Document:

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                                                                   Exhibit 10.19

     This Agreement (the "Agreement") is made as of the 5th day of February,
2001 between CORDIS CORPORATION, a Florida corporation ("Cordis") with an
address at 40 Technology Drive, Warren, NJ 07059, and PHOTOELECTRON CORPORATION,
a Massachusetts corporation ("PEC") with an address at 5 Forbes Road, Lexington,
MA 02421.

                                  Witnesseth:

     Whereas, Cordis is in the business of developing, manufacturing and
marketing medical devices, including intravascular radiation therapy devices;
and

     Whereas, PEC is in the business of developing, manufacturing and marketing
medical devices, including intravascular radiation therapy devices; and

     Whereas, Cordis and PEC have agreed to develop certain X-Ray Systems which
incorporate and combine Catheter Body Subassemblies and Delivery Devices
developed and manufactured by Cordis with X-Ray Tubes and Control Devices
developed and manufactured by PEC;

     Whereas, Johnson & Johnson Development Corporation ("JJDC") and PEC will
enter into an Equity Agreement, as hereinafter defined, to be concurrently
executed and contingent upon execution of this Agreement;

     Whereas, Cordis desires to be the exclusive marketing and distribution
entity for X-Ray Systems manufactured and/or developed by PEC as a result of the
Development Program; and

     Whereas, PEC is willing to grant to Cordis an exclusive license to use and
sell X-Ray Systems and the components in the Field, and Cordis is willing to
grant to PEC a non-exclusive license to use and sell Delivery Devices outside
the Field.

     Now, therefore, in consideration for the mutual covenants and promises
contained in this Agreement, the parties agree as follows:

     I.  DEFINITIONS

     Terms in this Agreement, which are set forth in quotation marks, have the
meaning established for such terms in the succeeding paragraphs of this Section.

     A.  "Affiliated Company" shall mean, for so long as one of the following
relationships is maintained, any corporation or other business entity controlled
by, controlling, or under common control with another entity, with "control"
meaning direct or indirect beneficial ownership of more than fifty percent (50%)
of the voting stock of such corporation, or more than fifty percent (50%)
interest in the decision-making authority of such other business entity; or
corporation in which the maximum amount of stock permitted by law to be held by
another entity is beneficially owned by such other entity.

     B.  "Approved Supplier" shall have the meaning as set forth in Exhibit A of
                                                                    ---------
this Agreement.

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     C.  "Available for Sale" shall mean the latter of the date (1) Cordis
receives formal permission from the FDA to commence commercial marketing and
sale of X-Ray Systems in the United States or Cordis receives a CE Mark, or (2)
when PEC has manufactured that number of X-Ray Systems projected in the first
three (3) months of the first non-zero, non-Clinical Demand Forecast.

     D.  "Catheter Body Subassembly" shall mean the Catheter Body Subassembly to
be developed by Cordis as part of the General Product Specifications and
Development Program described in Exhibits B and D attached hereto and
incorporated herewith.

     E.  "CE Mark" shall mean formal permission from the European Union to
commence commercial marketing and sale of X-Ray Systems in the European Union.

     F.  "Clinical(s)" shall mean any clinical trial or clinical trials of one
or more X-Ray Systems, whether or not required to be performed in order to
obtain formal permission from the FDA to commence commercial marketing and sale
of such X-Ray Systems in the United States, or any other regulatory body for
commercial marketing and sale of such X-Ray Systems outside of the United
States.

     G.  "Control Device" shall mean the control box to be developed by PEC as
part of the General Product Specifications and Development Program described in
Exhibits B and D attached hereto and incorporated herewith.

     H.  "Delivery Device" shall mean the pullback delivery device to be
developed by Cordis as part of the General Product Specifications and
Development Program described in Exhibits B and D attached hereto and
incorporated herewith.

     I.  "Demand Forecast" shall mean the twelve-month rolling forecasts
(clinical and commercial) to be provided by Cordis pursuant to Section IV.D.

     J.  "Development Program" shall mean the research and development program
undertaken between Cordis and PEC pursuant to this Agreement for the development
of the X-Ray System utilizing PEC's X-Ray Tube and Control Device  and Cordis'
Catheter Body Subassembly and Delivery Device, as more fully described in the
Exhibit D attached hereto and incorporated herewith.

     K.  "Development Technology" shall mean all information relating to the X-
Ray System (whether or not patentable and whether conceived solely by PEC or
Cordis or jointly by PEC and Cordis) including, without limitation, ideas,
concepts, methods, procedures, designs, plans, applications, specifications,
drawings, techniques, processes, technical data, know-how, apparatus, inventions
and discoveries, as well as improvements related thereto, which are conceived,
reduced to practice or developed prior to, during or as a result of the
Development Program.

     L.  "Confidential Information" shall mean any information of a confidential
and/or proprietary nature as to which Cordis or PEC, as the disclosing party,
prior to or during the term of this Agreement, develops or acquires any
interest, including but not limited to, all Know-How, and any discoveries,
inventions, improvements, and ideas relating to any process, formula, machine,
device, manufacture, composition of matter, plan or design whether patentable or
not, or relating to the conduct of business by the disclosing party, which,
prior to or during the term of this Agreement, was or is disclosed to the other
party, as receiving party, and identified in writing at the time of disclosure,
or if orally disclosed, then reduced to writing delivered to the receiving party
within thirty (30) days after such disclosure.

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     M.  "Effective Date" shall mean the date of the last signature below
written provided the Equity Agreement has been executed.

     N.  "Equity Agreement" shall refer to the agreement between Johnson &
Johnson Development Corporation ("JJDC") and PEC whereby JJDC invested in PEC
common stock concurrently executed with this Agreement.

     O.  "FDA" shall mean the United States Food and Drug Administration, U.S.
Department of Health and Human Services.

     P.  "FDC Act" shall mean the United States Food, Drug and Cosmetic Act, as
amended.

     Q.  "Field" shall mean the field of Intravascular Radiotherapy .

     R.  "Final Product" shall mean the version of the X-Ray System approved for
testing and sale by the Steering Committee.  The term shall also include any
successor models of the X-Ray System approved by the Steering Committee.

     S.  "Intravascular Radiation Therapy Devices" shall mean only radiotherapy
devices which can be delivered through or within the circulatory system.

     T.  "Milestone Completion Sign-Off  shall mean the final approval for
continuation to the next milestone after review of the results of each milestone
by the Steering Committee.

     U.  "Net Sales" shall mean the revenues actually received by Cordis or its
Affiliates from an arm's length buyer attributable to the sale, lease or other
transfer of any  X-Ray Catheter less costs directly attributable to such sale,
lease or other transfer, including (1) discounts, in amounts customary in the
trade, for quantity purchases, cash payments and prompt payments; (2) credits or
refunds for claims or returns; (3) any transportation or insurance premium paid
by Cordis; and (4) taxes, including sales, use, excise, import, export and other
taxes and duties borne by Cordis.

     V.  "PPI" shall mean the Producer Price Index, as it appears in the
periodical Producer Price Index, as published monthly by the United States
Department of Labor, Bureau of Statistics.

     W.  "Product Specifications" shall mean the general product specifications
for the X-Ray System set forth in Exhibit B as may be amended from time to time.

     X.  "Quality Systems Audit" shall mean a formal audit, performed by the
quality assurance representatives of each party, of PEC's and Cordis' respective
quality systems for determining each party's compliance with FDA and ISO
regulations, and compliance with the requirements of an Approved Supplier.

     Y.  "Regulatory Submissions" shall mean the submission of information, in
whatever form required or permitted, to the appropriate governmental body in
order to proceed with Clinicals and/or marketing activities related to the X-Ray
Systems.

     Z.  "Steering Committee" shall mean a committee comprised of two
individuals, one designated by  Cordis and one designated by PEC, for purposes
of making or communicating decisions or

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progress, either in person or electronically, associated with the Development
Program. Any decisions made shall be by mutual consent of both parties. Each
party shall have one vote on the Steering Committee. In the event that the
Steering Committee becomes deadlocked, the provisions of Section IX.E. apply.
The Steering Committee will be dissolved upon achievement of the final milestone
set forth in the Development Program described in Exhibit D.

     AA.  "Term", "Initial Term" and "Additional Term" shall have the meanings
set forth in Section IX.A.

     BB.  "Transfer Price" shall mean the prices that PEC will pay Cordis for
the Catheter Body Subassemblies and the Delivery Devices and the prices that
Cordis will pay PEC for the X-Ray System, in each case as set forth in Section
IV.K. and Exhibit C of this Agreement.

     CC.  "X-Ray Catheter" shall mean the combination of an X-Ray Tube and a
Catheter Body Subassembly as part of the General Product Specifications and
Development Program described in Exhibits B and D attached hereto and
incorporated herewith.

     DD.  "X-Ray Tube" shall mean the x-ray cathode tube to be developed by PEC
as part of the General Product Specifications and Development Program described
in Exhibits B and D attached hereto and incorporated herewith.

     EE.  "X-Ray System" shall refer to the x-ray system developed as a result
of the General Product Specifications and Development Program between Cordis and
PEC as described in Exhibits B and D incorporating a Catheter Body Subassembly,
a Delivery Device, an X-Ray Tube and a Control Device.

     II.  GRANT OF RIGHTS

     During the Term, each party will have the following rights to use the X-Ray
System or components thereof:

          1. PEC grants Cordis a worldwide, exclusive license to use and sell
     X-Ray Systems in the Field.

          2. Cordis grants PEC a worldwide right and license to manufacture and
     sell X-Ray Systems exclusively to Cordis for use in the Field subject to a
     royalty as set forth in Section VIII.

          3. Cordis grants PEC a worldwide, non-exclusive license to
     manufacture, use and sell Delivery Devices outside the Field subject to a
     royalty as set forth in Section VIII.

          4. Upon the request of PEC, Cordis will negotiate in good faith with
     PEC with respect to the supply of Catheter Body Subassemblies for PEC to
     use and/or sell outside the Field.

     III.  DEVELOPMENT

     A.  During the Term, PEC and Cordis will work exclusively with each other
in researching and developing X-Ray Systems for use in the Field.

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     B.  Cordis will perform the following services at its expense:

          1. Cordis will use reasonable efforts to develop a Catheter Body
     Subassembly and work with PEC to identify specifications to be acceptable
     for the Final Product.

          2. Cordis will use reasonable efforts to develop a Delivery Device and
     work with PEC to identify specifications to be acceptable for the Final
     Product.

          3. Cordis will perform all clinical and other testing necessary to
     adequately ensure that the Final Product is fit for human and non-human use
     and will be acceptable for submission to appropriate governmental
     regulatory agencies.

     C.  PEC will perform the following services at its expense:

          1. PEC will use reasonable efforts to develop an X-Ray Tube and a
     Control Device and work with Cordis to identify specifications to be
     acceptable for the Final Product.

          2. PEC will perform all testing necessary to adequately ensure that
     the X-Ray Tube and Control Device is fit for human and non-human use and
     will be acceptable for submission to appropriate governmental regulatory
     agencies.

     D.  PEC and Cordis will each furnish to the other information, materials,
data, specifications, design, engineering, manufacturing, marketing and other
operations, processes or experience within their respective possession
applicable to the X-Ray System or any component thereof as may be reasonably
necessary for the recipient of such information to perform its duties hereunder.
Information relating to the development of samples and test results shall also
be disclosed.  Should either party fail to provide such information to the other
party within thirty (30) days after a written request is made therefor, then the
party requesting such information, in addition to any other rights and remedies
available under this Agreement or otherwise, shall be entitled to seek an order
from the U.S. District Court for the Southern District of New York requiring
that such information be immediately disclosed to the requesting party.

     E.  During the Development Program the parties will communicate regularly
and work with each other and use commercially reasonable efforts to fulfill each
party's obligations under the Development Program in a manner that will best
result in the development of the Final Product.

     F.  Development Technology

          1.  Each party will promptly disclose to the other in writing all
     ideas invented, discovered or developed by such party relating in any
     manner to the Development Technology.  PEC will have sole ownership of and
     the sole right to file, prosecute, and maintain all of the patents covering
     the inventions relating to the X-Ray Tube and the Control Device, including
     all improvements thereto, whether patentable or not and whether invented,
     discovered or developed by PEC, Cordis, or jointly by PEC and Cordis, or
     their respective employees or agents.  Cordis will have sole ownership of
     and the sole right to file, prosecute, and maintain all the patents
     covering the inventions relating to the Catheter Body Subassembly and the
     Delivery Device, including all improvements thereto, whether patentable or
     not and whether invented, discovered, or developed by PEC, Cordis or
     jointly by PEC and Cordis, or their respective employees or agents.  Each
     party will assign, and will require its employees and agents to assign to
     the party

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     owning the same, all rights, title and interest to any such inventions,
     discoveries or developments. PEC and Cordis will jointly own any
     inventions, discoveries or developments related to the X-Ray System,
     including all improvements and/or modifications thereto, whether patentable
     or not and whether invented, discovered or developed by PEC, Cordis, or
     jointly by PEC and Cordis, or their respective employees or agents. After
     the dissolution of the Steering Committee, Cordis will have the sole right
     to file, prosecute, and maintain all of the patents related to improvements
     and/or modifications to the X-Ray System that are jointly owned, and will
     have the right to determine whether or not, and when, to file a patent
     application, to abandon the prosecution of any patent or patent
     application, or to discontinue the maintenance of any patent or patent
     application with respect to such improvements and/or modifications. PEC and
     Cordis will share equally in the costs/fees associated with the
     preparation, filing, prosecution and maintenance of jointly owned patents
     on a country by country basis. For any country in which PEC chooses not to
     participate, sole ownership of the patent application and the resulting
     patent in such country will reside in Cordis.

