Exhibit 10.4
FIRST AMENDMENT OF BENEFIT EQUALIZATION
PLAN OF ZIMMER HOLDINGS, INC. AND ITS SUBSIDIARY
OR AFFILIATE CORPORATIONS PARTICIPATING IN THE
ZIMMER HOLDINGS, INC. RETIREMENT INCOME PLAN OR
THE ZIMMER PUERTO RICO RETIREMENT INCOME PLAN
               This First Amendment of Benefit Equalization Plan of Zimmer
Holdings, inc. and Its Subsidiary or Affiliate Corporations Participating in the
Zimmer Holdings, Inc. Retirement Income Plan or the Zimmer Puerto Rico
Retirement Income Plan (the “Plan”) is adopted by Zimmer Holdings, Inc. (the
“Company”).
Background
               A. The Plan was established by the Company effective August 6,
2001.
               B. The Company now wishes to amend the Plan.
Amendment
               1. Effective January 1, 2003, Article III of the Plan is amended
to read as follows:

               III. Participation in the Plan
              Each member of the Retirement Income Plan or the Puerto Rico Plan
who is employed by a Participating Employer (which term also includes the
Company) shall be eligible to participate in this Plan whenever (a) his benefit
under the applicable Retirement Plan, as from time to time in effect, would
exceed the limitations on benefits and contributions imposed by Section 415 of
the Code calculated from and after September 2, 1974, (b) amounts of his
compensation would be excluded from his “Final Average Compensation” determined
under the Retirement Plan by reason of the application of Section 401(a)(17) of
the Code, (c) he participates in the Zimmer Holdings, Inc. Executive Performance
Incentive Plan (the “Performance Incentive Plan”), or (d) he qualifies for Rule
of 70 benefits under paragraph F of Article IV of this Plan.
               2. Effective January 1, 2003, subparagraph IV.D.(ii) of the Plan
is amended to read as follows:
        (ii) a lump sum, provided that, at least one year prior to retirement,
the participant has elected, in writing, to receive supplemental pension
benefits in a lump sum, which payment shall be made within 60 days after his
retirement

 

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entitling him to receive payments under the applicable Retirement Plan; except
that, in the case of a participant who is eligible to retire under the
applicable Retirement Plan, who has an involuntary termination or unplanned
retirement, and who elects, in writing, 90 days prior to retirement to receive
supplemental pension benefits in a lump sum, such payment shall be made on the
first anniversary of his retirement. A Participant’s election of a lump sum
under this subparagraph (ii) is revocable, but it must be made on or before the
applicable one year or 90-day deadline set forth above to be effective.
               3. Effective as of the date this supplemental pension benefit was
adopted by the Compensation and Management Committee of the Board of Directors
of the Company, a new paragraph IV.E. is added to the Plan to read as follows:
        E. For purposes of calculating the pension benefits of J. Raymond
Elliott (“Elliott”) from the Company, Elliott will be entitled to receive an
additional supplemental pension benefit under this Plan equal to the excess of
(1) the benefit that would have been payable to Elliott under the Retirement
Income Plan if (a) Elliott was entitled to the Retirement Income Plan’s early
retirement subsidies when he commences his Retirement Income Plan benefits on or
after age 55, and (b) Elliott was credited with ten years of service and ten
years of credited service with the Company as of August 6, 2001, and service
accrued with the Company by Elliott subsequent to August 6, 2001 was added to
the ten years of service and ten years of credited service as of August 6, 2001,
over (2) the actual benefit payable to Elliott or his beneficiaries under the
Retirement Income Plan. In addition, the amount of any additional supplemental
pension benefits that Elliott is entitled to receive under paragraphs A, B, or C
of this Article IV will be determined as if Elliott were entitled to the
Retirement Income Plan’s early retirement subsidies and was credited with ten
years of service and ten years of credited service with the Company as of
August 6, 2001. The supplemental pension benefits granted to Elliott pursuant to
this paragraph E of Article IV will be reduced by the benefits paid to Elliott
by Bristol-Myers Squibb pursuant to the letter agreement between Bristol-Myers
Squibb and Elliott dated May 1, 2001 and shall be payable to Elliott (or his
beneficiary) pursuant to his election under Section D of this Article IV.
               4. Effective January 1, 2003, a new paragraph IV.F. is added to
the Plan to read as follows:
        F. If a member of the Retirement Income Plan or the Puerto Rico Plan
terminates from active service with a Participating Employer but has not
attained age 55, and is thus not otherwise eligible to retire, he will be
eligible for “Rule of 70” benefits under this Plan if: (1) on the date of his
termination, the sum of his combined whole and partial years of age and service,
rounded up to the next

