KNOLL INC, S-1/A, 1997-05-06

KNOLL INC
S-1/A, 1997-05-06
MISCELLANEOUS FURNITURE & FIXTURES

Previous: 99 CENTS ONLY STORE, S-8, 1997-05-06

Next: KNOLL INC, 8-A12B, 1997-05-06

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1997
REGISTRATION NO. 333-23399
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------

AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
KNOLL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 2522 13-3873847
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTIONOF INDUSTRIALCLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION) ---------------
1235 WATER STREET
EAST GREENVILLE, PENNSYLVANIA 18041
(215) 679-7991
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDINGAREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
PATRICK A. MILBERGER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
KNOLL, INC.
1235 WATER STREET
EAST GREENVILLE, PENNSYLVANIA 18041
(215) 679-7991
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
MICHAEL A. SCHWARTZ, ESQ. VALERIE FORD JACOB, ESQ.
WILLKIE FARR & GALLAGHER FRIED, FRANK, HARRIS, SHRIVER &
ONE CITICORP CENTER JACOBSON
153 EAST 53RD STREET ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10004
(212) 821-8000 (212) 859-8000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
---------------
CALCULATION OF REGISTRATION FEE

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value.... 9,200,000 $22.00 $202,400,000 $61,334(3)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Includes shares issuable upon exercise of the Underwriters' over-allotment
options.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(3) Previously paid.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

EXPLANATORY NOTE

This registration statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in connection with a concurrent offering
outside of the United States and Canada (the "International Prospectus"). The
two prospectuses are identical except for the front and back cover pages and
the section entitled "Underwriting." Each of the alternate pages for the
International Prospectus included herein is labeled "Alternate Page for
International Prospectus."
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

PROSPECTUS PRELIMINARY PROSPECTUS DATED MAY 6, 1997
8,000,000 SHARES

LOGO

COMMON STOCK

-----------

All of the 8,000,000 shares of Common Stock offered hereby are being sold by
Knoll, Inc. ("Knoll" or the "Company"). Of the 8,000,000 shares of Common Stock
offered hereby, 6,400,000 shares are being offered for sale initially in the
United States and Canada by the U.S. Underwriters and 1,600,000 shares are
being offered for sale initially in a concurrent offering outside the United
States and Canada by the International Managers. The initial public offering
price and the aggregate underwriting discount per share will be identical for
both Offerings. See "Underwriting."

Prior to the Offerings, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price will be
between $19.00 and $22.00 per share. For a discussion relating to factors to be
considered in determining the initial public offering price, see
"Underwriting." Investors purchasing shares of Common Stock in the Offerings
will incur substantial and immediate dilution of $21.20 per share in pro forma
net tangible book value of Common Stock, which exceeds the assumed initial
public offering price of $20.50 per share (based on the midpoint of the
estimated range of the initial public offering price). See "Risk Factors--
Dilution" and "Dilution."

The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "KNL," subject to notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
- -----------------------------------------------------------------------------
Total(3)........................ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and a certain selling stockholder (the "Selling Stockholder")
have agreed to indemnify the several Underwriters against certain
liabilities, including certain liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $1,500,000.
(3) The Company has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional 384,000 shares and 96,000
shares of Common Stock, respectively, and the Selling Stockholder has
granted the U.S. Underwriters and the International Managers options to
purchase up to an additional 576,000 shares and 144,000 shares of Common
Stock, respectively, in each case exercisable within 30 days after the date
hereof, solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discount,
Proceeds to Company and Proceeds to Selling Stockholder will be $ , $ ,
$ and $ , respectively. See "Underwriting."

-----------

The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Common Stock will be made in New York,
New York, on or about , 1997.

-----------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
-----------

The date of this Prospectus is , 1997.
<PAGE>

[PICTURE OF FURNITURE]

----------------

Knoll(R), The Knoll Group(R), KnollStudio(R), KnollExtra(R), Reff(TM),
Bulldog(R), Calibre(R), Equity(R), Parachute(R), Spinneybeck(R), Good Design
is Good Business(R), Propeller(TM) and SoHo(TM) are trademarks of the Company.

----------------

The Company intends to furnish its stockholders annual reports containing
audited financial statements and will make available copies of quarterly
reports containing unaudited interim financial information for the first three
fiscal quarters of each fiscal year of the Company.

----------------

Certain persons participating in the Offerings may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Such transactions may include stabilizing, the purchase of Common Stock to
cover syndicate short positions and the imposition of penalty bids. For a
description of these activities, see "Underwriting."

2
<PAGE>

Office Systems The Company does not manufacture or sell computers,
computer hardware or telephone equipment.

[PHOTO] [PHOTO] [PHOTO]

Reff Morrison Equity

Seating Storage

[PHOTO] [PHOTO] [PHOTO]

Sapper Bulldog Calibre Files

[PHOTO] [PHOTO] [PHOTO]

Parachute SoHo Reuter Overhead
<PAGE>

Desks & Casegoods Tables Knoll

[PHOTO] [PHOTO] [PHOTO]

Magnusson Desk Propeller Tables with Interaction
SoHo Chairs Counterforce Table

KnollStudio

[PHOTO] [PHOTO] [PHOTO]

Florence Knoll Table Desk Mies van der Bertoia Collection
with deArmas Chairs Rohe Collection

KnollExtra Spinneybeck KnollTextiles

[PHOTO] [PHOTO] [PHOTO]

Adjustable Keyboard Support Machine Age Leathers Honeycomb
with Surf Ergonomic
Accessories
<PAGE>

SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data, including
the notes thereto, appearing elsewhere in this Prospectus. Unless the context
otherwise requires, the terms "Knoll" and the "Company" refer to Knoll, Inc.
and its subsidiaries and predecessor entities as a combined entity. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in such forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed in "Risk
Factors."

THE COMPANY

Knoll designs, manufactures and distributes office systems and business
furniture noted for its high quality, innovative design and sophisticated
image. Knoll's products are designed to provide enduring value rooted in
timeless aesthetics, functionality, flexibility and reliable performance. For
nearly sixty years, Knoll has been widely recognized as a design leader, with
products represented in major art museums around the world, including more than
30 Knoll pieces housed in the permanent Design Collection of the Museum of
Modern Art in New York. Since 1994 alone, Knoll has won more than 20 design
awards for new products and enhancements across all of its product categories.

Knoll's customers are typically Fortune 1000 companies. The Company's direct
sales force of approximately 290 professionals and its network of approximately
200 independent dealers in North America work in close partnership with
customers and design professionals to create distinctive work environments
using Knoll products. Knoll's products and knowledgeable sales organization
have generated strong brand recognition and loyalty among architects, designers
and corporate facility managers, who are key influences in the purchasing
process for business furnishings. Knoll's strong customer relationships allow
the Company to adapt and customize its products to meet evolving customer
needs, technology practices and ergonomic standards.

The Company offers a broad range of office furniture and accessories in five
basic categories: (i) office systems (typically modular and moveable workspaces
with integrated work surfaces, space dividers and lighting), comprised mainly
of the Reff, Morrison and Equity product lines; (ii) seating, including the
Sapper, Bulldog, Parachute and SoHo chairs; (iii) storage solutions and filing
cabinets, including the Calibre collection; (iv) desks and casegoods, including
bookcases and credenzas; and (v) tables. The Company's KnollStudio collection
features its signature design classics, including high image side chairs,
sofas, desks and tables for both office and home use. The Company also carries
its own lines of textiles and leather products and a line of desk, office
and computer accessories, which complement its furniture products and are also
sold in conjunction with the seating and systems products of other
manufacturers. In 1996, the Company had revenues of $651.8 million.

INDUSTRY DYNAMICS

The Company believes that fundamental shifts in the nature of corporate
organizational structures, technology and work processes are driving new
opportunities for growth in the office furniture industry, especially in the
middle to high-end segments where Knoll believes it has competitive advantages.
The need for redesigned space has accelerated as large corporations continue to
focus on the benefits of reengineering, restructuring and reorganizing, placing
greater emphasis on teamwork, flatter organizational structures and direct
communication among employees. In addition, the proliferation of technology
throughout the organization has created increasingly complex wire and cable
requirements and placed new demands on office furniture. Furthermore,
companies, workers and regulatory entities have become more sensitive to
ergonomic concerns and the need for designs that increase worker productivity.

The U.S. office furniture market generated sales of approximately $10.0
billion in 1996. The dollar value of U.S. office furniture industry shipments
has increased in each of the past 25 years, with the exception of 1975 and
1991, and according to estimates of The Business and Institutional Furniture
Manufacturer's Association ("BIFMA"), has grown at a compound annual rate of
approximately 7.2% over the three-year period ended December 31, 1996.

3
<PAGE>

GROWTH STRATEGY

Knoll focuses on the middle to high-end office furniture market which, as a
result of evolving workplace trends and industry dynamics, management expects
to grow faster than the industry as a whole. Management believes Knoll is well-
positioned to drive further growth in revenues, profitability and market share.
Key elements of the Company's growth strategy are as follows:

. LEVERAGE OFFICE SYSTEMS STRENGTH IN OTHER CATEGORIES. The Company
believes it has the opportunity to increase sales and market share in
seating, tables, desks and storage solutions. For example, the Company's
U.S. market share of seating and tables was 2.1% and 1.8%, respectively,
in 1996 while its office systems market share was 11.2% during this same
period (excluding sales of KnollStudio, KnollExtra, textiles and leather
products). Since these products are often sold in conjunction with the
initial specification of an office system, the Company believes that it
can increase its market share in these categories by leveraging its
market share strength in office systems.

. EXPAND SCOPE OF SELLING EFFORTS. The Company intends to increase the
number of direct selling professionals over the next two years to
increase sales by (i) developing new corporate relationships, (ii)
further penetrating existing corporate accounts and (iii) expanding its
selling efforts into secondary markets. Secondary markets account for
approximately $800 million in annual industry sales, but to date have
received limited or no coverage by the Company's direct sales force or
dealers. Management believes expanded selling efforts will present an
opportunity to increase total revenues and market share.

. EXPAND THE RANGE AND QUANTITY OF PRODUCTS OFFERED THROUGH THE EXISTING
DEALER NETWORK. The Company intends to leverage its dealers' estimated
1,000-person sales force to capture a larger share of business with
medium to smaller-size companies and independent business purchasers. In
order to stimulate sales in this segment, the Company has introduced
marketing programs such as QuickShip and PrimeTime! which make it easier
and more profitable for its dealers to market the Company's products.
Additionally, the Company is developing new products designed and
targeted for sale through the dealer distribution channel.

. CONTINUE TO USE SPECIALTY BUSINESSES TO ENHANCE REPUTATION AND DRIVE
INCREMENTAL GROWTH. The Company intends to expand its KnollStudio line,
which includes specially commissioned pieces by major architects and
designers. By relaunching KnollStudio classic products and introducing
new products, the Company expects to generate significant publicity and
goodwill in the design community and the media. Further, Knoll's textile,
leather and accessories lines offer the opportunity to achieve
incremental growth and attractive margins both when sold as part of Knoll
offerings and when sold in conjunction with products of other
manufacturers.

. IMPROVE INFORMATION SYSTEMS TO MAXIMIZE MANUFACTURING EFFICIENCY. The
Company is implementing integrated, comprehensive management information
systems for its operations. Management believes that new information
systems will enable it to enhance its order response time and accuracy,
improve manufacturing processes, reduce delivery times, improve shipping
accuracy and reduce fixed costs.

4
<PAGE>

PLATFORM FOR GROWTH

The Company has created a platform to execute its growth strategy through the
successful completion of its turnaround program. As part of the restructuring
efforts initiated by current management in 1994, the Company evaluated all
major business activities and significantly reduced operating costs. Since then
(i) virtually every product line has been modified and improved; (ii) the lead
time required to bring new and enhanced products to market has decreased
significantly; (iii) average lead times between order entry and delivery of
products to customers have been reduced from seven weeks to five weeks; and
(iv) on-time shipments have improved to the current 95% level from
approximately 91% in 1993. In addition, management refocused and retrained the
Company's sales force, instituted product line profitability measures and
aligned management incentives with Company growth and profitability.

As a result of management's restructuring efforts, Knoll experienced strong
growth in sales, gross margins and operating margins from 1994 to 1996. Sales
increased from $562.9 million in 1994 to $651.8 million in 1996, despite the
discontinuance of several product lines. Gross margins were 35.6% on a pro
forma basis in 1996 and 27.1% in 1994. The operating margin was 12.0% on a pro
forma basis in 1996, which the Company believes is among the highest of its
major competitors. The Company's improved financial and operating results
allowed it in 1996 to prepay $72.0 million of its senior credit facilities and
refinance such facilities on more favorable terms.

COMPETITIVE STRENGTHS

Knoll's business philosophy is to pursue growth and profitability by
maintaining and enhancing the Knoll brand image and reputation for quality and
by working closely with its customers. The Company's growth strategy is
designed to leverage its competitive strengths, which include:

TRADITION OF SUPERIOR DESIGN. The Company's greatest business strength lies
in the history and depth of its commitment to create furniture of enduring
design value which is known for innovative performance. This design
heritage has enabled the Company to build over time strong relationships
with some of the world's preeminent designers. The Company engages
prominent outside architects and designers to create new products and
product enhancements. By combining their creative vision with the Company's
commitment to developing products which address changing business needs,
the Company seeks to launch new offerings which achieve recognition in the
marketplace and generate strong demand among corporate customers.

REPUTATION FOR PRODUCT QUALITY. Knoll's quality serves as an important
marketing tool with design professionals and with new and existing
customers. Knoll's products are constructed of high quality materials, and
Knoll believes its products are differentiated from many of its competitors
in workmanship and attention to detail. The Company believes this results
in products with superior aesthetics and durability.

LEAN ORGANIZATION FOCUSED ON COSTS. As a result of the turnaround program,
the Company has developed an organization focused on expense control and
operating efficiency.

5
<PAGE>

certain categories of subjective industry studies. For a description of
competitive factors within the U.S. office furniture market and the Company's
competitive position, see "Business--Competition."

BACKGROUND

Knoll, Inc. is a Delaware corporation which is the successor by merger to the
business and operations of The Knoll Group, Inc. and related entities, which
were acquired in February 1996 (the "Acquisition") from Westinghouse Electric
Corporation ("Westinghouse") by a majority-owned subsidiary of Warburg, Pincus
Ventures, L.P. ("Warburg"). As part of the Acquisition, Warburg, NationsBanc
Investment Corp. ("NationsBanc" and also referred to herein as the "Selling
Stockholder") and senior management invested $160 million in the Company's
Common Stock, $.01 par value ("Common Stock"), and Series A 12% Participating
Convertible Preferred Stock, $1.00 par value ("Series A Preferred Stock").
Knoll International, Inc. ("Knoll International"), which was founded in 1938,
and other predecessors of the Company have been engaged in the design and
manufacture of office furniture since before the turn of the century. The
Company's principal executive offices are located at 1235 Water Street, East
Greenville, Pennsylvania 18041, and its telephone number is (215) 679-7991.

6
<PAGE>

THE OFFERINGS

The offering of 6,400,000 shares of the Common Stock in the United States and
Canada (the "U.S. Offering") and the offering of 1,600,000 shares of the Common
Stock outside the United States and Canada (the "International Offering") are
collectively referred to herein as the "Offerings."

<TABLE>
<C> <S>
Common Stock offered................ 8,000,000 shares
Common Stock to be outstanding after
the Offerings...................... 42,732,227 shares(1)
Use of Proceeds(2).................. The net proceeds will be used (i) to
redeem that portion of the Series A
Preferred Stock not converted into
Common Stock, (ii) to redeem a
portion of the Company's outstanding
subordinated debt and (iii) to the
extent available, to repay revolving
credit indebtedness of the Company
and/or for working capital and
general corporate purposes or
additional debt retirement. See "Use
of Proceeds."
NYSE Symbol......................... "KNL"
</TABLE>
- --------
(1) Includes 4,144,030 restricted shares issued under the Company's 1996 Stock
Plan, of which 1,224,365 shares have vested and 2,919,665 shares have not
yet vested. Excludes 1,820,868 shares of Common Stock reserved for sale or
issuance under the Company's stock incentive plans, of which options to
purchase 1,318,552 shares have been granted and 502,316 shares remain
available for issuance or sale. See "Management--Stock Incentive Plans."
Also excludes up to 1,000,000 shares of Common Stock which may be issued
pursuant to an employee stock purchase plan to be implemented by the
Company after consummation of the Offerings. Assumes the Underwriters'
over-allotment options are not exercised. If such over-allotment options
are exercised in full, an additional 480,000 shares will be issued and sold
by the Company and 720,000 shares will be sold by the Selling Stockholder.
(2) Of the 1,602,998 shares of Series A Preferred Stock outstanding prior to the
Offerings, 800,000 shares held by Warburg and the Selling Stockholder will
be redeemed for an aggregate redemption price of $80 million in cash and
11,749,361 shares of Common Stock, and the remaining 802,998 shares of
Series A Preferred Stock (including those held by Warburg and the Selling
Stockholder) will be converted into 15,691,558 shares of Common Stock.

RISK FACTORS

Purchasers of Common Stock in the Offerings should carefully consider the
risks relating to strong competition, achieving and managing growth and the
significant leverage of the Company and the other matters set forth under the
caption "Risk Factors" and the other information included in this Prospectus
prior to making an investment decision. See "Risk Factors." Investors
purchasing shares of Common Stock in the Offerings will incur substantial and
immediate dilution of $21.20 per share in pro forma net tangible book value of
Common Stock, which exceeds the assumed initial public offering price of $20.50
per share (based on the midpoint of the estimated range of the initial public
offering price). See "Risk Factors--Dilution" and "Dilution."

------------------

Except as otherwise indicated herein, the information contained in this
Prospectus (i) assumes no exercise of the Underwriters' over-allotment options,
(ii) assumes the redemption or conversion to Common Stock of the Company's
outstanding Series A Preferred Stock and (iii) gives effect to an amendment and
restatement of the Company's Certificate of Incorporation and a 3.13943:1 stock
split of the Common Stock effected on May 6, 1997. Except as otherwise
indicated, the market and Company market share data contained in this
Prospectus are based on information from BIFMA, the United States office
furniture trade association. The BIFMA data represents shipments of office
furniture from the United States (including U.S. exports to customers abroad)
and excludes foreign imports to customers in the United States. The Company
believes that such data are considered within the industry to be the best
available and generally are indicative of the Company's relative market share
and competitive position.

7
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following table presents (i) summary historical consolidated financial
information of the Company's predecessor (the "Predecessor"), as of the dates
and for the periods indicated, (ii) summary historical consolidated financial
information of the Company, as of the dates and for the periods indicated,
(iii) summary pro forma consolidated financial information of the Company, for
the periods indicated, after giving effect to the events described in the notes
below and in the Unaudited Pro Forma Financial Information and notes thereto
included elsewhere in this Prospectus and (iv) summary pro forma as adjusted
information of the Company, as of the dates and for the periods indicated,
after giving effect to the Offerings, the application of the estimated net
proceeds therefrom and the events described in the notes below and in the
Unaudited Pro Forma Financial Information and notes thereto included elsewhere
in this Prospectus. The historical consolidated financial information for each
of the two years in the period ended December 31, 1995 has been derived from
the Predecessor's financial statements, which have been audited by Price
Waterhouse LLP. The historical consolidated financial information for the two
month period ended February 29, 1996 and the ten month period ended December
31, 1996 has been derived from the Predecessor's and the Company's financial
statements, respectively, which have been audited by Ernst & Young LLP. The
historical consolidated financial information for the one month period ended
March 31, 1996 and the three month period ended March 31, 1997 has been derived
from unaudited financial statements and, in the opinion of management, includes
all adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of financial position and results of operations as of the dates
and for the periods indicated. The summary pro forma and pro forma as adjusted
information does not purport to represent what the Company's results actually
would have been if such events had occurred at the dates indicated, nor does
such information purport to project the results of the Company for any future
period. The summary financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Financial Statements and notes thereto and the Unaudited Pro
Forma Financial Information and notes thereto included elsewhere in this
Prospectus.
<TABLE>

<CAPTION>
PREDECESSOR THE COMPANY
-------------------------------- --------------------------------------
PRO FORMA
YEAR ENDED TWO MONTHS TEN MONTHS PRO FORMA AS ADJUSTED
DECEMBER 31, ENDED ENDED YEAR ENDED YEAR ENDED
------------------ FEBRUARY 29, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996 1996 1996 (1) 1996 (1)(2)
-------- -------- ------------ ------------ ------------ ------------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total sales............. $562,869 $620,892 $ 90,232 $561,534 $651,766 $651,766
Cost of sales(3)........ 410,104 417,632 59,714 358,841 419,908 419,908
-------- -------- -------- -------- -------- --------
Gross profit............ 152,765 203,260 30,518 202,693 231,858 231,858
Provision for restruc-
turing................. 29,180 -- -- -- -- --
Selling, general and
administrative
expenses(4)............ 167,238 138,527 21,256 131,349 153,388 153,388
Westinghouse long-term
incentive
compensation........... -- -- 47,900 -- -- --
Allocated corporate ex-
penses(3)(4)........... 5,881 9,528 921 -- -- --
-------- -------- -------- -------- -------- --------
Operating income
(loss)................. (49,534) 55,205 (39,559) 71,344 78,470 78,470
Interest expense........ 3,225 1,430 340 32,952 40,030 32,730
Other income (expense),
net.................... 699 (1,597) (296) 447 151 151
-------- -------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item..... (52,060) 52,178 (40,195) 38,839 38,591 45,891
Income tax expense (ben-
efit).................. 7,713 22,846 (16,107) 16,844 16,848 19,739
-------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary item(5).. $(59,773) $ 29,332 $(24,088) $ 21,995 $ 21,743 $ 26,152
======== ======== ======== ======== ======== ========
Pro forma income before
extraordinary item per
share of Common
Stock(5)(6)............ $ .63 $ .62 $ .61
Pro forma weighted aver-
age shares of Common
Stock outstanding(6)... 35,030 35,030 43,030
</TABLE>

(continued on following page)

8
<PAGE>

<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
-------------- -------------------------------------------------------
PRO FORMA AS
PRO FORMA ADJUSTED
TWO MONTHS ONE MONTH THREE MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED ENDED MARCH 31,
FEBRUARY 29, MARCH 31, MARCH 31, MARCH 31, -------------------
1996 1996 1997 1996 (1) 1996(1)(2) 1997(2)
-------------- --------- ------------ ------------ ---------- --------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total sales............. $ 90,232 $48,080 $177,833 $138,312 $138,312 $177,833
Cost of sales(3)........ 59,714 32,543 109,859 93,610 93,610 109,859
-------- ------- -------- -------- -------- --------
Gross profit............ 30,518 15,537 67,974 44,702 44,702 67,974
Selling, general and
administrative
expenses(4)............ 21,256 10,999 40,058 33,038 33,038 40,058
Westinghouse long-term
incentive
compensation........... 47,900 -- -- -- -- --
Allocated corporate ex-
penses(3)(4)........... 921 -- -- -- -- --
-------- ------- -------- -------- -------- --------
Operating income
(loss)................. (39,559) 4,538 27,916 11,664 11,664 27,916
Interest expense........ 340 3,602 7,742 10,680 8,855 5,952
Other income (expense),
net.................... (296) (49) (74) (345) (345) (74)
-------- ------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item..... (40,195) 887 20,100 639 2,464 21,890
Income tax expense (ben-
efit).................. (16,107) 438 8,462 442 1,165 9,171
-------- ------- -------- -------- -------- --------
Income (loss) before
extraordinary item(5).. $(24,088) $ 449 $ 11,638 $ 197 $ 1,299 $ 12,719
======== ======= ======== ======== ======== ========
Pro forma income before
extraordinary item per
share of Common
Stock(5)(6)............ $ .01 $ .33 $ .01 $ .03 $ .30
Pro forma weighted aver-
age shares of Common
Stock outstanding(6)... 35,030 35,030 35,030 43,030 43,030
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
----------------- -----------------------------------------------
MARCH 31, PRO FORMA
DECEMBER 31, DECEMBER 31, ----------------- AS ADJUSTED
1994 1995 1996 1996 1997 MARCH 31,1997(2)
-------- -------- ------------ -------- -------- ----------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
PERIOD END):
Working capital......... $ 22,898 $ 82,698 $ 64,754 $100,936 $ 77,716 $ 79,286
Total assets............ 705,316 656,710 675,712 694,780 662,034 662,197
Total long-term debt,
including current
portion................ 12,451 3,538 354,154 426,228 336,034 270,719
Total liabilities....... 247,310 176,259 497,908 533,952 474,660 407,775
Stockholders' equity.... 458,006 480,451 177,804 160,828 187,374 254,422
</TABLE>
- --------
(1) Reflects summary pro forma financial information of the Company derived
from the Financial Statements and notes thereto included elsewhere in this
Prospectus, adjusted for the completion of the Acquisition and the
application of the net proceeds of $160,000 from the sale of capital stock
of the Company and borrowings of $260,000 and $165,000 under the Credit
Facilities (as defined) and the Notes (as defined), respectively.
(2) Adjusted to reflect the sale of Common Stock offered hereby, the
application of the estimated net proceeds therefrom and the redemption of
800,000 shares of Series A Preferred Stock held by Warburg and the Selling
Stockholder for an aggregate redemption price of $80 million in cash and
11,749,361 shares of Common Stock, and the conversion of the remaining
802,998 shares of Series A Preferred Stock (including those held by Warburg
and the Selling Stockholder) into 15,691,558 shares of Common Stock. See
"Use of Proceeds."
(3) Cost of sales has been increased by (i) $801 for the pro forma and the pro
forma as adjusted year ended December 31, 1996 and the pro forma and the
pro forma as adjusted three months ended March 31, 1996 to reflect an
increase in depreciation resulting from the Acquisition and (ii) $552 for
the pro forma and the pro forma as adjusted year ended December 31, 1996
and the pro forma and the pro forma as adjusted three months ended March
31, 1996 in order to reflect the reclassification of a portion of allocated
corporate expenses. The reclassified allocated corporate expenses
approximate the replacement cost to the Company for services formerly
provided by Westinghouse to the Predecessor, including (i) benefit expense
related to
(footnotes continued on following page)

9
<PAGE>

the adoption of various independent benefit plans comparable to Westinghouse
benefit plans and (ii) the cost of services required to replace specific
activities formerly provided by Westinghouse to the Predecessor, including
audit, tax, general ledger, accounts receivable, human resources, legal,
insurance and data communications.
(4) Selling, general and administrative expenses have been increased by (i)
$369 for the pro forma and the pro forma as adjusted year ended December
31, 1996 and the pro forma and the pro forma as adjusted three months ended
March 31, 1996 to reflect the reclassification of allocated corporate
expenses which approximate the replacement cost to the Company (described
above in note 3) and (ii) $414 for the pro forma and the pro forma as
adjusted year ended December 31, 1996 and the pro forma and the pro forma
as adjusted three months ended March 31, 1996 to reflect an increase in
amortization and depreciation resulting from the Acquisition.
(5) The pro forma and the pro forma as adjusted 1996 income statement data
presented for the year ended December 31, 1996 does not include the $5,159
extraordinary loss on early extinguishment of debt, net of taxes. In
addition, the pro forma as adjusted income statement data for the year
ended December 31, 1996, the three month period ended March 31, 1996 and
the three month period ended March 31, 1997 does not include an anticipated
extraordinary loss of $5,612 net of taxes associated with the redemption of
a portion of the Notes in connection with the Offerings.

(6) All numbers of shares of Common Stock and per share amounts have been
adjusted to give retroactive effect to the 3.13943-for-1 stock split that
resulted from the amendment of the Company's Certificate of Incorporation
on May 6, 1997. Because of the significance of the redemption and
conversion into Common Stock of the outstanding Series A Preferred Stock
upon consummation of the Offerings, historical net income (loss) before
extraordinary item per share is not presented herein. Pro forma and pro
forma as adjusted net income before extraordinary item per share amounts
are based on the weighted average number of shares of Common Stock and
Common Stock equivalents (employee stock options) outstanding during the
period, after giving effect to the redemption and conversion into Common
Stock of the Series A Preferred Stock assuming such redemption and
conversion had occurred at the beginning of each period presented. See Note
(i) of the Notes to the Unaudited Pro Forma Financial Information.

10
<PAGE>

RISK FACTORS

Prospective purchasers of the Common Stock offered hereby should consider
carefully all of the information set forth in this Prospectus, and, in
particular, should evaluate the following risks in connection with an
investment in the Common Stock.

STRONG COMPETITION

The office furniture industry is highly competitive, with a significant
number of competitors offering similar products. Many of the Company's
competitors, especially those in North America, are large and have
significantly greater financial, marketing, manufacturing and technical
resources than those of the Company. The Company's most significant
competitors in its primary markets are Steelcase, Inc. ("Steelcase"), Herman
Miller, Inc. ("Herman Miller"), Haworth, Inc. ("Haworth") and HON Industries,
Inc. ("HON"). These competitors have a substantial volume of furniture
installed at businesses throughout the country, providing a continual source
of demand for further products and enhancements. Moreover, the products of
these competitors have strong acceptance in the marketplace, and such
competitors could develop alternative product designs which could give them a
competitive advantage over the Company. The Company also faces significant
price competition from its competitors and may encounter competition from new
market entrants. There can be no assurance that the Company will be able to
compete successfully in its markets in the future. See "Business--
Competition."

RISKS ASSOCIATED WITH ACHIEVING AND MANAGING GROWTH

As a result of its growth strategy, the Company will seek to increase its
sales and market share by the introduction of innovative new products and
products for new category segments where the Company's current market share is
relatively low. There can be no assurance that the Company's new products will
achieve the same degree of success as that achieved by the Company's products
historically or that the Company will be able to replicate its success in the
office systems market in markets for other furniture products, such as tables,
seating and storage. In addition, the introduction of new products in part
requires the Company to align itself with independent architects and designers
who are able to design in a timely manner high quality products consistent
with the Company's image. Furthermore, the introduction of new products
requires the coordination of the design, manufacturing and marketing of such
products which may be affected by factors beyond the Company's control.
Accordingly, the launch of any particular product may be later than originally
anticipated by the Company.

In addition, part of the Company's growth strategy will also depend on its
ability to increase its sales to existing customers with a broader range of
products, develop new customers in its existing markets and expand into new
secondary markets. Factors beyond the Company's control, including general
economic factors and business conditions in such markets or affecting such
customers, may affect the Company's ability to achieve such objectives.
Furthermore, the ability to effectuate and manage any growth will depend on
the Company's ability to hire or develop successful sales personnel and
dealers and to continue to develop its management information systems. There
is no assurance that the Company will be able to successfully implement its
growth strategy.

SIGNIFICANT LEVERAGE AND DEBT SERVICE

At March 31, 1997, on a pro forma basis taking into account the application
of the estimated net proceeds of the Offerings as described in "Use of
Proceeds," the Company would have had total consolidated outstanding debt of
approximately $270.7 million. Subject to the restrictions contained in the
Company's existing bank credit facilities (the "Credit Facilities") and the
indenture (the "Indenture") related to the Company's 10 7/8% Senior
Subordinated Notes (the "Notes"), the Company and its subsidiaries may incur
additional indebtedness from time to time to finance acquisitions or capital
expenditures or for other purposes. The high level of the Company's
indebtedness could have important consequences to holders of the Common Stock,
given that: (i) a

11
<PAGE>

substantial portion of the Company's cash flow from operations must be
dedicated to fund scheduled payments of principal and debt service and will
not be available for other purposes; (ii) the Company's ability to obtain
additional debt financing in the future for working capital, capital
expenditures, research and development or acquisitions may be limited; and
(iii) the Company's level of indebtedness could limit its flexibility in
reacting to changes in its industry or in economic conditions generally. See
"Description of Certain Indebtedness."

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS

The terms of the Credit Facilities and the Notes impose operating and
financial restrictions on the Company. As a result, the ability of the Company
to respond to changing business and economic conditions and to secure
additional financing, if needed, may be significantly restricted, and the
Company may be prevented from engaging in transactions that might further its
growth strategy or otherwise be considered beneficial to the Company. A breach
of any of these covenants could result in a default under the Credit
Facilities or the Indenture. If payments to the lenders under the Credit
Facilities or payments to the holders of the Notes were to be accelerated,
there can be no assurance that the assets of the Company would be sufficient
to repay in full such indebtedness and the other indebtedness of the Company.
See "Description of Certain Indebtedness."

DEPENDENCE ON KEY PERSONNEL

The Company's operations are dependent, to a significant extent, on the
continued efforts of certain of its executive officers, including Burton B.
Staniar, its Chairman, and John H. Lynch, its Vice Chairman, President and
Chief Executive Officer, with whom the Company has entered into one-year
employment agreements (which expire March 1, 1998, subject to automatic one-
year extensions unless either party gives 60 days notice not to renew)
containing one-year non-competition provisions. If these officers become
unable to continue in their present role, or if the Company is unable to
attract and retain other skilled employees, the Company's business could be
materially adversely affected. See "Management."

SHORT-TERM DEALERSHIP COMMITMENTS

The Company relies, to some extent, on a network of independent dealers for
the marketing of its products to end-users. The Company's dealers currently
operate primarily under one-year non-exclusive agreements. There can be no
assurance that its dealers will not choose to end their relationships with the
Company, or, if dealers choose to do so, that any replacements in areas
covered by such persons will be satisfactory. In addition, consolidation of
the office furniture distribution industry has caused and may in the future
cause the Company to end relationships with dealers that have been purchased
by a consolidator, as the Company continues to have a preference for locally
owned entrepreneurial dealers. The loss of certain dealers or the termination
of dealer relationships could cause disputes with the Company or difficulties
for the Company in marketing and distributing its products.

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of the Offerings, the Company's existing stockholders,
including Warburg and the Company's executive officers, will beneficially own
approximately 80% of the outstanding shares of the Company's Common Stock
(approximately 77% if the Underwriters' over-allotment options are exercised
in full). As a result, existing stockholders will be able to continue to elect
the Company's Board of Directors and take other corporate actions requiring
stockholder approval, as well as to dictate the direction and policies of the
Company. In addition, pursuant to a stockholders agreement, upon consummation
of the Offerings the stockholders who are a party thereto (comprising
approximately 79% of the outstanding shares of Common Stock of the Company
upon completion of the Offerings) have agreed to vote their shares of Common
Stock for four directors designated by Warburg if Warburg owns 50% or more of
the Company's outstanding shares of Common Stock, three directors if it owns
25% or more, two directors if it owns 15% or more and one director if it owns
5% or more. At the time of the completion of the Offerings, the Board of
Directors of the Company will consist of nine members, including four members
designated by Warburg. Accordingly, Warburg will have the

12
<PAGE>

ability to substantially influence any corporate action requiring Board
approval. In addition, Messrs. Staniar and Lynch have employment agreements
which provide that they will be appointed to the Board of Directors during the
duration of their employment. There can be no assurance that Warburg and
members of management will not decide to sell all or a portion of their
respective holdings at a future date. In addition, there can be no assurance
that in any transfer of a controlling interest in the Company any other
holders of Common Stock will be allowed to participate in any such transaction
or will realize any premium with respect to their shares. The foregoing may
have the effect of discouraging or preventing certain types of transactions
involving an actual or potential change of control. See "Principal and Selling
Stockholders" and "Certain Transactions."

RELIANCE ON PATENTS AND OTHER INTELLECTUAL PROPERTY

The Company owns numerous United States and foreign patents, trademarks and
service marks in order to protect certain of its innovations and designs. In
addition, the Company possesses a wide array of unpatented proprietary know-
how and common law trademarks and service marks. The Company's ability to
compete effectively with other companies depends, to a significant extent, on
its ability to maintain the proprietary nature of its intellectual property.
There can be no assurance as to the degree of protection offered by the claims
of the various patents, trademarks and service marks or the likelihood that
patents, trademarks or service marks will be issued on pending or contemplated
applications. If the Company were unable to maintain the proprietary nature of
its intellectual property with respect to its significant current or proposed
products, the Company's business could be materially adversely affected. See
"Business--Patents and Trademarks."

There can be no assurance that any patents, trademarks or service marks
issued to the Company will not be challenged, invalidated, cancelled, narrowed
or circumvented, or that the rights granted thereunder will provide
significant proprietary protection or competitive advantages to the Company.
There can be no assurance that, if challenged, the Company's patents,
trademarks or service marks would be held valid by a court of competent
jurisdiction. In addition, the Company's competitors may have filed for patent
protection which is not as yet a matter of public knowledge. Moreover, a court
could interpret a third party's patents broadly so as to cover some of the
Company's products.

In the past, certain products of the Company have been copied and sold by
others. The Company vigorously tries to enforce its intellectual property
rights. However, there can be no assurance that the sale of the Company's
products copied by others would not materially adversely impact the sale of
the Company's products.

RISK OF ENVIRONMENTAL LIABILITIES

The past and present business operations of the Company and the past and
present ownership and operation of manufacturing plants on real property by
the Company 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, the Company is involved from time to time in
administrative and judicial proceedings and inquiries relating to
environmental matters. The Company 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 the Company, some of which may be material. The
Company has been identified as a potentially responsible party pursuant to the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA")
for remediation costs associated with waste disposal sites previously used by
the Company. CERCLA imposes liability without regard to fault or the legality
of the disposal. The remediation costs at these CERCLA sites are unknown, but
the Company does not expect any liability it may have under CERCLA to be
material, based on the information currently known to the Company. In
addition, under the stock purchase agreement entered into with Westinghouse in
connection with the Acquisition (the "Stock Purchase Agreement"), Westinghouse
has agreed to indemnify the Company for certain costs associated with CERCLA
liabilities known as of the date of the Acquisition. See "Business--
Environmental Matters."

13
<PAGE>

POTENTIAL LABOR DISRUPTIONS

Certain of the Company's employees in Grand Rapids, Michigan and in Italy
are represented by unions. In addition, the Company has experienced brief work
stoppages from time to time at the Company's facilities in Italy as a result
of national and local issues. There can be no assurance that the Company will
not experience work stoppages or other labor problems in the future or that
the Company will be able to successfully negotiate new contracts with such
unions.

EXCHANGE RATE FLUCTUATION

The Company's foreign sales and certain expenses are transacted in foreign
currencies. In 1996, approximately 12% of the Company's revenues and 24% of
the Company's expenses were denominated in currencies other than U.S. dollars.
The production costs, profit margins and competitive position of the Company
are affected by the strength of the currencies in countries where it
manufactures or purchases goods relative to the strength of the currencies in
countries where its products are sold. The Company reviews from time to time
its foreign currency exposure and evaluates whether it should enter into
hedging transactions. As the Company generally does not hedge its foreign
currency exposure and may determine not to do so in the future, it is and in
the future may be vulnerable to the effects of currency exchange rate
fluctuations.

ECONOMIC FACTORS AFFECTING THE OFFICE FURNITURE INDUSTRY; QUARTERLY
FLUCTUATIONS

Fluctuations in industry revenues may be driven by a variety of
macroeconomic factors, such as white collar employment levels, corporate cash
flows, or non-residential commercial construction, as well as industry factors
such as corporate reengineering and restructuring, technology demands,
ergonomic, health and safety concerns and corporate relocations. There can be
no assurance that current or future economic or industry trends will not
adversely affect the business of the Company. See "Business--Industry
Overview." In addition, in certain years the Company has experienced
variability in its sales from quarter to quarter. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

SHARES ELIGIBLE FOR FUTURE SALE; POTENTIAL FOR ADVERSE EFFECT ON STOCK PRICE;
REGISTRATION RIGHTS

Sales of a substantial number of shares of Common Stock in the public market
or the perception that such sales could occur could adversely affect
prevailing market prices for the Common Stock. Upon completion of the
Offerings, the Company will have outstanding 39,812,562 shares of Common
Stock, excluding 2,919,665 shares of Common Stock which have been granted
under the Company's stock incentive plans but have not vested. Of these
shares, the 8,000,000 shares of Common Stock to be sold in the Offerings will
be freely tradable without restriction under the Securities Act of 1933, as
amended (the "Securities Act"), except for any such shares which may be
acquired by an "affiliate" of the Company. In connection with the Offerings,
existing stockholders (holding an aggregate of 31,812,562 shares of Common
Stock upon consummation of the Offerings) have agreed not to dispose of any
shares of Common Stock for a period of 180 days from the date of this
Prospectus without the consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") on behalf of the Underwriters. Upon expiration
of the lockup period, 31,010,274 shares will be eligible for sale in the
public market subject to compliance with the volume limitations and other
restrictions of Rule 144 under the Securities Act. In addition, promptly after
the closing of the Offerings, the Company intends to file a registration
statement under the Securities Act covering the sale of 6,964,898 shares of
Common Stock previously issued as restricted stock (including 2,919,665 shares
which have been granted but not yet vested) or reserved for issuance or sale
under the stock incentive plans and the Company's employee stock purchase
plan. Upon completion of the Offerings, there will be outstanding options to
purchase a total of 1,318,552 shares of Common Stock. See "Management--Stock
Incentive Plans." The Company has granted all existing stockholders
registration rights with respect to all of the shares of Common Stock held by
them prior to the Offerings, whether vested or unvested. See "Certain
Transactions." The sale of such shares could have an adverse effect on the
Company's ability to raise equity capital in the public markets. See "Shares
Eligible for Future Sale."

SUBSTANTIAL AND IMMEDIATE DILUTION TO INVESTORS PURCHASING IN THE OFFERINGS

Investors purchasing shares of Common Stock in the Offerings will incur
substantial and immediate dilution of $21.20 per share in the pro forma net
tangible book value of the Common Stock which exceeds the assumed

14
<PAGE>

initial public offering price of $20.50 per share (based on the midpoint of
the estimated range of the initial public offering price). In addition, these
investors will incur additional dilution upon the exercise of outstanding
stock options. See "Dilution."

RESTRICTIONS ON PAYMENT OF DIVIDENDS; ABSENCE OF DIVIDENDS

The Indenture pursuant to which the Notes were issued and the Credit
Facilities restrict, among other things, the ability of the Company to pay
dividends. The Company does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. See "Dividend Policy" and "Description
of Certain Indebtedness."

POTENTIAL ADVERSE EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS ON MARKET PRICE

The Company's certificate of incorporation authorizes the issuance of
preferred stock without stockholder approval and upon such terms as the Board
of Directors may determine. The issuance of preferred stock could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring or making a proposal to acquire, a
majority of the outstanding stock of the Company and could adversely affect
the prevailing market price of the Common Stock. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights
of holders of preferred stock that may be issued in the future. In addition,
under certain circumstances, Section 203 of the Delaware General Corporation
Law makes it more difficult for an "interested stockholder" (generally a 15%
stockholder) to effect various business combinations with a corporation for a
three-year period. See "Description of Capital Stock."

FORWARD-LOOKING STATEMENTS

This Prospectus includes forward-looking statements, including statements
regarding, among other items, (i) the Company's anticipated growth strategies,
(ii) the Company's intention to introduce new products, (iii) anticipated
trends in the Company's businesses, including trends in the market for office
furniture and corporate concerns for worker health and safety, (iv) future
expenditures for capital projects and (v) the Company's ability to continue to
control costs and maintain quality. These forward-looking statements are based
largely on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. Actual
results could differ materially from these forward-looking statements as a
result of the factors described in "Risk Factors" including, among others, (i)
changes in the competitive marketplace, including the introduction of new
products or pricing changes by the Company's competitors, and (ii) changes in
the trends in the market for office furniture, including changes in the trend
of increased white collar employment. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this Prospectus will in fact transpire.

ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Common
Stock. Although the Common Stock has been approved for listing on the NYSE,
subject to notice of issuance, there can be no assurance that an active
trading market for the Common Stock will develop or be sustained following the
Offerings or that the market price of the Common Stock will not decline below
the initial public offering price. The initial public offering price will be
determined by negotiation among the Company, the Selling Stockholder and the
Underwriters based upon several factors and may not be indicative of future
market prices. The price at which the Common Stock will trade will depend upon
a number of factors, including, but not limited to, the Company's historical
and anticipated operating results and general market and economic conditions,
some of which factors are beyond the Company's control. Factors such as
quarterly fluctuations in the Company's financial and operating results,
announcements by the Company or others and developments affecting the Company,
its products, its clients, the markets in which it competes or the industry
generally, also could cause the market price of the Common Stock
to fluctuate substantially. In addition, the stock market has from time to
time experienced extreme price and volume fluctuations. These broad market
fluctuations may adversely affect the market price of the Common Stock. See
"Underwriting."

15
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 8,000,000 shares of
Common Stock offered in the Offerings, based upon an assumed initial public
offering price of $20.50 per share (the midpoint of the estimated range of the
initial public offering price), are estimated to be $152.7 million ($161.9
million if the Underwriters' over-allotment options are exercised in full),
after deducting the underwriting discount and estimated offering expenses. The
Company will not receive any of the proceeds of any sale of shares by the
Selling Stockholder upon exercise of the Underwriters' over-allotment options.
The estimated net proceeds of the Offerings will be used (i) to pay $80.0
million in connection with the redemption of 800,000 shares of Series A
Preferred Stock held by Warburg and NationsBanc not converted into Common
Stock, (ii) to redeem an aggregate principal amount of $57.8 million of the
Notes for a total redemption price of $65.1 million, including a redemption
premium of $5.7 million and accrued and unpaid interest thereon of $1.6
million (assuming a redemption date of June 15, 1997) and (iii) to the extent
available, to repay revolving credit indebtedness of $7.6 million under the
Credit Facilities and/or for working capital and general corporate purposes or
additional debt retirement.

The Notes bear interest at a rate of 10 7/8% per annum and will mature on
March 15, 2006. Indebtedness under the Credit Facilities bears interest at a
floating rate based, at the Company's option, upon (i) LIBOR plus 0.875% or
(ii) the prime rate. The revolving portion of the Credit Facilities matures in
2002. The Notes were originally issued, and the Credit Facilities were
originally entered into, in order to finance a portion of the Acquisition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Description of Certain
Indebtedness."

DIVIDEND POLICY

The Company has not paid a cash dividend on its Common Stock since the
Acquisition, and does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future. The current policy of the Company's Board of
Directors is to retain earnings to finance the operations and expansion of the
Company's business. In addition, the Company's Credit Facilities and Indenture
restrict the Company's ability to pay dividends to its stockholders. Any
future determination to pay dividends will depend on the Company's results of
operations, financial condition, capital requirements, contractual
restrictions and other factors deemed relevant by the Board of Directors. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Description of Certain
Indebtedness."

16
<PAGE>

CAPITALIZATION

The following table sets forth: (i) the long-term debt (including current
portion) and the capitalization of the Company as of March 31, 1997 and (ii)
the long-term debt and capitalization as adjusted to reflect the redemption
and conversion, concurrent with the Offerings, of the outstanding shares of
Series A Preferred Stock for an aggregate of $80 million and 27,440,919 shares
of Common Stock and the sale by the Company of the 8,000,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $20.50 per
share (the midpoint of the estimated range of the initial public offering
price) and application of the estimated net proceeds therefrom as described in
"Use of Proceeds." This table should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Prospectus. See
"Selected Financial Information" and the Unaudited Pro Forma Financial
Information and notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS,
EXCEPT
SHARE DATA)
<S> <C> <C>
Long-term debt (including current portion):
Revolving Credit Facility (1).......................... $ 75,000 $ 67,435
Term Loan Facilities................................... 95,000 95,000
Notes.................................................. 165,000 107,250
Other.................................................. 1,034 1,034
-------- --------
Total long-term debt................................. 336,034 270,719
-------- --------
Stockholders' equity:
Preferred Stock, $1.00 par value, 10,000,000 shares
authorized; 1,602,998 shares issued and outstanding
actual and no shares issued and outstanding pro forma
as adjusted (2)....................................... 1,603 --
Common Stock, $0.01 par value, 100,000,000 shares au-
thorized (3);
7,291,308 shares issued and outstanding actual and
42,732,227 shares issued and outstanding pro forma as
adjusted (4).......................................... 73 427
Additional paid-in capital............................. 160,147 234,056
Unearned stock grant compensation...................... (1,381) (1,381)
Retained earnings (5).................................. 28,474 22,862
Cumulative foreign currency translation adjustment..... (1,542) (1,542)
-------- --------
Total stockholders' equity........................... 187,374 254,422
-------- --------
Total capitalization............................... $523,408 $525,141
======== ========
</TABLE>
- --------

(1) At March 31, 1997 the Company had $55,000 (actual) and $62,565 (pro forma
as adjusted) of unused credit availability under the Credit Facilities.
See "Use of Proceeds."

