-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WBKmNirla3zR6iRS8fUGEm0NFWGsuT1i9dlM6LR8PG8GEdFzWQLom/EmbFwKOZv0 3+R8FW0FWj9YYVeQjLv7IA== /in/edgar/work/0000909518-00-000711/0000909518-00-000711.txt : 20001114 0000909518-00-000711.hdr.sgml : 20001114 ACCESSION NUMBER: 0000909518-00-000711 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000929 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILSON GREATBATCH TECHNOLOGIES INC CENTRAL INDEX KEY: 0001114483 STANDARD INDUSTRIAL CLASSIFICATION: [3690 ] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-16137 FILM NUMBER: 760326 BUSINESS ADDRESS: STREET 1: 10000 WEHRLE DR CITY: CLARENCE STATE: NY ZIP: 14031 BUSINESS PHONE: 7167596901 10-Q 1 0001.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarter Ended September 29, 2000 Commission File Number 1-16137 WILSON GREATBATCH TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware 16-1531026 (State of Incorporation) (I.R.S. Employer Identification No.) 10,000 Wehrle Drive Clarence, New York 14031 (Address of principal executive offices) (Zip Code) (716) 759-6901 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [__] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of October 31, 2000 Common stock, $.001 par value per share 18,840,447 shares
WILSON GREATBATCH TECHNOLOGIES, INC. TABLE OF CONTENTS FOR FORM 10-Q QUARTER ENDED SEPTEMBER 29, 2000
PAGE COVER PAGE..............................................................................................1 TABLE OF CONTENTS.......................................................................................2 PART I - FINANCIAL INFORMATION..........................................................................3 ITEM 1. Financial Statements...........................................................................3 Condensed Consolidated Balance Sheets..........................................................3 Condensed Consolidated Statements of Operations................................................4 Condensed Consolidated Statements of Cash Flows................................................5 Notes to Condensed Consolidated Financial Statements...........................................6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..........9 ITEM 3. Quantitative and Qualitative Disclosures About Financial Market Risk..........................17 PART II - OTHER INFORMATION............................................................................17 ITEM 1. Legal Proceedings.............................................................................17 ITEM 2. Changes in Securities and Use of Proceeds.....................................................17 ITEM 3. Defaults Upon Senior Securities...............................................................18 ITEM 4. Submission of Matters to a Vote of Security Holders...........................................18 ITEM 5. Other Information.............................................................................18 ITEM 6. Exhibits and Reports on Form 8-K..............................................................18 SIGNATURE..............................................................................................20 EXHIBIT INDEX..........................................................................................21
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
September 29, December 31, 2000 1999 ------------- ------------ ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents ........................................................ $ 3,220 $ 3,863 Accounts receivable, net of allowance for doubtful accounts of $317 and $219 as of September 29, 2000 and December 31, 1999, respectively ......................... 15,757 11,016 Inventories ...................................................................... 14,369 13,583 Other current assets ............................................................. 5,018 4,908 --------- --------- Total Current Assets ....................................... 38,364 33,370 Property, plant & equipment, net ................................................. 36,987 33,557 Intangible assets, net ........................................................... 107,842 112,902 Deferred tax asset ............................................................... 7,828 7,828 Other assets ..................................................................... 1,865 2,122 --------- --------- Total Assets ............................................... $ 192,886 $ 189,779 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................................. $ 2,093 $ 2,385 Accrued liabilities .............................................................. 10,432 7,139 Current maturities of long-term obligations ...................................... 4,063 6,225 --------- --------- Total Current Liabilities ................................... 16,588 15,749 Long-term obligations ............................................................ 121,891 126,988 Deferred compensation ............................................................ 630 635 --------- --------- Total Liabilities .......................................... 139,109 143,372 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock ..................................................................... 13 12 Subscribed common stock .......................................................... 1,684 1,684 Capital in excess of par value ................................................... 72,441 63,488 Retained deficit ................................................................. (18,620) (16,984) --------- --------- Subtotal ..................................................................... 55,518 48,200 Less treasury stock, at cost ..................................................... (57) (109) Less subscribed common stock receivable .......................................... (1,684) (1,684) --------- --------- Total Stockholders' Equity ................................. 53,777 46,407 --------- --------- Total Liabilities and Stockholders' Equity ................. $ 192,886 $ 189,779 ========= =========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except per share amounts) Three Months Ended Nine Months Ended ----------------------------------- ----------------------------------- Sept. 29, Oct. 1, Sept. 29, Oct. 1, 2000 1999 2000 1999 --------------- --------------- -------------- ---------------- REVENUES....................................... $ 23,256 $ 19,621 $ 69,840 $ 57,939 Cost of goods sold............................. 13,530 9,862 39,915 29,247 --------------- --------------- -------------- ---------------- Gross profit................................... 9,726 9,759 29,925 28,692 Gross profit as a percentage of revenues ...... 42% 50% 43% 50% Selling, general and administrative expenses... 3,061 2,334 8,193 7,458 Research, development and engineering costs, net....................................... 2,456 2,347 7,502 7,477 Intangible amortization........................ 1,628 1,639 4,895 4,905 --------------- --------------- -------------- ---------------- 2,581 3,439 9,335 8,852 Interest expense............................... 3,879 3,458 11,666 9,977 Other (income) expense......................... (70) 55 1 184 --------------- --------------- -------------- ---------------- Loss before income tax (1,228) (74) (2,332) (1,309) Income tax benefit............................. (368) (22) (696) (343) --------------- --------------- -------------- ---------------- Loss before cumulative effect of accounting change.................................... (860) (52) (1,636) (966) Cumulative effect of accounting change, net of tax....................................... 0 0 0 (563) --------------- --------------- -------------- ---------------- NET LOSS....................................... $ (860) $ (52) $ (1,636) $ (1,529) =============== =============== ============== ================ Basic loss per share before cumulative effect of accounting change...................... $ (.07) $ .00 $ (.13) $ (.08) Basic loss per share........................... $ (.07) $ .00 $ (.13) $ (.12) Diluted loss per share before cumulative effect of accounting change............... $ (.07) $ .00 $ (.13) $ (.08) Diluted loss per share......................... $ (.07) $ .00 $ (.13) $ (.12) Weighted average shares outstanding Basic..................................... 12,971 12,511 12,705 12,465 Diluted................................... 12,971 12,511 12,705 12,465
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 4
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Nine Months Ended Ended Sept. 29, 2000 Oct. 1, 1999 ------------------- ----------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss............................................................. $ (1,636) $ (1,529) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization...................................... 9,678 8,941 Deferred financing costs........................................... 696 693 Deferred compensation.............................................. (354) (316) Deferred income taxes.............................................. 0 111 Loss on disposal of assets......................................... 0 4 Cumulative effect of accounting change............................. 0 563 Changes in operating assets and liabilities: Accounts receivable................................................ (3,798) 1,293 Inventories........................................................ 188 (160) Prepaid expenses and other assets.................................. 1,072 (897) Accounts payable................................................... (400) (677) Accrued liabilities................................................ 4,230 (3,219) Income taxes....................................................... (668) 81 ------------------- ----------------------- Net cash provided by operating activities........................ 9,008 4,888 ------------------- ----------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment......................... (3,865) (5,649) Proceeds from sale of property, plant and equipment.................. 0 5 Increase in intangible assets........................................ (267) (304) Decrease in other long term assets................................... 0 170 Cash provided in acquisition of subsidiary........................... 1,583 0 ------------------- ----------------------- Net cash used in investing activities............................ (2,549) (5,778) ------------------- ----------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings (repayments) under line of credit, net.................... (3,500) 2,000 Scheduled payments of long-term debt................................. (4,450) 0 Prepayments of long-term debt........................................ (2,025) (2,950) Acquisition earnout payment.......................................... 0 (2,764) (Purchase) Reissue of treasury stock................................. (127) 0 Issuance of capital stock............................................ 3,000 2,934 ------------------- ----------------------- Net cash used in financing activities............................ (7,102) (780) ------------------- ----------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS................................. (643) (1,670) Cash and cash equivalents, beginning of period....................... 3,863 4,140 ------------------- ----------------------- Cash and cash equivalents, end of period............................. $ 3,220 $ 2,470 =================== ======================= SUPPLEMENTAL CASH FLOW DATA: Cash paid during the period for interest ............................ $ 9,521 $ 9,064
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 5 WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS QUARTER ENDED SEPTEMBER 29, 2000 1. BASIS OF PRESENTATION The accounting policies used in preparing these statements are the same as those used in preparing the consolidated financial statements of Wilson Greatbatch Technologies, Inc., a holding company, and its wholly-owned subsidiary Wilson Greatbatch Ltd. (collectively, the "Company") for the year ended December 31, 1999. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's prospectus dated September 29, 2000. The foregoing balance sheet as of September 29, 2000, statements of operations for the three-months and nine-months ended September 29, 2000 and October 1, 1999 and statements of cash flows for the nine months ended September 29, 2000 and October 1, 1999 are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. The results of operations for the three-months and nine-months ended September 29, 2000 are not necessarily indicative of results to be expected for the entire year or for any other period. 2. INITIAL PUBLIC OFFERING On September 29, 2000, the Company commenced its initial public offering ("IPO") in which it initially sold 5,000,000 shares of common stock at a price of $16.00 per share. The net proceeds of the IPO, which the Company received on October 4, 2000, after deducting underwriting discounts and other expenses, were approximately $72.8 million. As the offering had not closed at the quarter-end, no entry for this stock sale has been recorded in the accompanying condensed consolidated balance sheet. The Company used the proceeds to pay down existing senior debt. In October 2000, the Company's underwriters exercised their option to purchase an additional 750,000 shares of common stock at $16.00 per share. This resulted in additional net proceeds, which the Company received on October 11, 2000, of $11.2 million after deducting underwriting discounts. The Company also used these proceeds to pay down senior debt. 3. ACQUISITION As noted in the Company's prospectus, on August 7, 2000, all of the capital stock of Battery Engineering, Inc. ("BEI"), a manufacturer of specialty batteries, was acquired in exchange for 339,856 shares of Company stock and the assumption of $2.7 million of indebtedness. The acquisition was recorded using the purchase method of accounting. Due to the insignificant effect on financial position and results of operations, no pro-forma data of this acquisition is required or presented. On October 20, 2000, we retired the $2.7 million in assumed indebtedness using a portion of the proceeds from the sale of Company stock to the former parent of BEI. This portion of the proceeds had been held in escrow for the purpose of retiring this indebtedness. 6 4. INVENTORIES Inventories consist of the following:
September 29, December 31, 2000 1999 ---------------------- --------------------- (unaudited) Raw material $7,373 $7,099 Work-in-progress 5,476 5,089 Finished goods 1,520 1,395 ---------------------- --------------------- Total $14,369 $13,583 ====================== =====================
5. INTANGIBLE ASSETS, NET Intangible assets consist of the following (in thousands):
September 29, December 31, 2000 1999 ---------------- ---------------- (unaudited) Goodwill, net of accumulated amortization of $3,294 and $2,229 $ 53,615 $ 53,944 Trademark and names, net of accumulated amortization of $2,241 and $1,685 27,419 27,975 Other Intangible Assets 26,808 30,983 ---------------- ---------------- Total $ 107,842 $ 112,902 ================ ================
6. COMPREHENSIVE INCOME For all periods presented, the Company's only component of comprehensive income is its net loss for those periods. 7. LOSS PER SHARE Basic loss per share is calculated by dividing the net loss for the period by weighted average number of shares outstanding during the period. Diluted loss per share is calculated by dividing the net loss for the period by the weighted average number of shares and potential common stock equivalents outstanding during the period, if dilutive, as computed under the "Treasury Stock" method. Potential common stock equivalents consist of shares of common stock issuable upon the exercise of stock options. During the three-month period and the nine-month period ended September 29, 2000, fully diluted weighted average shares exceeded basic weighted average shares by approximately 236,000 and 261,000 shares. During the three-month period and the nine-month period ended October 1, 1999, fully diluted weighted average shares exceeded basic weighted average shares by approximately 253,000 and 252,000 shares. The dilutive stock options were not included in the calculation of diluted loss per share for all periods presented because to do so would have been antidilutive. 7 8. BUSINESS SEGMENT INFORMATION The Company operates its business in two reportable segments: medical and commercial power sources. The medical segment designs and manufactures power sources, capacitors and components used in implantable medical devices, which are instruments that are surgically inserted into the body to provide diagnosis or therapy. The commercial power sources segment designs and manufactures non-medical power sources for use in aerospace, oil and gas exploration and oceanographic equipment. The Company's medical segment includes three product lines that have been aggregated because they share similar economic characteristics and similarities in the areas of products, production processes, types of customers, methods of distribution and regulatory environment. The three product lines are implantable power sources, capacitors and medical components. The reportable segments are separately managed, and their performance is evaluated based on income from operations. Management defines segment income from operations as gross profit less costs and expenses attributable to segment specific selling, general and administrative and research, development and engineering expenses. Non-segment specific selling, general and administrative, research, development and engineering expenses, interest expense, intangible amortization and non-recurring items are not allocated to reportable segments. Revenues from transactions between the two segments are not significant. The accounting policies of the segments are the same as those described and referenced in Note 1. All dollars are in thousands.
Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 29, October 1, September 29, October 1, 2000 1999 2000 1999 ------------------ ------------------ -------------------- ------------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Medical $19,224 $17,295 $60,970 $50,649 Commercial power sources 4,032 2,326 8,870 7,290 ------------------ ------------------ -------------------- ------------------ Total revenues $23,256 $19,621 $69,840 $57,939 ================== ================== ==================== ================== Segment income from operations: Medical $6,546 $7,677 $21,243 $21,935 Commercial power sources 839 537 2,090 1,786 ------------------ ------------------ -------------------- ------------------ Total segment income from operations 7,385 8,214 23,333 23,721 Unallocated (8,613) (8,288) (25,665) (25,030) ------------------ ------------------ -------------------- ------------------ Loss before income taxes $(1,228) $(74) $(2,332) $(1,309) ================== ================== ==================== ==================
9. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In the first quarter of 2001, the Company plans to adopt Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives Instruments and Hedging Activities." This standard as amended will 8 require the Company to recognize all derivative financial instruments on the balance sheet at fair value with changes in fair value recorded to the statement of operations or comprehensive income, depending on the nature of the investment. The Company does not expect the adoption of the standard to have a material effect on the financial statements. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 101, as amended, is required to be adopted by the Company no later than the fourth quarter of fiscal year 2000. Although the Company has not fully assessed the implications of SAB 101, management does not believe the adoption of SAB 101 will have a significant impact on the Company's consolidated financial position, results of operations or cash flows. 10. SUBSEQUENT EVENT On October 26, 2000, the Company purchased $5.0 million face amount of its senior subordinated notes at 102, plus accrued interest. In addition, the Company purchased 127,532 shares of Company stock owned by the holder of the notes, at the initial public offering price of $16.00 per share. The stock had been issued in conjunction with the senior subordinated notes. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements (including the Notes thereto) included elsewhere herein. INTRODUCTION We are a leading developer and manufacturer of power sources, feedthroughs and wet tantalum capacitors used in implantable medical devices. We also develop and manufacture other components used in implantable medical devices. We leverage our core competencies in technology and manufacturing to develop and produce power sources for commercial applications that demand high performance and reliability. INITIAL PUBLIC OFFERING In October 2000 we completed our initial public offering. In that offering, we sold 5,750,000 shares of common stock and received net proceeds of approximately $84.0 million. All net proceeds were used to prepay senior debt. BEI ACQUISITION During the quarter ended September 29, 2000, we acquired all of the capital stock of Battery Engineering, Inc., or BEI, a small specialty battery manufacturer. We issued $5.1 million (339,856 shares) of our common stock and assumed $2.7 million in BEI indebtedness in exchange for the capital stock of BEI. We recorded the acquisition using the purchase method of accounting. The acquisition will allow us to expand our presence in the downhole and seismic surveying segments of the oil and gas market. 9 REVENUE AND EXPENSE COMPONENTS Revenues We derive revenues from the sale of medical and commercial products. Our medical revenues consist of sales of implantable power sources, capacitors and components. Our commercial revenues consist of sales of commercial power sources. A substantial part of our business is conducted with a limited number of customers. Guidant Corporation accounted for approximately 34% of our revenues and St. Jude Medical, Inc. accounted for approximately 32% of our revenues in the nine month period ended September 29, 2000. We have entered into long term supply agreements ranging from two to four years with most of our large customers. Our implantable power source revenues are derived from sales of batteries for pacemakers, implantable cardioverter defibrillators, or ICD's, and other implantable medical devices. The majority of our implantable power source customers contract with us to develop custom batteries to fit their product specifications. We are the sole provider of these products to many of our customers. We also record royalties as implantable power source revenues. These revenues are recognized based on the reported number of units sold. Since January 2, 1998, royalties have accounted for approximately 2.7% to 3.3% of our aggregate annual revenues. Currently, Medtronic, Inc. is our sole source of royalty fees. Although our license agreement with Medtronic, Inc. itself has no termination date, the patents from which we receive royalty payments from Medtronic, Inc. expire in all material respects in 2000. Thereafter, in the absence of new patents, we do not expect to receive any royalties to record as implantable power source revenues. Our capacitor revenues are derived from sales of our wet tantalum capacitors, which we developed for use in ICDs. In 1999 and the first nine months of 2000, we incurred start-up costs related to our capacitor operations of $5.7 million. We believe that this amount will represent substantially all of our start-up costs. We began selling our new wet tantalum capacitors commercially in the fourth quarter of 1999. We expect to enter into long term agreements of more than one year with our capacitor customers and add new customers in an effort to increase our capacitor revenues. Although there can be no assurance, we believe that our revenues in 2000 and 2001 from capacitor sales will grow at a higher rate than sales of our other medical products and that our capacitor program will become increasingly profitable in 2001. Our components revenues are derived from sales of feedthroughs, electrodes and other precision components principally used in pacemakers and ICDs. We also sell our components for use in other implantable medical devices, such as left ventricular assist devices, hearing assist devices, drug pumps, neurostimulators and other medical applications. Our commercial power source revenues are primarily derived from sales of batteries for use in oil and gas exploration, including recovery equipment, pipeline inspection gauges, down-hole pressure measurement systems and seismic surveying equipment. We also supply batteries to NASA for its space shuttle program and other demanding commercial applications. For each of our products, we recognize revenue when the products are shipped. We do not give warranties to our customers for our products and to date, returns have been immaterial. Although approximately 30% of our sales are outside the United States, all of our invoices are United States dollar denominated. Accordingly, we are not impacted by foreign currency fluctuations. In addition to product revenues, we also receive cash flows from royalty revenues and cost reimbursements for research, development and engineering conducted on behalf of some of our customers. 10 Expenses Cost of goods sold includes materials, labor and other manufacturing costs associated with the products we sell. We have included start-up costs associated with the production of our capacitors in cost of goods sold. As a result, costs associated with capacitors prior to the fourth quarter of 1999, when we began to commercially offer these products, were substantially in excess of revenue generated from capacitor sales. Selling, general and administrative expenses include salaries, non-manufacturing facility costs and patent-related expenses. Research, development and engineering expenses include costs associated with the design, development, testing, deployment and enhancement of our products. We record cost reimbursements from customers as an offset to research, development and engineering expenses. Other expenses primarily include amortization of intangible assets and interest expense. Interest expense is primarily related to indebtedness that we assumed in connection with (i) a July 1997 leveraged buyout transaction in which DLJ Merchant Banking Partners II, L.P. and some of its affiliates, collectively referred to herein as DLJ Merchant Banking, and members of our management formed our Company to acquire Wilson Greatbatch Ltd. and (ii) our August 1998 acquisition of Hittman Materials and Medical Components, Inc. referred to herein as the Hittman Acquisition. Interest expense will decrease significantly in future quarters based on our application of the net proceeds from our initial public offering to the assumed indebtedness. RESULTS OF OPERATIONS Revenues Revenues for the quarter ended September 29, 2000 were $23.3 million, a $3.7 million, or 19%, increase from $19.6 million for the third quarter of 1999. This increase was primarily due to revenues from our line of capacitors, launched commercially in the fourth quarter of 1999, and the inclusion of revenues of the former BEI, acquired in August 2000. Revenues for the first nine months of 2000 were $69.8 million, an $11.9 million, or 21%, increase from $57.9 million for the first nine months of 1999. This increase was primarily due to capacitor revenues of $9.7 million for the first nine months of 2000, an increase of $8.2 million, or 536%, from $1.5 million for the first nine months of 1999. Implantable power source revenues for the quarter ended September 29, 2000 were $9.5 million, a decrease of $0.6 million, or 7%, from $10.1 million for the third quarter of 1999. Sales of cells for pacemakers were $5.0 million for the quarter ended September 29, 2000, an increase of $0.4 million, or 9.5%, from $4.6 million for the third quarter of 1999. Sales of cells for ICDs for the three months ended September 29, 2000 were $3.7 million, a $1.1 million, or 24%, decrease from $4.8 million for the third quarter of 1999. This decrease was primarily due to an industry-wide design change that resulted in ICDs using one battery instead of two. Management believes that the effects of this design change on sales subsequent to the quarter ended September 29, 2000 will be minimal because virtually all new ICDs use one cell. Implantable power source revenues for the first nine months of 2000 were $30.0 million, an increase of $0.4 million, or 1%, from $29.6 million for the first nine months of 1999. Sales of cells for pacemakers were $16.8 million for the nine months ended September 29, 2000, an increase of $2.2 million, or 14.9%, from $14.6 million for the first nine months of 1999. This increase was primarily due to an order from a European device manufacturer in response to a 11 large order from a national health agency partially offset by the third party acquisition of one of our customers and the ensuing termination of that customer's pacemaker sales operations. ICD sales for the nine months ended September 29, 2000 were $10.3 million, a decrease of $2.1 million, or 17%, from $12.4 million for the first nine months of 1999. This decrease was primarily due to the industry-wide design change in ICD devices referred to above. Capacitor revenues for the quarter ended September 29, 2000 were $2.8 million, an increase of $2.3 million, or 412%, from $0.5 million for the third quarter of 1999. Capacitor revenues were $9.7 for the first nine months of 2000, an $8.2 million, or 536% increase from $1.5 million for the first nine months of 1999. The increases for the three and nine month periods were primarily due to the commercial sales of our new wet tantalum capacitors beginning in the fourth quarter of 1999. Sales of medical components were $7.0 million for the quarter ended September 29, 2000, an increase of $0.4 million, or 5%, from $6.6 million for the third quarter of 1999. Medical components revenues for the first nine months of 2000 were $21.3 million, an increase of $1.8 million, or 9%, from $19.5 million for the first nine months of 1999. The increases for the three and nine month periods were primarily due to the sale of a greater number of implantable medical devices by our customers, as well as our sales of a broader range of components. Commercial power source revenues for the quarter ended September 29, 2000 were $4.0 million, an increase of $1.7 million, or 73%, from $2.3 million for the third quarter of 1999. For the first nine months of 2000, commercial power source revenues were $8.9 million, an increase of $1.6 million, or 22%, from $7.3 million for the first nine months of 1999. The increases for the three and nine periods were primarily due to the inclusion of sales from the former BEI. The BEI acquisition was completed in August 2000 and added $1.4 million in revenues for both the three and nine month periods. Gross profit Gross profit for the quarter ended September 29, 2000 was $9.7 million, a decrease of $0.1 million, or 1%, from $9.8 million for the third quarter of 1999. As a percentage of total revenues, gross profit for the third quarter of 2000 declined to 42% from 50% for the third quarter of 1999. The decrease in gross profit as a percentage of total revenues is primarily due to a lower percentage of total revenues from established product lines with no accompanying start-up costs, such as power sources, versus a higher percentage of total revenues from newer products, with accompanying start-up costs, primarily capacitors. In addition, sales of lower margin products, such as medical components and commercial power sources, have increased at a faster rate than sales of historically higher margin implantable power source products. For the first nine months of 2000, gross profit was $29.9 million, an increase of $1.2 million, or 4%, from $28.7 million for the first nine months of 1999. As a percentage of total revenues, gross profit for the first nine months of 2000 was 43%, a decline from 50% for the first nine months of 1999. For the first nine months of 2000 as compared with the first nine months of 1999, start up costs related to $8.2 million in capacitor sales