8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 16, 2006

Rochester Medical Corporation
__________________________________________
(Exact name of registrant as specified in its charter)

Minnesota	0-18933	41-1613227
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
One Rochester Medical Drive, Stewartville, Minnesota		55976
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

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

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On November 16, 2006, the Board of Directors of Rochester Medical Corporation (the "Company"), upon the recommendation of its Compensation Committee, approved a cash bonus management incentive plan for the fiscal year ending September 30, 2007 (the "Plan"). The Company’s management personnel will be entitled to earn bonus incentive compensation under the Plan based upon the Company’s financial performance in fiscal 2007, including the Company’s net sales and operating income. Such measures are deemed by the Board of Directors to be important measures of, among other things, the Company’s ability to generate value for shareholders. Minimum, target and maximum payout levels are set based upon the extent to which the specified performance measures are attained. A copy of the Plan is filed as Exhibit 10.1 to, and incorporated by reference in, this report.

On November 16, 2006, the Board of Directors of the Company, upon the recommendation of its Compensation Committee, a lso approved the issuance of stock options to purchase 40,000 shares of the Company’s common stock to Anthony Conway and options to purchase 20,000 shares of the Company’s common stock to each of David Jonas, Martyn Sholtis, Philip Conway and Dara Lynn Horner, to be issued on November 21, 2006 pursuant to the Company’s 2001 Stock Incentive Plan. Messrs. Jonas and Sholtis will also receive 20,000 shares of restricted stock pursuant to the Company’s 2001 Stock Incentive Plan. The stock options will vest 25% on each of the four anniversary dates of the stock option grant. The restricted stock will vest 100% on the fourth anniversary of the restricted stock grant. The form of restricted stock award is filed as Exhibit 10.2 to, and incorporated by reference in, this report.

On November 16, 2006, the Board of Directors also approved a revised director compensation policy for the Company’s non-management directors for fiscal year 2007. The revised policy replaces th e existing director compensation policy for the Company’s non-management directors. Under the revised policy, non-management directors will be paid $1,000 for each Board-related meeting attended via teleconference, and $2,000 for each Board meeting attended in person. Non-management directors will also receive annual equity compensation awards in the form of non-qualified stock options to purchase 40,000 shares of the Company’s common stock, to be issued on November 21, 2006 pursuant to the Company’s 2001 Stock Incentive Plan. The stock options will vest immediately, except in the case of Mr. Peter Conway, whose stock options will vest 25% immediately and 25% on each of March 31, 2007, June 30, 2007, and September 30, 2007. Directors will also be reimbursed for travel and business expenses. Any member of the Company’s management team serving on the Board of Directors is not eligible to receive compensation under the director compensation program.

Item 8.01 Other Events.

On November 20, 2006, the Company announced that it had reached a settlement with Premier, Inc. and Premier Purchasing Partners, L.P. ("Premier"), whereby Premier will pay the Company $8,825,000 and Premier will be dismissed from the lawsuit filed by the Company on March 16, 2004 against C.R. Bard, Inc.; TYCO International (US) Inc.; TYCO Healthcare Group, L.P.; Novation, LLC; VHA Inc.; and Premier. A copy of the press release that discusses these matters is filed as Exhibit 99.1 to, and incorporated by reference in, this report.

Item 9.01 Financial Statements and Exhibits.

10.1 Fiscal 2007 Executive Compensation Plan
10.2 Form of Restricted Stock Award
99.1 Press release of Rochester Medical Corporation, dated November 20, 2006

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 hereunto duly authorized.

	Rochester Medical Corporation
November 21, 2006	By:	/s/ David A. Jonas
		Name: David A. Jonas
		Title: Chief Financial Officer

Exhibit Index

Exhibit No.	Description
10.1	Fiscal 2007 Executive Compensation Plan
10.2	Form of Restricted Stock Award
99.1	Press release of Rochester Medical Corporation, dated November 20, 2006

EX-10.1

Exhibit 10.1

Rochester Medical Corporation
Fiscal 2007 Executive Compensation Plan

(adopted by the Compensation Committee of the Board of Directors on November 16, 2006)

MANAGEMENT INCENTIVE PLAN (BONUS)

Eligibility

• All Executive Officers and Director level management personnel will be eligible to participate.

• Recommended participation rates have been set by the President, and are based upon the respective position level and function of each executive. In all cases, participation rates are well within competitive incentive compensation ranges.

