exv10w1






Exhibit 10.1

Confidential
Treatment Requested


EXECUTION VERSION


MANUFACTURING AND LICENSING AGREEMENT


This MANUFACTURING AND LICENSING AGREEMENT (this “Agreement”) is dated as of May 30, 2008
(the “Effective Date”) between Kensey Nash Corporation, a Delaware corporation having its
principal place of business at 735 Pennsylvania Drive, Exton, PA 19341 (hereinafter referred to as
“KNC”), and Spectranetics Corporation, a Delaware corporation having its principal place of
business at 96 Talamine Court, Colorado Springs, CO 80907 (hereinafter referred to as
“Spectranetics”).


Whereas, pursuant to that certain Asset Purchase Agreement by and between KNC and Spectranetics,
dated as of May 12, 2008 (the “Purchase Agreement”), KNC agreed to sell, effective as of
the date hereof, to Spectranetics certain assets related to the KNC endovascular product line,
which assets include the ThromCat, SafeCross and QuickCat products.


Whereas, Spectranetics wishes for KNC to manufacture such products and KNC is willing, for the
consideration and on the terms set forth herein, to manufacture such products.


Now, therefore, in consideration of the mutual covenants and promises contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which are acknowledged,
KNC and Spectranetics agree as follows:



	1.	 	DEFINITIONS





	 	1.1	 	“Accounting Arbitrator” has the meaning set forth in Section 8.2
hereof.
	 
	 	1.2	 	“Additional Assets” means collectively the Additional QuickCat Assets
and the Additional SC/TC Assets.
	 
	 	1.3	 	“Additional Payment” has the meaning set forth in Section 6.2 hereof.
	 
	 	1.4	 	“Additional QuickCat Assets” means collectively all (i) saleable
inventory and work-in-process of the QuickCat Products, (ii) raw materials for the
QuickCat Products and (iii) fixed assets used exclusively in the manufacture of the
QuickCat Products, in each case that were added to KNC’s books and records subsequent
to the date hereof.
	 
	 	1.5	 	“Additional SC/TC Assets” means collectively all (i) saleable inventory
and work-in-process of the SafeCross Products and ThromCat Products, (ii) raw materials
for the SafeCross Products and ThomCat Products and (iii) fixed assets used exclusively
in the manufacture of the SafeCross Products and ThomCat Products, in each case that
were added to KNC’s books and records subsequent to the date hereof.




 


			
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and Exchange Commission.


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	 	1.6	 	“Affiliate,” as applied to any Person, means any other Person, directly
or indirectly, controlling, controlled by, or under common control with, that Person.
The term “control” (including, with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”), as applied to any Person, includes
the possession, directly or indirectly, of 10% or more of the Voting Power (or in the
case of a Person that is not a corporation, 10% or more of the ownership interest,
beneficial or otherwise) of such Person or the power otherwise to direct or cause the
direction of the management and policies of that Person, whether through voting, by
contract or otherwise.
	 
	 	1.7	 	“Agreement” has the meaning set forth in the preamble hereto.
	 
	 	1.8	 	“Blanket Purchase Order” has the meaning set forth in Section 5.2(e)
hereof.
	 
	 	1.9	 	“Combined Revenue” means the sum of the SafeCross Revenue and the
ThromCat Revenue for the relevant period of determination.
	 
	 	1.10	 	“Commitment” has the meaning set forth in Section 5.2(e) hereof.
	 
	 	1.11	 	“Confidential Information” shall mean all oral or written information
that is disclosed by either party (the “Disclosing Party”) to the other party
(the “Receiving Party”), or that the Receiving Party becomes aware of as a
result of its discussions and work with the Disclosing Party, and that is not generally
known to the public, including but not limited to, information of a technical nature
such as trade secrets; manufacturing processes or devices or know-how; techniques,
data, formulas, inventions, discoveries or innovations (whether or not patentable),
specifications and characteristics of current products or products under development;
research projects, methods and results; matters of a business nature such as
information about costs, margins, pricing policies, markets, sales, suppliers and
customers; product, marketing or strategic plans; financial information; personnel
records and other information of a similar nature, provided, however,
that Confidential Information shall not include any information that (i) is or becomes
public knowledge without breach of the Receiving Party’s obligations hereunder; (ii) is
rightfully acquired by the Receiving Party from a third party that is not under a
confidentiality restriction on disclosure or use; (iii) was already known to the
Receiving Party prior to receipt from the Disclosing Party as evidenced by written
records; (iv) is independently developed by the Receiving Party; (v) is required to be
disclosed by Law, provided that notice of the requirement is promptly delivered to the
Disclosing Party in order to provide the Disclosing Party with an opportunity to
challenge or limit the disclosure obligations; or (vi) is disclosed or used following
the Receiving Party’s receipt of express written consent from an authorized
representative of the Disclosing Party. Notwithstanding anything to the contrary in
the foregoing, all confidential or other proprietary information that is
transferred by KNC to Spectranetics under the Purchase Agreement or this 







 




			
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	 	 	 	Agreement
or that relates exclusively to the manufacture of the Products shall be deemed the
Confidential Information of Spectranetics. The Receiving Party shall have the
burden of proof respecting any of the aforementioned events on which the Receiving
Party relies as relieving it of any confidentiality restrictions hereunder. Written
disclosures for which protection is sought must be obviously marked as
“Confidential” or “Proprietary” and oral disclosures for which protection is sought
must at the outset be clearly identified by the Disclosing Party as Confidential
Information and submitted by the Disclosing Party in summary form to the Receiving
Party, marked as above within thirty (30) days after disclosure; provided, however,
that protection under Section 11 shall also be given to information that is not so
marked if a reasonable person would assume that it is Confidential Information.
	 
	 	1.12	 	“Development Agreement” means that certain Development and Regulatory
Services Agreement dated as of even date herewith between the parties hereto.
	 
	 	1.13	 	“Effective Date” has the meaning set forth in the preamble hereto.
	 
	 	1.14	 	“End Date” has the meaning set forth in Section 2.3 hereof.
	 
	 	1.15	 	“Equipment” has the meaning set forth in Section 4.1 hereof.
	 
	 	1.16	 	“Extended SC/TC Manufacturing Period” has the meaning set forth in
Section 2.2 hereof.
	 
	 	1.17	 	“Existing Equipment” has the meaning set forth in Section 4.1 hereof.
	 
	 	1.18	 	“FDA” means the U.S. Food and Drug Administration.
	 
	 	1.19	 	“Fee Year” means, as applicable, the one year period beginning on the
first day of the calendar month immediately following the month in which the SC/TC
Manufacturing Period expires or is terminated for any reason, and each subsequent one
year period (or portion thereof) prior to the End Date.
	 
	 	1.20	 	“Fiscal Quarter” means Spectranetics’ fiscal quarter.
	 
	 	1.21	 	“Governmental Body” means any federal or state jurisdiction or
government of any nature or federal governmental or quasi-governmental authority of any
nature, domestic or foreign (including any governmental agency, branch or department
exercising governmental or quasi-governmental powers and any governmental regulatory
organization).
	 
	 	1.22	 	“Indemnified Party” has the meaning set forth in Section 16.3 hereof.
	 
	 	1.23	 	“Indemnifying Party” has the meaning set forth in Section 16.3 hereof.






 



			
	*****Confidential portions of the material have been omitted and filed separately with the Securities
and Exchange Commission.



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	 	1.24	 	“Independent Third Party” means a party who both (i) as of the date
hereof owns less than fifteen percent (15%) of the outstanding capital stock of KNC and
(ii) is a strategic (as opposed to a financial) investor or acquiror.
	 
	 	1.25	 	“Initial SC/TC Manufacturing Period” has the meaning set forth in
Section 2.2 hereof.
	 
	 	1.26	 	“KNC” has the meaning set forth in the preamble hereof.
	 
	 	1.27	 	A “KNC Change of Control” shall be deemed to have occurred on the first
to occur of any of the following events:






(a) The acquisition by any Independent Third Party or group of Independent Third
Parties of fifty percent (50%) or more of the then outstanding capital stock of KNC;




(b) The consummation by KNC of a reorganization, merger or consolidation, in each
case, unless, following such reorganization, merger or consolidation, more than
fifty percent (50%) of the then outstanding equity of the entity resulting from such
reorganization, merger or consolidation (which shall be understood to be the
surviving parent in the case of a triangular merger) is then beneficially owned,
directly or indirectly, by parties who were not Independent Third Parties
immediately prior to such reorganization, merger or consolidation; or




(c) The consummation by KNC of the sale or other disposition of all or substantially
all of the assets of KNC to an Independent Third Party.




	 	1.28	 	“KNC Indemnified Party” has the meaning set forth in Section 16.2
hereof.
	 
	 	1.29	 	“Law” means any law, statute, regulation, rule or order of any
Governmental Body.
	 
	 	1.30	 	“Manufacturing Period” has the meaning set forth in Section 2.2 hereof.
	 
	 	1.31	 	“Manufacturing Year” means the respective one year period beginning on
the Effective Date or the applicable anniversary thereof.
	 
