EXHIBIT 10.1
ZIMMER HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
(As Amended Effective December 8, 2006)
1. Purpose:
The purpose of the 2006 Stock Incentive Plan is to secure for the Company and
its stockholders the benefits of the incentive inherent in common stock ownership by the officers
and key employees of the Company who will be largely responsible for the Companys future growth
and continued financial success and by providing long-term incentives in addition to current
compensation to certain key executives of the Company who contribute significantly to the long-term
performance and growth of the Company. It is intended that the former purpose will be effected
through the granting of various forms of equity-based awards and that the latter purpose will be
effected through the granting of such equity-based awards which are subject to performance-based
conditions.
2. Definitions:
For purposes of this Plan:
(a) Affiliate shall mean any entity in which the Issuer has, directly or indirectly, an
ownership interest of at least 20%.
(b) Associated Option shall have the meaning set forth in Section 7.
(c) Award shall mean an award of options, stock appreciation rights, performance shares,
performance units, restricted stock or restricted stock units granted under this Plan.
(d) Change in Control shall have the meaning set forth in Section 14(d).
(e) Committee shall have the meaning set forth in Section 4.
(f) Current Portion shall have the meaning set forth in Section 8(a).
(g) Code shall mean the Internal Revenue Code of 1986, as amended.
(h) Common Stock shall mean the Issuers common stock.
(i) Company shall mean the Issuer (Zimmer Holdings, Inc.) and its Subsidiaries and
Affiliates.
(j) Deferred Portion shall have the meaning set forth in Section 8(a).
(k) Disability or Disabled shall mean qualifying for and receiving payments under a
disability pay plan of the Company.
(l) Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
(m) Fair Market Value shall mean the average of the high and low sale prices of a share of
Common Stock on the New York Stock Exchange composite tape on the date of measurement or on any
date as determined by the Committee and, if there were no trades on such date, on the day on which
a trade occurred next preceding such date.
(n) Issuer shall mean Zimmer Holdings, Inc.
(o) Qualifying Performance Criteria shall have the meaning set forth in Section 6(a).
(p) Qualifying Termination shall have the meaning set forth in Section 14(e).
(q) Regulations shall have the meaning set forth in Section 4(c).
(r) Restriction Period shall have the meaning set forth in Section 9(b)(2).
(s) Retirement shall mean termination of the employment of an employee with the Company on
or after (i) the employees 65th birthday or (ii) the employees 55th birthday if the employee has
completed 10 years of service with the Company. For purposes
of this Section 2(s) and all other purposes of this Plan, Retirement shall also mean termination of employment of an employee with the
Company for any reason (other than the employees death, Disability, resignation, willful
misconduct or activity deemed detrimental to the interests of the Company) where, on termination,
the employees attained age (expressed as a whole number) plus completed years of service
(expressed as a whole number) plus one (1) equals at least 70 and the employee has completed 10
years of service with the Company and, where applicable, the employee has executed a general
release, a covenant not to compete and/or a covenant not to solicit. For purposes of this Plan,
service with the Companys former parent, Bristol-Myers Squibb Company, and its subsidiaries and
affiliates before August 6, 2001, shall be included as service with the Company.
(t) Subcommittee shall have the meaning set forth in Section 4(b).
(u) Subsidiary shall mean any corporation which at the time qualifies as a subsidiary of the
Issuer under the definition of subsidiary corporation in Section 424 of the Code.
(v) Tax Date shall have the meaning set forth in Section 13(a).
(w) Withholding Tax shall have the meaning set forth in Section 13(c).
3. Amount of Stock:
(a)
Aggregate Limitation
. The aggregate amount of Common Stock which may be made subject to
Awards under the Plan shall not exceed 10,000,000 shares plus the number of shares that are subject
to Awards granted hereunder that terminate or expire or are cancelled or forfeited during the term
of this Plan without being exercised or fully vested. Notwithstanding anything to the contrary
contained herein: (i) shares that participants tender during the term of this Plan to pay the
purchase price of options in accordance with Section 7(b)(5) shall not be added to the aggregate
Plan limit described above; (ii) shares that the Company retains or causes participants to
surrender to satisfy Withholding Tax requirements in accordance with Section 13 shall not be added
to the aggregate Plan limit described above; (iii) shares that are repurchased by the Company using
option exercise proceeds shall not be added to the aggregate Plan limit described above; (iv) if a
stock appreciation right included in an option in accordance with Section 7(b)(12) is exercised,
the number of shares covered by the option or portion thereof which is surrendered on exercise of
the stock appreciation right shall be considered issued pursuant to the Plan and shall count
against the aggregate Plan limit described above, regardless of whether or not any shares are
actually issued to the participant upon exercise of the stock appreciation right; and (v) shares
covered by any stock appreciation right granted in accordance with Section 18, to the extent that
it is exercised and whether or not shares are actually issued to the participant upon exercise of
the right, shall be considered issued pursuant to the Plan and shall count against the aggregate
Plan limit described above. Substitute or assumed Awards made under Section 19 shall not be
considered in applying this limitation.
(b)
Individual Limitation
. No individual participant may be granted Awards in any single
calendar year during the term of this Plan in respect of more than 500,000 shares of Common Stock.
For purposes of the foregoing limitation, the number of shares in Awards that are made with respect
to a period longer than one calendar year shall be considered to have been made on a pro rata basis
in the calendar years during such period. Substitute or assumed Awards made under Section 19 shall
not be included in applying this limitation.
(c)
Limitation on Full-Value Awards.
The aggregate number of shares of Common Stock which may
be made subject to Awards under Sections 8 and 9 shall not exceed 1,000,000 shares during the term
of this Plan.
(d)
Maximum Number of Incentive Stock Options.
The number of shares of Common Stock with
respect to which incentive stock options may be granted shall not exceed 1,000,000 shares during
the term of this Plan.
(e)
Adjustment
. The limitations under Sections 3(a), (b), (c) and (d) are subject to
adjustment in number and kind pursuant to Section 12.
(f)
Treasury or Market Purchased Shares.
Common Stock issued hereunder may be authorized and
unissued shares or issued shares acquired by the Company on the market or otherwise.
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4. Administration:
The Plan shall be administered under the supervision of the Board of
Directors of the Issuer, which may exercise its powers, to the extent herein provided, through the
agency of its Compensation and Management Development Committee (the Committee), which shall be
appointed by the Board of Directors of the Issuer.
(a)
Composition of Committee
. The Committee shall consist of not less than two (2) members of
the Board who are intended to meet the definition of outside director under the provisions of
Section 162(m) of the Code and the definition of non-employee directors under the provisions of
the Exchange Act or rules or regulations promulgated thereunder.
(b)
Delegation and Administration
. The Committee may delegate to one or more separate
committees (any such committee a Subcommittee) composed of one or more directors of the Issuer
(who may, but need not be, members of the Committee) the ability to grant Awards with respect to
participants who are not executive officers of the Company under the provisions of the Exchange Act
or rules or regulations promulgated thereunder, and such actions shall be treated for all purposes
as if taken by the Committee. Any action by any such Subcommittee within the scope of such
delegation shall be deemed for all purposes to have been taken by the Committee and references in
this Plan to the Committee shall include any such Subcommittee. The Committee may delegate the
administration of the Plan to an officer or officers of the Issuer, and such administrator(s) may
have the authority to execute and distribute agreements or other documents evidencing or relating
to Awards granted by the Committee under this Plan, to maintain records relating to the grant,
vesting, exercise, forfeiture or expiration of Awards, to process or oversee the issuance of shares
of Common Stock upon the exercise, vesting and/or settlement of an Award, to interpret the terms of
Awards and to take such other actions as the Committee may specify, provided that in no case shall
any such administrator be authorized to grant Awards under the Plan. Any action by any such
administrator within the scope of its delegation shall be deemed for all purposes to have been
taken by the Committee and references in this Plan to the Committee shall include any such
administrator, provided that the actions and interpretations of any such administrator shall be
subject to review and approval, disapproval or modification by the Committee.
(c)
Regulations
. The Committee, from time to time, may adopt rules and regulations
(Regulations) for carrying out the provisions and purposes of the Plan and make such other
determinations, not inconsistent with the terms of the Plan, as the Committee shall deem
appropriate. The interpretation and construction of any provision of the Plan by the Committee
shall, unless otherwise determined by the Board of Directors, be final and conclusive.
(d)
Records and Actions
. The Committee shall maintain a written record of its proceedings. A
majority of the Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall
be the acts of the Committee.
5. Eligibility:
Awards may be granted only to present or future officers and key employees
of the Company, including Subsidiaries and Affiliates which become such after the effective date of
the Plan. Any officer or key employee of the Company shall be eligible to receive one or more
Awards under the Plan. Any director who is not an officer or employee of the Company shall be
ineligible to receive an Award under the Plan. The adoption of this Plan shall not be deemed to
give any officer or employee any right to an Award, except to the extent and upon such terms and
conditions as may be determined by the Committee.
6. Qualifying Performance Criteria:
Awards under Section 8 of this Plan shall be, and any
other type of Award (other than incentive stock options) in the discretion of the Committee may be,
contingent upon achievement of Qualifying Performance Criteria.
(a)
Available Criteria
. For purposes of this Plan, the term Qualifying Performance Criteria
shall mean any one or more of the following performance criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole or to a business
unit, Affiliate or Subsidiary, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute basis or relative
to a pre-established target, to previous years results or to a designated comparison group, in
each case as specified by the Committee in the Award:
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(1)
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net sales,
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(2)
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revenue,
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(3)
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gross profit,
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(4)
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operating profit,
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(5)
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net earnings,
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(6)
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earnings per share,
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(7)
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profit margin (gross, operating or net),
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(8)
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cash flow, net cash flow or free cash flow,
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(9)
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acquisition integration synergies (measurable savings and
efficiencies resulting from integration),
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(10)
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acquisition integration milestone achievements,
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(11)
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stock price performance,
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(12)
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total stockholder return,
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(13)
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expense reduction,
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(14)
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debt or net debt reduction, and
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(15)
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financial return ratios (including return on equity, return on
assets or net assets, return on capital or invested capital and return on
operating profit).
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(b)
Adjustments
. The Committee may adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude the effects of any of the following items or events that occurs or
otherwise impacts reported results during a performance period: (1) asset write-downs, (2)
litigation or claim judgments or settlements, (3) changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (4) accruals for reorganization or
restructuring programs, (5) acquisition and integration expenses and purchase accounting, (6)
share-based payments, and (7) any extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 and/or in managements discussion and analysis of financial
condition and results of operations appearing in the Issuers annual report to stockholders for the
applicable year. Notwithstanding satisfaction or completion of any Qualifying Performance
Criteria, to the extent specified at the time of grant of an Award, the number of shares, stock
options, stock appreciation rights, performance shares, performance units, restricted stock, or
restricted stock units or other benefits granted, issued, retainable and/or vested under an Award
on account of satisfaction of such Qualifying Performance Criteria may be reduced by the Committee
on the basis of such further considerations as the Committee in its sole discretion shall
determine.
(c)
Establishment and Achievement of Targets
. The Committee shall establish the specific
targets for the selected Qualified Performance Criteria. For Awards that are intended to qualify
for exemption from the limitation on deductibility imposed by Section 162(m) of the Code or any
successor provision, the targets shall be established within the required time period. These
targets may be set at a specific level or may be expressed as relative to the comparable measure at
comparison companies or a defined index. In cases where Qualifying Performance Criteria are
established, the Committee shall determine the extent to which the criteria have been achieved and
the corresponding level to which vesting requirements have been satisfied or other restrictions are
to be removed from the Award or the extent to which a participants right to receive an Award
should lapse in cases where the Qualifying Performance Criteria have not been met, and shall
certify these determinations in writing. The Committee may provide for the determination of the
attainment of such targets in installments where it deems appropriate.
7. Stock Options:
Stock options under the Plan shall consist of incentive stock options
under Section 422 of the Code or nonqualified stock options (options not intended to qualify as
incentive stock options), as the Committee shall determine. In addition, the Committee may grant
stock appreciation rights in conjunction with an option, as set forth in Section 7(b)(12), or may
grant an option in conjunction with an award of performance units or performance shares, as set
forth in Section 7(b)(11) (an Associated Option).
Each option shall be subject to the following terms and conditions:
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(a)
Grant of Options
. The Committee shall (1) select the officers and key employees of the
Company to whom options may from time to time be granted, (2) determine whether incentive stock
options or nonqualified stock options are to be granted, (3) determine the number of shares to be
covered by each option so granted, (4) determine the terms and conditions (not inconsistent with
the Plan) of any option granted hereunder (including but not limited to restrictions upon the
options, conditions of their exercise (including as to nonqualified stock options, subject to any
Qualifying Performance Criteria), or restrictions on the shares of Common Stock issuable upon
exercise thereof), (5) determine whether nonqualified stock options or incentive stock options
granted under the Plan shall include stock appreciation rights and, if so, the Committee shall
determine the terms and conditions thereof in accordance with Section 7(b)(12) hereof, (6)
determine whether any nonqualified stock options granted under the Plan shall be Associated
Options, and (7) prescribe the form of the instruments necessary or advisable in the administration
of options.
(b)
Terms and Conditions of Option
. Any option granted under the Plan shall be evidenced by a
Stock Option Agreement entered into by the Company and the optionee, in such form as the Committee
shall approve, which agreement shall be subject to the following terms and conditions and shall
contain such additional terms and conditions not inconsistent with the Plan, and in the case of an
incentive stock option not inconsistent with the provisions of the Code applicable to incentive
stock options, as the Committee shall prescribe:
(1)
Number of Shares Subject to an Option
. The Stock Option Agreement shall specify the
number of shares of Common Stock subject to the Agreement. If the option is an Associated
Option, the number of shares of Common Stock subject to such Associated Option shall
initially be equal to the number of performance units or performance shares subject to the
Award, but one share of Common Stock shall be canceled for each performance unit or
performance share paid out under the Award.
(2)
Option Price
. The purchase price per share of Common Stock purchasable under an
option will be determined by the Committee but will be not less than the Fair Market Value of
a share of Common Stock on the date of the grant of the option, except as provided in Section
19 relating to assumed or substitute Awards.
(3)
Option Period
. The period of each option shall be fixed by the Committee, but no
option shall be exercisable after the expiration of ten years from the date the option is
granted.
(4)
Consideration
. Unless the Committee determines otherwise, each optionee, as
consideration for the grant of an option, shall remain in the continuous employ of the
Company for at least one year from the date of the granting of such option, and no option
shall be exercisable until after the completion of such one year period of employment by the
optionee.
(5)
Exercise of Option
. The Committee shall determine the time or times at which an
option may be exercised in whole or in part during the option period. An optionee may
exercise an option by giving written notice of exercise to the Company specifying the number
of shares to be purchased. Such written notice must be accompanied by payment in full of the
purchase price and Withholding Taxes (as defined in Section 13 hereof), due either (i) by
certified or bank check, (ii) by payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board, (iii) in shares of Common Stock owned
by the optionee having a Fair Market Value at the date of exercise equal to such purchase
price, provided that payment in shares of Common Stock will not be permitted unless at least
100 shares of Common Stock are required and delivered for such purpose, (iv) in any
combination of the foregoing, or (v) by any other method that the Committee approves. At its
discretion, the Committee may modify or suspend any method for the exercise of stock options,
including any of the methods specified in the previous sentence. Delivery of shares for
exercising an option shall be made either through the physical delivery of shares or through
an appropriate certification or attestation of valid ownership. Shares of Common Stock used
to exercise an option shall have been held by the optionee for the requisite period of time
to avoid adverse accounting consequences to the Company with respect to the option. No
shares shall be issued until full payment therefor has been made. An optionee shall have the
rights of a stockholder only with respect to shares of stock that have been recorded on the
Companys books on behalf of the optionee or for which certificates have been issued to the
optionee.
