AMONG

WP PRISM LLC,

WP PRISM MERGER SUB INC.

AND

BAUSCH & LOMB INCORPORATED

Dated as of May 16, 2007

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 16, 2007, by and among WP PRISM LLC, a Delaware limited liability company ("PARENT"), WP PRISM MERGER SUB INC., a New York corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and BAUSCH & LOMB INCORPORATED, a New York corporation (the "COMPANY").

RECITALS

WHEREAS, the Board of Directors of the Company, acting upon the recommendation of a special committee of non-management directors (the "SPECIAL COMMITTEE") thereof has determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable and fair to, and in the best interests of, the Company and its shareholders (other than shareholders (if any) who invest in Parent or Merger Sub, as to whom the Special Committee has not made any such determination);

WHEREAS, the Board of Directors of the Company, acting upon the recommendation of the Special Committee, unanimously has approved (1) the acquisition of the Company by Parent, the execution of this Agreement and the consummation of the transactions contemplated hereby, and unanimously has adopted and resolved to recommend that the Company's shareholders adopt the plan of merger contained in this Agreement in accordance with the requirements of the New York Business Corporation Law (the "NYBCL") and (2) the transactions contemplated by this Agreement, including the acquisition of the Company and shares of the capital stock of the Company by Parent, for purposes of Section 912 of the NYBCL and for purposes of Sections 13 and 14 of the Certificate of Incorporation;

WHEREAS, the Board of Directors of Parent has approved the execution of this Agreement and the consummation of the transactions contemplated hereby, and the Board of Directors of Merger Sub has approved and declared advisable the execution of this Agreement and the consummation of the transactions contemplated hereby, and has unanimously adopted the plan of merger contained in this Agreement in accordance with the requirements of the NYBCL;

WHEREAS, concurrently with the execution of this Agreement, and as a condition of the willingness of the Company to enter into this Agreement, Warburg Pincus Private Equity IX, L.P. (together with any entity to which the Guarantee is assigned in accordance with the terms thereof, the "GUARANTOR") is entering into a guarantee in favor of the Company (the "GUARANTEE") pursuant to which the Guarantor is guaranteeing certain obligations of Parent and Merger Sub in connection with this Agreement; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

THE MERGER

SECTION 1.01. THE MERGER; EFFECTS OF THE MERGER. Upon the terms and subject to the conditions hereof, and in accordance with the relevant provisions of the NYBCL, on the Effective Date, Merger Sub shall be merged with and into the Company (the "MERGER"). As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall be the surviving corporation in the Merger (the "SURVIVING CORPORATION") under the name "Bausch & Lomb Incorporated" and shall continue its existence under the Laws of the State of New York. The Merger shall have the effects set forth herein and in Section 906 of the NYBCL. Without limiting the generality of the foregoing and subject thereto, on the Effective Date, the Surviving Corporation shall possess all the rights, privileges, immunities, powers and franchises of the Company and Merger Sub, all the assets of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

SECTION 1.02. CONSUMMATION OF THE MERGER.

(a) Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated hereby (the "CLOSING," and the date on which the Closing actually occurs, the "CLOSING DATE") will take place at 10:00 a.m., local time, as promptly as practicable, but in no event later than the third Business Day, after the satisfaction or waiver (by the party entitled to grant such waiver) of the conditions set forth in ARTICLE VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at the Closing), at the offices of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 or at such other place or on such other date as Parent and the Company may mutually agree; PROVIDED, HOWEVER, that, notwithstanding the satisfaction or waiver of the conditions set forth in ARTICLE VI as of any date, Parent and Merger Sub shall not be required to effect the Closing until the earlier of (i) a date during the Marketing Period specified by Parent on no less than three Business Days' notice to the Company and (ii) the final day of the Marketing Period (subject in each case to the satisfaction or waiver (by the party entitled to grant such waiver) of all of the conditions set forth in ARTICLE VI as of the date determined pursuant to this proviso); PROVIDED, FURTHER, that notwithstanding the satisfaction or waiver of the conditions set forth in ARTICLE VI, this Agreement may be terminated pursuant to and in accordance with SECTION 7.01 hereof such that the parties shall not be required to effect the Closing, regardless of whether the final day of the Marketing Period shall have occurred before such termination.

(b) On the Closing Date and subject to the terms and conditions hereof, Merger Sub and the Company shall cause the Merger to be consummated by filing with the Secretary of State of the State of New York (the "SECRETARY OF STATE") a duly executed certificate of merger (the "CERTIFICATE OF MERGER"), as required by the NYBCL, and shall take all such further actions as may be required by Law to make the Merger effective. The date of the filing of the Certificate of Merger by the Secretary of State (or such later date as shall be agreed to by the parties hereto and is specified in the Certificate of Merger) is referred to as the "EFFECTIVE DATE."

SECTION 1.03. CERTIFICATE OF INCORPORATION AND BYLAWS. On the Effective Date, the certificate of incorporation of the Company shall, by virtue of the Merger, be amended and restated in its entirety to read as the certificate of incorporation of Merger Sub in effect immediately prior to the Effective Date, except that ARTICLE I thereof shall read as follows: "The name of the Corporation is Bausch & Lomb Incorporated" and subject to the inclusion of the provisions required by SECTION 5.07 hereof, and as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as permitted by Law. The bylaws of Merger Sub, as in effect immediately prior to the Effective Date, shall be the bylaws of the Surviving Corporation until thereafter amended as permitted by Law and the certificate of incorporation of the Surviving Corporation.

SECTION 1.04. DIRECTORS AND OFFICERS. The directors of the Company immediately prior to the Effective Date shall submit their resignations to be effective as of the Effective Date. Immediately after the Effective Date, Parent shall take the necessary action to cause the directors of Merger Sub immediately prior to the Effective Date to be the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation. The officers of the Company immediately prior to the Effective Date shall be the initial officers of the Surviving Corporation, and such officers shall hold office in accordance with and subject to the certificate of incorporation and bylaws of the Surviving Corporation.

SECTION 1.05. CONVERSION OF SHARES. Each (a) share of common stock of the Company, $0.40 par value (each, a "COMMON SHARE") and (b) share of Class B stock of the Company, $0.08 par value (each, a "CLASS B SHARE" and each Common Share or Class B Share being referred to herein individually as a "SHARE" and collectively as the "SHARES"), issued and outstanding immediately prior to the Effective Date (other than Dissenting Shares, if any, Shares owned by Parent, Merger Sub or any Subsidiary of Parent or the Company or held in the treasury of the Company (collectively, "EXCLUDED SHARES"), all of which shall be canceled without any consideration being exchanged therefor) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted on the Effective Date into the right to receive in cash an amount per Share equal to $65.00, without interest (the "MERGER CONSIDERATION"), subject to any applicable withholding Tax pursuant to SECTION 1.07, upon the surrender of the certificate representing such Shares as provided in SECTION 2.01. On the Effective Date all such Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration as provided herein.

SECTION 1.06. CONVERSION OF COMMON STOCK OF MERGER SUB. Each share of common stock, $0.01 par value, of Merger Sub issued and outstanding immediately prior to the Effective Date shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one share of common stock of the Surviving Corporation.

SECTION 1.07. WITHHOLDING TAXES. Parent and the Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable to a holder of Shares, Options, or Restricted Stock Units pursuant to the Merger or this Agreement any such amounts as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the "CODE"), or any applicable provision of state, local or foreign Tax Law. To the extent that amounts are so deducted and withheld and paid over to the applicable Governmental Entity, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares, Options, or Restricted Stock Units in respect of which such deduction and withholding was made. Parent shall pay, or shall cause to be paid, all amounts so withheld to the appropriate Governmental Entity for the account of the former holder within the period required under applicable Law.

SECTION 1.08. SUBSEQUENT ACTIONS. If at any time after the Effective Date the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to continue, vest, perfect or confirm of record or otherwise the Surviving Corporation's right, title or interest in, to or under any of the rights, properties, privileges, franchises or assets of the Company as a result of, or in connection with, the Merger, or otherwise to carry out the intent of this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Company, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of the Company or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties, privileges, franchises or assets in the Surviving Corporation or otherwise to carry out the intent of this Agreement.

ARTICLE II

PAYMENT FOR SHARES; EQUITY AWARDS

SECTION 2.01. PAYMENT FOR SHARES.

(a) Prior to the Effective Date, Parent and Merger Sub shall enter into an agreement with the Company's transfer agent (or another entity that is engaged in the paying agency or similar business and that is reasonably acceptable to the Company) to act as agent for the shareholders of the Company in connection with the Merger (the "PAYING AGENT") and to receive the Merger Consideration to which the shareholders of the Company shall become entitled pursuant to this Agreement. On the Effective Date, Parent will make available to the Paying Agent cash in amounts necessary to make the payments due pursuant to SECTION 1.05 to holders of Shares that are issued and outstanding immediately prior to the Effective Date (such amounts being hereinafter referred to as the "PAYMENT FUND"). The Payment Fund shall be invested in such manner as Parent shall direct; PROVIDED that (1) no such investment or losses thereon shall affect the Merger Consideration payable to the holders of Shares and, following any losses, to the extent necessary to pay the Merger Consideration, Parent shall promptly provide additional funds to the Paying Agent for the benefit of the shareholders of the Company and (2) such investments shall be in short-term obligations of the United States of America with maturities of no more than 30 days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively. The Payment Fund shall not be used for any purpose other than to fund payments due pursuant to SECTION 1.05, except as expressly provided in this Agreement.

