AGREEMENT AND PLAN OF MERGERAgreement and Plan of Merger |
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Search Agreement and Plan of Merger by:
Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
Dated as of January [ ], 2006
Among
BOSTON SCIENTIFIC CORPORATION,
GALAXY MERGER SUB, INC.
And
GUIDANT CORPORATION
TABLE OF CONTENTS
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ARTICLE I |
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The Merger |
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SECTION 1.01. The Merger |
1 |
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SECTION 1.02. Closing |
2 |
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SECTION 1.03. Effective Time |
2 |
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SECTION 1.04. Effects of the Merger |
2 |
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SECTION 1.05. Articles of Incorporation and By-laws |
2 |
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SECTION 1.06. Directors |
2 |
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SECTION 1.07. Officers |
2 |
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ARTICLE II |
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Effect of the Merger on the Capital Stock of the |
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Constituent Corporations; Exchange of Certificates |
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SECTION 2.01. Effect on Capital Stock |
3 |
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SECTION 2.02. Exchange of Certificates |
4 |
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ARTICLE III |
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Representations and Warranties |
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SECTION 3.01. Representations and Warranties of the Company |
7 |
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SECTION 3.02. Representations and Warranties of Parent and Sub |
27 |
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ARTICLE IV |
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Covenants Relating to Conduct of Business; No Solicitation |
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SECTION 4.01. Conduct of Business |
38 |
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SECTION 4.02. No Solicitation |
44 |
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ARTICLE V |
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Additional Agreements |
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SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement; Shareholders’ Meetings |
47 |
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SECTION 5.02. Access to Information; Confidentiality |
48 |
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SECTION 5.03. Reasonable Best Efforts |
49 |
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SECTION 5.04. Company Stock Options; ESPP |
51 |
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SECTION 5.05. Indemnification, Exculpation and Insurance |
53 |
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SECTION 5.06. Fees and Expenses |
54 |
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SECTION 5.07. Public Announcements |
55 |
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SECTION 5.08. Affiliates |
56 |
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SECTION 5.09. Stock Exchange Listing |
56 |
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SECTION 5.10. Shareholder Litigation |
56 |
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SECTION 5.11. Employee Matters |
56 |
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SECTION 5.12. Company Notes |
58 |
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SECTION 5.13. Rights Agreement |
58 |
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SECTION 5.14. Termination Fee |
58 |
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SECTION 5.15. Sale of Certain Assets Prior to Closing |
58 |
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ARTICLE VI |
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Conditions Precedent |
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SECTION 6.01. Conditions to Each Party’s Obligation to Effect the Merger |
59 |
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SECTION 6.02. Conditions to Obligations of Parent and Sub |
59 |
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SECTION 6.03. Conditions to Obligation of the Company |
60 |
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SECTION 6.04. Frustration of Closing Conditions |
61 |
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ARTICLE VII |
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Termination, Amendment and Waiver |
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SECTION 7.01. Termination |
61 |
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SECTION 7.02. Effect of Termination |
62 |
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SECTION 7.03. Amendment |
62 |
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SECTION 7.04. Extension; Waiver |
63 |
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SECTION 7.05. Procedure for Termination or Amendment |
63 |
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ARTICLE VIII |
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General Provisions |
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SECTION 8.01. Nonsurvival of Representations and Warranties |
63 |
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SECTION 8.02. Notices |
63 |
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SECTION 8.03. Definitions |
64 |
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SECTION 8.04. Interpretation |
66 |
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SECTION 8.05. Consents and Approvals |
66 |
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SECTION 8.06. Counterparts |
66 |
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SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries |
66 |
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SECTION 8.08. GOVERNING LAW |
66 |
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SECTION 8.09. Assignment |
67 |
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SECTION 8.10. Specific Enforcement; Consent to Jurisdiction |
67 |
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SECTION 8.11. Waiver of Jury Trial |
67 |
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SECTION 8.12. Severability |
67 |
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Annex I |
Index of Defined Terms |
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Exhibit A |
Restated Articles of Incorporation of the Surviving Corporation |
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Exhibit B |
Affiliate Letter |
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Exhibit C |
Form of Voting Agreement |
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AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of January [ ], 2006, among BOSTON SCIENTIFIC CORPORATION, a Delaware corporation (“Parent”), GALAXY MERGER SUB, INC., an Indiana corporation and a wholly owned Subsidiary of Parent (“Sub”), and GUIDANT CORPORATION, an Indiana corporation (the “Company”).
