10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2007.

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file No. 0-12515.

(Exact name of registrant as specified in its charter)

Indiana	35-1418342
(State of incorporation)	(IRS Employer Identification No.)

56 East Bell Drive, Warsaw, Indiana	46582
(Address of principal executive offices)	(Zip Code)

(574) 267-6639

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on which registered
Common Shares	The NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ¨     No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨     No   þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filers and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ                    Accelerated filer  ¨                    Non-accelerated filer  ¨

Indicate by checkmark whether the registered is a shell company (as defined in Rule 12b-2 of the Act). Yes  ¨    No  þ

The aggregate market value of the Common Shares held by non-affiliates of the registrant, based on the closing price of the Common Shares on November 30, 2006, as reported by The Nasdaq Stock Market, was approximately $8,777,842,305. As of July 24, 2007, there were 245,836,352 Common Shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words “believe,” “could,” “expect,” “intend,” “may,” “anticipate,” “plan,” “predict,” “potential,” “estimate” or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of population on demand for the Company’s products; assumptions and estimates regarding the size and growth of certain market segments; the Company’s ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of the Company’s capital resources to meet the needs of the Company’s business; the Company’s continued investment in new products and technologies; the ultimate marketability of products currently being developed; the ability to implement successfully new technologies; future declarations of cash dividends; the Company’s ability to sustain sales and earnings growth; the Company’s goals for sales and earnings growth; the Company’s success in achieving timely approval or clearance of the Company’s products with domestic and foreign regulatory entities; the stability of certain foreign economic markets; the impact of anticipated changes in the musculoskeletal industry and the Company’s ability to react to and capitalize on those changes; the Company’s ability to take advantage of technological advancements; the Company’s ability to successfully implement desired organizational changes; and the impact of the Company’s managerial changes.

Forward-looking statements reflect the Company’s current expectations and are not guarantees of performance. These statements are based on the Company’s management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to these forward-looking statements include, among others, assumptions regarding demand for the Company’s products, expected pricing levels, raw material costs, the timing and cost of planned capital expenditures, expected outcomes of pending litigation, the solvency of the Company’s insurers and the ultimate resolution of allocation and coverage issues with those insurers, competitive conditions and general economic conditions. Readers of this report are cautioned that reliance on any forward-looking statement involves risks and uncertainties. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There can be no assurance that the forward-looking statements contained in this report will prove to be accurate. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company’s objectives will be achieved.

Forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond the Company’s ability to control or predict and could, among other things, cause actual results to differ from those contained in forward-looking statements made in this report and presented elsewhere by management from time to time. Such factors, among others, may have a material adverse effect upon the Company’s business, financial condition and results of operations and may include, but are not limited to, factors discussed under the heading “Risk Factors” and the following: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in the Company’s markets; changes in the relationship between supply of and demand for the Company’s products; fluctuations in costs of raw materials and labor; changes in other significant operating expenses; decreases in sales of the Company’s principal product lines; slow downs or inefficiencies in the Company’s product research and development efforts; increases in expenditures related to increased government regulation of the Company’s business; developments adversely affecting the Company’s sales activities outside the United States; decreases in reimbursement levels by the Company’s customers; increases in cost-containment efforts by group purchasing organizations; loss of the Company’s key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of the Company’s products; and unanticipated expenditures related to litigation, including litigation related to the Merger (as defined below) and the stock option issues and investigations by the U.S. Department of Justice. The Company cautions you not to place undue reliance on these forward-looking statements that speak only as of the date they were made. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this offering memorandum or to reflect the occurrence of unanticipated events.

TABLE OF CONTENTS

PART I
Item 1.	Business	2
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	24
Item 3.	Legal Proceedings	25
Item 4.	Submission of Matters to a Vote of Security Holders	27
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Financial Data	30
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 8.	Financial Statements and Supplementary Data	39
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	67
Item 9A.	Controls and Procedures	67
Item 9B.	Other Information	68
PART III
Item 10.	Directors and Executive Officers of the Registrant	69
Item 11.	Executive Compensation	71
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	91
Item 13.	Certain Relationships and Related Transactions	93
Item 14.	Principal Accounting Fees and Services	94
PART IV
Item 15.	Exhibits and Financial Statement Schedules	95

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PART I

Item 1. Business.

General

Biomet, Inc. (“Biomet” or the “Company”), an Indiana corporation incorporated in 1977, and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy. The Company’s product portfolio encompasses reconstructive products, fixation devices, spinal products and other products. Biomet has corporate headquarters in Warsaw, Indiana, and manufacturing and/or office facilities in more than 50 locations worldwide.

The Company’s principal subsidiaries include Biomet Orthopedics, Inc.; Biomet Manufacturing Corp.; EBI, L.P. (operating under the assumed names Biomet Trauma and Biomet Spine (“BTBS”)); Biomet Europe B.V.; Biomet 3i, Inc. (“Biomet 3i”); Biomet Microfixation, Inc.; Biomet Sports Medicine, Inc.; and Biomet Biologics, Inc. Unless the context requires otherwise, the term “Company” as used herein refers to Biomet and all of its subsidiaries.

The Company’s annual reports on Form 10-K (for the five most recent fiscal years), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge in, or may be accessed through, the Investors Section of the Company’s Internet website at www.biomet.com as soon as reasonably practicable after the Company files or furnishes such material with or to the Securities and Exchange Commission (the “SEC”). In addition, copies of these reports will be made available free of charge, upon written request to the Company’s Investor Relations Department.

The information on Biomet’s website is not included as part of, nor incorporated by reference into, this Form 10-K.

Transaction with the Sponsor Group

On December 18, 2006, Biomet entered into an Agreement and Plan of Merger with LVB Acquisition, LLC, a Delaware limited liability company (“LVB”), and LVB Acquisition Merger Sub, Inc., an Indiana corporation and a wholly-owned subsidiary of LVB (“Purchaser”), which agreement was amended and restated as of June 7, 2007 (as may be amended and restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, after completion of the Offer (as defined below) and the satisfaction or waiver of certain conditions, Purchaser will be merged with and into Biomet, with Biomet continuing as the surviving corporation (the “Merger”). LVB is controlled by a consortium of private equity funds: Blackstone Capital Partners V L.P., Goldman Sachs Investments Ltd., KKR 2006 Fund L.P. and Texas Pacific Group (each a “Sponsor” and collectively, the “Sponsor Group”).

Pursuant to the Merger Agreement, on June 13, 2007, Purchaser commenced a cash tender offer, or the Offer, to purchase all of Biomet’s outstanding common shares, without par value (the “Common Shares” or the “Shares”), at a price of $46.00 per Share (the “Offer Price”), without interest and less any required withholding taxes. The Offer was made pursuant to Purchaser’s offer to purchase dated June 13, 2007 and the related letter of transmittal, each of which was filed with the SEC on June 13, 2007. The Offer expired at 12:00 midnight, New York City time, on July 11, 2007, with approximately 82.41% of the outstanding Shares having been tendered to Purchaser. On July 17, 2007, Purchaser completed its purchase of the tendered Shares.

In connection with the closing of the Offer, all outstanding options, each an Option, to purchase Shares under Biomet’s stock plans, vested or unvested, were cancelled and each Option holder was paid an amount in cash equal to the excess, if any, of the Offer Price over the applicable option exercise price for each Share subject to an Option, less any required withholding taxes.

In connection with the Offer, Purchaser entered into a credit agreement dated as of July 11, 2007 for a $6,165 million senior secured term loan facility, or the Tender Facility, maturing on June 6, 2008, and pursuant to which it borrowed approximately $4,181 million to finance a portion of the Offer and pay related fees and expenses. Biomet expects to refinance all amounts borrowed under the Tender Facility concurrently with the closing of its new senior secured credit facilities. Additional financing for the Offer was provided in the form of indirect equity contributions from the Sponsor Group, who collectively caused approximately $5,197 million to be contributed as equity to LVB Acquisition Holding, LLC, or Holding, concurrently with the funding of the Tender Facility. Holding, which owned 100% of the outstanding equity interests in LVB at the time of the Offer, contributed such funds to LVB, which in turn contributed such funds to Purchaser.

As a result of Purchaser having acquired approximately 82.41% of the outstanding Shares pursuant to the Offer, Biomet will call a special meeting of shareholders to vote upon the Merger, at which meeting Biomet expects that LVB and Purchaser will vote all of their Shares to approve the Merger. At the effective time of the Merger, or the Effective Time, each Share, other than the Shares owned by LVB or Purchaser immediately prior to the Effective Time, will be cancelled automatically and will cease to exist and will be converted into the right to receive the Offer Price, without interest and less any required withholding taxes. Additional funds necessary to complete the Merger are expected to be funded using equity contributions by certain of Biomet’s directors and equity contribution or rollover of existing equity interests by certain of Biomet’s executive officers and members of Biomet’s senior management (the “Management Participants”), an offering of high yield debt securities, initial borrowings under Biomet’s new senior secured credit facilities, its cash on hand and, if necessary, additional equity contributions by the Sponsor Group.

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Pursuant to the Merger Agreement, LVB obtained pro rata representation on and control of the Board of Directors.

The closing of the Merger is subject to various conditions as described in the Merger Agreement, including to customary conditions such as the absence of any governmental orders preventing the Merger or any other transaction contemplated by the Merger Agreement, Biomet’s provision to LVB of certain financial information and certificates described in the Merger Agreement, and the receipt of certain regulatory approvals. Biomet has agreed with LVB and Purchaser to each use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the Merger, including with respect to obtaining the necessary consents, approvals and authorizations from governmental authorities.

Completion of the transactions contemplated by the Merger Agreement is subject to various regulatory approvals or consents, including those required by (1) the Hart-Scott-Rodino Antitrust Improvement Act of 1976, or the HSR Act, and (2) the antitrust laws of the European Union. On February 15, 2007, the parties were granted early termination of the waiting period under the HSR Act for the Merger Agreement and related transactions. No approval of the antitrust authorities in the European Union is required in connection with the Merger, and none of the parties is aware of any other required approvals. The Company has been informed by the Sponsor Group that, in accordance with the provisions of the Merger Agreement, the Sponsor Group currently expects to complete the Merger no earlier than September 2007, subject to the satisfaction of the conditions contained therein.

Review of historical stock option grant practices

In December 2006, following the publication of an analyst report suggesting that certain historical grants of stock options by Biomet took place on dates when Biomet’s stock price was trading at relatively low prices and the filing of two shareholder derivative lawsuits alleging improper “backdating” of stock options, Biomet formed a special committee of the Board of Directors (the “Special Committee”), to conduct an independent investigation of Biomet’s stock option grants for the period from March 1996 to May 2006 and to determine whether Biomet had any claims arising out of any inappropriate stock option backdating and, if so, whether it was in the best interest of Biomet and its shareholders to pursue any such claim.

Based on an analysis of the preliminary reports of the Special Committee and relevant accounting literature, the Audit Committee determined on March 30, 2007 that Biomet should amend its Annual Report on Form 10-K for the fiscal year ended May 31, 2006 and Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2006 to reflect the restatement of Biomet’s consolidated financial statements (fiscal years ended May 31, 2006, 2005 and 2004 and periods ended August 31, 2006 and 2005) and related disclosures reflected therein. On May 25, 2007, the Board of Directors received and discussed the updated findings contained in the Special Committee’s final report.

In light of the Special Committee’s findings, on March 30, 2007 Gregory D. Hartman retired as Senior Vice President–Finance, Chief Financial Officer and Treasurer, and Daniel P. Hann retired as Executive Vice President of Administration and as a Director of the Company. On February 26, 2007, Biomet announced the appointment of Jeffrey R. Binder as President and Chief Executive Officer and a member of the Board of Directors. On March 30, 2007, Biomet announced the appointment of J. Pat Richardson as Vice President–Finance and Interim Chief Financial Officer and Treasurer, and on May 14, 2007, Biomet announced the appointment of Daniel P. Florin as Senior Vice President and Chief Financial Officer, effective June 5, 2007.

On May 29, 2007, Biomet filed its amended annual report on Form 10-K/A for the fiscal year ended May 31, 2006. On June 4, 2007, Biomet filed its amended quarterly report on Form 10-Q/A for the period ended August 31, 2006 and its quarterly reports on Form 10-Q for the periods ended November 30, 2006 and February 28, 2007. Biomet has not amended and does not intend to amend any of its previously filed annual reports on Form 10-K or quarterly reports on Form 10-Q for the periods affected by the restatement other than its amended annual report on Form 10-K/A for the fiscal year ended May 31, 2006 and its amended quarterly report on Form 10-Q/A for the period ended August 31, 2006. Accordingly, Biomet’s previously issued financial statements affected by the restatement and any related reports of its independent registered public accounting firm should not be relied upon.

Products

The Company operates in one business segment, musculoskeletal products, which includes the design, manufacture and marketing of four major market segments: reconstructive products, fixation devices, spinal products and other products. The Company has three reportable geographic markets: United States, Europe and Rest of World. Reconstructive products include knee, hip and extremity joint replacement systems, as well as dental reconstructive devices, bone cements and accessories, autologous therapy products and the procedure-specific instrumentation required to implant the Company’s reconstructive systems. Fixation devices include internal and external fixation devices, craniomaxillofacial fixation systems and electrical stimulation devices that do not address the spine. Spinal products include electrical stimulation devices addressing the spine, spinal fixation systems and orthobiologics. The other product sales category includes, arthroscopy products, softgoods and bracing products, casting materials, general surgical instruments, operating room supplies and other surgical products. Depending on the intended application, the Company reports sales of its bone substitute materials in the reconstructive product, fixation device or spinal product segment.

3

The following table shows the net sales and percentages of total net sales contributed by each of the Company’s product segments for each of the three most recent fiscal years ended May 31, 2007.

	Years Ended May 31, (Dollar amounts in thousands)
	2007				2006				2005
	Net Sales		Percent of Total Net Sales		Net Sales		Percent of Total Net Sales		Net Sales		Percent of Total Net Sales
Reconstructive Products	$	1,503,874	71	%	$	1,379,420	68	%	$	1,254,234	67	%
Fixation Devices		224,694	11	%		251,360	12	%		246,730	13	%
Spinal Products		205,862	10	%		221,964	11	%		214,039	11	%
Other Products		172,998	8	%		172,995	9	%		164,947	9	%
Total	$	2,107,428	100	%	$	2,025,739	100	%	$	1,879,950	100	%

Reconstructive Products

Orthopedic reconstructive implants are used to replace joints that have deteriorated as a result of disease (principally osteoarthritis) or injury. Reconstructive joint surgery involves the modification of the area surrounding the affected joint and the implantation of one or more manufactured components, and may involve the use of bone cement. The Company’s primary orthopedic reconstructive joints are knees, hips and shoulders, but it produces other joints as well. The Company also produces the associated instruments required by orthopedic surgeons to implant the Company’s reconstructive devices, as well as bone cements and cement delivery systems. Additionally, dental reconstructive implants and associated instrumentation are used for oral rehabilitation through the replacement of teeth and repair of hard and soft tissues.

Knee Systems. A total knee replacement typically includes a femoral component, a patellar component, a tibial component and an articulating surface. Total knee replacement may occur as an initial joint replacement procedure, or as a revision procedure, which may be required to replace, repair or enhance the initial implant. Partial, or unicondylar, knee replacement is an option when only a portion of the knee requires replacement.

Biomet’s newest and most comprehensive total knee system, the Vanguard™ Complete Knee System, accommodates up to 145 degrees of flexion. The launch of the Vanguard™ System, in conjunction with Biomet’s Microplasty^® Minimally Invasive Total Knee Instrumentation, continued throughout fiscal year 2007. The Microplasty^® Instrumentation is designed to reduce incision size and surrounding soft tissue disruption, which may provide reduced blood loss, a shortened hospital stay, reduced postoperative pain and less time spent in rehabilitation, as compared to a conventional procedure.

During fiscal year 2007, the Company continued the development efforts for the rotating platform and revision options of the Vanguard™ Complete Knee System, as well as the expansion of the Microplasty^® Minimally Invasive Instrument Platform to include less invasive posterior referencing, anterior referencing and image-guided options. In addition, the launch of the Premier™ Instrumentation and the Vanguard™ Revision SSK (Super Stabilized Knee) System which began during fiscal year 2006, continued during fiscal year 2007.

The Company continues to be a market leader in addressing the increasing demand from practitioners and patients for procedures and products accommodating minimally-invasive knee techniques. The Oxford^® Partial Knee, which is a mobile-bearing unicondylar knee that utilizes a minimally-invasive technique, continues to experience strong global sales. The Oxford^® Knee, which was introduced in the United States during fiscal year 2005, is currently the only free-floating meniscal bearing unicompartmental system approved for use in the United States. The Company’s offering of minimally-invasive partial knee systems also includes the Alpina^® Unicompartmental Knee (which is not currently available in the United States), the Vanguard M™ Series Unicompartmental Knee System and the Repicci II^® Unicondylar Knee System. The Vanguard M™ System is a modified version of the Oxford^® Knee that incorporates a fixed-bearing tibial component as opposed to a free floating tibial bearing. The Repicci II^® System is specifically designed to accommodate a minimally-invasive knee arthroplasty procedure that can often be performed on an outpatient basis, requiring a smaller incision, minimal bone removal, and may result in shorter recovery time and reduced blood loss. The Repicci II^® System incorporates self-aligning metal and polyethylene components.

Hip Systems. A total hip replacement involves the replacement of the head of the femur and the acetabulum, and may occur as an initial joint replacement procedure, or as a revision procedure, which may be required to replace, repair or enhance the initial implant. A femoral hip prosthesis consists of a femoral head and stem, which can be cast, forged or wrought, depending on the design and material used. Acetabular components include a prosthetic replacement of the socket portion, or acetabulum, of the pelvic bone. Because of variations

4

in human anatomy and differing design preferences among surgeons, femoral and acetabular prostheses are manufactured by the Company in a variety of sizes and configurations. The Company offers a broad array of total hip systems, most of which utilize titanium or cobalt chromium alloy femoral components and the Company’s patented ArCom^® or ArComXL^® polyethylene-lined, metal-on-metal or ceramic-on-ceramic acetabular components. Many of the femoral prostheses utilize the Company’s proprietary PPS^® porous plasma spray coating, which enables cementless fixation.

The Alliance^® family of hip systems is designed to address the demand from hospitals and surgeon groups toward standardization of total hip systems. The Alliance^® Hip family provides the largest selection in the marketplace of primary and revision stems available for implantation with a single set of instruments. The Alliance^® family of hip systems includes the Answer^®, Bi-Metric^®, Generation 4^®, Hip Fracture, Integral^®, Intrigue™, Progressive^®, Reach^® and Rx 90^® Hip Systems. The Alliance^® family was further augmented by introducing Exact™ Instrumentation, an integrated instrument set developed to promote intraoperative flexibility and increase the efficiency, simplicity and consolidation of instrument use.

The Taperloc^® Hip System is marketed for non-cemented use in patients undergoing primary or revision hip replacement surgery as a result of noninflammatory degenerative joint disease. The Taperloc^® femoral component is a collarless, flat, wedge-shaped implant designed to provide excellent durability and stability in a design that is relatively simple to implant. The incorporation of standard and lateralized offset options provides the surgeon with the ability to reconstruct a stable joint with proper leg length in virtually all patient anatomies.

The Mallory-Head^® Hip System is designed for both primary and revision total hip arthroplasty procedures. The primary femoral components feature a specific proximal geometry for cementless indications and a slightly different proximal ribbed geometry for those patients requiring fixation with bone cement. The Mallory-Head^® Revision Calcar components provide innovative solutions for difficult revision cases. The Mallory-Head^® Calcar replacement prosthesis is offered in both a one-piece and a modular version, which allows for individual customization at the time of surgical intervention, even in cases of severe bone deficiency. The modular version of the Mallory-Head^® System incorporates the Company’s patented roller hardened technology, which increases the strength of the modular connection.

The Company continues to explore the development of innovative articulation technologies and materials. Biomet’s M²a-Taper™ Acetabular System combines a cobalt chromium head with a cobalt chromium liner and has demonstrated a 20- to 100-fold reduction in volumetric wear in simulator studies compared to traditional metal-polyethylene articulation systems. The M²a-Taper™ Acetabular System may be utilized on all of Biomet’s femoral components and has continued to evolve with the introduction of the M²a-Magnum™ Articulation System, which incorporates larger diameter metal-on-metal components designed to more closely resemble the natural anatomy, offering improved range of motion and joint stability. The Company introduced the C² a-Taper™ Acetabular System during fiscal year 2006, which provides an additional alternative bearing option featuring ceramic-on-ceramic articulation. In addition, the Company is pursuing the development of a diamond-on-diamond hip articulation system through its relationship with Diamicron, Inc., a global leader in the research, development and manufacture of polycrystalline diamond composite technology for biomedical applications. The Company continues to market ArComXL^®, which is a second-generation highly crosslinked polyethylene bearing material based on the Company’s proven ArCom^® polyethylene. ArComXL^® polyethylene has demonstrated excellent wear characteristics without measurable oxidation after accelerated aging. During the fourth quarter of fiscal year 2007, Biomet received FDA clearance to market acetabular hip liners manufactured from E-Poly™ Highly Crosslinked Polyethylene. Biomet’s E-Poly™ liners are the world’s first Vitamin E stabilized highly crosslinked polyethylene products to be introduced to the market. Vitamin E is a natural antioxidant and is expected to provide optimal oxidation resistance for the implant bearings used in the Company’s total joint replacements.

Biomet’s comprehensive Microplasty™ Minimally Invasive Hip Program includes proprietary products from Biomet’s broad array of hip products, as well as a distinctive training program and uniquely-designed instruments for a minimally-invasive approach. The Company continues to enhance the development of the Microplasty^® Minimally Invasive Hip Instruments. Biomet’s minimally-invasive hip development efforts have been focused on various surgical approaches, including an anterior supine approach, which is an intramuscular surgical approach. Instruments relating to the anterior supine approach were first introduced during fiscal year 2006.

The ReCap^® Total Resurfacing System is a bone-conserving product currently used outside the United States for patients in the early stages of degenerative joint disease, including osteoarthritis, rheumatoid arthritis and avascular necrosis. The Company commenced a clinical study for the ReCap^® Total Resurfacing System in the United States during fiscal year 2006, and there are approximately 140 patients enrolled in the study as of May 31, 2007.

The Company also provides constrained hip liners, which are indicated for patients with a high risk of hip dislocation. While the percentage of patients requiring a constrained liner is relatively small, surgeons often prefer to utilize a primary and revision system that includes this option.

The Company introduced the Regenerex™ Porous Titanium Construct Acetabular System during the third quarter of fiscal year 2007. The Regenerex™ Construct provides design flexibility and solutions for difficult primary and revision cases. The advanced titanium scaffold structure of the Regenerex™ Construct is a continuous three-dimensional matrix comprised of industry-standard Ti-6AL-4V. Titanium is a clinically proven material in the orthopedic market, with optimal biological fixation, and Regenerex™ is expected to be the material of choice for porous metal constructs.

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Extremity Systems. The Company offers a variety of shoulder systems including the Absolute^® Bi-Polar, Bi-Angular^®, Bio-Modular^®, Comprehensive^®, Copeland™, Integrated™ and Mosaic™ Shoulder Systems, as well as uniquely-designed elbow replacement systems.

The Copeland™ Humeral Resurfacing Head was developed to minimize bone removal in shoulder procedures and has more than 19 years of positive clinical results in the United Kingdom. During fiscal year 2007, this system was expanded to include the Copeland™ EAS™ (Extended Articular Surface) Humeral Resurfacing Head designed to address rotator cuff arthropathy.

The first Comprehensive^® Primary Shoulder was released at the end of fiscal year 2007. This initial release of the new Primary System included the Standard and Mini length Comprehensive^® Primary Stems and the Versa-Dial™ Heads, as well as the Hybrid Glenoids. The Comprehensive^® Primary System is scheduled to have full release by the third quarter of fiscal year 2008.

The ExploR^® Radial Head Replacement System, a two-piece hemi-elbow comprised of a tapered stem paired with a head designed to articulate with the patient’s natural bone, continued to receive excellent market acceptance during fiscal year 2007.

The Company plans to continue the introduction of T.E.S.S.™ Total Evolutive Shoulder System in selected European markets. The T.E.S.S.™ System is a complete shoulder system that can be used in all indications of shoulder arthroplasty. The Company plans to begin distribution of the T.E.S.S.™ System in the United States during the second half of fiscal year 2008, pending FDA clearance.

Dental Reconstructive Implants. Through its subsidiary, Biomet 3i, the Company develops, manufactures and markets products designed to enhance oral rehabilitation through the replacement of teeth and the repair of hard and soft tissues. These products include dental reconstructive implants and related instrumentation, bone substitute materials and regenerative products and materials. A dental implant is a small screw or cylinder, normally constructed of titanium or titanium alloy, that is surgically placed in the bone of the jaw to replace the root of a missing tooth and provide an anchor for an artificial tooth.

Biomet 3i’s historical flagship product, the OSSEOTITE^® product line, features a patented micro-roughened surface technology, which allows for early loading and improved bone integration to the surface of the implant. During fiscal year 2007, Biomet 3i further enhanced implant surface technology with the introduction of the NanoTite™ Implant. The surface features the application of nanometer scale crystals of calcium phosphate to the existing OSSEOTITE^® surface. This enhancement has been demonstrated to increase the rate and extent of bone integration and results in a mechanical bonding of the host bone to the surface of the implant. The NanoTite™ Implant was initially introduced in Certain^® Implant configurations, which is an internal connection system that, through the use of the QuickSeat^® connection, provides audible and tactile feedback when abutments and ancillary components are seated into the implant. In addition, the 6/12 point connection design of the Certain^® Implant System offers enhanced flexibility in placing the implant and abutment. During fiscal year 2007, Biomet 3i continued to build on the strength of the Certain^® product line by introducing line extensions to the Certain^® PREVAIL^® Implant System. This implant is designed to enhance crestal bone preservation as a result of its integration of Platform Switching,™ a medialized Implant-Abutment-Junction that appears to limit the reformation of soft and hard tissue at the bone crest. In addition, the PREVAIL^® Implants are acid-etched with a Full OSSEOTITE^® Surface (FOSS) and are now available in NanoTite™ configurations.

During fiscal year 2007, Biomet 3i continued with developments to its tapered implant system. Building upon the fiscal year 2006 introduction of new Quad Shaping Drills and dedicated Depth Indicators, modifications to the implant body were incorporated during fiscal year 2007. These enhancements served to increase surface area and improve implant stability, particularly in less dense bone. The new surface was applied to the modified implant body during the second half of fiscal year 2007 with the introduction of the NanoTite™ Tapered Implant.

In the site preparation segment of the product portfolio, Biomet 3i engaged in alpha and beta evaluations of its CT Guidance Instrumentation Kits. This open architecture instrumentation is designed to interface with the software and surgical guide solutions offered by existing entities in the marketplace. As planning and guide fabrication are based upon computed tomography scans, this can result in more precise implant placement when combined with the depth and rotation control offered by the Biomet 3i instrumentation. As implant position can be replicated as planned, this can also provide the opportunity for fabrication of a provisional prosthesis in advance of surgery thereby allowing for a complete implant restoration in one patient visit. On the regenerative side of the site preparation portfolio, Biomet 3i introduced the OsseoGuard™ Membrane during fiscal year 2007. The OsseoGuard™ Membrane is a resorbable collagen based product that offers a resorption profile, strength and handling characteristics suitable for guided bone regeneration procedures in implant dentistry.

Several line extensions were launched during fiscal year 2007 in the restorative segment of the product portfolio including PreFormance™ Provisional Components for external hex implants, Locator^® Attachments for Microminiplant™ Implants, and straight Healing Abutments and Impression Copings for the Certain^® System. Additional efforts were directed at development of enhancements and line extensions for the Patient Specific Restoration (PSR) segment of the restorative product portfolio. Copy milling of laboratory created bar designs and a next generation of Encode^® Abutments were among the development projects. The Encode^® enhancement will allow Biomet 3i to fabricate an abutment and orient implant body analogs in the proper position in a stone model. This can allow for the complete fabrication or a restoration from one supragingival impression – significantly easier than present techniques and a potential opportunity to get more general dentists involved in implant therapy.

Locator^® is a registered trademark of Zest Anchors, Inc.

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Other Reconstructive Devices. Biomet’s PMI^® Patient-Matched Implant services group expeditiously designs, manufactures and delivers one-of-a-kind reconstructive devices to orthopedic specialists. The Company believes this service continues to enhance Biomet’s reconstructive sales by strengthening its relationships with orthopedic surgeons and augmenting its reputation as a responsive company committed to excellent product design. In order to assist orthopedic surgeons and their surgical teams in preoperative planning, Biomet’s PMI^® group utilizes a three-dimensional (“3-D”) bone reconstruction imaging system. The Company uses computed tomography (“CT”) data to produce 3-D reconstructions for the design and manufacture of patient-matched implants. With this imaging and model-making technology, Biomet’s PMI^® group is able to assist the physician prior to surgery by creating 3-D models. Within strict deadlines, the model is used by engineers, working closely with the surgeon, to create a PMI^® design for the actual manufacturing of the custom implant for the patient.

The Company is involved in the ongoing development of bone cements and delivery systems. The Company has broadened the range of its internally developed and manufactured bone cement product offerings. Cobalt™ HV (High Viscosity) Bone Cement, which was introduced in the United States during fiscal year 2006, is particularly well suited for use in minimally-invasive surgery, but may be used in all applicable joint replacement procedures. The excellent handling characteristics and high optical contrast of Cobalt™ HV Bone Cement are well suited to the current trends in orthopedic surgery. The patented SoftPac™ monomer packaging offers the only alternative to glass vial packaging, which is inherently less safe due to the necessity to break the glass vial to deliver the monomer. The Company offers its internally developed and manufactured bone cements with and without antibiotics. In conjunction with antibiotic loaded bone cement is the use of StageOne™ Cement Spacer Molds. The molds are used in revision surgery following infection as the first stage of a two stage treatment plan. A new product planned for fiscal year 2008 release is Cobalt™ MV (Medium Viscosity) Bone Cement. This new introduction is expected to greatly expand Biomet’s opportunity to further penetrate the bone cement market. Cobalt™ Bone Cement is marketed in conjunction with Biomet’s patented Optivac^® Vacuum Mixing System. During fiscal year 2007, the Fusion™ Vacuum Mixing Bowl was launched to address the open bowl mixing market. New for fiscal year 2008 is the OptiPac™ preloaded bone cement mixing and delivery system. It is anticipated that the OptiPac™ system will be launched in the United States following the initial European launch.

Additional products and services for reconstructive indications include bone substitute materials and services related to allograft material. The Company also provides services related to the supply of allograft material procured through several tissue bank alliances. Markets addressed by the Company’s allograft services include the orthopedic and dental reconstructive market segments, as well as the spinal, craniomaxillofacial and arthroscopy segments.

The GPS^® III Gravitational Platelet Separation System is a unique device that collects platelet concentrate from a small volume of the patient’s blood using a fast, single spin process, offering a high-quality platelet concentrate that has broad potential applications in the reconstructive and spine markets. The GPS^® III System is marketed in conjunction with the Biomet^® Rapid Recovery Program, a comprehensive approach to patient education, a minimally-invasive surgical approach and pain management that was developed in conjunction with leading orthopedic surgeons in the United States.

Fixation Devices

The Company’s fixation products include electrical stimulation devices (that do not address the spine), external fixation devices, craniomaxillofacial fixation systems, internal fixation devices and bone substitute materials utilized in fracture fixation applications. The Company’s craniomaxillofacial fixation products are marketed by its subsidiary, Biomet Microfixation, Inc. All other fixation products are marketed primarily by Biomet Trauma.

Electrical Stimulation Systems. The Company is the market leader in the electrical stimulation segment of the fixation market. The U.S. Food and Drug Administration (“FDA”) has acknowledged the Company’s extensive preclinical research documenting the Mechanism of Action for its pulsed electromagnetic field (“PEMF”), capacitative coupling and direct current technologies. The Mechanism of Action for these technologies involves the stimulation of a cascade of bone morphogenic proteins (“BMPs”), as well as angiogenesis, chondrogenesis and osteogenesis.

The EBI Bone Healing System^® unit is a non-invasive bone growth stimulation device indicated for the treatment of recalcitrant bone fractures (nonunions), failed fusions and congenital pseudarthrosis that have not healed with conventional surgical and/or non-surgical methods. The non-invasive bone growth stimulation devices sold by the Company generally provide an alternative to surgical intervention in the management of these bony applications. The EBI Bone Healing System^® units produce low-energy PEMF signals that induce weak pulsing currents in living tissues that are exposed to the signals. These pulses, when suitably configured in amplitude, repetition and duration, affect living bone cells to differentiate, migrate and proliferate. The Mechanism of Action behind the PEMF technology involves the stimulation of growth factors involved in normal bone healing. Biomet Trauma’s preclinical research demonstrates that PEMF signals increase a number of growth factors, such as TGF-ß, BMP-2 and BMP-4, which are normal physiological regulators of the various stages of bone healing, including angiogenesis, chondrogenesis and osteogenesis. The EBI Bone Healing System^® unit may be utilized over a patient’s cast, incorporated into the cast or worn over the skin.

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The OrthoPak^® 2 Bone Growth Stimulator, which is indicated for the treatment of recalcitrant (nonunion) fractures, offers a small, lightweight, non-invasive device using capacitive coupling technology. The OrthoPak^® 2 device delivers bone growth stimulation through wafer-thin electrodes that add virtually no extra weight on the nonunion site. The Mechanism of Action behind the Company’s capacitive coupling stimulation technology involves the stimulation of osteopromotive factors involved in normal bone healing, such as TGF-ß1 and PGE2. The OrthoPak^® 2 product provides greater ease of use and enhances access to fracture sites that are normally hard to treat.

The Company also offers an implantable option when bone growth stimulation is required in conjunction with or subsequent to surgical intervention. The Biomet^® OsteoGen^® surgically implanted bone growth stimulator is an adjunct treatment when bone grafting and surgical intervention are required to treat recalcitrant (nonunion) fractures in long bones. The Mechanism of Action behind the Company’s direct current stimulation technology involves the stimulation of a number of osteoinductive growth factors including BMP-2, -6 and -7 and the BMP-2 receptor ALK2, which are normal physiological regulators of various stages of bone healing, including chondrogenesis and osteogenesis. In addition, electrochemical reactions at the cathode lower oxygen concentrations and increase pH.

During fiscal year 2005, a private company petitioned the FDA to reclassify noninvasive bone growth stimulators from Class III to Class II medical devices. The petition was directed at products, like those described above, that utilize electromagnetic fields to stimulate bone growth. In June 2006, the FDA Advisory Panel recommended that the bone growth stimulator devices remain Class III devices. On January 17, 2007, the FDA published its agreement and sought public comment on the Advisory Panel’s recommendation that bone growth stimulators remain Class III devices. The private company that had petitioned for the down-classification of bone growth stimulators has since formally withdrawn that request. It is Biomet’s understanding that bone growth stimulators will remain Class III devices.

External Fixation Devices. External fixation is utilized for stabilization of fractures when alternative methods of fixation are not suitable. The Company offers a complete line of systems that address the various segments of the trauma and reconstructive external fixation marketplace. The DynaFix^® and DynaFix^® Vision^™ Systems are patented, modular external fixation devices intended for use in complex trauma situations involving upper extremities, the pelvis and lower extremities. The recently introduced Biomet^® Vision^™ FootRing System is a comprehensive external fixation system designed for the treatment of osteotomies, arthrodesis and fracture fixation indications. This system offers a simplified, snap-fit application of all fixation components to the Vision^™ Ring and can be configured into a multitude of constructs ranging from simple fractures to complex construction. The Biomet^® Vision^™ FootRing System is made of lightweight, carbon fiber, which is radiolucent and also provides for increased patient comfort. Biomet Trauma also has a full line of external fixation products for certain reconstructive procedures involving limb lengthening, fusion, articulated fixation and deformity correction applications.

Internal Fixation Devices. The Company’s internal fixation devices include products such as nails, plates, screws, pins and wires designed to stabilize traumatic bone injuries. These devices are used by orthopedic surgeons to provide an accurate means of setting and stabilizing fractures and for other reconstructive procedures. They are intended to aid in the healing process and may be removed when healing is complete. Internal fixation devices are not intended to replace normal body structures.

The Company develops, manufactures and/or distributes innovative products that fit into key segments of the fixation marketplace. The VHS^® Vari-Angle Hip Fixation System is used primarily in the treatment of hip fractures. The components of the VHS^® Vari-Angle Hip Fixation System can be adjusted intraoperatively, allowing the hospital to carry less inventory, while providing greater intraoperative flexibility to achieve the optimum fixation angle.

Biomet Trauma markets several nail systems including the Holland^™ Nail System, which is a single, universal trochanteric nail designed to treat all types of femoral (hip or thigh) fractures. One of Biomet Trauma’s premier products, the Biomet^® Peritrochanteric Nail System, incorporates an innovative single lag screw concept and utilizes a trochanteric entry point. In conjunction with the VHS^® System and the Holland^™ Nail System, the Biomet^® Peritrochanteric Nail System further augments the Company’s product portfolio for hip fracture fixation treatment.

The Biomet^® Low Profile Tibial Nail, used to treat fractures between the knee and ankle, is primarily indicated in the treatment of unstable or nonunion fractures. The Biomet^® Ankle Arthrodesis Nail is designed for reconstructive procedures where internal fixation is desired for fusion of the ankle joint. Nailing products introduced during fiscal year 2007 were the Biomet^® Pediatric Locking Nail (PLN) and the Biomet^® WIN^™ Flexible Nail to complement Biomet Trauma’s pediatric product line. The PLN customizable locking nail was designed to provide stable fixation of femur fractures in children. The WIN^™ Nail is manufactured of titanium alloy and is intended to treat a variety of long bone fractures.

The Company has also implemented several projects in the area of locked plating designs. The OptiLock^® Distal Radius Plating System was designed using state-of-the-art locking technology and incorporates plates and screws that address volar, radial and dorsal plating applications. The OptiLock^® Periarticular Plating System is a unique, pre-contoured plating system designed for fixation of periarticular lower extremity fractures. The system incorporates patent-pending SphereLock^™ technology that allows the surgeon to utilize locked or unlocked screws in various diameters through any hole in the plate, while incorporating minimally-invasive techniques. Biomet Trauma continued to rollout the OptiLock^® Proximal Tibial Plating System throughout fiscal year 2007. The Company continues to receive positive feedback from surgeons regarding this system, which was initially introduced during the first quarter of fiscal year 2007. During the first quarter of fiscal year 2008, the Company plans to introduce the OptiLock^® Distal Femoral Plating System and the Distal Tibial Plating System to complete its offering of periarticular plates, addressing a variety of simple and complex fractures.

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During the first quarter of fiscal year 2008, Biomet Trauma plans to introduce the VPC^™ (Variable Pitch Compression) Screw System. This system features headless stainless steel implants with a variable pitch designed to provide compression and stable fixation of small bone fragments. The VPC^™ System is primarily used for the fixation of scaphoid fractures and has proved useful in a variety of other applications, including small joint arthrodesis and intra-articular fracture fixation of other small bones in the wrist, hand and forefoot.

During fiscal year 2008, the Company intends to continue to make innovative improvements in hip fracture, locked plating, external fixation and intramedullary fixation devices to enhance the Company’s portfolio of fixation implants for the trauma marketplace.

Craniomaxillofacial Fixation Systems. The Company manufactures and distributes craniomaxillofacial, neurosurgical, and thoracic titanium and resorbable implants, along with associated surgical instrumentation, principally marketed to craniomaxillofacial, neurosurgical, plastic, ear/nose/throat, pediatric and cardiothoracic surgeons through its subsidiary, Biomet Microfixation, Inc. The Company also offers specialty craniomaxillofacial surgical instruments, HTR-PMI^® Hard Tissue Replacement for repair of severe cranial defects, and the Mimix^® Bone Substitute Material for use in craniomaxillofacial and neurosurgical applications.

Biomet Microfixation manufactures and markets the LactoSorb^® Fixation System of resorbable plates and screws comprised of a copolymer of poly-L-lactic acid and polyglycolic acid. As a result of its innovative design, the LactoSorb^® System is comparable in strength to titanium plating systems at its initial placement and is resorbed within 9 to 15 months after implantation. The LactoSorb^® System is especially beneficial in pediatric reconstruction cases by eliminating the need for additional surgery to remove the plates and screws.

Biomet Microfixation plans to introduce Allogenix^™ Plus bone graft material during fiscal year 2008. This biomaterial combines the lecithin-based Allogenix^™ Demineralized Bone Matrix with ProOsteon^® granules, resulting in an improved bone graft material. By combining a scaffold with an osteoinductive source into one product, there will not be a need to subject the patient to a second procedure in order to harvest bone chips for use as a scaffold. This also results in an economic benefit due to the reduction in operating room time that can be realized.

Bone Substitute Materials. When presented with a patient demonstrating a bone defect, such as a fractured bone or bone loss due to removal of a tumor, the treating surgeon may remove a portion of bone from the patient at a second site to use as a graft to induce healing at the site of the defect. Bone substitute materials eliminate the pain created at a graft site, as well as the costs associated with this additional surgical procedure. Depending on the specific use of the bone substitute material, it can have reconstructive, fixation or spinal applications.

Spinal Products

The Company’s spinal products include electrical stimulation devices for spinal applications, spinal fixation systems, bone substitute materials and motion preservation systems, as well as allograft services for spinal applications. These products and services are primarily marketed in the United States under the Biomet Spine tradename.

Spinal Fusion Stimulation Systems. Spinal fusions are surgical procedures undertaken to establish bony union between adjacent vertebrae. The Company distributes both non-invasive and implantable electrical stimulation units that surgeons can use as options to provide an appropriate adjunct to surgical intervention in the treatment of spinal fusion applications. The Company has assembled extensive preclinical research documenting the Mechanism of Action for the technology utilized in its spinal fusion stimulation systems.

The SpinalPak^® II Spine Fusion Stimulator utilizes capacitive coupling technology to encourage fusion incorporation. The Mechanism of Action behind the capacitive coupling stimulation technology involves the stimulation of osteopromotive factors that modulate normal bone healing, such as TGF-ß1 and PGE2. The unit consists of a small, lightweight generator worn outside the body that is connected to wafer-thin electrodes applied over the fusion site. The SpinalPak^® II System is patient friendly, enhancing comfort whether the patient is standing, sitting or reclining, and optimizes compliance with the treatment regimen to enhance fusion success.

The surgically implanted SpF^® Spinal Fusion Stimulator consists of a generator that provides a constant direct current to titanium cathodes placed where bone growth is required. The Mechanism of Action behind the Company’s direct current stimulation technology involves the stimulation of a number of osteoinductive growth factors including BMP-2, -6 and -7 and the BMP-2 receptor ALK2, which are normal physiological regulators of various stages of bone healing, including chondrogenesis and osteogenesis. The SpF^® Stimulator has exhibited a 50% increase in fusion success rates over fusions with autograft alone. The SpF^® MINI is a smaller SpF^® Stimulator, designed to enhance patient comfort and physician pre-implant testing and implantation.

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Spinal Fixation Systems. The Company markets spinal fixation products for various spinal fusion applications. The Company’s Synergy^™ System, which has been on the market since 1992, is a complete system capable of addressing both degenerative and deformity indications. It is available in both stainless steel and titanium versions, offering 4.75mm and 6.35mm rod diameters, as well as a full complement of screws ranging from 4.0mm to 8.0mm in both fixed and polyaxial styles. The Synergy^™ System also contains a full offering of hooks in a wide variety of styles and sizes. A more recent introduction in this market is the Array^® Spinal System, which has a single locking setscrew featuring V-Force^™ Thread Technology designed to enhance the intraoperative ease of use for the surgeon. During fiscal year 2006, the Company launched the Array^® Deformity Spine System, which includes various styles of screws, hooks and rods for scoliosis correction. The most recent product offering in this area is the Polaris^™ System, which is a top-loading, inner tightening thoracolumbar system utilizing a patented closing mechanism known as a Helical Flange^™. This feature helps prevent cross threading and seat splay, simplifying the implant closing procedure for the surgeon. Currently, the Polaris^™ System is available in titanium, in 6.35mm and 5.5mm rod diameters, with both fixed and polyaxial screws ranging in size from 4.0 to 7.0mm. The Company also markets the Structure System, which utilizes various kinds of fixation washers used to secure screws to the vertebral body for an anterior screw/rod construct. In the thoracolumbar fusion area, the Company markets the Biomet^® Omega 21^™ Spine System. This system features a unique multidirectional coupler and expandable screw. The Company also markets the SpineLink^®-II Spinal Fixation System, which addresses many of the inherent limitations of traditional rod and plate systems by linking each spine segment individually for intrasegmental control. Through the use of a modular titanium link and polydirectional screw, this unique system provides an intrasegmental option for spine fixation, enabling the surgeon to tailor the segmental construction to the patient’s anatomy.

The Company offers a variety of spacer products for the thoracolumbar market segment. The Ionic^® Spine Spacer System, for use with the Omega 21^™ Spine System or SpineLink^®-II Spinal Fixation System, features an open design that allows for optimal bone graft placement and bone ingrowth, along with the additional benefit of excellent postoperative x-ray visualization. The GEO Structure^® family features various sizes and shapes, including ovals, straight rectangles and bent rectangles. The Geo Structure^® family of products are produced from cast titanium, offering a maximum amount of space inside the implant, with a minimum amount of material, resulting in excellent strength characteristics and imaging capabilities. The Solitaire^™ System is a stand-alone device for anterior indications. The TPS^™ Telescopic Plate Spacer is a unique implant indicated for trauma and tumor pathologies of the thoracolumbar spine. This implant is designed as a combination of a plate and spacer that is expandable, allowing the surgeon to fit the implant to the defect. The Company also offers the ESL^® (Elliptically Shaped Lumbar) and Ibex^™ thoracolumbar spacers. Both of these spacers are endplate-sparing designs, reducing the risk of subsidence. In addition, both the ESL^® and Ibex^™ Systems are open to permit ample space for bone graft placement and growth. The ESL^® System features an elliptical shape offering optimal surface contact with the vertebral body endplates. The Ibex^™ implant is curved to conform to the anatomical shape of the vertebral body. Additionally, the beveled corners of the Ibex^™ implant facilitate ease of use for the surgeon during implantation. The ESL^® and Ibex^™ thoracolumbar spacers are both available with a PEEK-OPTIMA^® implant option for increased radiographic fusion assessment.

For cervical applications, the VueLock^® Anterior Cervical Plate System offers surgeons several important benefits. The open design of the VueLock^® System provides surgeons with enhanced visualization of the bone graft both during the actual surgical procedure and postoperatively on x-ray. The Company also offers the C-TEK^® Anterior Cervical Plate System, which offers a constrained, semi-constrained or a completely rigid construct, depending on the surgeon’s preference. Made from titanium, the C-TEK^® Anterior Cervical Plate System offers both fixed and variable screws in a wide variety of diameters and lengths. This system also features a unique locking mechanism to prevent screw back out. For posterior cervical procedures, the Company offers the Altius M-INI^™ System, which offers top loading, inner tightening, polyaxial screws as well as hooks for the cervico-thoracic spine. The Altius M-INI^™ System features a 3.5mm rod and a wide variety of screws ranging in diameter from 3.5mm to 4.5mm. Occipital fixation is also available with the Altius M-INI^™ System, featuring a low profile plate that is placed independently from the rod, allowing for easier assembly and less rod contouring.

Minimally-invasive spine surgery is of growing interest in the practice of many spine surgeons. Traditional, open surgical approaches to the spine for discectomy, fusion and fixation have brought with them lengthy postoperative healing and rehabilitation issues. A minimally-invasive approach to spine surgery has demonstrated less morbidity, minimal blood loss and further benefits such as a shorter hospital stay. In the minimally-invasive surgery market, the Company markets the VuePASS^™ Portal Access Surgical System, which offers spine surgeons an optimized balance between the current limitations of competitive percutaneous systems and traditional successful open techniques. Under direct visualization for a posterior lumbar approach, the VuePASS^™ System allows for traditional open techniques through a minimally-invasive cannula access system.

To address the vertebral body compression fracture market, the Company offers two systems designed for the delivery of materials to weakened bony structures, including the CDV^™ and LP^2™ Delivery Systems. Through a series of dilating cannulae and various instruments, the systems allow the surgeon to access the anatomy through a percutaneous approach and safely deliver high viscosity material under low, controlled pressure. The CDV^™ Delivery System offers the ability to biopsy before delivery. During fiscal year 2008, the Company expects to introduce Cobalt^™ V Bone Cement for vertebroplasty applications.

Bone Substitute Materials. Traditional spinal fixation surgery includes the use of a spinal fixation device in conjunction with a bone substitute or bone graft material to increase the likelihood of successful bone fusion. Pro Osteon^® 200R and Pro Osteon^® 500R are bone graft substitutes made from marine coral. Both are a resorbable combination of hydroxyapatite and calcium carbonate that is resorbed and replaced with natural bone during the healing process. Pro Osteon^® 200R is available as granules. Pro Osteon^® 500R is available in granules and blocks.

Helical Flange^™ is a trademark of the Jackson Group.

PEEK-OPTIMA^® is a registered trademark of Invibio, Ltd.

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The Biomet^® DBM (Demineralized Bone Matrix) Putty, derived exclusively from human bone, can be used with a variety of substances, such as bone substitute material, machined allograft, autograft and platelet rich plasma, to enhance the surgeon’s treatment options. The Company also has available the InterGro^® line of DBM products (InterGro^® Paste, InterGro^® Putty and InterGro^® Plus). The InterGro^® DBM products use lecithin as a carrier, which is a natural lipid carrier that is resistant to breakdown by bodily fluids, temperature or aggressive irrigation.

During fiscal year 2007, Biomet Spine launched PlatFORM DBM, an osteoconductive, osteoinductive and osteogenic matrix. This material consists of freeze-dried, highly flexible and pliable sheets of demineralized bone matrix putty for use as a bone void filler. PlatFORM DBM can be utilized alone or in combination with autologous bone or other forms of allograft and can be rehydrated with bone marrow aspirate for use in posterolateral spine fusions. This matrix has no synthetic additives, eliminating any surgeon concern regarding toxicity of certain carriers currently used in other DBMs.

Precision Machined Allograft. Many spinal fusion procedures, in both the lumbar and cervical spine, involve interbody spinal fusion. Surgeons often utilize precision machined allograft spacers to fuse the interbody space. The Company provides services related to the OsteoStim^® Cervical Allograft Spacer for anterior cervical interbody fusions, the OsteoStim⁹ ALIF Allograft Spacer for anterior lumbar interbody fusions and the OsteoStim^® PLIF Allograft Spacer for posterior lumbar interbody fusions, depending on the surgical approach. All three systems are lordotic in shape, have serrated teeth on the top and bottom for added stability, are offered in various heights and have specific instrumentation to facilitate implantation.

Motion Preservation Products. An IDE study for the Regain^® Disc began in the United States during fiscal year 2007. The Regain^® Lumbar Artificial Disc is a one-piece pyrocarbon artificial disc nucleus replacement. The pyrocarbon material has a high level of strength, is biocompatible and extremely resistant to wear. In addition, Biomet Spine is developing the Rescue^™ Cervical Disc Replacement product and the Min-T^™ Lumbar Artificial Disc for total lumbar disc replacement procedures.

Other Products

The Company also manufactures and distributes several other products, including orthopedic support products (also referred to as softgoods and bracing products), arthroscopy products, operating room supplies, casting materials, general surgical instruments, wound care products and other surgical products. The Company manufactures and markets a line of arthroscopy products through its Biomet Sports Medicine, Inc. subsidiary.

Arthroscopy Products. Arthroscopy is a minimally-invasive orthopedic surgical procedure in which an arthroscope is inserted through a small incision to allow the surgeon direct visualization of the joint. This market is comprised of five product categories: power instruments, manual instruments, visualization products, soft tissue anchors, and procedure-specific instruments and implants. The Company’s principal products consist of the EZLoc^™ Femoral Fixation Device, the WasherLoc^™ Tibial Fixation Device, LactoSorb^® resorbable arthroscopic fixation products, the ALLThread^™ Suture Anchor and the InnerVue^™ Diagnostic Scope System, which utilizes a needle scope to diagnose knee and shoulder conditions in a physician’s office.

During fiscal year 2007, Biomet Sports Medicine signed an agreement with Marc Tec to license more than 45 patents with applications in sports medicine and arthroscopy. This agreement is expected to lead to the improvement of existing products and allow the Company to introduce unique, innovative products into the sports medicine market.

Biomet Sports Medicine also signed an exclusive marketing and distribution agreement with Kensey Nash for OrthoFill^™, a proprietary resorbable bone void filler during fiscal year 2007. Further, Biomet Sports Medicine and Kensey Nash have agreed to work together to advance the research and development of Kensey Nash’s cartilage repair matrix to produce an improved clinical solution for articular cartilage defects.

Orthopedic Support Products. The Company distributes a line of orthopedic support products under the Biomet Bracing name, including back braces, knee braces and immobilizers, wrist and forearm splints, cervical collars, shoulder immobilizers, slings, abdominal braces, ankle supports and a variety of other orthopedic splints. Sales of these softgoods and bracing products are assisted by the S.O.S.^SM Support-on-Site stock and bill program, which handles the details of product delivery for the healthcare provider.

Product Development

The Company’s research and development efforts are essentially divided into two categories: innovative new technology and evolutionary developments. Most of the innovative new technology development efforts are focused on biomaterial products, and are managed at the corporate level and take place primarily in Warsaw, Indiana. Evolutionary developments are driven primarily by the individual subsidiaries and include product line extensions and improvements.

The Company continues to aggressively conduct internal research and development efforts to generate new marketable products, technologies and materials. In addition, the Company is well positioned to take advantage of external acquisition and development opportunities. An important component of the Company’s strategy has been the formation of strategic alliances to enhance the development of new musculoskeletal products.

OrthoFill^™ is a trademark of Kensey Nash Corporation.

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For the years ended May 31, 2007, 2006 and 2005, the Company expended approximately $94,416,000, $84,988,000, and $80,213,000, respectively, on research and development. It is expected that ongoing research and development expenses will continue to increase. The Company’s principal research and development efforts relate to its orthopedic reconstructive devices, spinal fixation products, revision orthopedic reconstructive devices, dental reconstructive devices, arthroscopy products, resorbable technology, biomaterial products and autologous therapies.

The Company’s research and development efforts have produced more than 700 new products and services during the last eight fiscal years. During fiscal year 2008, the Company intends to release numerous new products, product line extensions and improvements.

Government Regulation

Most aspects of the Company’s business are subject to some degree of government regulation in the countries in which its operations are conducted. It has always been the practice of the Company to comply with all regulatory requirements governing its products and operations and to conduct its affairs in an ethical manner. This practice is reflected in the Company’s Code of Business Conduct and Ethics and through the responsibility of the Audit Committee of the Board of Directors to review the Company’s systems of internal control, its process for monitoring compliance with laws and regulations and its process for monitoring compliance with its Code of Business Conduct and Ethics. For some products, and in some areas of the world such as the United States, Canada, Japan and Europe, government regulation is significant and, in general, there appears to be a trend toward more stringent regulation throughout the world, as well as global harmonization of various regulatory requirements. The Company devotes significant time, effort and expense to addressing the extensive government and regulatory requirements applicable to its business. Governmental regulatory actions can result in the recall or seizure of products, suspension or revocation of the authority necessary for the production or sale of a product, and other civil and criminal sanctions. The Company believes that it is no more or less adversely affected by existing government regulations than are its competitors.

In the United States, the development, testing, marketing and manufacturing of medical devices are regulated under the Medical Device Amendments of 1976 to the Federal Food, Drug and Cosmetic Act, the Safe Medical Devices Act of 1990, the FDA Modernization Act of 1997, the Medical Device User Fee and Modernization Act of 2002 and additional regulations promulgated by the FDA and various other federal, state and local agencies. In general, these statutes and regulations require that manufacturers adhere to certain standards designed to ensure the safety and efficacy of medical devices and related medical products.

The Company believes it is well positioned to face the changing international regulatory environment. The International Standards Organization (“ISO”) has an internationally recognized set of standards aimed at ensuring the design and manufacture of quality products. A company that has passed an ISO audit and obtained ISO certification applicable to its activity sector is internationally recognized as having quality manufacturing processes. The European Union legislation requires that medical devices bear a CE mark. The CE mark is a European Union and European Free Trade Association symbol, which indicates that the product adheres to European Medical Device Directives. Compliance with ISO quality systems standards is one of the requirements for placing the CE mark on the Company’s products. Each of the Company’s principal manufacturing facilities has been certified to ISO 13485:2003. Each of the Company’s products sold in Europe bears the CE mark, with the exception of custom-made implants that do not require a CE mark. The EU has recently reclassified Biomet’s total joint products to Class III via Directive 2005/50/EC and the Company is in the process of complying with this Directive.

In addition, governmental bodies in the United States and throughout the world have expressed concern about the costs relating to healthcare and, in some cases, have focused attention on the pricing of medical devices. Government regulation regarding pricing of medical devices already exists in some countries and may be expanded in the United States and other countries in the future. The Company is subject to increasing pricing pressures worldwide as a result of growing regulatory pressures, as well as the expanding predominance of managed care groups and institutional and governmental purchasers. Under Title VI of the Social Security Amendments of 1983, hospitals receive a predetermined amount of Medicare reimbursement for treating a particular patient based upon the patient’s type of illness identified with reference to the patient’s diagnosis under one or more of several hundred diagnosis-related groups (“DRGs”). Other factors affecting a specific hospital’s reimbursement rate include the size of the hospital, its teaching status and its geographic location.

While the Company is unable to predict the extent to which its business may be affected by future regulatory developments, it believes that its substantial experience in dealing with governmental regulatory requirements and restrictions throughout the world, its emphasis on efficient means of distribution and its ongoing development of new and technologically-advanced products should enable it to continue to compete effectively within this increasingly regulated environment.

Sales and Marketing

The Company believes that sales of its products are currently affected and will continue to be positively affected by favorable demographic trends and a shift toward a preference for technologically-advanced products. The demand for musculoskeletal products continues to grow, in part, as a result of the aging of the baby boomer population in the United States. The U.S. Census Bureau projections indicate that the population aged 55 to 75 years is expected to grow 36% to approximately 70 million people by the year 2017. Moreover, the age range of potential patients is expanding outside the traditional 55 to 75 year range, as procedures are now being recommended for younger patients and as elderly patients are remaining healthier and more active than in past generations. The Company has also observed a trend toward a demand

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for technologically-advanced products that are simple to use and cost effective, while applying state-of-the-art solutions to the demands of the increasingly active patient. The Company believes it has firmly positioned itself as a surgeon advocate and has worked to promote the right of the surgeon to prescribe the medical treatment best suited to the needs of the individual patient.

The Company has diligently worked to attract and retain qualified, well-trained and motivated sales representatives. The breadth of the Company’s product offering and the quality of its salesforces collaborate to create synergies that uniquely position the Company to continue to efficiently penetrate the musculoskeletal market. In the United States, the Company’s products are marketed by a combination of independent commissioned sales agents and direct sales representatives, based on the specific product group being represented. In an effort to ensure the continuity of its relationships with the independent third-party distributors who represent Biomet Orthopedics, Inc., the Company incurred expenses of $39,200,000 and approximately $33,000,000 in fiscal year 2007 and the first quarter of fiscal year 2008, respectively, which negatively affected its results of operations for these periods. The Company does not expect to incur additional significant expenses related to modifying these relationships subsequent to the first quarter of fiscal year 2008. In Europe, the Company’s products are promoted by sales representatives employed by subsidiaries, independent third-party distributors, and some independent commissioned sales agents, based primarily on the geographic location. In the rest of the world, the Company maintains direct selling organizations in ten countries, as well as independent commissioned sales agents and independent third-party distributors in other key markets. In aggregate, the Company’s products are marketed by more than 2,700 sales representatives throughout the world.

Elective surgery-related products appear to be influenced to some degree by seasonal factors, as the number of elective procedures declines during the summer months and the winter holiday season.

The Company’s customers are the hospitals, surgeons, other physicians and healthcare providers who use its products in the course of their practices. The business of the Company is dependent upon the relationships maintained by its distributors and salespersons with these customers, as well as the Company’s ability to design and manufacture products that meet the physicians’ technical requirements at a competitive price.

For the fiscal years ended May 31, 2007, 2006 and 2005, the Company’s foreign sales aggregated $800,953,000, $700,626,000 and $641,223,000, respectively, or 38%, 35% and 34% of net sales, respectively. Major international markets for the Company’s products are Western Europe, Asia Pacific, Australia, Canada and Latin America. The Company’s business in these markets is subject to pricing pressures and currency fluctuation risks. During fiscal year 2007, foreign sales were positively impacted by $38 million due to foreign currency translations. As the Company continues to expand in key international markets, it faces obstacles created by competition, governmental regulations and regulatory requirements. Additional data concerning net sales to customers, operating income, long-lived assets, capital expenditures and depreciation and amortization by geographic areas are set forth in Note L of the Notes to Consolidated Financial Statements included in Item 8 of this report and are incorporated herein by reference.

The Company has inventory located throughout the world with its customers, its distributors and direct salespersons for their use in marketing its products and in filling customer orders. As of May 31, 2007, inventory of approximately $177,506,000 was located with these distributors, salespersons and customers.

Competition

The business of the Company is highly competitive. Competition within the industry is primarily based on service, clinical results and product design, although price competition is an important factor as healthcare providers continue to be concerned with costs. Major competitors in the Company’s four major market segments are set forth below by market segment.

Reconstructive Products

The Company’s orthopedic reconstructive devices compete with those offered by DePuy, Inc. (a subsidiary of Johnson & Johnson), Smith & Nephew plc, Stryker Orthopaedics (a division of Stryker Corp.) and Zimmer, Inc. (a subsidiary of Zimmer Holdings, Inc.). Management believes these four companies, together with Biomet, have the predominant share of the global orthopedic reconstructive device market. The Company believes that its prices for orthopedic reconstructive devices are competitive with those in the industry. The Company believes its future success will depend upon, among other things, its service and responsiveness to its distributors and orthopedic specialists, the continued excellent clinical results of its products, and upon its ability to design and market innovative and technologically-advanced products that meet the needs of the marketplace.

The Company’s dental reconstructive products compete in the areas of dental reconstructive implants and related products. The primary competitors in the dental implant market include Nobel Biocare AB, Straumann AG, Zimmer Dental (a subsidiary of Zimmer Holdings, Inc.) and Astra Tech (part of the AstraZeneca Group).

Fixation Devices

The Company’s electrical stimulation devices primarily compete with those offered by Orthofix, Inc. (a subsidiary of Orthofix International N.V.), DJO Inc. (formerly dj Orthopedics, Inc.) and Smith & Nephew plc. Competition in the electrical stimulation market is on the basis of product design, service, price and success rates of various treatment alternatives.

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The Company’s external and internal fixation devices compete with other such devices primarily on the basis of price, ease of application and clinical results. The principal competitors in the external fixation market are Smith & Nephew plc, Stryker Trauma (a division of Stryker Corp.), Synthes, Inc. and Orthofix, Inc. (a subsidiary of Orthofix International N.V.). The Company’s internal fixation product lines compete with those of Synthes, Inc., DePuy, Inc. (a Johnson & Johnson Company), Zimmer, Inc. (a subsidiary of Zimmer Holdings, Inc.), Smith & Nephew plc and Stryker Trauma (a division of Stryker Corp.).

Spinal Products

The Company’s spinal fixation systems compete with other spinal fixation systems primarily on the basis of breadth of product line, product recognition and price. The principal competitors in this area are Medtronic Sofamor Danek, Inc. (a subsidiary of Medtronic, Inc.), DePuy Spine (a Johnson & Johnson Company), Synthes, Inc., Stryker Spine (a division of Stryker Corp.), Zimmer Spine (a subsidiary of Zimmer Holdings, Inc.) and others.

Other Products

The Company’s craniomaxillofacial fixation products, specialty surgical instrumentation and neurosurgical cranial flap fixation products compete with those offered by Synthes, Inc., Stryker Leibinger Micro Implants (a division of Stryker Corp.), KLS-Martin, L.P., Osteomed Corp., Aesculap, Inc., Medtronic, Inc. and Codman (a Johnson & Johnson Company).

The Company’s arthroscopy products compete primarily in the areas of procedure-specific implants and instruments, manual instruments and power instruments. Competitors include Smith & Nephew Endoscopy (a division of Smith & Nephew plc, Stryker Corp, Linvatec Corp. (a subsidiary of CONMED Corporation), Mitek (a division of Ethicon, a Johnson & Johnson Company), Arthrocare Corp., and Arthrex, Inc.

The Company’s orthopedic support products consist primarily of back braces, knee braces and immobilizers, wrist and forearm splints, cervical collars, shoulder immobilizers, slings, abdominal braces and ankle supports that compete with those offered by Orthofix, Inc. (a subsidiary of Orthofix International N.V.), DJO Inc. (formerly dj Orthopedics, Inc.) and Ossur. Competition in the bracing market is on the basis of product design, service and price.

Raw Materials and Supplies

The raw materials used in the manufacture of the Company’s orthopedic reconstructive devices are principally nonferrous metallic alloys, stainless steel and polyethylene powder. With the exception of limitations on the supply of polyethylene powder, none of the Company’s raw material requirements are limited to any material extent by critical supply or single origins. The demand for certain raw materials used by the Company, such as cobalt-chromium alloy and titanium may vary. The primary buyers of these metallic alloys are in the aerospace industry. If the demands of the aerospace industry should increase dramatically, the Company could experience complications in obtaining these raw materials. However, based on its current relationship with its suppliers, the Company does not anticipate a material shortage in the foreseeable future. Further, the Company believes that its inventory of raw materials is sufficient to meet any short-term supply shortages of metallic alloys. The results of the Company’s operations are not materially dependent on raw material costs.

The Company purchases all components of its electrical stimulators from approximately 190 outside suppliers, approximately 15 of whom are the single source of supply for the particular product. In most cases, the Company believes that all components are replaceable with similar components. In the event of a shortage, there are alternative sources of supply available for all components, but some time would likely elapse before the Company’s orders could be filled.

Coral is the primary raw material utilized to manufacture certain of the Company’s Pro Osteon^® products. The coral used in Pro Osteon^® products is sourced from two genera located in a variety of geographic locations. The Company’s primary source of coral has historically been the tropical areas of the Pacific and Indian Oceans. Although the Company obtains its coral from a single source supplier, for which an alternate supplier has not been identified, the Company believes that it has an adequate supply of coral for the foreseeable future.

The Company purchases all materials to produce its dental products from approximately 95 suppliers, approximately 87 of whom are the single source of supply for the particular product. The Company believes that, in the event of a shortage, there are readily available alternative sources of supply for single-source products, and maintains an inventory of materials sufficient to meet any short-term shortages of supply.

Employees

As of May 31, 2007, the Company’s domestic operations (including Puerto Rico) employed approximately 4,254 persons, of whom approximately 2,215 were engaged in production and approximately 2,039 in research and development, sales, marketing, administrative and clerical efforts. The Company’s international subsidiaries employed approximately 2,252 persons, of whom approximately 1,132 were engaged in production and approximately 1,120 in research and development, sales, marketing, administrative and clerical efforts. None of the Company’s principal domestic manufacturing employees is represented by a labor union. The production employees at its Bridgend, South Wales facility are organized. Employees working at the facilities in Germany; Valence, France; and Valencia, Spain are represented by statutory Workers’ Councils which negotiate labor hours and termination rights. The Workers’ Councils do not directly represent such employees with regard to collective bargaining of wages or benefits. The Company believes that its relationship with all of its employees is satisfactory.

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The establishment of Biomet’s domestic orthopedic reconstructive manufacturing operations in north central Indiana, near other members of the orthopedic industry, provides access to the highly skilled machine operators required for the manufacture of Biomet^® products. The Company’s European manufacturing locations in South Wales, England, France, Spain, Sweden and Germany also provide good sources for skilled manufacturing labor. The Company’s Puerto Rican operations principally involve the assembly of purchased components into finished products using a skilled labor force.

Patents and Trademarks

The Company believes that patents and other intellectual property will continue to be of importance in the musculoskeletal industry. Accordingly, management continues to protect technology developed internally and to acquire intellectual property rights associated with technology developed outside the Company. Management enforces its intellectual property rights consistent with the Company’s strategic business objectives. The Company does not believe that it has any single patent or license (or series of patents or licenses) that is material to its operations. The Company is not aware of any single patent that, if lost or invalidated, would be material to its consolidated revenues or earnings. The Company currently has more than 1,200 patents and in excess of 650 pending patent applications.

BIOMET is the Company’s principal registered trademark throughout the world, and registrations have been obtained or are in process with respect to various other trademarks associated with the Company’s products. Unless otherwise noted in this report, all trademarks contained herein are owned by Biomet Manufacturing Corp. or one of its affiliates.

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EXECUTIVE OFFICERS OF THE REGISTRANT

The name, age, business background, positions held with the Company and tenure as an executive officer of each of the Company’s executive officers as of July 17, 2007 are set forth below. No family relationship exists among any of the executive officers. Except as otherwise stated, each executive officer has held the position indicated during the last five years. Executive officers are elected annually by the Board to serve for one year and until their successors are elected, subject to resignation, retirement or removal.

Name, Age and Business Experience	Served as Executive Officer Since	Current Position(s) with the Company
Jeffrey R. Binder, 44 President and Chief Executive Officer since February 2007. Prior thereto, he served as Senior Vice President of Diagnostic Operations of Abbott Laboratories from January 2006 to February 2007. He previously served as President of Abbott Spine from June 2003 to January 2006, and President and Chief Executive Officer of Spinal Concepts from 2000 until June 2003.	2007	President and Chief Executive Officer of Biomet, Inc.
Daniel P. Florin, 43
Senior Vice President and Chief Financial Officer since June 5, 2007. Prior thereto, he served as Vice President and Corporate Controller for Boston Scientific Corporation since 2001. Prior to being appointed as Corporate Controller in 2001, he served in financial leadership positions within Boston Scientific Corporation and various business units since July 1995.	2007	Senior Vice President and Chief Financial Officer
J. Pat Richardson, 47 Corporate Vice President – Finance since June 7, 2007. Prior thereto, he served as Vice President – Finance, Interim Chief Financial Officer and Treasurer of Biomet, Inc. since April 2007. Prior thereto, Mr. Richardson served in financial leadership positions within various Johnson & Johnson business units (Cordis: Vice President, Finance – Cardiology from August 2000 to April 2007 and Group Controller–Cardiology from April 2004 to August 2006; DePuy Orthopaedics: Vice President, Finance – Orthopaedics from June 1997 to April 2004.	2007	Corporate Vice President – Finance
James W. Haller, 50 Controller and Vice President – Finance of Biomet Orthopedics, Inc. since June 2001.	1991	Controller of Biomet, Inc. and Vice President – Finance of Biomet Orthopedics, Inc.
Roger P. van Broeck, 58 Senior Vice President of Biomet, Inc. since June 7, 2007. Prior thereto, he served as Vice President since July 2004, and President of Biomet Europe since March 2004. Prior thereto Chief Executive Officer of BioMer C.V. and Biomet Merck B.V.	2004	Senior Vice President of Biomet, Inc. and President of Biomet Europe
Steven F. Schiess, 47 Senior Vice President of Biomet, Inc. since June 7, 2007. Prior thereto, he served as Vice President and President of Implant Innovations, Inc. since June 2005. Prior thereto, Senior Vice President, Sales and Marketing of Implant Innovations, Inc.	2005	Senior Vice President of Biomet, Inc. and President of Biomet 3i, Inc. (formerly Implant Innovations, Inc.)
Bradley J. Tandy, 48 Senior Vice President, General Counsel and Secretary since April 2007. Prior thereto, he served as Senior Vice President, Acting General Counsel and Secretary from January 2007 to April 2007 and Senior Vice President, Acting General Counsel, Secretary and Corporate Compliance Officer from March 2006 to January 2007. He previously served as Vice President, Assistant General Counsel and Corporate Compliance Officer.	2006	Senior Vice President, General Counsel and Secretary of Biomet, Inc.

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EXECUTIVE OFFICERS OF THE REGISTRANT, continued

Name, Age and Business Experience	Served as Executive Officer Since	Current Position(s) with the Company
Thomas R. Allen, 54 President of Biomet International since June 2006. Prior thereto, he served as Vice President - The Americas and Asia Pacific for Biomet Orthopedics, Inc.	2006	President of Biomet International
Richard J. Borror, 48 Senior Vice President, Operations since June 7, 2007. Prior thereto, he served as Chief Information Officer and Corporate Vice President for Manufacturing since April 2006. Corporate Vice President for Manufacturing from December 2005 to April 2006. Prior thereto, Vice President - Manufacturing for Biomet Manufacturing Corp.	2006	Senior Vice President, Operations
Gregory W. Sasso, 45 Senior Vice President, Biomet and President, Biomet SBU Operations since June 7, 2007. Prior thereto, he served as Senior Vice President – Corporate Development and Communications since June 2006. Prior thereto, Vice President – Corporate Development and Communications of Biomet, Inc.	2006	Senior Vice President, Biomet and President, Biomet SBU Operations
Darlene Whaley, 50 Senior Vice President – Human Resources since June 2006. Prior thereto, Vice President – Human Resources.	2006	Senior Vice President – Human Resources of Biomet, Inc.
William C. Kolter, 49 Senior Vice President, Biomet Orthopedics Commercial Operations since June 7, 2007. Prior thereto, he served as President, Biomet Orthopedics, Inc. since December 2005. Prior thereto, Vice President – Marketing of Biomet Orthopedics, Inc.	2006	Senior Vice President, Biomet Orthopedics Commercial Operations
Glen A. Kashuba, 44 Senior Vice President and President of Biomet Trauma & Biomet Spine since April 2007. Prior thereto, Mr. Kashuba served as Worldwide President of Cordis Endovascular, a division of Johnson & Johnson. Mr. Kashuba had been with Johnson & Johnson since 1998, also holding the positions of Worldwide President of Codman Neuro Science (from December 2002 to November 2005) and U.S. President of DePuy AcroMed, now known as DePuy Spine.	2007	Senior Vice President of Biomet, Inc. and President of Biomet Trauma & Biomet Spine

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Item 1A. Risk Factors.

The following factors, among others, could cause the Company’s future results to differ from those contained in forward-looking statements made in this report and presented elsewhere by management from time to time. Such factors, among others, may have a material adverse effect on the Company’s business, financial condition and results of operations. The risks identified in this section are not exhaustive. The Company operates in a dynamic and competitive environment. New risk factors affecting the Company emerge from time to time and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the impact of all risk factors on the Company’s business or the extent to which any single factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Given these inherent risks and uncertainties, investors are cautioned not to place undue reliance on forward-looking statements as a prediction of actual results. In addition, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following discussion of the Company’s risk factors speaks only as of the date on which they were made and should be read in conjunction with the consolidated financial statements and related notes included herein. Because of these and other factors, past financial performance should not be considered an indication of future performance.

