KNOLL, INC.

2007 STOCK INCENTIVE PLAN

 

ARTICLE I

Purpose

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

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

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

ARTICLE II

Administration

The Plan shall be administered by a Committee (the "Committee") appointed by the
Board of Directors of the Company (the "Board") and shall consist of not less
than two members. During any such time that the Company is subject to Section
16(b) of the Securities Exchange Act of 1934 (the "Exchange Act") each member of
the Committee shall, unless otherwise determined by the Board, be a
"Non-Employee Director" within the meaning of the rules promulgated under
Section 16(b) and during any such time that the Company is subject to Section
162(m) of the Code each member of the Committee shall, unless otherwise
determined by the Board, be an "outside director" within the meaning of Section
162(m) of the Code. Subject to the provisions of the Plan, the Committee shall
have sole authority, in its absolute discretion: (a) to determine which
individuals shall be granted shares of restricted stock ("Restricted Shares")
and which shall be granted options; (b) to make grants of Restricted Shares,
incentive stock options and nonqualified options to acquire Stock; (c) to
determine the times when Restricted Shares and options shall be granted and the
number of shares to be granted or optioned; (d) to determine the option price of
the shares subject to each option; (e) to determine the nature of any rights and
restrictions to be imposed on Restricted Shares granted under the Plan; (f) to
determine the time or times when each option becomes exercisable, the duration
of the exercise period and any other restrictions on the exercise of options
issued hereunder; (g) to prescribe the form or forms of agreements for
Restricted Shares granted under the Plan and the form or forms of the option
agreements for options granted under the Plan (which forms shall be consistent
with the terms of the Plan but need not be identical); (h) to adopt, amend and
rescind such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan; (i) to construe and interpret the Plan, the rules
and regulations, the Restricted Share agreements and the option agreements under
the Plan and to make all other determinations deemed necessary or advisable for
the administration of the Plan; and (j) to make determinations as to any other
awards to be made under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all grantees and
optionees.

ARTICLE III

Stock

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

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

ARTICLE IV

Eligibility of Participants

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

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

ARTICLE V

Fair Market Value

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

ARTICLE VI

Terms and Conditions of Restricted Shares

Restricted Shares will become unrestricted and vest only in accordance with a
vesting period set by the Committee with respect to each grant of Restricted
Shares (the "Restriction Period"). The Committee may provide in the Restricted
Share Agreement for acceleration of the Restriction Period and accelerated
vesting upon termination of the grantee's employment by reason of death or
disability, or by the Company without Cause, or upon any other event for which
the Committee determines, in its discretion, that such acceleration is
appropriate. With respect to each grant of Restricted Shares, "Cause" shall have
the meaning given such term in a grantee's Restricted Share Agreement.

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

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

ARTICLE VII

Option Grant and Exercise Price

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

ARTICLE VIII

Exercise and Terms of Options

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

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

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

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

ARTICLE IX

Special Provisions Applicable

to Incentive Stock Options Only

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

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

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

ARTICLE X

Payment for Shares

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

ARTICLE XI

Non-Transferability of Option Rights

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

ARTICLE XII

Adjustment for Recapitalization, Merger, etc.

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

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

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

ARTICLE XIII

No Obligation to Exercise Option

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

ARTICLE XIV

Use of Proceeds

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

ARTICLE XV

Rights as a Stockholder

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

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

ARTICLE XVI

Employment Rights

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

ARTICLE XVII

Compliance with the Law

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

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

ARTICLE XVIII

Cancellation of Options

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

ARTICLE XIX

Effective Date and Expiration Date of Plan

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

ARTICLE XX

Amendment or Discontinuance of Plan

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

ARTICLE XXI

Repurchase of Options

In granting options hereunder, the Committee may in its discretion, and on terms
it considers appropriate, require an optionee, or the executors or
administrators of an optionee's estate, to sell back to the Company such options
in the event such optionee's employment with the Company is terminated.

