EXHIBIT 2
SUBSCRIPTION AND UNDERWRITING AGREEMENT
dated as of
September 27, 2002
by and between
CENTERPULSE LTD.,
Xxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
(hereinafter the "COMPANY")
and
UBS AG,
acting through its business group UBS Warburg
Xxxxxxxxxxxxx 0
0000 Xxxxxxx, Xxxxxxxxxxx
(hereinafter the "GLOBAL COORDINATOR")
and
INCENTIVE CAPITAL AG
Xxxxxxxxxxxxx 0
0000 Xxx, Xxxxxxxxxxx
(hereinafter "INCENTIVE")
(InCentive and the Global Coordinator together referred to as the
"UNDERWRITERS")
1
--------------------------------------------------------------------------------
WHEREAS, the Company proposes to conduct a capital increase with a rights
offering to its existing shareholders (Kapitalerhohung mit Bezugsangebot an die
bisherigen Aktionare) (the "OFFERING") pursuant to which the holders (the
"EXISTING SHAREHOLDERS") of existing shares of the Company (the "OLD SHARES"),
subject to applicable securities laws, have the right to subscribe pro rata (the
"PREEMPTIVE RIGHTS") for 1'822'408 newly issued shares with a nominal value of
CHF 30 each (the "OFFERED SHARES" and, together with the Old Shares, the
"SHARES") to be offered by the Company.
WHEREAS, InCentive is a major shareholder of the Company, holding as of
September 24, 2002, through its wholly-owned subsidiary InCentive Investment
(Jersey) Ltd. (the "JERSEY SUBSIDIARY") 1'173'934 shares in the Company
(corresponding to 11.73 % of the Company's registered issued share capital),
call options covering 478,000 shares (corresponding to 4.78% of the Company's
registered issued share capital), and having granted through the Jersey
Subsidiary put options covering 111,000 shares (corresponding to 1.11% of the
Company's registered issued share capital).
WHEREAS, InCentive is prepared (i) to subscribe for such number of Offered
Shares as correspond to its Preemptive Rights with respect to the shares held at
the close of business on the day before the ex-Preemptive Rights Date (as
defined below) (the "INCENTIVE SHARES") in accordance with the terms of the
Offering and (ii) to subscribe for and underwrite that portion of Offered Shares
for which Preemptive Rights are not exercised by existing shareholders or new
investors having acquired the respective Preemptive Rights (the "REMAINING
OFFERED SHARES") up to such number of Remaining Offered Shares as correspond,
together with such number of Offered Shares for which Preemptive Rights have
been exercised by InCentive, to 1'428'571 Offered Shares being approximately 78%
of the aggregate number of Offered Shares and to a maximum aggregate
underwriting commitment of CHF 200 million, respectively.
WHEREAS, the Global Coordinator is prepared (i) to subscribe for and underwrite
that portion of Offered Shares for which Preemptive Rights have been exercised
by existing shareholders (except for InCentive and its subsidiaries) and new
investors having acquired Preemptive Rights, with an undertaking to allocate
such Offered Shares to the existing shareholders (except for InCentive and its
subsidiaries) and new investors having acquired Preemptive Rights, subject to
compliance with applicable securities laws and (ii) if any Remaining Offered
Shares have not been subscribed for following InCentive's subscription for such
shares, to subscribe for and underwrite such Remaining Offered Shares up to an
amount corresponding to 393'837 Offered Shares being approximately 22% of the
aggregate number of the Offered Shares.
WHEREAS, Offered Shares sold in the United States shall be sold only in the form
of restricted American depositary shares (the "RESTRICTED ADSS"), with each such
Offered Share represented by ten Restricted ADSs. Except as the context may
otherwise require, references herein to the "Offered Shares" shall include the
Offered Shares and Restricted ADSs.
WHEREAS, the Restricted ADSs are to be issued pursuant to a restricted deposit
agreement (the "RESTRICTED DEPOSIT AGREEMENT"), dated on or before the
2
Settlement Date, among the Company, Citibank N.A., as depositary (the
"DEPOSITARY"), and the holders from time to time of the restricted American
depositary receipts (the "RESTRICTED ADRS") issued by the Depositary and
evidencing the Restricted ADSs.
WHEREAS, all sales in the United States by UBS AG, acting through its business
group UBS Warburg, will be made through its U.S. broker-dealer affiliates (the
"SELLING AGENTS"), which shall be registered as broker-dealers under the
Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT").
WHEREAS, application has been made to list the Offered Shares on the main board
of the SWX Swiss Exchange ("SWX") and to admit the Preemptive Rights to trading
at the SWX.
WHEREAS, the Global Coordinator and the Company have entered into a mandate
agreement dated September 13, 2002 (the "MANDATE AGREEMENT").
WHEREAS, the Global Coordinator and InCentive have entered into an agreement
dated September 13, 2002 (the "INCENTIVE AGREEMENT") regarding certain
undertakings of InCentive with respect to the Offering.
WHEREAS, the Global Coordinator will act as lead underwriter and will represent
InCentive before the Company and third parties.
WHEREAS, the Company has prepared an offering and listing circular to be dated
September 29, 2002 (the "OFFERING CIRCULAR") relating to the Offering and the
listing of the Offered Shares on the SWX.
NOW, THEREFORE, the parties agree as follows:
1. Capital Increase, Subscription and Underwriting of Offered Shares
1.1 Resolutions on Authorizing the Capital Increase. The Company confirms
that (i) the ordinary shareholders' meeting held on May 17, 2002
authorized the board of directors to issue up to 4,000,000 fully paid
in registered shares (the "AUTHORIZED CAPITAL") and (ii) the board of
directors on September 27, 2002 approved an increase in the share
capital of the Company under such Authorized Capital from CHF
300'247'110 by CHF 54'672'240 to CHF 354'919'350 (the "CAPITAL
INCREASE") by issuing 1'822'408 Offered Shares with a nominal value
of CHF 30 (Ermachtigungsbeschluss). The board of directors will
implement the Capital Increase pursuant to Section 1.4.
1.2 Subscription of Offered Shares. The Company agrees to issue, and each
of the Global Coordinator and InCentive, severally and not jointly,
undertakes with the Company, on the basis of the representations and
warranties contained herein, subject to the conditions stated herein
and in view of the board of directors of the Company having to
resolve on the implementation of the Capital Increase (the "CAPITAL
INCREASE RESOLUTION") (Feststellungsbeschluss), to subscribe, on or
by October 9, 2002 (the "CAPITAL INCREASE DATE"), for up to such
number of Offered Shares at their nominal value and in the
proportions set forth below opposite its name, with the exact number
3
of Offered Shares to be subscribed for by each of the Global
Coordinator and InCentive to be determined by the Global Coordinator
on behalf of the Underwriters no later 13:00 (Swiss time) on the Last
Exercise Date (as defined below), with the Global Coordinator to
subscribe for Offered Shares for which Preemptive Rights will have
been exercised by Existing Shareholders (except for InCentive and its
subsidiaries) and new investors having acquired Preemptive Rights in
order to allocate such Offered Shares to the holders of Preemptive
Rights who have exercised their Preemptive Rights and for only those
Remaining Offered Shares that have not been subscribed for following
InCentive's subscription for Remaining Offered Shares, and to deliver
the corresponding subscription forms substantially in the form of
Schedule 1.2 to the notary public notarizing the Capital Increase
Resolution no later than 13:00 (Swiss time) on the Capital Increase
Date. It is understood and agreed that InCentive's obligation to
subscribe for Remaining Offered Shares shall be first in priority,
i.e., the Global Coordinator shall be obliged to subscribe for any
Remaining Offered Shares only if and to the extent that the Remaining
Offered Shares exceed the total number of Offered Shares underwritten
by InCentive and provided that InCentive shall have fulfilled its
underwriting obligations. In fulfilling its underwriting obligations
pursuant to this Agreement, InCentive may act through the Jersey
Subsidiary.
--------------------------------------------------------------------------------------------------------
UNDERWRITERS NUMBER OF OFFERED SHARES UNDERWRITTEN APPROXIMATELY PERCENTAGE OF OFFERED
SHARES UNDERWRITTEN
--------------------------------------------------------------------------------------------------------
Global Coordinator 393'837 22%
--------------------------------------------------------------------------------------------------------
InCentive 1'428'571 78%
--------------------------------------------------------------------------------------------------------
Total 1'822'408 100%
--------------------------------------------------------------------------------------------------------
1.3 Transfer of the Nominal Amount.
(a) The Global Coordinator on behalf of the Underwriters undertakes
with the Company subject to the terms and conditions set forth
herein:
(i) to deposit or cause to be deposited same day funds for
value on the Capital Increase Date (as defined below), in
the total amount of CHF 54'672'240 (the "TOTAL NOMINAL
AMOUNT") with Xxxxxxx Xxxxxxxxxxxx, Xxxxxxxx, XX-0000
Xxxxxx ("ZKB") in a blocked account for the Capital
Increase (Kapitaleinzahlungskonto) in favor of the Company;
and
(ii) to cause ZKB to issue and deliver a written
confirmation of payment of the Total Nominal Amount to the
notary public notarizing the Capital Increase Resolution no
later than 13:00 (Swiss time) on the Capital Increase Date.