(b) As soon as reasonably practicable after the Effective Date, the Surviving Corporation shall cause the Paying Agent to mail to each record holder, as of the Effective Date, of (i) a certificate or certificates which immediately prior to the Effective Date represented outstanding Shares (the "CERTIFICATES") or (ii) Shares represented by book-entry ("BOOK-ENTRY SHARES"), a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of transmittal) and instructions for use in effecting the surrender of the Certificates, or in the case of Book-Entry Shares the surrender of such Shares, and receiving payment of the Merger Consideration therefor. Following surrender to the Paying Agent of a Certificate or Book-Entry Share, together with such letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Share shall be paid in exchange therefor cash in an amount (subject to any applicable withholding Tax pursuant to SECTION 1.07) equal to the product of the number of Shares represented by such Certificate multiplied by the Merger Consideration, and such Certificate or book-entry shall forthwith be canceled. No interest will be paid or accrued on the cash payable upon the surrender of the Certificates or Book-Entry Shares. If payment is to be made to a Person other than the Person in whose name the Certificate or Book-Entry Share surrendered is registered, it shall be a condition of payment that the Certificate or Book-Entry Share so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the Person requesting such payment pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of the Certificate or Book-Entry Share surrendered or establish to the satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable. From and after the Effective Date and until surrendered in accordance with the provisions of this SECTION 2.01, each Certificate and each Book-Entry Share shall represent for all purposes solely the right to receive, in accordance with the terms hereof, the Merger Consideration in cash multiplied by the number of Shares evidenced by such Certificate or book-entry, without any interest thereon and subject to any applicable withholding Tax pursuant to SECTION 1.07.

(c) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration (without any interest thereon and subject to any applicable withholding Tax pursuant to SECTION 1.07) with respect to the Shares formerly represented thereby.

(d) Any portion of the Payment Fund (including the proceeds of any investments thereof) that remains unclaimed by the former shareholders of the Company for one year after the Effective Date shall be repaid to the Surviving Corporation. Any former shareholder of the Company that has not complied with this SECTION 2.01 prior to the end of such one-year period shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) but only as a general creditor thereof for payment of its claim for the Merger Consideration, without any interest thereon. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of Shares for the Merger Consideration. Neither Parent nor the Surviving Corporation shall be liable to any holder or former holder of Shares for any monies delivered from the Payment Fund or otherwise to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificates or Book-Entry Shares shall not have been surrendered immediately prior to the date that such unclaimed funds would otherwise become subject to any abandoned property, escheat or similar Law, any unclaimed funds payable with respect to such Certificates and Book-Entry Shares shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

SECTION 2.02. CLOSING OF THE COMPANY'S TRANSFER BOOKS. On the Effective Date, the stock transfer books of the Company shall be closed and no transfer of Shares that were outstanding prior to the Effective Date shall thereafter be made. If, after the Effective Date, Certificates or Book-Entry Shares that were outstanding prior to the Effective Date are presented to the Surviving Corporation for transfer, they shall be canceled and exchanged for the Merger Consideration as provided in this ARTICLE II.

SECTION 2.03. TREATMENT OF EQUITY-BASED AWARDS & DEFERRED COMPENSATION.

(a) The Company shall take such actions as are necessary such that, immediately prior to the Effective Date, each option to purchase Shares (an "OPTION") granted under the Company's 2003 Long-Term Incentive Plan (the "2003 PLAN"), the 2001 Stock Incentive Plan for Non-Officers (the "2001 PLAN") and the 1990 Stock Incentive Plan (the "1990 PLAN") or any other equity incentive plan of the Company that is outstanding and unexercised immediately prior to the Effective Date, whether vested or unvested, shall be canceled as of the Effective Date, and the holder thereof shall receive on the Effective Date from the Company, or as soon as practicable thereafter from the Surviving Corporation, in consideration for such cancellation, an amount in cash, without interest, equal to the product of (A) the number of Shares previously subject to such Option and (B) the excess, if any, of the Merger Consideration over the purchase price per Share previously subject to such Option, less any required withholding Taxes (with the aggregate amount of such payment rounded up to the nearest whole cent). Except as set forth in Section 2.03 of the Company Disclosure Letter, each Share granted subject to vesting or other lapse restrictions pursuant to any Plan (collectively, "RESTRICTED SHARES") which is outstanding immediately prior to the Effective Date shall vest and become free of such restrictions as of the Effective Date, and on the Effective Date the holder thereof shall, subject to this ARTICLE II, be entitled to receive the Merger Consideration in cash pursuant to SECTION 1.05.

(b) All Restricted Stock Units that are outstanding as of the Effective Date, whether vested or unvested, shall be canceled as of the Effective Date and the holder thereof shall receive on the Effective Date from the Company, or as soon as practicable thereafter from the Surviving Corporation, in consideration for such cancellation, an amount in cash equal to the product of (A) the number of Shares previously subject to such Restricted Stock Unit and (B) the Merger Consideration, subject to any applicable withholding Taxes pursuant to SECTION 1.07.

(c) On the Effective Date, each right of any kind, contingent or accrued, granted under any Plan including any deferred compensation plan (other than Options, and Restricted Shares and Restricted Stock Units) of the Company and its Subsidiaries, to receive Shares or benefits measured in whole or in part by the value of a number of Shares, which is outstanding immediately prior to the Effective Date shall cease to represent a right or award with respect to Shares, and shall be converted into a cash-based right or award equal in amount to the Merger Consideration in respect of each Share underlying such right and shall be distributed in accordance with the applicable Plan.

(d) The Company shall take such actions with respect to the Company's Employee Stock Purchase Plan (the "ESPP") as are necessary to provide that the ESPP will terminate, effective immediately as of the Effective Date (the "ESPP TERMINATION DATE"), except that all administrative and other rights and authorities granted under the ESPP to the Company, the Board of Directors of the Company or any committee or designee thereof shall remain in effect and reside with the Surviving Corporation following the Effective Date.

(e) Subject to SECTION 2.03 of the Company Disclosure Letter, the Company shall take any actions reasonably necessary to effectuate the foregoing provisions of this SECTION 2.03; it being understood that the intention of the parties is that following the Effective Date no holder of an Option, Restricted Share or Restricted Stock Unit or any participant in the ESPP or any other Plan or other employee benefit arrangement of the Company shall have any right thereunder to acquire any Shares or other capital stock (including any "phantom" stock or stock appreciation rights) of the Company, or the Surviving Corporation or any of their Subsidiaries.

SECTION 2.04. CONVERTIBLE SECURITIES. The terms of the supplemental indenture entered into by the Company as provided in SECTION 5.15 hereof shall be effective, such that the holders of the Company's outstanding 2004 Senior Convertible Securities due August 1, 2023 (the "2004 CONVERTIBLE SECURITIES") and the Company's outstanding Floating Rate Convertible Senior Notes due August 1, 2023 (the "2003 CONVERTIBLE SECURITIES" and, together with the 2004 Convertible Securities, the "CONVERTIBLE SECURITIES") shall thereafter have the right to convert such Convertible Securities only into an amount in cash equal to the amount that such holders of Convertible Securities would be entitled to receive in the Merger if such holders had validly converted their Convertible Securities into Shares (and, in the case of the 2004 Convertible Securities, cash) in accordance with their terms immediately prior to the Effective Date.

SECTION 2.05. ADJUSTMENTS. If at any time during the period between the date of this Agreement and the Effective Date, any change in the outstanding shares of capital stock of the Company, or securities convertible or exchangeable into or exercisable for shares of capital stock, shall occur as a result of any reclassification, recapitalization, stock split (including a reverse stock split) or subdivision or combination, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period merger or other similar transaction, the Merger Consideration (and any amounts payable hereunder to the holders of Options and Restricted Stock Units that are determined based on the Merger Consideration) shall be equitably adjusted, without duplication, to reflect such change; PROVIDED that nothing in this SECTION 2.05 shall be construed to permit the Company to take any action with respect to its securities that is prohibited or not expressly permitted by the terms of this Agreement.

SECTION 2.06. DISSENTING SHARES. Dissenting Shares (if any) shall not be converted into or be exchangeable for the right to receive the Merger Consideration, unless and until the holders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal (if any) under the NYBCL. The Company shall give Parent and Merger Sub (a) prompt written notice of any demands for appraisal of any Shares, attempted withdrawals of such demands and any other instruments served pursuant to the NYBCL and received by the Company relating to rights to be paid the "fair value" of Dissenting Shares, as provided in Section 910 of the NYBCL, and (b) the opportunity to participate in negotiations and proceedings with respect to demands for appraisal under the NYBCL. The Company shall not, except with the prior written consent of Parent, voluntarily make or agree to make any material payment with respect to any demands for appraisals of capital stock of the Company, or offer to settle or settle any such demands.

ARTICLE III

  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (a) as disclosed in the correspondingly numbered section of the disclosure letter dated the date of this Agreement and delivered by the Company to Parent with respect to this Agreement immediately prior to the execution of this Agreement (the "COMPANY DISCLOSURE LETTER") (PROVIDED, HOWEVER, that a matter disclosed with respect to one representation or warranty shall also be deemed to disclosed with respect to each other representation or warranty to which the matter disclosed reasonably relates, to the extent such relationship is reasonably apparent on the face of the disclosure contained in the Company Disclosure Letter with respect to such matter) or (b) as disclosed in, and reasonably apparent on the face of the disclosure contained in, any report, schedule, form or other document filed with, or furnished to, the Securities and Exchange Commission (the "SEC") and publicly available after December 27, 2003 and prior to the date of this Agreement (collectively, the "FILED SEC DOCUMENTS") and only as and to the extent disclosed therein (excluding any disclosures included therein to the extent they do not relate to historical or existing facts, events, changes, effects, developments, conditions or occurrences and are cautionary and forward-looking in nature) and, for the avoidance of doubt, without giving effect to any event occurring subsequent to the date any such Filed SEC Document was filed (PROVIDED that in no event shall any disclosure in any Filed SEC Documents qualify or limit the representations and warranties of the Company set forth in SECTION 3.02, SECTION 3.03, SECTION 3.05(A), SECTION 3.05(C) or SECTION 3.06(B) of this Agreement), the Company represents and warrants to each of Parent and Merger Sub as follows:

SECTION 3.01. ORGANIZATION AND QUALIFICATION.

