SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 18, 2017
ZIMMER BIOMET HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
345 East Main Street
Warsaw, Indiana 46580
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (574) 267-6131
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|☐||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|☐||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|☐||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|☐||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter) ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(e) of the Exchange Act ☐
|Item 5.02||Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.|
On December 19, 2017, Zimmer Biomet Holdings, Inc. (the Company) announced that the Board of Directors of the Company (the Board) appointed Bryan C. Hanson as the Companys President and Chief Executive Officer and elected him as a member of the Board, effective December 19, 2017. A copy of the related press release is furnished with this report as Exhibit 99.1.
Mr. Hanson, age 50, previously served as Executive Vice President and President, Minimally Invasive Therapies Group of Medtronic Public Limited Company (Medtronic) from January 2015 until joining the Company. Prior to that, he was Senior Vice President and Group President, Covidien of Covidien Public Limited Company (Covidien) from October 2014 to January 2015; Senior Vice President and Group President, Medical Devices and United States of Covidien from October 2013 to September 2014; Senior Vice President and Group President of Covidien for the Surgical Solutions business from July 2011 to October 2013; and President of Covidiens Energy-based Devices business from July 2006 to June 2011. Mr. Hanson held several other positions of increasing responsibility in sales, marketing and general management with Covidien from October 1992 to July 2006.
There are no arrangements or understandings between Mr. Hanson and any other persons pursuant to which he was appointed President and Chief Executive Officer and elected as a member of the Board. There are also no family relationships between Mr. Hanson and any director or executive officer of the Company, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Mr. Hanson succeeds Daniel P. Florin, who served as the Companys Interim Chief Executive Officer and as a member of the Board from July 11, 2017 through December 19, 2017. Mr. Florin will continue to serve as the Companys Senior Vice President and Chief Financial Officer.
Employment Arrangements with Mr. Hanson
On December 18, 2017, Mr. Hanson accepted a written offer letter from the Company establishing his compensation as President and Chief Executive Officer (the Offer Letter). On the same date, the Company entered into a Chief Executive Officer Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement with Mr. Hanson (the Restrictive Covenant Agreement). On December 19, 2017, the Company entered into a Change in Control Severance Agreement and an Indemnification Agreement with Mr. Hanson.
Mr. Hanson will serve on an at-will basis as the Companys President and Chief Executive Officer. He will be paid an initial annual base salary of $1,050,000 and will be eligible to participate in the Companys Executive Performance Incentive Plan (the EPIP) for the 2018 performance period, with a target annual bonus opportunity of 130% of his base salary. He will also be eligible for relocation assistance under the terms of the Companys relocation policy.
As an incentive for Mr. Hanson to serve as the Companys President and Chief Executive Officer, he received the following one-time sign-on equity awards under the Companys 2009 Stock Incentive Plan (the 2009 Plan), each with a grant date of December 19, 2017, but subject to cancellation as described below: (i) nonqualified stock options (NQSOs) with a grant date fair value of approximately $3,550,000 that will vest ratably on the first, second, third and fourth anniversaries of the grant date; and (ii) performance-based restricted stock units (PRSUs) with a grant date fair value of approximately $3,550,000 that will vest on the fourth anniversary of the grant date subject to achievement of specified stock price performance goals. The foregoing one-time sign-on equity awards are subject to cancellation unless Mr. Hanson executes an open market purchase of at least $3,000,000 of Company common stock within the first 90 business days of employment. As a further incentive for Mr. Hanson to serve as the Companys President and Chief Executive Officer, he also received the following one-time replacement equity grants under the 2009 Plan that are intended to replace the value of awards that he forfeited upon leaving his former employer to join the Company, each with a grant date of December 19, 2017: (i) NQSOs with a grant date fair value of approximately $2,750,000 that will vest ratably on the first, second, third and fourth anniversaries of the grant date; (ii) time-based restricted stock units (RSUs) with a grant date fair value of approximately $3,089,000 that will vest ratably on the first, second and third anniversaries of the grant date; and (iii) PRSUs with a grant date fair value of approximately $2,750,000 that will vest on the fourth anniversary of the grant date subject to achievement
of specified stock price performance goals. Pursuant to the Offer Letter, for calendar year 2018, Mr. Hanson will receive a grant of equity awards under the 2009 Plan having a grant date fair value of approximately $7,100,000. Thereafter, Mr. Hanson will be eligible for grants under the 2009 Plan in the discretion of the Compensation and Management Development Committee of the Board. Each equity award granted to Mr. Hanson is subject to the terms and conditions of the 2009 Plan and the applicable award agreement. Mr. Hanson will also be eligible to participate in the Companys Deferred Compensation Plan (the DCP), effective January 1, 2018. Additionally, he will be entitled to personal use of the Companys aircraft up to a maximum incremental cost to the Company of $200,000 per calendar year and he will be eligible to participate in employee benefit plans of the Company, including the Companys 401(k) plan and health and welfare benefit plans, on their terms as in effect from time to time.
In addition, Mr. Hanson will receive a one-time cash bonus of $573,000, intended to replace a pro rata portion of the bonus he forfeited upon leaving his former employer to join the Company, subject to his providing documentation evidencing forfeiture of bonus eligibility and further subject to full repayment to the Company in the event he voluntary terminates employment within one year.
The EPIP, the 2009 Plan and the DCP were incorporated by reference as exhibits to the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 1, 2017 (the 2016 Form 10-K). The forms of award agreement for Mr. Hansons NQSO, PRSU and RSU grants are attached as Exhibits 10.4, 10.5 and 10.6 to this report, respectively, and incorporated herein by reference.
Pursuant to the Offer Letter, in the event that Mr. Hansons employment is involuntary terminated without cause, he would be entitled to severance benefits of two times the sum of his base salary and target annual bonus, as well as 24 months of COBRA premiums (medical and dental) based on his coverage in effect immediately prior to his separation. The foregoing severance benefits would be subject to his execution of a general release of claims in favor of the Company and applicable terms and conditions to be set forth in an executive severance plan or individual agreement.
Change in Control Severance Agreement
The Change in Control Severance Agreement has a term ending December 31, 2018, with one-year extensions thereafter unless either party gives written notice not to extend the agreement at least 30 days prior to the end of the then-current term or unless a change in control occurs (as such term is defined in the agreement). If a change in control occurs during the term of the Change in Control Severance Agreement, the agreement will continue in effect for a period of 24 months from the end of the month in which the change in control occurs.
Under the Change in Control Severance Agreement, if Mr. Hansons employment is terminated during the term of the agreement following a change in control of the Company other than (i) by the Company for cause, (ii) by reason of Mr. Hansons death, or (iii) by Mr. Hanson without good reason (as such terms are defined in the agreement), Mr. Hanson would be entitled to receive: (a) a lump sum payment equal to three times the sum of his base salary and target annual bonus opportunity; and (b) a lump sum amount equal to any unpaid incentive compensation allocated or awarded to him for the completed calendar year preceding the date of termination and a pro rata portion to the date of termination of the aggregate value of all contingent incentive compensation awards to him for the current calendar year. If, prior to a change in control, Mr. Hansons employment is terminated without cause at the direction of a person who has entered into an agreement with the Company, the consummation of which would constitute a change in control, or by Mr. Hanson for good reason if the circumstance or event that constitutes good reason occurs at the direction of such person, Mr. Hanson would be entitled to receive: (a) a lump sum payment equal to three times the sum of his base salary and the amount of the largest aggregate annual bonus paid to him with respect to the three years immediately prior to the year in which the notice of termination was given; and (b) a lump sum amount equal to any unpaid incentive compensation allocated or awarded to him for the completed calendar year preceding the date of termination, provided that the performance conditions applicable to such incentive compensation are met, and an amount equal to a pro rata portion to the date of termination of the average annual award paid to him under the Companys incentive compensation plans during the three years immediately prior to the year in which the notice of termination was given.
The Change in Control Severance Agreement also provides that, under the employment termination circumstances described in the preceding paragraph, (i) all outstanding stock options granted to Mr. Hanson would become immediately vested and exercisable, and (ii) to the extent not otherwise provided under the applicable award agreement, any restrictions on outstanding shares of common stock would immediately lapse. In addition, Mr.
Hanson would be entitled to receive a lump sum cash amount equal to the unvested portion, if any, of the Companys matching contributions (and attributable earnings) credited to him under the Companys 401(k) plan and DCP. He would also receive a lump-sum payment equal to 24 times the monthly COBRA premium then charged for the same level of medical and dental coverage he had in effect immediately prior to his termination, and the Company would arrange to provide life insurance coverage for a 24-month period substantially similar to the coverage in effect immediately prior to his termination.
The Change in Control Severance Agreement does not provide for any tax gross-up payments. Further, it provides that in the event amounts payable to Mr. Hanson under the Change in Control Severance Agreement or otherwise in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended, then the value of those payments will be reduced to the extent necessary so that the payments will not trigger that excise tax.
All severance payments and benefits under the Change in Control Severance Agreement are subject to the execution of a general release of claims in favor of the Company.
Restrictive Covenant Agreement and Indemnification Agreement
The Restrictive Covenant Agreement with Mr. Hanson provides, among other matters, that while he is employed by the Company and for a period of two years thereafter, he will be prohibited from competing against the Company or its subsidiaries or affiliates, from soliciting any employees or actual or prospective customers of the Company or its subsidiaries or affiliates and from interfering with certain business relationships of the Company or its subsidiaries or affiliates. At all times while Mr. Hanson is employed by the Company and thereafter, he is subject to certain confidentiality covenants.
The Indemnification Agreement with Mr. Hanson is substantially similar to the form entered into by each of the Companys executive officers, which was incorporated by reference as an exhibit to the Companys 2016 Form 10-K.
The foregoing summaries of the Offer Letter, the Change in Control Severance Agreement and the Restrictive Covenant Agreement are qualified in their entirety by the full text of the Offer Letter, the Change in Control Severance Agreement and the Restrictive Covenant Agreement, copies of which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and incorporated herein by reference.
