10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      to                     

Commission File Number: 0-18933

ROCHESTER MEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

MINNESOTA State or other jurisdiction of incorporation or organization)	41-1613227 (I.R.S. Employer Identification No.)
ONE ROCHESTER MEDICAL DRIVE, STEWARTVILLE, MN (Address of principal executive offices)	55976 (Zip Code)

(507) 533-9600
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

12,322,402 Common Shares as of May 9, 2011.

Table of Contents

ROCHESTER MEDICAL CORPORATION

Report on Form 10-Q
for quarter ended
March 31, 2011

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets — March 31, 2011 and September 30, 2010	1
Condensed Consolidated Statements of Operations — Three and six months ended March 31, 2011 and 2010	2
Condensed Consolidated Statements of Cash Flows — Six months ended March 31, 2011 and 2010	3
Notes to Condensed Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3. Quantitative and Qualitative Disclosures about Market Risk	16
Item 4. Controls and Procedures	16
PART II. OTHER INFORMATION
Item 6. Exhibits	17
EX-2.1
EX-10.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

ROCHESTER MEDICAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			September 30,
	2011			2010
Assets:
Current assets:
Cash and cash equivalents	$	4,889,264		$	4,545,907
Marketable securities		29,468,851			30,967,007
Accounts receivable, net		9,179,768			7,858,540
Inventories, net		11,867,139			9,240,291
Prepaid expenses and other current assets		2,236,128			846,899
Deferred income tax asset		851,562			872,849
Total current assets		58,492,712			54,331,493
Property, plant and equipment:
Land and buildings		11,390,955			7,997,423
Equipment and fixtures		19,336,480			18,543,813
		30,727,435			26,541,236
Less accumulated depreciation		(18,797,468	)		(16,523,997	)
Total property, plant and equipment		11,929,967			10,017,239
Deferred income tax asset		1,195,440			1,175,052
Goodwill		10,680,572			4,561,781
Finite life intangibles, net		11,159,888			5,580,726
Total assets	$	93,458,579		$	75,666,291
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	2,893,187		$	2,016,058
Accrued compensation		1,128,046			1,458,652
Accrued expenses		1,166,754			610,570
Current maturities of long-term debt		16,723,998			2,641,233
Total current liabilities		21,911,985			6,726,513
Long-term liabilities:
Other long-term liabilities		1,698,738			46,327
Total long-term liabilities		1,698,738			46,327
Shareholders’ equity:
Common stock, no par value:
Authorized shares — 40,000,000
Issued and outstanding shares — 12,322,402 at March 31, 2011 and 12,072,452 at September 30, 2010		59,203,616			57,200,531
Retained earnings		13,150,198			14,578,678
Accumulated other comprehensive loss		(2,505,958	)		(2,885,758	)
Total shareholders’ equity		69,847,856			68,893,451
Total liabilities and shareholders’ equity	$	93,458,579		$	75,666,291

Note — The Balance Sheet information at September 30, 2010 was derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

ROCHESTER MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2011			2010			2011			2010
Net sales	$	12,852,601		$	9,845,480		$	23,799,006		$	20,077,292
Cost of sales		6,493,407			5,186,396			12,035,681			10,805,100
Gross profit		6,359,194			4,659,084			11,763,325			9,272,192
Operating expenses:
Marketing and selling		5,012,747			2,871,675			8,894,727			5,648,992
Research and development		251,672			241,390			529,527			684,418
General and administrative		2,403,698			1,747,604			4,112,791			3,438,351
Total operating expenses		7,668,117			4,860,669			13,537,045			9,771,761
Loss from operations		(1,308,923	)		(201,585	)		(1,773,720	)		(499,569	)
Other income (expense):
Interest income		51,977			49,719			104,547			105,375
Interest expense		(123,596	)		(39,470	)		(154,855	)		(80,588	)
Other income		(12,865	)		(34,741	)		(29,147	)		(61,388	)
Net loss before income taxes		(1,393,407	)		(226,077	)		(1,853,175	)		(536,170	)
Income tax expense (benefit)		(134,009	)		125,339			(424,695	)		(15,596	)
Net loss	$	(1,259,398	)	$	(351,416	)	$	(1,428,480	)	$	(520,574	)
Net loss per share — basic	$	(0.10	)	$	(0.03	)	$	(0.12	)	$	(0.04	)
Net loss per share — diluted	$	(0.10	)	$	(0.03	)	$	(0.12	)	$	(0.04	)
Weighted average number of common shares outstanding — basic		12,223,347			12,195,334			12,174,780			12,193,441
Weighted average number of common shares outstanding — diluted		12,223,347			12,195,334			12,174,780			12,193,441

The accompanying notes are an integral part of these condensed consolidated financial statements

2

ROCHESTER MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended
	March 31,
	2011			2010
Operating activities:
Net loss	$	(1,428,480	)	$	(520,574	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of acquisition:
Depreciation		722,820			683,127
Amortization		427,794			347,566
Stock based compensation		877,594			849,744
Deferred income tax		(26,529	)		(254,671	)
Changes in operating assets and liabilities:
Accounts receivable		244,374			(1,091,527	)
Inventories		(804,070	)		552,125
Other current assets		(1,387,272	)		(247,146	)
Accounts payable		442,835			466,047
Income tax payable		60,447			98,163
Other current liabilities		(289,144	)		(187,449	)
Net cash provided by (used in) operating activities		(1,159,631	)		695,405
Investing activities:
Purchase of property, plant and equipment		(666,069	)		(1,179,905	)
Cash acquired in business acquisition		55,973			—
Patents		(24,558	)		(29,311	)
Purchases of marketable securities		(16,855,217	)		(40,869,539	)
Sales and maturities of marketable securities		18,446,463			38,959,857
Net cash provided by (used in) investing activities		956,592			(3,118,898	)
Financing activities:
Proceeds from long-term debt		1,000,000			2,183
Payments on long-term debt		(1,647,140	)		—
Excess tax benefit from exercises of stock options		618,682			20,609
Proceeds from issuance of common stock		506,809			21,017
Net cash provided by financing activities		478,351			43,809
Effect of exchange rate on cash and cash equivalents		68,045			(138,052	)
Increase (decrease) in cash and cash equivalents		343,357			(2,517,736	)
Cash and cash equivalents at beginning of period		4,545,907			6,365,584
Cash and cash equivalents at end of period	$	4,889,264		$	3,847,848
Supplemental Cash Flow Information
Income taxes paid	$	60,000		$	264,743

The accompanying notes are an integral part of these condensed consolidated financial statements

3

ROCHESTER MEDICAL CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2011

Note A — Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements which have been derived from the Company’s audited financial statements as of September 30, 2010 and the unaudited March 31, 2011 and 2010 condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission which include the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Form 10-K for the year ended September 30, 2010. In the opinion of management, the unaudited condensed consolidated financial statements contain all recurring adjustments considered necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods presented. Operating results for the six-month period ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending September 30, 2011.

Note B — Acquisition of Laprolan B.V. from Fornix BioSciences N.V.

     On April 7, 2011, the Company completed the acquisition of the outstanding capital stock of Laprolan B.V., a corporation organized under the laws of The Netherlands and a wholly owned subsidiary of Fornix BioSciences N.V., pursuant to a Share Purchase Agreement dated as of January 12, 2011 (the “Purchase Agreement”). As provided in the Purchase Agreement, the transaction had a retroactive effective date of January 1, 2011, and the operating results of Laprolan are for the account of the Company from and after January 1, 2011. The Company has applied purchase accounting as of that date and has included the results of Laprolan in its second quarter financial statements. At closing, the Company paid to Fornix €10,474,974 (US$15,057,775, of which $60,217 was paid for the cash balance of Laprolan on January 1, 2011 and $119,433 was interest from January 1, 2011 until closing).

     The following table summarizes the estimated fair values of the assets and liabilities acquired at the date of acquisition. Included in the intangible assets acquired is approximately $5,678,000 of goodwill and $5,612,000 of finite —lived intangibles. As the Company completes its post-closing review and valuation of the acquisition, the allocation of the purchase price may change. Any change to the preliminary values of finite-lived intangibles and property and equipment could result in more or less amortization expense.

Current assets	$	3,136,000
Property and equipment		1,831,000
Intangible assets		11,290,000
Total assets acquired	$	16,257,000
Current liabilities	$	824,000
Long term liabilities		1,546,000
Total liabilities acquired	$	2,370,000

4

     The pro forma unaudited results of operations for the three and six months ended March 31, 2011 and 2010, assuming consummation of the purchase of Laprolan B.V. as of October 1, 2009, are as follow (in thousands):

	Three Months Ended					Six Months Ended
	March 31,					March 31,
	2011			2010		2011			2010
Net sales	$	12,853		$	13,117	$	26,717		$	27,117
Net income (loss)		(971	)		383		(625	)		1,068
Per share data:
Basic earnings (loss)	$	(0.08	)	$	0.03	$	(0.05	)	$	0.09
Diluted earnings (loss)	$	(0.08	)	$	0.03	$	(0.05	)	$	0.08

     In the table above, $255,000 and $391,000 have been added back to net income for the three and six months ended March 31, 2011 respectively, for one-time merger and acquisition costs and $26,000 has been added back to net income for the three and six months ended March 31, 2011 related to a short term accounting and IT support contract.

     In accordance with ASU No. 2010-29 the pro forma unaudited results do not purport to be indicative of the results which would actually have been obtained had the acquisition of Laprolan B.V. been completed as of the beginning of the earliest period presented.

Note C — Net Loss Per Share

     Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. For the quarters and six months ended March 31, 2011 and 2010, diluted net loss per common share equals basic net loss per common share because common stock equivalents are not included in periods where there is a net loss, as they are antidilutive.

Note D — Stock Based Compensation

     On January 28, 2010, the Company’s shareholders approved the Rochester Medical Corporation 2010 Stock Incentive Plan. As of that same date, no new awards were allowed to be granted under the Company’s 1991 Stock Option Plan or the 2001 Stock Incentive Plan. The 2010 Stock Incentive Plan authorizes the issuance of up to 1,000,000 shares of common stock pursuant to grants of incentive stock options, non-incentive stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards, stock awards, and other stock-based awards. Per the terms of the 2010 Stock Incentive Plan, awards may be granted with a term no longer than ten years. The vesting schedule and other terms of the awards granted under the 2010 Stock Incentive Plan will be determined by the Compensation Committee of the Board of Directors at the time of the grant. As of March 31, 2011, 567,000 shares remained available for issuance under the 2010 Stock Incentive Plan, and there were 433,000 options outstanding under this plan. As of March 31, 2011, the Company also had 8,000 options outstanding under the 1991 Stock Option Plan and 1,211,750 options outstanding under the 2001 Stock Incentive Plan.

     The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period. The Company recorded approximately $582,000 ($411,000 net of tax) and $878,000 ($645,000 net of tax) of related stock-based compensation expense for the quarter and six months ended March 31, 2011 and approximately $565,000 ($415,000 net of tax) and $850,000 ($649,000 net of tax) of related stock-based compensation expense for the quarter and six months ended March 31, 2010, respectively. This stock-based compensation expense reduced both basic and

5

diluted earnings per share by $0.03 and $0.03 for the quarter ended March 31, 2011 and 2010, respectively, and $0.05 and $0.05 for the six months ended March 31, 2011 and 2010, respectively.

     As of March 31, 2011, there is approximately $1,820,000 of unrecognized compensation cost that is expected to be recognized over a weighted average period of approximately thirteen months.

Stock Options

     In the second quarter of fiscal 2011 and 2010, options to purchase 230,000 and 203,000 shares were granted, respectively. The Black-Scholes option pricing model was used to estimate the fair value of stock-based awards with the following weighted average assumptions for the indicated periods.

	2011			2010
Dividend yield		0	%		0	%
Expected volatility		47	%		48	%
Risk-free interest rate		3.42	%		3.15	%
Expected holding period (in years)		8.74			8.46
Weighted-average grant-date fair value	$	6.29		$	7.14

     The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the Company’s stock options. The expected volatility, holding period, and forfeitures of options are based on historical experience.

     The following table represents stock option activity for the six months ended March 31, 2011:

				Weighted-		Weighted-
				Average		Average
	Number of			Exercise		Remaining
	Shares			Price		Contract Life
Outstanding options at beginning of period		1,672,700		$	7.83	5.31 Yrs
Granted		230,000		$	10.72
Exercised		(249,950	)	$	2.03
Outstanding options at end of period		1,652,750		$	9.11	6.11 Yrs.
Outstanding options exercisable at end of period		1,224,625		$	8.34	5.13 Yrs.