The Company’s future profitability depends on the success of the Company’s principal product lines.

Sales of the Company’s reconstructive products accounted for approximately 71% of the Company’s net sales for fiscal 2007 and approximately 68% of the Company’s net sales for fiscal 2006. The Company expects sales of reconstructive products to continue to account for a significant portion of the Company’s aggregate sales. Any event adversely affecting the sale of reconstructive products may, as a result, adversely affect the Company’s business, results of operations and financial condition.

If the Company is unable to continue to develop and market new products and technologies in a timely manner, the demand for the Company’s products may decrease or the Company’s products could become obsolete, and the Company’s revenue and profitability may decline.

The market for the Company’s products is highly competitive and dominated by a small number of large companies. The Company is continually engaged in product development, research and improvement efforts. New products and line extensions of existing products represent a significant component of the Company’s growth rate. The Company’s ability to continue to grow sales effectively depends on the Company’s capacity to keep up with existing or new products and technologies in the musculoskeletal products market. The process of obtaining regulatory approvals to market a medical device, particularly from the FDA and certain foreign governmental authorities, can be costly and time consuming and approvals and clearances might not be granted for future products on a timely basis, if at all. Delays in receipt of, or failure to obtain, approvals and clearances for future products could result in delayed realization of product revenues or in substantial additional costs that could have a material adverse effect on the Company’s business or results of operations. In addition, if the Company’s competitors’ new products and technologies reach the market before the Company’s products, they may gain a competitive advantage or render the Company’s products obsolete. The ultimate success of the Company’s product development efforts will depend on many factors, including, but not limited to, the Company’s ability to create innovative designs and materials, provide innovative surgical techniques, accurately anticipate and meet customers’ needs, commercialize new products in a timely manner and manufacture and deliver products and instrumentation in sufficient volumes on time.

Moreover, research and development efforts may require a substantial investment of time and resources before the Company are adequately able to determine the commercial viability of a new product, technology, material or other innovation. Even in the event that the Company is able to successfully develop innovations, they may not produce revenue in excess of the costs of development and may be quickly rendered obsolete as a result of changing customer preferences or the introduction by the Company’s competitors of products embodying new technologies or features.

The Company and the Company’s customers are subject to substantial government regulation and compliance with these regulations can have a material adverse effect on the Company’s business.

The medical devices the Company design, develop, manufacture and market are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. Overall, there appears to be a trend toward more stringent regulation throughout the world, and the Company does not anticipate this trend to dissipate in the near future.

In general, the development, testing, manufacture and marketing of the Company’s products are subject to extensive regulation and review by numerous governmental authorities both in the United States and abroad. The regulatory process requires the expenditure of significant time, effort and expense to bring new products to market. In addition, the Company is required to implement and maintain stringent reporting, labeling and record keeping procedures. The medical device industry also is subject to a myriad of complex laws governing Medicare and Medicaid reimbursement and health care fraud and abuse laws, with these laws and regulations being very complex and subject to interpretation. In many instances, the industry does not have the benefit of significant regulatory or judicial interpretation of these laws and regulations. In certain public statements, governmental authorities have taken positions on issues for which little official interpretation was previously available. Some of these positions appear to be inconsistent with common practices within the industry but have not previously been challenged.

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Various federal and state agencies have become increasingly vigilant in recent years in their investigation of various business practices. Governmental and regulatory actions against the Company can result in various actions that could adversely impact the Company’s operations, including:

• the recall or seizure of products;

• the suspension or revocation of the authority necessary for the production or sale of a product;

• the suspension of shipments from particular manufacturing facilities;

• the imposition of fines and penalties;

• the delay of the Company’s ability to introduce new products into the market;

• the exclusion of the Company’s products from being reimbursed by federal and state health care programs (such as Medicare, Medicaid, Veterans Administration health programs and Civilian Health and Medical Program Uniformed Service, or CHAMPUS); and

• other civil or criminal sanctions against the Company.

Any of these actions, in combination or alone, or even a public announcement that the Company are being investigated for possible violations of these laws, could have a material adverse effect on the Company’s business, results of operations and financial condition.

In many of the foreign countries in which the Company markets its products, the Company is subject to regulations affecting, among other things: clinical efficacy, product standards, packaging requirements, labeling requirements, import/export restrictions, tariff regulations, duties and tax requirements. Many of the regulations applicable to the Company’s devices and products in these countries, such as the European Medical Devices Directive, are similar to those of the FDA. In addition, in many countries the national health or social security organizations require the Company’s products to be qualified before they can be marketed with the benefit of reimbursement eligibility. Failure to receive or delays in the receipt of, relevant foreign qualifications also could have a material adverse effect on the Company’s business, results of operations and financial condition.

As both the U.S. and foreign government regulators have become increasingly stringent, the Company may be subject to more rigorous regulation by governmental authorities in the future. The Company’s products and operations are also often subject to the rules of industrial standards bodies, such as the International Standards Organization. If the Company fails to adequately address any of these regulations, the Company’s business will be harmed.

The Company, like other companies in the orthopedic industry, is involved in ongoing investigations by the U.S. Department of Justice, the results of which may adversely impact the Company’s business and results of operations.

On March 30, 2005 the Company announced that it had received a subpoena from the U.S. Department of Justice through the U.S. Attorney for the District of New Jersey requesting documents related to any consulting and professional service agreements with orthopedic surgeons using or considering the use of the Company’s hip or knee implants for the period January 2002 through March 29, 2005. The Company is aware that similar inquiries were directed to other companies in the orthopedics industry. On July 19, 2006 the Company received a letter from the U.S. Department of Justice through the U.S. Attorney for the District of New Jersey requesting additional documents further to the subpoena issued in March 2005. This letter requested additional documents related to consulting and service agreements for the time period January 1998 through the present, as well as research and other grant agreements for that same time period. Further, the letter requested that the Company provide copies of the agreements identified in the supplemental request on an on-going basis. In addition, the requested information related to Company-sponsored training events, the selection process used by the Company to identify consultants and researchers, the Company’s product design process for hip and knee implants and information on the Company’s orthopedic sales force. The Company has subsequently received additional requests for information, both informally and by subpoena.

The U.S. Attorney’s Office and the Company have recently begun discussions regarding a potential resolution of this matter. The results of any resolution remain uncertain at this time, but could, among other things, require monetary payments, cause the Company to significantly change some of its existing business practices, and include the potential for additional governmental oversight. Although the Company has cooperated and intends to continue to cooperate fully with the Department of Justice inquiry, discussions are still in preliminary stages with respect to the terms of any proposed resolution and there can be no assurance that the Company will enter into a consensual resolution of this matter with the U.S. Attorney’s Office.

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From time to time, the Company has been, and may be in the future, the subject of additional investigations. If, as a result of these investigations, the Company is found to have violated one or more applicable laws, the Company’s business, results of operations and financial condition could be materially adversely affected. If some of the Company’s existing business practices are challenged as unlawful, the Company may have to change those practices, which could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company conducts a significant amount of the Company’s sales activity outside of the United States, which subjects the Company to additional business risks and may cause the Company’s profitability to decline due to increased costs.

During fiscal 2007, the Company derived approximately $801 million, or 38% of the Company’s net sales, from sales of the Company’s products outside of the United States. The Company intends to continue to pursue growth opportunities in sales internationally, which could expose the Company to additional risks associated with international sales and operations. The Company’s international operations are, and will continue to be, subject to a number of risks and potential costs, including:

• changes in foreign medical reimbursement policies and programs;

• unexpected changes in foreign regulatory requirements;

• differing local product preferences and product requirements;

• diminished protection of intellectual property in some countries outside of the United States;

• trade protection measures and import or export licensing requirements;

• difficulty in staffing, training and managing foreign operations;

• differing legal and labor regulations;

• potentially negative consequences from changes in tax laws; and

• political and economic instability.

In addition, the Company is subject to risks arising from currency exchange rate fluctuations, which could increase the Company’s costs and may cause the Company’s profitability to decline. The U.S. dollar value of the Company’s foreign-generated revenues varies with currency exchange rate fluctuations. Measured in local currency, the majority of the Company’s foreign-generated revenues were generated in Europe. Significant increases in the value of the U.S. dollar relative to foreign currencies could have a material adverse effect on the Company’s results of operations. The Company’s consolidated net sales were positively affected by approximately 2% during fiscal 2007, as a result of the impact of foreign currency translations. At the present time, the Company does not engage in hedging transactions to protect against uncertainty in future exchange rates between any particular foreign currency and the U.S. dollar.

Any of these factors may, individually or as a group, have a material adverse effect on the Company’s business, results of operations and financial condition.

Sales may decline if the Company’s customers do not receive adequate levels of reimbursement from third-party payors for the Company’s products and if certain types of healthcare programs are adopted in the Company’s key markets.

In the United States, healthcare providers that purchase the Company’s products (e.g., hospitals, physicians, dentists and other health care providers) generally rely on payments from third-party payors (principally federal Medicare, state Medicaid and private health insurance plans) to cover all or a portion of the cost of the Company’s musculoskeletal products. These third-party payors may deny reimbursement if they determine that a device used in a procedure was not in accordance with cost-effective treatment methods, as determined by the third-party payor, or was used for an unapproved indication. Third-party payors may also decline to reimburse for experimental procedures and devices. In the event that third-party payors deny coverage or reduce their current levels of reimbursement, the Company may be unable to sell certain products on a profitable basis, thereby materially adversely impacting the Company’s results of operations. Further, third-party payors are continuing to carefully review their coverage policies with respect to existing and new therapies and can, without notice, deny coverage for treatments that may include the use of the Company’s products.

In addition, some healthcare providers in the United States have adopted, or are considering the adoption of, a managed care system in which the providers contract to provide comprehensive healthcare for a fixed cost per person. Healthcare providers in a managed care system may attempt to control costs by authorizing fewer elective surgical procedures, including joint reconstructive surgeries, or by requiring the use of the least expensive implant available. In response to these and other pricing pressures, the Company’s competitors may lower the prices for their products. The Company may not be able to match the prices offered by the Company’s competitors, thereby adversely impacting the Company’s results of operations and future prospects. Further, in the event that the United States considers the adoption of a national healthcare system in which prices are controlled and patient care is managed by the government, such regulation could have a material adverse effect on the Company’s business, results of operations and financial condition.

Outside of the United States, reimbursement systems vary significantly from country to country. In the majority of the international markets in which the Company’s products are sold, government-managed healthcare systems mandate the reimbursement rates and methods for medical devices and procedures. If adequate levels of reimbursement from third-party payors outside of the United States are not obtained, international sales of the Company’s products may decline. Many foreign markets, including Canada, and some European and Asian countries,

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have tightened reimbursement rates. The Company’s ability to continue to sell certain products profitably in these markets may diminish if the government-managed healthcare systems continue to reduce reimbursement rates.

The Company is subject to cost-containment efforts of group purchasing organizations, which may have a material adverse effect on the Company’s results of operations and financial condition.

Many customers of the Company’s products have joined group purchasing organizations in an effort to contain costs. Group purchasing organizations negotiate pricing arrangements with medical supply manufacturers and distributors, and these negotiated prices are made available to a group purchasing organization’s affiliated hospitals and other members. If the Company is not one of the providers selected by a group purchasing organization, affiliated hospitals and other members may be less likely to purchase the Company’s products, and if the group purchasing organization has negotiated a strict compliance contract for another manufacturer’s products, the Company may be precluded from making sales to members of the group purchasing organization for the duration of the contractual arrangement. The Company’s failure to respond to the cost-containment efforts of group purchasing organizations may cause the Company to lose market share to the Company’s competitors and could have a material adverse effect on the Company’s sales, results of operations and financial condition.

Loss of the Company’s key management and other personnel, or an inability to attract such management and other personnel, could impact the Company’s business.

The Company depends on the Company’s senior managers and other key personnel to run the Company’s business and on technical experts to develop new products and technologies. The loss of any of these senior managers or other key personnel could adversely affect the Company’s operations. Competition for qualified employees is intense, and the loss of qualified employees or an inability to attract, retain and motivate additional highly skilled employees required for the management, operation and expansion of the Company’s business could hinder the Company’s ability to expand, conduct research and development activities successfully and develop marketable products.

Increased costs of retaining existing independent sales agents of the Company’s products have negatively affected the Company’s results of operations and if the Company fails to retain the Company’s existing relationships with these independent sales agents or establish relationships with different agents, the Company’s results of operations may be negatively impacted.

The Company’s revenues and profitability depend largely on the ability of independent sales agents to sell the Company’s products to customers. Typically, these agents have developed long-standing relationships with the Company’s customers and provide the Company’s customers with the necessary training and product support relating to the Company’s products. The average tenure of the Company’s independent sales agents within Biomet Orthopedics, Inc. is 9 years.

Following the announcement of the Merger Agreement, in an attempt to exploit the uncertainty related to the pending transaction, the Company’s direct competitors approached the independent sales agents the Company works with and offered them incentives to discontinue their existing relationships with the Company. In an effort to ensure the continuity of its relationships with the independent third-party distributors who represent Biomet Orthopedics, Inc., the Company incurred expenses of $39,200,000 and approximately $33,000,000 in fiscal year 2007 and the first quarter of fiscal year 2008, respectively, which negatively affected its results of operations for these periods. The Company does not currently expect to incur additional significant expenses related to modifying these relationships subsequent to the first quarter of fiscal year 2008. In addition, the Company and its subsidiary, Biomet Orthopedics, Inc., recently initiated legal proceedings in Marion County, Indiana against a direct competitor and certain former independent sales agents related to the foregoing. For further information on this proceeding see “Item 3. Legal Proceedings - Other Litigation.” If the Company fails to retain it’s existing relationships with these agents or establish relationships with different agents, the Company’s results of operations may be negatively impacted.

The Company’s business may be harmed as a result of litigation.

The Company’s involvement in the manufacture and sale of medical devices creates exposure to significant risk of product liability claims, particularly in the United States. In the past, the Company has received product liability claims relating to the Company’s products and anticipate that it will continue to receive claims in the future, some of which could have a material adverse impact on the Company’s business. In addition, the Company could experience a material design or manufacturing failure in the Company’s products, a quality system failure, other safety issues or heightened regulatory scrutiny that would warrant a recall of some of the Company’s products. The Company’s existing product liability insurance coverage may be inadequate to satisfy liabilities the Company might incur. If a product liability claim or series of claims is brought against the Company for uninsured liabilities or is in excess of the Company’s insurance coverage limits, the Company’s business could suffer and the Company’s results could be materially adversely impacted.

In addition, the musculoskeletal products industry is highly litigious with respect to the enforcement of patents and other intellectual property rights. In some cases, intellectual property litigation may be used to gain a competitive advantage. The Company has in the past and may in the future become a party to lawsuits involving patents or other intellectual property. A legal proceeding, regardless of the outcome, could put pressure on the Company’s financial resources and divert the time, energy and efforts of the Company’s management.

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A natural or man-made disaster could have a material adverse effect on the Company’s business.

The Company has approximately 20 manufacturing operations located throughout the world. However, a significant portion of the Company’s products are produced at and shipped from the Company’s facility in Warsaw, Indiana. In the event that this facility is severely damaged or destroyed as a result of a natural or man-made disaster, the Company would be forced to shift production to the Company’s other facilities and/or rely on third-party manufacturers. Such an event could have a material adverse effect on the Company’s business prospects, results of operations and financial condition.

Risks Relating to the Stock Options Investigation and the Merger

The Company’s review of historical stock option granting practices and restatement of consolidated financial statements may result in future litigation or regulatory inquiries, which could harm the Company’s financial results.

On December 18, 2006 and March 30, 2007, the Company announced preliminary and updated reports from the Special Committee following the publication of an analyst report suggesting that certain historical stock option grants took place on dates when the Company’s stock price was trading at relatively low prices and the filing of two shareholder derivative lawsuits alleging improper “backdating” of stock options. Based upon the analysis of these reports and relevant accounting literature, including Staff Accounting Bulletin No. 99, the Company’s Audit Committee determined on March 30, 2007 that the Company should amend the Company’s annual report on Form 10-K for the fiscal year ended May 31, 2006 and the Quarterly Report on Form 10-Q for the period ended August 31, 2006 to reflect the restatement of the consolidated financial statements reflected therein (fiscal years 2006, 2005 and 2004 and periods ended August 31, 2006 and 2005) and related disclosures reflected therein.

On May 25, 2007, the Company’s Board of Directors received and discussed the updated findings contained in the Special Committee’s final report, which concluded that:

• the Company’s written stock option plans were treated by the Company’s management, and the stock option committee, as formalities concerning the manner in which individual stock option grants were to be approved, resulting in a failure to abide by the terms of the plans;

• the Company failed to receive appropriate legal or accounting advice from the Company’s former general counsel and the chief financial officer related to the Company’s stock option program and, as a result, relevant legal and accounting rules were not followed;

• the Company failed to put in place and implement internal controls to manage the Company’s stock option program, including failing to devote sufficient resources to the administration of the Company’s stock option program;

• the Company failed to prepare and maintain appropriate books and records documenting the administration of the Company’s stock option program, specifically with regard to the approval of individual stock option grants;

• most stock options issued by the Company were dated on dates other than the date of grant of those options, as that date was defined by the stock option plans;

• the Company engaged in purposeful “opportunistic” dating (and, therefore, pricing) of stock options; and

• as a result of these deficiencies, certain of the Company’s proxy statements were inaccurate.

The Company’s review of historical stock option granting practices has required it to incur additional expenses for legal, accounting, tax and other professional services, and could in the future adversely affect the Company’s business, results of operations, financial condition and cash flows, including by virtue of exposing the Company to greater risks associated with litigation, regulatory and other governmental proceedings. The Company has also incurred (or expects to incur) expenses in connection with certain corrective actions approved by its Compensation and Stock Option Committee with respect to misdated or mispriced stock options, including (a) payments to compensate certain former option holders whose option exercise prices the Company increased to the fair market value of the shares underlying such options on the “measurement date” (as that term is defined in Statement of Financial Accounting Standards No. 123 (“SFAS 123(R)”) for the options and (b) payments to the IRS on behalf of certain option holders (and reimbursement of one of the Company’s executive officers) to cover taxes and penalties payable by such individuals as a result of their exercise of misdated or mispriced stock options prior to the date the Company amended such options to bring them into compliance with (and thereby avoid the taxes and penalties imposed under) section 409A of the Internal Revenue Code of 1986, as amended, or the Code, as well as gross-up payments to such individuals for any taxes they incur as a result of such payments. In connection with the closing of the Offer, all outstanding options, each an Option, to purchase Shares under Biomet’s stock plans, vested or unvested, were cancelled and each Option holder was paid an amount in cash equal to the excess, if any, of the Offer Price over the applicable option exercise price for each Share subject to an Option, less any required withholding taxes. While the Company believes that it has made appropriate judgments in determining the correct measurement dates for the approximately 17,000 stock option awards in question, the SEC or other governmental agencies may disagree with the manner in which the Company has accounted for and reported, or not reported, the financial and other impacts of past stock option grant measurement date errors, and there is a risk that any such inquiry could lead to circumstances in which the Company may have to further restate the Company’s prior financial statements, amend prior SEC filings, or otherwise take other actions not currently contemplated by the Company. Any such circumstance could also lead to future delays in filing the Company’s subsequent SEC reports and delisting of the Company’s Shares from The NASDAQ Global Select Market. The Company cannot give assurance that any future litigation

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or regulatory action will result in the same conclusions as those reached by the Audit Committee. The conduct and resolution of these matters may be time consuming, expensive and distracting from the conduct of the Company’s business. Furthermore, if the Company is subject to adverse findings in any of these matters, the Company could be required to pay damages, penalties or additional taxes or have other remedies imposed upon it, which could harm the Company’s business, results of operations, financial condition and cash flows.

The Company has been named as a party to a number of shareholder derivative lawsuits relating to the Company’s historical stock option grant practices, and the Company may be named in additional lawsuits in the future. This litigation could become time consuming and expensive and could result in the payment of significant judgments and settlements, which could have a material adverse effect on the Company’s results of operations and financial condition.

In connection with the Company’s historical stock option granting practices and resulting restatements, a number of derivative actions were filed against certain of the Company’s current and former directors and officers, purporting to assert claims on the Company’s behalf. On May 25, 2007, the Board received and discussed an updated report from its Special Committee, which concluded that pursuing these shareholder derivative lawsuits was not in the Company’s best interests. Under Indiana law, the Special Committee’s determination may be binding on the pending shareholder derivative lawsuits and result in dismissal of these lawsuits. The Company cannot, however, predict the outcome of these current lawsuits, nor can the Company predict the amount of time and expense that will be required to resolve them. There may also be additional lawsuits of this nature filed in the future. Defending the current lawsuits and any additional shareholder derivative lawsuits may become time consuming and expensive, and an unfavorable outcome in any of these cases could have a material adverse effect on the Company’s business, results of operations and financial condition.

In addition, the issues arising from the Company’s previous retroactive pricing of stock options may make it more difficult to obtain director and officer insurance coverage in the future. If the Company is able to obtain this coverage, it could be significantly more costly than in the past, which could have an adverse effect on the Company’s financial results and cash flows. As a result of this and related factors, the Company’s directors and officers could face increased risks of personal liability in connection with the performance of their duties. Consequently, the Company may have difficulty attracting and retaining qualified directors and officers, which could adversely affect the Company’s business.

The Company is subject to litigation related to the Merger.

On December 20, 2006, a purported class-action lawsuit captioned Long, et al. v. Hann, et al., was filed in Indiana State court in the County of Kosciusko. The Long action names as defendants each member of the Company’s Board of Directors at the time, Blackstone Capital Partners V L.P., Goldman Sachs Investments Ltd., KKR 2006 Fund L.P., and TPG Partners V, L.P. In March, 2007, the defendants filed motions to dismiss the plaintiff’s complaint, and these motions are currently pending before the court. On January 2, 2007, a purported class-action lawsuit captioned Gervasio v. Biomet, Inc., et al., was filed in Supreme Court for the State of New York, New York County. The Gervasio complaint named as defendants the Company, each member of the Company’s Board of Directors at the time, The Blackstone Group L.P. and Kohlberg Kravis Roberts & Co. The Gervasio complaint also purported to name as defendants Goldman Sachs Capital Partners and Texas Pacific Group, neither of which is a legally existing entity. On March 26, 2007, the court granted defendants’ motion to dismiss the Gervasio action. A third purported class-action lawsuit captioned Corry v. Biomet, Inc., et al., was filed in New York state court in the County of New York on January 9, 2007, and was voluntarily discontinued on February 14, 2007. On May 31, 2007, the Company entered into a memorandum of understanding regarding the settlement of these purported class action lawsuits relating to the Merger. However, additional lawsuits pertaining to the Merger could be filed in the future.

Any conclusion of this litigation in a manner adverse to the Company could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. In addition, the cost to the Company of defending the litigation, even if resolved in the Company’s favor, could be substantial. Such litigation could also substantially divert the attention of the Company’s management and the Company’s resources in general. Uncertainties resulting from the initiation and continuation of this litigation could harm the Company’s ability to compete in the marketplace.

Biomet’s controlling shareholder may have interests that conflict with the interests of other stakeholders.

LVB beneficially owns over 80% of Biomet’s Common Shares. Subject to the terms of the Merger Agreement, LVB generally will have the ability to elect substantially all of the members of Biomet’s Board of Directors and will generally be able to select its management team, determine its corporate and management policies and make decisions relating to fundamental corporate actions. The directors elected by LVB generally will have the authority to make decisions affecting Biomet’s capital structure, including the issuance of debt and declaration of dividends, and to authorize transactions. These decisions could enhance LVB’s equity investment while involving risks to the interests of other stakeholders.

Item 1B. Unresolved Staff Comments.

None.

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Item 2. Properties.

The Company’s principal executive offices are at 56 East Bell Drive, Warsaw, Indiana. In addition, the Company maintains more than 30 other manufacturing facilities, offices and warehouse facilities in various countries, including Canada, Europe, Asia Pacific and Latin America. The Company believes that all of its facilities are adequate, well-maintained and suitable for the development, manufacture, distribution and marketing of all its products. As of May 31, 2007, the Company owned 17 facilities and leased five facilities. The following are the Company’s principal properties as of May 31, 2007:

FACILITY	LOCATION	SQUARE FEET	OWNED/ LEASED
Corporate headquarters of Biomet, Inc.; manufacturing, storage and research and development facilities of Biomet Manufacturing Corp.; distribution center and offices of Biomet Orthopedics, Inc.	Warsaw, Indiana	517,200	Owned
Administrative, manufacturing and distribution facility of EBI, L.P. and administrative offices of Electro-Biology, Inc.	(1) Parsippany, New Jersey1 (2) Parsippany, New Jersey	63,000 209,700	Owned Owned
Administrative, manufacturing and distribution facility of Biomet Microfixation, Inc.	Jacksonville, Florida	82,500	Owned
Office, manufacturing and distribution facility of Biomet 3i, Inc.	(1) Palm Beach Gardens, FL (2) Palm Beach Gardens, FL2	117,000 69,000	Owned Owned
Office and manufacturing facilities of Biomet Sports Medicine, Inc.	(1) Ontario, California (2) Redding, California	35,400 14,400	Owned Leased
Office and manufacturing facility of Electro-Biology, Inc.	Guaynabo, Puerto Rico	34,700	Owned
Office, manufacturing and warehouse facility of Biomet France Sarl	Valence, France	86,100	Owned
Office, manufacturing and warehouse facilities of Biomet Deutschland GmbH	Berlin, Germany	49,900	Owned
Administrative offices of Biomet Europe B.V. and office and warehouse facility of Biomet Nederland BV, Walter Lorenz Surgical Europe B.V. and Biomet 3i Netherlands B.V.	Dordrecht, The Netherlands	37,700	Owned
Office and manufacturing facility of Biomet Spain Orthopedics S.L.	Valencia, Spain	83,517	Owned
Office, manufacturing and warehouse facilities of Biomet Cementing Technologies AB	Sjöbo, Sweden	24,200	Owned
Manufacturing and administrative facilities of Biomet UK Ltd.	(1) Bridgend, South Wales (2) Swindon, England	105,200 53,400	Owned Owned

¹ Includes 42,000 square feet of space in this facility that is leased to other parties.

² Includes 23,000 square feet of space in this facility that is leased to other parties.

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Item 3. Legal Proceedings.

U.S. Department of Justice Investigations.

On March 30, 2005 the Company announced that it had received a subpoena from the U.S. Department of Justice through the U.S. Attorney for the District of New Jersey requesting documents related to any consulting and professional service agreements with orthopedic surgeons using or considering the use of the Company’s hip or knee implants for the period January 2002 through March 29, 2005. The Company is aware that similar inquiries were directed to other companies in the orthopedics industry. On July 19, 2006 the Company received a letter from the U.S. Department of Justice through the U.S. Attorney for the District of New Jersey requesting additional documents further to the subpoena issued in March 2005. This letter requested additional documents related to consulting and service agreements for the time period January 1998 through the present, as well as research and other grant agreements for that same time period. Further, the letter requested that the Company provide copies of the agreements identified in the supplemental request on an on-going basis. In addition, the requested information related to Company-sponsored training events, the selection process used by the Company to identify consultants and researchers, the Company’s product design process for hip and knee implants and information on the Company’s orthopedic sales force. The Company has subsequently received additional requests for information, both informally and by subpoena.

The U.S. Attorney’s Office and the Company have recently begun discussions regarding a potential resolution of this matter. The results of any resolution remain uncertain at this time, but could, among other things, require monetary payments, cause the Company to significantly change some of its existing business practices, and include the potential for additional governmental oversight. Although the Company has cooperated and intends to continue to cooperate fully with the Department of Justice inquiry, discussions are still in preliminary stages with respect to the terms of any proposed resolution and there can be no assurance that the Company will enter into a consensual resolution of this matter with the U.S. Attorney’s Office. Given the preliminary nature of these discussions, the Company does not believe that a range of loss is estimable; therefore, the Company has not accrued for any losses with regard to this inquiry.

In June 2006, the Company received a federal grand jury subpoena issued at the request of the U.S. Department of Justice, Antitrust Division, requesting documents from January 2001 through June 2006 regarding possible violations of federal criminal law, including possible violations of the antitrust laws, relating to the manufacture and sale of orthopedic implant devices, or the subpoena. The Company is aware of similar subpoenas directed to other companies in the orthopedic industry. The Company has cooperated and intends to continue to fully cooperate with the Department of Justice investigation. The result of this investigation may not be known for several years. However, the scope of the subpoena has currently been narrowed to a specific geographic region and specific product lines. It is the Company’s belief that the other orthopedic companies that received similar subpoenas have received similar guidance. It is the Company’s belief that the investigation was prompted by an unsolicited e-mail sent by a representative of one of the Company’s competitors that proposed a common pricing strategy in connection with a particular hospital. This e-mail was received by an independent sales representative of an independent distributor for Biomet Orthopedics, but it was never transmitted to the Company. Neither the Company, the Company’s independent distributor, nor the Company’s independent sales representative took any action in response to the e-mail, and the Company believes that no anticompetitive activity took place as a result of it. The Company requires compliance by the Company’s employees and the Company’s independent distributors with the Company’s Code of Business Conduct and Ethics and with applicable antitrust laws. The information provided herein is limited to the information available to the Company at the present time and the Company cannot offer any assurances as to the scope and final outcome of this investigation. On an issue related to the subpoena the Company has received two complaints in class action lawsuits alleging violations of the Sherman Antitrust Act. In addition, the Company is aware of other complaints that have been filed, but not served on the Company. The complaints also named various other companies in the orthopedic industry as defendants. The Company intends to vigorously defend this matter and believes that it has meritorious defenses to the claims being asserted.

In May 2007, the Company received a subpoena from the U.S. Department of Justice through the U.S. Attorney for the Southern District of West Virginia requesting documents generally relating to a certain number of products manufactured, marketed and sold by the Company’s subsidiary EBI, L.P. for the time period from January 1999 through the present. In June 2007, the Company received a second administrative subpoena from the U.S. Attorney for the Southern District of West Virginia requesting documents relating to a specific physician’s assistant. The Company intends to fully cooperate with the request of the Department of Justice. Further, the Company can make no assurances as to the time or resources that will be needed to devote to this inquiry or its final outcome.

Litigation Relating to Past Stock Option Grant Practices.

On September 21, 2006, two shareholder-derivative complaints were filed against certain of the Company’s current and former officers and directors in Kosciusko Superior Court I in Kosciusko Country, in the State of Indiana. The complaints, captioned Long v. Hann, et al., and Thorson v. Hann, et al., alleged violations of state law relating to the issuance of certain stock option awards by the Company dating back to 1996. Both complaints sought unspecified money damages as well as other equitable and injunctive relief. These two cases were consolidated under the caption In re Biomet, Inc. Derivative Litigation, and on January 19, 2007, plaintiffs filed an amended complaint that made additional allegations based on the Company’s December 18, 2006 disclosures related to stock option awards, including allegations that the defendants sought to sell the company in order to escape liability for their conduct, and that they did so at a devalued price, thus further breaching their fiduciary duties to shareholders. On February 16, 2007, defendants filed a motion to dismiss plaintiffs’ amended complaint, which is currently pending with the court.

On December 11, 2006, a third shareholder-derivative complaint captioned International Brotherhood of Electrical Workers Local 98 Pension Fund v. Hann, et al., No. 06 CV 14312, was filed in federal court in the Southern District of New York. The IBEW case makes allegations and claims similar to those made in the Indiana litigation, in addition to purporting to state three derivative claims for violations of the federal securities laws. On February 15, 2007, defendants filed a motion to dismiss the plaintiff’s complaint. On April 11, 2007, plaintiffs filed a

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motion for partial summary judgment claiming that the disclosures in the Company’s April 2, 2007 Form 8-K filing and press release regarding the Company’s historical stock options granting practices constitute admissions sufficient to establish defendants’ liability on certain of plaintiffs’ claims. Both motions are currently pending with the court.

Pursuant to Indiana law and provisions of the Company’s article of incorporation, the Company is advancing reasonable expenses, including attorneys’ fees, incurred by the Company’s current and former directors and officers in defending these lawsuits.

On May 25, 2007, the Board received and discussed an updated report from its Special Committee, which concluded that pursuing these three shareholder-derivative complaints was not in the Company’s best interests. Under Indiana law, the Special Committee’s determination may be binding on the pending shareholder-derivative claims and result in the dismissal of these complaints.

Litigation Relating to the Merger.

On December 20, 2006, a purported class-action lawsuit captioned Long, et al. v. Hann, et al., was filed in Indiana State court in the County of Kosciusko. The lawsuit names as defendants each member of the Company’s Board of Directors at the time, Dane Miller, Ph.D., and Blackstone Capital Partners V L.P., KKR 2006 Fund L.P., Goldman Sachs Investments Ltd., and TPG Partners V, L.P. The complaint alleges, among other things, that the defendants breached, or aided and abetted the breach of, fiduciary duties owed to the Company’s shareholders by the Company’s directors in connection with the Company’s entry into the Merger Agreement. Among the purported fiduciary breaches alleged in the complaint is that the Company’s director defendants “knew that the only way they could escape liability for their stock option granting improprieties would be to sell the Company, thus eliminating their liability.” The complaint seeks, among other relief, class certification of the lawsuit, a declaration that the Merger Agreement was entered into in breach of the fiduciary duties of the defendants, an injunction preventing the defendants from proceeding with the Merger unless and until the defendants implement procedures to obtain the highest possible sale price, an order directing the defendants to exercise their fiduciary duties to obtain a transaction which is in the best interests of the Company’s shareholders until the process for a sale of Biomet is completed and the highest price is obtained, an order directing the defendants to exercise their fiduciary duty to disclose all material information in their possession concerning the Merger prior to the shareholder vote, including the Company’s fiscal 2007 second quarter financial results, imposition of a constructive trust upon any benefits improperly received by the defendants, an award of attorneys’ fees and expenses, and such other relief as the court might find just and proper. On March 29 and 30, 2007, the defendants filed motions to dismiss the plaintiffs’ complaint, and these motions are currently pending before the court.

On January 2, 2007, a purported class action lawsuit captioned Gervasio v. Biomet, Inc., et al., was filed in the Supreme Court for the State of New York, New York County. A virtually identical action was filed on January 9, 2007, captioned Corry v. Biomet, Inc., etal., in the same court. Both of these lawsuits named as defendants Biomet, each member of its Board of Directors at the time, Dane Miller, Ph.D., The Blackstone Group L.P., Kohlberg Kravis Roberts & Co., Goldman Sachs Capital Partners, and Texas Pacific Group. The lawsuits made essentially the same claims and sought the same relief as in the Long action described above. On January 29, 2007, defendants filed a joint motion to dismiss Gervasio. On February 14, 2007, the plaintiff in Corry voluntarily discontinued his lawsuit and informed defendants that he intended to intervene in Gervasio. On March 26, 2007, the court granted defendants’ motion to dismiss Gervasio.

Pursuant to Indiana law and provisions of the Company’s articles of incorporation, the Company is advancing reasonable expenses, including attorneys’ fees, incurred by the Company’s current and former directors and officers in defending these lawsuits, with the exception of Dane Miller, Ph.D., whose status as a defendant does not arise from his status as a former director or officer.

On May 31, 2007, the Company entered into a memorandum of understanding regarding the settlement of class action lawsuits that were filed on behalf of the Company’s shareholders following the announcement of the proposed Merger. Each of Biomet and the other defendants denies all of the allegations in these lawsuits, including any allegation that its current disclosures with regard to the pending Merger are false, misleading or incomplete in any way. Nevertheless, without admitting any liability or wrongdoing, the Company and other defendants in these cases have agreed in principle to settle them in order to avoid the potential cost and distraction of continued litigation and to eliminate any risk of any delay to the closing of the Merger posed by these lawsuits. Such settlement is subject to execution and delivery of definitive documentation, the closing of the Merger and court approval. If the settlement becomes effective, the lawsuits will be dismissed with prejudice.

Pursuant to the terms of the settlement, the Company has agreed to make available meaningful additional information, including financial information, to its shareholders. Such additional information is contained in the Company’s Current Report on Form 8-K filed on May 31, 2007. In addition, the Sponsor Group has agreed to cause the Company (or the Company’s successors) to pay the legal fees and expenses of plaintiffs’ counsel, in an amount of $600,000 in the aggregate, subject to the approval by the court and the closing of the Merger. This payment will not affect the amount of consideration to be paid in the Merger. The details of the settlement will be set forth in a notice to be sent to the Company’s shareholders prior to a hearing before the court to consider the settlement. The settlement will not affect the consideration to be paid in the Merger to the Company’s shareholders in connection with the proposed Merger.

Additional lawsuits pertaining to the Merger could be filed in the future.

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Nasdaq Delisting Proceedings.

The Company’s common shares are currently traded on the NASDAQ Global Select Market under the symbol “BMET.” On January 9, 2007, the Company filed a Form 12b-25 with the SEC stating that it did not anticipate filing its quarterly report on Form 10-Q for the second quarter of fiscal year 2007 on or before the fifth calendar day following the prescribed due date. On January 11, 2007, the Company received a Staff Determination letter from The Nasdaq Stock Market indicating that the Company is not in compliance with the filing requirements for continued listing under Marketplace Rule 4310(c)(14). The letter was issued in accordance with NASDAQ procedures due to the Company’s inability to file its quarterly report on Form 10-Q for the second quarter of fiscal year 2007 by the prescribed due date.

A hearing was held on March 1, 2007, at which the Company requested an exception within which to regain compliance with the NASDAQ’s filing requirements. On April 11, 2007, a NASDAQ Listing Qualifications Panel (the “Panel”) granted the Company’s request for an exception and continued listing on the NASDAQ Global Select Market, notwithstanding the Company’s inability to timely file its quarterly report on Form 10-Q for the second quarter of fiscal 2007. On May 22, 2007, the Company requested an extension of the May 29, 2007 deadline until June 12, 2007.

On April 12, 2007, the Company announced that it received an additional notice of non-compliance from The Nasdaq Stock Market, pursuant to Marketplace Rule 4310(c)(14), due to the previously announced delay in filing its quarterly report on Form 10-Q for the third quarter of fiscal 2007. In the notice, the Company was invited to make an additional submission to the Panel addressing its plans for making the third quarter filing. On April 19, 2007, the Company requested an exception until June 12, 2007 to file its quarterly report on Form 10-Q for the third quarter of fiscal 2007.

On May 29, 2007, the Panel made a determination with respect to the Company’s April 19, 2007 and May 22, 2007 requests. In its May 29, 2007 determination, the Panel granted the Company’s request to extend the time to file the Company’s reports on Form 10-Q for the second and third quarters of fiscal 2007, and to complete all required restatements, to on or before July 11, 2007. The Panel added that notwithstanding this extension it expects the Company to comply with the terms of the exception by the June 12, 2007 date referenced in the Company’s April 19, 2007 and May 22, 2007 requests. On June 7, 2007, the Company received a letter from the Panel stating that Biomet has evidenced compliance with the Panel’s prior decisions and all applicable Nasdaq Marketplace Rules, and that the Panel has determined to continue the listing of Biomets’ common shares on the NASDAQ Global Select Market.

Other Litigation.

In February 2006, SDGI Holdings, Inc. and Medtronic Sofamor Danek, Inc. (collectively referred to herein as “Medtronic”) brought an action against EBI and Biomet alleging infringement of seven patents. Specifically, Medtronic alleges that the patents are infringed by certain components of the Company’s Vuelock^® Anterior Cervical Plate System, as well as instruments and surgical implantation methods associated with the Company’s Array^® Spinal System. Medtronic’s complaint did not seek a specific amount of damages, but does seek to enjoin the Company from manufacturing, selling and/or distributing the allegedly infringing products. The Company filed a counterclaim seeking a finding of noninfringement of the patents at issue and a finding that certain of the patents are invalid and unenforceable. The litigation is in the early stages of discovery. The Company is vigorously defending this matter and intends to continue to do so.

The Company and its subsidiary, Biomet Orthopedics, Inc., recently initiated legal proceedings against Zimmer US, Inc. (“Zimmer”), certain former Biomet distributors, and David Montgomery, a former employee of the Company who currently works for Zimmer. The thirteen count lawsuit filed in Marion County, Indiana alleges, among other things, that Zimmer and Mr. Montgomery attempted to create an unfair market advantage by engaging in a campaign to misappropriate Biomet confidential information, to interfere with Biomet’s contractual relations with distributors and to attempt to buy the assets of most of Biomet’s distributors (including the Company’s surgical instruments) throughout the United States. Further, the lawsuit alleges that the limited number of distributors who accepted Zimmer’s offer are in violation of their contractual obligations to the Company. Although nearly all of the Company’s distributors rejected Zimmer’s offers and have remained with the Company, and although no amount of money damages can completely compensate the Company for the losses it has sustained as a result of defendants’ conduct, the Company is nonetheless seeking to recover compensatory damages that are attributable to financial and other resources spent on signing new agreements with its sales force. To the extent the Company sustained damages as a result of its former distributors agreeing to purportedly sell their assets to Zimmer, the Company is seeking to recover lost profits and other damages as well. In addition, the Company is seeking to recover punitive damages from the defendants.

In a related matter, the Company brought suit against a former distributor for Biomet Orthopedics who, in violation of his contractual and other obligations to the Company under agreements stretching back to 1994, sold the assets of his distributorship to Zimmer in an apparent effort to avoid his contractual obligations to the Company. The complaint, now pending in federal district court in Indiana, asserts five causes of action that include breach of contract, unjust enrichment, and statutory wrongs. Among other things, the complaint seeks injunctive relief and compensatory and punitive damages. On July 16, 2007 a temporary restraining order was entered against the former Biomet distributor. Prior to the filing of the suit described above, that former Biomet distributor sued one of his former employees, who decided to continue to represent Biomet products in the future as he has for nearly ten years. The suit brought against this employee by the former Biomet distributor who sold his assets to Zimmer claims, among other things, that the former employee is violating his non-competition agreement with the former Biomet distributor by continuing to sell the same Biomet products he sold while employed by the former Biomet distributor. The suit also seeks, among other forms of relief, an injunction and compensatory and punitive damages.

There are various other claims, lawsuits, disputes with third parties, investigations and pending actions involving various allegations against the Company incident to the operation of its business, principally product liability and intellectual property cases. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company accrues for losses that are deemed to be probable and subject to reasonable estimate. Based on the advice of the Company’s counsel in these matters, management believes that the ultimate outcome of these matters and any liabilities in excess of amounts provided will not have a material adverse impact on the Company’s consolidated financial statements taken as a whole.

Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable.

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28

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The following table shows the quarterly range of high and low sales prices for the Company’s Common Shares as reported by The Nasdaq Stock Market for each of the three most recent fiscal years ended May 31. The approximate number of shareholders of record as of July 25, 2007, was 3,150.

		High		Low
2007
	Fourth	$	43.75	$	41.94
	Third		42.67		37.40
	Second		39.25		32.00
	First		36.07		30.22
2006
	Fourth	$	39.45	$	33.64
	Third		38.66		34.90
	Second		39.09		32.50
	First		39.11		33.64
2005
	Fourth	$	43.32	$	34.90
	Third		49.64		40.53
	Second		49.50		43.13
	First		49.60		39.69

The Company paid cash dividends of $0.30, $0.25 and $0.20 per share during fiscal years ending May 31, 2007, 2006 and 2005, respectively.

During the year ended May 31, 2007, the Company had two publicly-announced share repurchase programs outstanding. The first, announced June 30, 2005, approved the purchase of 2,500,000 shares to be automatically purchased daily in equal increments over a twelve-month period. The remaining shares available under this plan were purchased during the three months ended August 31, 2006. The second, announced December 21, 2005, approved the purchase of shares up to $100 million in open market or privately negotiated transactions expiring December 20, 2006. The Company did not repurchase any shares during the fiscal quarter ended May 31, 2007. When the plan expired on December 20, 2006, $45,861,743 remained available to purchase additional shares under the December 21, 2005 share repurchase plan.

Information regarding securities authorized for issuance under Biomet’s equity compensation plans is included in Part III, Item 12 of this Annual Report on Form 10-K under the caption “Securities Authorized for Issuance Under Equity Compensation Plans.”

29

Item 6. Selected Financial Data.

Income Statement Data⁽¹⁾

Years ended May 31,

(in thousands, except per share amounts)

	2007		2006		2005		2004		2003
Net sales	$	2,107,428	$	2,025,739	$	1,879,950	$	1,615,253	$	1,390,300
Cost of sales		642,270		582,106		533,355		462,166		408,091
Gross profit		1,465,158		1,443,633		1,346,595		1,153,087		982,209
Selling, general and administrative expenses		881,140		750,259		696,302		600,208		501,972
Research and development expense		94,416		84,988		80,213		64,964		56,901
In-process research and development		—		—		26,020		1,250		—
Other charges/(credits)		—		—		—		—		(5,800	)
Operating income		489,602		608,386		544,060		486,665		429,136
Other income, net		11,970		2,609		2,409		14,052		12,675
Income before income taxes and minority interest		501,572		610,995		546,469		500,717		441,811
Provision for income taxes		165,680		205,087		197,096		173,322		153,641
Income before minority interest		335,892		405,908		349,373		327,395		288,170
Minority interest		—		—		—		7,071		8,081
Net income	$	335,892	$	405,908	$	349,373	$	320,324	$	280,089
Earnings per share:
Basic	$	1.37	$	1.64	$	1.38	$	1.25	$	1.08
Diluted		1.37		1.63		1.37		1.25		1.07
Shares used in the computation of earnings per share:
Basic		245,217		247,576		252,387		255,512		259,493
Diluted		245,217		248,430		254,148		257,204		261,394
Cash dividends paid per common share	$	.30	$	.25	$	.20	$	.15	$	.10
Balance Sheet Data(1) At May 31, (in thousands)
	2007		2006		2005		2004		2003
Working capital	$	1,105,976	$	816,566	$	677,438	$	810,718	$	848,709
Total assets		2,457,861		2,282,647		2,114,945		1,790,120		1,681,403
Shareholders’ equity		2,049,224		1,720,194		1,568,844		1,451,669		1,289,742

(1) The selected financial data includes the operations of Interpore International, Inc. from its date of acquisition (June 18, 2004).

30

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion should be read in conjunction with the Company’s consolidated financial statements and the corresponding notes contained herein. The Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are subject to certain risk factors, as discussed elsewhere in this report under the caption Forward-Looking Statements.

Overview

Biomet, Inc. (the “Company”) is engaged in the research, development, manufacturing and marketing of products used primarily by musculoskeletal medical specialists. The Company operates in one business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in four major market segments: reconstructive products, fixation devices, spinal products and other products. Reconstructive products, which represented 71% of the Company’s net sales for fiscal year 2007, include knee, hip and extremity joint replacement systems, as well as dental reconstructive implants, bone cements and accessories, the GPS^® System and the procedure-specific instrumentation required to implant the Company’s reconstructive systems. Fixation devices, which represented 11% of the Company’s net sales for fiscal year 2007, include internal and external fixation devices, craniomaxillofacial fixation systems and electrical stimulation devices that do not address the spine. Spinal products, which represented 10% of the Company’s net sales for fiscal year 2007, include electrical stimulation devices addressing the spine, spinal fixation systems and orthobiologics. The other product sales category, which represented 8% of the Company’s net sales for fiscal year 2007, includes arthroscopy products, softgoods and bracing products, casting materials, general surgical instruments, operating room supplies and other surgical products. Depending on the intended application, the Company reports sales of bone substitute materials in the reconstructive product, fixation device or spinal product segment.

The Company has operations at over 50 locations and distributes its products in over 100 countries throughout the world and manages its operations through three reportable geographic markets: United States, Europe and Rest of World. The Company experienced solid net sales growth in its reconstructive product lines during fiscal year 2007 in both domestic and international markets, which is attributable to the Company’s emphasis on technological advances through product line extensions and new product introductions. In addition, growth in the patient population (as a result of increases in both the size of the elderly population and the expansion of the traditional age bracket of musculoskeletal patients) has contributed to this growth. Sales for fixation and spinal products decreased during fiscal 2007 reflecting performance below market and management objectives. Sales of other products were flat in fiscal 2007 as compared to fiscal 2006.

On May 29, 2007, Biomet restated its previously issued audited consolidated financial statements and related disclosures for the three years ended May 31, 2006, its consolidated statements of operations for the five years ended May 31, 2006, included in “Selected Financial Data” in Part II, Item 6, and its first quarter of fiscal 2007 to correct errors related to accounting for share-based compensation expense. The Company’s decision to restate its financial results described in the Company’s amended annual report on Form 10-K/A was based on the results of an independent investigation of the Company’s stock option grants for the period March 1996 through May 2006 by the Special Committee.

The Special Committee’s investigation was based upon the review of an extensive collection of information, interviews with more than two dozen individuals, and analysis of approximately 17,000 grants to purchase approximately 17,000,000 Biomet common shares on over 500 grant dates over the 11-year period. The Special Committee concluded that pursuant to APB 25 and related interpretations, the accounting measurement dates for most of the stock option grants awarded during this period differed from the measurement dates previously used for such awards. As a result, revised measurement dates were applied to the affected option grants and the Company recorded a total of $38.2 million in additional share-based compensation expense for the 11-year period. This is after consideration of vesting and forfeitures through May 31, 2006.

31

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following table shows the percentage relationship to net sales of items derived from the Consolidated Statements of Income and the percentage change from year to year.

	Percentage of Net Sales						Percentage Increase(Decrease)
	2007		2006		2005		2007 vs. 2006		2006 vs.2005
Net sales	100.0	%	100.0	%	100.0	%	4	%	8	%
Cost of sales	30.5		28.7		28.4		10		9
Gross profit	69.5		71.3		71.6		1		7
Selling, general and administrative expenses	41.8		37.1		37.0		17		8
Research and development expense	4.5		4.2		4.2		11		6
In-process research and development	—		—		1.4		—		n/m
Operating income	23.2		30.0		29.0		(20	)	12
Other income, net	0.6		0.1		0.1		359		8
Income before income taxes	23.8		30.1		29.1		(18	)	12
Provision for income taxes	7.9		10.1		10.5		(19	)	4
Net income	15.9	%	20.0	%	18.6	%	(17	)%	16	%

n/m – Not Meaningful

Net sales in fiscal year 2007 were $2,107,428,000, an increase of 4% from the prior fiscal year. Excluding the positive impact of foreign currency translation, net sales increased 2%.

Operating income for fiscal year 2007 was $489,602,000 compared to $608,386,000 for fiscal year 2006. Net income for fiscal year 2007 was $335,892,000, or $1.37 per share compared to $405,908,000 or $1.63 per share for fiscal year 2006. Reported results for fiscal year 2007 included special charges (pre-tax) of $119.3 million and stock compensation related expenses of $13.2 million, or $0.34 per share. The special charges (pre-tax) consisted of $39.2 million related to the renewal and re-negotiation of distribution agreements with existing distributors; $57.3 million related primarily to inventory write-downs and accounts receivable reserves related to its BTBS operations; $17.5 million in expenses related to the Merger Agreement and retirement/employment costs associated with changes in executive management; and $5.3 million in legal and accounting fees related to the previously announced stock option investigation.

Fiscal 2007 Compared to Fiscal 2006*

Net Sales – Worldwide sales of reconstructive devices increased 9% to $1,503,874,000 in fiscal 2007 compared to $1,379,420,000 in fiscal 2006. Factors contributing to this increase include incremental volume as a result of an increase in the overall market size for reconstructive devices and favorable product mix (7%) and currency translation (2%). During the current year, worldwide dental reconstructive product sales increased 15%, extremity sales increased 14%, knee sales increased 8%, hip sales increased 7% and bone cement and accessory sales were flat.

Fixation sales decreased 11% during fiscal 2007 to $224,694,000 from $251,360,000 in 2006. Decreased volume and product mix accounted for this decrease. Worldwide sales of craniomaxillofacial products, including bone substitutes, increased 2%. Internal fixation devices increased 2%, external fixation devices decreased 13% and electrical stimulation devices decreased 25%.

Spinal sales decreased 7% to $205,862,000 in fiscal 2007 compared to $221,964,000 in 2006. Decreased volume and product mix accounted for this decrease. Worldwide sales of spinal hardware, including orthobiologics, increased 2% while spinal stimulation product sales decreased 21%. During fiscal year 2007, BTBS has underperformed against the market and management’s objectives. Results have also been negatively impacted by the implementation of a new computer system. However, management changes have been made and progress has been achieved in the computer system implementation, sales support system, the in-sourcing of the manufacture of spinal hardware products and expanding the research and development team. The Company believes that the new management team and infrastructure changes will allow for greater focus on the spine and trauma markets and its customers.

Sales of the Company’s other products were flat at $172,998,000 in fiscal 2007 and $172,995,000 in 2006. Decreased volume and product mix (1%), were offset by currency translation (1%). Worldwide sales of arthroscopy products increased 10%, general surgical instrumentation increased 3%, while softgoods and bracing products decreased 5%.

Sales in the United States decreased 1% to $1,306,475,000 during the current fiscal year compared to $1,325,113,000 last year. Components of this change were incremental volume and product mix of reconstructive products (5%) offset by decreases in volume of fixation and spinal products (14%). The pricing environment was neutral for fiscal 2007. European sales increased 14% to $595,899,000 during the current fiscal year from $520,660,000 in 2006. Components of this increase were incremental volume and product mix (8%), and currency translation (6%). The Company anticipates foreign currency translation will positively influence sales for the first half of fiscal 2008. Sales in Rest of

* For purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, the fiscal period is June 1 - May 31.

32

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

World increased 14% to $205,054,000 this year from $179,966,000 last year. Components of this increase were incremental volume and product mix (13%), and currency translation (1%). The Company commenced direct sales of its products in Japan during fiscal 2002 and continues to experience good product acceptance with growth at approximately 22% for the current fiscal year in local currency.

Gross Profit – The Company’s gross profit increased 1.5% to $1,465,158,000 in fiscal 2007 from $1,443,633,000 in 2006. The gross profit margin decreased to 69.5% of sales in fiscal 2007 compared to 71.3% in 2006. The components of this change are additional expenses of 1.4% related to inventory write-downs at its BTBS operations and 0.4% from higher growth rates in foreign sales, where gross margins are lower as compared to gross margins on products sold in the United States.

Selling, General and Administrative Expenses – Selling, general and administrative expenses increased 17% in fiscal 2007 to $881,140,000 compared to $750,259,000 last year. This increase results from the renewal and re-negotiation of distribution agreements with existing distributors (5.2%), accounts receivable reserves related to its BTBS operations (3.6%), expenses related to the proposed Merger Agreement and retirement/employment costs associated with changes in executive management (2.3%), the adoption of SFAS 123(R) (1.5%), increased commission expense on higher sales (4.0%), and an increase in other marketing and general and administrative expenses (1.4%). These increases were offset by decreased direct to consumer advertising (1.0%). As a percent of sales, selling, general and administrative expenses were 41.8% in fiscal 2007 and 37.1% in 2006. During the first quarter of fiscal 2008, the Company expects to incur approximately $33,000,000 in expenses related to the completion of the renewal and re-negotiation of distribution agreements for Biomet Orthopedics, Inc. The Company does not expect to incur additional significant expenses related to modifying these relationships subsequent to the first quarter of fiscal 2008.

Research and Development Expense – Research and development expense increased 11% during the current year to $94,416,000 compared to $84,988,000 in 2006. The increase reflects the Company’s continued emphasis on new product development and enhancements and additions to its existing product lines and technologies. Also included in the increase is the impact of adopting SFAS 123(R) (2.7%). As a percent of sales, research and development expenses were 4.5% in fiscal 2007 and 4.2% in 2006.

Operating Income – Operating income decreased 20% during fiscal 2007 to $489,602,000 from $608,386,000 in 2006. U.S. operating income decreased 26% to $383,565,000 from $519,953,000 reflecting a slight decrease in sales and the additional expenses discussed above. European operating income increased 25% to $97,192,000 compared to $77,666,000 in 2006. The growth in Europe operating income reflects solid sales growth and favorable foreign currency exchange rates during fiscal year 2007 as compared to fiscal year 2006. Rest of World operating income decreased 18% to $8,845,000 in fiscal 2007 from $10,767,000 in 2006. This decline reflects higher selling expenses due to increased sales and expanding sales forces.

Other Income, Net – Other income, net increased 49% to $21,310,000 from $14,274,000, while interest expense decreased 20% to $9,340,000 from $11,665,000. During fiscal 2007, interest expense decreased as borrowings were reduced and investment income increased as the Company’s cash and investments increased. To reduce the risk of exchange rate gains and losses on transfer of inventory from domestic sites to international sites, the Company has lines of credit in both Europe and Japan in local currencies. (See Note G in the Notes to Consolidated Financial Statements). These lines of credit are used solely to fund inventory purchases and acquisitions in those local currencies.

Provision for Income Taxes – The provision for income taxes decreased $39,407,000 to $165,680,000, or 33.0% of income before income taxes for fiscal 2007 compared to $205,087,000 or 33.6% of income before income taxes last year. The effective income tax rate decreased primarily as a result of a higher proportionate share of taxable income in countries where tax rates are lower and the continued benefit from the Qualified Production Activities Deduction in the U.S.

Net Income – The factors mentioned above resulted in a 17% decrease in net income to $335,892,000 for fiscal 2007 from $405,908,000 in 2006 and a 16% decrease in basic earnings per share for 2007 to $1.37 compared to $1.64 in 2006.

Fiscal 2006 Compared to Fiscal 2005

Net Sales – Net sales increased 8% during fiscal 2006 to $2,025,739,000 from $1,879,950,000 in 2005. Excluding the negative impact of foreign currency translations (1%), net sales increased 9%.

Worldwide sales of reconstructive devices increased 10% to $1,379,420,000 in fiscal 2006 compared to $1,254,234,000 in 2005. Factors contributing to this increase include incremental volume and product mix (11%), offset by currency translation (1 %). During fiscal 2006, worldwide dental reconstructive product sales increased 14%, knee and extremity sales increased 12%, hip sales increased 9% and bone cement and accessory sales decreased 5%. Bone cement and accessory sales were negatively impacted by the loss of the Company’s primary bone cement supplier during fiscal 2006. The Company introduced its own bone cement during fiscal 2006 and anticipates recapturing some of its lost market share.

Fixation sales increased 2% during fiscal 2006 to $251,360,000 from $246,730,000 in 2005. Increased volume and product mix (3%) offset by pricing decreases (1%), accounted for this increase. Worldwide sales of craniomaxillofacial products, including bone substitutes, increased 12%, internal fixation devices increased 6%, electrical stimulation devices decreased 2% and external fixation devices decreased 7%. The combination and management of the Interpore and EBI salesforces continues to have a negative impact on sales in the fixation, spinal and softgoods and bracing market segments.

Spinal sales increased 4% to $221,964,000 in fiscal 2006 compared to $214,039,000 in 2005. Incremental volume and product mix accounted for this increase. Worldwide sales of spinal hardware, including orthobiologics, increased 6%, while spinal stimulation product sales decreased 3%.

33

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Sales of the Company’s other products increased 5% to $172,995,000 in fiscal 2006 from $164,947,000 in 2005. Factors contributing to this increase included pricing increases (1%) and incremental volume and product mix (5%), offset by currency translation (1%). Worldwide sales of arthroscopy products increased 12%, general surgical instrumentation increased 4%, while softgoods and bracing products decreased 3%.

Sales in the United States increased 7% to $1,325,113,000 during fiscal 2006 compared to $1,238,727,000 in 2005. Components of this increase were incremental volume and product mix (6%) and positive pricing environment (1%). European sales increased 7% to $520,660,000 during the current fiscal year from $487,991,000 in 2005. Components of this increase were incremental volume and product mix (12%), offset by pricing decreases (mainly in bone cements) (1%) and currency translation (4%). Sales in Rest of World increased 17% to $179,966,000 in 2006 from $153,232,000 in 2005. Components of this increase were incremental volume and product mix (19%), offset by pricing decreases (1%) and currency translation (1%). The Company commenced direct sales of its products in Japan during fiscal 2002 and continues to experience good product acceptance with growth at approximately 39% for fiscal 2006 in local currency.

Gross Profit – The Company’s gross profit increased 7% to $1,443,633,000 in fiscal 2006 from $1,346,595,000 in 2005. The gross profit margin decreased to 71.3% of sales in fiscal 2006 compared to 71.6% in 2005. The components of this change are an increase of 1.3% relating to the impact of inventory step-up from acquisitions on last year’s cost of goods sold, offset by a decrease of 0.3% due to an unanticipated, retroactive price increase from the supplier of Biomet’s antibiotic delivery system in Europe, additional expenses of 0.2% related to the Company’s review and reorganization of its EBI operations and discontinuation of the Acumen Surgical Navigation product line, 0.5% from average selling price decreases in Japan, Australia and Korea and 0.6% from higher growth rates in foreign sales, where gross margins are lower, versus domestic sales.

Selling, General and Administrative Expenses – Selling, general and administrative expenses increased 8% in fiscal 2006 to $750,259,000 compared to $696,302,000 in 2005. This increase results from increased commission expense on higher sales (2.8%), the direct to consumer advertising that commenced during the second quarter of fiscal year 2006 (1.4%), additional expenses in connection with the separation package payable to former President and CEO Dane A. Miller, Ph.D. (1.3%), additional expenses related to the Company’s review and reorganization of its EBI operations, discontinuation of the Acumen Surgical Navigation product line and the write-off of its investment in Z-KAT, Inc. (0.9%) and an increase in marketing and general and administrative expenses (1.6%). As a percent of sales, selling, general and administrative expenses were 37.1% in fiscal 2006 and 37.0% in fiscal 2005.

Research and Development Expense – Research and development expense increased 6% during fiscal 2006 to $84,988,000 compared to $80,213,000 in 2005. The increase includes the $2.6 million paid for a cross-licensing and settlement agreement between Biomet Biologics, Inc. and Cytomedix, Inc. In addition, the increase reflects the Company’s continued emphasis on new product development and enhancements and additions to its existing product lines and technologies. As a percent of sales, research and development expenses were 4.2% in fiscal 2006 and 2005.

Operating Income – Operating income increased 12% during fiscal 2006 to $608,386,000 from $544,060,000 in 2005. U.S. operating income increased 3% to $519,953,000 from $505,799,000, reflecting solid sales growth for higher-margin product lines, offset by the additional expenses discussed above. European operating income increased 3% to $77,666,000 compared to $75,769,000 in 2005. The growth in Europe operating income was negatively affected by a reduction in gross margins and higher selling expenses for the Company’s dental products, but reflects solid sales growth, higher gross margins (primarily related to the elimination in fiscal 2006 of inventory step-up costs recognized in fiscal 2005) and lower selling expenses for the rest of the Company’s products. Rest of World operating income decreased 16% to $10,767,000 in fiscal 2006 from $12,762,000 in 2005. This decline reflects higher selling expenses due to expanding salesforces and increased expenses to meet additional regulatory requirements in Japan, including support of new product introductions.

Other Income, Net – Other income, net increased 23% to $14,274,000 from $11,566,000, while interest expense increased 27% to $11,665,000 from $9,157,000. As interest rates increased during fiscal 2006, investment income, as well as interest expense increased. In addition, during fiscal 2006, investment income increased as the Company’s cash and investments increased. To reduce the risk of exchange rate gains and losses on transfer of inventory from domestic sites to international sites, the Company has lines of credit in both Europe and Japan in local currencies. (See Note G in the Notes to Consolidated Financial Statements). These lines of credit are used solely to fund inventory purchases and acquisitions in those local currencies.

Provision for Income Taxes – The provision for income taxes increased to $205,087,000, or 33.6% of income before income taxes for fiscal 2006 compared to $197,096,000 or 36.1% of income before income taxes in 2005. The effective income tax rate decreased primarily as a result of a $26 million write-off of in-process research and development last year, in connection with the Interpore acquisition not being tax affected. In addition, the tax rate benefited from the new Qualified Production Activities Deduction in the U.S. and continued expansion of operations in lower tax jurisdictions.

Net Income – The factors mentioned above resulted in a 16% increase in net income to $405,908,000 for fiscal 2006 from $349,373,000 in 2005. These factors and the reduction in the shares used in the computation of earnings per share through the Company’s share repurchase programs resulted in an 19% increase in basic earnings per share for 2006 to $1.64 compared to $1.38 in 2005.

34

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources

The Company’s cash and investments increased to $273,827,000 at May 31, 2007, from $225,471,000 at May 31, 2006. Net cash from operating activities was $439,753,000 in fiscal 2007 compared to $413,470,000 in 2006. The principal sources of cash from operating activities were net income of $335,892,000 and non-cash charges of depreciation and amortization of $97,005,000. The principal use of cash includes an increase in the deferred income tax net asset due to the timing of tax deductions related to expenses for renewal and re-negotiation of distribution agreements and accounts receivable reserves and inventory write-downs at BTBS. Accounts receivable and inventory did not have a significant impact in net cash from operating activities after giving effect to the non-cash charges included in net income related to BTBS operations.

Cash flows used in investing activities were $125,061,000 in fiscal 2007 compared to $99,065,000 in 2006. The primary uses of cash for investing activities in fiscal 2007 and 2006 were purchases of investments and capital expenditures, offset by sales and maturities of investments. Capital expenditures in 2007 include purchases of instruments in the United States of $36,654,000, which were sold to distributors in prior years. Major capital expenditures for fiscal 2006 were expansion of manufacturing facilities in New Jersey and Florida, and purchases of instruments outside the United States to support new product launches and sales growth.

Cash flows used in financing activities were $251,240,000 in fiscal 2007 compared to $257,594,000 in 2006. The primary uses of funds during 2007 was a cash dividend of $0.30 per share paid on July 21, 2006, to shareholders of record on July 14, 2006 and the paydown of short-term borrowings of $196,871,000. The primary uses of funds during fiscal 2006 was the share repurchase programs, in which $215,430,000 was used to purchase 5,986,000 Common Shares of the Company, and the primary source of funds from financing activities was proceeds on the exercise of stock options.

At May 31, 2007, the Company has two lines of credit outstanding: 1) a European line of credit in the amount of EUR 100 million ($136 million); and 2) a Japanese line of credit in the amount of YEN 6.0 billion ($50.2 million). The total amount available under these lines of credit at May 31, 2007, is approximately $105 million.

The Company maintains its cash and investments in money market funds, certificates of deposit, corporate bonds, debt instruments, mortgage-backed securities and equity securities. The Company’s investments are generally liquid and investment grade. The Company is exposed to interest rate risk on its corporate bonds, debt instruments, fixed rate preferred equity securities and mortgage-backed securities. The Company is confident about the growth prospects in its markets and intends to invest in an effort to improve its worldwide market position. The Company expects to spend in excess of $400 million over the next two fiscal years for capital expenditures and research and development costs in an effort to develop products and technologies that further enhance musculoskeletal procedures. Funding of these and other activities is expected to come from currently available funds, cash flows generated from future operations, and increased bank credit lines. The Company has no off-balance sheet financial arrangements and no material long-term contractual financial obligations.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of its financial position and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company’s significant accounting policies are discussed in Note B of the Notes to Consolidated Financial Statements. In management’s opinion, the Company’s critical accounting policies include revenue recognition, excess and obsolete inventory, goodwill and intangible assets, accrued insurance, and stock-based compensation expense.

Revenue Recognition – For the majority of the Company’s products in a country where the Company has a direct distribution operation, revenue is recognized upon notification to the Company that the product has been implanted in or applied to the patient. For other products or services, and in countries where the Company does not have a direct distribution operation, the Company recognizes revenue when title passes to the customer and there are no remaining obligations that will affect the customer’s final acceptance of the sale. For its insurance billings in the United States, the Company records anticipated price adjustments, which can occur subsequent to invoicing, based on estimates derived from past experience, as a reduction of net sales in the same period that revenue is recognized. The Company also records estimated sales returns and other adjustments as a reduction of net sales in the same period that revenue is recognized. In addition, the Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the assumptions used in estimating pricing adjustments or the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of the Company’s ability to collect its net receivables, additional allowances may be required which would affect its future operating results.

35

Management’s Discussion and Analysis of Financial Condition and Results of Operations (concluded).

Excess and Obsolete Inventory – In Biomet’s industry, inventory is routinely placed at hospitals to provide the healthcare provider with the appropriate product when needed. Because product usage tends to follow a bell curve, larger and smaller sizes of inventory are provided, but infrequently used. In addition, the musculoskeletal market is highly competitive, with new products, raw materials and procedures being introduced continually, which may obsolete products currently on the market. The Company must make estimates regarding the future use of these products and provide a provision for excess and obsolete inventory. If actual product life-cycles, product demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required which would affect future operating results.

Goodwill and Other Intangible Assets – In assessing the recoverability of the Company’s intangibles, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets.

Accrued Insurance – As noted in Note M of the Notes to Consolidated Financial Statements, the Company has a self-insured retention against product liability claims with insurance coverage over and above the retention. There are various other claims, lawsuits, disputes with third parties, investigations and pending actions involving various allegations against the Company. Product liability claims are routinely reviewed by the Company’s insurance carrier and management routinely reviews all claims for purposes of establishing ultimate loss estimates. In addition, management must determine the estimated liability for claims incurred, but not reported. Such estimates and any subsequent changes in estimates may result in adjustments to the Company’s operating results in the future.

Stock-Based Compensation Expense – On June 1, 2006 the Company adopted revised SFAS 123(R), Share-Based Payment, which requires all share-based payments to be recognized in our financial statements based on their respective grant date fair values. Under this standard, the fair value of each employee stock option is estimated on the date of grant using an option-pricing model that meets certain requirements. The Company currently uses the Black-Scholes option-pricing model to estimate the fair value of our share-based payments. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by Biomet’s stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The Company estimates the expected volatility based on historical volatility of the Company’s common stock. The expected life of the stock options is based on historical and other data including life of the option and vesting period. The risk-free interest rate assumption is the implied yield currently available on zero-coupon U.S. Government issues with a remaining term equal to the expected life of the options. The dividend yield assumption is based on the historical dividend yield of the Company’s Common Shares. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company uses an annual forfeiture rate of approximately 18% as of May 31, 2007, which represents the portion that the Company expects will be forfeited each year over the vesting period. The Company will evaluate the assumptions used to value stock-based awards periodically and adjust the forfeiture rate if necessary. If factors change and the Company employs different assumptions, stock-based compensation expense may differ significantly from what the Company have recorded in the past. Had the Company adopted SFAS 123(R) in prior periods, the magnitude of the impact of that standard on the Company’s results of operations would have approximated the pro forma number impact of SFAS 123(R), Share-Based Payment, described in Note I of our Notes to Consolidated Financial Statements under stock-based compensation.

Recent Accounting Pronouncements – Information about recent accounting pronouncements and their effect on the Company can be found in Note B of the Notes to Consolidated Financial Statements.

36

Quarterly Results

(in thousands, except earnings per share)

	1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.		Year
2007
Net sales	$	508,161	$	520,330	$	529,530	$	549,407	$	2,107,428
Gross profit		369,458		369,057		365,771		360,872		1,465,158
Net income		104,380		104,767		85,255		41,490		335,892
Earnings per share:
Basic		.43		.43		.35		.17		1.37
Diluted		.43		.43		.35		.17		1.37
2006
Net sales	$	484,903	$	494,690	$	506,254	$	539,892	$	2,025,739
Gross profit		350,322		354,965		363,096		375,249		1,443,633
Net income		99,685		100,476		105,380		100,367		405,908
Earnings per share:
Basic		.40		.41		.42		.41		1.64
Diluted		.40		.40		.42		.41		1.63
2005
Net sales	$	438,160	$	456,674	$	482,023	$	503,093	$	1,879,950
Gross profit		312,002		325,371		343,816		365,406		1,346,595
Net income		59,019		89,789		95,710		104,855		349,373
Earnings per share:
Basic		.23		.36		.37		.42		1.38
Diluted		.23		.35		.37		.42		1.37

• Per share data may not cross-foot due to the share repurchase program affecting the weighted share calculation differently by quarter compared to the full fiscal year.

• Net income for the fourth quarter of fiscal 2007 was adversely impacted by pre-tax charges of $29.9 million related to the renewal and re-negotiation of distribution agreements with existing distributors; $46.3 million related to inventory write-downs and accounts receivable reserves related to its BTBS operations; $8.2 million in expenses related to the Merger Agreement, and retirement/employment costs associated with changes in executive management; and $2 million in legal and accounting fees related to the previously announced stock option investigation.

• Net income for the third quarter of fiscal year 2007 was adversely impacted by pre-tax charges of $11 million related to inventory write-downs related to its BTBS Operations; $15.7 million in additional legal and distribution expenses; and $6.2 million in expenses related to the Merger Agreement.

• Net income for the fourth quarter of fiscal 2006 was adversely impacted by pre-tax charges of $9 million in connection with the separation package payable to former President and CEO Dane A. Miller, Ph.D.; $5.4 million for expenses related to the Company’s review and reorganization of its EBI operations; $4.8 million related to the discontinuation of the Acumen Surgical Navigation product line and the Company’s investment in Z-KAT, Inc.; and $2.6 million for a cross-licensing and settlement agreement between Biomet Biologics, Inc. and Cytomedix, Inc.

• Net income for the first quarter of fiscal 2005 was adversely impacted by a $26 million charge as a result of in-process research and development in connection with the Interpore acquisition.

37

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of business, operations of the Company are exposed to fluctuations in interest rates and foreign currencies. These fluctuations can vary the cost of financing, investment yields and operations of the Company.

In connection with the Interpore acquisition, the Company entered into a 36-month revolving credit facility in the amount of $200 million. The outstanding credit line was paid off in February 2007 and the credit facility subsequently expired. The Company also maintains unsecured lines of credit in countries in which it has significant intercompany transactions in an effort to minimize currency rate risks. At May 31, 2007 and 2006, the Company had lines of credit of EUR 100 million ($136 million) and EUR 100 million ($126 million), respectively, in Europe and YEN 6.0 billion ($50.2 million) and YEN 4.5 billion ($39.5 million), respectively, in Japan. Outstanding borrowings under all lines of credit bear interest at a variable rate of the lender’s interbank rate plus an applicable margin and, accordingly, changes in interest rates would impact the Company’s cost of financing.