Compensation Arrangements with Mr. Florin
Mr. Florins annual base salary was temporarily increased during the period he served as Interim Chief Executive Officer. Effective on or about December 19, 2017, Mr. Florins annual base salary will revert to $583,500.
|Item 7.01||Regulation FD Disclosure.|
On December 19, 2017, the Company issued a press release regarding Mr. Hansons appointment as President and Chief Executive Officer of the Company and election to the Board, and Mr. Florins stepping down as Interim Chief Executive Officer and a member of the Board. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in this Item 7.01, including the related information set forth in the press release attached hereto as Exhibit 99.1, is being furnished and shall not be deemed filed with the SEC for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.
|Item 9.01||Financial Statements and Exhibits.|
|10.1||Offer Letter, dated as of December 18, 2017, by and between Zimmer Biomet Holdings, Inc. and Bryan C. Hanson|
|10.2||Change in Control Severance Agreement, dated as of December 19, 2017, by and between Zimmer Biomet Holdings, Inc. and Bryan C. Hanson|
|10.3||Chief Executive Officer Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement, dated as of December 18, 2017, by and between Zimmer Biomet Holdings, Inc. and Bryan C. Hanson|
|10.4||Form of NQSO Award Agreement (CEO one-time award)|
|10.5||Form of PRSU Award Agreement (CEO one-time award)|
|10.6||Form of RSU Award Agreement (CEO one-time award)|
|99.1||Press release issued by Zimmer Biomet Holdings, Inc., dated December 19, 2017|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 21, 2017
|ZIMMER BIOMET HOLDINGS, INC.|
|Name:||Chad F. Phipps|
|Title:||Senior Vice President, General Counsel and Secretary|
December 18, 2017
We are pleased to offer you the role of President and Chief Executive Officer (CEO) of Zimmer Biomet Holdings, Inc. (the Company or Zimmer Biomet). You will report directly to the Companys Board of Directors and lead the Zimmer Biomet Operating Committee.
In this role, your initial annualized salary will be one million fifty thousand dollars ($1,050,000) payable in biweekly installments of forty thousand three hundred eighty-four dollars and sixty-two cents ($40,384.62). Your salary grade will be level Z01. Your start date will be Tuesday, December 19, 2017.
Annual Merit Adjustment
Zimmer Biomets annual merit review process involves base pay adjustments consistent with job performance. Merit adjustments are based on performance during the calendar year. You will be eligible for a merit increase beginning in 2019.
Executive Performance Incentive Plan
You will be eligible to participate in the 2018 Executive Performance Incentive Plan (EPIP). Performance period is from January 1 to December 31, 2018. Your target bonus will be one hundred thirty percent (130%) of your annual base salary (eligible earnings). Payout may be more or less than this target percentage, depending on actual year-end results for the established performance measures. Payment will occur in or around March of the year following the bonus period after annual performance measures upon which the bonus is based have been determined. You must remain employed by Zimmer Biomet at the time of bonus payout to receive the bonus.
2018 Long-Term Incentive (LTI) Plan Award
Zimmer Biomet annual LTI Plan grants have two components:
|||Stock options; and|
|||Performance-based Restricted Stock Units.|
The LTI structure currently offers participants a diversified award of 50% stock options and 50% performance-based restricted stock units (PRSUs) that can provide more consistent value than an award of stock options alone. Further, we believe this structure assists the Company in remaining competitive within the global labor market and creates a compelling and valuable long-term incentive for participants. We will review the performance metrics, equity award types and value mix in conjunction with the 2018 annual grant, along with your input and approval by the Compensation and Management Development Committee of the Board of Directors (Compensation Committee). Thereafter, applicable performance metrics, equity award types and value mix will be subject to annual review and approval by the Compensation Committee.
For 2018, your estimated LTI Plan grant date fair value is approximately seven million one hundred thousand dollars ($7,100,000). We anticipate the grant date (subject to Compensation Committee approval) of the 2018 award will be in March 2018.
LTI grant values are based upon our compensation philosophy, which is reviewed annually by the Compensation Committee and adjusted as warranted. Please keep in mind that your job responsibilities, performance against your goals and objectives, the overall financial results of the Company and peer group / market compensation practices also impact LTI grant values each year.
All awards are subject to Compensation Committee approval and other terms and conditions of the 2009 Stock Incentive Plan, as amended from time to time, award agreements, and your execution of a non-disclosure, intellectual property and restrictive covenant agreement in the form provided by the Company.
Former Employer Prorated Bonus Forfeiture Replacement
Subject to your providing documentation evidencing your forfeiture of bonus eligibility with your former employer as a result of your leaving that employment to serve as President and CEO of Zimmer Biomet, the Company will pay you a cash bonus of $573,000 to approximate your prorated bonus from your former employer. The amount of forfeiture is calculated assuming one hundred percent (100%) achievement of measures upon which the bonus amount is determined, and assuming payout for a prorated period of time beginning May 1, 2017 and ending December 31, 2017.
Zimmer Biomet will issue this payment to you within ninety (90) calendar days of the later of your Zimmer Biomet hire date or the date that your bonus ineligibility is confirmed by your former employer. Payment will be made less applicable tax withholdings and will not be treated as compensation for purpose of any other bonus or benefit plan. As a condition of payment you must agree by your signature below that in the event of your voluntary separation from Zimmer Biomet employment before the first anniversary of your date of hire, you will repay, on or before your last day of employment, the full gross amount of this Bonus Forfeiture Replacement.
One-Time Sign-on Equity Award
As an incentive for you to serve as the Companys President and CEO, as soon as administratively feasible following your commencement of employment with the Company but subject to cancellation as described below, the Company will issue to you:
|a)||Stock options with a grant date fair value of approximately three million five hundred fifty thousand dollars ($3,550,000) vesting twenty-five percent (25%) per year over a four- (4-) year period subject to continued employment on each vesting date, with such vesting on the anniversary dates of the grant, and with a term of ten (10) years; and|
PRSUs with performance measured by the Companys achievement of absolute stock price hurdles (Stock Price PRSUs) with a grant date fair value of approximately three million five hundred fifty thousand dollars ($3,550,000) vesting on the fourth (4th) anniversary of the grant subject to continued employment on such date and achievement of the specified performance goals and other conditions as provided in
|the award agreement. One-third (1/3) of the Stock Price PRSUs will become eligible to vest if the Companys closing stock price achieves each of three (3) hurdles for twenty (20) consecutive trading days, with hurdles set at twenty percent (20%), thirty-five percent (35%) and fifty percent (50%) growth over the average closing stock price for the thirty (30) trading days immediately prior to the grant date.|
This one-time sign-on equity award is subject to cancellation unless you execute, during periods of open trading in accordance with applicable law and the Companys policies and procedures, an open-market purchase of at least $3,000,000 of Zimmer Biomet common stock within your first 90 business days of employment. Please note, the Company anticipates that the open trading window during your first 90 business days of employment will run from approximately January 29, 2018 through March 14, 2018, taking into consideration the Q4 2017 and Q1 2018 quarterly blackout periods under the Companys Stock Trading Policy.
Replacement Equity Award for Forfeited Equity Awards
As a further incentive for you to serve as Zimmer Biomets President and CEO, and recognizing that in doing so you will forfeit certain equity compensation opportunities with your previous employer, Zimmer Biomet will, upon or as soon as administratively feasible following your commencement of employment, issue to you equity awards with an aggregate grant date fair value of approximately $8,589,000 as a one-time replacement of forfeited equity awards at your former employer. These equity awards will consist of:
|a)||Stock options with a grant date fair value of approximately two million seven hundred fifty thousand dollars ($2,750,000) vesting twenty-five percent (25%) per year over a four- (4-) year period subject to your continued employment on each vesting date, with such vesting on the anniversary dates of the grant, and with a term of ten (10) years and an exercise price equal to the fair market value of Zimmer Biomet common stock on the grant date;|
|b)||Time-Based Restricted Stock Units (RSUs) with a grant date fair value of approximately three million eighty-nine thousand dollars ($3,089,000) vesting thirty-three and one-third percent (33-1/3%) per year over a three-year period subject to your continued employment on each vesting date; and|
|c)||Stock Price PRSUs with a grant date fair value of approximately two million seven hundred fifty thousand dollars ($2,750,000) vesting on the fourth (4th) anniversary of the grant subject to your continued employment on the vesting date and achievement of the specified performance goals and other conditions as provided in the award agreement. One-third (1/3) of the Stock Price PRSUs will become eligible to vest if, during the four- (4-) year performance period, the Companys closing stock price achieves each of three (3) hurdles for twenty (20) consecutive trading days, with hurdles set at twenty percent (20%), thirty-five percent (35%) and fifty percent (50%) growth over the average closing stock price for the thirty (30) trading days immediately prior to the grant date.|
Executive Officer (Section 16)
You will be designated by the Board of Directors as an officer of Zimmer Biomet for purposes of Rule 16a-1(f) and as an executive officer for purposes of Rule 3b-7 under the Securities Exchange Act of 1934, as amended.
As an executive officer, you will be subject to stock ownership guidelines established by the Board of Directors in order to align the interests of executive officers more closely with those of stockholders. The guidelines will require you to own shares with a value equal to at least six (6) times your base salary. Under the guidelines, all shares you hold, including all RSUs and PRSUs you hold (at the target award level), will count toward this ownership requirement. In addition, one-half (1/2) of any gain on vested stock options will count toward this requirement. You will have up to five (5) years to achieve the required level of stock ownership. Further, every executive officer must obtain clearance prior to selling any shares of Company common stock, in part to ensure that all officers remain in compliance with the stock ownership guidelines. These stock ownership guidelines are reviewed and subject to modification by the Board of Directors from time to time.
Change In Control Severance Agreement
In your role, you will be offered a Change In Control Severance Agreement (CIC Agreement), subject to your entering into the enclosed non-disclosure, intellectual property and restrictive covenant agreement. The CIC Agreement would provide you an offer of certain severance benefits should there be a change in control (CIC) of Zimmer Biomet and resulting, qualifying termination of your employment within the specified time period.