decreased gross profit by $0.1 million. In addition, sales of lower margin products, such as medical components and commercial power sources, have increased at a faster rate than sales of historically higher margin implantable power source products. Selling, general and administrative expenses Selling, general and administrative expenses for the quarter ended September 29, 2000 were $3.1 million, an increase of $0.8 million, or 31%, from $2.3 million for the third quarter of 1999. This increase was primarily due to: 12 the cessation of a series of temporary cost containment measures initiated in 1999, such as salary reductions, shortened work weeks and reductions in discretionary spending; and the inclusion of the selling, general and administrative expenses of the former BEI. Severance costs for certain administrative personnel at the former BEI were approximately $0.2 million for the quarter ended September 29, 2000. As a percentage of revenues, selling, general and administrative expenses (after excluding the effects of the BEI acquisition) were 12% for both the third quarter of 2000 and 1999. For the first nine months of 2000, selling, general and administrative expenses were $8.2 million, an increase of $0.7 million, or 10%, from $7.5 million for the first nine months of 1999. Excluding the effects of the former BEI acquisition, selling, general and administrative expenses as a percentage of revenues declined to 11% for the first nine months of 2000 as compared to 13% for the first nine months of 1999. The decline was primarily due to the sharp increase in capacitor sales for the first nine months of 2000 compared to more constant period to period selling, general and administrative expenses . Research, development and engineering expenses Research, development and engineering expenses for the quarter ended September 29, 2000 were $2.5 million, an increase of $0.2 million, or 5%, from $2.3 million for the third quarter of 1999. Research, development and engineering expenses were $7.5 million for both the first nine months of 2000 and 1999. As a percentage of revenues, research, development and engineering expenses declined to 11% for the nine months of 2000 from 13% for the first nine months of 1999. The decline was primarily due the sharp increase in capacitor sales for the first nine months of 2000 compared to more constant period to period research, development and engineering expenses. Research, development and engineering spending to date in 2000 included: the development of several proprietary cells for implantable medical applications; research on future generations of implantable cells; and the development of our new line of rechargeable lithium ion cells. Other expenses Intangible amortization was $1.6 million for both the third quarter of 2000 and 1999 and was $4.9 million for both the first nine months of 2000 and 1999. Interest expense was $3.9 million for the quarter ended September 29, 2000, an increase of $0.4 million, or 12%, from $3.5 million for the third quarter of 1999. For the first nine months of 2000, interest expense was $11.7 million, an increase of $1.7 million, or 17%, from $10.0 million for the first nine months of 1999. For both the three and nine month periods, the increases were primarily due to higher interest rates. Management believes interest expense will decrease significantly going forward due to the application of approximately $84.0 million, in net proceeds from our recent initial public offering, to our outstanding debt. For the quarter ended September 29, 2000, there was other income of $0.1 million as compared to other expense of $0.1 million for the third quarter of 1999. For the first nine months of 2000, other expense was $0 as compared to $0.2 million for the first nine months of 1999. The difference in the amounts for the periods in 2000 and 1999 were primarily due to our receipt of a grant from a state economic development authority in the amount of $0.3 million in 2000, partially off-set by expenses associated with the acquisition of the former BEI. For the first nine months of 1999, the cumulative effect of the adoption of SOP 98-5, net of taxes, was a $0.6 million expense. 13 Provision for income taxes Our effective tax rate was 30% for the quarters ended September 29, 2000 and October 1, 1999. Our effective tax rate increased to 30% for the first nine months of 2000 from 26% for the first nine months of 1999. This increase was primarily due to the decrease in state tax credits available to us for the first nine months of 2000 compared to the first nine months of 1999. Our effective tax rate of 30% differs from the federal statutory rate of 35% due to the effect of state taxes, and federal and state tax credits. Management currently estimates that the year 2000 effective tax rate will remain at 30%. Net loss As a result of the start-up costs related to capacitors, severance costs and higher interest costs, the net loss for the quarter ended September 29, 2000 increased to $(0.9) million from a net loss of $(0.1) million in the third quarter of 1999. Net loss per share was $(.07) for the quarter ended September 29, 2000 as compared to $.00 for the third quarter of 1999. For the first nine months of 2000, the net loss and loss per share were $(1.7) million and $(.13), respectively, as compared to $(1.5) million and $(.12), respectively, for the first nine months of 1999. LIQUIDITY AND CAPITAL RESOURCES Since inception, we have funded our operations primarily from cash generated by our operations. We financed the July 1997 leveraged buyout transaction and the Hittman Acquisition through a combination of borrowings and private sales of our common stock. Net proceeds from financing activities from January 1, 1997 through September 29, 2000 included: o In connection with the July 1997 leveraged buyout transaction we issued $25.0 million principal amount of 13% senior subordinated notes, entered into a $10.0 million revolving line of credit and incurred $50.0 million of debt in senior Term A and Term B loans. Net proceeds from these borrowings totaled $71.8 million. We also received a $45.3 million equity investment from DLJ Merchant Banking, various members of our senior management and other investors. o In connection with the Hittman Acquisition, we incurred an additional $60.0 million of debt in Term A and Term B loans and increased our revolving line of credit up to a maximum of $20.0 million. We also received a $16.5 million equity investment from DLJ Merchant Banking, various members of our senior management and other investors. o In August 2000, we purchased all of the capital stock of BEI, a manufacturer of specialty batteries, by issuing $5.1 million in Company stock and assuming $2.7 million in BEI indebtedness. At the same time, the former parent of BEI purchased an additional $3.0 million in Company stock. We applied the net proceeds from our initial public offering to the Term A loan and Term B loans. As of October 20, 2000, there was $25.0 million principal amount outstanding under our 13% senior subordinated notes, $6.2 million outstanding under the Term A loan facility and $9.0 million outstanding under the Term B loan facility. As of November 1, 2000, the weighted average interest rate for our Term A loans was 10.2% and the weighted average interest rate for our Term B loans was 10.5%. 14 Our revolving line of credit is with the same lending syndicate that provided financing for the Hittman Acquisition and allows us to borrow up to $13.0 million. If we meet our financial targets, including the debt to EBITDA ratio set forth in our credit agreement, the maximum availability will increase after December 31, 2000 to $20.0 million. The line of credit bears interest at prime plus 2.25% or LIBOR plus 3.5%, at our option, and expires on September 30, 2004. As of September 29, 2000, $0.8 million was outstanding under this line of credit and the effective rate was 11.75%. The line of credit is secured by our accounts receivable and inventories and requires us to comply with various quarterly financial covenants, including covenants related to EBITDA and ratios of leverage, interest and fixed charges as they relate to EBITDA. In 1999, we failed to fully comply with the financial covenants required by our line of credit. In November 1999, we entered into a waiver and amendment with our lenders which, among other things, waived our non-compliance with financial covenants contained in the credit agreement. In February 2000, our credit agreement was again amended to change provisions governing the applicable interest rates and financial covenants. At September 29, 2000, we were in full compliance with the financial covenants under the line of credit. As of September 29, 2000, we had cash and cash equivalents of $3.2 million. We have historically generated positive cash flow from operations. Cash generated by operating activities for the nine months ended September 29, 2000 was $9.0 million as compared to $4.9 million for the nine months ended September 30, 1999. Cash was positively impacted in the first nine months of 2000 by the receipt of state tax credits and lower incentive compensation payments relative to the first nine months of 1999. Additionally, cash was positively impacted in the first nine months of 2000 by a restructuring of LIBOR contracts to avoid an increase in interest rates brought on by Year 2000 concerns. This had the effect of increasing cash interest payments in the fourth quarter of 1999 and lowering cash interest payments in the first quarter of 2000. Cash was negatively impacted in the first nine months of 2000 by an increase in receivables of $3.8 million in the nine months ended September 29, 2000. This was primarily the result of a $2.8 million escrow receivable for the purchase of stock by the former parent of BEI. Cash used in investing activities was $2.5 million and $5.8 million for the nine months ended September 29, 2000 and October 1, 1999, respectively. Capital expenditures were $3.9 million and $5.6 million for the nine months ended September 29, 2000 and October 1, 1999, respectively. The acquired assets of the former BEI included approximately $1.6 million in cash and cash equivalents. Cash used in financing activities was $7.1 million and $0.8 million for the nine months ended September 29, 2000 and October 1, 1999, respectively. In the nine months ended October 1, 1999, we made a payment of $2.8 million as a result of the achievement of certain 1998 earnings targets in connection with the Hittman acquisition. No such payments were due in 2000. Repayments of borrowings under our line of credit and prepayments or repayments of regularly-scheduled long-term debt payments were $10.0 million and $1.0 million for the nine months ended September 29, 2000 and October 1, 1999, respectively. The increase in prepayments and repayments of our regularly-scheduled long-term debt payments and paydown in our revolving line of credit in the first nine months of 2000 is due to the increase in cash from operating activities in 2000 over 1999, lower capital expenditures in 2000 relative to 1999 and the cash acquired in the BEI acquisition. We expect to incur capital expenditures of approximately $5.3 million in 2000, $3.2 million of which we anticipate will be used for continued development of our capacitor product line and $2.1 million of which we anticipate will be used for routine recurring capital expense obligations. As of September 29, 2000, we had incurred $3.9 million of capital expenditures in 2000. 15 Although it is difficult for us to predict future liquidity requirements, we believe that our existing cash balances and cash equivalents, cash from operations and funding sources for working capital purposes will be sufficient to finance our operations and planned capital expenditures for the next two years. Thereafter, we may require additional funds to support our working capital requirements or for other purposes and may seek additional funds through public or private equity or debt financing or from other sources. There can be no assurance that additional financing will be available to us or, if available, that it can be obtained on a timely basis or on terms acceptable to us. INFLATION We do not believe that inflation has had a significant effect on our operations to date. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In 2001, we plan to adopt Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives Instruments and Hedging Activities." This standard will require us to recognize all derivative financial instruments on our balance sheet at fair value with changes in fair value recorded to the statement of operations or comprehensive income, depending on the nature of the investment. Because we believe our interest rate cap agreements are our only derivative financial instruments, we do not expect the adoption of the standard to have a material effect on our financial statements. FORWARD-LOOKING STATEMENTS Certain written and oral statements made or incorporated by reference from time to time by us or our representatives are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, performance or achievements, and may contain the words "expect," "intend," "plan," "anticipate," "estimate," "believe," "will be," "will continue," "will likely result," and similar expressions. Statements by us in this report that contain forward-looking statements include, but are not limited to, discussions regarding future market conditions and the effect of such conditions on our future results of operations, and future uses of, and requirements for, financial resources. Such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, dependence upon a limited number of customers, product obsolescence, inability to market current or future products, pricing pressures from customers, harm to our reputation for quality, fluctuating operating results, failure to protect our intellectual property rights, intellectual property claims, product liability claims, inability to integrate acquisitions, unsuccessful expansion into new markets, inability to obtain licenses to key technology, regulatory changes or consolidation in the healthcare industry, costly environmental regulations, volatility in the oil and gas industry and various other matters many of which are beyond our control. The risks included here are not exhaustive. Other sections of this report and our filings with the Securities and Exchange Commission include additional factors that could adversely impact our business and financial performance. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based. 16 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT FINANCIAL MARKET RISK. Our major financial market risk exposure is to changing interest rates. Our policy is to use a combination of variable rate debt and interest rate cap agreements to manage our exposure to fluctuations in interest rates. As of October 1, 2000, 81% of our long-term debt consisted of variable rate instruments that accrue interest at floating rates. As of October 1, 2000, through interest rate cap agreements, we had capped our interest rate exposure at 7.0% on $24.1 million of floating rate debt through December 2000 and at 6.0% on $55.0 million of floating rate debt through January 2002. We do not use foreign currency forward contracts and do not have any material foreign currency exposure. In order to minimize our foreign exchange risk, all of our sales are made in United States dollars. We do not hedge against price fluctuation in the commodities used in the manufacturing of our products. We will reevaluate this policy as needed commensurate with the risks inherent in our business. On October 27, 2000, we sold the interest rate cap agreements in connection with the retirement of largely all of the debt underlying the capped interest rates through the net proceeds of our initial public offering. The proceeds from the sales of the interest rate cap agreements were $0.3 million. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. Recent Sales of Unregistered Securities In connection with our acquisition of all of the capital stock of Battery Engineering, Inc., or BEI, on August 7, 2000 we issued: (i) 339,856 shares of our common stock to Hitachi Maxell, Ltd., or Hitachi, in exchange for all of the capital stock of BEI and (ii) 200,000 shares of our common stock to Hitachi, for an aggregate purchase price of $3,000,006. On August 25, 2000, we made an irrevocable contribution of 57,038 shares of our common stock to the Wilson Greatbatch Ltd. Equity Plus Plan. The offering and sales of our shares of common stock to Hitachi were not registered under the Securities Act of 1933 because the offering and sales were made in reliance on the exemption provided by Section 4(2) of the Securities Act and Rule 506 thereunder for transactions by an issuer not involving a public offering (with Hitachi representing its intention to acquire the securities for its own account and not with a view to the distribution thereof and acknowledging that the securities were issued in a transaction not registered under the Securities Act of 1933). The foregoing contribution of our common stock to the Wilson Greatbatch Ltd. Equity Plus Plan was not registered under the Securities Act of 1933 because the contribution was made in a transaction exempt from Section 5 of the Securities Act of 1933 pursuant to Rule 701 thereunder. Use of Proceeds The effective date of our first registration statement, filed on Form S-1 under the Securities Act of 1933 (File No. 333-37554) and the related registration statement, filed on Form S-1 under the Securities Act of 1933 (File No. 333-46896), collectively referred to herein as our Registration Statement, relating to the initial public offering of our common stock, was September 28, 17 2000. We sold a total of 5,750,000 shares of our common stock in the offering. The managing underwriters for the offering were Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC, U.S. Bancorp Piper Jaffray Inc., and DLJdirect Inc. The offering commenced on September 29, 2000 and was completed on October 11, 2000. All of the 5,750,000 registered shares of common stock were offered and sold by us for an aggregate offering price of $92.0 million. We incurred an estimated $8.0 million in total expenses for our account in connection with the issuance and distribution of the securities registered for underwriting discounts and commissions and other expenses and received approximately $84.0 million in total net proceeds. We will pay approximately $2.6 million of the total expenses to affiliates of (i) DLJ Merchant Banking, which is comprised of persons beneficially owning more than ten percent of our common stock, and (ii) David L. Jaffe, Douglas E. Rogers, Henry Wendt and David M. Wittels, each of whom are directors of our Company. We will pay the remaining approximately $5.4 million to others including other underwriters, our legal counsel, accountants and other professionals. The estimated $8.0 million in total expenses consists of approximately $6.4 million of underwriting discounts and approximately $1.6 million of other expenses. The amounts disclosed above as estimated expenses incurred in connection with the issuance and distribution of the securities reflect total amounts incurred in connection with the registration of the securities rather than amounts incurred for the one-day period from the effective date of the Registration Statement, September 28, 2000, through the end of the quarterly reporting period. Additionally, because the offering was consummated subsequent to the end of the reporting period, the related payments were or will be made during the fourth quarter of 2000. From the time of receipt through November 13, 2000, all net proceeds were applied towards reduction of indebtedness. We paid approximately $1.2 million of the net proceeds applied towards reduction of indebtedness to affiliates of (i) DLJ Merchant Banking, which is comprised of persons beneficially owning more than ten percent of our common stock, and (ii) David L. Jaffe, Douglas E. Rogers, Henry Wendt and David M. Wittels, each of whom are directors of our Company. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Holders of 10,228,214 shares of our common stock executed a Written Consent of Stockholders of WGL Holdings, Inc. dated August 15, 2000. The holders of the remaining 2,924,530 outstanding shares of our common stock did not execute the consent. The consent was executed in lieu of a special meeting. The consent approved the proposal that we amend and restate our Certificate of Incorporation to effect a three-for-five reverse stock split of the outstanding shares of our common stock. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits See the Exhibit Index for a list of those exhibits filed herewith. 18 (b) Reports on Form 8-K None. 19 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WILSON GREATBATCH TECHNOLOGIES, INC. (Registrant) Date 13-Nov-2000 BY: /s/ Arthur J. Lalonde ----------- ----------------------------------------- Arthur J. Lalonde Vice President, Finance and Treasurer 20 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 1.1* The Underwriting Agreement dated September 28, 2000, among Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC, U.S. Bancorp Piper Jaffray Inc. and DLJdirect Inc. and Wilson Greatbatch Technologies, Inc. is attached hereto and filed herewith. 3.1 Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to our Registration Statement) 3.2 Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to our Registration Statement) 10.31 Stock Purchase Agreement, dated as of July 31, 2000, among Wilson Greatbatch Technologies, Inc., Battery Engineering, Inc. and Hitachi Maxell, Ltd. (Incorporated by reference to Exhibit 10.31 to our Registration Statement) 10.32 Stockholders Agreement, dated as of August 7, 2000, among Wilson Greatbatch Technologies, Inc., Hitachi Maxell, Ltd., DLJ Merchant Banking Partners II, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ First ESC L.P., DLJ Offshore Partners II, C.V., DLJ EAB Partners, L.P. and UK Investment Plan 1997 Partners (Incorporated by reference to Exhibit 10.32 to our Registration Statement) 10.33 Subscription Agreement, dated as of August 7, 2000, between Wilson Greatbatch Technologies, Inc. and Hitachi Maxell, Ltd. (Incorporated by reference to Exhibit 10.33 to our Registration Statement) 10.34 Non-Compete Agreement, dated as of August 7, 2000, between Wilson Greatbatch Technologies, Inc. and Hitachi Maxell, Ltd. (Incorporated by reference to Exhibit 10.34 to our Registration Statement) 27.1* Financial Data Schedule - -------------- *Filed herewith. 21 EX-1 2 0002.txt EXHIBIT 1.1 EXHIBIT 1.1 5,000,000 Shares WILSON GREATBATCH TECHNOLOGIES, INC. Common Stock UNDERWRITING AGREEMENT ---------------------- September 28, 2000 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANC OF AMERICA SECURITIES LLC U.S. BANCORP PIPER JAFFRAY INC. DLJdirect INC. As representatives of the several Underwriters named in Schedule I hereto c/o Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York, New York 10172 Dear Sirs: Wilson Greatbatch Technologies, Inc., a Delaware corporation (the "COMPANY"), proposes to issue and sell 5,000,000 shares of its common stock, par value $.001 per share (the "FIRM SHARES"), to the several underwriters named in Schedule I hereto (the "UNDERWRITERS"). The Company also proposes to issue and sell to the several Underwriters not more than an additional 750,000 shares of the common stock, par value $.001 per share (the "ADDITIONAL SHARES"), if requested by the Underwriters as provided in Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter referred to collectively as the "SHARES". The shares of common stock of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK." SECTION 1. Registration Statement and Prospectus. The Company has prepared and filed with the Securities and Exchange Commission (the "COMMISSION") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "ACT"), a registration statement on Form S-1, including a prospectus, relating to the Shares. The registration statement, as amended at the time it became effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as the "REGISTRATION STATEMENT" and the prospectus in the form first used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS". If the Company has filed or is required pursuant to the terms hereof to file a registration statement pursuant to Rule 462(b) under the Act registering additional shares of Common Stock (a "RULE 462(B) REGISTRATION STATEMENT"), then, unless otherwise specified, any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462(b) Registration Statement. SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell, and each Underwriter agrees, severally and not jointly, to purchase from the Company at a price per Share of $14.88 (the "PURCHASE PRICE") the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell the Additional Shares and the Underwriters shall have the right to purchase, severally and not jointly, up to 750,000 Additional Shares from the Company at the Purchase Price. Additional Shares may be purchased solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. The Underwriters may exercise their right to purchase Additional Shares in whole or in part from time to time by giving written notice thereof to the Company within 30 days after the date of this Agreement. You shall give any such notice on behalf of the Underwriters and such notice shall specify the aggregate number of Additional Shares to be purchased pursuant to such exercise and the date for payment and delivery thereof, which date shall be a business day (i) no earlier than two business days after such notice has been given (and, in any event, no earlier than the Closing Date (as hereinafter defined)) and (ii) no later than ten business days after such notice has been given. If any Additional Shares are to be purchased, each Underwriter, severally and not jointly, agrees to purchase from the Company the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) which bears the same proportion to the total number of Additional Shares to be purchased from the Company as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I bears to the total number of Firm Shares. 2 The Company hereby agrees not to (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (ii) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any Common Stock (regardless of whether any of the transactions described in clause (i) or (ii) is to be settled by the delivery of Common Stock, or such other securities, in cash or otherwise), except to the Underwriters pursuant to this Agreement, for a period of 180 days after the date of the Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation. Notwithstanding the foregoing, during such period (i) the Company may grant stock options pursuant to the Company's existing stock option plans and (ii) the Company may issue shares of Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof. The Company also agrees not to file any registration statement with respect to any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock for a period of 180 days after the date of the Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation. The Company shall, prior to or concurrently with the execution of this Agreement, deliver an agreement executed by (i) each of the directors and officers of the Company and (ii) each stockholder listed on Annex I hereto to the effect that such person will not, during the period commencing on the date such person signs such agreement and ending 180 days after the date of the Prospectus, without the prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation, (A) engage in any of the transactions described in the first sentence of this paragraph or (B) make any demand for, or exercise any right with respect to, the registration of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock. The Company hereby confirms its engagement of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH") as, and Merrill Lynch hereby confirms its agreement with the Company to render services as, a "qualified independent underwriter," within the meaning of Section (b)(15) of Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD") with respect to the offering and sale of the Shares. Merrill Lynch, solely in its capacity as qualified independent underwriter and not otherwise, is referred to herein as the "QIU." As compensation for the services of the QIU hereunder, the Company agrees to pay the QIU $5,000 on the Closing Date. The price at which the Shares will be sold to the public shall not be higher than the maximum price recommended by Merrill Lynch acting as QIU. 3 SECTION 3. Terms of Public Offering. The Company is advised by you