EXHIBIT 10.3
Zimmer Holdings, Inc.
2006 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION GRANTED TO
OPTIONEE:
STOCK AWARD SHARES:
EXERCISE PRICE PER SHARE: $
AWARD DATE:
Compensation and Management Development Committee:
Gentlemen:
          I understand that this option has been granted to provide a means for
me to acquire and/or expand an ownership position in Zimmer Holdings, Inc., and
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.
          I hereby agree to the foregoing and following terms and conditions and
accept the grant of this option subject thereto.

              Date   Signature

 
ZIMMER HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
NONQUALIFlED STOCK OPTION GRANT AGREEMENT FOR NON-US EMPLOYEES
     Zimmer Holdings, Inc. (the “Company”) hereby grants pursuant to the terms
of the heretofore designated stock option plan (the “Plan”) to the heretofore
named employee (the “Optionee”), as a matter of separate inducement and
agreement in connection with her/his employment, and not as or in lieu of any
salary or other compensation for her/his services, and upon the terms and
conditions set forth below, the option to purchase the number of fully paid and
non-assessable shares of the common stock of Zimmer Holdings, Inc., par value
$.01 per share (“Common Stock”), heretofore set forth (this “Option”) on or
before the expiration of ten years from the date hereof (the “Expiration Date”)
at the aforementioned exercise price per share. The Board of Directors of the
Company (the “Board”) has authorized the Compensation and Management Development
Committee of the Board (the “Committee”) to administer the Plan.
     This Option is granted upon and subject to the following terms and
conditions:
     1. No Option may be exercised hereunder for the purchase of shares unless
the Optionee shall have remained in the continuous employ of the Company or of
one of its subsidiaries for one year following the date hereof. Thereafter,
provided that the Optionee shall at the time of such exercise, except as
specifically set forth herein to the contrary, been in the employ of the Company
or of one of its subsidiaries, this Option may from time to time prior to the
Expiration Date be exercised in the manner hereinafter set forth, and this
Option may be exercised (i) only to the extent of 25 percent of the number of
shares to which this Option applies on or after the first anniversary and prior
to the second anniversary of the date of grant hereof, (ii) only to the extent
of 50 percent of the number of shares to which this Option applies on or after
the second anniversary and prior to the third anniversary of the date of grant
hereof, (iii) only to the extent of 75 percent of the number of shares to which
this Option applies

 