          2.  PEC will be responsible for executing and prosecuting applications
     for patents as may be necessary to protect the X-Ray Tube and the Control
     Device.  Cordis will be responsible for executing and prosecuting
     applications for patents as may be necessary to protect the Catheter Body
     Subassembly and the Delivery Device.  Each party will bear its own costs in
     connection with the filing and prosecution of applications for patents with
     respect to its components.

          3.  Each party will supply to the other party all information in its
     possession, which may be necessary or useful for the preparation and filing
     of patent applications.  In addition, each party, from time to time, on
     request, will supply such additional information as may be necessary or
     desirable to facilitate prosecution of such application.

     G.  A soon as reasonably possible after execution of this Agreement, Cordis
shall file a patent application with the U.S. Patent and Trademark Office with
respect to the X-Ray System.  Until it is dissolved, the Steering Committee will
have primary authority to decide what patents if any shall be obtained with
respect to the X-Ray System in the United States and other jurisdictions and the
allocation of costs of such patent applications.  Each party will be free to
execute and prosecute applications for patents with respect to the X-Ray Systems
in those jurisdictions in which the Steering Committee has elected not to
prosecute an applications for a patent.

     H.  If either party fails to meet any milestones set forth in Exhibit D to
this Agreement, that party will, within thirty (30) days of any such failure,
furnish to the other party a report detailing the reasons for such failure and a
plan for completing the milestone within a reasonable period of time.  Such
report shall demonstrate that the party who failed to meet the milestone is
devoting sufficient resources (in PEC's case, at least $3.8 million) to
accomplish the Development Program in a timely manner.

     IV.  SUPPLY OF X-RAY SYSTEMS AND COMPONENTS

     A.  During the Term of this Agreement, Cordis will manufacture and deliver
to PEC Catheter Body Subassemblies and Delivery Devices as ordered by PEC
pursuant to this Agreement. The Catheter Body Subassemblies and Delivery Devices
will conform at the time of shipment to the General Product Specifications set
forth in Exhibit B.

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     B.  During the Term of this Agreement, PEC will manufacture X-Ray Tubes and
Control Devices and deliver completed X-Ray Systems to Cordis as ordered by
Cordis pursuant to this Agreement. The X-Ray Systems will conform at the time of
shipment to the General Product Specifications set forth in Exhibit B.  Cordis
at its own expense will sterilize and package for final sale all X-Ray
Catheters.

     C.  Each party will become an Approved Supplier of the other party within
ninety (90) days after the later of the Quality Systems Audit or execution of
this Agreement, and continue to meet the requirements of an Approved Supplier
during the Term.  If either party fails to become an Approved Supplier within
such ninety (90) day period or fails to maintain its status as an Approved
Supplier throughout the Term, then such party will promptly provide to the other
party a plan to achieve such compliance within the sixty (60) day cure period
set forth in Section IX.B. of this Agreement.  In addition to the specific audit
rights set forth in Exhibit A, each party will have the right to conduct an
annual audit of the other party's operations and procedures to determine whether
the other party continues to maintain its status as an Approved Supplier.  The
parties may conduct more frequent audits by mutual consent.  If either party
fails to maintain its status as an Approved Supplier, then the termination
provisions set forth in Section IX.B. and Sections IX.C. or IX.D., as the case
may be, shall apply and, subject to the rights to cure such breach as set forth
in such Section IX.B. and Sections IX.C. or IX.D., as the case may be, such
failure shall be deemed a breach of a material provision of this Agreement.

     D.  Each month, commencing thirty (30) days following the date on which the
Steering Committee shall have approved the final configuration of the X-Ray
System, Cordis will provide PEC with a twelve-month rolling Demand Forecast by
item.  The quantity of X-Ray Systems to be delivered in the first three months
of each Demand Forecast will be binding upon Cordis.

     E.  Cordis will send to PEC written purchase orders setting forth the type
and quantity of X-Ray Systems to be supplied by PEC, setting forth
configuration, packaging and other relevant requirements.  PEC will warrant each
X-Ray System (excluding consumables) sold to Cordis and sold by Cordis to any
end user as set forth in Exhibit E.

     F.  PEC will send to Cordis written purchase orders setting forth the type
and quantity of Catheter Body Subassemblies and Delivery Devices to be supplied
by Cordis and setting forth other relevant requirements. Cordis will warrant
each Catheter Body Subassembly and Delivery Device (excluding consumables) sold
to PEC as set forth in Exhibit F.

     G.  Labeling will identify Cordis as the manufacturer and distributor of
the X-Ray Systems.  Labeling on each Control Device will identify PEC as the
manufacturer of the Control Device and the X-Ray Tubes.

     H.  PEC will inspect the X-Ray Systems prior to shipment to ensure that
they conform to the Product Specifications and will send Cordis a Certificate of
Analysis with respect to each shipment, which Certificate of Analysis  shall
include testing results based on Product Specification requirements.  Cordis
will notify PEC within thirty (30) days after receipt of the X-Ray Systems if
any X-Ray Systems fail Cordis' receiving inspection.  Cordis will then give PEC
the opportunity to re-inspect and test any X-Ray System which Cordis claims does
not meet the Product Specifications.  PEC may, at its option and at its expense,
re-inspect the X-Ray Systems at Cordis' premises. Cordis will return and PEC
will promptly replace the X-Ray Systems which, upon re-inspection, fail to meet
the Product Specifications.

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     I.  Cordis will inspect the Catheter Body Subassemblies prior to shipment
to ensure that they conform to the Product Specifications and will send PEC a
Certificate of Analysis with respect to each shipment, which Certificate of
Analysis  shall include testing results based on Product Specification
requirements.  PEC will notify Cordis within thirty (30) days after receipt of
the Cordis components if any components fail PEC's receiving inspection.  PEC
will then give Cordis the opportunity to re-inspect and test any component which
PEC claims does not meet the Product Specifications.  Cordis may, at its option
and at its expense, re-inspect the components at PEC's premises.  PEC will
return and Cordis will promptly replace the components which, upon re-
inspection, fail to meet the Product Specifications.

     J.  No Change.   PEC and Cordis each agrees to the following "No Change"
policy for the X-Ray Systems and any components thereof:

          1.  There shall be no change to the material, components or
     manufacturing process without prior notification and written approval of
     the Steering Committee relating to changes that may affect form, fit or
     function of the X-Ray Systems or any components thereof.  All other changes
     will require notification to the Steering Committee prior to
     implementation.

          2.  To institute a change, a change request must be submitted to the
     Steering Committee for approval and include the following:

               (a)  the reason for the change;
               (b)  a change description; and
               (c)  a statistically valid summary of test results demonstrating
                    equivalence or improvement of the product characteristics.

          3.  Upon written approval of requested changes, the Steering Committee
     will send documentation to each party that will:

               (a)   establish the date of change;
               (b)  identify the first lot of material to be received with the
                    change; and
               (c)  identify the date of material shipment to each party prior
                    to receipt of the shipment. This information will be sent to
                    the designated representatives of Cordis' Research and
                    Development Department, and PEC's Quality Department with an
                    additional copy accompanying the Certificate of Analysis.

               Non-compliance with these requirements will be cause for product
               rejection.

     K.  During the Term, (a) PEC will ship the X-Ray Systems to Cordis at the
Transfer Prices set forth in Exhibit C, and (b) Cordis will ship the Catheter
Body Subassemblies and Delivery Devices to PEC at the Transfer Prices set forth
in Exhibit C.

     L.    Each party will only be allowed to increase Transfer Prices on an
annual basis to account for unforeseen, significant changes in labor and
material costs.  In addition, at the end of the Initial Term and at the end of
each Additional Term thereafter, as set forth in Section IX, Transfer Prices
shall be adjusted in accordance with the PPI to reflect changes in the PPI since
the beginning of each Term.  All payments of Transfer Prices are due forty-five
(45) days after the later of shipment or invoice.

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     M.  PEC will ship the X-Ray Systems F.O.B. from manufacturing sites in the
United States to be designated from time to time by PEC.  PEC will pack all X-
Ray Systems ordered hereunder in a manner suitable for shipment and sufficient
to enable the X-Ray Systems to withstand the effects of shipping, including
handling during loading and unloading at which time title to such X-Ray Systems
shall pass to Cordis.  Cordis will bear all applicable freight and shipping
costs, taxes, duties and similar charges that may be assessed against the X-Ray
Systems.

     N.  Cordis will ship the Catheter Body Subassemblies and Delivery Devices
F.O.B. from manufacturing sites in the United States to be designated from time
to time by Cordis.  Cordis will pack all components ordered hereunder in a
manner suitable for shipment and sufficient to enable the components to
withstand the effects of shipping, including handling during loading and
unloading at which time title to such components shall pass to PEC.  PEC will
bear all applicable freight and shipping costs, taxes, duties and similar
charges that may be assessed against the components.

     O.  If, during a period of twelve consecutive (12) weeks, either party
fails to ship X-Ray Systems or components thereof to the other party, the other
party may obtain X-Ray Systems or such components from other sources.  If either
party elects to obtain X-Ray Systems or components from other sources, it will
notify the other party in writing of its intention, and the other party will
then provide to the party giving such notice all information and technology
relating to the manufacture of X-Ray Systems or components thereof so the
notifying party can assist a third party manufacturer.  Should a party exercise
its rights under this Section IV.O. to obtain X-Ray Systems or components
thereof from other sources, it will be obligated to pay the party no longer
manufacturing the X-Ray Systems or such components a royalty as provided in
Section IX.G.

     P.  The provisions of Section IV.O. above will not apply if a party's
inability to supply satisfies both the following criteria:  (i) such inability
to supply is due to a force majeure event, as subsequently defined and (ii) such
party delivers a recovery plan, within 30 days of the party's initial inability
to supply as defined in the Demand Forecast, which is reasonably acceptable to
the other party and which is adequate to ensure delivery for all X-Ray Systems
or components in less than one hundred eighty (180) days from the original
requested delivery date.

     Q.  The terms of this Agreement will supersede any contrary provisions in
any purchase order, invoice, agreement or other document used by either party.

     V.   DISTRIBUTION RIGHTS AND OBLIGATIONS

     A.  Subject to the terms and conditions set forth herein, PEC appoints
Cordis and Cordis accepts the appointment, as exclusive worldwide distributor
for the marketing and sale of the X-Ray System within the Field.

     B.  Cordis will use reasonable commercial efforts (i) to sell X-Ray Systems
in the Field, (ii) promote, through Cordis's own advertising and sales promotion
activities, the purchase and use of X-Ray Systems by customers in the Field, and
(iii) ensure representation of and sales support for X-Ray Systems at major
meetings and conferences in the Field, including without limitation, the
following meetings and conferences: American Heart Association and the American
College of Cardiology.  PEC will at its own expense support Cordis's efforts at
major meetings and conferences.  Cordis will be responsible for producing
appropriate sales and marketing materials to support its sales and promotional
efforts.

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     C.  Cordis will be responsible for servicing the X-Ray Systems.  In the
event Cordis is required to purchase replacement components from PEC, PEC agrees
to sell such components to Cordis at PEC's cost.  In the event Cordis requires
the assistance of PEC in calibrating any Control Device, PEC will provide such
calibration services to Cordis at the rates set forth in Exhibit C.

     D.  Cordis will be responsible for all customer training.  PEC will provide
up to five (5) days of training each calendar year during the Term to Cordis'
sales and service personnel at no charge to Cordis, except that Cordis shall be
responsible for all travel expenses (including transportation, room and board)
for Cordis personnel.  The training sessions will be conducted at facilities to
be selected by PEC and Cordis, and will be arranged by Cordis after consultation
with PEC.  PEC will prepare appropriate training materials that will be copied
and distributed to its sales and service personnel.  Cordis will be responsible
for preparing and distributing appropriate sales materials and product
brochures.  If Cordis requires more than five (5) days of training for its
personnel during any calendar year, Cordis can purchase such additional training
from PEC at PEC's then per diem rates.

     E.  The Steering Committee will be consulted as to the spare parts to be
maintained by Cordis as required to service the X-Ray Systems in a timely
manner.  Cordis will maintain an adequate supply of spare parts as required to
service the X-Ray Systems in a timely manner.  Cordis will purchase such spare
parts from PEC at PEC's then current cost.

     VI.  CLINICALS.

     Cordis will conduct all Clinicals in a competent manner in accordance with
applicable legal requirements.  Cordis will be responsible for determining what
Clinicals will be conducted in what countries after consultation with the
Steering Committee; provided, however, that Cordis will conduct all Clinicals
required to obtain regulatory approval to commence commercial marketing and sale
of X-Ray Systems in the United States, the European Union and Japan. Once Cordis
determines that clinical testing is desirable in a particular country (other
than as necessary for regulatory approval in the U.S., the European Union or
Japan) to obtain approval to commence commercial marketing of X-Ray Systems,
Cordis will conduct Clinicals (the manner, timing and conduct of such Clinicals,
the extent and duration thereof and the completion of which shall be determined
by Cordis in its reasonable discretion ) and such other testing as Cordis deems
appropriate or desirable in connection with the X-Ray System.  PEC will
cooperate with Cordis in conducting such Clinicals and take such reasonable
actions as Cordis shall reasonably request in connection therewith.   PEC will
cooperate by providing at its expense one Control Device and thirty (30) X-Ray
Catheters to Cordis for each clinical trial required to obtain initial FDA
approval for the X-Ray System.  Such components will be returned to PEC after
each clinical trial is completed.  If Cordis requires additional X-Ray
Catheters, it shall purchase such X-Ray Catheters from PEC at PEC's then current
cost. Cordis will retain ownership of all data generated from the Clinicals and
all results obtained from such data.  Cordis will share the results of such
Clinicals with PEC.  PEC will have the right to use data generated during animal
trials outside the Field. This information is considered confidential and shall
be treated as such in accordance with Section XII.

