UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)
JENNIFER CONVERTIBLES, INC.
(Name of Issuer)
Common Stock ($.01 par value)
(Title of Class of Securities)
476153101
(CUSIP Number)
Robert C. Shaffner, Senior Vice President
Klaussner Furniture Industries, Inc.
405 Lewallen Street
Asheboro, North Carolina 27203
910-625-6174
_________________________________________________________________
March 6, 1996
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box. ____.
Check the following box if a fee is being paid with the
statement: X
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
1) Name of Reporting Person
SS or I.R.S. Identification No. of Above Person
The group ("Group") is formed by each of the reporting
persons filing additional copies of this second part of
the cover page of Schedule 13D.
2) Check the Appropriate Box if a Member of a Group
(a) X
(b)
3) SEC Use Only
4) Source of Funds
00
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E)
______
6) Citizenship or Place of Organization
Hans J. Klaussner is a citizen of Germany. All
nonnatural reporting persons are organized under the
laws of Delaware or North Carolina.
Number of Shares Beneficially Owned by Each Reporting Person With
7) Sole Voting Power
1,085,623 shares. See Item 5.
8) Shared Voting Power
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
9) Sole Dispositive Power
1,085,623 shares. See Item 5.
10) Shared Dispositive Power
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,085,623 shares. See Item 5.
12) Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
_______
13) Percent of Class Represented by Amount in Row (11)
19.4%
14) Type of Reporting Person
This Schedule 13D is being filed jointly by the
members of the Group.
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
1) Name of Reporting Person
SS or I.R.S. Identification No. of Above Person
Hans J. Klaussner
2) Check the Appropriate Box if a Member of a Group
(a) X
(b)
3) SEC Use Only
4) Source of Funds
00
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E)
______
6) Citizenship or Place of Organization
Germany
Number of Shares Beneficially Owned by Each Reporting Person With
7) Sole Voting Power
1,085,623 shares. See Item 5.
8) Shared Voting Power
9) Sole Dispositive Power
1,085,623 shares. See Item 5.
10) Shared Dispositive Power
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,085,623 shares
12) Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
_______
13) Percent of Class Represented by Amount in Row (11)
19.4%
14) Type of Reporting Person
IN
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
1) Name of Reporting Person
SS or I.R.S. Identification No. of Above Person
Klaussner Corporation
2) Check the Appropriate Box if a Member of a Group
(a) X
(b)
3) SEC Use Only
4) Source of Funds
00
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E)
______
6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With
7) Sole Voting Power
8) Shared Voting Power
1,085,623. See Item 5.
9) Sole Dispositive Power
10) Shared Dispositive Power
1,085,623 shares. See Item 5.
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,085,623 shares
12) Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
_______
13) Percent of Class Represented by Amount in Row (11)
19.4%
14) Type of Reporting Person
CO
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
1) Name of Reporting Person
SS or I.R.S. Identification No. of Above Person
Klaussner Enterprises, Inc.
2) Check the Appropriate Box if a Member of a Group
(a) X
(b)
3) SEC Use Only
4) Source of Funds
00
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E)
______
6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With
7) Sole Voting Power
8) Shared Voting Power
1,085,623. See Item 5.
9) Sole Dispositive Power
10) Shared Dispositive Power
1,085,623 shares. See Item 5.
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,085,623 shares
12) Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
_______
13) Percent of Class Represented by Amount in Row (11)
19.4%
14) Type of Reporting Person
CO
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
1) Name of Reporting Person
SS or I.R.S. Identification No. of Above Person
Klaussner Furniture Industries, Inc.
2) Check the Appropriate Box if a Member of a Group
(a) X
(b)
3) SEC Use Only
4) Source of Funds
00
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E)
______
6) Citizenship or Place of Organization
North Carolina
Number of Shares Beneficially Owned by Each Reporting Person With
7) Sole Voting Power
8) Shared Voting Power
1,085,623 shares. See Item 5.
9) Sole Dispositive Power
10) Shared Dispositive Power
1,085,623 shares. See Item 5.
<PAGE>
CUSIP No. 476153101 SCHEDULE 13D
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,085,623 shares
12) Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
_______
13) Percent of Class Represented by Amount in Row (11)
19.4%
14) Type of Reporting Person
CO
<PAGE>
Item 1. Security and Issuer.
This Statement relates to the Common Stock, par value $.01
per share (the "Common Stock"), of Jennifer Convertibles, Inc., a
Delaware corporation ("Jennifer Convertibles"). The principal
office of Jennifer Convertibles is located at 419 Crossways Park
Drive, Woodbury, New York 11797.
Item 2. Identity and Background.
All of the outstanding capital stock of Klaussner Furniture
Industries, Inc. ("KFI") is owned by Klaussner Enterprises, Inc.
("KE"), all of the outstanding capital stock of KE is owned by
Klaussner Corporation ("KC"), and all of the outstanding capital
stock of KC is owned by Hans J. Klaussner. KFI is incorporated
under the laws of North Carolina and its principal business
address is 405 Lewallen Street, Asheboro, North Carolina 27203.
KE and KC are incorporated under the laws of Delaware and each
has a principal business address at 913 North Market Street,
Suite 804, Wilmington, Delaware 19801. Mr. Klaussner is a
citizen and resident of Germany and his business address is 7614
Gengenbach, Germany. His principal occupation is Chief Executive
Officer of Hukla-Werke Gmbh, a manufacturer of upholstered
furniture.
KFI and its subsidiaries are engaged in the furniture
manufacturing business. In addition to its ownership of KFI, KE
owns an interest in an investment company whose principal asset
is a golf course. KC has no assets other than its ownership of
KE and a note receivable from KFI.
Mr. Klaussner is the sole director of KFI, the sole director
of KC, Chairman of the Board and President of KC, and Chairman of
the Board and Senior Vice President of KE and of KFI. Mr.
Klaussner, J.B. Davis and Barbara A. Steen are the directors of
KE. Mr. Davis is Executive Vice President of KC, and President
and Chief Executive Officer of KE and KFI. Robert C. Shaffner is
Vice President of KC and of KE and is Senior Vice President and
Chief Financial Officer of KFI. Benjamin F. Frazier is Vice
President of KC and of KE and is Executive Vice President of KFI.
There are no other executive officers of KC, KE or KFI. Each of
Messrs. Davis, Shaffner and Frazier has his principal business
address at 405 Lewallen Street, Asheboro, North Carolina 27203,
and Ms. Steen has her principal business address at 900 Market
Street, Second Floor, Wilmington, Delaware 19301. Each of them
is a United States citizen.
During the last five years, none of the persons filing this
Statement and none of Messrs. Davis, Shaffner or Frazier or Ms.
Steen has been a party to a criminal proceeding (excluding
traffic violations or similar misdemeanors) nor has any of them
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of
which he or she was or is subject to a judgment, decree or final
order enjoining future
<PAGE>
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amounts of Funds or Other Consideration.
Prior to 1994, KFI and its subsidiaries sold furniture
products to Jennifer-New York, Inc. ("JNY"), which in turn sold a
portion of such furniture products to Jennifer Convertibles.
Effective January 1, 1994, KFI and its subsidiaries began selling
furniture products to a wholly owned subsidiary of Jennifer
Convertibles, but JNY remained indebted to KFI in the amount of
$3,500,000. That indebtedness has been paid down to $2,800,000
and is evidenced by JNY's Amended and Restated Promissory Note
dated as of March 1, 1996 (the "JNY Note").
On March 6, 1996, KFI made a loan to Jennifer Warehousing,
Inc. ("JWI") in the amount of $1,440,000 (the "JWI Loan") to
enable JWI to reduce outstanding indebtedness on a warehouse
facility (the "Warehousing Indebtedness") operated by JWI for the
benefit of Jennifer Convertibles and others. The Warehousing
Indebtedness was guaranteed in part by Jennifer Convertibles
under an agreement by which Jennifer Convertibles agreed with the
lender not to grant any liens or security interests on its
assets. As a result of the JWI Loan and the corresponding
reduction in the Warehousing Indebtedness, the lender has
consented to the granting of liens and security interests by
Jennifer Convertibles to KFI to secure all indebtedness (now
existing and hereafter arising) of Jennifer Convertibles and
affiliated companies to KFI and certain related parties.
The JWI Loan is evidenced by JWI's Promissory Note dated as
of March 1, 1996 (the "JWI Note"). As described below, payment
of the JNY Note and the JWI Note has been guaranteed by certain
affiliates of JNY and JWI and by two directors of Jennifer
Convertibles and those guarantees are secured by pledge
agreements covering an aggregate of 1,085,623 shares of Common
Stock of Jennifer Convertibles.
All of the financial accommodations described above to JNY
and JWI were provided from the working capital of KFI.
Item 4. Purpose of Transactions.
Payment of the JNY Note and the JWI Note has been guaranteed
by Jara Enterprises, Inc. ("Jara"), Convertibles Enterprises,
Inc. ("Convertible"), Bright Star Enterprises, Inc. ("Bright
Star"), Jennifer Advertising, Inc. ("Advertising"), Harley J.
Greenfield ("Greenfield"), Edward B. Seidner ("Seidner") and Fred
J. Love ("Love"). Love is the beneficial owner of all the
outstanding stock of Jara; and JNY, JWI, Convertible, Bright
Star, and Advertising are subsidiaries or affiliates of Jara.
Greenfield and Seidner are directors of
<PAGE>
Jennifer Convertibles and Greenfield is President and Chief
Executive Officer of Jennifer Convertibles.
To secure their guarantees, Jara, Convertible, Bright Star,
Advertising, Greenfield, Seidner and Love have entered into Stock
Pledge Agreements dated as of March 1, 1996 (the "Stock Pledge
Agreements") pursuant to which they have pledged shares of
Jennifer Convertibles Common Stock as follows:
Pledgor Number of Shares
Jara 66,320
Convertible 215,929
Bright Star 25,000
Advertising 36,000
Greenfield 245,458
Seidner 254,833
Love 242,083
1,085,623
Item 5. Interest in Securities of the Issuer.
The 1,085,623 shares of Jennifer Convertibles Common Stock
pledged to KFI pursuant to the Stock Pledge Agreements described
in Item 4 (the "Pledged Shares") represent 19.4% of the
outstanding shares of Jennifer Convertibles Common Stock. Under
the Stock Pledge Agreements, KFI will acquire voting and other
rights with respect to the Pledged Shares only upon the
occurrence of an Event of Default (as defined in the Stock Pledge
Agreements) and, if acquired, any such rights would be exercised
as directed by Mr. Klaussner in his capacity as sole director of
KFI.
In addition to the Pledged Shares, Mr. Davis beneficially
owns 26,375 shares and Mr. Shaffner beneficially owns 1,289
shares of Jennifer Convertibles Common Stock. Each of Messrs.
Davis and Shaffner has sole voting and investment power with
respect to the shares owned directly by him.
KFI's interest in the Pledged Shares was acquired on March
6, 1996 and the other shares owned by Messrs. Davis and Shaffner
were acquired more than 60 days prior to the date of this
Statement. Except as set forth in this Item 5, none of KC, KE,
KFI, or Messrs. Klaussner, Davis, Shaffner or Frazier
beneficially owns any shares of Jennifer Convertibles Common
Stock or has effected any transactions in the Common Stock during
the past 60 days.
<PAGE>
Item 6. Contracts, Arrangements or Understandings or
Relationships With Respect to Securities of the Issuer.
Except as set forth above, there are no contracts,
arrangements or understandings or relationships (legal or
otherwise) among KC, KE, KFI, Mr. Klaussner, Mr. Davis, Mr.
Shaffner, or Mr. Frazier and any other person with respect to any
of the securities of Jennifer Convertibles.
Item 7. Material to be Filed as Exhibits.
The following items are filed as exhibits to this Schedule
13D:
Exhibit 1 Agreement of Joint Filing
Exhibit 2 $2,800,000 Amended and Restated Promissory
Note of JNY dated as of March 1, 1996
Exhibit 3 $1,440,000 Promissory Note of JWI dated as
of March 1, 1996
Exhibit 4 Unconditional Guaranty of Greenfield,
Seidner and Love dated as of February 17,
1994, as amended by Amendment dated as of
January 1, 1995 and by Amendment dated as of
March 1, 1996
Exhibit 5 Continuing Guaranty Agreement by Jara,
Convertible, Bright Star and Advertising
dated as of February 26, 1993, as amended by
Amendment dated as of February 17, 1994, by
Amendment dated as of January 1, 1995, and
by Amendment dated as of March 1, 1996
Exhibit 6 Unconditional Guaranty and Subordination
Agreement of Jara, Convertible, Bright Star
and Advertising dated as of March 1, 1996
Exhibit 7 Unconditional Guaranty and Subordination
Agreement of Greenfield, Seidner and Love
dated as of March 1, 1996
Exhibit 8 Stock Pledge Agreement dated as of March 1,
1996 by and among Jara, Convertible, Bright
Star, Advertising and KFI
Exhibit 9 Stock Pledge Agreement dated as of March 1,
1996 by and among Greenfield, Seidner, Love
and KFI
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
March 11, 1996
/S/ Hans J. Klaussner
Hans J. Klaussner
KLAUSSNER CORPORATION
By: /S/Robert C. Shaffner
Robert C. Shaffner, Vice President
KLAUSSNER ENTERPRISES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner, Vice President
KLAUSSNER FURNITURE INDUSTRIES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner, Senior Vice
President and Chief Financial
Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
Exhibit 1 Agreement of Joint Filing
Exhibit 2 $2,800,000 Amended and Restated Promissory
Note of JNY dated as of March 1, 1996
Exhibit 3 $1,440,000 Promissory Note of JWI dated as
of March 1, 1996
Exhibit 4 Unconditional Guaranty of Greenfield,
Seidner and Love dated as of February 17,
1994, as amended by Amendment dated as of
January 1, 1995 and by Amendment dated as
of March 1, 1996.
Exhibit 5 Continuing Guaranty Agreement by Jara,
Convertible, Bright Star and Advertising
dated as of February 26, 1993, as amended
by Amendment dated as of February 17, 1994,
by Amendment dated as of January 1, 1995,
and by Amendment dated as of March 1, 1996
Exhibit 6 Unconditional Guaranty and Subordination
Agreement of Jara, Convertible, Bright Star
and Advertising dated as of March 1, 1996
Exhibit 7 Unconditional Guaranty and Subordination
Agreement of Greenfield, Seidner and Love
dated as of March 1, 1996
Exhibit 8 Stock Pledge Agreement dated as of March 1, 1996
by and among Jara, Convertible, Bright Star,
Advertising and KFI
Exhibit 9 Stock Pledge Agreement dated as of March 1, 1996
by and among Greenfield, Seidner, Love and KFI
<PAGE>
EXHIBIT 1
AGREEMENT OF JOINT FILING
The undersigned hereby agree, pursuant to Rule 13d-
1(f)(1)(iii), that a joint Schedule 13D be filed on behalf of
each of the undersigned, in respect of transactions in the Common
Stock of Jennifer Convertibles, Inc. involving each of the
undersigned.
Date: March 11, 1996
/S/Hans J. Klaussner
Hans J. Klaussner
KLAUSSNER CORPORATION
By: /S/Robert C. Shaffner
Robert C. Shaffner, Vice President
KLAUSSNER ENTERPRISES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner, Vice President
KLAUSSNER FURNITURE INDUSTRIES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner, Senior Vice
President and Chief Financial
Officer
<PAGE>
EXHIBIT 2
AMENDED AND RESTATED PROMISSORY NOTE
$2,800,000 Inwood, New York
March 1, 1996
FOR VALUE RECEIVED, Jennifer-New York, Inc. (the "Borrower")
promises to pay to the order of Klaussner Furniture Industries,
Inc. (the "Payee") at P. O. Drawer 220, Asheboro, N.C. 27204, or
at such other address as to which the Payee shall give written
notice to the Borrower, in lawful money of the United States of
America and in immediately available funds, the sum of Two
Million Eight Hundred Thousand Dollars ($2,800,000) in twenty-
eight monthly installments of $100,000 each, the first such
installment to be due and payable on March 15, 1996, and
subsequent installments to be due and payable on the 15th day of
each month thereafter to and including June 15, 1998.
The Borrower further promises to pay interest to the Payee
at such address, in like money, on the outstanding principal
amount owing hereunder at a variable rate per annum equal to the
"prime rate" as announced from time to time by Wachovia Bank of
North Carolina, N.A., Winston-Salem, North Carolina, plus 3%.
Such interest shall be computed daily on the basis of a 360-day
year and for the actual number of days elapsed. Interest accrued
hereunder shall be payable monthly, in arrears, on the 15th day
of each month, commencing March 15, 1996, with a final payment at
maturity, whether by acceleration or otherwise, until the
principal amount of this Note is indefeasibly paid in full. To
the extent permitted by law, interest accrued on this Note and
not paid on its due date will bear interest at the aforesaid rate
and be payable on demand, and interest will continue to accrue on
this Note at the aforesaid rate after the filing by or against
the Borrower of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief,
whether state or federal.
Payment of this Note is (i) guaranteed, jointly and
severally, by Harley J. Greenfield ("Greenfield"), Edward B.
Seidner ("Seidner"), and Fred J. Love ("Love") pursuant to the
Unconditional Guaranty dated as of February 17, 1994, as amended
by amendment dated as of January 1, 1995, and by amendment dated
as of the date hereof (the "Unconditional Guaranty") and (ii)
guaranteed, jointly and severally, by Jara Enterprises, Inc.
("Jara"), Convertible Enterprises, Inc. ("Convertible"), Bright
Star Enterprises, Inc. ("Bright Star") and Jennifer Advertising,
Inc. ("Advertising") pursuant to the Continuing Guaranty
Agreement dated as of February 26, 1993, as amended by amendment
dated as of February 17, 1994, by amendment dated as of January
1, 1995, and by amendment dated as of the date hereof (the
"Continuing Guaranty"). The Unconditional Guaranty and the
Continuing Guaranty are secured by the Stock Pledge Agreement
dated as of February 17, 1994, as amended by letter agreement
dated November 7, 1994, by amendment dated as of January 1, 1995,
and by amendment dated as of the date hereof (the "Jara Stock
Pledge Agreement") and the Stock Pledge Agreements of even
<PAGE>
date herewith executed by Greenfield, Seidner and Love and by
Jara, Convertible, Bright Star and Advertising and covering an
aggregate of 1,085,623 shares of common stock of Jennifer
Convertibles, Inc. (the "Jennifer Stock Pledge Agreements").
Payee is entitled to the benefits of and remedies provided in the
Unconditional Guaranty, the Continuing Guaranty, the Jara Stock
Pledge Agreement, and the Jennifer Stock Pledge Agreements (the
"Collateral Documents").
If any payment under this Note becomes due and payable on a
Saturday, Sunday or a legal bank holiday under the laws of the
State of North Carolina, the maturity thereof shall be extended
to the next succeeding business day and interest thereon shall be
payable at the rate set forth above during such extension.
The Borrower may, upon giving Payee prior notice, prepay
this Note, in whole or in part, at any time without premium or
penalty, but any partial prepayment shall not defer or otherwise
extend the due date of any installment payable hereunder until
the entire principal balance and all accrued interest and other
sums due hereunder have been paid in full. All partial
prepayments shall be applied in payment of the installments due
under this Note in the inverse order of their maturity.