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higher whole number, equals at least 70; (2) on the date of his termination, he
has completed a minimum of ten years of service as defined in the Retirement
Plan; and (3) he timely executes and does not timely revoke a general release in
a form acceptable to the Company and, if the Company so requires, he also
executes a covenant not to compete and/or a covenant not to solicit in a form
acceptable to the Company.
        Rule of 70 benefits under this paragraph F will not be payable to
participants: (1) who, although otherwise eligible for Rule of 70 benefits,
leave the employ of the Company prior to a scheduled termination date or
(2) whose service with the Company is terminated for any of the following
reasons:
               (i) Voluntary termination of employment.
               (ii) Mandatory retirement from employment in accordance with
Company policy or statutory requirements.
               (iii) Willful misconduct or activity deemed detrimental to the
interests of the Company. This may include, but is not limited to: dishonesty,
violation of Company policies (such as those relating to alcohol or drugs,
etc.), violation of safety rules, disorderly conduct, discriminatory harassment,
unauthorized disclosure of Company confidential information, or conviction of a
crime.
               (iv) The willful failure or refusal by the employee substantially
to perform his or her duties with the Company (other than any such failure
resulting from incapacity due to disability).
               (v) Refusal by the employee to accept a transfer to a position
(for which he or she is qualified by reason of knowledge, training and
experience) at a new work location that is less than 50 miles farther from the
employee’s residence than was his or her work location immediately prior to the
proposed transfer.
               (vi) The sale of all or part of the Company’s business assets if
the employee is offered employment by the acquirer of those assets.
               (vii) Retirement under a Company disability plan.
               (viii) The employee’s position is outsourced and, within four
weeks from the date that his or her employment with the Company terminates, the
employee is offered any type of employment with the entity, or any agent or
affiliate thereof, that will provide the outsourced services of the Company. For
purposes of this Plan, an employee’s position will be considered to have been
“outsourced” if the Company has arranged for a third party to provide to the
Company the services that the employee had been performing immediately prior to
the outsourcing.

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               If a participant is eligible under these “Rule of 70” provisions,
the participant or his beneficiaries shall be entitled to receive under the Plan
a supplemental pension benefit to offset the difference between the individual’s
actual Retirement Plan benefits as a vested terminated employee versus what his
benefit would have been as an early retiree. This amount will be determined (a)
without regard for any provision in the Retirement Plan incorporating
limitations imposed by Section 415 of the Code, in the manner set forth in
clause (1) of paragraph A of this Article IV, and (b) by disregarding any
limitations on the participant’s Final Average Compensation imposed by reason of
Section 401(a)(17) of the Code (if it produces a greater benefit), in the manner
set forth in paragraph B of this Article IV.
               Any Rule of 70 benefits to which a participant or his beneficiary
is entitled under this paragraph F will be reduced by the amount of any Rule of
70 benefits to which the participant is entitled under the Zimmer Holdings, Inc.
Severance Plan and shall be payable to the participant (or his beneficiary)
pursuant to his election under Section D of this Article IV.
                      Zimmer Holdings, Inc. has caused this First Amendment to
Benefit Equalization Plan of Zimmer Holdings, inc. and Its Subsidiary or
Affiliate Corporations Participating in the Zimmer Holdings, Inc. Retirement
Income Plan or the Zimmer Puerto Rico Retirement Income Plan to be signed by its
duly authorized officers this ___day of December, 2003.

            ZIMMER HOLDINGS, INC.
      By:   /s/ Sam R. Leno         (Signature)          Sam R. Leno      
(Printed)         Senior Vice President and Chief Financial Officer            
By:   /s/ Renee Rogers         (Signature)          Renee Rogers       
(Printed)         Vice President of Human Resources  

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