     At March 31, 2011, the aggregate intrinsic value of options outstanding was $4,307,532, and the aggregate intrinsic value of options exercisable was $4,138,926. Total intrinsic value of options exercised was $1,989,182 for the six months ended March 31, 2011. Shares available for future stock option grants to employees and directors under the 2010 Stock Incentive Plan were 567,000 at March 31, 2011.

Note E — Marketable Securities

     As of March 31, 2011, the Company has $29.5 million invested in high quality, investment grade debt securities, consisting of $26.2 million invested in U.S. treasury bills and CDs and $3.3 million invested in a mutual fund. The Company is currently reporting an unrealized loss of $319,000 related to the mutual fund investment. The Company currently considers this unrealized loss to be temporary.

     Marketable securities are classified as available for sale and are carried at fair value, with unrealized gains or losses included as a separate component of shareholders’ equity. The cost and fair value of available-for-sale securities were as follows:

6

			Unrealized
	Cost		Loss			Fair Value
March 31, 2011	$	29,788,344	$	(319,493	)	$	29,468,851
September 30, 2010	$	31,379,590	$	(412,583	)	$	30,967,007

     Losses recognized are recorded in Other income (expense), in the consolidated statements of operations. Gains and losses from the sale of investments are calculated based on the specific identification method.

     Effective October 1, 2008, the Company adopted the accounting standards which are now part of ASC 820, Fair Value Measurements and Disclosures, for financial assets and liabilities that are re-measured and reported at fair value at each reporting period. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires that fair value measurements be classified and disclosed using one of the following three categories:

     Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities;

     Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

     Level 3. Inputs that are unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities.

     The adoption of these standards did not have a material impact on the Company’s consolidated financial statements. The Company has determined that the values given to its marketable securities are appropriate and are measured using Level 1 inputs.

Note F — Inventories

     Inventories consist of the following:

	March 31,			September 30,
	2011			2010
Raw materials	$	1,743,372		$	1,756,313
Work-in-process		3,617,428			3,233,644
Finished goods		6,807,857			4,375,798
Reserve for inventory obsolescence.		(301,518	)		(125,464	)
	$	11,867,139		$	9,240,291

Note G — Income Taxes

     On a quarterly basis, the Company evaluates the realizability of its deferred tax assets and assesses the requirements for a valuation allowance. For fiscal 2010, the Company recorded a valuation allowance of $47,000 related to Minnesota R&D credit carryovers as the Company believes it is more likely than not that the deferred tax asset will not be utilized in future years. There has been no further valuation allowance recorded for the current quarter. For the quarter ended March 31, 2011, the Company had an effective income tax rate of approximately 10%. The variation of income tax rate from the federal income tax rate of 35% is primarily due to current year permanent adjustments for acquisition related expenses, meals and entertainment expenses, incentive stock options, state taxes and foreign taxes. In future periods, the Company expects the U.S. effective tax rate to be significantly higher than the federal and state statutory rates on U.S. income due to permanent adjustments noted above. The effective tax rate on worldwide income may fluctuate depending upon inter-company eliminations, profitability of foreign operations, and any discrete items.

7

     The Company adopted accounting provisions that now form part of ASC 740, Income Taxes, and which clarify the accounting for uncertainty in tax positions recognized in the financial statements. These provisions create a single model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. At the adoption date, October 1, 2007, the Company did not have a material liability for unrecognized tax benefits. As of March 31, 2011, the Company has recognized approximately $58,000 for unrecognized tax benefits. If the Company were to prevail on all unrecognized tax benefits recorded at March 31, 2011, the total gross unrecognized tax benefit totaling approximately $58,000 would benefit the Company’s effective tax rate.

     It is the Company’s practice to recognize penalties and/or interest to income tax matters in income tax expense. As of March 31, 2011, the Company did not have a material amount of accrued interest or penalties related to unrecognized tax benefits.

     The Company is subject to income tax examinations from time to time in the U.S. Federal jurisdiction, as well as in the United Kingdom, the Netherlands and various state jurisdictions.

Note H — Goodwill and Other Intangible Assets

     The Company records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Goodwill and intangibles with indefinite useful lives are not amortized but the Company is required to perform, at a minimum, an annual assessment of the carrying value of goodwill and other intangibles with indefinite useful lives. If the carrying value of goodwill or an intangible asset exceeds its fair value, an impairment loss shall be recognized. The Company tests annually for impairment on the anniversary date of the acquisition of the asset, which is currently on June 2nd of each fiscal year for the goodwill associated with the Company’s 2006 UK acquisition, and on December 31st of each fiscal year for the goodwill related to the 2011 Laprolan acquisition or more frequently if events and circumstances indicate that the asset might be impaired. The recoverability of other long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge would be recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset. The Company performed its most recent annual goodwill impairment testing by comparing the market value of the Company at June 2, 2010 to the net book value of its equity, and concluded that the goodwill was not impaired. The increase in value of goodwill as of March 31, 2011 is entirely related to the goodwill recorded during the purchase of Laprolan, offset by a decrease due to a change in foreign currency exchange rates in the United Kingdom.

Note I — Comprehensive Loss

     Comprehensive loss includes net loss, changes in foreign currency translation, and changes in the unrealized gains and losses on available for sale securities held. The comprehensive loss for the three and six months ended March 31, 2011 and 2010 consists of the following:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2011			2010			2011			2010
Net loss	$	(1,259,398	)	$	(351,416	)	$	(1,428,480	)	$	(520,574	)
Foreign currency adjustment		411,213			(923,641	)		319,803			(787,721	)
Unrealized gain on securities held		3,072			73,880			59,997			87,114
Comprehensive loss	$	(845,113	)	$	(1,201,177	)	$	(1,048,680	)	$	(1,221,181	)

Note J — Line of Credit and Long-Term Debt

     In June 2006, in conjunction with an asset purchase agreement with Coloplast A/S, the Company entered into an unsecured loan note deed with Coloplast with an outstanding principal amount of $5,340,000. The promissory note is non-interest bearing and payable in five equal annual installments of $1,068,000 payable annually on June 2. The Company discounted the note at 6.90% which reflected the Company’s cost of borrowing at the date of the purchase

8

agreement and the discount is being amortized over the life of the note. The discounted liability balance was $1,054,997 at March 31, 2011. The final payment is due on or before June 2, 2011.

     In December 2010, the Company entered into a credit facility with RBC Wealth Management (“RBC”). The credit facility consists of a revolving line of credit of up to $25,000,000 with interest accruing monthly at a variable rate currently at 1.375%. As of March 31, 2011, the Company had an outstanding balance under the revolving line of credit of $1,000,000.

     In conjunction with the closing of the Laprolan acquisition described under Note B, on April 7, 2011 the Company drew down $15,057,775 from its credit line with RBC.

Note K — Recently Issued Accounting Standards

     In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-06, “Fair Value Measurements and Disclosures,” that requires entities to make new disclosures about recurring or nonrecurring fair-value measurements and provides clarification of existing disclosure requirements. For assets and liabilities that are measured at fair value on a recurring basis, the ASU requires disclosure of significant transfers between Levels 1 and 2, and transfers into and out of Level 3 of the fair value hierarchy and the reasons for those transfers. Significant transfers into each level must be disclosed and discussed separately from transfers out of each level. Significance is judged with respect to earnings, total assets, total liabilities or total equity. An accounting policy must be determined and disclosed as to when transfers between levels are recognized: (1) actual date, (2) beginning of period or (3) end of period. The ASU amends the reconciliation of the beginning and ending balances of Level 3 recurring fair value measurements to present information about purchases, sales, issuances and settlements on a gross basis rather than as a net number. The ASU amends ASC 820 to require fair value measurement disclosures for each class of assets and liabilities and clarifies that a description of the valuation technique and inputs used to measure fair value is required for both recurring and nonrecurring fair value measurements. This standard became effective for the Company’s fiscal year ended September 30, 2010, except for the requirement to provide the Level activity of purchases, sales, issuances and settlement on a gross basis, which became effective beginning in the first quarter of fiscal year 2011. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

     In July 2010, the FASB issued ASU No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU No. 2010-20 amends the guidance with ASC Topic 310, “Receivables” to facilitate financial statement users’ evaluation of (1) the nature of credit risk inherent in the entity’s portfolio of financing receivables; (2) how that risk is analyzed and assessed in arriving at the allowance for credit losses; and (3) the changes and reasons for those changes in the allowance for credit losses. The amendments in ASU No. 2010-20 also require an entity to provide additional disclosures such as a rollforward schedule of the allowance for credit losses on a portfolio segment basis, credit quality indicators of financing receivables and the aging of past due financing receivables. The Company was required to adopt ASU No. 2010-20 as of December 15, 2010. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

     In December 2010, the FASB issued ASU No. 2010-29, “Disclosures of Supplementary Pro Forma Information for Business Combinations.” This ASU requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. ASU 2010-29 affects any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company adopted ASU 2010-29 in the second fiscal quarter of 2011. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

9

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     We develop, manufacture and market a broad line of innovative, technologically enhanced PVC-free and latex-free urinary continence and urine drainage care products for the home care and acute care markets. Acute care markets are generally hospitals and treatment facilities while home care users are generally patients who use our products at home. The products we manufacture include our male external catheters, standard silicone and anti-infection intermittent and Foley catheters and our FemSoft Insert. The primary markets for our products are distributors, extended care facilities and individual hospitals and healthcare institutions.

     We sell our products directly and through our private label partners, both domestically and internationally. Private label sales include our products manufactured by us and sold under brand names owned by other companies. Direct sales include all our Rochester Medical ^® branded sales, Script Easy sales and all of our other sales at Laprolan. In the UK, we use our Script Easy program to sell any product covered under drug tariff, and in the Netherlands we also have the exclusive rights to market a range of continence care, ostomy and wound and scar care products.

     As part of our updated three year strategic business plan, we increased investment in our sales and marketing programs to support our direct sales growth in the U.S. and Europe through the addition of more than 30 additional sales staff in the first half of fiscal 2011. Such increased investment was funded primarily through cash generated from current operations. Increasing our percentage of direct sales versus private label sales over time will have a positive impact on our gross margin. Direct sales accounted for 78% of total sales for the quarter ended March 31, 2011, compared to 74% for the quarter ended March 31, 2010. Home care direct sales accounted for 89% of total direct sales for the quarter ended March 31, 2011, compared to 87% for the quarter ended March 31, 2010.

     In September 2009, the FemSoft Insert was approved for inclusion in Part IX of the UK Drug Tariff as a prescription product that is reimbursable under the National Healthcare System, commencing in 2010. In November 2009, the Centers for Medicare & Medicaid Services (CMS) issued a specific reimbursement code which covers our FemSoft Insert. In January 2011, the CMS notified us of their decision regarding the Medicare reimbursement fee to be used for the FemSoft Insert in response to our request that the pricing data used to establish the fee schedule be revised. The current Medicare fee schedule amount is based on price data that is closest to a 1986/1987 base period and is significantly lower than the current retail price for the FemSoft Insert. We continue to believe that the reimbursement fee is unreasonably low, and we intend to continue to pursue a dialog with the CMS in an effort to change the reimbursement rate. We continue to believe the availability of National Healthcare System and Medicare reimbursement will help this unique device become an economically accessible and often preferred solution for incontinent women in the United Kingdom and in the United States.

     On April 7, 2011, we completed the acquisition of the outstanding capital stock of Laprolan B.V., a corporation organized under the laws of The Netherlands and a wholly owned subsidiary of Fornix BioSciences N.V., pursuant to a Share Purchase Agreement dated as of January 12, 2011 (the “Purchase Agreement”). At closing, we paid to Fornix €10,474,974 (US$15,057,775, of which $60,217 was paid for the cash balance of Laprolan on January 1, 2011 and $119,433 was interest from January 1, 2011 until closing). As provided in the Purchase Agreement, the transaction had a retroactive effective date of January 1, 2011, and the operating results of Laprolan are for our account from and after January 1, 2011. We have applied purchase accounting as of that date and have included the results of Laprolan in our second quarter financial statements for the quarter ended March 31, 2011.

     The following discussion pertains to our results of operations and financial position for the quarters ended March 31, 2011 and 2010. Results of the periods are not necessarily indicative of the results to be expected for the complete year. For the second quarter ended March 31, 2011, we reported a net loss of $0.10 per diluted share, compared to a net loss of $0.03 per diluted share for the same period last year. Loss from operations was $1,309,000 for the quarter ended March 31, 2011 compared to a loss from operations of $202,000 for the quarter ended March 31, 2010, while net loss was $1,259,000 and $351,000 for the quarters ended March 31, 2011 and 2010 respectively.