Notwithstanding anything in the Plan to the contrary, the Committee may, in its sole
discretion, allow the exercise of a lapsed grant if the Committee determines that: (i) the
lapse was solely the result of the Companys inability to execute the exercise of an option
Award due to conditions beyond the Companys control and (ii) the optionee made valid and
reasonable efforts to exercise the Award. In the event the Committee makes such a
determination, the Company shall allow the exercise to occur as promptly as possible
following its receipt of exercise instructions subsequent to such determination.
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(6)
Nontransferability of Options
. No option or stock appreciation right granted under
the Plan shall be transferable by the optionee other than by will or by the laws of descent
and distribution, and such option or stock appreciation right shall be exercisable, during
the optionees lifetime, only by the optionee.
Notwithstanding the foregoing, the Committee may set forth in a Stock Option Agreement
at the time of grant or thereafter, that the options (other than incentive stock options) may
be transferred to members of the optionees immediate family, to one or more trusts solely
for the benefit of such immediate family members and to partnerships in which such family
members or trusts are the only partners. For this purpose, immediate family means the
optionees spouse, parents, children, stepchildren, grandchildren and legal dependants. Any
transfer of options under this provision will not be effective until notice of such transfer
is delivered to the Company.
(7)
Termination of Employment Other than by Retirement, Death or Disability
. If an
optionee shall cease to be employed by the Company for any reason (other than termination of
employment by reason of Retirement, death or Disability) after the optionee shall have been
continuously so employed for one year after the granting of the option, or as otherwise
determined by the Committee, the option shall be exercisable only to the extent that the
optionee was otherwise entitled to exercise it at the time of such cessation of employment
with the Company, unless otherwise determined by the Committee. The option shall remain
exercisable for three months after such cessation of employment (or, if earlier, the end of
the option period), unless the Committee determines otherwise. The Plan does not confer upon
any optionee any right with respect to continuation of employment by the Company.
(8)
Retirement of Optionee
. If an optionee shall cease to be employed by the Company by
reason of Retirement after the optionee shall have been continuously employed by the Company
for a period of at least one year after the granting of the option, or as otherwise
determined by the Committee, all remaining unexercised portion(s) of the option shall
immediately vest and become exercisable by the optionee and shall remain exercisable for the
remainder of the option period set forth therein, except that, in the case of an incentive
stock option, the option shall remain exercisable for three months following Retirement (or,
if earlier, the end of the option period).
(9)
Death or Disability of Optionee
. An optionee who ceases to be employed by reason of
Disability shall be treated, for vesting purposes, as though the optionee remained in the
employ of the Company until the earlier of (i) cessation of payments under a disability pay
plan of the Company, (ii) the optionees death, or (iii) the optionees 65th birthday.
Except as otherwise provided in Section 7(b)(14), in the event of the optionees death
(i) while in the employ of the Company, (ii) while Disabled as described in the preceding
paragraph or (iii) after cessation of employment due to Retirement, the option shall be fully
exercisable by the executors, administrators, legatees or distributees of the optionees
estate, as the case may be, at any time following such death. In the event of the optionees
death after cessation of employment for any reason other than Disability or Retirement, the
option shall be exercisable by the executors, administrators, legatees or distributees of the
optionees estate, as the case may be, at any time during the twelve month period following
such death. Notwithstanding the foregoing, unless the Committee determines otherwise, in no
event shall an option be exercisable unless the optionee shall have been continuously
employed by the Company for a period of at least one year after the option grant, and no
option shall be exercisable after the expiration of the option period set forth in the Stock
Option Agreement. In the event any option is exercised by the executors, administrators,
legatees or distributees of the estate of a deceased optionee, the Company shall be under no
obligation to issue stock thereunder unless and until the Company is satisfied that the
person or persons exercising the option are the duly appointed legal representatives of the
deceased optionees estate or the proper legatees or distributees thereof.
(10)
No Deferral Feature.
No option or stock appreciation right granted under this Plan
shall include any feature for the deferral of compensation other than, in the case of an
option, the deferral of recognition of income until the later of exercise or disposition of
the option under Section 83 of the Code, or the time the stock acquired pursuant to the
exercise of the option first becomes substantially vested (as defined in regulations
interpreting Section 83 of the Code), or, in the case of a stock appreciation right, the
deferral of recognition of income until the exercise of the stock appreciation right.
(11)
Long-Term Performance Awards
. The Committee may from time to time grant
nonqualified stock options under the Plan in conjunction with and related to an award of
performance units or performance shares made under a Long-Term Performance Award as set forth
in Section 8(b)(11). In such event, notwithstanding any other provision hereof, (i) the
number of shares to which the Associated Option applies shall initially be equal to the
number of performance units or performance shares granted by the Award, but such number of shares shall be reduced on a one-share-for-one unit or share
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basis to the extent that the Committee determines, pursuant to the terms of the Award,
to pay to the optionee or the optionees beneficiary the performance units or performance
shares granted pursuant to such Award, and (ii) such Associated Option shall be cancelable in
the discretion of the Committee, without the consent of the optionee, under the conditions
and to the extent specified in the Award.
(12)
Stock Appreciation Rights
. In the case of any option granted under the Plan,
either at the time of grant or by amendment of such option at any time after such grant,
there may be included a stock appreciation right which shall be subject to such terms and
conditions, not inconsistent with the Plan, as the Committee shall impose, including the
following:
(A) A stock appreciation right shall be exercisable to the extent, and only
to the extent, that the option in which it is included is at the time exercisable, and
may be exercised within such period only at such time or times as may be determined by
the Committee (and in no event after expiration of ten years from the date the option
was granted);
(B) A stock appreciation right shall entitle the optionee (or any person
entitled to act under the provisions of Section 7(b)(9)) to surrender unexercised the
option in which the stock appreciation right is included (or any portion of such
option) to the Company and to receive from the Company in exchange therefor that
number of shares having an aggregate value equal to (or, in the discretion of the
Committee, less than) the excess of the value of one share (provided such value does
not exceed such multiple of the option price per share as may be specified by the
Committee) over the option price per share specified in such option (as determined by
the Committee in accordance with Section 7(b)(2)) times the number of shares called
for by the option, or portion thereof, which is so surrendered. The Committee shall
be entitled to cause the Company to settle its obligation, arising out of the exercise
of a stock appreciation right, by the payment of cash equal to the aggregate value of
the shares the Company would otherwise be obligated to deliver or partly by the
payment of cash and partly by the delivery of shares. Any such election shall be made
within 30 business days after the receipt by the Committee of written notice of the
exercise of the stock appreciation right. The value of a share for this purpose shall
be the Fair Market Value thereof on the last business day preceding the date of the
election to exercise the stock appreciation right;
(C) No fractional shares shall be delivered under this Section 7(b)(12) but in
lieu thereof a cash adjustment shall be made;
(D) If a stock appreciation right included in an option is exercised, such
option shall be deemed to have been exercised to the extent of the number of shares
called for by the option or portion thereof which is surrendered on exercise of the
stock appreciation right and no new option may be granted covering such shares under
this Plan; and
(E) If an option which includes a stock appreciation right is exercised, such
stock appreciation right shall be deemed to have been canceled to the extent of the
number of shares called for by the option or portion thereof is exercised and no new
stock appreciation rights may be granted covering such shares under this Plan.
(13)
Incentive Stock Options
. Incentive stock options may only be granted to employees
of the Issuer and its Subsidiaries and parent corporations, as defined in Section 424 of the
Code. In the case of any incentive stock option granted under the Plan, the aggregate Fair
Market Value of the shares of Common Stock (determined at the time of grant of each option)
with respect to which incentive stock options granted under the Plan and any other plan of
the Issuer or its parent or a Subsidiary which are exercisable for the first time by an
employee during any calendar year shall not exceed $100,000 or such other amount as may be
required by the Code.
(14)
Rights of Transferee
. Notwithstanding anything to the contrary herein, if an
option has been transferred in accordance with Section 7(b)(6), the option shall be
exercisable solely by the transferee. The option shall remain subject to the provisions of
the Plan, including that it will be exercisable only to the extent that the optionee or
optionees estate would have been entitled to exercise it if the optionee had not transferred
the option. In the event of the death of the optionee prior to the expiration of the right
to exercise the transferred option, the period during which the option shall be exercisable
will terminate on the date one year following the date of the optionees death. In the event
of the death of the transferee prior to the expiration of the right to exercise the option,
the period during which the option shall be exercisable by the executors, administrators,
legatees and distributees of the transferees estate, as the case may be, will terminate on
the date one year
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following the date of the transferees death. In no event will the option be
exercisable after the expiration of the option period set forth in the Stock Option
Agreement. The option shall be subject to such other rules as the Committee shall determine.
(15)
No Reload
. Options shall not be granted under this Plan in consideration for and
shall not be conditioned upon the delivery of shares of Common Stock in payment of the option
price and/or tax withholding obligation under any other employee stock option.
8. Long-term Performance Awards:
Long-term performance awards under the Plan shall consist
of the conditional grant of a specified number of performance units or performance shares. The
conditional grant of a performance unit to a participant will entitle the participant to receive a
specified dollar value, variable under conditions specified in the Award, if the Qualifying
Performance Criteria specified in the Award are achieved and the other terms and conditions thereof
are satisfied. The conditional grant of a performance share to a participant will entitle the
participant to receive a specified number of shares of Common Stock, or the equivalent cash value,
as determined by the Committee, if the Qualifying Performance Criteria specified in the Award are
achieved and the other terms and conditions thereof are satisfied. Each Award shall be subject to
the following terms and conditions:
(a)
Grant of Awards
. The Committee shall (1) select the officers and key executives of the
Company to whom Awards under this Section 8 may from time to time be granted, (2) determine the
number of performance units or performance shares covered by each Award, (3) determine the terms
and conditions of each performance unit or performance share awarded and the award period and
performance objectives with respect to each Award, (4) determine the extent to which a participant
may elect to defer payment of a percentage of an Award (the Deferred Portion) pursuant to the
terms of a deferred compensation plan of the Company, (5) determine whether payment with respect to
the portion of an Award which has not been deferred (the Current Portion) and the payment with
respect to the Deferred Portion of an Award shall be made entirely in cash, entirely in Common
Stock or partially in cash and partially in Common Stock, (6) determine whether the Award is to be
made independently of or in conjunction with a nonqualified stock option granted under the Plan,
and (7) prescribe the form of the instruments necessary or advisable in the administration of the
Awards.
(b)
Terms and Conditions of Award
. Any Award conditionally granting performance units or
performance shares to a participant shall be evidenced by a Performance Unit Agreement or
Performance Share Agreement, as applicable, executed by the Company and the participant, in such
form as the Committee shall approve, which agreement shall contain in substance the following terms
and conditions applicable to the Award and such additional terms and conditions as the Committee
shall prescribe:
(1)
Number and Value of Performance Units
. The Performance Unit Agreement shall specify
the number of performance units conditionally granted to the participant. If the Award has
been made in conjunction with the grant of an Associated Option, the number of performance
units granted shall initially be equal to the number of shares which the participant is
granted the right to purchase pursuant to the Associated Option, but one performance unit
shall be canceled for each share of the Issuers Common Stock purchased upon exercise of the
Associated Option or for each stock appreciation right included in such option that has been
exercised. The Performance Unit Agreement shall specify the threshold, target and maximum
dollar values of each performance unit and corresponding performance objectives as provided
under Section 8(b)(5).
(2)
Number and Value of Performance Shares
. The Performance Share Agreement shall
specify the number of performance shares conditionally granted to the participant. If the
Award has been made in conjunction with the grant of an Associated Option, the number of
performance shares granted shall initially be equal to the number of shares which the
participant is granted the right to purchase pursuant to the Associated Option, but one
performance share shall be canceled for each share of the Issuers Common Stock purchased
upon exercise of the Associated Option or for each stock appreciation right included in such
option that has been exercised. The Performance Share Agreement shall specify that each
Performance Share will have a value equal to one (1) share of Common Stock.
(3)
Award Periods
. For each Award, the Committee shall designate an award period with a
duration to be determined by the Committee in its discretion, but in no event less than three
calendar years, within which specified performance objectives are to be attained. There may
be several award periods in existence at any one time and the duration of performance
objectives may differ from each other.
(4)
Consideration
. Each participant, as consideration for the award of performance
units or performance shares, shall remain in the continuous employ of the Company for at
least one year after the date of the making of such Award, and
8
no Award shall be payable until after the completion of such one year of employment by
the participant, except as otherwise determined by the Committee.
(5)
Performance Objectives
. The Committee shall select the Qualifying Performance
Criteria and specific targets for each award period.
(6)
Determination and Payment of Performance Units or Performance Shares Earned
. As
soon as practicable after the end of an award period, the Committee shall determine the
extent to which Awards have been earned on the basis of the Companys actual performance in
relation to the Qualifying Performance Criteria as set forth in the Performance Unit
Agreement or Performance Share Agreement and certify these results in writing. The
Performance Unit Agreement or Performance Share Agreement shall specify that as soon as
practicable after the end of each award period, the Committee shall determine whether the
conditions of Sections 8(b)(4) and 8(b)(5) hereof have been met and, if so, shall ascertain
the amount payable or shares which should be distributed to the participant in respect of the
performance units or performance shares. As promptly as practicable after it has determined
that an amount is payable or should be distributed in respect of an Award, the Committee
shall cause the Current Portion of such Award to be paid or distributed to the participant or
the participants beneficiaries, as the case may be, in the Committees discretion, either
entirely in cash, entirely in Common Stock or partially in cash and partially in Common
Stock. Payment of any Deferred Portion of an Award shall be determined by the terms of the
Company deferred compensation plan under which the deferral was elected.
In making payment in the form of Common Stock hereunder, the cash equivalent of such
Common Stock shall be determined by the Fair Market Value of the Common Stock on the day the
Committee designates the performance units shall be payable.
(7)
Nontransferability of Awards and Designation of Beneficiaries
. No Award under this
Section of the Plan shall be transferable by the participant other than by will or by the
laws of descent and distribution, except that a participant may designate a beneficiary
pursuant to the provisions hereof. If any participant or the participants beneficiary shall
attempt to assign the participants rights under the Plan in violation of the provisions
thereof, the Companys obligation to make any further payments to such participant or the
participants beneficiaries shall forthwith terminate.
A participant may name one or more beneficiaries to receive any payment of an Award to
which the participant may be entitled under the Plan in the event of the participants death,
on a form to be provided by the Committee. A participant may change the participants
beneficiary designation from time to time in the same manner. If no designated beneficiary
is living on the date on which any payment becomes payable to a participants beneficiary, or
if no beneficiary has been specified by the participant, such payment will be payable to the
participants estate.
(8)
Retirement and Termination of Employment Other Than by Death or Disability
. In the
event of the Retirement prior to the end of an award period of a participant who has
satisfied the one year employment requirement of Section 8(b)(4) with respect to an Award
prior to Retirement, or as otherwise determined by the Committee, the participant, or his
estate, shall be entitled to a payment of such Award at the end of the award period, pursuant
to the terms of the Plan and the participants Performance Unit Agreement or Performance
Share Agreement, provided, however, that the participant shall be deemed to have earned that
proportion (to the nearest whole unit or share) of the value of the performance units or
performance shares granted to the participant under such Award as the number of months of the
award period which have elapsed since the first day of the calendar year in which the Award
was made to the end of the month in which the participants Retirement occurs, bears to the
total number of months in the award period, subject to the attainment of performance
objectives associated with the Award as certified by the Committee. The participants right
to receive any remaining performance units or performance shares shall be canceled and
forfeited.
Subject to Section 8(b)(6) hereof, the Performance Unit Agreement or Performance Share
Agreement shall specify that the right to receive the performance units or performance shares
granted to such participant shall be conditional and shall be canceled, forfeited and
surrendered if the participants continuous employment with the Company shall terminate for
any reason, other than the participants death, Disability or Retirement, prior to the end of
the award period, or as otherwise determined by the Committee.
