_______









Exhibit

10.17




 




Non-Qualified

Stock Option Agreement




under

the Inverness Medical Innovations, Inc.




2001

Stock Option and Incentive Plan




 




	

  Name of Optionee:


  	

   


  	

  David Scott (the “Optionee”)


  
	

   


  	

   


  	

   


  
	

  No. of Option Shares:


  	

   


  	

  52.2192197575339


  
	

   


  	

   


  	

   


  
	

  Option Exercise Price per Share:


  	

   


  	

  $47,418.5982 

  (the “Option Exercise Price Per Share”)


  
	

   


  	

   


  	

   


  
	

  Grant Date:


  	

   


  	

  August 15, 2001


  
	

   


  	

   


  	

   


  
	

  Expiration Date:


  	

   


  	

  January 31, 2002 (the “Expiration Date”)


  
	

   


  	

   


  	

   


  





 




Pursuant to the Inverness

Medical Innovations, Inc. 2001 Stock Option and Incentive Plan (the “Plan”),

Inverness Medical Innovations, Inc., a Delaware corporation (together with its

successors, the “Company”), hereby grants to the Optionee, who is an

officer, employee, director, consultant or other key person of the Company or

any of its subsidiaries, an option (the “Stock Option”) to purchase on

or prior to the Expiration Date all or part of the number of shares of Common

Stock, par value $.001 per share (the “Stock”), of the Company specified

above (the “Option Shares”) at the Option Exercise Price Per Share.  The Optionee agrees to the provisions set

forth herein and acknowledges that each such provision is a material condition

of the Company’s agreement to grant the Stock Option to him.




 




1.            Definitions. 

For the purposes of this Agreement, the following terms shall have the

following respective meanings.  All

capitalized terms used herein and not otherwise defined shall have the

respective meanings set forth in the Plan.




 




“Cause” means a

vote of the Board resolving that the Optionee has committed willful misconduct

or gross negligence in the performance of duty in connection with the business

affairs of the Company which, as determined in good faith by the Board,

would:  (i) materially adversely

affect the business or the reputation of the Company with its current or

prospective customers, suppliers, lenders and/or other third parties with whom

it does or might do business; or (ii) expose the Company to a risk of

civil or criminal legal damages, liabilities or penalties; provided that

if such willful misconduct or gross negligence and any adverse effects or

damages therefrom may be cured, the Optionee shall have fourteen (14) days or

such additional time as may be reasonably determined by the Board to effect

such cure from receipt by the Optionee of a written demand from the Board.




 




“Constructive

Termination” means the occurrence of any of the following events in the

absence of Cause:  (i) a

significant adverse change in the nature or scope of the Optionee’s

responsibilities, authorities, powers, functions or duties; (ii) a Change

of Control of the Company, except for a Change of Control which results from

the Merger; or (iii) the sale of all or substantially all of the assets of

the Company.




 




 





























 




“Disability” means

the Optionee’s inability to perform his normal required services for the

Company and its subsidiaries by reason of his mental or physical disability, as

determined by the Board in good faith in its sole discretion.




 




“Merger” means the

merger of Inverness Medical Technology, Inc. with a wholly-owned subsidiary of

Johnson & Johnson pursuant to the Agreement and Plan of Split-Off and

Merger dated as of May 23, 2001, among Johnson & Johnson, Sunrise

Acquisition Corp. and Inverness Medical Technology, Inc. (the “Merger

Agreement”).




 




“Negative Vote”

means the failure of the stockholders of Inverness Medical Technology, Inc.

entitled to vote at the Special Meeting to adopt the Merger Agreement, approve

the Company’s 2001 Stock Option and Incentive Plan and approve the Company’s

Executive Bonus Plan, each as described in the Registration Statement on Form

S-4 filed by the Company with the Securities and Exchange Commission on August

13, 2001, as the same may be amended from time to time.




