Exhibit 99.1
ZIMMER PUERTO RICO
SAVINGS AND INVESTMENT PROGRAM
EFFECTIVE August 6, 2001
TABLE OF CONTENTS
1. DEFINITIONS........................................................2
2. ELIGIBILITY AND PARTICIPATION......................................8
3. BASIC AND SUPPLEMENTARY CONTRIBUTIONS..............................9
4. CHANGE IN CONTRIBUTIONS............................................11
5. EMPLOYING COMPANY CONTRIBUTIONS....................................11
6. LIMITATIONS ON CONTRIBUTIONS.......................................12
7. ROLLOVER CONTRIBUTIONS.............................................16
8. INVESTMENT CHOICES OF PARTICIPANT..................................16
9. MAINTENANCE AND VALUATION OF PARTICIPANTS' ACCOUNTS................18
10. VESTING............................................................19
11. METHOD OF PAYMENT UPON DISTRIBUTION OR WITHDRAWAL..................20
12. WITHDRAWALS FROM ACCOUNT...........................................22
13. DISTRIBUTION UPON TERMINATION OF EMPLOYMENT........................27
14. TRANSFER OF A PARTICIPANT..........................................34
15. SUSPENSION OF CONTRIBUTIONS........................................35
16. EFFECT OF SUSPENSION OF CONTRIBUTIONS..............................35
17. LEAVE OF ABSENCE, LAYOFF, ABSENCE ON DISABILITY AND REEMPLOYMENT..36
18. DESIGNATION OF BENEFICIARIES IN THE EVENT OF DEATH................38
19. TRUSTEE OF THE PLAN................................................39
20. ADMINISTRATION OF THE PLAN.........................................41
21. AMENDMENT AND MODIFICATION OF THE PLAN.............................44
22. SUSPENSION, TERMINATION, MERGER OR CONSOLIDATION OF PLAN..........45
23. GENERAL PROVISIONS.................................................45
24. TOP HEAVY PROVISIONS...............................................47
-i-
ZIMMER PUERTO RICO
SAVINGS AND INVESTMENT PROGRAM
PURPOSE
The purpose of this Zimmer Puerto Rico Savings and Investment Program
(the "Plan") is to provide a convenient way for the employees of Zimmer
Holdings, Inc. ("Zimmer"), and certain of its subsidiaries and affiliates, who
reside in Puerto Rico to save on a regular and long-term basis and to encourage
such employees to make contributions and continue careers with Zimmer.
INTRODUCTION
This Plan was adopted by Zimmer in conjunction with the spin-off of
Zimmer from the Bristol-Myers Squibb Company (the "Bristol-Myers Squibb
Company"). In connection with the spin-off of Zimmer, the accounts of active
Zimmer employees under the Bristol-Myers Squibb Puerto Rico, Inc. Savings and
Investment Program (the "Bristol-Myers Squibb Puerto Rico Plan") were
transferred from the Bristol-Myers Squibb Puerto Rico Plan to this Plan.
ARTICLE 1
DEFINITIONS
For the purposes of the Plan the following terms shall have the
following meanings unless a different meaning is plainly required by the
context.
Section 1.01. "ADMINISTRATIVE AGENT" shall mean the third party
administrator appointed by the Committee which has the responsibility to
receive, cumulate and communicate to the Trustee investment and distribution
instructions (including requests for loans for a period of not more than 60
months from the Plan, but excluding loans from the Plan in excess of 60 months,
financial emergency and hardship withdrawals) received from Participants. With
respect to any such responsibilities which are responsibilities of the Committee
as the "administrator" or "named fiduciary" of the Plan under ERISA, the
Administrative Agent shall be a delegate of the Committee in accordance with
Section 20.07. With respect to any responsibilities assumed by the Trustee
pursuant to the Trust Agreement referred to in Article 19, the Administrative
Agent shall be an agent of the Trustee.
Section 1.02. "ADMINISTRATIVE ERROR" shall mean an error in operating
the Plan determined by the Committee to require correction by permitting
additional contributions by the Employee and/or an Employing Company,
distributing contributions made to the Plan due to factual error, correcting
distributions made in error or otherwise conforming the operations of the Plan
to the terms of the Plan.
Section 1.03. "AFFILIATE" shall mean any corporation, trade or business
if it and Zimmer are members of a controlled group of corporations, or are under
common control, or are members of an affiliated service group, within the
meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the U.S. Code,
respectively; PROVIDED, HOWEVER, that for purposes of Section 6.02, the
definitions prescribed by Sections 414(b) and 414(c) of the U.S. Code shall be
modified as provided by Section 415(h) of the U.S. Code by substituting "more
than 50%" common control for "at least 80%" common control.
Section 1.04. "AFTER-TAX CONTRIBUTION" shall mean a contribution to the
Plan pursuant to the election described in Section 2.01 by the Employee, which
election authorizes the Employee's Employing Company to deduct the amount of
such contribution from the portion of his Annual Benefit Salary or Wages
otherwise payable currently for each month without reducing the amount
includible in his gross income for federal and Puerto Rico income tax purposes.
Section 1.05. "ANNUAL BENEFIT SALARY OR WAGES" shall mean a
Participant's regular salary or wages, including total commissions paid during
the preceding calendar year on the basis of sales, to employees of an Employing
Company ; but excluding any compensation for overtime, special remuneration or
bonuses, as determined by an Employing Company from its payroll records. The
amount of a Participant's Annual Benefit Salary or Wages taken into account
under the Plan shall not exceed $150,000, as adjusted by the Commissioner of the
Internal Revenue Service for increases in the cost of living in accordance with
the regulations promulgated under Section 401(a)(17)(B) of the U.S. Code.
-2-
Section 1.06. "BASIC CONTRIBUTION" shall mean Pre-Tax Contributions,
After-Tax Contributions, or a combination thereof, which are so designated by
the Employee pursuant to Article 3.
Section 1.07. "BENEFICIARY" shall mean the beneficiary designated by
the Participant to receive all or part of the amount in the account balance of a
Participant, Inactive Participant or Former Participant upon such person's death
in accordance with Article 18.
Section 1.08. "BOARD OF DIRECTORS" shall mean the Board of Directors of
Zimmer, or the Executive Committee of such Board of Directors, as they may be
constituted from time to time.
Section 1.09. "BRISTOL-MYERS SQUIBB" shall mean the Bristol-Myers
Squibb Company Puerto Rico, Inc.
Section 1.10. "BRISTOL-MYERS SQUIBB PUERTO RICO PLAN" shall mean the
Bristol-Myers Squibb Puerto Rico, Inc. Savings and Investment Program.
Section 1.11. "BRISTOL-MYERS SQUIBB STOCK" shall mean the shares of
common stock of Bristol-Myers Squibb.
Section 1.12. "BRISTOL-MYERS SQUIBB STOCK FUND" shall mean the
Investment Fund invested primarily in shares of Bristol-Myers Squibb Stock.
Section 1.13. "BUSINESS DAY" shall mean any day on which the New York
Stock Exchange is open for business.
Section 1.14. "COMMITTEE" shall mean the committee referred to in
Article 20.
Section 1.15. "EFFECTIVE DATE" shall mean August 6, 2001.
Section 1.16. "EMPLOYEE" shall mean (i) a person who on the Effective
Date was both a common law employee of an Employing Company and a participant in
the Bristol-Myers Squibb Puerto Rico Plan and, (ii) with respect to a person or
who becomes a common law employee of an Employing Company after the Effective
Date, a person who is employed by an Employing Company on the date which is six
months after the date on which such person completed one Hour of Service for an
Employing Company and whose employment is for not less than 1,000 Hours of
Service during any twelve consecutive month period; PROVIDED, HOWEVER, Employee
shall not include any common law employee of an Employing Company covered by a
collective bargaining agreement which does not provide for participation under
the Plan, any person designated by an Employing Company as a leased employee of
an Employing Company, or any person who performs services for an Employing
Company and whom an Employing Company treats for federal and/or Puerto Rico tax
purposes as an independent contractor. The foregoing notwithstanding, if any
person is subsequently determined to be an Employee by the Internal Revenue
Service, the Treasury Department of the Commonwealth of Puerto Rico or any other
federal, state or local governmental agency or competent court of authority,
such person will deemed to be an Employee commencing on the date that this
determination is finally adjudicated or otherwise accepted by an Employing
Company; PROVIDED, HOWEVER, that such person must meet the other requirements of
this paragraph and that such person shall not, under any
-3-
circumstances, be deemed to be an Employee for the period of time during which
such Employing Company treated the person as an independent contractor for
federal and/or Puerto Rico tax purposes regardless of whether the determination
of the status of the person as an Employee has retroactive effect. In addition,
any person who performs services for an Employing Company, regardless of whether
such person is a common law employee or an independent contractor of an
Employing Company, shall not be an Employee for any period of time during which
such person has agreed in writing that such person will not participate in the
Plan or generally an Employing Company 's employee benefit plans.
Section 1.17. "EMPLOYING COMPANY" shall mean Zimmer and any Affiliate
which the Board of Directors or the Committee may from time to time determine to
bring under the Plan which shall adopt the Plan and any successor of any of
them.
Section 1.18. "EMPLOYING COMPANY CONTRIBUTIONS" shall mean
contributions made by the Employee's Employing Company pursuant to Article 5
hereof with respect to such Employee's Basic Contributions.
Section 1.19. "ENROLLMENT DATE" shall mean any Business Day on which an
Employee elects to enroll in the Plan.
Section 1.20. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended.
Section 1.21. "FORMER PARTICIPANT" means an individual who is no longer
employed by an Employing Company or any of its Affiliates but for whom an
account balance is maintained in the Trust.
Section 1.22. "HIGHLY COMPENSATED EMPLOYEE" has the meaning set forth in
U.S. Code Section 414(q) as such term refers to requirements of the U.S. Code
and has the meaning set forth in Section 1165(e)(3)(E)(iii) of the Puerto Rico
Code as such term refers to requirements of the Puerto Rico Code.
Section 1.23. "HOURS OF SERVICE means, with respect to a person who is
a common law employee of Zimmer or an Affiliate, each hour for which:
(a) he is paid, or entitled to payment, for the performance of
duties for an Employing Company as determined by an Employing Company ;
(b) back pay, irrespective of mitigation of damages, is either
awarded or agreed to by an Employing Company;
(c) he is paid, or entitled to payment, by an Employing
Company on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence;
-4-
(d) a court order, agreement with the U.S. Department of Labor
or other federal, Puerto Rico or local government agency or department, or other
similar agreement requires that service be awarded;
(e) he is absent without pay during a leave of absence,
period of layoff not to exceed six months or disability leave as provided in
Article 17; and
(f) he is paid, or entitled to payment, for the performance
of duties prior to the effective Date for an employer participating in the
Bristol-Myers Squibb Puerto Rico Plan.
For purposes of paragraph (a) above, Hours of Service shall be credited
for the period during which the duties are performed and for purposes of
paragraph (b), Hours of Service shall be credited for the period to which the
award or agreement pertains. For the purposes of paragraphs (c) and (d), Hours
of Service shall be credited for the period during which the absence occurs (but
not to exceed six months for layoff) and during such period of absence, shall be
credited as though the period of absence were a period of active employment with
an Employing Company. The same Hours of Service shall not be credited under more
than one of paragraphs (a), (b), (c), (d), (e) or (f).
It shall be assumed that each Employee as to whom an Employing Company
records do not and are not required by law to reflect hours worked for any
relevant period, worked 45 hours for each week for which he or she would be
required to be credited with at least one Hour of Service under Department of
Labor Regulations 2530.200b-2.
Section 1.24. "INACTIVE PARTICIPANT" shall mean a Participant who
remains employed by an Employing Company whose Pre-Tax Contributions and
After-Tax Contributions to the Plan have been suspended for any of the reasons
provided in the Plan.
Section 1.25. "INVESTMENT FUND" shall mean an investment option
established in accordance with Article 8, including (but not limited to) the
Zimmer Stock Fund, Bristol-Myers Squibb Stock Fund, portfolios managed by the
Trustee, the Committee (or its delegate) or an Investment Manager and
investments in any mutual fund which is registered under the Investment Company
Act of 1940 and any commingled trust fund (including any group trust meeting the
requirements of Revenue Ruling 81-100) established for the investment of funds
of profit sharing and pension plans which trust is exempt from tax under Section
501(a) of the U.S. Code, by reason of qualifying under Section 401(a) of the
U.S. Code or Section 1022(i)(1) of ERISA (as such Sections may be renumbered,
amended or re-enacted).
Section 1.26. "INVESTMENT MANAGER" has the meaning given such term under
Section 3(38) of ERISA.
Section 1.27. "ONE YEAR BREAK-IN-SERVICE" means a consecutive twelve
month period used to determine an Employee's Years of Service during which
period that Employee has not completed more than 500 Hours of Service. Solely
for determining whether an Employee has a One Year Break in Service, an Employee
who is absent from work by reason of pregnancy, birth of a child of the
Employee, placement of a child with an Employee because of the adoption of such
child, or for purposes of caring for a child of the Employee for a period
beginning with the birth or placement of the child shall be credited with the
number of Hours of Service the Employee would have normally been credited with
during the period of absence from service; PROVIDED, HOWEVER, the total Hours of
Service credited shall not exceed 501 hours and shall be
-5-
credited (i) only to the Plan Year in which the absence from service begins if
the Employee would have a One Year Break in Service in that Plan Year, or (ii)
if the Employee would not have a One Year Break in Service in the Plan Year in
which the absence from service begins, in the immediately following Plan Year.
The Plan shall not credit Hours of Service as provided above unless the Employee
furnishes to the Committee such timely information as the Plan may reasonably
require to establish that the absence from work is for the reasons described
above and the number of days of absence for such purpose.
Section 1.28. "PARTICIPANT shall mean an Employee who has elected to
participate in the Plan as provided in Article 2 and whose participation in the
Plan at the time of reference has not been suspended or terminated as provided
in the Plan. If a Participant becomes represented by a collective bargaining
agent after he has elected to participate in the Plan, such Participant's right
to continue to participate shall be determined in accordance with the terms of
the contract between the collective bargaining agent and the Employing Company.
If the contract provides that the Participant shall no longer continue to
participate, the Participant shall be deemed to have elected to suspend Pre-Tax
Contributions and After-Tax Contributions and the Participant shall become an
Inactive Participant.
Section 1.29. "PARTICIPANT LOAN FUND" shall mean an account invested in
debt obligations evidencing loans to the Participant pursuant to Section 12.05.
Section 1.30. "PLAN" shall mean the Zimmer Puerto Rico Savings and
Investment Program as described herein, as from time to time hereafter amended.
Section 1.31. "PLAN YEAR" shall mean a calendar year or, in the case of
the first plan year, the period commencing on the Effective Date and ending on
December 31, 2001.
Section 1.32. "PRE-TAX CONTRIBUTION" shall mean a contribution to the
Plan pursuant to the election described in Section 2.01 by the Employee, which
election authorizes the Employee's Employing Company to reduce, by the amount of
the contribution, (i) the portion of his Annual Benefit Salary or Wages payable
currently for each month and (ii) the amount includible in his gross income for
federal or Puerto Rico income tax purposes.
Section 1.33. "PUERTO RICO CODE" means the Commonwealth of Puerto Rico
Internal Revenue Code of 1994, as amended from time to time.
Section 1.34. "QUALIFIED NONELECTIVE CONTRIBUTION" shall mean a
contribution made on behalf of an Employee by the Employee's Employing Company
pursuant to Section 5.05 of the Plan, which is neither an Employing Company
Contribution nor a Pre-Tax Contribution or After-Tax Contribution, which is 100%
vested at all times, and which may not be distributed from the Plan, on account
of hardship or otherwise, prior to the termination of employment or death of the
Employee, his attainment of age 59 1/2 or becoming disabled and entitled to
receive disability payments under a disability pay plan maintained by an
Employing Company , or the termination of the Plan without establishment of a
successor plan, or the sale of an Employing Company or of substantially all the
assets of a division of an Employing Company or of an Employing Company which
employs the Employee, as required under Section 401(m)(4) of the U.S. Code and
under Section 1165(e)(3)(E)(ii) of the Puerto Rico Code and regulations issued
thereunder.
-6-
Section 1.35. "ROLLOVER CONTRIBUTION" shall have the meaning given such
term in Section 7.01.
Section 1.36. "SUPPLEMENTARY CONTRIBUTION" shall mean Pre-Tax
Contributions, After-Tax Contributions, or a combination thereof, which are so
designated by the Employee pursuant to Article 3.
Section 1.37. "TELEPHONIC NOTIFICATION" shall mean any communication
acceptable to the Administrative Agent, including communication via telephone,
telegraph, satellite, internet web site or other wireless communication, given
to the Administrative Agent at least 30 days (or such lesser number of days as
the Committee may specify) prior day for which the notice shall be effective.
Section 1.38. "TRUSTEE " shall mean the Trustee or Trustees under the
Trust Agreement referred to in Article 19.
Section 1.39. "U.S. CODE" shall mean the United States Internal Revenue
Code of 1986, as amended from time to time.
