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                                                                   Exhibit 10.21
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                  TAX ALLOCATION AND INDEMNIFICATION AGREEMENT



                          Dated as of October 30, 1996


                                     Among


                                  DEPUY, INC.,


                        BOEHRINGER MANNHEIM CORPORATION


                                      and


                                CORANGE LIMITED



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         TAX ALLOCATION AND INDEMNIFICATION AGREEMENT (the "Agreement")
                       dated as of October 30, 1996 among
                      DEPUY, INC., a Delaware Corporation
                                (the "Company"),
            BOEHRINGER MANNHEIM CORPORATION, an Indiana corporation
                          ("BMC") and CORANGE LIMITED,
                       a Bermuda corporation ("Corange").


     WHEREAS, each of the Company and BMC is an indirect, wholly-owned
subsidiary of Corange, which is the ultimate holding company within the Corange
Limited group of companies (the "Corange Group"), and each of various
subsidiaries in the Corange Group listed in Exhibit A hereto is engaged in the
manufacture and/or the distribution of orthopaedic products for the DePuy
division of the Corange Group;

     WHEREAS, Corange U.S. Holdings Inc., an Indiana corporation ("CUSHI") was
the common parent corporation, within the meaning of Section 1502 of the
Internal Revenue Code of 1986, as amended (the "Code"), of an affiliated group
of corporations (the "Affiliated Group") filing consolidated Federal income tax
returns and consolidated, combined or unitary state income tax returns, pursuant
to which CUSHI, BMC, and other members of the Affiliated Group have paid taxes
on a consolidated, combined or unitary basis;

     WHEREAS, in connection with an overall plan of reorganization affecting
those corporations within the DePuy division of the Corange Group, which plan
was approved by the Board of Directors of Corange in resolutions adopted at a
meeting held on July 11, 1996: (i) CUSHI has sold all of the outstanding shares
of BMC to Pharminvest S.A., a Luxembourg corporation in the Corange Group (the
"BMC Share Sale"), (ii) Corange and certain direct and indirect subsidiaries of
Corange have sold or otherwise transferred to CUSHI or to newly-created
subsidiaries of CUSHI, their shareholding in certain subsidiaries within the
DePuy division of the Corange Group, and certain assets related to the DePuy
business previously owned by a foreign distribution subsidiary of Corange
affiliated with the Boehringer Mannheim business of the Corange Group, and (iii)
CUSHI has merged with and into the Company (the "Merger"), with the Company
being the surviving corporation in the Merger (collectively, the "Pre-Offering
Reorganization");

     WHEREAS, pursuant to the Pre-Offering Reorganization, CUSHI ceased to be
the common parent of the Affiliated Group, BMC ceased to be a member of the
Affiliated Group, and the Company became the common parent corporation of the
Affiliated Group;

     WHEREAS, Corange, BMC and the Company desire to allocate the liability for
the taxes (including any interest or penalties thereon) of members of the
Affiliated Group for any taxable period beginning before the Pre-Offering
Reorganization and to provide for certain other tax-related matters;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows.
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     1. Indemnification by Corange and BMC.  (a)  Corange shall indemnify and
     hold harmless on an After-Tax Basis (as hereinafter defined) the Company
     and the DePuy Subsidiaries (as hereinafter defined) against any Corange Tax
     Liabilities (as hereinafter defined).  The term "Corange Tax Liabilities"
     shall mean any Taxes (as hereinafter defined): (i) imposed (x) with respect
     to any taxable period that ends prior to the date upon which the Closing of
     the public offering of the stock of the Company occurs (the "Closing Date")
     and (y) with respect to a taxable period that begins before and ends after
     the Closing Date, the portion of such period up to and including the the
     Closing Date (each period described in clause (x) or clause (y), being
     hereinafter referred to as a "Pre-Closing Tax Period"), or (ii) imposed as
     a result of the Pre-Offering Reorganization; provided, however, that the
     Taxes subject to indemnification as Corange Tax Liabilities under this
     Section 1(a) shall not include any "BMC Tax Liabilities" (as hereinafter
     defined) subject to indemnification by BMC under Section 1(b) hereof or any
     "DePuy Tax Liabilities" (as hereinafter defined) subject to indemnification
     by the Company and the DePuy Subsidiaries under Section 2 hereof.

          (b) BMC shall indemnify and hold harmless on an After-Tax Basis the
     Company and the DePuy Subsidiaries against any BMC Tax Liabilities.  The
     term "BMC Tax Liabilities" shall mean: (i) the full amount of the Taxes of
     BMC or a BMC Subsidiary (as hereinafter defined), as the case may be, for
     any taxable period for which the Tax liability of BMC or a BMC Subsidiary,
     as applicable, is determined on the basis of a separate Tax return, and
     (ii) in the case of any taxable period for which the Tax liability of BMC
     or a BMC Subsidiary, as applicable, is determined on the basis of a
     Consolidated Return (as hereinafter defined), the portion of the Taxes of
     the Consolidated Group (as hereinafter defined) attributable to BMC or to a
     BMC Subsidiary, as determined under Section 6 with respect to consolidated
     or combined returns, and under Section 7 with respect to unitary returns;
     provided, however, that the term "BMC Tax Liabilities" shall include no
     liabilities for Taxes imposed as a result of the Pre-Offering
     Reorganization.

