Document:

exv10w3

 

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

 

 

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  	 	 
	 	 	 	 
	 	 	 	 
	 

5exv10w4

 

EXHIBIT 10.4

Zimmer Holdings, Inc.

2006 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD GRANTED TO

AWARD RECIPIENT: [   ]

STOCK AWARD SHARES: [   ]

AWARD DATE: [   ]

Compensation and Management Development Committee:

Gentlemen:

     You have advised me that I have been granted the above restricted stock award subject to the
terms, restrictions and conditions set forth in this agreement, including the provision that
receipt of the shares of the stock award is contingent upon my remaining in the continuous employ
of Zimmer Holdings, Inc. or a subsidiary for period of five years from the Award Date. I
understand that some or all of such shares may be forfeited if I leave the Company prior to that
time, and it is expected that I will retain the stock I receive upon the lapse of the restrictions
consistent with the Company’s retention guidelines in effect at the time the restrictions lapse.

     My signature below indicates my agreement to all the terms, restrictions and conditions herein
set forth.

	 	 	 
	 	 	 
	 
	 	 
	Date
	 	Signature

 

ZIMMER HOLDINGS, INC.

2006 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD

     1. STOCK AWARD

     Under the terms of the Zimmer Holdings, Inc. 2006 Stock Incentive Plan (the “Plan”) the
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings,
Inc. (the “Committee”) has granted to the Award Recipient on the Award Date an award of restricted
Zimmer Holdings, Inc. Common Stock, par value $0.01 per share (“Common Stock”), as designated
herein subject to the terms, conditions, and restrictions set forth in this agreement (this “Stock
Award”). The purposes of such Stock Award are to motivate and retain the Award Recipient as an
employee of Zimmer Holdings, Inc. (the “Company”) or a subsidiary of the Company, to encourage the
Award Recipient to continue to give best efforts for the Company’s future success, and to further
the opportunity for stock ownership by the Award Recipient in order to increase the Award
Recipient’s proprietary interest in the Company. Except as may be required by law, the Award
Recipient is not required to make any payment (other than payments for taxes pursuant to Section 5
hereof) or provide any consideration other than the rendering of future services to the Company or
a subsidiary of the Company.

 

 

      2. STOCK CERTIFICATES

     The stock certificate(s), if any, evidencing the shares of this Stock Award shall be
registered on the Company’s books in the name of the Award Recipient as of the Award Date.
Physical possession or custody of such stock certificate(s), if any, shall be retained by the
Company or by a bank or other institution in accordance with rules adopted by the Committee until
such time as the applicable Restriction Period ends as set forth in Section 3 of this agreement or
such earlier termination of employment described in Section 3 of this agreement.

     While in its possession, the Company reserves the right to place a legend on the stock
certificate(s) restricting the transferability of such certificate(s) and referring to the terms
and conditions (including forfeiture) approved by the Committee and relating to the shares
represented by the certificate(s). After the applicable Restriction Period, or earlier termination
of employment, referred to above, ends, the Company shall cause an unlegended stock certificate(s)
covering the requisite number of vested shares registered on the Company’s books in the name of the
Award Recipient or Award Recipient’s beneficiary(ies), as appropriate, to be delivered to such
person(s) as soon as practicable after the applicable Restriction Period ends.

     The Company shall not be required to issue or deliver any certificate or certificates for
shares of its Common Stock upon the end of the Restriction Period 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, or (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.

      3. RESTRICTIONS AND FORFEITURES

     Except as otherwise provided in this Section 3, shares of stock covered by this Stock Award
shall be subject to the restrictions and conditions set forth herein during the period from the
Award Date until such shares become vested and nonforfeitable (the “Restriction Period”).

     Except as set forth in this section 3, one third of this Stock Award shall become vested and
nonforfeitable on the third anniversary of the Award Date provided the Award Recipient has been
continuously employed by the Company or a subsidiary of the Company since the Award Date; an
additional third of this Stock Award shall become vested and nonforfeitable on the fourth
anniversary of the Award Date provided the Award Recipient shall have been continuously employed by
the Company or a subsidiary of the Company since the Award Date; and the final third of this Stock
Award shall become vested and nonforfeitable on the fifth anniversary of the Award Date provided
the Award Recipient shall have been continuously employed by the Company or a subsidiary of the
Company since the Award Date.

     (a) Except as set forth below, during the Restriction Period, the Award Recipient may not
sell, transfer, pledge or assign any of the shares of stock covered by this Stock Award which have
not vested.

     (b) Except as the Committee may otherwise determine, the Award Recipient shall have with
respect to the stock covered by this Stock Award all of the rights of a stockholder of the Company,
including the right to vote the shares and receive dividends and other distributions provided that
distributions in the form of stock shall be subject to the same restrictions as the stock of the
underlying Stock Award. Certificates for shares of stock covered by this Stock Award shall be
delivered to the Award Recipient after the Restriction Period shall have expired without any
forfeiture occurring with respect to such shares.

