exv10w3



 







Exhibit 10.3




CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION AGREEMENT



This Confidentiality, Non-Competition and Non-Solicitation Agreement (this “Agreement”) is made by
and between Zimmer S.r.l. (“Company”) and Bruno A. Melzi (“Employee”).




Recitals




     A. For purposes of this Agreement, “Parent” means an entity which is a holding company of or
holds a controlling interest in Company; “Affiliates” means a subsidiary of Company or the Parent
of Company or a company over which Company or any holding company of Company has control; and the
definition of each of Company, Parent and Affiliates, includes any of their successors-in-interest,
including, but not limited to, Zimmer, Inc. (“ZINC”).



     B. Company, Parent and the Affiliates are part of the global holdings of Zimmer Holdings,
Inc., a publicly traded corporation incorporated under the laws of the state of Delaware, U.S.A.,
the primary purpose of which is to serve as the umbrella entity for ZINC. Company, Parent and the
rest of the Affiliates located throughout the world are engaged in the development, manufacture,
distribution, and sale of orthopedic medical and/or oral rehabilitation devices, products, and
services.



Agreement



NOW, THEREFORE, in consideration of the foregoing recitals, Company and Employee agree as follows:




     1. Acknowledgements. Employee acknowledges that Company is engaged in the highly
competitive business of the development, manufacture, distribution, and sale of orthopedic medical,
oral rehabilitation and/or spine or trauma devices, products, and services, and that Employee
serves in an executive, managerial capacity, and/or other designated position for Company. Further,
Employee acknowledges that in the course of Employee’s employment with Company, Employee i) has
been given and will continue to be given access to Confidential Information (as hereinafter
defined); ii) has participated and will continue to participate in
the development of
and/or usage of inventions, products, concepts, methods, or technologies which are related to
Company’s business; iii) has been given and will continue to be given specialized training relating
to Company’s products and/or processes; and/or iv) has been given and will continue to be given
access to Company’s customers and other business relationships.



     2. Non-Disclosure of Confidential Information. Employee acknowledges that
Confidential Information is a valuable, special, and unique asset of Company, Parent and the
Affiliates and agrees to the following:




(A) Confidential Information Defined. The term “Confidential Information”
includes, but is not limited to, any and all of Company’s, Parent’s or Affiliates’
trade secrets, confidential and proprietary information and all other information
and data of Company that is not generally known to the public or other third
parties who could derive economic value from its use or disclosure. Confidential
Information includes, without limitation, the following: i) marketing, sales, and
advertising



 









 






information such as lists of actual or potential customers; customer
preference data; marketing and sales techniques, strategies, efforts, and data;
merchandising systems and plans; confidential customer information including
identification of purchasing personnel, account status, needs and ability to pay;
business plans; product development and delivery schedules; market research and
forecasts; marketing and advertising plans, techniques, and budgets; overall
pricing strategies; the specific advertising programs and strategies utilized, and
the success or lack of success of those programs and strategies; ii) organizational
information such as personnel and salary data; merger, acquisition and expansion
information; information concerning methods of operation; divestiture information;
and competitive information pertaining to Company’s distributors; iii) financial
information such as product costs; supplier information; overhead costs; profit
margins; banking and financing information; and pricing policy practices; iv)
technical information such as product specifications, compounds, formulas,
improvements, discoveries, developments, designs, inventions, techniques, new
products and surgical training methods; v) information disclosed to Employee as
part of a training process; and vi) information of third parties provided to
Employee subject to non-disclosure restrictions for use in Employee’s business for
Company. Confidential Information also includes any work product created by
Employee in rendering services for Company.




(B) Non-Disclosure of Confidential Information. Employee agrees that
Employee will not disclose, transfer, or use (or seek to induce others to disclose,
transfer, or use) any Confidential Information for any purpose other than i)
disclosure to authorized employees and agents of Company who are bound to maintain
the confidentiality of the Confidential Information; and/or ii) for authorized
purposes during the course of Employee’s employment in furtherance of Company’s
business.