Each of the following events shall constitute a default
under this Note (an "Event of Default"):
(1) Borrower shall fail to make any payment
when due under this Note, by acceleration or
otherwise, and such failure is not cured within 10
days after receipt of written notice thereof given
by Payee to Borrower at 245 Roger Avenue, Inwood,
New York 11696 or c/o Jerome I. Silverman,
20 Donald Drive, Syosset, New York 11747; or
(2) Borrower, or any guarantor under the
Unconditional Guaranty or the Continuing Guaranty
(each of whom is hereinafter referred to as a
"Guarantor"), makes an assignment for the benefit
of creditors or admits in writing its inability to
pay its debts as they become due, or commences a
voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), or is adjudicated
bankrupt or insolvent, or files any petition or
answer seeking for itself any liquidation,
arrangement, composition, reorganization,
readjustment or similar relief under any present or
future statute, law or regulation pertaining to
insolvency or creditors' rights, or files any answer
admitting the material allegations of a petition
filed against it in any such proceeding, or seeks or
consents to or acquiesces in the appointment of any
trustee, receiver, liquidator or similar official for
itself or all or any substantial part of its
properties; or
(3) If within 90 days after the commencement of
any proceeding against Borrower or any Guarantor
seeking any liquidation, arrangement,
2
<PAGE>
composition, reorganization, readjustment or similar
relief under any present or future statute, law or
regulation pertaining to insolvency or creditors'
rights, such proceeding is not dismissed or stayed,
or if within 90 days after the appointment, without
the consent or acquiescence of Borrower or any
Guarantor, of any trustee, receiver, liquidator or
similar official for Borrower or any Guarantor or
of all or any substantial part of its properties,
such appointment is not vacated or stayed; or
(4) The occurrence of an Event of Default, as
defined in the Jara Stock Pledge Agreement; or
(5) The sale by Jara of all or substantially all
of the "Jennifer Convertibles" stores owned by it,
whether through the sale of stock of Jara or of the
subsidiaries owning such stores or through the sale of
the assets comprising such stores; or
(6) The sale or other disposition by Greenfield,
Seidner, Love, Jara, Convertible, Bright Star or
Advertising of any of the shares of common stock of
Jennifer Convertibles, Inc., a Delaware corporation,
pledged pursuant to the Jennifer Stock Pledge
Agreements; or
(7) The merger of Borrower, Jara or any other
Guarantor under the Continuing Guaranty with or into
any person, firm or corporation without the prior
consent of Payee, which shall not be unreasonably
withheld; or
(8) The sale by Jara of all or substantially
all the warehouse operations of Jennifer Warehousing,
Inc. ("Warehousing"), whether through the sale of
stock of Warehousing or through the sale of all or
substantially all of the assets comprising the
warehouse operations, except to Jennifer Convertibles,
Inc. and except for the sale of the warehouse located
in Inwood, New York; or
(9) The dissolution of Jara or the Borrower
or the dissolution of any other Guarantor under the
Continuing Guaranty unless the assets of such
company are distributed to Jara or any of its
subsidiaries; or
(10) The occurrence of an Event of Default,
as defined in the Jennifer Stock Pledge Agreements
(or either of them); or
(11) The occurrence of an Event of Default,
as defined in the Promissory Note of Jennifer
Warehousing, Inc. dated as of the date hereof in the
original principal amount of $1,440,000; or
3
<PAGE>
(12) Any judgment for $250,000 or more is
entered against Borrower, Jara, Convertible,
Bright Star, Advertising or Jennifer Warehousing,
Inc. (the "Jara Group") and is not stayed, bonded
or satisfied within 30 days after execution is
issued thereon.
Borrower covenants and agrees to notify Payee of any judgment
entered against any member of the Jara Group within five days
after receipt of notice of the entry thereof and to notify Payee
within 48 hours after receipt of notice of the issuance of
execution on or other enforcement action taken with respect to
any such judgment, and Borrower's failure to so notify Payee
shall constitute an Event of Default hereunder. Any such notices
to Payee shall be given by overnight delivery to 405 Lewallen
Street, Asheboro, North Carolina 27203.
Upon the occurrence and continuance of any Event of Default,
Payee may by written notice to Borrower at the address stated
above, at Payee's option, declare the entire unpaid principal
amount of this Note, together with accrued interest thereon, to
be due and payable, whereupon the same shall forthwith mature and
become due and payable, and Payee shall have such other remedies
as Payee may have at law, equity or otherwise, including but not
limited to, rights and remedies under the Collateral Documents.
No failure on the part of Payee to exercise, and no delay in
exercising, and no course of dealing with respect to, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
The Borrower agrees to pay all costs, including, without
limitation, all reasonable attorneys' fees, incurred by the Payee
in collecting or enforcing payment of this Note in accordance
with its terms.
This Note may be modified or canceled only by the written
agreement of the Borrower and the Payee.
All parties liable for the payment of this Note, whether as
principals, sureties, guarantors, endorsers, or otherwise, hereby
waive presentment, demand, protest, and notice of protest, of
demand, of nonpayment, of dishonor, and of acceleration of
maturity, and all other notices and formalities whatsoever to the
extent waivable, and agree that the time for payment hereof may
be extended from time to time and that any collateral which now
or hereafter secures payment hereof may be released from time to
time, in whole or in part, and increases and substitutions may be
made therein, all without notice to them and without affecting
their liability hereon in any manner whatsoever.
This Note may not be transferred or assigned by Payee
without the written consent of Borrower; provided, however, that
Payee may assign or transfer this Note to any affiliate or
subsidiary of Payee.
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This Note and the rights and obligations of the Borrower and
the Payee shall be governed by and construed in accordance with
the internal laws of the State of North Carolina in all respects,
including matters of construction, validity, and performance,
without regard to conflict of laws principles. THE BORROWER
HEREBY AGREES THAT ANY ACTION OR PROCEEDING UNDER THIS NOTE MAY,
IF THE PAYEE SO ELECTS, BE BROUGHT AND ENFORCED IN ANY COURT OF
THE STATE OF NORTH CAROLINA LOCATED WITHIN RANDOLPH COUNTY, NORTH
CAROLINA OR IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE
DISTRICT OF NORTH CAROLINA OR THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT, AND THE BORROWER HEREBY CONSENTS TO
JURISDICTION AND VENUE IN ANY SUCH ACTION OR PROCEEDING COMMENCED
IN ANY OF SUCH COURTS AND WAIVES ANY OBJECTION IT MIGHT OTHERWISE
HAVE WITH RESPECT THERETO. THE BORROWER FURTHER AGREES THAT ANY
PROCESS REQUIRED TO BE SERVED ON BORROWER FOR PURPOSES OF ANY
SUCH PROCEEDING MAY BE SERVED ON BORROWER, WITH THE SAME EFFECT
AS PERSONAL SERVICE ON BORROWER WITHIN THE STATE OF NORTH
CAROLINA, BY REGISTERED MAIL ADDRESSED TO BORROWER AT 245 ROGER
AVENUE, INWOOD, NEW YORK 11696 OR C/O JEROME I. SILVERMAN, 20
DONALD DRIVE, SYOSSET, NEW YORK 11747.
This Note restates, replaces, amends and supersedes the
Amended and Restated Promissory Note dated January 1, 1995, in
the original principal amount of $3,500,000, which shall be
attached hereto and marked "Superseded and Replaced."
JENNIFER-NEW YORK, INC.
By: /S/Fred J. Love
Fred J. Love, President
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EXHIBIT 3
PROMISSORY NOTE
$1,440,000.00 Inwood, New York
March 1, 1996
FOR VALUE RECEIVED, Jennifer Warehousing, Inc. (the
"Borrower") promises to pay to the order of Klaussner Furniture
Industries, Inc. (the "Payee"), at P. O. Drawer 220, Asheboro, N.C.
27204, or at such other address as to which the Payee shall give
written notice to the Borrower, in lawful money of the United
States of America and in immediately available funds, the sum of
One Million Four Hundred Forty Thousand Dollars ($1,440,000) in
fifteen consecutive monthly installments as follows:
(a) Fourteen monthly installments in the amount of $100,000
each, the first such installment to be due and payable on July 15,
1998, and subsequent installments to be due and payable on the 15th
day of each month thereafter to and including August 15, 1999; and
(b) One final installment, in the amount of the then entire
unpaid principal balance of this Note, to be due and payable on
September 15, 1999.
The Borrower further promises to pay interest to the Payee at
such address, in like money, from the date hereof on the
outstanding principal amount
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owing hereunder at a variable rate per annum equal to the "prime
rate" as announced from time to time by Wachovia Bank of North
Carolina, N.A., Winston-Salem, North Carolina, plus 3%. Such
interest shall be computed daily on the basis of a 360-day year and
for the actual number of days elapsed. Interest accrued hereunder
shall be payable monthly, in arrears, on the first day of the
month, commencing April 1, 1996, with a final payment at maturity,
whether by acceleration or otherwise, until the principal amount of
this Note is paid in full. To the extent permitted by law, interest
accrued on this Note and not paid on its due date will bear
interest at the aforesaid rate and be payable on demand, and
interest will continue to accrue on this Note at the aforesaid rate
after the filing by or against the Borrower of any petition seeking
any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state or federal.
Payment of this Note is i) guaranteed, jointly and severally,
by Harley J. Greenfield, Edward B. Seidner and Fred J. Love,
pursuant to the Unconditional Guaranty dated as of the date hereof
(the "Personal Guaranty"), and guaranteed, jointly and severally,
by Jara Enterprises, Inc. ("Jara"), Convertible Enterprises, Inc.
("Convertible"), Bright Star Enterprises, Inc. ("Bright Star"), and
Jennifer Advertising, Inc. ("Jennifer Advertising") (collectively
the "Corporate Guarantors") pursuant to the Unconditional Guaranty
dated as of the date hereof (the "Corporate Guaranty"). The
Personal Guaranty and Corporate Guaranty are respectively secured
in accordance with the separate Stock Pledge Agreements dated as of
the date hereof (collectively the "Jennifer Stock Pledge
Agreements") executed by Harley J. Greenfield, individually and
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in his capacity as Voting Trustee, Edward B. Seidner, Fred J. Love,
and by Jara, Convertible, Bright Star and Jennifer Advertising.
Payee is entitled to the benefits of and remedies provided in the
Jennifer Stock Pledge Agreements, the Personal Guaranty, and the
Corporate Guaranty (the "Collateral Documents").
If any payment of this Note becomes due and payable on a
Saturday, Sunday or a legal bank holiday under the laws of the
State of North Carolina, the maturity thereof shall be extended to
the next succeeding business day and interest thereon shall be
payable at the rate set forth above during such extension.
The Borrower may upon giving Payee prior written notice,
prepay this Note, in whole or in part, at any time without premium
or penalty, but any partial prepayment shall not defer or otherwise
extend the due date of any installment payable hereunder until the
entire principal balance and all accrued interest and other sums
due hereunder have been paid in full. All partial prepayments
shall be applied in payment of the installments due under this Note
in the inverse order of their maturity.
Borrower warrants and represents that the only members of the
Jara Group (as hereafter defined) that own the capital stock of
Jennifer Convertibles, Inc. ("JCI") are Harley J. Greenfield,
Edward B. Seidner, Fred J. Love, Jara, Convertible, Bright Star,
and Jennifer Advertising. The Jara Group shall mean Jara,
Convertible, Bright Star, Jennifer Advertising, all of the
Subsidiaries (as hereafter defined), Harley J. Greenfield, Edward
B. Seidner, Fred J. Love, all partnerships in which any of the
foregoing persons are either general or limited partners, and all
other entities in which any of the foregoing persons have an
ownership interest. The term "Subsidiary" shall
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mean any corporation of which more than 50% of the outstanding
shares of capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation
(irrespective of whether or not at the time capital stock of any
other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by Jara and/or by one or more of its
Subsidiaries and/or by Harley J. Greenfield, Edward B. Seidner
and/or Fred J.Love.
Borrower shall deliver or cause to delivered to Payee the
following documents not later than the following dates:
(a) within ninety (90) days after the six month period
ending November 1 of each year, an unaudited compilation financial
statement of Jara and its Subsidiaries for each such half-year
period prepared by Jerome I. Silverman & Co. or an independent
certified public accountant acceptable to Payee (the "Jara
Accountant"), which shall include a consolidated balance sheet,
consolidated income statement and a consolidated cash flow
statement; and
(b) within one hundred twenty (120) days after the end of
each fiscal year of Jara, an unaudited compilation of Jara and its
Subsidiaries for such fiscal year prepared by the Jara Accountant
presenting the financial condition of Jara and its Subsidiaries on
a consolidated basis, which shall include a consolidated balance
sheet, consolidated income statement and consolidated cash flow
statement.
Each of the following events shall constitute a default under
this Note (an
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"Event of Default"):
1. Borrower shall fail to make any payment when due under
this Note, by acceleration or otherwise, and such failure is not
cured within 10 days after receipt of written notice thereof given
by Payee to Borrower either at 245 Roger Avenue, Inwood, New York
11696, Attn: Jerome I. Silverman, or c/o Jerome I. Silverman at 20
Donald Drive, Syosset, New York 11747; or
2. Any representation or warranty made in this Note, the
Personal Guaranty, Corporate Guaranty and/or Jennifer Stock Pledge
Agreements proves to have been false or misleading in any material
respect when made; or
3. The failure of the Borrower to perform, observe or fulfill
any covenant or obligation contained in this Note and such failure
is not cured within 30 days after receipt of written notice thereof
given by Payee to Borrower at either 245 Roger Avenue, Inwood, New
York 11696, Attn: Jerome I. Silverman, or c/o Jerome I. Silverman
at 20 Donald Drive, Syosset, New York 11747; or
4. Borrower, Guarantor Fred J. Love, or any Corporate
Guarantor (each of whom is hereinafter referred to as a
"Guarantor"), makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts as they become
due, or commences a voluntary case under the federal bankruptcy
laws (as now or hereafter in effect), or is adjudicated bankrupt or
insolvent, or files any petition or answer seeking for itself any
liquidation, arrangement, composition, reorganization, readjustment
or similar relief under any present or future statute, law or
regulation pertaining to insolvency or creditors' rights, or files
any answer admitting the material
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allegations of a petition filed against it in any such proceeding,
or seeks or consents to or acquiesces in the appointment of any
trustee, receiver, liquidator or similar official for itself or all
or any substantial part of its properties; or
5. If within 90 days after the commencement of any proceeding
against Borrower or any Guarantor seeking any liquidation,
arrangement, composition, reorganization, readjustment or similar
relief under any present or future statute, law or regulation
pertaining to insolvency or creditors' rights, such proceeding is
not dismissed or stayed, or if within 90 days after the
appointment, without the consent or acquiescence of Borrower or any
Guarantor, of any trustee, receiver, liquidator or similar official
for Borrower or any Guarantor or of all or any substantial part of
its properties, such appointment is not vacated or stayed: or
6. The occurrence of an Event of Default, as defined in the
Jennifer Stock Pledge Agreements; or
7. The sale by Jara of all or substantially all of the
"Jennifer Convertibles" stores owned by it, whether through the
sale of stock of Jara or of the Subsidiaries owning such stores or
through the sale of the assets comprising such stores; or
8. The attempted or purported sale by any of the Guarantors
of any of the shares of capital stock of JCI, owned by any of them
and pledged with Payee under the Jennifer Stock Pledge Agreements;
or
9. The merger of Borrower, Jara or any other Guarantor under
the Corporate Guaranty with or into any person, firm or corporation
without the prior
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written consent of Payee, which shall not be unreasonably withheld;
or
10. The sale by Jara of all or substantially all warehouse
operations of Borrower, whether through the sale of stock of
Borrower or through the sale of all or substantially all of the
assets comprising the warehouse operations, except for the transfer
of such warehouse operations to JCI, and except for the sale of the
warehouse located at Inwood, New York.
11. The dissolution of the Borrower, Jara, or the dissolution
of any other Corporate Guarantor unless the assets of such company
are distributed to Jara or any of its Subsidiaries.
Upon the occurrence and continuance of any Event of Default,
Payee may by written notice to Borrower at the address stated
above, at Payee's option, declare the entire unpaid principal
amount of this Note, together with accrued interest thereon, to be
due and payable, whereupon the same shall forthwith mature and
become due and payable, and Payee shall have such other remedies as
Payee may have at law, equity or otherwise, including, but not
limited to the rights and remedies under the Collateral Documents.
No failure on the part of Payee to exercise, and no delay in
exercising, and no course of dealing with respect to, any right
hereunder or under any of the Collateral Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or
the exercise of any other right.
The Borrower agrees to pay all costs including, without
limitation, all
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reasonable attorneys' fees incurred by the Payee in preparing this
Note and all other documents executed in connection therewith in an
amount subject to the terms of a letter agreement of even date
herewith between Borrower and Payee, and all reasonable attorneys'
fees incurred by Payee in collecting or enforcing payment of this
Note in accordance with its terms.
This Note may be modified or cancelled only by the written
agreement of the Borrower and the Payee.
All parties liable for the payment of this Note, whether as
principals, sureties, guarantors, endorsers, or otherwise, hereby
waive presentment, demand, protest, and notice of protest, of
demand, of nonpayment, of dishonor, and of acceleration of
maturity, and all other notices and formalities whatsoever to the
extent waivable, and agree that the time for payment hereof may be
extended from time to time and that any collateral which now or
hereafter secures payment hereof may be released from time to time,
in whole or in part, and increases and substitutions may be made
therein, all without notice to them and without affecting their
liability hereon in any manner whatsoever.
This Note may not be transferred or assigned by Payee without
the written consent of Borrower, provided, however, that Payee may
assign or transfer this Note to any affiliate or subsidiary of
Payee.
This Note and the rights and obligations of the Borrower and
the Payee shall be governed by and construed in accordance with the
internal laws of the State of North Carolina in all respects,
including matters of construction, validity, and
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performance, without regard to conflict of laws principles. THE
BORROWER HEREBY AGREES THAT ANY SUCH PROCEEDING MAY, IF THE PAYEE
SO ELECTS, BE BROUGHT AND ENFORCED IN ANY COURT OF THE STATE OF
NORTH CAROLINA LOCATED WITHIN RANDOLPH COUNTY, NORTH CAROLINA OR IN
THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH
CAROLINA OR THE UNITED STATES COURT OF APPEALS FOR THE FOURTH
CIRCUIT, AND THE BORROWER HEREBY WAIVES ANY OBJECTION TO
JURISDICTION OR VENUE IN ANY SUCH PROCEEDING COMMENCED IN ANY OF
SUCH COURTS. THE BORROWER FURTHER AGREES THAT ANY PROCESS REQUIRED
TO BE SERVED ON BORROWER FOR PURPOSES OF ANY SUCH PROCEEDING MAY BE
SERVED ON BORROWER, WITH THE SAME EFFECT AS PERSONAL SERVICE ON
BORROWER WITHIN THE STATE OF NORTH CAROLINA, BY REGISTERED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS STATED ABOVE. BORROWER WAIVES
TRIAL BY JURY IN ANY SUCH PROCEEDING.
JENNIFER WAREHOUSING, INC.
By: /S/Fred Love
Title: President
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EXHIBIT 4
UNCONDITIONAL GUARANTY
THIS UNCONDITIONAL GUARANTY, dated as of February 17, 1994
(the "Guaranty"), is given, jointly and severally, by Harley J.
Greenfield, Edward B. Seidner and Fred J. Love (collectively
referred to as the "Guarantors") and extended to Klaussner
Furniture Industries, Inc. (the "Lender") for the benefit of
Jennifer-New York, Inc. (the "Borrower").
WHEREAS, the Borrower is a subsidiary of Jara Enterprises,
Inc. ("Jara");
WHEREAS, the Guarantors own all of the issued and
outstanding capital stock of Jara;
WHEREAS, the Lender has agreed to extend the due date of
certain advances in the aggregate amount of $2,300,000 previously
made by the Lender to the Borrower and to extend the due date of
certain accounts payable by the Borrower to the Lender in the
aggregate amount of $1,200,000 (collectively, the "Extensions");
WHEREAS, without this Guaranty, the Lender would be
unwilling to grant the Extensions to the Borrower;
WHEREAS, because of the benefit to the Guarantors from the
Lender's Extensions to the Borrower, the Guarantors agree to
guarantee to the Lender the obligations of the Borrower as set
forth herein;
NOW THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the Guarantors:
1 . The Guarantors, jointly and severally, unconditionally
guarantee the payment when due, upon maturity, acceleration or
otherwise, of any and all indebtedness of the Borrower to the
Lender. If any or all indebtedness of the Borrower to the Lender
becomes due and payable hereunder, the Guarantors, jointly and
severally, unconditionally promise to pay such indebtedness to
the Lender, or order, on demand, in lawful money of the United
States. The word "indebtedness" is used herein in its most
comprehensive sense and includes any and all advances, debts,
obligations and liabilities of the Borrower to the Lender
heretofore, now, or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, absolute or
contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to
time reduced, or extinguished, and thereafter increased or
incurred, whether the Borrower may be liable individually or
jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of
limitations, and whether or not such indebtedness may be or
hereafter become otherwise
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unenforceable, including without limitation, the obligations of
the Borrower under that Promissory Note of even date herewith
executed by the Borrower in favor or the Lender in the original
principal amount of $3,500,000.00.
2 . The Guarantors, jointly and severally, unconditionally
guarantee the payment of any and all indebtedness of the Borrower
to the Lender whether or not then due or payable by the Borrower
upon (a) the death, dissolution, insolvency, or business failure
of, or any assignment for benefit of creditors by, or
commencement of any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceedings by or against, the
Borrower or any of the Guarantors, or (b) the appointment of a
receiver for, or the attachment, restraint of, or making or
levying of any order of court or legal process affecting, the
property of the Borrower or any of the Guarantors, and jointly
and severally unconditionally promise to pay such indebtedness to
the Lender, or order, on demand, in lawful money of the United
States upon the occurrence of any such event.