Briefly, the CIC Agreement terms include:
|||Double Trigger a severance benefit offer would be triggered by a CIC of the Company and your termination of employment by the Company without Cause or by you for Good Reason, as those terms are defined in the Agreement.|
|||Window two (2) years post-CIC.|
|||Severance Benefits |
|||Three times (3x) the sum of base salary plus target bonus, plus a pro rata portion of all contingent incentive programs at target levels, all paid in lump-sum form less applicable tax withholdings. In the event of a qualifying termination of employment following a Potential Change in Control, incentive program severance amounts are computed by reference to historical, rather than target, amounts.|
|||Excise Tax Adjustment In the event payments would trigger excise tax under IRS rules and regulations, the amount of severance will be reduced to a level that does not trigger the tax.|
|||Equity To the extent not otherwise provided under the written agreement evidencing the grant:|
|||All outstanding stock options held will fully vest and be exercisable.|
|||All time-based restrictions imposed under all outstanding awards of restricted stock and restricted stock units will immediately lapse.|
|||With respect to performance-based awards, the number of shares or units deemed earned will be the greater of (i) the target number or (ii) the number that would have been earned based on actual performance from the beginning of the award period to the date of the CIC.|
|||Health Insurance Benefit A lump sum payment equal to the cost of twenty-four (24) months of COBRA coverage (medical and dental) at the rate in effect at your separation date for the level of coverage you have in place at that time.|
|||Outplacement Six (6) months of outplacement and support services.|
|||Life Insurance Benefit Continuation for a two- (2-) year period after your date of termination of employment, reduced to the extent you obtain comparable coverage at no greater cost to you, or two (2) years worth of the premium cost in lieu of such coverage.|
|||Tax Liability Any and all severance payments and benefits will be reported as taxable income and subject to applicable withholdings in accordance with IRS rules and regulations in effect at the time.|
|||General Release Requirement All severance benefits provided under the CIC Agreement are subject to and contingent upon your entering into a general release in a form specified by the CIC Agreement.|
This summary is for informational purposes; in the event of any ambiguity or conflict with the terms of the CIC Agreement, the terms of the CIC Agreement would control. There would be no duplication of benefits provided under the Executive Severance Plan or otherwise.
Executive Severance Plan
We expect that the Compensation Committee will approve an Executive Severance Plan in the near term. You will be eligible to participate in the Executive Severance Plan. As President and CEO, in the event of your involuntary separation without Cause as defined under the plan, your severance benefit offer would include two times (2x) your final base salary; two times (2x) your target annual bonus, and twenty-four (24) months of COBRA premiums (medical and dental) based on your coverage in effect immediately prior to your separation. All payments would be payable in a lump-sum form, less applicable tax withholdings, subject to your entering into a general release in the form provided by the Company. There would be no duplication of benefits provided under the CIC Agreement or otherwise. In the event the Company does not establish an Executive Severance Plan, the Company will provide you individual severance benefits, subject to the foregoing and other standard terms.
U.S. Deferred Compensation Plan
As a valued member of our Zimmer Biomet leadership team, you will be eligible to participate in the Zimmer Biomet Deferred Compensation Plan beginning January 1, 2018.
The Deferred Compensation Plan offers:
|||Additional savings opportunities through voluntary deferrals and Company matching contributions;|
|||Pre-tax earnings to help your account grow faster; and|
|||In-service distribution options to help you plan for future events.|
Key features include:
|||The ability to defer up to 50% of your base salary and up to 95% of your annual bonus.|
|||Matching contributions of 100% of your contribution up to a maximum of 6% of base salary and bonus, minus 401(k) matching contributions.|
Zimmer Biomet provides a competitive benefits program, with many of the benefits effective on your first day of active employment. Once you begin employment, you will receive an enrollment package from Zimmer Biomet Benefits Services, Zimmer Biomets group benefits
services administrator, regarding your medical, dental, and other group benefits. In addition, you will receive an enrollment package for our 401(k) plan, the Zimmer Biomet Holdings, Inc. Savings and Investment Program, from Fidelity, our 401(k) services administrator. If you do not receive these mailings within two (2) weeks of your hire date, please contact Zimmer Biomet Benefit Services at 1-877-588-0933 or Fidelity at 1-800-835-5095. You must enroll in the various medical plans within thirty-one (31) calendar days of your start date.
As agreed and as an exception to Zimmer Biomets policy, you will accrue vacation at rate of four (4) weeks per calendar year, prorated in your year of hire, until you reach your tenth (10th) year anniversary, after which you will be eligible for vacation in accordance with Zimmer Biomets standard vacation accrual policy.
Zimmer Biomet will assist you with your relocation to the Warsaw/Fort Wayne/South Bend, Indiana area by paying for reasonable moving expenses incurred within one (1) year from the start of your employment in accordance with our Relocation Policy for similarly-situated executives. Once you accept our offer of employment, you will be contacted directly by the relocation vendor to begin the relocation process.
Personal Use of Company Aircraft
You will be entitled to personal use of the Companys aircraft up to a maximum incremental Company cost of two hundred thousand dollars ($200,000) per calendar year. You will be responsible for any tax liability arising from such aircraft usage, and the value of this benefit will not be treated as compensation for purposes of any other bonus or benefit plan.
Conditions of Offer
As a condition of and in consideration for employment with Zimmer Biomet, you must sign and return the enclosed non-disclosure, intellectual property and restrictive covenant agreement.
We are aware of your Employee Agreement with your former employer that you signed on April 2, 2015. Should your former employer express an intention or take action to prohibit or delay you from immediately serving as Zimmer Biomets President and CEO, we will engage in negotiations with your former employer and exert good faith reasonable efforts to resolve any such legal challenge. For avoidance of doubt, we expect and trust that you will fully honor your confidentiality obligations to your former employer, as we are sure you intend to do.
To the extent that any payments or benefits under this letter are deemed to be subject to Section 409A of the Internal Revenue Code, this letter will be interpreted in accordance with Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder in order to (a) preserve the intended tax treatment of the benefits provided with respect to such payments and (b) comply with the requirements of Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this letter providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a separation from service within the meaning of Section 409A. Nothing in this letter shall be construed as a guarantee by the Company of any
particular tax effect. The Company shall not be liable to you for any tax, penalty, or interest imposed on any amount paid or payable hereunder by reason of Section 409A, or for reporting in good faith any payment made under this letter as an amount includible in gross income under Section 409A.
General Information and Additional Enclosures
Zimmer Biomet is a federal contractor subject to Section 503 of the Rehabilitation Act of 1973 and as such, we are required to extend to applicants post-offer invitations to identify themselves as individuals with disabilities or as disabled veterans, Vietnam-era veterans, or recently-separated veterans. Providing this information is voluntary, and any information provided in response to this invitation will be kept confidential in accordance with the law. Failure or refusal to provide this information will not have an adverse effect on your employment. This information will be used only for legal purposes. Invitations to self-identify are enclosed.
The Immigration Reform and Control Act of 1986 requires that employers verify the legal status of all individuals beginning employment. This verification process is accomplished by reviewing certain types of documents to establish identity and legal authorization to work in the United States. Enclosed is Form I-9, which lists the documents you may provide for verification of employment eligibility and for proof of birth date. Please review this list and be prepared to provide the applicable original document(s) after you accept this employment offer and no later than the third day of your employment.
Please note that all benefits are subject to the terms and conditions of the applicable plan document or insurance policy, as amended from time to time. If there is any discrepancy between this letter and the plan documents, the plan documents will govern. While Zimmer Biomet intends to continue benefits referenced in this offer, we reserve the right to change or discontinue them at any time for any reason.
Please note in particular that any amount payable or paid to you pursuant to the Company EPIP or LTI Plan or any other similar performance-based compensation may be subject to forfeiture or repayment in accordance with the Companys Executive Compensation Recoupment Policy or applicable plan document or award agreement as approved, adopted and/or revised by the Board or Compensation Committee from time to time, and/or subject to recoupment as required by any other provisions of any law (including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended), governmental regulation or stock exchange listing requirement. By signing below you acknowledge your understanding that any such repayment obligation will apply notwithstanding anything else stated in this letter.
This letter does not create or constitute a contract of employment between you and Zimmer Biomet. Employment with Zimmer Biomet is at will, which means that either you or Zimmer Biomet may terminate the employment relationship at any time for any reason, with or without cause or notice.
We are very excited to have you join us and are looking forward to receiving your signed offer letter. We believe you will make a valuable contribution and find your career with Zimmer Biomet challenging and rewarding.
CONFIRMATION OF ACCEPTANCE
Please indicate your acceptance of this offer by signing below and returning the signed letter to me. At the same time, please also return your signed non-disclosure, intellectual property and restrictive covenant agreement.
This written offer voids and supersedes any previous written or oral employment offers.
|Bill P. Fisher|
|Senior Vice President, Global Human Resources|
I accept the position and the compensation elements outlined above, subject to the execution of the enclosed non-disclosure, intellectual property and restrictive covenant agreement.
|Bryan C. Hanson||Date|
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of December 19th, 2017, is made by and between ZIMMER BIOMET HOLDINGS, INC., a Delaware corporation (the Company), and Bryan C. Hanson (the Executive). The capitalized words and terms used throughout this Agreement are defined in Article XIII.
A. The Company considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel.
B. The Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such a possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.
C. The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Companys management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control.
D. The parties intend that no amount or benefit will be payable under this Agreement unless a termination of the Executives employment with the Company occurs following a Change in Control, or is deemed to have occurred following a Change in Control, as provided in this Agreement.
In consideration of the premises and the mutual covenants and agreements set forth below, the Company and the Executive agree as follows:
Term of Agreement
This Agreement will commence on the date stated above and will continue in effect through December 31, 2018. Beginning on January 1, 2019, and each subsequent January 1, the term of this Agreement will automatically be extended for one additional year, unless either party gives the other party written notice not to extend this Agreement at least 30 days before the extension would otherwise become effective or unless a Change in Control occurs. If a Change in Control occurs during the term of this Agreement, this Agreement will continue in effect for a period of 24 months from the end of the month in which the Change in Control occurs.
Compensation other than Severance Payments
SECTION 2.01. Disability Benefits. Following a Change in Control and during the term of this Agreement, during any period that the Executive fails to perform the Executives full-time duties with the Company as a result of Disability, the Executive will receive short-term and long-term disability benefits as provided under short-term and long-term disability plans having terms no less favorable than the terms of the Companys short-term and long-term disability plans as in effect immediately prior to the Change in Control, together with all other compensation and benefits payable to the Executive pursuant to the terms of any compensation or benefit plan, program, or arrangement maintained by the Company during the period of Disability.
SECTION 2.02. Compensation Previously Earned. If the Executives employment is terminated for any reason following a Change in Control and during the term of this Agreement, the Company will pay the Executives salary accrued through the Date of Termination, at the rate in effect at the time the Notice of Termination is given, together with all other compensation and benefits payable to the Executive through the Date of Termination under the terms of any compensation or benefit plan, program, or arrangement maintained by the Company during that period.
