<PAGE>

                                                                    Exhibit 10.3

                                      CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
                                 PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
                           UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED


                                TUFTS UNIVERSITY
                          SPONSORED RESEARCH AGREEMENT

         This Agreement is entered into as of August 1, 1999, (the "Effective
Date"), by and between Photogen, Inc. ("Sponsor"), a Tennessee corporation,
having its principal place of business at 7327 Oak Ridge Highway, Knoxville,
Tennessee 37931 and Tufts University, a/k/a Trustees of Tufts College, a
Massachusetts not-for-profit corporation ("Tufts"). Sponsor and Tufts are
sometimes referred to as a "Party" or collectively, as the "Parties."

         WHEREAS, Sponsor desires to have Tufts undertake a research program in
accordance with the scope of work described in Section 1 and Protocols attached
hereto; and

         WHEREAS, the performance of such research is of mutual interest to
Sponsor and Tufts, and is consistent with the instructional, scholarship, and
research objectives of Tufts as a non-profit, tax-exempt, educational
institution;

         NOW, THEREFORE, the Parties agree as follows:

1.       THE RESEARCH. Tufts, through the Principal Investigator (as
         defined below) agrees to use its reasonable efforts to perform in a
         timely and expeditious manner one or more research projects pursuant
         and limited to one or more protocols to be agreed upon by the Parties
         (the "Research"). The first phase of the Research will consist of
         research pursuant to the terms of the protocol dated August 1, 1999
         attached hereto as Exhibit A ("Protocol-1"). Additional phases of the
         Research will be conducted pursuant to mutually agreed upon protocols
         which shall be subject in all respects to this Agreement and shall be
         designated by consecutive numbers (e.g., Protocol-2, Protocol-3, etc.).
         Revised budgets shall be mutually agreed upon for such additional
         protocols and shall form the basis for an amendment to this Agreement.

2.       THE TERM. The term of this Agreement and the Research shall be from
         August 1, 1999 through August 1, 2004, unless sooner terminated in
         accordance with the terms hereof.

3.       TERMINATION. This Agreement and the Research may be terminated as set
         forth below, in which case Sponsor's payment obligations will be
         adjusted as provided for in Section 5.

         (a)      In the event that either Party materially defaults in the due
                  performance of its respective obligations under this
                  Agreement, or in the event that any representation or warranty
                  by either Party in this Agreement or in the documentation or
                  data produced through the Research proves to be materially

                                       -1-

<PAGE>



                  false or misleading, and such default or breach is not cured
                  within thirty (30) days after written notice by the other
                  Party, then the non- defaulting Party may elect to terminate
                  the Research and this Agreement by giving written notice to
                  the defaulting Party, and this Agreement shall terminate upon
                  the defaulting Party's receipt of said notice. (Termination
                  for Cause).

         (b)      Tufts shall promptly advise Sponsor if for any reason David
                  Ruslander, DVM, DACVIM will not be available as the Principal
                  Investigator. If the Parties cannot agree on a qualified
                  scientist as a replacement as provided in Section 4 hereof,
                  either Party may terminate the Research and this Agreement as
                  provided in said Section 4 hereto.

         (c)      Notwithstanding anything in this Agreement to the contrary,
                  either Party may terminate this Agreement, without cause and
                  without liability except as provided hereinafter, on 90 days'
                  prior written notice to the other Party, in which event this
                  Agreement and the Research shall terminate on the 90th day
                  after delivery of such notice (Termination Without Cause). In
                  the event of such termination, Sponsor shall have an
                  obligation to continue for up to four (4) months beyond such
                  termination, salary support at the pretermination level of all
                  Ph.D., M.D., D.V.M. or equivalent personnel who have been
                  committed to the Research on half-time or greater basis,
                  provided Tufts uses reasonable efforts to reduce such costs to
                  Sponsor.

         (d)      The Parties recognize that the results of any particular
                  research cannot be guaranteed even through the use of Tufts's
                  reasonable efforts; therefore, it is specifically agreed that
                  the failure of Tufts to achieve specific research results or
                  to reach specific research milestones shall not constitute a
                  default or breach of this Agreement. Further, the Parties
                  agree that obligations under Sections 6, 7, 8, 10, 11, 12, 13,
                  15, 16, and 22 survive any termination of this Agreement or
                  the Research.

4.       CERTAIN PERSONNEL.  The Research will be under the overall direction of
         David M. Ruslander, DVM, DACVIM (the "Principal Investigator") for
         Tufts. Gerald L. Wolf, Ph.D., M.D. will serve as Co-Principal
         Investigator contingent upon his appointment by Tufts as a Research
         Professor. If Principal Investigator withdraws from or is unable to
         serve as Principal Investigator for any reason, Tufts will endeavor to
         obtain a successor to the satisfaction of Sponsor, in its sole
         discretion, but if Tufts is not able to do so within a reasonable
         period of time not to exceed six (6) months, then either Party may
         terminate the Research and this Agreement by written notice to the
         other any time after the expiration of that six (6)-month period and
         before Tufts has notified the Sponsor of the appointment of such
         successor. In addition to the Principal Investigator, Tufts shall use
         all reasonable efforts to provide the personnel identified on Exhibit B
         hereto who shall work under the supervision of the Principal
         Investigator on the Research, who together with the Principal
         Investigator are hereafter sometimes referred to as the
         "Investigators."

