Sulzer Implant Settlement

Class Action Settlement Agreement

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Article 9. CONTINUING JURISDICTION

Section 9.1 The Court shall retain exclusive and continuing jurisdiction of the Complaint, the Parties, all Class Members (other than a Class Member who exercises an Opt-Out Right pursuant to Section 3.8), Sulzer, Sulzer AG and the other Released Parties, and over this Settlement Agreement with respect to the performance of the terms and conditions of the Settlement Agreement, to assure that all disbursements are properly made in accordance with the terms of the Settlement Agreement, and to interpret and enforce the terms, conditions and obligations of this Settlement Agreement. Other than provided herein, the Court shall have the power to approve the designation, appointment and removal of auditors, consultants and disbursing agents, the Claims Administrator and it other agents, and the execution of contracts as necessary and appropriate to assure the administration of this Settlement Agreement. Any dispute that arises under this Settlement Agreement shall be submitted to the Court. If any dispute is so submitted, each party concerned shall be entitled to seven (7) days’ written notice (or otherwise as the Court may for good cause direct) and the opportunity to submit evidence and to be heard on oral argument as the Court may direct. To the extent that additional or different procedures for dispute resolution are provided, or standards to be applied in connection therewith are devised, under any other provision of this Settlement Agreement, such other provisions shall control.

Article 10. TERMINATION

Section 10.1 Section 10.1 Sulzer shall have the option to terminate and withdraw from this Settlement Agreement, in its sole discretion, at any time prior 5:00 p.m., Cleveland time, on the fifth (5) Business Day after the termination of the Opt Out Period by giving written notice to the Court, Sulzer AG and Class Counsel. Sulzer shall have the option to terminate and withdraw from this Settlement Agreement, in its sole discretion, at any time prior to 5:00 p.m., EDT, on 31 May 2002, by giving written notice to the Court, Sulzer AG, and Class Counsel.

Section 10.2 In the event that any of the conditions set forth in Section 13.3 have not been satisfied or waived by either Sulzer or Sulzer AG, as applicable (and such conditions are no longer capable of being satisfied), Sulzer and/or Sulzer AG shall have the right to terminate and withdraw from this Settlement Agreement by written notice to the Court, Class Counsel and Sulzer or Sulzer AG, as applicable.

Section 10.3 Class Representatives, on behalf of Class Members, shall have the option to terminate and withdraw from this Settlement Agreement in the event that, prior to the Fairness Hearing Date, Class Counsel is unable to obtain an opinion of counsel or other evidence or advice reasonably satisfactory to Class Counsel that the ADRs or Shares, as applicable, issued upon conversion of the CCI in accordance with the terms thereof are freely tradable by non-affiliates of SML upon such issuance. In the event Class Representatives exercise their right to terminate pursuant to this Section 10.3, they shall provide written notice to the Court, Sulzer, and Sulzer AG.

Section 10.4 In the event that the applicable Party terminates and withdraws from this Settlement Agreement in accordance with Sections 10.1, 10.2 or 10.3 above, no Party shall have any further obligations hereunder.

Section 10.5 In the event that Sulzer exercises its right to terminate this Settlement Agreement in accordance with this Section 10.1, Sulzer may not assert any defense to claims made by Class Members who have neither exercised an Opt-Out Right in accordance with Section 3.8 nor elected the GPO in accordance with Article 8, based on the failure of such Class Member to timely pursue his or her claim against Sulzer, including any statute of limitations or repose defense, the doctrine of laches or any defense based on any release signed by such Class Member and/or the existence of this Settlement Agreement; provided; that such limitation on defenses that Sulzer may not assert is solely with respect to the time period from August 29, 2001 through the date of termination of the Settlement Agreement. Any amounts recovered by a Class Member as a result of legal action that he or she commences upon termination of this Settlement Agreement shall be reduced by the amount of cash benefits that such Class Member has received hereunder (other than benefits in connection with the Section 3.3) prior to the termination of the Settlement Agreement.

Article 11. [RESERVED]

Article 12. [RESERVED]

Article 13. SETTLEMENT IMPLEMENTATION

Section 13.1 GENERAL

(a) In order to become effective, this Settlement Agreement must receive Final Judicial Approval, as well as necessary Sulzer AG board of directors approval and SML board of directors approval prior to the Fairness Hearing Date and SML shareholder approval for the transactions contemplated hereby.

