CRYSTAL PRODUCTION AND TECHNOLOGY TRANSFER AGREEMENT

This CRYSTAL PRODUCTION AND TECHNOLOGY TRANSFER AGREEMENT is made and entered into as of the first day of April, 1999, by and between CTI, INC., a Tennessee corporation, 810 Innovation Drive, Knoxville, Tennessee 37932, U.S.A. (hereinafter referred to as "CTI"), and CRYSTAL PHOTONICS, INC., a Florida corporation, 2729 N. Financial Court, Sanford, Florida 32773, U.S.A. (hereinafter referred to as "CPI").

RECITALS

CTI is engaged in research and development, manufacture and sale of positron emission tomography (hereinafter referred to as "PET") technologies, and other technologies including detector technologies. CTI is licensed by Schlumberger Technology Corporation for the worldwide exclusive right to manufacture and sell Lu (2) SiO (5): Ce single crystals (hereinafter referred to as "LSO") which can be used in such applications as gamma-ray detection for PET and other detector technologies. CPI engages in research and development, production, and sale of single crystals which can be used for various applications. CTI desires to engage CPI to produce LSO for the use by CTI on the terms and conditions set forth below.

AGREEMENTS:

IN CONSIDERATION OF the forgoing premises, and the mutual terms, covenants and conditions contained herein, CTI and CPI mutually agree as follows:

1. Production Facility.

a. CPI agrees to dedicate at least fifteen (15) and up to twenty five (25) high temperature furnace systems for LSO crystal growth by* technique for CTI within the next 24 months starting July 1999. Such furnaces must be sufficient for the growth of LSO crystals which meet the single crystal specifications set forth in Exhibit A attached hereto.

b. CTI agrees by initiating this contract commitment and by agreeing to enter into an annual purchase contract for LSO to assist CPI in financing construction of these new furnaces including power back-up systems and the necessary Iridium crucibles, rods and lids located at the CPI facility for growth of LSO crystals.

c. The CPI crystal production facility will include trained staff of engineers and technicians as necessary to keep all the furnaces in continuous operation and to produce LSO crystals meeting the specifications in Exhibit A.

d. CPI may use the furnaces described above dedicated to CTI for * purposes when they are not being utilized for CTI purposes. CPI agrees to immediately return the furnace systems to the dedicated use of CTI upon the request of CTI.

2. Raw Materials; Production of Crystals:

a. CTI will supply to CPI all the 99.99% pure Lu (2) O (3) for LSO crystal growth by CPI for use by CTI. CPI will promptly utilize the furnaces dedicated to production for CTI to timely produce LSO crystals for CTI which meet the specifications set forth in Exhibit A, and promptly deliver such crystals to CTI.

b. CPI represents and warrants to CTI that LSO crystals supplied to CTI hereunder will be produced to the highest quality standard of its technology limit, and free from defect in material and workmanship. It will comply with the specifications set forth in Exhibit A.

c. CPI will produce LSO crystals continuously based on an open-end purchase order from CTI specifying the size, quantity and required delivery date. CTI shall supply the raw Lutetium material to CPI in a timely manner.

d. CPI will account for all the 99.99% Lu (2) O (3) supplied by CTI in terms of mass balance of Lu (2) O (3) by written record in form of Exhibit B attached hereto, or other mutually agreeable written record.

e. CPI will return to CTI upon request in a timely manner all LSO scrap for recovery of 99.99% Lu (2) O (3). CTT will allow reasonable amount of loss of Lu (2) O (3) due to loading, crucible cleaning, slab and block fabrication and finally accidental leakage or other unintentional loss such as massive power failure or other natural disasters.

f. CTI will provide to CPI the result of measurements and analyses of the crystal quality for CPI's quality control program.

g. CPI will assist CTI to improve the LSO crystal production at CTI's Knoxville, Tennessee facility and to provide suggestions to reduce the cost of manufacture of LSO crystals in accordance with the licensing agreement set forth in section 5. b.

h. CPI and CTI will work together for the duration of this contract to increase light yield and reduce the cost of growing LSO crystals. This technical cooperation will take place at CPI's facility and CTI's facility where personnel from CPI and CTI will be allowed to observe all the processes and equipment used for LSO production at both facilities. Within thirty (30) days after the execution of this contract, CPI will make its best effort to send technical personnel at CTI's expense to CTI's growth-facility to monitor and to modify the LSO growth process in order to increase both the crystal yield and light output of LSO crystals to a level comparable to that of CPI. CTI will make any necessary changes to the CTI crystal growth stations that will cause the CPI and CTI growth stations to be near identical.

3. Purchase Requirements.

a. Provided that CPI can meet the quality standard set forth on Exhibit A and that CPI's LSO manufacturing cost does not exceed CPI's LSO manufacturing cost by more than* (*) percent, CTI will during the term of this Agreement, purchase from CPI (*) or more of CTI's need for PET and other detectors production, up to a maximum required amount not to exceed the amount of crystals produced by a maximum of twenty-five (25) furnace systems at CPI's facility. In the case CPI's cost exceeds CTI's by more than*%, CPI's will have the right to audit CTI's cost.

b. As long as CPI can meet the contract requirement of crystal quality, delivery schedule and cost, and CTI has need for LSO, CTI shall not unilaterally reduce or terminate the purchase of LSO crystals from CPI without parallel reduction in production of LSO at CTI's Knoxville facility. CTI will have the right to accept any and all of the LSO crystals grown at the CPI facility exceeds the production set forth in 3. c. The production parity is defined as equal number of crystal pullers used at each facility. If CTI unilaterally reduces or terminates the purchase of LSO crystals from CPI without comparable reduction at CTI, CTI shall compensate CPI for the loss of net income based on the production capacity at CPI's facility for the balance of the contract term.

c. If CPI produces LSO crystals hereunder satisfactorily and increases the number of furnace systems beyond the maximum of twenty-five (25) provided for in Section 3. a. above, CTI will negotiate with CPI in good faith towards an agreement to increase the percentage of CTI's crystal requirements to be provided by CPI:

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