     VII.  Maintenance of Records.

     Each of PEC and Cordis will maintain and will allow the other party to
examine its manufacturing records, including lot numbers and other manufacturing
documentation necessary to ensure traceability of the X-Ray Systems or
components thereof and compliance with United States and foreign regulatory
laws.

                                      -10-
<PAGE>

     VIII DEVELOPMENT AND ROYALTY PAYMENTS.

     A.  Cordis will make the following payments to PEC: *

     B.   PEC will make the following payments to Cordis: *

     IX.  TERM AND TERMINATION

     A.  The term of this Agreement will commence on the Effective Date and will
continue for a period of five (5) years from and after the date the X-Ray System
becomes Available for Sale ("Initial Term") unless terminated sooner under the
provisions of this Section IX.  At the end of the Initial Term, this Agreement
will automatically renew for successive one-year periods (each an "Additional
Term"), unless sooner terminated by Cordis upon 180 days' written notice to PEC
prior to the end of the Initial Term or any Additional Term (the "Initial Term
and all Additional Terms are collectively referred to in this Agreement as the
"Term").  PEC will also have the right to terminate this Agreement at the end of
the Initial Term or any Additional Term upon 180 days' written notice to Cordis
if Cordis fails to sell an average of * X-Ray Catheters per calendar year during
the Initial Term or any Additional Term. The calendar year in which the X-Ray
System first becomes Available for Sale will not be included in such
calculation.

     B.  This Agreement may be terminated upon any party's failure to cure any
breach of any material term, covenant or condition of this Agreement within
sixty (60) days after the breaching party receives notice of such breach from
the non-breaching party or within a shorter period if the non-breaching party
has reasonably determined that such breach is not subject to cure.  Upon
termination pursuant to this subsection B., the provisions of subsections F. and
G. of this Section IX will apply.

     C.  The occurrence of any of the following events shall constitute a breach
of a material term or provision of this Agreement and the provisions of
subsection B. of this Section IX. shall apply: (1) PEC fails to qualify as an
Approved Supplier as provided in Section IV.C., (2) PEC fails to make the
shipments of X-Ray Systems to Cordis as provided in Sections IV.O. and P., (3)
PEC becomes insolvent, fails generally to pay its debts as they become due,
makes an assignment for the benefit of creditors, is the subject of any
voluntary or involuntary case commenced under the federal bankruptcy laws, as
now constituted or hereafter amended (which, in the case of involuntary
bankruptcy, is not dismissed within ninety (90) days), or of any other
proceeding under other applicable laws of any jurisdiction regarding bankruptcy,
insolvency, reorganization, adjustment of debt or other forms of relief for
debtors, has a receiver, trustee, liquidator, assignee, custodian or similar
official appointed for it or for any substantial part of its property, or is the
subject of any dissolution or liquidation proceeding, or (4) PEC fails to comply
with Section III.H.

     D.  The occurrence of any of the following events shall constitute a breach
of a material term or provision of this Agreement and the provisions of
subsection B. of this Section IX. shall apply: (1) Cordis fails to qualify as an
Approved Supplier as provided in Section IV.C., (2) Cordis fails to make the
shipments of X-Ray System components to PEC as provided in Sections IV.O. and
P., (3) Cordis becomes insolvent, fails generally to pay its debts as they
become due, makes an assignment for the benefit of creditors, is the subject of
any voluntary or involuntary case commenced under the federal bankruptcy laws,
as now constituted or hereafter amended (which, in the case of involuntary
bankruptcy, is not dismissed within ninety (90) days), or of any other
proceeding under other applicable laws of any jurisdiction regarding bankruptcy,
insolvency, reorganization, adjustment of debt or other forms of relief for
debtors, has a receiver, trustee, liquidator, assignee, custodian or similar
official appointed for it or

                                      -11-
<PAGE>

for any substantial part of its property, or is the subject of any dissolution
or liquidation proceeding, or (4) Cordis fails to comply with Section III.H.

     E.  In the event that the Steering Committee becomes deadlocked on a
material matter, the parties will take the following actions:  Cordis and PEC
will first retain the services of a neutral third party mediator who is
experienced in the subject matter of the dispute in an effort to resolve the
dispute.  The costs of such mediator will be divided between the parties
equally. If the mediation is unsuccessful, then the parties will enter into good
faith negotiations to determine whether either or both parties will have the
right to develop, manufacture and distribute the X-Ray System and on what terms.
Finally, if those negotiations prove unsuccessful, then either party shall have
the right to terminate this Agreement upon written notice to the other party and
the provisions of subsections F. and G. of this Section IX. shall apply.

     F.   Upon termination of this Agreement,

          1.  any amounts owed from one party to the other for transactions
     occurring during the Term will be paid in accordance with the terms of this
     Agreement, provided that the milestone payments set forth in Section
     VIII.A. shall not be "owed" under this provision if the milestones have not
     been satisfied as of the date of termination;

          2.  the obligations of Sections IV.O., VIII, XII,  XIII, XIV, XV, XVI,
     XVII, XVIII,  XIX, XX and XXI will survive termination;

          3.  Cordis will retain the right to sell existing on hand inventory of
     the X-Ray System.

     G.  If this Agreement is terminated pursuant to subsection A. of this
Section IX., then either party will be free to develop, manufacture and sell X-
Ray Systems.  If this Agreement is terminated pursuant to subsections B., C., or
D. of this Section IX, then the party not in default shall have the exclusive
right to develop, manufacture and sell the X-Ray Systems.  If this Agreement is
terminated pursuant to subsection E. of this Section IX, then neither party
shall have the right to develop, manufacture or sell X-Ray Systems.  Each party
that sells X-Ray Systems following the termination of this Agreement (except
pursuant to a negotiated settlement under subsection E.) will be required to pay
to the other party a residual royalty on Net Sales to be determined as set forth
in Exhibit G to this Agreement.

     X.  REGULATORYRESPONSIBILITY

     A.  Except as provided below in this Section X., Cordis will be responsible
for obtaining and maintaining all FDA and foreign regulatory approvals required
in connection with the X-Ray System.  PEC is obligated to provide reasonable
assistance to Cordis in connection with obtaining and maintaining FDA and
foreign regulatory approvals.  Cordis will file, or cause to be filed, all
reports required pursuant to the medical device reporting regulations set forth
in 21 CFR Part 803, as amended.  All regulatory approvals will be in the name of
Cordis.

     B.  Cordis will provide PEC with a copy of each submission by Cordis to the
FDA or foreign regulatory authorities with respect to the X-Ray System.

                                      -12-
<PAGE>

     C.  Each party will be responsible for complying with applicable FDA and
foreign regulatory requirements with respect to manufacturing.

     D.  Each party will promptly notify the other in writing, with additional
copy being sent via fax to the respective Manager of Quality Assurance for the
other party, after receiving notice of any claim or action by the FDA or any
corresponding foreign equivalent relating to non-compliance with respect to any
violation of any applicable laws, or governmental regulations relating to X-Ray
Systems.

     E.  Each party will promptly notify the other in writing of any notice of
any audit conducted by the FDA or foreign regulatory authorities  of such
party's facilities for the manufacture of the X-Ray System or any component
thereof, or any request for information from the FDA related to the manufacture
of the X-Ray System or any component thereof.

     F.  If in Cordis's reasonable discretion, a recall of any X-Ray System is
reasonably necessary or if a recall is required by a governmental agency having
competent jurisdiction, both parties will cooperate in instituting such recall.
Where such recall is prompted by alleged defects in materials, workmanship or
design of the X-Ray System or any component thereof, or failure to warn or
inadequate warning with respect thereto based on information supplied, or which
should have been supplied, by or is prompted by a breach by either party of any
of its warranties and representations made in Section XI hereof, then such party
will be required to fund such recall, field corrective action, or the like and
will accept recalled X-Ray Systems or components it manufactured and deliver
replacement X-Ray Systems or components at its sole cost and expense.  Where the
requirement for a recall cannot be attributed solely to either party, then the
parties shall enter into good faith negotiations with respect to the allocation
of the costs of such recall.  The parties will maintain adequate records
concerning traceability of the X-Ray Systems and components, and will cooperate
with each other in the event that any procedures described in this Paragraph are
undertaken.

     G.  Subject to the provisions of Section IV.C., each  party will have the
right to inspect and perform a Quality Systems Audit of the other party's
manufacturing facilities, including the facilities of any subcontractor of
either party (to the extent that such party has the right to such subcontractor
audit) to ensure compliance with this Agreement or FDA regulations, and the
requirements of Exhibit A.  The party undertaking such inspection will provide a
minimum notice of ten (10) business days and said inspection/audit shall be on a
mutually agreed date.

     H.  Because regulatory requirements vary from jurisdiction to jurisdiction,
the parties agree to cooperate with one another as may reasonably be required to
obtain regulatory approvals and marketing clearances.  Furthermore, PEC will
provide to Cordis any data, results or any other information that Cordis deems
reasonable necessary for regulatory submission to the FDA or any foreign
governmental agency.

     I.  Cordis will maintain and manage a file of all customer complaints
received by Cordis with respect to the X-Ray System.  Upon Cordis' receipt of
any customer complaint alleging that any product is defective, Cordis will
promptly send to PEC a copy of such complaint together with the allegedly
defective product, if such has been returned to Cordis by its customer.  PEC
will perform a failure analysis of those X-Ray Systems or components which are
returned, as required; cooperate with and assist Cordis in submitting any
reports required by the FDA and other governmental agencies and provide Cordis
with duplicate copies of all such failure analysis reports.

                                      -13-
<PAGE>

     J.  Each party will use its best efforts to obtain ISO 9001 and EN46001
certification before January 1, 2002.

     K.  With respect to all environmental, safety and industrial hygiene
matters related to either party's activities under this Agreement, each party
shall (1) comply with all applicable laws and regulations issued by national,
state and local authorities, (2) inform each other promptly of any significant
adverse events (e.g. fires, explosions, accidental discharges), (3) inform each
other promptly of any allegations or findings of significant violations of
applicable laws or regulations, (4) allow each other to inspect each other's
facilities, such inspections to be at reasonable times and upon reasonable
notice, and (5) implement promptly any corrective action which may be reasonably
requested by the other party.

     XI.  REPRESENTATIONS AND WARRANTIES

     A.  Each party represents and warrants to the other:

          1.  that it will comply with all present and future statutes, laws,
     ordinances and regulations relating to the manufacture, assembly and supply
     of the  X-Ray Systems or components thereof being provided hereunder,
     including, without limitation, those enforced by the FDA (including
     compliance with good manufacturing practicesand quality systems
     requirements) and International Standards Organization Rules;

          2.  that it has the power to execute, deliver and perform the terms
     and conditions of this Agreement and has taken all the necessary action to
     authorize the execution, delivery and performance hereof;

          3.  that the execution, delivery and performance of this Agreement
     will not contravene any provision of law, statute, rule, regulation or
     policy of any local, state or governmental authority;

          4.  that the execution, delivery and performance of this Agreement
     will not constitute a violation of, be in conflict with, or result in, a
     breach of any agreement or contract to which it is a party or by which it
     is bound; and

          5.  that this Agreement constitutes the legal, valid and binding
     agreement of each party and is enforceable in accordance with its terms and
     conditions, except as enforcement of remedies may be limited by general
     principles of bankruptcy, insolvency or other similar laws affecting
     creditors' rights generally.

     XII.   CONFIDENTIALITY

     A.   Unless otherwise expressly provided for in this Agreement, both
parties will treat the Confidential Information received from the other party as
proprietary or confidential and will not disclose any such Confidential
Information to any third party during the Term and for a period of five (5)
years thereafter, other than such disclosure which may be required to be made to
a third party pursuant to this Agreement, and except for information which:

          1.  at the time of disclosure, was published, known publicly or
     otherwise in the public domain;

                                      -14-
<PAGE>

          2.  after disclosure, is published, becomes known publicly or
     otherwise becomes part of the public domain through no fault of the
     receiving party;

          3.  prior to the time of disclosure, is known to the receiving party
     as evidenced by its written records and is not then subject to an
     obligation of confidentiality to any third party; and

          4.  after disclosure, is made available to the receiving party in good
     faith by a third party under no obligation of confidentiality and without
     restriction on its further disclosure by the receiving party.

     B.  Notwithstanding the above, either party may disclose Confidential
Information of the other and this Agreement to their legal representatives,
employees, agents and subcontractors to the extent such disclosure is reasonably
necessary to achieve the purposes of this Agreement; or in connection with the
filing and support of patent applications; or as required by law or to comply
with applicable governmental regulations or court order, including the FDA and
its foreign counterparts; provided that if a party is required to make such
disclosure of another party's Confidential Information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to the other
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its reasonable efforts to secure confidential
treatment of such information in consultation with the other party prior to its
disclosure and disclose only the minimum necessary to comply with such
requirements.

     XIII.  Indemnification

     A.  PEC will be liable to Cordis for and will defend, indemnify and hold
Cordis, its directors, officers, employees and agents, harmless against any
liability, damages or loss from any claims, suits, proceedings, demands,
recoveries or expenses, including without limitation, expenses of total or
partial device recalls, arising out of, based on, or caused by:

          1.  alleged defects in materials, workmanship or design of the X-Ray
     Tubes or Control Devices, or failure to warn or inadequate warning with
     respect thereto based on information supplied, or which should have been
     supplied, by PEC;

          2.  claims of patent infringement made with respect to the X-Ray Tubes
     or Control Devices, wherein such infringement claims arise out of the
     manufacture, processes, methods, use or sale of the X-Ray Tubes or Control
     Devices; and

          3.  any violation by PEC of its obligations under this Agreement.

