Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WARBURG, XXXXXX VENTURES, L.P.
AND
XXXXX, INC.
Dated as of June 21, 1999
TABLE OF CONTENTS
Page
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ARTICLE I. The Merger 1
Section 1.1. Formation of Acquisition 1
Section 1.2. The Merger 1
Section 1.3. Effective Time 1
Section 1.4. Closing 2
Section 1.5. Certificate of Incorporation; By-laws;
Officers and Directors 2
Section 1.6. Effect on Common Stock 2
Section 1.7. Dissenting Shares 3
Section 1.8. Treatment of Stock Options 4
Section 1.9. Exchange of Certificates 4
Section 1.10. Proxy Statement and Schedule 13E-3 6
Section 1.11. Additional Agreements and Provisions 7
ARTICLE II. Representations and Warranties of Knoll 7
Section 2.1. Organization of Knoll and its Subsidiaries 7
Section 2.2. Capitalization of Knoll; Ownership 7
Section 2.3. Subsidiaries of Knoll 8
Section 2.4. Authorization 8
Section 2.5. Fairness Opinion and Approval by the Special Committee 8
Section 2.6. Brokers and Finders 8
Section 2.7. SEC Documents; Undisclosed Liabilities 8
Section 2.8. Absence of Certain Changes or Events 9
ARTICLE III. Representations and Warranties of Warburg 9
Section 3.1. Organization and Authority of Acquisition 9
Section 3.2. Authorization 9
Section 3.3. Brokers and Intermediaries 10
Section 3.4. Proxy Statement 10
Section 3.5. Financing 10
Section 3.6. Sale of Knoll 10
ARTICLE IV. Certain Covenants and Agreements 10
Section 4.1. Announcement 10
Section 4.2. Notification of Certain Matters 11
Section 4.3. Directors' And Officers' Indemnification 11
Section 4.4. Stockholders Meeting 11
Section 4.5. Obligations of Acquisition 11
ARTICLE V. Conditions Precedent 12
Section 5.1. Conditions to Each Party's Obligation to
Effect the Merger 12
Section 5.2. Conditions to the Obligation of Knoll to
Effect the Merger 12
Section 5.3. Conditions to the Obligation of Acquisition
to Effect the Merger 13
ARTICLE VI. Termination, Amendment and Waiver 13
Section 6.1. Termination 13
Section 6.2. Effect of Termination 14
Section 6.3. Amendment 14
Section 6.4. Waiver 14
Section 6.5. Approval of Special Committee Required 14
ARTICLE VII. Miscellaneous 14
Section 7.1. Non-Survival of Representations and Warranties 14
Section 7.2. Expenses 15
Section 7.3. Applicable Law 15
Section 7.4. Notices 15
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Section 7.5. Entire Agreement 16
Section 7.6. Assignment 16
Section 7.7. Headings; References 16
Section 7.8. Counterparts 16
Section 7.9. No Third Party Beneficiaries 16
Section 7.10. Severability; Enforcement 17
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AGREEMENT AND PLAN OF MERGER, dated as of June 21, 1999, by and between
Warburg, Xxxxxx Ventures, L.P., a Delaware limited partnership ("Warburg"), and
Xxxxx, Inc., a Delaware corporation ("Knoll").
WHEREAS, Warburg and certain members of the management of Knoll identified
in the Schedule 13D filed with the Securities and Exchange Commission (the
"SEC") on April 2, 1999 (collectively, the "Management Members" and, together
with Warburg, the "Buyout Group") desire to acquire the entire equity interest
in Knoll and to provide for the payment of $28.00 per share in cash for all
shares of the common stock, par value $.01 per share, of Knoll (the "Knoll
Common Stock") not held by them; and
WHEREAS, the Buyout Group intends to contribute shares of Knoll Common
Stock held by them to a corporation to be formed for the purpose of effecting
such transaction (such corporation, "Acquisition") and to acquire in exchange
therefor the common stock of Acquisition; and
WHEREAS, the Board of Directors of Knoll, upon the recommendation of the
special committee established to consider the fairness of the transaction
contemplated by this Agreement (the "Special Committee"), has unanimously
approved, and deems advisable and in the best interests of its stockholders, the
merger of Acquisition with and into Knoll in accordance with Section 251 of the
Delaware General Corporation Law (the "DGCL") and upon the terms, and subject to
the conditions, of this Agreement (the "Merger");
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I.
The Merger
Section 1.1. Formation of Acquisition. Prior to consummation of the Merger,
the Buyout Group will incorporate and organize Acquisition and contribute to
Acquisition, in exchange for the common stock of Acquisition, shares of Knoll
Common Stock owned by them and constituting at least a majority of the shares of
Knoll Common Stock outstanding.