 

ARTICLE XXII

Miscellaneous

 

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

     

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

     

 c. If the Committee shall find that any person to whom any amount is payable
    under the Plan is unable to care for his affairs because of illness or
    accident, or is a minor, or has died, then any payment due to such person or
    his estate (unless a prior claim therefor has been made by a duly appointed
    legal representative) may, if the Committee so directs the Company, be paid
    to his spouse, child, relative, an institution maintaining or having custody
    of such person, or any other person deemed by the Committee to be a proper
    recipient on behalf of such person otherwise entitled to payment. Any such
    payment shall be a complete discharge of the liability of the Committee and
    the Company therefor.
 d. No member of the Committee shall be personally liable by reason of any
    contract or other instrument executed by such member or on his behalf in his
    capacity as a member of the Committee nor for any mistake of judgment made
    in good faith, and the Company shall indemnify and hold harmless each member
    of the Committee and each other employee, officer or director of the Company
    to whom any duty or power relating to the administration or interpretation
    of the Plan may be allocated or delegated, against any cost or expense
    (including counsel fees) or liability (including any sum paid in settlement
    of a claim) arising out of any act or omission to act in connection with the
    Plan unless arising out of such person's own fraud or bad faith; provided,
    however, that approval of the Board shall be required for the payment of any
    amount in settlement of a claim against any such person. The foregoing right
    of indemnification shall not be exclusive of any other rights of
    indemnification to which such persons may be entitled under the Company's
    Certificate of Incorporation or By-Laws, as a matter of law, or otherwise,
    or any power that the Company may have to indemnify them or hold them
    harmless.
 e. The Plan shall be governed by and construed in accordance with the internal
    laws of the State of Delaware without reference to the principles of
    conflicts of law thereof.
 f. No provision of the Plan shall require the Company, for the purpose of
    satisfying any obligations under the Plan, to purchase assets or place any
    assets in a trust or other entity to which contributions are made or
    otherwise to segregate any assets, nor shall the Company maintain separate
    bank accounts, books, records or other evidence of the existence of a
    segregated or separately maintained or administered fund for such purposes.
    Optionees shall have no rights under the Plan other than as unsecured
    general creditors of the Company, except that insofar as they may have
    become entitled to payment of additional compensation by performance of
    services, they shall have the same rights as other employees under general
    law.
 g. Each member of the Committee and each member of the Board shall be fully
    justified in relying, acting or failing to act, and shall not be liable for
    having so relied, acted or failed to act in good faith, upon any report made
    by the independent public accountant of the Company and upon any other
    information furnished in connection with the Plan by any person or persons
    other than such member.
 h. Except as otherwise specifically provided in the relevant plan document, no
    payment under the Plan shall be taken into account in determining any
    benefits under any pension, retirement, profit-sharing, group insurance or
    other benefit plan of the Company.
 i. The expenses of administering the Plan shall be borne by the Company.
 j. Masculine pronouns and other words of masculine gender shall refer to both
    men and women.

ARTICLE XXIII

Other Awards

The Committee may grant any other cash, stock or stock-related awards to any
eligible individual under this Plan that the Committee deems appropriate,
including, but not limited to, cash-settled or stock-settled stock appreciation
rights, limited stock appreciation rights, phantom stock awards, restricted
stock units, the bargain purchase of Stock and stock bonuses. Any such benefits
and any related agreements shall contain such terms and conditions as the
Committee deems appropriate. Such awards and agreements need not be identical.
With respect to any benefit under which shares of Stock are or may in the future
be issued (other than shares issued from the Company's treasury) for
consideration other than prior services, the amount of such consideration shall
not be less than the amount (such as the par value of such shares) required to
be received by the Company in order to comply with applicable state law.

Shares of Stock may also be used to satisfy obligations of the Company to
deliver shares of Stock (whether or not restricted) under other compensation and
benefit plans heretofore or hereafter established by the Company.

 

* * *

As adopted by the Board of Directors of

Knoll, Inc. as of February 6, 2007.