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/ Xxxxx X. Xxxxxxx 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 000
Xxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000 ("Spectra"), and COMTEC
INFORMATION SYSTEMS, INC., a Rhode Island corporation with its principal place
of business at 00 Xxxx Xxx, Xxxxxxx, Xxxxx Xxxxxx 00000 ("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.
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"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 Preferred Stock Purchase Agreement" in
substantially the form set forth in Exhibit B attached hereto, and Comtec
will become an additional signatory to (i) Spectra's "Third Amended and
Restated Stockholders' Agreement", a copy of which is attached hereto as
Exhibit C, and (ii) Spectra's "Third Amended and Restated Registration
Rights Agreement", a copy of which is attached hereto as Exhibit D.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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SECTION 3. OWNERSHIP OF TECHNOLOGY; CONFIDENTIAL INFORMATION
3.1 Exclusive Ownership. Comtec shall exclusively own [***]. Spectra shall
exclusively own [***].
3.2 Confidential Information. All information to be provided to either
party shall be on a "need to know" basis. Each parry to this Agreement shall use
its best efforts and take all reasonable precautions to protect the Confidential
Information of the other party from publication (orally or in writing) to
persons or entities other than those agents or employees of the party who
require access in order to fulfill the purposes of this Agreement. Upon request
of a party, the other party shall require its agents and employees to execute
written agreements to abide by the terms of this Section 3.2, and shall furnish
copies of such agreements to the requesting party. In addition, all third
parties (such as suppliers, customers or laboratories) who require access to any
Confidential Information shall be required to sign a confidentiality agreement
in a form to be agreed upon by the parties hereto. The parties agree that the
rights and obligations of this Section 3.2 shall continue in full force and
effect for five (5) years after the termination of this Agreement for any
reason.
SECTION 4. PRODUCT PRODUCTION AND SALE
4.1 Exclusive Supplier. Upon the completion of the Product Development
Program, and acceptance of the Product by Spectra, and for the balance of the
Term, Spectra will purchase from Comtec, and Comtec will supply, [***]. All
Products supplied hereunder will carry Spectra's name, trademark and trade
dress, as designated from time to time by Spectra. Comtec agrees to manufacture
Products (and other kinds of [***]) for [***]. Comtec agrees to produce
quantities of the Products sufficient to fill Spectra's orders. No order shall
be for fewer than [***]. In the event that Comtec is unable or unwilling to
supply all of Spectra's requirements for Products pursuant to Spectra purchase
orders for a period of two hundred seventy (270) days or more, Spectra shall be
free, upon thirty (30) days' written notice to Comtec of the unavailability of a
supply of Products sufficient for Spectra's requirements for at least one
hundred eighty (180) days prior to such notice, to grant a manufacturing license
to a third party (which third party may be Spectra itself) and to purchase from
such third party any or all of its requirements for Products, unless such
inability or
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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unwillingness to supply is cured prior to the expiration of the notice period.
Comtec agrees to make available to, and permit such third party manufacturer to
use, any Comtec technology, know-how and assistance necessary to manufacture the
Products, provided that such third party manufacturer agrees in writing (i) to
keep such information confidential in accordance with confidentiality
requirements equivalent to the provisions of this Agreement and (ii) to use such
information only for the purpose of manufacturing Products for Spectra or its
affiliates. In lieu of exercising its rights under this Section 4.1, Spectra may
elect to treat Comtec's inability or unwillingness to supply its requirements as
a material breach of this Agreement.
4.2 Initial Purchases. Assuming completion of the Product Development
Program on the schedule provided in Section 2.1, Comtec will be prepared to
deliver to Spectra inventory of at least [***] Units between [***] and [***].
