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Tax Disaffiliation Agreement

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Sectors: Health Products and Services
Effective Date: April 16, 1996
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EXHIBIT 10.4
LUNAR CORPORATION AND SUBSIDIARIES


TAX DISAFFILIATION AGREEMENT (this "Agreement") dated as of April 16, 1996, by and between Lunar Corporation, a Wisconsin corporation ("Lunar"), and Bone Care International, Inc., a Wisconsin corporation ("Bone Care").


RECITALS


a. Lunar, pursuant to a Distribution Agreement dated April 16 ,
1996, by and between Lunar and Bone Care (the "Distribution
Agreement"), will distribute to the holders of the common stock of
Lunar approximately 97.3% of the outstanding shares of the common
stock of Bone Care (the "Distribution").


b. Lunar intends to contribute $725,000 to the capital of Bone Care
prior to the Distribution to reflect federal income tax savings
previously realized by Lunar that were attributable to losses incurred
by Bone Care prior to the Distribution (the "Lunar Tax Payment").


c. Lunar and Bone Care intend the Distribution to qualify as a
transaction described under Section 355 of the Code.


d. Lunar and Bone Care desire to set forth their rights and
obligations with respect to certain Tax liabilities.


NOW, THEREFORE, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


For the purposes of this Agreement,


1.01 "Code" shall mean the Internal Revenue Code of 1986, as amended.


1.02 "Distribution" shall have the meaning set forth in the recitals to this Agreement.


1.03 "Distribution Agreement" shall have the meaning set forth in the recitals to this Agreement.


1.04 "Bone Care Group" shall mean, for any period, Bone Care and its then Subsidiaries.


1.05 "Federal Income Taxes" shall mean United States federal income taxes imposed by the Code and any penalties, fines, additions to tax and interest related thereto.


1.06 "Final Determination" shall mean with respect to any issue (1) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final and not subject to further appeal, (2) a closing agreement entered into under Section 7121 of the Code or any other binding settlement agreement (whether or not with the Internal Revenue Service) entered into in connection with or in contemplation of an administrative or judicial proceeding, or (3) the completion of the highest level of administrative proceedings if a judicial contest is not or is no longer available.


1.07 "Indemnitor" shall have the meaning set forth in Section 5.02.


1.08 "Lunar Group" shall mean, for any period, Lunar and its then Subsidiaries.


1.09 "Lunar Tax Payment" shall have the meaning set forth in the recitals to this Agreement.


1.10 "Period After Distribution" shall mean any taxable year or other taxable period beginning after the Date of Distribution and, in the case of any taxable year or other taxable period that begins before and ends after the Date of Distribution, that part of the taxable year or other taxable period that begins after the close of the Date of Distribution.


1.11 "Period Before Distribution" shall mean any taxable year or other taxable period that ends on or before the Date of Distribution and, in the case of any taxable year or other taxable period that begins before and ends after the Date of Distribution, the part of the taxable year or other taxable period through the close of the Date of Distribution.


1.12 "Subsidiary" shall mean a corporation, partnership, joint venture or other legal entity if 50% or more of the stock or other equity interests is owned directly or indirectly by the corporation with respect to which such term is used. In determining whether a Subsidiary is a Subsidiary of Bone Care or Lunar for any period, Bone Care shall not be a Subsidiary of Lunar and any Subsidiary of Bone Care shall be a Subsidiary of Bone Care, but not Lunar, for such period.


1.13 "Tax" or "Taxes" whether used in the form of a noun or adjective, shall mean taxes on or measured by income, franchise, gross receipts, sales, use, excise, payroll, personal property, real property, ad valorem, value-added, or other taxes, levies, imposts, duties, charges or withholding of any nature (including, without limitation, any duty to reimburse another party for indemnified taxes or refunds or credit of taxes), and any penalties, fines, additions to tax and interest thereon.


1.14 "Tax Return" shall mean any report required to be filed for any period with any taxing authority (whether domestic or foreign) in connection with Taxes.


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