Section 1.40. "VALUATION DATE" shall mean any date specified by the
Committee or, if the Committee does not so specify, shall mean:
(a) with respect to valuation of Investment Funds, as of the close of
each Business Day;
(b) with respect to any inter-Investment Fund transfer pursuant to
Sections 8.03, as of the close of the first Business Day coincident with or
immediately following the date the Participant requests such transfer;
(c) with respect to withdrawals in the case of Financial Hardship
pursuant to Section 12.03 and withdrawals due to financial emergency pursuant to
Section 12.04, as of the close of the first Business Day following the date upon
which such withdrawal is approved;
(d) with respect to all other distributions and withdrawals, as of the
close of the first Business Day coincident with or next following the date the
Participant, Inactive Participant, Former Participant or Beneficiary (as
applicable) requests such distribution or withdrawal, PROVIDED, HOWEVER, that
the Valuation Date with respect to any payments which qualify as eligible
rollover distributions pursuant to Section 13.07 shall be delayed by such
waiting period as may apply by law or regulation to such distributions.
The foregoing notwithstanding, (i) if upon any otherwise applicable
Valuation Date trading in Zimmer Stock or Bristol-Myers Squibb Stock is
suspended by the Securities and Exchange Commission or halted pursuant to the
rules of the New York Stock Exchange and does not resume prior to the close of
that day, then, with respect to any valuation of the Zimmer Stock Fund or the
Bristol-Myers Squibb Stock Fund, inter-Investment Fund transfer, distribution or
withdrawal for which a determination of the net asset value of units in the
Zimmer Stock Fund or the Bristol-Myers Squibb Stock Fund and the closing price
per share of Zimmer Stock or Bristol-Myers Squibb Stock is required, the
Valuation Date shall be delayed to the close of the next
-7-
business day on which trading in Zimmer Stock or Bristol-Myers Squibb Stock
resumes; PROVIDED, HOWEVER, that where the suspension or halt in trading occurs
on the last Valuation Date of any month or continues through the close of
business on that day, then the Valuation Date shall not be delayed and the
Administrative Agent shall determine the net asset value of units in the
Zimmer Stock Fund or the Bristol-Myers Squibb Stock Fund and a deemed closing
price per share of Zimmer Stock or Bristol-Myers Squibb Stock as of that date in
accordance with a uniform valuation procedure established by the Committee which
shall be applied in a uniform and non-discriminatory manner to all persons
similarly situated, or (ii) if there is insufficient liquidity in the Zimmer
Stock Fund or the Bristol-Myers Squibb Stock Fund to allow for same day
withdrawals or transfers to other investment funds, the Trustee will suspend
transactions requiring the sale of Zimmer Stock Fund or Bristol-Myers Squibb
Stock Fund units until sufficient fund liquidity is restored and the Valuation
Date with respect to such suspended transactions shall be delayed to the close
of the business day on which the sale of Zimmer Stock Fund or Bristol-Myers
Squibb Stock Fund units occurs.
Section 1.41. "YEAR OF SERVICE" means with respect to an Employee, the
twelve month period commencing on the Employee's date of hire, and each calendar
year subsequent to the Employee's date of hire, during which an Employee has
completed at least 1,000 Hours of Service. If the Employee has incurred a One
Year Break in Service by reason of termination of service and is reemployed by
an Employing Company, in respect of the period subsequent to his reemployment,
the calendar year which includes his date of reemployment and each succeeding
calendar year, providing he has completed at least 1,000 Hours of Service during
each such calendar year. If the Employee has not incurred a One Year Break in
Service by reason of termination of service and is reemployed by an Employing
Company, he shall continue to be credited with Years of Service as provided
above. An Employee shall not be credited with Years of Service in respect of any
period prior to the date on which the Plan (or any predecessor plan as defined
by regulations of the Secretary of the Treasury or his delegate) became
effective with respect to the Employee's Employing Company. Years of Service
shall include any period of service that was recognized for purposes of
determining Years of Service under the Bristol-Myers Squibb Puerto Rico Plan as
of the Effective Date.
Section 1.42. "ZIMMER" shall mean Zimmer Holdings, Inc., a Delaware
Corporation.
Section 1.43. "ZIMMER STOCK" shall mean the shares of common stock of
Zimmer which are registered for the purpose of the Plan from time to time with
the Securities and Exchange Commission.
Section 1.44. "ZIMMER STOCK FUND" shall mean the Investment Fund
invested primarily in shares of Zimmer Stock.
Masculine pronouns include the feminine as well as the masculine gender.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
-8-
Section 2.01. PARTICIPATION. Any Employee may elect to participate in
the Plan, beginning on an Enrollment Date, if on such date the Employee
authorizes Pre-Tax Contributions, After-Tax Contributions, or both, from the
Employee's Annual Benefit Salary or Wages in accordance with Section 3.01 and
directs the investment of such Pre-Tax Contributions or After-Tax Contributions
in accordance with Article 8. For any month, the Pre-Tax Contributions and
After-Tax Contributions elected by a Participant cannot, in the aggregate exceed
sixteen percent (16%) of the portion of the Participant's Annual Benefit Salary
or Wages otherwise payable for such month; PROVIDED, HOWEVER, that in order to
correct an Administrative Error the total Pre-Tax Contributions and After-Tax
Contributions elected by the Participant can, in the aggregate, exceed sixteen
percent (16%) of the portion of the Participant's Annual Benefit Salary or Wages
otherwise payable for such month, but only to the extent necessary to correct
such Administrative Error. Such authorization and direction shall be by
Telephonic Notification.
Section 2.02. SERVICE WITH AN AFFILIATE. Any common law employee of an
Affiliate which is not an Employing Company or of a division or branch of an
Employing Company or who is included in an employee classification which is not
participating in the Plan, who becomes an Employee may elect to participate in
the Plan as provided in this Article 2, and for purposes of and Article 10, such
Employee's service with any Affiliate which is not an Employing Company, or with
a division or branch of an Employing Company which is not participating in the
Plan or in a classification of Employees ineligible to participate in the Plan,
shall be taken into account in the same manner and to the same extent as if such
service had been employment as an Employee with an Employing Company.
ARTICLE 3
BASIC AND SUPPLEMENTARY CONTRIBUTIONS
Section 3.01. CONTRIBUTION AMOUNT. Subject to Article 6 hereof, an
Employee may authorize a Basic Contribution from his Annual Benefit Salary or
Wages of from 2% to 6% (in whole percentages) of his Annual Benefit Salary or
Wages, and a Supplementary Contribution from his Annual Benefit Salary or Wages
of from 1% to 10% (in whole percentages) of his Annual Benefit Salary or Wages;
PROVIDED, HOWEVER, that the Employee may not authorize a Supplementary
Contribution for any month unless he has authorized a Basic Contribution equal
to 6% of his Annual Benefit Salary or Wages for such month. Notwithstanding the
foregoing, to the extent necessary to correct an Administrative Error, a
Participant may authorize a Basic Contribution from his Annual Benefit Salary or
Wages in excess of 6% (in whole percentages) of his Annual Benefit Salary or
Wages and a Supplementary Contribution from his Annual Benefit Salary or Wages
in excess of 10% (in whole percentages) of his Annual Benefit Salary or Wages.
Any authorization of a Basic Contribution or Supplementary Contribution in order
to correct an Administrative Error shall be made in accordance with principles
and procedures established by the Committee which are applicable to all persons
similarly situated, setting forth the timing and manner of such authorization;
PROVIDED, HOWEVER, that the Committee may determine the period during which such
additional Basic or Supplementary Contributions may be made. An Employee may
authorize Basic or Supplementary Contributions in the form of (a) Pre-Tax
Contributions of from 2% to 10% (in whole percentages) of his Annual Benefit
Salary
-9-
or Wages, (b) After-Tax Contributions of from 2% to 16% (in whole percentages)
of his Annual Benefit Salary or Wages , or a combination thereof. Basic or
Supplementary Contributions authorized by a Participant in order to effect a
correction of an Administrative Error shall be accounted for separately in the
Plan Year in which made. If the percentage of a Participant's Annual Benefit
Salary or Wages contributed on his behalf to the Plan as Pre-Tax Contributions
for any month is 6% or greater, then the Participant's After-Tax Contribution,
if any, for that month shall be deemed a Supplementary Contribution, unless such
Pre-Tax Contributions for any month equal or exceed 6% solely due to a
correction of an Administrative Error. If the percentage of a Participant's
Annual Benefit Salary or Wages contributed on his behalf to the Plan as a
Pre-Tax Contribution is less than 6% for any month, then such Pre-Tax
Contribution shall be a Basic Contribution and the Employee's After-Tax
Contribution, if any, for that month shall be a Basic Contribution to the extent
it does not exceed the difference between (i) 6% of the Employee's Annual
Benefit Salary or Wages for such month and (ii) the Employee's Pre-Tax
Contribution for such month; any remaining After-Tax Contribution shall be a
Supplementary Contribution; PROVIDED, HOWEVER, that the Committee may determine
that different percentage allocations between Basic and Supplementary
Contributions are required in order to correct an Administrative Error to the
extent a Participant elects under this Section 3.01 to make, or under Section
4.01 to reduce, his Pre-Tax Contribution and/or After-Tax Contributions below 6%
of his Annual Benefit Salary or Wages, then such Contribution shall be deemed to
be made first to correct any Administrative Error. Pre-Tax Contributions and
After-Tax Contributions will begin with the first month commencing after the
Enrollment Date on which the Employee begins participation in the Plan.
Section 3.02. MONTHLY BASIS. Pre-Tax Contributions and After-Tax
Contributions shall be computed on a monthly basis. Pre-Tax Contributions and
After-Tax Contributions during each month period shall be remitted to the
Trustee as soon as such contributions can reasonably be segregated from the
Employing Company's general assets after the end of each month, but not later
than fifteen (15) business days following the end of the month in which the
contributions are withheld from the Participant's paycheck, or as otherwise
required by ERISA.
Section 3.03. CONTRIBUTIONS FROM SALARY AND WAGES. A Participant shall
be entitled to contribute to the Plan only through Annual Benefit Salary or
Wages deductions. No deduction shall be made until the Employee has authorized
the Administrative Agent by Telephonic Notification to deduct from his Annual
Benefit Salary or Wages the amount of the Pre-Tax Contribution or After-Tax
Contribution to the Plan, specifying the exact percentage.
Section 3.04. ELECTIONS UNDER THE BRISTOL-MYERS SQUIBB PUERTO RICO PLAN.
All elections made by Participants that are in force under the Bristol Myers
Squibb Puerto Rico Plan as of the Effective Date, shall be recognized and
enforced under this Plan until changed by the Participant in accordance with the
provisions of this Plan including, but not limited to, contribution elections
under Section 3.01, investment elections under 8.02 and beneficiary designations
under Section 18.01. Any election by a Participant under the Bristol-Myers
Squibb Puerto Rico Plan to invest Pre-Tax Contributions, After-Tax Contributions
or Rollover Contributions in any investment fund offered under the Bristol-Myers
Squibb Puerto Rico Plan that is not an Investment Fund under this Plan, shall be
invested in the Investment Fund selected by the Committee.
-10-
ARTICLE 4
CHANGE IN CONTRIBUTIONS
Section 4.01. CONTRIBUTION CHANGE NOTIFICATION. A Participant may
change, effective as of the first day of the any month (or as soon thereafter as
administratively feasible), the percentage of his Annual Benefit Salary or Wages
that he has authorized as his Pre-Tax Contributions or After-Tax Contributions
to another permissible percentage by giving Telephonic Notification.
Notwithstanding anything above to the contrary, if the Participant's Pre-Tax
Contributions must be reduced in order to meet the nondiscrimination
requirements of Section 401(k) of the U.S. Code and/or Section 1165(e) of the
Puerto Rico Code, then to the extent the Participant authorizes, the Participant
may change the percentage of his Annual Benefit Salary or Wages authorized as
his After-Tax Contributions to include such former Pre-Tax Contributions by
giving Telephonic Notification.
Section 4.02. EFFECTIVENESS OF CHANGE. In the event of a change in the
Annual Benefit Salary or Wages of a Participant, the percentage of his Pre-Tax
Contributions and After-Tax Contributions, if any, currently in effect shall be
applied as soon as practicable with respect to such changed Annual Benefit
Salary or Wages, without action by the Participant.
Section 4.03. SUSPENSION OF CONTRIBUTIONS. In the event that, pursuant
to a Participant's satisfaction of the conditions set forth in Section 12.03 of
the Plan, the Committee approves a withdrawal of Pre-Tax Contributions from the
Plan due to Financial Hardship, his Pre-Tax Contributions and After-Tax
Contributions under the Plan may be suspended for the twelve-month period
commencing on the date of the Financial Hardship withdrawal under the Plan in
accordance with Article 12.
ARTICLE 5
EMPLOYING COMPANY CONTRIBUTIONS
Section 5.01. MATCHING CONTRIBUTIONS. Subject to the provisions of
Article 6 hereof, each Employing Company shall contribute, on behalf of each of
the Participants in its employ, an Employing Company Contribution equal to 75%
of the first 6% of the Participant's (whether consisting of Pre-Tax
Contributions, After-Tax Contributions, or a combination thereof) paid into the
Plan for each month. Any amount applied as a credit in reduction of an Employing
Company Contribution for any month in accordance with Section 13.05 shall be
considered as a part of the Employing Company Contribution for such month. Any
Employing Company Contribution made with respect to any portion of a
Participant's Basic Contribution that is attributable to the correction of an
Administrative Error shall be calculated separately.
Section 5.02. SUPPLEMENTARY CONTRIBUTIONS NOT MATCHED. Employing Company
Contributions will not be made with respect to Supplementary Contributions.
Section 5.03. QUALIFIED NONELECTIVE CONTRIBUTIONS. Qualified Nonelective
Contributions may be made by an Employing Company on behalf of Employees who are
not Highly
-11-
Compensated Employees, in order to satisfy the Actual Deferral Percentage tests
under Section 401(k)(3) of the U.S. Code and Section 1165(e)(3) of the Puerto
Rico Code and the Actual Contribution Percentage test under Section 401(m)(2) of
the U.S. Code, pursuant to regulations under the U.S. Code and the Puerto Rico
Code. Where made to satisfy each such tests, Qualified Nonelective Contributions
shall be allocated among those Employees eligible to participate in the Plan who
are not Highly Compensated Employees, beginning with the Employee who has the
lowest amount of compensation within the meaning of Section 414(s) of the U.S.
Code for the Plan Year to which the contributions relate and allocating to his
account whatever amount is required to satisfy the test, limited to the maximum
permitted under Section 415 of the U.S. Code, and if further allocations are
required, repeating the same procedure with respect to each Employee having the
next lowest amount of compensation (as defined under Section 414(s) of the U.S.
Code) for the year, until the Employing Company shall determine that the test
has been satisfied. An Employing Company shall maintain records sufficient to
demonstrate satisfaction of each such test and the amount of Qualified
Nonelective Contributions used in each such test. Qualified Nonelective
Contributions may also be made, where appropriate, to correct an Administrative
Error. Qualified Nonelective Contributions shall be allocated as of a date
within, and made before the last day of the twelve-month period immediately
following, the Plan Year to which the contributions relate.
ARTICLE 6
LIMITATIONS ON CONTRIBUTIONS
Section 6.01. CONTRIBUTIONS SUBJECT TO LIMITATIONS. Any provision of
Article 3 or Article 5 to the contrary notwithstanding, the Pre-Tax
Contributions, After-Tax Contributions and Employing Company Contributions made
on behalf of a Participant under this Plan for any Plan Year shall be subject to
the limitations of this Article 6.
Section 6.02. LIMITATION ON ANNUAL ADDITIONS. (a) Anything to the
contrary notwithstanding, the Plan shall be administered in a manner which will
result in its complying with the provisions of Section 415 of the U.S. Code. In
the case of a Participant who is permanently and totally disabled (as defined in
Section 21(e)(3) of the U.S. Code) and is eligible to receive disability
payments under a disability pay plan maintained by his Employing Company, the
term "Participant's compensation" shall mean the compensation the Participant
would have received for the year if the Participant was paid at the rate of
compensation paid immediately before becoming permanently and totally disabled.
(b) (i) In addition to other limitations set forth in the Plan and
notwithstanding any other provisions of the Plan, the annual additions (within
the meaning of Section 415(c)(2) of the U.S. Code) under the Plan (and all other
defined contribution plans required to be aggregated with this Plan under the
provisions of Section 415 of the U.S. Code), shall not increase to an amount in
excess of the amount permitted under Section 415 of the U.S. Code at any time.
For purposes of this paragraph and for determining compliance with Section 415
of the U.S. Code, compensation shall mean compensation as defined in Section
415(c)(3) of the U.S. Code and the regulations thereunder.
-12-
(ii) In the case where (A) this Plan and another defined
contribution plan of the Employing Company cover the same Participant and (B)
reductions in either the amount of annual additions under this Plan or the
amount of annual additions or annual benefit under such other plan with respect
to the Participant (or both) are necessary in order to comply with Code Section
415, a reduction in the annual benefit or annual additions under such other plan
or plans to the Participant shall be made to the extent necessary to comply with
Code Section 415 prior to any reduction in the annual additions under this Plan
with respect to the Participant.