(a) The Company is a duly organized and validly existing entity in good standing under the Laws of its jurisdiction of organization, with all requisite entity power and authority to own its properties and conduct its business as currently conducted. Each Subsidiary of the Company is a duly organized and validly existing entity in good standing (where applicable) under the Laws of its jurisdiction of organization, with all requisite entity power and authority to own its properties and conduct its business as currently conducted, except as would not have, individually or in the aggregate, a Material Adverse Effect. The Company and each Subsidiary is duly qualified and in good standing as a foreign corporation or entity authorized to do business in each of the jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transactied by it makes such qualification necessary, except as would not have, individually or in the aggregate, a Material Adverse Effect.

(b) The Company has heretofore made available to Parent true, correct and complete copies of the restated certificate of incorporation and bylaws of the Company as currently in effect, including all amendments thereto (respectively, the "CERTIFICATE OF INCORPORATION" and "BYLAWS").

SECTION 3.02. CAPITALIZATION.

(a) The authorized capital stock of the Company consists of (A) 200,000,000 Common Shares, (B) 15,000,000 Class B Shares, (C) 10,000 shares of 4% cumulative preferred stock, par value $100.00 per share (the "4% PREFERRED Shares"), and (D) 25,000,000 shares of Class A preferred stock, par value $1.00 per share (the "CLASS A PREFERRED SHARES" and, together with the 4% Preferred Shares, the "PREFERRED SHARES"), of which 350,000 of such Class A Preferred Shares are designated as "Class A Preferred Stock Series A." As of the close of business on May 15, 2007 (the "CAPITALIZATION DATE"), (i) 54,349,438 Common Shares, 29,180 Class B Shares, and no Preferred Shares were issued and outstanding, (ii) 6,104,836 Common Shares, 158,514 Class B Shares and no Preferred Shares were held in the Company's treasury, (iii) 1,520,130 Common Shares, no Class B Shares, and no Preferred Shares were issuable under the Plans (excluding the Options), and (iv) there were outstanding Options to purchase an aggregate of 2,385,477 Common Shares, 3,194,911 Class B Shares, and no Preferred Shares. All of the outstanding Shares, including Restricted Shares, have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.

(b) Section 3.02(b) of the Company Disclosure Letter contains a true, correct and complete list, as of the date specified thereon, of each outstanding Option, Restricted Share, Restricted Stock Unit, and other equity-based award (including under any deferred compensation plan or arrangement) outstanding, the number of Shares issuable thereunder or to which such award pertains, the expiration date, and the exercise or conversion price, if applicable, related thereto and, if applicable, the Plan pursuant to which each such Option, Restricted Stock Unit, equity-based deferred compensation arrangement or other equity-based award was granted. Since the Capitalization Date, the Company has not issued any Shares or Preferred Shares other than the issuance of Shares upon the exercise of Options or other equity-based awards outstanding on such date in accordance with their terms and the issuance of Shares upon the conversion of Convertible Securities outstanding on such date in accordance with their terms, has not granted any other Company Securities or entered into any other agreements or commitments to issue any Company Securities, and has not split, combined or reclassified any shares of its capital stock.

(c) Except for (i) the Options and Restricted Stock Units, in each case as set forth in SECTION 3.02(A) and SECTION 3.02(B), respectively, of the Company Disclosure Letter and (ii) the Convertible Securities, there are no outstanding (A) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, voting securities or other ownership interests in the Company, (B) options, restricted stock warrants, rights or other agreements or commitments to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities or other ownership interests in) the Company, (C) obligations of the Company or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in the Company (the items in clauses (A), (B) and (C), together with the capital stock of the Company, being referred to collectively as "COMPANY SECURITIES"), or (D) obligations of the Company or any of its Subsidiaries to make any payments directly or indirectly based (in whole or in part) on the price or value of any Company Securities. There are no outstanding obligations, commitments or arrangements, contingent or otherwise, of the Company or any of its Subsidiaries to purchase, redeem or otherwise acquire any Company Securities. There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of capital stock or other voting securities of the Company.

(d) The Company, alone or together with one or more of its Subsidiaries, is the record and beneficial owner of (x) all the equity interests of each Significant Subsidiary (as defined in Rule 1,02(w) of Regulation S-X under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of the Company, (y) 60% of the equity interests of Beijing Bausch & Lomb Eyecare Company, Ltd., 70% of the equity interests of Shandong B&L Freda Pharmaceutical Co. Ltd., 70% of the equity interests of Shandong B&L Freda New Packaging Resource Co. Ltd and 80% of the equity interests of Bausch & Lomb Korea Co. Ltd. in each case free and clear of any Lien, including any limitation or restriction on the right to vote, pledge or sell or otherwise dispose of such equity interests. With respect to each Significant Subsidiary only, there are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, voting securities or other ownership interests in any Significant Subsidiary of the Company, (ii) options, restricted stock, warrants, rights or other agreements or commitments to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities or other ownership interests in) any Significant Subsidiary of the Company, (iii) obligations of the Company or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in any Significant Subsidiary of the Company (the items in clauses (i), (ii) and (iii), together with the capital stock or other equity interests of such Significant Subsidiaries, being referred to collectively as "SIGNIFICANT SUBSIDIARY SECURITIES"), or (iv) obligations of the Company or any of its Subsidiaries to make any payment directly or indirectly based (in whole or in part) on the price or value of any Significant Subsidiary Securities. There are no outstanding obligations of the Company or any of its Significant Subsidiaries to purchase, redeem or otherwise acquire any outstanding Significant Subsidiary Securities. There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of capital stock or other voting securities of any Significant Subsidiary of the Company.

SECTION 3.03. AUTHORITY FOR THIS AGREEMENT; BOARD ACTION.

(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby to which the Company is a party. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company, acting upon the recommendation of the Special Committee, including the adoption by the Board of Directors, acting upon the recommendation of the Special Committee, of the plan of merger contained in this Agreement, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, other than, with respect to completion of the Merger, the adoption of the plan of merger contained in this Agreement by the Requisite Shareholder Approval prior to the consummation of the Merger and the filing with the Department of State for the State of New York of the Certificate of Merger as required by the NYBCL. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by each of Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(b) The Company's Board of Directors (at a meeting or meetings duly called and held), acting upon the recommendation of the Special Committee, unanimously has (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable and fair to and in the best interests of, the Company and its shareholders (other than shareholders (if any) who invest in Parent or Merger Sub, as to whom the Special Committee has not made any such determination), (ii) adopted and approved this Agreement and the transactions contemplated hereby, including the plan of merger contained in this Agreement and (iii) directed that this Agreement be submitted to the shareholders of the Company for their approval and (iv) subject to SECTION 5.02, resolved to recommend the adoption of the plan of merger contained in this Agreement by the shareholders of the Company (the "COMPANY BOARD RECOMMENDATION").

SECTION 3.04. CONSENTS AND APPROVALS; NO VIOLATION.

(a) Neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated hereby will (i) violate or conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws of the Company, (ii) assuming all consents, approvals and authorizations contemplated by clauses (i) through (iii) of subsection (b) below have been obtained, and all filings described in such clauses have been made, conflict with or violate any order, writ, injunction, decree, judgment, determination, requirement, award, stipulation, statute, rule or regulation of any Governmental Entity ("LAW") applicable to the Company or any of its Subsidiaries or by which any of their respective assets are bound, (iii) violate, conflict with or result in a breach of, or require any consent, waiver or approval under, or result in a default or give rise to any right of termination, cancellation, modification or acceleration (or an event that, with the giving of notice, the passage of time or otherwise, would constitute a default or give rise to any such right) under, any of the terms, conditions or provisions of any note, bond, mortgage, lease, license, agreement, contract, indenture or other instrument or obligation ("CONTRACT") to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective assets are bound, or (iv) result (or, with the giving of notice, the passage of time or otherwise, would result) in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, except in case of clauses (ii), (iii) and (iv), as would not have, individually or in the aggregate, a Material Adverse Effect.

(b) The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, or filing with or notification to, any foreign, federal, state or local government or subdivision thereof, or governmental, judicial, legislative, executive, administrative or regulatory authority, agency, commission, tribunal or body (a "GOVERNMENTAL ENTITY"), except (i) the pre-merger notification requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), under Council Regulation (EC) No 139/2004 (the "EMCR") or under the applicable requirements of antitrust or other competition laws, or investment laws relating to foreign ownership, of jurisdictions other than the United States ("FOREIGN ANTITRUST LAWS"), (ii) the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder or the rules and regulations of the New York Stock Exchange ("NYSE"), (iii) the filing of the Certificate of Merger with the Secretary of State required by the NYBCL, and (iv) any such consent, approval, authorization, permit, filing, or notification the failure of which to make or obtain would not have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.05. REPORTS; FINANCIAL STATEMENTS.

