Document:

<PAGE>

                                                                    Exhibit 10.5

                            PHOSPHOR SUPPLY AGREEMENT

     This agreement (the "Supply Agreement"), entered into as of January l,
1999, by and among Spectra Science Corporation, a Delaware corporation having
its principal place of business at 155 South Main Street, Suite 101, Providence,
Rhode Island 02903 (hereinafter referred to as the "SUPPLIER"), and Technical
Graphics, Inc., a New Hampshire corporation having its principal place of
business at 50 Meadowbrook Industrial Drive, Milford, New Hampshire 03055
(hereinafter referred to as "TGI"),

                              W I T N E S S E T H:

     WHEREAS, the SUPPLIER possesses unique research and manufacturing
capabilities necessary to develop and produce new, improved phosphor materials
for use in [***];

     WHEREAS, in recognition of the SUPPLIER's unique capabilities with respect
to research, customized materials development, and high purity manufacturing,
TGI desires to enter into an exclusive arrangement with the SUPPLIER, and the
SUPPLIER wishes to accept such an exclusive arrangement, pursuant to which the
SUPPLIER will supply all of TGI's direct and indirect requirements during the
TERM (as defined herein) for the MATERIALS (as defined herein) pursuant to the
terms and conditions of this SUPPLY AGREEMENT; and

     WHEREAS, in consideration of the exclusivity of this arrangement, the
SUPPLIER is willing during the TERM to conduct, and TGI wishes the SUPPLIER to
conduct, an ongoing research and development program with respect to the
development of new and/or improved MATERIALS (the "NEW MATERIALS") and to supply
such NEW MATERIALS to TGI and [***];

     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:

                                   ARTICLE ONE

                                   DEFINITIONS

     1.1 "FIELD" shall mean the incorporation of phosphorescent materials as
[***].

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

<PAGE>

     1.2 "MATERIALS" shall mean fluorescent and phosphorescent materials to be
incorporated in [***].

     1.3 "NET WEB FOOT" of thread shall mean one web foot of unsliced thread at
the historical TGI production yield [***] which meets the specifications to
which an order relates, without allowance for any other waste consideration.

     1.4 "PRICE PER NET WEB FOOT" shall mean the price of the volume of
MATERIALS necessary to produce one NET WEB FOOT of thread.

     1.5 "TERM" shall mean the three-year and nine month period commencing on
the date of this SUPPLY AGREEMENT, together with any extensions thereto pursuant
to Section 5.2 of this SUPPLY AGREEMENT.

                                   ARTICLE TWO

                           EXCLUSIVE SUPPLY; PRICING

     2.1 TGI shall, during the TERM, purchase from the SUPPLIER all of its
respective direct and indirect requirements for MATERIALS, subject to the terms
and conditions of this SUPPLY AGREEMENT.

     2.2 The SUPPLIER will supply the MATERIALS to TGI based on projections of
specific volume requirements for specific time periods provided to the SUPPLIER
with such reasonable lead times, and upon such other usual and customary
commercial terms and conditions, as the parties shall hereafter agree. TGI shall
use its best efforts to qualify phosphors provided by the SUPPLIER. The SUPPLIER
agrees not to sell MATERIALS to any other [***] thread supplier unless and until
such third party has been approved as a supplier by [***].

     2.3 TGI will provide the SUPPLIER with a supply proposal for a specific
time frame with detailed specifications outlining the actual required
characteristics of any MATERIALS to be purchased by it within a reasonable time
prior to any requested delivery date.

     2.4 Such specifications shall include a specification as to the amount of
MATERIALS required in the contemplated production process for the manufacture of
a web foot of thread. The specifications will be no more stringent as to product
properties than are required to meet the [***] specifications or to meet Crane &
Co., Inc.'s paper reprocessing requirements and TGI's processing requirements.
If the SUPPLIER's MATERIALS fail to meet either of these requirements, and it is
necessary to purchase phosphor from a third party, TGI shall have the right to
purchase the replacement phosphors from a third party only until such time as
the SUPPLIER is able to meet or exceed TGI's requirements.

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

                                       2

<PAGE>

     2.5 Based on such specifications, and within 30 days of the receipt thereof
by the SUPPLIER from TGI, the SUPPLIER will submit to TGI a supply proposal for
the specified quantity of MATERIALS and pricing, as follows:

          (a) For [***]. SUPPLIER will bill TGI based upon pounds of pigment
shipped and at a price that directly relates to the percentage loading of the
pigment to the Bostik adhesive, as collectively agreed to by both the SUPPLIER
and TGI. SUPPLIER will provide forecasts of increases in the costs of materials
expected during the term of the contract, and TGI shall use its best efforts in
good faith in its initial negotiations with the [***] to pass along such price
increase under the applicable government contract. SUPPLIER may increase the
supply price for MATERIALS charged to TGI to the extent TGI is successful in
passing along such price increase under the applicable government contract. Any
product specification changes or contractual changes between TGI and the [***]
that would lead to a renegotiation between TGI and the [***] would allow for a
renegotiation between TGI and the SUPPLIER as to price and other factors.

