Exhibit 10.1
ZIMMER, INC. MONITOR AGREEMENT
          This Zimmer, Inc. Monitor Agreement (this “Agreement”), dated October
25, 2007, is entered into between Zimmer, Inc. (“Zimmer”), a Delaware
corporation, pursuant to the authority granted by the Board of Directors of its
parent company, Zimmer Holdings, Inc. (“Zimmer Holdings”) and The Ashcroft Group
Consulting Services, LLC (“AGCS”), which includes consultants, advisors, and
other professionals who are employed by AGCS or who are contract employees of
AGCS and whom, in its sole discretion, AGCS determines are necessary to fulfill
the terms of this Agreement (collectively “AGCS” or “Monitor”).
RECITALS
          WHEREAS, Zimmer and the United States Attorney’s Office for the
District of New Jersey (the “Office”) entered into a deferred prosecution
agreement, dated September 27, 2007 (“Deferred Prosecution Agreement”), which is
incorporated herein and attached hereto as Exhibit A;
          WHEREAS, Zimmer desires to retain AGCS, chaired by John D. Ashcroft,
to act as the Monitor under the terms of the Deferred Prosecution Agreement;
          WHEREAS, AGCS has agreed to act as the Monitor in accordance with the
Deferred Prosecution Agreement and this Agreement;
          WHEREAS, the Board of Directors and management of Zimmer recognize the
responsibility the Monitor has in monitoring the Deferred Prosecution Agreement
and that this responsibility has been placed upon it by the Office to ensure
that the terms of the Deferred Prosecution Agreement are fully complied with.
          NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements set forth herein, and intended to be legally bound hereby, Zimmer and
the Monitor hereby agree as follows:
ARTICLE I
APPOINTMENT AND TERM OF THE MONITOR
          Section 1.1. Appointment as Monitor. Zimmer hereby retains the Monitor
to perform all of the powers and responsibilities of the Monitor as set forth in
the Deferred Prosecution Agreement and as set forth in this Agreement.
          Section 1.2. No Client Relationship. As a result of the appointment of
the Monitor under the Deferred Prosecution Agreement, and by this express
Agreement, no client relationship will be formed between the Monitor and Zimmer.
The Monitor is not a law firm, although the Monitor will employ legal counsel
solely to provide it advice and counsel in order to fulfill its duties under the
Deferred Prosecution Agreement. The Monitor asserts that communications between
the Monitor and its counsel regarding legal advice to the Monitor are privileged
and confidential.

 

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          In addition, the Monitor will perform its duties and responsibilities
under the terms of the Deferred Prosecution Agreement and at the direction of
the Office. The Office has indicated both to the Monitor and Zimmer that the
Office intends to rely on oral and written representations made to the Monitor
by Zimmer and by Zimmer’s employees and agents. Notwithstanding the previous
terms of this paragraph, the Monitor shall at all times be an independent
contractor of Zimmer, and no client, contractor, agent, or other relationship
shall be formed between the Monitor and the Office or any other agency or
department of the United States.
          Section 1.3. Term, This Agreement shall be for a term commencing on
the date the Deferred Prosecution Agreement becomes effective and ending on the
date of the Monitor’s submission of the final report to the Office, or on such
earlier date as the Office may determine that the Monitor shall no longer serve
as “Monitor” under the Deferred Prosecution Agreement. The Monitor may terminate
this Agreement at any time by providing thirty (30) days prior written notice to
the General Counsel of Zimmer. Zimmer may not terminate this Agreement.
ARTICLE II
POWERS AND RESPONSIBILITIES OF THE MONITOR
          Zimmer and the Monitor agree that the Monitor shall have all of the
powers and responsibilities set forth in the Deferred Prosecution Agreement,
which is incorporated herein and attached hereto as Exhibit A.
ARTICLE III
ADVISORS AND COMPENSATION
          Section 3.1. Advisors. The Monitor may determine it is necessary to
engage other consultants, accountants, or professionals who are not employees or
contract employees of AGCS (the Monitor). Under these circumstances, the Monitor
will separately retain these consultants, accountants, or professionals pursuant
to Section 19(d) of the Deferred Prosecution Agreement.
          Section 3.2. Monitor’s Compensation. The Monitor and all professionals
engaged shall be reasonably compensated by Zimmer for its work on this
engagement pursuant to the terms and provisions negotiated and agreed upon
between the Monitor and Zimmer in the Agreement Regarding Fees and
Reimbursements executed contemporaneous herewith. The Monitor will submit
estimated budgets and invoices for fees and reimbursements to Zimmer as set
forth in the Agreement Regarding Fees and Reimbursements. John D. Ashcroft may
have a financial interest in some of the professional or consulting groups
retained.
          Section 3.3. Reimbursement for Other Professionals. In addition to any
fees, costs, and reimbursable expenses payable to the Monitor and all
professionals employed or engaged by AGCS or the Ashcroft Law Firm, LLC under
this Agreement, Zimmer agrees to reimburse and/or advance the Monitor for all
out-of-pocket expenses incurred in connection with this engagement under this
Agreement, including reasonable fees and disbursements to professionals engaged
by AGCS or the Ashcroft Law Firm, LLC.

