<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
KNOLL, INC.
(Name of Issuer)
Common Stock, $0.01 Par Value
(Title of Class of Securities)
498904-10-4
(CUSIP Number)
Stephen Distler
E.M. Warburg, Pincus & Co., LLC
466 Lexington Avenue
New York, New York 10017
(212) 878-0600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With Copies To:
Patrick A. Milberger Michael A. Schwartz
Knoll, Inc. Willkie Farr & Gallagher
1235 Water Street 787 Seventh Avenue
East Greenville, Pennsylvania 18041 New York, New York 10019
(215) 679-1335 (212) 728-8000
June 21, 1999
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box. [ ]
Continued on following page(s)
Page 1 of 18 Pages
Exhibit Index: Page 16
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 2 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Ventures, L.P. I.D. #13-3784037
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 20,709,922
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
20,709,922
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
20,709,922
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 3 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co. I.D. #13-6358475
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
272,034
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 20,709,922
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
272,034
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
20,709,922
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
20,981,956
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.7%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 4 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 20,709,922
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
20,709,922
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
20,709,922
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 5 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Burton B. Staniar I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
1,187,927
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,187,927
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
1,187,927
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 6 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John H. Lynch I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
815,079
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
815,079
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
815,079
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 7 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Andrew B. Cogan I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
382,931
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
382,931
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
382,931
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 8 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kathleen G. Bradley I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
276,265
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
276,265
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
276,265
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.7%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 9 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Douglas J. Purdom I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
333,512
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
333,512
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
333,512
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.8%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP No. 498904-10-1 Page 10 of 18 Pages
- --------------------- -------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Carl G. Magnusson I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
32,911
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
32,911
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
32,911
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.1%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP No. 498904-10-1 Page 11 of 18 Pages
- --------------------- -------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Patrick A. Milberger I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
49,386
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
49,386
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
49,386
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.1%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP No. 498904-10-1 Page 12 of 18 Pages
- --------------------- -------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Barbara E. Ellixson I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
50,403
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
50,403
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
50,403
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.1%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 498904-10-1 Page 13 of 18 Pages
- --------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Barry L. McCabe I.D. #
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
128,589
--------- ------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 0
PERSON WITH
--------- ------------------------------------------------
9 SOLE DISPOSITIVE POWER
128,589
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
128,589
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.3%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
This Amendment No. 1 amends the Schedule 13D filed on April 2, 1999
(together, the "Schedule 13D"), on behalf of Warburg, Pincus Ventures, L.P.,
("WPV"), Warburg, Pincus & Co. ("WP") and E.M. Warburg, Pincus & Co., LLC ("EMW"
and, together with WPV and WP, the "Warburg Reporting Persons") and on behalf of
Burton B. Staniar, John H. Lynch, Andrew B. Cogan, Kathleen G. Bradley, Douglas
J. Purdom, Carl G. Magnusson, Patrick A. Milberger, Barbara E. Ellixson and
Barry L. McCabe (the "Management Reporting Persons" and, together with the
Warburg Reporting Persons, the "Reporting Persons"), pursuant to Rule
13d-1(k)(1).
This Schedule 13D is being filed to reflect certain events which occurred
on June 21, 1999, as required under the Securities Exchange Act of 1934, as
amended.
Item 3. Sources and Amounts of Funds or Other Consideration.
Item 3 of the Schedule 13D is hereby amended by deleting the final two
paragraphs thereof and adding the following paragraphs at the end thereof:
As more fully described in Item 4 below, on June 21, 1999, WPV entered into
an Agreement and Plan of Merger, by and between WPV and the Issuer (the "Merger
Agreement"), providing for the acquisition (the "Purchase") of all outstanding
shares of Common Stock not owned by the Reporting Persons for a cash purchase
price of $28.00 per share. The Reporting Persons contemplate that certain of the
Management Reporting Persons may sell, prior to or upon the consummation of the
Purchase, up to 50% of each such person's current aggregate holdings. Based on
40,645,363 shares of Common Stock outstanding as of June 21, 1999, the Reporting
Persons estimate that the aggregate purchase price to be paid in the Purchase
will be approximately $500 million.
WPV has entered into a Commitment Letter, dated June 21, 1999, with
NationsBank, N.A., The Chase Manhattan Bank and Merrill Lynch & Co. (the
"Commitment Letter"), which contemplates that the Issuer will borrow up to $775
million (the "Credit Facility") to (i) fund the Purchase and related costs and
expenses, (ii) refinance the Issuer's existing senior subordinated indebtedness
and (iii) provide for ongoing general corporate purposes after completion of the
Purchase. The commitment is subject to the satisfaction of conditions customary
in transactions of this type, including the condition that there be no material
adverse change in the (i) market for syndicated credit facilities which could
materially impair the syndication of the Credit Facility or (ii) business,
operations, or financial condition of the Issuer and its subsidiaries taken as a
whole.
The Merger Agreement and the Commitment Letter are filed as exhibits to
this Schedule 13D and are incorporated by reference herein.
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended by deleting the final two
paragraphs thereof and adding the following paragraphs at the end thereof:
Page 14 of 18 Pages
<PAGE>
On June 21, 1999, WPV and the Issuer entered into the Merger Agreement,
providing for the acquisition of all outstanding shares of Common Stock not
owned by the Reporting Persons (other than shares of Common Stock issued
pursuant to the Issuer's stock incentive plans that have not been transferred by
the person to whom such shares were issued) for a cash purchase price of $28.00
per share.
The Merger Agreement was approved by the Board of Directors of the Issuer
following the unanimous recommendation by a special committee of independent
directors (the "Special Committee"). Lazard Freres & Co., LLC is acting as
financial advisor to the Special Committee and has rendered its opinion to the
Special Committee that, as of the date of such opinion, the merger consideration
is fair from a financial point of view to the public shareholders.
The Merger Agreement provides that a newly formed entity ("Newco") would
merge with and into the Issuer, and the public shareholders of the Issuer would
receive $28.00 per share in cash for the approximately 17.7 million shares owned
by them, representing approximately 40% of the shares outstanding. Additionally,
if the effective time of the Purchase does not occur prior to November 18, 1999,
the merger consideration to be paid to the Issuer's public shareholders will be
increased at an annual rate of 6.5% from November 18, 1999 until the earlier of
the effective time or January 17, 2000.
Consummation of the Purchase is subject to, among other things, (i)
approval at the Issuer's 1999 Annual Meeting by at least a majority of the
outstanding Common Stock, (ii) receipt of financing for the transaction as
provided in the Merger Agreement, and (iii) receipt of consents to the merger
from the holders of a majority of the Issuer's outstanding senior subordinated
notes. As described in Item 3 above, WPV has received the Commitment Letter from
NationsBank, N.A., The Chase Manhattan Bank and Merrill Lynch & Co. to provide,
subject to certain conditions, the financing necessary to complete the Purchase.
The Purchase is expected to be completed in the third quarter of 1999.
The Reporting Persons currently expect that the Purchase will be effected
by Newco, to which the Warburg Reporting Persons will contribute all of the
shares of Common Stock held by them and to which the Management Reporting
Persons will contribute at least an aggregate of 50% of each such person's
current aggregate holdings. Additionally, the Reporting Persons intend to permit
certain additional members of the Issuer's management to contribute shares of
Common Stock held by them to Newco. As of June 21, 1999, the Reporting Persons
own approximately 60% of the outstanding Common Stock.
The Issuer has announced that it has entered into a Memorandum of
Understanding with counsel to the plaintiffs in the shareholder lawsuits arising
from the Purchase, which lawsuits have named certain Reporting Persons as
defendants. The Memorandum of Understanding provides for the settlement of such
lawsuits based on the payment of a per share merger consideration of $28.00 and
is subject to, among other things, completion of definitive documentation
relating to the settlement, court approval and consummation of the Purchase. The
Memorandum of Understanding is filed as an exhibit to this Schedule 13D and is
incorporated by reference herein.
