Document:

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                                                                   EXHIBIT 10.48

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

                                 LEASE AGREEMENT

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

                          CTI MOLECULAR IMAGING, INC.,

                                  as Landlord,

                                       and

                             CTI PET SYSTEMS, INC.,

                                   as Tenant.

                             Dated: November 1, 2002

                                    Premises:

                              810 Innovation Drive
                           Knoxville, Tennessee 37932

                           830 Corridor Park Boulevard
                           Knoxville, Tennessee 37932

                              835 Innovation Drive
                           Knoxville, Tennessee 37932

                           3100 Stock Creek Boulevard
                            Rockford, Tennessee 37853

                              10516 Lexington Drive
                           Knoxville, Tennessee 37932

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                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                 <C>
ARTICLE 1 REFERENCE DATA AND DEFINITIONS.........................................    1
ARTICLE 2 DEMISED PREMISES AND TERM..............................................    2
    Section 2.1. Demised Premises................................................    2
    Section 2.2.  Term...........................................................    3
ARTICLE 3 RENT...................................................................    3
    Section 3.1.  Basic Rent.....................................................    3
    Section 3.2.  Additional Rent................................................    3
    Section 3.3.  Past Due Rent..................................................    3
    Section 3.4.  Basic Rent Adjustment..........................................    3
ARTICLE 4 NET LEASE..............................................................    4
    Section 4.1.  Net Lease......................................................    4
ARTICLE 5 IMPOSITIONS............................................................    5
    Section 5.1.  Impositions....................................................    5
    Section 5.2.  Exclusions from Impositions....................................    5
    Section 5.3.  Tax Receipts...................................................    5
    Section 5.4.  Tax Consents...................................................    6
ARTICLE 6 CONDUCT OF BUSINESS BY TENANT..........................................    6
    Section 6.1.  Use of Demised Premises........................................    6
    Section 6.2.  Compliance with Laws and Requirements of Public Authorities....    7
ARTICLE 7  INSURANCE.............................................................    7
    Section 7.1.  Hazard Insurance...............................................    7
    Section 7.2.  Other Insurance................................................    7
    Section 7.3.  Insurers and Policies..........................................    8
    Section 7.4.  Rental Insurance...............................................    8
    Section 7.5.  Additional Insured.............................................    9
    Section 7.6.  Loss Payee.....................................................    9
    Section 7.7.  Concurrent and Blanket Insurance...............................    9
ARTICLE 8  REPAIRS, ALTERATIONS AND MECHANICS' LIENS.............................    9
    Section 8.1.  Repairs........................................................    9
    Section 8.2.  Alterations by Tenant..........................................    9
    Section 8.3.  Alterations by Landlord........................................   10
    Section 8.4.  Mechanics' Liens...............................................   11
ARTICLE 9 BUILDING SERVICES......................................................   11
    Section 9.1.  Building Services..............................................   11
    Section 9.2.  Electricity....................................................   11
    Section 9.3.  Interruption of Services.......................................   12
ARTICLE 10 LANDLORD'S RIGHT TO CURE..............................................   13
    Section 10.1.  Landlord's Right to Cure......................................   13
ARTICLE 11 INDEMNITY.............................................................   13
    Section 11.1.  Tenant's Indemnity and Landlord's Non-Liability...............   13
    Section 11.2.  Tenant's Waiver of Subrogation................................   15
    Section 11.3.  Landlord's Indemnity and Tenant's Non-Liability...............   15
    Section 11.4.  Landlord's Waiver of Subrogation..............................   16
ARTICLE 12 DAMAGE BY CASUALTY....................................................   16
    Section 12.1.  Notice........................................................   16
    Section 12.2.  Restoration of Improvements...................................   16
ARTICLE l3 EMINENT DOMAIN........................................................   17
    Section 13.1.  Taking of Demised Premises....................................   17
    Section 13.2.  Surrender.....................................................   17
    Section 13.3.  Rent Adjustment for Partial Taking............................   17
    Section 13.4.  Awards........................................................   17
    Section 13.5.  Reconstruction................................................   17
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<TABLE>
<S>                                                                                 <C>
ARTICLE 14 ACCESS................................................................   18
    Section 14.1.  Access to Demised Premises....................................   18
ARTICLE 15 ASSIGNMENT AND SUBLETTING.............................................   18
    Section 15.1  Consent Required...............................................   18
ARTICLE 16 BANKRUPTCY............................................................   19
    Section 16.1  Bankruptcy.....................................................   19
    Section 16.2.  Measure of Damages............................................   19
ARTICLE 17 TENANT'S DEFAULT......................................................   19
    Section 17.1.  Events of Default.............................................   19
    Section 17.2.  Damages.......................................................   20
    Section 17.3.  Waiver of Jury Trial..........................................   21
ARTICLE 18 SURRENDER.............................................................   21
    Section 18.1.  Possession....................................................   21
    Section 18.2.  Tenant's Property.............................................   21
    Section 18.3.  Merger........................................................   21
    Section 18.4.  Payments After Termination....................................   22
ARTICLE 19 CONDITION OF DEMISED PREMISES.........................................   22
    Section 19.1.  Condition of Demised Premises.................................   22
ARTICLE 20 REMEDIES CUMULATIVE...................................................   22
    Section 20.1.  No Waiver.....................................................   22
ARTICLE 21 ESTOPPEL CERTIFICATE, SUBORDINATION, ATTORNMENT.......................   22
    Section 21.1.  Estoppel Certificate..........................................   22
    Section 21.2.  Subordination.................................................   23
    Section 21.3.  Attornment....................................................   23
ARTICLE 22 QUIET ENJOYMENT.......................................................   23
    Section 22.1.  Quiet Enjoyment...............................................   23
ARTICLE 23 NOTICES...............................................................   23
    Section 23.1.  Notices.......................................................   24
ARTICLE 24 MISCELLANEOUS PROVISIONS..............................................   24
    Section 24.1.  Survival of Tenant's Obligation...............................   24
    Section 24.2.  Applicable Law and Construction...............................   24
    Section 24.3.  Parties Bound.................................................   24
    Section 24.4.  No Representations by Landlord................................   24
    Section 24.5.  Brokers.......................................................   25
    Section 24.6.  Severability..................................................   25
    Section 24.7.  Definition of Landlord........................................   25
    Section 24.8.  Exculpatory Clause............................................   25
    Section 24.9.  No Recording..................................................   25
    Section 24.10.  Entire Agreement; Modification...............................   25
ARTICLE 25 OPTION TO RENEW.......................................................   26
    Section 25.1.  Option to Renew...............................................   26
LIST OF EXHIBITS TO LEASE AGREEMENT..............................................   28
EXHIBIT A TO LEASE AGREEMENT.....................................................   29
EXHIBIT B TO LEASE AGREEMENT.....................................................   35
EXHIBIT C TO LEASE AGREEMENT.....................................................   36
</TABLE>

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                                 LEASE AGREEMENT

         This Lease Agreement ("LEASE") is made between Landlord and Tenant
named in ARTICLE 1 as of the date set forth therein. Landlord and Tenant, in
consideration of the covenants contained herein, agree as follows:

                                    ARTICLE 1
                         REFERENCE DATA AND DEFINITIONS

               The following are definitions of terms used in this Lease, and
each reference in this Lease to any of the following subjects shall be construed
to incorporate the data, terms, covenants and provisions stated for that subject
in this ARTICLE 1:

DATE OF EXECUTION          November 1, 2002
OF LEASE:

LANDLORD:                  CTI Molecular Imaging, Inc.
                           a Delaware corporation

LANDLORD'S                 810 Innovation Drive
ADDRESS FOR                Knoxville, Tennessee  37932
RENT AND
NOTICES:

TENANT:                    CTI PET Systems, Inc.
                           a Tennessee corporation

TENANT'S ADDRESS           810 Innovation Drive
FOR NOTICES:               Knoxville, Tennessee  37932

LAND:                      The Land described on EXHIBIT A hereto.

DEMISED PREMISES:          The portion of the buildings, structures and
                           improvements located upon the Land (the "BUILDINGS")
                           occupied from time to time by Tenant, and the
                           nonexclusive right to occupy and use Common Areas, as
                           described on EXHIBIT B hereto.

TENANT'S PRO RATA          The number of square feet occupied by Tenant divided
SHARE:                     by the total space in the Buildings. As of the
                           Commencement Date, the total space in the Buildings
                           will be 277,007 square feet. Upon completion of the
                           additional mezzanine space in Buildings 2 and 3 at
                           810 Innovation Drive the total space will be 290,007
                           square feet.

COMMENCEMENT DATE:         January 1, 2003.

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EXPIRATION DATE:           December 31, 2012.

TERM:                      Ten years.

RENEWAL TERM:              Two successive terms for five years each.

BASIC RENT:                Eleven dollars ($11.00) per square foot per year for
                           office space, and eight dollars ($8.00) per square
                           foot per year for manufacturing space, and four
                           dollars ($4.00) per square foot per year for
                           warehouse space at 10516 Lexington Drive plus
                           Tenant's Pro Rata Share of eleven dollars ($11.00)
                           per square foot per year for Common Areas of the
                           Building, from the Commencement Date until the
                           Expiration Date, subject to adjustment pursuant to
                           SECTION 3.4.

BASIC RENT ADJUSTMENT:     Increase by 100% of increase in Consumer Price Index
                           increase, not to exceed 3% per year, at the end of
                           years 3,6 and 9, as provided in SECTION 3.5.

CPI DATES:                 The end of the month during which the expiration of
                           three, six and nine years from the Commencement Date
                           occurs.

BUSINESS DAY:              A day on which banks in Knoxville, Tennessee are
                           opened for business.

                                    ARTICLE 2
                            DEMISED PREMISES AND TERM

         SECTION 2.1. DEMISED PREMISES. Landlord does hereby lease unto Tenant,
and Tenant does hereby lease from Landlord, the Demised Premises, upon and
subject to the covenants, agreements, terms, conditions, limitations, exceptions
and reservations of this Lease. Landlord and Tenant may, from time to time, by
agreement, change the configuration and size of the Demised Premises, and Rent
will be adjusted accordingly; provided, however, that the configuration of the
Demised Premises shall not during the Initial Term be changed in such a manner
that the Demised Premises is less than forty percent (40%) of the aggregate
space in the Buildings, exclusive of Common Areas. The configuration and size of
the Demised Premises shall be determined and measured by Landlord quarterly, as
of the beginning of each fiscal quarter of Landlord (October 1, January 1, April
1, and July 1) and Rent payable by Tenant hereunder shall be adjusted
accordingly for such quarter based upon the size of the Demised Premises, at the
Rent rates provided for herein. The Demised Premises shall include all space
within the Buildings occupied by Tenant and all space reserved for or assigned
for occupancy by Tenant. The availability of space in the Buildings for
occupancy by Tenant or reservation or assignment for Tenant shall be determined
by Landlord, provided that the minimum space available to Tenant at all times
shall be forty percent (40%) of the aggregate space in the

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Buildings, exclusive of Common Areas and, provided, further, that Landlord shall
not move Tenant from any space occupied by Tenant without Tenant's prior
approval. Landlord and Tenant agree that if Landlord further expands its
facilities at 810 Innovation Drive, whether by expanding the existing Buildings
there or by adding additional Buildings, or at 830 Corridor Park Boulevard by
acquiring additional space there, Tenant shall have the opportunity to negotiate
with Landlord with respect to the possibility of Tenant taking additional space
in such expansion area.

         SECTION 2.2. TERM. The Term shall commence on the Commencement Date and
shall terminate on the Expiration Date.

                                    ARTICLE 3
                                      RENT

         SECTION 3.1. BASIC RENT. Commencing on the Commencement Date, Tenant
shall pay to Landlord at the address set forth in ARTICLE 1, or at such other
place designated by Landlord in writing, without any prior demand therefor, the
Basic Rent set forth in ARTICLE 1, subject to adjustment as provided in SECTION
3.4. Except as may otherwise be set forth in ARTICLE 1, Basic Rent shall be due
and payable in equal monthly installments in lawful currency of the United
States of America and in arrears on the last day of each and every calendar
month thereafter during the term of this Lease based upon the space occupied by
Tenant during the month.

         SECTION 3.2. ADDITIONAL RENT. Any sums or charges to be paid by Tenant
pursuant to the provisions of this Lease, other than the Basic Rent, shall be
designated as "ADDITIONAL RENT" and shall be payable within five Business Days
after Landlord gives written notice that payment is due, unless otherwise
provided in this Lease. Payment shall be made at the location specified in
ARTICLE 1, unless otherwise designated by Landlord in writing Landlord shall
have the same rights against Tenant for default in payment of Additional Rent as
for default in payment of the Basic Rent. As used in this Lease, the term "RENT"
shall mean Basic Rent and Additional Rent.

         SECTION 3.3. PAST DUE RENT. If Tenant shall fail to pay any Rent before
the fifth business day after such Rent is due and payable, Tenant agrees to pay
as Additional Rent each day after such fifth day that the Rent remains unpaid a
charge (the "LATE CHARGE") which shall be 3% of the amount of such unpaid Rent
divided by 30. The Late Charge shall accrue and be payable daily until the
unpaid Rent (including the Late Charge) is paid. Tenant agrees that such amounts
are not a penalty, but are a reasonable amount to reimburse Landlord for the
loss of the use of the funds and the additional administrative costs resulting
from late payments.

         SECTION 3.4. BASIC RENT ADJUSTMENT. (a) On each of the CPI Dates (as
defined in ARTICLE 1), the Basic Rent payable thereafter shall be increased by
an amount equal to the product of (i) the CPI Factor (as defined below)
multiplied by (ii) the Basic Rent payable immediately preceding such date;
provided, however, that the adjustment to the Basic Rent shall only be made if
the CPI Factor is a positive number.

         (b)      The term "CPI FACTOR" shall mean the lesser of (i) one hundred
percent (100%) of the percentage increase, if any, between (A) the Consumer
Price Index for All Urban

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Consumers, All Items U. S. Cities Average (1982-84=100), published by the Bureau
of Labor Statistics, United States Department of Labor (the "CPI"), for the
December which (I) in the case of the first CPI Date immediately precedes the
Commencement Date, (II) in the case of the second CPI Date, immediately precedes
the first CPI Date, and (III) in the case of the third CPI Date, immediately
precedes the second CPI Date, and (B) the CPI for the December immediately
preceding the then current CPI Date, or (ii) three percent (3%) per year.

         (c)      In the event the relevant CPI shall hereafter be converted to
a different standard reference base, the determination of the increase in Basic
Rent shall be made with the use of such conversion factor, formula or table for
converting the relevant CPI as may be published by the Bureau of Labor
Statistics, United States Department of Agriculture, or, if said Bureau shall
not publish the same, then with the use of such conversion factor, formula or
table as may be published by Prentice Hall, Inc., or, failing such publication,
by any other nationally recognized publisher of similar statistical information.
In the event the relevant CPI shall cease to be published, then, for the
purposes of this SECTION 3.4, there shall be substituted for the CPI such other
index selected by Landlord as comparable as possible to the CPI.

         (d)      Within thirty (30) days following the publication of the
relevant CPI or the substitute therefore following the CPI Date, Landlord shall
submit to Tenant a statement setting forth the CPI Factor and the adjustment to
Basic Rent as a result thereof. Commencing as of the first day of such ensuing
Lease Year and on the first day of each month thereafter, Tenant shall pay to
Landlord the increased Basic Rent in the manner provided in SECTION 3.1 of this
Lease. The failure of Landlord to submit the statement required pursuant to this
SECTION 3.4 shall not prejudice Landlord's right to thereafter render such a
statement, but Tenant shall not be required to pay such adjustment until such
statement is rendered.

                                    ARTICLE 4
                                    NET LEASE

         SECTION 4.1. NET LEASE. (a) This Lease shall be deemed and construed to
be a "net lease", and Tenant shall pay to Lessor, absolutely net throughout the
term of this Lease, the Rent and other payments hereunder, free of any charges,
assessments, impositions or deductions of any kind (including, without being
limited to, any sales tax on Rent) and without abatement, deduction or set-off
except as otherwise expressly provided herein, and under no circumstances or
conditions, whether now existing or hereafter arising, or whether beyond the
present contemplation of the parties, shall Landlord be expected or required to
make any payment of any kind whatsoever or be under any other obligation or
liability hereunder except as herein otherwise expressly set forth or as may be
required by law.

         (b)      Except to the extent expressly provided for herein, no
happening, event, occurrence or situation during the term of this Lease, whether
foreseen or unforeseen, and however extraordinary, shall permit Tenant to quit
the Demised Premises or surrender or terminate this Lease or shall relieve
Tenant from any of the covenants, agreements, terms, provisions, conditions and
limitations contained herein on its part to be observed, performed or complied
with, and Tenant waives any rights now or hereafter conferred upon it by
statute, proclamation, decree or order, or otherwise, to quit the Demised
Premises, or any part thereof, to

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surrender or terminate this Lease or to claim any abatement, diminution,
reduction or suspension of the Rent and other charges payable hereunder on
account of any such happening, event, occurrence or situation.