     B.  Cordis will be liable to PEC and will defend, indemnify and hold PEC,
its directors, officers, employees and agents, harmless against any liability,
damages or loss from any claims, suits, proceedings, demands, recoveries or
expenses, including without limitation, expenses of total or partial device
recalls, arising out of, based on, or caused by:

          1.  alleged defects in materials, workmanship or design of the
     Catheter Body Subassemblies or Delivery Devices, or failure to warn or
     inadequate warning with respect thereto based on information supplied, or
     which should have been supplied, by Cordis;

                                      -15-
<PAGE>

          2.  claims of patent infringement made with respect to the Catheter
     Body Subassemblies or Delivery Devices, wherein such infringement claims
     arise out of the manufacture, processes, methods, use or sale of the
     Catheter Body Subassemblies or Delivery Devices;

          3.  alleged defects relating to Cordis processing such as labeling,
     packaging and sterilization; and

          4.  any violation by Cordis of its obligations under this Agreement.

     C.  A party (hereinafter referred to as the "Indemnifying Party")
indemnifying another party or parties (hereinafter referred to as the
"Indemnified Party"), pursuant to this Agreement, will defend, indemnify and
hold the Indemnified Party harmless against any and all actions, suits,
proceedings, demands, claims, assessments, costs, judgments, legal and other
expenses incidental to any of the foregoing (hereinafter referred to as a
"Claim").  In the event a Claim is made upon the Indemnified Party, the
Indemnified Party will promptly give notice of such Claim to the Indemnifying
Party, and will promptly deliver to such Indemnifying Party all information and
written material available to the Indemnified Party relating to such Claim.  If
such Claim is first made upon the Indemnifying Party, the Indemnifying Party
will promptly give notice of such Claim to the Indemnified Party.

     D.  The Indemnified Party will, if notified of the Indemnifying Party's
election to do so within thirty (30) days of the date of notice of a Claim,
permit the Indemnifying Party to defend in the name of the Indemnified Party any
Claim in any appropriate administrative or judicial proceedings and take
whatever actions may be reasonably requested of the Indemnified Party to permit
the Indemnifying Party to make such defense and obtain an adjudication of such
Claim on the merits, including the signing of pleadings and other documents, if
necessary; provided that the Indemnifying Party will defend the Claim with
counsel reasonably satisfactory to the Indemnified Party and provide the
Indemnified Party with evidence that the product liability insurance required to
be maintained by the Indemnifying Party under Section XIV remains in full force
and effect.  In addition to the liability for the ultimate settlement or
judgment, if any, arising out of such Claim under this Agreement, the
Indemnifying Party will be solely responsible for all the expenses incurred in
connection with such defense or proceedings, regardless of their outcome.
However, the Indemnifying Party will not be responsible for any expenses,
including attorneys fees and costs, incurred by the Indemnified Party to monitor
the defense of the Claim by the Indemnifying Party.  Notwithstanding the
foregoing, the Indemnifying Party will not agree to any settlement without the
consent of the Indemnified Party (which consent will not be unreasonable
withheld) unless such settlement (i) requires no more than a monetary payment
for which the Indemnifying Party has irrevocably agreed to indemnify such
Indemnified Party, and (ii) includes a full, unconditional and complete release
of such Indemnified Party.

     E.  In the event the Indemnifying Party does not undertake the defense of
such Claim under the terms hereof, the Indemnified Party will be entitled to
conduct such defense and settle or compromise such Claim, and the Indemnifying
Party's indemnification obligation under this Agreement will be absolute,
regardless of the outcome of such Claim.  The Indemnified Party, at its option,
may elect not to permit the Indemnifying Party to control the defense against a
Claim as to which it has undertaken the defense.  If the Indemnified Party so
elects, then the Indemnifying Party will not be obligated to indemnify the
Indemnified Party against any costs of defense (including attorneys fees),
settlements, judgments or other costs or obligations arising under or with
respect to such Claim which the Indemnified Party may make or incur relating to
such Claim.

                                      -16-
<PAGE>

     XIV.  INSURANCE

     A.  PEC agrees to procure and maintain in full force and effect during the
Term of this Agreement product liability insurance in an amount not less than $*
per occurrence combined single limit and $* in the aggregate. PEC will, on an
annual basis, furnish to Cordis a certificate of insurance evidencing such
insurance coverage. PEC will not reduce or cancel such insurance coverage
without at least ten (10) days' prior written notice to Cordis.

     B.  Cordis agrees to procure and maintain in full force and effect during
the Term of this Agreement product liability insurance in an amount not less
than $* per occurrence combined single limit and $* in the aggregate. Cordis
will, on an annual basis, furnish to PEC a certificate of insurance evidencing
such insurance coverage. Cordis will not reduce or cancel such insurance
coverage without at least ten (10) days' prior written notice to PEC.

     XV.  LIMITED WARRANTY AND LIMITATION OF LIABILITY

     A.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT (INCLUDING EXHIBITS E
AND F), NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, AND EACH
PARTY HEREBY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF TITLE, NON-
INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND ALL
WARRANTIES IMPLIED FROM ANY COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF
TRADE.

     B.  NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES ARISING OUT OF
OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
WHETHER SUCH LIABILITY ARISES FROM A CLAIM BASED UPON CONTRACT, WARRANTY, TORT
OR ANY OTHER THEORY OF LIABILITY, AND WITHOUT REGARD TO WHETHER THE EITHER PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

     XVI.  INFRINGEMENT.

     A.  Each of PEC and Cordis warrants to the other that it is not presently
aware of any patents or patent applications owned by a third party which would
be infringed by reason of the manufacture, use or sale of any X-Ray System, and
that, during the Term, it will promptly notify the other party if it does become
aware of such a patent.  During the Term each party will promptly inform the
other in writing of any apparent infringement by a third party of any claim of
any patent or patent application related to the X-Ray System or any component
thereof.  During the Term, Cordis shall have the right, but shall not be
obligated, to take action, including the commencement of litigation or other
proceedings, in an effort to halt such alleged infringing product or practice.
If Cordis elects to take legal or other action to halt such infringement, Cordis
will pay all of the legal fees and other expenses incurred in connection with
such action, except that PEC will have the right to participate in such action
and to share the legal fees and other expenses incurred in connection with such

                                      -17-
<PAGE>

action.  If Cordis elects not to take action against the alleged infringer, then
PEC shall have the right to pursue such action at its own expense. Any amounts
recovered in such litigation or other proceeding shall be divided between Cordis
and PEC in proportion to their respective contributions to the legal fees and
other expenses incurred in connection with such action.  Each party has the
right to include the other party as a party plaintiff in any litigation or
proceeding under this Section XVI.

     B.   If Cordis discovers that the manufacture, use or sale of any X-Ray
System infringes or potentially infringes the intellectual property rights of
any unaffiliated third party and if Cordis, after consultation with PEC, elects
to obtain a license from such third party to resolve such infringement or
potential infringement, then Cordis shall have the right to apply against any
license fees or royalties payable to such third party one-half of any royalties
payable by Cordis to PEC pursuant to Section VIII.A. or Exhibit G.

     XVII.  TRADEMARKS, LOGOS, PUBLICITY

     A.  Except as authorized by Section IV.G., neither party will, without the
prior written consent of the other party in each instance, use in any manner
whatsoever, the name, trademarks, logos, symbols or other images of the other
party.

     B.  Each party to this Agreement will not originate any publicity, news
release or public announcement, written or oral, whether to the public or press,
stockholders or otherwise, relating to this Agreement, to any amendment or
performances under the Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld, except that a party may
issue news release or other public announcement (after providing the other party
with an opportunity to review and comment on the news release or public
announcement) if it is required to do so by applicable law or by the rules of
the American Stock Exchange or any other exchange on which the securities of the
party issuing such news release or public announcement are then listed.
Attached to this Agreement as Exhibit H is the initial press release to be
issued by PEC announcing this Agreement and the investment by JJDC.

     XVIII.  DISPUTE RESOLUTION

     Except for the right of either party to seek injunctive relief in Federal
District Court pursuant to Section III.D., any controversy or claim arising out
of or relating to this Agreement or the validity, inducement, or breach thereof,
will be settled by arbitration before a single arbitrator in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA")
then pertaining, except where those rules conflict with this provision, in which
case this provision controls.  The parties hereby consent to the jurisdiction of
the federal district court for the district in which the arbitration is held for
the enforcement of this provision and the entry of judgment on any award
rendered hereunder.  Should such court for any reason lack jurisdiction, any
court with jurisdiction will enforce this clause and enter judgment on any
award.  The arbitrator will be an attorney who has at least 15 years of
experience with a law firm or corporate law department of over 25 lawyers or was
a judge of a court of general jurisdiction.  The arbitration will be held in New
York, New York, and in rendering the award the arbitrator must apply the
substantive law of New York (except where that law conflicts with this clause),
except that the interpretation and enforcement of this arbitration provision
will be governed by the Federal Arbitration Act.  The arbitrator will be
neutral, independent, disinterested, impartial and will abide by The Code of
Ethics for Arbitrators in Commercial Disputes approved by the AAA.  Within 45
days of initiation of arbitration, the parties will reach agreement upon and
thereafter follow procedures assuring that the arbitration will be concluded and
the award rendered within no more than eight months from selection of the
arbitrator.  Failing such agreement, the AAA will design and the parties will
follow procedures that meet such a time schedule.  Each party has the right
before or, if the arbitrator cannot hear the matter within an acceptable period,
during the arbitration to seek and obtain from the appropriate

                                      -18-
<PAGE>

court provisional remedies such as attachment, preliminary injunction, replevin,
etc., to avoid irreparable harm, maintain the status quo or preserve the subject
matter of the arbitration. THE ARBITRATOR WILL NOT AWARD ANY PARTY PUNITIVE,
EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN
PREJUDGMENT INTEREST OR ATTORNEYS' FEES OR COSTS.

     XIX.  MARKINGS

     Cordis agrees to mark all X-Ray Systems sold by it under the licenses
granted with the word "Patent", "Patents" or "Patents Pending" and the number or
numbers of the patent or patents applicable thereto.

     XX.  COOPERATION

     Each party will execute any instruments, reasonably believed by the other
party to be necessary to implement the provisions of this Agreement.

     XXI.  MISCELLANEOUS

     A.   Interpretation. This Agreement will be construed and the rights of the
parties hereunder will be determined in accordance with the laws of the State of
New York. All article captions or titles are inserted herein for reference only
and shall not amend or modify to any extent the express terms of this Agreement.
Any questions concerning the construction or effect of patent applications or
patents shall be decided in accordance with the laws of the country in which the
patent application was filed or the patent obtained in the appropriate court of
competent jurisdiction. Each party agrees that they will comply with applicable
law in fulfilling their respective obligations and exercising their respective
rights under this Agreement.

     B.   Entire Agreement  This writing constitutes the entire Agreement
between the parties relating to the subject matter of this Agreement and
supercedes any and all prior agreements and representations.  Furthermore, there
are no understandings, representations or warranties of any kind except as
expressly set forth herein.

     C.   Notices.  All notices, requests, demands and the like required to be
given under this Agreement will be sufficient if in writing sent by certified
mail, postage prepaid, as follows:

     If to Cordis:    Cordis Corporation
                      40 Technology Drive
                      Warren, NJ 07059
                      Attention: V.P. New Business Development

     With a copy to:  Johnson & Johnson
                      One Johnson & Johnson Plaza
                      New Brunswick, NJ 08933
                      Attention: Chief Patent Counsel

     If to PEC:       Photoelectron Corporation
                      5 Forbes Road

                                      -19-
<PAGE>

                      Lexington, MA 02421
                      Attention: President and CEO

     With a copy to:  William O. Flannery, Esq.
                      722 Grove Street
                      Framingham, Massachusetts 01701

     D.  Amendment  No changes, amendments or alterations will be effective
unless in writing and signed by both parties.

     E.   Waiver  No waiver of any default in the performance of any duties or
obligations arising out of this Agreement will be valid unless in writing and
signed by the waiving party.  Any waiver, expressed or implied, of any breach
under this Agreement will not be considered as a waiver of any subsequent breach
of the same or a different nature.

     F.   Construction  This Agreement will be interpreted without any regard to
any presumption or rule requiring construction against the party causing this
Agreement to be drafted.

     G.   Independent Contractor.  The relationship of each party to the other
hereunder will be solely that of an independent contractor.  Cordis and PEC each
acknowledge and agree that neither Cordis nor PEC is an employee, employer,
agent, partner or joint venturer of the other.  Neither Cordis nor PEC will have
or hold itself out as having the right or authority to assume or create any
obligation or responsibility, whether express or implied, on behalf of or in the
name of the other, except with the express written authority of the other.

     H.   Assignment.  This Agreement may not be assigned by either party
without the prior written consent of the other, except that either party may
assign its rights and/or obligations hereunder to any of its Affiliated
Companies or to the  acquirer of all or substantially all of  the party's entire
business.

     I.  Counterparts.  This Agreement may be executed in one or more
counterparts, including facsimile counterparts, each of which will be deemed an
original and which together will constitute one and the same agreement.

     J.  Remedies Cumulative.  The rights, powers and remedies set forth herein
are cumulative and shall be in addition to any and all other rights, powers and
remedies provided by law.  The exercise of any right or remedy hereunder shall
not in any way constitute a cure under this Agreement, or prejudice either party
in the exercise of any of its rights under this Agreement or law.

     K.  Severability.  If any provision of this Agreement shall be held to be
unenforceable in whole or in part, then the invalidity of such provision shall
not be held to invalidate any other provision herein and all other provisions
shall remain in full force and effect.

     L.   Force Majeure.  No delay or failure of either party to perform any of
its respective obligations under this Agreement will be considered a breach of
this Agreement if it results from any cause beyond the control of such party,
including without limitation, any act of God, earthquake, hurricane, fire,
flood, strike, lockout or other dispute, natural catastrophe, severe weather or
public emergency, insurrection, riot, war, transportation shortage or actions of
governmental authorities.

                                      -20-
<PAGE>

                  [End of Text; Signatures on Following Page]

                                      -21-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by affixing their signatures below.

