10-Q

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 JUNE 30, 2006

     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 Exchange Act 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.
þ Yes      o No

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

Large accelerated filer o           Accelerated filer o           Non-accelerated filer þ

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

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

5,537,280 Common Shares as of July 28, 2006.

Table of Contents

ROCHESTER MEDICAL CORPORATION

Report on Form 10-Q
for quarter ended
June 30, 2006

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets — June 30, 2006 and September 30, 2005		1
Consolidated Statements of Operations — Three months ended June 30, 2006 and 2005; nine months ended June 30, 2006 and 2005		2
Consolidated Statements of Cash Flows — Nine months ended June 30, 2006 and 2005		3
Notes to 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		15
Item 4. Controls and Procedures		15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		15
Item 6. Exhibits		17
Agreement
Private Label Distribution Agreement
Distribution Agreement
Asset Purchase Agreement
Term Loan Agreement
Revolving Credit Agreement
First Amendment to Term Loan Agreement
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

i

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

ROCHESTER MEDICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

	June 30,			September 30,
	2006			2005
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	2,129,523		$	1,129,876
Marketable securities		—			5,286,553
Accounts receivable, net		4,080,435			3,204,824
Inventories		4,208,982			3,936,243
Prepaid expenses and other assets		335,417			351,027
Deferred income tax asset		40,308			21,000
Total current assets		10,794,665			13,929,523
Property and equipment:
Land and buildings		7,579,056			6,360,447
Equipment and fixtures		12,813,308			11,783,213
		20,392,362			18,143,660
Less accumulated depreciation		(11,429,991	)		(10,582,357	)
Total property and equipment		8,962,371			7,561,303
Deferred income tax asset		1,190,689			433,000
Intangible assets, net		13,264,142			285,194
Total assets	$	34,211,867		$	22,209,020
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	926,995		$	283,332
Accrued expenses		1,099,492			744,256
Deferred revenue		157,143			157,143
Current maturities of debt		1,665,362			34,000
Current maturities of capital leases		41,497			39,785
Income tax payable		18,055			—
Total current liabilities		3,908,544			1,258,516
Long-term liabilities:
Deferred revenue		446,429			564,286
Long-term debt, less current maturities		7,806,738			34,000
Capital leases, less current maturities		32,689			64,030
Total long-term liabilities		8,285,856			662,316
Shareholders’ equity:
Common Stock, no par value:
Authorized — 20,000,000
Issued and outstanding shares (5,537,280 — June 30, 2006; 5,523,500 — September 30, 2005)		43,004,037			42,407,912
Accumulated deficit		(20,992,099	)		(22,044,650	)
Accumulated other comprehensive income		5,529			(75,074	)
Total shareholders’ equity		22,017,467			20,288,188
Total liabilities and shareholders’ equity	$	34,211,867		$	22,209,020

Note — The Balance Sheet at September 30, 2005 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. See Notes to Financial Statements

1

ROCHESTER MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Net sales	$	5,358,076		$	3,815,463		$	14,839,355		$	11,627,908
Cost of sales		3,361,907			2,512,473			9,682,200			7,412,813
Gross profit		1,996,169			1,302,990			5,157,155			4,215,095
Operating expenses:
Marketing and selling		786,583			616,209			1,961,950			1,753,199
Research and development		209,060			186,055			569,657			564,094
General and administrative		788,584			469,254			2,355,384			1,659,179
Total operating expenses		1,784,227			1,271,518			4,887,001			3,976,472
Income from operations		211,942			31,472			270,164			238,623
Other income (expense):
(Loss) on sale of investments		—			—			(103,532	)		—
Interest income		70,933			32,787			188,379			96,977
Interest expense		(56,377	)		(4,193	)		(61,451	)		(12,328	)
Net income before income taxes		226,498			60,066			293,560			323,272
Income tax benefit/(expense) — Net		758,991			—			758,991			—
Net income	$	985,489		$	60,066		$	1,052,551		$	323,272
Net income per share — basic	$	0.18		$	0.01		$	0.19		$	0.06
Net income per share — diluted	$	0.17		$	0.01		$	0.18		$	0.06
Weighted average number of common shares outstanding — basic		5,536,494			5,470,060			5,532,112			5,458,673
Weighted average number of common shares outstanding — diluted		5,918,855			5,770,867			5,826,292			5,737,994

See Notes to Financial Statements

2

ROCHESTER MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended
	June 30,
	2006			2005
Operating activities:
Net income	$	1,052,551		$	323,273
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		926,071			960,408
Stock based compensation		504,125			—
Deferred income tax		(776,997	)		—
Changes in assets and liabilities, net of acquisition of assets:
Accounts receivable		(875,611	)		(270,408	)
Inventories		766,125			(478,129	)
Other current assets		15,610			(42,993	)
Accounts payable		661,718			(143,809	)
Deferred revenue		(117,857	)		(117,857	)
Other current liabilities		355,236			(2,863	)
Net cash provided by operating activities	$	2,510,971		$	227,623
Investing activities:
Capital expenditures		(355,614	)		(260,172	)
Business acquisition		(11,556,656	)		—
Patents		(28,579	)		(74,843	)
Sales (purchases) of marketable securities, net		5,361,625			(604	)
Net cash provided by investing activities	$	(6,579,224	)	$	(335,619	)
Financing activities:
Increase (decrease) in long-term financing		5,000,000			(34,000	)
Payments on capital leases		(29,629	)		(28,009	)
Proceeds from issuance of common stock		92,000			141,388
Foreign currency translation adjustment		5,529			—
Net cash provided by financing activities	$	5,067,900		$	79,378
Increase (decrease) in cash and cash equivalents		999,647			(28,617	)
Cash and cash equivalents at beginning of period		1,129,876			620,441
Cash and cash equivalents at end of period	$	2,129,523		$	591,824
Supplemental disclosure of non-cash financing activities:
Debt used to finance asset acquisition	$	4,404,099		$	—

See Notes to Financial Statements

3

ROCHESTER MEDICAL CORPORATION

Notes to Financial Statements (Unaudited)

June 30, 2006

Note A — Basis of Presentation

     The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with 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 2005 Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended June 30, 2006 are not necessarily indicative of the results that may be expected for the year ending September 30, 2006.

Note B — Net Income Per Share

     Net income per share is calculated in accordance with Financial Accounting Standards Board Statement No. 128, “Earnings Per Share.” The Company’s basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing income by the weighted average number of common shares outstanding during the period, increased to include dilutive potential common shares issuable upon the exercise of stock options that were outstanding during the period. A reconciliation of the numerator and denominator in the basic and diluted net income per share calculation is as follows:

	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2006		2005		2006		2005
Numerator:
Net income	$	985,489	$	60,066	$	1,052,551	$	323,272
Denominator:
Denominator for basic net income per share-weighted average shares outstanding		5,536,494		5,470,060		5,532,112		5,458,673
Effect of dilutive stock options		382,361		300,807		294,180		279,321
Denominator for diluted net income per share-weighted average shares outstanding		5,918,855		5,770,867		5,826,292		5,737,994
Basic net income per share	$	0.18	$	0.01	$	0.19	$	0.06
Dilute net income per share	$	0.17	$	0.01	$	0.18	$	0.06

Employee stock options of 143,000 and 281,000 for the third quarter of fiscal years 2006 and 2005, and 191,000 and 336,000 for the nine months ended June 30, 2006 and 2005, respectively, have been excluded from the diluted net income per share calculation because their exercise prices were greater than the average market price of the Company’s common stock.

Note C — Stock Based Compensation

     The Company has three stock option plans under which options have been granted to employees, including officers and directors of the Company, at a price not less than the fair market value of the Company’s common stock at the date the options were granted. Options under the 1991 Stock Option Plan are no longer granted because the 10-year granting period has expired. The granting period for the 2001 Stock Incentive Plan expires in 2011. Under the 1995 Non-Statutory Stock Option Plan, options also may be granted to certain non-employees at

4

a price not less than the fair market value of the Company’s common stock at the date the options are granted. Options generally expire ten years from the date of grant or at an earlier date as determined by the committee of the Board of Directors of the Company that administers the plans. Options granted under the 1991, 1995 and 2001 Plans generally vest over four years from the date of grant.

     Effective October 1, 2005, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123(R)”) which requires all share-based payments, including grants of stock options, to be recognized in the statement of operations as an operating expense based on their fair values over the requisite service period. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees” for periods beginning in fiscal 2006. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R). The Company elected to utilize the modified-prospective transition method as permitted by SFAS 123(R). Under this transition method, the Company’s financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Stock-based compensation expense for the quarter and nine months ended June 30, 2006 includes: (a) compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of, October 1, 2005, based on grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation;” and (b) compensation expense for all stock-based compensation awards granted subsequent to October 1, 2005, based on grant-date fair value estimated in accordance with the provisions of SFAS 123(R). The Company recorded approximately $88,000 and $504,000 of related stock-based compensation expense for the quarter and nine months ended June 30, 2006. This stock-based compensation expense reduced both basic and diluted earnings per share by $0.02 and $0.09 for the three and nine months ended June 30, 2006.

     On November 10, 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. SFAS 123(R)-3, “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of employee share-based compensation, and to determine the subsequent impact on the APIC pool and Consolidated Statements of Cash Flows of the tax effects of employee share-based compensation awards that are outstanding upon adoption of SFAS 123(R). The Company is in the process of evaluating whether to adopt the provisions of SFAS 123(R)-3.

     As of June 30, 2006, $517,573 of unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately fourteen months.

     The following table illustrates the effect on operating results and per share information had the Company accounted for stock-based compensation in accordance with SFAS 123(R) for the three months and nine months ended June 30, 2005:

				Nine Months
	Three Months Ended			Ended June 30,
	June 30, 2005			2005
Net (loss) income:
As reported	$	60,066		$	323,272
Deduct: Stock-based employee compensation under the fair value method for all awards		(89,860	)		(364,758	)
Pro forma	$	(29,794	)	$	(41,486	)
Basic net income (loss) per share:
As reported	$	0.01		$	0.06
Deduct: Stock-based employee compensation under the fair value method for all awards		(0.02	)		(0.06	)
Pro forma	$	(0.01	)	$	0.00

5

				Nine Months
	Three Months Ended			Ended June 30,
	June 30, 2005			2005
Diluted net income (loss) per share:
As reported	$	0.01		$	0.06
Deduct: Stock-based employee compensation under the fair value method for all awards		(0.02	)		(0.06	)
Pro forma	$	(0.01	)	$	0.00

Stock Options

     In the third quarter of fiscal 2006 and 2005, 10,000 and 0 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 third quarter of fiscal 2006.

	2006
Dividend yield		0	%
Expected volatility		53	%
Risk-free interest rate		5.125	%
Expected holding period (in years)		6.66
Weighted-average grant-date fair value	$	8.60

     The risk-free rate is based on a treasury instrument whose term is consistent with the expected life of our 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 three months ended June 30, 2006:

				Weighted-		Weighted-
				Average		Average
	Number of			Exercise		Remaining
	Shares			Price		Contract Life
Outstanding options at beginning of period		1,016,000		$	8.71
Granted		10,000			14.59
Exercised		(2,000	)		4.42
Canceled		(5,500	)		14.65
Outstanding options at end of period		1,018,500		$	8.75	5.18 Yrs.
Outstanding exercisable at end of period		856,500		$	8.45	4.52 Yrs.

     The following table represents stock option activity for the nine months ended June 30, 2006:

				Weighted-		Weighted-
				Average		Average
	Number of			Exercise		Remaining
	Shares			Price		Contract Life
Outstanding options at beginning of period		1,023,000		$	8.84
Granted		105,000			11.70
Exercised		(13,780	)		6.68
Canceled		(95,720	)		13.32
Outstanding options at end of period		1,018,500		$	8.75	5.18 Yrs.
Outstanding exercisable at end of period		856,500		$	8.45	4.52 Yrs.

     Shares available for future stock option grants to employees and directors under existing plans were 434,000 at June 30, 2006. At June 30, 2006, the aggregate intrinsic value of options outstanding was $6,238,205, and the aggregate intrinsic value of options exercisable was $5,496,540. Total intrinsic value of options exercised was $14,845 for the three months ended June 30, 2006.

6

     The following table summarizes our nonvested stock option activity for the three months ended June 30, 2006:

				Weighted-
	Number of			Average Grant-
	Shares			Date Fair Value
Nonvested stock options at beginning of period		154,000		$	5.76
Granted		10,000			8.60
Vested		(500	)		3.59
Canceled		(1,500	)		6.00
Nonvested stock options at end of period		162,000		$	5.41

Note D — Inventories

     Inventories consist of the following:

	June 30,			September 30,
	2006			2005
Raw materials	$	1,540,643		$	1,076,839
Work-in-process		1,684,545			1,637,694
Finished goods		1,073,021			1,321,710
Reserve for inventory obsolescence		(89,227	)		(100,000	)
	$	4,208,982		$	3,936,243

Note E — Income Taxes

     The Company records a valuation allowance to reduce the carrying value of its net deferred tax assets to the amount that is more likely than not to be realized. Prior to fiscal 2005, the Company recorded a full valuation allowance against its deferred tax assets due to the uncertainty of the realization and timing of the benefits from those deferred tax assets as the Company had not achieved a sufficient level of sustained profitability. During 2005, management concluded that the Company had attained a sufficient level of sustained profitability to allow the valuation allowance to be reduced to reflect management’s estimate of the amount of deferred tax assets that will be realized in the near term. Considering projected levels of future income as well as the nature of the net deferred tax assets, management reduced the valuation allowance by $454,000 during 2005. As a result of the asset acquisition discussed in Note G, management further reduced the valuation allowance by approximately $777,000 to reflect management’s revised and increased estimates of future taxable income. Accordingly, the net deferred income tax asset as of June 30, 2006 is reflective of the amount which management estimates will be realized in the near term. In future periods of earnings, the Company will report income tax expenses at statutory rates offset by any further reductions in the valuation allowance based on an ongoing assessment of the future realization of the deferred tax assets. The reduction in the valuation allowance was partially offset by federal and state income taxes. During the three and nine months ended June 30, 2005, no income tax provision is presented as the Company utilized net operating loss carryforwards to offset taxable income.

Note F — Comprehensive Income

     Comprehensive income includes net income and all other nonowner changes in shareholders’ equity during a period.

7

     The comprehensive income for the three months and nine months ended June 30, 2006 and 2005 consists of the following:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2006		2005		2006		2005
Net income	$	985,489	$	60,066	$	1,052,551	$	323,222
Foreign currency adjustment		5,529		—		5,529		—
Unrealized gain (loss) on securities held		—		21,487		1,746		(5,600	)
Comprehensive income	$	991,018	$	81,553	$	1,059,826	$	317,672

Note G — Acquisition of Assets from Mentor and Coloplast

     On June 2, 2006, the Company, through its subsidiary Rochester Medical Limited, completed the acquisition of certain assets of Coloplast A/S (“Coloplast”) and Mentor Medical Limited (“MML”), pursuant to an agreement dated May 17, 2006. The Company paid a cash purchase price of $9.3 million at closing, and agreed to pay an additional $5.3 million in equal installments over five years. As provided in the Agreement, the Company acquired certain assets, including certain trademarks, related to sales of Male External Catheters (“MECs”) in the United Kingdom. The assets also include MML’s UK Dispensing Appliance Contractor License and its sales offices and warehouse facility in Lancing, England. The Company also agreed to purchase approximately $478,000 of inventory to be sold in the United Kingdom.

     On June 2, 2006, the Company completed the acquisition of certain assets owned and used by Mentor Corporation (“Mentor”) in its silicone MEC business. Pursuant to the Asset Purchase Agreement, the Company paid $750,000 for certain equipment and other tangible assets in Mentor’s facility in Anoka, Minnesota, and purchased certain inventory, work-in-progress and raw materials for the production of silicone MECs for approximately $879,000; the Company also leased the Anoka facility from Mentor for a minimum of six months following the closing of the transactions. Upon the closing of the transactions, the existing Supply Agreement, Foley Catheter Sales and Distribution Agreement and MEC License and Sales Distribution Agreement (including, but not limited to the Patent License and Technology License thereunder) between the Company and Mentor were terminated.

     Coloplast and the Company also entered into a separately negotiated Private Label Distribution Agreement under which the Company will supply silicone MECs to Coloplast, which will be sold under Coloplast’s brands worldwide excepting the United Kingdom. The Private Label Distribution Agreement specifies annual minimum purchases of silicone MECs by Coloplast. Coloplast will also supply the Company with its requirement of latex MECs which the Company will sell in the United Kingdom under its newly acquired Freedom^® and Freedom Plus^® brands.

     The following table summarizes the estimated fair values of the assets acquired at the date of acquisition. The Company did not assume liabilities from Coloplast or MML. Included in the intangible assets acquired is approximately $2,956,000 of goodwill and $10,073,000 of finite-lived intangibles. As the Company completes its post-closing review and valuation of the asset 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	$	1,039,000
Property and equipment		1,893,000
Intangible assets		13,029,000
Total assets acquired	$	15,961,000

8

     The pro forma unaudited results of operations for the three and nine months ended June 30, 2006 and 2005, assuming consummation of the purchase of the assets from Coloplast and MML as of October 1, 2004, are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2006		2005		2006		2005
Net Sales	$	6,820	$	5,651	$	20,650	$	18,458
Net Income		1,657		850		3,607		3,497
Per share data:
Basic earnings	$	0.30	$	0.16	$	0.65	$	0.64
Diluted earnings	$	0.28	$	0.15	$	0.62	$	0.61

     The proforma unaudited results do not purport to be indicative of the results which would actually have been obtained had the acquisition of assets been completed as of the beginning of the earliest period presented.

Note H — Bank Line of Credit and Term Debt

     On June 2, 2006, in conjunction with the financing of the transactions between the Company, Mentor, and Coloplast, the Company entered into a $7,000,000 credit facility with U.S. Bank National Association. The new credit facility replaces the prior $1,000,000 revolving line of credit with U.S. Bank that expired on March 31, 2006. The new credit facility consists of a $5,000,000 term loan payable in five years and accruing interest at a rate equal to the quoted one-month LIBOR rate plus 1.60% as of the date of the loan, and a revolving line of credit of up to $2,000,000, maturing annually beginning March 31, 2007, with interest payable monthly at a floating rate based on the quoted one-month LIBOR rate plus 1.60%. As of June 30, 2006, the Company had no borrowings under the revolving line of credit. The obligations of the Company are secured by assets of the Company, including accounts, general intangibles, inventory, and equipment. The term loan agreement and revolving credit agreement require the Company to comply with certain financial covenants, including a fixed charge coverage ratio and minimum working capital of $8 million, and restrict certain additional indebtedness and liens. The Company was in compliance with the financial covenants as of June 30, 2006.

Note I — Recently Issued Accounting Standards

     In November 2004, the FASB issued SFAS No. 151, Inventory Costs – an amendment of ARB No. 43, Chapter 4 (“SFAS 151”). SFAS 151 amends the guidance in Accounting Research Bulletin No. 43 to require idle facility expense, freight, handling costs, and wasted material (spoilage) to be recognized as current-period charges. In addition, SFAS 151 requires the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company adopted SFAS 151 on October 1, 2005 with no material impact to the consolidated financial statements.

     In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. FIN 48 provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of fiscal 2008, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of adopting FIN 48 on its consolidated financial statements.

9

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

Results of Operations

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

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Net Sales		100	%		100	%		100	%		100	%
Cost of Sales		63	%		66	%		65	%		64	%
Gross Margin		37	%		34	%		35	%		36	%
Operating Expenses:
Marketing and Selling		14	%		16	%		13	%		15	%
Research and Development		4	%		5	%		4	%		5	%
General and Administrative		15	%		12	%		16	%		14	%
Total Operating Expenses		33	%		33	%		33	%		34	%
Income from Operations		4	%		1	%		2	%		2	%
Interest Income (Expense), Net		0	%		1	%		0	%		1	%
Net Income before taxes		4	%		2	%		2	%		3	%
Income tax benefit		14	%		0	%		5	%		0	%
Net Income after taxes		18	%		2	%		7	%		3	%

     The following table sets forth, for the periods indicated, net sales information by product category (base products and advanced products), marketing method (private label and Rochester Medical^® branded sales) and distribution channel (domestic and international markets) (all dollar amounts below are in thousands):

	Fiscal Quarter Ended June 30,
	2006						2005
	Domestic		International		Total		Domestic		International		Total
Private label sales:
Base products	$	1,131	$	1,379	$	2,510	$	889	$	983	$	1,872
Advanced products		172		25		197		96		25		121
Total private label sales	$	1,303	$	1,404	$	2,707	$	985	$	1,008	$	1,993
Branded sales:
Base products	$	842	$	1,416	$	2,258	$	777	$	725	$	1,502
Advanced products		348		45		393		268		53		321
Total branded sales	$	1,190	$	1,461	$	2,651	$	1,045	$	778	$	1,823
Total net sales:	$	2,493	$	2,865	$	5,358	$	2,030	$	1,786	$	3,816

10

	Fiscal Year to Date Ended June 30
	2006						2005
	Domestic		International		Total		Domestic		International		Total
Private label sales:
Base products	$	3,920	$	3,674	$	7,594	$	3,138	$	2,793	$	5,931
Advanced products		524		75		599		153		76		229
Total private label sales	$	4,444	$	3,749	$	8,193	$	3,291	$	2,869	$	6,160
Branded sales:
Base products	$	2,517	$	2,871	$	5,388	$	2,340	$	2,271	$	4,611
Advanced products		1,017		241		1,258		627		230		857
Total branded sales	$	3,534	$	3,112	$	6,646	$	2,967	$	2,501	$	5,468
Total net sales:	$	7,978	$	6,861	$	14,839	$	6,258	$	5,370	$	11,628

Three Month and Nine Month Periods Ended June 30, 2006 and June 30, 2005

     Net Sales. Net sales for the third quarter of fiscal 2006 increased 40% to $5,358,000 from $3,815,000 for the comparable quarter of last fiscal year. The sales increase primarily resulted from an increase in sales volume. Domestic sales of branded products increased by 14% for the quarter compared to the same period last year. The Company’s international branded sales increased 88% compared to the same period last year. Total branded sales results met management’s expectations. Private label sales increased 36% for the quarter compared to the same period last year; however, the Company believes the increase was due in part to the timing of quarterly orders. The Company also believes that certain customers may have increased their inventory of male external catheters due to the uncertainty caused by Mentor Corporation’s sale of its urology business.

     Net sales for the nine months ended June 30, 2006 increased 28% to $14,839,000 from $11,628,000 for the comparable nine-month period of last fiscal year. The nine-month sales increase primarily resulted from an increased volume of sales of Rochester Medical^® branded products and private label sales of base products.

     During the quarter ended September 30, 2003, the Company entered into an agreement granting Hollister Inc. exclusive marketing and distribution rights in certain geographic areas with respect to the Company’s hydrophilic intermittent catheters. Introduction of these products into certain European countries was delayed pending the outcome of the patent infringement action brought by Coloplast against Hollister. In December 2005, the European Patent Office revoked Coloplast’s packaging patent related to hydrophilic intermittent catheters. While the Company expected Hollister to resume introduction of the product in Europe as a result of the decision by the European Patent Office, Hollister has requested certain changes to the distribution agreement between the parties prior to commencing further introduction. The Company has not agreed to any changes to the current agreement, and the two companies are currently in discussions to attempt to resolve the matter. On June 2, 2006, the Company entered into a cross license agreement with Coloplast, which licenses to the Company the right to use certain intermittent catheter patents of Coloplast, including the patent that is the subject of the litigation. Renewal of the male external catheter contract is also under discussion, but no assurance can be given as to the outcome of discussions between the parties.

     Gross Margin. The Company’s gross margin as a percentage of net sales for the third quarter of fiscal 2006 was 37% compared to 34% for the comparable quarter of last fiscal year. The increase in gross margin this quarter was primarily due to increased sales.

     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 third quarter of fiscal 2006 increased 28% to $786,000 from $616,000 for the comparable quarter of last fiscal year. Marketing and selling expense as a percentage of net sales for the fiscal quarters ended June 30, 2006 and 2005 were 15% and 16%, respectively. The increase in marketing and selling expense is primarily due to increased sales personnel and related expenses of $64,000 incurred through the addition of the Company’s new U.K. operations, increased compensation expense of $51,000 related to accruals for bonus compensation under the Company’s annual incentive program and $40,000 related to stock options in accordance with the new reporting requirements of SFAS 123(R).

11

     Marketing and selling expense for the nine months ended June 30, 2006 increased 12% to $1,962,000 from $1,753,000 for the comparable nine-month period of last fiscal year. Factors affecting the comparative nine-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 expenses associated with third-party vendors performing validation and investigative research regarding the Company’s products and development activities. Research and development expense for the third quarter of fiscal 2006 increased to $209,000 from $186,000 for the comparable quarter of last fiscal year. Research and development expense as a percentage of net sales for the fiscal quarters ended June 30, 2006 and 2005 were 4% and 5%, respectively. The increase in research and development expense relates primarily to increased compensation expense of $35,000 related to accruals for bonus compensation under the Company’s annual incentive program and $13,000 related to stock options in accordance with the new reporting requirements of SFAS 123(R), offset by a decrease in product development costs.

     Research and development expense for the nine months ended June 30, 2006 increased 1% to $570,000 from $564,000 for the comparable nine-month period of last fiscal year. Factors affecting the comparative nine-month expense levels are generally consistent with those discussed above for the current quarter.

     General and Administrative. General and administrative expense primarily includes payroll expense relating to the Company’s management and accounting, information technology and human resources staff, as well as fees and expenses of outside legal counsel and accounting advisors. General and administrative expense for the third quarter of fiscal 2006 increased 68% to $789,000 from $469,000 for the comparable quarter of last fiscal year. General and administrative expense as a percentage of net sales for the fiscal quarters ended June 30, 2006 and 2005 were 15% and 12%, respectively. The increase in general and administrative expense is primarily related to increased administrative costs of $66,000 associated with the addition of the Company’s new U.K. operations, $61,000 of additional travel and related expenses incurred during negotiations for the acquisition of the U.K. assets, and increased compensation expense of $78,000 related to accruals for bonus compensation under the Company’s annual incentive program and $35,000 related to stock options in accordance with the new reporting requirements of SFAS 123(R).

     General and administrative expense for the nine months ended June 30, 2006 increased 42% to $2,355,000 from $1,659,000 for the comparable nine-month period of last fiscal year. Factors affecting the comparative nine-month expense levels are generally consistent with those discussed above for the current quarter.

     Interest Income. Interest income for the third quarter of fiscal 2006 increased 115% to $71,000 from $33,000 for the comparable quarter of last fiscal year. The increase in interest income reflects significantly higher cash positions for a majority of the quarter and an overall higher interest rate on investments.

     Interest income for the nine months ended June 30, 2006 increased 94% to $188,000 from $97,000 for the comparable nine-month period of last fiscal year. The increase reflects significantly higher cash positions and an overall higher interest rate on investments as discussed above.

     Interest Expense. Interest expense for the third quarter of fiscal 2006 increased to $56,000 from $4,000 for the comparable quarter of last fiscal year. The increase in interest expense in the third quarter of fiscal 2006 reflects increases in debt used to partially finance the Company’s purchase of certain assets from Mentor Corporation and Coloplast A/S in June 2006 transactions.

     Interest expense for the nine months ended June 30, 2006 increased to $61,000 from $12,000 for the comparable nine-month period of last fiscal year. The increase reflects more interest accrued in the nine-month period ended June 30, 2006 for the reasons discussed above.

     Income Taxes. The Company had a history of pre-tax losses and until fiscal 2003 had not generated taxable income. While the Company had pre-tax income in fiscal 2003, 2004 and 2005 and the first three quarters of fiscal 2006, the Company has net operating loss carryforwards of approximately $23 million that will offset its taxable income and, therefore, no federal income taxes are due.

12

     The Company established a deferred tax asset of $454,000 in fiscal 2005. As a result of the asset acquisition discussed below, management further reduced the valuation allowance by approximately $777,000 to reflect management’s revised and increased estimates of future taxable income. Accordingly, the net deferred income tax asset as of June 30, 2006 is reflective of the amount which management estimates will be realized in the near term. In future periods of earnings, the Company will report income tax expenses at statutory rates offset by any further reductions in the valuation allowance based on an ongoing assessment of the future realization of the deferred tax assets.

Liquidity and Capital Resources

     The Company’s cash, cash equivalents and marketable securities were $2.1 million at June 30, 2006 compared to $6.4 million at September 30, 2005. The decrease in cash primarily resulted from the net cash provided by operating activities and cash generated by financing activities, offset by capital expenditures and cash used in investing activities. During the quarter ended June 30, 2006, $6.6 million was used to complete the transactions with Coloplast A/S (“Coloplast”) and Mentor Corporation (“Mentor”) described below.

     During the nine-month period ended June 30, 2006, the Company generated $2,511,000 of cash from operating activities compared to $228,000 of cash provided by operations during the comparable period of the prior fiscal year. Increased net cash from operating activities in fiscal 2006 primarily reflects net income before depreciation and decreases in current assets and inventories and increases in accounts payables and current liabilities, offset by increases in accounts receivables. Accounts receivable balances during this period increased 27% or $876,000, primarily as a result of increased sales volume, the new business in the United Kingdom and timing of large shipments. Inventories decreased 19% or $766,000, primarily as a result of increased sales volumes. Accounts payable increased 228% or $644,000 primarily reflecting costs associated with completing the transactions with Coloplast and Mentor. Other current liabilities increased 48% or $355,000 consistent with the reasons stated for accounts payable. In addition, capital expenditures during this period were $356,000 compared to $260,000 for the comparable period last year.

     On June 2, 2006, the Company, through its subsidiary Rochester Medical Limited, completed the acquisition of certain assets of Coloplast and Mentor Medical Limited (“MML”), pursuant to an agreement dated May 17, 2006. The Company paid a cash purchase price of $9.3 million at closing, and agreed to pay an additional $5.3 million in equal installments over five years. As provided in the Agreement, the Company acquired certain assets, including certain trademarks, related to sales of Male External Catheters (“MECs”) in the United Kingdom. The assets also include MML’s UK Dispensing Appliance Contractor License and its sales offices and warehouse facility in Lancing, England. The Company also agreed to purchase approximately $478,000 of inventory to be sold in the United Kingdom.

     On June 2, 2006, the Company completed the acquisition of certain assets owned and used by Mentor Corporation (“Mentor”) in its silicone MEC business. Pursuant to the Asset Purchase Agreement, the Company paid $750,000 for certain equipment and other tangible assets in Mentor’s facility in Anoka, Minnesota, and purchased certain inventory, work-in-progress and raw materials for the production of silicone MECs for approximately $879,000; the Company also leased the Anoka facility from Mentor for a minimum of six months following the closing of the transactions. Upon the closing of the transactions, the existing Supply Agreement, Foley Catheter Sales and Distribution Agreement and MEC License and Sales Distribution Agreement (including, but not limited to the Patent License and Technology License thereunder) between the Company and Mentor were terminated.

     Coloplast and the Company also entered into a separately negotiated Private Label Distribution Agreement under which the Company will supply silicone MECs to Coloplast, which will be sold under Coloplast’s brands worldwide excepting the UK. The Private Label Distribution Agreement specifies annual minimum purchases of silicone MECs by Coloplast. Coloplast will also supply the Company with its requirement of latex MECs which the Company will sell in the UK under its newly acquired Freedom^® and Freedom Plus^® brands.

     On June 2, 2006, in conjunction with the financing of the transactions between the Company, Mentor, and Coloplast, the Company entered into a $7,000,000 credit facility with U.S. Bank National Association. The new credit facility replaces the prior $1,000,000 revolving line of credit with U.S. Bank that expired on March 31, 2006. The new credit facility consists of a $5,000,000 term loan payable in five years and accruing interest at a rate equal to the quoted one-month LIBOR rate plus 1.60% as of the date of the loan, and a revolving line of credit of up to $2,000,000, maturing annually beginning March 31, 2007, with interest payable monthly at a floating rate based on the quoted one-month

13

LIBOR rate plus 1.60%. As of June 30, 2006, the Company had no borrowings under the revolving line of credit. The obligations of the Company are secured by assets of the Company, including accounts, general intangibles, inventory, and equipment. The term loan agreement and revolving credit agreement require the Company to comply with certain financial covenants, including a fixed charge coverage ratio and minimum working capital of $8 million, and restrict certain additional indebtedness and liens. The Company was in compliance with the financial covenants as of June 30, 2006.

     In relation to the exclusive distributorship agreement between the Company and Hollister Inc. and the related patent infringement action in the United Kingdom between Coloplast and Hollister, the Company entered into a Common Interest and Defense Agreement with Hollister in September 2004, whereby the Company agreed to share certain legal expenses incurred by Hollister under certain circumstances. In December 2005, Hollister provided invoices for significant legal fees for reimbursement by the Company. The Company does not believe the request for payment for any legal fees is justified within the terms of the agreements between the parties and, accordingly, has not reserved for payment for any portion of such invoices. The parties are in discussions in an attempt to resolve the matter. In the event that any or all of such fees are legally required to be paid by the Company, the payment of such fees could result in significant cash expenditures and expenses.

     The Company believes that its capital resources on hand at June 30, 2006, together with cash generated from sales, will be sufficient to satisfy its 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 the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005. However, the Company may be required to seek additional funding sources, such as equity financings, to fund the Company’s long term working capital requirements. If the Company decides to seek additional financing, there can be no assurance as to the outcome of such efforts, including whether financing will be available to the Company, or if available, whether it would be on terms favorable to the Company and its shareholders. Failure by the Company to secure additional financing could result in significant cash restraints and financial issues for the Company.

Forward-Looking Statements

     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 the actual results, performance or achievements of the Company, 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 timing of revenues from private label sales (particularly with respect to international customers); the uncertainty of successfully integrating and growing the Company’s new UK operations; FDA and other regulatory review and response times; the securing of Group Purchasing Organization contract participation; the uncertainty of reaching a satisfactory resolution of the current disagreements regarding contract terms and legal fees with the Company’s private label distributor for its hydrophilic intermittent catheters and any resulting effect on sales or liquidity; the uncertainty of the marketplace effects resulting from the Mentor Urology transaction; and other risk factors listed from time to time in the Company’s SEC reports, including, without limitation, the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, 2005.

14

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company’s primary financial instrument market risk results from fluctuations in interest rates. The Company’s revolving line of credit bears interest at a floating rate based on the quoted one-month LIBOR rate plus 1.60%. As of June 30, 2006, the Company had no borrowings under the revolving line of credit. Otherwise, the Company does not believe its 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. The Company does not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates.

Item 4. CONTROLS AND PROCEDURES

     Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are adequately designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in applicable rules and forms.

     Changes in Internal Controls. During our third fiscal quarter, there have not been any significant changes in the Company’s internal control over financial reporting (as defined in Rule 13(a)-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     The Company is plaintiff in a lawsuit titled Rochester Medical Corporation vs. C.R. Bard, Inc.; Tyco International (US), Inc.; Tyco Health Care Group, L.P.; Novation LLC; VHA, Inc.; Premier, Inc.; and Premier Purchasing Partners, in the United States District Court for the Eastern District of Texas, Civil Action No. 504-CV-060. This suit alleges anti-competitive conduct against the defendants in the markets for standard and anti-infection Foley catheters as well as urethral catheters, and seeks an unspecified amount of damages and injunctive and other relief. The litigation is in discovery, and the Company cannot now estimate the prospects for a favorable outcome.

     On November 28, 2005, the Company commenced an arbitration proceeding against Mentor Corporation to prevent Mentor from breaching its agreements with the Company. The Company requested the arbitration panel to enjoin Mentor from assigning its rights under the 1991 MEC License and Sales Distribution Agreement (the “MEC Agreement”) and the 2001 Supply Agreement in violation of those agreements and from misappropriating and wrongfully disclosing the Company’s confidential information and proprietary trade secrets licensed to Mentor under the MEC Agreement. On February 2, 2006, the Company and Mentor entered into an interim mediated settlement agreement which provided that the parties agreed to standstill on further motions or actions in the pending arbitration until 14 days after Mentor notifies the Company or publicly discloses the name of a proposed buyer of its urology business. The agreement further provided that during such 14-day period, Mentor, the Company and the proposed buyer would engage in good faith face-to-face negotiations in an effort to enter into a definitive supply or other agreement between the Company and the proposed buyer’s requirements of non-latex male external catheters or other related business.

15

     On May 17, 2006, the Company entered into an Asset Purchase Agreement (the “APA”) with Mentor relating to the acquisition of certain assets owned and used by Mentor in its Silicone Male External Catheter (“SMEC”) business. Pursuant to the APA, on June 2, 2006, the Company paid $750,000 for certain equipment and other tangible assets in Mentor’s facility in Anoka, Minnesota, and purchased certain inventory, work-in-progress and raw materials for the production of SMECs for approximately $879,000. The Company leased the Anoka facility from Mentor for a minimum of six months following the closing of the transactions. In connection with the asset acquisition, the Company obtained all right, title and interest in certain intellectual property (other than patents and trademarks) exclusively related to SMECs currently produced by Mentor or the production thereof, and received a license (on a non-exclusive basis) to any other intellectual property (other than patents and trademarks) to the extent related to SMECs currently produced by Mentor or the production thereof. The Company received from Coloplast a non-exclusive non-sublicensable license to certain patents and an exclusive license to certain United Kingdom trademarks for the sale of SMECs in the United Kingdom. Upon the closing of the transactions, the existing Supply Agreement, Foley Catheter Sales and Distribution Agreement and MEC Agreement (including, but not limited to the Patent License and Technology License thereunder) between the Company and Mentor were terminated. Each party executed a mutual settlement and release, and the arbitration proceedings were dismissed.

16

Item 6. Exhibits

10.1	Agreement, dated May 17, 2006, between Coloplast A/S, Coloplast Limited, Mentor Medical Limited, Rochester Medical Corporation, and Rochester Medical Limited
10.2	Private Label Distribution Agreement, dated May 17, 2006, between Rochester Medical Corporation and Coloplast A/S
10.3	Distribution Agreement, dated May 17, 2006, between Rochester Medical Corporation and Coloplast A/S
10.4	Asset Purchase Agreement, dated May 17, 2006, by and between Mentor Corporation and Rochester Medical Corporation
10.5	Term Loan Agreement, dated May 26, 2006, between Rochester Medical Corporation and U.S. Bank N.A.
10.6	Revolving Credit Agreement, dated May 26, 2006, between Rochester Medical Corporation and U.S. Bank N.A.
10.7	First Amendment to Term Loan Agreement and Addendum and Revolving Credit Agreement, dated May 26, 2006.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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: August 14, 2006	By:	/s/ Anthony J. Conway
		Anthony J. Conway
		President and Chief Executive Officer

Date: August 14, 2006	By:	/s/ David A. Jonas
		David A. Jonas
		Chief Financial Officer and Treasurer

18

INDEX TO EXHIBITS

Exhibit

10.1	Agreement, dated May 17, 2006, between Coloplast A/S, Coloplast Limited, Mentor Medical Limited, Rochester Medical Corporation, and Rochester Medical Limited
10.2	Private Label Distribution Agreement, dated May 17, 2006, between Rochester Medical Corporation and Coloplast A/S
10.3	Distribution Agreement, dated May 17, 2006, between Rochester Medical Corporation and Coloplast A/S
10.4	Asset Purchase Agreement, dated May 17, 2006, by and between Mentor Corporation and Rochester Medical Corporation
10.5	Term Loan Agreement, dated May 26, 2006, between Rochester Medical Corporation and U.S. Bank N.A.
10.6	Revolving Credit Agreement, dated May 26, 2006, between Rochester Medical Corporation and U.S. Bank N.A.
10.7	First Amendment to Term Loan Agreement and Addendum and Revolving Credit Agreement, dated May 26, 2006.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

19

EX-10.1

Exhibit 10.1

THIS AGREEMENT is made on 17 May 2006

Between

(1)	COLOPLAST A/S (registered number CVR-nr 69 74 99 17) whose registered office is at Holtedam 1, 3050 Humlebaek, Denmark (Coloplast);
(2)	COLOPLAST LIMITED (registered in England and Wales with number 01094405) whose registered office is at Peterborough Business Park, Peterborough, Cambridgeshire, PE2 6FX (CP UK);
(3)	MENTOR MEDICAL LIMITED (registered in England and Wales with number 04318120) whose registered office is at 10 Commerce Way, Lancing, West Sussex BN15 8TA (MML);
(4)	ROCHESTER MEDICAL CORPORATION, a Minnesota corporation with its principal place of business at One Rochester Medical Drive, Stewartville, MN 55976, USA (RMC); and
(5)	ROCHESTER MEDICAL LIMITED (registered in England and Wales with number 5779226) whose registered office is at 21 Wilson Street, London EC2M 2TD (the Purchaser).

(the Agreement).

Whereas:

(A) MML owns the Assets.

(B) Coloplast intends to purchase MML and the Licensed IP as part of Coloplast’s acquisition of Mentor Corporation’s worldwide urology business.

(C) Coloplast, CP UK and MML (together the Selling Parties) have agreed to sell the Assets and license the Licensed IP to the Purchaser or RMC for the consideration and upon the terms set out in this agreement.

It is hereby agreed as follows:

1. Definitions

1.1 Words and expressions written with an initial capital letter and used in this Agreement shall have the meanings set out in Schedule 1, unless the context requires otherwise or unless such words and expressions are defined elsewhere in this Agreement.

1.2 The headings in this agreement shall not affect its interpretation.

2. Agreement to Sell and Price

2.1 The Selling Parties shall sell and transfer (or procure the sale and transfer of) and the Purchaser shall purchase and take over the following:

Page 1

(a)	the benefit (subject to the burden) of the Contracts;
(b)	the Licences and Permits;
(c)	the Property;
(d)	the Furniture, Fixtures and Equipment;
(e)	the Transferred IP;
(f)	the IT Systems
(g)	the Stock;
(h)	the Business Records; and
(i)	the Market Goodwill (together, the Assets);

but excluding the Liabilities and the Excluded Assets.

Nothing in this Agreement shall pass to the Purchaser or be construed as an acceptance by the Purchaser of any liability or obligation of the Selling Parties other than as expressly set out in this Agreement.

2.2 Coloplast shall licence the Licensed IP to the Purchaser pursuant to the terms of the Trade Mark Licence.

2.3 Coloplast and CP UK covenant that, as of the Closing Date:

(a)	they will have the unencumbered right to transfer the legal and beneficial title to all the Assets; and
(b)	the Assets will at Closing be free from all Encumbrances other than Permitted Encumbrances.

2.4 The Purchaser shall not be obliged to complete the purchase of any of the Assets under this Agreement unless it can purchase them all simultaneously.

2.5 In consideration for the sale and transfer by the Selling Parties of the Assets and the grant of the licences of the Licensed IP, the Purchaser shall, subject to the terms of clause 13, pay to Coloplast (for itself and as agent for the Selling Parties) the price set out in this clause (the Purchase Price), which shall be satisfied as follows:

(a) $14,609,000, which shall consist of:

(i)	$9,269,000 payable in cash at Closing (the Initial Payment);
(ii)	$5,340,000 in the form of the promissory note (the Loan Note) set out in Schedule 6 (the Deferred Payment);

Page 2

(b)	an amount for the Stock (the Stock Payment), as calculated and payable in cash in accordance with Part B of Schedule 2; and
(c)	any Post Closing Adjustment, as calculated in accordance with Part A of Schedule 2.

3. Purchase Price Allocation

3.1 The Selling Parties and the Purchaser shall negotiate in good faith with a view to agreeing the basis on which the Purchase Price shall be allocated as between the relevant Assets within 90 days of Closing. If the parties are unable to agree on an allocation, each party shall be free to make its own good faith allocation of the Purchase Price among the Assets for purposes of its accounting records and Tax Returns. Notwithstanding the foregoing, all Parties acknowledge that the entire Purchase Price shall be allocated between the Assets provided by MML. Any allocation made under this clause, whether or not agreed between the Selling Parties and the Purchaser, shall include for the avoidance of doubt a determination of how any sums payable under the Loan Note or the Post-Closing Adjustment (if any) shall be allocated between the Assets.

3.2 Any payment made by the Selling Parties in respect of a breach of any of the Seller Warranties or otherwise pursuant to this Agreement shall (and shall be deemed to) reduce the consideration paid for the Assets under this Agreement by a matching amount. The reduction will be allocated as nearly as possible to the Assets to which the breach relates or (if that is not practicable or possible) as the Purchaser shall decide, acting reasonably.

4. Condition to Closing

Closing shall be conditional on completion of the purchase by Coloplast of the worldwide urology business of Mentor Corporation at a closing to be held contemporaneously with the Closing.

5. Closing

5.1 Closing shall take place at the offices of Freshfields Bruckhaus Deringer, 65 Fleet Street, London EC4Y 1HS, in accordance with clause 5.2.

5.2 At Closing, the Selling Parties shall cause to be delivered or made available to the Purchaser:

(a) a copy of the minutes of a meeting of the board of directors of each of the Selling Parties (or, in the case of Coloplast, the equivalent Danish law documents) authorising the execution by the relevant Selling Party of this Agreement and all other documents required by this Agreement to be executed by such Selling Party, and the doing of all such things as are incidental to its implementation (such copy minutes being certified as correct and of continuing authority as at Closing by the secretary of the relevant Selling Party);

Page 3

(b)	such deeds, documents, assurances, acts and things as the Purchaser may reasonably require to complete the sale and purchase of the Assets (other than the Property) and to vest good title to the Assets being transferred at Closing together with all deeds and documents of title relating thereto, duly executed in agreed form;
(c)	the Transfer duly executed together with all those deeds and title documents in relation to the Property held by the Selling Parties; and
(d)	subject to clause 5.10, possession of the Property and of the other tangible Assets agreed to be sold under this Agreement.
5.3	At Closing, the Purchaser shall:
(a)	pay to Coloplast (for itself and as agent for the Selling Parties) the Initial Payment;
(b)	execute and deliver the Loan Note to Coloplast (for itself and as agent for the Selling Parties);
(c)	execute and deliver to Coloplast the Trade Mark Licence in the form attached hereto at Part B of Schedule 7;
(d)	execute and deliver to MML the Trade Mark Assignment in the form attached hereto at Part A of Schedule 7;
(e)	execute and deliver to MML the Lease substantially in the form attached hereto at Part D of Schedule 12; and
(f)	deliver or make available to the Selling Parties a copy of the minutes of a meeting of the board of directors of the Purchaser authorising the execution by the Purchaser of this Agreement and all other documents required by this Agreement to be executed by the Purchaser, and the doing of all such things as are incidental to its implementation (such copy minutes being certified as correct and of continuing authority as at Closing by the secretary of the Purchaser);

5.4 At Closing, Coloplast shall execute and deliver to the Purchaser the Trade Mark Licence in the form attached hereto at Part B of Schedule 7.

5.5 At Closing, MML shall execute and deliver to the Purchaser the Trade Mark Assignment in the form attached hereto at Part A of Schedule 7.

5.6 At Closing, MML shall execute and deliver to the Purchaser the Lease in the form attached hereto at Part D of Schedule 12.