(9)
Disability of Participant
. For the purposes of any Award under this Section 8,
a participant who becomes Disabled shall be deemed to have suspended active employment by
reason of Disability commencing on the date the participant becomes entitled to receive payments under a
disability pay plan of the Company and continuing until the date the
9
participant is no longer entitled to receive such payments. In the event a participant
becomes Disabled during an award period, but only if the participant has satisfied the one
year employment requirement of Section 8(b)(4) with respect to an Award prior to becoming
Disabled, or as otherwise determined by the Committee, upon the determination by the
Committee of the extent to which an Award has been earned pursuant to Section 8(b)(6), the
participant shall be deemed to have earned that proportion (to the nearest whole unit or
share) of the value of the performance units or performance shares granted to the participant
under such Award as the number of months of the award period in which the participant was not
Disabled bears to the total number of months in the award period, subject to the attainment
of the performance objectives associated with the Award as certified by the Committee. The
participants right to receive any remaining performance units or performance shares shall be
canceled and forfeited.
(10)
Death of Participant
. In the event of the death prior to the end of an award
period of a participant who has satisfied the one year employment requirement with respect to
an Award under this Section 8 prior to the date of death, or as otherwise determined by the
Committee, the participants beneficiaries or estate, as the case may be, shall be entitled
to a payment of such Award upon the end of the award period, pursuant to the terms of the
Plan and the participants Performance Unit Agreement or Performance Share Agreement,
provided, however, that the participant shall be deemed to have earned that proportion (to
the nearest whole unit or share) of the value of the performance units or performance shares
granted to the participant under such Award as the number of months of the award period which
have elapsed since the first day of the calendar year in which the Award was made to the end
of the month in which the participants death occurs, bears to the total number of months in
the award period. The participants right to receive any remaining performance units or
performance shares shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part, such cancellation and
forfeiture of any performance units or performance shares.
(11)
Grant of Associated Option
. If the Committee determines that the conditional grant
of performance units or performance shares under the Plan is to be made to a participant in
conjunction with the grant of a nonqualified stock option under the Plan, the Committee shall
grant the participant an Associated Option under the Plan subject to the terms and conditions
of this Section 8(b)(11). In such event, such Award shall be contingent upon the participants being granted such an Associated Option pursuant to which: (i) the number of shares the optionee may purchase shall initially be equal to the number of performance units or performance shares conditionally granted by the Award, (ii) such number of shares shall be
reduced on a one-share-for-one-unit or share basis to the extent that the Committee determines, pursuant to Section 8(b)(6) hereof, to pay to the participant or the
participants beneficiaries the performance units or performance shares conditionally granted
pursuant to the Award, and (iii) the Associated Option shall be cancelable in the discretion
of the Committee, without the consent of the participant, under the conditions and to the
extent specified herein and in Section 8(b)(6) hereof.
If no amount is payable in respect of the conditionally granted performance units or
performance shares, the Award and such performance units or performance shares shall be
deemed to have been canceled, forfeited and surrendered, and the Associated Option, if any,
shall continue in effect in accordance with its terms. If any amount is payable in respect
of the performance units or performance shares and such units or shares were granted in
conjunction with an Associated Option, the Committee shall, within 30 days after the
determination of the Committee referred to in the first sentence of Section 8(b)(6),
determine, in its sole discretion, either:
(A) to cancel in full the Associated Option, in which event the value of the
performance units or performance shares payable pursuant to Sections 8(b)(5) and (6)
shall be paid or the performance shares shall be distributed;
(B) to cancel in full the performance units or performance shares, in which
event no amount shall be paid to the participant in respect thereof and no shares
shall be distributed but the Associated Option shall continue in effect in accordance
with its terms; or
(C) to cancel some, but not all, of the performance units or performance shares,
in which event the value of the performance units payable pursuant to Sections 8(b)(5)
and (6) which have not been canceled shall be paid or the performance shares shall be
distributed and the Associated Option shall be canceled with respect to that number of shares equal to the number of conditionally granted performance units or performance shares that remain payable.
10
Any action taken by the Committee pursuant to the preceding sentence shall be uniform
with respect to all Awards having the same award period. If the Committee takes no such
action, it shall be deemed to have determined to cancel in full the Award in accordance with
clause (B) above.
(12)
Compliance with Section 409A of the Code:
Notwithstanding any provision of the
Plan to the contrary, in the event any Award under this Section 8 constitutes or provides for
a deferral of compensation within the meaning of Section 409A of the Code, the Award shall
comply in all respects with the applicable requirements of Section 409A of the Code; the
Performance Share Agreement or Performance Unit Agreement, as the case may be, shall include
all provisions required for the Award to comply with the applicable requirements of Section
409A of the Code; and those provisions of the Performance Share Agreement or Performance Unit
Agreement, as the case may be, shall be deemed to constitute provisions of the Plan.
9. Restricted Stock and Restricted Stock Units:
An Award of restricted stock under the Plan
shall consist of a grant of shares of Common Stock of the Issuer, the grant, issuance, retention
and/or vesting of which is subject to the terms and conditions hereinafter provided. An Award of a
restricted stock unit to a participant will entitle the participant to receive a specified number
of shares of Common Stock or cash, as determined by the Committee, if the objectives specified in
the Award, if any, are achieved and the other terms and conditions thereof are satisfied. Each
Award shall be subject to the following terms and conditions:
(a)
Grant of Awards
: The Committee shall (i) select the officers and key employees to whom
restricted stock or restricted stock units may from time to time be granted, (ii) determine the
number of shares to be covered by each Award granted, (iii) determine the terms and conditions (not
inconsistent with the Plan) of any Award granted hereunder, and (iv) prescribe the form of the
agreement, legend or other instrument necessary or advisable in the administration of Awards under
the Plan.
(b)
Terms and Conditions of Awards
: Any Award granted under this Section 9 shall be evidenced
by a Restricted Stock Agreement or Restricted Stock Unit Agreement executed by the Issuer and the
participant, in such form as the Committee shall approve, which agreement shall be subject to the
following terms and conditions and shall contain such additional terms and conditions not
inconsistent with the Plan as the Committee shall prescribe:
(1)
Number of Shares Subject to an Award:
The agreement shall specify the number of shares of Common Stock or the number of restricted stock units subject to the Award.
(2)
Restriction Period:
The period of restriction applicable to each Award (the
Restriction Period) shall be established by the Committee but may not be less than one
year, unless the Committee determines otherwise. The Restriction Period applicable to each
Award shall commence on the award date.
(3)
Consideration:
Each participant, as consideration for the grant of an Award, shall
remain in the continuous employ of the Company for at least one year from the date of the
granting of such Award, or as otherwise determined by the Committee, and the participants
right to any shares of restricted stock or restricted stock units covered by such an Award
shall be forfeited if the participant does not remain in the continuous employ of the Company
for at least one year from the date of the granting of the Award, except as otherwise
determined by the Committee.
(4)
Restriction Criteria:
The Committee shall establish the criteria upon which the
Restriction Period shall be based. Restrictions shall be based upon either or both of (i)
the continued employment of the participant or (ii) the attainment of one or more Qualifying
Performance Criteria.
(c)
Terms and Conditions of Restrictions and Forfeitures:
The restricted stock or restricted
stock units awarded pursuant to the Plan shall be subject to the following restrictions and
conditions:
(1) During the Restriction Period, the participant will not be permitted to sell,
transfer, pledge or assign the Award made under this Section 9.
(2) Except as provided in Section 9(c)(1), or as the Committee may otherwise determine,
a participant holding restricted stock shall have all of the rights of a stockholder of the
Issuer, including the right to vote the shares and receive dividends and other distributions
provided that distributions in the form of stock shall be subject to the same restrictions as
the underlying restricted stock. A participant holding restricted stock units shall have
none of the rights of a stockholder of the Issuer during the Restriction Period.
11
(3) Unless the Committee shall expressly otherwise provide in the agreement relating to
an Award made under this Section 9, in the event of a participants Retirement, death or
Disability prior to the end of the Restriction Period for a participant who has satisfied the
one year employment requirement of Section 9(b)(3), all time-based restrictions imposed under
such Award shall immediately lapse, but such Award shall continue to be subject to the
satisfaction of any targets for Qualifying Performance Criteria set forth in the agreement
relating to such Award.
(4) Unless the Committee shall expressly otherwise provide in the agreement relating to
an Award made under this Section 9, if during the Restriction Period a participant terminates
employment with the Company for any reason other than Retirement, death or Disability, the shares covered by a restricted stock Award that are not already vested shall be canceled and
forfeited and will be deemed to be reacquired by the Issuer and any restricted stock units
still subject to restriction shall be forfeited by the participant.
(5) In cases of special circumstances as determined by the Committee, the Committee may,
in its sole discretion when it finds that such an action would be in the best interests of
the Company, accelerate or waive in whole or in part any or all remaining time-based
restrictions with respect to all or part of a participants restricted stock or restricted
stock units.
(6) In the event that the participant fails promptly to pay or make satisfactory
arrangements as to the Withholding Taxes as provided in Section 13, (i) all shares of
restricted stock still subject to restriction shall be forfeited by the participant and will
be deemed to be reacquired by the Company; and (ii) all restricted stock units still subject
to restriction shall be forfeited by the participant.
(7) A participant may, at any time prior to the expiration of the Restriction Period,
waive all rights to receive all or some of the shares covered by or corresponding to an Award
by delivering to the Company a written notice of such waiver.
(8) Notwithstanding the other provisions of this Section 9, the Committee may adopt
rules which would permit a gift by a participant holding restricted stock or the benefits of
a restricted stock unit, to members of the participants immediate family (spouse, parents,
children, stepchildren, grandchildren or legal dependants) or to a trust whose beneficiary or
beneficiaries shall be either such a person or persons or the participant.
(9) Any attempt to dispose of an Award under this Section 9 in a manner contrary to the
restrictions shall be ineffective.
(d)
Compliance with Section 409A of the Code
Notwithstanding any provision of the Plan to
the contrary, in the event any Award under this Section 9 constitutes or provides for a deferral of
compensation within the meaning of Section 409A of the Code, the Award shall comply in all respects
with the applicable requirements of Section 409A of the Code; the Restricted Stock Agreement or
Restricted Stock Unit Agreement, as the case may be, shall include all provisions required for the
Award to comply with the applicable requirements of Section 409A of the Code; and those provisions
of the Restricted Stock Agreement or Restricted Stock Unit Agreement, as the case may be, shall be
deemed to constitute provisions of the Plan.
10. Forfeiture of Awards; Recapture of Benefits:
The Committee may, in its discretion,
provide in an agreement evidencing any Award that, in the event that the participant engages,
within a specified period after termination of employment, in certain activity specified by the
Committee that is deemed detrimental to the interests of the Company (including, but not limited
to, the breach of any non-solicitation and/or non-compete agreements with the Company), the
participant will forfeit all rights under any Awards that remain outstanding as of the time of such
act and will return to the Company an amount of shares of Common Stock with a Fair Market Value
(determined as of the date such shares are returned) or, in the case of stock appreciation rights,
performance units or restricted stock units that are settled in cash, an amount of cash, equal to
the amount of any gain realized upon the exercise of or lapsing of restrictions on any Award that
occurred within a specified time period.
11. Determination of Breach of Conditions:
The determination of the Committee as to whether
an event has occurred resulting in a forfeiture or a termination of an Award or any reduction of
the Companys obligations in accordance with the provisions of the Plan shall be conclusive.
12
12. Adjustment of and Changes in the Common Stock:
(a)
Effect of Outstanding Awards
. The existence of outstanding Awards shall not affect in any
way the right or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, exchanges, or other changes in the Companys
capital structure or its business, or any merger or consolidation of the Company or any issuance of
Common Stock or other securities or subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common Stock or any sale
or transfer of all or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. Further, except as expressly provided herein or by
the Committee, (i) the issuance by the Company of Common Stock or any class of securities
convertible into shares of stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares
or obligations to the Company convertible into such shares or other securities, (ii) the payment of
a dividend in property other than shares of Common Stock, or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of shares of Common Stock subject to stock
options or other Awards theretofore granted or the purchase price per share, unless the Committee
shall determine, in its sole discretion, that an adjustment is necessary or appropriate.
(b)
Adjustments
. If the outstanding Common Stock or other securities of the Company, or both,
for which an Award is then exercisable or as to which an Award is to be settled shall at any time
be changed or exchanged by declaration of a stock dividend, stock split, combination of shares,
extraordinary dividend of cash and/or assets, recapitalization, reorganization, corporate
separation or division (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend) or any similar event
affecting the Common Stock or other securities of the Company, the Committee shall appropriately
and equitably adjust the number and kind of shares or other securities which are subject to this
Plan or subject to any Awards theretofore granted, and the exercise or settlement prices of such
Awards, so as to maintain the proportionate number of shares of Common Stock or other securities
without changing the aggregate exercise or settlement price.
(c)
Fractional Shares
. No right to purchase fractional shares shall result from any
adjustment in stock options or stock appreciation rights pursuant to this Section 12. In case of
any such adjustment, the shares subject to the stock option or stock appreciation right shall be
rounded down to the nearest whole share.
(d)
Assumption of Awards
. Any other provision hereof to the contrary notwithstanding (except
for Section 12(a)), in the event the Company is a party to a merger or other reorganization,
outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement
may provide, without limitation, for the assumption of outstanding Awards by the surviving
corporation or its parent, for their continuation by the Company (if it is the surviving
corporation), for accelerated vesting and accelerated expiration, or for settlement in cash.
13. Taxes:
(a) Each participant shall, no later than the Tax Date (as defined below), pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any Withholding Tax (as
defined below) with respect to an Award, and the Company shall, to the extent permitted by law,
have the right to deduct such amount from any payment of any kind otherwise due to the participant.
The Company shall also have the right to retain or sell without notice, or to demand surrender of,
shares of Common Stock in value sufficient to cover the amount of any Withholding Tax, and to make
payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount
in cash equal to the amount of such Withholding Tax, remitting any balance to the participant. For
purposes of this paragraph, the value of shares of Common Stock so retained or surrendered shall be
the average of the high and low sales prices per share on the New York Stock Exchange composite
tape on the date that the amount of the Withholding Tax is to be determined (the Tax Date) and
the value of shares of Common Stock so sold shall be the actual net sales price per share (after
deduction of commissions) received by the Company.
(b) Notwithstanding the foregoing, if the stock options have been transferred, the optionee
shall provide the Company with funds sufficient to pay such Withholding Tax. If such optionee does
not satisfy the optionees tax payment obligation and the stock options have been transferred, the
transferee may provide the funds sufficient to enable the Company to pay such taxes. However, if
the stock options have been transferred, the Company shall have no right to retain or sell without
notice, or to demand surrender from the transferee of, shares of Common Stock in order to pay such
Withholding Tax.
13
(c) The term Withholding Tax means the minimum required withholding amount applicable to the
participant, including federal, state and local income taxes, Federal Insurance Contribution Act
taxes, social insurance contributions, payroll tax, payment on account and any other governmental
impost or levy.
(d) The participant shall be entitled to satisfy the obligation to pay any Withholding Tax, in
whole or in part, by providing the Company with funds sufficient to enable the Company to pay such
Withholding Tax or, unless the Committee determines otherwise, by requiring the Company to retain
or to accept upon delivery thereof by the participant shares of Common Stock held by the
participant for more than six months having a Fair Market Value sufficient to cover the amount of
such Withholding Tax. Each election by a participant to have shares retained or to deliver shares
for this purpose shall be subject to the following restrictions: (i) the election must be in
writing and be made on or prior to the Tax Date; (ii) the election must be irrevocable; and (iii)
the election shall be subject to the disapproval of the Committee.
14. Change in Control
.
(a) Unless the Committee shall otherwise expressly provide in the agreement relating to an
Award, in the event an optionees employment with the Company terminates pursuant to a Qualifying
Termination (as defined below) during the three (3) year period following a Change in Control of
the Issuer (as defined below):
(1) all outstanding options shall become immediately fully vested and exercisable (to
the extent not yet vested and exercisable as of the date of the Qualifying Termination); and
(2) the Restriction Period applicable to all outstanding Awards of restricted stock and
restricted stock units shall immediately expire and all restrictions imposed under such
Awards shall immediately lapse.
