EXECUTION COPY









Exhibit 10.2




 




EXECUTION COPY




 




TAX ALLOCATION AGREEMENT dated as of

November 21, 2001 (this “Agreement”), among JOHNSON & JOHNSON, a

New Jersey corporation (“Parent”), INVERNESS MEDICAL TECHNOLOGY, INC., a

Delaware corporation (the “Company”), and INVERNESS MEDICAL INNOVATIONS, INC.,

a Delaware corporation and a direct majority owned subsidiary of the Company

(“Newco”).




 




WHEREAS

the Company is the common parent of the group of affiliated corporations (the

“Company Consolidated Group”), within the meaning of Section 1504(a) of

the Internal Revenue Code of 1986, as amended (the “Code”), with which the

Company filed a consolidated federal income Tax Return (as defined herein) at

any time prior to the Split-Off (as defined herein);




 




WHEREAS,

pursuant to the Agreement and Plan of Split-Off and Merger, dated as of

May 23, 2001 (the “Merger Agreement”), among Parent, Sunrise Acquisition

Corp. (“Sub”) and the Company, the Company will, on the Effective Date (as

defined herein) (i) effect the restructuring transactions (the

“Restructuring”) described in the Restructuring Agreement, dated as of

November 21, 2001, among the Company, Newco and certain subsidiaries of

the Company (the “Restructuring Agreement”) and (ii) distribute to the

holders of Company Common Stock all the outstanding shares of Newco Common

Stock in consideration of the redemption of a portion of their shares of

Company Common Stock (the “Split-Off”);




 




WHEREAS,

on the Effective Date, Sub will merge with and into the Company with the

Company surviving (the “Merger”) as contemplated by the Merger Agreement,

pursuant to which the holders of Company Common Stock will receive solely

common stock of Parent in exchange for their Company Common Stock not exchanged

in the Split-Off;




 




WHEREAS

Parent, the Company and Newco intend that, after the Split-Off, neither Newco

nor any of its Subsidiaries will be a member of the Company Consolidated Group

for federal income tax purposes;




 




WHEREAS,

for Federal income tax purposes, it is intended (a) by the Company that the distribution

of Newco Common Stock in connection with the transactions contemplated by the

Merger Agreement shall qualify, as to the stockholders of the Company, as a

transaction described in Section 355 of the Code (it being understood and

agreed that such qualification shall not be a condition to the




 





























 




consummation

of the transactions contemplated by this Agreement or the other Transaction

Agreements and that Parent shall have no obligation to cause such distribution

to so qualify) and (b) by Parent, the Company and Newco that the Merger qualify

as a “reorganization” within the meaning of Section 368 (a) of the Code;

and




 




WHEREAS

Parent, the Company and Newco desire on behalf of themselves, their

Subsidiaries and their successors to set forth their rights and obligations

with respect to Taxes relating to taxable periods before and after the

Split-Off.




 




NOW, THEREFORE, the parties hereto agree as

follows:




 




ARTICLE

I




 




Definitions




 




SECTION 1.01.  Definitions.  For

purposes of this Agreement:




 




“Agreement” shall have the meaning

set forth in the Preamble.




 




“Code” shall have the meaning set

forth in the Recitals.




 




“Company” shall have the meaning set

forth in the Preamble.




 




“Company Consolidated Group” shall

have the meaning set forth in the Recitals.




 




“Company Group” shall mean the

Company and each of its direct and indirect Subsidiaries, other than members of

the Newco Group.




 




“Dispose” (and, with correlative

meaning, “Disposition”) shall mean pay, discharge, settle or otherwise dispose.




 




“Due Date” shall mean, with respect

to any Tax Return or payment, the date on which such Tax Return is due to be

filed with, or such payment is due to be made to, the appropriate Tax Authority

pursuant to applicable law, giving effect to any applicable extensions of the

time for such filing or payment.




 




 




2





























 




“Effective

Date” shall mean the date on which the Effective Time occurs.




 




“Effective

Time” shall have the meaning set forth in the Merger Agreement.




