Document:

ex10_3.htm

    Exhibit
10.3

     

     

     

     

     

     

     

     

     

     

     

     

     

    VECTREN
CORPORATION

    

    NONQUALIFIED
DEFERRED COMPENSATION PLAN

     

     

     

     

     

     

    
      Effective
January 1, 2005

       

       

       

       

       

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE OF
CONTENTS

     

     Page

     

    
      
        	
                ARTICLE 1

                 

              	
                Definitions

              	
                1

              
	
                ARTICLE 2

                 

              	
                Selection,
      Enrollment, Eligibility

              	
                10

              
	
                2.1

                 

              	
                Selection
      by Committee

              	
                10

              
	
                2.2

                 

              	
                Enrollment
      and Eligibility Requirements; Commencement of
Participation

              	
                10

              
	
                ARTICLE 3

                 

              	
                Deferral
      Commitments/Company Contribution Amounts/Company Restoration Matching
      Amounts /Vesting/Crediting/Taxes

              	
                10

              
	
                3.1

                 

              	
                Maximum
      Deferral

              	
                10

              
	
                3.2

                 

              	
                Timing of
      Deferral Elections; Effect of Election
      Form

              	
                11

              
	
                3.3

                 

              	
                Withholding
      and Crediting of Annual Deferral Amounts

              	
                13

              
	
                3.4

                 

              	
                Company
      Contribution Amount

              	
                13

              
	
                3.5

                 

              	
                Company
      Restoration Matching Amount

              	
                14

              
	
                3.6

                 

              	
                Vesting

              	
                14

              
	
                3.7

                 

              	
                Crediting/Debiting
      of Account Balances

              	
                15

              
	
                3.8

                 

              	
                FICA
      and Other Taxes

              	
                18

              
	
                ARTICLE 4

                 

              	
                Scheduled
      Distributions

              	
                18

              
	
                4.1

                 

              	
                Scheduled
      Distributions

              	
                18

              
	
                4.2

                 

              	
                Postponing
      Scheduled Distributions

              	
                19

              
	
                4.3

                 

              	
                Other
      Benefits Take Precedence Over Scheduled Distributions

              	
                19

              
	
                4.4

                 

              	
                Unforeseeable
      Emergencies

              	
                19

              
	
                ARTICLE 5

                 

              	
                Change
      In Control Benefit

              	
                20

              
	
                5.1

                 

              	
                Change
      in Control Benefit

              	
                20

              
	
                5.2

                 

              	
                Payment
      of Change in Control Benefit

              	
                20

              
	
                ARTICLE 6

                 

              	
                Retirement
      Benefit

              	
                21

              
	
                6.1

                 

              	
                Retirement
      Benefit

              	
                21

              
	
                6.2

                 

              	
                Payment
      of Retirement Benefit

              	
                21

              
	
                ARTICLE 7

                 

              	
                Termination
      Benefit

              	
                22

              
	
                7.1

                 

              	
                Termination
      Benefit

              	
                22

              
	
                7.2

                 

              	
                Payment
      of Termination Benefit

              	
                22

              
	
                ARTICLE 8

                 

              	
                Disability
      Benefit

              	
                23

              
	
                8.1

                 

              	
                Disability
      Benefit

              	
                23

              
	
                8.2

                 

              	
                Payment
      of Disability Benefit

              	
                23

              
	
                ARTICLE 9

                 

              	
                Death
      Benefit

              	
                23

              
	
                9.1

                 

              	
                Death
      Benefit

              	
                23

              
	
                9.2

                 

              	
                Payment
      of Death Benefit

              	
                24

              
	
                ARTICLE 10

                 

              	
                Beneficiary
      Designation

              	
                24

              
	
                10.1

                 

              	
                Beneficiary

              	
                24

              
	
                10.2

                 

              	
                Beneficiary
      Designation; Change; Spousal Consent

              	
                24

              
	
                10.3

                 

              	
                Acknowledgement

              	
                24

              
	
                10.4

                 

              	
                No
      Beneficiary Designation

              	
                24

              
	
                10.5

                 

              	
                Doubt
      as to Beneficiary

              	
                25

              
	
                10.6

                 

              	
                Discharge
      of Obligations

              	
                25

              
	
                ARTICLE 11

                 

              	
                Leave
      of Absence

              	
                25

              
	
                11.1

                 

              	
                Paid
      Leave of Absence

              	
                25

              
	
                11.2

                 

              	
                Unpaid
      Leave of Absence

              	
                25

              
	
                ARTICLE 12

                 

              	
                Termination
      of Plan, Amendment or Modification

              	
                25

              
	
                12.1

                 

              	
                Termination
      of Plan

              	
                25

              
	
                12.2

                 

              	
                Amendment

              	
                26

              
	
                12.3

                 

              	
                Effect
      of Payment

              	
                26

              
	
                ARTICLE 13

                 

              	
                Administration

              	
                26

              
	
                13.1

                 

              	
                Committee
      Duties

              	
                26

              
	
                13.2

                 

              	
                Administration
      Upon Change In Control

              	
                27

              
	
                13.3

                 

              	
                Agents

              	
                27

              
	
                13.4

                 

              	
                Binding
      Effect of Decisions

              	
                27

              
	
                13.5

                 

              	
                Indemnity
      of Committee

              	
                27

              
	
                13.6

                 

              	
                Employer
      Information

              	
                27

              
	
                ARTICLE 14

                 

              	
                Other
      Benefits and Agreements

              	
                28

              
	
                14.1

                 

              	
                Coordination
      with Other Benefits

              	
                28

              
	
                ARTICLE 15

                 

              	
                Claims
      Procedures

              	
                28

              
	
                15.1

                 

              	
                Presentation
      of Claim

              	
                28

              
	
                15.2

                 

              	
                Notification
      of Decision

              	
                28

              
	
                15.3

                 

              	
                Review
      of a Denied Claim

              	
                29

              
	
                15.4

                 

              	
                Decision
      on Review

              	
                29

              
	
                15.5

                 

              	
                Legal
      Action

              	
                30

              
	
                ARTICLE 16

                 

              	
                Trust

              	
                30

              
	
                16.1

                 

              	
                Establishment
      of the Trust

              	
                30

              
	
                16.2

                 

              	
                Interrelationship
      of the Plan and the Trust

              	
                30

              
	
                16.3

                 

              	
                Distributions
      From the Trust

              	
                30

              
	
                ARTICLE 17

                 

              	
                Miscellaneous

              	
                30

              
	
                17.1

                 

              	
                Status
      of Plan

              	
                30

              
	
                17.2

                 

              	
                Unsecured
      General Creditor

              	
                30

              
	
                17.3

                 

              	
                Employer’s
      Liability

              	
                31

              
	
                17.4

                 

              	
                Nonassignability

              	
                31

              
	
                17.5

                 

              	
                Not
      a Contract of Employment

              	
                31

              
	
                17.6

                 

              	
                Furnishing
      Information

              	
                31

              
	
                17.7

                 

              	
                Terms

              	
                31

              
	
                17.8

                 

              	
                Captions

              	
                31

              
	
                17.9

                 

              	
                Governing
      Law

              	
                32

              
	
                17.1

                 

              	
                Notice

              	
                32

              
	
                17.11

                 

              	
                Successors

              	
                32

              
	
                17.12

                 

              	
                Spouse’s
      Interest

              	
                32

              
	
                17.13

                 

              	
                Validity

              	
                32

              
	
                17.14

                 

              	
                Incompetent

              	
                32

              
	
                17.15

                 

              	
                Domestic
      Relations Orders

              	
                33

              
	
                17.16

                 

              	
                Distribution
      in the Event of Income Inclusion Under Code Section 409A

              	
                33

              
	
                17.17

              	
                Deduction
      Limitation on Benefit Payments

              	
                33

              

      

    

    
       

       

      
        
        

      

      
        
          iii

        

        
          

        

      

      
        
        

      

    

    VECTREN
CORPORATION

     

     

    NONQUALIFIED
DEFERRED COMPENSATION PLAN

     

     

    Effective
January 1, 2005

     

    Purpose

     

    The
purpose of this Plan is to provide specified benefits to Directors and a select
group of management or highly compensated Employees who contribute materially to
the continued growth, development and future business success of Vectren
Corporation, an Indiana corporation, and its subsidiaries, if any, that sponsor
this Plan.  This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.

     

    This Plan
is intended to comply with all applicable law, including Code Section 409A and
related Treasury guidance and Regulations, and shall be operated and interpreted
in accordance with this intention.  In order to transition to the
requirements of Code Section 409A and related Treasury Regulations, the
Committee may make available to Participants certain transition relief provided
under Notice 2007-86, as described more fully in Appendix A of this
Plan.

     

     

    ARTICLE
1

     

     

    Definitions

     

    For the
purposes of this Plan, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated
meanings:

     

    
      	
              1.1  

            	
              “Account
      Balance” shall mean, with respect to a Participant, an entry on the
      records of the Employer equal to the sum of the Participant’s Annual
      Accounts.  The Account Balance shall be a bookkeeping entry only
      and shall be utilized solely as a device for the measurement and
      determination of the amounts to be paid to a Participant, or his or her
      designated Beneficiary, pursuant to this
Plan.

            

    

     

    If a
Participant is both an Employee and a Director and participates in the Plan in
each capacity, then separate Account Balances (and separate Annual Accounts, if
applicable) shall be established for such Participant as a device for the
measurement and determination of the (a) amounts deferred under the Plan that
are attributable to the Participant’s status as an Employee, and (b) amounts
deferred under the Plan that are attributable to the Participant’s status as a
Director.

     

    
      	
              1.2  

            	
              “Annual
      Account” shall mean, with respect to a Participant, an entry on the
      records of the Employer equal to (a) the sum of the Participant’s
      Annual Deferral Amount, Company Contribution Amount and Company
      Restoration Matching Amount for any one Plan Year, plus (b) amounts
      credited or debited to such amounts pursuant to this Plan, less (c) all
      distributions made to the Participant or his or her Beneficiary pursuant
      to this Plan that relate to the Annual Account for such Plan
      Year.  The Annual Account shall be a bookkeeping entry only and
      shall be utilized solely as a device for the measurement and determination
      of the amounts to be paid to a Participant, or his or her designated
      Beneficiary, pursuant to this Plan.

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    
      	
              1.3  

            	
              “Annual
      Deferral Amount” shall mean that portion of a Participant's Base Salary,
      Bonus, Commissions, Employee Restricted Stock, Employee Stock Unit Awards,
      Director Fees, Director Restricted Stock, Director Stock Unit Awards and
      LTIP Amounts that a Participant defers in accordance with Article 3
      for any one Plan Year, without regard to whether such amounts are withheld
      and credited during such Plan Year.

            

    

     

    
      	
              1.4  

            	
              “Annual
      Installment Method” shall mean the method used to determine the amount of
      each payment due to a Participant who has elected to receive a benefit
      over a period of years in accordance with the applicable provisions of the
      Plan.  The amount of each annual payment due to the Participant
      shall be calculated by multiplying the balance of the Participant’s
      benefit by a fraction, the numerator of which is one and the denominator
      of which is the remaining number of annual payments due to the
      Participant.  The amount of the first annual payment shall be
      calculated as of the close of business on or around the Participant’s
      Benefit Distribution Date, and the amount of
      each subsequent annual payment shall be calculated on or around each
      anniversary of such Benefit Distribution Date.  For purposes of
      this Plan, the right to receive a benefit payment in annual installments
      shall be treated as the entitlement to a single
  payment.

            

    

     

    
      	
              1.5  

            	
              “Base
      Salary” shall mean the annual cash compensation relating to services
      performed during any calendar year, excluding distributions from
      nonqualified deferred compensation plans, bonuses, commissions, overtime,
      fringe benefits, stock options, restricted stock, stock unit awards,
      restricted stock units, relocation expenses, incentive payments,
      non-monetary awards, director fees and other fees, and automobile and
      other allowances paid to a Participant for employment services rendered
      (whether or not such allowances are included in the Employee’s gross
      income).  Base Salary shall be calculated before reduction for
      compensation voluntarily deferred or contributed by the Participant
      pursuant to all qualified or nonqualified plans of any Employer and shall
      be calculated to include amounts not otherwise included in the
      Participant's gross income under Code Sections 125, 402(e)(3), 402(h), or
      403(b) pursuant to plans established by any Employer; provided, however,
      that all such amounts will be included in compensation only to the extent
      that had there been no such plan, the amount would have been payable in
      cash to the Employee.

            

    

     

    
      	
              1.6  

            	
              “Beneficiary”
      shall mean one or more persons, trusts, estates or other entities,
      designated in accordance with Article 10, that are entitled to
      receive benefits under this Plan upon the death of a
      Participant.

            

    

     

    
      	
              1.7  

            	
              “Beneficiary
      Designation Form” shall mean the form established from time to time by the
      Committee that a Participant completes, signs and returns to the Committee
      to designate one or more
Beneficiaries.

            

    

     

    
      	
              1.8  

            	
              “Benefit
      Distribution Date” shall mean the date upon which all or an objectively
      determinable portion of a Participant’s vested benefits will become
      eligible for distribution.  Except as otherwise provided in the
      Plan, a Participant’s Benefit Distribution Date shall be determined based
      on the earliest to occur of an event or scheduled date set forth in
      Articles 4 through 9, as
applicable.

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    
      	
              1.9  

            	
              “Board”
      shall mean the board of directors of the
  Company.

            

    

     

    
      	
              1.10  

            	
              “Bonus”
      shall mean any compensation, in addition to Base Salary, Commissions,
      Employee Restricted Stock, Employee Stock Unit Awards and LTIP Amounts,
      earned by a Participant under any Employer's annual bonus and cash
      incentive plans.

            

    

     

    
      	
              1.11  

            	
              “Change
      in Control” shall mean the occurrence of a “change in the ownership,” a
      “change in the effective control” or a “change in the ownership of a
      substantial portion of the assets” of a corporation, as determined in
      accordance with this Section.

            

    

     

    In order
for an event described below to constitute a Change in Control with respect to a
Participant, except as otherwise provided in part (b)(ii) of this Section, the
applicable event must relate to the corporation for which the Participant is
providing services, the corporation that is liable for payment of the
Participant’s Account Balance (or all corporations liable for payment if more
than one), as identified by the Committee in accordance with Treas. Reg.
§1.409A-3(i)(5)(ii)(A)(2), or such other corporation identified by the Committee
in accordance with Treas. Reg. §1.409A-3(i)(5)(ii)(A)(3).

     

    In
determining whether an event shall be considered a “change in the ownership,” a
“change in the effective control” or a “change in the ownership of a substantial
portion of the assets” of a corporation, the following provisions shall
apply:

     

    
      	
              (a)  

            	
              A
      “change in the ownership” of the applicable corporation shall occur on the
      date on which any one person, or more than one person acting as a group,
      acquires ownership of stock of such corporation that, together with stock
      held by such person or group, constitutes more than 50% of the total fair
      market value or total voting power of the stock of such corporation, as
      determined in accordance with Treas. Reg.
      §1.409A-3(i)(5)(v).  If a person or group is considered either
      to own more than 50% of the total fair market value or total voting power
      of the stock of such corporation, or to have effective control of such
      corporation within the meaning of part (b) of this Section, and such
      person or group acquires additional stock of such corporation, the
      acquisition of additional stock by such person or group shall not be
      considered to cause a “change in the ownership” of such
      corporation.

            

    

     

    
      	
              (b)  

            	
              A
      “change in the effective control” of the applicable corporation shall
      occur on either of the following
dates:

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    
      	
              (i)  

            	
              The
      date on which any one person, or more than one person acting as a group,
      acquires (or has acquired during the 12-month period ending on the date of
      the most recent acquisition by such person or persons) ownership of stock
      of such corporation possessing 30% or more of the total voting power of
      the stock of such corporation, as determined in accordance with Treas.
      Reg. §1.409A-3(i)(5)(vi).  If a person or group is considered to
      possess 30% or more of the total voting power of the stock of a
      corporation, and such person or group acquires additional stock of such
      corporation, the acquisition of additional stock by such person or group
      shall not be considered to cause a “change in the effective control” of
      such corporation; or

            

    

     

    
      	
              (ii)  

            	
              The
      date on which a majority of the members of the applicable corporation’s
      board of directors is replaced during any 12-month period by directors
      whose appointment or election is not endorsed by a majority of the members
      of such corporation’s board of directors before the date of the
      appointment or election, as determined in accordance with Treas. Reg.
      §1.409A-3(i)(5)(vi).  In determining whether the event described
      in the preceding sentence has occurred, the applicable corporation to
      which the event must relate shall only include a corporation identified in
      accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other
      corporation is a majority
shareholder.

            

    

     

    
      	
              (c)  

            	
              A
      “change in the ownership of a substantial portion of the assets” of the
      applicable corporation shall occur on the date on which any one person, or
      more than one person acting as a group, acquires (or has acquired during
      the 12-month period ending on the date of the most recent acquisition by
      such person or persons) assets from the corporation that have a total
      gross fair market value equal to or more than 40% of the total gross fair
      market value of all of the assets of the corporation immediately before
      such acquisition or acquisitions, as determined in accordance with Treas.
      Reg. §1.409A-3(i)(5)(vii).  A transfer of assets shall not be
      treated as a “change in the ownership of a substantial portion of the
      assets” when such transfer is made to an entity that is controlled by the
      shareholders of the transferor corporation, as determined in accordance
      with Treas. Reg.
§1.409A-3(i)(5)(vii)(B).