                              CORDIS CORPORATION

                              By:  /s/ Susan E. Morano
                                   -------------------

                              Title:  V.P. New Business Development
                                      -----------------------------

                              Date:  February 5, 2001
                                     ----------------

                              PHOTOELECTRON CORPORATION

                              By:  /s/ Euan Thomson
                                   ----------------
                                  Euan Thomson, Ph.D.
                                  President and CEO

                              Date:  February 5, 2001
                                     ----------------

* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.

                                      -22-
<PAGE>

                                   Exhibit A
                                   ---------

                         APPROVED SUPPLIER REQUIREMENTS

The following requirements shall be achieved in order to become and remain an
Approved Supplier for   the X-Ray Systems or their components.

QUALITY SYSTEM REQUIREMENTS
---------------------------

Assessment:  Both parties will perform a Quality System Audit of the other
party's quality systems to determine that the requirements of this section have
been satisfied.  Once the auditor has performed the audit with satisfactory
results, he shall notify the other party in writing that the supplier approval
process is complete.  Minor deficiencies or non-conformances identified during
these audits that are not indicative of a lack of control will not preclude
supplier approval.  However, such observations will be brought to the attention
of PEC and Cordis and the party who was audited will identify actions that shall
be taken to correct these items and agree upon a time schedule in which these
actions shall be implemented.

1.   Both parties shall attain a general state of compliance with the FDA and
international medical device requirements.

2.   Each party shall have, or shall develop, quality systems which comply with
current GMPQSR (CFR 820), ISO9001 and EN46001, as determined by the other party
and or FDA, NRC or EC Notified Body assessment.  However, the development of
appropriate quality systems shall occur in a timely fashion so as to permit
commercialization of the X-Ray Systems as soon as other factors permit.

3.   Written requirements, including but not limited to specifications,
drawings, test methods and procedures, shall be utilized by the parties for all
X-Ray Systems or their components . All requirements shall be mutually developed
and agreed upon by PEC and Cordis.

4.   Neither party shall not make any changes to components, processes, systems
(e.g. quality, measurement, testing) or suppliers used to produce, test andor
release X-Ray Systems or their components without prior written approval from
the other party's Quality Assurance management except as permitted in Section
IV.J. of this Agreement.

5.   Each party shall establish and implement a system that ensures Device
History Records (DHR) for each batch, lot, or unit are created to demonstrate
that the X-Ray System or their components are manufactured in accordance with
all applicable specifications and requirements.

     a.  DHR's shall contain adequate information to provide traceability of all
     components and manufacturing aids (if any) used in the manufacture of a
     finished X-Ray System.

     b.  DHR's shall contain adequate information to identify the processing
     methods and personnel involved in the manufacture of a finished X-Ray
     System.

     c.  DHR's shall contain adequate information to demonstrate that the
     manufactured Product was evaluated (tested and/or inspected) and found to
     meet the appropriate specifications.

                                      -23-
<PAGE>

6.   Both parties shall establish written requirements, including specifications
and drawings, for purchased materials and components and shall implement a
system to ensure that the materials and components supplied meet these
specifications.

7.   Both parties shall obtain written agreements with suitable suppliers for
all components, materials and services used in the manufacture of X-Ray Systems
or their components and that no changes in the goods or services supplied shall
be made without adequate notification to the other party.

8.   PEC and Cordis will have a system for handling customer complaints.

     a.   All complaints involving X-Ray Systems supplied to Cordis will be
initially reported to Cordis customer service.  PEC will be promptly informed if
the complaint involves a product supplied by PEC, and within seven (7) calendar
days, PEC will provide Cordis a written preliminary investigation report to
Cordis Quality Assurance.  PEC will also be promptly informed if the complaint
involves a component supplied by Cordis, and within seven (7) calendar days,
Cordis will provide PEC a written preliminary investigation report to PEC
Quality Assurance. Each preliminary report will include an initial assessment of
device reporting under MDR or Vigilance reporting requirements.  If a customer
contacts PEC, PEC will promptly notify Cordis and refer the customer to Cordis
Customer Service.

     b.   Each party shall cooperate fully and promptly in the investigation of
complaints involving supplied Products.  All complaints should be investigated
and a written response provided to CORDIS or PEC Quality Assurance, as the case
may be, within thirty (30) days of receipt.  All correspondence with the
complainant will be handled by Cordis, unless other arrangements are made by PEC
with Cordis on a case-by-case basis.

     c.   Cordis will be responsible for filing any device report under MDR or
Vigilance reporting requirements.

     d.   In the event that corrective actions are warranted as the result of
customer complaints for the supplied X-Ray Systems or their components, these
corrective actions shall be incorporated and tracked as part of the Cordis
Corrective Action system.

9.   If a problem that potentially affects the safety, efficacy or reliability
of the X-Ray Systems or their components is identified by either PEC or Cordis,
the problem and all known facts shall be brought to the attention of both
company's Quality Assurance management as soon as possible, but within 24 hours
of the identification of the problem.  In the event that a field action is
contemplated, Cordis and PEC shall work together to determine whether a field
action should take place; however, the final decision to implement a field
action shall be made by the Cordis Quality Management.  Cordis shall be
responsible for implementing any field action, including informing customers and
defining the logistics of the field action.  PEC shall cooperate fully in the
implementation of any field action.

10.  Each party shall maintain  a document retention procedure to ensure that
all documents required to meet the quality requirements herein set forth,
including distribution records, are retained for a minimum of 5 years from the
date of Product distribution.  Certain records, including but not limited to
Design History Files and Complaint Files shall be retained for a minimum of 5
years.

11.  Each party may conduct interim audits of the other party's quality systems
to ensure that those systems are being developed in accordance with these
Approved Supplier Requirements.

                                      -24-
<PAGE>

Product Requirement.

Assessment.  PEC Cordis shall conduct Design Validation, Design Verification and
Product Performance Qualification (PPQ) testing to determine if the components
of the X-Ray Systems supplied by Cordis meet their pre-established
specifications and quality attributes.  Cordis shall conduct Design Validation,
Design Verification and Product Performance Qualification (PPQ) testing to
determine if the X-Ray Systems supplied by PEC meet their pre-established
specifications and quality attributes.

Once the X-Ray Systems and components have successfully met all requirements of
the Design Validation and DesignVerification, and all Quality Systems
Requirements stated above have been met, each party  will be considered a
Qualified Supplier to the other and added to the parties' respective QSIL
(Qualified Supplier Items List).

                                      -25-
<PAGE>

                                   Exhibit B
                                   ---------

                         GENERAL PRODUCT SPECIFICATIONS

GOAL OF THE X-RAY SYSTEM:  *

OVERALL COMPONENTS OF THE SYSTEM:
1.  Catheter Body Subassembly (Cordis responsibility)
2.  X-Ray Tube (PeC responsibility)
3.  Control Device (PeC responsibility)
4.  Delivery Device (Cordis responsibility)

DESCRIPTION OF CATHETER BODY SUBASSEMBLY: *

DESCRIPTION OF THE DISPOSABLE X-RAY TUBE:  *

DESCRIPTION OF THE CONTROL DEVICE: *

DESCRIPTION OF THE DELIVERY DEVICE: *

* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.

                                      -26-
<PAGE>

                                   Exhibit C

                                TRANSFER PRICES
                                ---------------

Transfer Pricing Cordis to PEC:
-------------------------------

Catheter Body Subassembly               $  *

Delivery Device                         $  *

Transfer Pricing PEC to Cordis:
-------------------------------

X-Ray Tube attached to
Catheter Body Subassembly               $  *

Control Device with Delivery Device     $  *

Calibration services                    $  *

Note 1:  *

Note 2:  *

Audit Rights
------------

Each party shall have the right to conduct audits upon reasonable notice to
review the other party's manufacturing costs.

* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.

                                      -27-
<PAGE>

                                   Exhibit D

                              DEVELOPMENT PROGRAM
                              -------------------

                                       *

* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.

                                      -28-
<PAGE>

                                   Exhibit E
                                   ---------

                         PHOTOELECTRON LIMITED WARRANTY

Photoelectron warrants that each Photoelectron product or component (excluding
consumables) sold to Cordis pursuant to this Agreement will be free of defects
in design, material or workmanship for a period of twenty-four (24) months from
the date of installation.  If the equipment fails to satisfy this warranty,
Cordis will promptly notify Photoelectron of such failure within the warranty
period.  At Photoelectron's option, Photoelectron will repair or replace the
defective equipment.  Cordis will not return any equipment or component to
Photoelectron without Photoelectron's prior written authorization.  If
Photoelectron is unable to repair or replace the equipment after reasonable
efforts, Photoelectron will, as Cordis' exclusive remedy, refund the portion of
the purchase price previously paid by Cordis that is attributable to the
defective equipment.  Notwithstanding the foregoing provisions, Photoelectron
shall have no obligation or responsibility to repair or replace any defective
equipment if the defect was caused by:  (a) Cordis' or Cordis' customer's
failure to properly operate, sterilize or maintain the equipment in accordance
with Photoelectron's written instructions; (b) any attempted repair or
modification of the equipment that is not authorized by Photoelectron; (c) any
power failure, power surge, fire, water damage, Act of God or other circumstance
or event not within Photoelectron's reasonable control; (d) any damage resulting
from transporting or improperly handling the equipment; (e) normal wear and
tear; or (f) any other act or omission of Cordis, Cordis' agents or any other
third party except as provided in this Agreement.

                                      -29-
<PAGE>

                                   Exhibit F
                                   ---------

                            CORDIS LIMITED WARRANTY

Cordis warrants that each Cordis product or component (excluding consumables)
sold to PEC pursuant to this Agreement will be free of defects in design,
material or workmanship for a period of twenty-four (24) months from the date of
installation.  If the equipment fails to satisfy this warranty, PEC will
promptly notify Cordis of such failure within the warranty period.  At Cordis's
option, Cordis will repair or replace the defective equipment.  PEC will not
return any equipment or component to Cordis without Cordis's prior written
authorization.  If Cordis is unable to repair or replace the equipment after
reasonable efforts, Cordis will, as PEC's exclusive remedy, refund the portion
of the purchase price previously paid by PEC that is attributable to the
defective equipment.  Notwithstanding the foregoing provisions, Cordis shall
have no obligation or responsibility to repair or replace any defective
equipment if the defect was caused by:  (a) PEC's or Cordis's customer's failure
to properly operate, sterilize or maintain the equipment in accordance with
Cordis's written instructions; (b) any attempted repair or modification of the
equipment that is not authorized by Cordis; (c) any power failure, power surge,
fire, water damage, Act of God or other circumstance or event not within
Cordis's reasonable control; (d) any damage resulting from transporting or
improperly handling the equipment; (e) normal wear and tear; or (f) any other
act or omission of PEC, PEC's agents or any other third party except as provided
in this Agreement.

                                      -30-
<PAGE>

                                   Exhibit G
                                   ---------

                           RESIDUAL ROYALTY PAYMENTS

RESIDUAL ROYALTY PAYMENTS TO PEC AT THE COMPLETION  OF:
-------------------------------------------------------

*

RESIDUAL ROYALTY PAYMENTS TO CORDIS AT THE COMPLETION OF :
----------------------------------------------------------

*

Notes:   *

* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.

                                      -31-
<PAGE>

                                   Exhibit H
                                   ---------

                             Initial Press Release
                             ---------------------

     PHOTOELECTRON CORPORATION ANNOUNCES STRATEGIC PARTNERSHIP WITH CORDIS
CORPORATION FOR DEVELOPMENT OF INTRAVASCULAR RADIATION SYSTEM ; ALSO  ANNOUNCES
         EQUITY INVESTMENT BY JOHNSON & JOHNSON DEVELOPMENT CORPORATION

For Immediate Release
Contact: Timothy W. Baker
Chief Financial Officer
Photoelectron Corporation
781-861-2069

               LEXINGTON, Mass. (February 6, 2001) -- Photoelectron Corporation
          (AMEX:PHX), a medical device and technology company specializing in
          miniature x-ray technology, announced today that it has signed an
          exclusive agreement with Cordis Corporation, a Johnson & Johnson
          Company, to co-develop and co-manufacture a disposable miniature x-ray
          source and associated technology for the delivery of intravascular
          radiation therapy to prevent restenosis (re-narrowing) of coronary
          arteries following angioplasty and stent procedures. Cordis
          Corporation is a leader in circulatory disease management.

               Additionally, Photoelectron announced that Johnson & Johnson
          Development Corporation has made a $3.8 million equity investment in
          Photoelectron's common stock which is not required to be registered
          for a period of twelve months.

               "We are pleased to have signed these  agreements with Cordis
          Corporation and Johnson & Johnson Development Corporation," stated
          Euan Thomson, Ph.D., President and CEO, Photoelectron Corporation.
          "This $3.8 million investment is expected to provide us with the
          necessary resources to quickly complete development and successfully
          launch this new x-ray delivery system to treat cardiac patients
          requiring angioplasty and stent procedures."

               Under the terms of the agreement with Cordis, the companies will
          develop and manufacture an x-ray system based on Photoelectron's
          patented technology.  The new system will include an integrated
          disposable x-ray tube and catheter and a delivery and control device
          to deliver intravascular radiation therapy.  Both companies will
          manufacture components for the system, which will be co-labeled.
          Cordis will be responsible for the sales and marketing for the new x-
          ray system.

               In July 2000, Photoelectron Corporation announced that it had
          developed a new system for delivering x-rays to the inside of blood
          vessels. A clinical version of this system would be placed inside
          blood vessels to deliver a dose of radiation to the interior surface,
          sufficient to prevent restenosis, following balloon angioplasty and
          stent placement.  Stents are miniature scaffolds that are inserted
          into a blocked artery to support it and help maintain open blood flow
          after angioplasty. After an angioplasty and

                                      -32-
<PAGE>

          stent procedure, the treated site is potentially at risk for
          restenosis due to the body's natural healing response.

