S-1/A

As filed with the Securities and Exchange Commission on November 15, 2004

Registration No. 333-118901

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2

TO

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

KNOLL, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	2522	13-3873847
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

1235 Water Street

East Greenville, Pennsylvania 18041

(215) 679-7991

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Patrick A. Milberger, Esq.

Senior Vice President, General Counsel and Secretary

Knoll, Inc.

1235 Water Street

East Greenville, Pennsylvania 18041

(215) 679-7991

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Michael A. Schwartz, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 Kirk A. Davenport II, Esq. Latham & Watkins LLP 885 Third Avenue Suite 1000 New York, New York 10022 (212) 906-1200

Approximate date of commencement of proposed sale to the public:  As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1) (2)	Amount of Registration Fee (3)
Common Stock, par value $0.01 per share	$230,000,000	$29,141

(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2) Includes shares of common stock that underwriters have an option to purchase solely to cover over-allotments, if any.

(3) Previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement that is filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion. Dated November 15, 2004.

PRELIMINARY PROSPECTUS

             Shares

Knoll, Inc.

Common Stock

The selling stockholders of Knoll, Inc. are offering              shares of common stock. Knoll will not receive any of the proceeds from the sale of shares of common stock being sold by the selling stockholders. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $14.00 and $16.00 per share. We have been approved to list our common stock on the New York Stock Exchange under the symbol “KNL.”

Before buying any shares, you should carefully consider the risk factors described in “ Risk Factors” beginning on page 11.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to the selling stockholders	$	$

The underwriters may also purchase up to an additional              shares of common stock from the selling stockholders at the public offering price, less the underwriting discount and commissions within 30 days from the date of this prospectus.

The underwriters expect to deliver the shares against payment in New York, New York on or about                     , 2004.

Joint Book-Running Lead Managers
Goldman, Sachs & Co.	UBS Investment Bank
Co-Managers
Banc of America Securities LLC          JPMorgan           Merrill Lynch & Co.

The date of this prospectus is                     , 2004.

TABLE OF CONTENTS

Market and Industry Data	i
Prospectus Summary	1
Risk Factors	11
Special Note Regarding Forward-Looking Statements	19
Use of Proceeds	19
Dividend Policy	19
Capitalization	20
Dilution	21
Selected Consolidated Financial Data	22
Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Business	39

Management	56
Certain Relationships and Related Party Transactions	66
Principal and Selling Stockholders	68
Description of Capital Stock	70
Description of Certain Indebtedness	71
Shares Eligible for Future Sale	73
Material U.S. Federal Tax Considerations for Non-U.S. Holders of Our Common Stock	75
Underwriting	78
Validity of Securities	81
Experts	81
Where You Can Find More Information	81
Index to Consolidated Financial Statements	F-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information other than the information contained in this prospectus. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock.

MARKET AND INDUSTRY DATA

The market and industry data presented in this prospectus are generally estimates and are based upon third-party data, including The Business and Institutional Furniture Manufacturers Association, or BIFMA, and our own internal estimates. While we believe that these data are reasonable, in some cases the data are based on our or others’ estimates and cannot be independently verified by us.

i

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed information regarding us, the sale of our common stock in this offering, our financial statements and notes to those financial statements that appear elsewhere in this prospectus.

Knoll, Inc.

Business Overview

We are a leading designer and manufacturer of branded office furniture products and textiles. Our commitment to innovation and modern design has yielded a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision. Our products are recognized for high quality and a sophisticated image and are targeted at the middle to upper end of the market. We sell our products primarily in North America through a direct sales force of 314 professionals and a broad network of 225 independent dealers. Our distinctive operating approach has driven industry leading operating income margins among our primary publicly-held competitors. Our net revenues, operating income and net income for the twelve months ended September 30, 2004 were $692.6 million, $72.8 million and $29.3 million, respectively.

Since our founding in 1938, we have been recognized worldwide as a design leader within our industry. Our products are exhibited in major art museums worldwide, including more than 30 pieces in the permanent Design Collection of The Museum of Modern Art in New York. This design legacy continues to flourish today and is embodied in recently introduced, award winning products, including the innovative LIFE^™ chair and AutoStrada^™ office furniture system. Our design excellence is complemented by a management philosophy that fosters a strong collaborative culture, client-driven processes and a lean, agile operating structure. Our employees are performance-driven and motivated by a variable incentive compensation system and broad-based equity ownership in the company. Together, these core attributes have enabled us to achieve superior financial performance and have positioned us for profitable growth.

We offer a comprehensive and expanding portfolio of high quality office furniture and textiles across five product categories. Historically, we have derived most of our revenues from office systems, which are modular workspaces with integrated panels, work surfaces, storage and lighting, and from specialty products, including our KnollStudio^® collection of signature design classics furnishings, KnollTextiles^™, Spinneybeck^® leather and KnollExtra^® accessories. However, in recent years, we have significantly expanded our product offerings in seating, files and storage, desks and casegoods and tables. Our products and knowledgeable sales force have generated strong brand recognition and loyalty among architects, designers and corporate facility managers, all of whom are key decision makers in the office furnishings purchasing process. Our clients are typically Fortune 1000 companies, governmental agencies and other medium to large sized organizations in a variety of industries. We have an over $6 billion installed base of office systems, which provides a strong platform for recurring and add-on sales of products across all our categories.

Industry Overview

Overview. According to BIFMA, the U.S. office furniture market had $8.5 billion in shipments in 2003. Office systems and seating are the largest product categories, accounting for $2.6 billion (31%) and $2.3 billion (27%) of industry-wide shipments, respectively, in 2003. Industry demand is largely driven by macroeconomic

1

factors, including corporate profitability, business confidence and service-sector employment. Together, these factors impact commercial construction, business expansion, absorption of vacant office space and, ultimately, demand for our products.

In addition to these macroeconomic factors, the demand for office furniture is influenced by workplace trends, including changes in work processes such as increases in the use of technology and the number of knowledge workers. Customers in the middle to upper end of the market are focused on improving productivity and efficiency, worker health and safety, ergonomics and environmental standards for the workplace. In addition, clients in these market segments demand highly customized solutions and premium service levels, including short lead times of generally three to five weeks, and strong after-market support. These trends have heightened the importance of providing office furnishings of superior quality, design and function.

Historical Industry Environment The U.S. office furniture industry experienced positive growth in 23 of the 25 years preceding 2001. Moreover, in the four years from 1997 to 2000, the industry grew at an above-average compounded annual rate of 7.3%, driven by strong corporate profitability, business expansion and investment in infrastructure during the Y2K and “dot-com” booms. However, in 2001 through 2003, the economy suffered significant reductions in corporate profitability, business confidence, service-sector employment and commercial real estate occupancy rates. As a result, our industry experienced a sales decline of more than 36% during that period. This steep decline had a particularly pronounced effect on office systems due to the deferral of infrastructure investments by our clients and a saturation of the market by “just new” used office systems created by the increase in vacated office space. As a consequence, industry-wide shipments in the office systems category declined by 45%, more than in any other category in the three years from 2001 through 2003.

Industry Recovery. During the first nine months of 2004, higher levels of corporate profitability, improving business confidence, increasing service-sector employment and increasing absorption of vacant office space all contributed to improving demand for office furniture products. During that period, the U.S. office furniture market experienced positive period-over-period growth in orders and shipments of 6.0% and 5.0%, respectively. According to BIFMA, U.S. office furniture shipments are forecasted to grow 4.8% in 2004 and 8.1% in 2005. The early stages of a recovery have been most evident in the seating, files and storage and casegoods categories, which are generally lower ticket purchases. We expect that a rebound in office systems will occur later in this recovery due to the typically larger commitment that the purchase of these products represents. We also believe that demand for office systems in North America will benefit from a general economic recovery, as companies expand, relocate to take advantage of lower rents, hire additional knowledge workers and reorganize to improve efficiency and productivity.

Long-Term Prospects for Industry Growth. Over the longer term, we believe demand for office furnishings in the middle to upper end of the market will increase due to a number of factors. These factors include the trend toward an information-based economy, higher levels of service-sector employment, and a flattening of organizational structures, all of which drive demand for office systems products. In addition, we expect demand will be supplemented by ongoing trends in work processes, concerns surrounding worker health and safety, ergonomics and an increased awareness of, and interest in, meeting environmental standards for the workplace.

Our Competitive Strengths

Legacy of innovative modern design. One of our greatest strengths is our 66-year history of creating modern furniture with enduring design, quality and innovation. This design heritage, pioneered by Hans and Florence Knoll, has been fostered over time and has enabled us to build strong associations and relationships with some of the world’s preeminent designers and architects, including Ludwig Mies van der Rohe, Eero Saarinen, Frank O. Gehry and Don Chadwick. By combining their creative vision with our commitment to developing modern, high quality products that address changing business needs, we are able to generate strong demand for our new product offerings and cultivate brand loyalty among our target clients.

2

Premier brand identity in office furniture and specialty products. Our brand identity provides credibility and prestige and is a key factor in our clients’ purchasing decisions as they seek to create workplaces that will help project a desired image, enhance facility performance and attract and retain employees. We believe our products represent a modern, high-quality collection of office furnishings with a sophisticated image. We target our products toward the middle to upper end of the market, where clients typically value the image and performance of their work environment. Our KnollStudio and KnollTextiles collections also showcase our design strength outside of the traditional office environment, and in many cases have become collectibles, which has further elevated our brand.

Strong margins and cash flow generation throughout the business cycle. Our distinctive operating approach has driven our industry leading operating income margins among our primary publicly-held competitors. Our lean organization, highly variable cost structure, motivated associates and disciplined approach to business and capital management have enabled us to remain profitable throughout the business cycle. For example, despite industry-wide revenue declines from the beginning of 2001 through 2003, we generated positive operating income and net income in each quarter during this period and reduced our debt by $265.9 million, from $646.8 million on January 5, 2001 to $380.9 million on December 31, 2003. As a result, we were able to maintain our focus on enhancing the client experience, introducing new products, developing our sales and marketing organizations and strengthening our competitive position, rather than devoting material resources to costly restructuring initiatives. During the first nine months of 2004, we continued to have positive net cash flows from operating activities of $36.2 million, which enabled us to fund a cash dividend of $70.6 million on September 30, 2004 while having a net increase in our indebtedness of only $45.0 million during this period.

Performance-driven culture and experienced management team. Our corporate culture is highly collaborative and encourages employees at all levels to communicate ideas and explore ways to improve our performance. Our associates are dedicated to producing quality products and take great pride in their work and in our reputation. Our senior management team has over 130 years of cumulative industry experience and a proven track record of achieving profitability throughout the business cycle. Moreover, managers throughout our organization are held accountable for achieving sales and cost targets and are motivated by and rewarded with performance-based compensation and equity ownership.

Reputation for superior products and client service. Our reputation for product and service excellence serves as an important factor when marketing to the architecture and design community and to new and existing clients. Our products are constructed with high quality materials and exhibit what we believe to be market leading workmanship, aesthetics and durability, as evidenced by the lifetime warranty we offer on many of our products. We work with clients to customize our products for their individual needs, and through our broad dealer network we provide installation and support services that enhance our clients’ purchasing experience. In addition, our client service organization, investments in management information systems and electronically linked dealer network allow us to provide clients who have many facilities with an integrated and reliable single point of contact for all their office furniture purchases.

Significant market position in office systems and an over $6 billion installed base. We enjoyed an estimated 16% category share in 2003 in the $2.6 billion U.S. office systems category. Office systems is the largest category in the U.S. office furniture industry and typically represents the largest portion of a client’s furniture expenditure. Office systems are long-lasting, are often the first furniture element a client specifies and

3

are, therefore, key to securing long-term relationships. We believe our position provides us a strong base for recurring and add-on sales of products across all our categories. We estimate that more than half of our revenues are derived from our installed client base.

Strong direct selling organization and dealer network. Our experienced 314 person direct sales force and our network of 225 independent dealers in North America have close relationships with architects, designers, corporate facility managers and other professionals who influence product selection decisions for large clients and provide valuable input in the product development process. We have strong, long-standing relationships with our dealers and have historically experienced little dealer turnover. In addition, we have a dealer presence in every major metropolitan area across North America and our regional dealer network allows us to jointly and cost-effectively market to small and mid-sized accounts.

Our Strategy

We pursue profitable growth by working closely with clients, architects, designers and dealers to identify areas of opportunity, while maintaining and enhancing our brand image and reputation for design and quality. We will seek to drive gains in market share, revenues and profitability by pursuing the following initiatives:

Build on our strength in office systems. We are focused on growing our significant category share in office systems through continuous innovation, superior performance and aesthetics, and targeted customization. We will continue to offer systems with a broad range of features and price points to meet the needs of our existing and future clients and ensure our competitiveness. For example, in the second half of 2004, we have begun shipping the AutoStrada office system, which won a silver Best of NeoCon^® award at this year’s national industry trade show.

Expand our market opportunity in seating, storage and casegoods. We believe we have the opportunity to increase our share in non-systems categories by cross selling to our existing and future office systems clients and securing stand-alone opportunities for the sales of seating, files and storage and casegoods. Over the last three years, we have actively begun to expand our product lines in these non-systems categories to address the more than $5.0 billion U.S. market for those goods. The following table shows the estimated percentages of total 2003 U.S. office furniture shipments represented by office systems, seating, files and storage and desks and casegoods, as compared to the corresponding percentages for our total U.S. shipments in 2003.

Product Category	% of Industry’s 2003 U.S. Shipments	% of Knoll’s 2003 U.S. Shipments
Office systems	30.5%	65.3%
Seating	26.6%	8.6%
Files and storage	21.5%	5.5%
Desks and casegoods	11.0%	3.0%

We have begun to realize the benefits of these expanded market opportunities. For example, our seating sales grew over 25% in the first nine months of 2004 versus the same period in 2003, substantially outpacing industry-wide growth in this category. In 2005, we plan to introduce new seating lines, including the next chair by the renowned seating designer Don Chadwick, which will further broaden the price range and performance breadth of our offerings in this category.

Capture a greater share of our dealer network’s sales. While our dealer network does not offer any products of our principal direct competitors, we estimate that a significant portion of our dealers’ non-systems sales consist of seating, files and storage and casegoods products of other manufacturers. We introduced the Knoll Essentials collection of easy-to-order, best-selling products from our broad range of office furnishings in

4

January 2004 to target this opportunity. With a standard delivery lead-time of four weeks and special dealer incentives, we have made it easy and profitable for our dealers’ salespeople to sell these products. As we introduce new seating, storage and accessories products, our dealers are agreeing to refrain from selling other manufacturers’ comparable products.

Grow the Knoll high margin specialty businesses through expanded distribution and new product introductions. Our specialty businesses enhance our reputation for design and quality and represent our highest margin businesses. During the second half of 2004, we have begun expanding our KnollStudio distribution network to include residential furniture dealers and take advantage of growing consumer interest in modern and mid-century design for the home. We intend to double the pace of our KnollTextiles new product introductions in 2005 to help gain share in this very fragmented market.

Improve margins through our continuous improvement program and global sourcing initiative. During the past five years, we have implemented a culture of continuous improvement throughout our product development, manufacturing, client service and logistics operations. In addition to rationalizing capacity during the industry downturn, we improved processes, reduced lead-times, outsourced our logistics operations, improved working capital efficiency and enhanced client service performance. In addition, we recently launched a global sourcing initiative to capitalize on significant near-term opportunities to cost-effectively source selected components and raw materials globally.

Risks Related to Our Business and Strategy

Although we believe that our competitive strengths and our business strategy as set forth above will provide us with opportunities to reach our goals, there are a number of risks and uncertainties that may affect our financial and operating performance, including that:

• our product sales are tied to corporate spending and service-sector employment, which are outside of our control. Our sales and/or growth in sales would be adversely affected by a recessionary economy characterized by decreased corporate spending and service-sector employment. For example, in the last recessionary economy, our sales declined by 29% in the three years from 2001 to 2003;

• we may have difficulty increasing or maintaining our prices as a result of price competition, which could lower our profit margins, and our competitors may develop new product designs that give them an advantage over us in making future sales;

• our efforts to introduce new products that meet customer and workplace requirements may not be successful, which could limit our sales growth or cause our sales to decline;

• we are dependent on the pricing and availability of raw materials and components, and price increases and unavailability of raw materials and components could lower sales, increase our cost of goods sold and reduce our profits and margins;

• we rely upon independent furniture dealers, and a loss of a significant number of dealers could affect our ability to market and distribute our products;

• one of our largest clients, the U.S. government, is subject to uncertain future funding levels and federal procurement laws and requires restrictive contract terms;

• we may be vulnerable to the effects of currency exchange rate fluctuations because we pay some of our expenses in currencies other than the U.S. dollar and procure certain raw materials globally;

• an inability to protect our intellectual property, or third party claims that we infringe upon their intellectual property rights, could have a significant impact on our business; and

• potential labor disruptions or other interruptions of manufacturing operations may adversely affect our reputation, our vendor relations and our dealership network.

In addition to the preceding risks, you should also consider the risks discussed under “Risk Factors” and elsewhere in this prospectus.

5

Our Recent Refinancing

On September 30, 2004, in order to extend the maturities of our outstanding debt, obtain greater financial flexibility, take advantage of favorable debt capital markets and historically low interest rates and provide liquidity to our existing stockholders, we entered into the following new financial arrangements:

• a $63.0 million revolving credit facility; and

• a $425.0 million term loan facility.

We used the proceeds of the term loan facility to repay our prior revolving and term loan credit facilities and pay accrued interest in the aggregate amount of $355.2 million and to fund a cash dividend of $70.6 million to our existing stockholders. These transactions are referred to as our Refinancing. For additional information on our revolving and term loan facilities, or our new credit facility, see “Description of Certain Indebtedness.”

Our Principal Stockholder

Our principal stockholder is Warburg, Pincus Ventures, L.P. As of September 30, 2004, Warburg Pincus and its affiliates beneficially owned approximately 90.6% of our outstanding common stock. Following the completion of this offering, Warburg Pincus and its affiliates will beneficially own approximately     % of our common stock, or     % if the underwriters’ over-allotment option is fully exercised.

Our principal executive offices are located at 1235 Water Street, East Greenville, Pennsylvania 18041. Our telephone number is (215) 679-7991. We were incorporated in 1995 under Delaware law. Our website is located at http://www.knoll.com. The information on our website is not a part of this prospectus.

All trademarks or trade names referred to in this prospectus are the property of their respective owners.

6

THE OFFERING

Common stock offered              shares

Common stock to be outstanding after this offering              shares

Use of proceeds The proceeds from the sale of shares of our common stock offered pursuant to this prospectus are solely for the account of the selling stockholders. We will not receive any proceeds from the sale of shares by the selling stockholders.

Risk factors See “Risk Factors” on page 11 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Dividend policy Our board of directors currently intends to declare and pay quarterly dividends of $0.05 per share on our common stock. The declaration and payment of dividends is subject to the discretion of our board of directors and depends on various factors, including our net income, financial condition, cash requirements, future prospects and other factors deemed relevant by our board of directors.

New York Stock Exchange symbol KNL

The number of shares to be outstanding immediately after this offering excludes:

• 11,805,172 shares of common stock issuable upon the exercise of options outstanding as of October 15, 2004, with exercise prices ranging from $6.12 to $16.34 per share and a weighted average exercise price of $11.09 per share; and

• 661,488 shares of common stock reserved for future grants under our stock option plans as of October 15, 2004.

Except as otherwise noted, all information in this prospectus assumes:

• an initial public offering price of $15.00 per share, the midpoint of the estimated initial public offering price range;

• no exercise by the underwriters of their right to purchase up to an additional              shares to cover over-allotments; and

• a two-for-one stock split of our common stock that will occur prior to the closing of this offering.

7

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus, and our consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated financial data for the years ended December 31, 2001, 2002 and 2003 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data for the nine months ended September 30, 2003 and 2004, and as of September 30, 2004, are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments, consisting only of normal, recurring adjustments, that management considers necessary for a fair statement of the results of those periods. The historical results are not necessarily indicative of results to be expected in any future period, and the results for the nine months ended September 30, 2004 should not be considered indicative of results for the full fiscal year.

Certain information normally included in financial statements prepared in accordance with the U.S. generally accepted accounting principles has been omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission, or the SEC.

	Years Ended December 31,								Nine Months Ended September 30,
	2001			2002		2003			2003			2004
									(unaudited)
	(in thousands)
Consolidated Statement of Operations Data:
Sales	$	985,388		$	773,263	$	697,246		$	518,207		$	513,586
Cost of sales		594,446			492,902		460,911			343,241			341,349
Gross profit		390,942			280,361		236,335			174,966			172,237
Selling, general and administrative expenses		195,532			156,314		149,739			110,430			121,501
Restructuring charge		1,655			—		—			—			—
Operating income		193,755			124,047		86,596			64,536			50,736
Interest expense		42,101			26,541		20,229			15,225			13,233
Other (expense) income, net		(3,670	)		2,933		(2,473	)		(2,152	)		(2,185	)
Income before income tax expense		147,984			100,439		63,894			47,159			35,318
Income tax expense		60,794			40,667		27,545			20,088			15,328
Net income	$	87,190		$	59,772	$	36,349		$	27,071		$	19,990

8

	Years Ended December 31,						Nine Months Ended September 30,
	2001		2002		2003		2003		2004
							(unaudited)
Per Share Data:
Earnings per share:
Basic	$	1.88	$	1.29	$	.78	$	.58	$	.43
Diluted	$	1.80	$	1.23	$	.75	$	.56	$	.42
Weighted average shares outstanding:
Basic		46,285,108		46,345,714		46,317,530		46,320,752		46,300,556
Diluted		48,395,074		48,474,648		48,414,374		48,423,726		47,964,546

	As of September 30, 2004
	(unaudited)
	(in thousands)
Consolidated Balance Sheet Data:
Working capital	$	56,100
Total assets		569,231
Total long-term debt, including current portion		425,781
Total liabilities		625,880
Stockholders’ deficit		(56,649	)

9

SUMMARY CONSOLIDATED UNAUDITED QUARTERLY FINANCIAL DATA

The following summary consolidated unaudited quarterly financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus, and our consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated financial data for each quarter are unaudited and have been prepared on the same basis as the audited financial statements appearing elsewhere in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments, consisting only of normal, recurring adjustments, that management considers necessary for a fair statement of the unaudited quarterly results. The historical results are not necessarily indicative of results to be expected in any future period, and the results for the quarters during 2004 should not be considered indicative of results for the full fiscal year.

	Three Months Ended
	March 31, 2003			June 30, 2003			September 30, 2003			December 31, 2003			March 31, 2004			June 30, 2004			September 30, 2004
	(unaudited)
	(in thousands, except per share data)
Consolidated Statement of Operations Data:
Sales	$	164,630		$	177,014		$	176,563		$	179,039		$	153,324		$	178,821		$	181,441
Gross profit		55,751			59,291			59,924			61,369			47,061			62,174			63,002
Selling, general and administrative expenses		35,662			36,351			38,417			39,309			35,548			44,149			41,804
Operating income		20,089			22,940			21,507			22,060			11,513			18,025			21,198
Interest expense		5,084			5,075			5,066			5,004			3,732			4,635			4,866
Other (expense) income, net		(3,592	)		(1,819	)		3,259			(321	)		1,418			1,329			(4,932	)
Income before income tax expense		11,413			16,046			19,700			16,735			9,199			14,719			11,400
Income tax expense		5,114			6,998			7,976			7,457			3,973			5,920			5,435
Net income	$	6,299		$	9,048		$	11,724		$	9,278		$	5,226		$	8,799		$	5,965
Per Share Data:
Earnings per share:
Basic	$	.14		$	.20		$	.25		$	.20		$	.11		$	.19		$	.13
Diluted	$	.13		$	.19		$	.24		$	.19		$	.11		$	.18		$	.12
Weighted average shares outstanding:
Basic		46,340,306			46,319,020			46,312,786			46,307,976			46,314,236			46,300,508			46,297,630
Diluted		48,454,494			48,428,090			48,398,452			48,386,426			47,977,344			47,966,190			47,960,812
Statistical and Other Data:
Sales growth (decline) from comparable period during prior year		(16.8	)%		(12.7	)%		(5.9	)%		(3.3	)%		(6.9	)%		1.0	%		2.8	%
Gross profit margin		33.9	%		33.5	%		33.9	%		34.3	%		30.7	%		34.8	%		34.7	%

10

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with the other information contained in this prospectus, before making your decision to invest in shares of our common stock.

Risks Related to Our Business

Our product sales are tied to corporate spending and service-sector employment, which are outside of our control. Our sales and/or growth in sales would be adversely affected by a recessionary economy characterized by decreased corporate spending and service-sector employment.

Our sales of office furniture are significantly impacted by the level of corporate spending primarily in North America which, in turn, is a function of the general economic environment. In a recessionary economy, service-sector employment, corporate cash flows and non-residential commercial construction decrease, which typically leads to a decrease in demand for office furniture. In addition, a recessionary economy may also result in saturation of the market by “just new” used office systems, leading to a decrease in demand. Sales of office systems, which have historically accounted for more than half of our revenues, represent longer term and higher cost investments for our clients. As a result, sales of office systems are more severely impacted by decreases in corporate spending than sales of seating, files and storage and casegoods, and demand for office systems typically takes longer to respond to an economic recovery. Due to a combination of these factors, we experienced a significant decrease in sales and operating profits during the recent economic recession.

Geopolitical uncertainties, terrorist attacks, acts of war, increases in energy and other costs or combinations of such and other factors that are outside of our control could at any time have a significant effect on the North American economy, and, therefore, our business. The occurrence of any of these or similar events in the future could result in downward pressure on the economy, which we would expect to cause demand for our products to decline and competitive pricing pressures to increase.

We may have difficulty increasing or maintaining our prices as a result of price competition, which could lower our profit margins. Our competitors may develop new product designs that give them an advantage over us in making future sales.

Office furniture companies compete on the basis of, among other things, price and product design. Since our competitors offer products that are similar to ours, we face significant price competition from our competitors, which tends to intensify during an industry downturn. This price competition impacts our ability to implement price increases or, in some cases, such as during an industry downturn, maintain prices, which could lower our profit margins. Additionally, our competitors may develop new product designs that achieve a high level of customer acceptance, which could give them a competitive advantage over us in making future sales.

Our efforts to introduce new products that meet customer and workplace requirements may not be successful, which could limit our sales growth or cause our sales to decline.

To keep pace with workplace trends, such as changes in workplace design and increases in the use of technology, and with evolving regulatory and industry requirements, including environmental, health, safety and similar standards for the workplace and for product performance, we must periodically introduce new products. The introduction of new products requires the coordination of the design, manufacturing and marketing of such products, which may be affected by factors beyond our control. The design and engineering of certain of our new products can take up to a year or more, and further time may be required to achieve client acceptance. In addition, we may face difficulties in introducing new products if we cannot successfully align ourselves with independent architects and designers who are able to design, in a timely manner, high quality products consistent with our image. Accordingly, the launch of any particular product may be later or less successful than originally anticipated by us. Difficulties or delays in introducing new products or lack of customer acceptance of new products could limit our sales growth or cause our sales to decline.

11

We may not be able to manage our business effectively if we are unable to retain our experienced management team or recruit other key personnel.

The success of our operations is highly dependent upon our ability to attract and retain qualified employees and upon the ability of our senior management and other key employees to implement our business strategy. We believe there are only a limited number of qualified executives in the industry in which we compete. We rely substantially upon the services of Andrew B. Cogan, our Chief Executive Officer, Kathleen G. Bradley, our President and Chief Executive Officer – Knoll, North America, and Stephen A. Grover, our Senior Vice President – Operations. The loss of the services of any of these individuals or other key members of our management team could seriously harm our efforts to successfully implement our business strategy. While we currently maintain key man life insurance policies with respect to Mr. Cogan and Ms. Bradley, this insurance may not be sufficient to compensate us for any harm to our business resulting from any loss of their services. The inability to attract and retain other talented personnel could also affect our ability to successfully implement our business strategy.

We are dependent on the pricing and availability of raw materials and components, and price increases and unavailability of raw materials and components could lower sales, increase our cost of goods sold and reduce our profits and margins.

We require substantial amounts of raw materials, which we purchase from outside sources. Raw materials comprised our single largest total cost for the year ended December 31, 2003. Steel is the primary raw material used in the manufacture of our products. Steel prices have increased by an average of 11% during the first nine months of 2004, and as a result our costs for steel have increased by $3.8 million during this period. Plastics are another raw material used in the manufacture of our products. The prices of plastics are sensitive to the cost of oil, which is used in the manufacture of plastics, and have increased significantly in recent months. To date, we have been successful in largely offsetting these recent price changes in raw materials through our global sourcing initiatives, primarily from China, Taiwan, Italy and Germany, and our continuous improvement programs. However, if the prices of certain raw materials, in particular steel, continue to increase, we may be unable to continue to offset any further increased costs through our global sourcing initiatives and continuous improvement programs. The prices and availability of raw materials may in the future be subject to change or curtailment due to, among other things, the supply of, and demand for, such raw materials, changes in laws or regulations, including duties and tariffs, suppliers’ allocations to other purchasers, interruptions in production by raw materials or component parts suppliers, changes in exchange rates and worldwide price levels. Future changes in the price for, or supply of, these raw materials and components could increase our cost of goods sold and reduce our profits and margins.

In addition, contracts with most of our suppliers are short-term contracts. These suppliers may not continue to provide raw materials to us at attractive prices, or, at all, and we may not be able to obtain the raw materials we need in the future from these or other providers on the scale and within the time frames we require. Moreover, we do not carry significant inventories of raw materials or finished goods that could mitigate an interruption or delay in the availability of raw materials. Any failure to obtain raw materials on a timely basis, or any significant delays or interruptions in the supply of raw materials, could prevent us from being able to manufacture products ordered by our clients in a timely fashion, which could have a negative impact on our reputation and our dealership network, and could cause our sales to decline.

We rely upon independent furniture dealers, and a loss of a significant number of dealers could affect our business, financial condition and results of operations.

We rely on a network of independent dealers for the joint marketing of our products to small and mid-sized accounts, and to assist us in the marketing of our products to large accounts. We also rely upon these dealers to provide a variety of important specification, installation and after-market services to our clients. Our dealers operate primarily under one-year non-exclusive agreements. There is nothing to prevent our dealers from

12

terminating their relationships with us. In addition, individual dealers may not continue to be viable and profitable. If dealers go out of business or are restructured, we can suffer losses because they may not be able to pay us for furniture previously delivered to them. The loss of a dealer relationship could also negatively affect our ability to maintain market share in the affected geographic market and to compete for and service clients in that market until a new dealer relationship is established. The loss or termination of a significant number of dealer relationships could cause difficulties for us in marketing and distributing our products and a resulting decline in our sales.

One of our largest clients currently is the U.S. government, which is subject to uncertain future funding levels and federal procurement laws and requires restrictive contract terms; any of these factors could curtail current or future business with the U.S. government.

For the year ended December 31, 2003, we derived approximately 13.0% of our revenue from sales to over 60 agencies and departments within the U.S. government. Our ability to compete successfully for and retain business with the U.S. government is highly dependent on cost-effective performance, as well as the status of federal procurement laws that require certain government agencies to purchase products from Federal Prison Industries, Incorporated, or UNICOR, and whether certain waivers of the application of these laws will be continued. Our business is also sensitive to changes in national and international priorities and U.S. government budgets.

The U.S. government typically can terminate or modify any of its contracts with us either for its convenience or if we default by failing to perform under the terms of the applicable contract. A termination arising out of our default could expose us to liability and impede our ability to compete in the future for contracts and orders. Furthermore, if we were found to have committed fraud or a criminal offense in connection with any government contract, we could be suspended or debarred from all further government contracting.

We are highly leveraged, and a significant amount of cash will be required to service our indebtedness. Restrictions imposed by the terms of our indebtedness may limit our operating and financial flexibility.

At September 30, 2004, we had total consolidated outstanding debt of approximately $425.8 million. The high level of our indebtedness could have important consequences to holders of our common stock, given that:

• a substantial portion of our cash flow from operations must be dedicated to fund scheduled payments of principal and debt service and will not be available for other purposes;

• our ability to obtain additional debt financing in the future for working capital, capital expenditures, research and development or acquisitions may be limited by the terms of our new credit facility; and

• the terms of our new credit facility also impose other operating and financial restrictions on us, which could limit our flexibility in reacting to changes in our industry or in economic conditions generally.

Our new credit facility prevents us from incurring any additional indebtedness other than (i) borrowings under our revolving credit facility (there were no outstanding borrowings as of September 30, 2004 under our revolving credit facility); (ii) certain types of indebtedness that may be incurred subject to aggregate dollar limitations identified in our new credit facility, such as purchase money indebtedness and capital lease obligations not to exceed $30.0 million in the aggregate and unsecured indebtedness not to exceed $50.0 million in the aggregate, and (iii) other types of indebtedness that are not limited to specific dollar limitations, such as indebtedness incurred in the ordinary course of business and unsecured, subordinated indebtedness. The aggregate amount of indebtedness that we may incur pursuant to these exceptions is further limited by the financial covenants in our new credit facility and, therefore, will depend on our future results of operations and cannot be determined at this time. Furthermore, although we may incur unlimited amounts of certain types of indebtedness, subject to compliance with these financial covenants, the amount of indebtedness that we may actually be able to incur will depend on the terms on which such types of debt financing are available to us, if available at all.

13

As a result of the foregoing, we may be prevented from engaging in transactions that might further our growth strategy or otherwise be considered beneficial to us. A breach of any of the covenants in our new credit facility could result in a default thereunder. If payments to the lenders under our new credit facility were to be accelerated, our assets could be insufficient to repay in full our indebtedness under our new credit facility and our other liabilities. Any such acceleration could result in a foreclosure on all or substantially all of our subsidiaries’ assets, which would have a negative impact on the value of our common stock and jeopardize our ability to continue as a going concern.

An inability to protect our intellectual property could have a significant impact on our business.

We attempt to protect our intellectual property rights, both in the United States and in foreign countries, through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Because of the differences in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights do not generally receive the same degree of protection in foreign countries as they do in the United States. In some parts of the world, we have limited protections, if any, for our intellectual property. Our ability to compete effectively with our competitors depends, to a significant extent, on our ability to maintain the proprietary nature of our intellectual property. The degree of protection offered by the claims of the various patents, trademarks and service marks may not be broad enough to provide significant proprietary protection or competitive advantages to us, and patents, trademarks or service marks may not be issued on our pending or contemplated applications. In addition, not all of our products are covered by patents. It is also possible that our patents, trademarks and service marks may be challenged, invalidated, cancelled, narrowed or circumvented.

In the past, certain of our products have been copied and sold by others. We vigorously try to enforce our intellectual property rights, but we have to make choices about where and how we pursue enforcement and where we seek and maintain patent protection. In many cases, the cost of enforcing our rights is substantial, and we may determine that the costs of enforcement outweigh the potential benefits. If we are unable to maintain the proprietary nature of our intellectual property with respect to our significant current or proposed products, our competitors may be able to sell copies of our products, which could adversely affect our ability to sell our original products and could also result in competitive pricing pressures.

If third parties claim that we infringe upon their intellectual property rights, we may incur liability and costs and may have to redesign or discontinue an infringing product.

We face the risk of claims that we have infringed third parties’ intellectual property rights. Companies operating in our industry routinely seek patent protection for their product designs, and many of our principal competitors have large patent portfolios. Prior to launching major new products in our key markets, we normally evaluate existing intellectual property rights. However, our competitors may also have filed for patent protection which is not as yet a matter of public knowledge. Our efforts to identify and avoid infringing third parties’ intellectual property rights may not be successful. Any claims of patent or other intellectual property infringement, even those without merit, could (i) be expensive and time consuming to defend; (ii) cause us to cease making, licensing or using products that incorporate the challenged intellectual property; (iii) require us to redesign, reengineer, or rebrand our products or packaging, if feasible; or (iv) require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.

We could be required to incur substantial costs to comply with environmental requirements. Violations of, and liabilities under, environmental laws and regulations may increase our costs or require us to change our business practices.

Our past and present ownership and operation of manufacturing plants are subject to extensive and changing federal, state, local and foreign environmental laws and regulations, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste and the cleanup of properties affected by hazardous substances. As a result, we are involved from time to time in administrative and judicial proceedings

14

and inquiries relating to environmental matters and could become subject to fines or penalties related thereto. We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist. Compliance with more stringent laws or regulations, or stricter interpretation of existing laws, may require additional expenditures by us, some of which may be material. We have been identified as a potentially responsible party pursuant to the Comprehensive Environmental Response Compensation and Liability Act, or CERCLA, for remediation costs associated with waste disposal sites previously used by us. In general, CERCLA can impose liability for costs to investigate and remediate contamination without regard to fault or the legality of disposal and, under certain circumstances, liability may be joint and several, resulting in one party being held responsible for the entire obligation. Liability may also include damages for harm to natural resources. The remediation costs and our allocated share at some of these CERCLA sites are unknown. We may also be subject to claims for personal injury or contribution relating to CERCLA sites. We reserve amounts for such matters when expenditures are probable and reasonably estimable.

We are subject to potential labor disruptions, which could have a significant impact on our business.

Certain of our employees located in Grand Rapids, Michigan and Italy are represented by unions. The collective bargaining agreement for our Grand Rapids location has an initial term that expires on August 27, 2006 with evergreen one-year terms thereafter, but may be terminated by either party on August 27, 2006 and anniversaries thereof with 60 days’ notice. While we have good relations with our Grand Rapids associates and the union, we may be unsuccessful in negotiating and agreeing upon a new collective bargaining agreement at that time if the current collective bargaining agreement is terminated. We have also had sporadic, to date unsuccessful, attempts to unionize our other North American manufacturing locations. In August 2004, a petition was filed with the National Labor Relations Board seeking to unionize employees at our Muskegon, Michigan, facility. In September 2004, our employees at this facility voted against unionization. In addition, we have experienced a number of brief work stoppages in recent years at our facilities in Italy as a result of national and local issues. While we believe that we have good relations with our workforce, we may experience work stoppages or other labor problems in the future, and further unionization efforts may be successful. Any prolonged work stoppage could have an adverse effect on our reputation, our vendor relations and our dealership network. Moreover, because substantially all of our products are manufactured to order, we do not carry finished goods inventory that could mitigate the effects of a prolonged work stoppage.

Our insurance may not adequately insulate us from expenses for product defects.

We maintain product liability and other insurance coverage that we believe to be generally in accordance with industry practices, but our insurance coverage does not extend to field visits to repair, retrofit or replace defective products, or to product recalls. As a result, our insurance coverage may not be adequate to protect us fully against substantial claims and costs that may arise from product defects, particularly if we have a large number of defective products that we must repair, retrofit, replace or recall.

We may require additional capital in the future, which may not be available or may be available only on unfavorable terms.

Our capital requirements depend on many factors, including capital improvements, tooling and new product development. To the extent that our existing capital is insufficient to meet these requirements and cover any losses, we may need to raise additional funds through financings or curtail our growth and reduce our assets. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. Equity financings could result in dilution to our stockholders, and the securities may have rights, preferences and privileges that are senior to those of our common stock. If our need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital.

15

We may be vulnerable to the effects of currency exchange rate fluctuations, which could increase our expenses.

We primarily sell our products in U.S. dollars and we also report our financial results in U.S. dollars, but we pay some of our expenses in other currencies. This can result in a significant increase or decrease in the amount of those expenses in U.S. dollar terms, which affects our profits. In the future, any foreign currency appreciation relative to the U.S. dollar would increase our expenses that are denominated in that currency. From time to time we review our foreign currency exposure and evaluate whether we should enter into hedging transactions. We generally do not hedge our foreign currency exposure, and, to the extent that we determine not to do so in the future, we may be vulnerable to the effects of currency exchange rate fluctuations.

Risks Related to Our Common Stock and this Offering

Our principal stockholder and its affiliates will be able to influence matters requiring stockholder approval and could discourage the purchase of our outstanding shares at a premium.

After the offering, our principal stockholder, Warburg Pincus will beneficially own approximately     % of our outstanding common stock. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale or merger of our company and may negatively affect the market price of our common stock. Transactions that could be affected by this concentration of ownership include proxy contests, tender offers, mergers or other purchases of common stock that could give you the opportunity to realize a premium over the then-prevailing market price for shares of our common stock.

As a result of Warburg Pincus’ share ownership and representation on our board of directors, Warburg Pincus will be able to influence all affairs and actions of our company, including matters requiring stockholder approval such as the election of directors and approval of significant corporate transactions. The interests of our principal stockholder may differ from the interests of the other stockholders. For example, Warburg Pincus could oppose a third party offer to acquire us that you might consider attractive, and the third party may not be able or willing to proceed unless Warburg Pincus supports the offer. In addition, if our board of directors supports a transaction requiring an amendment to our certificate of incorporation, Warburg Pincus is currently in a position to defeat any required stockholder approval of the proposed amendment. If our board of directors supports an acquisition of us by means of a merger or a similar transaction, the vote of Warburg Pincus alone is currently sufficient to approve or block the transaction under Delaware law. In each of these cases and in similar situations, you may disagree with Warburg Pincus as to whether the action opposed or supported by Warburg Pincus is in the best interest of our stockholders.

We are exempt from certain corporate governance requirements since we are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, you will not have the protections afforded by these corporate governance requirements.

Because Warburg Pincus will control more than 50% of the voting power of our common stock after this offering, we are considered to be a “controlled company” for the purposes of the New York Stock Exchange listing requirements. As such, we are permitted, and have elected, to opt out of the New York Stock Exchange listing requirements that would otherwise require our board of directors to have a majority of independent directors and our compensation and nominating and corporate governance committees to be comprised entirely of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.

Future sales of our common stock in the public market could lower our share price.

We and our existing stockholders may sell additional shares of common stock into the public markets after this offering. We may also issue convertible debt securities to raise capital in the future. After the consummation of this offering, we will have outstanding              shares of common stock and options to purchase an additional

16

11,805,172 shares of common stock. This number includes the              shares being sold by the selling stockholders in this offering, which may be resold immediately in the public market. Of the remaining              outstanding shares and shares issuable upon exercise of options,              or     % of our total outstanding shares and shares issuable upon exercise of options will be restricted from immediate resale under the “lock-up” agreements between certain of our current stockholders and the underwriters described in “Underwriting,” but may be sold into the market after those “lock-up” restrictions expire or if they are waived by Goldman, Sachs & Co. and UBS Securities LLC in their sole discretion. The outstanding shares and shares issuable upon exercise of options subject to the “lock-up” restrictions will generally become available for sale at various times following the expiration of the lock-up agreements, which is 180 days after the date of this prospectus, subject to volume limitations and manner-of-sale requirements under Rule 144 of the Securities Act of 1933, or the Securities Act. In addition, options to purchase              shares of common stock will expire within 90 days following this offering if they are not exercised before then, subject to extensions in certain circumstances. The shares underlying these options will be available for immediate sale into the market.

Our corporate documents and Delaware law contain provisions that could discourage, delay or prevent a change in control of our company.

Provisions in our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our amended and restated certificate of incorporation authorizes our board of directors to issue up to 10,000,000 shares of “blank check” preferred stock. Without stockholder approval, the board of directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders could make it more difficult for a third party to acquire us. In addition, our amended and restated certificate of incorporation provides for a staggered board of directors, whereby directors serve for three-year terms, with approximately one third of the directors coming up for reelection each year. Having a staggered board will make it more difficult for a third party to obtain control of our board of directors through a proxy contest, which may be a necessary step in an acquisition of us that is not favored by our board of directors.

We are also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203. Under one such exception, Warburg Pincus and its affiliates do not constitute an “interested stockholder.”

Upon any change in control, the lenders under our new credit facility would have the right to require us to repay all of our outstanding obligations under the facility.

There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the New York Stock Exchange or otherwise or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid in this offering.

Our stock price may be volatile, and your investment in our common stock could suffer a decline in value.

There has been significant volatility in the market price and trading volume of equity securities, which is unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations

17

may negatively affect the market price of our common stock. The initial public offering price for our common stock will be determined by negotiations between representatives of the underwriters and us and may not be indicative of prices that will prevail in the open market following this offering. You may not be able to resell your shares at or above the initial public offering price due to fluctuations in the market price of our common stock caused by changes in our operating performance or prospects and other factors.

Some specific factors that may have a significant effect on our common stock market price include:

• actual or anticipated fluctuations in our operating results or future prospects;

• our announcements or our competitors’ announcements of new products;

• the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

• strategic actions by us or our competitors, such as acquisitions or restructurings;

• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• changes in accounting standards, policies, guidance, interpretations or principles;

• changes in our growth rates or our competitors’ growth rates;

• our inability to raise additional capital;

• conditions of the office furniture industry as a result of changes in financial markets or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events;

• sales of common stock by us or members of our management team; and

• changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies or the office furniture industry generally.

This offering will cause immediate and substantial dilution in net tangible book value.

Purchasers of our common stock in this offering will experience immediate and substantial dilution in net tangible book value of $21.34 per share at an assumed initial public offering price of $15.00 per share. Additional dilution is likely to occur upon the exercise of options granted by us. To the extent we raise additional capital by issuing equity securities, our stockholders may experience additional substantial dilution.

The requirements of being a public company may strain our resources and distract management.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, and the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These requirements may place a strain on our people, systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, significant resources and management oversight will be required. This may divert management’s attention from other business concerns. Upon consummation of this offering, our costs will increase as a result of having to comply with the Exchange Act, the Sarbanes-Oxley Act and the New York Stock Exchange listing requirements, which will require us, among other things, to establish an internal audit function. We may not be able to do so in a timely fashion or without incurring material costs.

18

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, principally in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Statements and financial discussion and analysis contained in this prospectus that are not historical facts are forward-looking statements. These statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on our current beliefs as well as assumptions made by us and information currently available to us. Forward-looking statements generally will be accompanied by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “possible”, “potential”, “predict”, “project”, or other similar words, phrases or expressions. Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: the risks described on the previous pages; changes in the financial stability of our clients; changes in relationships with clients; the mix of products sold and of clients purchasing our products; the success of new technology initiatives; and changes in business strategies and decisions. The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement. Unpredictable or unknown factors could also have material adverse effects on us. All forward-looking statements included in this report are expressly qualified in their entirety by the foregoing cautionary statements. Except as required under the Federal securities laws and rules regulations of the SEC, we undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

USE OF PROCEEDS

The proceeds from the sale of shares of common stock offered pursuant to this prospectus are solely for the account of the selling stockholders. We will not receive any proceeds from the sale of shares by the selling stockholders.

DIVIDEND POLICY

Our board of directors currently intends to declare and pay quarterly dividends of $0.05 per share on our common stock. The declaration and payment of dividends is subject to the discretion of our board of directors and depends on various factors, including our net income, financial condition, cash requirements, future prospects and other factors deemed relevant by our board of directors. Our new credit facility imposes restrictions on our ability to pay dividends, and thus our ability to pay dividends on our common stock will depend upon, among other things, our level of indebtedness at the time of the proposed dividend and whether we are in default under any of our debt instruments. Our future dividend policy will also depend on the requirements of any future financing agreements to which we may be a party and other factors considered relevant by our board of directors. For a discussion of our cash resources and needs, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

19

CAPITALIZATION

The following table sets forth our unaudited consolidated capitalization as of September 30, 2004. You should read this table in conjunction with “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

	As of September 30, 2004
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	12,336
Debt:
Term loan	$	425,000
Revolving credit facility		—
Other		781
Total Debt	$	425,781
Stockholders’ equity:
Common Stock ($0.01 par value; 100,000,000 shares authorized as of September 30, 2004, 200,000,000 shares authorized as adjusted; 46,295,758 shares issued and outstanding net of 116,500 treasury shares)	$	463
Paid-in-capital		1,750
Accumulated deficit		(62,679	)
Accumulated other comprehensive income		3,817
Total stockholders’ deficit		(56,649	)
Total capitalization	$	369,132

The number of shares of our common stock shown as issued and outstanding in the table above as of September 30, 2004 excludes:

• 11,805,172 shares of common stock issuable upon the exercise of options outstanding as of September 30, 2004, with exercise prices ranging from $6.12 to $16.34 per share and a weighted average exercise price of $11.09 per share; and

• 661,488 shares of common stock reserved for future grants under our stock option plans as of September 30, 2004.

The number of shares of common stock issuable upon the exercise of options and the exercise price of such options presented as of September 30, 2004 give effect to an October 15, 2004 adjustment made, in accordance with the stock incentive plan provisions, in response to the special cash dividend that was paid to stockholders on September 30, 2004.

20

DILUTION

Our tangible net book value (deficit) per share of our common stock will be substantially below the initial public offering price. You will, therefore, incur immediate and substantial dilution of $21.34 per share, based on the initial public offering price of $15.00 per share. As a result, if we are liquidated, you might not receive any value on your investment.