          (b) For MATERIALS or NEW MATERIALS supplied for any other purpose,
where the SUPPLIER submits a bid price greater than [***] per NET WEB FOOT of
thread, TGI shall have the right to solicit bids from other third party
suppliers, but shall not accept, in lieu of the SUPPLIER's bid, any third-party
bid which specifies a price higher than or equal to the bid submitted by the
SUPPLIER for MATERIALS of comparable quality, in TGI's reasonable judgment,
unless so directed by [***].

          (c) If pre-dispersed materials are provided by the SUPPLIER to TGI,
the SUPPLIER shall be reimbursed for the cost of any carrier materials (e.g.,
Bostik, Extender varnish) that the SUPPLIER shall have reasonably deemed
necessary, and the PRICE PER NET WEB FOOT for purposes of this Section 2.5 shall
not be deemed to include the cost of such carrier material.

     2.6 The SUPPLIER shall maintain a secure inventory of MATERIALS sufficient
to meet five months' requirements for TGI (based on average requirements over
prior months). In the event that the SUPPLIER is unable to manufacture and
supply MATERIALS to TGI for a continuous period of sixty (60) days or more, then
TGI may, upon thirty (30) days' written notice to the SUPPLIER, manufacture or
cause a third party to manufacture the MATERIALS, subject to the terms of this
subsection 2.7. No later than thirty (30) days after receipt of such written
notice, the SUPPLIER shall provide TGI with all formulas, synthesis procedures,
equipment lists, reagent suppliers, and other information proprietary to the
SUPPLIER which is necessary in the SUPPLIER's judgment to synthesize the
MATERIALS (collectively, the "MATERIALS KNOW-HOW"); provided, however, that:

          (a) Prior to releasing any MATERIALS KNOW-HOW to TGI, the SUPPLIER
shall first have the opportunity at its option to arrange tollhouse
manufacturing through a third party of SUPPLIER's choice reasonably acceptable
to TGI;

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

                                       3

<PAGE>

          (b) In the event that TGI intends to cause a third party to
manufacture and supply MATERIALS, TGI shall give the SUPPLIER notice of such
intent, and the SUPPLIER shall then negotiate directly with such third party as
to the manufacture and supply of the MATERIALS to TGI on behalf of the SUPPLIER;

          (c) The use of the MATERIALS KNOW-HOW by TGI or by any third-party
supplier hereunder shall be strictly limited to manufacture for and supply of
the MATERIALS to TGI during the shorter of the period when the SUPPLIER is
unable to manufacture and supply the MATERIALS to TGI or the minimum acceptable
time period required by the third-party supplier;

          (d) TGI may not provide the MATERIALS KNOW-HOW to any third party,
whether as a supplier or for any other reason, without the express written
consent of the SUPPLIER. The confidentiality provisions of Article IV of this
Agreement shall govern the use of the MATERIALS KNOW-HOW by TGI and no third
party shall be provided any MATERIALS KNOW-HOW unless it enters into a
confidentiality agreement for the benefit of the SUPPLIER on substantially the
terms set forth in Article IV hereof; and

          (e) TGI's right to manufacture the MATERIALS or cause a third party to
do the same by means of the MATERIALS KNOW-HOW shall in any case not extend
beyond the earliest of (i) the termination of this Agreement for any reason;
(ii) cure by the SUPPLIER of its inability to manufacture the MATERIALS at any
time prior to termination of this Agreement; or (iii) completion of the minimum
acceptable time period required by the third-party supplier.

Notwithstanding anything to the contrary in this Section 2.6, TGI shall not,
prior to giving SUPPLIER written notice of its intent to manufacture or cause a
third party to manufacture the MATERIALS, be required to observe the cure
periods set forth above, in the event that SUPPLIER's inability to manufacture
the MATERIALS results from SUPPLIER's having been adjudged bankrupt, or having
become insolvent, or having made an assignment for the benefit of creditors, or
having been placed in the hands of a receiver or a trustee in bankruptcy.

                                  ARTICLE THREE

                               DEVELOPMENT PROGRAM

     3.1 The SUPPLIER hereby agrees to use commercially reasonable efforts to
conduct, on an ongoing basis throughout the TERM, research and development
activities for the purpose of developing and improving NEW MATERIALS (the
"DEVELOPMENT PROGRAM") useful to TGI in the FIELD.

