Document:

exv10w4

 

Exhibit 10.4

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (the “Agreement”), is entered into as of May 17, 2006, by and
between Mentor Corporation, a Minnesota corporation (“Seller”), and Rochester Medical Corporation,
a Minnesota corporation (“Purchaser”).

     WHEREAS, Seller has entered into that certain purchase agreement with Coloplast A/S, a Danish
Corporation (“Coloplast”), dated May 17, 2006 pursuant to which Seller will sell certain of its
assets to Coloplast, and Coloplast will assume certain liabilities, in each case relating to
Seller’s surgical urology and consumer and clinical healthcare operating segments (the “Coloplast
Purchase Agreement”);

     WHEREAS, the Parties are parties to an arbitration proceeding, filed by Purchaser with the
American Arbitration Association (the “AAA”) on November 29, 2005, case No. AAA 65 133 M 00317 05
(the “Arbitration”);

     WHEREAS, the Parties have executed a binding Memorandum of Understanding dated as of April 2,
2006 (the “MOU”) pursuant to which, the Parties agreed, among other things, that, subject to the
satisfaction of certain conditions, the Arbitration would be dismissed with prejudice, the Parties
would execute a mutual settlement and release and Seller would sell, and Purchaser would purchase,
the Assets;

     WHEREAS, the MOU provides that the Parties shall use all reasonable efforts to negotiate
definitive agreements containing the terms set forth in the MOU and other commercially reasonable
terms; and

     WHEREAS, this Agreement is being executed by the Parties to supersede the MOU in its entirety
and effect the sale by Seller, and purchase by Purchaser, of the Assets upon the terms and
conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises herein
made, and in consideration of the covenants, representations, warranties, conditions and agreements
contained herein, the Parties hereto agree as follows:

ARTICLE 1.

DEFINITIONS

     The following terms shall have the following respective meanings for all purposes of this
Agreement:

     “Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks
in New York, New York are authorized or required by Law to close.

 

 

     “Cause” means (a) a Transferred Employee’s breach of any trade secret or any confidential
information agreement with Purchaser (or a Subsidiary thereof), or written policy of Purchaser or a
Subsidiary thereof, (b) willful misconduct by a Transferred Employee, which is injurious to the
business of Purchaser, (c) the conviction of, or entry of a guilty plea by, a Transferred Employee
for the commitment of, a crime of moral turpitude, (d) substance abuse, including alcohol, (e)
taking an action for the purpose of harming the Purchaser or its business, (f) noncompliance with
applicable Law in a manner that is injurious to the business of Purchaser, (g) fraud or intentional
misrepresentation, or (h) continual, significant absenteeism.

     “Change of Control” means, with respect to a Party, a transaction or series of related
transactions that would directly or indirectly: (a) result in or have the effect of a third Person
obtaining legal or beneficial ownership of more than 50% of the voting shares (or other voting
interests) of such Party (even if such Party is the surviving entity, such as in the case of a
reverse triangular merger); or (b) result in the sale, transfer, assignment, exclusive license or
other disposition of all or substantially all of the Party’s assets; other than, in the case of
(a), a transaction pursuant to which the shareholders of such Party immediately prior to the
relevant transaction continue to beneficially own at least 50% of the voting shares (or other
voting interests) of such Party or its direct or indirect parent entity immediately following such
transaction.

     “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985.

     “Code” means the Internal Revenue Code of 1986 and the Treasury Regulations promulgated
thereunder.

     “Confidentiality Agreement” means the Confidentiality Agreement between Purchaser and Seller,
dated January 25, 2006.

     “Constructive Termination” shall mean only a resignation of a Transferred Employee’s
employment submitted within forty-five (45) days after the occurrence of any of the following
events: (i) a material reduction in the Transferred Employee’s responsibilities, provided that a
change of title shall not constitute such a material reduction; (ii) a reduction in the Transferred
Employee’s base salary, other than a one-time reduction that applies to substantially all other
employees of Purchaser; or (iii) a relocation of the Transferred Employee’s principal office to a
location more than fifty (50) miles from the Anoka Facility; and provided in all the above cases
the Purchaser has failed to cure the facts and circumstances giving rise to the Constructive
Termination within fifteen (15) days after receipt of notice of such resignation.

     “Contracts” means all contracts, binding agreements, options, leases, licenses, sales, binding
commitments and other similar instruments.

     “Covenant Breach” means with respect to a Party, a breach of, nonfulfillment or failure to
comply with a covenant or agreement made or to be performed pursuant to this Agreement by such
Party or a Subsidiary thereof.

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     “Derivative Works” shall have the meaning ascribed to it under the United States Copyright
Law, Title 17 U.S.C. Sec. 101 et. seq.

     “Employee Benefits Plan” means, whether written or oral: (a) any plan, fund, agreement or
program which provides health, medical, surgical, hospital, vision or dental care or other welfare
benefits, or benefits in the event of sickness, accident or disability, or death benefits,
apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal
services; (b) any plan, fund, agreement or program which provides retirement income to employees or
results in a deferral of income by employees for periods extending to the termination of covered
employment or beyond; (c) any plan, fund, agreement, practice or program which provides severance,
unemployment, vacation or fringe benefits (including dependent and health care accounts); (d) any
incentive compensation plan, deferred compensation plan, stock option or stock-based incentive or
compensation plan, or stock purchase plan; (e) any other “employee pension benefit plan” (as
defined in Section 3(2) of ERISA), any other “employee welfare benefit plan” (as defined in Section
3(1) of ERISA); and (f) any other written or oral plan, agreement or arrangement involving direct
or indirect compensation including insurance coverage, severance benefits, disability benefits,
fringe benefits, pension or retirement plans, profit sharing, deferred compensation, bonuses
(including any sale bonuses), stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation, as well as any change in
control agreements, managing director agreements and other retention arrangements.

     “ERISA” means the Employee Retirement Income Security Act of 1974 and the regulations
thereunder.

     “Encumbrance” means any lien, claim, charge, license, security interest, mortgage, pledge,
easement, conditional sale or other title retention agreement, defect in title, covenant or other
restrictions of any kind, other than a Permitted Encumbrance.

     “End Date” shall mean the End Date as defined in the Coloplast Purchase Agreement, as the same
may be extended pursuant to the terms thereof.

     “Governmental Authority” means any national, supranational, local or foreign court,
governmental or administrative agency or commission or other governmental agency, authority,
instrumentality, notified body, competent authority, third party governmental designate or
regulatory body having appropriate jurisdiction worldwide.

     “HIPAA” means the Health Insurance Portability and Accountability Act of 1996 and any
regulations promulgated thereunder.

     “Intellectual Property Rights” or “IPR” means all rights associated with any of the following:
(a) United States and foreign patents and applications therefor, including any patent or
application that is a provisional application, reissue, re-examination, renewal, extension or
continuation of a patent or patent application (“Patents”); (b) know-how, trade secret rights and
all other rights in or to confidential business or technical information (“Trade Secrets”); (c) copyrights,

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copyright registrations and applications therefor and all other
rights corresponding thereto throughout the world (“Copyrights”); (d) trademarks, service marks,
logos, trade dress rights and similar designation of origin and rights therein, registrations and
applications for registration therefor (“Marks”); (e) industrial design rights and any
registrations and applications therefor; (f) URLs, WWW address, and domain names (“Internet
Properties”); (g) databases and data collections, (including knowledge databases, customer lists
and customer databases (such customer lists and customer databases, the “Customer Information”);
and (h) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the
world. Intellectual Property Rights specifically excludes contractual rights, including license
grants, and the tangible embodiment of any of the foregoing.

     “Knowledge” means the actual knowledge of a Party’s executive officers.

     “Laws” means any applicable laws, statutes, ordinances, regulations, rules, interpretations,
or orders of any Governmental Authority anywhere in the world.

     “Liabilities” means any and all debts, liabilities, obligations and duties (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, whether latent or patent, whether determined or
undetermined, and whether due or to become due).

     “Licensed Field” means the manufacture of SMECs.

     “Licensed IPR” means all IPR owned or licensable by Seller as of the Closing that absent a
license would be infringed by the manufacture of SMECs by Purchaser immediately after the Closing;
provided however that “Licensed IPR” shall not include any Patents, Marks, Internet Properties or
Customer Information.

     “Losses” means any and all losses, costs, obligations, Liabilities, settlement payments,
awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.

     “Operative Agreements” means the Bill of Sale, the Release, the Lease, the Dismissal and the
Termination.

“Parties” means Seller and Purchaser, and each individually a “Party.”

     “Permitted Encumbrance” means any or all of the following: (a) licenses or other non-exclusive
Intellectual Property Rights granted prior to the date of this Agreement by Seller to any third
Person; and (b) Encumbrances which do not materially detract from the use of the Assets other than
liens recorded pursuant to UCC-1 financing statements filed in the State of Minnesota.

     “Person” means any individual, corporation, partnership, limited liability company, trust,
unincorporated organization, association, firm, joint venture, joint stock company, Governmental
Authority or other entity.

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     “Purchase Price” has the meaning set forth on Schedule 1.1.

     “Purchaser Benefits Plans” means the Employee Benefits Plans of Purchaser (or a Subsidiary
thereof).

     “Purchaser Material Adverse Effect” means any change that is materially adverse to the net
assets or financial condition of Purchaser and its Subsidiaries taken as a whole or to the ability
of Purchaser to consummate the transactions contemplated hereby and by the Operative Agreements.

     “Purchaser SMECs” means all inventory of SMECs, including unpackaged SMECs, owned by the
Seller as of the Closing that were produced by Purchaser at its facility located at 1 Rochester
Medical Drive, Stewartville, Minnesota and that are in substantially the same condition as when
received by the Seller from Purchaser (the “Purchaser SMECs”).

     “Registered IPR” means (i) issued Patents and Patent applications, (ii) registered Copyrights
and applications to register Copyrights, (iii) registered Marks and applications to register Marks,
and (iv) other formal registrations or applications to register Intellectual Property Rights with
any Governmental Authority.

     “Seller Benefits Plans” means the Employee Benefits Plans of Seller (or a Subsidiary thereof)
under which some or all of the Transferred Employees are eligible to participate immediately prior
to the date of this Agreement.

     “Seller Material Adverse Effect” means any change that is materially adverse to the net assets
or financial condition of Seller and its Subsidiaries taken as a whole or to the ability of Seller
to consummate the transactions contemplated hereby and by the Operative Agreements.

     “Seller SMEC” means an SMEC produced by Seller at the Anoka Facility.

     “SMEC” means a Silicone Male External Catheter.

     “Subsidiary” means with respect to a Party, any other corporation, limited liability company,
general or limited partnership, unincorporated association or other business entity of which (a) if
a corporation, a majority of the total voting power of shares of stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such Party, or one or more
of the other Subsidiaries of such Party or a combination thereof, or (b) if a limited liability
company, partnership, association or other business entity, a majority of the partnership or other
similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by
such Party, or one or more Subsidiaries of such Party or a combination thereof.

     “Warranty Breach” means with respect to a Party, an inaccuracy or breach of a representation
or warranty expressly made by such Party in the Agreement.

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     “Years of Service” means, with respect to any Transferred Employee’s prior service as an
employee of either Seller or a Subsidiary of Seller, fully completed calendar years plus the pro
rated time described in the following sentence. Not fully completed calendar years shall be
counted towards Years of Service at the rate of 1/12th for each full calendar month of
service.

     1.1 Other Definitions. The following terms are defined in the sections indicated:

	 	 	 
	Term	 	Section
	AAA

	 	Recitals
	Agreement

	 	Preamble
	Anoka Facility

	 	Section 2.2
	Arbitration

	 	Recitals
	Assets

	 	Section 2.1(f)
	Bill of Sale

	 	Section 3.2(a)
	Cash Consideration

	 	Section 3.3(b)
	Closing

	 	Section 3.1
	Closing Date

	 	Section 3.1
	Coloplast

	 	Recitals
	Coloplast Purchase Agreement

	 	Recitals
	Copyrights

	 	Definitions
	Dismissal

	 	Section 3.2(c)
	Evaluation Material

	 	Section 9.5(a)
	Finished Goods

	 	Section 2.1(d)
	Internet Properties

	 	Definitions
	Lease

	 	Section 3.2(d)
	Licensee Party

	 	Section 4.3
	Licensor Party

	 	Section 4.3
	Marks

	 	Definitions
	MEC Agreement

	 	Section 3.2(e)
	MOU

	 	Recitals
	Offered Employee

	 	Section 8.1
	Patents

	 	Definitions
	Purchaser

	 	Preamble
	Purchaser Employment Liabilities

	 	Section 8.8
	Raw Materials

	 	Section 2.1(b)
	Release

	 	Section 3.2(b)
	Residuals

	 	Section 4.2
	Seller

	 	Preamble
	Seller Employment Liabilities

	 	Section 8.9
	Selling Subsidiary

	 	Section 5.1
	Tangible Assets

	 	Section 2.1(a)
	Trade Secrets

	 	Definitions

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	Term	 	Section
	Transferred Employee

	 	Section 8.1
	Transferred IPR

	 	Section 2.1(f)
	Transfer Taxes

	 	Section 3.4
	Transition Marks

	 	Section 4.7(e)
	Transition Products

	 	Section 4.7(e)
	WIP

	 	Section 2.1(c)

ARTICLE 2.

