Document:

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                                                                    Exhibit 10.3

                           EMPLOYEE BENEFITS AGREEMENT

                                 by and between

                          BRISTOL-MYERS SQUIBB COMPANY

                                       and

                              ZIMMER HOLDINGS, INC.

                              Dated as of [ ], 2001

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                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS

Section 1.01.     Definitions.................................................1

                                   ARTICLE II

                               GENERAL PRINCIPALS

Section 2.01.  Assumption of Liabilities......................................8
Section 2.02.  Employment-Related Claims......................................8
Section 2.03.  Amendment and Termination of Zimmer Plans......................9
Section 2.04.  Service Credit.................................................9
Section 2.05.  Continuity of Employment.......................................9
Section 2.06.  Expatriates...................................................10
Section 2.07.  Collective Bargaining Agreements..............................10
Section 2.08.  Union Plans...................................................10
Section 2.09.  International Retirement and Welfare Benefit Plans............10

                                   ARTICLE III

                         U.S. PENSION AND SAVINGS PLANS

Section 3.01.  U.S. Pension Plan.............................................11
Section 3.02.  U.S. Savings Plans............................................12
Section 3.03.  Non-Qualified Plans...........................................14

                                   ARTICLE IV

                            HEALTH AND WELFARE PLANS

Section 4.01.  Health and Welfare Plans Continuance..........................15
Section 4.02.  Establishment of LTD VEBA.....................................16
Section 4.03.  Establishment of Health and Welfare Plans.....................17

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Section 4.04.  Liabilities under Health and Welfare Plans....................17
Section 4.05.  Post-Retirement Medical and Life Insurance Obligations........18
Section 4.06.  HCFA..........................................................18
Section 4.07.  Health and Welfare Plan Subrogation Recovery..................19
Section 4.08.  FMLA and Leave of Absences....................................19

                                    ARTICLE V

                                  EQUITY PLANS

Section 5.01.  Establishment of Zimmer Stock Plans...........................19
Section 5.02.  Bristol-Myers Squibb Options..................................19
Section 5.03.  Bristol-Myers Squibb Stock Appreciation Rights................20

                                   ARTICLE VI

                            FRINGE AND OTHER BENEFITS

Section 6.01.  Retention Bonus Arrangements..................................21
Section 6.02.  Annual Bonus..................................................21
Section 6.03.  Vacation Pay/Paid Time Off....................................21
Section 6.04.  Severance.....................................................21
Section 6.05.  Relocation Benefits...........................................21
Section 6.06.  Educational Assistance Program................................22
Section 6.07.  Adoption Assistance Program...................................22
Section 6.08.  Workers' Compensation.........................................22
Section 6.09.  Other Agreements and Benefits.................................22

                                   ARTICLE VII

                                 INDEMNIFICATION

Section 7.01.  Indemnification by Zimmer.....................................23
Section 7.02.  Indemnification by Bristol-Myers Squibb.......................22
Section 7.03.  Indemnification Procedures....................................23

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                                  ARTICLE VIII

                                  MISCELLANEOUS

Section 8.01.  Effect if Distribution Does Not Occur.........................23
Section 8.02.  Parties in Interest...........................................23
Section 8.03.  Consent of Third Parties......................................23
Section 8.04.  Further Assurances and Consents...............................24
Section 8.05.  Non-Solicitation of Employees.................................24
Section 8.06.  Sharing of Participant Information............................24
Section 8.07.  Reporting and Disclosure and Communications to
                 Participants................................................24
Section 8.08.  Beneficiary Designations......................................25
Section 8.09.  Incorporation of the Contribution and Distribution
                 Agreement...................................................25

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                           EMPLOYEE BENEFITS AGREEMENT

                  THIS EMPLOYEE BENEFITS AGREEMENT, dated as of [ ], 2001, is by
and between BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation ("BRISTOL-MYERS
SQUIBB") and ZIMMER HOLDINGS, INC., a Delaware corporation ("ZIMMER").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in Article I hereof.

                                R E C I T A L S:

                  WHEREAS, the Board of Directors of Bristol-Myers Squibb has
determined that it is in the best interests of Bristol-Myers Squibb and its
stockholders to make a distribution to the holders of Bristol-Myers Squibb
Common Stock (as defined herein) of all of the shares of Zimmer Common Stock (as
defined herein) (the "Distribution"); and

                  WHEREAS, in furtherance of the foregoing, Bristol-Myers Squibb
and Zimmer have entered into a Contribution and Distribution Agreement, dated as
of ________________, 2001 (the "CONTRIBUTION AND DISTRIBUTION AGREEMENT").

                  NOW THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties, intending to
be legally bound, agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.01 DEFINITIONS. For purposes of this Agreement, the
following terms (other than the formal names of the Bristol-Myers Squibb Plans
(as defined below)) and not otherwise defined shall have the following meanings:

                  "ACQUIRED RIGHTS DIRECTIVE" means the European Council
Directive of February 14, 1977 on the Approximation of the Laws of the Member
States relating to the Safeguarding of Employee's Rights in the Event of
Transfers of Undertakings, Business or Parts of Businesses (77/187/EC) and its
subsequent transposition into local laws.

                  "ACTION" has the meaning given such term in the Contribution
and Distribution Agreement.

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                  "ACTIVE ZIMMER EMPLOYEE" means any individual who is employed
in the Zimmer Business as of the Distribution Date, including any individual
employed within or outside the United States, any individual who is absent from
work on the Distribution Date on account of sick leave, short term disability,
long-term disability, leave of absence or otherwise, any individual receiving
severance payments and any individual who was employed by Edward Weck & Company,
Inc., Xomed-Treace, Inc., Linvatec Corporation, Medical Engineering Corporation
or Aspen Labs at the time such individual began receiving long-term
disability benefits and who is receiving such benefits from a Bristol-Myers
Squibb Plan as of the Distribution Date; PROVIDED, HOWEVER, that Active
Zimmer Employee does not include any independent contractor or individual who
is not a common law employee of a member of the Zimmer Group. An alternate
payee under a QDRO, an alternate recipient under a QMCSO, a beneficiary or a
covered dependent, in each case of an employee described in the preceding
sentence shall also be an Active Zimmer Employee with respect to that
employee's benefit under the applicable Plans. Such an alternate payee,
alternate recipient, beneficiary or covered dependent shall not otherwise be
considered an Active Zimmer Employee with respect to his or her own benefits
under any applicable Plans unless he or she is an Active Zimmer Employee by
virtue of the first sentence of this definition.

                  "AFFILIATE" of any Person means a Person that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting securities or other interests, by contract or
otherwise.

                  "AGREEMENT" means this Employee Benefits Agreement, including
all of the schedules and appendices hereto.

                  "ANCILLARY AGREEMENT" has the meaning given such term in the
Contribution and Distribution Agreement.

                  "BEP-RIP" when immediately preceded by "Bristol-Myers Squibb"
means the Benefits Equalization Plan of Bristol-Myers Squibb Company and its
Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb
Company Retirement Income Plan or the Bristol-Myers Squibb Company Puerto Rico,
Inc. Retirement Income Plan and when immediately preceded by "Zimmer" means the
non-qualified defined benefit plans to be established by Zimmer pursuant to this
Agreement.

                  "BEP-SIP" when immediately preceded by "Bristol-Myers Squibb"
means the Benefits Equalization Plan of Bristol-Myers Squibb Company and its
Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb
Company Savings and Investment Program and when immediately preceded by "Zimmer"
means the non-qualified defined contribution plans to be established by Zimmer
pursuant to this Agreement.

                  "BRISTOL-MYERS SQUIBB" has the meaning set forth in the
Preamble.

                  "BRISTOL-MYERS SQUIBB COMMON STOCK" means the common stock of
Bristol-Myers Squibb Company, par value $.10 per share.

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                  "BRISTOL-MYERS SQUIBB GROUP" has the meaning given such term
in the Contribution and Distribution Agreement.

                  "BRISTOL-MYERS SQUIBB INDEMNITEES" has the meaning given such
term in the Contribution and Distribution Agreement.

                  "BRISTOL-MYERS SQUIBB KEY INTERNATIONAL PENSION PLAN" means
the Bristol-Myers Squibb Company Key International Pension Plan.

                  "BRISTOL-MYERS SQUIBB STOCK FUND" means the fund under the
Bristol-Myers Squibb Savings and Investment Program or the Zimmer Savings and
Investment Program which is primarily invested in Bristol-Myers Squibb Common
Stock.

                  "CLAIM LIABILITIES" means the present value of the Liabilities
associated with claims by Active Zimmer Employees who are receiving benefits
under the Bristol-Myers Squibb Company Long-Term Disability Income Plan and
Active Zimmer Employees who are receiving benefits under the Bristol-Myers
Squibb Company Short-Term Disability Plan on or prior to the Transition
Termination Date.

                  "COBRA" means the continuation coverage requirements for
"group health plans" under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and codified in Code Section 4980B and
ERISA Sections 601 through 608.

                  "CODE" means the Internal Revenue Code of 1986, as amended
from time to time. Reference to a specific Code section also includes any
proposed, temporary or final regulation in force under that section.

                  "COLLECTIVE BARGAINING AGREEMENTS" means collectively, the
agreement dated May 16, 2000, between Snyder Laboratories, Inc. and the United
Steelworkers of America, AFL- CIO-CLC on behalf of Local 2737-15 and the
agreement dated March 1, 1978, between Deloro Stellite (UK) Limited and the
Association of Scientific, Technical and Managerial Staff.

                  "COMBINED INTERNATIONAL ENTITIES" has the meaning given such
term in the Contribution and Distribution Agreement.

                  "CONTRIBUTION AND DISTRIBUTION AGREEMENT" has the meaning
given such term in the Recitals.

                  "DISTRIBUTION" has the meaning given such term in the
Recitals.

                  "DISTRIBUTION DATE" has the meaning given such term in the
Contribution and Distribution Agreement.

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                  "EMPLOYMENT-RELATED CLAIM" means any pending or potential
claim, action, suit, arbitration, proceeding or other Liability that may
directly or indirectly arise out of, or result from, any employment, labor,
employee benefit, labor action or related dispute of any kind including, without
limitation, any complaint or proceeding before any federal, state or local
court, agency or tribunal.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time. References to a specific section of ERISA
also include any proposed, temporary or final regulations in force under that
section.

                  "EXPATRIATE" means each Active Zimmer Employee who is
temporarily assigned to work at a location outside such Active Zimmer Employee's
home country.

                  "FMLA" means the Family Medical Leave Act of 1993, as amended
from time to time.

                  "FORMER ZIMMER EMPLOYEE" means any former employee of the
Zimmer Business as of the Distribution Date (including, without limitation, an
employee of the Zimmer Business who retired or otherwise terminated employment
before the Distribution Date) whose last day of active employment was with a
member of the Bristol-Myers Squibb Group or the Zimmer Group; PROVIDED, HOWEVER,
a Former Zimmer Employee shall not include any employee who is receiving
payments under a Bristol-Myers Squibb Severance Plan or Zimmer Severance Plan as
of the Distribution Date.

                  "HCFA" means the United States Health Care Financing
Administration.

                  "HEALTH AND WELFARE PLANS" means all Plans that provide
medical, dental, life insurance, accident, survivor, short term disability, long
term disability, long term care, flexible benefit, adoption assistance or other
welfare benefits; PROVIDED, HOWEVER, Health and Welfare Plans does not include
any Plans that provide post-retirement benefits. When immediately preceded by
"Bristol-Myers Squibb", Health and Welfare Plans means the Health and Welfare
Plans maintained by Bristol-Myers Squibb prior to the Distribution Date and when
immediately preceded by "Zimmer", Health and Welfare Plans means the Health and
Welfare Plans to be established by a member of the Zimmer Group pursuant to this
Agreement.

                  "HIPAA" means the Health Insurance Portability and
Accountability Act of 1996, as amended from time to time.

                  "LEAVE OF ABSENCE PROGRAMS" when immediately preceded by
"Bristol-Myers Squibb" means the personal, medical, military and FMLA leave
offered from time to time under the personnel policies and practices of
Bristol-Myers Squibb and when immediately preceded by "Zimmer" means the leave
of absence programs to be established by Zimmer pursuant to this Agreement.

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                  "LIABILITIES" has the meaning given such term in the
Contribution and Distribution Agreement.

                  "LTD VEBA" when immediately preceded by "Bristol-Myers Squibb"
means the welfare benefit fund established by Bristol-Myers Squibb to fund
certain long-term disability benefits and when immediately preceded by "Zimmer"
means the welfare benefit fund to be established by Zimmer pursuant to this
Agreement.

                  "OPTION" when immediately preceded by "Bristol-Myers Squibb"
means an option to purchase Bristol-Myers Squibb Common Stock pursuant to a
Bristol-Myers Squibb Stock Plan and when immediately preceded by "Zimmer" means
an option to purchase Zimmer Common Stock pursuant to a Zimmer Stock Plan.

                  "PERSON" means an individual, a general or limited
partnership, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, a limited liability entity, and a
governmental entity or any department, agency or political subdivision thereof.

                  "PLAN" means any plan, policy, program, scheme, payroll
practice, arrangement, contract, trust, insurance policy, or any agreement or
funding vehicle, whether written or unwritten, providing compensation or
benefits to Active Zimmer Employees, Former Zimmer Employees, or directors or
consultants of the Zimmer Business. When immediately preceded by "Bristol-Myers
Squibb", Plan means those Plans listed on Schedule 1.1 that are maintained by
Bristol-Myers Squibb for the benefit of Active Zimmer Employees in effect as of
the Distribution Date. When immediately preceded by "Zimmer", Plan means those
Plans to be established by Zimmer pursuant to this Agreement.