(b) Unless the Committee shall otherwise expressly provide in the agreement relating to an
Award, if the Company undergoes a Change in Control during the award period applicable to an Award
of performance shares or performance units, the number of shares or units deemed earned shall be
the greater of (i) the target number of shares or units specified in the participants Award
agreement or (ii) the number of shares or units that would have been earned by applying the
Qualifying Performance Criteria specified in the Award agreement to the Companys actual
performance from the beginning of the applicable award period to the date of the Change in Control.
(c) In addition, in the event of a Change in Control of the Issuer, the Committee may:
(1) determine that outstanding options shall be assumed by, or replaced with comparable
options by, the surviving corporation (or a parent or subsidiary of the surviving
corporation) and that outstanding Awards shall be converted to similar awards of the
surviving corporation (or a parent or subsidiary of the surviving corporation), or
(2) take such other actions with respect to outstanding options and other Awards as the
Committee deems appropriate.
(d) For purposes of this Plan, a Change in Control shall be deemed to have occurred on the
earliest of the following dates:
(1) The date any person (as defined in Section 14(d)(3) of the Exchange Act) shall have
become the direct or indirect beneficial owner of twenty percent (20%) or more of the then
outstanding common shares of the Issuer;
(2) The date the stockholders of the Issuer approve a merger or consolidation of the
Issuer with any other corporation other than (i) a merger or consolidation which would result
in the voting securities of the Issuer outstanding immediately prior thereto continuing to
represent at least 75% of the combined voting power of the voting securities of the Issuer or
the surviving entity outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the Issuer in which no
Person acquires more than 50% of the combined voting power of the Issuers then outstanding
securities;
(3) The date the stockholders of the Issuer approve a plan of complete liquidation of
the Issuer or an agreement for the sale or disposition by the Issuer of all or substantially
all of the Issuers assets; or
14
(4) The date there shall have been a change in a majority of the Board of Directors of
the Issuer within a two (2) year period beginning after the effective date of the Plan,
unless the nomination for election by the Issuers stockholders of each new director was
approved by the vote of two-thirds of the directors then still in office who were in office
at the beginning of the two (2) year period.
(e) For purposes of this Plan provision, a Qualifying Termination shall be deemed to have
occurred under the following circumstances:
(1) A Company-initiated termination for reasons other than the employees death,
Disability, resignation without good cause, willful misconduct or activity deemed detrimental
to the interests of the Company, provided the participant executes a general release and,
where applicable, a non-solicitation and/or non-compete agreement with the Company;
(2) The participant resigns with good cause, which includes (i) a substantial adverse
alteration in the nature or status of the participants responsibilities, (ii) a reduction in
the participants base salary or levels of entitlement or participation under any incentive
plan, award program or employee benefit program without the substitution or implementation of
an alternative arrangement of substantially equal value, or (iii) the Company requiring the
participant to relocate to a work location more than fifty (50) miles from the participants
work location prior to the Change in Control.
15. Amendment of the Plan:
The Board of Directors may amend or suspend this Plan at any time
and from time to time; provided, however, that the Board of Directors shall submit for stockholder
approval any amendment (other than an amendment pursuant to the adjustment provisions of Section
12) required to be submitted for stockholder approval by law, regulation or applicable stock
exchange requirements or that otherwise would:
(a) increase the limitations in Section 3;
(b) reduce the price at which stock options may be granted to below Fair Market Value on the
date of grant;
(c) reduce the option price of outstanding stock options;
(d) extend the term of this Plan; or
(e) change the class of persons eligible to be participants.
In addition, no such amendment or alteration shall be made which would impair the rights of any
participant, without such participants consent, under any Award theretofore granted, provided that
no such consent shall be required with respect to any amendment or alteration if the Committee
determines in its sole discretion that such amendment or alteration either (i) is required or
advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to
meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly
diminish the benefits provided under such Award, or that any such diminishment has been adequately
compensated.
16. Miscellaneous:
(a) By accepting any benefits under the Plan, each participant and each person claiming under
or through such participant shall be conclusively deemed to have indicated acceptance and
ratification of, and consent to, any action taken or to be taken or made under the Plan by the
Company, the Board, the Committee or any other committee appointed by the Board.
(b) No participant or any person claiming under or through him shall have any right or
interest, whether vested or otherwise, in the Plan or in any Award, contingent or otherwise, unless
and until all of the terms, conditions and provisions of the Plan and the Agreement that affect
such participant or such other person shall have been complied with.
(c) Neither the adoption of the Plan nor its operation shall in any way affect the rights and
powers of the Company to dismiss or discharge any employee at any time.
17. Term of the Plan:
This Plan was approved by the Board of Directors of the Issuer on
February 17, 2006 and will become effective on May 1, 2006, subject to the affirmative vote of the
holders of a majority of the votes cast at the 2006 annual
15
meeting of stockholders. The Plan shall expire on May 31, 2011, unless suspended or
discontinued earlier by action of the Board of Directors. The expiration of the Plan, however,
shall not affect the rights of participants under Awards theretofore granted to them, and all
Awards shall continue in force and operation after termination of the Plan except as they may lapse
or be terminated by their own terms and conditions.
18. Employees Based Outside of the United States:
Notwithstanding any provision of the Plan
to the contrary, in order to foster and promote achievement of the purposes of the Plan or to
comply with provisions of laws in other countries in which the Company operates or has Employees,
the Committee, in its sole discretion, shall have the power and authority to (i) determine which
employees employed outside the United States are eligible to participate in the Plan, (ii) modify
the terms and conditions of Awards granted to employees who are employed outside the United States,
(iii) establish subplans, modified option exercise procedures and other terms and procedures to the
extent such actions may be necessary or advisable, and (iv) grant to employees employed in
countries wherein the granting of stock options is impossible or impracticable, as determined by
the Committee, stock appreciation rights with terms and conditions that, to the fullest extent
possible, are substantially identical to the stock options granted hereunder; provided, however,
that in no event shall the exercise price of an option or stock appreciation right be less than the
Fair Market Value of a share of Common Stock on the date of grant and provided, further, that in no
event shall an option or stock appreciation right be exercisable after the expiration of ten years
from the date of grant thereof.
19. Grants in Connection with Corporate Transactions and Otherwise:
Nothing contained in
this Plan shall be construed to (i) limit the right of the Committee to assume the equity-based
awards or make substitute Awards under this Plan to an employee of another corporation who becomes
an employee of the Company by reason of a corporate merger, consolidation, acquisition of stock or
property, reorganization or liquidation involving the Company in substitution for an award granted
by such corporation, or (ii) limit the right of the Company to grant options or make other awards
outside of this Plan. The terms and conditions of any substitute or assumed Awards may vary from
the terms and conditions required by the Plan. Any substitute or assumed Awards that are made
pursuant to this Section 19 shall not count against the limitations provided under Section 3.
20. Governing Law:
The validity, construction, interpretation and effect of the Plan and
agreements issued under the Plan shall be governed and construed by and determined in accordance
with the laws of the State of Indiana, without giving effect to the conflict of laws provisions
thereof. The Committee may provide that any dispute as to any Award shall be presented and
determined in such forum as the Committee may specify, including through binding arbitration.
21. Unfunded Plan:
Insofar as it provides for Awards, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to participants who are granted Awards under
this Plan, any such accounts will be used merely as a bookkeeping convenience. The Company shall
not be required to segregate or earmark any cash or other property which may at any time be
represented by Awards, nor shall this Plan be construed as providing for such segregation or
earmarking, nor shall the Company or the Committee be deemed to be a trustee of stock or cash to be
awarded under the Plan.
22. Compliance with Other Laws and Regulations:
This Plan, the grant and exercise of Awards
hereunder, and the obligation of the Issuer to sell, issue or deliver shares of Common Stock under
such Awards, shall be subject to all applicable federal, state and local laws, rules and
regulations and to such approvals by any governmental or regulatory agency as may be required. The
Issuer shall not be required to register in a participants name or deliver any shares of Common
Stock prior to the completion of any registration or qualification of such shares under any
federal, state or local law or any ruling or regulation of any government body which the Committee
shall determine to be necessary or advisable. To the extent the Issuer is unable to or the
Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Issuers counsel to be necessary to the lawful issuance and sale
of any shares of Common Stock hereunder, the Issuer shall be relieved of any liability with respect
to the failure to issue or sell such shares as to which such requisite authority shall not have
been obtained. No stock option shall be exercisable and no shares of Common Stock shall be issued
and/or transferable under any other Award unless a registration statement with respect to the
shares underlying such stock option is effective and current or the Issuer has determined that such
registration is unnecessary.
23. Liability of Issuer:
The Issuer shall not be liable to a participant or other persons as
to (a) the non-issuance or sale of shares of Common Stock as to which the Issuer has been unable to
obtain from any regulatory body having jurisdiction the authority deemed by the Issuers counsel to
be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence
expected, but not realized, by any participant or other person due to the receipt, exercise or
settlement of any Award granted hereunder.
16
24. Prior Plan:
Following the effective date of this Plan, the Company shall not make any
additional awards under the Zimmer Holdings, Inc. 2001 Stock Incentive Plan.
17
EXHIBIT 10.2
Zimmer Holdings, Inc.
2006 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION GRANTED TO
OPTIONEE:
STOCK AWARD SHARES:
EXERCISE PRICE PER SHARE:
$
AWARD DATE:
Compensation and Management Development Committee:
Gentlemen:
I understand that this option has been granted to provide a means for me to acquire and/or
expand an ownership position in Zimmer Holdings, Inc., and it is expected that I will retain the
stock I receive upon the exercise of this option consistent with the Companys share retention
guidelines in effect at the time of exercise.
I hereby agree to the foregoing and following terms and conditions and accept the grant of
this option subject thereto.
ZIMMER HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
NONQUALIFlED STOCK OPTION
Zimmer Holdings, Inc (the Company) hereby grants pursuant to the terms of the heretofore
designated stock option plan (the Plan) to the heretofore named employee (the Optionee), as a
matter of separate inducement and agreement in connection with her/his employment, and not as or in
lieu of any salary or other compensation for her/his services, and upon the terms and conditions
set forth below, the option to purchase the number of fully paid and non-assessable shares of the
common stock of Zimmer Holdings, Inc., par value $.01 per share (Common Stock), heretofore set
forth (this Option) on or before the expiration of ten years from the date hereof (the
Expiration Date) at the aforementioned exercise price per share. The Board of Directors of the
Company (the Board) has authorized the Compensation and Management Development Committee of the
Board (the Committee) to administer the Plan.
This Option is granted upon and subject to the following terms and conditions:
1. No Option may be exercised hereunder for the purchase of shares unless the Optionee shall
have remained in the continuous employ of the Company or of one of its subsidiaries for one year
following the date hereof. Thereafter, provided that the Optionee shall at the time of such
exercise, except as specifically set forth herein to the contrary, been in the employ of the
Company or of one of its subsidiaries, this Option may from time to time prior to the Expiration
Date be exercised in the manner hereinafter set forth, and this Option may be exercised (i) only to
the extent of 25 percent of the number of shares to which this Option applies on or after the first
anniversary and prior to the second anniversary of the date of grant hereof, (ii) only to the
extent of 50 percent of the number of shares to which this Option applies on or after the second
anniversary and prior to the third anniversary of the date of grant hereof, (iii) only to the
extent of 75 percent of the number of shares to which this Option applies on or after the third
anniversary and prior to the fourth anniversary of the date of grant hereof; and (iv) in its
entirety on or after the fourth anniversary of the date of grant hereof.
2. This Option hereby granted may be exercised, in whole or in part in accordance with the
vesting schedule set forth in Section 1 above, by the delivery of an exercise notice to the Company
or the Companys designated agent. The exercise notice will be effective upon receipt by the
appropriate person at the Company or the Companys agent and upon payment of the exercise price,
any fees and any other amounts due to cover the withholding taxes, payroll taxes and similar-type
payments as described herein. Such exercise notice (which, in the Companys discretion, may be, or
may be required to be, given by electronic, telefax or other specified means) shall specify the
number of shares with respect to which this Option is being exercised and such other
representations and agreements as may be required by the Company. In the event the specified
Expiration Date falls on a day which is not a regular business day at the Companys executive
office in Warsaw, Indiana, then such written notification must be received on or before the last
regular business day prior to such Expiration Date. Payment is to be made by certified personal
check, or bank draft, by payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board, or by delivery of a certificate or certificates for
shares of Common Stock owned by the Optionee for at least six months having a fair market value at
the date of exercise equal to the purchase price for such shares, or in any combination of the
foregoing; provided, however, that payment in shares of Common Stock will not be permitted unless
at least 100 shares of Common Stock are required and delivered for such purpose. Any stock
certificate or certificates so delivered must be endorsed, or accompanied by an appropriate stock
power, to the order of Zimmer Holdings, Inc., with the signature guaranteed by a bank or trust
company or by a member firm of the New York Stock Exchange. No shares shall be sold or delivered
hereunder until full payment for such shares has been made. At its discretion, the Committee may
modify or suspend any method for the exercise of this Option. The Optionee shall have the rights
of a shareholder only with respect to shares of stock for which certificates have been issued to
her/him.
3. The Company shall not be required to issue or deliver any certificate or certificates for
shares of its Common Stock purchased upon the exercise of any part of this Option prior to (i) the
admission of such shares to listing on any stock exchange on which the stock may then be listed,
(ii) the completion of any registration or other qualification of such shares under any state or
federal law or rulings or regulations of any governmental regulatory body, (iii) the obtaining of
any consent or approval or other clearance from any governmental agency, which the Company shall,
in its sole discretion, determine to be necessary or advisable, and (iv) the payment to the
Company, upon its demand, of any amount requested by the Company for the purpose of satisfying its
withholding obligation, if any, with respect to federal, state or local income or FICA or earnings
tax or any other applicable tax assessment (plus interest or penalties thereon, if any, caused by a
delay in making such payment) incurred by reason of the exercise of this Option or the transfer of
shares thereupon (the Withholding Tax Obligation). The Optionee may satisfy the Withholding Tax
Obligation by authorizing the Company or its agent to withhold an appropriate number of shares
being issued on exercise; provided, however, that the value of the shares withheld shall not exceed
the Companys minimum required Withholding Tax Obligation with respect to the exercise of this
Option.
4. This Option is not transferable by the Optionee otherwise than by will or by the laws of
descent and distribution, and is exercisable, during the life of the Optionee, only by her/him.
5. Notwithstanding any other provision hereof:
(a) If the Optionee shall retire or cease to be employed by the Company or any of its
subsidiaries for any reason (other than death or disability entitling the Optionee to receive
payments under a disability pay plan of the Company or any of its subsidiaries) after the Optionee
shall have been continuously so employed for one year from the aforementioned date of grant, the
Optionee may exercise this Option only to the extent that the Optionee was otherwise entitled to
exercise it at the time of such retirement or cessation of employment with the Company or any of
its subsidiaries, but in no event after (i) the date that is ten years next succeeding the date
this Option was granted, in the case of retirement or cessation of employment with the Company or
any of its subsidiaries on or after the Optionees 65th birthday, or on or after the Optionees
55th birthday after having completed 10 years of service with the Company or any of its
subsidiaries, or on or after the date the sum of the Optionees age plus years of service, when
rounded up to the next highest number, equals at least 70 and the Optionee has completed ten years
of service with the Company or any of its subsidiaries and the Optionees employment terminates for
any reason other than death, disability, resignation, willful misconduct, or activity deemed
detrimental to the interest of the Company and, where applicable, the Optionee has executed a
general release, a covenant not to compete and/or a covenant not to solicit as required by the
Company, or (ii) the date that is three months next succeeding retirement or cessation of
employment, in the case of any other retirement or cessation of employment with the Company or any
of its subsidiaries.
(b) Whether military or government service or other bona fide leave of absence shall
constitute termination of employment for the purpose of this Option shall be determined in each
case by the Committee in its sole discretion.