Dilution in tangible net book value (deficit) per share represents the difference between the amount per share of our common stock that you pay in this offering and the net tangible book value (deficit) per share of our common stock immediately afterwards. Net tangible book value per share represents (1) our total net tangible assets (total net assets less intangible assets), divided by (2) the number of shares of our common stock outstanding.

Our tangible net book value (deficit) at September 30, 2004 was approximately $(293.5) million, or $(6.34) per share. This amount represents an immediate dilution in net tangible book value of $21.34 per share to you. The following table illustrates this dilution per share:

Initial public offering price per share	$	15.00
Net tangible book value (deficit) per share as of September 30, 2004	$	(6.34	)
Dilution per share to new investors	$	21.34

As of September 30, 2004, there were options outstanding to purchase 11,805,172 shares of common stock, with exercise prices ranging from $6.12 to $16.34 per share and a weighted average exercise price of $11.09 per share. The number of shares of common stock issuable upon the exercise of options and the exercise price of such options as of September 30, 2004 give effect to an October 15, 2004 adjustment made, in accordance with the stock incentive plan provisions, in response to the special cash dividend that was paid to stockholders on September 30, 2004. The table above assumes that those options have not been exercised. To the extent outstanding options are exercised, you would experience further dilution if the exercise price is less than our net tangible book value per share.

The following table summarizes the total number of shares purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders, and, the total number of shares purchased from the selling stockholders, the total consideration paid to the selling stockholders and the average price per share paid by new investors purchasing shares in this offering:

	Shares Purchased			Total Consideration			Average Price Per Share
	Number	Percent		Amount	Percent
Existing stockholders (1)		%		$	%		$
New investors								15.00
Total		100.0	%	$	100.0	%	$

(1) Excludes shares of common stock being sold by the selling stockholders and assumes exercise of outstanding options. As of September 30, 2004, there were options outstanding to purchase 11,805,172 shares of our common stock, with exercise prices ranging from $6.12 to $16.34 per share and a weighted average exercise price of $11.09 per share. The number of shares of common stock issuable upon the exercise of options and the exercise price of such options as of September 30, 2004 give effect to an October 15, 2004 adjustment made, in accordance with the stock incentive plan provisions, in response to the special cash dividend that was paid to stockholders on September 30, 2004.

If the underwriters exercise their over-allotment option in full, the percentage of shares of common stock held by existing stockholders will be approximately     % of the total number of shares of our common stock outstanding after this offering, and the number of shares held by new investors will be increased to             , or approximately     % of the total number of shares of our common stock outstanding after this offering.

21

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. The selected financial data for the years ended December 31, 2001, 2002 and 2003 and as of December 31, 2002 and 2003 are derived from our audited financial statements included elsewhere in this prospectus. The selected financial data for the years ended December 31, 1999 and 2000 and as of December 31, 1999, 2000 and 2001 are derived from our audited financial statements not included elsewhere in this prospectus. The selected financial data as of and for the nine months ended September 30, 2003 and 2004 are derived from our unaudited financial statements included in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments, consisting only of normal, recurring adjustments, that management considers necessary for a fair statement of the results of those periods. The historical results are not necessarily indicative of results to be expected in any future period and the results for the nine months ended September 30, 2004 should not be considered indicative of results for the full fiscal year.

	Years Ended December 31,													Nine Months Ended September 30,
	1999			2000		2001			2002		2003			2003			2004
														(unaudited)
	(in thousands, except per share data)
Consolidated Statement of Operations Data:
Sales	$	984,511		$	1,163,477	$	985,388		$	773,263	$	697,246		$	518,207		$	513,586
Cost of sales		593,442			682,421		594,446			492,902		460,911			343,241			341,349
Gross profit		391,069			481,056		390,942			280,361		236,335			174,966			172,237
Selling, general and administrative expenses		206,919			243,885		195,532			156,314		149,739			110,430			121,501
Restructuring charge		—			—		1,655			—		—			—			—
Operating income		184,150			237,171		193,755			124,047		86,596			64,536			50,736
Interest expense		21,611			44,437		42,101			26,541		20,229			15,225			13,233
Refinancing expense		6,356	(a)		—		—			—		—			—			—
Other (expense) income, net		(17,671	)(b)		3,026		(3,670	)		2,933		(2,473	)		(2,152	)		(2,185	)
Income before income tax expense		138,512			195,760		147,984			100,439		63,894			47,159			35,318
Income tax expense		60,151			79,472		60,794			40,667		27,545			20,088			15,328
Net income	$	78,361		$	116,288	$	87,190		$	59,772	$	36,349		$	27,071		$	19,990
Per Share Data:
Earnings per share:
Basic	$	1.06		$	2.55	$	1.88		$	1.29	$	.78		$	.58		$	.43
Diluted	$	1.02		$	2.43	$	1.80		$	1.23	$	.75		$	.56		$	.42
Cash dividends declared per share:	$	—		$	4.75	$	—		$	—	$	—		$	—		$	1.53
Weighted average shares outstanding:
Basic		73,761,018			45,572,652		46,285,108			46,345,714		46,317,530			46,320,752			46,300,556
Diluted		76,607,796			47,892,332		48,395,074			48,474,648		48,414,374			48,423,726			47,964,546

22

	As of December 31,															As of September 30,
	1999			2000			2001			2002			2003			2003			2004
																(unaudited)
	(in thousands)
Consolidated Balance Sheet Data:
Working capital (deficit)	$	104,087		$	32,678		$	4,020		$	(14,419	)	$	(28,238	)	$	(27,467	)	$	56,100
Total assets		742,306			695,130			639,003			590,351			561,001			559,338			569,231
Total long-term debt, including current portion		610,376			425,755			547,524			452,042			380,871			393,793			425,781
Total liabilities		836,500			899,505			761,321			653,474			569,120			582,270			625,880
Stockholders’ deficit		(94,194	)		(204,375	)		(122,318	)		(63,123	)		(8,119	)		(22,932	)		(56,649	)

(a) Cost incurred in connection with our leveraged recapitalization.

(b) Consists primarily of costs incurred in connection with the modification of terms of our senior subordinated notes.

23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion together with the financial statements, related notes and other financial information included elsewhere in this prospectus. The following discussion may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” and elsewhere in this prospectus. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

We are a leading designer and manufacturer of an expanding portfolio of high quality, branded office furniture products and textiles. Our products embody our commitment to innovation and are designed to provide enduring value and help clients shape their workplaces with imagination and vision. They are recognized for their high quality and sophisticated image and are targeted at the middle to upper end of the market.

Since 1997, the U.S. office furniture market has experienced periods of significant growth and contraction. In the four years from 1997 to 2000, the industry grew at an above-average compounded annual rate of 7.3%. In contrast, in 2001 through 2003, the industry experienced a sales decline of more than 36% due to a more challenging macroeconomic environment. Industry-wide shipments in the office systems category in particular declined by 45%, more than in any other category. During the first nine months of 2004, however, the U.S. office furniture market experienced positive period-over-period growth in orders and shipments of 6.0% and 5.0%, respectively. Consistent with these results, our sales backlog has grown by 6.3% since December 31, 2003. For a more detailed discussion of the trends in the U.S. office furniture market, see “Business— Industry Overview.”

Starting in early 2001, in an effort to maintain our gross profit and operating income margins, we reduced hourly headcount in response to declining sales volumes, eliminated certain salaried positions in North America, reduced the amount of square footage leased for operations and aggressively managed our discretionary expenditures. As a result, we have been able to maintain operating income margins that exceed those of our primary publicly held competitors, who are Herman Miller, Inc. and Steelcase, Inc.

Even with the more favorable recent macroeconomic environment, we have continued to aggressively manage our cost structure in order to maintain relatively strong profit margins, while maintaining our focus on growth initiatives that we believe will help to better position us to meet the needs of our clients as economic conditions continue to improve. These initiatives include investing in new product development and other sales and marketing initiatives designed to gain market share and investing in technology designed to streamline and simplify our order entry process and improve the client’s furniture buying experience. Upon consummation of this offering, however, our costs will increase as a result of having to comply with the Exchange Act, the Sarbanes-Oxley Act and the New York Stock Exchange listing requirements, which will require us, among other things, to establish an internal audit function.

In the first nine months of 2004, we experienced increases in sales of our seating, storage and specialty businesses. Our third quarter sales benefited from list price increases that we implemented in May 2004. Acceptance of the price increases indicates the continued reversal of industry pricing pressures that we experienced in 2001, 2002 and during the first half of 2003. Materials costs for steel and plastic increased by $4.7 million during the first nine months of 2004 due to increasing prices. Our list price increases, along with our global sourcing initiative and continuous improvement program, have largely offset our materials costs increases in steel and plastics to date. For 2004, we estimate that the aggregate increase in materials costs for steel and plastic will be approximately $8 million. Without factoring in the potential benefits from our global sourcing initiative and continuous improvement program, we estimate that our materials costs for steel and plastic will increase by an additional $10 million in 2005 due to price increases. We anticipate that our existing and ongoing global sourcing initiative and continuous improvement program, recently implemented list price increases and selected additional list price increases will offset these further increased costs.

24

	Three Months Ended
	March 31, 2003			June 30, 2003			September 30, 2003			December 31, 2003			March 31, 2004			June 30, 2004			September 30, 2004
	(unaudited)
	(in thousands, except statistical data)
Consolidated Statement of Operations Data:
Sales	$	164,630		$	177,014		$	176,563		$	179,039		$	153,324		$	178,821		$	181,441
Gross profit		55,751			59,291			59,924			61,369			47,061			62,174			63,002
Operating income		20,089			22,940			21,507			22,060			11,513			18,025			21,198
Interest expense		5,084			5,075			5,066			5,004			3,732			4,635			4,866
Other (expense) income, net		(3,592	)		(1,819	)		3,259			(321	)		1,418			1,329			(4,932	)
Income tax expense		5,114			6,998			7,976			7,457			3,973			5,920			5,435
Net income	$	6,299		$	9,048		$	11,724		$	9,278		$	5,226		$	8,799		$	5,965
Statistical and Other Data:
Sales (decline) growth from comparable period during prior year		(16.8	)%		(12.7	)%		(5.9	)%		(3.3	)%		(6.9	)%		1.0	%		2.8	%
Gross profit margin		33.9	%		33.5	%		33.9	%		34.3	%		30.7	%		34.8	%		34.7	%
Backlog	$	142,667		$	125,508		$	107,443		$	107,023		$	111,784		$	116,206		$	113,748

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions that affect the amounts of reported assets, liabilities, revenues and expenses and the disclosure of certain contingent assets and liabilities. Actual results may differ materially from such estimates. We believe that the critical accounting policies that follow are those of our policies that require the most judgment, estimation and assumption in preparing our consolidated financial statements.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our clients and dealers to make required payments. The allowance is determined through an analysis of the aging of accounts receivable and assessments of risk that are based on historical trends and an evaluation of the impact of current and projected economic conditions. This allowance is adjusted if, in our judgment, the financial condition of our clients and dealers has deteriorated and resulted in an impairment of their ability to make payments.

Inventory

Inventories are valued at the lower of cost or market value. Cost is determined using the first-in, first-out method. We write down inventory that, in our judgment, is impaired or obsolete. Obsolescence may be caused by the discontinuance of a product line, changes in product material specifications, replacement products in the marketplace and other competitive influences.

Goodwill and Other Intangible Assets

Goodwill represents the difference between the purchase price and the related underlying tangible and identifiable intangible net assets resulting from a business acquisition. We discontinued the amortization of

25

goodwill and our indefinite lived intangible assets in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”. Annually, or if conditions indicate an earlier review is necessary, the estimated fair value of our defined reporting unit is compared to the recorded carrying amount of the reporting unit. As discussed in Note 2 to the consolidated financial statements, if the estimated fair value is less than the carrying value, goodwill may be impaired, and will be written down to its estimated fair value, if necessary.

In testing for potential impairment, we measure the estimated fair value using a combination of two methods based upon a discounted cash flow valuation and a market value approach.

The discounted cash flow method analysis is based on the present value of projected cash flows and a residual value and uses the following assumptions:

• A business is worth today what it can generate in future cash to its owners;

• Cash received today is worth more than an equal amount of cash received in the future; and

• Future cash flows can be reasonably estimated.

The market value approach uses a set of five comparable companies to derive a range of market multiples for the last twelve months’ revenue and earnings before interest, taxes, depreciation and amortization.

We also perform an annual impairment analysis on our trademarks, which are not subject to amortization. In testing for potential impairment of our trademarks, we compare the fair value of our trademarks with their respective carrying amounts. If the carrying amount of the trademark exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. In determining fair value of our trademarks, we have used an income approach. The income method used estimates the cash flow savings realized from owning the intangible asset and not having to pay a royalty for its use. This method is commonly referred to as a relief-from-royalty method. Under this approach, it is necessary to estimate a royalty rate for the product, which is then applied to the projected net revenues for that product line. Estimated cash flow savings are then discounted using the applicable discount rate. As of the most recent valuation date, the fair market value of our trademarks exceeded their carrying amount.

The key assumptions used to determine fair value of our defined reporting unit and intangible assets include product sales forecasts, cash flows, terminal values and the discount rate based on our weighted average cost of capital adjusted for the risks associated with our operations.

We continue to amortize our deferred financing fees over the life of the respective debt.

Product Warranty

We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, our warranty obligation is affected by product failure rates and by material usage and service costs incurred in correcting a product failure. Cost estimates are based on historical product failure rates and identified one-time fixes for each specific product category. The accrued warranty cost generally varies in direct relation to sales volume, as such costs tend to be a consistent percentage of revenue. Should actual costs differ from original estimates, revisions to the estimated warranty liability would be required.

Employee Benefits

We are partially self-insured for our employee health benefits. We accrue for employee health benefit obligations based on an actuarial valuation. The actuarial valuation is based upon historical claims as well as a number of assumptions, including rates of inflation for medical costs and benefit plan changes. Actual results could be materially different from the estimates used.

26

Pension and Other Postretirement Benefits

We sponsor two defined benefit pension plans and two other postretirement benefit plans that cover substantially all of our U.S. employees. Several statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liability related to the plans. Key factors include assumptions about the expected rates of return on plan assets, discount rates, and health care cost trend rates, as determined by us, within certain guidelines. We consider market conditions, including changes in investment returns and interest rates, in making these assumptions.

We determine the expected long-term rate of return on plan assets based on aggregating the expected rates of return for each component of the plan’s asset mix. We use historic plan asset returns combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption and generally does not change annually. The discount rate reflects the market rate for high-quality fixed income debt instruments as of our annual measurement date and is subject to change each year. Holding all other assumptions constant, a one-percentage-point increase or decrease in the assumed rate of return on plan assets would decrease or increase, respectively, 2003 net periodic pension expense by approximately $0.4 million. Likewise, a one percentage point increase or decrease in the discount rate would decrease or increase, respectively, 2003 net periodic pension expense by approximately $3.2 million.

Unrecognized actuarial gains and losses are recognized over the expected remaining service life of the employee group. Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to the obligations and from the difference between expected returns and actual returns on plan assets. These unrecognized losses are systematically recognized as an increase in future net periodic pension expense in accordance with FASB Statement No. 87, Employers’ Accounting for Pensions.

Key assumptions we use in determining the amount of the obligation and expense recorded for postretirement benefits other than pensions (“OPEB”), under FASB Statement No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, include the assumed discount rate and the assumed rate of increases in future health care costs. The discount rate we use to determine the obligation for these benefits matches the discount rate used in determining our pension obligations in each year presented. In estimating the health care cost trend rate, we consider actual health care cost experience, future benefit structures, industry trends and advice from our actuaries. We assume that the relative increase in health care costs will generally trend downward over the next several years, reflecting assumed increases in efficiency in the health care system and industry-wide cost containment initiatives. At December 31, 2003, the expected rate of increase in future health care costs was 9% for 2004, declining to 5% in 2008 and thereafter. Increasing the assumed health care cost trend by one percentage point in each year would increase the benefit obligation as of December 31, 2003 by $2.4 million and increase the aggregate of the service and interest cost components of net periodic benefit cost for 2003 by approximately $0.3 million. Decreasing the assumed health care cost trend rate by one percentage point in each year would decrease the benefit obligation as of December 31, 2003 by approximately $2.0 million and decrease the aggregate of the service and interest cost components of net periodic benefit cost for 2003 by approximately $0.2 million.

The actuarial assumptions we use in determining our pension and OPEB retirement benefits may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may materially affect our financial position or results of operations.

Commitments and Contingencies

We establish reserves for the estimated cost of environmental and legal contingencies when such expenditures are probable and reasonably estimable. A significant amount of judgment and use of estimates is required to quantify our ultimate exposure in these matters. We engage outside experts as we deem necessary or

27

appropriate to assist in the evaluation of exposure. From time to time, as information becomes available regarding changes in circumstances for ongoing issues as well as information regarding emerging issues, we reassess our potential liability and adjust our reserve balances as necessary. Revisions to our estimates of potential liability, and actual expenditures related to environmental and legal contingencies, could have a material impact on our results of operations or financial position.

Taxes

We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” (“SFAS 109”) which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between book and tax bases of recorded assets and liabilities. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely that not that some portion or all of the deferred tax assets will not be recognized.

At December 31, 2002, our deferred tax liabilities of $44.1 million exceeded our deferred tax assets of $30.7 million by $13.4 million. At December 31, 2003, our deferred tax liabilities of $53.6 million exceeded our deferred tax assets of $28.0 million by $25.6 million. Our deferred tax assets at December 31, 2002 and 2003 of $30.7 million and $28.0 million, respectively, are net of valuation allowances of $13.6 million and $17.0 million, respectively. We have recorded the above valuation allowance primarily for net operating loss carryforwards in foreign tax jurisdictions where we have incurred historical tax losses from operations, and have determined that it is more likely than not that these deferred tax assets will not be realized.

We evaluate on a quarterly basis the realizability of our deferred tax assets and adjust the amount of our allowance, if necessary. The factors we use to assess the likelihood of realization are our forecast of future taxable income and our assessment of available tax planning strategies that could be implemented to realize the net deferred tax assets.

Interest Rate Collar Agreements

We account for our interest rate collar agreements, which matured in March 2004, in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”). Our interest rate collar agreements are classified as risk management instruments not eligible for hedge accounting. In accordance with SFAS 133, we record the fair value of these agreements on our balance sheet and recognize changes in their fair value in earnings during the period the value of the contract changes. The fair value of the interest rate collar agreements represents the present value of expected future payments, as estimated by the counterparties, who are dealers in these instruments, and is based upon a number of factors, including current interest rates and expectations of future interest rates. Changes in valuation assumptions and estimates used by the counterparties could materially affect our results of operations or financial position.

28

Results of Operations

Nine months ended September 30, 2003 and 2004

	Three Months Ended									Nine Months Ended			Three Months Ended									Nine Months Ended
	March 31, 2003			June 30, 2003			September 30, 2003			September 30, 2003			March 31, 2004			June 30, 2004			September 30, 2004			September 30, 2004
	(unaudited)
	(in thousands, except statistical data)
Consolidated Statement of Operations Data:
Sales	$	164,630		$	177,014		$	176,563		$	518,207		$	153,324		$	178,821		$	181,441		$	513,586
Gross profit		55,751			59,291			59,924			174,966			47,061			62,174			63,002			172,237
Operating income		20,089			22,940			21,507			64,536			11,513			18,025			21,198			50,736
Interest expense		5,084			5,075			5,066			15,225			3,732			4,635			4,866			13,233
Other (expense) income, net		(3,592	)		(1,819	)		3,259			(2,152	)		1,418			1,329			(4,932	)		(2,185	)
Income tax expense		5,114			6,998			7,976			20,088			3,973			5,920			5,435			15,328
Net income	$	6,299		$	9,048		$	11,724		$	27,071		$	5,226		$	8,799		$	5,965		$	19,990
Statistical and Other Data:
Sales growth (decline) from comparable period of prior year		(16.8	)%		(12.7	)%		(5.9	)%		(11.9	)%		(6.9	)%		1.0	%		2.8	%		(0.9	)%
Gross profit margin		33.9	%		33.5	%		33.9	%		33.8	%		30.7	%		34.8	%		34.7	%		33.5	%

Sales

Sales for the nine months ended September 30, 2004 were $513.6 million, a decrease of $4.6 million, or 0.9%, from sales of $518.2 million for the same period of 2003, primarily due to lower shipment volumes in the first quarter of 2004. The decrease of $4.6 million in sales for the first nine months of 2004 consisted of a decrease of $11.3 million, or 6.9%, in the first quarter, an increase of $1.8 million, or 1.0%, for the second quarter and another increase of $4.9 million, or 2.8%, for the third quarter as compared to same periods of 2003. These 2004 second and third quarter-over-quarter increases were the first back-to-back quarter-over-quarter increases in the past 13 quarters. A price increase in May 2004 contributed $1.1 million to sales for the period ended September 30, 2004. Third quarter 2004 sales of $181.4 million represented the highest sales for any quarter thus far in 2004.

The 0.9% period-over-period decrease in sales for the nine months ended September 30, 2004 was directly attributable to a $29.0 million, or 8.9%, decrease in sales of office systems, offset by a $19.8 million, or 12.2%, increase in sales of our seating, storage, casegoods and specialty products. The increase in seating sales of $10.2 million, or 25.4%, was primarily due to increased sales of the LIFE^TM chair, which was introduced in 2002. Storage sales increased by $2.0 million, or 5.8%, as a result of enhancements to the storage product line such as the introduction of storage towers, while specialty products sales also benefited from new product introductions and increased by $3.4 million, or 4.1%. Casegoods sales increased by $4.2 million, or 374.6%, due to greater sales of our Reference^TM product line, which was introduced in 2003. The decrease in sales of office systems was due to fewer large orders in this category. The 2004 third quarter decline in office systems sales slowed to 3.1% from third quarter 2003, while sales of seating, storage and specialty products increased 11.0% during the

29

same period. We believe that an industry recovery would start with growth in the shorter lead time and lower ticket products such as seating and storage and that the rebound of office systems sales will lag that of the rest of the industry due to the typically larger spending commitment that the purchase of these products represents.

At September 30, 2004, sales backlog was $113.7 million, an increase of $6.3 million, or 5.9%, from sales backlog as of September 30, 2003.

Gross Profit and Operating Income

Gross profit for the nine months ended September 30, 2004 was $172.2 million, a decrease of $2.8 million, or 1.6%, from gross profit of $175.0 million for the same period in 2003. Operating income for the nine months ended September 30, 2004 was $50.7 million, a decrease of 21.4% from operating income of $64.5 million for the same period in 2003.

As a percentage of sales, gross profit decreased from 33.8% in the nine months ended September 30, 2003 to 33.5% in the nine months ended September 30, 2004. Operating income as a percentage of sales declined from 12.5% to 9.9% over the same period. The decreases in gross profit and operating income margins from the first nine months of 2003 to the first nine months of 2004 were primarily due to lower sales volumes in the first quarter of 2004, allowing less absorption of fixed overhead costs, which adversely affected 2004 margins by 0.4%. Increasing prices for steel and plastic increased our materials costs by $4.7 million, which adversely affected 2004 margins by 1.0%. The increasing costs were in large part offset by our recent global sourcing initiative, which resulted in savings of $1.1 million and improved 2004 margins by 0.2%, our continuous improvement program, which resulted in savings of $2.1 million and improved 2004 margins by 0.4%, and list price increases, which contributed $1.1 million to sales and improved 2004 margins by 0.2%. The decrease in operating income margin from 2003 to 2004 also resulted from an increase of $2.2 million in product development expense, which adversely affected operating income margin by 0.4%, and an increase of $4.5 million in employee related expenses, which adversely affected operating income by 0.9%, in the nine month period of 2004 as compared to the same period of 2003.

Within the first nine months of 2004, gross profit margin increased from 30.7% in the first quarter to 34.8% and 34.7% in the second and third quarters, respectively, while operating margins increased from 7.5% in the first quarter to 10.1% and 11.7% for the second and third quarters, respectively. This sequential improvement in operating income margins was principally the result of increased overhead absorption on the higher sales volumes with the favorable impact of recently implemented price increases contributing to a lesser degree. Within the first nine months of 2003, gross profit margin decreased from 33.9% in the first quarter to 33.5% in the second quarter and then rose to 33.9% in the third quarter. Operating margins in 2003 increased from 12.2% in the first quarter to 13.0% in the second quarter and then fell to 12.2% in the third quarter.

Interest Expense

Interest expense for the nine months ended September 30, 2004 was $20.2 million, a decrease of $2.0 million from the comparable period in 2003, primarily as a result of our redemption on March 28, 2003 of the remaining $57.3 million principal amount of our 10.875% senior subordinated notes. The redemption was funded through our then-existing credit facility, which bore a lower rate of interest than the senior subordinated notes. The redemption and other reductions in debt reduced interest expense by $1.1 million but was offset by higher interest rates on our variable rate debt that increased interest expense by $2.8 million. In addition, we had net interest expense of $4.5 million under our interest rate collar and swap agreements in the nine-month period ended September 30, 2003 whereas we had a net interest expense of only $0.8 million under our interest rate collar agreements, which matured in March 2004, during the same period of 2004. Our interest rate swap agreements, which decreased the amount of net interest expense by $1.2 million in the nine-month period ended September 30, 2003, were terminated on March 11, 2003.

Other Income (Expense), Net

Other expense for the nine months ended September 30, 2004 includes a foreign exchange transaction loss of $0.5 million, consisting of gains of $0.6 million and $1.3 million during the first and second quarter of 2004, respectively, and a loss of $2.4 million in the third quarter of 2004, and is due primarily to a 2% devaluation of

30

the United States dollar to the Canadian dollar, offset in part by exchange rate hedge agreements; a gain of $0.8 million related to our interest rate collar agreement, which matured in February 2004; and the write off of $2.5 million in deferred financing fees associated with the termination of our prior credit agreement on September 30, 2004.

Other expense for the nine months ended September 30, 2003 includes a foreign exchange transaction loss of $5.7 million due to a 17% deterioration of the United States dollar to the Canadian dollar; a gain of $4.5 million related to our interest rate swap and collar agreements; and a loss of $1.1 million on the early redemption of the remaining $57.3 million principal amount of our 10.875% senior subordinated notes due 2006.

Income Tax Expense

The mix of pretax income and the varying effective tax rates in the countries in which we operate directly affects our consolidated effective tax rate. Our mix of pretax income was primarily responsible for the increase in the effective tax rate from 42.6% in the nine month period ended September 30, 2003 to 43.4% for the same period in 2004. Our effective tax rate in the United States is consistently around 40.0% of pretax income. The effective tax rate in Canada is usually between 35.0% and 38.0%. Tax operating losses and related carry forwards in the countries in which we operate in Europe make the effective tax rate in Europe, for which we do not record a tax benefit, responsible for the differences in our consolidated effective tax rate.

Years ended December 31, 2002 and 2003

Sales

Sales during 2003 were $697.2 million, a decrease of $76.1 million, or 9.8%, from sales of $773.3 million in 2002 due to lower unit shipments. The decrease in sales extended across all product categories except seating, which increased approximately $6.0 million, or 11.8%, in 2003 as compared to 2002. This increase in seating sales was primarily attributable to increased sales of the LIFE^TM chair, which was introduced in 2002. Sales of office systems, our largest category, accounted for the greatest dollar and percentage decrease in sales, approximately $70 million, or 14.0%, due to fewer large orders in this category and an overall industry decline in office systems sales. The overall decrease in sales was primarily attributable to continued weakness in the U.S. economy and specifically in the macroeconomic factors (corporate profitability, business confidence and service-sector employment growth) that drive demand for our products. BIFMA estimates that U.S. office furniture shipments in 2003 declined 4.3% from shipments in 2002 and that U.S. office systems shipments declined 9.1% from 2002 to 2003. We believe that the weak U.S. economy disproportionately affected our sales because office systems decreased more than the other categories in the industry and represent a greater proportion of our sales than they do of industry sales. Industry pricing pressures experienced in the first half of 2003 reversed during the second half of the year. As a result, industry pricing pressures did not have a significant impact on sales during 2003.

Gross Profit and Operating Income

Gross profit in 2003 was $236.3 million, a decrease of $44.1 million, or 15.7%, from gross profit of $280.4 million in 2002. Operating income in 2003 was $86.6 million, a decrease of $37.4 million, or 30.2%, from operating income of $124.0 million in 2002. However, during 2003, we continued to outperform the industry with the highest operating income margin among our primary publicly-held competitors. Gross profit and operating income as percentages of sales during 2003 were 33.9% and 12.4%, respectively, as compared with 36.3% and 16.0% in 2002, respectively. The decreases in gross profit and operating income margins from 2002 to 2003 were primarily due to the decrease in year-over-year sales during 2003, allowing for less absorption of fixed overhead costs, which adversely affected gross profit margin by 1.7%, and the weakening of the U.S. dollar versus foreign currencies, which adversely affected gross profit margin by 1.0%.

During 2003, we sought to maintain our profitability by continuing our efforts, initiated in early 2001, to aggressively manage expenditures and reduce hourly headcount in response to declining sales volumes.

31

Interest Expense

Interest expense during 2003 was $20.2 million, a decrease of $6.3 million from interest expense in 2002. The decrease was the result of lower interest rates on our variable-rate debt, which reduced interest expense by $1.7 million, the redemption on March 28, 2003 of the remaining 10.875% senior subordinated notes funded through our then-existing credit facility, which reduced interest expense by $3.3 million because this credit facility had lower interest rates than the senior subordinated notes, and the overall reduction of debt, which reduced interest expense by $3.5 million. All of these offset net settlement payments of $6.6 million under our interest rate collar and swap agreements during 2003 versus a net payment of $4.4 million in 2002. The higher settlement payments resulted from the termination on March 11, 2003 of our two interest rate swap agreements that, historically, partially offset the payments required under our three interest rate collar agreements.

Other Income (Expense), Net

Other expense for 2003 includes a net foreign exchange transaction loss of $7.7 million, a loss of $0.8 million related to the termination of our two interest rate swap agreements, and a $7.3 million net gain related to our interest rate collar agreements. See Note 10 to the consolidated financial statements for further discussion of these derivative financial instruments. The net foreign exchange transaction loss consists primarily of the loss incurred with respect to unhedged short-term operating receivables of a Canadian subsidiary that are payable from our U.S. operations. Other expense also includes a $1.1 million loss on the early redemption of the remaining $57.3 million principal amount of our 10.875% senior subordinated notes due 2006.

Other income for 2002 includes a net gain of $4.9 million related to our interest rate collar agreements. See Note 10 to the consolidated financial statements for further discussion of these derivative financial instruments. Other income for 2002 also includes a $1.9 million loss on the early redemption of $50.0 million of our senior subordinated notes due 2006 and a net foreign exchange transaction loss of $0.4 million.

Income Tax Expense

Our effective tax rate is directly affected by changes in our consolidated pretax income and mix of pretax income and by the varying effective tax rates in the countries in which we operate. Our geographic mix of pretax income and these varying tax rates were primarily responsible for the increase in the effective tax rate to 43.1% in 2003 from 40.5% in 2002. Non U.S. tax losses for which a tax benefit was not recorded increased the 2003 effective tax rate by approximately 3%.

Years ended December 31, 2001 and 2002

Sales

Sales in 2002 were $773.3 million, a decrease of $212.1 million, or 21.5%, from sales of $985.4 million in 2001 primarily due to lower unit shipments and industry pricing pressures, which resulted in lower prices for our products in 2002 as compared to 2001 and an approximately $24 million, or 2.4%, decrease in revenues. The decrease in sales was spread across all of our product categories. Sales of office systems, our largest category, accounted for the greatest dollar and percentage decrease, approximately $168.0 million, or 25.2%, due to fewer large orders and an overall industry decline in office system sales. The overall decrease in sales was primarily attributable to continued weakness in the U.S. economy and specifically in the macroeconomic factors (corporate profitability, business confidence and service-sector employment growth) that drive demand for our products. BIFMA estimates that U.S. office furniture shipments in 2002 declined 19.0% from shipments in 2001 and that U.S. office systems shipments declined 23.3% from 2001 to 2002. We believe that the weak U.S. economy disproportionately affected our sales because office systems decreased more than the other categories in the industry and represent a greater proportion of our sales than they do of industry sales.

Gross Profit and Operating Income

Gross profit in 2002 was $280.4 million, a decrease of $110.5 million, or 28.3%, from gross profit of $390.9 million in 2001. Operating income in 2002 was $124.0 million, a decrease of $69.8 million, or 36.0%, from

32

operating income of $193.8 million in 2001. However, during 2002, we continued to outperform the industry with the highest operating income margin among our primary publicly-held competitors. Gross profit and operating income as percentages of sales in 2002 were 36.3% and 16.0%, respectively, as compared with 39.7% and 19.7% in 2001, respectively. The decreases in gross profit and operating income margins from 2001 to 2002 were primarily due to the decrease in year-over- year sales during 2002, allowing for less absorption of fixed overhead costs, which adversely affected gross profit margin by 1.6%, and industry pricing pressure, which adversely affected gross profit margin by approximately 1.9%.

During 2002, we sought to maintain our profitability by continuing our efforts, initiated in early 2001, to aggressively manage our discretionary expenditures, reduce hourly headcount in response to declining sales volumes and eliminate certain salaried positions in North America.

Interest Expense

Interest expense during 2002 was $26.5 million, a decrease of $15.6 million from interest expense in 2001. The decrease in interest expense was the result of a net debt reduction of $95.6 million during 2002, which reduced interest expense by $6.1 million, lower short term borrowing rates in the U.S., which reduced interest expense by $9.7 million, and the redemption on April 30, 2002 of $50.0 million of 10.875% senior subordinated notes funded through our then-existing credit facility, which had lower interest rates than the senior subordinated notes that were redeemed and reduced interest expense by $2.2 million. All of these offset net settlement payments of $4.4 million under our interest rate collar and swap agreements during 2002 versus a net payment of $2.0 million in 2001.

Other Income (Expense), Net

Other income for 2002 includes a net gain of $4.9 million related to our interest rate collar agreements. See Note 10 to the consolidated financial statements for further discussion of these derivative financial instruments. Other income for 2002 also includes a $1.9 million loss on the early redemption of $50.0 million of our senior subordinated notes due 2006 and a net foreign exchange transaction loss of $0.4 million.

Other expense for 2001 includes a loss of $7.5 million related to our interest rate collar agreements and a net foreign currency transaction gain of $2.7 million. See Note 10 to the consolidated financial statements for further discussion of these derivative financial instruments. The net foreign currency transaction gain consists primarily of the gain recognized with respect to short-term operating receivables of a Canadian subsidiary that are payable from our U.S. operations.

Income Tax Expense

Our effective tax rate is directly affected by changes in our consolidated pretax income and mix of pretax income and by the varying effective tax rates in the countries in which we operate. Our geographic mix of pretax income and these varying tax rates were primarily responsible for the decrease in the effective tax rate to 40.5% in 2002 from 41.1% in 2001.

Liquidity and Capital Resources

The following table highlights certain key cash flows and capital information pertinent to the discussion that follows:

	2001			2002			2003			Nine Months Ended September 30, 2004
	(in thousands)
Cash provided by operating activities	$	134,147		$	95,366		$	78,975		$	36,201
Capital expenditures		25,020			18,114			9,722			7,146
Net cash used in investing activities		(24,949	)		(18,077	)		(10,117	)		(7,145	)
Purchase of common stock		403			494			526			186
Premium paid for early extinguishment of debt		—			1,813			1,037			—
Net proceeds from (repayment of) debt		121,750			(95,570	)		(71,336	)		45,000
Payment of dividend		220,339			—			—			68,183
Net cash used for financing activities		(98,992	)		(97,877	)		(72,899	)		(28,800	)

33

Historically, we have carried significant amounts of debt, and cash generated by operating activities has been used to fund working capital, capital expenditures and scheduled payments of principal and debt service. Our capital expenditures are typically for new product tooling and manufacturing equipment. These capital expenditures support new products and continuous improvements in our manufacturing processes. From time to time, we have used the proceeds of debt offerings to repay other debt and return capital to our stockholders.

At December 31, 2000, our outstanding indebtedness was $425.8 million. On January 5, 2001, we borrowed an additional $221.0 million under our then-existing credit facility to fund the payment of an aggregate dividend of $220.3 million to our stockholders. As a result of this borrowing, our aggregate debt on January 5, 2001 was $646.8 million. Despite industry-wide revenue declines from the beginning of 2001 through 2003, we generated positive operating income and net income in each quarter during the period and reduced debt by an aggregate of $265.9 million.

Net cash provided by operating activities was $79.0 million in 2003, $95.4 million in 2002 and $134.1 million in 2001. The decreases in operating cash flows in 2003 and 2002 were the result of lower sales during those years compared to the prior years. The decreases in sales in 2003 and 2002 were primarily attributable to continued weakness in the U.S. economy and specifically in the macroeconomic factors (corporate profitability, business confidence and service-sector employment growth) that drive demand for our products. In 2003, the decrease in cash flows from operations included $4.8 million in proceeds received from the termination of our interest rate swap agreements and $1.5 million in proceeds received from the settlement of one of our foreign currency contracts.

In 2003, we used available cash, including the $79.0 million of net cash from operations and $49.8 million of net borrowings under our then-existing revolving credit facility, to fund $9.7 million of capital expenditures, repay $121.1 million of debt and pay $1.0 million of premiums for the early extinguishment of debt. In 2002, we used available cash, including the $95.4 million of net cash provided from operations and $7.0 million of net borrowings under our then-existing revolving credit facility, to fund $18.1 million of capital expenditures, repay $102.6 million of debt and pay $1.8 million of premium for the early extinguishment of debt. In 2001, we used available cash, including the $134.1 million of net cash from operations and $153.0 million of net borrowings under our then-existing revolving credit facility, to fund $25.0 million of capital expenditures, repay $31.3 million of debt and to pay a dividend to our common stockholders of $220.3 million.

Cash used in investing activities was $10.1 million in 2003, $18.1 million in 2002 and $24.9 million in 2001, with the decreases in cash used in investing activities primarily attributable to decreases in capital expenditures. The sequential decreases in capital expenditures in 2001, 2002 and 2003 are the result of aggressive management of discretionary expenditures, one of the steps we took during this recessionary period to maintain our gross profit and operating income margins. Cash used in investing activities was $7.1 million for the nine months ended September 30, 2004, consisting primarily of capital expenditures. We estimate that our capital expenditures in 2004 and 2005 will be approximately $10 million to $12 million for each year.

Net cash provided by operating activities was $36.2 million for the nine months ended September 30, 2004 compared to $63.9 million for the nine months ended September 30, 2003. The decrease in operating cash flows was primarily attributable to an $11.0 million decrease in net income, adjusted for non-cash items, principally caused by higher operating expenses and a $7.6 million investment in working capital. Net cash provided by operating activities for the nine months ended September 30, 2003 also included cash proceeds of $4.8 million from the termination of our interest rate swap agreements and $1.5 million from the settlement of one of our foreign currency contracts.

On September 30, 2004, we repaid our then-existing revolving and term loan credit facilities with the proceeds of our new credit facility. Upon repayment of our then-existing credit facility, we paid as a dividend to our common stockholders an aggregate of $68.2 million in September 2004 and an additional $2.4 million in October 2004. As a result of the payment of the dividend, exercise prices for our outstanding options were

34

adjusted on October 15, 2004 in accordance with the terms of our equity incentive plans. Our new credit facility with various lenders and UBS AG, Stamford Branch, as Administrative Agent, and Goldman Sachs Credit Partners L.P., as Syndication Agent, permits us to borrow an aggregate principal amount of up to $488.0 million, consisting of a $63.0 million revolving credit facility and $425.0 million term loan facility. Our new credit facility is guaranteed by all our existing and future domestic wholly owned subsidiaries. Our new credit facility includes a letter of credit subfacility. As of September 30, 2004, our outstanding indebtedness was $425.8 million, a net increase of $45.0 million from December 31, 2003, and we had no outstanding borrowings on our revolving credit facility. The refinancing of our credit facility has significantly improved our working capital position.

In addition to our new credit facility, our foreign subsidiaries maintain local credit facilities to provide credit for overdraft, working capital and other purposes. As of September 30, 2004, total credit available under such facilities was approximately $10.4 million, or the foreign currency equivalent.

We continue to have significant liquidity requirements. In addition to our significant cash requirements for debt service, we have commitments under our operating leases for certain machinery and equipment as well as manufacturing, warehousing, showroom and other facilities used in its operations. Future minimum lease payments required under our operating leases that have an initial or remaining noncancelable lease term in excess of one year as of December 31, 2003 are as follows: $8.5 million in 2004, $7.5 million in 2005, $6.1 million in 2006, $4.7 million in 2007, $3.7 million in 2008 and $9.5 million thereafter.

We are currently in compliance with all of the covenants and conditions under our new credit facility. For additional information on these covenants see “Description of Certain Indebtedness.” We believe that existing cash balances and internally generated cash flows, together with borrowings available under our new revolving credit facility, will be sufficient to fund normal working capital needs, capital spending requirements and debt service requirements and dividend payments for at least the next twelve months. In addition, we believe that we will have adequate funds available to meet long-term cash requirements and that we will be able to comply with the covenants under our credit agreements. Future principal debt payments may be paid out of cash flows from operations, from future refinancing of our debt or from equity offerings. However, our ability to make scheduled payments of principal, to pay interest on or to refinance our indebtedness, to satisfy our other debt obligations and to pay dividends to stockholders will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. See “Risk Factors—We are highly leveraged, and a significant amount of cash will be required to service our indebtedness. Restrictions imposed by the terms of our indebtedness may limit our operating and financial flexibility.”

Contractual Obligations

The following summarizes our fixed long-term contractual obligations as of September 30, 2004 (in thousands):

	Payments due by period
	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Long-term debt	$	25,417	$	50,314	$	49,494	$	442,845	$	568,070
Operating leases		9,136		19,024		11,987		6,605		46,752
Purchase commitments		1,303		120		—		—		1,423
Pension obligations		6,699		1,580		—		—		8,279
Total	$	42,555	$	71,038	$	61,481	$	449,450	$	624,524

Contractual obligations for long-term debt include principal and interest payments. Interest has been included at either the fixed rate or the variable rate in effect as of September 30, 2004, as applicable.

35

Environmental Matters

Our past and present business operations and the past and present ownership and operation of manufacturing plants on real property are subject to extensive and changing federal, state, local and foreign environmental laws and regulations, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste and the cleanup of properties affected by hazardous substances. As a result, we are involved from time to time in administrative and judicial proceedings and inquiries relating to environmental matters and could become subject to fines or penalties related thereto. We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist. Compliance with more stringent laws or regulations, or stricter interpretation of existing laws, may require additional expenditures by us, some of which may be material. We have been identified as a potentially responsible party pursuant to CERCLA for remediation costs associated with waste disposal sites that we previously used. The remediation costs and our allocated share at some of these CERCLA sites are unknown. We may also be subject to claims for personal injury or contribution relating to CERCLA sites. We reserve amounts for such matters when expenditures are probable and reasonably estimable.

Off-Balance Sheet Arrangements

We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Quantitative and Qualitative Disclosures about Market Risk

During the normal course of business, we are routinely subjected to market risk associated with interest rate movements and foreign currency exchange rate movements. Interest rate risk arises from our debt obligations and related interest rate collar and swap agreements. Foreign currency exchange rate risk arises from our foreign operations and purchases of inventory from foreign suppliers.

There was no significant impact on our operations as a result of inflation during the three years ended December 31, 2003.

Interest Rate Risk

We have both fixed and variable rate debt obligations for other than trading purposes that are denominated in U.S. dollars. Changes in interest rates have different impacts on the fixed and variable-rate portions of the debt. A change in interest rates impacts the interest incurred and cash paid on the variable-rate debt but does not impact the interest incurred or cash paid on the fixed rate debt.

We use interest rate collar agreements for other than trading purposes in order to manage our exposure to fluctuations in interest rates on our variable-rate debt. Such agreements effectively set agreed-upon maximum and minimum rates on a notional principal amount and utilize the three-month London Interbank Offered Rate, or LIBOR, as a floating rate reference. The notional amounts are utilized to measure the amount of interest to be paid or received by us, quarterly, and do not represent the amount of exposure to credit loss. Fluctuations in LIBOR affect both our net financial instrument position and the amount of cash to be paid or received by us, if any, under these agreements.

The following table summarizes our market risks associated with our debt obligations and interest rate collar agreements as of December 31, 2003. For debt obligations, the table presents principal cash flows and related weighted average interest rates by year of maturity. Variable interest rates presented for variable-rate debt

36

represent the weighted average interest rates on our then-existing credit facility borrowings as of December 31, 2003. For interest rate caps and floors, the table presents the notional amounts and related weighted average interest rates by year of maturity.

	2004			2005			2006			2007			2008			Thereafter			Total		Fair Value
	(dollars in thousands)
Rate Sensitive Liabilities
Long-term Debt:
Fixed Rate	$	90		$	97		$	102		$	106		$	110		$	366		$	871	$	871
Average Interest Rate		4.11	%		4.11	%		4.11	%		4.11	%		4.11	%		4.11	%
Variable Rate	$	81,250		$	298,750			—			—			—			—		$	380,000	$	380,000
Average Interest Rate		2.53	%		2.53	%		—			—			—			—
Rate Sensitive Derivative Financial Instruments
Interest Rate Caps:
Notional Amount	$	200,000			—			—			—			—			—		$	200,000	$	—
Strike Rate		10.00	%		—			—			—			—			—
Interest Rate Floors:
Notional Amount	$	200,000			—			—			—			—			—		$	200,000	$	(2,100	)
Strike Rate		5.12	%		—			—			—			—			—

A 1% interest rate increase would increase interest expense by $3.8 million. We will continue to review our exposure to interest rate fluctuations and evaluate whether we should manage such exposure through derivative transactions.

Foreign Currency Exchange Rate Risk

We manufacture our products in the United States, Canada and Italy and sell our products in those markets as well as in other European countries. Our foreign sales and certain expenses are transacted in foreign currencies. Our production costs, profit margins and competitive position are affected by the strength of the currencies in countries where we manufacture or purchase goods relative to the strength of the currencies in countries where our products are sold. Additionally, as we report currency in the U.S. dollar, our financial position is affected by the strength of the currencies in countries where we have operations relative to the strength of the U.S. dollar. The principal foreign currencies in which we conduct business are the Canadian dollar and the Euro. Approximately 10.0% of our revenues in 2003 and 8.4% in 2002, and 34.0% of our cost of goods sold in 2003 and 29.2% in 2002, were denominated in currencies other than the U.S. dollar. Foreign currency exchange rate fluctuations resulted in a $7.7 million loss in 2003 and did not have a material impact on our financial results during 2002.

From time to time, we enter into foreign currency forward exchange contracts and foreign currency option contracts for other than trading purposes in order to manage our exposure to foreign exchange rates associated with short-term operating receivables of a Canadian subsidiary that are payable by our U.S. operations. The terms of these contracts are generally less than a year. Changes in the fair value of such contracts are reported in earnings in the period the value of the contract changes. The net gain or loss upon settlement and the remaining change in fair value is recorded as a component of other income (expense). The aggregate fair market value of the foreign

37

currency contracts outstanding at December 31, 2003 was $0.2 million, all of which was included in prepaid and other current assets on our consolidated balance sheet as of December 31, 2003. During 2003, we recognized a corresponding net gain related to the agreement. We also realized a net gain of $1.5 million related to agreements initiated and settled during 2003. We did not have any foreign currency forward exchange or option contracts outstanding at December 31, 2002. The aggregate net gain related to our foreign currency forward exchange contracts were not material for 2002.

Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). FIN 46 introduces a new consolidation model that determines control (and consolidation) based on potential variability in gains and losses of the entity being evaluated for consolidation. In December 2003, the FASB issued FIN 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN 46-R”) to address certain FIN 46 implementation issues. The consolidation requirements apply immediately to variable interest entities created after January 31, 2003, and apply to all other variable interest entities in the first interim period ending after March 15, 2004. The consolidation requirements did not have a material effect on our financial statements.

Quarterly Results of Operations

The following table sets forth the unaudited quarterly results of operations for each of the 11 quarters ended September 30, 2004. The information for each quarter is unaudited and has been prepared on the same basis as the audited financial statements appearing elsewhere in this document. In the opinion of management, all necessary adjustments, consisting only of normal, recurring adjustments, have been included to present fairly the unaudited quarterly results. The results of historical periods are not necessarily indicative of results for any future period.