The Company does not have any investments that would be classified as trading securities under generally accepted accounting principles. The Company’s non-trading investments, excluding cash and cash equivalents, consist of debt securities, equity securities and mortgage-backed securities. The debt securities include municipal bonds, with fixed rates, and preferred stocks, which pay quarterly fixed rate dividends. These financial instruments are subject to market risk in that changes in interest rates would impact the market value of such investments. The Company generally does not utilize derivatives to hedge against increases in interest rates which decrease market values, except for one of its investment managers who utilizes U.S. Treasury bond futures options (“futures options”) as a protection against the impact of increases in interest rates on the fair value of preferred stocks managed by that investment manager. The Company marks any outstanding futures options to market and market value changes are recognized in current earnings. The futures options generally have terms ranging from 90 to 180 days. Net realized gains (losses) on sales of futures options aggregated ($75,000) and ($136,000) for the years ended May 31, 2007 and 2006, respectively, and unrealized gains (losses) on outstanding futures options at May 31, 2007 and 2006, aggregated $28,000 and ($19,000), respectively.

Based on the Company’s overall interest rate exposure at May 31, 2007, including variable rate debt and fixed rate preferred stocks, a hypothetical 10 percent change in interest rates applied to the fair value of the financial instruments as of May 31, 2007, would not have a material impact on earnings, cash flows or fair values of interest rate risk sensitive instruments over a one-year period.

The Company’s foreign currency risk exposure results from fluctuating currency exchange rates, primarily the U.S. dollar against the European currencies. The Company faces transactional currency exposures that arise when its foreign subsidiaries (or the Company itself) enter into transactions, generally on an intercompany basis, denominated in currencies other than their local currency. The Company also faces currency exposure that arises from translating the results of its global operations to the U.S. dollar at exchange rates that have fluctuated from the beginning of the period. The Company has not used financial derivatives to hedge against fluctuations in currency exchange rates. Based on the Company’s overall exposure for foreign currency at May 31, 2007, a hypothetical 10 percent change in foreign currency rates would not have a material impact on the Company’s balance sheet, net sales, net income or cash flows over a one-year period.

38

Item 8.   Financial Statements and Supplementary Data.

Biomet, Inc. and Subsidiaries Index to consolidated Financial Statements and Schedule.

1. Financial Statements:
Management’s Report on Internal Control over Financial Reporting	39
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	40
Report of Independent Registered Public Accounting Firm	41
Consolidated Balance Sheets as of May 31, 2007 and 2006	42
Consolidated Statements of Income for the years ended May 31, 2007, 2006 and 2005	43
Consolidated Statements of Shareholders’ Equity for the years ended May 31, 2007, 2006 and 2005	44
Consolidated Statements of Cash Flows for the years ended May 31, 2007, 2006 and 2005	45
Notes to Consolidated Financial Statements	46
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts for the years ended May 31, 2007, 2006 and 2005	66
Schedules other than that listed above are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Management’s Report on Internal Control over Financial Reporting.

The management of Biomet, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (including its consolidated subsidiaries) and all related information appearing in the Company’s annual report on Form 10-K. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of its internal control over financial reporting as of May 31, 2007. The framework on which such evaluation was based is contained in the report entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO” Report). Based on that evaluation and the criteria set forth in the COSO Report, management concluded that its internal control over financial reporting was effective as of May 31, 2007.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of May 31, 2007 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which appears on page 40.

39

Report of Independent Registered Public Accounting Firm On Internal Control over Financial Reporting.

To the Board of Directors and Shareholders of Biomet, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that Biomet, Inc. maintained effective internal control over financial reporting as of May 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Biomet, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Biomet, Inc. maintained effective internal control over financial reporting as of May 31, 2007, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Biomet, Inc. maintained, in all material respects, effective internal control over financial reporting as of May 31, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Biomet, Inc. as of May 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended May 31, 2007 and our report dated July 25, 2007 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Fort Wayne, Indiana

July 25, 2007

40

Report of Independent Registered Public Accounting Firm.

To the Board of Directors and Shareholders of Biomet, Inc.:

We have audited the accompanying consolidated balance sheets of Biomet, Inc. and subsidiaries as of May 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended May 31, 2007. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Biomet, Inc. and subsidiaries at May 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2007 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Notes I and H, respectively, to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payments, ” and No. 158, “Employers’ Accounting for Defined Benefit Pension and Postretirement Plans, ” an amendment of FASB Statements No. 87, 88, 106, and 132(R), in 2007.

We have also audited in accordance with standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Biomet Inc.’s internal control over financial reporting as of May 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 25, 2007 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Fort Wayne, Indiana

July 25, 2007

41

Biomet, Inc. & Subsidiaries Consolidated Balance Sheets.

At May 31,

(in thousands, except par value)

	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	228,681	$	160,963
Investments		2,157		6,380
Accounts and notes receivable, less allowance for doubtful receivables (2007 – $84,112 and 2006 – $69,134)		498,738		507,883
Inventories		540,428		534,515
Refundable income taxes		—		16,880
Deferred income taxes		136,777		75,190
Prepaid expenses and other		45,007		32,342
Total current assets		1,451,788		1,334,153
Property, plant and equipment:
Land and improvements		28,211		24,944
Buildings and improvements		170,214		154,101
Machinery and equipment		583,457		476,387
		781,882		655,432
Less, Accumulated depreciation		354,486		297,800
Property, plant and equipment, net		427,396		357,632
Investments		42,989		58,128
Goodwill		448,427		441,397
Other intangible assets		74,569		79,498
Other assets		12,692		11,839
Total assets	$	2,457,861	$	2,282,647
Liabilities & Shareholders’ Equity
Current liabilities:
Short-term borrowings	$	81,824	$	276,561
Accounts payable		68,709		62,276
Accrued wages and commissions		80,335		84,665
Accrued income taxes		11,611		—
Other accrued expenses		103,333		94,085
Total current liabilities		345,812		517,587
Deferred income taxes		21,242		26,991
Employee related obligations		41,583		17,875
Total liabilities		408,637		562,453
Commitments and contingencies (Note M)
Shareholders’ equity:
Preferred shares, $100 par value: Authorized 5 shares; none issued		—		—
Common shares, without par value: Authorized 500,000 shares; issued and outstanding 2007 –245,667 shares and 2006 – 244,976 shares		229,610		206,633
Additional paid-in capital		138,933		116,528
Retained earnings		1,634,707		1,379,303
Accumulated other comprehensive income		45,974		17,730
Total shareholders’ equity		2,049,224		1,720,194
Total liabilities and shareholders’ equity	$	2,457,861	$	2,282,647

The accompanying notes are a part of the consolidated financial statements.

42

Biomet, Inc. & Subsidiaries Consolidated Statements of Income.

For the years ended May 31,

(in thousands, except per share amounts)

	2007			2006			2005
Net sales	$	2,107,428		$	2,025,739		$	1,879,950
Cost of sales		642,270			582,106			533,355
Gross profit		1,465,158			1,443,633			1,346,595
Selling, general and administrative expenses		881,140			750,259			696,302
Research and development expense		94,416			84,988			80,213
In-process research and development		—			—			26,020
Operating income		489,602			608,386			544,060
Other income, net		21,310			14,274			11,566
Interest expense		(9,340	)		(11,665	)		(9,157	)
Income before income taxes		501,572			610,995			546,469
Provision for income taxes		165,680			205,087			197,096
Net income	$	335,892		$	405,908		$	349,373
Earnings per share:
Basic	$	1.37		$	1.64		$	1.38
Diluted		1.37			1.63			1.37
Shares used in the computation of earnings per share:
Basic		245,217			247,576			252,387
Diluted		245,217			248,430			254,148

The accompanying notes are a part of the consolidated financial statements.

43

Biomet, Inc. & Subsidiaries Consolidated Statements of Shareholders’ Equity.

(in thousands, except per share amounts)

	Common Shares					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Number		Amount
Balance at June 1, 2004	254,262		$	167,301		$	101,317		$	1,181,168		$	1,883		$	1,451,669
Net income	—			—			—			349,373			—			349,373
Change in unrealized holding value on investments, net of $76 tax effect	—			—			—			—			142			142
Reclassification adjustment for losses included in net income, net of $76 tax effect	—			—			—			—			141			141
Currency translation adjustments	—			—			—			—			21,085			21,085
Comprehensive income	—			—			—			—			—			370,741
Exercise of stock options	1,360			24,640			—			—			—			24,640
Compensation expense	—			—			2,741			—			—			2,741
Tax benefit from exercise of stock options	—			—			7,730			—			—			7,730
Purchase of shares	(5,743	)		(3,779	)		(1,362	)		(234,522	)		—			(239,663	)
Cash dividends ($.20 per common share)	—			—			—			(50,872	)		—			(50,872	)
Other	—			—			1,858			—			—			1,858
Balance at May 31, 2005	249,879			188,162			112,284			1,245,147			23,251			1,568,844
Net income	—			—			—			405,908			—			405,908
Change in unrealized holding value on investments, net of $591 tax effect	—			—			—			—			1,098			1,098
Reclassification adjustment for losses included in net income, net of $366 tax effect	—			—			—			—			(678	)		(678	)
Currency translation adjustments	—			—			—			—			(5,941	)		(5,941	)
Comprehensive income	—			—			—			—			—			400,387
Exercise of stock options	1,083			23,002			—			—			—			23,002
Compensation expense	—			—			1,985			—			—			1,985
Tax benefit from exercise of stock options	—			—			2,240			—			—			2,240
Purchase of shares	(5,986	)		(4,531	)		(1,620	)		(209,279	)		—			(215,430	)
Cash dividends ($.25 per common share)	—			—			—			(62,473	)		—			(62,473	)
Other	—			—			1,639			—			—			1,639
Balance at May 31, 2006	244,976			206,633			116,528			1,379,303			17,730			1,720,194
Net income	—			—			—			335,892			—			335,892
Change in unrealized holding value on investments, net of $790 tax effect	—			—			—			—			1,467			1,467
Reclassification adjustment for losses included in net income, net of $11 tax effect	—			—			—			—			(22	)		(22	)
Currency translation adjustments	—			—			—			—			43,399			43,399
Comprehensive income	—			—			—			—			—			380,736
Employee defined benefit plan, net of $6,261 tax effect	—			—			—			—			(16,600	)		(16,600	)
Exercise of stock options	901			23,154			—			—			—			23,154
Compensation expense	—			—			17,701			—			—			17,701
Excess tax benefit from exercise of stock options	—			—			3,200			—			—			3,200
Purchase of shares	(210	)		(177	)		(58	)		(7,033	)		—			(7,268	)
Cash dividends ($.30 per common share)	—			—			—			(73,455	)		—			(73,455	)
Other	—			—			1,562			—			—			1,562
Balance at May 31, 2007	245,667		$	229,610		$	138,933		$	1,634,707		$	45,974		$	2,049,224

The accompanying notes are a part of the consolidated financial statements.

44

Biomet, Inc. & Subsidiaries Consolidated Statements of Cash Flows.

For the years ended May 31,

(in thousands)

	2007			2006			2005
Cash flows from (used in) operating activities:
Net income	$	335,892		$	405,908		$	349,373
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		88,210			71,976			61,781
Amortization		8,795			10,201			7,821
Write-off of in-process research and development		—			—			26,020
Share-based expense		17,701			1,985			2,741
Other		(2,395	)		1,130			(19	)
Deferred income taxes		(61,813	)		(4,356	)		3,847
Tax benefit from exercise of stock options		—			2,240			7,730
Excess tax benefit from exercise of stock options		(3,200	)		—			—
Changes in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and notes receivable		21,999			(31,284	)		16,265
Inventories		7,917			(69,728	)		(42,188	)
Accounts payable		2,825			4,030			(5,927	)
Other		23,822			21,368			(16,524	)
Net cash from operating activities		439,753			413,470			410,920
Cash flows from (used in) investing activities:
Proceeds from sales and maturities of investments		76,387			77,400			62,344
Purchases of investments		(52,400	)		(68,621	)		(57,890	)
Capital expenditures		(142,611	)		(108,912	)		(97,372	)
Acquisitions, net of cash acquired		—			—			(266,229	)
Other		(6,437	)		1,068			(1,535	)
Net cash used in investing activities		(125,061	)		(99,065	)		(360,682	)
Cash flows from (used in) financing activities:
Increase (decrease) in short-term borrowings		(196,871	)		(2,693	)		167,624
Issuance of shares		23,154			23,002			24,640
Cash dividends		(73,455	)		(62,473	)		(50,871	)
Purchase of common shares		(7,268	)		(215,430	)		(239,663	)
Excess tax benefit from exercise of stock options		3,200			—			—
Net cash used in financing activities		(251,240	)		(257,594	)		(98,270	)
Effect of exchange rate changes on cash		4,266			(554	)		(6,505	)
Increase (decrease) in cash and cash equivalents		67,718			56,257			(54,537	)
Cash and cash equivalents, beginning of year		160,963			104,706			159,243
Cash and cash equivalents, end of year	$	228,681		$	160,963		$	104,706
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	9,411		$	11,342		$	8,666
Income taxes		188,763			216,431			196,295

The accompanying notes are a part of the consolidated financial statements.

45

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements.

Note A: Nature of Operations.

Biomet, Inc. and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and nonsurgical therapy, including reconstructive products, fixation devices, spinal products and other products. Headquartered in Warsaw, Indiana, the Company and its subsidiaries currently distribute products in more than 100 countries. The Company operates in one business segment, but has three reportable geographic segments.

Note B: Accounting Policies.

The following is a summary of the accounting policies adopted by Biomet, Inc. that have a significant effect on the consolidated financial statements.

Basis of Presentation – The consolidated financial statements include the accounts of Biomet, Inc. and its subsidiaries (individually and collectively, “Biomet” or the “Company”). All foreign subsidiaries are consolidated on the basis of an April 30 fiscal year. All significant intercompany accounts and transactions are eliminated. Investments in affiliates in which the Company does not have the ability to significantly influence the operations are accounted for on the cost method, the carrying amount of which approximates market. Investments in affiliates in which the Company does have the ability to significantly influence the operations, but does not control, are accounted for using the equity method.

Use of Estimates – The consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles and, accordingly, include amounts that are based on management’s best estimates and judgments.

Translation of Foreign Currency – Assets and liabilities of foreign subsidiaries are translated at rates of exchange in effect at the close of their fiscal year. Revenues and expenses are translated at the weighted average exchange rates during the year. Translation gains and losses are accumulated within other comprehensive income (loss) as a separate component of shareholders’ equity. Foreign currency transaction gains and losses resulting from product transfer between subsidiaries is recorded in cost of goods sold. Other foreign currency exchange gains and losses, which are not material, are included in other income, net.

Cash and Cash Equivalents – The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Investments – Highly liquid investments with original maturities of three months or less are classified as cash and cash equivalents. Certificates of deposit with maturities greater than three months and less than one year are classified as short-term investments. Certificates of deposit with maturities greater than one year are classified as long-term investments. The Company accounts for its investments in debt and equity securities under Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” which requires certain securities to be categorized as either trading, available-for-sale or held-to-maturity. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within other comprehensive income (loss) as a separate component of shareholders’ equity. Held-to-maturity securities are carried at amortized cost. The Company has no trading securities. The cost of investment securities sold is determined by the specific identification method. Dividend and interest income are accrued as earned. The Company reviews its investments quarterly for declines in market value that are other than temporary. Investments that have declined in market value that are determined to be other than temporary, are charged to other income by writing that investment down to market value.

Concentrations of Credit Risk and Allowance for Doubtful Receivables – The Company provides credit, in the normal course of business, to hospitals, private and governmental institutions and healthcare agencies, insurance providers and physicians. The Company maintains an allowance for doubtful receivables and charges actual losses to the allowance when incurred. The Company invests the majority of its excess cash in certificates of deposit with financial institutions, money market securities, municipal, corporate and mortgage-backed securities and common stocks. The Company does not believe it is exposed to any significant credit risk on its cash and cash equivalents or investments.

Inventories – Inventories are stated at the lower of cost or market, with cost determined under the first-in, first-out method.

Property, Plant and Equipment – Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of 5 to 30 years for buildings and improvements and 3 to 10 years for machinery and equipment. Gains or losses on the disposition of property, plant and equipment are included in income. Maintenance and repairs are expensed as incurred. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows relating to the asset are less than its carrying amount, with the amount of the loss equal to the excess of carrying cost of the asset over fair value.

Goodwill – The Company accounts for goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142, among other things, requires that goodwill not be amortized but should be tested for impairment at least annually. In addition, the Company reviews goodwill for possible impairment by comparing the fair value of each reporting unit to its carrying amount annually. Based on the Company’s reviews, no impairment charges have been recorded.

46

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note B: Accounting Policies, Continued.

Other Intangible Assets – Intangible assets consist primarily of developed technology and patents, trademarks and trade names, customer relationships and covenants not to compete and are carried at cost less accumulated amortization. Intangible assets with an indefinite life, including certain trademarks and trade names, are not amortized. The useful life of indefinite life intangible assets is assessed annually to determine whether events and circumstances continue to support an indefinite life. Amortization of intangibles with a finite life is computed based on the straight-line method over periods ranging from 3 to 15 years. In addition, the Company reviews other intangible assets (indefinite life) for possible impairment annually or whenever events or circumstances indicate that the carrying amount may not be recoverable.

Income Taxes – Deferred income taxes are determined using the liability method. No provision has been made for U.S. and state income taxes or foreign withholding taxes on the undistributed earnings (approximately $362 million at May 31, 2007) of foreign subsidiaries because it is expected that such earnings will be reinvested overseas indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits), state income taxes and withholding taxes payable to the various foreign countries. Determination of the amount of any unrecognized deferred income tax liability on these undistributed earnings is not practical.

Fair Value of Financial Instruments – The carrying amounts of cash and cash equivalents, receivables, short-term borrowings, accounts payable and accruals that meet the definition of a financial instrument approximate fair value. The fair value of investments is disclosed in Note D.

Revenue Recognition – For the majority of the Company’s products in a country where the Company has a direct distribution operation, revenue is recognized upon notification to the Company that the product has been implanted in or applied to the patient. For other products or services, and in countries where the Company does not have a direct distribution operation, the Company recognizes revenue when title passes to the customer and there are no remaining obligations that will affect the customer’s final acceptance of the sale. For its insurance billings in the United States, the Company records anticipated price adjustments, which can occur subsequent to invoicing, based on estimates derived from past experience, as a reduction of net sales in the same period that revenue is recognized. The Company also records estimated sales returns and other adjustments as a reduction of net sales in the same period that revenue is recognized. Shipping and handling fees billed to customers are recorded as revenue, while related costs are included in cost of goods sold.

Comprehensive Income – Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity. The Company’s other comprehensive income is comprised of unrealized gains (losses) on available-for-sale securities, net of tax, foreign currency translation adjustments, and unrecognized actuarial loss.

The components of accumulated other comprehensive income (loss) at May 31, 2007 and 2006 are as follows: (in thousands)

	2007			2006
Net unrealized holding loss on investments, net of tax	$	(604	)	$	(2,049	)
Cumulative translation adjustment		63,178			19,779
Unrecognized actuarial loss		(16,600	)		—
	$	45,974		$	17,730

Stock-Based Compensation Expense – Effective June 1, 2006, the Company adopted SFAS No. 123(R), “Share-Based Payment,” (“SFAS 123(R)”) using the modified prospective method. SFAS 123(R) requires all shared-based payments to employees, including stock options, to be expensed based on their fair value over the required award service period. The Company uses the straight line method to recognize compensation expense related to share-based payments. In the prior year, the Company followed Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock option awards to employees and recorded share-based compensation expense for awards that were issued at strike prices less than fair value at date of grant. Under the modified prospective method, the provisions of SFAS 123(R) apply to all share-based compensation awards granted or modified on or after the Company’s date of adoption of SFAS 123(R), June 1, 2006. Prior period results are not restated under the modified prospective method. For shared-based compensation awards granted prior to the date of adoption, the unrecognized expense related to the unvested portion at the date of adoption will be recognized in net income under the grant date fair value provisions under SFAS 123. The Company uses the Black-Scholes option-pricing model to determine the fair value of its employee stock options.

47

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note B: Accounting Policies, Concluded.

New Accounting Pronouncements

The Company implemented SFAS 151, “Inventory Costs,” an amendment of ARB No. 43 in the fiscal first quarter of 2007. The adoption of this statement did not have a material effect on the Company’s financial statements.

In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes,” an interpretation of FASB Statement No. 109, “Accounting for Income Taxes,” This statement creates a single model to address uncertainty in tax positions which utilizes a two-step approach for evaluating such tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) is only addressed if step one has been satisfied. In addition, expanded disclosures are required. FIN 48 is effective June 1, 2007 and the Company will adopt it accordingly. The Company is currently evaluating the impact of adopting FIN 48. At this time, the Company does not expect the adoption of FIN 48 to have a material impact on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The statement is effective in the fiscal first quarter of 2008. The Company believes that the adoption of SFAS No. 157 will not have a material effect on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, “Employer’s Accounting for Defined Pension and Other Postretirement Plans” – an amendment of FASB Statements No. 87, 88, 106 and 132(R). This statement requires the recognition of the funded status of a benefit plan in the statement of financial position. It also requires the recognition as a component of other comprehensive income (OCI), net of tax, of the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to statements 87 or 106. The statement also has new provisions regarding the measurement date as well as certain disclosure requirements. The statement was effective during the current fiscal year and the Company adopted the statement as of May 31, 2007. See Note H for more information regarding Biomet’s adoption of SFAS No. 158.

In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, which expresses the Staff’s views regarding the process of quantifying financial statement misstatements. The bulletin was effective at fiscal year end 2007. The implementation of this bulletin had no impact on the Company’s results of operations, cash flows or financial position.

48

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note C: Business Combinations.

On June 18, 2004, the Company acquired Interpore International Inc. (“Interpore”) for $266 million in cash. Based in Irvine, California, Interpore is focused on providing innovative products for spinal surgery. The primary reason for making the Interpore acquisition was to broaden the product portfolio the Company offers in the spinal market. Interpore’s three major product groups include spinal implants, orthobiologic products and minimally-invasive surgery products used by orthopedic surgeons and neurosurgeons in a wide range of applications. The purchase price of this acquisition exceeded the fair value of identifiable tangible and intangible assets. This reflects the strategic compatibility of the products and technologies of Interpore and EBI, which is expected to provide increased earnings power and an improved platform from which the combined entity can actively pursue growth opportunities in these product categories, both domestically and internationally. The Company accounted for this acquisition under the purchase method of accounting pursuant to SFAS No. 141, “Business Combinations.” Accordingly, Interpore’s results of operations have been included in the Company’s consolidated statements of income since the closing date, and its respective assets and liabilities were recorded at their estimated fair values in the Company’s consolidated balance sheets as of the closing date, with the excess purchase price being allocated to goodwill. Interpore’s net sales in 2003 were approximately $67.5 million.

The following table summarizes the assets acquired and liabilities assumed in the acquisition:

(in thousands)

	As of June 18, 2004
Current assets	$	40,100
Property, plant and equipment		9,307
Intangible assets not subject to amortization:
Trademarks and trade names		1,260
Intangible assets subject to amortization:
Developed technology		16,180
License agreements		3,450
Trademarks and tradenames		2,270
Customer relationships		11,440
In-process research and development		26,020
Deferred taxes		15,945
Other assets		82
Goodwill		169,596
Total assets acquired	$	295,650
Deferred taxes		14,512
Other		14,909
Total liabilities assumed		29,421
Net assets acquired	$	266,229

The $26,020,000 assigned to in-process research and development was written off as of the acquisition date. With respect to the valuation of the Interpore in-process research and development expense, there were four projects valued. Net cash flows were forecasted to commence between 2005 and 2006, discount rates of 20% to 30% were used, and assumed additional research and development expenditures prior to the date of initial product introduction totaled approximately $2 million and approximately $1 million in 2005 and 2006, respectively. The major project, a total lumbar disc replacement, represented $18 million of the valuation. The total estimated additional expenditures have not changed to date, but the time table for getting the total lumbar disc replacement to market has been extended to 2012 or 2013 due to regulatory requirements. The weighted average amortization period for amortizable intangibles is 8 years. No amount of goodwill is expected to be deductible for tax purposes.

49

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note C: Business Combinations, Concluded.

The Company completed its purchase price allocation for Interpore in accordance with U.S. generally accepted accounting principles. The process included interviews with management, review of the economics and competitive environment in which the companies operate and examination of assets, including historical performance and future prospects. The purchase price allocation was based on information then available to the Company, and expectations and assumptions deemed reasonable to the Company’s management. No assurances can be given, however, that the underlying assumptions used to estimate expected technology based product revenues, development costs or profitability, or the events associated with such technology, will occur as projected.

Other Acquisitions – During the current year, the Company acquired the remaining 49% equity interest in its China manufacturing operations. Prior to this acquistion, the Company owned 51% and included its operating results in its financial statements. The Company recognized $1.9 million in goodwill. During fiscal 2006, the Company completed several acquisitions of foreign distributors and/or businesses. The acquisitions were accounted for using the purchase method of accounting with the operating results of the acquired businesses included in the Company’s consolidated financial statements from the date of acquisition. Goodwill recognized in connection with these acquisitions aggregated $6.4 million.

Pro forma financial information reflecting all acquisitions accounted for as purchases has not been presented as it is not materially different from the Company’s historical results.

50

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note D: Investments.

At May 31, 2007, the Company’s investment securities were classified as follows:

(in thousands)

	Amortized Cost		Unrealized					Fair Value
			Gains		Losses
Available-for-sale:
Debt securities	$	4,813	$	—	$	(404	)	$	4,409
Equity securities		9,370		928		(96	)		10,202
Mortgage-backed securities		28,871		—		(1,358	)		27,513
Total available-for-sale		43,054		928		(1,858	)		42,124
Held-to-maturity:
Debt securities		2,969		—		(54	)		2,915
Mortgage-backed obligations		53		—		—			53
Total held-to-maturity		3,022		—		(54	)		2,968
Total	$	46,076	$	928	$	(1,912	)	$	45,092

At May 31,2006, the Company’s investment securities were classified as follows:

(in thousands)

	Amortized Cost		Unrealized					Fair Value
			Gains		Losses
Available-for-sale:
Debt securities	$	8,534	$	—	$	(551	)	$	7,983
Equity securities		19,307		618		(541	)		19,384
Mortgage-backed securities		36,285		—		(2,679	)		33,606
Total available-for-sale		64,126		618		(3,771	)		60,973
Held-to-maturity:
Debt securities		2,961		—		(66	)		2,895
Mortgage-backed obligations		74		—		—			74
Total held-to-maturity		3,035		—		(66	)		2,969
Certificates of deposit		500		—		—			500
Total	$	67,661	$	618	$	(3,837	)	$	64,442

Proceeds from sales of available-for-sale securities were $71,916,000, $71,118,000 and $58,050,000 for the years ended May 31, 2007, 2006 and 2005, respectively. There were no sales of held-to-maturity securities for the years ended May 31, 2007, 2006 and 2005. The cost of marketable securities sold is determined by the specific identification method. For the year ended May 31, 2007, gross realized gains and (losses) on sales of available-for-sale securities were $2,937,000 and $(542,000), respectively. For the year ended May 31, 2006, gross realized gains and (losses) on sales of available-for-sale securities were $2,380,000 and $(2,107,000), respectively. For the year ended May 31, 2005, gross realized gains and (losses) on sales of available-for-sale securities were $918,000 and $(899,000), respectively. The Company’s investment securities at May 31, 2007 include $2,157,000 of debt securities, maturing within one year, and $5,221,000 of debt securities and $27,566,000 of mortgage-backed securities all maturing past one year.

Investment income (included in other income, net) consists of the following:

(in thousands)

	2007		2006		2005
Interest income	$	8,104	$	6,851	$	4,191
Dividend income		1,602		1,905		1,890
Net realized gains		9,097		5,617		1,785
Total	$	18,803	$	14,373	$	7,866

51

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note E: Inventories.

Inventories at May 31, 2007 and 2006 consist of the following:

(in thousands)

	2007		2006
Raw materials	$	77,695	$	71,126
Work-in-progress		70,469		48,416
Finished goods		214,758		225,997
Consigned distributor		177,506		188,976
Total	$	540,428	$	534,515

Reserves for excess and slow-moving inventory at May 31, 2007 and 2006 were $153,352,000 and $99,427,000, respectively.

Note F: Goodwill and Other Intangible Assets.

The following table summarizes the changes in the carrying amount of goodwill for the year ended May 31, 2007:

(in thousands)

	United States		Europe			Rest of World		Total
Balance at May 31, 2005	$	245,999	$	185,021		$	4,601	$	435,621
Goodwill acquired		—		6,409			—		6,409
Currency translation		—		(752	)		119		(633	)
Balance at May 31, 2006		245,999		190,678			4,720		441,397
Goodwill acquired		—		1,900			—		1,900
Currency translation		—		4,930			200		5,130
Balance at May 31, 2007	$	245,999	$	197,508		$	4,920		448,427

The components of identifiable intangible assets are as follows as of May 31:

(in thousands)

	2007				2006
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets subject to amortization:
Developed technology and patents	$	53,743	$	19,232	$	50,658	$	15,102
Trademarks and trade names		3,599		1,077		3,599		765
Customer relationships		16,511		8,288		16,734		5,858
Covenants not to compete		3,974		2,447		3,974		1,639
Other		923		637		923		526
		78,750		31,681		75,888		23,890
Intangible assets not subject to amortization:
Trademarks and trade names		27,500		—		27,500		—
Total identifiable intangible assets	$	106,250	$	31,681	$	103,388	$	23,890

Total amortization expense for finite-lived intangible assets was $8,795,000, $10,201,000 and $7,821,000 in 2007, 2006 and 2005, respectively, and was recorded as part of selling, general and administrative expense. The weighted average amortization lives for the covenants not to compete, developed technology and patents, trademarks and trade names, and customer relationships are 5 years, 10 years, 10 years and 15 years, respectively. The weighted average amortization life of these intangible assets on a combined basis is 9 years. Estimated annual amortization expense for the years ended May 31, 2008 through 2011 is $8.0 million.

52

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note G: Debt.

At May 31, 2007 and 2006, short-term borrowings consist of the following:

(in thousands)

	2007		2006
Bank line of credit	$	—	$	180,000
Bank line of credit - Biomet Europe		31,610		57,037
Bank line of credit - Biomet Japan		50,214		39,524
Total	$	81,824	$	276,561

In connection with the Interpore acquisition, the Company entered into a 36-month revolving credit facility in the amount of $200 million due in June 2007. The outstanding credit line was paid off in February 2007 and the credit facility subsequently expired. Biomet Europe has a EUR 100 million ($136 million at May 31, 2007) unsecured line of credit with a major European bank. This line of credit is used to finance its operations and interest on outstanding borrowings is payable monthly at the lender’s interbank rate plus 0.6% (effective rate of 4.41% and 3.1% at May 31, 2007 and 2006, respectively). Biomet Japan has a YEN 6.0 billion ($50.2 million at May 31, 2007) unsecured line of credit with major Japanese banks. This line of credit is used to finance its operations and interest on outstanding borrowings is payable monthly at the lender’s interbank rate plus 0.6% (effective rate of 1.18% and 1.03% at May 31, 2007 and 2006, respectively).

Note H: Team Member Benefit Plans.

The Company has an Employee Stock Bonus Plan for eligible Team Members of the Company and certain subsidiaries. The Company has historically contributed up to 3% of an eligible Team Member’s compensation. The amounts expensed under this plan for the years ended May 31, 2007, 2006 and 2005 were $5,842,000, $6,603,000 and $5,849,000, respectively. The Company makes cash contributions to the plan and issues no Common Shares in connection with the plan. On March 31, 2007, the Company merged this plan into the existing 401(k) plan. This did not affect the funding of this plan during the current fiscal year.

The Company also has a defined contribution profit sharing plan which covers substantially all of the Team Members within the continental U.S. and allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The Company currently matches up to 75% of the Team Member’s contribution up to a maximum of 5% of the Team Member’s compensation. The amounts expensed under this profit sharing plan for the years ended May 31, 2007, 2006 and 2005 were $4,903,000, $6,319,000 and $5,472,000, respectively.

The Company sponsors various retirement and pension plans, including defined benefit plans for some of its foreign operations. Many foreign employees are covered by government sponsored programs for which the direct cost to the Company is not significant. Retirement plan benefits are primarily based on employee’s compensation during the last several years before retirement and the number of years of service. Some foreign subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group contracts or reserves are provided. The Company uses the date of its consolidated financial statements (April 30, 2007 and 2006 for its foreign subsidiaries) as the measurement date.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132R, which requires an employer to fully recognize the over-funded or under-funded status of its pension and other postretirement benefit plans as an asset or liability in its financial statements. In addition, the Company is required to recognize as a component of other comprehensive income (loss) the actuarial gains or losses and the prior service costs and credits that arise during the period but are not immediately recognized as components of net periodic benefit costs. The company adopted SFAS No. 158 effective May 31, 2007. The incremental effect of applying SFAS No. 158 is a $16.6 million reduction in shareholder’s equity, net of deferred taxes.

Net periodic benefit costs for the Company’s defined benefit plans for 2007, 2006 and 2005 include the following components:

	2007			2006			2005
Net periodic benefit costs:
Service costs	$	5,110		$	3,760		$	3,342
Interest costs		5,280			4,291			3,375
Expected return on plan assets		(4,518	)		(3,319	)		(2,881	)
Recognized actuarial losses		1,305			1,408			653
Net periodic benefit costs	$	7,177		$	6,140		$	4,489

53

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note H: Team Member Benefit Plans, Continued.

The following table sets forth information related to the benefit obligation and the fair value of plan assets at year-end 2007 and 2006 for the Company’s defined benefit retirement plans. The Company maintains no postretirement plans.

	2007			2006
Change in Benefit Obligation
Projected benefit obligation - beginning of year	$	98,916		$	84,594
Service costs		5,110			3,760
Interest costs		5,280			4,291
Plan participant contribution		2,295			2,096
Actuarial (gains)/losses		(2,966	)		7,960
Benefits paid from plan		(2,587	)		(1,939	)
Effect of exchange rates		9,677			(1,846	)
Projected benefit obligation - end of year	$	115,725			98,916
Change in Plan Assets
Plan assets at fair value - beginning of year	$	59,956		$	44,727
Actual return on plan assets		2,444			11,376
Company contribution		5,936			4,601
Plan participant contribution		2,295			2,096
Benefits paid from plan		(2,587	)		(1,939	)
Effect of exchange rates		6,098			(905	)
Plan assets at fair value - end of year	$	74,142		$	59,956
Funded status at end of year	$	41,583		$	38,960
Unrecognized actuarial losses		—			(21,085	)
Total recognized in the consolidated balance sheet	$	41,583		$	17,875

Amounts Recognized in the Company’s Balance Sheet consist of the following:

	Prior to Adopting SFAS 158	Effect of Adopting SFAS 158		As Reported at May 31, 2007
Deferred income tax liability	($2,130)	($6,261)		($8,391)
Employee related obligations	18,722	22,861		41,583
Other comprehensive income (loss)	—	(16,600	)	(16,600	)

	2008
Amounts expected to be recognized in Net Periodic Cost in the coming year for the Company’s defined benefit retirement plans
Amortization of net actuarial losses	$	1,126

The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.

	2007		2006		2005
Discount rate	5.30	%	5.03	%	5.29	%
Expected long-term rate of return on plan assets	6.72	%	7.17	%	7.49	%
Rate increase in compensation levels	3.30	%	3.13	%	2.97	%

54

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note H: Team Member Benefit Plans, Concluded.

The projected future benefit payments from the Company’s defined benefit retirement plans are $2,164,000 - 2008, $2,252,000 - 2009, $2,339,000 - 2010, $2,431,000 - 2011, $2,503,000 - 2012, and $13,825,000 - 2013-2017. The Company expects to pay $6,889,000 into the plans during fiscal year 2008. In certain countries, the funding of pension plans is not a common practice. Consequently, the Company has several pension plans which are not funded.

The Company’s retirement plan asset allocation at April 30, 2007 was 41% to equity securities, 41% to debt securities, 8% to real estate, and 10% to other. The Company’s retirement plan asset allocation at April 30, 2006 was 73% to equity securities, 9% to debt securities, 1% to real estate, and 17% to other.

Strategic asset allocations are determined by country, based on the nature of the liabilities and considering demographic composition of the plan participants (average age, years of service and active versus retiree status). The Company’s plans are considered non-mature plans and the long-term strategic asset allocations are consistent with these types of plans. Emphasis is placed on diversifying on a broad basis combined with currency matching the fixed income assets.

55

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note I: Stock Option Plans.

The Company adopted SFAS No. 123(R), on June 1, 2006 using the modified prospective method. SFAS 123(R) requires all share-based payments to employees, including stock options, to be expensed based on their fair value over the required award service period. The Company uses the straight line method to recognize compensation expense related to share-based payments. In the prior year, the Company followed Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock option awards to employees, which required recording share-based compensation expense for awards that were issued at strike prices less than fair value at date of grant. For the Company’s non-employee distributors, share-based expense is recorded in accordance with Emerging Issues Task Force No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquistion, or in Conjunction with Selling, Goods or Services.”

Under the modified prospective method, the provisions of SFAS 123(R) apply to all share-based compensation awards granted or modified on or after the Company’s date of adoption of SFAS 123(R), June 1, 2006. Prior period results are not restated under the modified prospective method. For share-based compensation awards granted prior to the date of adoption, the unrecognized expense related to the unvested portion at the date of adoption will be recognized in net income under the grant date fair value provisions under SFAS 123(R). The Company uses the Black-Scholes option-pricing model to determine the fair value of its employee stock options. Total compensation expense recognized for the year ended May 31, 2007 was $17,701,000 offset by $3,926,000 of tax benefit, which is $0.06 per share. The amount of pre-tax compensation cost related to nonvested stock options not yet recognized was $99.8 million at May 31, 2007, which is expected to be amortized through 2015.

If compensation expense for the Company’s employee stock options had been determined based on the fair value method of accounting in fiscal years 2006 and 2005, pro forma net income and earnings per share would have been as follows:

	2006			2005
Net income as reported (in thousands)	$	405,908		$	349,373
Total share-based compensation expense included in the determination of net income (in thousands)		2,166			2,690
Deduct: Total share-based compensation expense determined under fair value based method for all awards net of related tax effects (in thousands)		(11,590	)		(11,159	)
Pro forma net income (in thousands)	$	396,484		$	340,904
Earnings per share:
Basic, as reported	$	1.64		$	1.38
Basic, pro forma		1.60			1.35
Diluted, as reported		1.63			1.37
Diluted, pro forma		1.60			1.35

Prior to adopting SFAS 123(R), Biomet classified all tax benefits of deductions resulting from the exercise of stock options as operating cash flows. SFAS 123(R) requires the cash flows resulting from excess tax benefits (i.e., tax deductions realized for stock options exercised in excess of the tax benefit recognized on the related share-based payment expense) to be classified as financing cash flows.

The Company has various stock option plans: the 1992 Employee and Non-Employee Director Stock Option Plan; the 1992 Distributor Stock Option Plan, the Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option Plan and the Biomet, Inc. 2006 Equity Incentive Plan. At May 31, 2007, the only plans with shares available for grant are the Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option Plan and the Biomet, Inc. 2006 Equity Incentive Plan.

Under the stock option plans, options may be granted to key employees, non-employee directors and distributors, at the discretion of the Compensation and Stock Option Committee, and generally become exercisable in annual or biannual increments beginning one or two years after the date of grant in the case of employee options and in annual increments beginning at the date of grant for distributor options. In the case of options granted to an employee of the Company who is a 10% or more shareholder, the option price is an amount per share not less than 110% of the fair market value per share on the date of granting the option, as determined by the Compensation and Stock Option Committee. No options have been granted to employees who are 10% or more shareholders. The term of each option granted expires within the period prescribed by the Compensation and Stock Option Committee, but shall not be more than five years from the date the option is granted if the optionee is a 10% or more shareholder, and not more than ten years for all other optionees. All rights under the options automatically terminate upon the optionee’s separation from service with the Company, unless such separation results from retirement, disability or death. For the years ended May 31, 2007, 2006 and 2005, the amount of compensation expense applicable to options granted to distributors was not material to the consolidated financial statements.

56

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note I: Stock Option Plans, Continued.

The following table summarizes stock option activity:

	Number of Shares		Weighted Average Exercise Price
Outstanding, May 31, 2004	7,357,369		$	25.89
Granted	2,407,505			42.44
Exercised	(1,326,339	)		19.21
Terminated	(374,700	)		24.99
Outstanding, May 31, 2005	8,063,835			31.86
Granted	2,878,601			35.01
Exercised	(1,172,179	)		22.76
Terminated	(607,301	)		34.59
Outstanding, May 31, 2006	9,162,956			33.84
Granted	2,832,903			33.49
Exercised	(917,737	)		26.13
Terminated	(1,448,227	)		34.75
Outstanding, May 31, 2007	9,629,895		$	34.34

The following table summarizes information about outstanding stock options as of May 31, 2007, that are vested and those that are expected to vest, and that are currently exercisable:

	Outstanding Stock Options Already Vested and Expected to Vest		Options that are Exercisable
Number of outstanding options		7,950,000		1,811,324
Weighted average remaining contractual life		7.2 years		1 year
Weighted average exercise price per share	$	34.34	$	34.02
Intrinsic value	$	73,776,000	$	17,389,000

Options outstanding at May 31, 2007, are exercisable at prices ranging from $11.57 to $48.27 and have a weighted average remaining contractual life of 7.2 years. At May 31, 2007 there were 3,234,286 shares available for future option grants. The following table summarizes information about stock options outstanding at May 31, 2007.

Range of Exercise Price	Number Outstanding at May 31, 2007	Outstanding Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at May 31, 2007	Weighted Average Exercise Price
$11.57-20.00	18,346	1.0 year	$	16.43	13,564	$	16.30
20.01-30.00	1,702,006	4.5 years		26.05	610,763		25.62
30.01-40.00	6,209,455	8.1 years		34.30	669,854		35.18
40.01-48.27	1,700,088	6.6 years		42.97	517,143		42.89
	9,629,895				1,811,324

The Company uses the Black-Scholes option-pricing model to determine the fair value of options. For stock options granted during the year ended May 31, 2007, expected volatility was derived based on historical volatility of the Company’s Common Shares. The expected term of the stock option was derived from historical employee exercise behavior. The risk-free interest rate is determined using the implied yield currently available for zero-coupon U.S. Government issues with a remaining term equal to the expected life of the options. A dividend yield is derived based on the historical dividend yield of the Company’s Common Shares.

57

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note I: Stock Option Plans, Concluded.

At May 31, 2006 and 2005, there were exercisable options outstanding to purchase 1,573,371 and 1,540,773 shares, respectively, at weighted average exercise prices of $30.05 and $23.20, respectively. The weighted average fair value of options granted during the fiscal years ended May 31, 2007, 2006, and 2005 was $11.37, $12.57, and $11.87, per option respectively, determined using the following assumptions: (1) expected life of option of 5.41, 5.27 and 5.22 years; (2) dividend yield of 0.90%, 0.72% and 0.43%; (3) expected volatility of 32%, 32% and 33%; and (4) risk-free interest rate of 4.56%, 5.21% and 3.90% respectively. The total intrinsic value of options exercised during the years ended May 31, 2007, 2006 and 2005 were $11.1 million, $16.3 million and $32.2 million, respectively.

	Year Ended May 31,
	2007			2006			2005
	Number of Shares	Weighted Average Price Per Share		Number of Shares	Weighted Average Price Per Share		Number of Shares	Weighted Average Price Per Share
Options granted with an exercise price equal to fair value at date of grant	2,799,903	$	33.49	1,100,845	$	36.46	637,955	$	40.31
Options granted with an exercise price greater than fair value at date of grant	—		—	292,200	$	34.85	582,275	$	43.49
Options granted with an exercise price less than fair value at date of grant	33,000	$	34.44	1,485,556	$	34.02	1,187,275	$	42.66

Note J: Shareholders’ Equity & Earnings Per Share.

Shares used in computation of diluted earnings per share reflect the dilutive effect of stock options.

In December 1999, the Board of Directors of the Company adopted a new Shareholder Rights Plan (the “Plan”) to replace a 1989 rights plan that expired on December 2, 1999. On December 17, 2006, and immediately prior to the Company’s entry into the Merger Agreement with the Sponsor Group, the Company’s Board of Directors terminated the Plan and redeemed all rights issued and outstanding under the Plan. As provided in the Plan, the rights terminated on December 17, 2006, and, thereafter, holders of the rights were entitled only to receive a redemption payment of $0.0001 per right (the “Redemption Payment”). The Redemption Payment was paid by the Company to rights holders of record on December 28, 2006 in accordance with the terms of the Plan on January 3, 2007.

58

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note K: Income Taxes.

The components of income before income taxes are as follows:

(in thousands)

	2007		2006		2005
United States operations	$	405,191	$	531,317	$	488,346
Foreign operations		96,381		79,678		58,123
Total	$	501,572	$	610,995	$	546,469

The provision for income taxes is summarized as follows:

(in thousands)

	2007			2006			2005
Current:
Federal	$	189,129		$	170,623		$	160,386
State, including Puerto Rico		13,880			19,012			19,927
Foreign		24,484			19,808			12,936
		227,493			209,443			193,249
Deferred		(61,813	)		(4,356	)		3,847
Total	$	165,680		$	205,087		$	197,096
Effective tax rate		33.0	%		33.6	%		36.1	%

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate follows:

	2007		2006		2005
U.S. statutory income tax rate	35.0	%	35.0	%	35.0	%
Add (deduct):
State taxes, less effect of federal reduction	1.1		1.7		2.0
Foreign income taxes at rates different from the U.S. statutory rate	(1.4	)	(.9	)	(1.3	)
Tax benefit relating to operations in Puerto Rico	(1.1	)	(.6	)	(.2	)
Tax credits	(.3	)	(.3	)	(.4	)
Tax benefit relating to U.S. export sales	(1.1	)	(1.2	)	(.6	)
In-process research and development	—		—		1.7
Other	.8		(.1	)	(.1	)
Effective tax rate	33.0	%	33.6	%	36.1	%

The components of the net deferred tax asset and liability at May 31, 2007 and 2006 are as follows:

(in thousands)

	2007			2006
Current deferred tax asset:
Accounts and notes receivable	$	72,534		$	19,541
Inventories		37,356			43,480
Accrued expenses		26,887			12,169
Current deferred tax asset	$	136,777		$	75,190
Long-term deferred tax asset (liability):
Depreciation	$	(13,453	)	$	(11,296	)
Financial accounting basis of net assets of acquired companies different than tax basis		(11,208	)		(12,100	)
Other		3,419			(3,595	)
Long-term deferred tax liability	$	(21,242	)	$	(26,991	)

59

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note L: Segment Data.

The Company operates in one business segment, musculoskeletal products, which includes the designing, manufacturing and marketing of reconstructive products, fixation devices, spinal products and other products. Other products consist primarily of softgoods and bracing products, arthroscopy products, general instruments and operating room supplies. The Company manages its business segment primarily on a geographic basis. These geographic markets are comprised of the United States, Europe and the Rest of World. Major markets included in the Rest of World geographic market are Australia, Japan and Canada. The Company evaluates performance of each geographic segment based on net sales growth exclusive of foreign currency impact and operating income exclusive of acquisition expenses and inventory step-up and in-process research and development write-offs. Identifiable assets are those assets used exclusively in the operations of each geographic segment. Revenues attributable to each geographic segment are based on the location of the customer.

Net sales growth by geographic segment and product category are as follows:

(in thousands)

	2007						2006
	Sales Growth As Reported		FX Impact		Sales Growth in Local Currencies		Sales Growth As Reported		FX Impact		Sales Growth in Local Currencies
Net sales to customers:
United States	(1	)%	—	%	(1	)%	7	%	—	%	7	%
Europe	14		(6	)	8		7		4		11
Rest of World	14		(1	)	13		17		(1	)	16
Total	4	%	(2	)%	2	%	8	%	1	%	9	%
Product category sales growth:
Reconstructive products	9	%	(2	)%	7	%	10	%	1	%	11	%
Fixation devices	(11	)	(1	)	(12	)	2		0		2
Spinal products	(7	)	(1	)	(8	)	4		0		4
Other products	—	%	(1	)%	(1	)%	5	%	1	%	6	%

60

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note L: Segment Data, Concluded.

Net sales of musculoskeletal products by product category and reportable geographic segment results are as follows:

(in thousands)

	2007		2006		2005
Reconstructive products	$	1,503,874	$	1,379,420	$	1,254,234
Fixation devices		224,694		251,360		246,730
Spinal products		205,862		221,964		214,039
Other products		172,998		172,995		164,947
	$	2,107,428	$	2,025,739	$	1,879,950
Net sales to customers:
United States	$	1,306,475	$	1,325,113	$	1,238,727
Europe		595,899		520,660		487,991
Rest of World		205,054		179,966		153,232
	$	2,107,428	$	2,025,739	$	1,879,950
Operating income:
United States	$	383,565	$	519,953	$	505,799
Europe		97,192		77,666		75,769
Rest of World		8,845		10,767		12,762
Current period impact of inventory step-up		—		—		(24,250	)
Write-off of in-process research and development		—		—		(26,020	)
	$	489,602	$	608,386	$	544,060
Long-lived assets:
United States	$	526,391	$	488,097	$	475,087
Europe		390,983		364,110		353,979
Rest of World		41,295		32,879		23,732
	$	958,669	$	885,086	$	852,798
Capital expenditures:
United States	$	75,730	$	48,175	$	50,930
Europe		51,941		47,023		38,008
Rest of World		14,940		13,714		8,434
	$	142,611	$	108,912	$	97,372
Depreciation and amortization:
United States	$	44,317	$	39,275	$	29,273
Europe		45,017		37,477		34,695
Rest of World		7,671		5,425		5,634
	$	97,005	$	82,177	$	69,602

61

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note M: Commitments & Contingencies.

Medical Insurance Plan – The Company maintains a self-insurance program for covered medical expenses for all Team Members within the continental U.S. The Company is liable for claims up to $200,000 per insured annually, as well as an additional annual aggregate of $60,000. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and a management-determined estimated liability for claims incurred but not reported.

Liability Insurance – Since 1989, the Company has self-insured against product liability risks, with excess coverage on a claims-made basis from various insurance carriers in excess of the self-insured amounts and subject to certain policy limits. Self-insurance costs are accrued based on reserves set in consultation with the insurance carrier for reported claims and a management-determined estimated liability for claims incurred but not reported. Based on historical experience, management does not anticipate that incurred but unreported claims would have a material impact on the Company’s consolidated financial position.

U.S. Department of Justice Investigations.

On March 30, 2005 the Company announced that it had received a subpoena from the U.S. Department of Justice through the U.S. Attorney for the District of New Jersey requesting documents related to any consulting and professional service agreements with orthopedic surgeons using or considering the use of the Company’s hip or knee implants for the period January 2002 through March 29, 2005. The Company is aware that similar inquiries were directed to other companies in the orthopedics industry. On July 19, 2006 the Company received a letter from the U.S. Department of Justice through the U.S. Attorney for the District of New Jersey requesting additional documents further to the subpoena issued in March 2005. This letter requested additional documents related to consulting and service agreements for the time period January 1998 through the present, as well as research and other grant agreements for that same time period. Further, the letter requested that the Company provide copies of the agreements identified in the supplemental request on an on-going basis. In addition, the requested information related to Company-sponsored training events, the selection process used by the Company to identify consultants and researchers, the Company’s product design process for hip and knee implants and information on the Company’s orthopedic sales force. The Company has subsequently received additional requests for information, both informally and by subpoena.

The U.S. Attorney’s Office and the Company have recently begun discussions regarding a potential resolution of this matter. The results of any resolution remain uncertain at this time, but could, among other things, require monetary payments, cause the Company to significantly change some of its existing business practices, and include the potential for additional governmental oversight. Although the Company has cooperated and intends to continue to cooperate fully with the Department of Justice inquiry, discussions are still in preliminary stages with respect to the terms of any proposed resolution and there can be no assurance that the Company will enter into a consensual resolution of this matter with the U.S. Attorney’s Office. Given the preliminary nature of these discussions, the Company does not believe that a range of loss is estimable; therefore, the Company has not accrued for any losses with regard to this inquiry.

In June 2006, the Company received a federal grand jury subpoena issued at the request of the U.S. Department of Justice, Antitrust Division, requesting documents from January 2001 through June 2006 regarding possible violations of federal criminal law, including possible violations of the antitrust laws, relating to the manufacture and sale of orthopedic implant devices, or the subpoena. The Company is aware of similar subpoenas directed to other companies in the orthopedic industry. The Company has cooperated and intends to continue to fully cooperate with the Department of Justice investigation. The result of this investigation may not be known for several years. However, the scope of the subpoena has currently been narrowed to a specific geographic region and specific product lines. It is the Company’s belief that the other orthopedic companies that received similar subpoenas have received similar guidance. It is the Company’s belief that the investigation was prompted by an unsolicited e-mail sent by a representative of one of the Company’s competitors that proposed a common pricing strategy in connection with a particular hospital. This e-mail was received by an independent sales representative of an independent distributor for Biomet Orthopedics, but it was never transmitted to the Company. Neither the Company, the Company’s independent distributor, nor the Company’s independent sales representative took any action in response to the e-mail, and the Company believes that no anticompetitive activity took place as a result of it. The Company requires compliance by the Company’s employees and the Company’s independent distributors with the Company’s Code of Business Conduct and Ethics and with applicable antitrust laws. The information provided herein is limited to the information available to the Company at the present time and the Company cannot offer any assurances as to the scope and final outcome of this investigation. On an issue related to the subpoena the Company has received two complaints in class action lawsuits alleging violations of the Sherman Antitrust Act. In addition, the Company is aware of other complaints that have been filed, but not served on the Company. The complaints also named various other companies in the orthopedic industry as defendants. We intend to vigorously defend this matter and believe that the Company has meritorious defenses to the claims being asserted.

In May 2007, the Company received a subpoena from the U.S. Department of Justice through the U.S. Attorney for the Southern District of West Virginia requesting documents generally relating to a certain number of products manufactured, marketed and sold by the Company’s subsidiary EBI, L.P. for the time period from January 1999 through the present. In June 2007, the Company received a second administrative subpoena from the U.S. Attorney for the Southern District of West Virginia requesting documents relating to a specific physician’s assistant. The Company intends to fully cooperate with the request of the Department of Justice. Further, the Company can make no assurances as to the time or resources that will be needed to devote to this inquiry or its final outcome.

Litigation Relating to Past Stock Option Practices.

On September 21, 2006, two shareholder-derivative complaints were filed against certain of the Company’s current and former officers and directors in Kosciusko Superior Court I in Kosciusko Country, in the State of Indiana. The complaints, captioned Long v. Hann, et al., and Thorson v. Hann, et al., alleged violations of state law relating to the issuance of certain stock option awards by the Company dating back to 1996. Both complaints sought unspecified money damages as well as other equitable and injunctive relief. These two cases were consolidated under the caption In re Biomet, Inc. Derivative Litigation, and on January 19, 2007, plaintiffs filed an amended complaint that made additional allegations based on the Company’s December 18, 2006 disclosures related to stock option awards, including allegations that the defendants sought to sell the company in order to escape liability for their conduct, and that they did so at a devalued price, thus further breaching their fiduciary duties to shareholders. On February 16, 2007, defendants filed a motion to dismiss plaintiffs’ amended complaint, which is currently pending with the court.

62

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note M: Commitments & Contingencies, Continued.

On December 11, 2006, a third shareholder-derivative complaint captioned International Brotherhood of Electrical Workers Local 98 Pension Fund v. Hann, et al., No. 06 CV 14312, was filed in federal court in the Southern District of New York. The IBEW case makes allegations and claims similar to those made in the Indiana litigation, in addition to purporting to state three derivative claims for violations of the federal securities laws. On February 15, 2007, defendants filed a motion to dismiss the plaintiff’s complaint. On April 11, 2007, plaintiffs filed a motion for partial summary judgment claiming that the disclosures in the Company’s April 2, 2007 Form 8-K filing and press release regarding the Company’s historical stock options granting practices constitute admissions sufficient to establish defendants’ liability on certain of plaintiffs’ claims. Both motions are currently pending with the court.

Pursuant to Indiana law and provisions of the Company’s article of incorporation, the Company is advancing reasonable expenses, including attorneys’ fees, incurred by the Company’s current and former directors and officers in defending these lawsuits.

On May 25, 2007, the Board received and discussed an updated report from its Special Committee, which concluded that pursuing these three shareholder-derivative complaints was not in the Company’s best interests. Under Indiana law, the Special Committee’s determination may be binding on the pending shareholder-derivative claims and result in the dismissal of these complaints.

Litigation Relating to the Merger.

On December 20, 2006, a purported class-action lawsuit captioned Long, et al. v. Hann, et al., was filed in Indiana State court in the County of Kosciusko. The lawsuit names as defendants each member of the Company’s Board of Directors at the time, Dane Miller, Ph.D., and Blackstone Capital Partners V L.P., KKR 2006 Fund L.P., Goldman Sachs Investments Ltd., and TPG Partners V, L.P. The complaint alleges, among other things, that the defendants breached, or aided and abetted the breach of, fiduciary duties owed to the Company’s shareholders by the Company’s directors in connection with the Company’s entry into the Merger Agreement. Among the purported fiduciary breaches alleged in the complaint is that the Company’s director defendants “knew that the only way they could escape liability for their stock option granting improprieties would be to sell the Company, thus eliminating their liability.” The complaint seeks, among other relief, class certification of the lawsuit, a declaration that the Merger Agreement was entered into in breach of the fiduciary duties of the defendants, an injunction preventing the defendants from proceeding with the Merger unless and until the defendants implement procedures to obtain the highest possible sale price, an order directing the defendants to exercise their fiduciary duties to obtain a transaction which is in the best interests of the Company’s shareholders until the process for a sale of Biomet is completed and the highest price is obtained, an order directing the defendants to exercise their fiduciary duty to disclose all material information in their possession concerning the Merger prior to the shareholder vote, including the Company’s fiscal 2007 second quarter financial results, imposition of a constructive trust upon any benefits improperly received by the defendants, an award of attorneys’ fees and expenses, and such other relief as the court might find just and proper. On March 29 and 30, 2007, the defendants filed motions to dismiss the plaintiffs’ complaint, and these motions are currently pending before the court.

On January 2, 2007, a purported class action lawsuit captioned Gervasio v. Biomet, Inc., et al., was filed in the Supreme Court for the State of New York, New York County. A virtually identical action was filed on January 9, 2007, captioned Corry v. Biomet, Inc., etal., in the same court. Both of these lawsuits named as defendants Biomet, each member of its Board of Directors at the time, Dane Miller, Ph.D., The Blackstone Group L.P., Kohlberg Kravis Roberts & Co., Goldman Sachs Capital Partners, and Texas Pacific Group. The lawsuits made essentially the same claims and sought the same relief as in the Long action described above. On January 29, 2007, defendants filed a joint motion to dismiss Gervasio. On February 14, 2007, the plaintiff in Corry voluntarily discontinued his lawsuit and informed defendants that he intended to intervene in Gervasio. On March 26, 2007, the court granted defendants’ motion to dismiss Gervasio. On May 31, 2007, the Company entered into a memorandum of understanding regarding the settlement of these purported class action lawsuits relating to the Merger.

Pursuant to Indiana law and provisions of the Company’s articles of incorporation, the Company is advancing reasonable expenses, including attorneys’ fees, incurred by the Company’s current and former directors and officers in defending these lawsuits, with the exception of Dane Miller, Ph.D., whose status as a defendant does not arise from his status as a former director or officer.

On May 31, 2007, the Company entered into a memorandum of understanding regarding the settlement of class action lawsuits that were filed on behalf of the Company’s shareholders following the announcement of the proposed Merger. Each of Biomet and the other defendants denies all of the allegations in these lawsuits, including any allegation that its current disclosures with regard to the pending Merger are false, misleading or incomplete in any way. Nevertheless, without admitting any liability or wrongdoing, the Company and other defendants in these cases have agreed in principle to settle them in order to avoid the potential cost and distraction of continued litigation and to eliminate any risk of any delay to the closing of the Merger posed by these lawsuits. Such settlement is subject to execution and delivery of definitive documentation, the closing of the Merger and court approval. If the settlement becomes effective, the lawsuits will be dismissed with prejudice.

Pursuant to the terms of the settlement, the Company has agreed to make available meaningful additional information, including financial information, to its shareholders. Such additional information is contained in the Company’s Current Report on Form 8-K filed on May 31, 2007. In addition, the Sponsor Group has agreed to cause the Company (or the Company’s successors) to pay the legal fees and expenses of plaintiffs’ counsel, in an amount of $600,000 in the aggregate, subject to the approval by the court and the closing of the Merger. This payment will not affect the amount of consideration to be paid in the Merger. The details of the settlement will be set forth in a notice to be sent to the Company’s shareholders prior to a hearing before the court to consider the settlement. The settlement will not affect the consideration to be paid in the Merger to the Company’s shareholders in connection with the proposed Merger.

Additional lawsuits pertaining to the Merger could be filed in the future.

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Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note M: Commitments & Contingencies, Concluded.

Nasdaq Delisting Proceedings.

The Company’s common shares are currently traded on the NASDAQ Global Select Market under the symbol “BMET.” On January 9, 2007, the Company filed a Form 12b-25 with the SEC stating that it did not anticipate filing its quarterly report on Form 10-Q for the second quarter of fiscal year 2007 on or before the fifth calendar day following the prescribed due date. On January 11, 2007, the Company received a Staff Determination letter from The Nasdaq Stock Market indicating that the Company is not in compliance with the filing requirements for continued listing under Marketplace Rule 4310(c)(14). The letter was issued in accordance with NASDAQ procedures due to the Company’s inability to file its quarterly report on Form 10-Q for the second quarter of fiscal year 2007 by the prescribed due date.

A hearing was held on March 1, 2007, at which the Company requested an exception within which to regain compliance with the NASDAQ’s filing requirements. On April 11, 2007, a NASDAQ Listing Qualifications Panel (the “Panel”) granted the Company’s request for an exception and continued listing on the NASDAQ Global Select Market, notwithstanding the Company’s inability to timely file its quarterly report on Form 10-Q for the second quarter of fiscal 2007. On May 22, 2007, the Company requested an extension of the May 29, 2007 deadline until June 12, 2007.

On April 12, 2007, the Company announced that it received an additional notice of non-compliance from The Nasdaq Stock Market, pursuant to Marketplace Rule 4310(c)(14), due to the previously announced delay in filing its quarterly report on Form 10-Q for the third quarter of fiscal 2007. In the notice, the Company was invited to make an additional submission to the Panel addressing its plans for making the third quarter filing. On April 19,2007, the Company requested an exception until June 12, 2007 to file its quarterly report on Form 10-Q for the third quarter of fiscal 2007.

On May 29, 2007, the Panel made a determination with respect to the Company’s April 19, 2007 and May 22, 2007 requests. In its May 29, 2007 determination, the Panel granted the Company’s request to extend the time to file the Company’s reports on Form 10-Q for the second and third quarters of fiscal 2007, and to complete all required restatements, on or before July 11, 2007. The Panel added that notwithstanding this extension it expects the Company to comply with the terms of the exception by the June 12, 2007 date referenced in the Company’s April 19, 2007 and May 22, 2007 requests. On June 7, 2007, the Company received a letter from the Panel stating that Biomet has evidenced compliance with the Panel’s prior decisions and all applicable Nasdaq Marketplace Rules, and that the Panel has determined to continue the listing of Biomets’ common shares on the NASDAQ Global Select Market.

Other Litigation.

In February 2006, SDGI Holdings, Inc. and Medtronic Sofamor Danek, Inc. (collectively referred to herein as “Medtronic”) brought an action against EBI and Biomet alleging infringement of seven patents. Specifically, Medtronic alleges that the patents are infringed by certain components of the Company’s Vuelock^® Anterior Cervical Plate System, as well as instruments and surgical implantation methods associated with the Company’s Array^® Spinal System. Medtronic’s complaint did not seek a specific amount of damages, but does seek to enjoin the Company from manufacturing, selling and/or distributing the allegedly infringing products. The Company has filed a counterclaim seeking a finding of noninfringement of the patents at issue and a finding that certain of the patents are invalid and unenforceable. The litigation is in the early stages of discovery. The Company is vigorously defending this matter and intends to continue to do so.

The Company and its subsidiary, Biomet Orthopedics, Inc., recently initiated legal proceedings against Zimmer US, Inc. (“Zimmer”), certain former Biomet distributors, and David Montgomery, a former employee of the Company who currently works for Zimmer. The thirteen count lawsuit filed in Marion County, Indiana alleges, among other things, that Zimmer and Mr. Montgomery attempted to create an unfair market advantage by engaging in a campaign to misappropriate Biomet confidential information, to interfere with Biomet’s contractual relations with distributors and to attempt to buy the assets of most of Biomet’s distributors (including the Company’s surgical instruments) throughout the United States. Further, the lawsuit alleges that the limited number of distributors who accepted Zimmer’s offer are in violation of their contractual obligations to the Company. Although nearly all of the Company’s distributors rejected Zimmer’s offers and have remained with the Company, and although no amount of money damages can completely compensate the Company for the losses it has sustained as a result of defendants’ conduct, the Company is nonetheless seeking to recover compensatory damages that are attributable to financial and other resources spent on signing new agreements with its sales force. To the extent the Company sustained damages as a result of its former distributors agreeing to purportedly sell their assets to Zimmer, the Company is seeking to recover lost profits and other damages as well. In addition, the Company is seeking to recover punitive damages from the defendants.

In a related matter, the Company brought suit against a former distributor for Biomet Orthopedics who, in violation of his contractual and other obligations to the Company under agreements stretching back to 1994, sold the assets of his distributorship to Zimmer in an apparent effort to avoid his contractual obligations to the Company. The complaint, now pending in federal district court in Indiana, asserts five causes of action that include breach of contract, unjust enrichment, and statutory wrongs. Among other things, the complaint seeks injunctive relief and compensatory and punitive damages. On July 16, 2007 a temporary restraining order was entered against the former Biomet distributor. Prior to the filing of the suit described above, that former Biomet distributor sued one of his former employees, who decided to continue to represent Biomet products in the future as he has for nearly ten years. The suit brought against this employee by the former Biomet distributor who sold his assets to Zimmer claims, among other things, that the former employee is violating his non-competition agreement with the former Biomet distributor by continuing to sell the same Biomet products he sold while employed by the former Biomet distributor. The suit also seeks, among other forms of relief, an injunction and compensatory and punitive damages.

There are various other claims, lawsuits, disputes with third parties, investigations and pending actions involving various allegations against the Company incident to the operation of its business, principally product liability and intellectual property cases. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company accrues for losses that are deemed to be probable and subject to reasonable estimate. Based on the advice of counsel to the Company in these matters, management believes that the ultimate outcome of these matters and any liabilities in excess of amounts provided will not have a material adverse impact on the Company’s consolidated financial statements taken as a whole.

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Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (concluded)

Note N: Subsequent Events.

On December 18, 2006, Biomet entered into an Agreement and Plan of Merger with LVB Acquisition, LLC, a Delaware limited liability company (“LVB”), and LVB Acquisition Merger Sub, Inc., an Indiana corporation and a wholly-owned subsidiary of LVB (“Purchaser”), which agreement was amended and restated as of June 7, 2007 (as may be amended and restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, after completion of the Offer (as defined below) and the satisfaction or waiver of certain conditions, Purchaser will be merged with and into Biomet, with Biomet continuing as the surviving corporation (the “Merger”). LVB is controlled by a consortium of private equity funds: Blackstone Capital Partners V L.P., Goldman Sachs Investments Ltd., KKR 2006 Fund L.P. and Texas Pacific Group (each a “Sponsor” and collectively, the “Sponsor Group”).

Pursuant to the Merger Agreement, on June 13, 2007, Purchaser commenced a cash tender offer, or the Offer, to purchase all of Biomet’s outstanding common shares, without par value (the “Common Shares” or the “Shares”), at a price of $46.00 per Share (the “Offer Price”), without interest and less any required withholding taxes. The Offer was made pursuant to Purchaser’s offer to purchase dated June 13, 2007 and the related letter of transmittal, each of which was filed with the SEC on June 13, 2007. The Offer expired at 12:00 midnight, New York City time, on July 11, 2007, with approximately 82.41% of the outstanding Shares having been tendered to Purchaser. On July 17, 2007, Purchaser completed its purchase of the tendered Shares.

In connection with the closing of the Offer, all outstanding options, each an Option, to purchase Shares under Biomet’s stock plans, vested or unvested, were cancelled and each Option holder was paid an amount in cash equal to the excess, if any, of the Offer Price over the applicable option exercise price for each Share subject to an Option, less any required withholding taxes.

In connection with the Offer, Purchaser entered into a credit agreement dated as of July 11, 2007 for a $6,165 million senior secured term loan facility, or the Tender Facility, maturing on June 6, 2008, and pursuant to which it borrowed approximately $4,181 million to finance a portion of the Offer and pay related fees and expenses. Biomet expects to refinance all amounts borrowed under the Tender Facility concurrently with the closing of its new senior secured credit facilities. Additional financing for the Offer was provided in the form of indirect equity contributions from the Sponsor Group, who collectively caused approximately $5,197 million to be contributed as equity to LVB Acquisition Holding, LLC, or Holding, concurrently with the funding of the Tender Facility. Holding, which owned 100% of the outstanding equity interests in LVB at the time of the Offer, contributed such funds to LVB, which in turn contributed such funds to Purchaser.

As a result of Purchaser having acquired approximately 82.41% of the outstanding Shares pursuant to the Offer, Biomet will call a special meeting of shareholders to vote upon the Merger, at which meeting Biomet expects that LVB and Purchaser will vote all of their Shares to approve the Merger. At the effective time of the Merger, or the Effective Time, each Share, other than the Shares owned by LVB or Purchaser immediately prior to the Effective Time, will be cancelled automatically and will cease to exist and will be converted into the right to receive the Offer Price, without interest and less any required withholding taxes. Additional funds necessary to complete the Merger are expected to be funded using equity contributions by certain of Biomet’s directors and equity contribution or rollover of existing equity interests by certain of Biomet’s executive officers and members of Biomet’s senior management (the “Management Participants”), an offering of high-yield debt securities, initial borrowings under Biomet’s new senior secured credit facilities, its cash on hand and, if necessary, additional equity contributions by the Sponsor Group.

Pursuant to the Merger Agreement, LVB obtained pro rata representation on and control of the Board of Directors.

The closing of the Merger is subject to various conditions as described in the Merger Agreement, including to customary conditions such as the absence of any governmental orders preventing the Merger or any other transaction contemplated by the Merger Agreement, Biomet’s provision to LVB of certain financial information and certificates described in the Merger Agreement, and the receipt of certain regulatory approvals. Biomet has agreed with LVB and Purchaser to each use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the Merger, including with respect to obtaining the necessary consents, approvals and authorizations from governmental authorities.

Completion of the transactions contemplated by the Merger Agreement is subject to various regulatory approvals or consents, including those required by (1) the Hart-Scott-Rodino Antitrust Improvement Act of 1976, or the HSR Act, and (2) the antitrust laws of the European Union. On February 15, 2007, the parties were granted early termination of the waiting period under the HSR Act for the Merger Agreement and related transactions. No approval of the antitrust authorities in the European Union is required in connection with the Merger, and none of the parties is aware of any other required approvals. The Company has been informed by the Sponsor Group that, in accordance with the provisions of the Merger Agreement, the Sponsor Group currently expects to complete the Merger no earlier than September 2007, subject to the satisfaction of the conditions contained therein.

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Biomet, Inc. and Subsidiaries Schedule II — Valuation and Qualifying Accounts

for the years ended May 31, 2007, 2006 and 2005

(in thousands)

Col. A	Col.B		Col.C					Col.D			Col.E
			Additions
Description	Balance at beginning of period		(1) Charged to costs and expenses		(2) Charged to other accounts - describe			Deductions describe			Balance at end of period
Allowance for doubtful receivables:
For the year ended May 31, 2007	$	69,134	$	65,057	$ $	45  646	(B) (C)	$	50,770(	A)	$	84,112
For the year ended May 31, 2006	$	59,513	$	21,725	$	(351	)(C)	$	11,753	(A)	$	69,134
For the year ended May 31, 2005	$	43,384	$	29,116	$	288  1,005	(B) (C)	$	14,280	(A)	$	59,513
Excess and obsolete inventory reserves:
For the year ended May 31, 2007	$	99,427	$	67,348	$	4,581	(C)	$	18,004	(D)	$	153,352
For the year ended May 31, 2006	$	93,046	$	29,577	$	(1,290	)(C)	$	21,906	(D)	$	99,427
For the year ended May 31, 2005	$	81,655	$	34,792	$	2,984	(C)	$	26,385	(D)	$	93,046

Notes:

(A) Uncollectible accounts written off

(B) Collection of previously written off accounts

(C) Effect of foreign currency translation

(D) Inventory written off

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures (as defined in Rule 13a- 15(e) of the Securities Exchange Act of 1934, as amended (the “Act”)) that are designed to provide reasonable assurance that information required to be disclosed by the Company, including the Company’s consolidated entities, in the reports that the Company files or submits under the Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the President and Chief Executive Officer (the “Principal Executive Officer”) and Chief Financial Officer (the “Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. Prior to the filing of this report, the Company completed an evaluation under the supervision and with the participation of senior management, including the Company’s Principal Executive Officer and its Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of May 31, 2007. Based on this evaluation, Biomet’s Principal Executive Officer and its Principal Financial Officer concluded that Biomet’s disclosure controls and procedures were effective at the reasonable assurance level as of May 31, 2007.

(b) Management’s Report on Internal Control over Financial Reporting. As described in more detail in Part II, Item 9A “Controls and Procedures” of the Company’s amended annual report on Form 10-K/A filed with the SEC on May 29, 2007 (the “Form 10-K/A”), as of May 31, 2006 the Company did not have an effective control designed and in place over the establishment of the appropriate grant date or the measurement date for determining share-based expense. These deficiencies resulted in the misstatement of the Company’s share-based expense, payroll and other employee taxes, additional paid-in capital accounts, related income tax accounts, retained earnings, related financial disclosures and other accounts and resulted in the restatements discussed in the Form 10-K/A. As a result of these deficiencies, the Company’s current management concluded that the Company had a material weakness as of May 31, 2006 and, therefore, the Company’s internal control over financial reporting was not effective as of such date.