 




“Final

Determination” shall mean (1) the entry of a decision of a court of

competent jurisdiction at such time as an appeal may no longer be taken from

such decision or (2) the execution of a closing agreement or its equivalent

between the particular taxpayer and the relevant Tax Authority.




 




“Merger”

shall have the meaning set forth in the Recitals.




 




“Merger

Agreement” shall have the meaning set forth in the Recitals.




 




“Newco”

shall have the meaning set forth in the Preamble.




 




“Newco

Business” shall have the meaning set forth in the Restructuring Agreement.




 




“Newco

Group” shall mean Newco and each corporation that is, immediately after the

Split-Off, a direct or indirect Subsidiary of Newco.




 




“Parent”

shall have the meaning set forth in the Preamble.




 




“Payee”

shall have the meaning set forth in Section 4.6 hereof.




 




“Payor”

shall have the meaning set forth in Section 4.6 hereof.




 




“Post-Distribution

Period” shall mean any taxable period beginning after the Effective Date

and, in the case of any Straddle Period, that portion of such Straddle Period

that begins on the day immediately following the Effective Date.




 




“Pre-Distribution

Period” shall mean any taxable period that ends on or prior to the

Effective Date and, in the case of any Straddle Period, that portion of such

Straddle Period ending on and including the Effective Date.




 




“Restructuring”

shall have the meaning set forth in the Recitals.




 




 




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“Split-Off”

shall have the meaning set forth in the Recitals.




 




“Sunrise

Business” shall have the meaning set forth in the Restructuring Agreement.




 




“Straddle

Period” shall mean any taxable period that begins before or on and ends

after the Effective Date.




 




“Subsidiary”

shall mean a subsidiary, as defined in the Merger Agreement, that is a corporation.




 




“Tax

Authority” shall mean the Internal Revenue Service and any other state,

local or foreign governmental authority responsible for the administration of

Taxes.




 




“Tax

Claim” shall mean a notice of deficiency, proposed adjustment, assessment,

audit, examination, suit, dispute or other claim with respect to Taxes or a Tax

Return.




 




“Taxes”,

as used in this Agreement, shall include (1) all forms of taxation,

whenever created or imposed, and whether domestic or foreign, and whether

imposed by a national, federal, state, provincial, local or other Governmental

Entity, including all interest, penalties and additions imposed with respect to

such amounts; (2) liability for the payment of any amounts of the type

described in clause (1) as a result of being a member of an affiliated,

consolidated, combined or unitary group; and (3) liability for the payment

of any amounts as a result of being party to any tax sharing agreement (other

than this Agreement) or as a result of any express or implied obligation to indemnify

any other person with respect to the payment of any amount described in

clause (1) or (2) (other than an obligation to indemnify under this

Agreement).




 




“Tax

Return” shall mean all domestic or foreign (whether national, federal,

state, provincial, local or otherwise) returns, declarations, statements,

reports, schedules, forms and information returns relating to Taxes and any

amended return relating to Taxes.




 




“Transaction

Taxes” shall have the meaning set forth in Section 3.03 (a) hereof.




 




“Underpayment

Rate” shall mean the interest rate specified under Section 6621 (a)

(2) of the Code.




 




 




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Any capitalized term not defined herein

shall have the meaning set forth in the Merger Agreement or the Restructuring

Agreement, as the case may be.




 




ARTICLE

II




 




Preparation

and Filing of Tax Returns




 




SECTION 2.01.      Preparation of Pre-Distribution Period Tax Returns and

Straddle Period Tax Returns. 

(a)  Parent or the Company shall, with the cooperation of

Newco and each member of the Newco Group (as provided for in Article VI

hereof), prepare (or cause to be prepared) and file (or cause to be filed) all

Tax Returns with respect to the Company Consolidated Group for any

Pre-Distribution Period or Straddle Period. 

Parent and the Company shall have sole discretion as to the positions

taken in any such Tax Returns except as otherwise provided in this

Agreement.  Similar provisions shall

apply with respect to any consolidated, combined, unitary, or aggregate state,

local, or foreign income Tax Return for any Pre-Distribution Period or Straddle

Period that includes any member of the Company Group.




