Document:

<PAGE>

                                                                   Exhibit 10.34

                               THEODORE TANNEBAUM
                            875 NORTH MICHIGAN AVENUE
                                   SUITE 2930
                             CHICAGO, IL 60611-1901

                                November 9, 1999

Photogen Technologies, Inc.
7327 Oak Ridge Highway, Suite B
Knoxville, TN  37931

                  RE:      AMENDED AND RESTATED STANDBY AGREEMENT

Gentlemen:

                  I understand that Photogen Technologies, Inc. (the "Company")
will be raising at least $5 million in additional financing during the fourth
quarter of 1999 to fund certain research projects and other working capital
needs. I am prepared to assure the success of that financing on the following
terms and conditions:

                  1. This Amended and Restated Standby Agreement, amends and
restates the Standby Agreement dated August 5, 1999 and executed August 9, 1999
by and between myself, Robert J. Weinstein, M.D., John T. Smolik as President of
the Company and individually, Craig Dees, Ph.D., Walter G. Fisher, Ph.D.,
Timothy Scott and Eric A. Wachter, Ph.D. attached hereto as Exhibit A.

                  2. During the fourth quarter of its 1999 fiscal year, the
Company agrees that it will offer to a number of accredited investors (within
the meaning of Regulation 501 under the Securities Act of 1933) a private
placement of Series B Convertible Preferred Stock, substantially in accordance
with the principal terms set forth in Exhibit B hereto and as set forth in the
Private Placement Memorandum dated November 15, 1999, resulting in not less than
$4 million of gross proceeds to the Company from the Preferred Stock. In
addition, at the request of the Company at any time before December 31, 2001, I
will purchase a secured term promissory note of the Company, in the principal
amount of $1 million, substantially in accordance with the principal terms set
forth in Exhibit C hereto. The total gross proceeds to the Company from the note
and Preferred Stock will be not less than $5 million. The parties to this
Agreement may change the terms of Exhibits B and C by mutual agreement.

<PAGE>

                                                THEODORE TANNEBAUM

Photogen Technologies, Inc.
November 9, 1999
Page 2

                  3. I agree (directly or through trusts or related entities I
control) to purchase the $1 million note, and up to $4 million of the Preferred
Stock to make up for any shortfall if total subscriptions from private placement
investors for the Preferred Stock are less than $4 million. The precise amount
of Preferred Stock I agree to purchase will be determined by subtracting the
total gross proceeds of subscriptions the Company receives for the Preferred
Stock from $4 million. If private placement investors agree to purchase $4
million or more of Preferred Stock, I will not be obligated to purchase any
Preferred Stock; however I will continue to be obligated to purchase the $1
million note.

                  4. Attached to this Agreement as Exhibit D is a letter from
Morgan Stanley Dean Witter confirming that I have sufficient resources to
fulfill the entire $5 million obligation under this Agreement.

                  5. Each of John T. Smolik, Eric A. Wachter, Craig Dees, Walter
Fisher and Timothy Scott (the "Tennessee Stockholders") agrees that for a period
of two years from August 9, 1999, he will not, directly or indirectly, Transfer
or agree or attempt to Transfer any interest in any common stock of the Company
now owned beneficially (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934) by him without my express prior written consent. It is
agreed that consent for Transfers by the Tennessee Stockholders will be granted
for all or part of the common stock whenever a requested Transfer will not be
expected to adversely affect the best interest of the Company in my judgment.
The term "Transfer" means any offer, sale, assignment, transfer, conveyance,
pledge, hypothecation, or other similar transaction (whether for consideration
or as a gift) of any Company common stock or any interest therein, including
purchasing, granting or creating any options, warrants, security convertible
into such person's common stock, or any other type of derivative security or
derivative transaction (including short sales, sales against the box or forward
agreements), or other transactions that have the effect of reducing the economic
risk of holding the Company's common stock.

                  6. I agree that for a period ending December 31, 2000, I will
notify Gilford Securities Incorporated and consult with Gilford on any proposed
Transfer by any of the Tennessee Stockholders pursuant to paragraph 5 above.

                  7. The transactions in paragraphs 2 and 3 above are subject to
the conditions that (a) definitive documentation is developed satisfactory to
the parties to this Agreement concerning the transactions described in
paragraphs 2 and 3, and (b) each of the parties identified in paragraph 5
complies with the provisions of that paragraph.

<PAGE>

                               THEODORE TANNEBAUM

Photogen Technologies, Inc.
November 9, 1999
Page 3

                  Please indicate your agreement to the foregoing by signing
below.

                                               Very truly yours,

                                               /s/ Theodore Tannebaum

Accepted and agreed to as of
 November 9, 1999.

Photogen Technologies, Inc.

By:/s/ JOHN SMOLIK
   -------------------------------
    John T. Smolik, President

     /s/ CRAIG DEES
-----------------------------------
Craig Dees, Ph.D.

     /s/ WALTER G. FISHER
-----------------------------------
Walter G. Fisher, Ph.D.

     /s/ TIMOTHY SCOTT
-----------------------------------
Timothy Scott

    /s/ JOHN SMOLIK
-----------------------------------
John T. Smolik

    /s/ ERIC A. WACHTER
------------------------------------
Eric A. Wachter, Ph.D.

<PAGE>

                               THEODORE TANNEBAUM

Photogen Technologies, Inc.
November 9, 1999
Page 4

Paragraph 6 acknowledged as of
November 9, 1999.

Gilford Securities Incorporated

By:  /s/ Robert Maley
     ------------------------

Its:  Senior VP
     -------------------------

<PAGE>
                                                                       EXHIBIT A

                               THEODORE TANNEBAUM
                            875 NORTH MICHIGAN AVENUE
                                   SUITE 2930
                             CHICAGO, IL 60611-1901

                                 August 5, 1999

Photogen Technologies, Inc.
7327 Oak Ridge Highway, Suite B
Knoxville, TN  37931

                              RE: STANDBY AGREEMENT

Gentlemen:

    Robert J. Weinstein, M.D. and I understand that Photogen Technologies, Inc.
(the "Company") will be raising at least $5 million in additional financing
during the fourth quarter of 1999 to fund certain research projects and other
working capital needs. Dr. Weinstein and I are prepared to assure the success of
that financing on the following terms and conditions:

    1. During the fourth quarter of its 1999 fiscal year, the Company agrees
that it will (a) offer to Dr. Weinstein and me one or more secured term
promissory notes, $1 million aggregate principal amount, substantially in
accordance with the principal terms set forth in Exhibit A hereto; and (b) offer
to a number of accredited investors (within the meaning of Regulation 501 under
the Securities Act of 1933) a private placement of Series A Convertible
Preferred Stock, substantially in accordance with the principal terms set forth
in Exhibit B hereto, resulting in not less than $4 million of gross proceeds to
the Company from the Preferred Stock. The total gross proceeds to the Company
from the notes and Preferred Stock will be not less than $5 million. The parties
to this Agreement may change the terms of Exhibits A and B by mutual agreement.

    2. Dr. Weinstein and I (directly or through trusts that each of us controls)
jointly and severally agree to purchase the $1 million of notes, and up to $4
million of the Preferred Stock to make up for any shortfall if total
subscriptions from private placement investors for the Preferred Stock are less
than $4 million. The precise amount of Preferred Stock Dr. Weinstein and I agree
to purchase will be determined by subtracting the total subscriptions

<PAGE>

                               THEODORE TANNEBAUM

Photogen Technologies, Inc.
August 5, 1999
Page 2

the Company receives for the Preferred Stock from $4 million. If private
placement investors agree to purchase $4 million or more of Preferred Stock, Dr.
Weinstein and I will not be obligated to purchase any Preferred Stock; however
we will continue to be obligated to purchase the $1 million of notes.

    3. Attached to this Agreement as Exhibit C is a letter from Morgan Stanley
Dean Witter confirming that I have sufficient resources to fulfill the entire $5
million obligation under this Agreement.

    4. Each of John T. Smolik, Eric A. Wachter, Craig Dees, Walter Fisher and
Timothy Scott (the "Tennessee Stockholders") agrees that for a period of two
years from the date hereof he will not, directly or indirectly, Transfer or
agree or attempt to Transfer any interest in any common stock of the Company now
owned beneficially (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934) by him without the express prior written consent of both
Dr. Weinstein and me. It is agreed that our consent for Transfers by the
Tennessee Stockholders will be granted for all or part of the common stock
whenever a requested Transfer will not be expected to adversely affect the best
interest of the Company in our judgment. The term "Transfer" means any offer,
sale, assignment, transfer, conveyance, pledge, hypothecation, or other similar
transaction (whether for consideration or as a gift) of any Company common stock
or any interest therein, including purchasing, granting or creating any options,
warrants, security convertible into such person's common stock, or any other
type of derivative security or derivative transaction (including short sales,
sales against the box or forward agreements), or other transactions that have
the effect of reducing the economic risk of holding the Company's common stock.

    5. The transactions in paragraphs 1 and 2 above are subject to the
conditions that (a) the Company's Board of Directors approves the transactions
in paragraph 1 (including the separate approval of Lester H. McKeever, Jr. as a
disinterested director), (b) definitive documentation is developed satisfactory
to the parties to this Agreement concerning the transactions described in
paragraphs 1 and 2, and (c) each of the parties identified in paragraph 4
complies with the provisions of that paragraph. The provisions of paragraph 4
will become effective immediately, and are subject to the condition subsequent
that the Company's Board approves the transactions in paragraph 1 (as set forth
in clause (a) of this paragraph).

<PAGE>

                               THEODORE TANNEBAUM

Photogen Technologies, Inc.
August 5, 1999
Page 3

        Please indicate your agreement to the foregoing by signing below.