(C) Protection of Confidential Information. Employee will notify Company
in writing of any circumstances which may constitute unauthorized disclosure,
transfer, or use of Confidential Information. Employee will use best efforts to
protect Confidential Information from unauthorized disclosure, transfer, or use.
Employee will implement and abide by all procedures adopted by Company to prevent
unauthorized disclosure, transfer, or use of Confidential Information.



     3. Ownership of Confidential Information and Inventions.




(A) Invention Defined. The term “Invention” includes, but is not limited to
ideas, programs, processes, systems, intellectual property, copyrightable materials,
discoveries, and/or improvements of which Employee conceives alone or in conjunction
with others during Employee’s employment with Company and/or within six (6) months
after Employee’s employment ends which relate to Company’s present or future
business. An Invention is covered by this Agreement regardless of whether i)
Employee conceived of the Invention in the scope of Employee’s employment; or ii)
the Invention is patentable.




(B) Ownership of Confidential Information and Inventions. Confidential
Information and Inventions are solely the property of Company. Employee agrees that



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Employee does not have any rights, title, or interest in any of the Confidential
Information or Inventions. Notwithstanding, Employee may be recognized as the
inventor of an Invention without retaining any other rights associated therewith.




(C) Disclosure and Assignment of Inventions. Employee will, without royalty
or other consideration- i) inform Company promptly and fully of each Invention in
writing with a detailed description of each Invention; ii) assign, and hereby does
assign, to Company all of Employee’s right, title and interest in and to each
Invention; and iii) execute at Company’s request and expense, any and all
applications, assignments, or other documents relating to any Invention and the
process of obtaining any patents or other protection for any Invention. However,
under those circumstances in which mandatory provisions of law provide that the
Company must pay an amount of money to the Employee in order for the Company to be
acknowledged as the owner of any Confidential Information and/or Inventions, the
Company shall be free to choose whether to pay the relevant applicable amount to the
Employee or not to exercise any rights to be acknowledged as the owner of any
Confidential Information and/or Inventions.



     4. Return of Confidential Information and Company Property. Immediately upon
termination of Employee’s employment with Company, Employee shall return to Company all of
Company’s property relating to Company’s business, including without limitation all of Company’s
property which is in the possession, custody, or control of Employee such as Confidential
Information, documents, hard copy files, copies of documents and electronic information/files.



     5. Obligations to Other Entities or Persons. Employee warrants that Employee is not
bound by the terms of a confidentiality agreement or any other legal obligation which would either
preclude or limit Employee from disclosing or using any of Employee’s ideas, inventions,
discoveries or other information or otherwise fulfilling Employee’s obligations to Company. While
employed by Company, Employee shall not disclose or use any Confidential Information belonging to
an entity or other person.



     6. Conflict of Interest and Duty of Loyalty. During Employee’s employment with
Company, Employee shall not engage, directly or indirectly, in any activity, employment or
business venture, whether or not for remuneration, that is i) competitive with Company’s business;
ii) deprives or potentially could deprive Company of any business opportunity; iii) conflicts or
potentially could conflict with Company’s business interests; or iv) is otherwise detrimental to
Company, including but not limited to preparations to engage in any of the foregoing activities.



     7. Non-Competition Covenants. Company and Employee acknowledge and agree that the
following non-competition covenants are reasonable and necessary to protect the legitimate
interests of Company, Parent and Affiliates, including, without limitation, the protection of
Confidential Information, and Inventions. Employee agrees to, and covenants to comply with, each
of the following separate and divisible restrictions:



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(A) Definitions.




1. “Competing Product” includes any orthopaedic product, process or service,
trauma product, process or service, including any new product formulation,
product modification, and/or product improvement (a) that resembles or
competes with a device, product, process or service Company, Parent, or
Affiliate researched, developed, manufactured, marketed, distributed, or sold
during Employee’s employment with Company and/or (b) with which the Employee
worked in the course of Employee’s employment with Company and/ or about
which the Employee obtained Confidential Information in the course of the
Employee’s employment with Company.