4
(b) InCentive shall pay on the Settlement Date to the Global
Coordinator the nominal value of each Offered Share subscribed for by
InCentive. The Global Coordinator shall have the right to debit
InCentive's account no. 230-P0448910.0 with UBS AG.
1.4 Capital Increase Resolution. On the Capital Increase Date, the
Company's board of directors shall immediately upon receipt of the
subscription forms:
(a) pass the Capital Increase Resolution (Feststellungsbeschluss) and
make all amendments to the Company's articles of association
necessary in connection with the implementation of the Capital
Increase; and
(b) file the Capital Increase Resolution along with the relevant
attachments thereto with the Commercial Register of the Canton of
Zurich (the "COMMERCIAL REGISTER") immediately after this meeting of
the board of directors.
1.5 Use of Total Nominal Amount. The Total Nominal Amount deposited on
the blocked account for the Capital Increase
(Kapitaleinzahlungskonto) shall, immediately following registration
of the Capital Increase by the Commercial Register, be transferred to
an interest-free account of the Company with UBS AG as follows:
----------------------------------------------------
At UBS AG, Zurich,
bank clearing no. 230
for the account no. 403,736,30D of the Company
----------------------------------------------------
The Company agrees that the Total Nominal Amount will remain
deposited and blocked with UBS AG until the earlier of (i) the
Settlement Date (as defined below), on which date such amount shall
be released in accordance with Section 4.3, or (ii) if an Event of
Non-Completion (as defined below) occurs, the date of receipt by the
Underwriters of the proceeds of (a) the Capital Reduction pursuant to
Section 14.1(a) or (b) the options pursuant to Sections 14.1(b) and
14.1(c) (each the "NOMINAL AMOUNT PAYMENT DATE").
On the Nominal Amount Payment Date, the Total Nominal Amount
deposited with UBS AG, Zurich, for the account of the Company shall
be released in same day funds in such account as the Company may
designate to UBS AG no later than two business days prior to the
Nominal Amount Payment Date.
1.6 Documentation and Issue of Offered Shares. Promptly after the
registration of the Capital Increase by the Commercial Register, but
no later than on the first trading date, 08.00 (Swiss time), the
Company shall:
(a) deliver to each of InCentive, the Global Coordinator, the
SWX, SIS SegaInterSettle AG, the Swiss securities clearing
corporation ("SIS") and ShareCommServices AG, the
Company's share register ("SHARECOMM"), a copy of a
certified excerpt from the Commercial Register along with
a copy of the Company's amended articles of association
evidencing the registration of the Capital Increase; and
5
(b) take all steps necessary to ensure that the Offered Shares
will be (i) issued and delivered immediately following the
registration of the Capital Increase to the Global
Coordinator (ii) duly recorded with SIS and (iii) freely
transferable. Accordingly, the Company shall give the
necessary instructions to SIS and ShareComm. The Global
Coordinator shall take reasonable and customary steps to
assist in the foregoing.
2. The Offering
2.1 Terms of the Offering. Holders of Preemptive Rights, except holders
of Preemptive Rights located in the United States (or in any other
jurisdiction where the exercise of the Preemptive Rights by such
holders would be prohibited by applicable law or regulation), will be
entitled to purchase two (2) Offered Shares at CHF 140 each (the
"OFFER PRICE") for every 11 Preemptive Rights held. Preemptive Rights
will be traded on the SWX. The Shares will be first traded
ex-Preemptive Rights on October 3, 2002 (the "EX-PREEMPTIVE RIGHTS
DATE"). The trading period for the Preemptive Rights will commence on
October 3, 2002 and end on October 8, 2002, at 17:00 (Swiss time).
The exercise period (the "EXERCISE PERIOD") for the Preemptive Rights
will commence on October 3, 2002, and end on October 9, 2002 at 12:00
noon (Swiss time) (the "LAST EXERCISE DATE"). To the extent
Preemptive Rights are not exercised prior to or on the Last Exercise
Date, the Preemptive Rights will lapse without compensation.
The record date for the determination of Shareholders entitled to
Preemptive Rights is October 1, 2002.
2.2 Delivery and Settlement. Delivery to and payment of the Offered
Shares by the holders having exercised Preemptive Rights shall occur
on October 15, 2002.
2.3 Expired Preemptive Right Claims. The Company shall assume full
liability and shall indemnify and hold harmless the Underwriters with
respect to any claims made by the owners of expired Preemptive
Rights.
3. Listing
3.1 The Company confirms that it has authorized the Global Coordinator's
filing of the application for the Offered Shares to be listed on the
SWX and application for the Preemptive Rights to be admitted to
trading at the SWX. On the Capital Increase Date the Company shall
have delivered to the SWX and the Global Coordinator a letter in the
form of Schedule 3.1.
3.2 The Company will deliver to the Global Coordinator two copies of the
Offering Circular duly signed by the Company and to the SWX copies of
the Offering Circular as required by the Listing Rules of the SWX
(the "SWX LISTING RULES") and will take such other steps as may be
required for the purpose of obtaining a listing.
6
4. Settlement
4.1 Settlement Date. The time and date of payment of the Offer Price net
commission and expenses (the "SETTLEMENT") shall be on October 15,
2002 (the "SETTLEMENT DATE"). Any documents to be delivered at the
Settlement Date by or on behalf of the parties pursuant to Section 12
will be delivered at the offices of Cleary, Gottlieb, Xxxxx &
Xxxxxxxx, City Place House, 00 Xxxxxxxxxx Xx., Xxxxxx, Xxxxxxx, XX0X
0XX.
4.2 Settlement Actions. At the Settlement the following actions shall be
taken:
(a) The Global Coordinator shall pay to the Company the
aggregate Offer Price payable for each Offered Share
subscribed for by the Global Coordinator less the nominal
amount for each Offered Shares subscribed for by the
Global Coordinator, less any commissions, fees and
expenses payable to the Global Coordinator or InCentive
pursuant to Section 10, less any VAT, turnover or other
taxes and stock exchange levies, by crediting same-day
funds in CHF to the Company's account with UBS AG, Zurich,
clearing no. 230, account no. 40373630D.
(b) InCentive shall pay to the Company the aggregate Offer
Price payable for each Offered Share subscribed for by
InCentive less the nominal amount for each Offered Share
subscribed for by InCentive, less any VAT, turnover or
other taxes and stock exchange levies, by crediting
same-day funds in CHF to the Company's account with UBS
AG, Zurich, clearing no. 230, account no. 40373630D.
(c) InCentive shall pay to the Global Coordinator the nominal
value of each Offered Share subscribed for by InCentive in
accordance with Section 1.3(b).
(d) The number of Offered Shares to be subscribed for by each
of InCentive and the Global Coordinator hereunder shall be
delivered by or on behalf of the Company to the Global
Coordinator through the facilities of SIS.
(e) Subject to (i) delivery of all of the Offered Shares to
the Global Coordinator by the Company in accordance with
Section 4.2(d) above and (ii) payment of the nominal value
of each Offered Share subscribed for by InCentive to the
Global Coordinator by InCentive in accordance with Section
1.3(b), the Global Coordinator shall deliver such number
of Offered Shares subscribed for by InCentive into
InCentive's share deposit no. 230-P0448910.1 (at UBS AG,
Zurich, bank clearing no. 230).
4.3 Unblocking of Company's Account with UBS AG. Upon payment of the
amount and delivery of the Offered Shares referred to in Section
4.2(c) above, the Global Coordinator will unblock the account of the
Company with UBS referred to in Section 1.5 and will transfer the
amounts in such account in accordance with Section 1.5 hereof.