Page 15 of 18 Pages
<PAGE>
Item 7. Material to be Filed as Exhibits.
Exhibit Number Description
- -------------- -----------
EXHIBIT A Agreement to file Joint Statement on Schedule 13D
(previously filed).
EXHIBIT B Agreement and Plan of Merger, by and between Warburg, Pincus
Ventures, L.P. and Knoll, Inc., dated June 21, 1999
(incorporated by reference from the Issuer's Current Report
on Form 8-K (File No. 001-12907) filed on June 22, 1999).
EXHIBIT C Press Release issued by Knoll, Inc. on June 21, 1999
(incorporated by reference from the Issuer's Current Report
on Form 8-K (File No. 001-12907) filed on June 22, 1999).
EXHIBIT D Commitment Letter, dated June 21, 1999, among Warburg,
Pincus Ventures, L.P., NationsBank, N.A., The Chase
Manhattan Bank and Merrill Lynch & Co. (filed herewith).
EXHIBIT E Memorandum of Understanding, dated June 21, 1999, among
counsel to the plaintiffs and counsel to the defendants in
the various class action lawsuits instituted by certain
stockholders of the Knoll, Inc. (incorporated by reference
from the Issuer's Current Report on Form 8-K (File No.
001-12907) filed on June 22, 1999).
Pge 16 of 18 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct as of the 22nd day of June 1999.
WARBURG, PINCUS VENTURES, L.P.
By: /s/ Stephen Distler
-------------------------
Name: Stephen Distler
Title: Partner
WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
-------------------------
Name: Stephen Distler
Title: Partner
E. M. WARBURG, PINCUS & CO., LLC
By: /s/ Stephen Distler
-------------------------
Name: Stephen Distler
Title: Member
/s/ Burton B. Staniar
-------------------------
Burton B. Staniar
/s/ John H. Lynch
-------------------------
John H. Lynch
/s/ Andrew B. Cogan
-------------------------
Andrew B. Cogan
/s/ Kathleen G. Bradley
-------------------------
Kathleen G. Bradley
/s/ Douglas J. Purdom
-------------------------
Douglas J. Purdom
/s/ Carl G. Magnusson
-------------------------
Carl G. Magnusson
/s/ Patrick A. Milberger
-------------------------
Patrick A. Milberger
Page 17 of 18 Pages
<PAGE>
/s/ Barbara E. Ellixson
-------------------------
Barbara E. Ellixson
/s/ Barry L. McCabe
-------------------------
Barry L. McCabe
Page 18 of 18 Pages
<PAGE>
EXHIBIT D
---------
THE CHASE MANHATTAN BANK NATIONSBANK, N.A.
270 Park Avenue Bank of America Corporate Center
4th Floor 100 North Tryon Street
New York, New York 10017 Charlotte, North Carolina 28255
CHASE SECURITIES, INC. BANC OF AMERICA SECURITIES LLC
270 Park Avenue Bank of America Corporate Center
4th Floor 100 North Tryon Street
New York, New York 10017 Charlotte, North Carolina 28255
June 21, 1999
Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
10th Floor
New York, NY 10017-3147
RE: Senior Secured Financing
------------------------
Ladies and Gentlemen:
1. You have advised us that Warburg, Pincus Ventures, L.P., Inc., (the
"Sponsor") and certain management of Knoll, Inc. intend to make through a newly
formed wholly owned subsidiary ("Newco") an offer to acquire approximately 17.9
million outstanding shares of common stock of Knoll, Inc. for an amount not to
exceed $28 per share (the "Repurchase"). You have advised us that $775 million
in senior bank financing will be required in order to effect the Repurchase, to
pay the costs and expenses related to the Repurchase, to refinance the existing
senior and subordinated indebtedness of Knoll, Inc. and to provide for ongoing
general corporate purposes after completion of the Repurchase and that no
external financing other than the financing described herein will be required in
connection with the Repurchase (collectively, the "Recapitalization"). Upon
consummation of the Repurchase, Newco will merge into Knoll, Inc. with Knoll,
Inc. being the surviving entity. The Sponsor may at any time assign (an
"Assignment") to Newco the Sponsor's rights and obligations hereunder and under
the Term Sheet and Fee Letter, provided that from and after such assignment the
Sponsor shall be jointly and severally liable with Newco hereunder and
thereunder subject to the limitations set forth in paragraph 16 of this letter.
Prior to such assignment, "you" refers to the Sponsor and from and after such
assignment, "you" refers to Newco.
2. In connection with the foregoing, (i) NationsBank, N.A. ("NationsBank" or
the "Administrative Agent") is pleased to advise you of its commitment to act as
Administrative Agent and to provide $348,750,000 of the total principal amount
of the senior bank credit facilities (the "Credit Facilities") described in the
Summary of Terms and Conditions attached hereto (the "Term Sheet"), (ii) The
Chase Manhattan Bank ("Chase" or the "Syndication Agent")
<PAGE>
June 21, 1999
Page 2
is pleased to advise you of its commitment to act as Syndication Agent and to
provide $348,750,000 of the total principal amount of the Credit Facilities and
(iii) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch Inc") (the "Documentation Agent") is pleased to advise you of
its commitment to act as Documentation Agent and of the commitment of Merrill
Lynch Capital Corporation ("Merrill Lynch Capital") to provide $77,500,000 of
the total principal amount of the Credit Facilities, in each case subject to the
conditions set forth below and in the Term Sheet. All capitalized terms used and
not otherwise defined herein shall have the meanings set forth in the Term
Sheet. NationsBank, Chase and Merrill Lynch Inc may be referred to collectively
herein as the "Agents".
3. Furthermore, Banc of America Securities LLC ("BAS") and Chase Securities,
Inc. ("Chase Securities") are pleased to advise you that they are willing to act
as Joint-Lead Arrangers and Joint-Book Managers for the Credit Facilities and to
form a syndicate of financial institutions, including the Agents (the "Lenders")
reasonably acceptable to BAS, Chase Securities and you for the Credit
Facilities. BAS and Chase Securities may be referred to collectively herein as
the "Joint Lead-Arrangers". No additional agents will be appointed without the
prior approval of the Agents and Joint Lead-Arrangers
4. The commitments of the Agents and the Joint Lead-Arrangers hereunder are
subject to the satisfaction of each of the following conditions precedent in a
manner reasonably acceptable to the Agents and the Joint Lead-Arrangers:
(a) each of the terms and conditions set forth herein;
(b) each of the terms and conditions set forth in the Term Sheet;
(c) the absence of a material breach of any representation or warranty
of the Sponsor set forth herein;
(d) execution of the fee letter dated the date hereof among the
Sponsor, NationsBank, BAS, Chase, Chase Securities, Merrill Lynch Inc and
Merrill Lynch Capital (the "Fee Letter") prior to or concurrently with the
acceptance by the Sponsor of this letter;
(e) execution of the fee letter dated the date hereof among the
Sponsor, NationsBank and BAS (the "NationsBank Fee Letter") prior to or
concurrently with the acceptance by the Sponsor of this letter;
(f) there not having occurred and being continuing since the date
hereof a material adverse change or a material disruption in the market for
syndicated credit facilities which, in our reasonable judgment, could
materially impair the syndication of the Credit Facilities.
5. Furthermore, the commitments of the Agents and the Joint Lead-Arrangers
hereunder are based upon the financial and other information regarding Knoll,
Inc. and its subsidiaries previously provided to the Agents and the Joint
Lead-Arrangers and are subject to the condition, among others, that there shall
not have occurred after the date of such information, in the reasonable opinion
of the Agents, any material adverse change (or any event or condition that could
reasonably be expected to have a material adverse change) in the business,
operations, or financial condition of Knoll, Inc. and its subsidiaries taken as
a whole.