                                       -2-

<PAGE>



         In the event such personnel shall terminate their status as
         Investigators on the Research, the Principal Investigator jointly with
         Sponsor shall appoint replacements as Investigators on the Research.
         Each Party will obtain written agreements from those of its employees,
         independent contractors, consultants and similar persons involved in
         the Research (in the case of Tufts, all Investigators) causing such
         persons to be bound by the provisions of Sections 7, 8, 10 and 12 of
         this Agreement.

5.       PAYMENTS BY SPONSOR.

         (a)      INITIAL PAYMENT.  To fund Protocol-1 of the Research, Sponsor
                  agrees to make payments to Tufts in an aggregate amount during
                  the performance of Protocol-1 of the Research of $[****] (the
                  "Initial Protocol Payment") upon the schedule of payments
                  hereafter provided. The Parties estimate that the Initial
                  Protocol Payment should be sufficient to support the costs of
                  Protocol-1 of the Research for the performance of the
                  Research. Sponsor shall not be liable for any payment in
                  excess of the Initial Protocol Payment with respect to
                  Protocol-1 except as mutually agreed upon by the Parties
                  hereto in writing, nor shall Tufts be obligated to spend finds
                  on Protocol-1 of the Research other than those provided by
                  Sponsor. Tufts shall not be required to specifically account
                  to Sponsor for the application of the payments made by Sponsor
                  to Tufts hereunder nor be required to refund any portion of
                  any of those payments which are made except as provided in
                  this Section 5. Payments with respect to Protocol-1 shall be
                  made to Tufts by the Sponsor according to the following
                  schedule:

<TABLE>
<CAPTION>

                           AMOUNT                       DATE
                         <S>                    <C>
                         $[****]                August 31, 1999
                         $[****]                By December 31, 1999
                         $[****]                By April 30, 2000
                         $[****]                By August 31, 2000
</TABLE>

                  Checks shall be made payable to Trustees of Tufts College and
                  shall be sent to Sponsored Program Accounting, 200 Harrison
                  Avenue, Boston, MA, 02111, Attention: Mr. Robert Gawlak,
                  Manager, with each payment including the title of the Research
                  and the name of the Principal Investigator for identification
                  purposes. If Sponsor terminates Research under Section 3
                  hereof, Sponsor agrees

----------------

[****]            REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A
                  REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
                  UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

                                       -3-

<PAGE>




                  that, in addition to payment of the portions of the Initial
                  Protocol Payments payable up through the effective termination
                  date, Sponsor will reimburse Tufts for non-cancelable expenses
                  related to the Research and budgeted to be spent after the
                  termination date, which expenses shall be deemed to include
                  any fellowships or post-doctoral associate appointments, but
                  shall not exceed the total amount committed under this
                  Agreement. Any funds paid by Sponsor in excess of the amount
                  due hereunder will be returned to Sponsor by Tufts.

                  All funds provided by Sponsor under this Agreement may be used
                  at the discretion of Tufts in support of the work for the
                  Research. Any changes to the above payment schedule must be
                  agreed to in writing by the Parties.

         (b)      SUBSEQUENT PAYMENTS. The cost for subsequent work pursuant to
                  other protocols must receive the mutual written agreement of
                  the Parties.

6.       EQUIPMENT.  In addition to the Initial Protocol Payment, Sponsor will
         lease the equipment and provide the services described in Exhibit C
         (the "Equipment") and make the required lease payments, including
         service contracts, and any balloon, final or buy-out payments (the
         "Lease Payments") over the five year term of this Agreement. Sponsor
         shall make such Lease Payments even if this Agreement is terminated by
         Tufts for Cause or by Sponsor without Cause. If this Agreement is
         terminated (i) by Sponsor for Cause or (ii) by Tufts without Cause,
         then Tufts may elect on thirty (30) days' written notice to Sponsor to
         make all remaining Lease Payments and Tufts shall indemnify and hold
         Sponsor harmless from such remaining Lease Payments. In either such
         event, at the end of the five year term of this Agreement, title to the
         Equipment and title to any other equipment purchased by Tufts in the
         performance of the Research shall vest in Tufts. If Tufts does not
         elect to make such Lease Payments, as provided above, then Sponsor
         shall continue to be obligated for such Lease Payments; provided,
         however, that Sponsor shall take possession of and remove the Equipment
         listed in Exhibit C from the premises at Tufts and shall indemnify and
         hold Tufts harmless from such remaining Lease Payments.