Throughout fiscal 2007, the Company implemented the following improvements or changes to its internal control over financial reporting to effectively remediate the material weakness described above:

• the Company is not currently granting any stock option awards, and has not granted any stock option awards since December 2006;

• on February 26, 2007, the Company announced the appointment of Jeffrey R. Binder as President and Chief Executive Officer and a member of the Company’s Board of Directors;

• on March 30, 2007, Gregory D. Hartman retired as Senior Vice President—Finance, Chief Financial Officer and Treasurer, and Daniel P. Hann retired as Executive Vice President of Administration and a Director of the Company;

• on March 30, 2007, the Company announced the appointment of J. Pat Richardson as Vice President - Finance and Interim Chief Financial Officer and Treasurer, and on May 14, 2007 the Company announced the appointment of Daniel P. Florin as Senior Vice President and Chief Financial Officer to become effective June 5, 2007;

• the Company appointed Bradley J. Tandy as Senior Vice President, General Counsel and Secretary;

• the Company’s current Chief Executive Officer and Interim Chief Financial Officer have met with the key personnel throughout the Company who have significant roles in the establishment and maintenance of internal control over financial reporting and disclosure controls and procedures to emphasize the Company’s commitment to enhancing the Company’s internal control over financial reporting and disclosure controls and procedures;

• the Company’s current Chief Executive Officer, current senior management and the Board of Directors are committed to setting the proper tone regarding internal control over financial reporting and achieving transparency through effective corporate governance, a strong control environment, business standards reflected in Biomet’s Code of Business Conduct and Ethics, and financial reporting and disclosure completeness and integrity;

• the Company’s Human Resources, Legal and Finance departments either have or will, prior to the Company’s resumption of the issuance of stock option awards, be provided additional training and education designed to ensure that relevant individuals involved in the administration of stock option grants understand the terms of the Company’s equity-based award plans and the relevant accounting guidance for stock options and other share-based payments; and

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• the Company’s Human Resources, Legal and Finance departments will develop, prior to the Company’s resumption of the issuance of stock option awards, formal, documented stock option grant procedures and practices to ensure systematic approval and execution of stock option grants and the proper recording of such grants in the Company’s stock administration records and financial statements.

With the implementation of the above measures and other events occurring throughout fiscal 2007, the Company has improved its internal control over financial reporting and reduced to a remote likelihood the possibility of a material misstatement that would not be prevented or detected related to the material weakness described above. The Company has, therefore, concluded that the above referenced material weakness in internal control over financial reporting has been remediated as of May 31, 2007.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted pursuant thereto, the Company included a report of management’s assessment of the effectiveness of its internal control over financial reporting as of May 31, 2007 as part of this report. The Company’s independent registered public accounting firm also attested to, and reported on, management’s assessment of the effectiveness of internal control over financial reporting as of May 31, 2007. Management’s report and the independent registered public accounting firm’s attestation report are included on pages 40 and 41, respectively, of this report and are incorporated herein by reference.

(c) Changes in Internal Control. Except as Set forth in part (b) of this Item 9A, Controls and Procedures, during the fourth quarter of fiscal year 2007, there were no changes in Biomet’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Biomet’s internal control over financial reporting.

Item 9B. Other Information

There was no information to be disclosed in a Current Report on Form 8-K during the fourth quarter of fiscal year 2007 that was not previously reported.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

DIRECTORS OF BIOMET

The following information sets forth, with respect to each individual, the name, age as of July 17, 2007, business address and current principal occupation or employment, and business experience for the past five years of Biomet’s Board.

Jeffrey R. Binder, age 44 Director since 2007

Mr. Binder was appointed the President and Chief Executive Officer effective February 26, 2007. Prior thereto, he served as Senior Vice President of Diagnostic Operations of Abbott Laboratories from January 2006 to February 2007. He previously served as President of Abbott Spine from June 2003 to January 2006, and President and Chief Executive Officer of Spinal Concepts from 2000 until June 2003. The business address of Mr. Binder is 56 East Bell Drive, Warsaw, Indiana 46582.

Chinh E. Chu, age 40 Director since 2007

Mr. Chu is a Senior Managing Director of The Blackstone Group, which he joined in 1990. Mr. Chu serves on the board of directors of Celanese AG, Financial Guaranty Insurance Company, HealthMarkets, Inc., Nalco Holding Company, Nycomed Holdings and SunGard Data Systems Inc. The business address of Mr. Chu is 345 Park Avenue, New York, New York 10154.

Jonathan J. Coslet, age 42 Director since 2007

Mr. Coslet has been a Partner of TPG Capital, L.P. since 1993 and is currently a Senior Partner. Mr. Coslet serves on the board of directors of IASIS Healthcare Corp., The Neiman Marcus Group, Inc., J. Crew Group, Inc. and Quintiles Transnational Corp. The business address of Mr. Coslett is 345 California Street, San Francisco, California 94101.

Michael Dal Bello, age 36 Director since 2007

Mr. Dal Bello has been a Principal in the Private Equity Group of The Blackstone Group since December 2005 and from 2002 until December 2005, he was an Associate in this group. Mr. Dal Bello serves on the board of directors of Catalent Pharma Solutions, Inc., Montecito Broadcast Group, LLC, Global Tower Partners, Sithe Global Power, LLC, Team Finance LLC and Vanguard Health Systems, Inc. The business address of Mr. Dal Bello is 345 Park Avenue, New York, New York 10154.

Sean Fernandes, age 33 Director since 2007

Mr. Fernandes joined Goldman, Sachs & Co. in the Financial Institution Group, as an Associate in 2000 and he became a Vice President in 2003. He joined the Principal Investment Area in 2007. Mr. Fernandes serves on the board of directors of Signature Hospital LLC. The business address of Mr. Fernandes is 85 Broad Street, New York, New York 10004.

C. Scott Harrison, M.D., age 70 Director since 1994

Dr. Harrison is the founder, President and Chief Executive Officer of CURE International (non-profit organization). The business address of Dr. Harrison is P.O. Box 2323, Harrisburg, Pennsylvania 17105-2323.

Adrian Jones, age 43 Director since 2007

Mr. Jones has been a Managing Director of Goldman, Sachs & Co. since 2002. Mr. Jones serves on the board of directors of Burger King Holdings, Inc., Education Management Corporation, HealthMarkets, Inc. and Signature Hospital LLC. The business address of Mr. Jones is 85 Broad Street, New York, New York 10004.

Michael Michelson, age 56 Director since 2007

Mr. Michelson has been a member of the limited liability company that serves as the general partner of Kohlberg Kravis Roberts & Co., L.P. since 1996 and prior thereto, he was a general partner of Kohlberg Kravis Roberts & Co, L.P. Mr. Michelson also serves on the board of directors of Accellent Inc., Jazz Pharmaceuticals, Inc. and HCA Inc. The business address of Mr. Michelson is 2800 Sand Hill Road, Menlo Park, California 94025.

Dane A. Miller, Ph.D., age 61 Director since 2007

Dr. Miller is one of the four founders of Biomet and, from 1977 until 2006, he served as President, Chief Executive Officer and a Director of Biomet. Dr. Miller serves on the board of directors of 1st Source Corporation, ForeTravel, Inc., the Indiana Economic Development Corporation, the University of Chicago Health Systems and the World Craniofacial Foundation. The business address of Dr. Miller is 700 Park Avenue, Suite G, Winona Lake, IN 46590.

Kenneth V. Miller, age 59 Director since 1979

Mr. Miller is a self-employed attorney, venture capitalist and a principal in Havirco (private investment management firm). Mr. Miller is a director and a member of the Compensation Committee of the Board of Directors of TEAM Industries, Inc. (manufacturer of expanded polystyrene products). Mr. Miller is also a member of the Board of Trustees of Western Michigan University, as well as the Chair of the Advisory Board of Haworth College of Business at Western Michigan University. In addition, Mr. Miller serves as a director of various charitable and civic organizations. The business address of Mr. Miller is 3505 Greenleaf Boulevard, Kalamazoo, Michigan 49008.

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John Saer, age 50 Director since 2007

Mr. Saer has been an executive of the limited liability company that serves as the general partner of Kohlberg Kravis Roberts & Co., L.P. since 2001. Mr. Saer also serves on the board of directors of KSL Holdings Corporation. The business address of Mr. Saer is 9 West 57th Street, New York, New York 10019.

Todd Sisitsky, age 35 Director since 2007

Mr. Sisitsky has been a Partner of TPG Capital, L.P. since 2007. From 2003 until 2007, he was an Investor at TPG Capital, L.P. From 2001 until 2003, he was an Investor/Associate at Forstmann Little & Co. Mr. Sisitsky serves on the board of directors of IASIS Healthcare Corp., Fenwal, Inc., and Surgical Care Affiliates, LLC. The business address of Mr. Sisitsky is 345 California Street, San Francisco, California 94101.

L. Gene Tanner, age 74 Director since 1985

Mr. Tanner is Vice Chairman of the Board of NatCity Investments, Inc. (investment banking firm) and a director of the Indiana Chamber of Commerce. In addition, Mr. Tanner serves as a director of various charitable organizations. The business address of Mr. Tanner is 101 W. Washington Street, Indianapolis, Indiana 46255.

Each of Messrs. Chu, Coslet, Dal Bello, Fernandes, Jones, Michelson, Saer and Sisitsky is a partner, member or employee of an entity affiliated with one of the investment funds that indirectly own all of the equity interests in LVB Acquisition, Inc. (“LVB”) and generally is entitled to be indemnified by such entity for his service on Biomet’s Board pursuant to such entities’ governing documents or other arrangements, in each case in accordance with such entities’ policies.

None of the directors (other than Mr. Binder) currently holds any position with Biomet. Except as described below, none of the directors (other than Mr. Binder) or any of his or her affiliates (1) has a familial relationship with any directors or executive officers of Biomet or (2) has been involved in any transactions with Biomet or any of its directors, officers or affiliates which are required to be disclosed pursuant to the rules and regulations of the SEC, except as may be disclosed herein.

Dr. Miller entered into a Separation, Release and Consultancy Agreement with Biomet on May 8, 2006. Pursuant to the terms of the agreement, Dr. Miller received or will receive $4,000,000 on October 1, 2006, $500,000 on November 30, 2006 and $500,000 on the last day of each quarter thereafter through the first quarter of fiscal year 2010 as compensation for his consulting services. The agreement contains certain restrictive covenants prohibiting Dr. Miller from competing with Biomet and soliciting employees of Biomet during the term of the agreement.

There have been no material changes to the procedures by which shareholders may recommend nominees to Biomet’s Board since August 15, 2006, the date of Biomet’s Definitive Proxy Statement on Schedule 14A in connection with the 2006 Annual Meeting of Shareholders.

EXECUTIVE OFFICERS OF BIOMET

Information regarding Biomet’s executive officers is included in Part I, Item I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant.”

Audit Committee

The Board has a standing Audit Committee comprised of C. Scott Harrison, M.D., Kenneth V. Miller (Chair) and L.Gene Tanner. Furthermore, the Board has determined that the the Audit Committee consists only of directors who, in the judgment of the Board, are independent within the meaning of The Nasdaq Stock Market listing standards. The Audit Committee and the Board have determined that each of the members of the Audit Committee qualifies as an “audit committee financial expert” within the meaning of the rules and regulations of the SEC. The Audit Committee operates pursuant to its charter adopted July 19, 2006, a copy of which is available in the Corporate Governance section of Biomet’s website at www.biomet.com.

Code of Business Conduct and Ethics

Biomet has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all of its employees, officers, and directors, including its Chief Executive Officer, Chief Financial Officer and Controller, as well as certain other personnel associated with Biomet. All Biomet team members, including the aforementioned individuals and the Board, are required to comply with the Code of Conduct. The Code of Conduct is based on five broad corporate values that shape Biomet’s business practices: (a) Legal/Compliance Obligations, (b) Integrity, (c) Respect for People, (d) Dedication to Quality and (e) Stewardship. The Code of Conduct also includes a procedure for reporting any potential violations of the Code of Conduct and a process for investigating and resolving any potential violations. A copy of the Code of Conduct is available on Biomet’s website at www.biomet.com or a copy may also be requested free of charge by contacting Biomet’s Investor Relations Department at Biomet, Inc., P.O. Box 587, Warsaw, Indiana 46581-0587 or at (574) 372-1514.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires Biomet’s directors, executive officers and persons who own more than 10 percent of a registered class of Biomet’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Biomet Common Shares and other equity securities. Officers, directors and greater-than-ten percent shareholders are required by SEC regulations to furnish Biomet with copies of all Section 16(a) forms filed by them.

During the fiscal year ended May 31, 2007, to Biomet’s knowledge, based solely on the review of the copies of such reports furnished to Biomet and written representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers, directors and greater-than-ten percent beneficial owners were complied with on a timely basis, except that a Form 4 for each of Messrs. Allen, Haller, Kolter, Schiess, Sasso and Tandy and Ms. Whaley was filed late on April 10, 2007 to report the exercise of stock options by each of these individuals. The exercise of stock options for each individual occurred on April 5, 2007.

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Item 11. Executive Compensation.

Compensation Discussion and Analysis

This section includes information regarding, among other things, the overall objectives of Biomet’s compensation program and each element of compensation that Biomet provides. The goal of this section is to provide a summary of Biomet’s executive compensation practices and the decisions that Biomet made during the 2007 fiscal year concerning the compensation package payable to its executive officers, including the seven executives in the Summary Compensation Table. Each of the seven executives listed in the Summary Compensation Table is referred to herein as a “named executive officer” or “NEO.” This “Compensation Discussion and Analysis” should be read in conjunction with the detailed tables and narrative descriptions under “Executive Compensation Tables” below.

Compensation and Stock Option Committee and Compensation Methodology

During the 2007 fiscal year, the Compensation and Stock Option Committee of the Board was responsible for administering the compensation and benefit programs for Biomet’s team members, including the executive officers. Historically, the Compensation and Stock Option Committee annually reviewed and evaluated cash compensation and stock option award recommendations along with the rationale for such recommendations, as well as summary information regarding the aggregate compensation, provided to Biomet’s executive officers. The Compensation and Stock Option Committee examined these recommendations in relation to Biomet’s overall objectives and makes compensation recommendations to the Board for final approval. The Compensation and Stock Option Committee also historically sent to the Board for approval its recommendations on compensation for the Chairman of the Board and the President and Chief Executive Officer, who do not participate in the decisions of the Board as to their compensation packages. Neither the Chairman of the Board nor the President and Chief Executive Officer was a member of the Compensation and Stock Option Committee during the 2007 fiscal year. On July 12, 2007, in accordance with the provisions of the Merger Agreement, each of Messrs. Jerry L. Ferguson, M. Ray Harroff, Thomas F. Kearns, Jr., Jerry L. Miller, Charles E. Niemier and Niles L. Noblitt and Mses. Sandra A. Lamb and Marilyn Tucker Quayle (collectively, the “Resigning Directors”) submitted a resignation from the Board and from any committees of the Board (including the Compensation and Stock Option Committee) on which such individuals were a member. Such resignations were effective July 17, 2007. Also effective on July 17, 2007, and in accordance with the provisions of the Merger Agreement, Messrs. Chinh E. Chu, Jonathan J. Coslet, Michael Dal Bello, Sean Fernandes, Adrian Jones, Michael Michelson, Dane A. Miller, Ph.D., John Saer and Todd Sisitsky (collectively, “LVB’s Designees”) were appointed to the Board to replace the Resigning Directors. None of LVB’s Designees has entered into any employment agreement or arrangement with Biomet.

Traditionally, Biomet has not hired a compensation consultant to review its compensation practices. In connection with change in control agreements entered into between Biomet and certain members of its senior management team, Biomet engaged The Kinsley Group, an independent compensation consultant, primarily to provide guidance to the Board on the terms of the agreements and relevant practices of the marketplace. The Kinsley Group also provided an evaluation of Biomet’s compensation practices with respect to the compensation paid to certain members of Biomet’s senior management team and members of the Board. More recently, Biomet has engaged The Kinsley Group to provide a more comprehensive evaluation of Biomet’s compensation practices and to offer additional research capabilities and expertise in designing and operating executive compensation programs. This review is ongoing and has not yet been completed.

Prior to the engagement of The Kinsley Group, the compensation of Biomet’s executives was determined by the Compensation and Stock Option Committee after consideration of an informal peer group consisting of some of Biomet’s competitors through publicly available filings, such as proxy statements filed with the SEC. However, the Compensation and Stock Option Committee did not engage in formal benchmarking during this informal review or in making compensation decisions. Among the companies that Biomet used for its informal peer group analysis are:

Stryker Corporation	Zimmer Holdings, Inc.	Smith & Nephew plc
ReAble Therapeutics, Inc.	Orthofix International N.V.	Wright Medical Group, Inc.
Exactech, Inc.

Biomet’s executive compensation practices are also affected by the highly competitive nature of the orthopedics industry and the location of Biomet’s executive offices in Warsaw, Indiana. The fact that a number of the leading orthopedic manufacturers in the world have significant operations in and around Warsaw, Indiana, means that there are continuing opportunities for experienced orthopedic executives who reside in this area. On the other hand, the fact that Warsaw, Indiana, is a small town in a predominantly rural area can present challenges to attracting executive talent from other industries and parts of the country.

Executive Compensation Philosophy and Objectives

Biomet’s current executive compensation policies and practices reflect the compensation philosophies of Biomet’s founders. Biomet’s executive compensation practices and policies are designed to help achieve the superior performance of Biomet’s executive officers and management team by accomplishing the following goals:

• Attracting, retaining and rewarding highly-qualified and productive persons;

• Relating compensation to both company and individual performance;

• Establishing compensation levels that are internally equitable and externally competitive; and

• Encouraging an ownership interest and instilling a sense of pride in Biomet, consistent with the interests of Biomet’s shareholders.

Biomet’s compensation methodology is based on the belief that all team members play a critical role in Biomet’s success and, therefore, all team members are eligible to participate in Biomet’s cash and equity compensation plans. Biomet’s compensation methodology is based upon one of its founding philosophies: equity incentives in the form of stock options are an excellent motivation for all team members, including executive officers, and serve to align the interests of team members, management and shareholders.

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Based on these objectives, the compensation package of Biomet’s executive officers is intended to meet each of the following three criteria: (1) market competitive - competitive levels with companies of similar size and performance to Biomet, such as the companies discussed above as its informal peer group; (2) performance-based—“at risk” pay that is based on both short- and long-term goals; and (3) shareholder aligned - incentives that are structured to create alignment between the shareholders and executives with respect to short- and long-term objectives.

The Elements of Biomet’s Compensation Program

As a result of Biomet’s compensation philosophies and objectives, the compensation package of Biomet’s executive officers consists of five primary elements: (1) base salary; (2) discretionary annual cash bonuses; (3) stock options; (4) participation in employee benefit plans; and (5) deferred compensation elections.

Base Salary. Consistent with the Compensation and Stock Option Committee’s consideration of Biomet’s informal peer group, Biomet’s practice is to provide base salaries at rates that it believes to be comparable with positions of executives in the orthopedics industry of similar responsibility to Biomet executives and other companies of similar size to Biomet. The Compensation and Stock Option Committee has historically made a recommendation to the Board concerning the appropriate base salary for each executive officer based on Biomet’s performance, the executive officer’s performance, Biomet’s future objectives and challenges and the current competitive environment. Historically the Board has set the base salary for each executive officer at the beginning of each calendar year, after receiving a recommendation from the Compensation and Stock Option Committee. In connection with the ongoing comprehensive evaluation of Biomet’s compensation practices by The Kinsley Group, Biomet may redesign certain aspects of its compensation program, which may affect future base salary determinations, depending on the results of this evaluation. Presently, Biomet considers its base salaries to be in line with its compensation objectives.

Discretionary Annual Cash Bonuses. Biomet provides the opportunity for all Biomet team members, including members of its senior management team, to earn discretionary annual cash bonuses. These awards are intended to compensate Biomet team members for contributing to Biomet’s achievement of its financial and operational goals and, in certain cases, for achieving individual annual performance objectives. Except as described below, the full amount of the potential discretionary annual cash bonus for Biomet’s senior management team, including its NEOs, has historically been determined at the discretion of the Compensation and Stock Option Committee, after considering the recommendation of the President and Chief Executive Officer (other than for himself), and approved by the Board after the conclusion of each fiscal year. In exercising its discretion, the Compensation and Stock Option Committee primarily has historically taken into account the growth in revenues and earnings and market share penetration of the operations for which each executive is responsible or plays a significant role, as well as the goals, objectives, responsibilities and length of service of each executive.

The annual cash bonuses payable to Biomet’s NEOs for the 2007 fiscal year are as follows:

• pursuant to the terms of the employment agreement between Biomet and Mr. Binder dated February 26, 2007, and the terms of the offer letter provided to Mr. Richardson by Biomet dated March 26, 2007, Messrs. Binder and Richardson will receive bonuses of $162,500 and $24,722, which represent Messrs. Binder’s and Richardson’s target discretionary annual cash bonuses for the 2007 fiscal year, respectively, pro-rated based on their respective lengths of service during the 2007 fiscal year;

• pursuant to the separation and retirement agreement dated May 31, 2007 between Biomet and Mr. England, Mr. England will receive either 100% of his target bonus if the transactions contemplated by the Merger Agreement are consummated or, if the Merger Agreement is terminated or the transactions contemplated by the Merger Agreement are not consummated within six months of the effective date of Mr. England’s separation from Biomet, Mr. England will receive an annual cash bonus payment equal to 94% of his target bonus;

• pursuant to his separation and retirement agreement dated June 6, 2007, Mr. Niemier will receive 100% of his target bonus;

• pursuant to the retirement and consulting agreement dated March 30, 2007 between Biomet and Mr. Hann, subject to certain conditions Biomet agreed to pay Mr. Hann $133,333 in full discharge of Mr. Hann’s annual cash bonus for Biomet’s 2007 fiscal year (prior to his retirement on March 30, 2007, Mr. Hann had also received, and was permitted to retain, $200,000, which represents 50% of his target annual cash bonus for the 2007 fiscal year, which was paid out in December 2006);

• pursuant to the retirement and consulting agreement dated March 30, 2007 between Biomet and Mr. Hartman, Mr. Hartman agreed to forfeit the remaining unpaid portion of his annual cash bonus for Biomet’s 2007 fiscal year (prior to his retirement on March 30, 2007, Mr. Hartman had also received, and was permitted to retain, $156,000, which represents 50% of his target annual cash bonus for the 2007 fiscal year, which was paid out in December 2006); and

• upon the Compensation and Stock Option Committee’s recommendation, the Board approved an annual cash bonus payment to Mr. van Broeck equal to 97.5% of his target bonus, which was generally a higher percentage than other executive officers due to Biomet’s European operations exceeding Biomet’s other significant business units in terms of sales and earnings.

Stock Options. Stock options have always been an element of Biomet’s long-term incentives program. The primary purpose of stock options is to provide executive officers and other team members with a personal and financial interest in Biomet’s success through Common Share ownership, thereby aligning the interests of executive officers and other team members with those of Biomet’s shareholders. Biomet’s broad-based stock option program was intended to further Biomet’s goal of motivating outstanding long-term contributions by team members within all levels of Biomet. Biomet’s compensation methodology is based upon the belief that stock options help to create an entrepreneurial environment within Biomet and instill the spirit of a small company. Additionally, Biomet’s compensation methodology is based upon the belief that stock options provide broad incentives for the day-to-day achievements of all team members in order to sustain and enhance Biomet’s long-term performance.

Stock option awards are based on an individual’s level of responsibility, contribution, length of service and total number of Common Shares owned in relation to other executive officers. All team members are eligible to receive stock options, including all hourly team members of

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Biomet and its subsidiaries in the United States and most other countries, who are eligible to receive a stock option after just two years of service with Biomet or one of its subsidiaries.

Under the stock option plans, options may also be granted to key employees, non-employee directors and distributors, at the discretion of the Compensation and Stock Option Committee, and generally become exercisable in annual or biannual increments beginning one or two years after the date of grant in the case of employee options and in annual increments beginning at the date of grant for distributor options. The term of each option granted expires within the period prescribed by the Compensation and Stock Option Committee, but shall not be more than five years from the date the option is granted if the optionee is a 10% or more shareholder, and not more than ten years for all other optionees. All rights under the options automatically terminate upon the optionee’s separation from service with Biomet, unless such separation results from retirement, disability or death.

During the 2005 and 2006 fiscal years, Biomet also granted conditional performance stock option awards, which conditioned the number of Common Shares earned by the award recipient on Biomet’s shareholder return over a three-year period against Biomet’s informal peer group discussed above. Based on Biomet’s performance over this three-year period, the recipient could earn between zero Common Shares and 150% of the target number of Common Shares provided for in the conditional performance grant. At the completion of the three-year performance period, the earned option remains exercisable for two years before the option expires. During the 2007 fiscal year, Biomet did not grant any conditional performance option awards.

As of May 31, 2007, Biomet had two stock option plans with Common Shares available for grant: the Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option Plan (the “1998 Plan”) and the Biomet, Inc. 2006 Equity Incentive Plan (the “2006 Plan”). However, in connection with certain limitations placed on Biomet under the Merger Agreement, Biomet is not currently granting stock option awards. Since the terms of the original Merger Agreement provided, and the terms of the Merger Agreement provide, that all unexercised options are cashed out if the transactions contemplated thereby are completed, grants of stock options would offer no retentive value to members of senior management. Moreover, upon the closing of the Offer, all outstanding options (each an Option) to purchase Shares under Biomet’s stock plans, vested or unvested, were cancelled and each Option holder was paid an amount in cash equal to the excess, if any, of the Offer Price over the applicable option exercise price for each Share subject to an Option, less any required withholding taxes. For further details regarding the treatment of stock options in connection with the Offer, refer to the Offer to Purchase, “The Offer—Section 11. Purpose of the Offer and Plans for Biomet; Merger Agreement.” Biomet did not grant stock options to recently hired members of its senior management team, including Messrs. Binder and Richardson, as a result of the limitations under the original Merger Agreement in effect at the time Biomet hired Messrs. Binder and Richardson. Biomet has agreed, however, to make certain equity awards to Messrs. Binder and Richardson in the event that the Merger Agreement is terminated. For a description of these agreements, refer to “—Employment Agreements and Potential Post-Termination Payments—Employment Agreement with Jeffrey R. Binder” and “— Employment Agreements and Potential Post-Termination Payments—Offer Letter to J. Pat Richardson” below.

If the transaction contemplated by the Merger Agreement is not consummated, Biomet’s Human Resources, Legal and Finance departments will, prior to Biomet’s resumption of the issuance of stock option awards, be provided additional training and education designed to ensure that relevant individuals involved in the administration of stock option awards understand the terms of Biomet’s equity-based award plans and the relevant accounting guidance for stock options and other share-based payments. In addition, such departments will develop, prior to Biomet’s resumption of the issuance of stock option awards, formal, documented stock option granting procedures and practices to ensure systematic approval and execution of stock option awards and the proper recording of such grants in Biomet’s stock administration records and financial statements.

Perquisites. Biomet believes that it has taken a reasonable approach to perquisites relative to other companies in its industry, such as the companies discussed above as its informal peer group. Biomet’s CEO and other NEOs are generally permitted, when practical, to use company aircraft for business and personal travel for security reasons. On a case by case basis, Biomet may reimburse executives for social club dues or offer to provide a travel allowance in connection with Biomet-related travel or relocation assistance to certain members of its senior management team who relocate their principal residence at Biomet’s request. For example, Biomet may, at times, provide reimbursement of moving expenses, offer protection against a loss on the sale of the executive’s home or provide tax “gross ups” for certain capital gains recognized by executives on the sale of the executive’s home. Typically, however, Biomet does not provide tax “gross ups” on perquisites.

Health and Welfare Benefits. The NEOs receive similar benefits to those provided to all other salaried U.S. employees, such as medical, dental, vision, life insurance and disability coverage.

Post-Termination Compensation and Management Continuity Agreements. As described in further detail below, during the 2007 fiscal year, the NEOs were provided arrangements which specified payments in the event the executive’s employment is terminated. The type and amount of payments vary by executive level and the nature of the termination. These severance benefits, which are competitive with the companies discussed above as Biomet’s informal peer group and general industry practices, are payable if and only if the executive’s employment terminates as specified in the applicable plan document or employment agreement. For more information, refer to “—Employment Agreements and Potential Post-Termination Payments.”

Historically, Biomet did not offer management continuity agreements to members of senior management. During the 2007 fiscal year, however, Biomet engaged The Kinsley Group to assist with the preparation of and execution of change in control agreements with members of Biomet’s senior management team. These agreements were intended to provide for continuity of management in the context of a prospective change in control of Biomet. These agreements were necessary to reinforce and encourage the continued attention and dedication of members of Biomet’s senior management to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control. For certain NEOs, namely Messrs. Hartman, Hann, England and Niemier, original change in control

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agreements executed with Biomet on September 20, 2006 were subsequently superceded or modified in connection with their retirement. For further information on the terms of the change in control agreements, refer to “—Employment Agreements and Potential Post-Termination Payments—Change in Control Agreements” below.

Retirement Plans. Biomet does not sponsor or maintain any pension plans applicable to its U.S.-based NEOs, however, Biomet has defined benefit retirement plans for certain of its foreign subsidiaries, discussed herein as its “foreign pension plans,” which cover certain of its overseas employees. One of these foreign pension plans is applicable to Mr. van Broeck and sponsored by Biomet Europe B.V. (“Biomet Europe”). Biomet Europe provides all employees, whether salaried or hourly, with the opportunity to build up benefits under pension plans as part of Biomet Europe’s standard conditions for working in the Netherlands in order to provide a level of retirement benefits competitive with European market conditions. The benefits under this foreign pension plan are generally based on years of service and a calculation of the employee’s weighted average final base salary. Detailed explanations of these terms and calculations can be found in the narrative discussion accompanying the Pension Benefits Table. The investment objective is to enable a fixed, guaranteed payout to the employee at the time of the employee’s retirement, except, in the case of Mr. van Broeck, for a moderate profit-sharing provision, which may affect him by providing an additional benefit based on the collective return of the plan assets. The assets covered by the pension plan are managed by independent investment professionals, however, due to the guaranteed payout, policy holders are relatively unaffected by poor performance and affected only by positive investment returns under the profit-sharing provision. The net assets of these foreign pension plans did not include any of Biomet’s Common Shares as of April 30, 2007 (the same measurement dates used for the 2007 fiscal year with respect to Biomet’s foreign subsidiaries). For information about Mr. van Broeck’s pension benefits, refer to the Pension Benefits Table in “—Executive Compensation Tables—Retirement And Non-Qualified Defined Contribution And Deferred Compensation Plans—Pension Plans” below.

Biomet’s executive officers are eligible to participate in Biomet’s 401(k) Plan. All team members residing in the United States who are at least 18 years of age and complete at least 90 days of continuous service or work at least 1,000 hours per year are also eligible to participate in the 401(k) plan. Each year Biomet, in its sole discretion, may match 75% of each team member’s contributions, up to a maximum amount equal to 5% of the team member’s compensation, either in cash or in Common Shares. All contributions to the 401(k) Plan are allocated to accounts maintained on behalf of each participating team member and, to the extent vested, are available for distribution to the team member or beneficiary upon retirement, death, disability or termination of service. Historically, the 401(k) Plan has purchased Common Shares with Biomet’s matching contribution.

Executive officers have also historically participated in Biomet’s Employee Stock Bonus Plan (the “ESBP”), which was merged into and with Biomet’s 401(k) Plan during the 2007 fiscal year. Under the ESBP, Biomet could make contributions to the ESBP in the form of Common Shares or cash in such amounts, if any, as it determined in its sole discretion, and participating team members could make voluntary contributions to the ESBP in amounts up to 10% of their annual compensation. Historically, Biomet had made contributions to the ESBP equal to 3% of each team member’s annual base salary, up to the maximum amount permitted by applicable Internal Revenue Service regulations. The funds accumulated under the ESBP were invested by the trustee primarily in Biomet Common Shares.

In addition, Biomet maintains The Biomet, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), a non-qualified deferred compensation plan, which is available for Biomet’s senior management and members of the Board. The Deferred Compensation Plan allows eligible participants to defer pre-tax compensation to reduce current tax liability and assist those team members in their planning for retirement and other long-term savings goals in a tax-effective manner. Biomet does not make any contributions to the Deferred Compensation Plan. Under the Deferred Compensation Plan, eligible participants may defer up to 100% of their base salary and cash bonus payments, as well as Board fees for non-employee directors, as applicable. Scheduled distributions from the Deferred Compensation Plan are available, and penalty-free, but treated as ordinary income subject to federal and state income taxation at the time of distribution. Except in circumstances of hardship, unscheduled withdrawals are not permitted. Amounts contributed to the Deferred Compensation Plan are at the participant’s election and “deemed investments,” which means that the participants have no ownership interest in the investment alternative selected. The participants’ deferrals and gains are reflected on Biomet’s financial statements and are unsecured general assets of Biomet. The Deferred Compensation Plan is an unfunded “future promise to pay” on behalf of Biomet. Neither Biomet nor the Deferred Compensation Plan record-keeper provides any guarantee of investment return. Biomet does not pay above-market interest rates on deferred amounts of compensation. For more information, refer to “—Executive Compensation Tables—Retirement and Non-Qualified Defined Contribution and Deferred Compensation Plans—Non-Qualified Defined Compensation” below.

Role of Management in Compensation Decisions. The Compensation and Stock Option Committee has historically annually reviewed and evaluated recommendations made by the Chairman of the Board and the President and Chief Executive Officer for the executive officers (other than for themselves) along with the rationale for such recommendations and the summary information regarding aggregate compensation provided to Biomet’s executive officers. The Compensation and Stock Option Committee has historically examined these recommendations in relation to Biomet’s overall objectives and makes compensation recommendations to the Board for final approval. The Compensation and Stock Option Committee also has historically delivered to the Board for approval its recommendations on compensation for the Chairman of the Board and the President and Chief Executive Officer, who do not participate in the decisions of the Board as to their compensation packages. Neither the Chairman of the Board nor the President and Chief Executive Officer was a member of the Compensation and Stock Option Committee during the 2007 fiscal year.

Common Share Ownership Guidelines. In past years, Biomet has not adopted guidelines with respect to its senior management team’s ownership of Common Shares. More recently, the Board has considered adopting such a policy for members of senior management, however, these discussions were discontinued upon execution of the original Merger Agreement.

Policy with Respect to Deductibility of Compensation Over $1 Million. Section 162(m) of the Internal Revenue Code of 1986 generally limits to $1 million the tax deductibility of annual compensation paid to certain executives named in the Summary Compensation Table. However,

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performance-based compensation can be excluded from this limit if it meets certain requirements. The Compensation and Stock Option Committee’s policy is to consider the impact of Section 162(m) in establishing compensation for Biomet’s senior executives. However, it retains the discretion to establish compensation, even if such compensation is not deductible under Section 162(m), if, in the Compensation and Stock Option Committee’s judgment, such compensation is in the best interest of Biomet and is reasonably expected to increase shareholder value.

Accounting for Stock-Based Compensation. Biomet adopted SFAS 123(R), “Share-Based Payment,” on June 1, 2006 using the modified prospective method. SFAS 123(R) requires all share-based payments to employees, including stock options, to be expensed based on their fair value over the required award service period. Biomet uses the straight line method to recognize compensation expense related to share-based payments. In the prior year, Biomet was governed by Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock option awards to employees.

Under the modified prospective method, the provisions of SFAS 123(R) apply to all share-based compensation awards granted or modified on or after Biomet’s date of adoption of SFAS 123(R), June 1, 2006. For share-based compensation awards granted prior to the date of adoption, the unrecognized expense related to the unvested portion of such awards at the date of adoption will be recognized in net income under the grant date fair value provisions under SFAS 123(R). The Compensation and Stock Option Committee reviews and considers the accounting impact of Biomet’s equity awards in recommending the size and terms of such awards.

For a detailed discussion of stock option awards and their material terms, refer to “—The Elements of Biomet’s Compensation Program—Stock Options” above and “—Executive Compensation Tables—Grant of Plan-Based Awards Table” below. For further information about the assumptions Biomet uses in recognizing compensation expense, refer to footnote (2) to the Summary Compensation Table in “Executive Compensation Tables” later in this section.

Changes in Senior Management During the 2007 Fiscal Year

During the 2007 fiscal year, there were several changes in Biomet’s executive management team. Among other changes, the following events occurred:

• on February 26, 2007, Mr. Binder was appointed President and Chief Executive Officer;

• on March 30, 2007, Mr. Hann retired as Executive Vice President of Administration -prior to his appointment as Executive Vice President of Administration on February 26, 2007, Mr. Hann had served as Interim President and Chief Executive Officer from March 27, 2006 through February 26, 2007;

• on March 30, 2007, Mr. Hartman retired as Senior Vice President – Finance, Chief Financial Officer and Treasurer;

• on April 11, 2007, Mr. Richardson was appointed Vice President – Finance and Interim Chief Financial Officer and Treasurer; and

• on May 31, 2007, Mr. England retired as Chief Operating Officer – Domestic Operations.

In addition, on June 5, 2007, Mr. Daniel P. Florin was appointed Senior Vice President and Chief Financial Officer. Mr. Florin did not hold this position as of May 31, 2007, the last day of the 2007 fiscal year, and as a result is not considered an NEO under SEC rules for the 2007 fiscal year.

Also, as of May 31, 2007, Mr. Niemier served as Senior Vice President, Biomet, Inc. and Senior Vice President, Biomet International and Corporate Relations. However, on June 6, 2007, Mr. Niemier retired from these positions effective June 18, 2007.

Executive Compensation Tables

Summary Compensation Table

The following narrative, tables and footnotes describe the “total compensation” earned during Biomet’s 2007 fiscal year by Biomet’s NEOs. The total compensation presented below does not reflect the actual compensation received by Biomet’s NEOs or the target compensation of Biomet’s NEOs during its 2007 fiscal year. The actual value realized by Biomet’s NEOs during its 2007 fiscal year from long-term incentives (options) is presented in the Option Exercises and Stock Vested Table below.

The individual components of the total compensation calculation reflected in the Summary Compensation Table are broken out below:

Salary. Base salary earned during Biomet’s 2007 fiscal year. Refer to “Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Base Salary” above for further information concerning this element of Biomet’s compensation program. The terms of their respective employment agreements govern the base salaries for Messrs. Binder and Richardson.

Bonus. Biomet’s NEOs earned annual incentive bonuses for its 2007 fiscal year. Refer to “Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Discretionary Annual Cash Bonuses” above for further information concerning this element of Biomet’s compensation program.

Stock Awards. The only equity-based compensation that Biomet provided to its NEOs for its 2007 fiscal year was in the form of stock option awards. For information about stock options granted to Biomet’s NEOs, see “Option Awards” immediately below.

Option Awards. The awards disclosed under the heading “Option Awards” consist of grants of stock options awarded under the 1998 Plan. For further information about Biomet’s stock option programs, refer to “Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Stock Options” above. In addition, details about option awards made during Biomet’s 2007 fiscal year are included in the Grant of Plan-Based Awards Table below. The dollar amounts for the awards in the Summary Compensation Table below represent the compensation expense recognized during Biomet’s 2007 fiscal year under SFAS 123(R) for each NEO. The recognized compensation

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expense of the option awards for financial reporting purposes will likely vary from the actual amount ultimately realized by the NEO based on a number of factors. The factors include Biomet’s actual operating performance, Common Share price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting.

Non-Equity Incentive Plan Compensation. For the 2007 fiscal year, Biomet did not have any non-equity incentive compensation plans applicable to its NEOs.

Change in Pension Value. Biomet does not sponsor or maintain any pension plans applicable to its U.S.-based NEOs. For Mr. van Broeck, represents the aggregate change in the actuarial present value of the accumulated benefit under his pension plan sponsored by Biomet Europe from April 30,2006 to April 30,2007 (the same measurement dates used for financial statement reporting purposes with respect to Biomet’s audited financial statements for the 2006 and 2007 fiscal years with respect to Biomet’s foreign subsidiaries). For information on Mr. van Broeck’s retirement benefits and certain material features of the pension plan in which he participates, refer to “–Compensation Discussion and Analysis–The Elements of Biomet’s Compensation Program—Retirement Plans” above and “Retirement And Non-Qualified Defined Contribution And Deferred Compensation Plans—Pension Plans” below.

Of Biomet’s NEOs, only Messrs. Hann and England participate in the Deferred Compensation Plan, however, Biomet does not pay above market or preferential earnings on non-qualified deferred compensation. For information on the Deferred Compensation Plan, refer to “—Compensation Discussion and Analysis—Retirement Plans.”

All Other Compensation. The amounts included under the All Other Compensation heading represent the sum of: (1) certain perquisites and other personal benefits; (2) Biomet-paid contributions to retirement plans; (3) Biomet-paid insurance premiums; (4) certain tax reimbursements made by Biomet; and (5) certain other amounts more fully described in footnote (3) to the Summary Compensation Table.

Name and Principal Position(1)	Year	Salary ($)		Bonus ($)		Option Awards (2) ($)	Stock Awards ($)	Non-Equity Incentive Plan Compen- sation ($)	Change in Pension Value and Non- Qualified Deferred Compen- sation Earnings ($)		All Other Compen- sation (3) ($)	Total($)
Jeffrey R. Binder President and Chief Executive Officer	2007	150,050		162,500		—	—	—	—		71,858	348,408
Daniel P. Hann Former Executive Vice President of Administration and Former Interim President and Chief Executive Officer	2007	481,401		333,333		432,519	—	—	—		88,351	1,335,604
J. Pat Richardson Corporate Vice President-Finance and Treasurer and Former Interim Chief Financial Officer	2007	25,834		24,722		—	—	—	—		3,788	54,344
Gregory D. Hartman Former Senior Vice President-Finance, Chief Financial Officer and Treasurer	2007	303,692		156,000		135,535	—	—	—		105,896	701,123
Garry L. England Former Chief Operating Officer-Domestic Operations	2007	361,173		349,000	(4)	205,911	—	—	—		1,521,274	2,437,358
Charles E. Niemier Former Senior Vice President and Former Senior Vice President, Biomet International and Corporate Relations	2007	397,583		400,000	(4)	160,367	—	—	—		28,442	986,392
Roger van Broeck Vice President and President, Biomet Europe	2007	386,741	(5)	284,235		119,486	—	—	77,073	(5)	68,311	899,846

(1) For further information on the principal positions of Biomet’s NEOs, refer to “—Compensation Discussion and Analysis—Changes in Senior Management During the 2007 Fiscal Year.”

(2) For each NEO listed in the Summary Compensation Table above, the value reflects the compensation expense recognized by Biomet during the 2007 fiscal year under SFAS 123(R). The amounts for Messrs. Hann and England reflect the acceleration of unvested stock option awards in connection with their retirement. For information on the full grant-date fair value of awards granted solely during the 2007 fiscal year, refer the Grant of Plan-Based Awards Table below and to footnote (1) of the Grant of Plan-Based Awards Table.

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Biomet uses the Black-Scholes option-pricing model to determine the fair value of options to calculate compensation expense. For information about the assumptions used in determining the compensation expense recognized by Biomet during the 2007 fiscal year, refer to Notes B and I to the Consolidated Financial Statements included in this Annual Report on the Form 10-K. For further information about Biomet’s use and adoption of SFAS 123(R), refer to “—Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Accounting for Stock-Based Compensation” above.

(3) The table below presents an itemized account of “All Other Compensation” provided during Biomet’s 2007 fiscal year. Consistent with Biomet’s emphasis on performance-based pay, perquisites and other compensation are limited in scope and primarily comprised of retirement benefit contributions and accruals. For each NEO listed below, the sum of each of the columns reflects the total value included under the All Other Compensation heading in the table above.

	Life Insurance Premiums ($)	Physical Exams ($)	Retirement Plan Contributions ($)	Medical Flex ($)	Social Club Dues ($)	Travel Allowance ($)		Personal Use of Company Aircraft ($)(a)		Other ($)		Amounts in Connection with Retirement ($)(b)
Jeffrey R. Binder	—	—	—	146	—	—		63,600	(c)	8,112	(d)	—
Daniel P. Hann	60	585	14,850	1,100	4,920	7,200		—		—		84,363
J. Pat Richardson	—	—	—	104	—	—		—		3,684	(e)	—
Gregory D. Hartman	60	—	14,850	1,350	5,000	—		—		—		59,636
Garry L. England	60	2,318	14,850	1,500	5,844	—		4,500		—		1,492,202
Charles E. Niemier	60	2,062	14,850	1,550	4,920	5,000		—		—		—
Roger van Broeck	—	—	38,811	—	—	24,621	(f)	—		4,879	(g)	—

(a) Biomet’s incremental cost for personal use of Biomet aircraft is calculated by multiplying the aircraft’s hourly variable operating cost by a trip’s flight time, which includes any flight time of an empty return flight. Variable operating costs are based on industry standard rates of Biomet’s variable operating costs, including fuel and oil costs, maintenance and repairs, landing/ramp fees and other miscellaneous variable costs. On certain occasions, a spouse or other family member may accompany one of Biomet’s NEOs on a flight. No additional operating cost is incurred in such situations under the foregoing methodology. Biomet does not pay its NEOs any amounts in connection with taxes on income imputed to them for personal use of Biomet’s aircraft.

(b) For Messrs. Hann and Hartman, the amounts under the Amounts in Connection with Retirement heading includes monthly consulting fees ($41,666 and $29,166, respectively) and monthly health insurance premiums under COBRA ($652 each) that Messrs. Hann and Hartman received for the months of April and May 2007 pursuant to retirement and consulting agreements between Biomet and Messrs. Hann and Hartman, respectively, dated March 30, 2007. For Mr. England, the amount reflects benefits that Biomet has accrued in respect of his retirement, assuming the transactions contemplated by the Merger Agreement are consummated and such benefits are not forfeited. These benefits consisting of two times base salary and two times target annual cash bonus, each for the 2008 fiscal year and each of $360,000 plus other certain benefits, pursuant to the separation and retirement agreement between Biomet and Mr. England dated May 31, 2007. In the case of Messrs. Hann and England, however, these amounts do not include the SFAS 123(R) compensation expense for stock option awards accelerated under the retirement and consulting agreement between Biomet and Mr. Hann dated March 30, 2007 or the separation and retirement agreement between Biomet and Mr. England dated May 31, 2007, respectively. These amounts are not included in this column or under the All Other Compensation heading to the Summary Compensation Table above because the amounts are already reflected in the amounts representing the SFAS 123(R) compensation expense for stock option awards under the Option Awards heading. Similarly, in the case of Messrs. Hann, Hartman and England, these amounts do not include the annual discretionary cash bonuses paid to these individuals because the amounts are already reflected in the amounts representing bonus payments under the Bonus heading to the Summary Compensation Table above. For further information concerning these agreements, refer to“—Employment Agreements and Potential Post-Termination Payments—Consulting Arrangements with Gregory D. Hartman and Daniel P. Hann” and “—Employment Agreements and Potential Post-Termination Payments-Retirements of Garry L. England and Charles E . Niemier” below.

(c) Pursuant to the employment agreement between Biomet and Mr. Binder, dated February 26, 2007, Biomet agreed to arrange, at its expense, for Mr. Binder to fly once per week to and from Mr. Binder’s Texas home and Biomet’s headquarters or such other location reasonably specified by Biomet during the term of the employment agreement. Biomet will not provide Mr. Binder with a “gross up” for taxes incurred in connection with these benefits. If, however, Mr. Binder uses a commercial flight and the income imputed in connection with the commercial flight is greater than the amount that would have been imputed to Mr. Binder if he had used a Biomet-aircraft, Biomet will provide to Mr. Binder “gross up” for taxes incurred on the incremental income associated with the commercial flight. Biomet’s incremental costs associated with extending these benefits to Mr. Binder are capped at $500,000 in any twelve-month period. For the purposes of applying this limitation, Biomet’s incremental cost for commercial flights shall be the cost of Mr. Binder’s tickets and for flights on Biomet-operated aircraft shall be the incremental per-hour cost associated with Mr. Binder’s flights and other incremental costs related to such flights, such as landing fees, transportation and housing costs of aircrew and other similar costs. The amount that appears under the Personal Use of Company Aircraft heading reflects the amount of this rolling twelve-month allowance that Mr. Binder has used.

(d) Represents the cost to Biomet of providing temporary housing to Mr. Binder in Warsaw, Indiana. In addition, pursuant to the employment agreement between Biomet) and Mr. Binder dated February 26, 2007, Biomet agreed to purchase Mr. Binder’s prior residence in Illinois at its appraised value, to be determined by an independent appraiser, up to $2,199,000. Furthermore, Biomet agreed to reimburse Mr. Binder for certain capital gains taxes, if any, incurred as a result of the sale of Mr. Binder’s prior residence. As a result of the independent appraisal, Biomet purchased Mr. Binder’s prior residence for significantly less than the maximum amount and Mr. Binder has not recognized any gain on the sale of his prior residence. The amount paid by Biomet to Mr. Binder is not reflected in the amount shown in the table above for Mr. Binder under the All Other Compensation heading. In addition, because Mr. Binder recognized a loss on the sale of his house, Biomet has not paid any “gross up” amounts to Mr. Binder in connection with the sale of his house. Also, pursuant to the employment agreement between Biomet and Mr. Binder dated February 26, 2007, Biomet agreed to reimburse Mr. Binder up to $1,320,000 if Mr. Binder is required to pay his former employer in connection with the termination of his previous employment. As of May 31, 2007, Biomet had not paid any amounts under this provision of the employment agreement, however, it is expected that Biomet may make payments to Mr. Binder’s prior employer under this provision during the 2008 fiscal year.

(e) Represents the cost to Biomet of providing temporary housing to Mr. Richardson in Warsaw, Indiana.

(f) Represents the cost to Biomet of providing a car to Mr. van Broeck.

(g) Represents the Biomet-paid portion of Mr. van Broeck’s government mandated health and wellness expense.

In addition to the foregoing compensation, NEOs also participated in health and welfare benefit programs, including vacation and medical, dental, prescription drug and disability coverage. These programs are generally available and comparable to those programs provided to all U.S. salaried employees.

(4) For Messrs. England and Niemier, represents an annual cash bonus for the 2007 fiscal year equal to 100% of their target bonus for the 2007 fiscal year pursuant to the terms of the change in control agreements between Biomet and Messrs. England and Niemier, respectively. The amount is contingent upon the consummation of the transactions contemplated by the Merger Agreement. If the Merger Agreement is terminated or the transactions contemplated by the Merger Agreement are not consummated within six months of the effective date of each executive’s separation from Biomet, the annual cash bonus payable to Messrs England and Niemier for the 2007 fiscal year will be reduced from 100% of their target annual bonus for the 2007 fiscal year to 94% of base salary, which represents a reduction of $20,940 and $24.000, respectively.

(5) For the purposes of the Summary Compensation Table above, to calculate Mr. van Broeck’s annual base salary and change in pension value in U.S. dollars, Biomet used, a currency conversion rate of 1 Euro to $1.3447, which represents the currency exchange rate from Euros to U.S. dollars on June 1, 2007 as published in The Wall Street Journal.

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Grant of Plan-Based Awards Table

During 2007, Biomet granted stock options to its NEOs under the 1998 Plan. Information with respect to each of these awards on a grant-by-grant basis is set forth in the table below. Fair market value under the 1998 Plan is defined as the closing price of the Common Shares as reported by The Nasdaq Stock Market or by any national securities exchange on which Common Shares may be traded. For additional discussion of Biomet’s stock option plans and certain material terms of Biomet’s stock option awards, refer to “Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Stock Options.”

All stock option awards to Biomet’s NEOs during the 2007 fiscal year were made such that the exercise price of the awards is equal to the closing price of Biomet’s Common Shares on the date of grant.

Name	Grant Date	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise of Base Price of Option Awards ($/Sh)	Grant-Date Fair Value of Stock and Option Awards(1) ($)
Jeffrey R. Binder(2)	—	—	—	—
Daniel P. Hann	—	—	—	—
J. Pat Richardson(3)	—	—	—	—
Gregory D. Hartman(4)	October 9, 2006	25,000	33.19	288,250
Garry L. England(5)	October 9, 2006	25,000	33.19	288,250
Charles E. Niemier(5)	October 9, 2006	50,000	33.19	576,500
Roger van Broeck	October 9, 2006	25,000	33.19	288,250

(1) For each NEO listed in the Grant of Plan-Based Awards Table above, the value reflects the full grant-date fair value calculated under SFAS 123(R) solely for awards granted during the 2007 fiscal year. The fair value of the stock option awards for financial reporting purposes likely will vary from the actual amount ultimately realized by the NEO based on a number of factors. These factors include Biomet’s actual operating performance, Common Share price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting.

(2) Pursuant to an employment agreement dated February 26, 2007 between Biomet and Mr. Binder, if the Merger Agreement is terminated, Mr. Binder will be granted an equity award after such termination and annually thereafter (if still employed) commencing after May 31, 2008. For further information about this equity award and Mr. Binder’s employment agreement, refer to “—Employment Agreements and Potential Post-Termination Payments—Employment Agreement with Jeffrey R. Binder” below. If the transaction contemplated by the Merger Agreement is consummated, Mr. Binder will not receive this benefit; although it is expected that Mr. Binder will receive an equity award following the consummation of the transaction contemplated by the Merger Agreement (although such award is still subject to negotiation and discussion).

(3) In the event that the Merger Agreement is terminated, Mr. Richardson will be entitled to equity awards that are commensurate with his position with Biomet. For further information about this equity award and the offer letter provided to Mr. Richardson, refer to “—Employment Agreements and Potential Post-Termination Payments—Offer Letter to J. Pat Richardson” below. If the transaction contemplated by the Merger Agreement is consummated, Mr. Richardson will be granted an equity interest in Biomet or one of its affiliates pursuant to an equity incentive plan (although such award is still subject to negotiation and discussion). Mr. Richardson’s equity interest in the new Biomet entity will be commensurate with his position with Biomet.

(4) For further information on stock options granted to Mr. Hartman during Biomet’s 2007 fiscal year, see footnote (7) to the Outstanding Equity Awards at Fiscal Year-End table immediately below.

(5) For further information on stock options granted to Messrs. England and Niemier during Biomet’s 2007 fiscal year, see footnote (10) to the Outstanding Equity Awards at Fiscal Year-End table immediately below.

Outstanding Equity Awards at Fiscal Year-End Table

Biomet has awarded stock options to members of its senior management and other Biomet team members throughout Biomet. The terms of these awards typically provide for vesting over a defined period of time. Awards listed in the table below, other than the conditional performance stock option awards, generally have an eight-part vesting schedule in which the first of the eight installments vests on the one-year anniversary of the grant date. Each subsequent one-eighth installment thereafter vests on the anniversary of the grant date for the next seven years. For information on the vesting schedule of the unvested portions of outstanding equity awards listed below, refer to footnote (2) to the table below. Each installment, however, has a two year lifespan with respect to exercise and therefore each installment will expire if not exercised two years from the date that the particular installment vests.

For further information on Biomet’s stock option awards and their material terms, refer to “—Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Stock Options.” For information about stock option awards granted solely during the 2007 fiscal year, refer to “—Grant of Plan-Based Awards Table.”

In addition, during Biomet’s 2005 and 2006 fiscal years, the Compensation and Stock Option Committee granted conditional performance stock options to certain of Biomet’s executive officers, with the exception of the Chairman of the Board who has never received stock option awards. The actual number of Common Shares available for exercise by each executive officer with respect to these conditional performance stock option awards will be determined by a calculation based on the performance of Biomet’s Common Shares in comparison to the performance of its informal peer group over a three-year time period. As a result, the actual number of Common Shares granted may vary from zero Common Shares to 150% of the number of target Common Shares stated in the conditional performance stock option award. Biomet did not grant any conditional performance stock option awards during the 2007 fiscal year. In addition, of Biomet’s NEOs, only Messrs. England, Niemier and van Broeck had outstanding conditional performance stock option awards as of May 31, 2007. For the amounts of these conditional performance stock option awards that remain outstanding, refer to Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options heading in the table below. For a detailed discussion of these conditional performance stock option awards and their material terms, refer to “Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Stock Options.”

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The following table shows the equity awards granted to Biomet’s NEOs, which are comprised of a mix of the conditional performance stock option awards and the time-based vesting stock option awards (vested and unvested), that were outstanding as of the end of Biomet’s 2007 fiscal year. In connection with the closing of the Offer, all outstanding options, each an Option, to purchase Shares under Biomet’s stock plans, vested or unvested, were cancelled and each Option holder was paid an amount in cash equal to the excess, if any, of the Offer Price over the applicable option exercise price for each Share subject to an Option, less any required withholding taxes.

OPTION AWARDS

Name	Number of Securities Underlying Unexercised Options (#) Exercisable(1)	Number of Securities Underlying Unexercised Options (#) Unexercisable(2)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(3)		Option Exercise Price ($)(4)	Option Expiration Date(5)
Jeffrey R. Binder(6)	—	—		—		—	—
Daniel P. Hann(7)	4,000	—		—		24.0000	7/17/2007
	1,875	—		—		20.8333	1/16/2009
	3,750	—		—		29.0933	7/05/2008
	2,500	—		—		28.8800	7/09/2008
	3,750	—		—		43.7100	6/28/2008
	25,000	—		—		34.3200	3/23/2009
	—	—		75,000	(8)	34.3200	—
	—	—		2,500	(8)	41.6000	1/02/2010
	—	—		3,750	(8)	34.5800	6/28/2010
J. Pat Richardson(9)	—	—		—		—	—
Gregory D. Hartman(7)	4,000	—		—		24.0000	7/17/2007
	1,875	—		—		20.8333	1/16/2009
	3,750	—		—		29.0933	7/05/2008
	2,500	—		—		28.8800	7/09/2008
	3,750	—		—		43.7100	6/28/2008
Garry L. England(10)	4,000	—		—		24.0000	7/17/2007
	1,875	1,875	(a)	—		20.8333	1/16/2011
	3,750	11,250	(b)	—		29.0933	7/05/2011
	2,500	6,250	(c)	—		28.8800	7/09/2013
	3,750	11,250	(d)	—		43.7100	6/28/2014
	1,875	13,125	(e)	—		36.8800	1/01/2016
	—	25,000	(f)	—		33.1900	10/8/2016
	—	—		18,000	(11)	41.6000	1/02/2010
	—	—		53,000	(11)	34.5800	6/28/2010
Charles E. Niemier(10)	4,000	—		—		24.0000	7/17/2007
	1,875	1,875	(a)	—		20.8333	1/16/2011
	3,750	11,250	(b)	—		29.0933	7/05/2011
	2,500	6,250	(c)	—		28.8800	7/09/20113
	3,750	11,250	(d)	—		43.7100	6/29/2014
	—	50,000	(f)	—		33.1900	10/8/2016
	—	—		12,000	(12)	41.6000	1/02/2010
	—	—		32,000	(12)	34.5800	6/28/2010
Roger van Broeck	938	1,875	(a)	—		20.8333	1/16/2011
	—	11,250	(b)	—		29.0933	7/06/2011
	—	6,250	(c)	—		28.8800	7/09/2013
	3,750	11,250	(d)	—		43.7100	6/28/2014
	—	25,000	(f)	—		33.1900	10/8/2016
	—	—		9,000	(13)	41.6000	1/02/2010
	—	—		21,000	(13)	34.5800	6/28/2010

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(1) On an award-by-award basis, the number of Common Shares underlying unexercised options that are exercisable and that are not reported in Column 3—”Number of Securities Underlying Unexercised Unearned Options.”

(2) On an award-by-award basis, the number of Common Shares underlying unexercised options that are unexercisable and that are not reported in Column 3—“Number of Securities Underlying Unexercised Unearned Options.” In connection with the transactions contemplated by the Merger Agreement, all of these outstanding unvested equity awards will be accelerated and cashed out. The vesting schedules of the outstanding unvested equity awards are listed below:

(a) Represents the outstanding unvested portion of the original option granted on January 17, 2001. The remaining unvested portion of the original award vests in increments of 938 Common Shares and 937 Common Shares on January 17, 2008 and January 17, 2009, respectively.

(b) Represents the outstanding unvested portion of the original option granted on July 6, 2001. The remaining unvested 3/4 of the original award vests in 1/ 4 increments annually with the next segment vesting on July 6, 2007.

(c) Represents the outstanding unvested portion of the original option granted on July 10, 2003. The remaining unvested 5/8 of the original award vests in 1/8 increments annually with the next segment vesting on July 10, 2007.

(d) Represents the outstanding unvested portion of the original option granted on June 29, 2004. The remaining unvested 6/8 of the original award vests in 1/8 increments annually with the next segment vesting on June 29, 2007.

(e) Represents the outstanding unvested portion of the original option granted on January 2, 2006. The remaining unvested 7/8 of the original award vests in 1/8 increments annually with the next segment vesting on January 2, 2008.

(f) Represents the outstanding unvested portion of the original option granted on October 9, 2006. The original award is unvested in full and vests in 1/8 increments annually beginning on October 9, 2007.

(3) On an award-by-award basis, the total number of Common Shares underlying unexercised options awarded under any equity incentive plan that have not been earned.

(4) The exercise price for each option, as it was recorded in the stock option award at the time of grant, is reported in Columns 1 and 2—”Number of Securities Underlying Unexercised Options” and Column 3—”Number of Securities Underlying Unexercised Unearned Options.”

(5) Represents the final expiration date for each option award reported in Columns 1 and 2—”Number of Securities Underlying Unexercised Options” and Column 3—”Number of Securities Underlying Unexercised Unearned Options.” However, the option awards reported in Columns 1 and 2 generally vest in equal installments over an eight year period. Once vested, each vested option must be exercised within two years. For information on the vesting schedule of unvested portions of outstanding option awards, see sub-footnotes (a)-(f) of footnote (2) above.

(6) For further information on equity awards that may be awarded to Mr. Binder pursuant to his employment agreement, refer to footnote (2) to the Grant of Plan-Based Awards Table above and “—Employment Agreements and Potential Post-Termination Payments—Employment Agreement with Jeffrey R. Binder” below.

(7) Pursuant to the terms of severance and consulting agreements dated March 30, 2007 between Biomet and Messrs. Hartman and Hann, respectively, Messrs. Hann and Hartman have agreed that, with respect to misdated or mispriced stock option awards granted to Messrs. Hartman or Hann which have vested but not yet been exercised, the exercise price of such unexercised stock option awards will be increased to the fair market value of Biomet’s Common Shares on the measurement date applicable to such award. Furthermore, Messrs. Hartman and Hann have agreed that, with respect to misdated or mispriced stock option awards which had previously been exercised, Messrs. Hartman and Hann would at a future date remit to Biomet an amount equal to the excess, if any, of the fair market value of Biomet’s Common Shares on the measurement date for such award over the exercise price of such award. Lastly, except for the option to purchase 75, 000 Common Shares granted to Mr. Hann in March 2006 (of the unvested option to purchase 175, 000 Common Shares awarded to Mr. Hann in March 2006) which immediately vested in connection with Mr. Hann’s severance and consulting agreement, Messrs. Hartman and Hann have each agreed to immediately terminate and forfeit any unvested stock option awards and that no options would be accelerated as a result of their retirement. As a result, on March 30, 2007, Messrs. Hann and Hartman agreed to immediately terminate and forfeit unvested options to purchase approximately 164, 000 and 89, 000 Common Shares respectively, awards which otherwise would have been reflected in the table above.

(8) The option to purchase 75, 000 Common Shares has vested and is discussed further in footnote (7) immediately above; however, pursuant to the consulting and retirement agreement between Biomet and Mr. Hann dated March 30, 2007, the proceeds from this option will be held by Biomet and will be distributable to Mr. Hann upon completion of the consulting arrangement provided that Biomet has not otherwise terminated the consulting arrangement. As a result, this option award appears in Column 3. For information on the retirement and consulting agreement, refer to “—Employment Agreements and Potential Post-Termination Payments—Consulting Arrangements with Gregory D. Hartman and Daniel P. Hann” below.

(9) For further information on equity awards that may be awarded to Mr. Richardson pursuant to his offer letter, refer to footnote (3) to the Grant of Plan-Based Awards Table above and “—Employment Agreements and “—Employment Agreements and Potential Post-Termination Payments—Offer Letter to J. Pat Richardson.”

(10) Pursuant to the terms of the separation and retirement agreements between Biomet and Messrs. England and Niemier dated May 31, 2007 and June 6, 2007, respectively, Messrs. England and Niemier have agreed that, with respect to misdated or mispriced stock option awards granted to them, which have vested, but not yet been exercised, the exercise price of such unexercised stock option awards will be increased to the fair market value of Biomet’s Common Shares on the measurement date applicable to such award. Furthermore, Messrs. England and Niemier have agreed that, with respect to misdated or mispriced stock option awards which had previously been exercised, Messrs. England and Niemier would, at a future date, remit to Biomet an amount equal to the excess, if any, of the fair market value of Biomet’s Common Shares on the measurement date for such award over the exercise price of such award. Messrs. England and Niemier will also receive accelerated vesting of certain previously unvested equity awards and all vested, unexercised equity awards will be exercisable in accordance with the terms of each award until the earliest of (1) the award’s expiration date, (2) the fifth anniversary of the separation date or (3) the date that the award is cashed out in a change in control event.

(11) Represents conditional performance stock option awards that were granted to Mr. England during the 2005 and 2006 fiscal years. As of May 31, 2007, these awards remained unearned and unexercisable. However, pursuant to the terms of the separation and retirement agreement between Biomet and Mr. England dated May 31, 2007, these conditional performance stock option awards have accelerated and, therefore, these conditional performance stock option awards are currently exercisable. The acceleration of these conditional performance stock option awards resulted in Mr. England earning the target amount specified in the conditional performance stock option awards.

(12) Represents conditional performance stock option awards that were granted to Mr. Niemier during the 2005 and 2006 fiscal years. As of May 31, 2007, these awards remained unearned and unexercisable. However, pursuant to the terms of the separation and retirement agreement between Biomet and Mr. Niemier dated June 6, 2007, these conditional performance stock option awards have accelerated and, therefore, these conditional performance stock option awards are currently exercisable. The acceleration of these conditional performance stock option awards resulted in Mr. Niemier earning the target amount specified in the conditional performance stock option awards.

(13) Represents conditional performance stock option awards that were granted to Mr. van Broeck during the 2005 and 2006 fiscal years. As of May 31, 2007, these awards remained unearned and unexercisable. The amount shown in the table assumes that Mr. van Broeck earns the target amount specified in the conditional performance stock option awards.

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Option Exercises and Stock Vested Table

The following table shows the equity awards that were exercised by Biomet’s NEOs during the 2007 fiscal year.

	Option Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($) (1)(2)
Jeffrey R. Binder	—	—
Daniel P. Hann January 12, 2007	938	19,573
J. Pat Richardson	—	—
Gregory D. Hartman June 28, 2006 June 28, 2006 January 12, 2007	1,250 4,500 938	3,275 91,625 19,573
Garry L. England January 12, 2007	938	19,573
Charles E. Niemier July 7, 2006 September 26, 2006 January 12, 2007	1,250 4,500 938	3,175 97,025 19,573
Roger van Broeck August 31, 2006 August 31, 2006 August 31, 2006 August 31, 2006	937 579 1,250 3,750	11,128 2,218 4,788 13,563

(1) Value realized is calculated on the basis of the difference between the exercise price and the closing price of Biomet’s Common Shares as reported on the NASDAQ Global Select Market on the date of exercise, multiplied by the number of Common Shares underlying the options exercised. This value is irrespective of whether the NEO sold the Common Shares upon exercise or continued to hold the Common Shares.

(2) The value realized upon the exercise of stock option awards for Messrs. Hann, Hartman, England and Niemier may not represent the actual benefit these individuals ultimately receive from the option awards as a result of agreements between Biomet and these individuals. Pursuant to these agreements, Messrs. Hann, Hartman, England and Niemier agreed to remit to Biomet, an amount equal to the excess, if any, of the fair market value of Biomet’s Common Shares on the measurement date for such award over the exercise price of such award with respect to misdated or mispriced stock option awards which had previously been exercised. For further information about the agreements between Biomet and Messrs. Hann, Hartman, England and Niemier, refer to footnotes (7) and (10) to the Outstanding Equity Awards at Fiscal Year-End Table above and “—Employment Agreements and Potential Post-Termination Payments” below.

Retirement And Non-Qualified Defined Contribution And Deferred Compensation Plans

Pension Plans

Biomet does not sponsor or maintain any pension plans applicable to its U.S.-based NEOs. Of Biomet’s NEOs, only Mr. van Broeck, who is based in the Netherlands, is a participant in a foreign pension plan sponsored by Biomet Europe. Biomet Europe provides all employees based in Europe, whether salaried or hourly, with the opportunity to build up benefits under pension plans as part of Biomet Europe’s standard conditions for working in the Netherlands in order to provide a level of retirement benefits competitive with European market conditions. Biomet Europe provides employees with pension benefits beginning after the completion of twelve consecutive months of employment with Biomet Europe. Once this minimum condition is met, however, the employee is credited with accrued time of service for the first twelve months of employment.

Under the foreign pension plan applicable to Mr. van Broeck, the basic contribution is a fixed premium to which he contributes 7% of his annual base salary and Biomet Europe contributes the remainder. Bonus is not included for the purposes of pension calculations or contributions. Certain employees are affected by a maximum pensionable salary condition, which imposes a cap on the amount of salary used for calculations that affect certain amounts, such as premiums and benefits. The benefits provided under this foreign pension plan are based on the following formula:

“years of service” x 1.75% x “final salary”

Under this foreign pension plan, “years of service” is calculated on a monthly basis from the date corresponding to the date that the employee first signed a contract with the plan provider providing the underlying coverage, which is meant to correspond to the first day of the employee’s employment at Biomet Europe. The maximum number of years of credited service is 40 years. Biomet Europe does not allow additional years of service credits to be granted to employees under this plan. For the purpose of the benefits formula, the calculation presumes the employee accrues 40 years of credited service and then the value is adjusted downward, if necessary.

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In addition, under this foreign pension plan, “final salary” is calculated as the average of the employee’s base salary over the last five calendar years subject to the maximum pensionable salary of 175,000 Euros.

Benefits under the plan are provided to the employee in a lump sum following retirement, unless the employee elects to purchase an annuity, which in operation provides a monthly retirement allowance. The benefits are payable only at normal retirement age and the plan contains no provisions allowing early retirement that would not result in a reduction in benefits. Normal retirement age under the plan is age 65.

The benefits provided by this foreign pension plan provide a guaranteed payout, which is intended to be based on the targeted annual payout of an annuity purchased at the time of retirement. Mr. van Broeck joined this plan in 1998, which provides for him to receive a guaranteed payout in the amount of 609,094 Euros on September 1, 2013.

Pension Benefits Table

The following table describes the estimated actuarial present value of accrued pension benefits through the end of Biomet’s 2007 fiscal year for each of the NEOs listed in the table. The calculation of actuarial present value is generally consistent with the methodology and assumptions outlined in Biomet’s audited financial statements, except that the calculation does not assume an average salary increase of 3.0%, a discount rate of 4.9% or an inflation rate of 2% because Mr. van Broeck’s salary is frozen for the purposes of the pension plan and because the payout amount is guaranteed. In addition, the calculation presumes an implied rate of return on the plan assets during the 2007 fiscal year of 4.0%. The expected rate of return on the plan assets is 4.9%, as assumed in conjunction with the preparation of Biomet’s audited financial statements. The actuarial present value of benefits is calculated in accordance with the following assumptions: (1) assumed retirement age: 65; (2) no pre-retirement decrements; and (3) assumed form of payment: lump sum. The actuarial increase during Biomet’s 2007 fiscal year of the projected retirement benefits can be found in the Summary Compensation Table under the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” heading (for Mr. van Broeck, the amount reported under that heading represents actuarial increases in Mr. van Broeck’s plan).

Name	Plan Name		Number of Years of Credited Service (#)(2)	Present Value of Accumulated Benefit ($)(3)	Payment During Last Fiscal Year ($)(4)
Jeffrey R. Binder	—		—	—	—
Daniel P. Hann	—		—	—	—
J. Pat Richardson	—		—	—	—
Gregory D. Hartman	—		—	—	—
Garry L. England	—		—	—	—
Charles E. Niemier	—		—	—	—
Roger van Broeck	Biomet Europe Pension Plan	*	9	504,329	38,811

* The English translation of the plan’s proper name, Biomet Europe Pensioenplan

(1) Mr. van Broeck participates in the Biomet Europe Pension Plan, which is sponsored by Biomet Europe.

(2) Mr. van Broeck’s nine years of accrued service under the Biomet Europe Pension Plan, started in 1998 with BioMer C. V., which was a joint venture between Biomet, Inc. and Merck KGaA, and then later with Biomet Europe, the successor company to BioMer C.V. Prior to 1998, Mr. van Broeck was with Biomet in different positions in different countries for which he did not carry over any build up of pension benefits to his current pension plan.

(3) For Mr. van Broeck, represents the actuarial present value of the accumulated benefit under the Biomet Europe Pensioenplan, which was computed as of April 30, 2007, which is the same pension plan measurement date used for financial statement reporting purposes with respect to Biomet’s audited financial statements for the fiscal year ended May 31, 2007. For the purposes of the Pension Benefits Table above, to calculate the actuarial present value of Mr. van Broeck’s accumulated benefit in U.S. dollars, Biomet used a currency conversion rate of 1 Euro to $1.3447, which represents the currency exchange rate from Euros to U.S. dollars on June 1, 2007 as published in The Wall Street Journal.

(4) For Mr. van Broeck, represents the annual premium contributed to the Biomet Europe Pension Plan after Mr. van Broeck’s contribution of 7% of his annual base salary.

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Non-Qualified Deferred Compensation

The Deferred Compensation Plan is a non-qualified deferred compensation plan, which is available for members of Biomet’s senior management and members of the Board. The Plan allows eligible participants to defer pre-tax compensation to reduce current tax liability and assist those team members in their plan for retirement and other long-term savings goals in a tax-effective manner. Under the Plan, eligible participants may defer up to 100% of their base salary and bonus payments, as well as Board fees for non-employee Directors, as applicable. Biomet does not make any contributions to the Plan. For further information on the Deferred Compensation Plan, refer to “—Compensation Discussion and Analysis—The Elements of Biomet’s Compensation Program—Retirement Plans.”

During the 2007 fiscal year, only Messrs. Hann and England participated in the Deferred Compensation Plan. Biomet does not pay above-market or preferential earnings on non-qualified deferred compensation.

Name	Executive Contributions in Last FY ($)(1)	Registrant Contributions in Last FY ($)(2)	Aggregate Earnings in Last FY ($)(3)	Aggregate Withdrawals/ Distributions ($)	Aggregate Balance at Last FY ($)(4)
Jeffrey R. Binder	—	—	—	—	—
Daniel P. Hann	116,052	—	36,926	—	289,303
J. Pat Richardson	—	—	—	—	—
Gregory D. Hartman	—	—	—	—	—
Garry L. England	81,175	—	52,072	—	344,646
Charles E. Niemier	—	—	—	—	—
Roger van Broeck	_	_	_	_	_

(1) The amounts shown in this column are reported in amounts included in the Summary Compensation Table under the Base Salary heading.

(2) Biomet does not make any contributions to the Deferred Compensation Plan.

(3) The amounts shown in this column are not reported in the Summary Compensation Table because Biomet does not pay above-market or preferential earnings on deferred compensation.

(4) The amounts shown in this column primarily represent amounts consisting of: (a) contributions by Messrs. Hann and England from prior fiscal years of each’s own compensation and (b) any at-market and non-preferential earnings on the accumulated balance.