that the Underwriters propose to (i) make a public offering of their respective portions of the Shares as soon after the execution and delivery of this Agreement as in your judgment is advisable and (ii) initially offer the Shares upon the terms set forth in the Prospectus. SECTION 4. Delivery and Payment. The Shares shall be represented by definitive certificates and shall be issued in such authorized denominations and registered in such names as Merrill Lynch shall request no later than two business days prior to the Closing Date or the applicable Option Closing Date (as defined below), as the case may be. The Company shall deliver the Shares, with any transfer taxes thereon duly paid by the respective Sellers, to Merrill Lynch through the facilities of The Depository Trust Company ("DTC"), for the respective accounts of the several Underwriters, against payment to the Company of the Purchase Price therefore by wire transfer of Federal or other funds immediately available in New York City. The certificates representing the Shares shall be made available for inspection not later than 9:30 A.M., New York City time, on the business day prior to the Closing Date or the applicable Option Closing Date (as defined below), as the case may be, at the office of DTC or its designated custodian (the "DESIGNATED OFFICE"). The time and date of delivery and payment for the Firm Shares shall be 9:00 A.M., New York City time, on October 4, 2000 or such other time on the same or such other date as Merrill Lynch and the Company shall agree in writing. The time and date of delivery for the Firm Shares are hereinafter referred to as the "CLOSING DATE". The time and date of delivery and payment for any Additional Shares to be purchased by the Underwriters shall be 9:00 A.M., New York City time, on the date specified in the applicable exercise notice given by you pursuant to Section 2 or such other time on the same or such other date as Merrill Lynch and the Company shall agree in writing. The time and date of delivery for the Additional Shares are hereinafter referred to as an "OPTION CLOSING DATE." The documents to be delivered on the Closing Date or any Option Closing Date on behalf of the parties hereto pursuant to Section 8 of this Agreement shall be delivered at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York, 10022, and the Shares shall be delivered at the Designated Office, all on the Closing Date or such Option Closing Date, as the case may be. 4 SECTION 5. Agreements of the Company. The Company agrees with you: (a) To advise you promptly and, if requested by you, to confirm such advice in writing (i) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information, (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for such purposes, (iii) when any amendment to the Registration Statement becomes effective, (iv) if the Company is required to file a Rule 462(b) Registration Statement after the effectiveness of this Agreement, when the Rule 462(b) Registration Statement has become effective and (v) of the happening of any event during the period referred to in Section 5(d) below which makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or which requires any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (b) To furnish to you with six signed copies of the Registration Statement as first filed with the Commission and of each amendment to it, including all exhibits, and to furnish to you and each Underwriter designated by you such number of conformed copies of the Registration Statement as so filed and of each amendment to it, without exhibits, as you may reasonably request. (c) To prepare the Prospectus, the form and substance of which shall be satisfactory to you, and to file the Prospectus in such form with the Commission within the applicable period specified in Rule 424(b) under the Act; during the period specified in Section 5(d) below, not to file any further amendment to the Registration Statement and not to make any amendment or supplement to the Prospectus of which you shall not previously have been advised or to which you shall reasonably object after being so advised; and, during such period, to prepare and file with the Commission, promptly upon your reasonable request, any amendment to the Registration Statement or amendment or supplement to the Prospectus which may be necessary or advisable in connection with the distribution of the Shares by you, and to use its best efforts to cause any such amendment to the Registration Statement to become promptly effective. (d) Prior to 10:00 A.M., New York City time, on the first business day after the date of this Agreement and from time to time thereafter for such period as in the opinion of counsel for the Underwriters a prospectus is required by law to be delivered in connection with sales by an Underwriter or a 5 dealer, to furnish in New York City to each Underwriter and any dealer as many copies of the Prospectus (and of any amendment or supplement to the Prospectus) as such Underwriter or dealer may reasonably request. (e) If during the period specified in Section 5(d), any event shall occur or condition shall exist as a result of which, in the opinion of counsel for the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare and file with the Commission an appropriate amendment or supplement to the Prospectus so that the statements in the Prospectus, as so amended or supplemented, will not in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with applicable law, and to furnish to each Underwriter and to any dealer as many copies thereof as such Underwriter or dealer may reasonably request. (f) Prior to any public offering of the Shares, to cooperate with you and counsel for the Underwriters in connection with the registration or qualification of the Shares for offer and sale by the several Underwriters and by dealers under the state securities or Blue Sky laws of such jurisdictions as you may request, to continue such registration or qualification in effect so long as required for distribution of the Shares and to file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign corporation in any jurisdiction in which it is not now so qualified or to take any action that would subject it to general consent to service of process or taxation other than as to matters and transactions relating to the Prospectus, the Registration Statement, any preliminary prospectus or the offering or sale of the Shares, in any jurisdiction in which it is not now so subject. (g) To mail and make generally available to its stockholders as soon as practicable an earnings statement covering the twelve-month period ending September 30, 2001 that shall satisfy the provisions of Section 11(a) of the Act, and to advise you in writing when such statement has been so made available. (h) During the period of three years after the date of this Agreement, to furnish to you as soon as available copies of all reports or other communications furnished to the record holders of Common Stock or furnished to or filed with the Commission or any national securities exchange on which any 6 class of securities of the Company is listed and such other publicly available information concerning the Company and its subsidiaries as you may reasonably request. (i) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company's counsel and the Company's accountants in connection with the registration and delivery of the Shares under the Act and all other fees and expenses in connection with the preparation, printing, filing and distribution of the Registration Statement (including financial statements and exhibits), any preliminary prospectus, the Prospectus and all amendments and supplements to any of the foregoing, including the mailing and delivering of copies thereof to the Underwriters and dealers in the quantities specified herein, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) all costs of printing or producing this Agreement and any other agreements or documents in connection with the offering, purchase, sale or delivery of the Shares, (iv) all expenses in connection with the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the several states and all costs of printing or producing any Preliminary and Supplemental Blue Sky Memoranda in connection therewith (including the filing fees and fees and disbursements of counsel for the Underwriters in connection with such registration or qualification and memoranda relating thereto), (v) the filing fees and disbursements of counsel for the Underwriters in connection with the review and clearance of the offering of the Shares by the NASD, (vi) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8-A relating to the Common Stock and all costs and expenses incident to the listing of the Shares on the New York Stock Exchange, Inc. (the "NYSE"), (vii) the cost of printing certificates representing the Shares, (viii) the costs and charges of any transfer agent, registrar and/or depositary, (ix) the fees and expenses of the QIU (including the fees and disbursements of counsel to the QIU) and (x) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. (j) To use its best efforts to list, subject to notice of issuance, the Shares on the NYSE and to maintain the listing of the Shares on the NYSE for a period of three years after the date of this Agreement. (k) To use its best efforts to do and perform all things required or necessary to be done and performed under this Agreement by the Company prior to the Closing Date or any Option Closing Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Shares. 7 (l) If the Registration Statement at the time of the effectiveness of this Agreement does not cover all of the Shares, to file a Rule 462(b) Registration Statement with the Commission registering the Shares not so covered in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of this Agreement and to pay to the Commission the filing fee for such Rule 462(b) Registration Statement at the time of the filing thereof or to give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act. SECTION 6. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that: (a) The Registration Statement has become effective (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement); any Rule 462(b) Registration Statement filed after the effectiveness of this Agreement will become effective no later than 10:00 P.M., New York City time, on the date of this Agreement; and no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission. (b) (i) The Registration Statement (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement), when it became effective, did not contain and, as amended, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement) and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Act, (iii) if the Company is required to file a Rule 462(b) Registration Statement after the effectiveness of this Agreement, such Rule 462(b) Registration Statement and any amendments thereto, when they become effective (A) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (B) will comply in all material respects with the Act and (iv) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein. 8 (c) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Act, complied when so filed in all material respects with the Act, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in any preliminary prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein. (d) Each of the Company and its subsidiaries has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to carry on its business as described in the Prospectus and to own, lease and operate its properties, and each is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the business, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (e) There are no outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of sale or liens granted or issued by the Company or any of its subsidiaries relating to or entitling any person to purchase or otherwise to acquire any shares of the capital stock of the Company or any of its subsidiaries, except as otherwise disclosed in the Registration Statement. (f) All the outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid, non-assessable and not subject to any preemptive or similar rights; and the Shares have been duly authorized and, when issued and delivered to the Underwriters against payment therefor as provided by this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights. (g) All of the outstanding shares of capital stock of each of the Company's subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable, and are owned by the Company, directly or indirectly through one or more subsidiaries, free and clear of any security interest, claim, lien, encumbrance or adverse interest of any nature. 