10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 001-12907

KNOLL, INC.

A Delaware Corporation I.R.S. Employer No. 13-3873847

1235 Water Street

East Greenville, PA 18041

Telephone Number (215) 679-7991

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨,    Accelerated filer  x,    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes  ¨    No  x

As of August 3, 2007, there were 49,981,646 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

KNOLL, INC.

TABLE OF CONTENTS FOR FORM 10-Q

Item		Page
	PART I—FINANCIAL INFORMATION
1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets at June 30, 2007 and December 31, 2006	3
	Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2007 and 2006	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006	5
	Notes to the Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
3.	Quantitative and Qualitative Disclosures about Market Risk	21
4.	Controls and Procedures	22
	PART II—OTHER INFORMATION
1.	Legal Proceedings	23
1A.	Risk Factors	23
2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
4.	Submission of Matters to Vote of Security Holders	25
6.	Exhibits	26
Signatures		27

2

PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KNOLL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and per share data)

	June 30, 2007		December 31, 2006
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	20,068	$	16,038
Customer receivables, net		127,120		132,970
Inventories		82,822		75,930
Deferred income taxes		8,986		13,416
Prepaid and other current assets		7,474		10,030
Total current assets		246,470		248,384
Property, plant, and equipment, net		138,514		137,729
Goodwill, net		45,010		44,637
Intangible assets, net		194,227		193,654
Other non-trade receivables		2,660		3,835
Other noncurrent assets		3,555		3,898
Total Assets	$	630,436	$	632,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	118	$	2,996
Accounts payable		68,305		72,567
Income taxes payable		2,331		16,317
Other current liabilities		76,977		79,334
Total current liabilities		147,731		171,214
Long-term debt		328,525		347,320
Deferred income taxes		41,269		41,665
Postretirement benefits other than pensions		27,889		26,636
Pension liability		27,848		27,633
International retirement obligation		5,434		5,243
Other noncurrent liabilities		10,696		8,042
Total liabilities		589,392		627,753
Stockholders' equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 49,980,946 issued and outstanding (net of 7,608,600 treasury shares) in 2007 and 49,037,660 shares issued and outstanding (net of 6,348,764 treasury shares) in 2006		500		490
Additional paid-in-capital		12,556		4,409
Retained earnings (deficit)		18,776		(2,726	)
Accumulated other comprehensive income		9,212		2,211
Total stockholders' equity		41,044		4,384
Total Liabilities and Stockholders' Equity	$	630,436	$	632,137

See accompanying notes to the condensed consolidated financial statements

3

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(dollars in thousands, except share and per share data)

	Three Months Ended June 30,					Six Months Ended June 30,
	2007			2006		2007			2006
Sales	$	272,089		$	247,476	$	520,036		$	465,576
Cost of sales		178,700			168,511		342,119			316,838
Gross profit		93,389			78,965		177,917			148,738
Selling, general, and administrative expenses		55,754			49,729		109,502			97,565
Operating Income		37,635			29,236		68,415			51,173
Interest expense		6,463			5,449		12,955			10,796
Other (expense) income, net		(2,737	)		525		(3,113	)		762
Income before income tax expense		28,435			24,312		52,347			41,139
Income tax expense		10,921			9,560		20,005			16,134
Net Income	$	17,514		$	14,752	$	32,342		$	25,005
Net earnings per share
Basic	$	0.36		$	0.29	$	0.67		$	0.49
Diluted	$	0.35		$	0.28	$	0.66		$	0.47
Dividends per share	$	0.11		$	0.10	$	0.22		$	0.20
Weighted-average shares outstanding:
Basic		48,442,239			51,436,922		48,088,019			51,283,364
Diluted		49,602,989			53,168,659		49,337,304			53,060,358

See accompanying notes to the condensed consolidated financial statements.

4

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(dollars in thousands)

	Six Months Ended June 30,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	32,342		$	25,005
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		9,807			9,667
Amortization of intangible assets		663			331
Write-off of deferred financing fees		1,195			—
Unrealized foreign currency loss		1,548			445
Stock based compensation		2,356			2,448
Other non-cash items		70			103
Changes in assets and liabilities:
Customer receivables		6,435			(19,055	)
Inventories		(5,258	)		(17,440	)
Accounts payable		(5,119	)		7,239
Current and deferred income taxes		(10,439	)		(913	)
Other current assets		1,318			(3,937	)
Other current liabilities		(3,533	)		(700	)
Other noncurrent assets and liabilities		5,725			2,731
Cash provided by operating activities		37,110			5,924
CASH FLOWS FOR INVESTING ACTIVITIES
Capital expenditures		(6,904	)		(3,224	)
Proceeds from the sale of assets		—			3
Cash used in investing activities		(6,904	)		(3,221	)
CASH FLOWS FOR FINANCING ACTIVITIES
Proceeds from revolving credit facilities, net		233,000			39,500
Repayment of long-term debt		(254,685	)		(31,250	)
Deferred financing fees		(2,431	)		—
Payment of dividends		(10,617	)		(10,282	)
Proceeds from the issuance of common stock		28,019			18,228
Purchase of common stock for treasury		(29,801	)		(26,516	)
Tax benefit from the exercise of stock options		8,956			6,984
Cash used in financing activities		(27,559	)		(3,336	)
Effect of exchange rate changes on cash and cash equivalents		1,383			1,073
Increase in cash and cash equivalents		4,030			440
Cash and cash equivalents at beginning of period		16,038			10,695
Cash and cash equivalents at end of period	$	20,068		$	11,135

See accompanying notes to the condensed consolidated financial statements

5

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2007

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed 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, 2006, 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 financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2006.

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB No. 87, 88, 106, and 132(R) (“SFAS 158”). SFAS 158 requires plan sponsors of defined benefit pension and other postretirement benefit plans (collectively, “postretirement benefit plans”) to recognize the funded status of their postretirement benefit plans in the statement of financial position, measure the fair value of plan assets and benefit obligations as of the date of the fiscal year-end statement of financial position, and provide additional disclosures. On December 31, 2006, the Company adopted the recognition and disclosure provision of SFAS 158. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statements of financial position is effective for the Company for the fiscal year ended December 31, 2008.

6

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 3: INVENTORIES

Inventories, net consist of:

	June 30, 2007		December 31, 2006
	(in thousands)
Raw Materials	$	43,928	$	42,476
Work-in-Process		8,012		7,952
Finished Goods		30,882		25,502
	$	82,822	$	75,930

Inventory reserves for obsolescence and other estimated losses were $6,753 and $6,462 at June 30, 2007 and December 31, 2006, respectively.

NOTE 4: INCOME TAXES

The Company adopted FASB Interpretation 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), on January 1, 2007, the beginning of the Company’s fiscal year. As of January 1, 2007, the Company had unrecognized tax benefits of $3.4 million. The Company did not have to record any cumulative effect adjustment to retained earnings as a result of adopting FIN 48. The entire amount of the unrecognized tax benefits would affect the effective tax rate if recognized.

Interest and penalties, if any, related to unrecognized tax benefits are recorded in income tax expense. At January 1, 2007, the Company had accrued $0.5 million for the potential payment of interest and penalties.

Included in the balance of unrecognized tax benefits at January 1, 2007, is approximately $900 thousand related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a potential decrease in unrecognized tax benefits comprised of items related to expiring statutes of limitations in federal and state jurisdictions.