5.7 From the date of this Agreement until (and including) the Closing Date, each of the Selling Parties will make reasonable efforts to continue in full force all of the insurance policies maintained by them in respect of the Assets or the Business.

Page 4

5.8 Upon Closing all insurance cover arranged in relation to the Assets by any of the Selling Parties shall cease (in relation to insured events taking place after Closing) and the Purchaser shall procure that no member of the Purchaser Group shall make any claim under any such policies. The Selling Parties shall be entitled to make arrangements with their insurers to reflect this clause.

5.9 If before Closing any Asset is lost, destroyed or damaged, the Purchaser may require the consideration payable to the Selling Parties under this Agreement to be reduced by an amount corresponding to the cost of replacing, repairing or reinstating the Asset, in which case all insurance moneys received in respect of the loss, destruction or damage shall belong to the relevant Selling Party.

5.10 Subject only to Closing the Purchaser hereby grants the Selling Parties a licence to have reasonable access to the Property within Working Hours (such access to be granted upon the reasonable request of the relevant Selling Party) as is reasonably necessary for the purpose of removing the Excluded Assets from the Property and such licence shall terminate on the removal of the Excluded Assets, provided that the Selling Parties will make good any physical damage to the Property thereby occasioned.

6. Title and Supplementary Provisions

Title and risk in respect of the Assets shall pass to the Purchaser on Closing. Title to all Assets which can be transferred by delivery shall pass on delivery and such delivery shall be deemed to take place at the Closing.

7. Property

The provisions of Schedule 12 shall apply to the sale of the Property.

8. Employees

The provisions of Schedule 8 shall apply in respect of the Transferred Employees.

9. Contracts

The provisions of Schedule 10 shall apply in respect of the Contracts.

10. Liabilities and Post-Closing Obligations

10.1 Nothing in this Agreement shall make the Purchaser liable in any way for anything done or omitted to be done in relation to the Business or any of the Assets before Closing or for the Liabilities. The Selling Parties shall promptly discharge all of the Liabilities and shall indemnify and hold the Purchaser harmless against all Losses and Expenses suffered or incurred by it directly in connection with all such things done or omitted to be done in relation to any of the Assets before Closing and all the Liabilities.

10.2 The benefit of all orders relating to the Contracts which are placed with any of the Selling Parties on or after Closing, and all payments relating to or connected with

Page 5

them which are received by the Selling Parties after the Closing, shall belong to the Purchaser and the Selling Parties undertake to promptly inform the Purchaser of the placing of any such orders and to promptly forward to the Purchaser any documentation or payments received by them after Closing in connection with the Contracts.

10.3 All periodical charges and periodical outgoings related to the Assets (other than those specifically dealt with under the Lease) shall be apportioned on a time basis so that such part of the relevant charges attributable to the period ending on the Closing Date shall be borne by the Selling Parties and such part of the relevant charges attributable to the period commencing on the day immediately following the Closing Date shall be borne by the Purchaser. All periodical receipts relating to the Assets shall be apportioned between the Selling Parties and the Purchaser on a like basis.

10.4 For three years following the Closing Date, the Selling Parties shall provide the Purchaser (at the Purchaser’s cost) with reasonable access within Working Hours to (and the right to take copies of) the records held by them immediately after Closing (such records to be maintained in safekeeping by the Selling Parties (at their own cost) for the duration of the relevant period) to the extent that they relate to the Business and to the period up to Closing to the extent that such access is necessary for the purposes of complying with any applicable regulatory requirements. This obligation is subject to the provisions of clause 19.

10.5 For three years following the Closing Date, the Purchaser shall provide the Selling Parties (at the Selling Parties’ cost) with reasonable access within Working Hours to (and the right to take copies of) the records held by it after Closing (such records to be maintained in safekeeping by the Purchaser (at its own cost) for the duration of the relevant period) to the extent that they relate to the Excluded Assets. This obligation is subject to the provisions of clause 19.

10.6 The parties to this Agreement shall if necessary enter into good faith negotiations, and provide each other with all reasonable assistance, in order to produce such further documentation as may be required by the Office of Fair Trading in relation to the Proposed Transaction.

10.7 From and after the Closing, the Selling Parties will afford the Purchaser and RMC and their respective representatives reasonable access at reasonable times and upon reasonable notice to the books and records and other information regarding MML and the Business, including the work papers of MML’s independent auditors, solely for the purpose of preparing audited financial statements for Purchaser in respect of the Business and Assets. Following the Closing MML shall cooperate with the Purchaser in the preparation of audited financial statements for the Purchaser in respect of the Business and Assets for the past three fiscal years and any interim periods specified in the rules of the Securities Exchange Act of 1934, all at the Purchaser’s sole expense.

Page 6

11. Tax

11.1 Any sums payable by the Purchaser to the Selling Parties under this Agreement are exclusive of VAT.

11.2 The Selling Parties and the Purchaser agree that any supplies by Coloplast or CP UK to the Purchaser will be subject to VAT and that, in the case of supplies by Coloplast to the Purchaser, any such VAT would be payable to H.M. Revenue & Customs by the Purchaser and not by Coloplast. Coloplast and CP UK agree that they shall, within ten Business Days of Closing, issue to the Purchaser a valid VAT invoice for any supplies that they have made, and the Purchaser agrees that it shall pay to the Selling Parties, in addition to any other sums payable under this Agreement, an amount equal to any VAT specified in the invoice.

11.3 The Selling Parties and the Purchaser intend and shall use all reasonable endeavours to ensure that section 49(1) VATA and article 5 of the Value Added Tax (Special Provisions) Order 1995 will apply to the transfer of the Assets and accordingly:

(a)

the Selling Parties and the Purchaser shall on the date of this Agreement or in any event not later than the Closing Date jointly send a written application to H.M. Revenue & Customs seeking a ruling as to whether the transfer of the Assets to the Purchaser pursuant to this Agreement is to be treated as the transfer to the Purchaser of all or part of the business of the Selling Parties as a going concern within article 5; and

(b)

on Closing, the Selling Parties shall deliver to the Purchaser all records referred to in section 49 VATA and shall not make any request to HM Revenue & Customs for a direction that such records be taken out of the custody of the Purchaser, and the Purchaser undertakes to preserve such records for such period as may be required by law and during that time to permit the Selling Parties or their agents reasonable access to inspect or copy them at the Selling Parties’ expense.

11.4 If HM Revenue & Customs determine that all or part of the consideration for the sale and purchase of the Assets is subject to VAT, the Selling Parties shall issue the Purchaser with a proper VAT invoice and the Purchaser shall pay to the Selling Parties an amount equal to the VAT specified in the invoice PROVIDED THAT no VAT shall be payable by the Purchaser in respect of any part of the consideration attributable to the sale of the whole or any part of the Property if the Selling Parties are in breach of warranties in clause11.6.

11.5 The Selling Parties and the Purchaser agree that any interest or penalties assessed by H.M. Revenue & Customs on the Selling Parties as a result of the transfer of the Assets not falling within Article 5 shall be borne equally between the Selling Parties on the one hand and the Purchaser on the other. On production by the relevant Selling Party of evidence of the total amount of any interest or penalties assessed, the Purchaser shall pay to the relevant Selling Party, in addition to amounts payable under clause 11.4 above, an amount equal to one half of the amount shown in such evidence.

Page 7

11.6 The relevant Selling Party represents and warrants to the Purchaser that:

(a)	it is registered for the purposes of VAT; and
(b)	it has not made an election under paragraph 2 of Schedule 10 to the VATA to waive the exemption from VAT in respect of the Property.

11.7 The Purchaser represents and warrants to the Selling Parties that:

(a)	that it is a registered taxable person for the purposes of VAT; and
(b)	that with effect from Closing it intends to use the Assets to carry on the same kind of business as that carried on by the relevant Selling Party in relation to the Assets.

11.8 The Selling Parties and the Purchaser shall, as soon as practicable after Closing, jointly elect by notice pursuant to section 198 of the Capital Allowances Act 2001, and in accordance with section 201 of the Capital Allowances Act 2001, with respect to any item of the Furniture, Fixtures and Equipment which is a fixture (as defined in section 173(1) of the Capital Allowances Act 2001) so as to fix the amount to be treated as expenditure by the Purchaser on the provision of such item of the Furniture, Fixtures and Equipment in accordance with Part A of Schedule 9.

12. Warranties

12.1 Coloplast and CP UK jointly and severally warrant to the Purchaser in the terms of the warranties set out in Schedule 3 (the Seller Warranties), and the Purchaser warrants to the Selling Parties in the terms of the warranties set out in Schedule 4 (the Purchaser Warranties). Each of the Seller Warranties set out in the separate paragraphs of Schedule 3 shall be separate and independent and (except as expressly otherwise provided) shall not be limited by reference to any other Seller Warranty or by anything in this Agreement or the Disclosure Documents. The Seller Warranties are given subject to the limitations set out in Schedule 5 provided that such limitations shall not apply in relation to the Seller Warranties set out in Part A of Schedule 3.

12.2 Notwithstanding any other provision of this Agreement, the provisions of Schedule 5 shall not apply to any claim made against Coloplast or CP UK which arises (or to the extent that it is increased) as a consequence of fraud or fraudulent misrepresentation by or on behalf of the Selling Parties.

12.3 The Seller Warranties are deemed to be repeated on the Closing Date and any reference made to the date of this Agreement (whether express or implied) in relation to any Warranty shall be construed, in relation to any such repetition, as a reference to the Closing Date.

13. Remedies

13.1 Subject always to Schedule 5, Coloplast and CP UK undertake to the Purchaser (without restricting the rights of the Purchaser or any remedy it may have

Page 8

on any basis available to it if any of the Seller Warranties is breached) to pay to the Purchaser on demand the aggregate of:

(a)	the full amount by which the value of any Asset (including any Asset warranted to exist which does not exist) is or becomes less than it would have been if the Seller Warranties had not been breached;
(b)	an amount equal to any other loss or liability suffered or incurred by the Purchaser directly or indirectly as a result of any Seller Warranty being breached; and
(c)	all Losses and Expenses suffered or incurred by the Purchaser directly or indirectly as a result of any Seller Warranty being breached.

13.2 For the avoidance of doubt, the rules of general law relating to claims for damages for breach of warranty shall not apply to the extent that they might limit the calculation of any amount payable under this clause 13, save where set out in Schedule 5.

13.3 Coloplast and CP UK further shall, jointly and severally, indemnify and hold the Purchaser harmless from and against any and all Losses and Expenses which are suffered or incurred by the Purchaser, in respect of or arising out of the Liabilities and/or the Excluded Assets.

13.4 The Purchaser shall be entitled to offset any amounts due to it under the terms of this clause 13 against the Deferred Payment under the Loan Note as and when such payments are to be made to the Selling Parties under the terms of the Loan Note.

14. Sale of the Stock

The Purchaser shall ensure that its or its Affiliates sale of any Stock which is packaged under any of the Selling Parties’ retained trade marks and trade dress, including the SIMPLA trade mark, is sold in such a condition so as not to materially damage the reputation of the relevant Selling Party’s trade mark or goodwill.

15. Termination

15.1 The Purchaser is entitled to treat this Agreement as terminated (in which case it will be deemed to have been terminated on the terms of this clause), without prejudice to accrued rights and obligations if:

(a)	a Material Adverse Change occurs before Closing;
(b)	in the period between the date of this Agreement and the Closing Date the Selling Parties do, suffer or permit to be done or agree to do in relation to the Business anything causing a material breach of the provisions of Schedule 11 (Conduct Pre-Closing), except in accordance with a prior waiver given by the Purchaser;

Page 9

(c)	the Proposed Transaction is referred to the Competition Commission for further investigation prior to Closing; or
(d)	prior to Closing there is a material breach of a material Seller Warranty which is not cured by the Selling Parties prior to the Closing Date.

16. Payments

16.1 Any payment to be made pursuant to this Agreement by the Purchaser shall be made to Coloplast’s Bank Account. Coloplast agrees to pay each of the Selling Parties that part of each payment to which it is entitled in accordance with clause 3. Receipt of such sums in Coloplast’s Bank Account shall be an effective discharge of the obligation of the Purchaser to pay such sums to Coloplast or any of the Selling Parties, and the Purchaser shall not be concerned to see to the application or be answerable for loss or misapplication of such amount.

16.2 Any payment to be made pursuant to this Agreement by Coloplast shall be made to the Purchaser’s Bank Account. Receipt of such sums in the Purchaser’s Bank Account shall be an effective discharge of the obligation of Coloplast to pay such sums to the Purchaser, and Coloplast shall not be concerned to see to the application or be answerable for loss or misapplication of such amount.

16.3 Payment under clause 16.1 and 16.2 shall be in immediately available funds by electronic transfer on the due date for payment.

16.4 If any sum due for payment in accordance with this Agreement is not paid on the due date for payment, the person in default shall pay Default Interest on that sum from but excluding the due date to and including the date of actual payment calculated on a daily basis.

17. Assignment

Subject to the rights of the parties expressly set forth in the relevant Schedules to this Agreement, unless the Selling Parties and the Purchaser specifically agree in writing, no person shall assign or transfer this Agreement nor grant, declare, create or dispose of any right or interest in it. Any purported assignment in contravention of this clause 17 shall be void.

18. Further assurance

18.1 The Selling Parties agree to perform (or procure the performance of) all further acts and things, and execute and deliver (or procure the execution and delivery of) such further documents, as may be required by law or as the Purchaser may reasonably require, whether on or after Closing, to implement and/or give effect to this Agreement and the transaction contemplated by it and for the purpose of vesting in the Purchaser the full benefit of the Assets to be transferred to the Purchaser under this Agreement.

18.2 The Selling Parties shall procure, from Closing, that Mentor Corporation shall in the UK:

Page 10

(a)	suspend use of the MENTOR CLEAR ADVANTAGE trade mark (UK registration number 1,494,286) immediately on the Closing Date; and
(b)	at the discretion of Mentor Corporation, either withdraw the UK trade mark registration for the MENTOR CLEAR ADVANTAGE mark or allow the registration to lapse.

19. Confidential information

19.1 Each party (other than MML) shall both during and after the arrangements contemplated by this Agreement:

(a)

keep confidential the terms of this Agreement and all information, whether in written or any other form, which has been disclosed to it by or on behalf of the other parties in confidence or which by its nature ought to be regarded as confidential (including any business information in respect of the other parties which is not directly applicable or relevant to the arrangements contemplated by this Agreement); and

(b)

procure that its officers, employees and representatives keep secret and treat as confidential such information.

19.2 Clauses 19.1 and 19.4 do not apply to information:

(a)	which shall after the date of this Agreement become published or otherwise generally available to the public, except as a result of a breach of any provision of this agreement by a party hereto;
(b)	to the extent made available to the recipient party by a third party who is entitled to divulge the information and who is not under any obligation of confidentiality in respect of such information to the other party or which has been disclosed under an express statement that it is not confidential;
(c)	to the extent required to be disclosed by any applicable law or by any recognised stock exchange or governmental or other regulatory or supervisory body or authority of competent jurisdiction to whose rules the party making the disclosure is subject, whether or not having the force of law, provided that the party disclosing the information shall notify the other party of the information to be disclosed (and of the circumstances in which the disclosure is alleged to be required) as early as reasonably possible before the disclosure must be made and shall take all reasonable action to avoid and limit the disclosure;
(d)	which has been independently developed by the recipient party otherwise than in the course of the exercise of that party’s rights under this Agreement or the implementation of this agreement;
(e)	disclosed to any applicable Taxation Authority either to the extent required by a legal obligation or to the extent reasonably required to assist the settlement

Page 11

of the disclosing party’s tax affairs or those of any of its shareholders or any other person under the same control as the disclosing party;

(f)	which the recipient party can prove was already known to it before its receipt from the disclosing party; or
(g)	which is disclosed with the written consent of the other parties.

19.3 Notwithstanding clause 19.1 above, the Selling Parties acknowledge and agree that, with the prior written permission of CP UK and MML (which may not be unreasonably withheld) the Purchaser may contact and notify wholesale, hospital and DAC customers of the Selling Parties in the United Kingdom for the Products regarding the general scope of the transaction contemplated by this Agreement at all times after the execution of this Agreement until its termination or the Closing occurs.

19.4 MML shall both during and after the arrangements contemplated by this Agreement keep confidential the terms of this Agreement. Coloplast, CP UK RMC and the Purchaser each expressly acknowledge and agree that neither MML nor any of its employees, directors, representatives, agents or affiliates received any confidential information of any parties hereto in connection with this Agreement (other than the existence of this Agreement and the terms hereof).

20. Excluded Data

20.1 For the avoidance of doubt and without limitation, nothing in this Agreement shall be held to transfer, license, assign or otherwise grant any rights over the Excluded Data to the Purchaser.

20.2 The Purchaser agrees with the Selling Parties that it shall not, and that it shall procure that no other member or employee of the Purchaser Group shall, utilise the Excluded Data in connection with any trade or business carried on by any member of the Purchaser Group, disclose or distribute the data to any person or make any copy or record of the Excluded Data.

20.3 The Purchaser agrees that on demand by the Selling Parties it will return the Excluded Data to the Selling Parties and then permanently destroy all remaining records of the Excluded Data and expunge the Excluded Data from all computers or other devices containing the Excluded Data. The destruction of the Excluded Data shall be certificated in writing by the Purchaser to the Selling Parties.

21. Costs

21.1 Subject to clause 21.2 and except as otherwise provided in this Agreement (or any other Transaction Document), the parties shall each be responsible for their own costs, charges and other expenses incurred in connection with the Proposed Transaction.

21.2 The Purchaser or its Affiliates shall bear all stamp, notarisation fees or other documentary or transaction duties, stamp duty reserve tax, stamp duty land tax and

Page 12

any other transfer taxes arising as a result of this Agreement or of any of the other Transaction Documents.

22. Notices

22.1 Any notice in connection with this agreement shall be in writing in English and delivered by hand, fax, registered post or courier using an internationally recognised courier company. A notice shall be effective upon receipt and shall be deemed to have been received (i) at the time of delivery, if delivered by hand, registered post or courier or (ii) at the time of transmission if delivered by fax provided that in either case, where delivery occurs outside Working Hours, notice shall be deemed to have been received at the start of Working Hours on the next following Business Day.

22.2 The addresses and fax numbers of the parties for the purpose of clause 22.1 are:

Coloplast

Coloplast A/S
Holtedam 1
3050 Humlebaek
Denmark

Fax: +45 49 11 24 10

For the attention of: Peter Volkers (Legal Affairs Director)

Purchaser and RMC

Rochester Medical Corporation
One Rochester Medical Drive
Stewartville
MN 55976
USA

Fax: +1 507 533 9725

For the attention of: Antony J. Conway (President)

MML

Mentor Medical Limited
10 Commerce Way
Lancing
West Sussex
BN15 8TA

Fax: +44 1903 753981

Page 13

Prior to Closing, with a copy to

Mentor Corporation
201 Mentor Drive
Santa Barbara, California 94311 USA
Attention: General Counsel
Facsimile No.: (805) 879-6008
Phone: (805) 879-6000 (for confirmation purposes only)

CP UK

Coloplast Limited
Peterborough Business Park
Peterborough
Cambridgeshire
PE2 6FX

Fax +44 1733 390851
For the attention of: Graham Sethna

23. Entire agreement

This Agreement, including the schedules hereto, together with the other Transaction Documents, sets out the entire agreement and understanding between the parties in respect of the sale and purchase of the Assets. It is agreed that:

(a)	no party has entered into this Agreement in reliance upon any representation, warranty or undertaking of any other party which is not expressly set out or referred to in this Agreement;
(b)	all terms and conditions which are implied under the Sale of Goods Act in a contract of sale of goods to which that Act applies are expressly excluded from the sale and purchase under this Agreement, save that this clause shall not exclude any liability under section 12 of the Sale of Goods Act;
(c)	a party may claim in contract for breach of warranty under this Agreement but shall have no claim or remedy under this Agreement in respect of misrepresentation (whether negligent or otherwise, and whether made prior to, and/or in, this Agreement) or untrue statement made by another party;

this clause shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation.

24. Waivers, Rights and Remedies

Except as expressly provided in this Agreement, no failure or delay by any party in exercising any right or remedy relating to this agreement or any of the Transaction Documents shall affect or operate as a waiver or variation of that right or remedy or preclude its exercise at any subsequent time. No single or partial exercise of any such

Page 14

right or remedy shall preclude any further exercise of it or the exercise of any other remedy.

25. Counterparts

This Agreement may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which is an original but all of which together constitute one and the same instrument.

26. Variation

No variation of this Agreement (or of any of the documents referred to in this Agreement) shall be valid unless it is in writing and signed by or on behalf of each of the parties to it. The expression variation shall include any variation, amendment, supplement, deletion or replacement however effected.

27. Severability

If any provision of this Agreement is held to be invalid or unenforceable, then such provision shall (so far as it is invalid or unenforceable) be given no effect and shall be deemed not to be included in this Agreement but without invalidating any of the remaining provisions of this Agreement. The parties shall then use all reasonable endeavours to replace the invalid or unenforceable provision by a valid and enforceable substitute provision the effect of which is as close as possible to the intended effect of the invalid or unenforceable provision.

28. Third Party Enforcement Rights

A person who is not a party to this Agreement shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

29. Governing Law and Arbitration

29.1 This Agreement and the relationship between the parties shall be governed by, and interpreted in accordance with, English law.

29.2 (a)  All disputes arising in connection with this Agreement and all shall be finally settled in London, England under the rules of conciliation and arbitration of the International Chamber of Commerce (ICC) in the English language by three (3) arbitrators appointed in accordance with said rules.

(b) All reasonable attorney’s fees and costs incurred by the prevailing party in any arbitration pursuant to this Agreement, and the cost of such arbitration, shall be paid by the other party to the arbitration within five (5) days after receipt of written demand therefor from the prevailing party following the rendition of the written decision of the arbitration tribunal, or as otherwise ordered by the arbitration tribunal. On the application of such prevailing party before or after the initial decision of the arbitration tribunal, and proof of its attorneys’ fees and

Page 15

costs, the arbitration tribunal shall order the other party to the arbitration to make the payments provided for in the preceding sentence.

(c)	Any decision rendered by any arbitration tribunal pursuant to this clause shall be final and binding on the parties thereto, and judgment thereon may be entered by any court of competent jurisdiction. The parties specifically agree that any arbitration tribunal shall be empowered to award and order equitable or injunctive relief with respect to matters brought before it.
(d)	Arbitration shall be the exclusive method available for resolution of claims, disputes and controversies described in this clause, and the parties stipulate that the provisions hereof shall be a complete defense to any suit, action, or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute. The provisions of this clause shall survive the termination or expiration of this Agreement.
(e)	Notwithstanding the terms of this clause or any contrary provisions in the ICC rules, at any time before and after a demand for arbitration is presented, the parties shall be free to apply to any court of competent jurisdiction for interim or conservatory measures (including temporary conservatory injunctions). The parties acknowledge and agree that any such action by a party shall not be deemed to be a breach of such party’s obligation to arbitrate all disputes under this clause or infringe upon the powers of any arbitral panel.

As witness this Agreement has been signed by or on behalf of the parties the day and year first before written.

Page 16

SCHEDULE 1

DEFINITIONS AND INTERPRETATION

1. Definitions. In this agreement, the following words and expressions shall have the following meanings:

Acquisition means the purchase by Coloplast of the worldwide urology business of Mentor at a closing to be held contemporaneously with the Closing.

Adjustment Date has the meaning given to it in Part A of Schedule 2;

Affiliate means, with respect to any entity, any other entity controlled by, under common control with, or which controls such entity through (a) the ownership, either directly or indirectly, of more than 50% of the voting shares or equity interests of such entity, (b) the right to elect the majority of the directors or members of any similar managing body of such entity (except by reason of the occurrence of a contingency), or (c) the right to manage and control such entity pursuant to contract.

Agreement has the meaning set forth in the first paragraph of this Agreement.

Assets has the meaning given to it in clause 2.1;

Base Volume has the meaning given to it in Schedule 2, Part A;

Business means the male external catheter business of the Selling Parties as carried on in the United Kingdom immediately before exchange of this Agreement, but incorporating solely the Clear Advantage, Freedom, Freedom+, Transfix and Uro-Flo brands;

Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on which banks are open in London for general commercial business;

Business Records means all data bases relating to the regulatory history of the Business and the customer history of the Business, except for patient records;

Claim means any claim under or for breach of this Agreement, except for any claim under Part A of the Seller Warranties;

Closing means closing of the sale and purchase hereunder in accordance with clause 5;

Closing Date means the date on which the condition set out in clause 4 of this Agreement has been fulfilled, or such other date as the Parties shall agree, and the Closing takes place;

Coloplast Adjustment Amount has the meaning given to it in Schedule 2, Part A;

Page 17

Coloplast’s Bank Account means Account number 5005810597 (US$), at Nordea in Copenhagen, Torvegade 2, København (in the name of Coloplast A/S, Holtedam 1, 3050 Humlebaek, Denmark)

Competent Authority means (i) any person (whether autonomous or not) having legal and/or regulatory authority; (ii) any court of law or tribunal in any jurisdiction; and/or (iii) any Taxation Authority;

Connected Person means (i) a shareholder, officer, director or employee of the relevant Selling Party, (ii) any member of the immediate family of any shareholder, officer, director or employee of the Selling Parties or (iii) any entity in which any of the persons described in clause (i) or (ii) owns any beneficial interest (other than less than one percent of the outstanding shares of capital stock of any corporation whose stock is listed on a national securities exchange).

Consent means any authorisation, consent, approval, filing, waiver, exemption or other action by or notice to any third party in relation to a Contract or any Competent Authority in respect of any regulatory, Tax, license, Litigation or like matter.

Contracts means those contracts listed in Schedule 10

DAC Licence means the Dispensing Appliance Contractor Licence granted by East Sussex PCSS to MML;

Default Interest means interest at LIBOR plus 4 per cent;

Deferred Payment has the meaning given to it in clause 2.5(a)(ii);

Disclosure Documents means the documents provided to the Purchaser prior to the execution of this Agreement, as set out in Exhibit 1;

Disclosed means disclosed by the Disclosure Documents with sufficient particularity to enable the Purchaser to assess the full impact on the Assets of the matter disclosed;

Documents means, in relation to the Property, the conveyances and other deeds and documents short particulars of which are set out in Schedule 12;

Employee Benefit Plan means (a) any plan, fund or agreement which provides medical, vision or dental care benefits, or benefits in the event of sickness, accident or disability, death benefits or severance benefits; (b) any incentive compensation plan, deferred compensation plan, share-option or share-based incentive or compensation plan, or share purchase plan; (c) any change of control agreements, or (d) any retention arrangements;

Employee Liabilities means any employee related costs (including wages, salaries, PAYE, NIS payments, and redundancy costs), claims, damages, penalties, compensation awards or expenses;

Encumbrance means any interest or equity (other than by virtue of this Agreement) of any person (including any right to acquire, option or right of pre-emption or

Page 18

conversion) or any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention or any other security agreement or arrangement, or any agreement or arrangement to create any of the above, other than the Permitted Encumbrances;

Environment means any and all organisms (including man), ecosystems, property and the following media: air (including the air within buildings and the air within other natural or man-made structures, whether above or below ground); water (including water under or within land or in drains or sewers and coastal and inland waters); and land (including land under water);

Environment Agreements means any and all leases or licences or other agreements (including agreements of the nature referred to at paragraph 44 of Chapter IV of the draft statutory Guidance to Part IIA of the Environment Protection Act 1990) which relate to the Business in any respect but only to the extent that they relate, either wholly or in part, to the protection of the Environment and/or the prevention of Harm and/or Remediation Action;

Environment Law means any and all laws, whether civil, criminal or administrative applicable to the Property and/or the conduct of the Business and which have as a purpose or effect the protection of the Environment and/or the prevention of Harm and/or the provision of remedies in respect of Harm, including: European Community or European Union regulations, directives, decisions and recommendations; statutes and subordinate legislation; regulations, orders and ordinances; Permits; Environment Agreements; codes of practice, circulars, guidance notes and the like; common law, local laws and bye-laws; and judgments, notices, orders, directions, instructions or awards of any Competent Authority;

Environment Liability means liability (including liability in respect of Remediation Action) on the owner for the time being of the Business under Environment Laws;

Estimated Stock Volume has the meaning given to it in Schedule 2, Part B;

Excluded Assets means the Excluded Data and any and all assets owned or used by the Selling Parties in connection with the Business or otherwise other than the Assets;

Excluded Data means any and all information, in any form whatsoever, concerning or in relation to the customers of MML’s home delivery service;

Final Stock Volume has the meaning given to it in Schedule 2, Part B;

Furniture, Fixtures and Equipment means those Assets described according to Part A of Schedule 9;

Harm means material harm or damage to, or other interference with, the Environment and includes any detrimental effects on the health of living organisms or other interference with the ecosystems of which they form part and, in the case of man, includes offence caused to any of his senses or harm or damage to his property;

Page 19

Hazardous Matter means any and all matter (whether alone or in combination with other matter) including electricity, heat, vibration, noise or other vibration which may cause Harm;

Initial Payment has the meaning given to it in clause 2.5(a)(i);

Intellectual Property Rights means patents, trade marks, service marks, logos, get-up, trade names, internet domain names, rights in designs, copyright (including rights in computer software) and moral rights, database rights, semi-conductor topography rights, utility models, rights in know-how and other intellectual property rights, in each case whether registered or unregistered, and all rights or forms of protection having equivalent or similar effect anywhere in the world and registered includes registrations and applications for registration;

IT Systems means the information and communications technologies described according to Part B of Schedule 9;

Lease means a lease of the ground floor and part of the first floor of the Property, substantially in the form annexed to this Agreement at Part D of Schedule 12;

Liabilities means all liabilities (whether actual or contingent), expenses and obligations arising directly in connection with the Business or any of the Assets prior to Closing; including those which:-

(a)	are directly in connection with any act, event, default or omission of any of the Selling Parties or any Connected Person, their employees, agents or sub-contractors; and
(b)	includes all debts, liabilities, expenses or obligations which are not expressly assumed by the Purchaser under this Agreement (and no reference in this Agreement to the Purchaser’s acquisition of the Assets shall imply to acquisition or acceptance of any such thing);

LIBOR means the display rate per annum of the offered quotation for deposits in dollars for a period of one month which appears on the appropriate page of the Reuters Screen (or such other page as the parties may agree) at or about 11.00 a.m. London time on the date on which payment of the sum under this Agreement was due but not paid;

Licences and Permits means the licences necessary for the Business, including the DAC Licence;

Licenced IP shall mean the Intellectual Property Rights licensed by Coloplast under the terms of the Trade Mark Licence;

Litigation means any actual or prospective proceedings, whether judicial, administrative, investigative, tribunal, arbitral, criminal or similar and whether or not subject or intended to be subject to alternative dispute resolution techniques;

Loan Note has the meaning given to it in clause 2.5(a)(ii);

Page 20

Losses and Expenses means actions, proceedings, losses, damages, liabilities, claims, demands, costs and expenses, including fines, penalties, clean-up costs, legal and other professional fees and any amount paid by the party claiming Losses and Expenses to any person in good faith, having reasonably determined such payment to be due to that person and in that amount (whether it is or not);

Market Goodwill means the UK market goodwill in relation to the Products, together with the non-home delivery customer lists;

Material Adverse Change means a change occurring after the date of this Agreement that is materially adverse to the value of the Assets taken as a whole. The term Material Adverse Change shall be deemed to exclude the impact of (i) changes in UK GAAP, (ii) changes to general economic conditions or interest rates, (iii) national or international political or social conditions, (iv) financial, banking or securities markets (including the disruption thereof and any decline in the price of any security or any market index), (v) changes in law, rules, regulations, orders, or other binding directives issued by any governmental body, or (vi) any event, occurrence, or circumstance with respect to which the Purchaser has actual knowledge, as of the date hereof;

Pension Scheme means the Group Personal Pension Scheme insured with Norwich Union;

Permits means any and all licences, consents, permits, registrations, filings, exemptions, approvals, authorisations or the like, made or issued pursuant to or under, or required by, Environment Laws in relation to the Assets;

Permitted Encumbrances means security interests (i) arising by operation of law; (ii) under the contracts with title retention provisions and equipment leases with third parties entered into in the ordinary course of business; (iii) for taxation and other governmental charges which are not due and payable or which may be paid without penalty after they become due and payable;

Post Closing Adjustment has the meaning given to it in Part A of Schedule 2;

Products means the Clear Advantage, Transfix, Freedom/Freedom+ and Uro-Flo male external catheter products;

Property mean the means the property described in Part B of Schedule 12;

Proposed Transaction means the transaction contemplated by the Transaction Documents;

Purchase Price has the meaning given to it in clause 2.5;

Purchaser Adjustment Amount has the meaning given to it in Schedule 2, Part A;

Purchaser Group means the Purchaser and its Affiliates from time to time;

Page 21

Purchaser’s Bank Account means such bank account as the Purchaser may notify to the other parties in writing from time to time;

Purchaser Warranties has the meaning given to it in clause 12.1;

Remediation Action means (i) preventing, limiting, removing, remedying, cleaning-up, abating or containing the presence or effect of any Hazardous Matter in the Environment (including the Environment at the Property) or (ii) carrying out investigative work and obtaining legal and other professional advice as is reasonably required in relation to (i);

Sale of Goods Act means the Sale of Goods Act 1979;

Seller Warranties has the meaning given to it in clause 12.1;

Standard Conditions means, in relation to the Property, the Standard Commercial Property Conditions (Second Edition);

Stock means the stock of the Products, as identified by the Selling Parties, to be purchased from the Selling Parties by the Purchaser in accordance with Schedule 2, Part B and Part C;

Stock Adjustment has the meaning given to it in Schedule 2, Part B;

Stock Payment has the meaning given to it in Schedule 2, Part B;

Stock Volume has the meaning given to it in Schedule 2, Part B;

Surviving Provisions means clauses 3 (Purchase Price Allocation) 10 (Liabilities and Selling Parties’ Post-Completion Obligations) 11 (Tax), 13 (Remedies) 17 (Assignment), 19 (Confidential Information) 21 (Costs), 22 (Notices), 23 (Entire Agreement), 24 (Waiver, Rights and Remedies), 26 (Variations), 27 (Severability), 28 (Third Party Enforcement Rights), 29 (Governing Law and Arbitration) and Schedule 1 (Definitions and Interpretation);

Taxation or Tax or Taxes means:

(a)	all forms of taxation and statutory, governmental, state, federal, provincial, local government or municipal charges, duties, imposts, contributions, levies, withholdings or liabilities wherever chargeable and whether of the UK or any other jurisdiction; and
(b)	any penalty, fine, surcharge, interest, charges or costs payable in connection with any taxation within (a) above;

Taxation Authority means HM Revenue & Customs, the Department for Work and Pensions and any other governmental or other authority whatsoever competent to impose any Taxation, whether in the United Kingdom or elsewhere;

Third Party Consent means all consents, approvals, authorisations or waivers required from third parties:-

Page 22

(a)	for the assignment or novation of any Contract in favour of the Purchaser; or
(b)	to prevent such third party, in respect of any such Contract, from exercising any right of termination, acceleration or other right which if exercised would adversely affect the value of the Contract to the Purchaser;

Total Sales has the meaning given to it in Schedule 2, Part A;

Trade Mark Assignment means the agreement in the form set out at Part A of Schedule 7;

Trade Mark Licence means the agreement in the form set out at Part B of Schedule 7;

Transaction Documents means this agreement, the Trade Mark Assignment, the Trade Mark Licence and the Lease;

Transfer means the transfer of the Property in the agreed form set out at Part C of Schedule 12;

Transferred Employees means the employees of the Selling Parties whose names are listed in Schedule 8;

Transferred IP means the Intellectual Property Rights transferred by MML under the terms of the Trade Mark Assignment;

Transfer Regulations means the Transfer of Undertakings (Protection of Employment) Regulations 2006;

TULCRA means the Trade Union and Labour Relations (Consolidation) Act 1992;

UK GAAP means generally accepted accounting principles applied in the UK, incorporating Statements of Standard Accounting Practice, Financial Reporting Standards and Urgent Issues Task Force Abstracts issued by the Accounting Standards Board Limited;

VATA means that Value Added Tax Act 1994;

VAT Invoice means an invoice that complies with the requirements of the Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — common system of value added tax: uniform basis of assessment (77/388/EEC) as subsequently amended and with the requirements of national VAT law in the country in which the invoice is issued; and

Working Hours means 9.30 am to 5.30 pm in the relevant location on a Business Day.

2. Interpretation. In this Agreement, unless the context otherwise requires:

(a) references to a person include any individual, firm, body corporate (wherever incorporated), government, state or agency of a state or any joint venture,

Page 23

association, partnership, works council or employee representative body (whether or not having separate legal personality);

(b)	headings do not affect the interpretation of this Agreement; the singular shall include the plural and vice versa; and references to one gender include all genders;
(c)	references to any English legal term or concept shall, in respect of any jurisdiction other than England, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction;
(d)	references to dollars or $ are references to the lawful currency from time to time of the United States of America;
(e)	for the purposes of applying a reference to a monetary sum expressed in sterling, an amount in a different currency shall be deemed to be an amount in sterling translated at the Exchange Rate at the relevant date (which in relation to a Claim, shall be the date of the receipt of notice of that Claim under Schedule 5); and
(f)	any statement in this Agreement qualified by the expression so far as the Selling Parties are aware or to the best of the Selling Parties’ knowledge or any similar expression shall be deemed to be made only on the basis of the actual knowledge, information and belief of the Selling Parties after they have made all reasonable enquiries.
(g)	any phrase introduced by the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.

3. Enactments. Except as otherwise expressly provided in this Agreement, any express reference to an enactment (which includes any legislation in any jurisdiction) includes references to: (i) that enactment as amended, consolidated or re-enacted by or under any other enactment before or after the date of this Agreement; (ii) any enactment which that enactment re-enacts (with or without modification); and (iii) any subordinate legislation (including regulations) made (before or after the date of this Agreement) under that enactment, as amended, consolidated or re-enacted as described in (i) or (ii) above, except to the extent that any of the matters referred to in (i) to (iii) occurs after the date of this Agreement and increases or alters the liability of the Seller or the Purchaser under this Agreement.

4. Schedules and Exhibits. The Schedules and Exhibits comprise schedules and exhibits to this Agreement and form part of this Agreement.

5. Inconsistencies. Where there is any inconsistency between the definitions set out in this Schedule and the definitions set out in any clause or any other Schedule, then, for the purposes of construing such clause or Schedule, the definitions set out in such clause or Schedule shall prevail.

Page 24

SCHEDULE 2

PURCHASE PRICE

Part A
Post Closing Adjustment

1. The Purchase Price shall be adjusted depending upon the Purchaser’s (and its Affiliates’) sales of male external catheters in the UK (excluding the Purchaser’s or its Affiliates’ private label sales) post Closing (the Post Closing Adjustment). Any Post Closing Adjustment shall be calculated following the fifth anniversary of the Closing Date (the Adjustment Date).

2. Any payment required to be made pursuant to this Part A shall be paid by Coloplast or the Purchaser (as the case may be) within 30 Business Days of the Adjustment Date. Any such payment shall be made in accordance with the provisions of clause 16.1 or 16.2 of this Agreement, as the case may be.

3. The Post Closing Adjustment shall be calculated on the following basis:

Base Volume is a total volume of 17,550,000 units;

Coloplast Adjustment Amount means: (Base Volume — Total Sales) x $0.67 per unit;

Purchaser Adjustment Amount means: (Total Sales — Base Volume) x $0.67 per unit;

Total Sales is the total volume of male external catheters sold by the Purchaser and the Purchaser’s Affiliates within the UK for the period from Closing until the fifth (5^th) anniversary of the Closing Date;

(a)	If Total Sales > Base Volume then the Purchaser shall pay a Post Closing Adjustment equal to the Purchaser Adjustment Amount to Coloplast.
(b)	If Total Sales < Base Volume then Coloplast shall pay a Post Closing Adjustment equal to the Coloplast Adjustment Amount to the Purchaser.

4. The Purchaser shall provide Coloplast with total annual sales figures for male external catheters sold by the Purchaser and the Purchaser’s Affiliates within 15 Business Days of each anniversary of the Closing Date until 2010.

5. The Total Sales shall be calculated by the Purchaser in accordance with this paragraph within 20 Business Days of the Adjustment Date.

(a) A written statement of the amount of the Total Sales, together with details of its calculation, shall be delivered to Coloplast upon completion of the calculation pursuant to this paragraph, in the form of a certificate prepared by the Purchaser. If Coloplast accepts the amount of Total Sales, it shall notify the Purchaser in writing of such acceptance. If Coloplast disputes the certified Total Sales, it shall notify the Purchaser in writing of the amount, nature and

Page 25

basis of such dispute within 10 Business Days of delivery of the certificate to Coloplast.

(b)	If Coloplast provides written notice of a dispute in accordance with paragraph 5(a) above, the Purchaser and Coloplast agree to negotiate in good faith to resolve such dispute. If they are unable to resolve the dispute within 21 days after delivery of the certificate to Coloplast, the dispute shall immediately be submitted by either the Purchaser or Coloplast to an independent UK accounting firm (the Expert) who shall either be agreed upon by the Purchaser and Coloplast or, if they cannot agree within 5 days of the end of the 21 day period, on the request of either the Purchaser or Coloplast, such Expert shall be appointed by the President of the Institute of Chartered Accountants in England and Wales. The Expert shall determine and deliver written notice of the determination of the amount of the Total Sales to Coloplast and Purchaser within 30 days from the date of his appointment and, in doing so, shall act as an expert and not as an arbitrator.
(c)	Coloplast and the Purchaser shall procure that the Expert has full access to the books and records of the Purchaser as the Expert shall deem reasonably necessary for each to be able to review in detail the calculation of the Total Sales (together with all supporting information relied on in making the calculation).
(d)	The determination of the Total Sales by the Expert shall (except in the case of manifest error) be final and binding on the parties. All determinations by the Expert shall be in writing, and shall be delivered to Coloplast and the Purchaser. The fees and expenses of the Expert shall be borne as the Expert shall determine.
(e)	The Total Sales shall be deemed to have been determined:

(i)	if the Purchaser agrees the calculation with Coloplast, on the day that they confirm such agreement in writing;
(ii)	if Coloplast and the Purchaser disagree as to any matters, but resolve in writing their difference or dispute prior to (or at any time during) the period of the appointment of the Expert, on the day that they so agree in writing; or
(iii)	on the date that the Expert notifies Coloplast and Purchaser of his determination.

(f) The parties agree that the Expert shall be entitled to determine, based upon the circumstances of any dispute, that interest shall not be payable.

Part B
Stock Payment

1. The Purchaser shall purchase the Stock for $478,000 (the Stock Payment), based on the assumption that the Stock volumes set out in Part C of this Schedule are

Page 26

correct (the Estimated Stock Volume). This amount shall be paid by the Purchaser to the Selling Parties as follows:

(a)	$239,000, to be paid to the Selling Parties within 3 calendar months of the Closing Date; and
(b)	$239,000, to be paid to the Selling Parties within 6 calendar months of the Closing Date (the Final Stock Instalment).

2. Within 30 days of Closing, the Purchaser will perform a stock audit, and notify Coloplast of the precise volume of the Stock (the Stock Volume).

3. If the Stock Volume is greater than the Estimated Stock Volume then the Final Stock Instalment will be increased by the price for each unit of Stock set out in Part C of this Schedule per additional unit of Stock over the Estimated Stock Volume. If the Stock Volume is less than the Estimated Stock Volume then the Final Stock Instalment will be reduced by the price for each unit of Stock set out in Part C of this Schedule per unit of Stock under the Estimated Stock Volume, provided that in each case the amount of the Stock Volume is not disputed in accordance with paragraph 4 below.

4. The Stock Volume shall be calculated by the Purchaser in accordance with this paragraph.

(a)	A written statement of Stock Volume, together with details of its calculation, shall be delivered to Coloplast upon completion of the audit pursuant to paragraph 2 above, in the form of a certificate prepared by the Purchaser. If Coloplast accepts the amount of the Stock Volume, it shall notify the Purchaser in writing of such acceptance. If Coloplast disputes the certified Stock Volume, it shall notify the Purchaser in writing of the amount, nature and basis of such dispute within 30 days after delivery of the certificate to Coloplast.
(b)	If Coloplast provides written notice of a dispute in accordance with paragraph 4(a) above, the Purchaser and Coloplast agree to negotiate in good faith to resolve such dispute. If they are unable to resolve the dispute within 21 days after delivery of the certificate to Coloplast, the dispute shall immediately be submitted by either the Purchaser or Coloplast to an independent UK accounting firm (the Expert) who shall either be agreed upon by the Purchaser and Coloplast or, if they cannot agree within 5 days of the end of the 21 day period, on the request of either the Purchaser or Coloplast, such Expert shall be appointed by the President of the Institute of Chartered Accountants in England and Wales. The Expert shall determine and deliver written notice of the determination of the amount of the Stock Volume to Coloplast and Purchaser within 30 days from the date of his appointment and, in doing so, shall act as an expert and not as an arbitrator.
(c)	Coloplast and the Purchaser shall each have and they shall procure that the Expert has full access to the books and records of the Purchaser as they shall each deem reasonably necessary for each to be able to review in detail the

Page 27

calculation of the Stock Volume (together with all supporting information relied on in making the calculation).

(d)	The determination of the Stock Volume by the Expert shall (except in the case of manifest error) be final and binding on the parties. All determinations by the Expert shall be in writing, and shall be delivered to Coloplast and the Purchaser. The fees and expenses of the Expert shall be borne as the Expert shall determine.
(e)	The Stock Volume shall be deemed to have been determined:

(i)	if the Purchaser agrees the calculation with Coloplast, on the day that they confirm such agreement in writing;
(ii)	if Coloplast and the Purchaser disagree as to any matters, but resolve in writing their difference or dispute prior to (or at any time during) the period of the appointment of the Expert, on the day that they so agree in writing; or
(iii)	on the date that the Expert notifies Coloplast and Purchaser of his determination.

(f) The parties agree that the Expert shall be entitled to determine, based upon the circumstances of any dispute, that interest shall not be payable.

Part C
Estimated Stock Volume

Freedom/Freedom = 480,000 packaged units (priced at $0.53 per unit)

Clear Advantage = 912,000 units (priced at $0.20 per unit)

Transfix = 207,000 units (priced at $0.20 per unit)

Page 28

SCHEDULE 3

SELLER WARRANTIES

Part A: General

1. The Selling Parties are validly incorporated, in existence and duly registered under the laws of their respective jurisdictions and have full power to conduct their respective businesses as conducted at the date of this Agreement.

2. The Selling Parties have obtained all corporate authorisations required to empower them to enter into and fully perform their respective obligations under this Agreement and every other document and thing it is required under this Agreement to execute or do. This Agreement and all such documents constitute (or will when executed constitute) valid binding and enforceable obligations on the Selling Parties in accordance with their respective terms.

3. Entry into and performance by the Seller Parties of this Agreement and/or any other Transaction Document to which they are a party will not breach any provision of their memorandum and articles of association, articles or certificate of incorporation, by-laws or equivalent constitutional documents.