Section 1.2. The Merger. At the Effective Time (as hereinafter defined),
upon the terms and subject to the conditions set forth in this Agreement and in
accordance with the DGCL, Acquisition shall be merged with and into Knoll, the
separate existence of Acquisition shall cease, and Knoll shall continue as the
surviving corporation (the "Surviving Corporation"). The Merger shall have the
effects as provided by the DGCL and other applicable law.
Section 1.3. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article V, Acquisition and
Knoll shall file with the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed in the Department of State of
the State of Delaware, or at such other time as is permissible in accordance
with the DGCL and as Acquisition and Knoll shall agree and as specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
Section 1.4. Closing. The closing of the Merger (the "Closing") will take
place at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 9:00 a.m. (New York time) on the date of the satisfaction of
the conditions provided in Article V, or at such other time and place as
Acquisition and Knoll shall agree (the "Closing Date").
Section 1.5. Certificate of Incorporation; By-laws; Officers and Directors.
Pursuant to the Merger: (a) the Certificate of Incorporation and By-laws of
Knoll as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation and By-laws of the Surviving Corporation following
the Merger, until thereafter changed or amended as provided therein and in
accordance with applicable law; (b) the directors of Knoll shall be the
directors of the Surviving Corporation following the Merger and until the
earlier of their death, resignation or removal or until their respective
successors are duly elected or appointed and qualified; and (c) the officers of
Knoll immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until the earlier of their death, resignation or removal
or until their respective successors are duly elected or appointed and
qualified.
Section 1.6. Effect on Common Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of Acquisition, Knoll or the
holders of any shares of Knoll Common Stock:
(a) Common Stock of Acquisition. Each share of Common Stock, par value $.01
per share, of Acquisition (the "Acquisition Common Stock") that is issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one share of the Common Stock, par value $.01 per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock").
(b) Common Stock of Knoll. Subject to Sections 1.6(c), 1.6(d), 1.6(e), 1.7
and 1.8, each share of Knoll Common Stock that is issued and outstanding
immediately prior to the Effective Time shall be converted into and become the
right to receive the sum (the "Merger Consideration") of $28.00 and the
Additional Amount (as defined below), if any, in cash and, when so converted,
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Knoll Common Stock
shall, to the extent such certificate represents such shares, cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration allocable to the shares formerly represented by such certificate
upon surrender of such certificate in accordance with Section 1.9. "Additional
Amount" shall mean an amount equal to the product of (i) $28.00, (ii) a
fraction, the numerator of which shall be the number of days in the period from
and including November 18, 1999 to but excluding the earlier of January 17, 2000
and the Closing Date, and the denominator of which shall be 365 and (iii) .065;
provided, however, that the Additional Amount shall be zero if the Effective
Time occurs prior to November 18, 1999.
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(c) Cancellation of Treasury Stock. Each share of Knoll Common Stock that
is owned immediately prior to the Effective Time by Knoll or any Subsidiary of
Knoll (as hereinafter defined) that constitutes treasury stock in the hands of
the holder thereof, shall be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor, and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto. The term "Subsidiary" means any corporation, joint venture,
partnership, limited liability company or other entity of which Knoll, directly
or indirectly, owns or controls capital stock (or other equity interests)
representing more than fifty percent of the general voting power of such entity
under ordinary circumstances.
(d) Knoll Common Stock Held by Acquisition. Each share of Knoll Common
Stock that is owned immediately prior to the Effective Time by Acquisition shall
be canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor, and Acquisition shall cease to have any rights
with respect to any certificates representing any such shares.
(e) Knoll Common Stock Subject to Incentive Plans or Held By Management
Members. Each share of Knoll Common Stock (i) issued pursuant to Xxxxx'x 1996
Stock Incentive Plan or 1997 Stock Incentive Plan (collectively, the "Knoll
Incentive Plans") that is outstanding immediately prior to the Effective Time
(whether or not vested), including any shares of Knoll Common Stock that were
issued upon exercise of Knoll Options (as defined below) granted under the Knoll
Incentive Plans, or (ii) otherwise held by any Management Member (except
pursuant to Xxxxx'x 401(k) Plan), but which, in either case of clauses (i) and
(ii) above, has not been transferred by the person to whom Knoll issued such
shares, shall remain outstanding as one share of Surviving Corporation Common
Stock and shall otherwise remain subject to the terms and conditions of the
Knoll Incentive Plans and any related agreements in effect immediately prior to
the Effective Time.