As of January 1, 2007 and June 30, 2007, the Company is subject to U.S. Federal income tax examinations for the tax years 2003 through 2005, and to non-U.S. income tax examinations for the tax years 1999 to 2006. In addition, the Company is subject to state and local income tax examinations for the tax years 2000 through 2005.

As of June 30, 2007 the Company had unrecognized tax benefits of approximately $3.1 million. The entire amount of the unrecognized tax benefits would affect the effective tax rate if recognized.

At June 30, 2007, the Company had accrued $0.6 million for the potential payment of interest and penalties.

Included in the balance of unrecognized tax benefits at June 30, 2007, is approximately $1.2 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a potential decrease in unrecognized tax benefits comprised of items related to expiring statutes of limitations in federal and state jurisdictions.

7

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provisions for the three months and six months ended June 30, 2007 and 2006 were based on the estimated effective tax rates applicable for the full years ending December 31, 2007 and 2006, after giving effect to items specifically related to the interim periods. The Company’s effective tax rate was 38% for the three months ended June 30, 2007 and for the six months ended June 30, 2007. The Company’s effective tax rate was 39% for the three and six months ended June 30, 2006. The Company’s effective tax rate is affected by the mix of pretax income and the varying effective tax rates of the tax jurisdictions in which it operates.

NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments, to reduce its exposure to adverse fluctuations in foreign currency exchange and interest rates.

On September 30, 2006, the Company entered into two interest rate cap agreements which set a maximum interest rate on a notional amount and utilize LIBOR as a variable-rate reference. Under these agreements, the Company paid a total premium of approximately $204 thousand for a cap rate of 6.00% on $200 million of the Company’s borrowings under the credit facility. The Company has elected not to apply hedge accounting under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, to these agreements. As such, the change in fair value of the contracts is reported in earnings in the period the value of the contract changes as a component of other income (expense). The interest rate cap agreements mature on September 30, 2008.

In October 2004, the Company entered into an interest rate swap agreement and an interest rate cap agreement. These agreements hedged interest rate risk on a notional amount of approximately $212.5 million of the Company’s borrowings under the credit facility. Both the interest rate swap agreement and the interest rate cap agreement matured on September 29, 2006.

Under the 2004 interest rate swap agreement, the Company paid a fixed rate of interest of 3.010% and received a variable rate of interest equal to three-month LIBOR, as determined on the last day of each quarterly settlement period on an aggregated notional principal amount of $50.0 million. Changes in the fair value of the interest rate swap agreement were recorded in the period the value of the contract changes. The net amount paid or received upon quarterly settlements was recorded as an adjustment to interest expense, while the change in fair value was recorded as a component of accumulated other comprehensive income in the equity section of the balance sheet.

The 2004 interest rate cap agreement set a maximum interest rate on a notional amount and utilized LIBOR as a variable-rate reference. Under the cap agreement, the Company paid a premium of $425 thousand for a cap rate of 4.25% on $162.5 million of the Company’s borrowing under the credit facility. The Company elected not to apply hedge accounting under SFAS No. 133, to the interest rate cap agreement. As such, the change in fair value of the contract was reported in earnings in the period the value of the contract changed as a component of other income (expense).

The fair values of the Company’s derivative instruments included in non-current assets are $14 thousand and $71 thousand at June 30, 2007 and December 31, 2006, respectively.

The change in the fair values of the Company’s derivative instruments and the adjustment to interest expense are summarized as follows:

	Three months ended June 30,						Six months ended June 30,
	(in thousands)						(in thousands)
	2007			2006			2007			2006
Interest income	$	—		$	544		$	—		$	846
Other expense		(2	)		(172	)		(57	)		(64	)
Pre-tax other comprehensive loss		—			(207	)		—			(323	)
Aggregate net (expense) benefit	$	(2	)	$	165		$	(57	)	$	459

8

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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).

As of June 30, 2007, the Company had no outstanding foreign currency contracts. In January, the Company entered into a one-month short-term forward contract, having a valuation date as of the end of the month. The contract settled on February 1, 2007 at a cost of approximately $611 thousand.

As of June 30, 2006, the Company had no outstanding foreign currency contracts but did enter into one-month short-term contracts in each month of the quarter having valuation dates as of the end of each month with settlements to be paid or received on the first business day of the following month. During the second quarter and six months ended June 30, 2006, the Company received a net settlement of approximately $1.0 million and recorded a related net realized gain.

9

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 6: 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. Based upon information presently known, 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.

At June 30, 2007, the Company employed a total of 4,147 people. Approximately 13.6% of the employees are represented by unions. The Grand Rapids, Michigan plant is the only unionized plant within the U.S and has an agreement with the Carpenters Union, Local 1615, of the United Brotherhood of Carpenters and Joiners of America, Affiliate of the Carpenters Industrial Council (the Union), covering approximately 373 hourly employees. The Collective Bargaining Agreement expires August 27, 2011. Certain workers in the facilities in Italy are also represented by unions.

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.

	Six Months Ended
	June 30, 2007			June 30, 2006
	(in thousands)
Balance at beginning of period	$	7,436		$	5,521
Provision for warranty claims		5,917			4,757
Warranty claims paid		(4,635	)		(3,891	)
Balance at end of period	$	8,718		$	6,387

10

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 7: PENSIONS

The following tables summarize the costs of the Company’s employee pension and post retirement plans for the periods indicated.

	Pension Benefits						Other Benefits
	Three months ended						Three months ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
	(in thousands)
Service cost	$	2,545		$	2,416		$	162		$	159
Interest cost		1,816			1,587			417			391
Expected return on plan assets		(1,776	)		(1,556	)		—			—
Amortization of prior service cost		19			19			(336	)		(339	)
Recognized actuarial loss		173			236			263			234
Net periodic benefit cost	$	2,777		$	2,702		$	506		$	445
	Pension Benefits						Other Benefits
	Six months ended						Six months ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
	(in thousands)
Service cost	$	5,090		$	4,832		$	324		$	318
Interest cost		3,632			3,174			834			782
Expected return on plan assets		(3,552	)		(3,112	)		—			—
Amortization of prior service cost		38			38			(672	)		(678	)
Recognized actuarial loss		346			472			526			468
Net periodic benefit cost	$	5,554		$	5,404		$	1,012		$	890

NOTE 8: STOCK PLANS

As of June 30, 2007, the Company sponsors two stock incentive plan with approximately 2,940,667 shares available for grant. Prior to January 1, 2006, the Company accounted for its stock incentive plan in accordance with APB 25, “Accounting for Stock Issued to Employees”, and related Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock Based Compensation, and no stock-based employee compensation was reflected in net income with respect to options granted under the existing plans at that time. Effective January 1, 2006 the Company adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment, using the modified-prospective-transition method for those unvested options granted after the Company’s initial public offering. The prospective method will be applied to those unvested options issued prior to the Company’s initial public offering that have historically been accounted for under the minimum value method. Such options continue to be accounted for under the provisions of APB 25.