-2-
<PAGE>
June 21, 1999
Page 3
If the continuing review by the Agents and the Joint Lead-Arrangers of Knoll,
Inc. and its subsidiaries discloses information relating to conditions or events
not previously disclosed to the Agents and the Joint Lead-Arrangers or relating
to new information or additional developments concerning conditions or events
previously disclosed to the Agents and the Joint Lead-Arrangers which will have
or could reasonably be expected to have a material adverse effect on the
business, operations or financial condition of Knoll, Inc., the Agents and the
Joint Lead-Arrangers may, in their sole discretion, suggest alternative
financing amounts or structures that ensure adequate protection for the Lenders
or decline to participate in the proposed financing.
6. The Joint Lead-Arrangers intend to commence syndication efforts promptly
following your acceptance of this commitment, and you agree to actively assist,
and to cause Knoll, Inc. to assist, the Joint Lead-Arrangers in achieving a
syndication of the Credit Facilities that is satisfactory to them. Such
assistance by you and Knoll, Inc. shall include (a) providing and causing your
advisors to provide the Agents, the Joint Lead-Arrangers and the other Lenders
upon request with all information reasonably deemed necessary by the Joint
Lead-Arrangers to complete syndication, including but not limited to information
and evaluations prepared by the Sponsor, Knoll, Inc. or their advisors, or on
their behalf, relating to the Recapitalization and/or Knoll, Inc., (b) assisting
the Joint Lead-Arrangers upon their reasonable request in the preparation of an
Information Memorandum to be used in connection with the syndication of the
Credit Facilities and (c) otherwise assisting the Joint Lead-Arrangers in their
syndication efforts, including by making available mutually agreed upon officers
and advisors of Knoll, Inc. and its subsidiaries from time to time to attend and
make presentations regarding the business and prospects of Knoll, Inc. and its
subsidiaries at a meeting or meetings of prospective Lenders. You further agree
to refrain from engaging in any additional financings for the Repurchase during
such syndication process unless otherwise agreed to by the Agents and the Joint
Lead-Arrangers.
7. It is understood and agreed that the Joint Lead-Arrangers, after
consultation with you, will manage and control all aspects of the syndication of
the Credit Facilities, including decisions as to the selection of proposed
Lenders and any titles offered to proposed Lenders, when commitments will be
accepted and the final allocations of the commitments among the Lenders. It is
understood that no Lender participating in the Credit Facilities will receive
compensation from you outside the terms contained herein and in the Term Sheet
in order to obtain its commitment. It is also understood and agreed that the
amount and distribution of the fees among the Lenders will be at the sole
discretion of the Joint Lead-Arrangers.
8. You hereby represent, warrant and covenant that (i) all information, other
than Projections (as defined below), which has been or is hereafter made
available to the Agents, the Joint Lead-Arrangers or the Lenders by you or any
of your representatives in connection with the transactions contemplated hereby
("Information") is and will be complete and correct in all material respects and
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading and (ii) all financial projections concerning Knoll, Inc. that have
been or are hereafter made available to the Agents, the Joint Lead-Arrangers or
the Lenders by you or any of your representatives (the "Projections") have been
or will be prepared in good faith based upon reasonable assumptions. You agree
to furnish us with such Information and Projections as we may reasonably request
and to supplement the Information and the Projections from time to time until
the closing of the Credit Facilities ("Closing") so that the representation and
warranty in the preceding sentence is correct on the such date. In arranging and
syndicating
-3-
<PAGE>
June 21, 1999
Page 4
the Credit Facilities, NationsBank, Chase and the Joint Lead-Arrangers will be
using and relying on the Information and the Projections without independent
verification thereof.
9. By executing this letter agreement, you agree to reimburse the Agents and
the Joint Lead-Arrangers from time to time on demand for all reasonable
out-of-pocket fees and expenses (including, but not limited to, the reasonable
fees, disbursements and other charges of Moore & Van Allen, PLLC, as counsel to
NationsBank) incurred in connection with the Credit Facilities and the
preparation of the definitive documentation for the Credit Facilities and the
other transactions contemplated hereby. This paragraph is hereafter referred to
as the "Expense Provision."
10. In the event that NationsBank, Chase, BAS, Chase Securities, Merrill Lynch
Inc or Merrill Lynch Capital becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter contemplated by this
letter, the Sponsor will reimburse each of NationsBank, Chase, BAS, Chase
Securities, Merrill Lynch Inc and Merrill Lynch Capital for their legal and
other expenses (including the cost of any investigation and preparation) as they
are incurred by NationsBank, Chase, BAS, Chase Securities, Merrill Lynch Inc and
Merrill Lynch Capital. The Sponsor also agrees to indemnify and hold harmless
NationsBank, Chase, BAS, Chase Securities, Merrill Lynch Inc and Merrill Lynch
Capital and their affiliates and their respective directors, officers, employees
and agents (the "Indemnified Parties") from and against any and all losses,
claims, damages and liabilities, joint or several, related to or arising out of
any matters contemplated by this letter unless and only to the extent that it
shall be finally judicially determined that such losses, claims, damages or
liabilities resulted primarily from the gross negligence or willful misconduct
of NationsBank, Chase, BAS, Chase Securities, Merrill Lynch Inc and Merrill
Lynch Capital. Any Indemnified Party seeking indemnification under this
paragraph shall give prompt written notice to the Sponsor of any claim against
such Indemnified Party. The Sponsor shall be entitled to control the defense of
any such claim after consultation with the Indemnified Party and no Indemnified
Party shall be able to settle any such claim without the prior written consent
of the Sponsor. This paragraph, together with paragraph 8 of this letter, is
hereafter referred to as the "Indemnification Provision."
11. The provisions of the immediately preceding three paragraphs shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this letter agreement or the commitments of any Agent or any
Co-Arranger hereunder, provided, however, that the Sponsor shall be deemed
released of its obligations under the immediately preceding three paragraphs
upon the execution of definitive financing documentation for the Credit
Facilities.
12. As described herein and in the Term Sheet, BAS and Chase Securities will
act as Joint-Lead Arranger and Joint-Book Manager for the Credit Facilities.
NationsBank and Chase reserve the right to allocate, in whole or in part, to BAS
and Chase Securities certain fees payable to NationsBank and Chase in such
manner as NationsBank and BAS, and Chase and Chase Securities, agree in their
sole discretion. You acknowledge and agree that NationsBank may share with any
of its affiliates (including specifically BAS) and Chase may share with any of
its affiliates (including specifically Chase Securities) any information
relating to the Credit Facilities, Knoll, Inc., the Sponsor and their
subsidiaries and affiliates; provided that such information may only be used in
connection with the Credit Facilities and the Recapitalization and all such
recipients shall treat such information on a confidential basis.
-4-
<PAGE>
June 21, 1999
Page 5
13. This letter agreement may not be assigned by the Sponsor (except to Newco)
without the prior written consent of the Agents and the Joint Lead-Arrangers.
14. If you are in agreement with the foregoing, please execute and return the
enclosed copy of this letter agreement no later than the close of business on
June 22, 1999. This letter agreement will become effective upon your delivery to
us of executed counterparts of this letter agreement, the Fee Letter and the
NationsBank Fee Letter and, without limiting the more specific terms hereof and
of the Term Sheet, you agree upon acceptance of this commitment to pay the fees
in accordance with the Term Sheet and in the Fee Letter and NationsBank Fee
Letter. This commitment shall terminate if not so accepted by you prior to that
time. Following acceptance by you, this commitment will terminate on November
30, 1999, unless the Credit Facilities are closed by such time.