     As of March 31, 2011, we had $4.9 million in cash and cash equivalents and $29.5 million invested in marketable securities. The marketable securities consist of $26.2 million invested in U.S. treasury bills and CDs and $3.3 million invested in a mutual fund. Our investments in marketable securities are subject to interest rate risk and the value thereof could be adversely affected due to movements in interest rates. Our investment choices, however, are

10

conservative and are intended to reduce the risk of loss or any material impact on our financial condition. We are currently reporting an unrealized loss of $319,000 related to the mutual fund investment as a result of the recent fluctuations in the credit markets impacting the current market value. We currently consider this unrealized loss to be temporary.

Results of Operations

     The following table sets forth, for the fiscal periods indicated, certain items from our statements of operations expressed as a percentage of net sales.

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2011			2010			2011			2010
Net sales		100	%		100	%		100	%		100	%
Cost of sales		51			53			51			54
Gross margin		49			47			49			46
Operating expenses:
Marketing and selling		39			29			37			28
Research and development		2			2			2			3
General and administrative		19			18			17			17
Total operating expenses		60			49			56			48
Loss from operations		(11	)		(2	)		(7	)		(2	)
Interest income (expense), net		(1	)		—			0			0
Other income		—			—			—			—
Net loss before taxes		(12	)		(2	)		(7	)		(3	)
Income tax expense (benefit)		(1	)		1			(1	)		—
Net loss after taxes		(11	)%		(4	)%		(6	)%		(3	)%

     The following table sets forth, for the periods indicated, net sales information by market category (acute care and home care), marketing method (private label and direct sales) and distribution channel (domestic and international markets) (all dollar amounts below are in thousands):

	For the Quarter ended March 31,
	2011												2010
				Europe &												Europe
				Middle			Rest of									& Middle			Rest of
	US			East			World			Total			US			East			World			Total
Net Sales
Acute Care — Direct	$	664		$	359		$	48		$	1,071		$	592		$	271		$	54		$	917
Home Care — Direct		1,855			7,047			105			9,007			1,581			4,661			105			6,347
Direct Total	$	2,519		$	7,406		$	153		$	10,078		$	2,173		$	4,932		$	159		$	7,264
Private Label		2,224			544			7			2,775			1,915			658			8			2,581
Total Sales	$	4,743		$	7,950		$	160		$	12,853		$	4,088		$	5,590		$	167		$	9,845
Direct Product Mix
Acute Care — Direct		26	%		5	%		32	%		11	%		27	%		5	%		34	%		13	%
Home Care — Direct		74	%		95	%		68	%		89	%		73	%		95	%		66	%		87	%
Direct Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

11

	For the Quarter ended March 31,
	2011												2010
				Europe &												Europe
				Middle			Rest of									& Middle			Rest of
	US			East			World			Total			US			East			World			Total
Direct Geographic Mix
Acute Care — Direct		7	%		4	%		0	%		11	%		8	%		4	%		1	%		13	%
Home Care — Direct		18	%		70	%		1	%		89	%		22	%		64	%		1	%		87	%
Direct Total		25	%		74	%		1	%		100	%		30	%		68	%		2	%		100	%
YOY Percentage Net Sales Growth
Direct		16	%		50	%		(4	%)		39	%
Private Label		16	%		(17	%)		(13	%)		8	%
Total Net Sales		16	%		42	%		(4	%)		31	%

	For the Year to Date ended March 31,
	2011												2010
				Europe &												Europe
				Middle			Rest of									& Middle			Rest of
	US			East			World			Total			US			East			World			Total
Net Sales
Acute Care — Direct	$	1,259		$	656		$	153		$	2,068		$	1,121		$	596		$	155		$	1,872
Home Care — Direct		3,587			12,006			244			15,837			3,008			8,858			257			12,123
Direct Total	$	4,846		$	12,662		$	397		$	17,905		$	4,129		$	9,454		$	412		$	13,995
Private Label		4,214			1,659			20			5,893			4,224			1,843			15			6,082
Total Revenues	$	9,060		$	14,321		$	417		$	23,798		$	8,353		$	11,297		$	427		$	20,077
Direct Product Mix
Acute Care — Direct		26	%		5	%		39	%		12	%		27	%		6	%		38	%		13	%
Home Care — Direct		74	%		95	%		61	%		88	%		73	%		94	%		62	%		87	%
Direct Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Direct Geographic Mix
Acute Care — Direct		7	%		4	%		1	%		12	%		8	%		4	%		1	%		13	%
Home Care — Direct		20	%		67	%		1	%		88	%		22	%		63	%		2	%		87	%
Direct Total		27	%		71	%		2	%		100	%		30	%		67	%		3	%		100	%
YOY Percentage Net Sales Growth
Direct		17	%		34	%		(3	%)		28	%
Private Label		0	%		(10	%)		33	%		(3	%)
Total Net Sales		8	%		27	%		(2	%)		19	%

Note:

Direct sales include sales made directly to the end consumer and include all Rochester Medical branded sales, UK Script Easy Sales and all Laprolan sales. Private label sales include our products packaged and sold by other manufacturers. Acute care refers to hospital sales. Home care refers to non-hospital sales.

Three Month and Six Month Periods Ended March 31, 2011 and March 31, 2010

     Net Sales. Net sales for the second quarter of fiscal 2011 increased 31% to $12,853,000 from $9,845,000 for the comparable quarter of last fiscal year. The sales increase primarily resulted from an increase in direct sales in the U.S.

12

and in the Europe and Middle East (“EME”) region, combined with a small increase in sales of private label products domestically, and partially offset by a decrease in private label sales in EME. US direct sales increased by 16% for the quarter compared to the same period last year, led by a 12% increase in acute care sales and a 17% increase in home care sales. Our EME direct sales increased 50% compared to the same period last year led by a strong increase in both the UK and the Netherlands in home care sales of 51% and acute care sales of 32%. Management believes these results demonstrate the favorable impact of our strategic decision to increase investment in sales and marketing programs, particularly in our direct sales business in the US and EME. Additionally, beginning with the quarter ended March 31, 2011, direct sales include the sales of Laprolan B.V., the Company’s newly acquired subsidiary in the Netherlands. These sales were partially strengthened (4% or $125,000) as a result of the change in foreign currency exchange rates in the United Kingdom as the U.S. dollar was somewhat weaker versus the pound sterling, thereby affecting sales positively given the significant volume of our Rochester Medical branded product sales in the United Kingdom. Direct sales in the rest of the world (“ROW”) decreased 4% compared to the same period last year including flat home care sales and an 11% decrease in acute care sales. Private label sales for the second quarter were up 8% from last year and continue to fluctuate on a quarterly basis. Private label sales accounted for approximately 22% of total sales.

     Net sales for the six months ended March 31, 2011 increased 19% to $23,799,000 from $20,077,000 for the comparable six-month period of last fiscal year. The sales increase resulted from an increase in direct sales in both the US and EME, offset by a decrease in private label sales in the EME. Our EME direct sales increased 34% compared to the same period last year, led by increases in both the UK and the Netherlands. Beginning with the quarter ended March 31, 2011, net sales include the sales of Laprolan.

     Gross Margin. Our gross margin as a percentage of net sales for the second quarter of fiscal 2011 was 49% compared to 47% for the comparable quarter of last fiscal year. The increase in gross margin this quarter was primarily due to the higher margins on Laprolan sales. Management expects the sale of these products and our direct sales in both the US and EME will continue to have a positive impact on margin as we continue to focus on direct sales. Gross margin for the six months ended March 31, 2011 increased to 49% from 46%. Factors affecting the comparative six month gross margin are generally consistent with those discussed above for the current quarter.

     Marketing and Selling. Marketing and selling expense primarily includes costs associated with base salary paid to sales and marketing personnel, sales commissions, and travel and advertising expense. Marketing and selling expense for the second quarter of fiscal 2011 increased 75% to $5,013,000 from $2,872,000 for the comparable quarter of last fiscal year. The increase in marketing and selling expense is primarily due to increased compensation and benefits associated with the increased sales staff in the US and UK, and the addition of our Laprolan sales personnel, partially offset by a reduction in advertising costs. Marketing and selling expense as a percentage of net sales for the fiscal quarters ended March 31, 2011 and 2010 was 39% and 29% respectively.

     Marketing and selling expense for the six months ended March 31, 2011 increased 57% to $8,895,000 from $5,649,000 for the comparable six-month period of last fiscal year. Factors affecting the comparative six-month expense levels are generally consistent with those discussed above for the current quarter.

     Research and Development. Research and development expense primarily includes internal labor costs, as well as expense associated with third-party vendors performing validation and investigative research regarding our products and development activities. Research and development expense for the second quarter of fiscal 2011 increased 5% to $252,000 from $241,000 for the comparable quarter of last fiscal year. The increase in research and development expense relates primarily to general increases in salaries and wages and normal increases from last fiscal year. Research and development expense as a percentage of net sales for the fiscal quarters ended March 31, 2011 and 2010 was 2%.

     Research and development expense for the six months ended March 31, 2011decreased 23% to $530,000 from $684,000 for the comparable six-month period of last fiscal year. The decrease in research and development expense for the six months ended March 31, 2011 primarily relates to decreased testing and development of new and existing products that were in development in the first quarter of fiscal 2010.

     General and Administrative. General and administrative expense primarily includes payroll expense relating to our management and accounting, information technology and human resources staff, as well as fees and expenses of outside legal counsel, accounting advisors, auditors and utilities. General and administrative expense for the second quarter of fiscal 2011 increased 38% to $2,404,000 from $1,748,000 for the comparable quarter of last fiscal year. The

13

increase in general and administrative expense is primarily related to one-time costs associated with the acquisition of Laprolan, administrative expenses in Laprolan, increased taxes and benefits, increased wages and an increase in consulting fees and supplies . General and administrative expense as a percentage of net sales for the fiscal quarters ended March 31, 2011 and 2010 was 19% and 18%, respectively.

     General and administrative expense for the six months ended March 31, 2011 increased 20% to $4,113,000 from $3,438,000 for the comparable six-month period of last fiscal year. The increase in general and administrative expenses for the six month period are generally consistent with those discussed above for the current quarter.

     Interest Income. Interest income for the second quarter of fiscal 2011 increased 4% to $52,000 from $50,000 for the comparable quarter of last fiscal year. The increase in interest income reflects slightly higher returns on CDs and investments.

     Interest income for the six months ended March 31, 2011 decreased less than 1% from $105,000 for the comparable six-month period of last fiscal year.

     Interest Expense. Interest expense for the second quarter of fiscal 2011 increased 218% to $124,000 from $39,000 for the comparable quarter of last fiscal year. The increase in interest expense reflects $105,000 related to the acquisition of Laprolan offset by lower amounts of debt as a result of quarterly debt payments.

     Interest expense for the six months ended March 31, 2011 increased 91% to $155,000 from $81,000 for the comparable six-month period of last fiscal year. The increase in interest expense for the six month period are generally consistent with those discussed above for the current quarter.

     Income Taxes. For the quarter ended March 31, 2011, we had an effective income tax rate of approximately 10%. The tax rate is affected by the estimated annual book income before tax in relation to permanent tax adjustments, particularly acquisition related expenses and incentive stock options, and in future periods we expect to report an income tax provision using an effective tax rate in the range of 40-42% for U.S. income. The effective tax rate on worldwide income may fluctuate depending upon inter-company eliminations, profitability of foreign operations, and any discrete items.

     We have recorded an income tax benefit of $425,000 for the six months ended March 31, 2011 compared to a benefit of $16,000 for the comparable six-month period of last fiscal year. The change in income taxes is attributable to the level of estimated annual book income (loss) before tax as compared to permanent book to tax differences.

Liquidity and Capital Resources

     Our cash, cash equivalents and marketable securities were $34.4 million at March 31, 2011 compared to $35.5 million at September 30, 2010. The decrease in cash primarily resulted from payments on debt and capital expenditures offset by cash provided from the sale of common stock upon exercise of options. As of March 31, 2011, we had $29.5 million invested in marketable securities. The marketable securities consist of $26.2 million invested in U.S. treasury bills and CDs and $3.3 million invested in a mutual fund. We are currently reporting an unrealized loss of $319,000 related to the mutual fund investment as a result of the recent fluctuations in the credit markets impacting the current market value. We currently consider this unrealized loss to be temporary.

     During the six-month period ended March 31, 2011, we used $1,160,000 of cash from operating activities compared to $695,000 of cash provided by operations during the comparable period of the prior fiscal year. The net cash used in operating activities in the first six months of fiscal 2011 primarily reflects our net loss adjusted for non-cash items related to depreciation, amortization, and stock based compensation and decreases in accounts receivable and increases in accounts payable and income taxes payable offset by increases in inventories and other current assets and decreases in other current liabilities. Accounts receivable during this period decreased 3% or $244,000, while inventories increased $804,000, or 9%, primarily as a result of rebuilding inventory level since year end. Other current assets during this period increased 164% or $1,387,000, primarily as a result of prepaid insurance premiums, prepaid income taxes on intercompany profits and taxes receivable related to incentive stock option exercises. Accounts payable

14

increased 22%, or $443,000, primarily reflecting timing of expenses related to quarter end. Other current liabilities decreased 14%, or $289,000, primarily reflecting payments of annual executive bonuses. In addition, capital expenditures during this period were $666,000 compared to $1,180,000 for the comparable period last year.