	 	1.32	 	“Microsoft Agreement” means that certain Microsoft OEM Customer License
Agreement for Embedded Systems, effective June 18, 2007, by and between KNC and
Microsoft Licensing, GP , as such agreement may from time to time be amended.
	 
	 	1.33	 	“Noncompetition Agreement” means that certain Non-Competition Agreement
dated as of even date herewith between the parties hereto.







 




			
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	 	1.34	 	“Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Body.
	 
	 	1.35	 	“Products” means collectively the QuickCat Product, the SafeCross
Wires, the SafeCross Consoles and the ThromCat Product.
	 
	 	1.36	 	“Purchase Agreement” has the meaning set forth in the preamble hereof.
	 
	 	1.37	 	“QuickCat Manufacturing Period” has the meaning set forth in Section
2.1 hereof.
	 
	 	1.38	 	“QuickCat Products” means the QuickCat products transferred to
Spectranetics pursuant to the Purchase Agreement and such products as they may be
hereinafter maintained, modified, altered or further developed by or for Spectranetics,
along with all successor products thereto.
	 
	 	1.39	 	“Repeated Failure” has the meaning set forth in Section 7.4 hereof.
	 
	 	1.40	 	“Revenue Share” has the meaning set forth in Section 15.1 hereof.
	 
	 	1.41	 	“Rolling Forecasts” has the meaning set forth in Section 5.2(e) hereof.
	 
	 	1.42	 	“SafeCross Consoles” means the SafeCross console product transferred to
Spectranetics pursuant to the Purchase Agreement and such product as it may be
hereinafter maintained, modified, altered or further developed by or for Spectranetics,
along with all successor products thereto.
	 
	 	1.43	 	“SafeCross Products” means collectively the SafeCross Consoles and the
SafeCross Wires.
	 
	 	1.44	 	“SafeCross Console Revenue” means the aggregate Sales Price received by
Spectranetics and its Affiliates in connection with the SafeCross Console during the
relevant period of determination.
	 
	 	1.45	 	“SafeCross Revenue” means the aggregate Sales Price received by
Spectranetics and its Affiliates in connection with the SafeCross Products during the
relevant period of determination.
	 
	 	1.46	 	“SafeCross Wires” means the SafeCross wire products transferred to
Spectranetics pursuant to the Purchase Agreement and such products as they may be
hereinafter maintained, modified, altered or further developed by or for Spectranetics,
along with all successor products thereto.
	 
	 	1.47	 	“Sales Price” means the price per unit at which a Product is sold by
Spectranetics. For the avoidance of doubt, the following items shall not be added to
the price per unit in the calculation of the “Sales Price”: (i) any refunds,
credits or allowances







 




			
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and Exchange Commission.




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	 	 	 	actually given or credited to any party due to rejections,
defects or returns of the Products, (ii) any sales, use, occupation or excise taxes,
duties or other governmental charges imposed on, and paid by Spectranetics during, the
importation, exportation, use or sale of Products, and (iii) any freight, postage or
insurance charges actually incurred.
	 
	 	1.48	 	“SC/TC Manufacturing Period” has the meaning set forth in Section 2.2 hereof.
	 
	 	1.49	 	“SCC Price” has the meaning set forth in Section 6.1 hereof.
	 
	 	1.50	 	“SCW Commission” has the meaning set forth in Section 6.1 hereof.
	 
	 	1.51	 	“Specifications” has the meaning set forth in Section 5.1(b) hereof.
	 
	 	1.52	 	“Spectranetics” has the meaning set forth in the preamble hereof.
	 
	 	1.53	 	“Spectranetics Indemnified Party” has the meaning set forth in Section
16.1 hereof.
	 
	 	1.54	 	“Surmodics Agreement” means that certain Master License Agreement,
effective May 26, 2004, by and between Surmodics, Inc. and KNC, as such agreement may
from time to time be amended.
	 
	 	1.55	 	“Term” has the meaning set forth in Section 2.3 hereof.
	 
	 	1.56	 	“TC Commission” has the meaning set forth in Section 6.1 hereof.
	 
	 	1.57	 	“TC Patents” means those certain Patent Applications listed on Schedule
3.6 (a)(i) to the Purchase Agreement that have been filed with the U.S. Patent and
Trademark Office or any other Governmental Body, the claims of which cover the ThromCat
Product, along with the progeny thereof.
	 
	 	1.58	 	“ThromCat Products” means the ThromCat products transferred to
Spectranetics pursuant to the Purchase Agreement and such products as they may be
hereinafter maintained, modified, altered or further developed by or for Spectranetics,
along with all successor products thereto.
	 
	 	1.59	 	“ThromCat Revenue” means the aggregate Sales Price received by
Spectranetics and its Affiliates in connection with the ThromCat Products during the
relevant period of determination.
	 
	 	1.60	 	“Total Console Costs” means, for the relevant period, the sum of (i)
the aggregate amount paid by Spectranetics to KNC during such period for SafeCross
Consoles pursuant to the terms of this Agreement and (ii) the aggregate depreciation
and service costs incurred by Spectranetics during such period with respect to the Safe
Cross Consoles.







 




			
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	 	1.61	 	“Transaction Documents” means the Purchase Agreement and all other
agreements delivered pursuant thereto, including, without limitation, this Agreement.
	 
	 	1.62	 	“Transfer Price” has the meaning set forth in Section 6.1 hereof.
	 
	 	1.63	 	“USPTO” has the meaning set forth in Section 15.1(c) hereof.
	 
	 	1.64	 	“Voting Power” of any Person means the total number of votes which may
be cast by the holders of the total number of outstanding shares of equity of any class
or classes of such Person in any election of directors or managers of such Person
without regard to the occurrence of any contingency.






	2.	 	MANUFACTURING PERIODS AND TERM






	 	2.1	 	The manufacturing arrangement provided hereunder with respect to the QuickCat
Products shall commence on the Effective Date and (unless earlier terminated under the
provisions of Section 14.1) continue until the six (6) month
anniversary hereof or such later date as may be agreed to by
the parties hereto upon mutually agreeable terms, with such period as extended, if
applicable, being referred to herein as the “QuickCat Manufacturing Period.”
	 
	 	2.2	 	The manufacturing arrangement provided for hereunder with respect to the
SafeCross Products and the ThromCat Products shall commence on the Effective Date and
continue  until the third (3rd) anniversary thereof (the “Initial SC/TC Manufacturing Period”) unless earlier
terminated under the provisions of Section 14.1. The Initial SC/TC Manufacturing
Period may be extended upon mutually agreeable terms (each renewed period hereof, an
“Extended SC/TC Manufacturing Period”), unless either party notifies the other
party at least 12 months prior to the end of the Initial SC/TC Manufacturing Period of
its intent not to renew. The Initial SC/TC Manufacturing Period, the Extended SC/TC
Manufacturing Period and any extensions thereof are herein collectively referred to as
the “SC/TC Manufacturing Period” and together with the QuickCat Manufacturing
Period as the “Manufacturing Period”.
	 
	 	2.3	 	The Term of this Agreement shall commence on the Effective Date and, unless
earlier terminated in accordance with Section 14.4, continue until the later of (a) 10
years following the expiration or termination of Manufacturing Period or (b) with
respect to each specific Product, the expiration date of the last to expire of (i)
existing patents, (ii) patents pending as of the date hereof, (iii) patents applied
for as of the date hereof and any continuation or continuation in part or re-issue
thereof, in each case with respect to each specific Product (the “End Date”
and the period beginning on the Effective Date and ending on the End Date, shall be
the “Term”). With respect to any products jointly developed by KNC and
Spectranetics after the date hereof pursuant to the Development Agreement or







 




			
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	 	 	 	otherwise, the parties shall agree to the terms and conditions of transfer in
connection therewith, including, without limitation, any extension of the End Date.
	 
	 	2.4	 	For the avoidance of doubt, except as set forth in Section 14.4, this Agreement
shall survive the termination of the Manufacturing Period and shall remain in full
force and effect after such termination, including, without limitation, with respect to
Article 15.






	3.	 	LICENSE






	 	3.1	 	Notwithstanding anything to the contrary in this Agreement, the Purchase
Agreement or any other document executed in connection herewith or therewith,
Spectranetics hereby grants to KNC a worldwide, non-transferable, fully paid and
royalty-free right and license, without the right to grant sublicenses, to manufacture
the Products; provided, however that such license may be used by KNC only as may be
necessary for KNC to fulfill its obligations to manufacture Products under this
Agreement.






	4.	 	EQUIPMENT






	 	4.1	 	The parties hereto agree and acknowledge that certain of the assets sold by KNC
to Spectranetics pursuant to the Purchase Agreement include equipment that is required
to manufacture the Products (the “Existing Equipment”). Spectranetics
therefore agrees that the use and physical possession of the applicable Existing
Equipment shall remain with KNC during the QuickCat Manufacturing Period and the SC/TC
Manufacturing Period, as applicable. KNC agrees to maintain the Existing Equipment and
the equipment included in the Additional Assets (collectively, the “Equipment”)
in good working order (including without limitation with respect to any periodic
calibrations, validations and preventive maintenance) in accordance with the
manufacturer’s recommended maintenance and as required by any Governmental Body, and to
no less standard than is consistent with its past practice, and to insure the
Equipment, at its expense, against damage, destruction or theft in an amount not less
than the replacement value of such Equipment. With respect to the foregoing provision
in connection with the requirements of any Governmental Body, the parties agree and
acknowledge that it applies to the Governmental Bodies in jurisdictions where KNC is
selling the Products as of the Effective Date, and the parties agree
to consult in advance regarding the requirements of any Governmental Body of any new jurisdiction where
Spectranetics may in future elect to sell the Products in order to assess the cost and feasibility of any such requirements to ensure that the parties comply with all applicable
requirements of Governmental Bodies for such jurisdiction.







