Exhibit 10.2

Zimmer Holdings, Inc.

STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
NONQUALIFIED STOCK OPTION GRANTED TO

OPTIONEE: ****

STOCK AWARD SHARES: ****

EXERCISE PRICE PER SHARE: $****

AWARD DATE: ****

To: Zimmer Holdings, Inc.

Gentlemen/Mesdames:

     You have advised me that you have granted me a nonqualified stock option to
purchase shares of the common stock of Zimmer Holdings, Inc. according to the
terms set forth herein. I understand that it is expected that I will retain the
stock I receive upon the exercise of this option consistent with the Company’s
share retention guidelines in effect at the time of exercise.

     My signature below indicates my agreement to the foregoing and my
acceptance of all the terms of the option granted.

       
 
   
Date
  Signature

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ZIMMER HOLDINGS, INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
NONQUALIFIED STOCK OPTION

     Zimmer Holdings, Inc. (the “Company”) hereby grants, pursuant to the terms
of the Zimmer Holdings, Inc. Stock Plan for Non-Employee Directors (the “Plan”),
to the heretofore named non-employee director of the Company (the “Optionee”),
as a matter of separate inducement and agreement in connection with the
Optionee’s services as a non-employee director of the Company, and not as or in
lieu of any fees, retainers, or other compensation for services, and upon the
terms and conditions set forth below, the option to purchase on or before the
expiration of ten years from the date hereof (the “Expiration Date”) the number
of fully paid and non-assessable shares heretofore set forth of the common stock
of the Company, par value $.01 per share (“Common Stock”), at the aforementioned
exercise price per share.

     This nonqualified stock option (“Option”) is granted upon and subject to
the following terms and conditions:

     1. Provided that the Optionee has at all times during the period beginning
with the date of grant of the Option and ending on the date of exercise been a
non-employee member of the Board of Directors of the Company (the “Board”) and
after the Option vests as described below (except as specifically set forth
herein to the contrary), this Option may from time to time on or prior to the
Expiration Date be exercised in the manner and subject to the terms hereinafter
set forth.

     2. The Option hereby granted may be exercised, in whole or in part, by
written notification delivered in person or by mail to the Secretary of the
Company at its executive office in Warsaw, Indiana, or to the Company’s
designated agent, such notification to be effective upon receipt by the
Secretary or the Company’s designated agent, on or before the specified
Expiration Date, in substantially the form enclosed hereto, specifying the
number of shares with respect to which the Option is then being exercised and
accompanied by payment for such shares. In the event the specified Expiration
Date falls on a day

 

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which is not a regular business day at the Company’s executive office in Warsaw,
Indiana then such written notification must be received at such office, or the
office of the Company’s designated agent, on or before the last regular business
day prior to such Expiration Date. Payment is to be made by certified check or
bank draft payable to the order of Zimmer Holdings, Inc., by payment through a
broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board, or by delivery of a certificate or certificates for shares of
Common Stock owned by the Optionee for at least six months having a fair market
value at the date of exercise equal to the option price for such shares, or in
any combination of the foregoing: provided, however, that payment in shares of
Common Stock will not be permitted unless at least 100 shares of Common Stock
are required and delivered for such purpose. Any stock certificate or
certificates so delivered must be endorsed, or accompanied by a signature
guaranteed stock power, to the order of Zimmer Holdings, Inc., with the
signature guaranteed by a bank or trust company or by a member firm of the New
York Stock Exchange. No shares shall be sold or delivered hereunder until full
payment for such shares has been made. The Optionee shall have the rights of a
shareholder only with respect to shares of stock for which certificates have
been issued to her/him.

     3. The Company shall not be required to issue or deliver any certificate or
certificates for shares of its Common Stock purchased upon the exercise of any
part of this Option prior to (i) the admission of such shares to listing on any
stock exchange on which the stock may then be listed, (ii) the completion of any
registration or other qualification of such shares under any state or federal
law or rulings or regulations of any governmental regulatory body, (iii) the
obtaining of any consent or approval or other clearance from any governmental
agency, which the Company shall, in its sole discretion, determine to be
necessary or advisable, and (iv) the payment to the Company, upon its demand, of
any amount requested by the Company for the purpose of satisfying its
withholding obligation, if any, with respect to federal, state or local income
or FICA earnings tax, other governmental impost, levy or any other applicable
tax or assessment (plus interest or penalties thereon, if any, caused by a delay
in making such payment) incurred by reason of the exercise of this Option or the
transfer of shares thereupon.

     4. Except as provided below, this Option is not transferable by the
Optionee otherwise than by will or by the laws of descent and distribution, and
is exercisable, during the life of the Optionee, only by her/him. This Option is
transferable by the Optionee, in whole or in part, to members of the Optionee’s
immediate family, to trusts solely for the benefit of such immediate family
members and to partnerships in which such family members and/or trusts are the
only partners. For this purpose, immediate family members means the Optionee’s
spouse, parents, children, stepchildren, grandchildren and legal dependants. Any
transfer of the Options made under this provision will not be effective until
notice of such transfer is delivered to the Company. If the Option is
transferred, it shall be exercisable solely by the transferee and shall remain
subject to the provisions of the Plan, including that it will be exercisable
only to the extent that the Optionee or the Optionee’s estate would have been
entitled to exercise it if the Optionee had not transferred the Option. In the
event of the death of the transferee prior to the expiration of the right to
exercise the Option, the period during which the Option shall be exercisable by
the executors, administrators, legatees and distributees of the transferee’s
estate, as the case may be, will terminate on the date one year following the
date of the transferee’s death. In no event will the Option be exercisable after
the Expiration Date. The transferred Option shall be subject to such other rules
as the Board shall determine.