(iii) A Limitation Year, for purposes of applying this
Section 6.02 means the twelve (12) month period commencing January 1 and ending
December 31.
(iv) Notwithstanding anything to the contrary in this Section
6.02, the special transitional relief afforded by Section 235 of the Tax Equity
and Fiscal Responsibility Act of 1982, as amended, is specifically incorporated
herein.
(b) To comply with the limitations on annual additions of this
Section 6.02, annual additions shall be reduced or eliminated in accordance with
the order set forth below and any Pre-Tax Contributions of a Participant which
are in excess of those permitted by the limitations shall be recharacterized as
After-Tax Contributions. After-Tax Contributions of a Participant which are in
excess of those permitted by the limitations shall be returned to him and any
contributions of any Employing Company based upon any such excess contributions
shall be applied in reduction of an Employing Company 's obligation to
contribute to the Plan on behalf of other Participants:
(i) Pre-Tax Contributions in excess of 6% of the Participant's
Annual Benefit Salary or Wages ;
(ii) Remaining Pre-Tax Contributions;
(iii) Employing Company Contributions;
(iv) After-Tax Contributions which are deemed to be
Supplementary Contributions;
(v) After-Tax Contributions which are deemed to be Basic
Contributions; and
(vi) Qualified Nonelective Contributions.
Section 6.03. LIMITATION ON PRE-TAX CONTRIBUTIONS, AFTER-TAX
CONTRIBUTIONS AND EMPLOYING COMPANY CONTRIBUTIONS. The Pre-Tax Contributions,
After-Tax Contributions, and Employing Company Contributions made on behalf of
any Participant for any Plan Year, when expressed as a percentage of such
Participant's compensation within the meaning of Section 414(s) of the U.S. Code
for such Plan Year, shall not exceed the Actual Deferral Percentage permitted by
Section 401(k)(3) of the U.S. Code or the Actual Deferral Percentage permitted
by Section 1165(e) of the Puerto Rico Code or the Actual Contribution Percentage
permitted by Section 401(m)(2) of the U.S. Code for such Plan Year. In
determining whether any such Contributions exceed the Actual Deferral Percentage
permitted by Section 401(k)(3) of the U.S.
-13-
Code or Section 1165(e) of the Puerto Rico Code or the Actual Contribution
Percentage permitted by Section 401(m)(2) of the U.S. Code, Zimmer shall use the
current year testing method. In order to comply with the requirements of Section
401(k)(3) of the U.S. Code, Section 1165(e) of the Puerto Rico Code and Section
401(m)(2) of the U.S. Code, Zimmer may, in its sole discretion, take either or
both of the following actions: (i) reduce all or any portion of the current and
future contributions to be made by or on behalf of any Participant or group of
Participants for any Plan Year in the manner set forth in subsection (a) hereof;
or (ii) reduce all or any portion of the contributions previously made by or on
behalf of any Participant or group of Participants for a Plan Year in the manner
set forth in subsection (b) hereof.
(a) If Zimmer shall determine that the contributions on behalf of any
Participant or group of Participants might result in discrimination in
contributions in favor of Employees who are Highly Compensated Employees or
might cause the Plan to violate the requirements of Section 401(k) or 401(m) of
the U.S. Code or Section 1165(e) of the Puerto Rico Code, Zimmer shall,
regardless of elections filed under Section 3.01 hereof, have the right to cause
such adjustments to be made in current or future Pre-Tax Contributions or
After-Tax Contributions and Employing Company Contributions on behalf of such
Participant or Participants as will, in Zimmer's opinion, avoid such
discrimination and satisfy the requirements of Sections 401(k) and/or 401(m) of
the U.S. Code, and Section 1165(e) of the Puerto Rico Code including without
limitation the right to reduce or suspend the amount of future Pre-Tax
Contributions or After-Tax Contributions or Employing Company Contributions
previously authorized by, or made on behalf of, a Participant or Participants.
To the extent it is deemed necessary to limit Pre-Tax Contributions or After-Tax
Contributions or Employing Company Contributions of Participants in order to
meet the nondiscrimination requirements of Section 401(k) or 401(m) of the U.S.
Code or Section 1165(e) of the Puerto Rico Code, (i) the Pre-Tax Contributions,
After-Tax Contributions and Employing Company Contributions of each Participant
who is not a Highly Compensated Employee and of each Participant who is a Highly
Compensated Employee whose Actual Deferral Percentage as defined in Section
401(k)(3) of the U.S. Code or Actual Deferral Percentage as defined in Section
1165(e) of the Puerto Rico Code or Actual Contribution Percentage as defined in
Section 401(m)(2) of the U.S. Code is not expected to exceed the permitted
Actual Deferral Percentage or Contribution Percentage under Section 401(k) or
401(m) of the U.S. Code or the permitted Actual Deferral Percentage under
Section 1165(e) of the Puerto Rico Code, as the case may be, shall be honored in
accordance with each such Participant's authorization and (ii) the Pre-Tax
Contributions, After-Tax Contributions and a proportionally corresponding amount
of Employing Company Contributions, if necessary, of each Participant who is a
Highly Compensated Employee whose Actual Deferral Percentage or Contribution
Percentage is expected to exceed the permitted Actual Deferral Percentage or
Contribution Percentage for such group under Section 401(k) or 401(m) of the
U.S. Code or to exceed the permitted Actual Deferral Percentage for such group
under Section 1165(e) of the Puerto Rico Code, shall be subject to adjustment
which shall be accomplished by reducing by one percent the Pre-Tax Contributions
and/or After-Tax Contributions which constitute Supplementary Contributions of
those Participants whose Contribution Percentage for the Plan Year is expected
to be the greatest, then, to the extent deemed necessary, by reducing by one
percent the Pre-Tax Contributions and/or After-Tax Contributions of such
Participants which constitute Basic Contributions of such Participants and an
Employing Company Contributions made with respect to Basic Contributions of such
Participants (whether such Basic Contributions are made in the form of Pre-Tax
Contributions or After-Tax Contributions); in the event further
-14-
reduction is deemed necessary, those Participants whose Actual Deferral
Percentage or Contribution Percentage is expected to be the greatest after
taking the prior reduction into account will have their Pre-Tax Contributions
and/or After-Tax Contributions which constitute Supplementary Contributions or
Basic Contributions and, if deemed necessary, their Employing Company
Contributions reduced in the same manner; such process will be repeated until
Zimmer shall determine that the maximum permitted Actual Deferral Percentage or
Contribution Percentage for the group of Highly Compensated Employees will not
be exceeded. The decision of Zimmer in this regard shall be final and shall not
be subject to question by the Trustee, Administrative Agent or by any
Participant or group of Participants.
(b) In the event that the Plan does not comply with the
nondiscrimination requirements of Section 401(k) or 401(m) of the U.S. Code and
Section 1165(e) of the Puerto Rico Code after the reduction (if any) described
in subsection (a) (and after any Qualified Nonelective Contributions have been
considered) for any Plan Year, the Pre-Tax Contributions which would be
considered Excess Contributions (within the meaning of Section 401(k)(8)(B) of
the U.S. Code) which would also be Excess Contributions under Section 1165(e) of
the Puerto Rico Code shall be distributed, or recharacterized as After-Tax
Contributions, to the extent permitted under both the U.S. and the Puerto Rico
Codes, and the After-Tax Contributions or Employing Company Contributions which
would be considered Excess Aggregate Contributions (within the meaning of
Section 401(m)(6)(B) of the U.S. Code) shall be distributed and to the extent
forfeitable shall be forfeited as follows: the total sum of such contributions
shall be determined and with respect to that sum, the After-Tax Contributions
and Employing Company Contributions made by or on behalf of the Participant who
has the highest dollar amount of such contributions for the Plan Year and is a
Highly Compensated Employee shall be reduced by the amount required to cause
such contributions to equal those made by the Highly Compensated Employee having
the next highest dollar amount of such contributions, and the part of the first
Participant's After-Tax Contributions and Employing Company Contributions equal
to the amount of the dollar reduction (and any income allocable to that part)
shall be distributed to him and to the extent forfeitable shall be forfeited by
no later than the close of the immediately following Plan Year, and if further
reductions are required to eliminate the total sum after the reduction described
above, the same procedure shall be repeated with respect to each such next
succeeding level of Highly Compensated Employees until Zimmer shall determine
that the maximum permitted Actual Contribution Percentage for the group of
Highly Compensated Employees will not be exceeded, provided that if at any step
a lesser reduction would equal the total sum still to be eliminated, then only
the lesser reduction amount shall be distributed or forfeited.
Section 6.04. DOLLAR LIMITATION ON PRE-TAX CONTRIBUTIONS (a) The amount
of Pre-Tax Contributions for a Participant for his taxable year shall be limited
to the maximum amount permitted to be deferred as a Pre-Tax Contribution
pursuant to the provisions of Sections 402(g)(1) and (5) of the U.S. Code and if
the Participant is a Puerto Rico resident Participant, such other amount as
provided under Puerto Rico Code Section 1165(e)(7), if less. Any Pre-Tax
Contributions which would be considered to be excess deferrals shall be deemed
distributed to the Employee in accordance with the rules of subsection (b)
hereof and recontributed as an After-Tax Contribution by the Employee to the
Plan for such Plan Year.
-15-
(b) To the extent the Participant has made Pre-Tax Contributions to the
Plan in excess of the amount set forth in subsection (a) (an "Excess Deferral"),
such Excess Deferrals shall be deemed distributed to him no later than the 15th
day of April following the end of the taxable year during which such Pre-Tax
Contributions are made. If, for a taxable year, a Participant makes Pre-Tax
Contributions to this Plan and to any other plan or arrangement, he may allocate
the amount of any Excess Deferrals for such taxable year among such plans. No
later than the first day of March following the close of the taxable year during
which the Excess Deferrals are made, the Participant shall notify the Committee
in writing of the amount of the Excess Deferrals allocated to this Plan. Such
amount shall then be deemed distributed (including income thereon) and
recontributed as an After-Tax Contribution by an Employing Company .
ARTICLE 7
ROLLOVER CONTRIBUTIONS
Section 7.01. "ROLLOVER CONTRIBUTION" shall mean a contribution to a
plan which has been merged into this Plan which at the time made such
contribution met the requirements of a rollover contribution under Section
402(c)(5) or Section 408(d)(3)(A)(ii) of the U. S. Code and Section 1165(b)(2).
Section 7.02. INVESTMENT AND DISTRIBUTION OF ROLLOVER CONTRIBUTIONS. Any
Rollover Contribution shall be held in a separate account, shall be invested in
accordance with the direction of the Participant pursuant to Article 8, shall be
distributed in the same manner and at the same time as described in Articles 11
and 13 with respect to a distribution to such Employee of benefits under the
Plan, and shall be subject to the provisions of Article 21, to the extent
applicable.
ARTICLE 8
INVESTMENT CHOICES OF PARTICIPANT
Section 8.01. ESTABLISHMENT OF INVESTMENT FUNDS. The Committee shall
establish the Zimmer Stock Fund, and such other Investment Funds as it shall
determine to be necessary or appropriate for the purpose of providing
Participants with options for the investment of their Plan accounts and may,
from time to time, (i) establish additional Investment Funds, (ii) liquidate (or
provide that no new investments be made in) or change the permissible
investments of existing Investment Funds, or (iii) open an Investment Fund which
had previously been closed to new investments by Participants pursuant to
Section 8.01(ii) above. There shall also be established a Participant Loan Fund
from which all loan proceeds shall be disbursed and to which the outstanding
balance of, and accrued interest on, any outstanding loan shall be credited.
Section 8.02. INVESTMENT ELECTIONS. Subject to the provisions of Section
8.08, each Participant shall make separate investment elections with respect to
(i) Pre-Tax Contributions, (ii) After-Tax Contributions, and (iii) Rollover
Contributions. Such Participant shall direct, at
-16-
the time the Participant elects to participate in the Plan, that the Pre-Tax
Contributions, After-Tax Contributions and Rollover Contributions made on his
behalf to the Plan be invested, in 1% increments, in any one or a combination of
the Investment Funds. Investment elections given by a Participant shall continue
in effect until changed by the Participant. A Participant may change an
investment direction as to future Pre-Tax Contributions and After-Tax
Contributions, as of the first day of the next payroll period (or as soon
thereafter as administratively feasible) by giving Telephonic Notification.
Section 8.03. ELECTION TO TRANSFER AMOUNTS BETWEEN INVESTMENT FUNDS. As
of any Valuation Date, and subject to the provisions of Section 8.04 and 8.08, a
Participant may direct that the amount in such Participant's account invested in
any Investment Fund be liquidated in 1% increments and the proceeds invested in
one or more of the Investment Funds in the manner the Participant shall
designate. The provisions of this Section 8.03 shall also apply to a
Participant, Former Participant, Inactive Participant or Beneficiary, whose
account shall not have been distributed as provided in Section 13.02 or 13.03(a)
and, with respect to the undistributed portion of his account, to a Former
Participant or Beneficiary who has elected distribution of his account in
installments as provided in Section 13.01(b) or Section 13.02 and any direction
under this Section 8.03 shall be given by the Former Participant or Beneficiary
by giving Telephonic Notification.
Section 8.04. EMPLOYING COMPANY CONTRIBUTIONS AND THE ZIMMER STOCK FUND.
Employing Company Contributions to the Plan made on behalf of a Participant on
or after the Effective Date shall be invested in the Zimmer Stock Fund. The
following amounts that are invested in the Zimmer Stock Fund may not be
liquidated and invested in other Investment Funds as provided in Section 8.03:
(i) Employing Company Contributions made on or after the Effective Date, (ii)
dividends and other distributions received by the Trustee that are attributable
to Employing Company Contributions made on or after January 1, 1991 under the
Bristol-Myers Squibb Plan, and (iii) any dividends and other distributions
received by the Trustee that are attributable to the amounts described in (i) or
(ii). The foregoing notwithstanding, effective as of the date that a Participant
attains age 55, such Participant may make a separate investment election with
respect to future Employing Company Contributions in accordance with Section
8.02, and may elect to liquidate and invest any portion or all of such
Participant's account invested in the Zimmer Stock Fund in accordance with
Section 8.03.
Section 8.05. DIVIDEND REINVESTMENT. Dividends and other distributions
received by the Trustee with respect to Zimmer Stock held in the Zimmer Stock
Fund shall be invested in the Zimmer Stock Fund. Except as provided in Section
8.08, dividends, interest and other distributions received by the Trustee with
respect to any other Investment Fund shall be invested in the same fund in which
the investment yielding such dividend, interest or other distribution is held.
Section 8.06. INVESTMENT OF QUALIFIED NONELECTIVE CONTRIBUTIONS. A
Qualified Nonelective Contribution made on behalf of a Participant to correct an
Administrative Error shall be invested in the Investment Fund determined by the
Committee, until the Participant directs otherwise. A Qualified Nonelective
Contribution made to satisfy the requirements of Sections 401(k)(3) and
401(m)(2) of the U.S. Code or Section 1165(e) of the Puerto Rico Code shall be
invested in accordance with the Participant's current separate investment
election applicable to
-17-
Pre-Tax Contributions. The portion of a Qualified Nonelective Contribution
designated as an Employing Company Contribution shall be invested as provided in
Section 8.04.
Section 8.07. INVESTMENT OF RECOVERED CLAIMS. In the event that the Plan
receives a recovery from a claim filed by the Trustee for the benefit of the
Plan and/or certain Participants and beneficiaries, the Committee shall, in its
discretion, determine the accounts and the Investment Funds to be credited. To
the extent possible, the Committee shall credit the accounts of Participants and
beneficiaries on whose behalf the claim was made, but if such Participants and
beneficiaries cannot be clearly identified or it is administratively unfeasible
to so determine them, the Committee may, in its sole discretion, determine to
benefit a class of Participants and beneficiaries which it deems represents such
participants and beneficiaries. Where the recovery is related to an Investment
Fund, the Committee may determine that such recovery shall be deposited in such
Investment Fund (or the Investment Fund that most closely resembles such
Investment Fund) for the benefit of the Participants and beneficiaries currently
investing in such Investment Fund.
Section 8.08. BRISTOL-MYERS SQUIBB STOCK FUND. The Committee shall
establish the Bristol-Myers Squibb Stock Fund for the purpose of holding
Bristol-Myers Squibb Stock that is transferred to the Plan from the
Bristol-Myers Squibb Puerto Rico Plan. Participants may not direct that Pre-Tax
Contributions, After-Tax Contributions, Rollover Contributions or any other
contribution be invested in the Bristol-Myers Squibb Stock Fund. Participants
may not elect that any amount liquidated in accordance with Section 8.03 be
invested in the Bristol-Myers Squibb Stock Fund. Dividends and other
distributions received by the Trustee with respect to Bristol-Myers Squibb Stock
held in the Bristol-Myers Squibb Stock Fund shall be invested in the Zimmer
Stock Fund.
Section 8.09. INITIAL FREEZE PERIOD. During the period beginning on the
Effective Date and ending on or about August 13, 2001 (or as soon as practicable
thereafter), no distributions pursuant to Article 13, no loans or withdrawals
pursuant to Article 12 and no inter-Investment Fund transfers pursuant to
Article 8 shall be processed. The existing account balances of active Zimmer
Employees which were invested in the Bristol-Myers Squibb Puerto Rico Plan on
the Effective Date shall be automatically transferred to the corresponding
Investment Fund under this Plan as determined by the Committee.