(c) If the Optionee has been continuously employed by the Company or one of its subsidiaries
for one year after the granting of this Option and retires or ceases to be so employed by reason of
disability entitling such Optionee to receive payments under a disability pay plan of the Company
or a subsidiary, the Optionee shall be treated as though he/she remained in the employ of the
Company or a subsidiary until the earlier of (i) cessation of payments under the disability pay
plan, (ii) death, or (iii) attainment of 65th birthday.
(d) Except as provided in section 4, in the event of the death of the Optionee while in the
employ of the Company or of any of its subsidiaries or within whichever period after retirement or
cessation of employment of the Optionee specified in subparagraphs (a) and (c) is applicable, and
after he/she shall have been continuously so employed for one year after the granting
2
of her/his Option, this Option theretofore granted to her/him shall be exercisable by the
executors, administrators, legatees or distributees of her/his estate, as the case may be, only to
the extent that the Optionee would have been entitled to exercise it if the Optionee were then
living, subject to subparagraph (e) herein, but in the case of the death of any Optionee after
retirement or cessation of employment in no event after the later of (i) the date twelve months
next succeeding such death and (ii) the last day of the period after Retirement or other cessation
of employment of the Optionee specified in subparagraphs (a)(i) or (a)(ii) and provided, in any
case, not after the Expiration Date.
In the event this Option is exercised by the executors, administrators, legatees or
distributees of the estate of the Optionee, the Company shall be under no obligation to issue stock
hereunder unless and until the Company is satisfied that the person or persons exercising this
Option are the duly appointed legal representatives of the Optionees estate or the proper legatees
or distributees thereof.
(e) The provisions of section 1 hereof restricting the percentage of shares of an Option
grant which can be exercised prior to the fourth anniversary of the date of such grant shall not
apply if (i) the Optionee has reached age 60; (ii) the Optionee dies while in the employ of the
Company or any of its subsidiaries; (iii) the Optionee shall have retired or ceased to be employed
by the Company or any of its subsidiaries (1) on or after the Optionees 65th birthday, or (2) on
or after the Optionees 55th birthday after having completed 10 years of service with the Company
or any of its subsidiaries, or (3) on or after the date the sum of the Optionees age plus years of
service, when rounded up to the next highest number, equals at least 70 and the Optionee has
completed ten years of service with the Company or any of its subsidiaries and the Optionees
employment terminates for any reason other than death, resignation, willful misconduct, or activity
deemed detrimental to the interest of the Company and, where applicable, the Optionee has executed
a general release, a non-solicitation and/or non-compete agreement with the Company as required by
the Company; or (iv) the Optionees employment terminates for any reason other than death,
resignation, willful misconduct, or activity deemed detrimental to the interest of the Company
provided the Optionee executes a general release and, where applicable, a non-solicitation and/or
non-compete agreement with the Company as required by the Company. For the purposes of this
Option, service with Bristol-Myers Squibb Company and its subsidiaries and affiliates before the
effective date of the Plan shall be included as service with the Company.
6. Under certain circumstances, if the Optionees employment with the Company or one of its
subsidiaries terminates during the three year period following a change in control of the Company,
this Option may become fully vested and exercisable. Please refer to the Plan for more
information.
7. If prior to the Expiration Date changes occur in the outstanding Common Stock by reason of
stock dividends, recapitalization, mergers, consolidations, stock splits, combinations or exchanges
of shares and the like, the exercise price per share and the number and class of shares subject to
this Option shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. If as a result of any adjustment under this paragraph any Optionee should become
entitled to a fractional share of stock, the Optionee shall have the right to purchase only the
adjusted number of full shares and no payment or other adjustment will be made with respect to the
fractional share so disregarded.
8. Until the Optionee is advised otherwise by the Committee, all notices and other
correspondence with respect to this Option will be effective upon receipt at the following address:
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings, Inc.
Zimmer Holdings, Inc.
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708
9. Except as explicitly provided in this agreement, this agreement will not confer any rights
upon the Optionee, including any right with respect to continuation of employment by the Company or
any of its subsidiaries or any right to future awards under the Plan. In no event shall the value,
at any time, of this agreement, the Common Stock covered by this agreement or any other benefit
provided under this agreement be included as compensation or earnings for purposes of any other
compensation, retirement, or benefit plan offered to employees of the Company or its subsidiaries
unless otherwise specifically provided for in such plan.
10. As a condition of receiving the Option, the Optionee has entered into or reaffirmed a
non-solicitation and/or non-compete agreement with the Company. The Optionee understands and
agrees that if he or she violates any provision of such agreement, the Committee may require the
Optionee to forfeit his or her right to any unexercised portion of the Option, even if vested, and,
to the extent any portion of the Option has previously been exercised, the Committee may require
the Optionee to return to the Company any shares of Common Stock received by the Optionee upon such
exercise or any cash proceeds received by the Optionee upon the sale of any such shares.
11. The Company may, in its sole discretion, decide to deliver any documents related to the
Option granted under and participation in the Plan or future options that may be granted under the
Plan by electronic means or to request the Optionees consent to participate in the Plan by
electronic means. The Optionee hereby consents to receive such documents by electronic
3
delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the
Company.
12. The Board and the Committee shall have full authority and discretion, subject only to the
express terms of the Plan, to decide all matters relating to the administration and interpretation
of the Plan and this agreement and all such Board and Committee determinations shall be final,
conclusive, and binding upon the Optionee and all interested parties. The terms and conditions set
forth in this agreement are subject in all respects to the terms and conditions of the Plan, as
amended from time to time, which shall be controlling. This agreement contains the entire
understanding of the parties and may not be modified or amended except in writing duly signed by
the parties. The waiver of, or failure to enforce, any provision of this agreement or the Plan by
the Company will not constitute a waiver by the Company of the same provision or right at any other
time or a waiver of any other provision or right. The various provisions of this agreement are
severable and any determination of invalidity or unenforceability of any provision shall have no
effect on the remaining provisions. This agreement will be binding upon and inure to the benefit
of the successors, assigns, and heirs of the respective parties. The validity and construction of
this agreement shall be governed by the laws of the State of Indiana.
4
EXHIBIT 10.3
Zimmer Holdings, Inc.
2006 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION GRANTED TO
OPTIONEE:
STOCK AWARD SHARES:
EXERCISE PRICE PER SHARE:
$
AWARD DATE:
Compensation and Management Development Committee:
Gentlemen:
I understand that this option has been granted to provide a means for me to acquire and/or
expand an ownership position in Zimmer Holdings, Inc., and it is expected that I will retain the
stock I receive upon the exercise of this option consistent with the Companys share retention
guidelines in effect at the time of exercise.
I hereby agree to the foregoing and following terms and conditions and accept the grant of
this option subject thereto.
ZIMMER HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
NONQUALIFlED STOCK OPTION GRANT AGREEMENT FOR NON-US EMPLOYEES
Zimmer Holdings, Inc. (the Company) hereby grants pursuant to the terms of the heretofore
designated stock option plan (the Plan) to the heretofore named employee (the Optionee), as a
matter of separate inducement and agreement in connection with her/his employment, and not as or in
lieu of any salary or other compensation for her/his services, and upon the terms and conditions
set forth below, the option to purchase the number of fully paid and non-assessable shares of the
common stock of Zimmer Holdings, Inc., par value $.01 per share (Common Stock), heretofore set
forth (this Option) on or before the expiration of ten years from the date hereof (the
Expiration Date) at the aforementioned exercise price per share. The Board of Directors of the
Company (the Board) has authorized the Compensation and Management Development Committee of the
Board (the Committee) to administer the Plan.
This Option is granted upon and subject to the following terms and conditions:
1. No Option may be exercised hereunder for the purchase of shares unless the Optionee shall
have remained in the continuous employ of the Company or of one of its subsidiaries for one year
following the date hereof. Thereafter, provided that the Optionee shall at the time of such
exercise, except as specifically set forth herein to the contrary, been in the employ of the
Company or of one of its subsidiaries, this Option may from time to time prior to the Expiration
Date be exercised in the manner hereinafter set forth, and this Option may be exercised (i) only to
the extent of 25 percent of the number of shares to which this Option applies on or after the first
anniversary and prior to the second anniversary of the date of grant hereof, (ii) only to the
extent of 50 percent of the number of shares to which this Option applies on or after the second
anniversary and prior to the third anniversary of the date of grant hereof, (iii) only to the
extent of 75 percent of the number of shares to which this Option applies
on or after the third anniversary and prior to the fourth anniversary of the date of grant
hereof; and (iv) in its entirety on or after the fourth anniversary of the date of grant hereof.
2. This Option hereby granted may be exercised, in whole or in part in accordance with the
vesting schedule set forth in Section 1 above, by the delivery of an exercise notice to the Company
or the Companys designated agent. The exercise notice will be effective upon receipt by the
appropriate person at the Company or the Companys agent and upon payment of the exercise price,
any fees and any other amounts due to cover the withholding taxes, payroll taxes and similar-type
payments as described herein. Such exercise notice (which, in the Companys discretion, may be, or
may be required to be, given by electronic, telefax or other specified means) shall specify the
number of shares with respect to which this Option is being exercised and such other
representations and agreements as may be required by the Company. In the event the specified
Expiration Date falls on a day which is not a regular business day at the Companys executive
office in Warsaw, Indiana, then such written notification must be received on or before the last
regular business day prior to such Expiration Date. Payment is to be made by certified personal
check, or bank draft, by payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board. No shares shall be sold or delivered hereunder until
full payment for such shares and any Tax-Related Items (as defined in Section 8 below) has been
made. At its discretion, the Committee may modify or suspend any method for the exercise of this
Option. The Optionee shall have the rights of a shareholder only with respect to shares of stock
for which certificates have been issued to her/him.
3. The Company shall not be required to issue or deliver any certificate or certificates for
shares of its Common Stock purchased upon the exercise of any part of this Option prior to (i) the
admission of such shares to listing on any stock exchange on which the stock may then be listed,
(ii) the completion of any registration or other qualification of such shares under any state or
federal law or rulings or regulations of any governmental regulatory body, (iii) the obtaining of
any consent or approval or other clearance from any governmental agency, which the Company shall,
in its sole discretion, determine to be necessary or advisable, and (iv) the payment to the
Company, upon its demand, of any amount requested by the Company for the purpose of satisfying the
Optionees obligations under Section 8 hereof.
4. This Option is not transferable by the Optionee otherwise than by will or by the laws of
descent and distribution, and is exercisable, during the life of the Optionee, only by her/him.
5. Notwithstanding any other provision hereof:
(a) If the Optionee shall retire or cease to be employed by the Company or any of its
subsidiaries for any reason (other than death or disability entitling the Optionee to receive
payments under a disability pay plan of the Company or any of its subsidiaries) after the Optionee
shall have been continuously so employed for one year from the aforementioned date of grant, the
Optionee may exercise this Option only to the extent that the Optionee was otherwise entitled to
exercise it at the time of such retirement or cessation of employment with the Company or any of
its subsidiaries, but in no event after (i) the date that is ten years next succeeding the date
this Option was granted, in the case of retirement or cessation of employment with the Company or
any of its subsidiaries on or after the Optionees 65th birthday, or on or after the Optionees
55th birthday after having completed 10 years of service with the Company or any of its
subsidiaries, or on or after the date the sum of the Optionees age plus years of service, when
rounded up to the next highest number, equals at least 70 and the Optionee has completed ten years
of service with the Company or any of its subsidiaries and the Optionees employment terminates for
any reason other than death, disability, resignation, willful misconduct, or activity deemed
detrimental to the interest of the Company and, where applicable, the Optionee has executed a
general release, a covenant not to compete and/or a covenant not to solicit as required by the
Company, or (ii) the date that is three months next succeeding retirement or cessation of
employment, in the case of any other retirement or cessation of employment with the Company or any
of its subsidiaries.
(b) Whether military or government service or other bona fide leave of absence shall
constitute termination of employment for the purpose of this Option shall be determined in each
case by the Committee in its sole discretion.
(c) If the Optionee has been continuously employed by the Company or one of its subsidiaries
for one year after the granting of this Option and retires or ceases to be so employed by reason of
disability entitling such Optionee to receive payments under a disability pay plan of the Company
or a subsidiary, the Optionee shall be treated as though he/she remained in the employ of the
Company or a subsidiary until the earlier of (i) cessation of payments under the disability pay
plan, (ii) death, or (iii) attainment of 65th birthday.
(d) Except as provided in Section 4, in the event of the death of the Optionee while in the
employ of the Company or of any of its subsidiaries or within whichever period after retirement or
cessation of employment of the Optionee specified in subparagraphs (a) and (c) is applicable, and
after he/she shall have been continuously so employed for one year after the granting of her/his
Option, this Option theretofore granted to her/him shall be exercisable by the executors,
administrators, legatees or distributees of her/his estate, as the case may be, only to the extent
that the Optionee would have been entitled to exercise it if the Optionee were then living, subject
to subparagraph (e) herein, but in the case of the death of any Optionee after retirement or
cessation of employment in no event after the later of (i) the date twelve months next succeeding
such death and (ii) the last day of the period after Retirement or other cessation of employment of
the Optionee specified in subparagraphs (a)(i) or (a)(ii) and provided, in any case, not after the
Expiration Date.
2
In the event this Option is exercised by the executors, administrators, legatees or
distributees of the estate of the Optionee, the Company shall be under no obligation to issue stock
hereunder unless and until the Company is satisfied that the person or persons exercising this
Option are the duly appointed legal representatives of the Optionees estate or the proper legatees
or distributees thereof.
(e) The provisions of Section 1 hereof restricting the percentage of shares of an Option
grant which can be exercised prior to the fourth anniversary of the date of such grant shall not
apply if (i) the Optionee has reached age 60; (ii) the Optionee dies while in the employ of the
Company or any of its subsidiaries; (iii) the Optionee shall have retired or ceased to be employed
by the Company or any of its subsidiaries (1) on or after the Optionees 65th birthday, or (2) on
or after the Optionees 55th birthday after having completed 10 years of service with the Company
or any of its subsidiaries, or (3) on or after the date the sum of the Optionees age plus years of
service, when rounded up to the next highest number, equals at least 70 and the Optionee has
completed ten years of service with the Company or any of its subsidiaries and the Optionees
employment terminates for any reason other than death, resignation, willful misconduct, or activity
deemed detrimental to the interest of the Company and, where applicable, the Optionee has executed
a general release, a non-solicitation and/or non-compete agreement with the Company as required by
the Company; or (iv) the Optionees employment terminates for any reason other than death,
resignation, willful misconduct, or activity deemed detrimental to the interest of the Company
provided the Optionee executes a general release and, where applicable, a non-solicitation and/or
non-compete agreement with the Company as required by the Company. For the purposes of this
Option, service with Bristol-Myers Squibb Company and its subsidiaries and affiliates before the
effective date of the Plan shall be included as service with the Company.
6. Under certain circumstances, if the Optionees employment with the Company or one of its
subsidiaries terminates during the three year period following a change in control of the Company,
this Option may become fully vested and exercisable. Please refer to the Plan and the Plan
prospectus for more information.
7. If prior to the Expiration Date changes occur in the outstanding Common Stock by reason of
stock dividends, recapitalization, mergers, consolidations, stock splits, combinations or exchanges
of shares and the like, the exercise price per share and the number and class of shares subject to
this Option shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. If as a result of any adjustment under this paragraph any Optionee should become
entitled to a fractional share of stock, the Optionee shall have the right to purchase only the
adjusted number of full shares and no payment or other adjustment will be made with respect to the
fractional share so disregarded.
8. Regardless of any action the Company or the Optionees employer (the Employer) takes
with respect to any or all income tax, social insurance, payroll tax, payment on account or other
tax-related withholding (Tax-Related Items), the Optionee acknowledges that the ultimate
liability for all Tax-Related Items legally due by the Optionee is and remains the Optionees
responsibility and that the Company and/or the Employer (1) make no representations or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect of the Option,
including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of
shares of Common Stock acquired pursuant to such exercise and the receipt of any dividends; and (2)
do not commit to structure the terms of the grant or any aspect of the Option to reduce or
eliminate the Optionees liability for Tax-Related Items.