15. Except as required by applicable law, this letter, the Fee Letter and the
NationsBank Fee Letter and the contents hereof and thereof shall not be
disclosed by you to any third party without the prior consent of the Agents and
Joint Lead-Arrangers, other than to your attorneys, financial advisors and
accountants, and to Knoll (and any special committee of the Board of Directors
of Knoll and its advisors) and as otherwise may be required by applicable law in
each case to the extent necessary in your reasonable judgment; provided,
however, it is understood and agreed that, after acceptance of this letter by
you by execution in the space provided below and execution by you of the Fee
Letter and the NationsBank Fee Letter, you may disclose the terms of this letter
as necessary in connection with the Repurchase.
16. Notwithstanding any provision herein, the Term Sheet or the Fee Letter to
the contrary, whether or not an Assignment shall occur, the Sponsor's maximum
aggregate liability with respect to the Indemnification Provision shall not
exceed $3,000,000 and the obligations of the Sponsor under this letter, the Term
Sheet and the Fee Letter (including the Indemnification Provision) shall
terminate upon the closing of the Repurchase and the execution of definitive
loan documentation with respect to the Credit Facilities (the "Sponsor
Termination Date"), except the Sponsor agrees to assist in the syndication
process as described in paragraph 6 of this letter before and after the Sponsor
Termination Date.
17. This letter may be executed in counterparts which, taken together, shall
constitute an original. This letter, together with the Term Sheet, the Fee
Letter and the NationsBank Fee Letter, embodies the entire agreement and
understanding among the Agents, the Joint Lead-Arrangers and the Sponsor with
respect to the specific matters set forth herein and supersedes all prior
agreements and understandings relating to the subject matter hereof. No party
has been authorized by any of the Agents or any of the Joint Lead-Arrangers to
make any oral or written statements inconsistent with this letter. THIS LETTER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
-5-
<PAGE>
June 21, 1999
Page 6
18. Notwithstanding any provision herein, the Term Sheet or the Fee Letter to
the contrary, Knoll, Inc. shall not be liable to pay any fees or expenses
hereunder or thereunder except upon the closing of the Repurchase.
Very truly yours,
NATIONSBANK, N.A. THE CHASE MANHATTAN BANK
By: /s/ William A. Bowen, Jr. By: /s/ William J. Cappiano
------------------------ ----------------------------
Name: William A. Bowen, Jr. Name: William J. Cappiano
-------------------- ------------------------
Title: Attorney-in-fact Title: Managing Director
---------------- ------------------------
BANC OF AMERICA Securities LLC CHASE SECURITIES, INC.
By: /s/ William A. Bowen, Jr. By: /s/ Ruth Stritehoff
------------------------- ----------------------------
Name: William A. Bowen, Jr. Name: Ruth Stritehoff
--------------------- -----------------------
Title: Managing Director Title: Managing Director
----------------- ------------------------
MERRILL LYNCH & CO., MERRILL LYNCH CAPITAL CORPORATION
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ Christopher Birosak
----------------------------
By: /s/ Christopher Birosak Name: Christopher Birosak
---------------------------- -----------------------
Name: Christopher Birosak Title: Vice President
----------------------- ------------------------
Title: Managing Director
------------------------
ACCEPTED AND AGREED TO:
WARBURG, PINCUS VENTURES, L.P.,
By: WARBURG, PINCUS & CO., GENERAL PARTNER
By: /s/ Kewsong Lee
----------------------------
Name: Kewsong Lee
--------------------------
Title: Managing Director
--------------------------
Date: June 21, 1999
---------------------------
-6-
<PAGE>
SUMMARY OF TERMS AND CONDITIONS
KNOLL, INC.
$775 MILLION SENIOR SECURED CREDIT FACILITY
BORROWER: Knoll, Inc., a Delaware corporation (the
'Borrower").
GUARANTORS: The Senior Credit Facility (defined below) shall
be guaranteed by all existing and future direct
and indirect domestic subsidiaries of the
Borrower (the "Guarantors"). All guarantees shall
be guarantees of payment and not of collection.
ADMINISTRATIVE AGENT: NationsBank, N.A. (the "Administrative Agent" or
"NationsBank") will act as sole and exclusive
administrative and collateral agent.
SYNDICATION AGENT: The Chase Manhattan Bank (the "Syndication Agent"
or "Chase") will act as sole and exclusive
syndication agent.
DOCUMENTATION AGENT: Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the
"Documentation Agent" or "Merrill Lynch, Inc")
will act as sole and exclusive documentation
agent (NationsBank, Chase and Merrill Lynch, Inc
may be referred to collectively herein as the
"Agents").
JOINT-LEAD ARRANGERS AND,
JOINT-BOOK MANAGERS: Bank of America Securities LLC ("BAS") and Chase
Securities, Inc. ("Chase Securities") (BAS and
Chase Securities may be referred to collectively
herein as the "Joint Lead-Arrangers").
LENDERS: A syndicate of financial institutions (including
NationsBank, Chase and Merrill Lynch Capital
Corporation) arranged by BAS and Chase
Securities, which institutions shall be
acceptable to the Borrower, the Administrative
Agent and the Syndication Agent (collectively,
the "Lenders").
SENIOR CREDIT FACILITY: An aggregate principal amount of up to $775
million will be available upon the terms and
conditions hereinafter set forth:
Revolving Credit Facility: $375 million revolving
credit facility (the "Revolving Credit
Facility"), which will include a $25 million
sublimit for the issuance of standby and
commercial letters of credit (each a "Lender of
Credit"), a $10 million sublimit for swingline
loans (each a "Swingline Loan"). Letters of
Credit will be issued by NationsBank (in such
capacity, the "Fronting Bank") and Swingline
Loans
-7-
<PAGE>
will be made available by NationsBank, and each
Lender will purchase an irrevocable and
unconditional participation in each Letter of
Credit and Swingline Loan.
Term Loan Facility: $400 million term loan
facility ("Term Loan Facility").
The Revolving Credit Facility and the Term Loan
Facility are collectively referred to herein as
the "Senior Credit Facility".
SWINGLINE OPTION: Swingline Loans will be made available on a same
day basis in an aggregate amount not exceeding
$I.0 million and in minimum amounts of $1.0
million.
PURPOSE: The proceeds of the Senior Credit Facility shall
be used: (i) to finance the repurchase of
approximately 17.9 million shares of the
Borrower's common stock at a price not to exceed
$28.00 per share (the "Repurchase"); (ii) to
refinance (a) the Borrower's $107.5 Million
Senior Subordinated Notes due 2006 pursuant to a
tender offer and (b) all amounts owing under the
Borrower's Credit Agreement dated as of August 8,
1997 (the "Refinancing," and together with the
Repurchase, the "Recapitalization"); (iii) to pay
all fees, expenses and premiums in connection
with the Recapitalization and the Refinancing in
an amount not to exceed $33 million; and (iv) for
working capital, capital expenditures, and other
lawful corporate purposes.
CLOSING: The execution of definitive loan documentation,
to occur on or before November 30, 1999.
("Closing').
INTEREST RATES: As set forth in Addendum I.
MATURITY: The Revolving Credit Facility shall terminate and
all amounts outstanding thereunder shall be due
and payable in full 6 years from Closing.
The Term Loan Facility shall be subject to
repayment according to the Scheduled Amortization
(defined below), with the final payment of all
amounts outstanding thereunder being due and
payable in full 6 years from Closing.
AVAILABILITY/SCHEDULED
AMORTIZATION: Revolving Credit Facility: Loans under the
Revolving Credit Facility ("Revolving Credit
Loans") (including Swingline Loans) may be made,
and Letters of Credit may
-8-
<PAGE>
be issued, in each case subject to the total
amount of the Revolving Credit Facility.