                                Very truly yours,

         /S/ THEODORE TANNEBAUM                    /S/ ROBERT J. WEINSTEIN
        ------------------------                  ---------------------------
           Theodore Tannebaum                      Robert J. Weinstein, M.D.

Accepted and agreed to as of
August 9, 1999.

Photogen Technologies, Inc.

By:    /S/ JOHN SMOLIK
   -----------------------------------
         John T. Smolik, President

       /S/ CRAIG DEES
   -----------------------------------
         Craig Dees, Ph.D.

       /S/ WALTER G. FISHER
   -----------------------------------
         Walter G. Fisher, Ph.D.

       /S/ TIMOTHY SCOTT
   -----------------------------------
         Timothy Scott

       /S/ JOHN SMOLIK
   -----------------------------------
         John T. Smolik

       /S/ ERIC A. WACHTER
   -----------------------------------
         Eric A. Wachter, Ph.D.

<PAGE>

                                                                       EXHIBIT A

<TABLE>

<CAPTION>

                                                    TERM SHEET

                                          $1 MILLION TERM CREDIT FACILITY

<S>                       <C>
Borrower:                 Photogen, Inc. ("Borrower").

Lenders:                  Theodore Tannebaum and Robert J. Weinstein,
                          M.D. ("Lenders").

Guarantor:                Photogen Technologies, Inc. ("PTI").

Principal amount:         $1,000,000.00.

Purpose:                  To fund working capital requirements in connection
                          with pre-clinical research and clinical testing of
                          Borrower's technologies.

Advances:                 The credit facility may be utilized in advances of
                          $100,000 increments, upon 15 days' prior written
                          notice to the Lenders. Once repaid, no portion of the
                          credit facility can be reborrowed.

Interest:                 The daily rate equivalent of 6% per annum calculated
                          on the basis of a 360-day year.

Amortization; maturity:   The notes will be payable over five
                          years. Interest only will be payable on an
                          annual basis until maturity, at which time
                          all outstanding principal and interest will
                          be due and payable.

Prepayment:               Prepayment will be permitted at any time and without
                          penalty.

</TABLE>

                                       1
<PAGE>

<TABLE>
<S>                       <C>
Collateral:               The credit facility will be secured by a first
                          priority lien on all of the Borrower's present and
                          future real and personal properties, including all:

                              -    accounts, chattel paper, tax refunds,
                                   contract rights, options, leases, leasehold
                                   interests, letters of credit, instruments,
                                   documents, documents of title;

                              -    patents, trade secrets, know how, copyrights,
                                   trademarks, trade names, software, data,
                                   licenses, goodwill;

                              -    general intangibles, beneficial interests;

                              -    goods, machinery, equipment, vehicles,
                                   furniture, inventory;

                              -    securities, cash or cash equivalents;

                              -    real estate and improvements, fixtures; and -
                                   products and proceeds (including without
                                   limitation insurance and litigation proceeds)
                                   of the foregoing, all accessions to the
                                   foregoing and all substitutions, renewals,
                                   improvements and replacements of and
                                   additions to the foregoing.

                         The lien will be granted to Dr. Weinstein as collateral
                         agent for the Lenders. The lien will be perfected by
                         appropriate filings with the secretary of state, county
                         recorder and U.S. Patent and Trademark Office.

Events of Default:       Upon the occurrence of any of the
                         following events, the notes will become immediately due
                         and payable and the Lenders will have the right to,
                         among other things, foreclose on the Collateral:

                              -    failure to pay interest or principal under
                                   the notes when due;
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                       <C>
                              -    a material default by the Borrower or PTI in any
                                   agreement or obligation to the Lenders or to
                                   any third party which is not cured within
                                   the time period, if any, permitted in the
                                   governing instrument for cure; or

                              -    the Borrower, PTI or any of PTI's other
                                   subsidiaries: becoming subject to bankruptcy
                                   proceedings (which, if filed against the
                                   Borrower, are not dismissed within 90 days),
                                   making a general assignment for the benefit
                                   of creditors, or authorizing such entity to
                                   seek the protection of or relief under the
                                   U.S. Bankruptcy Code or similar state laws
                                   relating to insolvency, reorganization or
                                   any other proceeding to modify or alter the
                                   rights of such entity's creditors.

Miscellaneous:           All terms, rights and other provisions of the
                         credit facility are subject to final negotiation and
                         the execution and delivery of mutually agreeable
                         definitive documentation, and approval by the
                         disinterested directors of the Borrower and PTI.
                         Documentation will include a loan and security
                         agreement, a promissory note, a collateral agency
                         agreement and a guaranty.
</TABLE>

                                       3
<PAGE>

                                                                       EXHIBIT B

                                   TERM SHEET

                      SERIES A CONVERTIBLE PREFERRED STOCK

<TABLE>
<S>                          <C>
Issuer:                       Photogen Technologies, Inc., a Nevada corporation
                              (the "Company").

Series and class:             Series A Convertible Preferred Stock, $.01 par
                              value per share ("Series A Preferred Stock").

Number of shares offered:     A minimum of 400,000 shares and a maximum of
                              1,000,000 shares.

Price:                        Shares to be priced at 110% of the Common Stock
                              market price on the date of pricing.  The Company
                              will receive a minimum of $4 million in gross
                              proceeds.

Offering:                     The Series A Preferred Stock will be offered
                              through a private placement only to accredited
                              investors.

Use of proceeds:              -    Purchasing clinical trial treatment systems;

                              -    Conducting clinical trials; - Designing and
                                   building clinical trial equipment;

                              -    Developing manufacturing process and
                                   formulate clinical trial supplies of drug;

                              -    Hiring FDA consultants and preparing FDA
                                   submissions;

                              -    Funding addition of business development
                                   personnel;

                              -    Adding temporary space to house new staff;

                              -    Other general operating expenses.

Dividends:                    Dividends will be paid-in-kind in additional
                              shares of Series A Preferred Stock at the rate of
                              6% per annum, resulting in each share of Series A
                              Preferred Stock receiving an annual dividend of
                              0.06 additional shares of Series A Preferred
                              Stock. Dividends will be payable annually
                              beginning on the first anniversary of the closing.
</TABLE>

                                      -1-
<PAGE>

<TABLE>
<S>                          <C>
Liquidation:                  The Series A Preferred Stock will be entitled to
                              a liquidation preference in an amount equal to the
                              purchase price per share of Series A Preferred
                              Stock.

Redemption:                   At any time after January 1, 2002, the Company may
                              redeem the Series A Preferred Stock for an amount
                              equal to 1.4 times the Series A Preferred Stock
                              purchase price per share.

Voting rights:                Each share of Series A Preferred Stock
                              will be entitled to one vote per share. Holders of
                              Series A Preferred Stock vote together with the
                              Common Stock, except as provided by the Articles
                              of Incorporation (see "Protective provisions,"
                              below) or by law.

Conversion:                   The Series A Preferred Stock will be convertible
                              into Common Stock at any time at the election of
                              the holder thereof, at the following ratios:
</TABLE>

<TABLE>
<CAPTION>
                                              ONE SHARE OF SERIES A
IF THE CONVERSATION TAKES PLACE:              PREFERRED WILL CONVERT INTO:
--------------------------------              ----------------------------
<S>                                           <C>
Before the first anniversary of the           1.0 shares of common stock
closing

After the first and before the                1.2 shares of common stock
second anniversary of the closing

After the second and before the               1.4 shares of common stock
fifth anniversary of the closing
</TABLE>

<TABLE>
<S>                          <C>
                              The Series A Preferred Stock will be automatically
                              and mandatorily converted into Common Stock:

                              -     Upon the approval of 66.66% of the holders
                                    Series A Preferred Stock;

                              -     Immediately prior to the closing of a firm
                                    commitment underwritten public offering of
                                    the Company's Common Stock (however, if the
                                    public offering occurs before the first
                                    anniversary of the closing, the conversion
                                    ratio will be 1.2 shares of Common Stock for
                                    each share of Series A Preferred Stock,
                                    rather than 1.0);
</TABLE>

                                      -2-
<PAGE>

<TABLE>
<S>                          <C>
                              -     At the discretion of the Board of Directors,
                                    if the holders of a majority of the
                                    outstanding Series A Preferred Stock do not
                                    approve the issuance of a security senior to
                                    the Series A Preferred Stock, or any other
                                    transaction by the requisite vote (including
                                    those described in "Protective provisions,"
                                    below), which has been approved by the
                                    Company's directors; or

                              -    At the discretion of the Board of Directors
                                   at any time after the fifth anniversary of
                                   the closing at a conversion ratio of 1.3
                                   shares of Common Stock for each share of
                                   Series A Preferred Stock.

Anti-dilution:                Shares of Series A Preferred Stock will be subject
                              to typical proportional adjustment in the event of
                              a stock split, stock dividend or similar event.
                              The Series A Preferred Stock is also protected
                              from dilution resulting from the Company issuing
                              Common Stock (or equivalent securities) at a lower
                              price than the Series A Preferred Stock, based on
                              the "weighted average" method of anti-dilution
                              adjustment.  No anti-dilution adjustments will be
                              made for issuances of Common Stock:  upon
                              conversion of Series A Preferred Stock; to
                              officers, directors, employees, or consultants to
                              the Company pursuant to an option plan approved by
                              the Board of Directors covering up to 2 million
                              shares; to vendors, licensors, lenders and others
                              up to 500,000 shares of Common Stock; and similar
                              transactions.

Protective provisions:        In addition to matters requiring a class vote
                              under Nevada corporate law, the approval or
                              consent of the holders of 66.66% or more of the
                              Series A Preferred Stock, voting separately as a
                              class, is required for the Company to: redeem any
                              of its Common Stock (with exceptions for
                              redemptions from terminating employees, etc.);
                              sell all or substantially all of the Company's
                              assets, merge or consolidate (except where no
                              change of control is effected); reclassify or
                              recapitalize its stock; permit any subsidiary to
                              sell any stock that will result in a change of
                              control of that subsidiary; increase or decrease
                              the number of authorized shares of Series A
                              Preferred Stock; amend the Company's Articles of
                              Incorporation or Bylaws; or reduce the dividend
                              rates, liquidation preference or redemption price
                              on the Series A Preferred Stock.

