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New Jersey (State or other jurisdiction of incorporation or organization)		2834 (Primary Standard Industrial Classification Code Number)		22-1024240 (I.R.S. Employer Identification No.)

Robert I. Townsend, III, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Telephone: (212) 474-1000		Bernard E. Kury, Esq. Guidant Corporation 111 Monument Circle, 29th Floor Indianapolis, Indiana 46204 Telephone: (317) 971-2000		Charles W. Mulaney, Jr., Esq. Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive Chicago, Illinois 60606 Telephone: (312) 407-0700

				Proposed		Proposed
				maximum		maximum
Title of each class of		Amount to		offering price		aggregate		Amount of
securities to be registered(1)		be registered(2)		per unit		offering price(3)		registration fee(4)
Common Stock, par value $1.00 per share		175,706,915		N/A		$10,143,242,984		$1,085,327(5)

(1)	This Registration Statement relates to securities of the registrant issuable to holders of common stock, without par value (“Guidant common stock”), of Guidant Corporation, an Indiana corporation (“Guidant”), in the proposed merger of Shelby Merger Sub, Inc., an Indiana corporation and a wholly owned subsidiary of the registrant (“Shelby Merger Sub”), with and into Guidant.
(2)	Based on the maximum number of shares to be issued in connection with the merger, calculated as the product of (a) 356,403,478, the aggregate number of shares of Guidant common stock outstanding as of December 1, 2005 (other than shares owned by Guidant, Shelby Merger Sub or the registrant) or issuable pursuant to the exercise of outstanding options prior to the date the merger is expected to be completed and (b) an exchange ratio of 0.493 shares of the registrant’s common stock for each share of Guidant common stock, representing the share consideration issuable in the merger.
(3)	Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act, and calculated pursuant to Rule 457(f) under the Securities Act. Pursuant to Rule 457(f)(1) under the Securities Act, the proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Guidant common stock (the securities to be cancelled in the merger) in accordance with Rule 457(c) under the Securities Act as follows: (a) $61.71, the average of the high and low prices per share of Guidant common stock on December 1, 2005, as reported on the New York Stock Exchange Composite Transactions Tape, multiplied by (b) 356,403,478, the aggregate number of shares of Guidant common stock outstanding as of December 1, 2005 (other than shares owned by Guidant, Shelby Merger Sub or the registrant) or issuable pursuant to the exercise of outstanding options prior to the date the merger is expected to be completed, less (c) the minimum amount of cash to be paid by registrant in exchange for shares of Guidant common stock (which equals $33.25 times 356,403,478, the aggregate number of shares of Guidant common stock outstanding as of December 1, 2005 (other than shares owned by Guidant, Shelby Merger Sub or the registrant) or issuable pursuant to the exercise of outstanding options prior to the date the merger is expected to be completed).
(4)	Calculated by multiplying the proposed maximum aggregate offering price for all securities by 0.00010700.
(5)	Previously paid. Registration fees of $1,781,664 were paid in connection with the first filing of this registration statement on February 16, 2005.

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	Sincerely,
	James M. Cornelius
	Chairman and interim Chief Executive Officer

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JOHNSON & JOHNSON One Johnson & Johnson Plaza New Brunswick, NJ 08933 Attention: Office of Corporate Secretary Telephone: (732) 524-2455		GUIDANT CORPORATION 111 Monument Circle, 29th Floor Indianapolis, IN 46204-5129 Attention: Secretary Telephone: (317) 971-2000

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To consider and vote upon a proposal to approve the Amended and Restated Agreement and Plan of Merger dated as of November 14, 2005, which amended and restated the Agreement and Plan of Merger dated as of December 15, 2004, among Johnson & Johnson, Shelby Merger Sub, Inc., a wholly owned subsidiary of Johnson & Johnson, and Guidant, pursuant to which Shelby Merger Sub will merge with and into Guidant with Guidant becoming a wholly owned subsidiary of Johnson & Johnson, and each outstanding share of Guidant common stock will be converted into the right to receive a combination of (i) $33.25 in cash and (ii) 0.493 shares of Johnson & Johnson common stock.

	By order of the board of directors,
	Bernard E. Kury
	Vice President, General Counsel and Secretary

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			Page
QUESTIONS AND ANSWERS ABOUT THE MERGER				Q-1
SUMMARY				1
	General			1
	The Special Meeting			4
	The Merger			4
	The Companies			6
	Market Prices and Dividend Information			7
	Comparative Per Share Information			8
	Selected Historical Consolidated Financial Data of Johnson & Johnson			9
	Selected Historical Consolidated Financial Data of Guidant Corporation			10
	Selected Unaudited Pro Forma Condensed Consolidated Financial Information			11
RISK FACTORS RELATING TO THE MERGER				12
THE SPECIAL MEETING				13
	Date, Time and Place			13
	Purpose of the Special Meeting			13
	Record Date; Shares Entitled to Vote; Quorum			13
	Vote Required			13
	Shares Owned by Guidant Directors and Executive Officers			13
	Voting of Proxies			14
	Revocability of Proxies			14
	Solicitation of Proxies			14
THE COMPANIES				16
	Johnson & Johnson			16
	Guidant			16
	Significant Contracts Between Guidant and Johnson & Johnson			17
THE MERGER				18
	Background to the Merger			18
	Reasons for the Merger and Recommendation of the Guidant Board of Directors			27
	Opinions of J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated			31
	Update on Guidant’s Business			43
	Interests of Guidant Directors and Executive Officers in the Merger			43
	Form of the Merger			49
	Merger Consideration			49
	Ownership of Johnson & Johnson Following the Merger			49
	Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares			50
	Effective Time of the Merger			50
	Stock Exchange Listing of Johnson & Johnson Common Stock			51
	Delisting and Deregistration of Guidant Common Stock			51
	Material United States Federal Income Tax Consequences of the Merger			51
	Regulatory Matters			53
	Dissenters’ Rights			53
	Guidant’s Rights Agreement			53
	Guidant Employee Benefits Matters			54
	Effect on Awards Outstanding Under Guidant Stock Incentive Plans			56
	Resale of Johnson & Johnson Common Stock			57
	Notices to Guidant Shareholders Resident in Canada and Canadian Resale Restrictions			57

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			Page
THE AMENDED AND RESTATED MERGER AGREEMENT				58
	Conditions to the Completion of the Merger			58
	No Solicitation			61
	Termination of the Amended and Restated Merger Agreement			63
	Fees and Expenses			64
	Conduct of Business Pending the Merger			65
	Representations and Warranties			66
	Additional Terms			67
	Articles of Incorporation and By-laws of the Surviving Corporation			69
	Amendment; Extension and Waiver			69
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS				70
ACCOUNTING TREATMENT				80
COMPARATIVE STOCK PRICES AND DIVIDENDS				80
DESCRIPTION OF JOHNSON & JOHNSON CAPITAL STOCK				82
COMPARISON OF RIGHTS OF COMMON SHAREHOLDERS OF JOHNSON & JOHNSON AND GUIDANT				83
LEGAL MATTERS				95
EXPERTS				95
OTHER MATTERS				95
FUTURE SHAREHOLDER PROPOSALS				95
WHERE YOU CAN FIND MORE INFORMATION				96
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS				98
Annexes
	Annex 1 — Amended and Restated Agreement and Plan of Merger
	Annex 2 — Opinion of J.P. Morgan Securities Inc.
	Annex 3 — Opinion of Morgan Stanley & Co. Incorporated
EX-5.1: OPINION OF PHILIP P CROWLEY
EX-99.1: REQUEST FOR ADMITTANCE / PROXY CARD OF GUIDANT CORPORATION

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	to submit a proxy or to vote in person at the special meeting, including abstentions and broker non-votes, will have the same effect as a vote against approval of the amended and restated merger agreement.

Q:	Can I change my vote after I have mailed my signed proxy?

A:

Yes. You can change your vote at any time before your proxy is voted at the special meeting. You can do this in one of three ways. First, you can send a written notice stating that you would like to revoke your proxy. Second, you can complete and submit a new valid proxy bearing a later date by Internet, telephone or mail. If you choose to send a written notice or to mail your new proxy, you must submit your notice of revocation or your new proxy to Guidant Corporation at 111 Monument Circle, 29th Floor, Indianapolis, Indiana 46204-5129, Attention: Secretary. Third, you can attend the special meeting and vote in person. Attendance at the special meeting will not in and of itself constitute revocation of a proxy.

Q:	If my Guidant shares are held in “street name” by my broker, will my broker vote my shares for me?

A:	Your broker will vote your Guidant shares only if you provide instructions on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Without instructions, your shares will not be voted, which will have the effect of a vote against the approval of the amended and restated merger agreement.

Q:	If my Guidant shares are held under Guidant’s employee stock ownership plan, will the plan trustee vote my shares for me?

A:	If you are a participant in Guidant’s employee stock ownership plan and wish to instruct the plan trustee how to vote your shares, you should follow the instructions provided by the plan trustee. The plan trustee under Guidant’s employee stock ownership plan may vote shares at its discretion for which timely instructions are not received.

Q:	Should I send in my stock certificates now?

A:	No. After the merger is completed, you will receive a transmittal form with instructions for the surrender of Guidant common stock certificates. Please do not send in your stock certificates with your proxy.

Q:	Is the merger expected to be taxable to me?

A:

Generally, yes. The receipt of the merger consideration for Guidant common stock pursuant to the merger will be a taxable transaction for United States federal income tax purposes. For United States federal income tax purposes, generally you will recognize gain or loss as a result of the merger measured by the difference, if any, between (i) the fair market value of the Johnson & Johnson common stock as of the effective time of the merger and the cash received and (ii) your adjusted tax basis in the Guidant common stock exchanged therefor in the merger.

		You should read “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 51 for a more complete discussion of the United States federal income tax consequences of the merger. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the tax consequences of the merger to you.

Q:	Can I dissent and require appraisal of my shares?

A:	No. Guidant shareholders have no dissenters’ rights under Indiana law in connection with the merger.

Q:	Who can help answer my questions?

A:	If you have any questions about the merger or if you need additional copies of this proxy statement/ prospectus or the enclosed proxy, you should contact:

Q-4

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	•	executing a later-dated proxy card relating to the same shares and delivering it to Guidant’s Secretary by Internet, telephone or mail before the taking of the vote at the special meeting
	•	filing with Guidant’s Secretary before the taking of the vote at the special meeting a written notice of revocation bearing a later date than the proxy card or
	•	attending the special meeting and voting in person (although attendance at the special meeting will not, in and of itself, revoke a proxy).

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	•	implantable defibrillator systems used to detect and treat abnormally fast heart rhythms (tachycardia) that could result in sudden cardiac death, including implantable cardiac resynchronization therapy defibrillator systems used to treat heart failure
	•	implantable pacemaker systems used to manage slow or irregular heart rhythms (bradycardia), including implantable cardiac resynchronization therapy pacemaker systems used to treat heart failure
	•	coronary stent systems for the treatment of coronary artery disease
	•	angioplasty systems including dilatation catheters, guidewires and related accessories for the treatment of coronary artery disease
	•	cardiac surgery systems to perform cardiac surgical ablation, endoscopic vessel harvesting and clampless beating-heart bypass surgery and
	•	peripheral systems, including those to treat biliary, peripheral vascular and carotid artery disease.

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	•	Market Price. The Guidant board of directors considered the value of the merger consideration to be received by Guidant shareholders in the merger, including the fact that Guidant shareholders will receive, for each share of Guidant common stock that they own, merger consideration consisting of $33.25 in cash and 0.493 shares of Johnson & Johnson common stock, which as of the close of business on November 14, 2005, had a value of $63.08 and, as of the close of business on December 22, 2005, had a value of $63.48. The Guidant board also considered that, because the exchange ratio for the stock portion of the merger consideration is now fixed and is not subject to a collar, the value of the merger consideration to be received by Guidant shareholders will increase or decrease in proportion to the extent that Johnson & Johnson’s common stock increases or decreases in value.
	•	Form of Merger Consideration. The Guidant board of directors considered that the stock portion of the merger consideration will permit Guidant shareholders to exchange their shares of Guidant common stock for shares of Johnson & Johnson common stock and retain an equity interest in the combined enterprise with the related opportunity to share in its future growth. The Guidant board also reviewed Johnson & Johnson’s current and historical results of operations, the trading prices for

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		its common stock and its future prospects. The board also noted the liquidity that holding shares of Johnson & Johnson common stock would provide to Guidant shareholders who do not wish to continue to hold shares of Johnson & Johnson common stock following the merger.
	•	Business, Condition and Prospects. The Guidant board of directors considered how Guidant’s financial condition, results of operations, business, competitive position, reputation, relationships with regulators, outstanding legal proceedings and investigations and business prospects have changed since the original merger agreement was executed in December 2004, as well as current industry, economic, government regulatory and market conditions and trends. The Guidant board evaluated recent changes in Guidant’s implantable defibrillator implant rates, an indicator of Guidant’s progress in regaining market share, including a decline in such rate in October of 2005 and related uncertainty as to the overall timing and pace of Guidant’s market share recovery. The Guidant board considered management’s belief that fourth quarter 2005 sales and income from continuing operations before income taxes are likely to be lower than the fourth quarter of 2004. The Guidant board of directors also reviewed Guidant’s future prospects if a merger with Johnson & Johnson were not completed under current circumstances and Guidant were to remain independent, including the risks inherent in remaining independent such as, among other things, the possible consequences of potentially protracted litigation with Johnson & Johnson to enforce the original merger agreement, the potential impact of recent developments on Guidant’s business prospects as an independent company and its ability to retain key management and sales personnel.
	•	Terms of the Amended and Restated Merger Agreement. The Guidant board of directors, with the assistance of its legal advisors, reviewed the terms of the amended and restated merger agreement, which is substantially the same as the original merger agreement except as to the pricing terms described above, the amount of the termination fees payable under certain circumstances described below, the termination date (which has been extended from February 28, 2006 to March 31, 2006) and the date from which any material adverse change would be measured (September 30, 2005 as compared to September 30, 2004). In addition, the representations and warranties of Guidant are qualified to exclude the effects on Guidant’s business relating to or arising from Guidant’s previously announced product recalls or any related pending or future litigation, governmental investigations or other developments and any information in Guidant’s Securities and Exchange Commission filings prior to the date of the amended and restated merger agreement.
	•	Litigation. The Guidant board of directors considered the assertion made by Johnson & Johnson that it had the right to refuse to complete the merger in accordance with the original merger agreement as a result of the effects of Guidant’s previously announced product recalls and related governmental investigations, lawsuits, claims and other developments on Guidant, that the outcome of the suit filed by Guidant against Johnson & Johnson seeking specific performance of the original merger agreement was not certain and that this litigation could be protracted and could divert management attention and resources away from operating the business.
	•	Strategic Advantages. The Guidant board of directors considered reports from Guidant management and advisors as to the results of their review of Johnson & Johnson’s business. The Guidant board also considered the existing relationships between Guidant and Johnson & Johnson, its assessment of the complementary strengths of each of the companies, the compatibility of the corporate structures and the historical success of Johnson & Johnson in incorporating acquired companies into a decentralized corporate organization. The Guidant board also reviewed information with respect to the prospects of the combined enterprise, including the potential for the combined enterprise to have a stronger competitive position and greater opportunities for growth than Guidant would have operating independently due to:

	•	the ability to combine Johnson & Johnson’s expertise in drug coating technology and the manufacturing of drug-eluting stents with Guidant’s expertise in stent design and stent delivery systems

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	•	Guidant gaining access to Johnson & Johnson’s strengths in developing long-term product pipelines, improving clinical outcomes, integrating technologies, securing regulatory approvals and supporting the adoption of new therapies
	•	Johnson & Johnson gaining access to Guidant’s strengths in improving devices brought to market, supplying products to customers and sales and marketing
	•	the potential that the combined resources of Guidant and Johnson & Johnson could increase the likelihood of recovering Guidant’s market share at a faster pace than Guidant could achieve alone and
	•	the potential to apply Guidant’s technology platforms (such as implantable micro-electronic devices and site-specific therapies) to current and future Johnson & Johnson products.

	•	Ability to Accept Superior Proposal Upon Payment of Termination Fee. The Guidant board of directors considered Guidant’s ability to terminate the amended and restated merger agreement prior to its approval by shareholders to enter into an alternative transaction in response to a superior proposal. In this regard, Guidant may not solicit competing offers and would be required to pay a $625 million termination fee in connection with accepting a superior proposal. The termination fee was reduced from $750 million in the original merger agreement.
	•	Regulatory Matters. The Guidant board of directors considered the fact that the European Commission approved the merger on August 25, 2005 and that the Federal Trade Commission conditionally approved the merger on November 2, 2005, making the consummation of the merger possible promptly following the special meeting of Guidant shareholders to approve the amended and restated merger agreement. The Guidant board took account of Johnson & Johnson’s agreement to assume certain continuing regulatory risks, including its agreement that, if the merger is not completed solely for antitrust reasons, Johnson & Johnson will: (1) pay a termination fee to Guidant of $300 million and (2) provide Guidant with an option to (i) take a license under certain patents owned by Johnson & Johnson relating to drugs and polymers for use in stents and (ii) arbitrate any issues of validity and infringement relating to such patents under claims Johnson & Johnson may bring against Guidant, in which case Johnson & Johnson’s sole remedy against Guidant for any finding of infringement would be a predetermined royalty. The termination fee was reduced from $700 million in the original merger agreement.
	•	Tax Treatment. The Guidant board noted the expected tax treatment of the merger to Guidant shareholders, including the fact that the merger is not structured as a reorganization for United States federal income tax purposes which would generally allow Guidant shareholders to refrain from recognizing any gain from the receipt of the stock portion of the merger consideration.
	•	Potential Risks. The Guidant board of directors considered a number of potential risks, as well as related mitigating factors, in connection with its evaluation of the merger. These risks include the potential diversion of management resources from operational matters and the opportunity costs associated with the merger prior to the completion or abandonment of the merger. Other risks considered by the Guidant board included:

	•	the possibility that the merger might not be completed as a result of the failure to satisfy closing conditions, which could result in significant distractions of Guidant’s employees and increased expenses from an unsuccessful attempt to complete the merger
	•	under the terms of the amended and restated merger agreement, prior to the completion or abandonment of the merger, Guidant will be required to conduct its business only in the ordinary course consistent with past practice and subject to operational restrictions and
	•	Guidant would be required to pay a $625 million termination fee if the amended and restated merger agreement is terminated under specified circumstances and Guidant later agrees to or consummates a takeover proposal.

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	In the judgment of Guidant’s board, however, these potential risks were more than offset by the potential benefits of the merger discussed above.

	•	Opinions of Financial Advisors. The Guidant board of directors considered the presentations delivered by JPMorgan and Morgan Stanley and the written opinions of JPMorgan and Morgan Stanley to the Guidant board of directors to the effect that, as of the date of the opinions and based on and subject to the matters set forth in the respective opinions, the merger consideration to be received by shareholders pursuant to the amended and restated merger agreement was fair, from a financial point of view, to Guidant shareholders. A copy of JPMorgan’s written opinion is attached as Annex 2 to this proxy statement/ prospectus and a copy of Morgan Stanley’s written opinion is attached as Annex 3 to this proxy statement/ prospectus.
	•	Additional Considerations. In the course of its deliberations on the merger, the Guidant board of directors consulted with members of Guidant’s management and Guidant’s legal, financial, accounting and tax advisors on various legal, business and financial matters. Additional factors considered by the Guidant board in determining whether to adopt the amended and restated merger agreement and recommend that Guidant shareholders vote to approve the amended and restated merger agreement included:

	•	the fact that Guidant shareholders will have an opportunity to vote on the merger on the terms provided in the amended and restated merger agreement and
	•	the uncertainty that any alternative transaction would yield a superior value to Guidant’s shareholders.

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	Opinion of J.P. Morgan Securities Inc.