     5. Notwithstanding any other provision hereof:

     (a) if the Optionee shall cease to be a non-employee director for reasons
other than retirement or death while holding any portion of the vested Option
that has not expired and has not been fully exercised, the Optionee, at any time
within one year after the date she/he ceases to be a non-employee director (but
in no event after the Expiration Date), may exercise the vested Option with
respect to any shares of Common Stock as to which the Optionee has not exercised
the Option on the date the Optionee ceased to be a non-employee director only to
the extent that the Option is exercisable at the time of termination;

     (b) if the Optionee shall cease to be a non-employer director by reason of
retirement or death while holding any portion of the Option that has not expired
and has not been fully exercised, the Optionee, or in the case of death, the
executors, administrators or distributees, as the case may be, at any time prior
to the Expiration Date, may exercise the Option with respect to any shares of
Common Stock as to which the Optionee has not exercised the Option on the date
the Optionee ceased to be a non-employee director, notwithstanding the
provisions of subparagraph 5(d) below; or

     (c) if the Optionee ceases to be a non-employee director for reasons other
than death and then dies holding any portion of the Option that has not been
fully exercised, the Optionee’s executors, administrators, heirs or
distributees, as the case may be, may, at any time within the greater of (1) one
year after the date of death or (2) the remainder of the period in which the
Optionee could have exercised the Option had the Optionee not died, (but in no
event under either (1) or (2) after the Expiration Date), exercise the Option
with respect to any shares as to which the Optionee could have exercised the
Option at the time of death.

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     (d) Subject to subparagraph (a) above, this Option with respect to all 100%
of the total number of shares of Common Stock covered by the Option shall become
exercisable on December 31 next succeeding the date hereof. In the event the
non-employee director ceases to be a non-employee director by reason of
retirement or death, the total number of shares of Common Stock covered by the
Option shall become exercisable.

     Retirement means the termination of the Optionee’s membership on the Board
on or after the Optionee’s 65th birthday, or on or after the Optionee’s 55th
birthday after having served as a member of the Board for 10 or more years. In
the event the Option is exercised by the executors, administrators, legatees or
distributees of the estate of the Optionee, the Company shall be under no
obligation to issue stock hereunder unless and until the Company is satisfied
that the person or persons exercising the Option are the fully appointed legal
representatives of the Optionee’s estate or the proper legatees or distributees
thereof.

     6. Under certain circumstances, if the Optionee’s membership on the Board
terminates during the three year period following a change in control of the
Company, this Option may become fully vested and exercisable. Please refer to
the Plan for more information.

     7. If prior to the Expiration Date changes occur in the outstanding Common
Stock by reason of stock dividends, recapitalization, mergers, consolidations,
stock splits, combinations or exchanges of shares and the like, the number,
class and the exercise price of shares subject to the Option shall be
appropriately adjusted by the Board, whose determination shall be conclusive. If
as a result of any adjustment under this paragraph any Optionee should become
entitled to a fractional share of stock, the Optionee shall have the right to
purchase only the adjusted number of full shares and no payment or other
adjustment will be made with respect to the fractional share so disregarded.

     8. Until the Optionee is advised otherwise by the Company, all notices and
other correspondence with respect to the Option will be effective upon receipt
at the following address:

Board of Directors
Zimmer Holdings, Inc.
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708

     9. Except as explicitly provided in this agreement, this agreement will not
confer any rights upon the Optionee, including any right with respect to
continued membership on the Board or any right to future awards under the Plan.
In no event shall the value, at any time, of this agreement, the Common Stock
covered by this agreement or any other benefit provided under this agreement be
included as compensation or earnings for purposes of any other compensation,
retirement, or benefit plan offered to Board members unless otherwise
specifically provided for in such plan.

     10. The Board shall have full authority and discretion, subject only to the
express terms of the Plan, to decide all matters relating to the administration
and interpretation of the Plan and this agreement and all such Board
determinations shall be final, conclusive, and binding upon the Optionee and all
interested parties. The terms and conditions set forth in this agreement are
subject in all respects to the terms and conditions of the Plan, as amended from
time to time, which shall be controlling. This agreement contains the entire
understanding of the parties and may not be modified or amended except in
writing duly signed by the parties. The waiver of, or failure to enforce, any
provision of this agreement or the Plan by the Company will not constitute a
waiver by the Company of the same provision or right at any other time or a
waiver of any other provision or right. The various provisions of this agreement
are severable and any determination of invalidity or unenforceability of any
provision shall have no effect on the remaining provisions. This agreement will
be binding upon and inure to the benefit of the successors, assigns, and heirs
of the respective parties. The validity and construction of this agreement shall
be governed by the laws of the State of Indiana.

                  ZIMMER HOLDINGS, INC.  
 
           

  By        

           

      David C. Dvorak    

      Executive Vice President, Corporate Services,    

      Chief Counsel & Secretary    

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