Short sale restriction:       No holder of Series A Preferred Stock may engage
                              in short sales of the Company's Common Stock.
</TABLE>

                                       -3-

<PAGE>

<TABLE>
<S>                          <C>
Miscellaneous:                No fractional shares of Series A Preferred Stock
                              or Common Stock will be recognized or issued.

                              Closing to occur on or about October 15, 1999.

                              All terms, rights, preferences, etc. of the Series
                              A Preferred Stock are subject to final negotiation
                              between the Company and the private placement
                              investors, and to Board approval.
</TABLE>

                                      -4-

<PAGE>

                                                                       EXHIBIT B

               CERTIFICATE OF DESIGNATION, PREFERENCES, AND RIGHTS
                                       OF
                      SERIES B CONVERTIBLE PREFERRED STOCK
                                       OF
                           PHOTOGEN TECHNOLOGIES, INC.

                  We, John T. Smolik and Eric A. Wachter, the President and the
Secretary, respectively, of Photogen Technologies, Inc., a corporation organized
and existing under the Nevada Revised Statutes (the "Corporation"), in
accordance with the provisions of Title 7, Chapter 78 of the Nevada Revised
Statutes thereof, DO HEREBY CERTIFY:

                  That pursuant to the authority conferred upon the Board of
Directors of the Corporation (the "Board of Directors") by the Restated Articles
of Incorporation of the said Corporation, the said Board of Directors on
November ___, 1999 adopted the following resolutions, pursuant to Article Fourth
of the Corporation's Restated Articles of Incorporation and Title 7, Chapter 78
of the Nevada Revised Statutes, creating one series of shares of Preferred Stock
designated as Series B Convertible Preferred Stock:

                  "RESOLVED, that pursuant to Article Fourth of the
Corporation's Restated Articles of Incorporation, a series of the class of
authorized Preferred Stock be, and it hereby is, created and the voting powers,
designation, preferences, limitations, restrictions, relative rights of the
shares of such series are as follows:

                  1.       GENERAL MATTERS.

                  a. TITLE OF SERIES. A series of Preferred Stock (as defined in
the Restated Articles of the Corporation) shall be designated as the Series B
Convertible Preferred Stock (the "Series B Preferred Stock").

                  b. NUMBER OF SHARES. The number of authorized shares of Series
B Preferred Stock shall be ____________________ (_____________) shares, par
value $.01 per share.

<PAGE>

                  c. FRACTIONAL SHARES. For purposes of dividends and the Series
B Liquidation Preference (as defined below) only, the Corporation will recognize
fractional shares. For all other purposes (including Conversion Rights (as
defined below), voting rights or otherwise) all calculations resulting in a
fractional share with respect to Series B Preferred Stock, or Common Stock (as
defined in the Restated Articles of Incorporation) issuable in connection
therewith, provided for in this Certificate of Designation shall be increased to
the nearest whole share of Series B Preferred Stock or Common Stock, as the case
may be (after aggregating all shares of Series B Preferred Stock or Common Stock
into which such shares are convertible, as applicable). Under no circumstances
will any fractional share or scrip, or cash in lieu thereof, be issued or
recognized; provided, however, that to the extent fractional shares are
recognized for purposes of dividends and the Series B Liquidation Preference,
such fractional shares will be reflected as a book entry on the stock transfer
records of the Corporation (which records shall be conclusive and binding absent
manifest error).

                  d. PROHIBITION AGAINST SHORT SALES. No holder of Series B
Preferred Stock shall, so long as such person is a holder of Series B Preferred
Stock, engage in or agree or attempt to engage in any "short sale" (as such term
is defined in Rule 3b-3 promulgated under the Securities Exchange Act of 1934,
as amended, or any successor rule thereto) of the Corporation's Common Stock. As
a condition to the ability or right of any holder of Series B Preferred Stock to
participate in any redemption or conversion (whether voluntary or, to the extent
provided in Section 6(d)(iii) below, mandatory conversion), notwithstanding any
contrary provision in this Certificate of Designation or otherwise, such holder
shall certify to the Corporation's reasonable satisfaction that such holder has
complied with this Section 1(d).

                  e. SENIOR SECURITIES. The Board of Directors is authorized to
fix or alter the rights, preferences, privileges, and restrictions granted to or
imposed upon additional series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or of any of them.
Subject to compliance with applicable protective voting rights which have been
or may be granted to the Preferred Stock or any series thereof in Certificates
of Designation (including Section 10 hereof), the Corporation's Restated
Articles of Incorporation or the Nevada General Corporation Law ("Protective
Provisions"), the rights, privileges, preferences, and restrictions of any such
additional series of Preferred Stock may be subordinated to, PARI PASSU with, or
senior in any respect to any of those of the Series B Preferred Stock or any
future class or series of Preferred Stock. Such senior securities are referred
to as "Senior Securities."

                                       -2-

<PAGE>

                  2.       DIVIDENDS.

                  a. The holders of record on the Series B Dividend Record Date
(as defined below) of the outstanding Series B Preferred Stock shall be entitled
to receive dividends, as and when declared by the Board of Directors out of
funds legally available therefor. Record holders of Series B Preferred Stock on
a Series B Dividend Record Date shall be entitled to one dividend-in-kind
payable each year in additional shares of Series B Preferred Stock at the rate
of six percent (6%) per annum, resulting in the holder of each share of Series B
Preferred receiving a dividend of 0.06 additional shares of Series B Preferred
Stock with respect to each share of Series B Preferred Stock. Each such dividend
shall be payable on or about each January 15 (a "Series B Dividend-in-Kind
Payment Date") (or if such date is not a business day, the dividends due on such
Series B Dividend-in-Kind Payment Date shall be paid on the next succeeding
business day) beginning on January 15, 2001. Such dividends shall be cumulative
and shall accrue on each share of Series B Preferred Stock from the date of such
share's issuance; provided, however, that dividends shall cease to accrue on a
share of Series B Preferred Stock following such share's redemption or
conversion, as the case may be. Dividends on the Series B Preferred Stock shall
be payable to holders of record as they appear on the stock register of the
Corporation on such record date, not less than 15 nor more than 60 days
preceding a dividend payment date (including a Series B Dividend-in-Kind Payment
Date), as shall be fixed by the Board of Directors (a "Series B Dividend Record
Date"). Except in the case of a redemption under Section 4 or mandatory
conversion under Section 6(c), below (in which case dividends shall accrue and
be paid through the date of such event), no dividends shall be payable on the
Series B Preferred Stock for any partial dividend period.

                  b. Subject to any rights of Senior Securities, no dividends or
other distributions shall be made with respect to the Common Stock unless at the
same time a dividend or distribution is paid with respect to all outstanding
shares of Series B Preferred Stock in an amount equal to the amount paid with
respect to a share of Common Stock as though the holders of the Series B
Preferred Stock were the holders of the number of shares of Common Stock of the
Corporation into which their respective shares of Series B Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.

                  c. In the event the Corporation shall declare a distribution
payable in securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options or
rights to purchase any such securities or evidences of indebtedness, then,
subject to any rights of Senior Securities, in each such case the holders of the
Series B Preferred Stock shall be entitled to a proportionate share of any such
distribution as though the holders of the Series B Preferred Stock were the
holders of the number

                                      -3-

<PAGE>

of shares of Common Stock of the Corporation into which their respective shares
of Series B Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such distribution.

                  3.       Liquidation Preference.

                  a. In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the Series
B Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock by reason of their ownership thereof, but after and
subject to the payment in full of all amounts required to be distributed to the
holders of the Corporation's Series A Convertible Exchangeable Preferred Stock
(the "Series A Preferred Stock") and any other Senior Securities ranking on
liquidation prior and in preference to the Series B Preferred Stock, the amount
of $__ per share [THE PURCHASE PRICE PER SHARE FOR THE SERIES B PREFERRED STOCK]
(as adjusted for any stock dividends, combinations or splits with respect to
such shares) ("Series B Liquidation Preference"), respectively. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series B Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid Series B Liquidation Preference,
then the entire assets and funds of the Corporation legally available for
distribution to the holders of Series B Preferred Stock shall be distributed
ratably among the holders of the Series B Preferred Stock in proportion to the
Series B Liquidation Preference each such holder is otherwise entitled to
receive.

                  b. After payment to the holders of the Series A Preferred
Stock, the Series B Preferred Stock and any Senior Securities of the amounts set
forth in Section 3(a) above, the entire remaining assets and funds of the
Corporation legally available for distribution, if any, shall be distributed pro
rata among the holders of the Common Stock and all classes and Series of
Preferred Stock in proportion to the shares of Common Stock then held by them
and the shares of Common Stock which they have the right to acquire upon
conversion of the shares of Preferred Stock then held by them.

                  c. For purposes of this Section 3, a liquidation, dissolution
or winding up of the Corporation shall be deemed to be occasioned by, or to
include, (i) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including any reorganization,
merger or consolidation, but excluding any merger effected exclusively to change
the domicile of the Corporation), or (ii) a sale of all or substantially all of
the assets of the Corporation, unless in either case (1) shareholders of record
of the Corporation as constituted immediately prior to such acquisition or sale
will, immediately after such acquisition or sale (by virtue of securities issued
as consideration for the acquisition or sale or

                                      -4-

<PAGE>

otherwise) hold a majority of the voting power of the surviving or acquiring
entity, or (2) the holders of a majority of the outstanding Series B Preferred
Stock agree by vote or consent to exclude such acquisition or sale from this
provision.

                  d. Whenever the distribution provided for in this Section 3
shall be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.