PURCHASE AND SALE OF THE ASSETS

     2.1 Purchase and Sale of the Assets. At the Closing, upon the terms and subject to the
conditions contained herein, Seller shall sell to Purchaser, effective as of the Closing, free and
clear of all Encumbrances, and Purchaser shall purchase and acquire from Seller, all of Seller’s
and its Subsidiaries right, title and interest in and to the following:

          (a) The tangible assets listed on Schedule 2.1(a) (the “Tangible Assets”);

          (b) All reasonably useable raw materials owned by Seller as of the Closing held for use in,
and that are useable for, the production of Seller SMECs that are practicably capable of becoming
SMECs that will be useable and acceptable to Coloplast (the “Raw Materials”);

          (c) All work-in-progress Seller SMECs (the “WIP”) owned by the Seller as of the Closing, that
are practicably capable of becoming SMECs that are useable and acceptable to Coloplast;

          (d) All finished goods inventory of Seller SMECs (the “Finished Goods”), owned by the Seller
as of the Closing, that are useable and acceptable to Coloplast;

          (e) The Purchaser SMECs; and

          (f) The IPR owned by Seller that: (i) is not (A) Registered IPR, (B) IPR transferred to
Coloplast pursuant to the Coloplast Purchase Agreement, or (C) Patents, Marks, Internet Properties
or Customer Information; and (ii) is used exclusively, as of the Closing, in connection with the
manufacture of SMECs (the “Transferred IPR” and, collectively with the Tangible Assets, the Raw
Materials, the WIP, the Finished Goods and the Purchaser SMECs, the “Assets”).

     2.2 Excluded Assets. Notwithstanding anything contained in this Agreement to the
contrary, for the avoidance of doubt, the Parties agree that Seller is not selling and Purchaser is
not purchasing the real property with all improvements now or hereafter located thereon commonly

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known as 800 Lund Boulevard, Anoka, Minnesota, including the land and the building located thereon
(collectively, the “Anoka Facility”) or any other assets (including IPR) of Seller other than the
Assets.

     2.3 Bulk Sales. Purchaser hereby waives compliance with the provisions of any applicable
laws which relate to the sale of property in bulk in connection with the sale of the Assets to the
Purchaser.

     2.4 Retained Liabilities. The parties specifically acknowledge that Purchaser is not
agreeing to assume any Liabilities of Seller, whether related to the Assets or otherwise, other
than the Purchaser Employment Liabilities, and that nothing in this Agreement, including this
Section 2.4, will be construed as an agreement otherwise.

ARTICLE 3.

CLOSING

     3.1 Closing. The transactions contemplated by this Agreement shall be consummated (the
“Closing”) at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at 650
Page Mill Road, Palo Alto, California, no later than two Business Days after all of the conditions
set forth in Article 7 shall have been satisfied or waived (other than those conditions
that by their terms are not capable of being satisfied or waived until the Closing), or such other
time, place or date as Seller and Purchaser may mutually agree in writing. The time and date on
which the Closing is actually held is sometimes referred to herein as the “Closing Date.”

     3.2 Deliveries by Seller. At the Closing, Seller will deliver or cause to be delivered to Purchaser (unless
previously delivered) the following:

          (a) a duly executed counterpart of the Bill of Sale for the Tangible Assets, the Raw
Materials, the WIP, the Finished Goods and the Purchaser SMECs in the form attached hereto as
Exhibit A (the “Bill of Sale”);

          (b) a duly executed counterpart of the Mutual Settlement and Release in the form attached
hereto as Exhibit B (the “Release”);

          (c) a duly executed counterpart of the Stipulation of Dismissal to be filed by Purchaser with
the AAA in the form attached hereto a Exhibit C (the “Dismissal”);

          (d) a duly executed counterpart of the lease for the Anoka Facility in the form attached as
Exhibit D (the “Lease”); and

          (e) A duly executed counterpart of the termination in the form attached as Exhibit E
(the “Termination”) which provides for the termination of (i) the Male External Catheter
License,

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Sales and Distribution Agreement (including the Patent License, the Technology License and
the Confidential Information thereunder), between Purchaser and Seller dated as of April 24, 1991,
as amended by the Settlement Agreement between Purchaser and Seller with an effective date of
September 8, 1995 (the “MEC Agreement”), pursuant to which termination, among other things, Seller
will relinquish its right to use any IPR or confidential information of Purchaser licensed
thereunder; (ii) the Supply Agreement between Purchaser and Seller dated October 1, 2001; and (iii)
the Foley Catheter Sales and Distribution Agreement between Purchaser and Seller dated as of April
24, 1991. Notwithstanding the foregoing, and for the avoidance of doubt, the Termination shall not
restrict or limit in any way the covenants made and licenses granted pursuant to Article 4
hereof.

     3.3 Deliveries by Purchaser. At the Closing, Purchaser will deliver or cause to deliver
to Seller (unless previously delivered) the following:

          (a) $750,000 in cash representing the aggregate purchase price for the Tangible Assets and the
Transferred IPR by wire transfer of immediately available federal funds to an account specified by
Seller;

          (b) an amount of cash equal to the aggregate Purchase Price for the Purchaser SMECs, the Raw
Materials, the WIP and the Finished Goods by wire transfer of immediately available federal funds
to an account specified by Seller (together with (a) above, the “Cash Consideration”);

          (c) a duly executed counterpart of the Bill of Sale;

          (d) a duly executed counterpart of the Release;

          (e) a duly executed counterpart of the Dismissal;

          (f) a duly executed counterpart of the Lease; and

          (g) a duly executed counterpart of the Termination.

     3.4 Transfer Taxes. Purchaser shall be responsible for and shall pay when due any sales, use, value-added,
gross receipts, excise, registration, stamp duty, transfer or other similar taxes or governmental
fees (including any interest or penalties related thereto) that may be payable in connection with
the transactions contemplated by this Agreement (the “Transfer Taxes”). The Parties hereto shall
cooperate, to the extent reasonably requested and permitted by applicable law, in minimizing any
such Transfer Taxes. The Party required by law to file a tax return with respect to such Transfer
Taxes shall do so within the time period prescribed by law, and Purchaser shall promptly pay Seller
for any Transfer Taxes so payable by Seller upon receipt of notice that such Transfer Taxes have
become payable.

     3.5 Delivery; Further Assurances.

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          (a) On the Closing Date, Seller shall deliver to Purchaser at the Anoka Facility, all of the
Assets with the exception of Assets delivered by electronic means. All Assets capable of being
delivered by electronic means shall be delivered by electronic means as mutually agreed upon by
Purchaser and Seller.

          (b) Seller shall, at any time and from time to time after the Closing, upon the request of
Purchaser and at the expense of Purchaser, do, execute, acknowledge and deliver, and cause to be
done, executed, acknowledged or delivered, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney or assurances as may be reasonably required, or to vest in
Purchaser all of the Seller’s right, title and interest in the Assets. Each of the Parties hereto
will cooperate with the other and execute and deliver to the other such other instruments and
documents and take such other actions as may be reasonably requested from time to time by the other
Party hereto as necessary to carry out, evidence and confirm the intended purposes of this
Agreement. Purchaser shall be solely responsible for the filing and recordation of any transfer
documents following the Closing.

ARTICLE 4.

INTELLECTUAL PROPERTY LICENSES

     4.1 Seller License. Subject to the terms and conditions of this Agreement, effective as of the Closing, Seller
and its Subsidiaries hereby grant to Purchaser and its Subsidiaries a worldwide, perpetual,
irrevocable, fully paid-up, non-exclusive right and license under all of Seller’s rights in the
Licensed IPR, to use, copy, create Derivative Works from, sell, and distribute the Assets, or any
products and provide any services, in the Licensed Field.

     4.2 Purchaser License and Covenant.

          (a) Subject to the terms and conditions of this Agreement, effective as of the Closing,
Purchaser and its Subsidiaries hereby grant Seller and its Subsidiaries, and Seller and its
Subsidiaries retain, under the Transferred IPR, a worldwide, perpetual, fully paid-up,
non-exclusive right and license to use, copy, create Derivative Works from, sell and distribute
products, and provide services, based upon the Residuals. “Residuals” means any IPR provided under
or relating to the MEC Agreement (including Confidential Information as defined thereunder) or any
Transferred IPR that is retained in the unaided memory of employees of Seller or its Subsidiaries
following the Closing.

          (b) Without limiting Section 4.2(a), Purchaser agrees, effective commencing as of the
Closing, that neither it nor any of its Subsidiaries will bring any action or assert any claim
against Seller, its Subsidiaries, their successors, or Coloplast based upon or alleging that any
trade secrets or other information or materials in the possession of, known to, or used by Seller,
as of the date hereof or transferred or disclosed by Seller to Coloplast in connection with the
Coloplast Purchase Agreement was or is misappropriated by Seller (or Coloplast) from Purchaser,
violates

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Purchaser’s trade secret rights, or infringes Purchaser’s copyrights, in each case outside
the Licensed Field. Coloplast shall be deemed an express third party beneficiary with rights of
enforcement under this Section 4.2(b) to the extent this Section 4.2(b) relates to
any assets acquired by Coloplast from Seller.

     4.3 Existing Licenses. All licenses granted by a Party (“Licensor Party”) to the other Party or its Subsidiaries,
as applicable (“Licensee Party”) under this Article 4 are subject to any and all Contracts
between the Licensor Party and any third Person entered into prior to the Closing.

     4.4 Reservation of Rights. Each of the Licensor Parties hereby reserves all rights not expressly granted hereunder.
No implied licenses are granted by Seller or Purchaser with respect to any of the Assets or
pursuant to any term of this Agreement.

     4.5 Trade Secret Protection and Use. Notwithstanding the retention of ownership of any Trade Secrets by Seller (and the license
granted thereto to Purchaser), or transfer of ownership of Trade Secrets to Purchaser (with a
license retained thereto by Seller) hereunder, each Party agrees (i) nothing set forth herein shall
limit either Party’s rights to enforce its rights with respect to any misappropriation following
the Closing by third parties of such Trade Secrets or to protect the confidentiality of such Trade
Secrets regardless of whether such Trade Secrets are licensed to, or owned by such Party, and (ii)
each Party shall treat the Trade Secrets of the other with at least the same degree of care, as its
does its own like Trade Secrets, but in no event with less than reasonable care; provided that each
Party may use and disclose the Trade Secrets of the other within the scope of the licenses granted
hereunder.

     4.6 Transfer and Sublicensing. Except with respect to the license granted to Purchaser pursuant to Section 4.7,
the Licensee Party may transfer, assign or sublicense the licenses granted to it hereunder;
provided, however, that with respect to the license to Residuals granted to Seller pursuant to
Section 4.2(a) hereof, such license may not be transferred, assigned or sublicensed by Seller (i)
to Coloplast or (ii) to any other person except pursuant to a Change of Control of Seller.

     4.7 License to Transition Marks.

          (a) Seller hereby grants to Purchaser, effective as of the Closing, a non-exclusive,
non-transferable license under the Transition Marks (as defined below) to use such Transition Marks
in connection with the sale and distribution of Transition Products (as defined below) in the U.K.
in substantially the same manner that such Transition Marks were used by Seller or Mentor Medical
Limited in the U.K. prior to the Closing. All goodwill associated with the use of such Transition
Marks shall inure to the benefit of Seller.

          (b) Purchaser shall maintain the quality of the goods with which such Transition Marks are
used at least at the same level maintained by Seller prior to the Closing. Without limiting the
foregoing, Purchaser shall not (i) use the Transition Marks in a manner that detracts from the
goodwill associated with such Transition Marks or in a manner contrary to the reasonable
instructions of Seller, (ii) co-brand the Transition Products with any other Marks without the
prior

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written consent of Seller, or (iii) sell any Transition Product beyond its shelf life or in
any other improper manner. Purchaser shall not make any warranty, express or implied, to any third
party on behalf of Seller with respect to the Transition Products and except as may be otherwise
provided under this Agreement shall be solely responsible for all Transition Products sold by it.

          (c) Purchaser will use reasonable commercial efforts, subject to regulatory requirements, to
cease using the Transition Marks as promptly as practicable following the Closing, and replace such
Transition Marks with new Marks owned by Purchaser. Without limiting the generality of the
foregoing, in no event may Purchaser market, package, sell or promote any product
under or bearing a Transition Mark after the last day of the ninth (9th) month
following the Closing Date.

          (d) Purchaser will sell Transition Products in inventory on a first-in-first-out (FIFO) basis
in advance of any other products that are reasonable substitutes for the Transaction Products but
which other products do not bear the Transition Marks.