Section 13.2 APPROVAL PROCESS PROVISIONS

(a) No later than seven (7) days following the date of this Settlement Agreement, the Parties shall file a joint motion requesting preliminary approval of the Settlement Agreement and approval of the forms of notice (the “Notice”).

(b) Each of Sulzer and Sulzer AG shall retain its right to contest class certification for any purposes other than the approval of this Settlement Agreement.

(c) The Parties shall cooperate and assist in all of the filings and proceedings relating to the obtaining Trial Court Approval and in any further filings and proceedings necessary to obtain Final Judicial Approval of the Settlement, and in any related appeals.

(d) Upon Final Judicial Approval, the Class Counsel and all Class Members shall cooperate with Sulzer, Sulzer AG and any other Released Party to cause the dismissal, with prejudice and without costs, of any action against Sulzer, Sulzer AG or any Released Party asserting a Settled Claim brought by or on behalf of any Class Member (other than a Class Member who exercises an Opt-Out Right pursuant to Section 3.8) entitled to benefits hereunder, including but not limited to class actions, whether or not certified as such, which are pending in any State or federal court. Upon Trial Court Approval, the Class Counsel and all such Class Members shall cooperate with Sulzer, Sulzer AG and any other Released Party to cause further proceedings in all such settled actions to be stayed pending Final Judicial Approval.

Section 13.3 CONDITIONS

(a) Sulzer’s and Sulzer AG’s obligations under this Settlement Agreement, will be subject to the following conditions:

(i) Trial Court Approval of the Settlement, which approval order or orders shall:

(1) Confirm the certification of the Settlement Class, under Fed. R. Civ. P. 23(a), 23(b)(2) and 23(b)(3) for Settlement purposes only;

(2) Confirm the appointment of the Class Representatives as the representatives of the Settlement Class;

(3) Approve this Settlement Agreement in its entirety pursuant to Fed. R. Civ. P. 23(e) as fair, reasonable, adequate, and non-collusive;

(4) Dismiss with prejudice and without costs all claims and actions asserting Settled Claims against Sulzer or Sulzer AG pending before the Court (other than claims and actions of a Class Member who exercises an Opt-Out Right pursuant to Section 3.8), with the condition that in the event that Final Judicial Approval is not obtained, such claims and/or actions may be reinstated to the status quo position, both procedurally and substantively, of such claim and/or action at the time of its dismissal;

(5) Bar and enjoin all Class Members (other than a Class Member who exercises an Opt-Out Right pursuant to Section 3.8) entitled to benefits hereunder from asserting and/or continuing to prosecute against Sulzer, Sulzer AG or any other Released Party any and all Settled Claims which the Class Member (other than a Class Member who exercises an Opt-Out Right pursuant to Section 3.8) had, has, or may have in the future in any federal or State court;

(6) Reserve the Court’s continuing and exclusive jurisdiction over the Parties, including Sulzer, Sulzer AG and the Class Members (other than a Class Member who exercises an Opt-Out Right pursuant to Section 3.8), to administer, supervise, interpret, and enforce this Settlement Agreement in accordance with its terms and to supervise the operation of the Sulzer Settlement Trust; and

(7) Enter such other orders as are needed to effectuate the terms of the Settlement Agreement;

(ii) Final Judicial Approval of this Settlement Agreement.

Article 14. [RESERVED]

Article 15. MISCELLANEOUS

Section 15.1 Any information provided by or regarding a Class Member or otherwise obtained pursuant to this Settlement Agreement shall be kept confidential and shall not be disclosed except to appropriate persons to the extent necessary to process Claims or provide benefits under this Settlement Agreement or as otherwise expressly provided in this Settlement Agreement (including, but not limited to, information to be released in connection with the “registry”. All Class Members shall be deemed to have consented to the disclosure of this information for these purposes.

Section 15.2This Settlement Agreement shall be binding on the successors and assigns of the Parties.

Section 15.3The Parties to the Settlement, including Sulzer, Sulzer AG, the other Released Parties, or any Class Member, shall not seek to introduce and/or offer the terms of the Settlement Agreement, any statement, transaction or proceeding in connection with the negotiation, execution or implementation of this Settlement Agreement, any statements in the Notice documents delivered in connection with this Settlement Agreement, stipulations, agreements, or admissions made or entered into in connection with the fairness hearing or any finding of fact or conclusion of law made by the Trial Court, or otherwise rely on the terms of this Settlement Agreement, in any judicial proceeding, except insofar as it is necessary to enforce the terms of the Settlement Agreement (or in connection with the determination of any income tax liability of a Party). If a Class Member who is not entitled to benefits hereunder seeks to introduce and/or offer any of the matters described herein in any proceeding, the restrictions of this Section 15.3 shall not be applicable to Sulzer, Sulzer AG and the other Released Parties with respect to that Class Member. If a Class Member who has timely and properly exercised an Opt-Out Right seeks to introduce and/or offer any of the matters described herein in any proceeding, the restrictions of this Section 15.3 shall not be applicable to Sulzer, Sulzer AG and the other Released Parties with respect to that Class Member.