 




(b)           Newco

shall, with respect to any Pre-Distribution Period or Straddle Period, prepare

(or cause to be prepared) and file (or cause to be filed) all separate state,

local or foreign Tax Returns of each member of the Newco Group and any

consolidated combined, unitary or aggregate state, local, or foreign Tax

Returns that do not include any member of the Company Group.




 




SECTION

2.02.      Preparation and Filing of

Post-Distribution Period Tax Returns. 

With respect to Post-Distribution Periods, Newco shall not have any

responsibility for preparing (or causing to be prepared) or filing (or causing

to be filed) any Tax Return with respect to any member of the Company Group,

and Parent and the Company shall not have any responsibility for preparing (or

causing to be prepared) or filing (or causing to be filed) any Tax Return with

respect to any member of the Newco Group.




 




SECTION 2.03.      Consistent Treatment. 

Each Tax Return described in this Article II (including Tax Returns

with respect to Post-Distribution Periods) shall be prepared (i) in a

manner consistent with the opinion of counsel obtained in connection with the

Merger pursuant to the provisions of the Merger Agreement, (ii) in a

manner consistent with the representations, warranties, statements




 




 




5





























 




and covenants set forth in the Transaction

Agreements and (iii) in a manner consistent with prior methods, practices

and procedures (except to the extent that departure from such methods,

practices and procedures would not materially adversely affect another party to

this Agreement).  Notwithstanding the

previous sentence, Tax Returns shall be prepared in the manner required by any

applicable Final Determination.




 




SECTION 2.04.      Amended Returns and Claims for Refund.  No member of the Newco Group (or any entity

that directly or indirectly controls Newco) shall amend a Tax Return or file a

claim for Tax refund with respect to any Pre-Distribution Period subject to a

Tax Return described in Section 2.01(a) hereof without the prior written

consent of Parent or the Company, which consent shall not be unreasonably

withheld or delayed.




 




ARTICLE

III




 




Payments

with Respect to Taxes




 




SECTION 3.01.      Payment of Taxes. 

(a)      For all Taxes with respect

to which Parent, the Company or any other member of the Company Group is

required to file a Tax Return pursuant to Section 2.01(a) hereof, Newco

shall pay the Company the amount of such Taxes attributable to the Newco

Business within 10 business days after receipt from Parent or the Company of a

copy of such Tax Return (or a copy of the decision or agreement with respect to

any Final Determination regarding the period to which such Tax Return relates),

together with a statement showing in reasonable detail the calculation of any

Taxes attributable to the Newco Business.




 




(b)           For all Taxes with respect to which

Newco or any other member of the Newco Group is required to file a Tax Return

pursuant to Section 2.01(b) hereof, the Company shall pay Newco the amount

of such Taxes attributable to the Sunrise Business within 10 days after receipt

from Newco of a copy of such Tax Return (or a copy of the decision or agreement

with respect to any Final Determination regarding the period to which such Tax

Return relates), together with a statement showing in reasonable detail the

calculation of any Taxes attributable to the Sunrise Business.




 




SECTION 3.02.      Remittance of Taxes to a Tax Authority.  The Company and Newco shall remit or cause

to be remitted in a timely manner to the appropriate Tax Authority all Taxes

due in respect of any Tax for which (i) in the




 




 




6





























 




case of

the Company, the Company or Parent is required to file a Tax Return pursuant to

Section 2.01(a) hereof, and (ii) in the case of Newco, Newco is

required to file a Tax Return pursuant to Section 2.01(b) hereof.




 




SECTION 3.03.      Calculation of Federal Income Taxes Attributable to the

Newco Business and the Sunrise Business. 