2. “Competing Organization” is defined as any organization that researches,
develops, manufactures, markets, distributes and/or sells one or more
Competing Products or has plans to research, develop, manufacture, market,
distribute, and/or sell one or more Competing Products.




3. “Same or Similar Capacity” is defined as: i) the same or similar capacity
or function in which the Employee worked for Company at any time during the
last two years of Employee’s employment; and/or ii) any executive or
managerial capacity; and/or iii) any other capacity in which Employee’s
knowledge of Confidential Information and/or Inventions would render
Employee’s assistance to a Competing Organization a competitive advantage,
and/or (iv) any consulting capacity or project worker.




4. “Restricted Geographic Area” is defined as: Italy, France, Switzerland
and Germany.




5. “Non-Competition Period” is defined as eighteen (18) months after the
Employee’s last day of employment with Company.




6. “Customer” is defined as any distributor, health care dealer, hospital,
hospital system, university practitioner, surgeon, dentist, health care
purchasing organization, or surgical group with whom Employee had a business
relationship on behalf of Company during the last two years of Employee’s
employment with Company, and/or any distributor, health care dealer,
hospital, hospital system, university practitioner, surgeon, dentist, health
care purchasing organization, or surgical group with whom Company had a
business relationship during the last two years of Employee’s employment with
Company.




7. “Potential Customer” is defined as any entity that Employee identified,
marketed to, and/or held discussions with regarding the research,
development, manufacture, distribution, and/or sale of one or more Competing
Products during the last two years of Employee’s employment with Company,
and/or any entity that Company identified, marketed to, and/or held
discussions with regarding the research, development, manufacture,
distribution, and/or sale of one or more Competing Products during the last
two years of Employee’s employment with Company.



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(B) Restrictive Covenants. During the Non-Competition Period, Employee
agrees to be bound by each of the following independent and divisible restrictions:




1. Employee will not seek or obtain employment, work for, consult with, or
lend assistance to any Competing Organization in a Same or Similar Capacity
in or for the Restricted Geographic Area.




2. Employee will not seek or obtain employment, work for, consult with, or
lend assistance to any Competing Organization in a Same or Similar Capacity
or in any capacity in or for the Restricted Geographic Area if it is likely
that as part of such capacity, Employee would inevitably use and/or
disclose any of Company’s Confidential Information and/or Inventions.




3. Employee will not provide, sell, market, or endeavor to provide, sell, or
market one or more Competing Products to any Customer, or otherwise solicit
or communicate about any Competing Products in a competitive capacity or for
a competitive purpose with any Customer in or for the Restricted Geographic
Area.




4. Employee will not provide, sell, market, or endeavor to provide, sell, or
market one or more Competing Products to any Potential Customer, or otherwise
solicit or communicate about any Competing Products in a competitive capacity
or for a competitive purpose with any Potential Customer in or for the
Restricted Geographic Area.




5. Employee will not adversely interfere with past, present, or prospective
business relationships between Company and any of its Customers, Potential
Customers, suppliers, distributors, agents, sales representatives, employees,
independent contractors, or other persons or entities with which Company,
Parent and/or Affiliates deal.




6. Employee will not employ, engage in personal service or favor (whether or
not compensated), solicit for employment, advise or recommend to any other
person or entity that such person or entity employ, or solicit for
employment, any individual now or hereafter employed by Company, or
otherwise induce or entice any such employee to leave Employee’s employment
with Company to work for, consult with, or lend assistance to any Competing
Organization.




7. Employee agrees that the divisible covenants contained in this Agreement
prohibit Employee from engaging in the restricted activities directly or
indirectly, whether on Employee’s behalf or on behalf of or for the benefit
of any other person or entity, including for Employee’s benefit, and that
all of the covenants restrict him from engaging in activities for a
competitive purpose.



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8. The performance of an activity that, if carried out by Employee, would be
restricted and prohibited by this Agreement, shall be restricted and
prohibited even if carried out through a fiduciary nominee –including spouse
and relatives, a trust, a legal entity or otherwise in an indirect way.




