Development & Sales Agreement

Exhibit 10.6


AMENDMENT I
DEVELOPMENT AND SALES AGREEMENT
BY AND BETWEEN SPECTRA SCIENCE CORPORATION AND COMTEC INFORMATION SYSTEMS,
INC.


This amendment dated December 12, 2000 amends the agreement made November 1, 1999.


Spectra and Comtec mutually agree that: 1) the dates specified in the original agreement will be changed to the best
efforts dates as follows:


In paragraph 2.1, [***] will be amended to [***].(Delivery of 5 rev D
units)


In paragraph 2.1, [***] will be changed to [***].(Complete Project
Dev. Program)


In paragraph 2.2 (a), [***] will be changed to [***] (Delivery of 3
rev C units with chargers).


In paragraph 4.2, [***] will be changed to [***] and December 31, 2000
will be changed to [***].


Spectra Science will order an additional quantity of [***] rev. D
units with chargers by [***] for delivery by [***]. Pricing will be
[***] per unit. The Product Specification will be ES-239 Rev. D dated
11/30/00.


An additional quantity of [***] production units whose cases will be
molded with production tooling will be ordered by Spectra Science
prior to [***] for delivery by [***]. Co-funding of the project will
be as indicated in the full Agreement. Pricing will be [***] per unit
The Product Specification will be ES-239 Rev. E dated 5/15/01.


2) In paragraph 2.1, the additional [***] prototype units to be delivered on
or before [***], will be deleted.


3) The specifications for the product are set forth in the document attached
hereto as Exhibit B, entitled - Engineering Specification for Pocket Eye
Terminal (ES-239, Rev. D) dated November 7, 2000. The specifications for
the product delivered after June 30, 2001 will be Engineering Specification
for Pocket Eye Terminal (ES-239, Rev. E) dated May 15, 2001.


The Rev. E specifications will include [***].


SPECTRA SCIENCE CORPORATION


By: /s/ Nabil M. Lawandy Title: Chairman and CEO
-----------------------------


COMTEC INFORMATION SYSTEMS, INC.


By: /s/ Illegible Title:
----------------------------- --------------------------------


[*] = Information redacted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.


DEVELOPMENT AND SALES AGREEMENT
[***]


Agreement made this 1st day of November, 1999, by and between SPECTRA SCIENCE CORPORATION, a Delaware corporation with its principal office at 155 South Main Street, Providence, Rhode Island 02903 ("Spectra"), and COMTEC INFORMATION SYSTEMS, INC., a Rhode Island corporation with its principal place of business at 30 Plan Way, Warwick, Rhode Island 02886 ("Comtec").


W I T N E S S E T H:


WHEREAS, Spectra is engaged in designing, producing and implementing optical materials and systems, with particular focus on textile and security system applications;


WHEREAS, Comtec is engaged in the design and manufacture of computer system hardware products, including portable and hand-held terminals and reading devices (bar code readers, etc.);


WHEREAS, Spectra requires the development and production of a hand-held reader/data terminal for its LaserCode(TM) automated identification systems for textile and security applications; and


WHEREAS, Comtec wishes to develop and sell such devices to Spectra on the terms and conditions set forth herein, and Spectra wishes to purchase such devices from Comtec on said terms and conditions.


NOW, THEREFORE, in consideration of these premises, and of the mutual covenants and agreements set forth herein, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:


SECTION 1. DEFINITIONS


As used in this Agreement, the following terms shall have the following meanings:


"Confidential Information" shall mean all general and specific knowledge, experience and information, including, without limitation, all inventions, trade secrets, know-how and improvements thereof, and all patent and proprietary rights now owned or possessed or hereafter developed or acquired by or on behalf of a party relating to the Product Development Program during the Term. Such term also includes, without implied limitation, (i) proprietary scientific data or information, or commercial or financial information submitted by one party to the other party and indicated or marked "confidential" relating to the Product Development Program, (ii)


[*] = Information redacted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.


as to Spectra, all of Spectra's technology, know-how and other proprietary information related to optical identification systems, and (iii) as to Comtec, all of Comtec's technology, know-how and other proprietary information related to computer systems and equipment, including reading devices. Notwithstanding the above, the parties agree that the term "Confidential Information" shall not include information which:


(i) was at the time of receipt otherwise known to the non-disclosing
party, as demonstrated by contemporaneous written evidence, without
restriction from a source other than the disclosing party;


(ii) becomes known or available to the non-disclosing party without
restriction from a source other than the disclosing party legally entitled
to disclose the same and without breach of this Agreement by the
non-disclosing party;


(iii) is or becomes part of the public domain without breach of this
Agreement by the non-disclosing party;


(iv) is publicly or privately disclosed in accordance with the
approval of the party who owns or has rights to such confidential
information, or


(v) is required to be disclosed by a court order or governmental civil
investigative demand which the other party has had a reasonable opportunity
to contest prior to any disclosure; provided, that disclosure under this
paragraph (v) may be made only to the entity issuing such order or demand,
and only to the extent legally required in the opinion of Spectra's or
Comtec's counsel, as the case may be.


"Effective Date" shall mean the date first above written.


"Invention(s)" shall mean any invention, discovery, improvement, development, process, know-how, knowledge, trade secret, or data, conceived or first reduced to practice by either or both parties or their employees or agents pursuant to the Product Development Program and under this Agreement, or renewals hereof, whether or not patented or patentable.


"Person" shall mean any individual, corporation, partnership, joint venture, trust or unincorporated organization or a government or any agency or political subdivision thereof.


"Product Development Program" shall mean the development by Comtec of prototypes of [***].


"Product" shall mean the one or more types of [***] developed by Comtec as a result of the Product Development Program.


[*] = Information redacted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.


-2-


"Term" shall mean the period commencing on the Effective Date and ending on December 31, 2009, as such period may be extended by the mutual consent of the parties hereto or terminated in accordance with the provisions of this Agreement.


"Unit" shall mean a complete single unit of the Product.


SECTION 2. PRODUCT DEVELOPMENT


2.1 Prototype Units. Between the Effective Date and [***], Comtec will use its best efforts to develop, construct and deliver to Spectra [***] prototype Units of the Product meeting the specifications set forth in Exhibit A. On or before [***], Comtec will use its best efforts to construct and deliver to Spectra [***] additional prototype Units of the Product meeting said specifications. Spectra shall determine (which determination will not be unreasonably withheld) whether these prototype Products meet the fundamental required specifications and will function for their intended purpose; provided, however. Spectra acknowledges and agrees these prototype Units may possess operating characteristics that fall outside the specifications of the Product, with the understanding that the prototypes will perform the necessary basic functions of [***]. In addition, the parties acknowledge and agree that the aesthetics and the manner of construction of these prototype Units may vary in substantial respects from what will be the final version(s) of the Product. The parties agree to use their best efforts to complete the Project Development Program, including the acceptance process, by [***].


2.2 Consideration for Product Development. As consideration for Comtec's undertaking the Product Development Program on an accelerated schedule, Spectra will:


(a) Pay Comtec [***], payable by delivery of two certified or cashier's
checks, one for [***] payable on the Effective Date and one for [***]
payable when [***](scheduled to occur on or before [***]); and


(b) Issue to Comtec on the Effective Date [***] shares of Spectra's
authorized but unissued Series D Convertible Preferred Stock. The shares
will be held in escrow by Spectra until Spectra receives and approves the
first [***] prototype Products (delivery of the shares to be conditional
upon the same), at which point Spectra will deliver the shares promptly to
Comtec. In connection with that share issuance, the parties will enter into
a "Series D Convertible Pr ...