Part B: The Assets

4.	Ownership
(a)	The relevant Selling Parties are the sole legal and beneficial owners of the Assets all free from hire or hire purchase agreement or leasing or factoring agreements or agreements for payment or deferred terms. All the Assets are in the relevant Selling Party’s sole possession and control and are in the United Kingdom. There is no Encumbrance on, over or affecting any of the Assets or the Business or any part of it, and no claim has been made by any person to be entitled to the benefit of any such Encumbrance.
5.	Condition
(a)	The Furniture, Fixtures and Equipment are in good repair and condition and free of any material defects (except those resulting from normal wear and operation).
(b)	The Stock is in good condition, is not obsolete or unusable and is capable of being sold in the ordinary course of the Business in accordance with its current price list without rebate or allowance to a purchaser.
(c)	The IT Systems are in good working order, function in accordance with all applicable specifications, and have been and are being properly and regularly maintained and replaced.

Page 29

Part C: The Contracts

6.	Terms & Material Obligations
(a)	Each Contract is a valid and binding agreement of MML and is in full force and effect and enforceable according to its terms.
(b)	MML has performed all material obligations required to be performed by it under the Contracts and is not in breach or default in any material respect thereunder.
7.	Accuracy

True and complete copies of each Contract have been made available to the Purchaser.

Part H: Environment

8.	Compliance with Environment Law
(a)	No state of affairs exists with respect to the Property that would constitute a violation in any material respect of any Environmental Law.
(b)	To the best of the Selling Parties’ knowledge, no written notice or other communication has been received which alleges that the Property has not been used at all times in compliance with Environmental Law or alleges any actual or potential Environmental Liability.
(c)	To the best of the Selling Parties’ knowledge, no Remediation Action is or may be required under any Environmental Law in relation to the Property.
9.	Permits
(a)	All Permits have been obtained and are in full force and effect and their terms and conditions have been materially complied with.
(b)	No circumstance exists which is likely to result in modification, suspension, or revocation of any Permit or is likely to result in any such Permit not being extended, renewed, granted or (where necessary) transferred.
10.	Hazardous Matter

No Hazardous Matter has been generated, used, kept, treated, transported, spilled, deposited, disposed of, discharged, emitted or otherwise dealt with or managed at, on, under or from the Property by any of the Selling Parties.

11. Environmental Liability

To the best of the Selling Parties’ knowledge there are no events, states of affairs, conditions, circumstances, activities, practices, incidents, or actions (including the generation, use, treatment, storage, transport, deposit, disposal, discharge or management of Hazardous Matter) which have occurred or are occurring or have been

Page 30

or are in existence at, in, under or about the Property which may give rise to Environmental Liability.

12. No storage tanks

To the best of the Selling Parties’ knowledge, no storage tanks of any kind, including related pipework, are or have been located at any time whatsoever on or under the Property.

13. Notice of claims

Within the two years prior to the date of this Agreement, none of the Selling Parties has had knowledge of or received any notice claim or other communication alleging any actual or potential Environmental Liability.

14. Assessments, audits etc

The Selling Parties have Disclosed copies of all material environmental or health and safety assessments, audits, reports or investigations relating to the Property.

Part I: Insurance

15. Premiums and termination

(a) All premiums due and payable under all insurance policies relating to the Assets have been paid, and the relevant Selling Party is otherwise in material compliance with the terms of such policies.

(b) No Selling Party is aware of any circumstances which would lead to the termination of, or a material increase in premium with respect to, any of the insurance policies relating to the Assets.

Part J: Litigation

16. Litigation

Except as claimant in the collection of debts (not exceeding $50,000 in the aggregate) arising in the ordinary course of trading, neither the Selling Parties nor any person for whose acts or defaults it may be vicariously liable is now engaged in any Litigation, and no Litigation is pending, threatened or expected, in relation to any of the Assets, whether by or against the relevant Selling Party and so far as the Selling Parties are aware there is no matter or fact in existence in relation to any of the Assets which would give rise to any Litigation.

17. The Selling Parties are not subject to any order or judgement or injunction given by any court, tribunal or governmental agency relating to any of the Assets which is still in force and have not given any undertaking to any court or tribunal or to any third party arising out of any Litigation relating to any of the Assets.

Page 31

Part K: Products

18. Product regulatory requirements

At no time has the relevant Selling Party had knowledge of or received any notice, claim, governmental enforcement action or other communication from any person alleging any defect in any Products manufactured, marketed or supplied by it or any contravention of any applicable law or standard in relation to any such goods.

Part L: Transferred Employees

19. Schedule 9 sets out a list of all Transferred Employees.

20. The Selling Parties do not recognise any trade union or other body representing the Transferred Employees or any of them for collective bargaining or negotiating purposes.

21. The Selling Parties are not aware of any current dispute with any of the Transferred Employees whether brought under the employer’s disciplinary or grievance procedure or otherwise, nor of any matters that might give rise to such a dispute. No litigation is threatened, pending or ongoing against the Selling Parties by on or on behalf of any of the Transferred Employees.

22. None of the Transferred Employees is currently on sick leave or maternity leave or any other leave of absence apart from scheduled annual holiday.

23. None of the Transferred Employees is eligible for an enhanced redundancy payment under any contractual or non-contractual policy operated by the Selling Parties.

24. None of the Transferred Employees is entitled to a period of notice of termination of employment in excess of 12 weeks.

25. There are no outstanding appeals against dismissal in respect of any employees who are not Transferred Employees.

Part M: Pension Schemes and Benefit Plans

26. Other than the state pension scheme, the Pension Scheme is the only arrangement under which the MML provides or is liable to provide relevant benefits (as defined in section 612(1) of the Income and Corporation Taxes Act 1988) in respect of any Transferred Employee.

27. The Disclosed Documents contain details of the Employee Benefit Plans maintained by, or contributed to by the Selling Parties for the benefit of the Transferred Employees. A copy or summary of each Employee Benefit Plan has been made available to the Purchaser.

Page 32

Part N: Intellectual Property

28. Ownership and rights

1.1 Schedule 7 contains a full and accurate list of all Transferred IP. Schedule 8 contains a full and accurate list of all Licensed IP (for the purposes of this Part N, the Transferred IP and Licensed IP being together the IP). The IP is valid, subsisting and enforceable and nothing has been done or omitted to be done which may cause it to not be valid, subsisting and enforceable.

1.2 The relevant Selling Party is the sole legal and beneficial owner of all of the IP and the IP has been validly granted to the relevant Selling Party free from any licence, encumbrance, restriction on use or disclosure obligation.

29. Enforcement

1.1 There have been no written claims within the last four years asserting the invalidity, misuse or unenforceability of the IP.

1.2 All IP has been properly maintained and all renewal fees have been paid on time.

1.3 The Selling Parties have taken reasonable steps to protect the know-how owned, used or exploited by the relevant Selling Party for the purposes of the Business.

1.4 There is no currently pending, or to the Selling Parties’ knowledge threatened, adverse judgment, decisions or claims in which any of the Selling Parties is a named party with respect to any opposition, cancellation, injunction, or other claim or restriction concerning the IP.

1.5 Nothing has been done to diminish or otherwise materially adversely affect the reputation of the unregistered IP.

30. Infringement

(a)	So far as the Selling Parties are aware, the Business has not infringed and does not infringe any Intellectual Property Rights of a third party.
(b)	So far as the Selling Parties are aware, they have not received written notice within the last four years of any material claim that the conduct of the Business infringes, misappropriates or otherwise violates the Intellectual Property Rights of a third party.

Part Q: Real Estate

31. The information in respect of the Property set out in Part B of Schedule 12 is true, accurate and complete and not misleading in any material respect.

32. Possession and occupation. MML is in possession of the whole of the Property on an exclusive basis, which is not vacant, and as far as the Selling Parties are aware no other person is in or actually or conditionally entitled to possession, occupation, use or control of it.

Page 33

33. Title. So far as the Selling Parties are aware the Property is not the subject of a subsisting contract for sale and no right to acquire or occupy the Property is in the process of being granted. MML is the sole beneficial owner of, and otherwise absolutely entitled to the Property and the proceeds of sale of it.

34. The Selling Parties or any Affiliate have disclosed true and complete copies of all the title deeds and documents to the Property in their possession and control.

35. As far as the Selling Parties are aware, the Property (and the proceeds of sale from it) is free from any mortgage debenture charge.

36. Notwithstanding that the Purchaser is minded to grant a lease of part of the Property to the Selling Parties immediately thereafter the Property will be transferred with vacant possession on the Closing Date.

Page 34

SCHEDULE 4

PURCHASER WARRANTIES

1. The Purchaser is validly incorporated, in existence and duly registered under the laws of its jurisdiction and has full power to conduct its business as conducted at the date of this Agreement.

2. The Purchaser has obtained all corporate authorisations required to empower it to enter into and fully perform its obligations under this Agreement and every other document and thing it is required under this Agreement to execute or do. This Agreement and all such documents constitute (or will when executed constitute) valid binding and enforceable obligations on the Purchaser in accordance with their respective terms.

3. Entry into and performance by the Purchaser of this Agreement and/or any other Transaction Document to which it is a party will not breach any provision of its memorandum and articles of association, articles or certificate of incorporation, by-laws or equivalent constitutional documents.

4. The Purchaser has available cash or available loan facilities which will at Closing provide in immediately available funds the necessary cash resources to pay the Initial Payment and meet its other obligations under this Agreement and, in the case of loan facilities, they involve no material pre-conditions and the Purchaser will be able to satisfy all conditions of drawdown to such loan facilities at or prior to Closing.

Page 35

SCHEDULE 5

LIMITATIONS ON LIABILITY

Time Limits. The liability of the Coloplast and CP UK in respect of any Claim under the Seller Warranties shall cease 18 months after the Closing Date.

1. Thresholds for Claims. The Selling Parties shall not be liable for any single Claim:

(a) unless the amount of the liability pursuant to that single Claim exceeds $75,000; and

(b) unless the aggregate amount of the liability of the Selling Parties for all Claims exceeds $250,000 (in which case the Purchaser shall be entitled to claim the whole amount of such Claims and not merely the excess).

2. Maximum limit for all Claims. The aggregate amount of the liability of the Selling Parties for all Claims shall not exceed the Purchase Price.

3. Matters disclosed. The Selling Parties shall not be liable for any Claim for breach of the Seller Warranties if and to the extent that the fact, matter, event or circumstance giving rise to such Claim is Disclosed by this Agreement or any other Transaction Document.

4. Contingent liabilities. If any Claim is based upon a liability which is contingent only, Coloplast and CP UK shall not be liable to make any payment unless and until such contingent liability gives rise to an obligation to make a payment (but the Purchaser has the right under paragraph 1 of this Schedule 5 to give notice of that Claim before such time).

5. No liability for Claims arising from acts or omissions of Purchaser. Coloplast and CP UK shall not be liable for any Claim to the extent that it would not have arisen but for, or has been increased or not reduced as a result of, any voluntary act, omission or transaction carried out:

(a) after Closing by the Purchaser or its Affiliates (or its respective directors, employees or agents or successors in title) otherwise than in the ordinary course of trading (unless such act was required to comply with English law or UK GAAP); or

(b) before Closing by any of the Selling Parties’ at the specific written direction or request of the Purchaser or any member of the Purchaser Group.

6. No double recovery. The Purchaser shall not be entitled to recover damages or obtain payment, reimbursement, restitution or indemnity more than once in respect of any one liability, loss, cost, shortfall, damage, deficiency, breach or other set of circumstances which gives rise to more than one Claim.

Page 36

7. Purchaser’s duty to mitigate. The Purchaser shall procure that all reasonable steps are taken to avoid or mitigate any loss or damage which it may suffer in consequence of any breach by the Selling Parties of the terms of this Agreement or any fact, matter, event or circumstance likely to give rise to a Claim.

8. Notwithstanding anything to the contrary herein, in no event shall MML have any liability under this Agreement prior to Closing, except in respect of a breach by MML of its obligations under Schedule 11.

9. In no event shall Mentor Corporation have any liability under this Agreement.

Page 37

SCHEDULE 6

FORM OF PROMISSORY NOTE

THIS UNSECURED LOAN NOTE DEED is made on _______ _______ 2006

Between:

(1) COLOPLAST A/S, whose registered office is at Holtedam 1, 3050 Humlebaek, Denmark (Coloplast); and

(2) ROCHESTER MEDICAL LIMITED, whose registered office is at 21 Wilson Street, London EC2M 2TD (the Purchaser).

Whereas:

(A) The Selling Parties and the Purchaser have entered into a sale and purchase agreement for the sale and purchase of certain assets (the Asset Sale Agreement).

(B) On closing of the Asset Sale Agreement, the Purchaser has agreed to enter into this unsecured loan note deed (the Loan Note).

(C) Capitalised terms used in this Loan Note shall bear the meanings given to them in the Asset Sale Agreement save where the context requires otherwise.

It is agreed:

1. This Loan Note represents an unsecured obligation of the Purchaser in favour of Coloplast.

2. On issue, the Loan Note is for an outstanding principal amount of $5,340,000 and will reduce by an amount equal to US$1,068,000 (each an Instalment) on each anniversary of Closing (each a Payment Date). The Final Payment Date falls on the date falling on the 5^th anniversary of the Closing Date.

3. If any instalment is not payable by the Purchaser on the relevant Payment Date, Coloplast shall have the right to set off the Instalment against any amounts owing by Coloplast to the Purchaser under the agreement entered into on or about the date of the Asset Sale Agreement between Coloplast and RCM concerning the worldwide supply of silicone male external catheters.

4. The Purchaser shall be entitled to offset any amounts payable to the Purchaser by Coloplast or CP UK pursuant to clause 13 of the Asset Sale Agreement against any instalment when due and payable on a Payment Date.

5. This Loan Note shall bear no interest on principal. Interest shall accrue on any unpaid Instalment at the Default Rate, until such time as the Instalment (together with

Page 38

accrued interest) is paid by the Purchaser, or the Instalment (together with accrued interest) is set off by the Seller in accordance with clause 3 above.

6. All payments made under this Loan Note shall be made to Coloplast’s Bank Account.

7. This Loan Note is non-transferable and the benefit of it may not be assigned.

8. This Loan Note is governed by English law.

9. (a)  All disputes arising in connection with this Agreement and all shall be finally settled in London, England under the rules of conciliation and arbitration of the International Chamber of Commerce (ICC) in the English language by three (3) arbitrators appointed in accordance with said rules.

(b)	All reasonable attorney’s fees and costs incurred by the prevailing party in any arbitration pursuant to this Agreement, and the cost of such arbitration, shall be paid by the other party to the arbitration within five (5) days after receipt of written demand therefor from the prevailing party following the rendition of the written decision of the arbitration tribunal, or as otherwise ordered by the arbitration tribunal. On the application of such prevailing party before or after the initial decision of the arbitration tribunal, and proof of its attorneys’ fees and costs, the arbitration tribunal shall order the other party to the arbitration to make the payments provided for in the preceding sentence.
(c)	Any decision rendered by any arbitration tribunal pursuant to this clause shall be final and binding on the parties thereto, and judgment thereon may be entered by any court of competent jurisdiction. The parties specifically agree that any arbitration tribunal shall be empowered to award and order equitable or injunctive relief with respect to matters brought before it.
(d)	Arbitration shall be the exclusive method available for resolution of claims, disputes and controversies described in this clause, and the parties stipulate that the provisions hereof shall be a complete defense to any suit, action, or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute. The provisions of this clause shall survive the termination or expiration of this Agreement.
(e)	Notwithstanding the terms of this clause or any contrary provisions in the ICC rules, at any time before and after a demand for arbitration is presented, the parties shall be free to apply to any court of competent jurisdiction for interim or conservatory measures (including temporary conservatory injunctions). The parties acknowledge and agree that any such action by a party shall not be deemed to be a breach of such

Page 39

party’s obligation to arbitrate all disputes under this clause or infringe upon the powers of any arbitral panel.

EXECUTED and DELIVERED as a	)	Name:
DEED by	)
COLOPLAST A/S acting by two directors/	)
a director and the secretary	)	Signature
		Name:
		Signature:
EXECUTED and DELIVERED as a	)	Name:
DEED by	)
ROCHESTER MEDICAL LIMITED	)
acting by two directors/	)	Signature
a director and the secretary	)
		Name:
		Signature

Page 40

SCHEDULE 7

PART A — FORM OF TRADE MARK ASSIGNMENT

AN ASSIGNMENT OF TRADE MARKS made on                      2006

Between

(1) MENTOR MEDICAL LIMITED whose registered office is at 10 Commerce Way, Lancing, West Sussex BN15 8TA (Assignor),

(2) ROCHESTER MEDICAL CORPORATION whose principal place of business is at One Rochester Medical Drive, Stewartville, MN 55976 USA (Assignee)

Whereas

(A) Assignor is the owner and registered proprietor of the Trade Marks (as defined below).

(B) Pursuant to the Asset Sale Agreement (as defined below), Assignor has agreed to assign the Trade Marks together with the goodwill attaching to the Trade Marks to Assignee, on the terms and conditions set out in this Assignment.

It is agreed as follows:

1. Interpretation

1.1 In this Assignment the following expressions shall have the following meanings:

Asset Sale Agreement means the agreement dated [· ] between, inter alia, the Assignor and Assignee for the sale and purchase of certain assets;

Products means male urinary sheaths and parts and fittings for such sheaths;

Registered Trade Mark means the registered trade mark particulars of which are set out in Appendix 1 Part A;

Trade Marks means the Registered Trade Mark and the Unregistered Trade Marks; and

Unregistered Trade Marks means the rights in the unregistered UK trade marks in relation to the Products particulars of which are set out in Appendix 1 Part B.

1.2	Schedule 1, paragraph 2 of the Asset Sale Agreement shall apply, mutatis mutandis to this Assignment.
1.3	The Appendix comprises an appendix to this Assignment and forms part of this Assignment.

Page 41

2. Assignment

Pursuant to the Asset Sale Agreement and in consideration of the sum of £1.00 now paid by the Assignee to the Assignor (the receipt of which the Assignor hereby acknowledges) the Assignor hereby assigns to Assignee the Trade Marks, and exclusive benefit of each of them together with:

(a)	all statutory and common law rights attaching to the Trade Marks,
(b)	the goodwill attaching to the Trade Marks; and
(c)	the right to sue (and to recover and retain) damages and other remedies in respect of any infringement or unauthorised use of any of the Trade Marks which may have occurred before the date of this Assignment

to hold the same unto the Assignee absolutely.

3. Assignor’s use of the FREEDOM and URO FLO marks

For the avoidance of doubt, the assignment of the Unregistered Trade Marks under this Assignment shall not prevent the Assignor or any of its group companies from using the marks FREEDOM and URO FLO on goods other than the Products in the UK.

4. Further Assurance

Assignor shall, at Assignee’s reasonable cost, perform all further acts and things, and execute and deliver all further documents, as may be required by Assignee to enable the Assignee become registered as proprietor of the Registered Trade Mark (at all relevant registries) and/or to secure the benefit of all rights hereby assigned.

5. Waivers, Rights and Remedies

Except as expressly provided in this Assignment, no failure or delay by either party in exercising any right or remedy relating to this Assignment shall affect or operate as a waiver or variation of that right or remedy or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.

6. Variation

No variation of this Assignment shall be valid unless it is in writing and signed by or on behalf of both parties. The expression variation shall include any variation, supplement, deletion or replacement however effected.

7. Severability

If any provision of this Assignment is held to be invalid or unenforceable, such provision (so far as it is invalid or unenforceable) shall be given no effect and shall be deemed not to be included in this Assignment but without invalidating any of the remaining provisions of this Assignment.

Page 42

8. Entire Agreement

This Assignment (and the Asset Sale Agreement and documents referred to therein) sets out the entire agreement and understanding between the parties in respect of the subject matter of this Assignment. It is agreed that:

(a)	neither party has entered into this Assignment in reliance upon any representation, warranty or undertaking of the other party which is not expressly set out in this Assignment or the Asset Sale Agreement (or documents referred to therein);
(b)	neither party shall have any remedy in respect of misrepresentation or untrue statement made by the other party which is not contained in this Assignment or the Asset Sale Agreement (or documents referred to therein);
(c)	this clause shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation.

9. Governing Law and Arbitration

1.1 This Assignment and the relationship between the parties shall be governed by, and interpreted in accordance with, English law.

1.2	(a)	All disputes arising in connection with this Agreement and all shall be finally settled in London, England under the rules of conciliation and arbitration of the International Chamber of Commerce (ICC) in the English language by three (3) arbitrators appointed in accordance with said rules.
	(b)	All reasonable attorney’s fees and costs incurred by the prevailing party in any arbitration pursuant to this Agreement, and the cost of such arbitration, shall be paid by the other party to the arbitration within five (5) days after receipt of written demand therefor from the prevailing party following the rendition of the written decision of the arbitration tribunal, or as otherwise ordered by the arbitration tribunal. On the application of such prevailing party before or after the initial decision of the arbitration tribunal, and proof of its attorneys’ fees and costs, the arbitration tribunal shall order the other party to the arbitration to make the payments provided for in the preceding sentence.
	(c)	Any decision rendered by any arbitration tribunal pursuant to this clause shall be final and binding on the parties thereto, and judgment thereon may be entered by any court of competent jurisdiction. The parties specifically agree that any arbitration tribunal shall be empowered to award and order equitable or injunctive relief with respect to matters brought before it.
	(d)	Arbitration shall be the exclusive method available for resolution of claims, disputes and controversies described in this clause, and the

Page 43

parties stipulate that the provisions hereof shall be a complete defense to any suit, action, or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute. The provisions of this clause shall survive the termination or expiration of this Agreement.

(e)

Notwithstanding the terms of this clause or any contrary provisions in the ICC rules, at any time before and after a demand for arbitration is presented, the parties shall be free to apply to any court of competent jurisdiction for interim or conservatory measures (including temporary conservatory injunctions). The parties acknowledge and agree that any such action by a party shall not be deemed to be a breach of such party’s obligation to arbitrate all disputes under this clause or infringe upon the powers of any arbitral panel.

10. Counterparts

This Assignment may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which is an original but all of which together constitute one and the same instrument.

11. No Rights Under Contracts (Rights of Third Parties) Act 1999

A person who is not a party to this Assignment shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

Page 44

IN WITNESS WHEREOF this Assignment has been signed by the authorised representatives of the parties on the day and year first written above.

SIGNED by	)
on behalf of	)
MENTOR MEDICAL LIMITED	)
SIGNED by	)
on behalf of	)
ROCHESTER MEDICAL	)
CORPORATION	)

Page 45

APPENDIX 1

Part A

Registered Trade Mark

TRANSFIX UK 2201911, Class 10

Part B

Unregistered Trade Marks

CLEAR ADVANTAGE for use in relation to the Products

FREEDOM PLUS for use in relation to the Products

URO FLO for use in relation to the Products

URO FLO II for use in relation to the Products

Page 46

SCHEDULE 7

Part B
Form of Trade Mark Licence

A TRADE MARK LICENCE made on                      2006

Between

(1) COLOPLAST A/S whose registered office is at Holtedam 1 3050, Humlebaek, Denmark (Licensor)

(2) ROCHESTER MEDICAL CORPORATION whose principal place of business is at One Rochester Medical Drive, Stewartville, MN 55976 USA (Licensee)

Whereas

(A) The Licensor is the owner of the Trade Mark (as defined below).

(B) Pursuant to the Asset Sale Agreement (as defined below), the Licensor has agreed to grant the Licensee a licence to use the Trade Mark, on the terms and conditions set out in this agreement.

It is agreed as follows:

1. Interpretation

1.1 In this agreement the following expressions shall have the following meanings:

Asset Sale Agreement means the agreement dated [· ] between, inter alia, the Licensor and Licensee for the sale and purchase of certain assets;

Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on which banks are open in London for general commercial business;

exclusive means the right to use the Trade Mark, to the exclusion of all other persons including the Licensor;

Licensed Products means male urinary sheaths and parts and fittings for such sheaths;

Territory means the United Kingdom;

Trade Marks mean the mark FREEDOM details of which are set out at Appendix 1;

1.2 Schedule 1, paragraph 2 of the Asset Sale Agreement shall apply, mutatis mutandis to this agreement.

Page 1

1.3 Appendix 1 comprises an appendix to this agreement and forms part of this agreement.

2. Grant of Licence

2.1 In consideration of and on the terms of this agreement, the Licensor hereby grants Licensee an exclusive, royalty-free licence within the Territory to use the Trade Mark on or in relation to the Licensed Products (including, without limitation, in relation to manufacture, promotion, distribution and sale).

2.2 The Licensee shall (at its discretion) take reasonable steps, at its own cost, to record the licence granted to it under clause 2.1 in any relevant registries.

2.3 Any recordal made under clause 2.2 shall be cancelled by the Licensor, at its own cost, on the termination of this agreement. The Licensee shall assist the Licensor at the Licensor’s cost and expense, as may reasonably be required by Licensor, to achieve such cancellation.

3. Maintenance of the Trade Mark

3.1 The Licensor shall take all reasonable steps to maintain and protect the registration (including, without limitation, promptly paying any renewals or other fees as they become due) for the Trade Mark, provided that the Licensee promptly provides all assistance as may reasonably be required by the Licensor in connection with doing so.

3.2 If at any time the Licensor wishes to cease maintaining or protecting the Trade Mark, then it shall follow the procedure set out in this clause, failing which it shall continue to be obliged to maintain or protect the same. The Licensor may offer to assign the Trade Mark for a nominal consideration, in exchange for the grant by the Licensee to the Licensor of a non-exclusive licence to use the Trade Mark outside of the Territory. If, within 90 days of receipt of such notice, the Licensee either notifies the Licensor that it does not wish to accept that offer, or fails to respond at all, the Licensor may thereafter cease to maintain or protect the Trade Mark.

4. Licensee Duties

4.1 The Licensee shall:

(a)	ensure that the Licensed Products comply with any quality standards which the Licensor may from time to time reasonably require;
(b)	use the Trade Mark only in a manner which conforms to the reasonable directions and standards notified to it by the Licensor from time to time;
(c)	not use, register or attempt to register any trade marks, company, business or trading names or domain names which are identical or confusingly similar to (or which incorporate) the Trade Mark, without the Licensor’s prior written consent;

Page 2

(d)	not do anything which could, in the Licensor’s reasonable opinion, bring the Trade Mark or the Licensor into disrepute or which could otherwise damage the goodwill attaching to the Trade Mark;
(e)	not use the Trade Mark in a manner which could, in the Licensor’s reasonable opinion, result in any of them becoming generic or in the Licensor’s rights in them becoming diluted, or which could otherwise knowingly prejudice or invalidate a registration of the Trade Mark; and
(f)	ensure that its use of the Trade Mark comply with all applicable laws, regulations and industry requirements and standards in force within the Territory.

4.2 The Licensee acknowledges and agrees that:

(a)	the Trade Mark is and shall remain the exclusive property of the Licensor;
(b)	it shall not acquire, nor claim, any right, title or interest in or to the Trade Mark or the goodwill attaching to it by virtue of this agreement or its use of the Trade Mark, other than the rights specifically granted to it under clause 2.1;
(c)	all goodwill arising from use of the Trade Mark by the Licensee during the term of this agreement shall accrue and belong to the Licensor, and the Licensee shall, at the Licensor’s request and cost, promptly execute all documents reasonably required by the Licensor to confirm this; and
(d)	all use of the Trade Mark by the Licensee shall be deemed to be use by the Licensor.

5. Infringement

5.1 Each party shall immediately notify the other in writing of any of the following matters which comes to its attention (giving full particulars):

(a)	any actual, suspected or threatened infringement of the Trade Mark;
(b)	any allegation or complaint made by any third party that the Trade Mark is invalid, that use of the Trade Mark infringes any third party rights, or that use of the Trade Mark may cause deception or confusion to the public;
(c)	any other form of attack or claim to which the Trade Mark may be subject.

5.2 The Licensee shall not make any admissions in respect of these matters other than to the Licensor and shall, in each case, provide the Licensor with all relevant information in its possession.

5.3 The Licensor shall decide, following consultation in good faith with the Licensee, in its absolute discretion, whether or not to take action, and what action to take, in respect of any of the matters in clause 6.1 and shall have exclusive control

Page 3

over any resulting claims, actions and proceedings. The provisions of section 30 of the Trade Marks Act 1994 are expressly excluded.

5.4 The Licensee shall, at the Licensor’s cost, provide any assistance which the Licensor reasonably requires (including bringing proceedings or lending its name to any proceedings brought by the Licensor) in connection with any of the matters in clause 5.1. Any award of costs or damages or other compensation payment recovered in connection with any of those matters shall be for the account of the Licensor.

6. Indemnity

The Licensor shall indemnify and hold the Licensee harmless against all claims, liabilities, costs (including legal costs) and expenses arising out of any claim that the Licensee’s use of the Trade Mark in accordance with this agreement infringes the rights of any third party.

The Licensee shall not make any comment or admission to any third party in respect of this matter and shall procure that its agents, sub-contractors and employees do not do so. The Licensor shall have sole conduct of the matter giving rise to the obligation to indemnify. The Licensee shall make no admission as to liability and shall not agree to any settlement or compromise of any action to which this clause relates, in each case without the Licensor’s prior written consent.

7. Duration of Agreement

This agreement commences on the date of this agreement and shall continue in full force and effect until terminated in accordance with clause 8.

8. Termination

8.1 On the occurrence of any of the following events, either party may (without prejudice to any other right or remedy) by written notice to the other party terminate this agreement with immediate effect:

(a)	if the other party commits a material breach of any obligation under this agreement, and in the case of a breach which is capable of remedy fails to remedy it within 30 days of receipt of notice from the first party of such breach and of its intention to exercise its rights under this clause; or
(b)	a petition is presented, or a meeting is convened for the purpose of considering a resolution or any other steps are taken by any person with a view to the appointment of an administrator (whether out of court or otherwise) against or for the winding up of the other party or an administration order or a winding up order is made against or a provisional liquidator appointed with respect to the other party ; or
(c)	an encumbrancer takes possession of, or a trustee or administrative receiver or similar officer is appointed in respect of, all or any part of the business or assets of the other party , or distress or any form of execution is levied or

Page 4

	enforced upon or sued out against any such assets and is not discharged within 7 days of being levied, enforced or sued out; or
(d)	the other party is unable to pay its debts as they fall due or the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities, or it suspends or threatens to suspend making payments with respect to all or any class of its debts; or
(e)	any voluntary arrangement is proposed under section 1 of the Insolvency Act 1986 (as amended, re-enacted or replaced from time to time) in respect of the other party ; or
(f)	the other party proposes or makes any composition or arrangement or composition with, or any assignment for the benefit of, its creditors; or
(g)	anything analogous to any of the events described in paragraphs (c) – (g), inclusive, occurs under the laws of any applicable jurisdiction; or

8.2 Licensor may terminate this agreement if the Licensee (or its successors or assigns) ceases to carry on the whole or any material part of its business and that cessation would affect adversely the Licensee’s ability to observe any of its obligations under this agreement.

8.3 For the purposes of clause 8.1(a), a breach shall be considered capable of remedy if the party in breach can comply with the provision in question in all respects other than as to time of performance.

9. Consequences of Termination

9.1 On termination of this agreement for any reason, the licence granted under clause 2.1 shall immediately cease and the Licensee shall immediately cease all use of the Trade Mark in or in relation to the Licensed Products, including cancelling or transferring to the Licensor any registrations in the name of the Licensee for any corporate, business, trade or domain names incorporating the Trade Mark or any aspect of any of them.

9.2 Notwithstanding clause 9.1 for a period of six months following termination, the Licensee may continue to use the Trade Mark for the purpose of selling the existing stocks of Licensed Products (including, for the avoidance of doubt, packaging of and literature relating to the Licensed Products) which are in its possession, custody or control on the date of termination of this agreement.

9.3 Termination of this agreement (howsoever arising) shall not affect either party’s accrued rights to damages arising out of any breach nor release either of the parties from any liability which at the time of termination has already accrued to the other party, nor affect in any way the survival of any other right, duty or obligation of the parties which is expressly stated elsewhere in this agreement to survive such termination.

10. Assignment and Other Dealings

Page 5

10.1 The Licensee may assign or transfer all of its rights and obligations under this agreement to a third party who acquires all or substantially all of the Licensee’s business in the Licensed Products and assets relating to that business.

10.2 If the Licensee assigns or transfers all of its rights and obligations under this agreement it shall notify the Licensor as soon as practicable after such assignment or transfer, together with particulars of the assignee or transferee.

10.3 The Licensee may sub-license its rights under this agreement to any third party it engages to manufacture or distribute the Licensed Products, provided that:

(a)	the sub-licence shall be in writing on the same terms as this agreement (except that the sub-licensee shall not have the right to sub-license its rights to any third party;
(b)	the permission to sub-licence under this clause shall automatically terminate in termination of this agreement; and
(c)	the Licensee shall be liable for all acts and omissions of its sub-licensees.

10.4 The Licensor may assign its rights under (subject to the burden of all or the relevant part of) this agreement only with the prior written consent of the Licensee, such consent not to be unreasonably withheld or delayed.

11. Notices

11.1 Any notice in connection with this agreement shall be in writing in English and delivered by hand, fax, registered post or courier using an internationally recognised courier company. A notice shall be effective upon receipt and shall be deemed to have been received (i) at the time of delivery if delivered by hand, registered post or courier or (ii) at the time of transmission if delivered by fax provided that in each case where delivery by hand or by fax occurs outside working hours, notice shall be deemed to have been received at the start of working hours on the next following Business Day.

11.2 The addresses and fax numbers of the parties for the purpose of clause 11.1 are:

Licensor
Address: [•]
Fax: [•]
For the attention of: [•]
Licensee
Address: [•]
Fax: [•]
For the attention of: [•]

12. Waivers, Rights and Remedies

Page 6

Except as expressly provided in this agreement, no failure or delay by either party in exercising any right or remedy relating to this agreement shall affect or operate as a waiver or variation of that right or remedy or preclude its exercise at any subsequent time. No single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.

13. Remedies Cumulative

The rights and remedies of each of the parties are cumulative, may be exercised as often as such party considers appropriate and are in addition to its rights and remedies under general law.

14. Variation

No variation of this agreement shall be valid unless it is in writing and signed by or on behalf of both parties. The expression variation shall include any variation, supplement, deletion or replacement howsoever effected.

15. Severability

If any provision of this agreement is held to be invalid or unenforceable, then such provision (so far as it is invalid or unenforceable) shall be given no effect and shall be deemed not to be included in the agreement but without invalidating any of the remaining provisions of this agreement.

16. Entire Agreement

This agreement (together with the Asset Sale Agreement and the documents referred to in it) sets out the entire agreement and understanding between the parties in respect of the subject matter of this agreement. It is agreed that:

(a)	neither party has entered into this agreement in reliance upon any representation, warranty or undertaking of the other party which is not expressly set out or referred to in this agreement;
(b)	neither party shall have any remedy in respect of misrepresentation or untrue statement made by the other party which is not contained in this agreement;
(c)	this clause shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation.

17. Legal Relationship

Nothing in this agreement is deemed to constitute a partnership between the parties nor constitute any party the agent of the other party for any purpose

18. Governing Law and Jurisdiction

18.1 This agreement and the relationship between the parties shall be governed by, and interpreted in accordance with, English law.

Page 7

18.2 The courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise in connection with this agreement. For such purposes each party irrevocably submits to the jurisdiction of the English courts, waives any objections to the jurisdiction of those courts and irrevocably agrees that a judgment or order of the English courts in connection with this agreement is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction.

19. Counterparts

This agreement may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which is an original but all of which together constitute one and the same instrument.

20. No Rights Under Contracts (Rights Of Third Parties) Act 1999

A person who is not a party to this Agreement shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

IN WITNESS WHEREOF this agreement has been signed by the authorised representatives of the parties on the day and year first written above.

SIGNED by	)	Name:
on behalf of	)
COLOPLAST A/S	)	Signature:
SIGNED by	)	Name
on behalf of	)
ROCHESTER MEDICAL	)
CORPORATION	)	Signature

Page 8

APPENDIX 1
TRADE MARK

Mark	No	Date of Regn.	Class
FREEDOM	E165423	01.04.1996	Class 10

Page 9

SCHEDULE 8

TRANSFERRED EMPLOYEES

1. Relevant transfer

The parties acknowledge and agree that the sale of the Assets from the Selling Parties to the Purchaser is a “relevant transfer” within the meaning of the Transfer Regulations.

If for any reason the contracts of employment of any of the Transferred Employees are not automatically transferred to the Purchaser pursuant to the Transfer Regulations, the Purchaser shall immediately offer to employ such persons on terms and conditions no less favourable to the Transferred Employees than the terms on which they were employed immediately prior to Closing.

2. Selling Parties Obligations

The Selling Parties shall indemnify the Purchaser against any Employee Liabilities which are attributable to any breach or default by the Selling Parties (or their predecessors as employer) prior to the close of business on Closing in respect of any of their obligations or duties as employer (in either case, whether arising under contract, common law, statute, or otherwise) to or in relation to any of the Transferred Employees and which the Purchaser may incur or suffer as a result of succeeding to the Selling Parties pursuant to the Transfer Regulations in relation to the contracts of employment of the Transferred Employees. This shall include, but shall not be limited to any failure by the Selling Parties to comply with their obligations under regulation 13(2) of the Transfer Regulations, save to the extent that the Purchaser fails to comply with its obligations under regulation 13(4) of the Transfer Regulations.

The Selling Parties shall indemnify the Purchaser against any Employee Liabilities incurred by the Purchaser which are attributable to the termination or dismissal (or alleged termination or dismissal) by any of the Selling Parties prior to the close of business on the Closing Date of the employment of any person who is not a Transferred Employee.

3. Purchaser Obligations

The Purchaser shall indemnify the Selling Parties against any Employee Liabilities which arise from the employment by the Purchaser (or any subsequent employer) of the Transferred Employees or Additional Employees on or after Closing or are attributable to any act or omission (or alleged act or omission) by the Purchaser in relation to any of the Transferred Employees or Additional Employees. This shall include, but shall not be limited to, any Employee Liability arising out of the termination of employment or dismissal of any Transferred Employee or Additional Employee after the Closing, any failure by the Purchaser to offer terms and conditions of employment and working conditions which are no less favourable than those which apply to the Transferred Employees or Additional Employees up to Closing, and any

Page 10

failure by the Purchaser to comply with its obligations under regulation 13(4) of the Transfer Regulations.

4. Apportionment

All amounts payable to or in relation to the Transferred Employees or Additional Employees by the Selling Parties in respect of the period prior to the close of business on the Closing Date shall be discharged by the Selling Parties and the Selling Parties shall indemnify the Purchaser against any Employee Liabilities arising out of or in connection with such amounts. All necessary apportionments shall be made to give effect to this paragraph.

5. Other employees

If any contract of employment of a person who is not a Transferred Employee has effect as if originally made between the Purchaser and such person, then:

(a)	the Purchaser may, within 1 month of becoming aware of such contract having effect as if originally made by the Purchaser, terminate such contract; and
(b)	the Selling Parties shall indemnify the Purchaser against any sums payable to or in relation to such person under or in connection with his contract of employment (whether before or after Closing) and against any Employee Liabilities arising out of or in connection with the termination of the contract of employment of such person, provided always that the Purchaser has used commercially reasonable efforts to minimise the amount of any such sums and/or Employee Liabilities; and
(c)	if the Purchaser does not terminate the contract of employment of such a person in accordance with this paragraph, he shall be treated as a Transferred Employee for the purposes of this Schedule 10.

6. Additional Employees

1. The Purchaser may offer employment to such additional employees of the Selling Parties (the Additional Employees) as may be agreed between the Selling Parties and the Purchaser between signing of this Agreement and Closing and on terms and conditions no less favourable to the Additional Employees than the terms on which they were employed immediately prior to Closing. Any Employee Liabilities arising in connection therewith, including redundancy payments payable to such employees, if any, shall be apportioned in accordance with paragraph 4 above.

7. Non-Solicitation

The Purchaser covenants with the Selling Parties that it shall not, whether directly or indirectly, on its own behalf or on behalf of or in conjunction with any Affiliate for the period of 1 year following the Closing Date, solicit or entice away or endeavour to solicit or entice away any individual other than a Transferred Employee or an

Page 11

Additional Employee who was employed or engaged by MML as of the date of this Agreement.

Page 12

APPENDIX 1
List of Transferred Employees

(a) Medical Healthcare Team:

(i)	Gill Downing;
(ii)	Phil Gibbs;
(iii)	Leah Leaves;
(iv)	Claire Gibbs; and
(v)	Alison Stubbs.

(b) Customer Service:

(i)	Sam Baker;
(ii)	Sharon Moore; and
(iii)	Vicki Cox.

(c) Warehouse

(i)	Terry Loversidge;
(ii)	Brian Jackson; and
(iii)	Barrie Lloyd

(d) IT – Joseph Baker-Coady

Page 13

SCHEDULE 9

Part A
Furniture, Fixtures and Equipment

The parties shall enter into good faith negotiations to finalise a document prior to Closing setting out details of the furniture, fittings and equipment that shall be transferred to the Purchaser at Closing.

Part B
IT Systems

The parties shall enter into good faith negotiations to finalise a document prior to Closing setting out details of the IT Systems that shall be transferred to the Purchaser at Closing.

As of the date of this Agreement, the parties have agreed that

• The Purchaser will take all computer equipment primarily used by the Transferred Employees and Additional Employees;

• The Selling Parties will retain the 4 servers present in the Property, together with all related equipment, telephone system, software and documentation; and

• The Purchaser will take the computer network located in the Property, except for the servers.

Page 14

SCHEDULE 10

CONTRACTS

1. Assignment of Contracts

1.1 To the extent that the benefit of any of the Contracts can be assigned without obtaining a Third Party Consent, this Agreement shall constitute an assignment to the Purchaser of the benefit of all of those Contracts with effect from Closing.

1.2 Nothing in this Agreement shall be construed as an attempt to assign or novate any Contract which by its terms is not assignable without a Third Party Consent or would otherwise constitute a breach of such contract until such Third Party Consent has been obtained.

2 Purchaser to complete Contracts and Purchaser’s indemnity

Subject always to the provisions of paragraph 4 below, the Purchaser shall from Closing perform all the obligations of the relevant Selling Party under the Contracts (other than in respect of any Contract which has been refused by the Purchaser pursuant to paragraph 6) and the Purchaser shall indemnify the relevant Selling Party for any Losses and Expenses suffered or incurred by it directly in connection with the Purchaser’s performance or non-performance of the relevant Selling Party’s obligations under such Contracts after Closing PROVIDED THAT notwithstanding any other provision of this Agreement or any assignment or novation between the relevant Selling Party or any Connected Person and the Purchaser and any third party, the Purchaser shall not be liable or responsible for any obligations or liabilities:-

(a) under the Contracts which are attributable to the negligence, default, act, event, omission, breach or performance or non-performance of the Contracts on the part of the relevant Selling Party or any Connected Person, or their employees, agents or sub-contractors prior to Closing;

(b) which arise as a result of the actions taken by the relevant Selling Party or any Connected Person pursuant to this Schedule 10; or

(c) which arise as a result of any failure to obtain any Third Party Consent or from any breach of any Contract caused by this Agreement or Closing.

3 The Selling Parties’ obligations and indemnity in respect of the Contracts

3.1 The Selling Parties shall or shall procure that from the date of this Agreement until Closing they shall properly perform the Contracts in accordance with their respective terms and, following Closing, the Selling Parties, shall indemnify and hold the Purchaser harmless against all Losses and Expenses suffered or incurred by it directly in connection with the performance or non-performance or negligent or defective performance between the date of this Agreement and Closing.

Page 15

4 Contracts and requiring a Third Party Consent

4.1 If any Third Party Consent has not been obtained by Closing, then following the Closing and until it is obtained:

(a) the Selling Parties shall use their best endeavours to obtain that Third Party Consent;

(b) the transfer of that Contract (to the extent that a Third Party Consent is required) shall not take effect and the Selling Parties shall from Closing hold it on trust for the Purchaser and account for and pay or deliver to the Purchaser (as soon as reasonably practicable after receipt) any moneys, goods and other benefits which they receive after Closing to the extent that they relate to such Contract (except in each case to the extent they comprise, or represent the proceeds from, an Excluded Asset);

(c) the Purchaser shall (if sub-contracting is permissible and lawful under the Contract) perform as the relevant Selling Party’s sub-contractor or, if sub-contracting is not permissible or lawful, the Purchaser shall (if the appointment of an agent is permissible and lawful under the Contract) perform as the relevant Selling Party’s agent, at the risk and cost and for the benefit of the Purchaser, the obligations of the relevant Selling Party thereunder falling due after Closing; and

(d) the Selling Parties shall from Closing give all reasonable assistance to the Purchaser (at the Purchaser’s request and expense) to enable the Purchaser to enforce its rights under the Contract.

4.2 If:

(a) the terms of any particular Contract do not permit the Purchaser to perform the relevant Selling Parties’ obligations as sub-contractor or as agent; or

(b) any Third Party Consent is not obtained within 6 months after the Closing Date or is refused,

then the Selling Parties and the Purchaser shall in good faith negotiate a mutually acceptable alternative solution by which the Purchaser shall receive the benefit of the relevant Contract and assume the associated obligations.

Page 16

APPENDIX 1

Agreement between Barloworld Handling and Eschmann Bros &Walsh Ltd, dated 19

Contract between The NHS Logistics Authority and MML, contract ref AA104003

Contract between Nottingham City Primary Care Trust and MML, pursuant to Nottingham Community Urology Formulary, [April 2006]

Contract between NHS Scotland Scottish Healthcare Supplies and MML, contract ref MRC015

Contract between Welsh Health Supplies and MML, contract ref AW3447a [as per extension of contract by agreement dated 14 October 2005]

Short-term hire agreement with Crown Lift Trucks Limited, dated 28 February 2006

Preventative Maintenance Contract between Atlet Limited and MML, dated 15 April 1996

Page 17

SCHEDULE 11

CONDUCT PRE-CLOSING

In the period up to Closing, the Selling Parties shall not take any of the following actions or suffer, permit or agree to be done any of the following by or in relation to the Assets, other than in the ordinary course of business:

(a)	any disposal of or removal from the Property of any Asset (other than an Excluded Asset and sales of inventory in the ordinary course);
(b)	make any material change in the design, specification or method of manufacture of the Products;
(c)	any entry into, modification, cancellation or intentional termination of any material Contract or arrangement (for the avoidance of doubt, excluding expiration or non-renewal of a contract by its existing terms);
(d)	commit any breach, not timely cured, of any term of any of the Contracts subsisting at the date of this Agreement which gives rise to a right of termination by any other party to it or which gives rise to a material claim for material damages or other material compensation by any such party;
(e)	the giving of any guarantee, indemnity or other agreement to secure an obligation of a third party;
(f)	the creation of any Encumbrance other than a Permitted Encumbrance over the Assets;
(g)	terminate the contract of employment of any Transferred Employee, other than for cause. If any such contract of employment is terminated for cause then, with the consent of the Purchaser (which shall not be unreasonably withheld) the Selling Parties may hire a replacement employee;
(h)	any material alteration of the terms and conditions of contracts (including benefits) of any Transferred Employees;
(i)	market or promote Coloplast or CP UK’s products through the Products;
(j)	price the products other than in the ordinary course of business;
(k)	the institution, settlement or agreement to settle any Litigation relating to the Assets; and
(l)	in relation to the Property:

(1)	any application for or implementation of planning permission;
(2)	any alteration, addition or change of use.