            

    

     

    
      	
              1.12  

            	
              “Code”
      shall mean the Internal Revenue Code of 1986, as it may be amended from
      time to time.

            

    

     

    
      	
              1.13  

            	
              “Commissions”
      shall mean the cash commissions earned by a Participant during a Plan
      Year, as determined in accordance with Code Section 409A and related
      Treasury Regulations.

            

    

     

    
      	
              1.14  

            	
              “Committee”
      shall mean the committee described in
  Article 13.

            

    

     

    
      	
              1.15  

            	
              “Company”
      shall mean Vectren Corporation, an Indiana corporation, and any successor
      to all or substantially all of the Company’s assets or
      business.

            

    

     

    
      	
              1.16  

            	
              “Company
      Contribution Amount” shall mean, for any one Plan Year, the amount
      determined in accordance with Section
3.4.

            

    

     

    
      	
              1.17  

            	
              “Company
      Restoration Matching Amount” shall mean, for any one Plan Year, the amount
      determined in accordance with Section
3.5.

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    
      	
              1.18  

            	
              “Director”
      shall mean any member of the board of directors of any
      Employer.

            

    

     

    
      	
              1.19  

            	
              “Director
      Fees” shall mean the annual fees earned by a Director from any Employer,
      including retainer fees and meetings fees, as compensation for serving on
      the board of directors.

            

    

     

    
      	
              1.20  

            	
              “Director
      Restricted Stock” shall mean any Director Fees or other compensation
      earned by a Director in the form of Restricted
  Stock.

            

    

     

    
      	
              1.21  

            	
              “Director
      Stock Unit Award” shall mean any Director Fees or other compensation
      earned by a Director in the form of Stock Unit
  Awards.

            

    

     

    
      	
              1.22  

            	
              “Disability”
      or “Disabled” shall mean that a Participant is either (a) unable to engage
      in any substantial gainful activity by reason of any medically
      determinable physical or mental impairment that can be expected to result
      in death or can be expected to last for a continuous period of not less
      than 12 months, or (b) by reason of any medically determinable physical or
      mental impairment that can be expected to result in death or can be
      expected to last for a continuous period of not less than 12 months,
      receiving income replacement benefits for a period of not less than 3
      months under an accident and health plan covering employees of the
      Participant’s Employer.  For purposes of this Plan, a
      Participant shall be deemed Disabled if determined to be totally disabled
      by the Social Security Administration.  A Participant shall also
      be deemed Disabled if determined to be disabled in accordance with the
      applicable disability insurance program of such Participant’s Employer,
      provided that the definition of “disability” applied under such disability
      insurance program complies with the requirements of this
      Section.

            

    

     

    
      	
              1.23  

            	
              “Election
      Form” shall mean the form, which may be in electronic format, established
      from time to time by the Committee that a Participant completes, signs and
      returns to the Committee to make an election under the
    Plan.

            

    

     

    
      	
              1.24  

            	
              “Employee”
      shall mean a person who is an employee of an
  Employer.

            

    

     

    
      	
              1.25  

            	
              “Employee
      Restricted Stock” shall mean any compensation earned by an Employee in the
      form of Restricted Stock.

            

    

     

    
      	
              1.26  

            	
              “Employee
      Stock Unit Award” shall mean any compensation earned by an Employee in the
      form of Stock Unit Awards.

            

    

     

    
      	
              1.27  

            	
              “Employer(s)”
      shall be defined as follows:

            

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    
      	
              (a)  

            	
              Except
      as otherwise provided in part (b) of this Section, the term “Employer”
      shall mean the Company and/or any of its subsidiaries (now in existence or
      hereafter formed or acquired) that have been selected by the Committee to
      participate in the Plan and have adopted the Plan as a
      sponsor.

            

    

     

    
      	
              (b)  

            	
              For
      the purpose of determining whether a Participant has experienced a
      Separation from Service, the term “Employer” shall
  mean:

            

    

     

    
      	
              (i)  

            	
              The
      entity for which the Participant performs services and with respect to
      which the legally binding right to compensation deferred or contributed
      under this Plan arises; and

            

    

     

    
      	
              (ii)  

            	
              All
      other entities with which the entity described above would be aggregated
      and treated as a single employer under Code Section 414(b) (controlled
      group of corporations) and Code Section 414(c) (a group of trades or
      businesses, whether or not incorporated, under common control), as
      applicable.  In order to identify the group of entities
      described in the preceding sentence, the Committee shall use an ownership
      threshold of at least 50% as a substitute for the 80% minimum ownership
      threshold that appears in, and otherwise must be used when applying, the
      applicable provisions of (A) Code Section 1563 for determining a
      controlled group of corporations under Code Section 414(b), and (B) Treas.
      Reg. §1.414(c)-2 for determining the trades or businesses that are under
      common control under Code Section
414(c).

            

    

     

     

    
      	
              1.28  

            	
              “ERISA”
      shall mean the Employee Retirement Income Security Act of 1974, as it may
      be amended from time to time.

            

    

     

    
      	
              1.29  

            	
              “401(k)
      Plan” shall mean, with respect to an Employer, a plan qualified under Code
      Section 401(a) that contains a cash or deferral arrangement described in
      Code Section 401(k), adopted by the Employer, as it may be amended from
      time to time, or any successor
thereto.

            

    

     

    
      	
              1.30  

            	
              “LTIP
      Amounts” shall mean any portion of the compensation attributable to a Plan
      Year that is earned by a Participant under any Employer's long-term
      incentive plan or any other long-term incentive arrangement designated by
      the Committee.

            

    

     

    
      	
              1.31  

            	
              “Measurement
      Fund” shall have the meaning set forth in Section
  3.7(a).

            

    

     

    
      	
              1.32  

            	
              “Participant”
      shall mean any Employee or Director (a) who is selected to
      participate in the Plan, and (b) whose executed Election Form and
      Beneficiary Designation Form are accepted by the
  Committee.

            

    

     

    
      	
              1.33  

            	
              “Performance-Based
      Compensation” shall mean compensation the entitlement to or amount of
      which is contingent on the satisfaction of pre-established organizational
      or individual performance criteria relating to a performance period of at
      least 12 consecutive months, as determined by the Committee in accordance
      with Treas. Reg. §1.409A-1(e).

            

    

     

    
      	
              1.34  

            	
              “Plan”
      shall mean this Vectren Corporation Nonqualified Deferred Compensation
      Plan, which shall be evidenced by this instrument, as it may be amended
      from time to time, and by any other documents that together with this
      instrument define a Participant’s rights to amounts credited to his or her
      Account Balance.

            

    

     

    
      	
              1.35  

            	
              “Plan
      Year” shall mean a period
      beginning on January 1 of each calendar year and continuing through
      December 31 of such calendar year.

            

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    
      	
              1.36  

            	
              “Restricted
      Stock” shall mean any portion of the compensation attributable to a Plan
      Year that is earned by a Participant under any Employers’ plan in the form
      of restricted stock or an award similar
thereto.

            

    

     

    
      	
              1.37  

            	
              “Retirement,”
      “Retire(s)” or “Retired” shall mean with respect to a Participant who is
      an Employee, a Separation from Service on or after the attainment of age
      55 with at least 10 Years of Service, and shall mean with respect to a
      Participant who is a Director, a Separation from Service.  If a
      Participant is both an Employee and a Director and participates in the
      Plan in each capacity, (a) the determination of whether the Participant
      qualifies for Retirement as an Employee shall be made when the Participant
      experiences a Separation from Service as an Employee and such
      determination shall only apply to the applicable Account Balance
      established in accordance with Section 1.1
      for amounts deferred under the Plan as an Employee, and (b) the
      determination of whether the Participant qualifies for Retirement as a
      Director shall be made at the time the Participant experiences a
      Separation from Service as a Director and such determination shall only
      apply to the applicable Account Balance established in accordance with
      Section 1.1 for amounts deferred under the
      Plan as a Director.

            

    

     

    
      	
              1.38  

            	
              “Separation
      from Service” shall mean a termination of services provided by a
      Participant to his or her Employer, whether voluntarily or involuntarily,
      other than by reason of death or Disability, as determined by the
      Committee in accordance with Treas. Reg. §1.409A-1(h).  In
      determining whether a Participant has experienced a Separation from
      Service, the following provisions shall apply:

            

    

     

    
      	
              (a)  

            	
              For
      a Participant who provides services to an Employer as an Employee, except
      as otherwise provided in part (c) of this Section, a Separation from
      Service shall occur when such Participant has experienced a termination of
      employment with such Employer.  A Participant shall be
      considered to have experienced a termination of employment when the facts
      and circumstances indicate that the Participant and his or her Employer
      reasonably anticipate that either (i) no further services will be
      performed for the Employer after a certain date, or (ii) that the level of
      bona fide services the Participant will perform for the Employer after
      such date (whether as an Employee or as an independent contractor) will
      permanently decrease to less than 50% of the average level of bona fide
      services performed by such Participant (whether as an Employee or an
      independent contractor) over the immediately preceding 36-month period (or
      the full period of services to the Employer if the Participant has been
      providing services to the Employer less than 36
  months).

            

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    If a
Participant is on military leave, sick leave, or other bona fide leave of
absence, the employment relationship between the Participant and the Employer
shall be treated as continuing intact, provided that the period of such leave
does not exceed 6 months, or if longer, so long as the Participant retains a
right to reemployment with the Employer under an applicable statute or by
contract.  If the period of a military leave, sick leave, or other
bona fide leave of absence exceeds 6 months and the Participant does not retain
a right to reemployment under an applicable statute or by contract, the
employment relationship shall be considered to be terminated for purposes of
this Plan as of the first day immediately following the end of such 6-month
period.  In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if there is a
reasonable expectation that the Participant will return to perform services for
the Employer. 

     

    
      	
              (b)  

            	
              For
      a Participant who provides services to an Employer as an independent
      contractor, except as otherwise provided in part (c) of this Section, a
      Separation from Service shall occur upon the expiration of the contract
      (or in the case of more than one contract, all contracts) under which
      services are performed for such Employer, provided that the expiration of
      such contract(s) is determined by the Committee to constitute a good-faith
      and complete termination of the contractual relationship between the
      Participant and such Employer. 

            

    

     

    
      	
              (c)  

            	
              For
      a Participant who provides services to an Employer as both an Employee and
      an independent contractor, a Separation from
      Service generally shall not occur until the Participant has ceased
      providing services for such Employer as both as an Employee and as an
      independent contractor, as determined in accordance with the provisions
      set forth in parts (a) and (b) of this Section,
      respectively.  Similarly, if a Participant either (i) ceases
      providing services for an Employer as an independent contractor and begins
      providing services for such Employer as an Employee, or (ii) ceases
      providing services for an Employer as an Employee and begins providing
      services for such Employer as an independent contractor, the Participant
      will not be considered to have experienced a Separation from Service until
      the Participant has ceased providing services for such Employer in both
      capacities, as determined in accordance with the applicable provisions set
      forth in parts (a) and (b) of this Section. 

            

    

     

    Notwithstanding
the foregoing provisions in this part (c), if a Participant provides services
for an Employer as both an Employee and as a Director, to the extent permitted
by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a
Director shall not be taken into account in determining whether the Participant
has experienced a Separation from Service as an Employee, and the services
provided by such Participant as an Employee shall not be taken into account in
determining whether the Participant has experienced a Separation from Service as
a Director.

     

     

    
      	
              1.39  

            	
              “Specified
      Employee” shall mean any Participant who is determined to be a “key
      employee” (as defined under Code Section 416(i) without regard to
      paragraph (5) thereof) for the applicable period, as determined annually
      by the Committee in accordance with Treas. Reg.
      §1.409A-1(i).  In determining whether a Participant is a
      Specified Employee, the following provisions shall
  apply:

            

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    
      	
              (a)  

            	
              The
      Committee’s identification of the individuals who fall within the
      definition of “key employee” under Code Section 416(i) (without regard to
      paragraph (5) thereof) shall be based upon the 12-month period ending on
      each December 31st
      (referred to below as the “identification date”).  In applying
      the applicable provisions of Code Section 416(i) to identify such
      individuals, “compensation” shall be determined in accordance with Treas.
      Reg. §1.415(c)-2(a) without regard to (i) any safe harbor provided in
      Treas. Reg. §1.415(c)-2(d), (ii) any of the special timing rules provided
      in Treas. Reg. §1.415(c)-2(e), and (iii) any of the special rules provided
      in Treas. Reg. §1.415(c)-2(g); and

            

    

     

    
      	
              (b)  

            	
              Each
      Participant who is among the individuals identified as a “key employee” in
      accordance with part (a) of this Section shall be treated as a Specified
      Employee for purposes of this Plan if such Participant experiences a
      Separation from Service during the 12-month period that begins on the
      April 1st
      following the applicable identification
date.

            

    

     

    
      	
              1.40  

            	
              “Stock
      Unit Awards” shall mean any portion of the compensation attributable to a
      Plan Year that is earned by a Participant under any Employer’s plan in the
      form of stock unit awards, restricted stock units or an award similar
      thereto.

            

    

     

    
      	
              1.41  

            	
              “Termination
      Benefit” shall have the meaning set forth in Section
  7.1.

            

    

     

    
      	
              1.42  

            	
              “Trust”
      shall mean one or more trusts established by the Company in accordance
      with Article 16.

            

    

     

    
      	
              1.43  

            	
              “Unforeseeable
      Emergency” shall mean a severe financial hardship of the Participant
      resulting from (a) an illness or accident of the Participant, the
      Participant’s spouse, the Participant’s Beneficiary or the Participant’s
      dependent (as defined in Code Section 152 without regard to paragraphs
      (b)(1), (b)(2) and (d)(1)(b) thereof), (b) a loss of the Participant’s
      property due to casualty, or (c) such other similar extraordinary and
      unforeseeable circumstances arising as a result of events beyond the
      control of the Participant, all as determined by the Committee based on
      the relevant facts and
circumstances.

            

    

     

    
      	
              1.44  

            	
              “Vectren
      Stock” shall mean common stock of the Company, without par value, or any
      other equity securities of the Company designated by the
      Committee.

            

    

     

    
      	
              1.45  

            	
              “Vectren
      Stock Measurement Fund” shall have the meaning set forth in Section
      3.7(c).

            

    

     

    
      	
              1.46  

            	
              “Years
      of Service” shall mean the total number of full years in which a
      Participant has been employed by one or more Employers.  For
      purposes of this definition, a year of employment shall be a 365 day
      period (or 366 day period in the case of a leap year) that, for the first
      year of employment, commences on the Employee's date of hiring and that,
      for any subsequent year, commences on an anniversary of that hiring
      date.  A partial year of employment shall not be treated as a
      Year of Service.

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
2

    Selection, Enrollment,
Eligibility

     

    
      	
              2.1  

            	
              Selection
      by Committee.  Participation in the Plan shall be limited
      to Directors and, as determined by the Committee in its sole discretion, a
      select group of management or highly compensated
      Employees.  From that group, the Committee shall select, in its
      sole discretion, those individuals who may actually participate in this
      Plan.

            

    

     

    
      	
              2.2  

            	
              Enrollment
      and Eligibility Requirements; Commencement of
      Participation.

            

    

     

    
      	
              (a)  

            	
              As
      a condition to participation, each Director or selected Employee shall
      complete, execute and return to the Committee an Election Form and a
      Beneficiary Designation Form by the deadline(s) established by the
      Committee in accordance with the applicable provisions of this
      Plan.  In addition, the Committee shall establish from time to
      time such other enrollment requirements as it determines, in its sole
      discretion, are necessary.

            

    

     

    
      	
              (b)  

            	
              Each
      Director or selected Employee who is eligible to participate in the Plan
      shall commence participation in the Plan on the date that the Committee
      determines that the Director or Employee has met all enrollment
      requirements set forth in this Plan and required by the Committee,
      including returning all required documents to the Committee within the
      specified time period.  

            

    

     

    
      	
              (c)  

            	
              If
      a Director or an Employee fails to meet all requirements established by
      the Committee within the period required, that Director or Employee shall
      not be eligible to participate in the Plan during such Plan
      Year.

            

    

     

     

    ARTICLE
3

     

    Deferral Commitments/Company
Contribution Amounts/

    Company Restoration Matching
Amounts/ Vesting/Crediting/Taxes

     

    
      	
              3.1  

            	
              Maximum
      Deferral.  

            

    

     

    
      	
              (a)  

            	
              Annual
      Deferral Amount.  For each Plan Year, a Participant may
      elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus,
      Commissions, LTIP Amounts, Employee Restricted Stock, Employee Stock Unit
      Awards, Director Restricted Stock, Director Stock Unit Awards and/or
      Director Fees up to the following maximum percentages for each deferral
      elected:

            

    

     

    
      	
              Deferral

            	
              Maximum
      Percentage

            
	
              Base
      Salary

            	
              90%

            
	
              Bonus

            	
              100%

            
	
              Commissions

            	
              100%

            
	
              LTIP
      Amounts

            	
              100%

            
	
              Employee
      Restricted Stock

            	
              100%

            
	
              Employee
      Stock Unit Awards

            	
              100%

            
	
              Director
      Restricted Stock

            	
              100%

            
	
              Director
      Stock Unit Awards

            	
              100%

            
	
              Director
      Fees

            	
              100%

            

    

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    
      	
              (b)  

            	
              Short
      Plan Year.  Notwithstanding the foregoing, if a
      Participant first becomes a Participant after the first day of a Plan
      Year, then to the extent required by Section 3.2 and Code Section 409A and related Treasury
      Regulations, the maximum amount of the Participant’s Base Salary, Bonus,
      Commissions, LTIP Amounts, Employee Restricted Stock, Employee Stock Unit
      Awards, Director Restricted Stock, Director Stock Unit Awards or Director
      Fees that may be deferred by the Participant for the Plan Year shall be
      determined by applying the percentages set forth in Section 3.1(a) to the
      portion of such compensation attributable to services performed after the
      date that the Participant’s deferral election is
  made.

