Guidant Corporation - MRRS Decision
Headnote
MRRS - Relief from registration and prospectusrequirements for issuance of securities by foreign issuer toCanadian employees, former employees and permitted transfereesand for related trades in connection with a long-term incentiveplan and employee stock purchase plans.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25(1), 53(1), and 74(1).
Applicable Ontario Rules
Rule 45-503 - Trades to Employees, Executivesand Consultants - ss.2.2, 2.4, 3.3 and 3.5.
Applicable Instruments
Multilateral Instrument 45-102 - Resale of Securities- s. 2.14(1).
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ONTARIO, BRITISH COLUMBIA,NOVA SCOTIA AND
ALBERTA
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
GUIDANT CORPORATION
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker")in each of Ontario, British Columbia, Nova Scotia and Alberta(the "Jurisdictions") has received an applicationfrom Guidant Corporation ("Guidant" or the"Company") for a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation")that (i) the requirements contained in the Legislation to beregistered to trade in a security (the "RegistrationRequirements"), and the requirement to file a prospectusand obtain a receipt (the "Prospectus Requirements")(the Registration Requirement and the Prospectus Requirementare, collectively, the "Registration and ProspectusRequirements") will not apply to certain trades insecurities of Guidant made in connection with the 2001 EmployeeStock Purchase Plan (the "Plan"); and (ii)the Registration Requirement will not apply to first tradesof shares ("Shares") acquired under the Planexecuted on an exchange or market outside of Canada or to aperson or company outside of Canada;
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS Guidant has represented tothe Decision Makers as follows:
1. Guidant is presently a corporation incorporatedunder the laws of the State of Indiana.
2. Guidant (and affiliates of Guidant ("GuidantAffiliates") (Guidant and Guidant Affiliates are,collectively, the "Guidant Companies")) isa global leader in the medical technology industry providinginnovative, minimally invasive and cost-effective productsand services for the treatment of cardiovascular and vasculardisease. Guidant has its principal operations in the UnitedStates, Western Europe and Japan and markets its productsin nearly 100 countries.
3. The Company is registered with the SecuritiesExchange Commission in the U.S. under the U.S. SecuritiesExchange Act of 1934 ("Exchange Act") andis not exempt from the reporting requirements of the ExchangeAct pursuant to Rule 12g 3-2.
4. Guidant is not a reporting issuer in theJurisdictions and has no present intention of becoming a reportingissuer in the Jurisdictions.
5. The authorized share capital of Guidantconsists of 1,000,000,000 shares of common stock ("Shares"),and 50,000,000 shares of preferred stock purchase rights ("PreferredShares"). As of May 8, 2002, there were 305,969,188Shares and no Preferred Shares issued and outstanding.
6. The Shares are listed for trading on theNew York Stock Exchange (the "NYSE") andthe Pacific Stock Exchange.
7. Guidant intends to use the services ofone or more agents/brokers in connection with the Plan (eachan "Agent"). Salomon Smith Barney Inc. ("SSB")has initially been appointed by Guidant to act as Agent forthe Plan. SSB is not registered to conduct retail trades inany of the Jurisdictions. SSB is a corporation registeredunder applicable U.S. securities or banking legislation toconduct retail trades in securities and any other Agent appointedin addition to, or in replacement of, SSB will be a corporationregistered under applicable U.S. securities or banking legislationand will be authorized by Guidant to provide services as anAgent under the Plan.
8. The role of the Agent may include: (a)disseminating information and materials to Participants (asdefined below) in connection with the Plan; (b) assistingwith the administration of and general record keeping forthe Plan; (c) holding Shares on behalf of Participants, FormerParticipants (as defined below) and Permitted Transferees(as defined below) in limited purpose brokerage accounts;(d) facilitating the payment of withholding taxes, if any,by cash or the tendering or withholding of Shares; and (e)facilitating the resale of Shares issued in connection withthe Plan.
9. As of June 3, 2002, there were 55 Participantsin Canada eligible to purchase Shares under the Plan: 37 Participantsin Ontario; 8 Participants in British Columbia; 2 Participantsin Alberta; 7 Participants in Québec and 1 Participantin Nova Scotia.
10. The Plan was adopted by the board of directorsof Guidant (the "Board") on February 19,2001, and approved by shareholders on May 21, 2001.
