Document:

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                                                                   Exhibit 10.36

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

                              [Photogen Letterhead]

January 18, 2000

BY FAX (408/764-4850) AND FEDERAL EXPRESS

Coherent Laser Group
5100 Patrick Henry Drive
Santa Clara, CA 95054

Attention:  Mr. Michael Armas

RE: COHERENT SOFTWARE DISTRIBUTION AGREEMENT ("DISTRIBUTION AGREEMENT")

Dear Mr. Armas:

          This letter sets out the agreement between Photogen, Inc. ("Photogen")
and the Laser Group of Coherent, Inc. ("Coherent") regarding a license to
distribute certain software Photogen developed.

1.       This Distribution Agreement applies to the software product described
         in Exhibit A to this letter, together with the documentation Photogen
         provides with that software for distribution to end users and any
         maintenance modifications that correct errors resulting from incorrect
         operation of the object code of that software (the "Software"). The
         Software does not include any update, new version or enhancement unless
         Photogen, in its sole discretion, adds that item and related fees to
         Exhibit A. A "Software Copy" is an exact object code copy of the
         Software in machine readable form, together with an exact copy of the
         end-user documentation included in the definition of the Software, made
         by or on behalf of Photogen. Software Copies may be sold in disk form
         or as part of a software/interface hardware package.

2.       Photogen grants to Coherent a license: (a) to license Software Copies
         for use only with laser systems manufactured by Coherent or other laser
         manufacturers ("Laser Systems") and only directly to end-user customers
         who will use the software only for qualitative purposes; (b) to use the
         Software only to test or demonstrate Laser Systems to prospective end
         users; and (c) to use Photogen's service marks and trademarks
         designated on Exhibit A to market the Software in accordance with
         Photogen's prior written approval. Coherent may license the Software to
         end users outside the United States, provided Coherent (at its own
         expense) demonstrates

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Coherent Software Distribution Agreement
January 18, 2000
Page 2 of 6

         compliance with applicable legal and regulatory requirements, such as
         necessary export licensing.

3.       The license granted to Coherent in paragraph 2 is exclusive; except
         that (a) if Coherent fails to meet the "Minimum Performance Criteria"
         in Exhibit A, the license will become non-exclusive with respect to
         Coherent upon written notice by Photogen; and (b) Photogen reserves for
         itself the right to use the Software for research, development and
         similar activities Photogen conducts or engages third parties to
         conduct and reserves all other rights not expressly granted to Coherent
         in this Distribution Agreement.

4.       Under all circumstances, as between the parties, Photogen retains: (a)
         all title to and (except as expressly licensed herein) all rights to
         the Software, all copies and derivative works thereof (by whomever
         produced) and all related documentation and materials; (b) all of its
         service marks, trademarks, tradenames or any other designations; (c)
         all copyrights, patent rights, trade secret rights, and all other
         intellectual and industrial property rights of any sort in the
         Software.

5.       Coherent will not distribute or license a Software Copy except pursuant
         to an enforceable End User License Agreement signed by the end user in
         the form set forth in Exhibit B hereto or a shrink-wrap or "click-on"
         version of the same agreement that is packaged and delivered to the end
         user in the manner specified by Photogen in writing. If a shrink-wrap
         or click-on agreement is used, Coherent will accept returns in
         accordance with the procedure specified in the packaging accompanying
         the Software Copy.

6.       Software Copies are delivered F.O.B. Photogen's principal office in
         Knoxville, Tennessee. Coherent will pay Photogen the Unit Price for
         each Software Copy as set forth in Exhibit A. Coherent will also pay
         all charges, including transportation charges and insurance premiums
         and shall be responsible for all taxes (except Photogen's U.S. income
         taxes) in connection with the subject matter of this Distribution
         Agreement, duties and other governmental assessments. Coherent will
         provide Photogen with quarterly nonbinding good faith forecasts of its
         anticipated requirements for Software Copies and shipping dates for the
         6-month periods following those forecasts.

7.       During the term of this Distribution Agreement, Photogen will: (a)
         inform Coherent within a reasonable time of any substantive changes in
         the Software or delivery schedules; (b) provide Coherent the most
         current commercial release or version of the Software; (c) use its
         reasonable efforts to fill (by full or partial shipment) Coherent's
         orders for Software Copies, which are accepted by Photogen at its main
         office (which acceptance will not be unreasonably withheld) within 60
         days after receipt of order insofar as practicable and consistent with
         Photogen's then-current lead-time schedule, shipping schedule, and
         access to supplies on acceptable terms; (d) provide one standard
         training program for Coherent personnel at Coherent's main office on a
         schedule reasonably acceptable to the parties; and (e) use its
         reasonable efforts to provide

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Coherent Software Distribution Agreement
January 18, 2000
Page 3 of 6

         support and maintenance services relating to the Software directly to
         Coherent, but not to end users, during the term of this Distribution
         Agreement.

8.       Coherent represents and warrants to, and agrees with Photogen, that
         Coherent will:

         (a)      not modify, create any derivative work of, or include in any
                  other software or make any copies of the Software or any
                  portion thereof;

         (b)      not delete, alter, obscure, add to or fail to reproduce in and
                  on any Software Copy and media the name of the Software and
                  any copyright, trademark, patent or other notices appearing in
                  or on any copy, media or master or package materials provided
                  by Photogen or which may be required by Photogen at any time;

         (c)      not reverse assemble, decompile, reverse engineer or otherwise
                  attempt to derive source code (or the underlying ideas,
                  algorithms, structure or organization) from the Software or
                  from any other information;

         (d)      use its best efforts to successfully market, distribute, and
                  support Software Copies within the scope of the license in
                  paragraph 2, including through (i) Coherent affiliates (as
                  defined in regulations under the Securities Exchange Act of
                  1934), and (ii) agents and sublicensees that Photogen approves
                  in its sole discretion in writing prior to their appointment
                  by Coherent;

         (e)      use the designated trademarks and other names associated with
                  the Software, it being agreed that such use (and any related
                  goodwill) shall be solely for Photogen's benefit; and Coherent
                  will not otherwise use or register (or make any filing with
                  respect to) any trademark, name or other designation or
                  copyrightable works relevant to the subject matter of this
                  Distribution Agreement anywhere in the world; and will not
                  contest anywhere in the world the use by or authorized by
                  Photogen of any trademark, name or other designation or
                  copyright relevant to the subject matter of this Distribution
                  Agreement or application or registration therefore, during the
                  term of this Distribution Agreement;

         (f)      keep Photogen informed as to any problems encountered with the
                  Software and any resolutions arrived at for those problems,
                  and communicate promptly to Photogen any and all
                  modifications, design changes or improvements of the Software
                  suggested by any end user, customer, employee, sublicensee or
                  agent; it being agreed by Coherent that Photogen shall have
                  and is hereby assigned any and all right, title, and interest
                  in and to any such suggested modifications, design changes, or
                  improvements of the Software, without the payment of any
                  additional consideration therefore either to Coherent, or its
                  employees, agents or customers and that Coherent will fully
                  cooperate with Photogen in this regard;

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Coherent Software Distribution Agreement
January 18, 2000
Page 4 of 6

         (g)      maintain a file of the name and address of all persons and
                  entities to which it distributes a Software Copy, the serial
                  number designation of the Software Copy, the date of delivery
                  and the End User License Agreement, and any other information
                  necessary to calculate payments due Photogen under this
                  Distribution Agreement; and permit Photogen or its
                  representative to examine and audit those records, records
                  relevant to license fees and any related records during
                  reasonable business hours (and Coherent will pay Photogen's
                  audit expenses if the audit uncovers a 5% or more deficiency
                  in payments);

         (h)      comply with applicable U.S. and foreign laws and regulations
                  covering its activities under this Distribution Agreement, and
                  not export or re-export, or allow the export or re-export of
                  any product, technology or information it obtains or learns
                  pursuant to this Distribution Agreement (or any direct product
                  thereof) in violation of this Distribution Agreement and any
                  such laws, restrictions or regulations; and

         (i)      use, in addition to and without in any way limiting Coherent's
                  other obligations hereunder, all methods to protect Photogen's
                  rights with respect to the Software, Software Copies and
                  Proprietary Information as Coherent uses to protect its own or
                  any third party's software, confidential information or rights
                  of a similar nature.

9.       It is anticipated that during the term of this Distribution Agreement
         Photogen shall disclose proprietary information to Coherent. The
         parties agree that the disclosure of such proprietary information shall
         be governed by the terms of the Proprietary Information Agreement
         attached hereto as Exhibit C.

10.      This Distribution Agreement will be in effect for a term of two years
         from the date of Coherent's acceptance and will automatically terminate
         unless: (a) it is renewed by a written agreement executed by both
         parties expressly providing for renewal; or (b) Coherent meets the
         performance criteria specified in Exhibit A, Unilateral Extension
         Performance Criteria. Photogen may terminate this Distribution
         Agreement at any time during the term upon written notice to Coherent
         if Coherent: (c) files or becomes subject to a petition under the U.S.
         Bankruptcy Code or becomes insolvent; (d) sells, distributes or
         otherwise disposes of all or substantially all of its assets, or any
         other change occurs in Coherent's business affairs which has a material
         adverse effect on its ability to perform under this Distribution
         Agreement; (e) fails to pay amounts owed to Photogen in accordance with
         Exhibit A; or (f) commits any material breach or default of any other
         provision of this Distribution Agreement. Termination is not the sole
         remedy under this Distribution Agreement and, whether or not
         termination is effected, all other remedies will remain available.