     In June 2006, in conjunction with the asset purchase agreement with Coloplast, we entered into an unsecured loan note deed with Coloplast with an outstanding principal amount of $5,340,000. The promissory note is non-interest bearing payable and due in five equal installments of $1,068,000 payable annually on June 2. We have discounted the note at 6.90% and reflect a net liability of $1,054,997 on our balance sheet as of March 31, 2011. The final payment is due on or before June 2, 2011.

     In December 2010, we entered into a credit facility with RBC Wealth Management. The credit facility consists of a revolving line of credit of up to $25,000,000 with interest accruing monthly at a variable rate currently at 1.375%. As of March 31, 2011, we had an outstanding balance under the revolving line of credit of $1,000,000. In conjunction with the closing of the Laprolan acquisition, on April 7, 2011 we drew down $15,057,775 from the line of credit.

     We believe that our capital resources on hand at March 31, 2011, together with cash generated from sales, will be sufficient to satisfy our working capital requirements for the foreseeable future as described in the Liquidity and Capital Resources portion of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. In the event that additional financing is needed, we may seek to raise additional funds through public or private financing, collaborative relationships or other arrangements. Any additional equity financing may be dilutive to shareholders, and debt financing, if available, may involve significant restrictive covenants. Collaborative arrangements, if necessary to raise additional funds, may require us to relinquish our rights to certain of our technologies, products or marketing territories. Failure to raise capital when needed could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that such financing, if required, will be available on terms satisfactory to us, if at all.

Cautionary Statement Regarding Forward Looking Information

     Statements other than historical information contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by the use of terminology such as “believe,” “may,” “will,” “expect,” “anticipate,” “predict,” “intend,” “designed,” “estimate,” “should” or “continue” or the negatives thereof or other variations thereon or comparable terminology. Such forward-looking statements involve known or unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the following:

• the uncertainty of market acceptance of new product introductions;

• the uncertainty of gaining new strategic relationships;

• the uncertainty of successfully establishing our separate Rochester Medical brand identity;

• the uncertainty of timing of revenues from private label sales (particularly with respect to international customers);

• the uncertainty of successfully growing our international operations;

• the risks associated with operating an international business, including the impact of foreign currency exchange rate fluctuations;

• the securing of Group Purchasing Organization contract participation;

• the uncertainty of gaining significant sales from secured GPO contracts;

• FDA and other regulatory review and response times;

• the impact of continued healthcare cost containment;

• new laws related to healthcare availability, healthcare reform, payment for healthcare products and services or the marketing and distribution of products, including legislative or administrative reforms to the U.S. Medicare and Medicaid systems or other U.S. or international reimbursement systems;

• changes in the tax or environmental laws or standards affecting our business;

15

and other risk factors listed from time to time in our SEC reports, including, without limitation, the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2010.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Our primary financial instrument market risk results from fluctuations in interest rates. Our cash is invested in bank deposits and money market funds denominated in United States dollars, euros and pound sterling. The carrying value of these cash equivalents approximates fair market value. Our investments in marketable securities are subject to interest rate risk and the value thereof could be adversely affected due to movements in interest rates. Our investment choices, however, are conservative in light of current economic conditions, and include primarily U.S. treasury bills to reduce the risk of loss or any material impact on our financial condition. Our revolving line of credit bears interest at a variable rate currently at 1.375%. As of March 31, 2011, we had an outstanding balance under the revolving line of credit of $1,000,000. In conjunction with the closing of the Laprolan acquisition, on April 7, 2011 we drew down $15,057,775 from the line of credit.

     In future periods, we believe a greater portion of our revenues could be denominated in currencies other than the U.S. dollar, thereby increasing our exposure to exchange rate gains and losses on non-United States currency transactions. Sales through our subsidiary, Rochester Medical, Ltd., are denominated in pound sterling, and fluctuations in the rate of exchange between the U.S. dollar and the pound sterling could adversely affect our financial results. Similarly, sales through our subsidiary, Laprolan B.V., are denominated in euros, and fluctuations in the rate of exchange between the U.S. dollar and the euro could adversely affect our financial results.

     Otherwise, we do not believe our operations are currently subject to significant market risks for interest rates, foreign currency exchange rates, commodity prices or other relevant market price risks of a material nature. We do not currently use derivative financial instruments to manage interest rate risk or enter into forward exchange contracts to hedge exposure to foreign currencies, or any other derivative financial instruments for trading or speculative purposes. In the future, if we believe an increase in our currency exposure merits further review, we may consider entering into transactions to mitigate that risk.

Item 4. CONTROLS AND PROCEDURES

     Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report (the Evaluation Date) we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

     Changes in Internal Controls. During our second fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule 13(a)-15(f) under the Exchange Act) that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

16

PART II. OTHER INFORMATION

Item 6. Exhibits

2.1	Share Purchase Agreement, dated January 12, 2011, between Fornix BioSciences N.V. and the Company.
10.1	Form of 2010 Stock Incentive Plan Restricted Stock Award Agreement.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer.
32.2	Section 1350 Certification of Chief Financial Officer.

17

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ROCHESTER MEDICAL CORPORATION
Date: May 10, 2011	By:	/s/ Anthony J. Conway
		Anthony J. Conway
		President and Chief Executive Officer
Date: May 10, 2011	By:	/s/ David A. Jonas
		David A. Jonas
		Chief Financial Officer and Treasurer

18

INDEX TO EXHIBITS

Exhibit
2.1	Share Purchase Agreement, dated January 12, 2011, between Fornix BioSciences N.V. and the Company.
10.1	Form of 2010 Stock Incentive Plan Restricted Stock Award Agreement.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer.
32.2	Section 1350 Certification of Chief Financial Officer.

19

EX-2.1

Exhibit 2.1

Dated 12 January 2011

Share Purchase Agreement

Fornix BioSciences N.M. (as seller)

and

Rochester Medical Corporation (as purchaser)

Contents

Clause	Page
1 Interpretation		2
2 Sale and Purchase		6
3 Pre-Completion Undertakings		6
4 Condition Precedent		10
5 Completion		10
6 Post Completion undertakings		12
7 Required Consents		17
8 Seller’s Warranties		17
9 Limitations of Liability		18
10 Purchaser’s Warranties		20
11 Confidentiality		20
12 Costs		20
13 Civil law notary		21
14 Miscellaneous		21
15 Governing law and jurisdiction		22

Schedule 1: Position of Mr. De Jong
Schedule 2: Form of Deed of Transfer
Schedule 3: Notary Letter
Schedule 4: Employee Benefit Scheme
Schedule 5: Plans
Schedule 6: Intellectual Property Rights
Schedule 7: Required Consents
Schedule 8: Seller’s Warranties
Schedule 9: Seller’s Knowledge
Schedule 10: Disclosure Schedule
Schedule 11: Due Diligence Information
Schedule 12: Purchaser’s Warranties
Schedule 13: Notices
Pursuant to Item 601(b)(2) of Reg. S-K, the registrant agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request.

i

THIS AGREEMENT is dated 12 January 2011 and is made BETWEEN:

(1)	Fornix BioSciences N.V., a public company (naamloze vennootschap) incorporated under the laws of the Netherlands, having its seat (statutaire zetel) in Lelystad and its business address at Vijzelweg 11, (8243 PM) Lelystad, the Netherlands, registered with the Trade Register of the Chamber of Commerce under file number 39039138 (the Seller); and
(2)	Rochester Medical Corporation, a corporation incorporated under the laws of the State of Minnesota, USA, having its business address at One Rochester Medical Drive, Stewartville, MN 55976, USA (the Purchaser);

WHEREAS:

(A)	the Seller is the holder of all issued shares (the Shares) in the capital of Laprolan B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, having its seat (statutaire zetel) in Beuningen and its business address at Aalsterveld 70 (6641 SE) Beuningen, the Netherlands, registered with the Trade Register of the Chamber of Commerce under file number 10042224 (the Company);
(B)	the Seller is willing to sell and transfer the Shares to the Purchaser and the Purchaser is willing to purchase the Shares from Seller subject to the terms and conditions set out in this Agreement (the Transaction);
(C)	the Purchaser and its representatives and advisers have conducted a due diligence investigation and in this respect have been granted access to a Data Room and have attended meetings with management of the Seller and the Company;
(D)	the Parties have complied with the provisions of the Dutch Works Council Act (Wet op de Ondernemingsraden) and the competent works council (ondernemingsraad/ondernemingsraden) of the Seller has rendered a positive advice in respect of the Transaction;
(E)	the Seller and Purchaser have jointly determined that no notification of the Transaction to the Dutch Competition Authority (Nederlandse Mededingingsauthoriteit) or any other competent Competition Authority is required;
(F)	each of the Parties has obtained any and all necessary approvals and consents for the Transaction other than those set out in clause 4 (Condition Precedent) and clause 7 (Required Consents).

NOW IT IS HEREBY AGREED as follows:

1	Interpretation
1.1	In this Agreement the following capitalised terms shall have the following meaning:
	Accounts Date means 31 December 2010;
	Affiliate means any entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the entity specified; and, for purposes of this Agreement, “control” of an entity means the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities or other equity interests, by contract or otherwise;
	Agreement means this share purchase agreement, including the recitals, schedules, annexes and the appendices attached hereto;
	Annual Financial Statements has the meaning given thereto in clause 3.5;
	Business means the business of the Company as conducted on the date of this Agreement;
	Business Day means a day other than a Saturday or a Sunday on which banks are open for the transaction of regular business in Amsterdam, the Netherlands and Minneapolis, MN USA;
	Claim means any claim of the Purchaser against the Seller pursuant to or in connection with this Agreement, including a claim for a Warranty Breach;
	Closing Cash has the meaning ascribed thereto in clause 2.3;
	Compensation Arrangement has the meaning ascribed thereto in clause 6.1;
	Competition Authority means any competition or antitrust body or authority of any national or supranational governmental organization in any jurisdiction which is responsible for applying merger control or other competition or antitrust legislation in such jurisdiction and, for the avoidance of doubt, includes the notion of “competent authority” as that term is used in the EC Merger Regulation;
	Completion means the completion of the transfer of the Shares pursuant to the Deed of Transfer;
	Completion Date has the meaning ascribed thereto in clause 5.1 or such other date as the Parties may agree upon in writing;
	Condition Precedent means the condition precedent (opschortende voorwaarde) specified in clause 4.1;

2

Current Account Debt means the intercompany current account debt owed by the Company to the Seller as certified by Seller’s Accountants that arises after the Effective Date, including any interest accrued at an interest rate of 3% per annum, accrued daily and compounded monthly;

Data Room means the data room made available electronically to the Purchaser, through iRooms (Imprama), containing certain of the Due Diligence Information;

Deed of Transfer means the notarial deed of transfer of the Shares in the agreed form as set out in clause 5.1 and as attached hereto as Schedule 2;

Disclosure Schedule means the schedules containing disclosures of exceptions to Seller’s Warranties and attached hereto as Schedule 10;

Due Diligence Information means all written information provided to the Purchaser or its advisors with regard to the Business, the Company and otherwise in relation to the Transaction in any form whatsoever, including the information in the Data Room, the index of which is attached in Schedule 11 and which shall be replicated electronically by Seller on a CD and delivered to Purchaser contemporaneously with the delivery of the Disclosure Schedule, for the purpose of the due diligence investigation as described in recital (C);

Effective Date has the meaning ascribed thereto in clause 2.1;

Effective Date Accounts means the audited accounts of the Company as of the Accounts Date prepared in accordance with clause 3.5;

Employee Benefit Scheme means the employee benefit scheme of the Company (Regeling variabele salarissen korte termijn) attached as Schedule 4;

Encumbrance means any mortgage, pledge (pand), security interest, usufruct (vruchtgebruik), charge, lien, option, right of first refusal or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any attribute of ownership (save for rights of first refusal, transfer or other restrictions contained in the Company’s articles of association);

Escrow Agent has the meaning ascribed to it in Schedule 7;

Escrow Agreement has the meaning ascribed to it in Schedule 7;

Escrow Amount has the meaning ascribed to it in Schedule 7;

IFRS means the International Financial Reporting Standards adopted by the International Accounting Standards Board and in effect as of the Accounts Date;

Long-Stop Date has the meaning ascribed hereto in clause 4.2;