7
5. Representations and Warranties of the Company
The Company represents and warrants to, and agrees with, each of the
Global Coordinator and InCentive as of the date hereof, the Capital
Increase Date and the Settlement Date that:
(a) Disclosure. The Offering Circular has been prepared in connection
with the Offering. The Offering Circular contains all material
information with respect to the Company and its subsidiaries (the
"GROUP") and the Offered Shares (including all information which,
according to the particular nature of the Company and of the Offered
Shares, is in the Company's view necessary to enable investors to
make an informed assessment of the assets and liabilities, financial
position, profits and losses and prospects of the Company, the Group
and of the rights attaching to the Offered Shares); and the Offering
Circular is and any amendments or supplements thereto will be, as of
their respective dates, true and accurate in all material respects,
and do not and will not, as of their respective dates, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading; and the Offering Circular contains all material
information concerning any actual transactions or agreements or, to
the best of the Company's knowledge, potential transactions or
agreements, involving the Company and/or the Group and any director,
shareholder or affiliate of the Company; provided, however, that with
respect to the Global Coordinator and InCentive the representations
and warranties made in this paragraph shall not apply to any
statements or omissions in the Offering Circular relating to the
Global Coordinator or InCentive in its capacity as an underwriter
made in reliance upon and in conformity with information furnished to
the Company by or on behalf of the Global Coordinator (which
information is set forth in (Schedule 5(a).1); and provided, further,
however, that with respect to InCentive the representations and
warranties made in this paragraph shall not apply to any statements
or omissions in the Offering Circular relating to made in reliance
upon and in conformity with information furnished to the Company by
or on behalf of InCentive (which information is set forth in Schedule
5(a).2);
(b) Takeovers. Although the Company is not presently negotiating any
transaction with any third party proposing to launch an offer for all
or a substantial part of its Shares and no substantiated bids have
been addressed to the Company in recent weeks, there have been
approaches in the year 2002 by third parties which the Board of
Directors considered insufficient and not in the best interest of
shareholders at the time.
(c) Requirements of the SWX. The Offering Circular contains all
particulars and information required by, and complies with,
applicable legal requirements and rules and regulations of the SWX
and otherwise complies with the requirements of Swiss law, in
particular, according to Article 652a of the Swiss Code of
Obligations and all other regulations to the extent applicable to the
issue of the Offered Shares;
8
(d) Corporate Existence of the Company. The Company has been duly
incorporated and is validly existing as a corporation under the laws
of Switzerland, has no pending bankruptcy, composition or similar
proceedings pending against it in its jurisdiction of incorporation,
is not in liquidation or receivership. The Company has full power and
authority to own or lease and operate its properties and conduct its
business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business that requires such qualification,
or except where such fault would not have a material adverse effect
on the financial condition, business, properties, results of
operations or business prospects of the Company and its subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT");
(e) Corporate Existence of Subsidiaries. Each of the Company's
subsidiaries has been duly incorporated and is validly existing as a
corporation under the laws of its respective jurisdiction of
incorporation, has no pending bankruptcy, composition or similar
proceedings pending against it in its jurisdiction of incorporation,
is not in liquidation or receivership and has full power and
authority to own or lease and operate its properties and conduct its
business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business that requires such qualification,
or is subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; except where
such fault would not have a Material Adverse Effect;
(f) Agreement. The Company has full right, power and authority to
enter into this Agreement; this Agreement has been duly authorized,
executed and delivered by the Company and constitutes valid and
legally binding obligations of the Company and is enforceable in
accordance with its terms, subject to the effect of bankruptcy,
insolvency and other similar laws relating to or affecting creditors'
rights generally and to general equity principles, and subject to
mandatory provisions of Swiss corporate law (Articles 659, 678 and
680 of the Swiss Code of Obligations);
(g) Share Capital. As at the date indicated in the Offering Circular,
the Company has the outstanding, authorized and conditional share
capital described therein, and all of the issued share capital of the
Company has been duly and validly authorized and issued in accordance
with Swiss law and the Company's Articles of Incorporation, and is
fully paid and non-assessable and conforms to the description of the
share capital of the Company contained in the Offering Circular; and
all of the issued share capital of each subsidiary of the Company has
been duly and validly authorized and issued, is fully paid and
non-assessable and, except for directors' qualifying shares, if any,
and except as set forth in the Offering Circular or as provided for
by the terms of the commitment from UBS AG to lend the Company USD
635 million in the form of a credit facility (or as provided for by
the agreement for such facility) (the "CREDIT FACILITY", is owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims except where such fault would not
have a Material Adverse Effect; all of the shares of the Company,
including the Offered Shares, have been or will be at the date
indicated in the Offering Circular duly listed and admitted for
9
trading on the SWX; there are no outstanding securities convertible
into or exchangeable for, or warrants, rights or options to purchase
from the Company, or obligations of the Company to issue any shares
or any other class of share capital of the Company (except as set
forth in the Offering Circular);
(h) The Offered Shares. The issuance of the Offered Shares will have
been duly and validly authorized on or prior to the date indicated in
the Offering Circular, and, when delivered and paid for in the manner
contemplated by this Agreement and the terms of the Preemptive Rights
will have been duly and validly issued and fully paid and
non-assessable and will conform to the description of the Offered
Shares contained in the Offering Circular; there are no restrictions
on transfers of the Offered Shares pursuant to Swiss law or the
Company's articles of association (Statuten) of the Company or
otherwise, other than such as described in the Offering Circular; the
shareholders of the Company have no further subscription, preemptive
or other rights to acquire the Offer Shares other than those
described in the Offering Circular; the shareholders meeting of May
17, 2002 has validly acted to authorize the Board of Directors of the
Company to issue the Offered Shares and the respective resolution has
not been challenged by a dissenting shareholder in court;
(i) Consents. All consents, approvals, authorizations, orders,
registrations, clearances or qualifications of or with any court or
governmental agency or body or any stock exchange authorities (the
"GOVERNMENTAL AGENCY") having jurisdiction over the Company or any of
its subsidiaries or any of their properties (the "GOVERNMENTAL
AUTHORIZATIONS") required, for the execution and delivery by the
Company of this Agreement, for the issue or offering of the Offered
Shares or the consummation of the other transactions contemplated by
this Agreement to be duly and validly authorized have been obtained
or made and are in full force and effect;
(j) Dividends. All dividends and other distributions declared and
payable on the share capital of the Company may under the current
laws and regulations of Switzerland be paid to the shareholders of
the Company in Swiss francs that may be converted into foreign
currency that may be freely transferred out of Switzerland, and
except as set forth in the Offering Circular under "Taxation", all
such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of
Switzerland and are otherwise free and clear of any tax, withholding
or deduction in Switzerland and without the necessity of obtaining
any Governmental Authorization in Switzerland;
(k) No Conflicts--Company. The execution and delivery of this
Agreement, the issue and sale of the Offered Shares and the use of
the proceeds of the sale of the Offered Shares as described in the
Offering Circular, the consummation of the transactions herein and
therein contemplated do not, or will not on or prior to the Capital
Increase Date or on the Settlement Date, subject to mandatory
provisions of Swiss corporate law (Articles 659, 678 and 680 of the
Swiss Code of Obligations), conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, the documents constituting the Company. The execution
and delivery of this Agreement, the issue and sale of the Offered
10
Shares and the use of the proceeds of the sale of the Offered Shares
as described in the Offering Circular, the consummation of the
transactions herein and therein contemplated do not, or will not on
or prior to the Capital Increase Date or on the Settlement Date
subject to mandatory provisions of Swiss corporate law (Articles 659,
678 and 680 of the Swiss Code of Obligations), (i) conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under any indenture, mortgage, deed of trust,
lease, loan agreement or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any
of the property or assets of the Company is subject or Swiss law or
any statute or any order, rule or regulation of any Governmental
Agency having jurisdiction over the Company, or (ii) infringe any
existing applicable law, rule, regulation, judgment, order or decree
of any government, governmental body or court, domestic or foreign,
having jurisdiction over the Company or any of its properties or
assets or (iii) infringe the rules of any stock exchange on which
securities of the Company are listed, except where such conflict,
breach, violation, default or infringement would not have a Material
Adverse Effect;
(l) No Conflicts--Subsidiaries. The execution and delivery of this
Agreement, the issue and sale of the Offered Shares and the use of
the proceeds of the sale of the Offered Shares as described in the
Offering Circular, the consummation of the transactions herein and
therein contemplated do not, or will not on or prior to the Capital
Increase Date or on the Settlement Date, conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, (i) the documents constituting the
Company's subsidiaries, or (ii) any indenture, mortgage, deed of
trust, lease, loan agreement or other agreement or instrument to
which any of the Company's subsidiaries is a party or by which any of
the Company's subsidiaries is bound or to which any of the property
or assets of the Company's subsidiaries is subject, except where such
breach, violation or default would not have a Material Adverse
Effect, nor will such action result in any violation of the
provisions of the Articles of Incorporation of any of the Company's
subsidiaries, Swiss law or any statute or any order, rule or
regulation of any Governmental Agency having jurisdiction over any of
the Company's subsidiaries, or infringe any existing applicable law,
rule, regulation, judgment, order or decree of any government,
governmental body or court, domestic or foreign, having jurisdiction
over any of the properties or assets of any of the Company's
subsidiaries or infringe the rules of any stock exchange on which