WHEREAS, the Company and Johnson & Johnson (“J&J”) entered into an Agreement and Plan of Merger, dated as of December 15, 2004, amended and restated as of November 14, 2005 and further amended as of January 11, 2006 (the “J&J Agreement”);
WHEREAS, immediately prior to execution of this Agreement, the Company terminated the J&J Agreement in accordance with its terms;
WHEREAS, the Board of Directors of each of the Company and Sub has adopted, and the Board of Directors of Parent has approved, this Agreement and the merger of Sub with and into the Company (the “Merger”), upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding share of common stock, without par value, of the Company (“Company Common Stock”), other than shares of Company Common Stock directly owned by Parent, Sub or the Company, will be converted into the right to receive (a) a number of validly issued, fully paid and nonassessable shares of common stock, par value $0.01 per share, of Parent (“Parent Common Stock”) and (b) $36.50 in cash, without interest;
WHEREAS, certain stockholders of Parent have entered into Voting Agreements with the Company, dated as of the date hereof, providing that, among other things, such stockholders will vote their shares of Parent Common Stock in favor of (i) an amendment to the Second Restated Certificate of Incorporation of Parent, as amended (the “Parent Certificate”), to increase the authorized number of shares of Parent Common Stock from 1,200,000,000 to 2,000,000,000 (the “Amendment”) and (ii) the issuance of shares of Parent Common Stock to the shareholders of the Company pursuant to the terms of the Merger (the “Share Issuance”); and
WHEREAS, Parent, Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and subject to the conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Business Corporation Law of the State of Indiana (the “IBCL”), Sub shall be merged with and into the Company at the Effective Time. Following the Effective Time, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation in the Merger (the “Surviving
Corporation”) and shall succeed to and assume all the rights and obligations of Sub in accordance with the IBCL.
SECTION 1.02. Closing. The closing of the Merger (the “Closing”) will take place at 10:00 a.m., local time, on a date to be specified by the parties, which shall be no later than the second business day after satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article VI (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by applicable Law) waiver of those conditions), at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022, unless another time, date or place is agreed to in writing by Parent and the Company; provided, however, that if all the conditions set forth in Article VI shall no longer be satisfied or (to the extent permitted by applicable Law) waived on such second business day, then the Closing shall take place on the first business day on which all such conditions shall again have been satisfied or (to the extent permitted by applicable Law) waived unless another time is agreed to in writing by Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.
SECTION 1.03. Effective Time. Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file with the Secretary of State of the State of Indiana articles of merger (the “Articles of Merger”) executed and acknowledged by the parties in accordance with the relevant provisions of the IBCL and, as soon as practicable on or after the Closing Date, shall make all other filings or recordings required under the IBCL. The Merger shall become effective upon the filing of the Articles of Merger with the Secretary of State of the State of Indiana, or at such later time as Parent and the Company shall agree and shall specify in the Articles of Merger (the time the Merger becomes effective being the “Effective Time”).
SECTION 1.04. Effects of the Merger. The Merger shall have the effects set forth in Section 23-1-40-6 of the IBCL.
SECTION 1.05. Articles of Incorporation and By-laws. (a) The Articles of Incorporation of the Company (the “Company Articles”) shall be amended at the Effective Time to be in the form of Exhibit A and, as so amended, such Company Articles shall be the Restated Articles of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.
(b)
The By-laws of Sub, as
in effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable Law.
SECTION 1.06. Directors. The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their
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resignation or removal or until their respective successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of Company Common Stock or any shares of capital stock of Parent or Sub:
(a)
Capital Stock of
Sub. Each
issued and outstanding share of capital stock of Sub shall be converted into
and become one validly issued, fully paid and nonassessable share of common
stock, without par value, of the Surviving Corporation.