7.       INTELLECTUAL PROPERTY RIGHTS OF THE PARTIES.  Neither Party (nor any
         Investigator) shall have any claim by virtue of this Agreement or the
         Research to any right, title or interest in any Invention, Trade Secret
         or Patent Rights (defined below) or any other intellectual property
         rights (a) issued to, owned or controlled by the other Party (or any
         Party in the case of an Investigator) prior to the date hereof, or (b)
         after the date hereof except any new Inventions, Trade Secrets or
         Patent Rights conceived and reduced to practice, constructively or
         actually in the performance of the Research and as specifically set
         forth in Section 8 below.


                                       -4-

<PAGE>



8.       INVENTIONS; PATENTING; LICENSES.

         (a)      The term "Invention" means a patentable discovery or invention
                  conceived and reduced to practice, constructively or actually
                  in the performance of the Research, including any novel
                  process, method, formula, machine, manufacture, composition of
                  matter or technology. The term "Sponsor Trade Secret" means
                  non-patented know-how, compositions, protocols, formulas,
                  processes and techniques, discoveries, machines, ideas,
                  compilations of information, computer programs (including
                  software and data used in all such programs), drawings,
                  specifications and technical information owned or developed by
                  Sponsor or its employees. The term "Patent Rights" means
                  patent applications and patent disclosures claiming an
                  Invention, together with all letters patent, reissuances,
                  continuations, divisionals, those claims in any continuations
                  in part of any patent application which claim an Invention
                  described in said patent application, revisions, extensions,
                  and reexaminations thereof.

         (b)      Inventions, Patent Rights and Sponsor Trade Secrets arising
                  out of the Research during the term of this Agreement and for
                  a period of 12 months thereafter if directly related to the
                  Research shall be owned as follows:

                  (1)      Tufts will own all such Inventions it, the Principal
                           Investigator or any other Tuft's Investigator
                           independently conceives (a "Tufts' Invention") and
                           all corresponding Patent Rights, subject to the
                           license if Sponsor exercises its option described in
                           subsection 8(f) below;

                  (2)      Tufts and Sponsor will jointly own all such
                           Inventions jointly conceived by Tufts, the Principal
                           Investigator or any other Investigator together with
                           Sponsor (a "Joint Invention") and all corresponding
                           Patent Rights, subject to the license if Sponsor
                           exercises its option described in subsection 8(f)
                           below; and

                  (3)      Sponsor will own all Inventions and Sponsor Trade
                           Secrets Sponsor independently conceives or owns and
                           all corresponding Patent Rights.

         (c)      With respect to a Tufts' Invention, Tufts will use its best
                  efforts, consistent with its current practices to cause all
                  Investigators to report such Invention and assign all of their
                  right, title and interest therein to Tufts; and with respect
                  to Joint Inventions, the Sponsor will cause its personnel and
                  Tufts will use its best efforts to cause each Investigator to
                  report such Invention and assign all of their right, title and
                  interest therein to Sponsor and Tufts as appropriate. Sponsor
                  and Tufts shall promptly advise the other in writing of each
                  Tufts' Invention or Joint Invention and shall cause their
                  Investigators and personnel, as applicable, to maintain
                  current and reasonably detailed records (in accordance with
                  customary academic research practice) as to possible Tufts and
                  Joint Inventions, which shall

                                       -5-

<PAGE>



                  be open to inspection by the other Party with reasonable
                  advance notice. The Parties shall discuss for up to 90 days
                  after the date an Invention is disclosed by one Party to the
                  other Party whether patent applications pertaining to such
                  Tufts or Joint Invention should be filed and in which
                  countries. All of the foregoing shall constitute proprietary
                  information subject to Section 10.

         (d)      Patent applications relating to Tufts' Inventions shall be
                  filed by Tufts at Tufts' sole discretion, and patent
                  applications relating to Joint Inventions shall be filed as
                  agreed by the Parties. All prosecution and maintenance costs
                  pertaining to patent applications covering a Tufts' or Joint
                  Invention that are filed by mutual agreement of the Parties
                  (including preparation, filing, prosecution, issuance and
                  maintenance costs) shall be borne by Sponsor. Tufts may select
                  counsel for such Tufts' or Joint Inventions, subject to
                  consultation with Sponsor. If Tufts declines to pursue filing
                  a patent application, Sponsor may select counsel. Tufts agrees
                  to cause Patent counsel selected by it to promptly provide
                  Sponsor with copies of all documents relating to the patent
                  application, to be available to Sponsor for consultation and
                  suggestions and for Sponsor to be otherwise fully informed
                  regarding all matters relating to the patent application and
                  its prosecution. If within the 90-day period provided for in
                  subsection 8(c) above, one Party states in writing that it is
                  not interested in filing patent applications on either a
                  Tufts' Invention or a Joint Invention (a "declining Party")
                  and the other Party (a "prosecuting Party") is interested in
                  filing such applications, the prosecuting Party shall be free
                  to select its own counsel, at its own expense, to file such
                  applications in the name(s) of the Parties to whom the
                  Inventors would be obliged to assign their rights and the
                  declining Party shall render the prosecuting Party, at the
                  prosecuting Party's expense, all necessary assistance in order
                  to facilitate filing and licensing of such Joint Inventions.
                  If Sponsor is the declining Party, Sponsor shall thereby have
                  waived its rights under subsection 8(f) below.