(a) The Company has timely filed or furnished (as applicable) (i) all quarterly reports on Form 10-Q and annual reports on Form 10-K required to be filed by it with or to the SEC since December 25, 2004 and before November 11, 2005 and (ii) all other forms, reports, statements and certifications (excluding reports on Form 10-Q or Form 10-K and any proxy statement with respect to an annual meeting that was not held) required to be filed or furnished by it with or to the SEC since December 25, 2004. The forms, reports, statements and certifications referred to in the previous sentence, collectively, together with all forms, reports, statements and certifications filed or furnished by the Company with or to the SEC on or after November 11, 2005, as amended (including the 2005 10-K and the 2006 10-K (each as defined below)) are referred to herein as the "COMPANY SEC REPORTS." As of their respective filing dates (or, if amended or superseded by a subsequent filing, as of the date of the last such amendment or superseding filing prior to the date hereof), the Company SEC Reports complied as to form in all material respects with all applicable requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Exchange Act and the Sarbanes-Oxley Act of 2002 (the "SARBANES-OXLEY ACT") and, in each case, the rules and regulations of the SEC promulgated thereunder. None of the Company SEC Reports, including any financial statements or schedules included or incorporated by reference therein, at the time filed or furnished (or, if amended or superseded by a subsequent filing, as of the date of the last such amendment or superseding filing prior to the date hereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any Company SEC Report. True, correct and complete copies of all Company SEC Reports filed or furnished prior to the date of this Agreement, whether or not required under applicable Law, have been furnished to Parent or are publicly available in the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC.

(b) None of the Company's Subsidiaries is required to file periodic reports with the SEC pursuant to the Exchange Act. As of the date of this Agreement, (i) the Common Shares are listed for trading on the New York Stock Exchange, and (ii) to the knowledge of the Company, there is no fact, event or circumstance which would reasonably be expected, individually or in the aggregate, to cause the Common Shares to be de-listed from trading on the New York Stock Exchange prior to the Effective Date.

(c) All of the Company's Significant Subsidiaries (as defined below) are consolidated for accounting purposes. The audited and unaudited consolidated financial statements (including the related notes thereto) of the Company included (or incorporated by reference) (i) in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2005 (the "2005 10-K") and the Company's Annual Report on Form 10-K for its fiscal year ended December 30, 2006 (the "2006 10-K"), in each case, filed with the SEC prior to the date of this Agreement, as amended or supplemented by filings with the SEC made prior to the date of this Agreement, or (ii) in Company SEC Reports filed or furnished with or to the SEC after the date of this Agreement related to periods ending after December 30, 2006 (the "BALANCE SHEET DATE"), have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of their respective dates, and the consolidated income, shareholders equity, results of operations and changes in consolidated financial position or cash flows for the periods presented therein; PROVIDED that unaudited interim financial statements may not contain footnotes required by GAAP and are subject to normal year-end adjustments.

(d) Except as set forth in the 2005 10-K and the 2006 10-K, the Company and its Subsidiaries have implemented and maintain a system of internal accounting controls over financial reporting (as required by Rule 13a-15(a) under the Exchange Act) that are sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. The Company (i) has implemented and maintains disclosure controls and procedures (as required by Rule 13a-15(a) or 15d-15 under the Exchange Act) reasonably sufficient to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time frames specified by the SEC's rules and forms, and (ii) has disclosed, based on its most recent regular quarterly evaluation prior to the date of this Agreement, to the Company's outside auditors and the audit committee of the Company's Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of its internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that would reasonably be expected to materially and adversely affect the Company's ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting.

(e) Neither the Company nor any of its Subsidiaries has any liabilities of any nature, whether accrued, absolute, fixed, contingent or otherwise, known or unknown, whether due or to become due, required by generally accepted accounting principles to be reflected in a consolidated balance sheet or the notes thereto, other than such liabilities (i) as and to the extent reflected or reserved against on the consolidated balance sheet of the Company dated as of the Balance Sheet Date included in the 2006 10-K or the notes thereto, (ii) incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date that would not have, individually or in the aggregate, a Material Adverse Effect, (iii) that have been discharged or paid in full prior to the date of this Agreement in the ordinary course of business or (iv) that would not have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.06. ABSENCE OF CERTAIN CHANGES.

(a) Since the Balance Sheet Date, the Company and its Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice in all material respects.

(b) Since the Balance Sheet Date, the Company has not suffered any Material Adverse Effect, and there has not been any change, condition, event or development that would have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.07. PROXY STATEMENT; OTHER FILINGS. The letter to shareholders, notice of meeting, final proxy statement and form of proxy that will be provided to shareholders of the Company in connection with the Merger (including any amendments or supplements) (collectively, the "PROXY STATEMENT"), at the time the Proxy Statement is first mailed to shareholders and at the time of the Special Meeting, and any other report required to be filed by the Company or any of its Subsidiaries with the SEC in connection with the Merger (the "OTHER FILINGS"), at the time of its filing with the SEC, each will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to information supplied or to be supplied in writing by Parent, Merger Sub or any Affiliate of Parent or Merger Sub expressly for inclusion therein. At the time of its respective filing with the SEC and at the time any amendment or supplement thereto is filed with the SEC, the Proxy Statement and the Other Filings will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations of the SEC promulgated thereunder.

SECTION 3.08. BROKERS; CERTAIN EXPENSES. No agent, broker, financial advisor or other Person is or will be entitled, as a result of any action, agreement or commitment of the Company or any of its Affiliates, to any broker's, finder's, financial advisor's or other similar fee or commission in connection with any of the transactions contemplated by this Agreement, except Morgan Stanley & Co. Incorporated ("MORGAN STANLEY"), whose fees and expenses shall be paid by the Company. A true and correct copy of the engagement letter with Morgan Stanley entered into in connection with the transactions contemplated hereby has been delivered to Parent prior to the date hereof, and such engagement letter has not been amended or modified in any respect.

SECTION 3.09. EMPLOYEE MATTERS.

(a) Section 3.09(a) of the Company Disclosure Letter contains a true, correct and complete list of all material Plans in effect on the date hereof. Prior to the date of this Agreement, the Company has provided to Parent true, correct and complete copies as in effect on the date hereof in all material respects of each of the following, as applicable, with respect to each material Plan maintained in the United States: (i) the plan document or agreement or, with respect to any Plan that is not in writing, a description of the material terms thereof; (ii) any summary plan description required to be furnished to participants pursuant to ERISA; (iii) the most recent annual report, actuarial report and/or financial report, if any (other than for Plans maintained outside of the United States); (iv) all amendments or modifications to any such documents; (v) the most recent determination letter received from the Internal Revenue Service with respect to each Plan that is intended to be a "qualified plan" under Section 401 of the Code; and (vi) the most recent required Internal Revenue Service Form 5500, including all schedules thereto. Notwithstanding the foregoing, Section 3.09(a) of the Company Disclosure Letter does not list Plans maintained outside of the United States, and the Company's obligations pursuant to this paragraph in respect of Plans maintained outside of the United States may be satisfied by the Company making reasonable efforts to provide Parent, no later than 20 business days following the date hereof, with: (i) a list of such Plans that are material, (ii) a copy or a summary of such material Plans; and (iii) a copy of actuarial reports or summary financial information of such material Plans to the extent applicable.

(b) Except as would not have, individually or in the aggregate, a Material Adverse Effect, with respect to each Plan, (i) all expenses, contributions, premiums or payments required to be made to, under or with respect to such Plan have been timely made and all amounts properly accrued to date or as of the Effective Date as liabilities of the Company or any of its Subsidiaries which are not yet due have been properly recorded on the books of the Company and, to the extent required by GAAP, adequate reserves are reflected on the financial statements of the Company, (ii) each such Plan which is an "employee pension benefit plan" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and intended to qualify under Section 401 of the Code has received a favorable determination letter from the Internal Revenue Service with respect to such qualification, and, to the knowledge of the Company, nothing has occurred since the date of such letter that has affected, or would adversely affect, such qualification, (iii) with respect to any Plan maintained outside the United States, all applicable foreign qualifications or registration requirements have been satisfied in all material respects, except where any failure to comply would not result in any material liability to the Company or its Subsidiaries, (iv) there are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of the Company, threatened or anticipated with respect to such Plan, any fiduciaries of such Plan with respect to their duties to any Plan, or against the assets of such Plan or any trust maintained in connection with such Plan, (v) it has been operated and administered in compliance in all material respects with its terms and all applicable Laws and regulations, including ERISA and the Code, and (vi) there is not now, and to the knowledge of the Company there are no existing circumstances that would reasonably be expected to give rise to, any requirement for the posting of security with respect to a Plan or the imposition of any pledge, lien, security interest or encumbrance on the assets of the Company or any of its Subsidiaries or any of their respective ERISA Affiliates (as defined below) under ERISA or the Code, or similar Laws of foreign jurisdictions.

(c) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, neither the Company nor any of its Subsidiaries nor any trade or business, whether or not incorporated (an "ERISA AFFILIATE"), that, together with the Company or any of its Subsidiaries would be deemed to be a "single employer" within the meaning of Section 4001(b) of ERISA, (i) maintains or contributes to (A) any "employee benefit plan" within the meaning of Section 3(3) of ERISA that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code or (B) a "multiemployer plan" within the meaning of Section 3(37) and 4001(a)(3) of ERISA or a "multiple employer plan" within the meaning of Sections 4063/4064 of ERISA or Section 413(c) of the Code, or (ii) has incurred or reasonably expects to incur any material liability pursuant to Title IV of ERISA (including any Controlled Group Liability), other than for premium payments to the Pension Benefit Guaranty Corporation. No Plan of the Company, any of its Subsidiaries or any of their respective ERISA Affiliates has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. With respect to each Plan that is a "multiemployer plan," no complete or partial withdrawal from such plan has been made by the Company or any of its Subsidiaries that would reasonably be expected to result in any liability to the Company or any of its Subsidiaries which would have, individually or in the aggregate, a Material Adverse Effect.