 .    An estimated 1.3-million angioplasty and stent placements took place in the
     United States in 2000; this number is expected to build to 3.3 million
     worldwide by 2003.

 .    Restenosis occurs in 30-40% of all angioplasty procedures and 20-30% of all
     stent placements.

 .    An estimated 400,000 patients per year will require intravascular radiation
     therapy by 2003.

               Clinical studies have shown that restenosis is inhibited in
          arteries treated with radiation.

               THE DEVELOPMENT PROGRAM

               Dr. Thomson added, "The signing of this agreement with a
          prominent company in the field of circulatory disease management such
          as Cordis, is consistent with our strategy to establish Photoelectron
          as the leading company in the field of miniature x-ray technology
          accessing each new marketplace through strategic partnerships with
          market leaders. With Cordis as our strategic partner in this field, we
          feel we will be able to rapidly develop the system and penetrate the
          intravascular radiation therapy market."

                             Conference Call Today

               Photoelectron Corporation will hold a conference call at 11:00
          a.m. (Eastern Time) today. During the call, President and Chief
          Executive Officer Euan Thomson and Chief Financial Officer Timothy
          Baker will discuss today's news release and be available to answer
          questions about other topics related to Photoelectron's strategy and
          opportunities. At 10:50 a.m. E.T., interested participants should call
          1-800-946-0741 in the U.S. or 1-719-457-2649 internationally. There
          will also be a live Webcast of the call on the Investor Relations
          section of Photoelectron's Web site at www.photoelectron.com.

                              About Photoelectron

               Founded in 1989 and based in Lexington, Mass., Photoelectron
          Corporation is a medical device and technology company specializing in
          miniature x-ray technology for the medical and industrial markets.
          The company has secured both regulatory approval and broad
          distribution channels for their current products.  Photoelectron is
          leveraging its core expertise in miniature x-ray technology into
          distinct markets including cancer treatment, intravascular care,
          industrial x-ray, and radiation dosimetry products
          (www.photoelectron.com).

               "Safe Harbor" statement under the Private Securities Litigation
          Reform Act of 1995; Any statements which are not historical facts
          contained in this release are forward looking statements that involve
          risk and uncertainties, including but not limited to those relating to
          product demand, pricing, market acceptance, the effect of economic

                                      -33-
<PAGE>

          conditions, the validity and enforceability of intellectual property
          rights, the outcome of government regulatory proceedings, competitive
          products, risks in product and technology development, the ability to
          complete transactions, and other risks identified in the Company's
          Securities and Exchange Commission filings.

                                      ###

                                      -34-<PAGE>

CONFIDENTIAL

                                                                   EXHIBIT 10.18

Paradigm Genetics, Inc. has omitted from this Exhibit 10.18 portions of the
Agreement for which Paradigm Genetics, Inc. has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment has been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.

                              Alliance Agreement

                                    Between

                              LION bioscience AG
                               Waldhofer Str. 98
                      69123 Heidelberg-Wieblingen Germany
                       represented by its managing board

                                          -called "LION" hereinafter-

                                      and

                            Paradigm Genetics Inc.
                       104 Alexander Drive, Building Two
            Research Triangle Park, North Carolina 27709-4528, USA
                   Represented by the CEO John Ryals, Ph.D.

                                                   - called "PGI" hereinafter-

                                   -  collectively called "Parties" hereinafter-

1
<PAGE>

CONFIDENTIAL

                                 Confidential

                               ALLIANCE AGREEMENT

This agreement is entered into by and between Lion bioscience AG, hereinafter
"LION", of Waldhofer Str. 98, 69123 Heidelberg-Wieblingen, Germany, with offices
at 141 Portland Street, 10/th/ Floor, Cambridge, Massachusetts 02139, and
Paradigm Genetics, Inc., hereinafter "PGI", of 104 Alexander Drive, Building 2,
Research Triangle Park, North Carolina 27709.

     WHEREAS, PGI is in the business of genomic research and has know-how,
facilities, experience and personnel in the field of genomics, particularly
functional genomics relating to life sciences;

     WHEREAS, LION has know-how, facilities, experience and personnel in the
field of developing, marketing and distributing bioinformatics software tools
and services; and

     WHEREAS, LION and PGI desire to conduct collaborative development and sales
and marketing in the area of bioinformatics for functional genomics for certain
life sciences.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein, the parties agree as follows:

     1.   Scope of Relationship. a) LION and PGI shall undertake a collaboration
          ---------------------
          ("COLLABORATION") in the area of Bioinformatics for Functional
          Genomics (the "FIELD"). For the purposes of this Agreement,
          "Functional Genomics" means functional genomics in the areas of crop
          production ("Crop Production"), nutrition, industrial products and
          foods for human health; "Crop Production" means any business activity
          resulting in the production or enhanced production of crops, food,
          animal feed or industrial feed stocks. "Bioinformatics" means database
          architecture, information storage and retrieval, software, data
          analysis and query tools and data display and user interface.

          b)   The COLLABORATION consists of the activities to be conducted by
               PGI and LION pursuant to the Product Development Plan and the
               Marketing Plan.

          c)   The Product Development Plan consists of i) the development of
               New Software Products that are useful for Functional Genomics and
               for use in the generation of, or with, a Metabolic Profiling
               Database on plants and fungi and ii) development of a Metabolic
               Profiling Database for the FIELD and

2
<PAGE>

CONFIDENTIAL

               the Health Care Market in accordance with the Plan attached
               hereto as Exhibit A.

          d)   The Sales & Marketing Program consists of i) the sales and
               marketing of New Software Products that are useful for Functional
               Genomics and for use in the generation of, or with, a Metabolic
               Profiling Database on plants and fungi and ii) the sales and
               marketing of a Metabolic Profiling Database for the FIELD and the
               Health Care Market in accordance with the Plan attached hereto as
               Exhibit B. In addition, a mutually agreed upon business plan will
               be completed by April 1, 2001.

          e)   The COLLABORATION shall be under the direction and supervision of
               a Joint Collaboration Committee consisting of an R & D
               representative and a Business representative from both PGI and
               LION as listed in the attached Exhibit C (each respectively a
               "REPRESENTATIVE" and collectively the "JOINT COLLABORATION
               COMMITTEE"). A party may change a designated REPRESENTATIVE by
               notice to the other party. All decisions relating to the
               COLLABORATION, as well as any modification of the Product
               Development Plan or the Marketing Plan, shall be effective only
               upon mutual agreement of all REPRESENTATIVES. In the event that
               the REPRESENTATIVES are unable to agree, the matter shall be
               referred to the persons designated in Article 22b. In addition,
               the scope of the COLLABORATION may be modified upon mutual
               written consent of the Parties.

     2.   Meetings and Reports. a) Designees of LION and PGI shall meet
          --------------------
          regularly to discuss the COLLABORATION, set specific objectives,
          define timelines and acceptance criteria, and evaluate and report
          progress. It is mutually agreed that PGI and LION will allocate
          efforts to projects based on the alignment with each party's business
          strategy. Participants of such meetings shall be determined by the
          REPRESENTATIVES. Meetings shall take place at a location that is
          mutually agreed upon by both parties. Each party shall be responsible
          for its out-of-pocket expenses associated with attendance at such
          meetings.

          b)   PGI and LION shall produce a written summary of meetings of the
               JOINT COLLABORATION COMMITTEE and a final written report
               summarizing the results of the PRODUCT DEVELOPMENT PLAN within
               sixty (60) days of its completion. The final report shall
               include, but not be limited to, all data, conclusions, results,
               observations, a detailed description of all procedures, and the
               like. All such reports may be utilized by both parties in the
               FIELD. All reports shall constitute CONFIDENTIAL INFORMATION (as
               defined below) subject to provisions of Article 6.

     3.   Consideration from PGI to LION.  In consideration of the services
          ------------------------------
          provided by LION and the rights obtained by PGI under this agreement,
          PGI shall provide LION with:

3
<PAGE>

CONFIDENTIAL

          a)   a minimum two full time employee (FTE) effort, as described in
               the attached Product Development Plan as Exhibit A, for the co-
               development of New Software Products and the Metabolic Profiling
               Database pertaining to this COLLABORATION. If appropriate, LION
               employees will work within PGI facilities under the appropriate
               confidentiality and non-disclosure agreements.

          b)   The current architectural schema for the FunctionFinder(TM)
               software solely to assist in the Product Development Plan covered
               under this agreement. LION will not use this schema for any other
               purpose, nor will LION market, sell or distribute this schema or
               any modified form of the schema to any third party without
               written consent of PGI.

          c)   Access to certain relevant Development Data for the Product
               Development Plan. LION will not market, sell or distribute these
               data, or copies of these data, to any third party. "Development
               Data" for the purposes of this Agreement means data that is
               useful in the Development Plan to develop New Software Products
               and the Metabolic Profiling Database.

          d)   Certain metabolic profiling data from plants and fungi to be used
               for the sole purpose of marketing and supporting the Metabolic
               Profiling Database. All plant and fungal metabolic profiling data
               shall remain the sole property of PGI. No license is granted to
               LION for this or any other data for any other activity.

          e)   All data to be used as part of this COLLABORATION which will be
               structured to be compatible with user interfaces designed by LION
               (for example, bioSCOUT(TM)) provided LION continues to use SRS
               and as long as LION provides PGI with timely updates on
               requirements.

          f)   Payments for any development which is carried out by LION for the
               benefit of PGI, which is not part of the Product Development Plan
               for the development of New Software Products or that is not used
               in the generation of the Metabolic Profiling Database. The rate
               of payment will be at a consultancy rate of $ [____] *
               /person/day. Travel and subsistence expenses will also be
               charged.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

4
<PAGE>

CONFIDENTIAL

          g)   A royalty of [___] * of the Net Sales of any Metabolic Profiling
               Database, which is licensed as a database by PGI under mutually
               agreed upon terms, as between PGI and LION, in the FIELD and the
               Health Care Market. This royalty shall be paid in US dollars
               within 30 days of the end of each quarter after sales have
               occurred. For purposes of this subsection g), "Net Sales" are the
               total revenue received for a license to the Metabolic Profiling
               Database before taxes and net of refunds, credits or discounts.
               If the Metabolic Profiling Database is sold as a part of a
               package of products, databases and/or services the royalty shall
               reflect the relative value of the Metabolic Profiling Database to
               the total contract value and PGI and LION shall negotiate the
               royalty rate in good faith.

          h)   Recommendation for LION products. PGI will market its functional
               genomics data, databases and products resulting from its internal
               discovery efforts. PGI and LION will market the Metabolic
               Profiling Database in the FIELD and in the Health Care Market. If
               a customer is interested in solutions to bioinformatics problems,
               PGI will mention that LION is the provider of choice for
               bioinformatics software for functional genomics. PGI will attempt
               to facilitate a favorable viewing of LION products and services.
               However, PGI is free to work with any customer it finds,
               independent of other agreements the customer may have with the
               competitors of LION. PGI agrees to protect the confidential
               information of LION to at least the same degree as set forth in
               the rules for confidentiality in the Letter of Intent dated
               January 19, 2000.

          i)   PGI will not enter into an agreement with any third party to co-
               develop bioinformatics software or the Metabolic Profiling
               Database covered under this agreement with the intention of
               marketing these tools in the FIELD with the exception of foods
               for human health. "Third Party" for this subsection i) means an
               entity other than the entity having a preexisting relationship
               with either party or an entity that provides a product or tools
               for which LION has no reasonable alternative or comparable
               product.

          j)   A royalty of [___] * of the Net Sales of any New Software
               Product, which is sold by PGI under mutually agreed upon terms,
               as between PGI and LION. This royalty shall be paid in US dollars
               within 30 days of the end of each quarter after sales have
               occurred. For purposes of this subsection j), "Net Sales" are the
               total revenue received for a license to the New Software Product
               before taxes and net of refunds, credits or discounts.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

5
<PAGE>

CONFIDENTIAL

               If the New Software Product is sold as a part of a package of
               products, databases and/or services the royalty shall reflect the
               relative value of the New Software Product to the total contract
               value and PGI and LION shall negotiate the royalty rate in good
               faith.

          k)   For new bioinformatics software which is co-developed pursuant to
               the COLLABORATION but is not a New Software Product, the revenue
               split between PGI and LION will be based on the percentage of the
               value contributed by each party to any new bioinformatics
               software.

     4.   Consideration from LION to PGI.  In consideration of the services
          ------------------------------
          provided by PGI and the rights obtained by LION under this Agreement,
          LION shall provide PGI with:

          a)   In addition to the terms and conditions of the license agreements
               dated October 26, 1999 and June 14, 2000, continued updates and
               support for SRS, bioSCOUT(TM) and arraySCOUT(TM) and associated
               software modules at prices no greater than those previously
               negotiated between the parties and no higher than licensed to
               other commercial entities in arms length transactions. LION will
               provide PGI with software development kits for SRS,
               arraySCOUT(TM) and bioSCOUT(TM) tools.

          b)   At commercially reasonable terms available to other customers,
               LION shall provide to customers of PGI a license to SRS,
               bioSCOUT, arraySCOUT and other tools required to use the
               Metabolic Profiling Data Analysis and Display Software and
               Metabolic Profiling Database. PGI will not independently market,
               sell or distribute the license or kits without the written
               consent of LION.

          c)   A minimum two full time employee (FTE) effort, as described in
               the Product Development Plan attached as Exhibit A, for the co-
               development of New Software Product and the Metabolic Profiling
               Database pursuant to this COLLABORATION. If appropriate, PGI
               employees will work within LION facilities under the appropriate
               confidentiality and non-disclosure agreements. Furthermore, LION
               will provide training and access to early phase products (-test
               site) that are appropriate for PGI.

          d)   The marketing of SRS, bioSCOUT(TM) and other bioinformatics
               software tools to industry. If the customer is in the Functional
               Genomics markets, LION will mention that PGI is the provider of
               choice for functional genomics. LION will attempt to facilitate a
               favorable viewing of PGI products and services. However, LION is
               free to work with any customer it finds, independent of that
               customer's interest in working with PGI and independent of other
               agreements the customer may have with competitors of PGI.