(2) The 1,602,998 issued and outstanding shares of Preferred Stock at March
31, 1997 consisted of shares of Series A 12% Participating Convertible
Preferred Stock.

(3) Gives effect to the amendment and restatement to the Company's Certificate
of Incorporation.

(4) Actual and pro forma as adjusted include 4,144,030 restricted shares which
have been issued under the Company's 1996 Stock Plan (including 2,919,665
shares which have been granted but have not yet vested).

(5) The reduction of retained earnings reflects the extraordinary loss, net of
related tax benefit, of $5,612 to be recognized on the redemption of Notes
with a portion of the net proceeds of the Offerings.

17
<PAGE>

DILUTION

The pro forma net tangible book deficit of the Company at March 31, 1997 was
($176,959,000) or approximately ($5.09) per share. Pro forma net tangible book
deficit per share represents the amount of total assets, excluding intangibles
(goodwill, trademarks and deferred financing fees), less total liabilities,
divided by the aggregate number of shares of Common Stock outstanding as of
March 31, 1997 (on a pro forma basis after giving effect to the redemption and
conversion of the outstanding shares of Series A Preferred Stock into an
aggregate of $80 million and 27,440,919 shares of Common Stock). Without
taking into account any changes in the Company's net tangible book deficit
after March 31, 1997, other than to give effect to (i) the receipt of the
estimated net proceeds from the sale of the 8,000,000 shares of Common Stock
offered hereby, assuming an initial public offering price of $20.50 per share
(the midpoint of the estimated range of the initial public offering price) and
the deduction of the underwriting discount and estimated offering expenses to
be paid by the Company, and (ii) the deduction of non-recurring and
extraordinary expenses to be incurred upon the completion of the Offerings,
the pro forma net tangible book deficit of the Company at March 31, 1997 would
have been ($29,911,000), or ($0.70) per share. This represents an immediate
increase in net tangible book value of $4.39 per share of Common Stock to
existing stockholders and an immediate dilution of approximately $21.20 per
share to new investors purchasing shares in the Offerings. The following table
illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................. $20.50
Pro forma net tangible book deficit per share before the Of-
ferings...................................................... $(5.09)
Increase per share attributable to new investors.............. 4.39
------
Pro forma net tangible book deficit per share after the Offer-
ings........................................................... (.70)
------
Dilution per share to new investors............................. $21.20
======
</TABLE>
- --------
(1) If the Underwriters' over allotment options are exercised in full,
dilution to new investors will be $20.98 per share.

The following table sets forth, on a pro forma basis as of March 31, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by the new investors purchasing shares of Common
Stock from the Company in the Offerings (before deducting underwriting
discount and estimated offering expenses). Total contribution from existing
stockholders reflect the $160.4 million paid for the Series A Preferred Stock
and Common Stock purchased, less $80 million paid in connection with the
redemption of the Series A Preferred Stock.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ -------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ------------ ------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 34,732,227 81.3% $ 80,541,000 32.9% $ 2.32
New investors................. 8,000,000 18.7 164,000,000 67.1 20.50
---------- ----- ------------ -----
Total....................... 42,732,227 100.0% $244,541,000 100.0% $ 5.72
========== ===== ============ =====
</TABLE>

The foregoing tables assume no exercise of the Underwriters' over-allotment
options. There were 1,318,552 options outstanding at March 31, 1997. Between
December 31, 1996 and March 7, 1997, the Company granted options to purchase
an aggregate of 1,318,552 shares of Common Stock at a weighted average
exercise price of $15.93 per share. See "Management--Stock Incentive Plans."
To the extent that outstanding options are exercised in the future, there will
be further dilution to new investors.

18
<PAGE>

SELECTED FINANCIAL INFORMATION

The following table presents (i) selected historical consolidated financial
information of the Predecessor, as of the dates and for the periods indicated,
(ii) selected historical consolidated financial information of the Company, as
of the dates and for the periods indicated, (iii) summary pro forma
consolidated financial information of the Company, for the periods indicated,
after giving effect to the events described in the notes below and in the
Unaudited Pro Forma Financial Information and notes thereto included elsewhere
in this Prospectus and (iv) summary pro forma as adjusted information of the
Company, as of the dates and for the periods indicated, after giving effect to
the Offerings, the application of the estimated net proceeds therefrom and the
events described in the notes below and in the Unaudited Pro Forma Financial
Information and notes thereto included elsewhere in this Prospectus. The
historical consolidated financial information for each of the three years in
the period ended December 31, 1995 has been derived from the Predecessor's
financial statements, which have been audited by Price Waterhouse LLP. The
historical consolidated financial information for the two month period ended
February 29, 1996 and the ten month period ended December 31, 1996 has been
derived from the Predecessor's and the Company's financial statements,
respectively, which have been audited by Ernst & Young LLP. The historical
consolidated financial information for the year ended December 31, 1992, for
the one month period ended March 31, 1996 and the three month period ended
March 31, 1997 has been derived from unaudited financial statements and, in
the opinion of management, includes all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of financial position
and results of operations as of the dates and for the periods indicated. The
summary pro forma and pro forma as adjusted information does not purport to
represent what the Company's results actually would have been if such events
had occurred at the dates indicated, nor does such information purport to
project the results of the Company for any future period. The selected
financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Financial Statements and notes thereto and the Unaudited Pro Forma Financial
Information and notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
------------------------------------------------------- --------------------------------------
PRO FORMA
TWO MONTHS TEN MONTHS PRO FORMA AS ADJUSTED
YEAR ENDED DECEMBER 31, ENDED ENDED YEAR ENDED YEAR ENDED
----------------------------------------- FEBRUARY 29, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1993 1994 1995 1996 1996 1996(1) 1996(1)(2)
--------- --------- --------- -------- ------------ ------------ ------------ ------------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total sales............... $ 576,621 $ 508,383 $ 562,869 $620,892 $ 90,232 $561,534 $ 651,766 $651,766
Cost of sales(3).......... 417,213 376,875 410,104 417,632 59,714 358,841 419,908 419,908
--------- --------- --------- -------- --------- -------- --------- --------
Gross profit.............. 159,408 131,508 152,765 203,260 30,518 202,693 231,858 231,858
Provision for
restructuring............ 26,000 6,165 29,180 -- -- -- -- --
Selling, general and
administrative expenses(4).. 165,913 163,015 167,238 138,527 21,256 131,349 153,388 153,388
Westinghouse long-term
incentive compensation... -- -- -- -- 47,900 -- -- --
Allocated corporate
expenses(3)(4)........... 5,036 4,899 5,881 9,528 921 -- -- --
--------- --------- --------- -------- --------- -------- --------- --------
Operating income (loss)... (37,541) (42,571) (49,534) 55,205 (39,559) 71,344 78,470 78,470
Interest expense.......... 3,866 3,301 3,225 1,430 340 32,952 40,030 32,730
Other income (expense),
net...................... (929) 2,082 699 (1,597) (296) 447 151 151
--------- --------- --------- -------- --------- -------- --------- --------
Income (loss) before
income taxes, cumulative
effect of changes in
accounting principles and
extraordinary item....... (42,336) (43,790) (52,060) 52,178 (40,195) 38,839 38,591 45,891
Income tax expense (benefit).. (4,795) (3,571) 7,713 22,846 (16,107) 16,844 16,848 19,739
--------- --------- --------- -------- --------- -------- --------- --------
Income (loss) before
cumulative effect of
changes in accounting
principles and
extraordinary item....... (37,541) (40,219) (59,773) 29,332 (24,088) 21,995 21,743 26,152
Cumulative effect of
changes in accounting
principles............... 11,202 1,118 -- -- -- -- -- --
--------- --------- --------- -------- --------- -------- --------- --------
Income (loss) before
extraordinary item....... (48,743) (41,337) (59,773) 29,332 (24,088) 21,995 21,743 26,152
Extraordinary loss on
early extinguishment of
debt,
net of taxes............. -- -- -- -- -- 5,159 -- --
--------- --------- --------- -------- --------- -------- --------- --------
Net income (loss)(5)...... $ (48,743) $ (41,337) $ (59,773) $ 29,332 $ (24,088) $ 16,836 $ 21,743 $ 26,152
========= ========= ========= ======== ========= ======== ========= ========
Pro forma income before
extraordinary item per
share of Common
Stock(5)(6).............. $ .63 $ .62 $ .61
Pro forma net income per
share of Common
Stock(5)(6).............. $ .48 $ .62 $ .61
Pro forma weighted average
shares of
Common Stock outstanding(6).. 35,030 35,030 43,030
</TABLE>

(continued on following page)

19
<PAGE>

<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
-------------- -----------------------------------------------------------
PRO FORMA PRO FORMA AS ADJUSTED
TWO MONTHS ONE MONTH THREE MONTHS THREE MONTHS THREE MONTHS ENDED
ENDED ENDED ENDED ENDED MARCH 31,
FEBRUARY 29, MARCH 31, MARCH 31, MARCH 31, -----------------------
1996 1996 1997 1996(1) 1996(1)(2) 1997(2)
-------------- --------- ------------ ------------ ------------ ----------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total sales............. $90,232 $48,080 $177,833 $138,312 $ 138,312 $ 177,833
Cost of sales(3)........ 59,714 32,543 109,859 93,610 93,610 109,859
------- ------- -------- -------- ---------- ----------
Gross profit............ 30,518 15,537 67,974 44,702 44,702 67,974
Selling, general and
administrative
expenses(4)............ 21,256 10,999 40,058 33,038 33,038 40,058
Westinghouse long-term
incentive
compensation........... 47,900 -- -- -- -- --
Allocated corporate
expenses(3)(4)......... 921 -- -- -- -- --
------- ------- -------- -------- ---------- ----------
Operating income
(loss)................. (39,559) 4,538 27,916 11,664 11,664 27,916
Interest expense........ 340 3,602 7,742 10,680 8,855 5,952
Other income (expense),
net.................... (296) (49) (74) (345) (345) (74)
------- ------- -------- -------- ---------- ----------
Income (loss) before
income taxes and
extraordinary item..... (40,195) 887 20,100 639 2,464 21,890
Income tax expense
(benefit).............. (16,107) 438 8,462 442 1,165 9,171
------- ------- -------- -------- ---------- ----------
Income (loss) before
extraordinary item..... (24,088) $ 449 $ 11,638 $ 197 $ 1,299 $ 12,719
======= ======= ======== ======== ========== ==========
Pro forma income before
extraordinary item per
share of Common
Stock(5)(6)............ $ .01 $ .33 $ .01 $ .03 $ .30
Pro forma weighted
average shares of
Common Stock
outstanding(6)......... 35,030 35,030 35,030 43,030 43,030
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
----------------------------------- ------------------------------------------
PRO FORMA
DECEMBER 31, MARCH 31, AS ADJUSTED
----------------------------------- DECEMBER 31, ----------------- MARCH 31,
1992 1993 1994 1995 1996 1996 1997 1997(2)
-------- -------- -------- -------- ------------ -------- -------- -----------
BALANCE SHEET DATA (AT (IN THOUSANDS) (IN THOUSANDS)
PERIOD END):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Working capital......... $ 67,063 $ 41,933 $ 22,898 $ 82,698 $ 64,754 $100,936 $ 77,716 $ 79,286
Total assets............ 726,469 691,043 705,316 656,710 675,712 694,780 662,034 662,197
Total long-term debt,
including current por-
tion................... 20,106 15,204 12,451 3,538 354,154 426,228 336,034 270,719
Total liabilities....... 186,347 205,104 247,310 176,259 497,908 533,952 474,660 407,775
Stockholders' equity.... 540,122 485,939 458,006 480,451 177,804 160,828 187,374 254,422
</TABLE>

- --------
(1) Reflects summary pro forma financial information of the Company derived
from the Financial Statements and notes thereto included elsewhere in this
Prospectus, adjusted for the completion of the Acquisition and the
application of the net proceeds of $160,000 from the sale of capital stock
of the Company and borrowings of $260,000 and $165,000 under the Credit
Facilities and the Notes, respectively.

(2) Adjusted to reflect the sale of Common Stock offered hereby, the
application of the estimated net proceeds therefrom and the redemption of
800,000 shares of Series A Preferred Stock held by Warburg and the Selling
Stockholder for an aggregate redemption price of $80 million in cash and
11,749,361 shares of Common Stock, and the conversion of the remaining
802,998 shares of Series A Preferred Stock (including those held by
Warburg and the Selling Stockholder) into 15,691,558 shares of Common
Stock. See "Use of Proceeds."

(3) Cost of sales has been increased by (i) $801 for the pro forma and the pro
forma as adjusted year ended December 31, 1996 and the pro forma as
adjusted three months ended March 31, 1996 to reflect an increase in
depreciation resulting from the Acquisition and (ii) $552 for the pro
forma and the pro forma as adjusted

20
<PAGE>

year ended December 31, 1996 and the pro forma and pro forma as adjusted
three months ended March 31, 1996 in order to reflect the reclassification
of a portion of allocated corporate expenses. The reclassified allocated
corporate expenses approximate the replacement cost to the Company for
services formerly provided by Westinghouse to the Predecessor, including
(i) benefit expense related to the adoption of various independent benefit
plans comparable to Westinghouse benefit plans and (ii) the cost of
services required to replace specific activities formerly provided by
Westinghouse to the Predecessor, including audit, tax, general ledger,
accounts receivable, human resources, legal, insurance and data
communications.

(4) Selling, general and administrative expenses have been increased by (i)
$369 for the pro forma and the pro forma as adjusted year ended December
31, 1996 and the pro forma and pro forma as adjusted three months ended
March 31, 1996 to reflect the reclassification of allocated corporate
expenses which approximate the replacement cost to the Company (described
above in note 3) and (ii) $414 for the pro forma and the pro forma as
adjusted year ended December 31, 1996 and the pro forma and the pro forma
as adjusted three months ended March 31, 1996 to reflect an increase in
amortization and depreciation resulting from the Acquisition.

(5) The pro forma and the pro forma as adjusted 1996 income statement data
presented for the year ended December 31, 1996 does not include the $5,159
extraordinary loss on early extinguishment of debt, net of taxes. In
addition, the pro forma as adjusted income statement data for the year
ended December 31, 1996, the three month period ended March 31, 1996, and
the three month period ended March 31, 1997 does not include an
anticipated extraordinary loss of $5,612 net of taxes associated with the
redemption of a portion of the Notes in connection with the Offerings.

(6) All numbers of shares of Common Stock and per share amounts have been
adjusted to give retroactive effect to the 3.13943-for-1 stock split that
resulted from the amendment of the Company's Certificate of Incorporation
on May 6, 1997. Because of the significance of the redemption and
conversion into Common Stock of the outstanding Series A Preferred Stock
upon consummation of the Offerings, historical net income (loss) per share
is not presented herein. Pro forma and pro forma as adjusted net income
per share amounts are based on the weighted average number of shares of
Common Stock and Common Stock equivalents (employee stock options)
outstanding during the period, after giving effect to the redemption and
conversion into Common Stock of the Series A Preferred Stock assuming such
redemption and conversion had occurred at the beginning of each period
presented. See Note (i) of the Notes to the Unaudited Pro Forma Financial
Information.

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF
OPERATIONS

The following discussion of the Company's historical and pro forma results
of operations and of its liquidity and capital resources should be read in
conjunction with the Selected Financial Information of the Company, the
Financial Statements of the Company and notes thereto and the Unaudited
Financial Information and notes thereto included elsewhere in this Prospectus.

Prior to the Acquisition, the Predecessor's results of domestic operations
were included in the consolidated U.S. federal income tax return of
Westinghouse and the results of the Canadian and European operations were
reported separately in their respective taxing jurisdictions. For the purposes
of the Prospectus, the income tax expense and other tax-related items included
in the financial statements is presented as if the Predecessor had been a
stand-alone taxpayer.

BACKGROUND

Westinghouse created The Knoll Group, Inc. by acquiring The Shaw-Walker
Company, Reff Inc. and Knoll International in 1989 and 1990 and combining them
with Westinghouse Furniture Systems, a division of Westinghouse. By joining
these four separate companies under the Knoll name, Westinghouse created a
business with a full line of office furnishings, a reputation for high quality
and superior design, and an internationally-recognized brand name.

For various reasons, the combined entities did not perform well. The Company
continued to be run as four separate entities, with essentially separate
operations with independent factories and administrative support personnel. In
addition, the Company believes that former management's steps to rationalize
the Company's U.S. dealer network and consolidate its sales forces may have
impaired Knoll's distribution and sales capabilities. A decline in revenues in
the U.S. office furniture industry in 1991, followed in 1992 by Westinghouse's
announcement of its intention to sell Knoll, exacerbated the difficult
operating environment within Knoll. As a result, under previous management
from 1991 to 1993, sales and net income deteriorated. In December 1993,
Westinghouse appointed Burton B. Staniar, then Chairman and Chief Executive
Officer of Westinghouse Broadcasting, as Knoll's Chairman and Chief Executive
Officer, and ended its efforts to sell Knoll. Mr. Staniar promptly recruited
John H. Lynch as Vice Chairman, and in 1994 they initiated a major turnaround
and restructuring program which led to significantly improved financial
performance. Management's turnaround efforts had a dramatic impact on the
Company's competitive position and financial performance and positioned the
Company for growth.

OVERVIEW

Operating performance improved from 1994 to 1996, primarily due to the
turnaround program and the restructuring efforts undertaken by the Company.
Sales increased from $562.9 million in 1994 to $651.8 million in 1996. Gross
margins increased from 27.1% in 1994 to 32.7% in 1995 and, on a pro forma
basis, from 31.5% in 1995 to 35.6% in 1996. Operating income improved by
$104.7 million from a loss of $49.5 million in 1994 to a profit of $55.2
million in 1995; pro forma operating income improved by $29.5 million from
$49.0 million in 1995 to $78.5 million in 1996. Operating margins increased
from (8.8)% in 1994 to 8.9% in 1995 and, on a pro forma basis, from 7.9% in
1995 to 12.0% in 1996. The most significant cost reductions, which improved
operating performance, were in 1995, when the Company eliminated approximately
$25.0 million in variable operating costs and approximately $45.0 million in
fixed operating costs and general expenses. The Company's improved financial
and operating results allowed it in 1996 to prepay $72.0 million under its
Credit Facilities and refinance such facilities on more favorable terms.
Periods prior to the Acquisition are not comparable to periods after the
Acquisition on a non-pro forma basis.

Since 1994, virtually every product line has been modified and improved, and
the lead time required to bring new and enhanced products to the market has
been decreased significantly through the use of computer-aided design
techniques and other process improvements; average lead times between order
entry and delivery of products to customers have been reduced from seven weeks
to five weeks; and on-time shipments, a measure of customer service, improved
to the current 95% level from approximately 91% in 1993. Management renewed

22
<PAGE>

sales growth by refocusing and retraining the Company's sales force, and
instituted product line profitability measures and management incentive
programs. Finally, management accelerated the development of new and enhanced
products and restructured the European business.

The Company believes that its recent sales growth exceeded industry growth
as a whole. According to BIFMA, U.S. furniture industry shipments have
increased at a compound annual growth rate of 4.3% over the ten-year period
ended December 31, 1996. In addition, BIFMA estimates that the U.S. office
furniture industry will grow approximately 5% in 1997. The Company's sales
increased 10.7% in 1994 and 10.3% in 1995. Sales increases of 5.0% in 1996
were negatively affected by management initiatives undertaken in the
turnaround to increase the profitability of the Company's sales, including (i)
the discontinuation of several products that were sold to customers in 1995
and (ii) an intentional decrease in heavily discounted, lower profit sales to
selected customers. During this transitional period, orders for new products
increased at a faster rate than sales, with 1996 orders of $686.8 million, up
$87.3 million, or 14.6%, over 1995 orders of $599.5 million.

The Company intends to pursue growth by introducing new products in the
office systems category, where the Company is already a recognized leader, and
in other product categories where the Company's market share could be
increased by leveraging the Company's design expertise and brand awareness.
The Company estimates that its share of the 1996 U.S. office furniture market
was 11.2% for office systems, 2.1% for seating, 2.1% for storage, 1.2% for
desks and casegoods and 1.8% for tables. Such percentages do not include sales
of KnollStudio, KnollExtra, textiles and leather products. The following table
describes the estimated 1996 U.S. office furniture market sales by category.

<TABLE>
<CAPTION>
U.S. MARKET % OF U.S.
PRODUCT CATEGORY SIZE MARKET
---------------- ------------- ---------
(IN BILLIONS)
<S> <C> <C>
Office systems................................... $3.4 34.1%
Seating.......................................... 2.6 25.4
Storage.......................................... 1.4 14.1
Desks and casegoods.............................. 1.6 16.4
Tables........................................... 0.7 6.6
</TABLE>

In addition, the Company had 1996 sales of approximately $79.5 million in
Canada and Europe. European sales are primarily in the United Kingdom,
Germany, France, Belgium and Italy.

RESULTS OF OPERATIONS

COMPARISON OF FIRST QUARTER ENDED MARCH 31, 1997 TO PRO FORMA FIRST QUARTER
ENDED MARCH 31, 1996

Total Sales. Sales for the first quarter of 1997 were $177.8 million, an
increase of $39.5 million, or 28.6%, from first quarter 1996 sales of $138.3
million. The sales growth principally resulted from increased volume across
all North American product categories, offset by a slight reduction in
European volume. A significant portion of the growth in sales volume was
attributable to sales of office systems, which grew $32.6 million, or 32.2%.
Additionally, first quarter sales growth benefitted from favorable industry
dynamics which the Company believes were, in part, the result of strong white
collar employment growth in the United States in the second half of 1996.

Gross profit. Gross profit was $68.0 million for the first quarter of 1997,
increasing $23.3 million, or 52.1%, from gross profit of $44.7 million for the
first quarter of 1996. Gross profit as a percentage of sales increased to
38.2% for the first quarter of 1997 from 32.3% for the first quarter of 1996.
These increases were principally due to the higher sales volume and better
pricing in North America, continued worldwide factory operating cost
improvements, the benefit of lower operating costs in Europe resulting from
consolidation and centralization of functions implemented in 1996 and other
fixed cost reductions.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $40.1 million for the first quarter of 1997, an
increase of $7.1 million from $33.0 for the first quarter of 1996. The

23
<PAGE>

increase was primarily due to increased sales incentive compensation and
employee benefits related to higher sales volumes in North America and
expenses related to new product and technology initiatives, partially offset
by the centralization of administrative functions in Europe. As a percentage
of sales, the Company's selling, general and administrative expenses decreased
to 22.6% for the first quarter of 1997 from 23.9% for the same period in 1996.

Operating income. Operating income increased to $27.9 million for the first
quarter of 1997 from $11.7 million for the first quarter of 1996. As a
percentage of sales, operating income increased to 15.7% for the first quarter
of 1997 from 8.5% in the first quarter of 1996. As noted above, this
improvement was driven by higher sales volume, better pricing, factory cost
improvements and efficiencies gained from consolidation and centralization of
administrative functions.

Interest expense. Interest expense decreased $2.9 million for the first
quarter of 1997 to $7.7 million from $10.7 million for the first quarter of
1996. The decrease was primarily attributable to the refinancing of the
Company's previously existing credit agreement in December 1996 and the
prepayment of $72.0 million of indebtedness under such credit agreement during
the ten month period ended December 31, 1996.

Income tax expense. Income tax expense for the first quarter of 1997 was
42.1% of pre-tax income as compared to 69.2% for the first quarter of 1996.
The decrease in the effective tax rate was primarily attributable to pre-tax
losses incurred in Europe in the first quarter of 1996 for which no benefit
was recorded.

COMPARISON OF PRO FORMA YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER
31, 1995

Total sales. Total sales were $651.8 million for the year ended December 31,
1996, an increase of $30.9 million, or 5.0%, from $620.9 million for the year
ended December 31, 1995. The sales growth resulted from price increases (an
average of 2.4% over 1995) and increased volume across all North American
product categories, and was partially offset by the elimination of certain
lower profit product lines and contracts during 1995. Sales of office systems
grew $27.8 million, or 6.0%, while sales of the Company's specialty products
(KnollStudio, KnollExtra, KnollTextiles and Spinneybeck) and seating grew
$10.4 million, or 10.8%, and $3.1 million, or 5.7%, respectively. This growth
is attributable to product enhancements in all categories as well as continued
growth from new product introductions. The 1996 sales increase of continued
product was $41.3 million, or 6.8%, as 1995 sales included lower profit
discontinued product sales of $10.4 million.

Gross profit. Gross profit was $231.9 million for the year ended December
31, 1996, an increase of $28.6 million, or 14.1%, from gross profit of $203.3
million for the year ended December 31, 1995. Gross profit as a percentage of
sales increased to 35.6% for the year ended December 31, 1996 from 32.7% for
the previous year. As noted in the Overview, the actual gross margin generated
by the Predecessor for the year ended December 31, 1995 is not comparable to
the pro forma gross margin generated by the Company for the year ended
December 31, 1996. Several factors affect the comparability of these amounts.
Approximately $3.1 million of costs included in 1996 pro forma cost of sales
were included in allocated corporate expenses in the 1995 historical income
statement. These costs were related to the adoption of various independent
employee benefit plans comparable to Westinghouse benefit plans. In addition,
$4.2 million of depreciation expense related directly to the Acquisition is
included in 1996 pro forma cost of sales. These increased depreciation costs
were not incurred during 1995. However, the above noted factors affecting
comparability were more than offset by improvements in operating results
experienced by the Company. These increases were principally due to the higher
sales volume in North America, better pricing, discontinuance of unprofitable
products, continued factory operating cost improvements, consolidation of
European operations and other fixed cost reductions.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $153.4 million for the year ended December 31,
1996, up $14.9 million, or 10.8%, from the year ended December 31, 1995. As
noted in the Overview, actual selling, general and administrative expenses
incurred by the Predecessor for the year ended December 31, 1995 is not
comparable to the pro forma selling, general and administrative expenses
incurred by the Company for the year ended December 31, 1996. Several factors
affect

24
<PAGE>

the comparability of these amounts. Approximately $2.5 million of costs were
incurred in 1996 to replace employee benefit plans and other services (audit,
tax, general ledger, accounts receivable, human resources and legal) that were
provided by Westinghouse prior to the Acquisition. These costs were included
in allocated corporate expenses in the 1995 historical income statement. In
addition, increased depreciation and amortization costs totalling $1.6 million
resulting from the Acquisition are included in 1996 pro forma selling, general
and administrative expenses. These increased depreciation and amortization
costs were not incurred during 1995. In addition to the above noted factors
affecting comparability, selling, general and administrative expenses
increased by $10.8 million primarily due to increased sales incentive
compensation and employee benefits related to higher sales volumes in North
America, and expenses related to new product and technology initiatives,
partially offset by savings resulting from showroom consolidations in Germany,
Italy and Belgium along with the centralization of administrative functions in
Europe. As a percentage of sales, the Company's selling, general and
administrative expenses were 23.6% for the year ended December 31, 1996 and
22.3% for the year ended December 31, 1995.

Allocated corporate expenses. Allocated corporate expenses of $9.5 million
in 1995 include (i) Westinghouse overhead charges for Westinghouse executive
management and corporate legal, environmental, audit, tax, treasury and other
related services and (ii) incentive compensation payable to Knoll executives
under Westinghouse long-term incentive plans. These allocated corporate
expenses, with the exception of incentive compensation, were payable by
Westinghouse and allocated to Knoll primarily based on sales. The 1996 pro
forma results do not include a $47.9 million charge to operations for the 1996
payment of awards to certain key executives of the Company pursuant to a long-
term incentive plan established by Westinghouse. The plan provided for payment
of awards at the end of a five-year period based on the achievement of certain
performance goals set by Westinghouse's board of directors. As a result of the
consummation of the Acquisition, the payment of awards was accelerated
pursuant to the terms of the plan. The Company has not implemented an
incentive plan similar to the Westinghouse plan and does not expect such
compensation to be payable in future periods.

Operating income. Operating income increased to $78.5 million for the year
ended December 31, 1996 from $55.2 million for the year ended December 31,
1995. As a percentage of sales, operating income increased to 12.0% for the
year ended December 31, 1996 from 8.9% for the same period in 1995. As noted
above, these improvements were driven by higher sales volume, better pricing,
discontinuance of lower profit product lines, factory cost improvements and
efficiencies gained from consolidation and centralization of administrative
functions.

Interest expense. Interest expense increased $38.6 million to $40.0 million
for the year ended December 31, 1996. This increase is attributable to the
debt incurred by the Company in connection with the Acquisition. This debt
consisted of $165 million of the Company's Notes and $260 million of
borrowings under the Credit Facilities.

Income tax expense. Income tax expense for the years ended December 31, 1996
and 1995 was 43.8% of pre-tax income.

Extraordinary item. For the year ended December 31, 1996, there was an
extraordinary charge of $5.2 million net of a tax benefit of $3.3 million
relating to the write-off of unamortized financing costs following the
refinancing of the Company's previous credit agreement.

COMPARISON OF PRO FORMA YEAR ENDED DECEMBER 31, 1996 TO PRO FORMA YEAR ENDED
DECEMBER 31, 1995

Because the Company was formed as a result of the Acquisition on February
29, 1996, the following discussion refers to the pro forma results of
operations as shown in Note 3 to the Consolidated Financial Statements.

25
<PAGE>

price increases (an average of 2.4% over 1995) and increased volume across all
North American product categories, and was partially offset by the elimination
of certain lower profit product lines and contracts during 1995. Sales of
office systems grew $27.8 million, or 6.0%, while sales of the Company's
specialty products (KnollStudio, KnollExtra, KnollTextiles and Spinneybeck)
and seating grew $10.4 million, or 10.8%, and $3.1 million, or 5.7%,
respectively. This growth is attributable to product enhancements in all
categories as well as continued growth from new product introductions. The
1996 sales increase of continued product was $41.3 million, or 6.8%, as 1995
sales included lower profit discontinued product sales of $10.4 million.

Gross profit. Gross profit was $231.9 million for the year ended December
31, 1996, an increase of $36.3 million, or 18.6%, from gross profit of $195.6
million for the year ended December 31, 1995. Gross profit as a percentage of
sales increased to 35.6% for the year ended December 31, 1996 from 31.5% for
the previous year. These increases were principally due to the higher sales
volume in North America, better pricing, discontinuance of unprofitable
products, continued factory operating cost improvements, consolidation of
European operations and other fixed cost reductions.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $153.4 million for the year ended December 31,
1996, up $10.8 million, or 7.6%, from the year ended December 31, 1995. The
increase was primarily due to increased sales incentive compensation and
employee benefits related to higher sales volumes in North America, and
expenses related to new product and technology initiatives, partially offset
by savings resulting from showroom consolidations in Germany, Italy and
Belgium along with the centralization of administrative functions in Europe.
As a percentage of sales, the Company's selling, general and administrative
expenses were 23.6% for the year ended December 31, 1996 and 23.0% for the
year ended December 31, 1995.

Allocated corporate expenses. Allocated corporate expenses of $4.0 million
in 1995 represents incentive compensation payable to Knoll executives under
Westinghouse long-term incentive plans.

Operating income. Operating income increased to $78.5 million for the year
ended December 31, 1996 from $49.0 million for the year ended December 31,
1995. As a percentage of sales, operating income increased to 12.0% for the
year ended December 31, 1996 from 7.9% for the same period in 1995. As noted
above, these improvements were driven by higher sales volume, better pricing,
discontinuance of lower profit product lines, factory cost improvements and
efficiencies gained from consolidation and centralization of administrative
functions.

COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994

Total sales. Total sales were $620.9 million for the year ended December 31,
1995, an increase of $58.0 million, or 10.3%, from $562.9 million for the year
ended December 31, 1994. Sales growth resulted from price increases (an
average increase of 1.6% over 1994) and increased volume across all major
North American product categories (an average increase of 8.7% over 1994).
Sales of office systems grew $50.7 million, or 15.1%, as sales of the Equity,
Morrison and Reff product lines increased due to product enhancements and
sales incentives at both the dealer and sales division level. Sales from the
Company's specialty products (KnollStudio, KnollExtra, Spinneybeck and
KnollTextiles) and seating products grew $4.9 million and $2.4 million,
respectively, a combined increase of 6.3% over 1994, due in part to continued
growth from new product introductions such as the Propeller table and the
Parachute and SoHo chairs.

Gross profit. Gross profit was $203.3 million for the year ended December
31, 1995, an increase of $50.5 million, or 33.0%, from $152.8 million for the
year ended December 31, 1994. This increase was principally due to the higher
sales volume, better pricing, discontinuance of lower profit product lines,
factory operating cost improvements, and cost reductions realized from closing
the Company's Legnano, Italy factory and consolidating its Muskegon, Michigan
operations. As a result, gross profit as a percentage of sales increased to
32.7% for the year ended December 31, 1995 from 27.1% for the year ended
December 31, 1994.

Restructuring provision. The Company's restructuring provision of $29.2
million for the year ended December 31, 1994 includes costs associated with
the factory closing and consolidation referred to above, lease

26
<PAGE>

cancellations, product discontinuations and employee separation costs
associated with initiatives implemented by management in the turnaround
program that commenced in early 1994.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $138.5 million for the year ended December 31,
1995, representing a decrease of $28.7 million, or 17.2%, from $167.2 million
for the year ended December 31, 1994. This decrease is primarily attributable
to the cost reductions and improved operating efficiencies derived from
consolidating and centralizing human resources, finance, purchasing and
logistics, order entry and customer service, and management information
systems operations at one facility, as well as from reducing marketing and
selling expenses associated with showroom and sales office consolidations and
eliminations. As a percentage of sales, selling, general and administrative
expenses improved to 22.3% for the year ended December 31, 1995 from 29.7% for
the year ended December 31, 1994.

Allocated corporate expenses. Allocated corporate expenses, which include
Westinghouse overhead charges for Westinghouse executive management and
corporate legal, environmental, audit, tax, treasury, and other related
services, were $9.5 million for the year ended December 31, 1995, an increase
of $3.6 million, or 61.0%, from $5.9 million for the year ended December 31,
1994. Allocated corporate expenses for 1995 include approximately $4.0 million
of long-term incentive compensation payable to Knoll executives. These
allocated corporate expenses, which are payable by Westinghouse and "pushed
down" to Knoll from Westinghouse, are allocated primarily based on sales, with
the exception of the incentive compensation, and are not necessarily
indicative of actual or future costs.

Operating income (loss). Operating income increased to $55.2 million for the
year ended December 31, 1995, representing an increase of $104.7 million, as
compared to a loss of $49.5 million for the year ended December 31, 1994. As a
percentage of total sales, operating income (loss) increased to 8.9% for the
year ended December 31, 1995 from (8.8)% for the same period in 1994. This
improvement was driven by higher sales volume, better pricing, cost reductions
and improved operating efficiencies, decreased depreciation and amortization
expense and the restructuring provision charged in 1994 as described above.

Interest expense. Interest expense decreased to $1.4 million for the year
ended December 31, 1995, a decrease of $1.8 million, or 56.3%, as compared to
$3.2 million for the year ended December 31, 1994. This decrease was due
primarily to the reduction of debt in the Company's European subsidiaries.

Other income (expense). The Company incurred other expenses of $1.6 million
for the year ended December 31, 1995, primarily due to the one-time write-off
of certain tooling that was purchased but not used, as compared to $0.7
million in other income for the year ended December 31, 1994.

Income tax expense. Income tax expense of $22.8 million was recorded for the
Company as a stand-alone entity for the year ended December 31, 1995, an
increase of $15.1 million from $7.7 million for the year ended December 31,
1994. The deferred income tax liability increased from $3.3 million at
December 31, 1994 to $11.3 million at December 31, 1995. This increase
resulted in deferred income tax expense of $8.0 million for the year ended
December 31, 1995, an increase of $2.2 million from $5.8 million for the year
ended December 31, 1994. The increase in the deferred income tax liability is
due primarily to the reversal of temporary differences arising from
restructuring charges recorded in 1994 partially offset by temporary
differences arising from certain charges recorded in 1995. The effective tax
rate increased to 43.8% in 1995 from an effective rate of 14.8% in 1994,
reflecting the impact of positive income from operations.

LIQUIDITY AND CAPITAL RESOURCES

The Company's free cash flow has historically been used to fund capital
expenditures, working capital requirements and debt service. Following the
Acquisition, interest expense associated with borrowings under the Credit
Facilities and the issuance of the Notes, as well as scheduled principal
payments of term loans under the Credit Facilities, significantly increased
interest expense and cash requirements compared to previous years. Following
completion of the Offerings, outstanding indebtedness will be reduced, which
will partly reduce the Company's interest expense. If the net proceeds from
the Offerings are less than the amount necessary to redeem the shares of
Series A Preferred Stock from Warburg and NationsBanc and redeem a portion of
the Notes, the

27
<PAGE>

Company will use cash on hand or the proceeds from borrowings under the Credit
Facilities. See "Use of Proceeds."

The Credit Facilities provide for a $100 million term loan and a $130
million revolving credit facility. The term loan is subject to quarterly
amortization of principal which commenced on March 31, 1997, in an aggregate
amount of $15 million in 1997, $15 million in 1998, $15 million in 1999, $15
million in 2000, $20 million in 2001 and $20 million in 2002. Loans made
pursuant to the revolving credit facility may be borrowed, repaid and
reborrowed from time to time until December 17, 2002. Indebtedness under the
Credit Facilities bears interest at a floating rate based, at the Company's
option, upon (i) LIBOR plus 0.875% or (ii) the prime rate. These rates are
subject to change based on the Company's ratio of funded debt to EBITDA. The
Credit Facilities contain restrictive covenants, financial covenants and
events of default. See "Description of Certain Indebtedness--Description of
Credit Facilities."

In addition to the Credit Facilities, in connection with the Acquisition the
Company also issued $165 million aggregate principal amount of 10 7/8% Senior
Subordinated Notes due 2006. The Notes are subordinated to all existing and
future senior indebtedness of the Company, including all indebtedness under
the Credit Facilities. The Indenture governing the terms of the Notes imposes
certain restrictions on the Company and its subsidiaries, including
restrictions on its ability to incur indebtedness, pay dividends, make
investments, grant liens and engage in certain other activities. The Notes may
be required to be purchased by the Company upon a change of control (as
defined) and in certain circumstances with the proceeds of asset sales. The
Notes are redeemable at the option of the Company at any time after March 15,
2001, initially at 105.438% of their principal amount at maturity, plus
accrued interest, declining to 100% of their principal amount at maturity,
plus accrued interest, on or after March 15, 2004. At any time on or before
March 15, 1999 the Company may redeem up to 35% of the original aggregate
principal amount of the Notes at a redemption price of 110% of their principal
amount with the net proceeds of a public equity offering by the Company. The
Company intends to redeem $57.8 million aggregate principal amount of the
Notes with the net proceeds of the Offerings. See "Description of Certain
Indebtedness--Description of the Notes."

The Company's foreign subsidiaries from time to time maintain local credit
facilities to provide credit for overdraft, working capital and other
purposes. The Credit Facilities restrict such indebtedness to $10.0 million at
any one time. As of March 31, 1997, the Company's total credit available under
such facilities was approximately $8.7 million, of which none had been
utilized. The Company believes that it is currently in compliance with all
terms of its indebtedness and that it has been in such compliance since the
Acquisition.

Cash provided by (used in) operating activities totaled $23.9 million for
the three months ended March 31, 1997, $89.5 million for the ten months ended
December 31, 1996, $(54.0) million for the two months ended February 29, 1996,
$51.9 million in 1995 and $(3.8) million in 1994. Cash provided by operations
resulted primarily from net earnings, depreciation and amortization, as well
as increases in accounts payable and other current liabilities and decreases
in inventory.

Cash used in investing activities totaled $2.8 million for the three months
ended March 31, 1997 and was primarily comprised of capital expenditures. Cash
flow used in investing activities totaled $594.8 million for the ten months
ended December 31, 1996 and was comprised primarily of the acquisition of the
Company from Westinghouse ($579.8 million) and capital expenditures by the
Company. Cash used in investing activities totaled $2.3 million for the two
months ended February 29, 1996, $19.0 million in 1995 and $19.8 million in
1994 and primarily was comprised of capital expenditures by the Company. The
Company's capital expenditures totaled $15.3 million for the ten months ended
December 31, 1996, $2.3 million for the two months ended February 29, 1996,
$19.3 million in 1995 and $20.2 million in 1994. Capital expenditures have
primarily been for new manufacturing equipment and information systems. The
Company expects to increase its capital expenditures over the next few years
as part of its growth strategy and efforts to provide superior service and
products to its customers. The Company estimates that capital expenditures
will be approximately $30 million in 1997. The Credit Facilities restrict the
Company's capital expenditures to $36 million annually (plus up to $10 million
carried forward from a previous year).

28
<PAGE>

Cash provided by (used in) financing activities totaled $(18.0) million for
the three months ended March 31, 1997, $511.8 million for the ten months ended
December 31, 1996, $57.0 million for the two months ended February 29, 1996
and $(36.8) million and $28.3 million for the years ended December 31, 1995
and 1994, respectively. The $18.0 million used by the Company for the three
months ended March 31, 1997 includes $14.3 million for the prepayment of
indebtedness under the Credit Facilities. The $511.8 million provided by the
Company in its financing activities during the ten months ended December 31,
1996 included $425.0 million for the issuance of debt and $160.0 million for
the issuance of stock in connection with the acquisition of the Company from
Westinghouse, partially offset by $72.0 million used by the Company for the
prepayment of indebtedness under the Credit Facilities.

The Company has recorded approximately $1.5 million of unearned stock grant
compensation on its balance sheet. Such amount will be expensed over the
vesting period of the related stock awards, which is generally five years.

The Company uses interest rate collar agreements in order to manage its
exposure to fluctuations in interest rates on its floating rate debt. At March
31, 1997, the Company had four outstanding interest rate collar agreements
with a total notional principal amount of $150 million and maximum and minimum
rates ranging from 7.5% to 7.99% and 5.00% to 5.5%, respectively. These
agreements mature over the next two years. Aggregate maturities of the total
notional principal amount are $35 million in 1998 and $115 million in 1999.

The past and present business operations of the Company and the past and
present ownership and operation of manufacturing plants on real property by
the Company are subject to extensive and changing federal, state, local and
foreign environmental laws and regulations. As a result, the Company is
involved from time to time in administrative and judicial proceedings and
inquiries relating to environmental matters. The Company 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 the Company, some of which may be
material. The Company has been identified as a potentially responsible party
pursuant to CERCLA for remediation costs associated with waste disposal sites
previously used by the Company. The remediation costs at these CERCLA sites
are unknown, but the Company does not expect any liability it may have under
CERCLA to be material, based on the information presently known to the
Company. Under the Stock Purchase Agreement, Westinghouse has agreed to
indemnify the Company for certain costs associated with CERCLA liabilities
known as of the date of the Acquisition. See "Business--Environmental
Matters."

The Company continues to have significant liquidity requirements. In
addition to working capital needs and capital expenditures, the Company has
cash requirements for debt service. The Company believes that existing cash
balances and cash flow from operating activities, together with borrowings
available under the Credit Facilities, will be sufficient to fund working
capital needs, capital spending requirements and debt service requirements of
the Company for at least the next 12 months.

INFLATION

There was no significant impact on Knoll's operations as a result of
inflation during the three years ended December 31, 1996 or the three months
ended March 31, 1997.

BACKLOG

As of March 31, 1997, the Company's backlog of unfilled orders was $110.7
million. At March 31, 1996, the backlog totaled $84.1 million. The Company
expects to fill all outstanding unfilled orders within the next twelve months.
The Company manufactures substantially all of its products to order and its
average manufacturing lead time is approximately five weeks. As a result,
backlog is not a significant factor used to predict the Company's long term
business prospects.

29
<PAGE>

FOREIGN OPERATIONS

The Company's foreign sales and certain expenses are transacted in foreign
currencies. In 1996, approximately 12% of the Company's revenues and 24% of
the Company's expenses were denominated in currencies other than U.S. dollars.
The principal foreign currencies in which the Company conducts business are
the Canadian dollar and the Italian lira. The production costs, profit margins
and competitive position of the Company are affected by the strength of the
currencies in countries where it manufactures or purchases goods relative to
the strength of the currencies in countries where its products are sold. The
Company reviews from time to time its foreign currency exposure and evaluates
whether it should enter into hedging transactions. The Company generally does
not hedge its foreign currency exposure and may determine not to do so in the
future. Exchange rate fluctuations did not have a material effect on the
financial results of the Company in 1996.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited summary pro forma and
historical information on a quarterly basis for the Company.

<TABLE>
<CAPTION>
PRO HISTORICAL
FORMA ----------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
Net sales.......................... $ 138,312 $166,520 $ 167,184 $179,750
Gross profit....................... 44,702 58,574 61,046 67,536
Income before extraordinary item... 197 7,527 7,685 6,334
<CAPTION>
PRO FORMA
---------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1995
Net sales.......................... $147,410 $159,352 $155,055 $159,075
Gross profit....................... 39,299 48,920 53,473 53,873
Net income (loss).................. (4,883) (484) 5,559 3,544
</TABLE>

The pro forma 1996 information presented above does not include the
extraordinary loss on the early extinguishment of debt amounting to $8,542
pre-tax, $5,159 after-tax, recognized during the fourth quarter.

In certain years, the Company has experienced variability in its sales from
quarter to quarter.

30
<PAGE>

BUSINESS

GENERAL

Knoll designs, manufactures and distributes office systems and business
furniture noted for its high quality, innovative design and sophisticated
image. Knoll's products are designed to provide enduring value rooted in
timeless aesthetics, functionality, flexibility and reliable performance. For
nearly sixty years, Knoll has been widely recognized as a design leader, with
products represented in major art museums around the world, including more
than 30 Knoll pieces housed in the permanent Design Collection of the Museum
of Modern Art in New York. Knoll's heritage of design excellence has enabled
the Company to win hundreds of awards, with special recognition across all of
its product categories, including office systems, seating, desks and
credenzas, tables, files and storage, technology accessories and textiles.
Since 1994 alone, Knoll has won more than 20 design awards for new products
and enhancements across all of its product categories.

Knoll's customers are typically Fortune 1000 companies. The Company's direct
sales force of approximately 290 professionals and its network of
approximately 200 independent dealers in North America work in close
partnership with customers and design professionals to create distinctive work
environments using Knoll products. Knoll's products and knowledgeable sales
organization have generated strong brand recognition and loyalty among
architects, designers and corporate facility managers, who are key influences
in the purchasing process for business furnishings. Knoll's strong customer
relationships allow the Company to adapt and customize its products to meet
evolving customer needs, technology practices and ergonomic standards.