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on or after the third anniversary and prior to the fourth anniversary of the
date of grant hereof; and (iv) in its entirety on or after the fourth
anniversary of the date of grant hereof.
     2. This Option hereby granted may be exercised, in whole or in part in
accordance with the vesting schedule set forth in Section 1 above, by the
delivery of an exercise notice to the Company or the Company’s designated agent.
The exercise notice will be effective upon receipt by the appropriate person at
the Company or the Company’s agent and upon payment of the exercise price, any
fees and any other amounts due to cover the withholding taxes, payroll taxes and
similar-type payments as described herein. Such exercise notice (which, in the
Company’s discretion, may be, or may be required to be, given by electronic,
telefax or other specified means) shall specify the number of shares with
respect to which this Option is being exercised and such other representations
and agreements as may be required by the Company. In the event the specified
Expiration Date falls on a day which is not a regular business day at the
Company’s executive office in Warsaw, Indiana, then such written notification
must be received on or before the last regular business day prior to such
Expiration Date. Payment is to be made by certified personal check, or bank
draft, by payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board. No shares shall be sold or delivered
hereunder until full payment for such shares and any Tax-Related Items (as
defined in Section 8 below) has been made. At its discretion, the Committee may
modify or suspend any method for the exercise of this Option. 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 the Optionee’s
obligations under Section 8 hereof.
     4. 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.
     5. Notwithstanding any other provision hereof:
          (a) If the Optionee shall retire or cease to be employed by the
Company or any of its subsidiaries for any reason (other than death or
disability entitling the Optionee to receive payments under a disability pay
plan of the Company or any of its subsidiaries) after the Optionee shall have
been continuously so employed for one year from the aforementioned date of
grant, the Optionee may exercise this Option only to the extent that the
Optionee was otherwise entitled to exercise it at the time of such retirement or
cessation of employment with the Company or any of its subsidiaries, but in no
event after (i) the date that is ten years next succeeding the date this Option
was granted, in the case of retirement or cessation of employment with the
Company or any of its subsidiaries on or after the Optionee’s 65th birthday, or
on or after the Optionee’s 55th birthday after having completed 10 years of
service with the Company or any of its subsidiaries, or on or after the date the
sum of the Optionee’s age plus years of service, when rounded up to the next
highest number, equals at least 70 and the Optionee has completed ten years of
service with the Company or any of its subsidiaries and the Optionee’s
employment terminates for any reason other than death, disability, resignation,
willful misconduct, or activity deemed detrimental to the interest of the
Company and, where applicable, the Optionee has executed a general release, a
covenant not to compete and/or a covenant not to solicit as required by the
Company, or (ii) the date that is three months next succeeding retirement or
cessation of employment, in the case of any other retirement or cessation of
employment with the Company or any of its subsidiaries.
          (b) Whether military or government service or other bona fide leave of
absence shall constitute termination of employment for the purpose of this
Option shall be determined in each case by the Committee in its sole discretion.
          (c) If the Optionee has been continuously employed by the Company or
one of its subsidiaries for one year after the granting of this Option and
retires or ceases to be so employed by reason of disability entitling such
Optionee to receive payments under a disability pay plan of the Company or a
subsidiary, the Optionee shall be treated as though he/she remained in the
employ of the Company or a subsidiary until the earlier of (i) cessation of
payments under the disability pay plan, (ii) death, or (iii) attainment of 65th
birthday.
          (d) Except as provided in Section 4, in the event of the death of the
Optionee while in the employ of the Company or of any of its subsidiaries or
within whichever period after retirement or cessation of employment of the
Optionee specified in subparagraphs (a) and (c) is applicable, and after he/she
shall have been continuously so employed for one year after the granting of
her/his Option, this Option theretofore granted to her/him shall be exercisable
by the executors, administrators, legatees or distributees of her/his estate, as
the case may be, only to the extent that the Optionee would have been entitled
to exercise it if the Optionee were then living, subject to subparagraph
(e) herein, but in the case of the death of any Optionee after retirement or
cessation of employment in no event after the later of (i) the date twelve
months next succeeding such death and (ii) the last day of the period after
Retirement or other cessation of employment of the Optionee specified in
subparagraphs (a)(i) or (a)(ii) and provided, in any case, not after the
Expiration Date.

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          In the event this 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 this Option are
the duly appointed legal representatives of the Optionee’s estate or the proper
legatees or distributees thereof.
          (e) The provisions of Section 1 hereof restricting the percentage of
shares of an Option grant which can be exercised prior to the fourth anniversary
of the date of such grant shall not apply if (i) the Optionee has reached age
60; (ii) the Optionee dies while in the employ of the Company or any of its
subsidiaries; (iii) the Optionee shall have retired or ceased to be employed by
the Company or any of its subsidiaries (1) on or after the Optionee’s 65th
birthday, or (2) on or after the Optionee’s 55th birthday after having completed
10 years of service with the Company or any of its subsidiaries, or (3) on or
after the date the sum of the Optionee’s age plus years of service, when rounded
up to the next highest number, equals at least 70 and the Optionee has completed
ten years of service with the Company or any of its subsidiaries and the
Optionee’s employment terminates for any reason other than death, resignation,
willful misconduct, or activity deemed detrimental to the interest of the
Company and, where applicable, the Optionee has executed a general release, a
non-solicitation and/or non-compete agreement with the Company as required by
the Company; or (iv) the Optionee’s employment terminates for any reason other
than death, resignation, willful misconduct, or activity deemed detrimental to
the interest of the Company provided the Optionee executes a general release
and, where applicable, a non-solicitation and/or non-compete agreement with the
Company as required by the Company. For the purposes of this Option, service
with Bristol-Myers Squibb Company and its subsidiaries and affiliates before the
effective date of the Plan shall be included as service with the Company.
     6. Under certain circumstances, if the Optionee’s employment with the
Company or one of its subsidiaries 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 and the Plan prospectus 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 exercise
price per share and the number and class of shares subject to this Option shall
be appropriately adjusted by the Committee, 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. Regardless of any action the Company or the Optionee’s employer (the
“Employer”) takes with respect to any or all income tax, social insurance,
payroll tax, payment on account or other tax-related withholding (“Tax-Related
Items”), the Optionee acknowledges that the ultimate liability for all
Tax-Related Items legally due by the Optionee is and remains the Optionee’s
responsibility and that the Company and/or the Employer (1) make no
representations or undertakings regarding the treatment of any Tax-Related Items
in connection with any aspect of the Option, including, but not limited to, the
grant, vesting or exercise of the Option, the subsequent sale of shares of
Common Stock acquired pursuant to such exercise and the receipt of any
dividends; and (2) do not commit to structure the terms of the grant or any
aspect of the Option to reduce or eliminate the Optionee’s liability for
Tax-Related Items.
     Prior to the relevant taxable event, the Optionee shall pay or make
adequate arrangements satisfactory to the Company and/or the Employer to satisfy
all withholding and payment on account obligations of the Company and/or the
Employer. In this regard, if permissible under local law, the Optionee
authorizes the Company and/or the Employer, at its discretion, to satisfy the
obligations with regard to all Tax-Related Items legally payable by the Optionee
by one or a combination of the following:
          (a) withholding from the Optionee’s wages or other cash compensation
paid to the Optionee by the Company and/or the Employer; or
          (b) withholding from proceeds of the sale of shares of Common Stock
acquired upon exercise of the Option;
          (c) arranging for the sale of shares of Common Stock acquired upon
exercise of the Option (on the Optionee’s behalf and at the Optionee’s direction
pursuant to this authorization); or
          (d) withholding in shares of Common Stock, provided that the Company
only withholds the amount of shares of Common Stock necessary to satisfy the
minimum withholding amount.
     Finally, the Optionee shall pay to the Company or the Employer any amount
of Tax-Related Items that the Company or the Employer may be required to
withhold as a result of the Optionee’s participation in the Plan or the
Optionee’s purchase of shares of Common Stock that cannot be satisfied by the
means previously described. The Company may refuse to honor the exercise and
refuse to deliver the shares of Common Stock if the Optionee fails to comply
with the Optionee’s obligations in connection with the Tax-Related Items as
described in this section.
     9. In accepting the grant, the Optionee acknowledges that:
          (a) the Plan is established voluntarily by the Company, it is
discretionary in nature, and it may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan and
this agreement;