          (c) Corange hereby guarantees BMC's obligation to indemnify and hold
     harmless on an After-Tax Basis the Company and the DePuy Subsidiaries
     against the BMC Tax Liabilities.  In the event that BMC defaults on its
     obligations to make indemnification payments with respect to any BMC Tax
     Liabilities in accordance with this Agreement, the Company and the DePuy
     Subsidiaries shall be entitled to collect such indemnification payments
     from Corange; provided, however, that the Company and the DePuy
     Subsidiaries shall in no event be entitled to receive more than the full
     amount of one indemnification payment with respect to any single claim for
     Taxes under this Agreement.

          2.  Indemnification by the Company.  The Company and each DePuy
     Subsidiary shall indemnify and hold harmless on an After-Tax Basis Corange,
     BMC, the Corange Subsidiaries (as hereinafter defined) and the BMC
     Subsidiaries against any and all DePuy Tax Liabilities.  The term "DePuy
     Tax Liabilities" shall mean: (i) the full

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     amount of the Taxes of the Company or a DePuy Subsidiary, as the case may
     be, for any taxable period for which the Tax liability of the Company or a
     DePuy Subsidiary, as applicable, is determined on the basis of a separate
     Tax return, (ii) in the case of any taxable period for which the Tax
     liability of the Company or a DePuy Subsidiary, as applicable, is
     determined on the basis of a Consolidated Return, that portion of the Taxes
     of the Consolidated Group attributable to the Company or to a DePuy
     Subsidiary, as determined under Section 6 with respect to consolidated or
     combined returns, and as determined under Section 7 with respect to unitary
     returns, and (iii) Taxes imposed as a result of the Pre-Offering
     Reorganization solely by reason of one or more actions taken by the Company
     or any DePuy Subsidiary in violation of any of its obligations under the
     agreements entered into with respect to the Pre-Offering Reorganization;
     provided, however, that the term "DePuy Tax Liabilities" shall include (x)
     no liabilities for Taxes imposed as a result of the Pre-Offering
     Reorganization except for liabilities for Taxes described in clause (iii)
     hereof, and (y) no liabilities for any interest or any penalties relating
     to any taxes, tariffs or governmental charges, in the case of liabilities
     for Taxes described in clauses (i) and (ii) hereof, and all such
     liabilities for interest and penalties shall be deemed to be Corange Tax
     Liabilities subject to indemnification by Corange under Section 1(a)
     hereof.

          3.  Definitions.  (a)  The term "Tax" or "Taxes" means Federal, state,
     local and foreign income, franchise, property, sales, excise, transfer,
     withholding (with respect to amounts paid or received), employment or other
     taxes, tariffs or governmental charges (and all interest and penalties
     relating thereto) imposed by a governmental authority pursuant to the
     exercise of its power to tax.

          (b) The term "After-Tax Basis" means, with respect to any payment, an
     amount calculated by taking into account the Tax consequences of the
     receipt of such payment, as well as any Tax benefit associated with the
     liability giving rise to the payment.  In the case of any item which gives
     rise to a deduction, the Tax benefit of such deduction shall be determined
     at the maximum statutory tax rate in effect during the relevant taxable
     period, whether or not the taxpayer actually realizes currently such Tax
     benefit.  For this purpose, all indemnification payments made by Corange
     under this Agreement shall be deemed to be capital contributions to the
     Company.

          (c) The term "DePuy Subsidiary" shall mean each entity listed in
     Exhibit A hereto and shall be deemed to include any predecessor or
     transferee of (or successor or transferor to) the Company or any entity
     listed in Exhibit A, but shall not include CUSHI for any period prior to
     the Merger or any subsidiary in the Corange Group affiliated with the
     Boehringer Mannheim business of the Corange Group; provided, however, that
     the DePuy division of BMC, which was a predecessor of DePuy, Inc.
     (incorporated on January 1, 1992) shall be deemed to be a DePuy Subsidiary.
     The term "BMC Subsidiary" shall mean any subsidiary of BMC, and shall be
     deemed to include any predecessor or transferee of (or successor or
     transferor to) BMC or any subsidiary of BMC, but shall not include CUSHI
     (or any predecessor thereof or transferor thereto),

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     the Company or any DePuy Subsidiary.  The term "Corange Subsidiary" shall
     mean any subsidiary in the Corange Group, including CUSHI, and shall be
     deemed to include any predecessor or transferee of (or successor or
     transferor to) Corange or any subsidiary of Corange, but shall not include
     the Company, any DePuy Subsidiary, BMC or any BMC Subsidiary.

          (d) The term "Tax Asset" shall mean any net operating loss, net
     capital loss, investment tax credit, foreign tax credit, target jobs tax
     credit, low income housing credit, research and experimentation credit,
     charitable deduction or any other credit or tax attribute, including
     additions to basis of property, which could reduce any tax, including,
     without limitation, deductions, credits, or alternative minimum net
     operating loss carryforwards related to alternative minimum taxes.