	Three Months Ended
	March 31, 2002		June 30, 2002			September 30, 2002		December 31, 2002		March 31, 2003			June 30, 2003			September 30, 2003		December 31, 2003			March 31, 2004		June 30, 2004		September 30, 2004
	(unaudited)
	(in thousands, except per share data)
Consolidated Statement of Operations Data:
Sales	$	197,807	$	202,662		$	187,696	$	185,098	$	164,630		$	177,014		$	176,563	$	179,039		$	153,324	$	178,821	$	181,441
Cost of sales		123,675		126,666			120,649		121,912		108,879			117,723			116,639		117,670			106,263		116,647		118,439
Gross profit		74,132		75,996			67,047		63,186		55,751			59,291			59,924		61,369			47,061		62,174		63,002
Selling, general and administrative expenses		36,483		42,691			37,560		39,580		35,662			36,351			38,417		39,309			35,548		44,149		41,804
Operating income		37,649		33,305			29,487		23,606		20,089			22,940			21,507		22,060			11,513		18,025		21,198
Interest expense		8,123		7,150			5,768		5,500		5,084			5,075			5,066		5,004			3,732		4,635		4,866
Other income (expense), net		2,289		(3,910	)		3,731		823		(3,592	)		(1,819	)		3,259		(321	)		1,418		1,329		(4,932	)
Income before income tax expense		31,815		22,245			27,450		18,929		11,413			16,046			19,700		16,735			9,199		14,719		11,400
Income tax expense		13,232		9,007			11,174		7,254		5,114			6,998			7,976		7,457			3,973		5,920		5,435
Net income	$	18,583	$	13,238		$	16,276	$	11,675	$	6,299		$	9,048		$	11,724	$	9,278		$	5,226	$	8,799	$	5,965
Per Share Data:
Earnings per share:
Basic	$	.40	$	.29		$	.35	$	.25	$	.14		$	.20		$	.25	$	.20		$	.11	$	.19	$	.13
Diluted	$	.38	$	.27		$	.34	$	.24	$	.13		$	.19		$	.24	$	.19		$	.11	$	.18	$	.12
Weighted average shares outstanding:
Basic		46,358,246		46,346,388			46,341,406		46,337,102		46,340,306			46,319,020			46,312,786		46,307,976			46,314,236		46,300,508		46,297,630
Diluted		48,498,998		48,479,666			48,462,796		48,457,416		48,454,494			48,428,090			48,398,452		48,386,426			47,977,344		47,966,190		47,960,812

38

BUSINESS

General

We are a leading designer and manufacturer of branded office furniture products and textiles. We estimate that we had a 16% category share in 2003 in the $2.6 billion U.S. office systems category and a 7.5% market share in 2003 in the over $8.5 billion U.S. office furniture market. By our estimates, the five largest companies, including us, accounted for approximately 66% of the U.S. office furniture market in 2003.

We offer a comprehensive portfolio of products which are recognized for high quality and a sophisticated image and are targeted at the middle to upper end of the market. We have a direct sales force and a broad network of independent dealers that sell our products throughout North America and internationally. Approximately 7% of our sales are outside North America, the majority of which are through our European operations.

Since our founding in 1938, we have been recognized worldwide as a design leader within our industry. Our status as a pioneer in bringing the principles of modern design to the workplace is well established. Our design leadership is exemplified by recently introduced, award winning products, including the innovative LIFE^™ chair and AutoStrada office furniture system. Additionally, Florence Knoll, our co-founder and first director of design, was awarded the 2002 National Medal Of Arts in recognition of her lifetime contributions to modern design. Our products are exhibited in major art museums worldwide, including more than 30 pieces in the permanent Design Collection of The Museum of Modern Art in New York.

In addition to our design excellence, our management philosophy and culture have enabled us to achieve superior financial performance and have positioned us for profitable growth. Our management philosophy fosters a strong collaborative culture, client-driven processes and a lean, agile operating structure. Additionally, our employees participate in a variable incentive compensation system and have broad-based equity ownership in the company, which drives and motivates strong performance.

Industry Overview

The North American office furniture industry association, BIFMA, reported 2003 shipments of $8.5 billion for the U.S. office furniture market. These industry shipments are divided into five primary categories: office systems, seating, files and storage, desks and casegoods, and tables. Office systems consist of moveable panels, work surfaces, storage units, electrical distribution, lighting, organizing tools and freestanding components. These modular systems are popular with clients who require flexible space configurations or have open plan floorspace as is common in today’s office. Products in the seating category range from executive desk chairs to general task and side chairs. Storage products include items such as file cabinets, pedestals, towers and bookcases. Desks and tables range from classic executive desks used in private offices to conference tables and highly adjustable worktables, which can accommodate increasing technological demands.

Office systems and seating are the largest product categories in the U.S. office furniture market. The following table indicates the estimated shipments and percentage of total shipments for each product category in the U.S. office furniture industry in 2003.

Product Category	U.S. Category Shipments		% of U.S. Market
	(in billions)
Office systems	$	2.6	30.5	%
Seating		2.3	26.6
Files and Storage		1.8	21.5
Desks and Casegoods		0.9	11.0
Tables		0.6	6.8
Other		0.3	3.5

39

Industry demand is driven by several macroeconomic factors and workplace trends that have influenced the office furniture landscape. Corporate profitability, business confidence and service-sector employment are key macroeconomic factors that impact commercial construction, business expansion, absorption of vacant office space and, ultimately, demand for our products.

Workplace trends such as changes in work processes, increases in the use of technology and the number of knowledge workers also influence the demand for office furniture. Customers in the middle to upper end of the market are focused on improving productivity and efficiency, worker health and safety, ergonomics and environmental standards for the workplace. In addition, clients in these market segments demand highly customized solutions and premium service levels, including short lead times of generally three to five weeks, and strong after-market support. These workplace trends affect the style, features and functionality of new products and have heightened the importance of providing office furnishings of superior quality, design and function.

Companies increasingly rely on workplace design and office furniture layout to express and reinforce business processes, corporate culture and company identity. Several of the key workplace trends that we believe have impacted, and will continue to impact, demand for our products are as follows:

Continued organizational change and increased demand for space-efficient furniture. In an effort to continually improve workflow and greater operating efficiencies, clients are experimenting with workplace design to increase worker productivity and reduce facility costs. This focus on the benefits of reengineering, restructuring and reorganizing has led to changes in the nature of the work environment. An emphasis on teams, flatter organizational structures and more direct communication among employees at varying levels, coupled with the growing demand for efficient use of office space, has accelerated the need for redesigned space. Office furniture systems, which are simple, flexible and easy to install, offer superior space efficiency and significant advantages over traditional drywall offices. As a result, these systems have become an important part of office design.

New office technology and the resulting necessity for improved cable and data management. Technology proliferation in the workplace has placed new demands on furniture performance. Today, office furniture must have the capability to support multiple monitors, including flat panel technology, video conferencing, networked communications, fiber optics and portable technologies. As a result, facility managers demand an endless variety of workplace configurations that can easily accommodate these increasingly complex power and data requirements. In response, we have designed and modified all of our office systems lines to handle these requirements. Our systems are adaptable and can be easily enhanced and reconfigured to meet the different workflow solutions and future technological needs.

Corporate relocations. As companies expand or relocate to take advantage of lower rents and more technologically advanced facilities, they often take this opportunity to upgrade and install furniture that is better adapted to their business processes and corporate culture. As more companies move or renegotiate their leases to take advantage of lower rents, we expect that a portion of this rental savings may be reinvested in facility upgrades using our products.

Increased focus on workplace health and safety and ergonomic standards. Concerns about health and safety in the office have intensified in recent years in response to the soaring costs of workers’ compensation claims. This, coupled with a desire for more comfort in the workplace, has fostered an increased interest in ergonomic seating, adjustable tables, keyboard trays, monitor arms and laptop holders, which create a healthier, more comfortable and aesthetically pleasing work environment. We offer a wide selection of products with ergonomic features that enhance safety and comfort while also increasing user productivity.

Growing concern for indoor air quality. In response to the heightened awareness regarding indoor air quality, we have worked to design and modify our product offerings and manufacturing processes to help our clients meet voluntary indoor air quality standards for commercial real estate. Some of our products meet or

40

exceed the voluntary indoor air quality standards developed by the GREENGUARD^™ Environmental Institute, or GEI, a non-profit organization that oversees the GREENGUARD^™ Certification Program for low-emitting products. Products such as these help our clients achieve voluntary indoor air quality criteria for buildings, such as the Leadership in Energy and Environmental Design, Commercial Interiors or LEED^®-CI certification, developed by the U.S. Green Building Council, a non-profit trade association with members from many sectors of the building industry.

Desire to create unique work environments that help attract and retain knowledge workers. Recent trends away from traditional cubical configurations and efforts to create unique or custom office environments have resulted in a new interest in less conventional workplace layouts, such as 120-degree planning, which allows clients to create hexagonal configurations, as well as more customized, architecturally-based approaches to office design. As a result of these changing needs, we have developed products that represent an alternative to the traditional office system, yet continue to offer high performance, flexibility and elegance to the workplace. For instance, our Equity^® and Morrison^™ office systems can be configured in 120-degree relationships between workstations, allowing for the creation of more open, adaptable and high-performance office environments. In addition, our new AutoStrada office system, which we plan to begin shipping in the second half of 2004, responds to the desire for a more customized, European architectural aesthetic and offers a rich combination of materials, including wood, aluminum and glass, for the creation of a more differentiated work environment.

Historical Industry Environment. Historically, the U.S. office furniture industry has demonstrated positive growth characteristics including growth in 23 of the 25 years preceding 2001 and above-average compounded annual growth of 7.3% during the four years from 1997 to 2000. Industry growth during this period has been driven by strong corporate profitability, business expansion and investment in infrastructure during the Y2K and dot-com booms. However, the economic recession in 2001 through 2003 resulted in significant reductions in corporate profitability, business confidence, service-sector employment and commercial real estate occupancy rates. That period, exacerbated by the tragic events of September 11, 2001, created economic hardships and uncertainty for a number of corporations, which cutback or eliminated investments in office space projects, and ultimately resulted in an industry sales decline of more than 36%. This steep decline had a particularly pronounced effect on office systems due to the deferral of infrastructure investments by our clients and a saturation of the market by “just new” used office systems created by the increase in vacated office space. As a consequence, industry-wide shipments in the office systems category declined by 45%, more than any other category in the three years from 2001 to 2003.

Industry Recovery. During the first nine months of 2004, the U.S. office furniture market experienced positive period-over-period growth in orders and shipments of 6.0% and 5.0%, respectively. This growth is expected to continue according to BIFMA, which forecasts U.S. office furniture shipments growth of 4.8% in 2004 and 8.1% in 2005. The early stages of a recovery have been most evident in the seating, files and storage and casegoods categories, which are generally lower ticket purchases. We expect that a rebound in office systems will occur later in this recovery due to the typically larger commitment that the purchase of these products represents. During that period, higher levels of corporate profitability, improving business confidence, increasing service-sector employment and increasing absorption of vacant office space all contributed to improving demand for office furniture products. We believe that demand for office systems in North America will benefit from a general economic recovery, as companies expand, relocate to take advantage of lower rents, hire additional knowledge workers and reorganize to improve efficiency and productivity.

41

Long-Term Prospects for Industry Growth. Over the longer term, we believe demand for office furnishings in the middle to upper end of the market will increase due to a number of factors. These factors include the trend toward an information-based economy, higher levels of service-sector employment, and a flattening of organizational structures, all of which drive demand for office systems products. In addition, we expect demand will be supplemented by ongoing trends in work processes, concerns surrounding worker health and safety, ergonomics and an increased awareness of, and interest in, meeting environmental standards for the workplace.

Our Competitive Strengths

Our business philosophy is to pursue growth and profitability by maintaining and enhancing our brand image and reputation for design and quality by working closely with our clients and dealers to identify areas of opportunity and improvement. Our growth strategy is designed to leverage our competitive strengths, which include:

Legacy of innovative modern design. One of our greatest strengths is our 66-year history of creating modern furniture with enduring design, quality and innovation. This design heritage, pioneered by Hans and Florence Knoll, has been fostered over time and has enabled us to build strong associations and relationships with some of the world’s preeminent designers and architects. Our collection of classic and current designs includes works by such internationally recognized architects and designers as Ludwig Mies van der Rohe, Marcel Breuer, Eero Saarinen, Harry Bertoia, Massimo Vignelli, Frank O. Gehry, Emilio Ambasz, Maya Lin and Isamu Noguchi. We maintain a rich archive of historic designs that we periodically re-introduce, which excite the architectural and design community and reinforce our design heritage and our position as a design leader.

Today, we continue to engage prominent outside architects and designers, such as Don Chadwick, Piero Lissoni and 2x4, a New York-based design firm, to create new products and enhancements. By combining their creative vision with our commitment to developing modern, high-quality products that address changing business needs, we are able to generate strong demand for our new product offerings and cultivate brand loyalty among our target clients. For example, we developed the award winning and commercially successful LIFE^™ chair with the Formway Design Group in New Zealand. Since its introduction in 2002, LIFE^™ has helped drive our growth in the seating category and allowed us to compete successfully in the high-performance work chair market by improving sales of seating to our systems clients as well as by penetrating our competitors’ installed bases of office systems.

42

Premier brand identity in office furniture and specialty products. Our brand identity provides credibility and prestige and is a key factor in our clients’ purchasing decisions as they seek to create workplaces that will help project a desired image, enhance facility performance and attract and retain employees. We believe our products represent a modern, high-quality collection of office furnishings with a sophisticated image. We target our products toward the middle to upper end of the market, where clients typically value the image and performance of their work environment.

Our specialty products allow us to broaden the recognition of the Knoll brand. Our KnollStudio collection of chairs, barstools, lounge seating, conference, dining and occasional tables and KnollTextiles collection of upholstery, panel fabrics, wall coverings and drapery also showcase our design strength outside of the traditional office environment. Our KnollStudio collection has extended our identity beyond the workplace, with pieces that meet client needs in upscale restaurants, hotel spaces and other image-conscious venues. Many pieces from our KnollStudio collection, such as the Barcelona Chair, the Saarinen Womb Chair and the Bertoia Diamond Chair, have become collectibles, which has further elevated our brand.

Strong margins and cash flow generation throughout the business cycle. Our distinctive operating approach has driven our industry leading operating income margins among our primary publicly-held competitors. We have developed an operations philosophy that emphasizes disciplined investments, expense control, cost accountability and operating efficiency, as embodied by our continuous improvement efforts and management of capital expenditures. Our lean organization, highly variable cost structure, motivated associates and disciplined approach to business and capital management have enabled us to remain profitable throughout the business cycle.

Despite industry-wide revenue declines from the beginning of 2001 through 2003, we reduced our debt by $266 million and generated positive operating income and net income in each quarter during this period. As a result, we were able to maintain our focus on enhancing the client experience, introducing new products, developing our sales and marketing organizations and strengthening our competitive position, rather than devoting material resources to costly restructuring initiatives.

Performance-driven culture and experienced management team. Our corporate culture is highly collaborative and encourages employees at all levels to communicate ideas and explore ways to improve our performance. Our associates are dedicated to producing quality products and take great pride in their work and in our reputation. Our senior management team has over 130 years of cumulative industry experience and a proven track record of achieving profitability throughout the business cycle, and our managers throughout the organization are held accountable for achieving sales and cost targets. For example, compensation of our sales managers is linked to the achievement of profitable sales and growth targets, and compensation of our operations managers is linked to the achievement of plant cost and client satisfaction targets. We believe that this variable, performance-based compensation, as well as equity ownership, motivates and rewards our employees by linking their compensation to performance criteria which they have the ability to affect as employees.

Reputation for superior products and client service. Our reputation for product and service excellence serves as an important factor when marketing to the architecture and design community and to new and existing clients. Our products are manufactured and assembled by experienced and dedicated associates who take great pride in our company. We believe the involvement of all of our associates, from plant associates to senior management, results in products with superior aesthetics and durability. Our products, which exhibit what we believe to be market-leading workmanship, are created with high-quality materials, which are selected with a focus on using recycled materials and environmental responsibility. The lifetime warranty we offer on many of our products gives clients confidence in their durability and supports our reputation for product quality and endurance. In addition, we enhance our clients’ purchasing experience by working with clients to customize our products for their individual needs. We estimate that over 20% of our total sales are uniquely customized by our clients. In addition to working with our clients to customize our products, we provide project management, installation and other support services through our broad dealer network. Recent investments in client service, management information systems and an electronically linked dealer network allow us to provide clients who have many facilities with an integrated and reliable single point of contact for all their office furniture purchases.

43

Over the past five years, we have significantly improved our reputation for service and consistency as evidenced by dealer surveys and client service performance metrics. From 2000 to 2003, we increased our electronic orders from zero to more than 50% of total orders, and we have reduced order entry cycle times by two weeks. We also implemented a system of measures that allows us to quote delivery dates rather than ship dates to our clients, thus allowing them to better coordinate their space planning projects. Additionally, we introduced consolidated logistics centers to improve delivery quality and reduce costs. Based on recent dealer surveys, we believe that we have made significant progress in improving our reliability and service performance.

Significant market position in office systems and an over $6 billion installed base. We enjoyed an estimated 16% category share in 2003 in the $2.6 billion U.S. office systems category. Office systems is the largest category in the U.S. office furniture industry and typically represents the largest portion of a client’s furniture expenditure. Our office systems are designed with the utmost flexibility in mind, which allows clients to add, update and change their office space without rendering their existing installed systems obsolete. This flexibility has been key in establishing our strong market position in the systems category. Office systems are long-lasting, are often the first furniture element a client specifies, and are, therefore, key to securing our long-term relationships. We believe our market position provides us a strong base for recurring and add-on sales of our products across all our categories. We are able to work with our existing clients and build on their satisfaction with our office systems to expand their purchases into seating, files and storage, casegoods and other areas. We estimate that more than half of our revenues are derived from our installed client base.

Strong direct selling organization and dealer network. Our experienced 314 person direct sales force and our network of 225 independent dealers in North America have close relationships with architects, designers, corporate facility managers and other professionals who influence product selection decisions for large clients and provide valuable input in the product development process. Our tradition of working closely with clients to help create spaces that elevate the appearance and productivity of the workplace dates back to our co-founder, Florence Knoll, and her pioneering work with many major American corporations in the 1950’s. Florence Knoll led the creation of the Knoll Planning Unit, focused on working with clients to plan and design office space, a revolutionary concept for the period. Today, that legacy is preserved in our experienced research team, which works with architects and design professionals to develop and implement workplace strategies. Our sales force’s compensation, we believe to a greater degree than the compensation of our competitors’ sales forces, is variable and is influenced by both volume and discount management, which drives them toward growth in profitable sales. We have strong, long-standing relationships with our dealers and have historically experienced little dealer turnover. In addition, we have a dealer presence in every major metropolitan area across North America and our regional dealer network allows us to jointly and cost effectively market to small and mid-sized accounts.

Our Strategy

We pursue profitable growth by working closely with clients, architects, designers and dealers to identify areas of opportunity, while maintaining and enhancing our brand image and reputation for design and quality. We will seek to drive gains in market share, revenue and profitability by pursuing the following initiatives:

Build on our strength in office systems. We are focused on growing our significant category share in office systems through continuous innovation, superior performance and aesthetics, and targeted customization. With an estimated 20% or more of our total sales uniquely customized by our clients, we believe that our ability to respond to client needs has contributed to our strong market position. We will continue to offer systems with a broad range of features and price points to meet the needs of our existing and future clients and ensure our competitiveness. For example, in the second half of 2004, we plan to begin shipping the AutoStrada office system, which won a silver Best of NeoCon^® award at this year’s national industry trade show. Continued strength in office systems is critical to achieving significant market share in the industry.

Expand our market opportunity in seating, storage and casegoods. Over the last three years, we have actively begun to expand our product lines in the seating, files and storage and casegoods categories to address

44

the more than $5 billion U.S. market for those goods. The following table shows the estimated percentages of total 2003 U.S. office furniture shipments represented by office systems, seating, files and storage and desks and casegoods, as compared to the corresponding percentages for our total U.S. shipments in 2003.

Product Category	% of Industry’s 2003 U.S. Shipments		% of Knoll’s 2003 U.S. Shipments
Office systems	30.5	%	65.3	%
Seating	26.6	%	8.6	%
Files and storage	21.5	%	5.5	%
Desks and casegoods	11.0	%	3.0	%

We believe that we have the opportunity to increase our share in non-systems categories by cross selling to our existing and future office systems clients, which can increase our revenues on specific orders. Once clients have installed a Knoll office system, our selling organization has a platform from which to expand client purchases into our complementary products. We also have the opportunity to attract new clients and capture share in non-systems categories by securing stand-alone sales in seating, files and storage and casegoods. As part of the effort to expand our market opportunity, we have invested in key new product introductions and existing product enhancements, including the award winning LIFE^™ chair, the Visor^® stacking chair, the Jellyfish^™ laptop holder, the Reference wood casegoods and the expanded Calibre^® files and architectural towers collection. In 2005, we are planning to introduce new seating platforms, including the next chair by the renowned seating designer Don Chadwick, which will further broaden the price range and performance breadth of our offerings in this category.

The opportunity available in non-systems categories is demonstrated by our recent sales in the seating category, which grew over 25% in the first nine months of 2004 versus the same period in 2003, substantially outpacing industry-wide growth in this category. Additionally, for the second year in a row the Office Furniture Dealers Alliance recognized us for the industry’s most comprehensive product line, which serves as recognition of our expanded product offering.

Capture a greater share of our dealer network’s sales. While our dealer network does not offer any products of our principal direct competitors, we estimate that a significant portion of our dealers’ non-systems sales consist of seating, files and storage and casegoods products of other manufacturers. In January 2004, to target this opportunity, we introduced the Knoll Essentials program, a collection of easy-to-order, best-selling products from our broad range of office furnishings. The Knoll Essentials catalog is a marketing tool that makes selling Knoll products easier and more appealing for our dealers and has translated into increased sales volumes from our dealer network. In conjunction with the Knoll Essentials introduction, we also placed sales representatives and technical specialists into certain key dealerships to work with dealers and clients to support the program. With a standard delivery lead-time of four weeks and special dealer incentives, we have made it easy and profitable for our dealers’ salespeople to sell these products. As we introduce new seating, storage and accessories products, our dealers are agreeing to refrain from selling other manufacturers’ comparable products.

Grow the Knoll high margin specialty businesses through expanded distribution and, new product introductions. The KnollStudio, KnollExtra, KnollTextiles and Spinneybeck businesses, which represent over 15% of our revenue, are our highest margin product lines and enhance our design and quality reputation. We intend to continue to design, commission and acquire products for our KnollStudio line and re-introduce Knoll design classics to generate publicity, goodwill and increased sales. During the second half of 2004, we plan to expand our specialty product distribution network through our Knoll Space retail program, a plan to introduce high-end residential furniture direct-to-client-retailers into our distribution network. This partnership with residential furniture dealers allows us to take advantage of growing consumer interest in modern and mid-century design for the home. We expect to have 50 residential retail dealers working with us through the Knoll Space program, by the end of 2005.

45

We intend to double the pace of our KnollTextiles new product introductions in 2005 to help gain share in this very fragmented market. As another component to our strategy to grow the Knoll specialty business, we appointed new KnollTextiles management with experience in both the textiles and contract furniture markets in June 2004. Other specialty products, such as the KnollExtra office accessory division and our Spinneybeck leather division, also offer the opportunity to achieve incremental growth and attractive margins.

Improve margins through our continuous improvement program and global sourcing initiative. During the past five years, we have implemented a culture of continuous improvement throughout our product development, manufacturing, client service and logistics operations. One important initiative during the recent downturn was to reduce our operations’ square footage by eliminating leased warehouse facilities and subcontracting our logistics operation to Penske Logistics LLC. Additionally, we improved our shipped complete and correct performance from 94.3% to 95.2% and our manufacturing on-time performance from 94.0% to 95.7%. Through these and other actions, we were able to enhance processes and reduce cycle time to better utilize existing space and equipment instead of adding manufacturing square footage.

We also recently launched a global sourcing initiative to capitalize on significant near-term opportunities to cost-effectively source selected components and raw materials globally. We have identified over an estimated $60 million of domestically sourced materials that could be purchased overseas while maintaining product quality and lead times. In 2003, we purchased approximately $13 million of components and raw materials from overseas suppliers, primarily from China, Taiwan, Italy and Germany, and anticipate purchasing approximately $21 million of components and raw materials from such suppliers in 2004. To date, we have saved a significant amount on materials sourced globally that were previously purchased domestically.

Products

We offer a comprehensive and expanding portfolio of branded office furniture products, textiles and accessories noted for their high quality and sophisticated image. Our commitment to innovation, modern design and meeting environmental standards for the workplace is reflected in products designed to provide enduring value that consistently meets client needs.

We offer products across five categories: (i) office systems, which are typically modular and moveable workspaces with functionally integrated panels, work surfaces, desk components, pedestal and other storage units, power and data systems and lighting; (ii) specialty products, including high image side chairs, sofas, desks and tables for the office and home, textiles, accessories and leathers and related products; (iii) seating; (iv) files and storage; and (v) desks, casegoods and tables. Historically, we have derived most of our revenues from office systems and specialty products; however, in recent years, we have expanded our product offering in non-systems categories, with a particular focus on seating and accessories.

Our major product categories and lines include:

Systems Furniture

We believe that office systems purchases are divided primarily between architect and designer-oriented products, and entry-level products with technology, ergonomic and functional support. Our office systems furniture reflects the breadth of these segments with a variety of planning models and a corresponding depth of product features. Our office systems furniture can define or adapt to virtually any office environment from collaborative spaces for team interaction to private executive offices.

Systems furniture consists principally of functionally integrated panels, work surfaces, desk components, pedestal and other storage units, power and data systems and lighting. These components are combined to create flexible, space-efficient work environments that can be moved, re-configured and re-used. Our clients, often working with architects and designers, have the opportunity to select from our palette of laminates, paints, veneers and textiles to design workspaces appropriate to their organizations’ personality. Our systems furniture product development strategy aims to insure that our product line enhancements can be added to clients’ existing installations, maximizing the value of our clients’ investments in our systems products.

46

Office systems furniture accounted for approximately 61.5% of our sales in 2003, 64.5% of sales in 2002 and 67.6% of sales in 2001.

Systems furniture product lines include the following panel and desk-based planning models:

AutoStrada

AutoStrada, which we plan to begin shipping in the second half of 2004, is one of the most comprehensive office concepts that we have developed. AutoStrada provides aesthetic and functional alternatives to traditional panel-based and desk-based systems furniture with four planning models that combine high-performance furniture with the look of custom millwork. The AutoStrada spine-based, storage-based, wall-based and collaborative/open table planning models leverage a consistent design aesthetic to create a distinctively modern office environment. Whether an office requires a high performance open plan system, architectural casegoods, progressive private office furniture or a collaborative “big table” concept, AutoStrada provides a solution. AutoStrada received a silver 2004 Best of NeoCon^® award.

Dividends^®

Dividends is a straightforward, versatile frame-and-tile furniture system featuring a universal panel frame. Removable panel inserts, which can be ordered in fabric, steel, glass or as marker boards, meet a range of clients’ design and budgetary needs. The Dividends panel frame enables our clients to utilize either monolithic, tiled or beltway panel type for applications throughout the workplace, and power and data access may be located virtually anywhere on the panel. The panel, in combination with the universal post, makes the Dividends system easy to re-configure, and workstations do not have to be dissembled to make changes to the panel. Dividends accommodates off-module planning, encouraging workstation design flexibility as well as the placement of freestanding Dividends desk components.

Equity

The distinguishing feature of Equity is its unique centerline modularity, which maximizes the efficient use of space for high-density workplaces with a minimal inventory of parts. Equity incorporates power and data capabilities, including desktop features, and integrates with Currents^®, which is described below, to provide advanced wire management capabilities. Equity components also create modular freestanding desks and Equity 120-degree planning enables clients to create sleek, hexagonal configurations that are well suited for call and data centers. For both 90- and 120-degree Equity planning, a variety of components accommodate clients’ needs for privacy and storage: add-on screens, bi-fold doors and side-door components. Add-on screens are available in perforated steel, polycarbonate, Plexiglas^® and Imago^™ to accommodate various aesthetic and budgetary requirements. Equity continues to lead the industry in terms of sustainable design. Equity was the first office system to use synthetic recycled gypsum composite for internal panel construction, which is composed of 64% recycled materials.

Morrison

We believe that Morrison, which meets essential power and data requirements for panel and desk-based planning and private offices, offers one of the broadest ranges of systems performance in the industry. Morrison 120-degree panel-based planning, introduced in June 2003, extends the Morrison legacy of systems planning flexibility through a definitive vocabulary of universal systems components. Morrison has been upgraded continually with interchangeable enhancements from its Morrison Network, Morrison Access and Morrison Options lines. In addition, Morrison integrates with Currents to provide advanced wire management capabilities, as well as with our Calibre and Series 2 desks, pedestals, lateral files, overhead storage cabinets and architectural towers to provide compatible, cost-effective panel and desk-based solutions.

47

Reff ^®

Reff is our flagship wood systems furniture platform. It combines the high performance capabilities of panel-based systems furniture and the refined elegance of wood casegoods, showcasing sophisticated all-wood construction and precisely crafted detail. Reff is available in an extensive range of veneers, and durable laminates and metal options that can be used interchangeably in panel-based open areas as well as in private offices, as freestanding casegoods. Reff offers clients a variety of flexible panel types, making it easy to create virtually any type of workstation and has extensive power and data management capabilities for data and communications technology.

Currents

Our award-winning and innovative Currents system provides advanced power and data capabilities to organizations that require maximum space-planning freedom, advanced technology support and require the mobility of freestanding furniture. The groundbreaking Currents service wall divides space and manages technology. Currents may be used in tandem with existing freestanding (or panel-based) furniture, removing the constraints imposed by conventional panel systems. Currents also integrates with competitors’ systems and freestanding furniture.

Seating

We continuously research and assess the general landscape of the office seating market, and tailor our work chair product development initiatives to enhance our competitive position for ergonomics, aesthetics, comfort and value. We believe that the result of these efforts is an increasingly innovative, versatile seating collection consistent with our brand.

Key client criteria in work chair selection include superior ergonomics, aesthetics, comfort, quality and affordability, all of which we believe is consistent with our strengths and reputation. To support our efforts, we have expanded the number of seating specialists in our sales force from 7 in 2000 to 21 in 2004 and have trained our recently appointed dealer sales representatives to focus on generating increased seating sales in our dealerships.

Our seating product lines are designed and engineered for clients in businesses of all sizes who seek distinctive, comfortable, high performance executive, task, conference and visitor chairs. The LIFE^™, RPM^®, Sapper, Bulldog^®, SOHO^™ and Visor^™ product lines, offer a range of ergonomic features at various price levels. We are also pursuing work chair product offerings in the middle-market and entry price point segment with the expected introduction of two new seating lines in 2005.

In 2003, our office seating earned the GREENGUARD^™ Indoor Air Quality Certification for low emitting products from the GEI. The Institute verified that Knoll office seating products have low chemical emissions that meet or exceed the GREENGUARD^™ indoor air quality standards. In addition, Knoll office seating products can help clients meet LEED^®-CI, requirements.

Office seating accounted for approximately 7.8% of our sales in 2003, 6.3% of our sales in 2002 and 5.6% of our sales in 2004.

Our principal seating lines are:

LIFE^™. LIFE^™, introduced in 2002, has become an industry benchmark for ergonomic and sustainable design. Recognized for its overall lightness and agility, LIFE^™ features intuitive adjustments that bring comfort and effortless control to a new performance level with an extensive range of supportive sitting options and responsive lumbar support.

48

LIFE^™ received the gold 2002 Best of NeoCon^® award in task seating, two Canadian International Interior Design Exhibition gold awards for both sustainable design and for work chairs and the U.K. FX awards as seating product of the year and overall Interior Product of the year.

RPM. RPM, recognized for outstanding comfort, extraordinary performance and exceptional value, is offered with distinctive fabrics that reflect its stylish design. Engineered for durability, RPM delivers comfort and support, especially for 24-hour work environments.

Files and Storage

Our files and storage products, featuring the Calibre and Series 2 product lines, are designed with unique features to maximize storage capabilities throughout the workplace. Our core files and storage products consist of lateral files, mobile pedestal and other storage units, bookcases and overhead storage cabinets. In 2004, we expanded the breadth of our storage products by introducing new storage towers, including wardrobe towers, bookcase towers and display towers. Knoll Calibre storage towers received a silver 2004 Best of NeoCon^® award.

Our range of files and storage completes our product offering, allowing clients to address all of their furniture needs with us, especially in competitive bid situations where our office systems, seating, tables and desks have been specified. The breadth of the product line also enables our dealers to offer our files and storage as stand alone products to businesses with smaller requirements.

Our files and storage are available in an extensive array of sizes, configurations and colors, which can be integrated with other manufacturers’ stand-alone furniture, thereby increasing our penetration in competitor accounts. In addition, certain elements of the product line can be configured as freestanding furniture in private offices or open-plan environments.

Files and storage accounted for approximately 6.8% of our sales in 2003, 6.9% of our sales in 2002 and 5.9% of our sales in 2001.

Tables and Desks

We offer collections of adjustable tables as well as meeting, conference, training, dining, and café tables for large scale projects and stand-alone desks and table desks. These items are also sold as stand-alone products through our dealers to businesses with smaller requirements.

Our Crinion, Interaction^™, and Upstart^™ product lines include adjustable, work, meeting, conference and training tables. These product lines range from independent tables to tables suitable for workstations that support individual preferences for computer and writing heights to plannable desks that can be linked together to build and reshape larger work areas. Additionally, Interaction tables are designed to be compatible with Dividends, Equity, Morrison and Reff office systems.

Our principal desk product lines, detailed to meet the needs of the contemporary office, offer traditional wood casegoods construction synonymous with the Knoll standard of quality. These desk product lines include: Magnusson^®, designed especially to serve the day-to-day wood casegoods requirements of Knoll dealers; Reference, with over thirty choices of natural veneers and finishes; and Crinion, a progressive casegoods aesthetic.

We synchronize our wood casegoods product development with standards provided by the Forest Stewardship Council (FSC), the industry’s most rigorous guidelines for forest stewardship. We offer Chain-of-Custody documentation for all of our FSC-certified wood products. In addition, our wood casegoods products can help clients to meet U.S. Green Building Council Leadership in Energy and Environmental Design, Commercial Interiors, or LEED^®-CI, requirements.

49

Tables and desks accounted for approximately 0.4% of our sales in 2003, 0.7% of our sales in 2002 and 0.7% of our sales in 2001.

Specialty Products

The KnollStudio, KnollTextiles, KnollExtra and Spinneybeck businesses serve as a marketing and distribution umbrella for our portfolio of specialty product lines. These businesses, which represent over 15% of our revenue, are our highest margin product lines and enhance our design and quality reputation.

KnollStudio is a renowned source for classic modern furniture and spirited new designs for the workplace, homes, hotels, government and educational institutions. KnollStudio includes wood side chairs; conference, dining and occasional tables; and café chairs, barstools and lounge seating. These products were designed in collaboration with many of the twentieth century’s most prominent architects and designers, such as Marcel Breuer, Frank O. Gehry, Maya Lin, Ludwig Mies van der Rohe, Isamu Noguchi, Jorge Pensi, Jens Risom, Eero Saarinen and Kazuhide Takahama.

KnollTextiles, established in 1947 to create high-quality textiles for Knoll furniture, offers upholstery, panel fabrics, wall coverings and drapery that harmonize color, pattern and texture. KnollTextiles offers products for corporate, hospitality, healthcare and residential interiors. KnollTextiles products are used in the manufacture of Knoll furniture and are sold to clients for use in other manufacturers’ products. Extending KnollTextiles’ heritage of product innovation from classic upholstery to ecologically oriented panel fabrics, we introduced Imago in 2000, a product that defined an entirely new category of hard surface materials. Designers who collaborate with us on KnollTextiles include Suzanne Tick and 2x4.

KnollExtra offers accessories that complement our office furniture products, including technology support accessories, desktop organizational tools, lighting and storage. KnollExtra integrates technology comfortably into the workplace, meeting the increased demand for flat panel monitor supports, central processing unit holders as cable management with such products as Zorro, Wishbone^™ and Rotation, which deliver adjustability and space savings. In 2004, our innovative JellyFish laptop holder won a 2004 Best of NeoCon^® gold award.

Spinneybeck Enterprises, Inc., our wholly owned subsidiary, offers leathers and related products, including leather rugs and wall panels. Spinneybeck supplies high-quality upholstery leather for use on Knoll furniture and for sale directly to clients, including other office furniture manufacturers, upholsterers, aviation, custom coach and boating manufacturers.

Specialty products accounted for approximately 15.8% of our sales in 2003, 15.7% of our sales in 2002 and 14.1% of our sales in 2001.

European Products

Knoll Europe has a product offering that allows clients to purchase a complete office environment from a single source. In addition, we offer certain products designed specifically for the European market. Our presence in the European market provides strategic positioning with our clients that have international offices where they would like to maintain their Knoll facility standard. In addition to working with our North American clients’ international offices, we also have a local European client base.

In Europe our core product categories include: (i) desk systems, including the KnollScope, PL1 and the Alessandri system; (ii) KnollStudio; (iii) seating, including a comprehensive range of chairs; and (iv) storage units, which are designed to complement our desk products.

Knoll Europe accounted for approximately 7.2% of our sales in 2003, 6.0% of our sales in 2002 and 6.0% of our sales in 2001.

50

Product Design and Development

Our design philosophy reflects our historical commitment to working with the world’s preeminent designers to develop products and product enhancements that delight and inspire. By combining our designers’ creative vision with our commitment to developing products that address changing business needs, we have been able to generate strong demand for our product offerings and cultivate brand loyalty among our target clients. Our reputation as a design leader and history of working with these preeminent designers allows us to continue to attract and collaborate with a diverse group of the world’s leading designers. In addition, these types of collaborations are consistent with our commitment to a lean organizational structure and incentive-based compensation, with the resulting costs a variable royalty-based fee as opposed to fixed costs associated with a larger in-house design staff.

As part of our continuous improvement program we have implemented a New Product Commercialization Process to ensure the quality and repeatability of our product development processes. This has helped us reduce product development cycle time and improve the quality of our output. We have also made a significant investment in Pro/ENGINEER^® design tools and rapid prototyping technology to reduce product design and development lead times and improve our responsiveness to special requests for customized solutions. We work very closely with our designers during this phase of design and development, to ensure the most viable products that balance innovative, modern design with practical, functional style. For all major development efforts we form cross-functional teams with dedicated leaders to facilitate a seamless flow into manufacture and accountability on cost and schedule. Additionally, throughout the development process, we evaluate the materials we use with a focus on incorporating recycled and recyclable materials into our products.

Sales and Distribution

Our clients are typically Fortune 1000 companies, governmental agencies and other medium to large sized organizations in a variety of industries including education, healthcare and hospitality. Our direct sales force of 314 professionals and network of 225 independent dealers in North America work in close partnership with clients and design professionals to specify distinctive work environments. Our direct sales representatives, in conjunction with our independent dealers, sell to and call directly on our key clients. Our independent dealers also call on many of our other medium and small sized clients to provide seamless sales support and client service.

Our products and knowledgeable sales force have generated strong brand recognition and loyalty among architects, designers and corporate facility managers, all of whom are key decision makers in the office furnishings purchasing process. Our strong relationships with architects and design professionals help us stay abreast of key workplace trends and position us to better meet the changing needs of our clients. For example, we have invested in training all of our Architect and Designer specialists as LEED^® accredited professionals to help our clients better address environmental issues that arise in the design of the workplace. We have an over $6 billion installed base of office systems, which provides a strong platform for recurring and add-on sales.

We recently realigned our sales force to target strategic areas of opportunity. For example, we created the Global Business Division to target competitively held accounts. We also placed sales representatives and technical specialists into certain dealerships to support programs such as Knoll Essentials, as well as strengthened our focused seating and KnollExtra sales team with new senior leadership.

In addition to coordinating sales efforts with our sales representatives, our dealers generally handle project management, installation and maintenance for client accounts after the initial product selection and sale. Although many of these dealerships also carry products of other manufacturers, they have agreed not to act as dealers for our principal direct competitors. We have not experienced significant dealer turnover. Our dealers’ substantial commitment to understanding our product line, and their strong relationship with us, serve to discourage dealers from changing vendor affiliations. We are not dependent on any one dealer, the largest of which accounted for less than 4.6% and 5.5% of our North American sales in 2003 and the first nine months of 2004, respectively.

51

We provide product training for our sales force and dealer sales representatives, who make sales calls primarily to small to medium sized businesses. As part of our commitment to building relationships with our dealer sales representatives, we introduced the Knoll Essentials program in January 2004, a catalog program developed in response to dealer requests for a consolidated, user-friendly selling tool for day-to-day systems, seating, storage and accessory products. The Knoll Essentials program includes dealer incentives to sell our products, and has already, in the first nine months of 2004, increased dealer generated sales by $12.5 million as compared to the first nine months of 2003. We also employ a dedicated team of dealer sales representatives to work with Knoll dealerships.

No single client represented more than 2.8% of our North American sales during 2003. However, a number of U.S. government agencies purchase our products through multiple contracts with the General Services Administration, or “GSA”. Sales to U.S. government entities under the GSA contracts aggregated approximately 13.0% of consolidated sales in 2003, with no single U.S. government order accounting for more than 1% of consolidated sales.

In Europe, we sell our products in largely the same manner as in North America, through a direct sales force and a network of dealers. In Europe, the majority of our sales come from the United Kingdom, France and Italy, as well as export markets in the Middle East. We also sell our products designed and manufactured in North America to the international operations of our core clients.

Manufacturing and Operations

We operate manufacturing sites in North America, with plants located in East Greenville, Pennsylvania, Grand Rapids and Muskegon, Michigan and Toronto, Canada. In addition, we have two plants in Italy: one in Foligno and one in Graffignana. We manufacture and assemble our products to specific customer order and operate all of our facilities under a philosophy of continuous improvement, lean manufacturing and efficient asset utilization. All of our plants are registered under ISO 9000, an internationally developed set of quality criteria for manufacturing companies. Additionally, our North American plants are ISO 14001 certified, which reflects our commitment to environmentally responsible practices.

The root of our continuous improvement efforts lies in our philosophy of lean manufacturing that drives our operations. As part of this philosophy, we partner with suppliers who can supply our facilities efficiently, often with just-in-time deliveries, thus allowing us to reduce our raw materials inventory. We also form Kaizen work groups in the plants, to develop best practices, to minimize scrap and time and material waste, at all stages of the manufacturing process. The involvement of employees at all levels ensures an organizational commitment to lean and efficient manufacturing operations.

Starting in 2000, we implemented new programs and procedures, which improved our operations from order entry through shipment, resulting in more efficient workflows, reduced lead times and enhanced client service. We have significantly reduced order-processing time and accuracy by investing in order entry technology that provides a direct interface with our dealer network through an Internet based order entry tracking system. In addition, we have improved associate safety performance, outsourced our logistics operation, all while improving service performance. Other areas of focus have been process cycle time, percentage of orders shipped complete and on-time, order correctness and other key measures aimed at driving service improvements.

Below are some examples of our continuous improvement initiatives and the related benefits of these efforts:

• Currents Frame Welder Changeovers: Our goal was to reduce the number of changeovers by frame welders in the manufacture of our Currents products by 50% and to eliminate process waste in order to increase output by 20%. The changeover process was redesigned from a complex setting and gauge adjustment procedure to a single flip gauge procedure. Additionally, our team was able to simplify the flow of materials into the area, reducing the number of skids of materials required. Our actual result was

52

a reduction in changeover time from 17.8 minutes to 2 minutes (89%), an increase in daily output by 44%, a reduction in floorspace by 44%, a decrease in work-in-process by 67%, and a reduction in throughput time from 72 hours to 24 hours (67%).

• LIFE^™ Line: Our goal was to increase productivity on the assembly line by 20%. Through improved line balance, parts organization and parts presentation, we were able to reduce cycle time and increase productivity by 40%, which equates to a cost savings at full volume of approximately $750,000 per year.

• Muskegon Paint Line Powder Scrap Reduction: Our goal was to reduce the amount of scrap powder on the paint line at our Muskegon facility. Our team implemented dual booths to reclaim scrap powder for the top five colors, which resulted in a total powder scrap savings of $152,000 per year.

• Muskegon Pedestal Fabrication Line Changeovers: Our goal was to reduce changeovers by 50%. Our team changed the method of materials presentation and redesigned equipment operations. Our actual result was a reduction in changeover time from 21 minutes to 5 minutes (76%).

In addition to our continued focus on enhancing the efficiency of our manufacturing operations, we also seek to reduce costs through our recently initiated global sourcing effort. We have capitalized on raw material and component cost savings available through lower cost global suppliers. This broader view of potential sources of supply has enhanced our leverage with domestic supply sources, and we have been able to reduce our cycle times by extracting improvements from all levels throughout the supply chain.

Raw Materials and Suppliers

Our purchasing function in North America is centralized at our East Greenville facility. This centralization, and our close relationships with our primary suppliers, has enhanced our ability to realize purchasing economies of scale and implement “just-in-time” inventory practices. We use steel, lumber, paper, paint, plastics, laminates, particleboard, veneers, glass, fabrics, leathers and upholstery filling material. Both domestic and overseas suppliers of these materials are selected by us based upon a variety of factors, with the price and quality of the materials and the supplier’s ability to meet our delivery requirements being primary factors in such selection. We currently do not have any long-term supply contracts and believe that the supply sources for these materials are adequate. As a result of not having any long-term supply contracts for these materials, we are vulnerable to fluctuations in the prices for these materials. Materials costs for steel and plastic increased by $4.7 million during the first nine months of 2004 due to increasing prices. For 2004, we estimate that the aggregate increase in materials costs for steel and plastic will be approximately $8 million. Without factoring in the potential benefits from our global sourcing initiative and continuous improvement program, we estimate that our materials costs will increase by an additional $10 million in 2005 due to price increases. We anticipate that our existing and ongoing global sourcing initiative and continuous improvement program, recently implemented list price increases and selected additional list price increases will offset these further increased costs. See “Risk Factors—We are dependent on the pricing and availability of raw materials and components, and price increases and unavailability of raw materials and components could lower sales, increase our cost of goods sold and reduce our profits and margins.” We do not rely on any sole supplier as the sole source of any of our raw materials, except for certain electrical products.

Competition

The office furniture market is highly competitive. Office furniture companies compete on the basis of (i) product design, including performance, ergonomic and aesthetic features, (ii) product quality and durability, (iii) relationships with clients, architects and designers, (iv) strength of dealer and distributor network, (v) on-time delivery and (vi) price. We estimate that we had a 7.5% market share in the U.S. office furniture market in 2003. We estimate that five companies, including us, represented approximately 66% of the U.S. market in 2003.

Some of our competitors, especially those in North America, are large and have significantly greater financial, marketing, manufacturing and technical resources than we do. Our most significant competitors in our primary markets are Herman Miller, Inc., Steelcase, Inc. and Haworth, Inc. and, to a lesser extent, Allsteel, Inc. an operating unit of HNI Corporation, formerly known as HON Industries, Inc., and Teknion Corporation. These competitors have a substantial volume of furniture installed at businesses throughout the country, providing a

53

continual source of demand for further products and enhancements. Moreover, the products of these competitors have strong acceptance in the marketplace. Although we believe that we have been able to compete successfully in our markets to date, there can be no assurance that we will be able to continue to do so in the future.

Patents and Trademarks

We consider securing and protecting our intellectual property rights to be important to our business. We own approximately 82 active U.S. utility patents on various components used in our products and systems and approximately 103 active U.S. design patents. We also own approximately 196 patents in various foreign countries. We own approximately 49 trademark registrations in the U.S., including registrations to the following trademarks, as well as related stylized depictions of the Knoll work mark: Knoll^®, KnollStudio^®, KnollExtra^®, Good Design Is Good Business^®, A3^®, Bulldog^®, Calibre^®, Currents^®, Dividends^®, Equity^®, Parachute^®, Propeller^®, Reff^®, RPM^®, Upstart^®, Visor^®. We also own approximately 144 trademarks registered in foreign countries. Additionally, we have the right to use the LIFE^™ trademark through an exclusive licensing arrangement.

In October 2004, we received registered trademark protection in the United States for five of our world-famous furniture designs created by Mies van der Rohe—the Barcelona Chair, the Barcelona Stool, the Barcelona Couch, the BarcelonaTable and the Flat Bar Brno Chair. This protection recognizes the renown of these designs and reflects our commitment to ensuring that when architects, furniture retailers, businesses and the public purchase a Mies van der Rohe design, they will be purchasing the authentic product, manufactured to the designer’s historic specifications.

Backlog

Our sales backlog was $113.7 million at September 30, 2004, $107.0 million at December 31, 2003 and $136.4 million at December 31, 2002. We manufacture substantially all of our products to order and expect to fill substantially all outstanding unfilled orders within the next twelve months. As such, backlog is not a significant factor used to predict our long-term business prospects.

Foreign and Domestic Operations

Our principal manufacturing operations and markets are in North America, and we also have manufacturing operations and markets in Europe. Our sales to clients and net property, plant and equipment are summarized by geographic areas below. Sales to clients are attributed to the geographic areas based on the point of sale.