         (e)      The Parties agree to cooperate and work together in good faith
                  to effect the provisions of this Section 8. Each Party agrees
                  to execute and deliver (or cause to be executed and delivered)
                  all assignments and other instruments of transfer necessary to
                  effect the provisions of this Section 8.

         (f)      As to all Patent Rights relating to a Tufts' Invention or a
                  Joint Invention (except as waived by Sponsor in subsection
                  8(d) above), Tufts hereby grants Sponsor for the twelve (12)
                  months next following the first filing of patent applications
                  in any jurisdiction relating to such Invention, the
                  irrevocable first option to obtain a license granting Sponsor
                  the following rights and containing the following terms:

                  (1)      Sponsor shall for the life of all patent rights,
                           unless sooner terminated by either Party in
                           accordance with the terms of such a license
                           agreement, have a world-wide, exclusive (subject only
                           to subsection 8(i) below), royalty-bearing license
                           granting Sponsor the right to use the Invention, to
                           design,

                                       -6-

<PAGE>



                           make, have made, market lease, offer for sale, sell,
                           import and distribute products embodying or produced
                           through the use of the Invention, itself or through
                           third Parties by way of sublicense, and in all other
                           respects to use, sublicense, and commercialize the
                           Invention and any such product under all Patent
                           Rights. Pursuant to such license, Sponsor shall use
                           reasonable efforts to commercialize such products in
                           accordance with time limits and objectives consistent
                           with the market potential of the Invention and the
                           capacity and resources of the Sponsor. Sponsor will
                           be free to design the products, and select pricing
                           and marketing methods in its discretion.

                  (2)      Sponsor shall pay Tufts a reasonable royalty of an
                           amount consistent with industry standards for such
                           Invention.

                  (3)      Sponsor will use all reasonable efforts to defend,
                           through counsel selected by it, at its expense all
                           challenges to Patent Rights, including alleged
                           infringements, and Tufts will cooperate with Sponsor
                           in that regard, including joining any infringement
                           suit as a plaintiff (or counter or cross plaintiff)
                           if required by law.

                  (4)      Sponsor may abandon the license at any time by
                           express written notice to Tufts, in which case all
                           rights will revert back to Tufts and all license and
                           royalty obligations of Sponsor shall terminate.

                  (5)      In addition to the foregoing, any other commercially
                           reasonable terms standard for agreements between
                           universities and industry not inconsistent with the
                           foregoing.

         (g)      Sponsor may exercise the subsection 8(f) option by giving
                  written notice of exercise to Tufts during said twelve-month
                  period. Thereafter, Tufts and Sponsor each agree to negotiate
                  in good faith and to enter into a license agreement
                  incorporating the foregoing terms within six (6) months after
                  notice of exercise. If Sponsor elects not to give written
                  notice of exercise during such 12-month period, Tufts may
                  grant a license to such Invention and Patent Rights to any
                  other person or entity.

         (h)      To the best of its knowledge, Tufts is not prohibited or
                  prevented from granting such a license to Sponsor and such
                  license will not conflict with any agreement or court order by
                  which it is bound. Tufts agrees, during the term of the
                  Research hereunder, not to enter into any agreement with any
                  third party to fund Principal Investigator to conduct the
                  Research and not to enter into an agreement with a third party
                  under terms that will prevent Tufts from granting to the
                  Sponsor the license contemplated under subsection 8(f) above
                  or which would conflict with such license to Sponsor. Tufts
                  will use reasonable efforts consistent with

                                       -7-

<PAGE>



                  academic practice to monitor the activities of the Principal
                  Investigator in order to avoid conflicting activities that
                  would prevent Tufts from granting such a License.

         (i)      It is understood that Tufts may reserve the right to use a
                  Tufts' Invention or Joint Invention (as defined in this
                  Agreement) only for non-commercial research, clinical and
                  educational purposes, and that if federal funding supports the
                  Invention, Sponsor's license will be subject to the rights,
                  conditions and limitations imposed by U.S. law including
                  without limitation the royalty-free non- exclusive license
                  granted to the U.S. government (see 35 USC sec. 202 et. seq.
                  and regulations pertaining thereto). Tufts represents,
                  warrants and agrees with Sponsor that no federal funds will be
                  used to support the Research as of the date of this Agreement
                  and, if any such funds will be used in the future, Tufts will
                  give Sponsor at least 120 days' prior written notice of
                  Tufts's acceptance of federal funds.