• Participation rates for incentive bonuses are expressed as a percentage of base salary.

Fiscal 2007

	Bonus Participation									Weighted Performance Criteria
	(% of Base Salary)
				Target			Maximum
Participant	Minimum Payout			Payout			Payout			Sales			Operating Income
Conway, Anthony		0	%		40	%		60	%		50	%		50	%
Jonas, David		0	%		35	%		52.5	%		50	%		50	%
Sholtis, Martyn		0	%		35	%		52.5	%		75	%		25	%
Conway, Philip		0	%		35	%		52.5	%		50	%		50	%
Horner, Dara Lynn		0	%		35	%		52.5	%		75	%		25	%

• The sales and operating income performance targets shall be set and approved annually by the Compensation Committee. Bonus weighting criteria is based on fiscal 2007 base plan without taking into account Premier-GPO based acute sales or affiliated spending. The President will recommend any bonus-related changes regarding the Company’s launch into the acute care market pursuant to the Premier-GPO contract.

Bonus Calculation and Payout

The President will evaluate actual results from the respective areas of responsibility for each executive against financial targets. This evaluation will result in a recommended payout level as a percentage of the annual incentive target. Performance levels and recommended payouts will be reviewed and approved by the Compensation Committee prior to disbursement.

Exhibit 10.2

RESTRICTED STOCK AWARD AGREEMENT

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

WHEREAS, the Corporation considers it desirable and in its best interests that the Employee be given an inducement to acquire a proprietary interest in the Corporation and an added incentive to advance the interests of the Corporation, by possessing a restricted stock award for common shares of the Corporation, in accordance with Rochester Medical Corporation 2001 Stock Incentive Plan (as adopted, amended and currently in effect, the “Plan").

NOW THEREFORE, in consideration of the premises and of the mutual promises and consideration provided herein, the parties agree as follows:

1. Definitions. Words and phrases not otherwise defined herein shall have the meanings ascribed to them, respectively, in the Plan.

2. Award. The Corporation hereby grants to Employee a restricted stock award of       shares (the “Shares”) of Common Stock, without par value per share, of the Corporation according to the terms and conditions set forth herein and in the Plan. A copy of the Plan will be furnished upon request of Employee. With respect to the Shares, Employee shall be entitled at all times on and after the date of issuance of the Shares to exercise the rights of a shareholder of Common Stock of the Corporation, including the right to vote the Shares and the right to receive dividends on the Shares.

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

On each of	Number of Shares
the following dates	Vested

4. Restrictions on Transfer. Until the Shares vest pursuant to Section 3 or Section 5 hereof, none of the Shares may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance shall be void and unenforceable against the Corporation, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the purported transferee with any interest or right in or with respect to the Shares.

5. Forfeiture; Early Vesting. If Employee ceases to be an employee of the Corporation or any affiliate prior to vesting of the Shares pursuant to Section 3 or Section 7 hereof, all of Employee’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, except that (i) if Employee ceases to be an employee by reason of permanent and total disability prior to the vesting of Shares under Section 3 or Section 7 hereof, (ii) if Employee ceases to be an employee by reason of death prior to the vesting of Shares under Section 3 or Section 7 hereof, or (iii) if Employee ceases to be an employee by reason of termination without cause prior to the vesting of Shares under Section 3 or Section 7 hereof, all Shares granted hereunder shall vest as of such termination of employment. Upon forfeiture, Employee will no longer have any rights relating to the unvested Shares, including the right to vote the Shares and the right to receive dividends declared on the Shares.

6. Distributions and Adjustments.

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

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

7. Change In Control. Notwithstanding Section 3 above, the Shares shall be fully vested on the date of (i) a public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) is made by the Company or any Person that such Person beneficially owns more than 50% of the Common Stock outstanding, (ii) the Company consummates a merger, consolidation or statutory share exchange with any other Person in which the surviving entity would not have as its directors at least 60% of the Continuing Directors and would not have at least 60% of its common stock owned by the common shareholders of the Company prior to such merger, consolidation or statutory share exchange, (iii) a majority of the Board of Directors is not comprised of Continuing Directors or (iv) a sale or disposition of all or substantially all of the assets of the Company or the dissolution of the Company. A “Continuing Director” is a current director of the Company, a director elected by the Board of Directors, a majority of whose members are Continuing Directors, or a director elected by shareholders upon the recommendation of the Board of Directors, a majority of whose members are Continuing Directors. “Person” means any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity.