Prior to the relevant taxable event, the Optionee shall pay or make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account
obligations of the Company and/or the Employer. In this regard, if permissible under local law,
the Optionee authorizes the Company and/or the Employer, at its discretion, to satisfy the
obligations with regard to all Tax-Related Items legally payable by the Optionee by one or a
combination of the following:
(a) withholding from the Optionees wages or other cash compensation paid to the Optionee by
the Company and/or the Employer; or
(b) withholding from proceeds of the sale of shares of Common Stock acquired upon exercise of
the Option;
(c) arranging for the sale of shares of Common Stock acquired upon exercise of the Option (on
the Optionees behalf and at the Optionees direction pursuant to this authorization); or
(d) withholding in shares of Common Stock, provided that the Company only withholds the
amount of shares of Common Stock necessary to satisfy the minimum withholding amount.
Finally, the Optionee shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of the Optionees
participation in the Plan or the Optionees purchase of shares of Common Stock that cannot be
satisfied by the means previously described. The Company may refuse to honor the exercise and
refuse to deliver the shares of Common Stock if the Optionee fails to comply with the Optionees
obligations in connection with the Tax-Related Items as described in this section.
9. In accepting the grant, the Optionee acknowledges that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and it
may be modified, amended, suspended or terminated by the Company at any time, unless otherwise
provided in the Plan and this agreement;
3
(b) the grant of the Option is voluntary and occasional and does not create any contractual
or other right to receive future grants of options, or benefits in lieu of options, even if options
have been granted repeatedly in the past;
(c) all decisions with respect to future option grants, if any, will be at the sole
discretion of the Company;
(d) the Optionees participation in the Plan shall not create a right to further employment
with the Employer and shall not interfere with the ability of the Employer to terminate the
Optionees employment relationship at any time;
(e) the Optionee is voluntarily participating in the Plan;
(f) the Option is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or any subsidiary, and which is outside the scope of
the Optionees employment contract, if any;
(g) the Option is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation, termination, redundancy, end
of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments and in no event should be considered as compensation for, or relating in any way
to, past services for the Company or any subsidiary;
(h) in the event that the Optionee is not an employee of the Company
,
the Option grant and
the Optionees participation in the Plan will not be interpreted to form an employment contract or
relationship with the Company; and furthermore, the Option grant will not be interpreted to form an
employment contract with any subsidiary of the Company;
(i) the future value of the underlying shares of Common Stock is unknown and cannot be
predicted with certainty;
(j) if the underlying shares of Common Stock do not increase in value, the Option will have
no value;
(k) if the Optionee exercises his/her Option and obtains shares of Common Stock, the value of
those shares of Common Stock acquired upon exercise may increase or decrease in value, even below
the exercise price;
(l) in consideration of the grant of the Option, no claim or entitlement to compensation or
damages shall arise from termination of the option or diminution in value of the Option or shares
of Common Stock purchased through exercise of the Option resulting from termination of the
Optionees employment by the Company or any subsidiary or affiliate (for any reason whatsoever and
whether or not in breach of local labor laws) and the Optionee irrevocably releases the Company and
any subsidiary or affiliate from any such claim that may arise; if, notwithstanding the foregoing,
any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this
agreememt, the Optionee shall be deemed irrevocably to have waived the Optionees entitlement to
pursue such claim;
(m) in the event of termination of the Optionees employment (whether or not in breach of
local labor laws), the Optionees right to receive or vest in the Option under the Plan, if any,
will terminate effective as of the date that the Optionee is no longer actively employed and will
not be extended by any notice period mandated under local law (
e.g.
, active employment would not
include a period of garden leave or similar period pursuant to local law); furthermore, in the
event of termination of the Optionees employment (whether or not in breach of local labor laws),
the Optionees right to exercise the Option after termination of the Optionees employment, if any,
will be measured by the date of termination of the Optionees active employment and will not be
extended by any notice period mandated under local law; the Board or Committee shall have the
exclusive discretion to determine when the Optionee is no longer actively employed for purposes of
the Optionees Option grant;
(n) the Company is not providing any tax, legal or financial advice, nor is the Company
making any recommendations regarding the Optionees participation in the Plan, or the Optionees
acquisition or sale of the underlying shares of Common Stock; and
(o) the Optionee is hereby advised to consult with the Optionees own personal tax, legal and
financial advisors regarding the Optionees participation in the Plan before taking any action
related to the Plan.
10.
The Optionee hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of the Optionees personal data as described in this
agreement and any other Option grant materials by and among, as applicable, the Employer, the
Company and its subsidiaries for the exclusive purpose of implementing, administering and managing
the Optionees participation in the Plan.
The Optionee understands that the Company and the Employer may hold certain personal
information about the Optionee, including, but not limited to, the Optionees name, home address
and telephone number, date of birth, social insurance number or other identification number,
salary, nationality, job title, any shares of stock or directorships held in the Company, details
of all Options or any other entitlement to shares of stock awarded, canceled, exercised, vested,
unvested or outstanding in the Optionees favor, for the exclusive purpose of implementing,
administering and managing the Plan (Data).
The Optionee understands that Data will be transferred to The Bank of New York or such other
stock plan service provider as may be selected by the Company in the future, which is assisting the
Company with the implementation, administration and management of the Plan. The Optionee
understands that the recipients of the Data may be located in the United States or elsewhere, and
that the recipients country (e.g., the United States) may have different data privacy laws and
4
protections than the Optionees country. The Optionee understands that the Optionee may
request a list with the names and addresses of any potential recipients of the Data by contacting
the Optionees local human resources representative. The Optionee authorizes the Company, The Bank
of New York and any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of implementing, administering
and managing the Optionees participation in the Plan. The Optionee understands that Data will be
held only as long as is necessary to implement, administer and manage the Optionees participation
in the Plan. The Optionee understands that he/she may, at any time, view Data, request additional
information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting in writing the
Optionees local human resources representative. The Optionee understands, however, that refusing
or withdrawing his/her consent may affect the Optionees ability to participate in the Plan. For
more information on the consequences of the Optionees refusal to consent or withdrawal of consent,
the Optionee understands that he/she may contact his/her local human resources representative.
11. Until the Optionee is advised otherwise by the Committee, all notices and other
correspondence with respect to this Option will be effective upon receipt at the following address:
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings, Inc.
Zimmer Holdings, Inc.
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708
12. Except as explicitly provided in this agreement, this agreement will not confer any
rights upon the Optionee, including any right with respect to continuation of employment by the
Company or any of its subsidiaries or any right to future awards under the Plan. In no event shall
the value, at any time, of this agreement, the Common Stock covered by this agreement or any other
benefit provided under this agreement be included as compensation or earnings for purposes of any
other compensation, retirement, or benefit plan offered to employees of the Company or its
subsidiaries unless otherwise specifically provided for in such plan.
13. The Company may, in its sole discretion, decide to deliver any documents related to the
Option granted under and participation in the Plan or future options that may be granted under the
Plan by electronic means or to request the Optionees consent to participate in the Plan by
electronic means. The Optionee hereby consents to receive such documents by electronic delivery
and, if requested, to agree to participate in the Plan through an on-line or electronic system
established and maintained by the Company or a third party designated by the Company.
14. As a condition of receiving the Option, the Optionee has entered into or reaffirmed a
non-solicitation and/or non-compete agreement with the Company. The Optionee understands and
agrees that if he or she violates any provision of such agreement, the Committee may require the
Optionee to forfeit his or her right to any unexercised portion of the Option, even if vested, and,
to the extent any portion of the Option has previously been exercised, the Committee may require
the Optionee to return to the Company any shares of Common Stock received by the Optionee upon such
exercise or any cash proceeds received by the Optionee upon the sale of any such shares.
15. The Board and the Committee shall have full authority and discretion, subject only to the
express terms of the Plan, to decide all matters relating to the administration and interpretation
of the Plan and this agreement and all such Board and Committee determinations shall be final,
conclusive, and binding upon the Optionee and all interested parties. The terms and conditions set
forth in this agreement are subject in all respects to the terms and conditions of the Plan, as
amended from time to time, which shall be controlling. This agreement contains the entire
understanding of the parties and may not be modified or amended except in writing duly signed by
the parties. The waiver of, or failure to enforce, any provision of this agreement or the Plan by
the Company will not constitute a waiver by the Company of the same provision or right at any other
time or a waiver of any other provision or right. The various provisions of this agreement are
severable and any determination of invalidity or unenforceability of any provision shall have no
effect on the remaining provisions. This agreement will be binding upon and inure to the benefit
of the successors, assigns, and heirs of the respective parties. The validity and construction of
this agreement shall be governed by the laws of the State of Indiana. If the Optionee has received
this or any other document related to the Plan translated into a language other than English, and
if the translated version is different than the English version, the English version will control.
5
EXHIBIT 10.4
Zimmer Holdings, Inc.
2006 STOCK INCENTIVE PLAN
RESTRICTED STOCK AWARD GRANTED TO
AWARD RECIPIENT
:
[ ]
STOCK AWARD SHARES
:
[ ]
AWARD DATE: [ ]
Compensation and Management Development Committee:
Gentlemen:
You have advised me that I have been granted the above restricted stock award subject to the
terms, restrictions and conditions set forth in this agreement, including the provision that
receipt of the shares of the stock award is contingent upon my remaining in the continuous employ
of Zimmer Holdings, Inc. or a subsidiary for period of five years from the Award Date. I
understand that some or all of such shares may be forfeited if I leave the Company prior to that
time, and it is expected that I will retain the stock I receive upon the lapse of the restrictions
consistent with the Companys retention guidelines in effect at the time the restrictions lapse.
My signature below indicates my agreement to all the terms, restrictions and conditions herein
set forth.
ZIMMER HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
RESTRICTED STOCK AWARD
1.
STOCK AWARD
Under the terms of the Zimmer Holdings, Inc. 2006 Stock Incentive Plan (the Plan) the
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings,
Inc. (the Committee) has granted to the Award Recipient on the Award Date an award of restricted
Zimmer Holdings, Inc. Common Stock, par value $0.01 per share (Common Stock), as designated
herein subject to the terms, conditions, and restrictions set forth in this agreement (this Stock
Award). The purposes of such Stock Award are to motivate and retain the Award Recipient as an
employee of Zimmer Holdings, Inc. (the Company) or a subsidiary of the Company, to encourage the
Award Recipient to continue to give best efforts for the Companys future success, and to further
the opportunity for stock ownership by the Award Recipient in order to increase the Award
Recipients proprietary interest in the Company. Except as may be required by law, the Award
Recipient is not required to make any payment (other than payments for taxes pursuant to Section 5
hereof) or provide any consideration other than the rendering of future services to the Company or
a subsidiary of the Company.
2.
STOCK CERTIFICATES
The stock certificate(s), if any, evidencing the shares of this Stock Award shall be
registered on the Companys books in the name of the Award Recipient as of the Award Date.
Physical possession or custody of such stock certificate(s), if any, shall be retained by the
Company or by a bank or other institution in accordance with rules adopted by the Committee until
such time as the applicable Restriction Period ends as set forth in Section 3 of this agreement or
such earlier termination of employment described in Section 3 of this agreement.
While in its possession, the Company reserves the right to place a legend on the stock
certificate(s) restricting the transferability of such certificate(s) and referring to the terms
and conditions (including forfeiture) approved by the Committee and relating to the shares
represented by the certificate(s). After the applicable Restriction Period, or earlier termination
of employment, referred to above, ends, the Company shall cause an unlegended stock certificate(s)
covering the requisite number of vested shares registered on the Companys books in the name of the
Award Recipient or Award Recipients beneficiary(ies), as appropriate, to be delivered to such
person(s) as soon as practicable after the applicable Restriction Period ends.
The Company shall not be required to issue or deliver any certificate or certificates for
shares of its Common Stock upon the end of the Restriction Period prior to (i) the admission of
such shares to listing on any stock exchange on which the stock may then be listed, (ii) the
completion of any registration or other qualification of such shares under any state or federal law
or rulings or regulations of any governmental regulatory body, or (iii) the obtaining of any
consent or approval or other clearance from any governmental agency, which the Company shall, in
its sole discretion, determine to be necessary or advisable.
3.
RESTRICTIONS AND FORFEITURES
Except as otherwise provided in this Section 3, shares of stock covered by this Stock Award
shall be subject to the restrictions and conditions set forth herein during the period from the
Award Date until such shares become vested and nonforfeitable (the Restriction Period).
Except as set forth in this section 3, one third of this Stock Award shall become vested and
nonforfeitable on the third anniversary of the Award Date provided the Award Recipient has been
continuously employed by the Company or a subsidiary of the Company since the Award Date; an
additional third of this Stock Award shall become vested and nonforfeitable on the fourth
anniversary of the Award Date provided the Award Recipient shall have been continuously employed by
the Company or a subsidiary of the Company since the Award Date; and the final third of this Stock
Award shall become vested and nonforfeitable on the fifth anniversary of the Award Date provided
the Award Recipient shall have been continuously employed by the Company or a subsidiary of the
Company since the Award Date.
(a) Except as set forth below, during the Restriction Period, the Award Recipient may not
sell, transfer, pledge or assign any of the shares of stock covered by this Stock Award which have
not vested.
(b) Except as the Committee may otherwise determine, the Award Recipient shall have with
respect to the stock covered by this Stock Award all of the rights of a stockholder of the Company,
including the right to vote the shares and receive dividends and other distributions provided that
distributions in the form of stock shall be subject to the same restrictions as the stock of the
underlying Stock Award. Certificates for shares of stock covered by this Stock Award shall be
delivered to the Award Recipient after the Restriction Period shall have expired without any
forfeiture occurring with respect to such shares.
(c) Except as set forth below, if during the Restriction Period the Award Recipient terminates
employment with the Company or a subsidiary for any reason other than retirement, death or
disability, the shares covered by this Stock Award that are not already vested shall be forfeited
and will be deemed to be reacquired by the Company. If during the Restriction Period and after the
Award Recipient has been continuously employed for one year or more from Award Date, the Award
Recipient terminates employment with the Company or a subsidiary on account of retirement, death or
disability, the restrictions with respect to all the shares of this Stock Award shall be waived and
the shares will be deemed fully vested. In the event of the termination of an Award Recipients
employment by the Company, other than for cause, retirement, death or disability, after one year of
continuous employment with the Company after the Award Date, a pro rata portion of this Stock Award
shall be deemed vested as shown in Schedule A to this agreement. Such pro rata portion shall
include the portion, if any, of this Stock Award already vested under the terms of this agreement.
Retirement shall mean the Award Recipients termination of employment with the Company or a
subsidiary on or after (i) the Award Recipients 65th birthday, (ii) the Award Recipients 55th
birthday after having completed 10 years of service with the Company or any of its subsidiaries, or
(iii) the date the sum of the Award Recipients age plus years of service, when rounded up to the
next highest number, equals at least 70 and the Award Recipient has completed ten years of service
with the Company or any of its subsidiaries and the Award Recipients employment terminates for any
reason other than death, disability, resignation, willful misconduct, or activity deemed
detrimental to the interest of the Company and, where applicable, the Award Recipient has executed
a general release and/or a covenant not to solicit as required by the Company. Disability shall
mean qualifying and receiving payments under a disability pay plan of the
2
Company. Cause shall mean termination by the Company of the Award Recipients employment
upon the willful and continued failure by the Award Recipient to substantially perform the Award
Recipients duties with the Company (other than any such a failure resulting from the Award
Recipients incapacity due to physical or mental illness) for a period of at least 30 days after a
written demand for substantial performance is delivered to the Award Recipient, which demand
specifically identifies the manner in which the Award Recipient has not substantially performed the
Award Recipients duties, or the willful engaging by the Award Recipient in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise.