<PAGE>

Coherent Software Distribution Agreement
January 18, 2000
Page 5 of 6

11.      Upon termination of this Distribution Agreement: (a) all amounts owed
         by Coherent to Photogen will become immediately due and payable; (b)
         Coherent will cease using the trademarks, service marks and other
         designations of Photogen, cease representing itself as a distributor
         and/or licensee of Photogen, and return all property (including
         Proprietary Information and Software Copies) belonging to Photogen; (c)
         Coherent will furnish to Photogen a complete list of all of Coherent's
         end users of the Software; (d) all unfilled orders for Software Copies
         by Coherent will be canceled; and (e) the license in paragraph 2 will
         terminate (but not the End User License Agreement) and Coherent will
         cease distributing or licensing any Software or Software Copies. Except
         for paragraphs 2, 7 and 8(d), the provisions of this Distribution
         Agreement survive termination or expiration of this Distribution
         Agreement.

12.      Except for the warranty made directly to end users in the End User
         License Agreement, PHOTOGEN MAKES NO WARRANTIES TO ANY PERSON WITH
         RESPECT TO THE SOFTWARE OR SOFTWARE COPIES OR ANY SERVICES OR LICENSES
         AND DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION
         WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
         NON-INFRINGEMENT. Coherent will be responsible for all warranty returns
         from end users and will be entitled only to credit for amounts paid to
         Photogen for properly returned Software Copies that are not replaced.
         However, Photogen will indemnify, defend and hold Coherent harmless
         from and against all claims, allegations, loss, liability (including
         settlement payments), expenses (including reasonable attorneys' fees
         and expenses) Coherent incurs that arise out of or relate to any
         finding by a court of competent jurisdiction that the Software
         infringes on the intellectual property rights of any third party.

13.      Coherent will indemnify, defend and hold Photogen harmless from and
         against all claims, allegations, loss, liability (including settlement
         payments), expenses (including reasonable attorneys' fees and expenses)
         Photogen incurs that arise out of or relate to any breach of this
         Distribution Agreement or other wrongful act or omission by Coherent.
         Coherent will maintain comprehensive general liability insurance
         coverage (which will include products and completed operations hazards)
         with limits of at least $2,000,000 for each occurrence and will name
         Photogen as an additional insured.

14.      Notwithstanding anything to the contrary, Photogen will not be liable
         with respect to any subject matter of this Distribution Agreement under
         any contract, negligence, strict liability or other legal theory (a)
         for any amounts in excess, in the aggregate, of the amounts paid to
         Photogen under this Distribution Agreement, (b) for any incidental or
         consequential damages or for lost data or business interruption, (c)
         for cost of procuring substitute goods, technology or services, or (d)
         for loss or corruption of data or for interruption of use of a Laser
         System.

<PAGE>

Coherent Software Distribution Agreement
January 18, 2000
Page 6 of 6

15.      This Distribution Agreement: (a) does not render Photogen and Coherent
         are partners, joint venturers or agents of the other, and neither party
         will be responsible for the liabilities of the other party; (b) may not
         be assigned or delegated without the prior written consent of the other
         party; (c) will be governed by the internal laws of Tennessee (and not
         the law of conflicts); (d) together with its Exhibits, contains the
         entire agreement of the parties concerning the subject matter hereof
         and supersedes all prior negotiations, representations and agreements;
         and (e) together with its Exhibits, supersedes any inconsistent terms
         in any purchase order or other business form of either party. Notices
         under this Distribution Agreement will be legally effective only if in
         writing and received by the addressee, delivered by a courier service,
         or mailed by certified or registered mail, return receipt requested, or
         faxed to a party at its address set forth on page one of this
         Distribution Agreement. If any provision of this Distribution Agreement
         is held to be illegal or unenforceable, that provision shall be limited
         or eliminated to the minimum extent necessary so that this Distribution
         Agreement shall otherwise remain in full force and effect and
         enforceable.

          Please indicate Coherent's agreement to the foregoing by returning a
countersigned copy of this letter to me.

                                         Photogen, Inc.

                                         By:   /S/ ERIC WACHTER
                                               ---------------------------------
                                         Its:  VICE PRESIDENT AND SECRETARY
                                               ---------------------------------

Accepted and Agreed to:

Coherent, Inc.

By:   /S/ SCOTT MILLER
     ----------------------------
Its:    SR VP
     ----------------------------
Date:   1-19-00
      ---------------------------

<PAGE>

                                                                       EXHIBIT A

                              PRODUCTS AND PRICING

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION                                                                              UNIT PRICE
-------------------                                                                              ----------
<S>                                                                                             <C>
PulseView (-TM-)* ver. 2.6 Software Package (CD-ROM, installation
and user guide) and PulseView (-TM-) Interface Adapter, IST/LSA Ver. 2.6                          $[****]
</TABLE>

                                  PAYMENT TERMS

During the first 90 days of this Distribution Agreement, Coherent will pay the
Unit Price to Photogen as follows: 50% on order and 50% on delivery. Thereafter,
Coherent will pay the Unit Price on terms of 30 days net.

                          MINIMUM PERFORMANCE CRITERIA

Coherent will order no less than 25 Product Units within 90 days of the date of
this Distribution Agreement, and no less than an additional 25 Product Units
after that 90-day period during the Term of Agreement (50 Product Units, in
total, during the Term of Agreement). All Product Units must be ordered in
multiples of 25 Units or more per order.

                    UNILATERAL EXTENSION PERFORMANCE CRITERIA

Coherent may, solely at its discretion, extend this Distribution Agreement for
an additional period up to the specified Term of Agreement upon placement of
orders constituting a cumulative quantity of 400% or more of that specified
under terms of the Minimum Performance Criteria.

                                TERM OF AGREEMENT

The term of this Distribution Agreement shall be two years.

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

<PAGE>

                                   TRADEMARKS

PulseView (-TM-)* (U.S. trademark registration pending; name may be subject to
change prior to product release)
Photogen (-TM-) (U.S. trademark registration pending)

<PAGE>

                                                                       EXHIBIT B

                           END-USER LICENSE AGREEMENT

By opening the Software, packaging, clicking on the "license accept" button
during Software installation, or installing, copying or otherwise using the
Software, you agree to be bound by the terms of this EULA. IF YOU DO NOT AGREE
TO THE TERMS OF THIS EULA, WE ARE UNWILLING TO LICENSE THE SOFTWARE TO YOU AND
YOU MUST CLICK ON THE "CANCEL" BUTTON. In that case, you are not permitted to
use or copy the Software, and you must promptly contact Coherent, Inc.
("Coherent") for instructions on return of the product(s) for a refund.

      This End-User License Agreement ("EULA") is a legal agreement between you
(a single entity), a user of PulseView-TM- computer software, the associated
media, certain hardware accompanying the computer software, and any printed
materials (together, the "Software") developed by Photogen, Inc.
("Photogen," "we" or "us").

      1. This EULA grants you a non-sublicensable, nonexclusive right to use the
Software only with a laser or related equipment in accordance with the
documentation accompanying the Software and only for qualitative purposes in
research, development and similar activities. This ELUA does not grant you any
license to use the Software for commercial purposes, including without
limitation, manufacturing, or any purposes for which regulatory approval is
required, for any purposes involving human research or medical treatment, or in
any other way that violates any law or regulation or this EULA. The Software is
not designed or intended for use in environments requiring fail-safe performance
or in any other critical application. The Software has not been tested or
designed for use in medical environments or for any clinical purpose. The data
exhibited by the Software is for qualitative purposes only, and we do not
warrant the accuracy of any such data.

      2. Photogen owns the copyright to the Software. Accordingly, the Software
is protected by copyright laws and international copyright treaties, as well as
other intellectual property laws and treaties. The Software is licensed, not
sold.

      3. Your license to the Software is subject to the following restrictions:

         (a)  As between the parties, Photogen retains all title to and
              ownership of all copyright, patent, trade secret and other
              intellectual property and proprietary rights associated with the
              Software, including all documentation. You may not reverse
              engineer, decompile, or disassemble the Software, or attempt to
              reconstruct or discover any source code or underlying ideas or
              algorithms relating to the Software.

         (b)  The Software is licensed as a single product. Its component parts
              may not be separated or copied for use on more than one computer
              at any one time.

         (c)  You may not rent, lease, lend or otherwise transfer the Software.

<PAGE>

         (d)  Without prejudice to any other rights, Photogen or Coherent may
              terminate your right to use the Software under this EULA if you
              fail to comply with the terms and conditions of this EULA. In that
              event, you must destroy all copies of the Software and all of its
              component parts.

         (e)  Software labeled as an upgrade replaces and/or supplements any
              prior version of the Software. You may use the resulting upgraded
              product only in accordance with the terms of this EULA.