 




 “Permitted Transferees” means any of

the following to whom the Optionee may transfer Repurchasable Shares hereunder

(as set forth in Section 6):  the

Optionee’s spouse, children (natural or adopted) or stepchildren, a trust for

the sole benefit of one or more such family members of which the Optionee is

the settlor, or a family limited partnership or family limited liability

company of which the limited partners or members, as the case may be, consist

solely of one or more such family members; provided, however,

that any such trust, family limited partnership, or family limited liability

company does not require or permit distribution of any Repurchasable Shares

during the term of this Agreement unless subject to the terms of this

Agreement.  Upon the death of the Optionee

(or a Permitted Transferee to whom Repurchasable Shares have been transferred

hereunder), the term Permitted Transferees shall also include such deceased

Optionee’s (or such deceased Permitted Transferee’s) estate, executions,

administrations, personal representations, heirs, legatees and distributees, as

the case may be.




 




“Person” means any

individual, corporation, partnership (limited or general), limited liability

company, limited liability partnership, association, trust, joint venture,

unincorporated organization or any similar entity.




 




“Repurchasable Shares”

shall initially mean all of the Option Shares purchased by the Optionee, provided

that, for so long as the Optionee remains an employee of the Company or any of

its subsidiaries, Option Shares acquired hereunder shall become Non-Repurchasable

Shares in 36 equal monthly installments commencing on the last day of the

calendar month during which such Option Shares are purchased (such date, the “Exercise

Date”).




 




“Special Meeting”

means the special meeting of the stockholders of Inverness Medical Technology,

Inc. at which such stockholders will vote upon a proposal to adopt the Merger

Agreement, a proposal to approve the Company’s 2001 Stock Option and Incentive

Plan and a proposal to approve the Company’s Executive Bonus Plan.




 




“Termination Event”

means the termination of the Optionee’s employment with the Company and its

subsidiaries for any reason whatsoever, regardless of the circumstances

thereof, and including without limitation upon retirement or discharge or

resignation for any 




 




2





























 




reason, whether voluntary or involuntary; provided,

however, that none of death, Disability, Constructive Termination or the

termination by the Company or its subsidiaries of the Optionee’s employment

with the Company and its subsidiaries without Cause shall be a Termination

Event.  For purposes hereof, the Board’s

determination of the reason for termination of the Optionee’s employment shall

be conclusive and binding on the Optionee and the Optionee’s representatives or

legatees.  Upon a Termination Event, all

remaining Repurchasable Shares shall remain Repurchasable Shares and shall no

longer become Non-Repurchasable Shares notwithstanding anything to the contrary

set forth herein.




 




“Non-Repurchasable

Shares” means all Option Shares that are not Repurchasable Shares.




 




2.            Exercisability.




 




(a)         This Stock Option may not be exercised

until it has becomes exercisable.  This

Stock Option shall be exercisable with respect to all or any portion of the

Option Shares at any time or times during the period commencing immediately

after the Merger becomes effective and ending on the close of business on the

Expiration Date (the “Exercise Period”), subject to the provisions

hereof and of the Plan; provided, however, that this Stock Option

may not be exercised more than twice.




 




(b)        To the extent the Optionee has not

exercised this Stock Option in full within the Exercise Period, upon the

Optionee’s delivery to the Company of the unexercised portion of this Stock

Option, the Company shall grant the Optionee a ten-year non-qualified stock

option, pursuant to a Remainder Option Agreement in the form attached hereto as

Exhibit A to purchase a number of shares of Stock equal to the number of

Option Shares not purchased within the Exercise Period (such options, the “Remainder

Option” and such shares, the “Remainder Option Shares”).  Notwithstanding the foregoing, the Optionee

shall be granted the Remainder Option prior to the expiration of the Exercise

Period upon the earlier of (i) the Optionee’s second partial exercise of

this Stock Option or (ii) receipt by the Company of the Optionee’s written

request to receive the Remainder Option in lieu of any remaining rights to

exercise this Stock Option.




 




3.            Manner of Exercise.




 




(a)         The Optionee may exercise this Stock

Option only in the following manner: from time to time during the Exercise

Period, the Optionee may give written notice to the Administrator of his

election to purchase some or all of the Option Shares.  This notice shall specify the number of

Option Shares to be purchased.