                                    ARTICLE 5
                                   IMPOSITIONS

         SECTION 5.1. IMPOSITIONS. Tenant shall, within thirty (30) days after
notice from Landlord, pay to Landlord Tenant's Pro Rata Share of all real estate
taxes, sales taxes, assessments, water and sewer rates, rents or charges, use or
occupancy taxes, vault charges, license or permit fees and any other
governmental levies or charges, general or special, ordinary or extraordinary,
foreseen or unforeseen, of any kind and nature whatsoever (said taxes,
assessments, water and sewer rates or charges, vault charges, license or permit
fees and other governmental levies or charges being hereinafter referred to as
"IMPOSITION"), which are assessed, levied, confirmed, imposed or become a lien
upon the Land and Building or become payable, during the term of this Lease;
provided, however, that, if by law any such Imposition is payable or may at the
option of the taxpayer be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Tenant may pay the same (and
any accrued interest on the unpaid balance of such Imposition) in installments
and shall pay only such installments as may become due during the term of this
Lease as the same respectively become due and before any fine, penalty, interest
or cost may be added thereto for the non-payment of any such installment and
interest; and provided further, that any Imposition relating to a fiscal period
which is included within the term of this Lease and a part of which is included
in a period of time after the expiration of the term of this Lease, other than a
termination of this Lease pursuant to ARTICLE 17 shall (whether or not such
Imposition shall be assessed, levied, confirmed, imposed or become a lien upon
the Demised Premises, or shall become payable, during the term of this Lease) be
adjusted between Landlord and Tenant as of the expiration of the term of this
Lease, so that Tenant shall pay that portion of such Imposition which that part
of such fiscal period included in the period of time after the expiration of
this Lease bears to such fiscal period and Landlord shall pay the remainder
thereof.

         SECTION 5.2. EXCLUSIONS FROM IMPOSITIONS. Nothing contained in this
Lease shall require Tenant to pay any franchise, corporate, estate, inheritance,
succession, capital levy or stamp tax of Landlord (an "EXCLUDED TAX"), and no
Excluded Tax shall be deemed to be included within the term Imposition;
provided, however, that (a) the foregoing shall not exclude from Impositions
excise, sales, gross receipts and similar taxes imposed upon the Rent and (b) if
under the laws of the State of Tennessee or any political subdivision thereof an
Excluded Tax is hereafter levied or assessed against Landlord or the Rent, in
lieu of or as a substitution in whole or in part for taxes assessed or imposed
by said State, or any political subdivision thereof, on land and buildings, the
same shall be deemed to be included within the term Imposition, and Tenant shall
(but to the extent only that such tax or excise, so far as ascertainable, is in
lieu of or in substitution for one or more Impositions) pay and discharge such
Excluded Tax in accordance with the provisions of SECTION 5.1 in respect of the
payment of Impositions.

         SECTION 5.3. TAX RECEIPTS. Landlord shall prepare and timely file all
required returns in respect of the Impositions to be paid by Tenant pursuant to
this ARTICLE 5. Landlord shall

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promptly furnish to Tenant copies of all tax returns, official receipts of the
appropriate taxing authority, or other evidence evidencing the payment of
Impositions and Tenant shall pay its Pro Rata Share thereof as provided in
SECTION 5.1 above.

         SECTION 5.4. TAX CONSENTS. Tenant shall have the right, subject to
Landlord's prior consent, which consent will not be unreasonably withheld or
delayed, to contest the amount or validity, in whole or in part, of any
Imposition by appropriate proceedings. Landlord shall not unreasonably withhold
its consent to joining in any such proceeding or permitting the same to be
brought in its name provided that the same is required by law or any rule or
regulation in order to make such contest effective. Landlord shall not be
subjected to any liability for the payment of any costs or expenses in
connection with any such proceeding, and Tenant shall indemnify and save
harmless Landlord from any such costs or expenses related to the Demised
Premises. Tenant shall be entitled promptly to any refund of any such Imposition
and penalties or interest thereon which have been paid by Tenant, or which have
been paid by Landlord and for which Landlord has been fully reimbursed,
notwithstanding the expiration of this Lease prior to payment of said refund.
Notwithstanding the foregoing, Landlord shall additionally have the right to
contest the amount or validity, in whole or in part, of any Imposition by
appropriate proceedings. The provisions of this SECTION 5.4 shall survive the
expiration or earlier termination of this Lease.

                                    ARTICLE 6
                          CONDUCT OF BUSINESS BY TENANT

         SECTION 6.1. USE OF DEMISED PREMISES. Tenant shall use the Demised
Premises during the full term of this Lease solely for general office use, use
for light manufacturing and uses ancillary thereto and for any other lawful
purpose.

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         SECTION 6.2. COMPLIANCE WITH LAWS AND REQUIREMENTS OF PUBLIC
AUTHORITIES.

         (a)      At all times during the term of this Lease, Tenant shall give
prompt notice to Landlord of any notice Tenant receives of any violation of any
law or requirement of any governmental authority affecting the Demised Premises,
and, at its sole cost and expense, Tenant shall immediately comply with all laws
and requirements of governmental authorities, including any violation, order or
duty imposed upon Tenant, arising from or relating to the Demised Premises,
whether now existing or hereafter enacted and whether ordinary or extraordinary,
foreseen or unforeseen, including but not limited to matters relating to toxic
wastes, hazardous or dangerous materials or other similar substances. Tenant, at
its expense, shall comply with all easements, restrictive covenants and matters
affecting the Demised Premises.

         (b)      Tenant shall not do, permit or suffer any act or thing to be
done which is injurious to the Demised Premises, which is immoral, a nuisance,
contrary to law or in violation of the certificate of occupancy issued for the
Building or which would result in the cancellation of, or any increase in
premiums for, insurance maintained hereunder with respect to the Demised
Premises.

         (c)      Tenant agrees that it shall not keep, use, sell or offer for
sale in or upon the Demised Premises any article which may be prohibited by any
then available standard forms of fire insurance policies with extended coverage.

         (d)      Tenant shall pay all costs, expenses, fines, penalties or
damages (including, without limitation, professional fees and disbursements)
which may be imposed upon Landlord by reason of Tenant's failure to comply with
the provisions of this SECTION 6.2.

         (e)      The provisions of this SECTION 6.2 shall survive the
expiration or earlier termination of this Lease.

                                    ARTICLE 7
                                    INSURANCE

         SECTION 7.1. HAZARD INSURANCE. Landlord shall obtain such reasonable
hazard insurance on the Land, Building and Demised Premises as Landlord deems
appropriate. Tenant shall pay to Landlord Tenant's Pro Rata Share of the cost of
such insurance within ten days after receipt of an invoice or bill therefor from
Landlord. Except as expressly provided herein, Landlord shall not be responsible
for obtaining insurance on any of Tenant's property, whether located within the
Demised Premises or otherwise.

         SECTION 7.2. OTHER INSURANCE. Until such time as Tenant elects to
arrange for and provide such insurance itself, at its own cost and expense,
Landlord, at its sole cost and expense, shall maintain insurance for the mutual
benefit of Landlord and Tenant against:

         (a)      loss of rental from the Demised Premises, under a rental value
insurance policy covering risk of loss due to the occurrence of any of the
hazards insured against by Landlord under SECTION 7.1 (if insurance covering
such hazards is generally available) in an amount

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sufficient to prevent Landlord or Tenant from becoming co-insurers and, in any
event, in an amount not less than the aggregate requirements for the Term of
this Lease including any extensions hereof, including Renewal Terms which become
effective pursuant to ARTICLE 25 of this Lease, for (i) Rent, (ii) Impositions
and (iii) premiums on insurance required to be carried pursuant to this Article;

         (b)      claims for bodily injury, death or property damage under a
policy of comprehensive public liability insurance, with such limits as may
reasonably be required by Landlord from time to time, but not less than
$3,000,000 in respect of injuries to or death of any one person and not less
than $5,000,000 in respect of injuries to or death of any number of persons in
any one occurrence and not less than $1,000,000 in respect of property damage.
Tenant shall also maintain for the mutual benefit of Landlord and Tenant excess
("umbrella") liability policies with total coverage of not less than
$10,000,000;

         (c)      hazard insurance covering Tenant's personal property located
within the Demised Premises, in such amounts as may be agreed by Landlord and
Tenant.

Until and unless Tenant elects to provide such insurance itself, the cost of
insurance provided by Landlord under this Section 7.2 shall be treated as a
common expense of the Buildings, and Tenant shall pay to Landlord Tenant's Pro
Rata share of the cost of such insurance within ten days after receipt of an
invoice or bill therefor from Landlord. Tenant may, upon ninety (90) days
advance notice to Landlord, elect to arrange for and provide such insurance
itself, at Tenant's sole cost and expense.

         SECTION 7.3. INSURERS AND POLICIES. All insurance provided for under
this Lease shall be effected under valid enforceable policies issued by
responsible, well-rated insurers licensed to do business in the State of
Tennessee. Upon the execution of this Lease certificates evidencing such
insurance coverage shall be delivered to Landlord. At least 30 days prior to the
expiration date of any policy, the renewal certificates for such insurance shall
be delivered by Tenant to Landlord. All such policies shall contain agreements
by the insurers that (a) any loss shall be payable, notwithstanding any act or
negligence of Landlord or Tenant which might otherwise result in forfeiture of
said insurance, (b) such policies shall not be canceled except upon 30 days
prior written notice to each named insured and loss payee and (c) the coverage
afforded thereby shall be affected by the performance of any work in or about
the Demised Premises. All such policies shall additionally comply with the
requirements of SECTION 11.2.

         SECTION 7.4. RENTAL INSURANCE. The rental value policy referred to in
SECTION 7.2(A) shall name Landlord as the loss payee thereunder. Upon receipt of
the same, Landlord shall apply the proceeds of such rental value insurance paid
to it first to the payment of Rent and then to the payment of Impositions and
insurance premiums and other items of Additional Rent becoming due during
restoration of the Demised Premises and any balance of such proceeds remaining
after payment of said sum shall be paid to Tenant; provided, however, that, if
Tenant shall then be in default hereunder, Landlord may retain such balance
until the default is cured by Tenant and provided, further, that, if this Lease
shall be terminated, whether by reason of the casualty related to the rental
insurance payment or otherwise, Landlord may retain any balance for its own
account.

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         SECTION 7.5. ADDITIONAL INSURED. Except as provided in SECTION 7.4, all
policies of insurance required herein shall name Landlord as an additional
insured as its interests may appear.

         SECTION 7.6. LOSS PAYEE. The loss, if any, under all policies of the
character referred to in SECTION 7.1 shall be payable to Landlord.

         SECTION 7.7. CONCURRENT AND BLANKET INSURANCE. Tenant shall not take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this ARTICLE 7 to be furnished by Tenant unless Landlord
is also included therein as an additional insured, with loss payable as provided
in this Lease. Tenant shall immediately notify Landlord of the taking out of any
such separate insurance and shall deliver certificates in respect thereof to
Landlord as provided in SECTION 7.3 hereof. Nothing in this Article shall
prevent Tenant from taking out insurance of the kind and in the amount provided
for under SECTION 7.2 hereof under a blanket insurance policy or policies which
can cover other properties owned or operated by Tenant as well as the Demised
Premises.

                                    ARTICLE 8
                    REPAIRS, ALTERATIONS AND MECHANICS' LIENS

         SECTION 8.1. REPAIRS. (a) Landlord, at its expense, shall make all
necessary or appropriate repairs, interior or exterior, structural or otherwise,
ordinary or extraordinary, foreseen or unforeseen to keep the Land and Building
in good order and repair. Tenant shall pay to Landlord Tenant's Pro Rata share
of the cost of such repairs within ten business days after receipt of an invoice
or bill therefor from Landlord. Tenant, at its expense, shall at all times
maintain the Demised Premises in a sightly and attractive manner.

         (b)      Tenant shall not permit or cause any waste, damage or injury
to the Demised Premises or any part thereof.

         SECTION 8.2. ALTERATIONS BY TENANT. Tenant, at its expense, may make
such alterations, additions and improvements to the Demised Premises as are
necessary or desirable for the conduct of its business; provided, however, that
Tenant shall not make any alterations, additions or improvements in or to the
Demised Premises which (a) affect the exterior or structure of the Demised
Premises or the Building's electrical, plumbing, mechanical or HVAC systems or
(b) reduce the value or utility of the Building, without Landlord's prior
written consent in each instance, such consent not to be unreasonably withheld
or delayed, and subject to such reasonable conditions and requirements as
Landlord may reasonably impose. Prior to making any alterations, additions,
installations or improvements, at its expense, Tenant shall obtain all permits,
approvals and certificates required by any governmental or quasi-governmental
bodies and (upon completion) certificates of final approval thereof and deliver
duplicates of all such permits, approvals and certificates to Landlord. Tenant
shall comply with the requirements of SECTION 6.2 in making any alterations,
additions, installations or improvements. Tenant shall carry, or cause Tenant's
contractors and sub-contractors to carry, such workmen's compensation, general
liability, builders' risk, personal and property damage insurance as Landlord
may

                                       9
<PAGE>

reasonably require. Tenant shall maintain a complete and current set of
"as-built" plans and specifications for the Demised Premises and shall deliver
copies thereof to Landlord not later than 30 days after the completion of any
alteration, addition or improvement to the Demised Premises. Any approved or
permitted alterations by Tenant shall be surrendered to Landlord as provided in
ARTICLE 18 hereof upon expiration of this Lease.

         SECTION 8.3. ALTERATIONS BY LANDLORD. (a) Tenant may request that
Landlord construct alterations, additions and improvements to the Demised
Premises. In such event, Landlord shall provide an architect and engineer
licensed by the State of Tennessee to prepare architectural, mechanical,
electrical and plumbing plans and specifications for the construction of such
improvements in accordance with general directions from Tenant. The plans and
specifications shall include (i) a schematic plan indicating the location of all
partitions and doors, a general furniture and equipment layout, and the location
and requirement of electrical, telephone and plumbing; and (ii) final plans
consisting of all plans and specifications necessary to construct the
improvements, including mechanical and electrical working drawings, which will
be certified by the architect or engineer and will be in a form which building
permits can be readily obtained and shall comply with applicable local laws,
ordinances, codes and regulations; the final plans shall contain all mechanical
and electrical working drawings. Tenant's plans shall be subject to Landlord's
approval. If Landlord disapproves of any of Tenant's Plans, Landlord shall
advise Tenant of the reasons for withholding approval. After being so advised by
Landlord, Tenant shall submit revised Tenant's Plans incorporating the
reasonably required revisions for Landlord's approval.

         (b)      Prior to commencing construction of the improvements, Landlord
shall submit to Tenant a written estimate of all costs to complete the
improvements. Tenant shall either approve or specify its objections to the
estimate within three (3) business days after receipt thereof. If Tenant
disapproves the estimate, Landlord and Tenant shall jointly agree to changes to
Tenant's plans that will achieve the Tenant's desired results and Landlord shall
submit a revised estimate, and the parties shall follow this procedure until the
estimate is finally approved by Tenant. Tenant shall not unreasonably withhold
or delay its approval of the estimate. Landlord shall not be obligated to
proceed with the Tenant improvements until Tenant approves the estimate in
writing.

         (c)      Upon Tenant's approval of the plans and estimate, and
following the receipt of the appropriate permits, Landlord shall proceed with
the construction of Tenant improvements. Contractors selected by Landlord shall
construct the Tenant improvements at Landlord's expense.

         (d)      Tenant shall reimburse Landlord for all of the actual costs
incurred by Landlord for the plans and improvements, plus interest at a rate
equal to the rate then paid by Landlord on its working capital line of credit.
Tenant shall pay such costs as Additional Rent in equal monthly installments
sufficient to fully repay Landlord by the end of the Term. Tenant shall be
obligated to pay Landlord for such costs even if the Tenant improvements are not
completed due to some fault of Tenant, or if Tenant breaches this Lease, or
otherwise terminates this Lease prior to the Termination Date.

                                       10
<PAGE>

         (e)      In the event Tenant breaches this Lease, or otherwise
terminates this Lease prior to the Termination Date, Landlord shall have the
option to accelerate all remaining unpaid installments of the foregoing
improvement costs, which amount shall immediately become due and payable without
presentment, demand, protest, or notice of any kind, all of which Tenant waives.
If Landlord exercises its option to require that such costs be immediately paid,
then in such event and from the date of the occurrence of such acceleration,
notwithstanding any other provisions herein to the contrary, such costs shall
bear interest at a rate equal to the highest rate allowed by applicable law. In
addition, Tenant shall pay to Landlord, upon demand, all expenses and costs,
including, but not limited to, reasonable attorneys' fees, that the Landlord
incurs in collecting or attempting to collect the accelerated balance of the
costs.

         SECTION 8.4. MECHANICS' LIENS. Tenant shall (a) pay before delinquency
all costs and expenses of work done or caused to be done by Tenant in the
Demised Premises; (b) keep the title to the Demised Premises and every part
thereof free and clear of any lien or encumbrance in respect of such work; and
(c) indemnify and hold harmless Landlord against any claim, loss, cost, demand
(including reasonable legal fees), whether in respect of liens or otherwise,
arising out of the supply of material, services or labor for such work. Tenant
shall immediately notify Landlord of any lien, claim of lien or other action of
which Tenant has or reasonably should have knowledge and which affects the title
to the Demised Premises or any part thereof, and shall cause the same to be
removed or bonded within thirty (30) days (or such additional time as Landlord
may consent to in writing). If Tenant shall fail to remove same within said time
period, Landlord may take such action as Landlord deems necessary to remove the
same and the entire cost thereof shall be immediately due and payable by Tenant
to Landlord and such amount shall bear interest at the lower of the prime rate
published from time to time in the Money Rates section of the Wall Street
Journal plus four percent (4%) or the maximum rate permitted by law (the
"DEFAULT RATE") from the date Landlord makes such payment. The provisions of
this SECTION 8.4 shall survive the expiration or earlier termination of this
Lease.