                  4.       REDEMPTION.

                  a. Provided shares of Common Stock issuable on conversion of
Series B Preferred Stock may be resold by the holder thereof either (i) without
registration pursuant to Rule 144(k) under the Securities Act of 1933, as
amended, (the "Securities Act"), or (ii) pursuant to an effective registration
statement, and provided further that an amount equal to the liquidation
preference of all Senior Securities (including the Series A Preferred Stock) is
paid in full, the Corporation may at any time after January 1, 2002 at its
option and in its sole discretion, redeem, from any source of funds legally
available therefor, all or any part of the issued and outstanding Series B
Preferred Stock. To effect such redemption, the Corporation shall pay in cash in
exchange for the shares of Series B Preferred Stock to be redeemed a sum equal
to $_________ [PURCHASE PRICE X 1.4] per share of Series B Preferred Stock (as
adjusted for any stock dividends, combinations or splits with respect to such
shares) plus all declared or accumulated but unpaid dividends on such shares
(the "Series B Redemption Price"). Any redemption effected pursuant to this
Section 4 shall be made on a PRO RATA basis among the holders of the Series B
Preferred Stock in proportion to the shares of Series B Preferred Stock then
held by them.

                  b. The term "Series B Redemption Date" shall refer to the
effective date on which the Corporation redeems shares of Series B Preferred
Stock. At least 30 but no more than 60 days prior to each Series B Redemption
Date, written notice shall be mailed, first class postage prepaid, to each
holder of record (at the close of business on the business day next preceding
the day on which notice is given) of the Series B Preferred Stock to be
redeemed, at the address last shown on the records of the Corporation or its
transfer agent for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder, the
Series B Redemption Date, the Series B Redemption Price, the place at which
payment may be obtained and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "Redemption Notice").
Except as provided in Section 4(c), on or after the Series B Redemption Date,
each holder of Series B Preferred Stock to be redeemed shall surrender to this
Corporation the certificate or certificates representing such shares, in the
manner and at the place designated in the Redemption Notice, and thereupon the
aggregate Series B

                                      -5-

<PAGE>

Redemption Price of such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be canceled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.

                  c. From and after the Series B Redemption Date, unless there
shall have been a default in payment of the Series B Redemption Price, all
rights of the holders of shares of Series B Preferred Stock designated for
redemption in the Redemption Notice as holders of Series B Preferred Stock
(except the right to receive the Series B Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or its transfer agent or be deemed to be outstanding for any purpose
whatsoever.

                  5. VOTING RIGHTS. Each holder of shares of the Series B
Preferred Stock shall be entitled to one vote for each share of Common Stock
into which such Series B Preferred Stock could then be converted (subject to
Section 1(c) above regarding fractional shares). Except as otherwise expressly
provided in this Certificate of Designation, the Restated Articles of
Incorporation or as required by the Nevada General Corporation Law, the holders
of Series B Preferred Stock shall vote together with the Common Stock as a
single class and shall (subject to Section 6(e) below) be entitled to notice of
any stockholders' meeting in the same manner as holders of Common Stock in
accordance with the Bylaws of the Corporation.

                  6.       CONVERSION.

                  a. CONVERSION RIGHTS. Each holder of Series B Preferred Stock
shall have the right to convert the Series B Preferred Stock into Common Stock
on and subject to the provisions of Section 6 and Section 7 of this Certificate
of Designation ("Series B Conversion Rights"). In the event of a liquidation of
the Corporation, all Series B Conversion Rights shall terminate at the close of
business on the fifth full business day preceding the date fixed for the payment
of any amounts distributable on liquidation to the holders of Series B Preferred
Stock.

                  b. OPTIONAL CONVERSION. Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share and on or prior to the fifth day prior to the
Series B Redemption Date, if any, as may have been fixed in any Redemption
Notice with respect to the Series B Preferred Stock, at the office of the
Corporation or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing (i) (x)
the Series B Conversion Price times 1.0 by (y) the Series B Conversion Price if
the conversion takes place at any time on or before December 31, 2000; (ii) (x)
the Series B Conversion Price times 1.2 by

                                      -6-

<PAGE>

(y) the Series B Conversion Price if the conversion takes place at any time
between January 1, 2001 through December 31, 2001; and (iii) (x) the Series B
Conversion Price times 1.4 by (y) the Conversion Price if the conversion takes
place at any time on or after January 1, 2002. The "Series B Conversion Price"
shall initially be $____ [the Series B Preferred Stock purchase price], and
shall be adjusted as provided in Section 7, below (provided, however, that the
Series B Conversion Price shall not exceed $_____ per share).

                  c. MANDATORY CONVERSION. The Corporation may at its option
require the holders of all outstanding shares of Series B Preferred Stock to
convert their Series B Preferred Stock into the number shares of Common Stock
into which such Series B Preferred Stock would be convertible pursuant to
Section 6(b) (subject, however, to the last sentence of this Section 6(c)) upon
the occurrence of any of the following:

                    (1) The date specified by the vote or written consent or
agreement of holders of a majority of the shares of Series B Preferred Stock
then outstanding;

                    (2) Immediately prior to the closing of the sale of the
Corporation's Common Stock in a firm commitment, underwritten public offering
registered under the Securities Act, which results in the Corporation receiving
$20,000,000 or more in gross proceeds (excluding underwriter's discounts,
commissions and similar compensation), other than a registration relating solely
to a transaction under Rule 145 under the Securities Act or to a stock option or
other type of employee benefit plan of the Corporation;

                    (3) At the discretion of the Board of Directors, if (A)
holders of the requisite majority of outstanding shares of Series B Preferred
Stock do not approve (by vote or written consent) of the creation, authorization
and/or issuance of any Special Senior Security (defined below) upon which such
holders are entitled to vote as a separate series or class pursuant to Section
10 below or pursuant to the Nevada General Corporation Law, but (B) such
transaction has been approved and recommended by the Board of Directors. A
"Special Senior Security" means any Senior Security or PARI PASSU security which
is issued to any vendor, licensor or other person or entity engaged in a joint
venture or other commercial or similar transaction or relationship with the
Corporation or any of the Corporation's affiliates, the bona fide purpose of
which transaction is (in the good faith business judgment of the Board of
Directors) to develop the Corporation's business and not solely to provide
financing to or invest in the securities of the Corporation;

                    (4) At the discretion of the Board of Directors, at any time
after January 1, 2005.

                                      -7-

<PAGE>

Notwithstanding anything herein to the contrary, if any mandatory conversion
under Section 6(c) takes place pursuant to subparagraphs (ii) or (iii) hereof at
any time before December 31, 2000, the number of shares of Common Stock issuable
in connection with such conversion shall be calculated by dividing (x) Series B
Conversion Price times 1.2 by (y) the Conversion Price.

                  d.       MECHANICS OF CONVERSION.

                    (1) Before any holder of Series B Preferred Stock shall be
entitled to convert the same on an optional basis pursuant to Section 6(b) into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for such stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the same and shall state
therein the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation or its transfer agent, such certificates surrendered for conversion
shall be endorsed or accompanied by written instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or such
holder's attorney duly authorized in writing. Such holder shall also provide the
compliance certificate regarding short sales of the Corporation's Common Stock
referred to in Section 1(d). The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series B
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have taken place immediately prior to the close of
business on the date of surrender of the shares of Series B Preferred Stock to
be converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock after such date.

                    (2) If the conversion is in connection with an underwritten
offering of securities pursuant to the Securities Act, the conversion may, at
the option of any holder tendering shares of Series B Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering, in which event the person(s) entitled to
receive the Common Stock upon conversion of the Series B Preferred Stock shall
not be deemed to have converted such Series B Preferred Stock until immediately
prior to the closing of such sale of securities.

                    (3) In the event of a mandatory conversion of Series B
Preferred Stock pursuant to Section 6(c) the conversion shall be deemed to
have taken place at the close of business on the effective date specified by
the Board of Directors. On such effective date, all of the outstanding
certificates which prior to that time represented shares of Series B
Preferred Stock shall be deemed for all purposes to evidence ownership of and
to represent the number of

                                      -8-

<PAGE>

shares of Common Stock into which the shares of Series B Preferred Stock have
been converted. The registered owner on the books and records of the Corporation
or its transfer agent of any such outstanding Series B Preferred Stock
certificate shall, until such certificate shall have been surrendered for
exchange or transfer or otherwise accounted for to the Corporation or its
transfer agent, have and be entitled to exercise any voting and other rights
with respect to the shares of Common Stock into which such Series B Preferred
Stock shall have been converted; provided, however, that dividends or other
distributions upon shares of Common Stock resulting from the conversion of such
Series B Preferred Stock shall accrue but shall not be delivered to any such
stockholder until such stockholder has surrendered or otherwise accounted for
the Series B Preferred Stock stock certificate representing the converted shares
and has provided the compliance certificate referred to in Section 1(d). The
Corporation shall issue new certificates for Common Stock in due course as
certificates for converted Series B Preferred Stock are tendered to the
Corporation or its transfer agent for exchange or transfer or otherwise
accounted for.

                  e. NOTICE TO HOLDERS OF SERIES B PREFERRED STOCK. In the
event:

                    (1) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;

                    (2) that the Corporation subdivides or combines its
outstanding shares of Common Stock;

                    (3) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock or a stock dividend or stock distribution thereon);

                    (4) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation, or an acquisition or sale of assets which has
the effect of a dissolution under Section 3(c); or

                    (5) of any transaction that causes a mandatory conversion
pursuant to Section 6(c);

then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series B Preferred Stock, and shall cause to
be mailed to the holders of the Series B Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the date specified in Sections 6(e)(v)(1) or 6(e)(v)(2) below or
twenty days before the date specified in Section 6(e)(v)(3) below, a notice
stating:

                                      -9-

<PAGE>

                              (a) the record date of such dividend,
                    distribution, subdivision or combination, or, if a record is
                    not to be taken, the date as of which the holders of Common
                    Stock of record to be entitled to such dividend,
                    distribution, subdivision or combination are to be
                    determined, or

                              (b) the effective date of any mandatory conversion
                    pursuant to Section 6(c), or

                              (c) the date on which such reclassification,
                    dissolution, liquidation, winding up, acquisition or sale of
                    assets is expected to become effective, and the date as of
                    which it is expected that holders of Common Stock of record
                    shall be entitled to exchange their shares of Common Stock
                    for securities or other property deliverable upon such
                    reclassification, consolidation, merger, sale, dissolution
                    or winding up.

                  f. NO IMPAIRMENT. The Corporation will not, by amendment of
its Restated Articles of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of Section 6 and Section 7 in the taking of all such action as may be
necessary or appropriate in order to protect the Series B Conversion Rights
against impairment.

                  g. ISSUE TAXES. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series B Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be obligated
to pay any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.

                  h. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of all shares of Series B Preferred Stock issuable pursuant to this
Certificate of Designation, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of the Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without

                                      -10-

<PAGE>

limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to the Corporation's Restated Articles of
Incorporation.