                  "PRESENT VALUE OF FUTURE SCHEDULED CONTRIBUTIONS" means the
present value of the portion of the Claim Liabilities which are not funded as of
the Transition Termination Date.

                  "QDRO" means a domestic relations order which qualifies under
Code Section 414(p) and ERISA Section 206(d) and which creates or recognizes an
alternate payee's right to, or assigns an alternate payee, all or a portion of
the benefits payable to a participant under a Bristol-Myers Squibb Plan.

                  "QMCSO" means a medical child support order which qualifies
under ERISA Section 609(a) and which creates or recognizes the existence of an
alternate recipient's right to, or assigns to an alternate recipient the right
to, receive benefits for which a participant or beneficiary is eligible under a
Bristol-Myers Squibb Health and Welfare Plan.

                  "RATIO" means the ratio determined by dividing the
Bristol-Myers Squibb Stock Value by the Zimmer Stock Value; PROVIDED, HOWEVER,
that adjustments may be made to the

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Ratio to minimize the independent, determinable and verifiable effect of
events other than the Distribution on the price of Bristol-Myers Squibb
Common Stock, the price of Zimmer Common Stock or the price of both.

                  "RETIREMENT INCOME PLAN" when immediately preceded by
"Bristol-Myers Squibb" means the Bristol-Myers Squibb Company Retirement Income
Plan and when immediately preceded by "Zimmer" means the U.S. tax-qualified
defined benefit pension plan to be established by Zimmer pursuant to this
Agreement.

                  "SAVINGS AND INVESTMENT PROGRAM" when immediately preceded by
"Bristol-Myers Squibb" means the Bristol-Myers Squibb Company Savings and
Investment Program and when immediately preceded by "Zimmer" means the U.S.
tax-qualified defined contribution plan and trust to be established by Zimmer
pursuant to this Agreement.

                  "SEVERANCE PLAN" when immediately preceded by "Bristol-Myers
Squibb" means the Bristol-Myers Squibb Company Severance Plan and any other
plans and policies maintained by a member of the Bristol-Myers Squibb Group that
provide for severance benefits upon termination of employment, including
statutorily required payments, and when immediately preceded by "Zimmer" means
the plans or policies to be established or maintained by a member of the Zimmer
Group to provide severance benefits upon termination of employment, including
any statutorily required payments.

                  "STOCK APPRECIATION RIGHT" when immediately preceded by
"Bristol-Myers Squibb" means a right to receive the dollar value of the
appreciation of a share of Bristol-Myers Squibb Common Stock over the price per
share at which the right was granted, and when immediately preceded by "Zimmer"
means a right to receive the dollar value of the appreciation of a share of
Zimmer Common Stock over the price per share at which the right was granted.

                  "STOCK PLAN" when immediately preceded by "Bristol-Myers
Squibb" means any plan, program or arrangement, pursuant to which any Active
Zimmer Employee holds Bristol-Myers Squibb Options, Bristol-Myers Squibb Stock
Appreciation Rights or other Bristol-Myers Squibb equity incentives, and when
immediately preceded by "Zimmer" means such plans, programs or arrangements to
be established by Zimmer pursuant to this Agreement.

                  "STOCK VALUE" when immediately preceded by "Bristol-Myers
Squibb" means the weighted average sales price of all trades of Bristol-Myers
Squibb Common Stock reported on the New York Stock Exchange on the Distribution
Date, or on the first day prior to the Distribution Date that the New York Stock
Exchange is open for trading if the New York Stock Exchange is not open for
trading on the Distribution Date and when immediately preceded by "Zimmer" means
the weighted average sales price of all trades of Zimmer Common Stock reported
on the New York Stock Exchange on the first day following the Distribution Date
that the New York Stock Exchange is open for trading.

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                  "TRANSITION HEALTH AND WELFARE PLANS" has the meaning given
such term in Section 4.01.

                  "TRANSITION PERIOD" means the period beginning on the
Distribution Date and ending at midnight on the day just prior to the
Transaction Termination Date.

                  "TRANSITION TERMINATION DATE" means January 1, 2002 (or such
other date(s) that Zimmer and Bristol-Myers Squibb mutually agree with respect
to each Plan).

                  "UNION PLANS" means collectively, the Snyder Laboratories,
Inc. Union Employees' Pension Plan, the Medical Plan for United Steelworkers of
America Local #2737-15, and the Zimmer Patient Care - United Steelworkers of
America Local #2737-15 Plan.

                  "WELFARE CLAIMS" means all claims for benefits under the
Health and Welfare Plans and any expenses related thereto.

                  "ZIMMER" has the meaning set forth in the Preamble.

                  "ZIMMER BUSINESS" has the meaning given such term in the
Contribution and Distribution Agreement.

                  "ZIMMER COMMON STOCK" means the common stock of Zimmer, par
value $.01 per share.

                  "ZIMMER FRINGE BENEFIT RATE" means the rate determined by
Bristol-Myers Squibb Company's Benefits Department and Corporate Finance
Department which represents the cost of providing benefits to Active Zimmer
Employees in the U.S. as a percentage of payroll.

                  "ZIMMER GROUP" has the meaning given such term in the
Contribution and Distribution Agreement.

                  "ZIMMER INDEMNITEES" has the meaning given such term in the
Contribution and Distribution Agreement.

                  "ZIMMER INTERNATIONAL HEALTH AND WELFARE PLANS" has the
meaning given such term in Section 2.09.

                  "ZIMMER STOCK FUND" means the fund under the Bristol-Myers
Squibb Savings and Investment Program or the Zimmer Savings and Investment
Program which is primarily invested in Zimmer Common Stock.

                  "ZIMMER UNION EMPLOYEE" means an Active Zimmer Employee who is
covered by a Collective Bargaining Agreement.

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                                   ARTICLE II

                               GENERAL PRINCIPALS

                  Section 2.01. ASSUMPTION OF LIABILITIES. (a) Effective as of
the Distribution Date, the Zimmer Group shall assume and be responsible for all
employment and employee benefit-related matters, obligations and Liabilities
that are payable on or after the Distribution Date, whether such matters,
obligations and Liabilities arise before, on or after the Distribution Date,
with respect to all Active Zimmer Employees, except as specifically provided
otherwise in this Agreement. From and after the Distribution Date, (i) the
Zimmer Group shall assume all responsibilities, Liabilities and obligations with
respect to Active Zimmer Employees and their beneficiaries, including any claims
incurred at any time and including any responsibilities, Liabilities or
obligations that arise under any retention letter agreements that have been
entered into between Zimmer, Bristol-Myers Squibb and certain Active Zimmer
Employees, and (ii) the Bristol-Myers Squibb Group shall have no
responsibilities, Liabilities or obligations with respect to the Active Zimmer
Employees and their beneficiaries, except as specifically provided otherwise in
this Agreement. Bristol-Myers Squibb shall retain all responsibilities,
Liabilities and obligations with respect to Former Zimmer Employees and their
beneficiaries that arise before, on or after the Distribution Date.

                  (b) Effective as of the Distribution Date, the Zimmer Group
will assume all contracts, obligations and Liabilities with respect to
independent contractors, consultants and temporary employees of the Zimmer
Business (including any sales agents and other independent contractors who are
not Active Zimmer Employees). From and after the Distribution Date,
Bristol-Myers Squibb shall have no contract obligations or Liabilities with
respect to independent contractors, consultants and temporary employees of the
Zimmer Business.

                  Section 2.02. EMPLOYMENT-RELATED CLAIMS. (a) On the
Distribution Date, the legal responsibility for all Employment-Related Claims
regarding Active Zimmer Employees shall be transferred in their entirety from
the Bristol-Myers Squibb Group to Zimmer. Thereafter, Zimmer shall assume the
defense of these Employment-Related Claims and all Liabilities arising with
respect to such Employment-Related Claims. Zimmer shall reimburse the
Bristol-Myers Squibb Group for any reasonable attorneys fees and other expenses
reasonably incurred by the Bristol-Myers Squibb Group on and after the
Distribution Date in connection with investigating and/or defending against any
such Employment-Related Claims, including reimbursement for any services
provided by members of the Bristol-Myers Squibb legal staff.

                  (b) The Zimmer Group shall have the sole responsibility for
all Employment- Related Claims regarding Active Zimmer Employees that exist, or
come into existence, on or after the Distribution Date that arise out of or
relate to their employment with a member of the Zimmer Group.

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                  Section 2.03. AMENDMENT AND TERMINATION OF ZIMMER PLANS.
Except as specified otherwise in this Agreement, nothing in this Agreement shall
preclude any member of the Zimmer Group, at any time after the Distribution
Date, from amending, merging, modifying, terminating, eliminating, reducing or
otherwise altering in any respect any Zimmer Plan or any trust, insurance policy
or funding vehicle related to any Zimmer Plan (to the extent permitted by law).

                  Section 2.04. SERVICE CREDIT. Except as specifically provided
for in this Agreement, each member of the Zimmer Group shall cause each Active
Zimmer Employee's service with each member of the Bristol-Myers Squibb Group and
the Zimmer Group before the Distribution Date to be credited for all purposes
with respect to all employee benefit plans and arrangements and
employment-related entitlements maintained or contributed to by the members of
the Zimmer Group for Active Zimmer Employees after the Distribution Date.

                  Section 2.05. CONTINUITY OF EMPLOYMENT. (a) Zimmer and
Bristol-Myers Squibb intend that there shall be continuity of employment with
respect to all Active Zimmer Employees as of the Distribution Date. Effective as
of the Distribution Date, (i) each member of the Zimmer Group that employs
Active Zimmer Employees shall continue the employment of each such Active Zimmer
Employee, and (ii) each of the appropriate members of the Zimmer Group shall
offer employment to each Active Zimmer Employee who is employed by one of the
Combined International Entities; PROVIDED, HOWEVER, the effective date of
employment offers to Active Zimmer Employees located in Russia and China shall
be postponed to a date or dates that Zimmer and Bristol-Myers Squibb mutually
agree with respect to each such country and, provided further, in the event that
the appropriate member of the Zimmer Group does not offer employment to all or
any of the Zimmer Employees located in Russia and China effective on or before
the Transition Termination Date, Bristol-Myers Squibb or the appropriate Member
of the Bristol-Myers Squibb Group may at any time on or after the Transition
Termination Date without notice to and without the consent of Zimmer or any
member of the Zimmer Group, terminate the employment of any or all such Zimmer
Employees and Zimmer shall reimburse and indemnify Bristol-Myers Squibb for and
against any and all costs, expenses or Liabilities incured by Bristol-Myers
Squibb or any member of the Bristol-Myers Squibb Group that result from such
terminations of employment.

                  (b) Anything in this Agreement to the contrary
notwithstanding, as of the Distribution Date, each member of the Zimmer Group
shall continue the employment of Active Zimmer Employees based in locations
outside the United States as required by the Acquired Rights Directive or any
similar law in the relevant jurisdiction. In addition, anything in this
Agreement to the contrary notwithstanding, as of the Distribution Date, each
member of the Zimmer Group shall offer and continue the employment of the Active
Zimmer Employees on the same terms and conditions, including compensation and
benefits, as in effect before the Distribution Date, where necessary to avoid
the imposition of severance or similar obligations on any member of the
Bristol-Myers Squibb Group or where otherwise required by law.

                  (c) The Zimmer Group will be responsible for complying with
all applicable fair employment practice laws in the employment offer and hiring
process and the Zimmer Group shall be solely responsible for any Liabilities or
claims that are based upon the conduct of the Zimmer Group during such
employment offer and hiring process. Without limiting the foregoing, the Zimmer
Group will not discriminate in favor against any employee or applicant for
employment because of race, religion, sex, national origin, disability, age or
veteran status as

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ordered by the Secretary of Labor pursuant to Section 202 of Executive Order
11246, Section 503 of the Rehabilitation Act of 1973, and Section 401 of the
Vietnam Era Veterans Readjustment Assistance Act of 1974.

                  Section 2.06. EXPATRIATES. Effective as of the Distribution
Date, the Zimmer Group shall assume all obligations, Liabilities and
responsibilities with respect to each Expatriate as of the Distribution Date.
Such obligations, Liabilities and responsibilities shall include, without
limitation, compensation increments, housing expenses, travel expenses,
relocation expenses and all other applicable benefits, all of which shall be
provided by the appropriate member of the Zimmer Group according to the terms of
the Expatriates' agreements with a member of the Bristol-Myers Squibb Group as
in effect before the Distribution Date. The Zimmer Group shall have all rights,
obligations and Liabilities of the Bristol-Myers Squibb Group with respect to
Expatriates, including rights, obligations and Liabilities that have arisen
prior to, on or after the Distribution Date under tax equalization agreements
with the Expatriates.

                  Section 2.07. COLLECTIVE BARGAINING AGREEMENTS. Effective as
of the Distribution Date, the Zimmer Group shall assume all Liabilities,
responsibilities and obligations under the Collective Bargaining Agreements with
respect to Zimmer Union Employees arising under, INTER ALIA, the terms of the
Collective Bargaining Agreements, the National Labor Relations Act, the Labor
Management Relations Act and all other laws and regulations applicable in the
jurisdictions in which Zimmer Union Employees are employed. From and after the
Distribution Date, the Bristol-Myers Squibb Group shall have no Liabilities,
responsibilities or obligations in connection with the Collective Bargaining
Agreements with respect to Zimmer Union Employees and their beneficiaries.

