on behalf of Licensee and PHS.  PHS shall provide
            appropriate powers of attorney and other documents necessary to
            undertake such actions to the patent attorneys or patent agents
            providing such services. Licensee and its attorneys or agents shall
            consort with PHS in all aspects of the preparation, filing,
            prosecution and maintenance of patent applications and patents
            included within the Licensed Patent Rights and shall provide PHS
            sufficient opportunity to comment on any document that Licensee
            intends to file or to cause to be filed with the relevant
            intellectual property or patent office.

     7.03   At any time, PHS may provide Licensee with written notice that PHS
            wishes to assume control of the preparation, filing, prosecution,
            and maintenance of any and all patent applications or patents
            included in the Licensed Patent Rights.  If PHS elects to assume
            such responsibilities, Licensee agrees to cooperate fully with PHS,
            its attorneys, and agents in the preparation, filing, prosecution,
            and  maintenance of any and all patent applications or patents
            included in the Licensed Patent Rights and to provide PHS with
            complete copies of any and all documents or other materials that
            PHS deems necessary to undertake such responsibilities. Licensee
            shall be responsible for all costs associated with transferring
            patent prosecution responsibilities to an attorney or agent of
            PHS's choice.

     7 04   Each park shall promptly inform the other as to all matters that
            come to its attention that may affect the preparation, filing,
            prosecution, or maintenance of the Licensed Patent Rights and
            permit each other to provide comments and suggestions with respect
            to the preparation, filing, prosecution, and maintenance of
            Licensed Patent Rights, which comments and suggestions shall be
            considered by the other party.

8.   RECORDKEEPING

     8.01   Licensee agrees to keep accurate and correct records of Licensed
            Products made, used, sold, or imported and Licensed Processes
            practiced under this Agreement appropriate to determine the amount
            of royalties due PHS. Such records shall be retained for at least
            five (5) years following a given reporting period and shall be
            available during normal business hours for inspection at the
            expense of PHS by an accountant or other designated auditor
            selected by PHS for the sole purpose of verifying reports and
            payments hereunder. The accountant or auditor shall only 


                                      11
<PAGE>


            disclose to PHS information relating to the accuracy of reports 
            and payments made under this Agreement. If an inspection shows an 
            under reporting or underpayment in excess of five percent (5%/0) 
            for any twelve (12) month period, then Licensee shall reimburse 
            PHS for the cost of the inspection at the time Licensee pays the 
            unreported royalties, including any late charges as required by 
            Paragraph 9.08 of this Agreement. All payments required under 
            this Paragraph shall be due within thirty (30) days of the date 
            PHS provides Licensee notice of the payment due.

     8.02   Licensee agrees to have an audit of sales end royalties conducted
            by an independent auditor at least every two (2) years if annual
            sales of the Licensed Product or Licensed Processes are over two
            (2) million dollars. The audit shall address, at a minimum, the
            amount of gross sales by or on behalf of Licensee during the audit
            period, terms of the license as to percentage or fixed royalty to
            be remitted to the Government, the amount of royalty funds owed to
            the Government under this Agreement, and whether the royalty amount
            owed has  been paid to the Government and is reflected in the
            records of the Licensee. The audit shall also indicate the PHS
            license number, product, and the time period being audited. A
            report certified by the auditor shall be submitted promptly by the
            auditor directly to PHS on completion. Licensee shall pay for the
            entire cost of the audit.

9.   REPORTS ON PROGRESS BENCHMARKS, SALES AND PAYMENTS

     9.01   Prior to signing this Agreement, Licensee has provided to PHS the
            Commercial Development Plan at Appendix F, under which Licensee
            intends to bring the subject matter of the Licensed Patent Rights
            and/or Background Patent Rights to the point of Practical
            Application. This Commercial Development Plan is hereby
            incorporated by reference into this Agreement. Based on this plan,
            performance Benchmarks are determined as specified in Appendix E.

     9.02   Licensee shall provide written annual reports on its product
            development progress or efforts to commercialize under the
            Commercial Development Plan for each of the Licensed Fields of Use
            within sixty (60) days after December 31 of each calendar year.
            These progress reports shall include, but not be limited to:
            progress on research and development, status of applications for
            regulatory approvals, manufacturing, sublicensing, marketing,
            importing, and sales during the preceding calendar year, as well as
            plans far the present calendar year. PHS also encourages these
            reports to include information on any of Licensee's public service
            activities that relate to the Licensed Patent Rights and Background
            Patent Rights. If reported progress differs from that projected in
            the Commercial Development Plan and Benchmarks, Licensee shall
            explain the reasons for such differences. In any such annual
            report, Licensee may propose amendments to the Commercial
            Development Plan, acceptance of which by PHS may not be denied
            unreasonably. Licensee agrees to provide any additional information
            reasonably required by PHS to evaluate Licensee's performance under
            this Agreement. Licensee may 


                                      12
<PAGE>


            amend the Benchmark at any time upon written consent by PHS. PHS 
            shall not unreasonably withhold approval of any request of 
            Licensee to extend the time periods of this schedule if such 
            request is supported by a reasonable showing by Licensee of 
            diligence in its performance under the Commercial Development 
            Plan and toward bringing the Licensed Products to the point of 
            Practical Application as defined in 37 CFR 404.3(d). Licensee 
            shall amend the Commercial Development Plan and Benchmarks at the 
            request of PHS to address any Licensed fields of Use not 
            specifically addressed in the plan originally submitted.