securities of any of the Company or its subsidiaries are listed,
except any such conflict, breach or default that would not have a
Material Adverse Effect;
(m) General Compliance. Neither the Company nor any of its
subsidiaries is in violation of its Articles of Association or other
constituent documents; neither the Company nor any of its
subsidiaries is in violation, conflict or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except
any such conflict, breach of default that would not have a Material
Adverse Effect;
11
(n) No Manipulation. Neither the Company nor any of its subsidiaries
has taken, directly or indirectly, any action which was designed to
or which has constituted or which would reasonably be expected to
cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Offered Shares other than in compliance with applicable law,
including Regulation M under the Exchange Act;
(o) Financial Statements. The consolidated balance sheets, cash flow
statements, shareholders' equity statement and income statements of
the Company (including the notes thereto) included in the Offering
Circular have been prepared in accordance with International
Accounting Standards ("IAS"), with the applicable provisions of the
Swiss Code of Obligations and reconciled with generally accepted
accounting principles consistently applied in the United States
("U.S. GAAP") and (i) present fairly the financial position of the
Company and its subsidiaries, as at the end of each of the relevant
financial periods, and the results of operations and changes in
financial position and cashflows of the Company and its subsidiaries
for each such period; (ii) have been prepared after due and careful
inquiry by the Company and, where applicable, its subsidiaries, and
on a consistent basis with IAS and, where applicable, in the manner
applicable under U.S. GAAP, (ii) comply as to form in all material
respects with the applicable requirements of IAS and, where
applicable, in the manner applicable under U.S. GAAP and (iii) make
proper provision, in accordance with IAS and, where applicable, in
the manner applicable under U.S. GAAP, for all liabilities, whether
deferred or contingent. Since December 31, 2001, other than as
disclosed in the Offering Circular, there has been no change (nor any
development or event involving a prospective change of which the
Company is, or might reasonably be expected to be, aware) which is or
would reasonably be expected to be materially adverse to the
condition (financial or other), prospects, results of operations or
general affairs of the Company or the Group, as the case may be;
(p) Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization, and (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with IAS and to maintain accountability for
assets;
(q) Ordinary Course of Business. Neither the Company nor any of its
subsidiaries has sustained, since the date of the latest audited
financial statements included in the Offering Circular, any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular; and,
since the respective dates as of which information is given in the
Offering Circular, there has not been any change in the share capital
(other than pursuant to the grant or exercise of preemptive rights
described in the Offering Circular) of the Company or any of its
subsidiaries, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity
or prospects or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
12
contemplated in the Offering Circular; the Company and its
subsidiaries are not in breach of the terms of, or in default under,
any instrument, agreement or order to which it is a party or by which
it or its property is bound, except where such loss, interferance,
change or breach would not have a Material Adverse Effect;
(r) Properties. The Company and its subsidiaries have good and legal
title to all real property and good and legal title to all such other
personal property and assets owned by them, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Offering Circular or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries;
(s) Legal Proceedings. Other than as set forth in the Offering
Circular, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which, if reasonably expected to be determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect, taken as a whole, and, to
the best of the Company's knowledge, no such proceedings are
threatened or contemplated by any Governmental Agency or threatened
by others; and the Company and its subsidiaries have no continuing
liabilities with respect to the proceedings described under "Business
- Litigation" in the Offering Circular that have not been provisioned
for; and neither it nor its subsidiaries is involved in or the
subject of any current or pending investigation or proceedings
(whether administrative, regulatory or otherwise) whether in
Switzerland or elsewhere, except where such investigation or
proceedings would not have a Material Adverse Effect;
(t) Insurance Matters. All material assets and material undertakings
of the Company and each of its subsidiaries of an insurable nature,
including product liability, are and have at all material times been
adequately insured and the Company and each of its subsidiaries are
now and have at all material times been adequately covered against
accident, damage, injury, third party loss and product liability in
such amounts as are to the Company's knowledge prudent and customary
in the business the Company and its subsidiaries are engaged; and
neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurance as may be necessary to continue its
businesses at a cost that would not have a Material Adverse Effect;
(u) Intellectual Property. Other than as specifically described in
the Offering Circular, to the best of the Company's knowledge, each
of the Company and its subsidiaries owns or possesses or can acquire
on reasonable terms adequate rights to use pursuant to license,
sublicense, agreement or permission all patents, patent applications,
trademarks, service marks, trade names, design rights, copyrights,
13
trade secrets and other know-how rights, proprietary rights and
processes (in each case whether registered or unregistered and
including applications for registration) arising or subsisting
anywhere in the world ("INTELLECTUAL PROPERTY") necessary for the
operation of the business of the Company and its subsidiaries as
described in the Offering Circular. In respect of Intellectual
Property devised, developed or created by or on behalf of the
Company, which the Company desires to own, or which is used, or which
the Company expects to use, in the Company's current or future
business, or which is necessary for the operation of the business of
the Company and its subsidiaries as described in the Offering
Circular, the Company has taken all steps necessary to secure
assignments of or obtain adequate rights to use such Intellectual
Property from its employees and third party creators of that
Intellectual Property (including employees and contractors of such
third party creators, if any); to the best of the Company's
knowledge, none of the technology or other Intellectual Property
employed by or necessary for the operation of the Company or any of
its subsidiaries has been obtained or is being used by the Company or
any of its subsidiaries in violation of any law or any contractual or
fiduciary obligation binding upon the Company, any of its
subsidiaries or any of their respective directors or executive
officers or any of their respective employees or consultants, except
where such violation would not have a Material Adverse Effect. Except
as specifically described in the Offering Circular, to the best of
the Company's knowledge, neither the Company nor any of its
subsidiaries has interfered with, infringed upon, misappropriated or
violated any Intellectual Property of any third party and the
continued operation of the business of the Company and its
subsidiaries as described in the Offering Circular will not result in
the same where any such event or circumstance would have a Material
Adverse Effect. Except as specifically described in the Offering
Circular, to the best of the Company's knowledge, the Company and its
subsidiaries have not received and do not expect to receive any
charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation (including
any claim that the Company or any of its subsidiaries must take a
license of or refrain from using any Intellectual Property of any
third party) that would have a Material Adverse Effect, and there are
no actions, suits or judicial proceedings pending relating to
Intellectual Property to which the Company or any of its subsidiaries
is subject, and no such actions, suits or judicial proceedings are
threatened by Governmental Agencies or other third parties, and the
Company is unaware of any facts which would form a reasonable basis
for any such claims. Except as specifically described in the Offering
Circular, to the best of the Company's knowledge, there is no patent
or published patent application to which the Company does not have
rights which contains claims that dominate or may dominate any
Intellectual Property described in the Offering Circular as being
owned by or licensed to the Company or that interferes with the
issued or pending claims of any such Intellectual Property. Except as
specifically described in the Offering Circular, to the best of the
Company's knowledge, there is and has been no infringement,
interference, misappropriation or violation by any third parties of
any Intellectual Property owned by the Company or any of its
subsidiaries that would have a Material Advise Effect. The Company
and its subsidiaries have taken and will maintain reasonable measures
14
to prevent the unauthorized use dissemination or publication of its
trade secrets, proprietary information and other confidential
information;
(v) Employment Matters. No material labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is threatened;
(w) Tax. Except as otherwise disclosed in the Offering Circular
(other than with respect to tax on income, profits or gains from
commissions, discounts or sales proceeds with respect to the sale of
Offered Shares or Restricted ADSs by any Underwriter that is subject
to income or gain tax in the ordinary course of business in
Switzerland), the Company and each of its subsidiaries has been and
continues to be in compliance with all applicable laws and
regulations relating to tax, except where its failure to be in such
compliance would not have a Material Adverse Effect; and the Company
has no reason to believe that it or any of its subsidiaries will
incur any additional tax charges in respect of past tax periods,
except as disclosed in the Offering Circular; no stamp or other
issuance or transfer taxes or duties and no capital gains,
withholding or other taxes are payable by or on behalf of the Global
Coordinator to Switzerland or any political subdivision or taxing
authority thereof or therein in connection with (i) the sale and
delivery by the Company of the Offered Shares or Restricted ADSs to
or for the account of the Global Coordinator, (ii) commissions earned
with respect to the sale of the Offered Shares or Restricted ADSs or
(iii) the sale and delivery by the Global Coordinator of the Offered
Shares or Restricted ADSs to the initial purchasers thereof, in each
case in accordance with the terms of this Agreement;
(x) Investment Company Act. The Company is not and, after giving
effect to the offering and sale of the Offered Shares, will not be an
"investment company" within the meaning of the U.S. Investment
Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(y) Permits/Licenses/Authorizations. Except as disclosed in the
Offering Circular, the Company and each of its subsidiaries have all
licenses, franchises, permits, authorizations, approvals and orders
and other concessions of and from all Governmental Agencies that are
necessary to own or lease their properties and conduct their
businesses as described in the Offering Circular, except where such
fault would not reasonably be expected to have a Material Adverse
Effect;
(z) Substantial U.S. Market Interest. There is no substantial U.S.