 




			
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	 	4.2	 	KNC acknowledges and agrees that, at all times during and following the
Manufacturing Period, Spectranetics shall remain the sole and exclusive owner of and
retain title and risk of loss related to the Existing Equipment; provided that, any
Equipment losses not covered by insurance that require purchase of replacement
Equipment shall be treated as Additional Assets.
	 
	 	4.3	 	KNC shall provide such additional equipment as shall in the reasonable
discretion of KNC be reasonably necessary to fulfill its obligations hereunder;
provided, however, that if KNC fails to obtain the prior written approval of
Spectranetics with respect to the purchase of any additional equipment (which approval
shall not be unreasonably conditioned, withheld or delayed), then Spectranetics may, in
its sole discretion, exclude such equipment from the Additional Assets. To the extent
that such additional equipment shall be deemed to be Additional Assets, it shall be
subject to the provisions set forth in Section 14.2.
	 
	 	4.4	 	KNC shall report to Spectranetics any material accident, as soon as reasonably
possible after such accident, resulting from use of the Equipment, including without
limitation accidents resulting in personal injury, property damage or environmental
release. KNC shall inform Spectranetics of any regulatory or other inspection, inquiry
or audit by any Governmental Body with respect to the Products as soon as possible, but
no later than five (5) days following such inspection, inquiry or audit, and shall
provide Spectranetics with a copy of any report, citation or other communication issued
with respect thereto.






	5.	 	MANUFACTURING AND SUPPLY






	 	5.1	 	KNC agrees that during the QuickCat Manufacturing Period with respect to the
QuickCat Products and during the SC/TC Manufacturing Period with respect to the
SafeCross Products and the ThromCat Products, it will:






	 	(a)	 	manufacture and supply Spectranetics with Spectranetics’
requirements for the Products in accordance with this Agreement, including
manufacturing sufficient quantities of the Products in order to meet the
Commitment and to use commercially reasonable efforts to have Product units
available for delivery to meet unanticipated spikes in demand for Products up
to fifteen percent (15%) in excess of Commitment;
	 
	 	(b)	 	supply Spectranetics with Products that (i) are free from any
material defect in manufacture when used under conditions of normal and proper
use; (ii) conform to, and perform in all material respects in accordance with,
the specifications provided on Schedule A hereto (the
“Specifications”); (iii) are not adulterated or misbranded within the
meaning of the U.S. Food, Drug and Cosmetic Act; (iv) comply with all
applicable Laws, including the FDA Quality System Regulation, ISO 13485:2003
and any compliance updates to such Laws made during the







 




			
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	 	 	 	applicable Manufacturing Period; and (v) comply with all applicable industry standards
(such as by way of example only, EN, ISO, IEC, AAMI, UL, etc.) that are used to
maintain a compliant quality system and obtain regulatory approvals, including
without limitation standards for labeling, packaging, biocompatibility,
sterilization, manufacturing environment, mechanical attributes and electrical
attributes, as such applicable standards may be revised over time. KNC agrees
that the foregoing applies to all industry standards of jurisdictions where KNC
is selling the Products as of the Effective Date, and the parties agree to
consult in advance regarding the application of Laws and Standards to any new
jurisdiction where Spectranetics may in future elect to sell the Products in
order to assess the cost and feasibility of any such change order to ensure
that the parties comply with all applicable Laws and standards for such
jurisdiction.
	 
	 	(c)	 	provide packaged Product, including labeling and package
inserts, in accordance with the prior written instructions or specifications of
Spectranetics;
	 
	 	(d)	 	not sell or otherwise transfer the Product to any Person, other
than as directed by Spectranetics; and
	 
	 	(e)	 	ship Product in accordance with Section 9 hereof, which
shipment shall be made at Spectranetics’ expense and risk of loss.






	 	5.2	 	Spectranetics agrees that during the QuickCat Manufacturing Period with respect
to the QuickCat Products and during the SC/TC Manufacturing Period with respect to the
SafeCross Products and the ThromCat Products, it will:






	 	(a)	 	use its commercially reasonable efforts to sell the Products;
	 
	 	(b)	 	subject to Section 14.1(b)(4), exclusively purchase all of its
requirements for the Products from KNC;
	 
	 	(c)	 	design and provide to KNC the appropriate instructions for use,
together with all advertising, promoting and marketing aids, if any, to be
packaged with Product;
	 
	 	(d)	 	be solely responsible for the cost of any Product redesign it
requests and approves which impacts Product or materials already manufactured,
or obsoleted thereby, after the Effective Date, (e.g., specifications, artwork,
labeling, configurations, packaging). Spectranetics will provide at its
expense, or reimburse KNC for, any inventory requirements of materials
purchased for the purpose of fulfilling the next three (3) months of the
existing Annual Forecast but made obsolete as a result of such changes as well
as any longer lead time components that KNC had to purchase in







 




			
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	 	 	 	advance to meet
its Commitment supply obligations where use of such components has been
rendered obsolete by the design change. Notwithstanding the foregoing
provisions, the Product prices will not change as a result of the Product
changes specified as of the Effective Date in the Development Agreement;
	 
	 	(e)	 	provide KNC with non-binding rolling twelve (12) month
forecasts (“Annual Forecasts”) and ninety (90) day forecasts
(“Quarterly Forecasts”) of Spectranetics’s requirements of Product
(collectively, “Rolling Forecasts”). Such Rolling Forecasts shall be
prepared in good faith and provided initially on the Effective Date of this
Agreement and each month thereafter, no less than thirty (30) days prior to the
beginning of the first month covered by the Rolling Forecast. The first three
(3) months of the Rolling Forecast shall be consistent with firm blanket
purchase orders (the “Commitment”) to purchase Products, which blanket
purchase order shall be in the form attached as Schedule B hereto (each, a
“Blanket Purchase Order”);
	 
	 	(f)	 	issue, from time to time, as shipping order (in written or
electronic form) against the Commitment, which shall be in the form attached as
Schedule C hereto (each, a “Shipping Order”) or such other written or
electronic form as may be agreed upon by the parties from time to time, and
which shall (subject to Section 9 hereof) include the ship-to location,
shipping date, Product and quantity to be shipped; and
	 
	 	(g)	 	except as otherwise provided in this Agreement, pay the actual
documented cost of shipping Product and be responsible for all insurance,
custom charges and taxes related to shipping and the distribution of the
Product.






	6.	 	PRICE AND PAYMENTS






	 	6.1	 	Transfer Price. The transfer price per unit (the “Transfer
Price”) for each Product is as follows:





	 	 	 
	 	 	Transfer Price
	Product	 	Per Unit ($US)
	QuickCat Product
	 	*****
	 	 	 
	ThromCat Product
	 	*****
	 	 	 
	SafeCross Wires
	 	*****
	 	 	 
	SafeCross Console
	 	The SCC Price








 




			
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and Exchange Commission.




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	 	 	 	The “TC Commission” shall mean an amount equal to ***** of the average Sales
Price for the ThromCat Product. The parties agree and acknowledge that the TC
Commission from the Effective Date until the end of the first full Fiscal Quarter
following the Effective Date shall be an amount equal to ***** per unit, which
amount shall not be subject to adjustment except for the true-up process specified
below. Fifteen (15) days prior to the beginning of each subsequent Fiscal Quarter,
Spectranetics shall calculate and deliver to KNC the actual Sales Price for the
prior three-month period ending on the last day of the calendar month preceding the
date of calculation. Spectranetics shall adjust the TC Commission to reflect such
updated Sales Price information and advise KNC of the updated amount of the TC
Commission, which shall be effective on the first day and the remainder of such
subsequent Fiscal Quarter.
	 
	 	 	 	The “SCW Commission” shall mean an amount equal to ***** of the average
Sales Price for the SafeCross Wires. The parties agree and acknowledge that the SCW
Commission beginning on the Effective Date through the first full Fiscal Quarter
shall be an amount equal to ***** per unit, which amount shall not be subject to
adjustment except for the true-up process specified below. Fifteen (15) days prior
to the beginning of each subsequent Fiscal Quarter, Spectranetics shall calculate
and deliver to KNC the actual Sales Price for the prior three-month period ending on
the last day of the calendar month preceding the date of calculation. Spectranetics
shall adjust the SCW Commission to reflect such updated Sales Price information and
advise KNC of the updated amount of the SCW Commission, which shall be effective on
the first day and the remainder of such subsequent Fiscal Quarter.
	 
