Document:

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                                                                    EXHIBIT 10.7

                              ZIMMER HOLDINGS, INC.
                           TEAMSHARE STOCK OPTION PLAN

      1. PURPOSE: The purpose of the Zimmer Holdings, Inc. TeamShare Stock
Option Plan (the "Plan") is to advance the interests of Zimmer Holdings, Inc.
and its Subsidiaries and Affiliates by giving substantially all Employees a
stake in the Company's future growth, in the form of stock options, thereby
improving such Employees' long-term incentives and aligning their interests with
those of the Company's shareholders.

      2. DEFINITIONS: For purposes of this Plan:

            (a) "Affiliate" shall mean any entity in which the Company has an
      ownership interest of more than 50%.

            (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

            (c) "Common Stock" shall mean the Company's common stock.

            (d) "Company" shall mean Zimmer Holdings, Inc.

            (e) "Disability" or "Disabled" shall mean qualifying for and
      receiving payments under a long-term disability pay plan maintained by the
      Company or any Subsidiary or Affiliate or as required by or available
      under applicable local law.

            (f) "Employee" shall mean any individual employed by the Company or
      any Subsidiary or Affiliate, excluding leased employees within the meaning
      of Section 414(n) of the Code and key executives of the Company or any of
      its Subsidiaries or Affiliates. Employee shall also exclude any person who
      performs services for the Company if the Company treats the person for tax
      or labor law purposes as an independent contractor. If such person is
      subsequently determined to be an employee of the Company by the Internal
      Revenue Service or any other federal, state or local governmental agency
      or competent court of authority, such person will become an Employee on
      the date that this determination is finally adjudicated or otherwise
      accepted by the Company as long as he or she meets the other requirements
      of this Section 2(f). Such person shall not, under any circumstances, be
      treated as an Employee for the period of time during which the Company
      treated the person as an independent contractor for federal tax purposes
      even if the determination of the employee status has retroactive effect.
      In addition, any person who performs services for the Company, regardless
      of whether such person is an employee or independent contractor, shall not
      be an Employee for any period of time during which he or she has agreed in
      writing that he or she is not entitled to participate in the Company's
      employee benefit plans.

            (g) "Exchange Act" shall mean the Securities Exchange Act of 1934,
      as amended.

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            (h) "Fair Market Value" shall mean the average of the high and low
      sale prices of a share of Common Stock on the New York Stock Exchange
      composite tape on the date of measurement or on any date as determined by
      the Committee, or if there were no trades on such date, on the day on
      which a trade occurred next preceding such date.

            (i) "Retirement" and "Retire" shall mean termination of the
      employment of an Employee with the Company or any Subsidiary or Affiliate
      on or after (i) the Employee's 65th birthday or (ii) the Employee's 55th
      birthday if the Employee has completed 10 years of service with the
      Company, its Subsidiaries and its Affiliates. For the purposes of this
      Section 2(i) and all other purposes of this Plan, Retirement shall also
      mean termination of employment of an Employee with the Company or a
      Subsidiary or Affiliate for any reason (other than the Employee's death,
      disability, resignation, willful misconduct or activity deemed detrimental
      to the interests of the Company) where, on termination, the Employee's age
      plus years of service (rounded up to the next higher whole number) equals
      at least 70 and the Employee has completed 10 years of service with the
      Company, its Subsidiaries and its Affiliates and where applicable, the
      Employee has executed a general release, a covenant not to compete and/or
      a covenant not to solicit.

            (j) "Subsidiary" shall mean any corporation which at the time
      qualifies as a subsidiary of the Company under the definition of
      "subsidiary corporation" in Section 424 of the Code.

      3. SHARES AVAILABLE FOR OPTIONS: The amount of shares of the Company's
stock which may be issued for options granted under the Plan shall not exceed
[___________] shares, subject to adjustment under Section 10 hereof. If and to
the extent options granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, the shares
subject to such options shall again be available for purposes of the Plan.

      4. ADMINISTRATION: The Plan shall be administered under the supervision of
the Board of Directors of the Company, which shall exercise its powers, to the
extent herein provided, through the agency of the Compensation and Management
Development Committee (the "Committee") appointed by the Board of Directors of
the Company and shall consist of not less than three directors who shall serve
at the pleasure of the Board.

      The Committee, from time to time, may adopt rules and regulations for
carrying out the provisions and purposes of the Plan and make such other
determinations, not inconsistent with the terms of the Plan, as the Committee
shall deem appropriate. The interpretation and construction of any provision of
the Plan by the Committee shall, unless otherwise determined by the Board of
Directors, be final and conclusive.

      The Committee shall maintain a written record of its proceedings. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the Committee.

      Notwithstanding the foregoing, the Committee may designate persons other
than members of the Committee to carry out such responsibilities of the
Committee under the Plan as

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it may deem appropriate. The delegation of responsibilities will be effected by
written instrument executed by the Committee.

      5. ELIGIBILITY: An option may be granted to an Employee who is actively
employed with the Company or any Subsidiary or Affiliate on the grant date
provided the Employee regularly works or is anticipated to regularly work at
least 1,000 hours in a twelve (12) consecutive month period.

      The adoption of this Plan shall not be deemed to give any Employee any
right to be granted an option to purchase Common Stock of the Company, except to
the extent and upon such terms and conditions as may be determined by the
Committee.

      6. GRANTS AS OF EFFECTIVE DATE: On or after the effective date of the
Plan, the Committee shall grant options to purchase Common Stock under this Plan
("Replacement Options") to all Employees who hold outstanding options to
purchase stock of Bristol-Myers Squibb Company under the Bristol-Myers Squibb
Company TeamShare Stock Option Plan ("BMS Options"). The Replacement Options
shall replace the Employees' outstanding BMS Options. The Committee shall
establish the option price and number of shares of the Replacement Options based
on the option price and number of shares of the corresponding BMS Options,
adjusted to reflect the spinoff of the Company from Bristol-Myers Squibb
Company. In other respects, the Replacement Options shall have terms generally
consistent with the BMS Options that they replace, with such changes as the
Committee deems appropriate. Service credited under the terms of the BMS Options
before the date of grant of the Replacement Options shall be considered service
for purposes of the Replacement Options.