	United States		Canada		Europe		Consolidated
	(in thousands)
2003
Sales to clients	$	627,844	$	19,263	$	50,139	$	697,246
Property, plant and equipment, net		111,213		30,448		12,992		154,653
2002
Sales to clients	$	708,409	$	18,746	$	46,108	$	773,263
Property, plant and equipment, net		128,256		25,814		11,434		165,504
2001
Sales to clients	$	899,042	$	26,807	$	59,539	$	985,388
Property, plant and equipment, net		137,200		27,115		10,723		175,038

Environmental Matters

We believe that we are substantially in compliance with all applicable laws and regulations for the protection of the environment and the health and safety of our employees based upon existing facts presently known to us. Compliance with federal, state, local and foreign environmental laws and regulations relating to the

54

discharge of substances into the environment, the disposal of hazardous wastes and other related activities has had and will continue to have an impact on our operations, but has, since the formation of our predecessor in 1990, been accomplished without having a material adverse effect on our operations. There can be no assurance that such laws and regulations will not change in the future or that we will not incur significant costs as a result of such laws and regulations. We have trained staff responsible for monitoring compliance with environmental, health and safety requirements. Our goal is to reduce and, wherever possible, eliminate the creation of hazardous waste in its manufacturing processes. While it is difficult to estimate the timing and ultimate costs to be incurred due to uncertainties about the status of laws, regulations and technology, based on information currently known to us and accrued environmental reserves, we do not expect environmental costs or contingencies to have a material adverse effect on us. The operation of manufacturing plants entails risks in these areas, however, and we cannot assure you that we will not incur material costs or liabilities in the future which could adversely affect us.

We have been identified as a potentially responsible party pursuant to CERCLA for remediation costs associated with waste disposal sites that we previously used. CERCLA can impose liability for costs to investigate and remediate contamination without regard to fault or the legality of disposal and, under certain circumstances liability, may be joint and several resulting in one responsible party being held responsible for the entire obligation. Liability may also include damages for harm to natural resources. The remediation costs and our allocated share at some of these CERCLA sites are unknown. We may also be subject to claims for personal injury or contribution relating to CERCLA sites. We reserve amounts for such matters when expenditures are probable and reasonably estimable.

Our Principal Stockholder

Our principal stockholder is Warburg, Pincus Ventures, L.P. As of September 30, 2004, Warburg Pincus and its affiliates beneficially owned approximately 90.6% of our outstanding common stock. Following the completion of this offering, Warburg Pincus and its affiliates will beneficially own approximately         % of our common stock, or         % if the underwriters’ over-allotment option is fully exercised.

Employees

As of September 30, 2004, we employed a total of 3,431 people, consisting of 2,191 hourly and 1,240 salaried employees. The Grand Rapids, Michigan plant is our only unionized plant within the U.S. In August 2002, we reached an agreement with the Carpenters and Joiners of America, Local 1615 on a new four-year collective bargaining agreement covering hourly employees at the plant. The new agreement expires on August 27, 2006, subject to automatic one-year renewals if the agreement is not terminated. From time to time, there have been unsuccessful efforts to unionize at our other North American locations. For example, in August 2004, a petition was filed with the National Labor Relations Board seeking to unionize employees at our Muskegon, Michigan, facility. In September 2004, our employees at this facility voted against unionization. We believe that relations with our employees throughout North America are good. Nonetheless, it is possible that our employees may continue attempts to unionize. Our employees in Italy are represented by unions. We have experienced brief work stoppages from time to time at our plants in Italy, none of which have exceeded eight hours. Work stoppages are relatively common occurrences at many Italian manufacturing plants and are usually related to national or local issues. We have had 5 work stoppages in 2004, with an average duration of 4.4 hours. None of these work stoppages were unique to our company, and these work stoppages have not materially affected our performance.

Legal Proceedings

We are from time to time subject to, and are presently involved in, litigation or other legal proceedings arising out of the ordinary course of business. Based upon information currently known to us, we believe the outcome of such proceedings will not have, individually or in the aggregate, a material adverse effect on our business, our financial condition or results of operations.

55

MANAGEMENT

Executive Officers and Directors

The following table sets forth certain information concerning our executive officers, our current directors and individuals who will be elected and have agreed to become our directors effective upon the closing of this offering:

Name	Age	Position
Burton B. Staniar	62	Chairman of the Board
Andrew B. Cogan	42	Chief Executive Officer, Knoll, Inc., and Director
Kathleen G. Bradley	55	President and Chief Executive Officer, Knoll North America, and Director
Arthur C. Graves	57	Senior Vice President—Sales and Distribution
Stephen A. Grover	52	Senior Vice President—Operations
Carl G. Magnusson	64	Executive Vice President and Director of Design
Barry L. McCabe	57	Senior Vice President and Chief Financial Officer
Patrick A. Milberger	47	Senior Vice President, General Counsel and Secretary
S. David Wolfe	47	Vice President—Human Resources
Jeffrey A. Harris	48	Director
Sidney Lapidus	67	Director
Kewsong Lee	39	Director
Kevin Kruse	34	Director
John F. Maypole	65	Director upon closing of this offering
Anthony P. Terracciano	66	Director upon closing of this offering

Burton B. Staniar has served as Chairman of the Board since his appointment in December 1993. Mr. Staniar served as our Chief Executive Officer from December 1993 to January 1997. Prior to that time, Mr. Staniar held a number of assignments at Westinghouse, including President of Group W Cable and Chairman and Chief Executive Officer of Westinghouse Broadcasting. Mr. Staniar is also a director of Church and Dwight Co., Inc. and Journal Register, Co.

Andrew B. Cogan has served as a director since February 1996 and assumed the role of Chief Executive Officer of Knoll, Inc. in April 2001 after serving as Chief Operating Officer since December 1999. Mr. Cogan has held several positions in the design and marketing group worldwide since joining us in 1989, including Executive Vice President—Marketing and Product Development and Senior Vice President. Mr. Cogan is also a director of the Chinati Foundation in Marfa, Texas.

Kathleen G. Bradley has served as a director since November 1999 and assumed the role of President and Chief Executive Officer, Knoll North America, in April 2001. She was named as our President in December 1999, after serving as Executive Vice President—Sales, Distribution and Customer Service since August 1998, Senior Vice President since 1996 and Divisional Vice President for Knoll’s southeast division since 1988. Prior to that time, Ms. Bradley was regional manager for our Atlanta region, a position to which she was promoted in 1983. She began her career with Knoll in 1979.

Arthur C. Graves has served as our Senior Vice President—Sales and Distribution since 1999. He began his career with us in 1989 and has held several senior sales management positions with us since that time. Prior to joining us, Mr. Graves was with Herman Miller, Inc. from 1979 to 1989 where he held several sales and management positions. Mr. Graves’ career in the contract office furniture industry has spanned 25 years.

Stephen A. Grover has served as our Senior Vice President of Operations since May 1999 and is responsible for our Purchasing, Logistics, Product Development and Manufacturing teams. Prior to joining us, he was the

56

Global Manufacturing Manager for General Electric’s Magnetic Resonance Imaging business. Over his 19-year career at GE, he also worked across the plastics business and medical systems business in progressively larger roles.

Carl G. Magnusson joined our company in 1976 and has served as our Executive Vice President and Director of Design since July 2003. Prior to this role, Mr. Magnusson served as our Senior Vice President and Director of Design. In 1997, Mr. Magnusson received the Pacific Design Center’s award for lifetime achievement.

Barry L. McCabe was appointed as our Senior Vice President and Chief Financial Officer in May of 2002, after serving as Senior Vice President, Treasurer and Controller since January 2000 and serving as Vice President, Treasurer and Controller since January 1995. Prior to joining us in August 1990, Mr. McCabe worked with a number of Westinghouse business units during his 16 year career at Westinghouse.

Patrick A. Milberger was appointed as our Senior Vice President, General Counsel and Secretary in January 2000, after serving as Vice President, General Counsel and Secretary. Mr. Milberger joined us as Vice President and General Counsel in April 1994. Prior to joining us, Mr. Milberger served as an assistant general counsel and in a number of other positions in the Westinghouse law department, which he joined in 1986.

S. David Wolfe was promoted to Vice President—Human Resources in October 2000. Mr. Wolfe joined us in May 2000 as Process Improvement Manager. Prior to joining us, he spent seven years at General Electric Company, where he held a variety of management positions, the last being Manager of Installation Services for GE Medical Systems.

Jeffrey A. Harris has served as a director since February 1996. Mr. Harris is a Managing Director of Warburg Pincus LLC, where he has been employed since 1983. Mr. Harris is also a director of Bill Barrett Corporation, Spinnaker Exploration Company, Proxim Corporation and several private companies.

Sidney Lapidus has served as a director since February 1996. Mr. Lapidus is a Managing Director and Senior Advisor of Warburg Pincus LLC, where he has been employed since 1967. Mr. Lapidus is a director of Lennar Corporation and Information Holdings, Inc.

Kewsong Lee has served as a director since February 1996. Mr. Lee is a Managing Director of Warburg Pincus LLC, where he has been employed since 1992. Mr. Lee is a director of Arch Capital Group Ltd., Eagle Family Foods Holdings, Inc., TransDigm Holding Company, TransDigm Inc. and several private companies.

Kevin Kruse has served as a director since December 2003. Mr. Kruse has been a Vice President of Warburg Pincus LLC since January 2003 and has been employed by Warburg Pincus LLC since February 2002. Prior to joining Warburg Pincus, Mr. Kruse was employed by AEA Investors Inc. Prior to that, he was employed by Bain & Co., a management consulting firm. Mr. Kruse is also a director of Polypore International, Inc., Polypore, Inc., TransDigm Holding Company and TransDigm Inc.

John F. Maypole will become a director effective upon the closing of this offering. Mr. Maypole has, for the past 19 years, served as an independent consultant to various corporations and providers of financial services. Mr. Maypole is also a director of MassMutual Financial Group, Church and Dwight Co., Inc. and Dan River Inc.

57

Anthony P. Terracciano will become a director effective upon the closing of this offering. Mr. Terracciano served on the board of directors of American Water Works Company Inc. from 1997, and held the position of Vice Chairman from 1998, until its acquisition by Thames Water in January 2003. From July 2000 to January 2002, he was chairman of Dime Bancorporation and he previously held executive positions with First Union Bank, First Fidelity Bank, Mellon Bank and Chase Manhattan Bank. Mr. Terracciano is also a director of Avaya, Inc., IKON Office Solutions and Riggs Bank.

Board of Directors and Committees

Term of Directors and Composition of Board of Directors

Immediately prior to this offering, our board of directors will be divided into three staggered classes of directors of the same or nearly the same number. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the directors will expire upon election and qualification of successor directors at the Annual Meeting of Stockholders to be held during the years 2005 for the Class I directors, 2006 for the Class II directors and 2007 for the Class III directors.

• Our Class I directors will be Messrs. Cogan, Kruse and Lee;

• Our Class II directors will be Messrs. Staniar, Lapidus and Terracciano; and

• Our Class III directors will be Ms. Bradley and Messrs. Harris and Maypole.

Our amended and restated certificate of incorporation and bylaws provide that the number of our directors shall be fixed from time to time by a resolution of the majority of our board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class shall consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

Term of Executive Officers

Each officer serves at the discretion of the board of directors and holds office until his successor is elected and qualified or until his earlier resignation or removal. There are no family relationships among any of our directors or executive officers.

Director Compensation

During 2003, our directors did not receive compensation for service on the board of directors but were reimbursed for certain expenses in connection with attendance at board and committee meetings. However, the individuals who have agreed to become our directors, effective upon the closing of this offering, will each receive $25,000 per year plus $2,500 per board meeting. These directors will also receive a grant of 50,000 options to purchase shares of common stock, or an equity based incentive of equivalent value. Mr. Maypole will also receive $10,000 per year for serving as chairman of our audit committee.

Board Committees

As of the closing of this offering, our board of directors will have an audit committee, a compensation committee, and a nominating and corporate governance committee, each of which has or will have the composition and responsibilities described below.

Audit Committee. Our audit committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements. Our audit committee (i) assists our board in monitoring the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence, and the performance of our internal audit function and independent auditors; (ii) assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of

58

performing any audit, review or attest services and for dealing directly with any such accounting firm; (iii) provides a medium for consideration of matters relating to any audit issues; and (iv) prepares the audit committee report that the SEC rules require be included in our annual proxy statement or annual report on Form 10-K. The members of our audit committee will be Messrs. Maypole and Terracciano. Mr. Maypole will be our audit committee financial expert under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act. We believe that the composition of our audit committee meets the requirements for independence under the current requirements of the Sarbanes-Oxley Act, the New York Stock Exchange and SEC rules and regulations. We believe that the functioning of our audit committee will comply with the applicable requirements of the Sarbanes-Oxley Act, the New York Stock Exchange and SEC rules and regulations. We intend to comply with future requirements to the extent they become applicable to us.

Compensation Committee. Our compensation committee reviews and recommends policy relating to compensation and benefits of our officers and employees, including reviewing and approving corporate goals and objectives relevant to compensation of the Chief Executive Officer and other senior officers, evaluating the performance of these officers in light of those goals and objectives and setting compensation of these officers based on such evaluations. The compensation committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the compensation committee with its charter. The members of our compensation committee will be Messrs. Harris and Lapidus. Our compensation committee has sole discretion concerning administration of our stock option plans, including selection of individuals to receive awards, types of awards, the terms and conditions of the awards and the time at which awards will be granted. Options that are granted have a maximum contractual life of ten years. Because Warburg Pincus will own more than 50% of the voting power of our common stock after this offering, we are considered to be a “controlled company” for the purposes of the New York Stock Exchange listing requirements. As such, we are permitted, and have elected, to opt out of the New York Stock Exchange listing requirements that would otherwise require our compensation committee to be comprised entirely of independent directors.

Nominating and Corporate Governance Committee. Upon the closing of this offering, we will establish a nominating and corporate governance committee consisting of Messrs. Harris and Staniar, each of whom is a non-management member of our board of directors. The nominating and corporate governance committee will oversee and assist our board of directors in identifying, reviewing and recommending nominees for election as directors; evaluate our board of directors and our management; develop, review and recommend corporate governance guidelines and a corporate code of business conduct and ethics; and generally advise our board of directors on corporate governance and related matters. Because Warburg Pincus will own more than 50% of the voting power of our common stock after this offering, we are considered to be a “controlled company” for the purposes of the New York Stock Exchange listing requirements. As such, we are permitted, and have elected, to opt out of the New York Stock Exchange listing requirements that would otherwise require our nominating and corporate governance committee to be comprised entirely of independent directors.

Our board of directors may from time to time establish other committees.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our board of directors or compensation committee.

59

Executive Compensation

The following table sets forth summary information concerning the total compensation awarded to or earned in the years ended December 31, 2003, 2002 and 2001, respectively, by our chief executive officer and by each of our four other most highly compensated executive officers whose total annual salary and bonus exceeded $100,000. We refer to these persons elsewhere in this prospectus as our “named executive officers.”

Summary Compensation Table

Name and Principal Position	Year	Annual Compensation				Long-Term Compensation Awards Securities Underlying Options (1)	All Other Compensation (2)
		Salary		Bonus
Burton B. Staniar Chairman of the Board	2003 2002 2001	$	250,008 250,007 200,004	$	200,000 215,000 625,000	—   100,000 —	$	6,096 5,916 5,199
Andrew B. Cogan Chief Executive Officer, Knoll, Inc.	2003 2002 2001		400,008 400,008 391,673		400,000 425,000 750,000	—   200,000 200,000		96 96 99
Kathleen G. Bradley President and Chief Executive Officer, Knoll North America	2003 2002 2001		400,008 400,008 391,673		400,000 425,000 750,000	—   200,000 200,000		6,096 5,916 5,199
Stephen A. Grover Senior Vice President—Operations	2003 2002 2001		218,392 207,992 207,992		200,000 250,000 300,000	—   100,000 —		6,096 5,916 5,199
Arthur C. Graves Senior Vice President—Sales and Distribution	2003 2002 2001		212,176 208,016 208,016		150,000 200,000 300,000	—   100,000 —		6,096 5,916 5,199

(1) Represents the aggregate number of shares of common stock subject to options granted to the named executive officers.

(2) Amounts in this column represent our matching contributions to the Knoll, Inc. Retirement Savings Plan, which was $6,000 for each named executive officer, other than Mr. Cogan, in 2003, and the payment by us of premiums in respect of term life insurance, which was $96 for each named executive officer in 2003.

Our compensation committee sets performance targets and evaluates performance against those targets, taking into consideration our performance and industry and general economic considerations affecting performance. For 2004, each member of our senior management team has a performance goal related to the achievement of operating profit, as well as goals tailored to reflect individual areas of primary responsibility, such as orders growth and budget thresholds.

60

Aggregate Option Exercises and Year-End Option Values

There were no options exercised by the named executive officers in 2003. The following table sets the number and value of unexercised options held by each named executive officer as of December 31, 2003. The information set forth in the following table gives effect to an October 15, 2004 adjustment to the number of shares of common stock issuable upon the exercise of options and the exercise price of such options, which was made in accordance with the stock incentive plan provisions, in response to the special cash dividend that was paid to stockholders on September 30, 2004. Because there was no public trading market for our common stock as of December 31, 2003, the value of the unexercised in-the-money options at year-end have been calculated using the assumed initial public offering price of $15.00 per share, the midpoint of the estimated initial public offering range, minus the applicable per share exercise price.

	Number of Securities Underlying Unexercised Options at December 31, 2003		Value of Unexercised In-the- Money Options at December 31, 2003
Name	Exercisable	Unexercisable	Exercisable	Unexercisable
Burton B. Staniar	424,028	77,128	1,665,549	0
Andrew B. Cogan	788,816	264,440	2,475,770	0
Kathleen G. Bradley	1,188,560	264,440	6,585,453	0
Stephen A. Grover	345,830	129,258	2,087,264	410,781
Arthur C. Graves	163,378	77,128	555,180	0

Stock Option Grants

We did not grant any stock options to our named executive officers during 2003 or during the first nine months of 2004.

Employment Agreements

Mr. Cogan serves as our Chief Executive Officer pursuant to an employment agreement dated March 23, 2001, as amended, and Ms. Bradley serves as President and Chief Executive Officer of Knoll North America pursuant to an employment agreement dated March 23, 2001, as amended. Effective September 1, 2004, each employment agreement provides for a base salary of $500,000 subject to annual review and a target annual bonus of 100% of base salary based upon the attainment of goals set by our board of directors. The employment agreements for Mr. Cogan and Ms. Bradley will renew automatically for additional one-year terms each April 1 unless either party gives 60 days notice of his, her or its intention not to renew. The agreements may be terminated by us at any time, but if so terminated without “cause,” or if we fail to renew the agreements, we must pay the employee termination compensation. In the case of Mr. Cogan, the termination compensation is an amount equal to 200% of his then current base salary plus the average of the annual bonuses paid to him for the last two completed fiscal years preceding the fiscal year of termination. In the case of Ms. Bradley, the termination compensation is an amount equal to 100% of her then current base salary plus the average of the annual bonuses paid to her for the last two completed fiscal years preceding the fiscal year of termination. The agreements also contain non-competition, non-solicitation (during the term of the agreement and for two years thereafter for Mr. Cogan and during the term of the agreement and for one year thereafter for Ms. Bradley) and confidentiality provisions.

Mr. Staniar serves as our Chairman of the Board pursuant to an amended and restated employment agreement dated January 1, 2000, as amended. The employment agreement with Mr. Staniar provides for a base salary of $250,000 subject to annual review and a target bonus of 100% of base salary based upon the attainment of goals set by the board of directors. The employment agreement for Mr. Staniar will continue to renew automatically for additional one-year terms each January 1, unless either party gives 60 days notice not to renew. Mr. Staniar’s agreement may be terminated at any time by us, but if so terminated without “cause,” or if we fail to renew the agreement, we must pay him an amount equal to 100% of his then current base salary. The agreement also contains non-competition, non-solicitation (during the term of the agreement and for one year thereafter) and confidentiality provisions.

61

Mr. Graves serves our Senior Vice President - Sales and Distribution in accordance with the terms set forth in an offer letter dated July 30, 1999. Effective September 1, 2004, as approved by our compensation committee, Mr. Graves’ base salary will be $240,000 subject to annual review and a target annual bonus of 100% of base salary based upon the attainment of goals set by our board of directors.

Mr. Grover serves our Senior Vice President of Operation in accordance with the terms set forth in an offer letter dated March 11, 1999. Effective January 1, 2004, as approved by our compensation committee, Mr. Grover’s base salary is $240,000 subject to annual review and a target annual bonus of 100% of base salary based upon the attainment of goals set by our board of directors.

Certain stock option agreements provide that upon a change of control (as defined therein) of our company, 100% of the options, to the extent not previously exercised, shall become fully vested and exercisable. This provision is included in each stock option agreement entered into with the named executive officers.

Severance Agreement

Effective May 2001, we implemented a severance plan for the benefit of full-time and certain part time non-union employees. Severance amounts paid under the plan are based on length of employment. We may modify, amend or terminate the severance plan for any reason at any time without prior notice.

Long-Term Incentive Plan

In 2003, we adopted the Knoll Inc. Long-Term Incentive Plan, or LTIP. Upon the closing of this offering, the LTIP will be terminated. No operating expense charge for the LTIP has been or will be recorded. The purpose of the LTIP was to attract, retain, and motivate key employees and promote long-term growth and profitability. The LTIP provided long-term incentives, contingent upon meeting certain corporate performance goals or upon a change in control.

Prior to its termination, awards under the LTIP were based upon achieving annual Operating Profit goals for two consecutive LTIP years within the four-year period ending December 31, 2006. The awards pool ranged from ten percent of Operating Profit if the average annual Operating Profit for two consecutive LTIP years equaled or exceeded $125 million up to a maximum of twenty-five percent on the average annual Operating Profit up to $200 million. The participants in the LTIP were granted interests in the awards pool in the form of LTIP units.

The following table sets forth information concerning the LTIP awards made to named executive officers in the year ended December 31, 2003.

Name	Number of Units	Performance Period	Estimated Future Payouts
Burton B. Staniar	7,000	1/1/03 - 12/31/06	$	0
Andrew B. Cogan	22,000	1/1/03 - 12/31/06		0
Kathleen G. Bradley	22,000	1/1/03 - 12/31/06		0
Stephen A. Grover	8,000	1/1/03 - 12/31/06		0
Arthur C. Graves	7,000	1/1/03 - 12/31/06		0

2004 Performance-Based Restricted Stock Awards

In lieu of and effective upon the termination of the LTIP and the closing of this offering, we intend to grant, under the Amended and Restated 1999 Stock Incentive Plan, performance-based restricted stock awards to former LTIP participants and certain other key employees covering 1,600,000 shares of common stock in the aggregate. These awards will provide for the delivery of shares of common stock to award recipients upon the satisfaction of certain vesting requirements. The restricted stock awards will vest as to one-sixth of the shares

62

underlying each award to the extent that the average Knoll operating profit for any two-year period is equal to $100.0 million. The awards will vest as to an additional one-sixth upon the achievement of $115.0 million in average operating profit over such a period, an additional one-sixth upon the achievement of $130.0 million in average operating profit over such a period, an additional one-sixth upon the achievement of $145.0 million in average operating profit over such a period, an additional one-sixth upon the achievement of $160.0 million in average operating profit over such a period, with full vesting upon the achievement of $175.0 million in average operating profit over such a period. In any event, the awards will fully vest on the sixth anniversary of the date of grant and will be subject to pro rata vesting upon a change of control of us, if earlier, regardless of whether the operating profit targets are met. The awards will also be subject to pro rata vesting if the recipient’s employment is terminated on account of death, disability or a termination by us without cause.

Stock Incentive Plans

We sponsor three stock incentive plans:

• 1996 Stock Incentive Plan (Amended and Restated as of November 4, 1999);

• 1997 Stock Incentive Plan (Amended and Restated as of November 4, 1999); and

• 1999 Stock Incentive Plan (Amended and Restated as of             , 2004).

The plans were created to encourage stock ownership by officers, directors, consultants and certain other key employees in order to increase their proprietary interest in our success and to encourage them to remain with us.

The plans will be administered by our compensation committee that will have full power to determine persons eligible to participate in the plans, to interpret the plans, to adopt the rules, regulations and guidelines necessary or proper to carry out the plans, and to determine the type and terms of any awards to be granted. Awards may include but are not limited to the following:

• Stock Options: A stock option is a grant of a right to purchase a specified number of shares of our common stock at a stated price. The committee establishes the option exercise price. However, the exercise price must not be less than the fair market value per share at the time the option is granted. The committee retains the right to reprice options to a lower exercise price for any reason.

• Restricted Stock Awards: A restricted stock award is an award of stock which will vest if performance or other goals are achieved over a specified period.

• Other Awards: The committee may grant any other cash, stock or stock related awards that it deems appropriate, including, but not limited to, stock appreciation rights, limited stock appreciation rights, phantom stock awards, the bargain purchase of stock and stock bonuses.

The specific terms, conditions, performance requirements, limitations and restrictions of any award will be determined by our compensation committee and set forth in an award agreement entered into between us and a participant. Options have a maximum contractual life of ten years. Grants to employees generally become partially vested and available for exercise one year from the date of the award agreement. On such date, 30% of the shares covered by the options become available for exercise. An additional 20% vest and become available on the second and third anniversaries and an additional 30% on the fourth anniversary such that the entire number of shares covered by an option are vested and available by the fourth anniversary of the date of the award agreement. However, our compensation committee may set different vesting conditions for any option and retains the right to accelerate vesting for any reason. Options may be granted with a provision that automatically accelerates vesting upon an optionee’s death, disability or termination of employment without cause, or a change of control of us. All outstanding options are already vested or contain this automatic vesting provision. The terms of each outstanding option also provide that, subject to certain exceptions, the options will automatically vest if:

• Any person, entity or group becomes the beneficial owner of shares of our common stock having at least 50% of the total number of votes that may be cast for the election of our directors;

63

• Our stockholders approve any merger or other business combination of us, sale of our assets or combination of the foregoing transactions, other than (i) a transaction involving only us and one or more of our subsidiaries, or (ii) a transaction immediately following which our stockholders continue to have a majority of the voting power in the resulting entity; and

• Within any 24-month period, the persons who were members of the board at the beginning of such period cease to constitute at least a majority of members of the board.

Our compensation committee may provide for a different change of control definition in the future. Awards granted under the plans are generally not transferable by the participant except by law, will or the laws of the descent and distribution and are exercisable during the participant’s lifetime only by the participant. Although options generally must be exercised prior to termination of employment, the committee may provide for post-termination exercise periods. Following this offering, outstanding options may be exercised up to 90 days after any termination of employment without cause, to the extent that the participant was entitled to exercise the options on the date of termination. In the case of any termination of employment without cause prior to this offering, outstanding options may be exercised until the earlier of three years after the date of termination or 90 days after this offering, subject to extensions for certain periods during which the participant is prohibited from selling our common stock, to the extent that the participant was entitled to exercise the options on the date of termination. In the case of termination of employment on account of death, disability or retirement on or after age 65, outstanding options exercisable on the date of termination may be exercised within 12 months after the date of termination. However, in no event may an option be exercised later than the earlier of the expiration of the term of the option or ten years from the date of the grant of the option.

An option holder may exercise an option by written notice and payment of the exercise price in a form acceptable to our compensation committee, which may include: by cash or check; by the surrender of a number of share of common stock already owned by the participant for at least the minimum period required to avoid any accounting charge, with a fair market value equal to the exercise price; through the delivery of irrevocable instructions to a broker to sell shares obtained under the exercise of the option and to deliver to us an amount out of the proceeds of the sale equal to the aggregate exercise price for the shares being purchased; or by any other means acceptable to the committee.

The 1996 plan will terminate February 28, 2006, the 1997 plan will terminate February 13, 2007, and the 1999 plan will terminate November 4, 2009. Awards granted under the plans will remain in effect following termination of the plans, subject to the term of the applicable grant. The board of directors may at any time amend, modify or terminate the plans.

As of October 15, 2004, a total of 21,430,398 shares of common stock have been authorized for issuance under the plans, of which a total of 661,488 shares are eligible for grant. As of October 15, 2004, options to purchase 11,805,172 shares of common stock were outstanding at a weighted average exercise price of $11.09 per share and 9,867,756 were exercisable at a weighted average exercise price of $10.32 per share under the plans.

We intend to issue stock options and other awards to directors, officers and other eligible persons under the plans from time to time in the ordinary course of business. To permit the issuance of additional stock options and other awards, we intend to amend the 1999 plan to increase the number of shares of common stock authorized for issuance under that plan by 3,000,000 shares.

Knoll Stock Ownership Award Plan

On November 4, 1999, we established The Knoll Stock Ownership Award Plan for our Canadian employees to encourage, through an equity-based compensation plan, eligible employees to contribute to our growth and profitability.

64

The plan is administered by the Knoll Retirement Plans Administration Committee, or the Committee. The Committee has full power and authority to interpret, construe and administer the plan. Under the plan, we may grant notional stock units to substantially all individuals employed by us as of the effective date of the plan. Participants vest their interest in notional stock units ratably according to years of service, with such units being 100% vested at the end of five years of service.

On November 4, 1999, we granted a total of 109,800 notional stock units, with an estimated fair value of $14.00 per unit, to eligible employees. In January 2001 and September 2004, the number of notional units outstanding was adjusted, in accordance with the plan provisions, in response to special cash dividends that were paid to stockholders.

The amount of the benefit payable to a participant, or in the case of a deceased participant, to his or her beneficiary or estate, will be equal to the number of notional plan stock units then vested in the participant’s account multiplied by the value of our stock as determined by an appraisal. Upon our becoming listed on a recognized stock exchange, the value of the shares will be the trading price of the shares on that exchange.

Settlement of these notional stock awards will be made in cash following a participant’s retirement, death, or termination of employment with us. In such event, we will pay the benefit amount to the participant or to the participant’s beneficiary or estate in a single lump sum cash payment no later then December 31 of the calendar year following the calendar year in which the employee retires, dies or terminates employment. Participants are not entitled to withdraw benefits under this plan prior to retirement, death or termination of employment.

The plan may be amended in whole or in part from time to time, or terminated, by action of the Committee. Upon termination of the plan, participants will automatically be 100% vested in their accounts and we will pay all amounts due to participants, as if their normal retirement dates were the date of termination of the plan.

As of October 15, 2004, approximately 123,628 notional units were outstanding, of which approximately 123,180 units were vested.

Knoll Retirement Savings Plan

We also sponsor a 401(k) retirement savings plan for all U.S. employees. Under this plan, participants may defer a portion of their earnings up to the annual contribution limits established by the Internal Revenue Service. We match 40.0% of participant contributions up to the first 6.0% of compensation for nonunion employees and match 50.0% of participant contributions up to the first 6.0% of compensation for union employees. For participants who are nonunion employees, the plan provides for additional employer matching based on the achievement of certain profitability goals. The plan also provides that we may make discretionary contributions of our common stock to participant accounts on behalf of all actively employed U.S. participants. However, upon retirement, death or termination of employment, participants must sell vested shares of our common stock back to the plan, and any shares that are not vested at such time are forfeited by the participant and held by the plan. Company contributions generally vest ratably over a five-year period.

Our total expense under the 401(k) plan was $2,805,000, $3,707,000, and $3,460,000 for 2003, 2002 and 2001, respectively.

We intend to maintain the qualification of the 401(k) plan under Section 401 of the internal revenue code so that contributions by employees or by us, and income earned on plan contributions, are not taxable to employees until withdrawn. Our contributions, if any, will be deducted by us when made.

65

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Stockholders Agreement

We are party to a stockholders agreement, dated November 4, 1999 and as amended on October 1, 2004, with Warburg Pincus and four current or former senior members of management, or holders. The stockholders agreement governs certain matters related to corporate governance and registration of shares of common stock, or Registrable Securities, held by such holders (other than shares acquired pursuant to the our stock incentive plans).

Pursuant to the stockholders agreement, Warburg Pincus is entitled to request at any time that we file a registration statement under the Securities Act covering the sale of shares of common stock with an aggregate public offering price of at least $25 million, subject to certain conditions. If our officers or directors holding other of our securities request inclusion of their securities in any such registration, or if holders of our securities other than Registrable Securities who are entitled, by contract with us or otherwise, to have securities included in such a registration, referred to as Other Stockholders, request such inclusion, the holders of Registrable Securities will offer to include the securities of such officers, directors and Other Stockholders in any underwriting involved in such registration, provided, among other conditions, that the underwriter representative of any such offering has the right, subject to certain conditions, to limit the number of Registrable Securities or other securities included in the registration. We may defer the registration for 120 days if we believe that it would be seriously detrimental to our and our stockholders for such registration statement to be filed.

The stockholders agreement further provides that, if we propose to register any of our securities (other than registrations related solely to employee benefit plans or pursuant to Rule 145 or on a form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities), either for our own account or for the account of other security holders, holders of Registrable Securities may require us to include all or a portion of their Registrable Securities in the registration and in any underwriting involved therein, provided, among other conditions, that the underwriter representative of any such offering has the right, subject to certain conditions, to limit the number of Registrable Securities included in the registration. In addition, after we become qualified to use Form S-3, the holders of Registrable Securities will have the right to request an unlimited number of registrations on Form S-3 to register such shares with an aggregate price to the public of more than $5 million, subject to certain conditions, provided that we will not be required to effect such a registration within 180 days of the effective date of the most recent registration pursuant to this provision. We may defer the registration for 120 days if we believe that it would be seriously detrimental to our and our stockholders for such registration statement to be filed.

In general, all fees, costs and expenses of such registrations (other than underwriting discounts and selling commissions applicable to sales of the Registrable Securities) and all fees and disbursements of counsel for the holders will be borne by us.

Stockholders Agreement (Common Stock Under Stock Incentive Plans)

We are party to an amended and restated stockholders agreement, dated November 14, 1999 and as amended on September 8, 2004, with Warburg Pincus and many of our current and former executive officers and other members of our management related to the issuance of restricted shares of our common stock pursuant to our stock incentive plans. Pursuant to this agreement, persons deemed to be “insiders” within the meaning of Section 16 of the Exchange Act have agreed not to transfer their shares except (i) to members of their immediate families and other related or controlled entities or (ii) to Warburg Pincus or an affiliate thereof. The restrictions on transfer will terminate when Warburg Pincus owns less than 10% of the outstanding shares of common stock. In addition, pursuant to this agreement, we agreed that, if we determine to register any shares of common stock for our own account or for the account of security holders, we will include in such registration certain vested shares of common stock received by management pursuant to the 1996 stock incentive plan, subject to certain

66

limited exceptions. In addition, after we become qualified to use Form S-3, management will have the right to request an unlimited number of registrations on Form S-3 to register vested shares of common stock issued under our stock plans with an aggregate price to the public of more than $5 million, subject to certain conditions, provided that we will not be required to effect such a registration within 180 days of the effective date of the most recent registration pursuant to this provision. We may defer the registration for 120 days if we believe that it would be seriously detrimental to our and our stockholders for such registration statement to be filed.

In general, all fees, costs and expenses of such registrations (other than underwriting discounts and selling commissions applicable to sales of the registrable securities) and all fees and disbursements of counsel for the holders will be borne by us.

Substantially all individuals who were granted options under our stock incentive plans have also agreed to be bound by the terms of this stockholders agreement (common stock under stock incentive plans).

Other

We paid $179,278, $297,921 and $276,844, for the nine months ended September 30, 2004, for the years ended December 31, 2003 and 2002, respectively, to Emanuela Frattini Magnusson for design services, consulting services and product royalties. The majority of the payments were made pursuant to the terms of a July 1993 design development agreement between Emanuela Frattini Magnusson and us pertaining to our PROPELLER product line. Emanuela Frattini Magnusson also provides design services to us under a June 2003 design development agreement and consulting services to Spinneybeck, our leather goods subsidiary, under a January 2004 consulting services agreement. Emanuela Frattini Magnusson is the wife of Carl G. Magnusson, our Executive Vice President and Director of Design. We believe that all of the transactions with Emanuela Frattini Magnusson are on terms that are fair to us and no less favorable to us than those that could have been obtained in a comparable transaction with an independent third party.

67

PRINCIPAL AND SELLING STOCKHOLDERS

Principal Stockholders

The following table sets forth certain information known to us regarding the beneficial ownership of our common stock as of October 15, 2004 for:

• each person known by us to beneficially own more than 5% of our common stock;

• each of our directors;

• each of our named executive officers; and

• all of our directors and executive officers as a group.

Except as indicated in the footnotes to this table and pursuant to state community property laws, each stockholder named in the table has sole voting and investment power for the shares shown as beneficially owned by them. Percentage of ownership is based on 46,295,058 shares of our common stock outstanding on October 15, 2004. Unless otherwise indicated, the address for each of the stockholders in the table below is c/o Knoll, Inc., 1235 Water Street, East Greenville, Pennsylvania 18041.

	Common Stock Beneficially Owned
Name and Address of Beneficial Owner	Number	Percent (1)
Stockholders owning approximately 5% or more:
Warburg, Pincus Ventures, L.P. (2)	41,963,912	90.6	%
Directors and Executive Officers:
Burton B. Staniar (3)	1,776,542	3.8
Andrew B. Cogan (3)	1,267,208	2.7
Kathleen G. Bradley (3)	1,427,400	3.0
Stephen A. Grover (3)	419,996	*
Arthur C. Graves (3)	241,926	*
Jeffrey A. Harris (4)	41,963,912	90.6
Sidney Lapidus (5)	41,963,912	90.6
Kewsong Lee (6)	41,963,912	90.6
Kevin Kruse	—	*
John F. Maypole (7)	—	*
Anthony P. Terracciano (8)	—	*
All directors and executive officers as a group (14 persons)	47,815,697	95.6

* Represents beneficial ownership of less than one percent of our common stock.

(1) Percentages are calculated pursuant to Rule 13d-3 under the Exchange Act. Percentage calculations assume, for each person and group, that all shares that may be acquired by such person or group pursuant to options currently exercisable or that become exercisable within 60 days following October 15, 2004 are outstanding for the purpose of computing the percentage of common stock owned by such person or group. However, those unissued shares of common stock described above are not deemed to be outstanding for calculating the percentage of common stock owned by any other person. Except as otherwise indicated, the persons in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and subject to the information contained in the footnotes to this table. The number of shares outstanding for these purposes as of October 15, 2004 was 46,295,058 shares of common stock.

(2) Includes 41,419,844 shares directly owned and 544,068 shares beneficially owned through Warburg Pincus & Co. The sole general partner of Warburg Pincus is Warburg Pincus & Co. Warburg Pincus LLC manages Warburg Pincus. The members of Warburg Pincus LLC are substantially the same as the partners of Warburg Pincus & Co. The address of Warburg Pincus entities is 466 Lexington Avenue, New York, NY 10017.

(3) Excludes options to purchase 55,092, 176,292, 55,092, 55,092, 176,292 and 578,460 shares of common stock held by Messrs. Staniar, Cogan, Graves, Grover and Ms. Bradley and all directors and executive officers as a group, respectively, that will not vest within 60 days of October 15, 2004.

68

(4) Mr. Harris, a director of Knoll, Inc., is a managing director of Warburg Pincus LLC and a general partner of Warburg Pincus & Co. All shares indicated as owned by Mr. Harris are included because of his affiliation with the Warburg Pincus entities. Mr. Harris owns no shares individually and disclaims beneficial ownership of all shares owned by the Warburg Pincus entities. His address is c/o Warburg Pincus LLC, 466 Lexington Avenue, New York, NY 10017.

(5) Mr. Lapidus, a director of Knoll, Inc., is a managing director and senior advisor of Warburg Pincus LLC and a general partner of Warburg Pincus & Co. All shares indicated as owned by Mr. Lapidus are included because of his affiliation with the Warburg Pincus entities. Mr. Lapidus owns no shares individually and disclaims beneficial ownership of all shares owned by the Warburg Pincus entities. His address is c/o Warburg Pincus LLC, 466 Lexington Avenue, New York, NY 10017.

(6) Mr. Lee, a director of Knoll, Inc., is a managing director of Warburg Pincus LLC and a general partner of Warburg Pincus & Co. All shares indicated as owned by Mr. Lee are included because of his affiliation with the Warburg Pincus entities. Mr. Lee owns no shares individually and disclaims beneficial ownership of all shares owned by the Warburg Pincus entities. His address is c/o Warburg Pincus LLC, 466 Lexington Avenue, New York, NY 10017.

(7) Excludes options to purchase 50,000 shares of common stock described in the offer letter to Mr. Maypole, the grant of which has not been approved by our board of directors.

(8) Excludes options to purchase 50,000 shares of common stock described in the offer letter to Mr. Terracciano, the grant of which has not been approved by our board of directors.

Selling Stockholders

The following table sets forth certain information with respect to the common stock held by each selling stockholder as of October 15, 2004 and as adjusted to reflect the sale of              shares by the selling stockholders in this offering.

	Beneficial Ownership Prior to Offering			Shares Being Offered(1)		Beneficial Ownership After Offering
Name	Shares	Percent(5)				Shares	Percent(5)
Warburg, Pincus Ventures, L.P.	41,963,912	90.6	%		(2)
Burton B. Staniar	1,776,592	3.8		0	(3)	1,776,542	3.8
John H. Lynch	1,694,836	3.6		0	(4)	1,694,836	3.6
Other selling stockholders	101,412	*		45,348		56,064	*

* Less than 1%.

(1) Assumes no exercise of the underwriters’ over-allotment option.

(2) Warburg Pincus has granted the underwriters a 30-day option to purchase up to              shares of common stock it holds solely to cover over-allotments, if any. In the event the over-allotment option is exercised in full, Warburg Pincus will beneficially own              shares, or         % of the common stock after the offering.

(3) Mr. Staniar has granted the underwriters a 30-day option to purchase up to              shares of common stock he holds solely to cover over-allotments, if any. In the event the over-allotment option is exercised in full, Mr. Staniar will beneficially own              shares, or         % of the common stock after the offering.

(4) Mr. Lynch has granted the underwriters a 30-day option to purchase up to              shares of common stock he holds solely to cover over-allotments, if any. In the event the over-allotment option is exercised in full, Mr. Lynch will beneficially own              shares, or         % of the common stock after the offering.

(5) Percentages are calculated pursuant to Rule 13d-3 under the Exchange Act. Percentage calculations assume, for each person and group, that all shares that may be acquired by such person or group pursuant to options currently exercisable or that become exercisable within 60 days following October 15, 2004 are outstanding for the purpose of computing the percentage of common stock owned by such person or group. However, those unissued shares of common stock described above are not deemed to be outstanding for calculating the percentage of common stock owned by any other person. Except as otherwise indicated, the persons in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and subject to the information contained in the footnotes to this table. The number of shares outstanding for these purposes as of October 15, 2004 was 46,295,058 shares of common stock.

69

DESCRIPTION OF CAPITAL STOCK

General

After this offering, our authorized capital stock will consist of 200,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $1.00 per share. As of October 15, 2004, there were 46,295,058 shares of common stock outstanding and no shares of preferred stock outstanding. As of October 15, 2004, we had 39 record holders of our common stock. Upon the closing of this offering, we will have 46,295,058 of shares of common stock and no shares of preferred stock outstanding. In addition, as of October 15, 2004, options to purchase 11,805,172 shares of our common stock were outstanding and 661,548 shares of our common stock were reserved for future grants under our stock option plans.

Common Stock

Holders of common stock are entitled to one vote per share in all matters to be voted on by our stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the outstanding shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in all assets remaining after payment of our liabilities and the liquidation preference, if any, of any outstanding preferred stock. Holders of shares of common stock have no preemptive, subscription, redemption or conversion rights. There are no redemption or sinking fund provisions applicable to our common stock. All of the outstanding shares of common stock are fully paid and non-assessable. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future.

Preferred Stock

Our board of directors has the authority, by adopting resolutions, to issue shares of preferred stock in one or more series, with the designations and preferences for each series set forth in the adopting resolutions. Our certificate of incorporation authorizes our board of directors to determine, among other things, the rights, preferences and limitations pertaining to each series of preferred stock. Our board of directors could authorize the issuance of preferred stock with terms and conditions that could discourage a takeover or other transaction that some holders of our common stock might believe to be in their best interests or in which holders of common stock might receive a premium for their shares over and above market price.

Registration Rights

Some of our stockholders have the right to require us to register common stock for resale in some circumstances. See “Certain Relationships and Related Party Transactions.”

Transfer Agent and Registrar

Our transfer agent and registrar for our common stock is EquiServe, Inc.

NYSE Listing

At present, there is no established trading market for the common stock. We have been approved to list our shares of common stock on the New York Stock Exchange under the trading symbol “KNL.”

70

DESCRIPTION OF CERTAIN INDEBTEDNESS

The following is a summary of the material provisions of the instruments evidencing our material indebtedness. It does not include all of the provisions of our material indebtedness, copies of which have been filed as exhibits of our Registration Statement filed in connection with this offering.

General. On September 30, 2004, we entered into a new credit facility. Our new credit facility with various lenders and UBS AG, Stamford Branch, as Administrative Agent, and Goldman Sachs Credit Partners L.P., as Syndication Agent, permits us to borrow an aggregate principal amount of up to $488.0 million, consisting of a $63.0 million revolving credit facility and $425.0 million term loan facility. Our revolving credit facility can be increased from $63.0 million to $75.0 million if we obtain additional commitments, which can be effected without the consent of the lenders. Our new credit facility is guaranteed by all our existing and future direct and indirect domestic subsidiaries. Our new credit facility includes a letter of credit subfacility. We used the proceeds of the term loan facility to repay our prior revolving and term loan credit facility, including accrued interest, in the aggregate amount of $355.2 million, and to fund a cash dividend of $70.6 million to our existing stockholders.

Security. Our indebtedness under our new credit facility is secured by, among other things, (i) 100% of the capital stock of each of our domestic subsidiaries and (ii) 65% of the capital stock of each of our foreign subsidiaries that are directly owned by us or by a one of our wholly owned domestic subsidiaries. In addition, the Lenders hold a first priority security interest in substantially all of our assets and properties, as well as those of our domestic subsidiaries. The lenders will release all of the collateral (other than collateral consisting of the capital stock of each of our subsidiaries) securing our new credit facility if our debt ratings reach specified levels.

Interest. Indebtedness under our new credit facility bears interest at a floating rate based, at our option, upon (i) LIBOR (the London Interbank Offered Rate) for one, two, three or six months plus 2.5% in the case of both revolving credit facility loans and plus 3.0% in the case of term loans or (ii) the greater of the federal funds rate plus 0.5% or the prime rate plus 1.5% in the case of the revolving credit facility loans and plus 2.0% in the case of term loans. In the case of the revolving credit facility, these rates are subject to change based on our ratio of funded debt to EBITDA.

Maturity. Loans made pursuant to the revolving credit facility may be borrowed, repaid and reborrowed from time to time until September 30, 2009, subject to satisfaction of certain conditions on the date of any such borrowing. No letter of credit can have an expiration date that is more than one year after the issuance date thereof or that is less than 15 days prior to the termination date of the revolving credit facility (unless cash collateralized). The loan made under the term loan facility was made in a single drawing on September 30, 2004 and will mature on September 30, 2011. The term loan facility is subject to quarterly amortization of principal, which will commence on December 31, 2004, equal to 0.25% of the original aggregate principal amount of the term loans. Our new credit facility will be permanently reduced with specified portions of the proceeds of asset sales that are not reinvested in assets useful in our business or the business of our subsidiaries within specified time periods.

Certain Fees. We are also required to pay to the lenders a commitment fee equal to 0.5% per annum on the committed undrawn amount of the revolving credit facility, subject to adjustment based upon our ratio of funded debt to EBITDA and letter of credit fees equal to the applicable margin payable on revolving credit facility loans maintained as LIBOR loans, subject to adjustment under similar circumstances.

Covenants. Our new credit facility contains two financial covenants. Compliance with these financial covenants is determined based on a calculation of adjusted EBITDA, in which certain types of income are excluded from EBITDA and certain non-recurring items are added back to EBITDA. The types of income excluded from EBITDA include income of any of our subsidiaries if such subsidiary is not able to pay dividends at that time, gains or losses attributable to sales of assets outside the ordinary course of business in excess of $2.5 million and gains and losses relating to fluctuations in currency values. The items added back to EBITDA include cash charges resulting from the refinancing that arise within six months of the closing of the refinancing,

71

non-cash charges, impairments and expenses other than depreciation and amortization, restructuring and acquisition integration costs not to exceed $10 million, extraordinary losses and cash charges incurred in connection with equity or debt financings.

One financial covenant, tested quarterly, requires that we maintain a funded debt to adjusted EBITDA ratio of no greater than 5.25 to 1 for the first fiscal quarter of our new credit facility ending on December 31, 2004 and becomes increasingly restrictive in quarter-point increments during the term of our new credit facility, requiring us to maintain a funded debt to adjusted EBITDA ratio of no greater than 3.00 to 1 for each four-fiscal quarter period ending on and after September 30, 2007. The other financial covenant, tested quarterly, requires us to maintain an adjusted EBITDA to interest ratio of at least 2.25 to 1 for the first fiscal quarter of our new credit facility ending on December 31, 2004 and becomes increasingly restrictive in quarter point increments during the term of our new credit facility, requiring us to maintain an adjusted EBITDA to interest ratio of at least 3.00 to 1 for each four-fiscal quarter period ending on and after September 30, 2007.