9 (h) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (i) Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective property is bound. (j) The execution, delivery and performance of this Agreement by the Company, the compliance by the Company with all the provisions hereof and the consummation of the transactions contemplated hereby will not (i) require any consent, approval, authorization or other order of, or qualification with, any court or governmental body or agency (except such as may be required under the securities or Blue Sky laws of the various states), (ii) conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws of the Company or any of its subsidiaries or any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective property is bound, (iii) violate or conflict with any applicable law or any rule, regulation, judgment, order or decree of any court or any governmental body or agency having jurisdiction over the Company, any of its subsidiaries or their respective property or (iv) result in the suspension, termination or revocation of any Authorization (as defined below) of the Company or any of its subsidiaries or any other impairment of the rights of the holder of any such Authorization. (k) There are no legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is or could be a party or to which any of their respective property is or could be subject that are required to be described in the Registration Statement or the Prospectus and are not so described; nor are there any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not so described or filed as required. (l) Neither the Company nor any of its subsidiaries has violated any foreign, federal, state or local law or regulation relating to the protection of human health and safety (including, without limitation, laws relating to the Food and Drug Administration), the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of 10 the Employee Retirement Income Security Act of 1974, as amended, or any provisions of the Foreign Corrupt Practices Act, or the rules and regulations promulgated thereunder, except for such violations which, singly or in the aggregate, would not have a material adverse effect on the business, prospects, financial condition or results of operation of the Company and its subsidiaries, taken as a whole. (m) Each of the Company and its subsidiaries has such permits, licenses, consents, exemptions, franchises, authorizations and other approvals (each, an "AUTHORIZATION") of, and has made all filings with and notices to, all governmental or regulatory authorities and self-regulatory organizations and all courts and other tribunals, including, without limitation, under any applicable Environmental Laws, as are necessary to own, lease, license and operate its respective properties and to conduct its business, except where the failure to have any such Authorization or to make any such filing or notice would not, singly or in the aggregate, have a material adverse effect on the business, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. Each such Authorization is valid and in full force and effect and each of the Company and its subsidiaries is in compliance with all the terms and conditions thereof and with the rules and regulations of the authorities and governing bodies having jurisdiction with respect thereto; and no event has occurred (including, without limitation, the receipt of any notice from any authority or governing body) which allows or, after notice or lapse of time or both, would allow, revocation, suspension or termination of any such Authorization or results or, after notice or lapse of time or both, would result in any other impairment of the rights of the holder of any such Authorization; and such Authorizations contain no restrictions that are burdensome to the Company or any of its subsidiaries; except where such failure to be valid and in full force and effect or to be in compliance, the occurrence of any such event or the presence of any such restriction would not, singly or in the aggregate, have a material adverse effect on the business, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (n) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any Authorization, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the business, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (o) This Agreement has been duly authorized, executed and delivered by the Company. 11 (p) Deloitte & Touche LLP are independent public accountants with respect to the Company and its subsidiaries as required by the Act. (q) The consolidated financial statements included in the Registration Statement and the Prospectus (and any amendment or supplement thereto), together with related schedules and notes, present fairly the consolidated financial position, results of operations and changes in financial position of the Company and its subsidiaries on the basis stated therein at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; the supporting schedules, if any, included in the Registration Statement present fairly in accordance with generally accepted accounting principles the information required to be stated therein; and the other financial and statistical information and data set forth in the Registration Statement and the Prospectus (and any amendment or supplement thereto) are, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company. (r) The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will not be, an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. (s) There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement. (t) Since the respective dates as of which information is given in the Prospectus other than as set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), (i) there has not occurred any material adverse change or any development involving a prospective material adverse change in the condition, financial or otherwise, or the earnings, business, management or operations of the Company and its subsidiaries, taken as a whole, (ii) there has not been any material adverse change or any development involving a prospective material adverse change in the capital stock or in the long-term debt of the Company or any of its subsidiaries and (iii) neither the Company nor any of its subsidiaries has incurred any material liability or obligation, direct or contingent. 12 (u) Each certificate signed by any officer of the Company and delivered to the Underwriters or counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to the Underwriters as to the matters covered thereby. (v) The Company owns or possesses, or can acquire on reasonable terms, all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, "INTELLECTUAL PROPERTY") currently employed by it in connection with the business now operated by it, except where the failure to own or possess or otherwise be able to acquire such Intellectual Property would not, singly or in the aggregate, have a material adverse effect on the business, prospects, financial condition or results of operation of the Company; and the Company is not infringing or conflicting with asserted rights of others with respect to any of such Intellectual Property which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the business, prospects, financial condition or results of operations of the Company. SECTION 7. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter, its directors, its officers and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), from and against any and all losses, claims, damages, liabilities and judgments (including, without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action, that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), the Prospectus (or any amendment or supplement thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished in writing to the Company by such Underwriter through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter who failed to deliver a Prospectus (as then amended or supplemented, provided by the Company to the several Underwriters in the requisite quantity and on a timely basis to permit proper delivery on or 13 prior to the Closing Date) to the person asserting any losses, claims, damages and liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged material misstatement or omission was cured in such Prospectus and such Prospectus was required by law to be delivered at or prior to the written confirmation of sale to such person. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to such Underwriter but only with reference to information relating to such Underwriter furnished in writing to the Company by such Underwriter through you expressly for use in the Registration Statement (or any amendment thereto), the Prospectus (or any amendment or supplement thereto) or any preliminary prospectus. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 7(a) and 7(b), the Underwriter shall not be required to assume the defense of such action pursuant to this Section 7(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of such Underwriter). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the 14 right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch, in the case of parties indemnified pursuant to Section 7(a), and by the Company, in the case of parties indemnified pursuant to Section 7(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than twenty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent the indemnification provided for in this Section 7 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 7(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 7(d)(i) above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant 15 equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand shall be deemed to be in the same proportion as the total net proceeds from the offering (after deducting underwriting discounts and commissions, but before deducting expenses) received by the Company, and the total underwriting discounts and commissions received by the Underwriters, bear to the total price to the public of the Shares, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such indemnified party in connection with investigating or defending any matter, including any action, that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective number of Shares purchased by each of the Underwriters hereunder and not joint. (e) The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. SECTION 8. Indemnification of QIU. 16 (a) The Company agrees to indemnify and hold harmless the QIU, its directors, its officers and each person, if any, who controls the QIU within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and judgments (including, without limitation, any legal or other expenses incurred in connection with defending or investigating any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) related to, based upon or arising out of (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), the Prospectus (or any amendment or supplement thereto) or any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the QIU's activities as QIU under its engagement pursuant to Section 2 hereof. (b) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to paragraph (a) of this Section 8 (THE "QIU INDEMNIFIED PARTY"), the QIU Indemnified Party shall promptly notify the Company in writing and the Company shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the QIU Indemnified Party and the payment of all fees and expenses of such counsel, as incurred. Any QIU Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the QIU Indemnified Party unless (i) the employment of such counsel shall have been specifically authorized in writing by the Company, (ii) the Company shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the QIU Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the QIU Indemnified Party and the Company, and the QIU Indemnified Party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Company (in which case the Company shall not have the right to assume the defense of such action on behalf of the QIU Indemnified Party). In any such case, the Company shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all QIU Indemnified Parties, which firm shall be designated by the QIU, and all such fees and expenses shall be reimbursed as they are incurred. The Company shall indemnify and hold harmless the QIU Indemnified Party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than ten 17 business days after the Company shall have received a request from the QIU Indemnified Party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the Company) and, prior to the date of such settlement, the Company shall have failed to comply with such reimbursement request. The Company shall not, without the prior written consent of the QIU Indemnified Party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the QIU Indemnified Party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the QIU Indemnified Party, unless such settlement, compromise or judgment (i) includes an unconditional release of the QIU Indemnified Party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of the QIU Indemnified Party. (c) To the extent the indemnification provided for in this Section 8 is unavailable to a QIU Indemnified Party or insufficient in respect of any losses, claims, damages, liabilities or judgments referred to therein, then the Company, in lieu of indemnifying such QIU Indemnified Party, shall contribute to the amount paid or payable by such QIU Indemnified Party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the QIU on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the QIU in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company and the QIU shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company as set forth in the table on the cover page of the Prospectus, and the fee received by the QIU pursuant to Section 2 hereof, bear to the sum of such total net proceeds and such fee. The relative fault of the Company and the QIU shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the QIU and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the QIU agree that it would not be just and equitable if contribution pursuant to this Section 8(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. 18 The amount paid or payable by a QIU Indemnified Party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such QIU Indemnified Party in connection with investigating or defending any matter that could have given rise to such losses, claims, damages, liabilities or judgments. In no event shall any QIU Indemnified Party be required to contribute in the aggregate an amount exceeding the fee received by the QIU pursuant to Section 2 hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (d) The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any QIU Indemnified Party at law or in equity. SECTION 9. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Firm Shares under this Agreement are subject to the satisfaction of each of the following conditions: (a) All the representations and warranties of the Company contained in this Agreement shall be true and correct on the Closing Date with the same force and effect as if made on and as of the Closing Date. (b) If the Company is required to file a Rule 462(b) Registration Statement after the effectiveness of this Agreement, such Rule 462(b) Registration Statement shall have become effective by 10:00 P.M., New York City time, on the date of this Agreement; and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been commenced or shall be pending before or contemplated by the Commission. (c) You shall have received on the Closing Date a certificate dated the Closing Date, signed by Arthur J. Lalonde and Larry T. DeAngelo, in their capacities as Vice President, Finance and Treasurer and Vice President, Administration and Secretary, respectively, of the Company, confirming the matters set forth in Sections 6(t), 9(a) and 9(b) and that the Company has complied with all of the agreements and satisfied all of the conditions herein contained and required to be complied with or satisfied by the Company on or prior to the Closing Date. (d) Since the respective dates as of which information is given in the 19 Prospectus other than as set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), (i) there shall not have occurred any change or any development involving a prospective change in the condition, financial or otherwise, or the earnings, business, management or operations of the Company and its subsidiaries, taken as a whole, (ii) there shall not have been any change or any development involving a prospective change in the capital stock or in the long-term debt of the Company or any of its subsidiaries and (iii) neither the Company nor any of its subsidiaries shall have incurred any liability or obligation, direct or contingent, the effect of which, in any such case described in clause 9(d)(i), 9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your judgment, makes it impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus. (e) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Weil, Gotshal & Manges LLP counsel for the Company, to the effect that: (i) each of the Company and Wilson Greatbatch Ltd., a New York corporation, WGL Intermediate Holdings, Inc., a Delaware corporation, and Greatbatch-Hittman, Inc., a Delaware corporation (each a "Subsidiary" and collectively the "Subsidiaries") is a corporation validly existing and in good standing under the laws of the State of its respective incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as described in the Prospectus; (ii) each of the Company and each Subsidiary is duly qualified to transact business and is in good standing as a foreign corporation authorized to do business in each jurisdiction identified in Schedule A to the opinion; (iii) all of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable and have not been issued in violation of any preemptive or similar rights pursuant to law or in the Company's Certificate of Incorporation; (iv) the shares of common stock to be issued pursuant to this Agreement have been duly authorized and, when issued as contemplated by this Agreement, will be validly issued, fully paid and non-assessable and free of preemptive or similar rights pursuant to law or in the Company's Certificate of Incorporation; 20 (v) all of the outstanding shares of capital stock of WGL Intermediate Holdings, Inc. are owned of record by the Company. All of the outstanding shares of capital stock of Wilson Greatbatch Ltd. are owned of record by WGL Intermediate Holdings, Inc. All of the outstanding shares of Greatbatch-Hittman, Inc. are owned of record by Wilson Greatbatch Ltd. To such counsel's knowledge, such shares are also owned beneficially by the respective record owners thereof and are free and clear of all adverse claims, limitations on voting rights, options and other encumbrances. Such shares are duly authorized, validly issued, fully paid and non-assessable, except as provided by Section 630 of the New York Business Corporation Law with respect to Wilson Greatbatch Ltd., and have not been issued in violation of (A) any preemptive rights pursuant to law, (B) any of the Subsidiaries' Certificates of Incorporation or (C) to such counsel's knowledge, any contractual preemptive rights; (vi) this Agreement has been duly authorized, executed and delivered by the Company; (vii) the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus; (viii) the Registration Statement has become effective under the Act, and such counsel is not aware of any stop order suspending the effectiveness of the Registration Statement. To such counsel's knowledge, after consultation with representatives of the Commission, no proceedings therefor have been initiated or overtly threatened by the Commission; (ix) the statements (A) in the Prospectus under the captions "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Business", "Management", "Related Party Transactions", "Description of Capital Stock", "Shares Eligible for Future Sale" and "Underwriting" and (B) in the Registration Statement in response to the requirements of Items 14 and 15 of Part II, in each case insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, except as pertaining to matters of intellectual property (including without limitation matters of patents, licenses and trade secrets), fairly present the information called for with respect to such legal matters, documents and proceedings and fairly summarize the matters referred to therein in all material respects; (x) the execution, delivery and performance of this Agreement by the Company, the compliance by the Company with all the provisions hereof and the consummation of the transactions 21 contemplated hereby will not (A) require any consent, approval, authorization or other order of, or qualification with, any court or governmental body or agency (except such as may be required under the federal or state securities or Blue Sky laws of the various states), (B) conflict with or constitute a breach of any of the terms or provisions of, or a default under, (i) the Certificate of Incorporation or By-Laws of the Company or any Subsidiary or (ii) any agreements filed as exhibits to the Registration Statement, that is material to the Company and its Subsidiaries, taken as a whole, to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or their respective property is bound, or (C) violate or conflict with any (i) applicable New York, Delaware corporate or federal law, rule or regulation or (ii) judgment, order or decree of any court, governmental body or agency having jurisdiction over the Company, any of its Subsidiaries or their respective property of which we are aware; (xi) to such counsel's knowledge, there are no legal or governmental proceedings pending or overtly threatened to which the Company or any Subsidiary is a party or to which any of the properties of the Company or any Subsidiary is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not so described or filed as required; (xii) the Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will not be, an "investment company" under the Investment Company Act of 1940, as amended, and the rules and regulations promulgated by the Commission thereunder; (xiii) to such counsel's knowledge, after due inquiry, except as disclosed in the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement; and (xiv) such counsel has participated in conferences with directors, officers and other representatives of the Company, representatives of the independent public accountants for the Company, representatives of the Underwriters and representatives of counsel for the Underwriters, at which conferences the contents of the 22 Registration Statement and the Prospectus and related matters were discussed, and, although such counsel has not independently verified and is not passing upon and assumes no responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and Prospectus (except to the extent specified in the foregoing opinion), no facts have come to such counsel's attention which lead such counsel to believe that the Registration Statement, on the effective date thereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading or that the Prospectus, on the date thereof or on the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel expresses no view with respect to the financial statements and related notes, the financial statement schedules and the other financial and accounting data included in the Registration Statement or Prospectus). The opinion of Weil, Gotshal & Manges LLP described in Section 9(e) above shall be rendered to you at the request of the Company and shall so state therein. (f) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Hodgson, Russ, Andrews, Woods & Goodyear LLP, local counsel for the Company, to the effect that: (i) there have come to such counsel's attention no facts that lead such counsel to believe that the Registration Statement or that the Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading, with respect to (1) any Intellectual Property of the Company or (2) any license agreement relating to any Intellectual Property of the Company; (ii) such counsel has no knowledge that, other than as stated in the Registration Statement and the Prospectus, there is any material pending or threatened action against the Company relating to (1) any Intellectual Property of the Company or (2) any license agreement relating to any Intellectual Property of the Company; 23 (iii) such counsel has no knowledge that the Company does not take measures that the Company reasonably believes to be adequate to prevent material adverse effects upon the Company by creating, maintaining, protecting, and realizing reasonable value from the material Intellectual Property of the Company and from current material license and other agreements between the Company and others; (iv) such counsel has no knowledge that any license agreement listed as an Exhibit in the Registration Statement was not duly executed or is not valid in accordance with its terms or that the Company is in default (declared or undeclared), except as otherwise disclosed, in connection with any material provision of any such license agreement, and there have come to such counsel's attention no facts that lead such counsel to believe that any such license agreement to which the Company is a party is not enforceable; (v) such counsel has no knowledge that, other than as stated in the Registration Statement and the Prospectus, there is any pending or threatened legal proceeding asserting a material breach or default by the Company relating to (1) any Intellectual Property of the Company or (2) any license agreement relating to any Intellectual Property of the Company; (vi) such counsel has no knowledge that the Company does not possess the Intellectual Property and licenses to Intellectual Property that are currently believed by the Company to be necessary for the conduct of the business of the Company as described in the Registration Statement and the Prospectus; (vii) such counsel has no knowledge, that the Company is not an owner of record in the appropriate governmental agency of any Intellectual Property of the Company that is currently believed by the Company to be necessary for the conduct of the business, of the Company as described in the Registration Statement and the Prospectus and for which the Company does not otherwise hold rights through an express license or agreement; (viii) such counsel has no knowledge that any Intellectual Property of the Company currently believed by the Company to be necessary for the conduct of the business of the Company as described in the Registration Statement and the Prospectus is unenforceable or invalid owing to a statutory bar arising out of the acts or omissions 24 of the Company, or that any lien has been filed against any such Intellectual Property; (ix) the statements under the subcaption "Patents and Proprietary Technology", under the caption "Business" in the Prospectus, insofar as such statements constitute a summary of the legal matters, documents or proceedings referred to therein fairly present the information called for with respect to such legal matters, documents and proceedings referred to therein in all material respects. The opinion of Hodgson, Russ, Andrews, Woods & Goodyear LLP described in Section 9(f) above shall be rendered to you at the request of the Company and shall so state therein. (g) You shall have received on the Closing Date an opinion, dated the Closing Date, of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the Underwriters, as to the matters referred to in Sections 9(e)(iv), 9(e)(vi), 9(e)(ix) (but only with respect to the statements under the caption "Description of Capital Stock" and "Underwriting") and 9(e)(xiv). In giving such opinions with respect to the matters covered by Section 9(e)(xvii), Weil, Gotshal & Manges LLP and Akin, Gump, Strauss, Hauer & Feld, L.L.P. may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. (h) You shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to you, from Deloitte & Touche LLP, independent public accountants, containing the information and statements of the type ordinarily included in accountants' "comfort letters" to Underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (i) The Company shall have delivered to you the agreements specified in Section 2 hereof which agreements shall be in full force and effect on the Closing Date. (j) The Shares shall have been duly listed, subject to notice of issuance, on the NYSE. (k) The Company shall not have failed on or prior to the Closing Date to perform or comply with any of the agreements herein contained and required to be performed or complied with by the Company on or prior to the Closing Date. 25 The several obligations of the Underwriters to purchase any Additional Shares hereunder are subject to the delivery to you on the applicable Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of such Additional Shares and other matters related to the issuance of such Additional Shares. SECTION 10. Effectiveness of Agreement and Termination. This Agreement shall become effective upon the execution and delivery of this Agreement by the parties hereto. This Agreement may be terminated at any time on or prior to the Closing Date by you by written notice to the Company if any of the following has occurred: (i) any outbreak or escalation of hostilities or other national or international calamity or crisis or change in economic conditions or in the financial markets of the United States or elsewhere that, in your judgment, is material and adverse and, in your judgment, makes it impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus, (ii) the suspension or material limitation of trading in securities or other instruments on the NYSE, the American Stock Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq National Market or limitation on prices for securities or other instruments on any such exchange or the Nasdaq National Market, (iii) the suspension of trading of any securities of the Company on any exchange or in the over-the-counter market, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in your opinion materially and adversely affects, or will materially and adversely affect, the business, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by either federal or New York State authorities or (vi) the taking of any action