      7. STOCK OPTIONS: Stock options under the Plan shall consist of
nonqualified stock options.

      Each option shall be subject to the following terms and conditions:

            (a)   GRANT OF OPTIONS. The Committee shall (1) determine the
      date(s) on which options may be granted, (2) select the Employees to whom
      options may be granted or offered subject to collective bargaining where
      required, (3) determine the number of shares to be covered by each option
      so granted, (4) determine the terms and conditions (not inconsistent with
      the Plan) of any option granted hereunder (including but not limited to
      restrictions upon the options, conditions of their exercise, or on the
      shares of Common Stock issuable upon exercise thereof), and (5) prescribe
      the form of the instruments necessary or advisable in the administration
      of options.

            (b)   TERMS AND CONDITIONS OF OPTION. Any option granted under the
      Plan shall be evidenced by a Stock Option Agreement executed by the
      Company and the optionee, in such form as the Committee shall approve,
      which agreement shall be subject to the following terms and conditions and
      shall contain such additional terms and conditions not inconsistent with
      the Plan. Unless the Optionee rejects such Stock Option Agreement in
      writing, the Optionee shall be deemed to have accepted the Stock Option
      Agreement and shall be bound by all of the terms and conditions of the
      Stock Option Agreement and the Plan.

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                  (1) NUMBER OF SHARES SUBJECT TO AN OPTION. The Stock Option
            Agreement shall specify the number of shares of Common Stock subject
            to the Agreement.

                  (2) OPTION PRICE. Except as provided in Section 6, the
            purchase price per share of Common Stock purchasable under an option
            will be determined by the Committee but will be not less than the
            Fair Market Value in U.S. dollars of a share of Common Stock on the
            date of the grant of such option.

                  (3) OPTION PERIOD. The period of each option shall be fixed by
            the Committee, but no option shall be exercisable after the
            expiration of ten years from the date the option is granted.

                  (4) CONSIDERATION. Each optionee, as consideration for the
            grant of an option, shall remain in the continuous employ of the
            Company or of one of its Subsidiaries or Affiliates for at least one
            year from the date of the granting of such option, and no option
            shall be exercisable until after the completion of such one year
            period of employment by the optionee.

                  (5) EXERCISE OF OPTION.

                         (a) An option shall be exercised by delivering notice
                  to the Company or its designee at such address and in such
                  form as shall be designated by the Committee from time to time
                  or pursuant to such other procedures that may be established
                  by the Committee from time to time for the exercise of
                  options.

                         (b) The Committee shall have the discretion to
                  establish one or more methods, and the accompanying
                  procedures, that an optionee may use to exercise and pay the
                  option exercise price including, without limitation, the
                  designation of the brokerage firm or firms through which
                  exercises shall be effected. At its discretion, the Committee
                  may modify or suspend any method or procedure for the exercise
                  or payment of stock options.

                         (c) The option exercise price shall be paid in full at
                  the time of exercise, and the Company shall require the
                  optionee to pay the Company at the time of exercise the amount
                  of tax required to be withheld by the Company under applicable
                  foreign, federal, state and local withholding tax laws. This
                  payment may be in paid in U.S. dollars or in any other manner
                  that the Committee in its sole discretion approves including,
                  without limitation, the withholding of shares of Common Stock
                  that would otherwise be distributed; PROVIDED, HOWEVER, in no
                  event may shares of Common Stock be withheld in an amount that
                  exceeds the Company's minimum applicable withholding tax
                  obligation for federal (including FICA), state, foreign and
                  local tax liabilities with respect to the optionee.

                         (d) Except as provided in subsections (7), (8), (9),
                  and (10), an optionee must be an Employee at the time of
                  exercise of an option.

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                         (e) Notwithstanding anything in the Plan to the
                  contrary, the Committee may, in its sole discretion, allow the
                  exercise of a lapsed grant if the Committee determines that:
                  (i) the lapse was solely the result of the Company's inability
                  to execute the exercise of an option award due to conditions
                  beyond the Company's control and (ii) the optionee made valid
                  and reasonable efforts to exercise the award. In the event the
                  Committee makes such a determination, the Company shall allow
                  the exercise to occur as promptly as possible following its
                  receipt of exercise instructions subsequent to such
                  determination.

                  (6) NONTRANSFERABILITY OF OPTIONS. No option granted under the
            Plan shall be transferable by the optionee otherwise than by will or
            by the laws of descent and distribution, and such option shall be
            exercisable, during the optionee's lifetime, only by the optionee.

                  (7) TERMINATION. An optionee who terminates employment with
            the Company or any Subsidiary or Affiliate (other than by
            Retirement, Disability or death) may exercise the vested portion of
            such option (as such vesting is set forth in the Stock Option
            Agreement), until the earlier of three months from the optionee's
            termination date or the expiration of the option period set forth
            therein. In the case of an optionee who terminates employment prior
            to the full vesting of the award, the unvested portion of the option
            will lapse unless the Committee has exercised its discretionary
            authority to accelerate the vesting of all or part of such option.

                  If an optionee is laid off or granted a leave of absence under
            a policy of the Company or any Subsidiary or Affiliate, the
            optionee's absence from work shall be treated as though the optionee
            remained in the employ of the Company, Subsidiary or Affiliate,
            provided that (i) in the case of a leave of absence, the optionee
            returns to work at the end of the approved period of absence and
            (ii) in the case of a layoff, the optionee returns to work within
            twelve months of the date the period of layoff commenced. An
            optionee who does not return to work as set forth above shall be
            treated as if the optionee's employment terminated effective as of
            (i) the date the optionee was scheduled to return to work, in the
            case of an approved leave of absence and (ii) the expiration of the
            twelve month period, in the case of an optionee who is laid off.