                  Section 2.08. UNION PLANS. Effective as of the Distribution
Date, Zimmer Group shall retain, assume and perform, fulfill and discharge all
responsibilities, Liabilities and obligations under the Union Plans whether they
arose prior to, on or after the Distribution Date. From and after the
Distribution Date, the Bristol-Myers Squibb Group shall have no
responsibilities, Liabilities or obligations in connection with the Union Plans.

                  Section 2.09. INTERNATIONAL RETIREMENT AND WELFARE BENEFIT
PLANS. (a) Appendix A sets forth the provisions applicable to certain pension
and retirement savings plans to be adopted or maintained for Active Zimmer
Employees who are employed outside the United States.

                  (b) On or prior to the Distribution Date, Zimmer shall take,
or cause the appropriate members of the Zimmer Group to take, all actions
necessary for the Zimmer Group to adopt and implement Health and Welfare Plans
for the benefit of Active Zimmer Employees located in countries outside the
United States (the "ZIMMER INTERNATIONAL HEALTH AND WELFARE PLANS"). Each of the
Zimmer International Health and Welfare Plans will provide benefits (i) that are
substantially similar to those provided to the applicable Active Zimmer
Employees under the Bristol-Myers Squibb Health and Welfare Plans that such
Active Zimmer Employees participated

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in prior to the Distribution Date and (ii) that meet the requirements of
applicable local law with respect to continuity of benefits. To the extent
necessary, the appropriate members of the Zimmer Group shall adopt the
International Zimmer Health and Welfare Plans and enroll the Active Zimmer
Employees in such International Health and Welfare Plans, as soon as
practicable, but, no later than the Transition Termination Date. To the extent
that Zimmer has not established certain Zimmer International Health and Welfare
Plans as of the Distribution Date, subject to applicable law and mutual
agreement between Bristol-Myers Squibb and Zimmer, during the Transition Period
Active Zimmer Employees who are located in countries outside the United
States shall continue to be enrolled and participate in the Bristol-Myers
Squibb Health and Welfare Plans that such Active Zimmer Employees
participated in prior to the Distribution Date. Except as otherwise
authorized by Bristol-Myers Squibb, the foregoing shall only apply if Active
Zimmer Employees participate in the Bristol-Myers Squibb Health and Welfare
Plans on the same basis and in a manner that is identical in all respects to
that of other participants, to the extent permissible under applicable law.
No member of the Bristol-Myers Squibb Group shall have any obligation to
continue such enrollment or participation in the Bristol-Myers Squibb Health
and Welfare Plans on or after the Transition Termination Date and Zimmer
shall reimburse and indemnify Bristol-Myers Squibb for and against any and
all costs, expenses or Liabilities incurred by Bristol-Myers Squibb or any
member of the Bristol-Myers Squibb Group that result from the termination of
such enrollment or participation. Commencing upon the Distribution Date,
Zimmer or the appropriate members of the Zimmer Group shall pay or reimburse
the appropriate member of the Bristol-Myers Squibb Group for the cost of
permitting the Active Zimmer Employees to participate in the Bristol-Myers
Squibb Health and Welfare Plans. Zimmer shall reimburse Bristol-Myers Squibb
for the costs associated with its participation in the Bristol-Myers Squibb
Health and Welfare Plans as provided on Schedule 2.09(b). During the
Transition Period, the appropriate member of the Zimmer Group will be deemed
to be a participating company (to the extent required) in the relevant
Bristol-Myers Squibb Health and Welfare Plans. Once enrolled in each
applicable Zimmer International Health and Welfare Plan, the Active Zimmer
Employee shall no longer be enrolled in, or accrue additional benefits or
rights under, the commensurate Bristol-Myers Squibb Health and Welfare Plan.

                                   ARTICLE III

                         U.S. PENSION AND SAVINGS PLANS

                  Section 3.01 U.S. PENSION PLAN. (a) Effective as of the
Distribution Date, Zimmer shall establish, or cause to be established, the
Zimmer Retirement Income Plan which shall be substantially identical in all
material respects to the Bristol-Myers Squibb Retirement Income Plan as of the
Distribution Date, and which shall cover Active Zimmer Employees who are
participants in the Bristol-Myers Squibb Retirement Income Plan immediately
prior to the Distribution Date. Bristol-Myers Squibb shall retain responsibility
for all benefits accrued before the Distribution Date by Former Zimmer Employees
and Active Zimmer Employees under the Bristol-Myers Squibb Retirement Income
Plan, and the Zimmer Group shall have no responsibilities, Liabilities or
obligations with respect to such Bristol-Myers Squibb Plan. Except as provided
in Section 3.01(a)(ii), Active Zimmer Employees shall receive credit for their
service with the Bristol-Myers Squibb Group and the Zimmer Group prior to the
Distribution Date for all purposes under the Zimmer Retirement Income Plan,
including for purposes of eligibility, vesting and benefit accrual, to the
extent that the Bristol-Myers Squibb Retirement

                                       11

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Income Plan gives employees credit for such service. Bristol-Myers Squibb shall
cause all Active Zimmer Employees on the Distribution Date to have a fully
vested interest in their benefits accrued under the Bristol-Myers Squibb
Retirement Income Plan as of the Distribution Date. The Zimmer Retirement Income
Plan shall provide benefits to Active Zimmer Employees at least equal to the
Active Zimmer Employee's benefit computed under the Zimmer Retirement Income
Plan based on credit for all service the Bristol-Myers Squibb Group and the
Zimmer Group (before, on and after the Distribution Date), with an offset for
the accrued benefits of the Active Zimmer Employee under the Bristol-Myers
Squibb Retirement Income Plan as of the Distribution Date. If the amount defined
in the previous sentence is zero or less, the Zimmer Retirement Income Plan
shall provide the Active Zimmer Employee's benefits computed under the Zimmer
Retirement Income Plan based on credit for service with the Zimmer Group on and
after the Distribution Date for benefit accrual purposes.

                  (b) Bristol-Myers Squibb will provide early retirement
subsidies under the Bristol-Myers Squibb Retirement Income Plan to the following
categories of Active Zimmer Employees as of the Distribution Date: (i) Active
Zimmer Employees who have attained age 55 and have at least 10 years of service
(as defined in the Bristol-Myers Squibb Retirement Income Plan) with the
Bristol-Myers Squibb Group and the Zimmer Group as of the day before the
Distribution Date; (ii) Active Zimmer Employees who are age 50-54 and have at
least 10 years of service (as defined in the Bristol-Myers Squibb Retirement
Income Plan) with the Bristol-Myers Squibb Group and the Zimmer Group as of the
day before the Distribution Date; and (iii) Active Zimmer Employees whose age,
plus years of service measured in years, months and days of completed service
with the Bristol-Myers Squibb Group and the Zimmer Group, equals at least 70 as
of the day before the Distribution Date.

                  (c) Bristol-Myers Squibb and Zimmer mutually agree that
effective as of the Distribution Date all Active Zimmer Employees will be
treated as terminated employees under the Bristol-Myers Squibb Retirement Income
Plan and will be eligible for distributions from the Bristol-Myers Squibb
Retirement Income Plan as provided under the terms of the Bristol-Myers Squibb
Retirement Income Plan.

                  Section 3.02 U.S. SAVINGS PLANS. (a) Effective as of the
Distribution Date, or as soon as practicable thereafter, Zimmer shall establish,
or cause to be established, the Zimmer Savings and Investment Program which
shall be substantially identical in all material respects to the Bristol-Myers
Squibb Savings and Investment Program. Each Active Zimmer Employee participating
in the Bristol-Myers Squibb Savings and Investment Program as of the
Distribution Date shall become a participant in the Zimmer Savings and
Investment Program as of the Distribution Date. Active Zimmer Employees shall
receive credit for all service with the Bristol-Myers Squibb Group and the
Zimmer Group prior to the Distribution Date for all purposes under the Zimmer
Savings and Investment Program, including for purposes of eligibility and
vesting, to the extent that the Bristol-Myers Squibb Savings and Investment
Program gives employees credit for service. All Active Zimmer Employees shall
have a fully vested interest in their accounts under the Bristol-Myers Squibb
Savings and Investment Program that are transferred to the

                                       12

<PAGE>

Zimmer Savings and Investment Program as of the Distribution Date. All amounts
withheld from Active Zimmer Employees' pay with respect to payroll periods
ending on or after the Distribution Date pursuant to such Active Zimmer
Employees' deferral elections will be contributed on behalf of such Active
Zimmer Employees to the Zimmer Savings and Investment Program, without pro-rata
contributions to the Bristol-Myers Squibb Savings and Investment Plan for
service performed prior to the Distribution Date.

                  (b) As soon as practicable following the Distribution Date,
assets of the Bristol-Myers Squibb Savings and Investment Program equal to the
aggregate account balances of Active Zimmer Employees shall be transferred to
the Zimmer Savings and Investment Program. The transfer shall be made in cash
and/or property (including shares of Bristol-Myers Squibb Common Stock, to the
extent the accounts of Active Zimmer Employees are invested in Bristol-Myers
Squibb Common Stock), according to the investment of each Active Zimmer Employee
as of the date the transfer is made. Any outstanding balances of plan loans in
the Bristol-Myers Squibb Savings and Investment Program of the Active Zimmer
Employees shall be transferred with the underlying accounts. The account
balances of Active Zimmer Employees shall be valued as of the date on which the
transfer is made, which value shall include the earnings, gains and losses,
appreciation and depreciation of the investment funds in which the accounts are
invested through the date on which the transfer is made. Bristol-Myers Squibb
will remain responsible for providing benefits accrued under the Bristol-Myers
Squibb Savings and Investment Program for Former Zimmer Employees. Bristol-Myers
Squibb shall debit the accounts of each Active Zimmer Employee under the
Bristol-Myers Squibb Savings and Investment Program by the amount transferred to
the Zimmer Savings and Investment Program, and Zimmer shall allocate the cash
and property transferred to the Zimmer Savings and Investment Program to the
accounts of Active Zimmer Employees by crediting such accounts in relative
proportion to the amount debited from the accounts of Active Zimmer Employees
under the Bristol-Myers Squibb Savings and Investment Program. For
administrative purposes, during a period of limited duration, no transactions
will be permitted under the Zimmer Savings and Investment Program. In the event
that any Former Zimmer Employee who, as of the date of such Former Zimmer
Employee's termination of employment with Zimmer, had an account under the
Bristol-Myers Squibb Savings and Investment Program that was not fully vested,
is employed by Zimmer following the Distribution Date and if the Zimmer Savings
and Investment Program is required to restore the forfeited benefit,
Bristol-Myers Squibb shall transfer to the Zimmer Savings and Investment Program
the amount that is necessary to restore such individual's forfeited benefit to
the Zimmer Savings and Investment Program.

                  (c) Effective as of the Distribution Date, Zimmer shall
establish a Zimmer Stock Fund and a Bristol-Myers Squibb Stock Fund under the
Zimmer Savings and Investment Program. After the Distribution Date, Zimmer shall
allow participants in the Zimmer Savings and Investment Program to retain their
investment in shares of Bristol-Myers Squibb Common Stock in the Bristol-Myers
Squibb Stock Fund under the Zimmer Savings and Investment Program for a
twenty-four month period following the Distribution Date. Participants shall be
permitted to transfer investments out of the Bristol-Myers Squibb Stock Fund
under the Zimmer

                                       13

<PAGE>

Savings and Investment Program, but no new contributions may be invested in and
no investments may be transferred into the Bristol-Myers Squibb Stock Fund under
the Zimmer Savings and Investment Program.

                  (d) Effective as of the Distribution Date, Bristol-Myers
Squibb shall establish a Zimmer Stock Fund under the Bristol-Myers Squibb
Savings and Investment Program. After the Distribution Date, Bristol-Myers
Squibb shall allow participants in the Bristol-Myers Squibb Savings and
Investment Program to retain their investment in shares of Zimmer Common Stock
under the Bristol-Myers Squibb Savings and Investment Program for a twenty-four
month period following the Distribution Date. Participants shall be permitted to
transfer investments out of the Zimmer Stock Fund under the Bristol-Myers Squibb
Savings and Investment Program, but no new contributions maybe invested in and
no investments may be transferred into the Zimmer Stock Fund under the
Bristol-Myers Squibb Savings and Investment Program.

                  (e) Following the transfer of cash or property described in
Section 3.02(b), (i) Zimmer shall assume all Liabilities under the Bristol-Myers
Squibb Savings and Investment Program with respect to Active Zimmer Employees
and their beneficiaries, and (ii) the Bristol-Myers Squibb Group shall have no
Liability in connection with the Zimmer Savings and Investment Program with
respect to Active Zimmer Employees and their beneficiaries.

                  (f) Each party shall provide to the other party in a timely
manner such proxy statements, annual reports, and other materials with respect
to the party's stock as may be reasonably requested by the other party.