	•	reviewed a draft, dated November 12, 2005, of the amended and restated merger agreement
	•	reviewed certain publicly available business and financial information concerning Guidant and Johnson & Johnson and the industries in which they operate, including publicly available financial forecasts relating to Johnson & Johnson that were reviewed and discussed with JPMorgan by the management of Johnson & Johnson (JPMorgan was not provided internal financial information or projections for Johnson & Johnson)
	•	compared the proposed financial terms of the merger with publicly available financial terms of transactions involving companies JPMorgan deemed relevant and the consideration received for those companies
	•	compared the financial and operating performance of Guidant and Johnson & Johnson with publicly available information concerning other companies JPMorgan deemed relevant and reviewed the

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		current and historical market prices of Guidant common stock and Johnson & Johnson common stock and publicly traded securities of those other companies
	•	reviewed certain internal financial analyses and forecasts prepared by the management of Guidant relating to its business and
	•	performed other financial studies and considered other information as JPMorgan deemed appropriate for the purposes of its opinion.

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	•	Medtronic, Inc.
	•	Boston Scientific Corporation
	•	St. Jude Medical, Inc.

Acquiror		Target
• Medtronic, Inc.		• Sofamor Danek Group, Inc.
• Medtronic, Inc.		• Arterial Vascular Engineering, Inc.
• Boston Scientific Corporation		• Schneider Worldwide
• Johnson & Johnson		• DePuy, Inc.
• Johnson & Johnson		• Cordis Corporation
• General Electric Company		• Amersham plc
• Guidant Corporation		• Intermedics Inc.
• Zimmer Holdings, Inc.		• Centerpulse AG

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	Opinion of Morgan Stanley & Co. Incorporated

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	•	reviewed certain publicly available financial statements and other information of Guidant and Johnson & Johnson
	•	reviewed certain internal financial statements and other financial and operating data concerning Guidant prepared by the management of Guidant
	•	reviewed certain financial projections prepared by the management of Guidant
	•	reviewed the pro forma impact of the merger on Johnson & Johnson’s earnings per share
	•	discussed the past and current operations and financial condition and the prospects of Guidant and Johnson & Johnson with senior executives of Guidant and Johnson & Johnson, respectively
	•	discussed the strategic rationale for the merger with senior executives of Guidant
	•	reviewed the reported prices and trading activity for Guidant common stock and Johnson & Johnson common stock
	•	compared the financial performance of Guidant and the prices and trading activity of Guidant common stock with that of certain other comparable publicly-traded companies and their securities
	•	compared the financial performance of Johnson & Johnson and the prices and trading activity of Johnson & Johnson common stock with that of certain other comparable publicly-traded companies and their securities
	•	participated in discussions among representatives of Guidant and Johnson & Johnson and their financial and legal advisors
	•	reviewed a draft of the amended and restated merger agreement dated November 12, 2005, the original merger agreement and certain related documents and
	•	performed such other analyses and considered such other factors as Morgan Stanley deemed appropriate.

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		Johnson & Johnson
Period Ending on November 11, 2005		Common Stock Price
5-Year High		$	69.40
5-Year Low		$	41.63
5-Year Average		$	56.25
3-Year Average		$	57.52
1-Year Average		$	64.76
6-Month Average		$	64.34

		Relative 5 Year
Company/ Market Index		Price Change
Johnson & Johnson			31	%
S&P 500 Index			-9	%
Peer Index(1)			-22	%

(1)	Peer Index included Abbott Laboratories, Bristol-Myers Squibb Company, GlaxoSmithKline plc, Novartis AG, Pfizer Inc. and Wyeth.

						Implied Guidant
						Common Stock
						Price Based on
		Johnson & Johnson				Merger
Period Ending on November 11, 2005		Common Stock Price				Consideration(1)
November 11, 2005		$	60.92			$	63.28
November 1, 2005(2)		$	61.90			$	63.77
October 17, 2005(3)		$	63.00			$	64.31
1-Week Average		$	61.11			$	63.38
2-Week Average		$	61.35			$	63.49
1-Month Average		$	62.45			$	64.04
3-Month Average		$	63.07			$	64.34
6-Month Average		$	64.34			$	64.97
1-Year Average		$	64.76			$	65.17
Average Since
December 15, 2004(4)		$	65.14			$	65.36
52-Week High		$	69.40			$	67.46
52-Week Low		$	60.20			$	62.93

(1)	$33.25 in cash plus a fixed exchange ratio of 0.493 shares of Johnson & Johnson common stock per each share of Guidant common stock.
(2)	Day prior to the Federal Trade Commission’s conditional approval of the transaction and Johnson & Johnson’s press release stating its belief that it had the right to refuse to complete the merger in accordance with the terms of the original merger agreement.

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(3)	Day prior to Johnson & Johnson’s third quarter earnings call with analysts and its indication that it was “continuing to consider the alternatives” under the original merger agreement.
(4)	Date of first announcement that Johnson & Johnson and Guidant had signed the original merger agreement.

	•	Boston Scientific Corporation
	•	Medtronic, Inc.
	•	St. Jude Medical, Inc.

Implied Guidant

Implied Guidant

Metric at $63.28 Per

Metric at $63.28 Per

Reference Range of

Share Based on

Share Based on

Metric

Multiples

Management Case 1(1)

Management Case 2(1)

Price/ 2006 Earnings

13.6x - 28.9x

34.3x

34.3x

Price/ 2007 Earnings

12.2x - 24.8x

22.2x

23.0x

(1)	$63.28 based on a merger consideration of $33.25 in cash plus a fixed exchange ratio of 0.493 shares of Johnson & Johnson common stock per each share of Guidant common stock and a closing market price of Johnson & Johnson common stock of $60.92 on November 11, 2005.

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	•	Abbott Laboratories
	•	Eli Lilly and Company
	•	Pfizer Inc.
	•	Wyeth

		Reference Range				Implied Johnson &
Metric		of Multiples				Johnson Metric
Price/ 2006 Earnings			10.9x - 16.4x				16.0x
Price/ 2007 Earnings			10.1x - 15.1x				14.7x
Price/ 2006 Earnings / Long Term Earnings Growth Rate			1.5x - 2.0x				1.5x

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											Number of Shares Subject
											to Grants of Restricted
			Number of Shares Subject				Weighted Average Exercise				Stock that had their
Name			to Options that Vested				Price per Share($)				Restrictions Lapse
James M. Cornelius				24,000				59.01				0
	Director,
	then non-executive Chairman*
Maurice A. Cox				10,000				59.01				0
	Director
Nancy-Ann DeParle				10,000				59.01				0
	Director
Enrique C. Falla				10,000				59.01				0
	Director
Michael Grobstein				10,000				59.01				0
	Director
Kristina M. Johnson				10,000				59.01				0
	Director
J.B. King				10,000				59.01				0
	Director
J. Kevin Moore				10,000				59.01				0
	Director
Mark Novitch				10,000				59.01				0
	Director
Jack A. Shaw				10,000				59.01				0
	Director
Eugene L. Step				10,000				59.01				0
	Director

*	Effective November 15, 2005, Mr. Cornelius was appointed Chairman and Interim Chief Executive Officer.

**	Mr. Dollens retired effective November 15, 2005.

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											Number of Shares Subject
											to Grants of Restricted
			Number of Shares Subject				Weighted Average Exercise				Stock that had their
Name			to Options that Vested				Price per Share($)				Restrictions Lapse
Ruedi E. Wager				10,000				59.01				0
	Director
August M. Watanabe				10,000				59.01				0
	Director
Ronald W. Dollens**				109,350				63.11				84,700
	former Director, President and Chief Executive Officer
Keith E. Brauer				22,000				63.11				46,700
	Vice President, Finance and Chief Financial Officer
R. Frederick McCoy, Jr.				22,000				63.11				50,900
	President, Cardiac Rhythm Management
Dana G. Mead, Jr.***				22,000				63.11				50,900
	former President, Vascular Intervention
Guido J. Neels****				45,650				63.11				61,800
	former Chief Operating Officer
Other Guidant Executive
	Officers (12 People)			429,175				46.93				220,250

***	Mr. Mead served until May 12, 2005.

****	Mr. Neels retired as Chief Operating Officer effective November 30, 2005 and is serving as special advisor to the Chairman until December 31, 2005.

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	•	the acquisition by any person, directly or indirectly, of 20% of more of Guidant’s voting shares
	•	shareholder approval of certain business transactions, including transactions such as the merger
	•	Guidant’s entering into a definitive agreement which, if consummated, would result in a change in control and
	•	the Guidant board of directors adopting a resolution to the effect that a change in control has occurred.

	•	continued welfare benefits at Guidant’s sole expense for three years following the date of termination at the level for which the executive officer was eligible at the time of the termination of employment or immediately prior to the change in control, whichever provides coverage more favorable to the executive officer
	•	three years of additional age and service credit for pension purposes and the crediting of severance benefits as pensionable earnings pro-rata over the three-year severance period
	•	to the extent not already vested and exercisable, immediate acceleration of any stock options or other stock-based awards
	•	payment of any accrued bonus (or, if greater, the pro-rata target bonus for the year of the termination) and any deferred compensation (unless the obligation to pay such amounts is subject to payment under a grantor (i.e., “rabbi”) trust)
	•	outplacement services and, if applicable, relocation expenses and
	•	a gross-up for any “golden parachute” excise tax that may be payable by the executive under Section 4999 of the Internal Revenue Code, and any income and employment withholding taxes on the gross-up payment, with respect to the severance payments and other benefits due to the executive officer (whether under the change in control plan or otherwise).

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Name			Payment and Benefit Amounts ($)
James M. Cornelius				*
	Chairman and interim Chief Executive Officer
Ronald W. Dollens				**
	former Director, President and Chief Executive Officer
Keith E. Brauer				2,675,795
	Vice President, Finance and Chief Financial Officer
R. Frederick McCoy, Jr.				2,313,837
	President, Cardiac Rhythm Management
Dana G. Mead, Jr.				***
	former President, Vascular Intervention
Guido J. Neels				4,048,656	****
	former Chief Operating Officer
Other Guidant Executive Officers (11 People)				17,245,297

*	The terms of Mr. Cornelius’ appointment as Chairman and interim Chief Executive Officer of Guidant provide that he shall not be entitled to any severance payments or any other benefits in connection with the merger under the change in control plan.

**	Mr. Dollens has informed Guidant that he has agreed to waive any severance payments and other benefits to which he would be entitled in connection with the merger under the change in control plan.

***	Mr. Mead no longer serves as an executive officer and is not entitled to any severance payments or other benefits to which he would have been entitled in connection with the merger under the change in control plan.

****	Pursuant to the terms of the change in control plan, Guidant has deemed Mr. Neels’ retirement a covered termination of employment under the change in control plan and he will receive a payment of $4,048,656 in January of 2006.

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	•	the outstanding shares of Johnson & Johnson common stock are 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
	•	Johnson & Johnson declares or pays cash dividends in any fiscal quarter in excess of 200% or the amount of regular quarterly dividends paid by Johnson & Johnson prior to the date of the new agreement or
	•	Johnson & Johnson engages in any spin off or split off

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	•	such certificate is properly endorsed or otherwise is in proper form for transfer and
	•	the person requesting such exchange pays any transfer or other taxes resulting from the payment of the merger consideration as described above to a person other than the registered holder of such certificate.

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	•	Guidant shareholders in the merger and
	•	holders of options to acquire shares of Guidant common stock, which will be converted into options to acquire shares of Johnson & Johnson common stock

	•	banks, insurance companies or other financial institutions
	•	broker-dealers
	•	traders
	•	expatriates
	•	tax-exempt organizations
	•	Non-United States Holders (as defined below)
	•	persons who are investors in a pass-through entity
	•	persons who are subject to alternative minimum tax
	•	persons who hold their shares of common stock as a position in a “straddle” or as part of a “hedging” or “conversion” transaction
	•	persons deemed to sell their shares of common stock under the constructive sale provisions of the Internal Revenue Code
	•	persons that have a functional currency other than the United States dollar or
	•	persons who acquired their shares of our common stock upon the exercise of stock options or otherwise as compensation.

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	•	a citizen or resident of the United States
	•	a corporation or an entity treated as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision thereof
	•	an estate the income of which is subject to United States federal income taxation regardless of its source or
	•	a trust (a) the administration over which a United States court can exercise primary supervision and (b) all of the substantial decisions of which one or more United States persons have the authority to control and certain other trusts considered United States persons for United States federal income tax purposes.

	Consequences of the Merger

	Backup Withholding

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	•	Johnson & Johnson or Guidant will be able to satisfy or comply with such conditions
	•	compliance or non-compliance will not have adverse consequences on Johnson & Johnson after completion of the merger or
	•	such litigation, if any, will be resolved favorably by Johnson & Johnson and Guidant.

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	•	10 business days following a public announcement that a person or group has acquired 15% or more of the outstanding shares of Guidant common stock (thereby becoming an “acquiring person” under the shareholder rights plan) or
	•	10 business days following the commencement of a tender offer or exchange offer that would result in a person or group becoming an acquiring person.

	•	for a period of 12 months following the merger, the employees of Guidant and its subsidiaries who remain in the employment of the surviving corporation and its subsidiaries will receive employee benefits that in the aggregate are substantially comparable to the employee benefits provided to such employees immediately prior to the merger
	•	for the six-month period immediately following the expiration of the 12-month period following the merger, the employees of Guidant and its subsidiaries who remain in the employment of the surviving corporation and its subsidiaries will receive employee benefits that in the aggregate are substantially comparable to either the employee benefits provided to such employees immediately prior to the merger or the employee benefits provided to similarly situated employees of Johnson & Johnson and its subsidiaries
	•	for a period of not less than 18 months following the merger, employees of Guidant and its subsidiaries who remain in the employment of the surviving corporation and its subsidiaries will receive base salary or wage rates that are not less than those in effect for such employees immediately prior to the merger, except that neither Johnson & Johnson nor the surviving corporation nor any of their subsidiaries will have any obligation to issue, or adopt any plans or arrangements providing for the issuance of, shares of capital stock, warrants, options, stock

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		appreciation rights or other rights in respect of any shares of capital stock of any entity or any securities convertible or exchangeable into such shares pursuant to any such plans or arrangements and
	•	no plans or arrangements of Guidant or any of its subsidiaries providing for the issuance of rights in the capital stock of Guidant or otherwise will be taken into account in determining whether employee benefits are substantially comparable in the aggregate.

	•	for purposes of vesting (but not benefit accrual) under Johnson & Johnson’s defined benefit pension plan
	•	for purposes of eligibility for vacation under Johnson & Johnson’s vacation program
	•	for purposes of eligibility and participation under any health or welfare plan maintained by Johnson & Johnson (other than any post-employment health or post-employment welfare plan)
	•	for purposes of eligibility for the company matching contribution under Johnson & Johnson’s 401(k) savings plan (it being understood that each such employee who was participating in Guidant’s 401(k) savings plan immediately prior to becoming eligible to participate in Johnson & Johnson’s 401(k) savings plan shall be immediately eligible for the company matching contribution under Johnson & Johnson’s 401(k) savings plan) and
	•	unless covered under another arrangement with or of Guidant, for benefit accrual purposes under Johnson & Johnson’s severance plan (but in the case of such severance and with respect to each plan or program that is the subject of any of the four bullet points above, solely to the extent that Johnson & Johnson makes such plan or program available to employees of the surviving corporation, it being Johnson & Johnson’s current intention to do so).

	•	waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to such employees to the extent such conditions and exclusions were satisfied or did not apply to such employees under the welfare plans maintained by Guidant prior to the merger and
	•	provide each such employee with credit for any co-payments and deductibles paid prior to the effective time in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under any such plan.

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	•	each Guidant stock option outstanding immediately prior to the merger shall be amended and converted into an option to acquire, on the same terms and conditions as were applicable under such Guidant stock option, the number of shares of Johnson & Johnson common stock (rounded down to the nearest whole share) equal to the sum of:
	•	the product of (A) the number of shares of Guidant common stock subject to such Guidant stock option and (B) 0.493 and
	•	the product of (A) the number of shares of Guidant common stock subject to such Guidant stock option and (B) the quotient obtained by dividing (x) $33.25 by (y) the volume weighted average trading price of Johnson & Johnson common stock for the 15 trading days ending three trading days prior to the consummation of the merger at an exercise price per share of Johnson & Johnson common stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (1) the aggregate exercise price for the shares of Guidant common stock subject to such Guidant stock option by (2) the aggregate number of shares of Johnson & Johnson common stock to be subject to such Guidant stock option after giving effect to the adjustments in this and the two preceding bullet points and
	•	make such other changes to the Guidant stock incentive plans as Johnson & Johnson and Guidant may agree are appropriate to give effect to the merger.

	•	participants will not increase their payroll deductions or purchase elections from those in effect on the date of the original merger agreement
	•	each participant’s outstanding right to purchase shares of Guidant common stock under the Guidant employee stock purchase plan will terminate on the day immediately prior to the day on which merger occurs, provided that all amounts allocated to each participant’s account under the Guidant employee stock purchase plan as of such date will thereupon be used to purchase from Guidant whole shares of Guidant common stock at the applicable price determined under the terms of the Guidant employee stock purchase plan for the then outstanding offering periods using such date as the final purchase date for each such offering period and
	•	the Guidant employee stock purchase plan will terminate immediately following such purchases of Guidant common stock.

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	•	the amended and restated merger agreement has been approved by the affirmative vote of shareholders of Guidant representing a majority of the shares of Guidant common stock outstanding and entitled to vote at the special meeting
	•	the shares of Johnson & Johnson common stock to be issued to:

	•	Guidant shareholders upon completion of the merger and
	•	holders of options to acquire shares of Guidant common stock, which will be converted into options to acquire shares of Johnson & Johnson common stock, have been approved for listing on the New York Stock Exchange, subject to official notice of issuance

	•	the waiting period applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act has expired or has been terminated. On November 2, 2005, the Federal Trade Commission terminated the waiting period under the Hart-Scott-Rodino Act and issued a consent order conditionally approving the merger. The consent order became final on December 21, 2005
	•	the European Commission has issued, or has been deemed to have issued, a decision under Article 6(1)(b), 8(1) or 8(2) of the EC merger regulation declaring the merger compatible with the Common Market. On August 25, 2005, the European Commission issued a decision under Article 8(2) of the EC merger regulation declaring the merger compatible with the Common Market
	•	no temporary restraining order, preliminary or permanent injunction or other court order or statute, law, rule, legal restraint or prohibition is in effect that prevents the completion of the merger and
	•	the registration statement on Form S-4, of which this proxy statement/ prospectus forms a part, has been declared effective by the Securities and Exchange Commission and is not the subject of any stop order or proceedings seeking a stop order.

	•	the representations and warranties of Guidant relating to:

	•	capitalization
	•	authority and noncontravention
	•	the absence of recent changes in the compensation and benefits for certain key personnel of Guidant, including increases in compensation or benefits, grants or increases in severance or termination pay, the entry into or amendment of employment and other similar contracts, the removal of restrictions in benefit plans or the adoption of new benefit plans for such personnel
	•	agreements that may restrict the ability of affiliates of Guidant to compete (other than any such agreement that only restricts Guidant’s ability to compete) in any line of business, geographic area or customer segment

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	•	the vote required by the shareholders of Guidant to approve the amended and restated merger agreement
	•	the adoption of the amended and restated merger agreement by the board of directors of Guidant and the inapplicability of state takeover statutes to the merger and
	•	the taking of all action by Guidant to render its rights agreement inapplicable with respect to the merger

that are qualified as to materiality or material adverse effect are true and correct, and such representations and warranties that are not so qualified by materiality or material adverse effect are true and correct in all material respects, in each case as of the date of the original merger agreement and as of the closing date of the merger as though made on the closing date, or if such representations and warranties expressly relate to an earlier date, then as of such date.