ARTICLE 9
MAINTENANCE AND VALUATION OF PARTICIPANT'S ACCOUNT
Section 9.01. MAINTENANCE OF SEPARATE ACCOUNTS. The Committee shall
establish for each Participant separate accounts which shall reflect separately
(i) Pre-Tax Contributions, (ii) After-Tax Contributions (Post-1986), (iii)
After-Tax Contributions (Pre-1987), (iv) Rollover Contributions, (v) Employing
Company Contributions (pre-1991), (vi) Employing Company Contributions
(post-1990), and (vii) Qualified Nonelective Contributions, and the investment
return on each of the foregoing, and shall reflect any transfers to or
transfers, withdrawals or distributions from such account.
-18-
Section 9.02. VALUATION OF ACCOUNTS. The value of each Participant's
account in an Investment Fund which consists solely of a single mutual fund
registered under the Investment Company Act of 1940 shall be accounted for in
shares of such mutual fund. Contributions and inter-Investment Fund transfers
shall be converted into shares based on the fair market value of a share of each
such Investment Fund on the Valuation Date applicable, and the number of shares
in the affected Investment Funds shall be adjusted accordingly. The value of a
Participant's account under the Plan invested in such Investment Funds shall be
determined by multiplying the number of shares in each such Investment Fund held
on his behalf by the fair market value of a share as of the relevant Valuation
Date.
ARTICLE 10
VESTING
Section 10.01. PRE-TAX CONTRIBUTIONS, AFTER-TAX CONTRIBUTIONS, QUALIFIED
NONELECTIVE CONTRIBUTIONS AND ROLLOVER CONTRIBUTIONS FULLY VESTED. Amounts
attributable to Pre-Tax Contributions or After-Tax Contributions from a
Participant's Annual Benefit Salary or Wages, Qualified Nonelective
Contributions, Rollover Contributions made by a Participant pursuant to Article
7 shall be fully vested in him at all times.
Section 10.02. VESTING OF EMPLOYING COMPANY CONTRIBUTIONS. Except as
provided in Sections 10.03, 10.04 or 10.05, the amount attributable to Employing
Company Contributions credited to a Participant's account which is vested shall
be a percentage of the total amount attributable to Employing Company
Contributions credited to his account, determined on the basis of his Years of
Service, according to the schedule below:
Years of Service Completed Vested Percentage
Less than 1 -0-
1 20%
2 40%
3 60%
4 80%
5 100%
Section 10.03. EMPLOYING COMPANY CONTRIBUTIONS FULLY VESTED ON EFFECTIVE
DATE. The above notwithstanding, as of the Effective Date, all amounts
transferred from the Bristol-Myers Squibb Puerto Rico Plan to this Plan shall be
100% vested.
Section 10.04. FULL VESTING UPON RETIREMENT OR DEATH. The above
notwithstanding, a Participant shall be 100% vested in amounts attributable to
Employing Company Contributions as provided in Article 13, but in no event later
than upon his attaining age 65 while an Employee.
-19-
Section 10.05. FULL VESTING UPON DISABILITY. In the case of a
Participant or Inactive Participant who becomes entitled to receive disability
benefits under a disability pay plan maintained by his Employing Company and
with respect to whom an election under Section 415(c)(3)(C) of the U.S. Code has
been made, amounts attributable to his Employing Company Contributions to match
Basic Contributions from his disability payments shall be 100% vested. In the
case of a Participant or Inactive Participant who becomes entitled to receive
disability benefits under a long-term disability pay plan maintained by his
Employing Company, amounts attributable to all Employing Company Contributions
shall be 100% vested.
ARTICLE 11
METHOD OF PAYMENT UPON DISTRIBUTION OR WITHDRAWAL
Section 11.01. METHOD OF PAYMENT. A distribution or withdrawal from a
Participant's account shall be paid in the following manner:
(a) With respect to amounts invested in the Zimmer Stock Fund or the
Bristol-Myers Squibb Stock Fund, payment shall be made in cash; except that a
Participant may elect, upon termination of employment or retirement or in a
withdrawal described in Article 12 hereof, to receive Zimmer Stock or
Bristol-Myers Squibb Stock in lieu of cash in an amount equal to the portion of
his account balance which is invested in the Zimmer Stock Fund or Bristol-Myers
Squibb Stock Fund respectively. If a Participant elects a distribution or
withdrawal of Zimmer Stock or Bristol-Myers Squibb Stock, in the case of any
fractional share, payment shall be in cash on the basis of the closing price per
share of Zimmer Stock or Bristol-Myers Squibb Stock on the New York Stock
Exchange on the Valuation Date as of which distribution or withdrawal is to be
made. For the purposes of distribution and withdrawal, there shall be deemed to
be in a Participant's account on the Valuation Date as of which distribution or
withdrawal is to be made a number of shares of Zimmer Stock or Bristol-Myers
Squibb Stock determined by dividing the total value of the amount invested in
Zimmer Stock or Bristol-Myers Squibb Stock in such Participant's account on such
Valuation Date by the closing price per share of Zimmer Stock or Bristol-Myers
Squibb Stock on the New York Stock Exchange on such Valuation Date.
(b) With respect to amounts invested in the Participant Loan Fund, such
amounts shall be reduced by the amount of the loan then outstanding and with
respect to any remaining amount, payment shall be in cash.
(c) With respect to amounts invested in Investment Funds other than the
Zimmer Stock Fund, the Bristol-Myers Squibb Stock Fund or the Participant Loan
Fund, payment shall be in cash.
Section 11.02. ANNUITY PAYMENTS. Notwithstanding Section 11.01, with
respect to a Participant (including for purposes of this Section 11.02 an
Inactive Participant or Former Participant) who has prior to the time of
distribution of his account, pursuant to Sections 13.01, 13.02 or 13.03, elected
an annuity form of payment, the Committee shall direct the Trustee to purchase
for such Participant an annuity, which may provide for a continuance of annuity
payments after the Participant's death to a beneficiary, in such amount as may
be purchased with
-20-
an amount equal to the cash amount such Participant would otherwise have been
entitled to receive (the "Annuity Purchase Amount"), provided that if such
Participant is married on the date on which distribution is to be made, the
Committee shall direct the Trustee to purchase for such Participant an annuity
in accordance with the provisions of Section 11.03(a) unless the Participant has
made an effective election pursuant to Section 11.03(c). If the beneficiary
under the annuity contract is other than the Participant's spouse, the actuarial
value of the benefit (at the time the contract is purchased) payable to the
Participant shall be greater than the actuarial value of the benefit payable to
the beneficiary.
Section 11.03. QUALIFIED JOINT AND SURVIVOR ANNUITY. (a) If an annuity
is to be purchased pursuant to Section 11.02 for a Participant (including for
purposes of this Section 11.03 an Inactive Participant or former Participant)
and the Participant is married as of the date on which distribution is to be
made, the Committee shall direct the Trustee to purchase with the Annuity
Purchase Amount applicable to such Participant an annuity which shall be in the
form of a "qualified joint and survivor annuity" pursuant to which such
Participant will receive monthly payments commencing on his retirement date, or
attainment of his normal retirement date in the case of distribution pursuant to
Section 13.01, and continuing during his life with the provision that after his
death, 50% of the amount of his monthly payments will continue during the life
of and be paid to his spouse, if such spouse shall survive him. A purchase of a
qualified joint and survivor annuity by the Trustee will not be directed as
provided in this paragraph (a) with respect to a married Participant who has
elected not to take a qualified joint and survivor annuity in accordance with
the provisions of Section 11.03(c), accompanied by the required written consent
of the spouse of such Participant.
(b) If a distribution is to be made pursuant to Section 13.02 by reason
of the death of a Participant and the Participant had elected the purchase of an
annuity contract in the event of his death, and at the time of his death is
survived by his spouse, the Committee shall direct the Trustee to purchase with
the Annuity Purchase Amount applicable to such Participant an annuity for the
life of his surviving spouse which may provide for payment for a term certain or
a modified cash refund.
(c) A Participant may elect not to have benefits paid in the manner set
forth under Sections 11.02, 11.03(a) or (b) and to have benefits paid as
provided in Article 13. A Participant may also subsequently revoke any such
election. Such an election or revocation must be made in the form and manner
prescribed by the Committee and shall be effective only if made during the
applicable following periods:
(i) In the case of a benefit described in Sections 11.02 and
11.03(a), the 90 day period ending on the day reduced annuity payments to the
Participant commence (or where applicable, such extended period as may be
required under regulations promulgated by the Secretary of the Treasury);
(ii) In the case of a benefit described in Section 11.03(b),
the period beginning with the first day of the Plan Year in which the
Participant attains age 35 and ending on the date of his death, but in the case
of a Participant whose employment with the Employing Company has terminated, the
period shall begin not later than the day his employment with the Employing
Company terminates.
-21-
A Participant's election to waive a qualified joint and survivor
annuity under Section 11.03(a) or his election to waive the survivor's benefit
under Section 11.03(b) shall be effective only if it is accompanied by the
written consent of his spouse who is entitled to receive such a survivor
annuity. Such written consent shall acknowledge the effect of the election and
must be witnessed by a representative of the Committee or by a Notary Public.
However, such written consent is not necessary if: (1) there is no spouse, (2)
the written consent cannot be obtained because the spouse cannot be located, or
(3) there exists any other circumstances that, under rules established by the
U.S. Secretary of the Treasury, relieve a Participant from the requirement of
obtaining the consent of his spouse. Within the period prior to commencement of
annuity payments to the Participant (as established under regulations
promulgated by the U.S. Secretary of the Treasury), each Participant shall be
furnished with a written explanation of the terms and conditions of the survivor
annuities described under Sections 11.02, 11.03(a) and (b). Such explanation
shall also describe the Participant's right to make (or revoke), and the general
financial effect of, an election not to receive benefits in a manner described
under such paragraphs, the requirement that the consent of his spouse be
obtained before he can make the election described above with respect to such
spouse, and the rights of his spouse. With regard to the survivor annuities
described in Section 11.03(b), such explanation shall be provided during the
period beginning with the first day of the Plan Year in which the Participant
attains age 32 and ending with the last day of the Plan Year preceding the Plan
Year in which he attains age 35, except that if an Employee becomes a
Participant on or after the date in which he attains age 35, such explanation
shall be provided as soon as it is practicable to do so after the date on which
such Employee becomes a Participant under the Plan.
ARTICLE 12
WITHDRAWAL FROM ACCOUNT
Section 12.01. WITHDRAWAL OF AFTER-TAX CONTRIBUTIONS, EMPLOYING COMPANY
CONTRIBUTIONS, AND ROLLOVER CONTRIBUTIONS. Subject to the provisions of this
Article 12 and to the first sentence of Section 11.01(a), a Participant (which
term for purposes of this Article 12 shall include an Inactive Participant) who
remains in employment may make withdrawals from his account of Employing Company
Contributions, After-Tax Contributions and Rollover Contributions, and earnings
and appreciation thereon, no more than a total of four (4) times in any one Plan
Year (other than a withdrawal made pursuant to Sections 12.03 or 12.04). Any
withdrawal by a Participant shall be counted as a withdrawal under the preceding
sentence unless such withdrawal is made pursuant to Sections 12.03 or 12.04 of
the Plan. Withdrawals pursuant to this Section 12.01 shall be made in the
following order of priority:
(a) FIRST, from After-Tax Contributions, an amount which shall not
exceed the lesser of (i) the amount of all After-Tax Contributions from his
Annual Benefit Salary or Wages (but not any earnings thereon), adjusted for the
amount of any previous distributions or withdrawals which have been made from
the Plan up to but not exceeding the amount of such After-Tax Contributions, or
(ii) the amount in his account attributable to such After-Tax Contributions.
-22-
(b) SECOND, the earnings and appreciation on such After-Tax
Contributions, so long as the Participant has withdrawn or requested withdrawal
of the entire amount available to him under paragraph (a) of this Section 12.01,
which amount shall not exceed the total of (i) the lesser of (x) the amount of
all After-Tax Contributions from his Annual Benefit Salary or Wages (but not any
earnings thereon), adjusted for the amount of any previous distributions or
withdrawals which have been made with respect to his After-Tax Contributions or
(y) the amount in his account attributable to such After-Tax Contributions and
(ii) the amount in his account attributable to the earnings and appreciation on
such After-Tax Contributions.
(c) THIRD, from Rollover Contributions plus earnings and appreciation
thereon, so long as the Participant has withdrawn or requested withdrawal of the
entire amount available to him under paragraphs (a) and (b) of this Section
12.01, which shall not exceed the amount in his account attributable to Rollover
Contributions plus earnings and appreciation thereon.
(d) FOURTH, from Employing Company Contributions plus earnings and
appreciation thereon, so long as the Participant has withdrawn or requested
withdrawal of the entire amount available to him under paragraphs (a), (b) and
(c) of this Section 12.01, which shall not exceed the amount in his account
attributable to Employing Company Contributions plus earnings and appreciation
thereon. Except for withdrawals because of financial emergencies made under
Section 12.04 of this Plan, a Participant may not make a withdrawal under this
subsection (d) unless (i) he has been a participant in the Plan or the
Bristol-Myers Squibb Puerto Rico Plan for sixty (60) months and is 100% vested
in the total amount in his account, and (ii) he has not made a withdrawal under
this Section or any predecessor provision during the calendar year. No Employing
Company Contributions will be made for six months following a withdrawal under
this Section 12.01(d) unless the Participant has demonstrated a Financial
Hardship (as provided in Section 12.03) or a Financial Emergency (as provided in
Section 12.04).
(e) Qualified Nonelective Contributions plus earnings and appreciation
thereon may not be withdrawn at any time on account of hardship.
Section 12.02. MANNER OF MAKING WITHDRAWAL. A Participant may make
withdrawals from his account pursuant to Section 12.01 by giving Telephonic
Notification to the Administrative Agent. A Participant may make withdrawals
from his account pursuant to Sections 12.03 and 12.04, effective as of the
Valuation Date following approval by the Committee or its designee of such
withdrawal, by giving at least thirty days (or such lesser number of days as the
Committee may specify) prior written notice to his Employing Company on a form
provided by it for such purpose. Payment to a Participant pursuant to a
withdrawal election shall be made in cash (except as provided in Section
11.01(a)) as soon as practicable thereafter and shall be made pro rata from the
Investment Funds, including the Zimmer Stock Fund, in which the Participant's
account is invested. A withdrawal under this Article 12 shall be in an amount of
not less than $300 or for the total amount available for withdrawal under a
particular withdrawal category.
Section 12.03. WITHDRAWALS OF PRE-TAX CONTRIBUTIONS (a) A Participant
may, upon proof of Financial Hardship satisfactory to the Committee, elect to
withdraw such portion of his account that is attributable to his Pre-Tax
Contributions (excluding earnings and appreciation
-23-
attributable thereto after December 31, 1988) as is needed on account of such
Financial Hardship provided he (i) has withdrawn to the maximum extent possible
all amounts enumerated in Section 12.01(a)-(d) hereof, (ii) has taken a
nontaxable loan from the Plan to the maximum extent possible, and (iii) has not
attained age 59 1/2 and is not disabled and entitled to receive disability
payments under a disability pay plan maintained by his Employing Company.
Withdrawals under this Article 12 shall be permitted, according to the specific
rules adopted by the Committee which shall be uniformly applied and consistently
followed. The term "Financial Hardship" means an immediate and heavy financial
need of the Participant resulting from: (1) the purchase of a primary residence;
(2) tuition expenses for the next semester or quarter for post-secondary
education for the Participant or his dependents; (3) payments to prevent
eviction or foreclosure on the Participant's primary residence; (4) medical
expenses not covered by insurance for the Participant or his dependents; or (5)
any other hardship consistent with regulations or other guidelines issued by the
Internal Revenue Service or the Puerto Rico Department of Treasury. A Financial
Hardship withdrawal hereunder is limited to the amount of actual financial need
that is unavailable to the Participant from the Participant's other sources. The
Committee may require the Participant to furnish a financial statement
disclosing the amount of liquid assets otherwise available to him. The
determination with respect to the Financial Hardship shall be made by the
Committee, shall be made on a non-discriminatory basis, and applied uniformly to
all Participants under similar circumstances. The Committee will make a
determination that a withdrawal is necessary to meet a Financial Hardship of a
Participant provided that the Participant satisfies one of the following:
(i) The Participant certifies that the Financial Hardship
will place him and his immediate family in heavy financial need and that the
need cannot be relieved:
(1) through reimbursement or compensation by insurance or
otherwise,
(2) by reasonable liquidation of his assets, to the
extent such liquidation would not itself cause an
immediate and heavy financial need,
(3) by cessation of his Pre-Tax Contributions and
After-Tax Contributions to the Plan, or
(4) by other distributions or nontaxable (at the time of
the loan) loans from plans maintained by Zimmer or by
any other employer, or by borrowing from commercial
sources on reasonable commercial terms.