                  Section 3.03 NON-QUALIFIED PLANS. (a) Effective as of the
Distribution Date, Zimmer shall have in effect the Zimmer BEP-SIP and the Zimmer
BEP-RIP which shall provide benefits to Active Zimmer Employees who are
participating in the Bristol-Myers Squibb BEP-SIP and the Bristol-Myers Squibb
BEP-RIP prior to the Distribution Date. Bristol-Myers Squibb shall retain
responsibility for all benefits accrued prior to the Distribution Date by Active
and Former Zimmer Employees under (i) the Bristol-Myers Squibb BEP-RIP and (ii)
the Bristol-Myers Squibb Key International Pension Plan.

                  (b) The Zimmer BEP-SIP shall provide those Active Zimmer
Employees who are participating before the Distribution Date in the
Bristol-Myers Squibb BEP-SIP with account balances under the Zimmer BEP-SIP
equal to the account balances of the Active Zimmer Employees under the
Bristol-Myers Squibb BEP-SIP as of the Distribution Date. Active Zimmer
Employees shall receive credit for service with the Bristol-Myers Squibb Group
and the Zimmer Group prior to the Distribution Date for all purposes under the
Zimmer BEP-SIP, including for purposes of eligibility, vesting and benefit
accrual, to the extent that the Bristol-Myers Squibb BEP-SIP gives employees
credit for such service. All Active Zimmer Employees shall have a fully vested
interest in their accounts under the Bristol-Myers Squibb BEP-SIP that are
transferred to the Zimmer BEP-SIP as of the Distribution Date. Zimmer shall
assume and be

                                       14

<PAGE>

responsible for paying all benefits accrued by Active Zimmer Employees under the
Bristol-Myers Squibb BEP-SIP before, on and after the Distribution Date.

                  (c) Bristol-Myers Squibb will provide early retirement
subsidies under the Bristol-Myers Squibb BEP-RIP to the following categories of
Active Zimmer Employees as of the Distribution Date: (i) Active Zimmer Employees
who have attained age 55 and have at least 10 years of service (as defined in
the Bristol-Myers Squibb Retirement Income Plan) with the Bristol-Myers Squibb
Group and the Zimmer Group as of the day before the Distribution Date; (ii)
Active Zimmer Employees who are age 50-54 and have at least 10 years of service
(as defined in the Bristol-Myers Squibb Retirement Income Plan) with the
Bristol-Myers Squibb Group and the Zimmer Group as of the day before the
Distribution Date; and (iii) Active Zimmer Employees whose age, plus years of
service measured in years, months and days of completed service with the
Bristol-Myers Squibb Group and the Zimmer Group, equals at least 70 as of the
day before the Distribution Date.

                  (d) Active Zimmer Employees shall receive credit for their
service with the Bristol-Myers Squibb Group and the Zimmer Group prior to the
Distribution Date for all purposes under the Zimmer BEP-RIP, including for
purposes of eligibility, vesting and benefit accrual, to the extent that the
Bristol-Myers Squibb BEP-RIP gives employees credit for such service. For
purposes of determining the amount of benefits payable under the BEP-RIP, Zimmer
will determine the total benefit that would be payable to a participant after
taking into account all service with any members of the Zimmer Group and the
Bristol-Myers Squibb Group, and all compensation paid to such participant,
without regard to any limitations or cut- backs imposed by the Code, offset by
all benefits payable under (i) the Bristol-Myers Squibb Retirement Income Plan
(including the same early retirement subsidies as described in Section 3.01(b)),
(ii) the Bristol-Myers Squibb BEP-RIP (including the same early retirement
subsidies as described in Section 3.03(c)) and, (iii) the Zimmer Retirement
Income Plan.

                                   ARTICLE IV

                            HEALTH AND WELFARE PLANS

                  Section 4.01 HEALTH AND WELFARE PLANS CONTINUANCE. (a) Except
as otherwise agreed by Bristol-Myers Squibb and Zimmer, with respect to each
Health and Welfare Plan, during the Transition Period, Active Zimmer Employees
employed in the U.S. shall continue to participate in the Bristol-Myers Squibb
Health and Welfare Plans that such Active Zimmer Employees participated in prior
to the Distribution Date as listed on Schedule 4.01(a)(i) ("TRANSITION HEALTH
AND WELFARE PLANS"). During the Transition Period, the appropriate member of the
Zimmer Group will be deemed to be a participating company (to the extent
required by the relevant Plan) in the Transition Health and Welfare Plans.
Except as otherwise agreed by Bristol-Myers Squibb and Zimmer, Bristol-Myers
Squibb shall administer claims incurred under the Transition Health and Welfare
Plans by Active Zimmer Employees which are submitted to

                                       15

<PAGE>

Bristol-Myers Squibb before the first anniversary of the Transition Termination
Date and any determinations made or settlements entered into by Bristol-Myers
Squibb with respect to such claims shall be final and binding. Zimmer shall
reimburse Bristol-Myers Squibb for the costs associated with its participation
in the Transition Health and Welfare Plans as provided on Schedule 4.01(a)(ii).
The foregoing undertakings by Bristol-Myers Squibb shall only be effective if
the terms of the Transition Health and Welfare Plans are identical in all
respects to the Bristol-Myers Squibb Health and Welfare Plans, except as
otherwise authorized by Bristol-Myers Squibb.

                  (b) During the Transition Period, Bristol-Myers Squibb and
Zimmer shall cause the Transition Health and Welfare Plans to recognize and
maintain all coverage and contribution elections made by Active Zimmer
Employees, including, but not limited to the elections made under the
Bristol-Myers Squibb Company Flexible Benefit Plan, Bristol-Myers Squibb Company
Health Care Reimbursement Account and the Bristol-Myers Squibb Company Dependant
Care Reimbursement Account.

                  Section 4.02. ESTABLISHMENT OF LTD VEBA. (a) Effective as of
the Transition Termination Date, Zimmer shall establish, or cause to be
established, the Zimmer LTD VEBA, for the purpose of funding long-term
disability benefits under the Zimmer Health and Welfare Plans. Such trust shall
constitute a voluntary employees' beneficiary association under Code Sec.
501(c)(9) which is exempt from the imposition of federal income tax under Code
Sec. 501(a).

                  (b) As soon as practicable after the Transition Termination
Date, Bristol-Myers Squibb shall transfer an amount from the Bristol-Myers
Squibb LTD VEBA equal to the amount of the Claim Liabilities, less the Present
Value of Future Scheduled Contributions which are attributable to Active Zimmer
Employees, valued as of the Transition Termination Date.

                  (c) The value of the assets transferred from the Bristol-Myers
Squibb LTD VEBA to the Zimmer LTD VEBA shall be computed using the actuarial
assumptions generally used for the Bristol-Myers Squibb LTD VEBA.

                  (d) Bristol-Myers Squibb and Zimmer shall make such
applications to regulatory agencies, including the Internal Revenue Service and
the United States Department of Labor, as may be necessary to ensure that any
transfers of assets from the Bristol-Myers Squibb LTD VEBA to the Zimmer LTD
VEBA will neither (i) result in any adverse tax, legal or fiduciary consequences
to Bristol-Myers Squibb and Zimmer, the Bristol-Myers Squibb LTD VEBA, the
Zimmer LTD VEBA, any participant therein or beneficiaries thereof, any successor
welfare benefit funds established by or on behalf of Zimmer, or the trustees of
such trusts, nor (ii) contravene any statute, regulation or technical
pronouncement issued by any regulatory agency. Prior to the Distribution Date,
Zimmer shall prepare all forms required to obtain favorable determination
letters from the Internal Revenue Service with respect to the tax-exempt status
of the Zimmer LTD VEBA. Zimmer and Bristol-Myers Squibb agree to cooperate with
each other to fulfill any filing and/or regulatory reporting obligations with
respect to such transfers.

                                       16

<PAGE>

                  Section 4.03 ESTABLISHMENT OF HEALTH AND WELFARE PLANS. (a)
Effective as of the Transition Termination Date, Active Zimmer Employees shall
cease to participate in the Transition Health and Welfare Plans. Effective as of
the Distribution Date, or the Transition Termination Date, where applicable,
Zimmer shall take, or cause to be taken, all actions necessary and appropriate
on behalf of Active Zimmer Employees to adopt, or to cause the appropriate
member of the Zimmer Group to adopt, such Zimmer Health and Welfare Plans as are
necessary to provide uninterrupted health and welfare benefits to the Active
Zimmer Employees substantially similar to those offered prior to the
Distribution Date or the Transition Termination Date, except as otherwise set
forth in this Agreement. All waiting periods and pre-existing condition clauses
shall be waived under the Zimmer Health and Welfare Plans for Active Zimmer
Employees and their eligible dependents who were participating in the
Bristol-Myers Squibb Health and Welfare Plans before the Distribution Date or
the Transition Termination Date, as applicable. Zimmer shall cause the Zimmer
Health and Welfare Plans to recognize any out-of-pocket medical and dental
expenses incurred by each of the Active Zimmer Employees and their eligible
dependents prior to the Distribution Date or the Transition Termination Date,
as applicable, and during the calendar year in which the Distribution Date or
the Transition Termination Date, as applicable, occurs for purposes of
determining deductibles and out-of-pocket maximums under the Zimmer Health
and Welfare Plans, if any for that calendar year. Where applicable, elections
made under Bristol-Myers Squibb Health and Welfare Plans shall continue in
effect under Zimmer Health and Welfare Plans, except to the extent Zimmer
determines otherwise, including, but not limited to elections under the
Bristol-Myers Squibb Company Flexible Benefit Plan, Bristol-Myers Squibb
Company Health Care Reimbursement Account and the Bristol-Myers Squibb
Company Dependant Care Reimbursement Account.

                  Section 4.04. LIABILITIES UNDER HEALTH AND WELFARE PLANS. (a)
Except as otherwise provided in this Article IV, the Zimmer Group shall be
liable for all Welfare Claims that are incurred on or after the Distribution
Date or the Transition Termination Date, where applicable, under the Health and
Welfare Plans or Transition Health and Welfare Plans, where applicable, with
respect to Active Zimmer Employees and their beneficiaries and dependents.

                  (b) If either party pays any Welfare Claim that is a Liability
of the other party, the responsible party shall reimburse the paying party for
all such payments.

                  (c) For purposes of this Section 4.04, a Welfare Claim is
incurred when the medical services are rendered and a life insurance Welfare
Claim is incurred when the covered employee dies. A Welfare Claim for hospital
admission shall be deemed to have been incurred on the date of admission to the
hospital, PROVIDED, HOWEVER, that financial responsibility for any costs
associated with the hospital confinement of an Active Zimmer Employee shall be
assumed by Zimmer immediately following the Transition Termination Date. A
long-term disability Welfare Claim or life insurance disability Welfare Claim
shall be deemed to have been incurred on the date the condition causing the
disability rendered the employee disabled, as determined by

                                       17

<PAGE>

the committee or plan administrator making the determination; costs for
long-term disability benefits relating to the Welfare Claim shall be included in
the Welfare Claim, PROVIDED, HOWEVER, that financial responsibility for all
short-term and long-term disability benefits for Active Zimmer Employees shall
be assumed by Zimmer immediately following the Transition Period, regardless of
when the disability was incurred.

                  (d) Except as otherwise agreed to between Bristol-Myers Squibb
and Zimmer, during the Transition Period, Bristol-Myers Squibb shall be
responsible for COBRA continuation coverage for Active Zimmer Employees and
their "qualified beneficiaries" (as that term is used in Section 4980B of the
Code) and any continuation coverage requirements applicable under all other laws
and regulations with respect to the Active Zimmer Employees their beneficiaries,
and Bristol-Myers Squibb will be responsible for the portability and
certification requirements of HIPAA with respect to Active Zimmer Employees and
their beneficiaries. Except as otherwise agreed to by Bristol-Myers Squibb and
Zimmer, effective as of January 1, 2002, Zimmer shall assume all
responsibilities and obligations for COBRA continuation coverage with respect to
Active Zimmer Employees and their qualified beneficiaries and any continuation
coverage requirements applicable under all other laws and regulations with
respect to the Active Zimmer Employees and their beneficiaries, and Zimmer shall
assume all responsibilities for the portability and certification requirements
of HIPAA with respect to Active Zimmer Employees and their beneficiaries.

                  Section 4.05. POST-RETIREMENT MEDICAL AND LIFE INSURANCE
OBLIGATIONS. The Bristol-Myers Squibb Group shall retain all Liabilities,
responsibilities and obligations for all post-retirement medical, dental and
life insurance benefits under the Bristol-Myers Squibb Plans with respect to
Former Zimmer Employees and with respect to Active Zimmer Employees who, as of
the Distribution Date are at least age 55 and have at least 10 years of service
(as defined in the Bristol-Myers Squibb Retirement Income Plan) with a member of
the Bristol-Myers Squibb Group and the Zimmer Group and the Zimmer Group shall
have no Liabilities, responsibilities or obligations with respect to such
benefits under the Bristol-Myers Squibb Plans. With respect to any individual
who is receiving post-retirement benefits under any Bristol-Myers Squibb Plan
and who becomes eligible for coverage under Zimmer Plans which provide the same
type of benefits as being provided under the Bristol-Myers Squibb Plans, such
coverage in the Zimmer Plans shall be the primary coverage with respect to such
individuals and their dependants and beneficiaries and Bristol-Myers Squibb can
condition the right of the individuals and their respective dependants and
beneficiaries to receive post-retirement benefits under the Bristol-Myers
Squibb Plans on such individuals enrolling in the corresponding Zimmer Plans.