Section 1.7. Dissenting Shares
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(a) Notwithstanding anything in this Agreement to the contrary, shares of
Knoll Common Stock outstanding immediately prior to the Effective Time and held
by a holder who has demanded and perfected such holder's right to appraisal of
such shares in accordance with Section 262 of the DGCL ("Dissenting Shares")
shall not be converted into the right to receive the Merger Consideration, but
the holder thereof shall instead be entitled to such rights as are afforded
under the DGCL with respect to such holder's Dissenting Shares, unless such
holder fails to perfect or withdraws or otherwise loses such holder's right to
appraisal.
(b) If any holder of shares of Knoll Common Stock who demands appraisal of
such holder's shares pursuant to the DGCL fails to perfect or withdraws or
otherwise loses such holder's right to appraisal, at the later of the Effective
Time or upon the occurrence of such event, the Dissenting Shares of such holder
shall be converted into and represent the right to receive the Merger
Consideration, without interest thereon, in accordance with Section 1.6(b).
(c) Knoll shall give Warburg and, after its formation, Acquisition (i)
prompt notice of any written demand for appraisal or payment of the fair value
of any shares of Knoll Common Stock, withdrawals of such demands, and any other
instruments served pursuant to the DGCL received
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by Knoll and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. Knoll shall not
voluntarily make any payment with respect to any demand for appraisal and shall
not, except with the prior written consent of Warburg or Acquisition, settle or
offer to settle any such demands.
Section 1.8. Treatment of Stock Options. Knoll and the Surviving
Corporation shall take all actions necessary to provide that, upon consummation
of the Merger, each then outstanding option to purchase shares of Knoll Common
Stock (collectively, the "Knoll Options") granted under the Knoll Incentive
Plans, whether or not then exercisable or vested, shall be assumed by the
Surviving Corporation at the Effective Time, and each such Knoll Option shall
become an option to purchase that number of shares of Surviving Corporation
Common Stock (a "Knoll Substitute Option") equal to the number of shares of
Knoll Common Stock purchasable immediately prior to the Merger pursuant to such
Knoll Option. The exercise price per share for each Knoll Substitute Option
shall be the current exercise price per share of Knoll Common Stock of the Knoll
Option related thereto. Each Knoll Substitute Option otherwise shall be subject
to the other terms and conditions applicable to the Knoll Option to which it
relates.
Section 1.9. Exchange of Certificates.
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(a) Exchange Agent. Prior to the Effective Time, Knoll shall appoint a bank
or trust company to act as exchange agent (the "Exchange Agent") for the payment
of the Merger Consideration. As of the Effective Time, Acquisition shall have
deposited with the Exchange Agent, for the benefit of the holders of shares of
Knoll Common Stock, for exchange in accordance with this Section 1.9, the
aggregate amount of cash payable pursuant to Section 1.6(b) hereof in exchange
for outstanding shares of Knoll Common Stock (the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, the Exchange
Agent shall mail to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding shares of
Knoll Common Stock, whose shares were converted into the right to receive cash
pursuant to Section 1.6(b), a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
representing such shares of Knoll Common Stock shall pass, only upon delivery of
the certificates representing such shares of Knoll Common Stock to the Exchange
Agent and shall be in such form and have such other provisions as the Exchange
Agent may reasonably specify), and instructions for use in effecting the
surrender of the certificates representing such shares of Knoll Common Stock, in
exchange for the Merger Consideration. Upon surrender to the Exchange Agent of a
certificate or certificates formerly representing shares of Knoll Common Stock
and acceptance thereof by the Exchange Agent, the holder thereof shall be
entitled to the amount of cash into which the number of shares of Knoll Common
Stock formerly represented by such certificate or certificates surrendered shall
have been converted pursuant to this Agreement. The Exchange Agent shall accept
such certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. After the Effective Time, there shall
be no further transfer on the records of Knoll or its transfer agent of
certificates representing shares of Knoll Common Stock and if such certificates
are presented to Knoll for transfer, they shall be canceled against delivery of
the Merger Consideration allocable to the shares of Knoll Common Stock
represented by such
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certificate or certificates. If any Merger Consideration is to be remitted to a
name other than that in which the certificate for the Knoll Common Stock
surrendered for exchange is registered, it shall be a condition of such exchange
that the certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to Knoll, or its transfer agent, any transfer
or other taxes required by reason of the payment of the Merger Consideration to
a name other than that of the registered holder of the certificate surrendered,
or establish to the satisfaction of Knoll or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 1.9, each certificate for shares of Knoll Common Stock shall be deemed
at any time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration allocable to the shares represented by
such certificate as contemplated by Section 1.6(b). No interest will be paid or
will accrue on any amount payable as Merger Consideration.