11

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As a result of adopting Statement 123(R), the Company’s income before taxes and net income after taxes for the three months ended June 30, 2007, is $0.4 million and $0.2 million lower, respectively, than if it had continued to account for share-based compensation under SFAS No 123 and APB Opinion No. 25. The Company’s income before taxes and net income after taxes for the six months ended June 30, 2007, is $0.6 million and $0.4 million lower, respectively, than if it had continued to account for share-based compensation under SFAS No. 123 and APB Opinion No. 25. For the three months ended June 30, 2007 both basic earnings per share and diluted earnings per share would have been $.01 higher had the Company not adopted Statement 123(R). For the six months ended June 30, 2007 basic earnings per share would have been $.02 higher and diluted earnings per share would have been $.01 higher had the Company not adopted Statement 123(R).

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.

	Three months ended						Six months ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
	(in thousands, except per share data)
Net income-as reported	$	17,514		$	14,752		$	32,342		$	25,005
Add:
Stock-based employee compensation expense included in reported net income		1,277			763			2,433			2,659
Deduct:
Total stock-based employee compensation expense determined under fair value based method, net of related tax effects		(1,425	)		(948	)		(2,699	)		(3,070	)
As adjusted net income	$	17,366		$	14,567		$	32,076		$	24,594
Earnings per share:
Basic-as reported	$	.36		$	.29		$	.67		$	.49
Diluted-as reported	$	.35		$	.28		$	.66		$	.47
Basic-as adjusted	$	.36		$	.28		$	.67		$	.48
Diluted-as adjusted	$	.35		$	.27		$	.65		$	.46

12

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 9: OTHER COMPREHENSIVE INCOME

Comprehensive income consists of net earnings plus other comprehensive income which includes foreign currency translation adjustments and pension liability adjustments. Comprehensive income was approximately $23.8 million and $18.8 million for the three months ended June 30, 2007 and June 30, 2006, respectively. For the six months ended June 30, 2007 and June 30, 2006, comprehensive income totaled $39.3 million and $29.0 million, respectively. The following presents the components of “Accumulated Other Comprehensive Income” for the period indicated, net of tax (in thousands).

	Beginning Balance			Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount		Ending Balance
Six months ended:
June 30, 2007
Pension funded status adjustment	$	(12,275	)	$	—	$	—	$	—	$	(12,275	)
Foreign currency translation adjustment		14,486			7,001		—		7,001		21,487
Accumulated other comprehensive income, net of tax	$	2,211		$	7,001	$	—	$	7,001	$	9,212

NOTE 10: COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the additional dilution for all shares and potential shares issued under the stock incentive plans.

	Three months ended		Six months ended
	June 30, 2007	June 30, 2006	June 30, 2007	June 30, 2006
	(in thousands)
Weighted average shares of common stock outstanding-basic	48,442	51,437	48,088	51,283
Potentially dilutive shares resulting from stock plans	1,161	1,732	1,249	1,777
Weighted average common shares-diluted	49,603	53,169	49,337	53,060
Antidilutive options not included in the weighted average common shares-diluted	220	50	475	50

Common stock activity for the six months ended June 30, 2007 and 2006, included the repurchase of approximately 1,259,836 shares for $29.8 million and 1,354,681 shares for $26.5 million, respectively. For the six months ended June 30, 2007 and 2006, common stock activity also included the issuance of 2,375,785 shares for $27.0 million and 1,840,610 shares for $18.2 million, respectively, under the Company’s stock based compensation plans.

13

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 11: INDEBTEDNESS

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

	June 30, 2007			December 31, 2006
	(in thousands)
Term loans, variable rate (7.11% at December 31, 2006)	$	—		$	254,685
Revolving loans, variable rate (8.25% at June 30, 2007 and 6.85% at December 31, 2006)		328,000			95,000
Other		643			631
Total		328,643			350,316
Less current maturities		(118	)		(2,996	)
Long-term debt	$	328,525		$	347,320

On June 29, 2007, the Company completed the refinancing of its existing credit facility with a new $500 million revolving credit facility maturing in June 2013. The Company may use the new revolving line of credit for general corporate purposes, including strategic acquisitions, stock buy backs and cash dividends. Under the Company’s new credit agreement, the Company can increase its revolving credit facility by up to $200 million subject to certain limitations and satisfaction of certain conditions, including compliance with certain financial covenants.

Loans made pursuant to the revolving credit facility may be borrowed, repaid and reborrowed from time to time until June 2013, subject to satisfaction of certain conditions on the date of any such borrowing. Obligations under the credit facility are secured by a first priority security interest in (i) the capital stock of each present and future subsidiary (with limitations on foreign subsidiaries) and (ii) all present and future property and assets of the Company (with various limitations and exceptions). Borrowings under the credit agreement 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 0.50% or the prime rate as announced by the facility’s lender.

The senior credit agreement contains a letter of credit subfacility that allows for the issuance of letters of credit and swing-line loans. Subject to the ability to increase the credit facility by up to $200 million as mentioned above, the sum of the outstanding revolver balance plus any outstanding letters of credit and swing-line loans cannot exceed $500,000,000. The amount available for borrowing under the revolving credit facility is reduced by the total outstanding letters of credit and swing-line loans.

The Company is required to pay a commitment fee equal to a rate per annum calculated as the product of the applicable rate based upon the Company’s leverage ratio as set forth in the credit agreement, times the unused portion of the revolving credit facility. In addition, the Company is required to pay a letter of credit fee equal to the applicable rate as set forth in the credit agreement times the daily maximum amount available to be drawn under such letter of credit.

In addition, the credit agreement also contains various affirmative and negative covenants that among other things, limit, subject to certain exceptions, the incurrence of additional indebtedness and capital expenditures in excess of a specified amount in any fiscal year. The Company was in compliance with the credit agreement covenants at June 30, 2007.

14

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Maturities

Aggregate maturities of the Company’s indebtedness as of June 30, 2007 are as follows (in thousands):

2007	$	118
2008		121
2009		125
2010		130
2011		149
Subsequent years		328,000
	$	328,643

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations provides a discussion of our financial performance and financial condition that should be read in conjunction with the accompanying unaudited condensed consolidated financial statements

Overview

This quarter we continued to generate better than industry revenue growth. Year-to-date sales are up 11.7% versus 5.0% year–to-date growth for the industry. Net sales were $272.1 million for the quarter, an increase of 9.9% from the second quarter of 2006. We also were able to expand our operating margins which were up 200 basis points to 13.8% for the quarter. Gross margin expanded by 240 basis points to 34.3% for the quarter. Net income was $17.5 million and earnings per share was $0.36 for the quarter.

The increase in our gross margins can be attributed to better pricing, moderating inflation, and improved factory performance. All of these factors helped to offset the negative effect of the strengthening Canadian Dollar.

Operating expenses were $55.8 million, or 20.5% of sales, compared to $49.7 million, or 20.0% of sales, a year ago. Increased compensation on higher sales volumes and increased growth initiative spending in product development and sales have lead to the increase.

This quarter we refinanced our existing credit agreement to, among other things, give us greater flexibility to invest in new products, strategic acquisitions, stock buybacks and/or increase cash dividends. The new credit agreement is a $500 million all revolver facility. This new facility will lower our borrowing costs from an approximate average of LIBOR plus 162 basis points to LIBOR plus 100 basis points. In connection with this refinancing we wrote-off approximately $1.2 million of deferred financing fees associated with the old facility. Our current debt is $328.6 million.

As we enter into the remaining half of the year we will continue to benefit from our growth initiatives and expect some further top line growth. We continue to see positive macro-economic fundamentals but we expect industry growth to moderate. We believe this moderation will be combated by our new product offerings and expanded international initiatives and which will allow us to continue to maximize profitability and expand our business.