            

    

     

    
      	
              3.2  

            	
              Timing
      of Deferral Elections; Effect of Election
      Form.  

            

    

     

    
      	
              (a)  

            	
              General
      Timing Rule for Deferral Elections.  Except as otherwise
      provided in this Section 3.2, in order for a Participant to make a valid
      election to defer Base Salary, Bonus, Commissions, Director Fees, Employee
      Restricted Stock, Employee Stock Unit Awards, Director Restricted Stock,
      Director Stock Unit Awards and/or LTIP Amounts, the Participant must
      submit an Election Form on or before the deadline established by the
      Committee, which in no event shall be later than the December 31st
      preceding the Plan Year in which such compensation will be earned or
      during which the Participant will obtain a legally binding right to such
      compensation.

            

    

     

    Any
deferral election made in accordance with this Section 3.2(a) shall be
irrevocable as of the December 31st
preceding the Plan Year in which such compensation will be earned; provided,
however, that if the Committee permits or requires Participants to make a
deferral election by the deadline described above for an amount that qualifies
as Performance-Based Compensation, the Committee may permit a Participant to
subsequently change his or her deferral election for such compensation by
submitting a new Election Form in accordance with Section 3.2(d)
below.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    
      	
              (b)  

            	
              Timing
      of Deferral Elections for Newly Eligible Plan
      Participants.  A Director or selected Employee who first
      becomes eligible to participate in the Plan on or after the beginning of a
      Plan Year, as determined in accordance with Treas. Reg.
      §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas.
      Reg. §1.409A-1(c)(2), may be permitted to make an election to defer the
      portion of Base Salary, Bonus, Commissions, Director Fees, Employee
      Restricted Stock, Employee Stock Unit Awards, Director Restricted Stock,
      Director Stock Unit Awards and/or LTIP Amounts attributable to services to
      be performed after such election, provided that the Participant submits an
      Election Form on or before the deadline established by the Committee,
      which in no event shall be later than 30 days after the Participant first
      becomes eligible to participate in the
Plan.

            

    

     

    If a
deferral election made in accordance with this Section 3.2(b) relates to
compensation earned based upon a specified performance period, the amount
eligible for deferral shall be equal to (i) the total amount of compensation for
the performance period, multiplied by (ii) a fraction, the numerator of which is
the number of days remaining in the service period after the Participant’s
deferral election is made, and the denominator of which is the total number of
days in the performance period. 

     

    Any
deferral election made in accordance with this Section 3.2(b) shall become
irrevocable no later than the 30th day
after the date the Director or selected Employee becomes eligible to participate
in the Plan.

     

    
      	
              (c)  

            	
              [Intentionally
      Omitted]

            

    

     

     

    
      	
              (d)  

            	
              Timing
      of Deferral Elections for Performance-Based Compensation.  Subject to
      the limitations described below, the Committee may determine that an
      irrevocable deferral election for an amount that qualifies as
      Performance-Based Compensation may be made by submitting an Election Form
      on or before the deadline established by the Committee, which in no event
      shall be later than 6 months before the end of the performance
      period.  

            

    

     

    In order
for a Participant to be eligible to make a deferral election for
Performance-Based Compensation in accordance with the deadline established
pursuant to this Section 3.2(d), the Participant must have performed services
continuously from the later of (i) the beginning of the performance period for
such compensation, or (ii) the date upon which the performance criteria for such
compensation are established, through the date upon which the Participant makes
the deferral election for such compensation.  In no event shall a
deferral election submitted under this Section 3.2(d) be permitted to apply to
any amount of Performance-Based Compensation that has become readily
ascertainable.

     

    
      	
              (e)  

            	
              Timing
      Rule for Deferral of Compensation Subject to Risk of
      Forfeiture.  With
      respect to compensation (i) to which a Participant has a legally binding
      right to payment in a subsequent year, and (ii) that is subject to a
      forfeiture condition requiring the Participant’s continued services for a
      period of at least 12 months from the date the Participant obtains the
      legally binding right, the Committee may determine that an irrevocable
      deferral election for such compensation may be made by timely delivering
      an Election Form to the Committee in accordance with its rules and
      procedures, no later than the 30th
      day after the Participant obtains the legally binding right to the
      compensation, provided that the election is made at least 12 months in
      advance of the earliest date at which the forfeiture condition could
      lapse, as determined in accordance with Treas. Reg.
      §1.409A-2(a)(5).

            

    

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    Any
deferral election(s) made in accordance with this Section 3.2(e) shall become
irrevocable no later than the 30th day
after the Participant obtains the legally binding right to the compensation
subject to such deferral election(s).

     

     

    
      	
              3.3  

            	
              Withholding
      and Crediting of Annual Deferral Amounts.  For each Plan
      Year, the Base Salary portion of the Annual Deferral Amount shall be
      withheld from each regularly scheduled Base Salary payroll in equal
      amounts, as adjusted from time to time for increases and decreases in Base
      Salary.  The Bonus, Commissions, LTIP Amounts, Employee
      Restricted Stock, Employee Stock Unit Awards, Director Restricted Stock,
      Director Stock Unit Awards and/or Director Fees portion of the Annual
      Deferral Amount shall be withheld at the time the Bonus, Commissions, LTIP
      Amounts, Employee Restricted Stock, Employee Stock Unit Awards, Director
      Restricted Stock, Director Stock Unit Awards or Director Fees are or
      otherwise would be paid to the Participant, whether or not this occurs
      during the Plan Year itself.  Annual Deferral Amounts shall be
      credited to the Participant’s Annual Account for such Plan Year at the
      time such amounts would otherwise have been paid to the
      Participant.  With respect to Employee Restricted Stock,
      Employee Stock Unit Awards paid in shares of Vectren Stock, Director
      Restricted Stock and Director Stock Unit Awards paid in shares of Vectren
      Stock, the amount credited to the Participant’s Annual Account shall be
      calculated using the closing price of the Vectren Stock as of the trading
      day coinciding with, or if such day is not a trading day then the trading
      day closest before, the date the Employee Restricted Stock, Employee Stock
      Unit Awards, Director Restricted Stock or Director Stock Unit Awards
      vests.

            

    

     

    
      	
              3.4  

            	
              Company
      Contribution Amount.

            

    

     

    
      	
              (a)  

            	
              For
      each Plan Year, an Employer may be required to credit amounts to a
      Participant’s Annual Account in accordance with employment or other
      agreements entered into between the Participant and the Employer, which
      amounts shall be part of the Participant’s Company Contribution Amount for
      that Plan Year.  Such amounts shall be credited to the
      Participant’s Annual Account for the applicable Plan Year on the date or
      dates prescribed by such
agreements.

            

    

     

    
      	
              (b)  

            	
              For
      each Plan Year, an Employer, in its sole discretion, may, but is not
      required to, credit any amount it desires to any Participant’s Annual
      Account under this Plan, which amount shall be part of the Participant’s
      Company Contribution Amount for that Plan Year.  The amount so
      credited to a Participant may be smaller or larger than the amount
      credited to any other Participant, and the amount credited to any
      Participant for a Plan Year may be zero, even though one or more other
      Participants receive a Company Contribution Amount for that Plan
      Year.  The Company Contribution Amount described in this Section
      3.4(b), if any, shall be credited to the Participant’s Annual Account for
      the applicable Plan Year on a date or dates to be determined by the
      Committee.

            

    

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    
      	
              (c)  

            	
              If
      not otherwise specified in the Participant’s employment or other agreement
      entered into between the Participant and the Employer, the amount (or the
      method or formula for determining the amount) of a Participant’s Company
      Contribution Amount shall be set forth in writing in one or more
      documents, which shall be deemed to be incorporated into this Plan in
      accordance with Section 1.34, no later than the date on which such Company
      Contribution Amount is credited to the applicable Annual Account of the
      Participant.

            

    

     

    
      	
              3.5  

            	
              Company
      Restoration Matching Amount.  A Participant's Company
      Restoration Matching Amount for any Plan Year shall be an amount
      determined by the Committee to make up for certain limits applicable to
      the 401(k) Plan or other qualified plan for such Plan Year, as identified
      by the Committee, or for such other purposes as determined by the
      Committee in its sole discretion.  The amount so credited to a
      Participant under this Plan for any Plan Year (a) may be smaller or larger
      than the amount credited to any other Participant, and (b) may differ from
      the amount credited to such Participant in the preceding Plan Year. The
      Participant’s Company Restoration Matching Amount, if any, shall be
      credited to the Participant’s Annual Account for the applicable Plan Year
      on a date or dates to be determined by the Committee.  The
      amount (or the method or formula for determining the amount) of a
      Participant’s Company Restoration Matching Amount shall be set forth in
      writing in one or more documents, which shall be deemed to be incorporated
      into this Plan in accordance with Section 1.34, no later than the date on
      which such Company Restoration Matching Amount is credited to the
      applicable Annual Account of the
Participant.

            

    

     

    
      	
              3.6  

            	
              Vesting.

            

    

     

    
      	
              (a)  

            	
              A
      Participant shall at all times be 100% vested in the portion of his or her
      Account Balance attributable to Annual Deferral Amounts, plus amounts
      credited or debited on such amounts pursuant to Section
    3.7.

            

    

     

    
      	
              (b)  

            	
              A
      Participant shall be vested in the portion of his or her Account Balance
      attributable to any Company Contribution Amounts, plus amounts credited or
      debited on such amounts pursuant to Section 3.7, in accordance with the
      vesting schedule(s) set forth in his or her employment agreement or any
      other agreement entered into between the Participant and his or her
      Employer.

            

    

     

    
      	
              (c)  

            	
              A
      Participant shall be vested in the portion of his or her Account Balance
      attributable to any Company Restoration Matching Amounts, plus amounts
      credited or debited on such amounts pursuant to Section 3.7, only to the
      extent that the Participant would be vested in such amounts under the
      provisions of the 401(k) Plan, as determined by the Committee in its sole
      discretion.

            

    

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    
      	
              (d)  

            	
              Notwithstanding
      anything to the contrary contained in this Section 3.6, in the event of a
      Change in Control, or upon a Participant’s Disability, Separation from
      Service on or after qualifying for Retirement, or death prior to
      Separation from Service, any amounts that are not vested in accordance
      with Sections 3.6(b) or 3.6(c) above, shall immediately become 100%
      vested.

            

    

     

    
      	
              3.7  

            	
              Crediting/Debiting
      of Account Balances.  In accordance with, and subject to,
      the rules and procedures that are established from time to time by the
      Committee, in its sole discretion, amounts shall be credited or debited to
      a Participant's Account Balance in accordance with the following
      rules:

            

    

     

    
      	
              (a)  

            	
              Measurement
      Funds.  The Participant may elect one or more of the
      measurement funds selected by the Committee, in its sole discretion, which
      are based on certain mutual funds including, without limitation, any
      Vectren Stock Measurement Fund (the “Measurement Funds”), for the purpose
      of crediting or debiting additional amounts to his or her Account
      Balance.  As necessary, the Committee may, in its sole
      discretion, discontinue, substitute or add a Measurement
    Fund.

            

    

     

    
      	
              (b)  

            	
              Election
      of Measurement Funds.  A Participant, in connection with
      his or her initial deferral election in accordance with Section 3.2 above,
      shall elect one or more Measurement Fund(s) (as described in Section
      3.7(a) above) to be used to determine the amounts to be credited or
      debited to his or her Account Balance.  If a Participant does
      not elect any of the Measurement Funds as described in the previous
      sentence, the Participant’s Account Balance shall automatically be
      allocated into the lowest-risk Measurement Fund, as determined by the
      Committee, in its sole discretion.  The Participant may (but is
      not required to) elect, by such process as is approved by the Committee,
      to add or delete one or more Measurement Fund(s) to be used to determine
      the amounts to be credited or debited to his or her Account Balance, or to
      change the portion of his or her Account Balance allocated to each
      previously or newly elected Measurement Fund.  If an election is
      made in accordance with the previous sentence, it shall apply as of the
      first business day deemed reasonably practicable by the Committee, in its
      sole discretion, and shall continue thereafter for each subsequent day in
      which the Participant participates in the Plan, unless changed in
      accordance with the previous sentence.  Notwithstanding anything
      herein to the contrary, the Committee, in its sole discretion, may impose
      limitations on the frequency with which one or more of the Measurement
      Funds elected in accordance with this Section 3.7(b) or Section
      3.7(c) may be added or deleted by such Participant; furthermore, the
      Committee, in its sole discretion, may impose limitations on the frequency
      with which the Participant may change the portion of his or her Account
      Balance allocated to each previously or newly elected Measurement
      Fund.

            

    

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    
      	
              (c)  

            	
              Vectren
      Corporation Stock Measurement
Fund.

            

    

     

    
      	
              (i)  

            	
              A
      Participant, in connection with his or her initial deferral election in
      accordance with Section 3.2 above, may elect a Measurement Fund invested
      solely in Vectren Stock (the “Vectren Stock Measurement Fund”) to be used
      to determine amounts to be credited or debited to his or her Account
      Balance.  The Participant may (but is not required to) elect, by
      such process as is approved by the Committee, to add or delete the Vectren
      Stock Measurement Fund as a Measurement Fund to be used to determine the
      amounts to be credited or debited to his or her Account Balance, or to
      change the portion of his or her Account Balance allocated to the Vectren
      Stock Measurement Fund.  If an election is made in accordance
      with the previous sentence, it shall apply as of the first business day
      deemed reasonably practicable by the Committee, in its sole discretion,
      and shall continue thereafter for each subsequent day in which the
      Participant participates in the Plan, unless changed in accordance with
      the previous sentence.  Notwithstanding anything to the contrary
      contained in this Section 3.7, the Committee may, in its sole discretion
      disallow any transfer which is made during a period in which the
      Participant is prohibited (by Company policy or otherwise) from acquiring
      or disposing of the Company’s equity
securities.

            

    

     

    
      	
              (ii)  

            	
              Any
      earnings, including stock dividends, cash dividends or other non-cash
      dividends that would have been payable on the Vectren Stock credited to a
      Participant’s Account Balance shall be treated separately from amounts
      otherwise deferred under the Plan and shall be credited to the
      Participant’s Account Balance in the form of additional shares of Vectren
      Stock and shall automatically and irrevocably be deemed to be re-invested
      in the Vectren Corporation Stock Measurement Fund until such amounts are
      distributed to the Participant; provided, however, a
      Participant may elect, in connection with the Participant’s commencement
      of participation in the Plan, to receive such earnings in cash, less
      applicable withholdings.  The number of shares credited to the
      Participant for a particular stock dividend shall be equal to (a) the
      number of shares of Vectren Stock credited to the Participant’s Account
      Balance as of the payment date for such dividend in respect of each share
      of Vectren Stock, multiplied by (b) the number of additional or fractional
      shares of Vectren Stock actually paid as a dividend in respect of each
      share of Vectren Stock.  The number of shares credited to the
      Participant for a particular cash dividend or other non-cash dividend
      shall be equal to (a) the number of shares of Vectren Stock credited to
      the Participant’s Account Balance as of the payment date for such dividend
      in respect of each share of Vectren Stock, multiplied by (b) the fair
      market value of the dividend, divided by (c) the “fair market value” of
      the Vectren Stock on the payment date for such
  dividend.

            

    

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    
      	
              (iii)  

            	
              The
      number of shares of Vectren Stock credited to the Participant’s Account
      Balance may be adjusted by the Committee, in its sole discretion, to
      prevent dilution or enlargement of Participants’ rights with respect to
      the portion of his or her Account Balance allocated to Vectren Corporation
      Measurement Stock Fund in the event of
      any reorganization, reclassification, stock split, or other unusual
      corporate transaction or event which affects the value of the Vectren
      Stock, provided that any such adjustment shall be made taking into account
      any crediting of shares of Vectren Stock to the Participant under Section
      3.7.

            

    

     

    
      	
              (iv)  

            	
              For
      purposes of this Section 3.7(c), the fair market value of the Stock shall
      be determined by the Committee in its sole
  discretion.

            

    

     

    
      	
              (d)  

            	
              Proportionate
      Allocation.  In making any election described in Section
      3.7(b) or 3.7(c) above, the Participant shall specify on the Election
      Form, in increments of five percent (5%) or such other percent selected by
      the Committee, the percentage of his or her Account Balance to be
      allocated/reallocated.

            

    

     

    
      	
              (e)  

            	
              Crediting
      or Debiting Method.  The performance of each Measurement
      Fund (either positive or negative) will be determined on a daily basis
      based on the manner in which such Participant’s Account Balance has been
      hypothetically allocated among the Measurement Funds by the
      Participant.

            

    

     

    
      	
              (f)  

            	
              No
      Actual Investment.  Notwithstanding any other provision
      of this Plan that may be interpreted to the contrary, the Measurement
      Funds are to be used for measurement purposes only, and a Participant's
      election of any such Measurement Fund, the allocation of his or her
      Account Balance thereto, the calculation of additional amounts and the
      crediting or debiting of such amounts to a Participant's Account Balance
      shall not be considered or construed in any manner as an actual investment
      of his or her Account Balance in any such Measurement Fund.  In
      the event that the Company or the Trustee (as that term is defined in the
      Trust), in its own discretion, decides to invest funds in any or all of
      the investments on which the Measurement Funds are based, no Participant
      shall have any rights in or to such investments
      themselves.  Without limiting the foregoing, a Participant's
      Account Balance shall at all times be a bookkeeping entry only and shall
      not represent any investment made on his or her behalf by the Company or
      the Trust and the Participant shall at all times remain an unsecured
      creditor of the Company.