9.       REPORTS. Progress reports by the Principal Investigator shall be:
         submitted to Sponsor each ninety (90) days after the Effective Date,
         and a final Research Report shall be submitted after completion of the
         Research with respect to each Protocol. Interim written progress
         reports may be provided on a mutually agreed schedule.

10.      CONFIDENTIALITY.

         (a)      Subject to the provisions of Section 12 Sponsor and Tufts each
                  agree that all Intellectual Property and all information
                  concerning research by the Parties shall be held by each Party
                  in confidence and not disclosed by a Party, or used by a Party
                  for any purpose other than the uses permitted under this
                  Agreement. Tufts agrees that all information disclosed to
                  Tufts' Principal and other Investigators concerning any
                  proprietary technology belonging to Sponsor that is identified
                  in writing by Sponsor as being confidential ("Sponsor
                  Confidential Information") shall be held by Tufts in
                  confidence and not disclosed by Tufts or used by it for any
                  purpose except to perform the Research in compliance with this
                  Agreement.

         (b)      Notwithstanding the foregoing, neither Party receiving
                  information ("Recipient") is required to keep confidential any
                  information received from the other Party ("Discloser") that:
                  (1) at the date of its disclosure by Discloser to Recipient
                  was known to Recipient; or (2) at the date of disclosure by
                  Discloser to Recipient was, or thereafter becomes through no
                  fault of Recipient, generally available to the public; or (3)
                  after its disclosure by Discloser to Recipient is also
                  received by the Recipient in good faith from a third Party not
                  under any duty to Discloser not to disclose it; or (4) after
                  its disclosure by Discloser to Recipient is independently
                  developed by employees of Recipient having no access to or
                  knowledge of it, which fact is supportable by documentary
                  evidence. Each Party agrees not to make any use or disclosure
                  in reliance on the exceptions of the immediately preceding
                  sentence unless it has given the other Party thirty (30) days'
                  prior

                                       -8-

<PAGE>



                  written notice of the reasons why the notifying Party believes
                  an exception applies.

         (c)      Sponsor agrees not to disclose any Sponsor Confidential
                  Information to Tufts' employees other than the Principal or
                  other Investigator(s), so as to provide for appropriate
                  control of the information.

11.      USE OF NAMES.  Sponsor agrees not to use the name of Tufts or any Tufts
         participant in the Research in any form of publicity or disclosure
         without Tufts' prior written consent, which may be withheld or
         withdrawn in Tufts' discretion at any time; provided, however, Tufts
         will make no objection to any proper reference by Sponsor to published
         technical publications by such participants; and, subject to
         confidentiality requirements and the conditions of the final sentence
         of Section 10(b), above, Tufts will make no objection to Sponsor's
         making such other disclosures as in the reasonable opinion of legal
         counsel are required as a matter of law and such general disclosures of
         this Agreement as may be desired by Sponsor for purposes of grant
         solicitations from governmental authorities. The foregoing
         notwithstanding, (a) Tufts and the Principal Investigator shall
         acknowledge Sponsor's support of the Research in their respective
         reports and publications, (b) Sponsor may disclose the existence and
         describe the terms of, and may file a copy of this Agreement (redacted
         to the extent Sponsor deems appropriate to ensure confidentiality) as
         an exhibit to its press releases, reports and governmental filings,
         including reports and filings with the U.S. Securities and Exchange
         Commission and relevant foreign government authorities; and (c) Sponsor
         may make reference to technical publications by the Principal
         Investigator or his co-authors. Any publicity or governmental filings
         of this Agreement pursuant to this Section 11 shall describe the
         relationship of the Parties accurately and appropriately, including the
         fact that the Research is being undertaken by Tufts in conjunction with
         Sponsor.

12.      PUBLICATION.

         (a)      The Research may be worthy of written or oral publication in
                  scholarly journals or at meetings. Such presentation or
                  publication shall be jointly authored by the Principal
                  Investigator and Sponsor's scientists in accordance with their
                  respective scientific contributions to the Research, if
                  applicable (otherwise, by the originating person). Prior to
                  publication, each Party will give the other the opportunity to
                  review and comment on any intended public disclosure covering
                  the Research, but in no event shall publication be permitted
                  without the express written approval of the Party from which
                  the results originated in accordance with prevailing academic
                  practice.

         (b)      In order to give Sponsor an opportunity to protect against
                  loss of confidentiality or patent rights as a result of
                  publication, the Principal Investigator and/or Tufts shall
                  submit copies of drafts of any article, abstract, submission
                  for publication or presentation on the Research conducted
                  which is written by any Investigator to

                                       -9-

<PAGE>



                  Sponsor for review and comment at least thirty (30) days prior
                  to the anticipated date of submission for publication or
                  presentation. In the absence of Sponsor's notice to the
                  contrary, Tufts shall be free to submit such drafts for
                  publication or presentation. If Sponsor notifies Tufts in
                  writing within such 30 day period that it needs additional
                  time to seek patent protection for the information, then Tufts
                  and the Principal Investigator, as the case may be, agree to
                  defer publication or presentation until such patent
                  application has been filed, or an additional 30 days,
                  whichever is sooner.