     9.03   Licensee shall report to PHS the dates for achieving Benchmarks
            specified in Appendix E and the First Commercial Sale in each
            country in the Incensed Territory within thirty (30) days of such
            occurrences.

     9.04   Licensee shall submit to PHS within sixty (60) days after each
            calendar half-year ending June 30 and December 31 a royalty report
            setting forth for the preceding half-year period the amount of the
            Licensed Products sold or Licensed Processes practiced by or on
            behalf of Licensee in each country within the Licensed Territory,
            the Net Sales, and the amount of royalty accordingly due. With each
            such royalty report, Licensee shall submit payment of the earned
            royalties due. If no earned royalties are due to PHS for any
            reporting period, the written report shall so state. The royalty
            report shall be recorded as correct by an authorized officer of
            Licensee and shall include a detailed listing of all deductions
            made under Paragraph 2.10 to determine Net Sales made under Article
            6 to determine royalties due.

     9.05   Licensee agrees to forward semi-annually to PHS a copy of such
            reports received by Licensee from its sublicensees during the
            preceding half-year period as shall be pertinent to a royalty
            accounting to PHS by Licensee for activities under the sublicensee.

     9.06   Royalties due under Article 6 shall be paid in U.S. dollars. For
            conversion of foreign currency to U.S. dollars, the conversion rate
            shall be the New York foreign exchange rate quoted in THE WALL
            STREET JOURNAL on the day that the payment is due. All checks and
            bank drafts shall be drawn on United States banks and shall be
            payable, as appropriate, to "NIH/Patent Licensing." All such
            payments shall be sent to the following address: NIH, P.O. Box
            360120, Pittsburgh, PA 15251-6120.  Any loss of exchange, value,
            taxes, or other expenses incurred in the transfer or conversion to
            U.S. dollars shall be paid entirely by Licensee.  The royalty
            report required by Paragraph 9.04 of this Agreement shall accompany
            each such payment, and a copy of such report shall also be mailed
            to PHS at its address for notices indicated on the Signature Page
            of this Agreement.


                                      13
<PAGE>


     9.07   Licensee shall be solely responsible for determining if any tax on
            royalty income is owed outside the United States and shall pay any
            such tax and be responsible for all filings with appropriate
            agencies of foreign governments.

     9.08   Interest and penalties may be assessed by PHS on any overdue
            payments in accordance with the Federal Debt Collection Act. The
            payment of such late charges shall not prevent PHS from exercising
            any other rights it may have as a consequence of the lateness of
            any payment.

     9.09   All plans and reports required by this Article 9 and marked
            "confidential" by Licensee shall, to the extent permitted by law,
            be treated by PHS as commercial and financial information obtained
            from a person and as privileged and confidential, and any proposed
            disclosure of such records by the PHS under the Freedom of
            Information Act (FOIA), 5 U.S.C. Section 552 shall be subject to
            the predisclosure notification requirements of 45 CFR Section
            5.65(d).

10.  PERFORMANCE

     10.01  Licensee shall use its reasonable best efforts to bring the
            Licensed Products and Licensed Processes to Practical Application.
            "Reasonable best efforts" for the purposes of this provision shall
            include adherence to the Commercial Development Plan at Appendix F
            and performance of the Benchmarks at Appendix E. The efforts of a
            sublicensee shall be considered the efforts of Licensee.

     10.02  Upon the First Commercial Sale, until the expiration of this
            Agreement, Licensee shall use its reasonable best efforts to make
            Licensed Products and Licensed Processes reasonably accessible to
            the United States public.

11.  INFRINGEMENT AND PATENT ENFORCEMENT

     11.01  PHS and Licensee agree to notify each other promptly of each
            infringement or possible infringement of the Licensed Patent Rights
            and for Background Patent Rights, as well as any facts which may
            affect the validity, scope, or enforceability of the Licensed
            Patent Rights and/or Background Patent Rights of which either Party
            becomes aware.

     11.02  Pursuant to this Agreement and the provisions of Chapter 29 of
            title 35, United States Code, Licensee may: a) bring suit in its
            own name, at its own expense, and on its own behalf for
            infringement of presumably valid claims in the Licensed Patent
            Rights; b) in any such suit, enjoin infringement and collect for
            its use, damages, profits, and awards of whatever nature
            recoverable for such infringement; and c) settle any claim or suit
            for infringement of the Licensed Patent Rights provided, however,
            that PHS and appropriate Government authorities shall have the
            first right to take such actions. If Licensee desires to 


                                      14
<PAGE>


            initiate a suit for patent infringement, Licensee shall notify 
            PHS in writing. If PHS does not notify Licensee of its intent to 
            pursue legal action within ninety (90) days, Licensee will be 
            free to initiate suit. PHS shall have a continuing right to 
            intervene in such suit. Licensee shall take no action to compel 
            the Government either to initiate or to join in any such suit for 
            patent infringement. Licensee may request the Government to 
            initiate or join in any such suit if necessary to avoid dismissal 
            of the suit. Should the Government be made a party to any such 
            suit, Licensee shall reimburse the Government for any costs, 
            expenses, or fees which the Government incurs as a result of such 
            motion or other action, including any and all costs incurred by 
            the Government in opposing any such motion or other action. In 
            all cases, Licensee agrees to keep PHS reasonably appraised of 
            the status and progress of any litigation. Before Licensee 
            commences an infringement action, Licensee shall notify PHS and 
            give careful consideration to the views of PHS and to any 
            potential effects of the litigation on the public health in 
            deciding whether to bring suit.