In addition, our new credit facility also contains covenants that limit, subject to certain exceptions, (i) the incurrence of additional indebtedness; (ii) capital expenditures in excess of a specified amount in any fiscal year with a two-year carry-over; (iii) sale/leaseback transactions; (iv) declaration or payment of dividends and stock repurchases; (v) loans to and investments in third parties; (vi) most transactions with affiliates other than on terms substantially as favorable as would be obtainable in a comparable arm’s length transaction; (vii) sales or leases of assets; (viii) acquisitions; (ix) mergers and consolidations, provided that any of our subsidiaries may be merged into one another or into us; (x) prepayments of subordinated indebtedness; (xi) liens and encumbrances; and (xii) changes to our fiscal year and other matters customarily restricted in such agreements. Our new credit facility also requires us to pledge after-acquired assets, including stock of after-acquired or formed subsidiaries, and to deliver guarantees by wholly owned domestic subsidiaries, with limited exceptions; to maintain its interest rate protection agreements for a period of not less than two years in an amount equal to 50% or more of the outstanding principal amount under our new credit facility; and to maintain insurance.

Events of Default. Our new credit facility contains standard events of default, including (i) defaults in the payment of principal or interest, (ii) defaults in the observance of covenants contained in our new credit facility and related documentation, (iii) breach of representations contained in our new credit facility and related documentation, (iv) events that cause the guarantees to cease to be in full force and effect, (v) certain bankruptcy and insolvency events with respect to us and certain of our subsidiaries, (vi) cross defaults on at least $10 million of other indebtedness of ours or any of our subsidiaries, (vii) judgments, orders or decrees entered against us or certain of our subsidiaries involving $10 million or more, (viii) certain events related to ERISA, (ix) events that cause the subordination provisions of certain subordinated debt to cease to be in full force and effect, (x) loss of liens on collateral and (xi) a change of control. After consummation of this offering, a change of control is deemed to occur if, among other events, any person or group becomes the beneficial owner of more than 40% of the voting stock, other than Warburg Pincus and our senior management, or if a majority of the seats on our board of directors are occupied by persons who were neither nominated by the board of directors nor appointed by directors so nominated.

72

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, no public market existed for our common stock. Market sales of shares of our common stock after this offering and from time to time, and the availability of shares for future sale, may reduce the market price of our common stock. Sales of substantial amounts of our common stock, or the perception that those sales could occur, could adversely affect prevailing market prices for our common stock and could impair our future ability to obtain capital, especially through an offering of equity securities.

Based on shares outstanding on             , 2004, upon completion of this offering,              shares of common stock will be outstanding. Of these outstanding shares, the              shares sold in this offering (assuming no exercise of the underwriters’ over-allotment option) will be freely tradable without restrictions or further registration under the Securities Act, unless the shares are purchased by our affiliates as that term is defined under Rule 144 under the Securities Act.

An aggregate of approximately              shares of our common stock held by existing stockholders upon completion of this offering will be “restricted securities” (as that phrase is defined in Rule 144) and may not be resold in the absence of registration under the Securities Act or pursuant to exemptions from such registration, including among others, the exemption provided by Rule 144 under the Securities Act. Except as described below, ninety days after the date of this prospectus, approximately              shares of common stock (plus              shares issuable upon exercise of then vested options) will be eligible for sale in the public market pursuant to Rule 701 under the Securities Act, of which              shares are subject to lock-up agreements described below. In addition, approximately              shares will be eligible for sale in the public market under Rule 144, subject to the volume limitations and other restrictions described below, and approximately              shares will be eligible for sale without restriction under Rule 144(k), of which              shares and              shares, respectively, are subject to lock-up agreements described below.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the effective date of this offering, a person who has beneficially owned restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, is entitled to sell a number of restricted shares within any three-month period that does not exceed the greater of (1) one percent of the number of shares of common stock then outstanding, and (2) the average weekly trading volume of our common stock on the New York Stock Exchange during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. Sales of restricted shares under Rule 144 are also subject to requirements regarding the manner of sale, notice and the availability of current public information about us. Rule 144 also provides that affiliates that sell our common stock that are not restricted shares must nonetheless comply with the same restrictions applicable to restricted shares, other than the holding period requirement.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been our affiliate at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate, may sell those shares without complying with the manner-of-sale, public information, volume limitation or notice provisions of Rule 144.

Rule 701

Under Rule 701, common stock acquired upon the exercise of currently outstanding options or pursuant to other rights granted under our stock plans may be resold, to the extent not subject to lock-up agreements, (1) by persons other than affiliates, beginning 90 days after the effective date of this offering, subject only to the manner-of-sale provisions of Rule 144, and (2) by affiliates, subject to the manner-of-sale, current public information, and filing requirements of Rule 144, in each case, without compliance with the one-year holding period requirement of Rule 144.

73

Form S-8 Registration Statements

We intend to file one or more registration statements on Form S-8 under the Securities Act following this offering to register our common stock that are issuable pursuant to our 1996 Stock Incentive Plan, 1997 Stock Incentive Plan and 1999 Stock Incentive Plan. These registration statements are expected to become effective upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets, subject to any applicable lock-up agreements and to Rule 144 limitations applicable to affiliates.

Registration Rights

Some of our securityholders have the right to require us to register common stock for resale in some circumstances. As of September 30, 2004, 46,108,058 shares of our common stock have registration rights under our stockholders agreements. See “Certain Relationships and Related Party Transactions.”

Lock-up Agreements

In connection with this offering, we and our directors, officers and stockholders who hold approximately              shares of our outstanding common stock and options to purchase shares of our common stock have agreed that, without the prior written consent of Goldman, Sachs & Co. and UBS Securities LLC on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus: offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any common stock or any securities convertible into or exercisable or exchangeable for common stock; or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock; whether any such transaction described above is to be settled by delivery of our common stock or such other securities, in cash or otherwise. These restrictions, and certain exceptions, are described in more detail under “Underwriting.”

74

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

OF OUR COMMON STOCK

The following is a general discussion of the material U.S. federal income tax consequences of the ownership and disposition of our common stock to a non-U.S. holder, but is not a complete analysis of all the potential tax consequences relating thereto. For the purposes of this discussion, a non-U.S. holder is any beneficial owner of our common stock that for U.S. federal income tax purposes is not a “U.S. person.” For purposes of this discussion, the term U.S. person means:

• an individual citizen or resident of the United States;

• a corporation or a partnership (or other entity taxable as a corporation or a partnership) created or organized in the United States or under the laws of the United States or any political subdivision thereof;

• an estate whose income is subject to U.S. federal income tax regardless of its source; or

• a trust (x) if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person.

If a partnership holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships which hold our common stock and partners in such partnerships should consult their tax advisors.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant in light of a non-U.S. holder’s special tax status or special circumstances. U.S. expatriates, insurance companies, tax-exempt organizations, dealers in securities, banks or other financial institutions, “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding companies,” corporations that accumulate earnings to avoid U.S. federal income tax and investors that hold our common stock as part of a hedge, straddle or conversion transaction are among those categories of potential investors that may be subject to special rules not covered in this discussion. This discussion does not address any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction. Furthermore, the following discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, and Treasury Regulations and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. Accordingly, each non-U.S. holder should consult its tax advisors regarding the U.S. federal, state, local and non-U.S. income and other tax consequences of acquiring, holding and disposing of shares of our common stock.

Dividends

Payments on our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted basis in the common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of the common stock.

Amounts treated as dividends paid to a non-U.S. holder of common stock generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividends or such lower rate as may be specified by an applicable tax treaty. In order to receive a reduced treaty rate, a non-U.S. holder must provide a valid Internal Revenue Service, or IRS, Form W-8BEN or other successor form certifying qualification for the reduced rate.

Dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder are exempt from such withholding tax. In order to obtain this exemption, a

75

non-U.S. holder must provide a valid IRS Form W-8ECI or other successor form properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are generally taxed at the same graduated rates applicable to U.S. persons, net of allowable deductions and credits.

In addition to the graduated tax described above, dividends received by a corporate non-U.S. holder that are effectively connected with a U.S. trade or business of such holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

A non-U.S. holder may obtain a refund of any excess amounts currently withheld if an appropriate claim for refund is filed timely with the IRS. If a non-U.S. holder holds our common stock through a foreign partnership or a foreign intermediary, the foreign partnership or foreign intermediary will also be required to comply with additional certification requirements.

Gain on Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

• the gain is effectively connected with a U.S. trade or business of the non-U.S. holder or, if a tax treaty applies, attributable to a U.S. permanent establishment maintained by such non-U.S. holder;

• the non-U.S. holder is an individual who holds his or her common stock as a capital asset (generally, an asset held for investment purposes) and who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and other conditions are met; or

• our common stock constitutes a U.S. real property interest by reason of our status as a “U.S. real property holding corporation” (a “USRPHC”) for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition or the holder’s holding period for our common stock.

We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, as long as our common stock is regularly traded on an established securities market, however, such common stock will be treated as U.S. real property interests only if the non-U.S. holder actually or constructively held more than 5 percent of such regularly traded common stock.

Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to the U.S. federal income tax imposed on net income on the same basis that applies to U.S. persons generally and, for corporate holders under certain circumstances, the branch profits tax, but will generally not be subject to withholding, provided any certification requirements are met. Gain described in the second bullet point above (which may be offset by U.S. source capital losses) will be subject to a flat 30% U.S. federal income tax. Non-U.S. holders should consult any applicable income tax treaties that may provide for different rules.

Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld, together with other information. A similar report is sent to the holder. These information reporting requirements apply even if withholding was not required because the dividends were effectively connected dividends or withholding could have been reduced or eliminated by an applicable tax treaty. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the recipient’s country of residence.

76

Backup withholding (currently at a rate of 28%) will generally not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. holder of our common stock if the holder has provided the certification described above that it is not a U.S. person or has otherwise established an exemption.

Payments of the proceeds from a disposition effected outside the United States by a non-U.S. holder of our common stock made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) will apply to such a payment if the broker is a U.S. person, a controlled foreign corporation for U.S. federal income tax purposes, a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period, or a foreign partnership if (1) at any time during its tax year, one or more of its partners are U.S. persons who, in the aggregate hold more than 50 percent of the income or capital interest in such partnership or (2) at any time during its tax year, it is engaged in the conduct of a trade or business in the United States, unless in any such case the broker has documentary evidence that the beneficial owner is a non-U.S. holder and specified conditions are met or an exemption is otherwise established.

Payment of the proceeds from a disposition by a non-U.S. holder of common stock made by or through the U.S. office of a broker is generally subject to information reporting and backup withholding unless the non-U.S. holder certifies as to its non-U.S. holder status under penalties of perjury or otherwise establishes an exemption from information reporting and backup withholding.

Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability provided the required information is furnished timely to the IRS.

77

UNDERWRITING

Knoll, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., UBS Securities LLC, Banc of America Securities LLC, J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are the representatives of the underwriters.

Underwriters	Number of Shares
Goldman, Sachs & Co.
UBS Securities LLC
Banc of America Securities LLC
J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith                  Incorporated
Total

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional              shares from the selling stockholders to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase              additional shares.

Paid by the Selling Stockholders
	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $             per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $             per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

We and all of our officers, directors and principal stockholders, including the selling stockholders, have agreed with the underwriters not to dispose of or hedge any shares of our common stock or securities convertible into or exchangeable for shares of our common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co. and UBS Securities LLC. Additionally, shares subject to a lock-up may be transferred by bona fide gift, or to a trust for the benefit of the party granting the lock-up so long as the trustee is bound by the terms of the lock-up and such transfer is not a disposition for value. The lock-up does not apply to sales to the underwriters or certain de minimis repurchases by us. The parties granting the lock-up may also establish a Rule 10b5-1 trading plan, so long as such plan does not transfer any shares during the lock-up period. This agreement does not apply to any existing employee benefit plans. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

78

Prior to the offering, there has been no public market for the shares. The initial public offering price has been determined by negotiations between representatives of the underwriters and Warburg Pincus. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We have been approved to list the common stock on the New York Stock Exchange under the symbol “KNL.” In order to meet one of the requirements for listing the common stock on the NYSE, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 2,000 beneficial holders.

In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from the selling stockholders in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the New York Stock Exchange in the over-the-counter market or otherwise.

Each underwriter has represented, warranted and agreed that: (i) it has not offered or sold and, prior to the expiry of a period of six months from the closing date of this offering, will not offer or sell any shares to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of any shares in circumstances in which section 21(1) of the FSMA does not apply to Knoll; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

The shares may not be offered or sold, transferred or delivered, as part of their initial distribution or at any time thereafter, directly or indirectly, to any individual or legal entity in the Netherlands other than to individuals

79

or legal entities who or which trade or invest in securities in the conduct of their profession or trade, which includes banks, securities intermediaries, insurance companies, pension funds, other institutional investors and commercial enterprises which, as an ancillary activity, regularly trade or invest in securities.

The shares may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation or subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than under circumstances in which such offer, sale or invitation does not constitute an offer or sale, or invitation for subscription or purchase, of the securities to the public in Singapore.

The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the Securities and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

A prospectus in electronic format will be made available on the website maintained by one or more of the lead managers of this offering and may also be made available on websites maintained by other underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the lead managers to underwriters that may make Internet distributions on the same basis as other allocations.

At our request, the underwriters have reserved, at the initial offering price, up to              shares offered hereby for sale to our directors, officers, employees, business associates, and related persons. The number of shares of common stock available for sale to the general public will be reduced to the extent such persons purchase the reserved shares. Any reserved shares which are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered hereby. UBS Financial Services, Inc., an affiliate of UBS Securities LLC, will act as plan administrator for such plan.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

We and the selling stockholders estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $            .

We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us and for Warburg Pincus or its affiliates, for which they have received or will receive customary fees and expenses. Certain affiliates of the underwriters have acted as arrangers, agents and lenders in connection with our new credit facility.

80

VALIDITY OF SECURITIES

The validity of our common stock offered by this prospectus will be passed upon for us by Willkie Farr & Gallagher LLP, New York, New York. The validity of the common stock offered by this prospectus will be passed upon for the underwriters by Latham & Watkins LLP, New York, New York.

EXPERTS

The consolidated financial statements and schedule of Knoll, Inc. at December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, appearing in the prospectus and registration statement, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Ernst & Young LLP, our independent registered public accounting firm, has recently notified our board of directors that certain of its affiliates had performed non-audit services in China and South Korea for an entity that may be deemed to be affiliated with our principal stockholder which were not in accordance with the auditor independence standards of Regulation S-X and the Public Company Accounting Oversight Board, or the PCAOB.

During fiscal years 2001, 2002 and 2003, Ernst & Young performed tax and payroll services for the affiliate of our principal stockholder. Ernst & Young’s affiliated firms in China and South Korea made payment of the relevant taxes and payrolls on behalf of the affiliate. The payment of those taxes and payrolls involved the handling of the affiliate’s tax and payroll related funds. Ernst & Young’s fees for these services were an aggregate of approximately $190,000 for the three year period. Total disbursements made by Ernst & Young in China and South Korea for the affiliate were approximately $9.6 million for the three year period. The services have been discontinued. Ernst & Young and the audit committee of the affiliate have concluded that the provision of such services has not impaired the independence of Ernst & Young with respect to the affiliate.

Our board of directors and Ernst & Young have separately considered the impact that providing these non-audit services may have had on Ernst & Young’s independence with respect to us. Our board of directors, on November     , 2004, and Ernst & Young have each concluded there has been no impairment of Ernst & Young’s independence. In making this determination, both our board of directors and Ernst & Young considered, among other things, that the services were provided to the affiliate and not to us or any of our subsidiaries, the ministerial nature of the services provided and the de minimis amount of the fees involved.

In addition, on November     , 2004, Ernst & Young issued its independence letter to our board of directors pursuant to Rule 3600T of the PCAOB, which adopts on an interim basis the Independence Standards Board’s Standard No. 1. That letter reported that Ernst & Young satisfies the auditor independence standards of Regulation S-X in connection with its audit opinion for the financial statements contained in this prospectus.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the shares we are offering by this prospectus. You should refer to the registration statement and its exhibits for additional information that is not contained in this prospectus. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC.

You can read our SEC filings, including this registration statement (File No. 333-118901), over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any documents we file with the SEC at its public reference facilities at 450 Fifth Street, N.W., Judiciary Plaza, Washington D.C. 20549. You also may obtain copies of the documents at prescribed rates by writing to the Public Reference Room of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

81

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

KNOLL, INC.

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements:
Consolidated Balance Sheets at December 31, 2003 and 2002	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002, and 2001	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2003, 2002, and 2001	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001	F-6
Notes to the Consolidated Financial Statements	F-7
Unaudited Interim Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2003 and September 30, 2004	F-28
Consolidated Statements of Operations for the Nine Months Ended September 30, 2004 and 2003	F-29
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003	F-30
Notes to the Unaudited Interim Consolidated Financial Statements	F-31

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Knoll, Inc.

We have audited the accompanying consolidated balance sheets of Knoll, Inc. as of December 31, 2003 and 2002, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Knoll, Inc. at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2002, the Company changed its method of accounting for goodwill and other indefinite-lived intangible assets.

/s/    ERNST & YOUNG LLP

Philadelphia, Pennsylvania

January 30, 2004, except for the first and second paragraphs of Note 22, as to which the dates are March 30, 2004 and November 14, 2004, respectively

F-2

KNOLL, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

(dollars in thousands, except per share data)

	2003			2002
ASSETS
Current assets:
Cash and cash equivalents	$	11,517		$	12,873
Customer receivables, net		91,271			91,687
Inventories		38,354			47,882
Deferred income taxes		14,338			18,121
Prepaid and other current assets		5,702			11,723
Total current assets		161,182			182,286
Property, plant, and equipment, net		154,653			165,504
Goodwill, net		45,101			43,782
Intangible assets, net		190,365			191,861
Other non-trade receivables		5,602			5,164
Other noncurrent assets		4,098			1,754
Total Assets	$	561,001		$	590,351
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt	$	81,340		$	63,824
Accounts payable		54,502			56,785
Income taxes payable		—			2,369
Other current liabilities		53,578			73,727
Total current liabilities		189,420			196,705
Long-term debt		299,531			388,218
Deferred income taxes		39,908			31,483
Postretirement benefits other than pension		21,149			20,028
Pension liability		8,768			5,090
International retirement obligation		5,313			4,165
Other noncurrent liabilities		5,031			7,785
Total liabilities		569,120			653,474
Stockholders’ deficit:
Common stock, $0.01 par value; authorized 100,000,000 shares; 46,306,858 shares issued and outstanding (net of 105,400 treasury shares) in 2003 and 46,336,058 shares issued and outstanding (net of 76,200 treasury shares) in 2002		463			463
Additional paid-in capital		1,937			2,463
Accumulated deficit		(12,068	)		(48,417	)
Accumulated other comprehensive income (loss)		1,549			(17,632	)
Total stockholders’ deficit		(8,119	)		(63,123	)
Total Liabilities and Stockholders’ Deficit	$	561,001		$	590,351

See accompanying notes to the consolidated financial statements.

F-3

KNOLL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

(dollars in thousands, except per share data)

	2003			2002		2001
Sales	$	697,246		$	773,263	$	985,388
Cost of sales		460,911			492,902		594,446
Gross profit		236,335			280,361		390,942
Selling, general, and administrative expenses		149,739			156,314		195,532
Restructuring charge (Note 13)		—			—		1,655
Operating income		86,596			124,047		193,755
Interest expense		20,229			26,541		42,101
Other (expense) income, net		(2,473	)		2,933		(3,670	)
Income before income tax expense		63,894			100,439		147,984
Income tax expense		27,545			40,667		60,794
Net income	$	36,349		$	59,772	$	87,190
Earnings per share:
Basic	$	.78		$	1.29	$	1.88
Diluted	$	.75		$	1.23	$	1.80
Weighted-average shares outstanding:
Basic		46,317,530			46,345,714		46,285,108
Diluted		48,414,374			48,474,648		48,395,074

See accompanying notes to the consolidated financial statements.

F-4

KNOLL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

(dollars in thousands, except per share data)

	Common Stock		Additional Paid-In Capital			Unearned Stock Grant Compensation			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity (Deficit)
Balance at January 1, 2001 (46,387,258 shares)	$	463	$	3,360		$	(2	)	$	(195,379	)	$	(12,817	)	$	(204,375	)
Net income		—		—			—			87,190			—			87,190
Foreign currency translation adjustment		—		—			—			—			(4,732	)		(4,732	)
Comprehensive income																82,458
Purchase of common stock (23,600 shares)		—		(403	)		—			—			—			(403	)
Earned stock grant compensation		—		—			2			—			—			2
Balance at December 31, 2001	$	463	$	2,975		$	—		$	(108,189	)	$	(17,549	)	$	(122,318	)
Net income		—		—			—			59,772			—			59,772
Foreign currency translation adjustment		—		—			—			—			2,568			2,568
Minimum pension liability (net of income tax effect of $1,766)		—		—			—			—			(2,651	)		(2,651	)
Comprehensive income																59,689
Purchase of common stock (27,600 shares)		—		(494	)		—			—			—			(494	)
Balance at December 31, 2002	$	463	$	2,463		$	—		$	(48,417	)	$	(17,632	)	$	(63,123	)
Net income		—		—			—			36,349			—			36,349
Foreign currency translation adjustment		—		—			—			—			18,980			18,980
Minimum pension liability (net of income tax effect of $133)		—		—			—			—			201			201
Comprehensive income																55,530
Purchase of common stock (29,200 shares)		—		(526	)		—			—			—			(526	)
Balance at December 31, 2003 (46,306,858 shares)	$	463	$	1,937		$	—		$	(12,068	)	$	1,549		$	(8,119	)

See accompanying notes to the consolidated financial statements.

F-5

KNOLL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

(in thousands)

	2003			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	36,349		$	59,772		$	87,190
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		28,217			28,768			27,735
Amortization of intangible assets		1,382			1,424			8,228
Loss on early extinguishment of debt		1,151			1,940			—
Proceeds from settlement of foreign currency contracts		1,484			—			—
Foreign currency loss (gain)		6,509			27			(2,593	)
Proceeds from termination of interest rate swap agreements		4,770			—			—
Other noncash items		(6,388	)		(4,690	)		7,895
Changes in assets and liabilities:
Customer receivables		3,117			9,832			32,019
Inventories		11,505			13,404			18,150
Accounts payable		(5,132	)		(4,014	)		(25,766	)
Current and deferred income taxes		1,217			10,462			757
Other current assets		920			(1,493	)		993
Other current liabilities		(15,894	)		(23,501	)		(22,780	)
Other noncurrent assets and liabilities		9,768			3,435			2,319
Cash provided by operating activities		78,975			95,366			134,147
CASH FLOWS FOR INVESTING ACTIVITIES
Capital expenditures		(9,722	)		(18,114	)		(25,020	)
Proceeds from sale of assets		235			37			71
Purchase of license agreement		(630	)		—			—
Cash used in investing activities		(10,117	)		(18,077	)		(24,949	)
CASH FLOWS FOR FINANCING ACTIVITIES
Proceeds from revolving credit facility, net		49,750			7,000			153,000
Repayment of long-term debt		(121,086	)		(102,570	)		(31,250	)
Payment of dividend		—			—			(220,339	)
Purchase of common stock		(526	)		(494	)		(403	)
Premium paid for early extinguishment of debt		(1,037	)		(1,813	)		—
Cash used in financing activities		(72,899	)		(97,877	)		(98,992	)
Effect of exchange rate changes on cash and cash equivalents		2,685			1,248			(332	)
(Decrease) increase in cash and cash equivalents		(1,356	)		(19,340	)		9,874
Cash and cash equivalents at beginning of year		12,873			32,213			22,339
Cash and cash equivalents at end of year	$	11,517		$	12,873		$	32,213

See accompanying notes to the consolidated financial statements.

F-6

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003

1. NATURE OF OPERATIONS

Knoll, Inc. and its subsidiaries (the “Company” or “Knoll”) are engaged in the design, manufacture and sale of office furniture products and accessories, focusing on the middle to high-end segments of the contract furniture market. The Company has operations in the United States (“U.S.”), Canada and Europe and sells its products primarily through its direct sales representatives and independent dealers.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Knoll, Inc. and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

The results of the European subsidiaries are reported and included in the consolidated financial statements on a one-month lag to allow for the timely presentation of consolidated information. The effect of this presentation is not material to the financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and highly liquid investments with maturities of three months or less at the date of purchase.

Revenue Recognition and Accounts Receivable

Revenue from the sale of products is recognized upon transfer of title to the client, which occurs at the time of shipment.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients and dealers to make required payments. The allowance is determined through an analysis of the aging of accounts receivable and assessments of risk that are based on historical trends and an evaluation of the impact of current and projected economic conditions. The Company evaluates the past-due status of its trade receivables based on contractual terms of sale. If the financial condition of the Company’s clients and dealers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method.

Property, Plant, Equipment and Depreciation

Property, plant, and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows: 45 years for buildings and 3 to 12 years for machinery and equipment.

Intangible Assets

Intangible assets consist of goodwill, trademarks and deferred financing fees. Goodwill is recorded at the amount by which cost exceeds the net assets of acquired businesses, and all other intangible assets are recorded at cost.

F-7

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company adopted Statements of Financial Accounting Standards No. 141, “Business Combinations” (“SFAS 141”) and No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), on January 1, 2002. The adoption of these statements did not result in any changes to the classification of the Company’s goodwill and other intangible assets. Effective January 1, 2002, the Company assigned an indefinite useful life to its trademarks and discontinued the amortization of both its goodwill and trademarks. The following table sets forth a reconciliation of reported net income to net income adjusted to exclude amortization expense recognized during the year ended December 31, 2001 for goodwill and trademarks:

	Twelve Months Ended December 31, 2001
	(in thousands except per share data)
Reported net income	$	87,190
Add back:
Goodwill amortization, net of tax benefit of $185		1,099
Trademark amortization, net of tax benefit of $2,189		3,309
Adjusted net income	$	91,598
Adjusted earnings per share – basic	$	1.98
Adjusted earnings per share – diluted	$	1.89

The Company completed the transitional impairment test of its trademarks as of January 1, 2002. The fair value of the trademarks was estimated using a discounted cash flow method. No impairment of the trademarks was determined to exist at January 1, 2002. The annual impairment test of trademarks is completed as of October 1 of each year. It was determined that no impairment existed based on the annual impairment tests for 2003 and 2002.

The Company has identified North America and Europe as its two reporting units and all of the Company’s goodwill is in North America. The Company completed its transitional goodwill impairment test as of January 1, 2002 and its annual impairment tests as of October 1, 2003 and 2002. The first step of the goodwill impairment test was performed, as prescribed by SFAS 142, to identify potential impairment. This first step included estimating the fair value of the reporting unit to which the Company’s goodwill is attributable and comparing that fair value to the carrying amount of the reporting unit. Fair value was estimated using discounted cash flows and comparable company market multiples. Step one yielded a fair value that exceeded the carrying amount of each reporting unit. As a result, goodwill was considered not impaired.

The Company continues to amortize its deferred financing fees over the life of the respective debt. The gross carrying amount and related accumulated amortization of these fees were as follows:

	2003			2002
	(in thousands)
Gross carrying amount	$	8,098		$	8,337
Accumulated amortization		(5,564	)		(4,307	)
Net amount	$	2,534		$	4,030

As further discussed in Note 8, the Company redeemed the remaining principal amount of its 10.875% Senior Subordinated Notes during 2003. As a result, $114,000 was written off for the related deferred financing fees net of approximately $125,000 of accumulated amortization. The Company recorded expense of approximately $1.4 million for the years ended December 31, 2003, 2002, and 2001 in connection with

F-8

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

amortizing its deferred financing fees. This amortization expense was recorded as a component of interest expense. The Company estimates that it will record amortization expense of $1.4 million in 2004 and $1.1 million in 2005.

Shipping and Handling

Amounts billed to clients for shipping and handling of products are classified as sales in the consolidated statements of operations. Costs incurred by the Company for shipping and handling are classified as cost of sales.

Research and Development Costs

Research and development expenses, which are expensed as incurred, were $9.3 million for 2003, $9.7 million for 2002, and $10.4 million for 2001.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

Derivative Financial Instruments

The Company adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”), on January 1, 2001. The adoption of SFAS 133 did not have a material effect on the earnings or financial position of the Company. On the date a derivative instrument is entered into, the Company designates the derivative as (i) a fair value hedge, (ii) a cash flow hedge, (iii) a hedge of a net investment in a foreign operation, or (iv) a risk management instrument not eligible for hedge accounting. The Company recognizes all derivatives on the consolidated balance sheet at fair value. All derivatives in effect during 2003, 2002 and 2001 were classified as risk management instruments not eligible for hedge accounting. Changes in the fair value of derivatives classified as risk management instruments not eligible for hedge accounting are reported in earnings in the period the value of the contract changes.

Foreign Currency Translation

Results of foreign operations are translated into U.S. dollars using average exchange rates during the period, while assets and liabilities are translated into U.S. dollars using exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss). As of December 31, 2003 and 2002, the accumulated foreign currency translation adjustments included in other comprehensive income (loss) amounted to $3,999,000 and $(14,981,000), respectively.

Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency are included in income in the year in which the change occurs.

Stock-Based Compensation

At December 31, 2003, the Company has three stock incentive plans, which are described more fully in Note 18. Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), encourages entities to record compensation expense for stock-based employee compensation

F-9

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

plans at fair value but provides the option of measuring compensation expense using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). The Company accounts for stock-based compensation in accordance with APB 25. No stock-based employee compensation cost related to the three stock incentive plans is reflected in net income, as all options granted under those plans had an exercise price equal to the fair value of the underlying common stock on the date of grant.

The following table illustrates the effect on net income if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation.

	Twelve Months Ended December 31,
	2003			2002			2001
	(in thousands except per share data)
Net income, as reported	$	36,349		$	59,772		$	87,190
Deduct:
Total stock-based employee compensation expense determined under fair-value-based method, net of related tax effects		(2,230	)		(4,078	)		(4,240	)
As adjusted net income	$	34,119		$	55,694		$	82,950
Earnings per share:
Basic – as reported	$	.78		$	1.29		$	1.88
Diluted – as reported	$	.75		$	1.23		$	1.80
Basic – as adjusted	$	.74		$	1.20		$	1.79
Diluted – as adjusted	$	.70		$	1.15		$	1.71

The weighted average per share fair value of options was $5.23 for 2002 grants and $5.18 for 2001 grants. There were no options granted in 2003.

The fair value of the options and stock purchase rights was estimated at the date of grant using (i) a Black-Scholes option pricing model for grants made prior to March 24, 1999 and (ii) a minimum value method for grants made on or subsequent to March 24, 1999. The following assumptions were used for the Black-Scholes model in 1999: risk-free interest rate of 6.5%, dividend yield of zero, expected volatility of the market price of the common stock of 35.0% and weighted average expected lives of 7 years for the options and 3 months for the stock purchase rights. Under the minimum value method, the Company used the following assumptions: risk-free interest rate of 4.9% in 2002 and 5.1% in 2001; dividend yield of zero in 2002 and 2001; and weighted average expected lives of 7 years in 2002 and 2001. Volatility was not considered under the minimum value method. The estimated fair value of the options was amortized to expense over the vesting period of the options for purposes of determining as adjusted net income.

F-10

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive (loss) income, net of tax are as follows (in thousands):

	Beginning Balance			Before-Tax Amount			Tax Benefit (Expense)			Net-of-Tax Amount			Ending Balance
December 31, 2001
Minimum pension liability	$	—		$	—		$	—		$	—		$	—
Foreign currency translation adjustment		(12,817	)		(4,732	)		—			(4,732	)		(17,549	)
Accumulated other comprehensive (loss) income, net of tax	$	(12,817	)	$	(4,732	)	$	—		$	(4,732	)	$	(17,549	)
December 31, 2002
Minimum pension liability	$	—		$	(4,417	)	$	1,766		$	(2,651	)	$	(2,651	)
Foreign currency translation adjustment		(17,549	)		2,668			—			2,568			(14,981	)
Accumulated other comprehensive (loss) income, net of tax	$	(17,549	)	$	(1,849	)	$	1,766		$	(83	)	$	(17,632	)
December 31, 2003
Minimum pension liability	$	(2.651	)	$	334		$	(133	)	$	201		$	(2,450	)
Foreign currency translation adjustment		(14,981	)		18,980			—			18,980			3,999
Accumulated other comprehensive (loss) income, net of tax	$	(17,632	)	$	19,314		$	(133	)	$	19,181		$	1,549

Earnings per Share

Basic earnings per share excludes the dilutive effect of common shares that could potentially be issued, due to the exercise of stock options, and is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share includes the effect of shares and potential shares issued under the stock incentive plans.

	Twelve Months Ended December 31,
	2003	2002	2001
	(in thousands)
Weighted average shares of common stock outstanding – basic	46,318	46,346	46,286
Assumed exercise of stock options, net of shares assumed reacquired	2,096	2,128	2,108
Weighted average common shares – diluted	48,414	48,474	48,394

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses and the disclosure of certain contingent assets and liabilities. Actual results may differ from such estimates.

New Accounting Pronouncement

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). FIN 46 introduces a new consolidation model that determines control (and consolidation) based on

F-11

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

potential variability in gains and losses of the entity being evaluated for consolidation. This new model for consolidation applies to an entity in which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In December 2003, the FASB issued FIN 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN 46-R”) to address certain FIN 46 implementation issues. The consolidation requirements apply immediately to variable interest entities created after January 31, 2003, and apply to all other variable interest entities in the first interim period ending after March 15, 2004. The consolidation requirements will not have a material effect on our financial statements.

3. CUSTOMER RECEIVABLES

Customer receivables are presented net of an allowance for doubtful accounts of $7,468,000 and $7,790,000 at December 31, 2003 and 2002, respectively. Management performs ongoing credit evaluations of its clients and generally does not require collateral. As of December 31, 2003 and 2002, the U.S. government represented approximately 23.2% and 23.1%, respectively, of gross customer receivables.

4. INVENTORIES

	2003		2002
	(in thousands)
Raw materials	$	20,125	$	25,176
Work in process		5,893		6,212
Finished goods		12,336		16,494
Inventories	$	38,354	$	47,882

Inventory reserves for obsolescence and other estimated losses were $6,559 and $6,953 at December 31, 2003 and 2002, respectively.

5. PROPERTY, PLANT, AND EQUIPMENT

	2003			2002
	(in thousands)
Land and buildings	$	80,334		$	75,303
Machinery and equipment		268,942			249,025
Construction in progress		5,784			10,071
Property, plant and equipment		355,060			334,399
Accumulated depreciation		(200,407	)		(168,895	)
Property, plant and equipment, net	$	154,653		$	165,504

6. INTANGIBLE ASSETS

Information regarding the Company’s goodwill and other intangible assets follow (in thousands):

	2003							2002
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Unamortizable intangible assets:
Goodwill	$	53,351	$	(8,250	)	$	45,101	$	51,763	$	(7,981	)	$	43,782
Trademarks		219,900		(32,069	)		187,831		219,900		(32,069	)		187,831
Amortizable intangible assets:
Deferred financing fees		8,098		(5,564	)		2,534		8,337		(4,307	)		4,030
Total	$	281,349	$	(45,883	)	$	235,466	$	280,000	$	(44,357	)	$	235,643

F-12

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The changes in the carrying amount of goodwill are as follows (in thousands):

	2003							2002
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Balance at beginning of year	$	51,763	$	(7,981	)	$	43,782	$	51,664	$	(7,972	)	$	43,692
Foreign currency translation gain		1,588		(269	)		1,319		99		(9	)		90
Balance at end of year	$	53,351	$	(8,250	)	$	45,101	$	51,763	$	(7,981	)	$	43,782

7. OTHER CURRENT LIABILITIES

	2003		2002
	(in thousands)
Accrued employee compensation	$	23,160	$	27,225
Accrued product warranty		5,647		7,110
Accrued pension costs		6,251		8,055
Accrued group insurance		3,207		3,625
Accrued freight		2,808		2,569
Other		12,505		25,143
Other current liabilities	$	53,578	$	73,727

8. INDEBTEDNESS

The Company’s long-term debt is summarized as follows:

	2003			2002
	(in thousands)
10.875% Senior Subordinated Notes	$	—		$	57,250
Term loans, variable rate (2.515% at December 31, 2003 and 2.545% at December 31, 2002), due through 2005		156,250			220,000
Revolving loans, variable rate (2.515% – 4.375% at December 31, 2003 and 2.545% – 4.25% at December 31, 2002), due 2005		223,750			174,000
Other		871			792
		380,871			452,042
Less current maturities		(81,340	)		(63,824	)
Long-term debt	$	299,531		$	388,218

Senior Subordinated Notes

On March 28, 2003, the Company redeemed the remaining principal amount ($57,250,000) of its 10.875% Senior Subordinated Notes due 2006 at a redemption price of 101.812% of principal amount, plus accrued interest. The redemption was funded with borrowings under the senior revolving credit facility. The Company recorded a loss on the early extinguishment of debt of $1,151,000.

On April 30, 2002, the Company redeemed $50,000,000 aggregate principal amount of the Senior Subordinated Notes at 103.625% of principal amount. The Company recorded a loss on the early extinguishment of debt of $1,940,000.

F-13

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In accordance with Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,” effective for fiscal years beginning after May 15, 2002, losses on extinguishments of debt no longer qualify for classification as an extraordinary item. These amounts have been included in other income (expense) on the consolidated statement of operations. The 2002 amounts have been reclassified to conform to the 2003 presentation.

Term and Revolving Loans

The Company has a senior credit agreement with a group of banks that includes a term-loan facility and a $325,000,000 revolving credit facility. The senior credit agreement contains a letter of credit subfacility that allows for the issuance of up to $25,000,000 in letters of credit and a swing-line loan subfacility that allows for the issuance of up to $10,000,000 in swing-line loans. The amount available for borrowing under the revolving credit facility is reduced by the total outstanding letters of credit and swing-line loans. At December 31, 2003, the Company had $5,038,000 of letters of credit outstanding, borrowings of $223,750,000 under the revolving credit facility and approximately $96,212,000 available for borrowing under the revolving credit facility. The letters of credit have expiration dates of May 30, 2004 and December 31, 2004 with auto-renew provisions, and one expires October 31, 2004.

The Company pays a commitment fee, depending on the Company’s leverage ratio, ranging from 0.175% to 0.50%, on the unused portion of the revolving credit facility. In addition, the Company is required to pay a letter of credit fee ranging from 0.625% to 1.625%, depending on the Company’s ratio of funded debt to earnings before income taxes, depreciation, amortization and other noncash charges (“EBITDA”), and an issuing lender fee equal to 0.25% on the amount available to be drawn under letters of credit. As of December 31, 2003, the commitment and letter of credit fees applicable to the Company were 0.375% and 1.375%, respectively.

Borrowings under the agreement bear interest at a floating rate based, at the Company’s option, upon (i) the Eurodollar rate (as defined therein) plus an applicable percentage that is subject to change based upon the Company’s ratio of funded debt to EBITDA or (ii) the greater of the federal funds rate plus 0.5% or the prime rate, plus an applicable percentage that is subject to change based upon the Company’s ratio of funded debt to EBITDA. The Company is required to make quarterly principal payments under the term loan facility of $18,750,000 through September 2004 increasing to $25,000,000 through September 2005. The revolving credit facility allows the Company to borrow, repay, and reborrow funds from time to time until November 4, 2005.

The agreement is secured by substantially all of the Company’s present and future domestic assets, 100% of the capital stock of the Company’s present and future domestic subsidiaries and 65% of the capital stock of the Company’s present and future foreign subsidiaries. Additionally, all borrowings are jointly and severally, unconditionally guaranteed by the Company’s existing and future domestic subsidiaries. However, if the Company is unable to satisfy all or any portion of its obligations with respect to the credit agreement, it is unlikely that the guarantors will be able to pay all or any portion of such unsatisfied obligations.

The credit agreement subjects the Company to various affirmative and negative covenants. Among other things, the covenants limit the Company’s ability to incur additional indebtedness, declare or pay dividends and purchase Company stock and require the Company to maintain certain financial ratios with respect to funded debt leverage and interest coverage. The Company was in compliance with the credit agreement covenants at December 31, 2003. See Note 10 for further discussion of interest rate protection agreements.

The Company also has several revolving credit agreements with various European financial institutions. These credit agreements provide credit primarily for overdraft and working capital purposes. As of December 31, 2003, total credit available under such agreements was approximately $10,251,000. There is

F-14

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

currently no expiration date on these agreements. The interest rate on borrowings is variable and is based on the monetary market rate that is linked to each country’s prime rate. As of December 31, 2003, the Company did not have any outstanding borrowings under the European credit facilities.

Interest Paid

During 2003, 2002 and 2001, the Company made interest payments including amounts paid related to the Company’s interest rate collar and swap agreements totaling $20,606,000, $26,577,000, and $40,202,000, respectively.

Maturities

Aggregate maturities of the Company’s indebtedness as of December 31, 2003 are as follows (in thousands):

2004	$	81,340
2005		298,847
2006		102
2007		106
2008		110
Subsequent years		366
	$	380,871

9. PREFERRED STOCK

The Company’s Certificate of Incorporation authorizes the issuance of 10,000,000 shares of preferred stock with a par value of $1.00 per share. 1,920,000 of these shares are designated as Series A 12% Participating Convertible Preferred Stock, of which 1,602,998 shares have been retired and canceled and 317,002 shares remain eligible to be issued. Subject to applicable laws, the Board of Directors is authorized to provide for the issuance of preferred shares in one or more series, for such consideration and with designations, powers, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions thereof, as shall be determined by the Board of Directors. There is no Preferred Stock outstanding as of December 31, 2003 and 2002.

10. DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Collar and Swap Agreements

The Company uses interest rate collar agreements to manage its exposure to fluctuations in interest rates on its variable-rate debt. Such agreements effectively set agreed-upon maximum and minimum rates on a notional principal amount and utilize the London Interbank Offered Rate (“LIBOR”) as a variable-rate reference. Changes in the fair value of interest rate collar agreements are reported in earnings in the period the value of the contract changes. The net amount paid or received upon quarterly settlements is recorded as an adjustment to interest expense, while the change in fair value is recorded as a component of other income (expense).

In February 2001, the Company negotiated modifications to its existing interest rate collar agreements that increased the aggregate notional principal amount from $135.0 million to $200.0 million, decreased the weighted average minimum rate from 5.64% to 5.12%, and extended the termination date to February 2004.

F-15

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In May 2002, the Company entered into two interest rate swap agreements that effectively convert the fixed rate floor on the Company’s interest rate collar agreements to a floating rate of interest. Under the interest rate swap agreements, the Company received a fixed rate of interest of 5.12% and paid a variable rate of interest equal to the three-month LIBOR, as determined on the last day of each quarterly settlement period, plus 1.35% on an aggregate notional principal amount of $200.0 million. On March 11, 2003, the Company terminated its two interest rate swap agreements for cash proceeds of $4,770,000, recognizing a loss of $758,000.

The aggregate fair market value of the interest rate collars from the Company’s perspective as of December 31, 2003 was ($2.1 million), all of which was included in other current liabilities in the Company’s consolidated balance sheet as of December 31, 2003. During 2003, the Company recognized an aggregate net gain related to the agreements of $720 thousand, of which $6.56 million was recorded as interest expense and $7.28 million was recorded as a component of other income in the Company’s consolidated statement of operations. The aggregate fair value of the interest rate collar and swap agreements from the Company’s perspective as of December 31, 2002 was ($3.7 million), of which $7.7 million was recorded as a current liability, $5.7 million was recorded as a current asset and $1.7 million was recorded as a noncurrent liability in the Company’s consolidated balance sheet as of December 31, 2002. During 2002, the Company recognized an aggregate net gain related to these agreements of $.5 million, of which $4.4 million was recorded as interest expense and $4.9 million was recorded as a component of other income in the Company’s consolidated statement of operations.

The Company will continue to review its exposure to interest rate fluctuations and evaluate whether it should manage such exposure through derivative transactions.

Foreign Currency Contracts

From time to time, the Company enters into foreign currency forward exchange contracts and foreign currency option contracts to manage its exposure to foreign exchange rates associated with short-term operating receivables of a Canadian subsidiary that are payable by the U.S. operations. The terms of these contracts are generally less than a year. Changes in the fair value of such contracts are reported in earnings in the period the value of the contract changes. The net gain or loss upon settlement and the remaining change in fair value is recorded as a component of other income (expense).

The aggregate fair market value of the foreign currency option contract outstanding at December 31, 2003 was $200 thousand, all of which was included in prepaid and other current assets in the Company’s consolidated balance sheet as of December 31, 2003. During 2003, the Company recognized a corresponding net gain related to the agreement. The Company also realized a net gain of $1.5 million related to agreements initiated and settled during 2003.

The Company did not have any foreign currency forward exchange or option contracts outstanding at December 31, 2002. The aggregate net gain related to the Company’s foreign currency forward exchange contracts was not material for 2002 or 2001.

11. CONTINGENT LIABILITIES AND COMMITMENTS

The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business. The Company accrues for such matters when expenditures are probable and reasonably estimable. Management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

F-16

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company offers a warranty for all of its products. The specific terms and conditions of those warranties vary depending upon the product sold. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time product revenue is recognized.

Factors that affect the Company’s liability include historical product failure experience and estimated repair costs for identified matters for each specific product category. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Adjustments to recorded reserves for pre-existing warranties are not material for each period presented.

Changes in the Company’s warranty reserve during the years ended December 31, 2003, 2002, and 2001 are as follows:

	2003			2002			2001
	(in thousands)
Balance, beginning of the year	$	7,110		$	8,113		$	10,485
Provision for warranty claims		4,729			4,452			5,037
Warranty claims paid		(6,070	)		(5,457	)		(7,493	)
Exchange rate impact		(122	)		2			84
Balance, end of the year	$	5,647		$	7,110		$	8,113

The Company is currently involved in various agreements in which it guarantees a percentage of the contract value between certain clients and a financing company. Under the terms of the agreements, the Company is liable for the guaranteed amount upon nonpayment by the client. As of December 31, 2003, the arrangements have expiration dates that range from 2004 to 2008 and the Company has recorded a liability of $628,000, which is the maximum potential liability under these guarantees. No recourse provisions or collateral exists which would allow the Company to recover amounts paid.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (“Statement 143”), “Accounting for Asset Retirement Obligations”. The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, that cost should be capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. The Company adopted Statement 143 on January 1, 2003 and recorded an asset retirement obligation of $390,000 related to the removal of leasehold improvements that have been made to one of the Company’s manufacturing and distribution centers. Such improvements must be removed upon termination of the lease agreement.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair values of each class of financial instruments:

Cash and Cash Equivalents, Accounts Receivable and Accounts Payable

The fair values of these financial instruments approximate their carrying amounts due to their immediate or short-term periods to maturity.

Long-Term Debt

The fair values of the Company’s long-term debt instruments approximate their carrying amounts.

F-17

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest Rate Collar and Swap Agreements

The carrying value and fair value of the Company’s interest rate collar and swap agreements, as estimated by dealers, was ($2,100,000) from the Company’s perspective at December 31, 2003. The carrying value and the fair value of the Company’s interest rate collar and swap agreements at December 31, 2002 was ($3,700,000).

13. RESTRUCTURING

In September 2001, the Company adopted a restructuring plan to eliminate certain salaried positions in its workforce in North America. In connection with the restructuring plan, the Company recorded a restructuring charge of $1,655,000 for severance and other termination benefits. As of December 31, 2003, all benefits have been fully paid.

14. INCOME TAXES

Income (loss) before income tax expense consists of the following:

	2003			2002		2001
	(in thousands)
U.S. operations	$	67,024		$	96,775	$	135,447
Foreign operations		(3,130	)		3,664		12,537
	$	63,894		$	100,439	$	147,984

Income tax expense is comprised of the following:

	2003		2002		2001
	(in thousands)
Current:
Federal	$	11,817	$	20,452	$	45,595
State		3,202		4,773		9,909
Foreign		857		2,296		5,488
Total current		15,876		27,521		60,992
Deferred:
Federal		9,698		10,436		(667	)
State		1,914		2,437		(89	)
Foreign		57		273		558
Total deferred		11,669		13,146		(198	)
Income tax expense	$	27,545	$	40,667	$	60,794

Income taxes paid, net of refunds received, by the Company during 2003, 2002, and 2001 totaled $19,032,000, $30,242,000, and $59,901,000, respectively.