 




Payment of the purchase price for the Option Shares

may be made by one or more of the following methods:  (i) in cash, by certified or bank check or other instrument

acceptable to the Administrator; or (ii) in cash in an amount no less than

the par value of the Option Shares being purchased together with delivery by

the Optionee to the Company of a promissory note in the form attached hereto as

Exhibit B in the amount of the remaining portion of the purchase

price.  Payment instruments will be

received subject to collection.




 




3





























 




The delivery of certificates representing the Option

Shares will be contingent upon the Company’s receipt from the Optionee of full payment

for the Option Shares, as set forth above and any agreement, statement or other

evidence that the Company may require to satisfy itself that the issuance of

Stock to be purchased pursuant to the exercise of Stock Options under the Plan

and any subsequent resale of the shares of Stock will be in compliance with

applicable laws and regulations.




 




(b)        Certificates for shares of Stock

purchased upon exercise of this Stock Option shall be issued and delivered to

the Optionee upon compliance to the satisfaction of the Administrator with all

requirements under applicable laws or regulations in connection with such

issuance and with the requirements hereof and of the Plan.  The determination of the Administrator as to

such compliance shall be final and binding on the Optionee. The Optionee shall

not be deemed to be the holder of, or to have any of the rights of a holder

with respect to, any shares of Stock subject to this Stock Option unless and

until this Stock Option shall have been exercised pursuant to the terms hereof,

the Company shall have issued and delivered the shares to the Optionee, and the

Optionee’s name shall have been entered as the stockholder of record on the

books of the Company.  Thereupon, the

Optionee shall have full voting, dividend and other ownership rights with

respect to such shares of Stock.




 




(c)         Notwithstanding any other provision

hereof or of the Plan, no portion of this Stock Option shall be exercisable

after the earlier of (i) the issuance of the Remainder Option, if any, and (ii)

the Expiration Date hereof.




 




4.            Repurchase Right.




 




(a)         Repurchase.  Upon the occurrence of a Termination Event,

the Company or its assigns shall have the right and option to repurchase all or

any portion of the Repurchasable Shares held by the Optionee or any Permitted

Transferee.  The purchase and sale

arrangements contemplated by the preceding sentence of this Section 4(a)

are referred to herein as the “Repurchase.”




 




(b)        Repurchase Price.  Subject to Section 4(a), the per share

purchase price of the Repurchasable Shares subject to the Repurchase (the “Repurchase

Price”) shall be the Fair Market Value of a share of Stock as of the date

of such Termination Event.




 




(c)         Closing Procedure.  The Company or its assigns shall effect the

Repurchase (if so elected) by delivering or mailing to the Optionee (and/or, if

applicable, any Permitted Transferee) written notice within six (6) months

after the Termination Event, specifying a date within such six-month period in

which the Repurchase shall be effected. 

Upon such notification, the Optionee and any Permitted Transferees shall

promptly surrender to the Company any certificates representing the Option

Shares being purchased, together with a duly executed stock power for the

transfer of such Option Shares to the Company or the Company’s assignee or

assignees.  Upon the Company’s or its

assignee’s receipt of the certificates from the Optionee or any Permitted

Transferees, the Company or its assignee or assignees shall deliver to him, her

or them a check for the Repurchase Price of the Repurchasable Shares being

purchased; provided, however, that the Company may pay the

Repurchase Price for such shares by offsetting and canceling firstly any

indebtedness to the Company incurred in connection with the 




 




4





























 




exercise of the Stock

Option and then, secondly, any other obligations then owed by the Optionee to

the Company.  At such time, the Optionee

and/or any holder of the Repurchasable Shares being purchased shall deliver to

the Company the certificate or certificates representing the shares so

repurchased, duly endorsed for transfer, free and clear of any liens or

encumbrances.