     11.03  In the event that a declaratory judgment action alleging invalidity
            or non-infringement of any of the Licensed Patent Rights shall be
            brought against Licensee or raised by way of counterclaim or
            affirmative defense in an infringement suit brought by Licensee
            under Paragraph 11.02, pursuant to this Agreement and the
            provisions of Chapter 29 of Title 35, United States Code or other
            statutes, Licensee may: a) defend the suit in its own name, at its
            own expense, and on its own behalf for presumably valid claims in
            the Licensed Patent Rights; b) in any such suit, ultimately to
            enjoin infringement and to collect for its use, damages, profits,
            and awards of whatever nature recoverable for such infringement;
            and c) settle any claim or suit for declaratory judgment involving
            the Licensed Patent Rights- provided, however, that PHS and
            appropriate Government authorities shall have the first right to
            take such actions and shall have a continuing right to intervene in
            such suit. If PHS does not notify Licensee of its intent to respond
            to the legal action within a reasonable time, Licensee will be free
            to do so. Licensee shall take no action to compel the Government
            either to initiate or to join in any such declaratory judgment
            action. Licensee may request the Government to initiate or to join
            any such suit if necessary to avoid dismissal of the suit. Should
            the Government be made a party to any such suit by motion or ally
            other action of Licensee, Licensee shall reimburse the Government
            for any costs, expenses, or fees which the Government incurs as a
            result of such motion or other action. If Licensee elects not to
            defend against such declaratory judgment action, PHS, at its
            option, may do so at its own expense. In all cases, Licensee agrees
            to keep PHS reasonably appraised of the status and progress of any
            litigation. Before Licensee commences an infringement action,
            licensee shall notify PHS and give careful consideration to the
            views of PEIS and to any potential effects of the litigation on the
            public health in deciding whether to bring surf.


                                      15
<PAGE>


     11.04  In any action under Paragraphs 11.02 or 11.03, the expenses
            including costs, fees, attorney fees, and disbursements, shall be
            paid by Licensee. The value of any recovery made by Licensee
            through court judgment or settlement shall be treated as Net Sales
            and subject to earned royalties.

     11.05  PHS shall cooperate fully with Licensee in connection with any
            action under Paragraphs 11.02 or 11.03. PHS agrees promptly to
            provide access to all necessary documents and to render reasonable
            assistance in response to a request by licensee.

12.  NEGATION OF WARRANTIES AND LNDEMNIFICATION

     12.01  PHS offers no warranties other than those specified in Article 1.

     12.02  PHS does not wan ant the validity of the Licensed Patent Rights and
            Background Patent Rights and makes no representations whatsoever
            with regard to the scope of the Licensed Patent Rights and
            Background Patent Rights, or that the Licensed Patent Rights and
            Background Patent Rights may be exploited without infringing other
            patents or other intellectual proper rights of third parties.

     12.03  PHS MAKES NO WARRANTS, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR
            FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY
            THE CLAIMS OF THE LICENSED PATENT RIGHTS AND BACKGROUND PATENT
            RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

     12.04  PHS does not represent that it will commence legal actions against
            third parties infringing the Licensed Patent Rights and/or
            Background Patent Rights.

     12.05  Licensee shall indemnify and hold PHS, its employees, students,
            fellows, agents, and consultants harmless from and against all
            liability, demands, damages, expenses, and losses, including but
            not limited to death, personal injury, illness, or property damage
            in connection with or arising out of: a) the use by or on behalf of
            Licensee, its sublicensees, directors, employees, or third parties
            of any Licensed Patent Rights and Background Patent Rights b) the
            design, manufacture, distribution, or use of any Licensed Products,
            Licensed Processes or materials by Licensee, or other products or
            processes developed in connection with or arising out of the
            Licensed Patent Rights and/or Background Patent Rights. Licensee
            agrees to maintain a liability insurance program consistent with
            sound business practice.


                                      16
<PAGE>


13.  TERM, TERMINATION, AND MODIFICATION OF RIGHTS

     13.01  This Agreement is effective when signed by all parties and shall
            extend to the expiration of the last to expire of the Licensed
            Patent Rights and Background Patent Rights unless sooner terminated
            as provided in this Article 13.

     13.02  In the event that Licensee is in default in the performance of any
            material obligations under this Agreement, including but not
            limited to the obligations listed in Article 13.05 and if the
            default has not been remedied within ninety (90) days after the
            date of notice in writing of such default, PHS may terminate this
            Agreement by written notice and pursue outstanding amounts owed
            through procedures provided by the Federal Debt Collection Act.