(a)    For purposes of this

Article III, the “Newco Business Tentative Tax” for any taxable period shall

equal the excess of (i) the actual liability for federal income Taxes of the

Company Consolidated Group for such period (the “Consolidated Group Tentative

Tax”), over (ii) the Consolidated Group Tentative Tax for such period assuming

that the Newco Business (and any assets used or held for use primarily in

connection therewith) had not been held, used or operated by the Company

Consolidated Group, provided, however, that the calculations

required by this Section 3.03 shall be made without regard to (x) any “net

operating loss carryovers” (as defined in Section 172 of the Code) of the

Company Consolidated Group (the “Consolidated Group NOL Carryovers”), and (y)

any liability for taxes directly or indirectly attributable to the

Restructuring, the Split-Off and all related transactions, including any taxes

imposed as a result of the application of Section 355(e) of the Code

(collectively the “Transaction Taxes”).




 




(b)           For purposes of this Article III, the

“Newco Business NOL Carryovers” for the relevant taxable period shall be the

Consolidated Group NOL Carryovers available for such period multiplied by a

fraction, the numerator of which is the Newco Business Tentative Tax for such

period and the denominator of which is the Consolidated Group Tentative Tax for

such period.




 




(c)           For purposes of this Agreement, the

amount of federal income Taxes attributable to the Newco Business for the

relevant taxable period shall equal the excess of (i) the actual liability for

federal income Taxes of the Company Consolidated Group for such period over

(ii) the actual liability for federal income Taxes of the Company Consolidated

Group for such period assuming for purposes of this clause (ii) that (x) the

Newco Business (and any assets used or held for use primarily in connection

therewith) had not been held, used or operated by the Company Consolidated

Group, and (y) the Consolidated Group NOL Carryovers for such period had been

reduced by an amount equal to the Newco Business NOL Carryovers for such

period, provided, however, that the calculations required by this

Section 3.03(c) shall be made without regard to the Transaction Taxes.




 




 




7





























 




(d)           For purposes of this Agreement, the

amount of federal income Taxes attributable to the Sunrise Business shall equal

the excess of (i) the actual liability for federal income Taxes of the Company

Consolidated Group for the such period over (ii) the amount of federal income

Taxes attributable to the Newco Business for such period.




 




SECTION 3.04.      Calculation of Taxes (Other Than

Federal Income Taxes Attributable to the Newco Business and the Sunrise

Business.  For purposes of this

Agreement, with respect to Taxes other than federal income Taxes, the amount of

such Taxes attributable to the Newco Business and the Sunrise Business shall be

determined in a manner similar to and consistent with the provisions of

Section 3.03 hereof.




 




SECTION 3.05.      Tax Refunds.  Newco shall be entitled to its pro rata

share of any refund of Tax subject to a Tax Return described in

Section 2.01 hereof to the extent of any amount paid by Newco under this

Agreement with respect to such Tax Return. 

Parent or the Company shall be entitled to any refund of Tax subject to

a Tax Return described in Section 2.01 in excess of the amount described

in the previous sentence.  Any refund of

Tax received by one party shall, no later than three business days after

receipt, be paid to the other party to the extent of the other party’s

entitlement thereto under this Section 3.05, together with a statement

showing in reasonable detail the calculation of such payment.




 




SECTION

3.06.      Calculation of Pro Rata

Share of Tax Refunds.  Newco’s pro

rata share of any Tax refund shall be equal to the excess, if any, of (i) the

amount of federal income Taxes attributable to the Newco Business as originally

calculated under this Agreement over (ii) the amount of federal income Taxes

attributable to the Newco Business as recalculated under this Agreement taking

into account the facts and circumstances giving rise to such refund.




 




SECTION 3.07.      Alternative Minimum Tax.  The purpose of this Article III is to

allocate tax liability in proportion to the respective tax liabilities

attributable to the Sunrise Business and the Newco Business, exclusive of “net

operating loss carryovers” (as defined in Section 172 of the Code) and

without regard to the Split-Off, the Restructuring and all related

transactions.  In the case of any

Company Consolidated Group alternative minimum tax under Section 55 of the

Code, the respective portions of such tax attributable to the Sunrise Business

and the Newco Business shall be determined in a manner similar to and

consistent with the provisions of Section 3.03 hereof.