3 . This Guaranty may be terminated as to future
transactions only upon written notice of termination thereof to
the Lender, and such notice shall be deemed to be effective as of
noon of the next succeeding business day following receipt
thereof by the Lender. No such notice shall release the
Guarantors from any liability as to any indebtedness which may be
owing to or held by the Lender or in which the Lender may have
any interest or for which the Guarantors or Borrower may be
obligated at the time of receiving such notice, or from
extensions and renewals thereof.
4 . The liability of the Guarantors hereunder is exclusive
and independent of any security for or other guaranty of the
indebtedness of the Borrower, whether executed by the Guarantors
or by any other party, and the liability of the Guarantors
hereunder is not affected or impaired by (a) any direction of
application of payment by the Borrower or by any other party, (b)
any other continuing or other guaranty or undertaking of the
Guarantors or of any other party as to the indebtedness of the
Borrower, (c) any payment on or in reduction of any such other
guaranty or undertaking, (d) any notice of termination hereof as
to future transactions given by, or by the death or termination,
revocation, or release of any obligations hereunder of, any other
of the Guarantors or (e) any payment made to the Lender on the
indebtedness which the Lender repays to the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement,
moratorium, or other debtor relief proceeding, and the
Guarantors, jointly and severally, waive any right to the
deferral or modification of their obligations hereunder by reason
of any such proceedings.
5 . The obligations of the Guarantors hereunder are joint
and several, and independent of the obligations of the Borrower,
and a separate action or actions may be brought and prosecuted
against any of the Guarantors whether or not action is brought
against the Borrower or the other Guarantors and whether or not
the Borrower or the other Guarantors be joined in any such action
or actions. The Guarantors waive, to the fullest extent
permitted by law, the
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benefit of any statute of limitations affecting their liability
hereunder or the enforcement thereof.
6. The Guarantors authorize the Lender (whether or not
after revocation or termination of this Guaranty) , without
notice or demand (except as shall be required by applicable
statue and cannot be waived), and without affecting or impairing
their liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate, or otherwise change the
time for payment of, or otherwise change the terms of any
indebtedness or any part thereof, including an increase or
decrease of the rate of interest thereon, (b) take and hold
security for the payment of this Guaranty or any indebtedness and
exchange, enforce, waive, and release any such security, (c)
apply such security and direct the order or manner of sale
thereof as the Lender in its discretion may determine, and (d)
release or substitute any one or more endorsers, guarantors,
borrowers, or other obligors. The Lender may not assign this
Guaranty, in whole or in part, without the consent of the
Guarantors.
7 . It is not necessary for the Lender to inquire into the
capacity or powers of the Borrower or the officer, directors,
partners, or agents acting or purporting to act on its behalf,
and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
8. Any indebtedness of the Borrower now or hereafter held
by any of the Guarantors is hereby subordinated to the
indebtedness of the Borrower to the Lender; and such indebtedness
of the Borrower to any of the Guarantors, if the Lender so
requests, shall be collected, enforced, and received by the
Guarantor as trustee for the Lender and be paid over to the
Lender on account of the indebtedness of the Borrower to the
Lender but without affecting or impairing in any manner the
liability of any Guarantors under the other provisions of this
Guaranty. Any instruments now or hereafter evidencing any
indebtedness of the Borrower to any of the Guarantors shall be
marked with a legend that the same are subject to this Guaranty
and, if the Lender so requests, shall be delivered to the Lender.
9 . The Guarantors waive any right to require the Lender to
(a) proceed against the Borrower or any other party, (b) proceed
against or exhaust any security held from the Borrower, or (c)
pursue any other remedy in the Lender's power whatsoever. The
Guarantors expressly waive any right conferred upon the
Guarantors under N.C. Gen. Stat. 26-7, et seq. The Guarantors
waive any defense based on or arising out of any defense of the
Borrower other than payment in full of the indebtedness,
including without limitation any defense based on or arising out
of the unenforceability of the indebtedness or any part thereof
from any cause, or the cessation from any cause of the liability
of the Borrower other than payment in full of the indebtedness.
The Lender may, at its election, foreclose on any security held
by the Lender by one or more judicial or nonjudicial sales or
exercise any other right or remedy the Lender may have against
the Borrower, or any security, without affecting or impairing in
any way the liability of the Guarantors hereunder except to the
extent the indebtedness has been paid. The Guarantors waive any
defense arising out of any such
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election by the Lender, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Borrower or
any security. The Guarantors shall have no right of subrogation,
reimbursement, contribution, exoneration or indemnity whatsoever
against the Borrower and waive any right to enforce any remedy
which the Lender now has or may hereafter have against the
Borrower, and waive any benefit of, and any right to participate
in any security now or hereafter held by the Lender. This waiver
is expressly intended to prevent the existence of any claim (as
defined in the Bankruptcy Code) in respect of such rights by the
Guarantors against the estate of the Borrower and to prevent the
Guarantors from being creditors of the Borrower due to such
rights. The Guarantors waive all presentments, demands for
performance, protests and notices, including without limitation
notices of nonperformance, notices of protest, notices of
dishonor, notices of acceptance of this Guaranty, and notices of
the existence, creation or incurring of new or additional
indebtedness. The Guarantors assume all responsibility for being
and keeping themselves informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the indebtedness and the nature, scope
and extent of the risks which the Guarantors assume and incur
hereunder, and agree that the Lender shall have no duty to advise
the Guarantors of information known to it regarding such
circumstances or risks.
10. In addition to the amounts guaranteed hereunder, the
Guarantors jointly and severally agree to pay reasonable
attorneys' fees and all other costs and expenses incurred by the
Lender in enforcing this Guaranty or in any action or proceeding
arising out of, or relating to, this Guaranty. The word
"Guarantors" shall mean all and any one or more of the parties to
this Guaranty. This Guaranty and the liability and obligations
of the Guarantors hereunder are binding upon the Guarantors and
their respective heirs, executors, administrators, successors,
and assigns, and inures to the benefit of and is enforceable by
the Lender and its successors, transferees, and assigns.
11. No right or power of the Lender hereunder shall he
deemed to have been waived by any act or conduct on the part of
the Lender, or by any neglect to exercise such right or power, or
by any delay in so doing; and every right or power shall continue
in full force and effect until specifically waived or released by
an instrument in writing executed by the Lender.
12. This Guaranty shall be deemed to be made under and
shall be governed by the internal laws of the State of North
Carolina in all respects, including matters of construction,
validity, and performance, without regard to conflict of laws
principles. The terms and provisions hereof may not be waived,
altered, modified, or amended except in writing duly signed by an
authorized officer of the Lender and by the Guarantors. The
Guarantors and the Lender agree that any dispute arising out of
this Guaranty shall be subject to the jurisdiction of both the
state and federal courts in North Carolina. For that purpose the
Guarantors each hereby submit to the jurisdiction of the state
and federal courts in North Carolina. The Guarantors each
further agree to accept service of process in any such dispute by
registered or certified mail addressed to the Guarantor.
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13 . If any of the provisions of this Guaranty shall
contravene or be held invalid under the laws of the State of
North Carolina, this Guaranty shall be construed as if not
containing those provisions and the rights and obligations of the
parties hereto shall be construed and enforced accordingly.
14. This Guaranty is in addition to the Continuing Guaranty
Agreement dated February 26, 1993, among the Guarantors and the
Lender, which continues in full force and effect.
IN WITNESS WHEREOF, the undersigned Guarantors have executed
this Guaranty as of the date first above written.
/S/Harley J. Greenfield (SEAL)
Harley J. Greenfield
/S/Edward B. Seidner (SEAL)
Edward B. Seidner
/S/Fred J. Love (SEAL)
Fred J. Love
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.
P. O. Drawer 220
Asheboro, NC 27204
By: /S/Robert C. Shaffner
Its: Vice President
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AMENDMENT TO UNCONDITIONAL GUARANTY
Reference is made to the Unconditional Guaranty (the
"Unconditional Guaranty") dated as of February 17, 1994, made and
given, jointly and severally, by Harley J. Greenfield, Edward B.
Seidner and Fred J. Love (collectively referred to as the
"Guarantors") and extended to Klaussner Furniture Industries,
Inc. (the "Lender") for the benefit of Jennifer-New York, Inc.
(the "Borrower"). Unless otherwise defined herein, terms in the
Unconditional Guaranty shall have their defined meanings herein.
WHEREAS, by letter agreement dated November 7, 1994, the
Guarantors confirmed their joint and several obligations to the
Lender under the Unconditional Guaranty, notwithstanding the
transactions referred to in said letter agreement; and
WHEREAS, in connection with the execution and delivery of
this Amendment, the Promissory Note referred to in the
Unconditional Guaranty is being amended and restated at the
request of the Borrower and the Guarantors; and
WHEREAS, the Guarantors have consented to the amendment and
restatement and have agreed to amend the Unconditional Guaranty
to refer to the Amended and Restated Promissory Note of Borrower
dated as of January 1, 1995, a copy of which is attached hereto
as Exhibit A and incorporated herein by reference;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree that the
Unconditional Guaranty shall be amended by deleting paragraph 1
in its entirety and inserting in lieu thereof the following:
"1. The Guarantors, jointly and severally,
unconditionally guarantee the payment when due,
upon maturity, acceleration or otherwise, of any
and all indebtedness of the Borrower to the Lender.
If any or all indebtedness of the Borrower to the
Lender becomes due and payable, the Guarantors,
jointly and severally, unconditionally promise to
pay such indebtedness to the Lender, or order, on
demand, in lawful money of the
<PAGE>
United States. The word "indebtedness" is used
herein in its most comprehensive sense and includes
any and all advances, debts, obligations and
liabilities of the Borrower to the Lender heretofore,
now, or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, absolute
or contingent, liquidated or unliquidated, determined
or undetermined, whether or not such indebtedness
is from time to time reduced, or extinguished, and
thereafter increased or incurred, whether the
Borrower may be liable individually or jointly with
others, whether or not recovery upon such
indebtedness may be or hereafter become barred by
any statute of limitations, and whether or not such
indebtedness may be or hereafter become otherwise
unenforceable. Accordingly, the indebtedness
guaranteed hereby includes, without limitation, the
obligations of the Borrower under that Promissory
Note dated as of February 17, 1994, executed by the
Borrower in favor of the Lender in the original
principal amount of $3,500,000, as amended and
restated by Amended and Restated Promissory Note
dated as of January 1, 1995, in the original
principal amount of $3,500,000."
Except as expressly amended hereby, the Unconditional
Guaranty shall remain in full force and effect, and each of the
Guarantors hereby confirms that his joint and several liability
thereunder continues to be absolute and unconditional and that
the rights and remedies of Lender thereunder continue unaffected
and unimpaired.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of January 1, 1995.
/S/Harley J. Greenfield
Harley J. Greenfield
/S/Edward B. Seidner
Edward B. Seidner
2
<PAGE>
/S/Fred J. Love
Fred J. Love
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.
P. O. Drawer 220
Asheboro, NC 27204
By: /S/Robert C. Shaffner
Robert C. Shaffner
Senior Vice President
3
<PAGE>
AMENDMENT TO UNCONDITIONAL GUARANTY
Reference is made to the Unconditional Guaranty (the
"Unconditional Guaranty") dated as of February 17, 1994, made and
given, jointly and severally, by Harley J. Greenfield, Edward B.
Seidner and Fred J. Love (collectively referred to as the
"Guarantors") and extended to Klaussner Furniture Industries,
Inc. (the "Lender") for the benefit of Jennifer-New York, Inc.
(the "Borrower"). Unless otherwise defined herein, terms in the
Unconditional Guaranty shall have their defined meanings herein.
WHEREAS, by letter agreement dated November 7, 1994, the
Guarantors confirmed their joint and several obligations to the
Lender under the Unconditional Guaranty, notwithstanding the
transactions referred to in said letter agreement; and
WHEREAS, by Amendment dated as of January 1, 1995, the
Unconditional Guaranty was amended to refer to the Borrower's
Amended and Restated Promissory Note dated as of January 1, 1995;
and
WHEREAS, in connection with the execution and delivery of
this Amendment, the Amended and Restated Promissory Note dated as
of January 1, 1995 is being amended and restated at the request
of the Borrower and the Guarantors; and
WHEREAS, the Guarantors have consented to the amendment and
restatement and have agreed to amend the Unconditional Guaranty
to refer to the Amended and Restated Promissory Note of Borrower
dated as of March 1, 1996, a copy of which is attached hereto as
Exhibit A and incorporated herein by reference;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree that the
Unconditional Guaranty, as heretofore amended, shall be further
amended by deleting paragraph 1 in its entirety and inserting in
lieu thereof the following:
"1. The Guarantors, jointly and severally,
unconditionally guarantee the payment when due, upon
maturity, acceleration or otherwise, of any and all
indebtedness of the Borrower to the Lender. If any
or all indebtedness of the Borrower to the Lender
becomes due and payable, the Guarantors, jointly and
severally, unconditionally promise to pay such
indebtedness to the Lender, or order, on demand, in
lawful money of the United States. The word
"indebtedness" is used herein in its most comprehensive
sense and includes any and all advances, debts,
obligations and liabilities of the Borrower to the
Lender heretofore, now, or hereafter made, incurred or
created, whether voluntary or involuntary and however
arising, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not
such indebtedness is from time to time reduced,
<PAGE>
or extinguished, and thereafter increased or incurred,
whether the Borrower may be liable individually or
jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any
statute of limitations, and whether or not such
indebtedness may be or hereafter become otherwise
unenforceable. Accordingly, the indebtedness guaranteed
hereby includes, without limitation, the obligations of
the Borrower under that Promissory Note dated as of
February 17, 1994, executed by the Borrower in favor of
the Lender in the original principal amount of
$3,500,000, as amended and restated by Amended and
Restated Promissory Note dated as of January 1, 1995,
in the original principal amount of $3,500,000, and as
amended and restated by Amended and Restated Promissory
Note dated as of March 1, 1996, in the original principal
amount of $2,800,000."
Except as expressly amended hereby, the Unconditional
Guaranty shall remain in full force and effect, and each of the
Guarantors hereby confirms that his joint and several liability
thereunder continues to be absolute and unconditional and that
the rights and remedies of Lender thereunder continue unaffected
and unimpaired.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of March 1, 1996.
/S/Harley J. Greenfield
Harley J. Greenfield
/S/Edward B. Seidner
Edward B. Seidner
/S/Fred J. Love
Fred J. Love
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.
P. O. Drawer 220
Asheboro, NC 27204
By: /S/Robert C. Shaffner
Robert C. Shaffner
Senior Vice President
2
<PAGE>
EXHIBIT 5
CONTINUING GUARANTY AGREEMENT
Continuing Guaranty Agreement, dated February 26, 1993, made
by Jara Enterprises, Inc. ("Jara") and Convertible Enterprises,
Inc. ("Convertible"), both New York corporations (collectively, the
"Guarantors"), for the benefit of KLAUSSNER FURNITURE INDUSTRIES,
INC., a North Carolina corporation ("Lender"):
WHEREAS, Jennifer - New York, Inc. ("Debtor") is indebted to
Lender; and
WHEREAS, Debtor and Convertible are wholly-owned subsidiaries
of Jara; and
WHEREAS, Debtor and each Guarantor have a direct financial
interest in maintaining the supply of merchandise from Lender to
Debtor;
NOW, THEREFORE, the parties agree as follows:
1. Guaranty.
(a) Guarantors, to induce Lender to continue to supply
merchandise to Guarantors and to continue to grant special credits
against current accounts payable at the rate of $50,000 per new
store, hereby jointly and severally guarantee the payment to Lender
of any and all Indebtedness (as hereinafter defined) of Debtor to
Lender.
(b) As used in this Guaranty, 'Indebtedness" shall mean
all loans payable of Debtor to Lender from time to time, whether
now existing or hereafter arising, of up to $2,400,000 arising out
of the sale of merchandise by Lender to Debtor and the granting of
special credits against current accounts receivable at the rate of
$50,000 per new store.
2 . Lender's Costs and Expenses.
Guarantors agree to pay all Costs and Expenses of every
kind incurred by Lender in enforcing this Guaranty. "Costs and
Expenses' as used in the preceding sentence shall include, without
limitation, the reasonable attorneys' fees incurred by Lender in
retaining counsel for advice, suit, appeal, any insolvency or other
proceedings under the Federal Bankruptcy Code or otherwise, or for
any purpose specified in the preceding sentence.
3. Continuing Guaranty.
This Guaranty is and is intended to be a continuing
guaranty of payment and not of collection of the Indebtedness
(irrespective of the aggregate amount thereof), independent of
and in addition to any other guaranty, endorsement, collateral or
other agreement held by Lender therefor or with respect thereto,
whether or not furnished by Guarantors.
4. Certain Rights and Obligations.
(a) Guarantors authorize Lender, without notice, demand
or any reservation of rights against Guarantors, and Lender and
Debtor may, without affecting Guarantors' obligations hereunder,
from time to time: (i) to renew, extend, increase, accelerate or
otherwise change the time for payment of, the
<PAGE>
terms of or the interest on the Indebtedness or any part thereof;
(ii) to accept from any person or entity and hold collateral for
the payment of the Indebtedness or any part thereof, and to
exchange, enforce or refrain from enforcing, or release such
collateral or any part thereof; (iii) to accept and hold any
endorsement or guaranty of payment of the Indebtedness or any part
thereof, and to discharge, release or substitute any such
obligation of any such indorser or guarantor, or any person or
entity who has given any security interest in any collateral as
security for the payment of the Indebtedness or any part thereof,
or any other person or entity in any way obligated to pay the
Indebtedness or any part thereof, and to enforce or refrain from
enforcing, or compromise or modify, the terms of any obligation of
any such indorser, guarantor, person orentity; (iv) to dispose of
any and all collateral securing the Indebtedness in any manner as
Lender, in its sole discretion, may deem appropriate, and to direct
the order or manner of such disposition and the enforcement of any
and all endorsements and guaranties relating to the Indebtedness or
any part thereof as Lender, in its sole discretion, may determine;
and (v) to determine the manner, amount and time of application of
payments and credits, if any, to be made on all or any part of any
component or components of the Indebtedness (whether principal,
interest, costs and expenses, or otherwise).
(b) Guarantors' obligation hereunder shall not be
affected by any of the following, all of which Guarantors hereby
waive: (i) any failure to perfect or continue the perfection of any
security interest in or other lien on any collateral securing
payment of any Indebtedness or Guarantors' obligation hereunder;
(ii) the invalidity, unenforceability, propriety of manner of
enforcement of, or loss or change in priority of any such security
interest or other lien; (iii) any failure to protect, preserve or
insure any such collateral; (iv) failure of Guarantors to receive
notice of any intended disposition of such collateral; (v) any
defense arising by reason of the cessation from any cause
whatsoever of liability of the Debtor including, without
limitation, any failure, negligence or omission by Lender in
enforcing its claims against the Debtor; (vi) any release,
settlement or compromise of any obligation of Debtor; (vii) the
invalidity or unenforceability of any of the Indebtedness; or
(viii) presentment and demand for payment of the Indebtedness.
5. Termination.
This Guaranty shall remain in full force and effect as to
each Guarantor until all Indebtedness, together with any interest
accruing thereon, shall be finally and irrevocably paid in ful1.
Payment of all of the Indebtedness from time to time shall not
operate as a discontinuance of this Guaranty.
6. Miscellaneous.
(a) No course of dealing between Debtor or any Guarantor
and Lender and no act, delay or omission by Lender in exercising
any right or remedy hereunder or with respect to any Indebtedness
shall operate as a waiver thereof or of any other right or remedy,
and no single or partial exercise thereof shall preclude any other
or further exercise thereof or the exercise of any other right or
remedy. Lender may remedy any default by Debtor under any
agreement with Debtor or with respect to any Indebtedness in any
reasonable manner without waiving the default remedied and without
waiving any other prior or subsequent default by Debtor. All
rights and remedies of Lender hereunder are cumulative.
2
<PAGE>
(b) No party may assign its rights or obligations
hereunder without the written consent of all parties.
(c) Captions of the sections of this Guaranty are
solely for the convenience of Lender and Guarantors, and are not
an aid in the interpretation of this Guaranty.
(d) If any provision of this Guaranty is unenforceable
in whole or in part for any reason, the remaining provisions
shall continue to be effective.
(e) This Guaranty and the transactions evidenced hereby
shall be construed under the laws of the State of North Carolina.
(f) Any notice to be given hereunder shall be duly
given if delivered or mailed as follows:
To Jara Enterprises, Inc. or
Convertible Enterprises, Inc.: c/o Jennifer Convertibles
Warehouse
245 Rogers Avenue
Inwood, NY 11696
To Lender: Klaussner Furniture
Industries, Inc.