     3.2 The SUPPLIER shall bear the expenses of the DEVELOPMENT PROGRAM.

                                       4

<PAGE>

     3.3 The SUPPLIER shall keep TGI informed of the progress of the DEVELOPMENT
PROGRAM and the development of any NEW MATERIALS resulting therefrom to the
extent necessary for TGI to determine the suitability of any such NEW MATERIALS
for usage by TGI or its [***] in the FIELD; provided, however, that all
intellectual property rights with respect to NEW MATERIALS shall remain with the
SUPPLIER, and the terms of Article IV hereof shall be binding on TGI with
respect to any disclosures made to it with respect to NEW MATERIALS.

     3.4 The provisions of Section 2.5(b) of this SUPPLY AGREEMENT shall apply
to the supply by the SUPPLIER to TGI of any NEW MATERIALS developed pursuant to
the DEVELOPMENT PROGRAM.

                                  ARTICLE FOUR

                                 CONFIDENTIALITY

     4.1 The parties hereto each recognize and hereby acknowledge that in the
performance of this SUPPLY AGREEMENT, each party and its employees and/or agents
may have access to secret or proprietary information owned and controlled by the
other party. The parties agree that all such information acquired by one party
(hereinafter the "RECEIVING PARTY") shall remain the disclosing party's
exclusive property and the RECEIVING PARTY shall keep and have its employees
and/or agents keep any and all such information confidential and shall not copy,
publish, or disclose it to others or authorize its employees, agents, or anyone
else to copy, publish, or disclose it to others, without the disclosing party's
prior written approval.

     4.2 All such tangible information shall be returned to the SUPPLIER upon
request or upon termination of this SUPPLY AGREEMENT.

                                  ARTICLE FIVE

                                TERM; TERMINATION

     5.1 This SUPPLY AGREEMENT shall terminate on September 30, 2002, unless the
TERM hereof shall have been extended pursuant to Section 5.2 or in the event of
earlier termination pursuant to Section 5.3

     5.2 The TERM of this SUPPLY AGREEMENT may be extended by mutual consent
beyond September 30, 2002, provided that the parties have agreed upon the length
of time by which the TERM is to be extended and any changes to the PRICE PER NET
WEB FOOT to apply during the extended TERM and have provided each other written
notice of such agreement.

     5.3 If either the SUPPLIER, on the one hand, or TGI, on the other hand,
shall be in default of any material obligation hereunder, or shall be adjudged
bankrupt, or become insolvent,

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

                                       5

<PAGE>

or make an assignment for the benefit of creditors, or be placed in the hands of
a receiver or a trustee in bankruptcy, the other party may terminate this SUPPLY
AGREEMENT by giving sixty (60) days notice to the first party, specifying the
basis for termination. If within sixty (60) days after the receipt of such
notice, the party receiving notice shall remedy the condition forming the basis
for termination, such notice shall cease to be operative and this SUPPLY
AGREEMENT shall continue in full force.

     5.4 Termination or expiration of this SUPPLY AGREEMENT for any reason will
not affect: (i) obligations, including the payment of any monies hereunder,
which have accrued as of the date of termination or expiration; (ii) any
materials supply requirements under Article II which have been contracted for as
of the date of termination or expiration; (iii) intellectual property rights
under Section 3.3 hereof; and (iv) confidentiality obligations under Article IV
hereof, which shall survive termination or expiration.

                                   ARTICLE SIX

                                  MISCELLANEOUS

     6.1 Dispute Resolution. In the event of any controversy or claim arising
out of or relating to any provision of this SUPPLY AGREEMENT or the breach
thereof, the parties shall try to settle their differences amicably between
themselves. Any such controversy or claim which the parties are unable to
resolve shall initially be submitted for review and resolution by the Chief
Executive Officers of the SUPPLIER and TGI prior to the initiation by either
party of any legal action.

     6.2 Severability. If any part, term, or provision of this SUPPLY AGREEMENT
shall be found invalid or unenforceable under any valid controlling law, the
SUPPLY AGREEMENT shall be construed as if the invalid or unenforceable
provisions had been deleted, and the SUPPLY AGREEMENT shall be deemed modified
to the extent necessary to render the surviving provisions enforceable to the
fullest extent permitted by law. In the event the legality of any provision of
this SUPPLY AGREEMENT is otherwise brought into question because of a decision
by a court of competent jurisdiction, the SUPPLIER, on the one hand, or TGI, on
the other hand, by written notice to and agreement with the other party, may
revise the provision in question or may delete it entirely so as to comply with
the decision of the court.