                  Section 4.06. HCFA As of the Distribution Date, Zimmer shall
assume all Liabilities relating to, arising out of or resulting from claims
verified by Zimmer or Bristol-Myers Squibb under the HCFA data match reports
that relate to Active Zimmer Employees and their beneficiaries regardless of the
date the claim was incurred.

                                       18

<PAGE>

                  Section 4.07. HEALTH AND WELFARE PLAN SUBROGATION RECOVERY.
Any amounts recovered by Zimmer through subrogation or otherwise for claims
incurred by Active Zimmer Employees or Former Zimmer Employees and their
beneficiaries and dependants that were paid or payable under the Bristol-Myers
Squibb Health and Welfare Plans or the Transition Health and Welfare Plans shall
be paid to Bristol-Myers Squibb.

                  Section 4.08. FMLA AND LEAVE OF ABSENCES. (a) Effective as of
the Distribution Date, (i) Zimmer shall adopt Leave of Absence Programs which
are identical in all material respects to the Bristol-Myers Squibb Leave of
Absence Programs in effect as of the Distribution Date, (ii) Zimmer shall honor
all terms and conditions of leaves of absences which have been granted to any
Active Zimmer Employee under a Bristol-Myers Squibb Leave of Absence Program
maintained by a member of the Bristol-Myers Squibb Group before the Distribution
Date, including such leaves that are to commence on or after the Distribution
Date, (iii) Zimmer shall be solely responsible for administering leaves of
absence and complying with FMLA with respect to Active Zimmer Employees and (iv)
Zimmer shall recognize all periods of service of Active Zimmer Employees with
the Bristol-Myers Squibb Group and the Zimmer Group, to the extent such service
is recognized by Bristol-Myers Squibb for the purpose of eligibility for leave
entitlement under Bristol-Myers Squibb Leave of Absence Programs; PROVIDED,
HOWEVER, that no duplication of benefits shall, to the extent permitted by law,
be required by the foregoing.

                  (b) As soon as administratively practicable after the
Distribution Date, Bristol-Myers Squibb shall provide to Zimmer copies of all
records pertaining to the Bristol-Myers Squibb Leave of Absence Programs with
respect to Active Zimmer Employees to the extent such records have not been
previously provided.

                                    ARTICLE V

                                  EQUITY PLANS

                  Section 5.01. ESTABLISHMENT OF ZIMMER STOCK PLANS. Effective
as of the Distribution Date, Zimmer shall have in effect Zimmer Stock Plans for
the benefit of Active Zimmer Employees. Each Active Zimmer Employee
participating in the Bristol-Myers Squibb Stock Plans as of the Distribution
Date shall become a participant in the Zimmer Stock Plans as of the Distribution
Date. Active Zimmer Employees shall receive credit for all service with the
Bristol-Myers Squibb Group and the Zimmer Group prior to the Distribution Date
for purposes of eligibility and vesting under the Zimmer Stock Plans.

                  Section 5.02. BRISTOL-MYERS SQUIBB OPTIONS. Effective as of
the Distribution Date, each outstanding Bristol-Myers Squibb Option held by
Active Zimmer Employees, other than Active Zimmer Employees who are receiving
severance payments from a member of the Bristol-Myers Squibb Group or the Zimmer
Group on the Distribution Date, whether vested or unvested, shall be assumed by
Zimmer and converted into a Zimmer Option, subject to

                                       19

<PAGE>

applicable law. Each Bristol-Myers Squibb Option so assumed shall continue to
have, and be subject to, the same terms and conditions set forth in the
Bristol-Myers Squibb Stock Plans and as provided in the respective option
agreements governing such Bristol-Myers Squibb Options as of the Distribution
Date, except that (i) the number of shares of Zimmer Common Stock subject to
each assumed Bristol-Myers Squibb Option shall equal the number of shares of
Bristol-Myers Squibb Common Stock subject to such Bristol-Myers Squibb Option
as of the Distribution Date, multiplied by the Ratio, with fractional shares
rounded to the nearest whole number of shares of Zimmer Common Stock, (ii)
the per share exercise price for the shares of Zimmer Common Stock issuable
upon exercise of each assumed Bristol-Myers Squibb Option shall equal the per
share exercise price of each assumed Bristol-Myers Squibb Option divided by
the Ratio, rounded to the nearest one-hundredth of a cent, and (iii)
references to any member of the Bristol-Myers Squibb Group shall be amended
to refer to appropriate member of the Zimmer Group. Bristol-Myers Squibb
Options not assumed under this Section 5.02 shall be governed by the
Bristol-Myers Squibb Stock Plans.

                  Section 5.03. BRISTOL-MYERS SQUIBB STOCK APPRECIATION
RIGHTS. Effective as of the Distribution Date, each outstanding Bristol-Myers
Squibb Stock Appreciation Right held by Active Zimmer Employees, other than
Active Zimmer Employees who are receiving severance payments from a member of
the Bristol-Myers Squibb Group or the Zimmer Group on the Distribution Date,
whether vested or unvested, shall be assumed by Zimmer and converted into a
Zimmer Stock Appreciation Right, subject to applicable law. Each
Bristol-Myers Squibb Stock Appreciation Right so assumed shall continue to
have, and be subject to, the same terms and conditions set forth in the
Bristol-Myers Squibb Stock Plans as provided in the respective agreements
governing such Bristol-Myers Squibb Stock Appreciation Rights as of the
Distribution Date, except that (i) the number of shares of Zimmer Common
Stock underlying each assumed Bristol-Myers Squibb Stock Appreciation Right
shall equal the number of shares of Bristol-Myers Squibb Common Stock
underlying such Bristol-Myers Squibb Stock Appreciation Right as of the
Distribution Date, multiplied by the Ratio, with fractional shares rounded to
the nearest whole number of shares of Zimmer Common Stock, (ii) the per share
grant price for the shares of Zimmer Common Stock underlying each assumed
Bristol-Myers Squibb Stock Appreciation Right shall equal the per share grant
price of each Bristol-Myers Squibb Stock Appreciation Right divided by the
Ratio, rounded to the nearest one-hundredth of a cent, and (iii) references
to any member of the Bristol-Myers Squibb Group shall be amended to refer to
the appropriate member of the Zimmer Group. Bristol-Myers Squibb Stock
Appreciation Rights not assumed under this Section 5.03 shall be governed by
the Bristol-Myers Squibb Stock Plans.

                                       20
<PAGE>

                                   ARTICLE VI

                            FRINGE AND OTHER BENEFITS

                  Section 6.01. RETENTION BONUS ARRANGEMENTS. The Zimmer Group
shall administer and make any and all retention bonus payments required to be
made to Active Zimmer Employees pursuant to the retention bonus arrangements
of Bristol-Myers Squibb that are applicable to Active Zimmer Employees, as
set forth in retention bonus announcements to Active Zimmer Employees dated
October 2000 from Charles G. Tharp, including any follow-up correspondence
regarding such retention bonus arrangements. As of the Distribution Date, the
Zimmer Group shall assume all responsibilities, Liabilities and obligations
with respect to such retention bonus payments.

                  Section 6.02. ANNUAL BONUS. As of the Distribution Date, the
Zimmer Group shall assume responsibility for, and shall pay, all annual bonuses,
including annual incentive bonuses that are payable to Active Zimmer Employees
for the year 2001, including bonuses accrued before the Distribution Date under
the annual bonus plans of the Bristol-Myers Squibb Group.

                  Section 6.03. VACATION PAY/PAID TIME OFF. As of the
Distribution Date, the Zimmer Group shall recognize all the Active Zimmer
Employees' accrued and unused vacation benefits consistent with the terms of the
vacation policies of Bristol-Myers Squibb applicable to the Active Zimmer
Employees as is in effect on the Distribution Date and shall assume or retain
Liability for all unpaid vacation pay, sick pay and personal leave accrued by
Active Zimmer Employees as of the Distribution Date.

                  Section 6.04. SEVERANCE. Effective as of the Distribution
Date, the Zimmer Group shall adopt and maintain Zimmer Severance Plans which
shall be identical in all material respects (including the Rule of 70 provisions
and six-month minimum severance benefits for certain terminations within 90 days
of the Distribution Date, as described in the Bristol-Myers Squibb Severance
Plans and other written communications to Active Zimmer Employees) to the
Bristol-Myers Squibb Severance Plans as in effect as of the Distribution Date.
The Zimmer Group shall assume and be responsible for paying any severance
obligations (including termination indemnities, notice liabilities and statutory
severance obligations) that are payable as a result of the Distribution, or that
are otherwise payable with respect to Active Zimmer Employees on or after the
Distribution Date. Each Active Zimmer Employee shall receive credit for all
service with a member of the Bristol-Myers Squibb Group and the Zimmer Group
prior to the Distribution Date for purposes of eligibility and benefits under
the Zimmer Severance Plans.

                  Section 6.05. RELOCATION BENEFITS. Effective as of the
Transition Termination Date or such earlier date as Bristol-Myers Squibb and
Zimmer may mutually agree, Zimmer shall perform or cause to be performed all
obligations of Bristol-Myers Squibb with respect to Active Zimmer Employees'
existing relocation arrangements, and the Zimmer Group shall have all
rights and obligations of Bristol-Myers Squibb under such relocation
arrangements with respect to Active Zimmer Employees.

                                       21

<PAGE>

                  Section 6.06. EDUCATIONAL ASSISTANCE PROGRAM. Effective as of
the Transition Termination Date or such earlier date as Bristol-Myers Squibb and
Zimmer may mutually agree, Zimmer shall provide a Zimmer educational assistance
program to Active Zimmer Employees which is substantially similar in all
material respects to the Bristol-Myers Squibb Company Educational Assistance
Tuition Aid Program. Zimmer shall cease to be a Participating Company in the
Bristol-Myers Squibb Company Educational Assistance Tuition Aid Program
coincident with Zimmer's establishment of the Zimmer educational assistance
program. At such time, any and all outstanding approved reimbursements under the
Bristol-Myers Squibb Company Educational Assistance Tuition Aid Program for
Active Zimmer Employees shall be made by Zimmer.

                  Section 6.07. ADOPTION ASSISTANCE PROGRAM. Effective as of the
Transition Termination Date or such earlier date as Bristol-Myers Squibb and
Zimmer may mutually agree, Zimmer shall provide a Zimmer adoption assistance
program to Active Zimmer Employees which is substantially similar in all
material respects to the Bristol-Myers Squibb Company Adoption Assistance
Program. Effective as of the Transition Termination Date or such other date as
Bristol-Myers Squibb and Zimmer may mutually agree, the Bristol-Myers Squibb
Company Adoption Assistance Program shall cease to provide reimbursement to any
Active Zimmer Employees and any and all outstanding approved reimbursements
shall be made by Zimmer.

                  Section 6.08. WORKERS' COMPENSATION. Effective as of the
Distribution Date, Zimmer shall assume all Liabilities for Active Zimmer
Employees related to any and all workers' compensation matters under any law of
any state, territory or possession of the U.S. or other country and Zimmer shall
be fully responsible for the administration of all such claims. If Zimmer is
unable to assume such Liability or the administration of any such claim because
of the operation of applicable state law or for any other reason, Zimmer shall
fully indemnify Bristol-Myers Squibb for all such Liabilities, including costs
of any administration that Zimmer has not been able to assume.

                  Section 6.09. OTHER AGREEMENTS AND BENEFITS. Without limiting
the foregoing, as of the Distribution Date, the Zimmer Group shall assume all
Liabilities and responsibilities, and shall perform or cause to be performed,
all obligations of the Bristol-Myers Squibb Group under the following
agreements, programs and policies in effect with respect to Active Zimmer
Employees as of the Distribution Date: (i) employment and supplemental benefit
agreements with respect to Active Zimmer Employees based in countries outside
the United States, (ii) automobile policies, and (iii) statutory benefits
applicable to Active Zimmer Employees and their beneficiaries.

                                       22

<PAGE>

                                   ARTICLE VII

                                 INDEMNIFICATION

                  Section 7.01. INDEMNIFICATION BY ZIMMER. Without limiting any
rights or obligations provided for under the Contribution and Distribution
Agreement, Zimmer shall indemnify defend and hold harmless each of the
Bristol-Myers Squibb Indemnitees from and against any and all Liabilities of the
Bristol-Myers Squibb Indemnitees relating to, arising out of or resulting from
the failure of any member of the Zimmer Group to pay, perform or otherwise
discharge, any of the employment and employee benefit Liabilities and
obligations assumed or retained, and agreements made, by Zimmer pursuant to this
Agreement.

                  Section 7.02. INDEMNIFICATION BY BRISTOL-MYERS SQUIBB. Without
limiting any rights or obligations provided for under the Contribution and
Distribution Agreement, Bristol-Myers Squibb shall indemnify, defend and hold
harmless each of the Zimmer Indemnitees from and against any and all Liabilities
of the Zimmer Indemnitees relating to, arising out of or resulting from the
failure of any member of the Bristol-Myers Squibb Group to pay, perform or
otherwise discharge, any of the employment and employee benefit Liabilities and
obligations assumed or retained, and agreements made, by Bristol-Myers Squibb
pursuant to this Agreement.