Section 15.4 Neither this Settlement Agreement nor any Annex, Exhibit, document or instrument delivered hereunder nor any of the statements in the notice documents in connection herewith, nor any statement, transaction or proceeding in connection with the negotiation, execution or implementation of this Settlement Agreement, is intended to be or shall be construed as or deemed to be evidence of an admission or concession by Sulzer, Sulzer AG or the Released Parties of any liability or wrongdoing or of the truth of any allegations asserted by any plaintiff against it or them, or as an admission by the Class Representatives or members of the Settlement Class of any lack of merit in their claims, and no such statement, transaction or proceeding shall be admissible in evidence for any such purpose except for purposes of obtaining approval of this Settlement Agreement in this or any other proceeding.

Section 15.5 The headings of the sections and paragraphs of this Settlement Agreement are included for convenience only and shall not be deemed to constitute part of this Settlement Agreement or to affect its construction.

Section 15.6 Class Counsel, together with the Special State Counsel Committee shall make a determination, subject to the approval of the Court, with respect to the disposition of any amounts remaining in any particular Fund upon the satisfaction in full of all obligations to pay Class Members and Plaintiffs’ Counsel pursuant to this Settlement Agreement, which may include a pro rata distribution to Class Members or in the event the amount is negligible, a donation to a neutral medical research institute or university or to charity; provided, however, that the Claims Administrator shall first use any amounts remaining in any particular Fund after satisfaction of all obligations to Class Members to either pay for or create a reserve for payment of all administrative expenses that have been or will be incurred in connection with the winding-up of the administration of the Sulzer Settlement Trust.

Section 15.7 Any notice, request, instruction or other document to be given by any Party to another Party shall be in writing and delivered personally or sent by Federal Express or facsimile (which such facsimile notice shall be deemed effective as of the time of receipt of confirmation by the sending party) as follows, or as otherwise instructed by a notice delivered to the other Party pursuant to this subsection:

If to Sulzer:

Sulzer Medica USA Inc.
3 East Greenway Plaza, Suite 1600
Houston TX 77046-0391
Attention: David S. Wise, Esq.
Facsimile: (713) 561-6300

with copies to:

The Scruggs Law Firm, P.A.
Post Office Drawer 1425
Pascagoula, MS 39568-1425
Attention: Richard F. Scruggs, Esq.
Sidney A. Backstrom, Esq.
Facsimile: (228) 762-1207

and

Shook, Hardy & Bacon, LLP
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118

Attention: Harvey L. Kaplan, Esq.
Bradley D. Honnold, Esq.
Facsimile: (816) 421-5547

and

Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, TX 75201
Attention: Martin A. Sosland, Esq.
W. Stuart Ogg, Esq.
Facsimile: (214) 746-7777

and

Bär & Karrer
Seefeldstr. 19, CH - 8024
Zürich, Switzerland
Attention: Andreas Länzlinger
Facsimile: +41 (0) 58 261 5001

(ii) If to Sulzer AG:

Sulzer AG
Zurcherstrasse 14, CH-8401
Winterthur, Switzerland
Attention: Alfred Gerber, Esq.
Facsimile: 011-41-52-262-0022

with copies to:

Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-6069
Attention: Werner L. Polak, Esq.
Facsimile: (212) 848-7179

(iii) If to the Class Representatives or Class Counsel:

Weisman, Goldberg & Weisman Co., L.P.A.
1600 Midland Building
Landmark Office Towers
Cleveland, Ohio 44115
Attention: R. Eric Kennedy, Esq.
Facsimile: (216) 781-6747

Section 15.8 Any form or other documentation required to be submitted under this Settlement Agreement shall be deemed timely if received on or before the date by which it is required to be submitted under this Settlement Agreement.

Section 15.9 No provision of this Settlement Agreement or any Exhibit or Annex hereto is intended to create any third-party beneficiary to this Settlement Agreement.