(c) No Further Ownership Rights in Knoll Stock. The Merger Consideration
paid upon the surrender for exchange of certificates formerly representing
shares of Knoll Common Stock in accordance with the terms of this Section 1.9
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Knoll Common Stock formerly represented by such certificates.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any interest and other income received by the Exchange Agent in
respect of all such funds) which remains undistributed to the holders of the
certificates formerly representing shares of Knoll Common Stock for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holders of shares of Knoll Common Stock prior to the Merger who
have not theretofore complied with this Section 1.9 shall thereafter look only
to the Surviving Corporation, and only as general creditors thereof, for payment
of their claim for Merger Consideration to which such holders may be entitled.
(e) No Liability. No party to this Agreement shall be liable to any Person
(as hereinafter defined) in respect of any amount from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. The term "Person" means any individual, corporation,
partnership, trust or unincorporated organization or a government or any agency
or political subdivision thereof.
(f) Lost Certificates. In the event any certificate or certificates
formerly representing shares of Knoll Common Stock shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate or certificates to be lost, stolen or destroyed, and
if required by the Surviving Corporation, the posting by such Person of a bond
in such amount as the Surviving Corporation may reasonably require as indemnity
against any claim that may be made against it with respect to such certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Section 1.9.
(g) Withholding Rights. The Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this
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Agreement to any holder of shares of Knoll Common Stock such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
under the United States Internal Revenue Code of 1986, as amended, or any
provision of state, local or foreign tax law with respect to the making of such
payment. To the extent that amounts are so withheld by the Surviving Corporation
or the Exchange Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares of Knoll
Common Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or the Exchange Agent.
Section 1.10. Proxy Statement and Schedule 13E-3
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(a) Knoll shall prepare, in consultation with Warburg, the Proxy Statement
on Schedule 14A (the "Proxy Statement") to be distributed to holders of the
Knoll Common Stock for the purpose of soliciting proxies for use at the annual
or special meeting of stockholders of Knoll (the "Stockholders Meeting") at
which the adoption of this Agreement and the approval of the transactions
contemplated thereby shall be sought. In the Proxy Statement, subject to the
fiduciary duties of its Board of Directors or of the directors constituting the
Special Committee (as determined by such directors in good faith after
consultation with counsel), Knoll shall recommend to its stockholders the
approval of the Merger, this Agreement and the transactions contemplated hereby.
Knoll shall file the Proxy Statement with the SEC as soon as is reasonably
practicable after the date hereof and shall use all reasonable efforts to
respond to comments from the SEC and to cause the Proxy Statement to be mailed
to Xxxxx'x stockholders at the earliest practicable time.
(b) None of the information to be supplied by Knoll for inclusion in the
Proxy Statement will, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will, as of its
date, comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder. Knoll
will not mail, amend or supplement the Proxy Statement unless the Proxy
Statement or any amendment or supplement thereof is satisfactory in content to
Warburg in the exercise of its reasonable judgment.
(c) As soon as practicable after the date of this Agreement, Warburg and
Knoll shall file with the SEC, and shall use their reasonable best efforts to
cause any of their respective affiliates engaging in this transaction to file
with the SEC, a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the
"Schedule 13E-3 Transaction Statement") with respect to the Merger. Each of the
parties hereto agrees to use its reasonable best efforts to cooperate and to
provide each other with such information as any of such parties may reasonably
request in connection with the preparation of the Proxy Statement and the
Schedule 13E-3 Transaction Statement. Each party hereto agrees promptly to
supplement, update and correct any information provided by it for use in the
Proxy Statement and the Schedule 13E-3 Transaction Statement if and to the
extent that such information is or shall have become incomplete, false or
misleading.
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Section 1.11. Additional Agreements and Provisions. Upon the terms and
subject to the conditions of this Agreement and subject to the fiduciary duties
of the directors of Knoll or of the directors constituting the Special Committee
(as determined by such directors in good faith after consultation with counsel),
each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all additional action and to do, or cause to be done, all
additional things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of either Knoll or Acquisition, the proper
officers and directors of each corporation that is a party to this Agreement
shall take all such necessary action. The parties hereto agree to use their
respective best efforts to challenge any action brought against any of the
parties hereto seeking a temporary restraining order or preliminary or permanent
injunctive relief which would prohibit, or materially interfere with, the
consummation of the transactions contemplated by this Agreement.
ARTICLE II.
Representations and Warranties of Knoll
Knoll hereby represents and warrants to Warburg and Acquisition as follows:
Section 2.1. Organization of Knoll and its Subsidiaries. Knoll and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all the
requisite corporate power and authority to carry on its business as now being
conducted and to own, lease, use and operate the properties owned and used by
it. Knoll and each of its Subsidiaries is qualified and in good standing to do
business in each jurisdiction in which the nature of its business requires it to
be so qualified, except to the extent the failure to be so qualified has not
had, and would not reasonably be expected to have, a Material Adverse Effect.
The term "Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities, results of operations or financial condition of
Knoll and its Subsidiaries, taken as a whole.