                  Section 7.03. INDEMNIFICATION PROCEDURES. The procedures for
claiming indemnification, the treatment of insurance proceeds, third-party
claims, cumulative remedies with respect to indemnification and the survival of
indemnification rights and obligations with respect to this Agreement shall be
the same as those provided for under the Contribution and Distribution
Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  Section 8.01 EFFECT IF DISTRIBUTION DOES NOT OCCUR. If the
Distribution does not occur, then all actions and events that are, under this
Agreement, to be taken or occur effective as of the Distribution Date, or
otherwise in connection with the Distribution, shall not be taken or occur
except to the extent specifically agreed by Zimmer and Bristol-Myers Squibb.

                  Section 8.02 PARTIES IN INTEREST. Neither of the parties
hereto may assign its rights or delegate any of its duties under this Agreement
without the prior written consent of each other party. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.

                  Section 8.03 CONSENT OF THIRD PARTIES. If any provision in
this Agreement is dependant on the consent of any third party (such as a vendor)
and such consent is withheld, Bristol-Myers Squibb and Zimmer shall use their
reasonable best efforts to implement the applicable provisions of this Agreement
to the fullest extent practicable. If any provision of this Agreement cannot be
implemented due to failure of such third party to consent, Bristol-Myers

                                       23

<PAGE>

Squibb and Zimmer shall negotiate in good faith to implement the provision in a
mutually satisfactory manner. The phrase "reasonable best efforts" as used in
this Agreement shall not be construed as to require the incurrence of any
non-routine or commercially unreasonable expense or liability or the waiver of
any right.

                  Section 8.04 FURTHER ASSURANCES AND CONSENTS. In addition to
the actions specifically provided for elsewhere in this Agreement, each of the
parties hereto will use its reasonable efforts to (a) execute and deliver such
further instruments and documents and take such other actions as any other party
may reasonably request in order to effectuate the purposes of this Agreement and
to carry out the terms hereof and (b) take, or cause to be taken, all actions,
and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements or otherwise to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using its reasonable efforts to obtain any
consents and approvals and to make any filings and applications necessary or
desirable in order to consummate the transactions contemplated by this
Agreement; provided that no party hereto shall be obligated to pay any
consideration therefor (except for filing fees and other similar charges) to any
third party from whom such consents, approvals and amendments are requested or
to take any action or omit to take any action if the taking of or the omission
to take such action would be unreasonably burdensome to the party or the
business thereof.

                  Section 8.05 NON-SOLICITATION OF EMPLOYEES. Bristol-Myers
Squibb and Zimmer each agree not to directly solicit or recruit the other
party's employees for a period of one year following the Distribution Date, if
such solicitation or recruitment would be disruptive or damaging or would
interfere with the operation of business of the other party. Notwithstanding the
foregoing, this prohibition on solicitation does not apply to actions taken by a
party either: (a) as a result of an employee's affirmative response to a general
recruitment effort carried out through a public solicitation or general
solicitation, or (b) as a result of an employee's initiative.

                  Section 8.06 SHARING OF PARTICIPANT INFORMATION. The
Bristol-Myers Squibb Group and the Zimmer Group shall, subject to applicable
laws on confidentiality, share with each other and their respective agents and
vendors (without obtaining releases) all participant information necessary for
the efficient and accurate administration of each of the Bristol-Myers Squibb
Plans and the Zimmer Plans. Bristol-Myers Squibb and Zimmer and their respective
authorized agents shall be given, subject to applicable laws on confidentiality,
reasonable and timely access to, any may make copies of, all information
relating to the subjects of this Agreement in the custody of the other party, to
the extent necessary for such administration.

                  Section 8.07 REPORTING AND DISCLOSURE AND COMMUNICATIONS TO
PARTICIPANTS. While Zimmer is a Participating Company in the Bristol-Myers
Squibb Health and Welfare Plans, Zimmer shall take all actions necessary or
appropriate to facilitate the distribution of all Bristol-Myers Squibb Health
and Welfare Plan-related communications and materials to employees,
participants, and beneficiaries, including, but not limited to, summary plan

                                       24

<PAGE>

descriptions and related summaries of material modification, summary annual
reports, investment information, prospectuses, notices, and enrollment materials
for the Bristol-Myers Squibb Health and Welfare Plans. The Bristol-Myers Squibb
Group and the Zimmer Group shall cooperate with each other and take all actions
to insure compliance with all reporting and disclosure requirements, including
the reporting and disclosure requirements of ERISA, which includes the
preparation of Form 5500 annual reports for the Bristol-Myers Squibb Plans and
Zimmer Plans, where applicable.

                  Section 8.08 BENEFICIARY DESIGNATIONS. All beneficiary
designations made by Active Zimmer Employees for Bristol-Myers Squibb Plans
shall be transferred to and be in full force and effect under the corresponding
Zimmer Plans until such beneficiary designations are replaced or revoked by the
Active Zimmer Employee who made the beneficiary designation.

                  Section 8.09 INCORPORATION OF THE CONTRIBUTION AND
DISTRIBUTION AGREEMENT. All provisions of the Contribution and Distribution
Agreement and any Ancillary Agreements are hereby incorporated by reference to
this Agreement.

                  IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.

                                    BRISTOL-MYERS SQUIBB COMPANY

                                    BY:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    ZIMMER HOLDINGS, INC.

                                    BY:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                       25<PAGE>

                                                                   Exhibit 10.4

                        TAX SHARING AGREEMENT dated as of [DATE], between
                  Bristol-Myers Squibb Company, a Delaware corporation ("BMS"),
                  and Zimmer Holdings, Inc., a Delaware corporation ("Zimmer",
                  collectively, the "Companies").

            WHEREAS, as of the date hereof, BMS is the common parent of an
affiliated group of domestic corporations, including Zimmer and its direct and
indirect subsidiaries, which has elected to file consolidated federal income tax
returns;

            WHEREAS, pursuant to an Amended and Restated Business Transfer
Agreement dated as of December 29, 2000, Bristol-Myers Squibb K.K., a Japanese
kabushiki kaisha and a wholly-owned subsidiary of BMS ("BMS KK"), transferred to
Zimmer K.K., a Japanese kabushiki kaisha and a wholly-owned subsidiary of BMS KK
("Zimmer KK"), certain assets relating to the Japanese portion of the Zimmer
Business in exchange for 2.9 billion Yen, subject to adjustment, and the
assumption of certain liabilities, all in accordance with the Amended and
Restated Business Transfer Agreement (the "Japan Restructuring");

            WHEREAS, the Board of Directors of BMS KK has determined to
distribute its shares of Zimmer KK to BMS (the "Japan Distribution");

            WHEREAS, the Board of Directors of Bristol-Myers Squibb Holdings
Limited, a United Kingdom public limited company and a wholly-owned subsidiary
of BMS ("BMS Holdings UK"), has determined to distribute the stock of Zimmer
Limited, a United Kingdom public limited company ("Zimmer Limited") and a
wholly-owned subsidiary of BMS UK, to BMS (the "UK Distribution");

            WHEREAS, the Board of Directors of BMS has determined to contribute
all the outstanding shares of common stock of Zimmer KK, Zimmer Limited and
Zimmer, Inc., a Delaware corporation and a direct wholly-owned subsidiary of
BMS, and certain other stock and/or assets in exchange for all the outstanding
shares of common stock of Zimmer and the assumption by Zimmer of certain
liabilities of BMS (the "Contribution");

            WHEREAS, the Board of Directors of BMS has determined to distribute
(the "Distribution") all the outstanding shares of common stock of Zimmer to the
BMS shareholders of record as of a date to be determined and, as a result of the
Distribution, Zimmer and its subsidiaries will not be included in the
consolidated federal income tax return of BMS for the portion of the taxable
year following the Distribution or in future taxable years;

            WHEREAS, the Companies have entered into a contribution and
distribution agreement (the "Contribution and Distribution Agreement") to, among
other things, allocate and assign responsibility for certain liabilities of the
Companies in connection with and after the Contribution and Distribution (the
"US Transactions");

<PAGE>
                                                                               2

            WHEREAS, the Companies intend that the Japan Restructuring and the
Contribution qualify as tax-free transfers under Sections 351 and 368(a)(1)(D)
of the Internal Revenue Code of 1986, as amended (the "Code"), and that the
Japan Distribution, the UK Distribution, and the Distribution qualify as a
tax-free spin-offs under Sections 355 and 368(a)(1)(D) of the Code;

            WHEREAS, BMS submitted a private letter ruling request to the United
States Internal Revenue Service ("IRS") to the effect that, for United States
federal income tax purposes, no gain or loss will be recognized by BMS or Zimmer
from the US Transactions or by the holders of BMS common stock upon receipt of
Zimmer shares in the Distribution (the initial submission dated February 22,
2001 and all supplements thereto collectively referred to herein as the "Ruling
Request"); and

            WHEREAS, the Companies desire to allocate the tax responsibilities,
liabilities and benefits of transactions which occurred on or prior to the date
on which the Distribution occurs (the "Distribution Date"), and transactions
which may occur after the Distribution Date, and to provide for certain other
Tax (as hereafter defined) matters;

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the Companies (each on behalf of itself, each of
its subsidiaries as of the Distribution Date, and its future subsidiaries)
hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            The following terms shall have the following meanings (such meanings
to apply equally to both the singular and the plural forms of the terms
defined). All section references are to this Agreement unless otherwise stated.

            "936 RETURN" means any IRS Form 5735 (or any successor form) and
any IRS Form 1120 (or any successor form) required to be filed with respect
to Zimmer Caribe.

            "AFFILIATED GROUP" means an affiliated group of corporations within
the meaning of Code Section 1504(a) for the taxable period in question.

            "BMS AFFILIATED GROUP" means the Affiliated Group of which BMS or
any successor of BMS is the common parent.

            "BMS GROUP" means (i) the corporations that are members of the BMS
Affiliated Group and (ii) the corporations that would be members of the BMS
Affiliated Group but for the fact they are not includible corporations under
Code Section 1504(b).

            "CHANGE IN ZIMMER STOCK OWNERSHIP" means any change in the
ownership, in terms of either value or voting power, of any class of stock of
Zimmer or of options or other securities or interests exchangeable for or
convertible into any class of stock of Zimmer, including, without limitation, a
change resulting from issuance of any class of stock of Zimmer in connection
with a public offering, private placement, stock or

<PAGE>
                                                                               3

asset acquisition, merger, option grant or capital contribution, or any change
in ownership required to be reported on Schedule 13D or 13G (or successor
schedules thereto) or issuance of employee stock options or issuance of stock
pursuant to the exercise of employee stock options. This definition and its
application are intended to monitor compliance with Section 355(e) of the Code
following the Distribution and shall be interpreted accordingly. Any
clarification of or change in the Treasury Regulations promulgated under Section
355(e) of the Code shall be incorporated in this definition and its
interpretation.

            "CODE" is defined in the recitals to this Agreement.

            "CONTRIBUTION" is defined in the recitals to this Agreement.

            "CONTRIBUTION AND DISTRIBUTION AGREEMENT" is defined in the recitals
to this Agreement.

            "COMBINED STATE INCOME TAXES" means any State Income Taxes with
respect to which BMS currently files, or has filed, Tax Returns on a combined,
consolidated or unitary basis.

            "DISTRIBUTION" is defined in the recitals to this Agreement.

            "DISTRIBUTION DATE" is defined in the recitals to this Agreement.

            "FINAL DETERMINATION" means the final resolution of liability for
any Tax for any taxable period by or as a result of: (i) a final and
unappealable decision, judgment, decree or other order by any court of competent
jurisdiction; (ii) a final settlement with the IRS, a closing agreement or
accepted offer in compromise under Code Sections 7121 or 7122, or a comparable
agreement under the laws of other jurisdictions, which resolves the entire Tax
liability for any taxable period; (iii) any allowance of a refund or credit in
respect of an overpayment of Tax, but only after the expiration of all periods
during which such refund may be recovered by the jurisdiction imposing the Tax;
or (iv) any other final disposition, including by reason of the expiration of
the applicable statute of limitations.

            "FOREIGN TAXES" means any Taxes imposed by a Taxing Authority
(including Puerto Rico or any of its localities) other than the United States or
any of its states or localities.

            "FORM 5471" is defined in Section 2.02(c).

            "GROUP" means either the BMS Group or the Zimmer Group, as the case
may be.

            "INDEMNIFYING PARTY" is defined in Section 6.01(a).

            "INDEMNITEE" is defined in Section 6.01(a).

<PAGE>
                                                                               4

            "INDEMNITY ISSUE" is defined in Section 6.01(a).

            "IRS" is defined in the recitals to this Agreement.

            "JAPAN DISTRIBUTION" is defined in the recitals to this Agreement.

            "JAPAN RESTRUCTURING" is defined in the recitals to this Agreement.

            "OPTIONS" means any options or stock appreciation rights relating to
BMS or Zimmer stock that are outstanding immediately after the Distribution.

            "POST-DISTRIBUTION PERIOD" means any taxable period ending after the
Distribution Date (in the case of a Straddle Period including only the portion
of such taxable period beginning on the day after the Distribution Date).
Accordingly, for the avoidance of doubt, the Distribution Date shall never be
included in any Post-Distribution Period.

            "PRE-DISTRIBUTION PERIOD" means any taxable period beginning on or
before the Distribution Date (in the case of a Straddle Period including only
the portion of such taxable period ending on the Distribution Date).
Accordingly, for the avoidance of doubt, the Distribution Date shall, in all
cases, be included in the Pre-Distribution Period.

            "PRELIMINARY TRANSACTIONS" means transactions by members of the BMS
Group to prepare for the Contribution and Distribution, other than the Japan
Restructuring, the Japan Distribution, and the UK Distribution.

