<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Jennifer Convertibles, Inc.
------------------------------------------------
(NAME OF ISSUER)
Common Stock, $0.01 par value
(TITLE OF CLASS OF SECURITIES)
476153101
(CUSIP NUMBER)
Kenneth S. Goodwin, Esq.
Coleman & Rhine LLP
1120 Avenue of the Americas
New York, New York 10036
212-840-3330
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 11, 1997
(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 [].
NOTE: SIX COPIES OF THIS DOCUMENT, INCLUDING ALL EXHIBITS, SHOULD BE FILED
WITH THE COMMISSION. SEE RULE 13d-1(a) FOR OTHER PARTIES TO WHOM COPIES ARE
TO BE SENT.
*THE REMAINDER OF THIS COVER PAGE SHOULD BE FILLED OUT FOR A REPORTING PERSON'S
INITIAL FILING ON THIS FORM WITH RESPECT TO THE SUBJECT CLASS OF SECURITIES, AND
FOR ANY SUBSEQUENT AMENDMENT CONTAINING INFORMATION WHICH WOULD ALTER
DISCLOSURES PROVIDED IN A PRIOR COVER PAGE.
THE INFORMATION REQUIRED ON THE REMAINDER OF THIS COVER PAGE SHALL NOT BE DEEMED
TO BE "FILED" FOR THE PURPOSE OF SECTION 18 OF THE SECURITIES EXCHANGE ACT OF
1934 ("ACT") OR OTHERWISE SUBJECT TO THE LIABILITIES OF THAT SECTION OF THE ACT
BUT SHALL BE SUBJECT TO ALL OTHER PROVISIONS OF THE ACT (HOWEVER, SEE THE
NOTES).
<PAGE> 2
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153301 PAGE 2 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anthony J. Pacchia
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
11,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 20,700
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 11,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 20,700
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 0.56%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 3
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 3 OF 86 PAGES
- -------------------- -------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
F & Co., Inc. Custodian for Anthony J. Pacchia under IRA
Account.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
16,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 15,700
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 16,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 15,700
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.56%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 4
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 4 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anthony J. Pacchia, P.C. (Money Purchase) fbo Anthony J.
Pacchia
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
2,500
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 29,200
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 2,500
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 29,200
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.56%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 5
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 5 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sandra Pacchia Custodian for Lee Pacchia
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,100
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 30,600
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 1,100
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 30,600
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.56%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 6
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 6 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sandra Pacchia Custodian for Tom Pacchia
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,100
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 30,600
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 1,100
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 30,600
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.56%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 7
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 7 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anthony T. Pacchia and Gloria Pacchia
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 15,000
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 1,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 15,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.28%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 8
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 8 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anthony T. Pacchia, IRA Rollover
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
15,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 1,000
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 15,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.28%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 9
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 9 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kenneth S. Grossman, Trustee, Profit Sharing Plan DLJSC -
Custodian fbo Kenneth S. Grossman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
96,400
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 3,500
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 96,400
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 3,500
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
99,900
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.75%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 10
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 476153101 PAGE 10 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kenneth S. Grossman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
3,500
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 96,400
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 3,500
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 96,400
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
99,900
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.75%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 11
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 11 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IRA fbo Patricia Berger, DLJSC as Custodian
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
3,500
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 3,500
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.06%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 12
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 12 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ellen Grossman, Custodian for Andrew Grossman UGMA/NY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
5,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 5,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.09%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 13
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 13 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IRA fbo Howard Berger, DLJSC as Custodian
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
3,500
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 3,500
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.06%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 14
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 14 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IRA fbo Jill Berger, DLJSC as Custodian, Rollover Account
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
3,500
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 3,500
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.06%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 15
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 15 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IRA fbo Herbert Berger, DLJSC as Custodian
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
5,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 5,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.09%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 16