	•	the representations and warranties of Guidant relating to various other agreements that either (1) may restrict the ability of Guidant or any of its subsidiaries ability to compete in any line of business, geographic area or customer segment or (2) relate to the distribution, sale, supply, licensing, co-promotion or manufacturing of any products or services are true and correct as of the date of the original merger agreement and as of the closing date of the merger as though made on the closing date, except to the extent that the facts or matters as to which such representations and warranties are not so true and correct as of such dates, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the reasonably expected benefits of the merger to Johnson & Johnson
	•	all the other representations and warranties of Guidant set forth in the amended and restated merger agreement are true and correct as of the date of the original merger agreement and as of the closing date of the merger as though made on the closing date, or if such representations and warranties expressly relate to an earlier date, then as of such date, except to the extent that the facts or matters as to which such representations and warranties are not so true and correct as of such dates, without giving effect to any qualifications or limitations as to materiality or material adverse effect set forth in such representations and warranties, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on Guidant
	•	Guidant has performed in all material respects all obligations required to be performed by it under the amended and restated merger agreement on or prior to the date on which the merger is to be completed
	•	there is no pending suit, action or proceeding by any governmental entity (i) seeking to restrain or prohibit the consummation of the merger or any other transaction contemplated by the amended and restated merger agreement or seeking to obtain from Johnson & Johnson, Shelby Merger Sub or Guidant or any other affiliate of Johnson & Johnson any damages that are material in relation to Guidant, (ii) seeking to impose limitations on the ability of Johnson & Johnson or any affiliate of Johnson & Johnson to hold, or exercise full rights of ownership of, any shares of capital stock of the surviving corporation, including the right to vote such shares on all matters properly presented to the shareholders of the surviving corporation, (iii) seeking to prohibit Johnson & Johnson or any of its subsidiaries from effectively controlling in any material respect the business or operations of Guidant or any of its affiliates, (iv) seeking any divestiture that is not required to be effected pursuant to the terms of the amended and restated merger agreement or (v) that has had or would reasonably be expected to have a material adverse effect on Guidant or Johnson & Johnson and
	•	there is no temporary restraining order, injunction or other court order or statute, law, rule, legal restraint or prohibition that is in effect that would reasonably be expected to result in any of the effects referred to in the immediately preceding clause.

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	•	the representations and warranties of Johnson & Johnson and Shelby Merger Sub relating to authority and noncontravention which are qualified as to materiality or material adverse effect are true and correct, and such representations and warranties that are not so qualified by materiality or material adverse effect are true and correct in all material respects, in each case as of the date of the original merger agreement and as of the closing date of the merger as though made on the closing date, or if such representations and warranties expressly relate to an earlier date, then as of such date
	•	all the other representations and warranties of Johnson & Johnson and Shelby Merger Sub set forth in the amended and restated merger agreement are true and correct as of the date of the original merger agreement and as of the closing date of the merger as though made on the closing date, or if such representations and warranties expressly relate to an earlier date, then as of such date, except to the extent that the facts or matters as to which such representations and warranties are not so true and correct as of such dates, without giving effect to any qualifications or limitations as to materiality or material adverse effect set forth in such representations and warranties, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on Johnson & Johnson and
	•	Johnson & Johnson and Shelby Merger Sub have performed in all material respects all obligations required to be performed by them under the amended and restated merger agreement on or prior to the date on which the merger is to be completed.

	Important Definitions.

	•	relating to the financial or securities markets or the economy in general,
	•	relating to the industry in which Guidant operates or the industries in which Johnson & Johnson operates, as the case may be, in general to the extent that such change, effect, event, occurrence, state of facts or development does not disproportionately impact Guidant or Johnson & Johnson,
	•	resulting from any divestiture required to be effected pursuant to the amended and restated merger agreement or
	•	relating to any failure, in and of itself, by Guidant or Johnson & Johnson, as applicable, to meet any internal or published projections, forecasts or revenue or earnings prediction.

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	•	solicit, initiate or knowingly encourage, or take any other action designed to, or which could reasonably be expected to lead to, a takeover proposal, as described below, or
	•	enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information, or otherwise cooperate in any way with, any takeover proposal.

	•	any direct or indirect acquisition or purchase, in one transaction or a series of transactions, of assets (including equity securities of any subsidiary of Guidant) or business that constitute 15% or more of the revenues, net income or assets of Guidant and its subsidiaries, taken as a whole, or 15% or more of any class of equity securities of Guidant
	•	any tender offer or exchange offer that if consummated would result in any person beneficially owning 15% or more of any class of equity securities of Guidant or
	•	any merger, consolidation, business combination, recapitalization, liquidation, dissolution, joint venture, binding share exchange or similar transaction involving Guidant or any of its subsidiaries pursuant to which any person or the shareholders of any person would own 15% or more of any class of equity securities of Guidant or of any resulting parent company of Guidant,

	•	Guidant receives a bona fide written takeover proposal that the Guidant board of directors determines (after consultation with outside counsel and a financial advisor of nationally recognized reputation) constitutes or is reasonably likely to lead to a superior proposal, as described below, and
	•	such takeover proposal was not solicited after the date of the original merger agreement and did not otherwise result from a breach by Guidant of the no solicitation provisions described above,

	•	furnish information about Guidant and its subsidiaries to the person making such takeover proposal pursuant to a customary confidentiality agreement not less restrictive to such person than the confidentiality provisions of the confidentiality agreement between Guidant and Johnson & Johnson,

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		provided that all such information is also, or has previously been, provided to Johnson & Johnson and
	•	participate in discussions or negotiations regarding such takeover proposal.

	•	more favorable to the Guidant shareholders from a financial point of view than the merger (taking into account all the terms and conditions of such proposal and the amended and restated merger agreement (including any changes to the financial terms of the amended and restated merger agreement proposed by Johnson & Johnson in response to such offer or otherwise)) and
	•	reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal.

	•	withdraw, modify in a manner adverse to Johnson & Johnson, or publicly propose to withdraw, or modify in a manner adverse to Johnson & Johnson, the adoption or recommendation by the Guidant board of directors of the amended and restated merger agreement, the merger or other transactions contemplated by the amended and restated merger agreement
	•	adopt or recommend, or publicly propose to adopt or recommend, any takeover proposal or
	•	adopt or recommend, or publicly propose to adopt or recommend, or allow Guidant or any of its subsidiaries to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar contract constituting or related to, or that is intended to or could reasonably be expected to lead to, any takeover proposal.

	•	withdraw its recommendation of the amended and restated merger agreement and the merger or recommend the approval of a takeover proposal if the Guidant board of directors determines in good faith, after consultation with outside counsel and a financial advisor of nationally recognized reputation that (i) a material adverse effect with respect to Johnson & Johnson has occurred and (ii) as a result thereof such action is consistent with its fiduciary duties to the Guidant shareholders under applicable law or
	•	in response to a takeover proposal that the Guidant board of directors reasonably determines, after consultation with outside counsel and a financial advisor of nationally recognized reputation, constitutes a superior proposal and that was unsolicited and made after the date of the original merger agreement and that did not otherwise result from a breach of the no solicitation provisions described above, (i) withdraw its recommendation of the amended and restated merger agreement and the merger or recommend the approval of a takeover proposal or (ii) terminate the amended and restated merger agreement and enter into an agreement or contract constituting or related to, or that is intended to or could reasonably be expected to lead to, a takeover proposal.

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	•	by mutual written consent of Johnson & Johnson, Shelby Merger Sub and Guidant
	•	by either Johnson & Johnson or Guidant, if the merger has not been completed by March 31, 2006, except that this right to terminate the amended and restated merger agreement will not be available to any party whose willful breach of a representation or warranty in the amended and restated merger agreement or whose other action or failure to act has been a principal cause of or resulted in the failure of the merger to be consummated on or before that date
	•	by either Johnson & Johnson or Guidant, if there exists a restraining order, injunction or other court order or statute, law, rule, legal restraint or prohibition, in any such case that has become final and cannot be appealed and which prevents the completion of the merger
	•	by either Johnson & Johnson or Guidant, if the Guidant shareholders do not approve the amended and restated merger agreement at the Guidant shareholder’s meeting duly convened or at any adjournment or postponement
	•	by either Johnson & Johnson or Guidant, if the other party has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the amended and restated merger agreement, which breach or failure to perform would give rise to the failure of a condition to the merger and has not been or cannot be cured within 30 calendar days following receiving written notice from the other party of such breach or failure to perform
	•	by Johnson & Johnson, if there exists a restraining order, injunction or other court order or statute, law, rule, legal restraint or prohibition that has become final and nonappealable, in any such case

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		that (i) seeks to restrain or prohibit the consummation of the merger or any other transaction contemplated by the amended and restated merger agreement or seeks to obtain from Johnson & Johnson, Shelby Merger Sub or Guidant or any other affiliate of Johnson & Johnson any damages that are material in relation to Guidant, (ii) seeks to impose limitations on the ability of Johnson & Johnson or any affiliate of Johnson & Johnson to hold, or exercise full rights of ownership of, any shares of capital stock of the surviving corporation, including the right to vote such shares on all matters properly presented to the shareholders of the surviving corporation, (iii) seeks to prohibit Johnson & Johnson or any of its affiliates from effectively controlling in any material respect the business or operations of Guidant or any of its affiliates, (iv) seeks any divestiture that is not required to be effected pursuant to the terms of the amended and restated merger agreement or (v) has had or would reasonably be expected to have a material adverse effect with respect to Guidant or Johnson & Johnson
	•	by Johnson & Johnson, if the Guidant board of directors:

	•	fails publicly to reaffirm its adoption and recommendation of the amended and restated merger agreement, the merger or the other transactions contemplated by the amended and restated merger agreement within 10 business days of receipt of a written request by Johnson & Johnson to provide such reaffirmation following a takeover proposal
	•	withdraws, or modifies in a manner adverse to Johnson & Johnson, or proposes to withdraw, or modify in a manner adverse to Johnson & Johnson, its approval, recommendation or declaration of advisability of the amended and restated merger agreement, or the merger or recommends, adopts or approves, or proposes publicly to recommend, adopt or approve, any takeover proposal

	•	by Guidant in accordance with the terms and subject to the conditions described in “— No Solicitation”.

	•	the amended and restated merger agreement is terminated by Johnson & Johnson pursuant to its right described in the second to last bullet point under “— Termination of the Amended and Restated Merger Agreement” (other than following the occurrence of a material adverse effect with respect to Johnson & Johnson)
	•	the amended and restated merger agreement is terminated by Guidant in accordance with the terms and subject to the conditions described in “— No Solicitation” or
	•	prior to Guidant’s shareholders approving the amended and restated merger agreement, a takeover proposal is made to Guidant or directly to the Guidant shareholders generally or otherwise becomes publicly known or any person publicly announces an intention, whether or not conditional, to make a takeover proposal, the amended and restated merger agreement is terminated by either Johnson & Johnson or Guidant pursuant to their respective rights described in the second (but only if a vote to obtain shareholder approval of the amended and restated merger agreement or the shareholder meeting has not been held) or fourth bullet points under “— Termination of the Amended and Restated Merger Agreement” and within 12 months after such termination, Guidant enters into a

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		definitive agreement to consummate, or consummates, the transactions contemplated by any takeover proposal (for purposes of this circumstance, the term “takeover proposal” has the same meaning as described under “— No Solicitation”, except that references to 15% are replaced by 35%).

	•	the amended and restated merger agreement is terminated by either Johnson & Johnson or Guidant pursuant to their respective rights described in the second, third or sixth bullet points under “— Termination of the Amended and Restated Merger Agreement” and at the time of any such termination all of the conditions set forth in “— Conditions to Completion of the Merger” have been satisfied or waived, except for the conditions described in the second, third, fourth and fifth bullet points under “— Conditions to the Completion of the Merger — Conditions to Johnson & Johnson’s and Guidant’s Obligations to Complete the Merger” and the conditions described in the fifth and sixth bullet points under “— Conditions to the Completion of the Merger — Conditions to Johnson & Johnson’s Obligation to Complete the Merger” (in the case of the conditions described in the fourth bullet point under “— Conditions to Completion of the Merger — Conditions to Johnson & Johnson’s and Guidant’s Obligations to Complete the Merger” and the conditions described in the fifth and sixth bullet points under “Conditions to Completion of the Merger — Conditions to Johnson & Johnson’s Obligations to Complete the Merger”, only to the extent that the conditions set forth therein have not been satisfied due to a suit, action or proceeding by any national governmental entity or the imposition of a restraint, in either case relating to competition, merger control, antitrust or similar laws).

	•	the declaration or payment of dividends (other than, among other things, regular cash dividends in respect of Guidant common stock not exceeding $0.10 per share per fiscal quarter)
	•	the alteration of share capital, including, among other things, stock splits, combinations or reclassifications
	•	the repurchase or redemption of capital stock
	•	the issuance or sale of capital stock or other voting securities
	•	amendments to its articles of incorporation or by-laws, or the indenture for its existing 6.15% senior unsecured notes due 2006
	•	the acquisition of assets or other entities
	•	the sale, lease or mortgaging of assets
	•	the incurrence or guarantee of indebtedness
	•	the making of capital expenditures

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	•	the extension of loans, advances, capital contributions or investments
	•	the payment, discharge or settlement of material claims or liabilities
	•	the waiver or assignment of material claims
	•	the waiver or modification of material contracts
	•	the entrance into certain types of agreements
	•	compensation and benefit matters with respect to directors, executive officers and key employees and
	•	the revaluation of assets and changes in accounting policies.

	•	corporate organization and similar corporate matters of Johnson & Johnson, Shelby Merger Sub and Guidant
	•	subsidiaries of Guidant
	•	capital structure of Johnson & Johnson, Shelby Merger Sub and Guidant
	•	authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of governmental authorities relating to, the amended and restated merger agreement and related matters of Johnson & Johnson, Shelby Merger Sub and Guidant
	•	documents filed by each of Johnson & Johnson and Guidant with the Securities and Exchange Commission and the accuracy of information contained in such documents
	•	absence of undisclosed liabilities of Guidant
	•	compliance with the Sarbanes-Oxley Act by Guidant and other matters relating to internal controls of Guidant
	•	accuracy of information supplied by each of Johnson & Johnson, Shelby Merger Sub and Guidant in connection with this proxy statement/ prospectus and the registration statement of which it is a part
	•	absence of material changes or events concerning Johnson & Johnson and Guidant
	•	pending or threatened material litigation of Johnson & Johnson and Guidant
	•	certain contracts and agreements of Guidant
	•	compliance with applicable laws, including environmental laws, by Guidant
	•	absence of changes in benefit plans and labor relations matters of Guidant
	•	matters relating to the Employee Retirement Income Security Act for Guidant
	•	absence of excess parachute payments to any director, officer, employee or consultant of Guidant or its affiliates
	•	filing of tax returns and payment of taxes by Guidant
	•	title to Guidant’s properties and Guidant’s compliance with the terms of its material leases
	•	intellectual property rights of Johnson & Johnson and Guidant
	•	required shareholder vote of Guidant

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	•	satisfaction of the requirements of certain state takeover statutes and provisions of the Guidant amended articles of incorporation and the Guidant by-laws by Guidant
	•	engagement and payment of fees of brokers, investment bankers, finders and financial advisors of Johnson & Johnson and Guidant
	•	receipt of fairness opinions by Guidant from its financial advisors
	•	inapplicability of the rights agreement between Guidant and EquiServe Trust Company
	•	compliance by Johnson & Johnson and Guidant with applicable regulatory and governmental requirements
	•	organization and operations of Shelby Merger Sub and
	•	availability to Johnson & Johnson of sufficient funds to effect the merger.

	•	will not survive consummation of the merger and, other than certain representations and warranties relating to broker and advisor fees, cannot be the basis for any claims under the amended and restated merger agreement by the other party after termination of the amended and restated merger agreement except if wilfully and materially breached
	•	may be intended not as statements of actual fact, but rather as a way of allocating risk between the parties
	•	are subject to the materiality standard described in the amended and restated merger agreement, which may differ from what may be viewed as material by you and
	•	were made only as of the date of the original merger agreement or such other date as is specified in the amended and restated merger agreement.

	•	taking of all acts necessary to cause the conditions to closing to be satisfied as promptly as practicable
	•	obtaining of all necessary actions or nonactions, waivers, consents and approvals from governmental entities and the making of all necessary registrations and filings and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any governmental entity
	•	the avoidance of each and every impediment under any antitrust, merger control, competition or trade regulation law that may be asserted by any governmental entity with respect to the merger so as to enable the closing to occur as soon as reasonably possible and

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	•	obtaining of all necessary consents, approvals or waivers from third parties, including any such consents, approvals or waivers required in connection with any divestiture.

	•	duly file with the United States Federal Trade Commission and the Antitrust Division of the Department of Justice the notification and report form required under the Hart-Scott-Rodino Act and
	•	duly make all notifications and other filings required (1) under the EC merger regulation or (2) under any other applicable competition, merger control, antitrust or similar law that Guidant and Johnson & Johnson deem advisable or appropriate, in each case with respect to the transactions contemplated by the amended and restated merger agreement and as promptly as practicable.

	•	cooperate with the other party to the extent necessary to assist the other party in the preparation of its antitrust filings and, if requested, to promptly amend or furnish additional information thereunder
	•	use their reasonable best efforts to furnish to each other all information required for any filing, form, declaration, notification, registration and notice, other than confidential or proprietary information not directly related to the transactions contemplated by the amended and restated merger agreement, and to keep the other party reasonably informed with respect to the status of each clearance, approval or waiver sought from a governmental entity in connection with the transactions contemplated by the amended and restated merger agreement and the material communications between such party and such governmental entity and
	•	consult with the other party, and consider in good faith the views of the other party, prior to entering into any agreement with any antitrust authority.

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	•	the amended and restated merger agreement may be amended by mutual consent of the parties in writing at any time, before or after the amended and restated merger agreement has been adopted by the shareholders of Guidant, except that no amendment may be entered into which requires further approval by Guidant shareholders unless such approval is obtained and
	•	at any time prior to the effective time of the merger, a party may, by written instrument signed on behalf of such party:
	•	extend the time for performance of any of the obligations or other acts of any other party to the amended and restated merger agreement
	•	waive inaccuracies in representations and warranties of any other party contained in the amended and restated merger agreement or in any related document or
	•	waive compliance by any other party with any agreements or conditions in the amended and restated merger agreement, except that no such waiver may be made after the amended and restated merger agreement has been adopted by the shareholders of Guidant which requires further approval by Guidant shareholders unless such approval is obtained.

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	•	accompanying notes to the unaudited pro forma condensed consolidated financial statements
	•	separate historical unaudited financial statements of Johnson & Johnson as of and for the fiscal nine months ended October 2, 2005 included in Johnson & Johnson’s Quarterly Report on Form 10-Q for the fiscal nine month period ended October 2, 2005, which is incorporated by reference into this proxy statement/ prospectus and
	•	separate historical audited financial statements of Johnson & Johnson as of and for the year ended January 2, 2005 included in Johnson & Johnson’s Annual Report on Form 10-K for the year ended January 2, 2005, which is incorporated by reference into this proxy statement/ prospectus and
	•	separate historical unaudited financial statements of Guidant as of and for the fiscal nine months ended September 30, 2005 included in Guidant’s Quarterly Report on Form 10-Q for the fiscal nine month period ended September 30, 2005, which is incorporated by reference into this proxy statement/ prospectus and
	•	separate historical audited financial statements of Guidant as of and for the year ended December 31, 2004 included in Guidant’s Annual Report on Form 10-K for the year ended December 31, 2004, which is incorporated by reference into this proxy statement/ prospectus.