      4. You may copy the Software onto one or more computers but only one copy
of the Software may be used at any one time. You may also make a single back-up
copy of the Software and use that copy solely for archival purposes. Except for
the foregoing, you may not make any other copy or modify any aspect of the
Software, including the printed materials accompanying the Software. All rights
not specifically granted under this EULA are reserved by Photogen.

      5. You will not, directly or indirectly, export or transmit the Software
or related documentation and technical data.

      6. You may use the Software in connection with a government project on the
following terms: As defined in FAR section 2.101, DFAR section
252.227-7014(a)(1) and DFAR section 252.227-7014(a)(5) or otherwise, all
Software and accompanying documentation are "commercial items," "commercial
computer software" and/or "commercial computer-software documentation."
Consistent with DFAR section 227.7202 and FAR section 12.212, any use,
modification, reproduction, release, performance, display, disclosure or
distribution of the Software and documentation by or for the U.S. Government
will be governed solely by the terms of this EULA and will be prohibited except
to the extent expressly permitted by the terms of this EULA. You will ensure
that each copy used or possessed by or for the government is labeled to reflect
the foregoing.

      7. Product support for the Software is not provided by Photogen. For
product support, please refer to your applicable Coherent support contact or
representative.

      8. This EULA will be governed by the internal laws of Tennessee, United
States of America.

<PAGE>

                                LIMITED WARRANTY

      LIMITED WARRANTY. Photogen warrants to you, the end user, that (a) the
Software will perform substantially in accordance with the accompanying written
materials for a period of one (1) year from the date of receipt, and (b) any
Photogen hardware accompanying the Software will be free from defects in
materials and workmanship under normal use and service for a period of one (1)
year from the date of receipt. You must report any problems with the Software or
hardware to Coherent. This Limited Warranty covers only problems reported to
Coherent during the warranty period.

      END USER REMEDIES. Photogen's entire liability and your exclusive remedy
under this Limited Warranty shall be, at Photogen's option, either (a) return of
the price paid for the Software, or (b) repair or replacement of the Software or
hardware that does not meet this Limited Warranty and which is returned to
Coherent with appropriate documents verifying the delivery date. This Limited
Warranty is void if failure of the Software or hardware has resulted from
accident, abuse, misuse or misapplication. Any replacement Software or hardware
will be warranted for the remainder of the original warranty period or thirty
(30) days, whichever is longer.

      NO OTHER WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
PHOTOGEN DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT AND/OR ACCURACY OF DATA, WITH REGARD TO THE
SOFTWARE, THE ACCOMPANYING WRITTEN MATERIALS, AND ANY ACCOMPANYING HARDWARE.
THIS LIMITED WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER RIGHTS
WHICH VARY FROM STATE TO STATE.

      NO LIABILITY FOR CONSEQUENTIAL OR PUNITIVE DAMAGES.  To the maximum
extent permitted by applicable law, Photogen will not be liable for any
consequential or punitive damages whatsoever (including, without limitation,
special, incidental, consequential, or indirect damages for personal injury,
loss of profits, business interruption, loss of information, or any other
pecuniary loss) arising out of the use or inability to use the Software, even if
Photogen has been advised of the possibility of such damages. Photogen's entire
monetary liability under any provision of this EULA or otherwise shall be
limited to the amount actually paid by you for the Software and/or Photogen
hardware. Because some states or other local jurisdictions do not allow the
exclusion or limitation of liability for consequential, incidental or punitive
damages, the above limitation may not apply to you.

<PAGE>

                                                                       EXHIBIT C

                        PROPRIETARY INFORMATION AGREEMENT

      WHEREAS, COHERENT, INC., a Delaware corporation, hereinafter referred to
as COHERENT, makes and sells lasers, laser accessories, and laser systems and
medical instrumentation;

      WHEREAS, PHOTOGEN, INC. (hereinafter referred to as PARTY) believes it has
information or ideas relating to its PulseView-TM- software product, including,
without limitation, the computer code, algorithms, know-how related thereto
(hereinafter referred to as Confidential Information), which may assist COHERENT
in connection with the Coherent Software Distribution Agreement between COHERENT
and PARTY dated January 18, 2000 (hereinafter referred to as Distribution
Agreement), and desires to disclose said Confidential Information to COHERENT;

      WHEREAS, COHERENT is willing to receive said Confidential Information
under certain conditions;

      NOW, THEREFORE, in consideration of the promises exchanged herein,
COHERENT and PARTY agree as follows:

      (1) COHERENT will not use said Confidential Information except for
purposes of the Distribution Agreement as set forth hereinabove. COHERENT will
not disclose said Confidential Information and shall restrict access to
Confidential Information to only such authorized employees and other agents who
have a need for access to the Confidential Information in connection with their
activities as contemplated by the Distribution Agreement, and will take all
steps necessary to ensure that such employees and agents comply with the terms
hereof.

      (2) All Confidential Information disclosed hereunder shall be in writing,
marked with the word CONFIDENTIAL, SECRET, or PROPRIETARY and dated in the first
instance or, if oral, shall be promptly confirmed in writing, marked with the
word CONFIDENTIAL and dated. This Agreement shall not apply to Confidential
Information disclosed after the date hereof in writing, not marked as set forth
herein or to Confidential Information disclosed after the date hereof orally and
not confirmed in writing and marked within thirty (30) days of the initial oral
disclosure. This Agreement shall also apply to Confidential Infomration
disclosed after February 25, 1999 which otherwise falls within the definition as
set forth herein and which is marked CONFIDENTIAL or confirmed in writing and so
marked within thirty (30) days after the date hereof.

      (3) The commitments set forth in (1) above shall not extend to any
 disclosure of Confidential Information:

         (a)  Which is generally available to the public prior to its
disclosure; or

         (b) Which is known to COHERENT prior to the disclosure thereof as
evidenced by written

<PAGE>

and dated material in its possession; or

         (c) Which, through no fault of COHERENT (including its agents,
representatives, and / or employees), becomes available to the public after the
disclosure hereof; or

         (d) Which is disclosed to COHERENT by a third party having a bona fide
right to do so; or

         (e) Which is approved for release by the written authorization of
PARTY; or

         (f) Which is disclosed pursuant to the requirement of a government
agency or by operation of law, provided COHERENT notifies PART of such
requirement and provides reasonable cooperation with PARTY'S efforts to restrict
such disclosure; or

         (g) Which is developed by COHERENT completely independent of
Confidential Information provided under this Agreement as evidenced by
COHERENT's written records or other competent written evidence;

         (h) Which becomes available to the public despite COHERENT having taken
the same level of care to safeguard said Confidential Information as it would
its own proprietary information; or

         (i) Which is more than five years after the date of initial disclosure.

      (4) This Agreement covers only information disclosed during the term of
the Distribution Agreement. In the event of any inconsistency between the terms
of this Agreement and the Distribution Agreement, the provisions of the
Distribution Agreement shall control.

      (5) COHERENT acknowledges that unauthorized disclosure or use of
Confidential Information could cause irreparable harm and significant injury to
PARTY, the amounts of which would be difficult to ascertain. Accordingly,
COHERENT agrees that PARTY shall have the right to seek and obtain immediate
injunctive relief from breaches of this Agreement, in addition to any other
rights and remedies it may have.

      (6) PARTY represents that it has the legal right to make disclosures of
Confidential Information under this Agreement.

      (7) No representation or warranty is made as to the accuracy, completeness
or technical or scientific quality of the Confidential Information disclosed
hereunder.

      (8) This Agreement shall be deemed to have been entered into and shall be
construed in accordance with the laws of the State of California.

      (9) Any materials or documents of PARTY which have been furnished to
COHERENT will be promptly returned to PARTY upon PARTY's request. Historical
information copies may be kept by the Party's attorney for purposes of file
continuity. COHERENT's attorney shall provide PARTY written confirmation of the
receipt of such information.

<PAGE>

      (10) The undersigned represent and warrant that they are legal
representatives of, and have the authority to execute this Agreement on behalf
of their respective parties. In the case of COHERENT, this Agreement shall be
valid and binding only if it is signed by an Officer of COHERENT.

PHOTOGEN, INC.                                   COHERENT, INC.

By:   /S/ ERIC WACHTER                           By:   /S/ SCOTT MILLER
     ---------------------------------               ---------------------------
Title:  VICE PRESIDENT AND SECRETARY             Title: SR VP
       -------------------------------                  ------------------------
Date:   18 JAN 2000                              Date:    1-19-00
      --------------------------------                 -------------------------<PAGE>

                                                                   Exhibit 10.37

                      EQUIPMENT LEASE (WITH ALL SCHEDULES)

         This Equipment Lease, No. 8520 (this Equipment Lease and all Equipment
Schedules collectively be referred to herein as "Agreement") made this 25th day
of October, 1999, between Picker Financial Group, L.L.C., a Limited Liability
Company, 585 Miner Road, Cleveland, Ohio 44143 ("Lessor"), and Photogen, Inc., a
Corporation, 7327 Oak Ridge Highway, Knoxville, TN 37931 ("Lessee").