Section 2.2. Capitalization of Knoll; Ownership. The authorized capital
stock of Knoll consists of 100,000,000 shares of Knoll Common Stock, of which
40,645,363 shares are issued and outstanding as of the date hereof. All of the
issued and outstanding shares of capital stock of Knoll are duly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights.
Except for outstanding Knoll Options to purchase an aggregate of no more than
2,750,000 shares of Knoll Common Stock, there are no outstanding options,
warrants or other rights of any kind to acquire (including preemptive rights)
any additional shares of capital stock of Knoll or securities convertible into
or exchangeable for, or which otherwise confer on the holder thereof any right
to acquire, any such additional shares, nor is Knoll committed to issue any such
option, warrant, right or security. Following the Merger, Knoll will have no
obligation to issue, transfer or sell any shares of its capital stock or other
securities of Knoll pursuant to any employee benefit plan or otherwise.
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Section 2.3. Subsidiaries of Knoll. All shares of capital stock of each
Subsidiary have been validly issued and are fully paid and non-assessable. There
are no outstanding options, warrants or other rights of any kind to acquire
(including preemptive rights) any additional equity interests of any Subsidiary
or securities convertible into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire, any additional equity interests of any
Subsidiary, nor is any Subsidiary committed to issue any such option, warrant,
right or security. Other than the Subsidiaries referred to in this Section 2.3,
Knoll does not own, directly or indirectly, any equity interest in any other
corporation, joint venture, partnership, limited liability company or other
entity.
Section 2.4. Authorization. Knoll has all requisite corporate power and
authority to enter into this Agreement and, subject to any necessary approval of
the Merger by the stockholders of Knoll, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of Knoll (other than the approval of this Agreement and the transactions
contemplated hereby by the stockholders of Knoll). The Board of Directors of
Knoll has unanimously adopted resolutions approving this Agreement and the
Merger, and has determined that the terms of the Merger are fair to, and in the
best interests of, Knoll and its stockholders. Knoll has taken all action
necessary to exempt the Merger and the other transactions contemplated hereby
with Warburg, Acquisition and their affiliates from the operation of the
"Business Combination Statute" at Section 203 of the DGCL. This Agreement has
been duly executed and delivered by Knoll and, assuming the due authorization,
execution and delivery hereof by Acquisition, constitutes the valid and binding
obligation of Knoll, enforceable against Knoll in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
or by general equitable principles.
Section 2.5. Fairness Opinion and Approval by the Special Committee. On or
prior to the date hereof, the Special Committee (i) determined that the Merger
is fair to and in the best interest of the stockholders of Knoll other than the
Buyout Group (the "Public Stockholders") and (ii) recommended that the Board of
Directors of Knoll approve this Agreement and such transactions. The Special
Committee has received an opinion of Lazard Freres & Co., L.L.C. to the effect
that the consideration to be received by the Public Stockholders in the Merger
is fair to such stockholders from a financial point of view.
Section 2.6. Brokers and Finders. Other than Lazard Freres & Co., L.L.C.,
neither Knoll nor any Subsidiary has employed any broker, finder, advisor or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to a broker's, finder's or similar fee or commission in
connection therewith or upon the consummation thereof. Any such fees due to
Lazard Freres & Co., L.L.C. shall be paid by Knoll.
Section 2.7. SEC Documents; Undisclosed Liabilities. Knoll has filed all
required reports, schedules, forms, statements and other documents with the
Securities and Exchange Commission (the "SEC") since January 1, 1998 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and
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regulations of the SEC promulgated thereunder applicable to such SEC Documents.
Except to the extent that information contained in any SEC Document has been
revised or superseded by a later filed SEC Document, none of the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Knoll included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by applicable instructions or regulations of
the SEC relating to the preparation of quarterly reports on Form 10-Q) applied
on a consistent basis during the period involved (except as may be indicated in
the notes thereto) and fairly present the financial position of Knoll as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 2.8. Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed and publicly available prior to the date of this
Agreement, since the date of the most recent audited financial statements
included in the filed SEC Documents, Knoll has conducted its business only in
the ordinary course, and there has not been any material adverse change in the
business or financial condition of Knoll and its subsidiaries taken as a whole.
ARTICLE III.
Representations and Warranties of Warburg
Warburg hereby represents and warrants to Knoll as follows:
Section 3.1. Organization and Authority of Acquisition. At the Effective
Time, Acquisition will be a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. Acquisition will be
incorporated solely for the purpose of merging with and into Knoll and taking
action incident thereto. Except for obligations or liabilities incurred in
connection with the transactions contemplated by this Agreement or in connection
with its organization, at the Effective Time Acquisition will not have incurred
any obligations or liabilities or engaged in any business activities of any
kind.