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          (b) the grant of the Option is voluntary and occasional and does not
create any contractual or other right to receive future grants of options, or
benefits in lieu of options, even if options have been granted repeatedly in the
past;
          (c) all decisions with respect to future option grants, if any, will
be at the sole discretion of the Company;
          (d) the Optionee’s participation in the Plan shall not create a right
to further employment with the Employer and shall not interfere with the ability
of the Employer to terminate the Optionee’s employment relationship at any time;
          (e) the Optionee is voluntarily participating in the Plan;
          (f) the Option is an extraordinary item that does not constitute
compensation of any kind for services of any kind rendered to the Company or any
subsidiary, and which is outside the scope of the Optionee’s employment
contract, if any;
          (g) the Option is not part of normal or expected compensation or
salary for any purposes, including, but not limited to, calculating any
severance, resignation, termination, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments and in no event should be considered as compensation for, or
relating in any way to, past services for the Company or any subsidiary;
          (h) in the event that the Optionee is not an employee of the Company,
the Option grant and the Optionee’s participation in the Plan will not be
interpreted to form an employment contract or relationship with the Company; and
furthermore, the Option grant will not be interpreted to form an employment
contract with any subsidiary of the Company;
          (i) the future value of the underlying shares of Common Stock is
unknown and cannot be predicted with certainty;
          (j) if the underlying shares of Common Stock do not increase in value,
the Option will have no value;
          (k) if the Optionee exercises his/her Option and obtains shares of
Common Stock, the value of those shares of Common Stock acquired upon exercise
may increase or decrease in value, even below the exercise price;
          (l) in consideration of the grant of the Option, no claim or
entitlement to compensation or damages shall arise from termination of the
option or diminution in value of the Option or shares of Common Stock purchased
through exercise of the Option resulting from termination of the Optionee’s
employment by the Company or any subsidiary or affiliate (for any reason
whatsoever and whether or not in breach of local labor laws) and the Optionee
irrevocably releases the Company and any subsidiary or affiliate from any such
claim that may arise; if, notwithstanding the foregoing, any such claim is found
by a court of competent jurisdiction to have arisen, then, by signing this
agreememt, the Optionee shall be deemed irrevocably to have waived the
Optionee’s entitlement to pursue such claim;
          (m) in the event of termination of the Optionee’s employment (whether
or not in breach of local labor laws), the Optionee’s right to receive or vest
in the Option under the Plan, if any, will terminate effective as of the date
that the Optionee is no longer actively employed and will not be extended by any
notice period mandated under local law (e.g., active employment would not
include a period of “garden leave” or similar period pursuant to local law);
furthermore, in the event of termination of the Optionee’s employment (whether
or not in breach of local labor laws), the Optionee’s right to exercise the
Option after termination of the Optionee’s employment, if any, will be measured
by the date of termination of the Optionee’s active employment and will not be
extended by any notice period mandated under local law; the Board or Committee
shall have the exclusive discretion to determine when the Optionee is no longer
actively employed for purposes of the Optionee’s Option grant;
          (n) the Company is not providing any tax, legal or financial advice,
nor is the Company making any recommendations regarding the Optionee’s
participation in the Plan, or the Optionee’s acquisition or sale of the
underlying shares of Common Stock; and
          (o) the Optionee is hereby advised to consult with the Optionee’s own
personal tax, legal and financial advisors regarding the Optionee’s
participation in the Plan before taking any action related to the Plan.
     10. The Optionee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Optionee’s
personal data as described in this agreement and any other Option grant
materials by and among, as applicable, the Employer, the Company and its
subsidiaries for the exclusive purpose of implementing, administering and
managing the Optionee’s participation in the Plan.
     The Optionee understands that the Company and the Employer may hold certain
personal information about the Optionee, including, but not limited to, the
Optionee’s name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in the Company, details of all Options
or any other entitlement to shares of stock awarded, canceled, exercised,
vested, unvested or outstanding in the Optionee’s favor, for the exclusive
purpose of implementing, administering and managing the Plan (“Data”).
     The Optionee understands that Data will be transferred to The Bank of New
York or such other stock plan service provider as may be selected by the Company
in the future, which is assisting the Company with the implementation,
administration and management of the Plan. The Optionee understands that the
recipients of the Data may be located in the United States or elsewhere, and
that the recipients’ country (e.g., the United States) may have different data
privacy laws and