          (e) The term "BMC Sale Date" shall mean the date upon which the BMC
     Share Sale occurs, and the term "Pre-BMC Sale Tax Period" shall mean (i)
     any taxable period that ends prior to the BMC Sale Date and (ii) with
     respect to a taxable period that begins before and ends after the BMC Sale
     Date, the portion of such period up to and including the BMC Sale Date.

          (f) The term "Consolidated Group" shall mean (i) the Affiliated Group
     and (ii) any group filing consolidated, combined or unitary tax returns for
     state tax purposes for any taxable period beginning before the BMC Sale
     Date which, for such taxable period, is comprised of at least one
     corporation which is a BMC Subsidiary and at least one corporation which is
     a DePuy Subsidiary.  The term "Consolidated Return" shall mean any Federal
     income tax return or any state tax return filed by the Consolidated Group
     on a consolidated, combined or unitary basis.

          4.  Tax Return Filing and Related Matters.  (a)  The Company shall
     prepare all Consolidated Returns of the Consolidated Group for taxable
     periods beginning on or after January 1, 1996 and ending on or before
     December 31, 1996, and all separate Tax returns of the Company and the
     DePuy Subsidiaries.  With respect to any Consolidated Returns referred to
     in the first sentence of this Section 4(a), BMC shall provide pro forma tax
     returns and other relevant data to the Company at least forty-five (45)
     days prior to the due date of such Tax returns (taking into account any
     applicable extensions).  The Company shall provide BMC with preliminary
     draft copies of such Tax returns at least thirty (30) days prior to the due
     date for filing (taking into account any applicable extensions) for review
     and approval by BMC with respect to BMC Tax Liabilities.  If BMC objects to
     any matter reflected in such draft Tax returns with respect to BMC Tax
     Liabilities, BMC shall inform the Company within ten (10) days of receipt
     of the draft Tax returns, and the Company shall revise such Tax returns as
     so directed by BMC, and shall sign and timely file such Tax returns with
     the appropriate taxing authorities.

          (b) BMC shall prepare all Consolidated Returns of the Consolidated
     Group for taxable priods ending on or before December 31, 1995, all
     separate Tax returns of

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     CUSHI for taxable periods ending on or before the Merger, and all separate
     Tax returns of BMC and the BMC Subsidiaries.  The provisions of this
     Section 4 shall apply with respect to any action or inaction after the date
     of this Agreement in connection with the preparation and filing of any such
     Tax returns. With respect to any Consolidated Returns referred to in the
     first sentence of this Section 4(b), the Company shall provide pro forma
     tax returns and other relevant data to BMC at least forty-five (45) days
     prior to the due date of such Tax returns (taking into account any
     applicable extensions).  BMC shall provide the Company with preliminary
     draft copies of such Tax returns at least thirty (30) days prior to the due
     date for filing (taking into account any applicable extensions) for review
     and approval by the Company with respect to DePuy Tax Liabilities.  If the
     Company objects to any matter reflected in such draft Tax returns with
     respect to DePuy Tax Liabilities, the Company shall inform BMC within ten
     (10) days of receipt of the draft Tax returns and BMC shall revise such Tax
     returns as so directed by the Company, and shall sign and timely file such
     Tax returns with the appropriate taxing authorities.

          (c) With respect to Consolidated Returns of the Consolidated Group for
     taxable periods beginning on or after January 1, 1996 and ending on or
     before December 31, 1996, BMC shall pay, or cause to be paid, to the
     Company an amount equal to (1) BMC's share of the Consolidated Group's
     consolidated Federal Tax liability and consolidated state Tax liability,
     determined in accordance with Section 6, and (2) BMC's share of the
     Consolidated Group's unitary state Tax liability, determined in accordance
     with Section 7, as provided below.

               (i) Promptly after the Company makes an estimated Tax payment
          with respect to any such Consolidated Return, the Company shall in
          good faith determine the amount of BMC's share of such estimated Tax
          payment in accordance with Section 6, in the case of any consolidated
          Federal Tax liability or any consolidated state Tax liability of the
          Consolidated Group, and in accordance with Section 7 using 1995
          apportionment factors, adjusted for significant dispositions or
          transfers of assets, in the case of any unitary state Tax liability of
          the Consolidated Group. The Company shall deliver a written statement
          to BMC reflecting the determination described above.  Within ten (10)
          business days after delivery of such written statement, BMC shall
          notify the Company whether BMC agrees with such determination.  BMC
          shall pay to the Company or the Company shall pay to BMC, as
          appropriate, the amount determined to be payable hereunder (x) within
          ten (10) business days thereafter, if BMC agrees with such
          determination, or (y) if the Company and BMC cannot agree on the
          determination, within ten (10) business days after the date of the
          determination of the amount payable pursuant to Section 11 hereof.