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											Pro Forma				Pro Forma
			Johnson & Johnson				Guidant				Adjustments				Consolidated
			(in millions, except per share data)
Sales to customers			$	47,348			$	3,766			$	(97	)a		$	51,017
Cost of products sold				13,422				1,003				843	b			15,268
Gross profit				33,926				2,763				(940	)			35,749
Selling, marketing and administrative expenses				15,860				1,191				(38	)a			17,013
Research expense				5,203				516								5,719
Purchased in-process research and development				18				100								118
Interest income				(195	)			(34	)			174	c			(55	)
Interest expense, net of portion capitalized				187				26				55	c			268
Other (income) expense, net				15				86								101
				21,088				1,885				191				23,164
Earnings before provision for taxes on income				12,838				878				(1,131	)			12,585
Provision for taxes on income				4,329				305				(396	)d			4,238
Income from continuing operations			$	8,509			$	573			$	(735	)		$	8,347
Basic earnings per share
	Income from continuing operations		$	2.87			$	1.84							$	2.67
Diluted earnings per share
	Income from continuing operations		$	2.84			$	1.78							$	2.64
Weighted average shares used to calculate earnings per common share amount:
	Basic			2,968.40				312.04								3,122.24
	Diluted			3,003.50				321.24								3,161.87
Dividends paid per share			$	1.095			$	0.40							$	1.095

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											Pro Forma				Pro Forma
			Johnson & Johnson				Guidant				Adjustments				Consolidated
			(in millions, except per share data)
Sales to customers			$	37,904			$	2,722			$	(93	)a		$	40,533
Cost of products sold				10,330				795				532	b			11,657
Gross profit				27,574				1,927				(625	)			28,876
Selling, marketing and administrative expenses				12,315				990				(34	)a			13,271
Research expense				4,336				426								4,762
Purchased in-process research and development				353				75								428
Interest income				(316	)			(59	)			215	c			(160	)
Interest expense, net of portion capitalized				52				23								75
Other (income) expense, net				(184	)			55								(129	)
				16,556				1,510				181				18,247
Earnings before provision for taxes on income				11,018				417				(806	)			10,629
Provision for taxes on income				2,790				59				(282	)d			2,567
Income from continuing operations			$	8,228			$	358			$	(524	)		$	8,062
Basic earnings per share
	Income from continuing operations		$	2.77			$	1.11							$	2.57
Diluted earnings per share
	Income from continuing operations		$	2.73			$	1.08							$	2.53
Weighted average shares used to calculate earnings per common share amount:
	Basic			2,973.5				323.67								3,133.07
	Diluted			3,019.0				332.24								3,182.79
Dividends paid per share			$	0.945			$	0.30							$	0.945

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											Pro Forma				Pro Forma
			Johnson & Johnson				Guidant				Adjustments				Consolidated
			(in millions, except per share data)
Assets
Current Assets
	Cash and cash equivalents		$	14,825			$	1,995			$	(9,903	)c		$	6,917
	Marketable securities			354				727				(1,081	)c			—
	Accounts receivable trade, less allowances for doubtful accounts			7,154				723				(8	)a			7,869
	Inventories			4,015				385				120	e			4,520
	Deferred taxes on income			1,813				327								2,140
	Prepaid expenses and other receivables			2,415				113				(13	)a			2,515
Total Current Assets			$	30,576			$	4,270			$	(10,885	)		$	23,961
	Marketable securities, non current		$	44			$	—							$	44
	Property, plant and equipment, net			10,227				883			$	100	f			11,210
	Intangible assets, net			12,086				604				20,304	g			32,994
	Deferred taxes on income			658				85				(52	)h			691
	Other assets			2,983				143								3,126
Total Assets			$	56,574			$	5,985			$	9,467			$	72,026
Liabilities and Shareholders’ Equity
Current Liabilities
	Loans and notes payable		$	278			$	350							$	628
	Accounts payable			3,684				91			$	104	i			3,879
	Accrued liabilities			3,164				316				(121	)a			3,359
	Accrued rebates, returns, and promotions			2,120				17								2,137
	Accrued salaries, wages and commissions			1,144				110								1,254
	Accrued taxes on income			1,657				323								1,980
Total current liabilities			$	12,047			$	1,207			$	(17	)		$	13,237
	Long-term debt		$	2,139			$	5							$	2,144
	Deferred tax liability			409				—			$	3,229	j			3,638
	Employee related obligations			3,055				68								3,123
	Other liabilities			2,077				172								2,249
Total liabilities			$	19,727			$	1,452			$	3,212			$	24,391
Shareholders’ Equity
	Preferred Stock — without par value			—				—								—
	Common stock			3,120				999				(836	)k			3,283
	Note receivable from employee stock ownership plan			—				(10	)			10	l			—
	Accumulated other comprehensive income			(751	)			165				(165	)m			(751	)
	Retained Earnings			40,422				3,379				7,246	n			51,047
	Less: common stock held in treasury, at cost			(5,944	)			—								(5,944	)
Total shareholders’ equity			$	36,847			$	4,533			$	6,255			$	47,635
Total liabilities and shareholders’ equity			$	56,574			$	5,985			$	9,467			$	72,026

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1.	Description of Transaction and Basis of Presentation

2.	Purchase Price

						(in millions)
Number of shares of Guidant common stock outstanding as of October 31, 2005 (in thousands)			330,357
Exchange ratio(1)			0.493
Number of shares of Johnson & Johnson common stock to be issued to holders of Guidant common stock (in thousands)(1)			162,866
Multiplied by assumed price per share of Johnson & Johnson common stock(1)		$	62.17			$	10,125
Cash portion of merger consideration ($33.25 × 330,357)							10,984
Estimated fair value of outstanding Guidant stock options to be exchanged for Johnson & Johnson stock options (calculated using the Black-Scholes option pricing model)							595
Estimated transaction costs(2)							125
Estimated purchase price						$	21,829

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Estimated Purchase Price			(in millions)
Net book value of assets acquired as of September 30, 2005			$	4,533
Less: Write-off of existing goodwill and other intangible assets, including related deferred taxes				(610	)
Adjusted book value of net assets acquired			$	3,923
Remaining allocation:
	Increase inventory to fair value			127
	Increase property plant and equipment to fair value			100
	In-process research and development charge(3)			—
	Identifiable intangible assets at fair value(3)			9,000
	Restructuring costs(4)			—
	Deferred taxes on income			(3,229	)
	Goodwill(3)			11,908
Estimated purchase price			$	21,829

(1)	Guidant shareholders will receive $33.25 in cash and 0.493 shares of Johnson & Johnson common stock for each share of Guidant common stock. Under the purchase method of accounting, the total equity consideration was determined using the average Johnson & Johnson closing stock prices beginning two days before and ending two days after November 15, 2005, the date the acquisition was announced.
(2)	Remaining estimated transaction costs to be recorded as of the closing date of the merger.
(3)	Sufficient information is not available at this time to provide specifics with regard to individual products, valuation methods and appraisal methods. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other relevant laws and regulations, there are significant limitations regarding what Johnson & Johnson can learn about specific Guidant currently marketed products and scientific projects that are underway.

	For purposes of the unaudited pro forma condensed consolidated financial statements, the estimated allocation to acquired identifiable intangible assets is expected to be within the following general categories:

	•	currently marketed products, including patented and unpatented technology
	•	collaboration agreements and or other licensing arrangements
	•	trademarks and trade names and
	•	customer contracts/relationships.

	The unaudited pro forma condensed consolidated financial statements include an estimated identifiable intangible asset value of $9 billion amortized on a straight line basis over 12 years. These estimates will be adjusted accordingly if the final identifiable intangible asset valuation generates results, including corresponding useful lives and related amortization methods, that differ from the pro forma estimates. The final valuation is expected to be completed within 12 months from the completion of the merger.
	In accordance with the requirements of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, any goodwill and acquired indefinite-lived intangibles associated with the merger will not be amortized.

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As required by Financial Accounting Standards Board Interpretation No. 4, “Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method”, the purchase price allocated to in-process research and development will be expensed immediately. It is reasonable to assume that an in-process research and development charge will be incurred, however the amount of the charge will not be determined until the final valuation is completed.

(4)	Certain restructuring and integration charges will be recorded subsequent to the merger that, under purchase accounting, may or may not be treated as part of the purchase price for Guidant. These costs are not factually supportable or expected to be material and as such have not been reflected in the unaudited pro forma condensed consolidated financial statements.

3.	Accounting Policies and Financial Statement Classifications

	•	Royalties, net to Cost of products sold
	•	Amortization to Cost of products sold
	•	Impairment charge, Litigation, net, Restructuring charge and Foundation contribution to Other (income) expense, net
	•	Interest, net allocated to Interest income and Interest expense
	•	Investments and Sundry to Other assets
	•	Goodwill to Intangible assets, net
	•	Additional paid-in capital and Unearned compensation to Retained earnings.

4.	Intercompany Transactions

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5.	Pro Forma Adjustments

							Fiscal Nine Months
			Fiscal Year Ended				Ended October 2,
			January 2, 2005				2005
Intercompany eliminations			$	(11	)		$	(20	)
Acquired intangible amortization				750				563
PP&E depreciation step-up				8				6
Inventory step-up				127
Pre-existing Guidant intangible amortization				(31	)			(17	)
	Total pro forma adjustment		$	843			$	532

			As of
			October 2, 2005
Intercompany eliminations			$	(7	)
Inventory step-up				127
	Total pro forma adjustment		$	120

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			As of
			October 2, 2005
Elimination of pre-existing Guidant goodwill			$	(512	)
Elimination of pre-existing Guidant intangibles				(92	)
Acquired identifiable amortizable intangibles				9,000
Acquired goodwill and indefinite lived trademarks				11,908
	Total pro forma adjustment		$	20,304

			As of
			October 2, 2005
Intercompany eliminations			$	(46	)
Deferred tax asset on pre-existing Guidant goodwill and intangible assets				(6	)
	Total pro forma adjustment		$	(52	)

			As of
			October 2, 2005
Intercompany eliminations			$	(21	)
Transaction costs				125
	Total pro forma adjustment		$	104

			As of
			October 2, 2005
Elimination of Guidant common stock (no par value)			$	(999	)
Issuance of Johnson & Johnson common stock ($1 par value)				163
	Total pro forma adjustment		$	(836	)

			As of
			October 2, 2005
Elimination of Guidant’s retained earnings			$	(2,895	)
Elimination of Guidant’s additional paid-in capital				(573	)
Elimination of Guidant’s unearned compensation				89
Intercompany elimination impact				68
Additional paid-in capital				10,557
	Total pro forma adjustment		$	7,246

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			Johnson & Johnson												Guidant
			Common Stock												Common Stock
											Dividends												Dividends
Calendar Period			High				Low				Declared				High				Low				Declared
2003
	First Quarter		$	58.68			$	49.10			$	0.205			$	37.95			$	28.89			$	0.00
	Second Quarter			59.08				50.75				0.24				45.75				34.59				0.08
	Third Quarter			54.24				49.00				0.24				52.04				43.00				0.08
	Fourth Quarter			52.89				48.05				0.24				60.53				44.95				0.08
2004
	First Quarter			54.90				49.25				0.24				73.70				59.39				0.10
	Second Quarter			57.28				49.90				0.285				69.50				51.50				0.10
	Third Quarter			58.80				54.37				0.285				66.87				49.95				0.10
	Fourth Quarter			64.25				54.81				0.285				74.20				62.05				0.10
2005
	First Quarter			68.68				61.20				0.285				75.08				70.80				0.10
	Second Quarter			69.99				64.43				0.33				75.15				59.94				0.10
	Third Quarter			65.35				61.65				0.33				72.91				64.20				0.10
	Fourth Quarter (through December 22, 2005)			64.60				59.76				0.33				72.50				55.26				0.10

	•	December 15, 2004, the last full trading day prior to the public announcement of the original merger agreement,
	•	November 14, 2005, the last full trading day prior to the public announcement of the amended and restated merger agreement, and
	•	December 22, 2005, the last practicable date prior to mailing this proxy statement/ prospectus.

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																										Equivalent Price
		Johnson & Johnson												Guidant												per Share of
		Common Stock												Common Stock												Guidant
																										Common Stock
		High				Low				Close				High				Low				Close
December 15, 2004		$	61.38			$	60.62			$	60.90			$	72.48			$	70.90			$	72.05			$	76.00
November 14, 2005		$	61.12			$	60.43			$	60.51			$	58.45			$	57.70			$	57.75			$	63.08
December 22, 2005			$61.32			$	60.56			$	61.32			$	67.37			$	66.95			$	67.37			$	63.48

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	Johnson & Johnson

	Guidant

	Johnson & Johnson

	Guidant

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	Johnson & Johnson

	Guidant

	Johnson & Johnson

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	Guidant

	Johnson & Johnson

	Guidant

	Johnson & Johnson

	•	through the notice of meeting
	•	by the Johnson & Johnson board of directors or
	•	by a shareholder of record entitled to vote at the meeting.

	Guidant

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	•	through the notice of meeting
	•	by the Guidant board of directors or
	•	by a shareholder with legal right and authority to do so.

	Johnson & Johnson

	Guidant

	Johnson & Johnson

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	Guidant

	•	the corporation’s charter documents
	•	board resolutions with respect to one or more classes or series of shares and fixing their relative rights, preferences and limitations, if shares issued pursuant to the resolutions are outstanding
	•	the minutes of all shareholder meetings and executed written consents from the past three years
	•	all written communications to shareholders generally within the past three years, including annual financial statements and
	•	the corporation’s most recent biennial report filed with the Secretary of State of the State of Indiana.

	•	excerpts from the minutes of any board meeting
	•	records of any action of a committee of the board while acting for the board
	•	minutes of shareholder meetings
	•	records of action taken by shareholders or the board without a meeting, to the extent not subject to inspection under the provisions described above
	•	accounting records of the corporation and
	•	the record of shareholders.

	•	the shareholder’s demand is made in good faith and for a proper purpose
	•	the shareholder describes with reasonable particularity the shareholder’s purpose and the records the shareholders desires to inspect and
	•	the records are directly connected with the shareholder’s described purpose.

	Johnson & Johnson

	•	the director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and
	•	with respect to any criminal proceeding, the director or officer had no reasonable cause to believe his or her conduct was unlawful.

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	Guidant

	•	a director is wholly successful in defending himself or herself, on the merits or otherwise, in a proceeding to which the director was a party because the director is or was a director of the corporation or
	•	indemnification is ordered by a court.

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	Johnson & Johnson

	Guidant

	•	Guidant would not be able to pay its debts as they become due in the usual course of business or
	•	Guidant’s total assets would be less than its total liabilities plus any amount that would be needed if Guidant were to be dissolved.

	Johnson & Johnson

	Guidant

	Johnson & Johnson

	Guidant

	Johnson & Johnson

	•	such corporation’s certificate of incorporation is not amended
	•	the shareholders of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations, and rights, immediately after and

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	•	the number of voting shares and participation shares outstanding after the merger will not exceed by 40% the total number of voting or participating shares of the surviving corporation before the merger.

	•	merger or consolidation of a resident domestic corporation or one of its subsidiaries:

	•	with an interested shareholder or
	•	with any corporation which is, or would be after such merger or consolidation, an affiliate or associate of an interested shareholder

	•	any transfer or other disposition to or with an interested shareholder or any affiliate or associate of an interested shareholder of at least 10% of (1) the assets, (2) the outstanding shares or (3) the earning power or income, on a consolidated basis, of such resident domestic corporation and
	•	other specified self-dealing transactions between such resident domestic corporation and an interested shareholder or any affiliate or associate thereof.

	•	a business combination approved by the board of directors of such corporation prior to the stock acquisition
	•	a business combination approved by the affirmative vote of the holders of two-thirds of the voting stock not beneficially owned by such interested shareholder at a meeting called for such purpose or
	•	a business combination in which the interested shareholder meets certain fair price criteria.

	•	any merger or consolidation of Johnson & Johnson

	•	with an interested shareholder or

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	•	with any other corporation which is, or after such merger or consolidation would be, an affiliate or associate of an interested shareholder

	•	any transfer or other disposition to or with any interested shareholder or any affiliate or associate of an interested shareholder of any assets or securities of Johnson & Johnson or any of its subsidiaries having an aggregate fair market value of 5% of the total assets of Johnson & Johnson and its subsidiaries
	•	the adoption of a plan of liquidation of Johnson & Johnson proposed by an interested shareholder or any affiliate or associate of an interested shareholder and
	•	any transaction which increases the capital stock beneficially owned by an interested shareholder or any affiliate or associate of an interested shareholder.

	Guidant

	•	the articles of the surviving corporation will not differ from its articles before the merger
	•	immediately after the effective date each shareholder of the surviving corporation will hold the same proportionate number of shares as those held by the shareholder immediately prior to the merger, with identical designations, preferences, limitations and rights and
	•	the number of voting or participating shares, as the case may be, outstanding immediately after the merger (either by conversion of other securities or upon exercise of rights or warrants issued pursuant to the merger), plus the number of voting or participating shares issuable as a result of the merger, will not exceed by more than 20% the number of voting or participating shares (adjusted to reflect any share split under the plan of merger) of the surviving corporation outstanding immediately prior to the merger.

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	•	the actions and transactions were authorized by the affirmative vote of at least 80% of all of the votes entitled to be cast by holders of the outstanding shares of voting stock voting together as a single class (which is not applicable if the action or transaction is approved by the Guidant board of directors and by a majority of the “continuing directors” (generally, directors that are not affiliates of a related person and who either were board members prior to the related person becoming a related person or were nominated by a majority of the remaining continuing directors))
	•	unless approved by a majority of the continuing directors, after becoming a related person and prior to consummation of such action or transaction:

	•	the related person shall not have acquired from Guidant or any of its subsidiaries any newly issued or treasury shares of capital stock or any newly issued securities convertible into capital stock of Guidant or any of its majority-owned subsidiaries, directly or indirectly, subject to certain exceptions
	•	the related person shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any form of financial assistance or tax credits provided by Guidant or any of its majority-owned subsidiaries, or made any major changes to the businesses or capital structures of Guidant or any of its majority-owned subsidiaries, or reduced the current rate of dividends payable on Guidant’s capital stock below the rate in effect immediately prior to the time such Related Person became a Related Person
	•	the related person shall have taken all required actions within its power to ensure that the Guidant board of directors included representation by continuing directors as provided in the Guidant amended articles of incorporation and

	•	a proxy statement in compliance with the requirements of the Exchange Act and the Guidant amended articles of incorporation shall be mailed to the shareholders of Guidant for the purpose of soliciting shareholder approval of such action or transaction unless the action or transaction has been approved by a majority of the continuing directors.

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	•	the acquisition by a person of, either within a 90-day period or pursuant to a plan to make a control share acquisition of ownership or
	•	the power to direct the voting of, shares representing between one-fifth and one-third, between one-third and one-half, or one-half or more of an issuing public corporation’s voting power in the election of directors.

	Johnson & Johnson

	Guidant

	•	render inapplicable the business combination provisions of Indiana law
	•	redeem any rights under, or render inapplicable, a shareholder rights plan or
	•	to take or decline to take any action solely because of the effect that the action might have on a proposed change of control.

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	Johnson & Johnson

	Guidant

	•	consummation of a plan of merger, if shareholder approval is required and the shareholder is entitled to vote on the plan
	•	consummation of a plan of share exchange by which the shareholder’s shares will be acquired, if the shareholder is entitled to vote on the plan
	•	consummation of a sale or exchange of all, or substantially all, the property of the corporation, other than in the usual course of business, if the shareholder is entitled to vote on the sale or exchange
	•	approval of a control share acquisition under Indiana law and
	•	any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, by-laws or resolution of the board of directors provides that voting or non-voting shareholders are entitled to dissent and obtain payment for their shares.

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Johnson & Johnson Filings		Period
Annual Report on Form 10-K		Fiscal Year ended January 2, 2005
Quarterly Report on Form 10-Q		Filed on May 10, 2005
Quarterly Report on Form 10-Q		Filed on August 10, 2005
Quarterly Report on Form 10-Q		Filed on November 7, 2005
Current Report on Form 8-K		Filed on November 15, 2005
Current Report on Form 8-K		Filed on November 18, 2005
Current Report on Form 8-K		Filed on December 16, 2005
Guidant Filings		Period
Annual Report on Form 10-K		Fiscal Year ended December 31, 2004
Quarterly Report on Form 10-Q		Filed on May 9, 2005
Quarterly Report on Form 10-Q		Filed on August 5, 2005
Quarterly Report on Form 10-Q		Filed on November 7, 2005
Current Report on Form 8-K		Filed on November 7, 2005
Current Report on Form 8-K		Filed on November 15, 2005
Current Report on Form 8-K		Filed on November 18, 2005
Current Report on Form 8-K		Filed on November 30, 2005
Current Report on Form 8-K		Filed on December 7, 2005
Current Report on Form 8-K		Filed on December 21, 2005

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Johnson & Johnson		Guidant Corporation
One Johnson & Johnson Plaza		111 Monument Circle, 29th Floor
New Brunswick, NJ 08933		Indianapolis, IN 46204-5129
Attention: Office of Corporate Secretary		Attention: Secretary
Telephone: (732) 524-2455		Telephone: (317) 971-2000

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	•	competitive factors, including technological advances achieved and patents attained by competitors and generic competition as patents on products expire and
	•	government laws and regulations affecting domestic and foreign operations, including those relating to trade, monetary and fiscal policies, taxes, price controls, regulatory approval of new products and licensing.