(ii) The Participant satisfies the following conditions:
(1) the Participant has obtained all other available
distributions and nontaxable loans available under
this Plan or any other plan maintained by an
Employing Company,
(2) for the twelve month period following the Financial
Hardship withdrawal all Pre-Tax Contributions under
this Plan or any other plan maintained by an
Employing Company shall be suspended, and
-24-
(3) the maximum Pre-Tax Contribution for the Plan Year
following the Plan Year in which the Financial
Hardship withdrawal occurs is reduced by the amount
of a Participant's Pre-Tax Contributions and
After-Tax Contributions made in the Plan Year in
which the Financial Hardship withdrawal occurred.
(b) A Participant who has attained age 59 1/2, who is disabled and
entitled to receive disability payments under a disability pay plan maintained
by his Employing Company, who is no longer employed by any Employing Company or
Affiliate (a "terminated vested Participant") or who is retired may withdraw, in
whole or in part (in $50.00 increments), his Pre-Tax Contributions and earnings
and appreciation thereon (provided he has withdrawn to the maximum extent
possible all amounts enumerated in Section 12.01(a)-(d) hereof) in an amount of
cash specified by the Participant which shall not exceed the total of (i) the
lesser of (x) the amount of all Pre-Tax Contributions from his Annual Benefit
Salary or Wages (but not any earnings thereon), adjusted for the amount of any
previous distributions or withdrawals which have been made with respect to such
Pre-Tax Contributions, or (y) the amount in his account attributable to such
Pre-Tax Contributions and (ii) the amount in his account attributable to the
earnings and appreciation on Pre-Tax Contributions. A Participant other than a
terminated vested Participant or a retired Participant may make no more than a
total of four withdrawals in any one Plan Year from his Pre-Tax Contributions
under the Plan other than a withdrawal made under Section 12.03(a) or 12.04.
Section 12.04. WITHDRAWAL BECAUSE OF FINANCIAL EMERGENCY. If a
Participant shall establish to the satisfaction of the Committee in accordance
with principles and procedures established by the Committee which are applicable
to all persons similarly situated that a withdrawal to be made by him pursuant
to this Article 12 is to be made by reason of a financial emergency such as
extraordinary medical expense incurred by reason of illness of the Participant
or a member of his immediate family, educational expense of a member of the
Participant's immediate family or the need for funds to be used for the purchase
of a home for the Participant, the suspension period prescribed by Section
12.01(d) shall not be applicable to such withdrawal and the Committee shall
waive the annual withdrawal limitation prescribed by Section 12.01(d). The term
"financial emergency" shall not include the loss of an opportunity to realize
monetary gain.
Section 12.05. LOANS TO PARTICIPANTS. Upon Telephonic Notification to
the Administrative Agent a Participant who is an Employee may request a loan
from the Participant Loan Fund. As soon as practicable after receipt of a loan
request containing all required information (subject to, in the case of loans
for a period in excess of 60 months, the completion of such documentation as the
Committee may require and approval by the Committee) such loan shall be granted,
subject to the following terms and conditions:
(a) The minimum amount of any loan hereunder shall be $1,000. The
maximum amount of any loan hereunder (when added to the outstanding balance or
all other loans from the Plan) shall be the lesser of (i) fifty percent (50%) of
the Participant's entire vested interest under the Plan, determined as of the
Valuation Date coinciding with or next preceding the date of the loan request,
and (ii) $50,000, reduced by the excess (if any) of (A) the highest outstanding
-25-
balance of loans from the Participant during the one-year period ending on the
day before the loan was made, over (B) the outstanding balance of loans from the
Plan on the date of the loan.
(b) The interest rate charged on a loan made pursuant to this Section
12.05 for any calendar month shall be a rate fixed by the Committee at the time
the loan is made in accordance with its loan administrative procedures. In no
instance shall the rate of interest exceed that permitted by law.
(c) The principal amount of each loan must be repaid within a period
permissible under the Committee's loan administrative procedures through equal
periodic payments of principal (not less frequently than quarterly), together
with interest on the unpaid principal amount at the rate determined in
accordance with Section 12.05(b). With the exception of a loan used to purchase
a principal residence for a Participant, the repayment period shall not exceed
60 months.
(d) A Participant who has made repayments with respect to an
outstanding loan from the Plan for a period of at least 12 calendar months may
prepay the entire outstanding balance of such loan at any time (but may not make
a partial prepayment).
(e) Each loan to a Participant shall be secured by fifty percent (50%)
of his entire vested interest under the Plan.
(f) No distribution shall be made to any Participant or Inactive
Participant, Former Participant or to a Beneficiary unless and until all unpaid
loans, including accrued interest thereon, have been liquidated. If the loan is
not repaid, the outstanding loan principal and accrued interest shall be treated
as a distribution to the Participant.
(g) On the date the loan is made, if the Participant is (i) married and
(ii) has elected an annuity form of payment on or prior to such date, pursuant
to Sections 11.02 and 11.03 of the Plan, the written consent of the spouse who
is entitled to receive such survivor annuity shall be required. Such written
consent must be witnessed by a representative of the Committee or by a Notary
Public.
(h) Upon repayment by a Participant of the principal and interest of
any loan, whether in whole or in part, amounts credited to the Participant Loan
Fund shall to the extent of such repayment be reduced, and the cash received
shall be reinvested in accordance with the then current investment directions of
the Participant applicable to the contributions which were the source of loan.
(i) Each Participant to whom a loan is made agrees, by endorsement of
the check representing the proceeds of the loan, (i) that such loan shall be
secured by fifty percent (50%) of his entire vested interest in the Plan, (ii)
to repay such loan as provided herein by payroll deduction or otherwise and
(iii) that he accepts the terms and conditions of such loan as set forth herein
and/or as disclosed by the Committee. Loans for a term of not more than 60
months may be effectuated by Telephonic Notification. If, within three days
after receipt of the check representing the proceeds of the loan the Participant
decides not to enter into such loan, he shall return the proceeds of the loan to
the Trustee, such loan shall be immediately canceled, and the
-26-
funds segregated for such loan shall be reinvested as soon as practicable in the
Investment Fund from which funds were withdrawn for the purpose of making such
loan.
(j) The Committee may prescribe such other terms and conditions for
loans not inconsistent with the foregoing requirements as the Committee deems
appropriate.
ARTICLE 13
DISTRIBUTION UPON TERMINATION OF EMPLOYMENT
Section 13.01. RETIREMENT. (a) If a Participant or Inactive Participant
retires pursuant to a retirement plan of an Employing Company or an Affiliate,
he may elect, in the form and manner prescribed by the Committee, to receive
distribution of his entire account (regardless of the number of his Years of
Service) in a single payment upon retirement as provided in Section 13.04. If a
Participant or Inactive Participant retires as set forth above and fails to make
such election prior to his retirement, payment in respect of his account will be
made in a single sum as of the Valuation Date concurrent with or immediately
following (i) his attainment of age 65, or (ii) his retirement if his retirement
is at or after age 65. For purposes of this Article 13, a Participant shall be
considered fully vested with respect to Employing Company Contributions,
irrespective of his Years of Service, when he attains age 65 or at his early
retirement under a Zimmer pension plan. For purposes of this Plan, any Employee
who terminates his employment after attaining age 55 with ten years of service
will be deemed to have terminated his employment due to early retirement.
(b) If the value of a Participant's vested account balance (determined
as of the applicable Valuation Date) is more than $5,000, in lieu of a single
payment as provided in Section 13.01(a), a Participant (which term shall include
for purposes of this Section 13.01(b) an Inactive Participant) may elect to
receive payment with respect to his account either (i) in a single payment as of
the last Valuation Date of any month subsequent to his retirement date as he
shall specify, (ii) over a period specified by him not exceeding 15 years, in
annual installments consisting of an amount approximately equal to the amount in
his account divided by the number of installments then remaining (including the
installment in question) each year, payable commencing as of the last Valuation
Date of any month following such retirement and as of the last Valuation Date of
the same month in each year thereafter until payment of all such installments
are made in the manner and on the basis of valuation provided for in Section
11.01 ("15 year installment method") or (iii) through the purchase of an
annuity.
(c) A former Participant who is entitled to a deferred vested benefit
under the Plan may, upon attainment of the age required for retirement under a
retirement plan of the Employing Company or of a subsidiary or an affiliate of
the Employing Company, elect to receive payment with respect to his account
either (i) in a single payment as of a Valuation Date subsequent to his
attainment of such age, (ii) over the 15 year installment method, or (iii)
through the purchase of an annuity.
(d) Any payment pursuant to Sections 13.01(b) and (c) shall be subject
to the following:
-27-
(i) no single sum payment may be made and no payment in
installments shall commence later than the date upon which payments must
commence under the provisions of Section 13.04(b),
(ii) if pursuant to a Participant's election, payment of
installments shall commence after the Participant's attainment of age 65, then
the specified payment period shall not exceed such period as determined by the
Committee which, on an actuarial basis, (A) will provide that the present value
of the payments to be made to the Participant is more than fifty percent (50%)
of the present value of the total payments to be made to the Participant and his
beneficiaries and (B) will not extend beyond the life expectancy of such
Participant and his designated beneficiary.
(e) An election under Sections 13.01(b) and (c) shall be made on a form
to be provided for that purpose and shall be signed by the Participant and
delivered to the Employing Company at any time before or after his retirement. A
Participant who has elected to defer payment of his account or to receive
installment payments may at any time change his election by giving at least
thirty (30) days prior written notice and either accelerate or defer within the
limitations prescribed by Sections 13.01(b) or (c) the time or payment of part
or all of the remaining amounts in his account. If a Participant should die
before complete payment of his account in accordance with Sections 13.01(b) or
(c), the amount remaining in his account at his death shall be distributed as
soon as practicable in accordance with Article 18 unless such Participant or
Inactive Participant had elected installment payments and had further elected
that upon his death prior to receipt of all such amounts, such installment
payments shall be continued to the person or persons entitled to distribution in
accordance with Article 18 until payment of all remaining installments have been
made. In no event shall the amount remaining in the Participant's account at his
death be distributed to the person or persons entitled to distribution in
accordance with Article 18 less rapidly than under the method of distribution
being used as of the date of the Participant's death. The purchase of an annuity
shall be treated as the complete distribution of the balance of the account of
the Participant. In the event a Participant had elected installment payments but
had not made a further election, then if the Participant dies before complete
payment of his account, installment payments may be continued to the person or
persons entitled to distribution in accordance with Article 18 until payment of
all remaining installments are made. In no event shall the amounts remaining in
the Participant's account at his death be distributed to the person or persons
entitled to distribution in accordance with Article 18 less rapidly than under
the method of distribution being used as of the date of the Participant's death.
Section 13.02. DEATH. In the event of the death of a Participant or
Inactive Participant, the amount in his account as of the Valuation Date of
distribution (regardless of the number of his Years of Service) will, except as
otherwise provided in Sections 13.02(c), (d) or (e), be:
(a) distributed in accordance with Article 18,
(b) applied to the purchase of an annuity as provided in Section
11.03(b), or
(c) if the Participant or Inactive Participant shall have so elected
prior to his death:
-28-
(i) distributed in accordance with Article 18 over a period of
not less than two years nor more than five years (as the Participant or Inactive
Participant shall have elected) in annual installments consisting of an amount
approximately equal to the amount in the Participant's account divided by the
number of installments then remaining (including the installment in question),
or in lieu thereof,
(ii) applied to the purchase of an annuity (if available in
the light of the amount to be used for the purchase) for the life of each of the
Participant's or Inactive Participant's surviving designated Beneficiary or of
such person or persons, other than the Participant's executors or
administrators, as may be entitled to distribution in accordance with Article
18, which annuity may provide for a term certain (not to exceed a period equal
to the life expectancy of the Participant's designated Beneficiary) or a
modified cash refund,
(d) if the Participant or Inactive Participant has not prior to his
death made an election in accordance with Section 13.02(c), the Participant's or
Inactive Participant's surviving designated Beneficiary or person or persons
entitled to distribution in accordance with Article 18 may, within 60 days after
the death of the Participant or Inactive Participant, elect that all of the
amounts in the account of the deceased Participant or Inactive Participant be
applied in accordance with Section 13.02(c)(ii) as soon as practicable after
receipt of such election to the purchase of an annuity), or, in lieu thereof, if
the Committee shall approve, be distributed over a period of not less than two
years nor more than five years (as the surviving designated Beneficiary or other
person or persons entitled to distribution shall elect) in annual installments
consisting of an amount equal to the amount in the Participant's account divided
by the number of installments then remaining (including the installment in
question), or
(e) with respect to a distribution of the amount in a Participant's or
Inactive Participant's account due to his death, amounts may not be applied to
the purchase of an annuity where the Participant's or Inactive Participant's
surviving designated Beneficiary or person or persons entitled to distribution
in accordance with Article 18 is someone other than his surviving spouse, unless
the Committee shall have received the written consent of the Participant's
spouse in accordance with Section 11.03(c).
Notwithstanding anything in this Section 13.02 to the contrary, if the
Participant's vested account balance is not more than $5,000, distribution of
his vested account balance under this Section 13.02 shall be made in a single
payment as soon as practicable to the person or persons entitled to distribution
in accordance with Article 18. In the case that distribution is to be made in
installments to the Participant's or Inactive Participant's designated
Beneficiary or person or persons entitled to distribution in accordance with
Article 18, such designated Beneficiary or person or persons may, within 60 days
after the death of the Participant or Inactive Participant, elect that
commencement of such distribution be delayed to a future Valuation Date;
provided, however, that the account of the deceased Participant or Inactive
Participant shall be distributed within five years after the death of such
Participant or Inactive Participant. If any person entitled to a distribution
which is to be made in installments shall die before all installments to which
he is entitled to have been received by him, the remaining installments shall be
paid to his executor or administrator. An election by a Participant or Inactive
Participant in accordance with Section 13.02(c) shall be made in the form and
manner prescribed by the Committee and may be
-29-
similarly revoked at any time prior to his death. An election in accordance with
Section 13.02(d) shall be made in the form and manner prescribed by the
Committee.
Section 13.03. TERMINATION OF EMPLOYMENT FOR ANY REASON OTHER THAN
RETIREMENT OR DEATH. (a) If the employment of a Participant or Inactive
Participant terminates for any reason other than retirement, death or transfer
to any subsidiary or affiliate of the Employing Company which has not adopted
the Plan, the vested amount in his account shall continue to be held in his
account for his benefit and shall be distributed in accordance with Article 11,
or Article 18 in the event of his death, at the earlier of (i) his normal
retirement date pursuant to a retirement plan of an Employing Company , or a
subsidiary or affiliate of an Employing Company which has not adopted the Plan,
or (ii) his death unless either (1) his vested account balance (determined as of
Valuation Date on which the Participant's or Inactive Participant's employment
terminated) is not more than $5,000, in which case distribution of his vested
account balance shall be made to him in a single payment as soon as practicable
as provided in Section 13.04, or (2) his vested account balance (determined as
of the Valuation Date on which the Participant's or Inactive Participant's
employment terminated) is more than $5,000, and the Participant or Inactive
Participant has elected, on a form prescribed by and filed with the Committee at
any time before or after employment, that distribution of his vested account
balance may be made to him (i) in a lump sum as soon as practicable or (ii)
through the purchase of an annuity. If distribution is to be made in accordance
with this paragraph (a) on account of the death of the Participant or Inactive
Participant then, instead of a single distribution in accordance with Article
18, distribution shall be made either in accordance with Section 13.02(c) or (d)
if appropriate and timely election has been made in accordance with either of
such Sections, but subject to the provisions of Section 13.02(e).
Notwithstanding any Plan provision to the contrary, in the event of a sale or
disposition by Zimmer or by an Affiliate to a purchaser, which is an unrelated
employer within the meaning of U.S. Treas. Reg. ss. 1.401(k)-1(d)(4)(iv)(B), of
all or substantially all of the assets used in a trade or business by Zimmer or
of the shares of a subsidiary, no termination of employment will occur on the
date of such sale or disposition with respect to a Participant who continues in
employment with such unrelated employer where the purchaser agrees in connection
with the sale or disposition to maintain the Plan as it applies to such
Participant and be substituted for Zimmer as the sponsor of the Plan or to
establish a defined contribution plan that is qualified under Section 401(a) of
the U.S. Code and Section 1165(a) of the Puerto Rico Code to which assets in the
amount of the Participant's account balance under the Plan will be transferred.
(b) Upon a Participant's or Inactive Participant's termination of
employment as provided in paragraph (a), his account balance attributable to
Employing Company Contributions which has not vested in accordance with Article
10 shall be forfeited provided that (i) upon his reemployment as an Employee
prior to five consecutive One Year Breaks in Service if he has not received
distribution of his account, or (ii) upon his reemployment as an Employee and
repayment of the distribution as provided in Section 13.06(a) if he has received
distribution of his account, an Employing Company shall restore to his account
an amount equal to the amount which at the date of termination of his employment
was not vested and was forfeited. Such amount shall be invested in the Zimmer
Stock Fund and shall constitute the beginning balance in the Participant's
account attributable to Employing Company Contributions.
-30-
Section 13.04. TIMING OF DISTRIBUTIONS. (a) For purposes of
distributions under Sections 13.01 and 13.03, if employment is terminated,
distribution in accordance with such Sections will be made in respect of amounts
in the Participant's or Inactive Participant's account as soon as practicable
after the Valuation Date corresponding with or immediately preceding the event
covering such distribution. Such amounts shall be valued for distribution
purposes in accordance with Section 11.01.