Critical Accounting Policies

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us 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. On an ongoing basis, we review our accounting policies and procedures. A more detailed review of our critical accounting policies is contained in our Annual Report on Form 10-K for the year ended December 31, 2006. During the first two quarters of 2007, there have been no material changes in our accounting policies and procedures with the exception of the adoption of FIN 48.

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Results of Operations

Comparison of the Three Months and Six Months Ended June 30, 2007 and 2006

	Three Months Ended						Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
	(in thousands)
Consolidated Statement of Operations Data:
Net Sales	$	272,089		$	247,476		$	520,036		$	465,576
Gross Profit		93,389			78,965			177,917			148,738
Operating Income		37,635			29,236			68,415			51,173
Interest Expense		6,463			5,449			12,955			10,796
Other (Expense) Income, net		(2,737	)		525			(3,113	)		762
Income Tax Expense		10,921			9,560			20,005			16,134
Net Income	$	17,514		$	14,752		$	32,342		$	25,005
Statistical and Other Data:
Sales Growth from Comparable Prior Period		9.9	%		25.2	%		11.7	%		23.5	%
Gross Profit Margin		34.3	%		31.9	%		34.2	%		32.0	%
Backlog	$	174,148		$	169,607		$	174,148		$	169,607

Sales

Sales for the second quarter of 2007 were $272.1 million, an increase of $24.6 million, or 9.9%, from sales of $247.5 million for the same period in the prior year. Sales for the six months ended June 30, 2007 were $520.0 million, an increase of $54.5 million, or 11.7%, over the first six months of 2006. The increase in sales for the three months and six months ended June 30, 2007 represents increased volume across all product categories. Previously implemented price increases contributed $9.9 million of the increase for the quarter ended June 30, 2007 and $17.0 million for the six months ended June 30, 2007.

At June 30, 2007, sales backlog was $174.1 million, an increase of $4.5 million, or 2.7%, from sales backlog of $169.6 million as of June 30, 2006.

Gross Profit and Operating Income

Gross profit for the second quarter of 2007 was $93.4 million, an increase of $14.4 million or 18.3% from gross profit of $79.0 million for the second quarter of 2006. Gross profit for the six months ended June 30, 2007 was $177.9 million, an increase of $29.2 million or 19.6% from gross profit of $148.7 million for the same period in the prior year. Operating income for the second quarter of 2007 was $37.6 million, an increase of $8.4 million or 28.8% from operating income of $29.2 million for the second quarter of 2006. Operating income for the six months ended June 30, 2007 was $68.4 million, an increase of $17.2 million or 33.6% from operating income of $51.2 million for the same period in 2006. As a percentage of sales, gross profit increased from 31.9% for the second quarter of 2006 to 34.3% for the second quarter of 2007. Operating income as a percentage of sales increased from 11.8% in the second quarter of 2006 to 13.8% for the same period of 2007. For the six months ended June 30, gross profit as a percentage of sales increased from 32.0% in 2006 to 34.2% in 2007. Operating income as a percentage of sales increased from 11.0% in the first six months of 2006 to 13.2% in the first six months of 2007.

The increase in gross margin resulted from better pricing, moderating inflation, and improved factory performance. Increased volumes allowed for better absorption of fixed costs and global sourcing initiatives resulted in lower material costs.

Operating expenses for the second quarter 2007 were $55.8 million, or 20.5% of sales, compared to $49.7 million, or 20.1% of sales, for the second quarter 2006. Operating expenses for the six months ended June 30, 2007 were $109.5 million or 21.1% of sales compared to $97.6 million or 21.0% of sales for the same period in 2006. The increase in operating expense dollars for the quarter and six months ended June 30, 2007 as compared with the prior year periods was due to investments made in growth initiatives and higher variable sales and incentive compensation as a result of increased sales levels and higher operating profits.

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Interest Expense

Interest expense for the quarter and six months ended June 30, 2007 was $6.5 million and $13.0 million respectively, an increase of $1.0 million and $2.2 million, respectively, from the same periods in 2006. The increase in interest expense is due the increase in average debt outstanding as a result of the 2006 share buybacks and higher average interest rates.

Other (Expense) Income, net

Other expense for the second quarter of 2007 was $2.7 million. This included $1.2 million related to the write-off of deferred financing fees associated with the refinancing of our old credit facility with a new $500.0 million revolving credit facility during the second quarter of 2007. Other expense also includes $1.7 million of losses from foreign currency translations partially offset by other income. Other income for the second quarter of 2006 was $0.5 million and consisted of losses on foreign currency translations offset by unrealized derivative income.

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. The effective tax rate was 38.4% for the second quarter of 2007, as compared to 39.3% for the same period in 2006. The effective tax rate for the six months ended June 30, 2007 was 38.2% and 39.2% for the same period in 2006.

Liquidity and Capital Resources

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

	Six Months Ended
	June 30, 2007			June 30, 2006
	(in thousands)
Cash provided by operating activities	$	37,110		$	5,924
Capital expenditures		6,904			3,224
Net cash used in investing activities		6,904			3,221
Purchase of common stock		29,801			26,516
Net (repayments) borrowings of debt		(21,685	)		8,250
Payment of dividend		10,617			10,282
Net proceeds from issuance of stock		28,019			18,228
Net cash used for financing activities		27,559			3,336

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Historically, we have carried significant amounts of debt, and cash generated by operating activities has been used to fund working capital, capital expenditures, repurchase shares and scheduled payments of principal and interest under our debt. 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.

We use our revolving credit facility in the ordinary course of business to fund our working capital needs, and at times make significant borrowings and repayments under the revolving facility depending on our cash needs and availability at such time.

On June 29, 2007 we completed the refinancing of our credit facility with a new $500 million revolving credit facility. The new agreement matures in six years and may be used for general corporate purposes, including strategic acquisitions, stock buybacks and cash dividends. Under the new agreement we can also increase our facility by up to $200 million subject to certain limitations and satisfaction of certain conditions. The improved interest rates in the new facility will provide for reduced borrowing costs allowing us to free up cash for other uses.

Year to date net cash provided by operations was $37.1 million, of which $46.8 million was provided from net income plus non-cash amortizations, $1.2 million from the non-cash write-off of deferred financing fees and a use of cash of ($10.9) million from the changes in assets and liabilities, primarily income taxes.

For the six month period ended June 30, 2007, we used available cash, including the $37.1 million of net cash from operating activities and $28.0 million of proceeds from the issuance of common stock, to fund $6.9 million in capital expenditures, pay down debt of $21.7 million in conjunction with our debt refinancing, repurchase $29.8 million of common stock for treasury, fund a dividend payment to shareholders totaling $10.6 million and fund working capital.

For the six month period ended June 30, 2006, we used available cash, including the $5.9 million of net cash from operating activities, $18.2 million of proceeds from the issuance of common stock, and $8.3 million of net borrowings, to fund $3.2 million in capital expenditures, repurchase $26.5 million of common stock for treasury, fund dividend payments to shareholders totaling $10.3 million, and fund working capital.

Cash used in investing activities was $6.9 million for the six month period ended June 30, 2007 and $3.2 million for the same period in 2006. Fluctuations in cash used in investing activities are primarily attributable to the levels of capital expenditures. We estimate that our capital expenditures in 2007 will be approximately $20.0 million.