               (ii) Promptly after the Company files an application to extend
          the due date of any such Consolidated Return, the Company shall in
          good faith determine the estimated amount of BMC's share of the
          Consolidated Group's consolidated Federal Tax liability or
          consolidated state Tax liability for such Consolidated

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          Return in accordance with Section 6 or, in the case of a unitary state
          Tax return, in accordance with Section 7 using 1995 apportionment
          factors, adjusted for significant dispositions or transfers of assets.
          The amount payable hereunder shall equal the difference, if any,
          between (x) the amounts so determined and (y) the aggregate amount of
          estimated installments paid with respect to BMC's share of such Tax
          liability for such Consolidated Return, adjusted to take into account
          amounts previously paid or received by BMC in connection with any
          previous extension payments.  The Company shall deliver to BMC a
          written statement of the amount payable hereunder, as described above.
          Within ten (10) business days after delivery of such written
          statement, BMC shall notify the Company whether BMC agrees with such
          determination. BMC shall pay to the Company or the Company shall pay
          to BMC, as appropriate, the amount determined to be payable hereunder
          (x) within ten (10) business days thereafter, if BMC agrees with such
          determination, or (y) if the Company and BMC cannot agree on the
          determination, within ten (10) business days after the date of the
          determination of the amount payable pursuant to Section 11 hereof.

               (iii)  Promptly after the Company files any such Consolidated
          Return, the Company shall deliver to BMC a written statement setting
          forth the difference between (x) BMC's share of the Consolidated
          Group's consolidated Federal Tax liability, consolidated state Tax
          liability or unitary state Tax liability for such Consolidated Return,
          determined in accordance with Section 6 or Section 7, as the case may
          be, and (y) the aggregate amount of payments with respect to BMC's
          share of such Tax liability for such Consolidated Return previously
          made pursuant to this Section.  Within ten (10) business days of
          delivery of such written statement, BMC shall notify the Company
          whether BMC agrees with such determination.  BMC shall pay to the
          Company or the Company shall pay to BMC, as appropriate, the amount
          equal to such difference, if any, (x) within ten (10) business days
          thereafter, if BMC agrees with such determination, or (y) if the
          Company and BMC cannot agree on the determination, within ten (10)
          business days after the date of the determination of the amount
          payable pursuant to Section 11 hereof.

          (d) With respect to Consolidated Returns of the Consolidated Group for
     taxable periods ending on or before December 31, 1995, the Company shall
     pay, or cause to be paid, to BMC the Company's share of the Consolidated
     Group's consolidated Federal Tax liability, consolidated state Tax
     liability, and unitary state Tax liability, determined in accordance with
     past practices.

          (e) In the case of Consolidated Returns of the Consolidated Group for
     taxable periods beginning on or after January 1, 1996 and ending on or
     before December 31, 1996, if the Company determines that it will be
     necessary to incur incremental out-of-pocket costs for legal, accounting or
     other related professional fees and disbursements attributable to the
     preparation of tax returns for BMC or the BMC Subsidiaries, the

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     Company shall obtain from BMC its written approval of such incremental out-
     of-pocket costs prior to incurring such costs. BMC shall reimburse the
     Company for such incremental out-of-pocket costs which have been approved
     by BMC pursuant to this Section 4(e) within thirty (30) days of delivery of
     a written statement of such costs specifying such costs in reasonable
     detail.

          (f) Without the prior written consent of BMC (in the case of BMC Tax
     Liabilities), which shall not be unreasonably withheld, and the prior
     written consent of Corange (in the case of Corange Tax Liabilities), which
     shall not be unreasonably withheld, the Company shall refrain, and shall
     cause each of the DePuy Subsidiaries to refrain, (i) from making, filing or
     amending any Tax return that includes any Pre-Closing Tax Period or any
     Pre-BMC Sale Tax Period that would materially affect the Tax liability of
     Corange, BMC, the Corange Subsidiaries or the BMC Subsidiaries, and (ii)
     from making any material tax election that would bind, or materially affect
     the Tax liability of, Corange, BMC, the Corange Subsidiaries or the BMC
     Subsidiaries.

          5.  Contests.  (a)  If the Company or any DePuy Subsidiary receives
     oral or written notice from the Internal Revenue Service or any other
     taxing authority of the commencement of an audit, the assertion of a claim,
     an assessment, or other dispute with respect to Taxes for which Corange or
     BMC are or may be required to indemnify, in whole or in part, under this
     Agreement, the Company shall provide notice to Corange and BMC (in the case
     of Corange Tax Liabilities), or shall provide notice to BMC and Corange (in
     the case of BMC Tax Liabilities) of the same in writing within ten (10)
     business days, specifying in reasonable detail the basis of such claim and
     the facts pertaining thereto, and shall not make payment of the Tax claimed
     for at least thirty (30) days after the giving of such notice. Corange (in
     the case of Corange Tax Liabilities) or BMC (in the case of BMC Tax
     Liabilities), at its own cost and expense, shall be entitled to control any
     such contest, including the determination of whether and when to settle any
     such contest; provided, however, that Corange or BMC, as the case may be,
     will consider in good faith any reasonable requests by the Company
     regarding the conduct of such contest and will promptly, and in any event
     within ten (10) business days, notify the Company of any action taken or
     proposed to be taken from time to time by Corange or BMC, as the case may
     be, with respect to such contest, and provided, further, that Corange and
     BMC will not settle any such contest that would materially affect the Tax
     liability of the Company or the DePuy Subsidiaries without the prior
     written consent of the Company, which shall not be unreasonably withheld.
     The Company agrees to provide to Corange and BMC (in the case of a contest
     regarding Corange Tax Liabilities) or to BMC and Corange (in the case of a
     contest regarding BMC Tax Liabilities) promptly, and in any event within
     ten (10) business days, copies of any correspondence or notices received
     from time to time from the Internal Revenue Service or any other taxing
     authority with respect to such contest.