Comtec and Spectra will share the cost of producing the initial [***] Units at
[***] each; Spectra shall provide its [***] share on the later of [***] or the
date on which the order for such initial Units is placed. Upon delivery thereof
to Spectra, Spectra will pay the purchase price for the same, less the amount
advanced to fund the production costs. The manufacture of these Units will
commence immediately after the completion of the Project Development Program
(targeted for [***]). The [***] start date will be moved to a later date only to
the extent required by (i) a mutually agreed-upon delay in completing the
Project Development Program, (ii) a delay on the part of Spectra not occasioned
by performance delays on the part of Comtec, in approving the prototype
Products, or (iii) one of the factors described in Section 7.
4.3 Subsequent Orders. Spectra shall place each purchase order with Comtec
for Products to be delivered hereunder at least [***] days prior to the delivery
date specified in each respective order. In the interest of maintaining an
orderly supply of the Products, Spectra agrees to place with Comtec an automatic
annual order of a minimum of [***] Units during the first week of each [***],
beginning in the year [***], unless Spectra shall have given Comtec notice to
the contrary on or before [***] of the prior calendar year. Comtec shall
maintain a back-up inventory of Products of approximately [***] Units to meet
Spectra's emergency purchase orders, to replace rejected Products, and other
similar situations. Such inventory level shall be mutually agreed by the
parties. Spectra shall notify Comtec in writing with respect to any claim that a
Product fails to meet specifications or with respect to any shortage in quantity
of any shipment of Products within ten (10) business days of receipt of such
Products. In the event of such rejection or shortage, Comtec shall replace the
rejected Products or make up the shortage from back-up inventory within seven
(7) business days of the notification of such rejection or shortage if
replacement stock is available, and in any case as soon as reasonably possible
after receiving such notice, at no additional cost to Spectra.
4.4 Pricing. The sale price for the [***] sold by Comtec to Spectra will be
[***] per Unit. Thereafter, the price for all additional Units sold to Spectra
during the Term will be [***] per Unit.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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SECTION 5. LICENSE
[***]
SECTION 6. REPRESENTATIONS
6.1 Authority of Spectra. Spectra represents and warrants to Comtec that it
has full right and authority to enter into this Agreement without the consent or
approval of any third party, except as contemplated by the documents set forth
as Exhibits B, C and D hereto.
6.2 Authority of Comtec. Comtec represents and warrants to Spectra that it
has full right and authority to enter into this Agreement without the consent or
approval of any third party.
6.3 Inventions. Each of the parties hereto hereby represents, warrants and
covenants that its employees are, and will be during the term of this Agreement,
subject to assignment agreements with each respective employer such that such
employees are required to assign to their respective employers all rights to
inventions developed during the course of their employment.
6.4 WARRANTY. COMTEC WARRANTS THAT THE PRODUCTS SOLD TO BUYER PURSUANT TO
THIS AGREEMENT WILL CONFORM TO THE PRODUCT SPECIFICATIONS SET FORTH IN EXHIBIT
A. THIS EXPRESS WARRANTY REPLACES AND IS IN LIEU OF ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR PARTICULAR APPLICATION OR USE. IN NO EVENT SHALL
COMTEC BE LIABLE TO SPECTRA FOR ANY LOST PROFITS OR SPECIAL OR CONSEQUENTIAL
DAMAGES. IN THE EVENT OF A CLAIM BY SPECTRA, COMTEC AND SPECTRA SHALL ATTEMPT TO
RESOLVE THE MATTER IN GOOD FAITH FOR A PERIOD OF AT LEAST NINETY (90) DAYS. IN
THE EVENT THE CLAIM CANNOT BE RESOLVED BETWEEN COMTEC AND SPECTRA, THE DISPUTE
SHALL BE RESOLVED BY AN ARBITRATION AS SET FORTH IN SECTION 9 HEREOF.
SECTION 7. FORCE MAJEURE
Neither Comtec nor Spectra shall be liable or deemed in default for failure
to perform or delay in performance due to any reason beyond its control,
including, but not limited to, acts of
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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God, acts of nature, acts of governments, fire, flood, accidents, strikes or
other interruptions of labor, shortages or scarcity of material, electricity,
labor or fuel, mechanical breakdowns, or inability to obtain transportation,
provided each party shall give the other timely notice of inability to perform
or deliver.