          (e) For the purposes of this Section 4.7, (i) “Transition Products” means all SMECs in
Mentor Medical Limited’s inventory that are purchased by Purchaser from Coloplast under the MML
Purchase Agreement, and (ii) “Transition Marks” means all Marks used by Seller or Mentor Medical
Limited in the U.K. that use or contain the letter string “MENTOR” prior to the Closing in
connection with the distribution and sale of SMECs by Mentor Medical Limited which are affixed as
of the Closing to the Transition Products.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants to Purchaser that:

     5.1 Organization and Qualification/Ownership of Seller. Seller is a corporation duly organized, validly existing and in good standing under the
laws of the State of Minnesota and has all requisite corporate power and authority to own, lease
and operate the Assets. Each of Seller’s Subsidiaries which owns Assets (each, a “Selling
Subsidiary”) is an entity duly organized, validly existing and in good standing (where applicable)
under the laws of its jurisdiction of organization and has all requisite corporate (or similar)
power and authority to own, lease and operate the Assets. Seller and the Selling Subsidiaries are
each duly qualified to do business as a foreign corporation and are in good standing in each
jurisdiction where such qualification is necessary, except for those jurisdictions where failure to
be so qualified would not, individually or in the aggregate, have a Seller Material Adverse Effect.

     5.2 Due Authorization. Seller has all requisite corporate power and authority to execute and deliver this
Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and thereby. The execution
and delivery by Seller of this Agreement and the Operative Agreements, the

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performance by Seller of
its obligations hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary corporate action on the
part of Seller. This Agreement has been duly and validly executed by Seller, and this Agreement
and each Operative Agreement to which Seller is a party are, upon execution and delivery hereof and
thereof by Seller, valid and binding obligations of Seller, enforceable against it in accordance
with the terms hereof and thereof (except as the enforceability hereof and thereof may be limited by any
applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally or by general
principles of equity, regardless of whether such enforceability is considered in equity or at law).

     5.3 No Conflict. Except as set forth in Schedule 5.3, neither the execution and delivery by Seller
of this Agreement or any of the Operative Agreements, nor the consummation by Seller of the
transactions contemplated hereby or thereby, nor compliance by Seller with any of the provisions
hereof or thereof, will: (a) conflict with, result in a breach or violation of or constitute (or
with notice or lapse of time or both constitute) a default under, (i) the Articles of Incorporation
or Bylaws of Seller or the like organizational documents of each Selling Subsidiary, (ii) any
order, judgment, decree, writ or injunction expressly applicable by its terms to any of the Assets
(but not including an order, judgment, decree, writ or injunction of general applicability), (iii)
to the Knowledge of Seller, any Law or other order, judgment, decree, writ or injunction applicable
to any of the Assets, or (iv) any of the terms, conditions or provisions of any Contract to which
Seller or its Subsidiaries is a party or by which Seller or its Subsidiaries (or any of the Assets)
is subject or bound which conflict, breach, violation or default would have a Seller Material
Adverse Effect; or (b) require Seller or, to the Knowledge of Seller, Purchaser to obtain any
authorization, consent, approval or waiver from, or to notify or to make any filing with, any
Governmental Authority.

     5.4 Title to Assets. Seller has good and marketable title to the Assets (other than
the Transferred IPR), free and clear of all Encumbrances. Seller owns all right, title and
interest in and to all of the Transferred IPR and/or has the right and authority to transfer such
Transferred IPR to Purchaser in accordance with the terms hereof free and clear of all
Encumbrances.

     5.5 Brokers. Seller and its Subsidiaries has not paid or become obligated to pay any fee or commission
to any broker, finder, investment banker or other intermediary in connection with the transactions
contemplated by this Agreement that is not the sole obligation of Seller.

     5.6 Employees. As of the date hereof, none of the Offered Employees are on an
approved leave of absence from work with Seller nor as of the date hereof has any such Offered
Employee provided written notice to Seller’s human resources department in accordance with Seller’s
human resource policies that he or she intends to take an approved leave of absence from work after
the date hereof.

     5.7 Exclusive Warranties. Except as set forth in this Article 5, Seller does not make any representations or
warranties, expressly or impliedly, with respect to the Assets, which are being sold “AS IS” in all
respects with all faults and without any other warranties of any kind. EXCEPT AS SPECIFICALLY
CONTAINED IN THIS ARTICLE 5, SELLER EXPRESSLY DISCLAIMS

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ALL OTHER
EXPRESS, STATUTORY AND IMPLIED WARRANTIES AND CONDITIONS, INCLUDING THE IMPLIED WARRANTY OR
CONDITION OF MERCHANTABILITY, SATISFACTORY QUALITY, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY OR
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF PURCHASER’S, WHETHER OR NOT SELLER HAS BEEN
MADE AWARE OF ANY SUCH PURPOSE.

ARTICLE 6.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser hereby represents and warrants to Seller as follows:

     6.1 Organization. Purchaser is a corporation, duly organized, validly existing and in good standing under the
laws of the State of Minnesota and has all requisite corporate power and authority to purchase the
Assets in accordance with the terms of this Agreement.

     6.2 Due Authorization. Purchaser has all requisite corporate power and authority to execute and deliver this
Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and thereby. The execution
and delivery by Purchaser of this Agreement and the Operative Agreements, the performance by
Purchaser of its obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all necessary corporate
action on the part of Purchaser. This Agreement has been duly and validly executed by Purchaser,
and this Agreement and each Operative Agreement to which Purchaser is a party are, upon execution
and delivery hereof and thereof by Purchaser, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with the terms hereof and thereof (except as the
enforceability hereof and thereof may be limited by any applicable bankruptcy, insolvency or other
laws affecting creditors’ rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law).

     6.3 No Conflict. Neither the execution and delivery by Purchaser of this Agreement or any of the other
documents contemplated hereby, nor the consummation by Purchaser of the transactions contemplated
hereby or thereby, nor compliance by Purchaser with any of the provisions hereof or thereof, will:
(a) conflict with, result in a breach or violation of or constitute (or with notice or lapse of
time or both constitute) a default under, (i) the Articles of Incorporation or Bylaws of Purchaser,
(ii) any order, judgment, decree, writ or injunction expressly applicable by its terms to
Purchaser (but not including an order, judgment, decree, writ or injunction of general
applicability), (iii) to the Knowledge of Purchaser, any Law or other order, judgment, decree, writ
or injunction of general applicability that is applicable to the Purchaser or (iv) any of the terms, conditions or
provisions of any Contract to which Purchaser is a party or by which Purchaser is bound which
conflict, breach, violation or default would have a Purchaser Material Adverse Effect; or (b)
require Purchaser, or to the Knowledge of Purchaser, Seller, to obtain any authorization,

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consent,
approval or waiver from, or to notify or to make any filing with, any Governmental Authority.

     6.4 Sufficiency of Funds. The Purchaser has available, and will have available at the Closing, sufficient funds to
enable it to consummate the transactions contemplated hereby and by the other Operative Agreements.

     6.5 Brokers. Purchaser has not paid or become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with the transactions contemplated by
this Agreement that is not the sole obligation of Purchaser.

     6.6 Exclusive Warranties. Purchaser acknowledges that, except for the express representations and warranties set
forth in Article 5, Seller does not make any representations or warranties, expressly or
impliedly, with respect to the Assets, which are being sold “AS IS” in all respects with all faults
and without any other warranties of any kind. PURCHASER ACKNOWLEDGES THAT EXCEPT AS SPECIFICALLY
CONTAINED IN ARTICLE 5, SELLER EXPRESSLY DISCLAIMS ALL OTHER EXPRESS, STATUTORY AND IMPLIED
WARRANTIES AND CONDITIONS, INCLUDING THE IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY,
SATISFACTORY QUALITY, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY OR SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF PURCHASER’S, WHETHER OR NOT SELLER HAS BEEN MADE AWARE OF ANY SUCH PURPOSE.

ARTICLE 7.

CONDITIONS

     7.1 Conditions to Obligations of Purchaser and Seller. All obligations of Purchaser and Seller to effect the Closing hereunder are subject to the
satisfaction at or prior to the Closing of the conditions precedent that follow, any one or more of
which may be waived in writing, in whole or in part, by Seller and Purchaser acting jointly:

          (a) No Injunction or Restraints; Illegality. No provision of any applicable Law shall
have been enacted, entered, promulgated or enforced by any Governmental Authority that
prohibits, restrains, enjoins, or restricts the consummation of the transactions contemplated
hereby in any material respect and no litigation or proceeding shall be pending by any Governmental
Authority seeking to prohibit, restrain, enjoin or restrict the consummation of the transactions
contemplated hereby in any material respect which would reasonably be expected to succeed.

          (b) Governmental Approvals. All material consents, approvals and actions of, filings
with and notice to any Governmental Authority necessary to permit Purchaser and Seller to perform
their obligations under this Agreement and to consummate the transactions contemplated hereby shall
have been duly obtained, made or given, and all terminations or expirations of waiting

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periods
imposed by any Governmental Authority necessary for the consummation of the transactions
contemplated by this Agreement shall have occurred.

          (c) Coloplast Closing. The “Closing” as defined in the Coloplast Purchase Agreement
shall have occurred or shall occur simultaneously with the Closing.

          (d) Purchaser-Coloplast Agreements. Purchaser and Coloplast shall have entered into:
(i) that certain Agreement by and among Purchaser, Coloplast, Mentor Medical Limited, Coloplast
Limited and Rochester Medical Limited dated as of the date hereof pursuant to which, among other
things, Purchaser will purchase from Coloplast, and Coloplast will sell to Purchaser, certain
assets and liabilities pertaining to the sale of SMECs in the United Kingdom (the “MML Purchase
Agreement”); (ii) that certain Private Label Distribution Agreement dated as of the date hereof;
and (iii) that certain Patent Cross-License Agreement dated as of the date hereof.

     7.2 Conditions to Obligations of Purchaser. All obligations of Purchaser to effect the Closing hereunder are subject to the
satisfaction at or prior to the Closing of the conditions precedent that follow, any one or more of
which may be waived in writing, in whole or in part, exclusively by Purchaser in its sole
discretion:

          (a) Closing Deliverables. Seller shall have made all the deliveries required to be
made by Seller pursuant to Section 3.2.

          (b) Representations and Warranties. The representations and warranties set forth in
Article 5 shall be true and correct in all material respects on date hereof and as of the
Closing Date as though such representations and warranties were made on and as of the Closing Date.

          (c) Performance. Seller and/or its Subsidiaries shall have performed and complied in
all materials respects with each of the agreements, covenants and conditions contained in this
Agreement that are required to be performed or complied with by Seller and/or its Subsidiaries at
or prior to the Closing.

          (d) Officer’s Certificate. Purchaser shall have received at the Closing, with respect
to Seller, a certificate, dated as of the Closing Date, of an appropriate officer of Seller
certifying that the conditions set forth in Section 7.2(b) and Section 7.2(c) have
been satisfied.

     7.3 Conditions to Seller’s Obligations. All obligations of Seller to effect the Closing hereunder are subject to the satisfaction
at or prior to the Closing of the conditions precedent that follow, any one or more of which may be
waived in writing, in whole or in part, exclusively by Seller in its sole discretion:

          (a) Closing Deliverables. Purchaser shall have made all the deliveries required to be
made by Purchaser pursuant to Section 3.3.

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          (b) Representations and Warranties. The representations and warranties set forth in
Article 6 shall be true and correct in all material respects on date hereof and as of the
Closing as though such representations and warranties were made on and as of the Closing.

          (c) Performance. Purchaser and/or its Subsidiaries shall have performed and complied
in all materials respects with each of the agreements, covenants and conditions contained in this
Agreement that are required to be performed or complied with by Purchaser and/or its Subsidiaries
at or prior to the Closing.

          (d) Officer’s Certificate. Seller shall have received at the Closing, with respect to
Purchaser, a certificate, dated as of the Closing Date, of an appropriate officer of Purchaser
certifying that the conditions set forth in Section 7.3(b) and Section 7.3(c) have
been satisfied.

ARTICLE 8.

EMPLOYEE MATTERS

     8.1 Employee Offers. On a date or dates to be mutually agreed upon by Purchaser and Seller, which shall be no
later than the tenth (10th) Business Day after the date Seller delivers Schedule 8.1 to
Purchaser, Purchaser will extend an offer of employment to each employee of Seller listed on
Schedule 8.1 (each, an “Offered Employee”), which schedule will provide with respect to
each Offered Employee his or her current position/title, base salary, benefits and time of
service.. Each such offer shall provide for employment by Purchaser effective only as of and after
the Closing Date and at a job responsibility level and title that is substantially similar to or
higher than such Offered Employee’s employment with Seller for the year prior to the date of the
offer. Effective only as of the Closing and after the Closing Date, Purchaser will hire each
Offered Employee who accepts the offer of employment extended to such individual by Purchaser
(each, a “Transferred Employee”). Notwithstanding the foregoing, any Offered Employee who is, at
the time an offer of employment is required under this Section 8.1 to be made, on a
Seller’s (or a Subsidiary’s thereof) approved leave of absence from work, shall not become an
employee of Purchaser (and shall not be considered a Transferred Employee) unless and until such
employee becomes eligible to return to active employment within one year after the Closing Date in
accordance with Seller’s human resource policies and applicable Laws and actually commences
employment with Purchaser.