P.O. Drawer 220
Asheboro, NC 27204
Notice shall be deemed given when received.
(g) This Agreement shall be binding upon the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
JARA ENTERPRISES, INC.
BY: /S/Fred J. Love
Fred J. Love
CONVERTIBLE ENTERPRISES, INC.
By: /S/Edward B. Seidner
Edward B. Seidner
KLAUSSNER FURNITURE INDUSTRIES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner
3
<PAGE>
Amendment to Continuing Guaranty Agreement
Reference is made to the Continuing Guaranty Agreement (the
"Guaranty Agreement"), dated February 26, 1993, made by Jara
Enterprises, Inc. ("Jara"), and Convertible Enterprises, Inc.
("Convertible") for the benefit of Klaussner Furniture
Industries, Inc. (the "Lender"). Unless otherwise defined
herein, terms in the Guaranty Agreement shall have their defined
meanings herein.
WHEREAS, the Indebtedness to be guaranteed by the Guarantors
pursuant to the Guaranty Agreement has been modified.
WHEREAS, the parties desire to modify the Guaranty Agreement
to substitute such new indebtedness.
NOW THEREFORE, the parties hereby agree as follows:
Notwithstanding anything to the contrary contained in the
Guaranty Agreement the term "Indebtedness" as defined in Section
I(b) of the Guaranty Agreement shall mean the promissory note in
the original principal amount of $3,500,000 dated as of February
17, 1994 and executed by Jennifer-New York, Inc. in favor of the
Lender.
Except as expressly amended hereby, the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of February 17, 1994.
JARA ENTERPRISES, INC.
By: /S/Fred Love
Name: Fred Love
Title: President
CONVERTIBLE ENTERPRISES, INC.
By: /S/Fred Love
Name: Fred Love
Title: President
<PAGE>
KLAUSSNER FURNITURE INDUSTRIES, INC.
By: /S/Robert C. Shaffner
Name: Robert C. Shaffner
Title: Vice President
2
<PAGE>
Amendment to Continuing Guaranty Agreement
Reference is made to the Continuing Guaranty Agreement dated
February 26, 1993, made by Jara Enterprises, Inc. ("Jara") and
Convertible Enterprises, Inc. ("Convertible") for the benefit of
Klaussner Furniture Industries, Inc. (the "Lender"), as amended
by amendment dated as of February 17, 1994 (the "Guaranty
Agreement"), pursuant to which Jara and Convertible have
guaranteed payment of certain indebtedness of Jennifer-New York,
Inc. ("JNY") . Unless otherwise defined herein, terms in the
Guaranty Agreement shall have their defined meanings herein.
WHEREAS, in connection with the execution and delivery of
this Amendment, the Indebtedness guaranteed by the Guarantors
pursuant to the Guaranty Agreement is being amended and restated
at the request of JNY, Jara, and Convertible; and
WHEREAS, Jara and Convertible have consented to the
amendment and restatement and have agreed to amend the Guaranty
Agreement to refer to the Amended and Restated Promissory Note of
JNY dated as of January 1, 1995, a copy of which is attached
hereto as Exhibit A and incorporated herein by reference;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree that
Section l(b) of the Guaranty Agreement will be amended in its
entirety to read as follows:
"(b) As used in this Guaranty, "Indebtedness"
shall mean the obligations of Debtor to Lender under
the Promissory Note in the original principal amount
of $3,500,000 dated as of February 17, 1994 and
executed by Debtor in favor of the Lender, as amended
and restated by the Amended and Restated Promissory
Note dated as of January 1, 1995 in the original
principal amount of $3,500,000."
<PAGE>
Except as expressly amended hereby, the Guaranty Agreement
shall remain in full force and effect, and Jara and Convertible
each hereby confirms that its joint and several liability
thereunder continues to be absolute and unconditional and that
the rights and remedies of Lender thereunder continue unaffected
and unimpaired.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of January 1, 1995.
JARA ENTERPRISES, INC.
By: /S/Fred J. Love
Fred J. Love, President
CONVERTIBLE ENTERPRISES, INC.
By: /S/Fred J. Love
Fred J. Love, President
KLAUSSNER FURNITURE INDUSTRIES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner
Senior Vice President
2
<PAGE>
AMENDMENT TO CONTINUING GUARANTY AGREEMENT
Reference is made to the Continuing Guaranty Agreement dated
February 26, 1993, made by Jara Enterprises, Inc. ("Jara") and
Convertible Enterprises, Inc. ("Convertible") for the benefit of
Klaussner Furniture Industries, Inc. (the "Lender"), as amended
by amendments dated as of February 17, 1994 and as of January 1,
1995 (the "Guaranty Agreement"), pursuant to which Jara and
Convertible have guaranteed payment of certain indebtedness of
Jennifer-New York, Inc. ("JNY"). Unless otherwise defined
herein, terms in the Guaranty Agreement shall have their defined
meanings herein.
WHEREAS, in connection with the execution and delivery of
this Amendment, the Indebtedness guaranteed by the Guarantors
pursuant to the Guaranty Agreement is being amended and restated
at the request of JNY, Jara, and Convertible; and
WHEREAS, to induce the Lender to agree to the amendment and
restatement, Bright Star Enterprises, Inc. ("Bright Star") and
Jennifer Advertising, Inc. ("Advertising"), wholly owned
subsidiaries of Jara and affiliates of JNY and Convertible, have
agreed to join in the Guaranty Agreement and to guarantee,
jointly and severally, the Indebtedness (as amended and
restated); and
WHEREAS, Jara and Convertible have consented to the
amendment and restatement and have agreed to amend the Guaranty
Agreement to refer to the Amended and Restated Promissory Note of
JNY dated as of March 1, 1996, a copy of which is attached hereto
as Exhibit A and incorporated herein by reference, and to add
Bright Star and Advertising as guarantors;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree that the
term "Guarantors" shall henceforth mean Jara, Convertible, Bright
Star and Advertising and that Sections 1(a) and 1(b) of the
Guaranty Agreement (as heretofore amended) will be amended in
their entirety to read as follows:
"(a) Guarantors hereby jointly and severally
guarantee the payment to Lender of any and all
Indebtedness (as hereinafter defined) of Debtor to
Lender.
(b) As used in this Guaranty, "Indebtedness"
shall mean the obligations of Debtor to Lender
under the Promissory Note in the original principal
amount of $3,500,000 dated as of February 17, 1994
and executed by Debtor in favor of the Lender, as
amended and restated by the Amended and Restated
Promissory Note dated as of January 1, 1995 in the
original principal amount of $3,500,000, and by the
Amended and Restated Promissory Note dated as of
March 1, 1996, in the original principal amount of
$2,800,000."
<PAGE>
Except as expressly amended hereby, the Guaranty Agreement
shall remain in full force and effect, and Jara and Convertible
each hereby confirms that its joint and several liability
thereunder continues to be absolute and unconditional and that
the rights and remedies of Lender thereunder continue unaffected
and unimpaired.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of March 1, 1996.
JARA ENTERPRISES, INC.
By: /S/Fred J. Love
Fred J. Love, President
CONVERTIBLE ENTERPRISES, INC.
By: /S/Fred J. Love
Fred J. Love, President
BRIGHT STAR ENTERPRISES, INC.
By: /S/Fred J. Love
Fred J. Love, President
JENNIFER ADVERTISING, INC.
By: /S/Fred J. Love
Fred J. Love, President
KLAUSSNER FURNITURE INDUSTRIES, INC.
By: /S/Robert C. Shaffner
Robert C. Shaffner
Senior Vice President
2
<PAGE>
EXHIBIT 6
UNCONDITIONAL GUARANTY AND SUBORDINATION AGREEMENT
THIS UNCONDITIONAL GUARANTY, dated as of March 1, 1996 (the
"Guaranty"), is given jointly and severally by Jara Enterprises,
Inc., Convertible Enterprises, Inc., Bright Star Enterprises, Inc.
and Jennifer Advertising, Inc. (collectively referred to as the
"Guarantors") and extended to and in favor of Klaussner Furniture
Industries, Inc. ("Lender") for the benefit of Jennifer
Warehousing, Inc. (the "Debtor").
WHEREAS, the Debtor is a wholly owned subsidiary of Jara
Enterprises, Inc. ("Jara") and an affiliate of Convertible
Enterprises, Inc., Bright Star Enterprises, Inc., and Jennifer
Advertising, Inc.; and
WHEREAS, Lender has made a loan in the principal amount of
$1,440,000 (the "Loan") to Debtor as evidenced by a Promissory Note
dated March 1, 1996 (the "Note") executed by Debtor in favor of
Lender; and
WHEREAS, without this Guaranty, Lender would be unwilling to
make the Loan to the Debtor; and
WHEREAS, because of the benefit to the Guarantors from the
Loan, Guarantors have agreed to guaranty to Lender the obligations
of the Debtor to Lender under the Note.
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Guarantors, each Guarantor, as to
itself, agrees as follows:
1. Each Guarantor, jointly and severally, absolutely and
unconditionally
1
<PAGE>
guarantees the payment when due, upon maturity, acceleration or
otherwise, of any and all indebtedness of the Debtor to the Lender
due under the Note and all renewals and extensions thereof (the
"Indebtedness"). If the Indebtedness becomes due and payable, the
Guarantors absolutely and unconditionally promise to pay such
Indebtedness to the Lender, or order, on demand, in lawful money of
the United States. Each Guarantor further jointly and severally
agrees to pay any and all reasonable expenses which may be incurred
or paid by Lender in collecting any and all of the Indebtedness
and/or enforcing its rights under this Guaranty, including all
reasonable attorneys' fees, which expenses shall be deemed part of
the Indebtedness. This Guaranty (and any security interest
securing this Guaranty) shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment, or any
part thereof, of the Indebtedness is rescinded or must otherwise be
restored by Lender upon the bankruptcy or reorganization of Debtor
or otherwise.
2. The Guarantors absolutely and unconditionally guaranty the
payment of the Indebtedness, and unconditionally promise to pay the
Indebtedness to the Lender, or order, on demand, in lawful money of
the United States, whether or not then due or payable by the
Debtor, upon (a) the dissolution, insolvency, or business failure
of, or any assignment for benefit of creditors by, or commencement
of any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceedings by or against the Debtor, any of the
Guarantors or Fred J. Love ("Love"), or (b) the appointment of a
receiver for, or the attachment, restraint of, or making or levying
of any order of court or legal process affecting, a substantial
portion of the property of the Debtor or any of the Guarantors or
Love.
3. This Guaranty may be terminated by any party hereto (a
"Terminating
2
<PAGE>
Guarantor") as to future transactions only upon written notice of
termination hereof to the Lender [such notice to be given and
delivered as provided in the Stock Pledge Agreement between
Guarantors and Lender of even date herewith (the "Stock Pledge
Agreement")], and such notice shall be deemed to be effective as of
noon of the next succeeding business day following receipt thereof
by the Lender. No such notice shall release the Terminating
Guarantor from any liability as to the Indebtedness for which the
Terminating Guarantor or Debtor may be obligated at the time of
receipt by lender of such notice, or from extensions and renewals
thereof. Any termination of this Guaranty by a Terminating
Guarantor shall not be deemed a termination of this Guaranty as to
any other Guarantor that is a party hereto.
4. The liability of the Guarantors hereunder is exclusive and
independent of any security for or other guaranty of the
Indebtedness of the Debtor, whether executed by the Guarantors or
by any other party, and the liability of the Guarantors hereunder
is not affected or impaired by (a) any direction of application of
payment by the Debtor or by any other party, (b) any other
continuing or other guaranty or undertaking of the Guarantors or of
any other party as to the Indebtedness, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any
notice of termination hereof as to future transactions given by the
Guarantors or any of Love, Harley J. Greenfield and Edward B.
Seidner (the "Personal Guarantors"), or (e) any payment made to the
Lender on the Indebtedness which the Lender repays to the Debtor
pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium, or other debtor relief proceeding, and the
Guarantors waive any right to the deferral or modification of their
obligations hereunder by reason of any such proceedings.
5. The obligations of the Guarantors hereunder are joint and
several, and
3
<PAGE>
independent of the obligations of the Debtor, and a separate action
may be brought and prosecuted against the Guarantors whether or not
action is brought against the Debtor and whether or not the Debtor
be joined in any such action.
6. The Guarantors each represent that the only members of the
Jara Group (as hereinafter defined) that own the stock of Jennifer
Convertibles, Inc. ("JCI") are the Guarantors and the Personal
Guarantors. The term "Jara Group" shall have the same meaning
given such term in the Note.
7. The Guarantors agree that the Lender may (whether or not
after revocation or termination of this Guaranty), without notice
or demand (except as shall be required by applicable statue and
cannot be waived), and without affecting or impairing their
liability hereunder, from time to time to (a) renew, compromise,
extend, accelerate, or otherwise change the time for payment of, or
otherwise change the terms of the Indebtedness or any part thereof,
including an increase or decrease of the rate of interest thereon,
(b) take and hold security for the payment of this Guaranty or the
Indebtedness and exchange, enforce, waive, and release any such
security, (c) apply such security and direct the order or manner of
sale thereof as the Lender in its discretion may determine, and (d)
release or substitute any one or more endorsers, guarantors,
borrowers, or other obligors.
8. It is not necessary for the Lender to inquire into the
capacity or powers of the Debtor or the officers, directors,
partners, or agents acting or purporting to act on its behalf, and
any Indebtedness made or created in reliance by the Lender upon the
professed exercise of such powers shall be guaranteed hereunder.
4
<PAGE>
9. Any indebtedness of the Debtor and/or the Personal
Guarantors to the Guarantors is hereby subordinated to the payment
of the Indebtedness, and all such indebtedness owed to the
Guarantors, if the Lender so requests, shall be collected,
enforced, and received by the Guarantors as trustee for the Lender
and be paid over to the Lender on account of the Indebtedness of
the Debtor, but without affecting or impairing in any manner the
liability of the Guarantors under the other provisions of this
Guaranty. Any instruments now or hereafter evidencing any
indebtedness of the Debtor and/or the Personal Guarantors to the
Guarantors shall be marked with a legend that the same are subject
to this Guaranty and, if the Lender so requests, shall be delivered
to the Lender.
10. The Guarantors waive any right to require the Lender to
(a) proceed against the Debtor or any other party, (b) proceed
against or exhaust any security held from the Debtor, or (c) pursue
any other remedy in the Lender's power whatsoever. The Guarantors
expressly waive any right conferred upon the Guarantors under N.C.
Gen. Stat. 26-7, et seq. The Guarantors waive any defense based
on or arising out of any defense of the Debtor other than payment
in full of the Indebtedness, including without limitation any
defense based on or arising out of the unenforceability of the
Indebtedness, or any part thereof, from any cause, the impairment
of any collateral held as security for this Guaranty or the
cessation from any cause of the liability of the Debtor other than
payment in full of the Indebtedness. The Lender may, at its
election, foreclose on any security held by the Lender by one or
more judicial or nonjudicial sales or exercise any other right or
remedy the Lender may have against the Debtor, or any security,
without affecting or impairing in any way the liability of the
Guarantors hereunder except to the extent the Indebtedness has been
paid. The Guarantors waive any defense arising out of any such
5
<PAGE>
election by the Lender, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Debtor or any
security. The Guarantors shall have no right of subrogation,
reimbursement, contribution, exoneration or indemnity whatsoever
against the Debtor and waive any right to enforce any remedy which
the Lender now has or may hereafter have against the Debtor, and
waive any benefit of, and any right to participate in any security
now or hereafter held by the Lender. This waiver is expressly
intended to prevent the existence of any claim (as defined in the
Bankruptcy Code) in respect of such rights by the Guarantors
against the estate of the Debtor and to prevent the Guarantors from
being a creditor of the Debtor due to such rights. Each Guarantor
waives all presentments, demands for performance, protests and
notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of
this Guaranty, and notices of the existence, creation or incurring
of new or additional Indebtedness. Each Guarantor agrees that it
has sole responsibility for obtaining such information concerning
the Debtor's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Indebtedness and the nature, scope and extent of the risks which
the Guarantors assume and incur hereunder, and agrees that the
Lender shall have no duty to advise the Guarantors of information
known to it regarding such circumstances or risks.
11. This Guaranty and the liability and obligations of the
Guarantors hereunder are binding upon the Guarantors and their
respective heirs, executors, administrators, successors, and
assigns, and inures to the benefit of and is enforceable by the
Lender and its successors, transferees, and assigns.
12. No right or power of the Lender hereunder shall be deemed
to have been
6
<PAGE>
waived by any act or conduct on the part of the Lender, or by any
neglect to exercise such right or power, or by any delay in so
doing; and every right or power shall continue in full force and
effect until specifically waived or released by an instrument in
writing executed by the Lender.
13. This Guaranty shall be deemed to be made under and shall
be governed by the internal laws of the State of North Carolina in
all respects, including matters of construction, validity, and
performance, without regard to conflict of laws principles. The
terms and provisions hereof may not be waived, altered, modified,
or amended except in writing duly signed by an officer of the
Lender and by the Guarantors. This Guaranty and the Stock Pledge
Agreement securing the Guarantors' obligations hereunder constitute
the entire agreement of the Guarantors with respect to the subject
matter hereof, and there are no other agreements or understandings,
oral or written, with respect thereto. The Guarantors and the
Lender agree that any legal action or proceeding arising out of
this Guaranty shall be subject to the jurisdiction of both the
state and federal courts in North Carolina. For that purpose the
Guarantors hereby submit to the jurisdiction of the state and
federal courts in North Carolina. The Guarantors further agree to
accept service of process in any such legal action or proceeding by
registered or certified mail, postage prepaid, addressed to the
Guarantors. The Guarantors agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment or in any other manner
provided by law. The Guarantors waive any objection to venue in
any state or federal court in North Carolina or based on the
grounds of forum non conveniens. The Guarantors further agree that
any action or proceeding brought against the Lender shall be
brought only in a state or federal court in North Carolina, but
nothing herein
7
<PAGE>
shall affect the right of the Lender to serve legal process in any
other manner permitted by law or affect the right of the Lender to
bring any action or proceeding against the Guarantors or its
property in the courts of any other jurisdiction. The Guarantors
waive trial by jury in any such action or proceeding.
14. If any of the provisions of this Guaranty shall
contravene or be held invalid under the laws of the State of North
Carolina, this Guaranty shall be construed as if not containing
those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
15. This Guaranty may be executed in any number of
counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned Guarantors have executed
this Guaranty under seal as of the date first above written.
JARA ENTERPRISES, INC.
By:/S/ Fred J. Love
Title: President
Address: 245 Roger Avenue
Inwood, New York
Telecopier No.: 516-371-3655
8
<PAGE>
CONVERTIBLE ENTERPRISES, INC.
By: /S/Fred J. Love
Title: President
Address:____________________
____________________________
Telecopier No.: ____________
BRIGHT STAR ENTERPRISES, INC.
By: /S/Fred J. Love
Title: President
Address:____________________
____________________________
Telecopier No.:_____________
JENNIFER ADVERTISING, INC.
By: /S/Fred J. Love
Title: President
Address:____________________
____________________________
Telecopier No.:_____________
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of JARA ENTERPRISES, INC., the corporation described in and which
executed the foregoing instrument; and (s)he signed (her) his name
thereto by order of the Board of Directors of said corporation, and
duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of CONVERTIBLE ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of BRIGHT STAR ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
12
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of JENNIFER ADVERTISING, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
13
<PAGE>
/TEXT>
EXHIBIT 7
UNCONDITIONAL GUARANTY AND SUBORDINATION AGREEMENT
THIS UNCONDITIONAL GUARANTY, dated as of March 1, 1996 (the
"Guaranty"), is given jointly and severally by Harley J.
Greenfield, Edward B. Seidner and Fred J. Love (collectively
referred to as the "Guarantors") and extended to and in favor of
Klaussner Furniture Industries, Inc. ("Lender") for the benefit of
Jennifer Warehousing, Inc. (the "Debtor").
WHEREAS, the Debtor is a wholly owned subsidiary of Jara
Enterprises, Inc. ("Jara") and the Guarantor Fred J. Love ("Love")
is a beneficial owner of Jara and the remaining Guarantors are
creditors of Jara; and
WHEREAS, Lender has made a loan in the principal amount of
$1,440,000 (the "Loan") to Debtor as evidenced by a Promissory Note
dated March 1, 1996 (the "Note") executed by Debtor in favor of
Lender; and
WHEREAS, without this Guaranty, Lender would be unwilling to
make the Loan to the Debtor; and
WHEREAS, because of the benefit to the Guarantors from the
Loan, Guarantors have agreed to guaranty to Lender the obligations
of the Debtor to Lender under the Note.