 




(d)        Notwithstanding anything to the contrary

in Sections 4(b) and 4(c) above, if the Optionee has, within the six-month

period ending on the date of the Termination Event, paid for any Option Shares,

then (i) the Company’s right to elect to Repurchase such Option Shares

shall expire at the end of the six-month period commencing on the date on which

the Optionee paid for such Option Shares, (ii) the Repurchase Price for such

Option Shares shall be the Fair Market Value of the Stock as of the date of

such Repurchase and (iii) the Optionee or any Permitted Transferee shall

retain ownership interest in such Option Shares, including, without limitation,

the right to vote such Option Shares and receive dividends issued in respect of

such Option Shares until the date of Repurchase.  For purposes of this Section 4(d), such Option Shares shall be

considered “paid for” only upon payment of that portion (the “Relevant

Proportion”) of the principal balance and interest owed under any promissory

note used to purchase such shares or secured in whole or in part by such shares

which is calculated by multiplying the aggregate amount of the principal

balance and interest owed under the relevant promissory note by a percentage

calculated as follows: A/B x 100/1 where A equals the number of Option Shares

the Optionee considers as having been “paid for”, and B equals the total number

of Option Shares purchased under the relevant promissory note.




 




(e)         The Repurchase right specified in this

Section 4 shall survive and remain in effect as to Repurchasable Shares

following and notwithstanding any public offering by or merger or other

transaction involving the Company and certificates representing such

Repurchasable Shares shall bear legends to such effect.




 




5.            Termination of Repurchase Right.  Upon the death, Disability or Constructive

Termination of the Optionee or upon the termination by the Company or its

subsidiaries of the Optionee’s employment with the Company and its subsidiaries

without Cause, all Repurchasable Shares at the time of such death, Disability

or constructive or actual termination shall become Non-Repurchasable Shares.




 




6.            Limitations Pending Lapse of Repurchase Right and

Repayment of Certain Debt.




 




(a)         Shares of Option Shares acquired

hereunder may not be sold, assigned, transferred, pledged or otherwise

encumbered or disposed of by the Optionee until such shares are no longer

subject to the right of Repurchase set forth in Section 4 and unless the

Company has received, or is satisfied that it will receive, payment of the

Relevant Proportion of the amounts outstanding, including without limitation

the principal balance interest owed, under any promissory note used to purchase

such shares or secured in whole or in part by such shares.




 




(b)        Any attempted disposition of Option

Shares not in accordance with the terms and conditions of this Section 6

shall be null and void, and the Company shall not reflect on its records any

change in record ownership of any Option Shares as a result of any such 




 




5





























 




disposition, shall

otherwise refuse to recognize any such disposition and shall not in any way

give effect to any such disposition of any Option Shares.




 




(c)         Other than the limitations set forth in

Sections 6(a) and 6(b) above, this Agreement is not intended to subject the

Options Shares to involuntary transfer, reversion or forfeiture.




 




(d)        Notwithstanding the foregoing

provisions, the Optionee (but not any transferee thereof) may sell, assign,

transfer or give away any or all of the Option Shares to Permitted Transferees;

provided, however, that such Permitted Transferee(s) shall, as a

condition to any such transfer, agree to be subject to the provisions of this

Agreement (including, without limitation, the provisions of Section 4 and

this Section 6) and shall have delivered a written acknowledgment to that

effect to the Company.




 




7.            Termination. 

This Stock Option shall terminate immediately and be of no further force

and effect upon the occurrence, as determined by the Board, of any of the

following events:




 




(a)         a Negative Vote;




 




(b)        termination for Cause of the Optionee’s

employment by the Company or a subsidiary; or




 




(c)         resignation of the Optionee from the

Company or a subsidiary other than as a result of Constructive Termination.




 




8.            Incorporation of Plan.  Notwithstanding anything herein to the contrary, the Stock Option

and this Agreement shall be subject to and governed by all the terms and

conditions of the Plan.




 




9.            Legend. 

Certificates evidencing the Option Shares acquired hereunder shall bear

an appropriate legend, as determined by the Administrator in its sole discretion,

to the effect that such Shares are subject to certain rights set forth herein

and in the Plan.




 




10.          Transferability.  This Agreement is personal to the Optionee,

is non-assignable and is not transferable in any manner, by operation of law or

otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the

Optionee’s lifetime, only by the Optionee, and thereafter, only by the

Optionee’s legal representative or legatee.