SECTION 2.03. Normal Post-Termination Compensation and Benefits. Except as provided in Section 3.01, if the Executives employment is terminated for any reason following a Change in Control and during the term of this Agreement, the Company will pay the Executive the normal post-termination compensation and benefits payable to the Executive under the terms of the Companys retirement, insurance, and other compensation or benefit plans, programs, and arrangements, as in effect immediately prior to the Change in Control. This provision does not restrict the Companys right to amend, modify, or terminate any plan, program, or arrangement prior to a Change in Control.
SECTION 2.04. No Duplication. Notwithstanding any other provision of this Agreement to the contrary, the Executive will not be entitled to duplicate benefits or compensation under this Agreement and the terms of any other plan, program, or arrangement maintained by the Company or any affiliate.
SECTION 3.01. Payment Triggers.
(a) In lieu of any other severance compensation or benefits to which the Executive may otherwise be entitled under any agreement, plan, program, policy, or arrangement of the Company (and which the Executive hereby expressly waives), the Company will pay the Executive the Severance Payments described in Section 3.02 upon termination of the Executives employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Article II, unless the termination is (1) by the Company for Cause, (2) by reason of the Executives death, or (3) by the Executive without Good Reason.
(b) For purposes of this Section 3.01, the Executives employment will be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason if (1) the Executives employment is terminated without Cause prior to a Change in Control at the direction of a Person who has entered into an agreement with the Company, the consummation of which will constitute a Change in Control; or (2) the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control as a Change in Control in applying the definition of Good Reason), if the circumstance or event that constitutes Good Reason occurs at the direction of such a Person.
(c) The Severance Payments described in this Article III are subject to the conditions stated in Article VI.
SECTION 3.02. Severance Payments. The following are the Severance Payments referenced in Section 3.01:
(a) Lump Sum Severance Payment. In lieu of any further salary payments to the Executive for periods after the Date of Termination, and in lieu of any severance benefits otherwise payable to the Executive, the Company will pay to the Executive, in accordance with Section 3.04, a lump sum severance payment, in cash, equal to three, times the sum of (1) the higher of the Executives annual base salary in effect immediately prior to the event or circumstance upon which the Notice of Termination is based or in effect immediately prior to the Change in Control, and (2) if Severance Payments are triggered under Section 3.01(a), the amount of the Executives target annual bonus entitlement under the Incentive Plan (or any other bonus plan of the Company then in effect) as in effect immediately prior to the event or circumstance giving rise to the Notice of Termination, or, if Severance Payments are triggered under Section 3.01(b), the amount of the largest aggregate annual bonus paid to the Executive with respect to the three years immediately prior to the year in which the Notice of Termination was given. If the Board determines that it is not workable to determine the amount that the Executives target bonus would have been for the year in which the Notice of Termination was given, then, for purposes of this paragraph (a), the Executives target annual bonus entitlement will be the amount of the largest aggregate annual bonus paid to the Executive with respect to the three years immediately prior to the year in which the Notice of Termination was given.
(b) Incentive Compensation. Notwithstanding any provision of the Incentive Plan or any other compensation or incentive plans of the Company, the Company will pay to the Executive, in accordance with Section 3.04, a lump sum amount, in cash, equal to the sum of (1) any incentive compensation that has been allocated or awarded to the Executive for a completed calendar year or other measuring period preceding the Date of Termination (to the extent not payable pursuant to Section 2.02) provided that, if Severance Payments are triggered
under Section 3.01(b), the performance conditions applicable to such incentive compensation are met, and (2) if Severance Payments are triggered under Section 3.01(a), a pro rata portion (based on elapsed time) to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for the current calendar year or other measuring period under the Incentive Plan, the Award Plan, or any other compensation or incentive plans of the Company, calculated as to each such plan using the Executives annual target percentage under that plan for that year or other measuring period and as if all conditions for receiving that target award had been met, or, if Severance Payments are triggered under Section 3.01(b), then with respect to each such plan, an amount equal to the average annual award paid to the Executive under such plan during the three years immediately prior to the year in which the Notice of Termination was given multiplied by a fraction, the numerator of which is the number of whole months elapsed since the beginning of the calendar year or other measuring period to the Date of Termination and the denominator of which is 12 (or the number of whole months in the measuring period).
(c) Options and Restricted Shares. All outstanding Options will become immediately vested and exercisable (to the extent not yet vested and exercisable as of the Date of Termination). To the extent not otherwise provided under the written agreement evidencing the grant of any restricted Shares to the Executive, all outstanding Shares that have been granted to the Executive subject to restrictions that, as of the Date of Termination, have not yet lapsed will lapse automatically upon the Date of Termination, and the Executive will own those Shares free and clear of all such restrictions. Notwithstanding the foregoing, options and restricted Shares remain subject to any forfeiture or clawback claims under the applicable option plan or award agreement.
(d) Welfare Benefits. Except as otherwise provided in this Section 3.02(d), for a 24-month period after the Date of Termination, the Company will arrange to provide the Executive with life insurance coverage substantially similar to that which the Executive is receiving from the Company immediately prior to the Notice of Termination (without giving effect to any reduction in that coverage subsequent to a Change in Control). Life insurance coverage otherwise receivable by the Executive pursuant to this Section 3.02(d) will be reduced to the extent comparable coverage is actually received by or made available to the Executive without greater cost to Executive than as provided by the Company during the 24-month period following the Executives termination of employment (and the Executive will report to the Company any such coverage actually received by or made available to the Executive).
If, as of the Date of Termination, the Company reasonably determines that the continued life insurance coverage required by this Section 3.02(d) is not available from the Companys group insurance carrier, cannot be procured from another carrier, and cannot be provided on a self-insured basis without adverse tax consequences to the Executive or his death beneficiary, then, in lieu of continued life insurance coverage, the Company will pay the Executive, in accordance with Section 3.04, a lump sum payment, in cash, equal to 24 times the full monthly premium payable to the Companys group insurance carrier for comparable coverage for an executive employee under the Companys group life insurance plan then in effect.
The Company will offer the Executive and any eligible family members the opportunity to elect to continue medical and dental coverage pursuant to COBRA. The Executive will be responsible for paying the required monthly premium for that coverage, but the Company will pay the Executive, in accordance with Section 3.04, a lump sum cash stipend
equal to 24 times the monthly COBRA premium then charged to qualified beneficiaries for the same level of health and dental coverage the Executive had in effect immediately prior to his termination, and the Executive may, but is not required to, choose to use the stipend for the payment of COBRA premiums for any COBRA coverage that the Executive or eligible family members may elect. The Company will pay the stipend to the Executive whether or not the Executive or any eligible family member elects COBRA coverage, whether or not the Executive continues COBRA coverage for the maximum period permitted by law, and whether or not the Executive receives medical or dental coverage from another employer while the Executive is receiving COBRA continuation coverage. Payment of the stipend will not in any way extend or modify the Executives continuation coverage rights under COBRA or any similar continuation coverage law.
(e) Matching Contributions. In addition to the vested amounts, if any, to which the Executive is entitled under the Savings Plan as of the Date of Termination, the Company will pay the Executive, in accordance with Section 3.04, a lump sum amount equal to the value of the unvested portion, if any, of the employer matching contributions (and attributable earnings) credited to the Executive under the Savings Plan.
(f) Outplacement Services. For a period not to exceed six (6) months following the Date of Termination, the Company will provide the Executive with reasonable outplacement services consistent with past practices of the Company prior to the Change in Control or, if no past practice has been established prior to the Change in Control, consistent with the prevailing practice in the medical device manufacturing industry.
SECTION 3.03. Limitation on Severance Payments.
(a) Notwithstanding anything to the contrary contained in this Agreement, in the event that any Severance Payments paid or payable to the Executive or for his benefit pursuant to the terms of this Agreement or otherwise in connection with a Change in Control (Total Payments) would be subject to any Excise Tax, then the value of the Total Payments will be reduced to the extent necessary so that, within the meaning of Code Section 280G(b)(2)(A)(ii), the aggregate present value of the payments in the nature of compensation to (or for the benefit of) the Executive that are contingent on a Change in Control (with a Change in Control for this purpose being defined in terms of a change described in Code Section 280G(b)(2)(A)(i) or (ii)), do not exceed 2.999 multiplied by the Base Amount. For this purpose, cash Severance Payments will be reduced first (if necessary, to zero), and all other, non-cash Severance Payments will be reduced next (if necessary, to zero). For purposes of the limitation described in the preceding sentence, the following will not be taken into account: (1) any portion of the Total Payments the receipt or enjoyment of which the Executive effectively waived in writing prior to the Date of Termination, and (2) any portion of the Total Payments that, in the opinion of the Accounting Firm, does not constitute a parachute payment within the meaning of Code Section 280G(b)(2).
(b) For purposes of this Section 3.03, the determination of whether any portion of the Total Payments would be subject to an Excise Tax will be made by an Accounting Firm selected by the Company and reasonably acceptable to the Executive. For purposes of that determination, the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments will be determined by the Accounting Firm in accordance with the principles of Section 280G(d)(3) and (4).
SECTION 3.04. Time of Payment. Except as otherwise expressly provided in Section 3.02, payments provided for in that Section will be made as follows:
(a) Subject to Section 3.04(c), if Executive signs and does not rescind the General Release in accordance with Section 6.03, the Company will pay to the Executive the amount due under Section 3.02 on the sixtieth (60th) business day following the Date of Termination.
(b) At the time that payment is made under Section 3.04(a), the Company will provide the Executive with a written statement setting forth the manner in which all of the payments to Executive under this Agreement were calculated and the basis for the calculations including, without limitation, any opinions or other advice the Company received from auditors or consultants (other than legal counsel) with respect to the calculations (and any such opinions or advice that are in writing will be attached to the statement).
(c) Notwithstanding any of the foregoing, , any and all payments under this Agreement that constitute deferred compensation under the Section 409A Standards shall be suspended until, and will be payable on, the date that is six (6) months after the Executives separation from service (or, if earlier, the date the Executive dies after separation from service).
