Common use of CONVERSION OF OUTSTANDING STOCK OPTIONS Clause in Contracts

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx stock options. The number of shares and the exercise price of your new Xxxxxx options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx options and future share price appreciation of Xxxxxx shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx X. Xxxxxxxx February 21, 2001 Page 3

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx stock options. The number of shares and the exercise price of your new Xxxxxx options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx options and future share price appreciation of Xxxxxx shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. .] Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx Xxxx X. Xxxxxxxx Xxxxxxx-Xxxxxx February 21, 2001 Page 3

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx Zimmer stock options. The number of shares and the exercise price of your new Xxxxxx Zimmer options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx Zimmer employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx Zimmer options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx Zimmer options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx Zimmer options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx Zimmer options and future share price appreciation of Xxxxxx Zimmer shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx Zimmer stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx X. Xxxxxxxx February 21, 2001 Page 3.

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx stock options. The number of shares and the exercise price of your new Xxxxxx options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx options and future share price appreciation of Xxxxxx shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx Xxxx X. Xxxxxxxx February 21, 2001 Page 3

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx stock options. The number of shares and the exercise price of your new Xxxxxx options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx options and future share price appreciation of Xxxxxx shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx Xxx X. Xxxxxxxx Xxxxxxxxxxxxx, Ph.D. February 21, 2001 Page 33 4. LONG-TERM PERFORMANCE AWARDS. A. 1999-2001 XXXXXXX-XXXXX SQUIBB LONG-TERM PERFORMANCE AWARD. Your participation in the 1999-2001 Xxxxxxx-Xxxxx Squibb Long-Term Performance Award ("1999-2001 LTP") cycle will terminate as of the Effective Date. In lieu of such participation or any payment under the 1999-2001 LTP, you will receive a cash payment equal to a full term award (i.e., based on 36 months of deemed participation) that you would have received pursuant to the terms of the 1999-2001 LTP award cycle had you worked for Xxxxxxx-Xxxxx Squibb for the entire award period. Payment to you will be based upon Xxxxxxx-Xxxxx Squibb's actual performance during the 36-month award cycle (which will be the same for other participants who continue to be employed by Xxxxxxx-Xxxxx Squibb during the entire cycle) and will be determined by Xxxxxxx-Xxxxx Squibb under the terms of the 1999-2001 LTP. Payment to you of this cash amount will occur on the normal payment date for participants in the 1999-2001 LTP (which is anticipated to be in February, 2002). B. 2001-2003 XXXXXXX-XXXXX SQUIBB LONG-TERM PERFORMANCE AWARD. Your participation in the 2001-2003 Xxxxxxx-Xxxxx Squibb Long-Term Performance Award ("2001-2003 LTP") cycle will terminate as of the Effective Date. In lieu of such participation or any payment under the 2001-2003 LTP, effective on the Effective Date, you will be awarded a Xxxxxx stock option with a value equal to the full LTP award. The number of shares and the exercise price of this Xxxxxx stock option will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors using a generally accepted valuation methodology. Your option will vest in equal installments over a period of four years provided that you remain employed with Xxxxxx during that time or as provided otherwise under the Xxxxxx Stock Incentive Plan.

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx Zimmer stock options. The number of shares and the exercise price of your new Xxxxxx Zimmer options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx Zimmer employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx Zimmer options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx Zimmer options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx Zimmer options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx Zimmer options and future share price appreciation of Xxxxxx Zimmer shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx Zimmer stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx Xxxx X. Xxxxxxxx February 21, 2001 Page 3

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx Zimmer stock options. The number of shares and the exercise price of your new Xxxxxx Zimmer options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx Zimmer employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx Zimmer options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx Zimmer options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx Zimmer options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx Zimmer options and future share price appreciation of Xxxxxx Zimmer shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. .] Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx Zimmer stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx Xxxx X. Xxxxxxxx Xxxxxxx-Xxxxxx February 21, 2001 21,2001 Page 3

CONVERSION OF OUTSTANDING STOCK OPTIONS. Any Xxxxxxx-Xxxxx Squibb stock options granted to you prior to the Effective Date (including, but not limited to, the options awarded to you on January 3, 2000 pursuant to a 50% reduction in target cash bonus under the Xxxxxxx-Xxxxx Squibb Company Performance Incentive Plan ("PIP")) that are outstanding on the date of the Spin-Off, will be converted into new Xxxxxx Zimmer stock options. The number of shares and the exercise price of your new Xxxxxx Zimmer options will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors based upon a conversion ratio that will be used for all Xxxxxx Zimmer employees and that preserves any gains earned through the date of conversion. Your new Xxxxxx Zimmer options will be vested in the same proportion that your Xxxxxxx-Xxxxx Squibb options were vested and the nonvested portion of your new Xxxxxx Zimmer options will vest from the original grant date of your Xxxxxxx-Xxxxx Squibb options according to the vesting schedule in such Xxxxxxx-Xxxxx Squibb options. Certain of your Xxxxxxx-Xxxxx Squibb options were subject to a price appreciation threshold of 30% for a period of eight years following grant. Your new Xxxxxx options will also be subject to a 30% price appreciation threshold that will be based upon the adjusted exercise price of your Xxxxxx options and future share price appreciation of Xxxxxx Zimmer shares subject to the requirement that the price appreciation threshold be met for 15 consecutive trading days. Any Xxxxxxx-Xxxxx Squibb stock options granted to you after the date of this letter agreement that are converted into new Xxxxxx Zimmer stock options will reflect any applicable conditions to exercisability such as vesting requirements or price appreciation thresholds. Xxxxx Xxx X. Xxxxxxxx Xxxxxxxxxxxxx, Ph.D. February 21, 2001 Page 33 4. LONG-TERM PERFORMANCE AWARDS. A. 1999-2001 XXXXXXX-XXXXX SQUIBB LONG-TERM PERFORMANCE AWARD. Your participation in the 1999-2001 Xxxxxxx-Xxxxx Squibb Long-Term Performance Award ("1999-2001 LTP") cycle will terminate as of the Effective Date. In lieu of such participation or any payment under the 1999-2001 LTP, you will receive a cash payment equal to a full term award (i.e., based on 36 months of deemed participation) that you would have received pursuant to the terms of the 1999-2001 LTP award cycle had you worked for Xxxxxxx-Xxxxx Squibb for the entire award period. Payment to you will be based upon Xxxxxxx-Xxxxx Squibb's actual performance during the 36-month award cycle (which will be the same for other participants who continue to be employed by Xxxxxxx-Xxxxx Squibb during the entire cycle) and will be determined by Xxxxxxx-Xxxxx Squibb under the terms of the 1999-2001 LTP. Payment to you of this cash amount will occur on the normal payment date for participants in the 1999-2001 LTP (which is anticipated to be in February, 2002). B. 2001-2003 XXXXXXX-XXXXX SQUIBB LONG-TERM PERFORMANCE AWARD. Your participation in the 2001-2003 Xxxxxxx-Xxxxx Squibb Long-Term Performance Award ("2001-2003 LTP") cycle will terminate as of the Effective Date. In lieu of such participation or any payment under the 2001-2003 LTP, effective on the Effective Date, you will be awarded a Xxxxxx stock option with a value equal to the full LTP award. The number of shares and the exercise price of this Zimmer stock option will be determined by the Xxxxxxx-Xxxxx Squibb Board of Directors using a generally accepted valuation methodology. Your option will vest in equal installments over a period of four years provided that you remain employed with Xxxxxx during that time or as provided otherwise under the Xxxxxx Stock Incentive Plan.