                  7. ADJUSTMENT TO SERIES B CONVERSION RIGHTS FOR CERTAIN
DILUTING EVENTS.

                  a. DEFINITIONS.

                    (1) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 7(b) below, deemed to be
issued) by the Corporation after the Original Issue Date (as defined in Section
7(a)(iv) below), but EXCLUDING shares of Common Stock issued or issuable:

                              (a) as a dividend or distribution on Series B
                    Preferred Stock;

                              (b) by reason of a dividend, stock split, or other
                    distribution on shares of Common Stock excluded from the
                    definition of Additional Shares of Common Stock by the
                    foregoing clause (1);

                              (c) upon the exercise of options excluded from the
                    definition of "Option" in Section 7(a)(iii);

                              (d) to vendors, licensors, lenders and similar
                    third parties engaged in commercial relationships with the
                    Corporation, up to 1,000,000 shares of Common Stock in the
                    aggregate, or Options to acquire or Convertible Securities
                    convertible into such Common Stock; or

                              (e) upon conversion of shares of Series B
                    Preferred Stock or any other Convertible Securities (as
                    defined in Section 7(a)(ii) below) outstanding as of the
                    date hereof (including the Series A Preferred Stock, the
                    Convertible Promissory Note in the principal amount of
                    $4,800,000 dated October 20, 1999 originally issued to Elan
                    International Services Ltd., the Warrant to acquire 100,000
                    shares of Common Stock originally issued to Elan
                    International Services, Ltd., and the Placement Agent's
                    Warrant Agreement originally issued or to be issued to
                    Gilford Securities Incorporated in connection with the
                    offering of Series B Preferred Stock).

                    (2) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.

                                      -11-

<PAGE>

                    (3) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, but EXCLUDING rights, options or warrants excluded from the
definition of "Additional Shares of Common Stock" and rights, options or
warrants granted to employees, directors or consultants of the Corporation
pursuant to plans or agreements adopted or approved by the Board of Directors to
acquire up to that number of shares of Common Stock as is equal to ten (10%)
percent of the Common Stock outstanding at the time of such adoption or approval
(provided that, for purposes of this Section 7(a)(iii), all shares of Common
Stock issuable upon (1) exercise of rights, options or warrants granted or
available for grant under plans approved by the Board of Directors, (2)
conversion of shares of Preferred Stock, or (3) conversion of Preferred Stock
issuable upon conversion or exchange of any Convertible Security, shall be
deemed to be outstanding).

                    (4) "Original Issue Date" shall mean the date on which the
first share of Series B Preferred Stock is issued.

                  b. DEEMED ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If
the Corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities, then the maximum number of
shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue; provided, that Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per share (determined
pursuant to Section 7(c)) hereof) of such Additional Shares of Common Stock
would be less than the Series B Conversion Price on the date such securities are
issued, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:

                    (1) No further adjustment in the Series B Conversion Price
shall be made upon the subsequent issue of shares of Common Stock upon the
exercise of such Option or conversion or exchange of such Convertible Security;

                    (2) Upon the expiration or termination of any unexercised
Option, the Series B Conversion Price shall not be readjusted, but the
Additional Shares of Common Stock deemed issued as the result of the original
issue of such Option shall not be deemed issued for the purposes of any
subsequent adjustment of the Series B Conversion Price; and

                                      -12-

<PAGE>

                    (3) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Series B Conversion Price then in effect
shall forthwith be readjusted to such Series B Conversion Price as would have
obtained had the adjustment that was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change been made
upon the basis of such change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any such
Option or Convertible Security.

          c. DETERMINATION OF CONSIDERATION. For purposes of this Section 7, the
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock shall be computed as follows:

                    (1) CASH AND PROPERTY: Such consideration shall:

                              (a) insofar as it consists of cash, be computed at
                    the aggregate of cash received by the Corporation, excluding
                    amounts paid or payable for accrued interest or accrued
                    dividends;

                              (b) insofar as it consists of property other than
                    cash, be computed at the fair market value thereof at the
                    time of such issue, as determined in good faith by the Board
                    of Directors; and

                              (c) in the event Additional Shares of Common Stock
                    are issued together with other shares or securities or other
                    assets of the Corporation for consideration which covers
                    both, be the proportion of such consideration so received,
                    computed as provided in clauses (1) and (2) above, as
                    determined in good faith by the Board of Directors.

                    (2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued relating to Options and Convertible Securities, shall
be determined by dividing:

                              (a) the total amount, if any, received or
                    receivable by the Corporation as consideration for the issue
                    of such Options or Convertible Securities, plus the minimum
                    aggregate amount of additional consideration (as set forth
                    in the instruments relating thereto, without regard to any
                    provision contained therein for a subsequent adjustment of
                    such consideration) payable to the

                                      -13-

<PAGE>

                    Corporation upon the exercise of such Options or the
                    conversion or exchange of such Convertible Securities, by

                              (b) the maximum number of shares of Common Stock
                    (as set forth in the instruments relating thereto, without
                    regard to any provision contained therein for a subsequent
                    adjustment of such number) issuable upon the exercise of
                    such Options or the conversion or exchange of such
                    Convertible Securities.

                  d. NO ADJUSTMENT OF SERIES B CONVERSION PRICE. No adjustment
in the number of shares of Common Stock into which the Series B Preferred Stock
is convertible shall be made by adjustment in the Series B Conversion Price: (i)
unless the consideration per share (determined pursuant to Section 7(c)) for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the then-current Series B Conversion Price, or (ii) if
prior to such issuance, the Corporation receives written notice from the holders
of a majority of the then outstanding shares of Series B Preferred Stock
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Shares of Common Stock.

                  e. ADJUSTMENT OF SERIES B CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. If the Corporation shall at any time after
the Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 7(b),
but excluding shares issued as provided in Sections 7(f) through 7(i), without
consideration or for a consideration per share less than the then-current Series
B Conversion Price, then and in such event, the Series B Conversion Price shall
be reduced, concurrently with such issue to a price (calculated to the nearest
cent) determined by multiplying the Series B Conversion Price by a fraction,

                              (1) the numerator of which shall be (1) the number
of shares of Common Stock outstanding immediately prior to such issue plus (2)
the number of shares of Common Stock which the aggregate consideration received
by the Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Series B Conversion Price; and

                              (2) the denominator of which shall be (1) the
number of shares of Common Stock outstanding immediately prior to such issue
plus (2) the number of such Additional Shares of Common Stock so issued.

Notwithstanding the foregoing, the Series B Conversion Price shall not be
reduced if the amount of such reduction would be an amount less than $.05, but
any such amount shall be carried forward and reduction with respect thereto made
at the time of and together with any subsequent

                                      -14-

<PAGE>

reduction which, together with such amount and any other amount or amounts so
carried forward, shall aggregate $.05 or more.

                  f. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Series B Conversion
Price then in effect immediately before that subdivision shall be
proportionately decreased. If the Corporation shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of Common
Stock, the Series B Conversion Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.

                  g. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, a dividend or other distribution payable in Additional
Shares of Common Stock, then and in each such event the Series B Conversion
Price shall be decreased as of the time of such issuance, by multiplying the
Series B Conversion Price by a fraction:

                    (1) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance, and

                    (2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance plus the number of shares of Common Stock issuable in payment of
such dividend or distribution.

                  h. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue a dividend or other distribution payable in securities
of the Corporation other than shares of Common Stock, then and in each such
event provision shall be made so that the holders of shares of the Series B
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period given application to all adjustments called for during such period, under
this paragraph with respect to the rights of the holders of the Series B
Preferred Stock.

                                      -15-

<PAGE>

                  i. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION.
If the Common Stock issuable upon the conversion of the Series B Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for in Section 3(c) above), then and in each such event the
holder of each share of Series B Preferred Stock shall have the right thereafter
to convert such share into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by holders of the number of shares of Common Stock into which
such shares of Series B Preferred Stock might have been converted immediately
prior to such reorganization, reclassification, or change, all subject to
further adjustment as provided herein.

                  j. CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment or
readjustment of the Series B Conversion Price pursuant to this Section 7, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder, if
any, of Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based and shall file a copy of such certificate with its
corporate records. The Corporation shall, upon the written request at any time
of any holder of Series B Preferred Stock, furnish or cause to be furnished to
such holder a similar certificate setting forth (1) such adjustments and
readjustments, (2) the Series B Conversion Price then in effect, and (3) the
number of shares of Common Stock and the amount, if any, of other property which
then would be received upon the conversion of Series B Preferred Stock. Despite
such adjustment or readjustment, the form of each or all Series B Preferred
Stock certificates, if the same shall reflect the initial or any subsequent
Series B Conversion Price, need not be changed in order for the adjustments or
readjustments to be valued in accordance with the provisions of this Certificate
of Designation, which shall control.