Term Loan Facility: Loans made under the Term
Loan Facility will be available in a single
borrowing at Closing. The Term Loan Facilities
will be subject to quarterly amortization of
principal, based upon the annual amounts set
forth below (the "Scheduled Amortization").
<TABLE>
<CAPTION>
$ millions Annual
Amount
------
<S> <C>
Loan year 1 $20.0
Loan year 2 40.0
Loan year 3 60.0
Loan year 4 70.0
Loan year 5 90.0
Loan year 6 120.0
-----
Total $400.0
</TABLE>
SECURITY: Concurrently with the Recapitalization, the
Administrative Agent (on behalf of the Lenders)
shall receive a first priority perfected security
interest (i) in all of the capital stock of each
of the domestic subsidiaries (direct or indirect)
of the Borrower owned by a domestic company and
65% of the capital stock of each foreign
subsidiary (direct or indirect) of the Borrower
owned by a domestic company, which capital stock
shall not be subject to any other lien or
encumbrance; and (ii) all 'other present and
future domestic assets and properties of the
Borrower and its subsidiaries (including, without
limitation, accounts receivable, inventory, real
property (excluding showroom leases), machinery,
equipment, contracts, trademarks, copyrights,
patents, license rights and general intangibles)
provided, however, that (i) in the case of
immaterial assets, the obligation of the Borrower
to grant such security interest shall be subject
to the availability of any required third party
consent, and (ii) certain assets of the Borrower
may be subject to immaterial prior existing
liens, subject to the approval of such Hens by
NationsBank.
The priority of the lien and security interest of
the Administrative Agent shall be supported by
such landlord and mortgagee waivers, warehousemen
and bailee letters, third party consents,
intercreditor agreements and other agreements as
shall be reasonably requested by the
Administrative Agent in each case in form and
substance satisfactory to the Administrative
Agent; it being understood that the
Administrative Agent may request, but
-9-
<PAGE>
shall not require, third party consents to be
received from the landlords of showroom leases.
The foregoing security shall ratably secure the
Senior Credit Facility and any interest rate
swap/foreign currency swap or similar agreements
with a Lender or its affiliates under the Senior
Credit Facility (unless the Borrower and any such
Lender or affiliate shall desire otherwise).
MANDATORY PREPAYMENTS
AND COMMITMENT
REDUCTIONS: In addition to the Scheduled Amortization, the
Senior Credit Facility will be prepaid by an
amount equal to I00% of the net after tax cash
proceeds of all asset sales by the Borrower or
any subsidiary of the Borrower (including sales
of stock of subsidiaries) provided that a
mandatory prepayment shall not be required with
respect to (a) the first $5 million per year in
proceeds from asset sales and (b) all proceeds
from asset sales in excess of $5 million per year
(up to an aggregate amount of $25 million per
year) if such proceeds are reinvested in similar
assets or a similar line of business within
twelve months from the time of such sale.
Prepayments shall be applied to reduce the Term
Loan Facility on a pro rata basis with respect to
each remaining installment of principal. In the
event that the Term Loan Facility shall have been
fully prepaid, the mandatory prepayments
described above shall be applied to permanently
reduce the amount available under the Revolving
Credit Facility.
OPTIONAL PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrower may prepay the Senior Credit
Facility in whole or in part at any time without
penalty, subject to reimbursement of the Lenders'
breakage and redeployment costs in the case of
prepayment of LIBOR borrowings. The Borrower may
borrow, repay and reborrow under the Revolving
Credit Facility subject to normal borrowing
conditions. The Borrower may also voluntarily
prepay the Term Loan Facility; provided that any
such prepayments shall be applied to reduce the
Term Loan Facility first in direct order of
maturity to the installments due thereunder
within twelve months after the date of such
voluntary prepayment, and thereafter pro rata
with respect to each remaining installment of
principal. The unutilized portion of any
commitment under the Senior Credit Facility in
excess of the stated amount
-10-
<PAGE>
of all Letters of Credit may be irrevocably
canceled in whole or in part.
CONDITIONS PRE-
CEDENT TO CLOSING: The Closing (and the initial funding) of the
Senior Credit Facility will be subject to
satisfaction of the following conditions and
other usual and customary conditions precedent
for transactions of this type:
(i) The Recapitalization shall have been
consummated pursuant to the terms of the
Recapitalization Agreement, and all
conditions precedent to the consummation
of the Recapitalization Agreement shall
have been satisfied or, with the prior
approval of the Administrative Agent,
waived. The Borrower and the Guarantors
shall have entered into the Credit
Agreement Documents in form and substance
satisfactory to the Agents, the Lenders
and the Joint Lead-Arrangers, and all
conditions precedent to the initial
borrowings shall have been satisfied.
(ii) The Administrative Agent shall have
received (a) audited financial statements
of the Borrower for its most recent three
fiscal years (which receipt by the
Administrative Agent is hereby
acknowledged), (b) the most recent
unaudited monthly financial statements of
the Borrower, (c) an unaudited pro forma
balance sheet of the Borrower and its
subsidiaries which gives effect to the
Recapitalization as if it had occurred on
the last day of the most recently
completely fiscal quarter, and (d) an
unaudited pro forma income statement of
the Borrower (including a calculation of
EBITDA) which gives effect to the
Recapitalization for the trailing 12
months of operations ending on the most
recently completed fiscal quarter end.
All pro forma financial statements shall
be prepared in accordance with the
requirements of Regulation S-X under the
Securities Act of 1933, as amended,
applicable to a Registration Statement
under such Act on Form S-1.
(iii) The Administrative Agent shall have
received annual pro forma financial
projections for the next succeeding seven
years and quarterly pro forma financial
projections for the next succeeding two
years, each in form and substance
acceptable to it.
-11-
<PAGE>
(iv) On or prior to Closing, (a) all fees and
expenses due and payable to NationsBank,
Chase, Merrill Lynch Capital Corporation,
any other Lender and/or their affiliates
pursuant to the Commitment Letter, the
Fee Letter, the NationsBank Fee Letter or
otherwise shall have been paid in full as
contemplated therein, and (b) the
Borrower shall have complied with all of
their obligations under the Commitment
Letter, the Fee Letter and the
NationsBank Fee Letter, and each such
letter shall be in full force and effect.
(v) There shall not have occurred since
December 31, 1998 a material adverse
change (nor shall any event or condition
have occurred that could reasonably be
expected to have a material adverse
effect) in the business, operations, or
financial condition of the Borrower and
its subsidiaries taken as a whole or in
the facts and information taken as a
whole regarding such entities as
represented to date.
(vi) The absence of any action, suit,
investigation or proceeding pending
(other than shareholder litigation of
which the Lenders are aware and that has
been settled in a manner satisfactory to
the Lenders) or threatened in any court
or before any arbitrator or governmental
authority that purports (a) to materially
and adversely affect the Borrower or its
subsidiaries, or (b) to affect any
transaction contemplated hereby or the
ability of the Borrower and its
subsidiaries or any other obligor under
the guarantees or security documents to
perform their respective obligations
under the documentation for the Senior
Credit Facility.
(vii) Receipt and review, with results
satisfactory to the Administrative Agent
and the Lenders, of information
confirming that (a) the Borrower and its
subsidiaries are taking all necessary and
appropriate steps to ascertain the extent
of, and to quantify and successfully
address, business and financial risks
facing the Borrower and its subsidiaries
as a result of what is commonly referred
to as the "Year 2000 problem" (i.e., the
inability of certain computer
applications to recognize correctly and
perform date-sensitive functions
involving certain dates prior to and
after December 31, 1999), including risks
resulting from the failure of key vendors
and customers of the
-12-
<PAGE>
Borrower and its subsidiaries to
successfully address the Year 2000
problem, and (b) the Borrower's and its
subsidiaries' material computer
applications and those of its key vendors
and customers will on a timely basis,
adequately address the Year 2000 problem
in all material respects.