SECTION 3.05. Attorneys Fees and Expenses. To the extent permissible under the Section 409A Standards, if the Executive finally prevails with respect to any bona fide, good faith dispute between the Executive and the Company regarding the interpretation, terms, validity or enforcement of this Agreement (including any dispute as to the amount of any payment due under this Agreement), the Company will pay or reimburse the Executive for all reasonable attorneys fees and expenses incurred by the Executive in connection with that dispute pursuant to the terms of this paragraph. Payment or reimbursement of those fees and expenses will be made within fifteen (15) business days after delivery of the Executives written
request for payment, accompanied by such evidence of fees and expenses incurred as the Company reasonably may require, but the Executive may not submit such a request until the dispute has been finally resolved by a legally binding settlement or by an order or judgment that is not subject to appeal or with respect to which all appeals have been exhausted. Any payment pursuant to this paragraph will be made no later than the end of the calendar year following the calendar year in which the dispute is finally resolved by a legally binding settlement or nonappealable judgment or order.
In addition, the Company will pay the reasonable legal fees and expenses incurred by the Executive in connection with any tax audit or proceeding to the extent attributable to the application of Code Section 4999 to any payment or benefit provided under this Agreement and including, but not limited to, auditors fees incurred in connection with the audit or proceeding. Payment pursuant to the preceding sentence shall be made within fifteen (15) business days after the delivery of the Executives written request for payment, accompanied by such evidence of fees and expenses incurred as the Company reasonably may require, but in no case later than the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the matter.
Termination of Employment
SECTION 4.01. Notice of Termination. After a Change in Control and during the term of this Agreement, any purported termination of the Executives employment (other than by reason of death) will be communicated by a written Notice of Termination from one party to the other party in accordance with Article VIII. The Notice of Termination will indicate the specific termination provision in this Agreement relied upon and will set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executives employment under the cited provision.
SECTION 4.02. Date of Termination. Except as otherwise provided in Section 4.01, with respect to any purported termination of the Executives employment after a Change in Control and during the term of this Agreement, the term Date of Termination will have the meaning set forth in this Section. If the Executives employment is terminated for Disability, Date of Termination means thirty (30) days after Notice of Termination is given, provided that the Executive does not return to the full-time performance of the Executives duties during that 30-day period. If the Executives employment is terminated for any other reason, Date of Termination means the date specified in the Notice of Termination, which, in the case of a termination by the Company, cannot be less than 30 days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, cannot be less than 15 days nor more than 60 days from the date on which the Notice of Termination is given.
The Company agrees that, if the Executives employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Article III. Further, the amount of any payment or benefit provided for in Article III (other than Section 3.02(d)) will not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.
The Executives Covenants
SECTION 6.01. Noncompetition Agreement. In consideration for this Agreement, the Executive will execute, concurrent with the execution of this Agreement, a noncompetition agreement with the Company; provided, however, that if the Executive has an existing noncompetition agreement with the Company, the Company, rather than entering into a new noncompetition agreement with the Executive, may instead, as a condition to entering into this agreement, require that the Executive acknowledge and affirm his continuing obligations under such existing noncompetition agreement and re-affirm his agreement to honor the obligations as set forth in that document.
SECTION 6.02. Potential Change in Control. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the term of this Agreement, the Executive will remain employed by the Company until the earliest of (a) a date that is six months following the date of the Potential Change of Control, (b) the date of a Change in Control, (c) the date on which the Executive terminates employment for Good Reason (determined by treating the Potential Change in Control as a Change in Control in applying the definition of Good Reason) or by reason of death, or (d) the date the Company terminates the Executives employment for any reason.
SECTION 6.03. General Release. The Executive agrees that, notwithstanding any other provision of this Agreement, the Executive will not be eligible for any Severance Payments under this Agreement unless the Executive timely signs, and does not timely revoke, a General Release in substantially the form attached to this Agreement as Exhibit A. The Executive will be given 21 days to consider the terms of the General Release. The General
Release will not become effective until seven days following the date the General Release is executed. If the Executive does not return the executed General Release to the Company by the end of the 21-day period, that failure will be deemed a refusal to sign, and the Executive will not be entitled to receive any Severance Payments under this Agreement. In certain circumstances, the 21-day period to consider the General Release may be extended to a 45-day period. The Executive will be advised in writing if the 45-day period is applicable. In the absence of such notice, the 21-day period applies. If any payment under this Agreement constitutes deferred compensation under the Section 409A Standards, and the 21-day or 45-day review period extends into a new calendar year, any payment of such deferred compensation shall occur in the new calendar year.
Successors; Binding Agreement
SECTION 7.01. Obligation of Successors.
(a) In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had occurred.
(b) Subject to Section 7.01(c), failure of the Company to obtain such an assumption and agreement under Section 7.01(a) prior to the effectiveness of any such succession will be a breach of this Agreement and will entitle the Executive to compensation from the Company in the same amount as the Executive would be entitled to under this Agreement if the Executive were to terminate employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which the succession becomes effective will be deemed the Date of Termination.
(c) Payment of benefits under Section 7.01(b) shall be made on the deemed Date of Termination if, and only if, the succession resulted from a transaction that satisfies the definition of change in control under Section 409A of the Code. If the transaction does not satisfy the definition of change in control under Section 409A, payment of benefits due under Section 7.01(b) shall be made within 30 days of the Executives actual date of termination of employment, subject to the provisions of Section 3.04(c). No interest or earnings shall be paid due to any delay in payment under this Section 7.01(c).
SECTION 7.02. Enforcement Rights of Others. This Agreement will inure to the benefit of and be enforceable by the Executives personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive dies while any amount is still payable to the Executive under this Agreement, (other than amounts that, by their terms, terminate upon the Executives death), then, unless otherwise provided in this Agreement, all such amounts will be paid in accordance with the terms of this Agreement to the executors, personal representatives, or administrators of the Executives estate.
For the purpose of this Agreement, notices and all other communications provided for in the Agreement will be in writing and will be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may furnish to the other in writing in accordance with this Article VIII, except that notice of change of address will be effective only upon actual receipt:
To the Company:
Zimmer Biomet Holdings, Inc.
Attention: General Counsel
345 East Main Street
Post Office Box 708
Warsaw, Indiana 46581-0708
To the Executive:
Bryan C. Hanson
At Executives principal residence as reflected in the records of the Company
This Agreement will not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive will not have any right to be retained in the employ of the Company. No provision of this Agreement may be modified, waived, or discharged unless the waiver, modification, or discharge is agreed to in writing and signed by the Executive and an officer of the Company specifically designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any other time. Neither party has made any agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement that are not expressly set forth in this Agreement. Except as provided in the following two sentences, the validity, interpretation, construction, and performance of this
Agreement will be governed by the laws of the State of Indiana, to the extent not preempted by federal law. This Agreement will at all times be effected, construed, interpreted, and applied in a manner consistent with the Section 409A Standards, and in resolving any uncertainty as to the meaning or intention of any provision of this Agreement, the interpretation that will prevail is the interpretation that causes the Agreement to comply with the Section 409A Standards. In addition, to the extent that any terms of this Agreement would subject the Executive to gross income inclusion, interest, or additional tax pursuant to Code Section 409A, those terms are to that extent superseded by the applicable Section 409A Standards. All references to sections of the Exchange Act or the Code will be deemed also to refer to any successor provisions to those sections. Any payments provided for under this Agreement will be paid net of any applicable withholding required under federal, state, or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under Articles III, IV, and VI will survive the expiration of the term of this Agreement. In no event shall Company be liable for any taxes, penalties, interest or additional tax payments assessed against Executive because of any benefits, remuneration or reimbursements provided under this Agreement.
The invalidity or unenforceability of any provision or this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.
This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
Settlement of Disputes; Arbitration
All claims by the Executive for benefits under this Agreement must be in writing and will be directed to and determined by the Board. Any denial by the Board of a claim for benefits under this Agreement will be delivered to the Executive in writing and will set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board will afford a reasonable opportunity to the Executive for a review of the decision denying a claim and will further allow the Executive to appeal to the Board a decision of the Board within 60 days after notification by the Board that the Executives claim has been denied. Any further dispute or controversy arising under or in connection with this Agreement will be settled exclusively by arbitration in Warsaw, Indiana in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators award in any court having jurisdiction. Each party will bear its own expenses in the arbitration for attorneys fees, for its witnesses, and for other expenses of presenting its case. Other arbitration costs, including arbitrators fees, administrative fees, and fees for records or transcripts, will be borne equally by the parties. Notwithstanding anything in this Article to the contrary, if the Executive prevails with respect to any dispute submitted to arbitration under this Article, the Company will reimburse or pay all reasonable legal fees and expenses that the Executive incurred in connection with that dispute as required by Section 3.05.
For purposes of this Agreement, the following terms will have the meanings indicated below:
(a) Accounting Firm means an accounting firm, other than the Companys independent auditors, that is designated as one of the four largest accounting firms in the United States.
(b) Award Plan means the Companys 2009 Stock Incentive Plan.
(c) Base Amount has the meaning stated in Code Section 280G(b)(3).
(d) Beneficial Owner has the meaning stated in Rule 13d-3 under the Exchange Act.
(e) Board means the Board of Directors of the Company.
(f) Cause for termination by the Company of the Executives employment, after any Change in Control, means (1) the willful and continued failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 4.01) for a period of at least 30 consecutive days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executives duties; (2) the Executive willfully engages in conduct that is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise; or (3) the Executive is convicted of, or has entered a plea of no contest to, a felony.
For purposes of clauses (1) and (2) of this definition, no act, or failure to act, on the Executives part will be deemed willful unless it is done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interest of the Company.
(g) A Change in Control will be deemed to have occurred if any of the following events occur:
(1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by that Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Companys then-outstanding securities; or
(2) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of the period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in clause (1), (3) or (4) of this paragraph whose election by the Board or nomination for election by the Companys stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved), cease for any reason to constitute a majority of the Board; or
(3) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after the merger or consolidation; or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Companys then-outstanding securities; or
(4) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Companys assets.
Notwithstanding the foregoing, a Change in Control will not include any event, circumstance, or transaction occurring during the six-month period following a Potential Change in Control that results from the action of any entity or group that includes, is affiliated with, or is wholly or partly controlled by the Executive; provided, further, that such an action will not be taken into account for this purpose if it occurs within a six-month period following a Potential Change in Control resulting from the action of any entity or group that does not include the Executive.
(h) COBRA means the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(i) Code means the Internal Revenue Code of 1986, as amended from time to time, and interpretative rules and regulations.