3

Losses means the amount required to put the Purchaser or the Company, as the case may be, financially in the position the Purchaser or the Company would have been if a Warranty Breach or other breach of this Agreement by Seller, if applicable, had not occurred, in each case to be determined in accordance with sections 6:95 seq. of the Dutch Civil Code, and excluding consequential damages (gevolgschade);

Notary means Mr. G.J. van Rijthoven, civil law notary with Norton Rose LLP in Amsterdam, the Netherlands or his replacement;

Notary Letter means the Notary payments instruction letter in the agreed form attached as Schedule 3;

Ordinary Course of Business means the ordinary course of business of the Company consistent with past custom and practice (including with respect to quantity and frequency, to the extent applicable) as it has been conducted in the twelve months prior to the Effective Date;

Party means a party to this Agreement and Parties means the parties to this Agreement;

Plans means health, bonus, compensation, insurance, pension, share option or purchase, retirement, severance or other benefit plans of the employees of the Company, all of which are listed on Schedule 5;

Pre-Completion Distribution means the dividend distribution by the Company to the Seller which is set-off against the intercompany liability of Seller towards the Company of the same amount, as per the Effective Date;

Purchase Price has the meanirig ascribed thereto in clause 2.2;

Purchaser has the meaning ascribed thereto above under (2);

Purchaser’s Warranties means the Purchaser’s warranties set forth in Schedule 12;

Required Consents has the meaning given thereto in clause 7.1;

Required Consents Adjustment has the meaning ascribed to it in Schedule 7;

Seller has the meaning ascribed thereto above under (1);

Seller’s Accountants means KPMG;

Seller’s EGM means the extraordinary general meeting of shareholders’ of the Seller;

Seller’s Knowledge means the knowledge of the officers or directors of the Seller or the Company as listed in Schedule 9, or any knowledge that would have been acquired by any such person upon appropriate inquiry and investigation;

Seller’s Warranties means the Seller’s warranties set forth in Schedule 8;

4

Share Plan means the employee share incentive plan of the Seller dated 2005 applicable to the employees of the Company which has been replaced by the Compensation Arrangement;

	Shares has the meaning ascribed thereto in recital (A) above;
	Supervisory Board of Seller means the supervisory board (raad van commissarissen) of the Seller;
	Taxes means any form of tax, whether created and imposed in the Netherlands or elsewhere, and for the avoidance of doubt includes corporate income tax, value added tax, property tax, custom and excise duties, stamp duties, property taxes, wage and personal income taxes, capital tax, social security premiums and any interest and penalties accrued in respect thereof, and Tax shall be construed accordingly;
	Transaction has the meaning ascribed thereto in Recital (B) above;
	Warranties means the Seller’s Warranties and the Purchaser’s Warranties; and
	Warranty Breach means any breach of the Seller’s Warranties.
1.2	All other words, terms or phrases written with capital letters and defined elsewhere in this Agreement shall have the meanings given such words, terms and phrases where first used.
1.3	In this Agreement:

(a)	reference to including means including without limitation;
(b)	reference to or (but not and) shall mean and/or;
(c)	if there is a discrepancy between an English term and a Dutch term used herein to clarify the English term and then to the extent of any conflict only, the meaning of the Dutch term shall prevail;
(d)	references to any Dutch legal term shall in respect of any jurisdiction other than the Netherlands be deemed to include what most nearly approximates in that jurisdiction to the Dutch legal terms;
(e)	references to clauses, articles, schedules, annexes and exhibits are to the clauses, articles, schedules, annexes and exhibits of this Agreement; and
(f)	references to any applicable laws or legislation include all subordinate and subsequent applicable laws, as the same may be amended or replaced from time to time.

5

2	Sale and Purchase
2.1	Subject to the terms and conditions of this Agreement, the Seller hereby sells to the Purchaser and the Purchaser hereby purchases from the Seller, the Shares with effect as of 1 January 2011 (the Effective Date). From and after the Effective Date until the Completion, the Seller shall operate the Business for the risk, account and benefit of the Purchaser and shall act in accordance with the terms and conditions of clause 3.
2.2	The consideration for the Shares payable by the Purchaser to the Seller shall be:

(a)	a cash consideration of EUR 10,350,000 which represents a cash free-debt free purchase price (the Purchase Price);
(b)	increased by the amount of immediately available cash, if any, of the Company as included in the Effective Date Accounts;
(c)	less the amount of the current account debt, if any, owed by the Company to the Seller as included in the Effective Date Accounts;

and

(d) increased by an interest rate of 3% per annum over such balance, calculated from the Effective Date up to and including the Completion Date, accrued daily and compounded monthly.

2.3	The amount of the Purchase Price as adjusted in accordance with this clause 2 shall hereinafter be referred to as the Closing Cash.
3	Pre-Completion Undertakings
3.1	From the date of this Agreement until the Completion Date (or the earlier termination of this Agreement in accordance with its terms) the Seller shall or shall procure that the Company shall, except as required under this Agreement or with the prior written consent of the Purchaser and to the extent permitted under applicable law:

(a)

carry on the Business in the Ordinary Course of Business and in accordance with the terms of this Agreement;

(b)

allow the Purchaser to have reasonable access, during normal business hours, to the offices of the Company and to its respective properties, books, records and employees, for the purpose of permitting the Purchaser to conduct confirmatory due diligence and ensure compliance by the Seller with the terms of this clause 3; provided however that (i) the Purchaser shall make the request thereto to the Seller at least five Business Days in advance, (ii) the Seller shall be free to join (or have a third party join) the visit, and (iii) such access shall be at reasonable times and shall not unreasonably disrupt the personnel and operation of the Company and shall solely be requested by the Purchaser for the purpose of the Transaction.

6

3.2 From the date of this Agreement until the Completion Date (or the earlier termination of this Agreement in accordance with its terms) the Seller shall not or shall procure that the Company shall not, except as required under this Agreement or with the prior written consent of the Purchaser and to the extent permitted under applicable law:

(a) take any of the following actions or decisions concerning the Business or the Company:

(i)	resolve to change its name or to alter its articles of association;
(ii)	modify the rights attached to the Shares;
(iii)	allot or issue or agree to allot or issue any shares or any options, warrants, or other securities convertible into the share capital of the Company or grant or agree to grant rights which confer on the holder any right to acquire any of the share capital of the Company or other such interest therein;
(iv)	reduce, repay, redeem or purchase any of its share capital or effect any other reorganisation of its capital;
(v)	declare, pay or make any dividend (whether in cash or in kind) or other distribution to the Seller, other than the Pre-Completion Distribution;
(vi)	resolve to be voluntarily wound up;
(vii)	sell, lease, transfer or assign any of its assets other than for fair consideration in the Ordinary Course of Business;
(viii)	place any Encumbrances over the Shares or, other than in the Ordinary Course of Business, over any of the assets of the Company;
(ix)	make any capital expenditures or any series of capital expenditures outside the Ordinary Course of Business;
(x)	make any capital investment in or acquire the share capital or other securities of, or all or substantially all of the assets of, any third party; or
(xi)	increase or modify the base compensation of its employees, other than in the Ordinary Course of Business, or adopt, amend, or terminate any Plan or make any commitment to its employees in respect of any existing Plan or otherwise.

(b) otherwise than in the Ordinary Course of Business, terminate, materially amend or materially vary any contract of the Company that involves material rights and obligations for the Company and is required by the Company in order to conduct its Business, unless such is necessary to avoid a material adverse effect to the Business and cannot be delayed;

7

(c)	make any material change in the nature, extent or terms of its Business;
(d)	enter into any borrowing or any lending commitments or issue any note, bond or other debt instrument or create, incur, assume or guarantee any indebtedness for borrowed money of the Company (other than the use of overdraft facilities in existence before the date of this Agreement or agreed to in this Agreement, including the Current Account Debt);
(e)	enter into any transaction with or for the benefit of the Seller (whether in its capacity as shareholder or director of the Company, or otherwise) or any Affiliate of the Seller, other than in the Ordinary Course of Business on arm’s length terms, or enter into any transaction or agreement with any private individual who is connected with the Seller; or
(f)	appoint new auditors of the Company.

3.3	At the request of Purchaser, the Company shall appoint Mr. Gerard de Jong as interim general manager of the Company as of the date of this Agreement. The duties and responsibilities of the interim general manager are set forth in more detail on Schedule 1. In the event that this Agreement terminates on the basis of clause 4.4 (or for any other reason), the Company shall be entitled to terminate the appointment of Mr. De Jong with immediate effect, without any payment of damages or compensation being due to Mr. De Jong or to the Purchaser.
3.4	In the period between the date of this Agreement and the Completion Date, the Company may obtain financing from the Seller in the form of Current Account Debt, for the purpose of financing its working capital, and the Company may repay or set-off any amount of such financing, save that if the outstanding amount of such financing at any time exceeds EUR 200,000 the Company may only obtain further financing with the prior written consent of the Purchaser. If any such amount is not repaid or set-off prior to Completion it shall be payable to the Seller in accordance with clause 5.2 (as Current Account Debt).
3.5	In the period between the date of this Agreement and the Completion Date, Seller shall cause the Company to complete and provide to the Purchaser financial statements audited by Seller’s Accountants, including profit and loss statements and balance sheets, for the Company for its fiscal years 2008, 2009 and 2010 in each case prepared in accordance with IFRS and consistent with past practices of the Company together with an unqualified audit report issued by Seller’s Accountants (the Annual Financial Statements; the Annual Financial Statement relating to the financial year 2010 also referred to as the Effective Date Accounts).
3.6	Effective as of the Completion Date, Seller waives any claim it may have against the Company that has not either (i) arisen in the Ordinary Course of Business (including any of the services to be phased out as referred to in clause 6.27) or (ii) is described in this Agreement (the latter including the Current Account Debt), and irrevocably offers to terminate any contract between Seller and the Company at no cost to the Company. Prior

8

to the Completion Date, Seller will and will cause each of its Affiliates to repay, in full, prior to the Completion, all indebtedness owed to the Company by the Seller or such Affiliate. Prior to the Effective Date, Seller will cause the Company to repay all interest bearing indebtedness for borrowed money to third party lenders such that, at the Effective Date, the Company shall have no interest bearing debt, other than any intercompany debt owed by the Company to the Seller, which shall be taken into account in clause 2.2.

3.7	Seller will ensure that the Company takes all reasonable steps to maintain and preserve good commercial relationships with its suppliers and customers and with its employees and otherwise preserve the goodwill of the Business up to and including the Completion Date.
3.8	The Seller will use best efforts to file or cause the Company to file all Tax returns to the extent they are due at a date prior to and including the Completion Date, by April 30, 2011, and Seller will not apply for a extension in relation to the corporate income tax return 2010, and to timely pay any Taxes in respect of such Tax returns filed or in respect of Tax assessments raised to the extent due and payable at a date prior to and including the Completion Date.
3.9	Up to and including the Completion Date the Seller will cause the Company to refrain from commencing any litigation proceedings of any kind or settle any litigation proceedings, without the prior written consent of the Purchaser, such consent not to be unreasonably withheld.
3.10	The Seller will cause the Company to maintain all insurance policies relating to its Business in full force and effect, covering property, fire, casualty and liability, as currently in place or in place during the twelve months prior to the Effective Date and will neither cancel or permit to lapse any such insurance policies prior to the Completion Date.
3.11	To the extent any of the trademarks, service marks, copyrights, know how or any other intellectual property rights used in the Business of the Company as of the date of this Agreement, other than the Logo or other intellectual property rights that are also used by the Seller or its Affiliates or divested Affiliates in the conduct of their respective businesses, are owned by or registered in the name of the Seller as of the date hereof, Seller shall ensure that the ownership of such intellectual property rights are assigned and transferred to the Company prior to the Completion Date or that a non-exclusive, fully paid-up license is granted to the Company to utilize such shared intellectual property rights in the Company’s Business. Seller shall further take all actions or cause the Company to take all actions required to keep such intellectual property rights used by the Company in its Business in full force and effect through the Completion Date,
3.12	The Seller will cause the Company to timely pay in full to its employees all wages, salaries, bonuses, severance payments and other benefits as and when due and payable and to withhold and pay to the appropriate governmental authorities all wage or salaries tax, social insurance charges (both employee and employer) and all other amounts required to be paid in full compliance with applicable law, up to and including the

9

Completion Date. The Seller will further cause the Company to make all payments due and fulfil all of its obligations under any Plan, including the pension arrangement and Employee Benefit Scheme up to and including the Completion Date.

