License, Development And Oem Agreement

SPECTRA, INC. AND 3D SYSTEMS, INC.
LICENSE, DEVELOPMENT, AND OEM AGREEMENT


(Portions have been omitted and filed separately with the Commission in accordance with Rule 406 of the Securities Act of 1933, as amended, and the Registrant's request for confidential treatment.)


THIS Agreement (the "Agreement") is made as of this 31st day of March 1995 (the "Effective Date"), by and between Spectra, Inc. ("Spectra"), a corporation organized and existing under the laws of Delaware, with its principal offices at 68 C Etna Road, Hanover, New Hampshire 03755, and 3D Systems, Inc. ("Customer"), a corporation organized and existing under the laws of California, with its principal offices at 26081 Avenue Hall, Valencia CA 91355, Spectra and Customer being hereinafter referred to singly as a "Party" or collectively as the "Parties".


WHEREAS, Spectra develops and acquires patented technology in the field of hot melt ink jet printing and manufactures components and supplies for various printing applications;


WHEREAS, Customer develops and manufactures technologies and products in the field of Rapid Prototyping equipment, systems and materials and provides services related thereto:


WHEREAS, Spectra and Customer wish to work together to design and develop certain hot melt ink jet products with applications in the field of Rapid Prototyping;


WHEREAS, Customer has studied the technical feasibility of hot melt ink jet technology for application to Rapid Prototyping;


WHEREAS, the Parties now wish to commence development work with respect to such hot melt ink jet products according to the specific terms and conditions hereof:


NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises contained herein, the Parties hereto agree as follows:


1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings hereinafter set forth:


1.1. "Affiliate" shall mean any corporation or other business entity
controlled by, controlling or under common control with a Party
hereunder. For this purpose "control" shall mean direct or indirect
beneficial ownership of at least a fifty percent (50%) interest in
the income or stock of such corporation or other business or the
right to elect or appoint a majority of directors (or any other body
with similar authority) of such corporation or other business.


1.2. "Ancillary Hardware" means any hardware, other than Printheads, that
is part of a Print Engine, including but not limited to Build
Material reservoirs, pressure regulators, head drive electronics,
Build Material supply tubing, etc.


1.3 "Build Material" shall mean phase change inks which are used in
printing and from which objects are made and/or supported during
construction, by jetting such material from a Printhead, as specified
more fully in the Specifications.


1.4. "Confidential Information" of a Party means any and all information
of such Party and such Party's affiliates that is not generally known
by others with whom it competes or does business, or with whom


CONFIDENTIAL
it plans to compete or do business, and any and all information,
which, if disclosed, would assist in competition against that Party
or any of its Affiliates or the disclosure of which would otherwise
be adverse to the interests of that Party or any of its Affiliates;
provided, however, that in order to be Confidential Information such
information must be identified as "Confidential Information" in
writing at the time of disclosure or, if initially disclosed orally,
within thirty (30) days following the end of the month in which
initial oral disclosure occurs. Confidential Information includes
without limitation such information relating to (i) the development,
research, testing, manufacturing, marketing, sales, purchasing and
financial activities of each Party and its Affiliates, (ii) any
inventions, discoveries, developments, methods, processes,
compositions, works or concepts conceived, made, created, developed
or reduced to practice by either Party or its Affiliates that have
not yet been published or publicly disclosed by that Party or
affiliates, (iii) the costs, sources of supply, financial performance
and strategic plans of each Party and its Affiliates, (iv) the
identity and special needs of the customers, if any, of each Party
and its Affiliates, and (v) the people and organizations with whom
each Party and its Affiliates have business relationships and those
relationships. Confidential Information also includes comparable
information that either Party or any of its Affiliates has received
belonging to others or which was received by such Party or any of its
Affiliates with any understanding that it would not be disclosed.


1.5. "Control Electronics" shall mean the electronics which control the
functions of the ink jet system including but not limited to
Printheads, Build Materials supply and ink jet system maintenance.


1.6. "Customer Base Technology" shall mean any Technology developed or
acquired by Customer prior to October 3, 1994, whether patented or
unpatented, relating to hot melt ink jet printing, including any
know-how for practicing such inventions or such Technologies.


1.7. "Customer Market" shall mean the market for Rapid Prototyping and
such other markets as the Parties may agree to in writing in the
future.


1.8. "Customer Patents" shall mean all United States and foreign patents
embodying Customer Technology and owned by or licensed to Customer,
together with any divisions, continuations or continuations-in-part
thereof.