(j) Company means Zimmer Biomet Holdings, Inc., a Delaware corporation, and any successor to its business and/or assets that assumes and agrees to perform this Agreement by operation of law, or otherwise (except in determining, under Section XIII(g), whether or not any Change in Control of the Company has occurred in connection with the succession).
(k) Company Shares means shares of common stock of the Company or any equity securities into which those shares have been converted.
(l) Date of Termination has the meaning stated in Section 4.02.
(m) Disability has the meaning stated in the Companys short-term or long-term disability plan, as applicable, as in effect immediately prior to a Change in Control.
(n) Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and interpretive rules and regulations.
(o) Excise Tax means any excise tax imposed under Code Section 4999.
(p) Executive means the individual named in the first paragraph of this Agreement.
(q) General Release has the meaning stated in Section 6.03.
(r) Good Reason for termination by the Executive of the Executives employment means the occurrence (without the Executives express written consent) of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (1), (4), (5), (6), or (7) below, the act or failure to act is corrected prior to the Date of Termination specified in the Executives Notice of Termination:
(1) the assignment to the Executive of any duties inconsistent with the Executives status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executives responsibilities from those in effect immediately prior to a Change in Control;
(2) a reduction by the Company in the Executives annual base salary as in effect on the date of this Agreement or as the same may be increased from time to time, or the level of the Executives entitlement under the Incentive Plan as in effect on the date of this Agreement or as the same may be increased from time to time;
(3) the Companys requiring the Executive to be based more than 50 miles from the Companys offices at which the Executive is based immediately prior to a Change in Control (except for required travel on the Companys business to an extent substantially consistent with the Executives business travel obligations immediately prior to the Change in Control), or, in the event the Executive consents to any such relocation of his offices, the Companys failure to provide the Executive with all of the benefits of the Companys relocation policy as in operation immediately prior to the Change in Control;
(4) the Companys failure, without the Executives consent, to pay to the Executive any portion of the Executives current compensation (which means, for purposes of this paragraph (4), the Executives annual base salary as in effect on the date of this Agreement, or as it may be increased from time to time, and the awards earned pursuant to the Incentive Plan) or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date the compensation is due;
(5) the Companys failure to continue in effect any compensation plan in which the Executive participates immediately prior to a Change in Control, which plan is material to the Executives total compensation, including, but not limited to, the Incentive Plan and the Award Plan or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to that plan, or the Companys failure to continue the Executives participation in such a plan (or in a substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executives participation relative to other participants, as existed at the time of the Change in Control;
(6) the Companys failure to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Companys pension (including, without limitation, , the Companys Savings and Investment Program,), life insurance, medical, health and accident, or disability plans in which the Executive was participating at the time of the Change in Control; the taking of any action by the Company that would directly or indirectly materially reduce any of those benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of a Change in Control; or the Companys failure to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Companys normal vacation policy in effect at the time of the Change in Control; or
(7) any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 4.01; for purposes of this Agreement, no such purported termination will be effective.
The Executives right to terminate the Executives employment for Good Reason will not be affected by the Executives incapacity due to physical or mental illness. The Executives continued employment will not constitute consent to, or a waiver of rights with respect to, any act or failure to act that constitutes Good Reason.
Notwithstanding the foregoing, the occurrence of an event that would otherwise constitute Good Reason will cease to be an event constituting Good Reason if the Executive does not timely provide a Notice of Termination to the Company within 120 days of the date on which the Executive first becomes aware (or reasonably should have become aware) of the occurrence of that event.
(s) Incentive Plan means the Companys Executive Performance Incentive Plan.
(t) Notice of Termination has the meaning stated in Section 4.01.
(u) Options means options for Shares granted to the Executive under the Award Plan.
(v) Person has the meaning stated in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) of the Exchange Act; however, a Person will not include (1) the Company or any of its subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (3) an underwriter temporarily holding securities pursuant to an offering of those securities, or (4) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(w) Potential Change in Control will be deemed to have occurred if any one of the following events occurs:
(1) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(2) the Company or any Person publicly announces an intention to take or to consider taking actions that, if consummated, would constitute a Change in Control;
(3) any Person who is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Companys then-outstanding securities, increases that Persons beneficial ownership of those securities by 5% or more over the percentage so owned by that Person on the date of this Agreement; or
(4) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
(x) Savings Plan means the Companys Savings and Investment 401(k) Program, which, for purposes of this Agreement, will be deemed to include the Zimmer Biomet Holdings, Inc. Deferred Compensation Plan.
(y) Section 409A Standards means the standards for nonqualified deferred compensation plans established by Code Section 409A.
(z) Severance Payments means the payments described in Section 3.02.
(a) Shares means shares of the common stock, $0.01 par value, of the Company.
(bb) Total Payments has the meaning stated in Section 3.03(a).
|EXECUTIVE||ZIMMER BIOMET HOLDINGS, INC.|
|Bryan C. Hanson||Bill P. Fisher|
|Senior Vice President, Global Human Resources|
CHIEF EXECUTIVE OFFICER
CONFIDENTIALITY, INTELLECTUAL PROPERTY, NON-COMPETITION
AND NON-SOLICITATION AGREEMENT
This Chief Executive Officer Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement (Agreement) is made by and between Zimmer Biomet Holdings, Inc., a corporation having its principal headquarters in Warsaw, Indiana, and Bryan C. Hanson (Executive).
A. For purposes of this Agreement, the term Company means Zimmer Biomet Holdings, Inc. and/or any or each of its affiliates or direct or indirect subsidiaries (including but not limited to Zimmer, Inc., Zimmer US, Inc., Biomet, Inc. and its and their affiliates, parents or direct or indirect subsidiaries), as well as any successor-in-interest to Zimmer Biomet Holdings, Inc. and/or to any of its direct or indirect subsidiaries or affiliates.
B. Executive is being employed by Company as its Chief Executive Officer, in which capacity Executive has or will have extensive access to trade secrets and confidential information of Company, and/or is being offered certain equity incentives.
C. Company has offered Executive employment and/or other valuable consideration, including without limitation equity incentives, contingent upon Executives entering into this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive agree to be legally bound as follows:
1. Acknowledgements. Executive acknowledges that Company is engaged in the highly competitive business of the development, manufacture, distribution, and sale of orthopedic- and musculoskeletal-related medical and surgical devices, products, and services, including but not limited to hip, knee, trauma, extremities, craniomaxillofacial, thoracic, dental rehabilitation, spine, microfixation, bone healing, bone cement, surgical, sports medicine, orthopedic diagnostic (including unique diagnostic products developed for or by Company) and/or biologics devices, products, processes and services, and that Executive serves or will serve in an executive capacity for Company and in that capacity Executive will have access to and will gain knowledge of substantial trade secrets and confidential information of Company.
2. Non-Disclosure and Ownership of Confidential Information. Executive acknowledges that Confidential Information is a valuable, special, and unique asset of Company, and solely the property of Company, and agrees to the following; provided, however, that this policy does not, in any manner, prevent Executive from filing a complaint with, providing information to, or participating in an investigation conducted by, the Securities and Exchange Commission, the United States Equal Opportunity Commission or any other governmental or law enforcement agency.
(a) Confidential Information Defined. The term Confidential Information includes, but is not limited to, any and all of Companys trade secrets, confidential and proprietary information and all other information and data of Company that is not generally known to the public or other third parties who could derive economic value from its use or disclosure. Confidential Information includes, without limitation, technical information such as product specifications, compounds, formulas, improvements, discoveries, developments, designs, inventions, techniques, new products and surgical training methods, and research and development information; confidential business methods and processes; business plans and strategies; marketing plans and strategies; non-public financial information including budgets, sales data, sales forecasts, sales quotas, and information regarding profits or losses; office optimization and logistics information; information pertaining to current and prospective customers; information pertaining to distributors and sales structures; pricing information; discount schedules; costing information; personnel information; compensation structure, schedules and plans; and information about current and prospective products or services, whether or not reduced to writing or other tangible medium of expression, including work product created by Executive in rendering services for Company.
(b) Non-Disclosure of Confidential Information. During Executives employment with Company and thereafter, Executive will not disclose, transfer, or use (or seek to induce others to disclose, transfer, or use) any Confidential Information for any purpose other than( i) disclosure to authorized employees and agents of Company who are bound to maintain the confidentiality of the Confidential Information; (ii) for authorized purposes during the course of Executives employment in furtherance of Companys business; and/or (iii) as specifically allowed or required under applicable law. Executives non-disclosure obligations shall continue as long as the Confidential Information remains confidential and shall not apply to information that becomes generally known to the public through no fault or action of Executive. The Federal Defend Trade Secrets Act provides that individuals may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (a) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney if such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law or for pursuing an anti-retaliation lawsuit; or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and the individual does not disclose the trade secret except pursuant to a court order.
(c) Protection of Confidential Information. Executive will notify Company in writing of any circumstances which may constitute unauthorized disclosure, transfer, or use of Confidential Information. Executive will use Executives best efforts to protect Confidential Information from unauthorized disclosure, transfer, or use. Executive will implement and abide by all procedures adopted by Company to prevent unauthorized disclosure, transfer, or use of Confidential Information. Notwithstanding the above requirements, nothing in this Agreement shall restrict Executives right to make disclosures specifically allowed or required under applicable law.
3. Ownership of Intellectual Property.
(a) Invention Defined. The term Invention includes, but is not limited to ideas, programs, processes, systems, intellectual property, works of authorship, copyrightable materials, discoveries, and/or improvements which Executive discovers, invents, originates, develops, makes, authors, or conceives alone or in conjunction with others during Executives employment with Company and/or within six (6) months after Executives employment ends which relate to Companys present or future business. An Invention is covered by this Agreement regardless of whether (i) Executive conceived of the Invention in the scope of Executives employment; (ii) the Invention is patentable; or (iii) Company takes any action to commercialize or develop the Invention.
(b) Ownership of Inventions. Inventions are solely the property of Company. Executive agrees that by operation of law and/or the effect of this Agreement Executive does not have any rights, title, or interest in any Inventions. Notwithstanding, Executive may be recognized as the inventor of an Invention without retaining any other rights associated therewith.