     8.2 Service Credit; Waivers; Credits. Provided Seller provides Purchaser at the Closing with a certificate of credible coverage
under HIPAA for all Transferred Employees, Purchaser shall provide each Transferred Employee with
credit for purposes of eligibility, vesting and benefit accrual under the Purchaser Benefits Plans
for Years of Service on and prior to the Closing Date with Seller and its Subsidiaries credited
under the comparable Seller Benefits Plans, including recognition of such service for purposes of
determining Transferred Employees’ amount of paid time off or vacation and severance benefits;
provided, however, that, except as provided in Section 8.6 or Section 8.7, in no
event shall Purchaser be required to provide any service credit to any Transferred Employee to the
extent the provision of such credit would result in any duplication of benefits or

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would cause one
of the Purchaser Benefit Plans to fail to satisfy the nondiscrimination requirements under federal
law (including the Code). Purchaser shall cause any pre-existing conditions or limitations and
eligibility waiting periods (to the extent that such waiting periods would be inapplicable under
Seller Benefits Plans) under any Purchaser Benefits Plans to be waived with respect to Transferred
Employees and their eligible dependents, provided that if required by Purchaser such employees
present a certificate of creditable coverage. Purchaser shall provide the Transferred Employees
and their eligible dependents with credit for any deductibles and annual out-of-pocket limits for
medical, dental and vision expenses paid during the applicable period under any Purchaser Benefits
Plans in satisfying any deductibles and annual out-of-pocket limits for medical, dental and vision
expenses for the corresponding period under the Purchaser Benefits Plans.

     8.3 401(k) Plan. To the extent permitted under Section 401(k) of the Code and regulations issued thereunder,
Transferred Employees who participate in Seller’s 401(k) plan shall be eligible to receive, at
their election, a distribution of their account balance from Seller’s 401(k) plan after the Closing
Date. Purchaser shall use reasonable efforts to cause its 401(k) plan to accept eligible rollovers
of such distributions, provided that Purchaser determines that receipt of any such rollover will
not result in a disqualification of Purchaser’s 401(k) plan. Rollovers relating to any Transferred
Employee may include participant loans, provided that it is permitted by Purchaser’s 401(k) plan
(it being expressly understood that Purchaser is not obligated to amend Purchaser’s 401(k) plan to
accept rollovers).

     8.4 FSA. Promptly after the Closing Date, Seller shall transfer and Purchaser shall accept the
flexible spending account elections, liabilities and accounts (maintained pursuant to Code Sections
105 and 129) of the Transferred Employees under Seller’s Section 125 plan flexible spending
arrangement. Promptly after the Closing Date, Seller shall cause to be transferred to Purchaser
the aggregate net cash amount (determined immediately prior to the Closing) for contributions paid
(but not yet reimbursed) by or on behalf of the Transferred Employees under Seller’s Section 125 plan
flexible spending arrangement.

     8.5 Vacation. Seller shall allow Transferred Employees to transfer any accrued but unused vacation time
(which vacation time was accrued in accordance with Seller’s policies consistent with past
practice) to Purchaser. Only Transferred Employees who submit a vacation consent form, prior to
the Closing Date, are eligible to transfer vacation time to Purchaser. To the extent permitted by
law, Purchaser shall assume such accrued but unused vacation time and allow each Transferred
Employee to use such accrued vacation time after the Closing Date. The transfer of vacation time
shall not affect each Transferred Employee’s accrual of vacation under Purchaser’s vacation
policies. Seller shall be liable for and pay in cash an amount equal to any accrued but unused
vacation time to any (i) Transferred Employee who has not executed a vacation consent form or (ii)
any Offered Employee who declines to accept Purchaser’s offer of employment made in accordance with
Section 8.1, and whose employment terminates prior to the Closing.

     8.6 Compensation and Benefits. Purchaser will compensate each Transferred Employee (so long as any such Transferred
Employee remains employed by Purchaser or any Subsidiary

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thereof, and subject to Purchaser’s
termination rights and resulting severance obligations under Section 8.7) for at least one
year after the Closing as follows:

          (a) Each Transferred Employee shall receive a rate of total cash compensation, including base
salary rate and target bonus opportunity, which shall be at least substantially similar to the
total cash compensation opportunity provided to the Transferred Employee by Seller immediately
prior to the date of this Agreement;

          (b) Each Transferred Employee shall participate in Purchaser’s health and welfare benefit
plans, which shall provide for benefits that are at least substantially similar to the health and
welfare benefits provided under those Seller Benefits Plans in effect immediately prior to the
Closing, or if a Transferred Employee is not eligible to participate in Purchaser’s health plans
and the Transferred Employee elects COBRA under Seller’s health plan, then Purchaser shall pay the
Transferred Employee’s COBRA premiums for up to 12 months; and

          (c) Each Transferred Employee shall participate in Purchaser’s other benefit plans provided to
employees of Purchaser of a similar level of job responsibility as the Transferred Employee.

     Following the 12-month period immediately after the Closing Date and thereafter, Transferred
Employees shall participate in the Purchaser’s severance program provided to similarly situated
Purchaser employees and be provided credit for years of service under such severance program for
their service with Seller and Purchaser.

     8.7 Severance. Purchaser shall provide any Transferred Employee whose employment is terminated by
Purchaser (other than employees terminated for Cause) or who resigns as a result of a Constructive
Termination, in each case within the 12-month period immediately following the Closing Date, with
severance payments and benefits, such Transferred Employee shall be provided the following
exclusive severance benefits: (i) 2 weeks pay for each full year of service at Seller and
Purchaser, subject to a minimum of 8 weeks pay, (ii) 30 days notice of termination, or if less than
30 days notice is provided, payment for each scheduled working day during the period from the time
of termination until the 30th day after notice was given, and (iii) COBRA benefits as
required by Law.

     8.8 Employment-Related Assumed Liabilities. Purchaser, to the exclusion of Seller, assumes, accepts and shall be fully responsible for
any and all Losses, Liabilities or claims to the extent arising out of or relating to: (a)
Purchaser’s alleged failure to make, or failure to make, offers of employment to Offered Employees
in keeping with its obligations under Section 8.1; (b) the employer-employee relationship,
or Purchaser’s employment or termination of employment, of any Transferred Employee, in each case,
on or after the Closing Date; (c) any Purchaser Benefits Plans; and (d) workers’ compensation
claims of any Transferred Employee arising out of conditions with a date of injury (or, in the case
of a claim relating to occupational illness or disease, the last significant exposure) that begins
prior to but continues after the Closing Date (collectively referred to herein as “Purchaser
Employment Liabilities”). Notwithstanding the preceding sentence, Purchaser shall retain
responsibility for and continue to pay all medical, life insurance, disability and other welfare

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plan expenses and benefits for each Transferred Employee with respect to claims incurred by such
Transferred Employees or their covered dependents on or after the Closing Date. Purchaser shall
reimburse, indemnify and hold harmless Seller and each of its Subsidiaries and their respective
Employee Benefits Plans from and against any and all Losses incurred by any of them in connection
with any Purchaser Employment Liabilities.

     8.9 Employment-Related Excluded Liabilities. Seller, to the exclusion of Purchaser, assumes, accepts and shall be fully responsible for
any and all Losses, Liabilities or claims to the extent arising out of or relating to: (a) the
employer-employee relationship, or Seller’s employment of, or the termination of employment of any
Transferred Employee, in each case, on or before the Closing Date; (b) any Seller Benefits Plans;
and (c) workers compensation claims of Transferred Employees arising out of conditions with a date
of injury, (or in the case of a claim relating to occupational illness or disease, the last
significant exposure) that begins and ends on or before the Closing Date (collectively referred to
herein as “Seller Employment Liabilities”). Notwithstanding the preceding sentence, Seller shall
retain responsibility for and continue to pay all medical, life insurance, disability and other
welfare plan expenses and benefits for each Transferred Employee with respect to claims incurred by
such Transferred Employees or their covered dependents prior to the Closing Date. Seller shall
reimburse, indemnify and hold harmless Purchaser and each of its
Subsidiaries and their respective Employee Benefits Plans from and against any and all Losses
whenever asserted or incurred by any of them in connection with any Seller Employment Liabilities.

     8.10 Timing of Claims Incurred. For purposes of Section 8.8 and Section 8.9, a claim is deemed incurred
when all facts and circumstances giving rise to the claim have occurred and specifically: in the
case of medical or dental benefits, when the services that are the subject of the claim are
performed; in the case of life insurance, when the death occurs; in the case of long term
disability benefits, when the disability occurs; in the case of workers compensation benefits, as
described in Section 8.8 and Section 8.9 above; and otherwise, at the time the
Transferred Employee or covered dependent becomes entitled to payment of a benefit (assuming that
all procedural requirements are satisfied and claims applications properly and timely completed and
submitted).

     8.11 No Modification of At-Will Employment; Other Positions. Nothing contained herein is intended as a guarantee of employment for any of the
Transferred Employees for any specified period of time or to limit in any way (i) the Transferred
Employees’ status as “at-will” employees or (ii) Purchaser’s right to terminate the employment of
any Transferred Employee (following the offer of employment required pursuant to Section
8.1 and subject to the severance provision in Section 8.7). Nothing contained herein
is intended to limit Purchaser and any Transferred Employee from mutually agreeing at any time
following the Closing to a new position at Purchaser, other than the position offered by Purchaser
to the Transferred Employee pursuant to this Article 8, upon such terms and conditions as
the Transferred Employee and Purchaser may mutually agree, including at a level of compensation,
benefits or responsibility different from the initially offered employment pursuant to this
Article 8.

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ARTICLE 9.

OTHER AGREEMENTS

     9.1 Conduct of Business. From the date hereof until the Closing Date, Seller shall use commercially reasonable
efforts to maintain the Assets in the condition of such Assets as of the date hereof, normal wear
and tear and conversion of Raw Materials and WIP into Finished Goods in the ordinary course
excepted, and shall not transfer any of the Assets except for sales of finished goods in the
ordinary course of business.

     9.2 Stay of Arbitration. The Parties agree the Arbitration shall be stayed until the earlier to occur of (i) the
Closing and (ii) the termination of this Agreement in accordance with its terms. The Parties shall
take any action necessary to notify the AAA of such stay and will not make any filing with the AAA
during the stay other than such notification.

     9.3 Purchase Requirements Under the Supply Agreement. The Parties hereby acknowledge and agree that as of April 1, 2006 and thereafter, the
Annual Minimum Purchases requirements and provisions set forth in Section 1.2 of the MEC Agreement
shall not be applicable to or enforceable against Seller with respect to all periods beginning on
or after April 1, 2006; provided, however, that if this Agreement terminates prior to Closing,
Seller shall be obligated to satisfy its Annual Minimum Purchases requirements set forth in Section
1.2 of the MEC Agreement for the period on and after April 1, 2006 which would have otherwise been
required without reference to the foregoing for the entire period beginning on April 1, 2006 and
ending upon the expiration or termination of the MEC Agreement, but without penalty to Seller for
failure to timely make any required minimum purchases during the period from April 1, 2006 until
the termination of this Agreement. Except as provided in the preceding sentence, the remaining
provisions of the MEC Agreement shall remain in effect until the delivery of the Termination at
Closing.

     9.4 Public Announcement. The Parties shall consult with each other before issuing any press release or making any
other public announcement with respect to this Agreement or the transactions contemplated hereby
and, except as required by any applicable Laws, regulatory requirement or the rules of any national
stock exchange or over the counter trading market upon which their respective securities are listed
for trading, neither of them shall issue any such press release or make any such public
announcement without the prior written consent of the other.

     9.5 Confidentiality

          (a) Confidentiality Agreement. The Confidentiality Agreement shall continue in full
force and effect and survive the execution of this Agreement, the Closing, the consummation of the
transactions contemplated hereby and by the Operative Agreements and/or the termination of this
Agreement for seven (7) years. The Parties hereby agree that the term “Evaluation Material,” as
used in the Confidentiality Agreement shall be deemed to include (i) all exhibits, schedules,
certificates and other documents executed or delivered in connection with this Agreement, the other

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Operative Agreements and the consummation of the transactions contemplated hereby and thereby, (ii)
all proprietary and confidential information concerning Seller and its Subsidiaries, which includes
all proprietary and confidential information of Seller and its Subsidiaries with respect to SMECs,
and (iii) all documents and materials contained in Seller’s data room, or otherwise furnished or
made available (directly or indirectly) to Purchaser or its Subsidiaries; provided, however, that
after the Closing, with respect to Purchaser, the foregoing shall not apply to such information
that (1) is embodied exclusively in the Assets and (2) is not also related to any business or
assets of Seller (or a Subsidiary thereof) not transferred to Purchaser under this Agreement. In
addition, notwithstanding any other provision of the Confidentiality Agreement, and this Agreement,
Purchaser and its Subsidiaries and Seller and its Subsidiaries may include this Agreement
(excluding schedules thereto) and the other Operative Agreements in or as an exhibit to any report,
form or registration statement filed with or furnished to the SEC to the extent required under the
Securities Act of 1933 or the Securities Exchange Act of 1934 and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder. Seller agrees to treat and hold
confidential any information concerning the Assets that is not (other than by virtue of Seller’s
violation of this Section 9.5(a)) generally available to the public; provided, however,
that nothing in this Section 9.5(a) shall prohibit Seller or any of its Subsidiaries from
complying with applicable Laws or the rules and regulations of any national or foreign stock
exchange or over the counter trading market upon which their respective securities are listed for
trading.