Page 18

(m) in the period up to Closing, the Selling Parties shall pay as they fall due the premiums on all insurance policies maintained in respect of the Assets or the Business, comply with the terms of such insurance policies, take no affirmative action to terminate any of the insurance policies, and otherwise use commercially reasonably efforts to continue all of the insurance policies in force. If such an insurance policy is terminated by the insurer, in whole or in part, the Selling Parties undertake to promptly notify the Purchaser.

Page 19

SCHEDULE 12

PROPERTY

Part A :

1. SALE AGREEMENT

MML shall sell the Property and the Purchaser will purchase the same with vacant possession on the Closing Date subject to the provisions of this Schedule and the Purchaser will immediately thereafter grant MML the Lease.

2. TITLE

2.1 In relation to the Property title shall comprise an official copy with title plan of the registers relating to the Property and full copies of any documents referred to on the register (where applicable) and such other documents listed on the Schedule hereto as may affect the Property except charges or incumbrances registered or protected on the register which are to be discharged or overreached at or prior to completion.

2.2 Title to the Property having been deduced to the Purchaser prior to the date hereof (as the Purchaser hereby admits) the Purchaser shall be deemed to have accepted such title and shall not raise any enquiries or requisitions thereon nor make any objections in respect thereof after the date of this Agreement save for matters revealed by final searches carried out by the Purchaser and/or except where the subject matter of the enquiry or requisition is registered at HM Land Registry or the Central Land Charges Register after the date of this Agreement.

2.3 The MML sells the Property with full title guarantee as specified in the Transfer.

2.4 Standard Conditions 3.1.2(d), 6.1 to 6.3 (inclusive), 6.4.2, 6.6.2 and 6.6.5 shall not apply.

3. MATTERS AFFECTING THE PROPERTY

3.1 The Property is sold and the Lease is granted subject to the following matters so far as they are still subsisting and capable of taking effect on the Closing Date:

(a)	any matters contained or referred to in the Property Register or the Charges Register of the registered title to the Property kept at HM Land Registry as at 11:36am on 10 May 2006 and/or the Documents (as the case may be);
(b)	all rights of way, light and air, support, drainage and other rights, easements, quasi easements, liabilities and public or private rights whatsoever and to any liability to repair or contribute to the repair of sewers, drains, pipes, party structures and other like matters;

Page 20

(c)	all matters in the nature of overriding interests as set out in Schedule 1 or Schedule 3 (as appropriate) and sections 11(4)(c) and 90 of the Land Registration Act 2002 (as amended by Schedule 12 of the Land Registration Act 2002 and the Land Registration (Transitional Provisions) (No. 2) Order 2003);
(d)	all Local Land Charges (whether or not registered before the date of this Agreement) and all matters capable of registration as Local Land Charges (whether or not actually registered);
(e)	all notices served and orders, demands, proposals, or requirements made by any local or other public or competent authority;
(f)	all actual or proposed orders, directions, plans, notices, instruments, charges, restrictions, conditions, agreements or other matters arising under any statute relating to town and country planning and any laws and regulations intended to control or regulate the construction, demolition, alteration or change of use of land or buildings or to preserve or protect the environment; and
(g)	matters contained in the Disclosure Documents.

3.2 The Purchaser shall be deemed to purchase or accept a transfer with full knowledge and notice of the matters aforesaid and shall not raise any objection or requisition whatsoever in respect of the same.

3.3 Standard Condition 3.1 shall apply with the following modifications:

(a) in paragraph 3.1.2(c) delete the words “and could not reasonably”;

4. FORM OF TRANSFER AND LEASE

4.1 The Transfer shall be in the agreed form set out at Part C of this Schedule and the Lease shall be substantially in the agreed form set out in Part D of this Schedule.

4.2 The Purchaser shall prepare and execute the Transfer in duplicate and shall deliver the executed Transfer and any other documents to be entered into between MML and the Purchaser (with or without other parties) to MML no later than five Business Days before the Closing Date.

4.3 MML shall prepare the lease in counterpart and original and shall deliver the original to the Purchaser for execution no later than the Closing Date and the Purchaser and MML shall execute the counterpart and the original parts (as appropriate) prior to the Closing Date.

5. COMPLETION

5.1 Standard Condition 1.1.3(b) shall be varied by adding the words “or if reasonable evidence is produced that the property will be released from all such mortgages on completion” after the words “all mortgages”.

Page 21

5.2 Standard Condition 8.5.1 shall be varied by adding the words “but this obligation shall not extend to any destroyed, missing or (to the extent of any incompleteness) incomplete document of which the buyer is aware” after the words “documents of title”.

5.3 Standard Conditions 8.8 and 9 shall not apply

6. INSURANCE

6.1 Insurance of the Property shall be continued by the Selling Parties in accordance with the obligations in clause 5.7 of this Agreement and further the Selling Parties shall comply with Standard Conditions 7.1.1 and 7.1.2(a) to (e).

6.2 Conditions 7.1.2(f) and (g), 7.1.3 and 7.1.4 do not apply.

7. RESTRICTION ON SUB SALE

MML shall not be required to transfer the Property for a greater consideration than the Purchase Price nor to transfer the Property otherwise than by a single transfer of the whole interest in the Property in favour of the Purchaser.

8. NON MERGER

Notwithstanding completion of the sale and purchase as contemplated by this Agreement, this Schedule shall remain in full force and effect so far as anything contained herein remains to be implemented.

9. STANDARD CONDITIONS

9.1 Part 1 of the Standard Conditions are incorporated into this Agrement save as varied by the express terms of this Agreement and where this Agreement conflicts with the Standard Conditions the provisions of this Agreement shall prevail.

9.2 Part 2 of the Standard Conditions shall not apply to this Agreement.

9.3 Conditions 1.3, 1.4, 2.2, 2.3 and 12 shall be deleted.

10. REGISTRATION OF THIS AGREEMENT

10.1 The Purchaser shall be entitled to protect this Agreement by way of unilateral notice or land charge class Civ (as appropriate) only and shall not send or permit to be sent to H.M. Land Registry or to the Land Charges Department a full copy of this Agreement.

10.2 If the Purchaser has protected this Agreement pursuant to paragraph 8.1 and this Agreement either completes (so that no term remains to be implemented) or terminates the Purchaser shall forthwith remove any such entry against MML or its title at H.M. Land Registry or the Land Charges Department.

Page 22

10.3 The Purchaser agrees that it will register the Transfer as soon as reasonably practicable after the Closing Date but in any event within two months of the Closing Date.

10.4 Where required and promptly provided by the Selling Parties, the Purchaser will submit with its application to register the transfers the Selling Parties’ Form EX1 and/or EX1A together with the appropriate fee which the Selling Parties agree to reimburse within 10 working days of demand and the accompanying documents edited by the Selling Parties provided that this clause shall not prevent the Purchaser from completing and submitting its own forms EX1 and EX1A together with an edited accompanying documents containing the same or different edited information to that of the Selling Parties

10.5 Where the Purchaser is required to disclose unregistered interests pursuant to Rule 28 or 57 of the Land Registration Rules 2003, the Purchaser will send to H.M. Land Registry with its Form DI the Seller’s Form(s) EX1 and EX1A together with the appropriate fee and the accompanying documents edited by the Selling Parties.

Part B

Description of the Property

ALL THAT freehold land known as Unit 3 Commerce Way Lancing registered at HM Land Registry with title absolute under Title Number WSX17055

Particulars Of The Documents

Date Document Parties

None

Part C

The Transfer

Please see Exhibit 2

Part D

Lease

LEASE

DATED                                                                2006

PARTICULARS

Page 23

LANDLORD:	ROCHESTER MEDICAL LIMITED whose registered office is at 21 Wilson Street London EC2M 2TD (Company Number 5779226)
TENANT:	MENTOR MEDICAL LIMITED whose registered office is at 10 Commerce Way Lancing West Sussex BN15 8TA (Company Number 04318120)
PREMISES:	The whole of the Ground floor and part first floor (as shown edged blue on the attached plan) of, Unit 3 Commerce Way Lancing
TERM:	12 months commencing on and including the date hereof (determinable as herein mentioned)
RENT:	[£4.50 psf] per annum exclusive of any Value Added Tax thereon such sum to be payable quarterly in advance on the usual quarter days in every year inclusive of service charge and insurance costs

1. DEFINITIONS AND INTERPRETATION

Definitions

1.1 In this Lease unless the context otherwise requires the terms set out in the Particulars will have the meanings given to them there and the following expressions shall have the following meanings:

Business means the business of the Tenant in the United Kingdom at the date hereof;

Common Parts means the accessways entrances halls staircases passages toilets staff canteen staff common-room IT-room sewers drains pipes watercourses cables and other conducting media plant and equipment and such other parts of the Landlord’s Premises as shall from time to time during the Term be allocated by the Landlord for use or used by the Tenant in common with the Landlord or other occupants of the Landlord’s Premises;

Insured Risks means the usual commercial risks as a reasonable Landlord would from time to time insure against (subject to any excesses exclusions and limitations imposed by the insurers);

Landlord’s Expenses means the costs outgoings and other expenditure paid or incurred by or on behalf of the Landlord from time to time during the Term in connection with the Landlord’s Premises;

Landlord’s Premises means the freehold premises known as Unit 3, Commerce Way, Lancing as registered at the Land Registry under Title Number WSX17055 and any part of such premises;

Page 24

Premises includes window frames and glass doors and door frames finishes raised floors and suspended ceilings and the voids above and below them light fittings and other Landlord’s fixtures and fittings within the Premises but excluding any part of the main structure foundations roof or exterior of the Landlord’s Premises;

Interpretation

1.2 This Lease shall unless the context otherwise requires be construed on the basis that:

(a)	words importing the masculine gender only shall include the feminine gender and singular shall include the plural and vice versa;
(b)	where the expression the Landlord or the Tenant includes more than one person covenants expressed to be given by such persons are made jointly and severally; and
(c)	where this Lease obliges the Tenant not to do something, the Tenant is also obliged not to permit it to be done by an invitee of the Tenant or any person under the Tenant’s control;

2. DEMISE

In consideration of the Tenant’s covenants contained in this Lease the Landlord DEMISES to the Tenant the Premises TOGETHER WITH the rights set out in Part A of The Schedule EXCEPTED AND RESERVED to the Landlord and to all other persons from time to time entitled to them the rights set out in Part B of The Schedule and SUBJECT TO all covenants rights easements and privileges affecting the Premises including any overriding interests as set out in Schedule 1 or Schedule 3 (as applicable), section 90 and Schedule 12 of the Land Registration Act 2002 TO HOLD the same for the Tenant for the Term PAYING to the Landlord the Rent the first instalment(s) or an appropriate proportion to be paid on the date of this Lease for the period from the date of this Lease to the next rent day after the date of this Lease

3. TENANT’S COVENANTS

The Tenant COVENANTS with the Landlord:

(a)	to pay the Rent and other sums payable under this Lease at the times and in the manner specified in this Lease clear of all deductions set off or counterclaim and (if required) by standing order;
(b)	to pay to the Landlord on demand the Value Added Tax (or any other tax replacing or supplementing the same) which from time to time is or may be chargeable (by reason of an election of the Landlord or otherwise) in respect of the rents reserved by this Lease and any other sums payable under this Lease;
(c)	without prejudice to any other right or remedy of the Landlord if any moneys payable by the Tenant to the Landlord under this Lease shall be paid late to

Page 25

	pay on demand to the Landlord interest thereon at a rate equal to three per centum (3%) above the National Westminster Bank plc base rate from time to time such interest to be calculated daily from the date when such moneys were due until the date such moneys are paid to the Landlord (both dates inclusive);
(d)	to bear pay and discharge all water and general rates and other outgoings levies and contributions whatsoever which are now or may during the Term be charged or imposed upon the whole or part of the Premises or upon or payable by the owner or occupier except any payable by the Landlord on the receipt of Rent or a dealing by the Landlord with its interest in the Landlord’s Premises and in the absence of direct assessment on the Premises or the Tenant then so far as the same is not comprised in the Landlord’s Expenses to pay to the Landlord on demand a fair proportion of them (determined by the Landlord acting reasonably);
(e)	to pay for 30% of all electricity gas water and other services (other than telephone) and all charges in respect of the Landlord’s Premises (including in all cases for the avoidance of doubt any taxes chargeable on such amounts) and to observe all regulations and requirements of the supply authorities;
(f)	to pay for all telephone charges attributable to the Tenant or persons under its control or invitees (including in all cases for the avoidance of doubt any taxes chargeable on such amounts) and to observe all regulations and requirements of the supply authorities;
(g)	if the Premises are destroyed by an Insured Risk to pay any applicable excess and any amounts that shall not be recovered from the insurers by reason of the act or default of the Tenant or a person under its control or any invitee;
(h)	to keep the Premises in a clean and tidy and tenantable condition and at the expiration or sooner determination of the Term to yield up the Premises with vacant possession in no worse state than as at the date of this Lease as evidenced by a schedule of condition attached hereto (damage by Insured Risks excepted save to the extent any amount is not recoverable by reason of the act or default of the Tenant or persons under its control or its invitees);
(i)	not to make any alterations or additions to the Premises without the consent of the Landlord (such consent not to be unreasonably withheld or delayed) and to remove any alterations making good any damage caused at the expiry of the Term or (in the case of unauthorised alterations) on demand to the Landlord’s reasonable satisfaction;
(j)	not to hold on trust for another charge assign underlet or otherwise part with or share possession or part with or share occupation of the whole or part of the Premises except that the Tenant may share occupation with another company in its group (within the meaning of section 42 of the Landlord and Tenant Act 1954) provided that the Landlord is notified in writing as soon as reasonably practicable after such sharing of occupation has commenced;

Page 26

(k)	from time to time during and at the expiry of the Term to make good to the reasonable satisfaction of the Landlord all physical damage to the Premises which may be caused or occasioned by the removal of any of the Tenant’s IT systems trade fixtures or fittings or alterations from the Premises or otherwise;
(l)	to comply with all statutory requirements (including planning legislation) and requirements of the insurers and supply authorities and not to apply for or implement any planning permission nor to invalidate any insurance policy or do any thing which would increase the insurance premiums;
(m)	to permit the Landlord and all persons authorised by it to enter the Premises for the purposes set out in Part B of The Schedule ;
(n)	to give a copy to the Landlord as soon as practicable of any notice received by the Tenant relating to the Premises or its use;
(o)	to perform and observe all the covenants conditions and provisions affecting the Landlord’s Premises including the matters referred to in title number WSX17055 insofar as they relate to the Premises are still subsisting and are capable of being enforced;
(p)	to indemnify and keep indemnified the Landlord against all actions proceedings claims costs expenses and demands in consequence of or arising out of the breach of any of the Tenant’s covenants in this Lease; and
(q)	to use the Premises only in connection with the Business

4. LANDLORD’S COVENANTS

The Landlord COVENANTS with the Tenant:

(a)	that the Tenant paying the rents reserved by this Lease and performing and observing the covenants conditions and agreements on the part of the Tenant contained in this Lease shall peaceably hold and enjoy the Premises without any interruption by the Landlord or any person lawfully claiming through under or in trust for the Landlord;
(b)	to use reasonable endeavours to keep the Common Parts in tenantable condition and service media in working order;
(c)	to insure the Landlord’s Premises against the Insured Risks for the full cost of reinstatement thereof;
(d)	to reinstate the Landlord’s Premises in a good and workmanlike manner as soon as reasonably practicable following receipt of all insurance monies for such damage or destruction by an Insured Risk save where all or part of the insurance monies are not recoverable by reason of an act default or omission of the Tenant or persons under its control or invitees in which event the Tenant shall pay to the Landlord such unrecoverable insurance monies on written demand.

Page 27

5. PROVISOS

5.1 This Lease is made on the condition that if:

(a)	the rents or any other sum due under this Lease shall be in arrear for 21 days (whether formally demanded or not); or
(b)	the Tenant shall fail to observe or perform any of its material covenants or conditions in this Lease; or
(c)	the Tenant goes into liquidation or an administrator or a receiver (including any administrative receiver) is appointed over the whole or part of the property assets or undertaking of the Tenant; or
(d)	the Tenant is struck off the Register of Companies or is dissolved or otherwise ceases to exist under the laws of the country or state of its incorporation;

the Landlord may forfeit this Lease but without prejudice to any other remedy of the Landlord in respect of any antecedent breach of any of the covenants or conditions contained in this Lease.

5.2 Nothing in this Lease shall operate expressly or impliedly to confer upon or grant to the Tenant any easement right or privilege other than those expressly granted by this Lease.

5.3 If the Tenant wishes to determine this Lease and shall give to the Landlord not less than one month’s notice in writing expiring at any time during the Term then upon the expiry of such notice the Term shall immediately cease and determine but without prejudice to the respective rights of either party in respect of any antecedent claim or breach of covenant.

5.4 Nothing in this Lease shall imply or be deemed to be a warranty that the use of the Premises for the purposes specified in clause 3(5) is or may be in accordance with planning legislation now or from time to time in force.

6. EXCLUSION OF SECTIONS 24-28 LANDLORD AND TENANT ACT 1954

6.1 The Tenant hereby confirms that before it became contractually bound to enter into the tenancy created by this Lease:

(a)	The Landlord served on the Tenant a notice dated                                           2006 in relation to the tenancy created by this Lease (the Notice) in a form complying with the requirements of Schedule 1 to the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (the Order).
(b)	The Tenant, or a person duly authorised by the Tenant, in relation to the Notice made a statutory declaration (the Declaration) dated                                           2006 in a form complying with the requirements of Schedule 2 of the Order.

Page 28

6.2 The Tenant further confirms that, where the Declaration was made by a person other than the Tenant, the declarant was duly authorised by the Tenant to make the Declaration on the Tenant’s behalf.

6.3 The Landlord and the Tenant agree to exclude the provisions of section 24 to 28 (inclusive) of the Landlord and Tenant Act 1954 in relation to the tenancy created by this Lease.

7. RECORD OF NEW TENANCY

The tenancy created by this Lease is a new tenancy within the meaning of section 1(3) of the Landlord and Tenant (Covenants) Act 1995.

8. THIRD PARTY RIGHTS

A person who is not a party to this Lease shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

EXECUTED AS A DEED and delivered on the date inserted on page 1

Page 29

SCHEDULE 13

PART A

RIGHTS GRANTED

The following rights (in common with the Landlord and all other persons now or hereafter granted the like rights):

1. Access to and egress from the Premises on foot only and during such hours as the Landlord (acting reasonably) shall determine over such parts of the Common Parts (and if appropriate for escape in case of emergency over other parts of the Landlord’s Premises) as the Landlord shall from time to time notify to the Tenant

2. To use half of the car parking spaces in the car park of and any service area within the Landlord’s Premises from time to time designated by the Landlord.

3. To use such service media as serve the Premises as are necessary for its use and enjoyment or as shall from time to time be designated by the Landlord.

4. To use such toilets at the Landlord’s Premises as the Landlord shall reasonably designate.

5. To use the staff canteen common-room and IT-room during usual business hours.

PART B

EXCEPTIONS AND RESERVATIONS

1. The free and uninterrupted passage of water electricity soil telecommunications and other services through service media appliances and apparatus now or hereafter in on or passing through the Premises.

2. At all reasonable times upon reasonable notice (where practicable) with or without workmen the right to enter and remain upon the Premises with all necessary tools appliances and materials (the person so entering making good all physical damage done thereby to the Premises) for the purpose of any matter or thing connected with the management maintenance alteration repair or renewal of the Landlord’s Premises or any fixture and fittings or service media from time to time therein or any adjoining or neighbouring property or for any other purpose mentioned in this Lease.

3. The right in case of fire or other emergency to pass and repass through and over the Premises.

Page 30

EXECUTED as a DEED	)
by ROCHESTER MEDICAL LIMITED	)
acting by two directors/a	)
director and the secretary:	)
EXECUTED as a DEED	)
by MENTOR MEDICAL LIMITED	)
acting by two directors/a	)
director and the secretary:	)

Page 31

SIGNED by	)	Name:
on behalf of	)
COLOPLAST A/S	)	Signature:
SIGNED by	)	Name:
on behalf of	)
COLOPLAST LIMITED	)	Signature:
SIGNED by	)	Name:
on behalf of	)
MENTOR MEDICAL LIMITED	)	Signature:
SIGNED by	)	Name
on behalf of	)
ROCHESTER MEDICAL	)
CORPORATION	)	Signature
SIGNED by	)	Name
on behalf of	)
ROCHESTER MEDICAL	)
LIMITED	)	Signature

Page 32

EX-10.2

Exhibit 10.2

PRIVATE LABEL DISTRIBUTION AGREEMENT

     This PRIVATE LABEL DISTRIBUTION AGREEMENT (“Agreement”) is made effective this 17th day of May, 2006 (the “Effective Date”) between ROCHESTER MEDICAL CORPORATION, a Minnesota corporation, on behalf of itself and its subsidiaries (herein, “RMC”) with offices at One Rochester Medical Drive, Stewartville, MN 55976 and COLOPLAST A/S., a Denmark corporation, on behalf of itself and its subsidiaries (herein, “COLOPLAST”), with offices at Egevangen 4 2980 Kokkedal, Denmark.

RECITALS:

     WHEREAS, RMC manufactures a patented all silicone male external catheter (the “MEC”) in various configurations as more particularly described in this Agreement.

     WHEREAS, COLOPLAST markets throughout the world a wide variety of urologic products and accessories.

     WHEREAS, COLOPLAST desires to acquire from RMC, and RMC is agreeable to granting to COLOPLAST the non-exclusive right to market the MEC throughout the world, with the exception of the United Kingdom (“UK”), under COLOPLAST’S own brands and marks upon the terms and conditions, including annual minimum purchase requirements, as set forth in this Agreement.

     WHEREAS, COLOPLAST also desires to acquire from RMC, and RMC is also agreeable to granting to COLOPLAST, a first right of negotiation with respect to future improvements to the MEC in accordance with the provisions of this Agreement.

          WHEREAS, COLOPLAST intends to acquire from another company (herein“ADAM”) an additional line of urology products (the “Acquisition”);

     WHEREAS, COLOPLAST and RMC also contemplate the sale by COLOPLAST to RMC or an affiliate of certain business and assets related to the sale and distribution of the MEC assets that Coloplast will acquire in the Acquisition in the UK (the “Divestiture”) in accordance with the directives of the UK Office of Fair Trade;

     WHEREAS, ADAM and RMC are parties to a certain Male External Catheter License, Sales and Distribution Agreement as amended by a Settlement Agreement and as further amended by a Supply Agreement (collectively the “MEC Agreement”],

1

whereby RMC granted ADAM a certain Patent License and a certain Technology licenses (collectively, the “Manufacturing Licenses”) more specifically described in the MEC Agreement, all of which relate to products that are the subject of this Agreement.

     WHEREAS. ADAM utilizes the Manufacturing Licenses for the manufacture of all silicone male external catheters at its manufacturing facilities located at 800 Lund Boulevard, Anoka, Minnesota (the “Adam Plant”).

     WHEREAS, RMC contemplates entering into a further agreement with ADAM concurrently with the RMC’s execution of this Agreement (the “Reconveyance”) whereby ADAM will (i) reconvey and release to RMC all of Adam’s right, title and interest in and to the Manufacturing Licenses, (ii) convey and assign to RMC all of ADAM’s right, title and interest in and to the intellectual property including specifically, but without limitation, all patent rights and trade secrets relating to the Manufacturing Licenses, (iii) terminate the MEC Agreement, (iv) sell or lease all or a portion of the Adam Plant, including equipment and fixtures, to RMC and (v) deliver to RMC all documentation relating to silicone male external catheters that ADAM has or maintains for manufacturing pursuant to the Manufacturing Licenses, along with the relevant regulatory compliance documents, together with all relevant packaging inventory solely related to the Manufacturing Licenses located at the Adam Plant.

     WHEREAS, the execution, delivery and consummation of the transactions contemplated by the Divestiture, the Acquisition and the Reconveyance are each a necessary condition subsequent to this Agreement.

     WHEREAS, RMC’s ability to supply to COLOPLAST certain configurations of MECs depends upon RMC’s acquisition from ADAM pursuant to the Reconveyance and the subsequent relocation of certain equipment located at the Adam Plant and COLOPLAST’s need for RMC’s supply of MEC products pursuant to this Agreement depends on the consummation of the Acquisition and Divestiture; and that therefore the parties desire to provide that the Acquisition, Divestiture and Reconveyance all become effective prior to the date that RMC becomes obligated to supply, and COLOPLAST becomes obligated to purchase MECs pursuant to this Agreement (“Conditions Precedent”).

     WHEREAS, COLOPLAST and RMC desire to acknowledge for avoidance of doubt that COLOPLAST manufactures, by a process different from RMC’s patented process, and sells an all silicone male external catheter under the brand name “Conveen Optima”™; that all references in this Agreement to silicone male external catheters are intended, to refer to RMC’s male external catheter products and not to the Conveen

2

Optima male external catheter products; and that nothing herein is intended to limit or restrict COLOPLAST’s freedom to market and sell its Conveen Optima male external catheter products except as may be otherwise limited by RMC’s rights under its US Patents described in §7.6.1 hereof by law or otherwise by enforceable agreement between the Parties.

     NOW, THEREFORE, in consideration of the foregoing premises and of the mutual promises and consideration provided herein, the parties, intending to be legally bound hereby, agree as follows:

Section 1 DEFINITIONS:

     Except as otherwise elaborated in this Section 1, the definitions set forth in the Recitals to this Agreement have the meanings there ascribed to them. In addition to such definitions, the following words and expressions shall have the meanings set forth in this Section:

     1.1. Confidential Information. “Confidential Information” means “Confidential Information” as defined in the Disclosure Agreement, and also includes all information of a confidential or proprietary nature disclosed by RMC to COLOPLAST or by COLOPLAST to RMC pursuant to or in connection with this Agreement or the Disclosure Agreement, and includes information regarding COLOPLAST’s purchases or sales of, including units, amounts and prices.

     1.2. Delivery Instructions. “Delivery Instructions” mean the instructions described in §4.5 hereof for delivery of each Order and other purchase orders as may be made from time to time.

     1.3. Direct Production Costs. “Direct Production Costs” mean the actual costs paid by RMC for the materials and direct labor used to manufacture MEC.

     1.4. Disclosure Agreement. “Disclosure Agreement” means the Disclosure Agreement dated November 13, 2001, entered into between RMC and COLOPLAST

     1.5. Effective Date. “Effective Date” means the Effective Date set forth above in the first paragraph of this Agreement, or as otherwise defined by § 3.1.

     1.6. Extenuating Circumstance. “Extenuating Circumstance” means an event of force majeure as set forth in §14.3 of this Agreement or any excused failure by RMC or COLOPLAST to perform under this Agreement as set forth in §8 hereof.

3

     1.7. FDA. “FDA” means the United States Food and Drug Administration.

     1.8. First Rights. “First Rights” mean the right of first negotiation regarding Improvements as are set forth in §7.3 of this Agreement.

     1.9. Improvements. “Improvements” means the Improvements to the MEC agreed to by the parties in accordance with § 7 of this Agreement.

     1.10 Line Item. “Line Item” means an MEC configuration by size.

     1.11. MEC. “MEC” means RMC’s all silicone male external catheter in its ”UltraFlex ^®”, “Wide Band^® “Pop On^®” and “The Natural^® Catheter”, configurations, and also includes the “Clear Advantage^®” and “Freedom Clear^®” configurations and includes Improvements to the extent provided herein.

     1.12. Packaging Specifications. “Packaging Specifications” means the specifications for packaging MECs, as may be agreed from time to time by RMC and COLOPLAST in accordance with this Agreement. The current Packaging Specifications are set forth in Schedule 3 to this Agreement, and are the basis for the Transfer Price.

     1.13. Product Specifications. “Product Specifications” means the specifications, quality control tests and inspection procedures for MECs, as they exist as of the Effective Date, and which may be promulgated from time to time by RMC with express mutual agreement by COLOPLAST and in accordance with this Agreement, and may include material modifications that may be agreed upon from time to time by COLOPLAST. The current Product Specifications are set forth in Schedule 2 to this Agreement.

     1.14 Technical Contract. “Technical Contract” means the product specifications, quality requirements and other design and manufacturing processes and specifications, mutually agreed upon by the Parties and documented in the Technical Contract appended to this Agreement as Schedule 4.

     1.15. Term. “Term” means the Term provided in §3.1.

     1.16. Territory. “Territory “ means the entire world except the United Kingdom.

4

     1.17. Transfer Price. “Transfer Price” means the initial Transfer Price for MECs set forth in Schedule 1 to this Agreement and includes Transfer Prices otherwise established in accordance with this Agreement.

     1.18. Quota. “Quota” means the amount of MECs that COLOPLAST must purchase from RMC during the Term of this Agreement as set forth in Section 4.1.

Section 2 AGREEMENT FOR MARKETING AND DISTRIBUTION & LICENSE

     2.1. Marketing Rights & License. COLOPLAST shall have a non-exclusive license and right to package, offer, sell and export the MECs COLOPLAST purchases from RMC throughout the Territory under COLOPLAST’s own brands and marks. Pursuant to the Reconveyance and the sale or lease of the Adam Plant and the documents conveying such between Adam and RMC, to the extent that Coloplast acquires any Adam employees or knowledge of the Manufacturing Licenses as a result of the Acquisition, RMC does hereby grant to Coloplast with respect to any product, technology or other activity excepting those directly connected to silicone MECs. a limited, worldwide, perpetual, fully paid-up, non-exclusive right and license to use, copy, create derivative works from, sell and distribute products, and provide services, based upon the Residuals with respect to any product, technology or other activity excepting those directly connected to silicone MECs. Without limiting the foregoing, RMC agrees that neither it nor any of its Subsidiaries will bring any action or assert any claim against Coloplast, its Subsidiaries, or their successors alleging that any trade secrets or other information or materials in the possession of, known to, or used by Coloplast transferred by and through the Acquisition was or is misappropriated by Coloplast from RMC, violates RMC’s trade secret rights, or infringes RMC’s copyrights all with respect to any product, technology or activity other than those directly connected to silicone MEC products. For the purposes of this paragraph, “Residuals” shall mean any information or materials that are or were assets of Adam that have now become assets of Coloplast through the Acquisition, and which are unintentionally retained now by Coloplast or known to employees now acquired by Coloplast that have been exposed to such information or materials. This license shall survive indefinitely any termination or expiration of this Agreement.

     2.2. CE Mark or other Regulatory Approvals. COLOPLAST shall have the right to obtain and affix to the MEC COLOPLAST’s own CE Mark or comparable regulatory approval mark. RMC shall cooperate reasonably with COLOPLAST for that purpose, and shall share with COLOPLAST, subject only to the Confidential Information provisions and the provision of Section 4.13 of this Agreement, RMC’s regulatory compliance technical files. RMC shall also provide other data and

5

information reasonably necessary to any governmental agency or to Coloplast for purposes of assisting COLOPLAST to obtain any regulatory license or approval for the private-labeled product.

     2.3 Limited License. COLOPLAST grants to RMC during the term of this Agreement a non-exclusive, royalty-free, limited license (“Aloe Patent License”) to US Patent 6,805,690 (“Aloe Patent”). The Aloe Patent License shall not be transferable by RMC except in connection with the sale of all or substantially all of RMC’s male external catheter business line or in case of merger, conveyance to a subsidiary or similar reorganization. RMC shall not, and shall not permit its employees, representatives or agents to sell, assign, lease, sublicense, transfer or disclose to any third party, or allow any third party to use the Aloe Patent License and associated technology, except as specifically permitted by this Agreement. The Aloe Patent License shall survive termination or expiration of this Agreement, unless the terms of the Aloe Patent License set forth in this Section 2.3 are violated, in which case COLOPLAST may terminate this limited license and/or this Agreement. Any sublicense and pass through license granted pursuant to this Section 2.3 must contain the same license terms and other limitations as contained in this Agreement.

Section 3 TERM; TERMINATION; EXTENSION

     3.1. Term. Subject to the Conditions Precedent and other provisions of this Section 3, the Term of this Agreement shall commence on June 1, 2006, and continue thereafter for a period of five (5) years (“Initial Commitment Period”) unless terminated in accordance with the provisions hereof. Provided, however, in the event that each Conditions Precedent identified in Section 3.2 shall have not occurred by June 1, 2006 but shall have occurred prior to August 31, 2006, then the Term of this Agreement shall be deemed to have commenced on the first day of the month following the month in which the last of such Condition Precedents shall have occurred (“Effective Date”).

          3.1.1. Successive Commitment Periods. After the expiration of the Initial Commitment Period, the Agreement shall renew automatically for an additional one-(1) year period (the “Successive Commitment Period”)unless either party gives the other party written notice of that party’s intent not to renew at least one-hundred eighty (180) days prior to expiration of the Initial Commitment Period .

          3.1.2 Failure of Good Faith Negotiations. Upon failure of the parties to arrive at terms commercially reasonable and agreeable to each as provided in Section 3.3 hereof, then either party may terminate this Agreement without cause upon one-hundred eighty (180) days written notice.

6

          3.1.3 Failure of ConditionsPrecedent. If each of the Conditions Precedent identified in Section 3.2 and in the Recitals of the Agreement cannot or shall not have occurred by August 31, 2006, this Agreement shall automatically terminate without necessity of notice or further action by either party; in which event all rights and obligations of the parties created by this Agreement, shall become and be void ab initio.

     3.2 Conditions Precedent. Nothing in this Agreement to the contrary withstanding, the Term of this Agreement shall not commence until and unless each Condition Precedent identified with respect to the Acquisition, the Divestiture and the Reconveyance described in the Recitals to this Agreement shall have occurred.

     3.3 Good Faith Negotiations. At least ninety (90) days prior to the expiration of the Initial Commitment Period and each Successive Commitment Period, the Parties shall undertake good faith negotiations for the purpose of reaching agreement regarding Quotas and Transfer Prices for the next Successive Commitment Period. Any Agreement reached by the Parties shall apply to the Next Successive Commitment Period or, if agreement is not reached until after commencement of such Period, shall be retroactive to its commencement. Nothing herein shall be deemed to require (i) any more than the exercise of good faith, (ii) the successful conclusion of any such negotiations, or (iii) the reaching of any final agreement regarding Quotas, Transfer Prices, or any other matter the Parties may wish to discuss or negotiate. In the event such good faith negotiations have not resulted in agreement, this Agreement shall continue in effect in accordance with the then applicable terms and conditions until and unless terminated in accordance with § 3.1.2 of this Agreement.

     3.4. Termination for Cause. A non-breaching party may terminate this Agreement upon ninety (90) days written notice to the other in case of a material breach of this Agreement that is not cured to the reasonable satisfaction of the notifying party within such period.

Section 4 PURCHASES; PRICE; ORDERS; FULFILLMENT

     4.1. Quota. COLOPLAST shall purchase from RMC during each year of the Initial Commitment Period during the Term of this Agreement the number of MECs set forth below for such year.

          4.1.1 Initial Commitment Period. The Quota for each year of the Initial Commitment Period shall be set forth on Schedule 1; provided however, COLOPLAST shall receive an abatement of such Quotas for years 1 and 2 of the Initial Commitment

7

Period as described herein. RMC and COLOPLAST shall commence good faith negotiations within ninety (90) days following the Effective Date in order to abate the Quotas for Years 1 and 2 by an amount not exceeding seven hundred fifty thousand (750,000) units in total to be abated evenly over both years to take into account the excess inventory that COLOPLAST may acquire from ADAM in the Acquisition. If the Parties do not reach agreement on this abatement within thirty (30) days after good faith negotiations commence, COLOPLAST shall be entitled to take the full 750,000 unit abatement on the Quotas to be spread evenly over Years 1 and 2 of this Agreement.

          4.1.2 Quarterly Purchases. COLOPLAST shall purchase no less than twenty percent (20%) of the applicable annual Quota in each calendar quarter.

     4.2 Additional Purchases. COLOPLAST may purchase MECs in excess of its Quota during any year, but the same shall not alter or abate COLOPLAST’S Quota obligation for any other year.

     4.3. Price. COLOPLAST shall pay RMC the applicable Transfer Price for MECs, FOB RMC, as defined in Section 4.5 below, properly packaged and delivered in accordance with the Delivery Instructions. The initial Transfer Prices for MECs are set forth on Schedule 1 to this Agreement. The applicable Transfer Price shall also be adjusted for changes in Packaging Specifications requested or directed by COLOPLAST.

     4.4 Firm Pricing. Subject to § 4.3, the Initial Transfer Prices for MECs shall remain firm until the second (2^nd) anniversary of the Effective Date of this Agreement, and shall thereafter be adjusted in accordance with § 4.4.1.

4.4.1. Price Adjustment. Commencing for the twelve-month period beginning on the 2^rd anniversary of the Effective Date, and for each following year of the Initial Commitment Period (the “First, Second and Third Price Adjustment Years”, respectively) the Transfer Price will be subject to annual adjustments pursuant to good faith negotiations between COLOPLAST and RMC. RMC and COLOPLAST will commence such negotiations no later than ninety (90) days prior to the commencement of each Price Adjustment Year. Absent agreement from such good faith negotiations by thirty (30) days prior to the commencement of a Price Adjustment Year, RMC may increase or decrease the Transfer Price to be effective at the commencement of that Price Adjustment Year by an amount calculated as follows:

     4.4.1.1 For increases, One Hundred Sixty percent (160%) of the actual increase for direct labor and material costs exceeding five percent (5%) over the 2006 Base Index since the latest of (i) the commencement of

8

the Term or (ii) the latest price adjustment to the Transfer Price, except adjustments for packaging changes directed or requested by COLOPLAST. RMC is to provide full documentation of such increases to COLOPLAST’S reasonable satisfaction before such price increase shall be effective.

4.4.1.2 For decreases, One Hundred Sixty(160%) of the actual decrease for direct labor and material costs decreasing more than five percent (5%) below the 2006 Base Index since the latest of (i) the Effective Date or (ii) the latest price adjustment to the Transfer Price, except adjustments for packaging changes directed or requested by COLOPLAST.

     4.4.1.3 Any adjustment to the Transfer Price will thereafter take effect at the beginning of the Price Adjustment Year to which the adjustment relates, and shall be then payable by COLOPLAST; except adjustments resulting from packaging changes requested or directed by COLOPLAST, which shall be effective immediately upon implementation.

     4.4.1.4 For purposes hereof, “2006 Base Index” means RMC’s actual costs for material and labor at the Effective Date of this Agreement as demonstrated from RMC’s business records maintained in the ordinary course of its business.

     4.5. Passage of Title and Risk of Loss. It is understood that “FOB RMC” means that upon delivery of MECs by RMC to a common carrier all title and risk of loss shall pass immediately to COLOPLAST

     4.6. Forecasts. Thirty days prior to the expiration of each calendar quarter, during the Term of this Agreement, COLOPLAST shall provide to RMC a nonbinding, rolling forecast of COLOPLAST’s projected requirements for the four (4) next succeeding calendar quarters.

     4.7. Delivery Instructions. All MECs will be placed for delivery to the destination or destinations specified by COLOPLAST.

     4.8. Minimum Order Size. COLOPLAST shall use commercially reasonable ordering procedures with a view to placing purchase orders for MECs in minimum aggregate amounts of at least One Hundred Thousand (100,000) units and with Line Item minimums of at least Twenty Thousand (20,000) units per Line Item ordered.

9

RMC acknowledges that there may be circumstances under which COLOPLAST may place orders of lesser quantities.

     4.9. Order Fulfillment. RMC will endeavor to ship MECs ordered by COLOPLAST within seven (7) weeks following receipt of order, and RMC will use commercially reasonable efforts to accommodate any earlier delivery date requested by COLOPLAST for unusual requirements.

     4.10. Invoice and Payment. RMC shall invoice COLOPLAST, thirty-five (35) days net for MEC shipments . COLOPLAST shall pay each such invoice within thirty-five (35) days following the date of the invoice.

     4.11. Non-Payment. If COLOPLAST is more than sixty (60) days in arrears for payment of any invoice from RMC, then in addition to any other right or remedy RMC may have at law or in equity, RMC shall be entitled upon thirty (30) days notice to withhold delivery of MECs until COLOPLAST has paid all such amounts in arrears.

     4.12. Country of Origin. RMC shall provide at COLOPLAST’s request a signed Affidavit of Country of Origin for MECs delivered to COLOPLAST pursuant to this Agreement.

     4.13. Regulatory Registration & Device Licensing. Each party shall bear its own costs and expenses for preparation of all documents necessary for registration and sale of MECs. The parties shall cooperate with each other and furnish each other such information as each may reasonably require from the other, including, where required by any government agency, the actual chemical compounds (excluding formulations and brands to the extent not reasonably required by the government agency) to effect such registration and with copies of any and all filings for review upon request.

     4.14 Obsoleted Packaging. Upon a change in Packaging Specifications requested or directed by COLOPLAST, COLOPLAST shall pay RMC an amount equal to RMC’s out-of-pocket expense for packaging materials made obsolete by such change; provided, however, said amount (i) shall be consistent with COLOPLAST’s forecasts pursuant to §4.6 and (ii) shall not in any case exceed the amount of packaging materials that would be reasonably consumed during a period of six (6) months. RMC shall notify COLOPLAST of the amount payable and furnish COLOPLAST with reasonable documentation substantiating RMC’s out-of-pocket expense. That amount shall be due and payable against invoice.

10

     4.15. Rebate. COLOPLAST shall be entitled to receive a Rebate from RMC in the amount(s) and upon the conditions set forth on Schedule 1 for purchases of MECs in excess of Quota. RMC shall pay the Rebate to COLOPLAST as a credit against COLOPLAST’s future purchases with the balance of the Rebate, if any, payable in cash upon termination of this Agreement. Rebates shall be calculated at the end of each anniversary date of the Effective Date.

Section 5 CONFORMING AND NON-CONFORMING GOODS

     5.1. Conforming Goods. RMC warrants that, when delivered, MECs that COLOPLAST purchases from RMC, (i) shall have been manufactured in accordance with Quality System Regulations and current Good Manufacturing Practices codified at 21 CFR Part 820, Canadian Medical Devices Conformity Assessment System (“CMDCAS”) and ISO 13485:2003 (ii) shall be manufactured in accordance with applicable European Union Medical Device Directives permitting affixation of a CE Mark (iii) shall be manufactured in accordance with, and shall conform to, the then current Product Specifications, (iv) shall be packaged in accordance with the applicable Packaging Specifications, (v) shall not be misbranded or adulterated, and (iv) shall conform to the Technical Contract. No warranty is given hereunder for misuse, misbranding or adulteration occurring after delivery to COLOPLAST.

     5.2. Non-Conforming Goods. COLOPLAST may reject and shall not be obligated to pay for any MECs that COLOPLAST may purchase from RMC, that do not conform to any of the warranties given by RMC in Section 5.1 of this Agreement.

          5.2.1. Apparent Defects. Subject to the provisions of §5.2.2 hereof, COLOPLAST shall promptly give written notice (herein, “Notice of Rejection”) to RMC of any MECs delivered to COLOPLAST that are being rejected as defective or as non-conforming. To be effective, a Notice of Rejection (i) shall be in writing, (ii) shall specify the shipment or lots being rejected, (iii) shall be accompanied by relevant information substantiating the claim that such MECs were defective or failed to conform to the applicable Product Specifications at the time of their delivery, and (iv) shall be accompanied by a RMC Returned Goods Authorization Number. COLOPLAST shall be deemed to have accepted MECs delivered to it unless COLOPLAST gives Notice of Rejection within thirty (30) days from the date of delivery to COLOPLAST of the MECs that are being rejected.

          5.2.2. Non-Apparent Defects. If the defect or nonconformity is not readily apparent by physical inspection or revealed by the applicable quality control tests at the time MECs are delivered to COLOPLAST (“Non-Apparent Defects”), then COLOPLAST

11

may revoke its acceptance thereof. COLOPLAST may revoke its acceptance of the MECs by notice (herein “Notice of Revocation”) given promptly upon discovery of any Non-Apparent Defect not later than one (1) year following the date of delivery to COLOPLAST of the MECs which are being rejected. Notwithstanding the foregoing, COLOPLAST may provide to RMC a Notice of Revocation of MECs with Non-Apparent Defects that have been returned by any of COLOPLAST’s customers up to three (3) years following delivery by RMC to COLOPLAST of the MECs that are being rejected. To be effective, any Notice of Revocation must (i) be in writing, (ii) specify the shipment or lots for which acceptance is being revoked, and (iii) be accompanied by relevant information substantiating that the defects or non-conformities were Non-Apparent Defects.

          5.2.3. Testing and Inspection. COLOPLAST shall adopt and follow the criteria and procedures set forth in the Technical Contract for the acceptance or rejection of MECs upon receipt from RMC.

     5.3. Replacement. At RMC’s cost and expense, COLOPLAST shall ship to a destination specified by RMC any MECs that are rejected or for which their previous acceptance has been revoked. RMC shall promptly replace at its own cost and expense any MECs that are rejected by COLOPLAST or the previous acceptance of which COLOPLAST has revoked in accordance with this Agreement.

     5.4. Product Recalls. RMC and COLOPLAST shall reasonably cooperate and advise and consent with each other prior to any market withdrawal or recall of MECs, or with respect to any device notification or safety alert given at the request of the FDA, any comparable regulatory body, or otherwise (herein collectively, “Product Recall”). RMC shall bear all costs and expense incurred by either of the parties in connection with such Product Recall (the “Recall Costs”), including without limitation any expenses or obligations to third parties and any costs associated with the shipment of recalled MECs from customers to COLOPLAST or RMC. Provided, however, that COLOPLAST shall bear all of the Recall Costs incurred by either of the parties that result from any act, error or omission of COLOPLAST. COLOPLAST shall maintain complete and accurate records, as may be required by applicable law, of MECs sold by COLOPLAST.

     5.5. Customer Complaints. COLOPLAST shall be responsible for notifying appropriate regulatory authorities in the Territory of any customer complaints from its own customers or other occurrences regarding the MECs that COLOPLAST has sold as may required by law to be so reported. COLOPLAST shall promptly provide to RMC all information that COLOPLAST has received regarding any such complaints or occurrences that require review, action or investigation by RMC.

12

     5.6. Quality Assurance or other Product Modifications. RMC shall not materially modify any quality control test and/or compliance procedure relating to MECs, or any other aspect of the Product, the manufacturing processes or the supplies and components embodied therein respectively without (i) proper compliance with Quality System Regulations (21 C.F.R. Part 820) and ISO 13485:2003 requirements and (ii) notification to COLOPLAST. RMC shall give COLOPLAST no less than ninety (90) days prior notice of RMC’s intent to make such a material change. Any changes that may require regulatory filings, updates or general documentation, RMC shall reasonably cooperate with COLOPLAST and provide the required documentation to effect such regulatory filing or update or to otherwise properly document Coloplast’s files.