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 16 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Marilyn Levy
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
5,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 5,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.09%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 17
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 17 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ellen Grossman Custodian for Joshua Grossman UGMA/NY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1)
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
5,000
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 5,000
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.09%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 18
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 18 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Amir Shaked
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
37,700
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 1,300
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 37,700
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,300
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.68%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 19
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 19 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IRA fbo Amir Shaked
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,300
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 37,700
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 1,300
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 37,700
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.68%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 20
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 20 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wexford Special Situations 1996, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 142,783
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 0
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 142,783
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
142,783
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.50%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 21
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 21 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wexford Special Situations 1996 Institutional, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 25,764
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 0
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 25,764
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,764
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.45%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 22
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 22 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wexford Special Situations 1996 Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 7,859
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 0
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 7,859
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,859
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.13%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 23
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 23 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wexford-Euris Special Situations 1996, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 36,094
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 0
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 36,094
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
36,094
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.63%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 24
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 24 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wexford Management LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 212,500
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 0
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 212,500
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
212,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.73%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IA
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 25
SCHEDULE 13D
- -------------------- -------------------
CUSIP NO. 983929100 PAGE 25 OF 86 PAGES
- -------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IRA fbo Zachary Goldwyn
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
Joint filing pursuant to Rule 13d-1(f)(1) (b)[x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
52,500
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 52,500
REPORTING ---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
52,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.92%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
EP
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 26
STATEMENT ON SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, $0.01 par value per share (the
"Common Stock") of Jennifer Convertibles, Inc. (the "Company" or "Jennifer"), a
Delaware corporation with principal executive offices at 419 Crossways Park
Drive, Woodbury, New York 11797.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(f)
This statement is being filed by the following persons (collectively, the
"Reporting Persons"): Anthony J. Pacchia, an individual and a citizen of the
United States; Fahnestock & Co., Inc. ("F&Co, Inc.") Custodian for Anthony J.
Pacchia under IRA Account; Anthony J. Pacchia, P.C. (Money Purchase), fbo
Anthony J. Pacchia; Sandra Pacchia, custodian for Lee Pacchia; Sandra Pacchia,
custodian for Tom Pacchia; Anthony J. Pacchia IRA Rollover; Anthony T. and
Gloria Pacchia, both of whom are citizens of the United States; Kenneth S.
Grossman, an individual and a citizen of the United States; Kenneth S. Grossman,
Trustee, Profit Sharing Plan Donaldson Lufkin & Jenrette Securities Corporation
("DLJSC") - Custodian fbo Kenneth S. Grossman; IRA fbo Patricia Berger, DLJSC as
Custodian; Ellen Grossman Custodian for Andrew Grossman under the Uniform Gift
to Minors Act of New York ("UGMA/NY"); IRA fbo Howard Grossman, DLJSC as
Custodian; Ellen Grossman, Custodian for Joshua Grossman under UGMA/NY; IRA fbo
Jill Berger, DLJSC as Custodian, Rollover Account; IRA fbo Herbert Berger, DLJSC
as Custodian; Marilyn Levy, an individual and a citizen of the United States;
Amir Shaked, an individual and a citizen of the United States; IRA fbo Amir
Shaked; Wexford Special Situations 1996, L.P. ("Wexford Situations"), a Delaware
limited partnership; Wexford Special Situations 1996 Institutional, L.P.
("Wexford Institutional"), a Delaware limited partnership; Wexford Special
Situations 1996 Limited ("Wexford Limited"), a Cayman Islands company;
Wexford-Euris Special Situations 1996, L.P. ("Wexford-Euris"), a Delaware
limited partnership; Wexford Management LLC ("Wexford Management"), a
Connecticut limited liability company; and IRA fbo Zachary Goldwyn.
Mr. Pacchia is employed as an attorney by Anthony Pacchia, P.C. with an
address at 620 Fifth Avenue, 7th Floor, New York, New York 10020. The address
for Mr. Pacchia's IRA and Purchase Money Plan is c/o Anthony J. Pacchia, 602
Orchard Street,
26
<PAGE> 27
Cranford, N.J. 07016.
The address for the trust for the benefit of Lee Pacchia, a minor child
and a citizen of the United States, is 602 Orchard Street, Cranford, New Jersey
07106.
The address for the trust for benefit of Tom Pacchia, a minor child is 602
Orchard Street, Cranford, New Jersey 07106.
The address for Anthony T. and Gloria Pacchia, as well as the IRA for
Anthony T. Pacchia, is 31 Center Board Drive, Bayville, New Jersey 08721. Mr.