          (b) If Corange, BMC, any Corange Subsidiary or any BMC Subsidiary
     receives any oral or written notices from the Internal Revenue Service or
     any other

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     taxing authority that relate to the Company or the DePuy Subsidiaries,
     Corange (on behalf of Corange or such Corange Subsidiary) or BMC (on behalf
     of BMC or such BMC Subsidiary) shall provide written notice to the Company
     of the same in writing within ten (10) business days.  The Company, at its
     cost and expense, shall be entitled to control any contests with respect to
     the Tax liability of the Company or the DePuy Subsidiaries, except for
     contests subject to control by Corange and BMC pursuant to this Agreement.

          (c) Indemnification payments required pursuant to this Agreement shall
     become due and payable upon a final determination of the liability for
     Taxes of the relevant taxpayer; provided, however, that indemnification
     payments which Corange is required to pay as guarantor pursuant to Section
     1(c) hereof shall be due and payable ten (10) business days after the
     Company notifies Corange that BMC has defaulted on its obligations to make
     such indemnification payments in accordance with this Agreement.  A "final
     determination" shall be deemed to occur with respect to a contest when (i)
     there is a decision, judgment, decree or other order by any court of
     competent jurisdiction, which decision, judgment, decree or other order has
     become final with respect to the taxpayer (i.e., all allowable appeals have
     been exhausted by either party to the action or the time period within
     which such appeal may be filed has expired), (ii) there is a closing
     agreement or other administrative settlement with the Internal Revenue
     Service or other taxing authority, (iii) the time for instituting a claim
     for refund in respect of the taxpayer has expired, or, if a claim was
     filed, the time for instituting suit with respect thereto has expired, or
     (iv) the Taxes which are the subject of such contest are paid, and pursuant
     to written agreement between the Company and Corange or BMC, no claim for
     refund is filed and no further contest is pursued.

          6.  Consolidated or Combined Tax Liability.  (a)  With respect to any
     consolidated Federal Tax liability or consolidated state Tax liability, BMC
     and the BMC Subsidiaries shall be responsible for the aggregate amount of
     such Tax liability of BMC and all BMC Subsidiaries that are members of the
     relevant Consolidated Group, and the Company and the DePuy Subsidiaries
     shall be responsible for the aggregate amount of such Tax liability of the
     Company and all DePuy Subsidiaries that are members of the relevant
     Consolidated Group.  A member's share of such Taxes shall be calculated as
     if such member were not and never were part of the Consolidated Group, but
     rather were a corporation filing separate income tax returns; provided,
     however, that (i) the applicable Tax rate shall be the relevant maximum
     statutory rate in effect during the relevant taxable period (with any
     applicable surtax exemption being ratably apportioned among the members),
     and (ii) in no event shall the Company's and the DePuy Subsidiaries' share
     of any consolidated Federal Tax liability or consolidated state Tax
     liability exceed the amount that would have constituted the Company's and
     the DePuy Subsidiaries' share of such Tax liability if such share had been
     calculated in the manner set forth in Treasury Regulation Sections 1.1552-
     1(a)(2) and 1.1502-33(d)(2).

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          (b) For purposes of paragraph (a) above, "Tax liability" (1) shall
     exclude any liability for the payment of alternative minimum tax, and (2)
     shall refer to an actual out-of-pocket payment to any taxing authority,
     after taking into account the utilization of net operating losses and any
     other Tax Assets.

          (c) Any alternative minimum Tax liability (and any Tax Assets
     attributable to such Tax liability) and any environmental Tax imposed under
     Section 59A of the Code shall be allocated among the members of the
     Consolidated Group in accordance with the formulas referenced in Proposed
     Treasury Regulation Section 1.1502-5(b)(6).  With respect to foreign tax
     credits under the Code, any consolidated unused foreign tax credits of the
     Consolidated Group shall be apportioned to the members of such Consolidated
     Group pursuant to Treasury Regulation Section 1.1502-79(d).

          (d) Any interest imposed in connection with any Tax liability shall be
     allocated in the same manner as the underlying Tax liability, as provided
     above.

          (e) Any penalty imposed in connection with any Tax liability shall be
     the responsibility of the party whose action or inaction resulted in the
     imposition of such penalty; provided, however, that if such a determination
     cannot be made, the penalty shall be allocated in the same manner as the
     underlying Tax liability, as provided above.

          7.  Unitary Tax Liability.  (a)  BMC's share of any unitary state Tax
     liability shall be, with respect to each state, the aggregate amount of
     unitary state Tax liability of BMC and all BMC Subsidiaries that are
     members of the relevant Consolidated Group. The Company's share of any
     unitary state Tax liability shall be, with respect to each state, the
     aggregate amount of unitary state Tax liability of the Company and all
     DePuy Subsidiaries that are members of the relevant Consolidated Group.  A
     member's liability for its share of unitary state Tax shall be determined
     in accordance with paragraph (c) of this Section 7; provided, however, that
     credits and any minimum taxes shall be allocated to the member responsible
     for the generation of such credit or minimum taxes.