                  8. NO REISSUANCE OF SERIES B PREFERRED STOCK. No share or
shares of Series B Preferred Stock acquired by the Corporation by reason of
redemption, purchase, conversion or otherwise shall be reissued, and all such
shares shall be canceled, retired and eliminated from the shares which the
Corporation shall be authorized to issue.

                  9. NOTICES. Any notice required by the provisions of this
Certificate of Designation to be given to the holders of shares of Series B
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

                                      -16-

<PAGE>

                  10. PROTECTIVE PROVISIONS. Subject in all cases to the
provisions of Section 6(c)(iii) above and the rights of any series of Preferred
Stock that may from time to time come into existence, so long as any shares of
Series B Preferred Stock are outstanding, the Corporation shall not, without
first obtaining the approval by vote or written consent of the holders of a
majority of the then-outstanding shares of Series B Preferred Stock, voting
separately as a series, (a) amend its Restated Articles of Incorporation so as
to adversely affect the shares of Series B Preferred Stock, (b) authorize or
issue any other equity security or security convertible into or exercisable for
any equity security having a preference over or being PARI PASSU with the Series
B Preferred Stock with respect to liquidation or dividend rights, or (c) change
the rights of the holders of the Series B Preferred Stock as set forth herein in
any other material respect."

                  IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be duly executed by its
President and Secretary as of November __, 1999.

                                        ----------------------------------------
                                        John T. Smolik, President

                                        ----------------------------------------
                                        Eric A. Wachter, Secretary

                                      -17-

<PAGE>

STATE OF _____________        )
                              ) SS.
COUNTY OF ___________         )

                  On this ____ day of November, 1999, personally appeared before
me, a Notary Public in and for the State and County aforesaid, John T. Smolik,
known to me to be the person described in and did say that he is the President
of Photogen Technologies, Inc., a Nevada corporation, and that the foregoing
Certificate of Designation, Preferences, and Rights of Series B Preferred Stock
was signed on behalf of said corporation by authority of its board of directors,
and said John T. Smolik acknowledged to me that said instrument to be the free
act and deed of said corporation.

                  WITNESS my hand and official seal, the day and year first
above written.

                                            ------------------------------------
                                            Notary Public

(Notarial Seal)

STATE OF _____________        )
                              ) SS.
COUNTY OF ___________         )

                  On this ____ day of November, 1999, personally appeared before
me, a Notary Public in and for the State and County aforesaid, Eric A. Wachter,
known to me to be the person described in and did say that he is the Secretary
of Photogen Technologies, Inc., a Nevada corporation, and that the foregoing
Certificate of Designation, Preferences, and Rights of Series B Preferred Stock
was signed on behalf of said corporation by authority of its board of directors,
and said Eric A. Wachter acknowledged to me that said instrument to be the free
act and deed of said corporation.

                  WITNESS my hand and official seal, the day and year first
above written.

                                            ------------------------------------
                                            Notary Public

(Notarial Seal)

                                      -18-

<PAGE>

                                                                       EXHIBIT C

                                   TERM SHEET

                         $1 MILLION TERM CREDIT FACILITY

<TABLE>
<S>                               <C>
Borrower:                          Photogen, Inc. ("Borrower").

Lenders:                           Theodore Tannebaum and Robert J. Weinstein, M.D. ("Lenders").

Guarantor:                         Photogen Technologies, Inc. ("PTI").

Principal amount:                  $1,000,000.00.

Purpose:                           To fund working capital requirements in connection with
                                   pre-clinical research and clinical testing of Borrower's

                                   technologies.

Advances:                          The credit facility may be utilized in advances of $100,000
                                   increments, upon 15 days' prior written notice to the Lenders.
                                   Once repaid, no portion of the credit facility can be reborrowed.

Interest:                          The daily rate equivalent of 6% per annum calculated on the basis
                                   of a 360-day year.

Amortization; maturity:            The notes will be payable over five
                                   years. Interest only will be payable on an
                                   annual basis until maturity, at which time
                                   all outstanding principal and interest will
                                   be due and payable.

Prepayment:                        Prepayment will be permitted at any time and without penalty.
</TABLE>

                                        1

<PAGE>

<TABLE>
<S>                               <C>
Collateral:                        The credit facility will be secured by a first priority lien on all of
                                   the Borrower's present and future real and personal properties,

                                   including all:

                                        - accounts, chattel paper, tax refunds, contract rights,
                                        options, leases, leasehold interests, letters of credit,
                                        instruments, documents, documents of title;

                                        - patents, trade secrets, know how, copyrights, trademarks,
                                        trade names, software, data, licenses, goodwill;

                                        - general intangibles, beneficial interests;

                                        - goods, machinery, equipment, vehicles, furniture,
                                        inventory;

                                        - securities, cash or cash equivalents;

                                        - real estate and improvements, fixtures; and

                                        - products and proceeds (including without limitation
                                        insurance and litigation proceeds) of the foregoing, all
                                        accessions to the foregoing and all substitutions, renewals,
                                        improvements and replacements of and additions to the
                                        foregoing.

                                   The lien will be granted to Dr. Weinstein as collateral
                                   agent for the Lenders. The lien will be perfected by
                                   appropriate filings with the secretary of state, county
                                   recorder and U.S. Patent and Trademark Office.

Events of Default:                 Upon the occurrence of any of the following events, the notes will become
                                   immediately due and payable and the Lenders will have the
                                   right to, among other things, foreclose on the Collateral:

                                        - failure to pay interest or principal under the notes when due;
</TABLE>

                                        2

<PAGE>

<TABLE>
<S>                               <C>
                                        - a material default by the Borrower or PTI in any agreement
                                        or obligation to the Lenders or to any third party which is
                                        not cured within the time period, if any, permitted in the
                                        governing instrument for cure; or

                                        - the Borrower, PTI or any of PTI's other subsidiaries:
                                        becoming subject to bankruptcy proceedings (which, if filed
                                        against the Borrower, are not dismissed within 90 days),
                                        making a general assignment for the benefit of creditors, or
                                        authorizing such entity to seek the protection of or relief
                                        under the U.S. Bankruptcy Code or similar state laws
                                        relating to insolvency, reorganization or any other
                                        proceeding to modify or alter the rights of such entity's
                                        creditors.

Miscellaneous:                     All terms, rights and other provisions of the credit facility
                                   are subject to final negotiation and the execution and
                                   delivery of mutually agreeable definitive documentation,
                                   and approval by the disinterested directors of the Borrower
                                   and PTI.  Documentation will include a loan and security
                                   agreement, a promissory note, a collateral agency
                                   agreement and a guaranty.
</TABLE>

                                        3<PAGE>

                                                                Exhibit 10.35

                           PHOTOGEN TECHNOLOGIES, INC.
                       FORM OF REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made as of
February 18, 2000 by and among Photogen Technologies, Inc., a Nevada corporation
(the "COMPANY"), and the holders of the Company's Series B Convertible Preferred
Stock signatory hereto.

                                R E C I T A L S:

          A.   Pursuant to a Stock Purchase Agreement dated as of the date
hereof by and between the Company and the Holder (the "PURCHASE AGREEMENT"),
such Holder has acquired, or will acquire in the future, certain shares of
Series B Convertible Preferred Stock, $.01 par value per share (the "SERIES B
PREFERRED STOCK"), which Series B Preferred Stock is convertible into shares of
Common Stock, $.001 par value per share, of the Company (the "COMMON STOCK").

          B.   The parties desire to set forth herein their agreement on the
terms and subject to the conditions set forth herein related to the granting of
certain registration rights to the Holders relating to the Common Stock issuable
upon conversion of shares of Series B Preferred Stock.

                               A G R E E M E N T:

          The parties hereto agree as follows:

          1.   CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:

          "COMMISSION" shall mean the U.S. Securities and Exchange Commission.

          "DEMAND REGISTRATION" means a registration by the Company for a public
offering of Registrable Securities on Form S-3 (or any successor form to Form
S-3) or any similar short-form registration statement, or a Form S-1 (or any
successor or equivalent registration form) only if the Company is not eligible
to use Form S-3 for that transaction, the reasonably anticipated aggregate price
to the public of which, net of underwriting discounts and commissions, if any,
would be at least $2,000,000.

          "ELIGIBLE HOLDER" means a Holder that beneficially owns $250,000 or
more of Series B Stock (based on the purchase price of Series B Preferred Stock
in the Purchase Agreement) or Common Stock issued upon conversion of such amount
of Series B Preferred Stock.

<PAGE>

          "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.

          "HOLDERS" or "HOLDERS OF REGISTRABLE SECURITIES" shall mean each
purchaser of Series B Preferred Stock who is a party to this Agreement and any
Person who shall have acquired Registrable Securities from such purchaser as
permitted herein in a transaction pursuant to which registration rights are
transferred pursuant to Section 10 hereof.

          "INITIATING HOLDERS" means Holders that collectively beneficially own
$1,000,000 or more of Series B Preferred Stock (based on the purchase price of
Series B Preferred Stock in the Purchase Agreement) or Common Stock issued upon
conversion of such amount of Series B Preferred Stock.

          "PERSON" shall mean an individual, a partnership, a company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental or quasi-governmental entity, or any department,
agency or political subdivision thereof.