Pacchia is retired.
Mr. Grossman is self employed as an investment consultant with a business
address at 620 Fifth Avenue, 7th Floor, New York, New York 10020. The address
for Mr. Grossman's Profit Sharing Plan is 620 Fifth Avenue, 7th Floor, New York,
New York 10020.
The address of the IRA fbo Patricia Berger is 31 Wisconsin Avenue, N.
Massapequa, N.Y. 11758. Patricia Berger, the beneficiary of the IRA, is a
citizen of the United States.
The address of the UGMA/NY trust for the benefit of Andrew Grossman, a
minor and a citizen of the United States, is 620 Fifth Avenue, 7th Floor, New
York, New York 10020.
The address of the UGMA/NY trust for the benefit of Joshua Grossman, a
minor and a citizen of the United States, is 620 Fifth Avenue, 7th Floor, New
York, New York 10020.
The address of the IRA fbo Howard Berger is 58 Alpine Way, Dix Hills, N.Y.
11746. Howard Berger, the beneficiary of the IRA, is a citizen of the United
States.
The address of the IRA fbo Jill Berger is 58 Alpine Way, Dix Hills, N.Y.
11746. Jill Berger, the beneficiary of the IRA, is a citizen of the United
States.
The address of the IRA fbo Herbert Berger is 31 Wisconsin Avenue, N.
Massapequa, N.Y. 11758. Herbert Berger, the beneficiary of the IRA, is a citizen
of the United States.
Marilyn Levy is self employed as a psychological therapist with a business
address at 155 East 76th Street, New York, New York 10022.
Mr. Shaked is self employed as a research analyst, with a business address
at 620 Fifth Avenue, 7th Floor, New York, New
27
<PAGE> 28
York 10020. The address for Mr. Shaked's IRA is 620 Fifth Avenue, 7th Floor, New
York, New York 10020.
Wexford Situations is a private investment partnership with a business
address at 411 West Putnam Avenue, Greenwich, Ct. 06830. The general partner of
Wexford Situations is Wexford Advisors LLC, a Delaware limited liability
company ("Wexford Advisors"), with a business address at 411 West Putnam
Avenue, Greenwich, Ct. 06830.
Wexford Institutional is a private investment partnership with a business
address at 411 West Putnam Avenue, Greenwich, Ct. 06830. The general partner of
Wexford Institutional is Wexford Advisors.
Wexford Limited is a private investment company with a business address
c/o Hemisphere Fund Managers Ltd. ("Hemisphere"), Harbour Centre, Georgetown,
Grand Cayman Island, B.W.I. The Board of Directors and executive officers of
Wexford Limited are Charles E. Davidson (Vice President), Joseph M. Jacobs,
Christopher Wetherhill (President), Thomas Healy (Treasurer), Stuart Drake and
Patralea Robinson. Messrs. Davidson and Jacobs are citizens of the United
States with a business address at 411 West Putnam Avenue, Greenwich, Ct. 06830.
Messrs. Wetherhill, Healy, Drake and Ms. Robinson are affiliated with Hemisphere
and are non-U.S. residents.
Wexford-Euris is a private investment partnership with a business address
at 411 West Putnam Avenue, Greenwich, Ct. 06830. The general partner of
Wexford-Euris is Wexford-Euris Advisors LLC, a Delaware limited liability
company ("Wexford-Euris Advisors"), with a business address at 411 West Putnam
Avenue, Greenwich, Ct. 06830.
Wexford Management is a private investment advisor with a business address
at 411 West Putnam Avenue, Greenwich, Ct. 06830. The Chairman and President of
Wexford Management are Charles E. Davidson and Joseph M. Jacobs, respectively.
The address of the IRA fbo Zachary Goldwyn is c/o Wexford Management, 411
West Putnam Avenue, Greenwich, Ct. 06830. Zachary Goldwyn, the beneficiary of
the IRA, is a citizen of the United States and an employee of Wexford
Management.