          (b) Release of Certain Confidentiality Obligations. Effective as of the Closing,
Seller shall, or shall cause its applicable Subsidiary to, release the Transferred Employees from
any confidentiality obligations they may have to Seller (or a Subsidiary thereof) with respect to
trade secret, confidential and other information that relates to the Assets, but only to the extent
such information does not also relate to any business or assets of Seller (or a Subsidiary thereof)
not transferred to Purchaser (or a Subsidiary thereof) under this Agreement.

     9.6 Return of Non-Transferred Assets. If at any time within 12 months following the Closing Date, Purchaser becomes aware of any
assets that were delivered to Purchaser in connection with this Agreement that are not Assets,
Purchaser shall promptly notify Seller of such assets in its possession, and shall return (or at
Seller’s discretion, destroy) such assets, including all copies thereof. In any case, Purchaser
agrees to keep and treat all such assets as Evaluation Material in accordance with the terms of the
Confidentiality Agreement.

     9.7 Mail Handling. Following the Closing Date, to the extent that Purchaser and/or any of its Subsidiaries
receives any mail or packages addressed to Seller or any of its Subsidiaries and delivered to
Purchaser and/or any of its Subsidiaries, Purchaser shall promptly deliver such mail or packages to
Seller. Following the Closing, to the extent Seller or any of its Subsidiaries receives any mail
or packages addressed and delivered to Seller but relating to the Assets, Seller shall, or shall
cause such Subsidiaries to, promptly deliver such mail or packages to Purchaser.

     9.8 Commercially Reasonable Efforts. Subject to the terms and conditions hereof, each of the Parties to this Agreement shall use
commercially reasonable efforts to effect the transactions

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contemplated hereby and to fulfill and
cause to be fulfilled the conditions precedent to this Agreement, set forth in Article 7.

     9.9 Raw Materials, WIP and Finished Goods.

          (a) Following the execution hereof, Seller shall allow Purchaser and Coloplast reasonable
access to inspect the Raw Materials, WIP and Finished Goods. The inspection shall occur at a time
mutually agreed by the Parties, and in any event shall occur not later than the third Business Day
prior to the Closing Date. If prior to the Closing, Coloplast concludes and notifies Seller or
Purchaser that:

               (i) any of the Raw Materials or WIP proposed by Seller to be transferred hereunder are not
practicably capable of becoming SMECs that will be useable and acceptable by Coloplast, or

               (ii) any of the Finished Goods proposed by Seller to be transferred hereunder are not useable
and acceptable to Coloplast, then Purchaser shall not be obligated to purchase such Raw Materials, WIP or Finished Goods, as the
case may be, and the Cash Consideration will be adjusted accordingly.

          (b) If on or before the 30th day after the Closing Date, Coloplast concludes and
notifies Purchaser or Seller in writing that

               (i) any of the Raw Materials transferred hereunder are not practicably capable of becoming
SMECs that will be useable and acceptable by Coloplast and such Raw Materials are returned to
Seller in substantially the same condition as delivered to Purchaser by Seller pursuant to the
terms hereof, or

               (ii) any of the Finished Goods transferred hereunder are not useable and acceptable to
Coloplast and such Finished Goods are returned to Seller in substantially the same condition as
delivered to Purchaser by Seller pursuant to the terms hereof,

then following the return thereof Seller will refund to Purchaser an amount of Cash Consideration
equal to the amount paid by Purchaser for such returned Raw Materials or Finished Goods, as the
case may be.

          (c) In the event Coloplast provides a written notice to either Party pursuant to subsection
(a) or (b) above, such Party shall promptly notify the other of such notice from Coloplast.

     9.10 Access to Records. Following the Closing, each party will provide the other party and such other party’s
independent registered public accountants reasonable access during normal business hours to (and
use commercially reasonable efforts to cause the party’s independent registered public accountants
to provide the other party and the other party’s registered independent

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public accountants
reasonable access to) such books, records, workpapers and data as may be reasonably requested by
such other party to allow such other party and its independent registered public accountants to conduct
an audit or review of the Assets for such periods as such other party may require for their
financial reporting purposes required in connection with any report required to be filed with the
Securities and Exchange Commission under the Securities Exchange Act of 1934. The parties mutually
agree to reasonably assist each other and their respective independent registered public
accountants in conducting any such audit or review; provided, that each party shall be responsible
for the cost of its own audit and shall pay to the other party the reasonable out of pocket costs
actually incurred by such party to provide the requested assistance. The parties mutually agree to
use their commercially reasonable efforts to cause their independent registered public accountants
to provide each other with any consents of their independent registered public accountants
necessary for such party to satisfy the financial reporting requirements under applicable
accounting rules of the Securities and Exchange Commission.

     9.11 Payment of Outstanding Invoices The Parties agree that nothing herein shall affect the obligation of Seller (or the
Subsidiaries of Seller, if applicable) to pay all outstanding invoices from Purchaser related to
Purchaser SMECs that have been shipped to Seller or its Subsidiaries prior to the date hereof.

ARTICLE 10.

TERMINATION

     10.1 Term. Unless terminated pursuant to Section 10.2 or as otherwise expressly set forth
herein, this Agreement shall continue in full force and effect until full and final performance of
all of the terms herein.

     10.2 Termination. Anything contained in this Agreement to the contrary notwithstanding, this Agreement may be
terminated at any time prior to the Closing Date:

          (a) by the mutual signed written consent of Purchaser and Seller;

          (b) by either Party if:

               (i) a Law is in effect having the effect of permanently restraining, enjoining or otherwise
prohibiting, in a material respect, the consummation of the transactions contemplated by this
Agreement, which Law is final and nonappealable; or

               (ii) the Closing shall not have occurred on or before the End Date; provided, however, that
the failure of the Closing to occur is not due to a material breach hereof by the Party seeking
termination;

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          (c) by Purchaser: in the event of a Warranty Breach or Covenant Breach by Seller such that the
conditions set forth in Section 7.2(b) or Section 7.2(c), as applicable, would not
be satisfied; provided, however, that Seller is given notice to cure such breach and does not cure
such breach within 30 days after receipt of notice from Purchaser requesting such breach be cured;
or

          (d) by Seller: in the event of a Warranty Breach or Covenant Breach by Purchaser such that the
conditions set forth in Section 7.3(b) or Section 7.3(c), as applicable, would not
be satisfied; provided, however, that Purchaser is given notice to cure such breach and does not
cure such breach within 30 days after receipt of notice from Seller requesting such breach be
cured.

     10.3 Notice of Termination. Any Party desiring to terminate this Agreement pursuant to Section 10.2 shall give
written notice of such termination to the other Party.

     10.4 Effect of Termination. In the event that this Agreement shall be validly terminated pursuant to Section
10.2, this Agreement shall forthwith terminate and be of no further force and effect; provided,
however, that (a) any agreements contained herein that expressly provide for survival after
termination of this Agreement and Section 9.5(a) and Article 11 (other than
Section 11.1) shall survive the termination hereof unless otherwise agreed by the Parties
in writing, and (b) nothing herein shall relieve any Party from Liability for any breach of this
Agreement or fraud arising prior to such valid termination. Termination of this Agreement will not
be an election of remedies and shall not limit the Liability of any Party for breach of this
Agreement.

ARTICLE 11.

MISCELLANEOUS

     11.1 Survival of Representations. Other than the exclusive warranties contained in Section 5.7 and Section
6.6, which shall survive indefinitely, the representations and warranties of the Parties
contained in this Agreement, or any instrument delivered pursuant to this Agreement, shall
terminate on the date that is twelve (12) months after the Closing Date.

     11.2 Notices.

          (a) Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be delivered in person, transmitted by facsimile (with acknowledgment of complete
transmission together with notice by telephone (either to a person or by voice mail message) to the
confirmatory telephone numbers below, provided that such confirmatory telephone numbers shall allow
for voice mail messages to be left 24 hours per day, seven days per week) or sent by registered or
certified mail, or recognized overnight courier, charges prepaid, addressed as follows

	 	 	 
	     If to Seller:

	 	Mentor Corporation

-25-

 

	 	 	 
	 

	 	201 Mentor Drive
	 

	 	Santa Barbara, California 94311
	 

	 	Attention: General Counsel
	 

	 	Facsimile No.: (805) 879-6008
	 

	 	Phone: (805) 879-6000 (for confirmation purposes only)
	 
	 	 
	     with a copy to:

	 	Wilson Sonsini Goodrich & Rosati
	 

	 	Professional Corporation
	 

	 	650 Page Mill Road
	 

	 	Palo Alto, California 94304
	 

	 	Attention: Bradley L. Finkelstein, Esq.
	 

	 	Facsimile No.: 650-493-6811
	 

	 	Phone: (650) 493-9300 (for confirmation purposes only)
	 
	 	 
	     If to Purchaser:

	 	Rochester Medical Corporation
	 

	 	One Rochester Medical Drive
	 

	 	Stewartville, Minnesota 55976
	 

	 	Attention:Anthony J. Conway, President
	 

	 	Facsimile No.: (507) 533-9725
	 

	 	Phone: (507) 533-9600 (for confirmation purposes only)
	 
	 	 
	     With a copy to:

	 	Dorsey & Whitney LLP
	 

	 	50 South Sixth Street
	 

	 	Minneapolis, Minnesota 55402
	 

	 	Attention: Robert A. Kuhns, Esq.
	 

	 	Facsimile No.: (612) 340-8738
	 

	 	Phone: (612) 340-2600 (for confirmation purposes only)

          (b) Any such notice or other communication shall be deemed to have been given and received on
the day on which it was personally delivered or transmitted by facsimile, receipt of complete
transmission confirmed (or, if such day is not a Business Day, on the next following
Business Day) or, if mailed, by registered or certified mail, on the third Business Day
following the date of mailing or, if couriered overnight, on the next following Business Day;
provided, however, that if at the time of mailing or within three Business Days thereafter, there
is or occurs a labor dispute or other event that might reasonably be expected to disrupt the
delivery of documents by mail, any notice or other communication hereunder shall be delivered or
transmitted by means of overnight courier as set forth above.

          (c) Either Party may change its address for service and/or notice at any time by giving notice
to the other Party in accordance with this Section 11.2.

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     11.3 Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars.

     11.4 Sections and Headings. Unless otherwise specified herein, any reference in this Agreement to an Article, Section,
paragraph, Schedule or Exhibit refers to the specified Article, Section or paragraph of, or
Schedule or Exhibit to, this Agreement. In this Agreement, the terms “this Agreement”, “hereof”,
“herein”, “hereunder” and similar expressions refer to this Agreement and not to any particular
part, Article, Section, paragraph or other provision hereof. The headings contained in this
Agreement are intended solely for convenience and shall not affect the rights of the Parties to
this Agreement.

     11.5 Rules of Construction. Unless the context otherwise requires, in this Agreement:

          (a) words importing the singular number only shall include the plural and vice versa and words
importing the masculine gender shall include the feminine and neuter genders and vice versa;

          (b) the word “or” may be conjunctive or disjunctive, as the context may require;

          (c) the words “include”, “includes”, “including” and “particularly” means “include”,
“includes” or “including”, in each case, “without limitation”;

          (d) reference to any agreement or other instrument referred to herein shall mean such
agreement or other instrument as amended, modified, replaced or supplemented from time to time to
the extent permitted by applicable provisions thereof and by this Agreement;

          (e) reference to any statute shall be deemed to be a reference to such statute as amended, re
enacted or replaced from time to time;

          (f) if there is any conflict or inconsistency between the provisions contained in the body of
this Agreement and those of any Schedule hereto or the Bill of Sale, the provisions contained in
the body of this Agreement shall prevail;

          (g) time periods within which a payment is to be made or any other action is to be taken
hereunder shall be calculated excluding the day on which the period commences and including the day
on which the period ends; and

          (h) whenever any payment to be made or action to be taken hereunder is required to be made or
taken on a day other than a Business Day, such payment shall be made or action taken on the next
following Business Day.

     11.6 Construction. The Parties acknowledge that their respective legal counsel have reviewed and participated
in settling the terms of this Agreement and that any rule of construction to

-27-

 

the effect that any
ambiguity is to be resolved against the drafting party, shall not be applicable in the
interpretation of this Agreement.

     11.7 Entire Agreement. This Agreement, together with the Operative Agreements and the schedules and exhibits
hereto and thereto, constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings, written and oral,
with respect to the subject matter hereof (including the MOU but excluding the Confidentiality
Agreement). There are no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter
hereof except as herein provided or as provided in the other documents executed and delivered by
the Parties in connection herewith.