         In consideration of the mutual covenants and promises hereinafter set
forth, the parties hereto agree as follows:

         1. UPGRADES: LESSOR SHALL, DURING THE TERM OF ANY EQUIPMENT SCHEDULE,
MAKE AVAILABLE TO LESSEE, AT LESSOR'S THEN CURRENT RATES AND TERMS, UPGRADES TO
THE EQUIPMENT THEN BEING OFFERED BY PICKER INTERNATIONAL, INC., AND AVAILABLE TO
LESSOR.

         2. PROPERTY LEASED: Lessor hereby rents and leases to Lessee and Lessee
hereby rents and leases from Lessor each unit of Equipment described on one or
more Schedules executed pursuant to the terms hereof. Each Schedule shall be
deemed an independently assignment and separate lease contract incorporating the
terms and conditions of this Lease. The word "Equipment" as used herein shall
mean the medical diagnostic equipment, upgrades, optional equipment, software
license, fixtures or other personal property more specifically described on a
Schedule, together with all parts, replacements, additions, repairs, accessions
and accessories incorporated therein or affixed thereto. Options and/or
accessories, including but not limited to developmental options, which are
subject to backorder may be described in separate Schedules at the option of
Lessor. To the extent that the terms of any Schedule conflict with the terms of
this Lease, the terms of such Schedule shall prevail. To the extent that Article
2A of the Uniform Commercial Code ("Code") applies, by executing this Agreement
Lessee agrees that this Agreement shall constitute a "finance lease" as defined
by the Code; and Lessee represents and warrants that Lessee has been informed or
advised in writing by Lessor (i) of the identity of the supplier (by reflection
in the applicable Schedule) ("Supplier"), (ii) that Lessee may have rights under
the related supply contract and (iii) that Lessee may contact the Supplier for a
description of such rights. Lessee shall be deemed to have irrevocably accepted
the Equipment on the earlier of (1) the date reflected in a complete and
properly executed Certificate of Acceptance which is delivered to Lessor or (2)
first clinical use of the Equipment by Lessee ("Rental Commencement Date").
Acceptance pursuant to subsection (1) or (2) of this Section shall constitute
Lessee's warranty and representation that it has unconditionally accepted the
Equipment. If Lessee properly rejects the Equipment by providing Lessor with
written notice of non-acceptance specifying the reasons therefor within ten (10)
days after completion of installation and first clinical usage, (a) Lessor and
Lessee shall be relieved of all obligations under such Schedule; (b)

                                       -1-

<PAGE>

Lessor shall retain any Advance Lease payments as liquidated damages for loss of
a bargain and not as a penalty, and (c) Lessee shall retain all rights and
obligations under any purchase order respecting the Equipment.

         3. SELECTION OF EQUIPMENT: LESSEE ACKNOWLEDGES AND AGREES THAT THE
EQUIPMENT LEASED UNDER EACH SCHEDULE WAS SELECTED BY LESSEE AND PURCHASED BY
LESSOR FOR LEASE TO LESSEE, AND THAT LESSEE IS SATISFIED THAT THE EQUIPMENT IS
SUITABLE FOR LESSEE'S PURPOSES.

         4. LEASE TERM: This Agreement will become effective as of the date
shown above upon its execution by both Lessee and Lessor. The Schedule term will
commence on the first day of the month or quarter, as applicable ("Commencement
Date"), following the Rental Commencement Date, and shall continue for the term
stated on the Applicable Schedule ("Initial Term"). If Lessee does not, prior to
the expiration of the Initial Term, select any of the end-of-term options set
forth in the Schedule, Lessor may either terminate the applicable Schedule and
remove the Equipment, or extend the term as provided in Section 14.

         5. RENT: The aggregate rent payable with respect to the Equipment shall
be in the amount shown on the applicable Schedule. Lessee shall pay to Lessor
the aggregate rental for the Equipment for the Initial Term, such rental to be
payable in the number and in the amount of successive monthly or quarterly
installments indicated on the applicable Schedule. Each installment is due and
payable in advance on the first day of each calendar month or quarter until the
aggregate rent is fully paid. If the Rental Commencement Date of any Schedule
shall be other than the first day of the month or quarter, as the case may be,
Lessee shall make rental payments ("Interim Rent") equal to one-thirtieth (1/30)
of the monthly rent or one-ninetieth (1/90) of the quarterly rent set forth in
the Schedule for each day from and including the Rental Commencement Date,
through and including the last day of the month or quarter prior to the
beginning of the Initial Term. Interim Rent is due and payable concurrently with
the first rental payment of the Initial Term. All rent shall be paid at Lessor's
place of business shown above, or such other place as Lessor may designate in
writing to Lessee. Delinquent installments of rent, as well as all other monies
due but unpaid, shall be subject to a late charge of five percent (5%) of the
unpaid installment if not prohibited by law, or otherwise at the highest amount
lawfully payable by Lessee.

         6. TITLE AND ASSIGNMENT: Nothing contained in any Schedule shall give
or convey to Lessee any right, title or interest in or to the Equipment, except
as a Lessee as set forth therein, and Lessee represents and agrees that Lessee
shall hold the Equipment subject and subordinate to the rights of the owner.
Lessor, any assignee and any secured party (as described in Section 17), and
Lessee shall furnish Lessor with such documentation as Lessor shall reasonably
require with respect thereto. Lessor is hereby authorized by Lessee to cause
this Lease, any Schedule or any statement or other instrument in respect of any
Schedule as may be required by law showing the interest of Lessor, any assignee
and any secured party in the Equipment to be filed, and Lessee agrees to execute
and deliver Uniform Commercial Code financing statements, certificates of

                                       -2-

<PAGE>

title and fixture filings reasonably requested by Lessor for such purpose.
Lessee shall, at its expense, protect and defend Lessor's title as well as the
interest of any assignee and any secured party against all persons claiming
against or through Lessee and shall at all times keep the Equipment free and
clear from any legal process, liens, claims or encumbrances whatsoever (except
any placed thereon by Lessor) and shall give Lessor immediate written notice
thereof and shall indemnify and hold Lessor, any assignee and any secured party
harmless from and against any loss caused thereby. It is expressly understood
that all of the Equipment shall be and remain personal property notwithstanding
the manner in which the Equipment may be attached or affixed to realty. LESSEE
AGREES THAT WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, LESSEE WILL NOT ASSIGN,
TRANSFER OR SUBLEASE ITS RIGHTS UNDER THIS LEASE OR ANY SCHEDULE, OR REMOVE OR
SUFFER THE EQUIPMENT OR ANY PARTS THEREOF TO BE REMOVED FROM THE EQUIPMENT
LOCATION SPECIFIED IN THE APPLICABLE SCHEDULE OR PERMIT THE EQUIPMENT TO BE USED
BY ANYONE OTHER THAN LESSEE AND LESSEE'S EMPLOYEES AND AUTHORIZED AGENTS. Lessor
shall have the right from time to time during reasonable business hours to enter
upon Lessee's premises or elsewhere for the purpose of confirming the existence
and condition of the Equipment and, at Lessor's request, Lessee will securely
affix conspicuous tags or plates thereon containing a notation that the same is
owned by and is the property of Lessor or its assignee, if any. Lessor shall
also have the right to demonstrate and show the Equipment to others at times
agreeable to Lessee.

         7.       MAINTENANCE:

                  a. If Lessee selects the "FullService" option under any
         Schedule, the following provisions shall apply only to Equipment
         supplied by Picker International; Lessee understands that Lessor is
         acting as an administrator for maintenance, repair and warranty work
         provided by Picker International ("Provider") with respect to the
         billing and collecting of maintenance and repair charges and is not a
         supplier of any maintenance or repair work. Lessee will look solely to
         Provider for the same, and Lessee's obligation to make Lease Payments
         shall remain unconditional.

                  b. The following provisions shall apply to Equipment not
         covered by a "FullService" option: Lessee shall, at its sole expense,
         at all times during the term of each Schedule, maintain the Equipment
         in good operating order, repair, condition and appearance and protect
         the Equipment from deterioration, other than normal wear and tear.
         Lessee shall not use the Equipment for any purpose other than that for
         which it was designed. Lessee's obligation regarding the maintenance of
         the Equipment shall include, without limitation, all maintenance and
         repair recommended or advised either by the manufacturer, government
         agencies, or regulatory bodies and those commonly performed in prudent
         business and/or professional practice. Upon return of the Equipment,
         Lessee shall provide Lessor with a letter from the manufacturer
         certifying that the Equipment meets all current specifications of the
         manufacturer, is in compliance with any and all pertinent governmental
         or regulatory rules, laws or guidelines for its operation or use, is

                                       -3-

<PAGE>

         qualified for the manufacturer's maintenance contract and is at then
         current release, revision and engineering change levels. If Lessee has
         the Equipment maintained by a party other than the manufacturer, Lessee
         hereby assumes and agrees to pay any costs necessary to have the
         manufacturer re-certify the Equipment at the scheduled expiration of
         the Schedule term, which Schedule term shall continue upon the same
         terms and conditions until such re-certification has been obtained.