Criminal and Securities Proceedings
During the last five years, no Reporting Person (including any general
partner, executive officer or director thereof) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities law or finding
any violation with respect to such laws
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Pacchia purchased his shares of Common Stock of the Company for an
aggregate of $26,620, none of which was borrowed. Mr. Pacchia's IRA purchased
its shares of Common Stock for an aggregate of $42,880, none of which was
borrowed. Mr. Pacchia's Purchase Money Plan purchased its shares of Common Stock
for an aggregate of $7,500, none of which was borrowed.
The trust for the benefit of Lee Pacchia purchased its shares of Common
Stock of the Company for an aggregate of $2,695,
28
<PAGE> 29
none of which was borrowed.
The trust for the benefit of Tom Pacchia purchased its shares of Common
Stock of the Company for an aggregate of $2,695, none of which was borrowed.
The IRA for the benefit of Anthony T. Pacchia purchased its shares of
Common Stock of the Company for an aggregate of $34,950, none of which was
borrowed.
Anthony T. and Gloria Pacchia purchased their shares of Common Stock of
the Company for an aggregate of $2,190, none of which was borrowed.
Mr. Grossman purchased his shares of Common Stock of the Company for an
aggregate of $12,500, none which was borrowed. Mr. Grossman's Profit Sharing
Plan purchased its shares of Common Stock for an aggregate of $247,850, none of
which was borrowed.
The IRA fbo Patricia Berger purchased its shares of Common Stock of the
Company for an aggregate of $8,968.75, none of which was borrowed.
The UGMA/NY trust for Andrew Grossman purchased its shares of Common Stock
of the Company for an aggregate of $12,500, none of which was borrowed.
The IRA fbo Howard Berger purchased its shares of Common Stock of the
Company for an aggregate of $9,250, none of which was borrowed.
The IRA fbo Jill Berger purchased its shares of Common Stock of the
Company for an aggregate of $8,968.75, none of which was borrowed.
The IRA fbo Herbert Berger purchased its shares of Common Stock of the
Company for an aggregate of $17,062.50, none of which was borrowed.
Marilyn Levy purchased her shares of Common Stock of the Company for an
aggregate of $15,000, none of which was borrowed.
The UGMA/NY trust for Joshua Grossman purchased its shares of Common Stock
of the Company for an aggregate of $12,500, none of which was borrowed.
Mr. Shaked purchased his shares of Common Stock of the Company for an
aggregate of $101,866, none of which was borrowed.
29
<PAGE> 30
Mr. Shaked's IRA purchased its shares of Common Stock for an aggregate of
$2,928, none of which was borrowed.
Wexford Situations purchased its shares of Common Stock of the Company for
an aggregate of $346,182.18, none of which was borrowed.
Wexford Institutional purchased its shares of Common Stock of the Company
for an aggregate of $62,844.04, none of which was borrowed.
Wexford Limited purchased its shares of Common Stock of the Company for an
aggregate of $19,484.97, none of which was borrowed. Neither of Messrs.
Davidson or Jacobs own any shares of Common Stock of the Company.
Wexford-Euris purchased its shares of Common Stock of the Company for an
aggregate of $87,912.19, none of which was borrowed.
Wexford Management has not purchased any shares of Common Stock of the
Company. Wexford Management serves as investment advisor or sub advisor for each
of Wexford Situations, Wexford Institutional, Wexford Limited and Wexford-Euris
(collectively, the "Wexford Funds"). Wexford Management has been granted
discretionary dispositive power over the Wexford Funds' securities and in some
instances has voting power over such securities. Any and all discretionary
authority which has been delegated to Wexford Management may be revoked in whole
or in part at any time.
Neither Wexford Advisors nor Wexford-Euris Advisors have purchased any
shares of Common Stock of the Company. Other than in their capacity as general
partners having a 1% interest in Wexford Situations and Wexford Institutional
(in the case of Wexford Advisors) and Wexford-Euris (in the case of
Wexford-Euris Advisors), neither Wexford Advisors nor Wexford-Euris Advisors
beneficially own any shares of Common Stock.
The IRA fbo Zachary Goldwyn purchased its shares of Common Stock of the
Company for an aggregate of $133,569.05, none of which was borrowed.
ITEM 4. PURPOSE OF THE TRANSACTION.
