Global Offering of 5,000,000 Ordinary Bearer Shares Offer Price 1 8.00 per Share This international offering is part of an initial public offering (the ‘‘Offering’’) of 5,000,000 newly issued no par value ordinary bearer shares of PAION AG, a stock corporation (Aktiengesellschaft) incorporated in the Federal Republic of Germany (the ‘‘New Shares’’), by way of a global offering. The Offering also includes a public offering in the Federal Republic of Germany pursuant to a separate offering circular in the German language and a public offering in Switzerland. The initial public offer price (the ‘‘Offer Price’’) for the Offered Shares in the international offering is the same as in the public offerings in the Federal Republic of Germany and in Switzerland. All of our ordinary bearer shares were admitted to trading on the official market segment (amtlicher Markt) (the ‘‘Official Market Segment’’) of the Frankfurt Stock Exchange under the symbol PA8 on February 9, 2005. It is expected that trading in our shares will commence on or about February 11, 2005. Prior to the Offering, there has been no public market for our shares. The Offered Shares are being offered severally by UBS Limited (the ‘‘Global Coordinator’’ or ‘‘UBS Investment Bank’’) on behalf of the other banks specified herein (together with the Global Coordinator, the ‘‘Underwriters’’), subject to their right to reject any order in whole or in part and subject to their receipt of the Offered Shares from us. It is expected that payment for and delivery of the Offered Shares will be made on or about February 11, 2005 through Clearstream Banking AG, Frankfurt am Main. Investing in our shares involves risks. See ‘‘Risk Factors’’ beginning on page 18. In connection with the Offering, we have granted the Underwriters an option to subscribe for up to an additional 750,000 of our ordinary bearer shares (the ‘‘Greenshoe Shares’’ and, together with the New Shares, the ‘‘Offered Shares’’) at the Offer Price (the ‘‘Over-Allotment Option’’). The Over-Allotment Option is exercisable for a period beginning on the date that our ordinary bearer shares commence trading on the Official Market Segment of the Frankfurt Stock Exchange and ending 30 calendar days thereafter. The Offered Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’), and are being offered and sold only pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, including in the United States to qualified institu- tional buyers (‘‘QIBs’’) in reliance on Rule 144A under the Securities Act (‘‘Rule 144A’’) and outside the United States in offshore transactions in reliance on Regulation S under the Securities Act (‘‘Regulation S’’). For a description of the restrictions on resale and transfer of the Offered Shares, see ‘‘Notice to Investors and Transfer Restrictions’’. Global Coordinator and Bookrunner UBS Investment Bank Co-Lead Manager Dresdner Kleinwort Wasserstein Co-Manager Landesbank Baden-Wurttemberg¨ Selling Agent Sparkasse Aachen Offering Circular, dated February 9, 2005 [This Page Intentionally Left Blank] In making an investment decision, investors should rely on their own examination of our company and the terms of the Offering, including the merits and risks involved. Any decision to buy Offered Shares should be based solely on this offering circular (the ‘‘Offering Circular’’). Our shares have not been approved, disap- proved or recommended by any federal or state securities commission or regulatory authority of the United States. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Offering Circular. Any representation to the contrary is a criminal offense. No person has been authorized to give any information or to make any representations in connection with this international offering other than those contained in this Offering Circular. If any information is given or any representations are made, such information or representations must not be relied upon as having been authorized by us or the Global Coordinator, the Underwriters, any of their respective affiliates, advisors or selling agents or any other person. At any time following the date of this Offering Circular, the information contained in this Offering Circular may no longer be correct and our affairs may have changed. No representation or warranty, express or implied, is made by the Global Coordinator, the Underwriters or any of their respective affiliates, advisors or selling agents as to the accuracy or completeness of the informa- tion set forth in this Offering Circular, and nothing contained herein is, or shall be relied upon as, a promise or representation by any of the Global Coordinator, the Underwriters or any of their respective affiliates, advisors or selling agents. No representation is made by us, the Global Coordinator, the Underwriters or any of our or their respective representatives to prospective investors as to the legality of an investment in the Offered Shares, and prospective investors should not construe anything in this Offering Circular as legal, business or tax advice. Prospective investors should consult their own advisors as to the legal, tax, business, financial and related aspects of an investment in the Offered Shares. This Offering Circular has been prepared solely for use in connection with the international offering. This Offering Circular is personal to each offeree and does not constitute an offer to any persons or to the public generally to purchase or otherwise acquire Offered Shares. Distribution of this Offering Circular to any person other than the offeree and those persons, if any, retained to advise such offeree with respect thereto is unauthorized and any disclosure of any of its contents, without our prior written consent, is prohibited. Each prospective investor, by accepting delivery of this Offering Circular, agrees to the foregoing and to make no photocopies of this Offering Circular. This Offering Circular does not constitute or form part of an offer to sell, or a solicitation of an offer to buy, any security other than the Offered Shares. The distribution of this Offering Circular and the offering of shares may, in certain jurisdictions, be restricted by law and this Offering Circular may not be used for the purpose of, or in connection with, any offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized, or to any person to whom it is unlawful to make such an offer or solicitation. Persons into whose possession this Offering Circular comes are required to inform themselves of and observe all such restrictions. Neither we nor the Global Coordinator nor any of the Underwriters accept any legal responsibility for any violation by any person, whether or not a prospective investor, of any such restrictions. No action has been or will be taken in any jurisdiction other than the Federal Republic of Germany or Switzerland that would permit a public offering of the Offered Shares or the possession, circulation or distribution of this Offering Circular or any other material relating to us or the Offered Shares in any jurisdiction where action for that purpose is required. Accordingly, the Offered Shares may not be offered or sold, directly or indirectly, and neither this Offering Circular nor any other offering material or advertise- ments in connection with the Offered Shares may be distributed or published in or from any country or jurisdiction except under circumstances that would result in compliance with any applicable rules and regulations of any such country or jurisdiction. The Offered Shares have not been and will not be registered under the Securities Act, or with any securities authority of any state of the United States, and may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable state securities laws. The Offered Shares are only being offered pursuant to exemptions from, or in transactions not subject to, registration, including (i) in the United States only to QIBs in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A and (ii) outside the United States only in offshore transactions (as defined in, and in accordance with, Regula- tion S). Prospective investors are hereby notified that sellers of the Offered Shares may be relying on the 1 exemption from the registration provisions of Section 5 of the Securities Act provided by Rule 144A. For certain restrictions on resales, see ‘‘Notice to Investors and Transfer Restrictions’’. In connection with the Offering, the Global Coordinator may, for the account of the Underwriters, over-allot or effect transactions with a view to supporting the market price of our shares at levels above those that might otherwise prevail in the open market for a limited period after the first day of trading of our shares on the Frankfurt Stock Exchange. Such transactions may be effected on the Frankfurt Stock Exchange, in the over- the-counter market or otherwise, and shall be carried out in accordance with applicable rules and regulations. Such stabilizing, if commenced, may be discontinued at any time without prior notice and will in any event be discontinued 30 calendar days after the first day of trading of our shares on the Frankfurt Stock Exchange. Notice to Investors and Transfer Restrictions Because of the following restrictions, prospective purchasers of the Offered Shares are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the Offered Shares. Each purchaser of the Offered Shares will be deemed to have represented and agreed as follows (terms used herein that are defined in Rule 144A or Regulation S are used herein as defined therein): 1.