     6.3 Governing Law. This SUPPLY AGREEMENT shall be construed and governed
according to the laws of the Commonwealth of Massachusetts. The courts and
authorities of the Commonwealth of Massachusetts shall have exclusive
jurisdiction over all controversies that may arise under or in relation to this
SUPPLY AGREEMENT and the execution and interpretation thereof and compliance
therewith.

     6.4 Force Majeure. Neither party shall be responsible to the other for any
failure or delay in performing any of its obligations under this SUPPLY
AGREEMENT if such delay or nonperformance is caused by strike, labor stoppage,
lockout or other labor trouble, fire, flood,

                                       6

<PAGE>

accident, act of God or of the Government, or by other cause unavoidable or
beyond the control of such party, provided that prompt notice is given of the
cause of the delay or nonperformance and diligent continuing efforts are made to
resume performance.

     6.5 Nonassignability. This SUPPLY AGREEMENT shall not be assignable by
either party hereto, except to a wholly-owned subsidiary or to a successor to
all or substantially all of such party's business, without the prior written
consent of the other party.

     6.6 Entire Agreement; Modification. This SUPPLY AGREEMENT constitutes the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, with respect
thereto. No license rights shall be created by implication or estoppel. No
modification or amendment hereof shall be valid or binding upon the parties
hereto unless made in writing and duly executed on behalf of both parties.

     6.7 Waiver. No actual waiver of breach or default by a party of any
provision of this SUPPLY AGREEMENT shall be deemed or construed to be a waiver
of any succeeding breach or default of the same or any other provision.

     6.8 Notices. Notices, where permitted or required hereunder, shall be
sufficiently given if sent by Certified Mail, return receipt requested and
postage prepaid, or if delivered by hand, if sent by confirmed facsimile
transmission with a copy deposited in the U.S. mails, first class and postage
prepaid, or if sent by overnight courier:

     If to the SUPPLIER, to:

SPECTRA SCIENCE CORPORATION
55 South Main Street, Suite 101
Providence, RI 02903
Attention: President

     with a copy to:

Kenneth S. Boger, Esquire
Warner & Stackpole LLP
75 State Street
Boston, MA 02109

     If to TGI, to:

                                       7

<PAGE>

TECHNICAL GRAPHICS, INC.
50 Meadowbrook Industrial Drive
Milford, NH 03055
Attention: President

     with a copy to:

James Hood, Esquire
Peabody & Brown
889 Elm Street
Manchester, NH 03101

Notices so given shall be deemed to have been received by the addressee on the
fourth day after deposit as Certified Mail, on the day after dispatch by
overnight courier, and on the day of delivery by hand or the day of transmittal
by facsimile transmission.

     IN WITNESS WHEREOF, the parties hereby execute this Agreement, in
triplicate, through the representatives listed below:

ACCEPTED AND AGREED TO BY:

SPECTRA SCIENCE CORPORATION                     TECHNICAL GRAPHICS, INC.
155 South Main Street                           50 Meadowbrook Industrial Drive
Providence, RI 02903                            Milford, NH 03055

By /s/ Nabil M. Lawandy                         By /s/ Illegible
   -----------------------------                   -----------------------------

Date Signed: April/21/99                        Date Signed: April 20, 1999

                                       8<PAGE>

                                                                    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.

<PAGE>

                         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.

<PAGE>

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-

<PAGE>

     "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.

                                      -3-

<PAGE>

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.

                                      -4-

<PAGE>

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.

                                      -5-

<PAGE>

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.

                                      -6-

<PAGE>

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-

<PAGE>

     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

                                      -8-

<PAGE>

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:

                    155 South Main Street
                    Providence, Rhode Island 02903

          If to Comtec:

                    30 Plan Way
                                -----------------------------------------
                    Warwick, Rhode Island 02886

     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).

                                      -9-

<PAGE>

     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/ Nabil M. Lawandy
--------------------------                          ----------------------------
                                                Title: Chairman & CEO

                                                COMTEC INFORMATION SYSTEMS, INC.

/s/ Illegible                                   By: /s/ Illegible
--------------------------                          ----------------------------
                                                Date:  11/1/99
                                                Title: Chairman & CEO

                                      -10-

<PAGE>

                                    EXHIBIT A

                             PRODUCT SPECIFICATIONS

          Original specifications in process of technical review update

                                      -11-

<PAGE>

                             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.

<PAGE>

                                      -2-

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

John Moon
Senior Research Engineer
Spectra Science Corporation
Moon@spectra-science.com
(401)431-2835 x36

[*] = 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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