Sulzer Implant Settlement

CLASS ACTION SETTLEMENT AGREEMENT

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Annex V

SUMMARY TERMS OF CONVERTIBLE CALLABLE INSTRUMENT ("CCI")

Issuer

Sulzer Orthopedics Inc., a Delaware corporation

Guarantor

Sulzer Medica AG, a Switzerland limited company, will guarantee SOUS’ obligations under the CCI, with standard waiver of any SML subrogation, contribution and indemnification rights against SOUS

Principal Amount

$300,000,000

Stated Maturity

The CCI shall be issued as of the later of (i) the 180^th day following the Trial Court Approval Date and (ii) the 60th day following the Final Judicial Approval Date (the "CCI Issue Date"). Unless earlier redeemed, the entire face amount plus accrued but unpaid interest of the CCI will be paid in cash by SOUS on the date that is 18 months from the CCI Issue Date (the "Maturity Date"); provided, however, that to the extent shareholders have not exercised the Subscription Options (as hereinafter defined) as of the Maturity Date, a proportionate amount of the unredeemed face amount plus accrued and unpaid interest thereon may, at the option of SOUS, be converted into ADRs or shares of SML (“Shares”) based on the Conversion Price (defined below) in effect on the Maturity Date.

“Conversion Price” means, for the 30 consecutive trading days ending 10 Business Days before the date of determination, the weighted (by volume of shares traded) average closing sales price of the ADRs or Shares as reported by the principal securities market on which the ADRs or Shares trade in the United States or Switzerland, as applicable, all as calculated and certified by the Chief Financial Officer of SML in an instrument delivered to the Sulzer Settlement Trust prior to the date as of which the Conversion Price is being determined.

The Conversion Price will be subject to adjustment for stock splits, dividends, reclassifications and recapitalizations; provided, that no adjustment shall be made to the Conversion Price with respect to the distribution of options to purchase Shares to the current shareholders of SML for the purpose of granting rights to such shareholders to subscribe to Shares for the purpose of retiring the CCI prior to the Maturity Date.

Ranking

The payment obligations under the CCI will be unsecured and subordinated to the Financing.

Interest

Interest on the CCI shall accrue (beginning on the CCI Issue Date) at a rate equal to 7.5% compounded annually. No interest shall be payable prior to the Maturity Date, except with respect to and only to the extent of a prior redemption, in which case the corresponding accrued but unpaid interest shall be payable upon such redemption. In the case of a conversion into ADRs or Shares, accrued but unpaid interest will be paid in ADRs or Shares based on the Conversion Price in effect at the Maturity Date.

Optional Call

SOUS may at any time and from time to time, upon 10 days prior written notice to the Sulzer Settlement Trust, redeem for cash all or any portion of the face amount of the CCI at a cash price equal to 100% of the face amount to be redeemed plus accrued but unpaid interest through the date of such redemption; provided, however, that each partial redemption shall be in a minimum face amount of $10 million.

Mandatory Call

1. Upon the occurrence of any of the events described below, concurrently with or as soon as practicable after the consummation of such event, SOUS shall redeem for cash the entire outstanding face amount of the CCI at a cash price equal to 100% of such outstanding face amount plus accrued but unpaid interest through the date of such redemption:

(i) a Change of Control of SML (as defined below);

(ii) a default under the Financing or any other funded indebtedness of SOUS or its affiliates that permits acceleration of $10 million or more of outstanding indebtedness and that is not waived by lender or cured by SOUS or such affiliate within 30 days of notice thereof;

(iii) a default by SOUS or SML of (x) any payment, redemption or conversion provision of the CCI or (y) any other provision thereof that continues for 10 Business Days after notice thereof is given to SOUS by the Sulzer Settlement Trust or other holder thereof; or

(iv) a sale of all or substantially all of the assets of SML and its subsidiaries taken as a whole.

“Change of Control” means (i) the acquisition by any “person” or “group” (as such terms are used in Section 13(d)(3) of the U.S. Securities Exchange Act of 1934) of ADRs and/or Shares such that such person becomes the ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of more than 50% of the total voting power of the Shares on a fully-diluted basis or (ii) any merger, consolidation, amalgamation or other similar transaction involving SML whereby the beneficial holders of Shares immediately prior to such transaction hold less than a majority of the outstanding voting power with respect to SML (or, if SML shall not be the surviving entity following such transaction, such successor entity) immediately following such transaction.

