MANUFACTURING AND LICENSING AGREEMENT

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.

 

	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

			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.

	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.

	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

			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.

	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

			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.

	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

			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

			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

			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

			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