3.13	Up to and including the Completion Date the Seller will cause the Company to comply in all material respects with all laws and regulations applicable to it, including all laws relating to the environment or the health and safety of workers.
4	Condition Precedent
4.1	The sale and purchase of the Shares as contemplated by clause 2 is conditional on the satisfaction of the condition precedent (opschortende voorwaarde) of the adoption of a resolution at the Seller’s EGM, unconditionally approving the entry by the Seller into the Transaction (the Condition Precedent).
4.2	The Seller undertakes to use its reasonable endeavours to ensure that the Condition Precedent is satisfied as soon as possible after the date of this Agreement, whereby it is envisaged to hold the Seller’s EGM in March/April and in any event by no later than 31 May 2011 or such other date as agreed between the Parties (the Long-Stop Date).
4.3	If at any time either Party becomes aware of a fact or circumstance that might prevent or delay the Condition Precedent being satisfied, it shall promptly notify the other Party.
4.4	If:

(a)	the Sellers’ EGM has rejected the resolution approving the Seller’s entering into and consummating the Transaction; or
(b)	the Condition Precedent is not satisfied by the Long Stop Date,

	then this Agreement shall automatically terminate, in each case (except clauses 11 Confidentiality, 12 (Costs), 14 (Miscellaneous) and 15 (Governing law and dispute resolution) which shall remain in full force and effect) and neither Party shall have any claim whatsoever against the other Party in respect of such termination.
5	Completion
5.1	The Shares shall be transferred (geleverd) by the Seller to the Purchaser together with all rights and obligations attached thereto free from all Encumbrances by execution of the Deed of Transfer before the Notary in Amsterdam, the Netherlands, at the offices of Norton Rose LLP, Amstelplein 1 (1096 HA), within ten (10) Business Days after satisfaction of the Condition Precedent, or at such other date agreed between the Parties (the Completion Date).
5.2	At least three (3) Business Days prior to the Completion Date, the Seller shall inform the Purchaser of the amount of Current Account Debt as per such date.

10

5.3 At the Completion, subject to all of the terms and conditions of this Agreement, Seller will deliver to the Purchaser:

(a)	the original shareholders’ register of the Company;
(b)	a certified copy of the resolutions of the EGM of Seller authorizing this Agreement and approving the Transaction;
(c)	copies of the Required Consents as obtained on or prior to Completion Date; and
(d)	the written resignation of Seller as managing director of the Company in a form satisfactory to the Purchaser, including a waiver by the Seller of any claims against the Company in its capacity as managing director.

5.4 At the Completion, subject to all of the terms and conditions of this Agreement, Purchaser will deliver to Seller.

(a)	the Closing Cash .and Current Account Debt (if any) by wire transfer of immediately available funds to the Notary in accordance with clause 5.5;
(b)	a certified copy of the resolutions adopted by the board of directors of Purchaser authorizing the execution and performance of this Agreement and approving the Transaction; and
(c)	immediately after execution of the Deed of Transfer, a shareholders resolution by the Purchaser as sole shareholder of the Company for the dismissal of the Seller as managing director of the Company, including full and final discharge (décharge) to the Seller with respect to the performance of its duties as managing director (statutair directeur) of the Company, and for the appointment of new management.

5.5 No later than one (1) Business Day prior to the Completion Date the Purchaser shall deposit (i) the Closing Cash and (ii) the Current Account Debt, if any, into the third party account (kwaliteitsrekening) of the Notary at ABN AMR() Bank N.V. with account number 575902396 and reference to Project Uranus and the Notary shall hold such amount on behalf of the Purchaser until execution of the Deed of Transfer as contemplated by clause 5.1 and thereafter on behalf of the Seller. As soon as possible after execution of the Deed of Transfer and the completion of all of the actions forming part of the Completion, the Notary shall release the Closing Cash and the Current Account Debt (if any) to the Seller, taking into account the amounts to be put in escrow in relation to the Required Consents as set out in Schedule 7, in accordance with the Notary Letter.

11

6	Post Completion undertakings
	Employee benefits
6.1	In July 2010 a compensation arrangement was entered into in relation to the early settlement of the Share Plan (the Compensation Arrangement). Pursuant to the Compensation Arrangement a maximum amount of EUR 17,899 (the Maximum Compensation Amount) is due by the Seller to the employees of the Company on 2 September 2011. The amount of the Compensation Arrangement shall be borne by the Seller and shall be paid by the Seller on the following terms:

(a)	the amount shall be paid by the Seller into the bank account of the Company on the Completion Date;
(b)	payment of compensation pursuant to the Compensation Arrangement to the employees of the Company and the withholding and payment of taxes related thereto shall be made through the payroll of the Company;
(c)	the Maximum Compensation Amount shall only be payable in full if each of the relevant employees of the Company is still eligible for payment at the relevant payment date (i.e., is still employed by the Company). If the payment due to the eligible employees pursuant to the Compensation Arrangement is less that the Maximum Compensation Amount, the Purchaser shall procure that the difference between the actual amount so payable to the eligible employees and the Maximum Compensation Amount shall be repaid by the Company to the Seller. If prior to 2 September 2011 it is apparent that the Maximum Compensation Amount shall not be reached, the Seller may request that the Company repays the excess amount to the Seller; and
(d)	the Purchaser agrees to indemnify the Seller and hold the Seller harmless for (i) the incorrect or incomplete settlement of the Compensation Arrangement by the Company in accordance with the provisions of this clause 6.1, as well as (ii) any agreements or arrangements made between the Company or the Purchaser with any employee of the Company in relation to the Compensation Arrangement or the Share Plan after the Completion Date. The Seller warrants to the Purchaser that the Maximum Compensation Amount has been calculated correctly.

6.2

The Purchaser shall procure that as soon as possible after the Completion Date and in any event no later than sixty (60) days after the Completion Date, a new Employee Benefit Scheme shall be put in place and effective for the employees of the Company. The Purchaser hereby agrees to indemnify and hold harmless (schadeloos stollen en vrijwaren) the Seller from any and all loss or expense arising directly or indirectly in connection with the Employee Benefit Scheme arising after the Effective Date.

6.3

The Purchaser shall procure that as soon as possible after the Completion Date and in any event no later than sixty (60) days after the Completion Date, a new pension arrangement or -if such is possible under the current pension arrangement- a continuation of the current arrangement in effect at the Company shall be put in place and effective for the

12

employees of the Company which is as much as possible equal (gelijkwaardig) to the current pension arrangement described in Schedule 5. The costs hereof are per the Effective Date for the account of the Company.

	IP Rights
6.4	The Seller grants the Company a non-exclusive right and license to use the logo as set out in Schedule 6 (the Logo) for the purpose of conducting the Business, until 30 June 2012 (or until such earlier as set out in clause 6.6). The Logo may not be used for any other purpose, and the Company has no rights with regard to such Logo other than as specifically set out herein. For the avoidance of doubt, the Company may not grant any rights to any other party to use the Logo in any way whatsoever and the Company shall not use the Logo on behalf of other parties.
6.5	In using the Logo the Company shall at all times take into account the interests of the Seller and shall ensure that the reputation of the Seller is not in any way jeopardized as a result of the use of the Logo by the Company nor is the Seller in any other way adversely affected by such use.
6.6	In case of a breach by the Company of clause 6.5, the right to use the Logo will cease with immediate effect without prejudice to any other rights the Seller may have for damages or otherwise.
	Intra-group guarantees
6.7	As soon as reasonably practical after the Completion Date and with effect from the Effective Date, the Seller shall assign and the Purchaser shall assume or shall procure the release of the Seller from all guarantees and other instruments of security of the Seller that the Seller has entered into, executed, issued or assumed for obligations of the Company, and listed in the Disclosure Schedule, including the ‘403-statement’ (aansprakelijkheidsverklaring) as referred to in section 2:403 sub f of the Dutch Civil Code dated 3 May 2007. Similarly, as soon as practical after the Completion Date, Seller shall procure the release of the Company from all guarantees and other instruments of security of any kind that the Company has entered into, executed or issued for the obligations of the Seller, and Seller shall indemnify and hold harmless the Company from any and all costs or expenses arising directly or indirectly in connection with any such guarantees or security provided by the Company for the benefit of Seller.
6.8	From and after the Completion Date, the Purchaser shall indemnify and hold harmless (schadeloos stellen en vrijwaren) the Seller from any and all losses, cost or expenses arising directly or indirectly or in connection with any guarantees or other instruments of security for the benefit of the Company as referred to in clause 6.7 above. The Purchaser further undertakes with the Seller to promptly provide such replacement security in favor of any creditor opposing the termination of the remaining liability (overblijvende aansprakelijkheid) within the meaning of section 2:404 of the Dutch Civil Code, as is required pursuant to section 2:404 subparagraph 4 of the Dutch Civil Code to prevent validation of an opposition (gegrondverklaring van het verzet), if made.

13

	Fiscal unity
6.9	The Seller and the Purchaser acknowledge that the Company will be excluded from the corporate income tax fiscal unity (fiscale eenheid) as from the Effective Date and the VAT (omzetbelasting) fiscal unity between Seller and the Company as of the Effective Date. The Parties acknowledge that any corporate income tax or VAT relating to the Company for the period as of Effective Date shall be borne by the Company.
6.10	Without prejudice to clause 6.9, should nonetheless the Company continue to be included in a corporation tax or VAT fiscal unity with Seller post Effective Date, the Purchaser shall procure that the Company shall promptly pay to the Seller, or, as the case may be, Seller shall promptly pay (or procure to be paid) to the Company, an amount equal to the amount of corporate income tax or VAT assessed or omitted to have been assessed with the Seller (or any of its group companies), which relates to the period starting on the Effective Date and ending on the Completion Date and which pertains to the Business of the Company, calculated in accordance with Dutch tax accounting principles as if the Company would have been assessed by the. relevant Tax authorities on a stand-alone basis (i.e., the Company not being part of any fiscal unity) but, for the avoidance of doubt, in calculating such Taxes no financing cost relating to the Transaction will be taken into account.
6.11	The Purchaser shall procure that the Company shall indemnify the Seller, or, as the case may be, Seller shall indemnify the Company, against the loss of any right of Seller, or, as the case may be the Company, to a repayment of Tax, as a result of the set-off pursuant to art. 24 of the Tax Collection Act 1990 of such right against a liability to Tax of the Company, or, as the case may be the Seller or any of its group companies, relating to a period up to the Effective Date except to the extent such Tax has been provided for in the Effective Date Accounts.
6.12	Notwithstanding clause 6.10, the Purchaser shall indemnify the Seller and hold the Seller harmless (schadeloos stellen en vrijwaren) for any Tax incurred by the Company relating to the period on or after the Effective Date or events on or after the Effective Date, whether claimed by the Tax authorities against the Seller or any of its Affiliates or otherwise.
6.13	The Seller shall indemnify the Purchaser and the Company and hold the Purchaser and the Company harmless (schadeloos stellen en vrijwaren) for the amount of any Tax arising directly or indirectly from or in connection with the Company (or its predecessors) relating to:

(a)	all periods up to the Effective Date; and
(b)	the corporation Tax and VAT consolidated, combined or unitary group of which the Company (or any of its predecessors) is or was a member on or prior to the Effective Date (or such later date when the consolidation is terminated), including for the avoidance of doubt any claims or set-off under the 1990 Dutch Tax Collection Act (lnvorderingswet 1990) and other liabilities that would not have

14

arisen but for the relationship, on or at any time prior to the Completion Date, of the Company with the Seller’s group.

6.14	A payment due by the Seller pursuant to clause 6.13, or, as the case may be, a payment due by the Purchaser pursuant to clause 6.12 shall not be considered due if and to the extent an adequate provision for the relevant Tax amount giving rise to such payment is included in the Effective Date Accounts.
	Conduct of tax affairs
6.15	The Seller and the Purchaser acknowledge that the Company will be excluded from the corporate income tax fiscal unity as from the Effective Date. Without prejudice to clause 3.8, the Seller shall prepare (or procure the preparation of), and duly and properly file (or procure the filing of) consistent with past practice the corporation tax return for the period up to the Effective Date.
6.16	At Completion, the Seller shall provide or procure to be provided to the Purchaser all the information and documentation exclusively relating to Tax matters of the Company that it has in its possession or under its control. For this purpose, the Seller shall give the Purchaser and its representatives, agents and advisers reasonable access to, and permit them to copy, all such information and documentation.
6.17	The Purchaser shall, and shall procure that the Company shall, allow the Seller, upon reasonable written notice, access during normal business hours to the books, records and other information of the Company, including the right to inspect and take copies (at the Seller’s expense), exclusively if and to the extent necessary for the Seller to be able to comply with its statutory obligations.
6.18	Within two months following the Completion Date, the Seller shall prepare and deliver to the Purchaser (i) a draft opening balance sheet for Dutch corporate income tax purposes as at the Effective Date in relation to the Company and (ii) draft explanatory notes thereto. The Purchaser may submit to the Seller any comments the Purchaser may have on these draft documents within 10 (ten) Business Days of receipt of the draft documents. The Seller and Purchaser shall discuss in good faith the comments of the Purchaser. The Seller shall then within 10 (ten) Business Days after receipt of the comments of the Purchaser (and thus ultimately within two months and twenty Business Days as from the Completion Date) provide the Company with (i) an opening balance sheet for Dutch corporate income tax purposes as at the Completion Date and (ii) explanatory notes thereto.
6.19	The Purchaser shall procure that the Company will, in a manner and on a basis consistent with past practice and where relevant taking into consideration the opening balance sheet referred to in clause 6.18, duly and properly file with each relevant Tax authority, all Tax returns other than covered by clauses 3.8 and 6.15.
6.20	The Purchaser or the Company shall promptly notify the Seller in writing and within ten (10) Business Days after becoming aware of a Tax claim or of any event that could lead

15

to a Tax claim relating to any period or portion thereof ending on or before the Effective Date, setting forth any and all relevant details in respect of such Tax claim or such event.