(C) Compensation. As compensation for the undertakings under this Section
7, Company shall pay Employee a gross amount equal to 60% (sixty percent) of the
Employee’s last gross fixed base compensation during the 365 (working and
non-working) days preceding the effective date of termination. Any benefit or
variable compensation in addition to the fixed compensation shall not be taken
into account. The total gross amount, determined as specified in this Section,
shall be the compensation for the undertakings during the entire “Non-Competition
Period” (i.e., 18 months).




The relevant amount shall be paid in three equal installments, as follows: (i) the
first installment shall be paid no later than 30 days after the end of the
employment relationship between Company and Employee; (ii) the second installment
shall be paid no later than 30 days after the end of the 9th month
after the end of the employment relationship between Company and Employee; (iii)
the third installment shall be paid no later than 30 days after the end of the
Non-Competition Period.




(D) For the avoidance of doubts, Company and Employee acknowledge that any
limitations on the Employee, set forth by provisions of law or deriving by other
contractual obligations and possibly identical or similar to those provided for by
the Restrictive Covenants under Section 7 (B), shall continue to be applicable
according to their respective terms.




It is understood that nothing provided in this Section 7 (D) shall exclude or
limit the rights of the Company and, respectively, of the Employee, to terminate
the employment agreement between themselves, in accordance with the law and
applicable contractual provisions.



     8. Reasonableness of Terms. Employee acknowledges and agrees that the restrictive
covenants contained in this Agreement are reasonably necessary to protect Company’s, Parent’s and
Affiliates’ legitimate interests in Confidential Information, Inventions, and goodwill.
Additionally, Employee acknowledges and agrees that the restrictive covenants are reasonable in
all respects, including, but not limited to, temporal duration, scope of prohibited activities and
geographic area. Employee further acknowledges and agrees that the restrictive covenants set forth
in this Agreement will not pose any hardship on Employee and that Employee will reasonably be able
to earn an equivalent livelihood without violating any provision of this Agreement.



     9. Non disparagement. Employee agrees to refrain from making any disparaging or
derogatory statements about Company, its products, Parent and any of the Affiliates, together
with their past, present and future officers, directors, employees, attorneys and agents.
Disparaging or derogatory statements include, but are not limited to, negative statements
regarding Company’s business and other practices.



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     10. Severability, Modification of Restrictions. The covenants and restrictions in
this Agreement are separate and divisible, and to the extent any clause, portion or section of
this Agreement is determined to be unenforceable or invalid for any reason, Company and Employee
acknowledge and agree that such unenforceability or invalidity shall not affect the
enforceability or validity of the remainder of the Agreement. If any particular covenant,
provision or clause of this Agreement is determined to be unreasonable or unenforceable for any
reason, including, without limitation, the temporal duration, scope of prohibited activity,
and/or geographic area covered by any non-competition, non-solicitation, non-disparagement or
non-disclosure covenant, provision or clause, Company and Employee acknowledge and agree that
such covenant, provision or clause shall automatically be deemed reformed such that the contested
covenant, provision or clause will have the closest effect permitted by applicable law to the
original form and shall be given effect and enforced as so reformed to whatever extent would be
reasonable and enforceable under applicable law. The parties agree that any court interpreting
the provisions of this Agreement shall have the authority, if necessary, to reform any such
provision to make it enforceable under applicable law.