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          Section 3.4. Reimbursable Expenses. Zimmer agrees to reimburse and/or
advance the Monitor for all out-of-pocket expenses reasonably incurred in
performing the duties and responsibilities under this Agreement. Such
reimbursable expenses include transportation expenses, including both commercial
and private aircraft transportation, as well as travel, lodging, meals,
telephone, and all other necessary expenses.
ARTICLE IV
INDEMNIFICATION
          Zimmer and Zimmer Holdings agree to indemnify the Monitor against any
and all losses, claims, damages and liabilities, joint or several, to which the
Monitor may become subject under any applicable Federal or state law, or
otherwise, and related to or arising out of the engagement of the Monitor
pursuant to, and the performance by the Monitor of the services contemplated by,
this Agreement and will reimburse and/or advance the Monitor for all reasonable
expenses (including counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not the Monitor is a party and whether or not such claim, action or proceeding
is initiated or brought by or on behalf of Zimmer or Zimmer Holdings. Zimmer and
Zimmer Holdings also agree that the Monitor shall have no liability (whether
direct or indirect, in contract or tort or otherwise) to Zimmer or Zimmer
Holdings or their security holders or creditors related to or arising out of the
engagement of the Monitor pursuant to, or the performance by the Monitor of the
services contemplated by, this Agreement except to the extent that any loss,
claim, damage or liability is found in a final judgment by a court to have
resulted from the Monitor’s bad faith or gross negligence.
          Zimmer and Zimmer Holdings agree that, without the Monitor’s prior
written consent, it will not settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding in respect of
which indemnification could be sought under the indemnification provision in
this Agreement (where the Monitor is an actual or potential party to such claim,
action or proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Monitor from all liability arising out of such
claim, action or proceeding.
          In the event that the Monitor is requested or required to appear as a
witness in any action brought by or on behalf of or against Zimmer, Zimmer
Holdings, or any Zimmer affiliate in which the Monitor is not named as a
defendant, Zimmer and Zimmer Holdings agree to reimburse and advance the Monitor
for all reasonable expenses incurred by it in connection with the Monitor’s
appearing and preparing to appear as such a witness, including, without
limitation, the fees and disbursements of its outside legal counsel, and to
compensate the Monitor commensurate with the Agreement Regarding Fees and
Reimbursements.
          Zimmer’s and Zimmer Holding’s obligations under Article IV will
survive any termination of this Agreement.
          The indemnification set forth in Article IV shall apply to all
professionals and consultants engaged by AGCS or the Ashcroft Law Firm, LLC.

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ARTICLE V
MISCELLANEOUS
          Section 5.1. Waiver, Amendment etc. No waiver, amendment or other
modification of this Agreement shall be effective unless in writing and signed
by each party to be bound thereby.
          Section 5.2. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri applicable to
contracts executed in and to be performed in that state.
          Section 5.3. Assignment. The Monitor may at its sole discretion assign
this Agreement to the Ashcroft Law Firm, LLC.
          Section 5.4. Controlling Agreement. Nothing in this Agreement shall be
construed to alter, change, or amend the Deferred Prosecution Agreement.
          IN WITNESS THEREOF, Zimmer and the Monitor have executed this
Agreement as of the date first written above.

            THE ASHCROFT GROUP CONSULTING SERVICES, LLC
      By:   /s/ Stacy W. Taylor         Name:   Stacy W. Taylor        Title:  
President        ZIMMER HOLDINGS, INC., parent company
of ZIMMER, INC.
      By:  /s/ Chad F. Phipps         Name:   Chad F. Phipps        Title:  
SVP, General Counsel & Secretary   

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EXHIBIT A
Deferred Prosecution Agreement

 

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AGREEMENT REGARDING FEES AND REIMBURSEMENTS
          This Agreement, dated October 25, 2007, is entered into between
Zimmer, Inc. (“Zimmer”), a Delaware corporation, pursuant to the authority
granted by the Board of Directors of its parent company, Zimmer Holdings, Inc.
(“Zimmer Holdings”), and The Ashcroft Group Consulting Services, LLC (“AGCS”).
          WHEREAS, Zimmer and the United States Attorney’s Office for the
District of New Jersey entered into a Deferred Prosecution Agreement, dated
September 27, 2007;
          WHEREAS, Zimmer and AGCS entered into the Zimmer, Inc. Monitor
Agreement (the “Monitor Agreement”), dated October 25, 2007, which specifically
references this Agreement;
          WHEREAS, pursuant to the terms and provisions of the Monitor
Agreement, Zimmer and AGCS negotiated and agreed that AGCS shall be reasonably
compensated by Zimmer for its work in performing the duties and responsibilities
set forth in the Deferred Prosecution Agreement;
          WHEREAS, pursuant to the terms and provisions of the Monitor
Agreement, Zimmer and AGCS negotiated and agreed that AGCS shall be paid
reasonable fees and shall be reimbursed and/or advanced for all expenses
incurred in connection with performing the duties and responsibilities set forth
in the Deferred Prosecution Agreement, including reasonable fees and
disbursements to professionals and advisors employed by or affiliated with AGCS,
and outside professionals and advisors not affiliated with AGCS;
          WHEREAS, pursuant to the terms and provisions of the Monitor
Agreement, Zimmer and AGCS negotiated and agreed that AGCS shall be reimbursed
and/or advanced for all other out-of-pocket expenses reasonably incurred in
performing the duties and responsibilities set forth in the Deferred Prosecution
Agreement, including but not limited to travel, private and commercial air
transportation, meals, telephone, and lodging expenses.
          NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements set forth herein, and intended to be legally bound hereby, Zimmer and
AGCS agree as follows:
          A. Zimmer will pay AGCS a fixed monthly fee of $750,000 for engagement
of AGCS’s Senior Leadership Group to perform the duties and responsibilities set
forth in the Monitor Agreement and the Deferred Prosecution Agreement. This
amount shall be due on the first business day of each month until the
termination of this Agreement.
          B. Zimmer will also pay fees on an hourly basis for engagement of
legal and business professionals, including but not limited to accountants,
consultants, attorneys, and other professionals employed or engaged by AGCS or
the Ashcroft Law Firm, LLC, to perform the duties and responsibilities set forth
in the Monitor Agreement and the Deferred Prosecution Agreement. The hourly
rates for professionals employed or engaged by AGCS or the Ashcroft