Each of the Reporting Persons purchased shares of Common Stock of the
Company for investment purposes. Except as set forth in this Item 4 and Item 6
below, none of the Reporting Persons (including any general partner, executive
officer or director thereof) have any present plans or proposals with respect
to:
(i) Any extraordinary corporate transaction relating to the Company or any
of its subsidiaries;
(ii) A sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
(iii) Any change in the present Board of Directors or
30
<PAGE> 31
management of the Company;
(iv) Any material change in the present capitalization of the Company;
(v) Any other material change in the Company's business or corporate
structure;
(vi) Any changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(vii) Causing a class of securities of the Company to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association;
(viii) Causing a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or
(ix) any similar action to those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) Reference is made to Items 7-13 on the cover sheets of this
Schedule 13D and to the response to Item 3 hereof.
(c)
(i) Mr. Grossman's Profit Sharing Plan effected the following
transactions in the Common Stock of the Company within 60 days prior to the date
of this Schedule 13D.
<TABLE>
<CAPTION>
No. Aggregate
of Purchase
Date Shares Price ($'s)
---- ------ -----------
<S> <C> <C>
3/19/97 10,000 20,000
3/24/97 2,000 3,750
3/24/97 4,000 7,500
</TABLE>
All of the above were effected in normal brokerage transaction.
(ii) Wexford Situations effected the following transactions in the
Common Stock of the Company within 60 days prior to the date of this Schedule
13D.
31
<PAGE> 32
<TABLE>
<CAPTION>
No. Aggregate
of Purchase
Date Shares Price ($'s)
---- ------ -----------
<S> <C> <C>
2/21/97 7,737 17,916.18
2/24/97 16,788 39,896.50
2/26/97 5,036 11,828.13
2/28/97 5,039 12,150.09
3/03/97 3,359 8,212.56
3/04/97 6,718 16,400.13
3/05/97 3,359 8,107.76
3/11/97 6,728 15,583.50
</TABLE>
All of the above were effected in normal brokerage transaction.
(iii) Wexford Institutional effected the following transactions in the
Common Stock of the Company within 60 days prior to the date of this Schedule
13D.
<TABLE>
<CAPTION>
No. Aggregate
of Purchase
Date Shares Price ($'s)
---- ------ -----------
<S> <C> <C>
2/21/97 1,392 3,244.00
2/24/97 3,020 7,197.50
2/26/97 906 2,148.44
2/28/97 907 2,207.47
3/03/97 605 1,499.69
3/04/97 1,209 2,971.94
3/05/97 605 1,480.78
3/11/97 1,210 2,823.13
</TABLE>
All of the above were effected in normal brokerage transaction.
32
<PAGE> 33
(iv) Wexford Limited effected the following transactions in the Common
Stock of the Company within 60 days prior to the date of this Schedule 13D.
<TABLE>
<CAPTION>
No. Aggregate
of Purchase
Date Shares Price ($'s)
---- ------ -----------
<S> <C> <C>
2/21/97 363 864.44
2/24/97 813 1,955.88
2/26/97 244 596.88
2/28/97 1,317 3,194.03
3/03/97 158 410.13
3/04/97 316 795.25
3/05/97 158 405.19
3/11/97 316 755.75
</TABLE>
All of the above were effected in normal brokerage transaction.
(v) Wexford - Euris effected the following transactions in the Common
Stock of the Company within 60 days prior to the date of this Schedule 13D.
<TABLE>
<CAPTION>
No. Aggregate
of Purchase
Date Shares Price ($'s)
---- ------ -----------
<S> <C> <C>
2/21/97 2,008 4,668.50
2/24/97 4,379 10,425.13
2/26/97 1,314 3,104.69
2/28/97 237 595.28
3/03/97 878 2,165.13
3/04/97 1,757 4,307.69
3/05/97 878 2,137.69
3/11/97 1,746 4,062.63
</TABLE>
All of the above were effected in normal brokerage transaction.
(d) Wexford Management has not purchased any shares of Common Stock of the
Company. Wexford Management serves as investment advisor or sub advisor for the
Wexford Funds. Wexford Management has been granted discretionary dispositive
power over the Wexford Funds' securities and in some instances has voting power
over such securities. Any and all discretionary authority which has been
delegated to Wexford Management may be revoked in whole or in part at any time.