6
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          e)   LION will not enter into an agreement with any third party to co-
               develop bioinformatics software or the Metabolic Profiling
               Database covered under this agreement with the intention of
               marketing these tools in the FIELD with the exception of foods
               for human health. "Third Party" for this subsection means an
               entity other than the entity having a preexisting relationship
               with either party or an entity that provides a product or tools
               for which PGI has no reasonable alternative or comparable
               product.

          f)   A royalty of [___] * of the Net Sales of any Metabolic Profiling
               Database, which is sold as a database by LION under mutually
               agreed upon terms, as between PGI and LION, in the FIELD or
               Health Care Market. This royalty shall be paid in US dollars
               within 30 days of the end of each quarter after sales have
               occurred. For purposes of this subsection f), "Net Sales" are the
               total revenue received for a license to the Metabolic Profiling
               Database before taxes and net of refunds, credits or discounts.
               If the Metabolic Profiling Database is sold as a part of a
               package of products, databases and/or services the royalty shall
               reflect the relative value of the Metabolic Profiling Database to
               the total contract value and PGI and LION shall negotiate the
               royalty rate in good faith.

          g)   A royalty of [___] * of the Net Sales of any New Software
               Product, which is licensed by LION under mutually agreed upon
               terms, as between PGI and LION. This royalty shall be paid in US
               dollars within 30 days of the end of each quarter after sales
               have occurred. For purposes of this subsection g), "Net Sales"
               are the total revenue received for a license to the
               Bioinformatics Software Tool before taxes and net of refunds,
               credits or discounts. If the New Software Product is sold as a
               part of a package of products, databases and/or services the
               royalty shall reflect the relative value of the New Software
               Product to the total contract value and PGI and LION shall
               negotiate the royalty rate in good faith.

     5.   Grants, Licenses and Options.  a) Under the SRS license agreement
          -----------------------------
               dated October 26, 1999 and the bioSCOUT(TM) and arraySCOUT(TM)
               licenses dated June 14, 2000, LION has granted to PGI annual
               licenses to use these products. Following the first sale of a New
               Software Product or a Metabolic Profiling Database at a price to
               be agreed between LION and PGI, LION will grant to PGI a non-
               exclusive license to use SRS, bioSCOUT(TM) and arraySCOUT(TM)
               from the date of the annual license renewals.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

7
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          b)   The granted non-exclusive licenses, pursuant to article 5(a),
               shall survive the termination of this Agreement provided that the
               royalties received or sales revenues retained by LION pursuant to
               articles 3(g), 3(j), 4(e) and 4(f) exceed the annual list price
               of the software for the year in which such royalties or sale
               revenues are received. However, the non-exclusive licenses
               granted pursuant to article 5(a) do not include new versions of
               the software or technical support.

          c)   LION is free to use, market, sell, license and distribute any
               product or service not specifically covered under this
               COLLABORATION without interference from PGI. PGI is free to sell
               and distribute any product or service not specifically covered
               under this COLLABORATION without interference from LION.

          d)   (i) LION herewith grants PGI a non-exclusive, world-wide, royalty
               free License to use and market the New Software Product and the
               Know-How related to the New Product Software solely for the
               purposes of this Agreement, without the right to sublicense, and
               subject to all terms and conditions hereof; and (ii) LION
               herewith also grants PGI and its affiliates an irrevocable, non-
               exclusive, world-wide, royalty-free License to use New Software
               Products and the Know-How related to the New Software Products
               for internal purposes without the right to sublicense.

          e)   (i) PGI herewith grants LION a non-exclusive, world-wide,
               royalty-free License to use and market the Metabolic Profiling
               Database and the Know-How related to the Metabolic Profiling
               Database solely for the purposes of this Agreement, without the
               right to sublicense, and subject to all terms and conditions
               hereof; and (ii) PGI herewith also grants LION and its affiliates
               an irrevocable, non-exclusive, world-wide, royalty-free License
               to use the Metabolic Profiling Database and the Know-How related
               to the Metabolic Profiling Database for internal purposes without
               the right to sublicense.

     6.   Confidentiality. In view of the parties' proprietary rights and
          ----------------
          interests concerning their facilities and technology, PGI and LION
          agree that during the term of and any subsequent extension of this
          Agreement and for a period of five (5) years thereafter, each party
          shall hold in confidence any CONFIDENTIAL INFORMATION (as defined
          below): a) received by one party ("Receiving Party") from the other
          party ("Disclosing Party"), or 2) that results from the COLLABORATION
          under this Agreement ("New Information") except as required under
          clause 5 for the purpose of the sale and marketing of the results of
          the COLLABORATION. "CONFIDENTIAL INFORMATION" includes, but is not
          limited to, confidential or proprietary information, business plan
          information, reports, materials, know-how, data, both technical and
          non-technical, procedures, databases, documents, specifications,
          techniques, assays, results, product development, conclusions, and the
          like (including the terms of

8
<PAGE>

CONFIDENTIAL

          this Agreement). Each party shall not disclose CONFIDENTIAL
          INFORMATION to any third party or use such CONFIDENTIAL INFORMATION
          for any purpose, except as provided herein, without the prior written
          approval of the other party. The parties shall have no obligations
          with respect to any portion of such CONFIDENTIAL INFORMATION which:

          a)   is or later becomes generally available to the public by use,
               publication or the like through no fault of the Receiving Party;

          b)   is obtained from a third party who had the legal right to
               disclose the same to the Receiving Party;

          c)   the Receiving Party already possesses, as evidenced by written
               records, predating receipt thereof from the Disclosing Party; or

          d)   is independently developed by the Receiving Party without
               reference to the CONFIDENTIAL INFORMATION, provided such
               independent development can reasonably be documented by the
               Receiving Party by written records.

     7.   Publication. PGI and LION recognize the importance to present or
          -----------
          publish scientific articles and the importance to protect CONFIDENTIAL
          INFORMATION from premature disclosure to third parties. However, LION
          agrees to obtain written permission from PGI prior to submission of
          any such presentation or article for publication that contains PGI's
          CONFIDENTIAL INFORMATION or prior to disclosure of PGI's CONFIDENTIAL
          INFORMATION to third parties. PGI agrees to obtain written permission
          from LION prior to submission of any such presentation or article for
          publication that contains LION's CONFIDENTIAL INFORMATION or prior to
          disclosure of LION's CONFIDENTIAL INFORMATION to third parties. Each
          party agrees to provide to the REPRESENTATIVE of the other party all
          such presentations or articles or disclosures of CONFIDENTIAL
          INFORMATION to the third parties at least sixty (60) days prior to
          submission of such presentations or articles for publication or prior
          to the intended disclosure of CONFIDENTIAL INFORMATION to third
          parties. The receiving REPRESENTATIVE will notify the party within
          thirty (30) days following receipt of the contents of the proposed
          publication or disclosure of any comments they may have. The parties
          agree to remove any CONFIDENTIAL INFORMATION contained in such
          proposed presentations, articles or disclosures and the parties agree
          to delay such disclosures, presentations or articles for publication
          for up to ninety (90) days in order to file a patent application if it
          is determined that the presentations or articles for publication or
          disclosure contain CONFIDENTIAL INFORMATION with potentially
          patentable subject matter.

     8.   Property Rights. a) Intellectual property developed by one or both
          ---------------
               Parties relating to or incorporating LION's core-software-
               products (including but

9
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CONFIDENTIAL

               not limited to SRS, bioSCOUT(TM), arraySCOUT(TM),
               genomeSCOUT(TM), pathSCOUT(TM), miSCOUT(TM)) shall belong to LION
               ("LION Intellectual Property").

          b)   Subject to Section 8a intellectual property relating to the
               Metabolic Profiling Database developed by one or both parties
               during the Product Development Plan shall be owned by PGI ("PGI
               Intellectual Property").

          c)   Intellectual property relating to New Software Products developed
               by one or both parties during the COLLABORATION shall be owned by
               LION ("LION Intellectual Property").

          d)   Intellectual property relating to Functional Genomics developed
               by one or both parties pursuant to the Product Development Plan
               shall be owned by PGI ("PGI Intellectual Property").

          e)   Subject to Sections 8a, 8b, 8c and 8d, other intellectual
               property developed by one more employees of both Parties pursuant
               to the Product Development Plan shall be jointly owned by LION
               and PGI ("Joint Intellectual Property"). Each owner of a jointly
               owned patent shall have the rights to use such Joint Intellectual
               Property pursuant to the rights granted in this Agreement.

          f)   Subject to Sections 8a, 8b, 8c, 8d and 8e any intellectual
               property developed solely by one or more employees of PGI, shall
               be owned by PGI ("PGI Intellectual Property").

          g)   Subject to Sections 8a, 8b, 8c, 8d and 8e any intellectual
               property developed solely by one or more employees of LION, shall
               be owned by LION ("LION Intellectual Property").

          h)   PGI shall be responsible for all costs associated with the
               preparation, filing, prosecution and maintenance of all PGI
               Intellectual Property and 50% of the costs for Joint Intellectual
               Property. LION shall be responsible for all costs associated with
               the preparation, filing, prosecution and maintenance of all LION
               Intellectual Property and 50% of the costs of Joint Intellectual
               Property.

     9.   Term.  a) This agreement shall be effective beginning November 1, 2000
          -----
          and shall remain in effect until December 31, 2005 unless terminated
          earlier or unless the goals of the Development Plan have been achieved
          earlier as mutually agreed by both Parties. This Agreement may be
          extended upon the mutual written agreement of both parties.

          b)   A party may terminate this Agreement upon or after the breach of
               any material provision of this Agreement, if the breaching party
               has not cured such breach within ninety (90) days after notice
               thereof from the other party.

10
<PAGE>

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               Any licenses granted hereunder to the non-breaching party shall
               survive a termination of this Agreement under this Article 9b and
               shall remain in full force and effect under the terms and
               conditions of the associated license agreement so long as such
               non-breaching party shall continue to comply with its obligations
               under this Agreement to the breaching party in respect of such
               licenses (including without limitation, any reporting, payment,
               funding, development, commercialization, or royalty obligations)
               as if this Agreement had not been terminated. A termination for
               breach as provided in this Article 9b shall not affect any
               licenses granted to third parties prior to such breach unless the
               granting of the license constitutes a breach of this Agreement.

     10.  Termination.  This Agreement shall terminate upon the expiration of
          ------------
          the term of Article 9 or for any reason prior thereto by either party
          after giving thirty (30) days notice.

     11.  Notices. Unless otherwise stated, any notice or reports required to be
          --------
          given under the terms of this Agreement may be given by certified
          letter addressed to the other party and addressed to the party at the
          following address. Any notice so given shall be deemed to have been
          served when hand delivered to the other Party or at the expiration of
          seven (7) days from the time of posting.

     For LION:                Dr. Friedrich von Bohlen
                              LION bioscience AG
                              Waldhofer Str. 98
                              69123 Heidelberg-Wieblingen
                              Germany

                              with a copy to:

                              Dr. Reinhard Schneider, CEO
                              Lion Bioscience Inc.
                              141 Portland Street
                              Cambridge, Massachusetts 02139

     For PGI:                 John Ryals, CEO
                              Paradigm Genetics, Inc.
                              104 Alexander Drive, Building 2
                              Research Triangle Park, North Carolina 27709

     12.  Publicity.  During the term of this Agreement, neither party hereto
          ----------
          will use the name of the other party in publicity or advertising
          without the written approval of the other party, such approval not to
          be unreasonably withheld. However, nothing in this Article or
          elsewhere in this Agreement or from including the existence and nature
          of this Agreement in the routine reporting of its activities.