(b)
Cancelation of
Treasury Stock and Parent-Owned Stock. Each share of Company Common Stock that is directly
owned by the Company, Parent or Sub immediately prior to the Effective Time
shall automatically be canceled and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(c)
Conversion of
Company Common Stock.
Subject to Section 2.02(e), each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.01(b)) shall be converted into the
right to receive (i) that number of validly issued, fully paid and
nonassessable shares of Parent Common Stock (the “Stock Portion”)
equal to the quotient determined by dividing $36.50 by the Parent Average
Closing Stock Price (as defined below) and rounding the result to the nearest
1/10,000 of a share (the “Exchange Ratio”), payable upon surrender,
in the manner provided in Section 2.02, of the certificate that formerly
evidenced such share of Company Common Stock; provided, however,
that if such quotient is less than 1.2647, the Exchange Ratio will be 1.2647
and if such quotient is greater than 1.5453, the Exchange Ratio will be 1.5453,
(ii) $36.50 in cash, without interest (the “Cash Portion”) and
(iii) if the Closing shall not have occurred on or prior to March 31,
2006, an amount in cash equal to $0.0120 per day for each day during the period
commencing April 1, 2006 through the date of the Closing (the
“Interest Portion”; the Interest Portion, if any, together with the
Stock Portion and Cash Portion, being the “Merger
Consideration”). For the purposes of this Section 2.01, the
term “Parent Average Closing Stock Price” means the average of the
per share closing prices of Parent Common Stock on the NYSE during the 20
consecutive trading days ending on (and including) the date that is three
trading days prior to the date of the Company Shareholders’
Meeting. At the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Company Common Stock (each, a
“Certificate”) shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e), in each case
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to be
issued or paid in consideration therefor upon surrender of such Certificate in
accordance with Section 2.02(b), without interest. Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time,
(A) the outstanding shares of Parent Common Stock shall have been changed
into a different number of shares or a different class, by reason of the
occurrence or record date of any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar
transaction, (B) Parent declares or pays cash dividends in any fiscal
quarter in excess of 200% of the amount of regularly quarterly dividends paid
by the Parent immediately prior to the date hereof or (C) Parent engages
in any spin-off or split-off, then in any such case the Exchange Ratio shall be
appropriately adjusted to reflect such action. The right of any holder of
a Certificate to receive the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e) shall be
subject to and reduced by the amount of any withholding that is required under
applicable tax Law.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Prior to the Effective Time, Parent shall appoint EquiServe Trust Company or another bank or trust company that is reasonably satisfactory to the Company to act as exchange agent (the “Exchange Agent”) for the payment of the Merger Consideration. At the Effective Time, Parent shall deposit, or cause the Surviving Corporation to deposit, with the Exchange Agent, for the benefit of the holders of Certificates, certificates representing shares of Parent Common Stock and cash in an amount sufficient to pay the aggregate Merger Consideration required to be paid pursuant to Section 2.01(c). In addition, Parent shall deposit with the Exchange Agent, as necessary from time to time after the Effective Time, any dividends or other distributions payable pursuant to Section 2.02(c) and cash in lieu of any fractional shares payable pursuant to Section 2.02(e). All shares of Parent Common Stock, cash, dividends and distributions deposited with the Exchange Agent pursuant to this Section 2.02(a) shall hereinafter be referred to as the “Exchange Fund”.