(b) Notwithstanding any other provision of the Plan with respect to the
time of making a distribution under the Plan but subject to the last sentence of
this subsection (b), unless the Participant or Inactive Participant elects
otherwise pursuant to the provisions of the Plan, a distribution to be made in
accordance with Section 13.01 or 13.03 shall be made or commenced no later than
the 60th day next following the close of the calendar year in which the
Participant attains age 65, or, if later, his employment with an Employing
Company or an Affiliate to which he was transferred in accordance with Article
14, is terminated. Notwithstanding anything in the Plan to the contrary, the
distribution of the vested account balance of a Participant, Inactive
Participant or Former Participant, including incidental death benefits under
Section 401(a)(9)(G) of the U.S. Code, if any, may be made under a method of
payment which, as of the "required beginning date" (as defined in Section
401(a)(9) of the U.S. Code and applicable regulations promulgated thereunder),
satisfies the minimum distribution requirements under Section 401(a)(9) of the
U.S. Code and any applicable regulations.
(i) With respect to a Participant, Inactive Participant or
Former Participant who attains age 70 1/2 before January 1, 1988 and who, at no
time at or after attaining age 66 1/2, was a 5-Percent Owner, the required
beginning date shall be no later than the April 1 of the calendar year following
the calendar year in which he attains age 70 1/2 or the calendar year in which
he retires, whichever is later. For purposes of this Section, 5-Percent Owner
shall have the same meaning as that set forth in section 416(i) of the U.S. Code
and applicable regulations.
(ii) With respect to a Participant, Inactive Participant or
Former Participant who attains age 70 1/2 after December 31, 1987 but before the
Transition Period, the required beginning date shall be no later than the April
1 of the calendar year following the calendar year in which he attains age 70
1/2. For purposes of this Section, the Transition Period is the period beginning
on January 1, 1997 and ending on December 31, 1999.
(iii) During the Transition Period, each Participant or
Inactive Participant who attained age 70 1/2 while employed by an Employing
Company and who was not a 5-Percent Owner shall elect a required beginning date
that is no later than the April 1 of the calendar year following the calendar
year in which he attains age 70 1/2 or his retirement date.
(iv) Each Participant, Inactive Participant or Former
Participant who attains age 70 1/2 on or after January 1, 2000 and who is not a
5-Percent Owner shall have a required beginning date that is no later than the
April 1 of the calendar year following the later of the calendar year in which
such Participant attains age 70 1/2 or his retirement date.
(v) For each Participant, Inactive Participant or Former
Participant who is a 5-Percent Owner, the required beginning date shall be no
later than the April 1 of the calendar year following the calendar year in which
he attains age 70 1/2.
-31-
With respect to distributions under the Plan made on or after
the Effective Date for calendar years beginning on or after January 1, 2001, the
Plan will apply the minimum distribution requirements of section 401(a)(9) of
the Internal Revenue Code in accordance with the regulations under section
401(a)(9) that were proposed on January 17, 2001 (the "2001 Proposed
Regulations"), notwithstanding any provision of the Plan to the contrary. If the
total amount of required minimum distributions made to a Participant for 2001
prior to the Effective Date is equal to or greater than the amount of required
minimum distributions determined under the 2001 Proposed Regulations, then no
additional distributions are required for such participant for 2001 on or after
such date. If the total amount of required minimum distributions made to a
Participant for 2001 prior to the Effective Date is less than the amount
determined under the 2001 Proposed Regulations, then the amount of required
minimum distributions for 2001 on or after such date will be determined so that
the total amount of required minimum distributions for 2001 is the amount
determined under the 2001 Proposed Regulations. This provision shall continue in
effect until the last calendar year beginning before the effective date of the
final regulations under section 401(a)(9) or such other date as may be published
by the Internal Revenue Service.
Section 13.05. USE OF FORFEITURES. Except as provided in Section 13.08,
all amounts forfeited under the Plan by a Participant shall be applied as a
credit to reduce subsequent contributions of an Employing Company by which the
Participant is employed at the time of forfeiture. In the event the Plan is
terminated, any forfeiture not applied prior thereto to reduce an Employing
Company Contributions shall be credited ratably to the accounts of its
participating employees in proportion to the amount of its contributions to such
accounts for the last month with respect to which it made contributions.
Section 13.06. REINSTATEMENT OF ACCOUNTS. (a) If a Participant or
Inactive Participant who terminates employment receives a distribution of his
account pursuant to Section 13.03 which is less than the entire balance in his
account as of the date of such distribution and if prior to incurring five
consecutive One Year Breaks-in-Service he is reemployed by an Employing Company
as an Employee, he may, within thirty days after his reemployment (which shall,
for the purposes of this paragraph (a), include reinstatement to status as a
disabled Employee), repay in cash to the Trustee an amount equal to the cash he
received and an amount equal to the value (as of the Valuation Date on which his
termination of employment occurred) of Zimmer Stock distributed to him. The
amount repaid shall, to the extent practicable, be invested by the Trustee in
such types of investments, and the types of investments shall be in such
proportion, as the account of the Participant or Inactive Participant shall have
been invested on the date as of which his account was distributed to him. Such
amounts shall be allocated to the Participant's or Inactive Participant's
Employing Company Contributions account and to the account attributable to his
After-Tax Contributions in the same proportion as was the amount in one account
to the amount in the other account which was redeemed to make distribution of
his accounts, and the amounts so allocated shall constitute the beginning
balances in such accounts. Any non-vested amount in his account at the time of
termination of his employment which shall be restored to his account as provided
in Section 13.03(b) shall constitute the beginning balance in his account
attributable to Employing Company Contributions.
(b) If a Participant or Inactive Participant who terminates employment
receives a distribution of his account pursuant to Section 13.03 which
represents the full value of his
-32-
account as of the date of such distribution and if prior to incurring 5 (five)
consecutive One Year Breaks-in-Service he is reemployed by an Employing Company
as an Employee, he may, within 30 days after his reemployment, repay in cash to
the Trustee an amount equal to the cash he received and an amount equal to the
value (as of the Valuation Date on which his termination of employment occurred)
of Zimmer Stock distributed to him. The amount repaid shall be invested by the
Trustee in such Investment Funds as determined by the Participant and in the
manner specified by the Committee, provided that any Employing Company
Contributions so reinvested shall be invested in the Zimmer Stock Fund. Such
amounts shall be allocated to the Participant's or Inactive Participant's
Employing Company Contributions account and to his account attributable to his
After-Tax Contributions in the same proportion as was the amount in one account
to the amount in the other account which was redeemed to make distribution of
his accounts, and the amount so allocated shall constitute the beginning
balances in such accounts.
Section 13.07. PAYMENT OF ELIGIBLE ROLLOVER DISTRIBUTIONS. Any
individual who is entitled to receive a distribution of benefits under the Plan
(excluding any Beneficiary who is not the Participant's surviving spouse but
including any Participant's spouse or an alternate payee under a qualified
domestic relations order within the meaning of Section 414(p) of the U.S. Code)
may elect to have all or a portion of the taxable amount of such benefit
distribution that qualifies as an eligible rollover distribution under Section
402(c)(4) of the U.S. Code paid directly to a single eligible retirement plan
specified by such individual. For purposes of this Section 13.07, an "eligible
retirement plan" is an individual retirement account described in Section 408(a)
of the U.S. Code, an individual retirement annuity described in Section 408(b)
of the U.S. Code (other than an endowment contract), an annuity plan described
in Section 403(a) of the U.S. Code or a plan that is qualified under Section
401(a) of the U.S. Code, the terms of which permit acceptance of such direct
rollover distributions. Notwithstanding the foregoing, in the case of an
eligible rollover distribution to the surviving spouse of a Participant, an
"eligible retirement plan" is an individual retirement account or individual
retirement annuity. The Committee shall establish uniform procedures for making
such direct rollover elections. If a distribution is one to which Sections
401(a)(11) and 417 of the U.S. Code do not apply, such distribution may commence
less than 30 days after the notice required under Section 1.411(a)-11(c) of the
U.S. Income Tax Regulations is given, provided that:
(a) the Committee clearly informs the Participant that the Participant
has a right to a period of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(b) the Participant, after receiving the notice, affirmatively elects a
distribution.
Notwithstanding any provisions of the Plan to the contrary that would
otherwise limit a distributee's election under this Plan, a distributee who is a
Puerto Rico resident Participant may request, at the time and in the manner
prescribed by the Committee, to have the entire portion of a distribution from
the Plan paid directly to a "Puerto Rico Eligible Retirement Plan" (as defined
below) in a direct rollover. For purposes of this section, the term "Puerto Rico
Eligible Retirement Plan" means a qualified trust described in Section 1165(a)
of the Puerto Rico Code and an individual retirement account or annuity
described in Sections 1169(a) and (b) of the Puerto Rico Code, respectively,
that accepts the rollover distribution.
-33-
Section 13.08. INABILITY TO LOCATE PAYEE. Where amounts become
distributable under the Plan and the Committee is unable, for a period of
twenty-four months from the date the Participant's account becomes eligible for
distribution, to locate the Participant or Beneficiary to whom the distribution
is payable, all such amounts shall be reallocated among the other Participants
as of the last day of such month. In the event the Participant or his
Beneficiary thereafter makes proper claims to the Committee, the amount payable
to such Participant or Beneficiary shall be distributable from amounts forfeited
by other Participants in accordance with Section 13.03(b) of the Plan.
Section 13.09. TERMINATED VESTED PARTICIPANTS. In the case of any
Former Participant who has not received a distribution of the vested account
balance pursuant to any section of this Plan, such Former Participant may elect
to make withdrawals during the period of deferral in the same manner and in the
same priorities as withdrawals may be made by a Participant or Inactive
Participant who remains in employment pursuant to Article 12. Notwithstanding
the election by a Former Participant to make withdrawals during the period of
deferral pursuant to this Section 13.09, the method of payment upon withdrawal
shall be as provided in Article 11.
ARTICLE 14
TRANSFER OF A PARTICIPANT
Section 14.01. TRANSFER TO EMPLOYING COMPANY. If a Participant shall
cease to be employed by one Employing Company and shall become employed as an
Employee by another Employing Company, his participation in the Plan shall not
be affected.
Section 14.02. TRANSFER TO AFFILIATE. If a Participant shall cease to
be employed as an Employee and shall become employed by an Affiliate which has
not adopted the Plan, he shall be deemed to have given notice to suspend the
making of Pre-Tax Contributions and After-Tax Contributions from his Annual
Benefit Salary or Wages effective with his last month ending in the month of his
transfer. The suspension shall continue as long as he remains in the employ of
an Affiliate which has not adopted the Plan. Such Inactive Participant's period
of employment by any such subsidiary, affiliate, division or branch shall be
taken into account in determining his Years of Service for purposes of Section
10.02 in the same manner and to the same extent as if such employment had been
employment as an Employee with an Employing Company without taking into account
any suspension in the making of Pre-Tax Contributions and After-Tax
Contributions from his Annual Benefit Salary or Wages as the result of this
Section 14.02. Should he terminate his employment with any such subsidiary or
affiliate and not become an Employee of an Employing Company, his employment
shall be deemed to have terminated for purposes of the Plan at the time of such
termination. The Committee, in its discretion, may determine that a Participant
will be deemed to have terminated his employment for purposes of the Plan upon
the sale of an Employing Company or of substantially all the assets of a
division of Zimmer or of an Employing Company which employs such Participant.
Section 14.03. TRANSFER TO FOREIGN AFFILIATE. If a Participant who is a
United States citizen shall become employed by a foreign affiliate of an
Employing Company (as the term
-34-
"foreign affiliate" is defined in Section 3121(l)(6) of the U.S. Code) and all
of the conditions which permit him to be deemed to be an Employee of such
Employing Company exist at the time of his transfer of employment and continue
to exist during his employment by such foreign affiliate, his transfer of
employment shall not affect his participation in the Plan. If, at any time while
he remains in the employment of such foreign affiliate, the conditions which
permit him to be deemed to be an Employee cease for any reason, he shall at such
time be regarded as having been transferred to an Affiliate which is not an
Employing Company. Should he terminate his employment with any such foreign
affiliate and not become an Employee of an Employing Company, his employment
shall be deemed to have terminated for purposes of the Plan at the time of such
termination.
ARTICLE 15
SUSPENSION OF CONTRIBUTIONS
Section 15.01. VOLUNTARY SUSPENSION. A Participant, by signing a
direction on a form to be provided for that purpose and delivering such form to
an Employing Company at least thirty (30) days (or such less number of days as
the Committee may specify) before the end of any month, may voluntarily suspend
the making of both his Pre-Tax Contributions and After-Tax Contributions from
his Annual Benefit Salary or Wages . Such change will be effective as soon as
practicable after receipt of the election to suspend, but not earlier than the
beginning of the first month after receipt of such election. However, no
Participant may suspend the making of Pre-Tax Contributions and After-Tax
Contributions pursuant to this Section 15.01 more than once in any Plan Year.
Also, no one such suspension may continue for a period of less than three
months. A Participant may terminate such a suspension of his Pre-Tax
Contributions and After-Tax Contributions as of the end of the third month that
the suspension has been in effect, or as of the end of any subsequent month, by
signing a direction on a form to be provided for that purpose and delivering
such form to an Employing Company at least thirty days (or such lesser number of
days as the Committee may specify) before the end of such month.
ARTICLE 16
EFFECT OF SUSPENSION OF CONTRIBUTIONS
Section 16.01. PROCEDURES FOR SUSPENSION. Whenever the making of
Pre-Tax Contributions and After-Tax Contributions from the Annual Benefit Salary
or Wages of a Participant is suspended for any reason, all contributions to the
Employee's account by an Employing Company under the Plan shall also be
suspended. If an event causing suspension under the Plan occurs during a period
when a suspension is already in effect, the periods of suspension shall run
concurrently except that a period of suspension pursuant to Section 12.01(d)
shall not run concurrently with, but shall be in addition to, any other period
of suspension under the Plan. When all suspensions are ended, unless the
participation of the Participant has been terminated, the making of Pre-Tax
Contributions and After-Tax Contributions from Annual Benefit Salary or Wages
shall be resumed (if the Employee elects to resume) beginning with the
-35-
Participant's first payroll period commencing after all suspensions are ended,
and contributions by the Employing Company also shall be resumed. There shall be
no make-up of Pre-Tax Contributions or After-Tax Contributions from Annual
Benefit Salary or Wages or of contributions by an Employing Company with respect
to a period of suspension.
ARTICLE 17
LEAVE OF ABSENCE, LAYOFF, ABSENCE ON DISABILITY AND REEMPLOYMENT
Section 17.01. LEAVE OF ABSENCE. (a) A Participant's temporary absence
pursuant to any leave of absence (including a family care and adoption
assistance leave) granted in accordance with his Employing Company's established
leave policies which shall be applied in a uniform and non-discriminatory manner
to all Participants under similar circumstances, will not be considered a
termination of employment and, except for months during which the Participant is
on a personal leave and in respect of which he made no allotments, shall be
considered a period of active employment with his Employing Company in
determining his Years of Service for purposes of Section 10.02, provided the
Participant returns to employment with an Employing Company as an employee prior
to or upon expiration of the period of leave or, in the case of a Participant
who has been granted a leave of absence for military service, within 90 days
after the time he first becomes eligible for release or discharge from active
duty (or such longer period as may be prescribed by law for the protection of
reemployment rights). If a Participant is granted a leave of absence for
military service (including a paid leave of absence as described in subsection
(c) hereof) and does not return to employment within such 90-day period, his
employment for purposes of this Plan shall be deemed to have terminated as of
the expiration of such 90-day period.
(b) If a Participant is granted a leave of absence without pay
(including unpaid leave for military or governmental service, and a family care
and adoption assistance leave) by his Employing Company, there shall be no
Pre-Tax Contributions or After-Tax Contributions from his Annual Benefit Salary
or Wages during the period of such leave of absence, except as provided in
Section 17.03.
(c) If a Participant is granted a leave of absence with pay for
military service under a policy of his Employing Company which provides for such
paid leave, such Participant may make Pre-Tax Contributions and/or After-Tax
Contributions from his Annual Benefit Salary or Wages during such leave of
absence; PROVIDED, HOWEVER, that for purposes of the foregoing, the
Participant's Annual Benefit Salary or Wages during a period of military service
shall be deemed to be that in effect at the time he commenced such service less
the amount of his base military pay for such period. A Participant who is
receiving payments pursuant to a paid military leave policy of his Employing
Company may at any time, if he so elects, suspend Pre-Tax Contributions and
After-Tax Contributions from such payments in accordance with Article 15. In the
event a Participant's period of military service exceeds the period for which he
is entitled to payment by his Employing Company pursuant to its paid military
leave policy, such Participant shall, as of the day on which such entitlement
ceases, be deemed to be granted a leave of absence without pay for military
service.
-36-
(d) Any provision of this Plan to the contrary notwithstanding,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Section 414(u) of the U.S. Code.