	 	 	 	The “SCC Price” shall mean KNC’s actual purchase cost per unit (which equals
the KNC variable manufacturing cost per unit) of the SafeCross Console during the
applicable Manufacturing Year. The parties agree and acknowledge that the SCC Price
during the Manufacturing Year ending on the first anniversary of the Effective Date
shall be an amount equal to *****, which amount shall not be subject to adjustment.
At least thirty (30) days prior to the end of each Manufacturing Year, KNC shall
deliver to Spectranetics the SCC Price for the next Manufacturing Year, which price
shall be effective as of the first day of such next Manufacturing Year.
	 
	 	 	 	Fifteen (15) days prior to the end of each Fiscal Quarter, Spectranetics will
calculate the actual Sales Price for all Products sold during the prior three-month
period ending on the last day of the calendar month preceding the date of







 




			
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	 	 	 	calculation. For the first Fiscal Quarter, this shall include all Products sold by
Spectranetics since the Effective Date. To the extent that the actual average Sales
Price of any Product during the applicable calculation period differs from the Sales
Price used to calculate the TC Commission or the SCW Commission for such calculation
period, the parties agree that an adjustment will be calculated and paid or credited
to Spectranetics, in the case of an overpayment, or to KNC, in the case of an
underpayment, within thirty (30) days after the calculation of the true-up.
	 
	 	 	 	Along with each adjustment to the TC Commission and SCW Commission, as well as for
the true-up calculations, made in accordance with this Section 6.1, Spectranetics
shall deliver such documentation as may reasonably be necessary for KNC to confirm
the respective calculations. For the avoidance of doubt, the parties agree and
acknowledge that any disagreements of the parties with respect to the appropriate
adjustments to the TC Commission, the SCW Commission and the SCC Price shall be
subject to, first, audit under Section 8.1 and, if the parties cannot agree on the
results of such audit, then arbitration in accordance with Section 8.2.
	 
	 	 	 	In addition to the foregoing adjustments, the Transfer Prices may be adjusted by
mutual agreement for any changes to the Specifications as may be mutually agreed
upon by the parties hereto. Notwithstanding the foregoing provisions, the Product
prices will not change as a result of the Product changes specified as of the
Effective Date in the Development Agreement.
	 
	 	6.2	 	Additional SafeCross Console Payment. If the SafeCross Console Revenue
attributable to any Manufacturing Year exceeds the Total Console Cost for such period,
then Spectranetics shall make to KNC an additional payment equal to ***** of such
SafeCross Console Revenue (the “Additional Payment”); provided, that in
the event that any Additional Payment would be greater than 50% of the amount by which
the SafeCross Console Revenue for such period exceeded the
Total Console Cost for such period, then the amount of the Additional Payment shall
be equal to 50% of the amount by which the SafeCross Console Revenue for such period
exceeded the Total Console Cost for such period. Spectranetics shall deliver to KNC
a written calculation of the Total Console Cost and the SafeCross Console Revenue
attributable to each Manufacturing Year, along with a calculation and the payment of
any Additional Payment that is owing, within forty five (45) days following the end
thereof. For the avoidance of doubt, the parties agree and acknowledge that any
disagreements of the parties with respect to the calculation of any Additional
Payment shall be subject to, first, audit under Section 8.1 and, if the parties
cannot agree on the results of such audit, then arbitration in accordance with
Section 8.2.
	 
	 	6.3	 	Determination of Sales Price. In the event Products are sold together
with other items at a single price, or Products are configured as a combination package







 




			
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	 	 	 	containing other products, such single price shall be allocated among the Products and
the other products based on the market price for such Products when sold separately,
provided, that if any of such Products is not also then being sold alone, Spectranetics
and KNC shall agree upon the Sales Price that could reasonably be expected for that
Product or a comparable product.
	 
	 	6.4	 	Payment Terms. KNC shall invoice Spectranetics for Product shipments
and Spectranetics shall pay any invoice within thirty (30) days of receipt. KNC may
impose a late payment service charge of one percent (1.0%) per month on invoices not
paid when due. All payments shall be in United States currency.
	 
	 	6.5	 	Subsequent Agreement on Cost Reductions. Subsequent to the date
hereto, KNC and Spectranetics may, in their respective sole discretion, enter into a
separate written agreement with respect to the sharing of cost reductions in cases
where KNC implements a manufacturing change that results in a decrease in the cost to
manufacture the Products, or the volume of purchases by Spectranetics results in a
decrease of the cost to manufacture Products.
	 
	 	6.6	 	Payment of Royalties. KNC shall be responsible for royalties on sales
during the SC/TC Manufacturing Period of SafeCross Product and ThromCat Product that
are incurred pursuant to the Microsoft Agreement and Surmodics Agreement. Spectranetics
will be responsible for payment of royalties under the Surmodics Agreement on sales of
the QuickCat Product by Spectranetics during the QuickCat Manufacturing Period.






	7.	 	INSPECTION; QUALITY CONTROL






	7.1	 	KNC shall test and inspect Products in accordance with existing procedures (or
modified procedures approved in advance by Spectranetics) before shipment thereof for
compliance with the applicable Specifications. KNC shall supply a
Spectranetics-approved certificate of compliance to Spectranetics for Products to be
shipped, stating actual testing results for compliance with the Specifications.
Upon receipt of each shipment of Products, Spectranetics, or a third party
designated by Spectranetics, may choose to test and inspect such Products for
compliance with the applicable Specifications. Spectranetics shall make any claims
regarding quantity or quality of each shipment of Products in writing to KNC within
thirty (30) days of receipt thereof, specifying in reasonable detail the nature and
basis for the claim and citing relevant control numbers or other information to
enable specific identification of the Product in question. In the event that KNC
receives a notice of rejection from Spectranetics, KNC shall, at its sole expense,
replace any shipment or portion thereof of such rejected Product within thirty (30)
days after receiving Spectranetics’s written notice of rejection or demonstrate, to
Spectranetics reasonable satisfaction why the initial rejection was unjustified.







 




			
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	 	7.2	 	If a shipment contains defective Product, or is deficient in quantity from the
quantity stated on the applicable invoice (other than in the case of a partial shipment
actually approved in writing by Spectranetics as contemplated in Section 9.1), KNC
shall promptly make up the affected quantity or replace the affected Product at its
expense, including cost of shipping and import. Spectranetics shall, at KNC’s expense
and direction, dispose of, or return to KNC, any defective Product.
	 
	 	7.3	 	Representatives of Spectranetics and Spectranetics’s designated third party
Product customers (to the extent agreed by KNC, such agreement not to be unreasonably
conditioned, delayed or withheld) shall be permitted, upon Spectranetics’s request and
upon reasonable notice, to review KNC’s quality system and conduct compliance audits of
KNC’s manufacturing facility and the Equipment. KNC shall permit representatives of
Spectranetics to inspect the manufacturing facility and the Equipment to verify that
the Products are being manufactured and supplied in accordance with the applicable
Specifications and applicable Law. KNC shall promptly, at its sole expense, remedy or
cause the remedy of any deficiencies that may be noted in any such inspection and all
non-compliances and all remediation shall be subject to Spectranetics’s prior written
approval, such approval not to be unreasonably conditioned, delayed or withheld. KNC
agrees to cooperate with Spectranetics at KNC’s own expense in any recertification or
requalification of any affected manufacturing facility. In addition, to the extent
necessary for Spectranetics to obtain any license, permit or satisfy any other
governmental requirement (“Approvals”) to distribute Products in a
jurisdiction, KNC agrees to provide access to its manufacturing facility and books and
records to Spectranetics or its designees to conduct such audits as are necessary to
obtain any necessary Approvals from any Governmental Body. In addition, if requested
by Spectranetics, KNC shall reasonably cooperate with Spectranetics in submitting any
required paperwork to obtain such Approvals.
	 
	 	7.4	 	For the purposes of this Agreement, repeated failure (“Repeated
Failure”) will be deemed to have occurred if, at any time during any five (5) year
period, a substantially similar repetitive failure or defect occurs in a particular
Product (in each case, within two (2) years of delivery by KNC of the affected units
thereof) indicating a common or systemic failure or root cause.






	 	(a)	 	In the event of a Repeated Failure, KNC and Spectranetics will
cooperate to implement the following procedure:






	 	(1)	 	The discovering party shall promptly notify the
other party upon discovery of the failure; provided, however, that, in
the event of a failure that creates a risk of injury or death, the
discovering party will immediately notify the other party and will also
provide the other party with written notice within twelve (12) business
hours of







 




			
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	 	 	 	any notification made by the discovering party to any
Governmental Body responsible for regulation of product safety;
	 
	 	(2)	 	KNC and Spectranetics shall jointly exert
commercially reasonable efforts to promptly diagnose the problem (root
cause) and plan a solution or corrective and preventive action,
depending on the root cause identified by the parties (“CAPA”);
	 
	 	(3)	 	Spectranetics shall prepare and consult with
KNC regarding an appropriate recovery CAPA plan if the root cause is
traceable to a manufacturing, design or materials issues; and
	 
	 	(4)	 	KNC and Spectranetics shall mutually agree if
the root cause is traceable to a manufacturing, design or materials
issue on a recovery CAPA plan, customer notification, replacement
scheduling and remediation, which may include a recall, field action,
and return inventory replacement, and repair.