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ARTICLE I
The Merger
SECTION 1.01.		The Merger			1-1
SECTION 1.02.		Closing			1-1
SECTION 1.03.		Effective Time			1-2
SECTION 1.04.		Effects of the Merger			1-2
SECTION 1.05.		Articles of Incorporation and By-laws			1-2
SECTION 1.06.		Directors			1-2
SECTION 1.07.		Officers			1-2
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates
SECTION 2.01.		Effect on Capital Stock			1-2
SECTION 2.02.		Exchange of Certificates			1-3
ARTICLE III
Representations and Warranties
SECTION 3.01.		Representations and Warranties of the Company			1-5
SECTION 3.02.		Representations and Warranties of Parent and Sub			1-21
ARTICLE IV
Covenants Relating to Conduct of Business; No Solicitation
SECTION 4.01.		Conduct of Business			1-25
SECTION 4.02.		No Solicitation			1-29
ARTICLE V
Additional Agreements
SECTION 5.01.		Preparation of the Form S-4 and the Proxy Statement; Shareholders’ Meeting			1-31
SECTION 5.02.		Access to Information; Confidentiality			1-31
SECTION 5.03.		Reasonable Best Efforts			1-32
SECTION 5.04.		Company Stock Options; ESPP			1-34
SECTION 5.05.		Indemnification, Exculpation and Insurance			1-35
SECTION 5.06.		Fees and Expenses			1-36
SECTION 5.07.		Public Announcements			1-37
SECTION 5.08.		Affiliates			1-37
SECTION 5.09.		Stock Exchange Listing			1-37
SECTION 5.10.		Shareholder Litigation			1-37
SECTION 5.11.		Employee Matters			1-37
SECTION 5.12.		Company Notes			1-38
SECTION 5.13.		Rights Agreement			1-38

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ARTICLE VI
Conditions Precedent
SECTION 6.01.		Conditions to Each Party’s Obligation to Effect the Merger			1-39
SECTION 6.02.		Conditions to Obligations of Parent and Sub			1-39
SECTION 6.03.		Conditions to Obligation of the Company			1-40
SECTION 6.04.		Frustration of Closing Conditions			1-40
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01.		Termination			1-41
SECTION 7.02.		Effect of Termination			1-41
SECTION 7.03.		Amendment			1-41
SECTION 7.04.		Extension; Waiver			1-42
SECTION 7.05.		Procedure for Termination or Amendment			1-42
ARTICLE VIII
General Provisions
SECTION 8.01.		Nonsurvival of Representations and Warranties			1-42
SECTION 8.02.		Notices			1-42
SECTION 8.03.		Definitions			1-43
SECTION 8.04.		Interpretation			1-44
SECTION 8.05.		Consents and Approvals			1-44
SECTION 8.06.		Counterparts			1-44
SECTION 8.07.		Entire Agreement; No Third-Party Beneficiaries			1-44
SECTION 8.08.		GOVERNING LAW			1-44
SECTION 8.09.		Assignment			1-44
SECTION 8.10.		Specific Enforcement; Consent to Jurisdiction			1-45
SECTION 8.11.		Waiver of Jury Trial			1-45
SECTION 8.12.		Severability			1-45
Annex I   Index of Defined Terms					1-47
Exhibit A Restated Articles of Incorporation of the Surviving Corporation					1-50
Exhibit B Affiliate Letter					1-51

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	AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of November 14, 2005, among JOHNSON & JOHNSON, a New Jersey corporation (“Parent”), SHELBY MERGER SUB, INC., an Indiana corporation and a wholly owned Subsidiary of Parent (“Sub”), and GUIDANT CORPORATION, an Indiana corporation (the “Company”).

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	(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.

	(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) 0.493 (the “Exchange Ratio”) validly issued, fully paid and nonassessable shares of Parent Common Stock (the “Stock Portion”) and (ii) $33.25 in cash, without interest (the “Cash Portion” and, together with the Stock Portion, the “Merger Consideration”). 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

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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 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.

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	(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 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”). 1,500,000 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 October 31, 2005, (i) 332,448,023 shares of Company Common Stock were issued and outstanding (which number includes (A) 708,755 shares of Company Common Stock held by the Company in its treasury, (B) 1,382,196 shares of Company Common Stock held by the trust established under The Guidant Employee Savings and Stock Ownership Plan and (C) 1,084,669 shares of Company Common Stock subject to vesting and restrictions on transfer (“Company Restricted Stock”)), (ii) 28,029,833 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 26,067,053 shares of Company Common Stock were subject to outstanding Company Stock Options or agreements to issue Company Stock Options, and (iii) no shares of

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	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 October 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 October 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 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 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, subject, in the case of the consummation of the Merger, to the obtaining of the 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 transfer, moratorium, reorganization or similar Laws affecting the rights of creditors generally and the availability of equitable remedies (regardless of

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whether such enforceability is considered in a proceeding in equity or at law). The Board of Directors of the Company, at a meeting duly called and held, duly and unanimously adopted by all directors present, resolutions (i) adopting this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) declaring that it is in the best interests of the Company and the shareholders of the Company that the Company enter into this Agreement and consummate the Merger and the other transactions contemplated by this Agreement on the terms and subject to the conditions set forth in this Agreement, (iii) directing that the Company use its reasonable best efforts to submit the approval of this Agreement to a vote at a meeting of the shareholders of the Company as promptly as practicable, and (iv) recommending that the shareholders of the Company approve this Agreement, which resolutions, as of November 14, 2005, have not been subsequently rescinded, modified or withdrawn in any way. The execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the Merger and the other transactions contemplated by this Agreement and compliance by the Company with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancelation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of the Company or any of its Subsidiaries under, (x) the Company Articles or the Company By-laws or the comparable organizational documents of any of its Subsidiaries, (y) any loan or credit agreement, bond, debenture, note, mortgage, indenture, lease, supply agreement, license agreement, development agreement or other contract, agreement, obligation, commitment or instrument that is intended by the Company, Parent or any of their respective Subsidiaries, as applicable, to be legally binding, (each, including all amendments thereto, a “Contract”), to which the Company or any of its Subsidiaries is a party or any of their respective properties or other assets is subject or (z) subject to the obtaining of the Shareholder Approval and the governmental filings and other matters referred to in the following sentence, any (A) statute, law, ordinance, rule or regulation (each, a “Law”) applicable to the Company or any of its Subsidiaries or their respective properties or other assets or (B) order, writ, injunction, decree, judgment or stipulation (each, an “Order”) applicable to the Company or any of its Subsidiaries or their respective properties or other assets, other than, in the case of clauses (y) and (z), any such conflicts, violations, breaches, defaults, rights of termination, cancelation or acceleration, losses or Liens that individually or in the aggregate have not had and would not reasonably be expected to (x) have a Material Adverse Effect, (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (z) prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by this Agreement. No consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any Federal, state, local or foreign government, any court, administrative, regulatory or other governmental agency, commission or authority or any organized securities exchange (each, a “Governmental Entity”) is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation of the Merger or the other transactions contemplated by this Agreement, except for (1) (A) the filing of a premerger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “HSR Act”) and the termination of the waiting period required thereunder, (B) all required notifications and filings by the Company under Article 4 of Council Regulation 139/2004 of the European Community, as amended (the “EC Merger Regulation”), and the receipt of a decision under Article 6(1)(b), 8(1) or 8(2) thereunder declaring the Merger compatible with the EC Common Market and (C) the receipt, termination or expiration, as applicable, of approvals or waiting periods required under any other applicable competition, merger control, antitrust or similar Law, (2) the filing with the Securities and Exchange Commission (the “SEC”) of (X) a proxy statement relating to the adoption by the shareholders of the Company of this Agreement (as amended or supplemented from time to time, the “Proxy Statement”) and (Y) such reports under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “Exchange Act”), as may be required in connection with this Agreement and the transactions contemplated by this Agreement,

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	(3) the filing of the Articles of Merger with the Secretary of State of the State of Indiana and appropriate documents with the relevant authorities of other states in which the Company or any of its Subsidiaries is qualified to do business, (4) any filings with and approvals of the NYSE and (5) such other consents, approvals, orders, authorizations, actions, registrations, declarations and filings the failure of which to be obtained or made individually or in the aggregate has not had and would not reasonably be expected to (x) have a Material Adverse Effect, (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (z) prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by this Agreement.
	(e) Company SEC Documents. (i) The Company has filed all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) with the SEC required to be filed by the Company since January 1, 2003 (such documents, together with any documents filed during such period by the Company with the SEC on a voluntary basis on Current Reports on Form 8-K, the “Company SEC Documents”). As of their respective filing dates, the Company SEC Documents complied in all material respects with, to the extent in effect at the time of filing, the requirements of the Securities Act of 1933, as amended (including the rules and regulations promulgated thereunder, the “Securities Act”), the Exchange Act and the Sarbanes-Oxley Act of 2002 (including the rules and regulations promulgated thereunder, “SOX”) applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent that information contained in any Company SEC Document has been revised, amended, supplemented or superseded by a later-filed Company SEC Document, none of the Company SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, which individually or in the aggregate would require an amendment, supplement or corrective filing to such Company SEC Documents. Each of the financial statements (including the related notes) of the Company included in the Company SEC Documents complied at the time it was filed as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of filing, had been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect. None of the Subsidiaries of the Company are, or have at any time since January 1, 2003 been, subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.
	(ii) Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Company SEC Documents, and the statements contained in such certifications are true and accurate. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in SOX. Neither the Company nor any of its Subsidiaries has outstanding, or has arranged any outstanding, “extensions of credit” to directors or executive officers within the meaning of Section 402 of SOX.

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	(iii) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorizations; (B) access to assets is permitted only in accordance with management’s general or specific authorization; and (C) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
	(iv) The Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the chief executive officer and chief financial officer of the Company required under the Exchange Act with respect to such reports.
	(f) Information Supplied. None of the information supplied or to be supplied by or on behalf of the Company specifically for inclusion or incorporation by reference in (i) the Form S-4 to be filed with the SEC by Parent in connection with the issuance of shares of Parent Common Stock in the Merger will, at the time the Form S-4 is filed with the SEC and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading or (ii) the Proxy Statement will, at the date it is first mailed to the shareholders of the Company and at the time of the Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of Parent or Sub specifically for inclusion or incorporation by reference in the Form S-4 or the Proxy Statement. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act.
	(g) Absence of Certain Changes or Events. Except for liabilities incurred in connection with this Agreement or as expressly permitted pursuant to Section 4.01(a)(i) through (xvi), since the date of the most recent financial statements included in the Filed Company SEC Documents, the Company and its Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice, and there has not been any Material Adverse Change, and from such date until the date hereof there has not been (i) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any capital stock of the Company or any of its Subsidiaries, other than (x) cash dividends payable by the Company in respect of shares of Company Common Stock consistent with past practice and not exceeding $0.10 per share of Company Common Stock per fiscal quarter or (y) dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to its shareholders, (ii) any purchase, redemption or other acquisition by the Company or any of its Subsidiaries of any shares of capital stock or any other securities of the Company or any of its Subsidiaries or any options, warrants, calls or rights to acquire such shares or other securities, other than in connection with net share withholding in connection with the vesting of Company Restricted Stock, (iii) any split, combination or reclassification of any capital stock of the Company or any of its Subsidiaries or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of their respective capital stock, (iv) (A) any granting by the Company or any of its Subsidiaries to any current or former (1) director of the Company or any of its Subsidiaries or (2) employee of the Company or any of its Subsidiaries who is treated as a Tier I Employee (a “Tier I Employee”) or Tier II Employee (a “Tier II Employee”) for purposes of the Company’s Change in Control Severance Pay Plan for Select Employees (all individuals described in the foregoing clauses (1) and (2) of this clause (A), collectively, the “Key Personnel”) of any increase

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	in compensation, bonus or fringe or other benefits, except for normal increases in cash compensation (including cash bonuses) in the ordinary course of business consistent with past practice or as was required under any Company Benefit Agreement or Company Benefit Plan, (B) any granting by the Company or any of its Subsidiaries to any Key Personnel of (1) any increase in severance or termination pay or (2) any right to receive any severance or termination pay except for severance or termination pay received in the ordinary course of business consistent with past practice or as was required under any Company Benefit Agreement or Company Benefit Plan, (C) any entry by the Company or any of its Subsidiaries into, or any amendments of, (1) any employment, deferred compensation, consulting, severance, change of control, termination or indemnification Contract with any Key Personnel or (2) any Contract with any Key Personnel the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving the Company of a nature contemplated by this Agreement (all such Contracts under this clause (C), collectively, “Company Benefit Agreements”), (D) the removal or modification of any restrictions in any Company Benefit Agreement or Company Benefit Plan or awards made thereunder, except as required to comply with applicable Law or any Company Benefit Agreement or Company Benefit Plan in effect as of the date hereof or (E) the adoption, amendment or termination of any Company Benefit Plan, other than, in the cases of clauses (A), (B), (C) and (D), such increases, amendments, new agreements, removals, modifications or terminations with respect to Tier II Employees that (1) do not provide for any increase in compensation or benefits for any individual Tier II Employee that is material in relation to such Tier II Employee’s compensation or benefits prior to such increase and (2) in the aggregate do not result in any material increase in compensation, benefits or other similar expenses of the Company and its Subsidiaries, (v) any damage, destruction or loss, whether or not covered by insurance, that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect, (vi) any change in accounting methods, principles or practices by the Company materially affecting its assets, liabilities or businesses, except insofar as may have been required by a change in GAAP or (vii) any material tax election or any settlement or compromise of any material income tax liability.
	(h) Litigation. Except with respect to taxes, which are the subject of Section 3.01(n), there is no suit, action or proceeding pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any of their respective assets that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect, nor is there any demand, letter or Order of any Governmental Entity or arbitrator outstanding against, or, to the Knowledge of the Company, investigation by any Governmental Entity involving, the Company or any of its Subsidiaries or any of their respective assets that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect.
	(i) Contracts. (1) As of the date hereof, neither the Company nor any of its Subsidiaries is a party to, and none of their respective properties or other assets is subject to, any Contract that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) (a “Material Contract”). None of the Company, any of its Subsidiaries or, to the Knowledge of the Company, any other party thereto is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice or both would cause such a violation of or default by the Company or any of its Subsidiaries or, to the Knowledge of the Company, any other party thereto under) any Contract to which it is a party or by which it or any of its properties or other assets is bound, except for violations or defaults that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has entered into any Contract that is currently in effect that is required to be disclosed pursuant to Item 404 of Regulation S-K of the SEC.
	(2) Section 3.01(i)(2) of the Company Disclosure Schedule contains a complete and accurate list, as of the date hereof, of (A) each material Contract restricting or purporting to restrict any of the Company’s Affiliates’ ability to compete (other than each such Contract that only restricts the Company’s Subsidiaries’ ability to compete) in any line of business, geographic area or customer

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	segment, (B) each material Contract restricting the Company’s or any of its Subsidiaries’ ability to compete in any line of business, geographic area or customer segment and (C) each material Contract relating to distribution, sale, supply, licensing, co-promotion or manufacturing of any products or services of the Company or any of its Subsidiaries or any products licensed by the Company or any of its Subsidiaries.
	(j) Compliance with Laws; Environmental Matters. (i) Except with respect to Environmental Laws, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), taxes and regulatory compliance, which are the subjects of Sections 3.01(j)(ii), 3.01(l), 3.01(n) and 3.01(u), respectively, each of the Company and its Subsidiaries is in compliance with all Laws and Orders (collectively, “Legal Provisions”) applicable to it, its properties or other assets or its business or operations, except for failures to be in compliance that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries has in effect all approvals, authorizations, certificates, filings, franchises, licenses, notices and permits of or with all Governmental Entities (collectively, “Permits”), including all Permits under the Federal Food, Drug and Cosmetic Act of 1938, as amended (including the rules and regulations promulgated thereunder, the “FDCA”), necessary for it to own, lease or operate its properties and other assets and to carry on its business and operations as currently conducted, except where the failure to have such Permits individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. Since January 1, 2000, there has occurred no default under, or violation of, any such Permit, except for any such default or violation that individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. The consummation of the Merger, in and of itself, would not cause the revocation or cancelation of any such Permit that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.
	(ii) Except for those matters that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect: (A) during the period of ownership or operation by the Company or any of its Subsidiaries of any of its currently or formerly owned, leased or operated properties, there have been no Releases of Hazardous Materials in, on, under or affecting any properties which would subject the Company or any of its Subsidiaries to any liability under any Environmental Law or require any expenditure by the Company or any of its Subsidiaries for remediation to meet applicable standards thereunder; (B) prior to and after, as applicable, the period of ownership or operation by the Company or any of its Subsidiaries of any of its currently or formerly owned, leased or operated properties, to the Knowledge of the Company, there were no Releases of Hazardous Materials in, on, under or affecting any properties which would subject the Company or any of its Subsidiaries to any liability under any Environmental Law or require any expenditure by the Company or any of its Subsidiaries for remediation to meet applicable standards thereunder; (C) neither the Company nor any of its Subsidiaries is subject to any indemnity obligation or other Contract with any person relating to obligations or liabilities under Environmental Laws; and (D) to the Knowledge of the Company, there are no facts, circumstances or conditions that would reasonably be expected to form the basis for any investigation, suit, claim, action, proceeding or liability against or affecting the Company or any of its Subsidiaries relating to or arising under Environmental Laws. The term “Environmental Laws” means all applicable Federal, state, local and foreign Laws (including the common law), Orders, notices, Permits or binding Contracts issued, promulgated or entered into by any Governmental Entity, relating in any way to the environment, preservation or reclamation of natural resources or the presence, management, Release of, or exposure to, Hazardous Materials, or to human health and safety. The term “Hazardous Materials” means (1) petroleum products and by-products, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances and (2) any other chemical, material, substance, waste, pollutant or contaminant that is prohibited, limited or regulated by or pursuant to any Environmental Law. The term “Release” means any spilling, leaking, pumping,

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	pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migrating into or through the environment or any natural or man-made structure.
	(k) Labor Relations. From the date of the most recent financial statements included in the Filed Company SEC Documents through the date hereof, there has not been any adoption, material amendment or termination by the Company or any of its Subsidiaries of any collective bargaining or other labor union Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound. There are no collective bargaining or other labor union Contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound. As of the date of this Agreement, none of the employees of the Company or any of its Subsidiaries are represented by any union with respect to their employment by the Company or such Subsidiary. Since January 1, 2003, neither the Company nor any of its Subsidiaries has experienced any material labor disputes, union organization attempts or work stoppages, slowdowns or lockouts due to labor disagreements.
	(l) ERISA Compliance. (i) Section 3.01(l)(i) of the Company Disclosure Schedule contains a complete and accurate list, as of the date hereof, of each employment, bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock appreciation, restricted stock, stock option, “phantom” stock, performance, retirement, thrift, savings, stock bonus, paid time off, perquisite, fringe benefit, vacation, severance, disability, death benefit, hospitalization, medical, welfare benefit or other plan, program, policy or Contract maintained, contributed to or required to be maintained or contributed to by the Company or any of its Subsidiaries or any other person or entity that, together with the Company, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (each, a “Commonly Controlled Entity”) (exclusive of any such plan, program, policy or Contract mandated by and maintained solely pursuant to applicable law), in each case providing benefits to any current or former director, officer or employee of the Company or any of its Subsidiaries (collectively, but exclusive of individual option and restricted award agreements issued under the Company Stock Plans, the “Company Benefit Plans”) and each Company Benefit Agreement (exclusive of local offer letters mandated under applicable non-U.S. law that do not impose any severance obligations other than any mandatory statutory severance). Each Company Benefit Plan that is an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) is sometimes referred to herein as a “Company Pension Plan” and each Company Benefit Plan that is an “employee welfare benefit plan” (as defined in Section 3(1) of ERISA) is sometimes referred to herein as a “Company Welfare Plan”.
	(ii) The Company has provided to Parent complete and accurate copies of (A) each Company Benefit Plan or, at the Company’s option, in the case of Company Benefit Plans maintained primarily for the benefit of individuals regularly employed outside the United States, a summary thereof (or, in either case, with respect to any unwritten Company Benefit Plans, descriptions thereof) and Company Benefit Agreements (exclusive of local offer letters mandated under applicable non-U.S. law that do not impose any severance obligations other than any mandatory statutory severance), (B) the two most recent annual reports on Form 5500 required to be filed with the Internal Revenue Service (the “IRS”) with respect to each Company Benefit Plan (if any such report was required), (C) the most recent summary plan description for each Company Benefit Plan for which such summary plan description is required and (D) each trust Contract and insurance or group annuity Contract relating to any Company Benefit Plan.
	(iii) Each Company Benefit Plan has been administered in all material respects in accordance with its terms. The Company, its Subsidiaries and all the Company Benefit Plans are all in compliance in all material respects with the applicable provisions of ERISA, the Code and all other applicable Laws, including Laws of foreign jurisdictions, and the terms of all collective bargaining Contracts.
	(iv) All Company Pension Plans intended to be tax-qualified have received favorable determination letters from the IRS with respect to “TRA” (as defined in Section 1 of IRS Rev.