F-18

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the tax effects of temporary differences that give rise to the deferred tax assets and liabilities:

	2003			2002
	(in thousands)
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$	2,876		$	2,998
Inventories		2,395			2,619
Net operating loss carryforwards		16,229			12,702
Obligation for postretirement benefits other than pension		8,920			8,519
Accrued liabilities and other items		14,615			17,463
Gross deferred tax assets		45,035			44,301
Valuation allowance		(17,033	)		(13,559	)
Net deferred tax assets		28,002			30,742
Deferred tax liabilities:
Intangibles, principally due to differences in amortization		35,744			29,436
Plant and equipment, principally due to differences in depreciation and assigned values		17,828			14,668
Gross deferred tax liabilities		53,572			44,104
Net deferred tax liabilities	$	(25,570	)	$	(13,362	)

As of December 31, 2003, the Company had net operating loss carryforwards totaling approximately $45,866,000 in various foreign tax jurisdictions, of which $549,000 expire in 2005, $1,079,000 in 2006, $541,000 in 2007, $498,000 in 2009, $940,000 in 2010, and $42,259,000 may be carried forward for an unlimited time.

Future tax benefits recognized through reductions of the valuation allowance for net operating loss carryforwards that existed as of February 29, 1996, the date the Company was formed, will generally reduce goodwill.

The following table sets forth a reconciliation of the statutory federal income tax rate to the effective income tax rate:

	2003		2002		2001
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
Increase in the tax rate resulting from:
State taxes, net of federal effect	5.4		4.7		4.6
Effect of tax rates of other countries	0.1		(0.3	)	0.6
Nondeductible goodwill amortization	—		—		0.2
Other	2.6		1.1		0.7
Effective tax rate	43.1	%	40.5	%	41.1	%

The Company has not made provisions for U.S. federal and state income taxes as of December 31, 2003 on $52,325,000 of foreign earnings that are expected to be reinvested indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. federal and state income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of the unrecognized deferred tax liability is not practicable.

F-19

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15. LEASES

The Company has commitments under operating leases for certain machinery and equipment as well as manufacturing, warehousing, showroom and other facilities used in its operations. Some of the leases contain renewal provisions and generally require the Company to pay certain operating expenses, including utilities, insurance and taxes, which are subject to escalation. Total rental expense for 2003, 2002, and 2001 was $8,945,000, $9,360,000, and $10,729,000, respectively. Future minimum rental payments required under those operating leases that have an initial or remaining noncancelable lease term in excess of one year are as follows (in thousands):

2004	$	8,451
2005		7,501
2006		6,060
2007		4,677
2008		3,664
Subsequent years		9,481
Total minimum rental payments	$	39,834

16. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company has two domestic defined benefit pension plans and two plans providing for other postretirement benefits, including medical and life insurance coverage. One of the pension plans and one of the other postretirement benefits plans cover eligible U.S. nonunion employees while the other pension plan and other postretirement benefits plan cover eligible U.S. union employees. During 2002, an amendment was made to the nonunion pension plan, in accordance with the Economic Growth and Tax Relief Reconciliation Act effective for taxable years beginning after December 31, 2001, which increased the limit on compensation that may be taken into account under a defined benefit pension plan to $200,000. The impact of this amendment was reflected in the measurement of the related benefit obligation as of December 31, 2002.

F-20

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth a reconciliation of the benefit obligation, plan assets and accrued benefit cost related to the pension and other postretirement benefits provided by the Company:

	Pension Benefits						Other Benefits
	2003			2002			2003			2002
	(in thousands)
Change in benefit obligation:
Benefit obligation at January 1	$	58,204		$	44,403		$	23,085		$	20,882
Service cost		8,729			8,009			835			748
Interest cost		3,967			3,231			1,533			1,479
Participant contributions		222			141			—			—
Plan amendment		—			505			—			—
Actuarial loss		2,617			2,333			2,261			1,454
Benefits paid		(624	)		(418	)		(1,295	)		(1,478	)
Benefit obligation at December 31	$	73,115		$	58,204		$	26,419		$	23,085
Change in plan assets:
Fair value of plan assets at January 1		34,969			30,945			—			—
Actual return (loss) on plan assets		6,054			(2,510	)		—			—
Employer contributions		6,961			6,811			1,295			1,478
Participant contributions		222			141			—			—
Benefits paid		(624	)		(418	)		(1,295	)		(1,478	)
Fair value of plan assets at December 31		47,582			34,969			—			—
Funded status		(25,533	)		(23,235	)		(26,419	)		(23,085	)
Unrecognized net loss		14,838			14,651			6,630			4,530
Unrecognized prior service cost (benefit)		705			782			(2,679	)		(2,903	)
Net amount recognized	$	(9,990	)	$	(7,802	)	$	(22,468	)	$	(21,458	)
Amounts recognized in the consolidated balance sheet consist of:
Accrued benefit cost	$	(14,778	)	$	(13,001	)	$	(22,468	)	$	(21,458	)
Intangible asset		705			782			—			—
Accumulated other comprehensive income		4,083			4,417			—			—
Net amount recognized	$	(9,990	)	$	(7,802	)	$	(22,468	)	$	(21,458	)

Weighted-average assumptions used to determine benefit obligations as of December 31 are as follows:

	Pension Benefits				Other Benefits
	2003		2002		2003		2002
Discount rate	6.25	%	6.75	%	6.25	%	6.75	%
Rate of compensation increase	4.00		4.00		4.00		4.00

F-21

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the components of the net periodic benefit cost for the Company’s pension and other postretirement benefits plans:

	Pension Benefits									Other Benefits
	2003			2002			2001			2003			2002			2001
	(in thousands)
Service cost	$	8,729		$	8,009		$	7,344		$	835		$	748		$	789
Interest cost		3,967			3,231			2,433			1,533			1,479			1,463
Expected return on plan assets		(3,761	)		(3,063	)		(2,210	)		—			—			—
Amortization of prior service cost		77			35			35			(223	)		(223	)		1
Recognized actuarial loss (gain)		137			—			—			161			90			(53	)
Net periodic benefit cost	$	9,149		$	8,212		$	7,602		$	2,306		$	2,094		$	2,200
Additional Information
(Decrease) increase in minimum liability included in other comprehensive income	$	(334	)	$	4,417		$	—		$	—		$	—		$	—

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 are as follows:

	Pension Benefits				Other Benefits
	2003		2002		2003		2002
Discount rate	6.75	%	6.75	%	6.75	%	6.75	%
Expected return on plan assets	8.50		8.50		N/A		N/A
Rate of compensation increase	4.00		4.00		4.00		4.00

The expected long-term rate of return on assets is based on management’s expectations of long-term average rates of return to be earned on the investment portfolio. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plan assets are invested.

At December 31, 2003 and 2002, both of the Company’s defined benefit pension plans had an accumulated benefit obligation in excess of plan assets. The accumulated benefit obligation applicable to both plans was $62,361,000 and $47,971,000, respectively, and the fair value of the related plan assets was $47,582,000 and $34,969,000, respectively. The projected benefit obligation for both plans at December 31, 2003 and 2002 was $73,115,000 and $58,204,000, respectively.

For purposes of measuring the benefit obligation and the net periodic benefit cost as of and for the year ended December 31, 2003, respectively, associated with the Company’s other postretirement benefits plans, a 9.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2004. The rate was then assumed to decrease 1.0% per year to an ultimate rate of 5.0% for 2008 and thereafter. Increasing the assumed health care cost trend rate by 1.0% in each year would increase the benefit obligation as of December 31, 2003 by $2,402,000 and increase the aggregate of the service and interest cost components of net periodic benefit cost for 2003 by $262,000. Decreasing the assumed health care cost trend rate by 1.0% in each year would decrease the benefit obligation as of December 31, 2003 by $1,992,000 and decrease the aggregate of the service and interest cost components of net periodic benefit cost for 2003 by $217,000.

F-22

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s pension plans’ weighted-average asset allocations as of December 31, 2003 and 2002, by asset category are as follows:

	Plan Assets at December 31
Asset Category	2003		2002
Temporary Investment Funds	1	%	6	%
Equity Investment Funds	60		50
Fixed Income Funds	39		44
Total	100	%	100	%

The Company’s pension plans’ investment policy includes an asset mix based on the Company’s risk posture. The investment policy states a target allocation of 60% equity funds and 40% fixed income funds. Inclusion of the fixed income funds is to provide growth through income and these funds should primarily invest in fixed income instruments of the U.S. Treasury and government agencies and investment-grade corporate bonds. The equity fund investments can consist of a broadly diversified domestic equity fund, an actively managed domestic equity fund and an actively managed international equity fund. The purpose of these funds is to provide the opportunity for capital appreciation, income, and the ability to diversify investments outside the U.S. equity market. Mutual funds are used as the plans’ investment vehicle since they have clearly stated investment objectives and guidelines, offer a high degree of investment flexibility, offer competitive long-term results, and are cost effective for small asset balances.

The Company expects to contribute $10,000,000 to its pension plans and $2,400,000 to its other postretirement benefit plans in 2004.

On December 8, 2003, President Bush signed into law a bill that expands Medicare, primarily adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. Deferring the recognition of the new Medicare provisions’ impact on the Company’s postretirement benefit plan obligation is permitted by Financial Accounting Standards Board Staff Position 106-1 due to open questions about some of the new Medicare provisions and a lack of authoritative accounting guidance about certain matters. The final accounting guidance could require changes to reported information.

Employees of the Canadian, Belgium and United Kingdom operations participate in defined contribution pension plans sponsored by the Company. The Company’s expense related to these plans for 2003, 2002 and 2001 was $944,000, $721,000, and $704,000, respectively.

The Company also sponsors a retirement savings plan (i.e., 401(k) plan) for all U.S. employees. Under this plan, participants may defer a portion of their earnings up to the annual contribution limits established by the Internal Revenue Service. The Company matches 40.0% of participant contributions up to the first 6.0% of compensation for nonunion employees and matches 50.0% of participant contributions up to the first 6.0% of compensation for union employees. For participants who are nonunion employees, the plan provides for additional employer matching based on the achievement of certain profitability goals. The plan also provides that the Company may make discretionary contributions of Knoll common stock to participant accounts on behalf of all actively employed U.S. participants. However, upon retiring or leaving the Company, participants must sell vested shares of Knoll common stock back to the plan, and any shares that are not vested at such time are forfeited by the participant and held by the plan. Participants generally vest their interest in Company contributions ratably according to years of service, with such contributions being 100% vested at the end of five years of service.

The Company’s total expense under the 401(k) plan was $2,805,000, $3,707,000, and $3,460,000 for 2003, 2002 and 2001, respectively.

F-23

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17. LONG-TERM INCENTIVE PLAN

In 2003, the Company adopted the Knoll Inc. Long-Term Incentive Plan. The purpose of the plan is to attract, retain, and motivate key employees of the Company and promote long-term growth and profitability. The Plan provides long-term incentives, contingent upon a change in control or upon meeting certain corporate performance goals.

Awards under the plan are based upon achieving annual Operating Profit goals for two consecutive plan years within the four-year period ending December 31, 2006. The awards pool can range from ten percent of Operating Profit if the average annual Operating Profit for two consecutive plan years equals or exceeds $125 million up to a maximum of twenty-five percent on the average annual Operating Profit up to $200 million.

An operating expense charge for the plan will be recorded when it becomes probable that performance targets will be met and an award will be paid under the plan. At December 31, 2003, management concluded that it was not probable that the performance target would be met and, therefore, no expense related to the plan was recorded. If management concludes in a future period that it is probable that the performance target will be met, the change in estimate will be reflected as a cumulative catch-up adjustment in that period.

18. STOCK PLANS

Stock Incentive Plans

The Company sponsors three stock incentive plans under which awards denominated or payable in shares or options to purchase shares of Knoll common stock may be granted to officers, certain other key employees, directors and consultants of the Company. As of December 31, 2003, a combined maximum of 20,278,438 shares were authorized for issuance under the plans. A Stock Option Committee of the Company’s Board of Directors (“Stock Option Committee”) has sole discretion concerning administration of the plans, including selection of individuals to receive awards, types of awards, the terms and conditions of the awards and the time at which awards will be granted. Options that are granted have a maximum contractual life of ten years.

The following table summarizes the Company’s stock option activity in the years indicated:

	2003				2002				2001
	Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
Outstanding at beginning of year	9,896,226		$	11.81	8,951,468		$	11.05	7,412,890		$	12.76
February 2001 adjustment to outstanding	—			—	—			—	1,355,046			N/A
Granted	—			—	1,095,000			18.00	400,000			17.25
Forfeited	(254,708	)		13.07	(150,242	)		11.57	(216,468	)		11.72
Outstanding at end of year	9,641,518			11.78	9,896,226			11.81	8,951,468			11.05
Exercisable at end of year	8,574,454			11.21	6,842,950			10.76	5,000,728			10.70
Available for future grants	1,673,182				1,418,474				2,363,232

Options were granted with an exercise price that equals the market price of a share of Knoll common stock on the date of grant, while the Company’s stock was publicly traded, or the estimated fair value of a share of Knoll common stock on the date of grant, subsequent to November 4, 1999, when the Company’s stock was no longer publicly traded. Options that were granted generally vest in installments over either a four- or five-year period, beginning one year from the date of grant.

F-24

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In February 2001, the Stock Option Committee approved certain adjustments to the outstanding options as well as the number of options available for grant under the stock incentive plans in response to dilution created by the special cash dividend paid on January 5, 2001. The adjustments included increasing the number of shares under option from 7,412,890 to 8,767,936, lowering the range of exercise prices from $7.97 – $16.57 to $6.74 – $14.01, and increasing the number of options available for future grants as of the time of adjustment from 2,153,168 to 2,546,764. These adjustments consequently increased the aggregate number of shares that are authorized for issuance under the stock incentive plans from 18,529,796 to 20,278,438. All vesting and term provisions of each award remained unchanged. No compensation expense was recognized in connection with these adjustments since (i) the adjustments were executed in response to an equity restructuring and (ii) the modifications to the awards did not increase the aggregate intrinsic value of each award and did not reduce the per share ratio of the exercise price to the market value.

The following table summarizes information regarding stock options outstanding and exercisable at December 31, 2003:

	Options Outstanding					Options Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$6.74 — $8.99	2,102,724	3.63	years	$	7.44	1,967,840	$	7.37
$10.23 — $11.31	158,490	2.83			10.91	151,390		10.94
$11.84 — $12.05	5,916,164	5.00			11.89	5,873,584		11.90
$14.01 — $18.00	1,464,140	7.54			17.64	581,640		17.34
$6.74 — $18.00	9,641,518	5.05			11.78	8,574,454		11.21

Other Stock-Based Compensation Plans

On November 4, 1999, the Company established The Knoll Stock Ownership Award Plan, under which it may grant notional stock units to substantially all individuals employed by the Company in Canada as of the effective date of the plan. Participants vest their interest in notional stock units ratably according to years of service, with such units being 100% vested at the end of five years of service. On November 4, 1999, the Company granted a total of 109,800 notional stock units, with an estimated fair value of $14.00 per unit, to eligible employees. In January 2001, the number of notional units outstanding was adjusted, in accordance with the plan provisions, in response to the special cash dividend that was paid. Compensation expense is recognized based on the estimated fair value of notional stock units and vesting provisions. Total compensation expense (income) incurred in connection with this award was $(363,000) for 2003, $138,000 for 2002 and $248,000 for 2001. Units forfeited totaled 256; 434; and 2,270 for 2003, 2002 and 2001, respectively.

As of December 31, 2003, approximately 114,528 notional units were outstanding, of which approximately 110,676 units were vested.

As discussed in Note 16, the Company may contribute shares of Knoll common stock into participant 401(k) plan accounts at its discretion. The Company contributed 300,200 shares into the 401(k) plan for substantially all individuals employed by the Company in the U.S. as of November 4, 1999. In connection with this award, the Company recognized $4,203,000 of compensation expense, which was based on a value of $14.00 per share. During 2003, 2002, and 2001 the Company repurchased 29,200; 27,600; and 23,600 of the contributed common shares, respectively, from the 401(k) plan at a weighted average price per share of $18.00 during 2003 and 2002, and $17.10 during 2001. Such shares are held in treasury.

F-25

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

19. SEGMENT AND GEOGRAPHIC REGION INFORMATION

In accordance with Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information,” management evaluates the Company as one reporting segment in the office furniture industry. The Company is engaged worldwide in the design, manufacture and sale of office furniture products and accessories through its wholly owned subsidiaries. Throughout the world, the product offerings, the production processes, the methods of distribution, and the customers serviced are similar. The Company’s product offerings consist primarily of office furniture systems, seating, files and storage, and other specialty products. These product offerings are marketed, distributed, and managed primarily as a group of similar products on an overall portfolio basis.

The Company’s net sales by product category are as follows:

	Year Ended December 31,
	2003		2002		2001
	(in thousands)
Office Systems	$	428,555	$	498,594	$	666,330
Specialty Products		110,078		121,293		139,287
Seating		54,597		48,821		54,998
Files and Storage		47,162		53,000		58,262
European Products		50,139		46,108		59,539
Other		6,715		5,447		6,972
	$	697,246	$	773,263	$	985,388

The Company markets its products in the United States and internationally, with its principal international markets being Canada and Europe. The table below contains information about the geographical areas in which the Company operates. Sales to clients are attributed to the geographic areas based on the origin of sale.

	United States		Canada		Europe		Consolidated
	(in thousands)
2003
Sales to clients	$	627,844	$	19,263	$	50,139	$	697,246
Property, plant and equipment, net		111,213		30,448		12,992		154,653
2002
Sales to clients	$	708,409	$	18,746	$	46,108	$	773,263
Property, plant and equipment, net		128,256		25,814		11,434		165,504
2001
Sales to clients	$	899,042	$	26,807	$	59,539	$	985,388
Property, plant and equipment, net		137,200		27,115		10,723		175,038

A number of U.S. government agencies purchase the Company’s products through multiple contracts with the General Services Administration (“GSA”). Sales under GSA contracts amounted to $122,839,000 in 2003, $129,288,000 in 2002, and $118,552,000 in 2001.

F-26

KNOLL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

20. QUARTERLY RESULTS (UNAUDITED)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Fiscal Year
	(in thousands, except per share data)
2003
Sales	$	164,630	$	177,014	$	176,563	$	179,039	$	697,246
Gross profit		55,751		59,291		59,924		61,369		236,335
Net income		6,299		9,048		11,724		9,278		36,349
Earnings per share – basic	$	.14	$	.20	$	.25	$	.20	$	.78
Earnings per share – diluted	$	.13	$	.19	$	.24	$	.19	$	.75
2002
Sales	$	197,807	$	202,662	$	187,696	$	185,098	$	773,263
Gross profit		74,132		75,996		67,047		63,186		280,361
Net income		18,583		13,238		16,276		11,675		59,772
Earnings per share – basic	$	.40	$	.29	$	.35	$	.25	$	1.29
Earnings per share – diluted	$	.38	$	.27	$	.34	$	.24	$	1.23

21. OTHER (EXPENSE) INCOME

	December 31
	2003			2002			2001
	(in thousands)
Foreign exchange transaction (loss) gain	$	(7,733	)	$	(409	)	$	2,680
Loss on termination of interest rate swap agreements		(758	)		—			—
Unrealized gain (loss) on derivatives		7,278			4,937			(7,531	)
Loss on early extinguishment of debt		(1,151	)		(1,940	)		—
Other		(109	)		345			1,181
Other (expense) income	$	(2,473	)	$	2,933		$	(3,670	)

22. SUBSEQUENT EVENT

On March 30, 2004, the Company executed a second amendment to its existing senior credit agreement. The amendment revised the related interest rates, commitment fees, and letter of credit fees that the Company will incur on outstanding borrowings and unused portions of the credit facility. Borrowings under the agreement will bear interest at a floating rate based, at the Company’s option, upon (i) the Eurodollar rate (as defined therein) plus 3.0% or (ii) the greater of the federal funds rate plus 0.5% or the prime rate plus 2.0%. The Company will incur a commitment fee of 0.50% on the unused portion of the revolving credit facility. In addition, the Company will be required to pay a letter of credit fee of 3.0%, and an issuing lender fee equal to 0.25% on the amount available to be drawn under letters of credit. The amendment also revised certain covenants as set forth in the credit agreement.

On November 14, 2004, a two-for-one stock split of the Company’s common stock was authorized by the Company’s Board of Directors. The stock split will be effective as of the date of the Company’s filing of an amended and restated certificate of incorporation, which will occur immediately prior to the completion of its initial public offering. All references in the consolidated financial statements to common shares, common stock options, common share prices and per share amounts have been adjusted retroactively for all periods presented to reflect this split. In connection with this split, the Company’s Board of Directors also approved an increase in the number of authorized shares of common stock from 100 million shares to 200 million shares. The Company’s authorized preferred shares and per share amounts are not impacted by the stock split.

F-27

KNOLL, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2004 AND DECEMBER 31, 2003

(dollars in thousands, except per share data)

	September 30, 2004			December 31, 2003
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	12,336		$	11,517
Customer receivables, net		95,627			91,271
Inventories		46,344			38,354
Deferred income taxes		14,396			14,338
Other current assets		9,073			5,702
Total current assets		177,776			161,182
Property, plant, and equipment, net		146,651			154,653
Goodwill, net		45,121			45,101
Intangible assets, net		191,740			190,365
Other non-trade receivables		4,937			5,602
Other noncurrent assets		3,006			4,098
Total assets	$	569,231		$	561,001
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt	$	4,348		$	81,340
Accounts payable		54,423			54,502
Income taxes payable		10,724			—
Other current liabilities		52,181			53,578
Total current liabilities		121,676			189,420
Long-term debt		421,433			299,531
Deferred income taxes		39,840			39,908
Postretirement benefits other than pensions		22,440			21,149
Pension liability		10,427			8,768
International retirement obligation		5,944			5,313
Other noncurrent liabilities		4,120			5,031
Total liabilities		625,880			569,120
Stockholders’ equity (deficit):
Common stock, $0.01 par value; authorized 100,000,000 shares; 46,295,758 and 46,306,858 shares issued and outstanding (net of 116,500 and 105,400 treasury shares) in 2004 and 2003, respectively		463			463
Additional paid-in capital		1,750			1,937
Accumulated deficit		(62,679	)		(12,068	)
Accumulated other comprehensive income		3,817			1,549
Total stockholders’ deficit		(56,649	)		(8,119	)
Total liabilities and stockholders’ deficit	$	569,231		$	561,001

See accompanying notes to unaudited interim consolidated financial statements.

F-28

KNOLL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(dollars in thousands, except per share data)

	Nine months ended
	September 30, 2004			September 30, 2003
Net sales	$	513,586		$	518,207
Cost of goods sold		341,349			343,241
Gross profit		172,237			174,966
Selling, general, and administrative expenses		121,501			110,430
Operating income		50,736			64,536
Interest expense		13,233			15,225
Other expense		(2,185	)		(2,152	)
Income before income tax expense		35,318			47,159
Income tax expense		15,328			20,088
Net income	$	19,990		$	27,071
Net earnings per share:
Basic	$	0.43		$	0.58
Diluted	$	0.42		$	0.56
Cash dividends declared per share:	$	1.53		$	—
Weighted-average shares of common stock outstanding:
Basic		46,300,556			46,320,752
Diluted		47,964,546			48,423,726

See accompanying notes to unaudited interim consolidated financial statements.

F-29

KNOLL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands)

	Nine months ended
	September 30, 2004			September 30, 2003
	(unaudited)
Cash flows from operating activities
Net earnings	$	19,990		$	27,071
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		15,921			21,721
Amortization of intangible assets		1,539			1,038
Loss on early extinguishment of debt		—			1,151
Write-off of deferred financing fees		2,517			—
Proceeds from settlement of foreign currency contracts		—			1,484
Foreign currency loss		996			4,821
Proceeds from termination of interest rate swap agreements		—			4,770
Other noncash items		(795	)		(4,610	)
Changes in assets and liabilities net of effects of acquisition:
Customer receivables		(4,058	)		6,931
Inventories		(7,662	)		11,690
Accounts payable		(270	)		(2,340	)
Current and deferred income taxes		10,605			6,953
Other current assets		(3,525	)		(513	)
Other current liabilities		(3,246	)		(23,263	)
Other noncurrent assets and liabilities		4,189			6,994
Net cash provided by operating activities		36,201			63,898
Cash flows from investing activities
Capital expenditures		(7,146	)		(5,967	)
Proceeds from disposal of property, plant, and equipment		1			223
Purchase of license agreement		—			(630	)
Net cash used in investing activities		(7,145	)		(6,374	)
Cash flows from financing activities
(Repayment) proceeds from revolving credit facility net		(223,750	)		44,000
Proceeds from issuance of long term debt		425,000			—
Repayment of long-term debt		(156,250	)		(102,336	)
Deferred financing fees		(5,431	)		—
Premium paid for early extinguishments of debt		—			(1,037	)
Payment of dividend		(68,183	)		—
Purchase of common stock		(186	)		(488	)
Net cash used for financing activities		(28,800	)		(59,861	)
Effect of exchange rate changes on cash		563			1,738
Net (increase) decrease in cash		819			(599	)
Cash and cash equivalents at beginning of period		11,517			12,873
Cash and cash equivalents at end of period	$	12,336		$	12,274

See accompanying notes to unaudited interim consolidated financial statements.

F-30

KNOLL, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Knoll, Inc. (the Company) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet of the Company, as of December 31, 2003, was derived from the Company’s audited consolidated balance sheet as of that date. All other consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented. All of these adjustments are of normal recurring nature. All intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year 2003.

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

In December 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 132 (revised 2003), Employer’s Disclosures about Pensions and Other Postretirement Benefits. The revisions to SFAS No. 132 are intended to improve financial statement disclosures for defined benefit plans and was initiated in 2003 in response to concerns raised by investors and other users of financial statements, about the need for greater transparency of pension information. In particular, the standard requires that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs, and other relevant quantitative and qualitative information. The guidance is effective for fiscal years ending after December 15, 2003. The Company has complied with these revised disclosure requirements.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). FIN 46 introduces a new consolidation model that determines control (and consolidation) based on potential variability in gains and losses of the entity being evaluated for consolidation. In December 2003, the FASB issued FIN 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN 46-R”) to address certain FIN 46 implementation issues. The consolidation requirements apply immediately to variable interest entities created after January 31, 2003, and apply to all other variable interest entities in the first interim period ending after March 15, 2004. The consolidation requirements did not have a material effect on the Company’s financial statements.

In the fourth quarter of 2003, Congress passed the Medicare Prescription Drug Act of 2003, which authorized Medicare to provide prescription drug benefits to retirees. To encourage employers to retain or provide postretirement drug benefits for their Medicare-eligible employees, beginning in 2006, the federal government will begin to make subsidy payments to employers who sponsor postretirement benefit plans under which retirees receive prescription drug benefits that are “actuarially equivalent” to the prescription drug benefits provided under Medicare. In May 2004, FASB Staff Position No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP No. 106-2”), was issued which provides guidance on accounting for the effects of the new Medicare legislation. Adoption of FSP No. 106-2, which is effective in the third quarter of 2004, did not materially impact Knoll’s consolidated financial statements.

F-31

KNOLL, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

NOTE 3: INVENTORIES

Inventories, net consist of:

	September 30, 2004		December 31, 2003
	(in thousands)
Raw Materials	$	23,312	$	20,125
Work-in-Process		5,123		5,893
Finished Goods		17,909		12,336
	$	46,344	$	38,354

NOTE 4: INCOME TAXES

The Company’s income tax provisions for all periods consist of federal, state and foreign income taxes. The tax provisions for the nine months ended September 30, 2004 and 2003 were based on the estimated effective tax rates applicable for the full years ending December 31, 2004 and 2003, after giving effect to items specifically related to the interim periods. The Company’s effective tax rate was 43% for the nine months ended September 30, 2004 and 2003. The Company’s effective tax rate is higher than federal, state and foreign statutory rates as a result of losses realized in certain non-U.S. jurisdictions for which no tax benefits have been recognized.

NOTE 5: INDEBTEDNESS

On September 30, 2004, the Company terminated its previously existing senior credit facility and entered into a new $488 million senior secured credit facility consisting of a $425 million term loan and a $63 million revolving credit line. The Company used the proceeds of the term loan to repay amounts outstanding under the previously existing senior credit facility, plus accrued interest, totalling $355.2 million and to pay transaction costs associated with the new credit facility of $3.9 million. In addition, the proceeds from the borrowing funded a $70.6 million dividend to the Company’s stockholders (see Note 6). No amounts have been borrowed under the revolving credit line as of September 30, 2004.

The $425 million term loan is subject to a .25% quarterly principal amortization equal to $1.0625 million per quarter with the remaining principal payment of approximately $396.3 million due on September 30, 2011. Obligations under the credit facility are secured by substantially all of the Company’s assets, including the capital stock of the Company. Borrowings under the credit agreements bear interest at a floating rate based, at the Company’s option, upon (i) a libor rate plus an applicable percentage or (ii) the greater of the federal funds rate plus 0.5% or the prime rate, plus an applicable percentage. Under the terms of the credit facility, the Company is required to prepay certain principal in the event of any termination of all the Revolving Credit Commitments. The effective borrowing rate as of September 30, 2004 is 5.0%.

In October 2004, as required by the Company’s new credit facility, the Company entered into an interest rate swap agreement and an interest rate cap agreement for purposes of managing its risk in market interest rate fluctuations. These agreements hedge interest rate risk on a notional amount of approximately $212.5 million of the Company’s borrowings under the new credit facility.

NOTE 6: DIVIDENDS

On September 27, 2004, the Company’s Board of Directors declared a $1.525 per share cash dividend payable to stockholders of record as of that date resulting in total dividends of $70.6 million. On September 30, 2004, the Company paid $68.2 million of the declared dividends and recorded an accrual for the remaining $2.4 million to be paid to stockholders.

F-32

KNOLL, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

NOTE 7: WARRANTY

The Company provides for estimated product warranty expenses when the related products are sold and are included in other current liabilities. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claims costs may differ from amounts provided. Adjustments to recorded reserves for pre-existing warranties are not material for each period presented. An analysis of changes in the liability for product warranties is as follows:

	Nine months ended
	September 30, 2004			September 30, 2003
	(in thousands)
Balance at beginning of period	$	5,647		$	7,110
Provision for warranty claims		4,413			3,496
Warranty claims paid		(5,136	)		(4,613	)
Balance at end of period	$	4,924		$	5,993

NOTE 8: PENSIONS

The Company has adopted the disclosure requirements of SFAS No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits as is reflected in Note 16 of its consolidated financial statements for the year ended December 31, 2003. The following table presents the interim disclosure requirements of components of the Company’s net periodic cost (benefit) related to its defined benefit pension plans for the nine months ended September 30, 2004 and 2003:

	Pension Benefits						Other Benefits
	Nine months ended						Nine months ended
	September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003
	(in thousands)
Service cost	$	6,742		$	6,547		$	653		$	626
Interest cost		3,413			2,975			1,215			1,150
Expected return on plan assets		(3,125	)		(3,761	)		—			—
Amortization of prior service cost		58			58			(168	)		(168	)
Recognized actuarial loss		267			103			202			121
Net periodic benefit cost	$	7,355		$	5,922		$	1,902		$	1,729

Significant assumptions used in the accounting for the pension benefit plans are as follows:

	Pension Benefits				Other Benefits
	Nine months ended				Nine months ended
	September 30, 2004		September 30, 2003		September 30, 2004		September 30, 2003
Discount rate	6.25	%	6.75	%	6.25	%	6.75	%
Expected return on plan assets	8.50	%	8.50	%	N/A		N/A
Rate of compensation increase	4.00	%	4.00	%	4.00	%	4.00	%

The Company expects to make cash contributions during the period October 1, 2004 through December 31, 2004 of approximately $1,317 to its Pension Benefits plans and $0 to its Other Benefits plan.

F-33

KNOLL, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

NOTE 9: STOCK PLANS

Under APB No. 25, if the exercise price of the Company’s employee stock options equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recognized.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation as amended, to options granted under the stock option plans. For purposes of this pro forma disclosure, the estimated value of the options is amortized ratably to expense over the options vesting periods. Because the estimated value is determined as of the date of grant, the actual value ultimately realized by the employee may be significantly different.

	Nine months ended
	September 30, 2004			September 30, 2003
	(in thousands, except per share data)
Net income – as reported	$	19,990		$	27,071
Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(964	)		(1,264	)
Net	$	19,026		$	25,807
Net income per common share – basic – as reported	$	0.43		$	0.58
Net income per common share – basic – pro forma	$	0.41		$	0.56
Net income per common share – diluted – as reported	$	0.42		$	0.56
Net income per common share – diluted – pro forma	$	0.40		$	0.53
Weighted average fair value of options granted during the period	$	4.61		$	—

NOTE 10: OTHER COMPREHENSIVE INCOME

Foreign Currency Translation

Results of foreign operations are translated into U.S. dollars using average exchange rates during the period, while assets and liabilities are translated into U.S. dollars using exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss).

	Nine months ended
	September 30, 2004		September 30, 2003
	(in thousands)
Net income	$	19,990	$	27,071
Other comprehensive income:
Foreign currency translation adjustments		2,268		13,605
Total comprehensive income	$	22,258	$	40,676

F-34

KNOLL, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

NOTE 11: EARNINGS PER SHARE

Net income per share – basic is based on the weighted average number of shares of Common Stock outstanding. Net income per share – diluted reflects the potential dilution that could occur if stock options were exercised. Weighted average common shares and common shares – diluted were as follows:

	Nine months ended
	September 30, 2004	September 30, 2003
Weighted average shares of common stock outstanding – basic	46,300,556	46,320,752
Assumed exercise of stock options, net of shares assumed reacquired	1,663,990	2,102,974
Weighted average common shares – diluted	47,964,546	48,423,726

During the nine months ended September 30, 2004 and 2003 there were 2,535,000 and 1,075,000 outstanding employee stock options, respectively, that are out-of-the money and therefore were excluded from the calculation of the dilutive effect of employee stock options.

NOTE 12: COMMITMENTS AND CONTINGENCIES

The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business. The Company accrues for such matters when expenditures are probable and reasonably estimable. Management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 13: SUBSEQUENT EVENT

On November 14, 2004, a two-for-one stock split of the Company’s common stock was authorized by the Company’s Board of Directors. The stock split will be effective as of the date of the Company’s filing of an amended and restated certificate of incorporation, which will occur immediately prior to the completion of its initial public offering. All references in the interim consolidated financial statements to common shares, common stock options, common share prices and per share amounts have been adjusted retroactively for all periods presented to reflect this split. In connection with this split, the Company’s Board of Directors also approved an increase in the number of authorized shares of common stock from 100 million shares to 200 million shares. The Company’s authorized preferred shares and per share amounts are not impacted by the stock split.

F-35

Through and including                     , 2004 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than the underwriting discounts and commissions, payable by Knoll in connection with the sale of common stock being registered.

Item	Amount to be Paid
SEC registration fee	$	29,141
NASD fee		23,500
NYSE listing fee		*
Blue Sky fees and expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Printing expenses		*
Transfer agent fees		*
Miscellaneous		*
Total	$	*

* To be filed by amendment.

Item 14. Indemnification of Directors and Officers

Our amended and restated certificate of incorporation provides that we will, and Delaware law permits us to, under certain situations, indemnify any of our directors, officers, employees or agents made or threatened to be made a party to a proceeding, by reason of the former or present official capacity of the person, against judgments, penalties, fines, settlements and reasonable expenses, including attorney’s fees, incurred by the person in connection with the proceeding if certain statutory standards are met. Any of these persons is also entitled, subject to certain limitations, to payment or reimbursement of reasonable expenses in advance of the final disposition of the proceeding. A proceeding means a threatened, pending or completed civil, criminal, administrative, arbitration or investigative proceeding, including one by or in the right of us. Reference is made to Section 145 of the Delaware Corporate Law and our amended and restated certificate of incorporation.

We maintain an insurance policy providing for indemnification of our officers, directors and certain other persons against liabilities and expenses incurred by any of them in certain stated proceedings and under certain stated conditions. In addition, our employment agreements with Mr. Cogan, Ms. Bradley and Mr. Staniar provide that if during and after the term of such officers’ employment the executive is made a party or compelled to participate in any action by reason of the fact that he is or was a director or officer of us, the executive will be indemnified by us to the fullest extent permitted by Delaware general corporation law or authorized by the our amended and restated certificate of incorporation or bylaws or resolutions of our board of directors.

We will, prior to the closing of this offering, enter into indemnification agreements with our directors and certain of our officers. The indemnification agreements will require us to indemnify, defend and hold harmless the indemnitees to the fullest extent permitted or required by the laws of the State of Delaware. The indemnification agreements will also provide that the indemnitee shall have the right to advancement from us, prior to the final disposition of any indemnifiable claim, of any and all actual and reasonable expenses relating to any indemnifiable claim paid or incurred by the indemnitee. For the duration of an indemnitee’s service as our director and/or officer and for a reasonable period of time thereafter, which period may be determined by us in our sole discretion, we must use commercially reasonable efforts to cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for our directors and/or officers that is substantially

II-1

comparable in scope and amount to that provided by our current policies of directors’ and officers’ liability insurance. In no event will we be required to expend more than 2.0 times the premium amount for such insurance in effect upon the closing of this offering in seeking to maintain directors’ and officers’ insurance.

Item 15. Recent Sales of Unregistered Securities

Set forth below is information regarding stock options granted by us within the past three years that we were not registered under the Securities Act of 1933. These stock options and the common stock issuable upon exercise of stock options were issued pursuant to written compensatory plans or arrangements with our employees and directors, in reliance on the exemption provided by Rule 701 promulgated under the Securities Act of 1933, as well as Section 4(2) of the Securities Act of 1933. All recipients either received adequate information about us or had access, though employment or other relationships, to such information. Certain of the transactions described below involved directors and officers.

We sponsor three stock incentive plans: the 1996 Stock Incentive Plan (amended and restated as of November 4, 1999); the 1997 Stock Incentive Plan (amended and restated as of November 4, 1999); and the 1999 Stock Incentive Plan (amended and restated as of                     , 2004). As of October 15, 2004, options to purchase 11,805,172 shares of common stock were outstanding under the plans and 9,867,756 were exercisable.

From January 1, 2001 to October 15, 2004, we granted the following stock options to purchase an aggregate of 2,784,826 shares of common stock at exercise prices ranging from $14.52 to $16.34 per share to officers, employees and directors.

Option Grant Date	Total Number of Stock Options Granted	Exercise Price
2/6/01	440,732	$	15.66
2/5/02	1,099,054	$	16.34
6/7/04	1,245,040	$	14.52

As of October 15, 2004, 97,500 of the 1,196,554 options granted on February 5, 2002 have been cancelled. The number of shares of common stock issuable upon the exercise of options and the exercise price of such options presented above give effect to an October 15, 2004 adjustment made, in accordance with the stock incentive plan provisions, in response to the special cash dividend that was paid to stockholders on September 30, 2004. To date, no options to purchase shares of common stock granted under the plans have been exercised.

During the three years preceding this filing, we have not issued or sold any shares of our common stock.

Item 16. Exhibits and Financial Statement Schedules

(A) Exhibits

Exhibit Number	Description
1.1	Form of Underwriting Agreement.
3.1	Amended and Restated Certificate of Incorporation of Knoll, Inc.
3.2	Amended and Restated By-Laws of Knoll, Inc.
4.1*	Form of Stock Certificate.
5.1*	Opinion of Willkie Farr & Gallagher LLP.
10.1 (a)	Stock Purchase Agreement, dated as of December 20, 1995, by and between Westinghouse and T.K.G. Acquisition Corp.

II-2

Exhibit Number	Description
10.2 (h)	Credit Agreement, dated as of September 30, 2004, by and among Knoll, Inc., the Lenders (as defined therein), UBS AG, Stamford Branch, and, as Administrative Agent, and Goldman Sachs Credit Partners L.P., as Syndication Agent.
10.3 (d)	Amended and Restated Employment Agreement, dated as of January 1, 2000, between Knoll, Inc. and Burton B. Staniar.
10.4 (f)	Amendment to Employment Agreement, dated as of March 25, 2002, between Knoll, Inc. and Burton B. Staniar.
10.5 (e)	Employment Agreement, dated as of March 23, 2001, between Knoll, Inc. and Andrew B. Cogan.
10.6 (h)	Amendment No. 1 to Amended and Restated Employment Agreement, dated as of August 25, 2004, between Knoll, Inc. and Andrew B. Cogan.
10.7 (e)	Employment Agreement, dated as of March 23, 2001, between Knoll, Inc. and Kathleen G. Bradley.
10.8 (h)	Amendment No. 1 to Amended and Restated Employment Agreement, dated as of August 25, 2004, between Knoll, Inc. and Kathleen G. Bradley.
10.9 (h)	Offer Letter, dated March 11, 1999, from Knoll, Inc. to Stephen A. Grover.
10.10 (h)	Offer Letter, dated July 30, 1999, from Knoll, Inc. to Arthur C. Graves.
10.11 (d)	Amended and Restated Stockholders Agreement, dated as of November 4, 1999, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.12 (h)	Amendment and Waiver to Amended and Restated Stockholders Agreement, dated as of October 1, 2004, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.13 (d)	Amended and Restated Stockholders Agreement (Common Stock Under Stock Incentive Plans), dated as of November 4, 1999, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.14 (h)	Amendment and Waiver to Amended and Restated Stockholders Agreement (Common Stock Under Stock Incentive Plans), dated as of September 8, 2004, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.15 (d)	Amended and Restated Knoll, Inc. 1996 Stock Incentive Plan.
10.16 (d)	Amended and Restated Knoll, Inc. 1997 Stock Incentive Plan.
10.17*	Amended and Restated Knoll, Inc. 1999 Stock Incentive Plan.
10.18 (g)	Form of Non-Qualified Stock Option Agreement under the Amended and Restated Knoll, Inc. 1996 Stock Incentive Plan, entered into by Knoll, Inc. and certain executive officers.
10.19 (g)	Form of Non-Qualified Stock Option Agreement under the Amended and Restated Knoll, Inc. 1997 Stock Incentive Plan, entered into by Knoll, Inc. and certain executive officers.
10.20 (d)	Form of Non-Qualified Stock Option Agreement under the Amended and Restated Knoll, Inc. 1999 Stock Incentive Plan, entered into by Knoll, Inc. and certain executive officers.
10.21*	Form of Restricted Stock Agreement under the Amended and Restated Knoll, Inc. 1999 Stock Incentive Plan.
10.22 (h)	Agreement between the Knoll, Inc. Grand Rapids and United Brotherhood of Carpenters and Joiners of America Midwestern Council of Industrial Workers Local 1615, dated August 25, 2002.
10.23	Form of Director and Officer Indemnification Agreement.
10.24	Offer Letter, dated October 6, 2004, from Knoll, Inc. to John F. Maypole.
10.25	Offer Letter, dated October 6, 2004, from Knoll, Inc. to Anthony P. Terracciano.

II-3

Exhibit Number	Description
21 (h)	Subsidiaries of Knoll, Inc.
23.1	Consent of Ernst & Young LLP.
23.2*	Consent of Willkie Farr & Gallagher LLP (included in opinion referred to in 5.1 above).
23.3	Consent of John F. Maypole.
23.4	Consent of Anthony P. Terracciano.
24.1	Power of Attorney (included on signature page)

* To be filed by amendment.

(a) Incorporated by reference to Knoll, Inc.’s Registration Statement on Form S-4 (File No. 333-2972), which was declared effective by the Commission on June 12, 1996.

(b) Incorporated by reference to Knoll, Inc.’s Amendment No. 1 to Schedule 13E-3, which was filed with the Commission on September 10, 1999.

(c) Incorporated by reference to Knoll, Inc.’s Definitive Proxy Statement on Schedule 14A, which was filed with the Commission on September 30, 1999.

(d) Incorporated by reference to Knoll, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1999.

(e) Incorporated by reference to Knoll, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2000.

(f) Incorporated by reference to Knoll, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001.

(g) See Exhibit 10.20. Exhibit is substantially identical to Exhibit 10.20.

(h) Previously filed with this Registration Statement on Form S-1 (File No. 333-118901).

(B) Financial Statement Schedules

Schedule II    Valuation and Qualifying Accounts

Other schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because they are not required, are not applicable or the information is included in the financial statements or notes thereto.

II-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Knoll, Inc.

We have audited the consolidated financial statements of Knoll, Inc. as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and have issued our report thereon dated January 30, 2004, except for the first and second paragraphs of Note 22, as to which the dates are March 30, 2004 and November 14, 2004, respectively (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(B) of Form S-1 of this Registration Statement. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/S/    ERNST & YOUNG LLP

Philadelphia, Pennsylvania

January 30, 2004

II-5

SCHEDULE II

KNOLL, INC.

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

	Balance at Beginning of Year		Additions Charged to Expense		Charge-Offs		Other (1)			Balance at End of Year
Allowance for doubtful accounts:
Year ended December 31, 2001	$	6,682	$	3,094	$	2,348	$	22		$	7,450
Year ended December 31, 2002	$	7,450	$	1,364	$	1,044	$	20		$	7,790
Year ended December 31, 2003	$	7,790	$	1,699	$	2,162	$	141		$	7,468
Allowance for inventory valuation:
Year ended December 31, 2001	$	6,265	$	3,310	$	3,224	$	235		$	6,586
Year ended December 31, 2002	$	6,586	$	2,060	$	1,857	$	164		$	6,953
Year ended December 31, 2003	$	6,953	$	1,400	$	2,199	$	405		$	6,559
Allowance for deferred income tax assets:
Year ended December 31, 2001	$	11,594	$	1,184	$	494	$	(13	)	$	12,271
Year ended December 31, 2002	$	12,271	$	1,765	$	478	$	1		$	13,559
Year ended December 31, 2003	$	13,559	$	3,426	$	—	$	48		$	17,033
Reserve for warranty claims:
Year ended December 31, 2001	$	10,485	$	5,037	$	7,493	$	84		$	8,113
Year ended December 31, 2002	$	8,113	$	4,452	$	5,457	$	2		$	7,110
Year ended December 31, 2003	$	7,110	$	4,729	$	6,070	$	(122	)	$	5,647

(1) Primarily the impact of currency changes.

II-6

Item 17. Undertakings

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to our amended and restated certificate of incorporation or bylaws, or otherwise, the registrant has been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of this issue.

(c) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, we have duly caused this Amendment No. 2 to its Registration Statement on Form S-1 to be signed on our behalf by the undersigned, thereunto duly authorized, in the city of New York, State of New York on this 15th day of November, 2004.

KNOLL, INC.
By:	/S/    ANDREW B. COGAN
	Andrew B. Cogan Chief Executive Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
* Burton B. Staniar	Chairman of the Board of Directors	November 15, 2004
/S/    ANDREW B. COGAN Andrew B. Cogan	Chief Executive Officer, Knoll, Inc. and Director (Principal Executive Officer)	November 15, 2004
* Kathleen G. Bradley	President and Chief Executive Officer, Knoll North America and Director	November 15, 2004
* Barry L. McCabe	Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	November 15, 2004
* Jeffrey A. Harris	Director	November 15, 2004
* Sidney Lapidus	Director	November 15, 2004
* Kewsong Lee	Director	November 15, 2004
* Kevin Kruse	Director	November 15, 2004

*By: /S/    ANDREW B. COGAN Name:  Andrew B. Cogan Attorney-in-Fact November 15, 2004

II-8

EXHIBIT INDEX

Exhibit Number	Description
1.1	Form of Underwriting Agreement.
3.1	Amended and Restated Certificate of Incorporation of Knoll, Inc.
3.2	Amended and Restated By-Laws of Knoll, Inc.
4.1*	Form of Stock Certificate.
5.1*	Opinion of Willkie Farr & Gallagher LLP.
10.1 (a)	Stock Purchase Agreement, dated as of December 20, 1995, by and between Westinghouse and T.K.G. Acquisition Corp.
10.2 (h)	Credit Agreement, dated as of September 30, 2004, by and among Knoll, Inc., the Lenders (as defined therein), UBS AG, Stamford Branch, as Administrative Agent, and Goldman Sachs Credit Partners L.P., as Syndication Agent.
10.3 (d)	Amended and Restated Employment Agreement, dated as of January 1, 2000, between Knoll, Inc. and Burton B. Staniar.
10.4 (f)	Amendment to Employment Agreement, dated as of March 25, 2002, between Knoll, Inc. and Burton B. Staniar.
10.5 (e)	Employment Agreement, dated as of March 23, 2001, between Knoll, Inc. and Andrew B. Cogan.
10.6 (h)	Amendment No. 1 to Amended and Restated Employment Agreement, dated as of August 25, 2004, between Knoll, Inc. and Andrew B. Cogan.
10.7 (e)	Employment Agreement, dated as of March 23, 2001, between Knoll, Inc. and Kathleen G. Bradley.
10.8 (h)	Amendment No. 1 to Amended and Restated Employment Agreement, dated as of August 25, 2004, between Knoll, Inc. and Kathleen G. Bradley.
10.9 (h)	Offer Letter, dated March 11, 1999, from Knoll, Inc. to Stephen A. Grover.
10.10 (h)	Offer Letter, dated July 30, 1999, from Knoll, Inc. to Arthur C. Graves.
10.11 (d)	Amended and Restated Stockholders Agreement, dated as of November 4, 1999, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.12 (h)	Amendment and Waiver to Amended and Restated Stockholders Agreement, dated as of October 1, 2004, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.13 (d)	Amended and Restated Stockholders Agreement (Common Stock Under Stock Incentive Plans), dated as of November 4, 1999, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.14 (h)	Amendment and Waiver to Amended and Restated Stockholders Agreement (Common Stock Under Stock Incentive Plans), dated as of September 8, 2004, among Knoll, Inc., Warburg, Pincus Ventures, L.P., and the signatories thereto.
10.15 (d)	Amended and Restated Knoll, Inc. 1996 Stock Incentive Plan.
10.16 (d)	Amended and Restated Knoll, Inc. 1997 Stock Incentive Plan.
10.17*	Amended and Restated Knoll, Inc. 1999 Stock Incentive Plan.

