Document:

exv10w2

 

Exhibit 10.2

BENEFIT EQUALIZATION PLAN

OF

ZIMMER HOLDINGS, INC. AND ITS SUBSIDIARY OR

AFFILIATED CORPORATIONS PARTICIPATING IN THE

ZIMMER HOLDINGS, INC. SAVINGS AND INVESTMENT PROGRAM

(effective as of August 6, 2001)

I. Purpose of the Plan

     The purpose of this Plan is to provide benefits for certain participants in the Zimmer
Holdings, Inc. Savings and Investment Program (the “Savings and Investment Program” or “Program”)
whose funded benefits are or will be limited by application of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) and the Internal Revenue Code of 1986, as amended (the
“Code”). The Plan is intended to be an “excess benefit plan” as that term is defined in Section
3(36) of ERISA with respect to those participants whose benefits under the Program have been
limited by Section 415 of the Code, and a “top hat” plan meeting the requirements of Sections
201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA with respect to those participants whose
benefits under the Program have been limited by Section 401(a)(17) of the Code.

     This Plan is a successor plan to the Benefit Equalization Plan of Bristol-Myers Company and
Its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Company Savings and
Investment Program, as in effect on January 1, 1996 and as amended thereafter (the “Prior Plan”).
Participants in the Prior Plan who as of the Effective Date are employed by a corporation
participating in the Program (a “Participating Employer”) shall as of the Effective Date become
participants in this Plan and shall not participate or be entitled to benefits under the Prior
Plan. As of the Effective Date, each such participant shall have an account balance under this
Plan that is equal to the participant’s account balance as of the Effective Date under the Prior
Plan, and this Plan assumes the liabilities for all benefits payable under the Prior Plan with
respect to such participants.

II. Administration of the Plan

     The Benefits Committee (the “Committee”) appointed by the Board of Directors of Zimmer
Holdings, Inc. (the “Company”) to administer the Savings and Investment Program shall also
administer this Plan. The Committee shall have full authority to determine all questions arising
in connection with the Plan, including its interpretation, may adopt procedural rules, and may
employ and rely on such legal counsel, such actuaries, such accountants and such agents as it may
deem advisable to assist in the administration of the Plan. Decisions of the Committee shall be
conclusive and binding on all persons.

III. Participation in the Plan

     Each participant in the Savings and Investment Program who is employed by a Participating
Employer (which term also includes the Company) shall be eligible to participate in this Plan
whenever (a) the allocation to his account under the Savings and Investment Program, as from time
to time in effect, would exceed the limitations on benefits and contributions

 

 

imposed by Section
415 of the Code calculated from and after September 2, 1974 or (b) amounts of his compensation
would be excluded from his “Annual Benefit Salary or Wages” determined under the Program by reason
of the application of Section 401(a)(17) of the Code.

IV. Equalization Benefits Related to the Savings and Investment Program

     A. A participant shall be entitled to equalization benefits under this Plan only for those
plan years in which (a) he has elected to have a percentage of his Annual Benefit Salary or Wages
contributed on his behalf to the Program and (b) he also has in effect an election, made prior to
the year with respect to which such contributions relate, to defer a specified percentage of his
Annual Benefit Salary or Wages and to have such amount credited to this Plan in the manner
described in paragraphs B and C of this Article IV.

     B. The Participating Employer that employs a participant meeting the requirements of paragraph
A for a plan year shall credit, or shall cause to be credited, a book account to record the amount
of such participant’s Annual Benefit Salary or Wages that he has elected to have credited to this
Plan, commencing at the time such participant is precluded from having additional contributions
made to his accounts under the Savings and Investment Program because of the limitations of Section
415 of the Code, and continuing through the end of the plan year. Such Participating Employer
shall also credit, or cause to be credited, a book account to record the amount of “Employing
Company contributions”, if any, that would have been contributed on such participant’s behalf for
such plan year to the Program pursuant to the terms of the Program had the amount of the
participant’s Annual Benefit Salary or Wages credited pursuant to this paragraph B been instead
contributed to the Program.