Section 17.02. LAYOFF. If a Participant is laid off, there shall be no
Pre-Tax Contributions or After-Tax Contributions from his Annual Benefit Salary
or Wages during the period of layoff. If a Participant or Inactive Participant
is laid off and returns as an Employee in active service within 6 months of his
layoff, the period of his layoff shall be considered as a period of active
employment with his Employing Company in determining his Years of Service for
purposes of Section 10.02. If the Participant or Inactive Participant returns as
an Employee in active service after 6 months but within 12 months of his layoff,
his employment shall not be deemed to have terminated by reason of such layoff
for purposes of the Plan but the period of his layoff shall not be considered in
determining his Years of Service under the Plan. If at the end of 12 months the
Participant or Inactive Participant has not returned as an Employee in active
service, then, notwithstanding any other provision of the Plan, his employment
shall be deemed to have terminated at such time for purposes of the Plan.
Section 17.03. DISABILITY. (a) If a Participant is entitled to receive
disability payments under a disability pay plan maintained by his Employing
Company, he shall be considered to be on a leave of absence which shall be
deemed to continue so long as he continues to be entitled to receive monthly
disability payments under such a disability pay plan, and the Annual Benefit
Salary or Wages of such Participant shall be deemed to be that in effect at the
time he commenced to receive monthly disability payments. Pre-Tax Contributions
and/or After-Tax Contributions will be made from such disability payments, and
whenever Pre-Tax Contributions and/or After-Tax Contributions made from Annual
Benefit Salary or Wages are referred to in the Plan, the reference shall include
Pre-Tax Contributions and/or After-Tax Contributions from such disability
payments. A Participant who is receiving disability payments may at any time, if
he so elects, suspend Pre-Tax Contributions and After-Tax Contributions from
disability payments in accordance with Article 15. If immediately following the
end of the period during which the Participant is entitled to receive disability
payments he is neither an Employee in active service nor on leave of absence,
his employment shall be deemed to have terminated at such time for purposes of
the Plan.
Section 17.04. REEMPLOYMENT. (a) If the service of an Employee is
terminated and he is reemployed by an Employing Company as an Employee, he may
elect, in accordance with Article 2, to participate in the Plan on an Enrollment
Date following the date of his reemployment upon completing at least six months
of service in the aggregate with an Employing Company, including service
rendered prior to his termination of service.
(b) If an Employee's service is terminated and he again becomes an
Employee, his Years of Service prior to the termination of his service shall be
restored if (i) he has not incurred a One Year Break-in-Service; or (ii) he has
incurred any number of One Year Breaks-in-Service and is vested in any amounts
attributable to Employing Company Contributions in accordance with Section
10.02; or (iii) the number of his consecutive One Year Breaks-in-Service does
not equal or exceed the greater of five or the aggregate number of his Years of
Service prior to such termination, disregarding any prior Years of Service which
are not required to be taken into account. Any Year of Service restored to an
Employee as provided in Section 17.04(b)(i), (ii) or
-37-
(iii) shall be taken into account for purposes of determining the Participant's
percentage of vested amounts attributable to Employing Company Contributions
made in respect of the period subsequent to his reemployment.
(c) If the service of an Employee is terminated and he is reemployed by
an Employing Company , any period of suspension in effect prior to the
termination of his service shall not be resumed upon his reemployment.
ARTICLE 18
DESIGNATION OF BENEFICIARIES IN THE EVENT OF DEATH
Section 18.01. BENEFICIARY DESIGNATION. A Participant may designate a
Beneficiary or Beneficiaries to receive all or part of the amount in his account
in case of his death if such Beneficiary or Beneficiaries shall be living at the
time of his death, however, a Participant may not designate a Beneficiary other
than his spouse unless the Committee has received a written consent to such
designation from the Participant's spouse in accordance with the provisions of
Section 11.03(c). A Participant may, subject to the preceding sentence, change
or revoke a designation of Beneficiary and such designation, change or
revocation shall be on a form to be provided for that purpose and shall be
signed by the Participant and delivered to the designated agent of Zimmer prior
to his death. In case of the death of the Participant, the amount in his account
with respect to which a designation of Beneficiary has been made (to the extent
it is valid and enforceable under applicable law) shall be distributed in
accordance with the Plan to the surviving designated Beneficiary or
Beneficiaries. The amount in the Participant's account distributable upon death
and not subject to such a designation, or if no Beneficiary shall be living at
the death of the Participant, shall be distributed following his death to the
person or persons in the first of the following classes of successive
preference:
(a) The Participant's surviving spouse.
(b) To such one or more of the Participant's surviving children as the
Committee shall determine and in such proportions as the Committee determines.
(c) The Participant's surviving parents, equally.
(d) To such one or more of the Participant's surviving brothers and
sisters as the Committee shall determine and in such proportions as the
Committee determines.
(e) The Participant's executors or administrators.
Section 18.02. BENEFICIARY PAYMENTS AND REINVESTMENT ELECTIONS. Payment
to such one or more such Beneficiaries shall completely discharge the Plan and
the Trustee with respect to the amount so paid. A designation of a Beneficiary
under this Section 18.01 shall be deemed a designation of a Beneficiary under
the Plan.
-38-
ARTICLE 19
TRUSTEE OF THE PLAN
Section 19.01. TRUST AGREEMENT. The assets of the Plan shall be held in
trust by a Trustee appointed by the Board of Directors. If the Board of
Directors so determines, Zimmer may enter into a trust agreement or trust
agreements with additional trustee(s). Any trust agreement may be amended by an
Employing Company from time to time in accordance with its terms. Any trust
agreement shall provide, among other things, that all funds received by the
Trustee thereunder will be held, administered, invested and distributed by the
Trustee, and that no part of the corpus or income of the trust held by the
Trustee shall be used for, or diverted to, purposes other than for the exclusive
benefit of Participants or Inactive Participants or their Beneficiaries. Any
trust agreement may also provide that the investment and reinvestment of any
Investment Fund or any part thereof may be carried out in accordance with
directions given to the Trustee by any investment advisor or advisors which may
be designated by the Committee and which shall qualify as an Investment Manager.
Zimmer may remove any Trustee or any successor Trustee, and any Trustee or
successor Trustee may resign. Upon removal or resignation of a Trustee, Zimmer
shall appoint a successor Trustee.
Section 19.02. TRUSTEE'S AUTHORITY. The Trustee shall have the powers
provided in the Trust Agreement forming a part of the Plan, provided that such
powers shall be exercised as the Committee shall from time to time direct.
Section 19.03. PURCHASES OF ZIMMER STOCK. As soon as practicable after
receipt of funds for investment in the Zimmer Stock Fund, the Trustee shall
purchase Zimmer Stock, or cause such Stock to be purchased, on the open market
or by private purchase, provided that no private purchase may be made at any
price greater than the last sale price or highest current independent bid price,
whichever is higher, for Zimmer Stock on the New York Stock Exchange.
Notwithstanding the foregoing, the Trustee may hold in cash, and may temporarily
invest in short-term United States Government obligations, commercial paper or
other investments of a short-term nature, funds allocated to the Zimmer Stock
Fund pending investment of such funds in Zimmer Stock or for liquidity purposes.
Section 19.04. PURCHASES OF SECURITIES FOR THE INVESTMENT FUNDS. As
soon as practicable after the Trustee receives funds for investment in the
Investment Funds, the Trustee shall invest such funds in the Investment Fund
designated for such investment or, if the Trust Agreement so provides, the
Trustee shall invest such funds as directed by an Investment Manager or the
Committee. Purchases in respect of the Investment Funds may be made on the open
market or directly from the issuer.
Section 19.05. VOTING OF ZIMMER STOCK AND BRISTOL-MYERS SQUIBB STOCK.
Before each annual or special meeting of shareholders of Zimmer or Bristol-Myers
Squibb, there shall be sent to each Participant any portion of whose account
balance is invested in the Zimmer Stock Fund or Bristol-Myers Squibb Stock Fund
a copy of the proxy soliciting material for the meeting, together with a form
requesting instructions to the Trustee on how to vote the Zimmer Stock or
Bristol-Myers Squibb Stock held on his behalf in the Zimmer Stock Fund or
Bristol-Myers Squibb Stock Fund on the Valuation Date immediately preceding the
record date of the Zimmer
-39-
Stock or Bristol-Myers Squibb Stock. Zimmer may appoint a person or persons to
solicit and/or tabulate the votes of Participants and to communicate the results
thereof to the Trustee. Upon receipt of such instructions, the Trustee shall
vote such Zimmer Stock or Bristol-Myers Squibb Stock as instructed by the
Participant. All Zimmer Stock or Bristol-Myers Squibb Stock for which the
Trustee does not receive instructions shall be voted by the Trustee on each
issue in the same proportion as those shares for which it has received
instructions from Participants.
Section 19.06. TENDERING OF ZIMMER STOCK - The Trustee may not take any
action in response to a tender offer except as otherwise provided in this
Section 19.05. Each Participant, a named fiduciary within the meaning of Section
403(a)(1) of ERISA, may direct the Trustee in writing to sell, exchange or
transfer the Zimmer Stock in his account in accordance with the terms of such
tender offer. To the extent to which Participants do not instruct the Trustee or
do not issue valid or timely directions to the Trustee to sell, exchange or
transfer the Zimmer Stock in their accounts, Participants shall be deemed to
have directed the Trustee that such shares be retained and not be disposed of
under the terms of the tender offer. Zimmer and the Trustee shall not interfere
in any manner with a Participant's decision as to whether to sell, exchange or
transfer the Zimmer Stock in his account. The Trustee shall arrange for
Participant directions or instructions to be made on a confidential basis and
Zimmer shall communicate to Participants the provisions of this Section 19.05.
The Trustee shall use its best efforts to distribute or cause to be distributed
to Participants all communications directed generally to the owners of Zimmer
Stock, except to the extent Zimmer distributes such communications directly to
Participants. Any cash proceeds received by the Trustee as a result of the sale
of Zimmer Stock pursuant to a tender offer shall be reinvested by the Trustee in
Zimmer Stock if such stock is available for purchase provided such Zimmer Stock
continues to be traded on a national securities exchange. If Zimmer Stock is no
longer traded on a national securities exchange, then the proceeds of such sale
shall be invested as directed by the Committee.
Section 19.07. VOTING OF SHARES IN CERTAIN INVESTMENT FUNDS. Before
each annual or special meeting of shareholders of an Investment Fund which is
registered under the Investment Company Act of 1940, there shall be sent to each
Participant any portion of whose account balance is invested in such Investment
Fund a copy of the proxy soliciting material for the meeting, together with a
form requesting instructions to the Trustee on how to vote the shares of the
Investment Fund held on his behalf on the Valuation Date immediately preceding
the record date of the Investment Fund. The Administrative Agent shall solicit
and/or tabulate the votes of Participants and communicate the results thereof to
the Trustee. Upon receipt of such instructions, the Trustee shall vote such
Investment Fund shares as instructed by the Participant. All shares of the
Investment Fund for which the Administrative Agent does not receive instructions
shall not be voted.
Section 19.08. UNINVESTED FUNDS. The Trustee may keep uninvested an
amount of cash sufficient in its opinion to enable it to carry out the purposes
of the Plan. No income shall accrue to an account of any Participant on such
uninvested funds.
Section 19.09. AUDIT. Zimmer shall select a firm of independent
certified public accountants to examine and report annually on the financial
position and the results of operations of the trust forming a part of the Plan.
-40-
ARTICLE 20
ADMINISTRATION OF THE PLAN
Section 20.01. BENEFITS COMMITTEE. The Plan shall be administered by a
benefits committee (the "Committee"), consisting of not less than three members,
as shall from time to time be determined by the Board of Directors. Members
shall be appointed by the Board of Directors. Any member of such Committee may
resign or be removed by the Board of Directors and new members may be appointed
by the Board of Directors.
Section 20.02. RESIGNATION OF COMMITTEE MEMBER. Any member of the
Committee may resign by delivering his written resignation to the Board of
Directors and such resignation shall become effective upon delivery or upon any
later date specified therein.
Section 20.03. SELECTION OF CHAIRMAN. The Committee shall select a
Chairman and may select a Secretary (who may, but need not, be a member of the
Committee) to keep its records or to assist it in the doing of any act or thing
to be done or performed by the Committee.
Section 20.04. QUORUM. A majority of the members of the Committee at
the time in office shall constitute a quorum for the transaction of business at
any meeting. Any determination or action of the Committee may be made or taken
by a majority of the members present at any meeting thereof, or without a
meeting by a resolution or written memorandum concurred in by a majority of the
members then in office.
Section 20.05. AUTHORITY OF THE COMMITTEE. The Committee shall control
and manage the operation and administration of the Plan, and it shall be deemed
the "Administrator" of the Plan as the term "Administrator" is defined in ERISA.
Section 20.06. NAMED FIDUCIARY. The assets of the Plan shall be
controlled or managed by a "named fiduciary", as that term is defined in ERISA,
consisting of the members of the Committee, so as to permit it to delegate
authority to manage, acquire or dispose of assets of the Plan to one or more
Investment Managers as provided in Section 402(c)(3) of ERISA.
Section 20.07. DELEGATION OF AUTHORITY. For the purpose of carrying out
its duties as Administrator, the Committee may, in its discretion, designate
persons other than members of the Committee to carry out such responsibilities
of the Committee under the Plan as it may see fit including, but not limited to,
the determination of questions concerning the eligibility of any employee to
participate in or receive benefits under the Plan, the interpretation and
construction of the provisions of the Plan and the resolution of ambiguities,
inconsistencies and omissions therein and the resolution and determination of
any appeal of the denial of a claim for benefits under the Plan. The delegation
of responsibilities will be effected by written instrument executed by the
Committee.
Section 20.08. APPOINTMENT OF INVESTMENT MANAGER. If a trust agreement
forming a part of the Plan so provides, the Committee shall have the authority
to appoint an Investment Manager or Investment Managers to manage (including the
power to acquire and dispose of)
-41-
some part or all of the assets of the Plan held by a trustee, to retain in the
Committee the power to invest such assets or to delegate such responsibility to
the trustee, as shall be provided in the trust agreement.
Section 20.09. FIDUCIARY OBLIGATIONS. It is intended, that to the
maximum extent permitted by ERISA, each person who is a "fiduciary" with respect
to the Plan as that term is defined in ERISA shall be responsible for the proper
exercise of his own powers, duties, responsibilities and obligations under the
Plan and the trust forming a part thereof, and any other funding medium, as
shall each person designated by any fiduciary to carry out any fiduciary
responsibility with respect to the Plan, the trust or other funding medium, and
no fiduciary or other person to whom fiduciary responsibilities are allocated
shall be liable for any act or omission of any other fiduciary or of any other
person delegated to carry out any fiduciary or other responsibility under the
Plan or any trust or any other funding medium.
Section 20.10. APPOINTMENT OF ADVISORS AND LEGAL COUNSEL. The Committee
may employ such independent "qualified public accountants" as such term is
defined in ERISA, legal counsel who may be of counsel to Zimmer, other
specialists and other persons as the Committee deems necessary or desirable in
connection with the administration of the Plan, and the Committee, and any
person to whom it may delegate any duty or power in connection with the
administration of the Plan, Zimmer and the officers and directors thereof shall
be entitled to rely conclusively upon and shall be fully protected in any action
omitted, taken or suffered by them in good faith in reliance upon any
independent qualified public accountant, counsel or other specialist or other
person selected by the Committee or in reliance upon any evaluations,
certificates, opinions or reports which shall be furnished by any of them or by
any Trustee or any insurance company.
Section 20.11. DETERMINATION OF THE COMMITTEE. The determination of the
Committee as to any question involving the general administration and
interpretation of the Plan and such determinations made by each person to whom
the Committee may delegate its responsibilities under the Plan, shall be final,
conclusive and binding upon all persons claiming any interest in or under the
Plan except as otherwise provided by law, and may be relied upon by the Zimmer,
the Employing Companies, the Trustee, the Administrative Agent and Participants
and their Beneficiaries. (The term "Participants" includes Inactive Participants
wherever used in this Article 20.) Any discretionary actions to be taken under
the Plan by the Committee and such actions taken by each person to whom the
Committee may delegate its responsibilities under the Plan, shall be uniform in
their nature and applicable to all persons similarly situated, shall not be
subject to de novo review if challenged in court, by arbitration or in any other
forum and shall be upheld unless found to be an abuse of discretion. Without
limiting the generality of the foregoing, the Committee shall have the following
discretionary authority and responsibilities in addition to those provided
elsewhere herein:
(a) to grant or deny claims for benefits under the Plan;
(b) to require any person to furnish such information as it may request
for the purpose of the proper administration of the Plan as a condition to
receiving any benefit under the Plan;
-42-
(c) to make and enforce such rules and regulations for the
administration of the Plan consistent with the provisions thereof and to
prescribe the use of such forms and other methods of communication and
notification as it shall deem necessary for the efficient administration of the
Plan;
(d) to interpret and construe the provisions of the Plan, and to
resolve ambiguities, inconsistencies and omissions therein;
(e) to decide such questions as may arise in connection with the
operation of the Plan including, but not limited to, questions concerning the
eligibility of any Employee to participate in or receive benefits under the
Plan; and
(f) to determine the amount of benefits which shall be payable to any
person in accordance with the provisions of the Plan and to authorize payment of
such benefits.