Zachary Goldwyn, the beneficiary of the IRA fbo Zachary Goldwyn, is a Vice
President of Wexford Management.
33
<PAGE> 34
Neither Wexford Management nor Mr. Goldwyn serves as custodian of the
assets of any of the Wexford Funds; accordingly, in each instance only the fund
itself or such fund's custodian or trustee bank has the right to receive
dividends paid with respect to, and proceeds from the sale of, such securities.
The ultimate power to direct the receipt of dividends paid with respect to, and
the proceeds from the sale of, such securities, is vested in the Wexford Funds
for which, as noted above, Wexford Management serves as investment advisor or
sub advisor.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
The Reporting Persons have retained the same counsel to object to the
terms of a proposed settlement in the litigation entitled Phillip E. Orbanes v.
Harley J. Greenfied et al., Civil Action No. CV-94-5694 (DRH) (E.D.N.Y.) and two
related derivative actions (collectively, the "Jennifer Derivative Litigation").
Other than such retention of counsel, the Reporting Persons (including any
general partners, executive officers or directors thereof) currently have no
contracts, arrangements, understandings or relationships (legal or otherwise),
other than as disclosed in response to the items of this Schedule 13D, among
themselves or between themselves and any other person with respect to any
securities of the Company, including but not limited to transfer or voting of
any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, or the giving or withholding of proxies, although
each of the Reporting Persons reserves the right to change its position in the
future if circumstances so warrant. Each of the Reporting Persons specifically
disclaims that it is a member of a group, as such term is defined with respect
to Section 13(d) of the Exchange Act.
ITEM 7. EXHIBITS.
The following documents are being filed herewith as Exhibits:
99.1. Powers of Attorney
99.2. Joint Filing Statement
99.3. Objection to Proposed Settlement and Notice of
Intention to Appear
34
<PAGE> 35
SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Dated: April 17, 1997
/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Fahnestock & Co., Inc, Custodian
for Anthony Pacchia under IRA
By/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Anthony J. Pacchia P.C. (Money
Purchase) fbo Anthony J. Pacchia
By/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Sandra Pacchia, Custodian for
Lee Pacchia
By/s/ Sandra Pacchia
--------------------------------------------
Sandra Pacchia
Sandra Pacchia, Custodian for
Tom Pacchia
By/s/ Sandra Pacchia
--------------------------------------------
Sandra Pacchia
Anthony T. Pacchia, IRA Rollover
By/s/ Anthony T. Pacchia
--------------------------------------------
Anthony T. Pacchia
35
<PAGE> 36
/s/ Anthony T. Pacchia
--------------------------------------------
Anthony T. Pacchia
/s/ Gloria Pacchia
--------------------------------------------
Gloria Pacchia
/s/ Kenneth S. Grossman
--------------------------------------------
Kenneth S. Grossman
Kenneth S. Grossman, Trustee,
Profit Sharing Plan DLJSC -
Custodian fbo Kenneth S. Grossman
By/s/ Kenneth S. Grossman
--------------------------------------------
Kenneth S. Grossman, Trustee
IRA fbo Patricia Berger, DLJSC as
Custodian
By/s/ Patricia Berger
--------------------------------------------
Patricia Berger
Ellen Grossman Custodian for Andrew
Grossman UGMA/NY
By/s/ Ellen Grossman
--------------------------------------------
Ellen Grossman, Custodian
Ellen Grossman Custodian for Joshua
Grossman UGMA/NY
By/s/ Ellen Grossman
--------------------------------------------
Ellen Grossman, Custodian
IRA fbo Howard Berger, DLJSC as
Custodian
By/s/ Howard Berger
--------------------------------------------
Howard Berger
36
<PAGE> 37
IRA fbo Jill Berger, DLJSC as
Custodian, Rollover Account
By/s/ Jill Berger
--------------------------------------------
Jill Berger
IRA fbo Herbert Berger, DLJSC as
Custodian
By/s/ Herbert Berger
--------------------------------------------
Herbert Berger
/s/ Marilyn Levy
--------------------------------------------
Marilyn Levy
/s/ Amir Shaked
--------------------------------------------
Amir Shaked
IRA fbo Amir Shaked
By/s/ Amir Shaked
--------------------------------------------
Amir Shaked
Wexford Special Situation 1996
Institutional, L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Special Situations 1996,
L.P.