     11.8 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the
State of Minnesota, without regard to any conflicts of law principles.

     11.9 Jurisdiction and Venue. Except with respect to the matters subject to arbitration proceedings set forth in
Section 11.12 hereof, the Parties hereto irrevocably submit to the exclusive jurisdiction
of any state or federal court located in Minneapolis, Minnesota for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the Parties hereto, further agrees that service of any process, summons, notice or document
by U.S. registered mail to such Party’s respective address set forth in Section 11.2 shall
be effective service of process for any action, suit or proceeding in Minneapolis, Minnesota with
respect to any matters
to which it has submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of the Parties hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding set forth above arising out of this Agreement or
the transactions contemplated hereby, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.

     11.10 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each Party
hereby (a) certifies that no representative, agent or counsel of the other Party has represented,
expressly or otherwise, that the other Party would not, in the event of litigation, seek to enforce
the foregoing waiver, and (b) acknowledges that it and the other Party have been induced to enter
into the Agreement by, among other things, the mutual waivers and certifications contained in this
Section 11.10.

     11.11 Attorney’s Fees. Except with respect to the matters subject to arbitration proceedings set forth in
Section 11.12 hereof, in the event that either Party institutes any litigation proceeding
under Section 11.9 to interpret or to enforce this Agreement or any of the Operative
Agreements or the rights of the Parties hereunder, the non-prevailing Party shall reimburse the
prevailing Party in

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any such proceeding for the prevailing Party’s attorneys’ fees and all other
reasonable costs and expenses incurred in such action or suit.

     11.12 Arbitration. Any controversy, dispute or claim between the Parties arising out of a breach or alleged
breach of the covenants and licenses granted pursuant to Article 4 shall be submitted to
mandatory binding arbitration. Such arbitration proceedings shall be held in Minneapolis,
Minnesota, in accordance with the rules then obtaining of the American Arbitration Association,
except that: (i) the arbitrators shall furnish the parties with a written decision setting forth
findings of fact, conclusions of law and an order; (ii) the arbitration panel shall be composed of
persons who are knowledgeable in matters of technology licensing; and (iii) a stenographic record
shall be made of the arbitration proceedings. Each arbitrator shall be neutral, impartial and
independent of the parties and others having any known interest in the outcome, shall abide by the
Canons of Ethics of the American Bar Association for neutral, independent arbitrators, and shall
have no ex parte communications about the case. In addition to any monetary award that may be
given, the arbitrators may order or direct either party to do any act required of it by this
Agreement or to refrain from the doing of any act or practice that is contrary to this Agreement.
This Agreement to arbitrate shall be specifically enforceable. Each Party shall bear its own costs
and expense in any such proceedings, but the
arbitrators may, in their discretion and consistent with this Agreement without regard to
Section 11.11, award costs and attorneys’ fees to either or both of the Parties. Any award
rendered by the arbitrators shall be conclusive, final and binding upon the Parties hereto, and
nonappealable to any court or forum. Judgment upon such award may be entered in any court of
competent jurisdiction.

     11.13 Expenses. Except as otherwise provided herein, each Party shall be responsible for all costs and
expenses incurred by it and its Subsidiaries, respectively, in connection with the negotiation of
this Agreement and the completion of the transactions contemplated hereby, whether or not the
transactions hereby shall have been consummated.

     11.14 Exclusion of Certain Damages. EXCEPT IN THE CASE OF FRAUD, NEITHER PURCHASER (INCLUDING PURCHASER’S SUBSIDIARIES) NOR
SELLER (INCLUDING SELLER’S SUBSIDIARIES) SHALL BE RESPONSIBLE FOR ANY INCIDENTIAL, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING LOSS OF PROFITS OR GOODWILL, IN CONNECTION
WITH ANY ASPECT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN NO EVENT SHALL
SELLER’S OR PURCHASER’S AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED THE
AMOUNT OF THE CASH CONSIDERATION, IT BEING EXPRESSLY UNDERSTOOD THAT LIABILITY FOR CLAIMS FOR
INFRINGEMENT OF THE IPR THAT IS THE SUBJECT OF THE LICENSES GRANTED PURSUANT TO ARTICLE 4
HEREOF SHALL NOT BE SO LIMITED TO THE CASH CONSIDERATION.

     11.15 Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the
validity, legality or enforceability of the remaining provisions hereof, and

-29-

 

each provision is
hereby declared to be separate, severable and distinct. To the extent that any such provision is
found to be invalid, illegal or unenforceable, the Parties shall act in good faith to substitute
for such provision, to the extent possible and as necessary, a new provision with content and
purpose as close as possible to the provision so determined to be invalid, illegal or
unenforceable.

     11.16 Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the benefit of and shall be binding on and enforceable by the
Parties and their respective successors and permitted assigns. Neither Party may assign any of its
rights or obligations hereunder, by operation of law or otherwise, without the prior written
consent of the other Party; provided, that either Party may assign any of its rights or obligations
under this Agreement pursuant to a Change of Control of such Party, provided that the assignee
agrees to be bound by the terms and provisions of this Agreement; provided further that the
covenants, licenses,
rights and obligations set forth in Article 4 hereof shall be assignable only as and
to the extent specifically provided in Section 4.6. Except with respect to the covenants,
licenses, rights and obligations set forth in Article 4 hereof which shall be assignable only as
and to the extent specifically provided in Section 4.6, each Party and its Subsidiaries
shall have the right without consent of the other Party to assign their rights under this Agreement
as collateral to their respective lenders after reasonable prior notice to the other Party. Any
purported assignment in violation of this Section 11.16 shall be void and no assignment by
Purchaser or Seller will relieve Purchaser or Seller from any of their respective obligations
hereunder. Nothing herein expressed or implied is intended or should be construed to confer upon
or give to any Person other than the Parties hereto and their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement; provided that Coloplast shall
be deemed an express third party beneficiary of Section 4.2(b) hereof with rights of
enforcement. Except with respect to Coloplast’s rights pursuant to Section 4.2(b) hereof
and with respect to the Parties’ respective successors and permitted assigns, third party
enforcement of this Agreement is barred.

     11.17 Amendments and Waiver. No amendment, modification or waiver of, or supplement to, any provision of this Agreement
shall be binding on any Party unless consented to in writing by such Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision, and no waiver shall
constitute a continuing waiver unless otherwise provided.

     11.18 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original
and all and all such counterparts together shall be deemed an original of this Agreement.

[The remainder of this page intentionally left blank.]

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     IN WITNESS WHEREOF, each of Purchaser and Seller has caused this Agreement to be executed by
its duly authorized representative as of the date and year first written above.

	 	 	 	 	 	 	 	 	 
	MENTOR CORPORATION	 	 	 	ROCHESTER MEDICAL CORPORATION
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Joshua H. Levine
	 	 	 	By:
	 	/s/ Anthony J. Conway
	 

	 	 
	 	 	 	 	 	 
	Print name: Joshua H. Levine	 	 	 	Print name: Anthony J. Conway
	Title: President & CEO	 	 	 	Title: CEO

Signature Page to Asset Purchase Agreementexv10w5

 

Exhibit 10.5

TERM LOAN AGREEMENT

     This Term Loan Agreement (the “Agreement”) is made and entered into by and between the
undersigned borrower (the “Borrower”) and the undersigned bank (the “Bank”) as of the date set
forth on the last page of this Agreement.

ARTICLE I. LOANS

     1.1 Terms for Advance(s). [Choose One:]

	 	Xo  	 	Single Advance Term Loan. As of the date hereof, the Borrower has obtained a
term loan from the Bank in the amount of $5,000,000 (the “Loan Amount”). The term loan
is evidenced by a single promissory note of the Borrower to the order of the Bank in
the principal amount of the Loan Amount and dated as of the date hereof (the “Note”).
	 
	 	o  	 	Multiple Advance Term Loan. Prior to n/a or the earlier
termination hereof, the Borrower may obtain advances from the Bank in an aggregate
amount not exceeding $ n/a (the “Loan Amount”). The term loans
will be evidenced by a single promissory note of the Borrower to the Bank In the
principal amount of the Loan Amount and dated as of the date hereof (the “Note”).
Although the Note will be expressed as payable in the full Loan Amount, the Borrower
will be obligated to pay only the amounts actually disbursed hereunder, together with
accrued interest on the outstanding balance at the rates and on the dates specified
therein and such other charges provided for herein.

     1.2 Advances and Paying Procedure. The Bank is authorized and directed to credit any of the
Borrower’s accounts with the Bank (or to the account the Borrower designates in writing) for all
loans made hereunder, and the Bank is authorized to debit such account or any other account of the
Borrower with the Bank for the amount of any principal, interest or expenses due under the Note or
other amount due hereunder on the due date with respect thereto. It, upon any request by the
Borrower to the Bank to issue a wire transfer, there Is an inconsistency between the name of the
recipient of the wire and its identification number as specified by the Borrower, the Bank may,
without liability, transmit the payment via wire based solely upon the identification number.

     1.3 Closing Fee. The Borrower will pay the Bank a one-time closing fee of
$ n/a contemporaneously with execution of this Agreement. This fee is in
addition to all other fees, expenses and other amounts due hereunder.

     1.4 Compensating Balances. The Borrower will maintain on deposit with the Bank in
non-interest bearing accounts average daily collected balances, in excess of that required to
support account activity and other credit facilities extended to the Borrower by the Bank, an
amount at least equal to the sum of (i) $ n/a and (ii) $ n/a%
of the Loan Amount as computed on a monthly basis. If the Borrower fails to keep and maintain such
balances, it will pay a deficiency fee, payable within five days after receipt of a statement
therefor calculated on the amount by which the Borrower’s average daily balances are less than the
requirements set forth above, computed at a rate equal to the rate set forth in the Note.

     1.5 Expenses and Attorneys’ Fees. Upon demand, the Borrower will immediately reimburse the
Bank and any participant in the Obligations (defined below) (“Participant”) for all attorneys’ fees
and all other costs, fees and out-of-pocket disbursements incurred by the Bank or any Participant
in connection with the preparation, execution, delivery, administration, defense and enforcement of
this Agreement or any of the other Loan Documents (defined below), including attorneys’ fees and
all other costs and fees (a) incurred before or after commencement of litigation or at trial, on
appeal or in any other proceeding, (b) incurred In any bankruptcy proceeding and (c) related to any
waivers or amendments with respect thereto (examples of costs and fees include but are not limited
to fees and costs for: filing, perfecting or confirming the priority of the Bank’s lien, title
searches or insurance, appraisals, environmental audits and other reviews related to the Borrower,
any collateral or the loans, if requested by the Bank). The

Page 1 of 11

 

Borrower will also reimburse the Bank and any Participant for all costs of collection,
including all attorneys’ fees, before and after judgment, and the costs of preservation and/or
liquidation of any collateral.

     1.6 Conditions to Borrowing. The Bank will not be obligated to make (or continue to make)
advances hereunder unless (i) the Bank has received executed originals of the Note and all other
documents or agreements applicable to the loans described herein, including but not limited to the
documents specified in Article III (collectively with this Agreement the “Loan Documents), in form
and content satisfactory to the Bank; (ii) if the loan is secured, the Bank has received
confirmation satisfactory to It that the Bank has a properly perfected security interest, mortgage
or lien, with the proper priority; (iii) the Bank has received certified copies of the Borrower’s
governance documents and certification of entity status satisfactory to the Bank and all other
relevant documents; (iv) the Bank has received a certified copy of a resolution or authorization in
form and content satisfactory to the Bank authorizing the loan and all acts contemplated by this
Agreement and all related documents, and confirmation of proper authorization of all guaranties and
other acts of third parties contemplated hereunder; (v) if required by the Bank, the Bank has been
provided with Opinion of the Borrower’s counsel in form and content satisfactory to the Bank
confirming the matters outlined in Section 2.2 and such other matters as the Bank requests; (vi) no
default exists under this Agreement or under any other Loan Documents, or under any other
agreements by and between the Borrower and the Bank; and (vii) all proceedings taken in connection
with the transactions contemplated by this Agreement (including any required environmental
assessments),and an instruments, authorizations and other documents applicable thereto, are
satisfactory to the Bank and its counsel.

ARTICLE II. WARRANTIES AND COVENANTS

     While any part of the credit granted to the Borrower under this Agreement or the other Loan
Documents is available or any obligations under any of the Loan Documents are unpaid or
outstanding, the Borrower continuously warrants and agrees as follows:

     2.1 Accuracy of Information. Alt information, certificates or statements given to the Bank
pursuant to this Agreement and the other Loan Documents will be true and complete when given.