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	Proc. 93-39), and have timely filed with the IRS determination letter applications (or have received such a determination letter) with respect to “GUST” (as defined in Section 1 of IRS Notice 2001-42), to the effect that such Company Pension Plans are qualified and exempt from Federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, no such determination letter has been revoked (nor, to the Knowledge of the Company, has revocation been threatened) and to the Knowledge of the Company, no event has occurred since the date of the most recent determination letter or application therefor relating to any such Company Pension Plan that would reasonably be expected to adversely affect the qualification of such Company Pension Plan or materially increase the costs relating thereto or require security under Section 307 of ERISA. The Company has provided to Parent a complete and accurate copy of the most recent determination letter received prior to the date hereof with respect to each Company Pension Plan, as well as a complete and accurate copy of each pending application for a determination letter, if any. The Company has also provided to Parent a complete and accurate list of all amendments to any Company Pension Plan as to which a favorable determination letter has not yet been received.
	(v) Neither the Company nor any Commonly Controlled Entity has, during the six-year period ending on the date hereof, maintained, contributed to or been required to contribute to any Company Pension Plan that is subject to Title IV of ERISA or Section 412 of the Code, or any “multiemployer plan” as defined in Section 3(37) or 4001(a)(3) of ERISA. Except as has not had and would not reasonably be expected to have a Material Adverse Effect, neither the Company nor any Commonly Controlled Entity has any unsatisfied liability under Title IV of ERISA. To the Knowledge of the Company, no condition exists that presents a material risk to the Company or any Commonly Controlled Entity of incurring a material liability under Title IV of ERISA. The Pension Benefit Guaranty Corporation has not instituted proceedings under Section 4042 of ERISA to terminate any Company Benefit Plan and, to the Knowledge of the Company, no condition exists that presents a material risk that such proceedings will be instituted.
	(vi) Except as has not had and would not reasonably be expected to have a Material Adverse Effect, (A) all reports, returns and similar documents with respect to all Company Benefit Plans required to be filed with any Governmental Entity or distributed to any Company Benefit Plan participant have been duly and timely filed or distributed, (B) none of the Company or any of its Subsidiaries has received notice of, and to the Knowledge of the Company, there are no investigations by any Governmental Entity with respect to, termination proceedings or other claims (except claims for benefits payable in the normal operation of the Company Benefit Plans), suits or proceedings against or involving any Company Benefit Plan or asserting any rights or claims to benefits under any Company Benefit Plan that could reasonably be expected to give rise to any material liability and (C) to the Knowledge of the Company, there are not any facts that could give rise to any liability in the event of any such investigation, claim, suit or proceeding.
	(vii) Except as has not had and would not reasonably be expected to have a Material Adverse Effect, (A) all contributions, premiums and benefit payments under or in connection with the Company Benefit Plans that are required to have been made as of the date hereof in accordance with the terms of the Company Benefit Plans have been timely made or have been reflected on the most recent consolidated balance sheet filed or incorporated by reference into the Filed Company SEC Documents and (B) no Company Pension Plan has an “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived.
	(viii) With respect to each Company Benefit Plan, except as has not had and would not reasonably be expected to have a Material Adverse Effect, (A) there has not occurred any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) in which the Company or any of its Subsidiaries or any of their respective employees, or, to the Knowledge of the Company, any trustee, administrator or other fiduciary of such Company Benefit Plan, or any agent of the foregoing, has engaged that could reasonably be expected to subject the Company or any of its Subsidiaries or any of their respective employees, or any such trustee, administrator or other fiduciary, to the tax or penalty on prohibited transactions imposed by Section 4975 of the Code or the sanctions

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	imposed under Title I of ERISA and (B) neither the Company, any of its Subsidiaries or any of their respective employees nor, to the Knowledge of the Company, any trustee, administrator or other fiduciary of any Company Benefit Plan nor any agent of any of the foregoing, has engaged in any transaction or acted in a manner, or failed to act in a manner, that could reasonably be expected to subject the Company or any of its Subsidiaries or any of their respective employees or, to the Knowledge of the Company, any such trustee, administrator or other fiduciary, to any liability for breach of fiduciary duty under ERISA or any other applicable Law.
	(ix) Each Company Welfare Plan may be amended or terminated (including with respect to benefits provided to retirees and other former employees) without material liability to the Company or any of its Subsidiaries at any time after the Effective Time. Each of the Company and its Subsidiaries complies in all material respects with the applicable requirements of Section 4980B(f) of the Code, Sections 601-609 of ERISA or any similar state or local Law with respect to each Company Benefit Plan that is a group health plan, as such term is defined in Section 5000(b)(1) of the Code or such state Law. Neither the Company nor any of its Subsidiaries has any material obligations for health or life insurance benefits following termination of employment under any Company Benefit Plan (other than for continuation coverage required under Section 4980(B)(f) of the Code).
	(x) None of the execution and delivery of this Agreement, the obtaining of the Shareholder Approval or the consummation of the Merger or any other transaction contemplated by this Agreement (alone or in conjunction with any other event, including as a result of any termination of employment on or following the Effective Time) will (A) entitle any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries to severance or termination pay, (B) accelerate the time of payment or vesting, or trigger any payment or funding (through a grantor trust or otherwise) of, compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any Company Benefit Plan or Company Benefit Agreement or (C) result in any breach or violation of, or a default under, any Company Benefit Plan or Company Benefit Agreement.
	(xi) Neither the Company nor any of its Subsidiaries has any material liability or obligations, including under or on account of a Company Benefit Plan, arising out of the hiring of persons to provide services to the Company or any of its Subsidiaries and treating such persons as consultants or independent contractors and not as employees of the Company or any of its Subsidiaries. No current or former independent contractor that provides or provided personal services to the Company or its Subsidiaries (other than a current or former director) is entitled to any material fringe or other benefits (other than cash consulting fees) pursuant to any plan, program, policy or Contract to which the Company or any of its Subsidiaries is a party or which is maintained, sponsored or contributed to by the Company or any of its Subsidiaries.
	(xii) No material deduction by the Company or any of its Subsidiaries in respect of any “applicable employee remuneration” (within the meaning of Section 162(m) of the Code) has been disallowed or is subject to disallowance by reason of Section 162(m) of the Code. For each of the Key Personnel, the Company has previously provided to Parent (A) accurate Form W-2 information for the 1999, 2000, 2001, 2002 and 2003 calendar years, (B) annual base salary as of the date hereof, actual bonus earned for the 2003 calendar year and target annual bonus for the 2004 calendar year and (C) a list, as of the date hereof, of all outstanding Company Stock Options, Company Restricted Stock and Company Stock-Based Awards granted under the Company Stock Plans or otherwise (other than rights under the ESPP), together with (as applicable) the number of shares of Company Common Stock subject thereto, and the grant dates, expiration dates, exercise or base prices and vesting schedules thereof, (D) estimated current annual cost of welfare benefits and (E) estimated cost of the pension benefit enhancement under Section 8 of the Company’s Change in Control Severance Plan for Select Employees.
	(m) No Parachute Gross Up. Except as provided in accordance with the Company’s Change in Control Severance Pay Plan for Select Employees, no current or former employee or director of the

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	Company or any of its Subsidiaries is entitled to receive any additional payment from the Company or any of its Subsidiaries or the Surviving Corporation by reason of the excise tax required by Section 4999(a) of the Code being imposed on such person by reason of the transactions contemplated by this Agreement.
	(n) Taxes. Except as has not had and would not reasonably be expected to have a Material Adverse Effect:

	(i) All tax returns required by applicable Law to have been filed with any taxing authority by, or on behalf of, the Company or any of its Subsidiaries have been filed in a timely manner (taking into account any valid extension) in accordance with all applicable Laws, and all such tax returns are true and complete in all material respects.
	(ii) The Company and each of its Subsidiaries has paid (or has had paid on its behalf) all taxes due and owing, and the Company’s most recent financial statements included in the Filed Company SEC Documents reflect an adequate accrual for all taxes payable by Company and its Subsidiaries for all taxable periods and portions thereof accrued through the date of such financial statements.
	(iii) There are no Liens or encumbrances for taxes on any of the assets of the Company or any of its Subsidiaries other than for taxes not yet due and payable.
	(iv) The Company and its Subsidiaries have complied with all applicable Laws relating to the payment and withholding of taxes.
	(v) No written notification has been received by the Company or any of its Subsidiaries that any federal, state, local or foreign audit, examination or similar proceeding is pending, proposed or asserted with regard to any taxes or tax returns of the Company or its Subsidiaries.
	(vi) There is no currently effective Contract extending, or having the effect of extending, the period of assessment or collection of any federal, state and, to the Knowledge of the Company, foreign taxes with respect to the Company or any of its Subsidiaries nor has any request been made for any such extension.
	(vii) No written notice of a claim of pending investigation has been received from any state, local or other jurisdiction with which the Company or any of its Subsidiaries currently does not file tax returns, alleging that the Company or any of its Subsidiaries has a duty to file tax returns and pay taxes or is otherwise subject to the taxing authority of such jurisdiction.
	(viii) Neither the Company nor any of its Subsidiaries joins or has joined, for any taxable period during the eight years prior to the date of this Agreement, in the filing of any affiliated, aggregate, consolidated, combined or unitary federal, state, local and, to the Knowledge of the Company, foreign tax return other than consolidated tax returns for the consolidated group of which the Company is the common parent.
	(ix) Neither the Company nor any of its Subsidiaries is a party to or bound by any tax sharing agreement or tax indemnity agreement, arrangement or practice (including any advance pricing agreement, closing agreement or other agreement relating to taxes with any taxing authority).
	(x) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code in the two years prior to the date of this Agreement.
	(xi) Neither the Company nor any of its Subsidiaries will be required to include in a taxable period ending after the Effective Time taxable income attributable to income that accrued in a prior taxable period (or portion of a taxable period) but was not recognized for tax purposes in any prior taxable period as a result of (A) an open transaction disposition made on or before the Effective Time, (B) a prepaid amount received on or prior to the Effective Time,

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	(C) the installment method of accounting, (D) the long-term contract method of accounting, (E) the cash method of accounting or Section 481 of the Code or (F) any comparable provisions of state or local tax Law, domestic or foreign, or for any other reason, other than any amounts that are specifically reflected in a reserve for taxes on the most recent financial statements of the Company included in the Filed Company SEC Documents.
	(xii) Neither the Company nor any of its Subsidiaries has entered into a “listed transaction” within the meaning of Treasury Regulation § 1.6011-4(b)(2)
	(xiii) As used in this Agreement (A) “tax” means (i) any tax, duty, governmental fee or other like assessment or charge of any kind whatsoever (including withholding on amounts paid to or by any person and liabilities with respect to unclaimed funds), together with any related interest, penalty, addition to tax or additional amount, and any liability for any of the foregoing as transferee, (ii) in the case of the Company or any of its Subsidiaries, liability for the payment of any amount of the type described in clause (i) as a result of being or having been before the Effective Time a member of an affiliated, consolidated, combined or unitary group, or a party to any Contract as a result of which liability of the Company or any of its Subsidiaries is determined or taken into account with reference to the activities of any other person and (iii) in the case of the Company or any of its Subsidiaries, liability of the Company or any of its Subsidiaries for the payment of any amount as a result of being party to any tax sharing Contract or with respect to the payment of any amount imposed on any person of the type described in (i) or (ii) as a result of any existing Contract (including an indemnification Contract); (B) “taxing authority” means any Federal, state, local or foreign government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising tax regulatory authority; and (C) “tax return” means any report, return, document, declaration or other information or filing required to be filed with respect to taxes (whether or not a payment is required to be made with respect to such filing), including information returns, any documents with respect to or accompanying payments of estimated taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.

	(o) Title to Properties. Each of the Company and its Subsidiaries has valid title to, or valid leasehold or sublease interests or other comparable contract rights in or relating to all of its real properties and other tangible assets necessary for the conduct of its business as currently conducted, except as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants and similar encumbrances that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries has complied with the terms of all leases or subleases to which it is a party and under which it is in occupancy, and all leases to which the Company is a party and under which it is in occupancy are in full force and effect, except for such failure to comply or be in full force and effect that individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received any written notice of any event or occurrence that has resulted or could result (with or without the giving of notice, the lapse of time or both) in a default with respect to any lease or sublease to which it is a party, which defaults individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect.
	(p) Intellectual Property. (i) Section 3.01(p)(i) of the Company Disclosure Schedule sets forth, as of the date hereof, a complete and accurate list (in all material respects) of all patents and applications therefor, registered trademarks and applications therefor, domain name registrations and copyright registrations (if any) that, in each case, are owned by or licensed to the Company or any of its Subsidiaries and are material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, as currently conducted. Such intellectual property rights required to be listed in Section 3.01(p)(i) of the Company Disclosure Schedule, together with any tradename rights, trade secret or know how rights, service mark rights, trademark rights, patent rights, intellectual property

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	rights in computer programs or software or other type of intellectual property rights, in each case, that are owned or licensed by the Company or any of its Subsidiaries and are material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, as currently conducted, are collectively referred to herein as “Intellectual Property Rights”. All Intellectual Property Rights are either (x) owned by the Company or a Subsidiary of the Company free and clear of all Liens or (y) licensed to the Company or a Subsidiary of the Company free and clear (to the Knowledge of the Company) of all Liens, except where the failure to so own or license such Intellectual Property Rights individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. There are no claims pending or, to the Knowledge of the Company, threatened with regard to the ownership or, to the Knowledge of the Company, licensing by the Company or any of its Subsidiaries of any Intellectual Property Rights which individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries owns, is validly licensed or otherwise has the right to use all Intellectual Property Rights, except where the failure to own, have a valid license or otherwise have rights to use individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. The execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the Merger and the other transactions contemplated by this Agreement and compliance by the Company with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancelation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon, any Intellectual Property Right, in each case that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect. Section 3.01(p)(i) of the Company Disclosure Schedule sets forth, as of the date hereof, all Contracts under which the Company or any of its Subsidiaries is obligated to make payments to third parties for use of any Intellectual Property Rights with respect to the commercialization of any products that are, as of the date hereof, being sold, manufactured by or under development by the Company or any of its Subsidiaries and for which such payments are in excess of $2,000,000 per year for any single product. The aggregate amount of all such payments that the Company and its Subsidiaries are obligated to make under any Contract of the type described in the immediately preceding sentence that are not required to be disclosed pursuant to such sentence does not exceed $10,000,000 per year.
	(ii) There are no pending or, to the Knowledge of the Company, threatened claims that the Company or any of its Subsidiaries has infringed or is infringing (including with respect to the manufacture, use or sale by the Company or any of its Subsidiaries of any products or to the operations of the Company and its Subsidiaries) any intellectual property rights of any person which individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect. To the Knowledge of the Company, as of the date of this Agreement, there are no facts, circumstances or conditions that would reasonably be expected to form the basis for any claim by a person to exclude or prevent the Company or any of its Subsidiaries from freely using its Intellectual Property Rights and that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.
	(iii) All patents required to be listed in Section 3.01(p)(i) of the Company Disclosure Schedule that are owned by the Company or any of its Subsidiaries have been duly registered and/or filed with or issued by each appropriate Governmental Entity, all necessary affidavits of continuing use have been timely filed, and all necessary maintenance fees have been timely paid to continue all such rights in effect, other than failures to be duly registered, filed, issued or paid which individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. None of the patents required to be listed in Section 3.01(p)(i) of the Company Disclosure Schedule that are owned by the Company or any of its Subsidiaries has expired or been declared invalid, in whole or in part, by any Governmental Entity, other than such expirations or declarations of invalidity which individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. There are no ongoing interferences, oppositions, reissues, reexaminations or

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	other proceedings challenging any of the patents or patent applications required to be listed in Section 3.01(p)(i) of the Company Disclosure Schedule and owned by the Company or any of its Subsidiaries (or, to the Company’s Knowledge, challenging any such patents or patent applications licensed to the Company or any of its Subsidiaries), including ex parte and post-grant proceedings, in the United States Patent and Trademark Office or in any foreign patent office or similar administrative agency, other than such interferences, oppositions, reissues, reexaminations or proceedings that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect.
	(iv) Except as has not had and would not reasonably be expected to have a Material Adverse Effect, the Company and its Subsidiaries have used commercially reasonable efforts to maintain their material trade secrets in confidence.
	(q) Voting Requirements. The affirmative vote of holders of a majority of the outstanding shares of Company Common Stock at the Shareholders’ Meeting or any adjournment or postponement thereof to approve this Agreement (the “Shareholder Approval”) is the only vote of the holders of any class or series of capital stock of the Company necessary to approve this Agreement and the transactions contemplated by this Agreement (it being understood that the approval of the Original Merger Agreement by the shareholders of the Company on April 27, 2005, shall not constitute the “Shareholder Approval” with regard to this Agreement).
	(r) State Takeover Laws; Company Articles Provisions. The Board of Directors of the Company has unanimously adopted, by all directors present, this Agreement, the terms of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement, and such adoption represents all the actions necessary to render inapplicable to this Agreement, the Merger and the other transactions contemplated by this Agreement, the restrictions (i) on “business combinations” (as defined in Section 23-1-43-5 of the IBCL) set forth in Section 23-1-43-18 of the IBCL and (ii) on the actions or transactions set forth in Paragraph 6 of the Company Articles (“Paragraph 6”), in each case to the extent, if any, such restrictions would otherwise be applicable to this Agreement, the Merger and the other transactions contemplated by this Agreement. For purposes of Paragraph 6, the approval of the Board of Directors of the Company referred to in the immediately preceding sentence constitutes the approval of the Merger and the other transactions contemplated by this Agreement by the “Continuing Directors” (as defined in Paragraph 6) pursuant to clause (c) of Paragraph 6. No other similar provision of the Company Articles or the Company By-laws or, to the Knowledge of the Company, other state takeover Law or similar Law applies or purports to apply to this Agreement, the Merger or the other transactions contemplated by this Agreement.
	(s) Brokers and Other Advisors. No broker, investment banker, financial advisor or other person (other than J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated), the fees and expenses of which will be paid by the Company, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. The Company has delivered to Parent complete and accurate copies of all Contracts under which any such fees or expenses are payable and all indemnification and other Contracts related to the engagement of the persons to whom such fees are payable.
	(t) Opinion of Financial Advisors. The Company has received the opinions of each of J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated, in each case dated as of November 14, 2005, to the effect that, as of such date, the Merger Consideration is fair, from a financial point of view, to the holders of shares of Company Common Stock, a signed copy of which opinion has been, or will promptly be, delivered to Parent.
	(u) Regulatory Compliance. (i) As to each product subject to the FDCA or similar Legal Provisions in any foreign jurisdiction that are developed, manufactured, tested, distributed and/or marketed by the Company or any of its Subsidiaries (a “Medical Device”), each such Medical