market interest (within the meaning of Regulation S under the
Securities Act) in the ordinary shares of the Company, and there is
not, as of the date of this Agreement, substantial U.S. market
interest (within the meaning of Regulation S under the Securities
Act) in the Preemptive Rights;
(aa) Foreign Private Issuer. The Company is a "foreign private
issuer" (as such term is defined in the rules and regulations of the
Exchange Act);
15
(bb) Directed Selling Efforts. Neither the Company nor any person
acting on its or their behalf has offered or sold or will offer or
sell the Preemptive Rights or the Offered Shares by means of any
directed selling efforts within the meaning of Rule 903 under the
Securities Act, and the Company has complied and will comply with the
offering restriction requirements of such Rule 903; provided,
however, that the Global Coordinator, acting through its Selling
Agents, may offer and deliver Preemptive Rights and may offer and
sell Offered Shares in the United States, provided that such Offered
Shares may be sold only in the form of Restricted ADSs to persons who
the Global Coordinator reasonably believes are "qualified
institutional buyers" within the meaning of Rule 144A under the
Securities Act in transactions not subject to the registration
requirements of the Securities Act who provide to it and to the
Company a letter in the form of Exhibit A hereto and that, in
connection with each such sale, the Global Coordinator has taken or
will take reasonable steps to ensure that the purchaser of such
Restricted ADSs is aware that such sale is being made in a
transaction not subject to registration under the Securities Act; and
(cc) General Solicitation and General Advertising. Neither the
Company nor any person acting on its behalf has offered or sold or
will offer or sell the Preemptive Rights or the Offered Shares by any
form of general solicitation or general advertising, including but
not limited to the methods described in Rule 502(c) under the
Securities Act.
6. Undertakings of the Company
6.1 Taxes. The Company will pay any stamp or other issuance or transfer
taxes, capital gains, withholding or other taxes (other than tax on
income, profits or gains from commissions, discounts or sales
proceeds with respect to the sale of Offered Shares or Restricted
ADSs by any Underwriter that is subject to income or gain tax in the
ordinary course of business in Switzerland) payable to Switzerland or
any political subdivision or taxing authority thereof or therein in
connection with (i) the sale and delivery by the Company of the
Offered Shares or Restricted ADSs to or for the account of the Global
Coordinator, (ii) commissions earned with respect to the sale of the
Offered Shares or Restricted ADSs or (iii) the sale and delivery by
the Global Coordinator of the Offered Shares or Restricted ADSs to
the initial purchasers thereof, in each case in accordance with the
terms of this Agreement.
6.2 Delivery of Offering Circular. The Company confirms that it has
prepared the Offering Circular and authorizes the Global Coordinator
to distribute copies of the Offering Circular in connection with the
Offering and undertakes to deliver to the Underwriters, without
charge, on the Business Day (whereby "BUSINESS DAY" shall mean any
day (other than a Saturday or Sunday) on which banks are open for
business in Zurich) following the date hereof and hereafter from time
to time as requested, such number of copies of the Offering Circular
as the Underwriters may reasonably request.
6.3 Amendments to the Offering Circular. If at any time prior to
completion of the distribution of the Offered Shares or the
Settlement Date any event shall have occurred as a result of which
16
the Offering Circular, as then amended or supplemented, would include
an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they are made when such Offering Circular
is delivered, not misleading in a material respect or if for any
other reason it shall be necessary to amend or supplement the
Offering Circular, the Company will notify the Underwriters, and,
upon request from the Global Coordinator, will prepare and furnish
without charge to the Underwriters as many copies as the Global
Coordinator may from time to time reasonably request of an amended
Offering Circular or a supplement to the Offering Circular which will
correct such statement or omission, and will take such steps as may
be reasonably requested by the Global Coordinator to remedy and/or
publicize such amendment or supplement to the Offering Circular.
6.4 Notification of Material Changes. The Company will notify the
Underwriters promptly of any material change affecting any of its
representations and warranties (including, but not limited to, any
considered, intended or actual Tender Offer it becomes aware of),
agreements and indemnities herein at any time prior to payment being
made to the Company on the Settlement Date.
6.5 Listing on the SWX. In connection with the application to list the
Offered Shares on the SWX and to admit the Preemptive Rights to
trading at the SWX, the Company will furnish from time to time any
and all documents, instruments, information and undertakings, publish
all advertisements or other material that may be necessary in order
to effect such listing and admittance and maintain such listing and
admittance and take all other such actions as may be required by the
Swiss Admission Board in order to comply with the requirements of the
SWX Listing Rules.
6.6 Provisions of Documents to the Underwriters. For a period of two
years from the Settlement Date, the Company will furnish to the
Underwriters copies of each document filed on a public basis by the
Company with the SWX including any notices under the ad-hoc publicity
rules of the SWX, and copies of financial statements and other
periodic reports that the Company may furnish generally to its
shareholders.
6.7 Coordination of Announcements. Between the date hereof and the
Settlement Date (both dates inclusive), the Company will, and will
cause its subsidiaries and all other parties acting on its behalf so
far as practical, with regard to applicable laws and regulations and
the requirements of the SWX, to notify and consult with the Global
Coordinator prior to issuing any public announcement concerning, or
which is likely to be material in the context of the offering and
distribution of the Offered Shares taken as a whole.
6.8 Use of Proceeds. The Company will use the net proceeds of the issue
and sale of the Offered Shares to finance part of its obligations
under the Settlement Agreement (as defined in the Offering Circular)
and otherwise in respect of the Implant Litigation (as defined in the
Offering Circular).
17
6.9 Clear Market. The Company will not for a period of 180 calendar days
after the Settlement Date, (i) issue, or announce the intent to
issue, any shares or securities convertible or exchangeable into
shares or representing rights to subscribe for shares, or enter into
transactions with a similar economic effect, and it will not (ii)
create, or announce the intent to create, any authorized capital or
new conditional capital, except as required under mandatory Swiss law
or in relation to conditional capital for shares to be issued upon
exercise of options granted to employees according to stock option
plans described in the Offering Circular, or in connection with the
CCI (as defined in the Offering Circular), without the prior written
consent of the Global Coordinator.
6.10 Issuance of the CCI. If the Offering is completed and the Company has
received funds in the amount of USD 635 million (subject to
adjustment pursuant to the terms of a commitment from UBS AG or
pursuant to a credit agreement reflecting such commitment) under a
credit facility then the Company undertakes not to issue the CCI, in
whole or in part.
6.11 Restricted ADS Election. Prior to the end of the Exercise Period, the
Company undertakes to enter into the Restricted Deposit Agreement,
which agreement shall provide that the Global Coordinator may, from
time to time, deposit any or all of its Offered Shares with the
Depositary in exchange for an equivalent amount of Restricted ADSs.
Such Restricted ADSs will be in physical, definitive form, and in
such authorized denominations and registered in such names as the
Global Coordinator requests. The Company undertakes to comply with
the Restricted Deposit Agreement so that Restricted ADRs evidencing
Restricted ADSs will be executed (and, if applicable, countersigned)
and issued by the Depositary against the receipt of Offered Shares
from time to time by the Depositary.
6.12 Stabilization and Manipulation. The Company will not ( and will cause
its subsidiaries not to) take, directly or indirectly, any action
which is designed to or which has constituted or which would
reasonably be expected to cause or result in stabilization or
manipulation or of the price of any security of the Company to
facilitate the sale or resale of the Offered Shares other than in
accordance with applicable law, including Regulation M under the
Exchange Act.