Section 20.12. SPOUSE'S RELEASE. The Committee, in its discretion, may
require as a condition of receiving any payment under the Plan, the filing with
the Committee of an authorization or release by the spouse of a Participant
divesting such spouse of any rights in the Plan or in any payments thereunder
which such spouse may have by operation of law under the laws of his matrimonial
domicile, or otherwise.
Section 20.13. PARTICIPANT ACCOUNTS AND STATEMENTS. The Committee shall
maintain or cause to be maintained accounts which accurately reflect the
interest of each Participant. The Committee shall mail to Participants reports
to be furnished to Participants in accordance with the Plan or as required by
ERISA. Any notice, reports or statements to be given, furnished, made or
delivered to a Participant shall be deemed duly given, furnished, made or
delivered when addressed to the Participant and delivered to the Participant in
person or mailed by ordinary mail to his address last appearing on the books of
an Employing Company.
Section 20.14. PARTICIPANT NOTICES. Consistent with the requirements of
ERISA and the regulations thereunder of the Secretary of Labor from time to time
in effect, the Committee shall:
(a) provide adequate notice in writing to any Employee, former
Employee, retired Employee or Beneficiary under the Plan (each being hereinafter
in this Section 20.14 referred to as "Participant") whose claim for benefits
under the Plan has been denied, setting forth specific reasons for such denial,
written in a manner calculated to be understood by such Participant, and
(b) afford a reasonable opportunity to any Participant whose claim for
benefits has been denied for a full and fair review of the decision denying the
claim.
Section 20.15. COMMITTEE EXPENSES. Unless otherwise agreed to by an
Employing Company, the members of the Committee shall serve without compensation
for their services as such, but all reasonable expenses incurred in the
performance of their duties shall be paid by Zimmer. Unless otherwise determined
by the laws of the United States or by the Board of Directors, no member of the
Committee shall be required to give any bond or other security in any
jurisdiction. No member of the Committee shall be personally liable under any
contract, agreement, bond or other instrument made or executed by him or on his
behalf as a member of the Committee.
-43-
Section 20.16. EXPENSES OF ADMINISTERING THE PLAN. Expenses incurred
with respect to the management of an Investment Fund or the administration and
recordkeeping of Participants' accounts, including Trustees' fees, may be
charged appropriately against the accounts of Participants, as directed by the
Committee. Brokerage fees, transfer taxes and other expenses incident to the
purchase or sale of securities by the Trustee shall be deemed to be part of the
cost of such securities or deducted in computing the proceeds therefrom, as the
case may be. Transfer taxes in connection with distribution of Zimmer Stock or
Bristol-Myers Squibb Stock to Participants or their beneficiaries shall be borne
by the Participant. Taxes, if any, on any assets held or income received by the
Trustee shall be charged appropriately against the accounts of Participants as
the Committee shall determine.
Section 20.17. FIDUCIARY CAPACITY. Any person or group of persons may
serve in more than one fiduciary capacity with respect to the Plan and
fiduciaries with respect to the Plan may serve as a fiduciary with respect to
the Plan in addition to being an officer, employee, agent or other
representative of a "party in interest" as that term is defined in ERISA.
Section 20.18. NOTIFICATION AND ELECTION PROCEDURES. Whenever a Plan
provision or Plan administrative procedure requires that the Participant (or
Inactive Participant, Former Participant or Beneficiary) give directions or
prior notice to the Committee or Administrative Agent, such direction or notice
shall be provided to the Committee or Administrative Agent sufficiently in
advance to implement the Participant's instructions in accordance with the
Committee's or Administrative Agent's standard procedures with respect to the
type of instruction being implemented, and in such manner (written or otherwise)
as the Committee shall communicate to Participants.
Section 20.19. COMMITTEE AUTHORITY TO MAKE CONTRIBUTIONS. The Committee
shall have the authority to determine whether a Qualified Nonelective
Contribution shall be made on behalf of a Participant or whether a Participant
may elect to make additional Basic Contributions or Supplementary Contributions
in order to correct an Administrative Error.
ARTICLE 21
AMENDMENT AND MODIFICATION OF THE PLAN
Section 21.01. The Plan may be amended or modified by the Board of
Directors in accordance with its normal procedures at any time and from time to
time; PROVIDED, HOWEVER, that no such amendment or modification, except in the
case of an amendment or modification respecting a qualified domestic relations
order as defined under Section 414(p) of the U.S. Code or as may otherwise be
prescribed by law, shall make it possible for any part of the corpus or income
of the trust fund to be used for or diverted to purposes other than for the
exclusive benefit of Participants or Inactive Participants or their
Beneficiaries under the Plan. Any such amendment or modification may make any
changes in the Plan, including retroactive changes which may be deemed necessary
or desirable to qualify the Plan and the trust forming a part thereof, or to
continue the qualified status of the Plan and the trust forming a part thereof,
or to continue the qualified status of the Plan under Section 1165(a) and
1165(e) of the Puerto Rico
-44-
Code and Section 401(a), 401(k) and 501(a) of the U.S. Code, or any similar
successor provisions of law or of ERISA, or to conform to governmental
regulations. No amendment to the Plan shall divest any Participant of any right
theretofore accrued nor shall any amendment eliminate a benefit payment option
under the Plan except as otherwise provided by law or regulation.
ARTICLE 22
SUSPENSION, TERMINATION, MERGER OR CONSOLIDATION OF THE PLAN
Section 22.01. SUSPENSION AND TERMINATION. It is the intention of an
Employing Company to continue the Plan indefinitely, however, the Board of
Directors may at any time and for any reason suspend or terminate the Plan or
discontinue or suspend the making of Pre-Tax Contributions and/or After-Tax
Contributions from Annual Benefit Salary or Wages of all Participants and of
contributions by an Employing Company . An Employing Company may, by action of
its Board of Directors, suspend or terminate the making of allotments from
Annual Benefit Salary or Wages of Participants and of contributions of such
Employing Company. In the event of termination or partial termination of the
Plan, or upon complete discontinuance of contributions under the Plan by an
Employing Company , all amounts in the account of each Participant or Inactive
Participant shall be nonforfeitable and shall be distributed to him in a single
distribution as soon as practicable after such termination, partial termination
or discontinuance, or if a Participant shall so elect, in accordance with
procedures prescribed by the Committee. Prior to the date fixed for
distribution, the Committee, in its sole discretion, may direct the Trustee to
purchase an annuity for the Participant in such amount as may be purchased with
an amount equal to the cash amount the Participant would otherwise be entitled
to receive if the entire amount in his account at the date fixed for
distribution were reduced to cash.
Section 22.02. MERGER AND CONSOLIDATION. The Plan shall not be merged
or consolidated with, or any of its assets or liabilities transferred to, any
other plan unless each Participant and Inactive Participant would (if the Plan
then terminated) receive a benefit immediately after the merger, consolidation,
or transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the Plan then terminated).
ARTICLE 23
GENERAL PROVISIONS
Section 23.01. PLAN NOT AN EMPLOYMENT CONTRACT. The Plan shall not be
deemed to constitute a contract between an Employing Company and any Employee
nor shall anything herein contained be deemed to give any Employee any right to
be retained by an Employing Company , or to interfere with the right of an
Employing Company to discharge any Employee at any time and to treat him without
regard to the effect which such treatment might have upon him as a Participant.
-45-
Section 23.02. ASSIGNMENT AND ATTACHMENT OF DISTRIBUTIONS NOT
PERMITTED. Except in the case of a qualified domestic relations order under
ERISA or as may otherwise be prescribed by law, no distribution or payment under
the Plan to any Participant, Inactive Participant or Beneficiary, or any other
person entitled to payment under the Plan, may be anticipated, assigned (either
at law or in equity), alienated or subject to attachment, garnishment, levy,
execution, or other legal or equitable process. If any such person is
adjudicated bankrupt or purports to anticipate, assign or alienate any such
distribution or payment, the Committee, in its discretion, may hold or apply or
cause to be held or applied such distribution or payment, or any part thereof,
for the benefit of such person in such manner as the Committee shall direct.
Section 23.03. PAYMENTS TO MINORS AND INCOMPETENT PERSONS. If the
Committee determines that any person entitled to a distribution or payment from
the trust fund under the Plan is an infant or incompetent or is unable to care
for his affairs by reason of physical or mental disability, it may cause all
distributions or payments thereafter becoming due to such person to be made to
any other person for his benefit, without responsibility to follow the
application of payments so made. Payments made pursuant to this provision shall
completely discharge an Employing Company, the Trustee and the Committee with
respect thereto.
Section 23.04. DISTRIBUTIONS PAID FROM TRUST. The trust fund
established under the Plan shall be the sole source of the payments or
distributions to be made in accordance with the Plan.
Section 23.05. PLAN INTENDED TO BE A QUALIFIED PLAN. An Employing
Company intends that the Plan (including the trust forming a part thereof) shall
be a plan of an Employing Company for the exclusive benefit of its Employees or
their Beneficiaries as provided for in Section 1165(a) of the Puerto Rico Code,
Sections 401(a) and 501(a) of the U.S. Code and as may be provided for in any
similar provisions of subsequent revenue laws, and that the trust shall be a
qualified trust under such provisions and exempt under Section 1165(a) of the
Puerto Rico Code, Section 501(a) of the U.S. Code and as may be provided for in
any similar provisions of subsequent revenue laws. An Employing Company intends
that the Plan shall meet the requirements of Sections 401(k) and (m) of the U.S.
Code and Section 1165(e) of the Puerto Rico Code.
Section 23.06. RETURN OF CONTRIBUTION. Upon request of an Employing
Company, to the extent permitted by ERISA the Trustee shall return:
(a) To an Employing Company who has made contributions, any
contributions made under this Plan (adjusted to reflect any earnings and any
appreciation or depreciation attributable thereto) if the Puerto Rico Treasury
Department or the federal Internal Revenue Service refuses to issue an initial
determination letter to the effect that this Plan and the trust meet the
requirements of the Puerto Rico Code and the U.S. Code. Such contributions will
be returned within one year after the date of such denial of qualification and
this Plan and the trust will then terminate.
(b) To an Employing Company, any contribution by such company made
under a mistake of fact. The amount which may be returned may not exceed the
excess of the amount contributed (reduced to reflect any loss or depreciation
attributable thereto) over the amount that would have been contributed had there
not occurred a mistake of fact. Appropriate reductions
-46-
will be made in the accounts of Participants to reflect the return of any
contribution previously credited to such accounts. However, no contribution will
be returned to the extent that such reduction would reduce the account of a
Participant to an amount less than the balance that would have been credited to
his account had the contributions not been made. No contribution made by an
Employing Company under a mistake of fact will be returned after the expiration
of one year from the date of contribution.
(c) To an Employing Company, any contribution by such company
conditioned upon its deductibility under Section 1023(n) of the Puerto Rico Code
or Section 404 of the U.S. Code. All contributions by an Employing Company under
the Plan are expressly made conditional upon their deductibility for Puerto Rico
income tax purposes and federal income tax purposes. The amount that may be
returned may not exceed the excess of the amount contributed (reduced to reflect
any loss or depreciation attributable thereto) over the amount that would have
been contributed had there not occurred a mistake in determining the deduction.
Appropriate reductions will be made in the accounts of Participants to reflect
the return of any contributions previously credited to such accounts. However,
no contribution will be returned to the extent that such reduction would reduce
the account of a Participant to an amount less than the balance that would have
been credited to his account had the contribution not been made. Any
contribution conditioned on its deductibility which is returned to Zimmer will
be returned within one year after it is disallowed as a deduction.
Section 23.07. GOVERNING LAW. The provisions of the Plan shall be
construed, administered and governed under the laws of Puerto Rico, except as
such laws may have been superseded by ERISA.
ARTICLE 24
TOP HEAVY PROVISIONS
Section 24.01. TOP HEAVY PLAN REQUIREMENTS. Notwithstanding any other
provisions of the Plan, if for any Plan Year the Plan is determined to be a Top
Heavy Plan (as defined in Section 24.03) within the meaning of Section 416(g) of
the U.S. Code, then the following requirements shall apply:
(a) The top heavy minimum contribution requirement of Section 416(c) of
the U.S. Code set forth in Section 24.04; and
(b) The top heavy limitation on compensation requirement of Section
416(d) of the U.S. Code set forth in Section 24.05.
Section 24.02. DEFINITIONS. For purposes of this Article 24, the
following terms shall have the respective meanings set forth below:
"AGGREGATION GROUP" means either a Required Aggregation Group (as
defined in subsection 24.02(g)) or a Permissive Aggregation Group (as defined in
subsection 24.02(f)).
-47-
"COMPENSATION" means, the annual remuneration paid or accrued for
personal services rendered to an Employing Company during the Plan Year as
reported on Commonwealth of Puerto Rico Form 499 R-2/W-2 PR, and shall also
include any authorized Pre-Tax Contributions pursuant to Section 2.01 of the
Plan and any authorized salary reduction amount pursuant to a plan established
under Section 125 of the U.S. Code.
"DETERMINATION DATE" means, with respect to any Plan Year, (i) the last
day of the immediately preceding Plan Year, or (ii) in the case of the first
Plan Year of the Plan, the last day of such Plan Year.
"KEY EMPLOYEE" means, for any Plan Year, an Employee within the meaning
of Section 416(i)(1) of the U.S. Code.
"NON-KEY EMPLOYEE" means any employee of the Zimmer or an Affiliate or
a Beneficiary of such employee who is not a Key Employee, within the meaning of
Section 416(i)(2) of the U.S. Code and the regulations thereunder.
"PENSION PLAN" means any defined benefit plan or any defined
contribution plan.
"PERMISSIVE AGGREGATION GROUP" means a Required Aggregation Group (as
defined in subsection 24.02(g)) that also includes a Pension Plan of Zimmer or
an Affiliate which, although not required to be included in the Required
Aggregation Group, is treated by Zimmer or an Affiliate as being part of such
Required Aggregation Group, provided that such Required Aggregation Group would
continue to meet the requirements of Sections 401(a)(4) and 410 of the U.S. Code
with such Pension Plan being taken into account.
"REQUIRED AGGREGATION GROUP" means (i) each Pension Plan of Zimmer or
an Affiliate in which a Key Employee is a member, and (ii) each other Pension
Plan of Zimmer or an Affiliate which enables any Pension Plan described in the
immediately preceding clause (i) to meet the requirements of Section 401(a)(4)
or 410 of the U.S. Code.
"TOP HEAVY GROUP" means, with respect to any Plan Year, an Aggregation
Group if, as of the Determination Date with respect to such Plan Year, (i) the
sum of (1) the present value of the cumulative accrued benefits (determined, in
accordance with Section 416(g) of the U.S. Code and the regulations thereunder,
as of the most recent date which is within a twelve (12) month period ending on
such Determination Date that is used for computing Defined Benefit Plan costs
for minimum funding) for Key Employees under all defined benefit plans included
in such Aggregation Group, and (2) the aggregate of the accounts (determined, in
accordance with Section 416(g) of the U.S. Code and the regulations thereunder),
as of the valuation date (as provided in Section 9.03 coincident with or
immediately preceding such Determination Date) of Key Employees under all
defined contributions plans included in such Aggregation Group, exceeds (ii)
sixty percent (60%) of a similar sum determined for Key Employees and Non-Key
Employees; provided, however, that if any employee is a Non-Key Employee with
respect to any Pension Plan for any Plan Year, but such employee was a Key
Employee with respect to such Pension Plan for any prior Plan Year, any accrued
benefits for such employee and any account of such employee shall not be taken
into account for purposes of the foregoing determination.
-48-
Section 24.03. DETERMINATION OF TOP HEAVY PLAN. The Plan shall be a Top
Heavy Plan for any Plan Year in which the Plan is included in a Top Heavy Group.
Section 24.04. TOP HEAVY CONTRIBUTION REQUIREMENT. For any Plan Year
with respect to which the Plan is determined to be a Top Heavy Plan, if the
benefits accrued, or contributions made, under all defined benefit plans and all
other defined contribution plans for Non-Key Employees is not at least equal to
those stated in Section 416(c) of the U.S. Code, an Employing Company
Contributions for such Plan Year for each Participant who is a Non-Key Employee,
regardless of whether such Non-Key Employee has completed 1,000 Hours of Service
during such Plan Year but only if such Non-Key Employee has not separated from
service with an Employing Company on the last day of such Plan Year, as a
percentage of such Participant's annual Compensation, shall not be less than the
lesser of:
(a) three percent (3%), or
(b) the highest percentage at which contributions are made for a Key
Employee; provided, however, that this paragraph (b) shall not apply if this
Plan and a defined benefit plan are required to be included in an Aggregation
Group and if this Plan enables such other plan to meet the qualification
requirements of the U.S. Code. If for any Plan Year, a Non-Key Employee
participates in one or more top-heavy qualified defined contribution plans and
one or more top-heavy defined benefit plans of Zimmer or an Affiliate, the
minimum contribution requirements set forth in this Section 24.04 will be deemed
met if the retirement benefit provided under the qualified defined benefit plan
or plans is at least equal to the minimum amount required under Section
416(c)(1) of the U.S. Code.
-49-