6.21	The Seller has the right to control the conduct of any such audits or other proceedings relating to Tax matters of the Company to the extent that they relate to the period up to the Effective Date and shall be entitled to settle and compromise any such audit or proceeding. The Seller shall consult the Purchaser, acting reasonably, and shall take into account any comments of the Purchaser, if and to the extent the Seller’s conduct could possibly result in adverse Tax consequences for the Purchaser or the Company. For purposes of this clause 6.21, the Purchaser shall procure that the Company shall grant an adequate power of attorney to the Seller.
6.22	If and to the extent that the Seller elects not to take over the conduct thereof in accordance with clause 6.21, the Purchaser shall procure that the Company shall (i) conduct the audit or other proceedings, (ii) advise the Seller periodically of developments in the audit investigation or other proceedings and (iii) obtain the Seller’s prior written approval (such approval not to be unreasonably withheld or delayed) on critical audit decisions and on material written communication to be forwarded to any Tax authority or competent court in relation to the audit or other proceedings. The Seller shall indemnify the Purchaser and hold the Purchaser harmless (schadeloos stellen en vrijwaren) for the amount of any costs or expenses, including but not limited to reasonable advisor’s fees, incurred by the Purchaser or the Company.
	Seller’s further undertakings
6.23	Seller will not take any action that is designed or intended to have the effect of discouraging any licensor, customer, supplier or other business associate of the Company from maintaining the same business relationships with any of them after the Completion as it maintained with any of them prior to the Completion.
6.24	During the period that commences on the Completion Date and ends on the third anniversary of the Completion Date, Seller will not, and Seller will cause each of its Affiliates not to, attempt to employ or interfere with any employment relationship with any employee of the Company.
6.25	Within thirty (30) days after Completion, Seller shall provide to Purchaser all historical sales and financial data and information relating to the Company’s Business and maintained on the Seller’s systems or located on Seller’s premises to the extent reasonably required by the Company to conduct its Business or comply with any legal requirements in relation to its bookkeeping.
6.26	For a period of ninety (90) days after the Completion Date, Seller shall make available to the Company access to and the use of all software and other IT equipment maintained by the Seller for the benefit of the Company prior to the Effective Date in connection with the financial operations of the Company including accounts receivable, accounts payable, inventory, shipping, invoicing, general ledger and other financial records reasonably

16

requested by the Company or the Purchaser, against compensation by the Purchaser or the Company for the costs incurred by the Seller as a result thereof.

6.27	As soon as possible after Completion Parties shall procure that all services provided on the basis of umbrella or other agreements between the Seller and service providers, which are provided for the benefit of the Purchaser (including but not limited to insurance, car leases), shall be phased out and assumed and provided by the Company or the Purchaser.
6.28	Without the prior written consent of the Purchaser, Seller covenants and agrees that it will not before 31 December 2011 complete a liquidation in respect of itself.
6.29	For the purposes of Seller’s obligations in respect of a Warranty Breach or tax indemnity as included in clause 6.13, Seller covenants to maintain until 31 December 2011 a cash reserve on its balance sheet of at least 15% of the Purchase Price.
7	Required Consents
7.1	Seller will use its best efforts to obtain, and will cause the Company to use its best efforts to obtain, as soon as possible after the date of this Agreement all third party contractual authorizations, consents, approvals, waivers, exemptions or other actions as these are described on Schedule 7 (the Required Consents). The Purchaser shall give all cooperation reasonably requested by the Seller to procure the same.
7.2	If the Seller has not obtained the Required Consents ultimately within 90 days after the Completion Date, the Purchase Price shall be reduced in accordance with the provisions set forth in Schedule 7.
8	Seller’s Warranties
8.1	The Seller hereby represents and warrants (verklaart en staat er voor in) to the Purchaser that, except as described in the Disclosure Schedule, each of the Seller’s Warranties is true, accurate and not misleading on the date of this Agreement.
8.2	The Seller’s Warranties are qualified and the Seller shall not be in breach of any of the Seller’s Warranties to the extent disclosed to the Purchaser, its representatives or advisors in (i) this Agreement, (ii) in the Due Diligence Information, and (iii) in the Disclosure Schedule.
8.3	In the event of a Warranty Breach, the Seller shall be liable towards the Purchaser for Losses resulting from such Warranty Breach. Any amounts payable the Seller to the Purchaser in respect of Losses shall be treated as an adjustment of the Purchase Price.
8.4	In relation to the Transaction, no representations, warranties, guarantees, indemnities or any other comfort is made or given, whether express or implied, by the Seller to the Purchaser other than the Seller’s Warranties set forth herein. The Purchaser agrees that it does not rely on and shall not have the right (or, to the extent necessary, hereby waives such right) to invoke any warranties that are in any way contained in or implied by the

17

laws of the Netherlands or any other jurisdiction, including but not limited to sections 7:17 and 7:20-23 of the Dutch Civil Code.

8.5	The Purchaser shall not be entitled to recover from the Seller under this Agreement more than once in respect of the same Losses suffered by Purchaser or the Company.
8.6	The Purchaser and the Seller hereby confirm that as at the date of this Agreement they are not aware of any fact, circumstance or development that would give rise to a Claim for a Warranty Breach as at the date of this Agreement.
9	Limitations of Liability
9.1	The Seller shall not be liable for Losses in respect of any Warranty Breach, unless the amount of Losses that would otherwise be recoverable from the Seller but for this clause 9.1 in respect of such claim:

(a)	individually exceeds EUR 50,000 and
(b)	when aggregated with any other amount recoverable in respect of all other claims (for the avoidance of doubt, such other amounts in each case individually exceeding an amount of EUR 50,000 exceeds EUR 250,000;

	in which event the Seller shall be liable for the aggregate amount of the Losses in relation to these claims.
9.2	The Seller’s maximum aggregate liability for a Warranty Breach is limited to 15% of the Purchase Price, except however the maximum aggregate Seller’s liability for a Warranty Breach relating to the Seller’s Warranties set forth in paragraph 3 (Shares) of Schedule 8 (Seller’s Warranties), or any other Claim is equal to the amount of the Purchase Price. For the avoidance of doubt, any Required Consents Adjustments shall be excluded from the aforementioned 15% cap.
9.3	The Seller shall not be liable for any claim by the Purchaser against the Seller for a Warranty Breach, unless the Purchaser has given notice to the Seller of such claim ultimately on 31 December 2011. Notwithstanding the first sentence of this clause 9.3, Seller shall not be liable for any claim by the Purchaser against the Seller under the tax indemnity included in clause 6.13 unless the Purchaser has given notice to the Seller of such claim ultimately on the earlier of (i) 90th day after the expiry of the statutory limitation period under Tax laws and regulations applicable to such claim, and (ii) the completion of a liquidation of the Seller.
9.4	The Seller shall not be liable for and the Purchaser shall have no right to invoke a Claim to the extent such Claim relates to any Losses:

(a)	for which a specific provision is included in the Effective Date Accounts; or
(b)	for which and to the extent that such Losses are recovered by the Company or the Purchaser from any third party (including an insurance company); or

18

(c)	which would not have arisen but for a change in legislation or regulations, or in a change in the interpretation or implementation thereof by any governmental body, or by reason of development in case law made after the date of this Agreement, or any amendment to or the withdrawal of any practice previously published by or of any extra-statutory concession previously made by a governmental body (whether or not the change purports to be effective retrospectively in whole or in part); or
(d)	which would not have arisen but for a change in the Tax structure or corporate structure of the Company after Completion; or
(e)	which arises as a result of any change in the accounting principles, bases, methods or policies after the Completion Date; or
(f)	if for a Warranty Breach which is contingent, unless and until such contingent Warranty Breach leads to an actual liability that is due and payable; or
(g)	which would not have arisen but for an action of the Purchaser, including a request or direction to the Company; or
(h)	if and to the extent that any Losses result from the failure of the Purchaser to ensure all reasonable steps necessary or appropriate are taken to prevent or mitigate any Losses that could give rise to a Claim.

9.5	In view of clause 9.4(b), the Purchaser shall procure that the Company shall, as of Completion Date, maintain in full force and effect all insurance policies currently in place in relation to the Business or take out similar insurance policies as currently in place, with similar coverage. Furthermore, in the event that the Purchaser or the Company has suffered any Losses which it intends to claim from the Seller pursuant to this Agreement, the Purchaser shall first seek to recover, and shall procure that the Company shall seek to recover, any such amount from any third party, if and to the extent the relevant third party could reasonably be expected to be liable in relation thereto (including but not limited to insurance companies). If the Purchaser or the Company has not recovered the relevant amount from such third party within a reasonable time, it may hold the Seller liable for the relevant Losses (in accordance with the terms of this Agreement). Should the Purchaser recover any Losses from the Seller and should subsequently the Purchaser or the Company recover any amount from a third party in relation to the same Losses, the Purchaser will reimburse the Seller for the amount so recovered from the third party.
9.6	Any Tax refund received by the Company and any reduction in Taxes payable by the Company, to the extent that such refund or reduction is attributable to the facts giving rise to a Claim, shall be taken into account and deducted from the amount of Losses in respect of such Claim.
9.7	If the Purchaser becomes aware of a Warranty Breach, the Purchaser shall within 30 (thirty) Business Days after becoming aware of the Warranty Breach give notice thereof in writing to the Seller. Failure to give such notification shall not result in termination of the right to claim for such Warranty Breach, save that the Seller shall not be liable for any (increased) losses arising due to, or in connection with, such failure.

19

9.8	The limitations on the Seller’s liability as included in this clause 9 do not apply in the event of a Claim which is attributable to fraud on the part of the Seller.
10	Purchaser’s Warranties
	The Purchaser hereby represents and warrants (verklaart en staat er voor in) to the Seller that each of the Purchaser’s Warranties is true, accurate and not misleading on the date of this Agreement.
11	Confidentiality
	Non-disclosure
11.1	Subject to, the provisions of clause 11.2, Parties shall treat as strictly confidential, and shall not disclose to any person other than a Party, any of the confidential information relating to any other Party that was received or obtained in connection with this Agreement or that relates to the negotiations relating to this Agreement, and shall not disclose the provisions or subject matter of this Agreement or any document referred to in this Agreement. Following the Completion, the Seller shall treat as confidential and shall not disclose or use any of the confidential information relating to the Business or the Company.
	Exceptions
11.2	The restrictions contained in clause 11.1 shall not apply to:

(a)	disclosure by the Parties as required by law or by any securities exchange or supervisory or regulatory or governmental body pursuant to rules to which the relevant Party is subject;
(b)	disclosure to any professional adviser for the purposes of obtaining advice (provided always that the provisions of this clause 11 shall apply to and the Parties shall procure that they apply to, and are observed in relation to, the use or disclosure by such professional adviser of the information provided to him);
(c)	announcements and disclosures consented to by the other Party;
(d)	any information which comes into the public domain otherwise than by a breach of this clause by the Parties;
(e)	any disclosure to the shareholders of the Seller for the purpose of obtaining approval at the Seller’s EGM as set out in clause 4.1.

12	Costs
	Each Party shall bear its own costs, including the costs of legal, financial and other advisors, incurred in connection with the negotiation, preparation and completion of this Agreement together with any documents referred to herein or executed coincidentally

20

with this Agreement, and any due diligence investigations. Seller represents and warrants that the Company has not and agrees that the Company will not bear any of Seller’s costs or expenses in connection with this Agreement or the Transaction, save as agreed in writing between the Parties.