            "RULING REQUEST" is defined in the recitals to this Agreement.

            "SECOND ANNIVERSARY PERIOD" means the period beginning on the date
of this Agreement and ending on the second anniversary of the Distribution Date.

            "STATE INCOME TAXES" means any United States state or local Taxes
determined by reference to income, net worth, gross receipts or capital, or any
such Taxes imposed (including franchise or similar Taxes) in lieu of income
Taxes.

            "STRADDLE PERIOD" means any taxable period that begins on or before
and ends after the Distribution Date.

            "TAXES" means all forms of taxation or duties imposed, or required
to be collected or withheld, including charges, together with any related
interest, penalties or other additional amounts.

            "TAXING AUTHORITY" means any governmental authority imposing Taxes.

            "TAX OPINION" means the opinion of Cravath, Swaine & Moore
concerning the United States federal income tax treatment of the Japan
Restructuring, the Japan Distribution and the UK Distribution.

<PAGE>
                                                                               5

            "TAX RETURN" means any return, filing, report, questionnaire,
information statement or other document required to be filed, including amended
returns that may be filed, for any taxable period with any Taxing Authority
(whether or not a payment is required to be made with respect to such filing).

            "TAX RULING" means a private letter ruling received in response to
the Ruling Request.

            "THIRD ANNIVERSARY PERIOD" means the period beginning on the date of
this Agreement and ending on the third anniversary of the Distribution Date.

            "TRANSACTIONS" means the Contribution, the Distribution, the Japan
Restructuring, the Japan Distribution, the UK Distribution and the Preliminary
Transactions.

            "TRANSACTION TAXES" means Taxes of, or indemnification for Taxes by,
any member of the BMS Group (as in existence prior to the Distribution)
resulting from, or arising in connection with, (a) the failure of (i) the
Contribution or the Japan Restructuring to be tax-free to such member under Code
Sections 351 and 368(a)(1)(D), or (ii) the Distribution, the Japan Distribution
or the UK Distribution to be tax-free to such member, or its shareholders, under
Code Sections 355 and 368(a)(1)(D) (including, without limitation, by reason of
the application of Code Sections 355(d) or (e)) or (b) the failure of any of the
Transactions to be tax-free under comparable provisions of federal, state, local
or foreign law.

            "TREASURY REGULATION" means the regulations promulgated from time to
time under the Code as in effect for the relevant taxable period.

            "UK DISTRIBUTION" is defined in the recitals to this Agreement.

            "US TRANSACTIONS" is defined in the recitals to this Agreement.

            "ZIMMER AFFILIATED GROUP" means the Affiliated Group of which Zimmer
or any successor of Zimmer is the common parent.

            "ZIMMER BUSINESS" is defined in the Ruling Request.

            "ZIMMER CARIBE" means Zimmer Caribe, Inc., a Delaware corporation
and a member of the Zimmer Group.

            "ZIMMER CUMULATIVE OWNERSHIP CHANGE" is defined in Section 5.02.

            "ZIMMER CUMULATIVE OWNERSHIP CHANGE BY VALUE" is defined in Section
5.01(a).

            "ZIMMER CUMULATIVE OWNERSHIP CHANGE BY VOTE" is defined in Section
5.01(b).

            "ZIMMER GROUP" means (i) the corporations that are members of the
Zimmer Affiliated Group and (ii) the corporations that would be members of the
Zimmer

<PAGE>
                                                                               6

Affiliated Group but for the fact they are not includible corporations
under Code Section 1504(b).

<PAGE>
                                                                               7

                                   ARTICLE II

                      Preparation and Filing of Tax Returns

            SECTION 2.01. TAX RETURNS FOR TAXABLE PERIODS ENDING ON OR BEFORE
THE DISTRIBUTION DATE. (a) BMS shall prepare and file all federal income Tax
Returns, all Combined State Income Tax Returns and all Foreign Tax Returns of
each member of the BMS Group for any taxable period that ends on or before the
Distribution Date. Zimmer hereby irrevocably designates, and agrees to cause
each of its affiliates to designate, BMS as its agent to take any and all
actions necessary or incidental to the preparation and filing by BMS of any Tax
Return described in this Section 2.01.

            (b) Zimmer shall prepare and file all Tax Returns (other than Tax
Returns described in Sections 2.02(b), (c) and (d), of each member of the Zimmer
Group for any taxable period that ends on or before the Distribution Date.

            SECTION 2.02. TAX RETURNS FOR STRADDLE PERIODS. (a) Except as
provided in Sections 2.02(b), (c) and (d), Zimmer shall prepare and file all
Tax Returns of each member of the Zimmer Group for all Straddle Periods.

            (b) In the case of any Straddle Period for State Income Taxes,
Zimmer shall prepare all Tax Returns of each member of the Zimmer Group on a
basis consistent with past practice, and shall present such Tax Returns to BMS
for review at least 30 days before the date on which such Tax Returns are
required to be filed. Zimmer shall not file such Tax Returns without the written
consent of BMS, which shall not be unreasonably withheld. Promptly upon
receiving the written consent of BMS, Zimmer shall file, or cause to be filed,
such Tax Returns.

            (c) In the case of any IRS Form 5471, or any successor form (a "Form
5471") relating to the calendar year in which the Distribution occurs, that is
required to be filed with respect to any member of the Zimmer Group, Zimmer
shall prepare such Form 5471 on a basis consistent with past practice, and shall
present such Form 5471 to BMS for review at least 30 days before the date on
which such Form 5471 is required to be filed. Zimmer shall not file such Form
5471 without the written consent of BMS, which shall not be unreasonably
withheld. BMS shall, and promptly upon receiving the written consent of BMS,
Zimmer shall, file or cause to be filed, such Form 5471, in each case in a
consistent manner.

            (d) In the case of any 936 Return required to be filed for a
Straddle Period, BMS shall prepare such 936 Return on a basis consistent with
past practice, and shall present such 936 Return to Zimmer for review at
least 30 days before the date on which such 936 Return is required to be
filed. BMS shall consider in good faith any suggestions or comments made by
Zimmer after such review. On or before the date on which such 936 Return is
required to be filed, Zimmer shall file or cause to be filed such 936 Return.
BMS shall be entitled to charge, and Zimmer shall be required to pay, a
reasonable fee for services provided by BMS to Zimmer pursuant to this
Section 2.02(d).

            SECTION 2.03. TAX RETURNS FOR TAXABLE PERIODS ENDING AFTER THE
DISTRIBUTION DATE (OTHER THAN STRADDLE PERIODS). In the case of any Tax Return
for any taxable period ending after the Distribution Date (other than a Straddle
Period), such Tax Returns shall be prepared and filed by BMS if they relate to
any member of the BMS Group and by Zimmer if they relate to any member of the
Zimmer Group.

            SECTION 2.04. MANNER OF TAX RETURN PREPARATION. (a) Unless otherwise

<PAGE>
                                                                               8

required by a Final Determination, the Companies shall file all Tax Returns, and
take all other actions, in a manner consistent with the Ruling Request and any
Tax Ruling.

            (b) Zimmer and BMS shall execute and file such consents, elections
and other documents as may be required or appropriate for the proper filing of
each Straddle Period Tax Return.

                                   ARTICLE III

                                Payment of Taxes

            SECTION 3.01. (a) PRE-DISTRIBUTION PERIOD TAXES. Except as otherwise
provided in Sections 3.02 and 3.03, BMS shall be liable for, shall indemnify
each member of the Zimmer Group against, and shall be entitled to retain all
refunds of, all federal income Taxes, Combined State Income Taxes and Foreign
Taxes of each member of the BMS Group for all Pre-Distribution Periods.

            (b) Except as otherwise provided in Sections 3.02 and 3.03, Zimmer
shall be liable for, shall indemnify each member of the BMS Group against, and
shall be entitled to retain all refunds of, all Taxes (other than Taxes
described in section 3.01(a)) of each member of the Zimmer Group for all
Pre-Distribution Periods.

            (c) POST-DISTRIBUTION PERIOD TAXES. Except as otherwise provided in
Sections 3.02 and 3.03, Zimmer shall be liable for, shall indemnify each member
of the BMS Group against, and shall be entitled to retain all refunds of, all
Taxes of each member of the Zimmer Group for all Post-Distribution Periods.

            (d) APPORTIONMENT OF STRADDLE PERIOD TAXES. Straddle Period income
Taxes shall be apportioned between the Pre-Distribution Period and the
Post-Distribution Period on a closing of the books basis.

            SECTION 3.02.  TRANSACTION TAXES.

            (a) ZIMMER GROUP LIABILITY FOR CERTAIN TRANSACTION TAXES. Each
member of the Zimmer Group shall be jointly and severably liable for, and shall
indemnify each member of the BMS Group against, any Transaction Taxes that are
primarily attributable to:

            (i) any inaccurate statement or representation of fact or intent (or
      omission to state a material fact) in the Ruling Request or Section 4.01
      that relates to the Zimmer Group; or

            (ii) any inaccurate statement or representation of fact or intent
      (or omission to state a material fact) that relates to the Zimmer Group in
      a letter or certificate that forms the basis for the Tax Opinion; or

            (iii) any action or omission by the Zimmer Group after the date of
      the Distribution inconsistent with the covenants set forth in Section
      4.02.

<PAGE>
                                                                               9

             (b) BMS GROUP LIABILITY FOR REMAINING TRANSACTION TAXES. BMS shall
be liable for, and shall indemnify each member of the Zimmer Group against, any
Transaction Taxes not allocated to the Zimmer Group under Section 3.02(a).

            SECTION 3.03. COMPENSATION DEDUCTIONS. (a) Each of BMS and Zimmer,
respectively, shall be responsible for timely filing with any relevant Taxing
Authorities all required Tax Returns with respect to grants or exercises of
Options on its stock (or grants or vesting of restricted stock issued by it).
BMS (or the appropriate member of the BMS Group) shall claim all Tax deductions
arising by reason of exercises of Options on, or receipt or vesting of
restricted shares of, BMS stock. Zimmer (or the appropriate member of the Zimmer
Group) shall claim all Tax deductions arising by reason of exercises of Options
on, or receipt or vesting of restricted shares of, Zimmer stock.

            (b) If, pursuant to a Final Determination, all or any part of a Tax
deduction claimed pursuant to Section 3.03(a) is disallowed to the Group
claiming such deduction, then, to the extent such deduction may be allowable to
a member of the other Group, such member shall promptly claim such deduction and
shall promptly pay to the Group whose Tax deduction was disallowed the amount of
any Tax benefit realized by such member or its Group as a result of claiming
such deduction.

                                   ARTICLE IV

         REPRESENTATIONS AND COVENANTS WITH RESPECT TO THE DISTRIBUTION

            SECTION 4.01. REPRESENTATIONS. (a) Zimmer represents that, as of the
date of this Agreement, it knows of no fact that may cause the Contribution or
the Japan Restructuring to fail to qualify as a tax-free transfer under Section
351 and 368(a)(1)(D) of the Code, or the Distribution, the Japan Distribution or
the UK Distribution to fail to qualify as a tax-free spin-off under Sections 355
and 368 (a)(1)(D) of the Code.

            (b) Zimmer represents that, as of the date of this Agreement, there
is no plan or intention to:

            (i) liquidate any of the members of the Zimmer Group or merge or
      consolidate any of such corporations with any other person subsequent to
      the Distribution;

            (ii) sell or dispose of the assets of any member of the Zimmer Group
      subsequent to the Distribution, except in the ordinary course of business;

            (iii) take any action inconsistent with the Ruling Request, the Tax
      Opinion or any Tax Ruling;

            (iv) purchase stock of Zimmer, other than in accordance with the
      requirements of Revenue Procedure 96-30 and in conformity with the Ruling
      Request and any Tax Ruling; or

<PAGE>
                                                                              10

            (v) enter into any negotiations, discussions, agreements or
      arrangements with respect to any proposed Change in Zimmer Stock Ownership
      after which the Zimmer Cumulative Ownership Change would exceed 10
      percent.

            (c) Zimmer represents that it is not aware of any plan or intention
by shareholders of BMS to sell, exchange, transfer, or otherwise dispose of any
of their stock or securities in BMS or Zimmer subsequent to the Distribution.

            SECTION 4.02. COVENANTS. (a) Zimmer agrees that it will not take,
and will not permit any member of the Zimmer Group to take, any action that will
cause the Contribution or the Japan Restructuring to fail to qualify as a
tax-free transfer under Sections 351 and 368(a)(1)(D) of the Code, or the
Distribution, the Japan Distribution or the UK Distribution to fail to qualify
as a tax-free spin-off under Code Sections 355 and 368(a)(1)(D).