(b)
Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent shall cause the Exchange Agent to
mail to each holder of record of a Certificate whose shares of Company Common
Stock were converted into the right to receive the Merger Consideration, any
dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable
pursuant to Section 2.02(e) (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and which shall be in customary form and
contain customary provisions) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration, any
dividends or other distributions payable pursuant to Section 2.02(c) and
cash in lieu of any fractional shares payable pursuant to
Section 2.02(e). Each holder of record of one or more Certificates
shall, upon surrender to the Exchange Agent of such Certificate or
Certificates, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange Agent, be
entitled to receive in exchange therefor (i) the amount of cash to which
such holder is entitled pursuant to Section 2.01(c), (ii) a
certificate or certificates representing that number of whole shares of Parent
Common Stock (after taking into account all Certificates surrendered by such
holder) to which such holder is entitled pursuant to
Section 2.01(c) (which shall be in uncertificated book entry form
unless a physical certificate is requested), (iii) any dividends or
distributions payable pursuant to Section 2.02(c) and (iv) cash
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in lieu of any fractional shares payable pursuant to
Section 2.02(e), and the Certificates so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company, payment of the
Merger Consideration in accordance with this Section 2.02(b) may be
made to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment of the
Merger Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable
pursuant to Section 2.02(e) to a person other than the registered
holder of such Certificate or establish to the reasonable satisfaction of
Parent that such taxes have been paid or are not applicable. Until
surrendered as contemplated by this Section 2.02(b), each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration, any dividends or
other distributions payable pursuant to Section 2.02(c) and cash in
lieu of any fractional shares payable pursuant to Section 2.02(e).
No interest shall be paid or will accrue on any payment to holders of
Certificates pursuant to the provisions of this Article II.
(c)
Distributions with
Respect to Unexchanged Shares. No dividends or other distributions with respect to
Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Parent Common Stock that the holder thereof has the right to receive upon the
surrender thereof, and no cash payment in lieu of fractional shares of Parent Common
Stock shall be paid to any such holder pursuant to Section 2.02(e), in
each case until the holder of such Certificate shall have surrendered such
Certificate in accordance with this Article II. Following the
surrender of any Certificate, there shall be paid to the record holder of the
certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and
the amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to
Section 2.02(e) and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Parent Common Stock.
(d)
No Further
Ownership Rights in Company Common Stock. The Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e) paid upon
the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented by
such Certificates. At the close of business on the day on which the
Effective Time occurs, the share transfer books of the Company shall be closed,
and there shall be no further registration of transfers on the share transfer
books of the Surviving Corporation of the shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificate is presented to the Surviving Corporation for
transfer, it shall be canceled against delivery of the Merger Consideration,
any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable
pursuant to Section 2.02(e) to the holder thereof as provided in this
Article II.
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(e)
No Fractional
Shares.
(i) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates,
no dividends or other distributions of Parent shall relate to such fractional
share interests and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Parent.
(ii) In lieu of such fractional share interests, Parent
shall pay to each holder of a Certificate an amount in cash equal to the
product obtained by multiplying (A) the fractional share interest to which
such holder (after taking into account all shares of Company Common Stock
formerly represented by all Certificates surrendered by such holder) would
otherwise be entitled by (B) the per share closing price of Parent Common
Stock on the Closing Date (the “Closing Price”), as such price is
reported on the New York Stock Exchange, Inc.(the “NYSE”)
Composite Transaction Tape (as reported by Bloomberg Financial Markets or such
other source as the parties shall agree in writing).
(f)
Termination of the
Exchange Fund.
Any portion of the Exchange Fund which remains undistributed to the holders of
the Certificates for six months after the Effective Time shall be delivered to
Parent, upon demand, and any holders of the Certificates who have not
theretofore complied with this Article II shall thereafter look only to
Parent for, and Parent shall remain liable for, payment of their claim for the
Merger Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable
pursuant to Section 2.02(e) in accordance with this Article II.
(g)
No Liability. None of Parent, Sub, the
Company, the Surviving Corporation or the Exchange Agent shall be liable to any
person in respect of any shares of Parent Common Stock, cash, dividends or
other distributions from the Exchange Fund properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificate shall not have been surrendered prior to four years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration (and any dividends or other distributions payable with
respect thereto pursuant to Section 2.02(c) and cash in lieu of any
fractional shares payable with respect thereto pursuant to
Section 2.02(e)) would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration (and any dividends or other
distributions payable with respect thereto pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable
with respect thereto pursuant to Section 2.02(e)) shall, to the extent
permitted by applicable Law, become the property of Parent, free and clear of
all claims or interest of any person previously entitled thereto.
(h)
Investment of
Exchange Fund.