1.9. "Customer Program Technology" shall mean any Technology developed or
acquired by Customer under the Development Program and related to hot
melt ink jet printing, whether patented or unpatented, including any
know-how for practicing such Technology.


1.10. "Customer Technology" shall refer collectively to the Customer
Base Technology and the Customer Program Technology.


1.11. "Development Period" shall mean the period that commences on
October 3, 1994 and terminates upon completion or termination of
the Development Program.


1.12. "Development Program" shall mean (i) phase 1: the development
activities as described in the then current Schedule 2, which
shall include, among other things, the Specifications, together
with a detailed statement of the scope of the Work to be
conducted by Spectra that shall include a detailed schedule of
deliverables, including milestones for such Work, and the
payment schedule ("Payment Schedule") pursuant to which Customer
shall be obligated to pay certain development fees with respect
to the Development Program, (ii) phase 2: ongoing development of
Build Material during the Term hereof by both Parties, who shall
cooperate with each other in such development, at their own
expense and (iii) development by either party under this
agreement which is undertaken specifically for Rapid Prototyping
Products which embody Spectra Printheads.


1.13. "Hardware" means Print Engines, Printheads and Ancillary
Hardware supplied by Spectra to Customer.


1.14. "Ink Jet Printing" shall mean all uses of or applications for
jetting technology other than Rapid Prototyping.


1.15. "Joint Developments" shall mean any Technology jointly developed
by the Parties under the Development Program, but shall in no
case include any Program Technology.


1.16. "Print Engine" shall mean an electro-mechanical device built by
or for Customer incorporating a Printhead, a Transport and
Control Electronics, but excluding the image processor.


1.17. "Printhead" shall mean configurations of drop-on-demand ink
jets, including piezo electric arrays, Build Material reservoir
and driver electronics, as more specifically defined in the
Specifications.


1.18. "Printhead Assembly" shall mean a kit assembly containing at
least one Printhead.


1.19. "Program Technology" shall refer collectively to Customer
Program Technology, and Spectra Program Technology.


1.20. "Purchase Order" means any purchase order that Customer issues
to order Spectra Products from Spectra in accordance with this
Agreement.


1.21. "Purchase Year" shall mean a twelve month period beginning on
April 1, of each year and ending on March 31 of the following
year, except that the first Purchase Year shall begin on the
date hereof and end on March 31, 1996.


1.22. "Rapid Prototyping" shall mean fabrication of free-standing
three-dimensional objects layer by layer.


1.23. "Rapid Prototyping Products" shall mean Rapid Prototyping
equipment, systems, supplies, and software.


1.24. "Specifications" shall mean the functional and performance
specifications with respect to the Printhead and Build Material
as set forth in the Development Program attached as Schedule 1
hereto, together with all revisions and modified versions
thereof, including any modified Specifications.


1.25. "Spectra Patents" shall mean any United States or foreign patent
applications included in any Spectra Technology, together with
any divisions, continuations, or continuations-in-part thereof,
patents issuing thereon and reissues thereof, excluding any of
such patents or applications licensed to Spectra from
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.


1.26. "Spectra Products" shall mean Hardware and Build Materials
supplied by Spectra to Customer.


1.27. "Spectra Program Technology" shall mean any Technology developed
or acquired by Spectra under the Development Program, whether
patented or unpatented, including any know-how for practicing
such Technology, and excluding any Technology which is
specifically related to Printheads or to Build Materials (except
to the extent that such Technology relates to the use of
Printheads and/or Build Materials in ink jet printing).


1.28. "Spectra Technology" shall refer collectively to the Spectra
System Technology and the Spectra Program Technology.


1.29. "System Technology" shall mean Technology for Transports and
Control Electronics and specifically excluding any Technology
which is specially related to Printheads or to Build Materials
(except to the extent that such Technology relates to the use of
Printheads and/or Build Materials in ink jet printing) which
Spectra now or hereafter owns or has the right to license or
sublicense excluding Technology licensed to Spectra by
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION Patents of others which
Spectra has the right to sublicense (or grant immunity from
suit) as of the date of this Agreement include patents owned by
third parties excluding CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION to
the extent that Spectra has the right to grant sublicenses or
grant immunity from suit under such patents.


1.30. "Technology" shall mean information of any type, including
without limitation inventions, patents, copyrights, trade
secrets, know-how, specifications, software, simulations, test
results, drawings, designs, material formulations and
manufacturing processes.