         8. NO WARRANTY: EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSOR MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION THE DESIGN OR CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS
FITNESS FOR A PARTICULAR PURPOSE, AND, AS TO LESSOR, LESSEE LEASES THE EQUIPMENT
"AS IS." Lessor hereby appoints Lessee as Lessor's agent to assert, during the
term of the applicable Schedule, any right Lessor may have to enforce the
manufacturer's warranties, if any; provided, however, that Lessee shall
indemnify and hold Lessor or its assignee harmless from and against any and all
claims, costs, expenses, damages, losses and liabilities, including without
limitation attorneys' fees and costs, incurred or suffered by Lessor as a result
of or incident to any action by Lessee in connection therewith.

         9. LIMITATION OF LIABILITY: LESSOR SHALL HAVE NO LIABILITY FOR ANY
CONSEQUENTIAL, INCIDENTAL, OR SPECIAL DAMAGES BY REASON OF ANY ACT OR OMISSION
OR ARISING OUT OF OR IN CONNECTION WITH THE EQUIPMENT OR ITS LEASE, DELIVERY,
INSTALLATION, MAINTENANCE, OPERATION, PERFORMANCE, OR USE, INCLUDING WITHOUT
LIMITATION ANY LOSS OF USE, LOST REVENUE, LOST PROFITS, OR COST ASSOCIATED WITH
DOWNTIME. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LESSEE HEREBY WAIVES ANY
AND ALL RIGHTS AND REMEDIES CONFERRED UPON A LESSEE UNDER THE CODE, ARTICLE 2A.

         10. FEES AND TAXES: Lessee agrees to pay promptly when due all
registration, title and license fees, assessments and sales, use, gross
receipts, property, stamp, recordation, personal property and other taxes of
whatsoever nature and by whomsoever payable (except Federal or state taxes
levied on Lessor's net income), now or hereafter imposed by any state, Federal,
local or foreign government upon the use, ownership, rental, shipment,
transportation, delivery or operation of the Equipment nor upon or measured by
any payments due hereunder. In the event any such registration, title and
license fees, assessments, taxes, and penalties, or interest thereon, shall be
paid by Lessor or if Lessor shall be so assessed or be required to collect or
pay any thereof, Lessee shall reimburse Lessor therefor promptly upon demand as
additional rent hereunder. Lessee agrees, at Lessee's sole expense, to procure
and maintain in effect all licenses, certificates, permits and other approvals
and consents required by municipal, state, Federal or foreign laws and
regulations in connection with the possession, use and operation of the
Equipment. Lessee identifies and agrees to hold Lessor harmless from and against
any loss or damage arising from the loss, disallowance or recapture of any tax
benefits anticipated to be

                                       -4-

<PAGE>

realized by Lessor from the ownership of the Equipment, to the extent the same
are caused by any act or omission of Lessee. This provision shall survive the
expiration of the Lease and all Schedules.

         11. RISK OF LOSS, INDEMNITY AND LIABILITY INSURANCE: Lessee indemnifies
and agrees to hold Lessor, its agents, any assignee and any secured party
harmless from and against any and all claims, costs, expenses, damages and
liabilities (including without limitation such claims, costs, expenses, damages
and liabilities based on liability in tort including without limitation strict
liability in tort), including reasonable attorneys' fees, arising out of the
ownership, selection, possession, leasing, renting, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment.
Notwithstanding the foregoing, Lessee shall not be responsible under the terms
of this section to a party indemnified hereunder for any claims, costs,
expenses, damages and liabilities occasioned by the gross negligence or willful
misconduct of such indemnified party. Lessor shall give Lessee prompt notice of
any claim or liability hereby indemnified against. Lessee shall be entitled to
control the defense thereof, so long as Lessee is not in default hereunder;
provided, however, that Lessor shall have the right to approve defense counsel
selected by Lessee. The obligations contained in this paragraph continue beyond
the termination of this Lease and all Schedules if the liability relates to an
event occurring during the term of the Lease or any Schedule. Effective upon
delivery of the Equipment to Lessee under the applicable Schedule and during the
Initial Term and any extended term, Lessee shall, at its own expense, cause to
be carried and maintain comprehensive general liability insurance with regard to
risks customarily insured against in the medical field. Such risks shall
include, without limitation, the risks of death, bodily injury and property
damage associated with the Equipment. The amount of such general liability
insurance shall not be less than $3,000,000 per occurrence. Such insurance shall
survive the expiration or other termination of the applicable Schedule with
regard to claims which relate to events occurring during the term of the
applicable Schedule. Each insurance policy will name Lessee as an insured and
Lessor, and Lessor's successor assignee, if any, as additional insureds thereto
as their interests may appear, and shall contain a clause requiring the insurer
to give Lessor and Lessor's successor assignee, if any, at least thirty (30)
days prior written notice of any alteration in the terms of such policy or of
the cancellation thereof. Lessee shall furnish to Lessor a certificate of
insurance or other evidence satisfactory to Lessor that such insurance coverage
is in effect; provided, however, that Lessor shall be under no duty either to
ascertain the existence of or to examine such insurance policy or to advise
Lessee in the event such insurance coverage shall not comply with the
requirements hereof. Lessee or its sub-lessee user, if applicable, is covered by
professional liability insurance in amounts customarily carried against risks
customarily insured against in the medical field.

         12. PROPERTY INSURANCE: During the term of this Lease and while any
obligation is owed to Lessor by Lessee under any Schedule issued pursuant
hereto, Lessee agrees and acknowledges that all risks of loss, theft, damage or
destruction of the Equipment subsequent to delivery and from any cause
whatsoever shall be borne by Lessee. In the event that any item of Equipment
shall become lost, stolen, destroyed or damaged beyond repair for any reason, or
in the event of any condemnation, confiscation, theft, or seizure or acquisition
of title to or use of

                                       -5-

<PAGE>

such item, Lessee shall promptly pay to lessor all rent then due, plus the
Casualty Value. As used herein, "Casualty Value" of any Equipment means, as of
the date of determination, the sum of (a) the aggregate of all rentals for the
remaining term of the Schedule relating to such Equipment, discounted to present
value at such date at the rate of five percent (5%) per annum, plus (b) the
estimated fair market value of such Equipment at the end of such term, as
determined by Lessor in its sole discretion. Lessee, at its own expense, shall
obtain and maintain for the Initial Term of any Schedule and any extended term
property damage insurance against all risk of loss or damage to the Equipment,
including loss by electrical injury and mechanical breakdown (boiler and
machinery endorsement), earthquake and flood, in such form and with such
insurers as shall be acceptable to Lessor; provided, however, that the amount of
insurance against loss or damage to the Equipment shall not be less than the
Casualty Value. The proceeds of such insurance, at the option of Lessor, shall
be applied toward (a) the replacement, restoration or repair of the lost or
damaged Equipment, in which case the related Schedule shall remain in full force
and effect with respect to the replacement Equipment or the restored or repaired
Equipment, or (b) the payment to Lessor of the Casualty Value, in which case the
related Schedule shall terminate. Each insurance policy will name Lessee as an
insured and Lessor, and Lessor's successor or assignee, if any, as loss payees
thereof as their interests may appear, and shall contain a clause requiring the
insurer to give Lessor and Lessor's successor assignee, if any, at least thirty
(30) days prior written notice of any alteration in the terms of such policy or
of the cancellation thereof. Lessee shall furnish to Lessor a certificate of
insurance or other evidence satisfactory to Lessor that such insurance coverage
is in effect; provided, however, that Lessor shall be under no duty either to
ascertain the existence of or to examine such insurance policy or to advise
Lessee in the event such insurance coverage shall not comply with the
requirements hereof. Lessee further agrees to give Lessor prompt notice of any
damage to, or loss of, the Equipment or any part thereof, and at Lessor's
request, to appoint Lessor as Lessee's attorney-in-fact to make claim for,
receive payment of, and execute and endorse all documents, checks or drafts with
respect to any loss or damage under any insurance policy maintained hereunder.

         13. USE OF EQUIPMENT: LESSEE REPRESENTS TO LESSOR THAT THE EQUIPMENT
WILL BE USED BY LESSEE SOLELY FOR BUSINESS OR COMMERCIAL PURPOSES. The operation
and use of the Equipment shall be solely at the risk of Lessee and not of
Lessor. Lessee warrants that the Equipment will at all times be used and
operated in compliance with the conditions of any applicable insurance, by
competent and trained operators in accordance with the vendor's or
manufacturer's instructions and under and in compliance with the laws of the
jurisdiction in which such Equipment may be operated; which operators are
covered by professional liability insurance in amounts customarily carried
against risks customarily insured against in the medical field, and in
compliance with all lawful acts, rules, regulations and orders of any judicial,
legislative or regulatory body having power to regulate or supervise the use of
such property; provided, however, that Lessee may in good faith contest in any
reasonable manner the application of any such rules, regulations or orders to
the extent that such contest does not adversely affect the title of Lessor to
any unit of Equipment, create any lien or encumbrance against the Equipment or
result in the forfeiture or sale of any of the Equipment. Lessee shall not
alter, modify or make additions or improvements to the Equipment without

                                       -6-

<PAGE>

Lessor's prior written consent. Unless otherwise agreed in writing, any such
alterations, modifications, additions or improvements shall forthwith upon the
making thereof become the property of Lessor and shall be subject to the terms
of this Lease.