     5.7. Audits and Inspections. Subject only to the provisions of this Agreement respecting Confidential Information, COLOPLAST shall have the right from time to time, but not more often than annually, upon reasonable notice to audit and inspect RMC’s manufacturing facilities and records, including technical files, relating to MECs. All such audits and inspections shall be conducted during RMC’s ordinary business hours. If any of COLOPLAST’s audits or inspections reveal material findings or noncompliances, COLOPLAST may re-audit and/or re-inspect more often than annually for follow-up audits and inspections.

Section 6 CONFIDENTIAL INFORMATION

     6.1. Confidential Information; Disclosure Agreement. All Confidential Information as defined in the Disclosure Agreement shall be maintained in confidence in accordance with the requirements of the Disclosure Agreement and of this Agreement. It is understood and agreed, however, that, notwithstanding anything herein to the contrary withstanding, RMC’s proprietary information viewed or reviewed by COLOPLAST during an audit or inspection of RMC’s manufacturing facilities shall be treated as Confidential Information.

     6.2. Confidential Information — Disclosure. Subject to the provisions of the Disclosure Agreement and Section 11.3.1 of this Agreement, neither party shall disclose any Confidential Information of the other to any person except an employee or attorney who (i) needs to know the Confidential Information for a proper purpose under this Agreement and (ii) acknowledges in writing that the Confidential Information may not be used or disclosed except in conformance with the requirements of this Agreement.

13

Section 7 IMPROVEMENTS; INFRINGEMENTS

     7.1 First Negotiation. RMC shall offer to negotiate with COLOPLAST an agreement, on terms generally similar to the terms of this Agreement, providing for RMC’s manufacture and COLOPLAST’s purchase of any Improved MEC (the “Improvement ” or “Improved Product”) that RMC may develop in the future. Such negotiations shall be conducted in good faith by the parties for a period of ninety (90) days exclusively between the parties following the date upon which RMC’s notifies COLOPLAST of the Improvement with a view to entering such an agreement, but nothing herein shall be deemed to require any more than the exercise of (i) exclusivity during this ninety (90) day period; (ii) good faith, (ii) the successful conclusion of any such negotiations, or (iii) the reaching of any final agreement regarding RMC’s manufacture and sale and COLOPLAST’s purchase of any Improved Product. In addition, nothing herein shall be deemed to require RMC to develop an Improved Product or to conduct any development activities therefor except as may be determined by RMC in its sole and exclusive judgment. The right of first, exclusive negotiation granted herein shall expire at the earlier of (i) RMC and COLOPLAST reaching an agreement for RMC’s manufacture and sale and COLOPLAST’s purchase of an Improved Product or (ii) the expiration of the specified ninety (90) days.

     7.2. Limitations. Until the expiration of the right of exclusive good-faith negotiation set forth in § 7.1, RMC shall not offer the Improved Product to any person other than COLOPLAST permitting such person to sell the Improved Product . Upon expiration of such right, RMC shall be immediately free to market and the Improved Product on any terms deemed appropriate by RMC; provided, however, to the extent RMC markets the Improved Product on terms that may be considered more favorable than those offered to COLOPLAST, RMC shall thereupon offer the Improved Product to COLOPLAST on substantially equivalent terms. Nothing herein shall be deemed to limit RMC’s right to market and sell any Improved Product at any time under RMC’s own brand and marks, either before, during or after the period for good faith negotiations set forth in § 7.1.

     7.3. Infringement by Others. Should any actual or possible infringement or other violation by any third party of any patents, Confidential Information, or other intellectual property rights referenced herein and pertaining in whole or in part to the MECs, or the manufacture thereof, come to the attention of either party to this Agreement, such party shall promptly notify the other party of the alleged infringement or violation. The parties hereto shall consult with one another with a view to reaching agreement as to the best means of eliminating the infringement or violation; provided, RMC shall have the sole right unilaterally to commence, to not commence or to

14

commence and discontinue any claim or suit for infringement of any patent or other intellectual property belonging to it at its own expense.

     7.4. Non-Infringement; Availability. RMC represents and warrants that:

          7.4.1. RMC is not aware of any infringement upon any patent or other intellectual property rights belonging to any other person or entity caused by the present or presently intended manufacture, sale or use of MECs by RMC.

          7.4.2. The manufacture, sale or use of the MECs by RMC do not infringe any U.S. patent.

          7.4.3. This Agreement and its performance by RMC, will not, breach any agreement executed by RMC.

          7.4.4. RMC is generally knowledgeable with respect to the patent rights of third parties relating to urinary catheters, and has conducted such inquiry and investigation as it deemed reasonably necessary for the purpose of determining whether the present or presently intended manufacture, sale or use of the MECs infringes any patent or technology of any third party. To the best of RMC’s knowledge, based upon such inquiry and investigation, the present or presently intended manufacture, sale and/or use of the MEC by RMC does not infringe any foreign patent or technology of any third party.

          7.4.5. Except as otherwise expressly stated herein, RMC makes no other warranty or representation (i) respecting the scope or enforceability of patent protection or the availability of patent protection in any jurisdiction, foreign or domestic, or (ii) respecting infringement of any patent or other intellectual property rights of others.

     7.5. Patent Maintenance.

          7.5.1 RMC will make all filings and periodic payments necessary to maintain the following Patents which cover MEC products that are the subject of this Agreement:

7.5.1.1 US Patents

5,176,666

5,376,085

5,334,175

15

7.5.1.2 Corresponding Patents

Australia	659117
Canada	2,095,030
Germany	DE 691 07 470 T2
EP	0 556 325 B1
France	0 556 325 B1
Great Britain	0 556 325 B1
Japan	3409070

          7.5.2 COLOPLAST will make all filings and periodic payments necessary to maintain the Aloe Patent described in Section 2.3 of this Agreement.

     7.6. Regulatory Compliance. RMC warrants that MECs are presently eligible for sale in interstate commerce in accordance with applicable rules and regulations of the FDA and the European Union, and of comparable authorities.

Section 8 EXCUSED PERFORMANCE

     8.1. RMC’s Performance Excused. RMC’s obligation to provide MECS to COLOPLAST under this Agreement shall be excused for the duration of any event of force majeure preventing RMC’s performance of such obligation or for the duration of any event of non payment in accordance with §4.10 of this Agreement.

     8.2. COLOPLAST’s Performance Excused. COLOPLAST’s obligation to RMC under this Agreement shall be excused for the duration of any event of force majeure preventing COLOPLAST performance of such obligation.

Section 9 MUTUAL WARRANTIES AND REPRESENTATIONS

     9.1. Corporate Standing; Authority. RMC and COLOPLAST each represent and warrant to each other that it is a duly organized and validly existing corporation in good standing under the laws of the state in which it is incorporated, and that it has full corporate power and authority to carry on the business presently being conducted by it and to enter into and to perform its obligations under this Agreement.

     9.2. Due Authorization. RMC and COLOPLAST each represent and warrant to each other that it has taken all action necessary to authorize the execution and delivery of this Agreement.

16

Section 10 COVENANTS

     10.1. Covenants of RMC. RMC makes the following covenants:

          10.1.1. For the Term of this Agreement and for one (1) year thereafter, RMC shall maintain product liability insurance (containing both a Vendor’s Additional Insured Endorsement and a Products Contractual Liability Endorsement) on MECs with minimum limits of one million ($1,000,000) first dollar coverage per occurrence and two million dollars ($2,000,000) in the aggregate and five million dollars ($5,000,000) of corporate umbrella public liability insurance. COLOPLAST shall be named as an additional named insured in each policy of insurance required to be maintained by RMC hereunder. The issuer of each such policy shall be a standard company licensed to issue insurance in the State of Minnesota having a Best’s rating of A or higher and a policy holder surplus of not less than thirty five million ($35,000,000). Each such policy shall provide for (a) the issuance of a reporting or tail coverage endorsement upon the earliest of termination of (i) the base policy, (ii) the marketing and sale of MECs by COLOPLAST and (b) for not less than thirty (30) days prior written notice to COLOPLAST of any proposed change in the nature, scope or amount of coverage. RMC shall provide COLOPLAST with certificates of such insurance and evidence of the payment of premiums therefor, promptly upon COLOPLAST’s request.

     10.2. Covenants of COLOPLAST. COLOPLAST makes the following covenants:

          10.2.1 COLOPLAST covenants (i) not to make any express warranties or other claims with respect to the MECs that have not been authorized by RMC, and (ii) not to misbrand or adulterate any MECs acquired from RMC and resold by COLOPLAST.

     10.3. Mutual Covenants. RMC and COLOPLAST each covenant to each other that:

          10.3.1. COLOPLAST and RMC will maintain all Confidential Information of the other in confidence in accordance with the provisions of this Agreement and the Disclosure Agreement. Notwithstanding the foregoing, COLOPLAST and RMC may disclose such Confidential Information as required by law; provided that the disclosing party shall (i) immediately notify the other party of the Confidential Information to be disclosed and the legal requirement for the disclosure of such Confidential Information; and (ii) use its commercially reasonable efforts to maintain the confidentiality of the

17

Confidential Information to the maximum extent possible, using in every case no less than the efforts the party would use to protect its own confidential information, for example, by seeking a protective order. Provided, however, RMC shall not be required to seek confidential treatment for, or to take other affirmative steps to attempt to limit the dissemination of, information routinely required to be filed by RMC in accordance with RMC’s reporting requirements pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and the Rules and Regulations of the Securities and Exchange Commission promulgated thereunder.

          10.3.2. Each party shall furnish to the other such information that is maintained by the furnishing party in the ordinary course of its business that the other party reasonably requests for the purpose of verifying the furnishing party’s compliance with the terms and conditions of this Agreement, including a complete and correct copy of any notice, report or other communication that it receives from the FDA or from any other governmental agency materially concerning the MEC.

          10.3.3. Each Party shall keep books and records in sufficient detail to permit verification of its compliance with the terms and conditions of this Agreement, and all such books and records shall be available for inspection upon prior written notice by the other party or its designated representative at the principal place of business of the party keeping such books and records at reasonable times during regular business hours. This obligation is in addition to any other record keeping obligation under this Agreement.

Section 11 INDEMNIFICATION

     11.1. Indemnification by RMC. RMC shall defend, indemnify and hold COLOPLAST, its officers, directors, employees, and agents free and harmless from and against any and all claims, demands, actions and causes of action which are hereafter made or brought against COLOPLAST, its officers, directors, employees, agents or distributors by any person, firm, corporation or association for recovery of damages to property, or damages for injury, illness and/or death of any person which is alleged to be caused by or attributable to (i) an error, omission, act, failure or regulatory noncompliance by RMC in the manufacturing and production of MECs; or (ii) infringement of the MECs on any third-party’s rights; or (iii) a breach by RMC of any warranty, or covenant given by RMC under this Agreement; provided that the obligations of RMC hereunder shall not extend to claims for damages that are found to be solely attributable to the acts, omissions or negligence of COLOPLAST; and provided further that COLOPLAST shall make no settlement of any claim for which it seeks indemnity from RMC without the written approval of RMC.

18

     11.2. Indemnification by COLOPLAST. COLOPLAST shall defend, indemnify and hold RMC, its officers, directors, employees and agents free and harmless from and against any and all claims, demands, actions and causes of action which are hereafter made or brought against RMC, its officers, directors, employees, agents or distributors by any person, firm, corporation or association for recovery of damages to property, or damages for injury, illness and/or death of any person which is alleged to be caused by or attributable to (i) an error, omission, act, failure or regulatory noncompliance by COLOPLAST in the marketing of the MECs; or (ii) a breach by COLOPLAST of any representation, warranty or covenant given by COLOPLAST under this Agreement. Provided however, that the indemnification obligation of COLOPLAST hereunder shall not extend to claims for damages that are found to be attributable solely to the acts, omissions or negligence of RMC; and provided further that RMC shall make no settlement of any claim for which it seeks indemnity from COLOPLAST without the written approval of COLOPLAST.

Section 12 DAMAGES

     12.1. Damages for Breach. Except as may be otherwise expressly provided in this Agreement, nothing in this Agreement shall be construed to relieve a defaulting party from liability to the other, or to limit the amount of such liability, at law or in equity on account of a breach by the defaulting party of its duties and obligations under this Agreement. Neither party, however, shall be liable to the other for any consequential or incidental damages resulting from a breach, notwithstanding that the possibility thereof was known to the party in breach.

Section 13 GENERAL PROVISIONS

     13.1. Notices. All notices permitted or required under this Agreement shall be in writing and shall be deemed to have been given and received immediately (i) when personally delivered or when transmitted by telefacsimile machine to the party for whom intended at the telefacsimile number below, with a confirming copy sent by U.S. mail, addressed to the party for whom intended at the address set forth below or (ii) on the second business day after the date on which mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the party for whom intended at the address set forth below or such other address or telefacsimile number as provided by the parties in writing:

Anthony J. Conway, President
Rochester Medical Corporation

19

One Rochester Medical Drive
Stewartville, Minnesota 55976
Telefacsimile Number: (507) 533-9725

Henrik Norup Riecke, Vice President — Contract
Manufacturing
COLOPLAST A/S
Egevangen 4 2980
Kokkedal, Denmark.
Telefacsimile Number: +45 49 11 11 60

With a copy to:
Peter Volkers, Legal Affairs Director
Coloplast A/S
Holtedam 1, DK-3050
Humlebæk Denmark
Fax +45 49 11 24 10

     13.2. Resolution of Disputes. Any controversy, dispute or claim in connection with, arising out of or relating to this Agreement or the performance, enforcement, breach, termination, application or validity hereof shall be submitted to arbitration. Such arbitration proceedings shall be held in Minneapolis, Minnesota, in accordance with the rules then obtaining of the American Arbitration Association, except that: (i) the arbitrators shall furnish the parties with a written decision setting forth findings of fact, conclusions of law and an order; (ii) if the issue in dispute involves matters of patents, licensing or technology, the arbitration panel shall be composed of persons who are knowledgeable in such matters; (iii) a stenographic record shall be made of the arbitration proceedings; and (iv) the award of the arbitrators shall be subject to review by a court of competent jurisdiction, which court shall apply the same standard of review that an appellate court would apply in reviewing the decision of a trial court. Each arbitrator shall be neutral, impartial and independent of the parties and others having any known interest in the outcome, shall abide by the Canons of Ethics of the American Bar Association for neutral, independent arbitrators, and shall have no ex parte communications about the case. In addition to any monetary award that may be given, the arbitrators may order or direct either party to do any act required of it by this Agreement or to refrain from the doing of any act or practice that is contrary to this Agreement. This Agreement to arbitrate shall be specifically enforceable. Each party shall bear its own costs and expense in any such proceedings, but the arbitrators may, in their discretion and consistent with this Agreement, award costs and attorneys’ fees to either or both of the parties.

20

     13.3. Force Majeure. Neither of the parties shall be liable to the other for any delay or default in performing its obligations hereunder if such delay or default is caused by force majeure, such as wars or insurrection, strikes, fires, vandalism, floods, work stoppages, embargoes, lack of materials or other circumstances beyond the reasonable ability of the party affected thereby to control provided that the party so affected resumes the performance of its obligations with due diligence as soon as practicable after the effects of any such event have been alleviated.

     13.4. Binding on Successors. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and legal representatives of each of the parties hereto. Neither party may assign this Agreement, in whole or in part, without the express prior written consent of the other, and any whole or partial assignment without such written consent shall be entirely void, except in connection with the sale of all or substantially all of RMC’s male external catheter business line or in case of merger, conveyance to a subsidiary or similar reorganization.

     13.5. Amendment. No amendment or modification of this Agreement shall be valid or binding upon either of the parties hereto unless made in writing and signed by such party or its duly authorized officer or representative.

     13.6. Governing Law. This Agreement shall be construed in accordance with the laws of the state of Minnesota without giving effect to its conflicts of law provisions.

     13.7. Captions. Captions appearing in this Agreement are intended solely for convenience of reference and are not to be deemed a part of this Agreement.

     13.8. Entire Agreement. This Agreement constitutes the entire understanding of the parties with respect to its subject matter, and supersedes any prior agreement or agreements in principle between the parties.

Section 14 Survival

     The provisions of §§ 6, 10, 11, 12 and 13 shall survive the termination of this Agreement.

SECTION 15. Attachments.

     The following attachments are appended to and made part of this Agreement:

21

Schedule 1	Transfer Prices
Schedule 2	Product Specifications
Schedule 3	Packaging Specifications
Schedule 4	Technical Contract

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by its duly authorized representatives as of the day and year first above written.

ROCHESTER MEDICAL CORPORATION,		COLOPLAST A/S
a Minnesota corporation		a Denmark corporation
By:	/s/ Anthony J. Conway Anthony. J. Conway	By:	/s/ Sten Scheibye Sten Scheibye
	President and Secretary		Its Chief Executive, CEO
ATTEST:		ATTEST:
By:	/s/ Martyn R. Sholtis Martyn R. Sholtis	By:	/s/ Peter Volkers Peter Volkers
	Its Vice President		Its Legal Affairs Director

22

EX-10.3

Exhibit 10.3

DISTRIBUTION AGREEMENT

     This PRIVATE LABEL DISTRIBUTION AGREEMENT (“Agreement”) is made effective this 17th day of May, 2006 (the “Effective Date”) between ROCHESTER MEDICAL CORPORATION, a Minnesota corporation, on behalf of itself and its subsidiaries (herein, “RMC”) with offices at One Rochester Medical Drive, Stewartville, MN 55976 and COLOPLAST A/S., a Denmark corporation, on behalf of itself and its subsidiaries (herein, “COLOPLAST”), with offices at Egevangen 4 2980 Kokkedal, Denmark.

RECITALS:

     WHEREAS, COLOPLAST intends to acquire from another company (herein“ADAM”) an additional line of urology products (the “Acquisition”);

     WHEREAS, COLOPLAST and RMC also contemplate the sale by COLOPLAST to RMC or an affiliate of certain business and assets related to the sale and distribution of the MEC assets that Coloplast will acquire in the Acquisition in the UK (the “Divestiture”) in accordance with the directives of the UK Office of Fair Trade;

     WHEREAS, COLOPLAST manufactures a patented latex male external catheter (the “MEC”) in various configurations as more particularly described in this Agreement.

     WHEREAS, COLOPLAST and ADAM are parties to an existing supply agreement dated September 29, 2001 whereby COLOPLAST is the exclusive distributor of, among others, the Freedom^® brand latex MECs, as more fully described herein (“Freedom MECs”), in the United Kingdom (“UK”), which shall be terminated simultaneously with the execution of this Agreement; and

     WHEREAS, RMC desires to market in the UK the Freedom MECs, which COLOPLAST is acquiring through the Acquisition, labeled with the Freedom brand names in all varieties with all accessories that are currently sold in the UK by COLOPLAST pursuant to the Existing Supply Agreement; and

     WHEREAS, RMC desires to acquire from COLOPLAST, and COLOPLAST is agreeable to granting to RMC the exclusive right (even as to COLOPLAST) to market the Freedom MECs only in the UK, under the Freedom brands and marks upon the terms and conditions, as set forth in this Agreement.

1

     WHEREAS, RMC also desires to acquire from COLOPLAST, and COLOPLAST is also agreeable to granting to RMC, a first right of negotiation with respect to future improvements to the MEC in accordance with the provisions of this Agreement.

     WHEREAS, the execution, delivery and consummation of the transactions contemplated by the Divestiture and the Acquisition are each a necessary condition subsequent to this Agreement.

     WHEREAS, COLOPLAST’s ability to supply to RMC the Freedom MECs depends upon COLOPLAST’s Acquisition from ADAM and RMC’s authority and need for COLOPLAST’s supply of Freedom MEC products pursuant to this Agreement depends on the consummation of the Acquisition and Divestiture; and that therefore the parties desire to provide that the Acquisition and Divestiture all become effective prior to or simultaneous with the date that COLOPLAST becomes obligated to supply, and RMC becomes obligated to purchase Freedom MECs pursuant to this Agreement (“Conditions Precedent”).

     NOW, THEREFORE, in consideration of the foregoing premises and of the mutual promises and consideration provided herein, the parties, intending to be legally bound hereby, agree as follows:

Section 1 DEFINITIONS:

     Except as otherwise elaborated in this Section 1, the definitions set forth in the Recitals to this Agreement have the meanings there ascribed to them. In addition to such definitions, the following words and expressions shall have the meanings set forth in this Section:

     1.1. Confidential Information. “Confidential Information” means “Confidential Information” as defined in the Disclosure Agreement, and also includes all information of a confidential or proprietary nature disclosed by COLOPLAST to RMC or by RMC to COLOPLAST pursuant to or in connection with this Agreement or the Disclosure Agreement, and includes information regarding RMC’s purchases or sales of, including units, amounts and prices.

     1.2. Delivery Instructions. “Delivery Instructions” mean the instructions described in §4.5 hereof for delivery of each Order and other purchase orders as may be made from time to time.

2

     1.3. Direct Production Costs. “Direct Production Costs” mean the actual costs paid by COLOPLAST for the materials and direct labor used to manufacture the Freedom MECs.

     1.4. Disclosure Agreement. “Disclosure Agreement” means the Disclosure Agreement dated November 13, 2001, entered into between COLOPLAST and RMC

     1.5. Effective Date. “Effective Date” means the Effective Date set forth above in the first paragraph of this Agreement, or as otherwise defined by § 3.1.

     1.6. Extenuating Circumstance. “Extenuating Circumstance” means an event of force majeure as set forth in §14.3 of this Agreement or any excused failure by COLOPLAST or RMC to perform under this Agreement as set forth in §8 hereof.

     1.7. FDA. “FDA” means the United States Food and Drug Administration.

     1.8. First Rights. “First Rights” mean the right of first negotiation regarding Improvements as are set forth in §7.3 of this Agreement.

     1.9. Improvements. “Improvements” means the Improvements to the Freedom MEC agreed to by the parties in accordance with § 7 of this Agreement.

     1.10 Line Item. “Line Item” means a Freedom MEC configuration by size.

     1.11. Freedom MEC. “Freedom MEC” means COLOPLAST’s latex male external catheter in its ”Freedom ^®” and “Freedom Plus^®” and Uro-Flo UK configurations, and includes Improvements to the extent provided herein.

     1.12. Packaging Specifications. “Packaging Specifications” means the specifications for packaging Freedom MECs, as may be agreed from time to time by COLOPLAST and RMC in accordance with this Agreement. The current Packaging Specifications are set forth in Schedule 3 to this Agreement, and are the basis for the Transfer Price.

     1.13. Product Specifications. “Product Specifications” means the specifications, quality control tests and inspection procedures for Freedom MECs, as they exist as of the Effective Date, and which may be promulgated from time to time by COLOPLAST with express mutual agreement by RMC and in accordance with this Agreement, and

3

may include material modifications that may be agreed upon from time to time by RMC. The current Product Specifications are set forth in Schedule 2 to this Agreement.

     1.14. Term. “Term” means the Term provided in §3.1.

     1.15. Territory. “Territory “ means the United Kingdom.

     1.16. Transfer Price. “Transfer Price” means the initial Transfer Price for Freedom MECs set forth in Schedule 1 to this Agreement and includes Transfer Prices otherwise established in accordance with this Agreement.

Section 2 AGREEMENT FOR MARKETING AND DISTRIBUTION & LICENSE

     2.1. Marketing Rights & License. RMC shall have an exclusive license and right limited to the UK Territory to offer and sell the Freedom MECs that RMC purchases from COLOPLAST throughout the Territory under the existing Freedom brands and marks as defined above under Freedom MECs.

Section 3 TERM; TERMINATION; EXTENSION

     3.1. Term. Subject to the Conditions Precedent and other provisions of this Section 3, the Term of this Agreement shall commence on June 1, 2006, and continue thereafter for a period of five (5) years (“Initial Commitment Period”) unless terminated in accordance with the provisions hereof. Provided, however, in the event that each Conditions Precedent identified in Section 3.2 shall have not occurred by June 1, 2006 but shall have occurred prior to August 31, 2006, then the Term of this Agreement shall be deemed to have commenced on the first day of the month following the month in which the last of such Condition Precedents shall have occurred (“Effective Date”).

          3.1.1. Successive Commitment Periods. After the expiration of the Initial Commitment Period, the Agreement shall renew automatically for an additional one-(1) year period (the “Successive Commitment Period”)unless either party gives the other party written notice of that party’s intent not to renew at least one-hundred eighty (180) days prior to expiration of the Initial Commitment Period .

          3.1.2 Failure of Good Faith Negotiations. Upon failure of the parties to arrive at terms commercially reasonable and agreeable to each as provided in Section 3.3 hereof, then either party may terminate this Agreement without cause upon one-hundred eighty (180) days written notice.

4

          3.1.3 Failure of ConditionsPrecedent. If each of the Conditions Precedent identified in Section 3.2 and in the Recitals of the Agreement cannot or shall not have occurred by August 31, 2006, this Agreement shall automatically terminate without necessity of notice or further action by either party; in which event all rights and obligations of the parties created by this Agreement, shall become and be void ab initio.

     3.2 Conditions Precedent. Nothing in this Agreement to the contrary withstanding, the Term of this Agreement shall not commence until and unless each Condition Precedent identified with respect to the Acquisition and the Divestiture described in the Recitals to this Agreement shall have occurred.

     3.3 Good Faith Negotiations. At least ninety (90) days prior to the expiration of the Initial Commitment Period and each Successive Commitment Period, the Parties shall undertake good faith negotiations for the purpose of reaching agreement regarding Forecasting and Transfer Prices for the next Successive Commitment Period. Any Agreement reached by the Parties shall apply to the Next Successive Commitment Period or, if agreement is not reached until after commencement of such Period, shall be retroactive to its commencement. Nothing herein shall be deemed to require (i) any more than the exercise of good faith, (ii) the successful conclusion of any such negotiations, or (iii) the reaching of any final agreement regarding Forecasting Transfer Prices, or any other matter the Parties may wish to discuss or negotiate. In the event such good faith negotiations have not resulted in agreement, this Agreement shall continue in effect in accordance with the then applicable terms and conditions until and unless terminated in accordance with § 3.1.2 of this Agreement.

     3.4. Termination for Cause. A non-breaching party may terminate this Agreement upon ninety (90) days written notice to the other in case of a material breach of this Agreement that is not cured to the reasonable satisfaction of the notifying party within such period.

Section 4 PURCHASES; PRICE; ORDERS; FULFILLMENT

     4.1. 100% Requirements. RMC shall purchase from COLOPLAST during each year of the Term of this Agreement one hundred percent (100%) of RMC’s requirements for any latex MEC for each such year.

     4.3. Price. RMC shall pay COLOPLAST the applicable Transfer Price for Freedom MECs, FOB ship point, meaning COLOPLAST retains the risk of loss until

5

COLOPLAST has delivered product to the transport courier, properly packaged and delivered in accordance with the Delivery Instructions. The initial Transfer Prices for Freedom MECs are set forth on Schedule 1 to this Agreement. The applicable Transfer Price shall also be adjusted for changes in Packaging Specifications requested or directed by RMC.

     4.4 Firm Pricing. Subject to § 4.3, the Initial Transfer Prices for Freedom MECs shall remain firm until the second (2^nd) anniversary of the Effective Date of this Agreement, and shall thereafter be adjusted in accordance with § 4.4.1.

4.4.1. Price Adjustment. Commencing for the twelve-month period beginning on the 2rd anniversary of the Effective Date, and for each following year of the Initial Commitment Period (the “First, Second and Third Price Adjustment Years”, respectively) the Transfer Price will be subject to annual adjustments pursuant to good faith negotiations between RMC and COLOPLAST. COLOPLAST and RMC will commence such negotiations no later than ninety (90) days prior to the commencement of each Price Adjustment Year. Absent agreement from such good faith negotiations by thirty (30) days prior to the the commencement of a Price Adjustment Year, COLOPLAST may increase or decrease the Transfer Price to be effective at the commencement of that Price Adjustment Year by an amount calculated as follows:

4.4.1.1

For increases, One Hundred Sixty percent (160%) of the actual increase for direct labor and material costs exceeding five percent (5%) over the 2006 Base Index since the latest of (i) the commencement of the Term or (ii) the latest price adjustment to the Transfer Price, except adjustments for packaging changes directed or requested by RMC. COLOPLAST is to provide full documentation of such increases to RMC’S reasonable satisfaction before such price increase shall be effective.

4.4.1.2 For decreases, One Hundred Sixty(160%) of the actual decrease for direct labor and material costs decreasing more than five percent (5%) below the 2006 Base Index since the latest of (i) the Effective Date or (ii) the latest price

6

adjustment to the Transfer Price, except adjustments for packaging changes directed or requested by RMC.

4.4.1.3	Any adjustment to the Transfer Price will thereafter take effect at the beginning of the Price Adjustment Year to which the adjustment relates, and shall be then payable by RMC; except adjustments resulting from packaging changes requested or directed by RMC, which shall be effective immediately upon implementation.
4.4.1.4	For purposes hereof, “2006 Base Index” means COLOPLAST’s actual costs for material and labor at the Effective Date of this Agreement as demonstrated from COLOPLAST’s business records maintained in the ordinary course of its business.

     4.5. Passage of Title and Risk of Loss. It is understood that “FOB ship point means that upon delivery of Freedom MECs by COLOPLAST to a common carrier all title and risk of loss shall pass immediately to RMC, as currently produced in Minneapolis.

     4.6. Forecasts. Thirty (30) days prior to the expiration of each calendar quarter, during the Term of this Agreement, RMC shall provide to COLOPLAST a nonbinding, rolling forecast of RMC’s projected requirements for the four (4) next succeeding calendar quarters.

     4.7. Delivery Instructions. All Freedom MECs will be placed for delivery to the destination or destinations specified by RMC.

     4.8. Minimum Order Size. RMC shall use commercially reasonable ordering procedures with a view to placing purchase orders for Freedom MECs in minimum aggregate amounts of at least Fifty Four Thousand (54,000) units and with Line Item minimums of at least Eighteen Thousand (18,000) units per Line Item ordered.

COLOPLAST acknowledges that there may be circumstances under which RMC may place orders of lesser quantities.

     4.9. Order Fulfillment. COLOPLAST will endeavor to ship Freedom MECs ordered by RMC within seven (7) weeks following receipt of order, and COLOPLAST

7

will use commercially reasonable efforts to accommodate any earlier delivery date requested by RMC for unusual requirements.

     4.10. Invoice and Payment. COLOPLAST shall invoice RMC, thirty-five (35) days net for Freedom MEC shipments . RMC shall pay each such invoice within thirty-five (35) days following the invoice date.

     4.11. Non-Payment. If RMC is more than sixty (60) days in arrears for payment of any invoice from COLOPLAST, then in addition to any other right or remedy COLOPLAST may have at law or in equity, COLOPLAST shall be entitled upon thirty (30) days notice to withhold delivery of Freedom MECs until RMC has paid all such amounts in arrears.

     4.12. Country of Origin. COLOPLAST shall provide at RMC’s request a signed Affidavit of Country of Origin for Freedom MECs delivered to RMC pursuant to this Agreement.

     4.13. Regulatory Registration & Device Licensing. Each party shall bear its own costs and expenses for preparation of all documents necessary for registration and sale of Freedom MECs. The parties shall cooperate with each other and furnish each other such information as each may reasonably require from the other, including, where required by any government agency, the actual chemical compounds (excluding formulations and brands to the extent not reasonably required by the government agency) to effect such registration and with copies of any and all filings for review upon request.

     4.14 Obsoleted Packaging. Upon a change in Packaging Specifications requested or directed by RMC, RMC shall pay COLOPLAST an amount equal to COLOPLAST’s out-of-pocket expense for packaging materials made obsolete by such change; provided, however, said amount (i) shall be consistent with RMC’s forecasts pursuant to §4.6 and (ii) shall not in any case exceed the amount of packaging materials that would be reasonably consumed during a period of six (6) months. COLOPLAST shall notify RMC of the amount payable and furnish RMC with reasonable documentation substantiating COLOPLAST’s out-of-pocket expense. That amount shall be due and payable against invoice.

8

Section 5 CONFORMING AND NON-CONFORMING GOODS

     5.1. Conforming Goods. COLOPLAST warrants that, when delivered, Freedom MECs that RMC purchases from COLOPLAST, (i) shall have been manufactured in accordance with Quality System Regulations and current Good Manufacturing Practices codified at 21 CFR Part 820, Canadian Medical Devices Conformity Assessment System (“CMDCAS”) and ISO 13485:2003 (ii) shall be manufactured in accordance with applicable European Union Medical Device Directives, and other governmental authority laws governing the manufacturing, importation, offering and selling of medical devices in any jurisdiction in the Territory and permitting affixation of a CE Mark (iii) shall be manufactured in accordance with, and shall conform to, the then current Product Specifications, (iv) shall be packaged in accordance with the applicable Packaging Specifications, (v) shall not be misbranded or adulterated, and (iv) shall conform to the Technical Contract. No warranty is given hereunder for misuse, misbranding or adulteration occurring after delivery to RMC.

     5.2. Non-Conforming Goods. RMC may reject and shall not be obligated to pay for any Freedom MECs that RMC may purchase from COLOPLAST, that do not conform to any of the warranties given by COLOPLAST in Section 5.1 of this Agreement.

          5.2.1. Apparent Defects. Subject to the provisions of §5.2.2 hereof, RMC shall promptly give written notice (herein, “Notice of Rejection”) to COLOPLAST of any Freedom MECs delivered to RMC that are being rejected as defective or as non-conforming. To be effective, a Notice of Rejection (i) shall be in writing, (ii) shall specify the shipment or lots being rejected, (iii) shall be accompanied by relevant information substantiating the claim that such Freedom MECs were defective or failed to conform to the applicable Product Specifications at the time of their delivery, and (iv) shall be accompanied by a COLOPLAST Returned Goods Authorization Number. RMC shall be deemed to have accepted Freedom MECs delivered to it unless RMC gives Notice of Rejection within thirty (30) days from the date of delivery to RMC of the Freedom MECs that are being rejected.

          5.2.2. Non-Apparent Defects. If the defect or nonconformity is not readily apparent by physical inspection or revealed by the applicable quality control tests at the time Freedom MECs are delivered to RMC (“Non-Apparent Defects”), then RMC may revoke its acceptance thereof. RMC may revoke its acceptance of the Freedom MECs by notice (herein “Notice of Revocation”) given promptly upon discovery of any Non-Apparent Defect not later than one (1) year following the date of delivery to RMC of the Freedom MECs which are being rejected. Notwithstanding the foregoing, RMC may provide to COLOPLAST a Notice of Revocation of Freedom MECs with Non-Apparent Defects that have been returned by any of RMC’s customers up to three (3) years

9

following delivery by COLOPLAST to RMC of the Freedom MECs that are being rejected. To be effective, any Notice of Revocation must (i) be in writing, (ii) specify the shipment or lots for which acceptance is being revoked, and (iii) be accompanied by relevant information substantiating that the defects or non-conformities were Non-Apparent Defects.

          5.2.3. Testing and Inspection. RMC shall adopt and follow the criteria and procedures set forth in the Technical Contract for the acceptance or rejection of Freedom MECs upon receipt from COLOPLAST.

     5.3. Replacement. At COLOPLAST’s cost and expense, RMC shall ship to a destination specified by COLOPLAST any Freedom MECs that are rejected or for which their previous acceptance has been revoked. COLOPLAST shall promptly replace at its own cost and expense any Freedom MECs that are rejected by RMC or the previous acceptance of which RMC has revoked in accordance with this Agreement.

     5.4. Product Recalls. COLOPLAST and RMC shall reasonably cooperate and advise and consent with each other prior to any market withdrawal or recall of Freedom MECs, or with respect to any device notification or safety alert given at the request of the FDA, any comparable regulatory body, or otherwise (herein collectively, “Product Recall”). COLOPLAST shall bear all costs and expense incurred by either of the parties in connection with such Product Recall (the “Recall Costs”), including without limitation any expenses or obligations to third parties and any costs associated with the shipment of recalled Freedom MECs from customers to RMC or COLOPLAST. Provided, however, that RMC shall bear all of the Recall Costs incurred by either of the parties that result from any act, error or omission of RMC. RMC shall maintain complete and accurate records, as may be required by applicable law, of Freedom MECs sold by RMC.

     5.5. Customer Complaints. RMC shall be responsible for notifying appropriate regulatory authorities in the Territory of any customer complaints from its own customers or other occurrences regarding the Freedom MECs that RMC has sold as may required by law to be so reported. RMC shall promptly provide to COLOPLAST all information that RMC has received regarding any such complaints or occurrences that require review, action or investigation by COLOPLAST.

     5.6. Quality Assurance or other Product Modifications. COLOPLAST shall not materially modify any quality control test and/or compliance procedure relating to Freedom MECs, or any other aspect of the Product, the manufacturing processes or the supplies and components embodied therein respectively without (i) proper compliance

10

with Quality System Regulations (21 C.F.R. Part 820) and ISO 13485:2003 requirements and (ii) notification to RMC. COLOPLAST shall give RMC no less than ninety (90) days prior notice of COLOPLAST’s intent to make such a material change. Any changes that may require regulatory filings, updates or general documentation, COLOPLAST shall reasonably cooperate with RMC and provide the required documentation to effect such regulatory filing or update or to otherwise properly document RMC’s files.

     5.7. Audits and Inspections. Subject only to the provisions of this Agreement respecting Confidential Information, RMC shall have the right from time to time, but not more often than annually, upon reasonable notice to audit and inspect COLOPLAST’s manufacturing facilities and records, including technical files, relating to Freedom MECs. All such audits and inspections shall be conducted during COLOPLAST’s ordinary business hours. If any of RMC’s audits or inspections reveal material findings or noncompliances, RMC may re-audit and/or re-inspect more often than annually for follow-up audits and inspections.

Section 6 CONFIDENTIAL INFORMATION

     6.1. Confidential Information; Disclosure Agreement. All Confidential Information as defined in the Disclosure Agreement shall be maintained in confidence in accordance with the requirements of the Disclosure Agreement and of this Agreement. It is understood and agreed, however, that, notwithstanding anything herein to the contrary withstanding, COLOPLAST’s proprietary information viewed or reviewed by RMC during an audit or inspection of COLOPLAST’s manufacturing facilities shall be treated as Confidential Information.

     6.2. Confidential Information — Disclosure. Subject to the provisions of the Disclosure Agreement and Section 11.3.1 of this Agreement, neither party shall disclose any Confidential Information of the other to any person except an employee or attorney who (i) needs to know the Confidential Information for a proper purpose under this Agreement and (ii) acknowledges in writing that the Confidential Information may not be used or disclosed except in conformance with the requirements of this Agreement.

Section 7 IMPROVEMENTS; INFRINGEMENTS

     7.1 First Negotiation. COLOPLAST shall offer to negotiate with RMC an agreement, on terms generally similar to the terms of this Agreement, providing for COLOPLAST’s manufacture and RMC’s purchase of any Improved Freedom MEC (the “Improvement ” or “Improved Product”) that COLOPLAST may develop in the future. Such negotiations shall be conducted in good faith by the parties for a period of ninety

11

(90) days exclusively between the parties following the date upon which COLOPLAST’s notifies RMC of the Improvement with a view to entering such an agreement, but nothing herein shall be deemed to require any more than the exercise of (i) exclusivity during this ninety (90) day period; (ii) good faith, (ii) the successful conclusion of any such negotiations, or (iii) the reaching of any final agreement regarding COLOPLAST’s manufacture and sale and RMC’s purchase of any Improved Product. In addition, nothing herein shall be deemed to require COLOPLAST to develop an Improved Product or to conduct any development activities therefor except as may be determined by COLOPLAST in its sole and exclusive judgment. The right of first, exclusive negotiation granted herein shall expire at the earlier of (i) COLOPLAST and RMC reaching an agreement for COLOPLAST’s manufacture and sale and RMC’s purchase of an Improved Product or (ii) the expiration of the specified ninety (90) days.

     7.2. Limitations. Until the expiration of the right of exclusive good-faith negotiation set forth in § 7.1, COLOPLAST shall not offer the Improved Product to any person other than RMC permitting such person to sell the Improved Product . Upon expiration of such right, COLOPLAST shall be immediately free to market and the Improved Product on any terms deemed appropriate by COLOPLAST; provided, however, to the extent COLOPLAST markets the Improved Product on terms that may be considered more favorable than those offered to RMC, COLOPLAST shall thereupon offer the Improved Product to RMC on substantially equivalent terms. Nothing herein shall be deemed to limit COLOPLAST’s right to market and sell any Improved Product at any time under COLOPLAST’s own brand and marks, either before, during or after the period for good faith negotiations set forth in § 7.1.

     7.4. Infringement by Others. Should any actual or possible infringement or other violation by any third party of any patents, Confidential Information, or other intellectual property rights referenced herein and pertaining in whole or in part to the Freedom MECs, or the manufacture thereof, come to the attention of either party to this Agreement, such party shall promptly notify the other party of the alleged infringement or violation. The parties hereto shall consult with one another with a view to reaching agreement as to the best means of eliminating the infringement or violation; provided, COLOPLAST shall have the sole right unilaterally to commence, to not commence or to commence and discontinue any claim or suit for infringement of any patent or other intellectual property belonging to it at its own expense.

     7.5. Non-Infringement; Availability. COLOPLAST represents and warrants that:

12

          7.5.1. COLOPLAST is not aware of any infringement upon any patent or other intellectual property rights belonging to any other person or entity caused by the present or presently intended manufacture, sale or use of Freedom MECs by COLOPLAST.

          7.5.2. The manufacture, sale or use of the Freedom MECs by COLOPLAST do not infringe any UK patent.

          7.5.3. This Agreement and its performance by COLOPLAST, will not, breach any agreement executed by COLOPLAST.

          7.5.4. COLOPLAST is generally knowledgeable with respect to the patent rights of third parties relating to urinary catheters, and has conducted such inquiry and investigation as it deemed reasonably necessary for the purpose of determining whether the present or presently intended manufacture, sale or use of the Freedom MECs infringes any patent or technology of any third party. To the best of COLOPLAST’s knowledge, based upon such inquiry and investigation, the present or presently intended manufacture, sale and/or use of the Freedom MEC by COLOPLAST does not infringe any foreign patent or technology of any third party.

          7.5.5. Except as otherwise expressly stated herein, COLOPLAST makes no other warranty or representation (i) respecting the scope or enforceability of patent protection or the availability of patent protection in any jurisdiction, foreign or domestic, or (ii) respecting infringement of any patent or other intellectual property rights of others.

          7.6. Patent Maintenance.

               7.6.1 COLOPLAST will make all filings and periodic payments necessary to maintain all Patents which cover the Freedom MEC products that are the subject of this Agreement

          7.7. Regulatory Compliance. COLOPLAST warrants that Freedom MECs are presently eligible for sale in interstate commerce in accordance with applicable rules and regulations of the FDA and the European Union, and of comparable authorities.

13

Section 8 EXCUSED PERFORMANCE

     8.1. COLOPLAST’s Performance Excused. COLOPLAST’s obligation to provide Freedom MECS to RMC under this Agreement shall be excused for the duration of any event of force majeure preventing COLOPLAST’s performance of such obligation or for the duration of any event of non payment in accordance with §4.10 of this Agreement.

     8.2. RMC’s Performance Excused. RMC’s obligation to COLOPLAST under this Agreement shall be excused for the duration of any event of force majeure preventing RMC performance of such obligation.

Section 9 MUTUAL WARRANTIES AND REPRESENTATIONS

     9.1. Corporate Standing; Authority. COLOPLAST and RMC each represent and warrant to each other that it is a duly organized and validly existing corporation in good standing under the laws of the state in which it is incorporated, and that it has full corporate power and authority to carry on the business presently being conducted by it and to enter into and to perform its obligations under this Agreement.

     9.2. Due Authorization. COLOPLAST and RMC each represent and warrant to each other that it has taken all action necessary to authorize the execution and delivery of this Agreement.

Section 10 COVENANTS

     10.1. Covenants of COLOPLAST. COLOPLAST makes the following covenants:

          10.1.1. For the Term of this Agreement and for one (1) year thereafter, COLOPLAST shall maintain product liability insurance (containing both a Vendor’s Additional Insured Endorsement and a Products Contractual Liability Endorsement) on Freedom MECs with minimum limits of one million ($1,000,000) first dollar coverage per occurrence and two million dollars ($2,000,000) in the aggregate and five million dollars ($5,000,000) of corporate umbrella public liability insurance. RMC shall be named as an additional named insured in each policy of insurance required to be maintained by COLOPLAST hereunder. The issuer of each such policy shall be a standard company licensed to issue insurance in the State of Minnesota having a Best’s rating of A or higher and a policy holder surplus of not less than thirty five million ($35,000,000). Each such policy shall provide for (a) the issuance of a reporting or tail coverage endorsement upon the earliest of termination of (i) the base policy, (ii) the marketing and sale of Freedom MECs by RMC and (b) for not less than thirty (30) days

14

prior written notice to RMC of any proposed change in the nature, scope or amount of coverage. COLOPLAST shall provide RMC with certificates of such insurance and evidence of the payment of premiums therefor, promptly upon RMC’s request.

     10.2. Covenants of RMC. RMC makes the following covenants:

          10.2.2 RMC covenants (i) not to make any express warranties or other claims with respect to the Freedom MECs that have not been authorized by COLOPLAST, and (ii) not to misbrand or adulterate any Freedom MECs acquired from COLOPLAST and resold by RMC.

     10.3. Mutual Covenants. COLOPLAST and RMC each covenant to each other that:

          10.3.1. RMC and COLOPLAST will maintain all Confidential Information of the other in confidence in accordance with the provisions of this Agreement and the Disclosure Agreement. Notwithstanding the foregoing, RMC and COLOPLAST may disclose such Confidential Information as required by law; provided that the disclosing party shall (i) immediately notify the other party of the Confidential Information to be disclosed and the legal requirement for the disclosure of such Confidential Information; and (ii) use its commercially reasonable efforts to maintain the confidentiality of the Confidential Information to the maximum extent possible, using no less than the efforts COLOPLAST would use to protect its own confidential information, for example, by seeking a protective order. Provided, however, COLOPLAST shall not be required to seek confidential treatment for, or to take other affirmative steps to attempt to limit the dissemination of, information routinely required to be filed by COLOPLAST in accordance with COLOPLAST’s reporting requirements pursuant to the Copenhagen Exchange rules and regulations promulgated thereunder.

          10.3.2. Each party shall furnish to the other such information that is maintained by the furnishing party in the ordinary course of its business that the other party reasonably requests for the purpose of verifying the furnishing party’s compliance with the terms and conditions of this Agreement, including a complete and correct copy of any notice, report or other communication that it receives from the FDA or from any other governmental agency materially concerning the Freedom MEC.

          10.3.3. Each Party shall keep books and records in sufficient detail to permit verification of its compliance with the terms and conditions of this Agreement, and all such books and records shall be available for inspection upon prior written notice by the other party or its designated representative at the principal place of

15

business of the party keeping such books and records at reasonable times during regular business hours. This obligation is in addition to any other record keeping obligation under this Agreement.