 




 




8





























 




ARTICLE

IV




 




Indemnification




 




SECTION 4.01.      Obligations of the Company.  The Company and each other member of the Company Group shall

indemnify and hold Newco and each other member of the Newco Group harmless from

and against the following:




 




(a)           any liability for Taxes attributable

to the Sunrise Business as calculated pursuant to Article III hereof;




 




(b)            any liability for Transaction Taxes;

and




 




(c)           any liability for Taxes attributable

to the Company or any other member of the Company Group to the extent that

Newco has made a payment to the Company with respect thereto pursuant to

Section 3.01 hereof.




 




SECTION 4.02.      Obligations of Newco. 

Newco and each other member of the Newco Group shall indemnify and hold

Parent, the Company and each other member of the Company Group harmless from

and against the following:




 




(a)           any liability for Taxes attributable

to the Newco Business as calculated pursuant to Article III hereof; and




 




(b)           any liability for Taxes attributable

to Newco or any other member of the Newco Group or Transaction 




Taxes, to the extent that the Company has

made a payment to Newco with respect thereto pursuant to Section 3.01

hereof; and




 




SECTION 4.03.      Straddle Periods. 

(a)    To the extent permitted by

law or administrative practice, the taxable year of any member of the Company

Group which includes the Effective Date shall be treated as closing on (and

including) the Effective Date.




 




(b)           Where it is necessary pursuant to

this Agreement to apportion between Newco, on the one hand, and the Company, on

the other hand, the Tax liability of an entity for a Straddle Period which is

not treated under Section 4.03 (a) hereof as closing on the Effective

Date, such liability shall be apportioned between the Pre-Distribution

Period and the Post-Distribution Period on the basis of an interim closing of

the books, except that




 




 




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Taxes

(such as real property Taxes) imposed on a periodic basis shall be allocated on

a daily basis.




 




SECTION

4.04.      Tax Obligations Arising

Under a Pre-Distribution Period Tax Sharing Agreement.  Except as set forth in this Agreement, any

and all existing Tax sharing agreements and practices regarding Taxes and their

payment, allocation, or sharing between any member of the Company Group and any

member of the Newco Group shall be terminated as of the Effective Date and no

remaining liabilities thereunder shall exist thereafter.  This Section 4.04 does not address tax

sharing agreements (if any) solely among members of the Newco Group or solely

among members of the Company Group.




 




SECTION 4.05.      Indemnification Payments.  To the extent that a party (the “Payor”) is required to make an

indemnification payment to another party (the “Payee”) pursuant to

Section 4.01, 4.02 or 4.03 hereof, the Payor shall pay the Payee no later

than 10 business days prior to the Due Date of the relevant Tax Return or 10

business days after the Payor receives the Payee’s calculations of the Payor’s

indemnification obligation hereunder, whichever occurs last, the amount of such

indemnification obligation.




 




ARTICLE

V




 




Tax

Claims




 




SECTION 5.01.      General.  Newco,

on the one hand, shall have sole control over all Tax Claims with respect to

any Tax Return which Newco is responsible for preparing (or causing to be

prepared) pursuant to this Agreement, and Parent and the Company, on the other

hand, shall have sole control over all Tax Claims with respect to any Tax

Return which Parent or the Company is responsible for preparing (or causing to

be prepared) pursuant to this Agreement. 

The party controlling a Tax Claim pursuant to the preceding sentence

shall have the sole right to contest, litigate and Dispose of such Tax Claim

and to employ counsel of its choice at Newco’s sole expense in the case of a

Tax Claim controlled by Newco, and at the Company’s sole expense in the case of

a Tax Claim controlled by the Company or Parent; provided, however,

that the other party may, at its own expense, participate in (but not control)

the defense of any such Tax Claim, but only if such Tax Claim may result in a

payment by such other party pursuant to the terms of this Agreement.  If a Tax Claim may result in a payment by

such other party pursuant to the terms of this Agreement or presents an issue

that affects both the Newco Business and




 




 




10





























 




the Sunrise Business, the party controlling

such Tax Claim shall not litigate or Dispose of such Tax Claim without the

prior written consent of such other party, which consent shall not be

unreasonably withheld or delayed.