The Company offers a broad range of office furniture and accessories in five
basic categories: (i) office systems (typically modular and moveable
workspaces with integrated work surfaces, space dividers and lighting),
comprised mainly of the Reff, Morrison and Equity product lines; (ii) seating,
including the Sapper, Bulldog, Parachute and SoHo chairs; (iii) storage
solutions and filing cabinets, including the Calibre collection; (iv) desks
and casegoods, including bookcases and credenzas; and (v) tables. The
Company's KnollStudio collection features its signature design classics,
including high image side chairs, sofas, desks and tables for both office and
home use. The Company also carries its own lines of textiles and leather
products and a line of desk, office and computer accessories, which complement
its furniture products and are also sold in conjunction with the seating and
systems products of other manufacturers. In 1996, the Company had revenues of
$651.8 million. The combination of its strong product offerings, experienced
dealer network and a sales force which management believes to be one of the
most effective in the industry has enabled the Company to capture an
increasing share of the U.S. business furniture market over the last three
years.

INDUSTRY DYNAMICS

. Continued corporate reengineering, restructuring and reorganizing. In
today's ever changing workplace, customers are more often experimenting
with workplace design with a goal of increasing worker productivity and
reducing facility costs. As large corporations have continued to focus on
the benefits of reengineering, restructuring and reorganizing, the nature
of the corporate work environment has changed. An emphasis on teams,
flatter organizational structures, and more direct communication among
employees at varying levels, have accelerated the need for redesigned
space. Office furniture systems that are simple, flexible and easy to
install are popular with large businesses that are reengineering,
restructuring and reorganizing their operations and offer significant
advantages over traditional drywall offices. The Company has experienced
increased demand for systems able to accommodate new work arrangements
such as team workspaces and workspaces shared by several employees who
are frequently out of the office, an arrangement known as "hoteling."

31
<PAGE>

. Corporate relocations. As companies redesign existing or relocate to new
facilities to take advantage of more sophisticated building services or
to reduce real estate costs, they often take the opportunity to install
furniture that is better adapted to their technological, ergonomic,
organizational and facility needs.

. New office technology and the resulting necessity for improved wire and
data management. Technology proliferation in the workplace has placed,
and the Company believes will continue to place, new demands on furniture
performance. Increasingly, office furniture must have the capability to
support the use of multiple monitors, video conferencing, local area
network and wide area network communications, fiber optics and portable
technologies. As businesses become more dependent upon these
technological systems, facility managers demand furniture that can easily
accommodate increasingly complex wire and cable requirements. In
response, the Company recently redesigned each of its office systems
lines in accordance with anticipated Electronic Industry Association/
Telecommunications Industry Association (EIA/TIA) guidelines.

. Heightened sensitivity to concerns about ergonomic standards. Concerns
about ergonomics, health and safety in the office have intensified in
recent years, and, in 1996, California became the first state to adopt
legislation relating to ergonomics in the workplace. Such legislation
should have a direct effect on the demand for ergonomically designed
office furniture products. As a result, the Company believes that
corporations will increasingly seek furniture like that offered by the
Company to enhance employee comfort and productivity through ergonomic
design.

In addition, other factors such as white collar employment levels, corporate
cash flow and non-residential construction reflect certain macroeconomic
conditions which management believes influence industry growth.

The U.S. office furniture market generated sales of approximately $10.0
billion in 1996. The dollar value of U.S. office furniture industry shipments
has increased in each of the past 25 years, with the exception of 1975 and
1991 and, according to BIFMA estimates, has grown at a compound annual rate of
approximately 7.2% over the three-year period ended December 31, 1996.

The U.S. office furniture market consists of five major product categories:
office systems, seating, storage, desks and casegoods, and tables. The
following table indicates the percentage of sales that each product category
contributed to the estimated U.S. office furniture industry in 1996.

<TABLE>
<CAPTION>
U.S. % OF U.S.
PRODUCT CATEGORY MARKET SIZE MARKET
---------------- ----------- ---------
(IN
BILLIONS)
<S> <C> <C>
Office systems...................................... $3.4 34.1%
Seating............................................. 2.6 25.4
Storage............................................. 1.4 14.1
Desks and casegoods................................. 1.6 16.4
Tables.............................................. 0.7 6.6
</TABLE>

Office systems consist of movable panels, work surfaces and storage units,
electrical distribution, lighting, organizing tools and freestanding
components. These modular systems are popular with customers who require
flexible space configurations, or where many people share open floor space as
is common in modern office buildings. Both seating, ranging from executive
desk chairs to task chairs and side chairs, and storage products, such as
overhead shelving, file cabinets and desk pedestals (file cabinets that serve
to support desks), are sold to users of office systems and also are sold
separately to non-systems users. Desks and tables range from classic writing
desks in private offices to conference and meeting room tables which can
accommodate sophisticated technological demands.

32
<PAGE>

GROWTH STRATEGY

Knoll focuses on the middle to high-end office furniture market which, as a
result of evolving workplace trends and industry dynamics, management expects
to grow faster than the industry as a whole. Management believes Knoll is
well-positioned to drive further growth in revenues, profitability and market
share. Key elements of the Company's growth strategy are as follows:

. CREATE INNOVATIVE NEW PRODUCTS TO INCREASE SALES AND MARKET SHARE. The
Company believes its brand identity, superior design and complementary
product offerings give it a competitive advantage in launching new
products. The Company intends to (i) expand its offerings in the $3.4
billion U.S. office systems category, where it is a recognized leader,
and (ii) expand the breadth of product offerings in other growing office
furniture categories, such as seating, tables, desks and storage
solutions, where the Company's market share is relatively low. For
example, the Company is developing new office systems products and line
extensions that address new price points and category segments, such as
the "teamwork" segment, where the Company's current product offerings
may be limited and management believes demand for quality products is
underserved. Leadership in office systems is critical to achieving
significant market share in the industry. Office systems are often the
first design component that the customer specifies and typically
represent the largest part of a customer's furniture purchase. Utilizing
extensive market research and direct customer feedback, the Company has
developed new products in other categories such as tables and seating,
including the Propeller table line and the Parachute chair line, which
expand the breadth of the Company's offerings in these growing
categories.

. EXPAND SCOPE OF SELLING EFFORTS. The Company intends to increase the
number of direct selling professionals over the next two years to
increase office furniture sales by (i) developing new corporate
relationships, (ii) further penetrating existing corporate accounts and
(iii) expanding its selling efforts into secondary markets. Secondary
markets account for approximately $800 million in annual industry sales,
but to date have received limited or no coverage by the Company's direct
sales force or dealers. Management believes expanded selling efforts
will present an opportunity to increase total revenues and market share.

. EXPAND THE RANGE AND QUANTITY OF PRODUCTS OFFERED THROUGH THE EXISTING
DEALER NETWORK. The Company intends to leverage its dealers' estimated
1,000-person sales force to capture a larger share of the business with
medium to smaller-size companies and independent business purchasers. In
order to stimulate sales in this segment, the Company has introduced
marketing programs such as QuickShip and PrimeTime! which make it easier
and more profitable for its dealers to market the Company's products.
Additionally, the Company is developing new products designed and
targeted for sale through the dealer distribution channel.

. CONTINUE TO USE SPECIALTY BUSINESSES TO ENHANCE REPUTATION AND DRIVE
INCREMENTAL GROWTH. The Company intends to expand its KnollStudio line,
which includes specially commissioned pieces by major architects and
designers. By relaunching KnollStudio classic products and introducing
new products, the Company expects to generate significant publicity and
goodwill in the design community and the media. Further, Knoll's
textile, leather and accessories lines offer the opportunity to achieve
incremental growth and attractive margins both when sold as part of
Knoll offerings and when sold in conjunction with products of other
manufacturers.

33
<PAGE>

COMPETITIVE STRENGTHS

TRADITION OF SUPERIOR DESIGN. The Company's greatest business strength lies
in the history and depth of its commitment to create furniture of enduring
design value which is known for innovative performance. This design
heritage has enabled the Company to build over time strong relationships
with some of the world's preeminent designers. The Company's collection of
classic and current designs includes works by such internationally
recognized architects and designers as Ludwig Mies van der Rohe, Marcel
Breuer, Eero Saarinen, Harry Bertoia, Massimo Vignelli and Frank Gehry.
Today, the Company continues to engage prominent outside architects and
designers to create new products and product enhancements. By combining
their creative vision with the Company's commitment to developing products
which address changing business needs, the Company seeks to launch new
offerings which achieve recognition in the marketplace and generate strong
demand among corporate customers.

REPUTATION FOR PRODUCT QUALITY. Knoll's quality serves as an important
marketing tool with design professionals and with new and existing
customers. The Company believes its manufacturing employees take pride in
the Company's heritage and the quality of their execution of the Company's
designs. Knoll's products are constructed of high quality materials, and
Knoll believes its products are differentiated from many of its competitors
in workmanship and attention to detail. The Company believes this results
in products with superior aesthetics and durability.

PREMIER BRAND IDENTITY IN OFFICE SYSTEMS, FURNITURE AND SPECIALTY
PRODUCTS. Knoll's high-end image is an important factor in its customers'
initial selection and purchasing decision and provides credibility and
confidence as businesses seek to upgrade and enhance their installed
systems and purchase other business furnishings. The Company believes its
brand identity reflects its strong brand heritage, its commitment to
quality, its strong links with the architect and design community and the
customized design solutions it offers its corporate clients. The Company
believes that this has made it a leader in the middle and high-end office
systems market, in the premium office furniture market and in its specialty
businesses, including textiles, leathers and accessories.

STRONG DIRECT SELLING ORGANIZATION AND DEALER NETWORK. The Company believes
that its direct sales force provides a strategic advantage relative to many
of its competitors. The direct sales force, in conjunction with the
Company's independent dealer network, has close relationships with
architects, designers and corporate facility managers, who have a
significant influence on product selection on large orders. The Company's
tradition of working closely with companies to design spaces that elevate
the appearance and productivity of the workplace dates back to the
Company's co-founder, Florence Knoll, and her work with major American
corporations in the 1950's.

LEAN ORGANIZATION FOCUSED ON COSTS. In 1994, Knoll's new management
instituted a series of initiatives designed to increase profitability.
Certain lower margin lines and products were discontinued, administrative
functions were centralized and manufacturing processes were significantly
rationalized and reorganized. Management also implemented an incentive
program under which the sales force and managers receive significant
performance bonuses if sales and profitability goals are achieved. As a
result of the turnaround program, the Company has developed an organization
focused on expense control and operating efficiency.

34
<PAGE>

While the Company believes it possesses these competitive strengths, several
of the Company's competitors have larger market shares than the Company and
have consistently received higher rankings than the Company in certain
categories of subjective industry studies. For a description of competitive
factors within the U.S. office furniture market and the Company's competitive
position, see "--Competition."

PREVIOUSLY IMPLEMENTED TURNAROUND PROGRAM

Westinghouse created The Knoll Group, Inc. by acquiring The Shaw-Walker
Company, Reff Inc. and Knoll International in 1989 and 1990 and combining them
with Westinghouse Furniture Systems, a division of Westinghouse. For various
reasons, the combined entities did not perform well. The Company continued to
be run as four separate entities, with essentially separate operations with
independent factories and administrative support personnel. In addition, the
Company believes that former management's steps to rationalize the Company's
U.S. dealer network and consolidate its sales forces may have impaired Knoll's
distribution and sales capabilities. A decline in revenues in the U.S. office
furniture industry in 1991, followed in 1992 by Westinghouse's announcement of
its intention to sell Knoll, exacerbated the difficult operating environment
within the Company. As a result, under previous management from 1991 to 1993,
sales and net income deteriorated. In December 1993, Westinghouse appointed
Burton B. Staniar, then Chairman and Chief Executive Officer of Westinghouse
Broadcasting, as Knoll's Chairman and Chief Executive Officer, and ended its
efforts to sell Knoll. Mr. Staniar promptly recruited John H. Lynch as Vice
Chairman, and in 1994 they initiated a major turnaround and restructuring
program which led to significantly improved financial performance.
Management's turnaround efforts had a dramatic impact on the Company's
competitive position and financial performance and positioned the Company for
growth.

The Company has created a platform to execute its growth strategy through
the successful completion of its turnaround program. As part of these
restructuring efforts initiated by current management in 1994, the Company
evaluated all major business activities and significantly reduced operating
costs. Since then, (i) virtually every product line has been modified and
improved; (ii) the lead time required to bring new and enhanced products to
market has been decreased significantly through the use of computer-aided
design techniques and other process improvements; (iii) average lead times
between order entry and delivery of products to customers have been reduced
from seven weeks to five weeks; and (iv) on-time shipments, a measure of
customer service, have improved to the current 95% level from approximately
91% in 1993. The turnaround program initiatives also included:

. Significantly reduced operating costs. Management evaluated all major
business activities and subsequently centralized administrative
functions eliminating duplicative overhead, simplified and automated
certain manufacturing processes, sold and consolidated certain
manufacturing facilities and consolidated purchasing activities. In
1995, the Company eliminated approximately $25.0 million in variable
operating costs and approximately $45.0 million in fixed operating costs
and general expenses.

. Instituted product line management. The Company enhanced its marketing
department by hiring and training professional managers who evaluated
each product for its profitability and market potential.

. Focused on sales growth. Management renewed sales growth by refocusing
and retraining the Company's sales force, aggressively pursuing
competitively held accounts and targeting the Company's large installed
base. Sales commissions were redefined to reward only profitable sales
growth.

. Improved the competitive position of its products. Management
accelerated the development of new and enhanced products and placed
product development under the direction of the Company's marketing
department in order to respond better to customer needs.

. Realigned management incentives. Management realigned incentive programs
to reward plant and product line managers and department heads with
substantial cash bonuses when specific cost and gross margin targets are
attained.

35
<PAGE>

. Restructured the European business. Management hired a managing director
for Europe and pared Knoll's European infrastructure to a level
commensurate with its sales volume, greatly reducing costs through plant
and showroom closings, elimination of excess personnel and manufacturing
cost improvements.

As a result of management's restructuring efforts, Knoll experienced strong
growth in sales, gross margins and operating margins from 1994 to 1996. Sales
increased from $562.9 million in 1994 to $651.8 million in 1996, despite the
discontinuance of several product lines. Gross margins were 35.6% on a pro
forma basis in 1996 and 27.1% in 1994. The operating margin was 12.0% on a pro
forma basis in 1996, which the Company believes is among the highest of its
major competitors. The Company's improved financial and operating results
allowed it in 1996 to prepay $72.0 million under its Credit Facilities and
refinance such facilities on more favorable terms.

In February 1996, a majority-owned subsidiary of Warburg acquired from
Westinghouse all of the capital stock of The Knoll Group, Inc., which was the
holding company that owned, directly or indirectly, the capital stock of each
of the companies that comprised the Knoll businesses. Since the Acquisition,
the Company has enjoyed strong growth, building on the success of the
turnaround program initiated by Messrs. Staniar and Lynch.

PRODUCTS

The Company offers a broad range of office furniture and accessories in five
basic categories: (i) office systems, comprised mainly of the Reff, Morrison
and Equity product lines; (ii) seating, including the Sapper, Bulldog,
Parachute and SoHo chairs; (iii) storage solutions and filing cabinets,
including the Calibre collection; (iv) desks and casegoods, including
bookcases and credenzas; and (v) tables. The Company's KnollStudio collection
features its signature design classics, including high image side chairs,
sofas, desks and tables for both office and home use. The Company also carries
its own lines of textiles sold under the KnollTextiles brand, lines of leather
products sold under the Spinneybeck name and a line of desk, office and
computer accessories under the KnollExtra brand that complement its furniture
products and are also sold to other manufacturers or with products
manufactured by others.

With the Company's strength in office systems, which typically represent the
largest part of a customer's furniture purchase, the Company believes it has a
significant opportunity to increase its share in seating, storage, desks and
tables by leveraging its direct sales force and independent dealers to create
incremental sales with new and existing customers.

Since 1994, nearly every product line, including each office system, has
been put under the individual management of an experienced product line
manager who carefully considers its market, competitive and strategic
positioning, marketing plan, costs, pricing, gross margin and gross profit
objective. A significant portion of the compensation of each product line
manager is based on achievement of product line-specific revenue and gross
profit targets. The Company's product line managers have conducted extensive
market studies and, in coordination with the product development team that was
brought under their control, used the results of the studies to re-design
portions of every major product line in an effort to respond to customer needs
and reduce manufacturing costs. The broad responsibility awarded to each
manager and the incentive-weighted compensation structure create a strong
sense of ownership of each product line.

The following is a description of the Company's major product categories and
lines:

Office Systems

The Company offers a complete line of systems products in order to meet the
needs of a variety of organizations. Systems may be used for teamwork
settings, private offices and open floor plans and are composed of adjustable
partitions, work surfaces, storage cabinets and electrical and lighting
systems which can be moved, re-configured and re-used within the office.
Systems therefore offer a cost effective and flexible alternative to
traditional drywall office construction. The Company has focused on this area
of the office furniture industry because it is the largest category, typically
provides attractive gross margins and often leads to repeat and add-on sales
of additional systems, complementary furniture and furniture accessories.

36
<PAGE>

Reff. The Reff system is the Company's flagship product for high-image
corporate customers, offering high-quality, sophisticated all-wood
construction with natural veneers and durable laminate and metal options that
can be used interchangeably in private offices, as freestanding casegoods, and
in panel-supported applications. The Reff system offers customers the choice
of a variety of panel types, making the system easy to transform into hundreds
of customized configurations, and has extensive power management capabilities
for data and communications technology. Desk-height wire management
enhancements support high-speed data transmission and fiber optics, and
circuits are arranged to separate data and power cabling while accommodating
the electrical needs of large clusters of workstations and providing easy
access to outlets.

Morrison. The Company believes that the Morrison system offers among the
broadest ranges of performance of any individual system line in the industry.
Morrison creates high-performance furniture options for team environments,
private offices and open floor plans, and offers the customer completely
interchangeable options from its Morrison Network, Morrison Access and
Morrison Options lines. These products allow the customer to choose from
premium wood surfaces or standard laminate finishes, fully powered desk
systems or panels with accessible wire management, or lower cost alternatives.
Morrison products include partitions, work surfaces, file storage and wire
management solutions which benefit new and existing customers by integrating
fully into existing Morrison platforms. Morrison products also carry a
lifetime warranty that is among very few of its kind in the industry. In
addition, the Company's Calibre desks, pedestals, files and overhead cabinets
(described below) may be integrated with the Morrison system to provide
compatible, cost-effective freestanding work surfaces and storage.

Equity. The Equity system, with its unique centerline design, simplifies
planning and maximizes the efficient use of space for growing companies and
high-density workplaces. Using a small inventory of parts, Equity offers a
wide variety of panel-based and freestanding applications that are easy to
reconfigure on-site. This flexibility minimizes inventory needs and
facilitates in-house management of expansion and rapid change. Equity's wire
management enhancements also support the latest in power, data and
communications technology. Freestanding products can easily be integrated with
the Equity panel system to reduce the cost of a typical workstation and
increase planning options. The Company finds Equity products to be popular
among government agencies, utilities and high tech and engineering
organizations. Equity products also carry a lifetime warranty that is among
very few of its kind in the industry.

The Company's innovative Reuter overhead storage and its height-adjustable
Interaction tables complement these system product lines by providing storage
and worktable products that address the ease, convenience and ergonomic
concerns of the customer.

The Company is developing new office systems products and line extensions
that address price points and new category segments, such as the "teamwork"
segment, where the Company's current product offerings may be limited and
demand for quality products is underserved. The Company believes its brand
identity, superior design and complementary product offerings give it a
competitive advantage in launching new products.

Seating

The Company's predecessors focused on the highest end of the seating market.
This focus provided the Company with excellent brand name awareness among
seating customers and in the architect and design community despite the fact
that its seating selection has not been broad enough to allow the Company to
penetrate the seating market to the same extent that it has penetrated the
office systems market. The Company believes that the office seating market
includes three major segments: the "appearance" segment, that appeals to more
hierarchical businesses; the "comfort" segment; and the "basic" segment. The
Company estimates that U.S. sales from these three segments in 1996 were
approximately $836 million, $632 million and $572 million, respectively.

The Company competes in the appearance segment with its Bulldog and Sapper
chairs. The Company's Bulldog chair, which is offered in eight separate models
that target every level of large corporations, has won the

37
<PAGE>

gold award from the International Facilities Management Association (IFMA) and
numerous Institute of Business Designers (IBD) citations for its synchronized
tilt mechanism that improves comfort by enabling the seat to tilt more slowly
than the backrest. The Sapper chair, designed by renowned industrial designer
Richard Sapper, is targeted for use in executive offices and conference rooms.
In 1995, the Company enhanced the comfort of the Sapper chair with a unique
adjustable lumbar support. The Company competes in the comfort segment with
its Parachute and SoHo models. The Parachute chair, introduced in 1994, was
designed for the less hierarchical organizations typically found in small to
mid-sized businesses and is available in several models targeted to these more
cost-conscious customers. SoHo is an affordable task chair with a distinctive,
contemporary look and easy adjustability. The Company does not have product
offerings in the basic seating segment.

Key customer criteria in seating include superior ergonomics, aesthetics,
comfort and quality, all of which the Company believes to be consistent with
its strengths and reputation. With the introduction in 1994 of its Parachute
and SoHo chairs and recent ergonomic enhancements to its Sapper and Bulldog
chairs, the Company has focused on product development to give it a
competitive advantage in this market. In order to capitalize on these
introductions, the Company will also increase sales incentives and has
recently added seating specialists in each sales region who will continue to
expand access to the Company's systems customers in order to further penetrate
the seating market. The majority of sales in the U.S. office seating market
are conducted through the same distribution channels as are office system
sales. The Company will seek to leverage its presence in the office systems
product line to increase sales in its other product lines, such as seating.

The Company has conducted extensive research to improve the seating product
line. Based on this research, the Company is developing a new state-of-the-art
seating product as well as enhancing its existing seating lines with new
ergonomic options that improve comfort and performance.

Storage Solutions and Filing Cabinets

The Company offers a variety of storage options designed to be integrated
with its office systems as well as with its and others' stand-alone furniture.
The Company's Calibre collection consists of stand-alone metal filing, storage
and desk products that integrate into and support the Company's Morrison and
Equity system sales. These products also function as free-standing furniture
in private offices or open-plan environments. This product line is part of the
Company's strategy of providing its customers with a one-stop source for
office furniture and permits the Company to sell products to businesses whose
office furniture systems are provided by its competitors. Additionally, the
Company relies upon its dealers for the promotion of Calibre products to
independent business purchasers and has instituted the QuickShip marketing
program to serve the dealer-promoted product segment. See "--Sales, Marketing
and Distribution."

Desks and Casegoods

The Company's collections of stand-alone wood furniture items, such as
desks, bookshelves and credenzas, are available in a range of designs and
price points. These products combine contemporary styling with sophisticated
workplace solutions and attract a wide variety of customers, from those
conducting large office reconfigurations to small retail purchasers. Casegoods
are part of the Company's strategy of being a one-stop source of quality
office furniture.

Tables

The Company recently has expanded its offerings in the table category of the
market with its innovative line of adjustable Interaction tables. Interaction
tables are designed to be integrated into the Company's systems lines and to
provide customers with ergonomically superior work surfaces. Additionally,
these tables are often sold as stand-alone products to non-systems customers.
In 1995, the Company introduced an award winning line of Propeller meeting and
conference tables that provide advanced wire management and technology support
while offering sufficient flexibility to allow end users to reconfigure a
meeting room quickly and easily to accommodate their specific needs.

38
<PAGE>

KnollStudio

The Company's historically significant KnollStudio collection serves the
design-conscious segment of the fine furniture contract market, providing the
architect and design community and customers with sophisticated furniture for
high-profile office and home uses. KnollStudio provides a marketing umbrella
for the full range of the Company's office products and is recognized as the
"design engine" of the Company. KnollStudio products, including a wide variety
of chairs and sofas, as well as conference, training, side and dining tables,
were created by many of this century's most prominent architects and designers
for prestigious corporate and residential interiors. This line includes
complete collections by individual designers as well as distinctive single
items.

Complementary Products

The Company offers product lines that complement its primary office systems
and seating business, permitting it to sell a complete package of office
interiors and generate high gross margins by supplying many of its own
component products. Such products help maintain the Company's unique design
image by incorporating elements developed by its own team of designers.

KnollExtra. KnollExtra is a rapidly growing line of desk and office
accessories, including letter trays, sorters, binder bins, file holders,
calendars, desk pads, planters, wastebaskets and bookends. In addition,
KnollExtra offers a number of computer accessories and ergonomic office
products. Besides serving as an attractive supplement to the Company's other
product lines in sales to its furniture customers, these products are also
sold to customers for use in connection with other manufacturers' products.

KnollTextiles. KnollTextiles offers a wide range of coverings for walls,
panels and seating. KnollTextiles was established in 1947 to develop high
quality fabrics for Knoll furniture. These products allow the Company to
distinguish its systems offerings by providing specialty fabric options and
flexibility in fabric selection and application. As it does with its furniture
lines, the Company uses many independent designers to create its fabrics which
has helped it establish what management believes to be a unique reputation for
textile design. During 1996, approximately 43% of the KnollTextiles coverings
were applied to Knoll furniture and 57% were sold to customers for use on
other manufacturers' products, thereby allowing the Company to benefit from
its competitors' sales.

Leather. Spinneybeck supplies quality upholstery leather to the Company, to
other furniture manufacturers and to aviation, custom coach and boating
manufacturers. Spinneybeck was the first to introduce quality aniline-dyed
Italian leathers to the North American design community. Besides using the
leather in its own product offerings, the Company has also established itself
as the largest seller of leather to third parties in the "customer's own
material" segment of the contract furniture market.

European Products

Knoll Europe has a broad product offering which allows customers to single-
source a complete office environment, including certain products designed
specifically for the European market. Knoll Europe's core product categories
include: (i) office systems, including the Hannah Desking System which is
targeted to Northern Europe, the Allesandri System which is targeted to the
French market and the SoHo Desking System, which has broad market appeal; (ii)
KnollStudio, which serves the image- and design-oriented segment of the fine
furniture market; (iii) seating, including a comprehensive range of chairs
such as Sapper, Bulldog, and Parachute; and (iv) cabinets, which are designed
to complement its systems products. The Company also sells its products
designed and manufactured in North America to the international operations of
its core North American customers.

PRODUCT DESIGN AND DEVELOPMENT

Knoll's design philosophy is linked to its commitment to working with the
world's preeminent designers to develop products that delight and inspire. The
Company's collection of classic and current designs includes

39
<PAGE>

works by a number of internationally recognized architects and designers.
Today, the Company continues to engage prominent outside architects and
designers to create new products and product enhancements.

Since 1994, under the leadership of Carl G. Magnusson, the Company's Senior
Vice President-Design, the Company has won over 20 design awards for its
recent product introductions. An important part of the Company's product
development capabilities is its responsiveness to customer needs and
flexibility to handle customized manufacturing requests. In order to develop
products across its product range, the Company works closely with independent
designers from a number of industries. By utilizing these long-standing design
relationships and listening to customers to analyze their needs, since 1994
the Company has redesigned or enhanced virtually every product line in order
to better meet customer preferences. Examples of recent product introductions
and enhancements include:

. An adjustable lumbar support for the Sapper chair.

. Freestanding desks in the Equity system.

. Propeller meeting and conference tables which provide for easy storage
and transportability and have extensive wire management capabilities.

. Morrison Access wire management capabilities.

. A belt-way panel and new edge detail for the Reff system, which offer
easier access to wire and data management and improved design options,
respectively.

. Upgrades to all systems products to accommodate high-speed data
transmission cable requirements.

. Calibre desks and pedestals, which provide lower priced desk and storage
options.

. New Interaction table models.

The Company has also made a significant investment in computer-aided design
tools to reduce product design and development lead time and improve upon what
management believes to be an industry leading position in quick response to
special customer requests. The Company believes this capability to be
particularly important in the middle to high-end of the contract furniture
market where the demand for custom solutions is the greatest. Approximately
10% of the Company's U.S. sales in 1996 involved custom product solutions, the
majority of these consisting of modifications to the Company's standard
product offerings.

SALES, MARKETING AND DISTRIBUTION

The Company believes that its direct sales force provides a strategic
advantage relative to many of its competitors. The Company employs
approximately 290 direct sales representatives, who work closely with its
approximately 200 independent dealers in North America to present the
Company's products to prospective customers. The sales force, in conjunction
with the dealer network, has close relationships with architects, designers
and corporate facility managers, who often have a significant influence on
product selection on large orders.

The Company believes that its sales representatives are particularly
effective and productive due to realigned incentives and more focused
management. The commission based incentive system importantly rewards both
order growth and profitability of the sale. The sales representatives employ
personalized sales techniques to maintain close contact with the Company's
current customers and develop new customers. The Company's sales force
receives extensive training including annual seminars focused on the Company's
products. The Company's sales representatives are supplemented by the
estimated 1,000-member sales force employed by the Company's dealers who make
separate sales calls, primarily on small to mid-sized business purchasers. A
component of the Company's growth strategy is to leverage its dealers' sales
force in order to capture a larger share of business with medium to smaller-
sized companies and independent business purchasers.

40
<PAGE>

In addition to coordinating sales efforts with the Company's sales
representatives, the Company's dealers generally handle project management,
installation and maintenance for the account after the initial product
selection and sale. Although many of these dealers also carry products of
other manufacturers, none of them acts as a dealer for the Company's principal
direct competitors. The Company has not experienced significant turnover in
its dealer network except at its own initiation, as the dealer's economic
investment in learning all aspects of a particular manufacturer's product
offerings and the value of the relationships the dealer forms with the Company
and with customers discourage dealers from changing their vendor affiliations.
The Company is not dependent on any one of its dealers, the largest of them
accounting for less than 5% of the Company's 1996 North American sales. No
customer represents more than 10% of the Company's 1996 North American sales.
However, a number of U.S. government agencies purchase the Company's products
through multiple contracts with the General Services Administration ("GSA").
Sales to the GSA aggregated approximately 10% in 1996.

The Company estimates that it has sold in excess of $4 billion in office
furniture systems since 1980 resulting in an installed base which management
believes generates significant annual sales through repeat and add-on orders.
Management believes that as the Company's existing office systems customers
expand and reconfigure their workplaces, their need for supplemental Company
products will increase. These customers tend to purchase the Company's
products rather than switch manufacturers, as switching sacrifices
compatibility, wastes inventory and makes reconfiguration more complex.

Knoll's customers are typically Fortune 1000 companies. The Company has
increased its efforts to penetrate the growing market of medium-sized
businesses by expanding its offerings of affordable free-standing products and
by establishing marketing programs such as QuickShip and PrimeTime!, which are
targeted for sale through dealer channels. These quick shipment programs help
dealers to access customers with Company products directly by providing a
direct mail catalog and price list along with a dependable delivery program
and firm delivery commitments. Sales of dealer-promoted products are a fast-
growing segment of the Company's business, benefiting from improved customer
access resulting from the QuickShip and PrimeTime! programs and increased
promotions due to dealer incentive programs such as the Company's Frequent
Seller Club. Sales via the QuickShip program increased from $7.0 million in
1992 to $27.9 million in 1996, and sales via the PrimeTime! program increased
from $6.7 million in 1993 to $15.8 million in 1996. Since the Company's sales
force is not required to generate such sales and since the Company grants
lower discounts to individual purchasers, it generates gross margins higher
than its average gross margins from dealer-promoted sales.

In Europe, the Company sells its products in largely the same manner as it
does in North America, through a direct sales force and a network of dealers,
though each major European market has its own distinct characteristics. In the
Latin American and Asia-Pacific markets, the Company uses both dealers and
independent licensees.

MANUFACTURING AND OPERATIONS

The Company operates four manufacturing sites in North America, with plants
located in East Greenville, Pennsylvania; Grand Rapids and Muskegon, Michigan;
and Toronto, Canada. The Morrison system and the Bulldog, Parachute and Sapper
chairs are manufactured at the East Greenville plant, while the Equity product
line is produced primarily at the Grand Rapids plant. The Muskegon plant
produces metal products, including Calibre files and desks. The Company's
Toronto facilities encompass three buildings, which manufacture wood products,
panels, and metal products for the Company's Reff product line. In addition,
the Company has two plants in Italy: in Foligno, where wood products are
manufactured, and in Graffignana, where metal components and cabinets are
produced. In 1994, all of the Company's plants were awarded registration to
ISO 9000, an internationally developed set of manufacturing facility quality
criteria.

"Just-in-time" inventory practices have been implemented at all plant
locations, and all plants "build to order" rather than to "forecast," which
directly reduces finished goods inventory levels and stresses continuous
improvement in set-up and delivery time. As a result of these and other order
processing and customer service

41
<PAGE>

improvements, the Company's average lead times have been reduced to five weeks
from seven weeks before the restructuring, and the Company currently delivers
approximately 95% of its orders on time in North America.

RAW MATERIALS AND SUPPLIERS

Based on management's initiatives, the Company has centralized purchasing in
its East Greenville facility and has formed close working relationships with
its main suppliers. This effort focuses on achieving purchasing economies and
"just-in-time" inventory practices. The Company utilizes steel, lumber, paper,
paint, plastics, laminates, particleboard, veneers, glass, fabrics, leathers
and upholstery filling material. Management currently maintains no long-term
supply contracts and believes that the supply sources for these materials are
adequate. The Company does not rely on any sole source suppliers for any of
its raw materials (other than certain electrical products).

COMPETITION

The office furniture market is highly competitive. Office furniture
companies compete on the basis of (i) product design, including ergonomic and
aesthetic factors, (ii) product quality and durability, (iii) price (primarily
in the middle and budget segments), (iv) on-time delivery and (v) service and
technical support. The Company focuses its efforts on the high and middle
segments of the market, where product design, quality and durability are
placed at a premium. In the United States, where the Company had a 5.8%
overall market share (based on all segments, including the budget segment) and
derived approximately 86% of its sales in 1996, four larger competitors in
terms of market share and the Company represent approximately 60% of the
market. In certain product categories, the Company has a larger market share.
For example, the Company's U.S. market share of seating and tables was 2.1%
and 1.8%, respectively, in 1996, while its office systems market share was
11.2% during the same period.

Many of the Company's competitors, especially those in North America, are
large and have significantly greater financial, marketing, manufacturing and
technical resources than those of the Company. The Company's most significant
competitors in its primary markets are Steelcase, Herman Miller, Haworth and
HON. These competitors have a substantial volume of furniture installed at
businesses throughout the country, providing a continual source of demand for
further products and enhancements. Although the Company believes that it has
been able to compete successfully in its markets to date, there can be no
assurance that it will be able to continue to do so in the future. See "Risk
Factors--Competition."

The European market accounted for approximately 8% of the Company's sales in
1996. This market is highly fragmented, as the combined sales of the estimated
top 20 manufacturers, based on 1995 data, represent less than 40% of the
market. The Company believes that no single company holds more than a 5% share
of the European market.

PATENTS AND TRADEMARKS

The Company has approximately 100 active United States utility patents on
various components used in its products and systems and approximately 120
active United States design patents. The Company also has approximately 175
patents in various foreign countries. Knoll(R), The Knoll Group(R),
KnollStudio(R), KnollExtra(R), Reff(TM), Bulldog(R), Calibre(R), Equity(R),
Parachute(R), Good Design Is Good Business(R), Propeller(TM) and SoHo(TM) are
trademarks and service marks of the Company. The Company considers securing
and protecting its intellectual property rights to be important to its
business.

ENVIRONMENTAL MATTERS

The Company believes that it is substantially in compliance with all
applicable laws and regulations for the protection of the environment and the
health and safety of its employees based upon existing facts known to
management. Compliance with federal, state, local and foreign environmental
regulations relating to the discharge of substances into the environment, the
disposal of hazardous wastes and other related activities has had and will
continue to have an impact on the operations of the Company, but has, since
the formation of Knoll

42
<PAGE>

in 1990, been accomplished without having a material adverse effect on the
operations of the Company. There can be no assurance that such regulations
will not change in the future or that the Company will not incur material
costs as a result of such regulations. While it is difficult to estimate the
timing and ultimate costs to be incurred due to uncertainties about the status
of laws, regulations and technology, management presently has no planned
expenditures of significant amounts for future environmental compliance. The
Company has trained staff responsible for monitoring compliance with
environmental, health and safety requirements. The Company's ultimate goal is
to reduce and, wherever possible, eliminate the creation of hazardous waste in
its manufacturing processes.

The Company has been identified as a potentially responsible party pursuant
to CERCLA for remediation costs associated with waste disposal sites
previously used by the Company. CERCLA imposes liability without regard to
fault or the legality of the disposal. The remediation costs at the CERCLA
sites are unknown; however, the Company does not expect its liability to be
material. At each of the sites, the Company is one of many potentially
responsible parties and expects to have only a small percentage of liability.
At some of the sites, the Company expects to qualify as a de minimis or de
micromis contributor, eligible for a cash-out settlement. In addition, under
the Stock Purchase Agreement, Westinghouse has agreed to indemnify the Company
for certain costs associated with CERCLA liabilities known as of the date of
the Acquisition.

EMPLOYEES

Management believes that relations with its employees are good. As of
February 1, 1997, the Company employed a total of 3,550 people, including
2,266 hourly and 1,284 salaried employees. The Grand Rapids, Michigan plant is
the only unionized Company plant within the United States, with the Carpenters
and Joiners of America-Local 1615 having a four-year contract expiring August
30, 1998. While management believes that relations with this union are
positive, management cannot assure that it will be successful in reaching a
new contract. Certain workers in the Company's facilities in Italy are
represented by unions. The Company has experienced brief work stoppages from
time to time at the Company's plants in Italy, certain of which related to
national or local issues. Such work stoppages have not materially affected the
Company.

PROPERTIES

The Company operates over 2,947,000 square feet of facilities, including
manufacturing plants, warehouses and sales offices. Of these facilities, the
Company owns approximately 2,372,000 square feet and leases approximately
575,000 square feet. The Company's manufacturing plants are located in East
Greenville, Pennsylvania; Grand Rapids and Muskegon, Michigan; Toronto,
Canada; and Foligno and Graffignana, Italy.

The Company's corporate headquarters are located in East Greenville,
Pennsylvania, where the Company owns two manufacturing facilities aggregating
approximately 547,000 square feet and leases three warehouses aggregating
approximately 142,000 square feet. The Morrison system and seating for the
Bulldog, Sapper and Parachute product lines are manufactured at the East
Greenville facility, which is also the distribution center for KnollStudio,
KnollExtra and KnollTextiles.

The Company owns one approximately 500,000 square foot manufacturing
facility in Grand Rapids, Michigan, which produces most of the Equity product
line and the Interaction table. The Company also owns an approximately 274,000
square foot plant in Muskegon, Michigan, which produces Calibre files and
desks and Reuter overhead storage units. The Company's plants in Toronto,
Canada consist of one approximately 375,000 square foot owned building and two
leased properties aggregating approximately 230,000 square feet. The Reff
product line is manufactured at these facilities. The Company's owned
facilities in East Greenville, Grand Rapids and Muskegon are encumbered by
mortgages securing an original aggregate principal amount of $230 million that
were entered into in connection with the Credit Facilities.

The Company owns two manufacturing facilities in Italy: an approximately
258,000 square foot building in Foligno, which houses the Knoll Europe
headquarters and where all of the Company's wood products are

43
<PAGE>

manufactured for Europe, and an approximately 110,000 square foot building in
Graffignana, where metal components and cabinets are manufactured.

The Company believes that its plants and other facilities are sufficient for
its needs for the foreseeable future.

LEGAL PROCEEDINGS

The Company is subject to litigation in the ordinary course of its business.
The Company is not a party to any lawsuit or proceeding which, in the opinion
of management, based on information presently known, is likely to have a
material adverse effect on the Company.

The Company, for a number of years, has sold various products to the United
States Government under GSA multiple award schedule contracts. The GSA is
permitted to audit the Company's compliance with the terms of the GSA
contracts. As a result of one such audit, the GSA has asserted refund claims
under 1985-88 and 1987-90 contracts between GSA and The Shaw-Walker Company,
which has been merged into the Company, for approximately $2.15 million
("Shaw-Walker GSA Claims") and has other contracts under audit review. GSA has
referred both of these Shaw-Walker contracts to the Justice Department for
consideration of potential civil False Claims Act cases. Under the civil False
Claims Act, the Company is potentially liable for treble damages plus
penalties of up to $10,000 for each "false" invoice submitted to the
Government. The former shareholders of The Shaw-Walker Company have agreed to
indemnify the Company for the Shaw-Walker GSA Claims. Based upon information
presently known, management disputes the audit results and does not expect
resolution of the Shaw-Walker GSA Claims to have a material adverse effect on
the Company's consolidated financial statements. Management does not have
information which would indicate a substantive basis for a civil False Claims
Act case under the contracts.

44
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Set forth below are the names, ages and positions of the directors and
executive officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Burton B. Staniar....... 55 Chairman of the Board
John H. Lynch........... 44 Vice Chairman of the Board, President and Chief Executive Officer
Wolfgang Billstein...... 48 Managing Director--Knoll Europe
Kathleen G. Bradley..... 47 Senior Vice President--Sales, Distribution and Customer Service
Andrew B. Cogan......... 34 Senior Vice President--Marketing and Product Development and Director
Carl G. Magnusson....... 57 Senior Vice President--Design
Douglas J. Purdom....... 38 Senior Vice President and Chief Financial Officer
Barbara E. Ellixson..... 43 Vice President--Human Resources
Barry L. McCabe......... 50 Vice President, Controller and Treasurer
Patrick A. Milberger.... 40 Vice President, General Counsel and Secretary
John W. Amerman*........ 65 Director
Robert J. Dolan*........ 49 Director
Jeffrey A. Harris....... 41 Director
Sidney Lapidus.......... 59 Director
Kewsong Lee............. 31 Director
John L. Vogelstein...... 62 Director
</TABLE>
- --------

* Messrs. Amerman and Dolan are not yet directors but have agreed to become
directors upon completion of the Offerings.

Burton B. Staniar was appointed Chairman of the Board of the Company in
December 1993 to effect the restructuring of the Company and restore it to
profitability. Mr. Staniar served as Chief Executive Officer of the Company
from December 1993 to January 1997. Prior to that time, Mr. Staniar had held a
number of assignments at Westinghouse, including President of Group W Cable
and Chairman and Chief Executive Officer of Westinghouse Broadcasting. Prior
to joining Westinghouse in 1980, he held a number of marketing and general
management positions at Colgate Palmolive and Church and Dwight Co., Inc.

John H. Lynch joined the Company as Vice Chairman of the Board in May 1994
to help initiate and lead the turnaround at Knoll. Mr. Lynch was subsequently
elected President of the Company and in January 1997 was elected Chief
Executive Officer. From 1990 to 1994, prior to joining the Company, Mr. Lynch
was a partner in BGI, a management firm. During that time, Mr. Lynch led the
restructuring of the Westinghouse Broadcasting television and radio stations.
From 1988 to 1990, Mr. Lynch was an associate dean at the Harvard Business
School. Mr. Lynch is a director of Renaissance Cosmetics, Inc.

Wolfgang Billstein was recruited in November 1994 to lead the restructuring
of the Company's European operations as Managing Director--Knoll Europe. In
addition, since 1991, Mr. Billstein has been owner and Managing Director of
Peill & Putzler, a German-based manufacturer and distributor of glass
products. A German citizen, Mr. Billstein previously worked in Europe for The
Procter & Gamble Company and Benckiser GmbH, a consumer products company.

Kathleen G. Bradley was named Senior Vice President--Sales, Distribution and
Customer Service in January 1996, after serving as Divisional Vice President
for Knoll's southeast region since 1988. Prior to that time, Ms. Bradley was
regional manager for the Company's Atlanta territory, a position to which she
was promoted in 1983. She began her career with Knoll in 1979.

Andrew B. Cogan has been a director of the Company since February 1996. He
has held the position of Senior Vice President--Marketing and Product
Development since May 1994. Mr. Cogan has held several positions in the design
and marketing group since joining the Company in 1989.

45
<PAGE>

Carl G. Magnusson has held the position of Senior Vice President--Design
since February 1993. Mr. Magnusson has been involved in design, product
development, quality and communications since joining the Company in 1976.

Douglas J. Purdom joined the Company as Senior Vice President and Chief
Financial Officer in August 1996. Prior to that time, Mr. Purdom served as
Vice President and Chief Financial Officer of Magma Copper Company, an
Arizona-based copper mining company, since 1992, and as Corporate Controller
of that company from 1989 to 1991.

Barbara E. Ellixson was promoted to her current position as Vice President--
Human Resources in August 1994, after serving as Manager of Human Resources
for the Company's East Greenville site. Ms. Ellixson began her career with
Westinghouse in 1971 and has held a variety of human resources positions in
several different business units.

Barry L. McCabe joined the Company in August 1990 as Controller. Mr. McCabe
worked with a number of Westinghouse business units after joining Westinghouse
in 1974 in the Auditing Department.

Patrick A. Milberger joined the Company as Vice President and General
Counsel in April 1994. Prior to joining the Company, Mr. Milberger served as
an Assistant General Counsel and in a number of other positions in the
Westinghouse Law Department, which he joined in 1986. Prior to such time, Mr.
Milberger was in private practice at Buchanan Ingersoll, P.C.

John W. Amerman will serve as a director of the Company upon completion of
the Offerings. Mr. Amerman is Chairman of the Board, and until January 1997
had served as Chief Executive Officer, of Mattel, Inc. positions in which he
served for ten years. Mr. Amerman is also a director of Unocal, Inc. and
Vanstar Corporation.

Robert J. Dolan will serve as a director of the Company upon completion of
the Offerings. Mr. Dolan has been a Professor of Business Administration at
Harvard University Graduate School of Business Administration since 1980. From
1976 to 1980, Mr. Dolan was a Professor of Business Administration at
University of Chicago Graduate School of Business.

Jeffrey A. Harris, a director of the Company since February 1996, has been a
General Partner of Warburg, Pincus & Co., a private investment firm, and a
Member and Managing Director of E.M. Warburg, Pincus & Co., LLC and its
predecessors since 1988, where he has been employed since 1983. Mr. Harris is
a director of Newfield Exploration Company, Comcast UK Cable Partners Limited,
Industri-Matematik International Corp., ECsoft Group plc and several privately
held companies.

Sidney Lapidus, a director of the Company since February 1996, has been a
General Partner of Warburg, Pincus & Co. and a Member and Managing Director of
E.M. Warburg, Pincus & Co., LLC and its predecessors since January 1982, where
he has been employed since 1967. Mr. Lapidus is currently a director of
Pacific Greystone Corporation, Caribiner International, Inc., Grubb and Ellis
Company, Journal Register Company and Panavision Inc., as well as several
privately held companies.

Kewsong Lee, a director of the Company since February 1996, has been a
General Partner of Warburg, Pincus & Co. and a Member and Managing Director of
E.M. Warburg, Pincus & Co., LLC and its predecessors since January 1997. From
January 1995 to January 1997, Mr. Lee was Vice President of Warburg, Pincus
Ventures, Inc. From 1992 to 1995, Mr. Lee was an associate at E.M. Warburg,
Pincus & Co., Inc. and prior to that had been a consultant at McKinsey &
Company, Inc. since 1990. Mr. Lee is currently a director of RenaissanceRe
Holdings Ltd. and several privately held companies.

John L. Vogelstein has been a director of the Company since February 1996.
Mr. Vogelstein is a General Partner of Warburg, Pincus & Co., and a Member,
Vice Chairman and President of E. M. Warburg, Pincus & Co., LLC, where he has
been employed since 1967. Mr. Vogelstein is currently a director of ADVO Inc.,
Aegis Group plc., Golden Books Family Entertainment, Inc., Journal Register
Company, LCI International, Inc., Mattel, Inc., Value Health, Inc., Vanstar
Corporation and several privately held companies.