                                    ARTICLE 9
                                BUILDING SERVICES

         SECTION 9.1. BUILDING SERVICES. Landlord shall be responsible for
obtaining all services to the Demised Premises reasonably necessary for Tenant's
occupancy thereof, including, without being limited to, all water, heat, air
conditioning, ventilation, electricity, sewerage, elevator service, janitorial
service, waste removal service and landscaping services. Tenant shall pay to
Landlord Tenant's Pro Rata Share of the cost of such services within ten (10)
business days after receipt of an invoice or bill therefor from Landlord.
Landlord shall provide such services in accordance with the Building and
Environmental Control Standard Operating Procedure attached hereto as EXHIBIT C,
as such Standard Operating Procedure may be amended from time to time by
agreement of Landlord and Tenant.

         SECTION 9.2. ELECTRICITY. Tenant shall not use the Building's electric
distribution systems in excess of the capacity for which such systems were
designed. Tenant shall not, without Landlord's prior written consent in each
instance (which consent shall not be unreasonably withheld or delayed), make any
alterations or additions to the electric system of the Building

                                       11
<PAGE>

existing at the commencement of the Term. If Landlord grants such consent, the
cost of all additional risers and other equipment required therefor shall be
paid by Tenant.

         SECTION 9.3. INTERRUPTION OF SERVICES. Landlord shall not be
responsible for any interruption of services to the Demised Premises and does
not covenant that Building services will be free from interruptions caused by
repairs, improvements, changes of service, alterations, strikes, lockouts, labor
controversies, accidents, inability to obtain fuel, water or supplies,
government regulation, earthquakes or any other cause, whether similar or
dissimilar. No such interruption of service shall be deemed a constructive
eviction or disturbance of Tenant's use and possession of the Demised Premises
or any part thereof, or otherwise render Landlord liable to Tenant for damages,
by abatement of rent or otherwise, or otherwise relieve Tenant from performance
of Tenant's obligations under this Lease unless such interruption or stoppage is
due to Landlord's gross negligence or willful misconduct. Tenant hereby waives
and releases all claims against Landlord for damages for interruption or
stoppage of Building services.

         SECTION 9.4 BUILDING AND ENVIRONMENTAL CONTROL. Landlord shall use
commercially reasonable efforts, within the capabilities of the existing
heating, ventilating and air conditioning systems servicing the Demised
Premises, to maintain within that portion of the Demised Premises designated as
manufacturing space building and environment conditions within the parameters
set forth in the Building and Environment Control Standard Operating Procedure
attached hereto as EXHIBIT C, as such Standard Operating Procedure may be
amended from time to time by agreement of Landlord and Tenant (the "ENVIRONMENT
STANDARDS"). If Tenant determines that Landlord is regularly failing to maintain
the Environment Standards, Tenant shall notify Landlord in writing of the
condition that fails to meet the required Environment Standards, and Landlord
shall promptly use commercially reasonable efforts to remedy the situation. If
Landlord reasonably determines that modifications of building heating,
ventilating and air conditioning systems serving the Demised Premises are
necessary in order to remedy the failure to meet the Environment Standards,
Landlord shall so advise Tenant in writing. Tenant shall determine whether it
wishes to have the modifications made, and notify Landlord of such determination
within thirty (30) days after the notice from Landlord. If Tenant elects to have
the proposed modifications made, Landlord shall make the modifications at
Tenant's expense. Tenant shall promptly reimburse Landlord for the costs of the
modifications, including design, construction and other related costs, upon the
submission of invoices for such costs by Landlord. If Tenant elects to decline
to have the proposed modifications made, Landlord shall be relieved of
responsibility for any failure to maintain the Environment Standards that
reasonably could be expected to have been avoided had the proposed modifications
been made. Except as provided above with respect to situations in which Landlord
determines that modifications of building systems are necessary and tenant
declines to have such modifications made, if Landlord regularly fails to
maintain the Environment Standards, within the reasonable capabilities of the
building heating, ventilating and air conditioning systems serving the Demised
Premises, for a period of sixty (60) days after written notice to Landlord from
Tenant, Landlord shall indemnify Tenant for any actual losses sustained by
Tenant after such sixty (60) days period directly caused by such failure.
Provided, however, that Landlord's responsibility for such damages shall be
limited to an amount equal to the amount of Basic Rent due hereunder for the
lease year during which the failure to maintain the Environment Standards
occurs. Landlord shall not be liable to Tenant for lost profits or other
consequential or special damages. Provided that Landlord otherwise

                                       12
<PAGE>

maintains the Demised Premises in a tenantable condition, Tenant's sole remedy
for failure to maintain the Environment Standards shall be as set forth in this
SECTION 9.4.

                                   ARTICLE 10
                            LANDLORD'S RIGHT TO CURE

         SECTION 10.1. LANDLORD'S RIGHT TO CURE. If Tenant shall at any time
fail to (a) pay any Imposition in accordance with the provisions of ARTICLE 5,
(b) to take out, pay for, maintain or deliver any of the insurance policies
provided for in ARTICLE 7, (c) to perform any maintenance or repair required by
SECTION 8.1, (d) to cause any lien of the character referred to in SECTION 8.4
to be discharged as therein provided, or (e) shall fail to perform any other act
on its part to be performed under this Lease and such failure shall continue for
a period of thirty (30) days after notice thereof, specifying such failure,
shall have been given to Tenant or, in the case of a failure which cannot with
due diligence be remedied by Tenant within thirty (30) days, if Tenant shall
fail to proceed as promptly as may reasonably be possible after the service of
such notice and with all due diligence to remedy the failure or shall thereafter
fail to prosecute the remedying of such failure with all due diligence, the
Landlord may, but shall not be obligated to do so, and without further notice or
demand upon Tenant and without waiving or releasing Tenant from any obligations
of Tenant in this Lease contained, (i) pay any Imposition payable by Tenant
pursuant to the provisions of ARTICLE 5, (ii) take out, pay for and maintain any
of the insurance policies provided for in ARTICLE 7, (iii) perform any
maintenance or repair required by SECTION 8.1, (iv) discharge any lien of the
character referred to in SECTION 8.4, or (v) perform any other act on Tenant's
part to be performed as in this Lease provided; provided, however, that, if
Tenant's failure shall have created a situation which, in the reasonable opinion
of Landlord, threatens imminent loss or impairment of Landlord's estate
hereunder or Landlord's interest in the Demised Premises or imminent loss or
damage to persons or property, or threatens civil and/or criminal penalties to
Landlord, the Landlord may act immediately and without prior written notice to
Tenant but Landlord shall attempt to give Tenant such notice as is reasonable
under the circumstances. All reasonable sums so paid by Landlord and all
necessary incidental and reasonable costs and expenses paid or incurred by
Landlord in connection with the performance of any such act by Landlord,
together with interest thereon from the date of making of such expenditure by
Landlord at the Default Rate, shall be payable by Tenant to Landlord on demand.

                                   ARTICLE 11
                                    INDEMNITY

         SECTION 11.1. TENANT'S INDEMNITY AND LANDLORD'S NON-LIABILITY. (a)
Neither Landlord nor Landlord's agents, employees, contractors, officers,
directors, shareholders, partners or principals (disclosed or undisclosed) shall
be liable to Tenant or Tenant's agents, employees, contractors, officers,
directors, shareholders, partners or principals (disclosed or undisclosed)
invitees or licensees or any other occupant of the Demised Premises, and Tenant
shall save Landlord, its successors and assigns, and their respective agents,
employees, contractors, officers, directors, shareholders, partners and
principals (disclosed or undisclosed) harmless from any loss, cost, liability,
claim, damage, expense (including reasonable attorneys' fees and disbursements),
penalty or fine incurred in connection with or arising from any injury to

                                       13
<PAGE>

Tenant or to any other person or for any damage to, or loss (by theft or
otherwise) of, any of Tenant's property or of the property of any other person,
irrespective of the cause of such injury, damage or loss (including the acts or
negligence of any tenant or of any owners or occupants of adjacent or
neighborhood property or caused by operations in construction of any private,
public or quasi-public work) unless, subject to SECTION 24.8 hereof, due to the
gross negligence or willful misconduct of Landlord or Landlord's agents or
employees. However, even if such loss or damage is caused by the gross
negligence or willful misconduct of Landlord, its agents or employees, Tenant
waives, to the full extent permitted by law, any claim for consequential damages
(including, without limitation, lost profits) in connection therewith. To the
extent of Tenant's insurance coverage, Landlord, and its agents and employees,
shall not be liable, for any loss or damage to any person or property due to the
gross negligence of Landlord, its agents or employees.

         (b)      No (i) performance by Landlord, Tenant or others of any
repairs, improvements, alterations, additions, installations, substitutions,
betterments or decorations in or to the Demised Premises, (ii) failure of
Landlord or others to make any such repairs or improvements, (iii) damage to the
Demised Premises or Tenant's property, (iv) any injury to any persons, caused by
other tenants or persons in the Building, or by operations in the construction
of any private, public, or quasi-public work, or by any other cause, (v) latent
defect in the Building or the Demised Premises, or (vi) inconvenience or
annoyance to Tenant or injury to or interruption of the Tenant's business by
reason of any of the events or occurrence referred to in the foregoing
subdivisions (i) through (v) shall impose any liability on Landlord to Tenant,
other than, subject to SECTION 24.8, such liability as may be imposed upon
Landlord by law for Landlord's gross negligence.

         (c)      Tenant hereby indemnifies and holds harmless Landlord and
Landlord's agents, employees, contractors, officers, directors, shareholders,
partners or principals (disclosed or undisclosed) from any loss, cost,
liability, claim, damage, expense (including reasonable attorneys' fees and
disbursements), penalty or fine incurred in connection with or arising from (i)
any default by Tenant in the performance of any of the terms of this Lease on
Tenant's part to be performed, or (ii) the use or occupancy or manner of use or
occupancy of the Demised Premises by Tenant or any person claiming under Tenant,
or (iii) any acts, omissions or negligence of Tenant or any such person, or the
contractors, agents, employees, invitees, licensees, assignees or sublessees of
Tenant or any such person, (iv) any accident, injury or damage whatsoever caused
to any person or to the property of any person and occurring in or about the
Demised Premises, resulting or claimed to have resulted from an act or omission
of Tenant, or the contractors, agents, employees, invitees, licensees, assignees
or sublessees of Tenant, or (v) any claim made against Landlord or other
obligation, liability, cost or expense incurred by Landlord with respect to
toxic wastes, hazardous or dangerous materials or other similar substances
affecting the Demised Premises, whether such substances affect the Demised
Premises as the result of acts or omissions occurring before or during the term
of this Lease. Tenant's obligations under this SECTION 11.1 shall survive the
expiration or earlier termination of this Lease. Tenant shall pay to Landlord as
Additional Rent, within five Business Days after submission of Landlord to
Tenant of bills or statements therefor, sums equal to all losses, costs,
liabilities, claims, damages, fines, penalties and expenses referred to in this
SECTION 11.1.

                                       14
<PAGE>

         (d)      The provisions of this SECTION 11.1 shall survive the
expiration or earlier termination of this Lease.

         SECTION 11.2. TENANT'S WAIVER OF SUBROGATION. Tenant shall procure an
appropriate clause in, or endorsement to, each of its policies for fire and
extended coverage insurance, pursuant to which the insurance company waives
subrogation or consents to waiver of its right of recovery against Landlord.
Tenant shall not make any claim against or seek to recover from the Landlord for
any loss or damage to its property or the property of others covered by such
fire or extended coverage insurance.

         SECTION 11.3. LANDLORD'S INDEMNITY AND TENANT'S NON-LIABILITY. (a)
Neither Tenant nor Tenant's agents, employees, contractors, officers, directors,
shareholders, partners or principals (disclosed or undisclosed) shall be liable
to Landlord or Landlord's agents, employees, contractors, officers, directors,
shareholders, partners or principals (disclosed or undisclosed) invitees or
licensees or any other occupant of the Demised Premises, and Landlord shall save
Tenant, its successors and assigns, and their respective agents, employees,
contractors, officers, directors, shareholders, partners and principals
(disclosed or undisclosed) harmless from any loss, cost, liability, claim,
damage, expense (including reasonable attorneys' fees and disbursements),
penalty or fine incurred in connection with or arising from any injury to
Landlord or to any other person or for any damage to, or loss (by theft or
otherwise) of, any of Landlord's property or of the property of any other
person, irrespective of the cause of such injury, damage or loss (including the
acts or negligence of any tenant or of any owners or occupants of adjacent or
neighborhood property or caused by operations in construction of any private,
public or quasi-public work) unless due to the gross negligence or willful
misconduct of Tenant or Tenant's agents or employees. However, even if such loss
or damage is caused by the gross negligence or willful misconduct of Tenant, its
agents or employees, Landlord waives, to the full extent permitted by law, any
claim for consequential damages (including, without limitation, lost profits) in
connection therewith. To the extent of Landlord's insurance coverage, Tenant,
and its agents and employees, shall not be liable, for any loss or damage to any
person or property due to the gross negligence of Tenant, its agents or
employees.

         (b)      No (i) performance by Tenant, Landlord or others of any
repairs, improvements, alterations, additions, installations, substitutions,
betterments or decorations in or to the Demised Premises, (ii) failure of Tenant
or others to make any such repairs or improvements, (iii) damage to the Demised
Premises or Landlord's property, (iv) any injury to any persons, caused by other
tenants or persons in the Building, or by operations in the construction of any
private, public, or quasi-public work, or by any other cause, (v) latent defect
in the Building or the Demised Premises, or (vi) inconvenience or annoyance to
Landlord or injury to or interruption of the Landlord's business by reason of
any of the events or occurrence referred to in the foregoing subdivisions (i)
through (v) shall impose any liability on Tenant to Landlord, other than,
subject to SECTION 24.8, such liability as may be imposed upon Tenant by law for
Tenant's gross negligence.

         (c)      Landlord hereby indemnifies and holds harmless Tenant and
Tenant's agents, employees, contractors, officers, directors, shareholders,
partners or principals (disclosed or undisclosed) from any loss, cost,
liability, claim, damage, expense (including reasonable

                                       15
<PAGE>

attorneys' fees and disbursements), penalty or fine incurred in connection with
or arising from (i) any default by Landlord in the performance of any of the
terms of this Lease on Landlord's part to be performed, or (ii) any acts,
omissions or negligence of Landlord or any such person, or the contractors,
agents, employees, invitees, licensees or assignees of Landlord or any such
person, (iii) any accident, injury or damage whatsoever caused to any person or
to the property of any person and occurring in or about the Demised Premises,
resulting or claimed to have resulted from an act or omission of Landlord, or
the contractors, agents, employees, invitees, licensees or assignees of
Landlord, or (iv) any claim made against Tenant or other obligation, liability,
cost or expense incurred by Tenant with respect to toxic wastes, hazardous or
dangerous materials or other similar substances affecting the Demised Premises,
caused by Landlord, or its contractors, agents, employees, invitees, licensees
or assignees, whether such substances affect the Demised Premises as the result
of acts or omissions occurring before or during the term of this Lease.
Landlord's obligations under this SECTION 11.3 shall survive the expiration or
earlier termination of this Lease. Tenant shall pay to Landlord as Additional
Rent, within five Business Days after submission of Landlord to Tenant of bills
or statements therefor, sums equal to all losses, costs, liabilities, claims,
damages, fines, penalties and expenses referred to in this SECTION 11.3.

         (d)      The provisions of this SECTION 11.3 shall survive the
expiration or earlier termination of this Lease.

         SECTION 11.4. LANDLORD'S WAIVER OF SUBROGATION. Landlord shall procure
an appropriate clause in, or endorsement to, each of its policies for fire and
extended coverage insurance pursuant to which the insurance company waives
subrogation or consents to waiver of its right of recovery against Tenant.
Landlord shall not make any claim against or seek to recover from the Tenant for
any loss or damage to its property or the property of others covered by such
fire or extended coverage insurance.

                                   ARTICLE 12
                               DAMAGE BY CASUALTY

         SECTION 12.1. NOTICE. Upon Tenant's knowledge thereof, Tenant shall
give immediate written notice to Landlord of any damage caused to the Demised
Premises by fire or other casualty.

         SECTION 12.2. RESTORATION OF IMPROVEMENTS. (a) In the event the Demised
Premises are damaged by fire or other casualty, Landlord shall, unless this
Lease is terminated as hereinafter provided, proceed with reasonable diligence
and continuity and at its sole cost and expense to repair the Demised Premises
to at least their condition prior to the fire or other casualty.