1.31. "Transport" shall mean an electro-mechanical device including
Printhead mounting, ink or Build Material supply and motion
hardware.


1.32. "Work" shall mean the work to be performed by Spectra, with the
cooperation of the Customer, during the term hereof.


2. DEVELOPMENT PROGRAM.


2.1. During the Development Period, Spectra shall use all reasonable
commercial efforts to develop Build Materials (jointly with
Customer). To the extent requested by Customer, Spectra will make
changes to its Printheads and/or related equipment to adapt same for
Rapid Prototyping given that all such requests are subject to
Spectra's approval and funding will be negotiated in advance of any
work by Spectra. The Development Program shall be conducted at
Spectra's facilities in Hanover, New Hampshire; provided, however,
that Spectra personnel may from time to time meet with Customer as
mutually agreed upon by the Parties pursuant hereto. The parties
shall consult on an on-going, hands-on basis with respect to all
critical aspects of the Development Program including, without
limitation, making revisions, amendments and/or improvements to the
Specifications and the Development Program as may be reasonably
required from time to time.


2.2. BUILD MATERIAL.
--------------


2.2.1. During the Development Period, the Parties will cooperate
in developing Build Materials that are compatible with the
Print Engine. The goal is to develop Build Materials which


maximize the demand for and use of Customer's Rapid
Prototyping Products which incorporate Spectra Technology.
Accordingly, Customer shall have the primary responsibility
to propose formulations for and prepare new Build
Materials, and will provide samples thereof to Spectra for
testing with Printheads hereunder.


2.2.2. Customer shall provide samples of Build Materials to
Spectra in mutually agreed amounts of such material.
Customer shall seek, on a reasonable efforts basis, to
formulate Build Materials which are generally not
hazardous. Customer will list the components of each
sample and the desired characteristics of the end products
to be built using such Build Materials. If any proposed
Build Material has, or reasonably should be expected to
have, ratings under the National Fire Protection
Association's scales of greater than (I) "1" for Health,
(ii) "2" for Flammability, (iii) "1" for Reactivity. or
(iv) any special ratings (e.g., reacts with water, is an
oxidizer, etc.), Customer shall provide Spectra, in
advance, to the extent available, with any and all data in
Customer's possession relevant to properties of the Build
Material so that Spectra may make a good faith
determination if it can and is willing to accept and handle
such Build Materials.


2.2.3. Spectra shall exclusively use such samples for testing
under this Agreement and, if requested by Customer, shall
not attempt to chemically or otherwise analyze the
composition thereof unless Spectra is required to do so for
safety or disposal reasons. Spectra shall not make any of
the samples or the formulations available to any third
party without Customer's express prior written
authorization. The samples and all information with regard
thereto shall be governed by the confidentiality provisions
of Section 12 hereof. Spectra and Customer shall each
appoint a coordinator to routinely discuss testing and
handling of Build Materials. Prior to offering Build
Materials for sale commercially, Customer shall, at its own
expense, obtain any safety tests which the Customer deems
appropriate for the intended use. Spectra is not
responsible for the safety and health of Build Materials
shipped to customers of Customer.


2.2.4. Spectra agrees to provide good faith efforts in
codevelopment of Build Materials. In the first two years
of this Agreement, Spectra's obligation relative to
codevelopment of Build Materials shall be to dedicate at
least CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION personyears of
effort (wherein a personyear is defined as one person
working nominally forty hours per week for one calendar
year along with supplies and equipment necessary to support
that person's work) per calendar year. Each personyear of
effort may be comprised by the partial time commitment of


several individuals of professional and technical caliber
including chemists, engineers, and technicians, but not
including ancillary efforts such as secretarial and
clerical. In the third and subsequent years of this
agreement, Spectra's obligation will be negotiated in good
faith between Spectra and Customer, but in no event shall
fall below CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
personyears unless Spectra's total revenue from Build
Materials under this Agreement was below CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION in the previous year.


2.2.5. Except as otherwise agreed in writing, each Party shall
bear its own expenses with respect to their activities
under Sections 2.1 and 2.2.


2.3. DEVELOPMENT FEES. In consideration of Spectra's performing the Work
under phase 1 of the Development Program, Customer shall pay Spectra
certain development fees (the "Development Fees") in the amounts set
forth in the Payment Schedule included on Schedule 2 hereof, and upon
Customer's acceptance of Deliverables set forth therein. Such
acceptance will not be unreasonably withheld.