11
<PAGE>

CONFIDENTIAL

     13.  Liability. Each party hereto agrees to be responsible and assume
          ----------
          liability for its own wrongful or negligent acts or omissions, or
          those of its officers, agents, or employees to the full extent allowed
          by law and further agrees to indemnify and hold harmless the other
          party against any action brought against the other party to the extent
          that such action is based on such wrongful or negligent acts or
          omissions. Further, each party warrants and represents that it
          possesses adequate liability insurance, which will remain in effect
          for the entire term of this Agreement, for the protection of itself
          and its officers, employees and agents, while acting within the scope
          of their employment by the party.

          a)   Indemnification of LION.  PGI shall indemnify, defend and hold
               -----------------------
               harmless LION against any action to the extent that such action
               is based on a claim that LION's use of the Metabolic Profiling
               Database, the Documentation, the Updates, the Know How or any
               part thereof under this Contract infringes an enforceable patent
               or copyright, or misappropriates or infringes upon a trade secret
               or other intellectual property right and PGI shall pay all costs
               (including reasonable attorney's fees) awarded or agreed to in
               settlement by PGI in such action; provided that PGI is given
               notice within fifteen (15) calendar days of the date the LION
               knows of such a claim, unless the failure to give such notice
               shall not, in the reasonable opinion of PGI, materially prejudice
               PGI's defense thereof. PGI shall control the defense in any such
               action and at its discretion may enter into a stipulation of
               discontinuance and settlement thereof. The foregoing indemnity
               shall not apply in respect of any infringement or
               misappropriation claim if such infringement or misappropriation
               claim is based on: (a) use of a superseded or altered release of
               the Metabolic Profiling Database if the infringement would have
               been avoided by the use of a current unaltered release of the
               Metabolic Profiling Database which PGI provides to LION, (b) the
               modification or alteration of the Metabolic Profiling Database or
               the source code by LION if such infringement would have been
               avoided by use of the Metabolic Profiling Database without such
               modification or alteration, or (c) the combination, operation or
               use of the New Software Product with software, hardware or other
               materials not furnished by PGI if such infringement would have
               been avoided by the use of the New Software Product without such
               software, hardware or other materials. In the event that portions
               of the Software are held or are believed by PGI to infringe, PGI
               may, in its sole discretion, terminate the license for the
               infringing New Software Product. This Section states PGI's entire
               liability and LION's exclusive remedy for infringement or
               misappropriation.

          b)   Indemnification of PGI.  LION shall indemnify, defend and hold
               ----------------------
               harmless PGI against any action to the extent that such action is
               based on a claim that PGI's use of the New Software Products, the
               Documentation, the Updates, the Know How or any part thereof
               under this Contract infringes an enforceable patent or copyright,
               or misappropriates or infringes upon a trade secret or other
               intellectual property right and LION shall pay all costs
12
<PAGE>

CONFIDENTIAL

          (including reasonable attorney's fees) awarded or agreed to in
          settlement by LION in such action; provided that LION is given notice
          within fifteen (15) calendar days of the date the PGI knows of such a
          claim, unless the failure to give such notice shall not, in the
          reasonable opinion of LION, materially prejudice LION's defense
          thereof. LION shall control the defense in any such action and at its
          discretion may enter into a stipulation of discontinuance and
          settlement thereof. The foregoing indemnity shall not apply in respect
          of any infringement or misappropriation claim if such infringement or
          misappropriation claim is based on: (a) use of a superseded or altered
          release of a New Software Product if the infringement would have been
          avoided by the use of a current unaltered release of the New Software
          Product which LION provides to PGI, (b) the modification or alteration
          of a New Software Product or the source code thereof by PGI if such
          infringement would have been avoided by use of the New Software
          Product without such modification or alteration, or (c) the
          combination, operation or use of a New Software Product with software,
          hardware or other materials not furnished by LION if such infringement
          would have been avoided by the use of the New Software Product without
          such software, hardware or other materials. In the event that portions
          of the New Software Product are held or are believed by LION to
          infringe, LION may, in its sole discretion, terminate the license for
          the infringing New Software Product. This Section states LION's entire
          liability and PGI's exclusive remedy for infringement or
          misappropriation.

     c)   Limitation of Liability.  EXCEPT WITH RESPECT TO THE PARTIES'
          -----------------------
          OBLIGATIONS UNDER SECTIONS 6, 13(a) AND 13(b) HEREOF, NEITHER LION NOR
          PGI SHALL HAVE ANY LIABILITY TO THE OTHER PARTY WITH RESPECT TO ITS
          OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL,
          EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES EVEN IF IT HAS BEEN
          ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT WITH RESPECT TO THE
          PARTIES' OBLIGATIONS UNDER SECTIONS 6, 13(a) AND 13(b) HEREOF, THE
          LIABILITY OF LION OR PGI TO THE OTHER PARTY FOR ANY REASON AND UPON
          ANY CAUSE OF ACTION SHALL BE LIMITED TO USD TWO HUNDRED & FIFTY
          THOUSAND DOLLARS ($250,000). THIS LIMITATION APPLIES TO ALL CAUSES OF
          ACTION IN THE AGGREGATE, INCLUDING WITHOUT LIMITATION TO BREACH OF
          CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY,
          MISREPRESENTATIONS, AND OTHER TORTS. BOTH PARTIES UNDERSTAND AND AGREE
          THAT THE REMEDIES AND LIMITATIONS HEREIN ALLOCATE THE RISKS OF PRODUCT
          AND SERVICE NONCONFORMITY BETWEEN THE PARTIES AS AUTHORIZED BY THE
          UNIFORM COMMERCIAL CODE AND BY OTHER APPLICABLE LAWS. THE AGREEMENTS
          HEREIN REFLECT, AND ARE SET IN RELIANCE UPON, THIS

13
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          ALLOCATION OF RISK AND THE LIMITATION OF DAMAGES SET FORTH IN THIS
          CONTRACT.

     14.  Independent Contractor.  In the performance of all services hereunder,
          ----------------------
          neither party is authorized or empowered to act as agent for the other
          for any purpose and shall not on behalf of the other enter into any
          contract, warranty, or representation as to any matter. Neither party
          shall be bound by the acts of the other.

     15.  Warranties.  The parties warrant and represent that they have the
          ----------
          right to enter into this Agreement. Both parties further warrant and
          represent that the terms of this Agreement are not inconsistent with
          other contractual obligations, expressed or implied that they may
          have.

     16.  Amendments. No modification to this Agreement shall be effective
          ----------
          unless made in writing and signed by a duly authorized representative
          of each party.

     17.  Entire Agreement.  This agreement constitutes the entire Agreement
          ----------------
          between the parties with respect to the subject matter hereof and
          supercedes all prior agreements and understandings between the parties
          (whether written or oral) relating to said subject matter.

     18.  Survival of Terms.  The terms of Articles 3, 4, 5, 6, 7, 8, 11, 13,
          -----------------
          19, 20 and 22 any shall survive any termination of this Agreement
          pursuant to Article 10.

     19.  No Implied License.  Neither Party by this Agreement grants to the
          ------------------
          other any license, express or implied, to any technology, know-how,
          inventions, improvements, trade secrets or materials that it
          possesses, except for research purposes necessary to conduct the
          Product Development Plan. Upon the termination of the Product
          Development Plan, the Parties' intellectual property rights with
          respect to the results of the Product Development Plan shall be as set
          forth in Article 6 and 8, and neither Party shall have any implied
          license to any other technology, know-how, inventions, improvements,
          trade secrets or materials of the other Party.

     20.  Assignment.  Neither Party shall assign or transfer an interest in
          ----------
          this Agreement, nor assign any claims for money due or to become due
          during this Agreement, other than to an Affiliated Company, without
          prior written approval of the other party. Subject to the foregoing,
          the Agreement shall inure to the benefit of and shall be binding upon
          the successors and permitted assigns of the Parties. For the purposes
          of this Section 20, "Affiliated Company" means a corporation or other
          entity which controls, is controlled by, or is under common control
          with a party to this Agreement. A corporation or other entity shall be
          deemed to control another corporation or entity if it owns, directly
          or indirectly, more than fifty percent (50%) of the voting shares or
          other interest, or has the power to elect

14
<PAGE>

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          more than half the directors, of such other corporation or entity.

     21.  Compliance with Laws.  Each Party agrees that it will comply with all
          --------------------
          applicable federal, state, and local laws, codes, regulations, rules
          and orders in the performance and direction of the work under this
          Agreement.

     22.  Governing Law, Dispute Resolution, Arbitration. a) This Agreement and
          ----------------------------------------------
          all of the obligations contained herein, including possible claims for
          damages arising from the withdrawal of one of the parties from the
          Agreement, shall be construed in accordance with the laws of the State
          of Delaware in The United States of America under exclusion of the UN
          law on sales. Place of jurisdiction shall be Delaware.

          b)   LION and PGI shall deal with each other in good faith. The
               parties agree in the event of a dispute between them arising
               from, concerning or in any way relating to this Agreement, the
               REPRESENTATIVES shall undertake good faith efforts to amicably
               resolve such dispute, the matter shall be referred to
               [_______________________] * or another designated representative
               of LION, and to [_____________] * or another designated
               representative of PGI, for further review and resolution.

          c)   In the event that a dispute is unable to be resolved, pursuant to
               Section 21.b, within ninety (90) days, the parties agree that any
               and all disputes arising directly or indirectly out of or
               relating in any way to this Agreement shall be submitted to
               binding arbitration pursuant to the Rules then in effect of the
               American Arbitration Association (AAA). One arbitrator shall hold
               arbitration. Arbitration shall be held in the English language.
               The arbitrator shall decide the matters submitted to him based
               upon the evidences presented and the terms of this Agreement. The
               arbitrator shall issue a written decision which shall state the
               reasons of the decision and which shall include findings of fact
               and conclusions of law. The decision of the arbitration shall be
               final, non-appealable and binding upon the parties and their
               respective successors and permitted assigns.

     23.  Force Majeure.  Neither party shall be held liable or responsible to
          -------------
          the other party nor be deemed to have defaulted under or breached this
          Agreement for failure or delay in fulfilling or performing any term of
          this Agreement to the extent, and for so long as, such failure or
          delay is caused by or results from causes beyond the reasonable
          control of the affected party including but not limited to fire,
          floods, embargoes, war, acts of war (whether war be declared or not),
          insurrections, riots, civil commotion, strikes, lockouts or other
          labor disturbances, acts of God or acts, omissions, or delays in
          acting by any governmental authority of the other party.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

15
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     24.  Severability of Clauses.  If any provision or provisions of this
          -----------------------
          Agreement are deemed illegal, invalid, or unenforceable in any state
          or country, to the extent of such illegality, invalidity or
          unenforceability, be deemed severed and shall not affect the legality,
          validity or enforceability of any other provision hereof. The invalid
          provision or the gap shall be filled by an appropriate provision which
          to the extent legally possible, comes closest to the Parties' intent
          of what the Parties would have laid down had they been aware of the
          invalidity or gap in order to meet the spirit and purpose of this
          Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
          dates set forth below.

          PGI                                   LION

          By: /s/ John A. Ryals                 By: /s/  Friedrich von Bohlen
              ---------------------------           --------------------------

          Title: CEO, President                 Title: Chief Executive Officer
                 ------------------------              -----------------------

          Date: November 22, 2000               Date: November 14, 2000
                -------------------------             ------------------------

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                                   EXHIBIT A

                           Product Development Plan

The parties shall agree on a business plan and mechanism for
marketing/commercialization of the Bioinformatics Software Tools and Metabolic
Profiling Database co-developed by LION and PGI.

1.  Bioinformatics Software Tools

This software will analyze and display biochemical profile data and will be
integrated into LION's proprietary SRS/bioSCOUT(TM) system for ease of use.

     a)   Milestones and Support for Metabolic Profiling Data Analysis and
          Display Software

          i)   LION agrees to support this co-development activity with at least
               2 Full Time Employees with the goal of developing [___________] *
               of biochemical profiling tools by 1 June 2001. [___________] *
               will be able to [________________] * and [______________________]
               * for biochemical profile data obtained at PGI.

          ii)  PGI agrees to support this co-development activity with at least
               2 Full Time Employees with the goal of developing [___________] *
               of biochemical profiling tools by 1 June 2001. [___________] *
               will be able to [________________] * and [______________________]
               * for biochemical profile data obtained at PGI.

     b)   A detailed project scope is: The [___________________________________]
          [_________________] * provides non-specialist users in the context of
          this tool, particularly biologists and geneticists who are not
          specialists in analytical chemistry, a powerful tool for the discovery
          of novel [_____________________] [__________] * that arise from the
          introduction of mutations in the genome of a target organisms. The
          [______________] * platform produces qualitative and quantitative
          information on the detectable [_______________________] *. Genetically
          characterized specimens are subjected to [_____________] * , followed
          by [______________] * to produce [_______] * that enable the
          identification of [__________________________________________________]
          [_______________] * processes [___] * data from the [_________] *
          through [__________] * and [__________] * processes to a finished data
          [________] * for

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

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<PAGE>

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          data [________] * by the end user with [____________________________]
          [_______] *. The overall scope of the software system is to provide a
          graphical user interface for access to [_________________________] *
          and data processing pipelines to fulfill the following major
          objectives:

               i)   Enable non-specialist users to compare [__________________]
                    * between and among specimens, treatments or experiments.

               ii)  Enable non-specialist users to predict the
                    [__________________] * in individual specimens based on
                    known genetic manipulation of the genome.

               iii) Enable non-specialist users to list [___________] * that
                    show significant changes in [_______________] *.

               iv)  Enable non-specialist users to display [________________] *
                    for specific samples or experiments.

               v)   Enable non-specialist users to plot groups of [_________] *
                    that are related [__________] * or on the [___________] * by
                    indicating the levels all the [__________] * in the group by
                    specimen or experiment.

               vi)  Enable non-specialists users to add novel [______________] *
                    and edit [____________] *.

     c)   A detailed list of intermediate milestones will be determined by the
          Joint Collaboration Committee by January 1, 2001.

2.   Metabolic Profiling Database

The Metabolic Profiling Database shall consist of [____________] * data from
[______] * and [_____] * linked to [________] * and accessible through a
graphical user interface. Metabolic profiling will help find [___________] * by
quickly relating changes in [______] * and [_________________] * to
[___________] * changes that are relevant to the disease.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

18
<PAGE>

CONFIDENTIAL

                                   EXHIBIT B

                                Marketing Plan

The parties shall agree on a plan and mechanism for marketing/commercialization
of products and services co-developed by LION and PGI.

1.   Marketing Milestones

          a)   LION agrees to provide PGI with one potential [________________]
               [___________] * by [___________] *. LION agrees to introduce PGI
               to one eventual [_______________] * whereby the relationship
               between PGI and the [____________] * is consummated by
               [__________] *.

          b)   PGI agrees to provide LION with one potential [_______________] *
               by [__________________] *. PGI agrees to introduce PGI to one
               eventual [____________] * whereby the relationship between LION
               and the [_________]* is consummated by [______________] *.

2.   Sharing of Company Contacts

          a)   The following is intended: LION agrees to provide PGI with a list
               of [________________________] * within [____________] * of the
               signing of the Alliance agreement. This customer list will
               include [______________] * and [__________________] *.

          b)   PGI agrees to provide LION with a list of [______________] *
               within [____________________] * of the signing of the Alliance
               agreement. This customer list will include [___________________]
               * and [________________]*.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

19
<PAGE>

CONFIDENTIAL

                                   EXHIBIT C

                         JOINT COLLABORATION COMMITTEE

LION R & D:               [______________] *
                          [______________] *

LION Business:            [_____________] *

PGI R & D:                [______________] *
                          [______________] *

PGI Business:             [_____________] *

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

20

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