(d) Except as would not have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Company, no Plan is under audit or is the subject of an investigation in each case by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation, the SEC or any other Governmental Entity, nor is any such audit or investigation pending or threatened.

(e) Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will, either alone or in conjunction with any other event (whether contingent or otherwise), (i) result in any payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of the Company or any of its Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation, or (iv) result in any amount failing to be deductible by reason of Section 280G of the Code.

(f) To the knowledge of the Company, all options have been granted in compliance with the terms of the applicable Plans, with applicable Law, and with the applicable provisions of the Certificate of Incorporation and Bylaws as in effect at the applicable time, and all such Options are accurately disclosed as required under applicable Law in the Company SEC Reports, including the financial statements contained therein or attached thereto (if amended or superceded by a filing with the SEC made prior to the date of this Agreement, as so amended or superceded). To the knowledge of the Company, the Company has not issued any Options or any other similar equity awards pertaining to Shares under any Plan with an exercise price that is less than the "fair market value" of the underlying Shares on the date of grant, as determined for financial accounting purposes under GAAP.

SECTION 3.10. EMPLOYEES.

(a) Neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or any labor union contract with respect to employees in the United States. At the date of this Agreement, there are no pending, or, to the knowledge of the Company, threatened, labor strikes, disputes, walkouts, work stoppages, slowdowns, or lockouts with respect to employees of the Company or any of its Subsidiaries, except for any such strikes, disputes, walkouts, work stoppages, slowdowns, or lockouts that would not have, individually or in the aggregate, a Material Adverse Effect. No labor grievance or arbitration demand or proceeding, or unfair labor practice charge or proceeding, whether or not filed pursuant to a collective bargaining agreement, has been filed, is pending or, to the knowledge of the Company, has been threatened against the Company or its Subsidiaries, except for any such demands, charges or proceedings that would not have, individually or in the aggregate, a Material Adverse Effect.

(b) Except as would not have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Company, the Company and each of its Subsidiaries are in compliance in all material respects with all applicable local, state, federal and foreign Laws relating to labor and employment, including but not limited to Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations. Except as would not have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Company, there are no complaints, lawsuits, arbitrations, administrative proceedings, or other Proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries brought by or on behalf of any applicant for employment, any current or former employee, any person alleging to be a current or former employee, any class of the foregoing, or any Governmental Entity, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortuous conduct in connection with the employment relationship.

(c) Within the last six months, neither the Company nor any of its Subsidiaries has incurred any liability or obligation which remains unsatisfied under the Worker Adjustment and Retraining Notification Act ("WARN" ) or any state or local Laws regarding the termination or layoff of employees.

SECTION 3.11. LITIGATION. As of the date hereof, there is no claim, action, suit, proceeding, arbitration, mediation or investigation by or before any Governmental Entity (each, a "PROCEEDING") pending or, to the knowledge of the Company, threatened against or relating to the Company or any of its Subsidiaries or any properties or assets of the Company or any Subsidiaries of the Company, other than any such Proceeding that would not have, individually or in the aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries nor any of their respective properties or assets is subject to any outstanding order, writ, injunction or decree of any Governmental Entity having jurisdiction which would have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.12. TAX MATTERS.

(a) Except as would not have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and each of its Subsidiaries has timely filed (taking into account extensions validly obtained) all returns and reports relating to Taxes required to be filed by applicable Law with respect to the Company and each of its Subsidiaries , (ii) all such returns are true, correct and complete, (iii) the Company and each of its Subsidiaries have timely paid all Taxes attributable to the Company or any of its Subsidiaries that were due and payable, except, in the case of clauses (ii) and (iii) hereof, with respect to Taxes that are being contested in good faith or have been adequately provided for in accordance with GAAP, (iv) the Company has made adequate provision, in accordance with GAAP, in the consolidated financial statements included in the Company SEC Reports for the payment of all Taxes for which the Company or any of its Subsidiaries may be liable for the periods covered thereby, (v) there is no audit, investigation, claim or assessment in respect of Taxes pending or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries, (vi) there are no Contracts in effect to extend the period of limitations for the assessment or collection of any Tax for which the Company or any of its Subsidiaries may be liable, and there is no currently effective "closing agreement" pursuant to Section 7121 of the Code (or any similar provision of foreign, state or local Law), (vii) there is no obligation of the Company or any of its Subsidiaries to contribute to the payment of any Tax liability (or any amount calculated with reference thereto) of any Person (other than the Company or its Subsidiaries), including under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as transferee or successor, by Contract or otherwise (other than pursuant to customary agreements to indemnify lenders or indemnity provisions in agreements relating to the acquisition or disposition of assets), (viii) no claim has been made within the last three years by any Governmental Entity in a jurisdiction where either the Company or any of its Subsidiaries has not filed income Tax returns that the Company or any Subsidiary is or may be subject to income taxation by that jurisdiction, (ix) neither the Company nor any of its Subsidiaries has engaged in a "listed transaction" (as defined in Treasury Regulation Section 1.6011-4), and (x) the Company and each of its Subsidiaries have withheld from payments to their employees, independent contractors, creditors, shareholders and any other applicable person (and timely paid to the appropriate Governmental Entity) proper and accurate amounts in compliance with all applicable Tax withholding provisions of any Governmental Entity for all periods through the date of this Agreement, except with respect to amounts that are being contested in good faith or have been adequately provided for in accordance with GAAP.

(b) For purposes of this Agreement, "TAX" shall mean all taxes, charges, levies, imposts, duties, and other like assessments, including any income, gross receipts, sales, use, transfer, intangibles, value-added, franchise, title, license, capital, withholding, employee withholding, payroll, worker's compensation, unemployment insurance, social security, employment, excise, severance, stamp, transfer, premium, recording, real property, personal property, commercial rent, environmental or other tax imposed by a Governmental Entity, together with any interest, penalties, fines or additions to tax.

SECTION 3.13. COMPLIANCE WITH LAW; PERMITS.

(a) Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company and each of its Subsidiaries is and has been in compliance with all Laws applicable to the conduct of the business of the Company or any of its Subsidiaries or by which any assets of the Company or any of its Subsidiaries are bound or affected, including all statutes, rules and regulations enforced by the United States Food and Drug Administration (the "FDA") or comparable Governmental Entities of any other jurisdiction in which the Company or any of its Subsidiaries conducts business (the "FOOD AND DRUG LAWS").

(b) The Company and its Subsidiaries have all registrations, applications, licenses, requests for exemptions, clearances approvals, permits and other regulatory authorizations, in each instance, from Governmental Entities having jurisdiction ("PERMITS") required (i) to own and/or lease their current real properties (as the case may be), (ii) to conduct their businesses as now being conducted, or (iii) for each product of the Company or any of its Subsidiaries that is currently in commercial distribution, and each such Permit is in full force and effect and, to the knowledge of the Company and its Subsidiaries, no suspension, revocation, cancellation or withdrawal by a Governmental Entity of such Permit is pending or threatened, except for any such Permits the absence of which, or the failure of which to be in full force and effect, or the suspension, revocation, cancellation or withdrawal of which, would not have, individually or in the aggregate, a Material Adverse Effect. Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company and each of its Subsidiaries is and has been in compliance with such Permits.

(c) Neither the Company nor any of its Subsidiaries is subject to any obligation arising under any consent decree, notice of violation letter, FDA Form 483, clinical hold, consent agreement, Official Action Indicated status, warning letter or other notice, response or commitment made to or with the FDA or any comparable Governmental Entity having jurisdiction, except for any such obligation that would not have, individually or in the aggregate, a Material Adverse Effect. The Company and its Subsidiaries have made all notifications, submissions and reports required by any such obligation, except for any such notifications, submissions and reports the failure of which to be made would not have, individually or in the aggregate, a Material Adverse Effect.

(d) Except as would not have, individually or in the aggregate, a Material Adverse Effect, each product in current commercial distribution that is subject to any Food and Drug Law and has been developed, manufactured, tested, packaged, labeled, stored, distributed or marketed by or on behalf of the Company or any of its Subsidiaries (a "MEDICAL DEVICE"), has been and is currently being developed, manufactured, tested, packaged, labeled, promoted, advertised, stored, distributed and marketed in compliance with (i) all Permits from the FDA or any comparable Governmental Entity having jurisdiction and (ii) all applicable requirements under the Food and Drug Laws.

(e) Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company's and its Subsidiaries' facilities are registered with the FDA (if the business that is currently conducted within such facility requires such registration), and each product of the Company or any of its Subsidiaries approved for sale pursuant to any Food and Drug Law enforced by the FDA is listed with the FDA under the applicable FDA registration and listing regulations for Medical Devices.

(f) Neither the Company nor any of its Subsidiaries has received any written notice or communication from the FDA alleging noncompliance with any applicable Food and Drug Law, except for any such alleged noncompliance that would not have, individually or in the aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to any Proceeding relating to or arising under any Food and Drug Law, the Social Security Act of 1935 (the "SOCIAL SECURITY ACT") or the regulations of the Office of the Inspector General of the Department of Health and Human Services, and, to the knowledge of the Company, no such Proceedings are threatened, except for any such Proceedings that would not have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.14. ENVIRONMENTAL MATTERS.