            

    

     

    
      	
              3.8  

            	
              FICA
      and Other Taxes.

            

    

     

    
      	
              (a)  

            	
              Annual
      Deferral Amounts.  For each Plan Year in which an Annual
      Deferral Amount is being withheld from a Participant, the Participant’s
      Employer(s) shall withhold from that portion of the Participant’s Base
      Salary, Bonus, Commissions, Employee Restricted Stock, Employee Stock Unit
      Awards and/or LTIP Amounts that is not being deferred, in a manner
      determined by the Employer(s), the Participant’s share of FICA and other
      employment taxes on such Annual Deferral Amount.  If necessary,
      the Committee may reduce the Annual Deferral Amount in order to comply
      with this Section 3.8.

            

    

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    
      	
              (b)  

            	
              Company
      Restoration Matching Amounts and Company Contribution
      Amounts.  When a Participant becomes vested in a portion
      of his or her Account Balance attributable to any Company Restoration
      Matching Amounts and/or Company Contribution Amounts, the Participant’s
      Employer(s) shall withhold from that portion of the Participant’s Base
      Salary, Bonus, Commissions, Employee Restricted Stock, Employee Stock Unit
      Awards and/or LTIP Amounts that is not deferred, in a manner determined by
      the Employer(s), the Participant’s share of FICA and other employment
      taxes on such amounts.  If necessary, the Committee may reduce
      the vested portion of the Participant’s Company Restoration Matching
      Amount or Company Contribution Amount, as applicable, in order to comply
      with this Section 3.8.

            

    

     

    
      	
              (c)  

            	
              Distributions.  The
      Participant’s Employer(s), or, if applicable, the trustee of the Trust,
      shall withhold from any payments made to a Participant under this Plan all
      federal, state and local income, employment and other taxes required to be
      withheld by the Employer(s), or, if applicable, the trustee of the Trust,
      in connection with such payments, in amounts and in a manner to be
      determined in the sole discretion of the Employer(s) and, if applicable,
      the trustee of the Trust.

            

    

     

     

    ARTICLE
4

     

     

    Scheduled Distribution;
Unforeseeable Emergencies

     

    
      	
              4.1  

            	
              Scheduled
      Distributions.  In connection with each election to defer
      an Annual Deferral Amount, a Participant may elect to receive all or a
      portion of such Annual Deferral Amount, plus amounts credited or debited
      on that amount pursuant to Section 3.7, in the form of a lump sum
      payment, calculated as of the close of business on or around the Benefit
      Distribution Date designated by the Participant in accordance with this
      Section (a “Scheduled Distribution”).  The Benefit Distribution
      Date for the amount subject to a Scheduled Distribution election shall be
      the first day of any Plan Year designated by the Participant, which may be
      no sooner than 3 Plan Years after the end of the Plan Year to which the
      Participant’s deferral election relates, unless otherwise provided on an
      Election Form approved by the
Committee.

            

    

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    Subject
to the other terms and conditions of this Plan, each Scheduled Distribution
elected shall be paid out during a 60 day period commencing immediately after
the Benefit Distribution Date.  By way of example, if a Scheduled
Distribution is elected for Annual Deferral Amounts that are earned in the Plan
Year commencing January 1, 2008, the earliest Benefit Distribution Date
that may be designated by a Participant would be January 1, 2012, and the
Scheduled Distribution would be paid out during the 60 day period commencing
immediately after such Benefit Distribution Date. 

     

    
      	
              4.2  

            	
              Postponing
      Scheduled Distributions.  A Participant may elect to
      postpone a Scheduled Distribution described in Section 4.1 above, and have such amount paid out during a
      60 day period commencing immediately after an allowable alternative
      Benefit Distribution Date designated in accordance with this Section 4.2.  In order to make such an
      election, the Participant must submit an Election Form to the Committee in
      accordance with the following
criteria:

            

    

     

     

    
      	
              (a)  

            	
              The
      election of the new Benefit Distribution Date shall have no effect until
      at least 12 months after the date on which the election is
      made;

            

    

     

     

    
      	
              (b)  

            	
              The
      new Benefit Distribution Date selected by the Participant for such
      Scheduled Distribution must be the first day of a Plan Year that is no
      sooner than 5 years after the previously designated Benefit Distribution
      Date; and

            

    

     

     

    
      	
              (c)  

            	
              The
      election must be made at least 12 months
      prior to the Participant's previously designated Benefit Distribution Date
      for such Scheduled Distribution.

            

    

     

    For
purposes of applying the provisions of this Section 4.2, a Participant’s
election to postpone a Scheduled Distribution shall not be considered to be made
until the date on which the election becomes irrevocable.  Such an
election shall become irrevocable no later than the date that is 12 months prior
to the Participant’s previously designated Benefit Distribution Date for such
Scheduled Distribution.

     

     

    
      	
              4.3  

            	
              Other
      Benefits Take Precedence Over Scheduled
      Distributions.  Should an event occur prior to any
      Benefit Distribution Date designated for a Scheduled Distribution that
      would trigger a benefit under Articles 5 through 9, as applicable, all
      amounts subject to a Scheduled Distribution election shall be paid in
      accordance with the other applicable provisions of the Plan and not in
      accordance with this Article 4.

            

    

     

    
      	
              4.4  

            	
              Unforeseeable
      Emergencies.

            

    

     

    
      	
              a.  

            	
              If
      a Participant experiences an Unforeseeable Emergency prior to the
      occurrence of a distribution event described in Articles 5 through 9, as
      applicable, the Participant may petition the Committee to receive a
      partial or full payout from the Plan.  The payout, if any, from
      the Plan shall not exceed the lesser of (i) the Participant's vested
      Account Balance, calculated as of the close of business on or around the
      Benefit Distribution Date for such payout, as determined by the Committee
      in accordance with provisions set forth below, or (ii) the amount
      necessary to satisfy the Unforeseeable Emergency, plus amounts necessary
      to pay Federal, state, or local income taxes or penalties reasonably
      anticipated as a result of the distribution.  A Participant
      shall not be eligible to receive a payout from the Plan to the extent that
      the Unforeseeable Emergency is or may be relieved (A) through
      reimbursement or compensation by insurance or otherwise, (B) by
      liquidation of the Participant’s assets, to the extent the liquidation of
      such assets would not itself cause severe financial hardship or (C) by
      cessation of deferrals under this
Plan.

            

    

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    If the
Committee, in its sole discretion, approves a Participant’s petition for payout
from the Plan, the Participant’s Benefit Distribution Date for such payout shall
be the date on which such Committee approval occurs and such payout shall be
distributed to the Participant in a lump sum no later than 60 days after such
Benefit Distribution Date.  In addition, in the event of such approval
the Participant’s outstanding deferral elections under the Plan shall be
cancelled.

     

    
      	
              b.  

            	
              A
      Participant’s deferral elections under this Plan shall also be cancelled
      to the extent the Committee determines that such action is required for
      the Participant to obtain a hardship distribution from an Employer’s
      401(k) Plan pursuant to Treas. Reg.
  §1.401(k)-1(d)(3).

            

    

     

     

    ARTICLE
5

    Change in Control
Benefit

     

    
      	
              5.1  

            	
              Change
      in Control Benefit.  A Participant, in connection with
      his or her commencement of participation in the Plan, shall have an
      opportunity to irrevocably elect to receive his or her unpaid vested
      Account Balance in the form of a lump sum payment in the event that a
      Change in Control (a) occurs prior to the Participant’s Separation from
      Service, Disability or death or (b) notwithstanding any election made
      pursuant to Article 6 or Article 7 to receive payment in an Annual
      Installment Method, occurs within one year after the Participant’s
      Separation from Service (including Retirement) (the “Change in Control
      Benefit”).  The Benefit Distribution Date for the Change in
      Control Benefit, if any, shall be the date on which the Change in Control
      occurs.

            

    

     

    If a
Participant elects not to receive a Change in Control Benefit, or fails to make
an election in connection with his or her commencement of participation in the
Plan, the Participant’s Account Balance shall be paid in accordance with the
other applicable provisions of the Plan.

     

     

    
      	
              5.2  

            	
              Payment
      of Change in Control Benefit.  The Change in Control
      Benefit, if any, shall be calculated as of the close of business on or
      around the Participant’s Benefit Distribution Date, as determined by the
      Committee, and paid to the Participant no later than 60 days after
      the Participant’s Benefit Distribution
Date.

            

    

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
6

     

     

    Retirement
Benefit

     

    
      	
              6.1  

            	
              Retirement
      Benefit.  If a Participant experiences a Separation from
      Service that qualifies as a Retirement, the Participant shall be eligible
      to receive his or her vested Account Balance in either a lump sum or
      annual installment payments, as elected by the Participant in accordance
      with Section 6.2 (the “Retirement
      Benefit”).  A Participant’s Retirement Benefit shall be
      calculated as of the close of business on or around the applicable Benefit
      Distribution Date for such benefit, which shall be (i) the first day after
      the end of the 6-month period immediately following the date on which the
      Participant experiences such Separation from Service if the Participant is
      a Specified Employee, and (ii) for all other
      Participants, the date on which the Participant experiences a Separation
      from Service; provided, however, if a Participant changes the form of
      distribution for the Retirement Benefit in accordance with Section 6.2(b),
      the Benefit Distribution Date for the Retirement Benefit shall be
      determined in accordance with Section 6.2(b).  

            

    

     

    
      	
              6.2  

            	
              Payment
      of Retirement Benefit.

            

    

     

    
      	
              (a)  

            	
              A
      Participant, in connection with his or her commencement of participation
      in the Plan, shall elect on an Election Form to receive the Retirement
      Benefit in a lump sum or pursuant to an Annual Installment Method of 5, 10
      or 15 years.  If a Participant does not make any election with
      respect to the payment of the Retirement Benefit, then such Participant
      shall be deemed to have elected to receive the Retirement Benefit as a
      lump sum.

            

    

     

    
      	
              (b)  

            	
              A
      Participant may change the form of payment for the Retirement Benefit by
      submitting an Election Form to the Committee in accordance with the
      following criteria:

            

    

     

    
      	
              (i)  

            	
              The
      election shall not take effect until at least 12 months after the date on
      which the election is made;

            

    

     

    
      	
              (ii)  

            	
              The
      new Benefit Distribution Date for the Participant’s Retirement Benefit
      shall be 5 years after the Benefit Distribution Date that would otherwise
      have been applicable to such benefit;
and

            

    

     

    
      	
              (iii)  

            	
              The
      election must be made at least 12 months prior to the Benefit Distribution
      Date that would otherwise have been applicable to the Participant’s
      Retirement Benefit.

            

    

     

    For
purposes of applying the provisions of this Section 6.2(b), a Participant’s
election to change the form of payment for the Retirement Benefit shall not be
considered to be made until the date on which the election becomes
irrevocable.  Such an election shall become irrevocable no later than
the date that is 12 months prior to the Benefit Distribution Date that would
otherwise have been applicable to the Participant’s Retirement
Benefit.  Subject to the requirements of this Section 6.2(b), the
Election Form most recently accepted by the Committee that has become effective
shall govern the form of payout of the Participant’s Retirement
Benefit.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)  

            	
              The
      lump sum payment shall be made, or installment payments shall commence, no
      later than 60 days after the Participant’s Benefit Distribution
      Date.  Remaining installments, if any, shall be paid no later
      than 60 days after each anniversary of the Participant’s Separation from
      Service.

            

    

     

     

    ARTICLE
7

     

     

    Termination
Benefit

     

    
      	
              7.1  

            	
              Termination
      Benefit. If a Participant
      experiences a Separation from Service that does not qualify as a
      Retirement, the Participant shall be eligible to receive his or her vested
      Account Balance in either a lump sum or annual installment payments, as
      elected by the Participant in accordance with Section 7.2 (the
      “Termination Benefit”).  A Participant’s Termination Benefit
      shall be calculated as of the close of business on or around the
      applicable Benefit Distribution Date for such benefit, which shall be
      (i) the first
      day after the end of the 6-month period immediately following the date on
      which the Participant experiences such Separation from Service if the
      Participant is a Specified Employee, and (ii) for all other Participants,
      the date on which the Participant experiences a Separation from Service;
      provided, however, if a Participant changes the form of distribution for
      the Termination Benefit in accordance with Section 7.2(b), the Benefit
      Distribution Date for the Termination Benefit shall be determined in
      accordance with Section 7.2(b).

            

    

     

    
      	
              7.2  

            	
              Payment
      of Termination Benefit.

            

    

     

    
      	
              (a)  

            	
              A
      Participant, in connection with his or her commencement of participation
      in the Plan, shall elect on an Election Form to receive the Termination
      Benefit in a lump sum or pursuant to an Annual Installment Method of 5
      years.  If a Participant does not make any election with respect
      to the payment of the Termination Benefit, then such Participant shall be
      deemed to have elected to receive the Termination Benefit as a lump
      sum.

            

    

     

    
      	
              (b)  

            	
              A
      Participant may change the form of payment for the Termination Benefit by
      submitting an Election Form to the Committee in accordance with the
      following criteria:

            

    

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    
      	
              (i)  

            	
              The
      election shall not take effect until at least 12 months after the date on
      which the election is made;

            

    

     

    
      	
              (ii)  

            	
              The
      new Benefit Distribution Date for the Participant’s Termination Benefit
      shall be 5 years after the Benefit Distribution Date that would otherwise
      have been applicable to such benefit;
and

            

    

     

    
      	
              (iii)  

            	
              The
      election must be made at least 12 months prior the Benefit Distribution
      Date that would otherwise have been applicable to the Participant’s
      Termination Benefit.

            

    

     

    For
purposes of applying the provisions of this Section 7.2(b), a Participant’s
election to change the form of payment for the Termination Benefit shall not be
considered to be made until the date on which the election becomes
irrevocable.  Such an election shall become irrevocable no later than
the date that is 12 months prior to the Benefit Distribution Date that would
otherwise have been applicable to the Participant’s Termination
Benefit.  Subject to the requirements of this Section 6.2(b), the
Election Form most recently accepted by the Committee that has become effective
shall govern the form of payout of the Participant’s Termination
Benefit.

     

     

    
      	
              (c)  

            	
              The
      lump sum payment shall be made, or installment payments shall commence, no
      later than 60 days after the Participant’s Benefit Distribution
      Date.  Remaining installments, if any, shall be paid no later
      than 60 days after each anniversary of the Participant’s Separation from
      Service.

            

    

     

     

    ARTICLE
8

     

     

    Disability
Benefit

     

    
      	
              8.1  

            	
              Disability
      Benefit. If a Participant becomes Disabled prior to the occurrence
      of a distribution event described in Articles 5 through 7, as applicable,
      the Participant shall receive his or her vested Account Balance in the
      form of a lump sum payment (the “Disability Benefit”).  The
      Disability Benefit shall be calculated as of the close of business on or
      around the Participant’s Benefit Distribution Date for such benefit, which
      shall be the date on which the Participant becomes
    Disabled.

            

    

     

    
      	
              8.2  

            	
              Payment
      of Disability Benefit. The Disability
      Benefit shall be paid to the Participant no later than 60 days after the
      Participant’s Benefit Distribution
Date.

            

    

     

     

    ARTICLE
9

     

     

    Death
Benefit

     

    
      	
              9.1  

            	
              Death
      Benefit.  In the event of a Participant’s death prior to
      the complete distribution of his or her vested Account Balance, the
      Participant's Beneficiary(ies) shall receive the Participant's unpaid
      vested Account Balance in a lump sum payment (the “Death
      Benefit”).  The Death Benefit shall be calculated as of the
      close of business on or around the Benefit Distribution Date for such
      benefit, which shall be the date on which the Committee is provided with
      proof that is satisfactory to the Committee of the Participant’s
      death.

            

    

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    
      	
              9.2  

            	
              Payment
      of Death Benefit.  The Death Benefit shall be paid to the
      Participant’s Beneficiary(ies) no later than 60 days after the
      Participant’s Benefit Distribution
Date.

            

    

     

     

    ARTICLE
10

     

     

    Beneficiary
Designation

     

    
      	
              10.1  

            	
              Beneficiary.  Each
      Participant shall have the right, at any time, to designate his or her
      Beneficiary(ies) (both primary as well as contingent) to receive any
      benefits payable under the Plan to a beneficiary upon the death of a
      Participant.  The Beneficiary designated under this Plan may be
      the same as or different from the Beneficiary designation under any other
      plan of an Employer in which the Participant
  participates.

            

    

     

    
      	
              10.2  

            	
              Beneficiary
      Designation; Change; Spousal Consent.  A Participant
      shall designate his or her Beneficiary by completing and signing the
      Beneficiary Designation Form, and returning it to the Committee or its
      designated agent.  A Participant shall have the right to change
      a Beneficiary by completing, signing and otherwise complying with the
      terms of the Beneficiary Designation Form and the Committee's rules and
      procedures, as in effect from time to time.  If the Participant
      names someone other than his or her spouse as a Beneficiary, the Committee
      may, in its sole discretion, determine that spousal consent is required to
      be provided in a form designated by the Committee, executed by such
      Participant's spouse and returned to the Committee.  Upon the
      acceptance by the Committee of a new Beneficiary Designation Form, all
      Beneficiary designations previously filed shall be
      canceled.  The Committee shall be entitled to rely on the last
      Beneficiary Designation Form filed by the Participant and accepted by the
      Committee prior to his or her
death.