The Exchange Agent shall invest the cash included in the Exchange Fund as
directed by Parent. Any interest and other income resulting from such
investments shall be paid to and be income of Parent. If for any reason
(including losses) the cash in the Exchange Fund shall be insufficient to fully
satisfy all of the payment obligations to be made in cash by the Exchange Agent
hereunder, Parent shall promptly deposit cash into the Exchange Fund in an
amount which is equal to the deficiency in the amount of cash required to fully
satisfy such cash payment obligations.
(i)
Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to
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be lost, stolen or destroyed and, if required by Parent,
the posting by such person of a bond in such reasonable amount as Parent may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall deliver in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration, any dividends
or other distributions payable pursuant to Section 2.02(c) and cash
in lieu of any fractional shares payable pursuant to Section 2.02(e), in
each case pursuant to this Article II.
(j)
Withholding Rights. Parent, the Surviving
Corporation or the Exchange Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
Certificates such amounts as Parent, the Surviving Corporation or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the
“Code”), or any provision of state, local or foreign tax Law.
To the extent that amounts are so withheld and paid over to the appropriate
taxing authority by Parent, the Surviving Corporation or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of Certificates in respect of which such
deduction and withholding was made by Parent, the Surviving Corporation or the
Exchange Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except as disclosed in the Company SEC Documents filed by the Company and publicly available prior to the date of this Agreement (“Filed Company SEC Documents”), and except as set forth in the disclosure schedule delivered by the Company to Parent prior to the execution of this Agreement (the “Company Disclosure Schedule”) (with specific reference to the particular Section or subsection of this Agreement to which the information set forth in such disclosure schedule relates; provided, however, that any information set forth in one section of the Company Disclosure Schedule shall be deemed to apply to each other Section or subsection thereof to which its relevance is readily apparent on its face), the Company represents and warrants to Parent and Sub as follows:
(a)
Organization,
Standing and Corporate Power. Each of the Company and its Subsidiaries has been
duly organized, and is validly existing and in good standing (with respect to
jurisdictions that recognize that concept) under the Laws of the jurisdiction
of its incorporation or formation, as the case may be, and has all requisite
power and authority and possesses all governmental licenses, permits,
authorizations and approvals necessary to enable it to use its corporate or
other name and to own, lease or otherwise hold and operate its properties and
other assets and to carry on its business as currently conducted, except where
the failure to have such governmental licenses, permits, authorizations or
approvals individually or in the aggregate has not had and would not reasonably
be expected to have a Material Adverse Effect. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions that recognize that concept) in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification, licensing or good
standing necessary, other than in such jurisdictions where the failure to be so
qualified, licensed or in good standing individually or in the aggregate has
not
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had and would not reasonably be expected to have a Material
Adverse Effect. The Company has made available to Parent, prior to the
date of this Agreement, complete and accurate copies of the Company Articles
and the Company’s By-laws (the “Company By-laws”), and the comparable
organizational documents of each Significant Subsidiary (as such term is
defined in Rule 12b-2 under the Exchange Act), in each case as amended to
the date hereof.
(b)
Subsidiaries.
Section 3.01(b) of the Company Disclosure Schedule lists, as of
the date hereof, (i) each Significant Subsidiary of the Company (including
its state of incorporation or formation) and (ii) each other Subsidiary of
the Company. All of the outstanding capital stock of, or other equity
interests in, each Significant Subsidiary of the Company, is directly or
indirectly owned by the Company. All the issued and outstanding shares of
capital stock of, or other equity interests in, each such Subsidiary owned by
the Company have been validly issued and are fully paid and nonassessable and
are owned directly or indirectly by the Company free and clear of all pledges,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (other than liens, charges and encumbrances for current taxes not
yet due and payable) (collectively, “Liens”), and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other equity interests. Except with respect to securities of
non-Affiliates that, to the Knowledge of the Company, do not constitute a 20%
or greater interest in such non-Affiliates (or a 5% or greater interest in such
non-Affiliates if the Company’s investment therein is greater than
$20,000,000), and except for the capital stock of, or voting securities or
equity interests in, its Subsidiaries, the Company does not own, directly or
indirectly, as of the date hereof, any capital stock of, or other voting
securities or equity interests in, any corporation, partnership, joint venture,
association or other entity.