46
<PAGE>

The employment agreements of Messrs. Staniar and Lynch provide that the
Company will nominate them to the board of directors during the term of their
employment pursuant to their employment agreements. In addition, the Company's
Stockholders Agreement, dated February 29, 1996, entitles Warburg to designate
between one and four directors depending on its percentage ownership of the
Company's outstanding shares of Common Stock or preferred stock. Following the
Offerings, Warburg will own more than 50% of the Common Stock of the Company
and will therefore be entitled pursuant to the Stockholders Agreement to
nominate four members of the board of directors. Messrs. Harris, Lapidus, Lee
and Vogelstein serve as Warburg's designees to the board of directors.

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The Company's Audit Committee will have general responsibility for
supervision of financial controls, as well as for accounting and audit
activities of the Company. The Audit Committee will annually review the
qualifications of the Company's independent certified public accountants, make
recommendations to the board of directors as to their selection and review the
planning, fees and results of their audit. The Audit Committee will consist of
Messrs. Amerman and Dolan.

SUMMARY COMPENSATION TABLE

The following table sets forth, for the years ended December 31, 1996 and
December 31, 1995, individual compensation information for the Chief Executive
Officer of the Company and each of the four other most highly compensated
executive officers of the Company who were serving as executive officers at
December 31, 1996 (the "named executive officers").

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ----------------
NAME AND PRINCIPAL RESTRICTED STOCK ALL OTHER
POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) COMPENSATION($)(2)
------------------ ---- ---------- --------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Burton B. Staniar....... 1996 410,830 600,000 30,000 5,595
Chairman of the Board 1995 465,000 350,000 -- 4,500
John H. Lynch........... 1996 393,330 600,000 30,000 9,449
Vice Chairman of the 1995 360,000 360,000 -- 6,075
Board, President and
Chief Executive Officer
Andrew B. Cogan......... 1996 197,930 250,000 12,000 --
Senior Vice President-- 1995 187,620 187,000 -- --
Marketing and Product
Development
Kathleen G. Bradley..... 1996 197,050 250,000 6,000 4,328
Senior Vice President-- 1995 163,668 256,740 -- 4,755
Sales, Distribution and
Customer Service
Wolfgang Billstein...... --
Managing Director-- 1996 396,000 572,836 -- --
Knoll Europe 1995 360,000 653,100 --
</TABLE>

- --------

(1) On February 29, 1996, Messrs. Staniar, Lynch and Cogan and Ms. Bradley
were granted 941,829, 941,829, 376,731 and 188,365 shares of restricted
stock, respectively. Holders of shares of restricted stock will not be
entitled to receive dividends until such shares vest and become
unrestricted. As of March 1, 1997, 40% of the grants of restricted stock
to each of Messrs. Staniar, Lynch and Cogan had vested and an additional
20% will vest on each of the next three anniversaries thereof. As to Ms.
Bradley, 20% of the grants of restricted stock vested on March 1, 1997 and
an additional 20% will vest on each of the next four anniversaries
thereof. The value of the shares listed above is based on the fair value
thereof on the date of grant, based on the price of the shares of Common
Stock sold in conjunction with the Acquisition.

(2) Amounts in this column represent the Company's matching contributions to
the Knoll, Inc. Retirement Savings Plan.

PENSION PLANS

Retirement benefits are provided to employees through two pension plans.
Prior to the purchase of the Company from Westinghouse, benefits were provided
under The Knoll Group Pension Plan which was retained

47
<PAGE>

by Westinghouse (the "Westinghouse Pension Plan"). Effective March 1, 1996,
the Company established the Knoll, Inc. Pension Plan (the "Company Pension
Plan"). The Westinghouse Pension Plan provides eligible employees with
retirement benefits based on a career average compensation formula. The
formula for computing normal retirement benefits under this plan is 1.45% of
career compensation divided by twelve. Once a participant accumulates five
years of vesting service, he or she can take early retirement anytime after
reaching age 55. Accrued normal retirement benefit is reduced 6% per year
prior to normal retirement age. The minimum benefit earned for any year of
participation in the plan is $300 ($25 per month), prorated for the partial
years worked during the first and last years of employment. The estimated
annual benefits payable upon normal retirement under this plan for each of the
named executive officers is as follows: Staniar ($0); Lynch ($4,712); Bradley
($24,648); and Cogan ($16,500). Mr. Billstein has never participated in the
Westinghouse Pension Plan.

The terms of the Company Pension Plan are the same as those of the
Westinghouse Pension Plan. The estimated annual benefits payable upon normal
retirement under this plan for each of the named executive officers is as
follows: Staniar ($1,812); Lynch ($1,812); Bradley ($1,812); and Cogan
($1,812). Mr. Billstein never participated in the Company Pension Plan.

Messrs. Staniar, Lynch and Cogan and Ms. Bradley also participated in the
Westinghouse Executive Pension Program (the "Westinghouse Excess Plan")
through the first two months of fiscal 1996, which provides for benefits not
payable by the Westinghouse Pension Plan because of limitations imposed by the
Internal Revenue Code of 1986, as amended. The benefit formula for this plan
is average total compensation and years of eligibility service multiplied by
1.47% minus amounts payable under the Westinghouse Pension Plan. The estimated
annual benefits payable under this plan upon normal retirement for each of the
named executive officers is as follows: Staniar ($263,000); Lynch ($13,972);
Bradley ($5,820); and Cogan ($14,089). Mr. Billstein has never participated in
the Westinghouse Excess Plan.

Remuneration covered by the Westinghouse Pension Plan, the Company Pension
Plan and the Westinghouse Excess Plan primarily includes salary and bonus, as
set forth in the Summary Compensation Table. Under the Westinghouse Pension
Plan, the Company Pension Plan and the Westinghouse Excess Plan, Messrs.
Staniar, Lynch and Cogan and Ms. Bradley have the following years of credited
service, as of December 31, 1996: 0.00/0.84/15.44, 1.75/0.84/1.75,
7.14/0.84/5.498 and 16.64/0.84/5.498 years, respectively.

DIRECTOR COMPENSATION

Directors who are not employees or officers of the Company or Warburg will
receive options to purchase 25,000 shares of Common Stock at an exercise price
equal to the initial public offering price. Such options will vest in five
installments commencing upon grant. Such directors also will be paid a fee of
$1,000 for each board meeting attended and will be reimbursed for certain
expenses in connection with attendance at board and committee meetings. Other
than with respect to reimbursement of expenses, directors who are employees or
officers of the Company will not receive additional compensation for services
as a director.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with Burton B. Staniar,
the Company's Chairman of the Board, John H. Lynch, the Company's Vice
Chairman, Chief Executive Officer and President, and Andrew B. Cogan, the
Company's Senior Vice President--Marketing and Product Development, for a term
expiring on March 1, 1998, subject to automatic one-year extensions unless
either party gives 60 days notice not to renew. The agreements with Messrs.
Staniar and Lynch provide for a base salary of $400,000, with a service bonus
of 25% of base salary at the end of each calendar year, and an annual bonus of
up to 125% of base salary based on the attainment of targets set by the Board
of Directors. The agreement with Mr. Cogan provides for a base salary of
$200,000 and an annual bonus of up to 100% of base salary based on the
attainment of targets set by the Board of Directors. The agreements may be
terminated at any time by the Company, but if so terminated without "cause,"
or if the Company fails to renew the agreements, the Company must pay the
employee 125% of one year's base salary (100% of base salary in the case of
Mr. Cogan). The agreements also contain non-compete and non-solicitation
(during the term of the agreement and for one year thereafter) and
confidentiality provisions.

48
<PAGE>

In addition, the Company has entered into a Consulting Agreement, dated as
of December 1, 1996, with Mr. Wolfgang Billstein. Pursuant to this agreement,
Mr. Billstein receives a monthly fee of 52,249 Deutsche Marks (approximately
$30,000 based on current exchange rates), and contingent incentives based on
the positive operating profit of Knoll Europe (subject to certain conditions)
and Knoll Europe's order volume. The agreement terminates on November 30, 1997
but is automatically renewed for two one-year periods unless either party
elects not to renew. Knoll has the right to terminate this agreement upon
three months notice and payment of 313,494 Deutsche Marks (approximately
$181,000 based on current exchange rates) plus a portion of Mr. Billstein's
incentive compensation.

STOCK INCENTIVE PLANS

At the Acquisition closing, Knoll adopted its 1996 Stock Incentive Plan (the
"1996 Stock Plan") pursuant to which up to 4,709,126 shares of Common Stock
were reserved for issuance pursuant to grants of restricted shares or options
to purchase such shares to officers, key employees, directors and consultants
of Knoll and its subsidiaries selected for participation in the 1996 Stock
Plan. The Company has issued 4,144,030 restricted shares and options to
acquire 565,096 shares pursuant to the 1996 Stock Plan. On February 14, 1997
Knoll adopted its 1997 Stock Incentive Plan (the "1997 Stock Plan," and
together with the 1996 Stock Plan, the "Stock Plans"). The 1997 Stock Plan
contains terms substantially similar to the 1996 Stock Plan, except that
pursuant to the 1997 Stock Plan (i) an aggregate of only 1,255,772 shares are
reserved for issuance thereunder, (ii) discounted options may be granted,
(iii) options may be repriced and (iv) the Board of Directors has greater
flexibility to amend the 1997 Stock Plan. The Company has issued options to
acquire 753,456 shares pursuant to the 1997 Stock Plan. The Stock Plans are
intended as an incentive to encourage stock ownership by such individuals in
order to increase their proprietary interest in Knoll's success and to
encourage them to remain in the employ of Knoll or its subsidiaries, as the
case may be.

The Stock Plans provide for the grant of restricted shares ("Restricted
Stock"), non-qualified stock options ("NQSOs") and incentive stock options as
defined in Section 422 of the Code ("ISOs").

The Stock Plans are administered by a Committee of at least two directors,
appointed by the Board of Directors of Knoll (the "Committee"). The Committee
determines the eligible individuals who are to receive shares of Restricted
Stock, the number of shares to be granted, the terms of the restrictions and
period of time that the restrictions will be effective. The Committee will
also determine the eligible individuals who are to receive options and the
terms of each option grant, including (i) the option prices of shares subject
to options, (ii) the dates on which options become exercisable and (iii) the
expiration date of each option. The Committee has the power to accelerate the
exercisability of outstanding options and to reprice any option at any time.

The purchase price of the shares subject to options will be fixed by the
Committee, in its discretion, at the time options are granted, provided that
in no event shall the per share purchase price of an option granted under the
1996 Stock Plan or any ISO granted under the 1997 Stock Plan be less than the
Fair Market Value Per Share (as defined in the Stock Plans) on the date of
grant.

Optionees and holders of Restricted Stock will have no voting, dividend, or
other rights as stockholders prior to the lapse of all restrictions or the
receipt of unrestricted shares upon the exercise of options. The exercise
price for options may be paid in cash or, at the discretion of the Committee,
satisfied by tendering shares having a value equal to the exercise price. The
number of shares covered by options will be appropriately adjusted in the
event of any stock split, merger, recapitalization or similar corporate event.
No adjustments will be made upon conversion of the Company's Series A
Preferred Stock.

The Board of Directors of Knoll may at any time terminate either or both of
the Stock Plans or from time to time make such modifications or amendments to
the Stock Plans as it may deem advisable; provided that, with respect to the
1997 Stock Plan, the Board may not, without the approval of the Knoll
stockholders, (i) increase the maximum number of shares for which options may
be granted under the Stock Plans, (ii) expand the class of employees eligible
to participate therein, (iii) reduce the minimum purchase price at which
options may be granted under the Stock Plans, (iv) extend the maximum term of
options or (v) extend the term of the 1997 Stock Plan.

49
<PAGE>

Options and Restricted Stock granted under the Stock Plans will be evidenced
by written agreements between the recipient and Knoll. Subject to limitations
set forth in the Stock Plans, the terms of option and Restricted Stock
agreements will be determined by the Committee, and need not be uniform among
recipients.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company expects to form a Compensation Committee shortly after
completion of the Offerings. During the year ended December 31, 1996, the
compensation of Messrs. Staniar, Lynch and Cogan was determined pursuant to
employment agreements which each of them has with the Company. See "--
Employment Agreements." The incentive portion of the compensation of each of
Messrs. Staniar and Lynch was determined by Messrs. Lapidus, Harris and Lee
and confirmed by the entire Board of Directors, including Messrs. Staniar and
Lynch. For the year ended December 31, 1996, the incentive compensation of Mr.
Cogan and the compensation for all other executive officers was determined by
Messrs. Staniar and Lynch. Except for Messrs. Staniar, Lynch and Cogan, no
member of the Board of Directors is or has been an officer or employee of the
Company. No executive officer of the Company served on any board of directors
or compensation committee of any entity (other than the Company) with which
any member of the Board of Directors is affiliated.

CERTAIN TRANSACTIONS

THE ACQUISITION

On February 29, 1996, pursuant to a Stock Purchase Agreement, the Company
acquired all of the outstanding capital stock of the companies that constitute
the Knoll business for an aggregate purchase price of $579,801,000. The
Company was formed by Warburg, NationsBanc and certain members of the
Company's management (collectively, the "Initial Investors") to consummate the
Acquisition. The Acquisition and related fees and expenses were financed
through a $260 million term loan, issuance of the Notes and with a $160.4
million equity contribution by the Initial Investors. Of the $160.4 million of
Company capital stock sold in connection with the Acquisition (plus shares
sold on October 21, 1996), certain members of the Company's management
(including the named executive officers) purchased $5.4 million, NationsBanc
purchased $8 million and Warburg purchased $147 million. The equity consisted
of 3,147,278 shares of Common Stock, sold for $100,250, and 1,602,998 shares
of Series A Preferred Stock, sold for $160.3 million.

STOCKHOLDERS AGREEMENT

In connection with the acquisition of the Company in 1996, Warburg Pincus
Ventures, L.P., NationsBanc and 12 senior members of management (each a
"Holder" and collectively, the "Holders") and the Company entered into a
Stockholders Agreement (the "Stockholders Agreement"), dated as of February
29, 1996, which governs certain matters related to corporate governance and
registration of shares of Common Stock and preferred stock ("Registrable
Securities") held by such Holders (other than shares acquired pursuant to the
Stock Plans).

Pursuant to the Stockholders Agreement, Warburg is entitled to request on up
to two occasions that the Company file a registration statement under the
Securities Act covering the sale of at least $25 million of shares of Common
Stock, subject to certain conditions. If officers or directors of the Company
holding other securities of the Company request inclusion of their securities
in any such registration, or if holders of securities of the Company other
than Registrable Securities who are entitled, by contract with the Company or
otherwise, to have securities included in such a registration (the "Other
Stockholders"), request such inclusion, the Holders shall offer to include the
securities of such officers, directors and Other Stockholders in any
underwriting involved in such registration, provided, among other conditions,
that the underwriter representative of any such offering has the right,
subject to certain conditions, to limit the number of Registrable Securities
included in the registration. The Company may defer the registration for 120
days if it believes that it would be seriously detrimental to the Company for
such registration statement to be filed.

The Stockholders Agreement further provides that, if the Company proposes to
register any of its securities (other than registrations related solely to
employee benefit plans or pursuant to Rule 145 or on a form which

50
<PAGE>

does not permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities), either for its own account or
for the account of other security holders, holders of Registrable Securities
may require the Company to include all or a portion of their Registrable
Securities in the registration and in any underwriting involved therein,
provided, among other conditions, that the underwriter representative of any
such offering has the right, subject to certain conditions, to limit the
number of Registrable Securities included in the registration. In addition,
after the Company becomes qualified to use Form S-3, the holders of
Registrable Securities will have the right to request an unlimited number of
registrations on Form S-3 to register at least $5 million of such shares,
subject to certain conditions, provided that the Company will not be required
to effect such a registration within 180 days of the effective date of the
most recent registration pursuant to this provision.

In general, all fees, costs and expenses of such registrations (other than
underwriting discounts and selling commissions applicable to sales of the
Registrable Securities and all fees and disbursements of counsel for the
Holders) will be borne by the Company. The registration rights described above
apply to 30,588,197 shares of Common Stock held by the Holders upon completion
of the Offerings. In connection with the Offerings, each of the Holders waived
all registration, subscription and other similar rights that they may have.

The Stockholders Agreement provides that the original Board of Directors of
the Company was to be composed of Messrs. Staniar, Lynch, Vogelstein, Lapidus,
Harris and Lee. Pursuant to the Stockholders Agreement, the stockholders who
are a party thereto (comprising approximately 79% of the outstanding shares of
Common Stock of the Company upon completion of the Offerings) have agreed to
vote their shares of Common Stock for four directors nominated by Warburg if
Warburg owns 50% or more of the Company's outstanding shares of Common Stock
and Series A Preferred Stock, three directors if it owns 25% or more, two
directors if it owns 15% or more and one director if it owns 5% or more.

The Company, Warburg, NationsBanc and the Company's other stockholders have
entered into an Agreement, pursuant to which the Company's stockholders have
agreed to waive certain subscription, registration and other rights in
connection with the Offerings. Pursuant to the Agreement, the Company's
preferred stockholders have agreed to redeem and/or convert their shares of
Series A Preferred Stock for an aggregate of $80 million in cash and
27,440,919 shares of Common Stock. Of such amounts, Warburg will receive $75.9
million and 25,024,481 shares of Common Stock and NationsBanc will receive
$4.1 million and 1,361,877 shares of Common Stock. Messrs. Staniar, Lynch,
Billstein, Cogan, Purdom, McCabe and Milberger will receive 400,736, 400,736,
6,249, 78,116, 78,116, 9,374 and 18,748 shares, respectively, and Mmes.
Bradley and Ellixson will receive 12,499 and 9,374 shares, respectively.

ISSUANCE OF RESTRICTED SHARES OF COMMON STOCK

In connection with the issuance of 4,144,030 restricted shares of Common
Stock pursuant to the Company's 1996 Stock Plan established in connection with
the Acquisition, Warburg and the Company also entered into separate
Stockholders Agreements with all of the Company's executive officers and other
members of the Company's management. Pursuant to these agreements, members of
management agreed not to transfer their shares except (i) to members of their
immediate families and other related or controlled entities, (ii) to Warburg
or an affiliate thereof or (iii) after the Offerings, upon 30 days prior
written notice to the Board of Directors. The restrictions on transfer
terminate after the Offerings when Warburg owns less than 10% of the
outstanding shares of Common Stock and less than 10% of the outstanding shares
of preferred stock. In addition, pursuant to these agreements, the Company
agreed that, if the Company determined to register any shares of Common Stock
for its own account or for the account of security holders, the Company would
include in such registration all of the vested shares of Common Stock received
by management pursuant to the 1996 Stock Plan. In addition, after the Company
qualifies for Form S-3, management may request unlimited registrations of at
least $5,000,000 of securities on Form S-3, provided that the Company is not
required to effect a registration pursuant to this provision within 180 days
of the effective date of the most recent registration pursuant to this
provision. In connection with the Offerings, each recipient of shares of
Common Stock under the 1996 Stock Plan waived all registration and other
similar rights that they may have.

51
<PAGE>

Pursuant to the 1996 Stock Incentive Plan, the Company also entered into
Restricted Share Agreements with each recipient of restricted shares of Common
Stock, including each of the Company's executive officers. Pursuant to these
agreements, Burton Staniar received 941,829 restricted shares, John Lynch
received 941,829 restricted shares, Andrew Cogan received 376,731 restricted
shares and Kathleen Bradley received 188,365 restricted shares. The agreements
were dated February 29, 1996 and the shares vested at a rate of 20% per year,
commencing on the date of grant (in the case of Messrs. Staniar, Lynch and
Cogan) or on the first anniversary of the date of grant. The agreements
provide that upon the voluntary termination of employment for reasons other
than death, disability or retirement at age 65, or if the grantee's employment
was terminated without cause, the nonvested restricted shares were to be
immediately forfeited to the Company. Upon termination with cause, the
agreements provide (i) in the case of Messrs. Staniar and Lynch, for the
immediate forfeiture of all restricted shares, regardless of whether vested
prior to termination, and (ii) that the Company may repurchase the shares of
Common Stock at $0.10 per share.

OTHER

NationsBanc, which is a beneficial owner of approximately five percent of
the outstanding capital stock of the Company, is an affiliate of (i)
NationsBank N.A., which is a party to the Credit Facilities, and (ii)
NationsBanc Capital Markets, Inc., the initial purchaser of the Company's
Notes. See "Principal and Selling Stockholders" and "Description of Certain
Indebtedness."

During 1996, the Company paid $137,337 to Emanuela Frattini Magnusson for
design services and product royalties, the bulk of which was payable pursuant
to the terms of a July 1993 Design Development Agreement between Emanuela
Frattini and the Company pertaining to the Company's Propeller product line.
Emanuela Frattini Magnusson is the wife of Carl G. Magnusson, the Company's
Senior Vice President--Design.

52
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with regard to the
beneficial ownership of the Common Stock and Series A Preferred Stock as of
April 18, 1997 and as adjusted to reflect the Offerings and the transactions
contemplated hereby, by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) the
Selling Stockholder, (iii) each director, nominee and named executive officer
of the Company and (iv) all current directors and executive officers of the
Company as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP PRIOR TO THE BENEFICIAL OWNERSHIP
OFFERINGS(1)(2) AFTER THE OFFERINGS(1)(2)
----------------------------------------------- -----------------------------
NAME AND ADDRESS OF SHARES OF SERIES A SHARES OF
BENEFICIAL OWNER PREFERRED STOCK PERCENT COMMON STOCK PERCENT SHARES PERCENT
- ------------------- ------------------ ------- ------------ ------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warburg, Pincus Ven-
tures, L.P.(3)......... 1,469,081 91.6% 2,884,351 66.0% 27,908,832 70.1%
466 Lexington Avenue
New York, NY 10017
NationsBanc Investment
Corp.(4)............... 79,950 5.0% 156,972 3.6% 1,518,848 3.8%
100 Tryon Street, 10th
Floor
Charlotte, NC 28255
Burton B. Staniar(5).... 20,507 1.3% 416,994 9.5% 817,729 2.1%
John H. Lynch(5)........ 20,507 1.3% 40,263 * 440,998 1.1%
Wolfgang
Billstein(5)(6)........ 320 * 628 * 6,877 *
Kathleen G. Brad-
ley(5)(6).............. 640 * 38,929 * 51,427 *
Andrew B. Cogan(5)...... 3,998 * 158,541 3.6% 236,656 *
John W. Amerman(7)...... -- -- -- -- -- --
Robert J. Dolan(7)...... -- -- -- -- -- --
Jeffrey A. Harris(8).... 1,469,081 91.6% 2,884,351 66.0% 27,908,832 70.1%
Sidney Lapidus(8)....... 1,469,081 91.6% 2,884,351 66.0% 27,908,832 70.1%
Kewsong Lee(8).......... 1,469,081 91.6% 2,884,351 66.0% 27,908,832 70.1%
John L. Vogelstein(8)... 1,469,081 91.6% 2,884,351 66.0% 27,908,832 70.1%
All current directors
and executive officers
as a group
(14 persons)........... 1,520,969 94.9% 3,607,829 82.5% 29,646,252 74.5%
</TABLE>
- --------
* Less than 1%.
(1) Except as otherwise indicated, the persons in this table have sole voting
and investment power with respect to all shares of Common Stock and Series
A Preferred Stock shown as beneficially owned by them, subject to
community property laws where applicable and subject to the information
contained in the footnotes to this table. There are no shares subject to
stock options exercisable within 60 days of the date of this Prospectus.

(2) The number of shares outstanding prior to the Offerings consists of
4,371,643 shares of Common Stock (excluding 2,919,665 restricted shares
which have not yet vested) and 1,602,998 shares of Series A Preferred
Stock. The number of shares of Common Stock deemed outstanding after the
Offerings consists of 39,812,562 shares (excluding 2,919,665 restricted
shares which have not yet vested, including an additional 8,000,000 shares
of Common Stock being offered for sale by the Company in the Offerings and
assuming the redemption and conversion of all outstanding shares of Series
A Preferred Stock for an aggregate of $80 million and 27,440,919 shares of
Common Stock).

(3) The sole general partner of Warburg, Pincus Ventures, L.P. ("Warburg"), is
Warburg, Pincus & Co., a New York general partnership ("WP"). E.M.
Warburg, Pincus & Co., LLC, a New York limited liability company ("EMW
LLC"), manages Warburg. The members of EMW LLC are substantially the same
as the partners of WP. Lionel I. Pincus is the managing partner of WP and
the managing member of EMW LLC and may be deemed to control both WP and
EMW LLC. WP has a 15% interest in the profits of Warburg as the general
partner. Jeffrey A. Harris, Sidney Lapidus, Kewsong Lee and John L.
Vogelstein, directors of the Company, are Managing Directors and members
of EMW LLC and general partners of WP. As such, Messrs. Harris, Lapidus,
Lee and Vogelstein may be deemed to have an indirect pecuniary interest
(within the meaning of Rule 16a-1 under the Securities Exchange Act of
1934) in an indeterminate portion of the shares beneficially owned by
Warburg. See Note 8 below.

(4) If the Underwriters exercise their overallotment options in full,
NationsBanc will own 798,848 shares of Common Stock, or 2.0% of the shares
of Common Stock outstanding.

(5) Excludes 565,098, 565,098, 0, 226,039, 150,692 and 2,015,514 restricted
shares of Common Stock for Messrs. Staniar, Lynch, Billstein and Cogan,
Ms. Bradley and all current directors and executive officers as a group,
respectively, which have not yet vested.

(6) Does not include options to purchase 376,731 and 188,365 shares of Common
Stock held by Mr. Billstein and Ms. Bradley, respectively, which vest at a
rate of 20% per year beginning March 1998.

(7) The Company expects to grant each of Messrs. Amerman and Dolan options to
purchase 25,000 shares of Common Stock. Such options will vest in five
installments commencing upon grant.

(8) All of the shares indicated as owned by Messrs. Harris, Lapidus, Lee and
Vogelstein are owned directly by Warburg and are included because of the
affiliation of such persons with Warburg. Messrs. Harris, Lapidus, Lee and
Vogelstein disclaim "beneficial ownership" of these shares within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934. See Note
3 above.

53
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon completion of the Offerings, the authorized capital stock of the
Company will consist of (i) 100,000,000 shares of Common Stock, par value $.01
per share, of which 39,812,562 shares will be outstanding (excluding 2,919,665
restricted shares which have not yet vested) and (ii) 10,000,000 shares of
preferred stock, par value $1.00 per share ("Preferred Stock"), of which no
shares will be outstanding.

COMMON STOCK

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

At present, there is no established trading market for the Common Stock. The
Common Stock has been approved for listing on the New York Stock Exchange,
subject to notice of issuance.

PREFERRED STOCK

As of April 18, 1997, there were outstanding 1,602,998 shares of Series A
Preferred Stock held of record by Warburg and NationsBanc and certain members
of management. With a portion of the net proceeds of the Offerings, the
Company will redeem 800,000 shares of Series A Preferred Stock; the remaining
shares of Series A Preferred Stock will be converted into 27,440,919 shares of
Common Stock. The Board of Directors is authorized to issue Preferred Stock
without stockholder approval and upon such terms as the Board of Directors may
determine. The issuance of Preferred Stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring or making a proposal to acquire, a majority of the outstanding
stock of the Company. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of holders of
Preferred Stock that may be issued in the future. For example, the issuance of
Preferred Stock could result in a class of securities outstanding that would
have preferences over the Common Stock with respect to dividends and in
liquidation and that could (upon conversion or otherwise) enjoy all of the
rights appurtenant to Common Stock. The Company has no present plans to issue
any shares of Preferred Stock.

LIMITATIONS ON DIRECTORS' LIABILITY

The Company's Amended and Restated Certificate of Incorporation (the
"Certificate") and Amended and Restated By-laws (the "By-laws") limit the
liability of directors and officers to the maximum extent permitted by
Delaware law. Delaware law provides that directors of a corporation will not
be personally liable for monetary damages for breach of their fiduciary duties
as directors, including gross negligence, except liability for (i) breach of
the directors' and officers' duty of loyalty, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) the unlawful payment of a dividend or unlawful stock purchase
or redemption and (iv) any transaction from which the director or officer
derives an improper personal benefit. Delaware law does not permit a
corporation to eliminate a director's or an officer's duty of care, and this
provision of the Company's Certificate has no effect on the availability of
equitable remedies, such as injunction

54
<PAGE>

or rescission, based upon a director's breach of the duty of care. The Company
does not believe that these provisions will limit liability under state or
federal securities laws. However, the Company believes that these provisions
will assist the Company in attracting and retaining qualified individuals to
serve as directors.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock generally is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that
such a stockholder became an interested stockholder, unless (i) the
corporation has elected in its original certificate of incorporation not to be
governed by Section 203 (the Company did not make such an election), (ii) the
business combination was approved by the Board of Directors of the corporation
before the other party to the business combination became an interested
stockholder, (iii) upon consummation of the transaction that made it an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also officers
or held in employee benefit plans in which the employees do not have a
confidential right to tender or vote stock held by the plan) or (iv) the
business combination was approved by the Board of Directors of the corporation
and ratified by two-thirds of the voting stock which the interested
stockholder did not own. The three-year prohibition also does not apply to
certain business combinations proposed by an interested stockholder following
the announcement or notification of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of the majority of the corporation's directors.
The term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an "interested stockholder,"
transactions with an "interested stockholder" involving the assets or stock of
the corporation or its majority-owned subsidiaries and transactions which
increase an interested stockholder's percentage ownership of stock. The term
"interested stockholder" is defined generally as a stockholder who, together
with affiliates and associates, owns (or, within three years prior, did own)
15% or more of a Delaware corporation's voting stock. Section 203 could
prohibit or delay a merger, takeover or other change in control of the Company
and therefore could discourage attempts to acquire the Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar of the Common Stock is The Bank of New
York.

DESCRIPTION OF CERTAIN INDEBTEDNESS

DESCRIPTION OF CREDIT FACILITIES

General. The Company has entered into a credit agreement with various
lenders (the "Lenders") and NationsBank, N.A., as Administrative Agent,
permitting the Company to borrow an aggregate principal amount of up to $230
million, consisting of a $130 million revolving credit facility (the
"Revolving Credit Facility") and $100 million term loan facility (the "Term
Loan Facility," and together with the Revolving Credit Facility, the "Credit
Facilities"). The Credit Facilities are guaranteed by all existing and future
domestic wholly owned subsidiaries of the Company (in this context, the
"Guarantors"). The Revolving Credit Facility includes a $20 million sub-limit
for standby and commercial letters of credit.

Security. Indebtedness of the Company under the Credit Facilities is secured
by, among other things, (i) 100% of the capital stock of the Company and each
of its domestic subsidiaries and (ii) 65% of the capital stock of each of its
foreign subsidiaries that are directly owned by the Company or by a wholly
owned domestic subsidiary of the Company. In addition, the Lenders hold a
first priority security interest in substantially all of the assets and
properties of the Company and the Guarantors. The Lenders will release all of
the collateral securing the Credit Facilities (i) if the Company's debt
ratings reach specified levels or (ii) if the Company receives at least $100
million net cash proceeds of an initial public offering and reaches and
maintains specified

55
<PAGE>

ratios of funded debt to EBITDA (as defined in the Credit Facilities). The
Company believes that the Lenders will release all of the Collateral in
connection with the Offerings.

Interest. Indebtedness under the Credit Facilities bears interest at a
floating rate based, at the Company's option, upon (i) LIBOR (the London
Interbank Offered Rate) for one, two, three or six months plus .875% or (ii)
the greater of the federal funds rate plus 0.5% or the prime rate. These rates
are subject to change based on the Company's ratio of funded debt to EBITDA.

Maturity. Loans made pursuant to the Revolving Credit Facility may be
borrowed, repaid and reborrowed from time to time until December 17, 2002,
subject to satisfaction of certain conditions on the date of any such
borrowing. No letter of credit shall have an expiration date that is more than
one year after the issuance date thereof or that is after the termination date
of the Revolving Credit Facility. The loan made under the Term Loan Facility
was made in a single drawing on December 17, 1996 and will mature on December
17, 2002. The Term Loan Facilities will be subject to quarterly amortization
of principal which commenced on March 31, 1997, in an aggregate amount of $15
million in 1997, $15 million in 1998, $15 million in 1999, $15 million in
2000, $20 million in 2001 and $20 million in 2002. The Credit Facilities will
be permanently reduced with specified portions of the proceeds of asset sales.

Certain Fees. The Company is also required to pay to the Banks a commitment
fee equal to .25% per annum on the committed undrawn amount of the Revolving
Credit Facility, subject to adjustment based upon the Company's ratio of
funded debt to EBITDA and letter of credit fees equal to .875% per annum based
on the average daily maximum amount available to be drawn on letters of credit
from the date of issuance to the date of expiration, subject to adjustment
under similar circumstances.

Covenants. The Credit Facilities require the Company to meet two financial
tests quarterly, a Funded Debt to EBITDA Ratio and an EBITDA to Interest
Ratio, which tests become increasingly restrictive during the term of the
Credit Facilities. The Credit Facilities also contain covenants which limit,
subject to certain exceptions, (i) the incurrence of additional indebtedness;
(ii) capital expenditures in excess of an aggregate of $36 million in any
fiscal year with a $10 million one-year carry-over; (iii) sale/leaseback
transactions other than those for personal property in an amount of up to $5
million during the term of the Credit Facilities; (iv) declaration or payment
of dividends and stock repurchases, provided that (A) subsequent to the
Company's initial public offering the Company may pay dividends in an amount
of $10 million so long as the Company's leverage ratio is less than or equal
to 2.5 to 1 and (B) net cash proceeds from a public equity offering of the
Company may be used to pay dividends or redeem stock within 60 days of such
public equity offering in such amounts as the Company and the Guarantors may
choose in their sole discretion; (v) loans to and investments in third
parties; (vi) changes to the character of the business of the Company or
Guarantors; (vii) most transactions with affiliates other than on terms
substantially as favorable as would be obtainable in a comparable arm's length
transaction; (viii) sales or leases of assets; (ix) acquisitions; (x) mergers
and consolidations, provided that any of the subsidiaries of the Company may
be merged into one another or into the Company; (xi) prepayments of
subordinated indebtedness; and (xii) liens and encumbrances and other matters
customarily restricted in such agreements. The Credit Facilities also require
the Company to pledge after-acquired assets, including stock of after-acquired
or formed subsidiaries, and to deliver guarantees by wholly owned domestic
subsidiaries, with limited exceptions; to maintain its interest rate
protection agreements in an amount equal to 40% or more of the outstanding
principal amount under the Credit Facilities; and to maintain insurance.

Events of Default. The Credit Facilities contain standard events of default,
including (i) defaults in the payment of principal or interest, (ii) defaults
in the observance of covenants contained in the Credit Facilities and related
documentation, (iii) events which cause the guarantees to cease to be in full
force and effect, (iv) certain bankruptcy events with respect to the Company
and certain of its subsidiaries, (v) cross defaults on at least $5 million of
other indebtedness of the Company or any of its subsidiaries, (vi) judgments,
orders or decrees involving $5 million or more, (vii) certain events related
to ERISA, (viii) events which cause the subordination provisions of certain
subordinated debt to cease to be in full force and effect, and (ix) a change
of control of the Company. After an initial public equity offering of the
Company, a change of control is deemed to occur if,

56
<PAGE>

among other events, any person or group becomes the beneficial owner of 35% or
more of the voting power of the voting stock of the Company on a fully diluted
basis and such person or group is the beneficial owner of a greater percentage
of the voting power of the voting stock than the percentage beneficially owned
by Warburg, NationsBanc Investment Corp. and the Company's senior management.

DESCRIPTION OF THE NOTES

General. The Company issued $165,000,000 of 10 7/8% Senior Subordinated
Notes Due 2006 in connection with the Acquisition pursuant to an Indenture
among the Company, The Knoll Group, Inc., Knoll North America, Inc.,
Spinneybeck Enterprises, Inc. and Knoll Overseas, Inc., as Guarantors, and IBJ
Schroder Bank & Trust Company, as trustee (the "Trustee"). On July 15, 1996,
the Company consummated an offer (the "Exchange Offer") to exchange such notes
for the Notes registered under the Securities Act.

Principal, Maturity and Interest. The Notes are limited in aggregate
principal amount to $165 million and will mature on March 15, 2006. Interest
on the Notes accrues at 10 7/8% per annum and is payable semiannually in
arrears on March 15 and September 15 of each year. Interest is computed on the
basis of a 360-day year comprised of twelve 30-day months.

Note Guarantees. The Notes are unsecured senior subordinated general
obligations of the Company and are unconditionally guaranteed on a senior
subordinated and unsecured basis by each existing and future Domestic
Subsidiary of the Company (the existing and future Domestic Subsidiaries of
the Company are referred to collectively as the "Guarantors").

Subordination. The payment of principal of, premium, if any, and interest on
the Notes and the guarantees thereon are subordinated in right of payment, as
set forth in the Indenture, to the prior payment in full in cash of Senior
Indebtedness of the Company, including borrowings under the Credit Facilities,
whether outstanding on the date of the Indenture or thereafter incurred.

Redemption. The Notes are not redeemable at the Company's option prior to
March 15, 2001. Thereafter, the Notes are subject to redemption at the option
of the Company, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on March 15 of the years indicated below:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001......................................................... 105.438%
2002......................................................... 103.625%
2003......................................................... 101.812%
2004 and thereafter.......................................... 100.000%
</TABLE>

In addition, at any time on or before March 15, 1999, the Company may redeem
up to 35% of the original aggregate principal amount of the Notes with the net
proceeds of a public equity offering at a redemption price equal to 110% of
the principal amount thereof, plus accrued and unpaid interest thereon, if
any, to the date of redemption, provided that at least 65% of the original
aggregate principal amount of the Notes remains outstanding immediately after
such redemption. The Company intends to use a portion of the net proceeds of
the Offerings to redeem Notes in the aggregate principal amount of $57.8
million. See "Use of Proceeds." The Company is not required to make mandatory
redemption or sinking fund payments with respect to the Notes.

Repurchase at the Option of Holders. Each holder of Notes has the right to
require the Company to repurchase all or any part of such holder's Notes at an
offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest thereon upon a change of control of the
Company. After consummation of the Offerings, a change of control for this
purpose means, among other things, (i) a person or group has become the
beneficial owner of 35% or more of the voting power of the voting stock of the
Company, or of such percentage of the voting power than that owned by the
Initial Stockholders (as defined in the Indenture), or (ii) during any period
of two consecutive calendar years, individuals elected to the Board of
Directors of the Company by the Initial Stockholders cease to be a majority of
the directors of the Company then in office.

57
<PAGE>

Covenants. The Indenture restricts, among other things, the Company's
ability to incur additional indebtedness, pay dividends or make certain other
restricted payments, incur liens to secure pari passu or subordinated
indebtedness, engage in any sale and leaseback transaction, sell stock of
subsidiaries, sell assets, merge or consolidate with any other person, sell,
assign, transfer, lease, convey or otherwise dispose of substantially all of
the assets of the Company, enter into certain transactions with affiliates, or
incur indebtedness that is subordinate in right of payment to any senior
indebtedness (including indebtedness incurred under the Credit Facilities and
any other indebtedness permitted to be incurred under the Indenture) and
senior in right of payment to the Notes. The Indenture permits, under certain
circumstances, the Company's subsidiaries to be deemed unrestricted
subsidiaries and thus not subject to the restrictions of the Indenture.

Events of Default. The Indenture contains standard events of default,
including (i) defaults in the payment of principal, premium or interest, (ii)
defaults in the compliance with covenants contained in the Indenture, (iii)
cross defaults on more than $10 million of other indebtedness, (iv) failure to
pay more than $10 million of judgments, and (v) certain events of bankruptcy
with respect to the Company and certain of its subsidiaries.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offerings there has been no market for the shares of the Common
Stock. The Company can make no predictions as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of the Common Stock in the public market, or the perception that such sales
may occur, could adversely affect prevailing market prices. See "Risk
Factors--Shares Eligible for Future Sale; Potential for Adverse Effect on
Stock Price; Registration Rights."

Upon completion of the Offerings, the Company expects to have 39,812,562
shares of Common Stock outstanding (excluding 2,919,665 shares of Common Stock
which have been granted but have not yet vested), assuming no exercise of the
Underwriters' over-allotment options. Of these shares, the 8,000,000 shares of
Common Stock sold in the Offerings will be freely tradable without restriction
under the Securities Act, except for any such shares which may be acquired by
an "affiliate" of the Company (an "Affiliate") as that term is defined in Rule
144 under the Securities Act, which shares will be subject to the resale
limitations of Rule 144.

An aggregate of approximately 31,812,562 shares of Common Stock held by
existing stockholders upon completion of this offering will be "restricted
securities" (as that phrase is defined in Rule 144) and may not be resold in
the absence of registration under the Securities Act or pursuant to exemptions
from such registration, including among others, the exemption provided by Rule
144 under the Securities Act. Upon expiration of the lock-up period described
below, approximately 31,010,274 shares will be eligible for sale in the public
market under Rule 144, subject to the volume limitations and other
restrictions described below.

In general, under Rule 144, if a period of at least one year has elapsed
since the later of the date the "restricted securities" were acquired from the
Company and the date they were acquired from an Affiliate, then the holder of
such restricted securities (including an Affiliate) is entitled to sell a
number of shares within any three-month period that does not exceed the
greater of 1% of the then outstanding shares of the Common Stock
(approximately 398,125 shares immediately after the Offerings) or the average
weekly reported volume of trading of the Common Stock on the NYSE during the
four calendar weeks preceding such sale. The holder may only sell such shares
through unsolicited brokers' transactions. Sales under Rule 144 are also
subject to certain requirements pertaining to the manner of such sales,
notices of such sales and the availability of current public information
concerning the Company. Affiliates may sell shares not constituting restricted
shares in accordance with the foregoing volume limitations and other
requirements but without regard to the one year holding period. Under Rule
144(k), if a period of at least two years has elapsed between the later of the
date restricted securities were acquired from the Company and the date they
were acquired from an Affiliate, as applicable, a holder of such restricted
securities who is not an Affiliate at the time of the sale and has not been an
Affiliate for at least three months prior to the sale would be entitled to
sell the shares immediately without regard to the volume limitations and other
conditions described above.

58
<PAGE>

Subject to the lock-up agreements described below, any employee of the
Company who purchased his or her shares of Common Stock pursuant to a written
compensation plan or contract may be entitled to rely on the resale provisions
of Rule 701 under the Securities Act, which permits nonaffiliates to sell
their Rule 701 shares after 90 days after the initial public offering without
having to comply with the current public information, holding period, volume
limitation or notice provision of Rule 144 and permits affiliates to sell
their Rule 701 shares after 90 days after the initial public offering without
having to comply with Rule 144's holding period restrictions.

The Company intends to file as soon as practicable after the closing of the
Offerings a registration statement on Form S-8 under the Securities Act to
register approximately 6,964,898 shares of Common Stock previously issued as
restricted stock (including 2,919,665 shares which have been granted but not
yet vested) or reserved for issuance (including shares subject to previously
granted options) or sale under the Stock Plans and the Company's employee
stock purchase plan (which may permit the purchase of shares at a discount to
the market price). The Form S-8 will include, in some cases, shares for which
an exemption under Rule 144 or Rule 701 would also be available, thus
permitting the resale of shares issued under the Stock Incentive Plans by non-
affiliates in the public market without restriction under the Securities Act.
Such registration statement is expected to become effective immediately upon
filing, whereupon shares registered thereunder will become eligible for sale
in the public market, subject to vesting and, in certain cases, subject to the
lock-up agreements described below. At the date of this Prospectus, options to
purchase an aggregate of 1,318,552 shares of Common Stock are outstanding
under the Stock Plans.

Notwithstanding the foregoing, in connection with the Offerings, the
Company, its executive officers and directors and all existing stockholders
have agreed, subject to certain exceptions, not to directly or indirectly (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock, whether now owned or thereafter acquired by the person executing
the agreement or with respect to which the person executing the agreement
thereafter acquires the power of disposition, or file a registration statement
under the Securities Act with respect to the foregoing or (ii) enter into any
swap or other agreement that transfers, in whole or in part, the economic
consequence of ownership of the Common Stock whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities,
in cash or otherwise, without the prior written consent of Merrill Lynch on
behalf of the Underwriters for a period of 180 days after the date of this
Prospectus, other than (i) the sale to the Underwriters of the shares of
Common Stock under the Underwriting Agreement, (ii) upon the exercise of
outstanding stock options or (iii) the issuance of options pursuant to the
Stock Plans.

The holders of all shares outstanding prior to the Offerings are entitled to
certain registration rights with respect to their shares. See "Certain
Transactions--Stockholders Agreement."

CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS FOR NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock applicable to Non-U.S. Holders. In general, a "Non-U.S. Holder" is any
holder other than (i) a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in the United States or under
the laws of the United States or of any state, (iii) an estate, the income of
which is includable in gross income for United States federal income tax
purposes regardless of its source, or (iv) a trust if (a) a court within the
United States is able to exercise primary supervision over the administration
of the trust, and (b) one or more United States fiduciaries have the authority
to control all substantial decisions of the trust. This discussion is based on
current law and is for general information only. This discussion does not
address aspects of United States federal taxation other than income and estate
taxation and does not address all aspects of income and estate taxation, nor
does it consider any specific facts or circumstances that may apply to a
particular Non-U.S. Holder (including certain U.S. expatriates).

59
<PAGE>

ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS
REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES INCOME
AND OTHER TAX CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.

An individual may, subject to certain exceptions, be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States for at least 31 days in the calendar year and for an aggregate
of at least 183 days during a three year period ending in the current calendar
year (counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second preceding year). In addition to the
"substantial presence test" described in the immediately preceding sentence,
an alien may be treated as a resident alien if he (i) meets a lawful permanent
residence test (a so-called "green card" test) or (ii) elects to be treated as
a U.S. resident and meets the "substantial presence test" in the immediately
following year. Resident aliens are subject to U.S. federal tax as if they
were U.S. citizens.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively
connected with a trade or business carried on by the Non-U.S. Holder within
the United States, or (ii) if certain income tax treaties apply, attributable
to a permanent establishment in the United States maintained by the Non-U.S.
Holder. Dividends effectively connected with such a United States trade or
business or attributable to such a United States permanent establishment
generally will not be subject to United States withholding tax (if the Non-
U.S. Holder files certain forms, including Internal Revenue Service Form 4224,
with the payor of the dividend) and generally will be subject to United States
federal income tax on a net income basis, in the same manner as if the Non-
U.S. Holder were a resident of the United States. A Non-U.S. Holder that is a
corporation may be subject to an additional branch profits tax at a rate of
30% (or such lower rate as may be specified by an applicable treaty) on the
repatriation from the United States of its "effectively connected earnings and
profits," subject to certain adjustments. To determine the applicability of a
tax treaty providing for a lower rate of withholding, dividends paid to an
address in a foreign country are presumed under current Treasury regulations
to be paid to a resident of that country absent knowledge to the contrary.
Proposed Treasury regulations, which are proposed to be effective for payments
made after December 31, 1997, however, generally would require Non-U.S.
Holders to file an I.R.S. Form W-8 to obtain the benefit of any applicable tax
treaty providing for a lower rate of withholding tax on dividends. A Non-U.S.
Holder that is eligible for a reduced rate of U.S. withholding tax pursuant to
a tax treaty may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund with the Internal Revenue Service.