Employment Agreements and Potential Post-Termination Payments

Biomet historically did not provide NEOs with employment agreements, with the exception of unique circumstances or if such agreements were customary in foreign countries. Of the current NEOs, Biomet has an employment agreement with Mr. Binder and has provided an offer letter to Mr. Richardson. In addition, Biomet has entered into Retirement and Consulting Agreements with Messrs. Hartman and Hann and Separation and Retirement Agreements with Messrs. Niemier and England.

Furthermore, on September 20, 2006, Biomet entered into change in control agreements with certain of its then current executive officers. With respect to certain of Biomet’s NEOs, namely Messrs. Hann, Hartman, England and Niemier, these change in control agreements were subsequently superceded or modified respectively in connection with such NEO’s retirement, as described in more detail below. In addition, in connection with the employment agreement between Biomet and Mr. Binder and the offer letter provided to Mr. Richardson, Biomet subsequently entered into change in control agreements with Messrs. Binder and Richardson.

In addition, on September 21, 2006, Biomet adopted the Biomet, Inc. Executive Severance Pay Plan, which provides each participating Biomet executive with severance benefits in the event of certain terminations of the executive’s employment. The following narrative describes the terms of these various agreements and the Severance Plan.

Employment Agreement with Jeffrey R. Binder

On February 26, 2007, Biomet entered into an employment agreement with Mr. Binder to become President and Chief Executive Officer of Biomet. Pursuant to the terms of the agreement between Biomet and Mr. Binder, the agreement has an initial three-year term that provides for automatic twelve-month extensions, beginning on January 1, 2010, unless either Biomet or Mr. Binder gives prior notice of termination. Mr. Binder will receive a base salary at a rate no less than $650,000 per year, which shall be adjusted at the discretion of Biomet. Mr. Binder will also have the opportunity to earn an annual cash bonus in an amount no less than 100% of his base salary for on-target performance with the possibility of exceeding 100% for high achievement.

If Mr. Binder is required to pay his former employer in connection with the termination of his employment, Biomet will reimburse him for the amount of such payment up to $1,320,000 (the “Make Whole Bonus”). Mr. Binder is required to pay such amount to Biomet if, prior to February 26, 2009, Mr. Binder terminates his employment other than for “good reason”, which generally includes any demotion, assignment of duties inconsistent with his position or a reduction in base salary or Biomet terminates his employment for “cause”, which generally includes failure to substantially perform his duties, conviction of a crime involving dishonesty or unappealable regulatory sanction related to his employment, material violation of a material written Biomet policy, material breach of the employment agreement, failure to cooperate with reasonable Biomet or governmental investigation or inquiries or willfully acting to injure Biomet. For further information, please refer to Mr. Binder’s agreement, previously filed with the SEC. This repayment obligation lapses with respect to 25% of the Make Whole Bonus for each six month period of

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employment after the date of the agreement. In addition, pursuant to the employment agreement between Biomet and Mr. Binder, in connection with the relocation arrangement provided for in the employment agreement, Biomet agreed to purchase Mr. Binder’s prior residence in Illinois at its then prevailing value, to be determined by an appraiser mutually agreeable to both parties, up to $2,199,000. Furthermore, Biomet agreed to reimburse Mr. Binder for certain capital gains taxes, if any, incurred as a result of the sale of Mr. Binder’s prior residence. As a result of the independent appraisal, Biomet purchased Mr. Binder’s prior residence for less than the maximum amount and Mr. Binder has not recognized any gain on the sale of his prior residence.

As a result of Mr. Binder’s spending weekends at his home in Austin, Texas, Biomet has agreed to arrange at its expense for Mr. Binder to fly (using commercial and corporate aircraft) once per week to and from his Texas home and Biomet’s headquarters. Biomet will not “gross up” Mr. Binder for taxes incurred in connection with this benefit and Biomet’s incremental costs associated with extending this benefit. However, if Mr. Binder uses a commercial flight and the income imputed in connection with the flights is greater than the amount imputed if Mr. Binder had used a Biomet aircraft, Biomet will provide a “gross up” to Mr. Binder for taxes on the incremental income associated with the commercial flight. Biomet’s incremental costs associated with extending these benefits for Mr. Binder are capped at $500,000 in any twelve-month period.

If the Merger Agreement is terminated, Mr. Binder will be granted an equity award after such termination and annually thereafter (if still employed) commencing after May 31, 2008, each with a nominal value of no less than $3,500,000 on the date of each grant. Each award would vest in five equal installments on the first five anniversaries of the grant date. Biomet’s Compensation and Stock Option Committee will have the discretion as to the form of this benefit, expected to be 50% in stock options and 50% in restricted stock or restricted stock units. Biomet’s Compensation and Stock Option Committee will also have the discretion to grant up to four-sevenths of each annual equity award in the form of restricted stock or restricted stock units the vesting of which will be contingent on the achievement of performance goals mutually agreed upon by the Compensation and Stock Option Committee and Mr. Binder. If the transaction contemplated by the Merger Agreement is consummated, Mr. Binder will not receive this benefit; although it is expected that Mr. Binder will receive an equity award following the consummation of the transaction contemplated by the Merger Agreement (although such award is still subject to negotiation and discussion).

The agreement provides that Mr. Binder could be entitled to certain severance benefits following termination of employment. If he is terminated by Biomet for any reason other than for cause or disability, or if Mr. Binder terminates his employment for good reason, he would be entitled to the following:

• An amount equal to (a) 1.5 times his base salary in effect at the date of termination (the “Base Component”), plus (b) 1.5 times the average of (x) the annual incentive bonus earned by Mr. Binder for the prior year and (y) the annual incentive bonus Mr. Binder would have received for the current year if his employment had not been terminated, based on Biomet’s performance to the date of termination extrapolated through the end of the current year (the “Bonus Component”, and together with the “Base Component”, the “Severance Benefit”). The total amount of the Severance Benefit will be paid in equal, ratable installments in accordance with Biomet’s regular payroll policies over the course of the 18 month non-compete period provided for in the agreement. If Mr. Binder becomes employed by another employer during that period, the Bonus Component will cease and the Severance Benefit will be limited to the Base Component;

• If Mr. Binder is eligible for and elects continuation coverage pursuant to COBRA, Biomet will pay the premiums for such coverage (or reimburse Mr. Binder for such premiums) during the 18 month period during which, under the employment agreement, Mr. Binder agrees not to engage in certain activities in competition with Biomet;

• Continued payment of Mr. Binder’s company-provided car allowance, if any, for a period of 12 months from the termination date;

• All outstanding options granted to Mr. Binder by Biomet (including the annual equity awards described above) on any Common Shares, that would have vested in the ordinary course within 12 months after the termination date if his employment had not been terminated will become immediately vested and exercisable (to the extent not yet vested and exercisable) as of the termination date and all vested options shall remain exercisable until the earlier of (x) the expiration of their original term or (y) 18 months from the date of termination. As of June 1, 2007 Mr. Binder had no outstanding options. To the extent not otherwise provided under the written agreement, if any, evidencing the grant of any restricted Common Shares to Mr. Binder, all such outstanding Common Shares that have been granted to Mr. Binder subject to restrictions that would have lapsed in the ordinary course within 12 months after the termination date if his employment had not been terminated will vest automatically upon the termination date, and Mr. Binder will become the owner of such Common Shares free and clear of all such restrictions. As of June 1, 2007 Mr. Binder had no restricted Common Shares. Biomet shall pay Mr. Binder an additional $1,000,000 in a cash lump sum if, and only if, a termination described above occurs prior to grant by Biomet to Mr. Binder of his first annual equity award and prior to the consummation of the transaction contemplated by the Merger Agreement. Such payment, if any, shall be made upon the termination of Mr. Binder’s employment.

Mr. Binder will not be eligible to receive the above severance benefits at a time he would also be entitled to benefits under the change in control agreement described below if his employment were terminated by Biomet without “cause” or by Mr. Binder for “good reason” (each as defined in the change in control agreement, described below). To receive the severance benefits provided under the agreement, Mr. Binder must sign a general release of claims. The agreement contains customary confidentiality, non-competition and non-solicitation provisions. Mr. Binder’s non-competition period is for 18 months after his termination.

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If Mr. Binder is terminated due to Mr. Binder’s death or disability, Mr. Binder is entitled to receive the following:

• His base salary in effect through date of termination;

• A pro-rated portion (based on the percentage of Biomet’s fiscal year preceding the date of termination) of the average of (x) the annual incentive bonus earned by Mr. Binder for the prior year and (y) the annual incentive bonus Mr. Binder would have received in the current year if his employment had not been terminated, based on the Company’s performance to the date of termination extrapolated through the end of the current year; and

• Biomet shall pay to Mr. Binder, or his estate, as applicable, as they come due, any “Accrued Benefits” (as defined in the agreement).

If Mr. Binder is terminated with “cause” or without “good reason” (each as defined in the agreement) Biomet will pay Mr. Binder the base salary in effect through the termination date and any “Accrued Benefits” (as defined in the agreement) when due.

Offer Letter to J. Pat Richardson

On March 30, 2007, Biomet announced the appointment of J. Pat Richardson as Corporate Vice President–Finance and Interim Chief Financial Officer and Treasurer effective April 11, 2007. Pursuant to an offer of employment between Biomet and Mr. Richardson, Mr. Richardson receives, among other benefits, a base salary of $250,000 per year, an opportunity to earn an annual bonus of 60% of base salary for on-target performance, a car allowance, and other customary benefits. In addition, subject to compliance with applicable state and federal securities laws, and subject to closing of the Merger Agreement, Mr. Richardson will be granted an equity interest in Biomet or one of its affiliates pursuant to an equity incentive plan commensurate with his position at Biomet (although such award is still subject to negotiation and discussion). In the event that the Merger Agreement is terminated, Mr. Richardson will be entitled to equity awards issued by the Compensation and Stock Option Committee that are commensurate with his position at Biomet. The option will be subject to the terms and conditions applicable to options granted under the 2006 Plan, as described in the 2006 Plan and the applicable stock option award. The exercise price per Common Share will be equal to the fair market value per Common Share on the date the option is granted. Further, if Mr. Richardson is terminated for any reason within the first three years of employment, he is required to repay Biomet his relocation costs. This repayment obligation lapses with respect to 33% of this relocation cost for each year of employment after the date of the agreement.

Change-in-Control Agreements

On September 20,2006, Biomet entered into change in control agreements with its then current executive officers, including Messrs. England, Hann, Hartman, Niemier and van Broeck. The agreements were intended to provide for continuity of management in the context of a prospective change in control of Biomet, which is generally defined as a change in the majority of the Board, not including any new Board member approved by the majority of the Board, any person becoming the beneficial owner of 20% or more of the outstanding shares of Biomet, any reorganization, merger, sale of all or substantially all of Biomet’s assets or similar corporate transaction or approval by the shareholders of a complete liquidation of Biomet. For additional information, see the change in control agreements previously filed with the SEC. Upon a change in control, including as may occur in connection with the transactions contemplated by the Merger Agreement, the agreements remain in effect for a period of at least 24 months beyond the month of such change in control. Each agreement provides that during the 24-month period following a change in control, Biomet agrees to continue to employ the executive and the executive agrees to remain in the employ of Biomet. In connection with the retirement of Messrs. Hann and Hartman on March 30, 2007, Messrs. Hann and Hartman entered into severance and consulting agreements with Biomet which supercede the earlier September 20, 2006 change in control agreements. For further information, refer to “—Consulting Arrangements with Gregory D. Hartman and Daniel P. Hann” below. In connection with the separation and retirement agreements of Messrs. Niemier and England dated June 6, 2007 and May 31, 2007, respectively, their respective change in control agreements were modified. For further information, refer to “—Retirement of Garry L. England and Charles E. Niemier” below.

In connection with the execution of the employment agreement with Mr. Binder and Mr. Richardson’s offer letter, Biomet entered into change in control agreements with Messrs. Binder and Richardson. The agreements are intended to provide for continuity of management of Biomet in the event of a change in control other than the proposed Merger Agreement and related transactions with LVB and Purchaser, which are exempted from the agreements. The terms of the agreements are substantially the same as the terms of the agreements entered into on September 20, 2006, which are described above except that the change in control agreements with Messrs. Binder and Richardson automatically terminate and are cancelled immediately prior to the closing of the transactions contemplated by the Merger Agreement.

Under the change in control agreements, if, following a change in control, certain executives die or are terminated by Biomet for any reason other than for “cause”, which is generally defined as willful failure to substantially perform the executive’s duties, willfully engaging in conduct injurious to Biomet or conviction of a felony, or disability, or by the executives for “good reason”, generally defined as any demotion, assignment of duties inconsistent with their title, relocation, any failure to pay or provide benefits to the executive (for more information, please see the agreements on file with the SEC) the executives would be entitled to: (1) a lump sum severance payment equal to two times (or, in the case of Mr. Binder, three times and Mr. Richardson, one times) the sum of the executive’s annual base salary, target bonus (or, in certain circumstances, the executive’s annual bonus earned during a specified time period), annual Biomet contributions to all qualified retirement plans on behalf of the executive and the executive’s total annual car allowance; (2) the executive would receive a payout of his unpaid annual base salary, the higher of the executive’s target bonus for the fiscal year in which termination occurs or the actual bonus paid to the executive for the fiscal year preceding termination and other accrued compensation and benefits through the end of the fiscal year containing the termination date; (3) Biomet would pay the executive a lump sum cash stipend equal to 24 times (or, in the case of Mr. Richardson, 18 times) the monthly premium then charged for family coverage under Biomet’s medical and dental plans and (4) the executive would receive life insurance and long-term disability benefits, or the cash equivalent if not available, substantially similar to those that the executive is receiving immediately prior to the notice of termination for a 24-month period (or, in the case of Mr. Richardson, a 12-month period) after the date of termination. Further, all outstanding stock options granted to the executive would become immediately vested and exercisable and all restrictions on restricted stock

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awards would lapse, unless otherwise provided for under the option award. The change in control agreements also provide for the reimbursement of outplacement services for a period of 12 months after termination occurs, but not in excess of $25,000.

In the event an “anticipatory termination” (as defined in the agreements) occurs, the executive would receive the sale benefits as they would in a termination without “cause” (as defined in the agreements) and all options or other stock awards terminated as a result of their anticipatory termination that were forfeited or would have vested had the termination originally been deemed a termination without cause shall be reinstated or the executive will be paid the fair value of such awards in cash. The executive is also entitled to receive $25,000 in liquidated damages.

In the event that any payments made to the executives in connection with a change in control and termination of employment would be subject to excise taxes under the Internal Revenue Code, Biomet will “gross up” the executive’s compensation to offset certain of such excise taxes.

Severance benefits, other than the life insurance and long-term disability benefits, are generally not subject to mitigation or reduction. To receive the severance benefits provided under the agreements, the executive must sign a general release of claims. In connection with the execution of the agreements, each executive executed a customary confidentiality, non-competition and non-solicitation agreement with Biomet.

Severance Pay Plan

On September 21, 2006, Biomet adopted the Biomet, Inc. Executive Severance Pay Plan for the executives party to the change in control agreements described above. The Severance Plan provides each participating Biomet executive with severance benefits in the event of a termination of the executive’s employment unrelated to the executive’s (1) performance of his employment duties or (2) commission of an act or acts outside of the scope of his employment duties that would constitute the basis of a termination for cause under his agreement.

Severance benefits under the Severance Plan generally consist of the following: (1) payment of a pro-rata target bonus (based on the elapsed portion of the year of termination) in a lump sum; (2) continued payment of base salary for 52 weeks plus one week per full year of service at Biomet, up to a maximum of 78 weeks following the termination date; (3) immediate vesting of all of the executive’s outstanding equity awards (stock options and restricted stock); (4) at Biomet’s expense, continuation of coverage under Biomet health insurance plans pursuant to COBRA for a period not to exceed eighteen months from the termination date; and (5) continuation of any Biomet-provided car allowance for a period of twelve months from the termination date.

As a condition to receiving severance benefits under the Severance Plan, the executive must execute a waiver and release of claims in favor of Biomet and enter into to a customary confidentiality, non-competition and non-solicitation agreement with Biomet. Severance benefits under the Severance Plan are generally intended to be the sole source of severance benefits payable upon a termination of the executive’s employment and are generally not subject to mitigation or reduction. Biomet may amend or terminate the Severance Plan at any time. In the event the executive is entitled to benefits under the change in control agreement as a result of a termination of employment, such executive is not entitled to receive benefits under the Severance Plan.

Management Arrangements

LVB has informed Biomet that it currently intends to retain members of Biomet’s management team following the Offer and Merger. LVB has also informed Biomet that it may offer current and former members of management the opportunity to convert all or a portion of their current equity interests in Biomet into, or otherwise invest on terms that are no more favorable than the other investors in, equity in LVB (and/or a subsidiary thereof). Further, LVB has informed Biomet that it intends to establish equity-based incentive compensation plans for management of the surviving corporation, a portion of which is likely to be allocated to Biomet’s executive officers. The size of such equity-based incentive compensation plans has not yet been determined and no awards have yet been made or promised to Biomet’s current executive officers. It is anticipated that equity awards granted under these incentive compensation plans would generally vest over a number of years of continued employment and would entitle management to share in the future appreciation of the surviving corporation.

Although certain members of Biomet’s current management team may enter into new arrangements with LVB or its affiliates regarding employment (and severance arrangements) with, and the right to purchase or participate in the equity of, LVB (and/or a subsidiary thereof), there can be no assurance that any parties will reach an agreement. These matters are subject to negotiation and discussion and no terms or conditions have been finalized. Any new arrangements are currently expected to be entered into at or prior to the completion of the Merger and would not become effective until the time the Merger is completed.

Although no arrangement has been made as of the date of this Annual Report on Form 10-K, LVB has informed Biomet that it expects to offer Mr. Binder, Biomet’s President and Chief Executive Officer, the opportunity to serve on the boards of directors of LVB and the surviving corporation following the purchase of Common Shares in the Offer, which boards of directors are expected to include at least eleven other members prior to completion of the Merger.

Although LVB has not indicated whether it plans to terminate any of Biomet’s executive officers, the following table shows the amount of potential cash payable (both accrued obligations and severance) to Biomet’s executive officers as of June 1, 2007, pursuant to the change in control agreements, based on an assumed termination date of June 1, 2007. The table also shows the cost to Biomet of continuing coverage and other benefits under Biomet’s group health, dental, disability and life insurance plans and the estimated tax “gross up” payments to each such officer. Although the calculations are intended to provide reasonable estimates of the potential benefits, they are based on numerous assumptions and do not represent the actual amount an executive would receive if an eligible termination event were to occur.

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Potential Payments Upon Certain Terminations

This table shows the potential compensation that Biomet would have to pay to certain named executive officers upon a termination following a termination without “cause” or with “good reason” (as defined in the applicable agreements) related or unrelated to a change in control, death or disability related or unrelated to a change in control, an “anticipatory termination” (as defined in the applicable agreements) in connection with a change in control or termination with “cause” or without “good reason” (as defined in the applicable agreements). The table excludes certain amounts payable pursuant to plans that are available generally to all salaried employees. In the event of the death or disability of one of the NEOs listed in the following table, the deceased or disabled NEO, or his designated beneficiaries, would receive a payment pursuant to the terms of Biomet-funded life or disability plans, respectively. The amounts shown assume that termination of employment was effective June 1, 2007. The amounts shown are only estimates of the amounts that would be payable to the executives upon termination of employment and do not reflect tax positions Biomet may take or the accounting treatment of such payments. Actual amounts to be paid can only be determined at the time of separation. Although the calculations are intended to provide reasonable estimates of the potential benefits, they are based on numerous assumptions and do not represent the actual amount an executive would receive if an eligible termination event were to occur.

	Termination in Connection with a Change in Control(1)												Termination in Absence of a Change in Control
Name of Executive Offlcer(2)(3)	Termination without Cause or with Good Reason			Anticipatory Termination			Disability			Death(7)			Termination without Cause or with Good Reason			Termination with Cause or without Good Reason			Disability			Death
Jeffrey R. Binder
Estimated Value of Accrued Obligations	$	5,437,800	(4)	$	5,462,800	(5)	$	1,327,425	(6)	$	5,412,800	(4)	$	2,125,075	(8)	$	164,281	(9)	$	165,394	(10)	$	165,394	(10)
Estimated Value of Options & Awards Payments		1,000,000	(11)		—			—			1,000,000	(11)		1,000,000	(11)		—			—			—
Estimated Value of Beneflts(12)		16,202			16,202			632,418			16,202			12,013			—			623,201			—
Total		6,454,002			5,479,002			1,950,843			6,429,002			3,137,088			164,281			788,595			165,394
J. Pat Richardson
Estimated Value of Accrued Obligations		941,445	(4)		966,445	(5)		483,070	(6)		916,445	(4)		310,853	(13)		35,567	(9)		310,853	(13)		310,853	(13)
Estimated Value of Options & Awards Payments		—			—			—			—			—			—			—			—
Estimated Value of Beneflts(12)		16,202			16,202			602,491			16,202			11,736			—			614,010			11,736
Total		957,647			982,647			1,085,561			932,647			322,589			35,567			924,863			322,589
Roger van Broeck(15)
Estimated Value of Accrued Obligations		2,387,544	(4)		2,412,554	(5)		953,008	(6)		2,362,554	(4)		892,476	(13)		249,295	(9)		892,476	(13)		892,476	(13)
Estimated Value of Options & Awards Payments		814,326	(14)		814,326	(14)		—			814,326	(14)		814,326	(14)		—			814,326	(14)		814,326	(14)
Estimated Value of Beneflts(12)		9,757			9,757			742,421			9,757			7,318			—			744,860			7,318
Total		3,211,637			3,236,367			1,695,429			3,186,637			1,714,120			249,295		$	2,451,662		$	1,714,120

(1) In connection with the execution of the employment agreement with Mr. Binder and Mr. Richardson’s offer letter, Biomet entered into change in control agreements with Messrs. Binder and Richardson, however the proposed Merger Agreement and related transactions with LVB and Purchaser are exempted from the agreements.

(2) In connection with the retirement of Messrs. Hann and Hartman on March 30, 2007, Biomet entered into severance and consulting agreements with them. These severance and consulting agreements supersede the earlier change in control agreements between Biomet and Messrs. Hann and Hartman dated September 20, 2006. For more information concerning these arrangements, refer to “—Consulting Arrangements with Gregory D. Hartman and Daniel P. Hann” immediately below.

(3) On May 31, 2007 and June 6, 2007, respectively, Biomet entered into separation and retirement agreements with Messrs. England and Niemier. These separation and retirement agreements modify the earlier change in control agreements between Biomet and Messrs. England and Niemier dated September 20, 2006. For further information concerning the terms of the separation and retirement agreements between Biomet and Messrs. England and Niemier, refer to “—Retirements of Garry L. England and Charles E. Niemier” below.

(4) Represents the sum of: (a) the executive’s annual base salary and car allowance from the date of termination occurred, (b) the higher of the executive’s target bonus for the fiscal year in which termination occurs or the actual bonus paid to the executive for the fiscal year preceding termination, (c) the amount the executive would have received during the fiscal year in additional employer contributions to Biomet tax-qualified plans (d) any unpaid accrued vacation or other accrued compensation (e) the total car allowance to the executive for the calendar year immediately preceding the year the change in control occurred and (f) amounts payable for nonqualified deferred compensation plan plus the amount equal to the product of one (for Mr. Richardson), two (for Mr. van Broeck) or three (for Mr. Binder) times (a) the executive’s annual base salary and car allowance from the date of termination through the end of Biomet’s fiscal year in which such termination occurred, (b) the highest of the executive’s target bonus for the fiscal year in which termination occurs or the highest actual bonus paid to the executive for the fiscal year (for Mr. Richardson), two years (for Mr. van Broeck) or three years (for Mr. Binder) preceding termination, minus any amounts paid pursuant to any other contractual arrangement with the executive or plan providing coverage to the executive as a result of the termination (c) total contributions (other than salary reduction contributions) made by Biomet on behalf of the executive for the calendar year immediately preceding the year in which the change in control occurs and (d) the total car allowance to the executive for the calendar year immediately preceding the year the change in control occurred paid as a lump sum. It also includes the maximum $25,000 payable by Biomet for outsourcing services to the executive and, for Mr. van Broeck only, the amount of payments to the pension plan in which Mr. van Broeck participates by Biomet.

(5) Represents the same payments as are due as described in footnote 4 of this table, with the addition of a $25,000 liquidated damages payment.

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(6) Represnt the sum of: (a) the executive’s annual base salary and car allowance from the date of termination through the end of Biomet’s fiscal year in which such termination occurred, (b) the higher of the executive’s target bonus for the fiscal year in which termination occurs or the actual bonus paid to the executive for the fiscal year preceding termination, (c) the amount the executive would have received during the fiscal year in additional employer contributions to Biomet tax-qualified plans (d) any unpaid accrued vacation or other accrued compensation and (e) the total car allowance to the executive through the end of the calendar year in which the change of control occurred paid in a lump sum. For Mr. van Broeck only, this amount also includes the amount of payments to the pension plan in which Mr. van Broeck participates. For a further description of this plan see “Executive Compensation - Compensation Discussion and Analysis” above.

(7) If the executive’s death occurs before a “change in control” (as defined in the agreements) occurs, then there are no payments under the change in control agreements. If the executive’s death occurs after the “change in control” (as defined in the Agreements) occurs and within the term of the change in control agreements the executive receives what they would if they were terminated without cause.

(8) Represents 1.5 times Mr. Binder’s base salary plus 1.5 times the average of the previous year’s bonus and the what current year’s bonus would be based on Biomet’s current performance extrapolated through the end of the fiscal year paid in accordance with Biomet’s regular payroll policies over the course of 18 months, as well as twelve months of Mr. Binder’s applicable car allowance.

(9) Represents base salary through the termination date and any unpaid accrued benefits, if applicable.

(10) Represents payments under Mr. Binder’s employment agreement including unpaid base salary through the termination date and a pro-rated portion of the average of the previous year’s bonus and what the current year’s bonus would be based on Biomet’s current performance extrapolated through the end of the fiscal year and any accrued benefits owed to the executive.

(11) Represents the lump sum payment due Mr. Binder under the terms of his change of control agreement or employment agreement, as applicable.

(12) Represents the cost to Biomet of continuing coverage and other benefits under Biomet’s group health, dental, disability and life insurance plans, and certain other benefits to each such officer under the terms of the applicable agreements or plans. Such coverage is under the same terms as available to all Biomet salaried employees. The disability amounts include the present value of the benefits payments the executives would receive after their disability under the disability plan discounted at 10%.

(13) Represents the payments under the Severance Plan for Messrs. Richardson and van Broeck, assuming the “eligible employee” criteria is met, for salary continuation for a number of weeks equal to 52 plus one week per year of service, up to a maximum of 78 weeks and applicable car allowance for one year, all paid out over the applicable periods in accordance with Biomet’s standard payroll practices; as well as a pro-rated portion of the executive’s target bonus for the year in which the termination occurred.

(14) Represents the intrinsic value under SFAS 123(R) of unexercised stock option awards as of June 1, 2007 (including unvested options).

(15) For the purposes of the table above, to calculate Mr. van Broeck’s amounts Biomet used a currency conversion rate of 1 Euro to $1.3447, which represents the currency exchange rate from Euros to U.S. dollars on June 1,2007 as published in The Wall Street Journal.

Consulting Arrangements with Gregory D. Hartman and Daniel P. Hann

On March 30, 2007, Gregory D. Hartman retired as Senior Vice President—Finance, Chief Financial Officer and Treasurer, and Daniel P. Hann retired as Executive Vice President of Administration and as a Biomet director. In order to ensure a smooth transition of business operations and financial matters, Messrs. Hartman and Hann agreed to serve as consultants to Biomet pursuant to severance and consulting agreements. These agreements discharged any other severance obligations that Biomet may have had with respect to Messrs. Hartman and Hann, including pursuant to their change of control agreements with Biomet dated September 20,2006. Pursuant to Mr. Hartman’s agreement, Mr. Hartman will be eligible to receive $29,166 per month during a six month consulting term. In addition, Mr. Hartman will be eligible to receive $325,000 upon completion of the six month consulting term if the transactions contemplated by the Merger Agreement have been consummated at a price not less than $44.00 per Common Share and the consulting arrangement has not otherwise been terminated. Mr. Hartman will also be reimbursed for insurance premiums he incurs as a result of his election to continue his health insurance coverage under COBRA at a cost to Biomet of $3,912. Biomet may terminate the consulting arrangement without any further payments or obligations to Mr. Hartman if the transactions contemplated by the Merger Agreement have been terminated or are consummated at a price less than the price currently set forth in the proposed Merger Agreement as a result of Biomet’s review of historical stock option granting practice; or if Biomet determines that Mr. Hartman has not adequately performed his consulting duties under the contract or has failed to cooperate with the SEC in connection with Biomet’s review of historical stock option granting practices. Mr. Hartman agreed to customary claims releases, waivers, confidentiality and non-compete terms.

Pursuant to Mr. Hann’s agreement, Mr. Hann will be eligible to receive $41,666 per month during a twelve-month consulting term. In addition, Mr. Hann is entitled to receive $133,333 in respect of his bonus for Biomet’s 2007 fiscal year and will be eligible to receive $400,000 upon completion of the twelve-month consulting term if the consulting arrangement has not otherwise been terminated. Mr. Hann will also be reimbursed for insurance premiums he incurs as a result of his election to continue his health insurance coverage under COBRA, at a cost to Biomet of $7,824. Furthermore, 75,000 options granted to Mr. Hann in March 2006 (of the 175,000 unvested options awarded to Mr. Hann in March 2006) were immediately vested in connection with Mr. Hann’s retirement and consulting agreement, the intrinsic value of which, as of June 1, 2007, equaled $720,750. Biomet refers to these accelerated options as the “CEO Options.” The CEO Options, or the proceeds therefrom, will be held by Biomet and will be distributable to Mr. Hann upon completion of the consulting arrangement provided that Biomet has not otherwise terminated the consulting arrangement. Biomet may terminate the consulting arrangement without any further payments or obligations to Mr. Hann, other than the non-competition payments described below, if the proposed Merger Agreement has been terminated or is consummated at a price less than $44.00 per Common Share as a result of Biomet’s review of historical stock option granting practices; or if Biomet determines that Mr. Hann has not adequately performed his consulting duties under the contract or has failed to cooperate with the SEC in connection with Biomet’s review of historical stock option granting practices.

Lastly, Mr. Hann has agreed not to compete with Biomet during the period beginning on the effective date of his agreement and extending for a period of six months following the expiration or termination of his consulting arrangement. In exchange, Biomet has agreed to make a $50,000 per month payment to Mr. Hann during the six month non-competition period. Mr. Hann also agreed to customary claims releases, waivers, and confidentiality terms.

Retirements of Garry L. England and Charles E. Niemier

Garry L. England retired as Chief Operating Officer—Domestic Operations, effective May 31, 2007. Charles E. Niemier retired as Senior Vice President, Biomet, Inc. and Senior Vice President, Biomet International and Corporate Relations effective June 18, 2007. Mr. Niemier has remained with Biomet as a Class in member of the Board.

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Pursuant to the terms of the separation and retirement agreements between Biomet and Messrs. England and Niemier, both Messrs. England and Niemier began receiving payments and benefits under the Severance Plan as of their respective separation dates. Each of Messrs. England and Niemier will receive 100% of their annual bonus for the fiscal year ended May 31, 2007, totaling $349,000 and $400,000, respectively, if the transactions contemplated by the Merger Agreement are consummated. If the Merger Agreement is terminated or the transactions contemplated by the Merger Agreement are not consummated within six months of the date of separation of Mr. England the annual bonus payable will be reduced from 100% to 94% of base salary, totaling $328,060 and Mr. Niemier will receive 100% of his annual bonus. In lieu of his car allowance, Mr. Niemier received full ownership of the car he used under his car allowance, at an approximate value of $12,000. Mr. England will receive his car allowance for 12 months, costing Biomet approximately $12,575. Messrs. England and Niemier are also entitled to receive 78 weeks of salary continuation at their base salaries as of termination, totaling $549,000 and $630,000, respectively. Messrs. England and Niemier are entitled to payment of their health and insurance premiums for 72 weeks, at a cost to Biomet of $15,436 for each. Biomet also agreed to accelerate the vesting of certain unvested options held by Messrs. England and Niemier and that such options would be exercisable until the earlier of their applicable expiration date or five years from the date of separation, the intrinsic value of which, as of June 1, 2007, was approximately $1,435,611 and $1,392,191, respectively. Mr. England is also entitled to reimbursement of his annual country club dues for 2007 and 2008, not to exceed $5,000 per year. Mr. Niemier is entitled to retain the computer, mobile phone and mobile phone number provided to him by Biomet, valued at approximately $1,700, however all ongoing costs of their operation are to be borne by Mr. Niemier. In the event a change of control does not occur within six months of Mr. Niemier’s date of separation, Mr. Niemier shall receive two times his base salary plus the higher of his target bonus or the highest annual incentive bonus earned by Mr. Niemier during the last two complete fiscal years immediately preceding Mr. Niemier’s separation date (annualized in the event Mr. Niemier was not employed by Biomet for the whole of any such fiscal year) plus total contributions (other than salary reductions contributions) made by Biomet to all qualified retirement plans on behalf of Mr. Niemier in the previous calendar year and the total car allowance for the previous year minus the amounts already paid under the Severance Plan for salary continuation and car allowance the cost of which would be approximately $1,472,042 to Biomet. Pursuant to the terms of these separation and retirement agreements, Messrs. England and Niemier have agreed to customary claims releases, waivers, confidentiality and non-compete terms.

If an applicable change in control event occurs, such as the completion of the transactions contemplated by the Merger Agreement, within six months of the date of Mr. Niemier’s and Mr. England’s respective separation and retirement agreements (or in the case of Mr. Niemier only, upon the expiration of the six-month period following his separation date if a change in control event does not occur during this period), Messrs. England and Niemier will no longer receive the payments and benefits under the Severance Plan, but will receive certain payments and benefits under the change in control agreements with Biomet dated September 20, 2006. Notwithstanding the express terms of the change in control agreements, both Messrs. England and Niemier have agreed to (1) forego any payments or benefits provided in the change of control agreements equal to the compensation continued through the end of the year in which the executive is terminated, the vesting of outstanding options and restricted stock, reimbursement for outplacement costs, and the $25,000 in liquidated damages for an “anticipatory termination” (as defined in the agreement), of the change in control agreements and (2) reduce the payment of two times (a) the executive’s annual base salary and car allowance from the date of termination through the end of Biomet’s fiscal year in which such termination occurred, (b) the highest of the executive’s target bonus for the fiscal year in which termination occurs or the highest actual bonus paid to the executive for the two years preceding termination, minus any amounts paid pursuant to any other contractual arrangement with the executive or plan providing coverage to the executive as a result of the termination (c) total contributions (other than salary reduction contributions) made by Biomet on behalf of the executive for the calendar year immediately preceding the year in which the change in control occurs and (d) the total car allowance to the executive for the calendar year immediately preceding the year the change in control occurred paid as a lump sum. Messrs. England and Niemier would also be entitled to a lump sum cash stipend equal to 24 times the monthly premium then charged for family coverage under Biomet’s medical and dental plans and the executive would receive life insurance and long-term disability benefits, or the cash equivalent if not available, substantially similar to those that the executive is receiving immediately prior to the notice of termination for a 24-month period after the date of termination. The approximate total value of these payments for Messrs. England and Mr. Niemier are $1,456,202 and $1,696,202, respectively, which will be reduced by the amounts previously paid to Messrs. England and Niemier under the Severance Plan.

Non-Employee Director Compensation and Benefits

Biomet’s compensation package for non-employee directors is generally comprised of cash (annual retainers and committee meeting fees) and stock option awards. The annual pay package is designed to attract and retain highly-qualified, independent professionals to represent Biomet’s shareholders and reflect Biomet’s position in the industry. Biomet’s compensation package is also designed to create alignment between its directors and its shareholders through the use of equity-based awards. Actual annual pay varies among directors based on Board committee memberships, committee chair responsibilities and meetings attended. In past years, Biomet has not adopted guidelines with respect to non-employee director ownership of Common Shares. More recently, the Board has considered adopting such a policy, however, these discussions were discontinued upon execution of the original Merger Agreement.

Historically, at the beginning of each calendar year, each Biomet non-employee director has received a vested option to purchase 2,000 of Biomet’s Common Shares each year during his or her service on the Board in accordance with the terms of the 1998 Plan. At the 2006 Annual Meeting, Biomet’s shareholders approved the Biomet, Inc. 2006 Equity Incentive Plan, which provided non-employee directors with an additional option grant to purchase 3,000 Common Shares every year. In connection with the transactions contemplated by the original Merger Agreement and other compelling reasons, each director consented to forego and forever waive the annual grant of option awards for the 2007 fiscal year under both plans.

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Compensation for non-employee directors during the 2007 fiscal year consisted of the following:

Type of Compensation	Amount ($)
Annual retainer for non-employee directors for Board membership (1)	45,000
Annual retainer for non-employee director serving as Chairman of the Board (2)	125,000
Annual retainer for non-employee director serving as Lead Director (3)	30,000
Annual retainer for non-employee director serving as Chair of the Audit Committee	20,000
Annual retainer for non-employee director serving as Chair of the Compensation and Stock Option Committee or Nominating and Corporate Governance Committee	5,000
Annual retainer for non-employee directors serving on the Executive Committee, Audit Committee (non-Chair)	10,000
Quarterly fee for non-employee directors serving on a special committee of the Board	5,000
Meeting fee for attendance by non-employee directors and non-employee members of committees
(except meetings of the Compensation and Stock Option and Nominating and Corporate Governance Committees held in conjunction with a meeting of the Board, for which no meeting fee is paid)	1,800
Meeting fee for telephonic participation by non-employee directors and non-employee members of committees	1,200
Meeting fee for committee meeting held in conjunction with Board meeting	0

(1) In past years, a minimum of 50% of the Board retainer fee received in Common Shares was held in trust by Biomet until such director’s retirement from the Board. Biomet non-employee directors could then take, at each director’s election, between 50% and 100% of the annual retainer fee in the form of Biomet Common Shares in lieu of cash. During the 2007 fiscal year, however, in connection with the original Merger Agreement and pursuant to Board action authorized on December 15,2006, the Board agreed to receive their entire annual retainer fee in cash rather than as Biomet Common Shares.

(2) The Chairman of the Board will receive this fee and meeting fees, but will not receive any additional committee fees.

(3) The Lead Director will receive this fee, in addition to other committee and meeting fees, as appropriate.

Compensation Granted in Connection with Biomet’s Strategic Alternatives

In addition, on December 15, 2006, Biomet’s Board also authorized the one-time payment of $5,000 to each of Dr. Harrison, Thomas F. Kearns, Jr., and Sandra A. Lamb in recognition of the services they provided in connection with the Board’s preliminary review of strategic alternatives for Biomet prior to the formation of the Strategic Alternatives Committee.

Business Expenses

The directors are reimbursed for their business expenses related to their attendance at Biomet meetings, including room, meals and transportation to and from Board and committee meetings. On rare occasions, a director’s spouse may accompany a director when traveling on Biomet business. At times, a director may travel to and from Biomet meetings on Biomet’s corporate aircraft. Directors are also eligible to be reimbursed for attendance at qualified director education programs.

Director and Officer Liability Insurance and Travel Accident Insurance

Director and officer liability insurance individually insures Biomet’s directors and officers against certain losses that they are legally required to bear as a result of their actions while performing duties on Biomet’s behalf. Biomet’s D&O insurance policy does not break out the premium for directors versus officers and, therefore, a dollar amount cannot be assigned to the coverage provided for individual directors.

Biomet also maintains an Aviation Insurance Policy that provides benefits to each director in the event of death or disability (permanent and total) during travel on Biomet’s corporate aircraft. This policy also covers employees and others while traveling on Biomet’s corporate aircraft and, therefore, a dollar amount cannot be assigned to the coverage provided for individual directors.

Non-Employee Directors’ Compensation Table

The following table shows information regarding the compensation of Biomet’s non-employee directors for the 2007 fiscal year. Mr. Binder is not included in the table below because, as President and Chief Executive Officer, disclosure in respect of his compensation is presented in the Summary Compensation Table. Mr. Niemier is not included in the table below because, during the 2007 fiscal year, he was Chief Operating Officer-Domestic Operations and, as a result, disclosure in respect of his compensation is also presented in the Summary Compensation Table.

Also, in response to the Special Litigation Committee’s preliminary report, all current members of the Board agreed that, with respect to misdated or mispriced stock option awards to the current directors on or after January 1,1996 which had not yet been exercised, the exercise price of such unexercised stock option awards would be increased to the fair market value of Biomet’s Common Shares on the measurement date applicable to such award. In addition, the current members of the Board agreed that, with respect to misdated or mispriced stock option awards to the current directors on or after January 1,1996 which had previously been exercised, such directors would at a future date remit to Biomet an amount equal to the excess, if any, of the fair market value of Biomet’s Common Shares on the measurement date for such award over the exercise price of such award. Biomet and the Special Litigation Committee are continuing to consider various matters, including other potential remedial measures.

Furthermore, as employee directors, Messrs. Binder and Niemier did not receive compensation in their capacity as directors. However, in connection with the separation and retirement agreement between Biomet and Mr. Niemier, dated June 6,2007, Mr. Niemier retired from active service as an employee of Biomet, effective June 18,2007, and has remained a member of the Board. As of the effective date his retirement, therefore, Mr. Niemier became a non-employee director.

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Name	Fees Earned or Paid in Cash ($)(1)	Stock Awards ($)(2)	Option Awards $(3)	Non-Equity Incentive Plan Compensation ($)(4)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5)	All Other Compensation ($)(6)	Total ($)
Jerry L. Ferguson	126,000	—	—	—	—	18,500	144,500
C. Scott Harrison, M.D.	136,400	—	5,340	—	—	—	141,740
M. Ray Harroff	63,000	—	5,340	—	—	—	68,340
Thomas F. Kearns, Jr.	77,000	—	5,340	—	—	—	82,340
Sandra A. Lamb	103,600	—	5,340	—	—	—	108,940
Dane Miller, Ph.D.	—	—	—	—	—	—	—
Jerry L. Miller	111,600	—	5,340	—	—	—	116,940
Kenneth V. Miller	147,800	—	5,340	—	—	—	153,140
Niles L. Noblitt	162,800	—	—	—	—	—	162,800
Marilyn Tucker Quayle	105,000	—	5,340	—	—	—	110,340
L. Gene Tanner	91,000	—	5,340	—	—	—	96,340

(1) The aggregate dollar amount of all fees earned or paid in cash for services as a director, including annual Board and committee chair retainer fees, and committee meeting fees, in each case including amounts deferred pursuant to director elections.

(2) In connection with the original Merger Agreement, during the 2007 fiscal year, Biomet’s Board agreed to receive its annual retainer fees in cash rather than in Biomet Common Shares.

(3) For each director listed in the Non-Employee Directors’ Compensation Table above, the value reflects the compensation expense recognized by Biomet during the 2007 fiscal year under SFAS 123(R). For information concerning the assumptions used in determining the compensation expense recognized by Biomet during the 2007 fiscal year, refer to Notes B and I to the Consolidated Financial Statements included in this Annual Report on Form 10-K. During the 2007 fiscal year, Biomet’s non-employee directors agreed to waive their annual grants of option awards. As of June 1, 2007, except Messrs. Ferguson and Noblitt, each of Biomet’s non-employee directors held options to purchase 4,000 Biomet Common Shares, all of which were vested. As of June 1, 2007, Messrs. Ferguson and Noblitt held no outstanding options to purchase Biomet Common Shares.

(4) Biomet does not have a non-equity incentive plan for non-employee directors.

(5) Biomet does not have a pension plan for non-employee directors and does not pay above market or preferential rate on non-qualified deferred compensations for non-employee directors.

(6) For Mr. Ferguson, represents $ 13,500 in personal use of Biomet aircraft and $5,000 in travel allowance. For information on how Biomet calculates its incremental cost of personal use of Biomet aircraft, refer to footnote (3)(a) to the Summary Compensation Table above.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain data with respect to those persons known by Biomet to be the beneficial owners of more than 5% of the issued and outstanding Biomet Common Shares as of July 17, 2007.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class
LVB Acquisition, LLC and related entities c/o Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801	208,324,725	1	84.74	%

(1) This figure represents the Common Shares beneficially owned by LVB, including 202,601,130 Common Shares acquired by LVB Acquisition Merger Sub, Inc. pursuant to the tender offer and 5,723,595 Common Shares owned by Dr. and Mrs. Miller, who, pursuant to a voting agreement, have agreed with LVB to vote all Common Shares beneficially owned by them in favor of the Merger.

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The following table sets forth the beneficial ownership of Biomet Common Shares as of July 17, 2007, by each of Biomet’s current directors, each named executive officer for fiscal 2007 and by all directors and executive officers currently employed by Biomet as a group (as well as Mr. Hann).

Name of Beneficial Owner	Number of Shares Beneficially Owned (1)	Biomet’s Employee Stock Bonus Plan (2)	Biomet 401(k) Savings and Retirement Plan (3)	Option Shares Exercisable Within 60 Days (4)	Total Number of Shares Beneficially Owned	Percent of Class
Jeffrey R. Binder	0	0	0	0	0	0
Garry L. England	0	0	0	0	0	0
Daniel P. Hann (3)	74,406	0	15,032	0	89,438	*
C. Scott Harrison, M.D.	1,284	0	0	0	1,284	*
Kenneth V. Miller	1,282	0	0	0	1,282	*
Charles E. Niemier	1,250	0	65,396	0	66,646	*
L. Gene Tanner	2,558	0	0	0	2,558	*
J. Pat Richardson	0	0	0	0	0	0
Gregory D. Hartman	160,478	0	34,694	0	195,172	*
Roger van Broeck	65,432	0	1,731	0	67,078	*
Chinh E. Chu(4)	0	0	0	0	0	0
Jonathan J. Coslet (4)	0	0	0	0	0	0
Michael Dal Bello (4)	0	0	0	0	0	0
Sean Fernandes (4)	0	0	0	0	0	0
Adrian Jones (4)	0	0	0	0	0	0
Michael Michelson (4)	0	0	0	0	0	0
Dane A. Miller, Ph.D. (5)	5,723,595	0	0	0	5,723,595	2.3	%
John Saer (4)	0	0	0	0	0	0
Todd Sisitsky (4)	0	0	0	0	0	0
Other Executive Officers (10 persons)	247,654	0	137,272	0	384,926	*
All Directors and Executive Officers as a Group (29 persons, including the foregoing)	6,284,279	0	256,335	0	6,540,614	2.7	%

* Represents less than 1.0% of Biomet’s issued and outstanding Common Shares.

(1) Other than as noted below, each director and executive officer has sole or shared voting power and investment power with respect to the Common Shares listed next to his or her name:

• Mr. Gregory D. Hartman—17,117 Common Shares in an individual indirect trust in the name of his spouse over which he has no voting or investment power and disclaims any beneficial ownership thereof; 57,486 Common Shares held by his spouses as to which Mr. Hartman has no voting or investment power and disclaims beneficial ownership and 2,800 Common Shares held in the name of his children over which he has no voting or investment power and disclaims any beneficial ownership thereof.

• Other Executive Officers—8,958 Common Shares held by the children of four of these executive officers, as to which the executive officers have no voting or investment power and disclaim beneficial ownership; and 14,607 Common Shares held by the spouses of one of these executive officers, as to which the executive officers have no voting or investment power and disclaim beneficial ownership.

(2) Biomet’s executive officers may elect to participate in Biomet’s Profit Sharing Plan and Trust qualified under Section 401(k) of the Internal Revenue Code. The officers have no voting power for the Common Shares held in their accounts in the 401(k) plan. They have sole investment power with respect to any shares purchased through their personal contributions to their accounts in the 401(k) plan. They have no investment power with respect to the Common Shares contributed by Biomet to their accounts in the 401(k) plan.

(3) On March 30,2007, Mr. Hann retired as Executive Vice President of Administration and a Biomet director. He is reflected in the table above as he met the criteria to be a named executive officer, under SEC regulations, for the 2007 fiscal year.

(4) Each of Messrs. Chu, Coslet, Dal Bello, Fernandes, Jones, Michelson, Saer and Sisitsky was designated to serve on Biomet’s Board by LVB, which is the beneficial owner of 208,324,725 Common Shares.

(5) Dr. Miller was designated to serve on Biomet’s Board by LVB, which is the beneficial owner of 208,324,725 Common Shares, including 5,723,595 Common Shares owned by Dr. Miller and his wife. Dr. Miller and his wife, Mary Louise Miller are subject to a voting agreement with LVB and agreed that during the time that the voting agreement is in effect, at any meeting of Biomet’s shareholders, however called, and at every adjournment or postponement thereof, with respect to outstanding Biomet Common Shares owned beneficially or of record by Dr. and Mrs. Miller, Dr. and Mrs. Miller (individually and jointly) will: (a) appear at such meeting or otherwise cause their Common Shares to be counted as present thereat for purposes of establishing a quorum; (b) vote or cause to be voted their Common Shares in favor of the Merger and the approval and adoption by Biomet’s shareholders of the “plan of merger” contained in the Merger Agreement, and any action required in furtherance thereof; and (c) vote or cause to be voted, or execute consents in respect of, their

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Common Shares against any proposal, action or transaction involving Biomet or any of its shareholders that could reasonably be expected to prevent or materially impede or delay the consummation of the transactions contemplated by the Merger Agreement. The voting agreement will terminate immediately upon the earliest of: (a) the effective time of the Merger; (b) the termination of the Merger Agreement; and (c) the mutual agreement of the parties to terminate the voting agreement. According to the voting agreement, as of the date of the voting agreement, Dr. and Mrs. Miller owned, individually or collectively and in the aggregate, 5,723,595 Common Shares, representing approximately 2.3% of the total number of outstanding Common Shares as of July 17, 2007. Any Common Shares acquired by Dr. and/or Mrs. Miller after the date of the voting agreement and prior to the termination voting agreement will also be subject to the voting agreement.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information regarding the securities to be issued and the securities remaining available for issuance under Biomet’s stock-based incentive plans as of July 17, 2007 (in thousands, except exercise price per Common Share):

	Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders	9,629,895	$	34.34	13,234,286
Equity compensation plans not approved by security holders	—		—	—
Total	9,629,895	$	34.34	13,234,286

Further information about Biomet’s stock-based incentive plans can be found in Note 1 to the financial statements contained in Item 8 of this report. Biomet does not have any plans not approved by its shareholders.

If the Merger Agreement is terminated, Mr. Binder will be granted an equity award after such termination and annually thereafter (if still employed) commencing after May 31, 2008, each with a nominal value of no less than $3,500,000 on the date of each grant. Each award would vest in five equal installments on the first five anniversaries of the grant date. Biomet’s Compensation and Stock Option Committee will have the discretion as to the form of this benefit, expected to be 50% in stock options and 50% in restricted stock or restricted stock units, which are not included in the table above. For more information please see “Item 11. Executive Compensation - Employment Agreements and Potential Post-Termination Payments - Employment Agreement with Jeffrey R. Binder.”

Item 13. Certain Relationships and Related Transactions.

Related Party Transactions

The Board has not adopted a written policy relating to the review and approval of transactions with related persons that are required to be disclosed by SEC regulations (“related person transactions”). However, it is Biomet’s practice for the Audit Committee to review and approve all such transactions to confirm that the terms of these transactions are no less favorable to Biomet than would have been available in the absence of the relationship with the related person. A “related person” is defined under the applicable SEC regulation and includes Biomet’s directors, executive officers, and 5% or more beneficial owners of Biomet’s Common Shares. At times, it may be advisable to initiate a transaction before the Audit Committee has evaluated it, or a transaction may begin before discovery of a related person’s participation. In such instances, management consults with the Chairman of the Audit Committee to determine the appropriate course of action. The Audit Committee periodically reports on its activities to the Board.

During Biomet’s 2007 fiscal year, there were no related person transactions.

Director Independence

As of July 17, 2007, 12 of Biomet’s 13 directors were non-employee directors. As of July 17, 2007, the Board has determined that 3 of its 12 non-employee directors (C. Scott Harrison, M.D., Kenneth V. Miller and L. Gene Tanner) satisfy the independence standards set forth in The Nasdaq Stock Market listing standards. The remaining directors (other than Dr. Miller and Mr. Binder) may also satisfy the independence standards (other than with respect to membership on the Audit Committee), however, the Board has not made such a determination as of the date of this Annual Report on Form 10-K.

As a result of LVB controlling more than 50% of Biomet’s voting power, Biomet qualifies as a “controlled company” as defined in Rule 4350(c)(5) of the Nasdaq Marketplace Rules. Therefore, Biomet is exempt from the requirements of Rule 4350(c) of the Nasdaq Marketplace Rules with respect to its Board being comprised of a majority of “independent directors” as defined by the Nasdaq Marketplace Rules and the related rules covering the independence of directors serving on the Compensation Committee and the Nominating and Corporate Governance Committee of the Board. The controlled company exemption does not modify the independence requirements for the Audit Committee. Of the 13 directors currently serving on the Board, the Board has determined that 3 directors meet the independence standards for Audit Committee members.

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Item 14. Principal Accounting Fees and Services.

Fees for professional services provided by Biomet’s independent accountants in each of the last two fiscal years, in each of the following categories are:

	2007		2006
Audit Fees	$	3,022,716	$	1,915,213
Audit-Related Fees		99,160		49,538
Tax Fees		5,168		13,347
All Other Fees		0		0
	$	3,127,044	$	1,978,098

Fees for audit services include fees associated with the annual audit of consolidated financial statements (including Sarbanes-Oxley 404 attestation in 2007 and 2006), the reviews of Biomet’s quarterly reports on Form 10-Q, audit-related accounting consultations, audit-related acquisition accounting and statutory audits required internationally. Audit-related fees principally included due diligence in connection with acquisitions, assistance with implementation of various rules and standards and benefit plan audits. Tax fees included tax compliance, tax advice and tax planning. Pursuant to the Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee, or the Chair of the Audit Committee, is responsible for approving in advance all audit and permitted non-audit services to be performed for Biomet by its independent accountants. Prior to the engagement of the independent accountants for the next year’s audit, management, with the participation of the independent accountants, submits to the Audit Committee for approval an aggregate request for services expected to be rendered during that year for various categories of services. In the event that additional services are required from the independent accountants, the Audit Committee has delegated authority to approve or deny such requests to the Chair of the Audit Committee.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following financial statements and financial statement schedule are included in Item 8 herein.

(1) Financial Statements:

Management’s Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of May 31, 2007 and 2006

Consolidated Statements of Income for the years ended May 31, 2007, 2006 and 2005

Consolidated Statements of Shareholders’ Equity for the years ended May 31, 2007, 2006 and 2005

Consolidated Statements of Cash Flows for the years ended May 31, 2007, 2006 and 2005

Notes to Consolidated Financial Statements

(2) Financial Statement Schedule:

Schedule II - Valuation and Qualifying Accounts

(3) Exhibits:

Refer to the Index to Exhibits immediately following the signature page of this report, which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on July 27, 2007.

BIOMET, INC.
By:	/s/ JEFFREY R. BINDER
	Jeffrey R. Binder
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on July 27, 2007.

By:	/s/ CHINH E. CHU
	Chinh E. Chu, Director
By:	/s/ JONATHAN J. COSLET
	Jonathan J. Coslet, Director
By:	/s/ MICHAEL DAL BELLO
	Michael Dal Bello, Director
By:	/s/ JEFFREY R. BINDER
	Jeffrey R. Binder, President and Chief Executive Officer and Director
	(Principal Executive Officer)
By:	/s/ C. SCOTT HARRISON, M.D.
	C. Scott Harrison, M.D., Lead Director
By:	/s/ SEAN FERNANDES
	Sean Fernandes, Director
By:	/s/ ADRIAN JONES
	Adrian Jones, Director

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By:	/s/ MICHAEL MICHELSON
	Michael Michelson, Director
By:	/s/ DANE A. MILLER
	Dane A. Miller, Director
By:	/s/ KENNETH V. MILLER
	Kenneth V. Miller, Director
By:	/s/ JOHN SAER
	John Saer, Director
By:	/s/ TODD SISITSKY
	Todd Sisitsky, Director
By:	/s/ L. GENE TANNER
	L. Gene Tanner, Director
By:	/s/ DANIEL P. FLORIN
	Daniel P. Florin, Senior Vice President - Finance (Principal Financial Officer)
By:	/s/ JAMES W. HALLER
	James W. Haller, Controller (Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibit Number Assigned

in Regulation S-K, Item 601

Title of Exhibits

(2)	2.1	Agreement and Plan of Merger, dated as of December 18, 2006, among Biomet, Inc., LVB Acquisition, LLC and LVB Acquisition Merger Sub, Inc. (Incorporated by reference to Exhibit 2.1 to Biomet, Inc. Form 8-K Current Report dated December 18, 2006, File No. 0-12515) as amended and restated as of June 7, 2007 (Incorporated by reference to Exhibit 2.1 to Biomet, Inc. Form 8-K Current Report dated June 7, 2007, File No. 0-12515).
(3)	3.1	Amended Articles of Incorporation filed July 23, 1982 (Incorporated by reference to Exhibit 3(a) to Biomet, Inc. Form S-18 Registration Statement, File No. 2-78589C).
	3.2	Articles of Amendment to Amended Articles of Incorporation filed July 11, 1983 (Incorporated by reference to Exhibit 3.2 to Biomet, Inc. Form 10-K Report for year ended May 31, 1983, File No. 0-12515).
	3.3	Articles of Amendment to Amended Articles of Incorporation filed August 22, 1987 (Incorporated by reference to Exhibit 3.3 to Biomet, Inc. Form 10-K Report for year ended May 31,1987, File No. 0-12515).
	3.4	Articles of Amendment to the Amended Articles of Incorporation filed September 18, 1989 (Incorporated by reference to Exhibit 3.4 to Biomet, Inc. Form 10-K Report for year ended May 31, 1990, File No. 0-12515).
	3.5	Amended and Restated Bylaws as Amended December 13, 1997 (Incorporated by reference to Exhibit 3.6 to Biomet, Inc. Form 10-K Report for year ended May 31, 1998, File No. 0-12515).
	3.6	Articles of Amendment to Amended Articles of Incorporation filed January 18, 2007 (Incorporated by reference to Exhibit 3.1 to Biomet, Inc. Form 8-K Current Report dated January 19,2007, File No. 0-12515).
	3.7	Amended and Restated Bylaws as Amended June 6, 2007.*
(4)	4.1	Specimen certificate for Common Shares (Incorporated by reference to Exhibit 4.1 to Biomet, Inc. Form 10-K Report for year ended May 31, 1985, File No. 0-12515).
(9)	9.1	Voting Agreement, dated June 6, 2007, among LVB Acquisition Acquisition, LLC and Dane A. Miller, Ph.D. and Mary Louise Miller (Incorporated by reference to Exhibit (d)(1)(J) of the Schedule TO filed by LVB Acquisition Merger Sub, Inc. and LVB Acquisition LLC with the SEC on June 13, 2007).
(10)	10.1	Employee and Non-Employee Director Stock Option Plan, dated September 18, 1992 (Incorporated by reference to Exhibit 19.1 to Biomet, Inc. Form 10-K Report for year ended May 31, 1993, File No. 0-12515).
	10.2	Form of Stock Option Agreement under the Employee and Non-Employee Stock Option Plan dated September 18, 1992 (Incorporated by reference to Exhibit 4.03 to Biomet, Inc. Form S-8 Registration Statement, File No. 33-65700).
	10.3	401(k) Savings and Retirement Plan amended as of April 1, 2007.*
	10.4	Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option Plan adopted August 3, 1998 (Incorporated by reference to Exhibit 10.6 to Biomet, Inc. Form 10-K Report for year ended May 31,1998, File No. 0-12515).
	10.5	Joint Venture Agreement between Biomet, Inc. and Merck KGaA dated as of November 24, 1997 (Incorporated by reference to Exhibit 2.01 to Biomet, Inc. Form 8-K Current Report dated February 17, 1998, File No. 0-12515).
	10.6	Purchase and Substitution Agreement dated March 19,2004 by and among Merck KGaA, Biomet, Inc., BioHoldings UK Ltd. and Biomet Europe Ltd. (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K current Report dated March 19, 2004, File No. 0-12515).

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10.7	Agreement and Plan of Merger dated March 7, 2004 among Biomet, Inc., Laker Acquisition Corp. I and Interpore International, Inc. (Incorporated by reference to Exhibit 1 to Biomet, Inc. Form SC 13D General Statement of Acquisition of Beneficial Ownership dated March 17, 2004, File No. 0-12515).
10.8	Separation and Release Agreement dated August 21, 2006 between Bart J. Doedens, M.D. and Biomet, Inc. (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated August 25, 2006, File No. 0-12515).
10.9	Severance and Change in Control Agreement dated as of September 20, 2006, by and among Biomet, Inc. and Daniel P. Hann (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated September 20, 2006, File No. 0-12515).
10.10	Change in Control Agreement dated as of September 20, 2006, by and among Biomet, Inc. and Garry L. England (Incorporated by reference to Exhibit 10.2 to Biomet, Inc. Form 8-K Current Report dated September 20, 2006, File No. 0-12515).
10.11	Change in Control Agreement dated as of September 20, 2006, by and among Biomet, Inc. and Charles E. Niemier (Incorporated by reference to Exhibit 10.3 to Biomet, Inc. Form 8-K Current Report dated September 20, 2006, File No. 0-12515).
10.12	Executive Severance Pay Plan dated as of September 22, 2006 (Incorporated by reference to Exhibit 10.4 to Biomet, Inc. Form 8-K Current Report dated September 20, 2006, File No. 0-12515).
10.13	Employment Agreement dated as of February 26, 2007, by and among Biomet, Inc. and Jeffrey R. Binder (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated February 27, 2007, File No. 0-12515).
10.14	Change in Control Agreement dated as of February 26, 2007, by and among Biomet, Inc. and Jeffrey R. Binder (Incorporated by reference to Exhibit 10.2 to Biomet, Inc. Form 8-K Current Report dated February 27, 2007, File No. 0-12515).
10.15	Offer Letter dated as of March 26, 2007, by and among Biomet, Inc. and J. Pat Richardson (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated March 30, 2007, File No. 0-12515).
10.16	Change in Control Agreement dated as of March 29, 2007, by and among Biomet, Inc. and J. Pat Richardson (Incorporated by reference to Exhibit 10.2 to Biomet, Inc. Form 8-K Current Report dated March 30, 2007, File No. 0-12515).
10.17	Retirement and Consulting Agreement dated as of March 30, 2007, by and among Biomet, Inc. and Gregory D.Hartman (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated April 23, 2007, File No. 0-12515).
10.18	Retirement and Consulting Agreement dated as of March 30, 2007, by and among Biomet, Inc. and Daniel P. Hann (Incorporated by reference to Exhibit 10.2 to Biomet, Inc. Form 8-K Current Report dated April 23, 2007, File No. 0-12515).
10.19	Letter Dated April 25, 2006 to Bart J. Doedens, M.D. describing compensation and relocation benefits (Incorporated by reference to Exhibit 10.19 of Biomet, Inc. Form 10-K Report for year ended May 31, 2006, File No. 0-12515).
10.20	Offer Letter dated as of May 10, 2007, by and among Biomet, Inc. and Daniel P. Florin (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated May 16, 2007, File No. 0-12515).
10.21	Change in Control Agreement dated as of May 14, 2007, by and among Biomet, Inc. and Daniel P. Florin (Incorporated by reference to Exhibit 10.2 to Biomet, Inc. Form 8-K Current Report dated May 16, 2007, File No. 0-12515).
10.22	Separation and Retirement Agreement dated as of May 31, 2007 between Garry L. England and Biomet, Inc. (Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated June 6, 2007, File No. 0-12515).
10.23	Change in Control Agreement, dated as of September 20, 2006, between Gregory D. Hartman and Biomet, Inc.*

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	10.24	Limited Guarantee, dated June 7, 2007, by TPG Partners V L.P. (incorporated by reference to Exhibit (d) (1)(F) of the Schedule TO filed by LVB Acquisition Merger Sub, Inc. and LVB Acquisition LLC with the SEC on June 13, 2007).
	10.25	Limited Guarantee, dated June 7, 2007, by KKR 2006 Fund L.P. (incorporated by reference to Exhibit (d) (1)(G) of the Schedule TO filed by LVB Acquisition Merger Sub, Inc. and LVB Acquisition LLC with the SEC on June 13,2007).
	10.26	Limited Guarantee, dated June 7, 2007, by GS Capital Partners VI Parallel, L.P., GS Capital Partners VI GmbH & Co. KG, GS Capital Partners VI Fund, L.P. and GS Capital Partners Offshore Fund, L.P. (incorporated by reference to Exhibit (d)(1)(G) ofthe Schedule TO filed by LVB Acquisition Merger Sub, Inc. and LVB Acquisition LLC with the SEC on June 13,2007).
	10.27	Limited Guarantee, dated June 7, 2007, by Blackstone Capital Partners V L.P. (incorporated by reference to Exhibit (d)(1)(H) ofthe Schedule TO filed by LVB Acquisition Merger Sub, Inc. and LVB Acquisition LLC with the SEC on June 13, 2007).
	10.28	Biomet 2006 Equity Incentive Plan adopted July 19, 2006 (incorporated by reference to Biomet, Inc. Schedule 14A Definitive Proxy Statement dated August 15, 2006).
	10.29	Separation, Release and Consultancy Agreement with Dane A. Miller, Ph.D. (incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form 8-K Current Report dated May 10,2006, File No. 0-12515).
(11)		No exhibit.
(12)		No exhibit.
(13)		No exhibit.
(14)		No exhibit.
(16)		No exhibit.
(18)		No exhibit.
(21)	21.1	Subsidiaries of the Registrant.*
(22)		No exhibit.
(23)	23.1	Consent of Independent Registered Public Accounting Firm.*
(24)		No exhibit.
(31)	31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
	31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
(32)	32.1	Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

* Filed herewith

** Furnished herewith

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EX-3.7

Exhibit 3.7

AMENDED AND RESTATED

BYLAWS

OF

BIOMET, INC.

(As Amended June 6, 2007)

ARTICLE I

Records Pertaining to Share Ownership

Section 1. Recognition of Shareholders. Biomet, Inc. (the “Corporation”) is entitled to recognize a person registered on its books as the owner of shares of the Corporation as having the exclusive right to receive dividends and to vote those shares, notwithstanding any other person’s equitable or other claim to, or interest in, those shares.

Section 2. Transfer of Shares. Shares are transferable only on the books of the Corporation subject to any transfer restrictions imposed by the Articles of Incorporation, these Bylaws, or an agreement among shareholders and the Corporation. Shares may be so transferred upon presentation of the certificate representing the shares, endorsed by the appropriate person or persons, and accompanied by (a) reasonable assurance that those endorsements are genuine and effective, and (b) a request to register the

1

transfer. Transfers of shares are otherwise subject to the provisions of the Indiana Business Corporation Law (the “Act”) and Article 8 of the Indiana Uniform Commercial Code.

Section 3. Certificates. Each shareholder is entitled to a certificate signed (manually or in facsimile) by the President and Chief Executive Officer or a Vice President and the Secretary or an Assistant Secretary, setting forth (a) the name of the Corporation and that it was organized under Indiana law, (b) the name of the person to whom issued, and (c) the number and class of shares represented. The Board of Directors shall prescribe the form of the certificate.

Section 4. Lost or Destroyed Certificates. A new certificate may be issued to replace a lost of destroyed certificate. Unless waived by the Board of Directors, the shareholder in whose name the certificate was issued shall make an affidavit or affirmation of the fact that his certificate is lost or destroyed, shall advertise the loss or destruction in such manner as the Board of Directors may require, and shall give the Corporation a bond of indemnity in the amount and form which the Board of Directors may prescribe.

2

ARTICLE II

Meetings of the Shareholders

Section 1. Annual Meeting. Annual meetings of the shareholders shall be held on the first Friday in September of each year, or on such other date as may be designated by the Board of Directors.

Section 2. Special Meetings. Special meetings of the shareholders may be called by the President and Chief Executive Officer or by the Board of Directors. Special meetings of the shareholders shall be called upon delivery to the Secretary of the Corporation of one or more written demands for a special meeting of the shareholders describing the purposes of that meeting and signed and dated by the holders of at least 90% of all the votes entitled to be cast on any issue proposed to be considered at that meeting.

Section 3. Notice of Meetings. The Corporation shall deliver or mail written notice stating the date, time and place of any shareholders’ meeting and, in the case of a special shareholders’ meeting or when otherwise required by law, a description of the purposes for which the meeting is called, to each shareholder of record entitled to vote at the meeting, at such address as appears in the records of the Corporation and at least 10, but no more than 60, days before the date of the meeting.

3

Section 4. Waiver of Notice. A shareholder may waive notice of any meeting, before or after the date and time of the meeting as stated in the notice, by delivering a signed waiver to the Corporation for inclusion in the minutes. A shareholder’s attendance at any meeting, in person or by proxy (a) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) waives objection to consideration of a particular matter at the meeting that is not within the purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

Section 5. Record Date. The Board of Directors may fix a record date, which may be a future date, for the purpose of determining the shareholders entitled to notice of a shareholders’ meeting, to demand a special meeting, to vote, or to take any other action. A record date may not exceed 70 days before the meeting or action requiring a determination of shareholders. If the Board of Directors does not fix a record date, the record date shall be the 10th day prior to the date of the meeting or other action.

Section 6. Voting by Proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder pursuant to a written appointment form executed by the shareholder or the shareholder’s duly authorized attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or

4

other officer or agent of the Corporation authorized to tabulate votes. The general proxy of a fiduciary is given the same effect as the general proxy of any other shareholder. A proxy appointment is valid for 11 months unless otherwise expressly stated in the appointment form.

Section 7. Voting Lists. After a record date for a shareholders’ meeting has been fixed, the Secretary shall prepare an alphabetical list of all shareholders entitled to notice of the meeting showing the address and number of shares held by each shareholder. The list shall be kept on file at the principal office of the Corporation or at a place identified in the meeting notice in the city where the meeting will be held. The list shall be available for inspection and copying by any shareholder entitled to vote at the meeting, or by the shareholder’s agent or attorney authorized in writing, at any time during regular business hours, beginning 5 business days before the date of the meeting through the meeting. The list shall also be made available to any shareholder, or to the shareholder’s agent or attorney authorized in writing, at the meeting and any adjournment thereof. Failure to prepare or make available a voting list with respect to any shareholder’s meeting shall not affect the validity of any action taken at such meeting.

Section 8. Quorum; Approval. At any meeting of shareholders, a majority of the votes entitled to be cast on a matter at the meeting constitutes a quorum. If a quorum is present when a vote is taken, action on a matter is

5

approved if the votes cast in favor of the action exceed the votes cast in opposition to the action, unless a greater number is required by law, the Articles of Incorporation or these Bylaws.

Section 9. Action by Consent. Any action required or permitted to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the Corporation for inclusion in the minutes. If not otherwise determined pursuant to Section 5 of this Article II, the record date for determining shareholders entitled to take action without a meeting is the date the first shareholder signs the consent to such action.

Section 10. Presence. Any or all shareholders may participate in any annual or special shareholders’ meeting by, or through the use of, any means of communication by which all shareholders participating may simultaneously hear each other during the meeting. A shareholder so participating is deemed to be present in person at the meeting.

6

ARTICLE III

Board of Directors

Section 1. Powers and Duties. All corporate powers are exercised by or under the authority of, and the business and affairs of the Corporation are managed under the direction of, the Board of Directors, unless otherwise provided in the Articles of Incorporation.

Section 2. Number and Terms of Office; Qualifications. The Board of Directors shall have not less than 10 nor more than 14 persons, as may from time to time be determined by resolution adopted by the Board of Directors. The Board of Directors shall be divided into three classes, as nearly equal in numbers as possible. Directors shall be elected to all classes at the annual meeting of the shareholders of the Corporation to be held in 1989. One class of directors so elected shall hold office until the annual meeting of the shareholders to be held in 1990, another class so elected shall hold office until the annual meeting of the shareholders to be held in 1991, and another class so elected shall hold office until the annual meeting of the shareholders to be held in 1992, and in each case the directors shall hold office until their successors are duly elected and qualified or until death, resignation, or removal in accordance with the Articles of Incorporation or these Bylaws. Directors elected at each annual (or special in lieu of the annual) meeting after 1989 shall serve for a term of three years and until their successors are elected and qualified or until death, resignation, or removal in accordance with the Articles of Incorporation or these Bylaws. A person need not be a shareholder or an Indiana resident to qualify to be a director.

7

Section 3. Removal. Any director may be removed with or without cause by action of the holders of at least 75% of all the votes entitled to be cast thereon at any meeting the notice of which states that one of the purposes of the meeting is removal of the director.

Section 4. Vacancies. If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors, the Board of Directors may fill the vacancy. If the directors remaining in office constitute fewer than a quorum of the Board, the directors remaining in office may fill the vacancy by the affirmative vote of a majority of those directors. Any director elected to fill a vacancy holds office until the next annual meeting of the shareholders and until a successor is elected and qualified.

Section 5. Annual Meetings. Unless otherwise agreed by the Board of Directors, the annual meeting of the Board of Directors shall be held immediately following the annual meeting of the shareholders, at the place where the meeting of shareholders was held, for the purpose of electing officers and considering any other business which may be brought before the meeting. Notice is not necessary for any annual meeting.

Section 6. Regular and Special Meetings. Regular meetings of the Board of Directors may be held pursuant to a resolution of the Board of Directors

8

establishing a method for determining the date, time and place of those meetings. Notice is not necessary for any regular meeting. Special meetings of the Board of Directors may be held upon the call of the President and Chief Executive Officer or Secretary or of any 2 directors and upon 24 hours’ written or oral notice specifying the date, time and place of the meeting. The notice need not describe the purpose of the special meeting. Notice of a special meeting may be waived in writing before or after the time of the meeting. The waiver must be signed by the director entitled to the notice and filed with the minutes of the meeting. Attendance at or participation in a meeting waives any required notice of the meeting, unless at the beginning of the meeting (or promptly upon the director’s arrival) the director objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

Section 7. Quorum. A quorum for the transaction of business at any meeting of the Board of Directors consists of a majority of the number of directors specified in Section 2 of this Article III. If a quorum is present when a vote is taken, action on a matter is approved if the action receives the affirmative vote of a majority of the directors present.

Section 8. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all directors then in office. The action must be evidenced

9

by one or more written consents describing the action taken, signed by each director, and included in the minutes. Action of the Board of Directors taken by consent is effective when the last director signs the consent, unless the consent specifies a prior or subsequent effective date.