     C. The Participating Employer that employs a participant meeting the requirements of paragraph
A for a plan year shall also credit, or cause to be credited, a separate book account to record the
amount of such participant’s Annual Benefit Salary or Wages that he has elected to have credited to
this Plan, commencing at the time such participant is precluded from having additional
contributions made to his accounts under the Savings and Investment Program because of the
limitations of Section 401(a)(17) of the Code, and continuing until the end of the plan year or, if
sooner, the time amounts begin to be credited to the participant’s book account under the Plan
pursuant to the first sentence of paragraph B for such plan year. No participant may earn credits
under both this paragraph C and under paragraph B at the same time; whenever possible, credits
shall be made pursuant to paragraph B prior to this paragraph C. Such Participating Employer shall
also credit, or cause to be credited, a book account to record the amount of “Employing Company
contributions”, if any, that would have been contributed on such participant’s behalf for such plan
year to the Program pursuant to the terms of the Program had the amount of the participant’s Annual
Benefit Salary or Wages credited pursuant to this paragraph C been instead contributed to the
Program.

     D. The election to have amounts credited to this Plan may be suspended at the participant’s
option during any period of time that the participant establishes to the satisfaction of the
Committee that he is undergoing a financial hardship as defined in Article VI of this Plan.

     E. Each participant’s account shall be deemed to be invested in any one or a combination of
the investment funds offered under the Savings and Investment Program (other

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than the
Zimmer Stock Fund and the Bristol-Myers Stock Fund) in 1% increments. On any business day the participant may,
pursuant to telephonic notification with the administrative agent of the Committee (the
“Administrative Agent”), (i) elect to have future credits to his account under this Article IV
deemed to be invested, in 1% increments, among such funds established under the Savings and
Investment Program (other than the Zimmer Stock Fund and the Bristol-Myers Stock Fund) effective as
of the first day of the next payroll period (or as soon as practicable thereafter) and (ii) elect
that the credits to his account under this Article IV representing any type of investment under the
Plan be deemed to be reduced to cash (in 1% increments) and that such deemed cash be invested in
such other funds which the participant shall designate in such election, effective as of the next
business day (or as soon as practicable thereafter). Any investment election given by a
participant shall continue in effect until changed by the participant. To the extent a participant
makes no election, all such credits shall be deemed to have been invested in the same manner and in
the same proportion as elected by the participant with respect to allotments credited to his
account under the Savings and Investment Program (and any changes in such investment elections),
except that any election (or change in election) to invest in the Zimmer Stock Fund and the
Bristol-Myers Stock Fund shall not be honored and such credits shall be deemed invested in equal
amounts in such other funds unless the participant has not elected to have any amounts invested in
such other funds, in which case such credits shall be deemed invested in the Fixed Income Fund
established under such Program. Such book accounts shall be revalued each business day as if they
had been so invested. For purposes of this Plan, “telephonic notification” shall include any form
of communication acceptable to the Administrative Agent, including, telephone, telegraph, satellite
or other wireless communication. A “business day” shall mean any day the New York Stock Exchange
is open for business.

     F. Each Participating Employer shall distribute to each participant in this Plan employed by
it for whom it maintains book accounts or his beneficiary designated under this Plan or, if no such
designation is made, under the Savings and Investment Program, upon the termination of employment
of such participant an amount in cash equal to (i) the value of his book accounts attributable to
credits to his account respecting allotments and deemed earnings and appreciation thereon and (ii)
the same percentage of the value of his book accounts attributable to the deemed contributions of
the Participating Employer as the percentage of his account balance under the Savings and
Investment Program which is vested at the time of termination of his employment less (iii) the
amount of any distribution for financial hardship made pursuant to Section VI (the participant’s
“Account Balance”). Distribution to participants who, as of the date of termination, have not
attained age 55 with 10 or more years of service, shall be paid their Account Balance in the form
of a single lump sum. Distribution to participants who, as of the date of termination, have
attained age 55 with 10 or more years of service, shall be paid their Account Balance in the form
of a single lump sum payment unless, in any calendar year prior to a participant’s termination of
employment, but not less than 90 days prior to such termination, such participant irrevocably
elects, in writing, to receive such distribution at a later date or in annual installments over a
period of 2 to 15 years consisting of an amount approximately equal to his Account Balance divided
by the number of installments then remaining (including the installment in question) each year
payable commencing as of the end of the month designated for commencement of such payment and as of
the end of the same month in each year thereafter until payment of all such installments is made
(the “Installment Payment”). Notwithstanding the foregoing, where the participant’s Account
Balance on the date

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of his termination of employment does not exceed $15,000, the participant or
his beneficiary shall receive payment of such Account Balance in the form of a single lump sum
payment.