     11. Remedies. Employee acknowledges that a breach or threatened breach by Employee
of this Agreement will give rise to irreparable injury to Company. Accordingly, Employee agrees
that Company shall under those circumstances, be entitled to obtain a Court’s order for specific
performance, as well as adequate injunctive relief (“provvedimento cautelare”) or any other
adequate judicial measure, to immediately stop such breach or threatened breach. Employee
acknowledges also that this Agreement would by itself constitute sufficient and final Court
evidence of the requirements necessary in order to obtain any of the above judicial measures,
except for summary evidence concerning the carrying out of competing activity by Employee, and in
addition to any other legal remedies which may be available. In addition to all other relief to
which it shall be entitled, Company shall be entitled to cease all payments to which Employee
would otherwise be entitled under Section 7 (C) hereto; continue to enforce this Agreement;
recover from Employee all payments made under Section 7 (C), and recover from Employee all
litigation costs and attorneys’ fees incurred by Company in any action or proceeding relating to
this Agreement in which Company prevails, including, but not limited to, any action or proceeding
in which Company seeks enforcement of this Agreement or seeks relief from Employee’s violation of
this Agreement.


Employee also agrees that for any breach of this Agreement, including, but not limited to, any
breach of the provisions set forth by Sections 2 (B), 2 (C), 3 (C), 4, 5, 6, 7, 9 or 17, Employee
shall pay to Company, by way of liquidated damages, an amount equal to 50% (fifty percent) of
Employee’s last gross fixed base compensation during the 365 (working and non-working) days
preceding the effective date of termination. In any event the Company may seek further damages, if
any.




     12. Survival of Obligations. Employee acknowledges and agrees that Employee’s
obligations under this Agreement, including, without limitation, Employee’s non-disclosure and
non-competition obligations, shall survive the termination of Employee’s employment with Company,
whether or not such termination is with or without cause or whether or not it is voluntary or
involuntary. Employee further acknowledges and agrees that Employee’s nondisclosure,
non-disparagement, non-solicitation and non-competition covenants set forth in Sections 2, 7 and 9
of this Agreement shall be construed as independent covenants and that no breach of any contractual



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or legal duty by Company shall be held sufficient to excuse or terminate the Employee’s obligations
under Sections 2, 7 and 9 of this Agreement or to preclude Company from obtaining injunctive relief
or other remedies for Employee’s violation or threatened violation of such covenants.




     13. Successors and Assigns. Company shall have the right to assign this Agreement,
and, accordingly, this Agreement shall inure to the benefit of, and may be enforced by, any and all
successors and assigns of Company, including without limitation by asset assignment, stock sale,
merger, consolidation or other corporate reorganization, and shall be binding on Employee,
Employee’s executors, administrators, personal representatives or other successors in interest. The
services to be provided by Employee to Company are personal to the Employee, and Employee shall not
have the right to assign Employee’s duties under this Agreement.



     14. Modification. This Agreement may not be amended, supplemented, or modified except
by a written document signed by both Employee and a duly authorized officer of Company.



     15. Waiver. The failure of Company to insist in any one or more instances upon
performance of any of the provisions of this Agreement or to pursue its rights hereunder shall not
be construed as a waiver of any such provisions or the relinquishment of any such rights.



     16. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but both of which when taken together will constitute one and the same
agreement.



     17. Duty to Provide Information. Throughout the duration of this Agreement and of the
Non-Competition Period, in order to allow the Company to verify Employee’s compliance with all the
obligations provided for herein, Employee shall provide Company with a written description of
Employee’s anticipated employments, business ventures, other activities, whether or not of a
professional/business nature, such description to include, without limitation, an assurance
satisfactory to Company that Employee’s activity is not in breach of this Agreement. Moreover the
Employee undertakes to answer promptly and exhaustively, including after the end of the
Non-Competition Period, to all requests of information that the Company may ask him in connection
with the employments, business ventures, other activities, whether or not of a
professional/business nature, that the Employee performs or is going to perform, throughout the
duration of this Agreement and of the Non-Competition Period; the Employee also undertakes to
provide to the Company, including after the end of the Non-Competition Period, a copy of the
documents, if any, concerning any and all such employments, business ventures and other activities.
All said requests of information and of documents by the Company shall be limited to what is
necessary in order to verify the Employee’s compliance with all the obligations provided for in
this Agreement.


Throughout the duration of this Agreement and of the Non-Competition Period, the Employee
undertakes to inform any future employers, principals, contractual parties, administrative bodies
of the entities of which the Employee may become a director or a shareholder, about the
restrictions and the obligations deriving to the Employee by this Agreement, before undertaking any
obligation or, depending on cases, before acquiring any interest in it.