 




SECTION 5.02.        Tax Claim Management. 

(a)       Parent or the Company, on

the one hand, and Newco, on the other hand, shall promptly notify the other

party in writing of any Tax Claim that may result in liability of the other

party to make a payment under this Agreement or that affects both the Newco

Business and the Sunrise Business.  With

respect to any such Tax Claim, the party controlling such Tax Claim shall

(i) not make any submission to any Tax Authority without offering the

other party the opportunity to review it, (ii) keep the other party

informed as to any information that it receives regarding the progress of such

Tax Claim, and (iii) provide the other party with any information that it

receives regarding the nature and amounts of any proposed Disposition of the

Tax Claim.




ARTICLE

VI




 




Cooperation




 




Parent and the Company, on the one hand,

and Newco, on the other hand, shall (and shall cause the members of the Company

Group and the Newco Group, respectively, to) cooperate with each other in the

preparation and filing of Tax Returns and the conduct of any audit or other

proceeding and each shall execute and deliver such powers of attorney and make

available such other documents as are necessary to carry out the intent of this

Agreement.  Such cooperation shall

include, without limitation, (a) making employees available on a mutually

convenient basis to provide such assistance as might reasonably be required and

(b) providing such information as might reasonably be required in connection

with any such Tax Return or proceeding, including, without limitation, records,

returns, schedules, documents, work papers or other relevant materials.




 




The

parties hereto shall use reasonable efforts to reduce any transfer, sales or

other similar Taxes that may be incurred with respect to the transactions

contemplated by the Transaction Agreements.




 




 




11





























 




ARTICLE

VII




 




Retention

of Records; Access




 




The Company Group and the Newco Group shall

(a) retain all records, documents, accounting data and other information

(including computer data) which may contain information or provide evidence

relevant to any taxable period that is the subject of a Tax Return for which a

member of the other group is responsible under this Agreement, until such time

as a Final Determination occurs with respect to such taxable period, provided,

however, that such records need not be retained longer than 15 years

after the end of the latest taxable period to which they relate and such

records do not relate to an ongoing contest; and (b) give to the other

group reasonable access to such records, documents, accounting data and other

information (including computer data) and to its personnel (ensuring their

cooperation) and premises, with reimbursement by the requesting group of

reasonable out-of-pocket costs incurred in connection therewith, to the extent

relevant to any obligation or liability of the requesting party under this

Agreement.




 




ARTICLE

VIII




 




Disputes




 




If the parties disagree as to the

calculation of any Tax or the amount of (but not liability for) any payment to

be made under this Agreement, the parties shall cooperate in good faith to

resolve any such dispute, and any agreed–upon amount shall be promptly

paid to the appropriate party.  If the

parties are unable to resolve such dispute within 10 business days

thereafter, such dispute shall be resolved by a law firm or accounting firm

acceptable to both Parent and the Company, on the one hand, and Newco, on the

other hand.  The decision of such firm

shall be final and binding.  The fees

and expenses incurred in connection with such decision shall be shared by the

Company and Newco in proportion to the final allocation of the Tax liability in

dispute.  Following the decision of such

firm, the parties shall each take (or cause to be taken) any action that is

necessary or appropriate to implement such decision, including, without

limitation, the filing of amended Tax Returns.




 




 




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ARTICLE

IX




 




Survival




 




Notwithstanding any provision in any other

Transaction Agreement to the contrary, all covenants, obligations and rights

under this Agreement shall survive indefinitely, except to the extent otherwise

provided herein.




 




 




ARTICLE

X




 




Miscellaneous

Provisions




 




SECTION 10.01.    Consistent Reporting. 