                  (8) RETIREMENT. If an optionee shall cease to be employed by
            the Company on account of Retirement after the optionee has been
            continuously employed for one year or more after the grant of the
            option, or as otherwise determined by the Committee, the option
            shall be exercisable only to the extent that the optionee was
            otherwise entitled to exercise it at the time of such cessation of
            employment, unless otherwise determined by the Committee, and the
            option shall remain exercisable for the remainder of the option
            period set forth therein.

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                  (9) DISABILITY. An optionee who ceases to be actively employed
            by reason of Disability shall be treated as though the optionee
            remained in the employ of the Company or a Subsidiary or Affiliate
            until the earlier of (i) cessation of payments under a disability
            pay plan of the Company, Subsidiary or Affiliate, (ii) the
            optionee's death, or (iii) the optionee's 65th birthday.

                  (10) DEATH. In the event of the death of the optionee

                         (a) while in the employ of the Company or of any of its
                  Subsidiaries or Affiliates and provided the optionee shall
                  have been continuously employed for one year after the
                  granting of the option, the option shall be exercisable
                  immediately by the executors, administrators, legatees or
                  distributees of the optionee's estate, as the case may be, but
                  in no event after the expiration of the option period set
                  forth therein,

                         (b) while in the employ of the Company or a Subsidiary
                  or Affiliate but before the first anniversary of the grant,
                  the option will immediately lapse,

                         (c) after Retirement, as defined in Section 2(i), and
                  provided the optionee shall have been continuously employed
                  for one year after the granting of the option, the option
                  shall be exercisable immediately by the executors,
                  administrators, legatees or distributees of the optionee's
                  estate, as the case may be, but in no event after the
                  expiration of the option period set forth therein,

                         (d) after termination, but within the three month
                  period indicated in Section 7(b)(7), and provided the optionee
                  shall have been continuously employed for three years after
                  the granting of the option, the option shall be exercisable
                  immediately by the executors, administrators, legatees or
                  distributees of the optionee's estate, as the case may be,
                  until the earlier of one year from the date of death or the
                  expiration of the option period set forth therein.

                  In the event any option is exercised by the executors,
            administrators, legatees or distributees of the estate of a deceased
            optionee, the Company shall be under no obligation to issue stock
            thereunder unless and until the Company is satisfied that the person
            or persons exercising the option are the duly appointed legal
            representatives of the deceased optionee's estate or the proper
            legatees or distributees thereof.

                  (11) OPTIONEES WHO BECOME SUBJECT TO SECTION 16 OF THE
            EXCHANGE ACT. If, subsequent to the grant date, an optionee becomes
            subject to Section 16 of the Exchange Act, the option and all rights
            of the optionee thereunder, shall terminate effective as of the day
            prior to such designation.

      8.    CHANGE IN CONTROL: In the event of a change in control of the
Company prior to the exercise of options granted under this Plan, but after the
optionee has completed one year of continuous employment subsequent to the date
of the granting of an option, all outstanding

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options shall become immediately fully vested and exercisable notwithstanding
any provisions of the Plan to the contrary.

      In addition, in the event of a change in control of the Company, the
Committee may (i) determine that outstanding options shall be assumed by, or
replaced with comparable options by, the surviving corporation (or a parent or
subsidiary of the surviving corporation) or (ii) take such other actions with
respect to outstanding options as the Committee deems appropriate.

      For the purpose of this Plan, a change in control shall be deemed to have
occurred on the earlier of the following dates:

            (a)   The date any entity or person (including a "group" as defined
      in Section 13(d)(3) of the Exchange Act) shall have become the beneficial
      owner of, or shall have obtained voting control over, twenty percent (20%)
      or more of the outstanding common shares of the Company;

            (b)   The date the shareholders of the Company approve a definitive
      agreement (i) to merge or consolidate the Company with or into another
      corporation, in which the Company is not the continuing or surviving
      corporation or pursuant to which any common shares of the Company would be
      converted into cash, securities or other property of another corporation,
      other than a merger of the Company in which holders of common shares
      immediately prior to the merger have the same proportionate ownership of
      Common Stock of the surviving corporation immediately after the merger as
      immediately before, or (ii) to sell or otherwise dispose of substantially
      all the assets of the Company; or

            (c)   The date there shall have been a change in a majority of the
      Board of Directors of the Company within a twelve (12) month period
      beginning after the effective date of the Plan, unless the nomination for
      election by the Company's shareholders of each new director was approved
      by the vote of three-fourths of the directors then still in office who
      were in office at the beginning of the twelve (12) month period.

      9.    DETERMINATION OF BREACH OF CONDITIONS: The determination of the
Committee as to whether an event has occurred resulting in a forfeiture or a
termination or reduction of the Company's obligations in accordance with the
provisions of the Plan shall be conclusive.

      10.   ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK: In the event of changes
in the outstanding Common Stock of the Company by reason of stock dividends,
recapitalization, mergers, consolidations, stock splits, combinations or
exchanges of shares and the like, the aggregate number and class of shares
available under the Plan, the number, class and the price of shares subject to
outstanding options and the minimum number of shares that may be exercised (as
set forth in Section 7(b)(5)(d)) shall be appropriately adjusted by the
Committee, whose determination shall be conclusive.

      11.   TAXES: In connection with the transfer of shares of Common Stock to
an optionee (or at such earlier date as may be required by local law), the
Company may require the optionee to pay the amount required by any applicable
governmental entity to be withheld or otherwise deducted and paid with respect
to such transfer. Subject to Section 12 hereof, an optionee shall

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satisfy the obligation to pay withholding tax by providing the Company with
funds (in U.S. dollars) sufficient to enable the Company to pay such Withholding
Tax, or at the Company's discretion, the Company may retain or accept upon
delivery thereof by the optionee shares of Common Stock sufficient in value to
cover the amount of such withholding tax; provided that shares may not be
withheld in excess of the Company's minimum applicable withholding tax for
federal (including FICA), state, foreign and local tax liabilities with respect
to the optionee.