SALE OF COMMON STOCK

In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the disposition of such holder's shares
of Common Stock unless (i) the gain either is effectively connected with a
trade or business carried on by the Non-U.S. Holder within the United States
or, alternatively, if certain tax treaties apply, is attributable to a
permanent establishment in the United States maintained by the Non-U.S. Holder
(and, in either case, the branch profits tax discussed above may also apply if
the Non-U.S. Holder is a corporation); (ii) the Non-U.S. Holder is an
individual who holds shares of Common Stock as a capital asset and is present
in the United States for 183 days more in the taxable year of disposition, and
either (a) such individual has a "tax home" (as defined for United States
federal income tax purposes) in the United States (unless the gain from the
disposition is attributable to an office or other fixed place of business
maintained by such Non-U.S. Holder in a foreign country and such gain has been
subject to a foreign income tax equal to at least 10% of the gain derived from
such disposition), or (b) the gain is attributable to an office or other fixed
place of business maintained by such individual in the United States; or (iii)
the Company is or has been a United States real property holding corporation
(a "USRPHC") for United States federal income tax purposes (which the Company
does not believe that it is or is likely to become) at any time within the
shorter of the five year period preceding such disposition or such Non-U.S.
Holder's holding period. If the Company were or were to become a USRPHC

60
<PAGE>

at any time during this period, gains realized upon a disposition of Common
Stock by a Non-U.S. Holder which did not directly or indirectly own more than
5% of the Common Stock during this period generally would not be subject to
United States federal income tax, provided that the Common Stock is regularly
traded on an established securities market.

ESTATE TAX

Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as defined for United States federal estate tax purposes) of the
United States at the time of death will be includable in the individual's
gross estate for United States federal estate tax purposes (unless an
applicable estate tax treaty provides otherwise), and therefore may be subject
to United States federal estate tax.

BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS

The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply
regardless of whether withholding was reduced or eliminated by an applicable
tax treaty. Copies of this information also may be made available under the
provisions of a specific treaty or agreement with the tax authorities in the
country in which the Non-U.S. Holder resides or is established.

United States backup withholding tax (which generally is imposed at the rate
of 31% on certain payments to persons that fail to furnish the information
required under the United States information reporting requirements) and
information reporting requirements (other than those discussed above under
"Dividends") generally will not apply to dividends paid on Common Stock to a
Non-U.S. Holder at an address outside the United States. Backup withholding
and information reporting generally will apply, however, to dividends paid on
shares of Common Stock to a Non-U.S. Holder at an address in the United
States, if such holder fails to establish an exemption or to provide certain
other information to the payor.

The payment of proceeds from the disposition of Common Stock or through a
United States office of a broker will be subject to information reporting and
backup withholding unless the owner, under penalties of perjury, certifies,
among other things, its status as a Non-U.S. Holder or otherwise establishes
an exemption. The payment of proceeds from the disposition of Common Stock to
or through a non-U.S. office of a non-U.S. broker generally will not be
subject to backup withholding and information reporting except as noted below.
In the case of proceeds from a disposition of Common Stock paid to or through
a non-U.S. office of a broker that is (i) a United States person, (ii) a
"controlled foreign corporation" for United States federal income tax purposes
or (iii) a foreign person 50% or more of whose gross income from certain
periods is effectively connected with a United States trade or business,
information reporting (but not backup withholding) will apply unless the
broker has documentary evidence in its files that the owner is a Non-U.S.
Holder (and the broker has not actual knowledge to the contrary). Proposed
regulations state that backup withholding will not apply to such payments
unless the broker has actual knowledge that the payee is a U.S. person.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded
or credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
Internal Revenue Service.

61
<PAGE>

UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Credit
Suisse First Boston Corporation, Goldman, Sachs & Co. and Morgan Stanley & Co.
Incorporated are acting as representatives (the "U.S. Representatives") of
each of the Underwriters named below (the "U.S. Underwriters"). Subject to the
terms and conditions set forth in a U.S. purchase agreement (the "U.S.
Purchase Agreement") among the Company, the Selling Stockholder and the U.S.
Underwriters, and concurrently with the sale of 1,600,000 shares of Common
Stock to the International Managers (as defined below), the Company has agreed
to sell to the U.S. Underwriters, and each of the U.S. Underwriters severally
has agreed to purchase from the Company, the number of shares of Common Stock
set forth opposite its name below.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER SHARES
---------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................................
Credit Suisse First Boston Corporation.............................
Goldman, Sachs & Co. ..............................................
Morgan Stanley & Co. Incorporated..................................
---------
Total......................................................... 6,400,000
=========
</TABLE>

The Company and the Selling Stockholder have also entered into an
international purchase agreement (the "International Purchase Agreement") with
certain underwriters outside the United States and Canada (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters") for
whom Merrill Lynch International, Credit Suisse First Boston (Europe) Limited,
Goldman Sachs International and Morgan Stanley & Co. International Limited are
acting as lead managers (the "Lead Managers"). Subject to the terms and
conditions set forth in the International Purchase Agreement, and concurrently
with the sale of 6,400,000 shares of Common Stock to the U.S. Underwriters
pursuant to the U.S. Purchase Agreement, the Company has agreed to sell to the
International Managers, and the International Managers severally have agreed
to purchase from the Company, an aggregate of 1,600,000 shares of Common
Stock. The initial public offering price per share and the total underwriting
discount per share of Common Stock are identical under the U.S. Purchase
Agreement and the International Purchase Agreement.

In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant
to such agreement are purchased. The closings with respect to the sale of
shares of Common Stock to be purchased by the U.S. Underwriters and the
International Managers are conditioned upon one another.

The U.S. Representatives have advised the Company and the Selling
Stockholder that the U.S. Underwriters propose initially to offer the shares
of Common Stock to the public at the initial public offering price set forth
on the cover page of this Prospectus, and to certain dealers at such price
less a concession not in excess of $ per share of Common Stock. The U.S.
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per share of Common Stock on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount
may be changed.

The Company and the Selling Stockholder have granted options to the U.S.
Underwriters, exercisable for 30 days after the date of this Prospectus, to
purchase up to an aggregate of 960,000 additional shares of Common Stock at
the initial public offering price set forth on the cover page of this
Prospectus, less the underwriting discount. The U.S. Underwriters may exercise
these options only to cover over-allotments, if any, made on the sale of the
Common Stock offered hereby. To the extent that the U.S. Underwriters exercise
these options, each

62
<PAGE>

U.S. Underwriter will be obligated, subject to certain conditions, to purchase
a number of additional shares of Common Stock proportionate to such U.S.
Underwriter's initial amount reflected in the foregoing table. The Company and
the Selling Stockholder also have granted options to the International
Managers, exercisable for 30 days after the date of this Prospectus, to
purchase up to an aggregate of 240,000 additional shares of Common Stock to
cover over-allotments, if any, on terms similar to those granted to the U.S.
Underwriters.

At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 5% of the shares to be sold and
offered hereby by the Company to certain dealers of the Company. The number of
shares of Common Stock available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares. Any reserved
shares which are not orally confirmed for purchase within one day of the
pricing of the Offerings will be offered by the Underwriters to the general
public on the same terms as the other shares offered hereby.

The Company, its executive officers and directors and all existing
stockholders have agreed, subject to certain exceptions, not to directly or
indirectly (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or thereafter acquired by the
person executing the agreement or with respect to which the person executing
the agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the foregoing
or (ii) enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the Common Stock whether any
such swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, without the prior written consent of Merrill
Lynch on behalf of the Underwriters for a period of 180 days after the date of
this Prospectus. See "Shares Eligible for Future Sale."

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted
to sell shares of Common Stock to each other for purposes of resale at the
initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are non-U.S. or
non-Canadian persons or to persons they believe intend to resell to persons
who are non-U.S. or non-Canadian persons, and the International Managers and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to U.S. persons or to Canadian persons or to
persons they believe intend to resell to U.S. or Canadian persons, except in
the case of transactions pursuant to the Intersyndicate Agreement.

Prior to the Offerings, there has been no public market for the Common Stock
of the Company. The initial public offering price will be determined through
negotiations among the Company, the Selling Stockholder and the U.S.
Representatives and the Lead Managers. The factors considered in determining
the initial public offering price, in addition to prevailing market
conditions, are price-earnings ratios of publicly traded companies that the
U.S. Representatives believe to be comparable to the Company, certain
financial information of the Company, the history of, and the prospects for,
the Company and the industry in which it competes, and an assessment of the
Company's management, its past and present operations, the prospects for, and
timing of, future revenues of the Company, the present state of the Company's
development, and the above factors in relation to market values and various
valuation measures of other companies engaged in activities similar to the
Company. There can be no assurance that an active trading market will develop
for the Common Stock or that the Common Stock will trade in the public market
subsequent to the Offerings at or above the initial public offering price.

The Common Stock has been approved for listing on the New York Stock
Exchange, subject to notice of issuance, under the symbol "KNL." In order to
meet the requirements for listing of the Common Stock on that exchange, the
U.S. Underwriters and International Managers have undertaken to sell lots of
100 or more shares to a minimum of 2,000 beneficial owners.

63
<PAGE>

The Underwriters do not intend to confirm sales of the Common Stock offered
hereby to any accounts over which they exercise discretionary authority.

The Company and the Selling Stockholder have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including certain liabilities under the Securities Act.

Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters
and certain selling group members to bid for and purchase the Common Stock. As
an exception to these rules, the U.S. Representatives are permitted to engage
in certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Common Stock in
the open market. The U.S. Representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described
above.

The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase shares of Common Stock in the open market to reduce
the Underwriters' short position or to stabilize the price of the Common
Stock, they may reclaim the amount of the selling concession from the
Underwriters and selling group members who sold those shares as part of the
Offerings.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the U.S. Representatives will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.

Each of the representatives of the Underwriters purchases or has purchased
furniture from the Company in the ordinary course of business on an arm's-
length basis.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Willkie Farr &
Gallagher, New York, New York. Certain legal matters relating to the Offerings
will be passed upon for the Underwriters by Fried, Frank, Harris, Shriver &
Jacobson (a partnership including professional corporations), New York, New
York.

EXPERTS

The consolidated financial statements of Knoll, Inc. at December 31, 1996
and for the ten month period then ended and the consolidated financial
statements of the Predecessor for the two month period ended February 29,
1996, appearing in this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent accountants, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing. The consolidated financial statements of The Knoll Group, Inc. as of
December 31, 1995 and for each of the two years in the period ended December
31, 1995 included in this Prospectus have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.

64
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-1 with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement in accordance with the rules and regulations of the
Commission. For further information pertaining to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement,
including the exhibits thereto and the financial statements, notes and
schedule filed as a part thereof. The Registration Statement may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
Regional Offices in New York (Seven World Trade Center, New York, New York
10007) and Chicago (Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661). Copies of such material can be obtained from the
public reference section of the Commission at prescribed rates by writing to
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such materials can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
or on the Commission's site on the Internet at http://www.sec.gov.

65
<PAGE>

KNOLL, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets at March 31, 1997 and December 31,
1996..................................................................... F-2
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1997, the one month ended March 31, 1996 and the two months
ended February 29, 1996 (Predecessor).................................... F-3
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1997, the one month ended March 31, 1996 and the two months
ended February 29, 1996 (Predecessor).................................... F-4
Notes to the Condensed Consolidated Financial Statements.................. F-5
AUDITED FINANCIAL STATEMENTS
Reports of Independent Auditors........................................... F-8
Consolidated Balance Sheets at December 31, 1996 and 1995 (Predecessor)... F-10
Consolidated Statements of Operations for the Ten Months Ended December
31, 1996, the Two Months Ended February 29, 1996 (Predecessor) and the
Years Ended December 31, 1995 and 1994 (Predecessor)..................... F-11
Consolidated Statements of Cash Flows for the Ten Months Ended December
31, 1996, the Two Months Ended February 29, 1996 (Predecessor) and the
Years Ended December 31, 1995 and 1994 (Predecessor)..................... F-12
Consolidated Statements of Changes in Stockholders' Equity for the Ten
Months Ended December 31, 1996, the Two Months Ended February 29, 1996
(Predecessor) and the Years Ended December 31, 1995 and 1994
(Predecessor)............................................................ F-13
Notes to the Consolidated Financial Statements............................ F-14
PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Financial Information................................. P-1
Unaudited Pro Forma Consolidated Income Statement for the Year Ended
December 31, 1996........................................................ P-2
Unaudited Pro Forma Consolidated Income Statement for the Three Months
Ended March 31, 1997..................................................... P-3
Unaudited Pro Forma Consolidated Income Statement for the Three Months
Ended March 31, 1996..................................................... P-4
Notes to Unaudited Pro Forma Financial Information........................ P-5
</TABLE>

F-1
<PAGE>

KNOLL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
MARCH 31, MARCH 31, DECEMBER 31,
1997 1997 1996
--------- --------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 11,064 $ 11,064 $ 8,804
Customer receivables, net................... 105,478 105,478 111,166
Inventories................................. 61,033 61,033 57,811
Deferred income taxes....................... 19,010 19,010 17,474
Prepaid and other current assets............ 4,914 4,914 7,424
-------- -------- --------
Total current assets...................... 201,499 201,499 202,679
Property, plant, and equipment at cost........ 196,726 196,726 195,483
Accumulated depreciation...................... (25,826) (25,826) (19,265)
-------- -------- --------
Property, plant and equipment, net........ 170,900 170,900 176,218
Intangible assets at cost..................... 293,206 293,206 293,753
Accumulated amortization...................... (8,873) (8,873) (6,813)
-------- -------- --------
Intangible assets, net.................... 284,333 284,333 286,940
Other noncurrent assets....................... 5,302 5,302 9,875
-------- -------- --------
Total Assets.............................. $662,034 $662,034 $675,712
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........ $ 15,238 $ 15,238 $ 23,265
Accounts payable............................ 50,226 50,226 50,250
Income taxes payable........................ 4,292 4,292 388
Other current liabilities................... 54,027 54,027 64,022
-------- -------- --------
Total current liabilities................. 123,783 123,783 137,925
Long-term debt................................ 320,796 320,796 330,889
Postretirement benefits obligation............ 16,193 16,193 15,873
Other noncurrent liabilities.................. 13,888 13,888 13,221
Series A 12% Participating Convertible Stock
to be redeemed; 800,000 shares; liquidation
value at $100 per share...................... -- 80,000 --
-------- -------- --------
Total liabilities......................... 474,660 554,660 497,908
-------- -------- --------
Stockholders' equity:
Preferred stock, $1.00 par value; 10,000,000
shares authorized; 1,602,998 shares issued
and outstanding actual..................... 1,603 -- 1,603
Common stock, $0.01 par value; 100,000,000
shares authorized; 7,291,308 shares issued
and outstanding actual and 34,732,227
shares issued and outstanding pro forma ... 73 347 73
Additional paid-in-capital.................. 160,147 81,476 160,147
Unearned stock grant compensation........... (1,381) (1,381) (1,387)
Retained earnings........................... 28,474 28,474 16,836
Cumulative foreign currency translation
adjustment................................. (1,542) (1,542) 532
-------- -------- --------
Total stockholders' equity................ 187,374 107,374 177,804
-------- -------- --------
Total Liabilities and Stockholders'
Equity................................... $662,034 $662,034 $675,712
======== ======== ========
</TABLE>

See accompanying notes.

F-2
<PAGE>

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THE KNOLL GROUP, INC.
THREE MONTHS ONE MONTH (PREDECESSOR)
ENDED ENDED TWO MONTHS ENDED
MARCH 31, MARCH 31, FEBRUARY 29,
1997 1996 1996
------------ --------- ---------------------
<S> <C> <C> <C>
Sales............................................................................ $177,833 $48,080 $ 90,232
Cost of sales.................................................................... 109,859 32,543 59,714
-------- ------- --------
Gross profit..................................................................... 67,974 15,537 30,518
Selling, general and administrative expenses..................................... 40,058 10,999 21,256
Westinghouse long-term incentive compensation.................................... -- -- 47,900
Allocated corporate expenses..................................................... -- -- 921
-------- ------- --------
Operating income (loss).......................................................... 27,916 4,538 (39,559)
Interest expense................................................................. 7,742 3,602 340
Other expense, net............................................................... 74 49 296
-------- ------- --------
Income (loss) before income tax expense (benefit)................................ 20,100 887 (40,195)
Income tax expense (benefit)..................................................... 8,462 438 (16,107)
-------- ------- --------
Net income (loss)................................................................ $ 11,638 $ 449 $(24,088)
-------- ------- --------
Earnings per share (see Note 4):
Pro forma net income per share of Common Stock................................... $ .33 $ .01
======== =======
Pro forma weighted average shares of Common Stock
outstanding..................................................................... 35,030 35,030
- --------------------------------------------------
======== =======
</TABLE>

See accompanying notes.

F-3
<PAGE>

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THE KNOLL GROUP, INC.
THREE MONTHS ONE MONTH (PREDECESSOR)
ENDED ENDED TWO MONTHS ENDED
MARCH 31, MARCH 31, FEBRUARY 29,
1997 1996 1996
------------ --------- ---------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)............................................................... $ 11,638 $ 449 $(24,088)
Noncash items included in income:
Depreciation and amortization................................................. 8,693 2,903 4,317
Other......................................................................... 81 -- --
Changes in assets and liabilities:
Customer receivables.......................................................... 4,693 (3,684) 8,798
Inventories................................................................... (3,845) 2,656 671
Accounts payable.............................................................. 1,053 (2,853) (15,292)
Current and deferred incomes taxes............................................ 6,830 873 (16,627)
Other current assets and liabilities.......................................... (9,686) 3,807 (4,907)
Other noncurrent assets and liabilities....................................... 4,470 (330) (6,911)
-------- --------- --------
Cash provided by (used in) operating activities................................. 23,927 3,821 (54,039)
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of the Company from Westinghouse.................................... -- (579,801)
Purchases of property, plant and equipment...................................... (2,844) (447) (2,296)
Proceeds from sale of assets.................................................... 33 -- --
-------- --------- --------
Cash used in investing activities............................................... (2,811) (580,248) (2,296)
-------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term debt.................................................... -- -- (3,805)
Proceeds from long-term debt.................................................... 2,500 425,000 --
Repayment of long-term debt..................................................... (20,500) -- --
Issuance of stock............................................................... -- 160,000 --
Net receipts from (payments to) parent company.................................. -- -- 60,848
-------- --------- --------
Cash provided by (used in) financing activities................................. (18,000) 585,000 57,043
-------- --------- --------
Effect of exchange rate changes on cash and cash equivalents.................... (856) 379 58
-------- --------- --------
Increase (decrease) in cash and cash equivalents................................ 2,260 8,952 766
Cash and cash equivalents at beginning of period................................ 8,804 2,335 1,569
-------- --------- --------
Cash and cash equivalents at end of period...................................... $ 11,064 $ 11,287 $ 2,335
- --------------------------------------------------
======== ========= ========
</TABLE>

See accompanying notes.

F-4
<PAGE>

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited, condensed consolidated financial statements of
Knoll, Inc. (the Company) and The Knoll Group, Inc. (the Predecessor) have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X, and therefore do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation are reflected in the condensed consolidated financial
statements. The condensed consolidated balance sheet as of December 31, 1996
and the condensed consolidated statement of operations and condensed
consolidated statement of cash flows for the two months ended February 29,
1996 are derived from audited financial statements. The condensed consolidated
financial statements and notes thereto should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Company's
annual report on Form 10-K for the year ended December 31, 1996. The results
of operations for the three months ended March 31, 1997 are not necessarily
indicative of the results to be expected for the full year ending December 31,
1997.

2. ACQUISITION OF KNOLL

On December 20, 1995, Westinghouse Electric Corporation (Westinghouse)
entered into a Stock Purchase Agreement (the Agreement) with T.K.G.
Acquisition Corp. (TKG), a subsidiary of Warburg, Pincus Ventures, L.P. Under
the terms of the Agreement, TKG acquired all of the outstanding capital stock
of The Knoll Group, Inc. and related entities on February 29, 1996 through its
wholly owned subsidiary T.K.G. Acquisition Sub, Inc. Immediately following
this transaction, T.K.G. Acquisition Sub, Inc. and The Knoll Group, Inc.
merged with and into Knoll North America, Inc., the principal United States
(U.S.) operating company of The Knoll Group, Inc. Knoll North America, Inc.
changed its name to Knoll, Inc. at the time of the merger. On March 14, 1997,
Knoll, Inc. merged with and into TKG. TKG then changed its name to Knoll, Inc.

3. PRO FORMA BALANCE SHEET

The unaudited pro forma balance sheet at March 31, 1997 reflects the assumed
redemption and conversion of the preferred stock for cash and shares of common
stock upon consummation of the initial public offering.

4. SHARE AND PER SHARE AMOUNTS

All numbers of shares of Common Stock and per share amounts have been
adjusted to give retroactive effect to the 3.13943-for-1 stock split as
discussed in Note 23 to the audited financial statements appearing elsewhere
in this registration statement.

Because of the significance of the redemption and conversion into Common
Stock of the outstanding Series A Preferred Stock upon consummation of the
initial public offering (IPO), historical net income (loss) per share is not
presented herein. Pro forma net income per share amounts are based on the
weighted average number of shares of Common Stock and Common Stock equivalents
(employee stock options) outstanding during the period, after giving effect to
the redemption and conversion into Common Stock of the Series A Preferred
Stock assuming such redemption and conversion had occurred at the beginning of
each period presented. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 83, all Common Stock and options to purchase Common
Stock issued at prices below the initial public offering price per share
during the twelve month period immediately preceding the initial filing date
of the Company's registration statement for the offerings have been included
as outstanding for all periods presented (using the treasury stock method at
the assumed initial public offering price).

F-5
<PAGE>

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997
(UNAUDITED)

5. CAPITAL STRUCTURE

On May 6, 1997, the Company's Certificate of Incorporation was amended to
increase the number of authorized shares of common stock from 24,000,000 to
100,000,000, increase the number of authorized shares of preferred stock from
3,000,000 to 10,000,000 and effect a 3.13943-for-1 split of common stock
whereby each share of common stock was exchanged for 3.13943 shares of common
stock. The amendment to the Certificate of Incorporation had no effect on the
par value of the common or preferred stock. Fractional shares resulting from
the common stock split will be settled in cash.

6. INVENTORIES

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
Raw materials..................................... $35,969 $34,147
Work in process................................... 7,488 7,508
Finished goods.................................... 17,576 16,156
------- -------
Inventories....................................... $61,033 $57,811
======= =======
</TABLE>

7. DIVIDENDS IN ARREARS

Dividends on the Series A 12% Participating Convertible Preferred Stock
(Series A Preferred Stock) are fully cumulative, accrue on a quarterly basis
at a rate of $12 per annum and are payable only at the discretion of the Board
of Directors. Upon conversion of Series A Preferred Stock to common stock, the
holders lose their right to any dividends, including dividends in arrears. As
of March 31, 1997 and December 31, 1996, the aggregate amount of cumulative
dividends in arrears was $21.9 million and $16.6 million, respectively, and
the per share amount was $13.66 and $10.36, respectively.

8. WESTINGHOUSE LONG-TERM INCENTIVE COMPENSATION

Certain key executives of the Predecessor were participants in a long-term
incentive compensation plan established by Westinghouse. The consummation of
the acquisition of the Predecessor from Westinghouse triggered the payment of
awards and established the amounts of payments due under the plan.
Consequently, a charge to operations of $47.9 million was recognized for the
two months ended February 29, 1996.

9. STOCK INCENTIVE PLANS

On February 14, 1997, the Company established the Knoll, Inc. 1997 Stock
Incentive Plan (the 1997 Stock Plan). Under the 1997 Stock Plan, awards
denominated or payable in shares or options to purchase shares of the
Company's common stock may be granted to officers and other key employees of
the Company. A combined maximum of 1,255,772 shares or options to purchase
shares may be granted under the 1997 Stock Plan. The 1997 Stock Plan provides
for the issuance of discounted options as well as repricing of options. A
Stock Plan Committee of the Company's Board of Directors has sole discretion
concerning administration of the 1997 Stock Plan, including selection of
individuals to receive awards, types of awards, the terms and conditions of
the awards and the time at which awards will be granted. The Board of
Directors may amend or terminate the 1997 Stock Plan at its discretion at any
time.

F-6
<PAGE>

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997
(UNAUDITED)
On March 7, 1997, the Company granted 753,456 options to purchase shares
under the 1997 Plan in addition to granting the remaining 565,096 shares
available under the Knoll, Inc. 1996 Stock Incentive Plan in the form of
options. The exercise price of these options is $15.93 per share.

10. INITIAL PUBLIC OFFERING

On April 18, 1997, April 30, 1997 and May 6, 1997, the Company filed
amendments to its registration statement on Form S-1 with the Securities and
Exchange Commission in anticipation of a possible public offering of common
stock. In connection with the possible public offering, a portion of the
Series A Preferred Stock will be redeemed and the remaining shares of Series A
Preferred Stock will be converted into shares of common stock. If the public
offering is completed, the net proceeds, from the sale of 8,000,000 shares of
common stock are estimated to be $152.7 million after deducting related
expenses. The estimated net proceeds will be used (i) to redeem a portion of
the Series A Preferred Stock for $80.0 million, (ii) to redeem an aggregate
principal amount of $57.8 million of the Company's 10.875% senior subordinated
notes for a total redemption price of $65.1 million, including a redemption
premium of $5.7 million and accrued and unpaid interest thereon of $1.6
million and (iii) to the extent available, to repay $7.6 million of
indebtedness under the Company's revolving loans and/or to fund general
working capital needs or retire additional debt. The redemption premium of
$5.7 million, along with the write-off of unamortized financing costs of $3.5
million associated with the redemption of the senior subordinated notes will
result in an extraordinary loss, net of taxes, of $5.6 million. In addition,
in connection with the initial public offering, the Company expects to grant
each of its two new directors options to purchase 25,000 shares of common
stock at an exercise price equal to the initial public offering price. Such
options will vest in five installments commencing upon grant.

F-7
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Knoll, Inc.

We have audited the accompanying consolidated balance sheet of Knoll, Inc. as
of December 31, 1996 and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the ten month period ended
December 31, 1996 (post-acquisition period), and the consolidated statements of
operations, changes in stockholders' equity and cash flows of The Knoll Group,
Inc. (Predecessor) for the two month period ended February 29, 1996 (pre-
acquisition period). Our audits also included the financial statement schedule
(as it pertains to 1996) as listed in the Index at Item 16(b). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the 1996 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Knoll, Inc. at December 31, 1996, and the consolidated results of its
operations and its cash flows for the post-acquisition period in conformity
with generally accepted accounting principles. Further, in our opinion, the
aforementioned Predecessor consolidated financial statements present fairly, in
all material respects, the consolidated results of operations and cash flows of
the Knoll Group, Inc. for the pre-acquisition period in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic 1996
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

March 14, 1997, except for Note 23,
as to which the date is May 6, 1997.

F-8
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Knoll, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, cash flows and changes in stockholders'
equity present fairly, in all material respects, the financial position of The
Knoll Group, Inc., an organizational unit of Westinghouse Electric Corporation
(Westinghouse), at December 31, 1995, and the results of their operations,
cash flows and changes in stockholders' equity for each of the two years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Westinghouse's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance that the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

The Knoll Group, Inc. is a business unit of Westinghouse for each of the two
years ended December 31, 1995 and, as disclosed in Note 4 to the accompanying
financial statements, engaged in various transactions and relationships with
other Westinghouse entities.

/s/ Price Waterhouse LLP

Pittsburgh, Pennsylvania
January 15, 1996

F-9
<PAGE>

KNOLL, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
THE KNOLL GROUP, INC.
ACTUAL (PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ---------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................... $ 8,804 $ 1,569
Customer receivables, net............................................................... 111,166 114,592
Inventories............................................................................. 57,811 59,643
Deferred income taxes................................................................... 17,474 18,273
Prepaid and other current assets........................................................ 7,424 8,465
-------- --------
Total current assets.................................................................. 202,679 202,542
Property, plant, and equipment............................................................ 176,218 164,633
Intangible assets......................................................................... 286,940 240,772
Prepaid pension cost...................................................................... -- 45,161
Other noncurrent assets................................................................... 9,875 3,602
-------- --------
Total Assets.......................................................................... $675,712 $656,710
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt......................................................................... $ -- $ 1,496
Current maturities of long-term debt.................................................... 23,265 3,287
Accounts payable--trade................................................................. 50,250 45,850
Accounts payable--related parties....................................................... -- 413
Income taxes payable.................................................................... 388 13,973
Accrued restructuring costs............................................................. 1,979 10,868
Other current liabilities............................................................... 62,043 43,957
-------- --------
Total current liabilities............................................................. 137,925 119,844
Long-term debt............................................................................ 330,889 251
Deferred income taxes..................................................................... 1,931 29,574
Postretirement benefits obligation........................................................ 15,873 20,593
Other noncurrent liabilities.............................................................. 11,290 5,997
-------- --------
Total liabilities..................................................................... 497,908 176,259
-------- --------
Stockholders' equity:
Preferred stock; $1.00 par value; authorized 10,000,000 shares, issued and outstanding
1,602,998 shares....................................................................... 1,603 --
Common stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding
7,291,308 shares....................................................................... 73 --
Additional paid-in-capital.............................................................. 160,147 --
Unearned stock grant compensation....................................................... (1,387) --
Retained earnings....................................................................... 16,836 --
Parent company investment............................................................... -- 503,317
Cumulative foreign currency translation adjustment...................................... 532 (22,866)
-------- --------
Total stockholders' equity............................................................ 177,804 480,451
-------- --------
Total Liabilities and Stockholders' Equity............................................ $675,712 $656,710
- --------------------------------------------------
======== ========
</TABLE>

See accompanying notes to the consolidated financial statements.

F-10
<PAGE>

KNOLL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to the consolidated financial statements.

F-11
<PAGE>

KNOLL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THE KNOLL
GROUP, INC.
(PREDECESSOR) THE KNOLL GROUP, INC.
TEN MONTHS TWO MONTHS (PREDECESSOR)
ENDED ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, FEBRUARY 29, -------------------------
1996 1996 1995 1994
-------------- ------------- ----------- ------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)..................................................... $ 16,836 $ (24,088) $ 29,332 $ (59,773)
Noncash items included in income:
Depreciation........................................................ 19,251 3,150 19,006 21,478
Amortization of intangible assets................................... 7,881 1,167 6,993 7,006
Loss on disposal of assets.......................................... 87 -- -- --
Extraordinary loss.................................................. 8,542 -- -- --
Noncash restructuring charges....................................... -- -- -- 9,367
Foreign currency transaction loss................................... 354 -- -- --
Changes in assets and liabilities:
Customer receivables................................................ (5,110) 8,798 (5,850) (11,269)
Inventories......................................................... 1,416 671 (76) (9,619)
Accounts payable.................................................... 15,870 (15,292) (7,005) 18,533
Current and deferred income taxes................................... (3,961) (16,627) 13,185 2,186
Other current assets................................................ 747 2,283 453 (1,186)
Other current liabilities........................................... 18,372 (7,190) (23,177) 16,951
Other noncurrent assets and liabilities............................. 9,217 (6,911) 19,003 2,542
--------- --------- ----------- ------------
Cash provided by (used in) operating activities....................... 89,502 (54,039) 51,864 (3,784)
--------- --------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of the company from Westinghouse.......................... (579,801) -- -- --
Capital expenditures.................................................. (15,255) (2,296) (19,334) (20,157)
Proceeds from sale of assets.......................................... 218 -- 316 332
--------- --------- ----------- ------------
Cash used in investing activities..................................... (594,838) (2,296) (19,018) (19,825)
--------- --------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term debt, net..................................... (1,483) (3,805) (20,961) (2,758)
Proceeds from long-term debt.......................................... 615,000 -- -- --
Repayment of long-term debt........................................... (262,130) -- (8,913) (2,753)
Issuance of stock..................................................... 160,400 -- -- --
Net receipts from (payments to) parent company........................ -- 60,848 (6,900) 33,836
--------- --------- ----------- ------------
Cash provided by (used in) financing activities....................... 511,787 57,043 (36,774) 28,325
--------- --------- ----------- ------------
Effect of exchange rate changes on cash and cash equivalents.......... 18 58 13 (1,996)
--------- --------- ----------- ------------
Increase (decrease) in cash and cash equivalents...................... 6,469 766 (3,915) 2,720
Cash and cash equivalents at beginning of period...................... 2,335 1,569 5,484 2,764
--------- --------- ----------- ------------
Cash and cash equivalents at end of period............................ $ 8,804 $ 2,335 $ 1,569 $ 5,484
- --------------------------------------------------
========= ========= =========== ============
</TABLE>

See accompanying notes to the consolidated financial statements.

F-12
<PAGE>

KNOLL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
THE KNOLL
GROUP, INC.
(PREDECESSOR) THE KNOLL GROUP, INC.
TEN MONTHS TWO MONTHS (PREDECESSOR)
ENDED ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, FEBRUARY 29, ------------------------
1996 1996 1995 1994
------------------ ------------- ----------- -----------
(IN THOUSANDS,
EXCEPT SHARE DATA) (IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
PREFERRED STOCK
Balance at beginning of period (1,599,000 shares)................... $ 1,599 $ -- $ -- $ --
Shares issued (3,998 shares)........................................ 4 -- -- --
--------- --------- ----------- -----------
Balance at end of period............................................ 1,603 -- -- --
--------- --------- ----------- -----------
COMMON STOCK
Balance at beginning of period (3,139,430 shares)................... 31 -- -- --
Shares issued under the Stock Incentive Plan (4,144,030 shares)..... 42 -- -- --
--------- --------- ----------- -----------
Balance at end of period............................................ 73 -- -- --
--------- --------- ----------- -----------
ADDITIONAL PAID-IN-CAPITAL
Balance at beginning of period...................................... 158,370 -- -- --
Shares issued....................................................... 396 -- -- --
Shares issued under the Stock Incentive Plan........................ 1,381 -- -- --
--------- --------- ----------- -----------
Balance at end of period............................................ 160,147 -- -- --
--------- --------- ----------- -----------
UNEARNED STOCK GRANT COMPENSATION
Balance at beginning of period...................................... -- -- -- --
Shares issued under the Stock Incentive Plan........................ (1,522) -- -- --
Earned stock grant compensation..................................... 135 -- -- --
--------- --------- ----------- -----------
Balance at end of period............................................ (1,387) -- -- --
--------- --------- ----------- -----------
RETAINED EARNINGS
Balance at beginning of period...................................... -- -- -- --
Net income.......................................................... 16,836 -- -- --
--------- --------- ----------- -----------
Balance at end of period............................................ 16,836 -- -- --
--------- --------- ----------- -----------
PARENT COMPANY INVESTMENT
Balance at beginning of period...................................... -- 503,317 480,885 506,822
Net income (loss)................................................... -- (24,088) 29,332 (59,773)
Capital expenditures................................................ -- 2,296 19,334 20,157
Proceeds from asset sales........................................... -- -- (316) (332)
Net interunit transactions.......................................... -- 58,552 (25,918) 14,011
--------- --------- ----------- -----------
Balance at end of period............................................ -- 540,077 503,317 480,885
--------- --------- ----------- -----------
CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENT
Balance at beginning of period...................................... -- (22,866) (22,879) (20,883)
Translation adjustment.............................................. 532 58 13 (1,996)
--------- --------- ----------- -----------
Balance at end of period............................................ 532 (22,808) (22,866) (22,879)
--------- --------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY.......................................... $ 177,804 $ 517,269 $ 480,451 $ 458,006
- --------------------------------------------------
========= ========= =========== ===========
</TABLE>

See accompanying notes to the consolidated financial statements.

F-13
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

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

The Company was formed on February 29, 1996 as a result of the acquisition
of the office furniture business unit (The Knoll Group, Inc. and related
entities) of Westinghouse Electric Corporation (Westinghouse). See Note 3
for further discussion of the acquisition.

The accompanying consolidated financial statements present the financial
position of the Company as of December 31, 1996 and of the Predecessor as
of December 31, 1995, the results of operations, cash flows, and changes in
stockholders' equity of the Company for the ten month period ended December
31, 1996, and the results of operations, cash flows, and changes in
stockholders' equity of the Predecessor for the two month period ended
February 29, 1996 and the years ended December 31, 1995 and 1994.

Since the Predecessor was a business unit of Westinghouse, the accompanying
financial statements of the Predecessor include estimates for certain
expenses incurred by the parent on its behalf. These expenses generally
include, but are not limited to, officer and employee salaries, rent,
depreciation, accounting and legal services, other selling, general and
administrative expenses, and other such expenses.

The results of the Predecessor's domestic operations were included in the
consolidated United States federal income tax return of Westinghouse, while
the results of its operations in Canada and Europe were reported separately
to their respective taxing jurisdictions. The income tax information in the
accompanying financial statements of the Predecessor is presented as if the
Predecessor had not been included in the consolidated tax returns of
Westinghouse or other affiliates (i.e. on a stand-alone basis). The
recognition and measurement of income tax expense and deferred income taxes
required certain assumptions, allocations, and significant estimates that
management believes are reasonable to measure the tax consequences as if
the Predecessor were a stand-alone taxpayer.

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

The consolidated financial statements of the Predecessor include the
accounts of The Knoll Group, Inc. and related entities after elimination of
intercompany transactions and balances except for those with other units of
Westinghouse as described in Note 4.

Revenue Recognition

Sales are recognized as products are shipped and services are rendered.

F-14
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand and investments with
original maturities of three months or less.

Inventories

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

Property, Plant, Equipment, and Depreciation

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

Intangible Assets

Intangible assets consist of goodwill, trademarks and deferred financing
fees. Goodwill is recorded at the amount by which cost exceeds the net
assets of acquired businesses, and all other intangible assets are recorded
at cost. Goodwill and trademarks are amortized under the straight-line
method over 40 years, while deferred financing fees are amortized over the
life of the respective debt.

Management reviews the carrying value of goodwill and other intangibles on
an ongoing basis. When factors indicate that an intangible asset may be
impaired, management uses an estimate of the undiscounted future cash flows
over the remaining life of the asset in measuring whether the intangible
asset is recoverable. If such an analysis indicates that impairment has in
fact occurred, the book value of the intangible asset is written down to
its estimated fair value.

Income Taxes

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

As discussed in Note 1, the U.S. operations of the Predecessor for the
first two months of 1996 and for the years ended December 31, 1995 and 1994
were included in a consolidated U.S. income tax return of Westinghouse and
its subsidiaries. Income taxes are provided in the accompanying financial
statements as if the Predecessor had filed a separate tax return.

Foreign Currency Translation

Results of foreign operations are translated into U.S. dollars using
average exchange rates during the period, while assets and liabilities are
translated into U.S. dollars using current rates. The resulting translation
adjustments are accumulated as a separate component of stockholders'
equity.

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

Stock-Based Compensation

Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," encourages entities to record compensation
expense for stock-based employee compensation plans at fair value but
provides the option of measuring compensation expense using the

F-15
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

intrinsic value method prescribed in Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," the former standard.
The Company has elected to account for stock-based compensation under the
former standard. Accordingly, compensation expense for restricted stock
awards and stock options is measured as the excess, if any, of the quoted
market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock. For those entities which
choose to measure compensation expense under the former standard, SFAS No.
123 requires supplemental disclosure to show the effects on operations as
if the new measurement criteria had been used. If the new measurement
criteria under SFAS No. 123 had been adopted, the Company's results of
operations would not differ from those reflected in the historical
financial statements.

Share and Per Share Amounts (Unaudited)

All numbers of shares of Common Stock and per share amounts have been
adjusted to give retroactive effect to the 3.13943-for-1 stock split as
discussed in Note 23.

Because of the significance of the redemption and conversion into Common
Stock of the outstanding Series A Preferred Stock upon consummation of the
initial public offering (IPO), historical net income (loss) per share is
not presented herein. Pro forma net income per share amounts are based on
the weighted average number of shares of Common Stock and Common Stock
equivalents (employee stock options) outstanding during the period, after
giving effect to the redemption and conversion into Common Stock of the
Series A Preferred Stock assuming such redemption and conversion had
occurred at the beginning of the period presented. Pursuant to Securities
and Exchange Commission Staff Accounting Bulletin No. 83, all Common Stock
and options to purchase Common Stock issued at prices below the initial
public offering price per share during the twelve month period immediately
preceding the initial filing date of the Company's registration statement
for the offerings have been included as outstanding for all periods
presented (using the treasury stock method at the assumed initial public
offering price).

Use of Estimates

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

Reclassifications

Certain amounts in the accompanying financial statements of the Predecessor
have been reclassified to conform with the Company's 1996 classifications.

3. ACQUISITION

On December 20, 1995, Westinghouse entered into a Stock Purchase Agreement
(the Agreement) with T.K.G. Acquisition Corp. (TKG), a subsidiary of
Warburg, Pincus Ventures, L.P. Under the terms of the Agreement, TKG
acquired all of the outstanding capital stock of The Knoll Group, Inc. and
related entities on February 29, 1996 through its wholly owned subsidiary
T.K.G. Acquisition Sub, Inc. Immediately following this transaction, T.K.G.
Acquisition Sub, Inc. and The Knoll Group, Inc. merged with and into Knoll
North America, Inc., the principal U.S. operating company of The Knoll
Group, Inc. Knoll North America, Inc. changed its name to Knoll, Inc. at
the time of the merger. On March 14, 1997, Knoll, Inc. merged with and into
TKG. TKG then changed its name to Knoll, Inc.

F-16
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The cost of the acquisition was $579,801,000. TKG funded the acquisition
through proceeds of $160,000,000 received from the sale of TKG capital
stock, $165,000,000 received from an offering of 10.875% senior
subordinated notes due 2006, and $260,000,000 in borrowings under senior
bank credit facilities. T.K.G. Acquisition Sub, Inc. executed the offering
of the senior notes and borrowings under the credit facilities. As such,
upon the acquisition and subsequent merger, the senior notes and credit
facility borrowings became obligations of Knoll, Inc.

The acquisition was accounted for using the purchase method of accounting.
Accordingly, the purchase price has been allocated to the assets acquired
and liabilities assumed based upon fair market value at the date of
acquisition. The excess of the consideration paid over the estimated fair
value of the net assets acquired, totaling $66,850,000, has been recorded
as goodwill and is being amortized on a straight-line basis over 40 years.
The purchase price allocation is summarized as follows (in thousands):

<TABLE>
<S> <C>
Net working capital............................................. $101,446
Property, plant and equipment................................... 180,074
Goodwill........................................................ 66,850
Other intangible assets......................................... 239,557
Other noncurrent liabilities, net............................... (8,126)
--------
$579,801
========
</TABLE>

The following table sets forth unaudited pro forma consolidated results of
operations assuming that the acquisition had taken place at the beginning
of the years presented:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Sales.......................................... $ 651,766 $ 620,892
Cost of sales.................................. 419,908 425,327
----------- -----------
Gross profit................................... 231,858 195,565
Selling, general and administrative expenses... 153,388 142,582
Allocated corporate expenses................... -- 4,000
----------- -----------
Operating income............................... 78,470 48,983
Interest expense............................... 40,030 40,945
Other income (expense), net.................... 151 (1,597)
----------- -----------
Income before income taxes and extraordinary
item.......................................... 38,591 6,441
Income taxes................................... 16,848 2,705
----------- -----------
Income before extraordinary item............... 21,743 3,736
Extraordinary loss on early extinguishment of
debt, net of taxes............................ 5,159 --
----------- -----------
Net income..................................... $ 16,584 $ 3,736
=========== ===========
</TABLE>

These pro forma results of operations have been prepared for comparative
purposes only and include certain adjustments, such as additional
depreciation expense as a result of a step-up in the basis of fixed assets,
additional selling, general and administrative costs for services
previously provided by Westinghouse, additional amortization expense as a
result of goodwill and other intangible assets, increased interest expense
as a result of the debt assumed to finance the acquisition, elimination of
incentive compensation under Westinghouse's long-term incentive plans which
became payable, and for which amounts payable were established, as a result
of the acquisition, and related income tax effects. Such results do not
purport

F-17
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

to be indicative of the actual results which would have occurred had the
acquisition been consummated at the beginning of each year presented, nor
do they purport to be indicative of results that will be obtained in the
future.

4. RELATED PARTY TRANSACTIONS OF THE PREDECESSOR

The Predecessor purchased products from and sold products to other
Westinghouse operations. The Predecessor also purchased certain services
from Westinghouse, including liability, property, and workers' compensation
insurance. These transactions are discussed in further detail below.

Cash and Cash Equivalents

The Predecessor utilized Westinghouse's centralized cash management
services in North America. Accounts receivable were collected and cash was
invested at a central location. Additionally, disbursements were funded
centrally on demand. As a result, the Predecessor maintained a low cash
balance on its books, and received charges and credits against the parent
company's investment for cash used and collected through a central
clearinghouse arrangement.

Intercompany Purchases and Payables

The Predecessor purchased products and services from other Westinghouse
operations. For intercompany purchases in the U.S., the Predecessor used
the central clearinghouse arrangement through which intercompany
transactions were settled at the transfer date.

Accounts payable to related parties at December 31, 1995 represents
balances payable for purchases from units of Westinghouse that do not
participate in the central clearinghouse arrangement.

Intercompany Sales and Receivables

The Predecessor sold products to various Westinghouse operations. These
transactions were settled immediately through the central clearinghouse or
the internal customer was invoiced and an intercompany receivable was
established.

Corporate Services

The Predecessor used, and was charged directly for, certain services that
Westinghouse provided to its business units. These services generally
included information systems support, certain accounting functions such as
transaction processing, legal, environmental affairs and human resources
consulting and compliance support.

Westinghouse centrally developed, negotiated, and administered the
Predecessor's insurance programs. The insurance included broad all-risk
coverage for real and personal property and third-party liability coverage,
employer's liability coverage, automobile liability, general and product
liability, and other standard liability coverage. The Predecessor also
maintained a program of self-insurance for workers' compensation in the
United States through Westinghouse. Westinghouse charged its business units
for all of the centrally administered insurance programs based in part on
claims history. Specific liabilities for general and product liability,
automobile liability and workers' compensation claims are presented in the
Predecessor's consolidated financial statements.

All of the charges for the corporate services described above are included
in the costs of the Predecessor's operations in the consolidated statements
of operations. Such charges were based on costs which directly related to
the Predecessor or on a pro rata portion of Westinghouse's total costs for
the services provided. These costs were allocated to the Predecessor on a
basis that management believes is reasonable. However,

F-18
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

management believes that it is possible that the costs of these
transactions may differ from those that would result from transactions
among unrelated parties. For the two month period ended February 29, 1996
and the years ended December 31, 1995 and 1994, charges related to
corporate services above totaled $510,000, $3,304,000, and $4,172,000,
respectively.

The Predecessor also purchased other Westinghouse internally-provided
services as necessary including telecommunications, printing, productivity
and quality consulting, and other services.

Allocated Corporate Expenses

Westinghouse allocated a certain portion of its corporate expenses to its
business units. These allocated costs include Westinghouse executive
management and corporate overhead; corporate legal, environmental, audit,
treasury and tax services, pension charges related to corporate functions,
and other corporate support and executive costs. For the year ended
December 31, 1995, allocated corporate expenses also include $4,000,000 of
incentive compensation payable to the Predecessor's executives under
Westinghouse long-term incentive plans.

These corporate expenses were allocated primarily based on sales with the
exception of the incentive compensation allocation. This methodology of
allocating corporate expenses to business units is reasonable and
consistent, but such allocations are not necessarily indicative of actual
costs. On an annual basis, it was not practical for Westinghouse management
to estimate the level of expenses that might have been incurred had the
Predecessor operated as a separate stand-alone entity.