     G. Notwithstanding the foregoing, no election under clause (ii) of paragraph C of this
Article IV and no distribution or withdrawal pursuant to paragraph G of this Article IV will be
processed during the period beginning on the Effective Date and ending on or about August 13, 2001
(or as soon as practicable thereafter).

V. Designation of Beneficiaries in the Event of Death

     A participant may designate a beneficiary or beneficiaries to receive all or part of the
amount of his account in case of his death if such beneficiary or beneficiaries shall be living at
the time of his death. A participant may, subject to the preceding sentence, change or revoke a
designation of beneficiary and such designation, change or revocation shall be on a form to be
provided for the purpose and shall be signed by the participant and delivered to his employing
corporation prior to his death. In case of the death of the participant, the amount of his account
with respect to which a designation of beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed in accordance with this Plan to the
surviving designated beneficiary or beneficiaries. The amount in the participant’s account
distributable upon death and not subject to such a designation, or if no beneficiary shall be
living at the time of the participant’s death, shall be distributed following his death to the
person or persons in the first of the following classes of successive preference:

          1. The participant’s surviving spouse.

          2. To such one or more of the participant’s surviving children as the Committee shall
determine and in such proportions as the Committee determines.

          3. The participant’s surviving parents, equally.

          4. To such one or more of the participant’s surviving brothers and sisters as the Committee
shall determine and in such proportions as the Committee determines.

          5. The participant’s executors or administrators.

     Payment to one or more of such persons shall completely discharge the Plan with respect to the
amount so paid. Notwithstanding the above, if the participant has designated a beneficiary under
the Savings and Investment Program, such designation shall be deemed a designation for purposes of
this Plan unless a separate beneficiary designation is made under this Plan in accordance with the
foregoing.

VI. Distribution for Financial Hardship

     If a participant shall establish to the satisfaction of the Committee in accordance with
principles and procedures established by the Committee which are applicable to all persons
similarly situated that a withdrawal to be made by him pursuant to this Article VI is to be made by
reason of an extreme financial hardship, the Participating Employer shall distribute to the
participant the amount necessary to meet such financial hardship but not more than the value
credited to his book accounts under Article IV hereof.

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VII. Miscellaneous

     This Plan may be terminated at any time by the Board of Directors of the Company, in which
event the rights of participants to their book accounts established under this Plan shall become
non-forfeitable. The Company or any Participating Employer may terminate this Plan with respect to
its employees participating in the Savings and Investment Program, in which event the rights of
participants to their book account established under this Plan and payable by such terminating
corporation shall become non-forfeitable.

     If the Plan is terminated, no distribution shall be made to a participant or beneficiary which
is attributable to the termination during the 90-day period following such termination.
Thereafter, providing the Company is not subject to an insolvency or bankruptcy proceeding, all
amounts then accrued on behalf of a participant shall be distributed to him (or his beneficiary)
within 60 days after the end of such 90-day period. If the Company is subject to an insolvency or
bankruptcy proceeding, distribution of such amounts shall be suspended subject to the pendency of
such proceeding.

     No right to payment or any other interest under this Plan may be alienated, sold, transferred,
pledged, assigned, or made subject to attachment, execution, or levy of any kind.

     Nothing in this Plan shall be construed as giving any employee the right to be retained in the
employ of any Participating Employer. Each Participating Employer in the Plan expressly reserves
the right to dismiss any employee at any time without regard to the effect which such dismissal
might have upon him under the Plan.

     This Plan may be amended at any time by the Board of Directors of the Company or the
Committee, except that no such amendment shall deprive any participant of the amount then credited
to his book account established under this Plan.