	 	 	 	Notwithstanding the foregoing Spectranetics may undertake any and all action
necessary independently of KNC.






	 	(b)	 	In the event of a Repeated Failure resulting from KNC’s breach
of this Agreement, and not from an external cause such as misuse of the
Products by end users, KNC shall be responsible for, at Spectranetics’s option:
(i) the replacement of the defective Products if KNC is still manufacturing the
Products at the time; or (ii) a credit to Spectranetics against any Transfer
Prices payable by Spectranetics hereunder or against the Revenue Share payments
in an amount equal to the cost to Spectranetics for qualified, non-defective
replacement Products reasonably acceptable to Spectranetics. In addition, in
the event of a Repeated Failure resulting
from KNC’s breach of this Agreement, KNC shall bear the labor costs (and
associated housing and travel costs) to replace the defective Products and
the freight and transportation costs incurred in connection with the repair
or replacement of the defective Products.






	 	7.5	 	Any written or oral expression of dissatisfaction related to the identity,
quality, durability, reliability, safety, effectiveness or performance of a Product
manufactured by KNC for Spectranetics shall be considered to be a “Complaint.” As
between the parties, Spectranetics shall be the primary contact for customer
Complaints. KNC shall (a) promptly and in reasonable detail notify Spectranetics
within two (2) business days of receipt of notice of any Complaint or of adverse events
relating to the Products of which it becomes aware, and (b) maintain a written record
of all Complaints and notice of all adverse events it receives.







 




			
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	 	(a)	 	In the event that KNC is contacted by any Governmental Body
with any inquiry that would involve any disclosures about any of the Products,
KNC shall notify Spectranetics within one (1) business day of such contact,
providing Spectranetics with the substance of the inquiry (including any
written materials which were provided) and an opportunity to respond. KNC
shall allow Spectranetics to address any such inquiries relating to the
Products and shall at all times do all necessary things and use its best
efforts to protect the confidentiality of any of Spectranetics’s Confidential
Information. KNC agrees to comply with any such reasonable requests made by
Spectranetics in the course of responding to any such inquiry. KNC agrees to
timely provide Spectranetics with any materials generated by either KNC or the
Governmental Body in responding to any inquiry relating to the Products,
including, in the case of an inspection, a copy of the inspection findings and
KNC’s proposed response to them. In the event of any contact by any
Governmental Body with Spectranetics, to the extent such inquiry may relate in
whole or in part to the manufacturing of any of the Products, KNC agrees to
cooperate with Spectranetics in providing any materials to the Governmental
Body that may be responsive to the inquiry. All information disclosed or
exchanged pursuant to this Section 7.5 shall be treated as Confidential
Information of Spectranetics and shall not be disclosed to any third party
without Spectranetics’ prior written consent, unless such disclosure is
required by applicable Law or court order (in which case KNC shall give
Spectranetics prior written notice of the anticipated disclosure).
	 
	 	(b)	 	As between the parties, Spectranetics shall be solely
responsible for determining how a Complaint should be responded to, including
any determination as to whether such Complaint should be reported to any
Governmental Body, and, except as otherwise required under applicable Law, KNC
shall not report any such Complaints without the prior
approval of Spectranetics. At either party’s request, the other party shall
cooperate with such party in investigating and resolving any Complaint. KNC
will communicate the outcome of the Complaint investigation by KNC to
Spectranetics, and Spectranetics shall be responsible for communicating with
the affected customer. Unless approved by Spectranetics or as required by a
Governmental Body, Spectranetics shall be solely responsible for contacts
with any Governmental Body or the media with respect to any Complaint. Each
party shall bear its own expenses regarding Complaints.
	 
	 	(c)	 	KNC agrees to provide Spectranetics reasonable technical
support and assistance upon request regarding questions about the
Specifications, quality systems and the manufacturing processes for the
Products.







 




			
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	8.	 	REPORTING REQUIREMENTS; AUDIT RIGHTS






	 	8.1	 	Spectranetics shall keep accurate written accounting records sufficient in
detail to enable KNC to determine and verify the amounts payable by Spectranetics
hereunder. Such records shall be retained for a period of not less than three calendar
years after the end of the applicable measurement period. For the sole purpose of
verifying the amounts payable hereunder, KNC shall have the right, at its own expense,
to review such records in the location(s) where they are maintained by Spectranetics
upon reasonable notice and during regular business hours and under obligations of
confidentiality as provided in Section 11. If KNC proceeds with a review and such
review reflects an underpayment, such underpayment by Spectranetics shall be promptly
remitted by Spectranetics to KNC, and if the underpayment is equal to or greater than
five percent (5%) of the amount that was otherwise due, Spectranetics shall pay, to the
extent reasonable, all of the actual third party costs incurred by KNC in connection
with such review.
	 
	 	8.2	 	If either party objects to the result of any audit conducted in accordance with
Section 8.1 and, if the objection cannot be resolved by negotiation within thirty (30)
days after the results of such audit having been communicated by the auditing party to
the non-auditing party, the results of the audit, including the amount being claimed by
the non-paying party, and all work papers related thereto (collectively, the
“Determination Materials”), shall be submitted to a mutually acceptable auditor
(the “Accounting Arbitrator”), which shall review the Determination Materials
and shall determine the amount of payment owed, if any, by one party to the other,
which may not be outside the range, if any, that comprised either the demand of the
claiming party or any bonafide offer by the non-claiming party. The Accounting
Arbitrator shall notify the parties of its determination within thirty (30) days
following the receipt of the Determination Materials. The fees and expenses of the
Accounting Arbitrator shall be shared
equally by the parties, and all determinations pursuant to this Section 8.2 shall be
in writing and shall be delivered to the parties hereto, and shall be final and
binding on the parties with respect to the matters submitted.






	9.	 	PRODUCT ORDERS






	 	9.1	 	With each Rolling Forecast, Spectranetics shall provide KNC with firm Blanket
Purchase Orders for Products equal to not less than the Commitment. The parties agree
to communicate on a regular basis to estimate the likely timing of estimated Shipping
Orders, and without limiting KNC’s supply obligations hereunder, Spectranetics shall
use reasonable efforts to attempt to accommodate the lead times of KNC’s suppliers
where possible. From time to time, Spectranetics will also place Shipping Orders for
full or partial shipments of the Products for such Blanket Purchase Orders during the
time period covered by the Commitment. Upon its prior approval, which may be granted
or withheld in its sole discretion, Spectranetics will accept partial shipments of
Products should it, for any commercial reasonable reason become necessary to ship in
advance of order







 




			
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	 	 	 	completion. In the event that Spectranetics elects not to accept any
such partial shipment, the Products that would have been delivered pursuant to such
partial shipment shall (solely for purposes of Section 14.1(b)(1) hereof) be deemed to
have been delivered at the time that such partial shipment would have been delivered.
KNC shall use commercially reasonable efforts to comply with any reasonable revisions
to Blanket Purchase Orders; provided, however, that no such revisions shall serve to
reduce the Commitment. Spectranetics’ Affiliates may also place Shipping Orders for
delivery of Products in coordination with Spectranetics, subject to the terms and
conditions of this Agreement and each such Affiliate shall be responsible for paying
KNC the applicable purchase price for any Product units it purchase; provided that if
such Affiliate does not pay KNC such amounts in a timely manner, KNC may charge
Spectranetics for such purchases.
	 
	 	9.2	 	Each Shipping Order shall provide for the shipment of Product directly to
Spectranetics, provided, however, that subsequent to the date hereof, KNC and
Spectranetics may, in their sole discretion, enter into a separate written logistics
agreement with respect to the shipment of Product directly to customers. So long as a
Shipping Order is consistent with the Blanket Purchase Order, KNC will ship the
applicable orders to Spectranetics within two (2) business days.






	10.	 	INTELLECTUAL PROPERTY RIGHTS






	 	10.1	 	Except as specifically set forth herein, Spectranetics owns and shall continue
to own the entire right, title and interest in and to the Products and any intellectual
property relating thereto.
	 
	 	10.2	 	Each party agrees that it will not, without the other party’s prior written
consent, use and/or associate the other party, the other party’s corporate name or any
of the other party’s trademarks, either orally or in writing, with any of the other
party’s products, except that Spectranetics shall use KNC’s name and designate KNC as
the manufacturer and developer or co-developer, as appropriate, of the Products, to the
extent required by any applicable Law in gaining approval to market or to continue the
marketing of the Products.