8. Miscellaneous.

(a) Issuance of Shares. The Corporation shall cause the Shares to be issued in the name of Employee, either by book-entry registration or issuance of a stock certificate or certificates evidencing the Shares, which certificate or certificates shall be held by the Secretary of the Corporation or the stock transfer agent or brokerage service selected by the Secretary of the Corporation to provide such services for the Plan. The Shares shall be restricted from transfer and shall be subject to an appropriate stop-transfer order. If any certificate is used, the certificate shall bear an appropriate legend referring to the restrictions applicable to the Shares. Employee hereby agrees to the retention by the Corporation of the Shares and, if a stock certificate is used, agrees to execute and deliver to the Corporation a blank stock power with respect to the Shares as a condition to the receipt of this award of Shares. After any Shares vest pursuant to Section 3 or Section 7 hereof, and following payment of the applicable withholding taxes pursuant to Section 8(b) of this Agreement, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the name of Employee or in the name of Employee’s legal representatives, beneficiaries or heirs, as the case may be, evidencing such vested whole Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to Employee or Employee’s legal representatives, beneficiaries or heirs, as the case may be, free of the legend or the stop-transfer order referenced above. The value of any fractional Shares shall be paid in cash at the time certificates evidencing the Shares are delivered to Employee.

(b) Income Tax Matters.

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

(ii) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, Employee may elect to satisfy Employee’s federal and state income tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the Shares, by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation shares of Common Stock already owned by Employee having a fair market value equal to the amount of such taxes. Any  shares already owned by Employee for no less than six months prior to the date delivered to the Corporation if such shares were acquired upon the exercise of an option or upon the vesting of restricted stock units or other restricted stock. The Corporation will not deliver any fractional Shares but will pay, in lieu thereof, the Fair Market Value of such fractional Shares. Employee’s election must be made on or before the date that the amount of tax to be withheld is determined.

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

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

(e) No Right to Employment. The issuance of the Shares shall not be construed as giving Employee the right to be retained in the employ, or as giving a director of the Corporation or an affiliate the right to continue as a director, of the Corporation or an affiliate, nor will it affect in any way the right of the Corporation or an affiliate to terminate such employment or position at any time, with or without cause. In addition, the Corporation or an affiliate may at any time dismiss Employee from employment, or terminate the term of a director of the Corporation or an affiliate, free from any liability or any claim under the Plan or the Agreement. Nothing in the Agreement shall confer on any person any legal or equitable right against the Corporation or any affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Corporation or an affiliate. The Award granted hereunder shall not form any part of the wages or salary of Employee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of the Corporation or any affiliate be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, Employee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee (as defined in the Plan) and shall be fully bound thereby.

(f) Governing Law. The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Minnesota.

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

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

(i) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation or any Affiliate and Employee or any other person.

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

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

ROCHESTER MEDICAL CORPORATION

By:

Name:

Title:

[Employee]
Name:

Exhibit 99.1

Rochester Medical Corporation Announces Settlement Agreement With Premier

Stewartville, MN November 20, 2006

Rochester Medical Corporation (NASDAQ:ROCM) today announced that Premier, Inc., Premier Purchasing Partners, L.P. (“Premier”) and the Company have reached a Settlement Agreement under which the Company will dismiss Premier from litigation which Rochester Medical filed on March 16, 2004 against C.R. Bard, Inc; TYCO International (US) Inc.; TYCO Healthcare Group, L.P.; Novation, LLC; VHA Inc.; and Premier Purchasing Partners, L.P.

Under the Settlement Agreement, Rochester Medical is dismissing Premier from the litigation with prejudice, and Premier is paying Rochester Medical a total of $8,825,000 out of which Rochester Medical will pay attorney’s fees. The impact of the settlement will be reflected in the current quarter’s financials. The litigation continues against all other defendants in the case. It is scheduled for trial in May 2007.

Rochester Medical Corporation develops, manufactures, and markets disposable medical catheters and devices for urological and continence care applications. The Company markets under its own Rochester Medical^® brand and under existing private label arrangements.

For further information, please contact Anthony J. Conway, President and Chief Executive Officer of Rochester Medical Corporation at (507) 533-9600. More information about Rochester Medical is available on its website at http://www.rocm.com.