2. SML expects to distribute options (the "Subscription Options") to its existing holders of Shares for the purpose of permitting existing shareholders to subscribe for new Shares at an exercise price which, in the aggregate, shall equal the principal amount of the CCI. Upon the exercise of any such Subscription Option, SOUS or SML shall set aside the cash proceeds of such exercise in a sinking or other fund for the purposes of redeeming a portion of the CCI at a cash price equal to 100% of the face amount thereof, together with accrued and unpaid interest to the date of redemption, which redemptions shall take place in increments of $10 million of face amount of the CCI each time such fund reaches at least that amount.

Covenants

1. So long as any face amount of the CCI is outstanding, SML and its affiliates will not incur indebtedness, except as follows:

(i) the Financing in a maximum principal amount equal initially to $425 million and thereafter decreasing in accordance with the required amortization schedule of such Financing, if any;

(ii) refinancing of the Financing in an aggregate principal amount not greater than the amount permitted to be outstanding under clause (i) above;

(iii) other indebtedness permitted to be incurred pursuant to the terms of the Financing or any permitted refinancing thereof; and

(iv) the incurrence of any other indebtedness the net proceeds of which are used to pay down all or part (in increments of at least $10 million principal face amount) of the outstanding obligations due under the CCI.

2. SML will not issue shares of capital stock that rank senior in dividend rights or liquidation preference to the Shares or the ADRs unless the net proceeds of such issuance are used to pay down all or part (in increments of at least $10 million principal face amount) of the outstanding obligations under the CCI.

3. Subject to any required shareholder approval, SML shall take all action reasonably necessary, at its sole expense, to properly reserve for issuance the number of Shares (and, if applicable, the corresponding number of ADRs) into which the CCI may be converted at the Maturity Date.

4. SML and SOUS shall not enter into or engage in transactions with affiliates on terms other than arm’ length (conclusively as determined in good faith by the board of directors of SML), other than any such affiliates are at least direct or indirect majority owned-subsidiaries of SML.

5. Except for (x) options to purchase Shares issued to the existing shareholders of SML with respect to which the proceeds from any exercise will be used to retire the CCI on or prior to the Maturity Date and (y) dividends of shares of capital stock of SML for which appropriate adjustment of the Conversion Price is made pursuant to the terms of the CCI, SML will not declare or pay cash dividends in respect of its Shares, declare or pay any other dividends in respect to the Shares or make any distributions of assets or rights to the holders of Shares; provided, however, that the foregoing shall not prevent any declaration payment or distribution that is made or effective only after the prior redemption or conversion in whole of the entire outstanding face amount of the CCI.

Subordination

All cash payments in respect of the CCI will be subordinated on standard terms and conditions to the prior payment in full of all amounts owing in respect to the Financing or the refinancing thereof as permitted by the terms of the CCI, together with all other senior indebtedness of SOUS and SML. Such subordination will not prevent the Sulzer Settlement Trust from exercising any right it might properly have to file appropriate proofs of claims with respect to the CCI in the event of any bankruptcy or other insolvency proceeding of SML or any of its subsidiaries.

Transfer Restrictions

The CCI will not be transferable by the Sulzer Settlement Trust in whole or in part without the prior written consent of SOUS and subject to applicable United States and foreign securities laws.

Transferability of ADRs or Shares

The ADRs or Shares issued upon conversion of the CCI will be issued in the United States pursuant to an exemption from registration under the Securities Act of 1933, as amended, by virtue of Section 3(a)(10) of the Securities Act. SML shall (at its own expense) take all action reasonably necessary to comply with the rules and regulations of the United States Securities and Exchange Commission and interpretations of the staff thereof to exempt the issuance of the CCI, ADRs and/or Shares pursuant to Section 3(a)(10) of the Securities Act. It is the intent of the Parties that the ADRs or Shares received by non-affiliated third parties or Class Members in the United States shall be freely tradable by such persons upon issuance. SML will (at its own expense) also use its commercially reasonable efforts to comply with the applicable securities laws of any foreign jurisdiction on which the Shares are then traded to ensure that any Shares received by non-affiliated third parties or Class Members shall be freely tradable by such persons upon issuance.