 




11.          Tax Withholding.  The Optionee shall, not later than the date

as of which the exercise of this Stock Option becomes a taxable event for

Federal income tax purposes, pay to the Company or make arrangements

satisfactory to the Administrator for payment of any Federal, state, local and

foreign taxes required by law to be withheld on account of such taxable event.




 




12.          Assignment.  At the discretion of the Board, the Company

shall have the right to assign its rights with respect to the Repurchase to any

Person or Persons, in whole or in part in 




 




6





























 




any particular instance, upon the same terms and

conditions applicable to the exercise thereof by the Company, and such assignee

or assignees of the Company shall then take and hold any Option Shares so

acquired subject to such terms as may be specified by the Company in connection

with any such assignment.




 




13.          Miscellaneous Provisions.




 




(a)         Adjustments for Stock-Split.  In the event that the Company effectuates a

stock split of its Common Stock in connection with the Merger, the Stock Option

and Option Exercise Price Per Share shall be adjusted accordingly; provided

that the resulting number of Option Shares shall be rounded up to the nearest

whole number and the resulting Option Exercise Price Per Share shall be rounded

up to the nearest one-tenth of a dollar.




 




(b)        Record Owner; Dividends.  Following the exercise of this Stock Option,

the Optionee and any Permitted Transferees, during the duration of this

Agreement, shall be considered the record owners of and shall be entitled to

vote the purchased Option Shares if and to the extent such shares are entitled

to voting rights.  The Grantee and any

Permitted Transferees shall be entitled to receive all dividends and any other

distributions declared on the purchased Option Shares; provided, however,

that the Company is under no duty to declare any such dividends or to make any

such distribution.




 




(c)         Equitable Relief.  The parties hereto agree and declare that

legal remedies are inadequate to enforce the provisions of this Agreement and

that equitable relief, including specific performance and injunctive relief,

may be used to enforce the provisions of this Agreement.




 




(d)         Change and Modifications.  This Agreement may not be orally changed,

modified or terminated, nor shall any oral waiver of any of its terms be

effective. This Agreement may be changed, modified or terminated only by an

agreement in writing signed by the Company and the Optionee.




 




(e)         Governing Law.  This Agreement shall be governed by and

construed in accordance with the laws of the State of Delaware without regard

to conflict of law principles.




 




(f)         Headings.  The headings are intended only for

convenience in finding the subject matter and do not constitute part of the

text of this Agreement and shall not be considered in the interpretation of

this Agreement.




 




(g)        Saving Clause.  If any provision(s) of this Agreement shall

be determined to be illegal or unenforceable, such determination shall in no

manner affect the legality or enforceability of any other provision hereof.




 




(h)        Notices.  All notices, requests, consents and other

communications shall be in writing and be deemed given when delivered

personally, by facsimile transmission or when received if mailed by first class

registered or certified mail, postage prepaid. 

Notices to the Company or the Optionee shall be addressed as set forth

underneath their signatures below, or to such other address or addresses as may

have been furnished by such party in writing to the other.




 




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Notices to any holder of

the Option Shares other than the Optionee shall be addressed to the address

furnished by such holder to the Company.




 




(i)          Continued Employment.  This Stock Option does not confer upon the

Optionee any rights with respect to continuance of employment by the Company or

any subsidiary.




 




(j)          Benefit and Binding Effect.  This Agreement shall be binding upon and

shall inure to the benefit of the parties hereto, their respective successors,

assigns, and legal representatives. 

Without limitation of the foregoing, upon any stock-for-stock merger in

which the Company is not the surviving entity, shares of the Company’s

successor issued in respect of the Option Shares shall remain subject to the Repurchase

rights and the schedule for release of Repurchase rights set forth in this

Agreement.  The Company has the right to

assign this Agreement, and such assignee shall become entitled to all the

rights of the Company hereunder to the extent of such assignment.




 




(k)         Dispute Resolution.  Except as provided below, any dispute

arising out of or relating to this Agreement or the breach, termination or

validity hereof shall be finally settled by binding arbitration conducted

expeditiously in accordance with the Comprehensive Arbitration Rules and

Procedures of JAMS or its successors (the “JAMS Rules”).  The arbitration shall be governed by the

United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the award

rendered by the arbitrators may be entered by any court having jurisdiction

thereof.  The place of arbitration shall

be  Boston, Massachusetts.