13	Civil law notary
	The Parties are aware of the fact that the Notary works with Norton Rose LLP, the firm that advises the Seller in this Transaction. With reference to the Code of Conduct (Verordening beroeps- en gedragsregels) established by the Royal Notarial Professional Organisation (Koninklijke Notariele Beroepsorganisatie), the Parties hereby explicitly agree (i) that the Notary shall execute any notarial deeds related to this Agreement and (ii) that the Seller is assisted and represented by Norton Rose LLP in relation to this Agreement and any agreements that may be concluded, or disputes that may arise, in connection therewith.
14	Miscellaneous
14.1	If any provision of this Agreement is or at any time becomes to any extent invalid, illegal or unenforceable under any enactment or rule of law, it shall to that extent be deemed not to form part of this Agreement but (except to that extent in the case of that provision) it and all other provisions of this Agreement shall continue in full force and effect, their validity, legality and enforceability shall not be thereby affected or impaired and the Parties shall use their best endeavours to agree on a valid and enforceable provision which shall reflect their original intent as much as possible.
14.2	Neither Parties shall be entitled to assign any rights under this Agreement (including the Seller’s Warranties) without the prior written consent of the other Party.
14.3	Notwithstanding clause 14.2, Purchaser is considering incorporating prior to Completion a Dutch legal entity to appoint it to act as purchaser of the Shares. In such event, Purchaser shall transfer its rights and obligations under this Agreement prior to Completion to such appointed company and this company shall, to the extent applicable, ratify all rights and obligations arising for it from this Agreement as if it was bound to the Agreement as a Purchaser as from date of signing the Agreement. The Purchaser hereby covenants and warrants to the Seller the full, due and punctual performance by any appointed company as referred to under clause 14.3 of all its obligations under the Agreement. If such appointed company fails in the full, due and punctual performance of its obligations hereunder, then the Purchaser shall be liable vis-a-vis the Seller for such obligations of the Purchaser, as if the Purchaser was a primary obligator and not a surety.
14.4	This Agreement and all documents to be entered into pursuant to or coincidentally with this Agreement, supersede any prior discussions, understandings and agreements (both oral and written) between the Parties.
14.5	This Agreement may only be amended, supplemented or restated in writing and signed by all Parties.

21

14.6	Each of the Parties hereby waives any right it may have to nullify (vernietigen) or rescind (ontbinden) this Agreement in whole or in part after Completion (whether pursuant to section 6:228 of the Dutch Civil Code, section 2:265 of the Dutch Civil Code, or otherwise).
14.7	Any notice required to be given under this Agreement shall be in writing in the Dutch or English language and shall be delivered personally, or sent by international courier for second day delivery or by fax or by email, to each of the Parties due to receive the notice, at the details set out in Schedule 13 or to such details as each Party may give by like notice from time to time in accordance with this clause 14.7.
14.8	Any notice given in accordance with clause 14.7 shall be deemed to be given:

(a)	if delivered personally, when left at the relevant address referred to in clause 14.7;
(b)	if sent by international courier, two Business Days after it was posted or delivered to the post office or the courier; and
(c)	if sent by fax or by email, on completion of its transmission on completion of its transmission so long as the sending party’s facsimile machine or email system does not produce a transmission fault and provided that a confirmation copy of the notice is sent by international courier on the same Business Day.

15	Governing law and jurisdiction
15.1	This Agreement shall be governed by the laws of the Netherlands.
15.2	Any disputes which may arise out of or in connection with this Agreement, and which cannot be settled amicably, shall be brought before the competent court in Amsterdam, the Netherlands, which shall have exclusive jurisdiction in connection with such dispute.

THUS SIGNED IN AMSTERDAM BY:

Fornix Biosciences N.V.	Rochester Medical Corporation
/s/ Cees Bergman	/s/ David Jonas
Name: Cees Bergman	Name: David Jonas
Title:   Director	Title:   Secretary
Date: 12 January 2011	Date: 12 January 2011

22

EX-10.1

Exhibit 10.1

ROCHESTER MEDICAL CORPORATION
2010 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

     This RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is made this _____ day of _____, _____, by and between Rochester Medical Corporation, a Minnesota corporation (the “Company”) and _____, an individual resident of _____, _____ (“Employee”).

     1. Restricted Stock Award. The Company hereby grants to Employee a restricted stock award of _____ shares (the “Restricted Shares”) of Common Stock, without par value per share, of the Company according to the terms and conditions set forth herein and in the Rochester Medical Corporation 2010 Stock Incentive Plan (as adopted, amended and currently in effect, the “Plan”). Words and phrases not otherwise defined herein shall have the meanings ascribed to them, respectively, in the Plan. A copy of the Plan will be furnished upon request of Employee. With respect to the Restricted Shares, except as provided in this Agreement, Employee shall be entitled at all times on and after the date of issuance of the Restricted Shares to exercise the rights of a shareholder of Common Stock of the Company, including the right to vote the Restricted Shares and the right to receive dividends on the Restricted Shares.

     2. Vesting. Except as otherwise provided in this Agreement, the Restricted Shares shall vest in accordance with the following schedule:¹

On each of
the following dates	Number of Restricted Shares Vested
__________, ____	[      ]
__________, ____	[      ]
__________, ____	[      ]

     3. Restrictions on Transfer. Until the Restricted Shares vest pursuant to Section 2 or Section 4 hereof, none of the Restricted Shares may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance shall be void and unenforceable against the Company, and no attempt to transfer the Restricted Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the purported transferee with any interest or right in or with respect to the Restricted Shares.

     4. Forfeiture; Early Vesting. If Employee ceases to be an employee of the Company or any Affiliate prior to vesting of the Restricted Shares pursuant to Section 2 or Section 6 hereof, all of Employee’s rights to all of the unvested Restricted Shares shall be immediately and

¹ This vesting schedule presumes the award will vest over a period of service (a service condition), and is consistent with the Company’s standard practice. Vesting could also be based on performance conditions or market conditions.

[Employee - Restricted Stock]

irrevocably forfeited, except that (i) if Employee ceases to be an employee by reason of permanent and total disability prior to the vesting of Restricted Shares under Section 2 or Section 6 hereof, (ii) if Employee ceases to be an employee by reason of death prior to the vesting of Restricted Shares under Section 2 or Section 6 hereof, or (iii) if Employee ceases to be an employee by reason of termination by the Company without cause prior to the vesting of Restricted Shares under Section 2 or Section 6 hereof, all Restricted Shares granted hereunder shall vest as of such termination of employment. Upon forfeiture, Employee will no longer have any rights relating to the unvested Restricted Shares, including the right to vote the Restricted Shares and the right to receive dividends declared on the Restricted Shares.

     5. Distributions and Adjustments.

     (a) If any Restricted Shares vest subsequent to any change in the number or character of the Common Stock of the Company (through any stock dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares, or otherwise), Employee shall receive upon such vesting the number and type of securities or other consideration which Employee would have received if such Restricted Shares had vested prior to the event changing the number or character of the outstanding Common Stock.

     (b) Any additional Restricted Shares of Common Stock of the Company, any other securities of the Company and any other property (except for regular cash dividends or other cash distributions) distributed with respect to the Restricted Shares prior to the date or dates the Restricted Shares vest shall be subject to the same restrictions, terms and conditions as the Restricted Shares to which they relate and shall be promptly deposited with the Secretary of the Company or a custodian designated by the Secretary.

     6. Acceleration of Vesting Upon Change In Control. Notwithstanding any other provision in this Agreement, the Restricted Shares shall be vested as to 100% of the Restricted Shares on the date of a “Change in Control.” A “Change in Control” shall mean any of the following: (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other corporate reorganization are owned by persons who were not shareholders of the Company immediately prior to such merger, consolidation or other corporate reorganization, (ii) a public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that any person or group has acquired beneficial ownership of more than 50% of the then outstanding shares of Common Stock and, for this purpose, the terms “person,” “group” and “beneficial ownership” shall have the meanings provided in Section 13(d) of the Exchange Act or related rules promulgated by the Securities and Exchange Commission; (iii) the Continuing Directors (as defined below) cease to constitute a majority of the Company’s Board of Directors; (iv) a sale of all or substantially all of the assets of the Company or the dissolution of the Company; (v) the commencement of or public announcement of an intention to make a tender or exchange offer for more than 50% of the then outstanding shares of the Common Stock; or (vi) the majority of Continuing Directors, in their sole and absolute discretion, determine that there has been a change in control of the Company.

2

“Continuing Director” shall mean any person who is a member of the Board of Directors of the Company, who (A) was a member of the Board of Directors on the date of this Agreement or (B) subsequently becomes a member of the Board of Directors, if such person’s initial nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors.

     7. Miscellaneous.

     (a) Issuance of Restricted Shares. The Company shall cause the Restricted Shares to be issued in the name of Employee, either by book-entry registration or issuance of a stock certificate or certificates evidencing the Restricted Shares, which certificate or certificates shall be held by the Secretary of the Company or the stock transfer agent or brokerage service selected by the Secretary of the Company to provide such services for the Plan. The Restricted Shares shall be restricted from transfer and shall be subject to an appropriate stop-transfer order. If any certificate is used, the certificate shall bear an appropriate legend referring to the restrictions applicable to the Restricted Shares. Employee hereby agrees to the retention by the Company of the Restricted Shares and, if a stock certificate is used, agrees to execute and deliver to the Company a blank stock power with respect to the Restricted Shares as a condition to the receipt of this award of Restricted Shares. After any Restricted Shares vest pursuant to Section 2 or Section 6 hereof, and following payment of the applicable withholding taxes pursuant to Section 7(b) of this Agreement, the Company shall promptly cause to be issued a certificate or certificates, registered in the name of Employee or in the name of Employee’s legal representatives, beneficiaries or heirs, as the case may be, evidencing such vested whole Restricted Shares (less any Restricted Shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to Employee or Employee’s legal representatives, beneficiaries or heirs, as the case may be, free of the legend or the stop-transfer order referenced above. The value of any fractional Restricted Shares shall be paid in cash at the time certificates evidencing the Restricted Shares are delivered to Employee.

     (b) Income Tax Matters.

     (i) In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Employee, are withheld or collected from Employee.

     (ii) In accordance with the terms of the Plan, and such rules as may be adopted under the Plan, Employee may elect to satisfy Employee’s federal and state income tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the Restricted Shares, by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the Company, (ii) having the Company withhold a portion of the Restricted Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock already owned by Employee having a Fair Market Value equal to the amount of such taxes. Any such shares already owned by Employee shall have been owned by Employee for no less than six months prior to the date delivered to the Company if such shares were acquired upon the exercise of an option or upon the vesting

3

of restricted stock units or other restricted stock. Employee shall represent and warrant in writing that Employee is the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions. Employee’s election must be made on or before the date that the amount of tax to be withheld is determined.

     (c) Plan Provisions Control. In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control.

     (d) No Right to Employment. The issuance of the Restricted Shares shall not be construed as giving Employee the right to be retained in the employ of the Company or an Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate such employment at any time, with or without cause. In addition, the Company or an Affiliate may at any time dismiss Employee from employment free from any liability or any claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan. By participating in the Plan, Employee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.

     (e) Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota shall govern all questions concerning the validity, construction and effect of the Plan and this Agreement, and any rules and regulations relating to the Plan and this Agreement.

     (f) Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or this Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the remainder of the Agreement shall remain in full force and effect.

     (g) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and Employee or any other Person. To the extent that Employee acquires a right to receive payments from the Company or any Affiliate pursuant to this Agreement, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

     (h) Headings. Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof.

     (i) Securities Matters. The Company shall not be required to deliver Restricted Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any applicable stock exchange and the Minnesota Business Corporation Act) as may be determined by the Company to be applicable are satisfied.

4

     (j) Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

     (k) Consultation With Professional Tax and Investment Advisors. The holder of this Award acknowledges that the grant, vesting or any payment with respect to this Award, and the sale or other taxable disposition of the Restricted Shares acquired pursuant to the Award, may have tax consequences pursuant to the Code or under local, state or international tax laws. The holder further acknowledges that such holder is relying solely and exclusively on the holder’s own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner, on the Company or any of its employees or representatives). Finally, the holder understands and agrees that any and all tax consequences resulting from the Award and its grant, vesting or any payment with respect thereto, and the sale or other taxable disposition of the Restricted Shares acquired pursuant to the Plan, is solely and exclusively the responsibility of the holder without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse such holder for such taxes or other items.

     IN WITNESS WHEREOF, the Company and Employee have executed this Restricted Stock Award Agreement on the date set forth in the first paragraph.

ROCHESTER MEDICAL CORPORATION
By:
	Name:
	Title:

EMPLOYEE
 

Name: 

5

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Anthony J. Conway, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Rochester Medical Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2011	/s/ Anthony J. Conway
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, David A. Jonas, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Rochester Medical Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2011	/s/ David A. Jonas
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Rochester Medical Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony J. Conway, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Anthony J. Conway  

Anthony J. Conway 

Chief Executive Officer
May 10, 2011 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Rochester Medical Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Jonas, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David A. Jonas  

David A. Jonas 

Chief Financial Officer
May 10, 2011