exv10w3



 







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.



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     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.



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     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



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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.




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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 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



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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 (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 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




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	 	 	 	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



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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.





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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


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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



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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



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(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:



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          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.





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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




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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

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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.



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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





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     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.



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     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






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     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	 	 







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