(c)
Capital Structure. The authorized capital
stock of the Company consists of 1,000,000,000 shares of Company Common Stock
and 50,000,000 shares of preferred stock, without par value (“Company
Preferred Stock”). 1,000,000 shares of Company Preferred Stock have
been designated as Series A Participating Preferred Stock, without par
value (the “Company Series A Preferred Stock”). At the
close of business on December 31, 2005, (i) 335,456,814 shares of
Company Common Stock were issued and outstanding (which number includes
(A) 1,620,416 shares of Company Common Stock held by the Company in its
treasury, (B) 1,276,225 shares of Company Common Stock held by the trust
established under The Guidant Employee Savings and Stock Ownership Plan and
(C) 1,024,479 shares of Company Common Stock subject to vesting and
restrictions on transfer (“Company Restricted Stock”)),
(ii) 27,018,113 shares of Company Common Stock were reserved and available
for issuance pursuant to the Company’s 1994 Stock Plan, as amended, 1996
Nonemployee Director Stock Plan, as amended, 1998 Stock Plan, as amended, and
2001 Employee Stock Purchase Plan (the “ESPP”) (such plans,
collectively, the “Company Stock Plans”), of which 23,850,560
shares of Company Common Stock were subject to outstanding Company Stock
Options or agreements to issue Company Stock Options, and (iii) no shares
of Company Preferred Stock (including Company Series A Preferred Stock)
were issued or outstanding or were held by the Company as treasury
shares. Except as set forth above in this Section 3.01(c), at the
close of business on December 31, 2005, no shares of capital stock or
other voting securities or equity interests of the Company were issued,
reserved for issuance or outstanding. At the close of business on December 31,
2005, there were no outstanding stock appreciation rights,
“phantom” stock rights, restricted stock units, performance units,
rights to receive shares of Company Common Stock on a deferred basis or other
rights (other than Company Stock Options) that are linked to the value
8
of Company Common Stock (collectively, “Company
Stock-Based Awards”). All outstanding options to purchase shares of
Company Common Stock exclusive of rights under the ESPP (collectively,
“Company Stock Options”) and shares of Company Restricted Stock are
evidenced by stock option agreements, restricted stock purchase agreements or
other award agreements. All outstanding shares of capital stock of the
Company are, and all shares which may be issued pursuant to the Company Stock
Options or Company Stock-Based Awards will be, when issued in accordance with
the terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote. Except as
set forth above in this Section 3.01(c) and for issuances of shares
of Company Common Stock pursuant to the Company Stock Options set forth above
in this Section 3.01(c) and subject to Section 4.01(a), (x)
there are not issued, reserved for issuance or outstanding (A) any shares
of capital stock or other voting securities or equity interests of the Company,
(B) any securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or equity
interests of the Company, (C) any warrants, calls, options or other rights
to acquire from the Company or any of its Subsidiaries, and no obligation of
the Company or any of its Subsidiaries to issue, any capital stock, voting
securities, equity interests or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of the Company or
(D) any Company Stock-Based Awards and (y) there are not any outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities. Neither the Company
nor any of its Subsidiaries is a party to any voting Contract with respect to
the voting of any such securities. Except as set forth above in this Section 3.01(c) and
subject to Section 4.01(a), there are no outstanding (1) securities
of the Company or any of its Subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or voting securities or equity
interests of any Subsidiary of the Company, (2) warrants, calls, options
or other rights to acquire from the Company or any of its Subsidiaries, and no
obligation of the Company or any of its Subsidiaries to issue, any capital
stock, voting securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of any
Subsidiary of the Company or (3) obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any such outstanding
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities.
(d)
Authority;
Noncontravention.
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and, subject to receipt of the Company Shareholder
Approval, to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement (other than the obtaining of the Company
Shareholder Approval). This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by each of the other parties hereto, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
9