(a)           Parent,

the Company and Newco agree to report the transactions set forth in

Section 4.1 of the Restructuring Agreement, for federal income tax

purposes, as follows:




 




(i)            the

transaction described in Section 4.1(a) of the Restructuring Agreement is

a liquidation under Section 332 of the Code;




 




(ii)           the

transaction described in Section 4.1(b) of the Restructuring Agreement is a

liquidation under Section 332 of the Code;




 




(iii)          the

transactions described in Section 4.1(c) (i) and Section 4.1(c) (iii)

of the Restructuring Agreement are transfers between divisions of a single

corporation and the transaction described in Section 4.1(c) (ii) of the

Restructuring Agreement is a sale;




 




(iv)          the transaction described in

Section 4.1(d) of the Restructuring Agreement is a transfer in connection

with a reorganization under Section 368(a)(1)(D) of the Code;




 




(v)           the transaction described in Section

4.1(e) of the Restructuring Agreement is a distribution under Section 301 of

the Code;




 




(vi)          the transactions described in Section

4.1(f) of the Restructuring Agreement are, respectively (I) a contribution

under Section 351 of the Code, and (II) a distribution under Section 301 of the

Code;




 




(vii)         the transaction described in Section

4.1(g) of the Restructuring Agreement is a distribution under Section 301

of the Code;




 




 




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(viii)        the transaction described in

Section 4.1(h) of the Restructuring Agreement is a distribution under

Section 301 of the Code;




 




(ix)           the transaction described in

Section 4.1(i) of the Restructuring Agreement is a distribution under

Section 301 of the Code;




 




(x)            the transaction described in

Section 4.1(j) of the Restructuring Agreement is a distribution under

section 301 of the Code;




 




(xi)           the transaction described in

Section 4.1(k) of the Restructuring Agreement is a transfer in connection

with a reorganization under Section 368(a) (1) (D) of the Code;




 




(xii)          the transaction described in

Section 4.1(1) of the Restructuring Agreement is a transfer in connection

with a reorganization under Section 368(a) (1)(D) of the Code; and




 




(xiii)         the transaction described in

Section 4.1(m) of the Restructuring Agreement is a distribution under

Section 301 of the Code.  For

purposes of determining the federal income tax consequences of such transaction,

the fair market value of the assets transferred in such transaction shall be

computed in accordance with the formula set forth in Schedule 4.1(m) to the

Restructuring Agreement.




 




(b)           Parent, the Company and Newco agree

to report the Split-Off, for federal income tax purposes, as integrated with

the Merger and as a redemption of a number of shares of Company Common Stock

equal in value to the value of the Newco Common Stock distributed in the

Split-Off, with such redemption qualifying, as to the stockholders of the

Company, as a transaction described in Section 355 of the Code; provided

that Goodwin Procter LLP, counsel to the Company, shall have issued (i) an

opinion to the Company to the effect that, more likely than not, the Split-Off

qualifies, as to the stockholders of the Company, as a transaction described in

Section 355 of the Code (the “Split-Off Opinion”), and (ii) an

opinion to the officers of the Company and the officers of Parent

(collectively, the “Officers”) substantially to the effect that the Officers

will not incur any liability under the Code for Taxes (including fees and other

monetary and non-monetary penalties) solely as a result of causing Parent and

the Company to report the Split-Off as a transaction qualifying, as to the

stockholders of the Company, as a transaction described in Section 355 of

the Code (the “Officer’s Opinion”).  In

rendering the Split-Off Opinion and the Officer’s Opinion, such counsel shall

be entitled to rely




 




 




14





























 




upon representations

reasonably requested by such counsel, including but not limited to the

representations in the Parent Representation Letter.




 




SECTION

10.02.    Overpayments and Interest on

Late Payments.  Any payment required

by this Agreement which is not made on or before the date required to be made

hereunder shall bear interest after such date at the Underpayment Rate.  Any payment made under this Agreement the

amount of which is subsequently determined to be in excess of the amount due

under this Agreement shall be refunded to the payor within 10 business

days of such subsequent determination, together with interest at the

Underpayment Rate calculated from the date of original payment.




 




SECTION

10.03.    Determination and

Characterization of Payments. 

(a)  All indemnification payments

under this Agreement shall be determined on an after-Tax basis, i.e.,

taking into account the Tax consequences to the indemnified party (and each

other member of the indemnified party’s Group) of making a payment that is

indemnified by another party under this Agreement or of receiving a payment

under this Agreement as indemnification therefor, but only to the extent such

Tax consequences are not otherwise taken into account in determining the amount

of an indemnification payment hereunder.