            

    

     

    
      	
              10.3  

            	
              Acknowledgment.  No
      designation or change in designation of a Beneficiary shall be effective
      until received and acknowledged in writing by the Committee or its
      designated agent.

            

    

     

    
      	
              10.4  

            	
              No
      Beneficiary Designation.  If a Participant fails to
      designate a Beneficiary as provided in Sections 10.1, 10.2 and 10.3
      above or, if all designated Beneficia­ries predecease the Participant
      or die prior to complete distribution of the Participant's benefits, then
      the Participant's designated Beneficiary shall be deemed to be his or her
      surviving spouse.  If the Participant has no surviving spouse,
      the benefits remaining under the Plan to be paid to a Beneficiary shall be
      payable to the executor or personal representative of the Participant's
      estate.

            

    

     

    
      	
              10.5  

            	
              Doubt
      as to Beneficiary.  If the Committee has any doubt as to
      the proper Beneficiary to receive payments pursuant to this Plan, the
      Committee shall have the right, exercisable in its discretion, to cause
      the Participant's Employer to withhold such payments until this matter is
      resolved to the Committee's
satisfaction.

            

    

     

    
      	
              10.6  

            	
              Discharge
      of Obligations.  The payment of benefits under the Plan
      to a Beneficiary shall fully and completely discharge all Employers and
      the Committee from all further obligations under this Plan with respect to
      the Participant.

            

    

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
11

     

     

    Leave of
Absence

     

    
      	
              11.1  

            	
              Paid
      Leave of Absence.  If a Participant is authorized by the
      Participant's Employer to take a paid leave of absence from the employment
      of the Employer, and such leave of absence does not constitute a
      Separation from Service, (a) the Participant shall continue to be
      considered eligible for the benefits provided under the Plan, and (b) the
      Annual Deferral Amount shall continue to
      be withheld during such paid leave of absence in accordance with
      Section 3.2.

            

    

     

    
      	
              11.2  

            	
              Unpaid
      Leave of Absence.  If a Participant is authorized by the
      Participant's Employer to take an unpaid leave of absence from the
      employment of the Employer for any reason, and such leave of absence does
      not constitute a Separation from Service, such Participant shall continue
      to be eligible for the benefits provided under the Plan.  During
      the unpaid leave of absence, the Participant shall not be allowed to make
      any additional deferral elections.  However, if the Participant
      returns to employment, the Participant may elect to defer an Annual
      Deferral Amount for the Plan Year following his or her return to
      employment and for every Plan Year thereafter while a Participant in the
      Plan, provided such deferral elections are otherwise allowed and an
      Election Form is delivered to and accepted by the Committee for each such
      election in accordance with Section 3.2
  above.

            

    

     

     

    ARTICLE
12

     

     

    Termination of Plan,
Amendment or Modification

     

    
      	
              12.1  

            	
              Termination
      of Plan.  Although each Employer anticipates that it will
      continue the Plan for an indefinite period of time, there is no guarantee
      that any Employer will continue the Plan or will not terminate the Plan at
      any time in the future.  Accordingly, each Employer reserves the
      right to terminate the Plan with respect to all of its
      Participants.  In the event of a Plan termination no new
      deferral elections shall be permitted for the affected Participants and
      such Participants shall no longer be eligible to receive new company
      contributions.  However, after the Plan termination the Account
      Balances of such Participants shall continue to be credited with Annual
      Deferral Amounts attributable to a deferral election that was in effect
      prior to the Plan termination to the extent deemed necessary to comply
      with Code Section 409A and related Treasury Regulations, and additional
      amounts shall continue to credited or debited to such Participants’
      Account Balances pursuant to Section 3.7.  The Measurement Funds
      available to Participants following the termination of the Plan shall be
      comparable in number and type to those Measurement Funds available to
      Participants in the Plan Year preceding the Plan Year in which the Plan
      termination is effective.  In addition, following a Plan
      termination, Participant Account Balances shall remain in the Plan and
      shall not be distributed until such amounts become eligible for
      distribution in accordance with the other applicable provisions of the
      Plan. Notwithstanding
      the preceding sentence, to the extent permitted by Treas. Reg.
      §1.409A-3(j)(4)(ix), the Employer may provide that upon termination of the
      Plan, all Account Balances of the Participants shall be distributed,
      subject to and in accordance with any rules established by such Employer
      deemed necessary to comply with the applicable requirements and
      limitations of Treas. Reg. §1.409A-3(j)(4)(ix). 

            

    

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    
      	
              12.2  

            	
              Amendment.  Any
      Employer may, at any time, amend or modify the Plan in whole or in part
      with respect to that Employer.  Notwithstanding the foregoing,
      (i) no amendment or modification shall be effective to directly decrease
      the value of a Participant's vested Account Balance in existence at the
      time the amendment or modification is made, and (ii) no amendment or
      modification of this Section 12.2 or Section 13.2 of the Plan shall be
      effective unless and until two-thirds (2/3) of Participants with an
      Account Balance in the Plan as of the date of such proposed amendment or
      modification provide prior written consent in a time and manner determined
      by the Committee.

            

    

     

    
      	
              12.3  

            	
              Effect
      of Payment.  The full payment of the Participant’s vested
      Account Balance in accordance with the applicable provisions of the Plan
      shall completely discharge all obligations to a Participant and his or her
      designated Beneficiaries under this
Plan.

            

    

     

     

    ARTICLE
13

     

     

    Administration

     

    
      	
              13.1  

            	
              Committee
      Duties.  Except as otherwise provided in this Article 13,
      this Plan shall be administered by a Committee, which shall consist of the
      Board, or such committee as the Board shall appoint.  Members of
      the Committee may be Participants under this Plan.  The
      Committee shall also have the discretion and authority to (a) make,
      amend, interpret, and enforce all appropriate rules and regulations for
      the administration of this Plan, and (b) decide or resolve any and
      all ques­tions, including benefit entitlement determinations and
      interpretations of this Plan, as may arise in connection with the
      Plan.  Any individual serving on the Committee who is a
      Participant shall not vote or act on any matter relating solely to himself
      or herself.  When making a determination or calculation, the
      Committee shall be entitled to rely on information furnished by a
      Participant or the Company.

            

    

     

    
      	
              13.2  

            	
              Administration
      Upon Change In Control. Within 120 days following a Change in
      Control, the individuals who comprised the Committee immediately prior to
      the Change in Control (whether or not such individuals are members of the
      Committee following the Change in Control) may, by written consent of the
      majority of such individuals, appoint an independent third party
      administrator (the “Administrator”) to perform any or all of the
      Committee’s duties described in Section 13.1
      above, including without limitation, the power to determine any questions
      arising in connection with the administration or interpretation of the
      Plan, and the power to make benefit entitlement
      determinations.  Upon and after the effective date of such
      appointment, (a) the Company must pay all reasonable administrative
      expenses and fees of the Administrator, and (b) the Administrator may only
      be terminated with the written consent of the majority of Participants
      with an Account Balance in the Plan as of the date of such proposed
      termination.

            

    

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    
      	
              13.3  

            	
              Agents.
      In the administration of this Plan, the Committee or the Administrator, as
      applicable, may, from time to time, employ agents and delegate to them
      such administrative duties as it sees fit (including acting through a duly
      appointed representative) and may from time to time consult with
      counsel.

            

    

     

    
      	
              13.4  

            	
              Binding
      Effect of Decisions.  The decision or action of the
      Committee or Administrator, as applicable, with respect to any question
      arising out of or in connection with the administration, interpretation
      and application of the Plan and the rules and regulations promulgated
      hereunder shall be final and conclusive and binding upon all persons
      having any interest in the Plan.

            

    

     

    
      	
              13.5  

            	
              Indemnity
      of Committee.  All Employers shall indemnify and hold
      harmless the members of the Committee, any Employee to whom the duties of
      the Committee may be delegated, and the Administrator against any and all
      claims, losses, damages, expenses or liabilities arising from any action
      or failure to act with respect to this Plan, except in the case of willful
      misconduct by the Committee, any of its members, any such Employee or the
      Administrator.

            

    

     

    
      	
              13.6  

            	
              Employer
      Information.  To enable the Committee and/or
      Administrator to perform its functions, the Company and each Employer
      shall supply full and timely information to the Committee and/or
      Administrator, as the case may be, on all matters relating to the Plan,
      the Trust, the Participants and their Beneficiaries, the Account Balances
      of the Participants, the compensation of its Participants, the date and
      circum­stances of the Separation from Service, Disability or death of
      its Participants, and such other pertinent information as the Committee or
      Administrator may reasonably
require.

            

    

     

     

    ARTICLE
14

     

     

    Other Benefits and
Agreements

     

    
      	
              14.1  

            	
              Coordination
      with Other Benefits.  The benefits provided for a
      Participant and Participant's Beneficiary under the Plan are in addition
      to any other benefits available to such Participant under any other plan
      or program for employees of the Participant's Employer.  The
      Plan shall supplement and shall not supersede, modify or amend any other
      such plan or program except as may otherwise be expressly
      provided.

            

    

     

     

    ARTICLE
15

     

     

    Claims
Procedures

     

    
      	
              15.1  

            	
              Presentation
      of Claim.  Any Participant or Beneficiary of a deceased
      Participant (such Participant or Beneficiary being referred to below as a
      “Claimant”) may deliver to the Committee a written claim for a
      determination with respect to the amounts distributable to such Claimant
      from the Plan.  If such a claim relates to the contents of a
      notice received by the Claimant, the claim must be made within
      60 days after such notice was received by the
      Claimant.  All other claims must be made within 180 days of
      the date on which the event that caused the claim to arise
      occurred.  The claim must state with particularity the
      determination desired by the
Claimant.

            

    

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    
      	
              15.2  

            	
              Notification
      of Decision.  The Committee shall consider a Claimant's
      claim within a reasonable time, but no later than 90 days after receiving
      the claim.  If the Committee determines that special
      circumstances require an extension of time for processing the claim,
      written notice of the extension shall be furnished to the Claimant prior
      to the termination of the initial 90 day period.  In no event
      shall such extension exceed a period of 90 days from the end of the
      initial period.  The extension notice shall indicate the special
      circumstances requiring an extension of time and the date by which the
      Committee expects to render the benefit determination.  The
      Committee shall notify the Claimant in
writing:

            

    

     

    
      	
              (a)  

            	
              that
      the Claimant's requested determination has been made, and that the claim
      has been allowed in full; or

            

    

     

    
      	
              (b)  

            	
              that
      the Committee has reached a conclusion contrary, in whole or in part, to
      the Claimant's requested determination, and such notice must set forth in
      a manner calculated to be understood by the
  Claimant:

            

    

     

    
      	
              (i)  

            	
              the
      specific reason(s) for the denial of the claim, or any part of
      it;

            

    

     

    
      	
              (ii)  

            	
              specific
      reference(s) to pertinent provisions of the Plan upon which such denial
      was based;

            

    

     

    
      	
              (iii)  

            	
              a
      description of any additional material or information necessary for the
      Claimant to perfect the claim, and an explanation of why such material or
      information is necessary;

            

    

     

    
      	
              (iv)  

            	
              an
      explanation of the claim review procedure set forth in Section 15.3
      below; and

            

    

     

    
      	
              (v)  

            	
              a
      statement of the Claimant’s right to bring a civil action under ERISA
      Section 502(a) following an adverse benefit determination on
      review.

            

    

     

    
      	
              15.3  

            	
              Review
      of a Denied Claim.  On or before 60 days after
      receiving a notice from the Committee that a claim has been denied, in
      whole or in part, a Claimant (or the Claimant's duly authorized
      representative) may file with the Committee a written request for a review
      of the denial of the claim.  The Claimant (or the Claimant's
      duly authorized representative):

            

    

     

    
      	
              (a)  

            	
              may,
      upon request and free of charge, have reasonable access to, and copies of,
      all documents, records and other information relevant (as defined in
      applicable ERISA regulations) to the claim for
  benefits;

            

    

     

    
      	
              (b)  

            	
              may
      submit written comments or other documents;
  and/or

            

    

     

    
      	
              (c)  

            	
              may
      request a hearing, which the Committee, in its sole discretion, may
      grant.

            

    

     

    
      	
              15.4  

            	
              Decision
      on Review.  The Committee shall render its decision on
      review promptly, and no later than 60 days after the Committee
      receives the Claimant’s written request for a review of the denial of the
      claim.  If the Committee determines that special circumstances
      require an extension of time for processing the claim, written notice of
      the extension shall be furnished to the Claimant prior to the termination
      of the initial 60 day period.  In no event shall such extension
      exceed a period of 60 days from the end of the initial
      period.  The extension notice shall indicate the special
      circumstances requiring an extension of time and the date by which the
      Committee expects to render the benefit determination.  In
      rendering its decision, the Committee shall take into account all
      comments, documents, records and other information submitted by the
      Claimant relating to the claim, without regard to whether such information
      was submitted or considered in the initial benefit
      determination.  The decision must be written in a manner
      calculated to be understood by the Claimant, and it must
      contain:

            

    

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    
      	
              (a)  

            	
              specific
      reasons for the decision;

            

    

     

    
      	
              (b)  

            	
              specific
      reference(s) to the pertinent Plan provisions upon which the decision was
      based;

            

    

     

    
      	
              (c)  

            	
              a
      statement that the Claimant is entitled to receive, upon request and free
      of charge, reasonable access to and copies of, all documents, records and
      other information relevant (as defined in applicable ERISA regulations) to
      the Claimant’s claim for benefits;
and

            

    

     

    
      	
              (d)  

            	
              a
      statement of the Claimant’s right to bring a civil action under ERISA
      Section 502(a).

            

    

     

    
      	
              15.5  

            	
              Legal
      Action.  A Claimant's compliance with the foregoing
      provisions of this Article 15 is a mandatory prerequisite to a
      Claimant's right to commence any legal action with respect to any claim
      for benefits under this Plan.

            

    

     

     

    ARTICLE
16

     

     

    Trust

     

    
      	
              16.1  

            	
              Establishment
      of the Trust.  In order to provide assets from which to
      fulfill its obligations to the Participants and their Beneficiaries under
      the Plan, the Company may, but is not obligated to, establish a trust by a
      trust agreement with a third party, the trustee, to which each Employer
      may, in its discretion, contribute cash or other property, including
      securities issued by the Company, to provide for the benefit payments
      under the Plan (the
“Trust”).  

            

    

     

    
      	
              16.2  

            	
              Interrelationship
      of the Plan and the Trust.  The provisions of the Plan
      and the Plan Agreement shall govern the rights of a Participant to receive
      distributions pursuant to the Plan.  The provisions of the Trust
      shall govern the rights of the Employers, Participants and the creditors
      of the Employers to the assets transferred to the Trust.  Each
      Employer shall at all times remain liable to carry out its obligations
      under the Plan.

            

    

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    
      	
              16.3  

            	
              Distributions
      From the Trust.  Each Employer's obligations under the
      Plan may be satisfied with Trust assets distributed pursuant to the terms
      of the Trust, and any such distribution shall reduce the Employer's
      obligations under this Plan.

            

    

     

     

    ARTICLE
17

     

     

    Miscellaneous

     

    
      	
              17.1  

            	
              Status
      of Plan.  The Plan is intended to be a plan that is not
      qualified within the meaning of Code Section 401(a) and that “is unfunded
      and is maintained by an employer primarily for the purpose of providing
      deferred compensation for a select group of management or highly
      compensated employees” within the meaning of ERISA Sections 201(2),
      301(a)(3) and 401(a)(1).  The Plan shall be administered and
      interpreted (a) to the extent possible in a manner consistent with the
      intent described in the preceding sentence, and (b) in accordance with
      Code Section 409A and related Treasury guidance and
      Regulations.

            

    

     

    
      	
              17.2  

            	
              Unsecured
      General Creditor.  Participants and their
      Bene­ficiaries, heirs, successors and assigns shall have no legal or
      equitable rights, interests or claims in any property or assets of an
      Employer.  For purposes of the payment of benefits under this
      Plan, any and all of an Employer's assets shall be, and remain, the
      general, unpledged unrestricted assets of the Employer.  An
      Employer's obligation under the Plan shall be merely that of an unfunded
      and unsecured promise to pay money in the
  future.

            

    

     

    
      	
              17.3  

            	
              Employer's
      Liability.  An Employer's liability for the payment of
      benefits shall be defined only by the Plan.  An Employer shall
      have no obliga­tion to a Participant under the Plan except as
      expressly provided in the Plan.

            

    

     

    
      	
              17.4  

            	
              Nonassignability.  Neither
      a Participant nor any other person shall have any right to commute, sell,
      assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
      transfer, hypothecate, alienate or convey in advance of actual receipt,
      the amounts, if any, payable hereunder, or any part thereof, which are,
      and all rights to which are expressly declared to be, unassignable and
      non-transferable.  No part of the amounts payable shall, prior
      to actual payment, be subject to seizure, attachment, garnishment or
      sequestration for the payment of any debts, judgments, alimony or separate
      maintenance owed by a Participant or any other person, be transferable by
      operation of law in the event of a Participant's or any other person's
      bankruptcy or insolvency or be transferable to a spouse as a result of a
      property settlement or otherwise.