	11.	 	CONFIDENTIAL INFORMATION






	 	11.1	 	The parties agree:






	 	(a)	 	To receive and hold all Confidential Information in strict
confidence and to disclose such Confidential Information only to its employees
and representatives who have a need to know the Confidential Information.
Without affecting the generality of the foregoing, the Receiving Party will
exercise no less care to safeguard the Confidential Information than it
exercises in safeguarding its own Confidential Information and will be







 




			
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	 	 	 	responsible for any breach of the provisions of this Section 11 by its
employees and representatives (including its employees who, subsequent to the
first disclosure of Confidential Information, become former employees);
	 
	 	(b)	 	That the Receiving Party shall not, directly or indirectly,
disclose or use the Confidential Information, in whole or in part, for any
purposes other than those contemplated herein. Without affecting the generality
of the foregoing, the Receiving Party shall not, directly or indirectly,
disclose any such Confidential Information to any third party or use the
Confidential Information for the benefit of any third party;
	 
	 	(c)	 	That neither party shall, without the prior written consent of
the other party, disclose to any third party the fact that the Confidential
Information has been made available or any of the terms, conditions or other
facts with respect to the business relationship of the parties. Any approved
disclosure made shall be no more extensive than is necessary to meet the
minimum requirement imposed on the party making such disclosure;
	 
	 	(d)	 	That money damages would not be a sufficient remedy for a
breach of this Section 11 and that the non-breaching party shall be entitled to
seek equitable relief (including, but not limited to, a temporary restraining
order or an injunction or specific performance), without posting bond or
establishing monetary damages, in the event of any breach of the provisions of
this Section 11;
	 
	 	(e)	 	The furnishing of Confidential Information hereunder shall not
constitute or be construed as a grant of any express or implied license or
other right, or a covenant not to sue or forbearance from any other right of
action by the Disclosing Party to the Receiving Party under any of the
Disclosing Party’s patents or other intellectual property rights;
	 
	 	(f)	 	Upon the Disclosing Party’s request, at any time, or upon
termination or expiration of this Agreement, the Receiving Party shall
immediately return all written, graphic and other tangible forms of the
Confidential Information (and all copies thereof) in the Receiving Party’s
possession or control except for one copy which may be retained for legal
archival purposes only; and
	 
	 	(g)	 	The obligations of the Receiving Party regarding disclosure and
use of Confidential Information shall survive the termination of this Agreement
and shall continue for ten (10) years after the End Date.







 




			
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12. WARRANTIES AND REPRESENTATIONS





	 	12.1	 	Spectranetics warrants that it shall comply with all applicable Laws and obtain
all approvals of any Governmental Body affecting the use, possession, distribution,
labeling, advertising and all forms of promotion in connection with the sale and
distribution of the Products.
	 
	 	12.2	 	KNC warrants that it shall provide Spectranetics with Products which meet the
Specifications and are manufactured at facilities registered with the applicable
Governmental Body, to the extent required by Law, and in accordance with all applicable
Laws of each Governmental Body having jurisdiction over the manufacture of Product in
accordance with the provisions of this Agreement. KNC agrees that the foregoing
applies to all jurisdictions where KNC is selling the Products as of the Effective
Date, and the parties agree to consult in advance regarding the application of Laws and
Standards to any new jurisdiction where Spectranetics may in future elect to sell the
Products in order to assess the cost and feasibility of any such change order to ensure
that the parties comply with all applicable Laws and standards for such jurisdiction
and upon such agreement (such agreement not to be unreasonably conditioned, delayed or
withheld) the foregoing warranty shall apply to any such additional jurisdiction.
	 
	 	12.3	 	KNC and Spectranetics each represent and warrant for itself that (i) it is duly
incorporated and validly existing and in good standing under the Laws of the state of
its incorporation, (ii) it has the full right, power, and authority to execute and
perform this Agreement, (iii) this Agreement does not conflict with or otherwise result
in a breach of any agreement to which such party is a party or to which it is
bound, and (iv) this Agreement represents a valid, legally binding obligation of it,
enforceable against it in accordance with its terms.
	 
	 	12.4	 	EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN THIS AGREEMENT, NEITHER OF THE
PARTIES MAKES ANY OTHER REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR ANY WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE EVEN WHERE THE PURPOSE IS KNOWN.






	13.	 	ASSIGNMENT






	 	13.1	 	Neither of the parties may assign or transfer this Agreement, in whole or in
part, to a third party without the prior written consent of the other party, which
consent shall not be unreasonably withheld, conditioned or delayed.
	 
	 	13.2	 	This Agreement will bind and inure to the benefit of the respective successors
and permitted assigns of the parties hereto, whether so expressed or not.







 




			
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	14.	 	TERMINATION; TRANSFER OF MANUFACTURING






	 	14.1	 	(a) KNC shall have the right, but not the obligation, to terminate the
Manufacturing Period upon sixty (60) days written notice by certified mail to
Spectranetics, under the following circumstances, unless the circumstances are remedied
or cured within said sixty (60) day notice period:






	 	(1)	 	if any amounts due KNC hereunder are unpaid
within the periods provided for herein;
	 
	 	(2)	 	if Spectranetics declares bankruptcy,
Spectranetics makes an assignment for the benefit of its creditors, if
any proceedings take place for reorganization or arrangement for the
appointment of a receiver or trustee to take possession of
Spectranetics’s assets, or any other proceeding under Law for the
relief of creditors shall be instituted; and
	 
	 	(3)	 	if Spectranetics materially breaches its
obligations under this Agreement.






	 	(b)	 	Spectranetics shall have the right, but not the obligation, to
terminate the Manufacturing Period upon sixty (60) days written notice by
certified mail to KNC under the following circumstances, unless the
circumstances are remedied or cured within said sixty (60) day notice period:






	 	(1)	 	if KNC is unable for a period of three (3)
successive months or four (4) months out of any six (6) months to
supply Spectranetics with at least ninety percent (90%) of its
Commitment, so long as such Commitment is not more than fifty percent
(50%) greater on a cumulative basis than the average of the five (5)
preceding months;
	 
	 	(2)	 	if KNC declares bankruptcy, KNC makes an
assignment for the benefit of its creditors, if any proceedings take
place for reorganization or arrangement for the appointment of a
receiver or trustee to take possession of KNC’s assets, or any other
proceeding under Law for the relief of creditors shall be instituted;
and
	 
	 	(3)	 	if KNC materially breaches its obligations
under this Agreement.
	 
	 	(4)	 	Alternatively, if KNC is unable to fulfill its
supply obligations per subsection (1) above, Spectranetics may elect to
continue to purchase Products from KNC on a non-exclusive basis and
Section 5.2(b) shall thereafter be waived and of no further force or
effect.







 




			
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	 	14.2	 	Upon the expiration of the QuickCat Manufacturing Period, (a) the Additional
QuickCat Assets will be transferred by KNC to Spectranetics in exchange for a payment
by Spectranetics equal to KNC’s net aggregate book value thereof at the time of such
transfer and (b) the Existing Equipment relating exclusively to the manufacture of the
QuickCat Product will be transferred by KNC to Spectranetics, in each case at the
expense of Spectranetics except as otherwise set forth in this paragraph. Upon the
expiration of the SC/TC Manufacturing Period, (x) the Additional SC/TC Assets will be
transferred by KNC to Spectranetics in exchange for a payment by Spectranetics equal to
KNC’s net aggregate book value thereof at the time of such transfer and (y) all
Existing Equipment or other assets purchased by Spectranetics through the Purchase
Agreement that remain in the possession of KNC will be transferred by KNC to
Spectranetics, in each case subject to the remainder of this paragraph. In the event
that either (aa) KNC elects to not extend the Initial SC/TC Manufacturing Period or
applicable Extended SC/TC Manufacturing Period or (bb) Spectranetics terminates the
Manufacturing Period pursuant to Section 14.1(b) or because a KNC Change of Control has
occurred or KNC has requested an increase in the Transfer Prices, then the cost of
removing and moving the Additional Assets and the Existing Equipment to a location
designated by Spectranetics shall be borne by KNC. In all other instances, such cost
will be borne by Spectranetics. Any Transfer Taxes (as defined in the Purchase
Agreement) arising in connection with the transfer of ownership by KNC of the
Additional Assets shall be shared equally by KNC and Spectranetics.
	 
	 	14.3	 	For the six months preceding and the six months following the expiration of
each of the QuickCat Manufacturing Period and the SC/TC Manufacturing Period, KNC shall
provide to Spectranetics such transition services as may be reasonably requested by
Spectranetics in connection with Equipment for the respective Products, with the
purpose of such services to be the validation of the equivalency of Spectranetics’
packaging equipment with that of KNC. In the event that either (a) KNC elects to not
extend the Initial SC/TC Manufacturing Period or applicable Extended SC/TC
Manufacturing Period or (b) Spectranetics terminates the Manufacturing Period pursuant
to Section 14.1(b) or because a KNC Change of Control has occurred or KNC has requested
an increase in the Transfer Prices, then the cost of the transition services described
in this Section 14.3 shall be borne by KNC. In all other instances, the reasonable,
pre-approved cost of such services will be borne by Spectranetics.
	 
	 	14.4	 	In the event of a material failure by a party to comply with any of its
obligations contained herein, the party not in default shall give to the party in
default written notice specifying the nature of the default, requiring such defaulting
party to make good or otherwise cure such default, and stating the non-defaulting
party’s intention to terminate this Agreement if such default is not cured. If such
default is not cured within sixty (60) days after the date such notice was sent, then
the party not in default shall be entitled, without prejudice to any other rights







 




			
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	 	 	 	conferred on it by this Agreement, and in addition to any other remedies available to
it by law or in equity, to terminate this Agreement by written notice of termination to
the defaulting party. Notwithstanding anything to the contrary set forth herein, any
termination of this Agreement shall be subject in all respects to Section 14.6.
	 