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Guarantors, each Guarantor, as to
itself, agrees as follows:
1. Each Guarantor, jointly and severally, absolutely and
unconditionally guarantees the payment when due, upon maturity,
acceleration or otherwise, of any and all
1
<PAGE>
indebtedness of the Debtor to the Lender due under the Note and all
renewals and extensions thereof (the "Indebtedness"). If the
Indebtedness becomes due and payable, the Guarantors absolutely and
unconditionally promise to pay the Indebtedness to the Lender, or
order, on demand, in lawful money of the United States. Each
Guarantor further jointly and severally agrees to pay any and all
reasonable expenses which may be incurred or paid by Lender in
collecting any and all of the Indebtedness and/or enforcing its
rights under this Guaranty, including all reasonable attorneys'
fees, which expenses shall be deemed Indebtedness. This Guaranty
(and any security interest securing this Guaranty) shall continue
to be effective or shall be reinstated, as the case may be, if at
any time any payment, or any part thereof, of the Indebtedness is
rescinded or must otherwise be restored or returned by Lender upon
the bankruptcy or reorganization of Debtor or otherwise.
2. The Guarantors absolutely and unconditionally guaranty the
payment of the Indebtedness, and unconditionally promise to pay the
Indebtedness to the Lender, or order, on demand, in lawful money of
the United States upon the occurrence of any such event, whether or
not then due or payable by the Debtor, upon (a) the dissolution,
insolvency, or business failure of, or any assignment for benefit
of creditors by, or commencement of any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceedings by or
against the Debtor, Love, or any of Jara, Convertible Enterprises,
Inc., Bright Star Enterprises, Inc. or Jennifer Advertising, Inc.
(collectively the "Corporate Guarantors"), or (b) the appointment
of a receiver for, or the attachment, restraint of, or making or
levying of any order of court or legal process affecting, a
substantial portion of the property of the Debtor or Love or
Corporate Guarantors.
2
<PAGE>
3. This Guaranty may be terminated by any party hereto (a
"Terminating Guarantor") as to future transactions only upon
written notice of termination hereof to the Lender [such notice to
be given and delivered as provided in the Stock Pledge Agreement
between Guarantors and Lender of even date herewith (the "Stock
Pledge Agreement")], and such notice shall be deemed to be
effective as of noon of the next succeeding business day following
receipt thereof by the Lender. No such notice shall release the
Terminating Guarantor from any liability as to any Indebtedness for
which the Terminating Guarantor or Debtor may be obligated at the
time of receipt by Lender of such notice, or from extensions and
renewals thereof. Any termination of this Guaranty by a
Terminating Guarantor shall not be deemed a termination of this
Guaranty as to any other Guarantor that is a party hereto.
4. The liability of the Guarantors hereunder is exclusive and
independent of any security for or other guaranty of the
Indebtedness of the Debtor, whether executed by the Guarantor or by
any other party, and the liability of the Guarantors hereunder is
not affected or impaired by (a) any direction of application of
payment by the Debtor or by any other party, (b) any other
continuing or other guaranty or undertaking of the Guarantors or of
any other party as to the Indebtedness, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any notice
of termination hereof as to future transactions given by the
Guarantors or any Corporate Guarantor or (e) any payment made to
the Lender on the Indebtedness which the Lender repays to the
Debtor pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium, or other debtor relief proceeding, and the
Guarantors waive any right to the deferral or modification of their
obligations hereunder by reason of any such proceedings.
5. The obligations of the Guarantors hereunder are joint and
several, and
3
<PAGE>
independent of the obligations of the Debtor, and a separate action
may be brought and prosecuted against the Guarantors whether or not
action is brought against the Debtor and whether or not the Debtor
be joined in any such action.
6. The Guarantors each represent that the only members of the
Jara Group (as hereinafter defined) that own the stock of Jennifer
Convertibles, Inc. ("JCI") are the Guarantors and the Corporate
Guarantors. The term "Jara Group" shall have the same meaning
given such term in the Note.
7. The Guarantors agree that the Lender may (whether or not
after revocation or termination of this Guaranty), without notice
or demand (except as shall be required by applicable statue and
cannot be waived), and without affecting or impairing their
liability hereunder, from time to time to (a) renew, compromise,
extend, accelerate, or otherwise change the time for payment of, or
otherwise change the terms of the Indebtedness or any part thereof,
including an increase or decrease of the rate of interest thereon,
(b) take and hold security for the payment of this Guaranty or the
Indebtedness and exchange, enforce, waive, and release any such
security, (c) apply such security and direct the order or manner of
sale thereof as the Lender in its discretion may determine, and (d)
release or substitute any one or more endorsers, guarantors,
borrowers, or other obligors.
8. It is not necessary for the Lender to inquire into the
capacity or powers of the Debtor or the officers, directors,
partners, or agents acting or purporting to act on its behalf, and
any Indebtedness made or created in reliance by the Lender upon the
professed exercise of such powers shall be guaranteed hereunder.
9. Any indebtedness of the Debtor and/or the Corporate
Guarantors to the
4
<PAGE>
Guarantors is hereby subordinated to the payment of the
Indebtedness, and all such indebtedness owed to the Guarantors, if
the Lender so requests, shall be collected, enforced, and received
by the Guarantors as trustee for the Lender and be paid over to the
Lender on account of the Indebtedness of the Debtor, but without
affecting or impairing in any manner the liability of the
Guarantors under the other provisions of this Guaranty, provided,
however, that until the occurrence and continuance of a default
hereunder (a) Jara may continue to make all interest payments owing
to Guarantor Harley J. Greenfield ("Greenfield") under Promissory
Note dated November 7, 1994 in the principal amount of $5,136,602
in favor of Greenfield and to Guarantor, Edward B. Seidner
("Seidner") under Promissory Noted dated November 7, 1994 in the
amount of $5,136,602 in favor of Seidner, and (b) Jara may continue
to make payments of normal salary and other compensation to Love.
Any instruments now or hereafter evidencing any indebtedness of the
Debtor and/or the Corporate Guarantors to the Guarantors shall be
marked with a legend that the same are subject to this Guaranty
and, if the Lender so requests, shall be delivered to the Lender.
10. The Guarantors waive any right to require the Lender to
(a) proceed against the Debtor or any other party, (b) proceed
against or exhaust any security held from the Debtor, or (c) pursue
any other remedy in the Lender's power whatsoever. The Guarantors
expressly waive any right conferred upon the Guarantors under N.C.
Gen. Stat. 26-7, et seq. The Guarantors waive any defense based
on or arising out of any defense of the Debtor other than payment
in full of the Indebtedness, including without limitation any
defense based on or arising out of the unenforceability of the
Indebtedness or any part thereof from any cause, the impairment of
any collateral held as security for this Guaranty or the cessation
from any cause of the liability
5
<PAGE>
of the Debtor other than payment in full of the Indebtedness. The
Lender may, at its election, foreclose on any security held by the
Lender by one or more judicial or nonjudicial sales or exercise any
other right or remedy the Lender may have against the Debtor, or
any security, without affecting or impairing in any way the
liability of the Guarantors hereunder except to the extent the
Indebtedness has been paid. The Guarantors waive any defense
arising out of any such election by the Lender, even though such
election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of the
Guarantors against the Debtor or any security. The Guarantors
shall have no right of subrogation, reimbursement, contribution,
exoneration or indemnity whatsoever against the Debtor and waive
any right to enforce any remedy which the Lender now has or may
hereafter have against the Debtor, and waive any benefit of, and
any right to participate in any security now or hereafter held by
the Lender. This waiver is expressly intended to prevent the
existence of any claim (as defined in the Bankruptcy Code) in
respect of such rights by the Guarantors against the estate of the
Debtor and to prevent the Guarantors from being a creditor of the
Debtor due to such rights. Each Guarantor waives all presentments,
demands for performance, protests and notices, including without
limitation notices of nonperformance, notices of protest, notices
of dishonor, notices of acceptance of this Guaranty, and notices of
the existence, creation or incurring of new or additional
indebtedness. Each Guarantor agrees that it has sole
responsibility for obtaining such information concerning the
Debtor's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Indebtedness and the nature, scope and extent of the risks which
the Guarantors assume and incur hereunder, and agrees that the
Lender shall have no duty to advise the Guarantors of information
known to it regarding such circumstances or risks.
6
<PAGE>
11. This Guaranty and the liability and obligations of the
Guarantors hereunder are binding upon the Guarantors and their
respective heirs, executors, administrators, successors, and
assigns, and inures to the benefit of and is enforceable by the
Lender and its successors, transferees, and assigns.
12. No right or power of the Lender hereunder shall be deemed
to have been waived by any act or conduct on the part of the
Lender, or by any neglect to exercise such right or power, or by
any delay in so doing; and every right or power shall continue in
full force and effect until specifically waived or released by an
instrument in writing executed by the Lender.
13. This Guaranty shall be deemed to be made under and shall
be governed by the internal laws of the State of North Carolina in
all respects, including matters of construction, validity, and
performance, without regard to conflict of laws principles. The
terms and provisions hereof may not be waived, altered, modified,
or amended except in writing duly signed by an officer of the
Lender and by the Guarantors. This Guaranty and the Stock Pledge
Agreement securing the Guarantors' obligations hereunder constitute
the entire agreement of the Guarantors with respect to the subject
matter hereof, and there are no other agreements or understandings,
oral or written, with respect thereto. The Guarantors and the
Lender agree that any legal action or proceeding arising out of
this Guaranty shall be subject to the jurisdiction of both the
state and federal courts in North Carolina. For that purpose the
Guarantors hereby submit to the jurisdiction of the state and
federal courts in North Carolina. The Guarantors further agrees to
accept service of process in any such legal action or proceeding by
registered or certified mail, postage prepaid, addressed to the
Guarantors. The Guarantors agree that a final judgment in any such
action
7
<PAGE>
or proceeding shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment or in any other manner
provided by law. The Guarantors waive any objection to venue in
any state or federal court in North Carolina or based on the
grounds of forum non conveniens. The Guarantors further agree that
any action or proceeding brought against the Lender shall be
brought only in a state or federal court in North Carolina, but
nothing herein shall affect the right of the Lender to serve legal
process in any other manner permitted by law or affect the right of
the Lender to bring any action or proceeding against the Guarantors
or its property in the courts of any other jurisdiction. The
Guarantors waive trial by jury in any such action or proceeding.
14. If any of the provisions of this Guaranty shall
contravene or be held invalid under the laws of the State of North
Carolina, this Guaranty shall be construed as if not containing
those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
15. This Guaranty may be executed in any number of
counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts shall
together constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the undersigned Guarantors have executed
this Guaranty under seal as of the date first above written.
/S/Harley J. Greenfield
HARLEY J. GREENFIELD,
Residence Address:
1725 York Avenue
New York, New York 10128
/S/Edward B. Seidner
EDWARD B. SEIDNER
Residence Address:
125 Rodeo Drive
Oyster Bay Cove, New York 11791
/S/Fred J. Love
FRED J. LOVE
Residence Address:
9 Martha Drive
Melville, New York 11747
9
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Harley
J. Greenfield to me known, and known to me to be the person
described in and who executed the foregoing instrument, and he duly
acknowledged that he executed the same.
/S/Stuart Radish
Notary Public
10
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Edward
B. Seidner to me known, and known to me to be the person described
in and who executed the foregoing instrument, and he duly
acknowledged that he executed the same.
/S/Stuart Radish
Notary Public
11
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love to me known, and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged
that he executed the same.
/S/Stuart Radish
Notary Public
12
<PAGE>
EXHIBIT 8
STOCK PLEDGE AGREEMENT
Stock Pledge Agreement, dated as of March 1, 1996, made by
Jara Enterprises, Inc., Convertible Enterprises, Inc., Bright Star
Enterprises, Inc., and Jennifer Advertising, Inc. (collectively,
the "Pledgors") to Klaussner Furniture Industries, Inc., a North
Carolina corporation (the "Secured Party").
In consideration of the premises, the mutual covenants, terms
and conditions herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgors hereby covenant and agree as follows:
1. Hypothecation and Pledge of Stock: Grant of Security
Interest. To secure payment and performance by Pledgors of (a)
their guaranty to Secured Party of even date herewith (the "JWI
Guaranty") of the Indebtedness as such term is defined in the JWI
Guaranty ("JWI Obligations"); and (b) Continuing Guaranty Agreement
dated February 26, 1993 by Pledgors to the Secured Party, as
amended by Amendment To Continuing Guaranty Agreement dated
February 17, 1994, as further amended by Amendment To Continuing
Guaranty Agreement dated January 1, 1995, as further amended by
Amendment To Continuing Guaranty Agreement dated March 1, 1996,
executed by Pledgors (the "Jennifer-New York Guaranty") of the
indebtedness as described in the Jennifer-New York Guaranty (the
"Jennifer-New York Obligations"), each Pledgor hereby pledges to
Secured Party and grants to the Secured Party a continuing first
priority security interest in and to all of their respective issued
1
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and outstanding shares of common stock, $0.01 per share par value,
of Jennifer Convertibles, Inc. (the "JCI Common Stock"). The JWI
Guaranty and the Jennifer-New York Guaranty are hereinafter
sometimes collectively referred to as the "Guaranty". The
execution and delivery of this Stock Pledge Agreement is a
condition to (a) Secured Party lending the sum of $1,440,000 to
Jennifer Warehousing, Inc. ("JWI"), a subsidiary of Jara
Enterprises, Inc. ("Jara") and an affiliate of the other Pledgors,
which loan is evidenced by a Note of even date herewith executed by
JWI in favor of Secured Party (the "JWI Note") and (b) pursuant to
Amended and Restated Promissory Note dated March 1, 1996, (the
"Jennifer-New York Note"), Secured Party is further agreeing to an
extension of the terms of payment of the obligations of
Jennifer-New York, Inc. ("Jennifer-New York") to the Secured Party.
All such shares of JCI Common Stock are evidenced by the certificates
listed on Schedule A (the "Pledged Shares"), and together with all
additions thereto, substitutions and replacements therefor and
Proceeds (as hereinafter defined) of all of the foregoing shall be
hereinafter referred to as the "Pledged Collateral". All Pledgors
shall simultaneously herewith deliver to the Secured Party, in form
transferable by delivery, the certificates representing the Pledged
Shares, accompanied by stock powers duly executed in blank, except
for the Lost Shares, as hereinafter defined, subject to the terms
of paragraph 2(o) hereof, to be held by the Secured Party as
security as aforesaid, provided, however, that so long as no Event
of Default (as hereinafter defined) shall have occurred and be
continuing, Secured Party shall not transfer to or register in its
name or any of its nominees any or all of the Pledged Collateral.
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<PAGE>
As used herein, the term "Proceeds" shall have the
meaning assigned to it under Article 9 of the Uniform Commercial
Code as in effect in the State of North Carolina as the same may be
amended from time to time (the "UCC") and, to the extent not
otherwise included, shall include, but not be limited to, i) any
and all proceeds of any causes and rights of action or settlements
thereof payable to any Pledgor from time to time with respect to
the Pledged Collateral, and ii) any and all other amounts from time
to time paid or payable under or in connection with the Pledged
Collateral, and shall also include, without limitation, cash
dividends, any cash, other stock or property received in exchange
or in substitution for the Pledged Shares, distributions which may
be made on, or distributed in consequence of the ownership of, the
Pledged Shares, instruments or distributions of any kind issuable,
issued or received upon conversion of, in respect of, or in
exchange for any of the Pledged Shares, including, without
limitation, those arising from a stock dividend, stock split,
reclassification, reorganization, merger, consolidation, sale of
assets, or other exchange of securities or any dividends or other
distributions, warrants, options or other rights of any kind upon
or with respect to the Pledged Shares.
2. Covenants and Agreements. Until the payment in full of
all of the JWI Obligations and Jennifer-New York Obligations
(collectively the "Obligations").
(a) Each Pledgor shall defend its Pledged Collateral
against all claims and demands of all persons (other than the
Secured Party) at any time claiming the same or any interest
therein.
(b) At any time and from time to time, upon the
request of the
3
<PAGE>
Secured Party and at the sole expense of each Pledgor, each Pledgor
will promptly execute, deliver, file and record any and all such
further instruments and documents, and take such further action as
may be deemed necessary or desirable in the reasonable judgment of
the Secured Party to obtain, maintain, perfect and enforce the
security interest granted hereby and the rights, remedies and
powers hereunder, including, without limitation, the provision of
instruments and documents reasonably necessary to perfect the
security interest granted hereby under Article 9 of the UCC, and
the execution and delivery of one or more proxies and powers of
attorney (in addition to those granted herein). In connection
herewith, the Secured Party is hereby irrevocably authorized and
empowered as each Pledgor's attorney-in-fact, at its option (but
without any obligation of the Secured Party to do so), to make any
filings of UCC financing and continuation statements and to give
all other notices as it shall deem necessary with respect to the
Pledged Collateral, all of which may be done with or without the
signature of any Pledgor. Each Pledgor agrees that the foregoing
power constitutes a power coupled with an interest which shall
survive until the payment in full of all of the Obligations. Each
Pledgor agrees that a carbon, photographic or other reproduction of
this Stock Pledge Agreement is sufficient as a financing statement.
(c) No Pledgor will sell, encumber, transfer or
otherwise dispose of or hypothecate the Pledged Collateral or any
portion thereof nor sign, file or authorize the signing or filing
of any document effecting such act, except upon the prior written
consent of the Secured Party.
(d) Each Pledgor will notify the Secured Party of any
change in
4
<PAGE>
such Pledgor's mailing address.
(e) Pursuant to this Stock Pledge Agreement, each
Pledgor shall have delivered to Secured Party of all instruments,
securities and documents which are part of the Pledged Collateral,
appropriately endorsed to the Secured Party's order, or with
appropriate powers. Regardless of the form of such endorsement,
each Pledgor hereby waives presentment, demand, notice of dishonor,
protest, and notice of protest, and all other notices with respect
to any of the foregoing which would otherwise require the same.
(f) With respect to the Pledged Collateral, the Secured
Party shall not be under any duty to present, send or file any
claim or notices, perform any services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for any
insurance, or pay any taxes or other charges, make any demand, or
make any inquiry as to the nature or sufficiency of any payment
received by it, or take any action of any kind in connection with
the management thereof, and its only duty with respect thereto
shall be to exercise reasonable care in the custody and
preservation of the Pledged Collateral held hereunder.
(g) Pledgors will, upon the Secured Party's written
request, do, file, record, make, execute and deliver all such acts,
deeds, things, notices and instruments as may be reasonably
necessary or desirable to vest in and assure to the Secured Party
a continuing first priority security interest in and to the Pledged
Collateral and the enforcement of, and giving effect to, the
rights, remedies and powers hereunder.
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(h) Any additions to, accumulations of, substitutions
for, and proceeds of the Pledged Collateral in any form whatsoever
which shall come into the possession of any Pledgor shall be held
in trust for the Secured Party, and, upon receipt thereof, shall be
promptly delivered to the Secured Party as Pledged Collateral in
the form received together with such stock powers or other
documents as the Secured Party shall request in connection
therewith.
(i) The Secured Party, may at any time, and from time
to time, extend the time of payment or performance or renew, in
whole or in part, any of, or modify, compromise, waive, supplement
or otherwise change in any way, the Obligations as the Secured
Party may determine and all of the provisions and authorizations
contained herein shall continue to remain in full force and effect.
(j) The security interest granted under this Stock
Pledge Agreement constitutes and shall at all times constitute a
continuing first priority security interest in the Pledged
Collateral, and Pledgors represent that the Pledged Collateral is
free and clear of all liens, security interests or encumbrances of
any kind, except for the security interest created by this Stock
Pledge Agreement, and that each Pledgor is the owner of the shares
representing its portion of the Pledged Collateral.
(k) Each Pledgor as to itself and its Pledged
Collateral represents and warrants that as of the date hereof:
i) Pledgor has full power and authority to enter
into and perform its obligations under this Stock Pledge Agreement
and to pledge the Pledged Collateral to the Secured Party as
provided herein.