SECTION 8. TERMINATION
8.1 Right to Terminate. Without prejudice to any other rights or remedies
either party might have, either party shall have the right to terminate this
Agreement if the other party commits any serious or persistent breach of this
Agreement.
8.2 Bankruptcy. In the event that one of the parties shall go into
liquidation, or a receiver, custodian or trustee be appointed for the property
or estate of that party, or the party makes an assignment for the benefit of
creditors, and whether any of the aforesaid events be the outcome of the
voluntary act of that party, or otherwise, the other party shall be entitled to
terminate this Agreement forthwith by giving written notice to the first party.
8.3 Effect of Termination. Upon the expiration or termination of this
Agreement for any reason, the provisions of Sections 3, 6.4, 10.4 and 10.10 and
any payment obligations accrued prior to the date of termination shall continue
in full force and effect.
SECTION 9. ARBITRATION
9.1 Commitment. Any controversy, dispute or claim arising out of or
relating to this Agreement, other than the failure of Spectra to purchase or
Comtec's failure to sell the required quantities of Products, shall be resolved
by arbitration in accordance with the provisions hereof and shall be in
accordance with the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"), and judgment on the award rendered
by the arbitrators may be entered and specifically enforced in any court having
jurisdiction thereof.
9.2 Process. Pursuant to AAA Rule 14, the parties to such controversy,
dispute or claim shall each appoint an arbitrator within ten (10) days of a
party giving a demand for arbitration (the "Demand for Arbitration") pursuant to
AAA Rule 6(a). A neutral arbitrator shall be appointed by the party-appointed
arbitrators pursuant to AA Rule 15 within 10 days of the Demand for Arbitration.
In the event any party fails to appoint an arbitrator within the time frames set
forth above, or in the event the party-appointed arbitrators fail to appoint a
third arbitrator within the time frames set forth above, AAA shall, within three
business days following such failure, appoint such arbitrator(s). Each of the
arbitrators shall have no less than 5 years experience in the optical materials
and systems business. The situs for an arbitration pursuant to this Section
shall be in Providence, Rhode Island.
9.3 Award. A final award shall be rendered as soon as reasonably possible
and in any event within 180 days of filing of such Demand for Arbitration.
-7-
9.4 Miscellaneous. The parties agree that the arbitrators shall have the
right to shorten the length of any notice periods or other time periods provided
in the AAA Rules and to implement Expedited Procedures under the AAA Rules in
order to ensure that the arbitration process is completed within the time frames
provided herein. The arbitration award shall be in writing. The costs of the
arbitration, including arbitrator's fees, shall be allocated among the parties
in whatever manner the arbitrators determine is appropriate. The arbitrators
shall not be entitled to award punitive damages to either party. To the extent
permitted by AAA Rules, and subject to the time periods provided herein, the
parties shall be entitled to document discovery from one another and from third
parties.
SECTION 10. MISCELLANEOUS
10.1 Assignment. Except as otherwise provided in this Agreement, the rights
and obligations of the parties under this Agreement may not be assigned without
the prior written consent of the other party.
10.2 Headings. Each party hereby agrees that marginal headings appearing at
the beginning of the numbered articles hereof have been inserted for convenience
only and do not constitute any part of this Agreement.
10.3 Independent Contractors. Comtec and Spectra agree that each party to
this Agreement is operating as an independent contractor and not as an agent for
the other. This Agreement shall not constitute a partnership or joint venture,
and neither party may be bound by the other to any contract, arrangement or
understanding except as specifically stated herein.
10.4 Publicity. No publicity, news release, or other public announcement,
written or oral, whether to the public press, to stockholders, or otherwise
relating to this Agreement, to any amendment hereto or to performance hereunder
or the existence of the arrangement between the parties shall be originated by
either party or their employees without written approval of the other party to
this Agreement, except as required by law.
10.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island.