2.4. ENGINEERING MODIFICATIONS TO PRINTHEADS AND RELATED EQUIPMENT may be
requested of Spectra by Customer from time to time during the
Development Program in order to provide increased functionality for
Rapid Prototyping, in which event the Parties shall negotiate in good
faith payment, completion, and other terms. Rights with respect to
resulting Technology shall be governed by Section 5.


3. DELIVERABLES AND DELIVERY.
-------------------------
Spectra agrees to use all commercially reasonably efforts to deliver to
Customer the deliverables set forth in Schedule 2 hereto (the
"Deliverables"). Spectra shall deliver such Deliverables F.O.B.
Spectra's Hanover, New Hampshire facilities.


4. EXCHANGE OF LICENSE AND OTHER RIGHTS BY SPECTRA AND CUSTOMER.
------------------------------------------------------------


4.1. LICENSE OF PROGRAM TECHNOLOGY. Subject to the terms hereof:
-----------------------------
4.1.1. Spectra hereby grants to Customer, the worldwide,
exclusive, paid-up, right and license for the field of
Rapid Prototyping under the Spectra Program Technology and
Joint Developments, and


4.1.2. Customer hereby grants to Spectra the worldwide, exclusive,
paid-up, right and license under the Customer Program
Technology and Joint Developments for the field of Ink Jet
Printing.


4.2. LICENSE OF SYSTEM TECHNOLOGY.
----------------------------
Subject to the terms hereof, Customer is granted a worldwide,


exclusive right and license, with a right to sublicense under the
Spectra System Technology to make or contract to have made, use,
lease, sell, import or export Rapid Prototyping Products
incorporating Spectra supplied Printheads (and/or Printheads
manufactured under the back-up manufactured rights as specified in
Section 6.2.5).


4.3. SUBLICENSE AND IMMUNITY UNDER THIRD PARTY RIGHTS
------------------------------------------------
Subject to full payment of royalties and fees defined in 4.4, Spectra
hereby grants an immunity from suit under the patents set forth in
Schedule 4 and represents and warrants that CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION and CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION will not assert against
Customer any of their respective patents that are licensed to
Spectra, in each case only with regard to any Rapid Prototyping
Products made by or for Customer which incorporate Spectra supplied
Printheads. Promptly following the execution of this Agreement,
Spectra shall compile a list of such patents that is as complete as
reasonably possible, based upon information known and reasonably
available to Spectra, and deliver a copy of such list to Customer
(which shall be appended hereto as Schedule 4).


4.4. Section 4.3 is subject to the following terms and conditions:


4.4.1. The obligation to pay royalties CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, their manufacture or their use in
Rapid Prototyping Products.


4.4.2. Customer must make the following payments of one-time fees
(if applicable) and running royalties as follows:


4.4.2.1. Subject to Sections 4.4.2.4, one-time fees are payable
when Printhead purchases and binding commitments to
purchase by Customer from Spectra first fall within
the following levels in a twelve month period ending
each March 31:


VOLUME ONE-TIME FEES
------ -------------


CONFIDENTIAL CONFIDENTIAL
INFORMATION INFORMATION
OMITTED AND OMITTED AND FILED
FILED SEPARATELY SEPARATELY WITH
WITH THE THE SECURITIES
SECURITIES AND AND EXCHANGE
EXCHANGE COMMISSION
COMMISSION


4.4.2.1.1. These fees relate to all Customer products
incorporating Spectra Printheads. The
cumulative total payment paid under Section


4.4.2.1 by Customer shall not exceed
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION during the lifetime of this
Agreement (including any extensions,
renewals, or replacements thereof).


4.4.2.2. Subject to Section 4.4.2.4, running royalties of
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION of
Customer's net selling price of Print Engines to
dealers are due and payable 30 days after each
calendar quarter for sales by Customer during said
calendar quarter of Rapid Prototyping equipment and
systems incorporating Spectra supplied Printheads, or
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION of the
selling price of Customer OEM Print Engines exclusive
of power supplies and covers.


4.4.2.3. Customer will provide Spectra with a written report,
no later than thirty (30) days following the end of
each calendar quarter, describing for such calendar
quarter the number and type of Customer Product sold,
leased or otherwise disposed of, together with a
detailed royalty calculation sufficient to establish
a statement of royalties due under Spectra's
agreements with parties identified in Section 4.3.
Customer will pay any royalties due together with such
report.


4.4.2.4. When Customer purchases Print Engines from Spectra for
resale into Customer's Markets, Customer shall not be
required to pay fees or royalties in respect thereof
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