Section 15.10 This Settlement Agreement and that certain Settlement Agreement, dated as of February 22, 2002, between SML and Sulzer AG, contains the entire agreement between the Parties with respect to the subject matter hereof and, except as specifically set forth herein or therein, supersedes and cancels all previous agreements, negotiations, and commitments in writings between the Parties hereto with respect to the subject matter hereof, including without limitation that certain term sheet dated as of August 2, 2001, the Settlement Agreement dated as of August 15, 2001, as amended August 23, 2001, as further amended September 12, 2001 and as further amended October 12, 2001, and the Memorandum of Understanding dated as of February 1, 2002. This Settlement Agreement may not be changed or modified in any manner unless in writing and signed by a duly authorized officer of each of Sulzer and Sulzer AG and by a duly authorized representative of the Class Representatives.

Section 15.11 This Settlement Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of laws principles thereunder.

Section 15.12 The Parties acknowledge and agree that in the event that SML, SOUS and any other subsidiary of SML shall file for bankruptcy protection under any applicable bankruptcy or insolvency laws, or a petition for an involuntary bankruptcy or insolvency proceeding is initiated against any such party prior to the termination of this Settlement Agreement, any plan of reorganization or liquidating plan shall incorporate substantially the terms of this Settlement Agreement.

Section 15.13 In the event that the Court approves a certification of the Settlement Class other than that contemplated by this Settlement Agreement, the parties hereby agree that they shall amend this Settlement Agreement to reflect such certification.

Section 15.14 Sulzer AG agrees that it will not, nor will it permit any of its subsidiaries, officers, directors, agents or affiliates to, submit for payment, or charge costs against, or make any claim for reimbursement from, the Initial Insurance Policies or the Second Year Insurance Policies in respect of claims of Knee Beneficiaries.

Section 15.15 The Parties acknowledge that all amounts reflected in this Settlement Agreement that are payable to Class Members pursuant to Sections 3.3, 3.4, 3.5 and 3.7 are estimates and are subject to modification based on the actual number of Class Members submitting a claim for benefits payable in respect of an Affected Product Revision Surgery. In the event that is it necessary to make changes or modifications to the Settlement Agreement for any reason, the Parties agree that Class Counsel together with the Special State Counsel Committee, has the authority to negotiate all such changes or modifications on behalf of the Settlement Class.

Section 15.16 This Settlement Agreement may be signed in multiple counterparts, each of which shall be deemed to be an original and all of which shall be deemed to be one and the same instrument.

Section 15.17 Sulzer, prior to Trial Court Approval and with the mutual consent of the other Parties and the Court, may separate the Settlement Class and this Settlement Agreement into two separate Settlement Classes and Settlement Agreements, one including Subclasses I and III, and the other including to Subclasses II, IV and V.

Article 16. BLOCK TRADE AGREEMENT

Section 16.1 “Block Trade Agreement,” as used herein, shall mean that certain Block Trade Agreement, dated on or about the date of this Amendment, by and among UBS AG and Sulzer AG, regarding the purchase by UBS AG’s affiliate UBS Warburg of the Settlement Shares currently held in escrow pursuant to the Escrow Agreement.

Section 16.2 Notwithstanding anything in this Settlement Agreement to the contrary, in the event that the closing contemplated by the Block Trade Agreement occurs, in lieu of and satisfaction of any obligations it may have to deliver or cause delivery of the Settlement Shares to the Settlement Trust, Sulzer AG shall cause the Purchase Price (as defined in the Block Trade Agreement) to be deposited witht the Escrow Agent (as defined in the Escrow Agreement) against release of the Settlement Shares pursuant to the Escrow Amendment and the Escrow Agent may release such Settlement Shares pursuant to the Escrow Amendment against deposit of the Purchase Price. Such Purchase Price together with the monies held under the Escrow Agreement by the Escrow Agent will, unless the Settlement Agreement is earlier terminated, be released to the Sulzer Settlement Trust in accordance with the terms of the Escrow Agreement.

Section 16.3 The provisions of Section 2.3(c) of this Settlement Agreement shall not apply to the transactions contemplated by the Block Trade Agreement."

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IN WITNESS WHEREOF, the Parties have duly executed this amended and restated Class Action Settlement Agreement among SOUS, SML, Sulzer AG and the Class Representatives, by their respective counsel as set forth below, as of the ______ day of March, 2002.

SULZER ORTHOPEDICS INC.

By: 

SULZER MEDICA AG

By: 

By: 

SULZER AG

By: 

By: 

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