         (b)      If the Demised Premises shall be (i) totally destroyed or (ii)
so substantially damaged that Tenant, in the good faith judgment of its Board of
Directors, determines that the Demised Premises cannot reasonably be rebuilt in
a reasonable period of time (which shall be at least six months) given the needs
of Tenant's business, then in either such event Tenant may elect by written
notice to Landlord given within 60 days after the occurrence of such casualty,
to terminate this Lease, effective thirty days after the giving of notice to
Landlord; provided,

                                       16
<PAGE>

however, that such election shall only be effective provided Tenant is not on
the date of the giving of notice of its election to terminate this Lease or upon
the date set for termination in default under this Lease, subject to any
applicable notice and cure provisions.

                                   ARTICLE L3
                                 EMINENT DOMAIN

         SECTION 13.1. TAKING OF DEMISED PREMISES. If during the Term of this
Lease all of the Demised Premises shall be taken for any public or quasi-public
use under any statute or by right of eminent domain, or purchased under threat
of such taking, this Lease shall automatically terminate on the date on which
the condemning authority takes possession of the Demised Premises (hereinafter
called the "DATE OF SUCH TAKING"). If so much of the Demised Premises (but less
than all) is taken as shall render the Demised Premises untenantable in Tenant's
reasonable judgment, Tenant shall have the right to terminate this Lease by
giving written notice to the Landlord of termination within 30 days after the
Date of Such Taking.

         SECTION 13.2. SURRENDER. On the date of any termination under SECTION
13.1, Tenant shall immediately surrender to Landlord the Demised Premises and
all interests therein under this Lease and Tenant shall pay Landlord Rent
through the date of termination (or through the Date of Such Taking if such date
shall not be the same as the date of termination). Landlord may re-enter and
take possession of the Demised Premises and remove Tenant therefrom.

         SECTION 13.3. RENT ADJUSTMENT FOR PARTIAL TAKING. If any portion of the
Demised Premises (but less than the whole thereof) is so taken, and the Demised
Premises shall remain tenantable for Tenant's purposes, and this Lease shall not
terminate as above provided, the Rent thereafter payable under this Lease shall
be adjusted pro rata by Landlord in order to account for the resulting
reduction, if any, in the area of the Demised Premises.

         SECTION 13.4. AWARDS. Upon any taking or purchase described in this
ARTICLE L3, Landlord shall be entitled to receive and retain the entire award or
consideration for the affected lands and improvements, and Tenant shall not have
nor advance any claim against Landlord or, except as provided in the immediately
following sentence, anyone else for the value of its property or its leasehold
estate under this Lease, or for the costs or removal or relocation, or business
interruption expense or any other damages arising out of such taking or
purchase. Nothing herein shall give Landlord any interest in or preclude Tenant
from seeking and recovering on its own account a separate award form the
condemning authority attributable to the taking or purchase of Tenant's trade
fixtures, or the removal or relocation of its business and effects, or the
interruption of its business provided that Landlord's award is not diminished
thereby. If any such award made or compensation paid to either party
specifically includes an award or amount for the other, the party first
receiving the same shall promptly account therefor to the other.

         SECTION 13.5. RECONSTRUCTION. If this Lease shall not terminate as
above provided, Landlord shall proceed with reasonable diligence and continuity
and at its sole cost and expense (except as hereinafter provided) to repair the
Demised Premises to as nearly their condition prior to the taking or purchase as
feasible.

                                       17
<PAGE>

                                   ARTICLE 14
                                     ACCESS

         SECTION 14.1. ACCESS TO DEMISED PREMISES. Landlord and Landlord's
agents shall have the right (but shall not be obligated) to enter the Demised
Premises in any emergency at any time, and to perform any acts related to the
safety, protection or preservation thereof of the Building, if not performed by
Tenant. At other reasonable times, and upon reasonable notice, Landlord may
enter the Demised Premises upon prior notice to Tenants (a) to examine and make
such repairs and replacements as Landlord may deem necessary or reasonably
desirable to the Demised Premises, (b) for the purpose of complying with laws,
regulations and other requirements of governmental authorities or the provisions
of this Lease, or (c) for the purposes of showing the same to prospective
purchasers or mortgagees of the Building, and during the last six months of the
term for the purpose of showing the same to prospective tenants. If Tenant is
not present to open and permit an entry into the Demised Premises in an
emergency, Landlord or Landlord's agents may enter the same whenever such entry
may be necessary or permissible by master key, provided reasonable care is
exercised to safeguard Tenant's property. Such entry shall not render Landlord
or its agents liable therefor, nor in such event shall the obligations of Tenant
hereunder be affected.

                                   ARTICLE 15
                            ASSIGNMENT AND SUBLETTING

         SECTION 15.1 CONSENT REQUIRED. (a) Tenant shall not, voluntarily or
involuntarily, by operation of law or otherwise, assign, mortgage, pledge,
encumber or in any manner transfer this Lease in whole or in part, nor sublet
all or any part of the Demised Premises, without the prior written consent of
Landlord in each instance, such consent not to be unreasonably withheld, and any
attempt to do any of such acts without such consent shall be null and void and
of no effect. Except as provided below with respect to the exercise by Landlord
or Siemens Medical Systems, Inc. ("Siemens") of their respective rights under
the put/call described below, a transfer of control of Tenant, including,
without being limited to, a transfer of stock or partnership interest or the
merger, consolidation, sale of all or substantially all of the other assets of
Tenant or other corporate or other reorganization of Tenant (whether or not
Tenant shall be the surviving entity), shall be deemed an assignment under this
Lease and shall be subject to all the provisions of this Article, including the
requirement of obtaining Landlord's prior consent. The consent by Landlord to
any assignment, mortgage, pledge, encumbrance, transfer or subletting shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment, mortgage, pledge, encumbrance, transfer or subletting.
Notwithstanding the foregoing, the exercise by Landlord of its right to put its
shares of Tenant to Siemens, or the exercise by Siemens of its right to call the
shares of Tenant of Landlord, under the Stock Purchase, Reorganization and Joint
Venture Agreement among Landlord, Siemens and others relating to Tenant dated as
of December 10, 1987, as amended, shall not constitute an assignment of this
Lease and this Lease shall in such event remain in full force and effect.

         (b)      If this Lease be assigned, or if the Demised Premises or any
part thereof be sublet or occupied by anyone other than Tenant, Landlord may
collect Rent from the assignee,

                                       18
<PAGE>

subtenant or occupant, and apply the net amount collected to the Rent herein
reserved, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of this covenant, or the acceptance of the assignee, subtenant
or occupant as tenant, or a release of Tenant from the further performance by
Tenant of covenants on the part of Tenant herein contained.

         (c)      Notwithstanding any assignment, mortgage, pledge, encumbrance,
transfer or sublease of this Lease, Tenant shall remain fully liable for the
performance of all of the terms, covenants, obligations and conditions of this
Lease and shall not be released therefrom.

         (d)      Notwithstanding any other provision of this ARTICLE 15, Tenant
may assign this Lease to any affiliate of Landlord, provided Landlord remains
liable for such affiliate's performance, including payment of rent, hereunder.

                                   ARTICLE 16
                                   BANKRUPTCY

         SECTION 16.1 BANKRUPTCY. If at any time alter the execution and
delivery of this Lease, there shall be tiled by or against Tenant in any court
pursuant to any statute either of the United States or of any State a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee or conservator of all or a portion of Tenant's property, or
if Tenant makes an assignment for the benefit of creditors, this Lease, at the
option of Landlord to be exercised within sixty (60) days after notice of the
happening of any one or more of such events, may be canceled and terminated, and
in any such event of termination neither Tenant nor any person claiming through
or under Tenant or by virtue of any statute or of an order of any court shall be
entitled to possession or to remain in possession of the Demised Premises but
shall forthwith quit and surrender the Demised Premises, and Landlord, in
addition to the other rights and remedies granted by virtue of any other
provision in this Lease or by virtue of any statute or rule of law, may retain
as damages any Rent, security deposit, or moneys received by it from Tenant or
others on behalf of Tenant.

         SECTION 16.2. MEASURE OF DAMAGES. In the event of the termination of
this Lease pursuant to SECTION 16.1, Landlord shall be entitled to the same
rights and remedies as set forth in ARTICLE 17.

                                   ARTICLE 17
                                TENANT'S DEFAULT

         SECTION 17.1. EVENTS OF DEFAULT. This Lease and the term and estate
hereby granted are subject to the limitation that:

         (a)      Whenever Tenant shall have failed to pay any installment of
Rent, or any portion thereof when the same shall be due and payable, and Tenant
shall have failed to pay same for a period of ten business days after notice of
such payment from Landlord; or

         (b)      Whenever Tenant shall have failed to comply with, shall have
violated or shall be in default in the performance of any other provision of
this Lease and Tenant shall have failed to

                                       19
<PAGE>

cure such default within fifteen (15) business days after notice from Landlord
of such noncompliance, violation or default (in the case of a default which
cannot with due diligence be cured within a period of ten days, Tenant shall
have such additional time, not to exceed sixty (60) days, to cure same as may
reasonably be necessary, provided Tenant commences curing such default within
the ten day period and proceeds promptly, effectively, continuously and with due
diligence to cure such default after receipt of said notice and Landlord, in its
reasonable judgment determines that the passage of such additional time shall
not subject the Landlord, the Premises, any third party or any other physical
property to any risk or liability); or

         (c)      Whenever Tenant shall abandon the Demised Premises; or

         (d)      Whenever Tenant shall do or permit to be done anything which
creates a lien upon the Demised Premises and/or the Building and such lien is
not discharged or removed or bonded within thirty (30) days of its imposition;

then regardless and notwithstanding the fact that Landlord has or may have some
other remedy under this Lease or by virtue hereof, or in law or in equity,
Landlord may give to Tenant a notice ("TERMINATION NOTICE") of intention of
Landlord to end the term of this Lease specifying a day not less than five
business days thereafter and, upon giving the Termination Notice, this Lease and
the term and estate hereby granted shall expire and terminate upon the day so
specified in the Termination Notice as fully and completely and with the same
force and effect as if the day so specified were the Expiration Date and all
rights of Tenant shall terminate and Tenant shall remain liable for damages as
hereinafter provided. From and after any date upon which Landlord is entitled to
give a Termination Notice, Landlord, without further notice, may enter upon,
re-enter, possess and repossess itself of the Demised Premises, by appropriate
legal proceedings, and may dispossess and remove Tenant and all other persons
and property from the Demised Premises and may have, hold and enjoy the Demised
Premises and the right to receive all rental and other income of and from the
same. As used in this Lease the words "enter" and "re-enter" are not restricted
to their technical legal meanings. Upon and after such entry into possession
Landlord shall use commercially reasonable efforts to re-let the Demised
Premises, or any part thereof, for the account of Tenant, to any person, firm or
corporation, other than Tenant, for such Rent, for such time and upon such terms
as Landlord, in Landlord's sole discretion, shall determine, and Landlord shall
not be required to accept any tenant offered by Tenant or to observe any
instruction given by Tenant about such re-letting.

         SECTION 17.2. DAMAGES. (a) Tenant covenants and agrees that in the
event of the expiration or termination of this Lease or re-entry by Landlord,
under any of the provisions of this ARTICLE 17 or pursuant to law, by reason of
default hereunder on the part of Tenant after the expiration of any applicable
notice and cure periods, Tenant shall pay to Landlord, as damages with respect
to this Lease, sums equal to the Rent which would have been payable by Tenant
had this Lease not so terminated, or had Landlord not so re-entered the Demised
Premises, payable upon the days specified in this Lease following such
termination or such re-entry and until the expiration date of the Lease
provided, however, that if the Demised Premises shall be leased or re-let during
said period, Landlord shall credit Tenant with the net rent, if any, received by
Landlord from such leasing or re-letting, such net rent to be determined by
first deducting from the gross rents as and when received by Landlord from such
leasing or re-letting the reasonable

                                       20
<PAGE>

expenses incurred or paid by Landlord in terminating this Lease or of reentering
the Demised Premises and of securing possession thereof, as well as the
reasonable expense of leasing and re-letting, including altering and preparing
any portion of the Demised Premises for new tenants, brokers' commissions and
all other expenses properly chargeable against the Demised Premises and the
rental therefrom; but in no event shall Tenant be entitled to receive any excess
of such net rents over the Rent payable by Tenant to Landlord hereunder.

         (b)      Suit or suits for the recovery of any and all damages, or any
installments thereof, provided for hereunder may be brought by Landlord from
time to time at its election, and nothing contained herein shall be deemed to
require Landlord to postpone suit until the date when the term of this Lease
would have expired if it had not been terminated under the provisions of this
ARTICLE 17, or under provisions of any law, or had Landlord not re-entered the
Demised Premises.

         (c)      Nothing herein contained shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any damages to which
Landlord may lawfully be entitled in any case other than those particularly
provided for above.

         SECTION 17.3. WAIVER OF JURY TRIAL. The parties hereto shall and they
hereby do waive trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other on any matters whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Demised Premises, and/or
any claim of injury or damage.

                                   ARTICLE 18
                                    SURRENDER

         SECTION 18.1. POSSESSION. Upon the expiration or earlier termination of
this Lease, Tenant shall immediately quit and surrender possession of the
Demised Premises in as good a state and condition as they were when entered
into, reasonable wear and tear and casualty damage (other than that which Tenant
is obligated to repair) and approved or permitted alterations excepted. Upon
such surrender, all right, title and interest of Tenant in the Demised Premises
shall cease.

         SECTION 18.2. TENANT'S PROPERTY. After the expiration or other
termination of the Lease all of Tenant's trade fixtures, personal property, and
improvements remaining in the Demised Premises shall be deemed conclusively to
have been abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without notice or obligation to compensate
Tenant or to account therefor, and Tenant shall pay to Landlord on written
demand all costs incurred by Landlord in connection therewith.

         SECTION 18.3. MERGER. The voluntary or other surrender of this Lease by
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord shall not work a merger, but shall, at Landlord's option, terminate all
or any subleases and subtenancies or operate as an assignment to Landlord of all
or any subleases or subtenancies. Landlord's option hereunder

                                       21
<PAGE>

shall be exercised by notice to Tenant and all known sublessee or subtenants in
the Demised Premises or any part thereof.

         SECTION 18.4. PAYMENTS AFTER TERMINATION. No payments of money by
Tenant to Landlord after the expiration or other termination of the Term or
after the giving of any notice (other than a demand for payment of money) by
Landlord to Tenant, shall reinstate, continue or extend the term or make
ineffective any notice given to Tenant prior to the payment of such money. After
the service of notice or the commencement of a suit, or after final judgment
granting Landlord possession of the Demised Premises, Landlord may receive and
collect any sums of Rent due under this Lease, and the payment thereof shall not
make ineffective any notice, or in any manner effect any pending suit or any
judgment theretofore obtained.

                                   ARTICLE 19
                          CONDITION OF DEMISED PREMISES

         SECTION 19.1. CONDITION OF DEMISED PREMISES. Tenant acknowledges that
the Demised Premises shall be delivered in "as is" condition and that any
additional work required to be performed shall be performed at Tenant's sole
cost and expense.

                                   ARTICLE 20
                               REMEDIES CUMULATIVE

         SECTION 20.1. NO WAIVER. No waiver by Landlord or Tenant of a breach of
any covenant, agreement, obligation or condition of this Lease shall be
construed to be waiver of any future breach of the same or any other covenant,
agreement, obligation or condition hereof. No receipt of money by Landlord from
Tenant after notice of default, or after the termination of this Lease or the
commencement of any suit or final judgment of possession of the Demised
Premises, shall reinstate, continue or extend the term of this Lease or affect
any notice, demand or suit. The rights and remedies hereby created are
cumulative, and the use of one remedy shall not be construed to exclude or waive
the right to the use of another, or exclude any other right or remedy allowed by
law.

                                   ARTICLE 21
                 ESTOPPEL CERTIFICATE, SUBORDINATION, ATTORNMENT

         SECTION 21.1. ESTOPPEL CERTIFICATE. Tenant shall at any time upon the
request of Landlord, execute and deliver in form prepared by Landlord, an
estoppel certificate certifying: The Commencement Date; the Expiration Date; the
date to which Rent has been paid; that this Lease is in full force and effect
and has not been modified or amended (or if modified or amended, describing the
same) and that to Tenant's knowledge there are no defenses or offsets thereto or
defaults of Landlord under this Lease (or if any be claimed, describing the
same); and such other matters as Landlord may reasonably request. Tenant's
failure to deliver such certificate within 10 days of the demand therefore shall
be a default hereunder; provided, however, that Tenant shall not be required to
execute and deliver more than two such estoppel certificates during any calendar
year.

                                       22
<PAGE>

         SECTION 21.2. SUBORDINATION. This Lease is and shall be subject and
subordinate to all ground or underlying leases and deeds of trust which now or
hereafter affect the Demised Premises and/or any ground or underlying leases
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof provided that Landlord procures, for the benefit to Tenant, a
non-disturbance and attornment agreement, in customary form and substance, from
the beneficiary under any such deed of trust or the ground lessor under any
ground lease affecting the Land or the Building or the Demised Premises. Except
as provided in the immediately preceding sentence, the provisions of this
section shall be automatic and shall not require any further action. In
confirmation of such subordination, Tenant will execute and deliver upon demand
of Landlord any and all instruments desired by Landlord subordinating this Lease
to such lease or deed of trust. Landlord is hereby irrevocably appointed and
authorized as agent and attorney-in-fact of Tenant to execute and deliver all
such subordination instruments in the event Tenant fails to execute and deliver
said instruments within 10 days after notice from Landlord requesting the
execution thereof.