          (b) BMC's share of any unitary state Tax Assets shall be, with respect
     to each state, the aggregate amount of unitary state Tax Assets of BMC and
     all BMC Subsidiaries that are members of the relevant Consolidated Group.
     The Company's share of any unitary state Tax Assets shall be, with respect
     to each state, the aggregate amount of unitary state Tax Assets of the
     Company and all DePuy Subsidiaries that are memebers of the relevant
     Consolidated Group.  A member's share of such unitary state Tax Assets
     shall be determined in accordance with paragraph (c) of this Section 7.

          (c) In the case of a member of the Consolidated Group, such member's
     share of any unitary state Tax liability or unitary state Tax Asset shall
     be determined in accordance with past practices.

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          (d) Any interest imposed in connection with any Tax liability shall be
     allocated in the same manner as the underlying Tax liability, as provided
     above.

          (e) Any penalty imposed in connection with any Tax liability shall be
     the responsibility of the party whose action or inaction resulted in the
     imposition of such penalty; provided, however, that if such a determination
     cannot be made, the penalty shall be allocated in the same manner as the
     underlying Tax liability, as provided above.

          8.  Allocation of Taxes To Certain Tax Periods.  In the case of any
     taxable period that includes but does not end on either the Closing Date or
     the BMC Sale Date (any such taxable period, being hereinafter referred to
     as a "Straddle Period"),

          (a) real, personal and intangible property Taxes, other than transfer
     and similar Taxes, ("Property Taxes") allocated to the Pre-Closing Tax
     Period or the Pre-BMC Sale Tax Period, as the case may be, shall be equal
     to the amount of such Property Taxes for the entire Straddle Period
     multiplied by a fraction, the numerator of which is the number of days
     during the Straddle Period that are in the Pre-Closing Tax Period or the
     Pre-BMC Sale Tax Period, as applicable, and the denominator of which is the
     number of days in the Straddle Period; and

          (b) all Taxes (other than Property Taxes) for the Pre-Closing Tax
     Period or the Pre-BMC Sale Tax Period, as the case may be, shall be
     computed in accordance with the principles of Treasury Regulation Section
     1.1502-76; provided, however, that the transfers and transactions
     (including Taxes attributable thereto) which occur to effectuate the Pre-
     Offering Reorganization shall be allocated to the Pre-Closing Tax Period or
     the Pre-BMC Sale Tax Period, as the case may be, and provided, further,
     however, that in the case of any Taxes attributable to the ownership of any
     equity interest in any partnership or other "flow through" entity, the
     Taxes allocated to the Pre-Closing Tax Period or the Pre-BMC Sale Tax
     Period, as the case may be, shall be determined on a daily proration basis.

          9.  Credits and Refunds.  (a)  If the Company or any DePuy Subsidiary
     receives from any taxing authority any refunds or credits of Taxes which
     are attributable to any item of income, loss, credit, deduction or other
     tax attribute of Corange, BMC, a Corange Subsidiary, or a BMC Subsidiary,
     the Company shall pay, or cause to be paid, the amount of such refund or
     credit, together with any related interest actually received or credited,
     to Corange (if attributable to an item or other tax attribute of Corange or
     a Corange Subsidiary) or to BMC (if attributable to an item or other tax
     attribute of BMC or a BMC Subsidiary) within twenty (20) business days of
     receipt.

          (b) If Corange, BMC, a Corange Subsidiary or a BMC Subsidiary receives
     from any taxing authority any refunds or credits of Taxes which are
     attributable to any item of income, loss, credit, deduction or other tax
     attribute of the Company or a DePuy Subsidiary, Corange (in the case of
     refunds or credits received by Corange or a Corange

                                       10
<PAGE>
 
     Subsidiary) or BMC (in the case of refunds or credits received by BMC or a
     BMC Subsidiary) shall pay, or caused to be paid, the amount of such refund
     or credit, together with any related interest actually received or
     credited, to the Company or to such DePuy Subsidiary within twenty (20)
     business days of receipt.

          (c) The determination as to whether a refund or credit is attributable
     to an item or other tax attribute of Corange, BMC, a Corange Subsidiary, a
     BMC Subsidiary, the Company or a DePuy Subsidiary, as the case may be,
     shall be made under Section 6 hereof with respect to consolidated or
     combined returns, under Section 7 hereof with respect to unitary returns,
     and on a separate return basis with respect to separate returns.

          10.  Cooperation.  Corange, BMC and the Company agree to cooperate in
     all reasonable respects with respect to Tax matters contemplated by this
     Agreement, which cooperation shall include executing and filing such
     waivers, consents, forms, court petitions, refund claims (including filing
     refund claims as may be directed by another party hereto), complaints,
     powers of attorney and other documents needed from time to time in
     connection with such Tax matters.  The Company agrees to furnish timely,
     and to cause each of the DePuy Subsidiaries to so furnish, Corange and BMC
     with any and all information reasonably requested by Corange and BMC in
     order to carry out the provisions of this Agreement.  Corange and BMC agree
     to furnish timely, and to cause each of their subsidiaries to so furnish,
     the Company with any and all information reasonably requested by the
     Company in order to carry out the provisions of this Agreement.