            

    

     

    
      	
              17.5  

            	
              Not
      a Contract of Employment.  The terms and conditions of
      this Plan shall not be deemed to constitute a contract of employment
      between any Employer and the Participant.  Such employment is
      hereby acknowledged to be an “at will” employment relationship that can be
      terminated at any time for any reason, or no reason, with or without
      cause, and with or without notice, unless expressly provided in a written
      employment agreement.  Nothing in this Plan shall be deemed to
      give a Participant the right to be retained in the service of any
      Employer, either as an Employee or a Director, or to inter­fere with
      the right of any Employer to discipline or discharge the Participant at
      any time.

            

    

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    
      	
              17.6  

            	
              Furnishing
      Information.  A Participant or his or her Beneficiary
      will cooperate with the Committee by furnishing any and all information
      requested by the Committee and take such other actions as may be requested
      in order to facilitate the administration of the Plan and the payments of
      benefits hereunder, including but not limited to taking such physical
      examinations as the Committee may deem
  necessary.

            

    

     

    
      	
              17.7  

            	
              Terms.  Whenever
      any words are used herein in the masculine, they shall be construed as
      though they were in the feminine in all cases where they would so apply;
      and whenever any words are used herein in the singular or in the plural,
      they shall be construed as though they were used in the plural or the
      singular, as the case may be, in all cases where they would so
      apply.

            

    

     

    
      	
              17.8  

            	
              Captions.  The
      captions of the articles, sections and paragraphs of this Plan are for
      convenience only and shall not control or affect the meaning or
      construction of any of its
provisions.

            

    

     

    
      	
              17.9  

            	
              Governing
      Law.  Subject to ERISA, the provisions of this Plan shall
      be construed and interpreted according to the internal laws of the State
      of Indiana without regard to its conflicts of laws
    principles.

            

    

     

    
      	
              17.10  

            	
              Notice.  Any
      notice or filing required or permitted to be given to the Committee under
      this Plan shall be sufficient if in writing and hand-delivered, or sent by
      registered or certified mail, to the address
  below:

            

    

     

    
      	
              Vectren
      Corporation

            
	
              Attn:
      General Counsel

            
	
              One
      Vectren Square

            
	
              Evansville,
      IN  47708

            

    

     

    Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.

     

    Any
notice or filing required or permitted to be given to a Participant under this
Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to
the last known address of the Participant.

     

    
      	
              17.11  

            	
              Successors.  The
      provisions of this Plan shall bind and inure to the benefit of the
      Participant's Employer and its successors and assigns and the Participant
      and the Participant's designated
Beneficiaries.

            

    

     

    
      	
              17.12  

            	
              Spouse's
      Interest.  The interest in the benefits hereunder of a
      spouse of a Participant who has predeceased the Participant shall
      automatically pass to the Participant and shall not be transferable by
      such spouse in any manner, including but not limited to such spouse's
      will, nor shall such interest pass under the laws of intestate
      succession.

            

    

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    
      	
              17.13  

            	
              Validity.  In
      case any provision of this Plan shall be illegal or invalid for any
      reason, said illegality or invalidity shall not affect the remaining parts
      hereof, but this Plan shall be construed and enforced as if such illegal
      or invalid provision had never been inserted
  herein.

            

    

     

    
      	
              17.14  

            	
              Incompetent.  If
      the Committee determines in its discretion that a benefit under this Plan
      is to be paid to a minor, a person declared incompetent or to a person
      incapable of handling the disposition of that person's property, the
      Committee may direct payment of such benefit to the guardian, legal
      representative or person having the care and custody of such minor,
      incompetent or incapable person.  The Committee may require
      proof of minority, incompetence, incapacity or guardianship, as it may
      deem appropriate prior to distribution of the benefit.  Any
      payment of a benefit shall be a payment for the account of the Participant
      and the Participant's Beneficiary, as the case may be, and shall be a
      complete discharge of any liability under the Plan for such payment
      amount.

            

    

     

    
      	
              17.15  

            	
              Domestic
      Relations Orders.  If necessary to comply with a domestic
      relations order, as defined in Code Section 414(p)(1)(B), pursuant to
      which a court has determined that a spouse or former spouse of a
      Participant has an interest in the Participant’s benefits under the Plan,
      the Committee shall have the right to immediately distribute the spouse’s
      or former spouse’s interest in the Participant’s benefits under the Plan
      to such spouse or former spouse. 

            

    

     

    
      	
              17.16  

            	
              Distribution
      in the Event of Income Inclusion Under Code Section 409A.  If any
      portion of a Participant’s Account Balance under this Plan is required to
      be included in income by the Participant prior to receipt due to a failure
      of this Plan to comply with the requirements of Code Section 409A and
      related Treasury Regulations, the Committee may determine that such
      Participant shall receive a distribution from the Plan in an amount equal
      to the lesser of (i) the portion of his or her Account Balance required to
      be included in income as a result of the failure of the Plan to comply
      with the requirements of Code Section 409A and related Treasury
      Regulations, or (ii) the unpaid vested Account
      Balance.  

            

    

     

    
      	
              17.17  

            	
              Deduction
      Limitation on Benefit Payments.  If an
      Employer reasonably anticipates that the Employer’s deduction with respect
      to any distribution from this Plan would be limited or eliminated by
      application of Code Section 162(m), then to the extent permitted by Treas.
      Reg. §1.409A-2(b)(7)(i), payment shall be delayed as deemed necessary to
      ensure that the entire amount of any distribution from this Plan is
      deductible.  Any amounts for which distribution is delayed
      pursuant to this Section shall continue to be credited/debited with
      additional amounts in accordance with Section 3.7.  The delayed amounts (and any
      amounts credited thereon) shall be distributed to the Participant (or his
      or her Beneficiary in the event of the Participant’s death) at the
      earliest date the Employer reasonably anticipates that the deduction of
      the payment of the amount will not be limited or eliminated by application
      of Code Section 162(m).  In the event that such date is
      determined to be after a Participant’s Separation from Service and the
      Participant to whom the payment relates is determined to be a Specified
      Employee, then to the extent deemed necessary to comply with Treas. Reg.
      §1.409A-3(i)(2), the delayed payment shall not made before the end of the
      six-month period following such Participant’s Separation from
      Service.

            

    

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    

    IN
WITNESS WHEREOF, the Company has signed this Plan document to be effective as of
January 1, 2005.

     

    “Company”

     

    VECTREN
CORPORATION

    

    

    

    By:  /s/ Ronald E.
Christian                                

    Title:
Chairperson of the Compensation and 

    Benefits
Committee of the Board of Directors

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    APPENDIX
A

     

     

    LIMITED TRANSITION RELIEF
FOR DISTRIBUTION ELECTIONS MADE AVAILABLE IN ACCORDANCE WITH NOTICE
2007-86

     

     

    

     

    The
capitalized terms below shall have the same meaning as provided in Article 1 of
the Plan.

     

    Opportunity
to Make New (or Revise Existing) Distribution Elections.  Notwithstanding
the required deadline for the submission of an initial distribution election
under Articles 4, 5 and 6 of the Plan, the Committee may, to the extent
permitted by Notice 2007-86, provide a limited period in which Participants may
make new distribution elections, or revise existing distribution elections, with
respect to amounts subject to the terms of the Plan, by submitting an Election
Form on or before the deadline established by the Committee, which in no event
shall be later than December 31, 2008.  Any distribution election(s)
made by a Participant, and accepted by the Committee, in accordance with this
Appendix A shall not be treated as a change in either the form or timing of a
Participant’s benefit payment for purposes of Code Section 409A or the
Plan.  If any distribution election submitted by a Participant in
accordance with this Appendix A either (a) relates to an amount that would
otherwise be paid to the Participant in 2008, or (b) would cause an amount to be
paid to the Participant in 2008, such election shall not be
effective.ex10_1.htm

    
      

    

    EXHIBIT
10.1

     

     

    FIRST
AMENDMENT TO CREDIT AGREEMENT

    

    

    THIS FIRST AMENDMENT TO CREDIT
AGREEMENT (this “Amendment”), dated as
of September 29, 2008, is by and among ORTHOFIX HOLDINGS, INC., a
Delaware corporation (the “Borrower”), ORTHOFIX INTERNATIONAL N.V., a
Netherlands Antilles corporation (the “Company”), COLGATE MEDICAL LIMITED, a
company formed under the laws of England and Wales (“Colgate”), VICTORY MEDICAL LIMITED, a
company formed under the laws of England and Wales (“Victory”), SWIFTSURE MEDICAL LIMITED, a
company formed under the laws of England and Wales (“Swiftsure”), ORTHOFIX UK LTD, a company
formed under the laws of England and Wales (“UK Ltd”), the
Domestic Subsidiaries of the Company party hereto (together with Swiftsure and
UK Ltd, each a “Subsidiary Guarantor”
and, taken together with the Company, Colgate and Victory, the “Guarantors”), and
WACHOVIA BANK, NATIONAL
ASSOCIATION, as administrative agent on behalf of the Lenders under the
Credit Agreement (as hereinafter defined) (in such capacity, the “Administrative
Agent”).  Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed thereto in the Credit
Agreement.

    

    

    W
I T N E S S E T H

    

    WHEREAS, the Borrower, the
Guarantors, certain banks and financial institutions from time to time party
thereto (the “Lenders”) and the
Administrative Agent are parties to that certain Credit Agreement dated as of
September 22, 2006 (as amended, modified, extended, restated, replaced, or
supplemented from time to time, the “Credit
Agreement”);

    

    WHEREAS, the Credit Parties
have requested the Required Lenders amend certain provisions of the Credit
Agreement; and

    

    WHEREAS, the Required Lenders
are willing to make such amendments to the Credit Agreement, in accordance with
and subject to the terms and conditions set forth herein.

    

    NOW, THEREFORE, in
consideration of the agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

    

    

    ARTICLE
I

    AMENDMENTS
TO CREDIT AGREEMENT

    

    1.1           New
Definitions.  The following
definitions are hereby added to Section 1.1 of the Credit Agreement in the
appropriate alphabetical order:

    

    “Canadian Dollars” or
“CAD” shall
mean dollars in the lawful currency of Canada.

    

    “Discretionary Issuing
Lender” shall have the meaning set forth in Section
2.3(k).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Dollar Equivalent”
shall mean, at any time, (a) with respect to Dollars or an amount denominated in
Dollars, such amount and (b) with respect to an amount in Foreign Currency or an
amount denominated in any Foreign Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent at such time on the basis of
the Spot Rate (determined by the Administrative Agent as of the most recent
Revaluation Date) applicable to such Foreign
Currency.

    

    “EMU Legislation”
shall mean the legislative measures of the European Council for the introduction
of, changeover to or operation of a single or unified European
currency.

    

    “Euro” and “EUR” shall mean the
lawful currency of the Participating Member States introduced in accordance with
the EMU Legislation.

    

    “First Amendment Effective
Date” shall mean September 29, 2008.

    

    “Foreign Currency”
shall mean any of the following:  (a) Euro, Sterling and Canadian
Dollars and (b) any other currency that is freely tradable and convertible into
Dollars that is approved by the applicable Issuing Lender and the Administrative
Agent.

    

    “Foreign Currency Letter of
Credit” shall have the meaning set forth in Section 2.3(j).

    

    “L/C Credit Extension”
shall mean, with respect to any Letter of Credit, the issuance thereof or
extension of the expiry date thereof, or the increase of the amount
thereof.

    

    “Participating Member
State” shall mean each state so described in any EMU
Legislation.

    

    “Product Commercialization
Investment” shall mean amounts incurred and paid during the Borrower’s
fiscal years 2008 and 2009 in connection with (i) the Credit Parties’
collaborative agreement with Musculoskeletal Transplant Foundation (“MTF”) to develop and
commercialize a stem cell-based bone growth biologic matrix and (ii) the Credit
Parties’ acquisition from Intelligent Implant Systems, LLC (“IIS”) of intellectual
property and related technology related to a spinal fixation system and research
and development functions IIS continues to perform related to such intellectual
property and related technology pursuant to that certain Technology Transfer and
Development Agreement.

    

    “Revaluation Date”
shall mean each of the following:  (a) each date a Loan is borrowed or
a Letter of Credit is issued; (b) each date there is a drawing under any Foreign
Currency Letter of Credit; (c) the last Business Day of each calendar month; and
(d) such additional dates as the Administrative Agent, the Issuing Lender, the
Required Lenders or the Borrower shall specify.

    

    “Ratings” shall mean,
as of any date of determination, the corporate credit rating as determined by
S&P or the corporate family rating as determined by Moody’s, as applicable,
of the Borrower.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Spot Rate” for any
Foreign Currency on any Revaluation Date shall mean the rate determined by the
Administrative Agent as the spot rate for the purchase by the Administrative
Agent of such Foreign Currency with Dollars through its principal foreign
exchange trading office on such Revaluation Date; provided that the
Administrative Agent may obtain such spot rate from another financial
institution designated by the Administrative Agent if the Administrative Agent
acting in such capacity does not have as of the date of determination a spot
buying rate for any such Foreign Currency; and provided, further, that the
Administrative Agent may use such spot rate quoted on the date as of which the
foreign exchange computation is made in the case of any Foreign Currency Letter
of Credit.

    

    “Sterling” and “£” shall mean the
lawful currency of the United Kingdom.

    

    1.1           Existing
Definitions.  The following
existing definitions set forth in Section 1.1 are hereby amended and restated in
their entirety to read as follows:

    

    “Applicable
Percentage” shall mean:

    

    (a)           Revolving
Loans.  With respect to Revolving Loans, for any day, the rate
per annum set forth in the Revolving Pricing Grid opposite the applicable
Revolving Pricing Grid Level then in effect, it being understood that the
Applicable Percentage for (i) Revolving Loans that are Alternate Base Rate Loans
shall be the percentage set forth in the Revolving Pricing Grid under the column
“Alternate Base Rate Margin for Revolving Loans”, (ii) Revolving Loans that are
LIBOR Rate Loans shall be the percentage set forth in the Revolving Pricing Grid
under the column “LIBOR Rate Margin for Revolving Loans and Letter of Credit
Fee”, (iii) the Letter of Credit Fee shall be the percentage set forth in the
Revolving Pricing Grid under the column “LIBOR Rate Margin for Revolving Loans
and Letter of Credit Fee”, and (iv) the Commitment Fee shall be the percentage
set forth in the Revolving Pricing Grid under the column “Commitment
Fee”

    

    Revolving Pricing
Grid

    

    
      	
              Revolving

              Pricing
      Level

            	
              Leverage

              Ratio

            	
              Alternate
      Base Rate Margin for Revolving Loans

            	
              LIBOR
      Rate Margin for Revolving Loans and Letter of Credit Fee

            	
              Commitment

              Fee

            
	
              I

            	
              ≥
      3.25 to 1.0

            	
              3.50%

            	
              4.50%

            	
              0.50%

            
	
              II

            	
              ≥
      2.50 to 1.0 but

              <
      3.25 to 1.0

            	
              3.25%

            	
              4.25%

            	
              0.375%

            
	
              III

            	
              ≥
      1.75 to 1.0 but

              <
      2.50 to 1.0

            	
              3.00%

            	
              4.00%

            	
              0.375%

            
	
              IV

            	
              <
      1.75 to 1.0

            	
              2.75%

            	
              3.75%

            	
              0.25%

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    The
Applicable Percentage for Revolving Loans shall, in each case, be determined and
adjusted quarterly on the date five (5) Business Days after the date on which
the Administrative Agent has received from the Borrower the financial
information and certifications required to be delivered to the Administrative
Agent and the Lenders in accordance with the provisions of Sections 5.1(a), (b)
and (c) and Section 5.2(b) (each, an “Interest Determination
Date”).  Such Applicable Percentage shall be effective from
such Interest Determination Date until the next such Interest Determination
Date.  The Applicable Percentages on and after the First Amendment
Effective Date shall be based on Revolving Pricing Level I until the first
Interest Determination Date occurring after the delivery of the officer’s
compliance certificate pursuant to Section 5.2(b) for the quarter ended
September 30, 2008.  If the Borrower shall fail to provide the annual
and quarterly financial information and certifications in accordance with the
provisions of Sections 5.1(a), (b) and (c) and Section 5.2(b), the Applicable
Percentage for Revolving Loans from such Interest Determination Date shall, on
the date five (5) Business Days after the date by which the Borrower was so
required to provide such financial information and certifications to the
Administrative Agent and the Lenders, be based on Revolving Pricing Level I
until such time as such information and certifications are provided, whereupon
the Revolving Pricing Level shall be determined by the then current Leverage
Ratio.  In the event that any financial statement or certification
delivered pursuant to Sections 5.1 or 5.2 after September 29, 2008 is shown to
be inaccurate (regardless of whether this Agreement or the Commitments are in
effect when such inaccuracy is discovered), and such inaccuracy, if corrected,
would have led to the application of a higher Applicable Percentage for
Revolving Loans for any period (an “Applicable Period”)
than the Applicable Percentage for Revolving Loans applied for such Applicable
Period, the Borrower shall immediately (i) deliver to the Administrative Agent a
corrected compliance certificate for such Applicable Period, (ii) determine the
Applicable Percentage for such Revolving Loans for such Applicable Period based
upon the corrected compliance certificate, and (iii) immediately pay to the
Administrative Agent for the benefit of the Lenders the accrued additional
interest and other fees owing as a result of such increased Applicable
Percentage for such Revolving Loans for such Applicable Period, which payment
shall be promptly distributed by the Administrative Agent to the Lenders
entitled thereto.  It is acknowledged and agreed that nothing
contained herein shall limit the rights of the Administrative Agent and the
Lenders under the Credit Documents, including their rights under Sections 2.9
and 7.1.