         SECTION 21.3. ATTORNMENT. If the interest of Landlord shall be acquired
by any Mortgagee (as used herein the term "MORTGAGEE" shall include any holder
of a mortgage or deed of trust encumbering the Demised Premises and any
purchaser of the Demised Premises at foreclosure) by foreclosure or other
proceedings to enforce the rights of the holder of any mortgage or deed of trust
encumbering the Demised Premises, and such Mortgagee succeeds to the interest of
Landlord hereunder, this Lease and the rights of Tenant hereunder shall continue
in full force and effect and shall not be terminated or disturbed except in
accordance with the terms hereof, and Tenant shall be bound to such Mortgagee
under all of the terms, covenants and conditions of this Lease for the balance
of the term then remaining, and extensions or renewals thereof that may be
effected in accordance with the options contained herein, with the same force
and effect as if such Mortgagee were the lessor or landlord hereunder and Tenant
the lessee under the Lease. In such event, Tenant agrees to and does hereby
attorn to such Mortgagee as its lessor, such attornment to be effective and
self-operative immediately upon such Mortgagee succeeding to the interest of
Landlord under the Lease. Tenant shall thereafter pay rent to Mortgagee from and
after the time that Tenant receives written notice from Mortgagee that it has
succeeded to the interest of Landlord under the Lease. The respective rights and
obligations of Tenant and such Mortgagee upon such attornment, to the extent of
the then remaining balance of the term of the Lease and any extension or
renewal, thereof, shall be and are the same as now set forth in this Lease.

                                   ARTICLE 22
                                 QUIET ENJOYMENT

         SECTION 22.1. QUIET ENJOYMENT. Landlord covenants and agrees with
Tenant that upon payment by Tenant of the Basic Rent any other charges hereunder
and upon the observance and performance of all of the terms, covenants and
conditions on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the Demised Premises, subject, nevertheless, to the terms and
conditions of this Lease (including, without being limited to, the provisions of
ARTICLE 21).

                                   ARTICLE 23

                                       23
<PAGE>

                                     NOTICES

         SECTION 23.1. NOTICES. Whenever any notice or consent is required or
permitted hereunder, such notice or consent shall be in writing. Any notice or
document required or permitted to be delivered hereunder shall be deemed to be
delivered on the second business day after it is deposited in the United States
Mail, postage prepaid, Registered or Certified Mail, Return Receipt Requested,
addressed to the parties hereto at the addresses set forth in ARTICLE 1, or at
such other addresses as they have theretofore specified by written notice
delivered in accordance herewith, or when actually received if sent by
recognized courier service or by hand delivery.

                                   ARTICLE 24
                            MISCELLANEOUS PROVISIONS

         SECTION 24.1. SURVIVAL OF TENANT'S OBLIGATION. Tenant's obligation to
pay Rent under this Lease shall survive termination of this Lease.

         SECTION 24.2. APPLICABLE LAW AND CONSTRUCTION. (a) This Lease shall be
governed by and construed under the laws of the State of Tennessee.

         (b)      The necessary grammatical changes required to make the
provisions of this Lease apply in the plural sense where there is more than one
tenant and to either corporations, associations, partnerships or individuals,
males or females, shall in all instances be assumed as though fully expressed.
If there is more than one person or entity who or which are the Tenant under
this Lease, the obligations imposed upon Tenant under this Lease shall be joint
and several. The relationship between Landlord and Tenant created hereunder
shall be that of lessor and lessee and nothing herein shall be construed as
creating any joint venture or partnership. The captions used in this Lease are
for convenience only and do not in any way limit or amplify the terms and
provisions hereof.

         SECTION 24.3. PARTIES BOUND. It is agreed that this Lease, and each and
all the covenants and obligations hereof, shall be binding upon and inure to the
benefit of, as the case may be, the parties hereto, their respective heirs,
executors, administrators, successors and assigns, subject to all agreements and
restrictions herein contained with respect to assignment or other transfer of
Tenant's interest herein.

         SECTION 24.4. NO REPRESENTATIONS BY LANDLORD. Neither Landlord nor
Landlord's agents have made any representations or promises with respect to the
physical condition of the Demised Premises, permissible uses of Demised
Premises, the expenses of operation or any other matter or thing affecting or
related to the Demised Premises except as herein expressly set forth, and no
rights, easements, or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this Lease. Tenant
has inspected the Demised Premises and is thoroughly acquainted with their
condition, and agrees to accept the same "as is". All understandings and
agreements heretofore made between the parties hereto are merged in this Lease,
which alone fully and completely expresses the agreement between Landlord and
Tenant, and any executory agreement hereafter made shall be ineffective to
change, modify,

                                       24
<PAGE>

discharge or effect an abandonment of it, in whole or in part, or a surrender of
this Lease or of the Demised Premises or any part thereof or of any interest of
Tenant therein unless such executory agreement is in writing and signed by
Landlord and Tenant.

         SECTION 24.5. BROKERS. Tenant warrants that it has had no dealings with
any broker, agent or any other person in connection with the Demised Premises.
Tenant agrees to indemnify and hold harmless Landlord from and against any and
all cost, expense, or liability for commissions or other compensation and
charges claimed by any broker or agent with respect to this Lease on account of
Tenant's acts. The provisions of this SECTION 24.5 shall survive the expiration
or earlier termination of this Lease.

         SECTION 24.6. SEVERABILITY. The invalidity or unenforceability of any
provision of this Lease shall not affect or impair the validity of any other
provision.

         SECTION 24.7. DEFINITION OF LANDLORD. As used in this Lease, the term
"LANDLORD" shall mean only the owner, or the mortgagee in possession, for the
time being, of the Demised Premises, so that in the event of any sale of the
Demised Premises or of said lease, or in the event of a lease of the Demised
Premises, said Landlord shall be and hereby is entirely freed and relieved of
all covenants and obligations of Landlord hereunder thereafter to be performed
or observed and it shall be deemed and construed without further agreement
between the parties or their successors in interest, or between the parties and
any such purchaser or lessee, that such purchaser or lessee has assumed and
agreed to perform and observe any and all covenants and obligations of Landlord
hereunder.

         SECTION 24.8. EXCULPATORY CLAUSE. All separate and personal liability
of Landlord or any officer, director, partner or principal (disclosed or
undisclosed) thereof of every kind or nature, if any, is waived by Tenant, and
by every person now or hereafter claiming by, through or under Tenant; and
Tenant shall look solely to Landlord's estate in the Demised Premises for the
payment of any claim against Landlord.

         SECTION 24.9. NO RECORDING. Tenant shall not record this Lease, or any
portion or any reference hereto. In the event Tenant records this Lease, or
permits or causes this Lease, or any portion hereof or reference hereto to be
recorded, this Lease shall terminate at Landlord's option or Landlord may
declare a default hereunder and pursue any and all of its remedies provided in
this Lease. Notwithstanding the foregoing, however, Tenant shall have the right
to record a memorandum of this Lease in form acceptable to Landlord. Not later
than five days after the expiration or earlier termination of this Lease,
Tenant, at his sole cost and expense shall take all necessary actions to remove
or release the Memorandum of Lease from recordation against the Demised
Premises. In the event that Tenant fails to do so in such five days period,
Landlord shall have the right to do so in Tenant's name and Tenant hereby
irrevocably grants Landlord a power of attorney to act on Tenant's behalf for
such purposes.

         SECTION 24.10. ENTIRE AGREEMENT; MODIFICATION. This Lease contains the
entire agreement of the parties with respect to the subject matter hereof, and
cannot be amended or modified except by written agreement. This Lease supercedes
all prior leases and related agreements between the parties hereto with respect
to the premises described herein, including,

                                       25
<PAGE>

but not limited to, the Lease Agreement between Landlord's
predecessor-in-interest, CTI, Inc., and Tenant dated as of August 20, 2000.

                                   ARTICLE 25
                                 OPTION TO RENEW

         SECTION 25.1. OPTION TO RENEW. Provided that Tenant is not in default
hereunder beyond any applicable notice and cure periods on the date of the
Notice to Renew (as hereinafter defined) or on the expiration date of the
Initial Term or the first Renewal Term, as the case may be, Tenant shall have
the right to extend the term of this Lease for the Renewal Term(s) described in
ARTICLE 1 hereof, upon the same terms and conditions as are herein provided
except that the Basic Rent during said Renewal Term shall be as set forth in
SECTION 3.4 and there shall be no Landlord's contribution for additional
alterations to the improvements. Such right shall be exercised by Tenant by
giving notice to Landlord at least six months prior to the expiration date of
the applicable term (the "NOTICE TO RENEW"). Time shall be of the essence for
the exercise of such option. Tenant shall have no further right to extend or
renew this Lease.

         IN WITNESS WHEREOF, that parties hereto have caused this Lease to be
executed as of the date first above written.

                                 LANDLORD:

                                 CTI MOLECULAR IMAGING, INC.

                                 By: /s/ Terry D. Douglass
                                    --------------------------------------------
                                 Name: Terry D. Douglass, Ph.D
                                 Title: President and Chief Executive Officer

                                 TENANT:

                                 CTI PET SYSTEMS, INC.

                                 By: /s/ Ronald Nutt
                                     --------------------------
                                 Name: Ronald Nutt
                                 Title: President

                                       26<PAGE>

                                                                   EXHIBIT 10.49

                           CTI MOLECULAR IMAGING, INC.
                       CODE OF BUSINESS CONDUCT AND ETHICS

<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                   <C>
PURPOSE............................................................................................... 1
REPORTING VIOLATIONS.................................................................................. 4
OUR OBLIGATION TO YOU................................................................................. 5
CODE ADMINISTRATOR AND COMPLIANCE COMMITTEE........................................................... 6
INVESTIGATIONS AND ENFORCEMENT........................................................................ 7
YOUR OBLIGATION TO THE COMPANY........................................................................ 7
DISCLOSURE, AMENDMENTS AND WAIVERS.................................................................... 8
STANDARDS OF CONDUCT AND ETHICS FOR EMPLOYEES, OFFICERS AND DIRECTORS................................. 9
   Compliance with Laws, Rules and Regulations........................................................ 9
   Conflicts of Interest..............................................................................12
   Corporate Opportunities............................................................................14
   Protection and Proper Use of Company Assets........................................................15
   Work Environment...................................................................................16
   Confidential and Proprietary Information...........................................................16
   Fraudulent Activities..............................................................................20
   Integrity of Records and Compliance with Accounting Principles.....................................20
   Disclosure Policies and Controls...................................................................21
   Fair and Honest Dealing............................................................................21
   Bribery, Kickbacks and Other Improper Payments; Customer and Supplier Relations....................21
   Ethics & Compliance in the International Community.................................................24
   Supplemental Standards for Principal Executive Officer, Principal Financial Officer and other
       Senior Financial Officers .....................................................................25
       Reporting Any Illegal or Unethical Behavior....................................................26
       Compliance Reminders...........................................................................26
       Certificate of Adoption of the Code............................................................27
</TABLE>

EXHIBIT A: ACKNOWLEDGEMENT FORM
EXHIBIT B: CONFLICT OF INTEREST DISCLOSURE STATEMENT
EXHIBIT C: CONTACTS AND PHONE NUMBERS
EXHIBIT D: SENIOR FINANCIAL OFFICERS' CODE OF ETHICS

    This Code is not intended to create, nor does it create, any contractual
                         rights related to employment.

                                      -i-

<PAGE>

                                     PURPOSE

         Dear employees, officers and directors ("team members") of CTI
Molecular Imaging, Inc. (the "Company"):

         The Company encourages you to conduct yourself everyday in a way that
helps us maintain an outstanding reputation in the communities we serve. You
already are excellent stewards for the Company. This Code of Business Conduct
and Ethics (this "Code") puts into writing many of the behaviors that you
already display and the actions you are already taking. Nonetheless, a written
code is an important reference source for employees, officers and directors,
especially in situations where there is some question about how to determine
"the right thing to do." Additional guidance is provided in the Company's
standard operating procedures and guidelines accessible in our "Corporate
Information on Notes" workspace.

         If a law, local custom, business practice or policy that you encounter
conflicts with this Code, please contact the Code Administrator (as defined
below) prior to taking any action in order to obtain guidance on handling the
potential conflict.

         You should keep in mind these important considerations when reading
this Code:

         -        The Code should be applied both in letter and in spirit.

         -        This Code should be considered together with any applicable
                  laws and regulations, as well as any applicable company
                  policies and procedures.

         -        The Code applies to all of our employees, officers and
                  directors regardless of where they work or their positions in
                  the overall organization.

         -        It is the policy of the Company for anyone aware of any
                  possible violation of this Code or of any Company policy or
                  legal requirement to report the possible violation. We will
                  not tolerate retaliation against anyone for such reporting.

         -        Anyone who does not comply with this Code, as well as with
                  other corporate policies and procedures, may be disciplined,
                  up to and including termination. Violations of the standards
                  outlined in this Code also could result in criminal penalties,
                  civil liabilities, or both. If you are in a situation that you
                  believe may violate or lead to a potential violation of this
                  Code, follow the guidelines provided elsewhere in this Code or
                  contact the Code Administrator.

         Integrity and a high standard of ethics are fundamental to our beliefs.
The Company is committed to doing what is right and deterring wrongdoing. In
dealings with our customers, suppliers and fellow employees, these principles
require that we:

                                      -1-

<PAGE>

         -        conduct ourselves in a forthright and honest manner

         -        are fair and considerate in all dealings

         -        maintain professional behavior in all relationships

         -        make only commitments we believe we can keep - and keep them

         -        respect the rights and dignity of all individuals

         -        obey the law

         The Company will take steps to communicate the provisions of this Code
and other company policies and procedures to its team members through periodic
training programs and the dissemination of other information. Your commitment to
this Code is required. If you have questions about this Code or the proper
course of action to take in a particular situation, ask your immediate
supervisor or the Code Administrator for direction. We may modify the Code from
time to time, so please be alert to notices relating to changes.

OUR MISSION

         The Company exists to advance the quality of life of our customers,
team members and stockholders through technology, creativity and innovation.

         We place high value on market understanding, customer satisfaction, the
individual and the team, continuous improvement, creativity, technological
strength and depth, and high integrity.

         To ensure that our mission becomes part of our everyday existence, and
part of our culture, the Company's business, financial and human resources
strategies are designed to support it. We continually evaluate and modify these
strategies to ensure they support our mission. The various processes, practices
and programs within the Company are founded on these strategies.

OUR APPROACH

         We expect our team members to adhere to a high standard of ethics and
to comply with all laws and regulations that govern our businesses. Our aim is
to promote an atmosphere in which ethical behavior is well recognized as a
priority and practiced and to treat fairly all persons regardless of such
factors as race, religion, gender, disability, age, or national origin.

         The guidelines and standards in this Code are grouped under section
headings that emphasize the fundamental and overriding principles that should
guide our behavior. We should act in a manner that will serve the best interests
of the Company and its stockholders; that will preserve confidential
information; and that will avoid conflicts of interest or the appearance of
conflicts of interest.

         This Code cannot provide rules to cover every circumstance. Answers to
questions involving ethical considerations are often neither easy nor clear-cut.
If you have a question about a particular situation, discuss it with your
manager or, if further

                                      -2-

<PAGE>

clarification is needed, the Code Administrator should be notified. Our General
Counsel is the Code Administrator. A process for resolving questions or issues
that may arise under the Code is provided in the sections below entitled
"Reporting Violations," and "Compliance Reminders."

SERVE THE COMPANY'S BEST INTERESTS

         We seek to obtain and preserve the trust and confidence of our
customers, vendors, and team members. In order to do so, complete honesty and
fairness is required in conducting our internal and external business. This
requires that team members provide accurate and complete information in dealings
with vendors, customers and other company team members. In cases involving
sensitive and/or proprietary information, team members must not discuss the
information except on a "need to know" basis. (See "Standards of Conduct and
Ethics for Employees, Officers and Directors--Confidential and Proprietary
Information" below.) The products and services of the Company should be
presented accurately and fairly. Any practice, no matter how long-standing or
widespread, that involves conveying inaccurate or incomplete information in
dealings with others is not acceptable. A copy of this Code should be provided
to the Company's agents, representatives and consultants so they are aware of
the ethical and business standards that are expected of persons acting on behalf
of the Company.

         As a team member of the Company, you are expected:

         -        To be knowledgeable about the requirements of your position
                  including the Company's expectations and governmental rules
                  and regulations that apply to your position;

         -        To conduct all aspects of the Company's business in an ethical
                  and legal manner and in accordance with federal laws and
                  regulations and the laws and regulations of all localities and
                  states where the Company does business;

         -        To comply with the Company's guidelines, polices, and
                  procedures, including this Code; and

         -        To assist co-workers in their professional development and to
                  support them in following the Code.

         You are expected to exercise good judgment and common sense in your
decision-making and your dealings with others. Commitments should be made only
if they can be met realistically. The services of others, such as suppliers,
attorneys, or consultants, should be chosen based on the quality of service and
competitiveness of price.