     Benefits payable under this Plan shall not be funded and shall be made out of the general
funds of the Participating Employers or any grantor trust established by the Company for this
purpose. The Participating Employers shall not be required to segregate any contributions made by
participants under this Plan. They shall become a part of the general funds of the Participating
Employers. To the extent that a grantor trust is established by the Company, the Committee may
from time to time reserve unto itself the right to vote any shares of equity securities or mutual
funds held in any investment fund thereunder or may permit such other committee, or Investment
Manager or Managers as it may designate to exercise such responsibility.

     This Plan shall be construed, administered and enforced according to the substantive internal
laws (and not the conflict of laws provisions) of the State of Indiana.

VIII. Effective Date

     This Plan shall be effective as of August 6, 2001 (the “Effective Date”).

5exv10w3

 

Exhibit 10.3

BENEFIT EQUALIZATION PLAN

OF

ZIMMER HOLDINGS, INC. AND ITS SUBSIDIARY OR

AFFILIATED CORPORATIONS PARTICIPATING IN THE

ZIMMER HOLDINGS, INC. RETIREMENT INCOME PLAN OR THE

ZIMMER PUERTO RICO RETIREMENT INCOME PLAN

(effective as of August 6, 2001)

I.   Purpose of the Plan

     The purpose of this Plan is to provide benefits for certain participants in the Zimmer
Holdings, Inc. Retirement Income Plan (the “Retirement Income Plan”) or the Zimmer Puerto Rico
Retirement Income Plan (the “Puerto Rico Plan”) (referred to herein collectively as the “Retirement
Plans”) whose funded benefits under the Retirement Plans are or will be limited by application of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the Internal Revenue
Code of 1986, as amended (the “Code”). The Plan is intended to be an “excess benefit plan” as that
term is defined in Section 3(36) of ERISA with respect to those participants whose benefits under
the Retirement Plans have been limited by Section 415 of the Code, and a “top hat” plan meeting the
requirements of Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA with respect to those
participants whose benefits under the Retirement Plans have been limited by Section 401(a)(17) of
the Code.

     This Plan is a successor plan to the Benefit Equalization Plan of Bristol-Myers Company and
Its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Company Retirement
Income Plan or the Bristol-Myers Company Puerto Rico, Inc. Retirement Income Plan, as in effect on
January 1, 1996 and as amended thereafter (the “Prior Plan”). Participants in the Prior Plan who
as of the Effective Date are employed by a corporation participating in either Retirement Plan (a
“Participating Employer”) shall as of the Effective Date become participants in this Plan. This
Plan shall recognize all service covered under the Retirement Income Plan or the Puerto Rico Plan.
Benefits payable under the Prior Plan shall continue to be payable under the Prior Plan by
Bristol-Myers Squibb Company, the sponsor of the Prior Plan (“Bristol-Myers Squibb”) and shall not
be assumed by or become obligations of Zimmer Holdings, Inc., the sponsor of this Plan (the
“Company”) or any other Participating Employer. As of the Effective Date, each participant under
this Plan shall be entitled to a benefit that will be reduced by the amount of the benefit that the
participant is entitled to under the Prior Plan.

II.  Administration of the Plan

     The Benefits Committee (the “Committee”) appointed by the Board of Directors of the Company to
administer the Retirement Plans shall also administer this Plan. The Committee shall have full
authority to determine all questions arising in connection with the Plan, including its
interpretation, may adopt procedural rules, and may employ and rely on such legal counsel, such
actuaries, such accountants and such agents as it may deem advisable to assist in the
administration of the Plan. Decisions of the Committee shall be conclusive and binding on all
persons.

 

III. Participation in the Plan

     Each member of the Retirement Income Plan or the Puerto Rico Plan who is employed by a
Participating Employer (which term also includes the Company) shall be eligible to participate in
this Plan whenever (a) his benefit under the applicable Retirement Plan, as from time to time in
effect, would exceed the limitations on benefits and contributions imposed by Section 415 of the
Code calculated from and after September 2, 1974, (b) amounts of his compensation would be excluded
from his “Final Average Compensation” determined under the Retirement Plan by reason of the
application of Section 401(a)(17) of the Code or (c) he participates in the Zimmer Holdings, Inc.
Executive Performance Incentive Plan (the “Performance Incentive Plan”).