7. Representations, Warranties and Undertakings of InCentive and the
Global Coordinator
7.1 Each of InCentive and the Global Coordinator, severally and not
jointly, acknowledges that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of
the Offered Shares, or possession or distribution of the Offering
Circular or any other offering or publicity material relating to the
Offered Shares, in any country or jurisdiction where action for that
purpose is required (including the United States, the United Kingdom,
Canada, Japan, the Netherlands, Australia and South Africa) other
than Switzerland, and each of InCentive and the Global Coordinator
will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers
18
Preemptive Rights or Offered Shares or has in its possession or
distributes the Offering Circular or any such other material.
7.2 Each of InCentive and the Global Coordinator, severally and not
jointly, represents and warrants to, and agrees with, the Company,
that it will not offer or sell the Preemptive Rights or the Offered
Shares except in accordance with Regulation S under the Securities
Act and that, in connection therewith, (i) it will not offer or sell
the Preemptive Rights or the Offered Shares by any form of directed
selling efforts within the meaning of Regulation S under the
Securities Act, and (ii) it will not offer or sell the Preemptive
Rights or the Offered Shares by any form of general solicitation or
general advertising, including but not limited to the methods
described in Rule 502(c) under the Securities Act.
Nothwithstanding the foregoing, the Global Coordinator may offer and
deliver the Preemptive Rights, and to the extent it so offers and
sells, represents that and agrees with the Company that, it will only
offer and sell the Offered Shares in the United States so long as
such Offered Shares are sold only in the form of Restricted ADSs to
persons who it reasonably believes are "qualified institutional
buyers" within the meaning of Rule 144A under the Securities Act in
transactions not subject to the registration requirements of the
Securities Act who provide to it and to the Company a letter in the
form of Exhibit A hereto and that, in connection with each such sale,
it has taken or will take reasonable steps to ensure that the
purchaser of such Restricted ADSs is aware that such sale is being
made in a transaction not subject to registration under the
Securities Act.
7.3 Each of InCentive and the Global Coordinator, severally and not
jointly, represents and warrants to, and agrees with, the Company,
that it: (i) it will not offer or sell and, prior to the expiry of a
period of six months from the Settlement Date, will not offer or sell
any Offered Shares to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (ii) it has only communicated and caused to be
communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity (within
the meaning of section 21 of the Financial Services and Markets Act
2000 ("FSMA")) received by it in connection with the issue or sale of
any Preemptive Rights or Offered Shares in circumstances in which
section 21(1) of the FSMA does not apply to the Company; and (iii) it
has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the
Preemptive Rights or Offered Shares in, from or otherwise involving
the United Kingdom.
7.4 Each of InCentive and the Global Coordinator, severally and not
jointly, represents and warrants to, and agrees with, the Company,
that it will only offer, sell, deliver or transfer, directly or
indirectly, Preemptive Rights or Offered Shares in the Netherlands to
individuals who, or legal entities which, trade or invest in
securities in the conduct of a profession or trade (including banks,
investment banks, securities firms, insurance companies, pension
19
funds, other institutional investors, and treasury deparments and
finance companies of large enterprises.
7.5 Each of InCentive and the Global Coordinator agrees with the Company
that any stabilization activities engaged in relating to the offer
and sale of Offered Shares shall be performed in accordance with all
applicable laws and regulations.
8. Undertakings of InCentive
8.1.
(a) Coordination of Announcements. Between the date hereof and
the Settlement Date (both dates inclusive), InCentive
will, and will cause its subsidiaries and all other
parties acting on its behalf so far as practical, with
regard to applicable laws and regulations and the
requirements of the SWX, to notify and consult with the
Global Coordinator prior to issuing any public
announcement concerning, or which is likely to be material
in the context of, the offering and distribution of the
Offered Shares taken as a whole.
(b) No Trading of Preemptive Rights with respect to InCentive
Shares. InCentive shall not sell its Preemptive Rights
with respect to InCentive Shares during the Exercise
Period.
9. Agreement Among Underwriters
9.1 Lead Underwriter. The Global Coordinator is hereby authorized on
behalf of the Underwriters to conduct the negotiation of, and to
enter into, any agreements related to this Agreement, and to agree
any variation in the terms of performance of this Agreement that, in
its reasonable judgment, will not have a material adverse effect on
the interest of the of the Underwriters.
9.2 Costs. Each Underwriter shall bear its own costs and expenses
incurred in connection with the Offering, except as provided for in
Section 10 below.
9.3 Representations and Warranties. Each of InCentive and the Global
Coordinator hereby gives to each other the same representations and
warranties given by the Underwriters to the Company as set forth in
Section 7.
10. Commission / Fees and Expenses
10.1 Commissions of Global Coordinator. In consideration of the
obligations undertaken herein by the Global Coordinator the Company
covenants and agrees with the Global Coordinator to pay, in addition
20
to its other obligations hereunder, the following commissions (the
"COMMISSIONS"):
(a) a base commission of ______ on the aggregate Offer Price
for all Offered Shares (number of Offered Shares times
Offer Price) for the managing, structuring and exercising
the Offering;
(b) an underwriting commission of ______ on the Global
Coordinator's underwriting commitment of CHF 55'137'120 (=
CHF 689'214);
(c) an incentive commission of ______ on the aggregate Offer
Price for all Offered Shares (number of Offered Shares
times Offer Price) at the sole discretion of the Company;
and
(d) a reimbursement commission of _____ on the aggregate Offer
Price for all Offered Shares (number of Offered Shares
times Offer Price) for banking system costs.
The Global Coordinator is authorized to set off the total amount of
the Commissions (including those payable to InCentive) established at
that time from the Company's net proceeds and invoice the remaining
amounts to the Company at a later time.
10.2 Commission of InCentive. In consideration of the obligations
undertaken herein by InCentive the Company covenants and agrees with
InCentive to pay, in addition to its other obligations hereunder, an
underwriting commission of 1.25% on InCentive's underwriting
commitment of CHF 200'000'000 (= CHF 2'500'000).
10.3 Fees and Expenses. The Company covenants and agrees with the Global
Coordinator to pay, in addition to its other obligations hereunder,
the following:
(a) all expenses in connection with the preparation, printing
and filing of the Offering Circular, listing publications
and any amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters;
(b) the costs and expenses of the Global Coordinator in
connection with the preparation of materials for "road
show" presentations to be made to existing shareholders
and prospective investors (including, without limitation,
costs for one accompanying banker and one sales
representative of the Global Coordinator);
(c) such expenses and listing fees as required in connection
with the listing of the Offered Shares on the SWX and the
admittance of the Preemptive Rights to trading at the SWX;
(d) the documented out-of-pocket expenses reasonably incurred
by the Global Coordinator in connection with the
transaction contemplated by this Agreement;
21
(e) the fees and disbursements of the international legal
counsel up to USD 700,000 (including advice in connection
with the Credit Facility, but not including advice and
fees for security arrangements in connection with such
Credit Facility, which, to the extent such advice and fees
result in USD 700,000 being exceeded, shall be paid by the
Company upon being provided with appropriate documentation
thereof) and Swiss legal counsel up to USD 100,000 of the
Global Coordinator in connection with the Offering, the
Credit Facility and the security arrangements thereunder;
(f) the fees and expenses of its own outside legal counsel,
including without limitation patent counsel to the
Company, financial and other advisors in connection with
the transactions contemplated herein;
(g) the fees and expenses of the Company's independent
accountants for services rendered in connection with the
transactions contemplated hereby;
(h) costs and expenses in connection with the statement and/or
recommendation to be obtained by the relevant takeover
authorities; and
(i) all other costs and expenses incident to the performance
of its obligations hereunder.
Such fees and expenses shall be payable upon request of the Global
Coordinator as invoiced in accordance with the Mandate Agreement. The
Global Coordinator is authorized to set off the total amount of such fees
and expenses established at that time from the Company's net proceeds
(provided that it has agreed in writing with the Company in advance the
amount of such set offs) and the fees payable to InCentive pursuant to
Section 10.4 and invoice the remaining amounts to the Company at a later
time.
All payments by the Company under this Agreement will be made without
set-off or counterclaim, and free and clear of and without deduction or
withholding for or on account of, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature. If
any such deduction or withholding is required by law in any jurisdiction
to be made in connection with any such payment, the Company will increase
the amount paid so that the full amount of such payment is received by the
payee as if no such deduction or withholding had been made.
10.4 Fees and Expenses of InCentive. The Company covenants and agrees with
InCentive to pay, in addition to its other obligations hereunder, CHF
250,000 for fees and expenses of InCentive incurred in connection
with the transactions contemplated herein.