         If you become aware of actual or potential problems in any area of the
Company's services or operations or in its business relationships with vendors,
you should inform the Code Administrator. Also, when the applicability and
interpretation of laws, regulations or policy is unclear, seek advice from the
Code Administrator.

                                      -3-

<PAGE>

PRINCIPAL EXECUTIVE AND FINANCIAL OFFICERS AND OTHER SENIOR FINANCIAL OFFICERS

         This Code contains additional standards of conduct for the Company's
principal executive officer, principal financial officer, other Senior
Leadership Team members, controller and certain other senior financial, policy
making and accounting executives. These can be found under the section entitled
"Supplemental Standards for Principal Executive Officer, Principal Financial
Officer and Other Senior Financial Officers."

                              REPORTING VIOLATIONS

         It is the policy of the Company that anyone aware of a possible
violation of this Code, or any other Company policy or legal requirement, report
that possible violation to the Company. There are several options available to
you if you need to make a report:

         YOU CAN SPEAK WITH YOUR SUPERVISOR. We encourage you first to contact
your immediate supervisor, who is in turn responsible for informing the Code
Administrator of any concerns raised.

         YOU CAN SPEAK DIRECTLY WITH THE CODE ADMINISTRATOR. If you prefer not
to discuss a concern with your own supervisor, you may instead contact the Code
Administrator directly at (865) 218-3830. You are also free to e-mail the Code
Administrator at nick.mccall@ctimi.com.

         YOU CAN CALL OUR COMPLIANCE LINE. You may also call the Company's
Compliance Line at 1-800-___ - ____. You can use the Compliance Line to report
possible violations or to check on the status of a previously filed report. You
can also report to the Compliance Line if you feel that a report previously made
to company management, your supervisor, other management personnel or the Code
Administrator has not been addressed.

         The Compliance Line is administered by an outside vendor. The telephone
operators for the Compliance Line have been trained to receive your call. The
Compliance Line is available 24 hours a day, seven days a week. All calls will
be answered by a live person. Calls are not recorded and are not able to be
traced. You have the option to remain anonymous. If you remain anonymous, you
will be given a numeric code so that you may call back and ask for follow up.
You will be guided through the call and prompted by appropriate questions from
the operator. You will be given a date on which you can call back and receive a
follow up report. Once the call is completed, a report will be generated and
sent to the Code Administrator. You are urged to call back for follow up,
because in the event more information is required, this will be an opportunity
for you to provide those details.

                                      -4-

<PAGE>

         If you report a possible violation, regardless of the method that you
use to make the report, it is important that you provide as much detail as
possible, including names, dates, times, locations and the specific conduct in
question. Only with sufficient specific information can the Company adequately
investigate the reported action.

         Your submission of information will be treated in a confidential manner
to the extent reasonably possible. Please note, however, that if an
investigation by the Company of the activities you have reported takes place, it
may be impossible for the Company to maintain the confidentiality of the fact of
the report or the information reported.

                              OUR OBLIGATION TO YOU

         The Company is committed to providing a workplace conducive to open
discussion of its business practices. It is the policy of the Company for anyone
aware of any possible violation of this Code or of any of our policies and
procedures or any legal requirement to report the possible violation. We will
not tolerate retaliation against anyone for such reporting. It is also our
policy to comply with all laws that protect employees against unlawful
discrimination or retaliation by anyone at the Company as a result of their
lawfully and truthfully reporting information regarding, or their participating
in, investigations involving allegations of corporate fraud or other violations
by the Company or its agents of federal or state law.

         Of course, reports based upon evidence that the employee knows to be
false and reports that the employee knows, or reasonably should know, to be
groundless are not appropriate and the Company reserves the right to take
appropriate disciplinary action with respect to such reports. In addition,
except to the extent required by law, this policy does not cover an employee who
violates the confidentiality of any applicable lawyer-client privilege to which
the Company or its agents may be entitled, or who violates his or her
confidentiality obligations with regard to the Company's trade secrets or other
confidential information. If you have any questions as to what information may
be confidential or as to what your obligations may be with respect to particular
information, you should contact the Code Administrator.

         If you believe that you have been subjected to any action that violates
this policy, you may file a complaint with your supervisor or the Code
Administrator. If it is determined that you have experienced any improper
employment action in violation of this policy, corrective action will be taken.

                                      -5-

<PAGE>

                   CODE ADMINISTRATOR AND COMPLIANCE COMMITTEE

         As part of the Company's commitment to conducting its business
ethically, the Board of Directors has appointed a Code Administrator and created
a management committee to help administer and implement the Code (the
"Compliance Committee"). The Code Administrator serves as chair of the
Compliance Committee and will handle the Company's day-to-day compliance
matters. The Code Administrator and Compliance Committee have overall
responsibility to:

         -        Receive, collect, review, process, investigate and resolve
                  concerns and reports by employees and others on the matters
                  described in the Code;

         -        Work with legal counsel from time to time to review the Code
                  in connection with current federal, state and local laws;

         -        Recommend to the Audit Committee of the Board of Directors any
                  updates to the Code deemed necessary;

         -        Present to the Company's Disclosure Committee, on a periodic
                  basis, either a copy or summary of each report received
                  regarding the Company's accounting, auditing, and internal
                  auditing controls or disclosure practices;

         -        Present directly to the Audit Committee of the Board of
                  Directors on a quarterly basis, unless immediate attention by
                  the Audit Committee as warranted, a copy of each report
                  received regarding the Company's accounting, auditing, and
                  internal auditing controls or disclosure practices;

         -        Coordinate with Human Resources the establishment of programs
                  to educate all team members about the Code and compliance
                  issues;

         -        Provide guidance on the meaning and application of the Code;

         -        Communicate with independent contractors and agents about the
                  Code, as necessary;

         -        Monitor and audit compliance with the Code; and

         -        Report periodically to management and the Audit Committee of
                  the Board of Directors on implementation and effectiveness of
                  the Code and other compliance matters.

                                      -6-

<PAGE>

                         INVESTIGATIONS AND ENFORCEMENT

         Reports of possible violations of the Code will be collected, reviewed
and processed by the Code Administrator. The Code Administrator may refer
reports submitted, as he or she determines to be appropriate or as required
under the directives of the Board of Directors to the Board or an appropriate
committee of the Board. Any reports submitted that involve the Company's
accounting, auditing and internal auditing controls and disclosure practices
will be presented directly to the Audit Committee of the Board of Directors on a
periodic basis, unless immediate attention by the Audit Committee is warranted.

         Reports of possible violations of the Code will be investigated by the
Company and, if a violation of the Code is substantiated, disciplinary action
will be taken, where necessary, including appropriate sanctions for the
individual(s) involved, up to and including termination of employment. Any
executive officer or director believed to have participated in a possible
violation shall not be permitted to participate in any investigation or
recommendation for disciplinary action or sanctions.

         Violations of the Code that may also constitute illegal conduct shall
be addressed, which may include making a report to civil or criminal authorities
for further action. In addition, the Company may, under certain circumstances,
be required to disclose violations of the Code to the stockholders of the
Company.

         The Company may also from time to time conduct reviews to assess
compliance with the Code.

                         YOUR OBLIGATION TO THE COMPANY

         The following information outlines standards of conduct and ethics of
the Company and its subsidiaries and affiliates. One person's misconduct can
damage the Company's hard-earned reputation and compromise the public's trust in
the Company. Every team member of the Company should become familiar with this
Code.

         If you have a question about a topic covered in this Code or a concern
regarding any conduct, please speak with your supervisor or with the Code
Administrator.

                                      -7-

<PAGE>

         As a team member of the Company, you have the following compliance
obligations under the Code:

         -        To read and comply with the Code. It is also your
                  responsibility to comply with the law and behave in an ethical
                  manner.

         -        To ensure that any required disclosures are made and approvals
                  and exceptions are obtained through the process outlined in
                  this section.

         -        To understand the Code and to get clarification if you are
                  unsure about its application in a specific situation. This
                  Code cannot anticipate every possible situation or cover every
                  topic in detail. From time to time, we may establish special
                  policies to address specific subjects. If you are unclear
                  about a situation, stop and ask for guidance from your
                  supervisor or the Code Administrator before taking action. If
                  you are uncomfortable speaking with any of these people or you
                  wish to remain anonymous, you may call the Compliance Line at
                  1-800-__--____ (your call is free and will be protected on the
                  basis of strict anonymity).

         -        To help ensure that our company complies with all applicable
                  laws and regulations. Failure to obey laws and regulations
                  violates this Code and may expose both you and the Company to
                  criminal or civil sanctions. Any violation of this Code or
                  other corporate policies may result in disciplinary action, up
                  to and including termination. The Company may also seek civil
                  remedies from you and even refer criminal misconduct to law
                  enforcement agencies.

         -        To report possible violations of this Code or any illegal or
                  unethical behavior to the Code Administrator.

         -        On the Company's request, to confirm in writing, using the
                  form attached hereto as Exhibit A, that you have received and
                  read a copy of the Code and that you are in compliance with
                  its provisions.

                       DISCLOSURE, AMENDMENTS AND WAIVERS

DISCLOSURE

         To the extent required by law or applicable NASDAQ standards, the
Company shall publicly (e.g., in its Annual Report on Form 10-K or on its
website) disclose this Code and its application to all of the Company's
directors, executive officers, senior financial officers and other employees.

                                      -8-

<PAGE>

AMENDMENTS

         This Code may only be amended by the Company's Board of Directors or a
duly authorized committee thereof. To the extent required by law, amendments to
the Code shall be disclosed publicly.

WAIVERS

         Any waiver of the Code for any of the Company's senior financial
officers, executive officers or directors may be made only by the Board of
Directors or a duly authorized committee thereof. To the extent required by law
or applicable NASDAQ standards , any such waivers for senior financial officers,
executive officers or directors shall be disclosed publicly.

                 STANDARDS OF CONDUCT AND ETHICS FOR EMPLOYEES,
                             OFFICERS AND DIRECTORS

                   COMPLIANCE WITH LAWS, RULES AND REGULATIONS

         The Company strives to ensure that all activity by or on behalf of the
Company is in compliance with applicable laws, rules and regulations. The
following standards are intended to provide guidance to team members to assist
them in their obligation to comply with applicable laws, rules and regulations.
These standards are neither exclusive nor complete. Additional corporate
policies and procedures are accessible in our "Corporate Information on Notes"
workspace, and others may be published to employees from time to time. Our team
members are required to comply with all applicable laws, rules and regulations,
whether or not specifically addressed in these policies. For additional
guidance, or if questions regarding the existence, interpretation or application
of any law, rule or regulation arise, please contact your supervisor or the Code
Administrator.

ANTITRUST LAWS

         All team members must comply with applicable antitrust and similar laws
that regulate competition in the countries in which we operate. Examples of
conduct prohibited by such laws include:

         -        agreements to fix prices, bid rigging, market allocation and
                  collusion (including price sharing) with competitors;

                                      -9-

<PAGE>

         -        boycotts, certain exclusive dealing arrangements and price
                  discrimination agreements; and

         -        unfair trade practices, including bribery, misappropriation of
                  trade secrets, deception, intimidation and similar unfair
                  practices.

HEALTH CARE LAWS

         The Company expects its team members to refrain from conduct that may
violate federal and state laws governing patient referrals, health care
financial relationships and participation in federal and state health care
benefit programs. The federal anti-kickback law prohibits any person or entity
from offering, paying, soliciting or receiving anything of value, directly or
indirectly, for the referral of patients covered by Medicare, Medicaid and other
federal and state health care benefit programs or the leasing, purchasing,
ordering or arranging for or recommending the lease, purchase or order of any
item, good, facility or service covered by these programs. There are many
similar state laws. These anti-kickback laws are broad and may apply to some of
our activities or our relationships with our customers or business partners.

ENVIRONMENTAL LAWS

         It is our policy to comply with all applicable environmental laws,
rules and regulations. Our team members will strive to utilize resources
appropriately and efficiently and dispose of waste in accordance with applicable
laws, rules and regulations.

DISCRIMINATION LAWS

         The diversity of the Company's employees is a tremendous asset. We
believe the fair and equitable treatment of employees, customers and suppliers
and other persons is critical to fulfilling our visions and goals. It is
therefore our policy to conduct the Company's business, and to recruit, hire,
train, promote, assign, transfer, layoff, recall and terminate employees,
without regard to the race, color, religion, gender, ethnic origin, sexual
orientation, age or disability of such person, or any other classification
protected by applicable law. It is our policy to recruit, hire, train, promote,
assign, transfer, layoff, recall and terminate employees based on their own
ability, achievement, experience and conduct and other legitimate business
reasons.

         The Company is proud of its work environment, and we will continually
take steps to maintain a pleasant work environment for all of our employees and
at all of our locations. It is our corporate policy that employees treat each
other with courtesy, consideration and professionalism. We will not tolerate
harassment of any employee by any other employee or supervisor for any reason.
In addition, harassment for any discriminatory reason, such as race, sex,
national origin, disability, sexual orientation, age or religion, is prohibited
by state and federal laws, which may subject the Company and/or the individual
harasser to liability for any such unlawful conduct. The Company prohibits not
only unlawful harassment, but also other unprofessional actions.

                                      -10-
<PAGE>

Accordingly, derogatory racial, ethnic, religious, age, sexual orientation,
sexual or other inappropriate remarks, slurs or jokes will not be tolerated.

         Employees should report allegations of harassment or discrimination
immediately upon their occurrence in accordance with the Company's Appropriate
Workplace Behavior Policy guidelines accessible in our "Corporate Information on
Notes" workspace. Reported allegations of harassment or discrimination will be
investigated in accordance with applicable laws and human resources policies.
Employees are expected to seek advice from the Code Administrator when
confronted with business decisions involving a risk of violation--or even the
potential appearance of violation--of these laws.

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 ("HIPAA")

         The Company's policy is to protect the privacy and confidentiality of
those individuals whose health care information may be identifiable within the
services supplied by the Company to its customers in conformance with applicable
law, including HIPAA. The Company and its employees, officers and directors will
strive to comply with all applicable HIPAA provisions that regulate the privacy,
security and electronic transmission of health information. The Company expects
its employees to use and disclose (or refrain from disclosing) protected health
information as proscribed by the federal government under HIPAA and related
regulations. It is also our policy to adhere to the established uniform
standards relating to data reporting, formatting, and coding that HIPAA "covered
entities" must use in conducting certain health care transactions. Questions
regarding the use and disclosure of protected health information may be directed
to the Company's Legal Department.

OTHER LAWS GOVERNING PRIVACY AND TRANSMISSION OF PERSONAL INFORMATION

         Certain other state and federal laws other than HIPAA govern the
collection, storage, dissemination, transfer, use, access to and confidentiality
of personal information and patient health information. Other countries also
have, or are developing, their own laws governing the collection, use, storage,
dissemination and transfer of personal information or patient data. These laws
can work to limit transfers of such data across borders and even among
affiliated entities in our group of companies. The Company and its team members
will comply with all provisions of these laws that relate to its business,
including the privacy, security and electronic transmission of health and other
personal information. The Company expects its team members to keep all such data
confidential and to protect, use and disclose information in the conduct of our
business only in compliance with these laws. The Company will consider and may
release personal information to third parties to comply with law or to protect
the rights, property or safety of the Company and its customers.

INSIDER TRADING

         The purchase or sale of the Company's securities while aware of
material nonpublic information about the Company, or the disclosure of material
nonpublic

                                     - 11 -
<PAGE>

information to others who then trade in the Company's securities, is prohibited
by the Company and by the federal securities laws. Our Board of Directors has
adopted an insider trading policy that applies to all directors, officers and
other employees. All team members should review the insider trading policy
carefully and follow the policies and procedures described therein. The failure
of a team member to comply with the Company's insider trading policy may subject
him or her to Company imposed sanctions, up to and including termination for
cause, whether or not the failure to comply results in a violation of law.

         THE USE OF NON-PUBLIC INFORMATION FOR PERSONAL FINANCIAL BENEFIT OR TO
"TIP" OTHERS WHO MIGHT MAKE AN INVESTMENT DECISION ON THE BASIS OF THIS
INFORMATION IS NOT ONLY UNETHICAL, BUT ALSO ILLEGAL.

         Refer to our Insider Trading Policy for all questions as to trading in
the Company's securities, insider trading, and related concerns. If you have
questions about the Company's insider trading policy, please contact the Code
Administrator.

POLITICAL PROCESS

         Employees, officers and directors shall comply with all laws, rules and
regulations governing campaign finance and lobbying activities and shall not
engage in any conduct that is intended to avoid the application of such laws to
activities undertaken on the Company's behalf. In addition, executive officers
shall monitor compliance with lobbyist registration and disclosure requirements
by all individuals who act on behalf of the Company.

                              CONFLICTS OF INTEREST

         A "conflict of interest" occurs when an individual's private interest
interferes in any way, or even appears to interfere, with the interests of the
Company as a whole. A conflict of interest situation can arise when an employee,
officer or director takes actions or has interests that may make it difficult to
perform his or her company work objectively and effectively. Conflicts of
interest also arise when an employee, officer or director, or a member of his or
her family, receives improper personal benefits as a result of his or her
position in the Company.