We are currently in compliance with all of the covenants and conditions under our credit facility. We believe that existing cash balances and internally generated cash flows, together with borrowings available under our revolving credit facility, will be sufficient to fund normal working capital needs, capital spending requirements, 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 the credit facility. However, our ability 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.

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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 the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“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.

Forward-looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, principally in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Statements and financial discussion and analysis contained in this Form 10-Q 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 under Item 1A and in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2006; changes in the financial stability of our clients or the overall economic environment, resulting in decreased corporate spending and service sector employment; changes in relationships with clients; the mix of products sold and of clients purchasing our products; the success of new technology initiatives; changes in business strategies and decisions; competition from our competitors; our ability to recruit and retain an experienced management team; changes in raw material prices and availability; restrictions on government spending resulting in fewer sales to one of our largest customers; our debt restrictions on spending; our ability to protect our patents, copyrights and trademarks; our reliance on furniture dealers to produce sales; lawsuits arising from patents, copyrights and trademark infringements; violations of environment laws and regulations; potential labor disruptions; adequacy of our insurance policies; the availability of future capital; and currency rate fluctuations. 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 Form 10-Q 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We provided a discussion of our market risk in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2006. During the first six months of 2007, there was no substantive change in our market risk except for the items noted below. This discussion should be read in conjunction with Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2006.

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 hedge agreements. Foreign currency exchange rate risk arises from our non-U.S. operations and purchases of inventory from foreign suppliers.

We also have risk in our exposure to certain material and transportation costs. Our largest raw material costs are for steel and plastics. Steel is the primary raw material used in the manufacture of our products. The prices of plastic, another significant raw material used in the manufacture of our products, are sensitive to the cost of oil, which has increased significantly in recent history. We continue to work to attempt to offset these price changes in raw materials and transportation costs through our global sourcing initiatives, cost improvements and product price increases.

Interest Rate Risk

We have variable rate debt obligations that are denominated in U.S. dollars. A change in interest rates impacts the interest incurred and cash paid on our variable-rate debt obligations. The weighted average rate as of June 30, 2007 was 7.1%. The weighted average rate as of June 30, 2006 was 7.4%.

We use interest rate hedge agreements for other than trading purposes in order to manage our exposure to fluctuations in interest rates on our variable-rate debt. Our current agreements effectively convert $200 million of our variable-rate debt to a fixed-rate basis, utilizing the three-month London Interbank Offered Rate, or LIBOR, as a floating rate reference. 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.

Foreign Currency Exchange Rate Risk

We manufacture our products in the United States, Canada and Italy, and sell our products primarily 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 12.5% of our revenues for the first half of 2007 and 11.0% in the same period for 2006, and 38.8% of our cost of goods sold for the first half of 2007 and 36.9% in the same period for 2006, were denominated in currencies other than the U.S. dollar. Foreign currency exchange rate fluctuations resulted in a $1.7 million translation loss for the second quarter of 2007 and a $0.2 million translation gain for the same period of 2006. The $1.7 million loss is largely due to the strengthening Canadian dollar. For the six months ended June 30, 2007 and 2006, foreign exchange rate fluctuations included in other income resulted in a $2.3 million translation loss and a $0.3 million translation gain, respectively.

21

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. As of June 30, 2007, the Company had no outstanding foreign currency.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in timely making known to them material information required to be disclosed in our reports filed or submitted under the Exchange Act.

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the first two quarters of 2007, there have been no new material legal proceedings or changes in the legal proceedings disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

ITEM 1A. RISK FACTORS

During the first two quarters of 2007, there were no material changes in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND THE USE OF PROCEEDS

Repurchases of Equity Securities

The following is a summary of share repurchase activity during the three months ended June 30, 2007.

On August 17, 2005, our board of directors approved a stock repurchase program (the “Options Proceeds Program”), whereby it authorized us to purchase shares of our common stock in the open market using the cash proceeds received by us upon exercise of outstanding options to purchase shares of our common stock.

On February 2, 2006, our board of directors approved an additional stock repurchase program, pursuant to which we are authorized to purchase up to $50.0 million of our common stock in the open market, through privately negotiated transactions, or otherwise.

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as part of publicly Announced Plans or Programs		Maximum Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1)
April 1, 2007 – April 30, 2007	132,987	23.70	132,987	(2)	34,821,944
May 1, 2007 – May 31, 2007	467,511	24.26	467,511	(2)	34,821,944
June 1, 2007 – June 30, 2007	74,572	24.25	74,572	(2)	34,821,944
Total	675,070		675,070

(1) There is no limit on the number or value of shares that may be purchased by us under the Options Proceeds Program. Under our $50.0 million stock repurchase program, we are only authorized to spend an aggregate of $50.0 million on stock repurchases. Amounts in this column represent the amounts that remain available under the $50.0 million stock repurchase program as of the end of the period indicated. There is no scheduled expiration date for the Option Proceeds Program or the $50.0 million stock repurchase program, but our board of directors may terminate either program in the future.

(2) These shares were purchased under the Options Proceeds Program.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of stockholders was held on May 1, 2007, at which:

(a) The following nominees were elected to serve three-year terms on our board of directors by the following votes:

	Kathleen G. Bradley	Jeffrey A. Harris	John F. Maypole
For	43,856,582	43,014,087	45,302,644
Withheld	2,427,538	3,270,033	981,476

The terms of office for incumbent directors, Burt B. Staniar, Andrew B. Cogan, Stephen F. Fisher, Kewsong Lee, Sarah E. Nash, Anthony P. Terracciano, and Sidney Lapidus, continued after the meeting.

(b) Ernst and Young LLP was approved as the Company’s independent registered accounting firm for the fiscal year ended December 31, 2007, by the following votes:

	Ratification of the Independent Auditors
For	44,679,963
Against	1,549,663
Abstain	54,494
Nonvotes	0

(c) The 2007 Stock Incentive Plan was approved by the following votes:

	2007 Stock Incentive Plan
For	22,238,918
Against	21,082,004
Abstain	70,694
Nonvotes	2,892,504

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ITEM 6. EXHIBITS

Exhibit Number	Description
10.1	Credit Agreements, dated as of June 29, 2007, among Knoll, Inc., the domestic subsidiaries of Knoll, Inc., Bank of America, N.A., Banc of America Securities LLC, HSBC Bank USA, National Association, Citizens Bank and other lenders party thereto (incorporated by reference to Knoll, Inc.’s Current Report of Form 8-K, which was filed with the Securities and Exchange Commission on June 29, 2007).
10.2	Amended and Restated Knoll, Inc. 2007 Stock Incentive Plan.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KNOLL, INC.

  (Registrant)

Date: August 9, 2007

By:	/s/ Andrew B. Cogan
	Andrew B. Cogan
	Chief Executive Officer

Date: August 9, 2007

By:	/s/ Barry L. McCabe
	Barry L. McCabe
	Chief Financial Officer

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EX-10.2

Exhibit 10.2

KNOLL, INC.

2007 STOCK INCENTIVE PLAN

(Amended and Restated as of August 2, 2007)

ARTICLE I

Purpose

The Knoll, Inc. 2007 Stock Incentive Plan, amended and restated as of August 2, 2007 (the “Plan”), is intended to provide compensation awards to officers, certain other key employees, directors and consultants of Knoll, Inc. (the “Company”) tied to the performance of the Company’s common stock, par value $0.01 per share (the “Stock”) and as an incentive to encourage Stock ownership by these individuals in order to increase their proprietary interest in the Company’s success and to encourage them to remain in the employ of the Company.