	 	14.5	 	Termination or expiration of this Agreement for any reason will not relieve a
party from accrued payment obligations or from obligations which are expressly
indicated to survive termination or expiration of this Agreement.
	 
	 	14.6	 	In addition to the rights otherwise specified to survive herein, the following
Articles and Sections of this Agreement shall survive its termination or expiration:
Article 1, Sections 14.2, 14.3, 14.5, 14.6, Article 15 and Article 17, provided,
however, if KNC materially breaches its non-competition obligations under the
Non-Competition Agreement and does not cure such breach within thirty (30) days of
receipt of notice, then Article 15 shall also expire.






	15.	 	REVENUE SHARE






	 	15.1	 	In exchange for the services provided hereunder, Spectranetics shall pay to KNC
a revenue share (the “Revenue Share”) in accordance with the following:






	 	(a)	 	if the SC/TC Manufacturing Period ended because (i) KNC
delivered written notice to Spectranetics of its intent not to extend the SC/TC
Manufacturing Period beyond the Initial SC/TC Manufacturing Period or
applicable Extended SC/TC Manufacturing Period, (ii) Spectranetics terminated
the Manufacturing Period pursuant to Section 14.1(b), or (iii) Spectranetics
elected not to extend the SC/TC Manufacturing Period beyond the Initial SC/TC
Manufacturing Period or applicable Extended SC/TC Manufacturing Period due to a
KNC Change of Control or a request by KNC for increased Transfer Prices, then
the Revenue Share shall be an amount equal to ***** of the Combined Revenue
attributable to each Fee Year, or
	 
	 	(b)	 	if the SC/TC Manufacturing Period terminated or expired for any
reason other than as set forth in clause (a) above, then the Revenue Share
shall be an amount equal to ***** of the Combined Revenue attributable to each
Fee Year; provided, however, that to the extent the Combined Revenue exceeds
***** for any Fee Year, then such ***** shall be reduced to ***** solely with
respect to the Combined Revenue earned for such Fee Year in excess of *****
(and, for the avoidance of doubt, such ***** shall be restored with respect to
each subsequent Fee Year).
	 
	 	(c)	 	In the event that (i) the United States Patent and Trademark
Office (the “USPTO”) issues a non-appealable notice of final rejection
of the TC







 




			
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and Exchange Commission.




24









 





	 	 	 	Patents substantially in the form as written as of the Effective Date
and no patent issues including a claim that covers a Product as modified
pursuant to the Development Agreement and (ii) thereafter a product that
competes with the ThromCat Product is introduced and such newly introduced
product would have infringed a claim of the TC Patents had such patents issued
substantially in the form as written as of the Effective Date (a “Competing
Product”), then the TC Commission or Revenue Share for the ThromCat
Product, as applicable, shall be reduced in accordance with the following,
which reduction shall be effective on the date that is the later of (x) three
(3) years after the Effective Date and (y) the date the Competing Product is
introduced in either the United States or outside the United States (as
applicable):






	 	(1)	 	When the TC Commission rate equals *****, for
every one dollar ($1) reduction in the average Sales Price of the
ThromCat Product compared with the baseline average Sales Price of the
ThromCat Product, as calculated by averaging the Sales Price of all
ThromCat Products sold by Spectranetics during the Fiscal Quarter
immediately preceding the introduction of the Competing Product, the TC
Commission will be reduced by ***** percentage points; provided that the TC Commission rate shall not be reduced to an
amount less than *****.
	 
	 	(2)	 	If the Revenue Share rate equals *****, for
every one dollar ($1) reduction in the average Sales Price of the
ThromCat Product compared with the baseline average Sales Price of the
ThromCat Product, as calculated by averaging the Sales Price of all
ThromCat Products sold by Spectranetics during the Fiscal Quarter
immediately preceding the introduction of the Competing Product, the
Revenue Share rate with respect to the ThromCat Product will be reduced
by ***** percentage points; provided that the Revenue Share rate shall
not be reduced to an amount less than *****.
	 
	 	(3)	 	If the Revenue Share rate equals *****, for
every one dollar ($1) reduction in the average Sales Price of the
ThromCat Product compared with the baseline average Sales Price of the
ThromCat Product, as calculated by averaging the Sales Price of all
ThromCat Products sold by Spectranetics during the Fiscal Quarter
immediately preceding the introduction of the Competing Product, the
Revenue Share rate with respect to the ThromCat Product will be reduced
by ***** percentage points; provided that the Revenue Share rate shall
not be reduced to an amount less than *****.






	 	 	 	For purposes of illustration and not limitation, if, at the time that the conditions
in the first paragraph of this Section 15.1(c) are satisfied, the Revenue Share rate







 




			
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25









 














	 	 	 	equals ***** and the baseline average Sales Price of the ThromCat Product during the
Fiscal Quarter immediately preceding the introduction of the Competing Product in
the United States is *****, then, if the average Sales Price in the United States
during a subsequent Fiscal Quarter is *****, the Revenue Share rate would be reduced
from ***** with respect to sales of the ThromCat Product in the United States during
such subsequent Fiscal Quarter (*****), and the Revenue Share per ThromCat Product
would be reduced from ***** (*****). Similarly, if, at the time that the conditions
in the first paragraph of this Section 15.1(c) are satisfied, the TC Commission rate
equals ***** and the baseline average Sales Price of the ThromCat Product during the
Fiscal Quarter immediately preceding the introduction of the Competing Product in
the United States is *****, then, if the average Sales Price in the United States
during a subsequent Fiscal Quarter is *****, the TC Commission rate would be reduced
from ***** with respect to sales of the ThromCat Product in the United States during
such subsequent Fiscal Quarter (*****), and the TC Commission per ThromCat Product
would be reduced from ***** (*****).
	 
	 	 	 	Any TC Commission or Revenue Share rate reduction will be calculated when the true
up is calculated each Fiscal Quarter.
	 
	 	 	 	For purposes of calculation, Product sales and average Sales Prices within the
United States will be calculated separately from Product sales and average Sales
Prices outside the United States, and the TC Commission or Revenue Share rate
reduction will only apply to the territory (United States versus outside the United
States) where the Competing Product is introduced.
	 
	 	 	 	Spectranetics shall deliver to KNC, within thirty (30) days after the end of each
calendar quarter, reasonably detailed written accountings of the Combined Revenue
for such calendar quarter (including any calculations with respect to amounts owing
with respect to Product bundled with other items as set forth in Section 6.3), and
units sold during such quarter, in each case on a Product-by-Product and
country-by-country basis and in the form attached as Schedule D hereto. When
Spectranetics delivers such accounting to KNC, it shall also deliver the TC
Commission or Revenue Share due under this Section 15.1 for the calendar quarter.
In addition to such quarterly reports, Spectranetics shall provide to KNC within
seven (7) days of each month end (with information readily available to it in that
timeframe) preliminary estimated monthly Combined Revenue calculations and units
sold on a Product-by-Product and country-by-country basis in the form attached as
Schedule D hereto. For the avoidance of doubt, the parties agree and acknowledge
that any disagreements of the parties with respect to the calculation of the TC
Commission or Revenue Share shall be subject, first, to audit in accordance with
Section 8.1 and then to arbitration in accordance with Section 8.2.







 




			
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26









 



16. INDEMNIFICATION




	 	16.1	 	KNC agrees to indemnify, defend and hold Spectranetics and any of its officers,
directors, Affiliates, employees, sales agents, successors and permitted assigns (each,
a “Spectranetics Indemnified Party”) harmless from and against any and all
claims of third parties for any losses arising out of or resulting from: (i) any KNC
breach of a representation, warranty, covenant or obligation in this Agreement; or (ii)
any negligence, recklessness or wrongful intentional acts or omissions of KNC or its
representatives, directors, officers, employees and agents, in connection with the
activities contemplated under this Agreement, in each case, only to the extent not due
to the negligence, recklessness or wrongful intentional acts or omissions of a
Spectranetics Indemnified Party, or to the extent such claims are otherwise subject to
indemnification under Section 16.2.
	 
	 	16.2	 	Spectranetics agrees to indemnify, defend and hold KNC and any of its officers,
directors, Affiliates, employees, sales agents, successors and permitted assigns (each,
a “KNC Indemnified Party”) harmless from and against any and all claims of
third parties for any losses arising out of or resulting from: (i) any Spectranetics
breach of a representation, warranty, covenant or obligation in this Agreement; (ii)
any negligence, recklessness or wrongful intentional acts or
omissions of Spectranetics or its representatives, directors, officers, employees and agents, in
connection with the activities contemplated under this Agreement, including without
limitation any deceptive, misleading, manipulative or intentionally or recklessly
inaccurate marketing or advertising practices; or (iii) Spectranetics’ advertising,
promoting, marketing, distributing and selling activities of Product that are not in
accordance with Law, in each case, only to the extent not due to the negligence,
recklessness or wrongful intentional acts or omissions of a KNC Indemnified Party,
or to the extent such claims are otherwise subject to indemnification under Section
16.1.
	 