11. Indemnification
11.1 The Company (the "INDEMNIFYING PARTY") undertakes with each of
InCentive and the Global Coordinator (for itself, its affiliated
companies and on behalf of its employees, directors, officers, and
such U.S. persons (if any) who control such Global Coordinator for
the purposes of Section 15 of the Securities Act or Section 20 of the
Exchange Act) (each an "INDEMNIFIED PARTY") that it will indemnify
and hold harmless each Indemnified Party from and against any and all
losses, liabilities, costs, claims, damages, expenses or demands
22
(including but not limited to, legal costs and expenses) (a "LOSS"),
joint or several, which that Indemnified Party may incur or which may
be made against that Indemnified Party arising out of or in relation
to or in connection with any breach or alleged breach of the
representations and warranties of the Company set out in this
Agreement or any untrue statement or alleged untrue statement of a
material fact contained in the Offering Circular, or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading and will reimburse each Indemnified Party on
demand an amount equal to such Loss; provided, however, that with
respect to both the Global Coordinator and InCentive this indemnity
agreement shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in
conformity with written information regarding the Global Coordinator
or InCentive in its capacity as Underwriter furnished to the Company
by the Global Coordinator expressly for use in the Offering Circular
(or any amendment thereto); provided, further, however, that with
respect to InCentive this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out
of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information regarding InCentive furnished to the Company by InCentive
expressly for use in the Offering Circular (or any amendment thereto)
. The amount paid or payable to an Indemnified Party as a result of a
Loss shall include any legal or other expenses incurred by such
Indemnified Party in connection with investigating or defending such
claim. This indemnity will be in addition to any liability which the
Company may otherwise have.
Notwithstanding the foregoing, each of InCentive and the Global
Coordinator agrees, severally and not jointly, that it will indemnify
and hold harmless the Company, its employees, directors, and officers
to the same extent as the Company will indemnify and hold harmless
the Global Coordinator or InCentive as set out in this Section 11,
but only with reference to the information furnished to the Company
by each of the Global Coordinator or InCentive, respectively, for use
in the Offering Circular.
11.2 If any action, claim or demand shall be brought or asserted against
any Indemnified Party hereunder, and with respect to which indemnity
may be sought hereunder, such Indemnified Party shall promptly notify
the Indemnifying Party in writing and the Indemnifying Party shall
assume the defence thereof, including the employment of legal
advisers reasonably satisfactory to such Indemnified Party and
payment of all fees and expenses. Any Indemnified Party shall have
the right to employ separate legal advisers in any such action and
participate in the defence thereof, but the fees and expenses of such
legal advisers shall be at the expense of such Indemnified Party
unless (i) the employment of such legal advisers shall have been
specifically authorized in writing by the Indemnifying Party, (ii)
the Indemnifying Party shall have failed to assume the defence and
employ legal advisers or (iii) the named persons to any such action
include both such Indemnified Party and the Indemnifying Party and
such Indemnified Party shall have been advised that there may be one
23
or more legal defences available to it which are different from or
additional to those available to the Indemnifying Party (in which
case the Indemnifying Party shall not have the right to assume the
defence on behalf of such Indemnified Party). It being understood,
however, that the Indemnifying Party shall not, in connection with
any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of legal advisers for all Indemnified
Parties (in addition to any local counsel), and that all such fees
and expenses shall be reimbursed when they are incurred. In the case
of any separate firm of legal advisers for the Indemnified Parties,
such firm of legal advisers shall be designated by such Indemnified
Party. The Indemnifying Party shall not be liable for any settlement
of any such action effected without its written consent but, if
settled with the written consent of the Indemnifying Party, the
Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party from and against any loss or liability by reason of
such settlement. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of
any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such
settlement included an unconditional release of such Indemnified
Party from all liability on claims that are the subject of such
proceeding.
12. Conditions Precedent
The obligation of the Global Coordinator and of InCentive to
subscribe, underwrite and to pay for the Offered Shares is subject to
the following conditions precedent:
12.1 Offering Circular. Upon the signing of this Agreement two copies of
the Offering Circular shall have been delivered to the Global
Coordinator and InCentive, duly signed by the Company.
12.2 Comfort Letter. Immediately preceding the signing of this Agreement,
on the Capital Increase Date and on the Settlement Date, there shall
have been delivered to the Global Coordinator and InCentive letters,
dated the date of this Agreement (or the date of the Offering
Circulars), the Capital Increase Date and the Settlement Date,
respectively, from PricewaterhouseCoopers AG, auditors to the
Company, substantially in the forms set forth in Schedule 12.2.
12.3 Officers' Certificates. On and dated the date of this Agreement, the
Capital Increase Date and the Settlement Date, there shall have been
delivered to the Global Coordinator and InCentive an officer's
certificate of the Company in the form of Schedule 12.3, executed by
two duly authorized officers of the Company, signed on behalf of the
Company.
12.4 Legal Opinions and Other Documents. On and dated the date of this
Agreement (or the date of the Offering Circular), the Capital
Increase Date and the Settlement Date, there shall have been
delivered to the Global Coordinator and InCentive, each in the agreed
24
form as attached in the Schedules 12.4 (a-f) hereto (provided that
(d) and (e) are to be delivered only on the Settlement Date):
(a) a disclosure letter and a legal opinion from Bar & Xxxxxx,
Swiss legal counsel to the Company;
(b) a legal opinion from Xxxx & Staehelin, Swiss legal counsel
to the Global Coordinator;
(c) a 10b-5 letter from Xxxxxx Xxxxxxxx, U.S. legal counsel to
the Global Coordinator;
(d) a legal opinion from Xxxxxx Xxxxxxxx, U.S. legal counsel to
the Global Coordinator, regarding the exemption from
registration under the Securities Act of the Offered
Shares;
(e) a legal opinion from Xxxx Xxxxxxx & Xxxxxx, U.S. legal
counsel to the Company, regarding, among other things, (i)
the exemption from registration under the Securities Act of
the Offered Shares, (ii) the statements contained in the
Offering Circular under the caption "Taxation--United
States Federal Income Tax Considerations", insofar as they
purport to describe U.S. federal statutes, rules and
regulations, and subject to the limitations set forth
therein, constitute a fair summary thereof, (iii) the
legally valid, binding and enforceable status of the
Restricted Deposit Agreement and (iv) "Description of
Restricted American Depositary Receipts" sections of the
Offering Circular;
(f) a disclosure letter from Shook, Hardy & Bacon LLP, U.S.
legal counsel to the Company; and
(g) such other resolutions, consents authorities and documents
relating to the offer and sale of the Offered Shares, as
the Global Coordinator, on behalf of the Underwriters, may
reasonably require.
12.5 No Material Adverse Change. At the Capital Increase Date and the
Settlement Date, there shall not have occurred any change, or any
development or event involving a prospective change, in the business,
condition (financial or other), properties, prospects or results of
the operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the Offering Circular, whether or not arising
in the ordinary course of business, which, in the sole discretion of
the Global Coordinator (after consultation, if practicable, with
InCentive and the Company), is material and adverse and which makes
it, in the sole discretion of the Global Coordinator (after
consultation, if practicable, with InCentive and the Company),
impracticable to or inadvisable to subscribe for and underwrite the
Offered Shares on the terms and in the manner contemplated in the
Offering Circular.
12.6 SWX Listing. The listing of the Offered Shares on the SWX and the
admittance of the Preemptive Rights to trading at the SWX shall have
been granted.
25
12.7 Termination of this Agreement. If any of the conditions set forth in
this Section 12 is not satisfied on or prior to the Settlement Date,
then the Global Coordinator shall have the right to terminate this
Agreement in accordance with Section 13 and 14. The Global
Coordinator, on behalf of the Underwriters, may at its discretion,
however, waive compliance with the whole or any part of this Section.
13. Termination
13.1 Notwithstanding anything contained herein, the Global Coordinator, on
behalf of the Underwriters, may, by notice to the Company, terminate
this Agreement at any time on or prior to the Settlement Date in any
of the following circumstances:
(a) if there shall have come to the notice of the Underwriters
any breach of, or any event rendering untrue or incorrect
in any respect, any of the warranties and representations
contained in Section 5 or any failure to perform any of
the Company's undertakings or agreements in this
Agreement;
(b) if any of the conditions precedent specified in Section 12
has not been satisfied or waived by the Global
Coordinator; or
(c) if, (A) (i) trading generally shall have been suspended or
materially limited on or by the SWX, (ii) the relevant
authorities shall have declared a general moratorium on
commercial banking activities in Switzerland, the United
Kingdom or the United Sates, (iii) there shall have
occurred a general crisis in international exchange
markets or (iv) there shall have occurred any outbreak or
escalation of hostilities or any act of terrorism
involving the United States, the United Kingdom or
Switzerland or the declaration by the United States, the
United Kingdom or Switzerland of a national emergency or
war or any change in financial markets or any calamity or
crisis or any change or development involving a
prospective change in national or international financial,
political or economic conditions or currency exchange
rates or exchange controls that, in the Global
Coordinator's judgment (after consultation, if
practicable, with InCentive and the Company), is material
and adverse or a material disruption has occurred in
commercial banking or securities settlement or clearance
services in the United States, the United Kingdom or
Switzerland and (B) in the case of any of the events
specified in this Section 13.1(c)(A)(i) through (iv) such
event, singly or together with any other such event, makes
it, in the Global Coordinator's sole judgment,
impracticable or inadvisable to subscribe for and
underwrite the Offered Shares on the terms and in the
manner contemplated in the Offering Circular.