          11.  Computations.  If Corange or BMC and the Company cannot agree on
     any computation of any amount payable under this Agreement, such
     computation shall be made by a nationally recognized independent public
     accounting firm acceptable to both such parties and the decision of such
     firm shall be final and binding.  The fees and expenses incurred in
     connection with such calculation shall be borne equally by the disputing
     parties.

          12.  Offsets.  No payment shall be required to be made by one party
     (the "first party") to another party (the "second party") pursuant to this
     Agreement to the extent that there is an amount then due and payable under
     this Agreement by the second party to the first party.

          13.  Assignment.  Neither this Agreement nor any of the rights,
     interests or obligations under this Agreement shall be assigned, in whole
     or in part, by operation of law or otherwise by any of the parties without
     the prior written consent of the other parties.  Subject to the preceding
     sentence, this Agreement shall be binding upon, inure to the benefit of,
     and be enforceable by, the parties hereto and their respective successors
     and assigns.

                                       11
<PAGE>
 
          14. Survival.  The provisions of this Agreement shall survive for the
     full period of all applicable statutes of limitations (giving effect to any
     waiver or extensions thereof) and sixty (60) days thereafter.

          15.  Notices.  All notices, requests or other communications hereunder
     shall be given or made in writing and shall be (i) delivered personally
     (including commercial courier), (ii) sent by registered or certified
     airmail, postage prepaid, or (iii) sent by telecopier, addressed to the
     party to whom they are directed at the following addresses, or at such
     other address as may be designated by notice from such party.


          To the Company:

          DePuy, Inc.
          700 Orthopaedic Drive
          Warsaw, Indiana 46581
          Attention:  Mr. Thomas J. Oberhausen
                      Senior Vice President and Chief Financial Officer

          with a copy to:

          DePuy, Inc.
          700 Orthopaedic Drive
          Warsaw, Indiana 46581
          Attention:  Steven L. Artusi, Esq.
                      Senior Vice President, General Counsel
                      and Secretary


          To BMC:

          Boehringer Mannheim Corporation
          9115 Hague Road
          Indianapolis, Indiana 46250
          Attention:  Mr. John D. Kellar
                      Vice President, Taxes

          with a copy to:

          Boehringer Mannheim Corporation
          9115 Hague Road
          Indianapolis, Indiana 46250
          Attention:  Steven Oldham, Esq.
                      General Counsel and Secretary

                                       12
<PAGE>
 
          To Corange:

          Corange Limited
          22 Church Street
          HM 11
          P.O. Box HM 2026
          Hamilton, HM HX
          Bermuda

          with a copy to:

          Anthony Williams, Esq.
          Coudert Brothers
          1114 Avenue of the Americas
          New York, New York  10036


     Any notice, request or other communication given or made in the manner
     prescribed in this Section shall be deemed to have been given and to be
     effective upon receipt or refusal by the addressee, or if later upon such
     later date as is specified therein.  Any party may change its address for
     notices hereunder, effective upon giving of notice of such change hereunder
     to the other parties.

          16.  Governing Law.  This Agreement is made and shall be construed in
     all respects in accordance with the laws of the State of New York without
     regards to its conflicts of laws principles. Any controversy concerning the
     interpretation or operation of this Agreement shall be resolved first by
     resort to good faith negotiation between the parties for up to thirty (30)
     days and, if that fails, by submitting the issue to arbitration in
     accordance with the commercial arbitration rules of Conciliation and
     Arbitration of the International Chamber of Commerce by three (3)
     arbitrators approved in accordance with such rules.  Such arbitration shall
     be conducted in New York City, New York.  The award of the arbitrator(s)
     shall be final and binding on the parties.  Judgement upon the award
     rendered by the arbitration may be entered in any court having jurisdiction
     thereof.

          17.  Entire Agreement.  This Agreement (a) constitutes the entire
     agreement and supersedes all prior agreements and understandings, both
     written and oral, among the parties with respect to the subject matter of
     this Agreement and (b) is not intended to confer upon any person other than
     the parties hereto any rights or remedies.

          18.  Counterparts.  This Agreement may be executed in any number of
     duplicate counterparts, each of which shall be deemed an original but all
     of which together shall constitute one and the same instrument.

                                       13
<PAGE>
 
          19. Severability.  In the event any of the provisions of this
     Agreement are held to be unenforceable or invalid by any court of competent
     jurisdiction, unless the unenforceability or invalidity thereof causes a
     substantial departure from the underlying intent and sense of the remainder
     of this Agreement, the validity and enforceability of the remaining
     provisions shall not be affected thereby, except those remaining provisions
     of which the unenforceable or invalidated provisions comprise an integral
     part or from which they are otherwise clearly inseparable.  In the event
     any provision is held unenforceable or invalid, the parties shall use their
     best efforts to agree upon an enforceable and valid provision which shall
     be a reasonable substitute for such unenforceable or invalid provision in
     light of the purpose of this Agreement and, upon so agreeing, shall
     incorporate such substitute provision in this Agreement.