Section 9. Committees. The Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on them. Each committee may have one or more members, who serve at the pleasure of the Board of Directors. The creation of a committee and appointment of members to it must be approved by the greater of (i) a majority of all the directors in office when the action is taken, or (ii) the number of directors required under Section 7 of this Article III to take action. All rules applicable to action by the Board of Directors apply to committees and their members. The Board of Directors may specify the authority that a committee may exercise; however, a committee may not (a) authorize distributions, except a committee may authorize or approve a reacquisition of shares if done according to a formula or method prescribed by the Board of Directors, (b) approve or propose to shareholders action that must be approved by shareholders, (c) fill vacancies on the Board of Directors or on any of its committees, (d) amend the Articles of Incorporation, (e) adopt, amend or repeal these Bylaws, (f) approve a plan of merger not requiring shareholder approval, or (g) authorize or approve the issuance or sale of a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except the Board of Directors may authorize a committee to so act within limits prescribed by the Board of Directors.

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Section 10. Presence. The Board of Directors may permit any or all directors to participate in any annual, regular, or special meeting by any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director so participating is deemed to be present in person at the meeting.

Section 11. Compensation. Each director shall receive such compensation for service as a director as may be fixed by the Board of Directors.

Section 12. Nominations of Board Members. Only persons who are nominated in accordance with the procedures set forth in this Section 12 shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders by or at the direction of the Board of Directors or by any shareholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 12. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to notice in writing to the Secretary of the Corporation, which notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more

11

than 90 days prior to the meeting; provided, however, that in the event that less than 70 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, any notice of nomination by the shareholder must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.

A shareholder’s notice of nomination shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the shareholder giving the notice (i) the name and address, as they appear on the Corporation’s books, of such shareholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such shareholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee.

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The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he would so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

ARTICLE IV

Officers

Section 1. Officers. The Corporation shall have a Chairman of the Board, a Vice Chairman of the Board, a President and Chief Executive Officer, one or more Vice Presidents, a Secretary, a Treasurer, and such assistant officers as the Board of Directors or the President and Chief Executive Officer designates. The same individual may simultaneously hold more than one office.

Section 2. Terms of Office. Officers are elected at each annual meeting of the Board of Directors and serve for a term expiring at the following annual meeting of the Board of Directors. An officer who has been removed pursuant to Section 4 of this Article IV ceases to serve as an officer immediately upon removal; otherwise, an officer whose term has expired continues to serve until a successor is elected and qualified.

Section 3. Vacancies. If a vacancy occurs among the officers, the Board of Directors may fill the vacancy. Any officer elected to fill a vacancy holds office until the next annual meeting of the Board of Directors and until a successor is elected and qualified.

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Section 4. Removal. Any officer may be removed by the Board of Directors at any time with or without cause.

Section 5. Compensation. Each officer shall receive such compensation for service in office as may be fixed by the Board of Directors.

Section 6. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors. The Chairman of the Board shall have general executive powers, and such other powers and duties as these Bylaws or the Board of Directors may from time to time prescribe.

Section 7. Vice Chairman of the Board. The Vice Chairman of the Board, if one is elected, shall have all the powers of, and perform all the duties incumbent upon, the Chairman of the Board during his absence or disability and shall have such other powers and duties as these Bylaws or the Board of Directors may from time to time prescribe.

Section 8. President and Chief Executive Officer. The President and Chief Executive Officer is the chief executive officer of the Corporation and is responsible for managing and supervising the affairs and personnel of the

14

Corporation, subject to the general control of the Board of Directors. The President and Chief Executive Officer shall preside at all meetings of the shareholders. The President and Chief Executive Officer, or proxies appointed by the President and Chief Executive Officer, may vote shares of other corporations owned by the Corporation. The President and Chief Executive Officer has authority to execute, with the Secretary, powers of attorney appointing other corporations, partnerships or individuals as the agents of the Corporation, subject to law, the Articles of Incorporation, and these Bylaws. The President and Chief Executive Officer has such other powers and duties as these Bylaws or the Board of Directors may from time to time prescribe.

Section 9. Vice Presidents. The Vice Presidents in the order designated by the Board of Directors shall have all the powers of, and perform all the duties incumbent upon, the President and Chief Executive Officer during his absence or disability and shall have such other powers and duties as these Bylaws or the Board of Directors may from time to time prescribe.

Section 10. Secretary. The Secretary is responsible for (a) attending all meetings of the shareholders and the Board of Directors, (b) preparing true and complete minutes of the proceedings of all meetings of the shareholders, the Board of Directors, and all committees of the Board of Directors, (c) maintaining and safeguarding the books (except books of account) and records of the Corporation, and (d) authenticating the records of the Corporation. If required,

15

the Secretary attests the execution of deeds, leases, agreements, powers of attorney, certificates representing shares of the Corporation, and other official documents by the Corporation. The Secretary serves all notices of the Corporation required by law, the Board of Directors, or these Bylaws. The Secretary has such other powers and duties as these Bylaws or the Board of Directors may from time to time prescribe.

Section 11. Treasurer. The Treasurer is responsible for (a) keeping correct and complete books of account which show accurately at all times the financial condition of the Corporation, (b) safeguarding all funds, notes, securities, and other valuables which may from time to time come into the possession of the Corporation, and (c) depositing all funds of the Corporation with such depositories as the Board of Directors shall designate. The Treasurer shall furnish at meetings of the Board of Directors, or when otherwise requested, a statement of the financial condition of the Corporation. The Treasurer has such other powers and duties as these Bylaws or the Board of Directors may from time to time prescribe.

Section 12. Assistant Officers. The Board of Directors or the President and Chief Executive Officer may from time to time designate and elect assistant officers who shall have such powers and duties as the officers whom they are elected to assist specify and delegate to them, and such other powers and duties as the Board of Directors or the President and Chief Executive Officer may from

16

time to time prescribe. An Assistant Secretary may, during the absence or disability of the Secretary, discharge all responsibilities imposed upon the Secretary of the Corporation, including, without limitation, attesting the execution of all documents by the Corporation.

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ARTICLE V

Miscellaneous

Section 1. Records. The Corporation shall keep as permanent records minutes of all meetings of the shareholders, the Board of Directors, and all committees of the Board of Directors, and a record of all actions taken without a meeting by the shareholders, the Board of Directors and all committees of the Board of Directors. The Corporation or its agent shall maintain a record of the shareholders in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class of shares showing the number and class of shares held by each. The Corporation shall maintain its records in written form or in a form capable of conversion into written form within a reasonable time. The Corporation shall keep a copy of the following records at its principal office: (a) the Articles of Incorporation then currently in effect, (b) the Bylaws then currently in effect, (c) all resolutions adopted by the Board of Directors with respect to one or more classes or series of shares and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding, (d) minutes of all shareholders’ meetings, and records of all actions taken by shareholders without a meeting, for the past three years, (e) all written communications to shareholders generally during the past three years, including annual financial statements furnished upon request of the

18

shareholders, (f) a list of the names and business addresses of the current directors and officers, and (g) the most recent annual report filed with the Indiana Secretary of State.

Section 2. Execution of Contracts and Other Documents. Unless otherwise authorized or directed by the Board of Directors, all written contracts and other documents entered into by the Corporation shall be executed on behalf of the Corporation by the President and Chief Executive Officer or a Vice President, and, if required, attested by the Secretary or an Assistant Secretary.

Section 3. Accounting Year. The accounting year of the Corporation begins on June 1 of each year and ends on the May 31 immediately following.

Section 4. Corporate Seal. The Corporation has no seal.

Section 5. Chapter 42 Inapplicable. IC 23-1-42-1, et seq. (the “Control Share Acquisition” chapter of the Indiana Business Corporation Law) does not apply to the Corporation.

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ARTICLE VI

Amendment

These Bylaws may be amended or repealed only by the Board of Directors. The affirmative vote of a majority of all the directors is necessary to amend or repeal these Bylaws.

ARTICLE VII

Indemnification of Directors, Officers, and Employees

Section 1. General. The Corporation shall indemnify every person (and his heirs and legal representatives) who is or was a director, officer, or employee of the Corporation, or of any other corporation which he has served as such at the request of the Corporation and of which the Corporation directly or indirectly is or was a shareholder or creditor, in accordance with the Articles of Incorporation.

Section 2. Advance of Expenses. The Corporation may advance expenses incurred with respect to any claim, action, suit, or other proceeding of the character described in Section 1 of this Article VII prior to final disposition upon receiving an undertaking by or on behalf of the recipient to repay such amount, unless it is ultimately determined that the recipient is entitled to indemnification under this Article VII.

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Section 3. Insurance. The Board of Directors may authorize procurement of insurance policies at the expense of the Corporation to insure any individual who is or was an officer, director or employee of the Corporation against liability asserted against or incurred by the individual in that capacity or arising from the individual’s status as a director, officer, or employee, whether or not the Corporation would have power to indemnify the individual against the same liability under Section 1 of this Article VII.

Section 4. Rights Not Exclusive. The rights of indemnification provided in this Article VII shall be in addition to any rights to which any person (or the heirs or legal representatives of such person) referred to in Section 1 of this Article may otherwise be entitled by contract or as a matter of law, and shall be available whether or not the claim asserted against such person is based on matters which antedate the adoption of this Article.

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EX-10.3

Exhibit 10.3

BIOMET 401(k) SAVINGS AND

RETIREMENT PLAN

Plan Number 002	Effective as of April 1, 2007
	(except as otherwise herein provided)

TABLE OF CONTENTS

		Page
ARTICLE I.	RESTATEMENT OF PLAN	2
ARTICLE II.	DEFINITIONS AND CONSTRUCTION	3
Section 2.01.	Definitions	3
Section 2.02.	Construction and Governing Law	23
ARTICLE III.	PARTICIPATION	25
Section 3.01.	Participation	25
Section 3.02.	Cessation of Participation	27
Section 3.03.	Reemployment	27
Section 3.04.	Change in Employment Status	27
Section 3.05.	Transfer of Employment Between Employers	28
Section 3.06.	Completion of Forms by Participants and Beneficiaries	29
ARTICLE IV.	CONTRIBUTIONS	29
Section 4.01.	Contributions	29
Section 4.02.	Pre-Tax Contributions	30
Section 4.03.	Matching Contributions	32
Section 4.04.	Regular and Nonelective Contributions	33
Section 4.05.	Participant After-Tax Contributions	35
Section 4.06.	Payment, Deductibility, and Nature of Contributions and Dividends	35
Section 4.07.	Expenses of Plan	36
Section 4.08.	Recapture of Tax Credit	36
Section 4.09.	Rollover Contributions and Transfers to the Plan	37
Section 4.10.	Employer Contributions Under the Biomet, Inc. Flexible Benefits Plan	38
ARTICLE V.	LIMITATIONS ON CONTRIBUTIONS AND OTHER ADDITIONS	39
Section 5.01.	Applicability of Article	39
Section 5.02.	Definitions	39
Section 5.03.	Distribution of Excess Deferral Amount	44
Section 5.04.	Limitations on Contributions under Code Section 401(k) and the Distribution of Excess Contributions	45
Section 5.05.	Limitations on Contributions under Code Section 401(m) and the Distribution of Excess Aggregate Contributions	46
Section 5.06.	Stock Bonus Component Aggregation	48
Section 5.07.	Limitation under Code Section 415	48
Section 5.08.	Priority of Limitations	51

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ARTICLE VI.	ACCOUNTING	51
Section 6.01.	Participant Accounts	51
Section 6.02.	Valuation	53
Section 6.03.	Value of Accounts of Participants	53
Section 6.04.	Allocation of Earnings to Non-Stock Subaccounts	54
Section 6.05.	Calculation on Basis of Employer Stock	54
ARTICLE VII.	BENEFITS	55
Section 7.01.	Retirement Benefits	55
Section 7.02.	Death Benefits	56
Section 7.03.	Beneficiaries	56
Section 7.04.	Termination Benefits	58
Section 7.05.	In-Service Withdrawals of Pre-Tax Contribution Account	59
Section 7.06.	In-Service Withdrawals of Rollover/Transfer Account	63
Section 7.07.	In-Service Withdrawals from Savings Account	64
Section 7.08.	In-Service Withdrawals Upon Attainment of Age 59 1/2	64
Section 7.09.	Charge or Discount	64
Section 7.10.	Persons Under Legal Disability	64
Section 7.11.	Payments at Direction of Administrator	65
Section 7.12.	Limitation on Distributions from Tax Credit Account	65
Section 7.13.	Special Rollover Distribution Rules	65
Section 7.14.	Requirements for Commencement and Distribution of Benefits	68
ARTICLE VIII.	PLAN LOANS	70
Section 8.01.	Plan Loans	70
Section 8.02.	Terms and Conditions	71
Section 8.03.	Loan Procedures	75
ARTICLE IX.	BORROWING BY PLAN	75
Section 9.01.	Borrowing by the Plan	75
Section 9.02.	Restrictions on Loans	79
ARTICLE X.	VESTING	80
Section 10.01.	Vesting Standards	80
Section 10.02.	Forfeitures	81
Section 10.03.	Reinstatement	81
ARTICLE XI.	ADMINISTRATION OF THE PLAN	82
Section 11.01.	Administrator	82
Section 11.02.	Claims Procedure	84
Section 11.03.	Employment of Consultants	85
Section 11.04.	Delegation by Administrator	85

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Section 11.05.	Qualified Public Accountant	86
Section 11.06.	Fiduciary Liability	86
Section 11.07.	Fiduciary Insurance	86
ARTICLE XII.	TRUST	87
Section 12.01.	Trust Funds	87
Section 12.02.	Investments	88
Section 12.03.	Transfers Among Investment Funds	89
Section 12.04.	Investment of Stock Subaccounts	91
Section 12.05.	Investments	91
Section 12.06.	Acquisition and Disposition of Employer Stock	92
Section 12.07.	Voting of Stock	92
Section 12.08.	ERISA Section 404(c)	93
ARTICLE XIII.	AMENDMENT OR TERMINATION OF PLAN	94
Section 13.01.	Amendment or Termination	94
Section 13.02.	Amendment for Qualification of Plan	94
Section 13.03.	Restrictions on Amendments	95
Section 13.04.	Discontinuance or Suspension of Contributions	95
Section 13.05.	Allocation of Assets on Termination	95
ARTICLE XIV.	ENTRY AND WITHDRAWAL OF EMPLOYERS	96
Section 14.01.	Entry of Employers	96
Section 14.02.	Withdrawal from Plan	96
ARTICLE XV.	TOP-HEAVY PROVISIONS	97
Section 15.01.	Definitions	97
Section 15.02.	Top-Heavy Plan Provisions	100
ARTICLE XVI.	NONALIENATION OF BENEFITS AND DOMESTIC RELATIONS ORDERS	102
Section 16.01.	Nonalienation of Benefits	102
Section 16.02.	Procedures Regarding Domestic Relations Orders	103
Section 16.03.	Surviving Spouse	105
ARTICLE XVII.	OPTIONS AND RESTRICTIONS ON EMPLOYER STOCK	105
Section 17.01.	Participant Put Option	105
Section 17.02.	Restrictions on Transfer	106
Section 17.03.	Payment of Purchase Price	109
Section 17.04.	Nonterminable Protections and Rights	110
Section 17.05.	Restrictions on Loans	110

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ARTICLE XVIII.	MISCELLANEOUS PROVISIONS RELATING TO EMPLOYER STOCK	110
Section 18.01.	Stock Dividends and Rights	110
Section 18.02.	Endorsement of Stock Certificates	111
Section 18.03.	Securities Laws	111
Section 18.04.	Dividends on Company Stock	111
ARTICLE XIX.	MISCELLANEOUS	112
Section 19.01.	Non-Diversion	112
Section 19.02.	Military Service	113
Section 19.03.	Merger, Consolidation of Plans, or Transfer of Plan Assets	114
Section 19.04.	Allocation of Fiduciary Responsibilities	114
Section 19.05.	Limitation of Rights and Obligations	114
Section 19.06.	Notice	115
Section 19.07.	Right of Recovery	115
Section 19.08.	Legal Counsel	116
Section 19.09.	Evidence of Action	116
Section 19.10.	Audit	116
Section 19.11.	Bonding	116
Section 19.12.	Receipt and Release	116
Section 19.13.	Legal Actions	117
Section 19.14.	Reliance	117
Section 19.15.	Entire Plan	117
Section 19.16.	Counterparts	117
ARTICLE XX.	SPECIAL PROVISIONS RELATING TO AMOUNTS TRANSFERRED FROM THE INTERPORE INTERNATIONAL, INC. RETIREMENT SAVINGS PLAN	117
Section 20.01.	General Provisions	117
Section 20.02.	Vesting	118
Section 20.03.	Distribution of Benefits	119
Section 20.04.	Transferred Participant Loans	119

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BIOMET

401(k) SAVINGS AND RETIREMENT PLAN

This restated Plan is hereby executed on behalf of Biomet, Inc., an Indiana corporation, effective as specifically provided herein.

PRELIMINARY INFORMATION

Desiring to recognize and reward the contribution made to it by its employees, Biomet, Inc. established the Biomet, Inc. 401(k) Profit Sharing Plan effective as of June 1, 1985. The Biomet, Inc. 401(k) Profit Sharing Plan has been amended several times since that date, and amended and restated most recently effective January 1, 2006. Effective December 31, 1994, the Kirschner Medical Corporation 401(k) Savings and Retirement Plan was merged with the Biomet, Inc. 401(k) Profit Sharing Plan. Effective January 1, 2006, the Interpore International, Inc. Retirement Savings Plan was merged into the Biomet, Inc. 401(k) Profit Sharing Plan. Now, effective April 1, 2007, the Biomet, Inc. Employee Stock Bonus Plan shall be merged into the Biomet, Inc. 401(k) Profit Sharing Plan and the merged plan shall be restated and designated as the Biomet 401(k) Savings and Retirement Plan (“Plan”).

The Plan is an employee stock ownership plan, which is a stock bonus plan designed to satisfy the requirements of Code Sections 401(a) (including, but not limited to Code Sections 401(a)(23)) and 4975(e)(7), as amended), and a profit sharing plan with a qualified cash or deferred arrangement within the meaning of Code Sections 401(a)(27) and 401(k), and the appropriate provisions of the Plan shall likewise be interpreted to accomplish this end. The Plan shall comply with the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.

The purpose of the Plan is to (i) provide retirement income to eligible employees of the Company and any adopting subsidiaries or affiliated employers who become Participants in this

Plan and (ii) invest the stock bonus component of the Plan primarily in the stock of the Company thereby enabling Participants to obtain a proprietary interest in the Company and encouraging such Participants to devote themselves to the development, growth, and prosperity of the Company and any adopting subsidiaries or affiliated employers.

The Company has entered into a Trust Agreement with the Trustee to hold the assets of the Plan.

ARTICLE I.

RESTATEMENT OF PLAN

The Biomet 401(k) Retirement and Savings Plan (“Plan”) is hereby amended and restated, effective as of April 1, 2007, except as otherwise specifically provided herein, to (i) incorporate all amendments to the Biomet, Inc. Employee Stock Bonus Plan since its prior restatement, including a good faith amendment to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) effective for Plan Years beginning on and after January 1, 2002, (ii) update the Plan to comply with regulatory guidance included in the 2006 Cumulative List under IRS Notice 2007-3, (iii) incorporate changes to comply with the Pension Protection Act of 2006 with January 1, 2007 and January 1, 2008 effective dates, and (iv) make certain other changes determined by the Company to be necessary or desirable. Except as otherwise specifically provided herein or as required by the Code or ERISA, the Plan as hereinafter set forth establishes the rights and obligations with respect to individuals who are Employees on and after such dates, as applicable, and to transactions under the Plan on and after such dates, as applicable. The rights and benefits, if any, of individuals who are not Employees on or after such dates, as applicable, shall be determined in accordance with the terms and provisions of the Plan that were in effect on the date that their employment terminated. The

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adoption of this restatement of the Plan is conditioned on the receipt of a determination letter, in a form satisfactory to the Company, from the Internal Revenue Service with respect to the Plan. Except to the extent specifically provided otherwise herein, all contributions to the Plan may be made without regard to profits for the taxable year; provided, however, the profit sharing component of the Plan shall qualify as a discretionary contribution profit sharing plan for purposes of Code Sections 401(a), 402, 412, and 417.

ARTICLE II.

DEFINITIONS AND CONSTRUCTION

Section 2.01. Definitions. When the initial letter of a word or phrase is capitalized herein, the meaning of such word or phrase shall be as follows:

(a) “Account” means the following separate bookkeeping accounts maintained for each Participant, reflecting his accrued benefit in the Plan. With respect to each Account maintained for each Participant, separate subaccounts shall be maintained thereunder referred to as the “Stock Subaccount,” which shall constitute the stock bonus plan component of the Plan, and the “Non-Stock Subaccount,” which shall constitute the profit sharing plan component of the Plan. The “Stock Subaccount” shall mean the Participant’s interest in the Trust Fund attributable to shares of Employer Stock (including any Leveraged Shares) acquired or held by the Trust and invested in Employer Stock and allocated to the Participant’s Account at any time on or after April 1, 2007, or pursuant to the Participant’s election under Section 12.02, Section 12.03 or Section 12.04, plus any allocable earnings or losses attributable to Employer Stock. The “Non-Stock Subaccount” shall mean the Participant’s interest in the Trust Fund attributable to assets other than Employer Stock acquired or held by the Trust on and after April 1, 2007, in assets other than Employer Stock pursuant to the Participant’s election under Sections 12.02, 12.03 and/or 12.04, plus any allocable earnings or losses attributable to assets other than Employer Stock.

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(1) “Dividend Account” means the account maintained to reflect the cash dividends paid into the stock bonus component of the Plan, and used to purchase shares of Employer Stock to be allocated to a Participant, pursuant to the Participant’s election under Section 18.04.

(2) “Pre-Tax Contribution Account” means the account maintained to reflect the accrued benefit of the Participant attributable to his Pre-Tax Contributions, including Catch-Up Contributions. This account shall also reflect the Participant’s “Employee Pre-Tax Account” balance (if any) transferred from the Kirschner Medical Corporation 401(k) Savings and Retirement Plan effective as of December 31, 1994.

(3) “Matching Account” means the account maintained to reflect the accrued benefit of the Participant attributable to his share of Matching Contributions

(4) “Nonelective Contribution Account” means the account maintained to reflect the accrued benefit of the Participant attributable to his share of Nonelective Contributions. This account shall also reflect the Participant’s “Discretionary Account” balance (if any) transferred from the Kirschner Medical Corporation 401(k) Savings and Retirement Plan effective as of December 31, 1994.

(5) “Regular Account” means the account maintained to reflect the accrued benefit of the Participant attributable to his share of Regular Contributions. This account shall also reflect the Participant’s “Regular Account” balance (if any) transferred from the Biomet, Inc. Employee Stock Bonus Plan effective as of April 1, 2007.

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(6) “Rollover/Transfer Account” means the account maintained to reflect the accrued benefit of the Participant attributable to his Rollover Contributions. This account shall also reflect the Employer Matching Account balance (if any) transferred from the Kirschner Medical Corporation 401(k) Savings and Retirement Plan effective as of December 31, 1994.

(7) “Savings Account” means the Participant’s Savings Account balance (if any) transferred from the Biomet, Inc. Employee Stock Bonus Plan, effective April 1, 2007, which reflects the accrued benefit of the Participant attributable to his after-tax contributions.

(8) “Tax Credit Account” means the Participant’s Tax Credit Account balance (if any) transferred from the Biomet, Inc. Employee Stock Bonus Plan, effective April 1, 2007, which reflects any and all amounts transferred to the Biomet, Inc. Employee Stock Bonus Plan by an Employer in accordance with Code Sections 41(c)(1)(B) or 48(n)(1) (as in effect prior to the enactment of the Tax Reform Act of 1984).

(b) “Acquisition Loan” means a loan to the Trust (or to the trust of the Biomet, Inc. Employee Stock Bonus Plan) that is either made or guaranteed by a Party in Interest and is used to finance the purchase of Employer Stock by the Trustee. If the context so requires, the term “Acquisition Loan” also refers to the agreement pursuant to which the Acquisition Loan is made.

(c) “Administrator” means the Benefits Committee, as defined in Section 11.01 of the Plan, which shall serve as the plan administrator under ERISA; provided, however, to the extent the Benefits Committee has delegated duties pursuant to Section 11.04, the term “Administrator” shall be deemed to include the person to whom such duties have been delegated.

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(d) “Affiliated Employer” means an Employer and any corporation that is a member of a controlled group of corporations (as defined in Code Section 414(b)) that includes an Employer; any trade or business (whether or not incorporated) that is under common control (as defined in Code Section 414(c)) with an Employer; any organization (whether or not incorporated) that is a member of an affiliated service group (as defined in Code Section 414(m)) that includes an Employer; and any other entity required to be aggregated with an Employer pursuant to regulations under Code Section 414(o). For purposes of Code Section 415, in applying Code Sections 414(b) and (c) to determine an Affiliated Employer the phrase “more than 50 percent” shall be substituted for the phrase “at least 80 percent” each place it appears in Code Section 1563(a)(1). An Affiliated Employer shall be included as such only for the period or periods during which such employer is under common control, affiliated, or aggregated and only to the extent required by any applicable provision of the Code.

(e) “Allocation Date” means the last day of the fiscal year of the Company (May 31) and such other date or dates as the Administrator may designate.

(f) “Alternate Payee” means an alternate payee, as defined by Code Section 414(p)(8).

(g) “Applicable Form” means the appropriate form as designated and furnished by the Administrator to make an election or provide a notice required by the Plan. To the extent permitted by the Code, or ERISA, and the regulations thereunder, the Administrator may prescribe an oral, electronic, or telephonic form in lieu of or in addition to a paper form.

(h) “Beneficiary” has the meaning set forth in Section 7.03.

(i) “Board of Directors” means the board of directors of the Company.

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(j) “Break in Service” means, with respect to an Employee, a Vesting Computation Period during which an Employee completes five hundred (500) or fewer Hours of Service. Solely for purposes of determining whether a Break in Service has occurred in the Vesting Computation Period after 1984 for eligibility and vesting purposes, an Employee shall receive credit for each Hour of Service, not to exceed five hundred one (501), for each Hour of Service the Employee otherwise normally would have been credited (or if such hours cannot be determined, eight (8) Hours of Service per normal work day of absence), if the Employee is absent from work (i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a child of the Employee, (iii) by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement. Such Hours of Service shall be credited (i) to the Vesting Computation Period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period, or (ii) in all other cases, to the following Vesting Computation Period. No such Hours of Service shall be credited unless the Employee furnishes to the Administrator such timely information as the Administrator may reasonably require to establish (i) that the absence from work is for one of the reasons provided above, and (ii) the number of days for which there was such an absence. To the extent required by the FMLA and the regulations thereunder, an Employee shall not incur a Break in Service for eligibility and Vesting purposes on or after August 5, 1993, on account of an absence from work that qualifies as a family or medical leave under the FMLA. To the extent required by the USERRA and the regulations thereunder, an Employee shall not incur a Break in Service for eligibility and Vesting purposes on or after December 12, 1994, on account of a period of qualified military service under the USERRA and Code Section 414(u)(8)(A). Notwithstanding

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the preceding provisions, for purposes of determining whether a Break in Service has occurred for purposes determining an Employee’s eligibility and Vesting, an Employee who was a Participant in the Biomet, Inc. Profit Sharing 401(k) Plan shall incur a Break in Service during the period beginning June 1, 2005, and ending December 31, 2006, if the Participant has five hundred (500) or fewer Hours of Service during (i) the twelve (12) month period beginning on June 1, 2005, and ending on May 31, 2006, or (ii) the twelve (12) month period beginning on January 1, 2006, and ending on December 31, 2006; provided, however, the Employee shall incur at most only one (1) Break in Service during said period beginning June 1, 2005, and ending December 31, 2006. In addition, an Employee who was a Participant in the Biomet, Inc. Employee Stock Bonus Plan shall incur a Break in Service during the period beginning June 1, 2006, and ending December 31, 2007, if the Participant has five hundred (500) or fewer Hours of Service during (i) the twelve (12) month period beginning on June 1, 2006, and ending on May 31, 2007 or (ii) the twelve (12) month period beginning on January 1, 2007, and ending on December 31, 2007, provided, however, the Employee shall incur at most only one (1) Break in Service during said period beginning June 1, 2006, and ending December 31, 2007.

(k) Catch-Up Contribution Limit” means, with respect to a Plan Year, the applicable dollar limit under Code Section 414(v).

(l) “Catch-Up Eligible Participant” means, with respect to a Plan Year, an Employee who is eligible to make Pre-Tax Contributions and who will reach age 50 by the end of the Plan Year.

(m) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(n) “Company” means Biomet, Inc. or any successor thereto.

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(o) “Continuous Employment” means any period for which an Employee is paid, or entitled to payment, for duties performed for an Affiliated Employer, on consecutive days without interruption by any period of more than two consecutive business days during which the Employee performs no such duties, excluding any days that the Employee performs no such duties as a result of weekends, vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or other approved leave of absence.

(p) “Contributions” means the following types of contributions to the Plan:

(1) “Pre-Tax Contributions” means contributions made to the Plan by an Employer at the election of a Participant pursuant to Section 4.02 provided, however, to the extent provided in Subsection 4.02(b), Catch-Up Contributions shall not be treated as Pre-Tax Contributions.

(2) “Catch-Up Contribution” means a Pre-Tax Contribution made by a Catch-Up Eligible Participant, to the extent that such Contribution exceeds the Pre-Tax Contribution Limit but does not exceed the Catch-Up Contribution Limit.

(3) “Matching Contributions” means contributions made to the Plan by an Employer for a Plan Year by reason of Pre-Tax Contributions of a Participant pursuant to Section 4.03.

(4) “Nonelective Contributions” means contributions made to the Plan by an Employer for a Plan Year that are designated as Nonelective Contributions pursuant to Subsection 4.04(b).

(5) “Regular Contributions” means contributions made to the Plan by an Employer for a Plan Year that are designated as Regular Contributions pursuant to Subsection 4.04(a).

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(6) “Rollover Contribution” means, with respect to any Participant, a rollover contribution or transfer made by, or on behalf of, the Participant pursuant to Section 4.09.

(q) “Cost of Living Adjustment” means the cost of living adjustment prescribed by the Secretary of the Treasury under Code Section 415(d) for any applicable year.

(r) “Covered Participant” means, with respect to a Plan Year, a Participant who completed an Hour of Service as an Eligible Employee during the Plan Year and who remains employed as an Employee as of the applicable Allocation Date.

(s) “Disability” or “Disabled” means, with respect to a Participant, that he has a disability as determined for purposes of the Social Security Act that qualifies the Participant for permanent disability insurance payments in accordance with such act. The Administrator may require subsequent proof of continued Disability and a Participant shall not be considered to be Disabled until he has shown to the Administrator’s satisfaction that he is disabled within the meaning of this Subsection.

(t) “Disability Retirement Date” means the first day of the month (prior to the Participant’s Early Retirement Date or Normal Retirement Date) after which a Participant Retires because of a Disability.

(u) “Early Retirement Date” means the first day of the month (prior to the Participant’s Normal Retirement Date) after which a Participant Retires from the employment of an Employer after attaining age fifty-five (55) and completing six (6) Years of Service. Notwithstanding the foregoing, “Early Retirement Date” for a Participant who was an Eligible Employee and a participant in the Interpore International, Inc. Retirement Savings Plan on December 31, 2005, shall mean the first day of the month (prior to the Participant’s Normal Retirement Date) after which such Participant Retires from the employment of an Employer after attaining age fifty-five (55).

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(v) “Election Period” means the 5-Plan Year period beginning with the Plan Year after the Plan Year in which the Participant reaches age fifty-five (55) (or, if later, beginning with the Plan Year after the first Plan Year in which the individual first became a Participant).

(w) “Eligible Employee” means an Employee of an Employer who has met the participation requirements under Section 3.01; provided, however, the term “Eligible Employee” shall not include any of the following Employees: (i) “leased employees” (as defined in Subsection 2.01(x) below); (ii) seasonal Employees, (iii) co-op Employees, and (iv) student interns.

(x) “Employee” means any common law employee employed by an Affiliated Employer, except (i) any individual designated in good faith by an Employer as an independent contractor, regardless of whether such person is later determined by the Internal Revenue Service, a court of law, or any other agency to be a common law employee for tax, workers compensation or other purposes, (ii) any individual who is a nonresident alien and who receives no earned income (within the meaning of Code Section 911(d)(2)) from an Employer that constitutes income from sources within the United States within the meaning of Code Section 861(a)(3), and (iii) any person who is a member of a unit covered by collective bargaining agreement between his Employer and a collective bargaining agent, provided that retirement benefits have been a subject of good faith bargaining, unless the collective bargaining agreement provides for coverage under the Plan. Notwithstanding any other provision of the Plan, for purposes of satisfying the requirements of Code Section 414(n)(3), a leased employee shall be treated as an Employee; provided, however, such leased employee shall not become a

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Participant unless he is an Employee without regard to this sentence and he satisfies the participation requirements of Article III. Effective for Plan Years beginning on or after January 1, 1997, the term “leased employee” means any person (other than an individual employed by an Affiliated Employer) who pursuant to an agreement between the Affiliated Employer and any other person (“leasing organization”) has performed services for the Affiliated Employer (or for the Affiliated Employer and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one (1) year, and such services are performed under the primary direction or control of the Affiliated Employer. Contributions or benefits provided to a leased employee by the leasing organization that are attributable to services performed for the Affiliated Employer shall be treated as provided by the Affiliated Employer. A leased employee shall not be considered an Employee if (i) he is covered by a money purchase pension plan providing (1) a nonintegrated employer contribution rate of at least ten percent (10%) of compensation, as defined in Code Section 415(n)(5)(C)(iii), (2) immediate participation, and (3) full and immediate vesting; and (ii) leased employees do not constitute more than twenty percent (20%) of the Affiliated Employers’ nonhighly compensated workforce, as defined in Code Section 414(n)(5)(C)(ii).

(y) “Employer” means, severally, the Company and any other Affiliated Employer or any part or division thereof authorized by the Administrator to participate in the Plan in a manner consistent with Article XIV with respect to its Employees. As of April 1, 2007, the following Affiliated Employers are considered Employers under the Plan: Biomet, Inc.; Arthrotek, Inc.; Biolectron, Inc.; Biomet Fair Lawn L.P.; Biomet Manufacturing Corp.; Biomet Orthopedics, Inc.; Biomet Orthopedics Puerto Rico, Inc.; EBI Holdings, Inc.; EBI Patient Care (effective March 1, 2006), Electro-Biology, Inc.; Florida Services Corporation (effective January 1, 2004);

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Implant Innovations, Inc.; Interpore Spine Ltd. (effective June 18, 2004); Interpore Cross International, Inc. (effective June 18, 2004); Interpore Orthopaedics, Inc. (effective June 18, 2004); and Walter Lorenz Surgical, Inc.

(z) “Employer Stock” means any common share of stock issued by an Employer that constitutes a Qualifying Employer Security.

(aa) “Employer Stock Collateral Account” means the Plan’s bookkeeping account under which Leveraged Shares purchased by the Plan are accounted before release to the Employer Stock Suspense Account. A separate Employer Stock Collateral Account shall be established with respect to each Acquisition Loan.

(bb) “Employer Stock Suspense Account” means the Plan’s bookkeeping account to which (i) Leveraged Shares released from the Employer Stock Collateral Account due to contributions under the stock bonus portion of the Plan are credited until allocated to the Stock Subaccounts of eligible Participants, (ii) Employer Stock acquired by the Plan pursuant to Subsection 9.01(b) is credited until allocated pursuant to Section 4.04, and (iii) forfeitures of any Stock Subaccount are credited until reallocated to Participants or used to reduce Employer Contributions pursuant to Section 10.02.

(cc) “Entry Date” means the first day of the month immediately following the day the Eligible Employee meets the requirements of Section 3.01.

(dd) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(ee) “FMLA” means the Family and Medical Leave Act of 1993, as amended from time to time.

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(ff) “Fund” means a separate investment fund that forms part of the Trust Fund established by the Trustee at the direction of the Administrator. Employer Stock is a separate Fund available under the Trust Fund.

(gg) “Highly Compensated Employee” means, effective for Plan Years beginning on or after June 1, 1997, an employee described in Code Section 414(q) and the regulations promulgated thereunder and, generally, includes highly compensated active employees and highly compensated former employees as described below:

(1) Highly compensated active employees include any Employee who performs service for an Affiliated Employer during the Determination Year and is in one or more of the following groups:

(A) Employees who were five percent (5%) owners of an Affiliated Employer at any time during the Determination Year or the Look-Back Year;

(B) Employees who (i) received compensation (as defined in Code Section 414(q)(4)) from an Affiliated Employer in excess of Eighty Thousand Dollars ($80,000) (as increased by the Cost of Living Adjustment) during the Look-Back Year, and (ii) were in the top twenty percent (20%) of Employees ranked according to the amount of compensation (as defined in Code Section 414(q)(4)) received from the Affiliated Employers during such Look-Back Year.

(2) Highly compensated former employees include former Employees who:

(A) Terminated Employment or Retired prior to the Determination Year;

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(B) performed no service for an Affiliated Employer during the Determination Year; and

(C) were highly compensated active employees, as described in Paragraph (1) above, during the year of Termination of Employment or Retirement or any Plan Year ending on or after the date the Employee attained age fifty-five (55).

(3) For purposes of the definition of Highly Compensated Employee, “Determination Year” means the Plan Year for which the determination of highly compensated employees is being made.

(4) For purposes of the definition of Highly Compensated Employee, “Look-Back Year” means the twelve (12) month period immediately preceding the Determination Year.

(hh) “Hour of Service” means each hour for which an Employee is entitled to credit as follows:

(1) An Employee shall be credited with each hour for which he is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. An Hour of Service described in this Paragraph shall be credited to an Employee for the Vesting Computation Period in which the duties are performed.

(2) An Employee shall be credited with each hour for which he is paid, or entitled to payment, by an Affiliated Employer on account of a period during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence; provided, however, that no Hours of Service

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shall be credited under this Paragraph for periods during which no duties are performed and for which the Employee is paid or entitled to payment, if such payment is made or due solely to reimburse an Employee for medical or medically related expenses or solely for the purpose of complying with applicable workers’ compensation, unemployment compensation, or disability insurance laws. Not more than five hundred one (501) Hours of Service shall be credited to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not this period occurs in a single Vesting Computation Period) unless the Hours of Service are credited pursuant to Paragraph (4). An Hour of Service credited to an Employee pursuant to this Paragraph shall be credited to the Vesting Computation Period or periods during which no duties are performed.

(3) An Employee shall be credited with each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliated Employer. The same Hour of Service shall not be credited under Paragraph (1) or Paragraph (2), as the case may be, and under this Paragraph. An Hour of Service described in this Paragraph shall be credited to the Vesting Computation Period or periods to which the award or agreement for back pay pertains, rather than to the Vesting Computation Period in which the award, agreement, or payment is made.

(4) “Hours of Service” shall be credited for military leave for training or service, or both, with the Uniformed Services of the United States to the extent required under USERRA.

(5) An Employee shall be credited with Hours of Service as required by 29 C.F.R. § 2530.200b-2 and such other regulations promulgated from time to time by the United States Department of Labor under ERISA regarding the definition of hours of service.

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(6) For eligibility and Vesting purposes only, “Hours of Service” shall be credited for leave that qualifies as family or medical leave under the FMLA; provided, however, such Hours of Service shall be credited only to the extent required by the FMLA and the regulations thereunder.

(ii) “Investment Manager” means any person other than the Trustee, in its capacity as trustee, or the Administrator who:

(1) has the power to manage, acquire, or dispose of any assets of the Plan;

(2) is qualified to act as an investment manager under ERISA;

(3) has acknowledged in writing that it is a fiduciary with respect to the Plan;

(4) has been designated by the Administrator as investment manager for the Plan.

(jj) “Late Retirement Date” means the first day of the month subsequent to the Normal Retirement Date of the Participant after which the Participant actually Retires.

(kk) “Leveraged Shares” means shares of Employer Stock purchased with an Acquisition Loan.

(ll) “Non-Highly Compensated Employee” means an Employee who is not a Highly Compensated Employee.

(mm) “Normal Retirement Date” means the first day of the month after which a Participant attains age sixty-five (65).

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(nn) “Participant” means an Eligible Employee or former Eligible Employee who is, or may become, eligible to receive a benefit of any type from the Plan and who has commenced participation in the Plan.

(oo) “Party in Interest” means a (i) Participant who is an active Employee, or (ii) Participant or Beneficiary who is a “party in interest” as that term is defined in Section 3(14) of ERISA.

(pp) “Plan” means, jointly and severally, as the context so requires, the stock bonus plan and the profit sharing and 401(k) plan created and embodied herein, as amended from time to time, designated as the “Biomet 401(k) Retirement and Savings Plan.”

(qq) “Plan Compensation” means, for a Plan Year, the cash remuneration as defined under Code Section 3401(a) of a Participant received from his Employer in the Plan Year, but only for periods after the Participant commences participation in the Plan, that is reportable for federal income tax withholding at the source purposes (which excludes, among other things, amounts related to the disqualifying disposition of a qualified stock option) but determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed. Notwithstanding anything contained in this Subsection to the contrary, Plan Compensation shall include elective amounts that are not includable in gross income pursuant to Code Sections 125, 132(f)(4), 401(k), 402(e)(3), 402(h) or 403(b). Notwithstanding anything contained herein, and to the extent required by Code Section 401(a)(17), the compensation of a Participant for any Plan Year taken into account under the Plan shall not exceed Two Hundred Thousand Dollars ($200,000) (as increased by Code Section 401(a)(17)(B) for the applicable Plan Year). If any Plan Year consists of less than twelve (12) months, the compensation limit under Code Section

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401(a)(17) shall be multiplied by a fraction, the numerator of which is the number of months in the short Plan Year and the denominator of which is twelve (12). For purposes of Regular Contributions to be made under Section 4.04, a Participant’s Plan Compensation shall be determined as set out in this Subsection, except that it shall be the Participant’s Plan Compensation during the Company’s 12-month fiscal year (June 1 through May 31) ending on the applicable Allocation Date rather than the Plan Year.

(rr) “Plan Year” means any twelve (12) month period beginning on January 1 and ending on the following December 31; provided, however:

(1) that the period beginning June 1, 2005, and ending December 31, 2005, shall be a short Plan Year with respect to the portion of the Plan that was formerly known as the Biomet, Inc. 401(k) Profit Sharing Plan;

(2) that prior to June 1, 2005, “Plan Year” means, with respect to the portion of the Plan that was formerly known as the Biomet, Inc. 401(k) Profit Sharing Plan, any twelve (12) month period beginning on June 1 and ending on the following May 31;

(3) that the period beginning June 1, 2006, and ending March 31, 2007, shall be a short Plan Year with respect to the portion of the Plan that was formerly known as the Biomet, Inc. Employee Stock Bonus Plan; and

(4) that prior to June 1, 2006, “Plan Year” means, with respect to the portion of the Plan formerly known as the Biomet, Inc. Employee Stock Bonus Plan, any twelve (12) month period beginning on June 1 and ending on the following May 31.

(ss) “Qualified Domestic Relations Order” means a domestic relations order that is determined to be qualified within the meaning of Code Section 414(p)(l).

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(tt) “Qualifying Employer Securities” means any security that is issued by the Company or an Affiliated Employer and that meets the requirements of Code Section 409(l) and ERISA Section 407(d)(5).

(uu) “Retires” or “Retirement” means that a Participant Terminates Employment on his Normal, Early, Late, or Disability Retirement Date.

(vv) “Section” means, when not preceded by the word Code or ERISA, a section of this Plan.

(ww) “Spouse” means the person to whom the Participant is legally married, pursuant to the applicable law of the state of the Participant’s residence.

(xx) “Terminated Employment,” “Terminates Employment” or “Termination of Employment” means, with respect to an Employee, that the Employee ceases to be an Employee of all Affiliated Employers; provided, however, it shall not include: (i) temporary absence of such Employee due to vacation, sickness (not including Disability), or layoff; (ii) military leave for training or service, or both, with the Uniformed Services of the United States to the extent required under USERRA and Code Section 414(u)(8)(A); (iii) a leave that qualifies as a family or medical leave under the FMLA; (iv) a leave of absence for any reason approved by an Affiliated Employer on a nondiscriminatory basis; or (v) a change in employment in which the Employee’s new employer assumes sponsorship of the Plan or maintains the Plan or accepts a transfer of assets and liabilities (within the meaning of Code Section 414(l)) with respect to the Employee.

(yy) “Trust” means the trust or trusts established and maintained under the Plan and any Trust Agreement to hold the Trust Fund.

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(zz) “Trust Agreement” means the Trust Agreement for the Biomet 401(k) Savings and Retirement Plan, as amended from time to time.

(aaa) “Trust Fund” means the assets of the Plan held by the Trustee in various Funds, pursuant to the terms of the Plan and the Trust.

(bbb) “Trustee” means the trustee(s) of the Trust or any successor trustee or trustees designated and appointed under the Trust.

(ccc) “Uniformed Services of the United States” means the Armed Forces (as defined in USERRA), the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or emergency.

(ddd) “USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(eee) “Valuation Date” means each day of the Plan Year or such other Valuation Dates as the Administrator or its designee may establish. In the case of the valuation of an asset or Account as of a Valuation Date, such valuation shall be determined as described in Article VI.

(fff) “Vested” or “Vesting” means, when used with respect to an Account of a Participant or his Beneficiary, a claim to that part of the Account that arises from service of the Participant that is unconditional, is legally enforceable against the Plan, and is nonforfeitable. Notwithstanding the preceding sentence, an amendment to this Plan may reduce the Vested Accounts of a Participant if such amendment satisfies the requirements of ERISA and the Code.

(ggg) “Vesting Computation Period” means each Plan Year; provided, however, that (i) for any Employee who was a Participant in the Biomet, Inc. 401(k) Profit Sharing Plan and

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who completed an Hour of Service during the short Plan Year period beginning June 1, 2005, and ending December 31, 2005, the following overlapping Vesting Computation Periods shall be established and such Participant shall be credited with a Year of Service in each such overlapping Vesting Computation Period in which he is credited with at least one thousand (1,000) Hours of Service: (A) June 1, 2005 to May 31, 2006, and (B) January 1, 2006 to December 31, 2006; and (ii) for any Employee who was a Participant in the Biomet, Inc. Employee Stock Bonus Plan and completed an Hour of Service during the short Plan Year period beginning June 1, 2006 and ending March 31, 2007, the following overlapping Vesting Computation Periods shall be established and such Participant shall be credited with a Year of Service in each such overlapping Vesting Computation Period in which he is credited with at least one thousand (1,000) Hours of Service: (A) June 1, 2006 to May 31, 2007, and (B) January 1, 2007 to December 31, 2007.

(hhh) “Years of Service” means, for an Employee, each Vesting Computation Period during which the Employee completes at least one thousand (1,000) Hours of Service; provided, however, the following Years of Service shall be excluded:

(1) In the case of an Employee who incurs a one (1) year Break in Service, Years of Service before such break will not be taken into account until the Employee has completed one (1) Year of Service after such Break in Service.

(2) Any Years of Service occurring prior to any period of consecutive one (1) year Breaks in Service shall not be taken into account if (i) the number of consecutive one (1) year Breaks in Service within such period equals or exceeds the greater of five (5) or the aggregate number of Years of Service of the Employee prior to such period, and if (ii) the Employee had no Vested right to any portion of his Account balances derived

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from Employer contributions at the commencement of such Break in Service; provided, however, any Years of Service excluded pursuant to this Paragraph shall also be excluded from any subsequent determination of Years of Service.

Notwithstanding the preceding provisions, the Years of Service of any Employee shall include any Years of Service of such Employee while he was an Employee of any Affiliated Employer. The Years of Service of any Employee shall also include: (i) any years of service such Employee was credited with under the Kirschner Medical Corporation 401(k) Savings and Retirement Plan as of December 31, 1994, (ii) any years of service such Employee was credited with under the Implant Innovations, Inc. Retirement 401(k) Plan as of December 15, 1999, (iii) any years of service such Employee was credited with under the Biolectron, Inc. 401(k) Plan as of September 24, 2000, and (iv) with respect to any Employee who was employed by Interpore Spine Ltd., Interpore Cross International, Inc., or Interpore Orthopaedics, Inc. as of June 18, 2004, and who was otherwise considered an Eligible Employee under the terms of the Plan, any years of service such Employee was credited with under the Interpore International, Inc. 401(k) Plan as of such date. Notwithstanding the preceding provisions, any Employee hired on October 25, 2004, who was an employee of Z-KAT, Inc. on October 24, 2004, shall be credited with his or her service while an employee of Z-KAT, Inc. for purposes of determining such Employee’s Years of Service.

Section 2.02. Construction and Governing Law. The following rules of construction shall govern any interpretation of the Plan:

(a) This Plan shall be interpreted, enforced, and administered and the validity thereof determined in accordance with ERISA, the Code, and, when not inconsistent with ERISA or the Code, the internal laws of the State of Indiana, without regard to conflict of law principles.

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(b) Words used herein in the masculine gender shall be construed to include the feminine gender where appropriate and words used herein in the singular or plural shall be construed as being in the plural or singular where appropriate.

(c) In resolving any conflict between provisions of the Plan and in resolving any other uncertainty as to the meaning or intention of any provision of the Plan, the interpretation that (i) causes the Plan to constitute a qualified plan under the provisions of Code Section 401 and the Trust to be exempt from tax under Code Section 501, (ii) causes the contributions of any Employer to the Trust to be deductible by such Employer from net income for federal income tax purposes, (iii) causes the Plan to satisfy the requirements to be an employee stock ownership plan which is a stock bonus plan described in Code Sections 4975(e)(7) and 401(a)(23), respectively, (iv) causes the Plan to constitute a profit sharing plan within the meaning of Code Section 401(a)(27), (v) causes the Plan to contain a qualified cash or deferred arrangement described in Code Section 401(k), and (vi) causes the Plan to comply with all applicable requirements of ERISA and the Code shall prevail over any different interpretation.

(d) The headings and subheadings in the Plan are inserted for convenience of reference only and are not to be considered in the construction of any provision of the Plan.

(e) If any provision of the Plan shall be held to violate ERISA or the Code or be illegal or invalid for any other reason, that provision shall be deemed to be null and void, but the invalidation of that provision shall not otherwise impair or affect the Plan.

(f) Reference to a provision of the Code or ERISA shall be deemed to include the successor of such provision, to the extent the context so permits.

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ARTICLE III.

PARTICIPATION

Section 3.01. Participation. Any individual who was a Participant in either the Biomet, Inc. 401(k) Profit Sharing Plan or the Biomet, Inc. Employee Stock Bonus Plan on the day immediately preceding April 1, 2007, shall continue to be a Participant on April 1, 2007, subject to the terms of the Plan.

(a) Any other Eligible Employee is eligible to become a Participant in the Plan if he has satisfied the following requirements:

(1) he (A) has completed ninety (90) days of Continuous Employment for an Employer and is scheduled to work at least one thousand (1,000) hours per year, or (B) has completed one thousand (1,000) Hours of Service in any Plan Year or in any of the overlapping Vesting Computation Periods required by the changes in the Plan Year under Subsection 2.01(rr); and

(2) he has attained at least age eighteen (18).

(b) An Eligible Employee shall become a Participant on the next Entry Date after which he has satisfied the participation requirements of Subsection (a), provided that he is an Eligible Employee on that Entry Date. If an individual who has satisfied the eligibility requirements of Subsection (a) is not an Eligible Employee on the applicable Entry Date, and the individual later completes an Hour of Service as an Eligible Employee, he shall become a Participant upon completing that Hour of Service, provided that he did not Terminate Employment and incur a Break in Service before completing that Hour of Service. If the Employee did incur a Break in Service, he shall become a Participant as provided in Subsection (a), taking into account the Break in Service rules set out in Subsection 2.01(hhh).

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(c) Notwithstanding the preceding provisions, all service credited under the Biolectron, Inc. 401(k) Plan as of September 24, 2000, including any days of continuous employment with Biolectron, Inc., shall be counted in determining an Employee’s eligibility to participate under the Plan. An Eligible Employee who was an employee of Biolectron, Inc. on September 24, 2000, shall become a Participant on December 1, 2000, provided such Eligible Employee has satisfied the eligibility requirements of Subsection (a) as of December 1, 2000, pursuant to the terms of this Subsection (c). If such Eligible Employee has not satisfied the eligibility requirements of Subsection (a) as of December 1, 2000, after applying the provisions of this Subsection (c), such Eligible Employee shall become a Participant on the next Entry Date after which he has satisfied the participation requirements of Subsection (a).

(d) Notwithstanding the preceding provisions, any Employee hired on October 25, 2004, who was an employee of Z-KAT, Inc. on October 24, 2004, shall be credited with his or her service while an employee of Z-KAT, Inc. in determining such Employee’s eligibility to participate under the Plan. An Eligible Employee, who was an employee of Z-KAT, Inc. on October 24, 2004, shall become a Participant on November 1, 2004, provided such Eligible Employee has satisfied the eligibility requirements of Subsection (a) as of November 1, 2004, pursuant to the terms of this Subsection (d). If such Eligible Employee has not satisfied the eligibility requirements of Subsection (a) as of November 1, 2004, after applying the provisions of this Subsection (d), such Eligible Employee shall become a Participant on the next Entry Date after which he or she has satisfied the participation requirements of Subsection (a).

(e) Notwithstanding the preceding provisions, all service credited under the Interpore International, Inc. Retirement Savings Plan as of December 31, 2005, including any days of continuous employment with Interpore Orthopaedics, Inc., Interpore Spine Ltd., or Interpore

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Cross International, Inc., shall be counted in determining an Employee’s eligibility to participate under the Plan. An Eligible Employee who was an employee of Interpore Orthopaedics, Inc., Interpore Spine Ltd., or Interpore Cross International, Inc., on June 17, 2004, shall become a Participant on June 18, 2004, provided such Eligible Employee has satisfied the eligibility requirements of Subsection (a) as of June 18, 2004, pursuant to the terms of this Subsection (e). If such Eligible Employee has not satisfied the eligibility requirements of Subsection (a) as of June 18, 2004, after applying the provisions of this Subsection (e), such Eligible Employee shall become a Participant on the next Entry Date after which he has satisfied the participation requirements of Subsection (a).

Section 3.02. Cessation of Participation. A Participant shall cease to be a Participant on the distribution or forfeiture of his Account.

Section 3.03. Reemployment.

(a) A former Participant shall become a Participant as of the date he again performs an Hour of Service as an Eligible Employee.

(b) A former Eligible Employee who had not satisfied the participation requirements under Subsection 3.01(a) at the time of his Termination of Employment shall become a Participant only in accordance with the requirements of Section 3.01.

Section 3.04. Change in Employment Status.

(a) A Participant whose employment status changes so that he no longer satisfies the definition of Eligible Employee, but who remains an Employee shall become a limited Participant hereunder as of the date of the change in employment status. Such limited Participant shall cease to make or share in Contributions under the Plan as of the date of such change in employment status. A limited Participant shall retain a right to be eligible for benefits under the

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Plan, but only to the extent of the balance of his Accounts, as of the date of his change in employment status adjusted to reflect adjustments under Article VI and distributions or withdrawals under Article VII. If such limited Participant does not again become an Eligible Employee prior to Retirement or Termination of Employment, the Vested Accounts of the limited Participant, if any, shall be paid as provided in Article VII.

(b) A limited Participant who again has a change in employment status, and becomes an Eligible Employee, shall become a full Participant as of such change in employment status. Thereafter, such Participant shall be entitled to make and share in Contributions in accordance with the terms of the Plan as in effect as of the date of subsequent change in employment status. In no event, however, shall such a Participant receive a greater benefit under the Plan than the benefit that the Participant would have received had the Participant not had a change in employment status.

(c) An Employee of the Employer or an Affiliated Employer who first becomes an Eligible Employee due to a change in employment status shall become a Participant as provided in Section 3.01.

Section 3.05. Transfer of Employment Between Employers.

(a) Subject to the provisions of Section 3.04, a Participant who is transferred from employment with an adopting Employer to employment with another adopting Employer shall continue to participate in accordance with the provisions of the Plan. Such a Participant’s prior election to make Pre-Tax Contributions shall continue in effect until revoked or changed in accordance with the provisions of Section 4.02 and receive an allocation of Matching Contributions thereon in accordance with Section 4.03. Such a transferred Participant shall be entitled to receive an allocation of Employer Contributions under Section 4.04 (to the extent

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eligible thereunder) for the Plan Year in which such transfer of employment occurs, based on Plan Compensation attributable to the respective adopting Employers during such Plan Year, if he is employed by an adopting Employer on the applicable Allocation Date.

(b) A Participant who is transferred from employment with an adopting Employer to employment with an Affiliated Employer that is not an adopting Employer under the Plan shall not be permitted to make any additional Pre-Tax Contributions to the Plan subsequent to such date of transfer. Such a transferred Participant shall be entitled to receive an allocation of Employer Contributions under Section 4.04 for the Plan Year in which such transfer of employment occurs, based upon Plan Compensation attributable to the adopting Employer during such Plan Year, if he otherwise satisfies the requirements to receive such Employer Contribution and is employed by an Affiliated Employer on the applicable Allocation Date.

Section 3.06. Completion of Forms by Participants and Beneficiaries. Each Participant and any Beneficiary eligible to receive, or claiming a right to receive, any benefits under the Plan shall complete such Applicable Form and furnish such proofs and information as may be required at any time by the Trustee or the Administrator.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Contributions.

(a) Contributions shall be made to the Plan in accordance with this Article and subject to the limitations under Article V. Contributions made pursuant to Sections 4.02 shall be made in cash. The contributions under Sections 4.03 and 4.04 may be made in cash or in the form of Qualifying Employer Securities, the value of which shall be determined pursuant to the Trust Agreement and Section 6.03. To the extent that any Contribution under Section 4.03 or

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4.04 is made in the form of Employer Stock, such Contribution shall be held in the Trust under the stock bonus component of the Plan and shall be allocated, pursuant to the provisions of Section 4.03 or 4.04, as applicable, to the Participants’ Stock Subaccounts, unless and until any such Participant directs the investment of such Contribution to one (1) or more of the other investment Funds available under the Plan pursuant to Section 12.02, at which time such Contribution shall become part of the non-stock bonus component of the Plan and shall be accounted for under such Participant’s Non-Stock Subaccounts.

(b) Notwithstanding anything in this Article IV to the contrary, Contributions under Section 4.04 shall be made in cash to the extent necessary to enable the Trustee to pay any maturing obligations under any outstanding Acquisition Loan. To the extent that Contributions for a Plan Year are used to repay an Acquisition Loan, any Leveraged Shares released from the Employer Stock Collateral Account as a result of the Contributions under Section 4.04 for the Plan Year shall be credited to the Employer Stock Suspense Account until allocated as provided in Section 4.04.

Section 4.02. Pre-Tax Contributions.

(a) A Participant who is an Eligible Employee may elect to have Pre-Tax Contributions made on his behalf as provided in this Section. Such a Participant may enter into a written salary deferral agreement with his Employer agreeing to have the Employer reduce his current cash compensation and contribute the reduction as Pre-Tax Contributions to the Plan of a specified percentage, equal to or greater than one percent (1%) of his Plan Compensation each pay period; provided, however, that Pre-Tax Contributions made on behalf of a Participant under the Plan (including Pre-Tax Contributions made pursuant to Section 4.10) for any calendar year shall not exceed (i) the dollar limitation contained in Code Section 402(g) in effect for such

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taxable year, and (ii) sixty (60%) percent of his Plan Compensation. A Participant’s Pre-Tax Contributions under this Section 4.02 shall include any Employer Contributions allocated to the Participant’s Pre-Tax Contribution Account. Pre-Tax Contributions shall reduce the cash compensation otherwise payable to such Participant and shall be paid in cash to the Trustee by the Employer on a basis consistent with its payroll practices within a reasonable period after being withheld from the cash compensation of a Participant, as required by ERISA.

(b) To the extent that the elected Pre-Tax Contributions of a Catch-Up Eligible Participant would exceed the applicable dollar limit under Code Section 402(g), such Contributions shall be deemed to be Catch-Up Contributions to the extent that the Participant’s Catch-Up Contributions for the Plan Year do not exceed the applicable Catch-Up Contributions Limit. In addition, a Catch-Up Eligible Participant may enter into a separate salary reduction agreement with his Employer pursuant to which his Employer shall reduce his cash compensation by an amount in excess of the applicable Pre-Tax Contribution Limit up to the Catch-Up Contribution Limit, and such reduction amount shall be contributed to the Plan as Catch-Up Contributions. Catch-Up Contributions made pursuant to this Subsection for a Plan Year, together with amounts deemed as Catch-Up Contributions for such Plan Year, shall not exceed the Catch-Up Contributions Limit for the Plan Year. Catch-Up Contributions shall not be treated as Pre-Tax Contributions for purposes of the Plan provisions implementing the requirements of Code Sections 401(k)(3), 402(g), 410(b), 415, or 416.

(c) No Participant shall be permitted to have elective deferrals made under this Plan, or any other qualified plan maintained by the Employer during any taxable year, in excess of the dollar limitation contained in Code Section 402(g) in effect for such taxable year, except to the extent permitted under Subsection (b) and Code Section 414(v), if applicable.

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(d) Participant elections to make Pre-Tax Contributions shall be made on the Applicable Form, which form may enable the Participant to exclude deferral elections from bonuses or other specified elements of Plan Compensation. A Participant may elect to make or change an election to make Pre-Tax Contributions as of the first day of each month on the Applicable Form within such period before the effective date of the change as the Administrator may establish. A Participant may suspend his Pre-Tax Contributions at any time on an Applicable Form filed with the Administrator within such period before the effective date of the suspension as the Administrator may establish.

(e) An election to make Pre-Tax Contributions shall not be valid with respect to any period during which the Participant is not an Eligible Employee. No election to make, change, or discontinue Pre-Tax Contributions shall be given retroactive effect.

(f) Pre-Tax Contributions made on behalf of a Participant for a Plan Year shall be allocated to the Pre-Tax Contributions Account of the Participant effective as of the earlier of the date coincident with or immediately following the date on which they are contributed to the applicable Trust or the last day of the Plan Year.

(g) The Administrator may establish additional nondiscriminatory rules and procedures governing the manner and timing of elections by Employees to make, change, or discontinue Pre-Tax Contributions, including, but not limited to, an additional limit on the Pre-Tax Contributions of Highly Compensated Employees.

Section 4.03. Matching Contributions.

(a) As of each payroll date during a Plan Year, Matching Contributions may be contributed on behalf of each Participant equal to a percentage of the Pre-Tax Contributions the Participant has made during that payroll period under Section 4.02 as approved by the

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Administrator, plus an allocated percentage of the forfeitures from the previous Plan Year, if any. The Administrator may, for each Plan Year, determine that portion or percentage, if any, of the Pre-Tax Contributions of Participants that each Employer shall contribute as Matching Contributions and any limitations applicable to those contributions. In so doing, the Administrator may limit the maximum Matching Contribution of each Participant to a percentage of his Plan Compensation or a stated dollar amount. Effective for Plan Years beginning on or after June 1, 2002, notwithstanding anything contained herein to the contrary and unless determined otherwise by the Administrator, each Employer shall contribute on behalf of each Participant a Matching Contribution equal to seventy-five percent (75%) of such Participant’s Pre-Tax Contributions that do not exceed five percent (5%) of such Participant’s Plan Compensation. Each Employer shall contribute the established Matching Contribution for a Plan Year on behalf of each Participant.

(b) If a Participant is employed by more than one (1) Employer during a Plan Year, the portion of the total Matching Contribution of the Participant for the Plan Year that is paid by each Employer shall equal the percentage of the Pre-Tax Contributions of the Participant for the Plan Year paid by the Employer. Matching Contributions made on behalf of a Participant for a Plan Year shall be allocated to his Matching Account as of the date the Employer contributes the Matching Contribution to the Trust; provided, however, such Matching Contributions shall be allocated no later than the last day of the Plan Year during which the related Pre-Tax Contributions were made to the Plan.

Section 4.04. Regular and Nonelective Contributions.

(a) For each Plan Year, and subject to Subsection (c) below, the Administrator, in its sole discretion, shall determine and designate the amount of Regular Contributions, if any, that

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an Employer shall contribute. Regular Contributions for a Plan Year shall be allocated among the Regular Accounts of Covered Participants as of the Allocation Date for the Plan Year in proportion to the relative Plan Compensation of the Covered Participants for the Company’s fiscal year ending on the Allocation Date.

(b) Except as otherwise provided in Subsection (c), the Administrator shall determine and designate the amount of Nonelective Contributions, if any, that an Employer shall contribute for a Plan Year. Nonelective Contributions for a Plan Year shall be allocated among the Nonelective Contribution Accounts of Covered Participants who are Non-Highly Compensated Employees as of the last day of the Plan Year in proportion to the relative Plan Compensation of the Covered Participants for the Plan Year.

(c) Notwithstanding the preceding provisions of Subsections (a) and (b), to the extent that an Acquisition Loan is outstanding during any Plan Year, the amount of Employer Contributions with respect to such Plan Year, plus any applicable dividends on unallocated shares, shall first be applied to pay any maturing obligations on such Acquisition Loan. Each Acquisition Loan shall provide for the release from encumbrance of Employer Stock used as collateral for the Acquisition Loan pursuant to this Subsection (c). For each Plan Year during which the Acquisition Loan is outstanding, the number of shares of Employer Stock released from the Employer Stock Collateral Account must equal the number of encumbered shares held immediately before release for the current Plan Year multiplied by a fraction, the numerator of which is equal to the amount of principal and interest paid for the Plan Year and the denominator of which is equal to the sum of the numerator plus the principal and interest to be paid in future Plan Years without regard to possible extension or renewal periods. Amounts released from the Employer Stock Collateral Account for a Plan Year shall be credited to the Employer Stock

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Suspense Account as provided until allocated among the Stock Subaccounts of Covered Participants, as of the last day of such Plan Year, in proportion to the relative Compensation of such Covered Participants for the Plan Year. Such number of shares of Employer Stock shall be identified as part of the Regular Accounts of such Participant. The shares of Employer Stock allocated under this Section shall be credited to the Trust Fund at the fair market value of such shares as of the applicable allocation date, as determined in accordance with Section 12.04.

(d) If a Covered Participant is employed by more than one (1) Employer during a Plan Year, the portion of the Nonelective Contributions and Regular Contributions of such Covered Participant for the Plan Year that is paid by each Employer shall equal the percentage of the Plan Compensation of the Covered Participant for the Plan Year paid by that Employer.

(e) For any Participant who is on a leave of absence pursuant to the FMLA, allocations under this Section shall be made to the Participant’s Account(s) as though the Participant was currently at work on the applicable allocation date(s); provided, however that, for any Participant who does not return to work immediately following a leave of absence taken pursuant to the FMLA, said Participant shall forfeit any and all allocations made to the Participant’s Account(s) during the Participant’s FMLA leave of absence.

Section 4.05. Participant After-Tax Contributions. Effective March 16, 2007, Participant after-tax contributions shall no longer be permitted to be made under the Plan.

Section 4.06. Payment, Deductibility, and Nature of Contributions and Dividends.

(a) The Employer Contributions under Sections 4.03 and 4.04 shall be made as of the last day of the Plan Year, or such earlier allocation date as determined by the Employer; and shall actually be paid within such time period as permitted by law.

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(b) If an Employer is unable to make any Contribution provided under Sections 4.03 or 4.04, any other Employer may make such Contributions on behalf of such Employer, as determined in the sole discretion of the Administrator; provided, however, the total Contributions of an Employer for any Plan Year under Sections 4.03 and 4.04, including any dividends, shall not exceed the amount allowable as a deduction from the income of the Employer for purposes of income tax liability under the Code, and any such Contributions are conditioned on such deductibility.

(c) Dividends paid on Employer Stock held under the stock bonus plan component of the Plan, and as provided in Section 18.04, shall be deductible to the full extent provided under Code Section 404(k).

Section 4.07. Expenses of Plan. All reasonable expenses of administering the Plan shall be paid by the Trustee and shall be charged against and paid from the Trust Fund, unless an Employer pays such expenses.

Section 4.08. Recapture of Tax Credit.

(a) Any and all amounts transferred to the Plan by an Employer because of the requirements of Code Sections 41(c)(1)(B) or 48(n)(1) (as in effect prior to the enactment of the Tax Reform Act of 1984) shall remain in the Plan to be allocated to the Tax Credit Accounts of the Participants (and if previously allocated to the Tax Credit Accounts of the Participants shall remain so allocated), even though part or all of the Employee plan credit (as in effect prior to the enactment of the Tax Reform Act of 1984) or the federal tax credit allowed under Code Section 41 with respect to such amounts is recaptured or redetermined.

(b) Notwithstanding Subsection (a) above, contributions by the Employer are conditioned on the determination by the Secretary of Treasury, or his delegate, that the Plan

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meets the requirements of Code Section 409 and any such contribution shall be returned to the Employer within one (1) year after the date on which the Secretary, or his delegate, issues a notice to the Company that the Plan does not satisfy the requirements of Code Section 409; provided an application for such determination was filed with the Secretary or his delegate not later than ninety (90) days after the date on which an Employee plan credit is claimed under the Code by an Employer.

Section 4.09. Rollover Contributions and Transfers to the Plan.

(a) At any time during a Plan Year, an Eligible Employee may contribute to the Plan in cash, and the Plan shall accept, Direct Rollovers (as defined in Section 7.13) of distributions from the following types of plans: (i) a qualified plan described in Code Section 401(a) or 403(a), excluding after-tax employee contributions; (ii) an annuity contract described in Code Section 403(b), excluding after-tax employee contributions; and (iii) an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. The Plan shall accept a contribution from an Eligible Employee of an Eligible Rollover Distribution (as defined in Section 7.13) (excluding after-tax employee contributions) from (i) a qualified plan described in Code Section 401(a) or 403(a), (ii) an annuity contract described in Code Section 403(b), and (iii) an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. The Plan shall accept a rollover contribution from an Eligible Employee (excluding after-tax employee contributions) of the portion of a distribution from an individual retirement account or annuity described in Code Section 408(a) or 408(b) that is eligible to be rolled over and would otherwise be includible in gross income. Before a Rollover Contribution is made, the Eligible Employee shall designate the

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Fund or Funds in which he wishes his Rollover Contribution to be invested. A Rollover Contribution shall be allocated to the Rollover/Transfer Account of the Eligible Employee as of the date of the contribution.

(b) A direct transfer to the Trustee of this Plan from the trustee of another plan that is qualified under Code Section 401(a) shall be made in connection with the merger of such other plan into this Plan or the transfer under Code Section 414(l) of the accrued benefit of any Participant who was a participant under such other plan. Any such direct transfer must be made directly by the trustee or other funding agent of the other plan rather than by the Participant. In no event may any direct transfer be made to this Plan which is attributable to deductible voluntary contributions within the meaning of Code Section 72(o)(5).

(c) A direct transfer may be made in cash or property; provided, however, that the Trustee shall have the right to reject a direct transfer if the assets are in a form inconsistent with the investment philosophy of the Trustee. Alternatively, the Trustee shall have the authority to convert noncash transferred assets to cash, securities or other investments. Any expenses incurred in converting such assets shall be paid from the assets received in the direct transfer.

(d) Unless the Eligible Employee elects otherwise on the Applicable Form, the direct transfer shall be invested in the investment Fund or Funds in which the Accounts to which the direct transfer is recorded pursuant to this Subsection 4.09(d). Separate accounting may be maintained with respect to any amounts transferred to this Plan pursuant to this Section 4.09.

Section 4.10. Employer Contributions Under the Biomet, Inc. Flexible Benefits Plan. Employer contributions as provided for under the Biomet, Inc. Flexible Benefits Plan, a benefit program under the Biomet, Inc. Employee Benefit Plan (“Flexible Benefits Plan”) may be allocated to the Participant’s Pre-Tax Contribution Account as Pre-Tax Contributions to the extent so elected by the Participant under the Flexible Benefits Plan, in accordance with the terms and conditions of the Plan and the Flexible Benefits Plan.

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ARTICLE V.

LIMITATIONS ON CONTRIBUTIONS AND OTHER ADDITIONS

Section 5.01. Applicability of Article. Notwithstanding any other provision of the Plan to the contrary, Contributions to the Plan and additions to Accounts of Participants shall be limited as provided in Code Sections 401(k), 401(m) and 415, as provided in this Article.

Section 5.02. Definitions. As used in this Article, the following terms, when capitalized, shall have the following meanings, unless otherwise expressly provided:

(a) “Allocable Income” means the sum of the allocable gain or loss for the year or partial year, as the case may be, determined in accordance with Code Section 401(k), 401(m), or 402(g), and the regulations promulgated thereunder. For Plan Years beginning before December 31, 2007, Allocable Income shall include gains or losses for the period from the end of the year to the date of the distribution or correction, but only to the extent that the excess amounts are or will be credited with gains or losses for the period.

(b) “Average Contribution Percentage” means the average (expressed as a percentage to the nearest one-hundredth of one percent) of the Contribution Percentages of the Eligible Participants in a group.

(c) “Average Deferral Percentage” means the average (expressed as a percentage to the nearest one-hundredth of one percent) of the Deferral Percentages of the Eligible Participants in a group.

(d) “Compensation” means, for purposes of Code Sections 401(k) and 401(m), compensation as defined in Code Section 414(s) which, in general, defines compensation as

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having the meaning given such term by Subsection 5.06(d); provided, however, to the extent permitted by the Code, Compensation for any period during which an individual is not a Participant may be disregarded. For Plan Years beginning on or before December 31, 1997, the Company may elect to include elective deferrals described in Code Section 414(s)(2) in Compensation. For Plan Years beginning after December 31, 1997, elective deferrals described in Code Section 414(s)(2) shall be included in Compensation unless the Company elects to exclude such elective deferrals. In general, elective deferrals described in Code Section 414(s)(2) include any amount that is contributed by an Affiliated Employer pursuant to a salary reduction agreement and that is not includible in the gross income of an Employee under Code Section 125, 132(f)(4), 402(e)(3), 402(h), 403(b) or 457.