Westinghouse did not charge its business units for the carrying costs
related to its investment in such units (parent company investment).
Therefore, the Predecessor's results of operations for each of the periods
presented do not include any allocated interest charges from Westinghouse.

Westinghouse Long-Term Incentive Compensation

Certain key executives of the Predecessor were participants in a long-term
incentive compensation plan established by Westinghouse. The plan provided
for payment of awards at the end of a five year period based on the
achievement of certain performance goals set by Westinghouse's Board of
Directors. As a result of the consummation of the acquisition discussed in
Note 3, the payment of awards was accelerated pursuant to the terms of the
plan, resulting in a charge to operations of $47,900,000 for the two months
ended February 29, 1996.

Parent Company Investment

Since the Predecessor was an operating unit of Westinghouse and was not a
distinct legal entity, there were no customary equity and capital accounts
recorded on the consolidated balance sheet. Instead, parent company
investment was maintained by the Predecessor and Westinghouse to account
for interunit transactions described above.

5. CUSTOMER RECEIVABLES

Customer receivables are presented net of an allowance for doubtful
accounts of $5,713,000 and $5,782,000 at December 31, 1996 and 1995,
respectively. Management performs ongoing credit evaluations of its
customers and generally does not require collateral. As of December 31,
1996 and 1995, the U.S. government represented approximately 17.3% and
16.4%, respectively, of gross customer receivables.

F-19
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. INVENTORIES
<TABLE>

<CAPTION>
THE KNOLL GROUP,
INC. (PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Raw materials......................... $ 34,147 $ 34,857
Work in process....................... 7,508 9,829
Finished goods........................ 16,156 14,957
-------- ---------
Inventories........................... $ 57,811 $ 59,643
======== =========

7. PROPERTY, PLANT AND EQUIPMENT

<CAPTION>
THE KNOLL GROUP,
INC. (PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Land and buildings.................... $ 61,844 $ 100,197
Machinery and equipment............... 122,573 180,057
Construction in progress.............. 11,066 10,473
-------- ---------
Property, plant and equipment, at
cost................................. 195,483 290,727
Accumulated depreciation.............. (19,265) (126,094)
-------- ---------
Property, plant and equipment, net.... $176,218 $ 164,633
======== =========

8. INTANGIBLE ASSETS

<CAPTION>
THE KNOLL GROUP,
INC. (PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Goodwill.............................. $ 62,627 $ 277,833
Trademarks............................ 219,900 623
Deferred financing fees............... 11,226 --
-------- ---------
293,753 278,456
Accumulated amortization.............. (6,813) (37,684)
-------- ---------
Intangible assets, net................ $286,940 $ 240,772
======== =========

9. OTHER CURRENT LIABILITIES

<CAPTION>
THE KNOLL GROUP,
INC. (PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Accrued employee compensation......... $ 27,881 $ 19,486
Accrued product warranty.............. 7,173 6,763
Other................................. 26,989 17,708
-------- ---------
Other current liabilities............. $ 62,043 $ 43,957
======== =========
</TABLE>

F-20
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. INDEBTEDNESS

The Company did not have any short-term borrowings outstanding as of
December 31, 1996. As of December 31, 1995, the Predecessor had outstanding
short-term European bank loans totaling $1,496,000. The composite and
weighted average interest rates on these borrowings was 11.00% and 10.356%,
respectively.

The Company's and the Predecessor's long-term debt is summarized as
follows:
<TABLE>

<CAPTION>
THE KNOLL GROUP, INC.
(PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ---------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
10.875% Senior subordinated notes, due 2006......................................... $165,000 $ --
Term loans, variable rate (6.515% at December 31, 1996) due through 2002............ 100,000 --
Revolving loans, variable rate (6.515% at December 31, 1996) due 2002............... 88,000 --
7.00% Urban Redevelopment Authority Grant, due 1996................................. -- 2,055
Other............................................................................... 1,154 1,483
-------- ------
354,154 3,538
Less current maturities............................................................. (23,265) (3,287)
-------- ------
Long-term debt...................................................................... $330,889 $ 251
======== ======
</TABLE>

Senior Subordinated Notes

The Company assumed the obligations under the 10.875% senior subordinated
notes as a direct result of the acquisition and merger which occurred on
February 29, 1996, as discussed in Note 3. The notes are unsecured and are
guaranteed by each existing and future wholly owned domestic subsidiary of
Knoll, Inc. However, if the Company is unable to satisfy all or any portion
of its obligations with respect to the notes, it is unlikely that the
guarantors will be able to pay all or any portion of such unsatisfied
obligations. There are no sinking fund requirements related to these notes,
and they are not redeemable at the Company's option prior to March 15,
2001. At such date, the notes are redeemable at 105.438% of principal
amount, and thereafter at an annually declining premium over par until
March 15, 2004 when they are redeemable at par. Notwithstanding the
foregoing, at any time on or before March 15, 1999, the Company may, under
certain conditions, redeem up to 35% of the original aggregate principal
amount of the notes at a redemption price of 110% of principal amount plus
interest with net proceeds from a public equity offering made by the
Company. The indenture limits the payment of dividends and incurrence of
indebtedness and includes certain other restrictions and limitations that
are customary with subordinated indebtedness of this type.

Term and Revolving Loans

On December 17, 1996, the Company entered into a $230,000,000 credit
agreement with a group of financial institutions that provides for a six
year term loan facility in the aggregate principal amount of $100,000,000
and a six year revolving credit facility in an aggregate amount of up to
$130,000,000. In addition, the revolving credit facility contains a letter
of credit subfacility which allows for the issuance of

F-21
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

up to $20,000,000 in letters of credit. The amount available for borrowing
under the revolving credit facility is reduced by the total outstanding
letters of credit. This credit agreement expires in December 2002.

The proceeds of the facilities were used to refinance the Company's debt
under the previously existing senior bank credit facilities that was
assumed as a result of the acquisition, as discussed in Note 3, and for
working capital and general corporate purposes. The refinancing resulted in
an extraordinary charge of $8,542,000 on a pre-tax basis, $5,159,000 on an
after-tax basis, to operations for the ten months ended December 31, 1996.
This extraordinary charge consisted of the write-off of unamortized
financing costs related to the refinanced debt.

Borrowings under the existing credit agreement bear interest at rates based
on a bank base rate or the Eurodollar rate adjusted by a certain percentage
which depends on the Company's leverage ratio, as defined by the agreement.
The Company is required to make quarterly principal payments on the term
loans through December 2002, commencing on March 31, 1997. All loans under
the agreement are secured by substantially all of the Company's assets,
100% of the capital stock of the Company's domestic operations, and 65% of
the capital stock of the Company's foreign operations. All borrowings are
also unconditionally guaranteed by the Company's existing and future wholly
owned domestic subsidiaries. However, if the Company is unable to satisfy
all or any portion of its obligations with respect to the credit agreement,
it is unlikely that the guarantors will be able to pay all or any portion
of such unsatisfied obligations.

The credit agreement subjects the Company to various affirmative and
negative covenants. Among other things, the covenants limit the Company's
ability to incur additional indebtedness, declare or pay dividends, and
make capital expenditures; require the Company to maintain certain
financial ratios with respect to interest coverage and funded debt
leverage; and require the Company to maintain interest rate protection
agreements in a notional amount of at least 40% of the outstanding
principal amount. See note 12 for further discussion of interest rate
protection agreements.

At December 31, 1996, the Company had outstanding borrowings totaling
$88,000,000, of which $8,000,000 has been classified as current, and total
letters of credit of approximately $1,406,000, under the revolving credit
facility. There were no borrowings under the letters of credit. The Company
pays a commitment fee ranging from 0.175% to 0.375%, depending on the
Company's leverage ratio, on the unused portion of the revolving credit
facility. In addition, a letter of credit fee ranging from 0.50% to 1.50%,
depending on the Company's leverage ratio, is required to be paid on the
amount available to be drawn under letters of credit.

The Company also has a revolving credit agreement with various European
financial institutions that allows for borrowings up to an aggregate amount
of $9,685,000 or the European equivalent. There is currently no expiration
date on this agreement. The interest rate on borrowings varies by bank. The
majority of the banks involved assess a fixed rate ranging from 6.0% to
11.0%, while others charge a floating rate equal to the monetary market
rate plus 0.6% to 1.1%. Any borrowings would be collateralized by certain
real property and receivables of the Company's European operations. As of
December 31, 1996, the Company did not have any outstanding borrowings
under this European credit facility.

Interest Paid

For the ten months ended December 31, 1996, the Company made interest
payments totaling $25,775,000.

F-22
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Maturities

Aggregate maturities of the Company's indebtedness are as follows (in
thousands):

<TABLE>
<S> <C>
1997............................................................. $ 23,265
1998............................................................. 15,000
1999............................................................. 15,000
2000............................................................. 15,000
2001............................................................. 20,000
Thereafter....................................................... 265,889
--------
$354,154
========
</TABLE>

11. PREFERRED STOCK

Dividends on the Series A 12% Participating Convertible Preferred Stock are
fully cumulative, accrue on a quarterly basis at a rate of $12 per annum,
and are payable only at the discretion of the Board of Directors. Upon
conversion, the holders of the outstanding Series A Preferred Stock lose
their right to any dividends, including dividends in arrears. As of
December 31, 1996, the aggregate and per share amounts of cumulative
dividends in arrears were $16.6 million and $10.36, respectively. Each
share of Series A Preferred Stock is convertible into a certain number of
shares of the Company's common stock based on the fair market equity value
of the Company at the time of conversion. Only the holder or holders of a
majority of the outstanding Series A Preferred Stock can cause all or a
portion of such stock to be converted. The Company may not redeem any of
the Series A Preferred Stock at its option. Holders are not granted the
benefit of any sinking fund. Upon involuntary liquidation, holders are
entitled to receive $100 per share plus any unpaid dividends. For each
share of Series A Preferred Stock, the holder is entitled to one thousand
votes on matters generally submitted to the stockholders of the Company and
certain matters on which a majority vote of holders of the Series A
Preferred Stock is required by the Company's Articles of Incorporation.

12. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses interest rate collar agreements for other than trading
purposes to manage its exposure to fluctuations in interest rates on its
floating rate debt. Such agreements effectively set agreed-upon maximum and
minimum rates on a notional principal amount and utilize the London
Interbank Offered Rate (LIBOR) as a floating rate reference. The notional
amounts are utilized to measure the amount of interest to be paid or
received and do not represent the amount of exposure to credit loss. These
interest rate collar agreements provide that, at specified intervals, when
the floating rate is less than the minimum rate, the Company will pay the
counterparty the differential computed on the notional principal amount,
and when the floating rate exceeds the maximum rate, the counterparty will
pay the Company the differential computed on the notional principal amount.
The net amount paid or received on the interest rate collar agreements is
recognized as an adjustment to interest expense. During the ten months
ended December 31, 1996, the Company was not required to make nor was it
entitled to receive any payments as a result of these hedging activities.

At December 31, 1996, the Company had five outstanding interest rate collar
agreements with a total notional principal amount of $185,000,000 and
maximum and minimum rates ranging from 7.50% to 7.99% and 5.00% to 5.50%,
respectively. These agreements mature over the next two years. Aggregate
maturities of the total notional principal amount are as follows:
$70,000,000 in 1998 and $115,000,000 in 1999.

The counterparties to the interest rate collar agreements are major
financial institutions. The Company continually monitors its positions and
the credit ratings of the counterparties and does not anticipate
nonperformance by them. The Company has not been required to provide nor
has it received any collateral related to its hedging activities.

F-23
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. CONTINGENT LIABILITIES AND COMMITMENTS

There are various claims and lawsuits pending against the Company, all of
which management believes, based upon information presently known, either
to be without merit or subject to adequate defenses. The resolution of
these claims and lawsuits is not expected to have a material adverse effect
on the Company.

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Cash and Cash Equivalents, Accounts Receivable, Accounts Payable, and Short-
Term Debt

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

Long-Term Debt

The fair values of the variable rate long-term debt instruments approximate
their carrying amounts. The fair value of other long-term debt was
estimated using quoted market values or discounted cash flow analyses based
on current incremental borrowing rates for similar types of borrowing
arrangements. The fair value of the Company's long-term debt, including the
current portion, is approximately $371,892,000 at December 31, 1996 while
the carrying amount is $354,154,000. The fair value of the Predecessor's
long-term debt, including the current portion, approximates its carrying
amount at December 31, 1995.

Interest Rate Collar Agreements

The fair value of the Company's interest rate collar agreements
approximates cost as of December 31, 1996.

15.INCOME TAXES

Income (loss) before income taxes and extraordinary item consists of the
following:

<TABLE>
<CAPTION>
THE KNOLL
GROUP, INC.
(PREDECESSOR) THE KNOLL GROUP, INC.
TEN MONTHS TWO MONTHS (PREDECESSOR)
-------------------------------------------------- ENDED ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, FEBRUARY 29, ------------------------
1996 1996 1995 1994
-------------- ------------- ----------- ------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. operations................................................. $23,381 $(39,105) $ 46,908 $ 7,729
Foreign operations.............................................. 15,458 (1,090) 5,270 (59,789)
------- -------- ----------- ------------
$38,839 $(40,195) $ 52,178 $ (52,060)
</TABLE>

F-24
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Income tax expense (benefit), excluding extraordinary items, is comprised
of the following:

Income taxes paid by the Company for the ten months ended December 31, 1996
totaled $13,137,000.

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

<TABLE>
<CAPTION>
THE KNOLL GROUP,
INC. (PREDECESSOR)
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due
to allowance for doubtful accounts.. $ 1,659 $ 1,753
Inventories.......................... 2,603 4,856
Net operating loss carryforwards..... 28,253 37,339
Accrued restructuring costs.......... 966 3,367
Postretirement benefit obligation.... 6,880 8,925
Accrued liabilities and other items.. 20,669 9,344
-------- --------
Gross deferred tax assets.............. 61,030 65,584
Valuation allowance.................... (33,161) (37,990)
-------- --------
Net deferred tax assets................ 27,869 27,594
-------- --------
Deferred tax liabilities:
Intangibles, principally due to
differences in amortization......... 3,338 --
Plant and equipment, principally due
to differences in depreciation and
assigned values..................... 1,930 22,369
Prepaid pension cost................. -- 16,526
-------- --------
Gross deferred tax liabilities......... 5,268 38,895
-------- --------
Net deferred tax asset (liability)..... $ 22,601 $(11,301)
======== ========
</TABLE>

F-25
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

As discussed in Notes 1 and 2, the recognition and measurement of income
tax expense and deferred taxes for the Predecessor required certain
assumptions, allocations, and significant estimates in order to measure the
tax consequences as if the Predecessor were a stand-alone taxpayer.

As of December 31, 1996, the Company has pre-acquisition net operating loss
carryforwards totaling approximately $76,000,000 in various foreign tax
jurisdictions which generally expire between 1997 and 2001 or may be
carried forward for an unlimited time.

The Company has recorded a valuation allowance for net deferred tax assets
in foreign tax jurisdictions, primarily related to pre-acquisition net
operating loss carryforwards, due to the significant losses incurred by the
Predecessor in these tax jurisdictions in previous years.

At February 29, 1996 and December 31, 1994 and 1993, the Predecessor had
recorded a valuation allowance of $38,446,000, $43,066,000, and
$24,881,000, respectively.

For the ten months ended December 31, 1996, tax benefits recognized through
reductions of the valuation allowance had the effect of reducing goodwill
by $4,246,000. If additional tax benefits are recognized in the future
through further reduction of the valuation allowance, such benefits will
reduce goodwill.

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

<TABLE>
<CAPTION>
THE KNOLL THE KNOLL
GROUP, INC. GROUP, INC.
(PREDECESSOR) (PREDECESSOR)
TEN MONTHS TWO MONTHS YEAR ENDED
ENDED ENDED DECEMBER 31,
DECEMBER 31, FEBRUARY 29, ---------------
1996 1996 1995 1994
------------ ------------- ------ -------
<S> <C> <C> <C> <C>
Federal statutory tax rate................................................... 35.0% (35.0%) 35.0% (35.0%)
Increase (decrease) in the tax rate resulting from:
State taxes, net of federal effect......................................... 3.9 (4.5) 4.9 2.5
Higher effective income taxes of other countries, net of change in
valuation allowance....................................................... 3.2 (0.2) (1.4) 41.8
Non-deductible goodwill amortization....................................... 1.0 1.1 4.7 4.7
Other...................................................................... 0.3 (1.4) 0.6 0.8
---- ----- ------ -------
Effective tax rate........................................................... 43.4% (40.0%) 43.8% 14.8%
--------------------------------------------------
==== ===== ====== =======
</TABLE>

At December 31, 1996, the Company has not made provision for U.S. federal
and state income taxes on approximately $9,194,000 of foreign earnings
which are expected to be reinvested indefinitely. Upon distribution of
those earnings in the form of dividends or otherwise, the Company would be
subject to U.S. income taxes (subject to an adjustment for foreign tax
credits) and withholding taxes payable to the various foreign countries.
Determination of the amount of the unrecognized deferred tax liability is
not practicable.

F-26
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

16. RESTRUCTURING

In 1994, the Predecessor adopted a $61,345,000 restructuring program that
included the separation of approximately 500 employees, the closing of
various facilities, and the exiting of several product lines. The total
cost of this program was offset by accruals previously established for
actions that were deferred and subsequently included in this program,
resulting in a net charge to operations in 1994 of $29,180,000. A summary
of the program's costs is shown below.

<TABLE>
<CAPTION>
FACILITY
EMPLOYEE CLOSURE AND
SEPARATION ASSET RATIONALIZATION
COSTS WRITEDOWN COSTS TOTAL
---------- --------- --------------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
North America................ $10,559 $19,104 $ 7,982 $37,645
Europe....................... 7,526 9,264 6,910 23,700
------- ------- ------- -------
Total.................... $18,085 $28,368 $14,892 $61,345
======= ======= ======= =======
</TABLE>

At December 31, 1995, the restructuring actions were essentially complete.
The remaining accrued costs totaling $10,868,000 at December 31, 1995
consist primarily of employee separation costs, lease costs related to
properties that are no longer being utilized, and product guarantees. The
remaining accrued costs of $1,979,000 at December 31, 1996 consist of
employee separation costs and product guarantees. The Company expects to
pay the remaining accrued restructuring costs during 1997.

17. LEASES

The Company has commitments under operating leases for certain machinery
and equipment and facilities used in its operations. Total rental expense
for the ten months ended December 31, 1996 was $7,787,000. Future minimum
rental payments required under those operating leases that have an initial
or remaining noncancelable lease term in excess of one year are as follows
(in thousands):

<TABLE>
<S> <C>
1997................................................ $ 5,270
1998................................................ 4,731
1999................................................ 3,550
2000................................................ 2,390
2001................................................ 1,907
Subsequent years.................................... 3,241
-------
Total minimum rental payments....................... $21,089
=======
</TABLE>

The Predecessor also had operating leases for certain machinery and
equipment and facilities. Total rental expense charged to operations was
$1,668,000 for the two months ended February 29, 1996 and $10,149,000 and
$10,917,000 for the years ended December 31, 1995 and 1994, respectively.

18. STOCK INCENTIVE PLANS

In connection with the acquisition discussed in Note 3, the Company
established the Knoll, Inc. 1996 Stock Incentive Plan (the 1996 Plan).
Under the 1996 Plan, awards denominated or payable in shares or options to
purchase shares of the Company's common stock may be granted to officers
and other key employees of the Company. A combined maximum of 4,709,126
shares or options may be granted under the 1996 Plan. A Stock Plan
Committee of the Company's Board of Directors has sole discretion
concerning administration of the 1996 Plan, including selection of
individuals to receive awards, types of awards, the terms and conditions of
the awards, and the time at which awards will be granted. The Board of
Directors may terminate the 1996 Plan at its discretion at any time.

F-27
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

For the ten months ended December 31, 1996, the Company granted 4,144,030
restricted common shares, with a weighted average fair market value of
$0.34 per share, to key employees. Of such amount, 2,260,389 of these
restricted common shares vest ratably over five years beginning on the
grant date, while the other 1,883,641 shares vest over five years
commencing one year subsequent to the grant date. The fair market value of
the shares on the date of the grant has been recorded as unearned stock
grant compensation and is presented as a separate component of
stockholders' equity. Compensation expense is recognized ratably over the
vesting period. Compensation expense recognized for the ten months ended
December 31, 1996 with respect to the restricted common shares granted
under the 1996 Plan was $135,000. No options were granted during the ten
month period ended December 31, 1996. The remaining 565,096 shares
available under the 1996 Plan were granted in the form of options on March
7, 1997. The exercise price with respect to these options is $15.93 per
share.

The Knoll, Inc. 1997 Stock Incentive Plan (the 1997 Plan) was established
on February 14, 1997. The terms of the 1997 Plan are essentially the same
as those of the 1996 Plan, except that pursuant to the 1997 Plan an
aggregate of only 1,255,772 shares of common stock are reserved for
issuance thereunder, discounted options may be granted, options may be
repriced and the Board of Directors has greater flexibility to amend the
1997 Plan. On March 7, 1997, the Company granted 753,456 options to
purchase shares under the 1997 Plan. The exercise price with respect to
these options is $15.93 per share.

19. PENSION PLANS

On March 1, 1996, the Company established two defined benefit pension
plans: The Knoll Pension Plan and The Knoll Pension Plan for Bargaining
Unit Employees. The first plan covers all eligible U.S. employees who are
not members of a collective bargaining unit (i.e. union), while the second
plan pertains to all U.S. employees who are covered by a collective
bargaining agreement. Benefits for these plans are based primarily on years
of credited service, annual compensation for each year of participation,
and age when payments begin. In order to accrue benefits under The Knoll
Pension Plan for Bargaining Unit Employees, participants are required to
make certain contributions to the plan. The Company makes contributions to
both plans as determined by an actuarial funding method. This funding
policy is consistent with the minimum funding requirements set forth by the
Employee Retirement Income Security Act of 1974, as amended, and other
governmental laws and regulations.

The Company's net periodic pension cost, which consists entirely of service
cost, for the ten months ended December 31, 1996 was $3,953,000.

The funded status of the Company's pension plans is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
--------------
(IN THOUSANDS)
<S> <C>
Actuarial present value of benefit obligation:
Vested................................................. $(2,784)
Nonvested.............................................. (273)
-------
Accumulated benefit obligation......................... (3,057)
Additional obligation for projected compensation
increases on accumulated years of service............. (896)
-------
Projected benefit obligation............................. (3,953)
Plan assets at fair value................................ 30
-------
Plan assets less than projected benefit obligation and
accrued pension cost.................................... $(3,923)
=======
</TABLE>

F-28
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The projected benefit obligation was measured using a discount rate of
7.25%. The assumed rate of compensation increase was 4.5%.

Prior to March 1, 1996, the Predecessor sponsored a defined benefit pension
plan, The Knoll Group Pension Plan, for all eligible U.S. nonunion
employees. The plan provisions were substantially the same as the current
pension plan for nonunion employees offered by Knoll, Inc. As a result of
the sale of the Predecessor by Westinghouse, benefits earned through
February 29, 1996 under The Knoll Group Pension Plan were frozen and
participants were fully vested in their benefits. The plan was subsequently
merged into a Westinghouse pension plan.

The following table sets forth the Predecessor's net periodic pension cost
(income) for The Knoll Group Pension Plan:

<TABLE>
<CAPTION>
TWO MONTHS
ENDED YEAR ENDED DECEMBER 31,
FEBRUARY 29, -------------------------
1996 1995 1994
------------ ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost.................... $ 522 $ 2,278 $ 2,955
Interest cost on projected
benefit obligation............. 933 5,212 5,016
Amortization of unrecognized
prior service cost............. 68 385 385
Amortization of unrecognized net
loss........................... 197 -- 468
------ ------------ -----------
1,720 7,875 8,824
Return on plan assets........... (1,543) (8,993) (8,846)
------ ------------ -----------
Net periodic pension cost
(income)....................... $ 177 $ (1,118) $ (22)
====== ============ ===========
</TABLE>

The return on plan assets was determined based on a weighted-average
expected long-term rate of return on plan assets of 9.75% for each period
presented.

The following table sets forth the funded status of The Knoll Group Pension
Plan:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Actuarial present value of benefit obligation:
Vested................................................. $ (68,081)
Nonvested.............................................. (3,363)
---------
Accumulated benefit obligation......................... (71,444)
Additional obligation for projected compensation
increases on accumulated years of service............. (12,491)
---------
Projected benefit obligation............................. (83,935)
Plan assets at fair value................................ 95,940
---------
Plan assets in excess of projected benefit obligation.... 12,005
Unrecognized prior service cost.......................... 4,458
Unrecognized net loss.................................... 28,698
---------
Prepaid pension cost..................................... $ 45,161
=========
</TABLE>

F-29
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The projected benefit obligation was measured using a discount rate of
6.75%. The assumed rate of compensation increase was 4.0%. As of December
31, 1995, plan assets consisted primarily of listed stocks, fixed income
securities, and real estate investments.

The Predecessor also participated in two single-employer defined benefit
pension plans sponsored by Westinghouse. These plans covered all U.S. union
employees of the Predecessor, certain domestic Westinghouse employees, and
certain domestic executives of the Predecessor and Westinghouse.

For purposes of these financial statements, the Predecessor's participation
in the plans sponsored by Westinghouse is accounted for as though such
plans were multiemployer plans. For multiemployer plans, employers are
required to recognize total contributions for the period as net pension
expense. For the two months ended February 29, 1996 and the years ended
December 31, 1995 and 1994, the Predecessor's contributions to Westinghouse
for these defined benefit pension plans totaled $212,000, $1,076,000, and
$1,223,000, respectively.

Employees of the Canadian and United Kingdom (U.K.) operations participate
in defined contribution plans. The Company's expense related to the
Canadian plan for the ten months ended December 31, 1996 was $607,000. The
Predecessor's expense for the two months ended February 29, 1996 and years
ended December 31, 1995, and 1994 totaled $114,000; $398,000; and $398,000;
respectively. Expense for the U.K. plan during each of the four
aforementioned periods was not significant.

The Company also sponsors a retirement savings plan, which is an employee
savings plan that qualifies as a deferred salary arrangement under Section
401(k) of the Internal Revenue Code, for all U.S. nonunion employees and
U.S. hourly union employees. Under this plan, participants may defer a
portion of their pretax earnings up to the annual contribution limit
established by the Internal Revenue Service. The Company matches 40% of
employee contributions on up to 6% of employee compensation. The plan also
provides for additional employer matching based on the achievement of
certain profitability goals. The Company's total expense under this plan
was $2,957,000 for the ten months ended December 31, 1996. The Predecessor
administered a similar retirement savings plan and incurred related expense
totaling $406,000; $2,675,000; and $1,592,000 for the two months ended
February 29, 1996 and the years ended December 31, 1995 and 1994,
respectively.

20. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company provides postretirement medical and life insurance coverage for
certain retired U.S. nonunion and union employees and their eligible
dependents. The amount of benefits provided to retired nonunion employees
varies according to the age of the retiree as of a predetermined date,
while benefits provided to retired union employees are based on annual
compensation. The Company does not currently fund its obligation related to
postretirement medical and life insurance benefits.

Net periodic postretirement benefit cost for the Company includes the
following components:

<TABLE>
<CAPTION>
TEN MONTHS
ENDED
DECEMBER 31,
1996
--------------
(IN THOUSANDS)
<S> <C>
Service cost............................................... $ 440
Interest cost on projected benefit obligation.............. 1,000
------
Net periodic postretirement benefit cost................... $1,440
======
</TABLE>

F-30
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company's liability related to the postretirement medical and life
insurance benefits is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
--------------
(IN THOUSANDS)
<S> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $ (7,329)
Fully eligible active participants....................... (1,593)
Other active participants................................ (8,235)
--------
Total accumulated postretirement benefit obligation........ (17,157)
Unrecognized net gain...................................... (217)
--------
Accrued postretirement benefit cost........................ $(17,374)
========
</TABLE>

The accumulated postretirement benefit obligation was measured using the
following assumptions: discount rate of 7.25%, rate of compensation
increase of 4.5%, and health care cost trend rate of 9.5% in 1996,
decreasing by 1.0% per year to 5.5% in 2000, and remaining at that level
thereafter. Increasing the assumed health care cost trend rate by one
percentage point in each year would increase the accumulated postretirement
benefit obligation by approximately $1,450,000 and increase the aggregate
of the service and interest cost by approximately $151,000.

The Predecessor provided postretirement medical and life insurance benefits
to U.S. retired nonunion employees. The current postretirement medical and
life insurance benefits which the Company provides to retired nonunion
employees remain essentially unchanged from those which the Predecessor had
provided.

Net periodic postretirement benefit cost incurred by the Predecessor
includes the following:

<TABLE>
<CAPTION>
TWO MONTHS
ENDED YEAR ENDED DECEMBER 31,
FEBRUARY 29, ------------------------
1996 1995 1994
------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost...................... $103 $ 449 $ 556
Interest cost on projected benefit
obligation....................... 207 1,509 1,509
Amortization of unrecognized prior
service cost..................... (56) (12) --
Amortization of unrecognized net
(gain) loss...................... 10 (25) 18
---- ----------- -----------
Net periodic postretirement
benefit cost..................... $264 $ 1,921 $ 2,083
==== =========== ===========
</TABLE>

The Predecessor's liability related to the postretirement medical and life
insurance benefits which it provided to U.S. retired nonunion employees is
as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $ (7,581)
Fully eligible active participants....................... (1,680)
Other active participants................................ (8,480)
---------
Total accumulated postretirement benefit obligation........ (17,741)
Unrecognized prior service cost............................ (4,155)
Unrecognized net loss...................................... 1,303
---------
Accrued postretirement benefit cost........................ $ (20,593)
=========
</TABLE>

F-31
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The accumulated postretirement benefit obligation was measured using the
following assumptions: discount rate of 7.25%, rate of compensation
increase of 4.0%, and health care cost trend rate of 11.5% in 1995,
decreasing by 0.5% per year to 7.0% in 2004, and remaining at that level
thereafter.

The Predecessor also participated in a single-employer postretirement
benefit arrangement maintained by Westinghouse. Westinghouse provided
medical and life insurance benefits to all retired U.S. union employees and
certain Westinghouse employees. For purposes of these financial statements,
the Predecessor's participation in this postretirement benefit arrangement
is accounted for as though it was a multiemployer postretirement benefit
plan. For multiemployer plans, employers are required to recognize total
contributions for the period as net periodic postretirement benefit
expense. The Predecessor's contributions for the postretirement benefit
arrangements sponsored by Westinghouse totaled $82,500 for the two months
ended February 29, 1996, $151,000 for the year ended December 31, 1995 and
$122,000 for the year ended December 31, 1994.

21. BUSINESS SEGMENT AND GEOGRAPHICAL REGION INFORMATION

The Company conducts business predominantly in the office furniture
industry through its operations in the United States, Canada, and Europe.
Summarized financial information regarding the Company's operations in
these geographic areas is presented below:

<TABLE>
<CAPTION>
TEN MONTHS ENDED UNITED
DECEMBER 31, 1996 STATES CANADA EUROPE ELIMINATIONS TOTALS
----------------- -------- ------- ------- ------------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales to customers....... $493,653 $24,456 $43,425 $ -- $561,534
Sales between geographic
areas................... 13,637 60,866 1,714 (76,217) --
-------- ------- ------- --------- --------
Net sales................ $507,290 $85,322 $45,139 $ (76,217) $561,534
======== ======= ======= ========= ========
Operating profit......... $ 54,381 $10,681 $ 6,282 -- $ 71,344
======== ======= ======= ========= ========
Identifiable assets...... $648,868 $52,690 $39,725 $ (65,571) $675,712
======== ======= ======= ========= ========
</TABLE>

F-32
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Predecessor also operated primarily in the office furniture industry in
the United States, Canada, and Europe. Summarized financial data regarding
the Predecessor's operations according to geographic area is as follows:

<TABLE>
<CAPTION>
TWO MONTHS ENDED UNITED
FEBRUARY 29, 1996 STATES CANADA EUROPE ELIMINATIONS TOTALS
----------------- -------- ------- -------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales to customers...... $ 78,267 $ 4,415 $ 7,251 $ -- $ 89,933
Sales to related
parties................ 299 -- -- -- 299
Sales between geographic
areas.................. 1,377 6,708 227 (8,312) --
-------- ------- -------- -------- ---------
Net sales............... $ 79,943 $11,123 $ 7,478 $ (8,312) $ 90,232
======== ======= ======== ======== =========
Operating profit........ $(39,010) $ (734) $ 185 -- $ (39,559)
======== ======= ======== ======== =========
<CAPTION>
YEAR ENDED UNITED
DECEMBER 31, 1995 STATES CANADA EUROPE ELIMINATIONS TOTALS
----------------- -------- ------- -------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales to customers...... $517,314 $31,132 $ 62,277 $ -- $ 610,723
Sales to related
parties................ 10,169 -- -- -- 10,169
Sales between geographic
areas.................. 17,349 61,262 1,882 (80,493) --
-------- ------- -------- -------- ---------
Net sales............... $544,832 $92,394 $ 64,159 $(80,493) $ 620,892
======== ======= ======== ======== =========
Operating profit........ $ 54,043 $ 483 $ 679 -- $ 55,205
======== ======= ======== ======== =========
Identifiable assets..... $455,784 $98,953 $ 72,265 $(32,698) $ 594,304
======== ======= ======== ========
General corporate
assets................. 62,406
Total assets............ $ 656,710
=========

<CAPTION>
YEAR ENDED UNITED
DECEMBER 31, 1994 STATES CANADA EUROPE ELIMINATIONS TOTALS
----------------- -------- ------- -------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales to customers...... $471,662 $30,294 $ 60,642 $ -- $ 562,598
Sales to related par-
ties................... 271 -- -- 271
Sales between geographic
areas.................. 20,994 43,541 2,445 (66,980) --
-------- ------- -------- -------- ---------
Net sales............... $492,927 $73,835 $ 63,087 $(66,980) $ 562,869
======== ======= ======== ======== =========
Operating profit........ $(11,378) $(7,292) $(30,864) -- $ (49,534)
======== ======= ======== ======== =========
Operating profit without
restructuring.......... $ 7,134 $(7,292) $(20,196) -- $ (20,354)
======== ======= ======== ======== =========
</TABLE>

For the two months ended February 29, 1996 and the years ended December 31,
1995 and 1994, allocated corporate expenses from Westinghouse were prorated
to the geographic segments based on sales. In addition, general corporate
assets at December 31, 1995 include cash and cash equivalents, prepaid
pension assets, and current and deferred tax assets that were maintained by
Westinghouse.

The Predecessor typically derived more than 10% of net sales from the U.S.
federal government. The Predecessor's sales to the U.S. federal government
totaled $9,925,000 for the two months ended

F-33
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

February 29, 1996 and $58,090,000 and $56,142,000 for the years ended
December 31, 1995 and 1994, respectively. The Company's total sales to the
U.S. federal government were $51,046,000 for the ten months ended December
31, 1996. Neither the Company nor the Predecessor engaged in export sales
from the U.S. to unaffiliated customers in foreign countries.

Sales between geographic areas are made at a transfer price that includes
an appropriate mark- up.

22. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following table sets forth summary information on a quarterly basis for
the Company and the Predecessor for the respective periods presented below.

<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
----------- -------------------------------------
TWO MONTHS ONE MONTH
ENDED ENDED SECOND THIRD FOURTH
FEBRUARY 29 MARCH 31 QUARTER QUARTER QUARTER
----------- --------- -------- --------- --------
(DOLLARS IN
THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
Net sales................. $ 90,232 $ 48,080 $166,520 $ 167,184 $179,750
Gross profit.............. 30,518 15,537 58,574 61,046 67,536
Income (loss) before ex-
traordinary item......... (24,088) 449 7,527 7,685 6,334
Net income (loss)......... (24,088) 449 7,527 7,685 1,175
<CAPTION>
PREDECESSOR
----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
1995
Net sales................. $147,410 $159,352 $155,055 $159,075
Gross profit.............. 42,919 50,279 54,829 55,233
Net income................ 1,216 5,945 12,174 9,997
</TABLE>

Results for 1996 and 1995 have been restated to reflect the
reclassification of certain expenses, principally product development, from
cost of sales to selling, general and administrative expenses as compared
to previously reported results.

During the quarter ended December 31, 1996, the Company recorded a loss on
the early extinguishment of debt amounting to $8,542,000 pre-tax,
$5,159,000 after-tax. The loss consisted of the write-off of unamortized
deferred financing fees.

23. SUBSEQUENT EVENT

On May 6, 1997, the Company's Certificate of Incorporation was amended to
increase the number of authorized shares of common stock from 24,000,000 to
100,000,000, increase the number of authorized shares of preferred stock
from 3,000,000 to 10,000,000 and effect a 3.13943-for-1 split of common
stock whereby each share of common stock was exchanged for 3.13943 shares
of common stock. The amendment to the Certificate of Incorporation had no
effect on the par value of the common or preferred stock. Fractional shares
resulting from the common stock split will be settled in cash.

F-34
<PAGE>

KNOLL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

24. FINANCIAL INFORMATION FOR GUARANTORS OF THE COMPANY'S DEBT

As discussed in Note 10, certain debt of the Company is guaranteed by all
existing and future directly or indirectly wholly owned domestic
subsidiaries of the Company (the "Guarantors"). The Guarantors are Knoll
Overseas, Inc., a holding company for the entities that conduct the
Company's European business, and Spinneybeck Enterprises, Inc., which
directly and through a Canadian subsidiary operates the Company's leather
business.

These Guarantors will irrevocably and unconditionally, fully, jointly and
severally, guarantee the performance and payment when due, of all
obligations under the 10.875% Senior Subordinated Notes and credit
agreement outstanding as of December 31, 1996, limited to the largest
amount that would not render such Guarantor's obligations under the
guarantees subject to avoidance under any applicable federal or state
fraudulent conveyance or similar law.

The condensed consolidating information which follows presents:

. Condensed financial statements as of December 31, 1996 and 1995, and for
the ten months ended December 31, 1996, two months ended February 29,
1996, and the years ended December 31, 1995 and 1994 of (a) Knoll, Inc.
(as the Issuer), (b) the Guarantors, (c) the combined non-Guarantors,
(d) elimination entries and (e) the Company on a consolidated basis.

. The Issuer and the Guarantors are shown with their investments in their
subsidiaries accounted for on the equity method.

The condensed consolidating financial statements should be read in
connection with the consolidated financial statements of the Company.
Separate financial statements of the Guarantors are not presented because
Management has determined that separate financial statements are not
material. The Guarantors are fully, jointly, severally and unconditionally
liable under the guarantees.

F-35
<PAGE>

KNOLL, INC.

BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
GUARANTORS
---------------------------
SPINNEYBECK
ENTERPRISES, KNOLL NON-
KNOLL, INC. INC. OVERSEAS, INC. GUARANTORS ELIMINATIONS TOTAL
----------- ------------ -------------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ 41 $ 267 $ -- $ 8,496 $ -- $ 8,804
Customer receivables.. 85,959 1,398 -- 23,809 -- 111,166
Inventories........... 39,951 6,747 -- 11,113 -- 57,811
Deferred income
taxes................ 17,079 -- -- 395 -- 17,474
Prepaid and other
current assets....... 9,769 50 (586) 2,817 (4,626) 7,424
-------- ------ ------- ------- -------- --------
Total current assets.... 152,799 8,462 (586) 46,630 (4,626) 202,679
Property, plant, and
equipment.............. 141,357 368 -- 34,493 -- 176,218
Intangible assets....... 278,389 -- -- 8,551 -- 286,940
Equity investments...... 75,571 550 12,789 -- (88,910) --
Other noncurrent
assets................. 9,976 13 97 2,289 (2,500) 9,875
-------- ------ ------- ------- -------- --------
Total assets............ $658,092 $9,393 $12,300 $91,963 $(96,036) $675,712
======== ====== ======= ======= ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt....... $ 23,000 $ -- $ -- $ 265 $ -- $ 23,265
Accounts payable--
trade................ 34,076 350 -- 15,824 -- 50,250
Accounts payable--
related parties...... 1,543 -- (5,169) 8,252 (4,626) --
Income taxes payable.. 11 19 (1) 359 -- 388
Accrued restructuring
costs................ 1,598 -- -- 381 -- 1,979
Other current
liabilities.......... 54,649 288 1,668 5,438 -- 62,043
-------- ------ ------- ------- -------- --------
Total current
liabilities............ 114,877 657 (3,502) 30,519 (4,626) 137,925
Long-term debt.......... 330,000 2,500 -- 889 (2,500) 330,889
Deferred income taxes... -- -- -- 1,931 -- 1,931
Postretirement benefits
obligation............. 15,873 -- -- -- -- 15,873
Other noncurrent
liabilities............ 6,391 -- -- 4,899 -- 11,290
-------- ------ ------- ------- -------- --------
Total liabilities....... 467,141 3,157 (3,502) 38,238 (7,126) 497,908
Stockholders' equity:
Preferred stock....... 1,603 -- -- -- -- 1,603
Common stock.......... 73 -- -- -- -- 73
Additional paid-in-
capital.............. 173,826 4,033 14,034 43,999 (75,745) 160,147
Unearned stock grant
compensation......... (1,387) -- -- -- -- (1,387)
Retained earnings..... 16,836 2,203 1,768 9,194 (13,165) 16,836
Cumulative foreign
currency translation
adjustment........... -- -- -- 532 -- 532
-------- ------ ------- ------- -------- --------
Total stockholders'
equity................. 190,951 6,236 15,802 53,725 (88,910) 177,804
-------- ------ ------- ------- -------- --------
Total liabilities and
stockholders' equity... $658,092 $9,393 $12,300 $91,963 $(96,036) $675,712
======== ====== ======= ======= ======== ========
</TABLE>

F-36
<PAGE>

KNOLL, INC.

BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
GUARANTORS
---------------------------
SPINNEYBECK
ENTERPRISES, KNOLL NON-
KNOLL, INC. INC. OVERSEAS, INC. GUARANTORS ELIMINATIONS TOTAL
----------- ------------ -------------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ (182) $ 182 $ -- $ 1,569 $ -- $ 1,569
Customer receivables.. 88,656 1,173 135 24,628 -- 114,592
Inventories........... 38,570 6,436 -- 14,637 -- 59,643
Deferred income
taxes................ 17,024 528 411 310 -- 18,273
Prepaid and other
current assets....... 2,093 6 4,554 26,377 (24,565) 8,465
-------- ------- ------- -------- -------- --------
Total current assets.... 146,161 8,325 5,100 67,521 (24,565) 202,542
Property, plant, and
equipment.............. 121,144 310 -- 43,179 -- 164,633
Intangible assets....... 160,072 4,430 626 75,644 -- 240,772
Prepaid pension cost.... 45,161 -- -- -- -- 45,161
Equity investments...... 32,050 2,140 26,152 -- (60,342) --
Other noncurrent
assets................. 2,568 30 97 3,151 (2,244) 3,602
-------- ------- ------- -------- -------- --------
Total assets............ $507,156 $15,235 $31,975 $189,495 $(87,151) $656,710
======== ======= ======= ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt....... $ -- $ -- $ -- $ 1,496 $ -- $ 1,496
Current maturities of
long-term debt....... 2,055 -- -- 1,232 -- 3,287
Accounts payable--
trade................ 27,534 910 123 17,283 -- 45,850
Accounts payable--
related parties...... 633 117 -- 6,591 (6,928) 413
Income taxes payable.. 13,760 984 (771) -- -- 13,973
Accrued restructuring
costs................ 5,893 -- -- 4,975 -- 10,868
Other current
liabilities.......... 36,726 861 1,778 4,592 -- 43,957
-------- ------- ------- -------- -------- --------
Total current
liabilities............ 86,601 2,872 1,130 36,169 (6,928) 119,844
Long-term debt.......... -- -- -- 251 -- 251
Deferred income taxes... 27,566 (56) 56 2,008 -- 29,574
Postretirement benefits
obligation............. 20,593 -- -- -- -- 20,593
Other noncurrent
liabilities............ 2,256 -- -- 3,741 -- 5,997
-------- ------- ------- -------- -------- --------
Total liabilities....... 137,016 2,816 1,186 42,169 (6,928) 176,259
Stockholders' equity:
Parent company
investment........... 370,140 12,419 30,789 170,192 (80,223) 503,317
Cumulative foreign
currency translation
adjustment........... -- -- -- (22,866) -- (22,866)
-------- ------- ------- -------- -------- --------
Total stockholders'
equity................. 370,140 12,419 30,789 147,326 (80,223) 480,451
-------- ------- ------- -------- -------- --------
Total liabilities and
stockholders' equity... $507,156 $15,235 $31,975 $189,495 $(87,151) $656,710
======== ======= ======= ======== ======== ========
</TABLE>

F-37
<PAGE>

KNOLL, INC.

STATEMENT OF OPERATIONS
TEN MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS)

F-38
<PAGE>

KNOLL, INC.

STATEMENT OF OPERATIONS
TWO MONTHS ENDED FEBRUARY 29, 1996
(IN THOUSANDS)

F-39
<PAGE>

KNOLL, INC.

STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)

F-40
<PAGE>

KNOLL, INC.

STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)

F-41
<PAGE>

KNOLL, INC.

STATEMENT OF CASH FLOWS
TEN MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS)

F-42
<PAGE>

KNOLL, INC.

STATEMENT OF CASH FLOWS
TWO MONTHS ENDED FEBRUARY 29, 1996
(IN THOUSANDS)

F-43
<PAGE>

KNOLL, INC.

STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)

F-44
<PAGE>

KNOLL, INC.

STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)

F-45
<PAGE>

KNOLL, INC.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma consolidated income statements for the
year ended December 31, 1996 and the three months ended March 31, 1996 give
effect to the acquisition by merger (the "Acquisition") of the business and
operations of The Knoll Group, Inc. and its subsidiaries in February 1996 by
Knoll, Inc. (the "Company"), the borrowings under the Company's bank credit
facilities (the "Credit Facilities") and the issuance of 10- 7/8% Senior
Subordinated Notes (the "Notes") and the application of the net proceeds
therefrom as though they had occurred as of the beginning of the year. The pro
forma income statements have been further adjusted to reflect the sale of the
Common Stock offered hereby, the application of the estimated net proceeds
therefrom to repurchase a portion of the Notes and pay down a portion of the
indebtedness outstanding under the Credit Facilities and the redemption and
conversion into Common Stock of the outstanding Series A Preferred Stock as if
such transactions had occurred on January 1, 1996.

The Acquisition has been accounted for by the purchase method of accounting,
and accordingly, the purchase price of $579.8 million (including estimated
fees and expenses) has been allocated to the assets acquired and liabilities
assumed based upon the estimated fair value at the date of Acquisition. The
excess of such purchase price over the estimated fair values at the date of
Acquisition has been recognized as goodwill, which is amortized over 40 years.

The pro forma as adjusted income statement for the three months ended March
31, 1997 reflects the sale of the Common Stock offered hereby, the application
of the estimated net proceeds therefrom to repurchase a portion of the Notes
and pay down a portion of the indebtedness outstanding under the Credit
Facilities and the redemption and conversion into Common Stock of the
outstanding Series A Preferred Stock as if such transactions had occurred on
January 1, 1997.

The unaudited pro forma consolidated income statements do not purport to
represent what the Company's results of operations actually would have been if
the events described above had occurred as of the dates indicated or what
results will be for any future periods. The unaudited pro forma financial
information is based upon the assumptions that the Company believes are
reasonable and should be read in conjunction with the Financial Statements and
accompanying Notes thereto included elsewhere in this Prospectus.