     (c) Except as set forth below, if during the Restriction Period the Award Recipient terminates
employment with the Company or a subsidiary for any reason other than retirement, death or
disability, the shares covered by this Stock Award that are not already vested shall be forfeited
and will be deemed to be reacquired by the Company. If during the Restriction Period and after the
Award Recipient has been continuously employed for one year or more from Award Date, the Award
Recipient terminates employment with the Company or a subsidiary on account of retirement, death or
disability, the restrictions with respect to all the shares of this Stock Award shall be waived and
the shares will be deemed fully vested. In the event of the termination of an Award Recipient’s
employment by the Company, other than for cause, retirement, death or disability, after one year of
continuous employment with the Company after the Award Date, a pro rata portion of this Stock Award
shall be deemed vested as shown in Schedule A to this agreement. Such pro rata portion shall
include the portion, if any, of this Stock Award already vested under the terms of this agreement.
“Retirement” shall mean the Award Recipient’s termination of employment with the Company or a
subsidiary on or after (i) the Award Recipient’s 65th birthday, (ii) the Award Recipient’s 55th
birthday after having completed 10 years of service with the Company or any of its subsidiaries, or
(iii) the date the sum of the Award Recipient’s age plus years of service, when rounded up to the
next highest number, equals at least 70 and the Award Recipient has completed ten years of service
with the Company or any of its subsidiaries and the Award Recipient’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 Award Recipient has executed
a general release and/or a covenant not to solicit as required by the Company. “Disability” shall
mean qualifying and receiving payments under a disability pay plan of the

2

 

Company. “Cause” shall mean termination by the Company of the Award Recipient’s employment
upon the willful and continued failure by the Award Recipient to substantially perform the Award
Recipient’s duties with the Company (other than any such a failure resulting from the Award
Recipient’s incapacity due to physical or mental illness) for a period of at least 30 days after a
written demand for substantial performance is delivered to the Award Recipient, which demand
specifically identifies the manner in which the Award Recipient has not substantially performed the
Award Recipient’s duties, or the willful engaging by the Award Recipient in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise.
No act, or failure to act, on the Award Recipient’s part shall be deemed willful unless done, or
omitted to be done, by the Award Recipient not in good faith and without reasonable belief that the
Award Recipient’s act, or failure to act, was in the best interest of the Company. In the event of
special circumstances as determined by the Committee, the Committee may, in its sole discretion
where it finds that a waiver would be in the best interests of the Company, waive any restrictions
then remaining with respect to all or part of the stock awarded pursuant to this Stock Award and
accelerate the vesting with regard to such Stock Award or part thereof. For the purposes of this
Stock Award, 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.

     (d) In the event that the Award Recipient fails promptly to pay or make satisfactory
arrangements as to the Withholding Tax Obligation as provided in Section 5, all shares then subject
to restriction shall be forfeited by the Award Recipient and will be deemed to be reacquired by the
Company.

     (e) The Award Recipient may, at any time prior to the expiration of the Restriction Period,
waive all rights with respect to all or some of the shares covered by this Stock Award by
delivering to the Company a written notice of such waiver.

     (f) Any shares covered by this Stock Award which are forfeited by the Award Recipient shall be
available for use under the Plan in accordance with Section 3 of the Plan.

     (g) (i) A transfer of an Award Recipient’s employment from the Company to a subsidiary, or
vice versa, or from one subsidiary to another, (ii) a leave of absence, duly authorized in writing
by the Company, for military service or sickness or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days, and (iii) a leave of absence in
excess of ninety (90) days, duly authorized in writing, by the Company, provided the Award
Recipient’s right to reemployment is guaranteed either by a statute or by contract, shall not be
deemed a termination of employment. However, failure of the Award Recipient to return to the
employ of the Company at the end of an approved leave of absence shall be deemed a termination.
During a leave of absence as defined in (ii) or (iii), the Award Recipient will be considered to
have been continuously employed by the Company but such period shall not be counted in determining
the period of employment for vesting purposes of this Section 3.

     (h) (i) The Award Recipient agrees that, during the Restriction Period and for the
Non-Competition Period set forth below, except with the prior written consent of the Company, the
Award Recipient shall not in any way, directly or indirectly, own, manage, operate, control, accept
employment or a consulting position with or otherwise advise or assist or be actively connected
with or have any financial interest in, directly or indirectly, any enterprise which engages in, or
otherwise carries on, any business activity in competition with the business of the Company in any
geographic area (including, without limitation, the United States and each county in the State of
California in which the Company from time to time sells or offers its products for sale) in which
it engages in such business. The Award Recipient recognizes that the Company’s business is
worldwide in scope in that it directly advertises and solicits business from customers wherever
they may be found. Wherever “Company” is used in this sub-section (h), it shall include all
subsidiaries and affiliates of the Company. The Award Recipient further agrees that during the
periods referenced above the Award Recipient shall not take any action which might divert from the
Company or any of its affiliates, successors or assigns any opportunity which would be within the
scope of its or their respective present or future operations or business. It is understood that
ownership of not more than one percent (1%) of the equity securities of a public company shall in
no way be prohibited pursuant to the foregoing provisions.

          (ii) For purposes of this sub-section (h), the Non-Competition Period shall be a period of
one year commencing on the date of the Award Recipient’s termination of employment for any reason.