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protections than the Optionee’s country. The Optionee understands that the
Optionee may request a list with the names and addresses of any potential
recipients of the Data by contacting the Optionee’s local human resources
representative. The Optionee authorizes the Company, The Bank of New York and
any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive,
possess, use, retain and transfer the Data, in electronic or other form, for the
sole purpose of implementing, administering and managing the Optionee’s
participation in the Plan. The Optionee understands that Data will be held only
as long as is necessary to implement, administer and manage the Optionee’s
participation in the Plan. The Optionee understands that he/she may, at any
time, view Data, request additional information about the storage and processing
of Data, require any necessary amendments to Data or refuse or withdraw the
consents herein, in any case without cost, by contacting in writing the
Optionee’s local human resources representative. The Optionee understands,
however, that refusing or withdrawing his/her consent may affect the Optionee’s
ability to participate in the Plan. For more information on the consequences of
the Optionee’s refusal to consent or withdrawal of consent, the Optionee
understands that he/she may contact his/her local human resources
representative.
     11. Until the Optionee is advised otherwise by the Committee, all notices
and other correspondence with respect to this Option will be effective upon
receipt at the following address:
Compensation and Management Development Committee of the Board of Directors of
Zimmer Holdings, Inc.
Zimmer Holdings, Inc.
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708
     12. Except as explicitly provided in this agreement, this agreement will
not confer any rights upon the Optionee, including any right with respect to
continuation of employment by the Company or any of its subsidiaries 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
employees of the Company or its subsidiaries unless otherwise specifically
provided for in such plan.
     13. The Company may, in its sole discretion, decide to deliver any
documents related to the Option granted under and participation in the Plan or
future options that may be granted under the Plan by electronic means or to
request the Optionee’s consent to participate in the Plan by electronic means.
The Optionee hereby consents to receive such documents by electronic delivery
and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party
designated by the Company.
     14. As a condition of receiving the Option, the Optionee has entered into
or reaffirmed a non-solicitation and/or non-compete agreement with the Company.
The Optionee understands and agrees that if he or she violates any provision of
such agreement, the Committee may require the Optionee to forfeit his or her
right to any unexercised portion of the Option, even if vested, and, to the
extent any portion of the Option has previously been exercised, the Committee
may require the Optionee to return to the Company any shares of Common Stock
received by the Optionee upon such exercise or any cash proceeds received by the
Optionee upon the sale of any such shares.
     15. The Board and the Committee 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 and Committee 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. If the
Optionee has received this or any other document related to the Plan translated
into a language other than English, and if the translated version is different
than the English version, the English version will control.

            ZIMMER HOLDINGS, INC.
      By                        

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