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	Device is being developed, manufactured, tested, distributed and/or marketed in compliance with all applicable requirements under the FDCA and similar Legal Provisions, including those relating to investigational use, premarket clearance or marketing approval to market a Medical Device, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security, and in compliance with the Advanced Medical Technology Association Code of Ethics on Interactions with Healthcare Professionals and the American Medical Association’s guidelines on gifts to physicians, except for failures in compliance that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received any notice or other communication from the Federal Food and Drug Administration (the “FDA”) or any other Governmental Entity (A) contesting the premarket clearance or approval of, the uses of or the labeling and promotion of any products of the Company or any of its Subsidiaries or (B) otherwise alleging any violation applicable to any Medical Device of any Legal Provision, in the case of (A) and (B), that individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect.
	(ii) No Medical Device is under consideration by senior management of the Company or any of its Subsidiaries for, or has been recalled, withdrawn, suspended, seized or discontinued (other than for commercial or other business reasons) by, the Company or any of its Subsidiaries in the United States or outside the United States (whether voluntarily or otherwise), in each case since January 1, 2002. No proceedings in the United States or outside of the United States of which the Company has Knowledge (whether completed or pending) seeking the recall, withdrawal, suspension, seizure or discontinuance of any Medical Device are pending against the Company or any of its Subsidiaries or any licensee of any Medical Device which individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect.
	(iii) As to each Medical Device of the Company or any of its Subsidiaries for which a premarket approval application, premarket notification, investigational device exemption or similar state or foreign regulatory application has been approved, the Company and its Subsidiaries are in compliance with 21 U.S.C. §§ 360 and 360e or 21 C.F.R. Parts 812 or 814, respectively, and all similar Legal Provisions and all terms and conditions of such licenses or applications, except for any such failure or failures to be in compliance which individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. In addition, the Company and its Subsidiaries are in substantial compliance with all applicable registration and listing requirements set forth in 21 U.S.C. § 360 and 21 C.F.R. Part 807 and all similar Legal Provisions, except for any such failures to be in compliance which individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect.
	(iv) No article of any Medical Device manufactured and/or distributed by the Company or any of its Subsidiaries is (A) adulterated within the meaning of 21 U.S.C. § 351 (or similar Legal Provisions), (B) misbranded within the meaning of 21 U.S.C. § 352 (or similar Legal Provisions) or (C) a product that is in violation of 21 U.S.C. § 360 or § 360e (or similar Legal Provisions), except for failures to be in compliance with the foregoing that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect.
	(v) Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has made an untrue statement of a material fact or fraudulent statement to the FDA or any other Governmental Entity, failed to disclose a material fact required to be disclosed to the FDA or any other Governmental Entity, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, could reasonably be expected to provide a basis for the FDA or any other Governmental Entity to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or any similar

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	Legal Provision or authorized by 21 U.S.C. § 335a(b) or any similar Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which such person or entity could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act of 1935, as amended (the “Social Security Act”) or any similar Legal Provision.
	(vi) Since January 1, 2002, neither the Company nor any of its Subsidiaries has received any written notice that the FDA or any other Governmental Entity has (a) commenced, or threatened to initiate, any action to withdraw its approval or request the recall of any Medical Device, (b) commenced, or threatened to initiate, any action to enjoin production of any Medical Device or (c) commenced, or threatened to initiate, any action to enjoin the production of any medical device produced at any facility where any Medical Device is manufactured, tested or packaged, except for any such action that individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect.
	(vii) To the Knowledge of the Company, there are no facts, circumstances or conditions that would reasonably be expected to form the basis for any investigation, suit, claim, action or proceeding against or affecting the Company or any of its Subsidiaries relating to or arising under (a) the FDCA or (b) the Social Security Act or regulations of the Office of the Inspector General of the Department of Health and Human Services, in each case individually or in the aggregate that has had or would reasonably be expected to have a Material Adverse Effect.
	(v) Rights Agreement. The Company has taken all actions necessary to cause the Rights Agreement dated as of December 15, 2004, between the Company and EquiServe Trust Company, as rights agent (the “Rights Agreement”), to (i) render the Rights Agreement inapplicable to this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) ensure that (x) none of Parent, Sub or any other Subsidiary of Parent is an Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights Agreement, (y) a Distribution Date or a Stock Acquisition Date (as such terms are defined in the Rights Agreement) does not occur and (z) the rights (the “Company Rights”) to purchase Company Series A Preferred Stock issued under the Rights Agreement do not become exercisable, in the case of clauses (x), (y) and (z), solely by reason of the execution of this Agreement or the consummation of the Merger or the other transactions contemplated by this Agreement and (iii) provide that the Expiration Date (as defined in the Rights Agreement) shall occur immediately prior to the Effective Time.

(a) Organization, Standing and Corporate Power. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated and has all requisite corporate 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 now being conducted, except whether the failure to have such governmental licenses, permits, authorizations and approvals individually or in the aggregate has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Each of Parent and Sub 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 had and would not reasonably be expected to have a Parent Material Adverse Effect. Parent has made available to the Company complete and accurate copies of

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	its Restated Certificate of Incorporation and By-laws, the Articles of Incorporation of Sub (the “Sub Articles”) and the By-laws of Sub, in each case as amended to the date hereof.
	(b) Authority; Noncontravention. Each of Parent and Sub has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Parent and Sub and the consummation by Parent and Sub of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of Parent and Sub and no other corporate proceedings on the part of Parent or Sub are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement. This Agreement and the transactions contemplated by this Agreement do not require approval of the holders of any shares of capital stock of Parent. This Agreement has been duly executed and delivered by each of Parent and Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Parent and Sub, as applicable, enforceable against Parent and Sub, as applicable, in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar Laws affecting the rights of creditors generally and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding at equity or at law). The execution and delivery of this Agreement by Parent and Sub do not, and the consummation by Parent and Sub of the Merger and the other transactions contemplated by this Agreement and compliance by Parent and Sub with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancelation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of Parent or Sub under (x) the Restated Certificate of Incorporation or By-laws of Parent, the Sub Articles or the By-laws of Sub, (y) any Contract to which Parent or Sub is a party or any of their respective properties or other assets is subject or (z) subject to the governmental filings and other matters referred to in the following sentence, any Legal Provision applicable to Parent or Sub or their respective properties or other assets, other than, in the case of clauses (y) and (z), any such conflicts, violations, breaches, defaults, rights of termination, cancelation or acceleration, losses or Liens that individually or in the aggregate have not had and would not reasonably be expected to (1) have a Parent Material Adverse Effect, (2) impair in any material respect the ability of Parent or Sub to perform its respective obligations under this Agreement or (3) prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by this Agreement. No consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Parent or Sub in connection with the execution and delivery of this Agreement by Parent and Sub or the consummation by Parent and Sub of the Merger or the other transactions contemplated by this Agreement, except for (1) (A) the filing of a premerger notification and report form by Parent under the HSR Act and the termination of the waiting period required thereunder, (B) all required notifications and filings by Parent under Article 4 of the EC Merger Regulation and the receipt of a decision under Article 6(1)(b), 8(1) or 8(2) thereunder declaring the Merger compatible with the EC Common Market and (C) the receipt, termination or expiration, as applicable, of approvals or waiting periods required under any other applicable competition, merger control, antitrust or similar Law, (2) the filing with th e SEC of (X) the Form S-4 and (Y) such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated by this Agreement, (3) the filing of the Articles of Merger with the Secretary of State of the State of Indiana, (4) any filings with and approvals of the NYSE and (5) such other consents, approvals, orders, authorizations, actions, registrations, declarations and filings the failure of which to be obtained or made individually or in the aggregate has not had and would not reasonably be expected to (x) have a Parent Material Adverse Effect, (y) impair in any material respect the ability of Parent or Sub to perform its respective obligations under this Agreement or (z) prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by this Agreement.

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	(c) Parent SEC Documents. Parent has filed all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) with the SEC required to be filed by Parent since January 1, 2003 (such documents, together with any documents filed during such period by Parent with the SEC on a voluntary basis on Current Reports on Form 8-K, the “Parent SEC Documents”). As of their respective filing dates, the Parent SEC Documents complied in all material respects with, to the extent in effect at the time of filing, the requirements of the Securities Act, the Exchange Act and SOX applicable to such Parent SEC Documents, and none of the Parent SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent that information contained in any Parent SEC Document has been revised, amended, supplemented or superseded by a later-filed Parent SEC Document, none of the Parent SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, which individually or in the aggregate would require an amendment, supplement or corrective filing to such Parent SEC Documents. Each of the financial statements (including the related notes) of Parent included in the Parent SEC Documents complied at the time it was filed as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of filing, had been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position of Parent and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Neither Parent nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which individually or in the aggregate have had or would reasonably be expected to have a Parent Material Adverse Effect.
	(d) Information Supplied. None of the information supplied or to be supplied by or on behalf of Parent or Sub specifically for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, or (ii) the Proxy Statement will, at the date it is first mailed to the shareholders of the Company and at the time of the Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by Parent or Sub with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of the Company specifically for inclusion or incorporation by reference in the Form S-4 or the Proxy Statement. The Form S-4 will comply as to form in all material respects with the requirements of the Securities Act and the rules and regulations thereunder.
	(e) Interim Operations of Sub. Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated hereby.
	(f) Capital Resources. As of the Closing, Parent will have funds that are sufficient to effect the Closing on the terms contemplated hereby.
	(g) Brokers. No broker, investment banker, financial advisor or other person, other than Goldman, Sachs & Co., the fees and expenses of which will be paid by Parent, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the

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	transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Sub.
	(h) Capital Structure. The authorized capital stock of Parent consists of 4,320,000,000 shares of Parent Common Stock and 2,000,000 shares of preferred stock, without par value, of Parent (“Parent Preferred Stock”). At the close of business on November 11, 2005, (i) 3,119,842,548 shares of Parent Common Stock were issued and outstanding, (ii) 145,627,833 shares of Parent Common Stock were held by Parent in its treasury, (iii) no shares of Parent Preferred Stock had been designated or issued, (iv) 252,675,833 shares of Parent Common Stock were subject to outstanding options to purchase shares of Parent Common Stock granted under Parent’s stock incentive plans and (v) 6,890,509 shares of Parent Common Stock were reserved for issuance upon conversion of the 3% Zero Coupon Convertible Subordinated Debentures of Alza Corporation, a Delaware corporation and wholly-owned subsidiary of Parent (“Alza”), and the 5.25% Zero Coupon Convertible Subordinated Debentures of Alza. Except as set forth above in this Section 3.02(h), at the close of business on November 11, 2005, there were not issued, reserved for issuance or outstanding (A) any shares of capital stock or other voting securities of Parent, (B) any securities of Parent convertible into or exchangeable or exercisable for shares of capital stock or voting securities of Parent or (C) any warrants, calls, options or other rights to acquire from Parent, or any obligation of Parent to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable or exercisable for capital stock or voting securities of Parent. Except as set forth above in this Section 3.02(h), at the close of business on November 11, 2005, no bonds, debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which the shareholders of Parent may vote are issued or outstanding. The authorized capital stock of Sub consists of 1,000 shares of common stock, without par value, of which 1,000 shares are issued and outstanding, all of which shares are beneficially owned by Parent.
	(i) Absence of Changes. Except for liabilities incurred in connection with this Agreement, since the date of the most recent financial statements included in the Filed Parent SEC Documents, there has not been any Parent Material Adverse Change.
	(j) Litigation. There is no suit, action or proceeding pending or, to the Knowledge of Parent, threatened against or affecting Parent or any of its Subsidiaries or any of their respective assets that individually or in the aggregate has had or would reasonably be expected to have a Parent Material Adverse Effect, nor is there any Order of any Governmental Entity or arbitrator outstanding against, or, to the Knowledge of Parent, investigation by any Governmental Entity involving, Parent or any of its Subsidiaries or any of their respective assets that individually or in the aggregate has had or would reasonably be expected to have a Parent Material Adverse Effect.
	(k) Intellectual Property Rights. Each of Parent and its Subsidiaries owns or has the right to use all intellectual property rights which are material to the conduct of the business of Parent and its Subsidiaries, taken as a whole, in each case (i) with respect to such intellectual property rights that are owned by Parent or any of its Subsidiaries, free and clear of all Liens and (ii) with respect to such intellectual property rights that are licensed by Parent or any of its Subsidiaries, to the Knowledge of Parent, free and clear of all Liens, except where the failure to so own or have such right to use such intellectual property rights individually or in the aggregate has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Neither the manufacture, marketing, license, sale or use by Parent or any of its Subsidiaries of any product violates any license or agreement between Parent or any of its Subsidiaries and any other person and there is no pending or, to the Knowledge of Parent, threatened claim or litigation contesting the validity, ownership or right to use, sell, license or dispose of any such intellectual property rights relating to any product or asserting that the proposed use, sale, license or disposition thereof, or the manufacture, use or sale of any product by Parent or any of its Subsidiaries, conflicts with the rights of any other person, in each case which, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.

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(l) Regulatory Compliance. To the Knowledge of Parent, the testing, manufacture, storage, distribution, use, promotion and sale of products of Parent or any of its Subsidiaries by Parent, such Subsidiary and their respective contractors have been performed and is performed in compliance with all applicable requirements under the FDCA and similar Legal Provisions, including those relating to investigational use, premarket clearance, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security, except for such instances of noncompliance or possible noncompliance that individually or in the aggregate have not had and would not reasonably be expected to have a Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries has received any adverse written notice within the past two years that the FDA or any other similar foreign Governmental Entity has commenced, or threatened to initiate, any action to withdraw its approval or request the recall of any product of Parent or any of its Subsidiaries, or commenced, or overtly threatened to initiate, any action to enjoin production of any such product, except where such action has not had and would not reasonably be expected to have a Parent Material Adverse Effect.

	(i) (x) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, other than (1) cash dividends payable by the Company in respect of shares of Company Common Stock consistent with past practice and not exceeding $0.10 per share of Company Common Stock per fiscal quarter, (2) dividends and distributions in connection with the Rights Agreement and (3) dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to its shareholders, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, except for purchases, redemptions or other acquisitions of capital stock or other securities (1) required by the terms of the Company Stock Plans or the ESPP or (2) required by the terms of any plans, arrangements or Contracts existing on the date hereof between the Company or any of its Subsidiaries and any director or employee of the Company or any of its Subsidiaries (to the extent complete and accurate copies of which have been heretofore delivered to Parent);
	(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities, or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units, including pursuant to Contracts as in effect on the date hereof (other than (x) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options or in connection with Company Stock Based Awards, in each case in accordance with their terms on the date hereof, and

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	(y) the issuance of Company Rights and shares of the Company’s capital stock pursuant to the Company Rights or the Rights Agreement);
	(iii) amend (x) the Company Articles or the Company By-laws or other comparable charter or organizational documents of any of the Company’s Subsidiaries or (y) the Indenture dated as of January 18, 1996 between the Company and Citibank, N.A., with respect to the 6.15% Senior Unsecured Notes due February 15, 2006 of the Company (the “Company Notes”), in each case except as may be required by applicable Law or the rules and regulations of the SEC or the NYSE;
	(iv) directly or indirectly acquire (x) by merging or consolidating with, by purchasing a substantial portion of the assets of, by making an investment in or capital contribution to, or by any other manner, any person or division, business or equity interest of any person or (y) any asset or assets, except for (1) capital expenditures, which shall be subject to the limitations of clause (vii) below, (2) purchases of components, raw materials or supplies in the ordinary course of business consistent with past practice and (3) acquisitions of material intellectual property rights in respect of cross-licenses permitted in connection with the discharge, settlement or satisfaction of claims and litigation under clause (viii) below;
	(v) (x) sell, lease, license, mortgage, sell and leaseback or otherwise encumber or subject to any Lien or otherwise dispose of any of its material properties or other material assets or any interests therein (including securitizations), except for (1) sales of inventory and used equipment in the ordinary course of business consistent with past practice and (2) licenses of Intellectual Property Rights permitted in connection with the discharge, settlement or satisfaction of claims and litigation under clause (viii) below, or (y) enter into, modify or amend any lease of material property, except for modifications or amendments that are not materially adverse to the Company and its Subsidiaries, taken as a whole;
	(vi) (x) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another person, enter into any “keep well” or other Contract to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing (other than short-term borrowings in the ordinary course of business consistent with past practice under the Company’s commercial paper program, in an aggregate amount not to exceed $800,000,000 at any time outstanding) or (y) make any loans or advances to any other person, other than to employees in respect of travel expenses in the ordinary course of business consistent with past practice, which would result in the aggregate principal amount of all of the outstanding foregoing loans and advances of the Company and its Subsidiaries exceeding $25,000,000;
	(vii) make any new capital expenditure or expenditures exceeding the amounts set forth in Section 4.01(a)(vii) of the Company Disclosure Schedule;
	(viii) except as required by Law or any judgment by a court of competent jurisdiction, (v) pay, discharge, settle or satisfy any material claims, liabilities, obligations or litigation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities disclosed, reflected or reserved against in the most recent audited financial statements (or the notes thereto) of the Company included in the Filed Company SEC Documents (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the ordinary course of business consistent with past practice, (w) cancel any material indebtedness, (x) waive or assign any claims or rights of material value, (y) waive any benefits of, or agree to modify in any respect, or, subject to the terms hereof, knowingly fail to enforce, or consent to any matter with respect to which consent is required under, any standstill or similar Contract to which the Company or any of its Subsidiaries is a party or (z) waive any material benefits of, or agree to modify in any material respect, or, subject to the terms hereof, knowingly fail to enforce in any material

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	respect, or consent to any matter with respect to which consent is required under, any material confidentiality or similar Contract to which the Company or any of its Subsidiaries is a party;
	(ix) enter into (1) any material Contract that would be of a type referred to in Section 3.01(i)(2)(A) or (2) any other material Contract that would be of a type referred to in Section 3.01(i)(2)(B) or (C) and, in the case of this clause (2), that (A) would reasonably be expected to impair in any material respect the ability of the Company and its Subsidiaries to conduct their business as currently conducted or (B) would reasonably be expected to have a material adverse effect on the reasonably expected benefits of the Merger to Parent;
	(x) enter into, modify, amend or terminate any Contract or waive, release or assign any material rights or claims thereunder, which if so entered into, modified, amended, terminated, waived, released or assigned would reasonably be expected to (A) have a Material Adverse Effect, (B) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (C) prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by this Agreement;
	(xi) enter into any material Contract to the extent consummation of the transactions contemplated by this Agreement or compliance by the Company with the provisions of this Agreement could reasonably be expected to conflict with, or result in a violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancelation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of the Company or any of its Subsidiaries under, or require Parent to license or transfer any of its Intellectual Property Rights or other material assets under, or give rise to any increased, additional, accelerated, or guaranteed right or entitlements of any third party under, or result in any material alteration of, any provision of such Contract;
	(xii) except as required to ensure that any Company Benefit Plan or Company Benefit Agreement is not then out of compliance with applicable Law or to comply with any Company Benefit Plan, Company Benefit Agreement or other Contract entered into prior to the date hereof (to the extent complete and accurate copies of which have been heretofore delivered to Parent), (A) adopt, enter into, terminate or amend (I) any collective bargaining Contract or Company Benefit Plan or (II) any Company Benefit Agreement or other Contract, plan or policy involving the Company or any of its Subsidiaries and Key Personnel, (B) increase in any manner the compensation, bonus or fringe or other benefits of, or pay any discretionary bonus of any kind or amount whatsoever to, any current or former director, officer, employee or consultant, except in the ordinary course of business consistent with past practice to employees of the Company or its Subsidiaries other than Key Personnel, (C) grant or pay any severance or termination pay, except for severance or termination pay granted or paid in the ordinary course of business consistent with past practice, to, or increase in any material manner the severance or termination pay of, any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries other than Key Personnel, (D) remove any existing restrictions in any Company Benefit Agreements, Company Benefit Plans or awards made thereunder, (E) take any action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan or Company Benefit Agreement, (F) take any action to accelerate the vesting or payment of any compensation or benefit under any Company Benefit Plan or Company Benefit Agreement or awards made thereunder or (G) materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company Pension Plan or change the manner in which contributions to any Company Pension Plan are made or the basis on which such contributions are determined;
	(xiii) except as required by GAAP, revalue any material assets of the Company or any of its Subsidiaries or make any change in accounting methods, principles or practices; or
	(xiv) authorize any of, or commit, resolve, propose or agree to take any of, the foregoing actions.