(c) Disclosure and Assignment of Inventions. Executive hereby assigns to Company all right, title and interest Executive may have in any Inventions that are discovered, invented, originated, developed, made, authored, or conceived by Executive (whether alone or with others) during Executives employment with Company and/or within six (6) months after Executives employment ends which relate to Companys present or future business. Executive agrees to: (i) promptly disclose all such Inventions in writing to Company; (ii) keep complete and accurate records of all such Inventions, which records shall be Company property and shall be retained on Company premises; and (iii) execute such documents and do such other acts as may be necessary in the opinion of Company to establish and preserve Companys property rights in all such Inventions. This section shall not apply to any Invention for which no equipment, supplies, facility or trade secret information of Company was used and which was developed entirely on Executives own time, and (1) which does not relate (a) directly to the business of Company, or (b) to Companys actual or demonstrably anticipated research or development, and (2) which does not result from any work performed by Executive for Company.
(d) Works of Authorship. All written, graphic or recorded material and all other works of authorship fixed in a tangible medium of expression made or created by Executive, solely or jointly with others, during Executives employment with Company and relating to Companys business, actual or contemplated, shall be the exclusive property of Company (collectively Works). Company will have the exclusive right to copyright such Works. Executive agrees that if any Work created while employed by Company, whether or not created at the direction of Company, is copyrightable, such Work will be a work made for hire, as that term is defined in the copyright laws of the United States. If, for any reason, any copyrightable Works created by Executive are excluded from that definition, Executive hereby assigns and conveys to Company all right, title and interest (including any copyright and renewals) in such Works.
(e) Attribution and Use of Works and Inventions; Waiver of Assertion of Moral Rights in Inventions and Works. Executive agrees that Company and its licensees are not required to designate Executive as author, inventor or developer of any Works or Inventions when distributed or otherwise. Executive hereby waives, and agrees not to assert, any moral rights in any Inventions and Works. Executive agrees that Company and its licensees shall have sole discretion with regard to how and for what purposes any Inventions or Works are used or distributed.
(f) Executive Cooperation in Establishment of Company Proprietary Rights. Executive will sign documents of assignment, declarations and other documents and take all other actions reasonably required by Company, at Companys expense, to perfect and enforce any of its proprietary rights. In the event Company is unable, for any reason whatsoever, to secure Executives signature to any lawful or necessary documents required to apply for, prosecute, perfect, or assign any United States or foreign application for Letters Patent, trademark, copyright registration, or other filing to protect any Invention or Work, Executive hereby irrevocably designates and appoints Company and its duly authorized officers and agents as Executives agent and attorney in fact, to act for and on Executives behalf, to execute and file any such application, registration or other filing, and to do all other lawfully permitted acts to further the prosecution, issuance or assignment of Letters Patent or other protections on such Inventions, or registrations for trademark or copyright or other protections on such Works, with the same force and effect as if executed by Executive.
4. Return of Confidential Information and Company Property. Immediately upon termination of Executives employment with Company, Executive shall return to Company all of Companys property relating to Companys business, including without limitation all of Companys property which is in the possession, custody, or control of Executive such as Confidential Information, documents, hard copy files, copies of documents and electronic information/files, and equipment (e.g., computers and mobile phones).
5. Obligations to Other Entities or Persons. Executive warrants that Executive is not bound by the terms of a confidentiality agreement or any other legal obligation which would either preclude or limit Executive from disclosing or using any of Executives ideas, inventions, discoveries or other information or otherwise fulfilling Executives obligations to Company. While employed by Company, Executive shall not disclose or use any confidential information belonging to another entity or other person.
6. Conflict of Interest and Duty of Loyalty. During Executives employment with Company, Executive shall not engage, directly or indirectly, in any activity, employment or business venture, whether or not for remuneration, that (i) is competitive with Companys business; (ii) deprives or potentially could deprive Company of any business opportunity; (iii) conflicts or potentially could conflict with Companys business interests; or (iv) is otherwise detrimental to Company, including but not limited to preparations to engage in any of the foregoing activities.
7. Restrictive Covenants. Executive agrees to, and covenants to comply with, each of the following separate and divisible restrictions:
(1) Competing Product is defined as any implant, device, or medical product(s), service(s), instrument(s) or supplies that is or are the same as, related to, or similar to any product, process or service that Company is researching, developing, manufacturing, distributing, selling and/or providing at the time of Executives separation from employment with Company (including, but not limited to, any product or service Companys Hip, Knee, Trauma, Extremities, Craniomaxillofacial, Thoracic, Biologics, Surgical, Sports Medicine, Microfixation, Bone Healing, Bone Cement, Orthopedic Diagnostic, Spine and/or Dental division is researching, developing, manufacturing, distributing, selling and/or providing at the time of Executives separation from employment with Company).
(2) Competing Organization is defined as any organization that researches, develops, manufactures, markets, distributes and/or sells one or more Competing Products. A Competing Organization is diversified if it operates multiple, independently operating business divisions, units, lines or segments some of which do not research, develop, manufacture, market, distribute and/or sell any Competing Products.
(3) Prohibited Capacity is defined as (a) any same or similar capacity to that held by Executive at any time during Executives last two (2) years of employment with Company; (b) any executive or managerial capacity; or (c) any capacity in which Executives knowledge of Confidential Information and/or Inventions would render Executives assistance to a Competing Organization a competitive advantage.
(4) Restricted Geographic Area is defined as all countries, territories, parishes, municipalities and states in which Company is doing business or is selling its products at the time of termination of Executives employment with Company, including but not limited to every parish and municipality in the state of Louisiana. Executive acknowledges that this geographic scope is reasonable given Executives position with Company, the international scope of Companys business; and the fact that Executive could compete with Company from anywhere Company does business.
(5) Restricted Period is defined as the date Executive executes this Agreement, continuing for two (2) years after the Executives last day of employment with Company (i.e., up to and including the second anniversary date of Executives last day of employment with Company) unless otherwise extended by Executives breach of this Agreement. The running time on the Restricted Period shall be suspended during any period in which Executive is in violation of any of the restrictive covenants set forth herein, and all restrictions shall automatically be extended by the period Executive was in violation of any such restrictions.
(6) Customer is defined as any person or entity with respect to whom, as of the date of Executives separation from Company employment or at any time during the two years prior to such separation, Company sold or provided any products and/or services.
(7) Active Prospect is defined as any person or entity that Company individually and specifically marketed to and/or held discussions with regarding the distribution and/or sale of any of Companys products, processes or services at any time during the last six (6) months of Executives employment with Company.
(b) Restrictive Covenants. During the Restricted Period, Executive agrees to be bound by each of the following independent and divisible restrictions:
(1) Covenant Not to Compete.
(A) Executive will not, within the Restricted Geographic Area, be employed by, work for, consult with, provide services to, or lend assistance to any Competing Organization in a Prohibited Capacity.
(B) Executive may be employed by, work for, consult with, provide services to, or lend assistance to a Competing Organization provided that: (i) the Competing Organizations business is diversified; (ii) the part of the Competing Organizations business with which Executive will be affiliated would not, evaluated on a stand-alone basis, be a Competing Organization; (iii) Executives affiliation with the Competing Organization does not involve any Competing Products; (iv) Executive provides Company a written description of Executives anticipated activities on behalf of the Competing Organization which includes, without limitation, an assurance satisfactory to Company that Executives affiliation with the Competing Organization does not constitute a Prohibited Capacity; and (v) Executives affiliation with the Competing Organization does not constitute a competitive disadvantage to Company.
(2) Covenant Not to Solicit Customers or Active Prospects. Executive will not, directly or indirectly, (i) provide, sell, or market; (ii) assist in the provision, selling or marketing of; or (iii) attempt to provide, sell or market any Competing Products to any of Companys Customers or Active Prospects located in the Restricted Geographic Area.
(3) Covenant Not to Interfere With Business Relationships. Executive will not, within the Restricted Geographic Area, urge, induce or seek to induce any of Companys independent contractors, subcontractors, distributors, brokers, consultants, sales representatives, customers, vendors, suppliers or any other person or entity with whom Company has a business relationship at the time of Executives separation from Company employment to terminate its or their relationship with, or representation of, Company or to cancel, withdraw, reduce, limit or in any manner modify any such persons or entitys business with, or representation of, Company
(4) Covenant Not to Solicit Company Employees. Executive will not employ, solicit for employment, or advise any other person or entity to employ or solicit for employment, any individual employed by Company at the time of Executives separation from Company employment, or otherwise directly or indirectly induce or entice any such employee to leave his/her employment with Company.
(5) Covenant Not to Disparage Company. Executive will not make or publish any disparaging or derogatory statements about Company; about Companys products, processes, or services; or about Companys past, present and future officers, directors, employees, attorneys and agents. Disparaging or derogatory statements include, but are not limited to, negative statements regarding Companys business or other practices; provided, however, nothing herein shall prohibit Executive from providing any information as may be compelled by law or legal process.
8. Reasonableness of Terms. Executive acknowledges and agrees that the restrictive covenants contained in this Agreement restrict Executive from engaging in activities for a competitive purpose and are reasonably necessary to protect Companys legitimate interests in Confidential Information, Inventions, and goodwill. Additionally, Executive acknowledges and agrees that the restrictive covenants are reasonable in all respects, including, but not limited to, temporal duration, scope of prohibited activities and geographic area. Executive further acknowledges and agrees that the restrictive covenants set forth in this Agreement will not pose unreasonable hardship on Executive and that Executive will have a reasonable opportunity to earn an equivalent livelihood without violating any provision of this Agreement.
9. Severability, Modification of Restrictions. The covenants and restrictions in this Agreement are separate and divisible, and to the extent any clause, portion or section of this Agreement is determined to be unenforceable or invalid for any reason, Company and Executive acknowledge and agree that such unenforceability or invalidity shall not affect the enforceability or validity of the remainder of the Agreement. If any particular covenant, provision or clause of this Agreement is determined to be unreasonable or unenforceable for any reason, including, without limitation, temporal duration, scope of prohibited activity, and/or scope of geographic area, Company and Executive acknowledge and agree that such covenant, provision or clause shall automatically be deemed reformed to have the closest effect permitted by applicable law to the original form and shall be given effect and enforced as so reformed to whatever extent would be reasonable and enforceable under applicable law. The parties agree that any court interpreting the provisions of this Agreement shall have the authority, if necessary, to reform any such provision to make it enforceable under applicable law.