P-1
<PAGE>

KNOLL, INC.

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------
THE KNOLL GROUP,
INC.
(PREDECESSOR)
2 MONTHS ENDED TEN MONTHS ENDED IPO PRO FORMA
FEBRUARY 29, 1996 DECEMBER 31, 1996 ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------------- ----------------- ----------- --------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Total sales............. $ 90,232 $561,534 $651,766 -- $651,766
Cost of sales........... 59,714 358,841 $ 552 (a)
801 (b) 419,908 -- 419,908
-------- -------- -------- -------- ------ --------
Gross profit............ 30,518 202,693 (1,353) 231,858 -- 231,858
Selling, general and
administrative
expenses............... 21,256 131,349 369 (a)
414 (b) 153,388 -- 153,388
Westinghouse long-term
incentive
compensation........... 47,900 -- (47,900)(c) -- -- --
Allocated corporate
expenses............... 921 -- (921)(a) -- -- --
-------- -------- -------- -------- ------ --------
Operating income
(loss)................. (39,559) 71,344 46,685 78,470 -- 78,470
Interest expense........ 340 32,952 6,738 (d) 40,030 (7,300)(f) 32,730
Other income (expense),
net.................... (296) 447 -- 151 -- 151
-------- -------- -------- -------- ------ --------
Income (loss) before
income taxes and
extraordinary item..... (40,195) 38,839 39,947 38,591 7,300 45,891
Income tax expense
(benefit).............. (16,107) 16,844 16,111 (e) 16,848 2,891 (h) 19,739
-------- -------- -------- -------- ------ --------
Income (loss) before
extraordinary item..... (24,088) 21,995 23,836 21,743 4,409 26,152
Extraordinary loss on
early extinguishment of
debt, net of taxes..... -- 5,159 (5,159)(g) -- -- --
-------- -------- -------- -------- ------ --------
Net income (loss)....... $(24,088) $ 16,836 $ 28,995 $ 21,743 (g) $4,409 $ 26,152 (g)
======== ======== ======== ======== ====== ========
Pro forma income before
extraordinary item per
share of Common Stock.. $ .63 $ .62 $ .61
Pro forma net income per
share of Common Stock.. $ .48 $ .62 (g) $ .61 (g)
Pro forma weighted
average shares of
Common Stock
outstanding(i)......... 35,030 35,030 43,030
</TABLE>

P-2
<PAGE>

KNOLL, INC.

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
HISTORICAL
THREE MONTHS
ENDED
MARCH 31, IPO PRO FORMA
1997 ADJUSTMENTS AS ADJUSTED
------------ ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Total sales.......................... $177,833 $ -- $177,833
Cost of sales........................ 109,859 -- 109,859
-------- ------- --------
Gross profit......................... 67,974 -- 67,974
Selling, general and administrative
expenses............................ 40,058 -- 40,058
-------- ------- --------
Operating income (loss).............. 27,916 -- 27,916
Interest expense..................... 7,742 (1,790)(f) 5,952
Other income (expense), net.......... (74) -- (74)
-------- ------- --------
Income before income taxes........... 20,100 (1,790) 21,890
Income tax expense (benefit)......... 8,462 709 (h) 9,171
-------- ------- --------
Net income (loss).................... $ 11,638 $ 1,081 $ 12,719 (g)
======== ======= ========
Pro forma net income per share of
Common Stock........................ $ .33 $ .30 (g)
Pro forma weighted average shares of
Common Stock outstanding(i)......... 35,030 43,030
</TABLE>

P-3
<PAGE>

KNOLL, INC.

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
HISTORICAL
---------------------------------
THE KNOLL GROUP,
INC.
(PREDECESSOR)
2 MONTHS ENDED ONE MONTH ENDED IPO PRO FORMA
FEBRUARY 29, 1996 MARCH 31, 1996 ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------------- --------------- ----------- --------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Total sales............. $ 90,232 $48,080 $138,312 $ -- $138,312
Cost of sales........... 59,714 32,543 $ 552 (a) --
801 (b) 93,610 93,610
-------- ------- -------- -------- ------ --------
Gross profit............ 30,518 15,537 (1,353) 44,702 -- 44,702
Selling, general and
administrative
expenses............... 21,256 10,999 369 (a) --
414 (b) 33,038 33,038
Westinghouse long-term
incentive
compensation........... 47,900 -- (47,900)(c) -- -- --
Allocated corporate
expenses............... 921 -- (921)(a) -- -- --
-------- ------- -------- -------- ------ --------
Operating income
(loss)................. (39,559) 4,538 46,685 11,664 -- 11,664
Interest expense........ 340 3,602 6,738 (d) 10,680 (1,825)(f) 8,855
Other income (expense),
net.................... (296) (49) -- (345) -- (345)
-------- ------- -------- -------- ------ --------
Income (loss) before
income taxes........... (40,195) 887 39,947 639 1,825 2,464
Income tax expense
(benefit).............. (16,107) 438 16,111 (e) 442 723 (h) 1,165
-------- ------- -------- -------- ------ --------
Net income (loss)....... $(24,088) $ 449 $ 23,836 $ 197 $1,102 $ 1,299 (g)
======== ======= ======== ======== ====== ========
Pro forma income per
share of Common Stock.. $ .01 $ .01 $ .03 (g)
Pro forma weighted
average shares of
Common Stock
outstanding(i)......... 35,030 35,030 43,030
</TABLE>

P-4
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

(a) Represents the reclassification of allocated corporate expenses from
Westinghouse. The reclassified allocated corporate expenses approximate the
replacement cost to the Company for services formerly provided by Westinghouse
to the Predecessor, including (i) benefit expense related to the adoption of
various independent benefit plans comparable to Westinghouse benefit plans and
(ii) the cost of services required to replace specific activities formerly
provided by Westinghouse to the Predecessor, including audit, tax, general
ledger, accounts receivable, human resources, legal, insurance and data
communications.

(b) Represents the increase in amortization and depreciation resulting from
the Acquisition.

(c) Represents the elimination of incentive compensation under
Westinghouse's Long-Term Incentive Plans, which became payable, and for which
the amounts payable were established, as a result of consummation of the
Acquisition.

(d) To reflect interest expense (and amortization of deferred financing
fees) on a pro forma basis as if the Acquisition had been completed on January
1, 1996. Interest expense assumes a weighted average interest rate of 9.2%,
which approximates the actual interest rate on the date of the Acquisition, on
$424,125 in average outstanding borrowings and amortization of deferred
financing charges. If interest rates changed 1/8%, the pro forma adjustment
for interest costs would change by approximately $88.

(e) Adjustment to reflect the assumed effective tax rate applied to the pro
forma income.

(f) To reflect interest expense (and amortization of deferred financing
fees) on a pro forma basis as if the net proceeds from the offerings had been
utilized to repurchase the Notes and pay down the Credit Facilities at the
beginning of each period presented. Interest expense assumes 10.875% for the
Notes which is the actual interest expense for all periods presented, 8.25%
for the Credit Facilities for the year ended December 31, 1996 and the three
months ended March 31, 1996 which approximates the actual interest expense for
the ten month period ended December 31, 1996 and 6.5% for the Credit
Facilities for the three months ended March 31, 1997 which approximates the
actual interest expense for the three month period ended March 31, 1997.

(g) The pro forma and the pro forma as adjusted income statement data
presented for the year ended December 31, 1996 does not include the $5,159
extraordinary loss on early extinguishment of debt, net of taxes. In addition,
the pro forma as adjusted income statement data for the year ended December
31, 1996, the three month period ended March 31, 1996 and the three month
period ended March 31, 1997 does not include an anticipated extraordinary loss
of $5,612, net of taxes associated with the redemption of a portion of the
Notes in connection with the Offerings.

(h) Income tax expense applied at the United States effective tax rate
during the ten month period ended December 31, 1996 (39.6%), which
approximates the actual effective tax rate for all periods presented.

(i) All numbers of shares of Common Stock and per share amounts have been
adjusted to give retroactive effective to the 3.13943-for-1 common stock split
that occurred on May 6, 1997. Because of the significance of the redemption
and conversion into Common Stock of the outstanding Series A Preferred Stock
upon consummation of the Offerings, historical net income (loss) per share is
not presented herein. Pro forma and pro forma as adjusted net income per share
are based on the weighted average number of shares of Common Stock and Common
Stock equivalents (employee stock options) outstanding during the period,
after giving effect to the redemption and conversion into Common Stock of the
Series A Preferred Stock assuming such redemption and conversion had occurred
at the beginning of each period presented. Pursuant to Securities and Exchange
Commission Staff Accounting Bulletin No. 83, all Common Stock and options to
purchase Common Stock issued at prices below the initial public offering price
per share during the twelve month period immediately preceding the initial
filing date of the Company's registration statement for the Offerings have
been included as outstanding for all periods presented (using the treasury
stock method at the assumed initial public offering price).

P-5
<PAGE>

Installations The Company does not maufacture or sell computers,
computer hardware or telephone equipment.

[PHOTO]

Reff System

[PHOTO]
Morrison System

<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPEC-
TUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET
FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HERE-
OF.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary ................................................................. 3
Risk Factors............................................................. 11
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Financial Information........................................... 19
Management's Discussion and Analysis
of Financial Condition and Results of Operations........................ 22
Business................................................................. 31
Management............................................................... 45
Certain Transactions..................................................... 50
Principal and Selling Stockholders....................................... 53
Description of Capital Stock............................................. 54
Description of Certain Indebtedness...................................... 55
Shares Eligible for Future Sale ......................................... 58
Certain United States Federal Tax Considerations For Non-United States
Holders................................................................. 59
Underwriting............................................................. 62
Legal Matters............................................................ 64
Experts.................................................................. 64
Additional Information................................................... 65
Index to Financial Statements............................................ F-1
Unaudited Pro Forma Financial Information................................ P-1
</TABLE>

8,000,000 SHARES

KNOLL

COMMON STOCK

----------------

PROSPECTUS

----------------

MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED

, 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED MAY 6, 1997
PROSPECTUS
8,000,000 SHARES

KNOLL

COMMON STOCK

-----------

All of the 8,000,000 shares of Common Stock offered hereby are being sold by
Knoll, Inc. ("Knoll" or the "Company"). Of the 8,000,000 shares of Common Stock
offered hereby, 1,600,000 shares are being offered for sale initially outside
the United States and Canada by the International Managers and 6,400,000 shares
are being offered for sale initially in the United States and Canada by the
U.S. Underwriters in a concurrent offering. The initial public offering price
and the aggregate underwriting discount per share will be identical for both
Offerings. See "Underwriting."

The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "KNL," subject to notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

-----------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
- -----------------------------------------------------------------------------
Total(3)........................ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and a certain selling stockholder (the "Selling Stockholder")
have agreed to indemnify the several Underwriters against certain
liabilities, including certain liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at 1,500,000.
(3) The Company has granted the International Managers and the U.S.
Underwriters options to purchase up to an additional 96,000 shares and
384,000 shares of Common Stock, respectively, and the Selling Stockholder
has granted the International Managers and the U.S. Underwriters options to
purchase up to an additional 144,000 shares and 576,000 shares of Common
Stock, respectively, in each case exercisable within 30 days after the date
hereof, solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discount,
Proceeds to Company and Proceeds to Selling Stockholder will be $ , $ ,
$ and $ , respectively. See "Underwriting."

-----------

-----------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL

-----------

The date of this Prospectus is , 1997.
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING

Merrill Lynch International, Credit Suisse First Boston (Europe) Limited,
Goldman Sachs International and Morgan Stanley & Co. International Limited are
acting as lead managers (the "Lead Managers") for each of the International
Managers named below (the "International Managers"). Subject to the terms and
conditions set forth in an international purchase agreement (the
"International Purchase Agreement") among the Company, the Selling Stockholder
and the International Managers, and concurrently with the sale of 6,400,000
shares of Common Stock to the U.S. Underwriters (as defined below), the
Company has agreed to sell to the International Managers, and each of the
International Managers severally has agreed to purchase from the Company the
number of shares of Common Stock set forth opposite its name below.

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGER SHARES
--------------------- ---------
<S> <C>
Merrill Lynch International........................................
Credit Suisse First Boston (Europe) Limited........................
Goldman Sachs International........................................
Morgan Stanley & Co. International Limited.........................
---------
Total......................................................... 1,600,000
=========
</TABLE>

The Company and the Selling Stockholder have also entered into a U.S.
purchase agreement (the "U.S. Purchase Agreement") with certain underwriters
in the United States and Canada (the "U.S. Underwriters" and, together with
the International Managers, the "Underwriters") for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Credit Suisse First
Boston Corporation, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated
are acting as representatives (the "U.S. Representatives"). Subject to the
terms and conditions set forth in the U.S. Purchase Agreement, and
concurrently with the sale of 1,600,000 shares of Common Stock to the
International Managers pursuant to the International Purchase Agreement, the
Company has agreed to sell to the U.S. Underwriters, and the U.S. Underwriters
severally have agreed to purchase from the Company, an aggregate of 6,400,000
shares of Common Stock. The initial public offering price per share and the
total underwriting discount per share of Common Stock are identical under the
International Purchase Agreement and the U.S. Purchase Agreement.

In the International Purchase Agreement and the U.S. Purchase Agreement, the
several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant
to such agreement are purchased. The closings with respect to the sale of
shares of Common Stock to be purchased by the International Managers and the
U.S. Underwriters are conditioned upon one another.

The Lead Managers have advised the Company and the Selling Stockholder that
the International Managers propose initially to offer the shares of Common
Stock to the public at the initial public offering price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of $ per share of Common Stock. The International
Managers may allow, and such dealers may reallow, a discount not in excess of
$ per share of Common Stock on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount
may be changed.

The Company and the Selling Shareholder have granted options to the
International Managers, exercisable for 30 days after the date of this
Prospectus, to purchase up to an aggregate of 240,000 additional shares of

62
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Common Stock at the initial public offering price set forth on the cover page
of this Prospectus, less the underwriting discount. The International Managers
may exercise these options only to cover over-allotments, if any, made on the
sale of the Common Stock offered hereby. To the extent that the International
Managers exercise these options, each International Manager will be obligated,
subject to certain conditions, to purchase a number of additional shares of
Common Stock proportionate to such International Manager's initial amount
reflected in the foregoing table. The Company and the Selling Stockholder have
also granted options to the U.S. Underwriters, exercisable for 30 days after
the date of this Prospectus, to purchase up to an aggregate of 960,000
additional shares of Common Stock to cover over-allotments, if any, on terms
similar to those granted to the International Managers.

The Company, the Company's executive officers and directors and all existing
stockholders have agreed, subject to certain exceptions, not to directly or
indirectly (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or thereafter acquired by the
person executing the agreement or with respect to which the person executing
the agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the foregoing
or (ii) enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the Common Stock whether any
such swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, without the prior written consent of Merrill
Lynch on behalf of the Underwriters for a period of 180 days after the date of
this Prospectus. See "Shares Eligible for Future Sale."

The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the International Managers and the U.S. Underwriters are permitted
to sell shares of Common Stock to each other for purposes of resale at the
initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are non-U.S. or
non-Canadian persons or to persons they believe intend to resell to persons
who are non-U.S. or non-Canadian persons, and the International Managers and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to U.S. persons or to Canadian persons or to
persons they believe intend to resell to U.S. or Canadian persons, except in
the case of transactions pursuant to the Intersyndicate Agreement.

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

The Underwriters do not intend to confirm sales of the Common Stock offered
hereby to any accounts over which they exercise discretionary authority.

The Company and the Selling Stockholder have agreed to indemnify the
International Managers and the U.S. Underwriters against certain liabilities,
including certain liabilities under the Securities Act.

Each of the representatives of the Underwriters purchases or has purchased
furniture from the Company in the ordinary course of business on an arm's-
length basis.

Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing
Date, will not offer or sell any shares of Common Stock to persons in the
United Kingdom, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which do not constitute an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Common Stock in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issuance of Common
Stock to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.

64
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or
any other material relating to the Company, the Selling Stockholder or shares
of Common Stock in any jurisdiction where action for that purpose is required.
Accordingly, the shares of Common Stock may not be offered or sold, directly
or indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the shares of Common Stock may be
distributed or published, in or from any country or jurisdiction except in
compliance with any applicable rules and regulations of any such country or
jurisdiction.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

LEGAL MATTERS

EXPERTS

The consolidated financial statements of Knoll, Inc. at December 31, 1996
and for the ten month period then ended and the consolidated financial
statements of the Predecessor for the two month period ended February 29,
1996, appearing in this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent accountants, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing. The consolidated financial statements of The Knoll Group, Inc. as of
December 31, 1995 and for each of the two years in the period ended December
31, 1995 included appearing in this Prospectus have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
the authority of said firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES DOL-
LARS.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary ................................................................. 3
Risk Factors............................................................. 11
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Financial Information........................................... 19
Management's Discussion and Analysis
of Financial Condition and Results of Operations........................ 22
Business................................................................. 31
Management............................................................... 45
Certain Transactions..................................................... 50
Principal and Selling Stockholders....................................... 53
Description of Capital Stock............................................. 54
Description of Certain Indebtedness...................................... 55
Shares Eligible for Future Sale ......................................... 58
Certain United States Federal Tax Considerations For Non-United States
Holders................................................................. 59
Underwriting............................................................. 62
Legal Matters............................................................ 65
Experts.................................................................. 65
Additional Information................................................... 65
Index to Financial Statements............................................ F-1
Unaudited Pro Forma Financial Information................................ P-1
</TABLE>

8,000,000 SHARES

KNOLL

COMMON STOCK

---------------

PROSPECTUS

---------------

MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered which will be paid
solely by the Company. All amounts shown are estimates, except the SEC
registration fee, the NASD filing fee and the NYSE listing fee:

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
SEC registration fee.......................................... $ 61,334
NASD filing fee............................................... 20,740
NYSE listing fee.............................................. 220,000
Transfer agent and registrar fees and expenses................ 10,000
Printing and engraving expenses............................... 200,000
Legal fees and expenses....................................... 500,000
Accounting fees and expenses.................................. 400,000
Blue sky fees and expenses.................................... 7,500
Miscellaneous expenses........................................ 80,426
----------
Total....................................................... $1,500,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company, which is a Delaware corporation, is empowered by the Delaware
General Corporation Law, subject to the procedures and limitations stated
therein, to indemnify any person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending or completed
action, suit or proceeding in which such person is made a party by reason of
his being or having been a director, officer, employee or agent of the
Company. The statute provides that indemnification pursuant to its provisions
is not exclusive of other rights of indemnification to which a person may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise. The Certificate of Incorporation and By-Laws of the
Company provide for indemnification of the directors and officers of such
entities to the full extent permitted by the Delaware General Corporation Law.

Article Nine of the Company's Certificate of Incorporation provides as
follows:

NINTH: 1. Indemnification. The Corporation shall indemnify to the fullest
extent permitted under and in accordance with the laws of the State of
Delaware any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the Corporation) by reason of the fact that he is or was a
director, officer, incorporator, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
trustee, employee or agent of or in any other similar capacity with another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, shall
not, of itself, create a presumption that the person had reasonable cause to
believe that his conduct was unlawful.

II-1
<PAGE>

2. Payment of Expenses. Expenses (including attorneys' fees) incurred in
defending any civil, criminal, administrative or investigative action, suit or
proceeding shall (in the case of any action, suit or proceeding against a
director of the Corporation) or may (in the case of any action, suit or
proceeding against an officer, trustee, employee or agent) be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article NINTH.

3. Nonexclusivity of Provision. The indemnification and other rights set
forth in this Article NINTH shall not be exclusive of any provisions with
respect thereto in the by-laws or any other contract or agreement between the
Corporation and any officer, director, employee or agent of the Corporation.

4. Effect of Repeal. Neither the amendment nor repeal of this Article NINTH,
subparagraph 1, 2, or 3, nor the adoption of any provision of this Certificate
of Incorporation inconsistent with this Article NINTH, subparagraph 1, 2, or
3, shall eliminate or reduce the effect of this Article NINTH, subparagraphs
1, 2, and 3, in respect of any matter occurring before such amendment, repeal
or adoption of an inconsistent provision or in respect of any cause of action,
suit or claim relating to any such matter which would have given rise to a
right of indemnification or right to receive expenses pursuant to this Article
NINTH, subparagraph 1, 2, or 3, if such provision had not been so amended or
repealed or if a provision inconsistent therewith had not been so adopted.

5. Limitation on Liability. No director or officer shall be personally
liable to the Corporation or any stockholder for monetary damages for breach
of fiduciary duty as a director or officer, except for any matter in respect
of which such director or officer (A) shall be liable under Section 174 of the
General Corporation Law of the State of Delaware or any amendment thereto or
successor provision thereto, or (B) shall be liable by reason that, in
addition to any and all other requirements for liability, he:

(i) shall have breached his duty of loyalty to the Corporation or its
stockholders;

(ii) shall not have acted in good faith or, in failing to act, shall not
have acted in good faith;

(iii) shall have acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of
law; or

(iv) shall have derived an improper personal benefit.

If the General Corporation Law of the State of Delaware is amended after the
date hereof to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.

The Company maintains an insurance policy providing for indemnification of
its officers, directors and certain other persons against liabilities and
expenses incurred by any of them in certain stated proceedings and under
certain stated conditions. In addition, the Company's employment agreements
with Burton B. Staniar, John H. Lynch and Andrew B. Cogan provide that if
during and after the term of such officers' employment the executive is made a
party or compelled to participate in any action by reason of the fact that he
is or was a director or officer of the Company, the executive will be
indemnified by the Company to the fullest extent permitted by Delaware general
corporation law or authorized by the Company's Certificate of Incorporation or
Bylaws or resolutions.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On February 29, 1996 and October 21, 1996, Warburg, NationBanc and certain
members of management purchased an aggregate of 3,147,278 shares of Common
Stock and 1,602,998 shares of Series A Preferred Stock for an aggregate
purchase price of $160.4 million. Such sales were made in reliance on the
exemption from registration pursuant to Section 4(2) of the Securities Act and
Regulation D promulgated thereunder.

II-2
<PAGE>

On February 29, 1996, in connection with the Acquisition, the Company sold
$165 million aggregate principal amount of its Notes to NationsBanc Capital
Markets, Inc. at a price of 96.75% of its face value. Such sale was made in
reliance on the exemption from registration pursuant to Section 4(2) of the
Securities Act and Rule 144A and Regulation D promulgated thereunder.

On February 29, 1996 and August 20, 1996, certain members of management were
granted a total of 4,144,030 shares of Common Stock, pursuant to the 1996
Stock Plan. These shares vest over periods determined at their date of grant.
See "Management--Stock Incentive Plans." These grants were made in reliance on
the exemption from registration pursuant to Section 4(2) of the Securities Act
and Rule 701 promulgated thereunder.

Options to purchase 565,096 shares of Common Stock were granted to certain
employees of the Company on March 7, 1997 pursuant to the 1996 Stock Plan.
These options vest over periods determined at their date of grant. See
"Management--Stock Incentive Plans." Such grants were made in reliance on the
exemption from registration pursuant to Section 4(2) of the Securities Act.

Options to purchase 753,456 shares of Common Stock were granted to certain
employees of the Company on March 7, 1997 pursuant to the 1997 Stock Plan.
These options vest over periods determined at their date of grant. See
"Management--Stock Incentive Plans." Such grants were made in reliance on the
exemption from registration pursuant to Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<C> <S>
*1.1 --Form of U.S. Underwriting Agreement.
*1.2 --Form of International Underwriting Agreement.
3.1 --Amended and Restated Certificate of Incorporation of the Company.
3.2 --Amended and Restated By-Laws of the Company.
4 --Specimen of the Company's Common Stock Certificate.
5 --Opinion of Willkie Farr & Gallagher.
**10.1 --Stock Purchase Agreement, dated as of December 20, 1995, by and
between Westinghouse and TKG.
**10.2 --TKG 1996 Stock Incentive Plan.
**10.3 --Indenture, dated as of February 29, 1996, by and among the Company,
T.K.G. Acquisition Corp., T.K.G. Acquisition Sub, Inc., The Knoll
Group, Inc., Knoll North America, Inc., Spinneybeck Enterprises,
Inc. and Knoll Overseas, Inc., as guarantors, and IBJ Schroder Bank
& Trust Company, as trustee, relating to $165,000,000 principal
amount of 10 7/8% Senior Subordinated Notes due 2006, including form
of Initial Global Note.
**10.4 --Supplemental Indenture, dated as of February 29, 1996, by and among
the Company, as successor to T.K.G. Acquisition Sub, Inc., the
Guarantors (as defined therein), and IBJ Schroder Bank & Trust
Company, as trustee, relating to $165,000,000 principal amount of 10
7/8% Senior Subordinated Notes due 2006, including form of Initial
Global Note.
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
***10.5 --Supplemental Indenture No. 2, dated as of March 14, 1997, by and
among the Company, the Guarantors (as defined therein), and IBJ
Schroder Bank & Trust Company, as trustee, relating to
$165,000,000 principal amount of 10 7/8% Senior Subordinated Notes
due 2006, including form of Initial Global Note.
****10.6 --Amended and Restated Credit Agreement, dated as of December 17,
1996, by and among the Company, T.K.G. Acquisition Corp., the
Guarantors (as defined therein), NationsBank, N.A., The Chase
Manhattan Bank and other lending institutions.
**10.7 --Security Agreement dated February 29, 1996, by and among T.K.G.
Acquisition Sub, Inc., the Guarantors (as defined therein), Knoll
North America, Inc., The Knoll Group, Inc., and NationsBank, N.A.
and other lending institutions.
***10.8 --Employment Agreement, dated as of February 29, 1996, between
T.K.G. Acquisition Corp. and Burton B. Staniar.
***10.9 --Employment Agreement, dated as of February 29, 1996, between
T.K.G. Acquisition Corp. and John H. Lynch.
***10.10 --Employment Agreement, dated as of February 29, 1996, between
T.K.G. Acquisition Corp. and Andrew B. Cogan.
***10.11 --Stockholders Agreement (Common Stock and Preferred Stock), dated
as of February 29, 1996, among T.K.G. Acquisition Corp., Warburg,
Pincus Ventures, L.P., and the signatories thereto.
***10.12 --Form of Stockholders Agreement (Restricted Shares), dated as of
February 29, 1996, among T.K.G. Acquisition Corp., Warburg, Pincus
Ventures, L.P. and the signatories thereto.
***10.13 --TKG 1997 Stock Incentive Plan.
***10.14 --Consulting Agreement, dated as of December 1, 1996, between
Wolfgang Bilstein and Knoll, Inc.
*10.15 --Form of Agreement, dated as of April 15, 1997, by and among the
Company, Warburg, Pincus Ventures, L.P., NationsBanc Investment
Corp. and the Investors (as defined therein).
10.16 --Amendment to Employment Agreement, dated as of April 30, 1997,
between the Company and Andrew B. Cogan.
11 --Statement Re: Computation of Earnings Per Share.
***21 --Subsidiaries of the Registrant.
23.1 --Independent Accountants' Consent of Price Waterhouse LLP.
23.2 --Independent Accountants' Consent of Ernst & Young LLP.
23.3 --Consent of Willkie Farr & Gallagher (included in their opinion
filed as Exhibit 5).
24 --Powers of Attorney (included on signature pages).
*27 --Financial Data Schedule.
99.1 --Consent to be Named as a Director of John W. Amerman.
99.2 --Consent to be Named as a Director of Robert J. Dolan.
</TABLE>
- --------

*Previously filed.

**Filed as an exhibit to the Company's Form S-4 dated March 29, 1996.

*** Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.

**** Filed as an exhibit to the Company's Annual Report on Form 10-K/A-1 for
the year ended December 31, 1996.

(b) Financial Statement Schedules:

Schedule II--Valuation and Qualifying Accounts

All other schedules have been omitted because they are not applicable or not
required or the required information is included in the financial statements or
notes thereto.

II-4
<PAGE>

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions, described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the option of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

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

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

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 the Registrant
has duly caused this Amendment No. 3 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on May 6, 1997.

KNOLL, INC.

/s/ Burton B. Staniar
-------------------------------------
BY: BURTON B. STANIAR
TITLE: CHAIRMAN OF THE BOARD

POWER OF ATTORNEY

We, the undersigned directors and officers of Knoll, Inc., do hereby
severally constitute and appoint Burton B. Staniar, John H. Lynch, Douglas J.
Purdom and Patrick A. Milberger, and each of them, our true and lawful
attorneys and agents, to do any and all acts and things in our name and behalf
in our capacities as directors and officers and to execute any and all
instruments for us and in our names in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or advisable to
enable said Corporation to comply with the Securities Act of 1933, as amended,
and any rules, regulations and requirements of the Securities and Exchange
Commission, in connection with this Registration Statement on Form S-1,
including specifically, but without limitation, power and authority to sign
for us or any of us, in our names in the capacities indicated below, any and
all amendments (including post-effective amendments and including any
subsequent registration statement for the same offering which may be filed
under Rule 462(b) pursuant to the Securities Act of 1933, as amended) hereto;
and we do each hereby ratify and confirm all that said attorneys and agents,
or any one of them, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:

SIGNATURES TITLE DATE

/s/ Burton B. Staniar Chairman of the
- ------------------------------------- Board May 6, 1997
BURTON B. STANIAR

* President, Chief
- ------------------------------------- Executive Officer May 6, 1997
JOHN H. LYNCH and Director
(Principal
Executive Officer)

* Chief Financial
- ------------------------------------- Officer (Principal May 6, 1997
DOUGLAS J. PURDOM Financial Officer)

II-6
<PAGE>

SIGNATURES TITLE DATE

Controller
* (Principal May 6, 1997
- ------------------------------------- Accounting Officer)
BARRY L. MCCABE

* Director
- ------------------------------------- May 6, 1997
ANDREW B. COGAN

* Director
- ------------------------------------- May 6, 1997
JEFFREY A. HARRIS

Director
May 6, 1997
/s/ Sidney Lapidus
- -------------------------------------
SIDNEY LAPIDUS

* Director
- ------------------------------------- May 6, 1997
KEWSONG LEE

* Director
- ------------------------------------- May 6, 1997
JOHN L. VOGELSTEIN

/s/ Burton B. Staniar
*By: ________________________________
ATTORNEY-IN-FACT

II-7
<PAGE>

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ---------- ------------- --------
ADDITIONS BALANCE
BALANCE AT CHARGED TO AT END
BEGINNING COSTS AND OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS(1) PERIOD
----------- ---------- ---------- ------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
VALUATION ACCOUNTS DEDUCTED IN
THE CONSOLIDATED BALANCE SHEET
FROM THE ASSETS TO WHICH
THEY APPLY:
TEN MONTHS ENDED DECEMBER 31,
1996:
Allowance for doubtful
accounts...................... $5,838 $2,098 $2,223 $5,713
TWO MONTHS ENDED FEBRUARY 29,
1996:
Allowance for doubtful
accounts...................... 5,790 159 210 5,739
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful
accounts...................... 4,700 2,720 1,630 5,790
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful
accounts...................... 2,162 3,636 1,098 4,700
</TABLE>
- --------
(1) Uncollectible accounts written off.
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
*1.1 --Form of U.S. Underwriting Agreement.
*1.2 --Form of International Underwriting Agreement.
3.1 --Amended and Restated Certificate of Incorporation of the
Company.
3.2 --Amended and Restated By-Laws of the Company.
4 --Specimen of the Company's Common Stock Certificate.
5 --Opinion of Willkie Farr & Gallagher.
**10.1 --Stock Purchase Agreement, dated as of December 20, 1995, by
and between Westinghouse and TKG.
**10.2 --TKG 1996 Stock Incentive Plan.
**10.3 --Indenture, dated as of February 29, 1996, by and among the
Company, T.K.G. Acquisition Corp., T.K.G. Acquisition Sub,
Inc., The Knoll Group, Inc., Knoll North America, Inc.,
Spinneybeck Enterprises, Inc. and Knoll Overseas, Inc., as
guarantors, and IBJ Schroder Bank & Trust Company, as
trustee, relating to $165,000,000 principal amount of 10
7/8% Senior Subordinated Notes due 2006, including form of
Initial Global Note.
**10.4 --Supplemental Indenture, dated as of February 29, 1996, by
and among the Company, as successor to T.K.G. Acquisition
Sub, Inc., the Guarantors (as defined therein), and IBJ
Schroder Bank & Trust Company, as trustee, relating to
$165,000,000 principal amount of 10 7/8% Senior Subordinated
Notes due 2006, including form of Initial Global Note.
***10.5 --Supplemental Indenture No. 2, dated as of March 14, 1997,
by and among the Company, the Guarantors (as defined
therein), and IBJ Schroder Bank & Trust Company, as trustee,
relating to $165,000,000 principal amount of 10 7/8% Senior
Subordinated Notes due 2006, including form of Initial
Global Note.
****10.6 --Amended and Restated Credit Agreement, dated as of December
17, 1996, by and among the Company, T.K.G. Acquisition
Corp., the Guarantors (as defined therein), NationsBank,
N.A., The Chase Manhattan Bank and other lending
institutions.
**10.7 --Security Agreement dated February 29, 1996, by and among
T.K.G. Acquisition Sub, Inc., the Guarantors (as defined
therein), Knoll North America, Inc., The Knoll Group, Inc.,
and NationsBank, N.A. and other lending institutions.
***10.8 --Employment Agreement, dated as of February 29, 1996,
between T.K.G. Acquisition Corp. and Burton B. Staniar.
***10.9 --Employment Agreement, dated as of February 29, 1996,
between T.K.G. Acquisition Corp. and John H. Lynch.
***10.10 --Employment Agreement, dated as of February 29, 1996,
between T.K.G. Acquisition Corp. and Andrew B. Cogan.
***10.11 --Stockholders Agreement (Common Stock and Preferred Stock),
dated as of February 29, 1996, among T.K.G. Acquisition
Corp., Warburg, Pincus Ventures, L.P., and the signatories
thereto.
***10.12 --Form of Stockholders Agreement (Restricted Shares), dated
as of February 29, 1996, among T.K.G. Acquisition Corp.,
Warburg, Pincus Ventures, L.P. and the signatories thereto.
***10.13 --TKG 1997 Stock Incentive Plan.
***10.14 --Consulting Agreement, dated as of December 1, 1996, between
Wolfgang Bilstein and Knoll, Inc.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
*10.15 --Form of Agreement, dated as of April 15, 1997, by and among
the Company, Warburg, Pincus Ventures, L.P., NationsBanc
Investment Corp. and the Investors (as defined therein).
10.16 --Amendment to Employment Agreement, dated as of April 30,
1997, between the Company and Andrew B. Cogan.
11 --Statement Re: Computation of Earnings Per Share.
***21 --Subsidiaries of the Registrant.
23.1 --Independent Accountants' Consent of Price Waterhouse LLP.
23.2 --Independent Accountants' Consent of Ernst & Young LLP.
23.3 --Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 5).
24 --Powers of Attorney (included on signature pages).
*27 --Financial Data Schedule.
99.1 --Consent to be Named as a Director of John W. Amerman.
99.2 --Consent to be Named as a Director of Robert J. Dolan.
</TABLE>
- --------

*Previously filed.

**Filed as an exhibit to the Company's Form S-4 dated March 29, 1996.

*** Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.

**** Filed as an exhibit to the Company's Annual Report on Form 10-K/A-1 for
the year ended December 31, 1996.

<PAGE>

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

KNOLL, INC.

It is hereby certified that:

The present name of the corporation (hereinafter called the
"Corporation") is Knoll, Inc. The date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware under the name "T.K.G. Acquisition Corp." was December 15, 1995.

This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware. The majority stockholder has consented in writing
to the adoption of this Amended and Restated Certificate of Incorporation.

The text of the certificate of incorporation of the Corporation as
amended hereby is restated to read in its entirety as follows:
<PAGE>

EXHIBIT 3.1

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

KNOLL, INC.

* * * * * * *

FIRST: The name of the corporation (the "Corporation") is KNOLL, INC.
------------

SECOND: The address of the registered office of the Corporation in
the State of Delaware is Corporation Trust Company, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as now in effect or as hereafter
amended.

FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 110,000,000 shares, consisting of (i)
100,000,000 shares of common stock, par value $0.01 per share ("Common Stock"),
------------
and (ii) 10,000,000 shares of preferred stock, par value $1.00 per share (the
"Preferred Stock"), of which 1,920,000 shares shall be designated as "Series A
- ----------------
12% Participating Convertible Preferred Stock" (the "Series A Preferred Stock").
------------------------
The Preferred Stock may be issued from time to time in one or more series. The
Board of Directors of the Corporation (the "Board of Directors") is expressly
------------------
authorized at any time, and from time to time, to provide for the issuance of
shares of Preferred Stock in one or more series, for such consideration (not
less than its par value) and with the designations, powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations, or restrictions thereof, as shall be determined by
the Board of Directors and fixed by resolution or resolutions adopted by the
Board of Directors providing for the number of shares in each such series.

The Common Stock and Series A Preferred Stock shall have the
designations, powers, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations, or restrictions thereof, as
hereinafter set forth in this Article FOURTH.

Prior to the closing of an Initial Public Offering (as defined in the
Stockholders Agreement (as defined below)), the ability of the Corporation to
issue shares of its capital stock shall be subject to the subscription rights of
certain stockholders of the Corporation set forth in Section 1(d) of that

<PAGE>

certain Stockholders Agreement (Common Stock and Preferred Stock), dated as of
February 29, 1996 (the "Stockholders Agreement"), by and among the Corporation,
Warburg, Pincus Ventures, L.P. ("Warburg") and certain other stockholders of the
-------
Corporation, as the same may be amended from time to time.

(A) COMMON STOCK.
------------

(1) Dividends. The holders of Common Stock shall be entitled to
---------
receive, when and as declared, out of assets and funds legally available
therefor, cash or non-cash dividends payable as and when the Board of
Directors in its sole business judgment so declares. Any such dividend
shall be payable ratably to all record holders of Common Stock as of the
record date fixed by the Board of Directors in accordance with the By-Laws
of the Corporation for the payment thereof.

(2) Liquidation Rights. In the event of any voluntary or
------------------
involuntary liquidation, dissolution or winding up of the Corporation

("Liquidation"), the holders of Common Stock then outstanding shall be
-----------
entitled to be paid ratably out of the assets and funds of the Corporation
available for distribution to its stockholders, after and subject to the
payment in full of all amounts required to be distributed to the holders of
any Preferred Stock upon Liquidation, an amount equal to their share
(including any declared but unpaid dividends on the Common Stock, subject
to proportionate adjustment in the event of any stock dividend, stock
split, stock distribution or combination with respect to such shares) of
such assets and funds.

(3) Voting.
------

(a) Except as required by law, as may be limited in the Knoll,
Inc. 1996 Stock Incentive Plan (the "Stock Plan") (formerly known as the
----------
T.K.G. Acquisition Corp. 1996 Stock Incentive Plan), the Knoll, Inc. 1997
Stock Incentive Plan (formerly known as the T.K.G. Acquisition Corp. 1997
Stock Incentive Plan) or any other incentive plan established for the
directors or employees of the Corporation or any of its subsidiaries, or as
otherwise provided herein or in any amendment hereof, the entire voting
power of the Corporation shall be vested in the holders of the Common Stock
and Series A Preferred Stock voting together as a single class.

(b) Each holder of Common Stock entitled to vote shall at every
meeting of the stockholders of the Corporation be entitled to one vote for
each share of Common Stock registered in his or her name on the record of
stockholders. Prior to the Conversion Date (as defined herein), each
holder of Series A Preferred Stock entitled to vote shall at every meeting
of the stockholders of the

-2-
<PAGE>

Corporation be entitled to one thousand votes for each share of Series A
Preferred Stock registered in his or her name on the record of
stockholders. From and after the Conversion Date, each holder of Series A
Preferred Stock entitled to vote shall at every meeting of the stockholders
of the Corporation be entitled to the number of votes equal to the number
of shares of Common Stock into which each share of Series A Preferred Stock
would have been convertible at the Conversion Date (assuming all
outstanding shares of Series A Preferred Stock were converted) for each
share of Series A Preferred Stock registered in his or her name on the
record of stockholders.

(c) At any time prior to the closing of an initial public
offering of the Common Stock, without first obtaining the affirmative vote
or written consent of a majority of the stockholders of the Corporation,
the Corporation shall not amend the Stock Plan, adopt any other incentive
plan that provides for the grant or sale of shares of the Corporation's
capital stock or securities convertible or exchangeable therefor or issue
any shares of the Corporation's capital stock or securities convertible or
exchangeable therefor.

(B) SERIES A PREFERRED STOCK.
------------------------

(1) Dividends. (a) The holders of Series A Preferred Stock
---------
shall be entitled to receive, when and as declared, out of funds legally
available therefor, dividends at the rate of $12.00 per annum, payable as
the Board of Directors may determine, before any dividends or other amounts
shall be set apart for or paid upon the Common Stock in any year. All
dividends declared upon the Series A Preferred Stock shall be declared pro
rata per share.

(b) Dividends on the Series A Preferred Stock shall be fully
cumulative, whether or not in any fiscal year there shall be net profits or
surplus available for the payment of dividends in such fiscal year, so that
if in any fiscal year or years dividends in whole or in part are not paid
upon the Series A Preferred Stock, unpaid dividends shall accumulate and be
compounded quarterly. Dividends on the Series A Preferred Stock shall
accrue on a quarterly basis. Notwithstanding the foregoing, no dividends
on any shares of Series A Preferred Stock shall be declared after the
Conversion Date or shall accrue from and after such date.

(c) Notwithstanding Section (A)(1) of this Article FOURTH, for so
long as dividends on the Series A Preferred Stock are accrued and unpaid,
the Corporation shall not pay any dividend upon the Common Stock, whether
in cash or other property (other than Common Stock), or purchase, redeem or
otherwise acquire any such Common Stock

-3-
<PAGE>

(other than redemptions or repurchases of any Common Stock held by
employees of the Corporation or its subsidiaries, and then only upon such
person's ceasing to be an employee of the Corporation or its subsidiaries,
each in accordance with terms of any applicable agreement between the
Corporation or its subsidiaries and any such employee or the terms of any
agreement or plan pursuant to which such Common Stock was issued).

(2) Liquidation Rights. (a) In the event of Liquidation, the
------------------
holders of Series A Preferred Stock then outstanding shall be entitled to
be paid out of the assets of the Corporation available for distribution to
its stockholders upon Liquidation, but before any payment shall be made to
the holders of Common Stock, an amount equal to $100 per share plus any
dividends thereon declared or accrued but unpaid (including as a result of
quarterly compounding), subject to proportionate adjustment in the event of
any stock dividend, stock split, stock distribution or combination with
respect to such shares.

(b) If upon Liquidation the remaining assets of the Corporation
available for the distribution to its stockholders shall be insufficient to
pay the holders of Series A Preferred Stock the full preferential amount
set forth in paragraph (a) above, the holders of Series A Preferred Stock
shall share ratably in any distribution of the remaining assets and funds
of the Corporation in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to said shares were
paid in full.

(c) After the payment of all preferential amounts required to be
paid to the holders of Series A Preferred Stock upon Liquidation, the
holders of Common Stock then outstanding shall be entitled to receive the
remaining assets and funds of the Corporation available for distribution to
its stockholders, as provided in Section (A)(2) above.

(d) The merger or consolidation of the Corporation into or with
another corporation, the merger or consolidation of any other corporation
into or with the Corporation, or the sale, conveyance, mortgage, pledge or
lease of all or substantially all the assets of the Corporation shall not
be deemed to be a Liquidation for purposes of this Section 3.

(3) Voting. In addition to the voting rights of holders of
------
Series A Preferred Stock provided in Section A(3) above or as required by
law, the Corporation shall not (and the holders of the Common Stock shall
not cause the Corporation to), without first obtaining the affirmative
-4-
<PAGE>

vote or written consent of the holders of a majority of the outstanding
Series A Preferred Stock:

(a) amend or repeal any provision of the Corporation's
Certificate of Incorporation or By-Laws;

(b) authorize or effect (i) any sale, lease, transfer or other
disposition of all or substantially all the assets of the Corporation or of
any assets of the Corporation not in the ordinary course of its business
(including, without limitation, capital stock of or other ownership
interests in any other entity); (ii) any merger or consolidation or other
reorganization of the Corporation with or into another corporation, (iii)
the acquisition by the Corporation of another corporation by means of a
purchase of all or substantially all the assets of such corporation, or
(iv) a liquidation, winding up or dissolution of the Corporation or
adoption of any plan for the same;

(c) employ or terminate the employment of the chief executive
officer, chief financial officer or chief operating officer of the
Corporation or any of its subsidiaries (or any person serving in any such
capacity); or

(d) amend the Stock Plan, adopt any other incentive plan that
provides for the grant or sale of shares of the Corporation's capital stock
or securities convertible or exchangeable therefor or issue any shares of
the Corporation's capital stock or securities convertible or exchangeable
therefor.

(C) CONVERSION OF SERIES A PREFERRED STOCK. Each holder of
--------------------------------------
Series A Preferred Stock shall be entitled to convert such Series A
Preferred Stock into Common Stock upon the terms and subject to conditions
hereinafter set forth in this Article FOURTH (C):

(1) Conversion Decision. The holder or holders of a majority of
-------------------
the outstanding Series A Preferred Stock, upon written notice to the
Corporation, may elect (the "Conversion Decision") to cause all or a
-------------------
portion of the shares of Series A Preferred Stock to be converted into
shares of Common Stock and to determine the percentage of the shares of
Series A Preferred Stock outstanding to be so converted (the "Conversion
----------
Percentage") as set forth herein. Such notice shall set forth the date (the
----------
"Conversion Date"), which shall not precede the date of the Conversion
---------------
Decision nor be more than sixty days following such date and which may be
conditioned on the occurrence of one or more events. Within five days
following receipt of such notice, the Corporation shall notify all holders
of Series A Preferred Stock of the Conversion Decision and the terms

-5-
<PAGE>

thereof, including the Conversion Percentage and the Conversion Date. Such
notice shall be sent by overnight mail, postage prepaid, to each record
holder of Series A Preferred Stock at such holder's address appearing on
the stock register of the Corporation. Upon conversion of shares of Series
A Preferred Stock on the Conversion Date, the Series A Preferred Stock
shall no longer be convertible into Common Stock or any other class of
capital stock of the Corporation. Notwithstanding anything to the contrary
contained herein, the holder or holders of a majority of the outstanding
Series A Preferred Stock, upon written notice to the Corporation prior to
the Conversion Date, may elect to revoke the Conversion Decision. Within
five days following receipt of such notice, the Corporation shall notify
all holders of Series A Preferred Stock of such revocation of the
Conversion Decision.

(2) Conversion of Shares. (a) On the Conversion Date, each share
--------------------
of Series A Preferred Stock to be converted pursuant to Section (C)(1)
above (the aggregate of such shares of Series A Preferred Stock being the

"Aggregate Preferred Conversion Shares") shall be converted into that
--------------------------------------
number of fully paid and nonassessable shares of Common Stock as shall be
equal to the quotient of (x) the Aggregate Common Conversion Shares (as
------------ --
defined below) divided by (y) the Aggregate Preferred Conversion Shares;
-------
provided, however, that if the Conversion Decision was made prior to March
-------- -------
1, 1998, then such number of fully paid and nonassessable shares of Common
Stock shall be equal to the lesser of (i) the Ceiling Ratio (as defined
--- ------ --
below) and (ii) the foregoing quotient.
---

(b) For purposes of the foregoing conversion formula,

(i) "Aggregate Common Conversion Shares" shall be equal to
----------------------------------

(NPF x GPS)
___________ - NPS

1 - NPF

where

GPS = the number of shares of Common Stock outstanding
immediately prior to conversion that have been granted,
whether vested or unvested, under the Stock Plan (also
referred to herein as the "Granted Plan Shares");
-------------------

NPS = the number of shares of Common Stock issued and outstanding
immediately prior to conversion other than Granted Plan
Shares

-6-
<PAGE>

(also referred to herein as the "Non-Plan Shares"); and
---------------

NPF = the Non-Plan Fraction (as defined below).