    

    (b)           Term
Loans.  With respect to Term Loans, the rate per annum set
forth in the Term Loan Pricing Grid opposite the applicable Term Loan Pricing
Level then in effect, it being understood that the Applicable Percentage for (i)
Term Loans that are Alternate Base Rate Loans shall be the percentage set forth
in the Term Loan Pricing Grid under the column “Alternate Base Rate Margin for
Term Loans” and (ii) Term Loans that are LIBOR Rate Loans shall be the
percentage set forth in the Term Loan Pricing Grid under the column “LIBOR Rate
Margin for Term Loans”:

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Term Loan Pricing
Grid

    

    
      	
              Term
      Loan

              Pricing
      Level

            	
              Ratings
      of the Borrower

            	
              Alternate
      Base Rate Margin for Term Loans

            	
              LIBOR
      Rate Margin for Term Loans

            
	
              I

            	
              > BB from
      S&P

              and

              > Ba3 from
      Moody’s

            	
              3.00%

            	
              4.00%

            
	
              II

            	
              Any
      Rating combination from Moody’s and S&P not satisfying the Ratings
      requirements of Term Loan Pricing Level I or Term Loan Pricing Level
      III

            	
              3.50%

            	
              4.50%

            
	
              III

            	
              < B+ from
      S&P

               and

              < B2 from
      Moody’s

            	
              4.00%

            	
              5.00%

            

    

    

    Notwithstanding the above, with
respect to the Applicable Percentage for Term Loans, if at any time the Borrower
is not rated by S&P and Moody’s, Term Loan Pricing Level III will
apply.  The
Applicable Percentage for Term Loans shall, in each case, be determined on the
First Amendment Effective Date and shall be adjusted thereafter on any date (each a “Calculation
Date”) on which there
is a change in the Borrower’s Ratings.  Each determination of the
Applicable Percentage for Term Loans shall be effective from one Calculation
Date until the next Calculation Date.  The Borrower shall promptly
deliver to the Administrative Agent information regarding any change in the
Borrower’s Ratings that would change the existing Term Loan Pricing Level
pursuant to the preceding sentence.

    

    “Consolidated EBITDA” shall mean,
for any applicable period of computation, the sum of (a) Consolidated Net Income
for such period, but excluding therefrom all extraordinary items of income or
loss, plus (b)
to the extent deducted in determining Consolidated Net Income for such period,
the sum of (i) the aggregate amount of depreciation and amortization charges for
such period, plus (ii)
Consolidated Interest Expense for such period, plus (iii) the
aggregate amount of all income taxes reflected on the consolidated statements of
income of the Company and its Subsidiaries for such period plus (iv) non-cash
charges related to Hedging Agreements plus (v) non-cash
expenses resulting from the grant of stock options to any director, officer or
employee of any Credit Party or any Subsidiary pursuant to a written plan or
agreement plus
(vi) fees and expenses associated with Permitted Acquisitions to the extent such
fees and expenses do not exceed $8,000,000 during the term of this Agreement
plus (vii)
other non-cash charges (excluding non-cash charges relating to accounts
receivable and inventories and excluding reserves or accruals for future cash
charges) in an aggregate amount not to exceed $8,000,000 per year) plus (viii) fees and
expenses associated with the Acquisition and the closing of this Credit
Agreement in an aggregate amount not to exceed $12,500,000 plus (ix) certain
one-time termination costs incurred in connection with the termination of the
Medtronic Services Agreement in an aggregate amount not to exceed $6,100,000
plus (x)
non-cash charges with respect to the write-off of research and development
expenses and inventory step-ups related to the Acquisition and the purchase
accounting treatment thereof plus (xi)
non-recurring cash
charges relating to strategic initiatives to sell assets and for relocations
incurred and paid in fiscal year 2008 in an aggregate amount not to exceed
$6,500,000 plus
(xii) goodwill and other intangible asset impairment charges relating to the
Acquisition for such period plus (xiii) research
and development charges paid during such period relating to the Product
Commercialization Investment in an aggregate amount not to exceed $13,500,000
during the term of this Agreement minus (c) non-cash
gains related to Hedging Agreements.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Excess Cash Flow”
shall mean, with respect to any fiscal year of the Company commencing with the
Company’s fiscal year ending December 31, 2007, for the Company and its
Subsidiaries on a consolidated basis, an amount equal to (a) Consolidated EBITDA
for such period minus (b)
Consolidated Capital Expenditures paid in cash for such period minus (c) Scheduled
Funded Debt Payments made during such period minus (d)
Consolidated Interest Expense paid in cash (excluding any Consolidated Interest
Expense associated with intercompany Indebtedness) for such period minus (e) amounts
paid in respect of federal, state, local and foreign income taxes of the Company
and its Subsidiaries with respect to such period minus (f) increases
in Consolidated Working Capital plus (g) decreases in
Consolidated Working Capital minus (h) optional
prepayments of Revolving Loans (to the extent accompanied by a corresponding
reduction of the Revolving Committed Amount) and the Term Loan made pursuant to
Section 2.7(a) minus (i) except to
the extent financed with the proceeds from the incurrence of Indebtedness or any
Equity Issuance, the amount of any cash consideration paid in connection with
any Permitted Acquisition during such period minus (j) to the
extent included in the calculation of Consolidated EBITDA for such period (i)
research and development charges paid in cash during such period relating to the
Product Commercialization Investment in an aggregate amount not to exceed
$13,500,000 during the term of this Agreement, (ii) amounts paid in cash for
such period, to the extent capitalized, relating to the licensing,
commercialization, development, marketing and distribution of orthopedic
products, and (iii) non-recurring cash charges relating to
strategic initiatives to sell assets and for relocations incurred and paid in
the fiscal year 2008 in an aggregate amount not to exceed
$6,500,000.

    

    “Issuing Lender” shall
mean (a) with respect to any Letter of Credit denominated in Dollars, Wachovia
and (b) with respect to any Letter of Credit denominated in a Foreign Currency,
Wachovia or a Discretionary Issuing Lender.

    

    “Letter of Credit”
shall mean any letter of credit issued by the Issuing Lender pursuant to the
terms hereof, as such letter of credit may be amended, modified, restated,
extended, renewed, increased, replaced or supplemented from time to
time.  A Letter of Credit may be issued in Dollars or in a Foreign
Currency, in accordance with Section 2.3.

    

    “LIBOR” shall mean,
for any LIBOR Rate Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBOR01 Page (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 A.M. (London time) two (2)
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.  If for any reason such rate is
not available, then “LIBOR” shall mean the rate per annum at which, as
determined by the Administrative Agent in accordance with its customary
practices, Dollars in an amount comparable to the Loans then requested are being
offered to leading banks at approximately 11:00 A.M. London time, two (2)
Business Days prior to the commencement of the applicable Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market for a period equal to the Interest Period selected.
Notwithstanding the foregoing, for purposes of this Agreement, LIBOR shall in no
event be less than 3.00% at any time.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    “LOC Obligations”
shall mean, at any date of determination, the Dollar Equivalent of the maximum
amount which is, or at any time thereafter may become, available to be drawn
under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters of Credit plus the aggregate
amount of all drawings under Letters of Credit honored by the Issuing Lender but
not theretofore reimbursed.

    

    1.2           Amendment
to Definition of Funded Debt.  Clause (f) of the
definition of Funded Debt set forth in Section 1.1 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

    

    (f)           
all net payment obligations of such Person under Hedging Agreements to the
extent required to be accounted for as a liability under GAAP, excluding any
portion thereof which would be accounted for as interest expense under
GAAP,

    

    1.3           Amendment
to Definition of Permitted Investments.  The definition of
Permitted Investments set forth in Section 1.1 of the Credit Agreement is hereby
amended by (1) inserting a new clause (n) and (2) changing the existing clause
(n) to be clause (o), in each case to read as follows:

    

    (n)           Investments
relating to the licensing, commercialization, development, marketing and
distribution of orthopedic products (including Investments
in joint ventures entered into in connection with the licensing,
commercialization, development, marketing and distribution of orthopedic
products), to the extent capitalized, in an aggregate amount not to exceed
$10,000,000 in any fiscal year of the Borrower;

    

    (o)           additional
loan advances and/or Investments of a nature not contemplated by the foregoing
clauses hereof; provided that such
loans, advances and/or Investments made pursuant to this clause o shall not
exceed an aggregate amount of $5,000,000.

    

    1.4           Amendment
to Definition of Permitted Liens.  The definition of
Permitted Liens set forth in Section 1.1 of the Credit Agreement is hereby
amended by adding the following clause (m) to the end of such definition and
making the appropriate punctuation and grammatical changes thereto as
follows:

    

    (m)           other
Liens in an aggregate amount not to exceed $5,000,000 at any time
outstanding.

    

    1.5           Amendment
to Article I.  Article I is
amended by adding a new Section 1.4 to the end of such Article to read as
follows:

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    1.4           Foreign
Currency.

    

    (a)           The
Administrative Agent shall determine the Spot Rates as of each Revaluation Date
to be used for calculating Dollar Equivalent amounts of L/C Credit Extensions
and outstanding LOC Obligations denominated in Foreign
Currencies.  Such Spot Rates shall become effective as of such
Revaluation Date and shall be the Spot Rates employed in converting any amounts
between the applicable currencies until the next Revaluation Date to
occur.  Except for purposes of financial statements delivered by the
Credit Parties hereunder or calculating financial covenants hereunder or except
as otherwise provided herein, the applicable amount of any currency (other than
Dollars) for purposes of the Credit Documents shall be such Dollar Equivalent
amount as so determined by the Administrative Agent.

    

    (b)           At
the Borrower’s request, the Administrative Agent shall advise the Borrower of
the outstanding LOC Obligations as of the last Revaluation Date.

    

    1.6           Amendment
to Section 2.1(f)(vii).  Section
2.1(f)(vii) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

    

    (vii)         if
the interest rate margin applicable to such Revolver Increase (taking into
account upfront fees payable to the Lenders making such Revolver Increase or any
original issue discount thereon) would be more than the Applicable Percentage
for the existing Revolving Loans, then the Applicable Percentage on the existing
Revolving Loans shall be increased and/or additional fees will be paid to the
existing Revolving Lenders to the extent necessary so that the interest rate
margin applicable to such Revolver Increase (taking into account upfront fees
payable to the Lenders making such Revolver Increase or any original issue
discount thereon) is equal to the Applicable Percentage on the existing
Revolving Loans, and

    

    1.7           Amendment
to Section 2.2(e)(x).  Section 2.2(e)(x)
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:

    

    (x)           the
interest rate margin applicable to such Incremental Term Facility (taking into
account upfront fees payable to the Lenders making such Incremental Term
Facility or any original issue discount thereon) may be higher than the
then-current interest rate margin on the existing Term Loans, but by no more
than 0.25% (it being understood that the existing Term Loan pricing will be
increased and/or additional fees will be paid to existing Term Loan Lenders to
the extent necessary to satisfy such requirement),

    

    1.8           Amendment
to Section 2.3(a).  Section 2.3(a) of
the Credit Agreement is hereby amended and restated in its entirety to read as
follows:

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (a)           Issuance.  Subject to the terms
and conditions hereof and of the LOC Documents, if any, and any other terms and
conditions which the Issuing Lender may reasonably require, during the
Commitment Period the Issuing Lender shall issue, and the Revolving Lenders
shall participate in, Letters of Credit for the account of the Borrower from
time to time upon request in a form acceptable to the Issuing Lender;
provided, however, that (i) the aggregate amount of
LOC Obligations shall not at any time exceed SEVEN MILLION
FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) (the “LOC
Committed Amount”),
(ii) the sum of the aggregate principal amount of outstanding Revolving Loans
plus outstanding Swingline Loans
plus outstanding LOC Obligations shall
not at any time exceed the Revolving Committed Amount then in effect, (iii) all
Letters of Credit shall be denominated in Dollars or, subject to Section 2.3(j),
in a Foreign Currency and (iv) Letters of Credit shall be issued for any lawful
corporate purpose and may be issued as standby letters of credit, including in
connection with workers’ compensation and other insurance
programs.  Except as otherwise expressly agreed upon by all the
Revolving Lenders, no Letter of Credit shall have an original expiry date more
than twelve (12) months from the date of issuance; provided, however, so long as no Default or Event of
Default has occurred and is continuing and subject to the other terms and
conditions to the issuance of Letters of Credit hereunder, the expiry dates of
Letters of Credit may be extended annually or periodically from time to time at
the request of the Borrower or by operation of the terms of the applicable
Letter of Credit to a date not more than twelve (12) months from the date of
extension; provided, further, that no Letter of Credit, as
originally issued or as extended, shall have an expiry date extending beyond the
Revolver Maturity Date.  Each Letter of Credit shall comply with the
related LOC Documents.  The issuance and expiry date of each Letter of
Credit shall be a Business Day.  Any Letter of Credit issued hereunder
shall be in a minimum original face amount of $100,000 (or such lesser amount as
approved by the Issuing Lender).  Wachovia shall be the Issuing Lender
on all Letters of Credit issued on or after the Closing Date.  In the
event and to the extent that the provisions of any LOC Document shall conflict
with this Agreement, the provisions of this Agreement shall
govern.  The Issuing Lender shall make any Letter of Credit issued
hereunder available to the Borrower at its office referred to in Section 9.2 or
as otherwise agreed with the Borrower in connection with such
issuance.   

    

    1.9           Amendment
to Section 2.3.  Section 2.3 of
the Credit Agreement is hereby amended by adding the following new subsections
(j) and (k) to the end of such section to read as follows:

    

    (j)           The
Borrower may request, and the applicable Issuing Lender may issue, Letters of
Credit denominated in any Foreign Currency (any such Letter of Credit, a “Foreign Currency Letter of
Credit”), subject to the following provisions:

    

    (i)         all
provisions of Section 2.3 shall be satisfied with respect to such Foreign
Currency Letter of Credit;

    

    (ii)        any
drawing under any Foreign Currency Letter of Credit shall be deemed to be a
drawing under a Letter of Credit hereunder in Dollars in an amount equal to the
Dollar Equivalent of such drawing, and such drawing shall be reimbursed or
repaid with Revolving Loans as provided in Sections 2.3(d) and (e) hereof as if
such drawing had been made in Dollars in an amount equal to the Dollar
Equivalent of such drawing;

    

    (iii)       for
purposes of determining the LOC Obligations attributable to the Foreign Currency
Letters of Credit at any time, such LOC Obligations shall be equal to the sum of
(A) the maximum Dollar Equivalent which is, or at any time thereafter may
become, available to be drawn under the Foreign Currency Letters of Credit then
outstanding, assuming compliance with all requirements for drawings referred to
in all such Foreign Currency Letters of Credit plus (B) the
aggregate Dollar Equivalent of all drawings under the Foreign Currency Letters
of Credit honored by the Issuing Lender but not theretofore
reimbursed;

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (iv)        the
obligation of the Borrower to reimburse the Issuing Lender for each drawing
under such Foreign Currency Letter of Credit shall be absolute, unconditional
and irrevocable under all circumstances, including, without limitation, any
adverse change in the relevant exchange rates or in the availability of any such
Foreign Currency to the Borrower or any Subsidiary or in the relevant currency
markets generally;

    

    (v)         within
five days of demand thereof by the applicable Discretionary Issuing Lender, the
Borrower shall reimburse the applicable Discretionary Issuing Lender of any
Foreign Currency Letter of Credit, for any costs, expenses, losses or
liabilities (including foreign currency exchange costs and losses) incurred by
such Discretionary Issuing Lender in connection with any drawing under such
Foreign Currency Letter of Credit and the reimbursement of such drawing in
Dollars rather than the applicable Foreign Currency, including, without
limitation, any costs, expenses, losses or liabilities resulting from the
determination of the Spot Rate two Business Days prior to the date a drawing
under such Foreign Currency Letter of Credit is reimbursed; and

    

    (vi)        any
request for a Letter of Credit in a currency other than Dollars shall be made to
the Administrative Agent and the applicable Issuing Lender not later than 11:00
a.m. five (5) Business Days prior to the date of the desired L/C Credit
Extension (or such earlier date as may be agreed by the Administrative Agent and
the applicable Issuing Lender in their sole discretion).  The
Administrative Agent and the applicable Issuing Lender shall promptly notify the
Borrower of the response to any request pursuant to this Section.

    

    (k)           Any
Lender with a Revolving Commitment may from time to time, at the written request
of the Borrower (with a copy to the Administrative Agent) and with the consent
of the Administrative Agent (such consent not to be unreasonably withheld or
delayed), and in such Lender’s sole discretion, agree to issue one or more
Foreign Currency Letters of Credit for the account of the Borrower (in such
capacity, a “Discretionary Issuing
Lender”) on the same terms and conditions in all respects as are
applicable to the Letters of Credit issued by the Issuing Lender hereunder;
provided, however, there shall
be no more than two (2) Discretionary Issuing Lenders any time.  With
respect to each of the Foreign Currency Letters of Credit issued (or to be
issued) thereby, each of the Discretionary Issuing Lenders shall have all of the
same rights and obligations under and in respect of this Agreement and the other
Credit Documents, and shall be entitled to all of the same benefits as are
afforded to the Issuing Lender with respect to U.S. Letters of Credit hereunder
and thereunder.  The Administrative Agent shall promptly notify each
of the Lenders with a Revolving Commitment of the appointment of any
Discretionary Issuing Lender.  Each Discretionary Issuing Lender shall
(i) prior to the issuance, renewal or extension of any Foreign Currency Letter
of Credit, receive written confirmation from the Administrative Agent that such
issuance, renewal or extension meets the requirements set forth in Section
2.3(a), (ii) provide to the Administrative Agent, upon the issuance, renewal or
extension of any Foreign Currency Letter of Credit and on a monthly basis, a
report that details the activity with respect to each Foreign Currency Letter of
Credit issued by such Discretionary Issuing Lender (including an indication of
the maximum amount then in effect with respect to each such Foreign Currency
Letter of Credit) and (iii) upon the Administrative Agent’s request, any other
documentation relating to any such Foreign Currency Letter of Credit (including,
without limitation, a copy of such Foreign Currency Letter of
Credit).