      12.   EMPLOYEES BASED OUTSIDE OF THE UNITED STATES: Notwithstanding any
provision of the Plan to the contrary, in order to foster and promote
achievement of the purposes of the Plan or to comply with provisions of laws in
other countries in which the Company, its Affiliates and its Subsidiaries
operate or have Employees, the Committee, in its sole discretion, shall have the
power and authority to (i) determine which Employees employed outside the United
States are eligible to participate in the Plan, (ii) modify the terms and
conditions of any options granted to Employees who are employed outside the
United States and (iii) establish subplans, modified option exercise procedures
and other terms and procedures to the extent such actions may be necessary or
advisable, and (iv) grant to Employees employed in countries wherein the
granting of stock options is impossible or impracticable, as determined by the
Committee, stock appreciation rights with terms and conditions that, to the
fullest extent possible, are substantially identical to the stock options
granted hereunder. In addition, the Committee may grant such stock appreciation
rights to individuals who provide services to the Company and who otherwise
would be characterized as employees, but who are not permitted to be Employees
of the Company pursuant to local laws of the country wherein the workers are
employed.

      13.   AMENDMENT OF THE PLAN: The Board of Directors may amend or suspend
the Plan at any time and from time to time. No such amendment of the Plan may,
however, without the written consent of the optionee, alter or impair any
option.

      14.   MISCELLANEOUS: By accepting any benefits under the Plan, each
optionee and each person claiming under or through such optionee shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken or made to be taken or made under the Plan by the
Company, the Board, the Committee or any other committee appointed by the Board.
No participant or any person claiming under or through him or her shall have any
right or interest, whether vested or otherwise, in the Plan or in any option
thereunder, contingent or otherwise, unless and until all of the terms,
conditions and provisions of the Plan and the Agreement that affect such
participant or such other person shall have been complied with. Nothing
contained in the Plan or in any Agreement shall require the Company to segregate
or earmark any cash or other property. Neither the adoption of the Plan nor its
operation shall in any way affect the rights and powers of the Company or any of
its Subsidiaries or Affiliates to dismiss and/or discharge any Employee at any
time.

      15.   CONDITIONS: The Company shall not be required to issue or deliver
any certificate or certificates for shares of Common Stock purchased upon the
exercise of any option granted under the Plan 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,

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and (iv) the payment to the Company, upon its demand, of any amount requested by
the Company for the purpose of satisfying its liability, if any, to withhold
federal, state or local income or earnings tax or any other applicable tax or
assessment (plus interest or penalties thereon, if any caused by a delay in
making such payment) incurred by reason of the exercise of any option granted
under the Plan or the transfer of shares thereupon.

      16.   TERM OF THE PLAN: The Plan shall become effective as of
[______________] by action of the Board of Directors. The Plan shall terminate
on the date that is ten years after the effective date of the Plan, or at such
earlier date as may be determined by the Board of Directors. Termination of the
Plan, however, shall not affect the rights of optionees under options
theretofore granted to them, and all unexpired options shall continue in force
and operation after termination of the Plan except as they may lapse or be
terminated by their own terms and conditions.

      17.   GOVERNING LAW: This Plan, and the validity and construction of any
options granted hereunder, shall be governed by the laws of the State of
Indiana.

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                                                                    EXHIBIT 10.8

                                                               February 21, 2001

J. Raymond Elliott
[Address]

                            PERSONAL AND CONFIDENTIAL

Dear Ray:

                  Previously you and Bristol-Myers Squibb Company
("Bristol-Myers Squibb") executed a letter agreement dated October 15, 2000 (the
"2000 Agreement"), and a letter amendment dated January 4, 2001 (the "2001
Amendment"), that described the bonus payments and other incentives that you
would receive in the event that Zimmer, Inc. ("Zimmer") was sold to a
third-party entity on or before September 30, 2001. It now appears possible that
Bristol-Myers Squibb may divest its interest in Zimmer through a "spin-off"
transaction involving the distribution of Zimmer stock to Bristol-Myers Squibb
shareholders (the "Spin-Off"). The Spin-Off may be preceded by a public offering
of Zimmer shares (the "IPO"). During the divestiture process, we believe that
operating the Zimmer business as usual is in the best interests of Bristol-Myers
Squibb, Zimmer and its employees. To provide assurance to you and to help ensure
that the Zimmer business is managed and operated efficiently and effectively
both before and after the divestiture, Bristol-Myers Squibb and Zimmer wish to
offer you the incentives described in this letter. If these incentives are
satisfactory and you wish to participate, please sign and return this letter in
the manner described on the last page of this letter.

                  The terms and conditions of this letter agreement will apply
in the event of an IPO or Spin-Off of Zimmer that occurs on or before September
30, 2001 and, with respect to payments and benefits contingent upon a Spin-Off,
the consummation of the Spin-Off on or before March 31, 2002. In the event of a
disposition of Zimmer which is not an IPO or Spin-Off occurring on or before
September 30, 2001 and, with respect to payments and benefits contingent upon a
Spin-Off, if the Spin-Off is not completed on or before March 31, 2002, the
terms and conditions of this letter agreement will terminate and will not apply.
Please note that if Zimmer is sold to a third party entity on or before
September 30, 2001, you will receive the bonus payments and other incentives
subject to the conditions described in the 2000 Agreement and the 2001
Amendment.

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J. Raymond Elliott
February 21, 2001
Page 2

                  As a member of the Zimmer management team, you are expected to
carry out the duties and responsibilities of your job during the coming months.
In addition, your assistance will be necessary to complete the divestiture
process. For your extra efforts and cooperation in helping Bristol-Myers Squibb
and Zimmer during this period, you will be provided with the following
incentives, subject to all of the terms and conditions of this letter agreement:

1. SPECIAL STOCK OPTION AWARD. Effective on the date of the Spin-Off or, if it
occurs first, the IPO, (the "Effective Date"), you will receive an option to
purchase shares of Zimmer stock with an economic value at the time of grant of
$875,000 using a generally accepted valuation methodology. This option will be
issued under a new option and equity compensation plan (the "Zimmer Stock
Incentive Plan") that will be adopted by Zimmer's Board of Directors. Your
option will vest in equal installments over a period of four years provided that
you remain employed with Zimmer during that time, or as provided otherwise under
the Zimmer Stock Incentive Plan. The exercise price will equal the fair market
value of Zimmer stock at the time the option is granted.