The term “Company,” when used in the Plan or a related Restricted Share agreement or option agreement with reference to eligibility and employment, shall include the Company and its subsidiaries. The word “subsidiary,” when used in the Plan, shall mean any subsidiary of the Company within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).

It is intended that certain options granted under this Plan will qualify as “incentive stock options” under Section 422 of the Code.

ARTICLE II

Administration

The Plan shall be administered by a Committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”) and shall consist of not less than two members. During any such time that the Company is subject to Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) each member of the Committee shall, unless otherwise determined by the Board, be a “Non-Employee Director” within the meaning of the rules promulgated under Section 16(b) and during any such time that the Company is subject to Section 162(m) of the Code each member of the Committee shall, unless otherwise determined by the Board, be an “outside director” within the meaning of Section 162(m) of the Code. Subject to the provisions of the Plan, the Committee shall have sole authority, in its absolute discretion: (a) to determine which individuals shall be granted shares of restricted stock (“Restricted Shares”) and which shall be granted options; (b) to make grants of Restricted Shares, incentive stock options and nonqualified options to acquire Stock; (c) to determine the times when Restricted Shares and options shall be granted and the number of shares to be granted or optioned; (d) to determine the option price of the shares subject to each option; (e) to determine the nature of any rights and restrictions to be imposed on Restricted Shares granted under the Plan; (f) to determine the time or times when each option becomes exercisable, the duration of the exercise period and any other restrictions on the exercise of options issued hereunder; (g) to prescribe the form or forms of agreements for Restricted Shares granted under the Plan and the

form or forms of the option agreements for options granted under the Plan (which forms shall be consistent with the terms of the Plan but need not be identical); (h) to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan; (i) to construe and interpret the Plan, the rules and regulations, the Restricted Share agreements and the option agreements under the Plan and to make all other determinations deemed necessary or advisable for the administration of the Plan; and (j) to make determinations as to any other awards to be made under the Plan. All decisions, determinations and interpretations of the Committee shall be final and binding on all grantees and optionees.

ARTICLE III

Stock

The stock to be granted or optioned under the Plan shall be shares of authorized but unissued Stock, or previously issued shares of Stock reacquired by the Company. Under the Plan, the total number of shares of Stock which may be granted or purchased pursuant to options granted hereunder shall not exceed, in the aggregate, 2,000,000 shares, except as such number of shares shall be adjusted in accordance with the provisions of ARTICLE XII hereof.

The number of shares of Stock available for issuance or grant of options under the Plan shall be decreased by the sum of (i) the number of Restricted Shares which are granted and then outstanding, (ii) the number of shares with respect to which options have been issued and are then unexercised and outstanding, including the number of shares issued upon exercise of options, and (iii) the number of shares subject to other then outstanding awards and the number of shares issued upon the exercise of other awards (except for such awards satisfied or to be satisfied in cash). In the event that any Restricted Shares are forfeited or that any outstanding option or other award under the Plan for any reason expires, is forfeited, is terminated or is canceled without exercise prior to the end of the period during which options may be granted, the Restricted Shares so forfeited and the shares of Stock called for by the unexercised portion of such option or other award shall again be available for grant or issuance under the Plan.

ARTICLE IV

Eligibility of Participants

Subject to ARTICLE IX in the case of incentive stock options, officers and other key employees of the Company shall be eligible to receive Restricted Shares, other awards and options under the Plan. In addition, Restricted Shares, other awards and options which are not incentive stock options may be granted to directors, consultants (including employees of consultants) or other key persons who the Committee determines shall receive such awards under the Plan. Notwithstanding anything to the contrary herein, during any time that the Company is subject to Section 162(m) of the Code, the maximum number of shares of Stock with respect to which options and stock appreciation rights (to the extent granted as an award under the plan) may be granted to any individual in any one year shall not exceed the maximum number of shares of Stock available for issue hereunder, as such number may change from time to time.

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As of any grant date which is during any time that the Stock is neither publicly traded nor listed on one or more national securities exchanges or other electronic securities exchanges, it shall be a condition to the grant of Restricted Shares or Stock upon the exercise of options under the Plan that the grantee or optionee execute a Joinder Agreement in the form attached to the Knoll, Inc. Stockholders Agreement (Common Stock under Stock Incentive Plan) (the “Stockholders Agreement”) agreeing to be bound by the terms of such Agreement.

ARTICLE V

Fair Market Value

“Fair Market Value Per Share” means, as of any date when the Stock is listed on one or more national securities exchanges, the closing price reported on the principal national securities exchange on which such Stock is listed and traded on the date of determination. If the Stock is not listed on an exchange, or representative quotes are not otherwise available, the Fair Market Value Per Share shall mean the amount determined by the Board in good faith to be the fair market value per share of Stock.

ARTICLE VI

Terms and Conditions of Restricted Shares

Restricted Shares will become unrestricted and vest only in accordance with a vesting period set by the Committee with respect to each grant of Restricted Shares (the “Restriction Period”). The Restriction Period for an award of Restricted Shares that is subject to time-based vesting cannot be less than three years following the date of grant and no more than 33.3% of the shares subject to each such award may vest in any one year. For Restricted Share awards subject to performance-based vesting, the performance period may not be less than one year. The above restrictions on time-based and performance-based vesting (the “Restrictions”) may be waived by the Committee, either in the Restricted Share Agreement or by subsequent resolution at any time, on account of the death, disability or retirement of an award recipient or in the event of a change in control of the Company. In addition, the Restrictions may be waived by the Committee, either in the Restricted Share Agreement or by subsequent resolution at any time, on account of the termination of an award recipient’s employment by the Company without Cause, but only with respect to an aggregate for all award recipients of up to ten percent (10%) of the aggregate number of shares of Stock that may be granted under the Plan, as set forth in Article III above (the “Ten-Percent Limit”). To the extent so waived, once the Ten-Percent Limit is reached, no further Restricted Shares may be subject to accelerated vesting on account of the termination of an award recipient’s employment without Cause, regardless of whether such acceleration is provided for in any Restricted Share Agreement. In the event that more than one award recipient, with respect to whom the Restrictions have been waived, is terminated without

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Cause at the same time or in connection with a reduction in force or any other coordinated termination program or policy implemented by the Company, and as a result of such terminations the number of shares with respect to which vesting would be accelerated exceeds the Ten-Percent Limit, the Committee may limit the acceleration among some or all of such terminated individuals on a pro rata basis or in any other manner it deems appropriate, as it determines in its sole discretion. Subject to the above limitations on vesting, the Committee may provide, either in the Restricted Share Agreement or by subsequent resolution at any time, for acceleration of the Restriction Period and accelerated vesting upon any event for which the Committee determines, in its discretion, that such acceleration is appropriate. With respect to each grant of Restricted Shares, “Cause” shall have the meaning given such term in a grantee’s Restricted Share Agreement. Notwithstanding anything herein to the contrary, the Restrictions shall not apply to Restricted Shares granted in lieu of cash compensation foregone at the election of employees, directors and consultants of the Company.