         Directors, officers and employees owe a duty of undivided and
unqualified loyalty to the Company and may not use their positions improperly to
profit personally or to assist others in profiting at the expense of the
Company. All team members are expected to regulate their activities so as to
avoid conflicts of interest. In addition, team members shall communicate to the
Code Administrator any material transaction or relationship that reasonably
could be expected to give rise to a conflict of interest.

         You are expected to devote your full time and attention to the
Company's interests during regular work hours and during any additional time
that is required.

                                     - 12 -
<PAGE>

While we recognize that involvement in civic and political activities is
beneficial to your personal growth and influence within your community and
profession, as well as to the Company, participation in outside activities must
not adversely affect your performance of your duties for the Company. Outside
activities that compete with the Company's business or present a conflict or
potential conflict of interest are not permitted

         While not all-inclusive, the following will serve as a guide to the
types of activities that might cause conflicts of interest:

OUTSIDE FINANCIAL INTERESTS

-        Ownership or other interest in or employment by any outside concern
         which does business with the Company. This does not apply to stock or
         other investments held in a publicly held company, provided that the
         stock and other investments do not, in the aggregate, exceed 5% of the
         outstanding ownership interests of such company. The Company may,
         following a review of the relevant facts, permit ownership interests
         which exceed these amounts if management or the Board of Directors, as
         appropriate, concludes such ownership interests will not adversely
         affect the Company's business interests or the judgment of the affected
         director, officer or employee.

-        Conducting business, not on behalf of the Company, with any the Company
         vendor, supplier, contractor, agency, or any of their directors,
         officers or employees.

-        Representation of the Company by a director, officer or employee in any
         transaction in which he or she, or a family member, has a substantial
         personal interest.

-        Disclosure or use of confidential, special or inside information of or
         about the Company, particularly for personal profit or advantage of the
         director, officer or employee, or a family member of such person.

-        Competition with the Company by a director, officer or employee,
         directly or indirectly, in the purchase, sale or ownership of property
         or services or business investment opportunities.

SERVICES FOR COMPETITORS/VENDORS

         Generally, it is aconflict of interest for a Company employee to work
simultaneously for a competitor, customer or supplier. Thus, no team member
shall perform work or render services for any competitor of the Company or for
any organization with which the Company does business or which seeks to do
business with the Company, outside of the normal course of his/her service or
employment with the Company, without the prior approval of the Code
Administrator (or the Audit Committee of the Board of Directors for our
executive officers, senior financial officers or directors).

                                     - 13 -
<PAGE>

No team member shall be a director, officer, or consultant of such an
organization, nor permit his/her name to be used in any fashion that would tend
to indicate a business connection with such organization without this prior
approval. THE ONLY EXCEPTION TO THIS SHALL BE AS TO ANY MEMBER OF THE BOARDS OF
DIRECTORS OF CTI MOLECULAR IMAGING, INC. OR OF CTI PET SYSTEMS, INC. WHO HAS
BEEN APPOINTED TO SUCH BOARDS BY SIEMENS MEDICAL SOLUTIONS USA, INC. ("SIEMENS")
PURSUANT TO OUR JOINT VENTURE AGREEMENT WITH SIEMENS.

         The best policy is to avoid any direct or indirect business connection
with our customers, suppliers or competitors, except on our behalf.

PARTICIPATION ON BOARDS OF DIRECTORS/TRUSTEES; POLITICAL ACTIVITIES

-        The Company encourages its employees to participate in religious,
         community, professional or charitable organizations and those within
         the industry that we serve. In order to avoid any conflict of interest,
         or appearance of a conflict, that could arise from service by an
         employee of the Company as a director or trustee of another
         organization, an employee must obtain prior approval from the Code
         Administrator before serving as a member of the board of directors or
         trustees of any business, industry or community organization. Approval,
         however, is not required to participate in a non-profit organization if
         the team member is not a director or trustee unless there is a
         potential conflict of interest between the organization and the
         Company. Participation shall not imply that the team member is serving
         at the direction or request of the Company.

-        The Company retains the right to prohibit membership by officers or
         employees on any board of directors or trustees where such membership
         might conflict with the best interests of the Company.

-        An officer or other employee must disclose all board of
         directors/trustees activities in his or her Conflict of Interest
         Disclosure Statement. A form Disclosure Statement is attached as
         Exhibit B to this Code of Conduct.

-        Participation shall not imply that the team member is serving at the
         direction or request of the Company.

-        Team members are encouraged to participate in political activities on
         their own time and in accordance with their individual desires and
         political preferences. However, it must be clear at all times that such
         participation is done as an individual and not as a representative of
         the Company. Before becoming a candidate or appointee to a public
         office, the team member must notify his/her manager or group leader and
         the Code Administrator.

                             CORPORATE OPPORTUNITIES

                                     - 14 -
<PAGE>

         Our team members owe a duty to the Company to advance its legitimate
interests when the opportunity to do so arises. Team members shall not take for
personal use (or for use by a family member) any business opportunity learned of
during the course of serving the Company, using the Company's property or as a
result of such individual's position with the Company. To the extent that a team
member learns of a business opportunity that is within the Company's existing or
proposed lines of business, the employee, officer or director should inform his
or her supervisor or the Code Administrator or the Board of Directors, as
appropriate, of the business opportunity and refrain from personally pursuing
the matter until such time as the Company decides to forego the business
opportunity. At no time may any team member utilize any of the Company's
property, information or position to generate personal gain or engage or
participate in any business that directly competes with the Company.

                   PROTECTION AND PROPER USE OF COMPANY ASSETS

         All team members shall strive to preserve and protect the Company's
assets and resources and to promote their efficient use. The standards set forth
below are intended to guide employees, officers and directors by articulating
the Company's expectations as they relate to activities or behaviors that may
affect the Company's assets.

PERSONAL USE OF CORPORATE ASSETS

         Theft, carelessness and waste have a direct impact on the Company's
profitability. Team members must not convert assets of the Company to personal
use. Company property should be used for the Company's legitimate business
purposes and the business of the Company shall be conducted in a manner designed
to further the Company's interest rather than the personal interest of an
individual team member. Our employees, officers and directors are prohibited
from the unauthorized use or taking of the Company's equipment, supplies,
materials or services. Prior to engaging in any activity on company time which
will result in remuneration to the team member or the use of the Company's
equipment, supplies, materials or services for personal or non-work related
purposes, officers and other employees shall obtain the approval of the
supervisor of the appropriate business unit and directors shall obtain the
approval of the Board of Directors.

USE OF COMPANY SOFTWARE

         Our employees use software programs for word processing, spreadsheets,
data management, and many other applications. Software products purchased by the
Company are covered by some form of licensing agreement that describes the
terms, conditions and allowed uses. It is the Company's policy to respect
copyright laws and observe the terms and conditions of any license agreements.
Copyright laws in the United States and other countries impose civil and
criminal penalties for illegal reproductions and use of licensed software. You
must be aware of the restrictions on the use of software and abide by those
restrictions.

                                     - 15 -
<PAGE>

COMPUTER RESOURCES/E-MAIL

         Our computer resources, which include the electronic mail system,
belong to the Company and not to the employee. They are not intended to be used
for amusement, solicitation, or other non-business purposes. While it is
recognized that employees will occasionally use the system for personal
communications, it is expected that such uses will be kept to a minimum and that
employees will be responsible and professional in their use of E-mail. The use
of the computer systems to make or forward derogatory or offensive remarks about
other people or groups is prohibited. E-mail messages should be treated as any
other written business communication. The Company's policies regarding its
electronic systems and communications are more fully described in the Electronic
and Telephone Communications System Policy.

                                WORK ENVIRONMENT

         The Company strives to provide a safe and healthy work environment for
all employees. Each team member has responsibility for maintaining a safe and
healthy workplace for all employees by following safety and health rules and
practices and by reporting accidents, injuries and unsafe equipment, practices
or conditions. Our EHS Program covers various standards we expect our employees
to follow with respect to maintaining a safe, productive and healthy work
environment.

         Violence and abusive and threatening behavior are not permitted. Team
members should report to work in condition to perform their duties, free from
the influence of alcohol or of illegal drugs. The use of illegal drugs in the
workplace will not be tolerated. The bringing of weapons of any type onto the
Company's property will likewise not be tolerated.

         SEE OUR APPROPRIATE WORKPLACE BEHAVIOR POLICY AVAILABLE IN THE
CORPORATE WORKSPACE FOR FURTHER GUIDANCE ON THESE MATTERS.

                    CONFIDENTIAL AND PROPRIETARY INFORMATION

CONFIDENTIALITY

          Confidential information includes all non-public information that
might be of use to competitors, or harmful to the Company or its customers, if
disclosed. It also includes information that suppliers and customers have
entrusted to us. All information (in any form, including electronic information)
that is created or used in support of corporate business activities is the
property of the Company. This information is a valuable asset and our team
members are expected to protect it from unauthorized disclosure. This includes
the Company's customer, supplier, business partner and employee data. Federal

                                     - 16 -
<PAGE>

and state law may restrict the use of such information and impose penalties for
impermissible use or disclosure.

         Our team members must not discuss confidential information with other
team members, except on a "need to know" basis. The obligation to preserve
confidential information continues even after employment ends.

         Team members are bound, during and after employment, by the CTI (or CPS
or PETNet, as the case may be) Guidelines for Protection of Confidential and
Proprietary Information form which obligates them to hold all confidential
information in confidence, to refrain from disclosing such information to any
person outside the Company without the Company's prior consent, and to refrain
from using confidential information for any purpose other than the performance
of their duties to the Company. Team members are also obligated to comply with
any disclosure obligations imposed on the Company in its agreements with third
parties.

         Information pertaining to the Company's competitive position or
business strategies and information relating to negotiations with employees or
third parties, should be protected and shared only with employees having a need
to know such information in order to perform their job responsibilities.

PATIENT/MEMBER INFORMATION

         All team members have an obligation to conduct themselves in accordance
with the principle of maintaining the confidentiality of patient and member
information, to the extent they have contact with such information, in
accordance with all applicable laws and regulations. Employees, officers and
directors shall refrain from revealing any personal or confidential information
concerning patients or members unless supported by legitimate business or
patient care purposes. If questions arise regarding an obligation to maintain
the confidentiality of information or the appropriateness of releasing
information, employees should seek guidance from the Code Administrator or Legal
Department.

INTELLECTUAL PROPERTY AND PROPRIETARY INFORMATION

         Our team members must carefully maintain and manage the intellectual
property rights of the Company to preserve and protect their value. Information,
ideas and intellectual property assets of the Company are important to the
Company's success. The obligation of all team members to protect the Company's
assets includes proprietary information and intellectual property such as trade
secrets, patents, trademarks, and copyrights, as well as business, marketing and
service plans, engineering and manufacturing ideas, designs, databases, records,
salary information and any unpublished financial data and reports. Unauthorized
use or distribution of this information would violate Company policy. It could
also be illegal and result in civil or even criminal penalties.

                                     - 17 -
<PAGE>

         Our name, logo, trademarks, inventions, processes and innovations are
intellectual property assets and their protection is vital to the success of the
Company's business. The Company's and any of its subsidiaries' names, logos and
other trademarks and service marks are to be used only for authorized company
business and never in connection with personal or other activities unless
appropriately approved and in accordance with company policy. In addition, our
employees, officers and directors must respect the intellectual property rights
of third parties. Violation of these rights can subject both you and the Company
to substantial liability, including criminal penalties.

     A basic definition of each of the common types of intellectual property
rights follows:

     A PATENT permits an investor to exclude others from making, using, offering
to sell, selling or importing products or services covered by the claims of the
patents. Report any unauthorized use of the Company's patents, and only use
products or services covered by the patent of a third party as authorized by the
terms of the license agreement that the Company has entered into with the third
party.

     TRADEMARKS and SERVICE MARKS are words, names, logos, and designs that help
consumers recognize the source of a product or service and distinguish it from
the source of products and services of competitors. Our name and logo are among
the Company's most valuable assets. The use of the Company's trademarks or
service marks by a third party must be properly authorized or licensed.
Conversely, the Company should be properly licensed or authorized to use a third
party trademark or service mark. Do not use a third party's trademark or service
mark without written permission.

     COPYRIGHTS protect works of authorship such as articles, drawings,
photographs, video, music, audiotapes and software. The owner of a valid
copyright enjoys many exclusive rights, including without limitation, the
exclusive rights to copy, perform, make derivative works and distribute the
works. Do not use, copy, distribute or store works of authorship without first
determining that the Company has obtained permission from the copyright holder
or that other limited copying is legally permitted.

     A TRADE SECRET is valuable non-public information, regardless of the form
of the information, that creates (i) a competitive advantage for the Company by
being kept secret and (ii) is the subject of efforts by Company reasonable under
the circumstances to maintain the secrecy of the information. Examples may
include information about customers, like their buying patterns and needs, and
financial, planning, marketing, and strategic information about the Company's
current and future business plans. Treat as trade secrets and keep confidential
all commercially sensitive and important business information of the Company and
all similar information of other companies and persons that the Company has
received under a confidentiality agreement. Follow all Company policies
regarding the treatment of sensitive information and follow all security
measures regarding the disclosure and distribution of sensitive information.

                                     - 18 -
<PAGE>

     Intellectual property that you create while employed by the Company belongs
to the Company. You must share any innovations or inventions you create with
your supervisor so that the Company can take steps to protect these valuable
assets.

RECORDS MANAGEMENT

         The Company requires honest and accurate recording and reporting of
information in order to make responsible business decisions. For example, only
the true and actual number of hours worked should be reported.

         Many officers and employees regularly use business expense accounts,
which must be documented and recorded accurately. If you are unsure whether a
certain expense is legitimate, ask your supervisor or your controller. Rules and
guidelines are available from the Accounting Department. Please also refer to
the Company's Signature and Contract Approval Guidelines found in the Corporate
Information workspace under "Finance."

         All of the Company's books, records, accounts and financial statements
must be maintained in reasonable detail, must appropriately reflect the
Company's transactions and must conform both to applicable legal requirements
and to the Company's system of internal controls. Unrecorded or "off the books"
funds or assets should not be maintained unless permitted by applicable law or
regulation.

         Business records and communications often become public, and we should
avoid exaggeration, derogatory remarks, guesswork, or inappropriate
characterizations of people and companies that can be misunderstood. This
applies equally to e-mail, internal memos and formal reports.

         Records should always be retained or destroyed according to the
Company's record retention policies. In accordance with those policies, in the
event of litigation or governmental investigation it is essential to follow the
advice of the Company's Law Department. Whenever litigation or an investigation
is pending or threatened, every potentially relevant document must be preserved
unless destruction has been approved by the Law Department.

PERSONNEL ACTIONS/DECISIONS

         Salary, benefit, medical and other personal information relating to
employees shall be treated as confidential. Personnel files, payroll
information, disciplinary matters, and similar information are to be maintained
in a manner designed to protect confidentiality in accordance with applicable
laws. Employees, officers and directors shall exercise due care to prevent the
release or sharing of information beyond those persons who may need such
information to fulfill their job function. Notwithstanding the foregoing, all
personnel information belongs solely to the Company and may be reviewed or used
by the Company as needed to conduct its business.

                                     - 19 -
<PAGE>

                              FRAUDULENT ACTIVITIES

         You must promptly report any activities that you believe may constitute
a violation of any law relating to securities fraud; mail fraud; bank, wire,
radio or television fraud; any rule or regulation of the Securities and Exchange
Commission; or any provision of law relating to fraud or deceptive practices
against stockholders. You must also promptly report any activities that you
believe constitute or will result in fraudulent reporting of the Company's
financial results.

                       INTEGRITY OF RECORDS AND COMPLIANCE
                           WITH ACCOUNTING PRINCIPLES

         The preparation and maintenance of accurate and reliable business
records is required by law and is of critical importance to the Company's
decision-making processes and to the proper discharge of our financial, legal,
and reporting obligations. All financial and other business records, including
expense accounts, purchase orders, requisitions, bills, payroll, reports to
government agencies, and other reports, books and records of the Company must be
prepared with care and honesty. False or misleading entries in such records are
unlawful and are not permitted.

         All corporate funds and assets must be recorded in accordance with
generally accepted accounting principles, consistently applied ("GAAP") and
applicable corporate procedures. No undisclosed or unrecorded corporate funds
shall be established for any purpose nor should the Company's funds be placed in
any personal or non-corporate account. No director, officer or employee,
whatever his or her position, is authorized to depart from the Company's policy
or to condone a departure by anyone else.

         The Company maintains a system of internal controls and procedures that
it believes provides reasonable assurance that transactions are executed in
accordance with management's authorization and properly recorded and that
financial records and reports are accurate and reliable. This system includes
written policies and procedures and examination by professional auditors. All
directors, officers and employees are expected to adhere to these procedures.

         Compliance with accounting and internal controls and procedures and
auditing procedures is required at all times. The Company expects for both the
letter and the spirit of internal controls and procedures to be strictly adhered
to at all times.

         A Note on "Side Letters": Members of the Company's sales force shall
not enter into any so-called "side letters" with customers or potential
customers of the Company. "Side letters" are defined as letters, amendments or
arrangements that alter fundamental terms--particularly the financial terms--of
sales contracts but which are intentionally not reported or disclosed to the
Company's senior officers and financial officers. Such letters directly and
negatively affect the Company's revenue recognition under GAAP, and no

                                     - 20 -
<PAGE>

side letter shall be entered into by any of the Company's employees with any
customer or potential customer of the Company. Any violation of this directive
will not be tolerated.