 

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Law Firm, LLC will be as defined in Exhibit A, which is incorporated herein and
attached hereto.
          C. Zimmer also agrees to reimburse and/or advance AGCS and the
Ashcroft Law Firm, LLC for all other expenses incurred in connection with its
performance of the duties and responsibilities set forth in the Monitor
Agreement and the Deferred Prosecution Agreement, including but not limited to
reasonable fees and disbursements to professionals and outside advisors engaged
by AGCS or the Ashcroft Law Firm, LLC.
          D. Zimmer also agrees to reimburse and/or advance AGCS and the
Ashcroft Law Firm, LLC for all other out-of-pocket expenses reasonably incurred
in performing the duties and responsibilities set forth in the Monitor Agreement
and the Deferred Prosecution Agreement. Such reimbursable expenses include but
are not limited to transportation expenses, including both commercial and
private aircraft transportation, as well as lodging, meals, telephone, and all
other necessary expenses. Zimmer understands that the estimated monthly budget
for such reimbursable expenses will average between $150,000 and $250,000 (but
may exceed this range) and agrees that these budget estimates are approved.
          E. Zimmer understands and agrees that AGCS’s total estimated monthly
budget, which includes the Ashcroft Law Firm, LLC, for all compensation, fees,
and expenses will average between $1,550,000 and $2,900,000 (but may exceed this
range). Zimmer further agrees that AGCS’s inclusion in the estimated monthly
budget for the Ashcroft Law Firm, LLC satisfies the requirements of section 19.
d under the Deferred Prosecution Agreement. Zimmer further agrees to make
payment on monthly invoices submitted by AGCS within thirty (30) days of
receipt.
          F. Zimmer understands and agrees that the estimated monthly budgets
set forth above may need to be adjusted from time to time based on potential or
actual changes in the scope of AGCS’s services, including the Ashcroft Law Firm,
LLC, and/or the need to add additional professionals necessary to perform the
duties and responsibilities set forth in the Monitor Agreement and the Deferred
Prosecution Agreement.
          G. Zimmer also agrees to pay, reimburse, and/or advance AGCS and any
professionals or consultants for work performed and expenses incurred prior to
the execution of this Agreement. Zimmer further agrees that payments,
reimbursements, and advancements to AGCS for work performed prior to the
execution this Agreement shall be paid in the manner and amounts set forth in
Paragraphs A through F above. Additionally, Zimmer agrees that the work
performed prior to the execution of this agreement was reasonable and necessary
under the Monitor Agreement and the Deferred Prosecution Agreement, and Zimmer
will make payment on invoices for such work within thirty (30) days of receipt.
          IN WITNESS THEREOF, Zimmer and AGCS have executed this Agreement as of
the date first written above.

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            THE ASHCROFT GROUP CONSULTING SERVICES, LLC
      By:   /s/ Stacy W. Taylor         Name:   Stacy W. Taylor        Title:  
President        ZIMMER HOLDINGS, INC.,
parent company of ZIMMER, INC.
      By:   /s/ Chad F. Phipps         Name:   Chad F. Phipps        Title:  
SVP, General Counsel & Secretary     

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EXHIBIT A
The Ashcroft Group Consulting Services, LLC — Hourly Billing Rates

          Personnel   Rates    
Senior Advisor
  $695-895/hour    
Senior Manager
  $550-795/hour    
Senior Associate
  $350-550/hour    
Associate
  $250-325/hour    
Non-professional support
  $50-150/hour    

The Ashcroft Law Firm, LLC — Hourly Billing Rates

          Personnel   Rates    
Senior Counsel
  $695-895/hour    
Counsel/Senior Associate
  $495-695/hour    
Associate
  $295-495/hour    
Paralegal
  $95-195/hour    
Administrative
  $50-175/hour    

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