      4. DEATH OF AWARD RECIPIENT

     In the event of the Award Recipient‘s death prior to the delivery of vested shares hereunder,
such shares shall be delivered to the Award Recipient‘s estate, upon presentation to the Committee
of letters testamentary or other documentation satisfactory to the Committee.

3

 

     5. TAXES

     At such time as the Company is required to withhold taxes with respect to this Stock Award
covered hereby, or at an earlier date as determined by the Company, the Award Recipient shall make
remittance to the Company of an amount sufficient to cover the Company’s withholding obligation, if
any, with respect to federal, state or local income or FICA or earnings tax or any other applicable
tax assessment (plus interest or penalties thereon, if any, caused by a delay in making such
payment) incurred with respect to such Stock Award, including dividends payable to the Award
Recipient (the “Withholding Tax Obligation”). The Company and its subsidiaries shall, to the
extent permitted by law, have the right to deduct such Withholding Tax Obligation from any payment
or distribution of any kind otherwise payable or distributable to the Award Recipient, including
Common Stock subject to this Stock Award and dividends on such Common Stock; provided, in the case
of Common Stock, that the market value of the shares withheld may not exceed the Company’s minimum
required Withholding Tax Obligation with respect to this Stock Award. Prior to vesting of the
shares covered by this Stock Award, the dividends payable to the Award Recipient will be
compensation (wages) for tax purposes and will be included on the Award Recipient‘s W-2 form.

      6. CHANGES IN CAPITALIZATION

     If prior to the expiration of the Restriction Period 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 and class of shares subject to this
Stock Award shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. If as a result of any adjustment under this paragraph any Award Recipient should
become entitled to a fractional share of stock, the Award Recipient shall have the right only the
adjusted number of full shares and no payment or other adjustment will be made with respect to the
fractional share so disregarded.

      7. NOTICE

     Until the Award Recipient is advised otherwise by the Committee, all notices and other
correspondence with respect to this Stock Award 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

      8. NO ADDITIONAL RIGHTS

     Except as explicitly provided in this agreement, this agreement will not confer any rights
upon the Award Recipient, 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.

      9. BREACH OF RESTRICTIVE COVENANTS

     The Award Recipient understands and agrees that if he or she violates the covenant not to
compete contained in section 3(h) of this agreement or any other restrictive covenant in favor of
the Company that he or she is a party to, the Committee may require the Award Recipient to forfeit
his or her right to any unvested portion of the Stock Award and, to the extent that any portion of
the Stock Award has previously vested, the Committee may require the Award Recipient to return to
the Company the shares covered by the Stock Award or any cash proceeds received by the Award
Recipient upon the sale of such shares.

      10. CONSENT TO ELECTRONIC DELIVERY

     The Company may, in its sole discretion, decide to deliver any documents related to the Stock
Award granted under and participation in the Plan or future stock awards that may be granted under
the Plan by electronic means or to request the Award Recipient’s consent to participate in the Plan
by electronic means. The Award Recipient 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.

4

 

      11. CONSTRUCTION AND INTERPRETATION

     The Board of Directors of the Company (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 Award Recipient 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  	 	 
	 	 	 	 
	 	 	 	 

5

 

	 	 	 	 	 

Schedule A

	 	 	 	 	 
	Months Completed After Award Date	 	Percent Vested	 
	 
	 	 	 	 
	12
	 	 	11.111	%
	13
	 	 	12.037	%
	14
	 	 	12.963	%
	15
	 	 	13.889	%
	16
	 	 	14.815	%
	17
	 	 	15.741	%
	18
	 	 	16.667	%
	19
	 	 	17.593	%
	20
	 	 	18.519	%
	21
	 	 	19.444	%
	22
	 	 	20.370	%
	23
	 	 	21.296	%
	24
	 	 	22.222	%
	25
	 	 	23.148	%
	26
	 	 	24.074	%
	27
	 	 	25.000	%
	28
	 	 	25.926	%
	29
	 	 	26.852	%
	30
	 	 	27.778	%
	31
	 	 	28.704	%
	32
	 	 	29.630	%
	33
	 	 	30.556	%
	34
	 	 	31.481	%
	35
	 	 	32.407	%
	36
	 	 	33.333	%
	37
	 	 	36.111	%
	38
	 	 	38.889	%
	39
	 	 	41.667	%
	40
	 	 	44.444	%
	41
	 	 	47.222	%
	42
	 	 	50.000	%
	43
	 	 	52.778	%
	44
	 	 	55.556	%
	45
	 	 	58.333	%
	46
	 	 	61.111	%
	47
	 	 	63.889	%
	48
	 	 	66.667	%
	49
	 	 	69.444	%
	50
	 	 	72.222	%
	51
	 	 	75.000	%
	52
	 	 	77.778	%
	53
	 	 	80.556	%
	54
	 	 	83.333	%
	55
	 	 	86.111	%
	56
	 	 	88.889	%
	57
	 	 	91.667	%
	58
	 	 	94.444	%
	59
	 	 	97.222	%
	60
	 	 	100.000	%

6

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