Exhibit Number	Description
10.18 (g)	Form of Non-Qualified Stock Option Agreement under the Amended and Restated Knoll, Inc. 1996 Stock Incentive Plan, entered into by Knoll, Inc. and certain executive officers.
10.19 (g)	Form of Non-Qualified Stock Option Agreement under the Amended and Restated Knoll, Inc. 1997 Stock Incentive Plan, entered into by Knoll, Inc. and certain executive officers.
10.20 (d)	Form of Non-Qualified Stock Option Agreement under the Amended and Restated Knoll, Inc. 1999 Stock Incentive Plan, entered into by Knoll, Inc. and certain executive officers.
10.21*	Form of Restricted Stock Agreement under the Amended and Restated Knoll, Inc. 1999 Stock Incentive Plan.
10.22 (h)	Agreement between the Knoll, Inc. Grand Rapids and United Brotherhood of Carpenters and Joiners of America Midwestern Council of Industrial Workers Local 1615, dated August 25, 2002.
10.23	Form of Director and Officer Indemnification Agreement.
10.24	Offer Letter, dated October 6, 2004, from Knoll, Inc. to John F. Maypole.
10.25	Offer Letter, dated October 6, 2004, from Knoll, Inc. to Anthony P. Terracciano.
21 (h)	Subsidiaries of Knoll, Inc.
23.1	Consent of Ernst & Young LLP.
23.2*	Consent of Willkie Farr & Gallagher LLP (included in opinion referred to in 5.1 above).
23.3	Consent of John F. Maypole.
23.4	Consent of Anthony P. Terracciano.
24.1	Power of Attorney (included on signature page)

* To be filed by amendment.

(a) Incorporated by reference to Knoll, Inc.’s Registration Statement on Form S-4 (File No. 333-2972), which was declared effective by the Commission on June 12, 1996.

(b) Incorporated by reference to Knoll, Inc.’s Amendment No. 1 to Schedule 13E-3, which was filed with the Commission on September 10, 1999.

(c) Incorporated by reference to Knoll, Inc.’s Definitive Proxy Statement on Schedule 14A, which was filed with the Commission on September 30, 1999.

(d) Incorporated by reference to Knoll, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1999.

(e) Incorporated by reference to Knoll, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2000.

(f) Incorporated by reference to Knoll, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001.

(g) See Exhibit 10.20. Exhibit is substantially identical to Exhibit 10.20.

(h) Previously filed with this Registration Statement on Form S-1 (File No. 333-118901).

EX-1.1

Exhibit 1.1

Knoll, Inc.

Common Stock, $0.01 par value

Underwriting Agreement

[            ], 2004

Goldman, Sachs & Co.

UBS Securities LLC

Banc of America Securities LLC

J.P. Morgan Securities Inc.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

As representatives of the several Underwriters

   named in Schedule I hereto,

c/o Goldman, Sachs & Co.,

85 Broad Street

New York, New York 10004

c/o UBS Securities LLC

299 Park Avenue

New York, New York 10171

Ladies and Gentlemen:

Certain stockholders named in Schedule II hereto (the “Selling Stockholders”) of Knoll, Inc., a Delaware corporation (the “Company”), propose, subject to the terms and conditions stated herein, to sell to the Underwriters named in Schedule I hereto (the “Underwriters”) an aggregate of [            ] shares (the “Firm Shares”) and, at the election of the Underwriters, up to [            ] additional shares (the “Optional Shares”) of common stock, $0.01 par value (“Stock”) of the Company (the Firm Shares and the Optional Shares which the Underwriters elect to purchase pursuant to Section 2 hereof are herein collectively called the “Shares”).

The Company hereby acknowledges that in connection with the proposed offering of the Shares, it has requested UBS Financial Services Inc., an affiliate of an Underwriter, to administer a directed share program (the “Directed Share Program”) under which up to [            ] Firm Shares of the Firm Shares to be purchased by UBS Securities LLC (the “Reserved Shares”), shall be reserved for sale by UBS Financial Services Inc. at the initial public offering price to the Company’s directors, officers, employees, business associates, and related persons, designated by the Company (the “Directed Share Participants”), as part of the distribution of the Shares by the Underwriters, subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the National Association of Securities Dealers, Inc. (the “NASD”) and all other applicable laws, rules and regulations. The number of Shares available for sale to the general public will be reduced to the extent that Directed Share Participants purchase Reserved Shares. UBS Securities LLC may offer any Reserved Shares not purchased by Directed Share Participants to the general public on the same

1

basis as the other Shares being issued and sold hereunder. The Company has supplied UBS Financial Services Inc. with names, addresses and telephone numbers of the individuals or other entities that the Company has designated to be participants in the Directed Share Program. It is understood that any number of those designated to participate in the Directed Share Program may decline to do so.

1. (a) The Company represents and warrants to, and agrees with, each of the Underwriters that:

(i) A registration statement on Form S-1 (File No. 333-118901) (the “Initial Registration Statement”) in respect of the Shares has been filed with the Securities and Exchange Commission (the “Commission”); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered to you, and, excluding exhibits thereto, to you for each of the other Underwriters, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a “Rule 462(b) Registration Statement”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Act”), which became effective upon filing, no other document with respect to the Initial Registration Statement has heretofore been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Act is hereinafter called a “Preliminary Prospectus”); the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “Registration Statement”; and such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the “Prospectus”;

(ii) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through Goldman, Sachs & Co. and UBS Securities LLC expressly for use therein or by a Selling Stockholder expressly for use in the preparation of the answers therein to Items 7 and 11(m) of Form S-1;

(iii) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the

2

Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through Goldman, Sachs & Co. and UBS Securities LLC expressly for use therein or by a Selling Stockholder expressly for use in the preparation of the answers therein to Items 7 and 11(m) of Form S-1;

(iv) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Prospectus any loss or interference with its business that is material to the Company and its subsidiaries, taken as a whole, from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, current or future prospects, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”), otherwise than as set forth or contemplated in the Prospectus;

(v) The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Prospectus or such as do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;

(vi) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and the Company has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction, except where the failure to be so qualified or have such power or authority would not have a Material Adverse Effect; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation;

(vii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform to the description of the Stock

3

contained in the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and, subject to Section 630 of the New York Business Corporation Law, to the extent applicable, non-assessable and (except for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for such liens or encumbrances on such shares of capital stock to secure the Company’s senior credit facility as described in the Prospectus;

(viii) The compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (i) any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) the Certificate of Incorporation or By-laws of the Company or (iii) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the cases of clauses (i) and (iii) as would not have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except the registration under the Act of the Shares and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters;

(ix) Neither the Company nor any of its subsidiaries is (i) in violation of its Certificate of Incorporation or By-laws or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except in the case of clause (ii) as would not have a Material Adverse Effect;

(x) The statements set forth in the Prospectus under the caption “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Stock, under the caption “Material U.S. Federal Tax Consequences for Non-U.S. Holders of our Common Stock” and under the caption “Shares Eligible for Future Sale”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair, and the statements set forth in the Prospectus under the caption “Underwriting”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects;

(xi) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to the best of the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;

(xii) The Company is not and, after giving effect to the offering and sale of the Shares, will not be an “investment company”, as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”);

4

(xiii) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government of Cuba or with any person or affiliate located in Cuba;

(xiv) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder;

(xv) The statistical, industry-related and market-related data included in the Registration Statement and the Prospectus were obtained from independent industry publications and reports and are based on or derived from sources which the Company reasonably and in good faith believes are reliable, and such data agree with the sources from which they are derived;

(xvi) Except as disclosed in the Registration Statement and the Prospectus, no holder of any security of the Company has any rights to require registration of any security of the Company as part or on account of, or otherwise in connection with, the offer and sale of the Shares contemplated hereby, and any such rights so disclosed have either been fully complied with by the Company or effectively waived by the holders thereof, and any such waivers remain in full force and effect;

(xvii) Except as disclosed in the Registration Statement and the Prospectus, the Company has not sold or issued any securities during the six-month period preceding the date of the Prospectus, including but not limited to any sales pursuant to Rule 144A or Regulation D or S under the Act and the rules and regulations promulgated thereunder (the “Rules and Regulations”), other than Stock issued pursuant to employee benefit plans, qualified stock option plans or the employee compensation plans or pursuant to outstanding options, rights or warrants as described in the Registration Statement and the Prospectus;

(xviii) There are no contracts or other documents (including, without limitation, any voting agreement), which are required to be described in the Registration Statement and the Prospectus or filed as exhibits to the Registration Statement by the Act and the Rules and Regulations and which have not been so described or filed;

(xix) No relationship, direct or indirect, exists between or among the Company and any director, officer, stockholder, customer or supplier of the Company which is required by the Act and the Rules and Regulations to be described in the Registration Statement or the Prospectus which is not so described and described as required. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company to or for the benefit of any of the executive officers or directors of the Company or any of their respective family members, except as disclosed in the Registration Statement and the Prospectus. The Company has not, in violation of the Sarbanes-Oxley Act, directly or indirectly, extended or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any director or executive officer of the Company;

(xx) Except for this Agreement and as disclosed in the Registration Statement and the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with the transactions contemplated by this Agreement, the Registration Statement and the Prospectus or, to the Company’s knowledge, any arrangements, agreements, understandings, payments or issuance with respect to the Company or any of its officers, directors, stockholders, partners, employees, subsidiaries or affiliates that may affect the Underwriters’ compensation as determined by the NASD;

5

(xxi) The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which they are engaged; and the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires;

(xxii) The Company holds, except where the failure to do so would not have a Material Adverse Effect, and is operating in compliance in all material respects with, all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals, clearances and orders of any federal, state or foreign governmental authority required for the ownership of the properties of the Company or the conduct of its business (collectively, “Government Licenses”) and all such Government Licenses are valid and in full force and effect; except as would not have a Material Adverse Effect, the Company has complied at all times with all applicable federal, state, local and foreign laws, regulations, orders and decrees; the Company has not received, and has no reason to believe it will receive, any notice of proceedings relating to the suspension, revocation or modification of any Government Licenses nor has any reason to believe that any such Governmental Licenses will not be renewed in the ordinary course;

(xxiii) Except as would not have a Material Adverse Effect, the Company owns, possesses, licenses or has other rights to use the patents and patent applications, copyrights, trademarks, service marks, trade names, technology, know-how (including trade secrets and other unpatented and/or unpatentable proprietary rights) and other intellectual property necessary or used in any material respect to conduct its business in the manner in which it is being conducted and in the manner in which it is contemplated as set forth in the Prospectus (collectively, the “Company Intellectual Property”); except as would not have a Material Adverse Effect, none of the patents owned or licensed by the Company is unenforceable or invalid, and, except as would not have a Material Adverse Effect, none of the patent applications owned or licensed by the Company would be unenforceable or invalid if issued as patents; except as would not have a Material Adverse Effect, the Company is not obligated to pay a royalty, grant a license, or provide other consideration to any third party in connection with the Company Intellectual Property other than as disclosed in the Prospectus; the Company has not received any notice of violation or conflict with (and the Company knows of no basis for violation or conflict with) rights of others with respect to the Company Intellectual Property that, if resolved against the Company or its subsidiaries, would have a Material Adverse Effect; except as would not have a Material Adverse Effect, there are no pending or, to the best knowledge of the Company, threatened actions, suits, proceedings or claims by others that the Company is infringing any patent, trade secret, trade mark, service mark, copyright or other intellectual property or proprietary right; and, except as would not have a Material Adverse Effect, the discoveries, inventions, products or processes of the Company referenced in the Prospectus do not, to the best knowledge of the Company, violate or conflict with any intellectual property or proprietary right of any third person, or any discovery, invention, product or process that is the subject of a patent application filed by any third person;

(xxiv) Except as set forth in the Prospectus, neither the Company nor any of its subsidiaries has violated any applicable existing Federal, State, local or international laws and regulations relating to protection of human health or the environment or imposing liability or

6

standards of conduct concerning any Hazardous Material (“Environmental Laws”), lacks any permits, licenses or other approvals required of it under applicable Environmental Laws or is violating any term or condition of any such permit, license or approval, except for such instances of noncompliance which would not have a Material Adverse Effect. The term “Hazardous Material” means (i) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any “hazardous waste” as defined by the Resource Conservation and Recovery Act of 1976, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any other law relating to protection of human health or the environment or imposing liability or standards of conduct concerning any such chemical, material, waste or substance;

(xxv) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;

(xxvi) the Registration Statement, the Prospectus and any Preliminary Prospectus comply or will comply, and any further amendments or supplements thereto will comply, with any applicable laws or regulations of any foreign jurisdiction in which the Prospectus or any Preliminary Prospectus, as amended or supplemented, is distributed in connection with the Directed Share Program; and no approval, authorization, consent or order of or filing with any governmental or regulatory commission, board, body, authority or agency, other than those obtained, is required in connection with the offering of the Reserved Shares in any jurisdiction where the Reserved Shares are being offered; and

(xxvii) the Company has not offered, or caused the Underwriters to offer, Shares to any person pursuant to the Directed Share Program with the intent to influence unlawfully (i) a customer or supplier of the Company or any of its subsidiaries to alter the customer’s or supplier’s level or type of business with the Company or any of its subsidiaries, or (ii) a trade journalist or publication to write or publish favorable information about the Company or any of its subsidiaries or any of their respective products or services.

(b) Each of the Selling Stockholders severally represents and warrants to, and agrees with, each of the Underwriters and the Company that:

(i) All consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Stockholder of this Agreement and the Power of Attorney and the Custody Agreement hereinafter referred to, and for the sale and delivery of the Shares to be sold by such Selling Stockholder hereunder, have been obtained; and such Selling Stockholder has full right, power and authority to enter into this Agreement, the Power-of-Attorney and the Custody Agreement and to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder;

(ii) The sale of the Shares to be sold by such Selling Stockholder hereunder and the compliance by such Selling Stockholder with all of the provisions of this Agreement, the Power

7

of Attorney and the Custody Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is subject, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of such Selling Stockholder if such Selling Stockholder is a corporation, the Partnership Agreement of such Selling Stockholder if such Selling Stockholder is a partnership or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Stockholder or the property of such Selling Stockholder;

(iii) Such Selling Stockholder has, and immediately prior to each Time of Delivery (as defined in Section 4 hereof) such Selling Stockholder will have, good and valid title to the Shares to be sold by such Selling Stockholder hereunder, free and clear of all liens, encumbrances, equities or claims; and, upon delivery of such Shares and payment therefor pursuant hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims, will pass to the several Underwriters;

(iv) Such Selling Stockholder has not taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;

(v) To the extent that any statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder expressly for use therein, such Preliminary Prospectus and the Registration Statement did, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus, when they become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

(vi) In order to document the Underwriters’ compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Stockholder will deliver to you prior to or at the First Time of Delivery (as hereinafter defined) a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof);

(vii) Certificates in negotiable form representing all of the Shares to be sold by such Selling Stockholder hereunder have been placed in custody under a Custody Agreement, in the form heretofore furnished to you (the “Custody Agreement”), duly executed and delivered by such Selling Stockholder to Knoll, Inc., as custodian (the “Custodian”), and such Selling Stockholder has duly executed and delivered a Power of Attorney, in the form heretofore furnished to you (the “Power of Attorney”), appointing the persons indicated in Schedule II hereto, and each of them, as such Selling Stockholder’s attorneys-in-fact (the “Attorneys-in-Fact”) with authority to execute and deliver this Agreement on behalf of such Selling Stockholder, to determine the purchase price to be paid by the Underwriters to the

8

Selling Stockholders as provided in Section 2 hereof, to authorize the delivery of the Shares to be sold by such Selling Stockholder hereunder and otherwise to act on behalf of such Selling Stockholder in connection with the transactions contemplated by this Agreement and the Custody Agreement; and

(viii) The Shares represented by the certificates held in custody for such Selling Stockholder under the Custody Agreement are subject to the interests of the Underwriters hereunder; the arrangements made by such Selling Stockholder for such custody, and the appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable; the obligations of the Selling Stockholders hereunder shall not be terminated by operation of law, whether by the death or incapacity of any individual Selling Stockholder or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or the termination of such estate or trust, or in the case of a partnership or corporation, by the dissolution of such partnership or corporation, or by the occurrence of any other event; if any individual Selling Stockholder or any such executor or trustee should die or become incapacitated, or if any such estate or trust should be terminated, or if any such partnership or corporation should be dissolved, or if any other such event should occur, before the delivery of the Shares hereunder, certificates representing the Shares shall be delivered by or on behalf of the Selling Stockholders in accordance with the terms and conditions of this Agreement and of the Custody Agreement; and actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event.

2. Subject to the terms and conditions herein set forth, (a) each of the Selling Stockholders agrees, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from each of the Selling Stockholders, at a purchase price per share of $[            ], the number of Firm Shares (to be adjusted by you so as to eliminate fractional shares) determined by multiplying the aggregate number of Firm Shares to be sold by each of the Selling Stockholders as set forth opposite their respective names in Schedule II hereto by a fraction, the numerator of which is the aggregate number of Firm Shares to be purchased by such Underwriter as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the aggregate number of Firm Shares to be purchased by all of the Underwriters from all of the Selling Stockholders hereunder and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, each of the Selling Stockholders agrees, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from each of the Selling Stockholders (up to the aggregate number of Optional Shares to be sold by such Selling Stockholder as set forth opposite its name on Schedule II thereto; provided, however, Warburg, Pincus Ventures, L.P. shall sell additional Optional Shares if and to the extent the other Selling Stockholders elect not to sell their Optional Shares for any reason), at the purchase price per share set forth in clause (a) of this Section 2, that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractional shares) determined by multiplying such number of Optional Shares by a fraction the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.

9

The Selling Stockholders, as and to the extent indicated in Schedule II hereto, hereby grant, severally and not jointly, to the Underwriters the right to purchase at their election up to [            ] Optional Shares, at the purchase price per share set forth in the paragraph above, for the sole purpose of covering sales of shares in excess of the number of Firm Shares. Any such election to purchase Optional Shares shall be made in proportion to the number of Optional Shares to be sold by each Selling Stockholder. Any such election to purchase Optional Shares may be exercised only by written notice from you to the Attorneys-in-Fact, given within a period of 30 calendar days after the date of this Agreement and setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless you and the Attorneys-in-Fact otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.

3. Upon the authorization by you of the release of the Firm Shares, the several Underwriters propose to offer the Firm Shares for sale upon the terms and conditions set forth in the Prospectus.

4. (a) The Shares to be purchased by each Underwriter hereunder, in definitive form, and in such authorized denominations and registered in such names as Goldman, Sachs & Co. and UBS Securities LLC may request upon at least forty-eight hours’ prior notice to the Selling Stockholders shall be delivered by or on behalf of the Selling Stockholders to Goldman, Sachs & Co., through the facilities of the Depository Trust Company (“DTC”), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by each of the Selling Stockholders, as their interests may appear, to Goldman, Sachs & Co. at least forty-eight hours in advance. The Company will cause the certificates representing the Shares to be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery (as defined below) with respect thereto at the office of Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 (the “Designated Office”). The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on [            ], 2004 or such other time and date as Goldman, Sachs & Co., UBS Securities LLC and the Selling Stockholders may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs & Co. of the Underwriters’ election to purchase such Optional Shares, or such other time and date as Goldman, Sachs & Co., UBS Securities LLC and the Selling Stockholders may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the “First Time of Delivery”, such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the “Second Time of Delivery”, and each such time and date for delivery is herein called a “Time of Delivery”.

(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the cross receipt for the Shares and any additional documents requested by the Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 (the “Closing Location”), and the Shares will be delivered at the Designated Office, all at such Time of Delivery. A meeting will be held at the Closing Location at 3:00 p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.

10

5. The Company agrees with each of the Underwriters:

(a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or Prospectus which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish you with copies thereof; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or prospectus or suspending any such qualification, promptly to use its best efforts to obtain the withdrawal of such order;

(b) Promptly from time to time to take such action as you may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;

(c) Prior to 2:00 P.M., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such period to amend or supplement the Prospectus in order to comply with the Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, and in case any Underwriter is required to deliver a prospectus in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;

11

(d) To make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);

(e) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the Prospectus, not to offer, sell, contract to sell or otherwise dispose of, except as provided hereunder any securities of the Company that are substantially similar to the Shares, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities (other than pursuant to employee benefit plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without the prior written consent of Goldman, Sachs & Co. and UBS Securities LLC;

(f) During a period of three years from the effective date of the Registration Statement, to furnish to its stockholders or file with the Commission via EDGAR as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail;

(g) During a period of three years from the effective date of the Registration Statement, to furnish to you copies of all reports or other communications (financial or other) furnished to stockholders, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission); provided that this clause (ii) shall not require the Company to deliver any information that would cause the Company to make a filing under Regulation FD as promulgated under the Securities Exchange Act of 1934, as amended;

(h) To use its best efforts to list, subject to notice of issuance, the Shares on the New York Stock Exchange (the “Exchange”);

(i) To file with the Commission such information on Form 10-Q or Form 10-K as may be required by Rule 463 under the Act;

(j) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and the Company shall at the

12

time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act;

(k) Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company’s trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the “License”); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred; and

(l) To comply with all applicable securities and other applicable laws, rules and regulations in each jurisdiction in which the Reserved Shares are offered in connection with the Directed Share Program.

6. The Company and each of the Selling Stockholders covenant and agree with one another and with the several Underwriters and UBS Financial Services Inc. that (a) the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Shares under the Act and, except as provided in Section 5(c), all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (iv) all fees and expenses in connection with listing the Shares on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and charges of the Attorneys-in-Fact and the Custodian and any transfer agent or registrar; (viii) all costs, fees and expenses in connection with the offer and sale of the Reserved Shares, including all costs and expenses of UBS Financial Services Inc., as administrator of the Directed Share Program, including the reasonable fees and disbursements of counsel for UBS Financial Services Inc., as administrator of the Directed Share Program; and (ix) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section; and (b) such Selling Stockholder will pay or cause to be paid all costs and expenses incident to the performance of such Selling Stockholder’s obligations hereunder which are not otherwise specifically provided for in this Section, including (i) any fees and expenses of counsel for such Selling Stockholder; and (ii) all expenses and taxes incident to the sale and delivery of the Shares to be sold by such Selling Stockholder to the Underwriters hereunder. In connection with clause (b)(ii) of the preceding sentence, Goldman, Sachs & Co. and UBS Securities LLC agree to pay New York State stock transfer tax, and the Selling Stockholder agrees to reimburse Goldman, Sachs & Co. and UBS Securities LLC for associated carrying costs if such tax payment is not rebated on the day of payment and for any portion of such tax payment not rebated. It is understood, however, that the Company shall bear, and the Selling Stockholders shall not be required to pay or to reimburse the Company for, the cost of any other matters not directly relating to the sale and purchase of the Shares pursuant to

13

this Agreement, and that, except as provided in this Section, and Sections 8 and 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, and any advertising expenses connected with any offers they may make.

7. The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and of the Selling Stockholders herein are, at and as of such Time of Delivery, true and correct, the condition that the Company and the Selling Stockholders shall have performed all of its and their obligations hereunder theretofore to be performed, and the following additional conditions:

(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have become effective by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction;

(b) Latham & Watkins LLP, counsel for the Underwriters, shall have furnished to you such written opinion or opinions (a draft of each such opinion is attached as Annex II(a) hereto), dated such Time of Delivery, with respect to the matters covered in paragraphs (i), (ii), (vii), (x), and (xiii) of subsection (c) below as well as such other related matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

(c) Willkie Farr & Gallagher LLP, counsel for the Company, shall have furnished to you their written opinion (a draft of such opinion is attached as Annex II(b) hereto), dated such Time of Delivery, in form and substance satisfactory to you, to the effect that:

(i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus;

(ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company (including the Shares being delivered at such Time of Delivery) have been duly and validly authorized and issued and are fully paid and non-assessable; and the Shares conform to the description of the Stock contained in the Prospectus;

(iii) The Company has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction except where the failure to be so qualified or to be in good standing would not result in a Material Adverse Effect (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company and certificates from government officials, provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates);

14

(iv) Each of Spinneybeck Enterprises, Inc., a New York corporation, and Knoll Overseas, Inc., a Delaware corporation (collectively, the “Domestic Subsidiaries”) has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; and all of the issued shares of capital stock of each Domestic Subsidiary has been duly and validly authorized and issued, is fully paid and non-assessable, and (except for directors’ qualifying shares and except as otherwise set forth in the Prospectus) is owned directly or indirectly by the Company, to such counsel’s knowledge, free and clear of all liens, encumbrances, equities or claims (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company or its subsidiaries, provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates);

(v) To the best of such counsel’s knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position stockholders’ equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;

(vi) This Agreement has been duly authorized, executed and delivered by the Company;

(vii) The sale of the Shares being delivered at such Time of Delivery and the compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, lease, loan agreement or other agreement or instrument filed as an exhibit to the Registration Statement, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company, or any statute, order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties;

(viii) No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except the registration under the Act of the Shares, and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters, as to which such counsel need express no opinion;

(ix) Neither the Company nor any of its subsidiaries is in violation of its Certificate of Incorporation or By-laws or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, or lease or agreement or other instrument filed as an exhibit to the Registration Statement;

15

(x) The statements set forth in the Prospectus under the caption “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Stock, under the caption “Material U.S. Federal Tax Consequences for Non-U.S. Holders of our Common Stock” and under the caption “Shares Eligible for Future Sale”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair, and the statements set forth in the Prospectus under the caption “Underwriting”, insofar as they purport to describe the provisions of the documents referred to therein, are accurate, complete and fair in all material respects;

(xi) The Company is not an “investment company”, as such term is defined in the Investment Company Act; and

(xii) The Registration Statement and the Prospectus and any further amendments and supplements thereto made by the Company prior to such Time of Delivery (other than the financial statements, related schedules and other financial data therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the rules and regulations thereunder.

In addition, such counsel shall state that although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those referred to in the opinion in subsection (x) of this Section 7(c), they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the Company prior to such Time of Delivery (other than the financial statements, related schedules and other financial data therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus or any further amendment or supplement thereto made by the Company prior to such Time of Delivery (other than the financial statements, related schedules and other financial data therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of such Time of Delivery, either the Registration Statement or the Prospectus or any further amendment or supplement thereto made by the Company prior to such Time of Delivery (other than the financial statements, related schedules and other financial data therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be described in the Registration Statement or the Prospectus which are not filed or described as required;

(d) The respective counsel for each of the Selling Stockholders, as indicated in Schedule II hereto, each shall have furnished to you their written opinion with respect to each of the Selling Stockholders for whom they are acting as counsel (a draft of each such opinion

16

is attached as Annex II(c) hereto), dated such Time of Delivery, in form and substance satisfactory to you, to the effect that:

(i) A Power-of-Attorney and a Custody Agreement have been duly executed and delivered by such Selling Stockholder and constitute valid and binding agreements of such Selling Stockholder in accordance with their terms;

(ii) This Agreement has been duly executed and delivered by or on behalf of such Selling Stockholder; and the sale of the Shares to be sold by such Selling Stockholder hereunder and the compliance by such Selling Stockholder with all of the provisions of this Agreement, the Power-of-Attorney and the Custody Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is subject that is, in each case material to the Selling Stockholder, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of such Selling Stockholder if such Selling Stockholder is a corporation, the Partnership Agreement of such Selling Stockholder if such Selling Stockholder is a partnership or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over such Selling Stockholder or the property of such Selling Stockholder;

(iii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement in connection with the Shares to be sold by such Selling Stockholder hereunder, except such consent, approval, authorization or order which have been duly obtained and are in full force and effect, such as have been obtained under the Act and such as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of such Shares by the Underwriters;

(iv) To such counsel’s knowledge, immediately prior to such Time of Delivery, such Selling Stockholder had good and valid title to the Shares to be sold at such Time of Delivery by such Selling Stockholder under this Agreement, free and clear of all liens, encumbrances, equities or claims, and full right, power and authority to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder; and

(v) Upon payment therefore by the Underwriters, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims, will be transferred to each of the several Underwriters who have purchased such Shares in good faith and without notice of any such lien, encumbrance, equity or claim or any other adverse claim within the meaning of the Uniform Commercial Code.

In rendering the opinion in paragraph (iv), such counsel may rely upon a certificate of such Selling Stockholder in respect of matters of fact as to ownership of, and liens, encumbrances, equities or claims on, the Shares sold by such Selling Stockholder, provided that such counsel shall state that they believe that both you and they are justified in relying upon such certificate;

(e) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time

17

of Delivery, Ernst & Young LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex I hereto (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex I(a) hereto and a draft of the form of letter to be delivered on the effective date of any post-effective amendment to the Registration Statement and as of each Time of Delivery is attached as Annex I(b) hereto);

(f)(i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus, and (ii) since the respective dates as of which information is given in the Prospectus there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Prospectus;

(g) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s debt securities;

(h) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Exchange; (ii) a suspension or material limitation in trading in the Company’s securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war; or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Prospectus;

(i) The Shares at such Time of Delivery shall have been duly listed, subject to notice of issuance, on the Exchange;

(j) The Company has obtained and delivered to the Underwriters executed copies of an agreement from each of the persons on Schedule III, substantially to the effect set forth in Subsection 5(e) hereof in form and substance satisfactory to you;

18

(k) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement; and

(l) The Company and the Selling Stockholders shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company and of the Selling Stockholders, respectively, satisfactory to you as to the accuracy of the representations and warranties of the Company and the Selling Stockholders, respectively, herein at and as of such Time of Delivery, as to the performance by the Company and the Selling Stockholders of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, and as to such other matters as you may reasonably request, and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a) and (f) of this Section.

8. (a)(i) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (A) an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Goldman, Sachs & Co. and UBS Securities LLC expressly for use therein and (B) the Directed Share Program, provided that the Company shall not be responsible under this clause (B) for any loss, damage, expense, liability or claim that is finally judicially determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Underwriter in conducting the Directed Share Program.

(ii) The Company agrees to indemnify, defend and hold harmless UBS Financial Services Inc. and its partners, directors and officers, and any person who controls UBS Financial Services Inc. within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, UBS Financial Services Inc. or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is (A) based upon any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company, including the Preliminary Prospectus, for distribution to Directed Share Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (B) caused by the failure of any Directed Share Participant to pay for and accept delivery of Reserved Shares that the Directed Share Participant has agreed to purchase; (C) caused by the failure of any Directed Share Participant to comply with any required procedures; (D) based upon any claims related to the Directed Share Program arising

19

subsequent to the delivery of the Reserved Shares to any Directed Share Participant; or (E) otherwise arises out of or is based upon the Directed Share Program, provided that the Company shall not be responsible under this clause (E) for any loss, damage, expense, liability or claim that is finally judicially determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of UBS Financial Services Inc. in conducting the Directed Share Program.

(b) Each of the Selling Stockholders, severally but not jointly, will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder expressly for use therein; and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that such Selling Stockholder shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Goldman, Sachs & Co. and UBS Securities LLC expressly for use therein; provided, further, that the liability of each Selling Stockholder pursuant to this subsection 8(b) shall not exceed the product of the number of Shares sold by such Selling Stockholder including any Optional Shares and the initial public offering price of the Shares as set forth in the Prospectus.

(c) Each Underwriter will indemnify and hold harmless the Company and each Selling Stockholder against any losses, claims, damages or liabilities to which the Company or such Selling Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Underwriter through Goldman, Sachs & Co. and UBS Securities LLC expressly for use therein; and will reimburse the Company and each Selling Stockholder for any legal or other expenses reasonably incurred by the Company or such Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred.

(d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in

20

writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

(e) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (d) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Stockholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholders on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each of the Selling Stockholders and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims,

21

damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint.

(f) The obligations of the Company and the Selling Stockholders under this Section 8 shall be in addition to any liability which the Company and the respective Selling Stockholders may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company) and to each person, if any, who controls the Company or any Selling Stockholder within the meaning of the Act.

9. (a) The Company will indemnify and hold harmless each Selling Stockholder against any losses, claims, damages or liabilities, joint or several, to which such Selling Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Selling Stockholder for any legal or other expenses reasonably incurred by such Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company expressly for use therein by (i) any Selling Stockholder or (ii) any Underwriter through Goldman, Sachs & Co. and UBS Securities LLC.

(b) Each of the Selling Stockholders, severally but not jointly, will indemnify and hold harmless the Company against any losses, claims, damages or liabilities, joint or several, to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such

22

amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the liability of each Selling Stockholder pursuant to this subsection 9(b), together with any liability of such Selling Stockholder pursuant to Section 8(b) hereof, shall not exceed the product of the number of Shares sold by such Selling Stockholder (including any Optional Shares) and the initial public offering price of the Shares as set forth in the Prospectus.

(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Selling Stockholders on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Selling Stockholders on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand and the Selling Stockholders on the other and the parties’ relative intent, knowledge, access to information

23

and opportunity to correct or prevent such statement or omission. The Company and each of the Selling Stockholders agree that it would not be just and equitable if contributions pursuant to this subsection (d) were determined by pro rata allocation (even if the Selling Stockholders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Selling Stockholder shall be required to contribute any amount that, together with any required contribution by such Selling Stockholder pursuant to Section 8 hereof, exceeds the product of the number of Shares sold by such Selling Stockholder including any Optional Shares and the initial public offering price of the Shares as set forth in the Prospectus. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Selling Stockholders’ obligations in this subsection (d) to contribute are several and not joint.

(e) Anything in this Section 9 notwithstanding, nothing contained in this Section 9 shall in any way affect the rights of the Underwriters and the obligations of the Company and the Selling Stockholders under Section 8 hereof.

10. (a) If any Underwriter shall default in its obligation to purchase the Shares which it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Selling Stockholders shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Selling Stockholders that you have so arranged for the purchase of such Shares, or the Selling Stockholders notify you that they have so arranged for the purchase of such Shares, you or the Selling Stockholders shall have the right to postpone a Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments to the Registration Statement or the Prospectus which in the opinion of Latham & Watkins LLP, counsel to the Underwriters, and Willkie Farr & Gallagher LLP, counsel to the Company, may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Shares. Nothing herein shall relieve a defaulting Underwriter from liability for its default.

(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Selling Stockholders shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

24

(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased exceeds one-eleventh of the aggregate number of all of the Shares to be purchased at such Time of Delivery, or if the Selling Stockholders shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to the Second Time of Delivery, the obligations of the Underwriters to purchase and of the Selling Stockholders to sell the Optional Shares) shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company or the Selling Stockholders, except for the expenses to be borne by the Company and the Selling Stockholders and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

11. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Selling Stockholders and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any of the Selling Stockholders, or any officer or director or controlling person of the Company, or any controlling person of any Selling Stockholder, and shall survive delivery of and payment for the Shares.

12. If this Agreement shall be terminated pursuant to Section 10 hereof, neither the Company nor the Selling Stockholders shall then be under any liability to any Underwriter or UBS Financial Services Inc., as the case may be, except as provided in Sections 6 and 8 hereof; but, if for any other reason any Shares are not delivered by or on behalf of the Selling Stockholders as provided herein, the Company will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company and the Selling Stockholders shall then be under no further liability to any Underwriter or UBS Financial Services Inc., as the case may be, in respect of the Shares not so delivered except as provided in Sections 6 and 8 hereof.

13. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you jointly or by Goldman, Sachs & Co. and UBS Securities LLC on behalf of you as the representatives; and in all dealings with any Selling Stockholder hereunder, you and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Stockholder made or given by any or all of the Attorneys-in-Fact for such Selling Stockholder.

All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to you as the representatives in care of Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Registration Department and UBS Securities LLC, 299 Park Avenue, New York, New York 10171 Attention: Syndicate Department; if to any Selling Stockholder shall be delivered or sent by mail, telex or facsimile transmission to counsel for such Selling Stockholder at its address set forth in Schedule II hereto; and if to the Company shall be delivered or sent by mail, telex or facsimile

25

transmission to the address of the Company set forth in the Registration Statement, Attention: Secretary or if sent to the signatories to the lock-up agreement or any of them, will be mailed, delivered, telegraphed and confirmed to such signatory at its address set forth in the lock up agreement; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire or telex constituting such Questionnaire, which address will be supplied to the Company or the Selling Stockholders by you on request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, UBS Financial Services Inc., the Company and the Selling Stockholders and, to the extent provided in Sections 8 and 11 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Stockholder or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.

15. Time shall be of the essence of this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.

16. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

17. Except as set forth below, no claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement (“Claim”), may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company and each of the Selling Stockholders consent to the jurisdiction of such courts and personal service with respect thereto. The Company and each of the Selling Stockholders hereby consent to personal jurisdiction, service and venue in any court in which any Claim arising out of or in any way relating to this Agreement is brought by any third party against, Goldman, Sachs & Co., UBS Securities LLC or any indemnified party. Each of Goldman, Sachs & Co., UBS Securities LLC, the Selling Stockholders and the Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. The Company and each of the Selling Stockholders agree that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Company or any of the Selling Stockholders and may be enforced in any other courts to the jurisdiction of which the Company or any of the Selling Stockholders are or may be subject, by suit upon such judgment.

18. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

19. The Company and the Selling Stockholders are authorized, subject to applicable law, to disclose any and all aspects of this potential transaction that are necessary to support any U.S. federal income tax benefits expected to be claimed with respect to such transaction, and all materials of any kind (including tax opinions and other tax analyses) related to those benefits, without the Underwriters imposing any limitation of any kind.

26

If the foregoing is in accordance with your understanding, please sign and return to us ten counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and each of the Selling Stockholders. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Selling Stockholders for examination, upon request, but without warranty on your part as to the authority of the signers thereof.

Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Stockholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and binding Power-of-Attorney which authorizes such Attorney-in-Fact to take such action.

Very truly yours,

Knoll, Inc.

By:

Name:

Title:

27

The Selling Stockholders named in Schedule II to this Agreement

By:

Name:

Title:

As Attorney-in-Fact acting on behalf of each of the Selling Stockholders named in Schedule II to this Agreement.

28

Warburg, Pincus Ventures, L.P.
By:	Warburg Pincus & Co., its general partner
	By:
	Name:
	Title:

29

Accepted as of the date hereof

Goldman, Sachs & Co.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Banc of America Securities LLC

J.P. Morgan Securities Inc.

By:
	(Goldman, Sachs & Co.)
UBS Securities LLC
By:
Name:
Title:
By:
Name:
Title:
On behalf of each of the Underwriters
UBS Financial Services Inc.
By:
Name:
Title:
By:
Name:
Title:

30

SCHEDULE I

Underwriter	Total Number of Firm Shares to be Purchased	Number of Optional Shares to be Purchased if Maximum Option Exercised
Goldman, Sachs & Co.
UBS Securities LLC.
Banc of America Securities LLC
J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated

1

SCHEDULE II

	Total Number of Firm Shares to be Sold	Number of Optional Shares to be Sold if Maximum Option Exercised
Warburg Pincus & Co. (a)
Burton B. Staniar (b)
John H. Lynch (b)
Miles Glidden (b)
Michael Lehman (b)
Total

(a) This Selling Stockholder is represented by Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019 and has appointed [            ] and [            ], and each of them, as the Attorneys-in-Fact for such Selling Stockholder.

(b) This Selling Stockholder is represented by Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston, MA 02110 and has appointed [            ] and [            ], and each of them, as the Attorneys-in-Fact for such Selling Stockholder.

1

SCHEDULE III

List of Persons Delivering Lock-Up Agreements

2

ANNEX I

Pursuant to Section 7(d) of the Underwriting Agreement, the accountants shall furnish letters to the Underwriters to the effect that:

(i) They are independent certified public accountants with respect to the Company and its subsidiaries within the meaning of the Act and the applicable published rules and regulations thereunder;

(ii) In their opinion, the financial statements and any supplementary financial information and schedules (and, if applicable, financial forecasts and/or pro forma financial information) examined by them and included in the Prospectus or the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations thereunder; and, if applicable, they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the unaudited consolidated interim financial statements, selected financial data, pro forma financial information, financial forecasts and/or condensed financial statements derived from audited financial statements of the Company for the periods specified in such letter, as indicated in their reports thereon, copies of which have been furnished to the representatives of the Underwriters (the “Representatives”);

(iii) They have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus as indicated in their reports thereon copies of which have been separately furnished to the Representatives and on the basis of specified procedures including inquiries of officials of the Company who have responsibility for financial and accounting matters regarding whether the unaudited condensed consolidated financial statements referred to in paragraph (vi)(A)(i) below comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations, nothing came to their attention that caused them to believe that the unaudited condensed consolidated financial statements do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations;

(iv) The unaudited selected financial information with respect to the consolidated results of operations and financial position of the Company for the five most recent fiscal years included in the Prospectus agrees with the corresponding amounts (after restatements where applicable) in the audited consolidated financial statements for such five fiscal years which were included or incorporated by reference in the Company’s Annual Reports on Form 10-K for such fiscal years;

(v) They have compared the information in the Prospectus under selected captions with the disclosure requirements of Regulation S-K and on the basis of limited procedures specified in such letter nothing came to their attention as a result of the foregoing procedures that caused them to believe that this information does not conform in all material respects with the disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;

(vi) On the basis of limited procedures, not constituting an examination in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim

3

financial statements of the Company and its subsidiaries, inspection of the minute books of the Company and its subsidiaries since the date of the latest audited financial statements included in the Prospectus, inquiries of officials of the Company and its subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that:

(A) (i) the unaudited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations, or (ii) any material modifications should be made to the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus for them to be in conformity with generally accepted accounting principles;

(B) any other unaudited income statement data and balance sheet items included in the Prospectus do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included in the Prospectus;

(C) the unaudited financial statements which were not included in the Prospectus but from which were derived any unaudited condensed financial statements referred to in clause (A) and any unaudited income statement data and balance sheet items included in the Prospectus and referred to in clause (B) were not determined on a basis substantially consistent with the basis for the audited consolidated financial statements included in the Prospectus;

(D) any unaudited pro forma consolidated condensed financial statements included in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements;

(E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares and upon conversions of convertible securities, in each case which were outstanding on the date of the latest financial statements included in the Prospectus) or any increase in the consolidated long-term debt of the Company and its subsidiaries, or any decreases in consolidated net current assets or stockholders’ equity or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with amounts shown in the latest balance sheet included in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and

(F) for the period from the date of the latest financial statements included in the Prospectus to the specified date referred to in clause (E) there were any decreases in consolidated net revenues or operating profit or the total or per share amounts of consolidated net income or other items specified by the Representatives, or any increases

4

in any items specified by the Representatives, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Representatives, except in each case for decreases or increases which the Prospectus discloses have occurred or may occur or which are described in such letter; and

(vii) In addition to the examination referred to in their report(s) included in the Prospectus and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (vi) above, they have carried out certain specified procedures, not constituting an examination in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Representatives, which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Prospectus, or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representatives, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries and have found them to be in agreement.

5

ANNEX II(a)

[Form of Latham & Watkins LLP Opinion]

1

ANNEX II(b)

[Form of Willkie Farr & Gallagher LLP Opinion]

1

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

KNOLL, INC.

Knoll, Inc., a Delaware corporation (hereinafter called the “Corporation”) hereby certifies as follows:

The present name of the Corporation is Knoll, Inc. The date of filing of the original Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware under the name “T.K.G. Acquisition Corp.” was December 15, 1995. The date of filing of the first Amended and Restated Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware was May 6, 1997.

This Amended and Restated Certificate of Incorporation, which amends and restates the Amended and Restated Certificate of Incorporation filed on May 6, 1997, has been duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

The text of the first Amended and Restated Certificate of Incorporation of the Corporation as amended hereby is restated to read in its entirety as follows:

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

KNOLL, INC.

* * * * * * *

FIRST: The name of the corporation (the “Corporation”) is KNOLL, INC.

SECOND: The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware as now in effect or as hereafter amended.

FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 210,000,000 shares, consisting of (i) 200,000,000 shares of common stock, par value $0.01 per share (“Common Stock”), and (ii) 10,000,000 shares of preferred stock, par value $1.00 per share (the “Preferred Stock”). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the “Board of Directors”) is expressly authorized at any time, and from time to time, to provide for the issuance of shares of Preferred Stock in one or more series, for such consideration (not less than its par value) and with the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations, or restrictions thereof, as shall be determined by the Board of Directors and fixed by resolution or resolutions adopted by the Board of Directors providing for the number of shares in each such series.

On the date on which this Amended and Restated Certificate of Incorporation is filed with the Office of the Secretary of the State of Delaware (the “Effective Date”), each issued and outstanding share of Common Stock, par value $.01 per share, shall be split and exchanged, ipso facto, for 2.0 shares of the new Common Stock, par value $0.01 per share. The Common Stock shall have the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations, or restrictions thereof, as hereinafter set forth in this Article FOURTH.

(1) Dividends. The holders of Common Stock shall be entitled to receive, when and as declared, out of assets and funds legally available therefor, cash or non-cash dividends payable as and when the Board of Directors in its sole business judgment so declares. Any such dividend shall be payable ratably to all record holders of Common Stock as of the record date fixed by the Board of Directors in accordance with the by-laws of the Corporation for the payment thereof.

(2) Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (“Liquidation”), the holders of Common Stock then outstanding shall be entitled to be paid ratably out of the assets and funds of the Corporation available for distribution to its stockholders, after and subject to the payment in full of all amounts required to be distributed to the holders of any Preferred Stock upon Liquidation, an amount equal to their share (including any declared but unpaid dividends on the Common Stock, subject to proportionate adjustment in the event of any stock dividend, stock split, stock distribution or combination with respect to such shares) of such assets and funds.

(3) Voting. Except as required by law, as may be limited in the Knoll, Inc. 1996 Stock Incentive Plan (formerly known as the T.K.G. Acquisition Corp. 1996 Stock Incentive Plan), the Knoll, Inc. 1997 Stock Incentive Plan (formerly known as the T.K.G. Acquisition Corp. 1997 Stock Incentive Plan), the Knoll, Inc. 1999 Stock Incentive Plan, in each case, as amended from time to time (collectively, the “Stock Plans”), or any other incentive plan established for the directors or employees of the Corporation or any of its subsidiaries, or as otherwise provided herein or in any amendment hereof:

(i) the entire voting power of the Corporation shall be vested in the holders of the Common Stock, and

(ii) each holder of Common Stock entitled to vote shall at every meeting of the stockholders of the Corporation be entitled to one vote for each share of Common Stock registered in his or her name on the record of stockholders.

FIFTH: In furtherance and not in limitation of the powers conferred by statute, the by-laws of the Corporation may be made, altered, amended or repealed by the stockholders or by a majority of the entire Board of Directors.

SIXTH: 1. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors of the Corporation shall be fixed from time to time by resolution of the Board of Directors.

2. Upon the Effective Date, the Board of Directors shall be divided into three classes to be designated as Class I, Class II and Class III. The number of directorships shall be apportioned among the classes so as to maintain the classes as nearly equal in number as possible. The Board of Directors, by resolution, shall designate the class in which each of the directors then in office shall serve upon such classification. The terms of office of the classes of directors so designated by the Board of Directors shall expire at the times of the annual meetings of the stockholders as follows: Class I on the first annual meeting of stockholders following the Effective Date, Class II on the second annual meeting following the Effective Date and Class III on the third annual meeting following the Effective Date, or thereafter in each case when their respective successors are elected and qualified. The directors chosen to succeed those whose terms are expiring at such annual meetings and thereafter shall be identified as being of the same class as the directors whom they succeed, and shall be elected for a term ending at the time of the

-2-

third succeeding annual meeting of stockholders following their election, or thereafter in each case when their respective successors are elected and qualified.