2. SPECIAL RESTRICTED STOCK AWARD. As of the Effective Date, you will receive a
grant of Zimmer restricted stock with a value (determined as if no restrictions
applied) of $300,000. The restricted stock will vest in three equal installments
on the third, fourth and fifth anniversaries of the grant of the award provided
that you remain employed with Zimmer during that time. Any dividends that are
payable on Zimmer stock will be paid to you on this restricted stock on a
current basis. This restricted stock will also be issued under the Zimmer Stock
Incentive Plan.

3. CONVERSION OF EXECUTIVE STOCK OPTIONS. Any Bristol-Myers Squibb stock options
granted to you prior to the Effective Date (including, but not limited to, the
options awarded to you on January 3, 2000 pursuant to a 50% reduction in target
cash bonus under the Bristol-Myers Squibb Company Performance Incentive Plan
("PIP")) that are outstanding on the date of the Spin-Off, will be converted
into new Zimmer stock options. The number of shares and the exercise price of
your new Zimmer options will be determined by the Bristol-Myers Squibb Board of
Directors based upon a conversion ratio that will be used for all Zimmer
employees and that preserves any gains earned through the date of conversion.
Your new Zimmer options will be vested in the same proportion that your
Bristol-Myers Squibb options were vested and the nonvested portion of your new
Zimmer options will vest from the original grant date of your Bristol-Myers
Squibb options according to the vesting schedule in such Bristol-Myers Squibb
options. Certain of your Bristol-Myers Squibb options were subject to a price
appreciation threshold of 30% for a period of eight years following grant. Your
new Zimmer options will also be subject to a 30% price appreciation threshold
that will be based upon the adjusted exercise price of your Zimmer options and
future share price appreciation of Zimmer shares, subject to the requirement
that the price appreciation threshold be met for 15 consecutive trading days.
Any Bristol-Myers Squibb stock options granted to you after the date of this
letter agreement that

<PAGE>

J. Raymond Elliott
February 21, 2001
Page 3

are converted into new Zimmer stock options will reflect any applicable
conditions to exercisability such as vesting requirements or price appreciation
thresholds.

4. CONVERSION OF RESTRICTED STOCK AWARDS. Your Bristol-Myers Squibb restricted
shares that are unvested as of the Effective Date, including those that you have
held less than one year from their date of grant, will be exchanged for Zimmer
restricted shares of equal value (in each case determined as if no restrictions
applied) determined on the Effective Date. Your restricted Zimmer shares shall
be subject to vesting based upon the vesting schedule of the original
Bristol-Myers Squibb restricted share grant.

5. LONG-TERM PERFORMANCE AWARDS.

      A.    1999-2001 BRISTOL-MYERS SQUIBB LONG-TERM PERFORMANCE AWARD. Your
            participation in the 1999-2001 Bristol-Myers Squibb Long-Term
            Performance Award ("1999-2001 LTP") cycle will terminate as of the
            Effective Date. In lieu of such participation or any payment under
            the 1999-2001 LTP, you will receive a cash payment equal to a full
            term award (i.e., based on 36 months of deemed participation) that
            you would have received pursuant to the terms of the 1999-2001 LTP
            award cycle had you worked for Bristol-Myers Squibb for the entire
            award period. Payment to you will be based upon Bristol-Myers
            Squibb's actual performance during the 36-month award cycle (which
            will be the same for other participants who continue to be employed
            by Bristol-Myers Squibb during the entire cycle) and will be
            determined by Bristol-Myers Squibb under the terms of the 1999-2001
            LTP. Payment to you of this cash amount will occur on the normal
            payment date for participants in the 1999-2001 LTP (which is
            anticipated to be in February, 2002).

      B.    2001-2003 BRISTOL-MYERS SQUIBB LONG-TERM PERFORMANCE AWARD. Your
            participation in the 2001-2003 Bristol-Myers Squibb Long-Term
            Performance Award ("2001-2003 LTP") cycle will terminate as of the
            Effective Date. In lieu of such participation or any payment under
            the 2001-2003 LTP, effective on the Effective Date, you will be
            awarded a Zimmer stock option with a value equal to the full LTP
            award. The number of shares and the exercise price of this Zimmer
            stock option will be determined by the Bristol-Myers Squibb Board of
            Directors using a generally accepted valuation methodology. Your
            option will vest in equal installments over a period of four years
            provided that you remain employed with Zimmer during that time or as
            provided otherwise under the Zimmer Stock Incentive Plan.

6. 2001 PERFORMANCE INCENTIVE PLAN. Your 2001 PIP payment under the 2001 PIP
will be calculated in accordance with the following terms and conditions: (i)
your full target bonus will be in effect in 2001; (ii) your payment will be
based upon actual results versus targeted

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J. Raymond Elliott
February 21, 2001
Page 4

performance criteria through the Effective Date, subject to the established PIP
payout schedule; (iii) if the Effective Date is on or before June 30, 2001, a
six-month bonus payment will be made; (iv) if the Effective Date occurs after
June 30, 2001, you will accrue additional months of bonus credit beyond six
months subject to any applicable conditions of the PIP; and (v) your 2001 PIP
payment will be made on December 15, 2001 and February 15, 2002 consistent with
the current plan provisions, provided that you remain employed with Zimmer
through the aforementioned payment dates.