            (b) Zimmer agrees that:

            (i) No member of the Zimmer Group shall purchase stock of Zimmer,
      other than in accordance with the requirements of Revenue Procedure 96-30
      and in conformity with the Ruling Request, the Tax Opinion and any Tax
      Ruling;

            (ii) On or after the Distribution Date, Zimmer shall not, nor shall
      it permit any member of the Zimmer Group to, make or change any tax
      election, change any accounting method, amend any Tax Return or take any
      position on any Tax Return, take any action, omit to take any action or
      enter into any transaction that results in an increased tax liability or
      reduction of any Tax attribute of BMS with respect to any Pre-Distribution
      Period;

            (iii) During the Second Anniversary Period:

                  (A) No member of the Zimmer Group shall liquidate, merge or
            consolidate with any other person;

                  (B) Zimmer shall not sell, exchange, distribute or otherwise
            dispose of the assets of any member of the Zimmer Group, except in
            the ordinary course of business;

                  (C) Zimmer shall continue the active conduct of its historic
            United States business (i.e. the manufacture and marketing of
            reconstructive implants, fracture management products and orthopedic
            surgical products in the United States); and

                  (D) Zimmer shall not consummate any proposed Change in Zimmer
            Stock Ownership after which the Zimmer Cumulative Ownership Change
            will exceed 10%. Notwithstanding the foregoing, if a proposed Change
            in Zimmer Stock Ownership is a result of negotiations, discussions,
            agreements or arrangements that occurred at any time before, or
            during the six-month period immediately following, the Distribution,

<PAGE>
                                                                              11

            then the preceding sentence shall apply to that proposed Change in
            Zimmer Stock Ownership during the Third Anniversary Period; and

            (iv) Within 30 days after entering into an agreement or adopting a
      plan to consummate any Change in Zimmer Stock Ownership, Zimmer will
      notify BMS of such agreement or plan and provide BMS with complete details
      as to how the proposed Change in Zimmer Stock Ownership will affect the
      Zimmer Cumulative Ownership Change.

            (c) EXCEPTIONS. Notwithstanding the foregoing, Zimmer and the
members of the Zimmer Group shall be permitted to take an action inconsistent
with the provisions of Section 4.02(b)(iii), if, prior to taking such action,
Zimmer:

            (i) Provides notification to BMS of its plans with respect to such
      action, and promptly responds to any inquiries by BMS following such
      notification; and

            (ii) obtains and provides to BMS either:

                  (A) a ruling from the IRS to the effect that such action shall
            not cause any of the Transactions to be taxable to BMS or its
            shareholders; or

                  (B) an opinion, in form and substance acceptable to BMS in its
            sole discretion, of Cravath, Swaine & Moore (or of other independent
            counsel that is nationally recognized as being expert in federal Tax
            matters and is acceptable to BMS in its sole discretion) to the
            effect that such action shall not cause any of the Transactions to
            be taxable to BMS or its shareholders.

                                    ARTICLE V

                CALCULATION OF ZIMMER CUMULATIVE OWNERSHIP CHANGE

            SECTION 5.01. (a) ZIMMER CUMULATIVE OWNERSHIP CHANGE BY VALUE.
"Zimmer Cumulative Ownership Change by Value" means the total percentage change
in Zimmer stock ownership in terms of value immediately after a proposed Change
in Zimmer Stock Ownership and shall be calculated by multiplying (a) 100 by (b)
a fraction (i) the numerator of which is the sum of (A) the total value of the
shares of Zimmer stock proposed to be issued, or for which there is a change in
ownership, in the proposed Change in Zimmer Stock Ownership, (B) the total value
of the shares of Zimmer stock issued, or for which there has been a change in
ownership, in all prior Changes in Zimmer Stock Ownership, and (C) the value of
the number of shares of Zimmer stock determined by BMS and Zimmer on or prior to
the Distribution Date, and (ii) the denominator of which is the total value of
the shares of Zimmer stock that would be outstanding after the proposed Change
in Zimmer Stock Ownership.

            (b) ZIMMER CUMULATIVE OWNERSHIP CHANGE BY VOTE. "Zimmer Cumulative
Ownership Change by Vote" means the total percentage change in Zimmer

<PAGE>
                                                                              12

stock ownership in terms of voting power immediately after a proposed Change in
Zimmer Stock Ownership and shall be calculated by multiplying (a) 100 by (b) a
fraction (i) the numerator of which is the sum of (A) the total voting power of
the shares of Zimmer stock proposed to be issued, or for which there is a change
in ownership, in the proposed Change in Zimmer stock Ownership, (B) the total
voting power of the shares of Zimmer Stock issued, or for which there has been a
change in ownership, in all prior Changes in Zimmer Stock Ownership, and (C) the
voting power of the number of shares of Zimmer stock determined by BMS and
Zimmer on or prior to the Distribution Date, and (ii) the denominator of which
is the total voting power of the shares of Zimmer stock that would be
outstanding after the proposed Change in Zimmer Stock Ownership.

            (c) CALCULATION. In calculating the value or voting power of shares
of Zimmer stock (i) to be issued or issued or for which there is or has been a
change in ownership in either a proposed or prior Change in Zimmer Stock
Ownership, or (ii) that would be outstanding after a proposed Change in Zimmer
Stock Ownership, any options or other securities exchangeable for or convertible
into any class of stock of Zimmer shall be treated as exercised, exchanged or
converted, as the case may be, where such treatment would increase the resulting
Zimmer Cumulative Ownership Change.

            SECTION 5.02. ZIMMER CUMULATIVE OWNERSHIP CHANGE. The "Zimmer
Cumulative Ownership Change" shall equal the greater of the Zimmer Cumulative
Ownership Change by Value and the Zimmer Cumulative Ownership Change by Vote.

                                   ARTICLE VI

            TAX PROCEEDINGS; COOPERATION AND EXCHANGE OF INFORMATION

            SECTION 6.01. TAX PROCEEDINGS. (a) NOTIFICATION. Within 15 days
after a party (the "Indemnitee") becomes aware of the existence of a Tax issue
(an "Indemnity Issue") that may give rise to an indemnification claim under
Article III of this Agreement (a "Tax Controversy"), by it against the other
party (the "Indemnifying Party"), the Indemnitee shall promptly notify the
Indemnifying Party of the Indemnity Issue, and thereafter shall promptly forward
to the Indemnifying Party copies of notices and communications with a Taxing
Authority relating to such Tax Controversy (E.G., any IRS revenue agent's
reports or similar reports, notices of proposed adjustment, or notices of
deficiency).

            (b) CONTROL OF TAX PROCEEDINGS. Except as provided in Section
6.01(c), the Indemnifying Party may elect to control, and may elect to have sole
discretion in handling, settling or contesting any audit inquiry, information
request, audit proceeding, suit, contest or any other action with respect to a
Tax Controversy for which it would be required to indemnify the other party if
it acknowledges in writing that it has sole liability for any Taxes that might
arise in such proceeding. The Indemnifying Party shall not settle any Tax
proceeding with respect to a Tax Controversy on a basis that would materially
adversely affect the Indemnitee without obtaining the Indemnitee's written
consent, which consent shall not be unreasonably withheld. The Indemnitee shall
not settle any Tax Controversy without obtaining the Indemnifying Party's
written consent, which shall

<PAGE>
                                                                              13

not be unreasonably withheld. Any out-of-pocket costs incurred in handling,
settling or contesting a Tax controversy shall be borne by the Indemnifying
Party.

            (c) CONTROL OF TRANSACTION TAX PROCEEDINGS. BMS and Zimmer shall
jointly control, and shall each have the right to participate in all activities
and strategic decisions with respect to, any Tax proceedings relating to
Transaction Taxes. BMS may assume sole control of a Transaction Tax proceeding
if it acknowledges in writing that it has sole liability for any Transaction
Taxes that might arise in such proceeding.

            SECTION 6.02. INDEMNIFICATION PAYMENTS. (a) If an Indemnitee has a
claim for an indemnification payment from an Indemnifying Party under this
Agreement, the Indemnitee shall promptly provide to the Indemnifying Party
notice of such claim, including a description of such claim and a detailed
calculation of the amount of the indemnification payment that is claimed. The
Indemnifying Party shall make the claimed payment to the Indemnitee within 20
business days after receiving such notice, unless the Indemnifying Party
reasonably disputes the amount of, or its liability for, such payment. All
disputes regarding the amounts of, or liability for, any such claimed payment
shall be resolved pursuant to the procedures set forth in the Contribution and
Distribution Agreement. Interest shall accrue with respect to any
indemnification payment (including any disputed payment that is ultimately
required to be made) not made within the period provided for payment, at the
underpayment rate in effect under the Code at such time.

            (b) TREATMENT OF PAYMENTS. The amount of all indemnification
obligations under this Agreement shall be calculated on an after-Tax basis. Any
payments made to one party by another party which this Agreement shall be
treated for all Tax purposes as nontaxable payments (dividends or capital
contributions, as the case may be) made immediately prior to the Distribution,
unless, and then only to the extent, otherwise required by a Final
Determination.

            SECTION 6.03. COOPERATION AND EXCHANGE OF INFORMATION. (a) Each
member of the BMS Group and the Zimmer Group shall cooperate fully with all
reasonable requests from the other party in connection with the preparation and
filing of Tax Returns, claims for refund, and Tax proceedings concerning issues
or other matters covered by this Agreement. Such cooperation shall include,
without limitation:

            (i) the retention until the expiration of the applicable statute of
      limitations, and the provision upon request, of Tax Returns, books,
      records (including information regarding ownership and tax basis of
      property), documentation and other information relating to the Tax
      Returns, including accompanying schedules, related work papers, and
      documents relating to rulings or other determinations by Taxing
      Authorities;

            (ii) the execution of any document that may be necessary or
      reasonably helpful in connection with any Tax proceeding, or the filing of
      a Tax Return or refund claim by a member of the BMS or Zimmer Group,
      including certification, to the best of a party's knowledge, of the
      accuracy and completeness of the information it has supplied; and

<PAGE>
                                                                              14

            (iii) the use of the parties' best efforts to obtain any
      documentation that may be necessary or reasonably helpful in connection
      with any of the foregoing.

      Each party shall make its employees and facilities available on a
      reasonable and mutually convenient basis in connection with the foregoing
      matters.

            (b) If a party fails to comply with any of its obligations set forth
in Section 6.03(a) of this Agreement upon reasonable request and notice by the
other party, and such failure results in the imposition of additional Taxes, the
nonperforming party shall be liable in full for such additional Taxes.

             SECTION 6.04. RETENTION OF INFORMATION. A party intending to
dispose of documentation of BMS or Zimmer or any member of its respective Group,
including without limitation, books, records, Tax Returns and all supporting
schedules and information relating thereto (after the expiration of the
applicable statute of limitations), shall provide written notice to the other
party describing the documentation to be destroyed or disposed of 60 days prior
to taking such action. The other party may arrange to take delivery of the
documentation described in the notice at its expense during the succeeding
60-day period.

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

            SECTION 7.01. NOTICE. Any payment, notice or communication required
or permitted to be given under this Agreement shall be in writing (including
facsimile) and mailed, faxed or delivered to the parties at the following
addresses (or at such other address as one party may specify by notice to the
other party):

            If to BMS to:

                  Bristol-Myers Squibb Company
                  345 Park Avenue
                  New York, NY 10154-0037
                  Attention: Eileen S. Silvers, Esq., Vice President, Taxes

                  Bristol-Myers Squibb Company
                  345 Park Avenue
                  New York, NY 10154-0037
                  Attention: General Counsel

            If to Zimmer:

                  Zimmer Holdings, Inc.
                  345 East Main Street
                  Warsaw, IN 46580
                  Attention: General Counsel

<PAGE>
                                                                              15

Notification of a change of address shall be given by either party to the other
as provided in this Section 7.01. All such notices and communications shall be
effective (i) when received, if mailed or delivered, or (ii) when confirmed by
fax answerback, if faxed.

            SECTION 7.02. GOVERNING LAW. This Agreement shall be governed by the
laws applicable to contracts entered into and to be performed within the State
of New York by residents thereof.

            SECTION 7.03. JURISDICTION. Each party agrees to submit itself
exclusively to the personal jurisdiction of any New York court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement and agrees that it will not attempt to deny or defeat such
personal jurisdiction or venue by motion or other request for leave from any
such New York court. Each party further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this Section 7.03.

            SECTION 7.04. WAIVER OF JURY TRIAL. Each party waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any dispute arising out of this Agreement.

            SECTION 7.05. ENTIRE AGREEMENT. This Agreement embodies the entire
understanding between the parties relating to its subject matter and supersedes
and terminates all prior agreements and understandings among the parties with
respect to such matters. No promises, covenants or representations of any kind,
other than those expressly stated herein, have been made to induce any party to
enter into this Agreement. This Agreement shall not be modified or terminated
except by a writing duly signed by each of the parties hereto, and no waiver of
any provisions of this Agreement shall be effective unless in a writing duly
signed by the party sought to be bound. If, and to the extent, the provisions of
this Agreement conflict with the Contribution and Distribution Agreement, or any
other agreement entered into in connection with the Transactions, the provisions
of this Agreement shall control.

            SECTION 7.06. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other party; provided, however,
that no such consent shall be required in the event of a merger, consolidation
or sale of either BMS or Zimmer. Subject to the preceding sentence, this
Agreement shall be binding on, and shall inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and assigns.

            SECTION 7.07. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same.

            SECTION 7.08. SEVERABILITY. If any provision of this Agreement or
the

<PAGE>
                                                                              16

application of any such provision to any person or circumstances shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.

            SECTION 7.09. HEADINGS. Headings of sections in this Agreement are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

            SECTION 7.10. SURVIVAL. Notwithstanding anything in this Agreement
to the contrary, the provisions of this Agreement shall survive for the full
period of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof).

            IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed by its respective duly authorized officer as of the date first set
forth above.

                                    Bristol-Myers Squibb Company

                                    by
                                      ----------------------------
                                    Name:
                                    Title:

                                    Zimmer Holdings, Inc.

                                    by
                                      ----------------------------
                                    Name:
                                    Title:

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