exv10w2



 







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”],



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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”TM; 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



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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.



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     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.



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     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



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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.





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          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

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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 (2nd) 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 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



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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.



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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.



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     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

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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.



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     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.



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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



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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.



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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

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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.



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     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