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ii) The execution, delivery and performance of this
Stock Pledge Agreement by the Pledgor, and the pledge of the
Pledged Collateral hereunder do not and will not conflict with,
result in any violation of, or constitute any default under, a
provision of any contractual obligation of Pledgor or any law or
governmental regulation or court decree or order applicable to or
binding upon Pledgor. This Stock Pledge Agreement is the legal,
valid and binding obligation of the Pledgor, enforceable in
accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
iii) To the best of its knowledge, the JCI Common
Stock constituting Pledged Collateral is duly authorized and
validly issued, fully paid and nonassessable.
iv) Except as set forth in Schedule B annexed
hereto, none of the Pledged Shares (A) is subject to any option,
agreement or commitment pursuant to which any third party shall
have a right to acquire any interest therein; (B) is subject to any
restriction of any kind as provided in the Securities Act of 1933,
as amended and the Securities and Exchange Act of 1934, as amended,
and the regulations promulgated thereunder, including, but not
limited to Rule 144 of the Securities Exchange Commission
(collectively the "Act") and applicable state securities laws; (C)
is or shall become "control" or "restricted" stock as such terms
are used in the Act; and (D) is or shall become subject to a legend
or agreement which would restrict the transfer thereof by the
Pledgor or the Secured Party.
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(l) To the extent that any provision of this Stock
Pledge Agreement conflicts with any of the provisions of the Option
Agreements and Voting Trust Agreements described in Schedule B
hereof (collectively, the "Option and Voting Agreements"), the
provisions of this Stock Pledge Agreement shall govern. All of the
parties to the Option and Voting Agreements hereby consent to the
terms of this Stock Pledge Agreement, and hereby waive and
subordinate to Secured Party any and all rights (including, without
limitation any notices to be given) each of such parties may have
with respect to the Option and Voting Agreements and such Option
and Voting Agreements shall be deemed suspended and without any
force and effect until the payment in full of the Obligations,
provided that the Pledged Shares may be voted (subject to the terms
of paragraph 5 and the other applicable provisions of this Stock
Pledge Agreement) in accordance with the Option and Voting Trust
Agreements until the occurrence and continuance of an Event of
Default, provided further, however, that nothing contained herein
shall preclude the right of any optionee to exercise any option to
purchase to purchase any Pledged Shares under the Option and Voting
Agreements, provided that such optionee either agrees to be bound
as a Pledgor subject to all of the terms of this Stock Pledge
Agreement and ratifies this Stock Pledge Agreement or executes a
new stock pledge agreement that refers to such Pledged Collateral
and is in the same form as this Stock Pledge Agreement.
(m) The Pledgors recognize that the Secured Party may
be unable to effect a public sale of any or all the Pledged
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and the Securities
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and Exchange Act of 1934, as amended, and the regulations
promulgated thereunder, including but not limited to Rule 144 of
the Securities and Exchange Commission (collectively the "Act"),
and applicable state securities laws, but may be compelled to
resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to
acquire such Pledged Collateral for their own account for
investment and not with a view to the distribution or resale
thereof. Pledgors agree that Secured Party is authorized to impose
any limitation and take all such acts as Secured Party shall deem
necessary to comply with the Act in making any sale or other
distribution of the Pledged Collateral. Each Pledgor (at its own
expense) shall use reasonable efforts to cause Jennifer
Convertibles, Inc. ("JCI") to take all action and to execute all
documents that Secured Party shall reasonably require in order to
comply with the Act in connection with the sale of any of the
Pledged Collateral, after and during the continuance of an Event of
Default. Each Pledgor acknowledges that any such private sale may
result in prices and other terms less favorable than if sold at
public sales, and agrees that any such private sale shall be deemed
to have been made in a commercially reasonable manner. Secured
Party shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit any
issuer of such Pledged Collateral to register such Pledged
Collateral for public sale under the Act, or under applicable state
securities laws, even if such issuer would agree to do so.
(n) Secured Party acknowledges that all or part of the
Pledged Collateral may be or may become subject to Rule 144 of the
Securities and Exchange
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<PAGE>
Commission as amended from time to time ("Rule 144"). Until the
payment in full of the Obligations, and in the event of any sale of
the Pledged Collateral pursuant to Rule 144 made by the Pledgors
and consented to by the Secured Party, the Pledgors will furnish
the Secured Party with a copy of any Form 144 filed in respect of
such sale. The Pledgors will cooperate fully with the Secured
Party with respect to any sale by the Secured Party of any of the
Pledged Collateral, including full and complete compliance with all
requirements of Rule 144 and will give to the Secured Party all
information and will do all things necessary, including the
execution of all documents, forms, instruments, and other items, to
comply with Rule 144 and any and all other rules, regulations or
laws of the United States or the state necessary for the
unrestricted sale and/or transfer of the Pledged Collateral, and
will exercise their reasonable efforts to have JCI, upon the
request of the Secured Party, publicly disseminate all information
required to satisfy Rule 144. The Pledgors understand that the
pledge to Secured Party of the Pledged Collateral by the Pledgors
is a bona fide pledge and not intended by the Pledgors to result in
the satisfaction of the Obligations by the liquidation and sale of
the Pledged Collateral. The Pledgors agree to execute one or more
Forms 144 or any other form required to comply with Rule 144 at any
time after the Secured Party's written request with respect to the
Pledged Collateral.
(o) Certain of the Pledged Shares identified in
Schedule A have been lost or misplaced (the "Lost Shares") and lost
certificate affidavits have been submitted by the appropriate
Pledgors to the transfer agent of JCI, and replacement certificates
for the Lost Shares (the "Replacement Certificates") have been
requested.
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Pledgers covenant and agree that Secured Party shall receive the
Replacement Certificates, together with appropriate stock powers
endorsed in blank, no later than April 1, 1996, which Replacement
Certificates shall be deemed Pledged Collateral.
3. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
(a) The occurrence and continuance of any Event of
Default, as such term is defined in the JWI Note, and/or any
default by JWI in the payment of the JWI Obligations;
(b) The occurrence and continuance of any Event of
Default, as such term is defined in the Jennifer-New York Note,
and/or any default by Jennifer-New York in the payment of the
Jennifer-New York Obligations;
(c) A default by any Pledg or under its Guaranty;
(d) Any representation or warranty made by Pledgor in
the Guaranty and/or in this Stock Pledge Agreement shall prove to
have been false or misleading in any material respect when made;
(e) A Pledgor fails to observe, perform or comply
with any term, provision, condition, or covenant contained herein,
and the same is not cured within 30 days after receipt by Pledgor
of written notice thereof; or
(f) Any Pledgor, Fred J. Love, Jennifer-New York,
and/or JWI shall i) make an assignment for the benefit of
creditors, or ii) is generally not be paying its debts not subject
to bona fide dispute as such debts become due, or iii) admit in
writing its inability to pay its debts as they become due, or iv)
file a voluntary petition
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in bankruptcy, or v) become insolvent (however such insolvency
shall be evidenced), or vi) file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment
of debt, liquidation or dissolution or similar relief under any
present or future statute, law or regulation of any jurisdiction,
or vii) petition or apply to any tribunal for any receiver,
custodian or any trustee for any substantial part of its property,
or viii) seek, approve, consent to or acquiesce in any such
proceeding, or in the appointment of any trustee, receiver,
custodian or liquidator for it, or any substantial part of its
property or an order is entered appointing any such trustee,
receiver or custodian, liquidator and such order remains in effect
and unstayed for 90 days, or ix) take any formal action for the
purpose of effecting any of the foregoing or looking to the
liquidation or dissolution of any Pledgor, Fred J. Love,
Jennifer-New York, and/or JWI, unless such action has been previously
consented to in writing by the Secured Party after adequate notice
and opportunity to review such proposed action;
(g) An order for relief is entered under the United
States Bankruptcy laws or any other decree or order is entered by
a court having jurisdiction in the premises i) adjudging any
Pledgor, Fred J. Love, Jennifer-New York, and/or JWI a bankrupt or
insolvent, or ii) approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect to any Pledgor, Fred J. Love, Jennifer-New York, and/or JWI
under the United States bankruptcy laws or any applicable law, or
iii) appointing a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of any
Pledgor, Fred J.
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<PAGE>
Love, Jennifer-New York, and/or JWI or any substantial part of the
property of any of them, or iv) ordering the winding up or
liquidation of the affairs of any Pledgor, Fred J. Love,
Jennifer-New York, and/or JWI and any such decree or order continues
unstayed and in effect for a period of 90 days.
4. Rights and Powers of the Secured Party on Default.
(a) In General. After the occurrence and continuance of
an Event of Default, the Secured Party may proceed to enforce its
rights hereunder by suit in equity, action at law and/or other
appropriate proceedings, whether for payment or the specific
performance of any covenant or agreement contained in this Stock
Pledge Agreement. Without limiting the foregoing, upon the
occurrence and continuance of an Event of Default, the Secured
Party may, in its discretion (without any duty or obligation to do
so):
i) endorse as any Pledgor's agent any instruments
or securities pertaining to the Pledged Collateral;
ii) take control of Proceeds, including, if any,
stock received as dividends or by reason of stock splits, and use
cash Proceeds to reduce any part of the Obligations;
iii) take any action any Pledgor is required to
take or any other necessary action to obtain, preserve and enforce
this Stock Pledge Agreement, and maintain and preserve the Pledged
Collateral, without notice to such Pledgor (except as such notice
is expressly provided for hereunder or required by applicable law)
and add the costs of same to the Obligations;
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<PAGE>
iv) release Pledged Collateral in its possession to
any Pledgor, temporarily or otherwise;
v) take control of funds generated by the Pledged
Collateral, such as cash dividends and use same to reduce any part
of the Obligations;
vi) vote any stock which is part of the Pledged
Collateral and give consents, waivers and ratifications in respect
of such shares;
vii) exercise all other rights in a commercially
reasonable manner which an owner of such Pledged Collateral may
exercise; and
viii) transfer any of the Pledged Collateral or
evidence thereof into its own name or that of its nominee and
receive the Proceeds therefrom and hold the same as security for
the Obligations, or apply the same thereto.
After the occurrence and continuance of an Event of
Default, the Secured Party may, but shall be under no duty or
obligation to, demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose, or realize upon the Pledged Collateral,
in its own name or in the name of Pledgor, as the Secured Party may
reasonably determine. The cost of such collection and enforcement,
including reasonable attorneys' fees and expenses, shall be borne
by all Pledgors, whether the same is incurred by the Secured Party,
or an agent or representative thereof, or by any Pledgor. If paid
by the Secured Party, such payment shall become a part of the
Obligations. The foregoing rights and powers of the Secured Party
shall be in addition to, and not a limitation upon, any rights and
powers of the Secured Party given by law, custom, elsewhere by this
Stock Pledge Agreement or otherwise.
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<PAGE>
(b) Power of Sale; Enforcement. In case an Event of
Default shall have occurred and be continuing, the Secured Party,
personally or by agents or representatives,
i) may to the extent permitted by law, including
any federal or state laws governing the sales of securities, grant
options to purchase or sell at one or more sales, all or any part
of the Pledged Collateral, such sale or other disposition to be
made at the discretion of the Secured Party at one or more private
sales or to the highest bidder at public auction at such place or
places, at such time or times, and upon such terms as may be
commercially reasonable, including, without limitation, credit, as
the Secured Party may fix and specify in the notice of sale or
other disposition to be given as herein provided or as may be
required by law. The Secured Party shall be under no obligation to
delay the sale of any of the Pledged Collateral for the period of
time necessary to permit registration of such securities for public
sale under the Act or under applicable state securities laws;
ii) may proceed to protect and enforce the rights
of the Secured Party under this Stock Pledge Agreement by suit,
whether for specific performance of any covenant herein contained,
or in aid of the execution of any power herein granted, or for the
foreclosure of or other realization upon the security interest
provided in this Stock Pledge Agreement and the sale of the Pledged
Collateral under the judgment or decree of a court of competent
jurisdiction, or for the enforcement of any other right, as the
Secured Party in its sole discretion shall determine; and
iii) may exercise any and all of the rights and
remedies of
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<PAGE>
a secured party after default under the UCC (subject to applicable
securities laws) as well as all other rights and remedies possessed
by the Secured Party under this Stock Pledge Agreement, at law, in
equity or otherwise.
(c) Notice of Sale or other Disposition. If notice of
any sale or other disposition of all or any part of the Pledged
Collateral is required by law to be given, each Pledgor agrees that
a notice sent to it at least 20 days before the time of any
intended public sale, or of the time after which any private sale
or other disposition of the Pledged Collateral is to be made, shall
be reasonable notice of such sale or other disposition.
(d) Delivery to Purchaser. Upon the completion of any
sale or other disposition of all or any part of the Pledged
Collateral under this paragraph 4, full title and right of
possession to such Pledged Collateral shall pass to such purchaser
or purchasers forthwith upon the completion of such sale without
any action required on the part of any Pledgor. Nevertheless, if
so requested by the Secured Party or by any purchaser, each Pledgor
shall confirm any such sale or transfer by executing and delivering
to such purchaser all proper instruments of conveyance and transfer
and releases as may be designated in any such request.
(e) Application of Proceeds. The proceeds of any sale
of the Pledged Collateral or any part thereof under this paragraph
4, together with any other sums then held by the Secured Party as
part of the Pledged Collateral, shall be, applied by Secured Party
in the following order: a) first, to the payment of all reasonable
costs and expenses, including reasonable attorneys' fees, incurred
by Secured Party in
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<PAGE>
enforcing its remedies hereunder or under the JWI Note,
Jennifer-New York Note and/or Guaranty, b) second, to the payment
of the JWI Obligations, c) third, to the payment of the
Jennifer-New York Obligations, d) fourth, to the payment of any
other amounts, if any, owing to Secured Party in connection with
the Obligations, and e) fifth, to the extent any surplus remains,
the surplus shall be paid to Pledgors jointly. Pledgors shall be
liable to the Secured Party for any deficiency between the
outstanding amount of the Obligations and the amount of cash
proceeds realized. Secured Party shall account in writing to each
Pledgor for the proceeds of any sale or other disposition of Pledged
Collateral received by Secured Party.
(f) Secured Party May Purchase; Purchaser May Apply
Obligations Toward Purchase. At any sale or other disposition
hereunder, the Secured Party may bid for and purchase the Pledged
Collateral offered for sale, and, upon compliance with the terms of
sale or other disposition, may hold, retain and dispose of such
Pledged Collateral in a manner consistent with applicable law. At
any sale or other disposition, the Secured Party shall be entitled,
for the purpose of making payment for the Pledged Collateral
purchased, to apply any part of the Obligations due and payable to
it as a credit against the purchase price of such Pledged
Collateral. Notwithstanding the foregoing, Pledgors shall remain
jointly and severally liable for any deficiency remaining with
respect to the Obligations.
(g) Registration. Upon the occurrence and continuance
of an Event of Default, (A) any or all shares of capital stock
constituting the Pledged Collateral may be registered in the name
of the Secured Party or its nominee, as the
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Secured Party shall, in its discretion, decide; and (B) the Secured
Party or such nominee, in its sole discretion, may thereafter,
without notice, exercise all voting and other shareholder rights
with respect to the Pledged Collateral at any meetings thereof, and
exercise any and all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining to any shares
of the Pledged Collateral as if the Secured Party or such nominee
were the absolute owner thereof, including, without limitation, the
right to exchange, at the Secured Party's or such nominee's
discretion, any and all of the Pledged Collateral. In connection
therewith, the Secured Party or such nominee may deposit and
deliver any or all of the capital stock constituting the Pledged
Collateral with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions
as the Secured Party or its nominee may determine, all without
liability, except for fraud, gross negligence or willful misconduct
and except to account for property actually received by it, but the
Secured Party or its nominee shall have no obligation or duty to
exercise any of the aforesaid rights, privileges or options, and
shall not be responsible for any failure to do so or delay in so
doing.
5. Voting and Other Rights. Unless an Event of Default has
occurred and is continuing, each Pledgor shall be entitled to
exercise any and all voting and all other rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with, or in violation of any provision of, this Stock
Pledge Agreement. Any cash dividends received by any of Pledgors
shall be received in trust for Secured Party and promptly remitted
to Secured Party as Pledged Collateral in the form
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received.
6. No Segregation of Moneys; No Interest. No moneys
received by the Secured Party need be segregated in any manner
except to the extent required by law, and any such moneys may be
deposited in a money market account in the name of Secured Party
under such general conditions as may be prescribed by law
applicable to the Secured Party, and any interest earned thereon
shall be deemed part of the Pledged Collateral, and the Secured
Party shall not be liable for any interest thereon.
7. Notices. Except as otherwise specifically provided
herein, all notices, requests, consents, demands, waivers and other
communications hereunder and all statements, reports, documents,
certificates and papers to be delivered hereunder shall be given to
the respective parties hereto in writing and shall be delivered in
person with receipt acknowledged or sent by registered or certified
mail return receipt requested, postage prepaid, or by telecopy and
confirmed by the telecopy answerback to the address set forth
herein under the signature line of such party.
8. No Assignment. The Secured Party may not assign or
otherwise transfer its rights under this Stock Pledge Agreement or
any interest herein except to any affiliate or subsidiary of the
Secured Party.
9. Applicable Law; Severability. This Stock Pledge
Agreement shall be construed in accordance with, and governed by,
all of the provisions of the UCC and by the other internal laws of
the State of North Carolina, without regard to conflicts of law.
Whenever possible, each provision of this Stock Pledge Agreement
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<PAGE>
shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Stock Pledge
Agreement shall be prohibited by or invalid under the applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Stock Pledge
Agreement.
10. Paragraph Titles. The paragraph titles contained in this
Stock Pledge Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties.
11. Waiver; Entire Agreement. The Secured Party's failure,
at any time or times hereafter, to require strict compliance with
or performance by each Pledgor of any provision of this Stock
Pledge Agreement or to fail to exercise, or delay in exercising any
right or remedy hereunder, shall not waive, affect or diminish any
right of the Secured Party thereafter to demand strict compliance
therewith and performance thereby. Any suspension or waiver by the
Secured Party of an Event of Default under this Stock Pledge
Agreement shall not suspend, waive or affect any other Event of
Default under this Stock Pledge Agreement, whether the same is
prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements,
warranties, covenants and representations of each Pledgor contained
in this Stock Pledge Agreement, and no Event of Default by any
Pledgor under this Stock Pledge Agreement shall be deemed to have
been suspended or waived by the Secured Party unless such
suspension or waiver is in writing and signed by an officer of the
Secured Party, specifying such suspension or
20
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waiver. This Stock Pledge Agreement constitutes the entire
agreement with respect to the subject matter hereof, and supersedes
all prior agreements, whether oral or written, among the parties
with respect to the subject matter hereof, and may not be modified
or amended except in a document signed by all Pledgors and the
Secured Party.
12. Waiver; Consent to Amendments. The liability of each
Pledgor hereunder and with respect to the Pledged Collateral shall
be in no way affected or impaired by any waiver, amendment,
extension or other modification of any of the Obligations or by any
acceptance by the Secured Party of any direct or indirect security
for any indebtedness, liability or obligation of each Pledgor or
JWI or Jennifer-New York to the Secured Party, or by any failure,
delay, neglect or omission by the Secured Party to realize upon or
perfect any such security, indebtedness, liability or obligation,
or by any direct or indirect collateral security therefor, or by
the bankruptcy, reorganization or insolvency of, or by any other
proceeding for the relief of debtors commenced against any Pledgor
or JWI or Jennifer-New York.
13. Rights Cumulative. The rights and remedies of the
Secured Party under the Guaranty and this Stock Pledge Agreement
shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have, and no failure or delay by the
Secured Party in exercising any right shall operate as a waiver of
it, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other
power or right.
14. Power of Attorney. Each Pledgor hereby makes,
constitutes and
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appoints the Secured Party as its true and lawful attorney-in-fact
in his name, place and stead in any way, and to do any act, which
each Pledgor could so do or act, with respect to the following
matters, with full and unqualified authority to delegate any and
all of the following powers to any person or persons whom the
Secured Party shall select to do the following acts as each
Pledgor's attorney-in-fact, provided, however, that so long as no
Event of Default shall have occurred and be continuing, Secured
Party shall not exercise such power of attorney:
To take in its own name or in the name of any Pledgor,
all action which the Secured Party may deem necessary or desirable
to perfect or otherwise protect, perfect and maintain the liens
created under, and to obtain the benefits of, this Stock Pledge
Agreement, and to otherwise protect and preserve the Pledged
Collateral, including, without limitation, the signing of any UCC
or other type of financing statements, any security agreements,
mortgages, deeds of trust and amendments to any of the foregoing;
to endorse any notes, checks, drafts, money orders or other
instruments of payment (including payments payable under or in
respect of any policy of insurance) in respect of the Pledged
Collateral that may come into possession of the Secured Party; to
execute and deliver all agreements, instruments, papers,
certificates, powers and other documents and chattel paper relating
to the Pledged Collateral; to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or
placed on or threatened against the Pledged Collateral; to demand,
collect, receipt for, compromise, settle and sue for monies due in
respect of the Pledged Collateral; to execute any proof of claim,
subrogation receipt and any other document
22
<PAGE>
required by any insurance company as a condition to or otherwise in
connection with payment under any policy of insurance; to cancel,
assign or surrender any such policies; and to execute and file in
the name of and on behalf of Pledgor any one or more Forms 144 or
any other form required to comply with Rule 144; and, generally, to
do, at the option of the Secured Party and at the expense of the
Pledgors, at any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect, preserve and
realize upon the Pledged Collateral and the Secured Party's lien
thereon in order to effect the intent of this Stock Pledge
Agreement, all as fully and effectually as each Pledgor might or
could do.