     2.2 Organization and Authority; Litigation. This Agreement and the other Loan Documents are
the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms. The execution, delivery and performance of this Agreement and all
other Loan Documents to which the Borrower is a party (i) are within the borrower’s power; (ii)
have been duly authorized by all appropriate entity action; (iii) do not require the approval of
any governmental agency; and (iv) will not violate any law, agreement or restriction by which the
Borrower is bound. If the Borrower is not an Individual, the Borrower is validly existing and in
good standing under the laws of its state of organization, has all requisite power and authority
and possesses all licenses necessary to conduct its business and own Its properties. There is no
litigation or administrative proceeding threatened or pending against the Borrower which would, if
adversely determined, have a material adverse effect on the Borrower’s financial condition or its
property.

     2.3 Existence; Business Activities; Assets; Change of Control. The Borrower will (i)
preserve its existence, rights and franchises; (ii) not make any material change in the nature or
manner of its business activities; (iii) not liquidate, dissolve, acquire another entity or merge
or consolidate with or into another entity or change its form of organization; (iv) not amend its
organizational documents In any manner that may conflict with any term or condition of the Loan
Documents; and (v) not sell, lease, transfer or otherwise dispose of all or substantially all of
its assets. Other than the transfer to a trust beneficially controlled by the transferor, no event
shall occur which causes or results in a transfer of majority ownership of the Borrower while any
Obligations are outstanding or while the Bank has any obligation to provide funding to the
Borrower.

     2.4 Use of Proceeds; Margin Stock; Speculation. Advances by the Bank hereunder will be used
exclusively by the Borrower for the purposes represented to the Bank. The Borrower will not,
without the prior written consent of the Bank, redeem, purchase, or retire any of the capital stock
or declare or pay

Page 2 of 11

 

any dividends, or make any other payments or distributions of a similar type or nature
including withdrawal distributions. The Borrower will not use any of the loan proceeds to purchase
or carry “margin’ stock (as defined In Regulation U of the Board of Governors of the Federal
Reserve System). No part of any of the proceeds will be used for speculative investment purposes,
including, without limitation, speculating or hedging in the commodities and/or futures market.

     2.5 Environmental Matters. Except as disclosed in a written schedule attached to this
Agreement (if no schedule Is attached, there are no exceptions), there exists no uncorrected
violation by the Borrower of any federal, state or local laws (including statutes, regulations,
ordinances or other governmental restrictions and requirements) relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the environment or
Hazardous Substances as hereinafter defined, whether such laws currently exist or are enacted in
the future (collectively “Environmental Laws”). The term “Hazardous Substances” will mean any
hazardous or toxic wastes, chemicals or other substances, the generation, possession or existence
of which is prohibited or governed by any Environmental Laws. The Borrower is not subject to any
judgment, decree, order or citation, or a party to (or threatened with) any litigation or
administrative proceeding, which asserts that the Borrower (i) has violated any Environmental Laws;
(ii) is required to clean up, remove or take remedial or other action with respect to any Hazardous
Substances (collectively “Remedial Action”);or (iii) is required to pay all or a portion of the
cost of any Remedial Action, as a potentially responsible party. Except as disclosed on the
Borrower’s environmental questionnaire provided to the Bank, there are not now, nor to the
Borrower’s knowledge after reasonable investigation have there ever been, any Hazardous Substances
(or tanks or other facilities for the storage of Hazardous Substances) stored, deposited, recycled
or disposed of on, under or at any real estate owned or occupied by the Borrower during the periods
that the Borrower owned or occupied such real estate, which if present on the real estate or in
soils or ground water, could require Remedial Action. To the Borrower’s knowledge, there are no
proposed or pending changes In Environmental Laws which would adversely affect the Borrower or its
business, and there are no conditions existing currently or likely to exist while the Loan
Documents are in effect which would subject the Borrower to Remedial Action or other liability.
The Borrower currently complies with and will continue to timely comply with all applicable
Environmental Laws; and will provide the Bank, immediately upon receipt, copies of any
correspondence, notice, complaint, order or other document from any source asserting or alleging
any circumstance or condition which requires or may require a financial contribution by the
Borrower or Remedial Action or other response by or on the part of the Borrower under Environmental
Laws, or which seeks damages or civil, criminal or punitive penalties from the Borrower for an
alleged violation of Environmental Laws.

     2.6 Compliance with Laws. The Borrower has complied with all laws applicable to its business
and its properties, and has all permits, licenses and approvals required by such laws, copies of
which have been provided to the Bank.

     2.7 Restriction on Indebtedness. The Borrower will not create, incur, assume or have
outstanding any indebtedness for borrowed money (including capitalized leases) except (i) any
Indebtedness owing to the Bank and its affiliates, and (ii) any other indebtedness outstanding on
the date hereof, and shown on the Borrower’s financial statements delivered to the Bank prior to
the date hereof, provided that such other indebtedness will not be increased.

     2.8 Restriction on Liens. The Borrower will not create, incur, assume or permit to exist any
mortgage, pledge, encumbrance or other lien or levy upon or security interest in any of the
Borrower’s property now owned or hereafter acquired, except (i) taxes and assessments which are
either not delinquent or which are being contested in good faith with adequate reserves provided;
(ii) easements, restrictions and minor title irregularities which do not, as a practical matter,
have an adverse effect upon the ownership and use of the affected property; (iii) liens in favor of
the Bank and its affiliates; and (iv) other liens disclosed in writing to the Bank prior to the
date hereof.

     2.9 Restriction on Contingent Liabilities. The Borrower will not guarantee or become a
surety or otherwise contingently liable for any obligations of others, except pursuant to the
deposit and collection of checks and similar matters in the ordinary course of business.

Page 3 of 11

 

     2.10 Insurance. The Borrower will maintain insurance to such extent, covering such risks and
with such insurers as is usual and customary for businesses operating similar properties, and as is
satisfactory to the Bank, Including insurance for fire and other risks insured against by extended
coverage, public liability Insurance and workers’ compensation insurance; and will designate the
Bank as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take
such other action as the Bank may reasonably request to ensure that the Bank will receive (subject
to no other interests) the insurance proceeds on the Bank’s collateral.

     2.11 Taxes and Other Liabilities. The Borrower will pay and discharge, when due, all of its
taxes, assessments and other liabilities, except when the payment thereof is being contested In
good faith by appropriate procedures which will avoid foreclosure of liens securing such items, and
with adequate reserves provided therefor.

     2.12 Financial Statements and Reporting. The financial statements and other Information
previously provided to the Bank or provided to the Bank in the future are or will be complete and
accurate and prepared In accordance with generally accepted accounting principles. There has been
no material adverse change In the Borrower’s financial condition since such information was
provided to the Bank. The Borrower will (i) maintain accounting records In accordance with
generally recognized and accepted principles of accounting consistently applied throughout the
accounting periods involved; (ii) provide the Bank with such information concerning its business
affairs and financial condition (including Insurance coverage) as the Bank may request; and (iii)
without request, provide the Bank with such specific financial statements, certifications and/or
information as may be set forth in an addendum to this Agreement.

     2.13 Inspection of Properties and Records; Fiscal Year. The Borrower will permit
representatives of the Bank to visit and inspect any of the properties and examine any of the books
and records of the Borrower at any reasonable time and as often as the Bank may reasonably desire.
The Borrower will not change its fiscal year.

     2.14 Financial Status. Financial Covenants, if any, will be as set forth in an addendum to
this Agreement.

ARTICLE III. COLLATERAL AND GUARANTIES

     3.1 Collateral. This Agreement and the Note are secured by any and all security interests,
pledges, mortgages/deeds of trust (except any mortgage/deed of trust expressly limited by its terms
to a specific obligation of Borrower to Bank) or liens now or hereafter in existence granted to the
Bank to secure indebtedness of the Borrower to the Bank, including without limitation as described
in the following documents:

	 	 	 	 	 	 	 	 	 
	o	 	Real Estate Mortgage(s)/Deed(s) of Trust dated	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	covering real estate located at	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Xo	 	Security Agreement(s) dated 0/5/26/06	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	o	 	Possessory Collateral Pledge Agreement(s) dated	 	 
	 

	 	 	 	 	 	 	 	 
	 
	o

	 	Other	 	 	 	 	 	 
	 	 	 	 	 

     3.2 Guaranties. This Agreement and the Note are guarantied by each and every guaranty now or
hereafter in existence guarantying the indebtedness of the Borrower to the Bank (except for any
guaranty expressly limited by its terns to a specific separate obligation of Borrower to the Bank)
including, without limitation, the following:                                                            

 

 

 

Page 4 of 11

 

     3.3 Credit Balances; Setoff. As additional security for the payment of the obligations
described in the Loan Documents and any other obligations of the Borrower to the Bank of any nature
whatsoever(collectively the “Obligations”, the Borrower hereby grants to the Bank a security
Interest in, a lien on and an express contractual right to set off against all depository account
balances, cash and any other property of the Borrower now or hereafter in the possession of the
Bank and the right to refuse to allow withdrawals from any account (collectively “Setoff”. The
Bank may, at any time upon the occurrence of a default hereunder (notwithstanding any notice
requirements or grace/cure periods under this or other agreements between the Borrower and the
Bank) Setoff against the Obligations whether or not the Obligations (including future installments)
are then due or have been accelerated, all without any advance or contemporaneous notice or demand
of any kind to the Borrower, such notice and demand being expressly waived.

     The omission of any reference to an agreement In Sections 3.1 and 3.2 above will not affect
the validity or enforceability thereof. The rights and remedies of the Bank outlined In this
Agreement and the documents identified above are intended to be cumulative.

ARTICLE IV. DEFAULTS

     4.1 Defaults. Notwithstanding any cure periods described below, the Borrower will
Immediately notify the Bank In writing when the Borrower obtains knowledge of the occurrence of any
default specified below. Regardless of whether the Borrower has given the required notice, the
occurrence of one or more of the following will constitute a default:

	 	(a)	 	Nonpayment. The Borrower shall fail to pay (i) any interest due on the Note or any
fees, charges, costs or expenses under the Loan Documents by 5 days after the same becomes
due; or (ii) any principal amount of the Note when due.
	 
	 	(b)	 	Nonperformance. The Borrower or any guarantor of Borrower’s Obligations to the Bank
(“Guarantor”) shall fail to perform or observe any agreement, term, provision, condition,
or covenant (other than a default occurring under (a), (c), (d), (e), (f) or (g) of this
Section 4.1) required to be performed or observed by the Borrower or any Guarantor
hereunder or under any other Loan Document or other agreement with or in favor of the Bank.
	 
	 	(c)	 	Misrepresentation. Any financial information, statement, certificate, representation
or warranty given to the Bank by the Borrower or any Guarantor (or any of their
representatives) in connection with entering into this Agreement or the other Loan
Documents and/or any borrowing thereunder, or required to be furnished under the terms
thereof, shall prove untrue or misleading in any material respect (as determined by the
Bank in the exercise of its judgment) as of the time when given.
	 
	 	(d)	 	Default on Other Obligations. The Borrower or any Guarantor shall be in default under
the terms of any loan agreement, promissory note, lease, conditional sale contract or other
agreement, document or instrument evidencing, governing or securing any indebtedness owing
by the Borrower or any Guarantor to the Bank or any indebtedness in excess of $10,000 owing
by the Borrower to any third party, and the period of grace, if any, to cure said default
shall have passed.
	 
	 	(e)	 	Judgments. Any judgment shall be obtained against the Borrower or any Guarantor which,
together with all other outstanding unsatisfied judgments against the Borrower (or such
Guarantor), shall exceed the sum of $10,000 and shall remain unvacated, unbonded or
unstayed for a period of 30 days following the date of entry thereof.
	 
	 	(f)	 	Inability to Perform; Bankruptcy/Insolvency. (i) The Borrower or any Guarantor shall
die or cease to exist; or (ii) any Guarantor shall attempt to revoke any guaranty of the
Obligations described herein, or any guaranty becomes unenforceable in whole or in part for
any reason; or (iii) any bankruptcy, insolvency or receivership proceedings, or an
assignment for the benefit of creditors, shall be commenced under any Federal or state law
by or against the Borrower or any

Page 5 of 11

 

	 	 	 	Guarantor; or (iv) the Borrower or any Guarantor shall become the subject of any
out-of-court settlement with its creditors; or (v) the Borrower or any Guarantor is unable
or admits in writing its inability to pay its debts as they mature; or (vi) if the Borrower
is a limited liability company, any member thereof shall withdraw or otherwise become
disassociated from the Borrower.
	 
	 	(g)	 	Adverse Change; Insecurity. (i) There is a material adverse change in the business,
properties, financial condition or affairs of the Borrower or any Guarantor, or in any
collateral securing the Obligations; or (ii) the Bank in good faith deems itself insecure.

     4.2 Termination of Loans; Additional Bank Rights. Upon the occurrence of any of the events
identified in Section 4.1, the Bank may at any time (notwithstanding any notice requirements or
grace/cure periods under this or other agreements between the Borrower and the Bank) (i)
immediately terminate its obligation, if any, to make additional loans to the Borrower, (ii)
Setoff; and/or (iii) take such other steps to protect or preserve the Bank’s interest in any
collateral, including without limitation, notifying account debtors to make payments directly to
the Bank, advancing funds to protect any collateral and insuring collateral at the Borrower’s
expense; all without demand or notice of any kind, all of which are hereby waived.