	 	16.3	 	To receive the indemnification protection provided in this Section 16, the
party entitled to indemnification hereunder (the “Indemnified Party”) must
provide the party obligated to provide indemnification hereunder (the “Indemnifying
Party”) with (i) reasonably prompt notice in writing of any such claim or action,
(provided that, the failure to provide such notice shall not relieve the Indemnifying
Party from any of its obligations under this Article 16 except to the extent
the Indemnifying Party is materially prejudiced by such failure) and (ii) information
and reasonable assistance, at the Indemnifying Party’s expense, as necessary or
appropriate to defend or settle such claim or action. No such third party claim,
except the settlement thereof which involves the payment of money
only and for which the Indemnified Party is fully indemnified by the Indemnifying Party, may be settled by
the Indemnifying Party without the written consent of the Indemnified Party, which
shall not be unreasonably withheld or delayed. The Indemnified Party shall have the
right to employ separate counsel and participate in the defense of any claim or action,
at its own expense. Except




 



			
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27








 












	 	 	 	as provided in the last sentence of this Section 16.3, the
Indemnified Party may not settle any claim or action under this Section 16 on behalf of
the Indemnifying Party without first obtaining the Indemnifying Party’s written
permission, and so long as the Indemnifying Party is diligently conducting a defense as
provided herein, it shall not be liable for the attorneys’ fees or expenses of the
Indemnified Party. If an Indemnified Party provides notice of an indemnification claim
in accordance herewith and is not notified within fifteen (15) days after receipt of
such notice, that the Indemnifying Party intends to defend such claim, the Indemnified
Party shall (upon delivering notice to such effect to the Indemnifying Party) be
entitled to defend, settle and/or compromise such claim, subject to the indemnification
provided for herein.






	17.	 	MISCELLANEOUS PROVISIONS






	 	17.1	 	Independent Contractor. Neither party shall have the right, power or
authority to assume or create any obligations or responsibility expressed or implied,
on behalf of, or in the name of, the other party, or to bind the other party in any
manner or to any extent whatsoever, without the prior written approval and acceptance
of the other party. Each of the parties hereto is an independent contractor for the
purposes of this Agreement and nothing contained herein shall be deemed or construed
to create the relationship of agency, partnership or joint venture or any other
association except that of an independent contractor relationship.
	 
	 	17.2	 	Amendment and Waiver. This Agreement may be amended, and any provision
of this Agreement may be waived, provided that any such amendment or waiver will be
binding on each party only if such amendment or waiver is set forth in a writing
executed by such parties. Waiver of a breach of the Agreement shall not constitute a
waiver of any other subsequent breach of the Agreement. The waiver of any provision of
this Agreement shall not constitute a continuing waiver of that provision or a waiver
of any other provision of this Agreement.
	 
	 	17.3	 	Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in writing and
will be deemed to have been given when personally delivered, mailed by overnight mail,
return receipt requested, or sent via confirmed facsimile. Notices, demands and
communications will, unless another address is specified in writing, be sent to the
addresses set forth as follows:





	 	 	 
	If to Spectranetics:

	 	John G. Schulte
	 

	 	President and CEO
	 

	 	Spectranetics Corporation
	 

	 	96 Talamine Court
	 

	 	Colorado Springs, CO 80907
	 

	 	Facsimile: (719) 447-2070








 




			
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28









 













	 	 	 
	With a copy to:
	 	Roger Wertheimer
	 
	 	Vice President, General Counsel
	 
	 	Spectranetics Corporation
	 
	 	96 Talamine Court
	 
	 	Colorado Springs, CO  80907
	 
	 	Facsimile: (719) 447-2070
	 
	 	 
	     If to KNC:
	 	Joseph W. Kaufmann
	 
	 	President and CEO
	 
	 	Kensey Nash Corporation
	 
	 	735 Pennsylvania Dr.
	 
	 	Exton, PA 19341
	 
	 	Facsimile: 484.713.2901
	 
	 	 
	With a copy to:
	 	David R. Shevitz
	 
	 	Kimberly T. Smith
	 
	 	Katten Muchin Rosenman LLP
	 
	 	525 West Monroe Street
	 
	 	Chicago, IL  60661
	 
	 	Facsimile: 312.902.1061







	 	17.4	 	Severability. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under applicable Law, but
if any provision of this Agreement is held to be prohibited by or invalid under
applicable Law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
	 
	 	17.5	 	Complete Agreement. This document, along with the other Transaction
Documents, contains the complete agreement between KNC and Spectranetics and supersedes
all prior understandings, agreements and representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
	 
	 	17.6	 	Counterparts; Electronic Delivery. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which, when
taken together, shall constitute one and the same instrument. Signatures sent by
facsimile transmission, by email of a .pdf, .tiff or similar file or other electronic
transmission shall be deemed to be original signatures.







 




			
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29









 














	 	17.7	 	Governing Law. The law of the State of Delaware will govern, without
regard to the conflicts of law provisions thereof, all questions concerning the
construction, validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement.
	 
	 	17.8	 	Governing Law; Dispute Resolution. Except for matters arising out of
Section 8.1, as provided in Section 8.2, and except where it is pursuant to the terms
of this Agreement entitled to injunctive relief, prior to commencing any litigation in
connection with this Agreement, each party hereto shall use commercially reasonable
efforts to cause its chief executive officer to confer with the chief executive officer
of the other party hereto for a period of at least 30 days, and each party hereto shall
use its commercially reasonable efforts to resolve such dispute. During such 30-day
period, the party seeking to commence such litigation shall attend no fewer than three
(3) full business days of meetings at the other party’s principal executive offices.
Only after compliance with the provisions of this Section 17.8 may a party hereto
commence an action in connection with this Agreement. Each party hereto hereby submits
to the exclusive jurisdiction of the United States District Court for the District of
Delaware and of any Delaware state court sitting in the County of New Castle, State
of Delaware for purposes of all legal proceedings arising out of or relating to this
agreement or the transactions contemplated hereby. Each party hereto irrevocably
waives, to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum, and the parties hereto irrevocably agree that all
such proceedings shall be heard and determined in such a Delaware state or federal
court. The parties hereby consent to and grant any such court jurisdiction over the
person of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or proceeding
in the manner provided in Section 17.3 or in such other manner as may be permitted
by law shall be valid and sufficient service thereof. Each party will continue to
perform its obligations under this Agreement during any dispute, including without
limitation paying any undisputed amounts due hereunder.
	 
	 	17.9	 	Headings. Section headings used in this Agreement are for convenience
only and form no part or in any way modify or define the text of meaning or any
provision of this Agreement.
	 
	 	17.10	 	Force Majeure. Neither party shall be liable or deemed in default for
failure to perform any duty or obligation that such party may have under this Agreement
where such failure has been directly or indirectly caused by any act of God, fire,
inevitable accident, or war. The party whose performance has been so interrupted shall
give the other party prompt notice of the interruption and the cause thereof, and shall
use its commercially reasonable efforts to resume full performance of







 




			
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30









 














	 	 	 	this Agreement as
soon as possible. In addition, if a party’s supplier suffers a force majeure event as
defined above that shall constitute a force majeure event for the affected party
hereunder, provided that the party whose supplier has suffered the force majeure event
shall have ninety (90) days to resolve the supplier issue or replace the supplier.
	 
	 	17.11	 	Damage Exclusions. EXCEPT FOR BREACHES OF CONFIDENTIALITY OBLIGATIONS
OR LICENSE RESTRICTIONS, IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE TO THE OTHER FOR
ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES OR LOST SALES OR PROFITS IN
CONNECTION WITH ANY MATTERS RELATING TO THE BUSINESS RELATIONSHIP OF THE PARTIES, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES BY THE OTHER PARTY.
THE FOREGOING SHALL NOT APPLY TO KNC’S LIABILITY IN THE EVENT THAT KNC HAS
INTENTIONALLY OR WILLFULLY BREACHED THIS AGREEMENT BY FAILING TO PERFORM
ITS OBLIGATIONS HEREUNDER, OR BY GROSS NEGLIGENCE HAS FAILED TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT.





[Signature Page Follows]






 




			
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IN WITNESS WHEREOF, the parties have executed this Agreement through their duly authorized
representatives as of the date first written above.




	 	 	 	 	 	 	 	 	 	 	 
	THE SPECTRANETICS CORPORATION	 	 	 	KENSEY NASH CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Guy A. Childs
 

	 	 
	 	By:
	 	/s/ Joseph W. Kaufmann
 

	 	 
	Name:

	 	Guy A. Childs
	 	 	 	Name:
	 	Joseph W. Kaufmann	 	 
	Title:

	 	Vice President and Chief Financial
Officer
	 	 	 	Title:
	 	Chief Executive Officer, President and
Secretary	 	 






MANUFACTURING AND LICENSING AGREEMENT




 









 




Schedule A — Specifications


Schedule B — Form of Blanket Purchase Order


Schedule C — Form of Shipping Order


Schedule D — Form of Revenue Share Reporting Schedule



1