                        DISCLOSURE POLICIES AND CONTROLS

         The Company must disclose to the SEC and the NASDAQ Stock Market, its
stockholders and the investing public, information that is required to be
disclosed under the securities laws and also any information that may be
necessary to ensure the required disclosures are not misleading or inaccurate.
The Company requires you to participate in the disclosure process, which is
overseen by the Company's Disclosure Committee and the Company's chief executive
officer and chief financial officer.

         The disclosure process is designed to record, process, summarize and
report material information as required by all applicable laws, rules and
regulations. Participation in the disclosure process is a requirement of a
public company, and full cooperation and participation by all team members in
the disclosure process is a requirement of this Code.

                             FAIR AND HONEST DEALING

         We seek to outperform our competition fairly and honestly. We seek
competitive advantages through superior performance, never through unethical or
illegal business practices. Our team members shall deal fairly and honestly with
the Company's stockholders, customers, suppliers, competitors and employees.
Such individuals shall behave in an ethical manner and shall not take unfair
advantage of anyone through manipulation, concealment, abuse of privileged
information, misrepresentation of material facts, or any other unfair dealing or
practice. Stealing proprietary information, possessing trade secret information
that was obtained without the owner's consent, or inducing such disclosures by
past or present employees of other companies is prohibited.

                 BRIBERY, KICKBACKS AND OTHER IMPROPER PAYMENTS;
                         CUSTOMER AND SUPPLIER RELATIONS

GENERAL

         The Company and its employees, officers and directors must maintain
high ethical and professional standards in dealing with government officials and
members of the private sector. The Company's funds, property or services must
not be given, either directly or indirectly, to anyone in an improper effort to
obtain or retain business for the Company or to obtain special or unusual
treatment in connection with a business transaction.

                                     - 21 -
<PAGE>

SELLING TO CUSTOMERS

         The Company competes vigorously, but fairly. Do not misrepresent or
exaggerate our products, services or capabilities, even if fair and honest
representation means potentially losing a sale. If silence about a fact could
mislead a customer, disclose the information. Communicate clearly and precisely
so that customers understand the terms of contracts, including schedules,
prices, and responsibilities. Customers rely on our employees and on our
commitment to them.

CHOOSING SUPPLIERS

         Strive to build good working relationships with our suppliers. Choose
the services of others, such as suppliers or consultants, based on merit,
considering, among other things, competitiveness of price, the quality of
service, delivery capability, responsiveness and reputation for service and
integrity.

BUSINESS COURTESIES AND INDUCEMENTS

         Gifts, meals and entertainment are common courtesies intended to build
goodwill and sound working relationships among business professionals, not to
gain unfair advantage with customers. You may accept or offer meals and
entertainment from and to other business professionals if they are voluntarily
offered, for a legitimate business purpose, are reasonable, and do not
compromise (or could appear to compromise) your or their business judgment or
your or their ability to make objective and fair business decisions.

         It is improper for you or your family members to knowingly request,
accept or offer anything else that could be construed as an attempt to influence
your performance of duties or to favor a customer, supplier, or competitor
contrary to the best interests of the Company, including gifts, payments,
travel, honoraria, or other valuable benefits from any existing or potential
customer, supplier, or competitor. Loans of any sort are strictly prohibited.

         Team members are not authorized to provide or accept gifts (including
cash gifts), entertainment, payment, favors or anything of significant value
(defined as approximately $100 in value) from a customer, supplier, consultant
or other party seeking to conduct, or currently conducting business with, the
Company. The following items are not subject to the $100 limit:

         -        Gifts clearly given to the Company rather than to an
                  individual team member (i.e. a painting, a commemorative
                  plaque or sculpture, etc.);

         -        Gifts based on obvious family or personal relationships when
                  it is clear that the relationship, and not the Company's
                  business, is the basis for the gift; and

                                     - 22 -
<PAGE>

         -        Awards from civic, charitable, educational, or religious
                  organizations for recognition of service or accomplishment.

         No gift or entertainment should ever be offered, given, provided or
accepted by any team member or family member of an officer, employee or agent
unless it: (1) is not a cash gift; (2) is consistent with customary business
practices; (3) cannot be construed as a bribe or payoff; and (4) does not
violate any laws or regulations.

         In addition, gifts should not be given to government officials,
regardless of monetary value. See "Dealings with Government Agencies" below.

         NOTE: The gift-giving and acceptance guidelines noted above are based
on United States business practices and customs. For those conducting
international business transactions, all decisions should be made based on what
is in the best interest of the Company. As a rule, however, if a team member
receives a gift while conducting international business, the team member should
turn the gift over as soon as possible to the Company. Team members with any
doubt or questions on the propriety of a gift or its acceptance should contact
the Code Administrator.

         Sales-related commissions, rebates, discounts, credits and allowances
are often customary business inducements. Both givers and receivers of these
inducements must exercise strict care and caution to avoid illegal or unethical
payments and to maintain compliance with tax and anti-kickback or foreign
corrupt practices laws (see below), if applicable. Any such commissions or
credits given or received by the Company must be reasonable in value,
competitively justified, properly documented and made to the business entity
with which the original sales agreement was made or to which the original
invoice was issued. Such inducements should not be made to or received by
individual officers, employees or agents of the business entity, to an official
of any governmental entity (whether federal, state, local or municipal, and
whether domestic or international), or to another related business entity.
Although discouraged, some payments may be permitted but only if they are legal
and necessary, and if they follow established, well-recognized practice in the
area. Payments must be made only for administrative actions to which the Company
is clearly entitled and they should be approved in advance and recorded.

DEALINGS WITH GOVERNMENT AGENCIES

         Strict and special care must be taken when dealing with government
customers. Activities that might otherwise be appropriate when working with
private sector customers may be grossly improper and even illegal when dealing
with government employees, or when providing goods and services to another
customer who, in turn, will deliver the Company's product to a government end
user.

         Do not directly or indirectly give, promise, offer or make payment in
money or anything of value to anyone, including a government official, agent or
employee of a government, political party, labor organization or business entity
or a candidate of a

                                     - 23 -
<PAGE>

political party, or their families, with the intent to induce favorable business
treatment or to improperly affect business or government decisions. This policy
prohibits actions intended either to influence a specific decision or merely to
enhance future relationships. It is also inappropriate in certain circumstances
to discuss employment possibilities with government employees while doing
business with the government.

         In short, special care must be taken when dealing with government
customers. Contact the Code Administrator if you have questions concerning
compliance with these obligations.

               ETHICS & COMPLIANCE IN THE INTERNATIONAL COMMUNITY

         The Company is committed to maintaining high standards of business
conduct at home and abroad. The Company and its team members must comply with
all local laws of the countries in which the Company conducts business,
applicable international and intergovernmental regulations and U.S. laws that
apply to international activities and other applicable laws.

         If you conduct business for the Company outside of the U.S., in
addition to being familiar with the local laws of the other countries involved,
be sure you are familiar with the following U.S. laws and regulations.
Violations of these laws can result in substantial fines, imprisonment and
severe restrictions on the Company's ability to do business.

FOREIGN CORRUPT PRACTICES ACT

The Foreign Corrupt Practices Act (the "FCPA") has a variety of provisions that
regulate business in other countries and with foreign citizens. In essence, the
FCPA makes it a crime-- with sanctions of fines (potentially against both the
corporation involved and individual members of the corporation, be they
officers, directors, employees or agents involved) and imprisonment--to promise
or give anything of value to a foreign official or political party in order to
obtain or keep business or obtain any improper advantage. It is also illegal to
make payments or "gifts" to agents, sales representatives or other third parties
if you have reason to believe your transaction may or will be used illegally.
Seek advice from the Code Administrator for interpretation of the FCPA if you
are involved in any business dealings that involve foreign countries.

ANTI-BOYCOTT LAWS

         It is against the law to cooperate in any boycotts between foreign
countries not sanctioned by U.S. law. All requests for boycott support or
boycott-related information must be reported. Seek advice from the Code
Administrator for any questions concerning such boycotts and current countries
affected.

                                     - 24 -
<PAGE>

TREASURY EMBARGO SANCTIONS

         The U.S. Treasury Department's Office of Foreign Assets Control,
together with the U.S. State Department and the U.S. Commerce Department's
Bureau of Export Affairs, prohibits U.S. companies and their foreign
subsidiaries from doing business with certain countries and
organizations/agencies and certain individuals. The regulations vary depending
on the country and the type of transaction, and these rules often change as U.S.
foreign policy changes.

         If you are aware of any sensitive political issues with a country in
which the Company is doing or considering doing business, seek advice from the
Legal Department before engaging in a potential transaction. The potential civil
and criminal consequences range from fines and corporate debarment from federal
contracting to imprisonment.

EXPORT CONTROL RESTRICTION

         To prevent sensitive goods, technology and software from falling into
the wrong hands, exports of these products and technical information to certain
countries or individuals are restricted by the U.S State Department and the U.S.
Commerce Department's Bureau of Export Affairs. These restrictions may also
apply to transfers between the Company and its foreign subsidiaries.

         An "export" is broadly defined as any method of conveying data to
foreign individuals or companies, including sales, training and consulting,
product promotion and casual conversation, even if these activities occur in the
U.S. Because these control restrictions are designed to further U.S. foreign
policy and national security goals, they are subject to change. Obtain guidance
from the Code Administrator or the Legal Department to identify the applicable
rules before exporting such goods or technology. In addition to these specific
laws, be aware that U.S. antitrust laws and certain employment laws apply to our
international operations.

                 SUPPLEMENTAL STANDARDS FOR PRINCIPAL EXECUTIVE
             OFFICER, PRINCIPAL FINANCIAL OFFICER AND OTHER SENIOR
                               FINANCIAL OFFICERS

          The Board of Directors of the Company has established certain
supplemental ethical standards for the Company's principal executive officer,
principal financial officer, other Senior Leadership Team members, Controller,
and certain other senior officers with financial, policy-making and accounting
functions (the "Financial Officers"). The Financial Officers must comply with
these standards in addition to all of the other standards contained in this
Code. These standards are attached as Exhibit D to this Code.

                                     - 25 -
<PAGE>

                   REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR

         Employees are encouraged to talk to supervisors, managers or other
appropriate personnel about observed illegal or unethical behavior and when in
doubt about the best course of action in a particular situation. It is the
policy of the Company not to allow retaliation for reports of misconduct by
others made in good faith by employees. Employees are expected to cooperate in
internal investigations of misconduct.

                              COMPLIANCE REMINDERS

         The provisions of this Code apply to all team members of the Company
and its affiliated companies regardless of whether the team member is classified
as a full-time, part-time, or temporary.

         Violation of the Code is extremely serious misconduct for which the
Company reserves the right to impose discipline, up to and including
termination.

         We must all work to ensure prompt and consistent action against
violations of this Code. However, in some situations it is difficult to know
right from wrong. Since we cannot anticipate every situation that will arise, it
is important that we have a way to approach a new question or problem. These are
the steps to keep in mind:

         -        Make sure you have all the facts. In order to reach the right
                  solutions, we must be as fully informed as practicable, and as
                  soon as reasonably possible.

         -        Ask yourself: What specifically am I being asked to do? Does
                  it seem unethical or improper? This will enable you to focus
                  on the specific question you are faced with, and the
                  alternatives you have. Use your judgment and common sense; if
                  something seems unethical or improper, it probably is.

         -        Clarify your responsibility and role. In most situations,
                  there is shared responsibility. Are your colleagues informed?
                  It may help to get others involved and discuss the problem.

         -        Discuss the problem with your supervisor. This is the basic
                  guidance for all situations. In many cases, your supervisor
                  will be more knowledgeable

                                     - 26 -
<PAGE>

                  about the question and will appreciate being brought into the
                  decision-making process. Remember that it is your supervisor's
                  responsibility to help solve problems.

         -        Seek help from Company resources. In the rare case where it
                  may not be appropriate to discuss an issue with your
                  supervisor or where you do not feel comfortable approaching
                  your supervisor with your question, discuss it with a Human
                  Resources representative or the Code Administrator. If that
                  also is not appropriate, call (800) ____-______, the Company's
                  toll-free Ethics Hotline. If you prefer to write, address your
                  concerns to the Code Administrator.

         -        You may report ethical violations in confidence and without
                  fear of retaliation. If your situation requires that your
                  identity be kept secret, your anonymity will be protected. The
                  Company does not permit retaliation of any kind against
                  employees for good faith reports of ethical violations.

         -        Always "ask first, act later": If you are unsure of what to do
                  in any situation, seek guidance first, before you act.

                       CERTIFICATE OF ADOPTION OF THE CODE

         This Code of Business Conduct and Ethics was duly APPROVED AND ADOPTED
by the Board of Directors of the Company on the 9th day of December, 2003.

                                                      /s/ Jack H. McCall
                                                     ------------------------
                                                     Jack H. McCall, Jr.
                                                     Secretary

                                     - 27 -
<PAGE>

                                    EXHIBIT A
                              ACKNOWLEDGEMENT FORM

         I acknowledge receipt of a copy of the Company's Code of Business
Conduct and Ethics (the "Code"). I understand that this Code is not a contract,
is not intended to create, nor does it create, any contractual rights related to
employment on the Company. I further acknowledge that I have read the Code and
understand my responsibilities as a team member of the Company related to the
Code, and agree to abide by to the Code.

         I acknowledge and understand, as a team member of the Company, failure
to comply with the Code could result in disciplinary action up to and including
termination. In addition, I agree to report any misconduct/violations of the
Code to the Code Administrator.

         I understand and agree that if I have any future questions regarding
the Code, I should contact my manager or a Human Resources Representative. If
further clarification is needed, I understand and agree that I should contact
the Code Administrator.

Date:                                   Signed:
     ___________________                       _________________________________
                                                Team Member's Signature

                                               _________________________________
                                                Print Name

                                               _________________________________
                                                Company Representative Signature

                                     - 28 -
<PAGE>

                                    EXHIBIT B
                    CONFLICT OF INTEREST DISCLOSURE STATEMENT

         I, __________________________, disclose to the Board of Directors of
the Company that I serve either as an officer or as a member of the board of
trustees/board of directors of the following entities and receive as
remuneration for my services the amounts set forth below:

  Entity                             Title                          Compensation

____________________________            __________________________________
Date of Disclosure Statement            Print Name

                                        __________________________________
                                        Signature

         I further disclose that I, or a member of my family, holds a direct or
indirect ownership interest in assets or stock of the following entities that
sell products or services or have contracts with the Company:

                                                            Contact or Nature of
                                                           Relationship With the
Family Member        Entity     Nature and % Ownership            Company

___________________________             ____________________________________
Date of Disclosure Statement            Print Name

                                        ____________________________________
                                        Signature

<PAGE>

                                    EXHIBIT C
                           CONTACTS AND PHONE NUMBERS

<TABLE>
<S>                                                              <C>
Code Administrator (General Counsel's Office)...........         (865) 218-3830

Compliance Line.........................................         1-800-___-____

HR Director.............................................         (865) 218-2211
</TABLE>

    This Code is not intended to create, nor does it create, any contractual
                          rights related to employment.

<PAGE>

                                    EXHIBIT D
                    SENIOR FINANCIAL OFFICERS' CODE OF ETHICS

     The Board of Directors of (the "Company') has established the following
supplemental ethical standards for the Company's Chief Executive Officer,
Principal Financial Officer, [THE OTHER SENIOR LEADERSHIP TEAM MEMBERS,
CONTROLLER, GENERAL COUNSEL, VICE PRESIDENT OF SALES, CONTROLLER OF PETNET, AND
THE CONTROLLER OF CPS], all of whom have significant financial, policy-making or
accounting functions (the "Financial Officers"). The Financial Officers must
comply with these standards in addition to all of the other standards contained
in the Company's Code of Business Conduct and Ethics.

INTEGRITY AND ACCURACY OF PUBLIC DISCLOSURES

     The Financial Officers shall take all reasonable steps to provide full,
fair, accurate, timely and understandable disclosures in the reports and
documents that the Company files with or submits to the Securities and Exchange
Commission and in other public communications made by the Company. In the event
that a Financial Officer learns that any such report, document or communication
does not meet this standard and the deviation is material, then such officer
shall review and investigate such deviation, advise the Board of Directors or
the appropriate committee of the Board of Directors regarding the deviation and,
where necessary, revise the relevant report, document or communication.

ACCOUNTING TREATMENT

     Although a particular accounting treatment for one or more of the Company's
operations may be permitted under applicable accounting standards, the Financial
Officers shall not authorize or permit the use of such an accounting treatment
if the effect is to distort or conceal the Company's true financial condition.
The accounting standards and treatments utilized by the Company shall, in all
instances, be determined on an objective and uniform basis and without reference
to a single transaction or series of transactions and their impact on the
Company's financial results for a particular time period. Any new or novel
accounting treatment or standard that is to be utilized in the preparation of
the Company's financial statements shall be first discussed with the Audit
Committee of the Board of Directors, and the Company's independent auditors.

    This Code is not intended to create, nor does it create, any contractual
                          rights related to employment

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