     13.03  In the Event that Licensee becomes insolvent, files a petition in
            bankruptcy, has such a petition filed against it, determines to
            file a petition in bankruptcy, or receives notice of a third
            party's intention to file an involuntary petition in bankruptcy,
            Licensee shall immediately notify PHS in writing. Furthermore, PHS
            shall have the right to terminate this Agreement immediately upon
            Licensee's receipt of written notice.

     13 .04 Licensee shall have a unilateral right to terminate this Agreement
            and/or any licenses in any country or territory by giving PHS sixty
            (60) days written notice to that effect.

     13.05  PHS shall specifically have the right to terminate or modify, at
            its option, this Agreement, if PHS determines that the Licensee: 1)
            is not executing the Commercial Development Plan submitted with its
            request for a license and the Licensee cannot otherwise demonstrate
            to PHS's satisfaction that the Licensee has taken, or can be
            expected to take within a reasonable time, effective steps to
            achieve Practical Application of the Licensed Products or Licensed
            Processes; 2) has not achieved the Benchmarks as may be modified
            under Paragraph 9.02; 3.) has not met one or more of the
            obligations of Appendix C; 4) has willfully made a false statement
            of, or willfully omitted, a material fact in the license
            application or in any report required by the license Agreement; 5)
            has committed a material breach of a covenant or agreement
            contained in the license; 6) is not keeping Licensed Products or
            Licensed Processes reasonably available to the public after
            commercial use commences; 7) cannot reasonably satisfy unmet health
            and safety needs; or 8) cannot reasonably justify a failure to
            comply with the domestic production requirement of Paragraph 5.02
            unless waived.  In making this determination, PHS will take into
            account the normal course of such commercial development programs
            conducted with sound and reasonable business practices and judgment
            and the annual reports submitted by Licensee under Paragraph 9.02.
            Prior to invoking this right, PHS shall give written notice to
            Licensee providing Licensee specific notice of, and a ninety (90)
            day opportunity to respond to, PHS's concerns as to the previous
            items 1) to 7). If Licensee fails to 


                                      17
<PAGE>


            alleviate PHS's concerns as to the previous items 1) to 7) or 
            fails to initiate corrective action to PHS's satisfaction, PHS 
            may terminate this Agreement.

     13.06  When the public health and safety so require, and after written
            notice to Licensee providing Licensee a sixty (60) day opportunity
            to respond, PHS shall have the right to require Licensee to grant
            sublicenses to responsible applicants, on reasonable terms, in any
            Licensed Fields of Use under the Licensed Patent Rights, unless
            Licensee can reasonably demonstrate that the granting of the
            sublicensee would not materially increase the availability to the
            public of the subject matter of the Licensed Patent Rights. PHS
            will not require the granting of a sublicensee unless the
            responsible applicant has first negotiated in good faith with
            Licensee.

     13.07  PHS reserves the right according to 35 U.S.C. Section 209(f)(4) to
            terminate or modify this Agreement if it is determined that such
            action is necessary to meet requirements for public use specified
            by federal regulations issued after the date of the license and
            such requirements are not reasonably satisfied by Licensee.

     13.08  Within thirty (30) days of receipt of written notice of PHS's
            unilateral decision to modify or terminate this Agreement, Licensee
            may, consistent with the provisions of 37 CFR 404.11, appeal the
            decision by written submission to the designated PHS official. The
            decision of the designated PHS official shall be the final agency
            decision. Licensee may thereafter exercise any and all
            administrative or judicial remedies that may be available.

     13.09  Within ninety (90) days of expiration or termination of this
            Agreement under this Article 13, a final report shall be submitted
            by Licensee. Any royalty payments, including those incurred but not
            yet paid (such as the full minimum annual royalty), and those
            related to patent expense, due to PHS shall become immediately due
            and payable upon termination or expiration. If terminated under
            this Article 13, sublicensees may elect to convert their
            sublicenses to direct licenses with PHS pursuant to Paragraph 4.03.
            Unless otherwise specifically provided for under this Agreement,
            upon termination or expiration of this Agreement, Licensee shall
            return all Licensed Products or other materials included within the
            Licensed Patent Rights and Background Patent Rights to PHS or
            provide PHS with certification of the destruction thereof

14.  GENERAL PROVISIONS

     14.01  Neither Party may waive or release any of its rights or interests
            in this Agreement except in writing. The failure of the Government
            to assert a right hereunder or to insist upon compliance with any
            term or condition of this Agreement shall not constitute a waiver
            of that right by the Government or excuse a similar subsequent
            failure to perform any such term or condition by Licensee.


                                      18
<PAGE>


     14.02  This Agreement constitutes the entire agreement between the Parties
            relating to the subject matter of the Licensed Patent Rights and
            Background Patent Rights, and all prior negotiations,
            representations, agreements, and understandings are merged into,
            extinguished by, and completely expressed by this Agreement.

     14.03  The provisions of this Agreement are severable, and in the event
            that any provision of this Agreement shall be determined to be
            invalid or unenforceable under any controlling body of law, such
            determination shall not in any way affect the validity or
            enforceability of the remaining provisions of this Agreement.