This power of attorney is a power coupled with an
interest and shall continue until the payment in full of the
Obligations.
15. Consent to Jurisdiction. Each Pledgor irrevocably
consents that any legal action or proceeding against it under,
arising out of or in any manner relating to, this Stock Pledge
Agreement or any other documents executed and delivered in
connection herewith or therewith, may be brought in any court of
the State of North Carolina located within Randolph, North Carolina
or in the United States District Courts for the Middle District of
North Carolina or the United States Court of Appeals for the Fourth
Circuit and each Pledgor waives trial by jury with respect to such
legal action or proceeding. Each Pledgor, by the execution and
delivery of this Stock Pledge Agreement, expressly and irrevocably
consents and submits to the personal jurisdiction of any such court
in any such action or proceeding. Each Pledgor further irrevocably
consents to the service of any complaint, summons, notice or other
process relating
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<PAGE>
to any such action or proceeding by delivery thereof to it at the
address set forth herein for each Pledgor. Each Pledgor hereby
expressly and irrevocably waives any claim or defense in any such
action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens. Each Pledgor
shall not be entitled in any such action or proceeding to assert
any defense given or allowed under the laws of any jurisdiction
other than the State of North Carolina unless such defense is also
given or allowed by the laws of the State of North Carolina.
Nothing in this paragraph shall affect or impair in any manner or
to any extent the right of the Secured Party to commence legal
proceedings relating to this Stock Pledge Agreement against any
Pledgor in any jurisdiction or to serve process in any manner
permitted by law.
16. Termination. Upon the payment in full of all of the
Obligations, this Stock Pledge Agreement and the security interest
granted hereby will terminate, all rights to the Pledged Collateral
shall revert to the Pledgors and the Secured Party will promptly
return the Pledged Collateral to each Pledgor. The Secured Party
shall execute and deliver to each Pledgor such documents as Pledgor
shall reasonably request to evidence termination of this Stock
Pledge Agreement and the security interest granted herein, which
documents shall be prepared at Pledgor's sole cost and expense.
17. This Stock Pledge Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which Counterparts shall
together constitute one and the same
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instrument.
IN WITNESS WHEREOF, the Pledgors have caused this Stock Pledge
Agreement to be duly executed as of the date first above written.
JARA ENTERPRISES, INC.
By:/S/Fred J. Love
Title:President
Address:
Telecopier No.
CONVERTIBLE ENTERPRISES, INC.
By:/S/Fred J. Love
Title:President
Address:
Telecopier No.
BRIGHT STAR ENTERPRISES, INC.
By:/S/Fred J. Love
Title:President
Address:
Telecopier No.
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JENNIFER ADVERTISING, INC.
By:/S/Fred J. Love
Title:President
Address:
Telecopier No.
CONSENTED TO:
/S/Harley J. Greenfield
Harley J. Greenfield,
As Voting Trustee and Optionee
/S/Edward B. Seidner
Edward B. Seidner,
As Optionee
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.,
405 Lewallen Road
Asheboro, North Carolina 27203
By:/S/Robert C. Shaffner
Title:Senior Vice President
Telecopier No.
27
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STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of JARA ENTERPRISES, INC., the corporation described in and which
executed the foregoing instrument; and (s)he signed (her) his name
thereto by order of the Board of Directors of said corporation, and
duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
28
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STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of CONVERTIBLE ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
29
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of BRIGHT STAR ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
30
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love, to me known, and who stated to me that he is the President
of JENNIFER ADVERTISING, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Stuart Radish
Notary Public
31
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SCHEDULE A
1) Jara Enterprises, Inc.
Ctf. No. Date Issued Shares
JCC 673 08/25/88 50,000 (Lost put in for
replacement)
JCC 907 04/10/88 7,650
JCC 1191 02/05/91 8,670
2) Convertible Enterprises, Inc.
Ctf. No. Date Issued Shares
JCC 674 08/25/88 75,000 (Lost put in for
replacement)
JCC 908 04/10/89 22,950
JCC 931 06/19/89 19,278
JCC 970 09/15/89 98,701
3) Bright Star Enterprises, Inc.
Ctf. No. Date Issued Shares
JCC 675 08/25/88 25,000 (Lost put in for
replacement)
4) Jennifer Advertising, Inc.
Ctf. No. Date Issued Shares
JCC 2946 01/19/96 36,000
32
<PAGE>
SCHEDULE B
1. THE OPTION AGREEMENT dated November 7, 1994, by and between
Jara Enterprises, Inc., a New York Corporation, and Harley
J. Greenfield.
2. THE OPTION AGREEMENT dated November 7, 1994, by and between
Convertible Enterprises, Inc., a New York Corporation, and
Harley J. Greenfield.
3. THE OPTION AGREEMENT dated November 7, 1994, by and between
Bright Star Enterprises, Inc., a New York Corporation, and
Harley J. Greenfield.
4. THE OPTION AGREEMENT dated November 7, 1994, by and between
Jennifer Advertising, Inc., a New York Corporation, and
Harley J. Greenfield.
5. THE OPTION AGREEMENT dated November 7, 1994, by and between
Jara Enterprises, Inc., a New York Corporation, and Edward
B. Seidner.
6. THE OPTION AGREEMENT dated November 7, 1994, by and between
Convertible Enterprises, Inc., a New York Corporation, and
Edward B. Seidner.
7. THE OPTION AGREEMENT dated November 7, 1994, by and between
Bright Star Enterprises, Inc., a New York Corporation, and
Edward B. Seidner.
8. THE OPTION AGREEMENT dated November 7, 1994, by and between
Jennifer Advertising, Inc., a New York Corporation, and
Edward B. Seidner.
33
<PAGE>
33
<PAGE>
EXHIBIT 9
STOCK PLEDGE AGREEMENT
Stock Pledge Agreement, dated as of March 1, 1996, made by
Harley J. Greenfield, individually and as Voting Trustee, Edward B.
Seidner and Fred J. Love (collectively, the "Pledgors") to
Klaussner Furniture Industries, Inc., a North Carolina corporation
(the "Secured Party").
In consideration of the premises, the mutual covenants, terms
and conditions herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgors hereby covenant and agree as follows:
1. Hypothecation and Pledge of Stock: Grant of Security
Interest. To secure payment and performance by Pledgors of (a)
their guaranty to Secured Party of even date herewith (the "JWI
Guaranty") of the Indebtedness as such term is defined in the JWI
Guaranty ("JWI Obligations"); and (b) Unconditional Guaranty dated
as of February 17, 1994 by Pledgors to the Secured Party, as
amended by Amendment To Unconditional Guaranty dated as of January
1, 1995 executed by Pledgors as further amended by Amendment To
Unconditional Guaranty dated March 1, 1996 (the "Jennifer-New York
Guaranty") of the indebtedness as described in the Jennifer-New
York Guaranty (the "Jennifer-New York Obligations") (the JWI
Obligations and Jennifer-New York Obligations are sometimes
hereinafter collectively referred to as the "Obligations"), each
Pledgor hereby pledges to Secured Party and grants to the Secured
Party a continuing first priority security interest in and to all
of
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his respective issued and outstanding shares of common stock, par
value $0.01 per share of Jennifer Convertibles, Inc. (the "JCI
Common Stock"). The JWI Guaranty and the Jennifer-New York
Guaranty are hereinafter sometimes collectively referred to as the
"Guaranty". The execution and delivery of this Stock Pledge
Agreement is a condition to (a) Secured Party lending the sum of
$1,440,000 to Jennifer Warehousing, Inc. ("JWI"), a subsidiary of
Jara Enterprises, Inc. ("Jara"), in which the Pledgors are either
the beneficial owners or of which they are creditors, which loan is
evidenced by a Note of even date herewith executed by JWI in favor
of Secured Party (the "JWI Note") and (b) pursuant to Amended and
Restated Promissory Note dated March 1, 1996, (the "Jennifer-New
York Note"), Secured Party is further agreeing to an extension of
the terms of payment of the obligations of Jennifer-New York, Inc.
("Jennifer-New York") to the Secured Party. All such shares of JCI
Common Stock are evidenced by the stock certificates and voting
trust certificates listed on Schedule A (the "Pledged Shares"), and
together with all additions thereto, substitutions and replacements
therefor and Proceeds (as hereinafter defined) of all of the
foregoing shall be hereinafter referred to as the "Pledged
Collateral". All Pledgors shall simultaneously herewith deliver to
the Secured Party, in form transferable by delivery, the
certificates and voting trust certificates representing the Pledged
Shares, accompanied by stock powers duly executed in blank, except
for the Street Shares, as hereinafter defined, subject to the terms
of paragraph 2(o) hereof, to be held by the Secured Party as
security as aforesaid, provided, however, that so long as no Event
of Default (as hereinafter defined) shall have occurred and be
continuing, Secured Party shall not
2
<PAGE>
transfer to or register in its name or any of the nominees any or
all of the Pledged Collateral.
As used herein, the term "Proceeds" shall have the meaning
assigned to it under Article 9 of the Uniform Commercial Code as in
effect in the State of North Carolina as the same may be amended
from time to time (the "UCC") and, to the extent not otherwise
included, shall include, but not be limited to, i) any and all
proceeds of any causes and rights of action or settlements thereof
payable to any Pledgor from time to time with respect to the
Pledged Collateral, and ii) any and all other amounts from time to
time paid or payable under or in connection with the Pledged
Collateral, and shall also include, without limitation, cash
dividends, any cash, other stock or property received in exchange
or in substitution for the Pledged Shares, distributions which may
be made on, or distributed in consequence of the ownership of, the
Pledged Shares, instruments or distributions of any kind issuable,
issued or received upon conversion of, in respect of, or in
exchange for any of the Pledged Shares, including, without
limitation, those arising from a stock dividend, stock split,
reclassification, reorganization, merger, consolidation, sale of
assets, or other exchange of securities or any dividends or other
distributions, warrants, options or other rights of any kind upon
or with respect to the Pledged Shares.
3
<PAGE>
2. Covenants and Agreements. Until the termination of this
Stock Pledge Agreement as provided in paragraph 16 hereof:
(a) Each Pledgor shall defend his Pledged Collateral
against all claims and demands of all persons (other than the
Secured Party) at any time claiming the same or any interest
therein.
(b) At any time and from time to time, upon the request
of the Secured Party and at the sole expense of each Pledgor, each
Pledgor will promptly execute, deliver, file and record any and all
such further instruments and documents and take such further action
as may be deemed necessary or desirable in the reasonable judgment
of the Secured Party to obtain, maintain, perfect and enforce the
security interest granted hereby and the rights, remedies and
powers hereunder, including, without limitation, the provision of
instruments and documents reasonably necessary to perfect the
security interest granted hereby under Article 9 of the UCC, and
the execution and delivery of one or more proxies and powers of
attorney (in addition to those granted herein). In connection
herewith, the Secured Party is hereby irrevocably authorized and
empowered as each Pledgor's attorney-in-fact, at its option (but
without any obligation of the Secured Party to do so), to make any
filings of UCC financing and continuation statements and to give
all other notices as it shall deem necessary with respect to the
Pledged Collateral, all of which may be done with or without the
signature of any Pledgor. Each Pledgor agrees that the foregoing
power constitutes a power coupled with an interest which shall
survive until the termination of this Stock Pledge Agreement as
provided in paragraph 16 hereof. Each Pledgor
4
<PAGE>
agrees that a carbon, photographic or other reproduction of this
Stock Pledge Agreement is sufficient as a financing statement.
(c) No Pledgor will sell, encumber, transfer or
otherwise dispose of or hypothecate the Pledged Collateral or any
portion thereof nor sign, file or authorize the signing or filing
of any document effecting such act, except upon the prior written
consent of the Secured Party.
(d) Each Pledgor will notify the Secured Party of any
change in such Pledgor's mailing address.
(e) Pursuant to this Stock Pledge Agreement, each
Pledgor shall have delivered to Secured Party all instruments,
securities and documents which are part of the Pledged Collateral,
appropriately endorsed to the Secured Party's order, or with
appropriate powers. Regardless of the form of such endorsement,
each Pledgor hereby waives presentment, demand, notice of dishonor,
protest, and notice of protest, and all other notices with respect
to any of the foregoing which would otherwise require the same.
(f) With respect to the Pledged Collateral, the Secured
Party shall not be under any duty to present, send or file any
claim or notices, perform any services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for any
insurance, or pay any taxes or other charges, make any demand, or
make any inquiry as to the nature or sufficiency of any payment
received by it, or take any action of any kind in connection with
the management thereof, and its only duty with respect thereto
shall be to exercise reasonable care in the custody and
preservation of
5
<PAGE>
the Pledged Collateral held hereunder.
(g) Pledgors will, upon the Secured Party's written
request, do, file, record, make, execute and deliver all such acts,
deeds, things, notices and instruments as may be reasonably
necessary or desirable to vest in and assure to the Secured Party
a continuing first priority security interest in and to the Pledged
Collateral and the enforcement of, and giving effect to, the
rights, remedies and powers hereunder.
(h) Any additions to, accumulations of, substitutions
for, and proceeds of the Pledged Collateral in any form whatsoever
which shall come into the possession of any Pledgor shall be held
in trust for the Secured Party, and, upon receipt thereof, shall be
promptly delivered to the Secured Party as Pledged Collateral in
the form received together with such stock powers or other
documents as the Secured Party shall request in connection
therewith.
(i) The Secured Party, may at any time, and from time to
time, extend the time of payment or performance or renew, in whole
or in part, any of, or modify, compromise, waive, supplement or
otherwise change in any way, the Obligations as the Secured Party
may determine and all of the provisions and authorizations
contained herein shall continue to remain in full force and effect.
(j) The security interest granted under this Stock
Pledge Agreement constitutes and shall at all times constitute a
continuing first priority security interest in the Pledged
Collateral, and Pledgors represent that the Pledged Collateral is
free and clear of all liens, security interests or encumbrances of
any kind,
6
<PAGE>
except for the security interest created by this Stock Pledge
Agreement, and that each Pledgor is the owner of the shares
representing its portion of the Pledged Collateral.
(k) Each Pledgor as to itself and its Pledged Collateral
represents and warrants that as of the date hereof:
i) The execution, delivery and performance of this
Stock Pledge Agreement by the Pledgor, and the pledge of the
Pledged Collateral hereunder do not and will not conflict with,
result in any violation of, or constitute any default under, a
provision of any contractual obligation of Pledgor or any law or
governmental regulation or court decree or order applicable to or
binding upon Pledgor. This Stock Pledge Agreement is the legal,
valid and binding obligation of the Pledgor, enforceable in
accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
ii) To the best of his knowledge, the JCI Common
Stock constituting Pledged Collateral is duly authorized and
validly issued, fully paid and nonassessable.
iii) Except as set forth in Schedule B annexed
hereto, none of the Pledged Shares (A) is subject to any option,
agreement or commitment pursuant to which any third party shall
have a right to acquire any interest therein; and/or (B) is or
shall become subject to a legend or agreement which would restrict
the transfer thereof by the Pledgor or the Secured Party.
(l) To the extent that any provision of this Stock
Pledge
7
<PAGE>
Agreement conflicts with any of the provisions of the Option
Agreements and Voting Trust Agreements described in Schedule B
hereof (collectively, the "Option and Voting Agreements"), the
provisions of this Stock Pledge Agreement shall govern. All of the
parties to the Option and Voting Agreements hereby consent to the
terms of this Stock Pledge Agreement and hereby waive and
subordinate to Secured Party any and all rights (including, without
limitation any notices to be given) each of such parties may have
with respect to the Option and Voting Agreements, and such Option
and Voting Agreements shall be deemed suspended and without any
force and effect until such time as this Stock Pledge Agreement is
terminated in accordance with paragraph 16 hereof, provided that
the Pledged Shares may be voted (subject to the terms of paragraph
5 and the other applicable provisions of this Stock Pledge
Agreement) in accordance with the Option and Voting Trust
Agreements until the occurrence and continuance of an Event of
Default, and provided further, however, that nothing contained
herein shall preclude the right of any optionee to exercise any
option to purchase any Pledged Shares under the Option and Voting
Agreements provided that such optionee either agrees to be bound as
a Pledgor subject to all of the terms of this Stock Pledge
Agreement and ratifies this Stock Pledge Agreement or executes a
new stock pledge agreement that refers to such Pledged Collateral
and is in the same form as this Stock Pledge Agreement. Without
limiting any of the foregoing, Harley J. Greenfield, as Voting
Trustee under Voting Trust Agreement dated October 15, 1986, as
amended, entered into among the Pledgors (the "Voting Trust
Agreement") hereby covenants and agrees that he has noted on his
books and records that all of the
8
<PAGE>
Pledged Shares subject to the Voting Trust Agreement are subject to
the terms and conditions of this Stock Pledge Agreement.
(m) The Pledgors recognize that the Secured Party may be
unable to effect a public sale of any or all the Pledged Collateral
by reason of certain prohibitions contained in the Securities Act
of 1933, as amended, and the Securities and Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, including
but not limited to Rule 144 of the Securities and Exchange
Commission (collectively the "Act"), and applicable state
securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such Pledged
Collateral for their own account for investment and not with a view
to the distribution or resale thereof. Pledgors agree that Secured
Party is authorized to impose any limitation and take all such acts
as Secured Party shall deem necessary to comply with the Act in
making any sale or other distribution of the Pledged Collateral.
Each Pledgor (at his own expense) shall use reasonable efforts to
cause Jennifer Convertibles, Inc. ("JCI") to take all action and
execute all documents that Secured Party shall reasonably require
in order to comply with the Act in connection with the sale of any
of the Pledged Collateral after and during the continuance of an
Event of Default. Each Pledgor acknowledges that any such private
sale may result in prices and other terms less favorable than if
sold at public sales and agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
Secured Party shall be under no obligation to delay a sale of any
of the Pledged Collateral for the period
9
<PAGE>
of time necessary to permit any issuer of such Pledged Collateral
to register such Pledged Collateral for public sale under the Act,
or under applicable state securities laws, even if such issuer
would agree to do so.
(n) Secured Party acknowledges that all or part of the
Pledged Collateral may be or may become subject to Rule 144 of the
Securities and Exchange Commission as amended from time to time
("Rule 144"). Until the termination of this Stock Pledge Agreement
as provided in paragraph 16 hereof, and in the event of any sale of
the Pledged Collateral pursuant to Rule 144 made by the Pledgors
and consented to by the Secured Party, the Pledgors will furnish
the Secured Party with a copy of any Form 144 filed in respect of
such sale. The Pledgors will cooperate fully with the Secured
Party with respect to any sale by the Secured Party of any of the
Pledged Collateral, including full and complete compliance with all
requirements of Rule 144 and will give to the Secured Party all
information and will do all things necessary, including the
execution of all documents, forms, instruments, and other items, to
comply with Rule 144 and any and all other rules, regulations or
laws of the United States or the state necessary for the
unrestricted sale and/or transfer of the Pledged Collateral, and
will exercise their reasonable efforts to have JCI, upon the
request of the Secured Party, publicly disseminate all information
required to satisfy Rule 144. The Pledgors understand that the
pledge to Secured Party of the Pledged Collateral by the Pledgors
is a bona fide pledge and not intended by the Pledgors to result in
the satisfaction of the Obligations by the liquidation and sale of
the Pledged Collateral. The Pledgors agree to execute one or more
Forms 144 or any other form required to
10
<PAGE>
comply with Rule 144 at any time after the Secured Party's written
request with respect to the Pledged Collateral.
(o) Certain of the Pledged Shares identified in Schedule
A are in street name (the "Street Shares"). Pledgors covenant and
agree that all Street Shares shall be transferred to the Pledgors
identified as the beneficial owners of such Street Shares in
Schedule A and be received by Secured Party, together with
appropriate stock powers endorsed in blank, not later than April
15, 1996, which Street Shares shall be deemed Pledged Collateral.