(e) “Contribution Percentage” means the ratio (expressed as a percentage to the nearest one-hundredth of one percent) of the Matching Contributions (excluding Matching Contributions that are forfeited because the contribution to which they relate are Excess Deferral Amounts, Excess Contributions or Excess Aggregate Contributions) and after-tax contributions of an Eligible Participant for the Plan Year to the extent not used to satisfy one of the tests under Subsection 5.04(a), as applicable, to the Compensation of the Participant for the Plan Year. As may be necessary to satisfy one (1) of the tests under Subsection 5.05(a), and in the sole discretion of the Administrator, Elective Deferrals and Nonelective Contributions of a Participant that are not necessary to meet one (1) of the tests under Subsection 5.04(a) for the Plan Year may be included in the determination of such Contribution Percentage for the Plan Year. The Contribution Percentage for Participants shall be determined in accordance with the following:

(1) The Contribution Percentage for any Highly Compensated Participant for the Plan Year who is eligible to make employee contributions, or to receive matching

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contributions, qualified nonelective contributions, or Elective Deferrals allocated to his accounts under two (2) or more plans described in Code Section 401(a) or arrangements described in Code Section 401(m), and that are maintained by an Affiliated Employer, shall be determined as if all such contributions and deferrals were made under this Plan, without regard to the plan years of the other plans or arrangements.

(2) In the event that the Plan satisfies the requirements of Code Section 410(b) only if aggregated with one (1) or more other plans, or if one (1) or more other plans satisfy the requirements of Code Section 410(b) only if aggregated with the Plan, the Contribution Percentages of Eligible Participants shall be determined as if all such plans were a single plan.

(f) “Current Plan Year” means the Plan Year for which tests given in Section 5.04 or 5.05 are being performed.

(g) “Deferral Percentage” means for an Eligible Participant the ratio (expressed as a percentage to the nearest one-hundredth of one percent) of the sum of Elective Deferrals (including Excess Deferral Amounts of Highly Compensated Participants) and Nonelective Contributions of the Participant for the Plan Year to the Compensation of the Eligible Participant for the Plan Year. The Deferral Percentage for Participants shall be determined in accordance with the following:

(1) The Deferral Percentage for any Highly Compensated Participant for the Plan Year who is eligible to make Elective Deferrals, or to receive matching contributions or qualified nonelective contributions allocated to his accounts under two (2) or more plans described in Code Section 401(a) or arrangements described in Code Section 401(k), and that are maintained by an Affiliated Employer, shall be determined as if all such contributions and deferrals were made under this Plan, without regard to the plan years of the other plans or arrangements.

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(2) In the event that the Plan satisfies the requirements of Code Section 410(b) only if aggregated with one (1) or more other plans, or if one (1) or more other plans satisfy the requirements of Code Section 410(b) only if aggregated with the Plan, the Deferral Percentages of Eligible Participants shall be determined as if all such plans were a single plan.

(h) “Elective Deferrals” means elective deferrals as defined by Code Section 402(g)(3), excluding, however, Catch-Up Contributions and any deferrals properly distributed as excess annual additions under Section 5.06.

(i) “Eligible Participant” means for a Plan Year any Eligible Employee who is eligible, in accordance with Code Section 401(k), to make Pre-Tax Contributions for the Plan Year.

(j) “Excess Aggregate Contributions” means the total amount of Matching Contributions and after-tax contributions with respect to Highly Compensated Participants for the Plan Year that, if reduced, would result in the Plan satisfying one (1) of the tests under Subsection 5.05(a). The Excess Aggregate Contributions are determined for the group of Highly Compensated Participants under a leveling method, starting with the Participant with the highest Contribution Percentage. The first amount of excess attributable to that Participant is the amount of said Matching Contributions and after-tax contributions that, if reduced, would result in the Contribution Percentage of the Participant being equal to the greater of (i) the Contribution Percentage of the Participant with the next highest Contribution Percentage, or (ii) the Contribution Percentage for the Participant that would result in the Plan satisfying one (1) of the

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tests under Subsection 5.05(a). If one (1) of the tests under Subsection 5.05(a) is not then satisfied, the same process is repeated with the Highly Compensated Participant with the next highest Contribution Percentage until one (1) of such tests is satisfied. The total amount of Excess Aggregate Contributions is equal to the total of the reductions in Matching Contributions and after-tax contributions of all affected Participants after application of this Section.

(k) “Excess Contributions” means the total amount of Elective Deferrals with respect to Highly Compensated Participants for the Plan Year that, if reduced, would result in the Plan satisfying one (1) of the tests under Subsection 5.04(a). Excess Contributions are determined for the group of Participants who are Highly Compensated Participants under a leveling method, starting with the Participant with the highest Deferral Percentage. The first amount of excess attributable to that Participant is the amount of Elective Deferrals that, if reduced, would result in the Deferral Percentage of the Participant being equal to the greater of (i) the Deferral Percentage of the Highly Compensated Participant with the next highest Deferral Percentage or (ii) the Deferral Percentage that would result in the Plan satisfying one (1) of the tests under Subsection 5.04(a). If one (1) of the tests under Subsection 5.04(a) is not then satisfied, the same process is repeated with the Highly Compensated Participant with the next highest Deferral Percentage until one (1) of such tests is satisfied. The total amount of Excess Contributions is equal to the total of such reductions in Elective Deferrals of all affected Participants after application of this Section.

(l) “Excess Deferral Amount” means the amount of Elective Deferrals for a calendar year that the Participant timely claims pursuant to the following procedure:

(1) A Participant may submit a claim on the Applicable Form to the Administrator not later than the March 1 following the close of the calendar year for which the claim for an Excess Deferral Amount is made, specifying the Excess Deferral Amount claimed by the Participant for the preceding calendar year for the Plan.

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(2) Said claim shall be accompanied by the written statement of such Participant that if such amounts are not distributed, such claimed Excess Deferral Amount, when added to amounts deferred under other plans or arrangements described in Code Sections 401(k), 403(b), or 408(k), exceeds the limit imposed on the Participant by Code Section 402(g) (including, if applicable, the limitation on Catch-Up Contributions under Code Section 414(v)) for the calendar year in which the deferral occurred.

(m) “Highly Compensated Participant” means any Participant who is a Highly Compensated Employee and who is an “eligible employee” within the meaning of Code Section 401(k) or 401(m), as the case may be.

(n) “Nonelective Contributions” means, for a Participant for a Plan Year, the amount of Nonelective Contributions designated under Subsection 4.04(b); provided, however, Matching Contributions may be treated as Nonelective Contributions to the extent used to satisfy one (1) of the tests under Subsection 5.04(a).

(o) “Non-Highly Compensated Participant” means any Participant who is not a Highly Compensated Participant and who is an “eligible employee” within the meaning of Code Section 401(k) or 401(m), as the case may be.

(p) “Prior Plan Year” means the Plan Year immediately preceding the Current Plan Year.

Section 5.03. Distribution of Excess Deferral Amount. Excess Deferral Amounts, adjusted for Allocable Income, may be distributed in the discretion of the Administrator not later than each April 15 to the Participant who claims such Excess Deferral Amount for the preceding calendar year.

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Section 5.04. Limitations on Contributions under Code Section 401(k) and the Distribution of Excess Contributions.

(a) The Plan shall be administered to satisfy the test under either Paragraph (1) or Paragraph (2) below in each Plan Year:

(1) The Average Deferral Percentage for the group of Highly Compensated Participants for the Current Plan Year shall not exceed the Average Deferral Percentage for the group of Non-Highly Compensated Participants for the Current Plan Year multiplied by one and twenty-five one-hundredths (1.25).

(2) The Average Deferral Percentage for the group of Highly Compensated Participants for the Current Plan Year shall not exceed the Average Deferral Percentage for the group of Non-Highly Compensated Participants for the Current Plan Year multiplied by two (2.0), provided the Average Deferral Percentage for the group of Highly Compensated Participants does not exceed the Average Deferral Percentage for the group of Non-Highly Compensated Participants by more than two (2) percentage points.

(b) In the event there are Excess Contributions for a Plan Year, one (1) of the tests under Subsection (a) shall be met by distributing to each affected Participant the Excess Contributions allocable to such Participant pursuant to Subsection (c), adjusted for Allocable Income, on or before the last day of the following Plan Year. Notwithstanding anything in the Plan to the contrary, no Matching Contributions shall be made with respect to any such Excess Contributions.

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(c) The Excess Contributions for a Plan Year shall be allocated among Highly Compensated Participants under a leveling method, starting with the Highly Compensated Participant with the highest dollar amount of Elective Deferrals for the Plan Year. The first amount of excess allocated to that Participant is the amount of said Elective Deferrals that, if reduced, would result in the dollar amount of Elective Deferrals of the Participant being equal to the greater of (i) the dollar amount of Elective Deferrals of the Highly Compensated Participant with the next highest dollar amount of Elective Deferrals, or (ii) the dollar amount of contributions for the Participant that would result in the Plan satisfying one (1) of the tests under Subsection 5.04(a). If one (1) of the tests under Subsection 5.04(a) is not then satisfied, the same process is repeated with the Highly Compensated Participant with the next highest dollar amount of Elective Deferrals until one (1) of such tests is satisfied. The Excess Contributions, adjusted for Allocable Income, shall be distributed to the affected Participants no later than the last day of the succeeding Plan Year.

(d) The Administrator may adjust the Elective Deferral election of any Highly Compensated Participant to the extent it anticipates that such adjustment is necessary to satisfy the test under Subsection 5.04(a).

Section 5.05. Limitations on Contributions under Code Section 401(m) and the Distribution of Excess Aggregate Contributions.

(a) The Plan shall be administered to satisfy the test under either Paragraph (1) or Paragraph (2) below in each Plan Year:

(1) The Average Contribution Percentage for the group of Highly Compensated Participants for the Current Plan Year shall not exceed the Average Contribution Percentage for the group of Non-Highly Compensated Participants for the Current Plan Year multiplied by one and twenty-five one-hundredths (1.25).

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(2) The Average Contribution Percentage for the group of Highly Compensated Participants for the Current Plan Year shall not exceed the Average Contribution Percentage for the group of Non-Highly Compensated Participants for the Current Plan Year multiplied by two (2.0), provided that the Average Contribution Percentage for the group of Highly Compensated Participants does not exceed the Average Contribution Percentage for the group of Non-Highly Compensated Participants by more than two (2) percentage points.

(b) In the event there are Excess Aggregate Contributions for a Plan Year, one of the tests under Subsection (a) shall be met by forfeiting, if forfeitable, or distributing to each affected Participant, if not forfeitable, the Excess Aggregate Contributions, adjusted for Allocable Income, allocable to such Participant no later than the last day of the succeeding Plan Year. The Excess Aggregate Contributions shall be allocated among Highly Compensated Participants under a leveling method, starting with the Highly Compensated Participant with the highest dollar amount of Matching Contributions and after-tax contributions for the Plan Year. The first amount of excess distributed to that Participant is the amount of said Matching Contributions and after-tax contributions that, if reduced, would result in the dollar amount of Matching Contributions and after-tax contributions of the Participant being equal to the greater of (i) the dollar amount of Matching Contributions and after-tax contributions of the Highly Compensated Participant with the next highest dollar amount of Matching Contributions and after-tax contributions, or (ii) the dollar amount of Matching Contributions and after-tax contributions for the Participant that would result in the Plan satisfying one (1) of the tests under

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Subsection 5.05(a). If one (1) of the tests under Subsection 5.05(a) is not then satisfied, the same process is repeated with the Highly Compensated Participant with the next highest dollar amount of Matching Contributions and after-tax contributions until one (1) of such tests is satisfied.

(c) The determination of the Excess Aggregate Contributions for the Plan Year shall be made after application of the provisions of Section 5.04 for the Plan Year. Forfeitures of Excess Aggregate Contributions shall be used to reduce future Employer Contributions under Section 4.03 or 4.04.

Section 5.06. Stock Bonus Component Aggregation. For purposes of satisfying the nondiscrimination requirements under Code Sections 401(k) and 401(m) as provided in Sections 5.04 and 5.05, the stock bonus component of the Plan should be aggregated with the profit sharing plan component of the Plan.

Section 5.07. Limitation under Code Section 415. Notwithstanding any other provisions in the Plan to the contrary, the following limitations shall apply:

(a) Except to the extent permitted under Subsection 4.02(b) and Code Section 414(v), in no event shall the “annual addition,” as defined in Subsection (f), for a Participant for any Plan Year (which shall be the limitation year) exceed the lesser of:

(1) Forty Thousand Dollars ($40,000) (as increased by the Cost of Living Adjustment); or

(2) One hundred percent (100%) of the “compensation,” as defined in Subsection (d), that such Participant received from Affiliated Employers during the Plan Year.

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The Compensation limit referred to in Paragraph (2) above shall not apply to any Contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or Code Section 419A(f)(2) that is otherwise treated as an annual addition). Notwithstanding the foregoing, if any Plan Year consists of less than twelve (12) months, the annual dollar limit referred to in Paragraph (l) shall be multiplied by a fraction, the numerator of which is the number of months in the short Plan Year and the denominator of which is twelve (12).

(b) The Plan shall be administered so as to comply with the limitations of Code Section 415. Notwithstanding anything in Article IV, the Contributions on behalf of any Participant shall be reduced to the extent necessary to comply such limitations.

(c) For purposes of this Section and subject to Code Section 415(h), all defined contribution plans of an Affiliated Employer are to be treated as a single defined contribution plan, and all Affiliated Employers shall be considered as a single employer.

(d) For purposes of this Section, ‘compensation’ means compensation as defined in Code Section 415(c)(3). In general, Code Section 415(c)(3) defines compensation as all of a Participant’s wages as defined in Code Section 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)); provided, however, compensation shall also include the amount of any elective deferrals, as defined in Code Section 402(g)(3), and any amount contributed or deferred by the employer at election of the Employee and that is not includable in the gross income of the Employee by reason of Code Section 125, 132(f)(4) or 457.

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(e) If the annual addition for a Participant under the Plan, determined without regard to the limitation of Subsection (a), would have been greater than the annual addition for such Participant as limited by Subsection (a), then the excess, if due to a reasonable error in estimating compensation or such other circumstances as found by the Secretary of the Treasury to justify application of this Subsection, shall be reduced, to the extent necessary to satisfy such limitation by reallocating to the other Participants any Employer Contributions of such Participant for the Plan Year without any allocation of income or loss thereto in proportion to the relative Plan Compensation of the Participants for the Plan Year. Provided, however, if such reallocations would result in the annual additions for all eligible Participants exceeding the limitations of Subsection (a), the excess shall be held unallocated in a suspense account and used to reduce Employer Contributions in subsequent Plan Years.

(f) For purposes of this Section, “annual addition” means the annual addition as defined in Code Section 415(c) and as modified in Code Sections 415(l)(1) and 419(A)(2). In general, Code Section 415(c) defines the annual addition as the sum of the following amounts credited to a Participant’s accounts for the limitation year under this Plan and any other plan maintained by an Affiliated Employer:

(1) employer contributions;

(2) employee contributions; and

(3) forfeitures.

Amounts allocated, after March 31, 1984, to an individual medical account, as defined in Code Section 415(1)(2), that is part of a pension or annuity plan maintained by an Affiliated Employer are treated as annual additions to a defined contribution plan. Excess Aggregate Contributions and Excess Contributions shall be treated as annual additions under the Plan even if distributed.

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Rollover Contributions are not included in annual additions. Also, amounts derived from contributions paid or accrued after December 31, 1984, in taxable years ending after such date, that are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Code Section 419A(d)(3), under a welfare benefit fund, as defined in Code Section 419(e), maintained by an Affiliated Employer are treated as annual additions to a defined contribution plan.

For purposes of this Section, any Leveraged Shares of Employer Stock released from the Employer Stock Suspense Account and allocated to a Participant’s Stock Subaccounts for a Plan Year shall be accounted for at the lower of (i) the fair market value of the shares as of the allocation date, or (ii) the amount of the Employer Contributions made to the Plan which resulted in the release of those shares from the Employer Stock Suspense Account for the Plan Year.

Section 5.08. Priority of Limitations. The provisions of Sections 5.03, 5.04, 5.05, and 5.07 shall be applied in the following order: (i) Section 5.03; (ii) Section 5.04; (iii) Section 5.05; and (iv) Section 5.07.

ARTICLE VI.

ACCOUNTING

Section 6.01. Participant Accounts.

(a) The Administrator shall establish and maintain adequate records to reflect the Accounts of each Participant and Beneficiary. Credits and charges shall be made to such Accounts pursuant to the Plan to reflect contributions, distributions, and withdrawals and to reflect gains or losses. Each Participant shall have a separate Pre-Tax Contribution Account, Matching Account, Nonelective Contribution Account, Regular Account, Rollover/Transfer Account, Savings Account and Tax Credit Account, with a Stock Subaccount and Non-Stock

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Subaccount maintained under each such Account. The Administrator shall maintain a record of the Employer Stock and the value of all other assets attributable to each Account. The maintenance of individual accounts is for accounting purposes only, and a segregation of Plan assets to each Account shall not be required, except as otherwise provided in the Plan.

(b) Each Participant’s Stock Subaccount shall be credited with shares of Employer Stock (including fractional shares), as provided in the Plan, whether (i) contributed to the Trust, (ii) acquired and paid for by the Trust, including Leveraged Shares released from the Employer Stock Suspense Account, or (iii) invested, at the Participant’s direction, in Employer Stock at any time on or after June 1, 2001. Each Participant’s Stock Subaccount shall be charged or reduced with respect to all or any portion of such Stock Subaccount that is transferred, at the Participant’s direction, to the Participant’s Non-Stock Subaccount. The Administrator shall maintain records of the cost basis (which, at the Administrator’s sole discretion, may be based on average cost) of Employer Stock allocated to a Participant’s Stock Subaccount.

(c) Each Participant’s Non-Stock Subaccount shall be credited with his allocable share, as provided in the Plan, of (i) Contributions that are not in the form of Employer Stock, and (ii) investments, at the Participant’s direction or pursuant to the default investment established by the Administrator, at all times on and after June 1, 2001, in assets other than Employer Stock, and shall be adjusted for any net income or loss of the Trust not attributable to Employer Stock, as provided in Section 6.04. Each Participant’s Non-Stock Subaccount shall be charged or reduced for (i) the Participant’s share of any cash payment by the Trustee for the acquisition of Employer Stock, (ii) the payment of any principal or interest due under any Acquisition Loan, or (iii) the transfer of all or any portion of such Non-Stock Subaccount, at the Participant’s direction, to the Participant’s Stock Subaccount.

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Section 6.02. Valuation. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund, each separate Fund and each share of Employer Stock that it holds in accordance with the Trust Agreement and Section 6.03. Based on the valuation of the Trustee, the Administrator, or its designee, shall determine the value of the Accounts of each Participant and the number of shares of Employer Stock, if any, credited to that Account.

Section 6.03. Value of Accounts of Participants.

(a) The value of an Account as of any Valuation Date shall be determined in accordance with ERISA Sections 408(e) and 3(18) and regulations thereunder. The value of the Account shall be determined as of the close of business on such Valuation Date, or if the NASDAQ or any national securities exchange on which the Fund or Employer Stock is trading, is not open on such date (or, in the case of Employer Stock, the Employer Stock is not traded on such date), as of the close of business on the first day prior to such Valuation Date that the NASDAQ or national securities exchange is open (or that Employer Stock is traded), increased by the amount of any Contributions allocated to the Account after the prior Valuation Date and reduced by the amount of any payments or withdrawals made from the Account after the prior Valuation Date.

(b) The value of Employer Stock shall be the closing price of the Employer Stock as reported on NASDAQ or any national securities exchange on which the Employer Stock is trading; provided, however, that if the Employer Stock is traded on NASDAQ and if the closing price is greater than the bid price or less than the asked price, then the value of Employer Stock shall be determined by taking the average of the most recent bid and asked prices quoted by persons independent of the Employer or any Party in Interest, as reported on NASDAQ. Determination of the value of Employer Stock with respect to transactions between the Plan and a Party of Interest shall be made as of the date of the transaction.

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Section 6.04. Allocation of Earnings to Non-Stock Subaccounts. Subject to the loan provisions under Article VIII, earnings on the Non-Stock Subaccounts of each Participant shall be allocated as follows:

(a) If a Fund separately accounts for the portion of each Participant’s share of the Fund earnings, the earnings of the Fund, whether positive or negative, shall be allocated among the Non-Stock Subaccounts invested in that Fund pursuant to the rules of the Fund.

(b) If a Fund does not separately account for the portion of each Participant’s Fund earnings, the earnings of the Fund, whether positive or negative, shall be allocated among all Non-Stock Subaccounts in proportion to the relative value of those Non-Stock Subaccounts invested in the Fund during the period following the preceding Valuation Date, which relative value shall be determined under a reasonable procedure established by the Administrator and consistently applied. Accounts terminated since the preceding Valuation Date shall be disregarded for purposes of this Subsection.

(c) The earnings of a Fund shall be determined pursuant to the rules of that Fund.

Section 6.05. Calculation on Basis of Employer Stock. For purposes of determining the net unrealized appreciation on any Employer Stock distributed to the Participant, the cost or other basis of such Employer Stock shall be the cost or other basis to the Trust Fund of each such share of Employer Stock.

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ARTICLE VII.

BENEFITS

Section 7.01. Retirement Benefits.

(a) When a Participant Retires he is entitled to begin distribution of his Accounts. Such Accounts shall be paid, as elected by the Participant on the Applicable Form, either (i) in a lump sum payment, or (ii) in monthly, quarterly, semiannual, or annual installments over a period of years not to exceed the life expectancy of the Participant, increased or decreased for any gain or loss as allocated to the Accounts under the Plan during the installment period. If any portion of the Vested Accounts of the Participant consists of Employer Stock, the Participant may elect that all or any part of such portion of his Vested Accounts be distributed in whole shares of such Employer Stock and the remainder thereof in cash. In the event a Participant makes no election, his Accounts shall be paid in a lump sum cash payment.

(b) Actual payment of such benefits shall begin within ninety (90) days after the later of the Participant’s Normal Retirement Date or the date he actually Retires; provided, however, a Participant who Retires before his Normal Retirement Date may elect an earlier distribution on an Applicable Form. After a Participant informs the Administrator of his wish to receive an early distribution, the Administrator shall provide the Participant with a written notice of (i) his right to defer receipt of the distribution, and (ii) his right to a period of at least 30 days after receiving the notice to decide whether to elect an early distribution. After receiving the Administrator’s written notice, the Participant may elect an early distribution date that is not more than 180 days after the date of the notice and, except as provided in the following sentence, is at least 30 days after the notice. The Participant may waive the 30-day notice requirement described in the preceding sentence, but not the 180-day requirement. The Participant’s election must be made on the Applicable Form.

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(c) Notwithstanding the foregoing and effective with respect to a distribution made on or after March 28, 2005, if the value of the Accounts of a Participant, excluding his Rollover/Transfer Account, at the time of distribution does not exceed One Thousand Dollars ($1,000), his Accounts shall be paid to him in a lump sum payment within ninety (90) days after the Participant Retires.

(d) Distributions shall be based on the value of the Accounts as of the Valuation Date coincident with or immediately preceding the distribution date.

Section 7.02. Death Benefits.

(a) If a Participant dies after distribution of his Accounts has begun under the Plan, any remaining installments shall be paid as they become due unless his Beneficiary elects a lump sum cash payment of such remaining installments on an Applicable Form.

(b) If a Participant dies prior to distribution of his Accounts, his Accounts, if any, shall be paid to the primary or contingent Beneficiary of the Participant under Section 7.03 in a lump sum cash payment, or, at the Beneficiary’s election and only to the extent of the value of the Participant’s Stock Subaccounts at the time of distribution, in the form of Employer Stock. Payment of such benefit shall be made as soon as administratively feasible following the date of death.

Section 7.03. Beneficiaries.

(a) If a Participant is married, his primary Beneficiary shall be his Spouse, unless he elects a different primary Beneficiary under Subsection (b).

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(b) Each Participant may designate on an Applicable Form filed with the Administrator one (1) or more primary and contingent Beneficiaries to receive any death benefits payable under this Plan upon his death. Each such designation may be revoked, amended, or changed by the Participant by notice in writing to the Administrator. To be effective, a Beneficiary designation must be received by the Administrator during the Participant’s life. The designation of a Beneficiary other than the Spouse of such Participant shall not be effective unless:

(1) the consent of the Spouse of the Participant (i) is obtained on the Applicable Form, (ii) acknowledges the effect of the election, (iii) applies only to a specific Beneficiary designation that may not be changed without spousal consent (or the consent of the Spouse expressly permits future elections by the Participant without any requirement of further consent by the Spouse), and (iv) is witnessed by a notary public; or

(2) the Participant establishes to the satisfaction of the Administrator, in its sole discretion, that the consent under Paragraph (1) cannot be obtained because (i) the Participant has no Spouse, (ii) the Spouse of the Participant cannot be located, or (iii) of such other circumstances as the Secretary of the Treasury by regulation may prescribe.

Any consent by a Spouse of a Participant, or establishment that consent of such Spouse cannot be obtained, shall be effective only with respect to such Spouse.

(c) In the absence of a designation by the Participant or if all designated Beneficiaries predecease the Participant, the benefits, if any, shall be paid to the surviving Spouse of the Participant, if living at the time of the death of the Participant, or if no such Spouse is then living, then to the descendants of the Participant, per stirpes, who are living at the time of the death of the Participant, or if there are no such descendants then living, then to the estate of the Participant.

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Section 7.04. Termination Benefits.

(a) If a Participant Terminates Employment prior to his Retirement for any reason other than death, such Participant is entitled to receive his Vested Accounts, if any, as provided in this Section. If any portion of the Vested Accounts of the Participant consists of Employer Stock, the Participant may elect that all or any part of such portion of his Vested Accounts be distributed in whole shares of such Employer Stock and the remainder thereof in cash.

(b) The Vested portion of the Accounts of a Participant under Subsection (a), based on the value of his Accounts as of the Valuation Date coincident with or immediately preceding the distribution, shall be paid in a lump sum within ninety (90) days after the Participant Terminates Employment, if, effective with respect to a distribution made on or after March 28, 2005, the Vested portion of the Accounts of the Participant, excluding his Rollover/Transfer Account, does not exceed One Thousand Dollars ($1,000) at the time of the distribution.

(c) If the Vested portion of the Accounts of the Participant, excluding his Rollover/Transfer Account, exceeds One Thousand Dollars ($1,000) at the time of any distribution on or after March 28, 2005, the Vested portion of the Accounts of a Participant under Subsection (a) shall be paid in a lump sum within ninety (90) days after the Participant Terminates Employment and elects such a distribution if the Participant consents on the Applicable Form to such distribution.

(d) In the event that the Vested Accounts of a Participant equal or exceed the cash surrender value of any insurance contracts held in the Participant’s name, the Trustee, when so directed by the Administrator and agreed to by the Participant, shall assign, transfer, and give

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over to such Participant all contracts on his life in such form or with such endorsements, so that the settlement options are consistent with the provisions of Section 7.01. In the event that the Vested Accounts do not at least equal the cash surrender value of the contracts, if any, held in the Participant’s name, the Participant may pay over to the Trustee the sum needed to make the distribution equal to the value of the contracts being assigned or transferred, or the Trustee, pursuant to the election of the Participant, may borrow the cash surrender value of the contracts from the insurer and then assign the contracts to the Participant.

(e) If the Vested portion of the Accounts of a Participant under Subsection (a) are not paid pursuant to Subsections 7.04(b), (c), or (d), such Vested Accounts shall be paid pursuant to the provisions of Section 7.01 commencing as of the date which would have been the Normal Retirement Date of the Participant had he not Terminated Employment.

(f) If a Participant who has Terminated Employment with a Vested Account dies before he begins receiving benefits hereunder, the Vested Accounts payable under Subsection (a) shall be paid in accordance with Section 7.02.

(g) Distributions payable as of any date shall be made on or as soon as administratively feasible after that date.

Section 7.05. In-Service Withdrawals of Pre-Tax Contribution Account.

(a) In addition to the withdrawal provisions in Section 7.08, a Participant who has not Terminated Employment may request on the Applicable Form, for reason of financial hardship as defined under regulations of the Internal Revenue Service, to withdraw in cash as of any Valuation Date all or part of his Pre-Tax Contribution Account, excluding any earnings of the Trust Fund allocated to such Pre-Tax Contribution Account after December 31, 1988. Only one (1) such request may be made each calendar quarter. Such a request must be on the

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Applicable Form. Such hardship withdrawals may include all or any portion of the Stock Subaccount under the Participant’s Pre-Tax Contribution Account, which shall be deemed to be an election that any such Employer Stock be liquidated prior to distribution of the requested hardship withdrawal. The request will be approved only if it satisfies all the requirements of this Section.

(b) A withdrawal for reason of financial hardship must be on account of:

(1) expenses incurred for medical care as described in Code Section 213(d) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income) for the Participant, his Spouse, or any dependent of the Participant as defined in Code Section 152 or expenses necessary for such persons to obtain such medical care;

(2) costs directly related to the purchase (excluding mortgage payments) of a principal residence for the Participant;

(3) payment of tuition, room and board expenses, and related educational fees for up to the next twelve (12) months of post-secondary education, including expenses for the then current semester or quarter, for the Participant, his Spouse, children, or any dependents of the Participant as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B);

(4) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the principal residence of the Participant; or

(5) with respect to Plan Years beginning on or after January 1, 2007, payments for funeral or burial expenses for the Participant’s deceased parent, Spouse, child or dependent (as defined in Code Section 152, without regard to Code Section 152(d)(1)(B);

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(6) with respect to Plan Years beginning on or after January 1, 2007, expenses to repair damage to the Participant’s principal residence that would qualify for a casualty loss deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income); or

(7) such other financial circumstances as declared by the Commissioner of Internal Revenue to constitute immediate and heavy financial need under Code Section 401(k) or the regulations thereunder.

(c) Any withdrawal under this Section for reason of financial hardship must satisfy all of the following requirements:

(1) The distribution may not be in excess of the amount of the immediate and heavy financial need of the Participant. The amount of the immediate and heavy financial need may include any amounts necessary to pay any federal, state, or local taxes or penalties reasonably anticipated to result from the distribution.

(2) The Participant must have obtained all distributions, other than hardship distributions, all dividends and all nontaxable loans currently available under all plans maintained by an Affiliated Employer; provided, however, the Participant shall not be required to obtain any such distribution or loan if the effect of such distribution or loan would be to increase the amount of the immediate and heavy financial need of the Participant.

(3) The Pre-Tax Contributions of the Participant under the Plan and any elective contributions or employee contributions of the Participant under any other plan maintained by an Affiliated Employer, except for employee contributions under a health or welfare benefit plan, including one that is part of a cafeteria plan under Code Section 125, shall be suspended for six (6) months after receipt of any withdrawal.

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(d) The request by a Participant for a withdrawal shall specify the reason of the financial hardship, specify the amount the Participant wishes to withdraw to meet the need caused by the financial hardship, and state the need cannot be met:

(1) through reimbursement or compensation by insurance or otherwise;

(2) by reasonable liquidation of the assets of the Participant, to the extent such liquidation would not itself cause an immediate and heavy financial need;

(3) by cessation of Pre-Tax Contributions under the Plan; or

(4) by other currently available distributions (including distributions of dividends under Code Section 404(k)) and nontaxable (at the time of the loan) loans from plans maintained by the Employers or by any other employer, or by borrowing from commercial sources on reasonable commercial terms.

The Administrator shall determine whether financial hardship exists, and its determination shall be final and conclusive. Denial of a withdrawal request shall be made in accordance with the claims procedure of the Plan. In making this determination, the Administrator may rely on the representation by the Participant that the need cannot be met by any of the aforementioned resources or from any other resources that are reasonably available to the Participant. For purposes of this Section, the resources of the Participant include those assets of the Spouse of the Participant and the minor children of the Participant that are reasonably available to the Participant. The determination of whether resources are reasonably available to the Participant is to be made on the basis of all relevant facts and circumstances. If the Administrator requires further information in order to determine whether financial hardship exists, it may request this information.

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(e) The Administrator shall apply uniform and nondiscriminatory standards in administering the provisions of this Section. The withdrawals shall be paid to the Participant as soon as practicable after approval by the Administrator of the Participant’s written request for a hardship withdrawal.

(f) No amount that is held as security for an outstanding Plan loan pursuant to Subsection 8.02(e) shall be eligible for a hardship withdrawal pursuant to this Section 7.05.

(g) Notwithstanding the foregoing provisions of this Section 7.05, as permitted by Code Section 401(k)(2)(B)(i) with regard to distributions made after September 11, 2001, any “qualified reservist” may request a distribution from his Pre-Tax Contribution Account at any time during a period of active duty and shall not be subject to the ten percent (10%) early withdrawal penalty tax under Code Section 72(t). For purposes of this Subsection (g), a “qualified reservist” is an individual who is a reservist or national guardsman who was ordered or called to active duty after September 11, 2001 and before December 31, 2007 for a period in excess of one hundred seventy-nine (179) days or for an indefinite period. A qualified reservist who takes a distribution from his Pre-Tax Contribution Account under this Subsection (g) may repay such distribution to an individual retirement account (i) at any time during the two (2) year period after the end of active duty, or (ii) by August 17, 2008, if later.

Section 7.06. In-Service Withdrawals of Rollover/Transfer Account.

(a) A Participant who has not Terminated Employment may request on the Applicable Form, for reason of financial hardship as defined under regulations of the Internal Revenue Service, to withdraw in cash all or part of his Rollover/Transfer Account. Such a

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withdrawal may not occur more than twice each Plan Year and is subject to approval of the Administrator. The request will be approved only if it satisfies all the requirements of this Section and Subsections 7.05(b), (c), (d), and (e).

(b) Any withdrawal under this Section for reason of financial hardship must not be in excess of the amount of the immediate and heavy financial need for the Participant.

(c) A Participant may, at his election, also withdraw any amount necessary to cover withholding for federal income tax purposes.

Section 7.07. In-Service Withdrawals from Savings Account. A Participant may request a withdrawal of all or part of the balance in his Savings Account. Any such withdrawal request shall be made on an Applicable Form and be filed with the Trustee and the Administrator. The amount requested shall be distributed to the Participant within ninety (90) days following the date of the request.

Section 7.08. In-Service Withdrawals Upon Attainment of Age 59 ¹/2. A Participant who has attained age fifty-nine and one-half (59-1/2) and who has not Terminated Employment may request (once in any Plan Year) on the Applicable Form to withdraw all or any portion of his Vested Accounts. Such request must be on an Applicable Form and be filed with the Administrator at least two (2) weeks before the date the Participant wishes to receive the withdrawal.

Section 7.09. Charge or Discount. If any charge or discount is incurred by the Trustee as an incident to the payment of any benefits hereunder, such charge or discount shall be charged against the benefits of the Participant or Beneficiary to which the same relates.

Section 7.10. Persons Under Legal Disability. If any benefit is payable to a minor or other person who is incapacitated, under a legal disability, or other similar situation as defined by

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state law, of which the Administrator has been informed in writing, the Administrator may direct that such payments be made to the legal guardian of such person or to such other person or organization as a court of competent jurisdiction may direct in full satisfaction of any payment due under the Plan.

Section 7.11. Payments at Direction of Administrator. Any benefit payable under the Plan shall be paid by the Trustee only at the direction of the Administrator.

Section 7.12. Limitation on Distributions from Tax Credit Account. Notwithstanding any other provision in this Article, no Employer Stock allocated to the Tax Credit Account of a Participant may be distributed from that Account’s Stock Subaccount prior to the end of the eighty-fourth (84th) month beginning after the month in which the Employer Stock is allocated to such Participant’s Tax Credit Account; provided, however, such Employer Stock may be distributed prior to the end of the preceding eighty-four (84) month period in the case of the Participant’s death, Disability, or Termination of Employment.

Section 7.13. Special Rollover Distribution Rules. Notwithstanding any other provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover.

(a) Definitions.

(1) An “Eligible Rollover Distribution” is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: (i) any distribution that is (A) one of a series of substantially equal periodic payments (not less frequently than annually) made for the life

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(or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated Beneficiary, or (B) for a specified period of ten (10) years or more; (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9); (iii) any financial hardship distribution described in Code Section 401(k) and the regulations thereunder; (iv) the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities) or (v) any distribution to a Participant of dividends declared on Employer Stock pursuant to Section 18.04. A portion of the distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of employee after-tax contributions that are not includable in gross income. However, such after-tax portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or in a direct trustee-to-trustee rollover to a qualified trust described in Code Section 401(a) or 403(a) that is part of a defined contribution or defined benefit plan, or to an annuity contract, described in Code Section 403(b), and such trust or annuity contract separately accounts for amounts so transferred, including separately accounting for the portion of such distribution that is includable in gross income and the portion of the distribution that is not so includable. Effective January 1, 2008, an Eligible Rollover Distribution shall also mean a qualified rollover contribution to a Roth IRA within the meaning of Code Section 408A.

(2) An “Eligible Retirement Plan” is (i) an individual retirement account described in Code Section 408(a), (ii) an individual retirement annuity described in Code Section 408(b), (iii) an annuity plan described in Code Section 403(a), or (iv) a qualified

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plan described in Code Section 401(a), that accepts the Distributee’s Eligible Rollover Distribution. “Eligible Retirement Plan” also means an annuity contract described in Code Section 403(b) or an eligible plan under Code Section 457(b) maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. Effective January 1, 2008, an Eligible Retirement Plan shall also mean a Roth IRA described in Code Section 408A.

(3) A “Distributee” includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving Spouse and the Employee’s or former Employee’s Spouse or former Spouse who is the Alternate Payee under a Qualified Domestic Relations Order, are Distributees with regard to the interest of the Spouse or former Spouse. Effective January 1, 2007, a designated Beneficiary (as defined in Code Section 401(a)(9)(E) of the Employee who is not a surviving Spouse is a Distributee with regard to the interest of the designated Beneficiary.

(4) A “Direct Rollover” is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

(b) If a distribution is one to which Code Sections 401(a)(11) and 417 do not apply, such distribution may commence less than thirty (30) days after the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that:

(1) the Plan Administrator clearly informs the Participant that he has a right to a period of at least thirty (30) days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and

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(2) the Participant, after receiving the notice, affirmatively elects a distribution.

Section 7.14. Requirements for Commencement and Distribution of Benefits. Notwithstanding any provision of the Plan to the contrary, any distribution under the Plan shall be made in accordance with Code Section 401(a)(9) and the regulations promulgated thereunder, including the incidental death benefit rules under Code Section 401(a)(9)(G), and shall comply with the following rules:

(a) To the extent required by Code Section 401(a)(9) and the regulations promulgated thereunder, payment of the Accounts of a Participant shall begin not later than the “required beginning date.” For purposes of this Section, “required beginning date” means April 1 of the calendar year following the later of: (i) the calendar year in which the Participant reaches age seventy and one-half (70-1/2), or (ii) the calendar year in which the Participant Retires; provided, however, for a Participant who is a five percent (5%) owner, as defined in Code Section 416, “required beginning date” means April 1 of the calendar year following the calendar year in which the Participant reaches age seventy and one-half (70-1/2), regardless of whether he has Retired. A Participant who (i) has not Terminated Employment, (ii) attained age seventy and one-half (70-1/2) prior to January 1, 1997, and (iii) began receiving distributions from the Plan pursuant to the requirements of Code Section 401(a)(9) as in effect on December 31, 1996, may elect to discontinue such distributions at any time by filing the Applicable Form with the Plan Administrator.

(b) If the Participant dies before distributions have begun, the entire interest, if any, of a Participant under the Plan shall be distributed by December 31 of the calendar year containing the fifth (5th) anniversary of the Participant’s death, unless the Participant or Beneficiary elects otherwise pursuant to Subsection (c).

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(c) Notwithstanding the provisions of Subsection (b), effective for distributions commencing on or after January 1, 2004, Participants or Beneficiaries may elect on an individual basis whether (i) the Participant’s entire interest in the Plan shall be distributed to the designated Beneficiary by December 31 of the calendar year containing the fifth (5th) anniversary of the Participant’s death, or (ii) the distribution of benefits shall begin (A) in the case of a non-spouse Beneficiary or if the surviving Spouse is not the sole Beneficiary, no later than the December 31 of the calendar year following the calendar year in which the Participant died, or (B) in the case of a surviving Spouse, no later than December 31 of the calendar year in which the Participant would have attained age seventy and one-half (70 1/2). The election must be made no later than the earlier of the date on which distribution would be required to begin under (i) or (ii) of this Subsection. If neither the Participant nor Beneficiary makes an election under this Subsection, distributions shall be made in accordance with Subsection (b). If the surviving Spouse is the designated Beneficiary and the surviving Spouse dies before the distribution of benefits begins, this Subsection shall be applied as if the surviving Spouse were the Participant.

(d) Unless a Participant elects otherwise, the payment of his benefits under the Plan must begin not later than the sixtieth (60th) day after the end of the Plan Year in which occurs the latest of (i) the Participant’s sixty-fifth (65th) birthday, (ii) the tenth (10th) anniversary of the Plan Year in which the Participant began participation in the Plan, or (iii) the Participant’s Termination of Employment.

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ARTICLE VIII.

PLAN LOANS

Section 8.01. Plan Loans.

(a) Any Party in Interest may apply on the Applicable Form to the Administrator for a loan from the Plan pursuant to this Article and such other procedures as may be established by the Administrator. Loans will be available to all such Parties in Interest on a uniform and nondiscriminatory basis. Loans shall not be made available to Highly Compensated Employees, officers, or shareholders in an amount greater than the amount made available to other Parties in Interest, as determined in accordance with ERISA and the Code. Such loans may not include any portion of the Participant’s Stock Subaccounts, but shall only be available from the Participant’s Non-Stock Subaccounts.

(b) The amount of such loan, when added to the outstanding balance of all other loans from the Plan, shall not exceed the lesser of:

(1) Fifty Thousand Dollars ($50,000), reduced by the excess, if any, of the highest outstanding balance of loans from the Plan during the one (1) year period ending on the date on which the loan is made, over the outstanding balance of loans from the Plan on the date on which such loan is made; or

(2) One-half (1/2) of the Vested Accounts of the Participant under the Plan.

For purposes of the above limitations, all loans from all plans of the Affiliated Employers shall be aggregated.

Notwithstanding the foregoing, the minimum amount of a loan shall be One Thousand Dollars ($1,000) and the maximum amount of a loan shall not exceed the value of the Participant’s Non-Stock Subaccounts on the date the loan is made.

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Section 8.02. Terms and Conditions. The loan program described in this Article shall be administered by the Administrator. All loans under Section 8.01 shall comply with the following terms and conditions and the terms and conditions of any applicable loan procedures:

(a) All loans shall be subject to the approval of the Administrator.

(b) A Party in Interest may apply for a loan by completing the Applicable Forms; provided, however a Party in Interest may only request one (1) loan in each twelve (12) month period. Notwithstanding the preceding provisions, the Administrator may, on a nondiscriminatory basis, permit more than one (1) loan during a twelve (12) month period or permit refinancing of a loan if such loan would otherwise prevent the Party in Interest from receiving a hardship distribution during such period.

(c) The Party in Interest receiving the loan shall make the required repayments in accordance with the loan agreement.

(d) Rates of interest shall be determined by the Administrator in accordance with ERISA.

(e) Each loan shall be adequately secured. The Plan shall have a security interest in the Accounts of the Party in Interest; provided however, such security interest of the Plan shall not exceed fifty percent (50%) of the value of such Accounts at the inception of the loan, or from time to time thereafter, whichever is greater.

(f) Each loan shall be amortized on a substantially level basis over a period not to exceed five (5) years (ten (10) years in the event the loan is for the purchase or construction of the Party in Interest’s principal residence) with payments not less frequently than quarterly. The term of the loan shall not extend beyond the earliest of (i) in the case of a distribution that begins after the date of the loan, the date such distribution of the Accounts under Article VII begins;

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provided, however, a withdrawal for reason of financial hardship pursuant to Section 7.05 shall not be taken into account under this Subsection unless the amount withdrawn from the Accounts of the Party in Interest affects the security of the loan, (ii) the date of distribution or separation of the Accounts pursuant to a Qualified Domestic Relations Order of any portion of the Accounts if the amount distributed or separated from the Accounts of the Party in Interest pursuant to such offer affects the security of the loan, or (iii) the date of a default on the loan.

(g) Notwithstanding Subsection (f), loan repayments may be suspended for a period, not longer than one (1) year, that the Party in Interest is on an Employer-approved leave of absence, whether without pay from an Affiliated Employer or at a rate of pay (after income and employment tax withholding) that is less than the amount of the loan repayments required under the term of the loan; provided, however, the loan must be repaid in full not later than five (5) years (ten (10) years in the event the loan is for purchase or construction of the Party in Interest’s principal residence) after the date of the loan. Loan repayments due after the leave ends (or if earlier, after the first year of the leave) shall be reamortized on a substantially level basis with payments not less frequently than quarterly.

(h) Notwithstanding Subsection (f) and Subsection (g), if a Party in Interest Terminates Employment or takes a leave of absence from an Affiliated Employer because of a period of service in the Uniformed Services of the United States and does not receive a distribution of his Vested Accounts, the Plan shall suspend loan payments as permitted under Code Section 414(u)(4) and USERRA. If a Party in Interest has an outstanding loan(s) during a period of service in the Uniformed Services of the United States, (i) loan payments shall be suspended during such period, (ii) interest shall accrue on the loan during such period at a rate equal to the lesser of six percent (6%) as provided under the Servicemembers Civil Relief Act of

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2003 or the rate of interest determined at the inception of the loan pursuant to Subsection (d), (iii) the time for repayment of such loan(s) shall be extended for a period of time equal to the period of service in the Uniformed Services of the United States, and if the original term of the loan was less than the maximum term permitted under Subsection (f), the time for repayment may be extended for a period of time equal to the maximum term permitted under Subsection (f) plus the period of Uniformed Services of the United States, (iv) loan payments shall resume upon the completion of such period of Uniformed Services of the United States, and (v) the frequency and amount of the periodic installments following the period of Uniformed Services of the United States shall not be less than the frequency and amount of the periodic installments required under the terms of the original loan.

(i) A default on the loan shall occur thirty (30) days after the occurrence of either of the following conditions: (i) the Party in Interest fails to make a payment, or (ii) the Administrator in good faith deems the Plan insecure with respect to the repayment of the loan and notifies the Party in Interest of this deemed insecurity. Except as provided below, notwithstanding the foregoing sentence, the Administrator may allow the Party in Interest to cure the defaulted loan, in which case the Party in Interest may pay the amount due plus accrued interest not later than the last day of the calendar quarter following the calendar quarter in which the Party in Interest failed to make the payment.

(j) Notwithstanding the preceding Subsection, any Party in Interest who has Retired or Terminated Employment or any Beneficiary of a deceased Party in Interest must pay off the outstanding balance on any outstanding loan, determined at the time of such Retirement, Termination of Employment, or Party in Interest’s death, as applicable, within ninety (90) days of the Retirement, Termination of Employment or death, or the loan shall be deemed to be a distribution to the Party in Interest or his Beneficiary.

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(k) If the Party in Interest (or Beneficiary of a deceased Party in Interest) is in default, the Dividend Account, the Rollover/Transfer Account, the Savings Account, the Regular Account and the Matching Account of the Party in Interest may in the discretion of the Administrator be applied against the outstanding loan to the extent necessary to fully repay the same. In the event the loan remains outstanding after application of the Accounts in the preceding sentence, the Pre-Tax Contribution Account and Nonelective Contribution Account of the Party in Interest may in the discretion of the Administrator be applied against the outstanding loan provided that the Party in Interest (i) is age fifty-nine and one-half (59-1/2), (ii) is deceased, (iii) is Disabled, or (iv) has Terminated Employment. If a Party in Interest defaults on a loan and the loan is not repaid, such as by an offset of the Party in Interest’s Accounts, then (i) the loan shall remain outstanding, (ii) the amount available for any subsequent loan requested by the Party in Interest shall be reduced by the amount of the outstanding loan, and (iii) any subsequent loan shall be included in the Party in Interest’s taxable income for the year the subsequent loan is taken unless the Party in Interest agrees to repay the loan through payroll deductions under a legally enforceable arrangement or adequate security is given for the loan in addition to the Party in Interest’s Account balance.

(l) No distributions to a Party in Interest (or a Beneficiary of a deceased Party in Interest) shall be made prior to repayment of all outstanding loans, except as provided in Subsection (k). A default is a distributable event, to the extent permitted by the Code.

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(m) The Party in Interest (or a Beneficiary of a deceased Party in Interest) may repay at any time, in a form acceptable to the Administrator and without penalty, the entire outstanding principal balance of the loan and accrued interest to date of repayment.

Section 8.03. Loan Procedures.

(a) The Administrator shall approve any loan application that satisfies the requirements set forth in this Article. Denial of a loan shall be made in accordance with the claims procedure of the Plan.

(b) Any loan to a Party in Interest shall be considered to be a separate asset of the Trust Fund segregated for the benefit of such Party in Interest. The interest paid on the loan shall be credited to the Account or Accounts of the Party in Interest, and such portion of the Account or Accounts segregated shall not share in the allocation of gains or losses, pursuant to Article VI. The principal and interest paid on the loan shall be credited to the Account or Accounts and such Fund or Funds as determined by the Administrator. The loan proceeds shall come from such Account or Accounts and from such Fund or Funds of the Party in Interest as determined by the Administrator.

(c) The Administrator may establish and charge a processing fee with respect to any loan.

ARTICLE IX.

BORROWING BY PLAN

Section 9.01. Borrowing by the Plan.

(a) (a) Subject to the requirements of this Article, the Trustee may enter into an Acquisition Loan to acquire Employer Stock on such terms and conditions as the Trustee deems reasonable and appropriate.

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(b) If the Acquisition Loan under Subsection (a) above would be a prohibited transaction under Code Section 4975(c) except for the exemption under Code Section 4975(d)(3), such Acquisition Loan may only be entered into if it is primarily for the benefit of the Participants and their Beneficiaries and the Trustee has determined that the following conditions are satisfied:

(1) At the time the Acquisition Loan is made, the interest rate for the Acquisition Loan and the price of the Employer Stock to be acquired with the Acquisition Loan proceeds are not such that the Plan assets shall be drained off. In determining if this condition is satisfied, the Trustee shall make its determination based on the projected net effect of the Acquisition Loan on the Plan for the duration of the loan.

(2) At the time the Acquisition Loan is made the terms of the Acquisition Loan are at least as favorable to the Plan as the terms of a comparable loan resulting from arm’s length negotiations between independent parties.

(3) The interest rate of the Acquisition Loan shall not be in excess of a reasonable rate of interest, taking into account the amount and duration of the Acquisition Loan, the security and guarantee (if any) involved, and the interest rates prevailing on comparable loans.

(4) The Acquisition Loan shall be for a specific period and shall not be payable at the demand of any person except in the case of default.

(5) The proceeds of the Acquisition Loan shall be used within a reasonable time after their receipt by the Plan only for any or all of the following purposes:

(A) to acquire Employer Stock, provided such Employer Stock is a qualifying employer security within the meaning of Code Section 409(l), which is readily tradable on an established national securities market;

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(B) to repay such Acquisition Loan; or

(C) to repay a prior Acquisition Loan made pursuant to this Article.

(6) Except as otherwise required by applicable law, no Employer Stock acquired with the proceeds of such Acquisition Loan shall be subject to a put, call, or other option, or buy-sell or similar arrangement while held by and when distributed from the Plan, whether or not the Plan is then an employee stock ownership plan. All Leveraged Shares acquired by the Trust with the proceeds of an Acquisition Loan shall be credited to an Employer Stock Collateral Account (whether or not used as collateral for the Acquisition Loan). Leveraged Shares shall be withdrawn from the Employer Stock Collateral Account each Plan Year pursuant to the provisions of Subsection 4.04(c) and Paragraph (11) as though all securities in the Employer Stock Collateral Account were encumbered.

(7) Such Acquisition Loan shall be without recourse against the Plan and the only assets of the Plan that shall be given as collateral on the Acquisition Loan are Leveraged Shares acquired with the proceeds of such Acquisition Loan or Employer Stock that was used as collateral on a prior Acquisition Loan pursuant to this Article that was repaid with the proceeds of the current Acquisition Loan.

(8) No person entitled to payment under the Acquisition Loan shall have any right to any assets of the Plan other than:

(A) collateral given for the Acquisition Loan;

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(B) Contributions (other than Contributions of Employer Stock) that are made under the Plan to meet its obligations under the Acquisition Loan; and

(C) earnings attributable to such collateral and the investment of such Contributions.

(9) Payments of principal and interest on an Acquisition Loan shall be made by the Trustee (as directed by the Administrator) from (i) Contributions by the Employer to the Trust and the earnings on those Contributions; (ii) dividends on the Employer Stock; (iii) Leveraged Shares held as collateral for an Acquisition Loan and earnings attributable to those Leveraged Shares; and (iv) the proceeds of a subsequent Acquisition Loan made to repay a prior Acquisition Loan. The payments made with respect to the Acquisition Loan by the Plan during a Plan Year shall not exceed an amount equal to the sum of such Contributions by the Employers and earnings received during or prior to the Plan Year less such payments in prior years.

(10) Contributions that are made under the Plan to meet the obligations under the Acquisition Loan and earnings thereon shall be accounted for separately on the books of account of the Plan until the Acquisition Loan is repaid.

(11) The Acquisition Loan shall provide for the release from encumbrance of Employer Stock used as collateral for the Acquisition Loan as follows: for each Plan Year during the duration of the Acquisition Loan, the number of shares of Employer Stock released must equal the number of encumbered shares of Employer Stock held immediately before the release for the current Plan Year multiplied by a fraction, the numerator of which is the amount of principal and interest paid for the year and the denominator of which is the sum of the numerator plus the principal and interest to be

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paid for all future Plan Years. If the interest rate under the loan is variable, the interest to be paid in future years must be computed using the interest rate applicable as of the end of the Plan Year. Any Employer Stock released from such encumbrance, shall be allocated to the Accounts of Participants pursuant to Section 4.04.

(12) In the event of default under the Acquisition Loan, the value of Plan assets transferred in satisfaction of the Acquisition Loan shall not exceed the amount of default. Further, if the lender is a disqualified person under Code Section 4975 or a Party in Interest, the Acquisition Loan shall provide for a transfer of Plan assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of the Acquisition Loan.

(c) Any Employer Stock acquired with the proceeds of an Acquisition Loan subject to this Article shall not be part of the Trust Fund nor allocated to the Accounts of Participants until released from encumbrance under Paragraph (b)(11) above and allocated to the Regular Accounts of Participants under Section 4.04 and credited to the Trust Fund. Such Employer Stock shall nevertheless be held in trust as a part of the assets of the Plan.

Section 9.02. Restrictions on Loans.

(a) Employer Stock allocated to a Tax Credit Account shall not be used as collateral for, or to satisfy, an Acquisition Loan made to the Plan.

(b) Notwithstanding anything in the Plan or any other agreement to which the Plan may be bound, the Trustee, on behalf of the Plan, may not enter into an Acquisition Loan made by a Party in Interest or disqualified person or an Acquisition Loan that is guaranteed by a Party in Interest or disqualified person, unless all the terms, conditions, and requirements of any regulations or rulings of the United States Department of Labor or the Internal Revenue Service have been satisfied or for which provision has otherwise been made.

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ARTICLE X.

VESTING

Section 10.01. Vesting Standards.

(a) A Participant shall be 100% Vested in his Pre-Tax Contribution Account, Nonelective Contribution Account, Savings Account, Tax Credit Account and Rollover/Transfer Account at all times.

(b) A Participant shall be Vested in his Matching Account and Regular Account on and after the earlier of his attaining age sixty-five (65), his Disability Retirement Date, Early Retirement Date, or his date of death.

(c) A Participant shall be Vested in his Matching Account and Regular Account in the following percentages as of the completion of the following Years of Service:

Number of Years of Service	Vested Percentage
Less than 2	0%
2	20%
3	40%
4	60%
5	80%
6 or more	100%

(d) A Plan amendment changing any Vesting schedule under the Plan shall not affect the Vested portion of a Participant’s Accounts (determined as of the day immediately preceding the later of the day such amendment is adopted, or the day such amendment becomes effective). Each Participant having not fewer than three (3) Years of Service shall be permitted to elect on an Applicable Form, within a reasonable period after the adoption of such amendment, to have

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his Vested Accounts computed under the Plan without regard to such amendment. The reasonable period shall end no earlier than the latest of the following dates (i) the date that is sixty (60) days after the day the amendment is adopted, (ii) the date that is sixty (60) days after the day the amendment becomes effective, or (iii) the date that is sixty (60) days after the day the Participant is issued written notice of the amendment by the Employer or Administrator.

Section 10.02. Forfeitures.

(a) Except as otherwise provided in Subsection (b), the non-Vested Accounts of a Participant shall be forfeited at the time he incurs five (5) consecutive Breaks in Service with any such forfeiture coming first from the Non-Stock Subaccounts of such Participant.

(b) Upon distribution of the entire Vested Accounts of a Participant before the end of the second Plan Year following the Plan Year in which the Participant Terminates Employment, his non-Vested Accounts shall be forfeited. If at the time a Participant Terminates Employment, his Accounts are entirely non-Vested, he shall be deemed to have received a distribution of his Vested Accounts upon Termination of Employment, and his non-Vested Accounts shall be forfeited.

(c) Such forfeited amounts shall be held in a “Forfeited Suspense Account”. Forfeitures attributable to Matching Contributions, Regular Contributions and Nonelective Contributions shall be used to reduce Employer contributions under Section 4.03, Subsection 4.04(a) or Subsection 4.04(b), respectively, in the discretion of the Employer, as of the earliest possible Allocation Date.

Section 10.03. Reinstatement. If a former Participant whose non-Vested Accounts are forfeited pursuant to Section 10.02 is reemployed by the Employer, the forfeited amounts shall be restored; provided, however, if the Participant received a distribution described in the first

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sentence of Subsection 10.02(b), he must repay to the Trust the full amount distributed to him before the earlier of five (5) years from his date of reemployment or the date on which he incurs five (5) consecutive Breaks in Service after the date of the distribution before such restoration occurs. Such restoration shall be made from the “Forfeited Suspense Account” under Section 10.02 or from additional Employer payments. This additional contribution shall not constitute an annual addition under Code Section 415. The restored amount will become Vested in accordance with Section 10.01 provided the reemployed Participant continues in the employ of an Affiliated Employer until such date.

ARTICLE XI.

ADMINISTRATION OF THE PLAN

Section 11.01. Administrator.

(a) The Plan shall be administered by a Benefits Committee of at least three (3) persons appointed by the President of the Company and serving at the pleasure of the President of the Company. The Benefits Committee shall act by a majority of its membership. The action of the majority may be expressed by a vote at a meeting, or in writing without a meeting. The Benefits Committee shall be the Administrator of the Plan within the meaning of ERISA. Each member of the Benefits Committee shall hold office until removed by the President of the Company, which removal may be without cause and without advance notice. The Administrator shall have the authority to control and manage the operation and administration of the Plan and shall be the named fiduciary of the Plan. The Administrator is authorized to accept service of legal process.

(b) The Administrator shall have such power and authority (including discretion with respect to the exercise of that power and authority) as may be necessary, advisable, desirable, or convenient to enable the Administrator to carry out its duties under the Plan. By way of illustration and not limitation, the Administrator is empowered and authorized:

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(1) to make rules and regulations in respect of the Plan not inconsistent with the Plan, the Code, or ERISA and to amend or rescind such rules and regulations;

(2) to determine, consistently therewith, all questions of law or fact that may arise as to the eligibility, benefits, status, and rights of any person claiming benefits or rights under the Plan, including without limitation, Participants, former Participants, surviving Spouses of Participants, Beneficiaries, Employees and former Employees;

(3) to direct the Trustee to make payments from the Trust Fund to Participants, their Beneficiaries, and other persons as the Administrator may determine, and

(4) subject to and consistent with the Code and ERISA, to construe and interpret the Plan and to correct any defects, supply any omissions, or reconcile any inconsistencies in the Plan.

Benefits under this Plan shall be paid only if the Administrator, in its sole discretion, decides the applicant for the benefits is entitled to the benefits.

(c) Any action by the Administrator, which is not found to be an abuse of discretion, shall be final, conclusive, and binding on all individuals affected thereby. The Administrator may take any such action in such manner and to such extent as the Administrator in its sole discretion may deem expedient and the Administrator shall be the sole and final judge of such expediency.

(d) The Administrator shall not take any action with respect to any of the benefits provided hereunder or act otherwise in pursuance of the powers conferred herein upon the

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Administrator that would be discriminatory in favor of Participants who are Highly Compensated Employees or that would result (i) in benefiting one (1) Participant or group of Participants at the expense of another, (ii) in discrimination as between Participants similarly situated, or (iii) in the application of different rules to a substantially similar set of facts.

Section 11.02. Claims Procedure. Any person who believes that he is entitled to any benefits under the Plan shall present such claim in writing to the Administrator. The Administrator shall, within sixty (60) days after receipt of the claim, provide adequate notice in writing to any claimant as to its decision on any such claim, unless special circumstances require an extension of time to process the claim. Written notice of any extension shall be furnished to the claimant prior to the termination of the initial sixty (60) day period specifying the circumstances requiring an extension and when a final decision will be reached, which shall be no later than one hundred twenty (120) days after the claim was filed.

(a) If a claim is denied, in whole or in part, the Administrator’s notice shall set forth (i) the specific reasons for such denial; (ii) specific reference to any pertinent provisions of the Plan on which denial is 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; and (iv) an explanation of the review procedure for the Plan. Such notice shall be written in a manner calculated to be understood by the Participant.

(b) Within sixty (60) days after receipt by the claimant of notification of denial, the claimant shall have the right to present a written appeal to the Administrator. If such appeal is not filed within said sixty (60) day period, the decision of the Administrator shall be final and binding. The Administrator shall act as a fiduciary in making a full and fair review of such denial. The claimant or his duly authorized representative may review any Plan documents that are pertinent to the claim and may submit issues and comments to the Administrator in writing.

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(c) A decision by the Administrator shall be made promptly, and in any event not later than sixty (60) days after its receipt of the appeal; provided, however, if the Administrator decides that special circumstances require an extension of time to process any appeal, such as a hearing at which the claimant or his duly authorized representative may be present is necessary and such a hearing is held, such decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after its receipt of the appeal. If the period for reviewing the appeal is extended because of the failure to submit information needed to decide the claim, the sixty (60) day extension period within which the Administrator must make a determination shall be put on hold until the date of which the claimant responds to the request for additional information.

(d) Any such decision of the Administrator shall be in writing and provide adequate notice to the claimant setting forth the specific reasons for any denial, and shall be written in a manner calculated to be understood by a Participant. Any such decision by the Administrator shall be final. All claims procedures shall be governed by the regulations promulgated by the Secretary of Labor.

Section 11.03. Employment of Consultants. The Administrator or a fiduciary named by the Administrator may employ one (1) or more persons to render advice with regard to their respective responsibilities under the Plan.

Section 11.04. Delegation by Administrator. The Administrator may from time to time delegate to an individual, committee, or organization certain of its fiduciary responsibilities under the Plan. Any such individual, committee, or organization shall remain a fiduciary until

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such delegation is revoked by the Administrator, which revocation may be without cause and without advance notice. To the extent permitted under ERISA, such individual, committee, or organization shall have such power and authority with respect to such delegated fiduciary responsibilities as the Administrator has under the Plan. The Administrator shall not be liable for any act or omission of such fiduciary in carrying out such responsibility, except as may be otherwise provided in ERISA.

Section 11.05. Qualified Public Accountant. If required under ERISA, the Administrator shall engage on behalf of all Participants an independent qualified public accountant who is qualified to act as such under ERISA and who shall conduct such an examination of any financial statements of the Plan, and of other books and records of the Plan, as the qualified public accountant may deem necessary to enable him to form an opinion as to whether the financial statements and schedules required to be included in the annual report of the Plan under ERISA are presented fairly in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding Plan Year and who shall perform such other services for the Plan as the Administrator may require.

Section 11.06. Fiduciary Liability. If the Employer, Administrator, Trustee, or any other fiduciary with respect to the Plan acts in accordance with the fiduciary duties of ERISA in (i) relying on a consent or revocation made pursuant to Article VII, or (ii) making a determination under Section 16.02, the consent, revocation or determination shall be treated as valid for purposes of discharging the Plan from liability to the extent of payments made pursuant to such acts.

Section 11.07. Fiduciary Insurance. The Plan may purchase fiduciary liability insurance for any of its fiduciaries, or for itself, to cover liability or losses occurring by reason of the act or omission of a fiduciary, provided that such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation under ERISA by such fiduciary.

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ARTICLE XII.

TRUST

Section 12.01. Trust Funds.

(a) All Contributions under the Plan shall be transferred to the Trust directed by the Administrator to be held, managed, invested, and distributed as part of the appropriate Fund by the Trustee in accordance with the provisions of the Plan and the Trust Agreement. All Trust assets invested in Employer Stock shall be transferred to, and accounted for, solely under the Stock Subaccounts of the Participants, shall constitute the primary assets of the stock bonus plan portion of the Plan, and shall become subject to the requirements of Code Sections 4975(e)(7), 409(e), 409(h), and 409(o), as provided in this restatement of the Plan. All Trust assets not invested in Employer Stock, shall be retained in, and accounted for, solely under the profit sharing plan portion of the Plan. Except as provided in the preceding sentences, the Trustee shall be accountable only for funds actually received by the Trustee, and the Trustee shall have no right or duty (i) to inquire into the amount of Contributions or distributions made by the Company, (ii) to inquire into the methods used in determining the amount of Contributions or distributions, or (iii) to pursue and collect such amounts. All benefits under the Plan shall be distributed solely from the Trust Fund, and the Employer shall have no liability therefore other than the obligation to make Contributions as provided in the Plan.

(b) The Administrator may designate investment funds for the Non-Stock Subaccounts designed with such investment guidelines as the Administrator may specify (“Fund”), and may add additional Funds or eliminate Funds in its sole discretion. Any such

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Funds may invest through the medium of any common, collective, or commingled fund maintained by the Trustee that is invested principally in property of the kind specified for such Fund, and may be in individual assets not part of the Fund. The Administrator or its designee shall establish investment guidelines or policies applicable to each such Fund. A portion of each Fund may be maintained in cash or cash equivalents. Income or losses from investments in each Fund shall be credited or debited to the same Fund.

(c) In the event the Administrator allows Participants to individually direct specific investments under the Plan, a separate directed investment fund shall be established for each Participant who has directed an investment pursuant to Subsection 12.02(b). Transfers between the Trust Funds and the directed investment fund of the Participant shall be charged and credited as the case may be to the appropriate Account. The directed investment fund shall not share in Trust Fund earnings, but it shall be charged or credited as appropriate with the net earnings, gains, losses, and expenses as well as any appreciation or depreciation in market value during each Plan Year attributable to such account.

Section 12.02. Investments.

(a) Except as otherwise provided herein, Participants shall be permitted to direct the Trustee as to the investment of all or a portion of their Accounts. Investment directions of Participants shall be subject to the procedures established and applied in a nondiscriminatory manner, under which Participants shall direct the applicable Trustee on the Applicable Form to invest their Accounts in specific Funds.

(b) As of June 1, 2001, the Administrator permitted Participants in the Biomet, Inc. 401(k) Profit Sharing Plan to direct the investment of all or a portion of their Pre-Tax Contribution Accounts, Nonelective Contribution Accounts and Rollover/Transfer Accounts. As

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of January 1, 2007, the Administrator permitted Participants in the Biomet, Inc. 401(k) Profit Sharing Plan who have completed three (3) or more Years of Service to direct the investment of all or a portion of their Matching Accounts. As of April 1, 2007, the Administrator permits Participants who have completed three (3) or more Years of Service to direct the investment of all or a portion of their Regular Accounts, Savings Accounts and Tax Credit Accounts. Participants shall be permitted to direct the Trustee to invest their Accounts in specific assets including Employer Stock or Employer real property that constitutes a Qualifying Employer Security, and other investments authorized by the Administrator, including self-directed brokerage accounts. Effective April 1, 2007, if a Participant directs the investment of all or any portion of his Non-Stock Subaccounts into Employer Stock, such directed amount shall be transferred to his Stock Subaccounts and shall become subject to the terms of Section 12.04.

(c) The Administrator may appoint one or more Investment Managers to direct the investment and reinvestment of all or a portion of the Trust Funds held in a Fund.

(d) Any loan to a Participant or Beneficiary shall be considered to be a separate asset of the Trust Fund segregated for the benefit of such Participant. The interest and principal paid on the loan shall be credited to the Account or Accounts of such Participant and such Fund or Funds from which the loan proceeds came.

Section 12.03. Transfers Among Investment Funds. (a) Effective as of the Valuation Date following any request of a Participant, (i) Participant Pre-Tax Contribution Accounts, Non-Elective Contribution Accounts, and Rollover Transfer Accounts, (ii) amounts credited to the Matching Accounts of Participants who have completed three Years of Service with respect to Plan Years beginning on or after January 1, 2007, and (iii) amounts credited to the Regular Accounts, Savings Accounts and Tax Credit Accounts of Participants who have completed three

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Years of Service on or after April 1, 2007, may be transferred among designated investment Funds, including Employer Stock, as directed by the Participant. The Administrator shall transfer such Funds as directed as soon as administratively feasible.

(b) Elections with respect to investments in Employer Stock by Participants who are members of the Board of Directors of the Company or who are officers of the Company within the meaning of Securities and Exchange Commission Rule 16a-1(f), will be given effect only if one of the following conditions is met:

(1) if the election is made in connection with the death, Disability, Retirement or Termination of Employment of the Participant; or

(2) the election is required to be made available to the Participant pursuant to the Code; or

(3) if the election involves a transfer of existing Non-Stock Subaccount balances into Stock Subaccounts, it is not made within six (6) months following the most recent election, with respect to any employee benefit plan of the Company, that effected a transaction that was a disposition of Employer Stock; or, if the election involves a transfer of Stock Subaccounts into Non-Stock Subaccounts, it is not made within six (6) months following the most recent election, with respect to any employee benefit plan of the Company, that effected a transaction that was an acquisition of Employer Stock; or

(4) if the election results in the investment of future contributions (e.g., new money) into Employer Stock; or

(5) the election is determined by the Trustee, based upon the advice of counsel to the Company, to be otherwise exempt from Section 16(b) of the Exchange Act of 1934.

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Section 12.04. Investment of Stock Subaccounts.

(a) The Stock Subaccounts of Participants shall be invested primarily in Employer Stock, and any amounts transferred from a Participant’s Non-Stock Subaccount to his Stock Subaccount shall be so invested; provided, however, a Participant may direct that all or any portion of his Stock Subaccounts be invested in or transferred to one (1) or more of the Funds in accordance with Section 12.02 or Section 12.03. Notwithstanding the foregoing, any portion of a Participant’s Account balance that is invested in Employer Stock shall be subject to the provisions of this Plan that apply to Stock Subaccounts, including the provisions of Subsections (b) and (c) below.

(b) Within ninety (90) days after the last day of each Plan Year during the Election Period of the Participant, the Participant shall be permitted to direct the Plan as to the investment of at least twenty-five percent (25%) of the value of his Stock Subaccounts in one (1) or more of the Funds; provided, however, a Participant may direct the Plan as to the investment of at least fifty percent (50%) of the value of his Stock Subaccounts starting with the last Plan Year in the Election Period of the Participant.

(c) A Participant’s direction under Subsection (a) shall specify which, if any, of the investment Funds offered by the Plan, in accordance with Code Section 401(a)(28)(B)(ii)(II) and the regulations thereunder, that the Participant selects. Such direction shall be provided to the Administrator in writing on the Applicable Form and the Plan shall then invest the portion of the Account of the Participant covered by the election in accordance with such direction no later than ninety (90) days after the election is made.

Section 12.05. Investments. Notwithstanding anything in the Plan to the contrary, the Stock Subaccounts which constitute the stock bonus component of the Plan shall be invested

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primarily in Employer Stock, and as otherwise provided in the Trust Agreement. Therefore, there shall be no limitation on the percentage of the assets of the Plan in the Stock Subaccounts that are invested in Employer Stock. The Plan assets in the Non-Stock Subaccounts may also be invested in appropriate investments other than Employer Stock, including cash or readily liquidated investments, in anticipation of the acquisition of Employer Stock, and as otherwise set forth in the Trust Agreement.

Section 12.06. Acquisition and Disposition of Employer Stock. Subject to the following provisions, the Trustee, in its sole discretion, may purchase Employer Stock from, or sell Employer Stock to, any person.

(a) The purchase price paid by the Trust for Employer Stock shall not exceed fair market value (as determined pursuant to Subsection 6.03(b)), and the sale price received by the Trust for Employer Stock shall not be less than fair market value (as determined pursuant to Subsection 6.03(b)).

(b) Except as provided in Article IX, any Employer Stock acquired by the Plan shall be held in the Employer Stock Suspense Account, until allocated pursuant to Section 4.04.

(c) No commission shall be charged to the Plan with respect to a transaction between the Trust and an Interested Party or any other transaction to which ERISA Section 406 or 407 applies.

Section 12.07. Voting of Stock. Except as specifically provided in Subsection (a), the Trustee shall have all voting rights appurtenant to the Employer Stock held in the Trust, and shall vote the shares as determined in the sole discretion of the Trustee.

(a) Each Participant shall have the right to direct the Trustee as to the manner in which the voting rights of Employer Stock (including fractional shares) allocated to the

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Participant’s Stock Subaccounts are to be voted. Each Participant shall be entitled to one (1) vote for each share of Employer Stock allocated to his Stock Subaccounts and a fractional vote based upon any fractional shares allocated to such Stock Subaccounts.

(b) The Trustee shall vote the combined shares and fractional shares of Employer Stock that are allocated to Participants’ Stock Subaccounts, in accordance with the direction of such Participants (the “Directed Shares”). If any Participant fails to direct the Trustee as to the manner in which to vote his allocated Employer Stock, the Trustee shall vote the shares or fractional shares of such Participant’s allocated Employer Stock in the same proportion as the Directed Shares. With respect to any shares of Employer Stock that are held in the Employer Stock Suspense Account or the Employer Stock Collateral Account under the Plan, the Trustee shall vote such shares in the same proportion as the Directed Shares.

(c) The Company shall furnish the Trustee and all Participants entitled to direct voting of any Employer Stock with notices and information statements when voting rights are to be exercised. The time and manner for furnishing such Participants with a notice or information statement must comply with the corporate law of the State of Indiana and the Articles of Incorporation and By-laws of the Company. The content of the information statements must be the same for Participants as for other security holders. The Company’s management may solicit and exercise the voting rights of Participants under any proxy provision applicable to all security holders of the Company.

(d) The Beneficiaries of deceased Participants shall have the same voting rights as Participants.

Section 12.08. ERISA Section 404(c). The Plan is intended to comply with ERISA Section 404(c), and such compliance shall limit the liability of Plan fiduciaries with regard to

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Participant-directed investments. In accordance with the provisions of ERISA Section 404(c), each Participant shall have the right to direct the investment of his Accounts in one (1) or more Funds in accordance with this Article, the Trust Agreement, and any rules promulgated and adopted by the Plan Administrator.

ARTICLE XIII.