3. A director may be removed from office only for cause and only by vote of at least a majority of the outstanding stock entitled to vote in an election of directors. “Cause” shall mean (a) a final conviction of a felony involving moral turpitude or (b) willful misconduct that is materially and demonstrably injurious economically to the Corporation. For purposes of this definition of “cause,” no act, or failure to act, by a director shall be considered “willful” unless committed in bad faith and without a reasonable belief that the act or failure to act was in the best interest of the Corporation or any Affiliate of the Corporation. “Cause” shall not exist unless and until the Corporation has delivered to the director a written notice of the act or failure to act that constitutes “cause” and, if cure is possible, such director shall not have cured such act or omission within 90 days after the delivery of such notice. As used in this Amended and Restated Certificate of Incorporation, “Affiliate” has the meaning given such term under Rule 12b-2 of the Securities Exchange Act of 1934. Any vacancy on the Board of Directors, however resulting, and any newly created directorship resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class, shall be filled only by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected.

4. Elections of directors need not be by written ballot.

SEVENTH: 1. Indemnification. The Corporation shall indemnify to the fullest extent permitted under and in accordance with the laws of the State of Delaware any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, incorporator, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of or in any other similar capacity with another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, shall not, of itself, create a presumption that the person had reasonable cause to believe that his or her conduct was unlawful.

2. Payment of Expenses. Expenses (including attorneys’ fees) incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding shall (in the case of any action, suit or proceeding against a director of the Corporation) or may (in the

-3-

case of any action, suit or proceeding against an officer, trustee, employee or agent) be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors upon receipt of an undertaking by or on behalf of the indemnified person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article SEVENTH.

3. Nonexclusivity of Provision; Insurance. The indemnification and other rights set forth in this Article SEVENTH shall not be exclusive of any provisions with respect thereto in the by-laws or any other contract or agreement between the Corporation and any officer, director, employee or agent of the Corporation. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of the State of Delaware.

4. Effect of Repeal. Neither the amendment nor repeal of this Article SEVENTH, subparagraph 1, 2, or 3, nor the adoption of any provision of this Certificate of Incorporation inconsistent with Article SEVENTH, subparagraph 1, 2, or 3, shall eliminate or reduce the effect of this Article SEVENTH, subparagraphs 1, 2, and 3, in respect of any matter occurring before such amendment, repeal or adoption of an inconsistent provision or in respect of any cause of action, suit or claim relating to any such matter which would have given rise to a right of indemnification or right to receive expenses pursuant to this Article SEVENTH, subparagraph 1, 2, or 3, if such provision had not been so amended or repealed or if a provision inconsistent therewith had not been so adopted.

5. Limitation on Liability. No director or officer shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director or officer, except for any matter in respect of which such director or officer (A) shall be liable under Section 174 of the General Corporation Law of the State of Delaware or any amendment thereto or successor provision thereto, or (B) shall be liable by reason that, in addition to any and all other requirements for liability, he or she:

(i) shall have breached his or her duty of loyalty to the Corporation or its stockholders;

(ii) shall not have acted in good faith or, in failing to act, shall not have acted in good faith;

(iii) shall have acted in a manner involving intentional misconduct or a knowing violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of law; or

(iv) shall have derived an improper personal benefit.

-4-

If the General Corporation Law of the State of Delaware is amended after the Effective Date to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended.

EIGHTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof on the application of any receiver or receivers appointed for this Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

NINTH: The Corporation reserves the right to amend this Amended and Restated Certificate of Incorporation in any manner permitted by the General Corporation Law of the State of Delaware, as amended from time to time, and all rights and powers conferred herein on stockholders, directors and officers, if any, are subject to this reserved power.

-5-

IN WITNESS WHEREOF, Knoll, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by                                         , its                                                      , this              day of             , 2004.

Knoll, Inc.

By:

Name:

Title:

-6-

EX-3.2

Exhibit 3.2

KNOLL, INC.

Incorporated Under the Laws of

the State of Delaware

AMENDED AND RESTATED BY-LAWS

ARTICLE I

OFFICES

The registered office of Knoll, Inc. (the “Corporation”) in Delaware shall be at 1209 Orange Street in the City of Wilmington, County of New Castle, and The Corporation Trust Company will be the resident agent of the Corporation in charge thereof. The Corporation may also have such other offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time designate or the business of the Corporation may require.

ARTICLE II

STOCKHOLDERS

Section 1. Annual Meeting. The annual meeting of stockholders for the election of directors and the transaction of any other business will be held in such city and state and at such date, time and place as may be designated by the Board of Directors and set forth in the notice of such meeting. At the annual meeting any business may be transacted and any corporate action may be taken, whether stated in the notice of meeting or not, except as otherwise expressly provided by statute or the Corporation’s certificate of incorporation (the “Certificate of Incorporation”).

Section 2. Special Meetings. Special meetings of the stockholders for any purpose may be called at any time by the Board of Directors or by its Chairman, or by the Chief Executive Officer or President, and will be called by the Chairman, Chief Executive Officer or President at the request of the holders of a majority of the outstanding shares of capital stock entitled to vote. Special meetings shall be held at such place or places within or without the State of Delaware as shall from time to time be designated by the Board of Directors and stated in the notice of such meeting. At a special meeting no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.

Section 3. Notice of Meetings. Not less than ten (10) days nor more than sixty (60) days before the date of every stockholder’s meeting, the Secretary shall give to each stockholder entitled to vote at such meeting and each other stockholder entitled to notice of the meeting, written or printed notice stating the time and place of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, either by mail or by presenting it to him or her personally or by leaving it at his or her residence or usual place of

business. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his or her post office address as it appears on the records of the Corporation, with postage thereon prepaid. Notice of any adjourned meeting need not be given except by announcement at the meeting so adjourned, unless otherwise ordered in connection with such adjournment. Such further notice, if any, shall be given as may be required by law.

Section 4. Waiver of Notice. Any stockholder may waive notice of any meeting before or after the meeting. The waiver must be in writing, signed by the stockholder and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. A stockholder’s attendance, in person or by proxy, at a meeting (a) waives objection to lack of notice or defective notice of the meeting, unless the stockholder or his or her proxy at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (b) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder or his or her proxy objects to considering the matter before it is voted upon.

Section 5. Quorum. Any number of stockholders, together holding at least a majority of the capital stock of the Corporation issued and outstanding and entitled to vote, who will be present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business, except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws.

Section 6. Adjournment of Meetings. If less than a quorum is in attendance at the time for which a meeting is called, the meeting may adjourn by a majority vote of the stockholders present or represented by proxy and entitled to vote at the meeting, without notice other than announcement at such meeting, until a quorum is in attendance. Any meeting at which a quorum is present may also be adjourned in like manner and for the amount of time as may be determined by a majority vote of the stockholders present or represented by proxy and entitled to vote. At any adjourned meeting at which a quorum is present, any business may be transacted and any corporate action may be taken which might have been transacted at the meeting as originally called.

Section 7. Voting List. The Secretary will prepare and make, at least ten days before every election of directors, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares of each stockholder. The list will be open at either (i) a place within the city where the meeting is to be held, which place shall be specified in the notice of such meeting, or (ii) if not so specified, at the place the meeting is to be held, for said ten days, as well as at the time and place of such meeting, and will be subject to the inspection of any stockholder.

Section 8. Voting. Each stockholder entitled to vote at any meeting may vote either in person or by proxy, but no proxy shall be voted on or after three years from its date, unless the proxy provides for a longer period. Each stockholder entitled to vote will at every meeting of the stockholders be entitled to one vote for each share of stock (or such other number of votes as shall be provided in the certificate of incorporation, including any certificate of

-2-

designation, with respect to any class or series of stock) registered in his or her name on the record of stockholders. At all meetings of stockholders, all matters, except as otherwise provided by statute and except that directors shall be elected by a plurality vote, will be determined by the affirmative vote of the majority of shares present in person or by proxy and entitled to vote on the subject matter. Voting at meetings of stockholders need not be by written ballot.

Section 9. Record Date of Stockholders. The Board of Directors is authorized to fix in advance a date not exceeding sixty days nor less than ten days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock will go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders, and any adjournment of a meeting of stockholders, or entitled to receive payment of any dividend, or to any allotment of rights, or to exercise the rights in respect of any change, conversion or exchange of capital stock, or to give consent. Only the stockholders that are stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, the meeting of stockholders, and any adjournment of the meeting, or to receive payment of the dividend, or to receive the allotment of rights, or to exercise the rights, or to give the consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation, after the record date fixed in accordance with this Section 9.

Section 10. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken (i) is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted and (ii) is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent will be given to those stockholders who have not consented in writing.

Section 11. Conduct of Meetings. The Chairman of the Board of Directors, or in his or her absence the Chief Executive Officer, the President or any vice president designated by the Chairman of the Board, shall preside at all regular or special meetings of stockholders. To the maximum extent permitted by law, the presiding person will have the power to set procedural rules, including but not limited to rules respecting the time allotted to stockholders to speak, governing all aspects of the conduct of the meetings. The Secretary of the Corporation will act as secretary of each meeting. In the absence of the Secretary, the chairman of the meeting will appoint any person to act as secretary of the meeting.

-3-

ARTICLE III

DIRECTORS

Section 1. Number and Qualifications. The Board of Directors will consist of such number of directors as may be fixed from time to time by resolution of the Board of Directors. The directors need not be stockholders.

Section 2. Election and Duration of Office. At the time set forth in the Corporation’s certificate of incorporation (the “Effective Time”), the Board of Directors shall be divided into three classes to be designated as Class I, Class II and Class III. The number of directorships shall be apportioned among the classes so as to maintain the classes as nearly equal in number as possible. The Board of Directors, by resolution, shall designate the class in which each of the directors then in office shall serve upon such classification. The terms of office of the classes of directors so designated by the Board of Directors shall expire at the times of the annual meetings of the stockholders as follows: Class I on the first annual meeting of stockholders following the Effective Time, Class II on the second annual meeting following the Effective Time and Class III on the third annual meeting following the Effective Time, or thereafter in each case when their respective successors are elected and qualified. The directors chosen to succeed those whose terms are expiring at such annual meetings and thereafter shall be identified as being of the same class as the directors whom they succeed, and shall be elected for a term ending at the time of the third succeeding annual meeting of stockholders following their election, or thereafter in each case when their respective successors are elected and qualified.

Section 3. Advance Notice of Nomination of Directors. Only persons who are nominated in accordance with the provisions set forth in these By-Laws shall be eligible to be elected as directors at an annual or special meeting of stockholders. Nomination for election to the Board of Directors shall be made by the Board of Directors or the Nominating and Corporate Governance Committee of the Board of Directors.

Nomination for election of any person to the Board of Directors may also be made by a stockholder if written notice of the nomination of such person shall have been delivered to the Secretary of the Corporation at the principal office of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, notice by stockholder must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination, the beneficial owner, if any, on whose behalf the nomination is made and of the person or persons to be nominated; (b) the class and number of shares of stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, and a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the

-4-

nomination or nominations are to be made by the stockholder; (d) all other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission if the nominee had been nominated by the Board of Directors; and (e) the written consent of each nominee to serve as director of the Corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

Section 4. Removal and Resignation of Directors. A director may be removed from office only for cause and only by vote of at least a majority of the outstanding stock entitled to vote in an election of directors. Any director may resign at any time. Such resignation will take effect at the time specified in the resignation, and if no time is specified, at the time of its receipt by the Chairman, Chief Executive Officer, President or Secretary. The acceptance of a resignation will not be necessary to make it effective, unless so specified in the resignation.

Section 5. Filling of Vacancies. Any vacancy among the directors, occurring from any cause whatsoever, may be filled by a majority of the remaining directors, though less than a quorum, provided however, that the stockholders removing any director may at the same meeting fill the vacancy caused by the removal, and provided further, that if the directors fail to fill any vacancy, the stockholders may at any special meeting called for that purpose fill the vacancy. In case of any increase in the number of directors, the additional directors may be elected by the directors in office before the increase.

Any director elected to fill a vacancy shall hold office, subject to the right of removal as provided in these By-Laws, for a term that shall coincide with the term of the class to which such director shall have been elected and until his or her successor is elected and qualified.

Section 6. Regular Meetings. The Board of Directors will hold an annual meeting for the purpose of organization and the transaction of any business immediately after the annual meeting of the stockholders, provided a quorum of directors is present. Other regular meetings may be held at any time as may be determined from time to time by resolution of the Board of Directors.

Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors or by the Chief Executive Officer or President.

Section 8. Notice and Place of Meetings. Meetings of the Board of Directors may be held at the principal office of the Corporation, or at any other place as is stated in the notice of such meeting. Notice of any special meeting, and except as the Board of Directors may otherwise determine by resolution, notice of any regular meeting, will be mailed to each director addressed to him or her at his or her residence or usual place of business at least two days before the day on which the meeting is to be held, or if sent to him or her at such place by telegraph, cable or facsimile, or delivered personally, by telephone or electronic mail at his or her electronic mail address on record with the Corporation, not later than the day before the day on which the

-5-

meeting is to be held. No notice of the annual meeting of the Board of Directors will be required if it is held immediately after the annual meeting of the stockholders and if a quorum is present.

Section 9. Business Transacted at Meetings, etc. Any business may be transacted and any corporate action may be taken at any regular or special meeting of the Board of Directors at which a quorum is present, whether the business or proposed action is stated in the notice of that meeting or not, unless special notice of such business or proposed action is required by statute.

Section 10. Quorum. A majority of the Board of Directors at any time in office will constitute a quorum. At any meeting at which a quorum is present, the vote of a majority of the members present will be the act of the Board of Directors unless the act of a greater number is specifically required by law or by the Certificate of Incorporation or these By-Laws. The members of the Board of Directors will act only as the Board of Directors and the individual members of the Board of Directors will not have any powers in their individual capacities.

Section 11. Compensation. The Board shall have the authority to fix the form and amount of compensation paid to directors, including fees and reimbursement of expenses paid for attendance at regular or special meetings of the Board of Directors or any committee thereof. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity, as an officer, agent or otherwise, and receiving compensation therefor.

Section 12. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee of the Board of Directors, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent to the action in writing. The writing or writings evidencing such consent shall be filed with the minutes of the proceedings of the Board of Directors or committee.

Section 13. Meetings Through Use of Communications Equipment. Members of the Board of Directors, or any committee of the Board of Directors, will, except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, have the power to participate in a meeting of the Board of Directors, or any committee, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and this participation will constitute presence in person at the meeting.

ARTICLE IV

COMMITTEES

Section 1. Audit Committee. The Board of Directors shall have an Audit Committee comprised of such directors as may be determined from time to time by the Board of Directors; provided, that the composition of the Audit Committee shall comply, to the extent required, with the requirements of the New York Stock Exchange, or such other national securities exchange or stock market on which the Company’s securities may be listed, and federal securities and other laws, rules and regulations. The Audit Committee shall have the powers and perform the duties set forth in the audit committee charter adopted by the Board of Directors.

-6-

Section 2. Compensation Committee. The Board of Directors shall have a Compensation Committee comprised of such directors as may be determined from time to time by the Board of Directors; provided, that the composition of the Compensation Committee shall comply, to the extent required, with the requirements of the New York Stock Exchange, or such other national securities exchange or stock market on which the Company’s securities may be listed, and federal securities and other laws, rules and regulations. The Compensation Committee shall have the powers and perform the duties set forth in the compensation committee charter adopted by the Board of Directors.

Section 3. Nominating and Corporate Governance Committee. The Board of Directors shall have a Nominating and Corporate Governance Committee comprised of such directors as may be determined from time to time by the Board of Directors; provided, that the composition of the Nominating and Corporate Governance Committee shall, to the extent required, comply with the requirements of the New York Stock Exchange, or such other national securities exchange or stock market on which the Company’s securities may be listed, and federal securities and other laws, rules and regulations. The Nominating and Corporate Governance Committee shall have the powers and perform the duties set forth in the nominating and corporate governance committee charter adopted by the Board of Directors.

Section 4. Executive Committee. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate two or more of their number to constitute an Executive Committee to hold office at the pleasure of the Board of Directors, which Committee will, during the intervals between meetings of the Board of Directors, have and exercise all of the powers of the Board of Directors, other than such powers and duties as are granted to the Audit Committee, the Compensation Committee or the Nominating and Corporate Governance Committee, in the management of the business and affairs of the Corporation, subject only to restrictions or limitations as the Board of Directors may from time to time specify, or as limited by the Delaware Corporation Law, and will have power to authorize the seal of the Corporation to be affixed to all papers that may require it.

Section 5. Other Committees. Other committees, whose members need not be directors, may be appointed by the Board of Directors or the Executive Committee, which committees shall hold office for an amount of time and have powers and perform duties as may from time to time be assigned to them by the Board of Directors or the Executive Committee.

Section 6. Removal. Subject to the requirements of the New York Stock Exchange, or such other national securities exchange or stock market on which the Company’s securities may be listed, and federal securities and other laws, rules and regulations, each to the extent applicable, any member of these committees may be removed at any time, with or without cause, by the Board of Directors (or, in the case of a committee appointed by the Executive Committee, the Executive Committee), and any vacancy in a committee occurring from any cause whatsoever may be filled by the Board of Directors (or, in the case of a committee appointed by the Executive Committee, the Executive Committee). Any person ceasing to be a director shall ipso facto cease to be a member of any committee, including the Audit Committee,

-7-

Compensation Committee, Nominating and Corporate Governance Committee and Executive Committee.

Section 7. Resignation. Any member of a committee may resign at any time. This resignation will be made in writing and will take effect at the time specified in the resignation, or, if no time is specified, at the time of its receipt by the Chairman, Chief Executive Officer, President or Secretary. The acceptance of a resignation will not be necessary to make it effective unless so specified in the resignation.

Section 8. Quorum. Unless otherwise specified in the applicable committee charter, a majority of the members of a committee shall constitute a quorum, and the act of a majority of the members of a committee present at any meeting at which a quorum is present will be the act of the committee. The members of a committee will act only as a committee, and the individual members of the committee will not have any powers in their individual capacities.

Section 9. Record of Proceedings, etc. Each committee will keep a record of its acts and proceedings, and will report the same to the Board of Directors when and as required by the Board of Directors.

Section 10. Organization, Meetings, Notices, etc. A committee may hold its meetings at the principal office of the Corporation, or at any other place that a majority of the committee may at any time agree upon. Each committee may make rules as it deems expedient for the regulation and carrying on of its meetings and proceedings. Unless otherwise ordered by the Executive Committee, any notice of a meeting of a committee may be given by the Secretary of the Corporation or by the chairman of the committee and will be sufficient if mailed to each member at his or her residence or usual place of business at least two days before the day on which the meeting is to be held, or if sent to him or her at that place by telegraph, cable or facsimile, or by electronic mail at his or her electronic mail address on record with the Corporation or delivered personally or by telephone not later than 24 hours before the time at which the meeting is to be held.

Section 11. Compensation. The members of any committee will be entitled to such compensation as may be allowed them by resolution of the Board of Directors.

ARTICLE V

OFFICERS

Section 1. Number. The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer, a Treasurer, a Secretary and such other officers as may be determined from time to time by the Board of Directors. Such other officers shall be elected or appointed in such manner, have such duties and hold their offices for such terms as may be determined from time to time by the Board of Directors.

Section 2. Election, Term of Office and Qualifications. Each officer of the Corporation shall hold office until his or her successor shall have been duly chosen and shall

-8-

qualify or until his or her earlier death, resignation or removal in the manner hereinafter provided.

Section 3. Removal of Officers. Any officer of the Corporation may be removed from office, with or without cause, by a vote of a majority of the Board of Directors.

Section 4. Resignation. Any officer of the Corporation may resign at any time. This resignation shall be in writing and take effect at the time specified in the resignation, or if no time is specified, at the time of its receipt by the Chairman, Chief Executive Officer, President or Secretary. The acceptance of a resignation shall not be necessary in order to make it effective, unless so specified in the resignation.

Section 5. Filling of Vacancies. A vacancy in any office will be filled by the Board of Directors or by the authority appointing the predecessor in such office.

Section 6. Compensation. The compensation of the officers will be fixed by the Compensation Committee.

Section 7. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders and Board of Directors. The Chairman shall be the medium of communication to the Board of Directors and to the standing committees of all matters presented for their consideration, and shall have such powers and perform such duties as may from time to time be assigned to him by the Board of Directors.

Section 8. Chief Executive Officer. The Chief Executive Officer will, in the absence of the Chairman, preside at all meetings of the stockholders and meetings of the Board of Directors. The Chief Executive Officer will have power to call special meetings of the stockholders or of the Board of Directors or of the Executive Committee at any time. The Chief Executive Officer will be the chief executive officer of the Corporation, and, subject to the direction of the Board of Directors, will be responsible for the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Executive Officer.

Section 9. President. The President will, in the absence of the Chairman and the Chief Executive Officer, preside at all meetings of the stockholders and meetings of the Board of Directors. The President will have power to call special meetings of the stockholders or of the Board of Directors or of the Executive Committee at any time. The President will assist the Chief Executive Officer, and, in the Chief Executive Officer’s absence, act as Chief Executive Officer, be responsible for the general direction of the business, affairs and property of the Corporation, and of its several officers, and, subject to the direction of the Chief Executive Officer, will have and exercise all the powers and discharge the duties as usually pertain to the office of President.

Section 10. Chief Financial Officer. Subject to the direction of the Board of Directors, the Chief Executive Officer and the President, the Chief Financial Officer will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief

-9-

Financial Officer or that are assigned to him or her by the Board of Directors, the Chief Executive Officer or the President.

Section 11. Treasurer. The Treasurer will have custody of all the funds and securities of the Corporation which may be delivered into his possession. The Treasurer may endorse on behalf of the Corporation for collection, checks, notes and other obligations, and will deposit the same to the credit of the Corporation in a depository or depositories of the Corporation, and may sign all receipts and vouchers for payments made to the Corporation. The Treasurer will enter or cause to be entered regularly in the books of the Corporation kept for that purpose, full and accurate accounts of all monies received and paid on account of the Corporation and whenever required by the Board of Directors will render statements of the accounts. The Treasurer will perform the duties and have all other powers that are incident to the office of Treasurer or that are assigned to him or her by the Board of Directors, the Chief Executive Officer or the President.

Section 12. Secretary. The Secretary will keep the minutes of all meetings of the stockholders and all meetings of the Board of Directors and any committee in books maintained for that purpose. The Secretary may affix the seal of the Corporation to all instruments to be executed on behalf of the Corporation under its seal. The Secretary will perform the duties and have all other powers that are incident to the office of Secretary or that are assigned to him or her by the Board of Directors, the Chief Executive Officer or the President.

Section 13. Assistant Secretary and Assistant Treasurer. In the event of the absence or inability to serve of the Secretary, an assistant secretary shall perform all the duties of the Secretary, and in the event of the absence or inability to serve of the Treasurer, an assistant treasurer shall perform all the duties of the Treasurer.

ARTICLE VI

CAPITAL STOCK

Section 1. Issue of Certificates of Stock. Certificates of capital stock will be in the form approved by the Board of Directors. The certificates will be numbered in the order of their issue and will be signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President or one of the vice presidents, and the Secretary or an assistant secretary or the Treasurer or an assistant treasurer, and the seal of the Corporation or a facsimile of the seal will be impressed or affixed or reproduced on the certificates, provided, however, that where the certificates are signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the Corporation and a registrar, the signature of the Chairman of the Board of Directors, Chief Executive Officer, President, vice president, Secretary, assistant secretary, Treasurer or assistant treasurer may be facsimile. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any certificate or certificates ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before that certificate or certificates are delivered by the Corporation, that certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed that certificate or certificates, or whose facsimile

-10-

signature or signatures is used thereon have not ceased to be an officer or officers of the Corporation.

Section 2. Registration and Transfer of Shares. The name of each person owning a share of the capital stock of the Corporation will be entered on the books of the Corporation together with the number of shares held by him or her, the numbers of the certificates covering the shares and the dates of issue of the certificates. The shares of stock of the Corporation will be transferable on the books of the Corporation by the holders of the shares in person, or by their duly authorized attorneys or legal representatives, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. A record will be made of each transfer. The Board of Directors may make other rules and regulations concerning the transfer and registration of certificates for stock and may appoint a transfer agent or registrar or both and may require all certificates of stock to bear the signature of either or both.

Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock of the Corporation will immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificates. The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it and alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his or her legal representatives, to give the Corporation a bond, in such sum not exceeding double the value of the stock and with such surety or sureties as they may require, to indemnify it against any claim that may be made against it by reason of the issue of the new certificate and against all other liability in the premises, or may remit the owner to any remedy or remedies he or she may have under the laws of the State of Delaware.

Section 4. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person except as required by law.

ARTICLE VII

DIVIDENDS, SURPLUS, ETC.

Section 1. General Discretion of Directors. The Board of Directors will have power to fix and vary the amount to be set aside or reserved as working capital of the Corporation, or as reserves, or for other proper purposes of the Corporation, and, subject to the requirements of the Certificate of Incorporation, to determine whether any part of the surplus or net profits of the Corporation will be declared as dividends and paid to the stockholders, and to fix the date or dates for the payment of dividends.

-11-

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 1. Fiscal Year. The fiscal year of the Corporation will commence on the first day of January and end on the last day of December.

Section 2. Corporate Seal. The corporate seal will be in the form approved by the Board of Directors and may be altered at their pleasure. The corporate seal may be used by causing it or a facsimile of the seal to be impressed or affixed or reproduced or otherwise.

Section 3. Notices. Except as otherwise expressly provided, any notice required to be given by these By-Laws will be sufficient if given by depositing the same in a post office or letter box in a sealed postpaid wrapper addressed to the person entitled to the notice at his or her address, as the same appears upon the books of the Corporation, or by electronic mail at his or her electronic mail address on record with the Corporation or by telegraphing or cabling the same to that person at that address, or by facsimile transmission to a number designated upon the books of the Corporation, if any; and the notice will be deemed to be given at the time it is mailed, sent by electronic mail, telegraphed or cabled, or sent by facsimile.

Section 4. Waiver of Notice. Any stockholder or director may at any time, by writing or by telegraph, cable or facsimile transmission, waive any notice required to be given under these By-Laws, and if any stockholder or director is present at any meeting his or her presence will constitute a waiver of notice.

Section 5. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, will be signed by an officer or officers, agent or agents of the Corporation, and in such manner, as will from time to time be designated by resolution of the Board of Directors.

Section 6. Deposits. All funds of the Corporation will be deposited from time to time to the credit of the Corporation in a bank or banks, trust companies or other depositories as the Board of Directors may select, and, for the purpose of the deposit, checks, drafts, warrants and other orders for the payment of money which are payable to the order of the Corporation, may be endorsed for deposit, assigned and delivered by any officer of the Corporation, or by agents of the Corporation as the Board of Directors, the Chief Executive Officer or the President may authorize for that purpose.

Section 7. Voting Stock of Other Corporations. Except as otherwise ordered by the Board of Directors or the Executive Committee, the Chief Executive Officer, the President, any vice president and the Treasurer each has full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the stockholders of any corporation of which the Corporation is a stockholder, and to execute a proxy to any other person to represent the Corporation at any meeting, and at any meeting of the stockholders of any corporation of which the Corporation is a stockholder. The Chief Executive Officer, the President, any vice president or the Treasurer or the holder of any proxy, as the case may be, will possess and may exercise any and all rights and powers incident to ownership of the stock which

-12-

the Corporation might have possessed and exercised if present. The Board of Directors or the Executive Committee may from time to time confer like powers upon any other person or persons.

ARTICLE IX

AMENDMENTS

The Board of Directors will have the power to make, rescind, alter, amend and repeal these By-Laws, provided, however, that the stockholders will have power to rescind, alter, amend or repeal any by-laws made by the Board of Directors, and to enact by-laws that will not be rescinded, altered, amended or repealed by the Board of Directors. Notice of the proposal to make, amend or repeal any provision of these By-Laws will be included in the notice of any meeting of the stockholders or the Board of Directors at which the action is to be considered.

Dated:                              , 2004

-13-

EX-10.23

EXHIBIT 10.23

FORM OF

DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

This Director and Officer Indemnification Agreement, dated as of            , 2004 (this “Agreement”), is made by and between Knoll, Inc., a Delaware corporation (the “Company”), and                                  (“Indemnitee”).

RECITALS:

A. Section 141 of the Delaware General Corporation Law provides that the business and affairs of a corporation shall be managed by or under the direction of its board of directors.

B. By virtue of the managerial prerogatives vested in the directors and officers of a Delaware corporation, directors and officers act as fiduciaries of the corporation and its stockholders.

C. Thus, it is critically important to the Company and its stockholders that the Company be able to attract and retain the most capable persons reasonably available to serve as directors and officers of the Company.

D. In recognition of the need for corporations to be able to induce capable and responsible persons to accept positions in corporate management, Delaware law authorizes (and in some instances requires) corporations to indemnify their directors and officers, and further authorizes corporations to purchase and maintain insurance for the benefit of their directors and officers.

E. The Delaware courts have recognized that indemnification by a corporation serves the dual policies of (1) allowing corporate officials to resist unjustified lawsuits, secure in the knowledge that, if vindicated, the corporation will bear the expense of litigation, and (2) encouraging capable women and men to serve as corporate directors and officers, secure in the knowledge that the corporation will absorb the costs of defending their honesty and integrity.

F. Indemnitee is, or will be, a director and/or officer of the Company and his willingness to serve, or continue to serve, in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him in accordance with the undertakings set forth in this Agreement.

G. Therefore, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s service or continued service as a director and/or officer of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the “Constituent Documents”), any change in the composition of the Company’s Board of Directors (the “Board”) or any

change-in-control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancement of expenses to Indemnitee on the terms, and subject to the conditions, set forth in this Agreement.

H. It is the intention and desire of the Company and the Indemnitee that the provisions of this Agreement be construed liberally, subject to their express terms, so as to maximize the protection to be provided to Indemnitee hereunder.

AGREEMENT:

NOW, THEREFORE, the parties hereby agree as follows:

1. Certain Definitions. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:

(a) “Change in Control” shall have occurred at such time, if any, as Incumbent Directors cease for any reason to constitute a majority of Directors. For purposes of this Section 1(a), “Incumbent Directors” means the individuals who, as of the date hereof, are Directors of the Company and any individual becoming a Director subsequent to the date hereof whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least a majority of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents in opposition to one or more nominees for director chosen by or on behalf of the Board.

(b) “Claim” means (i) any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; and (ii) any inquiry or investigation, whether made, instituted or conducted by the Company or any other Person, including, without limitation, any federal, state or other governmental entity, that Indemnitee reasonably determines might lead to the institution of any such claim, demand, action, suit or proceeding. For the avoidance of doubt, the Company intends indemnity to be provided hereunder in respect of acts or failures to act prior to, on or after the date hereof.

(c) “Controlled Affiliate” means any corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, that is directly or indirectly controlled by the Company. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity or enterprise, whether through the ownership of voting securities, through other voting rights, by contract or

- 2 -

otherwise; provided that direct or indirect beneficial ownership of capital stock or other interests in an entity or enterprise entitling the holder to cast 15% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such entity or enterprise shall be deemed to constitute control for purposes of this definition.

(d) “Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.

(e) “Expenses” means attorneys’ and experts’ fees and expenses and all other costs and expenses paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on appeal), any Claim.

(f) “Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any actual, alleged or suspected act or failure to act by Indemnitee in his or her capacity as a director, officer, employee or agent, including as a member of any committee of the board of directors, of the Company or as a director, officer, employee, member, manager, trustee or agent, including as a member of any committee of the board of directors or similar governing body, of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company, (ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or any other entity or enterprise referred to in clause (i) of this sentence, or (iii) Indemnitee’s status as a current or former director, officer, employee or agent of the Company or as a current or former director, officer, employee, member, manager, trustee or agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence or any actual, alleged or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon Indemnitee by reason of such status. In addition to any service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to be serving or to have served at the request of the Company as a director, officer, employee, member, manager, trustee or agent of another entity or enterprise if Indemnitee is or was serving as a director, officer, employee, member, manager, agent, trustee or other fiduciary of such entity or enterprise and (i) such entity or enterprise is or at the time of such service was a Controlled Affiliate, (ii) such entity or enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate, or (iii) the Company or a Controlled Affiliate (by action of the Board, any committee thereof or the Company’s Chief Executive Officer (“CEO”) (other than as to the CEO him or herself)) caused or authorized Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity.

(g) “Indemnifiable Losses”means any and all Losses relating to, arising out of or resulting from any Indemnifiable Claim; provided, however, that Indemnifiable Losses shall not include Losses incurred by Indemnitee in respect of any Indemnifiable

- 3 -

Claim (or any matter or issue therein) as to which Indemnitee shall have been adjudged liable to the Company, unless and only to the extent that the Delaware Court of Chancery or the court in which such Indemnifiable Claim was brought shall have determined upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court shall deem proper.

(h) “Independent Counsel” means a nationally recognized law firm, or a member of a nationally recognized law firm, that is experienced in matters of Delaware corporate law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company (or any Subsidiary) or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements) or (ii) any other named (or, as to a threatened matter, reasonably likely to be named) party to the Indemnifiable Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

(i) “Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other) and amounts paid or payable in settlement, including, without limitation, all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.

(j) “Person” means any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

(k) “Standard of Conduct” means the standard for conduct by Indemnitee that is a condition precedent to indemnification of Indemnitee hereunder against Indemnifiable Losses relating to, arising out of or resulting from an Indemnifiable Claim. The Standard of Conduct is (i) good faith and a reasonable belief by Indemnitee that his action was in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, that Indemnitee had no reasonable cause to believe that his conduct was unlawful, or (ii) any other applicable standard of conduct that may hereafter be substituted under Section 145(a) or (b) of the Delaware General Corporation Law or any successor to such provision(s).

2. Indemnification Obligation. Subject only to Section 7 and to the proviso in this Section, the Company shall indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted or required by the laws of the State of Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, from and against any and all Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in Section 5, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has joined in or consented to the initiation

- 4 -

of such Claim. The Company acknowledges that the foregoing obligation may be broader than that now provided by applicable law and the Company’s Constituent Documents and intends that it be interpreted consistently with this Section and the recitals to this Agreement.

3. Advancement of Expenses. Indemnitee shall have the right to advancement by the Company prior to the final disposition of any Indemnifiable Claim of any and all actual and reasonable Expenses relating to, arising out of or resulting from any Indemnifiable Claim paid or incurred by Indemnitee. Without limiting the generality or effect of any other provision hereof, Indemnitee’s right to such advancement is not subject to the satisfaction of any Standard of Conduct. Without limiting the generality or effect of the foregoing, within five business days after any request by Indemnitee that is accompanied by supporting documentation for specific reasonable Expenses to be reimbursed or advanced, the Company shall, in accordance with such request (but without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall repay, without interest, any amounts actually advanced to Indemnitee that, at the final disposition of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable by Indemnitee in respect of Expenses relating to, arising out of or resulting from such Indemnifiable Claim. In connection with any such payment, advancement or reimbursement, at the request of the Company, Indemnitee shall execute and deliver to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee’s ability to repay the Expenses, by or on behalf of the Indemnitee, to repay any amounts paid, advanced or reimbursed by the Company in respect of Expenses relating to, arising out of or resulting from any Indemnifiable Claim in respect of which it shall have been determined, following the final disposition of such Indemnifiable Claim and in accordance with Section 7, that Indemnitee is not entitled to indemnification hereunder.

4. Indemnification for Additional Expenses. Without limiting the generality or effect of the foregoing, the Company shall indemnify and hold harmless Indemnitee from and against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request accompanied by supporting documentation for specific Expenses to be reimbursed or advanced, any and all actual and reasonable Expenses paid or incurred by Indemnitee in connection with any Claim made, instituted or conducted by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company; provided, however, if it is ultimately determined that the Indemnitee is not entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, then the Indemnitee shall be obligated to repay any such Expenses to the Company; provided further, that, regardless in each case of whether Indemnitee ultimately is determined to be entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, Indemnitee shall return, without interest, any such advance of Expenses (or portion thereof) which remains unspent at the final disposition of the Claim to which the advance related.

- 5 -

5. Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Indemnifiable Loss but not for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

6. Procedure for Notification. To obtain indemnification under this Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a written request therefor, including a brief description (based upon information then available to Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of such request, the Company has directors’ and officers’ liability insurance in effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Company shall give prompt written notice of such Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, substantially concurrently with the delivery thereof by the Company to the applicable insurers. The failure by Indemnitee to timely notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and to the extent that such failure results in forfeiture by the Company of substantial defenses, rights or insurance coverage.

7. Determination of Right to Indemnification.

(a) To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Indemnifiable Claim or any portion thereof or in defense of any issue or matter therein, including, without limitation, dismissal without prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses relating to, arising out of or resulting from such Indemnifiable Claim in accordance with Section 2, and no Standard of Conduct Determination (as defined in Section 7(b)) shall be required.

(b) To the extent that the provisions of Section 7(a) are inapplicable to an Indemnifiable Claim that shall have been finally disposed of, any determination of whether Indemnitee has satisfied the applicable Standard of Conduct (a “Standard of Conduct Determination”) shall be made as follows: (i) if a Change in Control shall not have occurred, or if a Change in Control shall have occurred but Indemnitee shall have requested that the Standard of Conduct Determination be made pursuant to this clause (i), (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) if such Disinterested Directors so direct, by a majority vote of a committee of Disinterested Directors designated by a majority vote of all Disinterested Directors, or (C) if there are no such Disinterested Directors, or if a majority of the Disinterested Directors so direct, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee; and (ii) if a Change in Control shall

- 6 -

have occurred and Indemnitee shall not have requested that the Standard of Conduct Determination be made pursuant to clause (i), by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee.

(c) If (i) Indemnitee shall be entitled to indemnification hereunder against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law is a legally required condition precedent to indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has been determined or deemed pursuant to Section 7(b) to have satisfied the applicable Standard of Conduct, then the Company shall pay to Indemnitee, within five business days after the later of (x) the date of notification pursuant to Section 6 in respect of the Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are related, out of which such Indemnifiable Losses arose or from which such Indemnifiable Losses resulted, and (y) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) above shall have been satisfied, an amount equal to the amount of such Indemnifiable Losses. Nothing herein is intended to mean or imply that the Company is intending to use Section 145(f) of the Delaware General Corporation Law to dispense with a requirement that Indemnitee meet the applicable Standard of Conduct where it is otherwise required by such statute.

(d) If a Standard of Conduct Determination is required to be made by Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected by the Board or a committee of the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is required to be made by Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In all events, the Company shall pay all of the actual and reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 7(b).

8. Cooperation. Indemnitee shall cooperate with reasonable requests of the Company in connection with any Indemnifiable Claim and any individual or firm making a Standard of Conduct Determination, including providing to such Person documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to defend the Indemnifiable Claim or make any Standard of Conduct Determination. The Company shall indemnify and hold harmless Indemnitee from and against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request accompanied by supporting documentation for specific costs and expenses to be reimbursed or advanced, any and all costs and expenses (including attorneys’ and experts’ fees and expenses) actually and reasonably incurred by Indemnitee in so cooperating with the Person defending the Indemnifiable Claim or making such Standard of Conduct Determination.

9. No Presumption. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or

- 7 -

conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable Standard of Conduct or that indemnification hereunder is otherwise not permitted.

10. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under the Constituent Documents, or the substantive laws of the State of Delaware, any other contract or otherwise (collectively, “Other Indemnity Provisions”). The Company may not, without the consent of Indemnitee, adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber Indemnitee’s right to indemnification under this Agreement.

11. Liability Insurance and Funding. For the duration of Indemnitee’s service as a director and/or officer of the Company and for a reasonable period of time thereafter, which such period shall be determined by the Company in its sole discretion, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company that is substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. Upon reasonable request, the Company shall provide Indemnitee or his or her counsel with a copy of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials. In all policies of directors’ and officers’ liability insurance obtained by the Company, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy. Notwithstanding the foregoing, (i) the Company may, but shall not be required to, create a trust fund, grant a security interest or use other means, including, without limitation, a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses pursuant to this Agreement and (ii) in renewing or seeking to renew any insurance hereunder, the Company will not be required to expend more than 2.0 times the premium amount for insurance in effect upon the closing of the initial public offering of the Company’s securities (equitably adjusted if necessary to reflect differences in policy periods).

12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee against other Persons (other than Indemnitee’s successors), including any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f). Indemnitee shall execute all papers reasonably required to evidence such rights (all of Indemnitee’s reasonable Expenses, including attorneys’ fees and charges, related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Company).

13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Losses to

- 8 -

the extent Indemnitee has otherwise already actually received payment (net of Expenses incurred in connection therewith) under any insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise (including from any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f)) in respect of such Indemnifiable Losses otherwise indemnifiable hereunder.

14. Defense of Claims. Subject to the provisions of applicable policies of directors’ and officers’ liability insurance, if any, the Company shall be entitled to participate in the defense of any Indemnifiable Claim or to assume or lead the defense thereof with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee determines, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable Claim (including any impleaded parties) include both the Company and Indemnitee and Indemnitee shall conclude that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company, (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, or (d) Indemnitee has interests in the claim or underlying subject matter that are different from or in addition to those of other Persons against whom the Claim has been made or might reasonably be expected to be made, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim for all indemnitees in Indemnitee’s circumstances) at the Company’s expense. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable Claim effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any threatened or pending Indemnifiable Claim which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from all liability on any Claims that are the subject matter of such Indemnifiable Claim. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee.

15. Successors and Binding Agreement.

(a) This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including, without limitation, any Person acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Company” for purposes of this Agreement), but shall not otherwise be assignable or delegatable by the Company.

(b) This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s personal or legal representatives, executors, administrators, heirs, distributees, legatees and other successors.

- 9 -

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 16(a) and 16(b). Without limiting the generality or effect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by the Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section 16(c), the Company shall have no liability to pay any amount so attempted to be assigned or transferred.

16. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder must be in writing and shall be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or one business day after having been sent for next-day delivery by a nationally recognized overnight courier service, addressed to the Company (to the attention of the Secretary of the Company) and to Indemnitee at the applicable address shown on the signature page hereto, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.

17. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to the principles of conflict of laws of such State. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the Chancery Court of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement, waive all procedural objections to suit in that jurisdiction, including, without limitation, objections as to venue or inconvenience, agree that service in any such action may be made by notice given in accordance with Section 17 and also agree that any action instituted under this Agreement shall be brought only in the Chancery Court of the State of Delaware.

18. Validity. If any provision of this Agreement or the application of any provision hereof to any Person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other Person or circumstance shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal. In the event that any court or other adjudicative body shall decline to reform any provision of this Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the immediately preceding sentence, the parties thereto shall take all such action as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal.

- 10 -

19. Miscellaneous. No provision of this Agreement may be waived, modified or discharged unless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement.

20. Certain Interpretive Matters. Unless the context of this Agreement otherwise requires, (1) “it” or “its” or words of any gender include each other gender, (2) words using the singular or plural number also include the plural or singular number, respectively, (3) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (4) the terms “Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article, Section, Annex or Exhibit of or to this Agreement, (5) the terms “include,” “includes” and “including” will be deemed to be followed by the words “without limitation” (whether or not so expressed), and (6) the word “or” is disjunctive but not exclusive. Whenever this Agreement refers to a number of days, such number will refer to calendar days unless business days are specified and whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time or by a particular date that ends or occurs on a non-business day, then such period or date will be extended until the immediately following business day. As used herein, “business day” means any day other than Saturday, Sunday or a United States federal holiday.

21. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter of this Agreement. Any prior agreements or understandings between the parties hereto with respect to indemnification are hereby terminated and of no further force or effect.

22. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together shall constitute one and the same agreement.

[ SIGNATURE PAGE FOLLOWS ]

- 11 -

IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly authorized representative to execute this Agreement as of the date first above written.

KNOLL, INC.
Address:
1235 Water Street
East Greenville, PA 18041
Facsimile: 215-        -
By:
Name:
Title:
INDEMNITEE
Address:
Facsimile:	-        -
Name:

EX-10.24

EXHIBIT 10.24

[LETTERHEAD OF KNOLL, INC.]

October 6, 2004

Mr. John F. Maypole

14 Sherwood Drive

Mountain Lakes, NJ 07046

Dear John:

I am very pleased to offer you the opportunity to serve as a member of the Knoll, Inc. (“Knoll”) board of directors (the “Board”) as of the date of the Company’s successful completion of its initial public offering (the “IPO”). We would also like you to be chairman of the Company’s audit committee. We are convinced that you will be a terrific addition to our Board.

As we discussed, the compensation would be as follows:

1. $25,000 per year as a director fee.

2. An additional $2,500 per board meeting (including telephonic Board meetings).

3. Payment of reasonable expenses for attending Board and Board Committee meetings.

4. A grant to you of 25,000 options to purchase Knoll stock with an exercise price equal to the price that the shares are offered to the public in Knoll’s initial public offering. These stock options would vest 25% per year on each of the next 4 anniversaries of the grant date and would otherwise be controlled by the terms of the 1999 Knoll Stock Incentive Plan and a Stock Option Agreement. If such a grant is not feasible, we would provide equity based incentive of equivalent value.

5. An additional $10,000 per year fee for serving as chairman of the Company’s Audit Committee.

There would be no additional compensation for committee meetings (whether in person or by telephone), except for reimbursement of expenses.

This offer is subject to:

1. The Board’s final determination that you are “independent” and a “financial expert” for purposes of the New York Stock Exchange and the Sarbanes-Oxley Act;

2. The Board’s formal election of you as a director;

3. The Compensation Committee’s formal approval of your compensation and equity grant;

4. Your execution of the Knoll Intellectual Property Agreement and Code of Ethics; and

5. The successful completion of the IPO.

Please indicate your acceptance of this offer by signing and returning this letter. I will then have our lawyers send out the Knoll Code of Ethics, Intellectual Property Agreement and Director’s Questionnaire to move this process along. We look forward to the skill, intelligence and experience that you will bring to Knoll.

Thank you.

Sincerely,

/s/    Burton B. Staniar

Burton B. Staniar

Chairman

cc: Andrew Cogan

Jeffrey Harris

Agreed

/s/    John Maypole

John Maypole

EX-10.25

EXHIBIT 10.25

[LETTERHEAD OF KNOLL, INC.]

October 6, 2004

Mr. Anthony P. Terracciano

1123 Third Avenue, 2^nd Floor

Spring Lake, NJ 07762

Dear Tony:

I am very pleased to offer you the opportunity to serve as a member of the Knoll, Inc. (“Knoll”) board of directors (the “Board”) as of the date of the Company’s successful completion of its initial public offering (the “IPO”). We would also like you to be a member of the Company’s audit committee. We are convinced that you will be a terrific addition to our Board.

As we discussed, the compensation would be as follows:

1. $25,000 per year as a director fee.

2. An additional $2,500 per board meeting (including telephonic Board meetings).

3. Payment of reasonable expenses for attending Board and Board Committee meetings.

4. A grant to you of 25,000 options to purchase Knoll stock with an exercise price equal to the price that the shares are offered to the public in Knoll’s initial public offering. These stock options would vest 25% per year on each of the next 4 anniversaries of the grant date and would otherwise be controlled by the terms of the 1999 Knoll Stock Incentive Plan and a Stock Option Agreement. If such a grant is not feasible, we would provide equity based incentive of equivalent value.

There would be no additional compensation for committee meetings (whether in person or by telephone), except for reimbursement of expenses.

This offer is subject to:

1. The Board’s final determination that you are “independent” and a “financial expert” for purposes of the New York Stock Exchange and the Sarbanes-Oxley Act;

2. The Board’s formal election of you as a director;

3. The Compensation Committee’s formal approval of your compensation and equity grant;

4. Your execution of the Knoll Intellectual Property Agreement and Code of Ethics; and

5. The successful completion of the 1 PO.

Please indicate your acceptance of this offer by signing and returning this letter. I will then have our lawyers send out the Knoll Code of Ethics, Intellectual Property Agreement and Director’s Questionnaire to move this process along. We look forward to the skill, intelligence and experience that you will bring to Knoll.

Thank you.

Sincerely,

/s/ Burton B. Staniar

Burton B. Staniar

Chairman

cc: Andrew Cogan

Jeffrey Harris

Agreed

Anthony Terracciano

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our reports dated January 30, 2004, except for the first and second paragraphs of Note 22, as to which the dates are March 30, 2004 and November 15, 2004, respectively, in Amendment No. 2 to the Registration Statement (Form S-1 No. 333-118901) and related Prospectus of Knoll, Inc. dated November 15, 2004.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

November 15, 2004

EX-23.3

Exhibit 23.3

CONSENT OF JOHN F. MAYPOLE

I consent to the reference to me under the caption “Management” in the prospectus contained in the Registration Statement on Form S-1 (File No. 333-118901) of Knoll, Inc.

/s/ John F. Maypole

John F. Maypole

New York, New York

November 15, 2004

EX-23.4

Exhibit 23.4

CONSENT OF ANTHONY P. TERRACCIANO

I consent to the reference to me under the caption “Management” in the prospectus contained in the Registration Statement on Form S-1 (File No. 333-118901) of Knoll, Inc.

Anthony Terracciano

Anthony Terracciano

New York, New York

November 15, 2004

CORRESP

WILLKIE FARR & GALLAGHER LLP	787 Seventh Avenue New York, NY 10019-6099
	212 728 8000 Fax: 212 728 8111