     14.04  If either Party desires a modification to this Agreement, the
            Parties shall, upon reasonable notice of the proposed modification
            by the Party desiring the change, confer in good faith to determine
            the desirability of such modification. No modification will be
            effective until a written amendment is signed by the signatories to
            this Agreement or their designees.

     14.05  The construction, validity, performance, and effect of this
            Agreement shall be governed by Federal law as applied by the
            Federal courts in the District of Columbia.

     14.06  All notices required or permitted by this Agreement shall be given
            by prepaid, first class, registered or certified mail or by an
            express/overnight delivery service provided by a commercial
            carrier, properly addressed to the other Party at the address
            designated on the following Signature Page, or to such other
            address as may be designated in writing by such other Party.
            Notices shall be considered timely if such notices are received on
            or before the established deadline date or sent on or before the
            deadline date as verifiable by U.S. Postal Service postman or dated
            receipt from a commercial carrier. Parties should request legibly
            dated U.S. Postal Service postmark or obtain a dated receipt from a
            commercial carrier or the U.S. Postal Service. Private metered
            postmarks shall not be acceptable as proof of timely mailing.

     14.07  This Agreement shall not be assigned by Licensee except: a) with
            the prior written consent of PHS, such consent not to be withheld
            unreasonably; or b) as part of a sale or transfer of substantially
            the entire business of Licensee relating to operations which
            concern this Agreement. Licensee shall notify PHS within ten (10)
            days of any assignment of this Agreement by Licensee, and Licensee
            shall pay PHS, as an additional royalty, one percent (1%) of the
            fair market value of any consideration received for any assignment
            of this Agreement within thirty (30) days of such assignment.

     14.08  Licensee agrees in its use of any PHS-supplied materials to comply
            with all applicable statutes, regulations, and guidelines,
            including PHS and DEBS regulations and guidelines. Licensee agrees
            not to use the materials for research involving human subjects or
            clinical trials in the United States without complying 


                                      19
<PAGE>


            with 21 CFR Part 50 and 45 CFR Part 46. Licensee agrees not to 
            use the materials for research involving human subjects or 
            clinical trials outside of the United States without notifying 
            PHS, in writing, of such research or trials and complying with 
            the applicable regulations of the appropriate national control 
            authorities. Written notification to PHS of research involving 
            human subjects or clinical trials outside of the United States 
            shall be given no later than sixty (60) days prior to 
            commencement of such research or trials.

     14.09  Licensee acknowledges that it is subject to and agrees to abide by
            the United States laws and regulations (including the Export
            Administration Act of 1979 and Arms Export Control Act) controlling
            the export of technical data, computer software, laboratory
            prototypes, biological material, and other commodities. The
            transfer of such items may require a license from the cognizant
            Agency of the U.S. Government or written assurances by Licensee
            that it shall not export such items to certain foreign countries
            without prior approval of such agency. PHS neither represents that
            a license is or is not required or that, if required, it shall be
            issued.

     14.10  Licensee agrees to mark the Licensed Products or their packaging
            sold in the United States with all applicable U.S. patent numbers
            and similarly to indicate "Patent Pending" status. All Licensed
            Products manufactured in, shipped to, or sold in other countries
            shall be marked in such a manner as to preserve PHS patent rights
            in such countries.

     14.11  By entering into this Agreement, PHS does not directly or
            indirectly endorse any product or service provided, or to be
            provided, by Licensee whether directly or indirectly related to
            this Agreement. Licensee shall not state or imply that this
            Agreement is an endorsement by the Government, PHS, any over
            Government organizational unit, or any Government employee.
            Additionally, Licensee shall not use the names of N1H, CDC, PHS, or
            DHHS or the Government or their employees in any advertising,
            promotional, or sales literature without the prior written consent
            of PHS.

     14.12  The Parties agree to attempt to settle amicably any controversy or
            claim arising under this Agreement or a breach of this Agreement,
            except for appeals of modifications or termination decisions
            provided for in Article 13 . Licensee agrees first to appeal any
            such unsettled claims or controversies to the designated PHS
            official, or designee, whose decision shall be considered the final
            agency decision. Thereafter, Licensee may exercise any
            administrative or judicial remedies that may be available.

     14.13  Nothing relating to the grant of a license, nor the grant itself,
            shall be construed to confer upon any person any immunity from or
            defenses under the antitrust laws or from a charge of patent
            misuse, and the acquisition and use of rights pursuant to 


                                      20
<PAGE>


            37 CFR Part 404 shall not be immunized from the operation of state 
            or Federal law by reason of the source of the grant.

     14.14  Paragraphs 4.03, 8.01, 9.05-9.07, 12.01-12.05, 13.08, 13.09, and
            14.12 of this Agreement shall survive termination of this
            Agreement.