     4.3 Acceleration of Obligations. Upon the occurrence of any of the events identified in
Sections 4.1 (a) through 4.1(e) and 4.1(g), and the passage of any applicable cure periods, the
Bank may at any time thereafter, by written notice to the Borrower, declare the unpaid principal
balance of any Obligations, together with the interest accrued thereon and other amounts accrued
hereunder and under the other Loan Documents, to be immediately due and payable; and the unpaid
balance will thereupon be due and payable, all without presentation, demand, protest or further
notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents. Upon the occurrence of any event under
Section 4.1(f), the unpaid principal balance of any Obligations, together with all Interest accrued
thereon and other amounts accrued hereunder and under the other Loan Documents, will thereupon be
immediately due and payable, all without presentation, demand, protest or notice of any kind, all
of which are hereby waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. Nothing contained in Section 4.1, Section 4.2 or this section will
limit the Bank’s right to Setoff as provided in Section 3.3 or otherwise in this Agreement.

     4.4 Other Remedies. Nothing in this Article IV is intended to restrict the Bank’s rights
under any of the Loan Documents or at law, and the Bank may exercise all such rights and remedies
as and when they are available.

ARTICLE V. OTHER TERMS

     5.1 Additional Terms; Addendum/Supplements. The warranties, covenants, conditions and other
terms described in this Section and/or in the Addendum and/or other attached document(s) referenced
In this Section are incorporated into this Agreement:

      

      

      

      

ARTICLE VI. MISCELLANEOUS

     6.1 Delay; Cumulative Remedies. No delay on the part of the Bank in exercising any right,
power or privilege hereunder or under any of the other Loan Documents will operate as a waiver
thereof, nor will any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein specified are cumulative and are not exclusive of any rights or
remedies which the Bank would otherwise have.

Page 6 of 11

 

     6.2 Relationship to Other Documents. The warranties, covenants and other obligations of the
Borrower (and the rights and remedies of the Bank) that are outlined in this Agreement and the
other Loan Documents are Intended to supplement each other. In the event of any inconsistencies in
any of the terms in the Loan Documents, all terms will be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if there is a direct
conflict between any preprinted terms and specifically negotiated terms (whether included in an
addendum or otherwise), the specifically negotiated terms will control.

     6.3 Successors. The rights, options, powers and remedies granted in this Agreement and the
other Loan Documents shall be binding upon the Borrower and the Bank and their respective
successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the
successors and assigns of the Bank, including without limitation any purchaser of any or all of the
rights and obligations of the Bank under the Note and the other Loan Documents. The Borrower may
not assign its rights or obligations under this Agreement or any other Loan Documents without the
prior written consent of the Bank.

     6.4 Disclosure. The Bank may, in connection with any sale or potential sale of all or any
interest in the Note and other Loan Documents, disclose any financial information the Bank may have
concerning the Borrower to any purchaser or potential purchaser. From time to time, the Bank may,
in its discretion and without obligation to the Borrower, any Guarantor or any other third party,
disclose information about the Borrower and this loan to any Guarantor, surety or other
accommodation party. This provision does not obligate the Bank to supply any information or
release the Borrower from its obligation to provide such information, and the Borrower agrees to
keep all Guarantors, sureties or other accommodation parties advised of its financial condition and
other matters which may be relevant to their obligations to the Bank.

     6.5 Indemnification. Except for harm arising from the Bank’s willful misconduct, the
Borrower hereby indemnities and agrees to defend and hold the Bank harmless from any and all
losses, costs, damages, claims and expenses of any kind suffered by or asserted against the Bank
relating to claims by third parties arising out of the financing provided under the Loan Documents
or related to any collateral (including, without limitation, the Borrower’s failure to perform its
obligations relating to Environmental Matters described in Section 2.5 above). This
indemnification and hold harmless provision will survive the termination of the Loan Documents and
the satisfaction of the Obligations due the Bank.

     6.6 Notice of Claims Against Bank; Limitation of Certain Damages. In order to allow the Bank
to mitigate any damages to the Borrower from the Bank’s alleged breach of its duties under the Loan
Documents or any other duty, if any, to the Borrower, the Borrower agrees to give the Bank
immediate written notice of any claim or defense it has against the Bank, whether in tort or
contract, relating to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations for any reason. The
requirement of providing timely notice to the Bank represents the parties’ agreed-to standard of
performance regarding claims against the Bank. Notwithstanding any claim that the Borrower may
have against the Bank, and regardless of any notice the Borrower may have given the Bank, the Bank
will not be liable to the Borrower for consequential and/or special damages arising therefrom,
except those damages arising from the Bank’s willful misconduct.

     6.7 Notices. Notice of any record shall be deemed delivered when the record has been (a)
deposited in the United States Mail, postage pre-paid, (b) received by overnight delivery service,
(c) received by telex, (d) received by telecopy, (e) received through the internet, or (f) when
personally delivered.

     6.8 Payments. Payments due under the Note and other Loan Documents will be made in lawful
money of the United States. Alt payments may be applied by the Bank to principal, Interest and
other amounts due under the Loan Documents In any order which the Bank elects.

     6.9 Applicable Law and Jurisdiction; Interpretation; Joint Liability; Severability. This
Agreement and all other Loan Documents will be governed by and interpreted in accordance with the
internal laws of the State of Minnesota, except to the extent superseded by Federal law. THE
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR

Page 7 of 11

 

FEDERAL COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK’S BRANCH WHERE THE
LOAN WAS ORIGINATED AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO
ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE, THE COLLATERAL
ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein will affect the Bank’s rights to serve
process in any manner permitted by law, or limit the Bank’s right to bring proceedings against the
Borrower in the competent courts of any other jurisdiction or jurisdictions. This Agreement, the
other Loan Documents and any amendments hereto (regardless of when executed) will be deemed
effective and accepted only at the Bank’s offices, and only upon the Bank’s receipt of the executed
originals thereof. If there is more than one Borrower, the liability of the Borrowers will be
joint and several, and the reference to “Borrower’ will be deemed to refer to all Borrowers.
Invalidity of any provision of this Agreement shall not affect the validity of any other provision.

     6.10 Copies; Entire Agreement; Modification. The Borrower hereby acknowledges the receipt of
a copy of this Agreement and all other Loan Documents. This Agreement is a “transferable record”
as defined in applicable law relating to electronic transactions. Therefore, the holder of this
Agreement may, on behalf of Borrower, create a microfilm or optical disk or other electronic image
of this Agreement that is an authoritative copy as defined in such law. The holder of this
Agreement may store the authoritative copy of such Agreement in its electronic form and then
destroy the paper original as part of the holder’s normal business practices. The holder, on its
own behalf, may control and transfer such authoritative copy as permitted by such law.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY
THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE
TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO
BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE
BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK,
WHICH OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN
INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD
NOT BE RELIED UPON.

     6.11 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND THE BANK HEREBY
JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING
TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS,
OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. THE BORROWER AND THE BANK EACH
REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

     6.12 Attachments. All documents attached hereto, including any appendices, schedules,
riders, and exhibits to this Agreement, are hereby expressly incorporated by reference.

Page 8 of 11

 

     IN WITNESS WHEREOF, the undersigned have executed this TERM LOAN AGREEMENT as of May 26, 2006.

	 	 	 	 	 	 	 	 	 	 	 
	(Individual Borrower)	 	 	 	Rochester Medical Corporation
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Borrower Name (Organization)
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	a Minnesota Corporation
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Borrower Name n/a	 	 	 	By /s/ Anthony J. Conway
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name and Title: Anthony J. Conway,
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	President/CEO
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By
	 	/s/ David A. Jonas	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Borrower Name	 	 	 	 	 	Name and Title: David A. Jonas, Chief Financial Officer
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	U.S. Bank, N.A.	 	(Bank)
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By /s/ Bruce A. Gudlin
	 	 	 	 	 	 	Name and Title: Bruce A. Gudlin, Vice President

Borrower Address: 1 Rochester Medical Drive NW, Stewartville, MN 55976

	 	 	 
	Borrower Telephone No.:
	 	 
	 

	 	 

Page 9 of 11

 

Exhibit 10.5

ADDENDUM TO TERM LOAN AGREEMENT AND NOTE

This Addendum is made part of the Term Loan Agreement and Note (the “Agreement”) made and entered
into by and between the undersigned borrower (the `Borrower”) and the undersigned bank (the `Bank”)
as of the date identified below. The warranties, covenants and other terms described below are
hereby added to the Agreement.

Financial Covenants. Financial terms used herein which are not specifically defined herein shall
have the meanings ascribed to them under generally accepted accounting principles. For any
Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year
will be deemed to be the calendar year. Borrower (herein referred to as the “Subject Party”) will
maintain the following:

Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the fiscal quarter then ended
of at least 1.30 to 1.

“Fixed Charge Coverage Ratio” shall mean (a) EBITDAR minus cash taxes, cash dividends and
Maintenance Capital Expenditures divided by (b) the sum of all required principal payments (on
short and long term debt and capital leases), interest and rental or lease expense.

“EBITDAR” shall mean net income, plus interest expense, plus income tax expense, plus depreciation
expense plus amortization expense plus rent or lease expense.

“Maintenance Capital Expenditures” shall mean the dollar amount of Capital Expenditures that are
necessary to maintain the current level of revenues. For the purposes of the covenant calculation,
at no time shall the amount of the Capital Expenditures used be less than $300,000.00 per fiscal
year, prorated evenly for the measurement periods required above.

“Capital Expenditures” shall mean the aggregate amount of all purchases or acquisitions of fixed
assets, including real estate, motor vehicles, equipment, fixtures, leases and any other items that
would be capitalized on the books of the Subject Party under generally accepted accounting
principles. The term “Capital Expenditures” will not include expenditures or charges for the usual
and customary maintenance, repair and retooling of any fixed asset or the acquisition of new
tooling in the ordinary course of business.

Net Working Capital as of the end of each fiscal quarter in the amount of at least $8,000,000.00.

“Net Working Capital” shall mean:

	(i)	 	the amount of all assets which under generally accepted accounting principles would appear as
current assets on the balance sheet of the Subject Party, plus 60% of LIFO reserve, if any,

Less

	(ii)	 	the amount of all liabilities which under generally accepted accounting principles would
appear as current liabilities on such balance sheet, including all indebtedness payable on
demand or maturing (whether by reason of specified maturity, fixed prepayments, sinking funds
or accruals of any kind, or otherwise) within 12 calendar months or less from the date of the
relevant statement, including all lease and rental obligations due in 12 calendar months or
less under capitalized leases, and including customers’ advances and progress billings on
contracts.

Financial Information and Reporting. This provision replaces in its entirety the provision of the
Agreement titled “Financial Information and Reporting”. Financial terms used herein which are not
specifically defined herein shall have the meanings ascribed to them under generally accepted
accounting principles. For any Borrower who does not have a separate fiscal year end for tax
reporting purposes, the fiscal year will be deemed to be the calendar year. The financial
statements and other information previously provided to Bank or provided to Bank in the future are
or will be complete and accurate and prepared in accordance with generally accepted accounting
principles. There has been no

 

 

material adverse change in Borrower’s financial condition since such information was provided to
Bank. Borrower will (i) maintain accounting records in accordance with generally recognized and
accepted principles of accounting consistently applied throughout the accounting periods involved;
(ii) provide Bank with such information concerning its business affairs and financial condition
(including insurance coverage) as Bank may request; and (iii) without request, provide to Bank the
following financial information, in form and content acceptable to Bank, pertaining to Borrower;

Interim Financial Statements: Not later than 60 days after the end of each fiscal quarter, interim
financial statements, compiled by a certified public accounting firm acceptable to Bank.

Annual Financial Statements: Not later than 120 days after the end of each fiscal year, annual
financial statements, audited by a certified public accounting firm acceptable to Bank.

Permitted Indebtedness. Notwithstanding the restrictions on indebtedness in Section 2.7 of the
Agreement, and so long as (a) no default has occurred and (b) no default would be caused by such
indebtedness, Borrower may without the prior consent of Bank incur indebtedness to third parties in
an aggregate amount not to exceed $6,000,000.00 outstanding at any time.

	 	 	 	 	 	 	 	 	 
	Dated as of
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	(Individual)

	 	 	 	 	 	 	 	(Non-Individual)
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Rochester Medical Corporation
	 	 	 	 	 
	Borrower Name n/a	 	 	 	a/an Minnesota Corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By: /s/ Anthony J. Conway
	 	 	 	 	 
	Borrower Name n/a	 	 	 	Name and Title: Anthony J. Conway,
	 

	 	 	 	 	 	 	 	President/CEO
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By: /s/ David A. Jonas
	 

	 	 	 	 	 	 	 	Name and Title: David A. Jonas, Chief Financial
	 

	 	 	 	 	 	 	 	Officer
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Agreed to:
	 

	 	 	 	 	 	 	 	U.S. BANK N.A.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By: /s/ Bruce A. Gudlin
	 

	 	 	 	 	 	 	 	Name and Title: Bruce A. Gudlin, Vice President

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