13.2 Survival. Upon such notice being given on or prior to the Settlement
Date, this Agreement shall terminate and be of no further effect and
no party shall be under any liability to any other in respect of this
Agreement, except for obligations and liabilities already incurred or
accrued, and except that the Company shall remain liable as provided
26
under Sections 10, 11 and 14(i) provided, however, that the Global
Coordinator shall use its reasonable best efforts to transfer to a
bank or other financial intermediary the administrative functions it
is carrying out in connection with the execution of the transactions
contemplated hereby.
14. Effects of Termination on Offered Shares
14.1 Event of Non-Completion. If there is a termination of this Agreement
prior to the Settlement Date pursuant to Section 12.7 or 13 or if the
delivery of the Offered Shares to the Global Coordinator is not
completed on the Settlement Date or if the Offering contemplated
herein is not consummated for any other reason (each an "EVENT OF
NON-COMPLETION") and the Capital Increase has occurred and been
registered, then, unless the Company and the Global Coordinator
otherwise agree in writing within ten calendar days after the Event
on Non-Completion, the following shall apply:
(a) The Company and InCentive shall cause to be held a
shareholders' meeting of the Company in which the
shareholders of the Company shall resolve on a reduction
of the registered issued share capital of the Company from
CHF 354'919'350 to CHF 300'247'110 (the "CAPITAL
REDUCTION") by cancellation of the Offered Shares against
repayment of the Total Nominal Amount of the Offered
Shares to the Underwriters. Prior to such shareholders'
meeting, the auditors of the Company shall confirm in
writing, pursuant to Article 732 para. 2 of the Swiss Code
of Obligations, that the claims of the Company's creditors
are covered notwithstanding the Capital Reduction. The
Capital Reduction shall be effected in accordance with the
provisions of Swiss statutory law, in particular Articles
732 ff. of the Swiss Code of Obligations and shall be
consummated at the earliest date possible by entry in the
Commercial Register. The proceeds of the Capital
Reduction, being CHF 54'672'240 (such amount representing
the aggregate par value of the Offered Shares) shall be in
the form of a cash payment to be made to the Underwriters
having subscribed for such Offered Shares as set forth in
Section 1.2.
(b) If (i) the Capital Reduction is not resolved within 40
business days after the Global Coordinator's request, or
(ii) the auditors of the Company have not provided the
confirmation referred to in Section 14.1(a) prior to such
shareholders' meeting, or (iii) the Capital Reduction has
not been recorded in the Commercial Register within 120
calendar days after the Global Coordinator having
requested the Capital Reduction, or (iv) the Underwriters
have not received the proceeds of the Capital Reduction
within 120 calendar days after having requested the
Capital Reduction and further provided the Company has not
exercised its Call Option pursuant to Section 14.1(c)
below and paid to the Underwriters the Total Nominal
Amount plus costs and expenses as set out in Section
14.1(d)(ii), then the Global Coordinator and InCentive
shall have the right, but no obligation, and always
provided that the Capital Reduction has not yet occurred,
to sell at their own discretion all or any number of the
27
Offered Shares subscribed by them to a third party. If the
aggregate proceeds of such sale exceed the Total Nominal
Amount plus costs and expenses as set out in Section
14.1(d)(ii) (the "SURPLUS"), the Company shall be entitled
to receive the Surplus.
(c) Call Option. Before the occurrence of an event described
in subsection (i) through (iv) of Section 14.1(b) and
further provided that the Capital Reduction has not yet
occurred and the Underwriters have not yet received the
proceeds of such Capital Reduction, the Company shall have
the right (the "CALL OPTION") to request in writing that
the Global Coordinator and InCentive deliver the Offered
Shares to an account specified by the Company against
payment of a total of CHF 54'672'240 plus expenses as set
out in Section 14.1(d)(ii).
(d) Costs and Expenses. The Company shall bear:
(i) all costs incidental to the Capital Reduction,
including but not limited to notarization costs, costs
of the Commercial Register and costs of publication of
the Capital Reduction;
(ii) the costs of the Global Coordinator and InCentive
incurred in connection with the Capital Reduction
respectively the Call Option (including, but not
limited, to (I) taxes, (II) default interest at the
statutory rate of 5%, calculated on a 30/360 basis
from the date of the Event of Non-Completion until the
date of payment of proceeds to the Underwriters, and
(III) reasonable out-of-pocket expenses of the
Underwriters and their respective counsels).
(e) If an Event of Non-Completion occurs after the
registration of the Capital Increase and before the
Settlement Date, the Global Coordinator, having paid the
Total Nominal Amount of all the Offered Shares in
accordance with Section 1.3(a), shall debit InCentive's
cash account no. 230-P0448910.0 (at UBS AG, Zurich, bank
clearing no. 230) in the amount of the nominal value of
each Offered Share subscribed for by InCentive and deliver
in return the respective number of Offered Shares into
InCentive's share deposit no. 230-P0448910.0 (at UBS AG,
Zurich, bank clearing no. 230).
The Company further undertakes to indemnify the Global Coordinator
and InCentive for, and to hold the Global Coordinator and InCentive
harmless from, any costs, expenses, third party claims and
liabilities, actual or contingent, that may be incurred by or made
against the Global Coordinator, InCentive or any third party in
connection with the Capital Reduction.
14.2 If an Event of Non-Completion occurs after the Global Coordinator
having deposited the Total Nominal Amount but before registration of
the Capital Increase, the Company shall procure that the Total
Nominal Amount plus accrued interest, if any, on such amount, while
28
deposited with ZKB is refunded to the Global Coordinator upon first
demand as soon as possible.
15. Notices
Any notice or communication under or in connection with this
Agreement shall be in writing and shall be delivered personally or
sent by mail or facsimile transmission:
to the Company at:
Centerpulse Ltd.
Xxxxxxxxxxxxxx 00
XX-0000 Xxxxxx
Attn.: Xxxxxxxxx Xxxxxxxx/Xxxxxx Xxxxxxxxx
Facsimile:x00 0 000 00 00
to InCentive at:
InCentive Capital AG
c/o InCentive Asset Management AG
Xxxxxxxxxxx 00
XX-0000 Xxxxxx
Attn.: Xxxx Xxxxxxxxx / Xxxxxx Xxxxx
Facsimile:x00 0 000 00 00
to the Global Coordinator at:
UBS Warburg
Xxxxxxxxxxxxx 0
XX-0000 Xxxxxxx
Attn.: CFCM Legal
Facsimile:x00 0 000 00 00
16. Changes and Amendments to This Agreement
Changes and amendments to this Agreement, including this Section 16
will only be valid if made in writing and signed by each of the
Company, InCentive and the Global Coordinator.
29
17. Applicable Law and Jurisdiction
17.1 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of Switzerland.
17.2 Jurisdiction. Each of the Company, InCentive and the Global
Coordinator hereby agrees to the venue of Zurich 1 and irrevocably
submits to the non-exclusive jurisdiction of the Commercial Court of
the Canton of Zurich (Handelsgericht Zurich), with reserve of appeals
to the Swiss Federal Supreme Court (Schweizerisches Bundesgericht) to
settle any disputes which may arise out of or in connection with this
Agreement or the transactions contemplated thereby. Irrespective of
the foregoing, the Underwriters shall have the right to initiate
legal proceedings against the Company before any other court in which
any suit, action or other proceedings of any type whatsoever has been
brought against any of the Underwriters.
30
So Agreed as of September 27, 2002:
THE COMPANY:
CENTERPULSE LTD.
By: By:
---------------------------- ------------------------------
Name: Name:
Title Title:
INCENTIVE:
INCENTIVE CAPITAL AG
By: By:
---------------------------- ------------------------------
Name: Name:
Title Title:
THE GLOBAL COORDINATOR:
UBS AG ACTING THROUGH ITS BUSINESS GROUP UBS WARBURG
By: By:
---------------------------- ------------------------------
Name: Name:
Title Title:
31