         14. RETURN OF EQUIPMENT: Upon the expiration or other termination of
the Initial Term of the related Schedule or any extension thereof in respect to
any of the Equipment, and unless the Equipment is purchased by Lessee, Lessee
will surrender and return possession of such Equipment to Lessor in good order
and repair, ordinary wear and tear excepted. Upon expiration of the applicable
Schedule and surrender of the Equipment to Lessor, Lessor shall arrange for its
removal and return at Lessor's expense (with the exception of magnetic resonance
imaging equipment, the removal and return of which shall be at Lessee's
expense). The cost of Equipment removal prior to expiration of the Schedule
shall be at Lessee's expense. In the event Lessee makes structural modifications
to the premises after the Equipment has been placed at the Equipment location,
and such modification impedes the removal of the Equipment, the cost of removing
and restoring the impediments shall be assumed by Lessee. If Lessee shall fail
to return the Equipment as provided herein, then, at Lessor's exclusive option,
this Lease and the applicable Schedule may be continued on a month-to-month (or
quarter-to-quarter) basis until Lessee returns the Equipment to Lessor, on not
less than thirty (30) days notice. In the event this Lease and applicable
Schedule are so continued, Lessee shall pay to Lessor rent in the highest
periodic amounts as provided in the applicable Schedule for the Equipment not
returned.

         15. EVENTS OF DEFAULT: The occurrence of any of the following shall
constitute an Event of Default hereunder:

                  a.       Lessee fails to pay any installment of rent or other
                  amount when due;

                  b.       Lessee breaches any representation or warranty made
                  herein, or in the applicable Schedule;

                  c.       Lessee fails to observe or perform any of its
                  obligations required to be observed or performed by Lessee
                  under this Lease and the applicable Schedule, or relating to
                  any other obligation or indebtedness of Lessee to Lessor
                  otherwise owing or due by Lessee to Lessor in any other
                  agreement now or hereafter executed between the parties hereto
                  and such failure shall continue uncured for twenty (20) days
                  after written notice thereof to Lessee by Lessor;

                  d.       Lessee ceases doing business as a going concern,
                  makes an assignment for the benefit of creditors, admits in
                  writing its inability to pay its debts as they become due,
                  files a voluntary petition in bankruptcy, is adjudicated a
                  bankrupt or an insolvent, files a petition seeking for itself
                  any reorganization, arrangement, composition, readjustment,
                  liquidation, dissolution or similar arrangement under any
                  present or future statute, law or regulation or files an
                  answer admitting the material allegations of a petition filed
                  against it in any such proceeding, consents to or acquiesces
                  in the appointment of a trustee,

                                       -7-

<PAGE>

                  custodian, receiver ore liquidator of it or of all or any
                  substantial part of its assets or properties; or its
                  shareholders take any action looking to its dissolution or
                  liquidation, or an order for relief is entered under the
                  United States Bankruptcy Code against Lessee;

                  e.       Within thirty (30) days after the commencement of any
                  proceedings against Lessee seeking reorganization,
                  arrangement, readjustment, liquidation, dissolution or similar
                  relief under any present or future statute, law or regulation,
                  such proceedings shall not have been dismissed; or within
                  thirty (30) days after the appointment without Lessee's
                  consent or acquiescence of any trustee, custodian, receiver or
                  liquidator of it or of all or any substantial part of its
                  assets and properties, such appointment shall not be vacated;

                  f.       Lessee defaults under any Schedule or any other
                  agreement executed at any time with Lessor or its assignee.

         16. REMEDIES: Upon the occurrence of any Event of Default, Lessor may
at its option do any or all of the following: (i) by notice to Lessee, terminate
this Lease as to any or all Schedules; (ii) whether or not this Lease and/or any
Schedule(s) are so terminated, take possession of any or all of the Equipment
listed on such Schedules, wherever situated, and for such purpose, enter upon
any premises without liability for so doing, or Lessor may cause Lessee and
Lessee hereby agrees, to return said Equipment to Lessor as provided in this
Lease; (iii) declare all sums due and to become due hereunder for the full term
of the applicable Schedule(s) immediately due and payable; (iv) recover from
Lessee, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to the Casualty Value (as such term is defined in Section 12) due
under any Schedule, which amount shall become immediately due and payable; (v)
sell, dispose of, hold, use or lease any Equipment as Lessor, in its sole
discretion may determine; and (vi) exercise any other right or remedy which may
be available to it under the Uniform Commercial Code or applicable law including
without limitation the right to recover damages for breach hereof. Except as to
items or Schedules with respect to which Lessor has elected to terminate, this
Lease and all Schedules shall remain in full force and effect and Lessee shall
be obligated to perform all acts, obligations and to pay all rent and other
amounts required under this Lease and such Schedules. In the event that Lessee
shall have paid to Lessor the liquidated damages referred to in (iv) above,
Lessor hereby agrees to pay to Lessee, promptly after receipt thereof, all
rentals or proceeds received from the reletting or sale of the Equipment during
the balance of the term of the Schedule for such Equipment (after deduction of
all expenses incurred by Lessor), said amount never to exceed the amount of the
liquidated damages paid by Lessee. Lessee shall in any event remain fully liable
for reasonable damages as provided by law and for all costs and expenses
incurred by Lessor on account of such default, including but not limited to all
court costs and reasonable attorney fees. Lessee hereby agrees that, in any
event, it will remain liable for any deficiency after any sale, lease or other
disposition by Lessor. The rights afforded Lessor hereunder shall not be deemed
to be exclusive, but shall be in addition to any rights or remedies provided by
law.

                                       -8-

<PAGE>

         17. ASSIGNMENT: Lessor may assign a Schedule and/or grant a security
interest in the related Equipment in whole or in part, without notice to Lessee,
and any such assignee or secured party may reassign the Schedule and such
interest without notice to Lessee. Lessee agrees to execute and deliver such
documents as any such assignee or secured party may reasonably request in
connection with such assignment or loan. Each assignee or secured party shall
have all the rights but none of the obligations of Lessor under the applicable
Schedule, and Lessee shall, upon receipt of proper notice thereof, recognize
each such assignment or grant of security interest and shall comply with the
directions or demand given in writing by any such assignee or secured party.
Lessee shall not assert against the assignee or secured party any defense,
counterclaim or set-off that Lessee may have against Lessor. It is further
acknowledged and agreed that the assignee shall be entitled to all of Lessor's
rights, privileges and powers, but none of Lessor's obligations, under this
Agreement and that any assignment by Lessor shall not materially change Lessee's
obligations or increase Lessee's burdens hereunder.

         18. NO AGENCY: No person except a duly authorized officer of Lessor
shall have any power to modify, amend or waive any of the provisions hereunder,
and all sums to be paid hereunder shall be paid only in the name of and to
Lessor or to its assignee. Neither the manufacturer or other vendor of the
Equipment nor any salesman or agent thereof is an agent of Lessor, and no such
person is authorized to waive, alter or amend any term or condition hereof or to
make any representation on behalf of Lessor.

         19. FINANCIAL STATEMENTS: Lessee agrees to provide Lessor as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of Lessee a copy of its audited statement of income and surplus for such
year and its balance sheet as at the end of such year, all in reasonable detail
and certified by an independent certified public accountant, without material
qualification and in form consistent with statements of previous years, and
promptly upon Lessor's request, a copy of its interim statement of income and
balance sheet for the most recent quarter, and such other financial information
as is reasonably requested by Lessor. Lessor shall have the right, without
liability, to decline to enter into any Schedule (whether or not submitted to
Lessee for signature by Lessee) if, in Lessor's sole opinion, any material
adverse change in the business, condition (financial or otherwise) or prospects
of Lessee shall have occurred prior to the Rental Commencement Date for such
Schedule.

         20. ABSOLUTE LEASE: THIS LEASE IS IRREVOCABLE FOR THE FULL TERM AND FOR
THE AGGREGATE RENTALS AS SET FORTH IN EACH SCHEDULE. LESSOR AND LESSEE
ACKNOWLEDGE AND AGREE THAT SUCH SCHEDULE CONSTITUTES A NET LEASE AND THAT
LESSEE'S OBLIGATION TO PAY ALL RENT AND ANY AND ALL AMOUNTS PAYABLE BY LESSEE
UNDER ANY SCHEDULE SHALL BE ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT
TO ANY ABATEMENT, REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM, INTERRUPTION,
DEFERMENT OR RECOUPMENT FOR ANY REASON WHATSOEVER, AND THAT SUCH PAYMENTS SHALL
BE AND CONTINUE TO BE PAYABLE IN ALL EVENTS. LESSEE ACKNOWLEDGES AND AGREES THAT
LESSOR IS NOT THE

                                       -9-

<PAGE>

MANUFACTURER OR SUPPLIER OF ANY EQUIPMENT, NOR IS LESSOR THE MAINTENANCE, REPAIR
OR EQUIPMENT WARRANTY WORK PROVIDER AND THAT LESSEE WILL NOT OFFSET, WITHHOLD OR
FAIL TO MAKE ANY PAYMENT TO LESSOR BY REASON OF ANY CLAIM RELATED TO THE
MANUFACTURE OF THE EQUIPMENT OR A DEFECT IN THE EQUIPMENT OR TO MAINTENANCE,
REPAIR, OR WARRANTY WORK.