3. Events of Default. Each of the following shall constitute
an "Event of Default" hereunder:
(a) The occurrence and continuance of any Event of
Default, as such term is defined in the JWI Note, and/or any
default by JWI in the payment of the JWI Obligations;
(b) The occurrence and continuance of any Event of
Default, as such term is defined in the Jennifer-New York Note,
and/or any default by Jennifer-New York in the payment of the
Jennifer-New York Obligations;
(c) A default by any Pledgor under his Guaranty;
(d) Any representation or warranty made by Pledgor in
his Guaranty and/or in this Stock Pledge Agreement shall prove to
have been false or misleading in any material respect when made;
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(e) Pledgor fails to observe, perform or comply with any
term, provision, condition, covenant contained herein, and the same
is not cured within 30 days after receipt by Pledgor of written
notice thereof; or
(f) Any of Fred J. Love or Jara, Convertible
Enterprises, Inc., Bright Star Enterprises, Inc., and Jennifer
Advertising, Inc. (collectively the "Corporate Guarantors"),
Jennifer-New York, and/or JWI shall i) make an assignment for the
benefit of creditors, or ii) generally not be paying its debts not
subject to bona fide dispute as such debts become due, or iii)
admit in writing its inability to pay its debts as they become due,
or iv) file a voluntary petition in bankruptcy, or v) become
insolvent (however such insolvency shall be evidenced), or vi) file
any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute,
law or regulation of any jurisdiction, or vii) petition or apply to
any tribunal for any receiver, custodian or any trustee for any
substantial part of its property, or viii) seek, approve, consent
to or acquiesce in any such proceeding, or in the appointment of
any trustee, receiver, custodian, liquidator for it, or any
substantial part of its property or an order is entered appointing
any such trustee, receiver, custodian, or liquidator and such order
remains in effect and unstayed for 90 days, or ix) take any formal
action for the purpose of effecting any of the foregoing or looking
to the liquidation or dissolution of Fred J. Love, any Corporate
Guarantor, Jennifer-New York, and/or JWI, unless such action has
been previously consented to in writing by the Secured Party after
adequate notice and opportunity to review such proposed action;
(g) An order for relief is entered under the United
States
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Bankruptcy laws or any other decree or order is entered by a court
having jurisdiction in the premises i) adjudging any of Fred J.
Love, any Corporate Guarantor, Jennifer-New York, and/or JWI a
bankrupt or insolvent, or ii) approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect to any of Fred J. Love, any Corporate
Guarantor, Jennifer-New York, and/or JWI under the United States
bankruptcy laws or any applicable law, or iii) appointing a
receiver, liquidator, assignee, trustee, custodian or sequestrator
(or other similar official) of any of Fred J. Love, any Corporate
Guarantor, Jennifer-New York, and/or JWI or any substantial part of
the property of any of them, or iv) ordering the winding up or
liquidation of the affairs of any of Fred J. Love, any Corporate
Guarantor, Jennifer-New York, and/or JWI and any such decree or
order continues unstayed and in effect for a period of 90 days.
4. Rights and Powers of the Secured Party on Default.
(a) In General. After the occurrence and continuance of
an Event of Default, the Secured Party may proceed to enforce its
rights hereunder by suit in equity, action at law and/or other
appropriate proceedings, whether for payment or the specific
performance of any covenant or agreement contained in this Stock
Pledge Agreement. Without limiting the foregoing, upon the
occurrence and continuance of an Event of Default, the Secured
Party may, in its discretion (without any duty or obligation to do
so):
i) endorse as any Pledgor's agent any instruments
or securities pertaining to the Pledged Collateral;
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ii) take control of Proceeds, including, if any,
stock received as dividends or by reason of stock splits, and use
cash Proceeds to reduce any part of the Obligations;
iii) take any action any Pledgor is required to
take or any other necessary action to obtain, preserve and enforce
this Stock Pledge Agreement, and maintain and preserve the Pledged
Collateral, without notice to such Pledgor (except as such notice
is expressly provided for hereunder or required by applicable law)
and add the costs of same to the Obligations;
iv) release Pledged Collateral in its possession to
any Pledgor, temporarily or otherwise;
v) take control of funds generated by the Pledged
Collateral, such as cash dividends and use same to reduce any part
of the Obligations;
vi) vote any stock which is part of the Pledged
Collateral and give consents, waivers and ratifications in respect
of such shares;
vii) exercise all other rights in a commercially
reasonable manner which an owner of such Pledged Collateral may
exercise; and
viii) transfer any of the Pledged Collateral or
evidence thereof into its own name or that of its nominee and
receive the Proceeds therefrom and hold the same as security for
the Obligations, or apply the same thereto.
After the occurrence and continuance of an Event of
Default, the Secured Party may, but shall be under no duty or
obligation to, demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose, or realize upon the Pledged
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<PAGE>
Collateral, in its own name or in the name of Pledgor, as the
Secured Party may reasonably determine. The cost of such
collection and enforcement, including reasonable attorneys' fees
and expenses, shall be borne by all Pledgors, whether the same is
incurred by the Secured Party, or an agent or representative
thereof, or by any Pledgor. If paid by the Secured Party, such
payment shall become a part of the Obligations. The foregoing
rights and powers of the Secured Party shall be in addition to, and
not a limitation upon, any rights and powers of the Secured Party
given by law, custom, elsewhere by this Stock Pledge Agreement or
otherwise.
(b) Power of Sale; Enforcement. In case an Event of
Default shall have occurred and be continuing, the Secured Party,
personally or by agents or representatives,
i) may to the extent permitted by law, including
any federal or state laws governing the sales of securities, grant
options to purchase or sell at one or more sales, all or any part
of the Pledged Collateral, such sale or other disposition to be
made at the discretion of the Secured Party at one or more private
sales or to the highest bidder at public auction at such place or
places, at such time or times, and upon such terms as may be
commercially reasonable, including, without limitation, credit, as
the Secured Party may fix and specify in the notice of sale or
other disposition to be given as herein provided or as may be
required by law. The Secured Party shall be under no obligation to
delay the sale of any of the Pledged Collateral for the period of
time necessary to permit registration of such securities for public
sale under the Act or under applicable state securities laws;
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ii) may proceed to protect and enforce the rights
of the Secured Party under this Stock Pledge Agreement by suit,
whether for specific performance of any covenant herein contained,
or in aid of the execution of any power herein granted, or for the
foreclosure of or other realization upon the security interest
provided in this Stock Pledge Agreement and the sale of the Pledged
Collateral under the judgment or decree of a court of competent
jurisdiction, or for the enforcement of any other right, as the
Secured Party in its sole discretion shall determine; and
iii) may exercise any and all of the rights and
remedies of a secured party after default under the UCC (subject to
applicable securities laws), as well as all other rights and
remedies possessed by the Secured Party under this Stock Pledge
Agreement, at law, in equity or otherwise.
(c) Notice of Sale or other Disposition. If notice of
any sale or other disposition of all or any part of the Pledged
Collateral is required by law to be given, each Pledgor agrees that
a notice sent to it at least 20 days before the time of any
intended public sale, or of the time after which any private sale
or other disposition of the Pledged Collateral is to be made, shall
be reasonable notice of such sale or other disposition.
(d) Delivery to Purchaser. Upon the completion of any
sale or other disposition of all or any part of the Pledged
Collateral under this paragraph 4, full title and right of
possession to such Pledged Collateral shall pass to such purchaser
or purchasers forthwith upon the completion of such sale without
any action required on the part of any Pledgor. Nevertheless, if
so requested by the Secured Party or by any
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purchaser, each Pledgor shall confirm any such sale or transfer by
executing and delivering to such purchaser all proper instruments
of conveyance and transfer and releases as may be designated in any
such request.
(e) Application of Proceeds. The proceeds of any sale
of the Pledged Collateral or any part thereof under this paragraph
4, together with any other sums then held by the Secured Party as
part of the Pledged Collateral, shall be, applied by Secured Party
in the following order: a) first, to the payment of all reasonable
costs and expenses, including reasonable attorneys' fees, incurred
by Secured Party in enforcing its remedies hereunder or under the
JWI Note, Jennifer-New York Note, and/or Guaranty, b) second, to
the payment of the JWI Obligations, c) third, to the payment of the
Jennifer-New York Obligations, d) fourth, to the payment of any
other amounts, if any, owing, to Secured Party in connection with
the Obligations, and e) fifth, to the extent any surplus remains,
the surplus shall be paid to Pledgors jointly. Pledgors shall be
liable to the Secured Party for any deficiency between the
outstanding amount of the Obligations and the amount of cash
proceeds realized. Secured Party shall account in writing to each
Pledgor for the proceeds of any sale or other disposition of
Pledged Collateral receIved by Secured Party.
(f) Secured Party May Purchase; Purchaser May Apply
Obligations Toward Purchase. At any sale or other disposition
hereunder, the Secured Party may bid for and purchase the Pledged
Collateral offered for sale, and, upon compliance with the terms of
sale or other disposition, may hold, retain and dispose of such
Pledged Collateral in a manner consistent with applicable law. At
any sale or
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other disposition, the Secured Party shall be entitled, for the
purpose of making payment for the Pledged Collateral purchased, to
apply any part of the Obligations due and payable to it as a credit
against the purchase price of such Pledged Collateral.
Notwithstanding the foregoing, Pledgors shall remain jointly and
severally liable for any deficiency remaining with respect to the
Obligations.
(g) Registration. Upon the occurrence and continuance
of an Event of Default, (A) any or all shares of capital stock
constituting the Pledged Collateral may be registered in the name
of the Secured Party or its nominee, as the Secured Party shall, in
its discretion, decide; and (B) the Secured Party or such nominee,
in its sole discretion, may thereafter, without notice, exercise
all voting and other shareholder rights with respect to the Pledged
Collateral at any meetings thereof, and exercise any and all rights
of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged
Collateral as if the Secured Party or such nominee were the
absolute owner thereof, including, without limitation, the right to
exchange, at the Secured Party's or such nominee's discretion, any
and all of the Pledged Collateral. In connection therewith, the
Secured Party or such nominee may deposit and deliver any or all of
the capital stock constituting the Pledged Collateral with any
committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Secured
Party or its nominee may determine, all without liability, except
for fraud, gross negligence or willful misconduct and except to
account for property actually received by it, but the Secured Party
or its nominee shall have no obligation or duty to exercise any of
the
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aforesaid rights, privileges or options, and shall not be
responsible for any failure to do so or delay in so doing.
5. Voting and Other Rights. Unless an Event of Default has
occurred and is continuing, each Pledgor shall be entitled to
exercise any and all voting and all other rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with, or in violation of any provision of, this Stock
Pledge Agreement. Any cash dividends received by any of Pledgors
shall be received in trust for Secured Party and promptly remitted
to Secured Party as Pledged Collateral in the form received.
6. No Segregation of Moneys; No Interest. No moneys received
by the Secured Party need be segregated in any manner except to the
extent required by law, and any such moneys may be deposited in a
money market account in the name of the Secured Party under such
general conditions as may be prescribed by law applicable to the
Secured Party, and any interest earned thereon shall be deemed part
of the Pledged Collateral, and the Secured Party shall not be
liable for any interest thereon.
7. Notices. Except as otherwise specifically provided
herein, all notices, requests, consents, demands, waivers and other
communications hereunder and all statements, reports, documents,
certificates and papers to be delivered hereunder shall be given to
the respective parties hereto in writing and shall be delivered in
person with receipt acknowledged or sent by registered or certified
mail return receipt requested, postage prepaid.
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8. No Assignment. The Secured Party may not assign or
otherwise transfer its rights under this Stock Pledge Agreement or
any interest herein except to any affiliate or subsidiary of the
Secured Party.
9. Applicable Law; Severability. This Stock Pledge Agreement
shall be construed in accordance with, and governed by, all of the
provisions of the UCC and by the other internal laws of the State
of North Carolina, without regard to conflicts of law. Whenever
possible, each provision of this Stock Pledge Agreement shall be
interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Stock Pledge Agreement
shall be prohibited by or invalid under the applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Stock Pledge
Agreement.
10. Paragraph Titles. The paragraph titles contained in this
Stock Pledge Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties.
11. Waiver; Entire Agreement. The Secured Party's failure,
at any time or times hereafter, to require strict compliance with
or performance by each Pledgor of any provision of this Stock
Pledge Agreement or to fail to exercise, or delay in exercising any
right or remedy hereunder, shall not waive, affect or diminish any
right of the Secured Party thereafter to demand strict compliance
therewith and performance thereby. Any suspension or waiver by the
Secured Party of an Event of Default under this Stock Pledge
Agreement shall not suspend, waive or affect any
20
<PAGE>
other Event of Default under this Stock Pledge Agreement, whether
the same is prior or subsequent thereto and whether of the same or
of a different kind or character. None of the undertakings,
agreements, warranties, covenants and representations of each
Pledgor contained in this Stock Pledge Agreement, and no Event of
Default by any Pledgor under this Stock Pledge Agreement shall be
deemed to have been suspended or waived by the Secured Party unless
such suspension or waiver is in writing and signed by an officer of
the Secured Party, specifying such suspension or waiver. This
Stock Pledge Agreement constitutes the entire agreement with
respect to the subject matter hereof, and supersedes all prior
agreements, whether oral or written, among the parties with respect
to the subject matter hereof, and may not be modified or amended
except in a document signed by all Pledgors and the Secured Party.
12. Waiver; Consent to Amendments. The liability of each
Pledgor hereunder and with respect to the Pledged Collateral shall
be in no way affected or impaired by any waiver, amendment,
extension or other modification of any of the Obligations or by any
acceptance by the Secured Party of any direct or indirect security
for any indebtedness, liability or obligation of each Pledgor or
JWI or Jennifer-New York to the Secured Party, or by any failure,
delay, neglect or omission by the Secured Party to realize upon or
perfect any such security, indebtedness, liability or obligation,
or by any direct or indirect collateral security therefor, or by
the bankruptcy, reorganization or insolvency of, or by any other
proceeding for the relief of debtors commenced against any Pledgor
or JWI or Jennifer-New York.
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13. Rights Cumulative. The rights and remedies of the
Secured Party under the Guaranty and this Stock Pledge Agreement
shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have, and no failure or delay by the
Secured Party in exercising any right shall operate as a waiver of
it, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other
power or right.
14. Power of Attorney. Each Pledgor hereby makes,
constitutes and appoints the Secured Party as its true and lawful
attorney-in-fact in his name, place and stead in any way, and to do
any act, which each Pledgor could so do or act, with respect to the
following matters, with full and unqualified authority to delegate
any and all of the following powers to any person or persons whom
the Secured Party shall select to do the following acts as each
Pledgor's attorney-in-fact, provided, however, that so long as no
Event of Default shall have occurred and be continuing, Secured
Party agrees that it shall not exercise such power of attorney:
To take in its own name or in the name of any Pledgor,
all action which the Secured Party may deem necessary or desirable
to perfect or otherwise protect, perfect and maintain the liens
created under, and to obtain the benefits of, this Stock Pledge
Agreement, and to otherwise protect and preserve the Pledged
Collateral, including, without limitation, the signing of any UCC
or other type of financing statements, any security agreements,
mortgages, deeds of trust and amendments to any of the foregoing;
to endorse any notes, checks, drafts, money orders or other
instruments of payment (including payments payable under or in
respect of any policy
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<PAGE>
of insurance) in respect of the Pledged Collateral that may come
into possession of the Secured Party; to execute and deliver all
agreements, instruments, papers, certificates, powers and other
documents and chattel paper relating to the Pledged Collateral; to
pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or threatened against
the Pledged Collateral; to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of the Pledged
Collateral; to execute any proof of claim, subrogation receipt and
any other document required by any insurance company as a condition
to or otherwise in connection with payment under any policy of
insurance; to cancel, assign or surrender any such policies to
execute; and file in the name of an on behalf of Pledgor any one or
more Forms 144 or any other form required to comply with Rule 144;
and, generally, to do, at the option of the Secured Party and at
the expense of the Pledgors, at any time, or from time to time, all
acts and things which the Secured Party deems necessary to protect,
preserve and realize upon the Pledged Collateral and the Secured
Party's lien thereon in order to effect the intent of this Stock
Pledge Agreement, all as fully and effectually as each Pledgor
might or could do.
This power of attorney is a power coupled with an
interest and irrevocable and shall continue until the termination
of the Stock Pledge Agreement in accordance with paragraph 16
hereof.
15. Consent to Jurisdiction. Each Pledgor irrevocably
consents that any legal action or proceeding against him under,
arising out of or in any manner relating to, this Stock Pledge
Agreement or any other documents executed and
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<PAGE>
delivered in connection herewith or therewith, may be brought in
any court of the State of North Carolina located within Randolph,
North Carolina or in the United States District Court for the
Middle District of North Carolina or the United States Court of
Appeals for the Fourth Circuit, and each Pledgor waives trial by
jury with respect to such legal action or proceeding. Each
Pledgor, by the execution and delivery of this Stock Pledge
Agreement, expressly and irrevocably consents and submits to the
personal jurisdiction of any such court in any such action or
proceeding. Each Pledgor further irrevocably consents to the
service of any complaint, summons, notice or other process relating
to any such action or proceeding by delivery thereof to it at the
address set forth herein for each Pledgor. Each Pledgor hereby
expressly and irrevocably waives any claim or defense in any such
action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens. Each Pledgor
shall not be entitled in any such action or proceeding to assert
any defense given or allowed under the laws of any jurisdiction
other than the State of North Carolina unless such defense is also
given or allowed by the laws of the State of North Carolina.
Nothing in this paragraph shall affect or impair in any manner or
to any extent the right of the Secured Party to commence
legal proceedings relating to this Stock Pledge Agreement against
any Pledgor in any jurisdiction or to serve process in any manner
permitted by law.
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<PAGE>
16. Termination. Upon the payment in full of the Jennifer-
New York Obligations, this Stock Pledge Agreement and the security
interest granted hereby will terminate, all rights to the Pledged
Collateral shall revert to the Pledgors and the Secured Party will
promptly return the Pledged Collateral to each Pledgor. The
Secured Party shall execute and deliver to each Pledgor such
documents as Pledgor shall reasonably request to evidence
termination of this Stock Pledge Agreement and the security
interest granted herein, which documents shall be prepared at
Pledgor's sole cost and expense.
17. This Stock Pledge Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the Pledgors have caused this Stock Pledge
Agreement to be duly executed as of the date first above written.
/S/Harley J. Greenfield
HARLEY J. GREENFIELD,
Individually and as Voting Trustee
Residence Address:
1725 York Avenue
New York, New York 10128
/S/Edward B. Seidner
EDWARD B. SEIDNER
Residence Address:
125 Rodeo Drive
Oyster Bay Cove, New York 11791
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/S/Fred J. Love
FRED J. LOVE
Residence Address:
9 Martha Drive
Melville, New York 11747
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CONSENTED TO:
/S/Harley J. Greenfield
Harley J. Greenfield,
As Optionee
/S/Edward B. Seidner
Edward B. Seidner,
As Optionee
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.,
405 Lewallen Road
Asheboro, North Carolina 27203
By:/S/Robert C. Shaffner
Title:Senior Vice President
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<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Harley
Greenfield to me known, and known to me to be the person described
in and who executed the foregoing instrument, and he duly
acknowledged that he executed the same.
/S/Stuart Radish
Notary Public
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<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Edward
B. Seidner to me known, and known to me to be the person described
in and who executed the foregoing instrument, and he duly
acknowledged that he executed the same.
/S/Stuart Radish
Notary Public
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<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Fred
J. Love to me known, and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged
that he executed the same.
/S/Stuart Radish
Notary Public
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SCHEDULE A
<TABLE>
<S> <C> <C> <C> <C> <C>
Number Name Voting
of of Stock Trust No.
Registered Beneficiarial Certificate Date Certificate of
Owner Owner Number Issued Number Shares
Harley J. Fred J. Love JCC 683 8/29/88 #1 242,083
Greenfield
Harley J. Edward B. JCC 681 8/29/88 #2 250,833
Greenfield Seidner
Street Edward B. Awaiting 4,000
Name Seidner Transfer
Harley J. Harley J. JCC 700 8/29/88 241,458
Greenfield Greenfield
Street Harley J. Awaiting 4,000
Name Greenfield Transfer
</TABLE>
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SCHEDULE B
1. THE OPTION AGREEMENT dated November 7, 1994, by and between
Fred J. Love and Harley J. Greenfield.
2. THE OPTION AGREEMENT dated November 7, 1994, by and between
Fred J. Love and Edward B. Seidner.
3. THE STOCK PLEDGE AND SECURITY AGREEMENT dated November 7,
1994, by and between Harley J. Greenfield and Fred J. Love.
4. VOTING TRUST AGREEMENT dated October 15, 1986 as amended, by
and between Harley J. Greenfield, Edward B. Seidner and Fred
J. Love.
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