Section 3.2. Authorization. Warburg has, and Acquisition will have, all
partnership or corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been (or in the case
of Acquisition, will be) duly authorized by all requisite partnership or
corporate action on the part of Warburg and Acquisition. This Agreement has been
duly executed and delivered by Warburg and, assuming the due authorization,
execution and delivery hereof by Knoll, constitutes the valid and binding
obligation of Warburg, enforceable against Warburg in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency,
9
reorganization, or similar laws affecting creditors' rights generally or by
general equitable principles. Upon consummation of the Assignment (as
hereinafter defined), assuming the due authorization, execution and delivery
hereof by Knoll, this Agreement will constitute the valid and binding obligation
of Acquisition, enforceable against Acquisition in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws affecting creditors' rights
generally or by general equitable principles.
Section 3.3. Brokers and Intermediaries. Other xxxx Xxxxxxx Xxxxx & Co.,
Warburg has not, and Acquisition will not have, employed any broker, finder,
advisor or intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to a broker's, finder's, or similar fee or
commission in connection therewith or upon the consummation thereof. Any such
fees shall be the liability of Warburg or Acquisition.
Section 3.4. Proxy Statement. None of the information to be supplied by
Warburg or Acquisition for inclusion in the Proxy Statement will, at the time of
the mailing of the Proxy Statement and any amendments or supplements thereto,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 3.5. Financing. Warburg has received a letter (the "Commitment
Letter") from NationsBank, N.A., as Administrative Agent, The Chase Manhattan
Bank, as Syndication Agent, Xxxxxxx Xxxxx & Co. and Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, as Documentation Agent, and Banc of America
Securities LLC and Chase Securities, Inc., as Joint Lead Arrangers and Joint
Book Managers, committing to provide to Acquisition, upon the terms and subject
to the conditions therein, up to $775 million in financing in connection with
the Merger and certain transactions related thereto and for ongoing general
corporate purposes. Warburg has furnished a copy of the Commitment Letter to the
Special Committee and its advisers.
Section 3.6. Sale of Knoll. Neither Warburg nor any of its affiliates has
any agreement, understanding or any present intention to sell Knoll or any
material part of Knoll.
ARTICLE IV.
Certain Covenants and Agreements
Section 4.1. Announcement. None of Knoll, Warburg or Acquisition shall
issue any press release or otherwise make any public statement with respect to
this Agreement and the transactions contemplated hereby without the prior
consent of the others (which consent shall not be unreasonably withheld), except
as may be required by applicable law or stock exchange regulation.
Notwithstanding anything in this Section 4.1 to the contrary, Acquisition,
Warburg and Knoll will, to the extent practicable, consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any such press release or other public
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statement with respect to this Agreement and the transactions contemplated
hereby whether or not required by law.
Section 4.2. Notification of Certain Matters. Knoll shall give prompt
notice to Warburg and Acquisition, and Warburg and Acquisition shall give prompt
notice to Knoll, of (a) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (b) any
material failure of Knoll, or of Warburg or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.3 shall not limit or otherwise affect the remedies
available hereunder to the party or parties receiving such notice.
Section 4.3. Directors' And Officers' Indemnification.
----------------------------------------
(a) The Certificate of Incorporation and the By-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
limitation of liability of directors and officers set forth in Xxxxx'x
Certificate of Incorporation and By-laws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective Time were
directors or officers of Knoll, unless such modification is required by law.
(b) The Surviving Corporation shall maintain in effect for six years from
the Effective Time policies of directors' and officers' liability insurance
containing terms and conditions which are not less advantageous to the insured
than any such policies of Knoll currently in effect on the date of this
Agreement (the "Knoll Insurance Policies"), with respect to matters occurring
prior to the Effective Time, to the extent available, and having the maximum
available coverage under any such Knoll Insurance Policies; provided, that in no
event shall the Surviving Corporation be required to pay annual premiums for
insurance under this Section 4.3(b) in excess of 200% of the annual premiums
currently paid by Knoll and provided further, however, that if the annual
premiums for such insurance coverage exceed 200% of the annual premiums
currently paid by Knoll, the Surviving Corporation shall be obligated to obtain
a policy with the greatest coverage that can be obtained for premiums that are
200% of the annual premiums currently paid by Knoll.
Section 4.4. Stockholders Meeting. Knoll agrees to seek and solicit the
requisite vote of stockholders at the Stockholders Meeting for the adoption and
approval of this Agreement and the transactions contemplated hereby. Warburg
agrees to vote all shares of Knoll Common Stock owned by it, and to cause
Acquisition to vote any and all shares of Knoll Common Stock that Acquisition
may own, at the Stockholders Meeting in favor of the adoption and approval of
this Agreement and the transactions contemplated hereby.