 




(b)           The payments made pursuant to this

Agreement shall be treated as occurring immediately before the Split-Off, and

no member of the Newco Group or the Company Group shall take any position

inconsistent with such treatment before any Tax Authority, except to the extent

that a Final Determination requires otherwise.




 




SECTION

10.04.    Notices and Governing Law.  All notices required or permitted to be

given pursuant to this Agreement shall be given, and the applicable law

governing the interpretation of this Agreement shall be determined, in

accordance with the applicable provisions of the Merger Agreement.




 




SECTION

10.05.    Amendments.  This Agreement may not be amended except by

an agreement in writing, signed by the parties.




 




SECTION

10.06.    Binding Effect; No

Assignment; Third Party Beneficiaries. 

This Agreement shall be binding on, and shall inure to the benefit of,

the parties and their respective successors, assigns, and persons controlling

any of the corporations bound hereby. 

Parent and the Company, on the one hand, and Newco, on the other hand,

hereby




 




 




15





























 




guarantee

the performance of all actions, agreements and obligations provided for under

this Agreement of the Company’s Subsidiaries and Newco’s Subsidiaries,

respectively.  The Company and Newco

shall, upon the written request of any other party, cause any of their

respective Subsidiaries to execute this Agreement.  No party to this Agreement shall assign any of its rights or

delegate any of its duties under this Agreement without the prior written

consent of Newco, in the case of Parent or the Company, or without the prior

written consent of Parent or the Company, in the case of Newco, except that the

Company may assign, in its sole discretion, any or all of its rights, interests

and obligations under this Agreement (other than tax payment obligations and

other payment obligations) to Parent or to any direct or indirect wholly owned

Subsidiary of Parent, but no such assignment shall relieve the Company of any

of its obligations hereunder.  Nothing

contained in this Agreement is intended to confer upon any person or entity

other than the parties hereto and their respective successors and permitted

assigns, any benefit, right or remedy under or by reason of this Agreement.




 




SECTION

10.07.    Entire Agreement.  This Agreement constitutes the entire

agreement of the parties concerning the subject matter hereof and supersedes

all prior agreements, whether or not written, concerning such subject matter.  To the extent that the provisions of this

Agreement are inconsistent with the provisions of any other Transaction

Agreement, the provisions of this Agreement shall prevail.




 




SECTION

10.08.    Counterparts.  This Agreement may be executed in one or

more counterparts, each of which shall be deemed an original and all of which

shall constitute together the same document.




 




16





























 




IN

WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the

day and year first above written.




 




	

   


  	

  Johnson & Johnson,


  
	

   


  	

   


  	

   


  
	

   


  	

  By:

  


  	

    

  /s/  ERIC MILLEDGE 


  	

   


  
	

   


  	

   


  	

  Name:


  	

  Eric Milledge


  
	

   


  	

   


  	

  Title:


  	

  Company Group Chairman


  
	

   


  	

   


  
	

   


  	

  Inverness Medical Technology, Inc.,


  
	

   


  	

   


  	

   


  
	

   


  	

  By:

  


  	

    

  /s/  RON ZWANZIGER


  	

   


  
	

   


  	

   


  	

  Name:


  	

  Ron Zwanziger


  
	

   


  	

   


  	

  Title:


  	

  President and Chief


  
	

   


  	

   


  	

   


  	

  Executive Officer


  
	

   


  	

   


  
	

   


  	

  Inverness Medical Innovations, Inc.,


  
	

   


  	

   


  	

   


  
	

   


  	

  By:

  


  	

    

  /s/  RON ZWANZIGER


  	

   


  
	

   


  	

   


  	

  Name:


  	

  Ron Zwanziger


  
	

   


  	

   


  	

  Title:


  	

  President and Chief


  
	

   


  	

   


  	

   


  	

  Executive Officer


  
					





 




[Tax Allocation Agreement]