7. SPECIAL SEVERANCE UPON TERMINATION OF EMPLOYMENT. In addition to the other
payments specified in this letter agreement, you may be eligible for special
severance payments pursuant to either (A) or (B) below (note that should you
become reemployed by Bristol-Myers Squibb or any of its affiliates following
your receipt of severance payments, you may be obligated to repay a portion of
any severance payments as required by the Bristol-Myers Squibb Company Severance
Plan ("BMS Severance Plan")). The special severance payments described in this
letter agreement will be in lieu of, and not in addition to, the severance (if
any) that might ordinarily have been payable to you under the terms of the BMS
Severance Plan.

      A.    EMPLOYMENT CONTINUED BY ZIMMER BUT TERMINATED WITHIN 12 MONTHS. In
            the event that your employment with Zimmer is initially continued
            after the Effective Date, but is subsequently terminated prior to
            the first anniversary of the date of the Spin-Off, and you do not at
            such time become reemployed by Bristol-Myers Squibb or any of its
            affiliates, you will receive severance "make-up" benefits (in lieu
            of any amount payable pursuant to the BMS Severance Plan). The
            severance benefits hereunder, when combined with any severance
            payments from Zimmer for which you may be eligible, will increase
            your total severance benefits under this paragraph to an amount
            equal to two years of your base salary at the rate in effect on the
            date immediately prior to the Effective Date (regardless of the
            amount that you would otherwise be entitled to receive under the
            terms of the BMS Severance Plan). The severance make-up benefits
            described in this paragraph will be paid to you in accordance with
            the payment schedule and subject to all of the terms and conditions
            of the BMS Severance Plan in effect as of the Effective Date
            (including but not limited to the terms providing for the
            eligibility for severance pay, and the determination of which
            circumstances constitute a termination pursuant to which severance
            pay would be payable).

      B.    EMPLOYMENT NOT CONTINUED BY ZIMMER. In the event that your
            employment is not continued by Zimmer as of the Effective Date, and
            you have neither been retained nor reemployed by Bristol-Myers
            Squibb at such time, you will be eligible to receive a severance
            benefit in an amount equal to two years of your base salary at the
            rate in effect on the date immediately prior to the Effective Date,
            (regardless of the amount that you would otherwise be entitled to
            receive

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J. Raymond Elliott
February 21, 2001
Page 5

            under the terms of the BMS Severance Plan). The severance benefits
            described herein will be paid to you in accordance with the payment
            schedule and subject to all of the terms and conditions of the BMS
            Severance Plan in effect as of the Effective Date, (including but
            not limited to the terms providing for the eligibility for severance
            pay, and the determination of which circumstances constitute a
            termination pursuant to which severance pay would be payable). You
            acknowledge and agree that, in the event that Zimmer provides
            severance payments to you, whether through contractual obligation or
            otherwise, the amount of severance payments that you actually
            receive from Zimmer will set off and reduce Bristol-Myers Squibb's
            obligations under this subparagraph (B) on a dollar-for-dollar
            basis.

8. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL.

      A.    SPECIAL SEVERANCE. In the event that Zimmer terminates your
            employment following a Change in Control (as defined below), and
            provided that your termination occurs after the Effective Date and
            prior to the first anniversary of the date of the Spin-Off, and
            provided further that you do not at such time immediately become
            reemployed by Bristol-Myers Squibb or any of its affiliates, at the
            time of your termination, Zimmer will provide you with a special
            severance payment equal to three times the sum of (i) the higher of
            your annual base salary in effect immediately prior to the
            occurrence of the event or circumstance upon which your termination
            is based or in effect immediately prior to the Change in Control,
            and (ii) the aggregate amount of your target annual bonus payment
            under the Zimmer Performance Incentive Plan (or any similar bonus
            plan of Zimmer then in effect) in effect immediately prior to the
            occurrence of the circumstances giving rise to your termination
            (provided that if it is not practicable to determine the amount that
            your aggregate target bonus would have been for the year of your
            termination, then your target annual bonus payment will be deemed to
            be the amount of the largest aggregate annual bonus paid to you
            during the five years immediately prior to the year in which you are
            terminated).

      B.    VESTING OF OPTIONS AND RESTRICTED STOCK. If you receive the special
            severance described in this paragraph 8, as of the date of your
            termination, any stock options awarded to you under the Zimmer Stock
            Incentive Plan will become fully exercisable (without regard to any
            vesting and price appreciation threshold requirements that would
            otherwise apply) for a period of three months commencing on the date
            of your termination. In addition, vesting and performance
            restrictions on any grants of restricted Zimmer stock awarded to you
            under the Zimmer Stock Incentive Plan which, as of the date of your
            termination,

<PAGE>

J. Raymond Elliott
February 21, 2001
Page 6

            have not then lapsed shall lapse automatically on the date of your
            termination and you will own such stock free and clear of all such
            restrictions.

      C.    DEFINITION OF CHANGE IN CONTROL. For the purpose of this paragraph
            8, a "Change in Control" shall be deemed to have occurred if:

            (i)   any Person (as defined below) is or becomes the beneficial
                  owner (as defined in Rule 13d-3 under the Securities Exchange
                  Act of 1934, as amended), directly or indirectly, of Zimmer's
                  securities (not including in the securities beneficially owned
                  by such Person any securities acquired directly from Zimmer or
                  its affiliates) representing 20% or more of the combined
                  voting power of Zimmer's then outstanding securities;

            (ii)  the individuals who constitute the Zimmer Board of Directors
                  immediately after the Effective Date cease for any reason to
                  constitute a majority thereof (other than any director
                  designated by a Person or entity who has entered into an
                  agreement with Zimmer to effect a transaction described in
                  clause (i), (iii) or (iv) of this sub-paragraph 8.C. and whose
                  election by the Zimmer Board of Directors or nomination for
                  election by Zimmer's stockholders was approved by a vote of at
                  least two-thirds of the directors then still in office who
                  either were directors immediately after the Effective Date or
                  whose election or nomination for election was previously so
                  approved;

            (iii) Zimmer's shareholders approve a merger or consolidation of
                  Zimmer with any other corporation, other than (A) a merger or
                  consolidation which would result in Zimmer's voting securities
                  outstanding immediately prior thereto continuing to represent
                  (either by remaining outstanding or by being converted into
                  voting securities of the surviving entity), in combination
                  with the ownership of any trustee or other fiduciary holding
                  securities under a Zimmer employee benefit plan, at least 75%
                  of the combined voting power of the voting securities of
                  Zimmer or such surviving entity outstanding immediately after
                  such merger or consolidation, or (B) a merger or consolidation
                  effected to implement a recapitalization of Zimmer (or similar
                  transaction) in which no Person acquires more than 50% of the
                  combined voting power of Zimmer's then outstanding securities;
                  or

            (iv)  Zimmer's shareholders approve a plan of complete liquidation
                  of Zimmer or an agreement for the sale or disposition by
                  Zimmer of all or substantially all of Zimmer's assets.