         21. SEVERABILITY: In the event any section or paragraph is invalidated
for any reason whatsoever, the parties agree that this Lease and all Schedules
shall remain binding between them and in full force and effect except for such
invalidated section or paragraph.

         22. REPRESENTATIONS AND WARRANTIES: Each party hereby represents,
warrants and covenants that, with respect to this Lease and each Schedule
executed hereunder, (a) the execution, delivery and performance thereof have
been duly authorized, (b) the individual executing such was duly authorized to
do so, and (c) this Lease and each Schedule constitute legal, valid and binding
agreements enforceable in accordance with their respective terms.

         23. GOVERNING LAW AND JURISDICTION: THIS LEASE AND ANY SCHEDULES
ENTERED INTO INCORPORATING THE TERMS OF THIS LEASE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OHIO WITHOUT
REGARD TO ITS CHOICE OF LAW RULES. LESSEE EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY. The parties hereto hereby agree that actions arising out of this Lease
and/or any Schedule, may be litigated under the laws of the State of Ohio, and
that service of process by certified mail, return receipt requested, will be
sufficient to confer personal jurisdiction over the parties hereto. Each of the
parties hereto submits to the jurisdiction of the courts of the State of Ohio.

         24. GENERAL PROVISIONS: It is understood and agreed that, so long as
Lessee is not in default thereunder, Lessee shall peacefully and quietly hold
the Equipment during the term hereof without interference from Lessor. Any
obligation of Lessor shall be excused to the extent Lessor is delayed or
hindered or prevented from complying therewith because of any matter beyond its
control. All of Lessee's covenants herein shall survive the termination of this
Lease and the return of the Equipment. Notices hereunder shall be given in
writing and mailed to the other party at the address specified for each herein.
Notices cannot be waived except by the written consent of the party entitled to
receive such notice. Forbearance or indulgence by Lessor in any regard
whatsoever shall not constitute a waiver of the covenant or condition to be
performed by Lessee to which the same may apply, and until complete performance
by Lessee of said covenant or condition. Lessor shall be entitled to invoke any
remedy available to Lessor under this Lease or by law or in equity despite said
forbearance or indulgence. Section headings are for convenience and are not a
part of this Lease. This Lease (including the Lease, each Schedule, and any
addendum to either or both thereof) embodies the entire agreement between Lessor
and Lessee with respect to the subject matter hereof, and nothing is to be
construed as conveying to Lessee any rights in the Equipment except as Lessee
thereof and on the terms and

                                      -10-

<PAGE>

conditions herein provided. THERE ARE NO ORAL COVENANTS OR AGREEMENTS MADE BY
EITHER PARTY HERETO EXCEPT AS REDUCED TO WRITING HEREIN. NEITHER THIS LEASE NOR
ANY SCHEDULE MAY BE TERMINATED, MODIFIED OR AMENDED, AND NO WAIVER OF ANY
PROVISION HEREIN OR THEREIN SHALL BE DEEMED TO HAVE OCCURRED REGARDLESS OF THE
ACTION OR INACTION OF LESSOR IN CONNECTION THEREWITH EXCEPT ON THE WRITTEN
AGREEMENT OF THE PARTIES HERETO. NEITHER THIS LEASE NOR ANY SCHEDULE SHALL BE
BINDING UPON LESSOR UNLESS EXECUTED ON BEHALF OF LESSOR BY ITS DULY AUTHORIZED
OFFICER. LESSEE CERTIFIES THAT IT HAS READ AND RECEIVED A COPY OF THIS
AGREEMENT. LESSEE UNDERSTANDS AND AGREES THAT NEITHER THE SUPPLIER OF THE
EQUIPMENT NOR ANY SALESPERSON OR OTHER AGENT OR EMPLOYEE OF THE SUPPLIER IS AN
AGENT OF THE LESSOR OR HAS ANY AUTHORITY TO SPEAK FOR OR TO BIND LESSOR IN ANY
WAY. LESSOR IS NOT AN AGENT OR REPRESENTATIVE OF THE SUPPLIER. LESSEE HEREBY
AUTHORIZES LESSOR TO RELY ON FACSIMILE SIGNATURES OF LESSEE AND AGREES TO
PROVIDE THE ORIGINAL OF THE PERTINENT DOCUMENT TO LESSOR WITHIN FIVE BUSINESS
DAYS AFTER FACSIMILE TRANSMISSION.

LESSOR:                                LESSEE:
         PICKER FINANCIAL GROUP,                PHOTOGEN, INC..
         L.L.C.

By:     /s/ Karen L. Sawonik                   /s/ John Smolik
   ----------------------------------  ----------------------------
                                       By: John Smolik
Title: Karen L. Sawonik, Dir. of Ops.  Title: President

                                      -11-

<PAGE>

EQUIPMENT SCHEDULE NO. 0001                                    / / TRUELEASE-TM-
---------------------------                     Lease Type   /X/ FULLSERVICE-TM-
                                                           / / LEASEPURCHASE-TM-

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

This Schedule is entered into October 25, 1999, and constitutes an independent
lease incorporating the terms and conditions of the Equipment Lease NO. 8520
("Lease") dated October 25, 1999 by and between PICKER FINANCIAL GROUP, L.L.C.
("Lessor") and Photogen, Inc. ("Lessee"). All capitalized terms in this Schedule
shall have the meanings ascribed to them in the Lease. To the extent that the
terms of this Schedule conflict with the terms of the Lease, the terms of this
Schedule shall control.

<TABLE>
<CAPTION>

            Description of Equipment                Term of Lease                     Aggregate Rental
                                                      In Months           (including service for FullService only)
<S>                                                 <C>                   <C>
One (1) Picker PQ5000 A CT                                60                            $1,858,656.00
w/AcQsim, together with all
accessories.  Reference Picker Quote
No. 500-8396.

                                                     TOTAL                              $1,858,656.00

</TABLE>

Supplier Name & Address:________________________________________________________

(If no name is shown above, the Supplier is Picker International, Inc., 595
Miner Road, Cleveland, OH 44143)

Equipment Location: Tufts University School of Veterinary Medicine, 200 Westboro
                    Rd., North Grafton, MA 01536

Advance Rental: $28,748.00 (plus all applicable taxes)
/ / 1st Payment          /X/ Last Payment          / / Other ___________________
Other Payments (if applicable) Describe:

The Aggregate rent of $1,858,565.00 (including service for FullService only)
shall be paid in 12 monthly payments of $17,146.00 each, and followed by 48
monthly payments of $28,748.00, each commencing upon the Commencement Date.

Rate Adjustments: Lessee authorizes Lessor to increase the rental payment
amounts by not more than 1% for each 1% (or prorata for any fraction of 1%)
change in the average yield of similar term Treasury Notes from the date of
Lessor's proposal to the Rental Commencement Date.

End of Term Options: Upon no more than one hundred eighty (180) days but no less
than ninety (90) days prior to the end of the Initial Term of this Schedule or
any subsequent extension term thereof, Lessee may select any of the following
end-of-term options: (i) renewal of the Schedule

                                       -1-

<PAGE>

(ii) purchase of Equipment for its then fair market value (iii) return the
Equipment. If the Equipment is returned, dismantlement and shipping cost will be
borne by Lessor.

THE EQUIPMENT SHALL BE SOLD TO LESSEE AND LESSEE SHALL TAKE POSSESSION OF THE
EQUIPMENT "AS IS" AND "WHERE IS" AND WITHOUT WARRANTY OF ANY KIND, INCLUDING THE
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE AND OF MERCHANTABILITY. ALL TAXES
ATTRIBUTABLE TO THE TRANSACTION HEREIN CONTEMPLATED SHALL BE BORNE EXCLUSIVELY
BY LESSEE.

/X/LESSEE HEREBY ELECTS TO OBTAIN MAINTENANCE FROM PICKER
INTERNATIONAL, INC. (CHECK IF APPLICABLE).  IF BOX IS CHECKED,
DESCRIPTION OF APPLICABLE MAINTENANCE PROVISIONS BETWEEN LESSEE
AND PICKER INTERNATIONAL, INC. IS SHOWN ON REVERSE SIDE.

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

Accepted (Date): October 26, 1999               Executed on: 10/25/99

PICKER FINANCIAL GROUP, L.L.C.                  PHOTOGEN, INC.
(Lessor)                                        (Lessee)

By: /s/ Karen L. Sawonik                        By: /s/ John Smolik
Director of Operations                          President

                                 Y       N

Insurance Provided by Lessor    / /     /X/

This is counterpart #3 of 3 serially numbered, manually executed counterparts.
To the extent that this document constitutes chattel paper, no security interest
in this document may be created through the transfer and possession of any
counterpart other than counterpart #1.