(ii) "Non-Plan Fraction" shall be equal to
-----------------

P + (M x (E - P))
_________________
E

where

P = the sum of (x) the aggregate liquidation preference of the
Aggregate Preferred Conversion Shares but not including any
dividends declared or accrued thereon, less any dividends
previously paid thereon, plus (y) the aggregate purchase
----
price paid for the Non-Plan Shares;

M = 1 minus the product of .15 and the Granted Plan Shares
-----
Percentage; and

E = the fair market value of the Corporation (also referred to
herein as the "Total Equity Value"), determined in good
------------------
faith by the Board of Directors; provided that the fair
market value of the Corporation with respect to any
Conversion Decision made in connection with an initial
public offering of the Corporation's equity securities shall
be determined by reference to the initial public offering
price of such securities, net of any underwriting discounts
or commissions.

(iii) "Ceiling Ratio" shall be equal to
-------------

(CRM x GPS) - ((1 - CRM) x NPS)
___________________________________________________
(1 - CRM) x (Aggregate Preferred Conversion Shares)

where

CRM = 1 minus the product of .10 and the
-----
Granted Plan Shares Percentage.

(iv) "Granted Plan Shares Percentage" shall be equal to the
------------------------------
quotient of (x) the Granted Plan Shares divided by (y) the sum of (a)
-------- -------
the Granted Plan Shares and (b) the total number of shares of Common
Stock available for future grant under the Stock Plan.

(v) Notwithstanding anything in this Section (C)(2) of
Article FOURTH to the contrary, shares of the

-7-
<PAGE>

Corporation's capital stock issued or issuable pursuant to the
Corporation's 1997 Stock Incentive Plan shall be ignored for purposes
of determining the number of Aggregate Common Conversion Shares and
making the other calculations pursuant to such Section.

(c) If any fraction of a share of Common Stock would be issuable
upon conversion of any Series A Preferred Stock, the Corporation may issue
fractions of the shares of Common Stock, or in lieu thereof, pay to the
person entitled thereto an amount in cash equal to the current value of
such fraction, calculated to the nearest one-hundredth (1/100) of a share,
to be computed (i) if the Common Stock is listed on any national securities
exchange, on the basis of the last sales price per share of the Common
Stock on such exchange (or the quoted closing bid price if there shall have
been no sales) on the date of conversion, or (ii) if the Common Stock shall
not be so listed, on the basis of the mean between the closing bid and
asked prices per share for the Common Stock on the date of conversion as
reported by NASDAQ, or its successor, and if there are not such closing bid
and asked prices, on the basis of the fair market value per share as
determined by the Board of Directors.

(d) Conversion Upon Initial Public Offering. Notwithstanding
---------------------------------------
anything in this Article FOURTH (C) to the contrary, upon the closing of an
initial public offering of the Common Stock prior to May 31, 1997, the
802,997.50 outstanding shares of Series A Preferred Stock (which does not
include the shares of Series A Preferred Stock that the Corporation has
agreed to purchase pursuant to that certain Agreement made and entered into
as of the 15th day of April, 1997, by and among the Corporation, Warburg,
NationsBanc Investment Corp. and certain other individuals) shall be
converted pro rata into shares of Common Stock at a rate of
19.5412382490117-to-1 (after giving effect to the stock split set forth in
Article FIFTH below).

(e) Prior to the closing of an initial public offering of the
Common Stock prior to May 31, 1997 and subsequent to the repurchase and
conversion of shares of Series A Preferred Stock described in paragraph (d)
above, any fractional shares of Common Stock that would be issued after
giving effect to such conversion and stock split shall be paid in cash
based on a price of $20.50 per share.

(3) Conversion Procedure.
--------------------

(a) On or after the Conversion Date, each holder of Series A
Preferred Stock (i) shall surrender the certificate or certificates
therefor to the principal office of the transfer agent for the Series A
Preferred Stock (or if no transfer agent be at the time appointed, then to
the Corporation at its principal office), and (ii) shall give

-8-
<PAGE>

written notice to the Corporation at such office of the name or names (with
address) in which the certificate or certificates for Common Stock which
shall be issuable on such conversion shall be issued, subject to any
restrictions on transfer relating to shares of the Series A Preferred Stock
or Common Stock upon conversion thereof. If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly authorized in writing. As soon as practicable after
receipt of such notice and the surrender of the certificate or certificates
for Series A Preferred Stock as aforesaid, the Corporation shall cause to
be issued and delivered at such office to such holder, or on such holder's
written order, a certificate or certificates for (i) the number of full
shares of Common Stock issuable on such conversion of each holder's
Conversion Percentage of his Series A Preferred Stock in accordance with
the provisions hereof and fractional shares of Common Stock or cash as
provided in Section (C)(2)(c) in respect of any fraction of a Common Stock
otherwise issuable upon such conversion, and (ii) the number of shares of
Series A Preferred Stock not being converted. The Corporation may legend or
alter the form of the certificates for such shares of Series A Preferred
Stock not being converted to reflect changes in the rights thereof as a
result of the conversion.

(b) The Corporation shall at all times when Series A Preferred
Stock shall be outstanding reserve and keep available out of its authorized
but unissued stock, for the purposes of effecting the conversion of the
Series A Preferred Stock, such number of shares of its duly authorized
Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding Series A Preferred Stock.
Notwithstanding the foregoing, for purposes of this Section (C) of Article
FOURTH, the Corporation shall not be required to determine Total Equity
Value except in connection with a Conversion Decision.

(c) From and after the Conversion Date, all Series A Preferred
Stock which shall have been surrendered for conversion and converted as
herein provided shall no longer be deemed to be outstanding and all rights
with respect to such shares, including the rights, if any, to receive
notices and to vote, shall forthwith cease and terminate except only the
right of the holder thereof to receive certificates representing Common
Stock in exchange therefor and payment of any accrued and unpaid dividends
upon such Common Stock. Any Series A Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to
reduce the authorized Preferred Stock accordingly.

-9-
<PAGE>

FIFTH: On the date on which this Amended and Restated Certificate of
Incorporation is filed with the Office of the Secretary of the State of
Delaware, each issued and outstanding share of the Corporation's Common Stock,
par value $.01 per share, shall be split and exchanged, ipso facto, for 3.13943
shares of the new Common Stock, par value $0.01 per share.

SIXTH: The mailing address of the Corporation is as follows:

1235 Water Street
East Greenville, Pennsylvania 18042

SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the by-laws of the Corporation may be made, altered, amended or
repealed by the stockholders or by a majority of the entire Board of Directors.

EIGHTH: Elections of directors need not be by written ballot.

NINTH: 1. Indemnification. The Corporation shall indemnify to the
---------------
fullest extent permitted under and in accordance with the laws of the State of
Delaware any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, incorporator, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, trustee,
employee or agent of or in any other similar capacity with another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, shall not, of itself, create a presumption that
the person had reasonable cause to believe that his conduct was unlawful.

2. Payment of Expenses. Expenses (including attorneys' fees) incurred
-------------------
in defending any civil, criminal, administrative or investigative action, suit
or proceeding shall (in the case of any action, suit or proceeding against a
director of the

-10-
<PAGE>

Corporation) or may (in the case of any action, suit or proceeding against an
officer, trustee, employee or agent) be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors upon receipt of an undertaking by or on behalf of the
indemnified person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article NINTH.

3. Nonexclusivity of Provision. The indemnification and other rights
---------------------------
set forth in this Article NINTH shall not be exclusive of any provisions with
respect thereto in the by-laws or any other contract or agreement between the
Corporation and any officer, director, employee or agent of the Corporation.

4. Effect of Repeal. Neither the amendment nor repeal of this Article
----------------
NINTH, subparagraph 1, 2, or 3, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with Article NINTH, subparagraph 1, 2,
or 3, shall eliminate or reduce the effect of this Article NINTH, subparagraphs
1, 2, and 3, in respect of any matter occurring before such amendment, repeal or
adoption of an inconsistent provision or in respect of any cause of action, suit
or claim relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to this Article NINTH,
subparagraph 1, 2, or 3, if such provision had not been so amended or repealed
or if a provision inconsistent therewith had not been so adopted.

5. Limitation on Liability. No director or officer shall be
-----------------------
personally liable to the Corporation or any stockholder for monetary damages for
breach of fiduciary duty as a director or officer, except for any matter in
respect of which such director or officer (A) shall be liable under Section 174
of the General Corporation Law of the State of Delaware or any amendment thereto
or successor provision thereto, or (B) shall be liable by reason that, in
addition to any and all other requirements for liability, he:

(i) shall have breached his duty of loyalty to the Corporation or its
stockholders;

(ii) shall not have acted in good faith or, in failing to act, shall
not have acted in good faith;

(iii) shall have acted in a manner involving intentional misconduct
or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of
law; or

(iv) shall have derived an improper personal benefit.

-11-
<PAGE>

If the General Corporation Law of the State of Delaware is amended
after the date of the filing of this Amended and Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted

by the General Corporation Law of the State of Delaware, as so amended.

TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.

ELEVENTH: The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of the General Corporation Law of
the State of Delaware.

TWELFTH: The Corporation reserves the right to amend this Amended and
Restated Certificate of Incorporation in any manner permitted by the General
Corporation Law of the State of Delaware, as amended from time to time, and all
rights and powers conferred herein on stockholders, directors and officers, if
any, are subject to this reserved power.

-12-
<PAGE>

IN WITNESS WHEREOF, Knoll, Inc. has caused this Amended and Restated
Certificate of Incorporation to be signed by Barry L. McCabe, its Vice
President, Controller and Treasurer, this 6th day of May, 1997.

/s/ Barry L. McCabe
----------------------------------
Name: Barry L. McCabe
Title: Vice President,
Controller and Treasurer

-13-

<PAGE>

EXHIBIT 3.2

KNOLL, INC.

Incorporated Under the Laws of

the State of Delaware

BY-LAWS
-------

ARTICLE I
OFFICES
-------

The registered office of the Corporation in Delaware shall be at 1209
Orange Street in the City of Wilmington, County of New Castle, and The
Corporation Trust Company will be the resident agent of the Corporation in
charge thereof. The Corporation may also have such other offices at such other
places, within or without the State of Delaware, as the Board of Directors may
from time to time designate or the business of the Corporation may require.

ARTICLE II
STOCKHOLDERS
------------

Section 1. Annual Meeting. The annual meeting of stockholders for
--------------
the election of directors and the transaction of any other business will be held
in such city and state and at such date, time and place as may be designated by
the Board of Directors and set forth in the notice of such meeting. At the
annual meeting any business may be transacted and any corporate action may be
taken, whether stated in the notice of meeting or not, except as otherwise
expressly provided by statute or the Certificate of Incorporation.

Section 2. Special Meetings. Special meetings of the stockholders
----------------
for any purpose may be called at any time by the Board of Directors, or by the
President, and will be called by the President at the request of the holders of
a majority of the outstanding shares of capital stock entitled to vote. Special
meetings shall be held at such place or places within or without the State of
Delaware as shall from time to time be designated by the Board of Directors and
stated in the notice of such meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting.

Section 3. Notice of Meetings. Written notice of the time and place
------------------
of any stockholders' meeting, whether annual or special, will be given to each
stockholder entitled to vote at that meeting, by personal delivery or by mailing
the same to him
<PAGE>

or her at his or her address as the same appears upon the records of the
Corporation at least ten days but not more than sixty days before the day of the
meeting. Notice of any adjourned meeting need not be given except by
announcement at the meeting so adjourned, unless otherwise ordered in connection
with such adjournment. Further notice, if any, will be given as may be required
by law.

Section 4. Quorum. Any number of stockholders, together holding at
------
least a majority of the capital stock of the Corporation issued and outstanding
and entitled to vote, who will be present in person or represented by proxy at
any meeting duly called, shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws.

Section 5. Adjournment of Meetings. If less than a quorum is in
-----------------------
attendance at the time for which a meeting is called, the meeting may adjourn by
a majority vote of the stockholders present or represented by proxy and entitled
to vote at the meeting, without notice other than announcement at such meeting,
until a quorum is in attendance. Any meeting at which a quorum is present may
also be adjourned in like manner and for the amount of time as may be determined
by a majority vote of the stockholders present or represented by proxy and
entitled to vote. At any adjourned meeting at which a quorum is present, any
business may be transacted and any corporate action may be taken which might
have been transacted at the meeting as originally called.

Section 6. Voting List. The Secretary will prepare and make, at
-----------
least ten days before every election of directors, a complete list of the
stockholders entitled to vote, arranged in alphabetical order and showing the
address of each stockholder and the number of shares of each stockholder. The
list will be open at either (i) a place within the city where the meeting is to
be held, which place shall be specified in the notice of such meeting, or (ii)
if not so specified, at the place the meeting is to be held, for said ten days,
as well as at the time and place of such meeting, and will be subject to the
inspection of any stockholder.

Section 7. Voting. Each stockholder entitled to vote at any meeting
------
may vote either in person or by proxy, but no proxy shall be voted on or after
three years from its date, unless the proxy provides for a longer period. Each
stockholder entitled to vote will at every meeting of the stockholders be
entitled to one vote for each share of stock registered in his or her name on
the record of stockholders. At all meetings of stockholders, all matters,
except as otherwise provided by statute, will be determined by the affirmative
vote of the majority of shares present in person or by proxy and entitled to
vote on the subject matter. Voting at meetings of stockholders need not be by
written ballot.

-2-
<PAGE>

Section 8. Record Date of Stockholders. The Board of Directors is
---------------------------
authorized to fix in advance a date not exceeding sixty days nor less than ten
days preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock will go into effect,
or a date in connection with obtaining the consent of stockholders for any
purpose, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders, and any adjournment of a
meeting of stockholders, or entitled to receive payment of any dividend, or to
any allotment of rights, or to exercise the rights in respect of any change,
conversion or exchange of capital stock, or to give consent. Only the
stockholders that are stockholders of record on the date so fixed shall be
entitled to notice of, and to vote at, the meeting of stockholders, and any
adjournment of the meeting, or to receive payment of the dividend, or to receive
the allotment of rights, or to exercise the rights, or to give the consent, as
the case may be, notwithstanding any transfer of any stock on the books of the
Corporation, after the record date fixed in accordance with this Section 8.

Section 9. Action Without Meeting. Any action required or permitted
----------------------
to be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken (i) is signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take the action at a meeting at which
all shares entitled to vote on the action were present and voted and (ii) is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent will be given to those stockholders who have not
consented in writing.

Section 10. Conduct of Meetings. The Chairman of the Board of
-------------------
Directors, or in his absence the President or any Vice President designated by
the Chairman of the Board, shall preside at all regular or special meetings of
stockholders. To the maximum extent permitted by law, the presiding person will
have the power to set procedural rules, including but not limited to rules
respecting the time allotted to stockholders to speak, governing all aspects of
the conduct of the meetings. The Secretary of the Corporation will act as
secretary of each meeting. In the absence of the Secretary, the chairman of the

-3-
<PAGE>

meeting will appoint any person to act as secretary of the meeting.

ARTICLE III
DIRECTORS
---------

Section 1. Number and Qualifications. The Board of Directors will
-------------------------
consist initially of two directors, and thereafter will consist of the number as
may be fixed from time to time by resolution of the Board. The directors need
not be stockholders.

Section 2. Election of Directors. The directors will be elected by
---------------------
the stockholders at the annual meeting of stockholders.

Section 3. Duration of Office. The directors chosen at any annual
------------------
meeting will, except as otherwise provided in these By-Laws, hold office until
the next annual election and until their successors are elected and qualify.

Section 4. Removal and Resignation of Directors. Any director may be
------------------------------------
removed from the Board of Directors, with or without cause, by the holders of a
majority of the shares of capital stock entitled to vote, either by written
consent or consents or at any special meeting of the stockholders called for
that purpose, and the office of a removed director will immediately become
vacant.

Any director may resign at any time. Such resignation will take
effect at the time specified in the resignation, and if no time is specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation will not be necessary to make it effective, unless so specified in
the resignation.

Section 5. Filling of Vacancies. Any vacancy among the directors,
--------------------
occurring from any cause whatsoever, may be filled by a majority of the
remaining directors, though less than a quorum, provided however, that the
-------- -------
stockholders removing any director may at the same meeting fill the vacancy
caused by the removal, and provided further, that if the directors fail to fill
-------- -------
any vacancy, the stockholders may at any special meeting called for that purpose
fill the vacancy. In case of any increase in the number of directors, the
additional directors may be elected by the directors in office before the
increase.

Any person elected to fill a vacancy will hold office, subject to the
right of removal as provided in these By-Laws, until the next annual election
and until his successor is elected and qualified.

Section 6. Regular Meetings. The Board of Directors will hold an
----------------
annual meeting for the purpose of organization and

-4-
<PAGE>

the transaction of any business immediately after the annual meeting of the
stockholders, provided a quorum of directors is present. Other regular meetings
may be held at any time as may be determined from time to time by resolution of
the Board of Directors.

Section 7. Special Meetings. Special meetings of the Board of
----------------
Directors may be called by the Chairman of the Board of Directors or by the
President.

Section 8. Notice and Place of Meetings. Meetings of the Board of
----------------------------
Directors may be held at the principal office of the Corporation, or at any
other place as is stated in the notice of such meeting. Notice of any special
meeting, and except as the Board of Directors may otherwise determine by
resolution, notice of any regular meeting, will be mailed to each director
addressed to him or her at his residence or usual place of business at least two
days before the day on which the meeting is to be held, or if sent to him or her
at such place by telegraph, cable or facsimile, or delivered personally or by
telephone, not later than the day before the day on which the meeting is to be
held. No notice of the annual meeting of the Board of Directors will be
required if it is held immediately after the annual meeting of the stockholders
and if a quorum is present.

Section 9. Business Transacted at Meetings, etc. Any business may be
-------------------------------------
transacted and any corporate action may be taken at any regular or special
meeting of the Board of Directors at which a quorum is present, whether the
business or proposed action is stated in the notice of that meeting or not,
unless special notice of such business or proposed action is required by
statute.

Section 10. Quorum. A majority of the Board of Directors at any time
------
in office will constitute a quorum. At any meeting at which a quorum is
present, the vote of a majority of the members present will be the act of the
Board of Directors unless the act of a greater number is specifically required
by law or by the Certificate of Incorporation or these By-Laws. The members of
the Board will act only as the Board and the individual members of the Board
will not have any powers in their individual capacities.

Section 11. Compensation. The directors will not receive any stated
------------
salary for their services as directors, but by resolution of the Board of
Directors a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall preclude any director from
serving the Corporation in any other capacity, as an officer, agent or
otherwise, and receiving compensation therefor.

Section 12. Action Without a Meeting. Any action required or
------------------------
permitted to be taken at any meeting of the Board of Directors, or of any
committee of the Board of Directors, may be

-5-
<PAGE>

taken without a meeting if all members of the Board or committee, as the case
may be, consent to the action in writing, and the writing or writings are filed
with the minutes of the proceedings of the Board or committee.

Section 13. Meetings Through Use of Communications Equipment.
------------------------------------------------
Members of the Board of Directors, or any committee designated by the Board of
Directors, will, except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, have the power to participate in a meeting of
the Board of Directors, or any committee, by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and this participation will constitute presence
in person at the meeting.

ARTICLE IV
COMMITTEES
----------

Section 1. Executive Committee. The Board of Directors may, by
-------------------
resolution passed by a majority of the entire Board, designate two or more of
their number to constitute an Executive Committee to hold office at the pleasure
of the Board, which Committee will, during the intervals between meetings of the
Board of Directors, have and exercise all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
subject only to restrictions or limitations as the Board of Directors may from
time to time specify, or as limited by the Delaware Corporation Law, and will
have power to authorize the seal of the Corporation to be affixed to all papers
that may require it.

Any member of the Executive Committee may be removed at any time, with
or without cause, by a resolution of a majority of the entire Board of
Directors.

Any person ceasing to be a director shall ipso facto cease to be a
---- -----
member of the Executive Committee.

Any vacancy in the Executive Committee occurring from any cause
whatsoever may be filled from among the directors by a resolution of a majority
of the entire Board of Directors.

Section 2. Audit Committee: There shall be an Audit Committee
---------------
consisting of at least two members of the Board of Directors. None of the
members of the Audit Committee shall be directly involved in the supervision or
management of the financial affairs of the Corporation or any of its
subsidiaries.

A. The books, records and accounts of the Corporation may be audited
periodically by independent public accountants. In connection with the audit
process, the Audit Committee shall have the following duties to:

-6-
<PAGE>

(1) make recommendations about the appointment, retention, and
termination of independent public accountants;

(2) make recommendations about the scope of the audit and audit
procedures;

(3) review for the Board of Directors all recommendations made by the
independent public accountants about accounting methods and matters which are
relevant to the Corporation; and

(4) review with the independent public accountants those aspects of
the following matters which pertain to the Corporation, upon completion of their
audit: (a) the financial statements and any report or opinion proposed to be
rendered in connection therewith; (b) the independent public accountant's
perceptions of the personnel responsible for the Corporation's financial and
accounting matters; (c) the cooperation which the independent public accountants
receive during the course of their audit; (d) the extent which the resources of
the Corporation were or should be utilized to minimize the audit fee; (e) any
significant transactions which were not in the ordinary, routine and regular
course of business of the Corporation; (f) any change in accounting principles,
policies or standards; (g) all significant adjustments proposed by the
independent public accountants; (h) general policies and procedures relating to
internal auditing and financial controls which pertain to the Corporation; and
(i) any recommendations which the independent public accountants may have with
respect to internal financial controls, choice of accounting policies and
principles, or management reporting systems.

(5) The Audit Committee shall meet periodically with the staff
responsible for the Corporation's financial and accounting matters to review and
discuss the scope of internal accounting procedures and controls then in effect
and the extent which any recommendations made by the independent public
accountants or any internal auditors have been implemented.

(6) The Audit Committee shall direct and supervise any investigation
which it believes is necessary into any matter brought to its attention within
the scope of its duties. The Audit Committee may retain outside consultants in
connection with any such investigation.

(7) The Audit Committee shall monitor the business practices of the
Corporation as set forth in the written policies of the Corporation, such as
compliance with antitrust policies and other policies, as directed by the Board
of Directors.

(8) The Audit Committee shall prepare and present to the Board of
Directors a report covering its activities twice

-7-
<PAGE>

yearly at regular board meetings or more often, when considered necessary, to
report a material irregularity.

Section 3. Other Committees. Other committees, whose members need
----------------
not be directors, may be appointed by the Board of Directors or the Executive
Committee, which committees shall hold office for an amount of time and have
powers and perform duties as may from time to time be assigned to them by the
Board of Directors or the Executive Committee.

Any member of these committees may be removed at any time, with or
without cause, by the Board of Directors or the Executive Committee. Any
vacancy in a committee occurring from any cause whatsoever may be filled by the
Board of Directors or the Executive Committee.

Section 4. Resignation. Any member of a committee may resign at any
-----------
time. This resignation will be made in writing and will take effect at the time
specified in the resignation, or, if no time is specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation will not
be necessary to make it effective unless so specified in the resignation.

Section 5. Quorum. A majority of the members of a committee shall
------
constitute a quorum. The act of a majority of the members of a committee
present at any meeting at which a quorum is present will be the act of the
committee. The members of a committee will act only as a committee, and the
individual members of the committee will not have any powers in their individual
capacities.

Section 6. Record of Proceedings, etc. Each committee will keep a
---------------------------
record of its acts and proceedings, and will report the same to the Board of
Directors when and as required by the Board of Directors.

Section 7. Organization, Meetings, Notices, etc. A committee may
-------------------------------------
hold its meetings at the principal office of the Corporation, or at any other
place that a majority of the committee may at any time agree upon. Each
committee may make rules as it deems expedient for the regulation and carrying
on of its meetings and proceedings. Unless otherwise ordered by the Executive
Committee, any notice of a meeting of a committee may be given by the Secretary
of the Corporation or by the chairman of the committee and will be sufficient if
mailed to each member at his residence or usual place of business at least two
days before the day on which the meeting is to be held, or if sent to him or her
at that place by telegraph, cable or facsimile, or delivered personally or by
telephone not later than 24 hours before the time at which the meeting is to be
held.

-8-
<PAGE>

Section 8. Compensation. The members of any committee will be
------------
entitled to such compensation as may be allowed them by resolution of the Board
of Directors.

ARTICLE V
OFFICERS
--------

Section 1. Number. The officers of the Corporation shall be a
------
Chairman of the Board, a Vice Chairman of the Board, a President, a Managing
Director for European Operations, such number of Vice Presidents (including
Executive and Senior Vice Presidents) as may from time to time be elected by the
Board, a Controller, a Treasurer, one or more Assistant Treasurers, a Secretary,
one or more Assistant Secretaries, and such other officers as the Board may from
time to time determine. Such other officers shall be elected or appointed in
such manner, have such duties and hold their offices for such terms as may be
determined by the Board of Directors.

Section 2. Election, Term of Office and Qualifications. The officers
-------------------------------------------
of the Corporation shall be elected annually by the Board of Directors and,
except in the case of officers appointed in accordance with the provisions of
Section 1 of this Article V, each shall hold office until the next annual
election of officers and until his successor shall have been duly chosen and
shall qualify or until his earlier death, resignation or removal in the manner
hereinafter provided.

Section 3. Other Officers. Other officers, including one or more
--------------
additional vice presidents, assistant secretaries or assistant treasurers, may
from time to time be appointed by the Board of Directors, which other officers
shall have powers and perform duties as may be assigned to them by the Board of
Directors or the officer or committee appointing them.

Section 4. Removal of Officers. Any officer of the Corporation may
-------------------
be removed from office, with or without cause, by a vote of a majority of the
Board of Directors.

Section 5. Resignation. Any officer of the Corporation may resign at
-----------
any time. This resignation shall be in writing and take effect at the time
specified in the resignation, or if no time is specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation shall
not be necessary in order to make it effective, unless so specified in the
resignation.

Section 6. Filling of Vacancies. A vacancy in any office will be
--------------------
filled by the Board of Directors or by the authority appointing the predecessor
in such office.

Section 7. Compensation. The compensation of the officers will be
------------
fixed by the Board of Directors, or by any

-9-
<PAGE>

committee upon whom power in that regard may be conferred by the Board of
Directors.

Section 8. Chairman of the Board. The Chairman of the Board shall
---------------------
preside at all meetings of the stockholders and Board of Directors. He shall be
ex-officio a member and chairman of all standing committees. He shall be the
medium of communication to the Board and to the standing committees of all
matters presented for their consideration, and have general charge of the
affairs of the Corporation.

Section 9. Vice Chairman of the Board. In the absence of the
--------------------------
Chairman of the Board, the Vice Chairman of the Board shall preside at meetings
of the stockholders and the Board of Directors. He shall advise and counsel
with the President and the Chairman of the Board and shall perform such other
duties as may be requested by the Board of Directors, or as shall be jointly
determined by the Chairman of the Board or the President and himself.

Section 10. President. The President shall have, subject to the
---------
direction and control of the Chairman of the Board, the Vice Chairman, and the
Board, immediate supervision and control of the Corporation's business. He may
sign, with any other proper officer of the Corporation thereunto authorized,
certificates for stock of the Corporation. Subject to the Board, the Chairman
of the Board and the Vice Chairman, he shall have and perform such other powers
and duties as from time to time may be assigned or delegated to him by the
Board, the Chairman of the Board or the Vice Chairman.

Section 11. Managing Director for European Operations. The Managing
-----------------------------------------
Director for European Operations, subject to the direction and control of the
Board, the Chairman of the Board, the Vice Chairman of the Board and the
President, shall have general charge of the European operations of the
Corporation. Subject to the Board, the Chairman of the Board, the Vice Chairman
of the Board and the President, he shall have and perform such powers and duties
as from time to time may be assigned or delegated to him by the Board, the
Chairman of the Board, the Vice Chairman of the Board or the President.

Section 12. Vice Presidents. At the request of the President, or in
---------------
his absence or inability to act, the Vice President or, if there be more than
one, the Vice President designated by the Board, shall perform all the duties of
the President and, when so acting, shall have all the powers of and be subject
to all the restrictions placed upon the President. Each Vice President shall
perform such duties as from time to time may be assigned to him by the Chairman
of the Board, the Vice Chairman, the President or the Board. Except where by
law the signature of the President is required, each of the Vice Presidents
shall possess the same power as the President to sign

-10-
<PAGE>

all certificates, contracts, obligations and other instruments of the
Corporation.

Section 13. Controller. The Controller shall have general charge of
----------
the Accounting Department of the Corporation. He shall prescribe and supervise
a system of accounting and internal auditing that shall be adopted and followed
by the Corporation. He, or some other person or persons designated by name, in
writing, by him, shall prepare and certify all vouchers and payrolls. The
Controller shall, except as otherwise provided in this Section 13 or in Section
14 of this Article V, sign all checks before they are presented to the
Treasurer. The Controller may designate by name, in writing, one or more other
persons, each of whom may sign checks for him and on his behalf. The Controller
shall at the close of each month present for the information of the Board of
Directors a complete statement of the Corporation's financial affairs and of its
operations for the preceding month and for the months elapsed from the
commencement of the fiscal year. He shall also present a full statement of the
properties owned and controlled by the Corporation, under appropriate headings
as the Board of Directors may at any time require. He shall carefully preserve
and keep in his custody in the office of the Corporation all contracts, leases,
assignments and other valuable instruments of writing. He shall be charged with
the duty of verification of all property of the Corporation and of its
proprietary companies and the supervision of taking of all inventories.

Section 14. Treasurer. The Treasurer shall have charge of all monies
---------
and securities belonging to the Corporation. He shall deposit all monies
received by him in the name and to the credit of the Corporation, in such bank
or other place or places of deposit as the Board of Directors shall from time to
time designate; and for that purpose shall have power to endorse for collection
or payment all checks or other negotiable paper drawn payable to his order or to
the order of the Corporation. He shall disburse the monies of the Corporation
as directed by the Board, by checks which shall bear his signature as Treasurer,
or that of an Assistant Treasurer, and also the signature of the Controller or
some other person designated by name, in writing, by the Controller. The
Treasurer may designate by name, in writing, one or more other persons, each of
whom may sign checks for him and on his behalf. The Board of Directors may
authorize the establishment of dividend, disbursing, petty cash and payroll
accounts in such banks or other place or places of deposit as the Board of
Directors may from time to time designate, and monies of the Corporation may be
deposited in such accounts by checks signed as above provided in this Section
14. The Treasurer may designate by name, in writing, one or more persons each
of whom may sign checks on any one or more of such accounts for him or on his
behalf and, notwithstanding the foregoing provisions of Section 13 and of this
Section 14, funds in any such account may be withdrawn or disbursed by checks
bearing the single signature of a person so designated, or bearing the
Treasurer's facsimile

-11-
<PAGE>

signature by a check-signing machine if authorized by the Treasurer in writing.
The Treasurer shall execute a bond (in the penalty fixed by the Board, with such
surety as the Board may approve) conditioned for the delivery to the President,
or according to the order of the Board, in case of his decease, resignation or
discharge, of all monies, bonds, evidences of debts, vouchers, accounts, books,
writings and papers, and securities of any kind belonging to the Corporation
received by him or in his possession, charge or custody, and for the faithful
performance of all the duties of his office.

Section 15. Secretary. The Secretary, if present, shall act as
---------
secretary at all meetings of the Board and of the stockholders and keep the
minutes thereof in a book or books to be provided for that purpose; shall see
that all notices required to be given by the Corporation are duly given and
served; shall be custodian of the seal of the Corporation and shall affix the
seal or cause it to be affixed on all certificates of stock of the Corporation
and to all documents the execution of which on behalf of the Corporation under
its seal shall be duly authorized in accordance with the provisions of these By-
laws; shall have charge of the stock records of the Corporation; may sign, with
any other proper officer of the Corporation thereunto authorized, certificates
for stock of the Corporation; and in general, shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board.

Section 16. Assistant Controller, Assistant Secretary and Assistant
-------------------------------------------------------
Treasurer. In the event of the absence or inability to serve of the Controller,
- ---------
an assistant controller shall perform all the duties of the Controller; in the
event of the absence or inability to serve of the Secretary, an assistant
secretary shall perform all the duties of the Secretary, and in the event of the
absence or inability to serve of the Treasurer, an assistant treasurer shall
perform all the duties of the Treasurer.

ARTICLE VI
CAPITAL STOCK
-------------

Section 1. Issue of Certificates of Stock. Certificates of capital
------------------------------
stock will be in the form approved by the Board of Directors. The certificates
will be numbered in the order of their issue and will be signed by the Chairman
of the Board of Directors, the President or one of the Vice Presidents, and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer,
and the seal of the Corporation or a facsimile of the seal will be impressed or
affixed or reproduced on the certificates, provided, however, that where the
certificates are signed by a transfer agent or an assistant transfer agent or by
a transfer clerk acting on behalf of the Corporation and a registrar, the
signature of the Chairman of the

-12-
<PAGE>

Board of Directors, President, Vice President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer may be facsimile. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on any certificate or certificates ceases to be an officer of the
Corporation, whether because of death, resignation or otherwise, before that
certificate or certificates are delivered by the Corporation, that certificate
or certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed that certificate or
certificates, or whose facsimile signature or signatures is used thereon have
not ceased to be an officer or officers of the Corporation.

Section 2. Registration and Transfer of Shares. The name of each
-----------------------------------
person owning a share of the capital stock of the Corporation will be entered on
the books of the Corporation together with the number of shares held by him or
her, the numbers of the certificates covering the shares and the dates of issue
of the certificates. The shares of stock of the Corporation will be
transferable on the books of the Corporation by the holders of the shares in
person, or by their duly authorized attorneys or legal representatives, on
surrender and cancellation of certificates for a like number of shares,
accompanied by an assignment or power of transfer endorsed thereon or attached
thereto, duly executed, and with such proof of the authenticity of the signature
as the Corporation or its agents may reasonably require. A record will be made
of each transfer.

The Board of Directors may make other rules and regulations concerning
the transfer and registration of certificates for stock and may appoint a
transfer agent or registrar or both and may require all certificates of stock to
bear the signature of either or both.

Section 3. Lost, Destroyed and Mutilated Certificates. The holder of
------------------------------------------
any stock of the Corporation will immediately notify the Corporation of any
loss, theft, destruction or mutilation of the certificates. The Corporation may
issue a new certificate of stock in the place of any certificate previously
issued by it and alleged to have been lost, stolen or destroyed, and the Board
of Directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give the Corporation a
bond, in such sum not exceeding double the value of the stock and with such
surety or sureties as they may require, to indemnify it against any claim that
may be made against it by reason of the issue of the new certificate and against
all other liability in the premises, or may remit the owner to any remedy or
remedies he or she may have under the laws of the State of Delaware.

-13-
<PAGE>

ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
------------------------

Section 1. General Discretion of Directors. The Board of Directors
-------------------------------
will have power to fix and vary the amount to be set aside or reserved as
working capital of the Corporation, or as reserves, or for other proper purposes
of the Corporation, and, subject to the requirements of the Certificate of
Incorporation, to determine whether any part of the surplus or net profits of
the Corporation will be declared as dividends and paid to the stockholders, and
to fix the date or dates for the payment of dividends.

ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------

Section 1. Fiscal Year. The fiscal year of the Corporation will
-----------
commence on the first day of January and end on the last day of December.

Section 2. Corporate Seal. The corporate seal will be in the form
--------------
approved by the Board of Directors and may be altered at their pleasure. The
corporate seal may be used by causing it or a facsimile of the seal to be
impressed or affixed or reproduced or otherwise.

Section 3. Notices. Except as otherwise expressly provided, any
-------
notice required to be given by these By-Laws will be sufficient if given by
depositing the same in a post office or letter box in a sealed postpaid wrapper
addressed to the person entitled to the notice at his address, as the same
appears upon the books of the Corporation, or by telegraphing or cabling the
same to that person at that address, or by facsimile transmission to a number
designated upon the books of the Corporation, if any; and the notice will be
deemed to be given at the time it is mailed, telegraphed or cabled, or sent by
facsimile.

Section 4. Waiver of Notice. Any stockholder or director may at any
----------------
time, by writing or by telegraph, cable or facsimile transmission, waive any
notice required to be given under these By-Laws, and if any stockholder or
director is present at any meeting his presence will constitute a waiver of
notice.

Section 5. Checks, Drafts, etc. All checks, drafts or other orders
--------------------
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, will be signed by an officer or officers, agent or
agents of the Corporation, and in such manner, as will from time to time be
designated by resolution of the Board of Directors.

Section 6. Deposits. All funds of the Corporation will be deposited
--------
from time to time to the credit of the

-14-
<PAGE>

Corporation in a bank or banks, trust companies or other depositories as the
Board of Directors may select, and, for the purpose of the deposit, checks,
drafts, warrants and other orders for the payment of money which are payable to
the order of the Corporation, may be endorsed for deposit, assigned and
delivered by any officer of the Corporation, or by agents of the Corporation as
the Board of Directors or the President may authorize for that purpose.

Section 7. Voting Stock of Other Corporations. Except as otherwise
----------------------------------
ordered by the Board of Directors or the Executive Committee, the President or
the Treasurer has full power and authority on behalf of the Corporation to
attend and to act and to vote at any meeting of the stockholders of any
corporation of which the Corporation is a stockholder, and to execute a proxy to
any other person to represent the Corporation at any meeting, and at any meeting
of the stockholders of any corporation of which the Corporation is a
stockholder. The President or the Treasurer or the holder of any proxy, as the
case may be, will possess and may exercise any and all rights and powers
incident to ownership of the stock which the Corporation might have possessed
and exercised if present. The Board of Directors or the Executive Committee may
from time to time confer like powers upon any other person or persons.

Section 8. Indemnification of Officers and Directors. The
-----------------------------------------
Corporation will indemnify any and all of its directors and officers, including
former directors and officers, including those serving as an officer or director
of any corporation at the request of this Corporation, to the fullest extent
permitted under and in accordance with the laws of the State of Delaware.

ARTICLE IX
AMENDMENTS
----------

The Board of Directors will have the power to make, rescind, alter,
amend and repeal these By-Laws, provided, however, that the stockholders will
have power to rescind, alter, amend or repeal any by-laws made by the Board of
Directors, and to enact by-laws that will not be rescinded, altered, amended or
repealed by the Board of Directors. Notice of the proposal to make, amend or
repeal any provision of these By-Laws will be included in the notice of any
meeting of the stockholders or the Board of Directors at which the action is to
be considered. No change of the time or place for the annual meeting of the
stockholders for the election of directors will be made except in accordance
with the laws of the State of Delaware.

Dated: May 6, 1997

-15-

<PAGE>

EXHIBIT 4.1

COMMON STOCK [LOGO] COMMON STOCK

KNOLL, INC. CUSIP 498904 10 1

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

SEE REVERSE FOR
CERTAIN DEFINITIONS

This certifies that

is the owner of

FULLY PAID AND NON-ASSESSABLE COMMON STOCK
KNOLL, INC.

transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This certificate
is not valid unless countersigned and registered by the Transfer Agent and
Registrar.

Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated:

/s/ Patrick A. Milberger /s/ Burton B. Staniar
- ------------------------ ---------------------
SECRETARY CHAIRMAN

Countersigned and Registered:
THE BANK OF NEW YORK
BY TRANSFER AGENT
AND REGISTRAR

AUTHORIZED SIGNATURE
<PAGE>

KNOLL, INC.

The Corporation will furnish without charge to each stockholder who so requests,
a copy of the designations, powers, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Any such requests may be addressed to the Secretary of the Corporation.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws and regulations:

TEN COM - as tenants in common UNIF GIFT MIN Custodian
------- -------
TEN ENT - as tenants by entireties (Cust) (Minor)

JT TEN - as joint tenants under Uniform Gifts to Minors Act
with right of
survivorship
and not as ----------------------------------
tenants in common (State)

Additional abbreviations may also be used though not in the above list.

For value received, hereby sell, assign and transfer unto
--------------------

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------------------
| |
- ---------------------------------------------------

- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)

- --------------------------------------------------------------------------------

Shares
- --------------------------------------------------------------------------
of the Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint

- --------------------------------------------------------------------------------
Attorney to transfer the said Stock registered on the books of the within named
Corporation with full power of substitution in the premises.

--------------------------------------------

Dated
---------

--------------------------------------------
THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THIS CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.

<PAGE>

EXHIBIT 5

May 6, 1997

Knoll, Inc.
1235 Water Street
East Greenville, Pennsylvania 18041

Ladies and Gentlemen:

We have acted as counsel to Knoll, Inc. (the "Company"), a corporation organized
under the laws of the State of Delaware, in connection with the preparation of a
Registration Statement on Form S-1 (Registration No. 333-23399) (as amended, the
"Registration Statement") relating to the offer and sale of up to 9,200,000
shares of the common stock of the Company, par value $.01 per share, including
1,200,000 shares of common stock which are subject to the underwriters' over-
allotment options (the "Shares").

We have examined copies of the Amended and Restated Certificate of Incorporation
and By-Laws of the Company, the Registration Statement, all resolutions adopted
by the Company's Board of Directors and other records and documents that we have
deemed necessary for the purpose of this opinion. We have also examined such
other documents, papers, statutes and authorities as we have deemed necessary to
form a basis for the opinion hereinafter expressed.

In our examination, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us. As to various
questions of fact material to our opinion, we have relied on statements and
certificates of officers and representatives of the Company and public
officials.

Based on the foregoing, we are of the opinion that: (1) the Company has duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware; and (2) the Shares, when duly sold, issued and
paid for in accordance with the terms of the Prospectus included as part of the
Registration Statement, will be
<PAGE>

Knoll, Inc.
May 6, 1997
Page 2

duly authorized and validly issued and will be fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included as
part of the Registration Statement.

Very truly yours,

/S/ Willkie Farr & Gallagher

<PAGE>

EXHIBIT 10.16

AMENDMENT TO
EMPLOYMENT AGREEMENT

WHEREAS, Knoll, Inc. (formerly TKG Acquisition Corp.) (the "Company") and
Andrew B. Cogan (the "Employee") have entered into an Employment Agreement,
dated as of February 29, 1996 (the "Employment Agreement"); and

WHEREAS, the Company and the Employee have agreed to amend the Employment
Agreement.

NOW, THEREFORE, effective as of the date written below, the Employment
Agreement is amended as follows:

1. Section 3.01(c) shall be replaced by the following:

"Executive shall participate during the Term in such other
bonus plans or programs that are established during the Term for
senior management by the Board, with a target annual bonus opportunity
for each year during the Term of 100% of Executive's Base Salary,
which shall be calculated on the basis of achievement of goals set by
the Board, which goals may include, without limitation, specific
individual goals and/or corporate performance parameters such as
revenue, profit, balance sheet and cash management objectives. The
Board shall establish the goals applicable to Executive in
consultation with the Executive in advance of any fiscal year or other
applicable period."

IN WITNESS WHEREOF, the parties have executed this Amendment on the 30th day of
April, 1997.

Knoll, INC.

By: /s/ Barry L. McCabe
--------------------------
Name: Barry L. McCabe
Title: Vice President, Controller
and Treasurer

/s/ Andrew B. Cogan
-----------------------------
Andrew B. Cogan

<PAGE>

EXHIBIT 11

KNOLL, INC.

STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
TEN MONTHS PRO FORMA THREE MONTHS THREE MONTHS
ONE MONTH ENDED YEAR ENDED ENDED ENDED
ENDED DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
MARCH 31, 1996 1996 1996 1996 1997
-------------- ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net income before
extraordinary item
(a).................... $ 449 $21,995 $21,743 $ 197 $11,638
Extraordinary loss on
early extinguishment of
debt................... -- (5,159) -- -- --
------ ------- ------- ------ -------
Net income (b).......... $ 449 $16,836 21,743 197 11,638
====== =======
Adjustment of interest
expense for assumed
repayment of debt net
of tax effect.......... 4,409 1,102 1,081
------- ------ -------
Net income as adjusted
before extraordinary
item (c)............... $26,152 $1,299 $12,719
======= ====== =======
Common stock outstanding
during the period...... 7,291 7,291 7,291 7,291 7,291
Dilutive effect of stock
options computed in
accordance with the
treasury stock method
as required by SAB 83.. 298 298 298 298 298
Conversion of preferred
shares into common
shares upon completion
of IPO................. 27,441 27,441 27,441 27,441 27,441
------ ------- ------- ------ -------
Pro forma weighted
average number of
common shares
outstanding prior to
shares issued in
connection with IPO
(d).................... 35,030 35,030 35,030 35,030 35,030
Shares issued in
connection with the
IPO.................... 8,000 8,000 8,000 8,000 8,000
------ ------- ------- ------ -------
Pro forma weighted
average number of
common shares
outstanding after
shares issued in
connection with IPO
(e).................... 43,030 43,030 43,030 43,030 43,030
====== ======= ======= ====== =======
Pro forma income before
extraordinary item per
share of Common Stock
(a)/(d)................ $ .01 $.63 $.62 $.01 $.33
====== ======= ======= ====== =======
Pro forma net income per
share of Common
Stock (b)/(d).......... $ .01 $.48 N/A N/A $.33
====== ======= ======= ====== =======
Pro forma as adjusted
income before
extraordinary item per
share of Common Stock
(c)/(e)................ N/A N/A $.61 $.03 $.30
====== ======= ======= ====== =======
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of Knoll, Inc. of our report dated January
15, 1996 relating to the consolidated financial statements of The Knoll Group,
Inc. which appears in such Prospectus. We also consent to the application of
such report to the Financial Statement Schedule for the two years ended
December 31, 1995 listed under Item 16(b) of this Registration Statement when
such schedule is read in conjunction with the consolidated financial
statements referred to in our report. The audits referred to in such report
also included this schedule. We also consent to the references to us under the
headings "Experts," "Summary Historical and Pro Forma Financial Information,"
and "Selected Financial Information" in such Prospectus. However, it should be
noted that Price Waterhouse LLP has not prepared or certified such "Summary
Historical and Pro Forma Financial Information" and "Selected Financial Data."

/s/ Price Waterhouse LLP

Price Waterhouse LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219
May 6, 1997

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the references to our firm under the captions "Selected
Financial Information" and "Experts" and to the use of our report dated March
14, 1997 (except for Note 23, as to which the date is May 6, 1997) in the
Registration Statement (Form S-1 No. 333-23399) and related Prospectus of
Knoll, Inc. dated May 6, 1997.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

May 6, 1997

<PAGE>

EXHIBIT 99.1

CONSENT TO BE NAMED AS A DIRECTOR

I, John W. Amerman, hereby consent to be a director of Knoll, Inc., a
Delaware corporation (the "Company"), and to be named as a director in the
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission by the Company.

Dated: May 6, 1997

/s/ John W. Amerman
------------------------------
Name: John W. Amerman

<PAGE>

EXHIBIT 99.2

CONSENT TO BE NAMED AS A DIRECTOR

I, Robert J. Dolan, hereby consent to be director of Knoll, Inc., a
Delaware corporation (the "Company"), and to be named as a director in the
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission by the Company.

Dated: May 6, 1997

/s/ Robert J. Dolan
----------------------------
Name: Robert J. Dolan