          "REGISTRABLE SECURITIES" means (i) any shares of Common Stock issued
or issuable upon conversion of shares of Series B Preferred Stock, and (ii) any
shares of Common Stock issued or issuable in respect of the securities referred
to in clause (i) above upon any stock split, stock dividend, recapitalization or
similar event. The term "REGISTRABLE SECURITIES" EXCLUDES in all cases, however,
(a) Common Stock issued or issuable upon conversion of Series B Preferred Stock
that may be sold under Rule 144(k) promulgated under the Securities Act or
shares held by a Person to whom registration rights are not transferred pursuant
to Section 10 hereof, and (b) shares of Common Stock issued upon conversion of
Series B Preferred Stock that have been sold either in a transaction pursuant to
an effective registration statement under the Securities Act or pursuant to any
provision of Rule 144 promulgated under the Securities Act.

          The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act.

          "REGISTRATION EXPENSES" shall mean all expenses, other than Selling
Expenses, incurred by the Company in complying with Sections 2 or 3 hereof,
including without limitation, all registration, qualification and filing fees,
exchange listing fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration.

          "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

                                       2
<PAGE>

          "SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and the costs and fees of any accountants, attorneys or other
experts retained by the Holders or Holder.

          2.   DEMAND REGISTRATION.

          (a)   REQUESTS FOR REGISTRATION. At any time after April 1, 2000,
the Initiating Holders may request in writing that the Company engage in two
Demand Registrations, one such registration on or after April 1, 2000 and a
second on or after April 1, 2001. Within 10 days after receipt of any such
request, the Company will give written notice of such requested registration
to all other Eligible Holders. The Company shall include in such offering the
Registrable Securities of the Initiating Holders and those Eligible Holders
who have responded affirmatively within 10 days after the receipt of the
Company's notice. If the Demand Registration is not an underwritten offering,
the Company shall file for a so-called traditional "shelf registration" on
Form S-3 (or Form S-1) pursuant to which the Initiating Holders and Eligible
Holders participating in such registration may sell their Registrable
Securities from time to time at prevailing market prices directly, through
agents they designate, or through dealers.

          (b)   PRIORITY ON DEMAND REGISTRATION. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities requested
to be included in such offering exceeds the number of Registrable Securities
which can be sold in such offering without adversely affecting the
marketability of the offering, the Company will include in such registration
(subject to the rights of the holder(s) of the Company's Series A Convertible
Exchangeable Preferred Stock (the "SERIES A PREFERRED STOCK") and to the
rights of other Persons under agreements existing as of the date hereof such
number of Registrable Securities allocated PRO RATA among the Holders thereof
based upon the number) of Registrable Securities owned by each such Holder
and the Company will provide an additional registration within 6 months
thereafter for Registrable Securities excluded from that offering. No
securities other than Registrable Securities hereunder shall be included in
such Demand Registration without the prior written consent of Initiating and
Eligible Holders who collectively hold Registrable Securities representing at
least 50% of the Registrable Securities subject to the Demand Registration,
except for securities relating to the Company's existing obligations to third
party demand or piggyback rights on a pro rata basis with the Registrable
Securities.

          (c)   RESTRICTIONS ON DEMAND REGISTRATION. The Initiating Holders
in the aggregate will be entitled to request two Demand Registrations
hereunder on or after the dates specified in paragraph (a) above (subject to
paragraph (b) above). A registration will not count as a permitted Demand
Registration until it has become effective (unless such Demand Registration
has not become effective due solely to the fault of the Initiating or
Eligible Holders participating in such registration, including a request by
such Holders that such registration be

                                       3
<PAGE>

withdrawn). The Company may postpone the filing or the effectiveness of a
registration statement for a Demand Registration for up to 30 days in connection
with any Demand Registration requested between April 1, 2000 and June 30, 2000
or up to 90 days for any other Demand Registration if the Company determines in
good faith that such Demand Registration would reasonably be expected to have a
material adverse effect on any proposal or plan by the Company to engage in any
financing, acquisition or disposition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction or would require disclosure of any information that the board of
directors of the Company determines in good faith the disclosure of which would
be detrimental to the Company; provided, however, that in such event, the
Holders initially requesting such Demand Registration will be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration will not count as a permitted Demand Registration hereunder and the
Company will pay any Registration Expenses in connection with such registration.

          (d)   SELECTION OF UNDERWRITERS. If the Demand Registration is
underwritten, the Initiating Holders will have the right to select the
investment banker(s) and manager(s) to administer an offering pursuant to the
Demand Registration, subject to the prior written approval of the Company,
which will not be unreasonably withheld or delayed.

          (e)   OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, so long as any Holder owns any Registrable Securities, the Company
will not grant to any Persons the right to request the Company to register
any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, which conflicts with or
is superior to the rights granted to the Holders hereunder, without the prior
written consent of the Holders of at least 50% of the Registrable Securities,
EXCEPT (i) for securities relating to the Company's existing obligations to
third party demand or piggyback rights on a pro rata basis with the
Registrable Securities, and (ii) for securities issued (or issuable upon
conversion or exercise of options, warrants, convertible instruments and
similar securities that are currently outstanding) to vendors, licensors,
lenders, Persons involved in joint ventures with the Company or its
affiliates, and similar Persons engaged in commercial relationships with the
Company.

          3.   PIGGYBACK REGISTRATIONS. (a) RIGHT TO PIGGYBACK. At any time
prior to April 1, 2002 that the Company shall propose to register Common Stock
under the Securities Act (other than in a registration on Form S-3 relating to
sales of securities to participants in a Company dividend reinvestment plan,
Forms S-4 or S-8 or any successor forms, or in connection with an acquisition or
exchange offer or an offering of securities solely to the existing shareholders
or employees of the Company), the Company shall give prompt written notice to
all Holders of Registrable Securities of its intention to effect such a
registration and, subject to Section 3(b) and the other terms of this Agreement,
shall include in such registration all Registrable Securities that are permitted
under applicable securities laws to be included in the form of registration
statement selected by the Company and with respect to which the Company

                                       4
<PAGE>

has received written requests for inclusion therein by the Holders within 10
days after the receipt of the Company's notice (each, a "PIGGYBACK
REGISTRATION").

          (b)  PRIORITY ON PIGGYBACK REGISTRATIONS. If a Piggyback Registration
is an underwritten registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company shall include in such registration, only as may be
permitted in the reasonable business judgment of the managing underwriters for
such registration:

          (i)  first, up to that number of securities the Company proposes to
sell;

          (ii) second, up to that number of registrable securities requested to
be included in such registration by the holders of the Series A Preferred Stock;

          (iii) third, up to that number of Registrable Securities requested to
be included in such registration by the Holders, PRO RATA among the Holders of
such Registrable Securities, on the basis of the number of shares owned by each
of such Holders, subject to the rights of other Persons under agreements
existing as of the date hereof; and

          (iv) fourth, up to that number of other securities requested to be
included in such registration.

The Holders of any Registrable Securities included in such a registration shall
execute an underwriting agreement in form and substance satisfactory to the
managing underwriters.

          (c)  RIGHT TO TERMINATE REGISTRATION. If, at any time after giving
written notice of its intention to register any of its securities as set forth
in Section 3(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its election, give
written notice of such determination to each Holder of Registrable Securities
and thereupon be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith as provided herein).

          (d)  SELECTION OF UNDERWRITERS. The Company shall have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to a Piggyback Registration.

                                       5
<PAGE>

          4.   EXPENSES OF REGISTRATION. Except as otherwise provided herein,
all Registration Expenses incurred in connection with registrations pursuant to
Section 2 shall be borne by the Company and all Selling Expenses relating to
securities registered on behalf of the Holders of Registrable Securities shall
be borne by such Holders. All Registration Expenses incurred in connection with
registrations pursuant to Section 3 shall be borne by the Company except for
Selling Expenses which shall be borne by such Holders.

          5.   HOLDBACK AGREEMENTS.

          (a)   The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, for its own account during
the seven days prior to and during the 90-day period beginning on the
effective date of any underwritten Demand Registration (except (A) as part of
such underwritten registration, (B) pursuant to registration statements on
Form S-4 or Form S-8 or any successor form, (C) pursuant to a registration
statement then in effect or (D) as required under any existing contractual
obligation of the Company), unless the underwriters managing the registered
public offering otherwise agree, and (ii) to use reasonable efforts to cause
each holder of at least 5% (on a fully-diluted basis) of its outstanding
Common Stock, or any securities convertible into or exchangeable or
exercisable for Common Stock, purchased from the Company at any time after
the date of this Agreement (other than in a registered public offering) to
agree not to effect any public sale or distribution (including sales pursuant
to Rule 144) of any such securities during such periods (except as part of
such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.

          (b)   Each Holder agrees, in the event of an underwritten public
offering of Common Stock under a registration statement on Form S-1, S-3 or
S-4, not to effect any offer, sale, distribution or transfer, including a
sale pursuant to Rule 144 (or any similar provision then effect) under the
Securities Act (except as part of such registration), beginning on the date
of receipt of a written notice from the Company setting forth its intention
to effect such registration and ending on the earlier of (i) 180 days from
the date of receipt of such written notice or (ii) 90 days from the effective
date of such Registration Statement.