No act, or failure to act, on the Award Recipients part shall be deemed willful unless done, or
omitted to be done, by the Award Recipient not in good faith and without reasonable belief that the
Award Recipients act, or failure to act, was in the best interest of the Company. In the event of
special circumstances as determined by the Committee, the Committee may, in its sole discretion
where it finds that a waiver would be in the best interests of the Company, waive any restrictions
then remaining with respect to all or part of the stock awarded pursuant to this Stock Award and
accelerate the vesting with regard to such Stock Award or part thereof. For the purposes of this
Stock Award, service with Bristol-Myers Squibb Company and its subsidiaries and affiliates before
the effective date of the Plan shall be included as service with the Company.
(d) In the event that the Award Recipient fails promptly to pay or make satisfactory
arrangements as to the Withholding Tax Obligation as provided in Section 5, all shares then subject
to restriction shall be forfeited by the Award Recipient and will be deemed to be reacquired by the
Company.
(e) The Award Recipient may, at any time prior to the expiration of the Restriction Period,
waive all rights with respect to all or some of the shares covered by this Stock Award by
delivering to the Company a written notice of such waiver.
(f) Any shares covered by this Stock Award which are forfeited by the Award Recipient shall be
available for use under the Plan in accordance with Section 3 of the Plan.
(g) (i) A transfer of an Award Recipients employment from the Company to a subsidiary, or
vice versa, or from one subsidiary to another, (ii) a leave of absence, duly authorized in writing
by the Company, for military service or sickness or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days, and (iii) a leave of absence in
excess of ninety (90) days, duly authorized in writing, by the Company, provided the Award
Recipients right to reemployment is guaranteed either by a statute or by contract, shall not be
deemed a termination of employment. However, failure of the Award Recipient to return to the
employ of the Company at the end of an approved leave of absence shall be deemed a termination.
During a leave of absence as defined in (ii) or (iii), the Award Recipient will be considered to
have been continuously employed by the Company but such period shall not be counted in determining
the period of employment for vesting purposes of this Section 3.
(h) (i) The Award Recipient agrees that, during the Restriction Period and for the
Non-Competition Period set forth below, except with the prior written consent of the Company, the
Award Recipient shall not in any way, directly or indirectly, own, manage, operate, control, accept
employment or a consulting position with or otherwise advise or assist or be actively connected
with or have any financial interest in, directly or indirectly, any enterprise which engages in, or
otherwise carries on, any business activity in competition with the business of the Company in any
geographic area (including, without limitation, the United States and each county in the State of
California in which the Company from time to time sells or offers its products for sale) in which
it engages in such business. The Award Recipient recognizes that the Companys business is
worldwide in scope in that it directly advertises and solicits business from customers wherever
they may be found. Wherever Company is used in this sub-section (h), it shall include all
subsidiaries and affiliates of the Company. The Award Recipient further agrees that during the
periods referenced above the Award Recipient shall not take any action which might divert from the
Company or any of its affiliates, successors or assigns any opportunity which would be within the
scope of its or their respective present or future operations or business. It is understood that
ownership of not more than one percent (1%) of the equity securities of a public company shall in
no way be prohibited pursuant to the foregoing provisions.
(ii) For purposes of this sub-section (h), the Non-Competition Period shall be a period of
one year commencing on the date of the Award Recipients termination of employment for any reason.
4.
DEATH OF AWARD RECIPIENT
In the event of the Award Recipient
s death prior to the delivery of vested shares hereunder,
such shares shall be delivered to the Award Recipient
s estate, upon presentation to the Committee
of letters testamentary or other documentation satisfactory to the Committee.
3
5.
TAXES
At such time as the Company is required to withhold taxes with respect to this Stock Award
covered hereby, or at an earlier date as determined by the Company, the Award Recipient shall make
remittance to the Company of an amount sufficient to cover the Companys withholding obligation, if
any, with respect to federal, state or local income or FICA or earnings tax or any other applicable
tax assessment (plus interest or penalties thereon, if any, caused by a delay in making such
payment) incurred with respect to such Stock Award, including dividends payable to the Award
Recipient (the Withholding Tax Obligation). The Company and its subsidiaries shall, to the
extent permitted by law, have the right to deduct such Withholding Tax Obligation from any payment
or distribution of any kind otherwise payable or distributable to the Award Recipient, including
Common Stock subject to this Stock Award and dividends on such Common Stock; provided, in the case
of Common Stock, that the market value of the shares withheld may not exceed the Companys minimum
required Withholding Tax Obligation with respect to this Stock Award. Prior to vesting of the
shares covered by this Stock Award, the dividends payable to the Award Recipient will be
compensation (wages) for tax purposes and will be included on the Award Recipient
s W-2 form.
6.
CHANGES IN CAPITALIZATION
If prior to the expiration of the Restriction Period changes occur in the outstanding Common
Stock by reason of stock dividends, recapitalization, mergers, consolidations, stock splits,
combinations or exchanges of shares and the like, the number and class of shares subject to this
Stock Award shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. If as a result of any adjustment under this paragraph any Award Recipient should
become entitled to a fractional share of stock, the Award Recipient shall have the right only the
adjusted number of full shares and no payment or other adjustment will be made with respect to the
fractional share so disregarded.
7.
NOTICE
Until the Award Recipient is advised otherwise by the Committee, all notices and other
correspondence with respect to this Stock Award will be effective upon receipt at the following
address:
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings, Inc.
Zimmer Holdings, Inc.
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708
8.
NO ADDITIONAL RIGHTS
Except as explicitly provided in this agreement, this agreement will not confer any rights
upon the Award Recipient, including any right with respect to continuation of employment by the
Company or any of its subsidiaries or any right to future awards under the Plan. In no event shall
the value, at any time, of this agreement, the Common Stock covered by this agreement or any other
benefit provided under this agreement be included as compensation or earnings for purposes of any
other compensation, retirement, or benefit plan offered to employees of the Company or its
subsidiaries unless otherwise specifically provided for in such plan.
9.
BREACH OF RESTRICTIVE COVENANTS
The Award Recipient understands and agrees that if he or she violates the covenant not to
compete contained in section 3(h) of this agreement or any other restrictive covenant in favor of
the Company that he or she is a party to, the Committee may require the Award Recipient to forfeit
his or her right to any unvested portion of the Stock Award and, to the extent that any portion of
the Stock Award has previously vested, the Committee may require the Award Recipient to return to
the Company the shares covered by the Stock Award or any cash proceeds received by the Award
Recipient upon the sale of such shares.
10.
CONSENT TO ELECTRONIC DELIVERY
The Company may, in its sole discretion, decide to deliver any documents related to the Stock
Award granted under and participation in the Plan or future stock awards that may be granted under
the Plan by electronic means or to request the Award Recipients consent to participate in the Plan
by electronic means. The Award Recipient hereby consents to receive such documents by electronic
delivery and, if requested, to agree to participate in the Plan through an on-line or electronic
system established and maintained by the Company or a third party designated by the Company.
4
11.
CONSTRUCTION AND INTERPRETATION
The Board of Directors of the Company (the Board) and the Committee shall have full
authority and discretion, subject only to the express terms of the Plan, to decide all matters
relating to the administration and interpretation of the Plan and this agreement and all such Board
and Committee determinations shall be final, conclusive, and binding upon the Award Recipient and
all interested parties. The terms and conditions set forth in this agreement are subject in all
respects to the terms and conditions of the Plan, as amended from time to time, which shall be
controlling. This agreement contains the entire understanding of the parties and may not be
modified or amended except in writing duly signed by the parties. The waiver of, or failure to
enforce, any provision of this agreement or the Plan by the Company will not constitute a waiver by
the Company of the same provision or right at any other time or a waiver of any other provision or
right. The various provisions of this agreement are severable and any determination of invalidity
or unenforceability of any provision shall have no effect on the remaining provisions. This
agreement will be binding upon and inure to the benefit of the successors, assigns, and heirs of
the respective parties. The validity and construction of this agreement shall be governed by the
laws of the State of Indiana.
5
Schedule A
|
|
|
|
|
Months Completed After Award Date
|
|
Percent Vested
|
|
|
|
|
|
|
12
|
|
|
11.111
|
%
|
13
|
|
|
12.037
|
%
|
14
|
|
|
12.963
|
%
|
15
|
|
|
13.889
|
%
|
16
|
|
|
14.815
|
%
|
17
|
|
|
15.741
|
%
|
18
|
|
|
16.667
|
%
|
19
|
|
|
17.593
|
%
|
20
|
|
|
18.519
|
%
|
21
|
|
|
19.444
|
%
|
22
|
|
|
20.370
|
%
|
23
|
|
|
21.296
|
%
|
24
|
|
|
22.222
|
%
|
25
|
|
|
23.148
|
%
|
26
|
|
|
24.074
|
%
|
27
|
|
|
25.000
|
%
|
28
|
|
|
25.926
|
%
|
29
|
|
|
26.852
|
%
|
30
|
|
|
27.778
|
%
|
31
|
|
|
28.704
|
%
|
32
|
|
|
29.630
|
%
|
33
|
|
|
30.556
|
%
|
34
|
|
|
31.481
|
%
|
35
|
|
|
32.407
|
%
|
36
|
|
|
33.333
|
%
|
37
|
|
|
36.111
|
%
|
38
|
|
|
38.889
|
%
|
39
|
|
|
41.667
|
%
|
40
|
|
|
44.444
|
%
|
41
|
|
|
47.222
|
%
|
42
|
|
|
50.000
|
%
|
43
|
|
|
52.778
|
%
|
44
|
|
|
55.556
|
%
|
45
|
|
|
58.333
|
%
|
46
|
|
|
61.111
|
%
|
47
|
|
|
63.889
|
%
|
48
|
|
|
66.667
|
%
|
49
|
|
|
69.444
|
%
|
50
|
|
|
72.222
|
%
|
51
|
|
|
75.000
|
%
|
52
|
|
|
77.778
|
%
|
53
|
|
|
80.556
|
%
|
54
|
|
|
83.333
|
%
|
55
|
|
|
86.111
|
%
|
56
|
|
|
88.889
|
%
|
57
|
|
|
91.667
|
%
|
58
|
|
|
94.444
|
%
|
59
|
|
|
97.222
|
%
|
60
|
|
|
100.000
|
%
|
6
EXHIBIT 10.5
Zimmer Holdings, Inc.
2006 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD GRANTED TO
AWARD RECIPIENT
: [
]
RESTRICTED STOCK UNIT AWARD SHARES
: [
]
AWARD DATE:
[
]
Compensation and Management Development Committee:
Gentlemen:
You have advised me that I have been granted the above restricted stock unit (RSU) award
subject to the terms, restrictions and conditions set forth in this agreement, including the
provision that receipt of the shares of the stock award is contingent upon my remaining in the
continuous employ of Zimmer Holdings, Inc. or a subsidiary for period of five years from the Award
Date. I understand that some or all of such RSUs may be forfeited if I leave the Company prior to
that time, and it is expected that I will retain the stock I receive upon the lapse of the
restrictions consistent with the Companys retention guidelines in effect at the time the
restrictions lapse.
My signature below indicates my agreement to all the terms, restrictions and conditions herein
set forth.
ZIMMER HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD FOR NON-US EMPLOYEES
1.
RSU AWARD
Under the terms of the Zimmer Holdings, Inc. 2006 Stock Incentive Plan (the Plan) the
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings,
Inc. (the Committee) has granted to the Award Recipient on the Award Date an award of RSUs over
Zimmer Holdings, Inc. Common Stock, par value $0.01 per share (Common Stock), as designated
herein subject to the terms, conditions, and restrictions set forth in this agreement (this RSU
Award). The purposes of such RSU Award are to motivate and retain the Award Recipient as an
employee of Zimmer Holdings, Inc. (the Company) or a subsidiary of the Company, to encourage the
Award Recipient to continue to give best efforts for the Companys future success, and to further
the opportunity for stock ownership by the Award Recipient in order to increase the Award
Recipients proprietary interest in the Company. Each RSU represents an unfunded, unsecured
promise by the Company to deliver one share of Common Stock, subject to certain restrictions and
the terms and conditions contained in this agreement. Except as may be required by law, the Award
Recipient is not required to make any payment (other than payments for taxes pursuant to Section 7
hereof) or provide any consideration other than the rendering of future services to the Company or
a subsidiary of the Company.
2.
NO SHAREHOLDER RIGHTS
The grant of RSUs does not entitle the Award Recipient to any rights of a shareholder of
Common Stock, including dividends or voting rights. The rights of the Award Recipient with respect
to the RSUs shall remain forfeitable at all time prior to the lapse of the Restriction Period, as
defined in Section 4 below.
3.
TRANSFER RESTRICTIONS
Neither the RSUs nor any interest thereto may be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, and
any such purported sale, assignment, transfer, pledge, hypothecation or other disposition shall be
void and unenforceable against the Company.
4.
RESTRICTIONS AND FORFEITURES
Except as otherwise provided in this Section 4, this RSU Award shall be subject to the
restrictions and conditions set forth herein during the period from the Award Date until such RSUs
become vested and nonforfeitable (the Restriction Period).
(a) Except as set forth in this Section 4, one third of this RSU Award shall become vested and
nonforfeitable on the third anniversary of the Award Date provided the Award Recipient has been
continuously employed by the Company or a subsidiary of the Company since the Award Date; an
additional third of this RSU Award shall become vested and nonforfeitable on the fourth anniversary
of the Award Date provided the Award Recipient shall have been continuously employed by the Company
or a subsidiary of the Company since the Award Date; and the final third of this RSU Award shall
become vested and nonforfeitable on the fifth anniversary of the Award Date provided the Award
Recipient shall have been continuously employed by the Company or a subsidiary of the Company since
the Award Date.
(b) Certificates for shares of Common Stock covered by this RSU Award shall be delivered to
the Award Recipient only after the Restriction Period shall have expired.
(c) Except as set forth below, if during the Restriction Period the Award Recipient terminates
employment with the Company or a subsidiary for any reason other than retirement, death or
disability, the RSUs that are not already vested shall be forfeited. If during the Restriction
Period and after the Award Recipient has been continuously employed for one year or more from Award
Date, the Award Recipient terminates employment with the Company or a subsidiary on account of
retirement, death or disability, the restrictions with respect to this RSU Award shall be waived
and the RSUs will be deemed fully vested. In the event of the termination of an Award Recipients
employment by the Company, other than for cause, retirement, death or disability, after one year of
continuous employment with the Company after the Award Date, a pro rata portion of this RSU Award
shall be deemed vested as shown in Schedule A to this agreement. Such pro rata portion shall
include the portion, if any, of this RSU Award already vested under the terms of this agreement.
Retirement shall mean the Award Recipients termination of employment with the Company or a
subsidiary on or after (i) the Award Recipients 65th birthday, (ii) the Award Recipients 55th
birthday after having completed 10 years of service with the Company or any of its subsidiaries, or
(iii) the date the sum of the Award Recipients age plus years of service, when rounded up to the
next highest number, equals at least 70 and the Award Recipient has completed ten years of service
with the Company or any of its subsidiaries and the Award Recipients employment terminates for any
reason other than death, disability, resignation, willful misconduct, or activity deemed
detrimental to the interest of the Company and, where applicable, the Award Recipient has executed
a general release and/or a covenant not to solicit as required by the Company. Disability shall
mean qualifying and receiving payments under a disability pay plan of the Company. Cause shall
mean termination by the Company of the Award Recipients employment upon the willful and continued
failure by the Award Recipient to substantially perform the Award Recipients duties with the
Company (other than any such a failure resulting from the Award Recipients incapacity due to
physical or mental illness) for a period of at least 30 days after a written demand for substantial
performance is delivered to the Award Recipient, which demand specifically identifies the manner in
which the Award Recipient has not substantially performed the Award Recipients duties, or the
willful engaging by the Award Recipient in conduct which is demonstrably and materially injurious
to the Company or its subsidiaries, monetarily or otherwise. No act, or failure to act, on the
Award Recipients part shall be deemed willful unless done, or omitted to be done, by the Award
Recipient not in good faith and without reasonable belief that the Award Recipients act, or
failure to act, was in the best interest of the Company. In the event of special circumstances as
determined by the Committee, the Committee may, in its sole discretion where it finds that a waiver
would be in the best interests of the Company, waive any restrictions then remaining with respect
to all or part of this RSU Award and accelerate the vesting with regard to such RSU Award or part
thereof. For the purposes of this RSU Award, service with Bristol-Myers Squibb Company and its
subsidiaries and affiliates before the effective date of the Plan shall be included as service with
the Company.