13.      NO TUFTS' WARRANTIES.  TUFTS MAKES NO REPRESENTATIONS AND EXTENDS
         NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,
         INCLUDING WITHOUT LIMITATION, TO CONDITION OR RESULTS OF THE RESEARCH
         OR ANY INVENT IONS OR PRODUCTS, WHETHER TANGIBLE OR INTANGIBLE,
         CONCEIVED, DISCOVERED, OR DEVELOPED UNDER THIS AGREEMENT; OR THE
         OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE
         RESEARCH OR ANY SUCH MENTION OR PRODUCTS. Without limitation of the
         foregoing generality, nothing contained herein or in any disclosure of
         the Research made by or on behalf of Tufts shall be construed as
         extending any representation or warranty with respect to the Research
         or the results to be obtained by the use of the Research or any
         products resulting therefrom, or that anything made, used, to sold by
         use of the Research or any part thereof, alone or in combination, will
         be free from infringement of patents of third Parties. TUFTS SHALL NOT
         BE LIABLE TO SPONSOR OR ANY OTHER PARTY, REGARDLESS OF THE FORM OR
         THEORY OF ACTION (WHETHER CONTRACT, TORT, INCLUDING NEGLIGENCE; STRICT
         LIABILITY, OR OTHERWISE), FOR ANY DAMAGES, INCLUDING WITHOUT
         LIMITATION, ANY DIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE,
         OR OTHER DAMAGES ARISING OUT OF OR RELATED TO THE RESEARCH, OR ANY
         PRODUCTS OR SERVICES FURNISHED OR NOT FURNISHED TUFTS, EVEN IF TUFTS
         HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.

14.      FORCE MAJEURE.  Tufts shall not be considered in breach of this
         Agreement to the extent any failure to perform any term or provision is
         caused by any reason beyond Tufts' reasonable control, or by reason of
         any of the following circumstances: labor or employee disturbances or
         disputes of any kind; accidents; laws, rules or regulations of any
         government (including, without limitation, export and import
         regulations); failure of any government approval required; disease;
         failure of utilities, mechanical breakdowns, material shortages or
         other similar occurrences; civil disorders or commotions acts of
         aggression, vandalism or other similar occurrences; or fire, floods,
         earthquakes, or acts of God.


                                      -10-

<PAGE>



15.      INDEMNITY.

         (a)      INDEMNITY.  Sponsor agrees to exonerate, indemnify, and hold
                  harmless Tufts, its trustees, officers, employees, students
                  and agents, from all costs, expenses (including attorneys'
                  fees), interest, losses, obligations, liabilities, and damages
                  paid or liability for which is incurred by any of said Parties
                  ("Losses"), and which arise out of or are in connection with
                  or are for the purpose of avoiding any and all claims,
                  demands, actions, causes of action, suits, appeals, and
                  proceedings ("Claims"), all whether groundless or not, or the
                  settlement thereof, based on any actual or alleged injuries,
                  damages' or liability of any kind whatsoever (including,
                  without limitation, personal injury, death, property damage,
                  breach of warranty, or breach of contract) arising, directly
                  or indirectly, out of any one or more of: any breach of
                  Sponsor of its representations, warranties, or agreements
                  hereunder; or any manufacture, marketing, possession, use,
                  sale, or other disposition by Sponsor, its licensees, or
                  anyone else claiming by, through, or under any of them, of any
                  products made by use of any of the Research or Tufts
                  Intellectual Property or any products furnished to Sponsor by
                  Tufts pursuant to this Agreement or in connection with any
                  license granted to Sponsor hereunder or referred to herein
                  (whether same occurs during or after the Research); or any
                  acquisition, possession, disclosure, or use of any of the
                  Research or Tufts Intellectual Property by Sponsor, its
                  licensees, or anyone else claiming by, through, or under any
                  of them; or the presence of Sponsor's officers, agents,
                  employees, invitees, or property or any thereof on Tufts'
                  premises or the installation, presence, or operation of the
                  Equipment prior to title vesting in Tufts; or the removal and
                  disposal of current Tufts' equipment under this Agreement. The
                  obligations of Sponsor under this Section 15 shall apply in
                  full force whether or not the Claims and any Losses resulted
                  or are alleged to have resulted in whole or in part from the
                  negligent acts or omissions of Tufts or any other Party
                  indemnified under this Section or from acts of omissions of
                  Tufts or such other Party for which they or any of them would
                  otherwise be liable on any other theory, including, without
                  limitation, any theory of warranty (whether express or
                  implied) or strict liability.

