COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

Total minimum annual rental obligations (net of sublease revenue of approximately $306,000 in fiscal 2000 and $195,000 per year thereafter through March 2005) under noncancelable operating leases (substantially all real property or equipment) in force at October 31, 2000 are payable in subsequent years as follows:

(In thousands)
2001	$	4,720
2002		4,356
2003		3,774
2004		3,127
2005		2,045
2006 and thereafter		6,477
	$	24,499

Aggregate rental expense for both cancelable and noncancelable contracts amounted to $5.2 million, $5.7 million and $3.2 million in 2000, 1999 and 1998, respectively.

MEC
In 1993, we reached agreement with Medical Engineering Corporation (“MEC”), a subsidiary of Bristol-Myers Squibb Company, which limited our contingent liabilities associated with breast implant litigation involving a former division of ours (the “MEC Agreement”). The remaining liability recorded for payments to be made to MEC under the MEC Agreement is due as follows:

December 31, (In thousands)
2000	$	3,500
2001		4,000
2002		4,500
2003		3,000
	$	15,000

Payments to MEC of $11.5 million beginning December 31, 2001 are contingent upon our earning net income before taxes in each fiscal year. They were recorded in Cooper’s financial statements in fiscal 1997 as loss from sale of discontinued operations as Management concluded that the maximum payments would be required. They are reflected on the balance sheet in “Other accrued liabilities” for the amount due on December 31, 2000 and in “Other noncurrent liabilities” for the amounts due thereafter. These payments are limited to the lesser of 50% of our net income before taxes in each fiscal year on a noncumulative basis, or the amounts shown above.

ENVIRONMENTAL

In 1997, environmental consultants that Cooper engaged identified a contained area of groundwater contamination consisting of industrial solvents including trichloroethane (also known as TCA) at one of CVI’s sites. In the opinion of counsel, the solvents were released into the ground before we acquired the business at that site, and the area containing these chemicals is limited. On April 6, 1999, Cooper and the New York Department of Environmental Conservation entered into a voluntary agreement covering the environmental investigation of the site. The investigation has been completed and we expect to initiate a state-approved mediation in the spring of 2001. As of October 31, 2000, we have accrued approximately $300,000 for that purpose. In our opinion, the cost of remediation will not be material, considering this accrual.