Section 11 INDEMNIFICATION

     11.1. Indemnification by COLOPLAST. COLOPLAST shall defend, indemnify and hold RMC, its officers, directors, employees, and agents free and harmless from and against any and all claims, demands, actions and causes of action which are hereafter made or brought against RMC, its officers, directors, employees, agents or distributors by any person, firm, corporation or association for recovery of damages to property, or damages for injury, illness and/or death of any person which is alleged to be caused by or attributable to (i) an error, omission, act, failure or regulatory noncompliance by COLOPLAST in the manufacturing and production of Freedom MECs; or (ii) infringement of the Freedom MECs on any third-party’s rights; or (iii) a breach by COLOPLAST of any warranty, or covenant given by COLOPLAST under this Agreement; provided that the obligations of COLOPLAST hereunder shall not extend to claims for damages that are found to be solely attributable to the acts, omissions or negligence of RMC; and provided further that RMC shall make no settlement of any claim for which it seeks indemnity from COLOPLAST without the written approval of COLOPLAST.

     11.2. Indemnification by RMC. RMC shall defend, indemnify and hold COLOPLAST, its officers, directors, employees and agents free and harmless from and against any and all claims, demands, actions and causes of action which are hereafter made or brought against COLOPLAST, its officers, directors, employees, agents or distributors by any person, firm, corporation or association for recovery of damages to property, or damages for injury, illness and/or death of any person which is alleged to be caused by or attributable to (i) an error, omission, act, failure or regulatory noncompliance by RMC in the marketing of the Freedom MECs; or (ii) a breach by RMC of any representation, warranty or covenant given by RMC under this Agreement. Provided however, that the indemnification obligation of RMC hereunder shall not extend to claims for damages that are found to be attributable solely to the acts, omissions or negligence of COLOPLAST; and provided further that COLOPLAST shall make no settlement of any claim for which it seeks indemnity from RMC without the written approval of RMC.

16

Section 12 DAMAGES

     12.1. Damages for Breach. Except as may be otherwise expressly provided in this Agreement, nothing in this Agreement shall be construed to relieve a defaulting party from liability to the other, or to limit the amount of such liability, at law or in equity on account of a breach by the defaulting party of its duties and obligations under this Agreement. Neither party, however, shall be liable to the other for any consequential or incidental damages resulting from a breach, notwithstanding that the possibility thereof was known to the party in breach.

Section 13 GENERAL PROVISIONS

     13.1. Notices. All notices permitted or required under this Agreement shall be in writing and shall be deemed to have been given and received immediately (i) when personally delivered or when transmitted by telefacsimile machine to the party for whom intended at the telefacsimile number below, with a confirming copy sent by U.S. mail, addressed to the party for whom intended at the address set forth below or (ii) on the second business day after the date on which mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the party for whom intended at the address set forth below or such other address or telefacsimile number as provided by the parties in writing:

Anthony J. Conway, President
Rochester Medical Corporation
One Rochester Medical Drive
Stewartville, Minnesota 55976
Telefacsimile Number: (507) 533-9725

Henrik Norup Riecke, Vice President — Contract
Manufacturing
COLOPLAST A/S
Egevangen 4 2980
Kokkedal, Denmark.
Telefacsimile Number: +45 49 11 11 60

With a copy to:
Peter Volkers, Legal Affairs Director
Coloplast A/S
Holtedam 1, DK-3050
Humlebæk Denmark
Fax +45 49 11 24 10

17

     13.2. Resolution of Disputes. Any controversy, dispute or claim in connection with, arising out of or relating to this Agreement or the performance, enforcement, breach, termination, application or validity hereof shall be submitted to arbitration. Such arbitration proceedings shall be held in Minneapolis, Minnesota, in accordance with the rules then obtaining of the American Arbitration Association, except that: (i) the arbitrators shall furnish the parties with a written decision setting forth findings of fact, conclusions of law and an order; (ii) if the issue in dispute involves matters of patents, licensing or technology, the arbitration panel shall be composed of persons who are knowledgeable in such matters; (iii) a stenographic record shall be made of the arbitration proceedings; and (iv) the award of the arbitrators shall be subject to review by a court of competent jurisdiction, which court shall apply the same standard of review that an appellate court would apply in reviewing the decision of a trial court. Each arbitrator shall be neutral, impartial and independent of the parties and others having any known interest in the outcome, shall abide by the Canons of Ethics of the American Bar Association for neutral, independent arbitrators, and shall have no ex parte communications about the case. In addition to any monetary award that may be given, the arbitrators may order or direct either party to do any act required of it by this Agreement or to refrain from the doing of any act or practice that is contrary to this Agreement. This Agreement to arbitrate shall be specifically enforceable. Each party shall bear its own costs and expense in any such proceedings, but the arbitrators may, in their discretion and consistent with this Agreement, award costs and attorneys’ fees to either or both of the parties.

     13.3. Force Majeure. Neither of the parties shall be liable to the other for any delay or default in performing its obligations hereunder if such delay or default is caused by force majeure, such as wars or insurrection, strikes, fires, vandalism, floods, work stoppages, embargoes, lack of materials or other circumstances beyond the reasonable ability of the party affected thereby to control provided that the party so affected resumes the performance of its obligations with due diligence as soon as practicable after the effects of any such event have been alleviated.

     13.4. Binding on Successors. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and legal representatives of each of the parties hereto. Neither party may assign this Agreement, in whole or in part, without the express prior written consent of the other, and any whole or partial assignment without such written consent shall be entirely void, except in connection with the sale of all or substantially all of RMC’s male external catheter business line or in case of merger, conveyance to a subsidiary or similar reorganization.

18

     13.5. Amendment. No amendment or modification of this Agreement shall be valid or binding upon either of the parties hereto unless made in writing and signed by such party or its duly authorized officer or representative.

     13.6. Governing Law. This Agreement shall be construed in accordance with the laws of the state of Minnesota without giving effect to its conflicts of law provisions.

     13.7. Captions. Captions appearing in this Agreement are intended solely for convenience of reference and are not to be deemed a part of this Agreement.

     13.8. Entire Agreement. This Agreement constitutes the entire understanding of the parties with respect to its subject matter, and supersedes any prior agreement or agreements in principle between the parties.

Section 14 Survival

     The provisions of §§ 6, 10, 11, 12 and 13 shall survive the termination of this Agreement.

SECTION 15. Attachments.

     The following attachments are appended to and made part of this Agreement:

Schedule 1	Transfer Prices
Schedule 2	Product Specifications
Schedule 3	Packaging Specifications

19

     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by its duly authorized representatives as of the day and year first above written.

ROCHESTER MEDICAL CORPORATION,		COLOPLAST A/S
a Minnesota corporation		a Denmark corporation
By:	/s/ Anthony J. Conway Anthony. J. Conway	By:	/s/ Sten Scheibye Sten Scheibye
	President and Secretary		Its Chief Executive, CEO
ATTEST:		ATTEST:
By:	/s/ Martyn R. Sholtis Martyn R. Sholtis	By:	/s/ Peter Volkers Peter Volkers
	Its Vice President		Its Legal Affairs Director

20

EX-10.4

Exhibit 10.4

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (the “Agreement”), is entered into as of May 17, 2006, by and between Mentor Corporation, a Minnesota corporation (“Seller”), and Rochester Medical Corporation, a Minnesota corporation (“Purchaser”).

     WHEREAS, Seller has entered into that certain purchase agreement with Coloplast A/S, a Danish Corporation (“Coloplast”), dated May 17, 2006 pursuant to which Seller will sell certain of its assets to Coloplast, and Coloplast will assume certain liabilities, in each case relating to Seller’s surgical urology and consumer and clinical healthcare operating segments (the “Coloplast Purchase Agreement”);

     WHEREAS, the Parties are parties to an arbitration proceeding, filed by Purchaser with the American Arbitration Association (the “AAA”) on November 29, 2005, case No. AAA 65 133 M 00317 05 (the “Arbitration”);

     WHEREAS, the Parties have executed a binding Memorandum of Understanding dated as of April 2, 2006 (the “MOU”) pursuant to which, the Parties agreed, among other things, that, subject to the satisfaction of certain conditions, the Arbitration would be dismissed with prejudice, the Parties would execute a mutual settlement and release and Seller would sell, and Purchaser would purchase, the Assets;

     WHEREAS, the MOU provides that the Parties shall use all reasonable efforts to negotiate definitive agreements containing the terms set forth in the MOU and other commercially reasonable terms; and

     WHEREAS, this Agreement is being executed by the Parties to supersede the MOU in its entirety and effect the sale by Seller, and purchase by Purchaser, of the Assets upon the terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises herein made, and in consideration of the covenants, representations, warranties, conditions and agreements contained herein, the Parties hereto agree as follows:

ARTICLE 1.

DEFINITIONS

     The following terms shall have the following respective meanings for all purposes of this Agreement:

     “Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.

     “Cause” means (a) a Transferred Employee’s breach of any trade secret or any confidential information agreement with Purchaser (or a Subsidiary thereof), or written policy of Purchaser or a Subsidiary thereof, (b) willful misconduct by a Transferred Employee, which is injurious to the business of Purchaser, (c) the conviction of, or entry of a guilty plea by, a Transferred Employee for the commitment of, a crime of moral turpitude, (d) substance abuse, including alcohol, (e) taking an action for the purpose of harming the Purchaser or its business, (f) noncompliance with applicable Law in a manner that is injurious to the business of Purchaser, (g) fraud or intentional misrepresentation, or (h) continual, significant absenteeism.

     “Change of Control” means, with respect to a Party, a transaction or series of related transactions that would directly or indirectly: (a) result in or have the effect of a third Person obtaining legal or beneficial ownership of more than 50% of the voting shares (or other voting interests) of such Party (even if such Party is the surviving entity, such as in the case of a reverse triangular merger); or (b) result in the sale, transfer, assignment, exclusive license or other disposition of all or substantially all of the Party’s assets; other than, in the case of (a), a transaction pursuant to which the shareholders of such Party immediately prior to the relevant transaction continue to beneficially own at least 50% of the voting shares (or other voting interests) of such Party or its direct or indirect parent entity immediately following such transaction.

     “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985.

     “Code” means the Internal Revenue Code of 1986 and the Treasury Regulations promulgated thereunder.

     “Confidentiality Agreement” means the Confidentiality Agreement between Purchaser and Seller, dated January 25, 2006.

     “Constructive Termination” shall mean only a resignation of a Transferred Employee’s employment submitted within forty-five (45) days after the occurrence of any of the following events: (i) a material reduction in the Transferred Employee’s responsibilities, provided that a change of title shall not constitute such a material reduction; (ii) a reduction in the Transferred Employee’s base salary, other than a one-time reduction that applies to substantially all other employees of Purchaser; or (iii) a relocation of the Transferred Employee’s principal office to a location more than fifty (50) miles from the Anoka Facility; and provided in all the above cases the Purchaser has failed to cure the facts and circumstances giving rise to the Constructive Termination within fifteen (15) days after receipt of notice of such resignation.

     “Contracts” means all contracts, binding agreements, options, leases, licenses, sales, binding commitments and other similar instruments.

     “Covenant Breach” means with respect to a Party, a breach of, nonfulfillment or failure to comply with a covenant or agreement made or to be performed pursuant to this Agreement by such Party or a Subsidiary thereof.

-2-

     “Derivative Works” shall have the meaning ascribed to it under the United States Copyright Law, Title 17 U.S.C. Sec. 101 et. seq.

     “Employee Benefits Plan” means, whether written or oral: (a) any plan, fund, agreement or program which provides health, medical, surgical, hospital, vision or dental care or other welfare benefits, or benefits in the event of sickness, accident or disability, or death benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services; (b) any plan, fund, agreement or program which provides retirement income to employees or results in a deferral of income by employees for periods extending to the termination of covered employment or beyond; (c) any plan, fund, agreement, practice or program which provides severance, unemployment, vacation or fringe benefits (including dependent and health care accounts); (d) any incentive compensation plan, deferred compensation plan, stock option or stock-based incentive or compensation plan, or stock purchase plan; (e) any other “employee pension benefit plan” (as defined in Section 3(2) of ERISA), any other “employee welfare benefit plan” (as defined in Section 3(1) of ERISA); and (f) any other written or oral plan, agreement or arrangement involving direct or indirect compensation including insurance coverage, severance benefits, disability benefits, fringe benefits, pension or retirement plans, profit sharing, deferred compensation, bonuses (including any sale bonuses), stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation, as well as any change in control agreements, managing director agreements and other retention arrangements.

     “ERISA” means the Employee Retirement Income Security Act of 1974 and the regulations thereunder.

     “Encumbrance” means any lien, claim, charge, license, security interest, mortgage, pledge, easement, conditional sale or other title retention agreement, defect in title, covenant or other restrictions of any kind, other than a Permitted Encumbrance.

     “End Date” shall mean the End Date as defined in the Coloplast Purchase Agreement, as the same may be extended pursuant to the terms thereof.

     “Governmental Authority” means any national, supranational, local or foreign court, governmental or administrative agency or commission or other governmental agency, authority, instrumentality, notified body, competent authority, third party governmental designate or regulatory body having appropriate jurisdiction worldwide.

     “HIPAA” means the Health Insurance Portability and Accountability Act of 1996 and any regulations promulgated thereunder.

     “Intellectual Property Rights” or “IPR” means all rights associated with any of the following: (a) United States and foreign patents and applications therefor, including any patent or application that is a provisional application, reissue, re-examination, renewal, extension or continuation of a patent or patent application (“Patents”); (b) know-how, trade secret rights and all other rights in or to confidential business or technical information (“Trade Secrets”); (c) copyrights,

-3-

copyright registrations and applications therefor and all other rights corresponding thereto throughout the world (“Copyrights”); (d) trademarks, service marks, logos, trade dress rights and similar designation of origin and rights therein, registrations and applications for registration therefor (“Marks”); (e) industrial design rights and any registrations and applications therefor; (f) URLs, WWW address, and domain names (“Internet Properties”); (g) databases and data collections, (including knowledge databases, customer lists and customer databases (such customer lists and customer databases, the “Customer Information”); and (h) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world. Intellectual Property Rights specifically excludes contractual rights, including license grants, and the tangible embodiment of any of the foregoing.

     “Knowledge” means the actual knowledge of a Party’s executive officers.

     “Laws” means any applicable laws, statutes, ordinances, regulations, rules, interpretations, or orders of any Governmental Authority anywhere in the world.

     “Liabilities” means any and all debts, liabilities, obligations and duties (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether latent or patent, whether determined or undetermined, and whether due or to become due).

     “Licensed Field” means the manufacture of SMECs.

     “Licensed IPR” means all IPR owned or licensable by Seller as of the Closing that absent a license would be infringed by the manufacture of SMECs by Purchaser immediately after the Closing; provided however that “Licensed IPR” shall not include any Patents, Marks, Internet Properties or Customer Information.

     “Losses” means any and all losses, costs, obligations, Liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.

     “Operative Agreements” means the Bill of Sale, the Release, the Lease, the Dismissal and the Termination.

“Parties” means Seller and Purchaser, and each individually a “Party.”

     “Permitted Encumbrance” means any or all of the following: (a) licenses or other non-exclusive Intellectual Property Rights granted prior to the date of this Agreement by Seller to any third Person; and (b) Encumbrances which do not materially detract from the use of the Assets other than liens recorded pursuant to UCC-1 financing statements filed in the State of Minnesota.

     “Person” means any individual, corporation, partnership, limited liability company, trust, unincorporated organization, association, firm, joint venture, joint stock company, Governmental Authority or other entity.

-4-

     “Purchase Price” has the meaning set forth on Schedule 1.1.

     “Purchaser Benefits Plans” means the Employee Benefits Plans of Purchaser (or a Subsidiary thereof).

     “Purchaser Material Adverse Effect” means any change that is materially adverse to the net assets or financial condition of Purchaser and its Subsidiaries taken as a whole or to the ability of Purchaser to consummate the transactions contemplated hereby and by the Operative Agreements.

     “Purchaser SMECs” means all inventory of SMECs, including unpackaged SMECs, owned by the Seller as of the Closing that were produced by Purchaser at its facility located at 1 Rochester Medical Drive, Stewartville, Minnesota and that are in substantially the same condition as when received by the Seller from Purchaser (the “Purchaser SMECs”).

     “Registered IPR” means (i) issued Patents and Patent applications, (ii) registered Copyrights and applications to register Copyrights, (iii) registered Marks and applications to register Marks, and (iv) other formal registrations or applications to register Intellectual Property Rights with any Governmental Authority.

     “Seller Benefits Plans” means the Employee Benefits Plans of Seller (or a Subsidiary thereof) under which some or all of the Transferred Employees are eligible to participate immediately prior to the date of this Agreement.

     “Seller Material Adverse Effect” means any change that is materially adverse to the net assets or financial condition of Seller and its Subsidiaries taken as a whole or to the ability of Seller to consummate the transactions contemplated hereby and by the Operative Agreements.

     “Seller SMEC” means an SMEC produced by Seller at the Anoka Facility.

     “SMEC” means a Silicone Male External Catheter.

     “Subsidiary” means with respect to a Party, any other corporation, limited liability company, general or limited partnership, unincorporated association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Party, or one or more of the other Subsidiaries of such Party or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by such Party, or one or more Subsidiaries of such Party or a combination thereof.

     “Warranty Breach” means with respect to a Party, an inaccuracy or breach of a representation or warranty expressly made by such Party in the Agreement.

-5-

     “Years of Service” means, with respect to any Transferred Employee’s prior service as an employee of either Seller or a Subsidiary of Seller, fully completed calendar years plus the pro rated time described in the following sentence. Not fully completed calendar years shall be counted towards Years of Service at the rate of 1/12^th for each full calendar month of service.

     1.1 Other Definitions. The following terms are defined in the sections indicated:

Term	Section
AAA	Recitals
Agreement	Preamble
Anoka Facility	Section 2.2
Arbitration	Recitals
Assets	Section 2.1(f)
Bill of Sale	Section 3.2(a)
Cash Consideration	Section 3.3(b)
Closing	Section 3.1
Closing Date	Section 3.1
Coloplast	Recitals
Coloplast Purchase Agreement	Recitals
Copyrights	Definitions
Dismissal	Section 3.2(c)
Evaluation Material	Section 9.5(a)
Finished Goods	Section 2.1(d)
Internet Properties	Definitions
Lease	Section 3.2(d)
Licensee Party	Section 4.3
Licensor Party	Section 4.3
Marks	Definitions
MEC Agreement	Section 3.2(e)
MOU	Recitals
Offered Employee	Section 8.1
Patents	Definitions
Purchaser	Preamble
Purchaser Employment Liabilities	Section 8.8
Raw Materials	Section 2.1(b)
Release	Section 3.2(b)
Residuals	Section 4.2
Seller	Preamble
Seller Employment Liabilities	Section 8.9
Selling Subsidiary	Section 5.1
Tangible Assets	Section 2.1(a)
Trade Secrets	Definitions

-6-

Term	Section
Transferred Employee	Section 8.1
Transferred IPR	Section 2.1(f)
Transfer Taxes	Section 3.4
Transition Marks	Section 4.7(e)
Transition Products	Section 4.7(e)
WIP	Section 2.1(c)

ARTICLE 2.

PURCHASE AND SALE OF THE ASSETS

     2.1 Purchase and Sale of the Assets. At the Closing, upon the terms and subject to the conditions contained herein, Seller shall sell to Purchaser, effective as of the Closing, free and clear of all Encumbrances, and Purchaser shall purchase and acquire from Seller, all of Seller’s and its Subsidiaries right, title and interest in and to the following:

          (a) The tangible assets listed on Schedule 2.1(a) (the “Tangible Assets”);

          (b) All reasonably useable raw materials owned by Seller as of the Closing held for use in, and that are useable for, the production of Seller SMECs that are practicably capable of becoming SMECs that will be useable and acceptable to Coloplast (the “Raw Materials”);

          (c) All work-in-progress Seller SMECs (the “WIP”) owned by the Seller as of the Closing, that are practicably capable of becoming SMECs that are useable and acceptable to Coloplast;

          (d) All finished goods inventory of Seller SMECs (the “Finished Goods”), owned by the Seller as of the Closing, that are useable and acceptable to Coloplast;

          (e) The Purchaser SMECs; and

          (f) The IPR owned by Seller that: (i) is not (A) Registered IPR, (B) IPR transferred to Coloplast pursuant to the Coloplast Purchase Agreement, or (C) Patents, Marks, Internet Properties or Customer Information; and (ii) is used exclusively, as of the Closing, in connection with the manufacture of SMECs (the “Transferred IPR” and, collectively with the Tangible Assets, the Raw Materials, the WIP, the Finished Goods and the Purchaser SMECs, the “Assets”).

     2.2 Excluded Assets. Notwithstanding anything contained in this Agreement to the contrary, for the avoidance of doubt, the Parties agree that Seller is not selling and Purchaser is not purchasing the real property with all improvements now or hereafter located thereon commonly

-7-

known as 800 Lund Boulevard, Anoka, Minnesota, including the land and the building located thereon (collectively, the “Anoka Facility”) or any other assets (including IPR) of Seller other than the Assets.

     2.3 Bulk Sales. Purchaser hereby waives compliance with the provisions of any applicable laws which relate to the sale of property in bulk in connection with the sale of the Assets to the Purchaser.

     2.4 Retained Liabilities. The parties specifically acknowledge that Purchaser is not agreeing to assume any Liabilities of Seller, whether related to the Assets or otherwise, other than the Purchaser Employment Liabilities, and that nothing in this Agreement, including this Section 2.4, will be construed as an agreement otherwise.

ARTICLE 3.

CLOSING

     3.1 Closing. The transactions contemplated by this Agreement shall be consummated (the “Closing”) at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at 650 Page Mill Road, Palo Alto, California, no later than two Business Days after all of the conditions set forth in Article 7 shall have been satisfied or waived (other than those conditions that by their terms are not capable of being satisfied or waived until the Closing), or such other time, place or date as Seller and Purchaser may mutually agree in writing. The time and date on which the Closing is actually held is sometimes referred to herein as the “Closing Date.”

     3.2 Deliveries by Seller. At the Closing, Seller will deliver or cause to be delivered to Purchaser (unless previously delivered) the following:

          (a) a duly executed counterpart of the Bill of Sale for the Tangible Assets, the Raw Materials, the WIP, the Finished Goods and the Purchaser SMECs in the form attached hereto as Exhibit A (the “Bill of Sale”);

          (b) a duly executed counterpart of the Mutual Settlement and Release in the form attached hereto as Exhibit B (the “Release”);

          (c) a duly executed counterpart of the Stipulation of Dismissal to be filed by Purchaser with the AAA in the form attached hereto a Exhibit C (the “Dismissal”);

          (d) a duly executed counterpart of the lease for the Anoka Facility in the form attached as Exhibit D (the “Lease”); and

          (e) A duly executed counterpart of the termination in the form attached as Exhibit E (the “Termination”) which provides for the termination of (i) the Male External Catheter License,

-8-

Sales and Distribution Agreement (including the Patent License, the Technology License and the Confidential Information thereunder), between Purchaser and Seller dated as of April 24, 1991, as amended by the Settlement Agreement between Purchaser and Seller with an effective date of September 8, 1995 (the “MEC Agreement”), pursuant to which termination, among other things, Seller will relinquish its right to use any IPR or confidential information of Purchaser licensed thereunder; (ii) the Supply Agreement between Purchaser and Seller dated October 1, 2001; and (iii) the Foley Catheter Sales and Distribution Agreement between Purchaser and Seller dated as of April 24, 1991. Notwithstanding the foregoing, and for the avoidance of doubt, the Termination shall not restrict or limit in any way the covenants made and licenses granted pursuant to Article 4 hereof.

     3.3 Deliveries by Purchaser. At the Closing, Purchaser will deliver or cause to deliver to Seller (unless previously delivered) the following:

          (a) $750,000 in cash representing the aggregate purchase price for the Tangible Assets and the Transferred IPR by wire transfer of immediately available federal funds to an account specified by Seller;

          (b) an amount of cash equal to the aggregate Purchase Price for the Purchaser SMECs, the Raw Materials, the WIP and the Finished Goods by wire transfer of immediately available federal funds to an account specified by Seller (together with (a) above, the “Cash Consideration”);

          (c) a duly executed counterpart of the Bill of Sale;

          (d) a duly executed counterpart of the Release;

          (e) a duly executed counterpart of the Dismissal;

          (f) a duly executed counterpart of the Lease; and

          (g) a duly executed counterpart of the Termination.

     3.4 Transfer Taxes. Purchaser shall be responsible for and shall pay when due any sales, use, value-added, gross receipts, excise, registration, stamp duty, transfer or other similar taxes or governmental fees (including any interest or penalties related thereto) that may be payable in connection with the transactions contemplated by this Agreement (the “Transfer Taxes”). The Parties hereto shall cooperate, to the extent reasonably requested and permitted by applicable law, in minimizing any such Transfer Taxes. The Party required by law to file a tax return with respect to such Transfer Taxes shall do so within the time period prescribed by law, and Purchaser shall promptly pay Seller for any Transfer Taxes so payable by Seller upon receipt of notice that such Transfer Taxes have become payable.

     3.5 Delivery; Further Assurances.

-9-

          (a) On the Closing Date, Seller shall deliver to Purchaser at the Anoka Facility, all of the Assets with the exception of Assets delivered by electronic means. All Assets capable of being delivered by electronic means shall be delivered by electronic means as mutually agreed upon by Purchaser and Seller.

          (b) Seller shall, at any time and from time to time after the Closing, upon the request of Purchaser and at the expense of Purchaser, do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney or assurances as may be reasonably required, or to vest in Purchaser all of the Seller’s right, title and interest in the Assets. Each of the Parties hereto will cooperate with the other and execute and deliver to the other such other instruments and documents and take such other actions as may be reasonably requested from time to time by the other Party hereto as necessary to carry out, evidence and confirm the intended purposes of this Agreement. Purchaser shall be solely responsible for the filing and recordation of any transfer documents following the Closing.

ARTICLE 4.

INTELLECTUAL PROPERTY LICENSES

     4.1 Seller License. Subject to the terms and conditions of this Agreement, effective as of the Closing, Seller and its Subsidiaries hereby grant to Purchaser and its Subsidiaries a worldwide, perpetual, irrevocable, fully paid-up, non-exclusive right and license under all of Seller’s rights in the Licensed IPR, to use, copy, create Derivative Works from, sell, and distribute the Assets, or any products and provide any services, in the Licensed Field.

     4.2 Purchaser License and Covenant.

          (a) Subject to the terms and conditions of this Agreement, effective as of the Closing, Purchaser and its Subsidiaries hereby grant Seller and its Subsidiaries, and Seller and its Subsidiaries retain, under the Transferred IPR, a worldwide, perpetual, fully paid-up, non-exclusive right and license to use, copy, create Derivative Works from, sell and distribute products, and provide services, based upon the Residuals. “Residuals” means any IPR provided under or relating to the MEC Agreement (including Confidential Information as defined thereunder) or any Transferred IPR that is retained in the unaided memory of employees of Seller or its Subsidiaries following the Closing.

          (b) Without limiting Section 4.2(a), Purchaser agrees, effective commencing as of the Closing, that neither it nor any of its Subsidiaries will bring any action or assert any claim against Seller, its Subsidiaries, their successors, or Coloplast based upon or alleging that any trade secrets or other information or materials in the possession of, known to, or used by Seller, as of the date hereof or transferred or disclosed by Seller to Coloplast in connection with the Coloplast Purchase Agreement was or is misappropriated by Seller (or Coloplast) from Purchaser, violates

-10-

Purchaser’s trade secret rights, or infringes Purchaser’s copyrights, in each case outside the Licensed Field. Coloplast shall be deemed an express third party beneficiary with rights of enforcement under this Section 4.2(b) to the extent this Section 4.2(b) relates to any assets acquired by Coloplast from Seller.

     4.3 Existing Licenses. All licenses granted by a Party (“Licensor Party”) to the other Party or its Subsidiaries, as applicable (“Licensee Party”) under this Article 4 are subject to any and all Contracts between the Licensor Party and any third Person entered into prior to the Closing.

     4.4 Reservation of Rights. Each of the Licensor Parties hereby reserves all rights not expressly granted hereunder. No implied licenses are granted by Seller or Purchaser with respect to any of the Assets or pursuant to any term of this Agreement.

     4.5 Trade Secret Protection and Use. Notwithstanding the retention of ownership of any Trade Secrets by Seller (and the license granted thereto to Purchaser), or transfer of ownership of Trade Secrets to Purchaser (with a license retained thereto by Seller) hereunder, each Party agrees (i) nothing set forth herein shall limit either Party’s rights to enforce its rights with respect to any misappropriation following the Closing by third parties of such Trade Secrets or to protect the confidentiality of such Trade Secrets regardless of whether such Trade Secrets are licensed to, or owned by such Party, and (ii) each Party shall treat the Trade Secrets of the other with at least the same degree of care, as its does its own like Trade Secrets, but in no event with less than reasonable care; provided that each Party may use and disclose the Trade Secrets of the other within the scope of the licenses granted hereunder.

     4.6 Transfer and Sublicensing. Except with respect to the license granted to Purchaser pursuant to Section 4.7, the Licensee Party may transfer, assign or sublicense the licenses granted to it hereunder; provided, however, that with respect to the license to Residuals granted to Seller pursuant to Section 4.2(a) hereof, such license may not be transferred, assigned or sublicensed by Seller (i) to Coloplast or (ii) to any other person except pursuant to a Change of Control of Seller.

     4.7 License to Transition Marks.

          (a) Seller hereby grants to Purchaser, effective as of the Closing, a non-exclusive, non-transferable license under the Transition Marks (as defined below) to use such Transition Marks in connection with the sale and distribution of Transition Products (as defined below) in the U.K. in substantially the same manner that such Transition Marks were used by Seller or Mentor Medical Limited in the U.K. prior to the Closing. All goodwill associated with the use of such Transition Marks shall inure to the benefit of Seller.

          (b) Purchaser shall maintain the quality of the goods with which such Transition Marks are used at least at the same level maintained by Seller prior to the Closing. Without limiting the foregoing, Purchaser shall not (i) use the Transition Marks in a manner that detracts from the goodwill associated with such Transition Marks or in a manner contrary to the reasonable instructions of Seller, (ii) co-brand the Transition Products with any other Marks without the prior

-11-

written consent of Seller, or (iii) sell any Transition Product beyond its shelf life or in any other improper manner. Purchaser shall not make any warranty, express or implied, to any third party on behalf of Seller with respect to the Transition Products and except as may be otherwise provided under this Agreement shall be solely responsible for all Transition Products sold by it.

          (c) Purchaser will use reasonable commercial efforts, subject to regulatory requirements, to cease using the Transition Marks as promptly as practicable following the Closing, and replace such Transition Marks with new Marks owned by Purchaser. Without limiting the generality of the foregoing, in no event may Purchaser market, package, sell or promote any product under or bearing a Transition Mark after the last day of the ninth (9^th) month following the Closing Date.

          (d) Purchaser will sell Transition Products in inventory on a first-in-first-out (FIFO) basis in advance of any other products that are reasonable substitutes for the Transaction Products but which other products do not bear the Transition Marks.

          (e) For the purposes of this Section 4.7, (i) “Transition Products” means all SMECs in Mentor Medical Limited’s inventory that are purchased by Purchaser from Coloplast under the MML Purchase Agreement, and (ii) “Transition Marks” means all Marks used by Seller or Mentor Medical Limited in the U.K. that use or contain the letter string “MENTOR” prior to the Closing in connection with the distribution and sale of SMECs by Mentor Medical Limited which are affixed as of the Closing to the Transition Products.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants to Purchaser that:

     5.1 Organization and Qualification/Ownership of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota and has all requisite corporate power and authority to own, lease and operate the Assets. Each of Seller’s Subsidiaries which owns Assets (each, a “Selling Subsidiary”) is an entity duly organized, validly existing and in good standing (where applicable) under the laws of its jurisdiction of organization and has all requisite corporate (or similar) power and authority to own, lease and operate the Assets. Seller and the Selling Subsidiaries are each duly qualified to do business as a foreign corporation and are in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Seller Material Adverse Effect.

     5.2 Due Authorization. Seller has all requisite corporate power and authority to execute and deliver this Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and the Operative Agreements, the

-12-

performance by Seller of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly and validly executed by Seller, and this Agreement and each Operative Agreement to which Seller is a party are, upon execution and delivery hereof and thereof by Seller, valid and binding obligations of Seller, enforceable against it in accordance with the terms hereof and thereof (except as the enforceability hereof and thereof may be limited by any applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally or by general principles of equity, regardless of whether such enforceability is considered in equity or at law).

     5.3 No Conflict. Except as set forth in Schedule 5.3, neither the execution and delivery by Seller of this Agreement or any of the Operative Agreements, nor the consummation by Seller of the transactions contemplated hereby or thereby, nor compliance by Seller with any of the provisions hereof or thereof, will: (a) conflict with, result in a breach or violation of or constitute (or with notice or lapse of time or both constitute) a default under, (i) the Articles of Incorporation or Bylaws of Seller or the like organizational documents of each Selling Subsidiary, (ii) any order, judgment, decree, writ or injunction expressly applicable by its terms to any of the Assets (but not including an order, judgment, decree, writ or injunction of general applicability), (iii) to the Knowledge of Seller, any Law or other order, judgment, decree, writ or injunction applicable to any of the Assets, or (iv) any of the terms, conditions or provisions of any Contract to which Seller or its Subsidiaries is a party or by which Seller or its Subsidiaries (or any of the Assets) is subject or bound which conflict, breach, violation or default would have a Seller Material Adverse Effect; or (b) require Seller or, to the Knowledge of Seller, Purchaser to obtain any authorization, consent, approval or waiver from, or to notify or to make any filing with, any Governmental Authority.

     5.4 Title to Assets. Seller has good and marketable title to the Assets (other than the Transferred IPR), free and clear of all Encumbrances. Seller owns all right, title and interest in and to all of the Transferred IPR and/or has the right and authority to transfer such Transferred IPR to Purchaser in accordance with the terms hereof free and clear of all Encumbrances.

     5.5 Brokers. Seller and its Subsidiaries has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement that is not the sole obligation of Seller.

     5.6 Employees. As of the date hereof, none of the Offered Employees are on an approved leave of absence from work with Seller nor as of the date hereof has any such Offered Employee provided written notice to Seller’s human resources department in accordance with Seller’s human resource policies that he or she intends to take an approved leave of absence from work after the date hereof.

     5.7 Exclusive Warranties. Except as set forth in this Article 5, Seller does not make any representations or warranties, expressly or impliedly, with respect to the Assets, which are being sold “AS IS” in all respects with all faults and without any other warranties of any kind. EXCEPT AS SPECIFICALLY CONTAINED IN THIS ARTICLE 5, SELLER EXPRESSLY DISCLAIMS

-13-

ALL OTHER EXPRESS, STATUTORY AND IMPLIED WARRANTIES AND CONDITIONS, INCLUDING THE IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY, SATISFACTORY QUALITY, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY OR SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF PURCHASER’S, WHETHER OR NOT SELLER HAS BEEN MADE AWARE OF ANY SUCH PURPOSE.

ARTICLE 6.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser hereby represents and warrants to Seller as follows:

     6.1 Organization. Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Minnesota and has all requisite corporate power and authority to purchase the Assets in accordance with the terms of this Agreement.

     6.2 Due Authorization. Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Purchaser of this Agreement and the Operative Agreements, the performance by Purchaser of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Purchaser. This Agreement has been duly and validly executed by Purchaser, and this Agreement and each Operative Agreement to which Purchaser is a party are, upon execution and delivery hereof and thereof by Purchaser, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with the terms hereof and thereof (except as the enforceability hereof and thereof may be limited by any applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally or by general principles of equity, regardless of whether such enforceability is considered in equity or at law).

     6.3 No Conflict. Neither the execution and delivery by Purchaser of this Agreement or any of the other documents contemplated hereby, nor the consummation by Purchaser of the transactions contemplated hereby or thereby, nor compliance by Purchaser with any of the provisions hereof or thereof, will: (a) conflict with, result in a breach or violation of or constitute (or with notice or lapse of time or both constitute) a default under, (i) the Articles of Incorporation or Bylaws of Purchaser, (ii) any order, judgment, decree, writ or injunction expressly applicable by its terms to Purchaser (but not including an order, judgment, decree, writ or injunction of general applicability), (iii) to the Knowledge of Purchaser, any Law or other order, judgment, decree, writ or injunction of general applicability that is applicable to the Purchaser or (iv) any of the terms, conditions or provisions of any Contract to which Purchaser is a party or by which Purchaser is bound which conflict, breach, violation or default would have a Purchaser Material Adverse Effect; or (b) require Purchaser, or to the Knowledge of Purchaser, Seller, to obtain any authorization,

-14-

consent, approval or waiver from, or to notify or to make any filing with, any Governmental Authority.

     6.4 Sufficiency of Funds. The Purchaser has available, and will have available at the Closing, sufficient funds to enable it to consummate the transactions contemplated hereby and by the other Operative Agreements.

     6.5 Brokers. Purchaser has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement that is not the sole obligation of Purchaser.

     6.6 Exclusive Warranties. Purchaser acknowledges that, except for the express representations and warranties set forth in Article 5, Seller does not make any representations or warranties, expressly or impliedly, with respect to the Assets, which are being sold “AS IS” in all respects with all faults and without any other warranties of any kind. PURCHASER ACKNOWLEDGES THAT EXCEPT AS SPECIFICALLY CONTAINED IN ARTICLE 5, SELLER EXPRESSLY DISCLAIMS ALL OTHER EXPRESS, STATUTORY AND IMPLIED WARRANTIES AND CONDITIONS, INCLUDING THE IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY, SATISFACTORY QUALITY, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY OR SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF PURCHASER’S, WHETHER OR NOT SELLER HAS BEEN MADE AWARE OF ANY SUCH PURPOSE.

ARTICLE 7.

CONDITIONS

     7.1 Conditions to Obligations of Purchaser and Seller. All obligations of Purchaser and Seller to effect the Closing hereunder are subject to the satisfaction at or prior to the Closing of the conditions precedent that follow, any one or more of which may be waived in writing, in whole or in part, by Seller and Purchaser acting jointly:

          (a) No Injunction or Restraints; Illegality. No provision of any applicable Law shall have been enacted, entered, promulgated or enforced by any Governmental Authority that prohibits, restrains, enjoins, or restricts the consummation of the transactions contemplated hereby in any material respect and no litigation or proceeding shall be pending by any Governmental Authority seeking to prohibit, restrain, enjoin or restrict the consummation of the transactions contemplated hereby in any material respect which would reasonably be expected to succeed.

          (b) Governmental Approvals. All material consents, approvals and actions of, filings with and notice to any Governmental Authority necessary to permit Purchaser and Seller to perform their obligations under this Agreement and to consummate the transactions contemplated hereby shall have been duly obtained, made or given, and all terminations or expirations of waiting

-15-

periods imposed by any Governmental Authority necessary for the consummation of the transactions contemplated by this Agreement shall have occurred.

          (c) Coloplast Closing. The “Closing” as defined in the Coloplast Purchase Agreement shall have occurred or shall occur simultaneously with the Closing.

          (d) Purchaser-Coloplast Agreements. Purchaser and Coloplast shall have entered into: (i) that certain Agreement by and among Purchaser, Coloplast, Mentor Medical Limited, Coloplast Limited and Rochester Medical Limited dated as of the date hereof pursuant to which, among other things, Purchaser will purchase from Coloplast, and Coloplast will sell to Purchaser, certain assets and liabilities pertaining to the sale of SMECs in the United Kingdom (the “MML Purchase Agreement”); (ii) that certain Private Label Distribution Agreement dated as of the date hereof; and (iii) that certain Patent Cross-License Agreement dated as of the date hereof.

     7.2 Conditions to Obligations of Purchaser. All obligations of Purchaser to effect the Closing hereunder are subject to the satisfaction at or prior to the Closing of the conditions precedent that follow, any one or more of which may be waived in writing, in whole or in part, exclusively by Purchaser in its sole discretion:

          (a) Closing Deliverables. Seller shall have made all the deliveries required to be made by Seller pursuant to Section 3.2.

          (b) Representations and Warranties. The representations and warranties set forth in Article 5 shall be true and correct in all material respects on date hereof and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date.

          (c) Performance. Seller and/or its Subsidiaries shall have performed and complied in all materials respects with each of the agreements, covenants and conditions contained in this Agreement that are required to be performed or complied with by Seller and/or its Subsidiaries at or prior to the Closing.

          (d) Officer’s Certificate. Purchaser shall have received at the Closing, with respect to Seller, a certificate, dated as of the Closing Date, of an appropriate officer of Seller certifying that the conditions set forth in Section 7.2(b) and Section 7.2(c) have been satisfied.

     7.3 Conditions to Seller’s Obligations. All obligations of Seller to effect the Closing hereunder are subject to the satisfaction at or prior to the Closing of the conditions precedent that follow, any one or more of which may be waived in writing, in whole or in part, exclusively by Seller in its sole discretion:

          (a) Closing Deliverables. Purchaser shall have made all the deliveries required to be made by Purchaser pursuant to Section 3.3.

-16-

          (b) Representations and Warranties. The representations and warranties set forth in Article 6 shall be true and correct in all material respects on date hereof and as of the Closing as though such representations and warranties were made on and as of the Closing.

          (c) Performance. Purchaser and/or its Subsidiaries shall have performed and complied in all materials respects with each of the agreements, covenants and conditions contained in this Agreement that are required to be performed or complied with by Purchaser and/or its Subsidiaries at or prior to the Closing.

          (d) Officer’s Certificate. Seller shall have received at the Closing, with respect to Purchaser, a certificate, dated as of the Closing Date, of an appropriate officer of Purchaser certifying that the conditions set forth in Section 7.3(b) and Section 7.3(c) have been satisfied.

ARTICLE 8.

EMPLOYEE MATTERS

     8.1 Employee Offers. On a date or dates to be mutually agreed upon by Purchaser and Seller, which shall be no later than the tenth (10th) Business Day after the date Seller delivers Schedule 8.1 to Purchaser, Purchaser will extend an offer of employment to each employee of Seller listed on Schedule 8.1 (each, an “Offered Employee”), which schedule will provide with respect to each Offered Employee his or her current position/title, base salary, benefits and time of service.. Each such offer shall provide for employment by Purchaser effective only as of and after the Closing Date and at a job responsibility level and title that is substantially similar to or higher than such Offered Employee’s employment with Seller for the year prior to the date of the offer. Effective only as of the Closing and after the Closing Date, Purchaser will hire each Offered Employee who accepts the offer of employment extended to such individual by Purchaser (each, a “Transferred Employee”). Notwithstanding the foregoing, any Offered Employee who is, at the time an offer of employment is required under this Section 8.1 to be made, on a Seller’s (or a Subsidiary’s thereof) approved leave of absence from work, shall not become an employee of Purchaser (and shall not be considered a Transferred Employee) unless and until such employee becomes eligible to return to active employment within one year after the Closing Date in accordance with Seller’s human resource policies and applicable Laws and actually commences employment with Purchaser.

     8.2 Service Credit; Waivers; Credits. Provided Seller provides Purchaser at the Closing with a certificate of credible coverage under HIPAA for all Transferred Employees, Purchaser shall provide each Transferred Employee with credit for purposes of eligibility, vesting and benefit accrual under the Purchaser Benefits Plans for Years of Service on and prior to the Closing Date with Seller and its Subsidiaries credited under the comparable Seller Benefits Plans, including recognition of such service for purposes of determining Transferred Employees’ amount of paid time off or vacation and severance benefits; provided, however, that, except as provided in Section 8.6 or Section 8.7, in no event shall Purchaser be required to provide any service credit to any Transferred Employee to the extent the provision of such credit would result in any duplication of benefits or

-17-

would cause one of the Purchaser Benefit Plans to fail to satisfy the nondiscrimination requirements under federal law (including the Code). Purchaser shall cause any pre-existing conditions or limitations and eligibility waiting periods (to the extent that such waiting periods would be inapplicable under Seller Benefits Plans) under any Purchaser Benefits Plans to be waived with respect to Transferred Employees and their eligible dependents, provided that if required by Purchaser such employees present a certificate of creditable coverage. Purchaser shall provide the Transferred Employees and their eligible dependents with credit for any deductibles and annual out-of-pocket limits for medical, dental and vision expenses paid during the applicable period under any Purchaser Benefits Plans in satisfying any deductibles and annual out-of-pocket limits for medical, dental and vision expenses for the corresponding period under the Purchaser Benefits Plans.

     8.3 401(k) Plan. To the extent permitted under Section 401(k) of the Code and regulations issued thereunder, Transferred Employees who participate in Seller’s 401(k) plan shall be eligible to receive, at their election, a distribution of their account balance from Seller’s 401(k) plan after the Closing Date. Purchaser shall use reasonable efforts to cause its 401(k) plan to accept eligible rollovers of such distributions, provided that Purchaser determines that receipt of any such rollover will not result in a disqualification of Purchaser’s 401(k) plan. Rollovers relating to any Transferred Employee may include participant loans, provided that it is permitted by Purchaser’s 401(k) plan (it being expressly understood that Purchaser is not obligated to amend Purchaser’s 401(k) plan to accept rollovers).

     8.4 FSA. Promptly after the Closing Date, Seller shall transfer and Purchaser shall accept the flexible spending account elections, liabilities and accounts (maintained pursuant to Code Sections 105 and 129) of the Transferred Employees under Seller’s Section 125 plan flexible spending arrangement. Promptly after the Closing Date, Seller shall cause to be transferred to Purchaser the aggregate net cash amount (determined immediately prior to the Closing) for contributions paid (but not yet reimbursed) by or on behalf of the Transferred Employees under Seller’s Section 125 plan flexible spending arrangement.

     8.5 Vacation. Seller shall allow Transferred Employees to transfer any accrued but unused vacation time (which vacation time was accrued in accordance with Seller’s policies consistent with past practice) to Purchaser. Only Transferred Employees who submit a vacation consent form, prior to the Closing Date, are eligible to transfer vacation time to Purchaser. To the extent permitted by law, Purchaser shall assume such accrued but unused vacation time and allow each Transferred Employee to use such accrued vacation time after the Closing Date. The transfer of vacation time shall not affect each Transferred Employee’s accrual of vacation under Purchaser’s vacation policies. Seller shall be liable for and pay in cash an amount equal to any accrued but unused vacation time to any (i) Transferred Employee who has not executed a vacation consent form or (ii) any Offered Employee who declines to accept Purchaser’s offer of employment made in accordance with Section 8.1, and whose employment terminates prior to the Closing.