          20.  Headings.  Headings of sections in this Agreement are inserted
     for convenience of reference only and are not intended to be part of or to
     affect the meaning or interpretation of this Agreement.

          21.  Amendments.  This Agreement may be modified, amended or
     supplemented only by the mutual written agreement of the parties hereto.



                 [Remainder Of Page Intentionally Left Blank.]

                                       14
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.


                                    DEPUY, INC.

                                    By:  /s/  James A. Lent
                                         ------------------
                                         Name:   James A. Lent
                                         Title:  Chairman and Chief Executive
                                                 Officer


                                    BOEHRINGER MANNHEIM
                                    CORPORATION

                                    By:  /s/  Hubert Rehkaemper
                                         ----------------------
                                         Name:   Hubert Rehkaemper
                                         Title:  President & CEO


                                    CORANGE LIMITED

                                    By:  /s/  Anthony Williams
                                         ---------------------
                                         Name:   Anthony Willams
                                         Title:  Vice Chairman

                                       15
<PAGE>
 
                                   EXHIBIT A
                                   ---------

                               DEPUY SUBSIDIARIES

     Name and Registered Office/Principal Place of Business of Subsidiaries
     ----------------------------------------------------------------------


DePuy Orthopadie GmbH                DePuy Japan Incorporated          
Mellinweg 16                         Noto Building                     
66280 Sulzbach                       22-1 Shinkawa 2-Chome             
Germany                              Chuo-ku, Tokyo 104                
                                     Japan                             
De Puy A.G.                                                            
Alte Steinhauserstrasse 19           DePuy Korea, Inc.                 
6330 Cham                            12th Floor                        
Switzerland                          Yooksung Building                 
                                     706-725 Yoksam-Dong               
DePuy Orthopedie SA                  Kangnam-ku                        
2 rue de Bois Sauvage                Seoul                             
91055 Evry Cedex                     Korea                             
France                                                                 
                                     DePuy Far East Pte Ltd.           
DePuy Italia S.r.L.                  21 Collyer Quay                   
Palazzo Marco Polo                   #14-02/03 (c/o May Oh & Wee)      
Il Girasole                          Hong Kong Bank Building           
20084 Lacchiarella                   Singapore 0104                    
Milan                                                                  
Italy                                DePuy GmbH                        
                                     Torfstecherstrasse 1              
DePuy Iberica, S.A.                  5111 Burmoos                      
Avenida Melchor Fernandez            Austria                           
Almagro 23                                                             
28029 Madrid                         DePuy Olmed AB                    
Spain                                Dag Hammerskjolds vag 12          
                                     75183 Uppsala                     
Medical Trivest SL                   Sweden                            
Calle Museu 6                                                          
Baedalona 08915                      DePuy Hungary                     
Barcelona                            Kereskedelmi Kft                  
Spain                                1134 Budapest                     
                                     Apaly vtoa 4/A                    
                                     1X em 36                          
                                     Hungary                            
<PAGE>
 
DePuy CZ s.r.o.                  DePuy Canada Ltd.                   
Konopistska 16                   6695 Millcreek Drive                
CZ-101 00 Prague 10              Unit 3                              
Czech Republic                   Mississauga, Ontario                
                                 L5N 5R8                             
DePuy New Zealand                Canada                              
Limited                                                              
15 Rakino Way                    DePuy Orthopaedics, Inc.            
Mount Wellington                 P.O. Box 988                        
Auckland, New Zealand            700 Orthopaedic Drive               
                                 Warsaw, IN 46581                    
Corange U.K. Holdings Ltd.                                           
St. Anthony's Road               DePuy Orthopaedic Technology, Inc.  
Leeds LS11 8DT                   1905 North MacArthur Drive          
England                          Tracy, CA 95376                     
                                 
DePuy International Ltd.         DePuy ACE Medical Company             
St. Anthony's Road               2260 East El Segundo Blvd.           
Leeds LS11 8DT                   El Segundo, CA 90245                  
England                                                               
                                 DePuy DuPont Orthopedics Partnership  
DePuy Joints S.A.                P.O. Box 988                          
Uribu 663                        700 Orthopaedic Drive                 
1027 Buenos Aires                Warsaw, IN  46581                     
Argentina                        (50% owned)                           
                                                                       
DePuy Taiwan                     DePuy Motech, Inc.                    
20th Floor                       P.O. Box 988                          
510 Chungshiao East Road         700 Orthopaedic Drive                 
Section 5                        Warsaw, IN 46581                      
Taipei, Taiwan                   (80% owned)                           
Republic of China                                                      
                                 Expanded Optics, Inc.                 
DePuy Australia Pty Limited      7382 Bolsa Avenue                     
1113 Palmer Court                Westminster, CA  92683                
P.O. Box 476                                                           
Mount Waverly, Victoria 3149     DePuy Overseas Trading Ltd.           
Australia                        22 Church Street                      
                                 Hamilton, HM 11, Bermuda               
DePuy Mexico S.A. De C.V.        
Huizaches 25                     
Colonia Ranchos los Colorines    
Mexico D.F. 14386                
Mexico


                                       2