10.6 Waiver of Rights. No failure or delay on the part of any party in the
exercise of any power, right or privilege hereunder shall, nor shall any single
or partial exercise of any such power, right or privilege, operate as a waiver
thereof. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
10.7 Integration. This document sets forth the entire understanding between
the parties relating to the subject matter contained herein and merges all prior
discussions between them.
10.8 Severability. If any one or more of the provisions contained in this
Agreement or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining
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provisions contained herein shall not in any way be affected or impaired;
provided, however, that in such case the parties oblige themselves to use their
best efforts to achieve the purpose of the invalid provision by a new legally
valid stipulation.
10.9 Amendments. If any party desires a modification of this Agreement the
parties shall, upon reasonable notice of the proposed modification by the party
desiring the change, confer in good faith to determine the desirability of such
modification. Such modification shall not be effective until a written amendment
is signed by the signatories hereto or by their representatives duly authorized
to execute such amendment.
10.10 Use of Name. A party to this Agreement shall have no right to use the
name, trademark, or trade name of the other party with any product, promotion or
publication without the prior written approval of such other party.
10.11 Notices. All notices pertaining to or required by this Agreement
shall be in writing and signed by an authorized representative, and shall be
delivered by hand or sent by air courier, or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Spectra:
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
If to Comtec:
00 Xxxx Xxx
-----------------------------------------
Xxxxxxx, Xxxxx Xxxxxx 00000
Notice should be presumed receive don the date of delivery if delivered by
hand, on the next business day if sent by air courier, and on the third business
day after mailing (if sent by U.S. mail).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the duly authorized officers in duplicate as of the day and year
first above written.
WITNESSES: SPECTRA SCIENCE CORPORATION
/s/ Illegible By: /s/ Xxxxx X. Xxxxxxx
-------------------------- ----------------------------
Title: Chairman & CEO
COMTEC INFORMATION SYSTEMS, INC.
/s/ Illegible By: /s/ Illegible
-------------------------- ----------------------------
Date: 11/1/99
Title: Chairman & CEO
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EXHIBIT A
PRODUCT SPECIFICATIONS
Original specifications in process of technical review update
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Product Specification
Hand-held reader/terminal for fluorescent-based coding
(e.g. LaserCode(TM))
Overview
Spectra Science seeking a turnkey solution for a hand-held reader/data terminal
for its LaserCode(TM) automated identification technology. The patented
LaserCode(TM) technology has been specifically developed for the textile rental
industry and overcomes many limitations of other automated identification
technologies such as bar codes and radio-frequency chips.
[***]
A machine which reacts a LaserCode(TM) label must be able to:
(1) [***]
(2) [***]
(3) [***]
(4) [***]
The above four steps all need to take place in about [***].
The specifications for such a device follows.
General Specifications:
Size/weight: [***]
Power: [***]
Battery on-time: [***]
Communication ports: [***]
Display: [***]
Audio: [***]
Keypad: [***]
Environmental:
Temperature range: [***]
[***]
Shock: [***]
Humidity: [***]
Optical receiver specifications:
Imaging FOV: [***]
Minimum imaging distance: [***]
Maximum imaging distance: [***]
Shutter: [***]
Gain: [***]
Imager: [***]
Other optical filters: [***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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Optical illuminator specifications:
Repetition rate: [***]
Target Amplitude stability: [***]
Preferred i11uminator type: [***]
[***]
Optical Filtering: [***]
Peripheral illuminator: [***]
Electrical specifications:
Image data-to-memory speed: [***]
Image data format: [***]
Processor: [***]
Flash Storage: [***]
RAM: [***]
Software specifications:
RT0S: [***]
Device drivers: [***]
Decoding Software Core: [***]
Input to Decoding Core: [***]
Output of Decoding core: [***]
Decode Time Target: [***]
Contact information
Xxxx Xxxx
Senior Research Engineer
Spectra Science Corporation
Xxxx@xxxxxxx-xxxxxxx.xxx
(000)000-0000 x00
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