 




The parties covenant and agree that the arbitration

shall commence within 60 days of the date on which a written demand for

arbitration is filed by any party hereto. 

In connection with the arbitration proceeding, the arbitrator shall have

the power to order the production of documents by each party and any

third-party witnesses.  In addition,

each party may take up to three depositions as of right, and the arbitrator may

in his or her discretion allow additional depositions upon good cause shown by

the moving party.  However, the

arbitrator shall not have the power to order the answering of interrogatories

or the response to requests for admission. 

In connection with any arbitration, each party shall provide to the

other, no later than seven (7) business days before the date of the

arbitration, the identity of all persons that may testify at the arbitration

and a copy of all documents that may be introduced at the arbitration or

considered or used by a party’s witness or expert.  The arbitrator’s decision and award shall be made and delivered

within six (6) months of the selection of the arbitrator.  The arbitrator’s decision shall set forth a

reasoned basis for any award of damages or finding of liability.  The arbitrator shall not have power to award

damages in excess of actual compensatory damages and shall not multiply actual

damages or award punitive damages or any other damages that are specifically excluded

under this Agreement, and each party hereby irrevocably waives any claim to

such damages.




 




The parties covenant and agree that they will

participate in the arbitration in good faith. 

This Section 13(k) applies equally to requests for temporary, preliminary

or permanent injunctive relief, except that in the case of temporary or

preliminary injunctive relief any party may proceed in court without prior

arbitration for the limited purpose of avoiding immediate and irreparable harm.




 




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Each of the parties hereto (i) hereby irrevocably

submits to the jurisdiction of any United States District Court of competent

jurisdiction for the purpose of enforcing the award or decision in any such

proceeding, (ii) hereby waives, and agrees not to assert, by way of

motion, as a defense, or otherwise, in any such suit, action or proceeding, any

claim that it is not subject personally to the jurisdiction of the above-named

courts, that its property is exempt or immune from attachment or execution

(except as protected by applicable law), that the suit, action or proceeding is

brought in an inconvenient forum, that the venue of the suit, action or

proceeding is improper or that this Agreement or the subject matter hereof may

not be enforced in or by such court, and hereby waives and agrees not to seek

any review by any court of any other jurisdiction which may be called upon to

grant an enforcement of the judgment of any such court.  Each of the parties hereto hereby consents

to service of process by registered mail at the address to which notices are to

be given.  Each of the parties hereto

agrees that its, his or her submission to jurisdiction and its, his or her

consent to service of process by mail is made for the express benefit of the

other parties hereto.  Final judgment

against any party hereto in any such action, suit or proceeding may be enforced

in other jurisdictions by suit, action or proceeding on the judgment, or in any

other manner provided by or pursuant to the laws of such other jurisdiction.




 




(l)          Counterparts.  For the convenience of the parties and to

facilitate execution, this Agreement may be executed in two or more

counterparts, each of which shall be deemed an original, but all of which shall

constitute one and the same document.




 




[SIGNATURE

PAGE FOLLOWS]




 




 





























 




IN WITNESS WHEREOF, the Company and the Optionee have

executed this Non-Qualified Stock Option Agreement as of the date first above

written.




 




	

   


  	

  COMPANY


  
	

   


  	

   


  
	

   


  	

  INVERNESS MEDICAL


  INNOVATIONS, INC.


  
	

   


  	

   


  
	

   


  	

  By: 


  	

  /s/ Duane L. James


  	

   


  
	

   


  	

   


  	

  Name:  Duane

  L. James


  
	

   


  	

   


  	

  Title:  Vice

  President and Treasurer


  
	

   


  	

   


  
	

   


  	

  OPTIONEE


  
	

   


  	

   


  
	

   


  	

  /s/ David Scott


  	

   


  
	

   


  	

  Name:  David

  Scott


  
	

   


  	

  Address:


  	

  68 Newland Mill


  
	

   


  	

   


  	

  Whitney


  
	

   


  	

   


  	

  Oxon OX8 6SZ


  
	

   


  	

   


  	

  UK