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	(i) each Company Stock Option outstanding immediately prior to the Effective Time shall be amended and converted into an option to acquire, on the same terms and conditions as were applicable under such Company Stock Option, the number of shares of Parent Common Stock (rounded down to the nearest whole share) equal to the sum of (x) the product of (A) the number of shares of Company Common Stock subject to such Company Stock Option and (B) the Exchange Ratio and (y) the product of (A) the number of shares of Company Common Stock subject to such Company Stock Option and (B) the Cash Portion Option Exchange Multiple, at an exercise price per share of Parent Common Stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (1) the aggregate exercise price for the shares of Company Common Stock subject to such Company Stock Option by (2) the aggregate number of shares of Parent Common Stock to be subject to such Company Stock Option after giving effect to the adjustments in this clause (i) (each, as so adjusted, an “Adjusted Option”); and
	(ii) make such other changes to the Company Stock Plans as Parent and the Company may agree are appropriate to give effect to the Merger.

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	(a) Shareholder Approval. The Shareholder Approval shall have been obtained.
	(b) NYSE Listing. The shares of Parent Common Stock issuable to the shareholders of the Company and to holders of Adjusted Options as contemplated by this Agreement shall have been approved for listing on the NYSE, subject to official notice of issuance.
	(c) Antitrust. (i) The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired and (ii) the European Commission shall have issued a decision under Article 6(1)(b), 8(1) or 8(2) of the EC Merger Regulation (or shall have been deemed to have done so under Article 10(6) of the EC Merger Regulation) declaring the Merger compatible with the EC Common Market (and/or, as may be the case, any national competition authority in the EC to which all or part of the case may have been transferred shall have issued a decision with similar effect or have been deemed to have done so).
	(d) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any court or agency of competent jurisdiction or other Law, rule, legal restraint or prohibition (collectively, “Restraints”) shall be in effect preventing the consummation of the Merger.
	(e) Form S-4. The Form S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order.

(a) Representations and Warranties. (i) The representations and warranties of the Company contained in Sections 3.01(c), 3.01(d), 3.01(g)(iv) (but only with respect to current and former directors and Tier I Employees), 3.01(i)(2)(A), 3.01(q), 3.01(r) (but not with respect to the last sentence thereof) and 3.01(v) of this Agreement that are qualified as to materiality or by reference to Material Adverse Effect or Material Adverse Change shall be true and correct, and such representations and warranties of the Company that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date, (ii) the representations and warranties of the Company contained in Sections 3.01(i)(2)(B) and (C) shall be true and correct as of the date of this Agreement as though made on the Closing Date, except to the extent that the facts or matters as to which such representations and warranties are not so true and correct as of such date, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the reasonably expected benefits of the Merger to Parent and (iii) all other representations and warranties of the Company contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date, and except further, in the case of this clause (iii), to the extent that the facts or matters as to which such representations and warranties are not so true and correct as of such dates (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect

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	or Material Adverse Change set forth therein), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect.
	(b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect.
	(c) No Litigation. There shall not be pending any suit, action or proceeding by any national Governmental Entity (i) seeking to restrain or prohibit the consummation of the Merger or any other transaction contemplated by this Agreement or seeking to obtain from the Company, Parent, Sub or any other Affiliate of Parent any damages that are material in relation to the Company, (ii) seeking to impose limitations on the ability of Parent or any Affiliate of Parent to hold, or exercise full rights of ownership of, any shares of capital stock of the Surviving Corporation, including the right to vote such shares on all matters properly presented to the shareholders of the Surviving Corporation, (iii) seeking to prohibit Parent or any of its Affiliates from effectively controlling in any material respect the business or operations of the Company or any of its Affiliates, (iv) seeking any Divestiture that is not required to be effected pursuant to the terms of this Agreement or (v) that has had or would reasonably be expected to have a Material Adverse Effect or Parent Material Adverse Effect.
	(d) Restraints. No Restraint that would reasonably be expected to result, directly or indirectly, in any of the effects referred to in clauses (i) through (v) of paragraph (c) of this Section 6.02 shall be in effect.

	(a) Representations and Warranties. (i) The representations and warranties of Parent and Sub contained in Section 3.02(b) of this Agreement that are qualified as to materiality or by reference to Parent Material Adverse Effect or Parent Material Adverse Change shall be true and correct, and such representations and warranties of Parent that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date and (ii) all other representations and warranties of Parent contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date, and except further, in the case of this clause (ii), to the extent that the facts or matters as to which such representations and warranties are not so true and correct as of such dates (without giving effect to any qualifications or limitations as to materiality or Parent Material Adverse Effect or Parent Material Adverse Change set forth therein), individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. The Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent to such effect.
	(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent to such effect.

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	(a) by mutual written consent of Parent, Sub and the Company;
	(b) by either Parent or the Company:

	(i) if the Merger shall not have been consummated on or before March 31, 2006; provided, however, that the right to terminate this Agreement under this Section 7.01(b)(i) shall not be available to any party whose wilful breach of a representation or warranty in this Agreement or whose other action or failure to act has been a principal cause of or resulted in the failure of the Merger to be consummated on or before such date;
	(ii) if any Restraint having any of the effects set forth in Section 6.01(d) shall be in effect and shall have become final and nonappealable; or
	(iii) if the Shareholder Approval shall not have been obtained at the Shareholders’ Meeting duly convened therefor or at any adjournment or postponement thereof;

	(c) by Parent (i) if the Company shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 6.02(a) or 6.02(b) and (B) is incapable of being cured by the Company within 30 calendar days following receipt of written notice of such breach or failure to perform from Parent or (ii) if any Restraint having the effects referred to in clauses (i) through (v) of Section 6.02(c) shall be in effect and shall have become final and nonappealable;
	(d) by the Company, if Parent shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 6.03(a) or 6.03(b) and (B) is incapable of being cured by Parent within 30 calendar days following receipt of written notice of such breach or failure to perform from the Company;
	(e) by Parent, in the event that prior to the obtaining of the Shareholder Approval (i) a Company Adverse Recommendation Change shall have occurred or (ii) the Board of Directors of the Company fails publicly to reaffirm its adoption and recommendation of this Agreement, the Merger or the other transactions contemplated by this Agreement within ten business days of receipt of a written request by Parent to provide such reaffirmation following a Takeover Proposal; or
	(f) by the Company in accordance with the terms and subject to the conditions of Section 4.02(b).

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	Johnson & Johnson
	One Johnson & Johnson Plaza
	New Brunswick, NJ 08933
	Telecopy No.: (732) 524-2788
	Attention: Office of General Counsel

	Cravath, Swaine & Moore LLP
	Worldwide Plaza
	825 Eighth Avenue
	New York, NY 10019
	Telecopy No.: (212) 474-3700
	Attention: Robert I. Townsend, III, Esq.

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	Guidant Corporation
	111 Monument Circle, 29th Floor
	Indianapolis, IN 46204
	Telecopy No.: (317) 971-2119
	Attention: General Counsel

	Skadden, Arps, Slate, Meagher & Flom LLP
	333 West Wacker Drive
	Chicago, Illinois 60606
	Telecopy No.: (312) 407-0411
	Attention: Charles W. Mulaney, Jr., Esq.

	(a) an “Affiliate” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person;
	(b) “Knowledge” of any person that is not an individual means, with respect to any matter in question, the actual knowledge of such person’s executive officers after making due inquiry of the current Tier I Employees and Tier II Employees having primary responsibility for such matter;
	(c) “Material Adverse Change” or “Material Adverse Effect” means any change, effect, event, occurrence, state of facts or development which individually or in the aggregate would reasonably be expected to result in any change or effect, that is materially adverse to the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided, that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Change or Material Adverse Effect: (A) any change, effect, event, occurrence, state of facts or development (1) in the financial or securities markets or the economy in general, (2) in the industries in which the Company or any of its Subsidiaries operates in general, to the extent that such change, effect, event, occurrence, state of facts or development does not disproportionately impact the Company or any of its Subsidiaries, or (3) resulting from any Divestiture required to be effected pursuant to the terms of this Agreement or (B) any failure, in and of itself, by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions (it being understood that the facts or occurrences giving rise or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect or a Material Adverse Change);
	(d) “Parent Material Adverse Change” or “Parent Material Adverse Effect” means any change, effect, event, occurrence, state of facts or development which individually or in the aggregate would reasonably be expected to result in any change or effect, that is materially adverse to the business, financial condition or results of operations of Parent and its Subsidiaries, taken as a whole; provided, that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Parent Material Adverse Change or Parent Material Adverse Effect: (A) any change, effect, event, occurrence, state of facts or development (1) in the financial or securities markets or the economy in general, (2) in the industries in which Parent or any of its Subsidiaries operates in general, to the extent that such change, effect, event, occurrence, state of facts or development does not disproportionately impact Parent or any of its Subsidiaries or (3) resulting from any Divestiture required to be effected pursuant to the terms of this Agreement or (B) any failure, in and of itself, by Parent to meet any internal or published projections, forecasts or revenue or earnings predictions (it

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	being understood that the facts or occurrences giving rise or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to be, a Parent Material Adverse Effect or a Parent Material Adverse Change);
	(e) “person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity; and
	(f) a “Subsidiary” of any person means another person, an amount of the voting securities, other voting rights or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person.

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	JOHNSON & JOHNSON,

	by	/s/ Robert J. Darretta

	Name: Robert J. Darretta
	Title: Vice Chairman and Chief Financial Officer
	SHELBY MERGER SUB, INC.,

	by	/s/ James R. Hilton

	Name: James R. Hilton
	Title: President
	GUIDANT CORPORATION,

	by	/s/ Ronald W. Dollens

	Name: Ronald W. Dollens
	Title: President and Chief Executive Officer

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Term
Acquisition Agreement		Section 4.02(b)
Actions		Section 4.01(d)
Adjusted Option		Section 5.04(a)
Affiliate		Section 8.03(a)
Agreement		Preamble
Alza		Section 3.02(h)
Antitrust Filings		Section 5.03
Articles of Merger		Section 1.03
Average Parent Stock Price		Section 5.04(h)
Cash Portion		Section 2.01(c)
Cash Portion Option Exchange Multiple		Section 5.04(g)
Certificate		Section 2.01(c)
Closing		Section 1.02
Closing Date		Section 1.02
Closing Price		Section 2.02(e)
Code		2.02(j)
Commonly Controlled Entity		Section 3.01(l)
Company		Preamble
Company Adverse Recommendation Change		Section 4.02(b)
Company Articles		Section 1.05
Company Benefit Agreements		Section 3.01(g)
Company Benefit Plans		Section 3.01(l)
Company By-laws		Section 3.01(a)
Company Common Stock		Recitals
Company Disclosure Schedule		Section 3.01
Company Notes		Section 4.01(a)
Company Pension Plan		Section 3.01(l)
Company Preferred Stock		Section 3.01(c)
Company Restricted Stock		Section 3.01(c)
Company Rights		Section 3.01(v)
Company SEC Documents		Section 3.01(e)
Company Series A Preferred Stock		Section 3.01(c)
Company Stock-Based Awards		Section 3.01(c)
Company Stock Options		Section 3.01(c)
Company Stock Plans		Section 3.01(c)
Company Termination Fee		Section 5.06(c)
Company Welfare Plan		Section 3.01(l)
Confidentiality Agreement		Section 5.02
Continuing Employees		Section 5.11(a)
Contract		Section 3.01(d)
EC Merger Regulation		Section 3.01(d)
Effective Time		Section 1.03
Environmental Laws		Section 3.01(j)
ERISA		Section 3.01(j)
ESPP		Section 3.01(c)
Excess Distribution		Section 4.01(d)
Exchange Act		Section 3.01(d)

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Term
Exchange Agent		Section 2.02(a)
Exchange Fund		Section 2.02(a)
Exchange Ratio		Section 2.01(c)
FDA		Section 3.01(u)
FDCA		Section 3.01(j)
Filed Company SEC Documents		Section 3.01
Filed Parent SEC Documents		Section 3.02
Form S-4		Section 5.01
GAAP		Section 3.01(e)
Governmental Entity		Section 3.01(d)
Hazardous Materials		Section 3.01(j)
HSR Act		Section 3.01(d)
HSR Filing		Section 5.03
IBCL		Section 1.01
Intellectual Property Rights		Section 3.01(p)
IRS		Section 3.01(l)
Key Personnel		Section 3.01(g)
Knowledge		Section 8.03(b)
Law		Section 3.01(d)
Legal Provisions		Section 3.01(j)
Liens		Section 3.01(b)
Material Adverse Change		Section 8.03(c)
Material Adverse Effect		Section 8.03(c)
Medical Device		Section 3.01(u)
Merger		Recitals
Merger Consideration		Section 2.01(c)
New Rights Plan		Section 5.13
Non-U.S. Subsidiary		Section 4.01(d)
Notice of Superior Proposal		Section 4.02(b)
NYSE		2.02(e)
Order		3.01(d)
Original Merger Agreement		Preamble
Paragraph 6		3.01(r)
Parent		Preamble
Parent Common Stock		Recitals
Parent Disclosure Schedule		Section 3.02
Parent Material Adverse Change		Section 8.03(d)
Parent Material Adverse Effect		Section 8.03(d)
Parent Preferred Stock		Section 3.02(h)
Parent SEC Documents		Section 3.02(c)
Parent Termination Fee		Section 5.06(b)
Permits		Section 3.01(j)
Person		Section 8.03(e)
Post-Signing Returns		Section 4.01(d)
Primary Company Executives		Section 3.01(m)
Proxy Statement		Section 3.01(d)
Representatives		Section 4.02(a)
Release		Section 3.01(j)
Restraints		Section 6.01(d)
Rights Agreement		Section 3.01(v)
SEC		Section 3.01(d)

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Term
Securities Act		Section 3.01(e)
Shareholder Approval		Section 3.01(q)
Shareholders’ Meeting		Section 5.01(b)
Significant Subsidiary		Section 3.01(a)
Social Security Act		Section 3.01(u)
SOX		Section 3.01(e)
Stock Portion		Section 2.01(c)
Sub		Preamble
Sub Articles		Section 3.02(a)
Subsidiary		Section 8.03(g)
Superior Proposal		Section 4.02(a)
Surviving Corporation		Section 1.01
Takeover Proposal		Section 4.02(a)
tax		Section 3.01(n)
taxing authority		Section 3.01(n)
tax return		Section 3.01(n)
Tier I Employee		Section 3.01(g)
Tier II Employee		Section 3.01(g)

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“The shares represented by this certificate were issued pursuant to a transaction to which Rule 145 promulgated under the Securities Act of 1933 applies. The shares have not been acquired by the holder with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933. The shares may not be sold, pledged or otherwise transferred except in accordance with Rule 145, pursuant to a Registration Statement under the Securities Act of 1933 or in accordance with an exemption from the registration requirements of the Securities Act of 1933.”

	Very truly yours,

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[Name]	[Date]

	Very truly yours,

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	Very truly yours,
	/s/       J.P. Morgan Securities Inc.
	J.P. MORGAN SECURITIES INC.

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	November 14, 2005

	i)	reviewed certain publicly available financial statements and other information of the Company and Buyer;

	ii)	reviewed certain internal financial statements and other financial and operating data concerning the Company prepared by the management of the Company;

	iii)	reviewed certain financial projections prepared by the management of the Company;

	iv)	reviewed the pro forma impact of the Merger on Buyer’s earnings per share;

	v)	discussed the past and current operations and financial condition and the prospects of the Company and Buyer, with senior executives of the Company and Buyer, respectively;

	vi)	discussed the strategic rationale for the Merger with senior executives of the Company;

	vii)	reviewed the reported prices and trading activity for Company Common Stock and Buyer Common Stock;

	viii)	compared the financial performance of the Company and the prices and trading activity of Company Common Stock with that of certain other comparable publicly-traded companies and their securities;

	ix)	compared the financial performance of Buyer and the prices and trading activity of Buyer Common Stock with that of certain other comparable publicly-traded companies and their securities;

	x)	participated in discussions among representatives of the Company and Buyer and their financial and legal advisors;

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	xi)	reviewed the draft Merger Agreement, dated November 12, 2005 and Agreement and Plan of Merger dated December 15, 2004 between Buyer, Acquisition Sub and the Company (the “Original Merger Agreement”) and certain related documents; and

	xii)	performed such other analyses and considered such other factors as we have deemed appropriate.

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	Very truly yours,
	MORGAN STANLEY & CO. INCORPORATED
	By: /s/ Peter N. Crnkovich

	Peter N. Crnkovich
	Managing Director

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	JOHNSON & JOHNSON,

	By:	/s/ W.C. Weldon

	Name: W.C. Weldon
	Title: Chairman, Board of Directors and Chief
	Executive Officer

Signature		Title		Date
/s/ W.C. Weldon (W.C. Weldon)		Chairman, Board of Directors and Chief Executive Offer, and Director (Principal Executive Officer)		December 23, 2005
* (R. J. Darretta)		Vice Chairman, Board of Directors; Chief Financial Officer and Director (Principal Financial Officer)		December 23, 2005
* (S. J. Cosgrove)		Controller (Principal Accounting Officer)		December 23, 2005
* (M. S. Coleman)		Director		December 23, 2005
* (J. G. Cullen)		Director		December 23, 2005
* (A. D. Jordan)		Director		December 23, 2005
* (A. G. Langbo)		Director		December 23, 2005
* (S. L. Lindquist)		Director		December 23, 2005
* (L. F. Mullin)		Director		December 23, 2005
* (S. S. Reinemund)		Director		December 23, 2005
* (D. Satcher)		Director		December 23, 2005

*By:	/s/ Steven M. Rosenberg

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Exhibits
	2	.1		Amended and Restated Agreement and Plan of Merger dated as of November 14, 2005, among Johnson & Johnson, Shelby Merger Sub, Inc. and Guidant Corporation (included as Annex 1 to the proxy statement/prospectus which is a part of this Registration Statement).
	4	.1*		Provisions of the Restated Certificate of Incorporation of Johnson & Johnson dated May 21, 1996, that define the rights of security holders of Johnson & Johnson (incorporated by reference to Exhibit 3(a)(iii) to Johnson & Johnson’s Annual Report on Form 10-K for the year ended December 29, 1996).
	4	.2*		Provisions of the By-laws of Johnson & Johnson, as amended effective April 23, 1999, that define the rights of security holders of Johnson & Johnson (incorporated by reference to Exhibit 3 to Johnson & Johnson’s Quarterly Report on Form 10-Q for the quarterly period ended July 4, 1999).
	5	.1		Opinion of Philip P. Crowley, Assistant General Counsel of Johnson & Johnson, regarding the legality of the securities being issued.
	23	.1*		Consent of PricewaterhouseCoopers LLP (incorporated by reference to Exhibit 23.1 of Johnson & Johnson’s Post-Effective Amendment No. 1 to this Registration Statement filed on December 6, 2005).
	23	.2*		Consent of Ernst & Young LLP (incorporated by reference to Exhibit 23.2 of Johnson & Johnson’s Post-Effective Amendment No. 1 to this Registration Statement filed on December 6, 2005).
	23	.3		Consent of Philip P. Crowley, Assistant General Counsel of Johnson & Johnson (included in Exhibit 5.1).
	23	.5		Consent of J.P. Morgan Securities Inc. (included in Annex 2 to the proxy statement/prospectus which is part of this Registration Statement)
	23	.6		Consent of Morgan Stanley & Co. Incorporated. (included in Annex 3 to the proxy statement/prospectus which is part of this Registration Statement).
	24	.1**		Power of Attorney.
	99	.1		Request for Admittance/Proxy Card of Guidant Corporation.

*	Incorporated by reference.

**	Previously included on the signature page of this Registration Statement filed on February 16, 2005.