          6.   REGISTRATION PROCEDURES. Whenever the Company is under the
obligation to register Registrable Securities hereunder, the Company will use
all reasonable efforts to effect the registration and the sale of such
Registrable Securities, and pursuant thereto the Company will as expeditiously
as possible:

          (a)   subject to Section 2(c) and 3(a) hereof, prepare and file
with the Commission a registration statement within 45 days of the receipt of
notice from the Holder on any form for which the Company qualifies with
respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective (provided that before

                                       6
<PAGE>

filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to the one counsel selected by the Holders
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and (ii) notify each Holder of
Registrable Securities covered by such registration of any stop order issued or
threatened by the Commission);

          (b)   subject to Section 2(c), 3(b) and 6(e) hereof, prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for a period equal to the
shorter of (i) the time at which the registered shares are freely saleable
under Rule 144(k), or (ii) the time by which all securities covered by such
registration statement have been sold, and all Holders shall comply with
Company's reasonable requests in connection with such termination, and comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof
set forth in such registration statement;

          (c)   furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;

          (d)   use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(d), (ii)
subject itself to taxation in any jurisdiction, or (iii) consent to general
service of process in any such jurisdiction);

          (e)   notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller,
the Company will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading; provided, however, that the Company shall not be
required to amend the registration statement or

                                       7
<PAGE>

supplement the Prospectus for a period of up to 90 days if the board of
directors determines in good faith that to do so would reasonably be expected to
have a material adverse effect on any proposal or plan by the Company to engage
in any financing, acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or
similar transaction or would require the disclosure of any information that the
board of directors determines in good faith the disclosure of which would be
detrimental to the Company, it being understood that the period for which the
Company is obligated to keep the Registration Statement effective shall be
extended for a number of days equal to the number of days the Company delays
amendments or supplements pursuant to this provision. Upon receipt of any notice
pursuant to this Section 6(e), the Holders shall suspend all offers and sales of
securities of the Company and all use of any prospectus until advised by the
Company that offers and sales may resume, and shall keep confidential the fact
and content of any notice given by the Company pursuant to this Section 6(e);

          (f)   cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed;

          (g)   provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;

          (h)   enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Holders
of a majority of the Registrable Securities being sold or the underwriters,
if any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;

          (i)   make available for inspection by a representative of the
Holders of Registrable Securities included in the registration statement, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

          (j)   otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;

                                       8
<PAGE>

          (k)   in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification
of any Common Stock included in such registration statement for sale in any
jurisdiction, use all reasonable efforts promptly to obtain the withdrawal of
such order; and

          (l)   if the registration is an underwritten offering, use all
reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.

          7.   OBLIGATIONS OF HOLDERS. Whenever the Holders of Registrable
Securities sell any Registrable Securities pursuant to a Demand Registration,
such Holders shall be obligated to comply with the applicable provisions of the
Securities Act, including the prospectus delivery requirements thereunder, and
any applicable state securities or blue sky laws.

          8.   INDEMNIFICATION. (a) In connection with any registration
statement for a Demand Registration in which a Holder of Registrable Securities
is participating, the Company agrees to indemnify, to the fullest extent
permitted by applicable law, each such Holder of Registrable Securities, its
officers and directors and each Person who controls such Holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities,
expenses or any amounts paid in settlement of any litigation, investigation or
proceeding commenced or threatened to which each such indemnified party may
become subject under the Securities Act (collectively, "CLAIMS") insofar as such
Claim arose out of (i) any untrue or alleged untrue statement of material fact
contained, on the effective date thereof, in any such registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use
therein, by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder with a sufficient number of copies of the same
or by such Holder's failure to comply with applicable securities laws. In
connection with an underwritten offering, the Company will indemnify the
underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.

          (b)  In connection with any registration statements for a Demand
Registration in which a Holder of Registrable Securities is participating, each
such Holder will furnish to the Company in writing such customary information as
the Company reasonably requests for use in

                                       9
<PAGE>

connection with any such registration statement or prospectus (the "SELLER'S
INFORMATION") and, to the fullest extent permitted by applicable law, will
indemnify the Company, its directors and officers and each Person who controls
the Company (within the meaning of the Securities Act) against any and all
Claims to which each such indemnified party may become subject under the
Securities Act insofar as such Claim arose out of (i) any untrue or alleged
untrue statement of material fact contained, on the effective date thereof, in
any such registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements regarding Seller's Information therein not misleading or
(iii) any failure on the part of the Holder to comply with applicable securities
laws; provided that with respect to a Claim arising pursuant to clause (i) or
(ii) above, the material misstatement or omission is contained in such Seller's
Information; provided, further, that the obligation to indemnify will be
individual to each Holder and will be limited to the amount of proceeds received
by such Holder from the sale of Registrable Securities pursuant to such
registration statement.

          (c)  Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (but the failure to provide such notice shall not
release the indemnifying party of its obligation under paragraphs (a) and (b),
unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) unless in such
indemnified party's reasonable judgment, based on written advice of counsel, a
conflict of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party, based on
written advice of counsel, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.

          (d)  The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party's written consent (but such consent will
not be unreasonably withheld). Furthermore, the indemnifying party shall not,
except with the prior written approval of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect of such claim or
litigation without any payment or consideration provided by each such
indemnified party.

                                       10
<PAGE>

          (e)  If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under clauses (a) and (b) above in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company
(if any), the underwriters, the sellers of Registrable Securities and any other
sellers participating in the registration statement from the sale of shares
pursuant to the registered offering of securities for which indemnity is sought
but also the relative fault of the Company, the underwriters, the sellers of
Registrable Securities and any other sellers participating in the registration
statement in connection with the statement or omission which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company (if any), the
underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement shall be deemed to be based on the
relative relationship of the total net proceeds from the offering (before
deducting expenses) to the Company (if any), the total underwriting commissions
and fees from the offering (before deducting expenses) to the underwriters and
the total net proceeds from the offering (before deducting expenses) to the
sellers of Registrable Securities and any other sellers participating in the
registration statement. The relative fault of the Company, the underwriters, the
sellers of Registrable Securities and any other sellers participating in the
registration statement shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the sellers of Registrable Securities and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

          (f)  The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of the Registrable Securities.

          9.   PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holder or Holders entitled hereunder
to approve such arrangements, (b) as expeditiously as possible notifies the
Company of the occurrence of any event as a result of which any prospectus
contains an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (c) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

                                       11
<PAGE>

          10.  TRANSFER OF REGISTRATION RIGHTS. The rights granted to any Holder
under this Agreement may be assigned to any permitted transferee of Registrable
Securities, in connection with any transfer or assignment of Registrable
Securities by a Holder; provided, however, that: (a) such transfer is otherwise
effected in accordance with applicable securities laws, (b) if not already a
party hereto, the assignee or transferee agrees in writing prior to such
transfer to be bound by the provisions of this Agreement applicable to the
transferor, and (c) such transferee shall own Registrable Securities
representing at least 25,000 shares of Common Stock (as adjusted for any
combinations, consolidations, stock distributions, stock dividends or other
recapitalizations with respect to such shares).

          11.  INFORMATION BY HOLDER. Each Holder shall furnish to the Company
such written information regarding such Holder and any distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement and shall promptly notify the Company
of any changes in such information.

          12.  EXCHANGE ACT COMPLIANCE. The Company shall comply with all of the
reporting requirements of the Exchange Act then applicable to it and shall
comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Registrable Securities. The Company shall cooperate with each Holder in
supplying such information as may be necessary for such Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.

          13.  TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Agreement shall terminate and be of no further force and
effect, as to any particular Holder, at such time as all shares of Common Stock
issuable upon conversion of Series B Preferred Stock held by such Holder are
saleable under Rule 144(k).

          14.  MISCELLANEOUS.

          (a)   NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the Holders of Registrable Securities
in this Agreement without the prior written consent of the Initiating Holders
who hold at least 50% of the Registrable Securities collectively held by the
Initiating Holders.

          (b)   REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate

                                       12
<PAGE>

remedy for any breach of the provisions of this Agreement and that any party may
in its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement; provided, however, that in no
event shall any Holder have the right to enjoin, delay or interfere with any
offering of securities by the Company.

          (c)   AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only with the prior
written consent of the Company and Initiating Holders who hold at least 50%
of the Registrable Securities collectively held by the Initiating Holders (in
which case, such amendment shall be binding upon all Holders, including
Holders that did not specifically consent to the amendment); provided,
however, that without the prior written consent of all the Holders, no such
amendment or waiver shall reduce the foregoing percentage required to amend
or waive any provision of this Agreement.

          (d)   SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto,
and shall inure to the benefit and be enforceable by each Holder of
Registrable Securities from time to time. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are
for the benefit of Holders of Registrable Securities are also for the benefit
of, and enforceable by, any permitted transferee of Registrable Securities in
accordance with Section 10 hereof.

          (e)   SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

          (f)   COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed
in two or more counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together will
constitute one and the same Agreement. This Agreement may be executed by a
signature page delivered by fax transmission, which shall have the same
effect as if the signature page was an original.

          (g)   DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.

          (h)   GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of New York without

                                       13
<PAGE>

regard to principles of conflicts of laws, except that all issues concerning the
relative rights of the Company and its shareholders shall be governed by Nevada
State Law, without giving effect to the principles thereof relating to conflicts
of laws.

          (i)   NOTICES. All notices, demands and requests of any kind to be
delivered to any party in connection with this Agreement shall be in writing
and shall be deemed to have been duly given if personally delivered or if
sent by nationally-recognized overnight courier or by registered or certified
airmail, return receipt requested and postage prepaid or by facsimile
transmission, addressed as follows:

          (j)   if to the Company, to:

               Photogen Technologies, Inc.
               7327 Oak Ridge Highway, Suite B
               Knoxville, Tennessee  37931
               Attention: President
               Facsimile:  (423) 769-4013

               with a copy to:

               Grippo & Elden
               Suite 3600
               227 West Monroe Street
               Chicago, Illinois 60606
               Attn: Theodore Grippo, Esq.
               Facsimile: (312) 558-1195

          (ii) if to a Holder, to such Holder's most recent address in the stock
               records of the Company.

          (k)   ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding understanding and agreement between the parties with
regard to the subject matter hereof.

                            [Signature page follows]

                                       14
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                              PHOTOGEN TECHNOLOGIES, INC.

                              By:  /s/ Timothy Scott
                                 -------------------------------
                                   Name:   Timothy Scott
                                   Title:  President

                              HOLDER

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

                              By:
                                 -------------------------------
                                   Name:
                                   Title:

                                       15

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