Section 4.5. Obligations of Acquisition. Warburg shall take all actions
necessary to cause Acquisition to perform its obligations in accordance with the
terms, and subject to the conditions, of this Agreement.
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ARTICLE V.
Conditions Precedent
Section 5.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any of which may be waived by the parties hereto in writing, in
whole or in part, to the extent permitted by applicable law):
(a) No Injunction or Proceeding. No preliminary or permanent injunction,
temporary restraining order or other decree of a court, legislature or other
agency or instrumentality of federal, state or local government (a "Governmental
Entity") shall be in effect, no statute, rule or regulation shall have been
enacted by a Governmental Entity and no action, suit or proceeding by any
Governmental Entity shall have been instituted or threatened, which prohibits
the consummation of the Merger or materially challenges the transactions
contemplated hereby.
(b) Consents. Other than filing the Certificate of Merger, all consents,
approvals and authorizations of and filings with Governmental Entities required
for the consummation of the transactions contemplated hereby shall have been
obtained or effected or filed.
(c) Approval of Holders of Knoll Common Stock. This Agreement and the
Merger shall have been adopted by the affirmative vote or written consent of a
majority of the shares of Knoll Common Stock outstanding.
(d) Consent of Holders of Senior Subordinated Notes. The holders of a
majority in principal amount of Xxxxx'x outstanding 10-7/8% Senior Subordinated
Notes due 2006 shall have consented to the Merger (including the related
financing thereof).
(e) Recommendation of the Special Committee. The Special Committee shall
not have withdrawn its recommendation that (i) the Merger is fair to and in the
best interest of the Public Stockholders and (ii) the Board of Directors of
Knoll approve this Agreement and such transactions.
Section 5.2. Conditions to the Obligation of Knoll to Effect the Merger.
The obligation of Knoll to effect the Merger is further subject to the
satisfaction or waiver of each of the following conditions prior to or at the
Closing Date:
(a) Representations and Warranties. The representations and warranties of
Warburg and Acquisition contained in this Agreement shall be true and correct in
all material respects at and as of the Effective Time as though made at and as
of the Effective Time, and Knoll shall have received a certificate of the
President of Acquisition to that effect.
(b) Agreements. Warburg and Acquisition shall have performed and complied
in all material respects with all their undertakings and agreements required by
this Agreement to be performed or complied with by them prior to or at the
Closing Date.
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Section 5.3. Conditions to the Obligation of Acquisition to Effect the
Merger. The obligation of Acquisition to effect the Merger is further subject to
the satisfaction or waiver of each of the following conditions prior to or at
the Closing Date:
(a) Representations and Warranties. The representations and warranties of
Knoll contained in this Agreement shall be true and correct in all material
respects at and as of the Effective Time as though made at and as of the
Effective Time, and Acquisition shall have received a certificate of the
President and Chief Executive Officer of Knoll to that effect.
(b) Agreements. Knoll shall have performed and complied in all material
respects with all of its undertakings and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
(c) No Material Adverse Change. Except as set forth in the Knoll SEC
Reports filed on or prior to the date of this Agreement, since December 31, 1998
there shall have been no material adverse change in the business, assets,
liabilities, results of operations or financial condition of Knoll and its
Subsidiaries, taken as a whole.
(d) Availability of Funds. Acquisition shall have funds available to it at
the Closing sufficient to pay the Merger Consideration, pursuant to the
Commitment Letter or any other commitment acceptable to Acquisition.
(e) Appraisal Rights. The holders of not more than 10% of the issued and
outstanding shares of Knoll Common Stock shall have exercised their rights to
dissent from the Merger in accordance with Section 262 of the DGCL and pursuant
to Section 1.7 of this Agreement.
ARTICLE VI.
Termination, Amendment and Waiver
Section 6.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after stockholder approval thereof:
(a) by the mutual written consent of Warburg (or Acquisition, after its
formation) and Knoll (with the approval of the Special Committee);
(b) by either Warburg (or Acquisition, after its formation) or Knoll (with
the approval of the Special Committee), in each case by written notice to the
other, if:
(i) the Merger has not been consummated on or prior to December 31,
1999; provided, however, that the right to terminate this Agreement under
this Section 6.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or prior to such date;
or
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(ii) the Special Committee shall have withdrawn, or modified or
changed in any manner adverse to Acquisition its approval of this Agreement
or the Merger after having concluded in good faith after consultation with
independent legal counsel that there is a reasonable probability that the
failure to take such action would result in a violation of its fiduciary
obligations under applicable law.