         (b)      DEFENSE; SETTLEMENT. Sponsor shall defend and control
                  negotiation of settlement of any Claim, with counsel of
                  Sponsor's choosing approved in advance by Tufts, which
                  approval shall not be unreasonably withheld. Tufts agrees to
                  cooperate fully in the defense of any Claim and may
                  participate in the defense with counsel of Tufts' choosing,
                  such separate counsel to be at Tufts' expense unless a
                  conflict of interest exists between Sponsor and Tufts with
                  respect to the defense, in which case Tufts' separate counsel
                  shall be at the Sponsor's expense. Any settlement by which
                  Tufts would incur any obligation or liability, whether for the
                  payment of money, the taking of any action, the refraining
                  from any action, or otherwise, shall require the advance
                  written consent of Tufts, which may be withheld in the sole
                  discretion of Tufts without relieving Sponsor of any of its
                  indemnification or other obligations hereunder.

                                      -11-

<PAGE>




16.      INSURANCE.

         (a)      COVERAGE.  Not later than thirty (30) days before the time
                  when Sponsor or any licensee of Sponsor or anyone claiming by,
                  through, or under any of them, shall make, use, or sell any
                  products made by use of any of the Research or Tufts
                  Intellectual Property or any products furnished to Sponsor by
                  Tufts pursuant to this Agreement or in connection with any
                  license granted to Sponsor hereunder, and at all times
                  thereafter until the expiration of all applicable statutes of
                  limitation pertaining to any manufacture, marketing,
                  possession, use, sale or other disposition of any of the
                  aforesaid products, Sponsor will, at Sponsor's expense, obtain
                  and maintain in full force and effect, comprehensive general
                  liability insurance, including product liability insurance,
                  protecting Tufts against all claims suits, obligations,
                  liabilities, and damages, based upon or arising out of actual
                  or alleged bodily injury, personal injury, death, or any other
                  damage to or loss of persons or property, caused by any such
                  manufacture' marketing, possession, use, sale, or other
                  disposition. Such insurance policy or policies shall be issued
                  by companies rated by A. M. Best as A VIII or better (or
                  other' companies acceptable to Tufts), shall name Tufts as an
                  additional named insured, shall have limits of at least
                  $1,000,000 per occurrence with an aggregate of at least
                  $3,000,000, shall be non-cancelable except upon thirty (30)
                  days' prior written notice to Tufts, and shall provide that as
                  to any loss covered hereby and also by any policies obtained
                  by Tufts itself, Sponsor's policies shall provide primary
                  coverage for Tufts and Tufts ' policies shall be considered
                  excess coverage for Tufts.

         (b)      CERTIFICATES; POLICIES.  Sponsor will forthwith after the
                  obtaining of such insurance required by Subsection 16(a),
                  obtain and deliver to Tufts certificates of and copies of, and
                  at all times thereafter, deliver without further demand
                  replacement certificates and copies of, all such insurance
                  policies that are in force and effect. As often as is
                  reasonably requested by Tufts, Sponsor will furnish to Tufts a
                  complete list, statement, and description of all insurance
                  called for in this Section, together with certificates and
                  copies of policies from each insurance company issuing any
                  thereof, that such insurance is in full force and effect, that
                  all premiums have been paid, and that such insurance will not
                  be canceled except upon thirty (30) days' prior written notice
                  to Tufts.

17.      ASSIGNMENTS. Neither Party shall assign this Agreement to another
         without the prior written consent of the other Party hereto. Subject to
         the foregoing, this Agreement shall be binding upon and inure to the
         benefit of the Parties hereto and their respective successors and
         permitted assigns.


                                      -12-

<PAGE>



18.      INDEPENDENT INQUIRY. As between the Parties hereto, Sponsor, Tufts, and
         the entities and individuals participating in the Research shall all be
         free to engage in similar research and inquiries made independently
         under other grants, contracts, or agreements with or involving Parties
         other than those to this Agreement; provided, however, that the
         confidentiality provisions of Section 10 shall be complied with
         notwithstanding the foregoing.

19.      NOTICES. All notices, requests, consents or other communications under
         this Agreement that are required to be in writing shall be delivered by
         courier, return receipt requested, or mailed by certified or registered
         mail, return receipt requested, charges and postage pre-paid, addressed
         to the Parties as follows

             If to Sponsor:       John T. Smolik
                                  Photogen, Inc.
                                  7327 Oak Ridge Highway
                                  Suite B
                                  Knoxville, TN 37931

             With a Copy to:      Grippo & Elden
                                  227 West Monroe Street
                                  Suite 3600
                                  Chicago, IL 60606
                                  Attn.:  Theodore W. Grippo

             If to Tufts:         Associate Provost for Research
                                  136 Harrison Avenue (75K-1520)
                                  Boston, MA 02111

             With a Copy to:      Gail Zamarchi
                                  Contract Officer
                                  Tufts University School of Veterinary Medicine
                                  200 Westboro Road
                                  N. Grafton, MA 01536

         or to such other address or addresses as may from time to time be given
         in writing by either Party to the other pursuant to the terms hereof.