by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in your opinion has a material adverse effect on the financial markets in the United States. If on the Closing Date or on an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase the Firm Shares or Additional Shares, as the case may be, which it has or they have agreed to purchase hereunder on such date and the aggregate number of Firm Shares or Additional Shares, as the case may be, which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the total number of Firm Shares or Additional Shares, as the case may be, to be purchased on such date by all Underwriters, each non-defaulting Underwriter shall be obligated severally, in the proportion which 26 the number of Firm Shares set forth opposite its name in Schedule I bears to the total number of Firm Shares which all the non-defaulting Underwriters have agreed to purchase, or in such other proportion as you may specify, to purchase the Firm Shares or Additional Shares, as the case may be, which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Firm Shares or Additional Shares, as the case may be, which any Underwriter has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 10 by an amount in excess of one-ninth of such number of Firm Shares or Additional Shares, as the case may be, without the written consent of such Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased by all Underwriters and arrangements satisfactory to you and the Company for purchase of such Firm Shares are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter and the Company. In any such case which does not result in termination of this Agreement, either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase such Additional Shares or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase on such date in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of any such Underwriter under this Agreement. SECTION 11. Miscellaneous. Notices given pursuant to any provision of this Agreement shall be addressed as follows: (i) if to the Company, to Wilson Greatbatch Technologies, Inc., 10,000 Wehrle Drive, Clarence, New York, 14031 and (ii) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate Department or in any case to such other address as the person to be notified may have requested in writing. The respective indemnities, contribution agreements, representations, warranties and other statements of the Company and the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full 27 force and effect, and will survive delivery of and payment for the Shares, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the officers or directors of any Underwriter, any person controlling any Underwriter, the QIU Indemnified Party, the Company, the officers or directors of the Company or any person controlling the Company, (ii) acceptance of the Shares and payment for them hereunder and (iii) termination of this Agreement. If for any reason the Shares are not delivered by or on behalf of the Company as provided herein (other than as a result of any termination of this Agreement pursuant to Section 10), the Company agrees to reimburse the several Underwriters for all out-of-pocket expenses (including the fees and disbursements of counsel) incurred by them. Notwithstanding any termination of this Agreement, the Company shall be liable for all expenses which it has agreed to pay pursuant to Section 5(i) hereof. The Company also agrees to reimburse the several Underwriters, their directors and officers and any persons controlling any of the Underwriters for any and all fees and expenses (including, without limitation, the fees disbursements of counsel) incurred by them in connection with enforcing their rights hereunder (including, without limitation, pursuant to Sections 7 and 8 hereof). Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters, the Underwriters' directors and officers, any controlling persons referred to herein, the QIU Indemnified Party, the Company's directors and the Company's officers who sign the Registration Statement and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Shares from any of the several Underwriters merely because of such purchase. This Agreement shall be governed and construed in accordance with the laws of the State of New York. This Agreement may be signed in various counterparts which together shall constitute one and the same instrument. 28 Please confirm that the foregoing correctly sets forth the agreement between the Company and the several Underwriters. Very truly yours, WILSON GREATBATCH TECHNOLOGIES, INC. By: /s/ Edward F. Voboril -------------------------------- Name: Edward F. Voboril Title: Chairman, President & CEO DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANC OF AMERICA SECURITEIS LLC U.S. BANCORP PIPER JAFFRAY, INC. DLJdirect INC. Acting severally on behalf of themselves and the several Underwriters named in Schedule I hereto By DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By: /s/ Richard Landgarten ----------------------------- Name: Richard Landgarten Title: Senior Vice President SCHEDULE I ---------- - ------------------------------------------------------------ ---------------- UNDERWRITERS NUMBER OF SHARES - ------------------------------------------------------------ ---------------- Donaldson, Lufkin & Jenrette Securities Corporation 1,146,000 - ------------------------------------------------------------ ---------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated 1,146,000 - ------------------------------------------------------------ ---------------- Banc of America Securities LLC 764,000 - ------------------------------------------------------------ ---------------- U.S. Bancorp Piper Jaffray Inc. 764,000 - ------------------------------------------------------------ ---------------- DLJdirect Inc. 100,000 - ------------------------------------------------------------ ---------------- Bear, Stearns & Co. Inc. 40,000 - ------------------------------------------------------------ ---------------- CIBC World Markets Corp. 40,000 - ------------------------------------------------------------ ---------------- Chase Securities Inc. 40,000 - ------------------------------------------------------------ ---------------- Credit Suisse First Boston Corporation 40,000 - ------------------------------------------------------------ ---------------- Deutsche Bank Securities Inc. 40,000 - ------------------------------------------------------------ ---------------- A.G. Edwards & Sons, Inc. 40,000 - ------------------------------------------------------------ ---------------- First Union Securities, Inc. 40,000 - ------------------------------------------------------------ ---------------- Goldman, Sachs & Co. 40,000 - ------------------------------------------------------------ ---------------- HSBC Securities (USA) Inc. 40,000 - ------------------------------------------------------------ ---------------- Morgan Stanley & Co. Incorporated 40,000 - ------------------------------------------------------------ ---------------- PaineWebber Incorporated 40,000 - ------------------------------------------------------------ ---------------- Prudential Securities Incorporated 40,000 - ------------------------------------------------------------ ---------------- Salomon Smith Barney Inc. 40,000 - ------------------------------------------------------------ ---------------- Thomas Weisel Partners LLC 40,000 - ------------------------------------------------------------ ---------------- Robert W. Baird & Co. Incorporated 20,000 - ------------------------------------------------------------ ---------------- George K. Baum & Company 20,000 - ------------------------------------------------------------ ---------------- Burnham Securities Inc. 20,000 - ------------------------------------------------------------ ---------------- Crowell, Weedon & Co. 20,000 - ------------------------------------------------------------ ---------------- Fahnestock & Co. Inc. 20,000 - ------------------------------------------------------------ ---------------- Gerard Klauer Mattison & Co., Inc. 20,000 - ------------------------------------------------------------ ---------------- Gruntal & Co., L.L.C. 20,000 - ------------------------------------------------------------ ---------------- Janney Montgomery Scott LLC 20,000 - ------------------------------------------------------------ ---------------- Johnston, Lemon & Co. Incorporated 20,000 - ------------------------------------------------------------ ---------------- C.L. King & Associates, Inc. 20,000 - ------------------------------------------------------------ ---------------- Ladenburg Thalmann & Co. Inc. 20,000 - ------------------------------------------------------------ ---------------- McDonald Investments Inc., A KeyCorp Company 20,000 - ------------------------------------------------------------ ---------------- Needham & Company, Inc. 20,000 - ------------------------------------------------------------ ---------------- Parker/Hunter Incorporated 20,000 - ------------------------------------------------------------ ---------------- Pennsylvania Merchant Group 20,000 - ------------------------------------------------------------ ---------------- Ragen MacKenzie Incorporated 20,000 - ------------------------------------------------------------ ---------------- Raymond James & Associates, Inc. 20,000 - ------------------------------------------------------------ ---------------- The Robinson-Humphrey Company, LLC 20,000 - ------------------------------------------------------------ ---------------- Sanders Morris Harris 20,000 - ------------------------------------------------------------ ---------------- Sands Brothers & Co., Ltd. 20,000 - ------------------------------------------------------------ ---------------- Stephens Inc. 20,000 - ------------------------------------------------------------ ---------------- - ------------------------------------------------------------ ---------------- Sutro & Co. Incorporated 20,000 - ------------------------------------------------------------ ---------------- Tucker Anthony Incorporated 20,000 - ------------------------------------------------------------ ---------------- C.E. Unterberg, Towbin 20,000 - ------------------------------------------------------------ ---------------- Wachovia Securities, Inc. 20,000 - ------------------------------------------------------------ ---------------- The Williams Capital Group, L.P. 20,000 ============================================================ ================ TOTAL 5,000,000 - ------------------------------------------------------------ ---------------- Annex I o Evelyn Belstadt o Jack Belstadt o Karianne Belstadt o Ricky Belstadt o Tim H. Belstadt o Grazyna Boron o Susan M. Bratton o William Bruns o Ashton Carter o David R. Ciurzynski o Larry T. DeAngelo o John Deutch o DLJ Diversified Partners, L.P. o DLJ Diversified Partners-A, L.P. o DLJ EAB Partners, L.P. o DLJ ESC II L.P. o DLJ First ESC L.P. o DLJ Investment Funding, Inc. o DLJ Investment Partners, L.P. o DLJ Investment Plan 1997 Partners o DLJ Merchant Banking Partners II, L.P. o DLJ Merchant Banking Partners II-A, L.P. o DLJ Millennium Partners, L.P. o DLJ Millennium Partners-A, L.P. o DLJ Offshore Partners II, C.V. o DLJMB Funding II, Inc. o Richard E. Dombrowski o East Hill Foundation o John R. Empl o Gayle Fairchild o Joseph C. Falcone o John T. Fordyce o Christine A. Frysz o Richard M. Garlapow o Douglas Gillies o Ami A. Greatbatch o Cody W. Greatbatch o Kenneth A. Greatbatch o Michele A. Greatbatch o Warren D. Greatbatch o Robert W. Hammell o Robert Herman o Hitachi Maxell Ltd. o Fred Hittman o Curtis F. Holmes o Robert C. Jackson o David Jaffe o Paul Kaminski o Arthur J. Lalonde o Terry M. Martino o Lauren M. Miller o Elizabeth A. Mott o Lois H. Mott o Richard W. Mott o Charles L. Mozeko o William Perry o Robert E. Rich, Jr. o Douglas E. Rogers o Adam R. Rusin o Christopher M. Rusin o Elizabeth A. Rusin o Frank S. Rusin o F. David Rusin o Robert C. Rusin o Michele R. Schmidt o Gary Sfeir o Robert W. Siegler o Michael A. Startek o Esther S. Takeuchi o The Northwestern Mutual Life Insurance Company o UK Investment Plan 1997 Partners o Dolores B. Urban o James VanWormer o Edward F. Voboril o Henry Wendt o Gary Whitcher o John White o David M. Wittels o Ami A. Greatbatch and Jack Belstadt, as Trustees of the Jack Belstadt Family Trust U/A/D August 25, 1997 o Ami A. Greatbatch and Tim Belstadt, as Trustees of the Ricky Belstadt Family Trust U/A/D August 25, 1997 o Ami A. Greatbatch and Tim Belstadt, as Trustees of the Tim Belstadt Family Trust U/A/D August 25, 1997 o Ann K. & Lawrence A. Maciariello as Tenants in Common o Eleanor F. & Wilson Greatbatch as Tenants in Common o James E. Maciariello TOD Lawrence A. Maciariello o John L. Greatbatch & Tommie M. Greatbatch as Tenants in Common o Kenneth A. & Sharon H. Greatbatch, as Tenants in Common o Lawrence A. Maciariello Jr. and Darla G. Maciariello as Tenants in Common o Lawrence A. Maciariello Jr. as Custodian for Rachel L. Maciariello under UGMA o Melanie F. Voboril, Emil Victor Fraccaro, Jr., and Edward Victor Voboril or their successors, Trustees of the Edward F Voboril 2000 Family Trust, U/A/D May 16, 2000 o Richard W. Mott, Trustee of the Lindsay N. Mott Trust o Richard W. Mott, Trustee of the Rachel A. Mott Trust o Richard W. Mott, Trustee of the Sarah E. Mott Trust o Tim H. Belstadt, Trustee of the Trust for Jenny Dulian under the Ami A. Greatbatch 1998 Trusts for Children U/A/D February 11, 1998 o Tim H. Belstadt, Trustee of the Trust for Kenneth Dulian under the Ami A. Greatbatch 1998 Trusts for Children U/A/D February 11, 1998 o Trustees of the Stock Bonus Plan of the Wilson Greatbatch Ltd. Equity Plus Plan o Trustees of the Wilson Greatbatch Ltd. Equity Plus Plan o Warren Greatbatch and Peter Greatbatch as Trustees of the John Greatbatch Family Trust U/A/D November 17, 1997 EX-27 3 0003.txt
5 This schedule contains summary financial information extracted from the Company's financial statements as of September 29, 2000 and for the nine month period ended September 29, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS JAN-31-2001 SEP-29-2000 3,220 0 16,074 317 14,369 38,364 52,374 15,387 192,886 16,588 121,891 0 0 13 53,764 192,886 0 69,840 39,915 20,590 1 0 11,666 (2,332) (696) (1,636) 0 0 0 (1,636) (0.13) (0.13)
-----END PRIVACY-ENHANCED MESSAGE-----