</TABLE>

                             SIGNATURE BEGIN ON NEXT PAGE


                                      21
<PAGE>

                      PHS PATENT LICENSE AGREEMENT -- EXCLUSIVE
                                    SIGNATURE PAGE

For PHS:

____________________________________                 __________________, 1999
Jack Spiegel, Ph.D.                                        Date
Director, Division of Technology Development and Transfer
Office of Technology Transfer
National Institutes of Health

Mailing Address for Notices:

Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852-3804

For Licensee (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of Licensee made or referred to
in this document are truthful and accurate.):


by:

__________________________________________            _________________, 1999
Signature of Authorized Official                            Date

__________________________________________
Printed Name

__________________________________________
Title

Official and Mailing Address for Notices:

NeoPharm, Inc.
100 Corporate North - Suite 214
Bannockburn, Illinois 60015
Phone No.: (847)-295-8678
FAX No.: (847)-295-8854

Any false or misleading statements made, presented, or submitted to the
Government, including any relevant omissions, under this Agreement and during
the course of negotiation of this Agreement are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. Sections 3801-3812
(civil liability) and 18 U.S.C. Section 1001 (criminal liability including
fine(s) and/or imprisonment).


                                      22
<PAGE>


                    APPENDIX A-Patent(s) or Patent Application(D)

Patent Application(s) that are "Licensed Patent Rights" - licensed exclusive
basis:

1.)  USPA 08/776,271, Entitled, "Mesothelium Antigen and Methods and Kits for
     Targeting It",  Inventors: Dr. Ira H. Pastan (NCI) and Dr. Rai Chang (NCI),
     Filed: January 12, 1998,[= E-002-96/0/1/1/2]; and

2.)  USPA 60/067,175, Entitled "Antibodies, Including Fv Molecules, and
     Immunoconjugates having High Binding Affinity for Mesothelin and Methods
     for Their Use", Inventors Dr. Ira H. Pastan (NCI) and Dr. Partha Chowdhury
     (NCI), Filed December 1, 1997, 
     [= E-021-98/0/1].

Patent(s) or Patent Application(s) that are Background Patent Rights - licensed
on a nonexcluslve basis:

A.)  USPN 4,892,827 (= USSN 06/911,227), enabled, "Recombinant PSEUDOMONAS
     Exotoxin: Construction of an Active Immunotoxin with Low Side Effects",
     inventors: Drs. Ira H. Pastan (NCI), Sankar Adhya (NCI), and David
     FitzGerald (NC1), - excluding any foreign equivalents corresponding to
     4,892,827 (= USSN 06/911,227 ) [= E-385-96/0]. 

B.)  USPN 5,747,654 (= USPA 08/077,252) entitled, "Recombinant Disulfide
     Stabilized Polypeptide Fragments Having Binding Specificity", inventors:
     Drs. Ira H. Pastan (NCI), Byungkook Lee (NCI), Sun-Hee Jung (NCI), Ulrich
     Brinkmann (NCI). PHS is an owner of corresponding foreign rights in
     national phase prosecution in Canada, Australia, Japan, and the European
     Patent Office [E-163-93/0].

C.)  USPA 09/002,753 (=Division of USPA 08/077,252), entitled: "Recombinant
     Disulfide Stabilized Polypeptide Fragments Having Binding Specificity",
     inventors: Ira H. Pastan (NCI), Byungkook Lee (NCI), Sun-Hee Jung (NCI),
     Ulrich Brinkmann (NCI) [=13-63-93/4].


                                      23
<PAGE>

                   APPENDIX B-Licensed Fields of Use and Territory

Licensed Fields of Use:

The Licensed Fields of Use: is limited to the use of the SS(dsFv)-P-38
immunotoxin, and the relevant patent applications defined under Licensed Patent
Rights and/or Background Patent Rights, for the IN VIVO therapeutic treatment of
ovarian carcinomas and mesotheliomas.

Licensed Territory: World-Wide


                                      24
<PAGE>


                                APPENDIX C - Royalties


     EXECUTION ROYALTY:

 .1   Licnesee agrees to pay PHS a noncreditable, nonrefundable license issue
     royalty in the amount of Seventy-Five Thousand ($75,000.00) U.S. Dollars.

     MINIMUM ANNUAL ROYALTY:

2.   Licensee agrees to pay PHS a nonrefundable minimum annual royalty in the
     amount of twenty thousand dollars $20,000.00) beginning on January 1, 2001
     and for each year thereafter that this Agreement is in effect, except that
     in the event Licensee fails to meet the benchmarks associated with the
     "Scale Up Production of the SS9dsFv)-PE38 immunotoxin", and/or the
     initiation of Phase II or Phase III clinical trials as set forth in
     Appendix E for which a time period has been assigned, Licensee shall be
     obligated to pay retroactive to the prior January 1, to PHS a minimum
     annual royalty in the amount of one hundred and fifty thousand dollars
     $150,000.00) per year, any time after the execution of this Agreement,
     until such time as the benchmark(s) is achieved, after which time the
     nonrefundable minimum annual royalty shall revert to twenty thousand
     dollars ($20,000.00) per year beginning January 1, 2001 or the next January
     1 thereafter or until the subject agreement is terminated.

     EARNED ROYALTIES:

3.   Licensee agrees to pay PHS earned royalties on Net Sales as follows:

     A.     Five Percent (5%) of Net Sales by Licnesee and Licensee's
            sublicensee(s) (or an Affiliate of Licensee) of Licensed Products
            and/or Licensed Process(es).