(a) Except as would not have, individually or in the aggregate, a Material Adverse Effect, each of the Company and its Subsidiaries (i) is and has been in compliance with applicable Environmental Laws and (ii) holds and is and has been in compliance with all Permits required under Environmental Laws for the conduct of its business and activities ("ENVIRONMENTAL PERMITS"). Except as would not have, individually or in the aggregate, a Material Adverse Effect, such Environmental Permits were validly issued and are in full force and effect, and all applications, notices or other documents have been timely filed to effect timely renewal, issuance or reissuance of such Environmental Permits. To the knowledge of the Company, all material Environmental Permits are expected to be issued or reissued on a timely basis on such terms and conditions as are reasonably expected to enable the Company and its Subsidiaries to continue to conduct their operations in a manner substantially similar to the manner in which such operations are presently conducted, except for any such Environmental Permits the failure of which to be issued or reissued on a timely basis and on such terms and conditions as described would not have, individually or in the aggregate, a Material Adverse Effect.

(b) Neither the Company nor any of its Subsidiaries has been or is presently the subject of any Environmental Claim, and no Environmental Claim is pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or against any Person whose liability for the Environmental Claim was or may have been retained or assumed by Contract or by operation of Law or pursuant to any Order by the Company or any of its Subsidiaries, except for any such Environmental Claims that would not have, individually or in the aggregate, a Material Adverse Effect.

(c) Except as would not have, individually or in the aggregate, a Material Adverse Effect, no Hazardous Materials are present at any properties currently leased, operated or used or previously owned, leased, operated or used, in circumstances that would reasonably be expected to form the basis for an Environmental Claim against the Company or any of its Subsidiaries.

(d) To the knowledge of the Company, no property presently owned, leased or operated by the Company or any of its Subsidiaries contains any landfills, surface impoundments, disposal areas, underground storage tanks, aboveground storage tanks, asbestos or asbestos-containing material, polychlorinated biphenyls, radioactive materials or other Hazardous Materials that would reasonably be expected, individually or in the aggregate, to give rise to remediation, removal or retirement costs which would result in a Material Adverse Effect.

(e) No Lien imposed by any Governmental Entity having jurisdiction pursuant to any Environmental Law is currently outstanding and no financial assurance obligation is in force as to any property owned, leased or operated by the Company or any of its Subsidiaries, except for any such Liens or obligations that would not have, individually or in the aggregate, a Material Adverse Effect.

(f) The Company and its Subsidiaries have no obligation or liability by Contract relating to or arising under Environmental Law, except for any such obligations or liabilities that would not have, individually or in the aggregate, a Material Adverse Effect.

(g) For purposes of the Agreement:

(i) "ENVIRONMENT" means any ambient, workplace or indoor air, surface  water, drinking water, groundwater, land surface (whether below or above  water), subsurface strata, sediment, plant or animal life, natural  resources, and the sewer, septic and waste treatment, storage and disposal  systems servicing real property or physical buildings or structures.

(ii) "ENVIRONMENTAL CLAIM" means any claim, cause of action,  investigation or notice by any Person, including any Governmental Entity  having jurisdiction, alleging potential liability (including potential  liability for investigatory costs, cleanup or remediation costs,  governmental or third party response costs, natural resource damages,  property damage, personal injuries, or fines or penalties) based on or  resulting from (A) the presence or Release of any Hazardous Materials at  any location, whether or not owned or operated by the Company or any of its  Subsidiaries, or (B) any violation of any Environmental Law.

(iii) "ENVIRONMENTAL LAW" means any Law (including common law) or any  binding Contract, memorandum of understanding or commitment letter issued  or entered by or with any Governmental Entity or Person relating to: (A)  the Environment, including pollution, contamination, cleanup, preservation,  protection and reclamation of the Environment, (B) exposure of employees  or third parties to any Hazardous Materials, (C) any Release or threatened  Release of any Hazardous Materials, including investigation, assessment,  testing, monitoring, containment, removal, remediation and cleanup of any  such Release or threatened Release, (D) the management of any Hazardous  Materials, including the use, labeling, processing, disposal, storage,  treatment, transport, or recycling of any Hazardous Materials, or (E) the  presence of Hazardous Materials in any building, physical structure,  product or fixture.

(iv) "HAZARDOUS MATERIALS" means any pollutant, contaminant,  constituent, chemical, raw material, product or by-product, mold, petroleum  or any fraction thereof, asbestos or asbestos-containing material, polychlorinated biphenyls, lead  paint, insecticide, fungicide, rodenticide, pesticide, any hazardous,  industrial or solid waste, and any toxic, radioactive, infectious or  hazardous substance, material, or agent, including all substances,  materials or wastes which are identified by or subject to regulation or  give rise to liability under any Environmental Law.

(v) "RELEASE" means any release, spill, emission, leaking, pumping,  injection, deposit, disposal, discharge, dispersal, leaching or migration  into the indoor or outdoor Environment, or into or out of any property,  including movement through air, soil, surface water, groundwater or  property.

SECTION 3.15. INTELLECTUAL PROPERTY.

(a) Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company and its Subsidiaries own, or are validly licensed or otherwise have the right to use, all patents, patent rights, inventions and discoveries (whether or not patentable or reduced to practice), trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, copyrights, trade secrets and all other confidential or proprietary information and know-how, whether or not reduced to writing or any other tangible form, and other proprietary intellectual property rights arising under the Laws of the United States (including any state or territory), any other country or group of countries or any political subdivision of any of the foregoing, whether registered or unregistered (collectively, "INTELLECTUAL PROPERTY RIGHTS") used in or reasonably necessary for the conduct of the business of the Company or any of its Subsidiaries as of the date of this Agreement, including Intellectual Property Rights reasonably necessary for the development and commercialization of products currently marketed by the Company and its Subsidiaries (such subset of Intellectual Property Rights, the "COMPANY INTELLECTUAL PROPERTY").

(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) Company has received no third-party written claim of invalidity or conflicting ownership rights with respect to any Company Intellectual Property owned by the Company or by a Subsidiary of the Company ("COMPANY OWNED INTELLECTUAL PROPERTY") and no such Company Owned Intellectual Property is the subject of any pending or, to the Company's knowledge, threatened interference, opposition or other Proceeding, (ii) no Person has given written notice to the Company or any Subsidiary of the Company that the use of any Company Intellectual Property, including the manufacture, importation, sale or offer for sale of any product of the Company or any of its Subsidiaries currently in commercial distribution, by the Company, any Subsidiary of the Company or any licensee is infringing or has infringed any domestic or foreign registered patent, trademark, service mark, trade name, or copyright or design right, or that the Company, any Subsidiary of the Company or any licensee has misappropriated or improperly used or disclosed any trade secret, confidential information or know-how, (iii) to the knowledge of the Company, the manufacture, importation, sale or offer for sale of any product of the Company or any of its Subsidiaries currently in commercial distribution, does not infringe any valid domestic or foreign registered patent, trademark, service mark, trade name, copyright or other Intellectual Property Right of any third party, and does not involve the misappropriation or improper use or disclosure of any trade secrets, confidential information or know-how of any third party of which the Company has knowledge, (iv) to the Knowledge of the Company, neither the Company nor  any Subsidiary of the Company has performed prior acts or is engaged  in current conduct or use, (and to the knowledge of the Company, there  exists no prior act or current use by any third party) that would void or  invalidate any Company Owned Intellectual Property, and (v) the execution,  delivery and performance of this Agreement by the Company and the  consummation of the transactions contemplated hereby will not cause the  forfeiture or termination or give rise to a right of forfeiture or  termination of any of the Company Intellectual Property, impair the right  of the Company to make, use, sell, license or dispose of, or to bring any  action for the infringement of, any Company Owned Intellectual Property,  or impair the right of Company or any of its Subsidiaries to the  manufacture, importation, sale or offer for sale of any of their products  currently in commercial distribution.

(c) Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in this SECTION 3.15 are the only representations and warranties in this Agreement with respect to Intellectual Property Rights.

SECTION 3.16. REAL PROPERTY.

(a) Section 3.16(a) of the Company Disclosure Letter sets forth a true, correct and complete list of all material real property owned by the Company or any of its Subsidiaries (the "OWNED REAL PROPERTY"). With respect to each Owned Real Property, (i) either the Company or a Subsidiary of the Company has good and marketable title in fee simple to such Owned Real Property, free and clear of all Liens other than Permitted Liens, (ii) there are no outstanding purchase options, rights of first refusal or similar rights in favor of any other Person to purchase such Owned Real Property or any portion thereof or interest therein, and (iii) there are no leases, subleases, licenses, options, rights, concessions or other Contracts affecting the ownership, possession or use of any portion of such Owned Real Property, other than, in the case of clause (ii) or (iii) above, as would not have, individually or in the aggregate, a Material Adverse Effect. There are no physical conditions or defects at any of the Owned Real Properties that impair or would impair the continued use of such Owned Real Property in the ordinary course of business as presently conducted at each such Owned Real Property, except for any such conditions or defects that would not have, individually or in the aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received notice of any pending, and to the knowledge of the Company, there is no threatened, condemnation with respect to any of the Owned Real Properties, except for any such condemnations that would not have, individually or in the aggregate, a Material Adverse Effect.

(b) Section 3.16(b) of the Company Disclosure Letter sets forth a true, correct and complete list of all leases, subleases and other Contracts under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any material real property (the "REAL PROPERTY LEASES"). Except as would not have, individually or in the aggregate, a Material Adverse Effect, (i) to the knowledge of the Company, each Real Property Lease is valid, binding and in full force and effect, and (ii) no termination event or condition or uncured default on the part of the Company or any of its Subsidiaries or, to the knowledge of the Company, the landlord thereunder exists under any Real Property Lease. Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company and each of its Subsidiaries has a good and valid leasehold interest in each parcel of real property leased by it, free and clear of all Liens except for Permitted Liens. Neither the Company nor any of its Subsidiaries has received notice of any pending, and to the knowledge of the Company there is no threatened, condemnation with respect to any real property leased pursuant to any of the Real Property Leases, except for any such condemnations that would not have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.17. MATERIAL CONTRACTS.