11. The Plan is administered by the Boardand/or one or more committees appointed by the Board.
12. The purpose of the Plan is to provideemployees of the Guidant Companies an opportunity to purchaseShares at a discount through payroll deductions.
13. Subject to adjustments as provided forin the Plan, an aggregate of 5,000,000 Shares have been reservedfor issuance under the Plan.
14. Under the Plan, employees of the GuidantCompanies ("Participants") are offered anopportunity to purchase Shares by means of applying accumulatedpayroll deductions to the purchase of Shares at a discountprice determined in accordance with the terms of the Plan.
15. Employees who participate in the Planwill not be induced to purchase Shares by expectation of employmentor continued employment.
16. All necessary securities filings havebeen made in the U.S. in order to offer the Plan to Participantsresident in the U.S.
17. A prospectus prepared according to U.S.securities laws describing the terms and conditions of thePlan will be delivered to each Canadian Participant who iseligible to participate in the Plan. The annual reports, proxymaterials and other materials that Guidant provides to itsU.S. shareholders will be provided or made available uponrequest to Canadian Participants who acquire and retain Sharesunder the Plan at substantially the same time and in the samemanner as the documents are provided or made available toU.S. participants.
18. Purchase rights under the Plan are nottransferable by a Participant other than by will or by thelaws of intestacy.
19. Following the termination of a Participant'srelationship with the Guidant Companies for reasons of disability,retirement ("Former Participants"), and onthe death of a Participant where rights have been transferredby will or the laws of intestacy ("Permitted Transferees"),the Former Participants and Permitted Transferees will continueto have rights in respect of the Plan ("Post-TerminationRights").
20. Post-Termination Rights may include, amongother things: (a) the right to receive Shares under the Plan;(b) the right to receive payment of accumulated payroll deductionsin his or her account, without interest under the Plan; and(c) the right to sell Shares acquired under the Plan throughthe Agent.
21. Post-Termination Rights will only be availableif the awards or rights to which they relate are granted tothe Participant while the Participant was an employee andno new awards or rights will be granted to Former Participantsunder the Plan.
22. Following the termination of a Participant'srelationship with the Guidant Companies for any reason otherthan disability, retirement or death the Participant's participationin the Plan will terminate and all accumulated payroll deductionsnot already used to purchase Shares will be returned to theParticipant without interest.
23. As of October 11, 2002, Canadian shareholdersdid not own, directly or indirectly, more than 10% of theissued and outstanding Shares and did not represent in numbermore than 10% of the shareholders of the Company. If at anytime during the currency of the Plan Canadian shareholdersof the Company hold, in aggregate, greater than 10% of thetotal number of issued and outstanding Shares or if such shareholdersconstitute more than 10% of all shareholders of the Company,the Company will apply to the relevant Jurisdiction for anorder with respect to further trades to and by Participants,Former Participants, Permitted Transferees in that Jurisdictionin respect of the Shares acquired under the Plan.
24. As there is no market for the Shares inCanada and none is expected to develop, it is expected thatthe resale by Participants, Former Participants and PermittedTransferees of the Shares acquired under the Plan will beeffected through the NYSE.
25. The Legislation of all of the Jurisdictionsdoes not contain exemptions from the Prospectus and RegistrationRequirements for all the intended trades in Shares under thePlan.
26. When the Agents sell Shares on behalfof Former Participants and Permitted Transferees, the Agents,Former Participants and Permitted Transferees may not be ableto rely upon the exemptions from the Registration Requirementcontained in the Legislation of the Jurisdictions.
AND WHEREAS pursuant to the System, thisDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makers pursuantto the Legislation is that:
(a) the Registration and Prospectus Requirementswill not apply to any trade or distribution of Awards madein connection with the Plans, including trades or distributionsinvolving the Guidant Companies, the Agents, Former Participants,and Permitted Transferees, provided that the first tradein any securities acquired through the Plans under thisDecision will be deemed a distribution, or a distributionto the public under the Legislation; and
(b) the first trade by Participants, FormerParticipants or Permitted Transferees in Shares acquiredpursuant to this Decision, including first trades effectedthrough the Agent, shall not be subject to the Registrationand Prospectus Requirements, provided that the conditionsin subsection 2.14(1) of Multilateral Instrument 45-102- Resale of Securities ("MI 45-102") aresatisfied.
October 25, 2002.
"Robert W. Korthals" "HaroldP. Hands"