10. Remedies. Executive acknowledges that a breach or threatened breach by Executive of this Agreement will give rise to irreparable injury to Company and that money damages will not be adequate relief for such injury. Accordingly, Executive agrees that Company shall be entitled to obtain injunctive relief, including, but not limited to, temporary restraining orders, preliminary injunctions and/or permanent injunctions, without having to post any bond or other security, to restrain or prohibit such breach or threatened breach, in addition to any other legal remedies which may be available. In addition to all other relief to which it shall be entitled, Company shall be entitled to continue to enforce this Agreement and recover from Executive all litigation costs and attorneys fees incurred by Company in any action or proceeding relating to this Agreement in which Company prevails in any respect, including, but not limited to, any action or proceeding in which Company seeks enforcement of this Agreement or seeks relief from Executives violation of this Agreement.
11. Survival of Obligations. Executive acknowledges and agrees that Executives obligations under this Agreement, including, without limitation, Executives non-disclosure and non-competition obligations, shall survive the termination of Executives employment with Company, whether such termination is with or without cause and whether it is voluntary or involuntary. Executive acknowledges and agrees that nothing in this Agreement alters the at-will nature of Executives employment and that either Company or Executive may terminate the
employment relationship at any time, with or without cause or notice. Executive further acknowledges and agrees that: (a) Executives non-disclosure, non-disparagement, non-solicitation and non-competition covenants set forth in Sections 2 and 7 of this Agreement shall be construed as independent covenants and that no breach of any contractual or legal duty by Company shall be held sufficient to excuse or terminate Executives obligations or to preclude Company from obtaining injunctive relief or other remedies for Executives violation or threatened violation of such covenants, and (b) the existence of any claim or cause of action by Executive against Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to Companys enforcement of Executives obligations under Sections 2 and 7 of this Agreement.
12. Governing Law and Choice of Forum. This Agreement shall be construed and enforced in accordance with the laws of the State of Indiana, notwithstanding any states choice-of-law rules to the contrary. The parties agree that any legal action relating to this Agreement shall be commenced and maintained exclusively before the United States District Court for the Northern District of Indiana if jurisdiction permits, or otherwise before any appropriate state court located in Kosciusko County, Indiana. The parties hereby submit to the jurisdiction of such courts and waive any right to challenge or otherwise object to personal jurisdiction or venue, in any action commenced or maintained in such courts. Language translations aside, the English version shall govern.
13. Enforcement. The parties agree that Zimmer, Inc., Zimmer US, Inc. and/or any or each of their affiliates, parents, or direct or indirect subsidiaries (including but not limited to Biomet, Inc. and its direct or indirect subsidiaries), as well as any successor-in-interest to Zimmer, Inc., Zimmer US, Inc. and/or to any of their direct or indirect subsidiaries, affiliates, or parents are express and intended parties to and beneficiaries to this Agreement, with full rights to enforce this Agreement independently or in conjunction with each other.
14. Successors and Assigns. Company shall have the right to assign this Agreement, and, accordingly, this Agreement shall inure to the benefit of, and may be enforced by, any and all successors and assigns of Company, including without limitation by asset assignment, stock sale, merger, consolidation or other corporate reorganization, and shall be binding on Executive. The services to be provided by Executive to Company are personal to Executive, and Executive shall not have the right to assign Executives duties under this Agreement.
15. Modification. This Agreement may not be amended, supplemented, or modified except by a written document signed by both Executive and a duly authorized officer of Company.
16. No Waiver. The failure of Company to insist in any one or more instances upon performance of any provision of this Agreement or to pursue its rights hereunder shall not be construed as a waiver of any such provisions or the relinquishment of any such rights.
17. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which when taken together will constitute one and the same agreement.
18. Entire Agreement. This Agreement, including Recitals, constitutes the entire agreement of the parties with respect to the subjects specifically addressed herein, and supersedes any prior agreements, understandings, or representations, oral or written, on the subjects addressed herein.
Executives signature below indicates that Executive has read the entire Agreement, understands what Executive is signing, and is signing the Agreement voluntarily. Executive agrees that Company advised Executive to consult with an attorney prior to signing the Agreement.
|Bryan C. Hanson|
|Date: December 18, 2017|
|Bill P. Fisher|
|Senior Vice President, Global Human Resources|
|Date:||December 18, 2017|
ZIMMER BIOMET HOLDINGS, INC.
2009 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION GRANT
|4-Year NQSO Award (CEO - 2017)|
|4-Year NQSO Award (CEO - 2017)|
|4-Year NQSO Award (CEO - 2017)|
|4-Year NQSO Award (CEO - 2017)|
|4-Year NQSO Award (CEO - 2017)|
|4-Year NQSO Award (CEO - 2017)|
|4-Year NQSO Award (CEO - 2017)|
ZIMMER BIOMET HOLDINGS, INC.
2009 STOCK INCENTIVE PLAN
FOUR-YEAR PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD
|4-Year Performance-Based RSU Award (CEO - 2017)|
|4-Year Performance-Based RSU Award (CEO - 2017)|
|4-Year Performance-Based RSU Award (CEO - 2017)|
|4-Year Performance-Based RSU Award (CEO - 2017)|
|4-Year Performance-Based RSU Award (CEO - 2017)|
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan or in the Agreement of which this Annex A forms a part.
The number of RSUs that may be earned with respect to the Award shall be determined based upon achievement of certain stock price hurdles relative to the average closing price of the Common Stock on the New York Stock Exchange (the NYSE) for the thirty (30) consecutive trading days immediately prior to the Grant Date (the Beginning Stock Price), as follows:
|||One-third (1/3) of the RSUs subject to this Award shall be earned and eligible to vest on the Scheduled Vest Date if, and only if, at any time during the Performance Period, the Common Stock attains a closing price on the NYSE for at least twenty (20) consecutive trading days equal to or greater than one hundred twenty percent (120%) of the Beginning Stock Price.|
|||An additional one-third (1/3) of the RSUs subject to this Award shall be earned and eligible to vest on the Scheduled Vest Date if, and only if, at any time during the Performance Period, the Common Stock attains a closing price on the NYSE for at least twenty (20) consecutive trading days equal to or greater than one hundred thirty-five percent (135%) of the Beginning Stock Price.|
|||The remaining one-third (1/3) of the RSUs subject to this Award shall be earned and eligible to vest on the Scheduled Vest Date if, and only if, at any time during the Performance Period, the Common Stock attains a closing price on the NYSE for at least twenty (20) consecutive trading days equal to or greater than one hundred fifty percent (150%) of the Beginning Stock Price.|
Once a stock price hurdle is achieved, a subsequent decline in the price of the Common Stock does not change the achievement of that hurdle.
|4-Year Performance-Based RSU Award (CEO - 2017)|
ZIMMER BIOMET HOLDINGS, INC.
2009 STOCK INCENTIVE PLAN
THREE-YEAR RESTRICTED STOCK UNIT AWARD
|3-Year RSU Award (CEO - 2017)|
|3-Year RSU Award (CEO - 2017)|
|3-Year RSU Award (CEO - 2017)|
|3-Year RSU Award (CEO - 2017)|
|3-Year RSU Award (CEO - 2017)|
345 E. Main St.
Warsaw, IN 46580
|Monica Kendrick||Derek Davis|
Zimmer Biomet Announces Appointment of Bryan C. Hanson
as President and Chief Executive Officer
(WARSAW, IN) December 19, 2017Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global leader in musculoskeletal healthcare, today announced that Bryan C. Hanson has been appointed President and Chief Executive Officer and a member of the Board of Directors, effective today. Daniel P. Florin, who has served as Interim CEO since July 11, 2017, will continue in his role as Senior Vice President and Chief Financial Officer.
Larry C. Glasscock, Chairman of the Zimmer Biomet Board of Directors, stated, On behalf of the Board, I am thrilled to welcome Bryan to the Zimmer Biomet team. The Board of Directors, with the assistance of a leading executive search firm, carefully identified, evaluated and interviewed a number of highly-qualified candidates and concluded that Bryan is the best fit to lead the Company. Bryan is a proven executive with a track record of successfully leading, growing and transforming global medical device businesses to achieve higher levels of innovation, commercial success and profitability. This leadership announcement comes at an important time in Zimmer Biomets history, and we look forward to working closely with Bryan to further leverage our leading portfolio of technologies, solutions and personalized services to enhance stockholder value.
Mr. Hanson joins Zimmer Biomet with more than 20 years of experience in the medical device industry. Most recently, he served as a member of Medtronics Executive Committee and as the Executive Vice President and President of Medtronics Minimally Invasive Therapies Group, where he oversaw and provided strategic direction to this approximately $9 billion business. Prior to Medtronic, Mr. Hanson served in a number of executive roles of increasing responsibility. In 2013, he was named Group President of Covidiens Medical Devices business. In 2011, as Surgical Solutions Group President, Mr. Hanson transformed two of Covidiens largest divisionsEnergy-based Devices and Surgical Devicesinto one global business unit. Mr. Hanson also serves on the board of AmeriCares, an emergency response and global health organization committed to saving lives and building healthier futures for people in crisis.
Mr. Hanson stated, I am honored and excited to join the talented team at Zimmer Biomet. I have long admired Zimmer Biomet, including its strong brand, commercial excellence and market-leading salesforce, healthy portfolio of marquee products and strong innovation pipeline. I share the Companys purpose of improving the quality of life for patients and I look forward to deeply familiarizing myself with Zimmer Biomets global operations to ensure we have the right foundation in place to support our customers and the patients they serve around the world, while driving sustained shareholder value.
Mr. Florin commented, It has been a privilege to lead the Zimmer Biomet organization as Interim CEO. I join the rest of the management team in welcoming Bryan, and I am confident the Company will thrive under his leadership.
Mr. Glasscock added, On behalf of everyone at Zimmer Biomet, I want to thank Dan for serving as the Companys Interim CEO for the past five months. We are grateful that Dan assumed this role at such an important time, and we look forward to continuing to benefit from his expertise through his ongoing service as CFO.
About Zimmer Biomet
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.
We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com, or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.
Cautionary Statement Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning Zimmer Biomets expectations, plans, prospects, and product and service offerings. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially. For a list and description of some of such risks and uncertainties, see Zimmer Biomets periodic reports filed with the U.S. Securities and Exchange Commission (SEC). These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in Zimmer Biomets filings with the SEC. Forward-looking statements speak only as of the date they are made, and Zimmer Biomet disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers of this release are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this release.