AMENDMENT OR TERMINATION OF PLAN

Section 13.01. Amendment or Termination. The Administrator shall have the right, in its sole and final discretion, to amend or terminate this Plan at any time and to any extent that it may deem advisable; provided, however, that no amendment shall retroactively increase the duties or responsibilities of the Trustee without its written consent. A certified copy of the resolution of the Administrator taking such action shall be delivered to the Trustee, and the Plan shall be amended or terminated in the manner and effective as of the date set forth in such resolution, and the Employers, Employees, Participants, Beneficiaries, Trustee, Administrator, and all other persons having any interest under this Plan shall be bound thereby. Provided, however, that no such Administrator action shall operate to recapture for an Employer any contributions or payments previously made to the Plan, nor to adversely affect any benefits otherwise payable to Participants and their Beneficiaries, except to the extent permitted by ERISA and the Code.

Section 13.02. Amendment for Qualification of Plan. It is the intent of the Company that the Plan shall be and remain qualified for tax purposes under the Code. The Administrator shall timely submit the Plan for approval under the Code and all expenses incident thereto shall be borne by the Company. The Administrator may make any modifications, alterations, or amendments to the Plan necessary to obtain and retain approval of the Secretary of the Treasury

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or his delegate as may be necessary to establish and maintain the status of the Plan as qualified and the deductibility for income tax purposes of Employer contributions thereto under the provisions of the Code or other federal legislation, as now in effect or hereafter enacted, and the regulations issued thereunder. Any modification, alteration, or amendment of the Plan, made in accordance with this Section, may be made retroactively, if necessary or appropriate. A certified copy of the resolution of the Administrator making such amendment shall be delivered to the Trustee, and the Plan shall be amended in the manner and effective as of the date set forth in such resolution, and the Employers, Employees, Participants, Beneficiaries, Trustee, Administrator, and all others having any interest under the Plan shall be bound thereby.

Section 13.03. Restrictions on Amendments. Any amendment may be made to the Plan that is not contrary to ERISA or the Code. No amendment may be made to the Plan that violates Code Section 411(d)(6).

Section 13.04. Discontinuance or Suspension of Contributions. An Employer may discontinue completely or suspend temporarily for a definite or indefinite period its contributions under the Plan, or terminate its participation in the Plan, at any time without any liability whatsoever, as contributions by the Employers are completely voluntary and the Employers are under no contractual obligation to continue contributions. Temporary suspension of contributions by an Employer shall not result in any Accounts becoming Vested.

Section 13.05. Allocation of Assets on Termination. In the case of the complete or partial termination of the Plan, as to one (1) or more Employers, including a termination arising from the complete discontinuance of contributions, the Accounts of each affected Participant shall become irrevocably Vested. On such complete or partial termination, the affected portion of the Trust Funds shall be liquidated pursuant to the direction of the Administrator. The Plan

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shall remain in full effect with respect to each Employer, and Participants who are Employees of such Employer, that does not terminate its participation in the Plan on behalf of its Employees; provided, however, that the termination of participation by less than all of the Employers shall not affect the Plan as it applies to Participants who are not, at the time of termination, Employees of a terminating Employer.

ARTICLE XIV.

ENTRY AND WITHDRAWAL OF EMPLOYERS

Section 14.01. Entry of Employers. Any organization classified by the Administrator as an Employer may become a party to the Plan as of the first day of any Plan Year, or such other date specified by the Administrator, by delivering to the Administrator an appropriate resolution by the board of directors or other governing body of such organization. With the consent of the Administrator, such organization shall become an Employer hereunder, as of the specified date, and shall be subject to the terms and provisions of the Plan as then in effect and thereafter amended, including such credit for Years of Service as established by the Administrator.

Section 14.02. Withdrawal from Plan. Any Employer may withdraw from the Plan under the following conditions:

(a) Any Employer hereunder which elects to withdraw from the Plan shall deliver to the Administrator a resolution of its board of directors or other governing body authorizing its withdrawal as an Employer hereunder. Notice of withdrawal must be submitted to the Administrator at least thirty (30) days prior to the date withdrawal is to be effective, unless such requirement is waived by the Administrator.

(b) If the withdrawal of an Employer is a part of the complete termination and dissolution of the business of said Employer or the discontinuance of the Plan without

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termination of its business and without the immediate establishment of a new qualified plan under the Code, the provisions of Article XIII hereof shall apply to the withdrawal of such Employer as if the withdrawal were a part of the complete termination of this Plan, but without affecting the participation of other Employers hereunder.

(c) If the withdrawal of any Employer hereunder is the result of the establishment of a new and different retirement plan for its employees that will immediately upon withdrawal of said Employer from the Plan cover employees of such Employer who are Participants under the Plan, upon receiving evidence of the terms of such new plan, the Trustee shall establish the interest of said Employer in the value of the Trust Fund, as approved by the Administrator, and, after reduction for charges and expenses incurred to process withdrawal of the Employer, shall transfer such amount from the Trust Fund to the trustee or trustees of such new Plan. Provided, however, the Administrator in its sole discretion, shall have the right to require the Trustee to transfer the withdrawal value of said Employer to the trustee or trustees of the new plan in the form of installments, in cash or in cash and securities over a period of time not to exceed one (1) year following the effective date of the withdrawal of said Employer. The application of the interest of the withdrawing Employer in the Trust Fund pursuant to the terms of this Article shall constitute a complete discharge of the Trustee, Administrator, Board of Directors, and any other Employers without any responsibility on their part to see to the application or disposition thereof.

ARTICLE XV.

TOP-HEAVY PROVISIONS

Section 15.01. Definitions. For purposes of this Article, the following definitions shall apply:

(a) “Aggregation Group” means each qualified plan of the Employers (including any terminated plan if it was maintained at any time during the last one (1) year period ending on the Determination Date) in which at least one (1) Key Employee participates in the Plan Year containing the Determination Date or any of the four (4) preceding Plan Years and each other qualified plan of the Employers that, during such period, enables any plan in which a Key Employee participates to meet the requirements of Code Sections 401(a)(4) or 410. “Aggregation Group” also includes each other qualified plan of the Employers designated by the Employers as part of such group, if such group, taking into account such plan, would continue to meet the requirements of Code Sections 401(a)(4) and 410.

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(b) “Compensation” means compensation within the meaning of Code Section 414(q)(4) which, in general, has the same meaning given such term by Subsection 5.06(d)

(c) “Determination Date” means, for any Plan Year, the last day of the preceding Plan Year.

(d) “Key Employee” means any Employee or former Employee, and the Beneficiaries of such Employee, who at any time during the Plan Year that includes the Determination Date was:

(1) an officer of an Employer having annual Compensation greater than One Hundred Thirty Thousand Dollars ($130,000) (as adjusted under Code Section 416(i)(l));

(2) a five percent (5%) owner of an Employer; or

(3) a one percent (1%) owner of an Employer with annual Compensation of more than One Hundred Fifty Thousand Dollars ($150,000).

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The status of an Employee as a Key Employee shall be determined with reference to the Plan Year containing the Determination Date, and shall be determined in accordance with Code Section 416(i)(1) and the regulations thereunder.

(e) “Non-Key Employee” means any Employee or former employee, and the Beneficiaries of such Employee, who is not a Key Employee.

(f) “Top-Heavy Plan” means, for any Plan Year, the Plan if the “top-heavy ratio” for the Aggregation Group as of the Determination Date exceeds sixty percent (60%). The top-heavy ratio is a fraction, the numerator of which is the present value of the cumulative accrued benefits as of the Top-Heavy Allocation Date under the defined benefit plans for all Key Employees plus the sum of account balances as of the Determination Date under the defined contribution plans for all Key Employees, and the denominator of which is the present value of the cumulative accrued benefits as of the Top-Heavy Allocation Date under the defined benefit plans plus the sum of account balances as of the Determination Date under the defined contribution plans for all Participants, including Key Employees, former Participants, and the Beneficiaries of such Participants. Provided, however, in the calculation of the top-heavy ratio (i) if any Participant has not performed any services for an Employer at any time during the one (1) year period ending on the Determination Date, the cumulative accrued benefit and the value of the accounts of such Participant shall not be taken into account; (ii) the value of account balances and cumulative accrued benefits of a Participant who is a Non-Key Employee but who was a Key Employee in a prior year shall be disregarded; (iii) the value of account balances and cumulative accrued benefits for the Aggregation Group shall be calculated with reference to the Determination Date of each plan that falls within the same calendar year; (iv) the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with

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Code Section 416 and the regulations thereunder; and (v) the present value of the cumulative accrued benefits and account balances of a Participant shall be increased by the aggregate distributions made with respect to such Participant during the one (1) year period ending on the Determination Date (five (5) year period ending on the Determination Date in the case of a distribution for a reason other than separation from service, death or disability), including such distributions from terminated plans that, if not terminated, would be required to be included in the Aggregation Group. The accrued benefit of a Participant other than a Key Employee shall be determined under: (i) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employers, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Code Section 411(b)(1)(C).

(g) “Top-Heavy Allocation Date” means, for any Plan Year, the date of the most recent valuation immediately preceding or coincident with the Determination Date for the Plan Year.

(h) “Top-Heavy Year” means any Plan Year in which the Plan is a Top-Heavy Plan.

Section 15.02. Top-Heavy Plan Provisions. If the Plan is a Top-Heavy Plan in any one (1) or more Plan Years, and notwithstanding Article V, in each Top-Heavy Year the following provisions shall apply:

(a) The minimum allocation to the Accounts for each Participant who is a Non-Key Employee and who is an Employee on the last day of the Plan Year shall equal a percentage of the Participant’s Compensation for the Top-Heavy Year equal to the lesser of (i) three percent (3%) or (ii) the percentage of Compensation for the Top-Heavy Year allocated to the Accounts of the Key Employee with the highest percentage allocation for the Top-Heavy Year; provided,

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however, the minimum allocation may not be less than three percent (3%) if the Plan is required to be included in an Aggregation Group and the Plan enables a defined benefit plan required to be included in such group to meet the requirements of Code Section 401(a)(4) or 410. The minimum allocation to the Accounts of a Non-Key Employee shall include all amounts allocated to the Accounts of such Employee for the Top-Heavy Year pursuant to Article IV; provided, however, that Catch-Up Contributions shall not be counted for this purpose. The preceding sentence shall apply with respect to Matching Contributions under the Plan or, if the Plan provides that the minimum allocation requirement shall be met in another plan, such other plan. Employer Matching Contributions that are used to satisfy the minimum allocation requirements shall be treated as Matching Contributions for purposes of the Average Contribution Percentage test under Section 5.05 and other requirements of Code Section 401(m). In determining the highest percentage allocation for any Key Employee for the Top-Heavy Year, all amounts allocated to the Accounts of the Key Employee for the Top-Heavy Year pursuant to Article IV are taken into account. Those Non-Key Employees who are Participants in the Plan and have not Terminated Employment by the end of the Plan Year shall receive the minimum allocation regardless of whether the Non-Key Employee has completed fewer than one thousand (1,000) Hours of Service during the Plan Year, and regardless of the level of Compensation of the Non-Key Employee.

(b) Notwithstanding Subsection (a), if an Employer maintains another Top-Heavy Plan that is a defined contribution plan, and the other plan satisfies Subsection (a) with respect to a Participant who is a Non-Key Employee in both plans, then Subsection (a) shall not apply to this Plan with respect to such Participant.

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(c) Notwithstanding Subsection (a), if an Employer maintains another Top-Heavy Plan that is a defined benefit plan, then either (i) this other plan must satisfy the defined benefit minimum provisions of Code Section 416(c)(1) with respect to a Participant who is a Non-Key Employee in both plans, or (ii) this Plan must provide a minimum allocation for such Participant (determined under the rules of Subsection (a)) equal to five percent (5%) of the Participant’s Compensation for the Top-Heavy Year.

ARTICLE XVI.

NONALIENATION OF BENEFITS AND DOMESTIC RELATIONS ORDERS

Section 16.01. Nonalienation of Benefits.

(a) Except as provided in Subsection (b), no benefit under the Plan, prior to actual receipt thereof by a Participant or a Beneficiary, shall be subject to any debt, liability, contract, engagement, or tort of any Participant or his Beneficiary, nor subject to anticipation, sale, assignment, transfer, encumbrance, pledge, charge, attachment, garnishment, execution, alienation, or other voluntary or involuntary alienation or other legal or equitable process, nor transferable by operation of law.

(b) The benefits of a Participant shall be paid (i) to an Alternate Payee pursuant to the applicable requirements of any Qualified Domestic Relations Order under Code Sections 401(a)(13) and 414(p), and (ii) pursuant to any settlement or judgment to which Code Section 401(a)(13)(C) applies.

(c) Notwithstanding any other provision of the Plan, any benefit payable to a Participant or a Beneficiary of a Participant shall be reduced by any benefit paid or payable pursuant to a Qualified Domestic Relations Order from the benefits of the Participant under the Plan. The Administrator, in its sole discretion, may direct the Trustee to separately account for any benefit payable pursuant to Subsection (b).

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(d) Notwithstanding any other provision of the Plan, the Plan may make a distribution to an Alternate Payee pursuant to a Qualified Domestic Relations Order prior to the date the Participant attains his earliest retirement age, as defined in Code Section 414(p)(4)(B), if the order specifically provides for such distribution.

Section 16.02. Procedures Regarding Domestic Relations Orders.

(a) If the Plan receives any order that may be a Qualified Domestic Relations Order, the Administrator shall:

(1) promptly notify the Participant and any prospective Alternate Payee of (i) the receipt of such order, and (ii) the procedures under the Plan for determining whether such order is a Qualified Domestic Relations Order; and

(2) within a reasonable period after receipt of such order, and in accordance with regulations that the Secretary of Labor may prescribe, determine whether such order is a Qualified Domestic Relations Order and notify the Participant and each Alternate Payee of such decision.

(b) The Administrator shall establish reasonable procedures to determine whether an order is a Qualified Domestic Relations Order and to administer the distribution of benefits with respect to such orders. The procedures shall (i) be in writing, (ii) provide prompt notice of such procedures to each person specified in the order as entitled to the payment of benefits, at the address specified in the order, and (iii) permit an Alternate Payee to designate a representative for receipt of copies of notices that are sent to Alternate Payees with respect to a Qualified Domestic Relations Order.

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(c) During any period of time in which the issue of whether an order is a Qualified Domestic Relations Order is being determined by the Administrator, a court of competent jurisdiction, or otherwise, the Administrator shall provide the Trustee with written direction to separately account under the Trust for the amounts, if any, that would be payable to an Alternate Payee during such period if such order is determined to be a Qualified Domestic Relations Order. If within the eighteen (18) month period beginning on the date on which the first payment would be required to be made under the order, the order, or modification thereof, is determined to be a Qualified Domestic Relations Order, the Administrator shall pay such separately accounted amounts, plus any interest thereon, to the Alternate Payee or Payees entitled thereto. If within the eighteen (18) month period the order is determined to not be a Qualified Domestic Relations Order, or if such issue has not been resolved, the Administrator shall direct the Trustee to pay such separately accounted amounts, plus any interest thereon, to the Participant or Beneficiary entitled to such amounts as if there had been no order. Any determination that an order is a Qualified Domestic Relations Order after the close of the eighteen (18) month period shall have prospective application only. Notwithstanding the preceding provisions, and in accordance with such regulations as the Secretary of the Treasury may prescribe, the Administrator, in its sole discretion, may delay payment of any amounts payable under the Plan to a Participant (i) to the end of said eighteen (18) month period, if an order is found to be defective within said eighteen (18) month period and the Administrator has notice that the parties with respect to the order are attempting to rectify any defects in the order, or (ii) for a reasonable period of time, if the Administrator receives notice that an order that may be a Qualified Domestic Relations Order is being sought with respect to the Participant; provided, however, for these purposes, a court stay to the Administrator during the time an appeal is pending is notice that the parties with respect to

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an order are attempting to cure any defects in an order, and the Administrator shall honor a restraining order prohibiting the disposition of any amounts with respect to a Participant pending resolution of a dispute with respect to an order that may be a Qualified Domestic Relations Order.

(d) The Administrator may establish and charge a processing fee with respect to any Qualified Domestic Relations Order.

Section 16.03. Surviving Spouse. To the extent so provided in any Qualified Domestic Relations Order, the former Spouse of a Participant shall be treated as the surviving Spouse of the Participant under the Plan for purposes of Code Sections 401(a)(11) and 417 and the Spouse of the Participant shall not be treated as a Spouse of the Participant for such purposes.

ARTICLE XVII.

OPTIONS AND RESTRICTIONS ON EMPLOYER STOCK

Section 17.01. Participant Put Option.

(a) If the Employer Stock is not readily tradable on an established market, within the meaning of Code Section 409(h)(1), the provisions of this Section shall apply. A Participant or a Beneficiary shall have the right to require the Company to purchase any Employer Stock distributed to the Participant or the Beneficiary under the Plan (“put option”). The put option shall be exercisable during a fifteen (15) month period that shall begin on the date the Employer Stock is distributed to the Participant or Beneficiary by the Plan. If not exercised during such period, the put option shall lapse. For purposes of this Section, a Participant or a Beneficiary includes donees of such Participant or Beneficiary and a person (including an estate or its distributee) to whom the security passes by reason of the death of such Participant or Beneficiary.

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(b) The put option is exercised by the holder notifying the Administrator and the Trustee in writing that the put option is being exercised. The purchase price at which the put option is exercisable is the fair market value of the Employer Stock as determined under Section 6.03. If the holder of the put option notifies the Administrator in writing that he desires to exercise such put option, the Plan may elect to exercise the rights of the Administrator at the time the put option is exercised.

(c) At the election of the Administrator (or the Plan, if applicable) payment of the purchase price to the holder of the put option may be made in a lump sum, or if otherwise permitted by ERISA, in deferred installments. Any installment payments shall provide for a reasonable rate of interest, and as security for such installment payments, the holder of the put option shall be given a promissory note that provides that it shall become due and payable in full if the purchaser defaults in the payment of such installment payments. The installment payments shall begin within thirty (30) days after the date the put option is exercised and must be substantially equal. The cumulative payments at any time shall be no less than the aggregate of reasonable periodic payments as of such time. Generally, the payment period for such installments may not end more than five (5) years after the date the put option is exercised; provided, however, if otherwise reasonable, such period may be extended to a date no later than the earlier of ten (10) years from the date the put option is exercised or the date the proceeds of the exempt loan used by the Plan to acquire the Employer Stock subject to the put option is entirely repaid.

Section 17.02. Restrictions on Transfer.

(a) In the event the Employer Stock is not readily tradable on an established market at the time an option may be exercised, the Trustee shall have an option, and if the Trustee fails to

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exercise such option in whole or in part, each Employer shall have an option to purchase, as provided in Section 17.03, any or all shares of Employer Stock previously distributed pursuant to Article VI in the event of a “transfer” of any of such shares. The term “transfer” as used herein shall mean and include any sale, assignment, conveyance, gift, bequest, intestate transfer, pledge, foreclosure of a pledge or other encumbrance, levy or other transfer pursuant to a judicial order or legal process, voluntary or involuntary bankruptcy of a shareholder holding such shares, or the appointment of a receiver with respect to the property of such shareholder or any other disposition of any kind or character.

(b) Prior to any voluntary “transfer” or proposed “transfer” or immediately following any involuntary “transfer,” as set forth in Subsection (a) above, the holder of Employer Stock, or any holder of an interest therein, that is the subject of such transfer, shall give notice to the Trustee, the Administrator, and the Secretary of the Company of the transfer or proposed transfer, setting forth all of the terms and conditions of any such transfer or proposed transfer including:

(1) the identification of each transferee or proposed transferee of the Employer Stock;

(2) the number of shares and certificate numbers of Employer Stock that are subject to the transfer or proposed transfer, or owned by a deceased Participant or Beneficiary, as the case may be;

(3) the authority, conditions, and circumstances under which the transferee or proposed transferee obtained or shall obtain any interest in such Employer Stock;

(4) the proposed purchase price, if any, offered by a buyer making a good faith offer to purchase the Employer Stock; and

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(5) all other terms of the transfer or proposed transfer.

(c) The options of the Trustee and the Employers under Subsection (a) above shall arise on the earlier of:

(1) the receipt by the Trustee, the Administrator, and the Secretary of the Company of the notice required under Subsection (b) above; or

(2) the tender of any certificate representing such Employer Stock to the Employer for transfer on the records of the Company.

The Trustee, or if the Trustee fails to exercise its option in whole, each Employer, may exercise its option by giving notice to the holder of such shares of its intention to exercise the option within fourteen (14) days after the date the option arises.

(d) On and after the date of any involuntary transfer of Employer Stock, or the transfer of any such stock in violation of this Section, and until the earlier of (i) the transfer of such shares to the Trustee or an Employer pursuant to the exercise of any option hereunder, or (ii) the lapse of the period for the exercise of any such options with respect to such shares under Subsection (c) above, such shares shall not be voted and any vote of such shares shall be void ab initio, and all distributions with respect to such shares shall be held by the Company or any other person receiving such distribution in trust, to be paid to the transferee of such shares upon the exercise or nonexercise of the options with respect to such shares.

(e) In the event neither the Trustee nor the Employers exercises the option to purchase Employer Stock, provided in Subsection (a) above, and such shares are not otherwise subject to any restriction on transfer, the holder of such shares shall have a right to sell, encumber, transfer or otherwise dispose of such shares on the terms of the transfer set forth in the written notice to the Trustee, the Administrator, and the Secretary of the Company, provided any

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such voluntary transfer is effected within fourteen (14) days after the expiration of the fourteen (14) day option period under Subsection (c) above. If the transfer is not effected within such period, the options under Subsection (a) above shall reapply. If neither the Trustee nor the Employer exercises the option to purchase Employer Stock in the event of an involuntary transfer, the Secretary shall effect the transfer of such shares on its records. In the event of the disposition of the Employer Stock, the transferee of such shares shall take and hold such shares subject to the options provided in this Section.

Section 17.03. Payment of Purchase Price.

(a) The purchase price of the Employer Stock subject to an option under Subsection 17.02(a), and the terms of such purchase, shall be at the fair market value of such stock as provided under Section 11.03 and upon the terms under Subsection (b) below, or if greater, the proposed purchase price and upon such other terms as set forth in the notice required under Subsection 17.02(b).

(b) Purchases by the Trustee or an Employer pursuant to Subsection (a) above may be paid: (i) in a lump sum, (ii) in quarterly installments over a period not to exceed ten (10) years, with interest at six percent (6%), compounded annually, or (iii) in accordance with any payment terms set forth in the written notice referred to in Subsection 17.02(b), at the election of the Trustee or an Employer. Such payment or payments of the purchase price shall be made or commenced as soon as practicable after the date the Trustee or an Employer becomes obligated to purchase the stock. Within thirty (30) days of the date on which the Trustee or an Employer exercises the option, the holder of such shares shall deliver to the Trustee or an Employer the share certificates, duly endorsed or accompanied by all documents necessary to effect a transfer, and accompanied by the payment of any transfer taxes due, and the Trustee or an Employer shall

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pay the shareholder in a lump sum or shall execute a promissory note to the shareholder in the amount of the unpaid price. The purchase price, or any part thereof, may be prepaid at any time without penalty.

Section 17.04. Nonterminable Protections and Rights. The protections and rights provided to Participants under Section 17.01 concerning put options are nonterminable and the Plan shall not be amended to effect a termination of such protections and rights so long as such termination is prohibited by regulations or rulings of the United States Department of Labor or the Internal Revenue Service.

Section 17.05. Restrictions on Loans. Notwithstanding anything in the Plan or any other agreement to which the Plan may be bound, the Trustee, on behalf of the Plan, may not enter into a loan made by a Party in Interest or disqualified person or a loan that is guaranteed by a Party in Interest or disqualified person, unless all the terms, conditions, and requirements of any regulations or rulings of the United States Department of Labor or the Internal Revenue Service have been satisfied or for which provision has otherwise been made.

ARTICLE XVIII.

MISCELLANEOUS PROVISIONS RELATING TO

EMPLOYER STOCK

Section 18.01. Stock Dividends and Rights. The Trustee shall allocate any Employer Stock received as a stock dividend, or stock split, or as the result of a reorganization in the same manner as the Employer Stock to which it is attributable. The Trustee, as directed by the Administrator, shall exercise rights, warrants, or options issued on Employer Stock held in the Plan, to the extent cash is then available. Any such rights, warrants, or options that cannot be exercised due to lack of cash then available shall be sold by the Trustee and the proceeds treated as a cash dividend received on Employer Stock.

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Section 18.02. Endorsement of Stock Certificates. Certificates for Employer Stock registered in the name of the Trustee and certificates for Employer Stock distributed to a Participant or Beneficiary shall have endorsed thereon (if required) an appropriate legend setting forth the restrictions and limitations on the transfer, hypothecation, or sale thereof under the Plan.

Section 18.03. Securities Laws. All transactions provided for herein including but not limited to the issuance of any instrument evidencing a beneficial interest in the Plan and the acquisition of Employer Stock by the Plan, distribution thereof as a benefit, and repurchase or sale thereof by the Plan, are subject to and conditioned upon compliance with any applicable provisions of federal and state securities laws or regulations and with the rules of any stock exchange on which Employer Stock may be listed; and any such transaction also shall be conditioned upon such clearance or approval thereof by such other regulatory bodies as the Administrator may deem advisable.

Section 18.04. Dividends on Company Stock.

(a) Stock dividends paid during a Plan Year on Employer Stock allocated to Participant Stock Subaccounts shall be allocated to such Stock Subaccounts as of the date of payment. Cash dividends on Employer Stock allocated to Participant Stock Subaccounts shall be used as provided in this Subsection. Cash dividends paid on Employer Stock allocated to a Participant’s Stock Subaccount, pursuant to the Participant’s election, shall be either:

(1) paid into the stock bonus plan component of the Plan, and used to purchase shares of Employer Stock to be allocated to the Participant’s Dividend Account; or

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(2) distributed to the Participant, either directly by the Company to the Participant (or, if the Participant is deceased, his Beneficiary), or if paid to the Trustee, by the Trustee to the Participant (or, if a Participant is deceased, his Beneficiary) as soon as administratively feasible after payment to the Trustee but in no case later than ninety (90) days after the end of the Plan Year in which the dividends are paid.

The Participant’s election under this Subsection shall be irrevocable as of the date the cash dividend is paid or such earlier date as designated by the Administrator or its designee; provided however, that a Participant may change his election with regard to any future cash dividend at least annually. If a Participant does not make an election under this Subsection, the Participant shall be deemed to have elected that such cash dividend shall be paid into the stock bonus plan component of the Plan and used to purchase additional shares of Employer Stock pursuant to Paragraph (1). All cash dividends paid on Company Stock and allocated to Participants’ Dividend Accounts under this Subsection shall be immediately one hundred percent (100%) Vested.

(b) If an Acquisition Loan is outstanding, cash dividends on unallocated shares of Employer Stock purchased with the proceeds of the Acquisition Loan shall be used to meet the obligations of such Acquisition Loan through which the purchase of the shares was financed.

ARTICLE XIX.

MISCELLANEOUS

Section 19.01. Non-Diversion. The assets of the Plan shall never inure to the benefit of an Employer and shall be held for the exclusive purposes of providing benefits to Participants in the Plan and their Beneficiaries and defraying reasonable expenses of administering the Plan, except as follows:

(a) If a contribution is made by an Employer under a mistake of fact, such contribution shall be returned to the Employer, upon demand, within one (1) year after the payment of the contribution and shall be reduced for any loss incurred but unadjusted for any gains earned during the time the mistaken contribution was part of the Trust.

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(b) Contributions by an Employer are conditioned on the deductibility of the contribution under the Code. To the extent the deduction is disallowed, such contributions to the extent disallowed shall be returned to the Employer, upon demand, within one (1) year after the disallowance of such deduction. Any amount not returned to the Employer shall be deductible in subsequent taxable periods as provided in the Code.

Section 19.02. Military Service.

Notwithstanding any other provision in the Plan to the contrary, any Participant who is entitled to the rights, protections, and privileges afforded by USERRA and is reemployed with an Affiliated Employer as provided in USERRA, shall, to the extent required by USERRA, (i) receive credit for the period served in the military for purposes of Vesting and benefit accrual under the terms of the Plan, (ii) be entitled to receive any Employer Contributions the Participant failed to receive as a result of his or her military service as required by USERRA, and (iii) be entitled to make-up any contributions the Participant missed as a result of his or her military service, to the extent required by USERRA and permitted under the Code. However, any make-up Contributions shall not exceed the amount the Participant would have been permitted to contribute to the Plan had the Participant remained continuously employed by the Employer throughout the period of his or her military service. Any make-up Contributions to the Plan described in this Section shall be made during the period beginning with the date of reemployment and ending on the date that occurs on the earlier of (i) three (3) times the period of the Participant’s military service, or (ii) five (5) years.

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Section 19.03. Merger, Consolidation of Plans, or Transfer of Plan Assets. In the case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan, each Participant in the Plan shall be entitled to a benefit (as if the Plan had been terminated) immediately after the merger, consolidation, or transfer that is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (as if the Plan had been terminated). The Plan shall comply with the requirements of Code Sections 401(a)(11)(A) and 417, and the regulations issued thereunder, with respect to a Participant’s benefits, if for that Participant, the Plan is a direct or indirect transferee of benefits held on or after January 1, 1985, by a defined benefit plan or a defined contribution plan subject to those laws. If the Plan provides for a separate accounting with respect to any such transferred benefits, the Plan may apply these requirements only to the separate account attributable to the transferred benefits.

Section 19.04. Allocation of Fiduciary Responsibilities. To the extent permitted under ERISA, each fiduciary under the Plan shall be responsible only for the specific duties assigned under the Plan and shall not be directly or indirectly responsible for the duties assigned to another fiduciary. Any person or a group of persons may serve in more than one (1) fiduciary capacity with respect to the Plan.

Section 19.05. Limitation of Rights and Obligations. Neither the establishment nor maintenance of the Plan nor any amendment thereof, nor any act or omission under the Plan or resulting from the operation of the Plan shall be construed:

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(a) as conferring upon any Participant, Beneficiary, or any other person a right or claim against the Trust, the Company, the Employer, the Administrator, or the Trustee, except to the extent that such right or claim shall be specifically expressed and provided in the Plan or provided under ERISA;

(b) as creating any responsibility or liability of the Employer for the validity or effect of the Plan;

(c) as a contract or agreement between the Employer and any Participant or other person;

(d) as being consideration for, or an inducement or condition of, employment of any Participant or other person, or as affecting or restricting in any manner or to any extent whatsoever the rights or obligations of the Employer or any Participant or other person to continue or terminate the employment relationship at any time; or

(e) as giving any Participant the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any Participant or other person at any time.

Section 19.06. Notice. Any notice given under this Plan shall be sufficient if given to the Administrator, when addressed to its office, or if given to a Participant, when addressed to the Participant at his or her address as it appears in the records of the Administrator.

Section 19.07. Right of Recovery. If the Company and/or the Trustee makes any payment that according to the terms of the Plan and the benefits provided hereunder should not have been made, the Company and/or the Trustee may recover that incorrect payment, whether or not it was made due to the error of the Company and/or the Trustee, from the person to whom it was made, or from any other appropriate party. If any such incorrect payment is made directly to a Participant, the Company and/or the Trustee may deduct it when making future payments directly to that Participant.

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Section 19.08. Legal Counsel. The Administrator and/or its designee, and the Trustee may from time to time consult with counsel, who may be counsel for the Company, and shall be fully protected in acting upon the advice of such counsel.

Section 19.09. Evidence of Action. Any action by any Employer pursuant to any of the provisions of this Plan shall be evidenced by resolution of its governing body, and the Administrator shall be fully protected in acting in accordance with such resolution so certified to it. All orders, requests and instructions to the Administrator by an Employer or by any duly authorized representative, shall be in writing and the Administrator shall act and shall be fully protected in acting in accordance with such orders, requests and instructions.

Section 19.10. Audit. If an audit of the Plan and Trust is required under ERISA for any Plan Year, the Administrator shall engage an independent qualified public accountant. Such audit shall be conducted in accordance with the requirements of ERISA Section 103.

Section 19.11. Bonding. Each fiduciary of the Plan, unless exempted under ERISA, shall be bonded to the extent required by ERISA. The expense of such bond shall be paid from the assets of the Plan unless paid by the Employer.

Section 19.12. Receipt and Release. Any payments to any Participant or Beneficiary shall, to the extent thereof, be in full satisfaction of the claim of such Participant or Beneficiary being paid thereby and the Trustee or Administrator may condition payment thereof on the delivery by the Participant or Beneficiary of the duly executed receipt and release in such form as may be determined by the Trustee or Administrator.

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Section 19.13. Legal Actions. If the Administrator is made a party to any legal action regarding the Trust or the Plan, except for a breach of fiduciary responsibility of such person or persons, any and all costs and expenses, including reasonable attorneys’ fees, incurred by the Administrator in connection with such proceeding shall be paid from the assets of the Plan unless paid by the Company.

Section 19.14. Reliance. The Administrator shall not incur any liability in acting upon any notice, request, signed letter, telegram, or other paper or document believed by the Administrator to be genuine or to be executed or sent by an authorized person.

Section 19.15. Entire Plan. The Plan document and the documents incorporated by reference herein shall constitute the only legally governing documents for the Plan. All statements made by the Company, Employer, Administrator, or Trustee shall be deemed representations and not warranties. No such statements shall void or reduce coverage under the Plan or be used in defense to a claim unless in writing signed by the Administrator.

Section 19.16. Counterparts. The Plan may be executed in any number of counterparts, each of which shall be deemed to be an original. All the counterparts shall constitute but one (1) and the same instrument and shall be sufficiently evidenced by any one (1) counterpart.

ARTICLE XX.

SPECIAL PROVISIONS RELATING TO

AMOUNTS TRANSFERRED FROM THE

INTERPORE INTERNATIONAL, INC. RETIREMENT SAVINGS PLAN

Section 20.01. General Provisions. Notwithstanding any provision contained herein to the contrary, any amounts held under the Plan which were transferred from the Interpore International, Inc. Retirement Savings Plan on behalf of Participants who were transferred from the Interpore International, Inc. Retirement Savings Plan to the Plan as a result of a merger of the

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Plans on or about January 1, 2006 (hereinafter “Interpore Transferred Employees”), shall be administered to preserve any protected benefits, rights and features associated with such amounts consistent with the provisions of Code Sections 401(a)(12) and 414(l).

Section 20.02. Vesting.

(a) Notwithstanding any provision contained herein to the contrary, any amounts held under the Plan which are transferred from the Interpore International, Inc. Retirement Savings Plan on behalf of Interpore Transferred Employees shall be Vested consistent with the provisions of Code Section 411(a)(10) and as provided in Section 10.01.

(b) Accordingly, any Interpore Transferred Employee shall be Vested in his or her Account balance under the Plan, attributable to both (i) the amounts transferred to the Plan from the Interpore International, Inc. Retirement Savings Plan, and (ii) the amounts accrued under the Plan on and after the date such Interpore Transferred Employee became a Participant in the Plan, in the following percentages based on the years of vesting service completed by the Interpore Transferred Employee as of January 1, 2006, as determined under the elapsed time method set forth in the Interpore International, Inc. Retirement Savings Plan:

Years of Vesting Service	Vested Percentage
Less than 1	0%
1	33%
2	67%
3 or more	100%

(c) Notwithstanding the foregoing, any Interpore Transferred Employee who has not completed at least three (3) years of Vesting Service under the Interpore International, Inc. Retirement Savings Plan as of January 1, 2006, shall continue to be Vested at the percentage determined January 1, 2006 until the Interpore Transferred Employee has completed five (5)

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Years of Service under the Plan. Upon completion of five (5) Years of Service, any Interpore Transferred Employee subject to this Subsection (c) shall become subject to the vesting schedule under Subsection 10.01(c), and such Interpore Transferred Employee’s Vested percentage attributable to both (i) the amounts transferred to the Plan from the Interpore International, Inc. Retirement Savings Plan, and (ii) the amounts accrued under the Plan on and after the date such Interpore Transferred Employee became a Participant in the Plan shall be subject to the vesting schedule set forth under Subsection 10.01(c) of the Plan.

Section 20.03. Distribution of Benefits. The benefits payable under Article VII of the Plan on behalf of Interpore Transferred Employees shall be comprised of the Vested account balance of such Interpore Transferred Employees attributable to both the amounts transferred to the Plan from the Interpore International, Inc. Retirement Savings Plan and the amounts accrued under the Plan on and after the date such Interpore Transferred Employee became a Participant in the Plan. Consistent with the provisions of Treasury Regulation Section 1.411(d)-4 (Q&A-2(e)), effective with respect to distributions to Interpore Transferred Employees that first commence on and after the effective date of this Article XX, the benefits payable under Article VII of the Plan on behalf of Interpore Transferred Employees shall be payable at the time and in the forms of distribution permitted under Article VII of the Plan, and all optional forms of benefit previously available under the Interpore International, Inc. Retirement Savings Plan but not available under Article VII of the Plan, including but not limited to annuities, shall cease to be available under the Plan.

Section 20.04. Transferred Participant Loans. With regard to any participant loans outstanding and attributable to amounts transferred to this Plan on behalf of a Interpore Transferred Employee pursuant to the provisions of this Article, such loans shall continue to be

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administered pursuant to the requirements of Code Section 72(p) and the provisions of Article VIII, to the extent not inconsistent herewith. Provided, however, that the availability of new loans after the date such Interpore Transferred Employee became a Participant in this Plan shall be governed exclusively by Article VIII of this Plan.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGE FOLLOWS.]

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On behalf of the Benefits Committee this restatement of the Plan is executed this              day of                                                          , 2007.

BENEFITS COMMITTEE

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AMENDMENT NUMBER ONE

TO THE

BIOMET 401(k) SAVINGS AND RETIREMENT PLAN

THIS AMENDMENT NUMBER ONE is hereby executed on behalf of Biomet, Inc. (“Company”).

The Biomet 401(k) Savings and Retirement Plan (f/k/a the Biomet, Inc. 401(k) Profit Sharing Plan) (“Plan”) was originally established effective June 1, 1985, was most recently merged with the Biomet, Inc. Employee Stock Bonus Plan and amended, restated and renamed effective as of April 1, 2007. The Administrator, having reserved the right to amend the Plan pursuant to Section 13.01 of the Plan, now desires to amend the Plan to clarify certain plan provisions following the merger with the Stock Bonus Plan.

THEREFORE, the Plan is hereby amended, effective April 1, 2007, as follows:

1. The following sentence shall be added to the end of Subsection 2.01(hhh) of the Plan, regarding the computation of years of service, to be and read as follows:

“Notwithstanding the preceding provisions, for purposes of determining whether a Participant has three (3) or more Years of Service determined under Code Section 401(a)(35) and the participant-directed investment provisions of Sections 12.02 and 12.03, a Year of Service shall be credited to the Participant as of the first day of the month (or such other date designated by the Administrator) following the date on which such Participant first completes one thousand (1,000) Hours of Service during any Vesting Computation Period.”

2. Paragraph 3.01(a)(1) of the Plan, regarding participation, shall be amended to be and read as follows:

“(1) he (A) has completed three (3) full consecutive months of continuous, active employment (i.e., he must be actively employed with the Employer on each day of the three full consecutive months) with the Employer for an Employer and is scheduled to work at least one thousand (1,000) hours per year, or (B) has completed one thousand (1,000) Hours of Service in any Plan Year or in

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any of the overlapping Vesting Computation Periods required by the changes in the Plan Year under Subsection 2.01(rr); and”

3. Subsection 8.02(b) of the Plan, regarding plan loans, shall be amended to be and read as follows:

“(b) A Party in Interest may apply for a loan by completing the Applicable Forms; provided, however a Party in Interest may only request one (1) loan in each twelve (12) month period. Notwithstanding the preceding provisions, the Administrator may, on a nondiscriminatory basis, permit more than one (1) loan during a twelve (12) month period if such loan would otherwise prevent the Party in Interest from receiving a hardship distribution during such period.”

4. A new Section 12.08 of the Plan, regarding tender offers, shall be added to the Plan with the remaining sections to be re-numbered accordingly, to be and read as follows:

“Section 12.08. Tender Offers.

(a) If any person, either alone or in conjunction with others, makes a tender offer, or exchange offer, or otherwise offers to purchase or solicits an offer to sell to such person 1% or more of the outstanding shares of Employer Stock (referred to hereinafter collectively as a “Tender Offer”), the following shall apply:

(1) Each Participant (or Beneficiary in the event a Participant is deceased) may direct the Trustee to sell, offer to sell, exchange or otherwise dispose of the Employer Stock allocated to such Participant’s Account (or Beneficiary’s Account in the event a Participant is deceased) in accordance with the provisions, conditions and terms of the Tender Offer and the provisions of this Section. Such directions shall be in the form and shall be filed in the manner and at such time as the Trustee or the Administrator may prescribe.

(2) The Trustee shall sell, offer to sell, exchange or otherwise dispose of the Employer Stock allocated to the Participant’s Accounts (or Beneficiary’s Account in the event a Participant is deceased) in accordance with the direction of such Participant (or Beneficiary in the event a Participant is deceased) (the “Directed Shares”). The proceeds of a disposition directed by a Participant (or Beneficiary) from his Account shall be allocated to such Participant’s (or Beneficiary’s) Account and be invested as described in Subsection (b) below.

(3) If any Participant (or Beneficiary) fails to validly direct the Trustee to sell, offer to sell, exchange or otherwise dispose of the Employer

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Stock allocated to his Account, he shall be deemed to have directed the Trustee that such shares remain invested in Employer Stock subject to all provisions of the Plan.

(4) In the case of shares of Stock that are held unallocated in the Employer Stock Suspense Account, the Trustee shall tender, sell, offer to sell, exchange or otherwise dispose such of shares in the same proportion in which Participant’s tendered the Directed Shares in relation to all shares of Employer Stock held under the Plan. The proceeds of a disposition of Stock in the Employer Stock Suspense Account shall be held by the Trustee subject to the provisions of the Trust Agreement, the Plan and any applicable loan agreement.

(b) Except as otherwise determined by the Administrator, the proceeds of a disposition of Employer Stock in a Participant’s (or Beneficiary’s) Account pursuant to this Section 12.08 shall be reinvested in the Fund or Funds elected by the Participant (or Beneficiary) for the investment of future contributions to the Plan (excluding Employer Stock) in effect as of the date on which such proceeds are received by the Trust, or, if no such investment election is in effect as of the date on which such proceeds are received by the Trust, in the default investment alternative designated by the Administrator.”

5. In all other respects the Plan shall be and remain unchanged.

This Amendment Number One is executed this              day of             , 2007.

BENEFITS COMMITTEE

Bradley J. Tandy

Darlene Whaley

Daniel P. Florin

EX-10.23

Exihibit 10.23

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, dated as of September 20, 2006, is made by and between Biomet, Inc., an Indiana corporation (the “Company”), and Gregory D. Hartman (the “Executive”).

Recitals

A. The Company considers it essential to the best interests of its shareholders to foster the continuous employment of certain key management personnel, including the Executive who is currently serving as Senior Vice President, Finance, Chief Financial Officer and Treasurer, Biomet, Inc.

B. The Board recognizes that, as is the case with many publicly-held corporations, the possibility of a Change in Control exists and that such a possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of certain key management personnel to the detriment of the Company and its shareholders.

C. The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from, among other things, the possibility of a Change in Control.

D. The parties intend that no amount or benefit will be payable under this Agreement unless both of the following events occur: (i) a Change in Control occurs; and (ii) the Executive’s employment with the Company is terminated as provided in this Agreement.

AGREEMENT

In consideration of the premises and the mutual covenants and agreements set forth below, the Company and the Executive agree as follows:

ARTICLE I

Term of Agreement

Section 1.01 Term. The “Term” of this Agreement is the period commencing on the date hereof and ending on the second anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Term shall be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Board shall give notice to the Executive that the Term not be so extended. Notwithstanding any notice to the Executive that the Term shall not be extended, if a Change in Control occurs prior to the expiration of the Term, then the Term shall be automatically extended so as to expire two years from the date of such Change in Control.

Section 1.02 Post-Change in Control Employment Period. Subject to the terms and conditions of this Agreement, the Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company for the period commencing on the first date on which a Change in Control occurs during the Term and ending on the second anniversary of such date (the “Post-CIC Employment Period”).

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ARTICLE II

Termination of Employment

Section 2.01 Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Term. If the Company determines in good faith that the Disability (pursuant to the definition of Disability set forth below) of the Executive has occurred during the Term, it may give to the Executive written notice in accordance with Article VII of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the thirty days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness, which is determined to be a disability pursuant to the Company’s then existing long term disability plan or, in the absence of such a plan, a disability determined to be total and permanent by a physician selected by the Company and acceptable to the Executive or the Executive’s legal representative.

Section 2.02 Cause. The Company may terminate the Executive’s employment during the Term for Cause.

Section 2.03 Good Reason. The Executive’s employment may be terminated by the Executive for Post-CIC Good Reason.

Section 2.04 Notice of Termination. Any termination by the Company for Cause, or by the Executive for Post-CIC Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Article VII of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Post-CIC Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

Section 2.05 Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Post-CIC Good Reason, the date of receipt of the Notice of Termination or any later date up to six months thereafter specified therein, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination or any later date specified therein within 30 days of such notice and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

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ARTICLE III

Obligations of the Company Upon Termination

Section 3.01 Post-CIC Good Reason; Other Than for Cause or Disability. If, during the Post-CIC Employment Period, the Executive shall terminate employment for Post-CIC Good Reason or the Company shall terminate the Executive’s employment other than for Cause or Disability (entitling the Executive to benefits under the Company’s long-term disability plan, after any applicable waiting period):

(a) The Company shall pay to the Executive in a lump sum in cash on the tenth (10) Business Day following the Date of Termination the aggregate of the following amounts:

(i) the sum of (1) the Executive’s Annual Base Salary (which for this purpose shall include any allowance for perquisites that is paid directly to the Executive) through the end of the fiscal year containing the Date of Termination; (2) an amount equal to (x) the higher of the target bonus amount or the bonus actually paid to the Executive under the Company’s incentive bonus plan (or any comparable successor plan(s)) for the fiscal year of the Company prior to the Date of Termination (or the first date on which a Change in Control occurs, if such date is earlier) or (y) the target bonus amount payable to the Executive under such plan(s) for the fiscal year of the Company which contains the Date of Termination, whichever of (x) or (y) is higher (the “Target Bonus”); (3) the total contributions (other than salary reduction contributions) made by the Company to all qualified retirement plans on behalf of the Executive through the end of the fiscal year containing the Date of Termination; (4) the total car allowance contributions made by the Company to the Executive through the end of the fiscal year containing the Date of Termination; and (5) any accrued vacation or other pay not theretofore paid (the sum of the amounts described in clauses (1), (2), (3), (4) and (5) are herein referred to as the “Accrued Obligations”); and,

(ii) the amount equal to the product of (1) two and (2) the sum of (w) the Executive’s Annual Base Salary (which for this purpose shall include any allowance for perquisites that is paid directly to the Executive) and (x) the higher of (aa) the Target Bonus and (bb) the highest annual incentive bonus earned by Executive during the last two (2) completed fiscal years of the Company immediately preceding Executive’s Date of Termination (annualized in the event Executive was not employed by the Company for the whole of any such fiscal year), with the product of (1) and (2) reduced by the amounts paid, if any, to the Executive pursuant to any other contractual arrangement with the Executive or plan providing coverage to the Executive as a result of such termination; (y) the total contributions (other than salary reduction contributions) made by the Company to all qualified retirement plans on behalf of the Executive for the calendar year immediately preceding the calendar year in which the Change in Control occurs; and (z) the total car allowance contributions made by the Company to the Executive for the calendar year immediately preceding the calendar year in which the Change in Control occurs.

(b) The Company shall provide the following benefit payments to the Executive:

(i) For a 24-month period after the Date of Termination, the Company will arrange to provide the Executive with life insurance benefits and long-term disability benefits substantially similar to those that the Executive was receiving from the Company immediately prior to the Date of Termination (or the first date on which a Change in Control occurs, if such date is earlier). Life insurance benefits and long-term disability benefits otherwise receivable by the Executive pursuant to the preceding sentence will be reduced to the

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extent comparable benefits are actually received by or made available to the Executive by any source other than the Company without greater cost to him than as provided by the Company during the 24-month period following the Executive’s termination of employment (and the Executive will report to the Company any such benefits actually received by or made available to the Executive). If, as of the Date of Termination, the Company reasonably determines that the continued life insurance coverage and/or long-term disability coverage required by this Section 3.01(b) is not available from the Company’s group insurance carrier, cannot be procured from another carrier, and cannot be provided on a self-insured basis without adverse tax consequences to the Executive or his death beneficiary, then, in lieu of continued life insurance coverage and/or long-term disability coverage, the Company will pay the Executive a lump sum payment, in cash, equal to 24 times the full monthly premium payable to the Company’s group insurance carrier for comparable coverage for an executive employee under the Company’s group life insurance plan or long-term disability plan then in effect.

(ii) The Company will offer the Executive and any eligible family members the opportunity to elect to continue medical and dental coverage pursuant to the continuation coverage requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). The Executive will be responsible for paying the required monthly premium for that coverage, but the Company will pay the Executive a lump sum cash stipend equal to 24 times the monthly premium then charged to qualified beneficiaries for full family COBRA continuation coverage under the Company’s medical and dental plans, which the Executive may choose to use for the payment of COBRA premiums. The Company will pay the stipend to the Executive whether or not the Executive or anyone in his family elects COBRA continuation coverage, whether or not the Executive continues COBRA coverage for a full 24 months, and whether or not the Executive receives health coverage from another employer while the Executive is receiving COBRA continuation coverage.

(c) All outstanding Options will become immediately vested and exercisable (to the extent not yet vested and exercisable as of the Date of Termination) and shall remain exercisable until the earlier of (i) the expiration of the option term or (ii) five (5) years after the Date of Termination. To the extent not otherwise provided under the written agreement, if any, evidencing the grant of any restricted Shares to the Executive, all outstanding Shares that have been granted to the Executive subject to restrictions that, as of the Date of Termination, have not yet lapsed will lapse automatically upon the Date of Termination, and the Executive will own those Shares free and clear of all such restrictions.

(d) For 12 months following the Date of Termination the Company shall, at its sole expense, reimburse the Executive for the cost (but not in excess of $25,000 in the aggregate), as incurred, for outplacement services the scope and provider of which shall be selected by the Executive in Executive’s sole discretion.

(e) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any other amounts or benefits required to be paid or provided or which Executive is eligible to receive under any plan, program, policy, practice, contract or agreement of the Company (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

Section 3.02 Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Term and prior to a Change in Control, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement. Anything in this Agreement to the contrary notwithstanding, if the Executive’s death occurs after a Change In Control, then this Section 3.02 shall not apply and the Executive’s estate and/or beneficiaries shall be entitled to the benefits of Section 3.01.

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Section 3.03 Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Term, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash on the twentieth (20th) Business Day following the Date of Termination. The term “Other Benefits” as utilized in this Section 3.03 shall include, without limitation, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Date of Termination (or the date on which a Change in Control occurs, if such date is earlier) or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of the Company and their families.

Section 3.04 Termination in Anticipation of a Change in Control.

(a) An “Anticipatory Termination” occurs if either

(i) (1) the Company terminates the Executive’s employment other than for Cause or Disability prior to the date on which a Change in Control occurs, (2) it is reasonably demonstrated by the Executive that such termination of employment (x) was at the request or instruction of a third party who had taken steps reasonably calculated to effect a Change in Control or (y) otherwise arose within six months of, and was in connection with or in anticipation of, a Change in Control, and (3) a Change in Control occurs, or

(ii) (1) during the Term, an event occurs that would have constituted Post-CIC Good Reason if the date on which a Change in Control occurs was deemed to be the date immediately prior to the date of such event and the Executive terminated his employment subsequent to such event, (2) the Executive can reasonably demonstrate that such Post-CIC Good Reason event (x) was at the request or instruction of a third party who had taken steps reasonably calculated to effect a Change in Control or (y) otherwise arose within six months of, and was in connection with or in anticipation of, a Change in Control, and (3) a Change in Control occurs.

(iii) For purposes of clauses (i)(1)(y) and (ii)(1)(y) of this Section 3.04(a), it shall be presumed that such event was in connection with or in anticipation of a Change in Control unless the Company establishes otherwise by clear and convincing evidence.

(b) If the Executive has reason to believe that an Anticipatory Termination may have occurred, he shall provide a notice setting forth such belief in accordance with Article VII of this Agreement within 120 days after a Change in Control has occurred. Upon an Anticipatory Termination, the Executive shall be entitled to (A) the payments specified in Sections 3.01(a),(d) and (e) (to the extent not previously paid), (B) the benefits specified in Section 3.01(b) (to the extent not previously provided) (or the after-tax equivalent thereof to the extent that such benefits have not been or are not provided in kind), (C) to the extent that the Executive has outstanding any unexercised stock options and other stock-based awards, the provisions of Section 3.01(c) shall apply to them, (D) in respect of any stock options or other stock based awards that were forfeited by the Executive as a result of his termination of

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employment but would have vested had Section 3.01(c) applied, such awards shall be reinstated (or if not reinstated, the Executive shall be paid in cash the fair value of such award), and (E) liquidated damages of $25,000 for penalties associated with the Anticipatory Termination. For the purposes of this Section 3.04(b), the Executive’s Date of Termination shall be deemed to be his last date of employment by the Company.

Section 3.05 Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company and for which the Executive may qualify, nor, subject to Section 8.02, shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice, or program of or any contract or agreement with the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

Section 3.06 Certain Additional Payments by the Company.

(a) Anything in this Agreement or in any other agreement between the Company and the Executive or in any stock option or other benefit plan to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 3.06) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

(b) All determinations required to be made under this Section 3.06, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the Company or the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 3.06, shall be paid by the Company to the Executive in the calendar year that includes the date on which the Payment was made; provided, however, that if a payment is made after December 1 of any calendar year, then the Gross-Up Payment, as determined pursuant to this Section 3.06, shall be paid by the Company to the Executive in the immediately succeeding calendar year. In either case, the Gross-Up Payment shall be made on the later of the fifth day following the Accounting Firm’s determination and the first day of the applicable calendar year. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

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Section 3.07 Tax Matters. Notwithstanding anything contained in this Agreement (or any other agreement between Executive and the Company or any of its subsidiaries) to the contrary, the Company and its subsidiaries shall be entitled to deduct and withhold any amounts required by the Code or under any state or local law relating to compensation from any payment amounts distributable or due to Executive from the Company or any of its subsidiaries, including from Executive’s wages, compensation, or benefits, as may be required by the Code or under any state or local law relating to compensation. The Company and the Executive agree to use commercially reasonable efforts to ensure that this Agreement complies with Section 409A of the Code such that Executive is not subject to any additional taxes, interest or penalties under such provisions. In furtherance thereof, if payment or provision of any amount or benefit hereunder at the time specified in this Agreement would subject such amount or benefit to any additional tax under Section 409A of the Code, the payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or the provision of such amount or benefit could be made without incurring such additional tax (including paying any severance that is delayed in a lump sum upon the earliest possible payment date which is consistent with Section 409A of the Code). Without limiting the generality of the immediately preceding sentence, if payment or provision of any amount or benefit hereunder at the time specified in this Agreement would fail to comply with the provisions of Section 409A of the Code because the Executive is treated as a “specified” employee (within the meaning of Section 409A(a)(2)(B)(i) of the Code), then such amount or benefit shall not be paid or provided at the time otherwise specified in this Agreement, but instead shall be paid or provided on the date that is six months after the date of separation from service (or, if earlier, the date of death of the Executive). In addition, to the extent that any regulations or guidance issued under Code §409A (after application of the previous provision of this paragraph) would result in Executive being subject to the payment of interest or any additional tax under Code §409A, the Company and the Executive agree, to the extent reasonably possible, to amend this Agreement in order to avoid the imposition of any such interest or additional tax under Code §409A, which amendment shall have the minimum economic effect necessary on Executive and be reasonably determined in good faith by the Company and the Executive.

ARTICLE IV

No Mitigation

The Company agrees that, if the Executive’s employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Article III. Further, the amount of any payment or benefit provided for in Article III (other than Section 3.01(b)(i)) will not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

ARTICLE V

The Executive’s Covenants

Section 5.01 Noncompetition Agreement. In consideration for this Agreement, the Executive will execute, concurrent with the execution of this Agreement, a noncompetition agreement in the form attached to this Agreement as Exhibit A. In the event of termination of this Agreement as provided in Section 1.01, the noncompetition Agreement shall survive termination.

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Section 5.02 Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all material proprietary information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 5.02 constitute a basis for denying, deferring or withholding any amounts or benefits payable to the Executive under this Agreement.

Section 5.03 General Release. The Executive agrees that, notwithstanding any other provision of this Agreement, the Executive will not be eligible for any payments under Section 3.01 unless the Executive timely signs, and does not timely revoke, a General Release in substantially the form attached to this Agreement as Exhibit B.

ARTICLE VI

Successors; Binding Agreement

Section 6.01 Obligation of Successors. In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had occurred. Failure of the Company to obtain such an assumption and agreement prior to the effectiveness of any such succession will be a breach of this Agreement.

Section 6.02 Enforcement Rights of Others. This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive dies while any amount is still payable to the Executive under this Agreement, (other than amounts that, by their terms, terminate upon the Executive’s death), then, unless otherwise provided in this Agreement, all such amounts will be paid in accordance with the terms of this Agreement to the executors, personal representatives, or administrators of the Executive’s estate.

ARTICLE VII

Notices

For the purpose of this Agreement, notices and all other communications provided for in the Agreement will be in writing and will be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may furnish to the other in writing in accordance with this Article VIII, except that notice of change of address will be effective only upon actual receipt:

To the Company:	To the Executive:
Biomet, Inc. 56 E. Bell Drive P. O. Box 587 Warsaw, Indiana 46581-0587	Gregory D. Hartman 59625 County Road 13 Elkart, Indiana 46517

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ARTICLE VIII

Miscellaneous; At-Will

Section 8.01 Miscellaneous. No provision of this Agreement may be modified, waived, or discharged unless the waiver, modification, or discharge is agreed to in writing and signed by the Executive and an officer of the Company specifically designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any other time. Neither party has made any agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement that are not expressly set forth in this Agreement. The validity, interpretation, construction, and performance of this Agreement will be governed by the laws of the State of Indiana. All references to sections of the Exchange Act or the Code will be deemed also to refer to any successor provisions to those sections. Any payments provided for under this Agreement will be paid net of any applicable withholding required under federal, state, or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under Articles III, IV, and VI will survive the expiration of this Agreement, if applicable.

Section 8.02 At-Will. The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will,” and the Executive’s employment may be terminated by either the Executive or the Company at any time.

ARTICLE IX

Validity

The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

ARTICLE X

Counterparts

This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

ARTICLE XI

Settlement of Disputes; Arbitration

All claims by the Executive for benefits under this Agreement must be in writing and will be directed to and determined by the Board. Any denial by the Board of a claim for benefits under this Agreement will be delivered to the Executive in writing and will set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board will afford a reasonable opportunity to the Executive for a review of the decision denying a claim and will further allow the Executive to appeal to the Board a decision of the Board within 60 days after notification by the Board that the Executive’s claim has been denied. Any further dispute or controversy arising under or in connection with this Agreement will be settled exclusively by arbitration in Warsaw, Indiana in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having

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jurisdiction. Each party will bear its own expenses in the arbitration for attorneys’ fees, for its witnesses, and for other expenses of presenting its case. Other arbitration costs, including arbitrators’ fees, administrative fees, and fees for records or transcripts, will be borne equally by the parties. Notwithstanding anything in this Article to the contrary, if the Executive prevails with respect to any dispute submitted to arbitration under this Article, the Company will reimburse or pay all reasonable legal fees and expenses that the Executive incurred in connection with that dispute as required by Section 3.08.

ARTICLE XII

Definitions

For purposes of this Agreement, the following terms will have the meanings indicated below:

“401(k) Plan” means the Biomet, Inc. Profit Sharing Plan and Trust qualified under section 401(k) of the Code and any comparable successor plan(s).

“Accounting Firm” means such nationally recognized certified public accounting firm as may be designated by the Executive.

“Accrued Obligations” shall have the meaning described in Section 3.01(a)(i).

“Annual Base Salary” means the Executive’s annual base salary as in effect immediately prior to the date of the Change in Control.

“Anticipatory Termination” shall have the meaning described in Section 3.04.

“Beneficial Owner” has the meaning stated in Rule 13d-3 under the Exchange Act.

“Board” means the Board of Directors of the Company.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the State of Indiana.

“Cause” for termination by the Company of the Executive’s employment, after any Change in Control, means (1) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Post-CIC Good Reason or Pre-CIC Good Reason or by the Executive pursuant to Sections 3.01 and 3.02) for a period of at least 30 consecutive days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties; (2) the Executive willfully engages in conduct that is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise; or (3) the Executive is convicted of, or has entered a plea of no contest to, a felony. For purposes of clauses (1) and (2) of this definition, no act, or failure to act, on the Executive’s part will be deemed “willful” unless it is done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.

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“Change in Control” will be deemed to have occurred if any of the following events occur:

(a) Individuals who, as of September 20, 2006, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of such Board, provided that any person becoming a director after September 20, 2006 and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be deemed an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to the election or removal of directors (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

(b) Any Person is or becomes a Beneficial Owner directly or indirectly, of either (A) 20% or more of the then-outstanding Company Shares or (B) securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of directors (the “Company Voting Securities”); provided, however, that for purposes of this subsection (b), the following acquisitions shall not constitute a Change in Control: (i) an acquisition directly from the Company, (ii) an acquisition by the Company or a subsidiary of the Company, or (iii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or

(c) The consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or a subsidiary (a “Reorganization”), or the sale or other disposition of all or substantially all of the Company’s assets (a “Sale”) or the acquisition of assets or stock of another corporation (an “Acquisition”), unless immediately following such Reorganization, Sale or Acquisition: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company Shares and outstanding Company Voting Securities immediately prior to such Reorganization, Sale or Acquisition beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Reorganization, Sale or Acquisition (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the “Surviving Corporation”) in substantially the same proportions as their ownership, immediately prior to such Reorganization, Sale or Acquisition, of the outstanding Company Shares and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (i) the Company or any subsidiary of the Company, (ii) the Surviving Corporation or its ultimate parent corporation, or (iii) any employee benefit plan or related trust sponsored or maintained by any of the foregoing) is the beneficial owner, directly or indirectly, of 20% or more of the total common stock or 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation, and (C) at least a majority of the members of the board of directors of the Surviving Corporation were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization, Sale or Acquisition; or

(d) Approval by the shareowners of the Company of a complete liquidation or dissolution of the Company.

11

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and interpretative rules and regulations.

“Company” means Biomet, Inc., an Indiana corporation, and any successor to its business and/or assets that assumes and agrees to perform this Agreement by operation of law, or otherwise (except in determining whether or not any Change in Control of the Company has occurred in connection with the succession).

“Company Shares” means shares of common stock of the Company or any equity securities into which those shares have been converted.

“Date of Termination” shall have the meaning described in Section 2.05.

“Disability” shall have the meaning described in Section 2.01.

“Disability Effective Date” shall have the meaning described in Section 2.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and interpretive rules and regulations.

“Excise Tax” shall have the meaning described in Section 3.05(a).

“Executive” “ shall have the meaning described in the first paragraph of this Agreement.

“Gross-Up Payment” shall have the meaning described in Section 3.06(a).

“Notice of Termination” shall have the meaning described in Section 2.04.

“Options” means options for Shares granted to the Executive under the Stock Option Plan.

“Other Benefits” shall have the meaning described in Section 3.01 (e) or 3.03, as determined by the nature of the termination of the Agreement, as described in each of those sections.

“Payment” shall have the meaning described in Section 3.06(a).

“Person” has the meaning stated in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) of the Exchange Act; however, a Person will not include (1) the Company or any of its subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (3) an underwriter temporarily holding securities pursuant to an offering of those securities, or (4) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

“Post-CIC Employment Period” shall have the meaning assigned in Section 1.02.

“Post-CIC Good Reason” for termination by the Executive of the Executive’s employment means the death of the Executive during the Post-CIC Employment Period or the

12

occurrence (without the Executive’s express written consent) of any one of the following acts by the Company, or failures by the Company to act, in each case during the Post-CIC Employment Period, unless, in the case of any act or failure to act described in paragraph (i), (iv), (v), (vi), or (viii) below, the act or failure to act is corrected prior to the Date of Termination specified in the Executive’s Notice of Termination:

(i) The assignment to the Executive of any duties inconsistent with the Executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to a Change in Control;

(ii) A reduction by the Company in the Executive’s annual base salary and/or Target Bonus as in effect on the date of this Agreement or as the same may be increased from time to time;

(iii) The Company’s requiring the Executive to be based more than 50 miles from the Company’s offices at which the Executive is based prior to a Change in Control (except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations immediately prior to the Change in Control), or, in the event the Executive consents to any such relocation of his offices, the Company’s failure to provide the Executive with all of the benefits of the Company’s historical practices with respect to relocation of executive employees as in operation immediately prior to the Change in Control;

(iv) The Company’s failure, without the Executive’s consent, to pay to the Executive any portion of the Executive’s current compensation (which means, for purposes of this paragraph (4), the Executive’s annual base salary as in effect on the date of this Agreement, or as it may be increased from time to time, and any installment of the annual target bonus earned by the Executive) or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date the compensation is due;

(v) The Company’s failure to continue in effect any compensation plan in which the Executive participates immediately prior to a Change in Control, which plan is material to the Executive’s total compensation, including, but not limited to, the Stock Option Plan or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to that plan, or the Company’s failure to continue the Executive’s participation in such a plan (or in a substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive’s participation relative to other participants, as existed at the time of the Change in Control;

(vi) The Company’s failure to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s retirement plans (including, without limitation, the Company’s 401(k) Plan, the Biomet, Inc. Employee Stock Bonus Plan, and such other life insurance, medical, health and accident, or disability plans in which the Executive was participating at the time of the Change in Control); the taking of any action by the Company that would directly or indirectly materially reduce any of those benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of a Change in Control; or the Company’s failure to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control;

13

(vii) Any purported termination of the Executive’s employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 4.01; for purposes of this Agreement, no such purported termination will be effective; or

(viii) any failure by the Company to comply with and satisfy Section 6.01 of this Agreement.

The Executive’s right to terminate the Executive’s employment for Post-CIC Good Reason will not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment will not constitute consent to, or a waiver of rights with respect to, any act or failure to act that constitutes Post-CIC Good Reason. Notwithstanding the foregoing, the occurrence of an event that would otherwise constitute Post-CIC Good Reason will cease to be an event constituting Post-CIC Good Reason if the Executive does not timely provide a Notice of Termination to the Company within 120 days of the date on which the Executive first becomes aware (or reasonably should have become aware) of the occurrence of that event.

“Renewal Date” shall have the meaning described in Section 1.01.

“Shares” means shares of the common stock of the Company.

“Stock Option Plan” means the 1998 Biomet, Inc. Qualified and Non-Qualified Stock Option Plan and any other equity compensation plan of the Company approved by the Board and adopted by the shareholders of the Company.

“Target Bonus” shall have the meaning described in Section 3.01(a)(i).

“Term” shall have the meaning described in Section 1.01.

*     *     *

EXECUTIVE	BIOMET, INC.
/s/Gregory D. Hartman	By:
Gregory D. Hartman	Name:
	Its:

14

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

(as the date of filing)

Biomet, Inc. (the Registrant; Indiana corporation)

Domestic subsidiaries:

American OsteoMedix Corp. (California corporation)

Biolectron, Inc. (Delaware corporation)

Biomet 3i, Inc. (Florida corporation)

Biomet Biologics, Inc. (Indiana corporation)

Biomet Europe Ltd. (Delaware corporation)

Biomet Fair Lawn, L.P. (Indiana limited partnership)

Biomet Holdings Ltd. (Delaware corporation)

Biomet International Ltd. (Delaware corporation)

Biomet Investment Corp. (Delaware corporation)

Biomet Leasing, Inc. (Indiana corporation)

Biomet Manufacturing Corp. (Indiana corporation)

Biomet Microfixation, Inc. (Florida corporation)

Biomet Orthopedics, Inc. (Indiana corporation)

Biomet Sports Medicine, Inc. (Indiana corporation)

Biomet Travel, Inc. (Indiana corporation)

Blue Moon Diagnostics, Inc. (Indiana corporation)

Cross Medical Products, Inc. (Delaware corporation)

EBI, L.P. (Indiana limited partnership)

EBI Holdings, Inc. (Delaware corporation)

EBI Medical Systems, Inc. (Delaware corporation)

EBI Patient Care, Inc. (Puerto Rican corporation)

Electro-Biology, Inc. (Delaware corporation)

Implant Innovations Holding Corporation (Indiana corporation)

Interpore Cross International, Inc. (California corporation)

Interpore Orthopaedics Inc. (Delaware corporation)

Interpore Spine Ltd. (Delaware corporation)

Kirschner Medical Corporation (Delaware corporation)

Meridew Medical, Inc. (Indiana corporation)

Poly-Medics, Inc. (Indiana corporation)

Thoramet, Inc. (Indiana corporation)

Vascu-Med, Inc. (Indiana corporation)

Foreign subsidiaries:

Arthrovision Sport GmbH (German corporation)

Biomet 3i Australia Pty. Ltd. (Australian corporation)

Biomet 3i France (French corporation)

Biomet 3i Netherlands B.V. (Dutch corporation)

Biomet 3i Switzerland GmbH (Swiss corporation)

Biomet 3i U.K., Ltd. (U.K. corporation)

Biomet C Z S.r.o. (Czech corporation)

Biomet Acquisitions Limited (U.K. corporation)

Biomet Argentina S.A. (Argentine corporation)

Biomet Australia Pty. Ltd. (Australian corporation)

Biomet Austria GmbH (Austrian corporation)

Biomet Belgium BVBA (Belgian corporation)

Biomet Bridgend B.V. (Dutch corporation)

Biomet Canada, Inc. (Canadian corporation)

Biomet Cementing Technologies AB (Swedish corporation)

Biomet Chile, S.A. de C.V. (Chilean corporation)

Biomet Danmark ApS (Danish corporation)

Biomet Deutschland GmbH (German corporation)

Biomet Europe B.V. (Dutch corporation)

Biomet Europe Spine B.V. (Dutch corporation)

Biomet European Distribution Center B.V. (Dutch corporation)

Biomet Finland Oy (Finnish corporation)

Biomet France S.á r.l. (French corporation)

Biomet Hellas Commercial and Industrial Company of Medical

and Pharmaceutical Products S.A. (Greek corporation)

Biomet Holdings B.V. (Dutch corporation)

Biomet Insurance Ltd. (Bermuda Captive insurance company)

Biomet Italia s.r.l. (Italian company)

Biomet Japan, Inc. (Japanese corporation)

Biomet Korea Co. Ltd. (Korean corporation)

Biomet Luxembourg S.á r.l. (Luxembourg company)

Biomet Magyarorszag Kft. (a/k/a Biomet Hungary Kft.) (Hungarian company)

Biomet Manufacturing Polska Sp. z o.o. (Polish Corporation)

Biomet Medikal Ürünler Daðýtým Pazarlama

Ýthalat Ýhracat ve Dýs Ticaret?Ltd. Sti (Turkish company)

Biomet Norge A.S. (Norwegian corporation)

Biomet Onroerend Goed BV (Dutch corporation)

Biomet Polska Sp. z o.o. (Polish corporation)

Biomet Portugal, Unipessoal Lda. (Portuguese corporation)

Biomet Mexico S.A. de C.V. (Mexican corporation)

Biomet Orthopaedic Ltd. (New Zealand corporation)

Biomet Orthopaedics Switzerland GmbH (Swiss corporation)

Biomet Orthopedics Puerto Rico, Inc. (Puerto Rican corporation)

Biomet Spain Orthopaedics S.L. (Spanish corporation)

Biomet Swindon B.V. (Dutch corporation)

Biomet Taiwan Ltd. (Taiwan corporation)

Biomet UK Ltd. (U.K. corporation)

Biomet UK Real Estate Holdings B.V. (Dutch corporation)

EBI Medical Systems Ltd. (U.K. corporation)

Implant Innovations Benelux Holding N.V. (Belgium complany)

Implant Innovations Belgium N.V. (Belgium company)

Implant Innovations do Brasil Ltda. (Brazilian corporation)

Implant Innovations Canada, Inc. (Canadian corporation)

Implant Innovations Deutschland, GmbH (German corporation)

Implant Innovations Iberica, SL (Spanish corporation)

Implant Innovations de Mexico S.A. de C.V. (Mexican corporation)

Implant Innovations Nordic AB (Swedish corporation)

Implant Innovations Portugal Lda. (Portugese corporation)

Ortopédica Biomet Costa Rica S.A. (Costa Rican corporation)

Ortra Holdings, S.A. (Swiss corporation)

Rewi Holding BV (Dutch corporation)

Scandimed Holding AB (Swedish corporation)

Zhejiang Biomet Medical Products Co., Ltd. (Chinese corporation)

Each subsidiary is wholly-owned by its immediate parent, except for the following: Biomet Chile, S.A. de C.V. of which Biomet International Ltd. owns 71% of the outstanding shares.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements of Biomet, Inc. on Forms S-8 (File Nos. 333-118326, 333-118323, 333-118264, 333-65139, 333-00331, 33-75618, 33-65700, 33-50268, 33-37561, 33-26826 and 33-7361), on Form S-4 (File No. 333-88905) and on Forms S-3 (File Nos. 33-50420, 33-27008 and 333-94959) and in the related prospectus, of our reports dated July 25, 2007, with respect to the consolidated financial statements and schedule of Biomet, Inc., Biomet, Inc., management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Biomet, Inc. included in this Form 10-K for the year ended May 31, 2007.

Fort Wayne, Indiana

July 26, 2007

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey R. Binder, certify that:

1. I have reviewed this annual report on Form 10-K of Biomet, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 30, 2007

/S/ JEFFREY R. BINDER

Jeffrey R. Binder

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel P. Florin, certify that:

1. I have reviewed this annual report on Form 10-K of Biomet, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 30, 2007

/S/ DANIEL P. FLORIN

Daniel P. Florin

Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

The undersigned, the Chief Executive Officer and the Chief Financial Officer of Biomet, Inc. (the “Company”), each hereby certifies pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge on the date hereof:

(a) The Annual Report on Form 10-K of the Company for the Fiscal Year Ended May 31, 2007 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 30, 2007
	/S/ JEFFREY R. BINDER
	Jeffrey R. Binder
	President and Chief Executive Officer
July 30, 2007
	/S/ DANIEL P. FLORIN
	Daniel P. Florin
	Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-K and shall not be deemed to be considered filed as part of the Form 10-K.