During the Restriction Period, Restricted Shares shall constitute issued and outstanding shares of Stock for all corporate purposes but unless and until such Restricted Shares shall have become vested (i.e., the date at which such shares shall not be subject to forfeiture) (a) the Company shall retain custody of the stock certificate or certificates representing such shares, (b) the Company will retain custody of all dividends and distributions (“Retained Distributions”) made or declared thereon (and such Retained Distributions shall be subject to the same restrictions, terms and vesting and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account; provided, however, that in the event such Retained Distributions are taxable to the grantee in the year of payment, notwithstanding their failure to have become vested by the date of payment, the Company shall arrange for the release to the grantee of such part of the Retained Distributions as are sufficient to cover the taxes payable by the grantee with respect thereto; (c) the grantee of such Restricted Shares shall not be entitled to vote such shares, and (d) except as otherwise permitted by the Stockholders Agreement, the grantee of such Restricted Shares may not, whether voluntarily or involuntarily, sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or any Retained Distributions thereon or his interest in any of them (it being understood that, except to the extent so permitted, any sale, assignment, transfer, pledge, exchange, or disposition (i) before the shares shall have become vested shall be null and void and of no effect and (ii) after the shares shall have become vested shall only be as permitted under the terms of the Stockholders Agreement). Except as set forth in any applicable Restricted Share Agreement, any Restricted Shares which have not vested as of, or by reason of, a grantee’s termination of employment shall be immediately forfeited to the Company and the grantee and any permitted transferee shall have no further rights in respect of such forfeited shares.

With respect to Restricted Shares which have become vested pursuant to the provisions of the Restricted Share Agreement, the Company shall promptly deliver the Stock certificate or certificates representing such shares to the grantee, registered in the name of the grantee and any Retained Distributions related to such shares. The Company may endorse such legends on such certificates as may be required by law or under the terms of the Plan, the Restricted Share Agreement or the Stockholders Agreement.

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ARTICLE VII

Option Grant and Exercise Price

Options shall be deemed granted on the date that the Committee takes action or such subsequent date that the Committee determines to be appropriate. The option price per share of Stock for each option shall be set by the Committee on the date of grant; provided, however, that the option price per share of Stock for incentive stock options, subject to ARTICLE IX, shall not be less than the Fair Market Value Per Share on the date the option was granted.

ARTICLE VIII

Exercise and Terms of Options

The Committee shall determine the dates after which options may be exercised, in whole or in part. If an option is exercisable in installments, the installments or portions thereof which become exercisable shall remain exercisable until expiration, termination or cancellation.

Any other provision of the Plan to the contrary notwithstanding, but subject to ARTICLE IX in the case of incentive stock options, no option shall be exercised after the date ten years from the date of grant of such option (the “Termination Date”).

Options shall become exercisable only in accordance with the exercise schedule set forth in the option agreement entered into with respect to each grant of options (the “Option Agreement”). The Committee may provide in the Option Agreement for acceleration of exercisability upon termination of the optionee’s employment by reason of death, disability, or by the Company without Cause, or upon any other event for which the Committee determines, in its discretion, that such acceleration is appropriate, including a change in control of the Company. With respect to each grant of options, “Cause” shall have the meaning given such term in the optionee’s Option Agreement.

Notwithstanding the foregoing provisions of this ARTICLE VIII or the terms of any option agreement, the Committee may in its sole discretion accelerate the exercisability of any option granted hereunder. Any such acceleration shall not affect the terms and conditions of any such option other than with respect to exercisability.

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ARTICLE IX

Special Provisions Applicable

to Incentive Stock Options Only

To the extent the aggregate Fair Market Value Per Share (determined as of the time the option is granted in accordance with Article V) with respect to which any options granted hereunder which are intended to be incentive stock options may be exercisable for the first time by the optionee in any calendar year (under this Plan or any other stock option plan of the Company or any parent or subsidiary thereof) exceeds $100,000, such options shall not be considered incentive stock options but rather shall be nonqualified options.

No incentive stock option may be granted to an individual who, at the time the option is granted, owns directly, or indirectly within the meaning of Section 424(d) of the Code, stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or of any parent or subsidiary thereof, unless such option (i) has an option price of at least 110 percent of the Fair Market Value Per Share on the date of the grant of such option; and (ii) cannot be exercised more than five years after the date it is granted.

Each optionee who receives an incentive stock option must agree to notify the Company in writing immediately after the optionee makes a disqualifying disposition of any Stock acquired pursuant to the exercise of an incentive stock option. A disqualifying disposition is any disposition (including any sale) of such Stock made within the period which is (a) two years after the date the optionee was granted the incentive stock option or (b) one year after the date the optionee acquired Stock by exercising the incentive stock option.

ARTICLE X

Payment for Shares

Payment for shares of Stock purchased under an option granted hereunder shall be made in full upon exercise of the option, by certified or bank cashier’s check payable to the order of the Company or by any other means acceptable to the Company. The Committee, in its discretion, may allow an optionee to pay such exercise price by having the Company withhold shares of Stock being purchased having an aggregate Fair Market Value Per Share equal to the amount of such exercise price.

ARTICLE XI

Non-Transferability of Option Rights

No option shall be transferable except by will or the laws of descent and distribution. During the lifetime of the optionee, the option shall be exercisable only by him. The Committee may, however, in its sole discretion, allow for transfer of options which are not incentive stock options to other persons or entities, subject to such conditions or limitations as it may establish.

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ARTICLE XII

Adjustment for Recapitalization, Merger, etc.

The aggregate number of shares of Stock which may be granted or purchased pursuant to options and other awards granted hereunder, the number of shares of Stock which may be subject to options and stock appreciation rights granted to any one person in any one year, the number of shares of Stock covered by each outstanding option and other award and the price per share thereof in each such option or other award shall be appropriately adjusted for any increase or decrease in the number of outstanding shares of stock resulting from a stock split or other subdivision or consolidation of shares of Stock or for other capital adjustments or payments of stock dividends or distributions or other increases or decreases in the outstanding shares of Stock without receipt of consideration by the Company. Any adjustment shall be conclusively determined by the Committee.

In the event of any change in the outstanding shares of Stock by reason of any recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other corporate change, or any distributions to common shareholders other than ordinary cash dividends, the Committee shall make such substitution or adjustment, if any, as it deems to be equitable, as to the number or kind of shares of Stock or other securities issued or reserved for issuance pursuant to the Plan, the number or kind of shares of Stock which may be subject to options and stock appreciation rights granted to any one person in any one year, and the number or kind of shares of Stock or other securities covered by outstanding options and other awards, and the option price thereof. In instances where another corporation or other business entity is being acquired by the Company, and the Company has assumed outstanding employee option grants and/or the obligation to make future or potential grants under a prior existing plan of the acquired entity, similar appropriate adjustments shall be made as determined by the Committee.

The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Committee in its sole discretion. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an option.

ARTICLE XIII

No Obligation to Exercise Option

The granting of an option shall impose no obligation on the recipient to exercise such option.

ARTICLE XIV

Use of Proceeds

The proceeds received from the sale of Stock pursuant to the Plan shall be used for general corporate purposes.

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ARTICLE XV

Rights as a Stockholder

An optionee or a transferee of an option or other award shall have no rights as a stockholder with respect to any share of Stock covered by his option or other award until he shall have become the holder of record of such share, and he shall not be entitled to any dividends or distributions or other rights in respect of such share (except as set forth in such award) for which the record date is prior to the date on which he shall have become the holder of record thereof.