IV. Equalization Benefits Related to the Retirement Plan

     A. Each participant in this Plan or his beneficiaries shall be entitled to receive under this
Plan a supplemental pension benefit equal to the excess of (1) the benefit that would have been
payable to such participant or his beneficiaries under the applicable Retirement Plan determined
(a) without regard for any provision therein incorporating limitations imposed by Section 415 of
the Code, and (b) by deeming as “compensation” for purposes of determining Final Average
Compensation under such Retirement Plan amounts elected to be deferred under the Zimmer Holdings,
Inc. Savings and Investment Program (“Savings and Investment Program”) but which due to Section 415
limitations were, in accordance with the participant’s election, credited to the Benefit
Equalization Plan of Zimmer Holdings, Inc. and Its Subsidiary or Affiliated Corporations
Participating in the Zimmer Holdings, Inc. Savings and Investment Program (the “Savings and
Investment BEP”), over (2) the actual benefit payable to such participant or his beneficiaries
under the applicable Retirement Plan.

     B. Each participant whose compensation under the applicable Retirement Plan is limited by
Section 401(a)(17) of the Code or who participates in the Performance Incentive Plan shall be
entitled to receive an additional supplemental pension benefit under this Plan equal to the amount,
if any, by which the supplemental pension benefit determined under paragraph A of this Article IV
would be greater if the hypothetical benefit calculated under clause (1) of such paragraph were
determined (a) by disregarding, in addition to Section 415 limitations, any limitations on such
participant’s Final Average Compensation imposed by reason of Section 401(a)(17) of the Code, (b)
by including in his “annual rate of compensation” for purposes of determining Final Average
Compensation under such Retirement Plan amounts elected to be deferred under the Savings and
Investment Program but, due to Section 401(a)(17) limitations, were, in accordance with such
participant’s election, credited to the Savings and Investment BEP and (c) by recalculating his
“annual rate of compensation” for each year used in determining Final Average Compensation under
such Retirement Plan, by substituting for the cash award paid under the Performance Incentive Plan
during such calendar year the cash award earned by such participant under the Performance Incentive
Plan for such calendar year. For purposes of clause (c) of the preceding sentence, any performance
incentive award for the calendar year in which the participant retires or otherwise terminates
employment shall be assumed to be fully earned as though all performance goals and other conditions
to full payment had been attained as of such retirement or termination date.

     C. Each participant in this Plan in grade levels E07 and above or his beneficiaries

2

 

shall be
entitled to receive a supplemental pension benefit equal to the excess of the benefit that would
have been payable to such participant or his beneficiaries under the applicable Retirement Plan
determined without limiting his total years of service to 40 years.

     D. The supplemental pension benefits payable to a participant under paragraphs A, B and C of
this Article IV shall be calculated utilizing the same actuarial assumptions used to compute the
participant’s Retirement Plan benefit payments or such other assumptions as may be determined by
the Committee from time to time, shall be reduced by the amount of the benefit that the participant
is entitled to under the Prior Plan, and shall be payable to the participant (or his beneficiary)
upon his election in either:

          (i) a lifetime benefit, 50% joint and survivor, 100% joint and survivor, or the Variable
Retirement Income annuity forms of payment as provided under the applicable Retirement Plan,
commencing within 60 days after the earlier of (1) his retirement entitling him to receive payments
under the applicable Retirement Plan, (2) his death, (3) his total disability as defined in the
applicable Retirement Plan, or (4) if the participant’s employment terminates prior to the date he
is entitled to receive payments under the applicable Retirement Plan, the date he attains his Early
Retirement Date under such Retirement Plan. Such election shall be made, in writing, concurrent
with the participant’s benefit election under the applicable Retirement Plan and shall become
irrevocable as of the retirement date; or

          (ii) a lump sum provided that one year prior to retirement, the participant irrevocably
elects, in writing, to receive supplemental pension benefits in such form, which payment shall be
made within 60 days after his retirement entitling him to receive payments under the applicable
Retirement Plan, except that, in the case of a participant who is eligible to retire under the
applicable Retirement Plan who has an involuntary termination or unplanned retirement and who
irrevocably elects, in writing, 90 days prior to retirement to receive supplemental pension
benefits in such form, such payment shall be made on the first anniversary of his retirement.