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    1.10         Amendment
to Section 2.7(b)(ii).  Section
2.7(b)(ii) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

    

    (ii)           Asset Dispositions.
The Borrower shall prepay the Loans and cash collateralize the outstanding LOC
Obligations in an aggregate amount equal to 100% of the Net Cash Proceeds
derived from Asset Dispositions during any fiscal year in excess of $500,000
(such prepayment to be applied as set forth in clause (vi) below); provided, however, that, so
long as no Default or Event of Default has occurred and is continuing, such Net
Cash Proceeds shall not be required to be so applied to the extent the Borrower
delivers to the Administrative Agent promptly following such Asset Disposition a
certificate stating that it or the Company or any Subsidiary intends to use such
Net Cash Proceeds to acquire like assets used in the business of the Borrower
and its Subsidiaries within 180 days of the receipt of such Net Cash Proceeds,
it being expressly agreed that any Net Cash Proceeds not so reinvested shall be
applied to prepay the Loans and cash collateralize the outstanding LOC
Obligations immediately thereafter (such prepayment to be applied as set forth
in clause (vi) below); provided, further that,
notwithstanding anything herein to the contrary, if after giving effect to such
Asset Disposition on a Pro Forma Basis, the Leverage Ratio of the Credit Parties
and their Subsidiaries is higher than the Leverage Ratio of the Credit Parties
and their Subsidiaries immediately prior to such Asset Disposition (the “Prior Leverage
Ratio”), the Borrower shall immediately prepay the Loans and cash
collateralize the outstanding LOC Obligations in an aggregate amount to cause
the Leverage Ratio of the Credit Parties and their Subsidiaries to be equal to
or less than the Prior Leverage Ratio;

    

    1.11         Amendment
to Section 5.7.  Section 5.7 of
the Credit Agreement is hereby amended by inserting new clause (j) to read as
follows:

    

    (j)           Ratings
Changes.  Upon any change in its Ratings, the Borrower shall
promptly deliver such information to the Administrative Agent.

    

    1.12         Amendment
to Section 5.9.  Section 5.9(a) of
the Credit Agreement is hereby amended and restated in its entirety to read as
follows:

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (a)           Leverage
Ratio.  The Leverage Ratio, as of the last day of each fiscal
quarter of the Company occurring during the periods indicated below, shall be
less than or equal to the following:

    

    
      	
              Period

            	
              Ratio

            
	
              Closing
      Date through June 30, 2007

            	
              4.25
      to 1.0

            
	
              July
      1, 2007 through December 31, 2007

            	
              4.00
      to 1.0

            
	
              January
      1, 2008 through June 30, 2008

            	
              3.75
      to 1.0

            
	
              July
      1, 2008 through June 30, 2009

            	
              4.00
      to 1.0

            
	
              July
      1, 2009 through September 30, 2009

            	
              3.50
      to 1.0

            
	
              October
      1, 2009 through December 31, 2009

            	
              3.25
      to 1.0

            
	
              January
      1, 2010 through March 31, 2010

            	
              2.85
      to 1.0

            
	
              April
      1, 2010 through June 30, 2010

            	
              2.75
      to 1.0

            
	
              July
      1, 2010 and thereafter

            	
              2.50
      to 1.0

            

    

    

    1.13         Amendment
to Section 6.1.  Section 6.1 of
the Credit Agreement is hereby amended by (1) inserting new clauses (j) and (k)
and (2) changing existing clause (j) to be clause (l), in each case to read as
follows:

    

    (j)           
secured Indebtedness of the Company and its Subsidiaries which does not exceed
$5,000,000 at any time outstanding;

    

    (k)           Indebtedness
established and issued collectively by Unicredit BABK, Banco Popolare di Verona
and Banco of Brescia, in favor of Orthofix SRL/DMO, in a maximum principal
amount at any time outstanding of €10,000,000 and renewals, refinancings or
extensions thereof in a principal amount not in excess of €10,000,000;
and

    

    (l)          
 other unsecured Indebtedness of the Company and its Subsidiaries which
does not exceed $10,000,000 in the aggregate at any time
outstanding.

    

    1.14         Amendment
to Section 6.4.  Section 6.4 of
the Credit Agreement is hereby amended by (1) amending and restating Section
6.4(a)(ix) in its entirety and (2) amending and restating the first proviso at
the end of Section 6.4(a), in each case to read as follows:

    

    (ix)           the
sale, lease, transfer or other disposition of property or assets not to exceed
$25,000,000 in the aggregate in any fiscal year and $60,000,000 in the aggregate during
the term of this Agreement; provided, that, with respect to
any sale, lease, transfer or other disposition of property or assets in excess
of $5,000,000, the Credit Parties shall demonstrate, to the reasonable
satisfaction of the Administrative Agent, that after giving effect to such sale,
lease, transfer or other disposition on a Pro Forma Basis, the Credit Parties
are in compliance with each of the financial covenants set forth in Section
5.9;

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    provided, that (1) in
the case of clauses (i), (ii), (iii) and (vii) above, at least 75% of the
consideration received therefore by the Borrower or any other Credit Party is in
the form of cash or Cash Equivalents and (2) in the case of clause (ix) above,
(y) for any sale, lease, transfer, or other disposition of property or assets
not to exceed $5,000,000 in the aggregate in any fiscal year, at least 50% of
the consideration received therefore by the Borrower or any other Credit Party
is in the form of cash or Cash Equivalents and (z) for any other sale, lease,
transfer or other disposition of property or assets permitted under clause (ix)
above, at least 75% of the consideration received therefore by the Borrower or
any other Credit Party is in the form of cash or Cash Equivalents,

    

    1.15         Amendment
to Article IX.  Article IX of the Credit Agreement is hereby
amended by adding a new Section 9.22 to the end of such Article to read as
follows:

    

    Section
9.22     Judgment
Currency.

    

    If,
for the purposes of obtaining judgment in any court, it is necessary to convert
a sum due hereunder or any other Credit Document in one currency into another
currency, the rate of exchange used shall be that at which in accordance with
normal banking procedures the Administrative Agent, the applicable Issuing
Lender or other applicable Lender could purchase the first currency with such
other currency on the London market at 11:00 A.M. London time on the Business
Day preceding that on which final judgment is given.  The obligation
of the Borrower in respect of any such sum due from it to Administrative Agent,
the applicable Issuing Lender or other applicable Lender hereunder or under the
other Credit Documents shall, notwithstanding any judgment in a currency (the
“Judgment
Currency”) other than that in which such sum is denominated in accordance
with the applicable provisions of this Agreement (the “Agreement Currency”),
be discharged only to the extent that on the Business Day following receipt by
the Administrative Agent, the applicable Issuing Lender or other applicable
Lender of any sum adjudged to be so due in the Judgment Currency, the
Administrative Agent, the applicable Issuing Lender or other applicable Lender
may in accordance with normal banking procedures purchase the Agreement Currency
with the Judgment Currency.  If the amount of the Agreement Currency
so purchased is less than the sum originally due to the Administrative Agent,
the applicable Issuing Lender or other applicable Lender from the Borrower in
the Agreement Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent, the
applicable Issuing Lender or other applicable Lender against such
loss.  If the amount of the Agreement Currency so purchased is greater
than the sum originally due to the Administrative Agent, the applicable Issuing
Lender or other applicable Lender in such currency, the Administrative Agent,
the applicable Issuing Lender or other applicable Lender agrees to return the
amount of any excess to the Borrower (or to any other Person who may be entitled
thereto under applicable law).

    

    1.16         Amendment
to Schedule 3.3.  Schedule 3.3 of the Credit Agreement is
hereby amended by adding the items on Exhibit B hereto to
such Schedule.

    

    1.17         Amendment
to Schedule 6.1.  Schedule 6.1 of the Credit Agreement is
hereby amended by deleting the following reference from such
schedule:

    

    Orthofix
SRL/DMO

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (a)           Available
line of credit established and issued collectively by Unicredit BABK, Banco
Popolare di Verona and Banco of Brescia, in favor of Orthofix SRL/DMO, in a
maximum principal amount at any time outstanding of €6,800,000.  This
line of credit is renewed each April.

    

    

    ARTICLE
II

    CONDITIONS
TO EFFECTIVENESS

    

    2.1           Closing
Conditions.  This Amendment
shall become effective as of the day and year set forth above (the “Amendment Effective
Date”) upon satisfaction of the following conditions (in form and
substance reasonably acceptable to the Administrative Agent):

    

    (a)           Executed
Amendment.  The Administrative Agent shall have received a copy
of this Amendment duly executed by each of the Credit Parties and the
Administrative Agent, on behalf of the Required Lenders.

    

    (b)           Executed
Consents.  The Administrative Agent shall have received
executed consents, in substantially the form of Exhibit A attached
hereto, from the Required Lenders authorizing the Administrative Agent to enter
into this Amendment on their behalf.  The delivery by the
Administrative Agent of its signature page to this Amendment shall constitute
conclusive evidence that the consents from the Required Lenders have been
obtained.

    

    (c)           Default.  After
giving effect to this Amendment, no Default or Event of Default shall
exist.

    

    (d)           Fees and
Expenses.  The Administrative Agent shall have received from
the Borrower, on behalf of each Lender that executes and delivers a Lender
Consent to the Administrative Agent by 4 p.m. (Charlotte, NC time) on September
25, an amendment fee in an amount equal to 50 basis points on (i) the aggregate
Revolving Commitments of such approving Revolving Lenders and (ii) the
outstanding principal amount of the Term
Loan held by such approving Term Loan Lenders.

    

    

    ARTICLE
III

    MISCELLANEOUS

    

    3.1           Amended
Terms.  On and after the
Amendment Effective Date, all references to the Credit Agreement in each of the
Credit Documents shall hereafter mean the Credit Agreement as amended by this
Amendment.  Except as specifically amended hereby or otherwise agreed,
the Credit Agreement is hereby ratified and confirmed and shall remain in full
force and effect according to its terms.

    

    3.2           Representations
and Warranties of Credit Parties.  Each of the
Credit Parties represents and warrants as follows:

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (a)           It
has taken all necessary action to authorize the execution, delivery and
performance of this Amendment.

    

    (b)           This
Amendment has been duly executed and delivered by such Person and constitutes
such Person’s legal, valid and binding obligation, enforceable in accordance
with its terms, except as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors’ rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).

    

    (c)           No
consent, approval, authorization or order of, or filing, registration or
qualification with, any court or governmental authority or third party is
required in connection with the execution, delivery or performance by such
Person of this Amendment.

    

    (d)           The
representations and warranties set forth in Article III of the Credit Agreement
are true and correct as of the date hereof (except for those which expressly
relate to an earlier date).

    

    (e)           After
giving effect to this Amendment, no event has occurred and is continuing which
constitutes a Default or an Event of Default.

    

    (f)          
 The Security Documents continue to create a valid security interest in,
and Lien upon, the Collateral, in favor of the Administrative Agent, for the
benefit of the Lenders, which security interests and Liens are perfected in
accordance with the terms of the Security Documents and prior to all Liens other
than Permitted Liens.

    

    (g)           The
Credit Party Obligations are not reduced or modified by this Amendment and are
not subject to any offsets, defenses or counterclaims.

    

    3.3           Reaffirmation
of Credit Party Obligations.  Each Credit Party
hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it
is bound by all terms of the Credit Agreement applicable to it and (b) that it
is responsible for the observance and full performance of its respective Credit
Party Obligations.

    

    3.4           Credit
Document.  This Amendment
shall constitute a Credit Document under the terms of the Credit
Agreement.

    

    3.5           Expenses.  The Borrower
agrees to pay all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, execution and delivery of this Amendment,
including without limitation the reasonable fees and expenses of the
Administrative Agent’s legal counsel.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    3.6           Further
Assurances.  The Credit
Parties agree to promptly take such action, upon the request of the
Administrative Agent, as is necessary to carry out the intent of this
Amendment.

    

    3.7           Entirety.  This Amendment
and the other Credit Documents embody the entire agreement among the parties
hereto and supersede all prior agreements and understandings, oral or written,
if any, relating to the subject matter hereof.

    

    3.8           Counterparts;
Telecopy.  This Amendment
may be executed in any number of counterparts, each of which when so executed
and delivered shall be an original, but all of which shall constitute one and
the same instrument.  Delivery of an executed counterpart to this
Amendment by telecopy or other electronic means shall be effective as an
original and shall constitute a representation that an original will be
delivered.

    

    3.9           No
Actions, Claims, Etc.  As of the date
hereof, each of the Credit Parties hereby acknowledges and confirms that it has
no knowledge of any actions, causes of action, claims, demands, damages and
liabilities of whatever kind or nature, in law or in equity, against the
Administrative Agent, the Lenders, or the Administrative Agent’s or the Lenders’
respective officers, employees, representatives, agents, counsel or directors
arising from any action by such Persons, or failure of such Persons to act,
under this Credit Agreement on or prior to the date hereof.

    

    3.10         GOVERNING
LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

    

    3.11         Successors
and Assigns.  This Amendment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

    

    3.12         General
Release.  In consideration
of the Administrative Agent, on behalf of the Lenders, entering into this
Amendment, each Credit Party hereby releases the Administrative Agent, the
Lenders, and the Administrative Agent’s and the Lenders’ respective officers,
employees, representatives, agents, counsel and directors from any and all
actions, causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected to the extent that any of the foregoing arises from any action or
failure to act under the Credit Agreement on or prior to the date
hereof.

    

    3.13         Consent
to Jurisdiction; Service of Process; Waiver of Jury Trial.  The jurisdiction,
services of process and waiver of jury trial provisions set forth in Sections
9.14 and 9.17 of the Credit Agreement are hereby incorporated by reference,
mutatis
mutandis.

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF the parties hereto have caused this Amendment to be duly
executed on the date first above written.

    

    
      	
              BORROWER:

            	
              ORTHOFIX
      HOLDINGS, INC.,

            
	 
      	
              a
      Delaware corporation

            
	 
      	 
      
	 
      	 
      
	 
      	
              By: /s/ Alan
      W.
      Milinazzo                                                            

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      President

            

    

    

    

    [Signature
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              GUARANTORS:

            	
              ORTHOFIX
      INTERNATIONAL N.V.,

            
	 
      	
              a
      Netherlands Antilles corporation

            
	 
      	 
      
	 
      	
              By: /s/ Alan
      W.
      Milinazzo                                                            
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Group President and Chief Executive
Officer

            

    

    

    

    [Signature
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              COLGATE
      MEDICAL LIMITED,

            
	 
      	
              a
      company formed under the laws of England and Wales

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Director

            

    

    

    

    [Signature
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              VICTORY
      MEDICAL LIMITED,

            
	 
      	
              a
      company formed under the laws of England and Wales

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Director

            

    

    

    

    [Signature
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              ORTHOFIX
      INC.,

            
	 
      	
              a
      Minnesota corporation

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Chief Executive Officer

            

    

    

    

    [Signature
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              BREG
      INC.,

            
	 
      	
              a
      California corporation

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Chief Executive Officer

            

    

    

    

    [Signature
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              ORTHOFIX
      US LLC,

            
	 
      	
              a
      Delaware limited liability company

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              ORTHOFIX
      UK LTD,

            
	 
      	 
      	
              Sole
      Member

            
	 
      	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Director of Orthofix UK Ltd

            

    

    

    

    [Signature
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              AMEI
      TECHNOLOGIES INC.,

            
	 
      	
              a
      Delaware corporation

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      President

            

    

    

    

    [Signature
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              NEOMEDICS,
      INC., a New Jersey corporation

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      President

            

    

    

    

    [Signature
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              OSTEOGENICS
      INC., a Delaware corporation

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      President

            

    

    

    

    [Signature
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              BLACKSTONE
      MEDICAL, INC.,

            
	 
      	
              a
      Massachusetts corporation

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Chief Executive Officer

            

    

    

    

    [Signature
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              SWIFTSURE
      MEDICAL LIMITED,

            
	 
      	
              a
      company formed under the laws of England and Wales

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Director

            

    

    

    

    [Signature
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              ORTHOFIX
      UK LTD,

            
	 
      	
              a
      company formed under the laws of England and Wales

            
	 
      	 
      
	 
      	
              By:
      Alan W.
      Milinazzo                                                                  
      

            
	 
      	
              Name:
      Alan W. Milinazzo

            
	 
      	
              Title:
      Director

            

    

    

    

    [Signature
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              ADMINISTRATIVE
      AGENT:

            	
              WACHOVIA
      BANK, NATIONAL ASSOCIATION,

              as
      a Lender and as Administrative Agent on behalf of the Required
      Lenders

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      /s/ Scott Santa
      Cruz                                                                
      

            
	 
      	
              Name:
      Scott Santa Cruz

            
	 
      	
              Title:
      Director

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