(d) In the event that the Award Recipient fails promptly to pay or make satisfactory
arrangements as to the Withholding Tax Obligation as provided in Section 7, all unvested RSUs shall
be forfeited by the Award Recipient.
2
(e) (i) A transfer of an Award Recipients employment from the Company to a subsidiary, or
vice versa, or from one subsidiary to another, (ii) a leave of absence, duly authorized in writing
by the Company, for military service or sickness or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days, and (iii) a leave of absence in
excess of ninety (90) days, duly authorized in writing, by the Company, provided the Award
Recipients right to reemployment is guaranteed either by a statute or by contract, shall not be
deemed a termination of employment. However, failure of the Award Recipient to return to the
employ of the Company at the end of an approved leave of absence shall be deemed a termination.
During a leave of absence as defined in (ii) or (iii), the Award Recipient will be considered to
have been continuously employed by the Company but such period shall not be counted in determining
the period of employment for vesting purposes of this Section 4.
(f) (i) The Award Recipient agrees that, during the Restriction Period and for the
Non-Competition Period set forth below, except with the prior written consent of the Company, the
Award Recipient shall not in any way, directly or indirectly, own, manage, operate, control, accept
employment or a consulting position with or otherwise advise or assist or be actively connected
with or have any financial interest in, directly or indirectly, any enterprise which engages in, or
otherwise carries on, any business activity in competition with the business of the Company in any
geographic area (including, without limitation, the United States and each county in the State of
California in which the Company from time to time sells or offers its products for sale) in which
it engages in such business. The Award Recipient recognizes that the Companys business is
worldwide in scope in that it directly advertises and solicits business from customers wherever
they may be found. Wherever Company is used in this sub-section (f), it shall include all
subsidiaries and affiliates of the Company. The Award Recipient further agrees that during the
periods referenced above the Award Recipient shall not take any action which might divert from the
Company or any of its affiliates, successors or assigns any opportunity which would be within the
scope of its or their respective present or future operations or business. It is understood that
ownership of not more than one percent (1%) of the equity securities of a public company shall in
no way be prohibited pursuant to the foregoing provisions.
(ii) For purposes of this sub-section (f), the Non-Competition Period shall be a period of
one year commencing on the date of the Award Recipients termination of employment for any reason.
5.
STOCK CERTIFICATES
The stock certificate(s), if any, evidencing the shares issued upon vesting of this RSU Award
shall be registered on the Companys books in the name of the Award Recipient after the lapse of
the Restriction Period.
The Company shall not be required to issue or deliver any certificate or certificates for
shares of its Common Stock upon the end of the Restriction Period prior to (i) the admission of
such shares to listing on any stock exchange on which the stock may then be listed, (ii) the
completion of any registration or other qualification of such shares under any state or federal law
or rulings or regulations of any governmental regulatory body, or (iii) the obtaining of any
consent or approval or other clearance from any governmental agency, which the Company shall, in
its sole discretion, determine to be necessary or advisable.
6.
DEATH OF AWARD RECIPIENT
In the event of the Award Recipients death prior to the delivery of shares issuable pursuant
to vested RSUs, such shares shall be delivered to the Award Recipients estate, upon presentation
to the Committee of letters testamentary or other documentation satisfactory to the Committee.
7.
RESPONSIBILITY FOR TAXES
Regardless of any action the Company or the Award Recipients actual employer (the Employer)
takes with respect to any or all income tax (including federal, state and local taxes), social
insurance, payroll tax, payment on account or other tax-related withholding (Tax-Related Items),
the Award Recipient acknowledges that the ultimate liability for all Tax-Related Items legally due
by the Award Recipient is and remains the Award Recipients responsibility and that the Company
and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the
vesting of the RSUs, the conversion of the RSUs into shares of Common Stock, the subsequent sale of
any shares acquired at vesting and the receipt of any dividends or dividend equivalents; and (ii)
do not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate
the Award Recipients liability for Tax-Related Items.
Prior to the issuance of shares of Common Stock pursuant to this RSU Award, the Award
Recipient shall pay, or make adequate arrangements satisfactory to the Company or to the Employer
(in their sole discretion) to satisfy all withholding and payment on account obligations of the
Company and/or Employer. In this regard and, if permissible under local law, the Award Recipient
authorizes the Company and/or the Employer, at their discretion, to satisfy the obligations with
regard to all Tax-Related Items legally Payable by the Award Recipient in one or any combination of
the forms specified below:
3
(a) by requiring the Award Recipient to pay an amount necessary to pay the Tax-Related Items
directly to the Company (or the Employer) in the form of cash, check or other cash equivalent;
(b) by the deduction of such amount from wages or other cash compensation payable to the Award
Recipient by the Company and/or the Employer;
(c) by withholding a net number of shares otherwise issuable having a then current fair market
value not exceeding the amount necessary to satisfy the withholding obligation of the Company or
the Employer based on the minimum applicable statutory withholding rates; or
(d) by arranging for the sale of shares to be issued upon vesting of the RSUs (on the Award
Recipients behalf and at the Award Recipients direction pursuant to this authorization).
If the Company satisfies the obligation for Tax-Related Items by withholding a number of whole
shares as described in clause (c) above, the Award Recipient is deemed to have been issued the full
number of shares subject to the RSU Award, notwithstanding that a number of the shares is held back
solely for the purpose of paying the Tax-Related Items due as a result of the vesting of the RSUs.
The Award Recipient shall pay to the Company or to the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of the Award Recipients
receipt of this Award, the vesting of the RSUs, or the conversion of the vested RSUs into shares
that cannot be satisfied by the means previously described. The Company may refuse to deliver
shares to the Award Recipient if the Award Recipient fails to comply with the Award Recipients
obligation in connection with the Tax-Related Items as described herein.
8.
NATURE OF GRANT
In accepting the RSUs, the Award Recipient acknowledges that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may
be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan;
(b) the award of RSUs is voluntary and occasional and does not create any contractual or other
right to receive future awards of RSUs, or benefits in lieu of RSUs even if RSUs have been awarded
repeatedly in the past;
(c) all decisions with respect to future RSUs, if any, will be at the sole discretion of the
Company;
(d) the Award Recipients participation in the Plan is voluntary;
(e) the RSU Award is an extraordinary item that does not constitute compensation of any kind
for services of any kind rendered to the Company or to the Employer, and the RSUs are outside the
scope of the Award Recipients employment contract, if any;
(f) the RSUs are not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement benefits or similar
payments;
(g) neither the RSU Award nor any provision of this agreement nor the Plan confer upon the
Award Recipient any right with respect to employment or continuation of current employment, and in
the event that the Award Recipient is not an employee of the Company, the RSUs shall not be
interpreted to form an employment contract or relationship with the Company;
(h) the future value of the shares underlying the RSUs is unknown and cannot be predicted with
certainty;
(i) if the Award Recipient receives shares, the value of such shares acquired on vesting of
the RSUs may increase or decrease in value;
(j) no claim or entitlement to compensation or damages arises from termination of the RSUs,
and no claim or entitlement to compensation or damages shall arise from any diminution in value of
the shares received upon vesting of the RSUs resulting from termination of the Award Recipients
employment by the Employer (for any reason whatsoever and whether or not in breach of local labor
laws) and the Award Recipient irrevocably releases the Company and the Employer from any such claim
that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by signing this Agreement, the Award Recipient shall be deemed
irrevocably to have waived his or her entitlement to pursue such claim;
4
(k) the Company is not providing any tax, legal or financial advice, nor is the Company making
any recommendations regarding the Award Recipients participation in the Plan, or his or her
acquisition or sale of the underlying shares; and
(l) the Award Recipient is hereby advised to consult with his or her own personal tax, legal
and financial advisors regarding his or her participation in the Plan before taking any action
related to the Plan.
9.
DATA PRIVACY
The Award Recipient hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of the Award Recipients personal data as described in this
agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company
and its subsidiaries for the exclusive purpose of implementing, administering and managing the
Award Recipient s participation in the Plan.
The Award Recipient understands that the Company and the Employer may hold certain personal
information about the Award Recipient, including, but not limited to, the Award Recipients name,
home address and telephone number, date of birth, social insurance number or other identification
number, salary, nationality, job title, any shares of stock or directorships held in the Company,
details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised,
vested, unvested or outstanding in the Award Recipients favor, for the exclusive purpose of
implementing, administering and managing the Plan (Data).
The Award Recipient understands that Data will be transferred to The Bank of New York or such
other stock plan service provider as may be selected by the Company in the future, which is
assisting the Company with the implementation, administration and management of the Plan. The
Award Recipient understands that the recipients of the Data may be located in the United States or
elsewhere, and that the recipients country (e.g., the United States) may have different data
privacy laws and protections than the Award Recipients country. The Award Recipient understands
that the Award Recipient may request a list with the names and addresses of any potential
recipients of the Data by contacting the Award Recipients local human resources representative.
The Award Recipient authorizes the Company, The Bank of New York and any other possible recipients
which may assist the Company (presently or in the future) with implementing, administering and
managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other
form, for the sole purpose of implementing, administering and managing the Award Recipients
participation in the Plan. The Award Recipient understands that Data will be held only as long as
is necessary to implement, administer and manage the Award Recipients participation in the Plan.
The Award Recipient understands that he/she may, at any time, view Data, request additional
information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting in writing the
Award Recipients local human resources representative. The Award Recipient understands, however,
that refusing or withdrawing his/her consent may affect the Award Recipients ability to
participate in the Plan. For more information on the consequences of the Award Recipients refusal
to consent or withdrawal of consent, the Award Recipient understands that he/she may contact
his/her local human resources representative.
10.
CHANGES IN CAPITALIZATION
If prior to the expiration of the Restriction Period changes occur in the outstanding Common
Stock by reason of stock dividends, recapitalization, mergers, consolidations, stock splits,
combinations or exchanges of shares and the like, the number and class of shares subject to this
RSU Award shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. If as a result of any adjustment under this paragraph any Award Recipient should
become entitled to a fractional share of stock, the Award Recipient shall have the right only to
the adjusted number of full shares and no payment or other adjustment will be made with respect to
the fractional share so disregarded.
11.
NOTICE
Until the Award Recipient is advised otherwise by the Committee, all notices and other
correspondence with respect to this RSU Award will be effective upon receipt at the following
address:
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings, Inc.
Zimmer Holdings, Inc.
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708
5
12.
BREACH OF RESTRICTIVE COVENANTS
The Award Recipient understands and agrees that if he or she violates the covenant not to
compete contained in Section 4(f) of this agreement or any other restrictive covenant in favor of
the Company that he or she is a party to, the Committee may require the Award Recipient to forfeit
his or her right to any unvested portion of the RSU Award and, to the extent that any portion of
the RSU Award has previously vested, the Committee may require the Award Recipient to return to the
Company the shares covered by the RSU Award or any cash proceeds received by the Award Recipient
upon the sale of such shares.
13.
CONSENT TO ELECTRONIC DELIVERY
The Company may, in its sole discretion, decide to deliver any documents related to the RSU
Award granted under and participation in the Plan or future stock awards that may be granted under
the Plan by electronic means or to request the Award Recipients consent to participate in the Plan
by electronic means. The Award Recipient hereby consents to receive such documents by electronic
delivery and, if requested, to agree to participate in the Plan through an on-line or electronic
system established and maintained by the Company or a third party designated by the Company.
14.
SECTION 409A COMPLIANCE
To the extent applicable, it is intended that the Plan and the Agreement comply with the
requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and any related
regulations or other guidance promulgated with respect to such Section by the U.S. Department of
the Treasury or the Internal Revenue Service. Any provision of the Plan or this agreement that
would cause this RSU Award to fail to satisfy Section 409A shall have no force or effect until
amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by
Section 409A.
15.
CONSTRUCTION AND INTERPRETATION
The Board of Directors of the Company (the Board) and the Committee shall have full
authority and discretion, subject only to the express terms of the Plan, to decide all matters
relating to the administration and interpretation of the Plan and this agreement and all such Board
and Committee determinations shall be final, conclusive, and binding upon the Award Recipient and
all interested parties. The terms and conditions set forth in this agreement are subject in all
respects to the terms and conditions of the Plan, as amended from time to time, which shall be
controlling. This agreement contains the entire understanding of the parties and may not be
modified or amended except in writing duly signed by the parties. The waiver of, or failure to
enforce, any provision of this agreement or the Plan by the Company will not constitute a waiver by
the Company of the same provision or right at any other time or a waiver of any other provision or
right. The various provisions of this agreement are severable and any determination of invalidity
or unenforceability of any provision shall have no effect on the remaining provisions. This
agreement will be binding upon and inure to the benefit of the successors, assigns, and heirs of
the respective parties. The validity and construction of this agreement shall be governed by the
laws of the State of Indiana, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the substantive law of another
jurisdiction. If the Award Recipient has received this agreement or any other document related to
the Plan translated into a language other than English and if the meaning of the translated version
is different that the English version, the English version will control.
16.
SEVERABILITY
In the event any provision of this agreement shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining provisions of this agreement, and this
agreement shall be construed and enforced as if such illegal or invalid provision had not been
included.
6
Schedule A
|
|
|
|
|
Months Completed After Award Date
|
|
Percent Vested
|
|
|
|
|
|
12
|
|
|
11.111
|
%
|
13
|
|
|
12.037
|
%
|
14
|
|
|
12.963
|
%
|
15
|
|
|
13.889
|
%
|
16
|
|
|
14.815
|
%
|
17
|
|
|
15.741
|
%
|
18
|
|
|
16.667
|
%
|
19
|
|
|
17.593
|
%
|
20
|
|
|
18.519
|
%
|
21
|
|
|
19.444
|
%
|
22
|
|
|
20.370
|
%
|
23
|
|
|
21.296
|
%
|
24
|
|
|
22.222
|
%
|
25
|
|
|
23.148
|
%
|
26
|
|
|
24.074
|
%
|
27
|
|
|
25.000
|
%
|
28
|
|
|
25.926
|
%
|
29
|
|
|
26.852
|
%
|
30
|
|
|
27.778
|
%
|
31
|
|
|
28.704
|
%
|
32
|
|
|
29.630
|
%
|
33
|
|
|
30.556
|
%
|
34
|
|
|
31.481
|
%
|
35
|
|
|
32.407
|
%
|
36
|
|
|
33.333
|
%
|
37
|
|
|
36.111
|
%
|
38
|
|
|
38.889
|
%
|
39
|
|
|
41.667
|
%
|
40
|
|
|
44.444
|
%
|
41
|
|
|
47.222
|
%
|
42
|
|
|
50.000
|
%
|
43
|
|
|
52.778
|
%
|
44
|
|
|
55.556
|
%
|
45
|
|
|
58.333
|
%
|
46
|
|
|
61.111
|
%
|
47
|
|
|
63.889
|
%
|
48
|
|
|
66.667
|
%
|
49
|
|
|
69.444
|
%
|
50
|
|
|
72.222
|
%
|
51
|
|
|
75.000
|
%
|
52
|
|
|
77.778
|
%
|
53
|
|
|
80.556
|
%
|
54
|
|
|
83.333
|
%
|
55
|
|
|
86.111
|
%
|
56
|
|
|
88.889
|
%
|
57
|
|
|
91.667
|
%
|
58
|
|
|
94.444
|
%
|
59
|
|
|
97.222
|
%
|
60
|
|
|
100.000
|
%
|
7