(a) Section 3.17(a) of the Company Disclosure Letter lists, and the Company has made available to Parent prior to the date of this Agreement, true, correct and complete copies of, any of the following Contracts to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective assets is bound, as of the date hereof:

(i) that would be required to be filed by the Company as a "material contract" pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed by the Company on a Current Report on Form 8-K;

(ii) that contains covenants that limit the ability of the Company or any of its Subsidiaries (or which, following the consummation of the Merger, could restrict the ability of the Surviving Corporation or any of its Affiliates) to compete in any business or with any person or in any geographic area or distribution or sales channel, or to sell, supply or distribute any service or product, in each case, that could reasonably be expected to be material to the business of the Company and its Subsidiaries, taken as a whole, except for any such Contract that may be canceled without any penalty or other liability to the Company or any of its Subsidiaries upon notice of 60 calendar days or less;

(iii) that relates to a joint venture, partnership, limited liability or other similar agreement or arrangement relating to the formation, creation, operation or control of any partnership or joint venture or similar entity or arrangement that is material to the business of the Company and its Subsidiaries, taken as a whole, or pursuant to which the Company or any of its Subsidiaries has an obligation (contingent or otherwise) to make a material investment in or material extension of credit to any Person;

(iv) that involves any exchange traded, over-the-counter or other swap, cap, floor, collar, futures contract, forward contract, option or any other derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including commodities, emissions allowances, renewable energy credits, currencies, interest rates foreign currency and indices;

(v) that relates to (A) indebtedness for borrowed money or the deferred purchase price of property and having an outstanding principal amount in excess of $50 million or (B) conditional or similar sale arrangements in connection with which the aggregate actual or contingent obligations of the Company and its Subsidiaries under such Contract are greater than $50 million;

(vi) entered into after December 31, 2005 or not yet consummated, and that involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of rights, assets or equity interests of another Person for aggregate consideration in excess of $100 million other than acquisitions or dispositions of inventory, raw materials and equipment in the ordinary course of business consistent with past practice;

(vii) other than the Material Contracts described in SECTION 3.17(A)(IV), under which the aggregate amounts to be paid to or received by the Company and its Subsidiaries over the remaining term of such Contract would reasonably be expected to exceed $75 million in any twelve-month period or more than $100 million in the aggregate (other than purchase orders for the purchase of inventory in the ordinary course of business);

(viii) that relates to a Related Party Transaction; or

(ix) that would prevent or materially delay the Company's ability to consummate the Merger or the other transactions contemplated by this Agreement.

Each Contract of the type described in clauses (i) through (xi) is referred to herein as a "MATERIAL CONTRACT."

(b) Except as would not have, individually or in the aggregate, a Material Adverse Effect, each Material Contract is valid and binding on the Company and any Subsidiary of the Company that is a party thereto and, to the knowledge of the Company, each other party thereto and is in full force and effect. There is no default under any Material Contract by the Company or any of its Subsidiaries or, to the knowledge of the Company, by any other party, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Company or any of its Subsidiaries, or to the knowledge of the Company, by any other party, in each case except as would not have, individually or in the aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is party to any Contract that prohibits the Company from providing to Parent the information described in SECTION 5.02(D).

SECTION 3.18. INSURANCE. Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company and each of its Subsidiaries is covered by valid and currently effective insurance policies issued in favor of the Company or one or more of its Subsidiaries that are customary for companies of similar size in the industries and locales in which the Company and its Subsidiaries operate. Section 3.18 of the Company Disclosure Letter sets forth a true, correct and complete list of all material insurance policies issued since January 1, 2003 in favor of the Company or any of its Subsidiaries, or pursuant to which the Company or any of its Subsidiaries is a named insured or otherwise a beneficiary, as well as any material historic occurrence-based policies still in force. With respect to each such insurance policy, except as would not have, individually or in the aggregate, a Material Adverse Effect, (i) the policy is in full force and effect and all premiums due thereon have been paid, (ii) neither the Company nor any of its Subsidiaries is in breach or default, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default in any material respect with respect to their respective obligations under such policies, or permit termination or modification of, any such policy, and (iii) to the knowledge of the Company, no insurer on any such policy has been declared insolvent or placed in receivership, conservatorship or liquidation, and no notice of cancellation or termination has been received with respect to any such policy.

SECTION 3.19. RELATED PARTY TRANSACTIONS. Except for employment-related Contracts, forms of which are filed or incorporated by reference as an exhibit to a Company SEC Report filed prior to the date hereof or Plans and except as described in Items 11 and 15 (note 8 - Related Party Transaction) of the 2006 10-K, Section 3.19 of the Company Disclosure Letter sets forth a correct and complete list in all material respects of the Contracts (that are in existence as of the date of this Agreement and under which the Company or any of its Subsidiaries has any existing or future material liabilities) between the Company or any of its Subsidiaries, on the one hand, and, on the other hand, any (a) executive officer or director of the Company or any of such executive officer's or director's immediate family members, (b) owner of more than 5% of the Shares as of the date hereof, or (c) to the knowledge of the Company, any "related person" (within the meaning of Item 404 of Regulation S-K under the Securities Act) of any such officer, director or owner (other than the Company or any of its Subsidiaries) entered into within the last twelve months and, in each case, that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act (a "RELATED PARTY TRANSACTION"). The Company has provided to Parent copies of each Contract or other relevant documentation (including any amendments or modifications thereto) providing for each Related Party Transaction.

SECTION 3.20. OPINION. Prior to the execution of this Agreement, Morgan Stanley has delivered to the Special Committee and the Board of Directors of the Company its written opinion (or oral opinion to be confirmed in writing), dated as of the date hereof, to the effect that, as of such date and based upon and subject to the matters set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of Shares other than Merger Sub and its affiliates and the shareholders (if any) who invest in Parent or Merger Sub. The Company has obtained or will obtain prior to the filing of the Proxy Statement with the SEC, the authorization of the Company Financial Advisor to include a copy of its opinion in the Proxy Statement.

SECTION 3.21. REQUIRED VOTE OF COMPANY SHAREHOLDERS. The only vote of the holders of securities of the Company required by the Certificate of Incorporation or bylaws, by Law or otherwise to complete the Merger is the adoption of the plan of merger contained in this Agreement by the affirmative vote of the holders of not less than 66-2/3% of the outstanding Shares, voting together as a single class. The adoption of the plan of merger contained in this Agreement by the vote required by the previous sentence is referred to as the "REQUISITE SHAREHOLDER APPROVAL."

SECTION 3.22. TAKEOVER LAWS, ETC. The Board of Directors of the Company, acting upon the recommendation of the Special Committee, has taken all actions necessary so that the restrictions contained in Section 912 of the NYBCL and the restrictions contained in Sections 13 and 14 of the Certificate of Incorporation shall be inapplicable to Parent and Merger Sub and their Affiliates, the execution, delivery or performance of this Agreement, and the consummation of the Merger and the other transactions contemplated by this Agreement, including the acquisition of the Company and the capital stock of the Company by Parent and its Affiliates, and (b) resolved to elect, to the extent permitted by Law, for the Company not to be subject to any "moratorium," "control share acquisition," "business combination," "fair price" or other form of anti-takeover Laws (collectively, "TAKEOVER LAWS") of any jurisdiction that may purport to be applicable to this Agreement or the transactions contemplated hereby.

SECTION 3.23. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the representations and warranties of the Company contained in this ARTICLE III, neither the Company nor any other Person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries or with respect to any other information provided by the Company. Neither the Company nor any other Person will have or be subject to any liability or indemnification obligation to Parent, Merger Sub or any other person resulting from the making available or failing to make available to Parent or Merger Sub, or Parent's or Merger Sub's use of, any such information, including any information, documents, projections, forecasts or other material made available to Parent or Merger Sub in certain "data rooms" or management presentations in expectation of the transactions contemplated by this Agreement, except to the extent any such information is expressly included in a representation or warranty contained in this ARTICLE III or in the corresponding section of the Company Disclosure Letter.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as disclosed in the correspondingly numbered section of the disclosure letter dated the date of this Agreement and delivered by the Company to Parent with respect to this Agreement immediately prior to the execution of this Agreement (the "PARENT DISCLOSURE LETTER") (PROVIDED, HOWEVER, that a matter disclosed with respect to one representation or warranty shall also be deemed to disclosed with respect to each other representation or warranty to which the matter disclosed reasonably relates, to the extent such relationship is reasonably apparent on the face of the disclosure contained in the Parent Disclosure Letter with respect to such matter), Parent and Merger Sub represent and warrant to the Company as follows:

SECTION 4.01. ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub is a duly organized and validly existing entity in good standing under the Laws of the jurisdiction of its organization, with all entity power and authority to own its properties and conduct its business as currently conducted and is duly qualified and in good standing as a foreign corporation or entity authorized to do business in each of the jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes such qualification necessary, except as would not reasonably be expected, individually or in the aggregate, to prevent or materially delay the consummation of the transactions contemplated by this Agreement. All of the issued and outstanding capital stock of Merger Sub is directly or indirectly owned, beneficially and of record, by Parent, free and clear of all Liens (other than any Liens created pursuant to the Financing).

SECTION 4.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent and Merger Sub have heretofore furnished or otherwise made available to the Company a complete and correct copy of the certificate of incorporation and by-laws or other organizational documents of each of Parent and Merger Sub, in each case as currently in effect. Each of Parent and Merger Sub is not in violation of any provisions of its certificate of incorporation or by-laws.