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J. Raymond Elliott
February 21, 2001
Page 7

                  The foregoing notwithstanding, the Spin-Off and any event
                  occurring in conjunction with the Spin-Off shall not
                  constitute a Change in Control and a Change in Control shall
                  not include any event, circumstance or transaction occurring
                  during the six-month period following a Potential Change in
                  Control which results from the action of any entity or group
                  which you control wholly or partly or with which you are
                  affiliated. For the purpose of this paragraph 8, "Potential
                  Change in Control" means Zimmer entering into an agreement the
                  consummation of which would result in a Change in Control, a
                  public announcement by Zimmer or any other Person of its
                  intent to take or consider taking actions which, if
                  consummated, would constitute a Change in Control, any Person
                  who is or becomes the beneficial owner, directly or indirectly
                  of Zimmer securities representing 10% or more of the combined
                  voting power of Zimmer's outstanding securities as of the date
                  of the Spin-Off, increases such Person's beneficial ownership
                  by 5% or more, or Zimmer's Board of Directors adopts a
                  resolution to the effect that, for the purpose of this
                  agreement, a Potential Change in Control has occurred. For the
                  purpose of this paragraph 8, "Person " has the meaning given
                  under Section 3(a)(9) of the Securities Exchange Act of 1934,
                  as amended, as modified and used in Sections 13(d) and 14(d)
                  thereof; however, a Person shall not include Bristol-Myers
                  Squibb, Zimmer or any of their respective subsidiaries, a
                  trustee or other fiduciary holding securities under an
                  employee benefit plan of Bristol-Myers Squibb, Zimmer or any
                  of their respective subsidiaries, an underwriter temporarily
                  holding securities pursuant to an offering of such securities,
                  or a corporation owned, directly or indirectly, by the
                  stockholders of Zimmer in substantially the same proportions
                  as their ownership of stock of Zimmer.

            D.    EXCISE PAYMENT. In the event that any special severance
                  payment or other payment to you exceeds 110% of the maximum
                  amount of such payments that could be paid to you under this
                  paragraph 8 without being subject to excise taxes under
                  sections 280G and 4999 of the Internal Revenue Code, Zimmer
                  will pay you an additional amount such that the amount you
                  retain after deduction of any excise tax and any other
                  Federal, state and local employment and income taxes is equal
                  to the present value of such special severance payments and
                  other payments. In the event that any special severance
                  payment or other payment to you exceeds the maximum amount of
                  such payments that could be paid to you without being subject
                  to excise taxes under sections 280G and 4999 of the Internal
                  Revenue Code but is less than 110%, of such amount, Zimmer
                  shall reduce such payments to you to an amount equal to
                  maximum amount that may be paid to you without being subject
                  to excise taxes under sections 280G and 4999 of the Internal
                  Revenue Code.

<PAGE>

J. Raymond Elliott
February 21, 2001
Page 8

            E.    OTHER SEVERANCE PLANS. The severance benefits described in
                  this paragraph 8 are in lieu of, and not in addition to, the
                  severance (if any) that might otherwise have been payable to
                  you under the terms of either the BMS Severance Plan or the
                  Zimmer Severance Plan.

9. VESTING IN PENSION PLAN AND SAVINGS PLAN. In addition to the incentives
specified in this letter agreement, your unvested benefits under the
Bristol-Myers Squibb Company Retirement Income Plan and the Bristol-Myers Squibb
Company Savings and Investment Program will become fully vested as of the
consummation of the Spin-Off.

10. SHORT SERVICE ADJUSTMENT. In view of your short service with Bristol-Myers
Squibb, and the impact that this may have on your ability to accrue a pension
benefit under the Bristol-Myers Squibb Retirement Income Plan, on the Effective
Date , you will be awarded deferred stock units with respect to Zimmer stock in
an amount equivalent to $500,000. At the time of your retirement or termination
of employment, your deferred stock units will be distributed to you in the form
of a lump sum cash payment. Your payment will be equal to the number of deferred
stock units awarded to you multiplied by (i) the market value of Zimmer stock at
the time of your termination or retirement, plus (ii) the sum of all dividends
credited on a share of Zimmer stock during the period commencing upon the date
of your deferred stock award and the date of your termination or retirement. The
number of your deferred share units will be adjusted to preserve the value of
your deferred stock units in the event of a Zimmer stock dividend, stock split,
recapitalization or other financial restructuring that affects the value of
Zimmer shares.