     B.     Licensee and Licensee's sublicensee(s) shall be entitled to a One
            Half Percent (0.5%) credit against the earned royalty rate on Net
            Sales for each percent of royalty Licensee must pay to third party
            licensors for the manufacture and sale of Licensed Products and/or
            Licensed Process(es), except for any royalty which Licensee must
            pay to other unaffiliated licensors for all counterpart foreign
            Applications and Patents corresponding to United States Patent
            Number 4,892,827, entitled "Recombinant Pseudomonas Exotoxin:
            Construction Of An Immunotoxin With Low Side Effects", inventors;
            Dr. Ira H. Pastan, Sankar Adhya and David FitzGerald, as listed in
            Appendix A.  Said reduction in earned royalties, however, shall
            only be triggered should the collective earned royalty burden on
            Net Sales be more than Twelve Percent (12%), but, in no case, shall
            the royalty rate owed to PHS by Licensee and Licensee's
            sublicensee(s) for Licensed Products and/or Licensed Process(es) be
            reduced below four percent (4%).


                                      25
<PAGE>


     BENCHMARK ROYALTIES:
4.   Licensee agrees to pay PHS benchmark royalties as follows:

     Upon filing of the first application for regulatory approval to conduct a
     clinical trial in humans anywhere in the Licensed Territory utilizing
     and/or directed to Licensed Products and/or Licensed Process(es) - 
     Twenty-Five Thousand ($25,000.00) U.S. Dollars.

     At the completion of the First Phase I Clinical Trials in humans anywhere
     in the Licensed Territory utilizing and/or directed to Licensed Products
     and/or Licensed Process(es) - Fifty Thousand ($50,000.00) U.S. Dollars.

     At the completion of the First Phase II Clinical Trials in humans anywhere
     in the Licensed Territory utilizing and/or directed to Licensed Products
     and/or Licensed Process(es) anywhere in the Licensed Territory - Seventy-
     Five Thousand ($75,000.00) U.S. Dollars.

     At the initiation of the first Phase III Clinical Trials in he as anywhere
     in the Licensed Territory utilizing and/or directed to Licensed Products
     and/or Licensed Process(es) - One Hundred Thousand ($100,000.00) U.S.
     Dollars.

     Upon filing of the first application for marketing approval anywhere in the
     Licensed Territory utilizing and/or directed to Licensed Produces and/or
     Licensed Process(es) -Two Hundred and Fifty Thousand Dollars ($250,000.00)
     U.S. Dollars.

     Upon each additional rnarketing approval in a major market (e.g., the
     United States of America, Canada, Europe, Japan, etc.) utilizing and/or
     directed to Licensed Product and/or Licensed Process(es) - Five Hundred
     Thousand ($500,000.00) U.S. Dollars.

SUBLICENSING ROYALTIES:

5.   Licensee agrees to pay PHS sublicensing royalties as follows:

     (a.)   Twenty-five percent (25%) of earned royalties paid by a sublicensee
            on Net Sales or two percent (2%) of the Net Sales of a sublicensee,
            whichever is greater; and

     (b.)   Twenty percent (20%) of all non-creditable and non-refundable
            consideration received for granting a sublicense, if the technology
            is sublicensed on or before the one year anniversary of this
            Agreement; or ten percent (10%) of all noncreditable and non-
            refundable consideration received in granting a sublicense, if the
            technology is sublicensed after the one year anniversary of this
            Agreement. Fees paid expressly for research and development of
            Licensed Product and Licensed Processes, such as clinical trial
            support, shall be excluded.


                                      26
<PAGE>


                                APPENDIX C - Royalties

EXECUTION ROYALTY:

1.   Licensee agrees to pay PHS a noncreditable, nonrefundable license issue
     royalty in the amount of Seventy-Five Thousand ($75,000.00) U.S. Dollars.

MINIMUM ANNUAL ROYALTY:

2.   Licensee agrees to pay PHS a nonrefundable minimum annual royalty in the
     amount of twenty thousand dollars ($20,000.00) beginning on January 1, 2001
     and for each year thereafter that this Agreement is in effect, except that
     in the event Licensee fails to meet the benchmarks associated with the
     "Scale Up Production of the SS(dsFv)-PE38 immunotoxin", and/or the
     initiation of Phase II or Phase m clinical teals as set forth in Appendix
     E! for which a time period has been assigned, Licensee shall be obligated
     to pay, retroactive to the prior January lo alto PHS a minimum annual
     royalty in the amount of one hundred and fifty thousand dollars
     ($150,000.00) per year, any time after the execution of this Agreement,
     until such time as the benchmark(s) is achieved, after which time the
     nonrefundable minimum annual royalty shall revert to twenty thousand
     dollars($20,000.00)per year beginning January 1,2001 or the next January
     1st thereafter or until the subject Agreement is terminated. 

EARNED ROYALTIES:

3.   Licensee agrees to pay PHS earned royalties on Net Sales as follows:

     A.     Five Percent (5%) of Net Sales by Licensee and Licensee's
            sublicensee(s) (or an Affiliate of Licensee) of Licensed Products
            and/or Licensed Process(es) .