37
<PAGE> 38
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Special Situations 1996
Limited
By Wexford Management LLC as
Sub-Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford-Euris Special Situations
1996, L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Management LLC
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
IRA fbo Zachary Goldwyn
By/s/ Zachary Goldwyn
--------------------------------------------
Zachary Goldwyn
38
<PAGE> 1
POWER OF ATTORNEY
Know all persons by these presents that each person whose signature
appears below constitutes and appoints Kenneth S. Grossman, as his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for such person and in such person's name, place and stead, in
any and all capacities, to sign any Schedule 13D and any and all amendments to
the Schedule 13D filed on behalf of each of them, with respect to their
beneficial ownership of shares of Common Stock of Jennifer Convertibles, Inc.,
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Dated: April 17, 1997
/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Fahnestock & Co., Inc, Custodian
for Anthony Pacchia under IRA
By/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Anthony J. Pacchia P.C. (Money
Purchase) fbo Anthony J. Pacchia
By/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Sandra Pacchia, Custodian for
Lee Pacchia
By/s/ Sandra Pacchia
--------------------------------------------
Sandra Pacchia
39
<PAGE> 2
Sandra Pacchia, Custodian for
Tom Pacchia
By/s/ Sandra Pacchia
--------------------------------------------
Sandra Pacchia
Anthony T. Pacchia, IRA Rollover
By/s/ Anthony T. Pacchia
--------------------------------------------
Anthony T. Pacchia
/s/ Anthony T. Pacchia
--------------------------------------------
Anthony T. Pacchia
/s/ Gloria Pacchia
--------------------------------------------
Gloria Pacchia
/s/ Kenneth S. Grossman
--------------------------------------------
Kenneth S. Grossman
Kenneth S. Grossman, Trustee,
Profit Sharing Plan DLJSC -
Custodian fbo Kenneth S. Grossman
By/s/ Kenneth S. Grossman
--------------------------------------------
Kenneth S. Grossman, Trustee
IRA fbo Patricia Berger, DLJSC as
Custodian
By/s/ Patricia Berger
--------------------------------------------
Patricia Berger
Ellen Grossman Custodian for Andrew
Grossman UGMA/NY
By/s/ Ellen Grossman
--------------------------------------------
Ellen Grossman, Custodian
40
<PAGE> 3
Ellen Grossman Custodian for Joshua
Grossman UGMA/NY
By/s/ Ellen Grossman
--------------------------------------------
Ellen Grossman, Custodian
IRA fbo Howard Berger, DLJSC as
Custodian
By/s/ Howard Berger
--------------------------------------------
Howard Berger
IRA fbo Jill Berger, DLJSC as
Custodian, Rollover Account
By/s/ Jill Berger
--------------------------------------------
Jill Berger
IRA fbo Herbert Berger, DLJSC as
Custodian
By/s/ Herbert Berger
--------------------------------------------
Herbert Berger
/s/ Marilyn Levy
--------------------------------------------
Marilyn Levy
/s/ Amir Shaked
--------------------------------------------
Amir Shaked
IRA fbo Amir Shaked
By/s/ Amir Shaked
--------------------------------------------
Amir Shaked
41
<PAGE> 4
Wexford Special Situation 1996
Institutional, L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Special Situations 1996,
L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Special Situations 1996
Limited
By Wexford Management LLC as
Sub-Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford-Euris Special Situations
1996, L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
42
<PAGE> 5
Wexford Management LLC
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
IRA fbo Zachary Goldwyn
By/s/ Zachary Goldwyn
--------------------------------------------
Zachary Goldwyn
43
<PAGE> 1
STATEMENT OF JOINT FILERS
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G of the General Rules
and Regulations of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, the undersigned agrees that the statement to
which this Exhibit is attached is filed on behalf of each of them in the
capacities set forth below.