Section 6.2. Effect of Termination. In the event of the termination of this
Agreement as provided in Section 6.1, this Agreement shall become null and void,
and there shall be no liability on the part of Warburg, Acquisition or Knoll
(except as set forth in Section 7.2 hereof, which shall survive any termination
of this Agreement); provided that nothing herein shall relieve any party from
any liability or obligation with respect to any breach of this Agreement.
Section 6.3. Amendment. This Agreement may be amended in writing by the
parties hereto; provided that any amendment of this Agreement following approval
by the stockholders of Knoll at the Stockholders Meeting that, in the judgment
of the Special Committee, adversely affects in any material respect the rights
of stockholders under this Agreement shall require the prior approval of the
stockholders of Knoll.
Section 6.4. Waiver. At any time prior to the Effective Time, whether
before or after the approval of the holders of Knoll Common Stock referred to in
Section 5.1(c) hereof, either party may (i) extend the time for the performance
of any of the obligations or other acts of the other party hereto or (ii) waive
compliance with any of the agreements of the other party or fulfillment of any
conditions to its own obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party by a duly authorized
officer.
Section 6.5. Approval of Special Committee Required. The approval of the
Special Committee shall be required for (i) any amendment or modification of
this Agreement that adversely affects in any material respect the rights of
stockholders under this Agreement, (ii) any waiver of any condition to the
obligations of Knoll under Sections 5.1(e), 5.2(a) or 5.2(b) hereof and (iii)
any waiver of Xxxxx'x rights under this Agreement.
ARTICLE VII.
Miscellaneous
Section 7.1. Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time, and neither
Warburg, Acquisition or Knoll, nor any of their respective officers, directors
or employees or stockholders, shall have any liability whatsoever with respect
to any such representation or warranty after such time. This Section 7.1 shall
not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
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Section 7.2. Expenses. Except as contemplated by this Agreement, all costs
and expenses incurred in connection with the Agreement and the consummation of
the transactions contemplated hereby shall be the obligation of the party
incurring such expenses. All costs and expenses incurred by Warburg or
Acquisition in connection with the Agreement and the consummation of the
transactions contemplated hereby shall, after the Effective Time, be obligations
of the Surviving Corporation.
Section 7.3. Applicable Law. This Agreement shall be governed by the law,
excluding conflicts of law rules, of the State of Delaware.
Section 7.4. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given or made as follows:
(a) if sent by registered or certified mail in the United States return receipt
requested, upon receipt; (b) if sent by reputable overnight air courier, two
business days after being so sent; (c) if sent by telecopy transmission, with a
copy mailed on the same day in the manner provided in clauses (a) or (b) above,
when transmitted and receipt is confirmed by telephone; or (d) if otherwise
actually personally delivered, when delivered, and shall be sent or delivered as
follows:
If to Knoll, to:
Xxxx X. Xxxxx
President & CEO
Xxxxx, Inc.
0000 Xxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
(000) 000-0000 (facsimile)
with a copy to:
Xxxxxxx X. Xxxxxxxxx, Esq.
Vice President, General Counsel and Secretary
Xxxxx, Inc.
0000 Xxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
(000) 000-0000 (facsimile)
and to:
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 (facsimile)
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If to Warburg or Acquisition, to:
Xxxxxxx X. Xxxxxx
Managing Director
Warburg, Xxxxxx Ventures, L.P.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 (facsimile)
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 (facsimile)
Such names and addresses may be changed by such notice.
Section 7.5. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) contains the entire understanding of the parties
hereto with respect to the subject matter contained herein, and supersedes and
cancels all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting such subject matter.
Section 7.6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any either party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other party; provided, however, that promptly following the formation of
Acquisition, Warburg shall assign to Acquisition (the "Assignment") its rights,
interests and obligations hereunder, Acquisition shall assume and succeed to
such rights, interests and obligations, and Warburg shall be fully and
irrevocably relieved of its obligations hereunder, except its obligations
pursuant to Sections 1.11, 4.1, 4.2, 4.4 and 4.5 hereof. This Section 7.6 shall
survive any termination of this Agreement.
Section 7.7. Headings; References. The article, section and paragraph
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Section 7.8. Counterparts. This Agreement may be executed in one or more
counterparts, each counterpart shall be deemed to be an original but all of
which shall be considered one and the same agreement.
Section 7.9. No Third Party Beneficiaries. Except as provided in Sections
1.9 and 4.3, nothing in this Agreement, express or implied, is intended to
confer upon any Person not a party to this Agreement any rights or remedies
under or by reason of this Agreement.
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Section 7.10. Severability; Enforcement. Any term or provision of this
Agreement that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or unenforceability
of any of the terms or provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provisions shall be interpreted to be only so broad as is enforceable.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
XXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
WARBURG, XXXXXX VENTURES, L.P.
By: Warburg, Xxxxxx & Co., General Partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
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