     B.     Licensee and Licensee's sublicensee(s) stall be entitled to a One
            Half Percent (0.5%) credit against the earned royalty rate on Net
            Sales for each percent of royalty Licensee must pay to third party
            licensors for the manufacture and sale of Licensed Products, except
            for any royalty which Licensee must pay to other unaffiliated
            licensors for all counterpart foreign Applications and Patents
            corresponding to United States Patent Number 4,892,827, entitled,
            "Recombinant Pseudomonas Exotoxin: Construction Of An l~nunotoxin
            With Low Side Effects", inventors; Dr. Ira H. Pastan, Sankar Adhya
            and David FitzGerald, as listed in Appendix A. Said reduction in
            earned royalties, however, shall only be triggered should the
            collective earned royalty burden on Net Sales be more loom Twelve
            Percent (12%), but, in no case, shall the royalty rate owed to PHS
            by Licensee and Licensee's sublicensee(s) for Licked Products
            and/or Licensed Process(es) be reduced below four Percent (4%). 


                                      27
<PAGE>


                              APPENDIX D - Modifications

PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this Agreement:

NONE DOES NOT APPLY/ NO MODIFICATIONS OR AMENDMENTS ARE HEREBY MADE TO THIS
AGREEMENT.


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<PAGE>


                          APPENDIX E - Benchmark Performance

Licensee agrees to the following Benchmarks for its performance under this
Agreement and, within thirty (30) days of achieving a Benchmark, shall notify
PHS that the Benchmark has been achieved.

Ethical Therapeutic for the treatment of Ovarian Carcinoma and Mesothelioma

The Projected Project lime Lines are as followers:


 Manufacture and scale up of Therapeutic Drug
 [incorporating the SS(dsFv)-PE-38 immunotoxin]           October 1, 1999

 IN VIVO Efficacy and IN VIVO Toxicity Studies initiated
 by:                                                      March 31, 2000

 Scale-Up Production Regulatory Studies, GLP & GMP,
 Validation of Process completed by:                      July 31, 2000
 Phase I trial initiated by:                              December 1, 2000
 Phase I trial completed by:                              June 30, 2002

 Phase II trial initiated by:                             November 1, 2001
 Patient accrual completed by:                            June 30, 2003

 Phase III trial Initiated by:                            March 31, 2004
 Patient accrual completed by:                            June 30, 2004

 If Safety and Efficacy Indicate:
 Study evaluated for safety and efficacy by:              September 30, 2004
 Product License Application filed by:                    March 31, 2005


                                      29
<PAGE>


                       APPENDIX F- Commercial Development Plan

See NeoPharm, Inc.'s License Application dated August 12, 1998 and signed by
James Hussey R.Ph., M.B.A., Chief Executive Officer and President, 
for L-323-08/0


The NeoPharm, Inc.  "Commercial Development Plan" is attached to this Agreement
and/or hereby incorporated by reference into this Agreement.



                                      30
<PAGE>


                APPENDIX G - PHS Reimbursable Patent Prosecution Costs

            As set forth in Article 6 and Section 6.09 of this Agreement.

Patent Application(s) that are "Licensed Patent Rights" - licensed on an
exclusive basis:

     1.)    USPA 08/776,271, Entitled, "Mesothelium Antigen and Methods and
            Kits for Targeting It", Inventors: Dr. Ira H. Pastan (NCI) and Dr.
            Kai Chang NCI), Filed January 12,1998; and      
                                      ($29,000.00)

     2.)    USPA 60/067,175, Entitled "Antibodies, Including Pv Molecules, and
            Immunoconjugates~, having High Binding Affinity for Mesothelin and
            Methods for Their Use", Inventors Dr. Ira HI. Pastan (NCI) and Dr.
            Parka Chowdhury (NCI), Filed: December 1, 1997.      
                                       ($8,200.00)

Patent(s) or Patent Application(s) that are "Background Patent Rights" -
licensed on a non-exclusive basis:

            USPN 4,892,827 (= USSN 06/911,227), entitled, "Recombinant
            Pseudomonas Exotoxin: Construction of an Active Imrnunotoxin with
            Low Side Effects", inventors: Drs. Ira H. Pastan (NCI), Sankar
            Adhya (NCl), and David FitzGerald (NCI), - exuding any foreign
            equivalents corresponding to 4,892,827 (= USSN 06/911,227 ).
                                    ($5,000.00)

            USPN 5,747,654 (= USPA 08/077,252) entitled, "Recombinant
            DisulfideStabilized Polypeptide Fragments Having Binding
            Specificity", inventors: Drs. Ira H. Pastan (NCI), Byungkook Lee
            (NCI), Sun-Hee Jung (NCI), Ulrich Brinkmann (NC1). PHS is an owner
            of corresponding foreign rights in national phase prosecution in
            Canada, Australia, Japan, and the European Patent Office.
                                   ($135,054.00)

            USPA 09/002,753 (-Division of USPA 08/077,252), entitled
            "Recombinant Disulfide-Stabilized Polypeptide Fragments Having
            Binding Specificity", inventors: Drs. Ira H. Pastan (NC1),
            Byungkook Lee (NC1), Sun-Hee Jung (NCI) Ulrich Brinkmann (NCI).
                ($1,203.00)

            Total:                 ($175,457.00)


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