     8.6 Compensation and Benefits. Purchaser will compensate each Transferred Employee (so long as any such Transferred Employee remains employed by Purchaser or any Subsidiary

-18-

thereof, and subject to Purchaser’s termination rights and resulting severance obligations under Section 8.7) for at least one year after the Closing as follows:

          (a) Each Transferred Employee shall receive a rate of total cash compensation, including base salary rate and target bonus opportunity, which shall be at least substantially similar to the total cash compensation opportunity provided to the Transferred Employee by Seller immediately prior to the date of this Agreement;

          (b) Each Transferred Employee shall participate in Purchaser’s health and welfare benefit plans, which shall provide for benefits that are at least substantially similar to the health and welfare benefits provided under those Seller Benefits Plans in effect immediately prior to the Closing, or if a Transferred Employee is not eligible to participate in Purchaser’s health plans and the Transferred Employee elects COBRA under Seller’s health plan, then Purchaser shall pay the Transferred Employee’s COBRA premiums for up to 12 months; and

          (c) Each Transferred Employee shall participate in Purchaser’s other benefit plans provided to employees of Purchaser of a similar level of job responsibility as the Transferred Employee.

     Following the 12-month period immediately after the Closing Date and thereafter, Transferred Employees shall participate in the Purchaser’s severance program provided to similarly situated Purchaser employees and be provided credit for years of service under such severance program for their service with Seller and Purchaser.

     8.7 Severance. Purchaser shall provide any Transferred Employee whose employment is terminated by Purchaser (other than employees terminated for Cause) or who resigns as a result of a Constructive Termination, in each case within the 12-month period immediately following the Closing Date, with severance payments and benefits, such Transferred Employee shall be provided the following exclusive severance benefits: (i) 2 weeks pay for each full year of service at Seller and Purchaser, subject to a minimum of 8 weeks pay, (ii) 30 days notice of termination, or if less than 30 days notice is provided, payment for each scheduled working day during the period from the time of termination until the 30^th day after notice was given, and (iii) COBRA benefits as required by Law.

     8.8 Employment-Related Assumed Liabilities. Purchaser, to the exclusion of Seller, assumes, accepts and shall be fully responsible for any and all Losses, Liabilities or claims to the extent arising out of or relating to: (a) Purchaser’s alleged failure to make, or failure to make, offers of employment to Offered Employees in keeping with its obligations under Section 8.1; (b) the employer-employee relationship, or Purchaser’s employment or termination of employment, of any Transferred Employee, in each case, on or after the Closing Date; (c) any Purchaser Benefits Plans; and (d) workers’ compensation claims of any Transferred Employee arising out of conditions with a date of injury (or, in the case of a claim relating to occupational illness or disease, the last significant exposure) that begins prior to but continues after the Closing Date (collectively referred to herein as “Purchaser Employment Liabilities”). Notwithstanding the preceding sentence, Purchaser shall retain responsibility for and continue to pay all medical, life insurance, disability and other welfare

-19-

plan expenses and benefits for each Transferred Employee with respect to claims incurred by such Transferred Employees or their covered dependents on or after the Closing Date. Purchaser shall reimburse, indemnify and hold harmless Seller and each of its Subsidiaries and their respective Employee Benefits Plans from and against any and all Losses incurred by any of them in connection with any Purchaser Employment Liabilities.

     8.9 Employment-Related Excluded Liabilities. Seller, to the exclusion of Purchaser, assumes, accepts and shall be fully responsible for any and all Losses, Liabilities or claims to the extent arising out of or relating to: (a) the employer-employee relationship, or Seller’s employment of, or the termination of employment of any Transferred Employee, in each case, on or before the Closing Date; (b) any Seller Benefits Plans; and (c) workers compensation claims of Transferred Employees arising out of conditions with a date of injury, (or in the case of a claim relating to occupational illness or disease, the last significant exposure) that begins and ends on or before the Closing Date (collectively referred to herein as “Seller Employment Liabilities”). Notwithstanding the preceding sentence, Seller shall retain responsibility for and continue to pay all medical, life insurance, disability and other welfare plan expenses and benefits for each Transferred Employee with respect to claims incurred by such Transferred Employees or their covered dependents prior to the Closing Date. Seller shall reimburse, indemnify and hold harmless Purchaser and each of its Subsidiaries and their respective Employee Benefits Plans from and against any and all Losses whenever asserted or incurred by any of them in connection with any Seller Employment Liabilities.

     8.10 Timing of Claims Incurred. For purposes of Section 8.8 and Section 8.9, a claim is deemed incurred when all facts and circumstances giving rise to the claim have occurred and specifically: in the case of medical or dental benefits, when the services that are the subject of the claim are performed; in the case of life insurance, when the death occurs; in the case of long term disability benefits, when the disability occurs; in the case of workers compensation benefits, as described in Section 8.8 and Section 8.9 above; and otherwise, at the time the Transferred Employee or covered dependent becomes entitled to payment of a benefit (assuming that all procedural requirements are satisfied and claims applications properly and timely completed and submitted).

     8.11 No Modification of At-Will Employment; Other Positions. Nothing contained herein is intended as a guarantee of employment for any of the Transferred Employees for any specified period of time or to limit in any way (i) the Transferred Employees’ status as “at-will” employees or (ii) Purchaser’s right to terminate the employment of any Transferred Employee (following the offer of employment required pursuant to Section 8.1 and subject to the severance provision in Section 8.7). Nothing contained herein is intended to limit Purchaser and any Transferred Employee from mutually agreeing at any time following the Closing to a new position at Purchaser, other than the position offered by Purchaser to the Transferred Employee pursuant to this Article 8, upon such terms and conditions as the Transferred Employee and Purchaser may mutually agree, including at a level of compensation, benefits or responsibility different from the initially offered employment pursuant to this Article 8.

-20-

ARTICLE 9.

OTHER AGREEMENTS

     9.1 Conduct of Business. From the date hereof until the Closing Date, Seller shall use commercially reasonable efforts to maintain the Assets in the condition of such Assets as of the date hereof, normal wear and tear and conversion of Raw Materials and WIP into Finished Goods in the ordinary course excepted, and shall not transfer any of the Assets except for sales of finished goods in the ordinary course of business.

     9.2 Stay of Arbitration. The Parties agree the Arbitration shall be stayed until the earlier to occur of (i) the Closing and (ii) the termination of this Agreement in accordance with its terms. The Parties shall take any action necessary to notify the AAA of such stay and will not make any filing with the AAA during the stay other than such notification.

     9.3 Purchase Requirements Under the Supply Agreement. The Parties hereby acknowledge and agree that as of April 1, 2006 and thereafter, the Annual Minimum Purchases requirements and provisions set forth in Section 1.2 of the MEC Agreement shall not be applicable to or enforceable against Seller with respect to all periods beginning on or after April 1, 2006; provided, however, that if this Agreement terminates prior to Closing, Seller shall be obligated to satisfy its Annual Minimum Purchases requirements set forth in Section 1.2 of the MEC Agreement for the period on and after April 1, 2006 which would have otherwise been required without reference to the foregoing for the entire period beginning on April 1, 2006 and ending upon the expiration or termination of the MEC Agreement, but without penalty to Seller for failure to timely make any required minimum purchases during the period from April 1, 2006 until the termination of this Agreement. Except as provided in the preceding sentence, the remaining provisions of the MEC Agreement shall remain in effect until the delivery of the Termination at Closing.

     9.4 Public Announcement. The Parties shall consult with each other before issuing any press release or making any other public announcement with respect to this Agreement or the transactions contemplated hereby and, except as required by any applicable Laws, regulatory requirement or the rules of any national stock exchange or over the counter trading market upon which their respective securities are listed for trading, neither of them shall issue any such press release or make any such public announcement without the prior written consent of the other.

     9.5 Confidentiality

          (a) Confidentiality Agreement. The Confidentiality Agreement shall continue in full force and effect and survive the execution of this Agreement, the Closing, the consummation of the transactions contemplated hereby and by the Operative Agreements and/or the termination of this Agreement for seven (7) years. The Parties hereby agree that the term “Evaluation Material,” as used in the Confidentiality Agreement shall be deemed to include (i) all exhibits, schedules, certificates and other documents executed or delivered in connection with this Agreement, the other

-21-

Operative Agreements and the consummation of the transactions contemplated hereby and thereby, (ii) all proprietary and confidential information concerning Seller and its Subsidiaries, which includes all proprietary and confidential information of Seller and its Subsidiaries with respect to SMECs, and (iii) all documents and materials contained in Seller’s data room, or otherwise furnished or made available (directly or indirectly) to Purchaser or its Subsidiaries; provided, however, that after the Closing, with respect to Purchaser, the foregoing shall not apply to such information that (1) is embodied exclusively in the Assets and (2) is not also related to any business or assets of Seller (or a Subsidiary thereof) not transferred to Purchaser under this Agreement. In addition, notwithstanding any other provision of the Confidentiality Agreement, and this Agreement, Purchaser and its Subsidiaries and Seller and its Subsidiaries may include this Agreement (excluding schedules thereto) and the other Operative Agreements in or as an exhibit to any report, form or registration statement filed with or furnished to the SEC to the extent required under the Securities Act of 1933 or the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission promulgated thereunder. Seller agrees to treat and hold confidential any information concerning the Assets that is not (other than by virtue of Seller’s violation of this Section 9.5(a)) generally available to the public; provided, however, that nothing in this Section 9.5(a) shall prohibit Seller or any of its Subsidiaries from complying with applicable Laws or the rules and regulations of any national or foreign stock exchange or over the counter trading market upon which their respective securities are listed for trading.

          (b) Release of Certain Confidentiality Obligations. Effective as of the Closing, Seller shall, or shall cause its applicable Subsidiary to, release the Transferred Employees from any confidentiality obligations they may have to Seller (or a Subsidiary thereof) with respect to trade secret, confidential and other information that relates to the Assets, but only to the extent such information does not also relate to any business or assets of Seller (or a Subsidiary thereof) not transferred to Purchaser (or a Subsidiary thereof) under this Agreement.

     9.6 Return of Non-Transferred Assets. If at any time within 12 months following the Closing Date, Purchaser becomes aware of any assets that were delivered to Purchaser in connection with this Agreement that are not Assets, Purchaser shall promptly notify Seller of such assets in its possession, and shall return (or at Seller’s discretion, destroy) such assets, including all copies thereof. In any case, Purchaser agrees to keep and treat all such assets as Evaluation Material in accordance with the terms of the Confidentiality Agreement.

     9.7 Mail Handling. Following the Closing Date, to the extent that Purchaser and/or any of its Subsidiaries receives any mail or packages addressed to Seller or any of its Subsidiaries and delivered to Purchaser and/or any of its Subsidiaries, Purchaser shall promptly deliver such mail or packages to Seller. Following the Closing, to the extent Seller or any of its Subsidiaries receives any mail or packages addressed and delivered to Seller but relating to the Assets, Seller shall, or shall cause such Subsidiaries to, promptly deliver such mail or packages to Purchaser.

     9.8 Commercially Reasonable Efforts. Subject to the terms and conditions hereof, each of the Parties to this Agreement shall use commercially reasonable efforts to effect the transactions

-22-

contemplated hereby and to fulfill and cause to be fulfilled the conditions precedent to this Agreement, set forth in Article 7.

     9.9 Raw Materials, WIP and Finished Goods.

          (a) Following the execution hereof, Seller shall allow Purchaser and Coloplast reasonable access to inspect the Raw Materials, WIP and Finished Goods. The inspection shall occur at a time mutually agreed by the Parties, and in any event shall occur not later than the third Business Day prior to the Closing Date. If prior to the Closing, Coloplast concludes and notifies Seller or Purchaser that:

               (i) any of the Raw Materials or WIP proposed by Seller to be transferred hereunder are not practicably capable of becoming SMECs that will be useable and acceptable by Coloplast, or

               (ii) any of the Finished Goods proposed by Seller to be transferred hereunder are not useable and acceptable to Coloplast, then Purchaser shall not be obligated to purchase such Raw Materials, WIP or Finished Goods, as the case may be, and the Cash Consideration will be adjusted accordingly.

          (b) If on or before the 30^th day after the Closing Date, Coloplast concludes and notifies Purchaser or Seller in writing that

               (i) any of the Raw Materials transferred hereunder are not practicably capable of becoming SMECs that will be useable and acceptable by Coloplast and such Raw Materials are returned to Seller in substantially the same condition as delivered to Purchaser by Seller pursuant to the terms hereof, or

               (ii) any of the Finished Goods transferred hereunder are not useable and acceptable to Coloplast and such Finished Goods are returned to Seller in substantially the same condition as delivered to Purchaser by Seller pursuant to the terms hereof,

then following the return thereof Seller will refund to Purchaser an amount of Cash Consideration equal to the amount paid by Purchaser for such returned Raw Materials or Finished Goods, as the case may be.

          (c) In the event Coloplast provides a written notice to either Party pursuant to subsection (a) or (b) above, such Party shall promptly notify the other of such notice from Coloplast.

     9.10 Access to Records. Following the Closing, each party will provide the other party and such other party’s independent registered public accountants reasonable access during normal business hours to (and use commercially reasonable efforts to cause the party’s independent registered public accountants to provide the other party and the other party’s registered independent

-23-

public accountants reasonable access to) such books, records, workpapers and data as may be reasonably requested by such other party to allow such other party and its independent registered public accountants to conduct an audit or review of the Assets for such periods as such other party may require for their financial reporting purposes required in connection with any report required to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. The parties mutually agree to reasonably assist each other and their respective independent registered public accountants in conducting any such audit or review; provided, that each party shall be responsible for the cost of its own audit and shall pay to the other party the reasonable out of pocket costs actually incurred by such party to provide the requested assistance. The parties mutually agree to use their commercially reasonable efforts to cause their independent registered public accountants to provide each other with any consents of their independent registered public accountants necessary for such party to satisfy the financial reporting requirements under applicable accounting rules of the Securities and Exchange Commission.

     9.11 Payment of Outstanding Invoices The Parties agree that nothing herein shall affect the obligation of Seller (or the Subsidiaries of Seller, if applicable) to pay all outstanding invoices from Purchaser related to Purchaser SMECs that have been shipped to Seller or its Subsidiaries prior to the date hereof.

ARTICLE 10.

TERMINATION

     10.1 Term. Unless terminated pursuant to Section 10.2 or as otherwise expressly set forth herein, this Agreement shall continue in full force and effect until full and final performance of all of the terms herein.

     10.2 Termination. Anything contained in this Agreement to the contrary notwithstanding, this Agreement may be terminated at any time prior to the Closing Date:

          (a) by the mutual signed written consent of Purchaser and Seller;

          (b) by either Party if:

               (i) a Law is in effect having the effect of permanently restraining, enjoining or otherwise prohibiting, in a material respect, the consummation of the transactions contemplated by this Agreement, which Law is final and nonappealable; or

               (ii) the Closing shall not have occurred on or before the End Date; provided, however, that the failure of the Closing to occur is not due to a material breach hereof by the Party seeking termination;

-24-

          (c) by Purchaser: in the event of a Warranty Breach or Covenant Breach by Seller such that the conditions set forth in Section 7.2(b) or Section 7.2(c), as applicable, would not be satisfied; provided, however, that Seller is given notice to cure such breach and does not cure such breach within 30 days after receipt of notice from Purchaser requesting such breach be cured; or

          (d) by Seller: in the event of a Warranty Breach or Covenant Breach by Purchaser such that the conditions set forth in Section 7.3(b) or Section 7.3(c), as applicable, would not be satisfied; provided, however, that Purchaser is given notice to cure such breach and does not cure such breach within 30 days after receipt of notice from Seller requesting such breach be cured.

     10.3 Notice of Termination. Any Party desiring to terminate this Agreement pursuant to Section 10.2 shall give written notice of such termination to the other Party.

     10.4 Effect of Termination. In the event that this Agreement shall be validly terminated pursuant to Section 10.2, this Agreement shall forthwith terminate and be of no further force and effect; provided, however, that (a) any agreements contained herein that expressly provide for survival after termination of this Agreement and Section 9.5(a) and Article 11 (other than Section 11.1) shall survive the termination hereof unless otherwise agreed by the Parties in writing, and (b) nothing herein shall relieve any Party from Liability for any breach of this Agreement or fraud arising prior to such valid termination. Termination of this Agreement will not be an election of remedies and shall not limit the Liability of any Party for breach of this Agreement.

ARTICLE 11.

MISCELLANEOUS

     11.1 Survival of Representations. Other than the exclusive warranties contained in Section 5.7 and Section 6.6, which shall survive indefinitely, the representations and warranties of the Parties contained in this Agreement, or any instrument delivered pursuant to this Agreement, shall terminate on the date that is twelve (12) months after the Closing Date.

     11.2 Notices.

          (a) Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, transmitted by facsimile (with acknowledgment of complete transmission together with notice by telephone (either to a person or by voice mail message) to the confirmatory telephone numbers below, provided that such confirmatory telephone numbers shall allow for voice mail messages to be left 24 hours per day, seven days per week) or sent by registered or certified mail, or recognized overnight courier, charges prepaid, addressed as follows

     If to Seller: Mentor Corporation

-25-

	201 Mentor Drive
	Santa Barbara, California 94311
	Attention: General Counsel
	Facsimile No.: (805) 879-6008
	Phone: (805) 879-6000 (for confirmation purposes only)
with a copy to:	Wilson Sonsini Goodrich & Rosati
	Professional Corporation
	650 Page Mill Road
	Palo Alto, California 94304
	Attention: Bradley L. Finkelstein, Esq.
	Facsimile No.: 650-493-6811
	Phone: (650) 493-9300 (for confirmation purposes only)
If to Purchaser:	Rochester Medical Corporation
	One Rochester Medical Drive
	Stewartville, Minnesota 55976
	Attention:Anthony J. Conway, President
	Facsimile No.: (507) 533-9725
	Phone: (507) 533-9600 (for confirmation purposes only)
With a copy to:	Dorsey & Whitney LLP
	50 South Sixth Street
	Minneapolis, Minnesota 55402
	Attention: Robert A. Kuhns, Esq.
	Facsimile No.: (612) 340-8738
	Phone: (612) 340-2600 (for confirmation purposes only)

          (b) Any such notice or other communication shall be deemed to have been given and received on the day on which it was personally delivered or transmitted by facsimile, receipt of complete transmission confirmed (or, if such day is not a Business Day, on the next following Business Day) or, if mailed, by registered or certified mail, on the third Business Day following the date of mailing or, if couriered overnight, on the next following Business Day; provided, however, that if at the time of mailing or within three Business Days thereafter, there is or occurs a labor dispute or other event that might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by means of overnight courier as set forth above.

          (c) Either Party may change its address for service and/or notice at any time by giving notice to the other Party in accordance with this Section 11.2.

-26-

     11.3 Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars.

     11.4 Sections and Headings. Unless otherwise specified herein, any reference in this Agreement to an Article, Section, paragraph, Schedule or Exhibit refers to the specified Article, Section or paragraph of, or Schedule or Exhibit to, this Agreement. In this Agreement, the terms “this Agreement”, “hereof”, “herein”, “hereunder” and similar expressions refer to this Agreement and not to any particular part, Article, Section, paragraph or other provision hereof. The headings contained in this Agreement are intended solely for convenience and shall not affect the rights of the Parties to this Agreement.

     11.5 Rules of Construction. Unless the context otherwise requires, in this Agreement:

          (a) words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine and neuter genders and vice versa;

          (b) the word “or” may be conjunctive or disjunctive, as the context may require;

          (c) the words “include”, “includes”, “including” and “particularly” means “include”, “includes” or “including”, in each case, “without limitation”;

          (d) reference to any agreement or other instrument referred to herein shall mean such agreement or other instrument as amended, modified, replaced or supplemented from time to time to the extent permitted by applicable provisions thereof and by this Agreement;

          (e) reference to any statute shall be deemed to be a reference to such statute as amended, re enacted or replaced from time to time;

          (f) if there is any conflict or inconsistency between the provisions contained in the body of this Agreement and those of any Schedule hereto or the Bill of Sale, the provisions contained in the body of this Agreement shall prevail;

          (g) time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated excluding the day on which the period commences and including the day on which the period ends; and

          (h) whenever any payment to be made or action to be taken hereunder is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next following Business Day.

     11.6 Construction. The Parties acknowledge that their respective legal counsel have reviewed and participated in settling the terms of this Agreement and that any rule of construction to

-27-

the effect that any ambiguity is to be resolved against the drafting party, shall not be applicable in the interpretation of this Agreement.

     11.7 Entire Agreement. This Agreement, together with the Operative Agreements and the schedules and exhibits hereto and thereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written and oral, with respect to the subject matter hereof (including the MOU but excluding the Confidentiality Agreement). There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as herein provided or as provided in the other documents executed and delivered by the Parties in connection herewith.

     11.8 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Minnesota, without regard to any conflicts of law principles.

     11.9 Jurisdiction and Venue. Except with respect to the matters subject to arbitration proceedings set forth in Section 11.12 hereof, the Parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court located in Minneapolis, Minnesota for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the Parties hereto, further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth in Section 11.2 shall be effective service of process for any action, suit or proceeding in Minneapolis, Minnesota with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the Parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding set forth above arising out of this Agreement or the transactions contemplated hereby, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

     11.10 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each Party hereby (a) certifies that no representative, agent or counsel of the other Party has represented, expressly or otherwise, that the other Party would not, in the event of litigation, seek to enforce the foregoing waiver, and (b) acknowledges that it and the other Party have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications contained in this Section 11.10.

     11.11 Attorney’s Fees. Except with respect to the matters subject to arbitration proceedings set forth in Section 11.12 hereof, in the event that either Party institutes any litigation proceeding under Section 11.9 to interpret or to enforce this Agreement or any of the Operative Agreements or the rights of the Parties hereunder, the non-prevailing Party shall reimburse the prevailing Party in

-28-

any such proceeding for the prevailing Party’s attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.

     11.12 Arbitration. Any controversy, dispute or claim between the Parties arising out of a breach or alleged breach of the covenants and licenses granted pursuant to Article 4 shall be submitted to mandatory binding arbitration. Such arbitration proceedings shall be held in Minneapolis, Minnesota, in accordance with the rules then obtaining of the American Arbitration Association, except that: (i) the arbitrators shall furnish the parties with a written decision setting forth findings of fact, conclusions of law and an order; (ii) the arbitration panel shall be composed of persons who are knowledgeable in matters of technology licensing; and (iii) a stenographic record shall be made of the arbitration proceedings. Each arbitrator shall be neutral, impartial and independent of the parties and others having any known interest in the outcome, shall abide by the Canons of Ethics of the American Bar Association for neutral, independent arbitrators, and shall have no ex parte communications about the case. In addition to any monetary award that may be given, the arbitrators may order or direct either party to do any act required of it by this Agreement or to refrain from the doing of any act or practice that is contrary to this Agreement. This Agreement to arbitrate shall be specifically enforceable. Each Party shall bear its own costs and expense in any such proceedings, but the arbitrators may, in their discretion and consistent with this Agreement without regard to Section 11.11, award costs and attorneys’ fees to either or both of the Parties. Any award rendered by the arbitrators shall be conclusive, final and binding upon the Parties hereto, and nonappealable to any court or forum. Judgment upon such award may be entered in any court of competent jurisdiction.

     11.13 Expenses. Except as otherwise provided herein, each Party shall be responsible for all costs and expenses incurred by it and its Subsidiaries, respectively, in connection with the negotiation of this Agreement and the completion of the transactions contemplated hereby, whether or not the transactions hereby shall have been consummated.

     11.14 Exclusion of Certain Damages. EXCEPT IN THE CASE OF FRAUD, NEITHER PURCHASER (INCLUDING PURCHASER’S SUBSIDIARIES) NOR SELLER (INCLUDING SELLER’S SUBSIDIARIES) SHALL BE RESPONSIBLE FOR ANY INCIDENTIAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING LOSS OF PROFITS OR GOODWILL, IN CONNECTION WITH ANY ASPECT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN NO EVENT SHALL SELLER’S OR PURCHASER’S AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED THE AMOUNT OF THE CASH CONSIDERATION, IT BEING EXPRESSLY UNDERSTOOD THAT LIABILITY FOR CLAIMS FOR INFRINGEMENT OF THE IPR THAT IS THE SUBJECT OF THE LICENSES GRANTED PURSUANT TO ARTICLE 4 HEREOF SHALL NOT BE SO LIMITED TO THE CASH CONSIDERATION.

     11.15 Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and

-29-

each provision is hereby declared to be separate, severable and distinct. To the extent that any such provision is found to be invalid, illegal or unenforceable, the Parties shall act in good faith to substitute for such provision, to the extent possible and as necessary, a new provision with content and purpose as close as possible to the provision so determined to be invalid, illegal or unenforceable.

     11.16 Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the benefit of and shall be binding on and enforceable by the Parties and their respective successors and permitted assigns. Neither Party may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other Party; provided, that either Party may assign any of its rights or obligations under this Agreement pursuant to a Change of Control of such Party, provided that the assignee agrees to be bound by the terms and provisions of this Agreement; provided further that the covenants, licenses, rights and obligations set forth in Article 4 hereof shall be assignable only as and to the extent specifically provided in Section 4.6. Except with respect to the covenants, licenses, rights and obligations set forth in Article 4 hereof which shall be assignable only as and to the extent specifically provided in Section 4.6, each Party and its Subsidiaries shall have the right without consent of the other Party to assign their rights under this Agreement as collateral to their respective lenders after reasonable prior notice to the other Party. Any purported assignment in violation of this Section 11.16 shall be void and no assignment by Purchaser or Seller will relieve Purchaser or Seller from any of their respective obligations hereunder. Nothing herein expressed or implied is intended or should be construed to confer upon or give to any Person other than the Parties hereto and their respective successors and permitted assigns any rights or remedies under or by reason of this Agreement; provided that Coloplast shall be deemed an express third party beneficiary of Section 4.2(b) hereof with rights of enforcement. Except with respect to Coloplast’s rights pursuant to Section 4.2(b) hereof and with respect to the Parties’ respective successors and permitted assigns, third party enforcement of this Agreement is barred.

     11.17 Amendments and Waiver. No amendment, modification or waiver of, or supplement to, any provision of this Agreement shall be binding on any Party unless consented to in writing by such Party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, and no waiver shall constitute a continuing waiver unless otherwise provided.

     11.18 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all and all such counterparts together shall be deemed an original of this Agreement.

[The remainder of this page intentionally left blank.]

-30-

     IN WITNESS WHEREOF, each of Purchaser and Seller has caused this Agreement to be executed by its duly authorized representative as of the date and year first written above.

MENTOR CORPORATION		ROCHESTER MEDICAL CORPORATION
By:	/s/ Joshua H. Levine	By:	/s/ Anthony J. Conway
Print name: Joshua H. Levine		Print name: Anthony J. Conway
Title: President & CEO		Title: CEO

Signature Page to Asset Purchase Agreement

EX-10.5

Exhibit 10.5

TERM LOAN AGREEMENT

     This Term Loan Agreement (the “Agreement”) is made and entered into by and between the undersigned borrower (the “Borrower”) and the undersigned bank (the “Bank”) as of the date set forth on the last page of this Agreement.

ARTICLE I. LOANS

     1.1 Terms for Advance(s). [Choose One:]

Xo

Single Advance Term Loan. As of the date hereof, the Borrower has obtained a term loan from the Bank in the amount of $5,000,000 (the “Loan Amount”). The term loan is evidenced by a single promissory note of the Borrower to the order of the Bank in the principal amount of the Loan Amount and dated as of the date hereof (the “Note”).

o

Multiple Advance Term Loan. Prior to n/a or the earlier termination hereof, the Borrower may obtain advances from the Bank in an aggregate amount not exceeding $ n/a (the “Loan Amount”). The term loans will be evidenced by a single promissory note of the Borrower to the Bank In the principal amount of the Loan Amount and dated as of the date hereof (the “Note”). Although the Note will be expressed as payable in the full Loan Amount, the Borrower will be obligated to pay only the amounts actually disbursed hereunder, together with accrued interest on the outstanding balance at the rates and on the dates specified therein and such other charges provided for herein.

     1.2 Advances and Paying Procedure. The Bank is authorized and directed to credit any of the Borrower’s accounts with the Bank (or to the account the Borrower designates in writing) for all loans made hereunder, and the Bank is authorized to debit such account or any other account of the Borrower with the Bank for the amount of any principal, interest or expenses due under the Note or other amount due hereunder on the due date with respect thereto. It, upon any request by the Borrower to the Bank to issue a wire transfer, there Is an inconsistency between the name of the recipient of the wire and its identification number as specified by the Borrower, the Bank may, without liability, transmit the payment via wire based solely upon the identification number.

     1.3 Closing Fee. The Borrower will pay the Bank a one-time closing fee of $ n/a contemporaneously with execution of this Agreement. This fee is in addition to all other fees, expenses and other amounts due hereunder.

     1.4 Compensating Balances. The Borrower will maintain on deposit with the Bank in non-interest bearing accounts average daily collected balances, in excess of that required to support account activity and other credit facilities extended to the Borrower by the Bank, an amount at least equal to the sum of (i) $ n/a and (ii) $ n/a% of the Loan Amount as computed on a monthly basis. If the Borrower fails to keep and maintain such balances, it will pay a deficiency fee, payable within five days after receipt of a statement therefor calculated on the amount by which the Borrower’s average daily balances are less than the requirements set forth above, computed at a rate equal to the rate set forth in the Note.

     1.5 Expenses and Attorneys’ Fees. Upon demand, the Borrower will immediately reimburse the Bank and any participant in the Obligations (defined below) (“Participant”) for all attorneys’ fees and all other costs, fees and out-of-pocket disbursements incurred by the Bank or any Participant in connection with the preparation, execution, delivery, administration, defense and enforcement of this Agreement or any of the other Loan Documents (defined below), including attorneys’ fees and all other costs and fees (a) incurred before or after commencement of litigation or at trial, on appeal or in any other proceeding, (b) incurred In any bankruptcy proceeding and (c) related to any waivers or amendments with respect thereto (examples of costs and fees include but are not limited to fees and costs for: filing, perfecting or confirming the priority of the Bank’s lien, title searches or insurance, appraisals, environmental audits and other reviews related to the Borrower, any collateral or the loans, if requested by the Bank). The

Page 1 of 11

Borrower will also reimburse the Bank and any Participant for all costs of collection, including all attorneys’ fees, before and after judgment, and the costs of preservation and/or liquidation of any collateral.

     1.6 Conditions to Borrowing. The Bank will not be obligated to make (or continue to make) advances hereunder unless (i) the Bank has received executed originals of the Note and all other documents or agreements applicable to the loans described herein, including but not limited to the documents specified in Article III (collectively with this Agreement the “Loan Documents), in form and content satisfactory to the Bank; (ii) if the loan is secured, the Bank has received confirmation satisfactory to It that the Bank has a properly perfected security interest, mortgage or lien, with the proper priority; (iii) the Bank has received certified copies of the Borrower’s governance documents and certification of entity status satisfactory to the Bank and all other relevant documents; (iv) the Bank has received a certified copy of a resolution or authorization in form and content satisfactory to the Bank authorizing the loan and all acts contemplated by this Agreement and all related documents, and confirmation of proper authorization of all guaranties and other acts of third parties contemplated hereunder; (v) if required by the Bank, the Bank has been provided with Opinion of the Borrower’s counsel in form and content satisfactory to the Bank confirming the matters outlined in Section 2.2 and such other matters as the Bank requests; (vi) no default exists under this Agreement or under any other Loan Documents, or under any other agreements by and between the Borrower and the Bank; and (vii) all proceedings taken in connection with the transactions contemplated by this Agreement (including any required environmental assessments),and an instruments, authorizations and other documents applicable thereto, are satisfactory to the Bank and its counsel.

ARTICLE II. WARRANTIES AND COVENANTS

     While any part of the credit granted to the Borrower under this Agreement or the other Loan Documents is available or any obligations under any of the Loan Documents are unpaid or outstanding, the Borrower continuously warrants and agrees as follows:

     2.1 Accuracy of Information. Alt information, certificates or statements given to the Bank pursuant to this Agreement and the other Loan Documents will be true and complete when given.

     2.2 Organization and Authority; Litigation. This Agreement and the other Loan Documents are the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms. The execution, delivery and performance of this Agreement and all other Loan Documents to which the Borrower is a party (i) are within the borrower’s power; (ii) have been duly authorized by all appropriate entity action; (iii) do not require the approval of any governmental agency; and (iv) will not violate any law, agreement or restriction by which the Borrower is bound. If the Borrower is not an Individual, the Borrower is validly existing and in good standing under the laws of its state of organization, has all requisite power and authority and possesses all licenses necessary to conduct its business and own Its properties. There is no litigation or administrative proceeding threatened or pending against the Borrower which would, if adversely determined, have a material adverse effect on the Borrower’s financial condition or its property.

     2.3 Existence; Business Activities; Assets; Change of Control. The Borrower will (i) preserve its existence, rights and franchises; (ii) not make any material change in the nature or manner of its business activities; (iii) not liquidate, dissolve, acquire another entity or merge or consolidate with or into another entity or change its form of organization; (iv) not amend its organizational documents In any manner that may conflict with any term or condition of the Loan Documents; and (v) not sell, lease, transfer or otherwise dispose of all or substantially all of its assets. Other than the transfer to a trust beneficially controlled by the transferor, no event shall occur which causes or results in a transfer of majority ownership of the Borrower while any Obligations are outstanding or while the Bank has any obligation to provide funding to the Borrower.

     2.4 Use of Proceeds; Margin Stock; Speculation. Advances by the Bank hereunder will be used exclusively by the Borrower for the purposes represented to the Bank. The Borrower will not, without the prior written consent of the Bank, redeem, purchase, or retire any of the capital stock or declare or pay

Page 2 of 11

any dividends, or make any other payments or distributions of a similar type or nature including withdrawal distributions. The Borrower will not use any of the loan proceeds to purchase or carry “margin’ stock (as defined In Regulation U of the Board of Governors of the Federal Reserve System). No part of any of the proceeds will be used for speculative investment purposes, including, without limitation, speculating or hedging in the commodities and/or futures market.

     2.5 Environmental Matters. Except as disclosed in a written schedule attached to this Agreement (if no schedule Is attached, there are no exceptions), there exists no uncorrected violation by the Borrower of any federal, state or local laws (including statutes, regulations, ordinances or other governmental restrictions and requirements) relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or Hazardous Substances as hereinafter defined, whether such laws currently exist or are enacted in the future (collectively “Environmental Laws”). The term “Hazardous Substances” will mean any hazardous or toxic wastes, chemicals or other substances, the generation, possession or existence of which is prohibited or governed by any Environmental Laws. The Borrower is not subject to any judgment, decree, order or citation, or a party to (or threatened with) any litigation or administrative proceeding, which asserts that the Borrower (i) has violated any Environmental Laws; (ii) is required to clean up, remove or take remedial or other action with respect to any Hazardous Substances (collectively “Remedial Action”);or (iii) is required to pay all or a portion of the cost of any Remedial Action, as a potentially responsible party. Except as disclosed on the Borrower’s environmental questionnaire provided to the Bank, there are not now, nor to the Borrower’s knowledge after reasonable investigation have there ever been, any Hazardous Substances (or tanks or other facilities for the storage of Hazardous Substances) stored, deposited, recycled or disposed of on, under or at any real estate owned or occupied by the Borrower during the periods that the Borrower owned or occupied such real estate, which if present on the real estate or in soils or ground water, could require Remedial Action. To the Borrower’s knowledge, there are no proposed or pending changes In Environmental Laws which would adversely affect the Borrower or its business, and there are no conditions existing currently or likely to exist while the Loan Documents are in effect which would subject the Borrower to Remedial Action or other liability. The Borrower currently complies with and will continue to timely comply with all applicable Environmental Laws; and will provide the Bank, immediately upon receipt, copies of any correspondence, notice, complaint, order or other document from any source asserting or alleging any circumstance or condition which requires or may require a financial contribution by the Borrower or Remedial Action or other response by or on the part of the Borrower under Environmental Laws, or which seeks damages or civil, criminal or punitive penalties from the Borrower for an alleged violation of Environmental Laws.

     2.6 Compliance with Laws. The Borrower has complied with all laws applicable to its business and its properties, and has all permits, licenses and approvals required by such laws, copies of which have been provided to the Bank.

     2.7 Restriction on Indebtedness. The Borrower will not create, incur, assume or have outstanding any indebtedness for borrowed money (including capitalized leases) except (i) any Indebtedness owing to the Bank and its affiliates, and (ii) any other indebtedness outstanding on the date hereof, and shown on the Borrower’s financial statements delivered to the Bank prior to the date hereof, provided that such other indebtedness will not be increased.

     2.8 Restriction on Liens. The Borrower will not create, incur, assume or permit to exist any mortgage, pledge, encumbrance or other lien or levy upon or security interest in any of the Borrower’s property now owned or hereafter acquired, except (i) taxes and assessments which are either not delinquent or which are being contested in good faith with adequate reserves provided; (ii) easements, restrictions and minor title irregularities which do not, as a practical matter, have an adverse effect upon the ownership and use of the affected property; (iii) liens in favor of the Bank and its affiliates; and (iv) other liens disclosed in writing to the Bank prior to the date hereof.

     2.9 Restriction on Contingent Liabilities. The Borrower will not guarantee or become a surety or otherwise contingently liable for any obligations of others, except pursuant to the deposit and collection of checks and similar matters in the ordinary course of business.

Page 3 of 11

     2.10 Insurance. The Borrower will maintain insurance to such extent, covering such risks and with such insurers as is usual and customary for businesses operating similar properties, and as is satisfactory to the Bank, Including insurance for fire and other risks insured against by extended coverage, public liability Insurance and workers’ compensation insurance; and will designate the Bank as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take such other action as the Bank may reasonably request to ensure that the Bank will receive (subject to no other interests) the insurance proceeds on the Bank’s collateral.

     2.11 Taxes and Other Liabilities. The Borrower will pay and discharge, when due, all of its taxes, assessments and other liabilities, except when the payment thereof is being contested In good faith by appropriate procedures which will avoid foreclosure of liens securing such items, and with adequate reserves provided therefor.

     2.12 Financial Statements and Reporting. The financial statements and other Information previously provided to the Bank or provided to the Bank in the future are or will be complete and accurate and prepared In accordance with generally accepted accounting principles. There has been no material adverse change In the Borrower’s financial condition since such information was provided to the Bank. The Borrower will (i) maintain accounting records In accordance with generally recognized and accepted principles of accounting consistently applied throughout the accounting periods involved; (ii) provide the Bank with such information concerning its business affairs and financial condition (including Insurance coverage) as the Bank may request; and (iii) without request, provide the Bank with such specific financial statements, certifications and/or information as may be set forth in an addendum to this Agreement.

     2.13 Inspection of Properties and Records; Fiscal Year. The Borrower will permit representatives of the Bank to visit and inspect any of the properties and examine any of the books and records of the Borrower at any reasonable time and as often as the Bank may reasonably desire. The Borrower will not change its fiscal year.

     2.14 Financial Status. Financial Covenants, if any, will be as set forth in an addendum to this Agreement.

ARTICLE III. COLLATERAL AND GUARANTIES

     3.1 Collateral. This Agreement and the Note are secured by any and all security interests, pledges, mortgages/deeds of trust (except any mortgage/deed of trust expressly limited by its terms to a specific obligation of Borrower to Bank) or liens now or hereafter in existence granted to the Bank to secure indebtedness of the Borrower to the Bank, including without limitation as described in the following documents:

o	Real Estate Mortgage(s)/Deed(s) of Trust dated
	covering real estate located at
Xo	Security Agreement(s) dated 0/5/26/06
o	Possessory Collateral Pledge Agreement(s) dated
o	Other

     3.2 Guaranties. This Agreement and the Note are guarantied by each and every guaranty now or hereafter in existence guarantying the indebtedness of the Borrower to the Bank (except for any guaranty expressly limited by its terns to a specific separate obligation of Borrower to the Bank) including, without limitation, the following:                                                            

Page 4 of 11

     3.3 Credit Balances; Setoff. As additional security for the payment of the obligations described in the Loan Documents and any other obligations of the Borrower to the Bank of any nature whatsoever(collectively the “Obligations”, the Borrower hereby grants to the Bank a security Interest in, a lien on and an express contractual right to set off against all depository account balances, cash and any other property of the Borrower now or hereafter in the possession of the Bank and the right to refuse to allow withdrawals from any account (collectively “Setoff”. The Bank may, at any time upon the occurrence of a default hereunder (notwithstanding any notice requirements or grace/cure periods under this or other agreements between the Borrower and the Bank) Setoff against the Obligations whether or not the Obligations (including future installments) are then due or have been accelerated, all without any advance or contemporaneous notice or demand of any kind to the Borrower, such notice and demand being expressly waived.

     The omission of any reference to an agreement In Sections 3.1 and 3.2 above will not affect the validity or enforceability thereof. The rights and remedies of the Bank outlined In this Agreement and the documents identified above are intended to be cumulative.

ARTICLE IV. DEFAULTS

     4.1 Defaults. Notwithstanding any cure periods described below, the Borrower will Immediately notify the Bank In writing when the Borrower obtains knowledge of the occurrence of any default specified below. Regardless of whether the Borrower has given the required notice, the occurrence of one or more of the following will constitute a default:

(a)	Nonpayment. The Borrower shall fail to pay (i) any interest due on the Note or any fees, charges, costs or expenses under the Loan Documents by 5 days after the same becomes due; or (ii) any principal amount of the Note when due.
(b)	Nonperformance. The Borrower or any guarantor of Borrower’s Obligations to the Bank (“Guarantor”) shall fail to perform or observe any agreement, term, provision, condition, or covenant (other than a default occurring under (a), (c), (d), (e), (f) or (g) of this Section 4.1) required to be performed or observed by the Borrower or any Guarantor hereunder or under any other Loan Document or other agreement with or in favor of the Bank.
(c)	Misrepresentation. Any financial information, statement, certificate, representation or warranty given to the Bank by the Borrower or any Guarantor (or any of their representatives) in connection with entering into this Agreement or the other Loan Documents and/or any borrowing thereunder, or required to be furnished under the terms thereof, shall prove untrue or misleading in any material respect (as determined by the Bank in the exercise of its judgment) as of the time when given.
(d)	Default on Other Obligations. The Borrower or any Guarantor shall be in default under the terms of any loan agreement, promissory note, lease, conditional sale contract or other agreement, document or instrument evidencing, governing or securing any indebtedness owing by the Borrower or any Guarantor to the Bank or any indebtedness in excess of $10,000 owing by the Borrower to any third party, and the period of grace, if any, to cure said default shall have passed.
(e)	Judgments. Any judgment shall be obtained against the Borrower or any Guarantor which, together with all other outstanding unsatisfied judgments against the Borrower (or such Guarantor), shall exceed the sum of $10,000 and shall remain unvacated, unbonded or unstayed for a period of 30 days following the date of entry thereof.
(f)	Inability to Perform; Bankruptcy/Insolvency. (i) The Borrower or any Guarantor shall die or cease to exist; or (ii) any Guarantor shall attempt to revoke any guaranty of the Obligations described herein, or any guaranty becomes unenforceable in whole or in part for any reason; or (iii) any bankruptcy, insolvency or receivership proceedings, or an assignment for the benefit of creditors, shall be commenced under any Federal or state law by or against the Borrower or any

Page 5 of 11

	Guarantor; or (iv) the Borrower or any Guarantor shall become the subject of any out-of-court settlement with its creditors; or (v) the Borrower or any Guarantor is unable or admits in writing its inability to pay its debts as they mature; or (vi) if the Borrower is a limited liability company, any member thereof shall withdraw or otherwise become disassociated from the Borrower.
(g)	Adverse Change; Insecurity. (i) There is a material adverse change in the business, properties, financial condition or affairs of the Borrower or any Guarantor, or in any collateral securing the Obligations; or (ii) the Bank in good faith deems itself insecure.

     4.2 Termination of Loans; Additional Bank Rights. Upon the occurrence of any of the events identified in Section 4.1, the Bank may at any time (notwithstanding any notice requirements or grace/cure periods under this or other agreements between the Borrower and the Bank) (i) immediately terminate its obligation, if any, to make additional loans to the Borrower, (ii) Setoff; and/or (iii) take such other steps to protect or preserve the Bank’s interest in any collateral, including without limitation, notifying account debtors to make payments directly to the Bank, advancing funds to protect any collateral and insuring collateral at the Borrower’s expense; all without demand or notice of any kind, all of which are hereby waived.

     4.3 Acceleration of Obligations. Upon the occurrence of any of the events identified in Sections 4.1 (a) through 4.1(e) and 4.1(g), and the passage of any applicable cure periods, the Bank may at any time thereafter, by written notice to the Borrower, declare the unpaid principal balance of any Obligations, together with the interest accrued thereon and other amounts accrued hereunder and under the other Loan Documents, to be immediately due and payable; and the unpaid balance will thereupon be due and payable, all without presentation, demand, protest or further notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein or in any of the other Loan Documents. Upon the occurrence of any event under Section 4.1(f), the unpaid principal balance of any Obligations, together with all Interest accrued thereon and other amounts accrued hereunder and under the other Loan Documents, will thereupon be immediately due and payable, all without presentation, demand, protest or notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein or in any of the other Loan Documents. Nothing contained in Section 4.1, Section 4.2 or this section will limit the Bank’s right to Setoff as provided in Section 3.3 or otherwise in this Agreement.

     4.4 Other Remedies. Nothing in this Article IV is intended to restrict the Bank’s rights under any of the Loan Documents or at law, and the Bank may exercise all such rights and remedies as and when they are available.

ARTICLE V. OTHER TERMS

     5.1 Additional Terms; Addendum/Supplements. The warranties, covenants, conditions and other terms described in this Section and/or in the Addendum and/or other attached document(s) referenced In this Section are incorporated into this Agreement:

ARTICLE VI. MISCELLANEOUS

     6.1 Delay; Cumulative Remedies. No delay on the part of the Bank in exercising any right, power or privilege hereunder or under any of the other Loan Documents will operate as a waiver thereof, nor will any single or partial exercise of any right, power or privilege hereunder preclude other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein specified are cumulative and are not exclusive of any rights or remedies which the Bank would otherwise have.

Page 6 of 11

     6.2 Relationship to Other Documents. The warranties, covenants and other obligations of the Borrower (and the rights and remedies of the Bank) that are outlined in this Agreement and the other Loan Documents are Intended to supplement each other. In the event of any inconsistencies in any of the terms in the Loan Documents, all terms will be cumulative so as to give the Bank the most favorable rights set forth in the conflicting documents, except that if there is a direct conflict between any preprinted terms and specifically negotiated terms (whether included in an addendum or otherwise), the specifically negotiated terms will control.

     6.3 Successors. The rights, options, powers and remedies granted in this Agreement and the other Loan Documents shall be binding upon the Borrower and the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the successors and assigns of the Bank, including without limitation any purchaser of any or all of the rights and obligations of the Bank under the Note and the other Loan Documents. The Borrower may not assign its rights or obligations under this Agreement or any other Loan Documents without the prior written consent of the Bank.

     6.4 Disclosure. The Bank may, in connection with any sale or potential sale of all or any interest in the Note and other Loan Documents, disclose any financial information the Bank may have concerning the Borrower to any purchaser or potential purchaser. From time to time, the Bank may, in its discretion and without obligation to the Borrower, any Guarantor or any other third party, disclose information about the Borrower and this loan to any Guarantor, surety or other accommodation party. This provision does not obligate the Bank to supply any information or release the Borrower from its obligation to provide such information, and the Borrower agrees to keep all Guarantors, sureties or other accommodation parties advised of its financial condition and other matters which may be relevant to their obligations to the Bank.