REPRESENTATIONS
AND WARRANTIES: Similar to the Borrower's Credit Agreement dated
August 8, 1997 (the "Existing Agreement"), to
include: (i) corporate existence and status; (ii)
corporate power and authority/enforceability;
(iii) no material violation of law or contracts
or organizational documents; (iv) no material
litigation; (y) correctness of specified
financial statements and no material adverse
change; (vi) no required governmental or third
party approvals; (vii) net of proceeds/compliance
with margin regulations; (viii) status under
Investment Company Act; (ix) ERISA matters; (x)
environmental matters; (xi) payment of taxes;
(xii) accuracy of disclosure; (xiii) Year 2000
preparedness; (xiv) perfected liens and security
interests; (xv) solvency (the solvency
representation will be limited to a
representation by the credit parties and their
chief financial officer - no third party opinion
is required).
COVENANTS: Usual and customary for transactions of this type
and similar to the Existing Agreement, to
include: (i) delivery of quarterly and annual
financial statements and other reports (iii)
delivery of compliance certificates; (iii)
delivery of notices of default, material
litigation and material governmental and
environmental proceedings; (iv) compliance with
laws (including environmental laws and ERISA
matters) in all material respects; (v) payment of
taxes; (vi) maintenance of insurance; (vii)
limitation on liens; (viii) limitation on
mergers, consolidations and sales of assets; (ix)
limitation on incurrence of debt; provided (A)
the Borrower may incur unsecured debt if after
giving effect thereto the Borrower demonstrates
compliance with the then required covenants in
the Credit Agreement Documentation, (B) the
Borrower may incur purchase money indebtedness
(including Capital Leases or TROLS as defined in
the Existing Agreement) in an amount not to
exceed $25 million at any one time outstanding
and (C) the Borrower may incur up to $50 million
of deeply subordinated debt to shareholders on
terms acceptable to the Required Lenders (and
such deeply subordinated debt shall not count as
debt for purposes of calculating the financial
covenants); (x) limitation on dividends, stock
redemptions and the redemption and/or prepayment
of
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<PAGE>
other debt; provided that if no Default or Event
of Default exists and is continuing, the Borrower
may (A) make restricted payments in connection
with employment benefit plans and/or repurchase
outstanding capital stock of employees following
their death, disability, termination or
retirement (even if an employee is retained in a
consulting capacity) in an amount not to exceed
$15 million per year or $30 million during the
term of the Senior Credit Facility, (B) make
restricted payments and/or pay dividends in an
amount not to exceed $20 million during the term
of the Senior Credit Facility, and (C) otherwise
pay dividends on its capital stock or repurchase
its capital stock so long as after giving effect
to each such dividend or share repurchase the
Borrower's pro forma Debt to EBITDA ratio is less
than 2.5 to 1.0; (xi) limitation on investments
(including loans and advances) and acquisitions;
provided the Borrower may make acquisitions in
similar lines of business as long as after giving
effect thereto the Borrower demonstrates
compliance with the covenants in the Credit
Agreement Documentation; (xii) limitation on
transactions with affiliates; (xiii) limitations
on sale leaseback transactions in an amount not
to exceed $30 million during the term of Senior
Credit Facility; and (xiv) Year 2000 compliance.
Financial covenants to include:
(bullet) Maintenance on a rolling four quarter
basis of a Maximum Leverage Ratio
(total funded debt/EBITDA),
- From the closing to June 30, 2001,
4.0 to 1.0 - From July 1, 2001
thereafter, 3.5 to 1.0
(bullet) Maintenance on a rolling four quarter
basis of an Adjusted Coverage Ratio
(EBITDA/(interest expense + restricted
payments)).
- From the closing to June 30, 2001,
2.5 to 1.0
- From July 1, 2001 thereafter, 3.0 to
1.0
In addition, the loan documentation shall require
the Borrower to enter into interest rate
protection agreements acceptable to the
Administrative Agent for $250 million of the
Senior Credit Facility within 90 days from
Closing for 3 years.
EVENTS OF DEFAULT: Usual and customary in transactions of this type,
to include without limitation: (i) nonpayment of
principal, interest, fees or other amounts, (ii)
violation of covenants, (iii) inaccuracy of
representations and warranties, (iv)
-14-
<PAGE>
cross-default to other material indebtedness, (v)
bankruptcy and other insolvency events, (vi)
material judgments, (vii) ERISA matters, (viii)
actual or asserted invalidity of any loan
documentation or security interests, and (ix)
Change of Control which shall occur if (A) prior
to an initial public offering, Warburg, Pincus
Ventures, L.P. ("Warburg") and the management
group (collectively, the "Permitted Holders")
shall fail to own beneficially, directly or
indirectly, at least 51% of the outstanding
voting capital stock of the Borrower or (B) after
an initial public offering, any person or group
(other than the Permitted Holders) shall acquire
more than 35% of such voting capital stock and
such other person or group shall own a greater
percentage of such voting capital stock than is
owned by the Permitted Holders or (C) the board
of directors of the Borrower shall not consist of
a majority of "Continuing Directors."
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make assignments
in acceptable minimum amounts to other financial
institutions approved by the Borrower (so long as
no event of default under the Senior Credit
Facility or incipient default has occurred and is
continuing) and the Administrative Agent, which
approval shall not be unreasonably withheld.
Lenders will be permitted to sell participations
with voting rights limited to significant matters
such as changes in amount, rate and maturity date
and releases of all or substantially all of the
collateral (other than the release of collateral
permitted by "Releases of Collateral" below) and
the Guarantors. An assignment fee of $3,500 shall
be payable by the Lender to the Administrative
Agent upon the effectiveness of any such
assignment (including, but not limited to, an
assignment by a Lender to another Lender).
WAIVERS AND
AMENDMENTS: Amendments and waivers of the provisions of the
loan agreement and other definitive credit
documentation will require the approval of
Lenders holding loans and commitments
representing more than 50% of the aggregate
amount of loans and commitments under the Senior
Credit Facility, except that the consent of all
of the Leaders affected thereby shall be required
with respect to (a) increases in the commitment
of such Lender, (b) reductions of principal,
interest or fees, (c) extensions of scheduled
maturities or times for payment, and (d) releases
of all or substantially all of the collateral or
the Guarantors.
-15-
<PAGE>
INDEMNIFICATION: The Borrower shall indemnify the Agents, the
Joint Lead-Arrangers and the Lenders and their
respective affiliates from and against all
losses, liabilities, claims, damages or expenses
arising out of or relating to the Senior Credit
Facility, the Borrower's use of loan proceeds or
the commitments, including, but not limited to,
reasonable attorneys' fees (including the
allocated cost of internal counsel) and
settlement costs. This indemnification shall
survive and continue for the benefit of the
indemnitees at all times after the Borrower's
acceptance of the Leaders' commitments for the
Senior Credit. Facility, notwithstanding any
failure of the Senior Credit facility to close.
GOVERNING LAW: New York
FEES/EXPENSES: As set forth in Addendum I.
RELEASE OF COLLATERAL: The Lenders will release all of the collateral
securing the facilities upon the occurrence of
either of the following events: (a) the Borrower
receives an investment grade rating on its senior
unsecured debt from Moody's or S&P; or (b) the
Borrower has (and has maintained for a period of
two successive quarters - at least one of which
must be the quarter ending December 31) a pro
forma Funded Debt to EBITDA ratio of less than
2.0 to 1.0; provided however that upon the
release of all collateral, the financial
covenants shall change such that the Borrower
must maintain a Funded Debt to EBITDA ratio of
less than or equal to 3.0 to 1.0 at all times.