                                       -2-

<PAGE>

Lessee: Photogen, Inc.
Address:

Equipment Lease No. 8520 dated as of October 25, 1999

                                    ADDENDUM

         WHEREAS, Picker Financial Group, L.L.C. ("Lessor") and the above
described Lessee ("Lessee") have determined that it is to their mutual benefit
to make certain amendments to the above described Equipment Lease ("Lease").

         NOW, THEREFORE, for good and valuable consideration, intending to be
legally bound and pursuant to the Terms and Conditions of the Lease, it is
hereby agreed as follows:

         1. The second sentence of Section 11 is hereby amended by the deletion
of "gross." The sixth sentence of Section 11 is hereby amended by the insertion
of "veterinary" immediately prior to "medical."

         2. The eighth sentence of Section 12 is hereby amended by the insertion
of "following an Event of Default," immediately prior to "to appoint Lessor."

         3. The second sentence of Section 14 is hereby amended by the deletion
of "(with the exception of magnetic resonance imaging equipment, the removal and
return of which shall be at Lessee's expense)."

         4. The second line of Section 15 is hereby amended by the insertion of
"within five (5) days of" immediately prior to "when due."

         5. Section 16 is hereby amended by the insertion of the following
sentence at the end thereof "Notwithstanding any provision contained herein to
the contrary Lessor shall only be entitled to exercise such remedies provided
herein to obtain one full and complete recovery from Lessee or any other party
liable hereunder."

         6. Lessee covenants that upon the occurrence of any Event of Default
and until all payments of rent, taxes and other amounts due and payable by
Lessee under the Lease have been paid in full, Lessee shall not make any
distribution to holders of its outstanding stock, its officers or directors, of
cash dividends, redemption payments, return of capital or similar transactions
(provided, that Lessee will nonetheless be entitled to pay normal salaries,
benefits, expense reimbursement and scheduled payments on Lessee's $1,000,000
debt described below)."

                                       -1-

<PAGE>

         7. Lessee covenants that on or prior to December 31, 1999 Lessee shall
obtain an additional equity contribution of not less than $4,000,000 and debt
financing of not less than $1,000,000.

         8. It is expressly agreed by the parties that this Addendum is
supplemental to the Lease which is by reference made a part hereof and all the
Terms and Conditions and provisions thereof unless specifically modified herein,
are to apply to this Addendum and are made a part of this Addendum as though
they were expressly rewritten, incorporated and included herein. In the event of
any conflict, inconsistency or incongruity between the provisions of this
Addendum and any of the provisions of the Lease, the provision of this Addendum
shall in all respects govern and control.

         IN WITNESS WHEREOF, the parties have caused this Addendum to be
executed on the dates set forth below.

Lessee: Photogen, Inc.                        Picker Financial Group, L.L.C.

By: /s/ John Smolik                           By: /s/ Karen L. Sawonik

Print Name: John Smolik                       Print Name: Karen L. Sawonik

Title: President                              Title: Director of Operations

Date: 10/25/99                                Date: October 26, 1999

                                       -2-

<PAGE>

                          COLLATERAL SECURITY AGREEMENT

         This COLLATERAL SECURITY AGREEMENT ("Agreement") is entered into as of
___________, 1999 by and between Photogen, inc., a corporation having offices
located at 7327 Oak Ridge Highway, Suite B, Knoxville, Tennessee 37931
("Lessee") and Picker Financial Group, L.L.C., a limited liability company
having offices located at 600 Beta Drive, Mayfield Village, Ohio 44143
("Lessor").

                                   WITNESSETH

         WHEREAS, Lessee has requested Lessor to lease various items of software
and equipment pursuant to Master Lease Schedules (each a "Lease" and
collectively "Leases") issued under that certain Master Lease Agreement dated as
of by and between Lessee and Lessor ("Master Lease"); and

         WHEREAS, Lessor is willing to enter into the Leases, but only upon
Lessee's agreement with the terms hereof.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

         1. ADDITIONAL COLLATERAL. As additional security for the performance
when due of all of Lessee's obligations under the Leases, Lessee shall provide
Lessor with a cash security deposit in the amount of $500,000 ("Security
Deposit). The Security Deposit shall be due prior to the Commencement Date of
the first Lease. Upon the occurrence of an Event of Default, as defined in any
Lease, Lessor may without notice to lessee and at Lessor's sole discretion,
apply all or a portion of the amounts then comprising the Security Deposit to
the cure of such Event of Default. As collateral for the performance when due of
all of Lessee obligations under the Master Lease, Lessee hereby grants Lessor a
first priority security interest in the Security Deposit, all Gains, as defined
herein, and all proceeds of the foregoing.

         2. INVESTMENT OF SECURITY DEPOSIT. The Security Deposit shall be
invested by Lessor for the benefit of Lessee and according to Lessee's written
instructions. It is agreed that the investment of the Security Deposit shall be
conservative in nature with a primary objective of maintaining the principal
balance. All investment directions requested by Lessee shall be subject to
Lessor's prior written approval, such approval not to be unreasonably withheld.
Initially, the Security Deposit shall be invested in an account ("Initial
Account") established in the name of Lessor at an FDIC insured nationally
recognized financial institution offering interest bearing money market accounts
("Financial Institution"). The Initial Account, and any subsequent investment of
the Security Deposit shall be made in the name of Lessor and Lessor shall have
exclusive control over such accounts. Lessee shall be responsible for any and
all taxes that may accrue based upon dividends, distributions, interest and/or
any other gains arising as a result of

                                       -1-

<PAGE>

the investment of the Security Deposit (collectively, "Gains"). For the purposes
hereof, Gains shall constitute part of the Security Deposit. If, at any time,
Lessor is required to pay any taxes related to the Security Deposit and/or any
Gain, Lessor shall have the right to set off the amount of such tax from the
funds then constituting the Security Deposit.

         3. PERIODIC REDUCTION OF SECURITY DEPOSIT. Provided no Event of Default
has occurred and remains uncured under any Lease, Lessor shall release to Lessee
a portion of the Security Deposit in accordance with the following schedule:
upon Lessor's receipt of the first eighteen (18) monthly payments under Lease
#8520, Lessor shall release $100,000 of the Security Deposit to Lessee; upon
Lessor's receipt of the first thirty (30) monthly payments under Lease #8520,
Lessor shall release $100,000 of the Security Deposit to Lessee; upon Lessor's
receipt of the first forty-two (42) monthly payments under Lease #8520, Lessor
shall release $100,000 of the Security Deposit to Lessee; upon Lessor's receipt
of the first fifty-one monthly payments under Lease #8520, Lessor shall release
$100,000 of the Security Deposit to Lessee; and upon Lessor's receipt of the
first sixty (60) monthly payments under Lease #8520, Lessor shall release the
balance of the Security Deposit to lessee. All releases of the Security Deposit
as set forth above are contingent upon sufficient funds being then available for
release.

         4. NOTICES. Any notice, demand or request required hereunder shall be
given in writing to the addresses set forth below via personal service,
facsimile or overnight courier.

                  If to Lessor

                  Picker Financial Group, L.L.C.
                  600 Beta Drive
                  Mayfield Village, Ohio 44143
                  Attention: Director of Operations

                  If to Lessee:

                  Photogen, Inc.
                  7327 Oak Ridge Highway, Suite B
                  Knoxville, Tennessee 37931
                  Attention: President

         Such addresses may be changed by notice to the other party given in the
same manner as provided above.

         5. FEES AND EXPENSES. Lessee shall reimburse Lessor for all costs
relating to the establishment of the Initial Account and subsequent accounts
according to the directions of Lessee. Lessee shall be responsible for all costs
associated with the investment of the Security Deposit and the opening of the
accounts. It is anticipated that the Initial Account will be maintained without
change for the entire term of Lease #8520 and that Lessor shall not be

                                       -2-

<PAGE>

required to contact the Financial Institution to establish new accounts and/or
convey investment instructions. If Lessor is required to contact the Financial
Institution for such reasons more than one (1) time, Lessor reserves the right
to charge Lessee $50.00 for each subsequent contact with Financial Institution
requested by Lessee. Lessor shall be entitled to deduct such fees and expenses
from the Security Deposit.

         6. INVESTMENT INFORMATION. Lessor shall provide Lessee with a copy of
all investment information received from the Financial institution and shall
consent to Lessee obtaining such information directly from the Financial
Institution. However, under no circumstances shall Lessee be entitled to make
withdrawals or direct the Financial Institution to invest the Security Deposit
in any way, such rights being specifically reserved for Lessor.

         7. DEFAULT. In the event that Lessee shall breach any of the terms
hereof and such breach is not cured to Lessor's satisfaction within five (5)
days, such breach shall be an Event of Default under the Leases. In the event of
a conflict between the terms of this Agreement and the terms of the Master
Lease, the terms hereof shall take priority.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date set forth
above.

LESSOR: Picker Financial Group, L.L.C.    LESSEE: Photogen, Inc.

By: /s/ Karen L. Sawonik                  By: /s/ John Smolik

PRINT NAME: Karen L. Sawonik              PRINT NAME: John Smolik

TITLE: Director of Ops.                   TITLE: President

                                       -3-

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