     6.5 Indemnification. Except for harm arising from the Bank’s willful misconduct, the Borrower hereby indemnities and agrees to defend and hold the Bank harmless from any and all losses, costs, damages, claims and expenses of any kind suffered by or asserted against the Bank relating to claims by third parties arising out of the financing provided under the Loan Documents or related to any collateral (including, without limitation, the Borrower’s failure to perform its obligations relating to Environmental Matters described in Section 2.5 above). This indemnification and hold harmless provision will survive the termination of the Loan Documents and the satisfaction of the Obligations due the Bank.

     6.6 Notice of Claims Against Bank; Limitation of Certain Damages. In order to allow the Bank to mitigate any damages to the Borrower from the Bank’s alleged breach of its duties under the Loan Documents or any other duty, if any, to the Borrower, the Borrower agrees to give the Bank immediate written notice of any claim or defense it has against the Bank, whether in tort or contract, relating to any action or inaction by the Bank under the Loan Documents, or the transactions related thereto, or of any defense to payment of the Obligations for any reason. The requirement of providing timely notice to the Bank represents the parties’ agreed-to standard of performance regarding claims against the Bank. Notwithstanding any claim that the Borrower may have against the Bank, and regardless of any notice the Borrower may have given the Bank, the Bank will not be liable to the Borrower for consequential and/or special damages arising therefrom, except those damages arising from the Bank’s willful misconduct.

     6.7 Notices. Notice of any record shall be deemed delivered when the record has been (a) deposited in the United States Mail, postage pre-paid, (b) received by overnight delivery service, (c) received by telex, (d) received by telecopy, (e) received through the internet, or (f) when personally delivered.

     6.8 Payments. Payments due under the Note and other Loan Documents will be made in lawful money of the United States. Alt payments may be applied by the Bank to principal, Interest and other amounts due under the Loan Documents In any order which the Bank elects.

     6.9 Applicable Law and Jurisdiction; Interpretation; Joint Liability; Severability. This Agreement and all other Loan Documents will be governed by and interpreted in accordance with the internal laws of the State of Minnesota, except to the extent superseded by Federal law. THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR

Page 7 of 11

FEDERAL COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK’S BRANCH WHERE THE LOAN WAS ORIGINATED AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE, THE COLLATERAL ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein will affect the Bank’s rights to serve process in any manner permitted by law, or limit the Bank’s right to bring proceedings against the Borrower in the competent courts of any other jurisdiction or jurisdictions. This Agreement, the other Loan Documents and any amendments hereto (regardless of when executed) will be deemed effective and accepted only at the Bank’s offices, and only upon the Bank’s receipt of the executed originals thereof. If there is more than one Borrower, the liability of the Borrowers will be joint and several, and the reference to “Borrower’ will be deemed to refer to all Borrowers. Invalidity of any provision of this Agreement shall not affect the validity of any other provision.

     6.10 Copies; Entire Agreement; Modification. The Borrower hereby acknowledges the receipt of a copy of this Agreement and all other Loan Documents. This Agreement is a “transferable record” as defined in applicable law relating to electronic transactions. Therefore, the holder of this Agreement may, on behalf of Borrower, create a microfilm or optical disk or other electronic image of this Agreement that is an authoritative copy as defined in such law. The holder of this Agreement may store the authoritative copy of such Agreement in its electronic form and then destroy the paper original as part of the holder’s normal business practices. The holder, on its own behalf, may control and transfer such authoritative copy as permitted by such law.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BE RELIED UPON.

     6.11 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND THE BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

     6.12 Attachments. All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Agreement, are hereby expressly incorporated by reference.

Page 8 of 11

     IN WITNESS WHEREOF, the undersigned have executed this TERM LOAN AGREEMENT as of May 26, 2006.

(Individual Borrower)	Rochester Medical Corporation
	Borrower Name (Organization)
	a Minnesota Corporation
Borrower Name n/a	By /s/ Anthony J. Conway
	Name and Title: Anthony J. Conway,
	President/CEO
	By	/s/ David A. Jonas
Borrower Name	Name and Title: David A. Jonas, Chief Financial Officer
	U.S. Bank, N.A.		(Bank)
	By /s/ Bruce A. Gudlin
	Name and Title: Bruce A. Gudlin, Vice President

Borrower Address: 1 Rochester Medical Drive NW, Stewartville, MN 55976

Borrower Telephone No.:

Page 9 of 11

Exhibit 10.5

ADDENDUM TO TERM LOAN AGREEMENT AND NOTE

This Addendum is made part of the Term Loan Agreement and Note (the “Agreement”) made and entered into by and between the undersigned borrower (the `Borrower”) and the undersigned bank (the `Bank”) as of the date identified below. The warranties, covenants and other terms described below are hereby added to the Agreement.

Financial Covenants. Financial terms used herein which are not specifically defined herein shall have the meanings ascribed to them under generally accepted accounting principles. For any Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year will be deemed to be the calendar year. Borrower (herein referred to as the “Subject Party”) will maintain the following:

Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the fiscal quarter then ended of at least 1.30 to 1.

“Fixed Charge Coverage Ratio” shall mean (a) EBITDAR minus cash taxes, cash dividends and Maintenance Capital Expenditures divided by (b) the sum of all required principal payments (on short and long term debt and capital leases), interest and rental or lease expense.

“EBITDAR” shall mean net income, plus interest expense, plus income tax expense, plus depreciation expense plus amortization expense plus rent or lease expense.

“Maintenance Capital Expenditures” shall mean the dollar amount of Capital Expenditures that are necessary to maintain the current level of revenues. For the purposes of the covenant calculation, at no time shall the amount of the Capital Expenditures used be less than $300,000.00 per fiscal year, prorated evenly for the measurement periods required above.

“Capital Expenditures” shall mean the aggregate amount of all purchases or acquisitions of fixed assets, including real estate, motor vehicles, equipment, fixtures, leases and any other items that would be capitalized on the books of the Subject Party under generally accepted accounting principles. The term “Capital Expenditures” will not include expenditures or charges for the usual and customary maintenance, repair and retooling of any fixed asset or the acquisition of new tooling in the ordinary course of business.

Net Working Capital as of the end of each fiscal quarter in the amount of at least $8,000,000.00.

“Net Working Capital” shall mean:

(i) the amount of all assets which under generally accepted accounting principles would appear as current assets on the balance sheet of the Subject Party, plus 60% of LIFO reserve, if any,

Less

(ii) the amount of all liabilities which under generally accepted accounting principles would appear as current liabilities on such balance sheet, including all indebtedness payable on demand or maturing (whether by reason of specified maturity, fixed prepayments, sinking funds or accruals of any kind, or otherwise) within 12 calendar months or less from the date of the relevant statement, including all lease and rental obligations due in 12 calendar months or less under capitalized leases, and including customers’ advances and progress billings on contracts.

Financial Information and Reporting. This provision replaces in its entirety the provision of the Agreement titled “Financial Information and Reporting”. Financial terms used herein which are not specifically defined herein shall have the meanings ascribed to them under generally accepted accounting principles. For any Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year will be deemed to be the calendar year. The financial statements and other information previously provided to Bank or provided to Bank in the future are or will be complete and accurate and prepared in accordance with generally accepted accounting principles. There has been no

material adverse change in Borrower’s financial condition since such information was provided to Bank. Borrower will (i) maintain accounting records in accordance with generally recognized and accepted principles of accounting consistently applied throughout the accounting periods involved; (ii) provide Bank with such information concerning its business affairs and financial condition (including insurance coverage) as Bank may request; and (iii) without request, provide to Bank the following financial information, in form and content acceptable to Bank, pertaining to Borrower;

Interim Financial Statements: Not later than 60 days after the end of each fiscal quarter, interim financial statements, compiled by a certified public accounting firm acceptable to Bank.

Annual Financial Statements: Not later than 120 days after the end of each fiscal year, annual financial statements, audited by a certified public accounting firm acceptable to Bank.

Permitted Indebtedness. Notwithstanding the restrictions on indebtedness in Section 2.7 of the Agreement, and so long as (a) no default has occurred and (b) no default would be caused by such indebtedness, Borrower may without the prior consent of Bank incur indebtedness to third parties in an aggregate amount not to exceed $6,000,000.00 outstanding at any time.

Dated as of
(Individual)	(Non-Individual)
	Rochester Medical Corporation
Borrower Name n/a	a/an Minnesota Corporation
	By: /s/ Anthony J. Conway
Borrower Name n/a	Name and Title: Anthony J. Conway,
	President/CEO
	By: /s/ David A. Jonas
	Name and Title: David A. Jonas, Chief Financial
	Officer
	Agreed to:
	U.S. BANK N.A.
	By: /s/ Bruce A. Gudlin
	Name and Title: Bruce A. Gudlin, Vice President

EX-10.6

Exhibit 10.6

REVOLVING CREDIT AGREEMENT

     This Revolving Credit Agreement (the “Agreement” is made and entered into by and between the undersigned borrower (the “Borrower) and the undersigned bank (the “Bank”) as of the date set forth on the last page of this Agreement.

ARTICLE I. LOANS

     1.1 Revolving Credit Loans. From time to time prior to March 31, 2007 (the “Maturity Date”) or the earlier termination hereof, the Borrower may borrow from the Bank for working capital purposes up to the aggregate principal amount outstanding at any one time of the lesser of (i) $2,000,000(the “Loan Amount”), less letters of credit Issued by the Bank, or (ii) if applicable, the Borrowing Base (defined below). All revolving loans hereunder will be evidenced by a single promissory note of the Borrower payable to the order of the Bank in the principal amount of the Loan Amount (the “Note”). Although the Note will be expressed to be payable in the full Loan Amount, the Borrower will be obligated to pay only the amounts actually disbursed hereunder, together with accrued interest on the outstanding balance at the rates and on the dates specified therein and such other charges provided for herein. In the event that the principal amount outstanding under the Note exceeds the Borrowing Base at any time, the Borrower will immediately, without request, prepay an amount sufficient to eliminate such excess.

     1.2 Borrowing Base. The Borrowing Base, if any, will be as set forth in an addendum to this Agreement.

     1.3 Advances After Maturity or in Excess of Maximum Loan Amount. The Bank shall have no obligation whatsoever, and the Bank has no present intention, to make any advance after the Maturity Date or which would cause the principal amount outstanding under this Agreement to exceed the maximum loan amount or any other imitations on advances stated in this Agreement. Notwithstanding the foregoing, the Bank may from time to time, in its sole and absolute discretion, agree to make an advance after the Maturity Date or which would cause the principal amount of advances outstanding under this Agreement to exceed the maximum loan amount or any of the other limitations on advances. The Borrower is and shall be and remain unconditionally liable to the Bank for the amount of all advances, including, without limitation, advances in excess of the maximum loan amount or any other limitation on advances and advances made after the Maturity Date. Immediately upon the Bank’s demand, the Borrower shall pay to the Bank the amount of any advances made after the Maturity Date or in excess of the maximum loan amount or any other limitation on advances contained in this Agreement, together with interest on the principal amount of such excess advances, for so long as such advances are outstanding, at the highest interest rate from time to time in effect for such advances. Any such advances shall not be deemed an extension of this Agreement nor an increase in the maximum loan amount available for borrowing under this Agreement.

     1.4 Advances and Paying Procedure. The Bank is authorized and directed to credit any of the Borrower’s accounts with the Bank (or to the account the Borrower designates in writing) for all loans made hereunder, and the Bank is authorized to debit such account or any other account of the Borrower with the Bank for the amount of any principal, interest or expenses due under the Note or other amount due hereunder on the due date with respect thereto. If, upon any request by the Borrower to the Bank to issue a wire transfer, there is an inconsistency between the name of the recipient of the wire and its identification number as specified by the Borrower, the Bank may, without liability, transmit the payment via wire based solely upon the identification number.

     1.5 Closing Fee. The Borrower will pay the Bank a one-time closing fee of $ n/a contemporaneously with execution of this Agreement. This fee is in addition to all other fees, expenses and other amounts due hereunder,

     1.6 Loan Facility Fee. The Borrower will pay a loan facility fee equal to:

o $ n/a per annum, payable annually in advance; (or)

Page 1 of 11

o n/a % per annum of the Loan Amount, payable annually In advance; (or)

o n/a % per annum of the difference between the Loan Amount and the actual daily unpaid principal amount of the Note outstanding from time to time, payable quarterly, In arrears, on the last business day of each third calendar month, and at maturity; (or)

o n/a % per annum of the actual daily unpaid principal amount of the Note outstanding from time to time, payable quarterly, in arrears, on the last business day of each third calendar month, and at maturity.

The loan facility fee is payable for the entire period that this Agreement is in effect, regardless of whether any amounts are outstanding hereunder at any given time.

     1.7 Expenses and Attorneys’ Fees. Upon demand, the Borrower will immediately reimburse the Bank and any participant in the Obligations (defined below) (“Participant”) for all attorneys’ fees and all other costs, fees and out-of-pocket disbursements incurred by the Bank or any Participant in connection with the preparation, execution, delivery, administration, defense and enforcement of this Agreement or any of the other Loan Documents (defined below), including attorneys’ fees and all other costs and fees (a) incurred before or after commencement of litigation or at trial, on appeal or in any other proceeding, (b) incurred In any bankruptcy proceeding and (c) related to any waivers or amendments with respect thereto (examples of costs and fees Include but are not limited to fees and costs for: filing, perfecting or confirming the priority of the Bank’s lien, title searches or insurance, appraisals, environmental audits and other reviews related to the Borrower, any collateral or the loans, if requested by the Bank). The Borrower will also reimburse the Bank and any Participant for all costs of collection, including all attorneys’ fees, before and after judgment, and the costs of preservation and/or liquidation of any collateral.

     1.8 Compensating Balances. The Borrower will maintain on deposit with the Bank in non-interest bearing accounts average daily collected balances, in excess of that required to support account activity and other credit facilities extended to the Borrower by the Bank, an amount at least equal to the sum of (i) $ n/a and (ii) n/a% of the Loan Amount as computed on a monthly basis. If the Borrower fails to keep and maintain such balances, it will pay a deficiency fee, payable within five days after receipt of a statement therefor calculated on the amount by which the Borrower’s average daily balances are less than the requirements set forth above, computed at a rate equal to the rate set forth in the Note.

     1.9 Conditions to Borrowing. The Bank will not be obligated to make (or continue to make) advances hereunder unless (i) the Bank has received executed originals of the Note and all other documents or agreements applicable to the loans described herein, including but not limited to the documents specified in Article III (collectively with this Agreement the “Loan Document”), in form and content satisfactory to the Bank; (ii) if the loan is secured, the Bank has received confirmation satisfactory to it that the Bank has a properly perfected security interest, mortgage or lien, with the proper priority; (iii) the Bank has received certified copies of the Borrower’s governance documents and certification of entity status satisfactory to the Bank and all other relevant documents; (iv) the Bank has received a certified copy of a resolution or authorization in form and content satisfactory to the Bank authorizing the loan and all acts contemplated by this Agreement and all related documents, and confirmation of proper authorization of all guaranties and other acts of third parties contemplated hereunder, (v) if required by the Bank, the Bank has been provided with an opinion of the Borrower’s counsel in form and content satisfactory to the Bank confirming the matters outlined in Section 2.2 and such other matters as the Bank requests; (vi) no default exists under this Agreement or under any other Loan Documents, or under any other agreements by and between the Borrower and the Bank; and (vii) all proceedings taken in connection with the transactions contemplated by this Agreement (including any required environmental assessments), and all instruments, authorizations and other documents applicable thereto, are satisfactory to the Bank and its counsel.

Page 2 of 11

ARTICLE II. WARRANTIES AND COVENANTS

     While any part of the credit granted to the Borrower under this Agreement or the other Loan Documents is available or any obligations under any of the Loan Documents are unpaid or outstanding, the Borrower continuously warrants and agrees as follows:

     2.1 Accuracy of Information. All information, certificates or statements given to the Bank pursuant to this Agreement and the other Loan Documents will be true and complete when given.

     2.2 Organization and Authority; Litigation. This Agreement and the other Loan Documents are the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms. The execution, delivery and performance of this Agreement and all other Loan Documents to which the Borrower Is a party (i) are within the borrower’s power, (ii) have been duly authorized by all appropriate entity action; (iii) do not require the approval of any governmental agency; and (iv) will not violate any law, agreement or restriction by which the Borrower is bound. If the Borrower is not an individual, the Borrower is validly existing and in good standing under the laws of its state of organization, has all requisite power and authority and possesses all licenses necessary to conduct its business and own its properties. There is no litigation or administrative proceeding threatened or pending against the Borrower which would, if adversely determined, have a material adverse effect on the Borrower’s financial condition or its property.

     2.3 Existence; Business Activities; Assets; Change of Control. The Borrower will (i) preserve its existence, rights and franchises; (i) not make any material change in the nature or manner of its business activities; (iii) not liquidate, dissolve, acquire another entity or merge or consolidate with or into another entity or change its form of organization; (iv) not amend its organizational documents in any manner that may conflict with any term or condition of the Loan Documents; and (v) not sell, lease, transfer or otherwise dispose of all or substantially all of its assets. Other than the transfer to a trust beneficially controlled by the transferor, no event shall occur which causes or results in a transfer of majority ownership of the Borrower while any Obligations are outstanding or while the Bank has any obligation to provide funding to the Borrower.

     2.4 Use of Proceeds; Margin Stock; Speculation. Advances by the Bank hereunder will be used exclusively by the Borrower for working capital and other regular and valid purposes. The Borrower will not, without the prior written consent of the Bank, redeem, purchase, or retire any of the capital stock or declare or pay any dividends, or make any other payments or distributions of a similar type or nature Including withdrawal distributions. The Borrower will not use any of the loan proceeds to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System). No part of any of the proceeds will be used for speculative investment purposes, including, without limitation, speculating or hedging in the commodities and/or futures market.

     2.5 Environmental Matters. Except as disclosed in a written schedule attached to this Agreement (if no schedule is attached, there are no exceptions), there exists no uncorrected violation by the Borrower of any federal, state or local laws (including statutes, regulations, ordinances or other governmental restrictions and requirements) relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or Hazardous Substances as hereinafter defined, whether such laws currently exist or are enacted in the future (collectively “Environmental Laws”). The term “Hazardous Substances” will mean any hazardous or toxic wastes, chemicals or other substances, the generation, possession or existence of which Is prohibited or governed by any Environmental Laws. The Borrower is not subject to any judgment, decree, order or citation, or a party to (or threatened with) any litigation or administrative proceeding, which asserts that the Borrower (i) has violated any Environmental Laws; (ii) is required to clean up, remove or take remedial or other action with respect to any Hazardous Substances (collectively “Remedial Action”);or (iii) is required to pay all or a portion of the cost of any Remedial Action, as a potentially responsible party. Except as disclosed on the Borrower’s environmental questionnaire provided to the Bank, there are not now, nor to the Borrower’s knowledge after reasonable investigation have there ever been, any Hazardous Substances (or tanks or other facilities for the storage of Hazardous Substances) stored, deposited, recycled or disposed of on,

Page 3 of 11

under or at any real estate owned or occupied by the Borrower during the periods that the Borrower owned or occupied such real estate, which if present on the real estate or in soils or ground water, could require Remedial Action. To the Borrower’s knowledge, there are no proposed or pending changes in Environmental Laws which would adversely affect the Borrower or its business, and there are no conditions existing currently or likely to exist while the Loan Documents are In effect which would subject the Borrower to Remedial Action or other liability. The Borrower currently complies with and will continue to timely comply with all applicable Environmental Laws; and will provide the Bank, immediately upon receipt, copies of any correspondence, notice, complaint, order or other document from any source asserting or alleging any circumstance or condition which requires or may require a financial contribution by the Borrower or Remedial Action or other response by or on the part of the Borrower under Environmental Laws, or which seeks damages or civil, criminal or punitive penalties from the Borrower for an alleged violation of Environmental Laws.

     2.6 Compliance with Laws. The Borrower has compiled with all laws applicable to Its business and its properties, and has all permits, licenses and approvals required by such laws, copies of which have been provided to the Bank.

     2.7 Restriction on Indebtedness. The Borrower will not create, incur, assume or have outstanding any Indebtedness for borrowed money (including capitalized leases) except (i) any indebtedness owing to the Bank and its affiliates, and (ii) any other indebtedness outstanding on the date hereof, and shown on the Borrower’s financial statements delivered to the Bank prior to the date hereof, provided that such other Indebtedness will not be increased.

     2.8 Restriction on Liens. The Borrower will not create, Incur, assume or permit to exist any mortgage, pledge, encumbrance or other lien or levy upon or security interest in any of the Borrower’s property now owned or hereafter acquired, except (i) taxes and assessments which are either not delinquent or which are being contested in good faith with adequate reserves provided; (ii) easements, restrictions and minor title irregularities which do not, as a practical matter, have an adverse effect upon the ownership and use of the affected property; (iii) liens in favor of the Bank and its affiliates; and (iv) other liens disclosed in writing to the Bank prior to the date hereof.

     2.9 Restriction on Contingent Liabilities. The Borrower will not guarantee or become a surety or otherwise contingently liable for any obligations of others, except pursuant to the deposit and collection of checks and similar matters in the ordinary course of business.

     2.10 Insurance. The Borrower will maintain insurance to such extent, covering such risks and with such insurers as is usual and customary for businesses operating similar properties, and as is satisfactory to the Bank, including insurance for fire and other risks insured against by extended coverage, public liability insurance and workers’ compensation insurance; and will designate the Bank as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take such other action as the Bank may reasonably request to ensure that the Bank will receive (subject to no other Interests) the insurance proceeds on the Bank’s collateral.

     2.11 Taxes and Other Liabilities. The Borrower will pay and discharge, when due, all of its taxes, assessments and other liabilities, except when the payment thereof is being contested in good faith by appropriate procedures which will avoid foreclosure of liens securing such items, and with adequate reserves provided therefor.

     2.12 Financial Statements and Reporting. The financial statements and other information previously provided to the Bank or provided to the Bank in the future are or will be complete and accurate and prepared In accordance with generally accepted accounting principles. There has been no material adverse change In the Borrower’s financial condition since such information was provided to the Bank. The Borrower will (i) maintain accounting records in accordance with generally recognized and accepted principles of accounting consistently applied throughout the accounting periods involved; (ii) provide the Bank with such information concerning its business affairs and financial condition (including insurance coverage) as the Bank may request; and (iii) without request, provide the Bank with such specific financial statements, certifications and/or information as may be set forth in an addendum to this Agreement.

Page 4 of 11

     2.13 Inspection of Properties and Records; Fiscal Year. The Borrower will permit representatives of the Bank to visit and inspect any of the properties and examine any of the books and records of the Borrower at any reasonable time and as often as the Bank may reasonably desire. The Borrower will not change its fiscal year.

     2.14 Financial Status. Financial Covenants, if any, will be as set forth in an addendum to this Agreement:

     2.15 Paid-in-Full Period. o if checked here, all revolving loans under this Agreement and the Note must be paid in full for a period of at least n/a consecutive days during each fiscal year.

ARTICLE III. COLLATERAL AND GUARANTIES

     3.1 Collateral. This Agreement and the Note are secured by any and all security interests, pledges, mortgages/deeds of trust (except any mortgage/deed of trust expressly limited by Its terms to a specific obligation of Borrower to Bank) or liens now or hereafter in existence granted to the Bank to secure indebtedness of the Borrower to the Bank, including without limitation as described In the following documents:

o	Real Estate Mortgage(s)/Deed(s) of Trust dated
	covering real estate located at
Xo	Security Agreement(s) dated 05/26/06
o	Possessory Collateral Pledge Agreement(s) dated
o	Other

     3.2 Guaranties. This Agreement and the Note are guarantied by each and every guaranty now or hereafter in existence guarantying the indebtedness of the Borrower to the Bank (except for any guaranty expressly limited by its terms to a specific separate obligation of Borrower to the Bank) including, without limitation, the following:                                                            

     3.3 Credit Balances; Setoff. As additional security for the payment of the obligations described in the Loan Documents and any other obligations of the Borrower to the Bank of any nature whatsoever (collectively the “Obligations”, the Borrower hereby grants to the Bank a security interest in, a lien on and an express contractual right to set off against all depository account balances, cash and any other property of the Borrower now or hereafter in the possession of the Bank and the right to refuse to allow withdrawals from any account (collectively “Setoff”). The Bank may, at any time upon the occurrence of a default hereunder (notwithstanding any notice requirements or grace/cure periods under this or other agreements between the Borrower and the Bank) Setoff against the Obligations whether or not the Obligations (including future installments) are then due or have been accelerated, all without any advance or contemporaneous notice or demand of any kind to the Borrower, such notice and demand being expressly waived.

     The omission of any reference to an agreement in Sections 3.1 and 3.2 above will not affect the validity or enforceability thereof. The rights and remedies of the Bank outlined in this Agreement and the documents identified above are intended to be cumulative.

Page 5 of 11

ARTICLE IV. DEFAULTS

     4.1 Defaults. Notwithstanding any cure periods described below, the Borrower will immediately notify the Bank in writing when the Borrower obtains knowledge of the occurrence of any default specified below. Regardless of whether the Borrower has given the required notice, the occurrence of one or more of the following will constitute a default:

(a)	Nonpayment. The Borrower shall fail to pay (i) any interest due on the Note or any fees, charges, costs or expenses under the Loan Documents by 5 days after the same becomes due; or (ii) any principal amount of the Note when due.
(b)	Nonperformance. The Borrower or any guarantor of Borrower’s Obligations to the Bank (“Guarantor”) shall fail to perform or observe any agreement, term, provision, condition, or covenant (other than a default occurring under (a), (c), (d), (e), (f) or (g) of this Section 4.1) required to be performed or observed by the Borrower or any Guarantor hereunder or under any other Loan Document or other agreement with or In favor of the Bank.
(c)	Misrepresentation. Any financial information, statement, certificate, representation or warranty given to the Bank by the Borrower or any Guarantor (or any of their representatives) in connection with entering into this Agreement or the other Loan Documents and/or any borrowing thereunder, or required to be furnished under the terms thereof, shall prove untrue or misleading in any material respect (as determined by the Bank in the exercise of its judgment) as of the time when given.
(d)	Default on Other Obligations. The Borrower or any Guarantor shall be in default under the terms of any loan agreement, promissory note, lease, conditional sale contract or other agreement, document or instrument evidencing, governing or securing any indebtedness owing by the Borrower or any Guarantor to the Bank or any indebtedness in excess of $10000 owing by the Borrower to any third party, and the period of grace, if any, to cure said default shall have passed.
(e)	Judgments. Any judgment shall be obtained against the Borrower or any Guarantor which, together with all other outstanding unsatisfied judgments against the Borrower (or such Guarantor), shall exceed the sum of $10,000 and shall remain unvacated, unbonded or unstayed for a period of 30 days following the date of entry thereof.
(f)	Inability to Perform; Bankruptcy/Insolvency. (i) The Borrower or any Guarantor shall die or cease to exist; or (ii) any Guarantor shall attempt to revoke any guaranty of the Obligations described herein, or any guaranty becomes unenforceable in whole or in part for any reason; or (iii) any bankruptcy, insolvency or receivership proceedings, or an assignment for the benefit of creditors, shall be commenced under any Federal or state law by or against the Borrower or any Guarantor; or (iv) the Borrower or any Guarantor shall become the subject of any out-of-court settlement with its creditors; or (v) the Borrower or any Guarantor is unable or admits in writing its inability to pay its debts as they mature; or (vi) If the Borrower Is a limited liability company, any member thereof shall withdraw or otherwise become disassociated from the Borrower.
(g)	Adverse Change; Insecurity. (i) There Is a material adverse change in the business, properties, financial condition or affairs of the Borrower or any Guarantor, or in any collateral securing the Obligations; or (ii) the Bank in good faith deems Itself insecure.

     4.2 Termination of Loans; Additional Bank Rights. Upon the Maturity Date or the occurrence of any of the events identified in Section 4.1, the Bank may at any time (notwithstanding any notice requirements or grace/cure periods under this or other agreements between the Borrower and the Bank) (i) immediately terminate its obligation, if any, to make additional loans to the Borrower; (ii) Setoff; and/or (iii) take such other steps to protect or preserve the Bank’s interest in any collateral, including without limitation, notifying account debtors to make payments directly to the Bank, advancing funds to protect

Page 6 of 11

any collateral and insuring collateral at the Borrower’s expense; all without demand or notice of any kind, all of which are hereby waived.

     4.3 Acceleration of Obligations. Upon the Maturity Date or the occurrence of any of the events identified in Sections 4.1(a) through 4.1(e) and 4.1(g), and the passage of any applicable cure periods, the Bank may at any time thereafter, by written notice to the Borrower, declare the unpaid principal balance of any Obligations, together with the interest accrued thereon and other amounts accrued hereunder and under the other Loan Documents, to be immediately due and payable; and the unpaid balance will thereupon be due and payable, all without presentation, demand, protest or further notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein or In any of the other Loan Documents. Upon the occurrence of any event under Section 4.1(f), the unpaid principal balance of any Obligations, together with all interest accrued thereon and other amounts accrued hereunder and under the other Loan Documents, will thereupon be immediately due and payable, all without presentation, demand, protest or notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein or in any of the other Loan Documents. Nothing contained In Section 4.1, Section 4.2 or this section will limit the Bank’s right to Setoff as provided in Section 3.3 or otherwise in this Agreement.

     4.4 Other Remedies. Nothing in this Article IV is intended to restrict the Bank’s rights under any of the Loan Documents or at law, and the Bank may exercise all such rights and remedies as and when they are available.

ARTICLE V. OTHER TERMS

     5.1 Additional Terms; Addendum/Supplements. The warranties, covenants, conditions and other terms described In this Section and/or in the Addendum and/or other attached document(s) referenced in this Section are incorporated into this Agreement:

ARTICLE VI. MISCELLANEOUS

     6.1 Delay; Cumulative Remedies. No delay on the part of the Bank in exercising any right, power or privilege hereunder or under any of the other Loan Documents will operate as a waiver thereof, nor will any single or partial exercise of any right, power or privilege hereunder preclude other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein specified are cumulative and are not exclusive of any rights or remedies which the Bank would otherwise have.

     6.2 Relationship to Other Documents. The warranties, covenants and other obligations of the Borrower (and the rights and remedies of the Bank) that are outlined in this Agreement and the other Loan Documents are intended to supplement each other. In the event of any inconsistencies in any of the terms in the Loan Documents, all terms will be cumulative so as to give the Bank the most favorable rights set forth in the conflicting documents, except that if there is a direct conflict between any preprinted terms and specifically negotiated terms (whether included in an addendum or otherwise), the specifically negotiated terms will control.

     6.3 Successors. The rights, options, powers and remedies granted in this Agreement and the other Loan Documents shall be binding upon the Borrower and the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the successors and assigns of the Bank, including without limitation any purchaser of any or all of the rights and obligations of the Bank under the Note and the other Loan Documents. The Borrower may not assign its rights or obligations under this Agreement or any other Loan Documents without the prior written consent of the Bank.

Page 7 of 11

     6.4 Disclosure. The Bank may, In connection with any sale or potential sale of all or any interest in the Note and other Loan Documents, disclose any financial information the Bank may have concerning the Borrower to any purchaser or potential purchaser. From time to time, the Bank may, in its discretion and without obligation to the Borrower, any Guarantor or any other third party, disclose information about the Borrower and this loan to any Guarantor, surety or other accommodation party. This provision does not obligate the Bank to supply any information or release the Borrower from its obligation to provide such information, and the Borrower agrees to keep all Guarantors, sureties or other accommodation parties advised of its financial condition and other matters which may be relevant to their obligations to the Bank.

     6.5 Indemnification. Except for harm arising from the Bank’s willful misconduct, the Borrower hereby indemnifies and agrees to defend and hold the Bank harmless from any and all losses, costs, damages, claims and expenses of any kind suffered by or asserted against the Bank relating to claims by third parties arising out of the financing provided under the Loan Documents or related to any collateral (including, without limitation, the Borrower’s failure to perform its obligations relating to Environmental Matters described in Section 2.5 above). This indemnification and hold harmless provision will survive the termination of the Loan Documents and the satisfaction of the Obligations due the Bank.

     6.6 Notice of Claims Against Bank; Limitation of Certain Damages. In order to allow the Bank to mitigate any damages to the Borrower from the Bank’s alleged breach of its duties under the Loan Documents or any other duty, if any, to the Borrower, the Borrower agrees to give the Bank immediate written notice of any claim or defense It has against the Bank, whether in tort or contract, relating to any action or inaction by the Bank under the Loan Documents, or the transactions related thereto, or of any defense to payment of the Obligations for any reason. The requirement of providing timely notice to the Bank represents the parties’ agreed-to standard of performance regarding claims against the Bank. Notwithstanding any claim that the Borrower may have against the Bank, and regardless of any notice the Borrower may have given the Bank, the Bank will not be liable to the Borrower for consequential and/or special damages arising therefrom, except those damages arising from the Bank’s willful misconduct.

     6.7 Notices. Notice of any record shall be deemed delivered when the record has been (a) deposited in the United States Mail, postage pre-paid, (b) received by overnight delivery service, (c) received by telex, (d) received by telecopy, (e) received through the interest, or (f) when personally delivered.

     6.8 Payments. Payments due under the Note and other Loan Documents will be made in lawful money of the United States. All payments may be applied by the Bank to principal, interest and other amounts due under the Loan Documents in any order which the Bank elects.

     6.9 Applicable Law and Jurisdiction; Interpretation; Joint Liability; Severability. This Agreement and all other Loan Documents will be governed by and Interpreted in accordance with the internal laws of the State of Minnesota, except to the extent superseded by Federal law. THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK’S BRANCH WHERE THE LOAN WAS ORIGINATED, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT. THE NOTE, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein will affect the Bank’s rights to serve process in any manner permitted by law, or limit the Bank’s right to bring proceedings against the Borrower in the competent courts of any other jurisdiction or jurisdictions. This Agreement, the other Loan Documents and any amendments hereto (regardless of when executed) will be deemed effective and accepted only upon the Bank’s receipt of the executed originals thereof. If there is more than one Borrower, the liability of the Borrowers will be joint and several, and the reference to “Borrower” will be deemed to refer to all Borrowers. Invalidity of any provision of this Agreement shall not affect the validity of any other provision.

Page 8 of 11

     6.10 Copies; Entire Agreement; Modification. The Borrower hereby acknowledges the receipt of a copy of this Agreement and all other Loan Documents. This Agreement is a “transferable record” as defined in applicable law relating to electronic transactions. Therefore, the holder of this Agreement may, on behalf of Borrower, create a microfilm or optical disk or other electronic image of this Agreement that is an authoritative copy as defined in such law. The holder of this Agreement may store the authoritative copy of such Agreement In its electronic form and then destroy the paper original as part of the holder’s normal business practices. The holder, on Its own behalf, may control and transfer such authoritative copy as permitted by such law.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BE RELIED UPON.

     6.11 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND THE BANK HEREBY. JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

     6.12 Attachments. All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Agreement, are hereby expressly incorporated by reference.

     IN WITNESS WHEREOF, the undersigned have executed this REVOLVING CREDIT AGREEMENT as of May 26, 2006.

(Individual Borrower)	Rochester Medical Corporation
	Borrower Name (Organization)
	a Minnesota Corporation
Borrower Name	By /s/ Anthony J. Conway
	Name and Title: Anthony J. Conway,
	President/CEO
	By /s/ David A. Jonas
Borrower Name	Name and Title: David A. Jonas, Chief Financial
	Officer
	U. S. Bank N.A.	(Bank)
	By /s/ Bruce A. Gudlin
	Name and Title: Bruce A. Gudlin, Vice President

Page 9 of 11

Exhibit 10.6

ADDENDUM TO REVOLVING CREDIT AGREEMENT AND NOTE

This Addendum is made part of the Revolving Credit Agreement and Note (the “Agreement”) made and entered into by and between the undersigned borrower (the “Borrower”) and the undersigned bank (the “Bank”) as of the date identified below. The warranties, covenants and other terms described below are hereby added to the Agreement

Financial Covenants. Financial terms used herein which are not specifically defined herein shall have the meanings ascribed to them under generally accepted accounting principles. For any Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year will be deemed to be the calendar year. Borrower (herein referred to as the “Subject Party”) will maintain the following:

Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the fiscal quarter then ended of at least 1.30 to 1.

“Fixed Charge Coverage Ratio” shall mean (a) EBITDAR minus cash taxes, cash dividends and Maintenance Capital Expenditures divided by (b) the sum of all required principal payments (on short and long term debt and capital leases), interest and rental or lease expense.

“EBITDAR” shall mean net income, plus interest expense, plus income tax expense, plus depreciation expense plus amortization expense plus rent or lease expense.

“Maintenance Capital Expenditures” shall mean the dollar amount of Capital Expenditures that are necessary to maintain the current level of revenues. For the purposes of the covenant calculation, at no time shall the amount of the Capital Expenditures used be less than $300,000.00 per fiscal year, prorated evenly for the measurement periods required above.

“Capital Expenditures” shall mean the aggregate amount of all purchases or acquisitions of fixed assets, including real estate, motor vehicles, equipment, fixtures, leases and any other items that would be capitalized on the books of the Subject Party under generally accepted accounting principles. The term “Capital Expenditures” will not include expenditures or charges for the usual and customary maintenance, repair and retooling of any fixed asset or the acquisition of new tooling in the ordinary course of business.

Net Working Capital as of the end of each fiscal quarter in the amount of at least $8,000,000.00.

“Net Working Capital” shall mean:

(i) the amount of all assets which under generally accepted accounting principles would appear as current assets on the balance sheet of the Subject Party, plus 60% of LIFO reserve, if any,

Less

(ii) the amount of all liabilities which under generally accepted accounting principles would appear as current liabilities on such balance sheet, including all indebtedness payable on demand or maturing (whether by reason of specified maturity, fixed prepayments, sinking funds or accruals of any kind, or otherwise) within 12 calendar months or less from the date of the relevant statement, including all lease and rental obligations due in 12 calendar months or less under capitalized leases, and including customers’ advances and progress billings on contracts.

Financial Information and Reporting. This provision replaces in its entirety the provision of the Agreement titled “Financial Information and Reporting”. Financial terms used herein which are not specifically defined herein shall have the meanings ascribed to them under generally accepted accounting principles. For any Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year will be deemed to be the calendar year. The financial statements and other information previously provided to Bank or provided to Bank in the future are or will be complete and accurate and prepared in accordance with generally accepted accounting principles. There has been no material adverse change in Borrower’s financial condition since such information was provided to Bank. Borrower will (i) maintain accounting records in accordance with generally recognized and accepted principles of accounting consistently applied throughout the accounting periods involved; (ii) provide Bank with such information

concerning its business affairs and financial condition (including insurance coverage) as Bank may request; and (iii) without request, provide to Bank the following financial information, in form and content acceptable to Bank, pertaining to Borrower

Interim Financial Statements: Not later than 60 days after the end of each fiscal quarter, interim financial statements, compiled by a certified public accounting firm acceptable to Bank.

Annual Financial Statements: Not later than 120 days after the end of each fiscal year, annual financial statements, audited by a certified public accounting fine acceptable to Bank.

Permitted Indebtedness. Notwithstanding the restrictions on indebtedness in Section 2.7 of the Agreement, and so long as (a) no default has occurred and (b) no default would be caused by such indebtedness, Borrower may without the prior consent of Bank incur indebtedness to third parties in an aggregate amount not to exceed $6,000,000.00 outstanding at any time.

Dated as of May 26, 2006

(Individual)	(Non-Individual)
	Rochester Medical Corporation
Borrower Name n/a	a/an Minnesota Corporation
	By: /s/ Anthony J. Conway
Borrower Name n/a	Name and Title: Anthony J. Conway, President/CEO
	By: /s/ David A. Jonas
	Name and Title: David A. Jonas, Chief Financial
	Officer
	Agreed to:
	U.S. BANK N.A.
	By: /s/ Bruce A. Gudlin
	Name and Title: Bruce A, Gudlin, Vice President

EX-10.7

Exhibit 10.7

FIRST AMENDMENT TO TERM LOAN AGREEMENT

AND ADDENDUM AND REVOLVING CREDIT AGREEMENT

AND ADDENDUM

     This First Amendment to Term Loan Agreement and Addendum and Revolving Credit Agreement and Addendum, dated as of May 26, 2006, (the “Amendment”), between Rochester Medical Corporation, a Minnesota corporation (the “Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Bank”).

RECITALS:

     A. The Borrower and the Bank are parties to that certain Term Loan Agreement dated May 26, 2006 (“the Term Loan Agreement”) and Addendum to Term Loan Agreement dated May 26, 2006 (“the Term Loan Addendum”).

     B. The Borrower and the Bank are parties to that certain Revolving Credit Agreement dated May 26, 2006 (“Revolving Credit Agreement”) and Addendum to Revolving Credit Agreement dated May 26, 2006 (“the Revolving Credit Addendum”)

     C. The Borrower and Bank have further agreed to amend certain sections of the Term Loan Agreement, Term Loan Addendum, Revolving Credit Agreement and Revolving Credit Agreement (collectively the “Original Agreements”).

     NOW, THEREFORE, the parties agree as follows:

     1. Defined Terms. All capitalized terms used in this Amendment shall, except where the context otherwise requires, have the meanings set forth, in the Original Agreements as amended hereby.

     2. Amendments. The Original Agreements are amended as follows:

(a)

Article II of the Term Loan Agreement is amended by adding the following Covenant:

2.15 Restriction on Real Property Liens. The Borrower will not create, incur, assume or permit to exist any mortgage, pledge, encumbrance or other lien or other levy upon or security interest in any of Borrower’s real property now owned, except (i) taxes and assessments which are either not delinquent or which are being contested in good faith with adequate reserves provided; (ii) easements, restrictions and minor title irregularities which do not, as a practical matter, have an adverse effect upon the ownership and use of the affected property, A description of the real property subject to this covenant is attached hereto as Exhibit “A” and made a part hereof. Borrower further agrees to execute an agreement in recordable form so acknowledging the restriction on further liens on the property described herein. The restriction shall last during the term of any loan made pursuant to the Original Agreements.

(b)	Article II of the Revolving Credit Agreement is amended by adding the following Covenant:
	Section 2.16 Restriction on Real Property Liens. The Borrower will not create, incur, assume or permit to exist any mortgage, pledge, encumbrance or other lien or other levy upon or security interest in any of Borrower’s real property now owned, except (i) taxes and assessments which are either not delinquent or which are being contested in good faith with adequate reserves provided; (ii) easements, restrictions and minor title irregularities which do not, as a practical matter, have an adverse effect upon the ownership and use of the affected property, A description of the real property subject to this covenant is attached hereto as Exhibit “A” and made a part hereof. Borrower further agrees to execute an agreement in recordable form so acknowledging the restriction on further liens on the property described herein. The restriction shall last during the term of any loan made pursuant to the Original Agreements.
(c)	The definition of EBITDAR appearing in the Term Loan Addendum and Revolving Credit Addendum is amended to read as follows:
	“EBITDAR” shall mean net income, plus interest expense, plus income tax expense, plus depreciation expense, plus amortization expense, plus rent or lease expense, plus non cash share-based compensation deducted in accordance with SFAS 123.”
(d)	The Fixed Charge Coverage Ratio in the covenant to Term Loan Addendum and Revolving Credit Addendum is amended to read as follows:
	“Fixed Charge Coverage Ratio. As of the end of each fiscal quarter for the fiscal quarter then ended of at least 1.3 to 1. The first measurement of the Fixed Charge Coverage Ratio will be December 31, 2006. The test will be using the monthly operating information from July 1, 2006 to the measurement date. The next measurement will use the monthly operating information from the date of the Original Agreements to March 31, 2007. The next measurement and all measurements thereafter will use twelve (12) months of operating information on a trailing twelve month basis.”
(e)	The Net Working Capital covenant in the Term Loan Addendum and Revolving Credit Addendum, is amended to read as follows:
	“Net Working Capital. As of the end of each fiscal quarter commencing December 31, 2006, and quarterly thereafter in the amount of at least $8,000,000.00.”

2

     3. Conditions to Effectiveness. This Amendment shall become effective on the date (the “Effective Date”) when, and only when, the Bank shall have received:

(a)	Counterparts of this Amendment executed by the Borrower;
(b)	A copy of the corporate resolution of the Borrower authorizing the execution, delivery and performance of this Amendment certified by the Secretary or an Assistant Secretary of the Borrower;
(c)	An incumbency certificate showing the names and titles and bearing the signatures of the officers of the Borrower and Subsidiary authorized to execute this Amendment certified by the Secretary or an Assistant Secretary of such Loan Party;
(d)	A certificate of good standing for the Borrower in the jurisdiction of its incorporation certified by the appropriate governmental officials as of a date not more than 30 days prior to the date of this Amendment;
(e)	Such other documents, certificates or other items as the Bank may reasonably request.

     4. Representations and Warranties. To induce the Bank to enter into this Amendment, the Borrower represents and warrants to the Bank as follows:

(a) The execution, delivery and performance by the Borrower of this Amendment, and any other documents required to be executed and/or delivered by the Borrower by the terms of this Amendment have been duly authorized by all necessary corporate action do not require any approval or consent of, or any registration, qualification or filing with, any government agency or authority or any approval or consent of any other person (including, without limitation, any stockholder), do not and will not conflict with, result in any violation of or constitute any default under, any provision of the Borrower’s articles of incorporation or bylaws, any agreement binding on or applicable to the Borrower or any of its property, or any law or governmental regulation or court decree or order binding upon or applicable to the Borrower or of any of its property and will not result in the creation or imposition of any security interest or other lien or encumbrance in or on any of its property pursuant to the provisions of any agreement applicable to the Borrower or any of its property;

     5. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all costs and expenses of the Bank in connection with the preparation, reproduction, execution and delivery of this Amendment and the other documents to be delivered hereunder or thereunder, including the Bank’s reasonable attorneys’ fees and legal expenses. In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder, and the Borrower agrees to hold the Bank harmless from

3

and against any and all liabilities with respect to, or resulting from, any delay in the Borrower’s paying or omission to pay, such taxes or fees.

     6. Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AMENDMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.

     7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by then respective officers thereunto duly authorized as of the date first written above.

ROCHESTER MEDICAL CORPORATION

By	/s/ Anthony J. Conway Anthony J. Conway, President/CEO
By	/s/ David A. Jonas David A. Jonas, Financial Officer

U.S. BANK, NATIONAL ASSOCIATION

By /s/ Bruce A. Gudlin   Bruce A. Gudlin, Vice President

4

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Anthony J. Conway, Chief Executive Officer of Rochester Medical Corporation, 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)) 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)	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
c)	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.

August 14, 2006 /s/ Anthony J. Conway   Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATIONS

 I, David A. Jonas, Chief Financial Officer of Rochester Medical Corporation, 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)) 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)	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
c)	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: August 14, 2006 /s/ David A. Jonas   Chief Financial Officer

2

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 June 30, 2006 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

August 14, 2006

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 June 30, 2006 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

August 14, 2006