SECTION 4.03. CAPITALIZATION OF PARENT AND MERGER SUB. The authorized capital stock of Merger Sub consists solely of 900 shares of common stock, par value $0.01, 100 shares of which are issued and outstanding, and 100 shares of preferred stock, par value $0.01 per share, none of which is issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is owned by Parent. As of the date hereof, all of the equity interests in Parent are, and on the Effective Date a majority of the voting equity interests in Parent will be, owned by Warburg Pincus Private Equity IX, L.P. and its affiliates.

SECTION 4.04. AUTHORITY FOR THIS AGREEMENT. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary entity proceedings on the part of Parent and Merger Sub, and no other entity proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub enforceable against each of Parent and Merger Sub in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

SECTION 4.05. CONSENTS AND APPROVALS; NO VIOLATION.

(a) Neither the execution and delivery of this Agreement by Parent or Merger Sub nor the consummation of the transactions contemplated hereby will (i) violate or conflict with or result in any breach of any provision of the certificate of incorporation or bylaws or similar governing documents of Parent or Merger Sub, (ii) assuming all consents, approvals and authorizations contemplated by clauses (i) through (iii) of subsection (b) below have been obtained and all filings described in such clauses have been made, conflict with or violate any Law applicable to Parent or Merger Sub or by which any of their respective assets are bound, or (iii) violate or conflict with, or result in a breach of, or require any consent, waiver or approval under or result in a default or give rise to any right of termination, cancellation, modification or acceleration (or an event that, with the giving of notice, the passage of time or otherwise, would constitute a default or give rise to any such right) under any of the terms, conditions or provisions of any Contract to which Parent or Merger Sub is a party or by which Parent or Merger Sub or any of their respective assets are bound, except in the case of clauses (ii) and (iii), as would not reasonably be expected, individually or in the aggregate, to prevent or materially delay the consummation of the transactions contemplated hereby.

(b) The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity, except (i) the pre-merger notification requirements under the HSR Act, under the EMCR or under the applicable requirements of Foreign Antitrust Laws, (ii) the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder and the rules and regulations of the NYSE, (iii) the filing of the Certificate of Merger with the Secretary of State required by the NYBCL, and (iv) any such consent, approval, authorization, permit, filing, or notification the failure of which to make or obtain would not reasonably be expected, individually or in the aggregate, to prevent or materially delay the consummation of the transactions contemplated hereby.

SECTION 4.06. PROXY STATEMENT; OTHER FILINGS. None of the information supplied or to be supplied in writing by Parent, Merger Sub or any Affiliate of Parent or Merger Sub for inclusion in the Proxy Statement will, at the date of filing with the SEC, at the time the Proxy Statement is mailed and at the time of the Special Meeting, and none of the information supplied or to be supplied in writing by Parent, Merger Sub or any Affiliate of Parent or Merger Sub for inclusion in Other Filings, will, at the date of filing with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, Parent makes no representation or warranty with respect to any information supplied or to be supplied by the Company or any Affiliate of the Company that is contained in any of the foregoing documents.

SECTION 4.07. ABSENCE OF LITIGATION. As of the date hereof, there are no suits, claims, actions, proceedings, arbitrations, mediations or investigations pending or, to the knowledge of Parent, threatened against Parent or any of its Affiliates, other than any such suit, claim, action, proceeding or investigation that would or would not, reasonably be expected to, prevent or delay the consummation of, or otherwise adversely affect the ability of Parent or Merger Sub to consummate, the transactions contemplated hereby. As of the date hereof, neither Parent nor any of its Subsidiaries nor any of their respective properties is or are subject to any order, writ, judgment, injunction, decree or award that would, or would reasonably be expected to, prevent or delay the consummation of, or otherwise adversely affect the ability of Parent or Merger Sub to consummate, the transactions contemplated hereby.

SECTION 4.08. FINANCING. Parent has delivered to the Company true and complete copies of (i) executed commitment letter(s) (as the same may be amended pursuant to SECTION 5.11(A), the "DEBT FINANCING COMMITMENTS"), pursuant to which the lenders party thereto have agreed, subject to the terms and conditions set forth therein, to provide or cause to be provided the financing described therein (the "DEBT FINANCING"), and (ii) executed equity commitment letters (as the same may be amended in accordance with the terms thereof, the "EQUITY FINANCING COMMITMENTS," and together with the Debt Financing Commitments, the "FINANCING COMMITMENTS"), pursuant to which the Guarantor, J.P. Morgan Ventures Corporation, BAS Capital Funding Corporation, Citigroup Global Markets Inc. and Credit Suisse Management LLC have committed, subject to the terms and conditions set forth therein, to make the investments described therein (the "EQUITY FINANCING," and together with the Debt Financing, the "FINANCING"). As of the date of this Agreement, except as permitted by SECTION 5.11 or this SECTION 4.08, none of the Financing Commitments has been amended or modified, no such amendment or modification is contemplated (except as described in the Debt Financing Commitments, including to effect the appointments and allocations contemplated by the third paragraph of the Debt Financing Commitments), and the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded in any respect. Parent has fully paid any and all commitment fees or other fees in connection with the Financing Commitments that are payable on or prior to the execution hereof. The Financing Commitments are in full force and effect and are the legal, valid and binding obligations of Parent and, to the knowledge of Parent, of the other parties thereto. There are no conditions precedent or other contingencies related to the funding of the full amount of the Financing other than as expressly set forth in the Financing Commitments. Subject to the terms and conditions of the Financing Commitments, and subject to the terms and conditions of this Agreement, including compliance by the Company in all material respects with its obligations under SECTION 5.11 and SECTION 5.18, the aggregate proceeds contemplated by the Financing Commitments, together with the available and unrestricted cash of the Company on the Closing Date, will be sufficient for Parent and Merger Sub (or, if applicable, the Surviving Corporation) to (i) consummate the Merger upon the terms contemplated by this Agreement (including the payment of the aggregate Merger Consideration), (ii) effect any other repayment or refinancing of debt contemplated herein in connection with the Merger or contemplated by the Financing Commitments, and (iii) pay all related fees and expenses. As of the date of this Agreement, Parent does not have any reason to believe that any of the conditions to the Financing will not be satisfied or that the Financing will not be available to Parent or Merger Sub on the Closing Date.

SECTION 4.09. BROKERS; CERTAIN EXPENSES. No agent, broker, financial advisor or other Person is or will be entitled, as a result of any action, agreement or commitment of Parent or any of its Affiliates, to any broker's, finder's, financial advisor's or other similar fee or commission in connection with any of the transactions contemplated by this Agreement, except J.P. Morgan Ventures Corporation, BAS Capital Funding Corporation, Citigroup Global Markets Inc. and Credit Suisse Management LLC, whose fees and expenses shall be paid by Parent (except as provided in SECTION 7.03(F)).

SECTION 4.10. OPERATIONS OF PARENT AND MERGER SUB. Each of Parent and Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and has, and prior to the Effective Date will have, engaged in no other business activities and incurred no liabilities or obligations other than as contemplated herein or in the Financing Commitments or incident to the transactions contemplated hereby and thereby.

SECTION 4.11. SOLVENCY. Assuming (i) that the Company is Solvent immediately prior to the Effective Date, (ii) satisfaction of the conditions to Parent's and Merger Sub's obligation to consummate the Merger, or waiver of such conditions, (iii) the accuracy of the representations and warranties of the Company set forth in ARTICLE III hereof, and (iv) that the estimates, projections or forecasts provided by the Company to Parent prior to the date hereof have been prepared in good faith on assumptions that were and continue to be reasonable, and after giving effect to the transactions contemplated by this Agreement (including the Financing, the payment of the aggregate Merger Consideration, any other repayment or refinancing of existing indebtedness contemplated in this Agreement or the Financing Commitments, payment of all amounts required to be paid in connection with the consummation of the transactions contemplated hereby, and payment of all related fees and expenses), each of Parent and the Surviving Corporation will be Solvent as of the Effective Date and immediately after the consummation of the transactions contemplated hereby. For the purposes of this Agreement, the term "SOLVENT" when used with respect to Parent and the Surviving Corporation, means that, as of any date of determination, (A) the amount of the "fair saleable value" of the assets of Parent and the Surviving Corporation will, as of such date, exceed (1) the value of all "liabilities of Parent and the Surviving Corporation, including contingent and other liabilities," as of such date, as such quoted terms are generally determined in accordance with applicable U.S. federal Laws governing determinations of the insolvency of debtors, and (2) the amount that will be required to pay the probable liabilities of Parent and the Surviving Corporation on their existing debts (including contingent and other liabilities) as such debts become absolute and mature, (B) Parent and the Surviving Corporation will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which they intend to engage or propose to be engaged following the Closing Date, and (C) Parent and the Surviving Corporation will be able to pay their liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, "not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged" and "able to pay its liabilities, including contingent and other liabilities, as they mature" means that Parent and the Surviving Corporation will be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.

SECTION 4.12. GUARANTEE. Concurrently with the execution of this Agreement, Parent has caused the Guarantor to deliver to the Company the duly executed Guarantee. The Guarantee is in full force and effect and is the valid, binding and enforceable obligation of the Guarantor, and no event has occurred which, with or without notice, lapse of time or both, would constitute a default on the part of the Guarantor under the Guarantee.

SECTION 4.13. OWNERSHIP OF SHARES. None of Parent, Merger Sub or their respective controlled affiliates owns, directly or indirectly, beneficially or of record, any Shares and none of Parent, Merger Sub or their respective controlled affiliates holds any rights to acquire any Shares except pursuant to this Agreement.

SECTION 4.14. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the representations and warranties of Parent and Merger Sub contained in this Article IV, none of Parent, Merger Sub or any other Person on behalf of Parent or Merger Sub makes any other e