     Any other provision of this Article IV to the contrary notwithstanding, if upon a
participant’s termination of employment or retirement the present value of the amount of the
supplemental pension benefits determined under paragraphs A, B and C of this Article IV is not more
than $5,000 (or if payments would be less than $50 per month), such benefit shall be paid in cash
to the participant in a single sum at the time of such termination or retirement.

     Each participant’s supplemental pension benefits under this Plan shall be paid by his
Participating Employer. If the participant was employed by more than one such Participating
Employer, the proportion to be paid by each such Participating Employer shall be in the ratio which
the “Credited Service” (as defined in the applicable Retirement Plan) of the participant with a
Participating Employer bears to the total Credited Service of such participant with all
Participating Employers.

V. Designation of Beneficiaries in the Event of Death

     Upon the death of a participant prior to receipt of all or part of the amount on his account,
the balance remaining on his account shall be paid as follows: If the participant has designated a

3

 

joint annuitant or beneficiary under the applicable Retirement Plan, such person shall be deemed
the joint annuitant or beneficiary for purposes of this Plan. If the participant has not
designated a joint annuitant or beneficiary under such Retirement Plan, or if no such joint
annuitant or beneficiary is living at the time of the participant’s death, the amount in the
participant’s account that is distributable upon his death shall be distributed to the same person
or persons who would otherwise be entitled to receive a distribution of the participant’s
Retirement Plan benefits. Payment to one or more of such persons shall completely discharge the
Plan with respect to the amount so paid.

VI. Miscellaneous

     This Plan may be terminated at any time by the Board of Directors of the Company, in which
event the rights of participants to their accrued supplemental pension benefits under this Plan
shall become non-forfeitable. The Company or any Participating Employer may terminate this Plan
with respect to its employees participating in the Retirement Plans, in which event the rights of
participants to their accrued supplemental pension benefits under this Plan and payable by such
terminating corporation shall become non-forfeitable.

     If the Plan is terminated, no distribution shall be made to a participant or beneficiary which
is attributable to the termination during the 90 day period following such termination.
Thereafter, providing the Company is not subject to an insolvency or bankruptcy proceeding, all
amounts then accrued on behalf of a participant shall be distributed to him (or his beneficiary)
within 60 days after the end of such 90-day period. If the Company is subject to an insolvency or
bankruptcy proceeding, distribution of such amounts shall be suspended subject to the pendency of
such proceeding.

     No right to payment or any other interest under this Plan may be alienated, sold, transferred,
pledged, assigned, or made subject to attachment, execution, or levy of any kind.

     Nothing in this Plan shall be construed as giving any employee the right to be retained in the
employ of any Participating Employer. Each Participating Employer in the Plan expressly reserves
the right to dismiss any employee at any time without regard to the effect which such dismissal
might have upon him under the Plan.

     This Plan may be amended at any time by the Board of Directors of the Company or the
Committee, except that no such amendment shall deprive any participant of his supplemental pension
benefit accrued at the time of such amendment.

     Benefits payable under this Plan shall not be funded and shall be made out of the general
funds of the Participating Employers or any grantor trust established by the Company for this
purpose. The Participating Employers shall not be required to segregate any contributions made by
participants under this Plan. They shall become a part of the general funds of the Participating
Employers. To the extent that a grantor trust is established by the Company, the Committee may
from time to time reserve unto itself the right to vote any shares of equity securities held in a
Pension Trust Fund or may permit such other committee, or Investment Manager or Managers as it may
designate to exercise such responsibility.

     This Plan shall be construed, administered and enforced according to the substantive

4

 

internal
laws (and not the conflict of laws provisions) of the State of Indiana.

VII. Effective Date

     This Plan shall be effective as of August 6, 2001 (the “Effective Date”) for retirements or
other terminations of employment on and after such date.

5

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