     18. Entire Agreement; Date of Effect. This Agreement, including Recitals, constitutes
the entire agreement of the parties with respect to the subjects specifically addressed herein, and
is



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effective as of its last date of signature by the Parties. This Agreement supersedes any prior
agreements, understandings, or representations, oral or written, on the subjects addressed herein.
Notwithstanding the foregoing, to the extent the employee has an existing non-competition,
confidentiality, and/or non-solicitation agreement in favor of Company and has breached or violated
the terms thereof, Company may continue to enforce its rights and remedies under and pursuant to
such existing agreement.




     Employee’s signature below indicates that Employee has read the entire Agreement, Employee
understands what Employee is signing, and is signing it voluntarily. Employee agrees that Company
advised Employee to consult with an attorney prior to signing the Agreement.



“Company”




Zimmer S.r.l.




	 	 	 	 	 
	 	 	 
	By:  	/s/ ENZO FRACASSO
 	 
	 	Enzo Fracasso 	 
	 	Director 	 
	 



	 	 	 	 	 
	Milan 
	 	March 22, 2006
	 
	 	 
	Place
	 	Date






	 	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	“Employee”

 	 
	/s/ BRUNO A. MELZI
 	 
	Bruno A. Melzi 	 
	Chairman, Europe, Middle East and Africa 	 
	 



	 	 	 	 	 
	Milan 
	 	March 22, 2006
	 
	 	 
	Place
	 	Date






I declare that I specifically approve the following clauses:




2 (B) Non-Disclosure of Confidential Information (Employee shall not disclose, transfer or
use Confidential Information or induce others to do so); 3 (A) (Inventions include those conceived
within six months after employment ends and those conceived outside the scope of the employment); 3
(B) (Employee agrees not to have rights on any Confidential Information and Inventions); 3 (C)
(Employee assigns to Company all of Employee’s right, title and interest in each Invention and
accepts to sign documents requested by Company); 6 Conflict of Interest and Duty of Loyalty
(limitation of Employee’s activities during employment); 7 (B) Restrictive Covenants
(restrictions to Employee’s activities) at paragraphs: 1 (prohibition of employment and activities
for Competing Organizations in a Same or Similar Capacity); 2 (prohibition of employment and
activities for Competing Organizations in any capacity); 3



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(prohibition of activities regarding
Competing Products and towards Customers); 4 (prohibition of activities towards Potential
Customers); 5 (prohibition of interference with Company’s relationships with third parties); 6
(prohibition of offers, dealings and activities with Company’s employees); 7 (restrictions and
prohibitions are both direct and indirect and restrict Employees from activities with a competitive
purpose); 10 Severability, Modification of Restrictions (unenforceability and invalidity of
any provision shall not affect the remainder of the Agreement and shall automatically be deemed
reformed and any court shall have the authority to reform any such provision); 11 Remedies
(Company’s right to obtain order for specific performance and injunctive relief), (liquidated
damages); 12 Survival of Obligations (Employee’s obligations under this Agreement shall
survive the termination of Employee’s employment with Company, shall be construed as independent
covenants and no breach of any duty by Company shall be held sufficient to excuse or terminate the
Employee’s obligations); 13 Successors and Assigns (Company shall have the right to assign
this Agreement; Employee shall not have the right to assign Employee’s duties under this
Agreement); 15 No Waiver (failure of Company to require performance or to pursue its rights
shall not be construed as a waiver); 17 Duty to provide information (Employee’s obligation
to provide information to the Company about Employee’s activities); (Employee’s obligation to
provide information and documents requested by Company in order to verify compliance with this
Agreement)





	 	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 
	/s/ BRUNO A. MELZI
 	 
	Bruno A. Melzi 	 
	 



	 	 	 	 	 
	Milan 
	 	March 22, 2006
	 
	 	 
	Place
	 	Date






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