-16-
<PAGE>
ADDENDUM I
FEES AND EXPENSES
COMMITMENT FEE: The Borrower will pay a fee (the "Commitment
Fee"), determined in accordance with the
Performance Pricing grid set forth below, on the
unused portion of each Lender's share of the
Senior Credit Facility. The Commitment Fee is
payable quarterly in arrears commencing upon
Closing. Swingline Loans will not be deemed to be
utilization for purposes of calculating the
Commitment Fee.
INTEREST RATES: The Revolving Credit Facility and the Term Loan
Facility shall bear interest at a rate equal to
LIBOR plus the Applicable Margin or the Alternate
Base Rate (to be defined as the higher of (i) the
NationsBank prime rate and (H) the Federal Funds
rate plus .50%) plus the Applicable Margin. The
Applicable Margin in each case shall be
determined in accordance with the performance
Pricing grid set forth below. During the first 90
days following the closing of the Credit
Facilities, the Borrower shall only be permitted
to request one month LIBOR periods unless the
Administrative Agent consents otherwise. Each
Swingline Loan shall bear interest at the
Alternate Base Rate.
The Borrower may select interest periods of 1, 2,
3 or 6 months for LIBOR loans, subject to
availability. Interest shall be payable at the
end of the selected interest period, but no less
frequently than quarterly.
A penalty rate shall apply on all loans in the
event of a payment default under the Senior
Credit Facility at a rate per annum of 2% above
the applicable interest rate.
PERFORMANCE PRICING: The Commitment Fee and the Applicable Margin, for
any fiscal quarter, shall be the applicable rate
per annum set forth in the table below opposite
the ratio of Funded Debt to EBITDA determined as
of the list day of the immediately preceding
fiscal quarter. Prior to the Administrative
Agent's receipt of the Borrower's December 31,
1999 financial statements, the Commitment Fee and
the Applicable Margin shall not be less thin as
set forth under Pricing Level IV on the table
below.
-17-
<PAGE>
<TABLE>
<CAPTION>
Applicable Margin for
Pricing Funded Debt to Applicable Margin for Alternate Base
Level EBITDA Ratio Commitment Fee (bps) LIBOR Loans (bps) Rate Loans (bps)
----- ------------ -------------------- ----------------- ----------------
<S> <C> <C> <C> <C>
I Less than or equal to 2.00 to 1.0 17.5 62.5 0.0
II Greater than 2.00 to 1.0 but less 25.0 87.5 0.0
than or equal to 2.50 to 1.0
III Greater than 2.50 to 1.0 but less 30.0 112.5 12.5
than or equal to 3.50 to 1.0
IV Greater than 3.00 to 1.0 but less 37.5 137.5 37.5
than or equal to 3.50 to 1.0
V Greater than 3.50 to 1.0 50.0 162.5 62.5
</TABLE>
CALCULATION OF
INTEREST AND FEES: Other than calculations in respect of
interest at the Alternate Base Rate (which shall
be made on the basis of actual number of days
elapsed in a 365/366 day year), all calculations
of interest and fees shall be made on the basis
of actual number of days elapsed in a 360 day
year. COST AND YIELD PROTECTION: Customary for
transactions and facilities of this type,
including, without limitation, in respect of
breakage or redeployment costs incurred in
connection with prepayments, changes in capital
adequacy and capital requirements or their
interpretation, illegality, unavailability,
reserves without proration or offset and payments
free and clear of withholding or other taxes.
LETTER OF CREDIT FEES: Letter of credit fees are due quarterly in
arrears to be shared proportionately by the
Lenders. Fees will be equal to the Applicable
Margin for LIBOR loans on a per annum basis plus
a fronting fee of 1/4% per annum to be paid to
the Fronting Bank for its own account. Fees will
be calculated on the aggregate stated amount for
each Letter of Credit for the stated duration
thereof.
EXPENSES: The Borrower will pay all reasonable costs and
expenses associated with the preparation, due
diligence, administration, syndication and
enforcement of all documentation executed in
connection with the Senior Credit Facility,
including, without limitation, the legal fees of
counsel to the Agents and the Joint
Lead-Arrangers (including the allocated cost of
internal counsel), regardless of whether or not
the Senior Credit facility is closed. The
Borrower will also pay the expenses of each
Lender in connection with the enforcement of any
loan documentation for the Facility.
-18-
<PAGE>
EXHIBIT E
---------
THE COURT OF CHANCERY FOR THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ------------------------------------------x
: Consolidated C.A.
IN RE KNOLL, INC. SHAREHOLDERS LITIGATION No. 17052
:
- ------------------------------------------x
MEMORANDUM OF UNDERSTANDING
The parties to the actions captioned In re Knoll, Inc. Shareholders
Litigation, Consolidated C.A. No. 17052 (Guido v. Warburg Pincus & Co., et al.,
No. 17052NC; Marotta v. Knoll, Inc., et al., No. 17053NC; Finkelstein v. Knoll,
Inc., et al., No. 17055NC; Rausch v. Knoll, Inc., et al., No. 17059NC; Hatfield
v. Knoll, Inc., et al., No. 17068NC; Shervy v. Knoll, Inc., et al., No. 17073NC;
Simms v. Knoll, Inc., et al., No. 17076NC), now pending in the Court of Chancery
of the State of Delaware (the "Actions"), by their undersigned attorneys, have
reached an agreement in principle providing for the settlement of the Actions on
behalf of the plaintiffs and all other stockholders in Knoll, Inc. ("Knoll") on
the terms and subject to the conditions set forth below.
Whereas, on March 24, 1999, it was announced that Warburg, Pincus Ventures,
L.P. and certain members of Knoll's management (the "Buyout Group") had offered
to purchase all outstanding shares of Knoll common stock not already owned by
members of the Buyout Group (the "Proposed Transaction") for a price of $25.00
per share.
<PAGE>
Whereas, the Actions were subsequently filed in the Delaware Court of
Chancery, New Castle County, challenging the Proposed Transaction;
Whereas, the complaints in the Actions were brought as class actions on
behalf of all holders of the stock of Knoll (except defendants in the Actions
and any persons, firm, trust, corporation, or other entity related to or
affiliated with them and their successors in interest) and named as defendants
Warburg Pincus & Co., Warburg Pincus Ventures, L.P. (collectively, "Warburg"),
Knoll directors Burton B. Staniar, John H. Lynch, John W. Amerman, Robert J.
Dolan, Jeffrey A. Harris, Sidney Lapidus, Kewsong Lee, and John L. Vogelstein
(collectively, the "Individual Defendants"), and Knoll. Defendants Harris,
Lapidus, Lee, and Vogelstein are members of Warburg Pincus & Co.
Whereas, the Actions challenged the Proposed Transaction alleging, inter
alia, that Knoll, the Individual Defendants and Warburg had breached fiduciary
duties owed to Knoll stockholders and failed to disclose all material facts in
connection with the Proposed Transaction, and that the proposed price of $25.00
per share was unfair;
Whereas, on March 23, 1999, the board of directors of Knoll (the "Board")
appointed a special committee of two independent directors (the "Special
Committee") to review, evaluate and negotiate the terms of the Proposed
Transaction with the Buyout Group and to make a recommendation to the Board
concerning the proposal;
-2-
<PAGE>
Whereas, the Special Committee retained Lazard Freres & Co. LLC as its
financial advisor;
Whereas, after negotiations with the Special Committee (and its financial
advisor) and separate negotiations with plaintiffs' counsel (and their financial
advisor), the Buyout Group has agreed to increase the acquisition price to
$28.00 per share (the "Merger Price"). The Special Committee has recommended
approval of the Proposed Transaction at the Merger Price, and the Board has
approved the Proposed Transaction at the Merger Price.