Notwithstanding anything herein to the contrary, the Committee, in its sole discretion, may restrict the transferability of all or any number of shares issued under the Plan by legending the stock certificate as it deems appropriate.

ARTICLE XVI

Employment Rights

Nothing in the Plan or in any agreement related to options, Restricted Shares or other awards granted hereunder shall confer on any optionee or grantee any right to continue in the employ of the Company or any of its subsidiaries, or to be evidence of any agreement or understanding, express or implied, that the Company or any if its subsidiaries will employ the optionee or grantee in any particular position or at any particular rate of remuneration, or for any particular period of time, or to interfere in any way with the right of the Company or any of its subsidiaries to terminate the optionee’s employment at any time.

ARTICLE XVII

Compliance with the Law

The Company is relieved from any liability for the nonissuance or non-transfer or any delay in issuance or transfer of any shares of Stock subject to options or other awards under the Plan which results from the inability of the Company to obtain or any delay in obtaining from any regulatory body having jurisdiction, all requisite authority to issue or transfer shares of Stock of the Company either upon exercise of the options or disposition of Stock pursuant to other awards under the Plan or shares of Stock issued as a result of such exercise or disposition, if counsel for the Company deems such authority necessary for lawful issuance or transfer of any such shares. Appropriate legends may be placed on the stock certificates evidencing shares issued upon exercise of options to reflect such transfer restrictions.

Each option and other award granted under the Plan is subject to the requirement that if at any time the Committee determines, in its discretion, that the listing, registration or qualification of shares of Stock issuable upon exercise of options or disposition under other awards is required by any securities exchange or under any state or Federal law, or that the consent or approval of any

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governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of shares of Stock, no shares of Stock shall be issued, in whole or in part, unless such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions or with such conditions as are acceptable to the Committee. Notwithstanding any terms or conditions of any award to the contrary, the Company shall be under no obligation to offer to sell or to sell and shall be prohibited from offering to sell or selling any shares of Stock or other security pursuant to an award under the Plan unless such shares or other securities have been properly registered for sale with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or unless the Company has received advice of counsel, satisfactory to the Company, that such shares or securities may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the shares of Stock or other securities to be offered or sold under the Plan. If the shares of Stock or other securities offered for sale or sold under the Plan are offered or sold pursuant to an exemption from registration under the Securities Act, the Company may restrict the transfer of such shares and may legend the Stock certificates representing such shares in such manner as it deems advisable or to ensure the availability of any such exemption.

ARTICLE XVIII

Cancellation of Options

The Committee, in its discretion, may, with the consent of any optionee, cancel any outstanding option hereunder.

ARTICLE XIX

Effective Date and Expiration Date of Plan

The Plan is effective as of February 6, 2007, the date of adoption of the Plan by the Board, subject to approval by the stockholders of the Company in a manner which complies with Section 422(b)(1) of the Code and the Treasury Regulations thereunder. The expiration date of the Plan, after which no option may be granted hereunder, shall be February 6, 2017.

ARTICLE XX

Amendment or Discontinuance of Plan

The Board may, without the consent of the Company’s stockholders or optionees under the Plan, at any time terminate the Plan entirely and at any time or from time to time amend or modify the Plan, provided that no such action shall adversely affect awards theretofore granted hereunder without the grantee’s or optionee’s consent.

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ARTICLE XXI

Miscellaneous

(a) Grants of options, Restricted Shares and other awards hereunder shall be evidenced by agreements (which need not be identical) in such forms as the Committee may from time to time approve. Such agreements shall conform to the terms and conditions of the Plan and may provide that the grant of any Restricted Share, option or other award under the Plan and Stock acquired upon the exercise or disposition of such awards shall also be subject to such other conditions (whether or not applicable to any other grantee or optionee) as the Committee determines appropriate, including, without limitation, provisions to assist an optionee in financing the purchase of Stock through the exercise of options, provisions for the forfeiture of, or restrictions on, resale or other disposition of shares under the Plan, provisions giving the Company the right to repurchase shares acquired under the Plan in the event the participant elects to dispose of such shares, and provisions to comply with Federal and state securities laws and Federal and state income tax withholding requirements.

(b) At such time that the delivery of shares of Stock or other disposition of an award to a grantee or optionee becomes subject to tax withholding requirements, the Company may require that the grantee or optionee pay to the Company such amount as the Company deems necessary to satisfy its obligation to withhold Federal, state or local income or other taxes. The Committee, in its discretion, may allow the grantee or optionee to pay such amount by having the Company withhold shares of Stock which would otherwise be delivered to such grantee or optionee having an aggregate fair market value equal to such amount.

(c) If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.

(d) No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in

10

connection with the Plan unless arising out of such person’s own fraud or bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

(e) The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware without reference to the principles of conflicts of law thereof.

(f) No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Optionees shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.

(g) Each member of the Committee and each member of the Board shall be fully justified in relying, acting or failing to act, and shall not be liable for having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant of the Company and upon any other information furnished in connection with the Plan by any person or persons other than such member.

(h) Except as otherwise specifically provided in the relevant plan document, no payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit-sharing, group insurance or other benefit plan of the Company.

(i) The expenses of administering the Plan shall be borne by the Company.

(j) Masculine pronouns and other words of masculine gender shall refer to both men and women.

ARTICLE XXII

Other Awards

The Committee may grant any other cash, stock or stock-related awards to any eligible individual under this Plan that the Committee deems appropriate, including, but not limited to, cash-settled or stock-settled stock appreciation rights, limited stock appreciation rights, phantom stock awards, restricted stock units, the bargain purchase of Stock and stock bonuses.

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Any such benefits and any related agreements shall contain such terms and conditions as the Committee deems appropriate; provided, however that the Restrictions shall apply to any full-value awards, except for such awards granted in lieu of cash compensation foregone at the election of employees, directors and consultants of the Company. Such awards and agreements need not be identical. With respect to any benefit under which shares of Stock are or may in the future be issued (other than shares issued from the Company’s treasury) for consideration other than prior services, the amount of such consideration shall not be less than the amount (such as the par value of such shares) required to be received by the Company in order to comply with applicable state law.

Shares of Stock may also be used to satisfy obligations of the Company to deliver shares of Stock (subject to the vesting limitations for full-value awards) under other compensation and benefit plans heretofore or hereafter established by the Company.

* * *

As adopted by the Board of Directors of

Knoll, Inc. as of February 6, 2007 and

amended and restated as of August 2, 2007.

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Andrew B. Cogan, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2007 of Knoll, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to material affect, the registrant’s internal control over financial reporting; and

(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2007

/s/ Andrew B. Cogan

Andrew B. Cogan

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Barry L. McCabe, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2007 of Knoll, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to material affect, the registrant’s internal control over financial reporting; and

(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2007

/s/ Barry L. McCabe

Barry L. McCabe

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

In connection with the Quarterly Report on Form 10-Q of Knoll, Inc. (the “Company”) for the period ending June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Andrew B. Cogan, Chief Executive Officer of the Company, certifies, pursuant to18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

a. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

b. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 9, 2007

/s/ Andrew B. Cogan

Andrew B. Cogan

Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

In connection with the Quarterly Report on Form 10-Q of Knoll, Inc. (the “Company”) for the period ending June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Barry L. McCabe, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

a. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

b. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 9, 2007

/s/ Barry L. McCabe

Barry L. McCabe

Chief Financial Officer