11. CONDITIONS OF THIS LETTER AGREEMENT. The incentive payments and benefits
described in this letter agreement are contingent upon: (a) the Effective Date
occurring on or before September 30, 2001 and, with respect to payments and
benefits contingent upon a Spin-Off, the consummation of the Spin-Off on or
before March 31, 2002; (b) your continuous employment with Zimmer through and
including the date of the relevant award, and your cessation of employment
within the Bristol-Myers Squibb controlled group (as defined under section
1563(a) of the Internal Revenue Code) as a result of the Spin-Off; (c) your
execution on the date of the consummation of the Spin-Off, and the
effectiveness, of a general release in favor of Bristol-Myers Squibb, its
affiliates, and others related to such entities (including but not limited to
their directors, officers, employees) and a limited release of Zimmer, its
affiliates, and others related to such entities (including but not limited to
their directors, officers, employees) with respect to Zimmer's obligations in
connection with the Spin-Off, in form and substance satisfactory to
Bristol-Myers Squibb and Zimmer, (d) your honoring the need for strict
confidentiality regarding the IPO and the Spin-Off and the terms of this letter
agreement, neither of which should be discussed with anyone (other than your
personal financial or legal advisors) without the express and specific
permission of George P. Kooluris, Senior Vice President, Corporate Development,
it being acknowledged that matters relating to the IPO and the Spin-Off (except
the terms of this letter agreement) may be discussed only with employees of
Bristol-Myers Squibb and its

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J. Raymond Elliott
February 21, 2001
Page 9

affiliates and their legal and financial advisors who are participating in the
IPO and the Spin-Off process and no others (and then only with those individuals
on a "need to know" basis); (e) your providing full support and cooperation in
the best interests of Bristol-Myers Squibb and Zimmer up to and including the
date of the Spin-Off; and (f) following the Spin-Off, your taking no action,
excluding normal competitive activity not contrary to law and not inconsistent
with your other contractual obligations to Bristol-Myers Squibb, Zimmer or their
affiliates, but including any actions prohibited by this letter agreement, which
would be considered contrary to the best interests of Bristol-Myers Squibb,
Zimmer or their affiliates.

12. NON-COMPETE AND NON-SOLICITATION. As a condition to your receipt of any
payments or benefits under this letter agreement, you agree that, for a period
commencing on the date of your execution of this letter agreement and ending on
the date which is one year after the consummation of the Spin-Off you will not,
directly or indirectly, (i) own, manage, control or participate in the
ownership, management or control of, be employed or engaged by or otherwise
affiliated or associated as a consultant, independent contractor or otherwise
with, any other corporation, partnership, proprietorship, firm, association, or
other business entity, or otherwise engage in any business, which is engaged in
any manner in, or otherwise competes with, the business of Zimmer or any of its
affiliates in the United States of America or any of the countries in which
Zimmer or any of its affiliates is doing business, (ii) solicit on behalf of any
other corporation, partnership, proprietorship, firm, association, or other
business entity, any person or business that is a customer or supplier of Zimmer
or any of its affiliates, or (iii) solicit for employment, hire, employ, or
retain in any capacity (including but not limited to as an employee, director,
independent contractor, consultant or otherwise), other than for employment
within Zimmer or its affiliates in conjunction with the IPO and Spin-Off or
within Bristol-Myers Squibb or its affiliates, any person who is employed or
otherwise engaged on a full or part-time basis by Bristol-Myers Squibb or its
affiliates (including but not limited to Zimmer). You understand and agree that
a breach by you of this paragraph would be a material breach of your obligations
under this letter agreement, and that, if any amounts have been provided to you
under the terms of this letter agreement prior to any such breach, in addition
to any other remedy that may be available to Bristol-Myers Squibb in law or at
equity, upon demand, you will promptly return all such amounts to Bristol-Myers
Squibb or Zimmer as appropriate.

13. NOT AN EMPLOYMENT AGREEMENT. The terms of this letter agreement neither bind
you to continued employment with Bristol-Myers Squibb, Zimmer, their affiliates
or any successor thereto, nor confer any rights upon you with respect to the
continuation of employment by Bristol-Myers Squibb, Zimmer, their affiliates or
any successor thereto.

14. WITHHOLDING. It is understood and agreed that all amounts, payments or
benefits payable to you as described in this letter agreement (except as
otherwise provided in Section 8D of this letter agreement) represent gross
amounts (as opposed to net after-tax amounts), and that Bristol-

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J. Raymond Elliott
February 21, 2001
Page 10

Myers Squibb, Zimmer or its affiliates or agents are hereby authorized to
withhold any and all applicable withholdings and taxes from any such amounts,
payments or benefits.

15. EXCLUSIVE RETENTION AND SEVERANCE BENEFIT. In the event that any or all
other employees of Zimmer receive or are offered either a retention or similar
bonus payable upon or in connection with the IPO or the Spin-Off (a "Retention
Bonus"), or an enhanced severance benefit payable upon or in connection with the
IPO or the Spin-Off, you understand and agree that you will not be eligible to
receive such Retention Bonus or enhanced severance benefit, except as explicitly
set forth in this letter agreement.

16. RETURN OF COMPANY PROPERTY AND USE OF COMPANY PERQUISITES. In the event of
your separation from Bristol-Myers Squibb, Zimmer or their affiliates (whether
prior to or in connection with the IPO or Spin-Off), you agree to return all
property belonging to Bristol-Myers Squibb, Zimmer or their affiliates
(including but not limited to any company laptop or computers, and other
equipment, documents and property belonging to Bristol-Myers Squibb, Zimmer or
their affiliates) upon such separation (in accordance with the normal practice
relating thereto); provided, however, at Zimmer's discretion you may continue to
retain use of your employer-provided automobile, and, if applicable, may
continue to use the employer-provided financial counseling, tax preparation
assistance, and club membership.

17. GOVERNING LAW; JURISDICTION. This letter agreement will be governed by and
construed under the laws of the State of New York, without regard to its
principles of conflict of laws. You and Bristol-Myers Squibb agree to submit to
the jurisdiction of the courts of the state of New York in the event of any
dispute regarding this letter agreement.

Please acknowledge your understanding of and agreement to the provisions of this
letter agreement by signing and returning a copy of this letter to me by March
9, 2001.

Very truly yours,

George P. Kooluris
Senior Vice President
Corporate Development
Bristol-Myers Squibb Company

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J. Raymond Elliott
February 21, 2001
Page 11

J. Raymond Elliott
President, Zimmer
Zimmer, Inc.

AGREED TO AND ACCEPTED:

___________________________________

DATE:  ____________________________

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