Whereas, plaintiffs' counsel have inspected documents relating to the
Proposed Transaction, and determined that a settlement of the Actions in
principle on the terms reflected in this Memorandum of Understanding is fair,
reasonable and adequate and in the best interest of Knoll's public stockholders;
Whereas, defendants maintain there is no substance to the claims against
them in the Actions and continue to deny all allegations of wrongdoing, but have
concluded, in light of the costs and risks attendant to the further prosecution
of the defense of the Actions, that it is desirable that the claims against them
be compromised and settled;
NOW THEREFORE, the parties to the Actions have reached an agreement
providing for the settlement of the actions on the terms and subject to the
conditions set forth below (the "Settlement").
1. The Buyout Group will acquire all available shares of Knoll common stock
not already owned by the Buyout Group at
-3-
<PAGE>
the price of $28.00 per share in a merger, subject to the approval of Knoll's
shareholders and certain other customary conditions. The Buyout Group
acknowledges that the pendency of the Actions and the efforts of plaintiffs'
counsel were contributing factors in the circumstances that led to the increase
in the offer.
2. Plaintiffs' counsel agree to apply to the Court for an award of
attorneys' fees and disbursements in an amount not to exceed $875,000, as the
Court may allow. Defendants agree that they will not oppose such application,
and Knoll will cause to be paid to plaintiffs' counsel the amounts awarded by
the Court. Notwithstanding the foregoing, no payment shall be due unless the
Proposed Transaction is consummated.
3. The undersigned parties will promptly attempt in good faith to agree
upon and to execute an appropriate stipulation of settlement and such other
documentation as may be required in order to obtain, within 75 days, court
approval of the settlement of the Actions upon the terms set forth in this
Memorandum of Understanding. The stipulation of settlement will expressly
provide, inter alia, that defendants deny, and continue to deny, that they have
committed or aided and abetted in the commission of any violations of law, or
breaches of duties, and that they are entering into the stipulation solely
because the proposed Settlement would eliminate the burden, risk and expense of
further litigation. The stipulation of settlement will provide for a release of
all claims of the stockholders of Knoll against all defendants, or any of their
present or former
-4-
<PAGE>
officers, directors, agents, attorneys, financial advisors, commercial bank
lenders, investment bankers, representatives, affiliates, associates, parents,
subsidiaries, general and limited partners and partnerships, heirs, executors,
administrators, successors, and assigns, whether under state law, federal law or
any other applicable law, whether known or unknown, and whether asserted
directly, representatively, derivatively or in any other capacity in connection
with, or that arise out of the subject matter of the Actions, the offer for the
Proposed Transaction, negotiation of the Proposed Transaction, consummation of
the Proposed Transaction, or any other aspect of the Proposed Transaction, and
the fiduciary or disclosure obligations of any of the defendants (or persons to
be released) with respect to the foregoing, except for claims arising from the
rights conferred by the Settlement and statutory appraisal rights.
4. Consummation of the Settlement is subject to the drafting and execution
of an appropriate stipulation of settlement and such other documentation as may
be required, certification of a class (in accordance with paragraph 5), final
court approval of the Settlement (as to be defined in the stipulation of
settlement), and dismissal of the Actions with prejudice and each party to bear
its own costs (except for the costs set forth in paragraph 2 above).
5. For purposes of settlement of the Actions consistent with the terms of
this Memorandum of Understanding, plaintiffs will petition the Court in
connection with the
-5-
<PAGE>
stipulation of settlement for certification of a class pursuant to Chancery
Court Rules 23(b)(1) and (b)(2), on a non opt-out basis, consisting of all Knoll
stockholders (exclusive of defendants and their affiliates) who owned Knoll
shares on any day during the period from March 24, 1999 (the date that the
Proposed Transaction was publicly announced) to and including the effective date
of the Proposed Transaction, including the legal representatives, heirs,
successors in interest, transferees and assigns of all such foregoing holders
and/or owners, immediate and remote. Defendants will consent to such petition
solely in connection with the Settlement.
6. The undersigned counsel will present the stipulation of settlement to
the Court for approval as soon as practicable and will use their best efforts to
obtain final court approval of the Settlement and the dismissal of the Actions
with prejudice and without cost to any party, except as provided in paragraph 2
above.
7. The Settlement contemplated herein shall be conditioned upon the
completion of such discovery as plaintiffs' counsel reasonably believes is
necessary to confirm the fairness and adequacy of the Settlement, and upon
consummation of the Proposed Transaction.
8. The Settlement contemplated by this Memorandum of Understanding will not
be binding upon any party until an appropriate stipulation of settlement has
been signed and final court approval of the Settlement and the dismissal of the
Actions with prejudice and each party to bear its own costs (except for
-6-
<PAGE>
the costs set forth in paragraph 2 above) has been obtained. This Memorandum of
Understanding shall be null and void and of no force and effect should any of
these conditions not be met and, in that event, this Memorandum of Understanding
shall not be deemed to prejudice in any way the positions of the parties with
respect to the Actions.
Dated: New York, New York June 21, 1999
Of Counsel: ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
BERNSTEIN LIEBHARD & LIFSHITZ, LLP By: /s/ Norman M. Monhait
10 East 40th Street ---------------------
New York, New York 10008 Norman M. Monhait
(212) 779-1414
Suite 1401, Mellon Bank Center
WOLF POPPER LLP P.O. Box 1070
845 Third Avenue Wilmington, Delaware 19899
New York, New York 10022 (302) 656-4433
(212) 759-4600
On Behalf of All Plaintiffs
STULL, STULL & BRODY
6 East 45th Street WILLKIE FARR & GALLAGHER
New York, New York 10017
(212) 687-7230 By: /s/ Joseph T. Baio
---------------------
WEISS & YOURMAN Joseph T. Baio
The French Building
551 Fifth Avenue 787 Seventh Avenue
New York, New York 10176 New York, New York 10019
(212) 682-3025 (212) 728-8546
SCHUBERT & REED LLP Attorneys for Defendants Warburg
Suite 1050 Pincus & Co., Warburg Pincus
Two Embarcadero Center Ventures, L.P., Burton B.
San Francisco, CA 94111 Staniar, John H. Lynch, Jeffrey
(415) 788-4220 A. Harris, Sidney Lapidus,
Kewsong Lee, and John L.
LOWEY DANNENBERG BEMPORAD & Vogelstein
SELINGER, P.C.
The Gateway
One North Lexington Avenue
White Plains, New York 10601
(914) 997-0500
-7-
<PAGE>
ANDERSON & ROTTENBERG, P.C.
FARUQI & FARUQI
415 Madison Avenue By: /s/ Mitchel H. Ochs
New York, New York 10017 ---------------------
(212) 986-1074 Mitchel H. Ochs
GOODKIND LABATON RUDOFF &
SUCHAROW LLP 369 Lexington Avenue
100 Park Avenue Sixteenth Floor
New York, New York 10017 New York, New York 10017
(212) 907-0700 (212) 661-3080
Attorneys for Defendant Knoll, Inc.
DEBEVOISE & PLIMPTON
By: /s/ Gary W. Kubek
---------------------
Gary W. Kubek
875 Third Avenue
New York, New York 10022
(212) 909-6000
Attorneys for Defendants John W.
Amerman and Robert J. Dolan
RICHARDS, LAYTON & FINGER
By: /s/ Anne C. Foster
---------------------
Anne C. Foster, Esq.
One Rodney Square, P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Defendants Warburg
Pincus & Co., Warburg Pincus
Ventures, L.P., Burton B.
Staniar, John H. Lynch, Jeffrey
A. Harris, Sidney Lapidus,
Kewsong Lee, and John L.
Vogelstein
-8-