20.      DATA. The original data generated as a result of the Research shall be
         provided to Sponsor promptly. Sponsor agrees to hold any data so
         disclosed in confidence provided Sponsor may use such data as it deems
         advisable, seeking regulatory approvals or for any other purposes,
         except to the extent that such use infringes upon a patent owned or
         controlled by Tufts not licensed to Sponsor. However, this provision
         shall not be interpreted to restrict Tufts's publication rights under
         Section 12 of this Agreement. The Principal Investigator shall keep
         reasonable and customary records of the Research and

                                      -13-

<PAGE>



         related data sufficient for Sponsor's regulatory approval activities
         and shall make such records available to Sponsor on reasonable request.

21.      APPROVALS. Tufts represents and warrants to Sponsor that this Agreement
         and the Research have received the required approvals of Tufts
         University and that no other approvals are required to authorize the
         execution and effectiveness of this Agreement. Sponsor represents and
         warrants to Tufts that this Agreement and the Research have been
         approved by its Board of Directors.

22.      OTHER PROVISIONS.

         (a)      INDEPENDENT CONTRACTORS. The Parties hereto shall be
                  independent contractors with respect to each other, and
                  neither shall be deemed to be the agent, principal, employee,
                  servant, joint venturer, or partner of the other for any
                  purpose.

         (b)      GOVERNING LAW. This Agreement shall be governed by and
                  construed in accordance with the laws of the Commonwealth of
                  Massachusetts without regard to conflict of law rules or
                  principles. Tufts and Sponsor each irrevocably consent and
                  submit to the jurisdiction of the courts of the state of New
                  York and the United States District Court for the District of
                  Manhattan, New York.

         (c)      SOLE AGREEMENT. This Agreement and any Exhibits and Protocols
                  attached hereto (each of which is hereby made part hereof by
                  this reference) constitute the entire agreement between the
                  Parties concerning the subject matter hereof and all prior
                  negotiations, representations, warranties, agreements, and
                  understandings related thereto are superseded hereby.

         (d)      SEVERABILITY. If any provision of this Agreement shall to any
                  extent be found to be invalid or unenforceable, the remainder
                  of this Agreement shall not be affected thereby, and any such
                  invalid or unenforceable provision shall be reformed so as to
                  be valid and enforceable to the fullest extent permitted by
                  law.

         (e)      HEADINGS. Headings of Articles, Sections, and subsections
                  included herein for convenience for reference only and shall
                  not be used to construe this Agreement.

         (f)      FINANCIAL CONFIDENTIALITY. Both Parties agree to keep the
                  financial terms of this Agreement confidential, unless
                  required by law to be disclosed.

         (g)      SPONSOR REPRESENTATIONS. Sponsor represents and warrants to
                  Tufts that:

                  (1)      Sponsor is a corporation organized and existing under
                           the laws of the state of Tennessee and has the power
                           and authority to enter into this Agreement.


                                      -14-

<PAGE>



                  (2)      Sponsor has taken all necessary corporate action to
                           authorize its execution and delivery of this
                           Agreement by the representatives of Sponsor who
                           carried out such execution and deliver, and to
                           authorize the performance by Sponsor of its
                           obligations hereunder.

                  (3)      Execution and delivery of this Agreement and its
                           performance by Sponsor will not result in any breach
                           or violation of, or constitute a default under, any
                           agreement, instrument, judgment, or order to which
                           Sponsor is a party or by which it is bound.

23.      INVESTIGATORS JOIN INTO AGREEMENT. Each person engaged by Tufts as an
         Investigator hereby joins into this Agreement and agrees to become
         bound to all terms applicable to him or her and in particular, Sections
         4, 7, 8, 10, and 12.



                                      -15-

<PAGE>


         IN WITNESS WHEREOF, the Parties hereto have hereunder executed and
delivered this Agreement to be effective as the date hereof.


TUFTS UNIVERSITY                            Photogen, Inc.


By:   /s/ Margaret E. Newell                By:  /s/ John T. Smolik
   ------------------------------               --------------------------------
                                                John T. Smolik
Margaret E. Newell                              Chairman and President
---------------------------------           ------------------------------------
Typed Name
                                            8/19/99
                                            ------------------------------------
Associate Provost for Research              Date
---------------------------------
Title

8/18/99
---------------------------------
Date




Agreed to and Accepted by the following Investigator(s) as his or her interests
and obligations may appear in the Agreement:

                                          Name(s)

Date:  8/11/99                               /s/ David Ruslander
       -----------------------           --------------------------------

Date:  _______________________           ________________________________

Date:  _______________________           ________________________________









                                      -16-