Dated: April 17, 1997
/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Fahnestock & Co., Inc, Custodian
for Anthony Pacchia under IRA
By/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Anthony J. Pacchia P.C. (Money
Purchase) fbo Anthony J. Pacchia
By/s/ Anthony J. Pacchia
--------------------------------------------
Anthony J. Pacchia
Sandra Pacchia, Custodian for
Lee Pacchia
By/s/ Sandra Pacchia
--------------------------------------------
Sandra Pacchia
Sandra Pacchia, Custodian for
Tom Pacchia
By/s/ Sandra Pacchia
--------------------------------------------
Sandra Pacchia
Anthony T. Pacchia, IRA Rollover
By/s/ Anthony T. Pacchia
--------------------------------------------
Anthony T. Pacchia
44
<PAGE> 2
/s/ Anthony T. Pacchia
--------------------------------------------
Anthony T. Pacchia
/s/ Gloria Pacchia
--------------------------------------------
Gloria Pacchia
/s/ Kenneth S. Grossman
--------------------------------------------
Kenneth S. Grossman
Kenneth S. Grossman, Trustee,
Profit Sharing Plan DLJSC -
Custodian fbo Kenneth S. Grossman
By/s/ Kenneth S. Grossman
--------------------------------------------
Kenneth S. Grossman, Trustee
IRA fbo Patricia Berger, DLJSC as
Custodian
By/s/ Patricia Berger
--------------------------------------------
Patricia Berger
Ellen Grossman Custodian for Andrew
Grossman UGMA/NY
By/s/ Ellen Grossman
--------------------------------------------
Ellen Grossman, Custodian
Ellen Grossman Custodian for Joshua
Grossman UGMA/NY
By/s/ Ellen Grossman
--------------------------------------------
Ellen Grossman, Custodian
IRA fbo Howard Berger, DLJSC as
Custodian
By/s/ Howard Berger
--------------------------------------------
Howard Berger
45
<PAGE> 3
IRA fbo Jill Berger, DLJSC as
Custodian, Rollover Account
By/s/ Jill Berger
--------------------------------------------
Jill Berger
IRA fbo Herbert Berger, DLJSC as
Custodian
By/s/ Herbert Berger
--------------------------------------------
Herbert Berger
/s/ Marilyn Levy
--------------------------------------------
Marilyn Levy
/s/ Amir Shaked
--------------------------------------------
Amir Shaked
IRA fbo Amir Shaked
By/s/ Amir Shaked
--------------------------------------------
Amir Shaked
Wexford Special Situation 1996
Institutional, L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
46
<PAGE> 4
Wexford Special Situations 1996,
L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Special Situations 1996
Limited
By Wexford Management LLC as
Sub-Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford-Euris Special Situations
1996, L.P.
By Wexford Management LLC as
Investment Manager
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
Wexford Management LLC
By/s/ Arthur Amron
--------------------------------------------
Arthur Amron
Senior Vice President and
General Counsel
IRA fbo Zachary Goldwyn
By/s/ Zachary Goldwyn
--------------------------------------------
Zachary Goldwyn
47
<PAGE> 1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- ----------------------------------------x
PHILIP E. ORBANES, suing derivatively : Civil Action No.
on behalf of JENNIFER CONVERTIBLES, CV-94-5694 (DRH)
INC., :
Plaintiff, :
-against- :
HARLEY J. GREENFIELD, FRED J. LOVE, :
EDWARD B. SEIDNER, AL FERRARA, BERNARD
WINCIG, WILLIAM F. APFELBAUM, GLENN S. :
MYERS, MICHAEL N. ROSEN and JARA
ENTERPRISES, INC., :
Defendants, :
-and- :
JENNIFER CONVERTIBLES, INC., :
Nominal Defendant. :
- ----------------------------------------x
MYER OKUN and DAVID SEMEL, derivatively : Civil Action No.
and on behalf of JENNIFER CONVERTIBLES, CV-95-0080 (DRH)
INC., :
Plaintiffs, :
-against- :
AL FERRARA, HARLEY J. GREENFIELD, FRED :
J. LOVE, EDWARD B. SEIDNER, LAWRENCE R.
HAUT, BERNARD WINCIG, WILLIAM F. :
APFELBAUM, GLENN S. MYERS, MICHAEL N.
ROSEN, MICHAEL J. COLNES and JARA :
ENTERPRISES, INC. and JENNIFER
CONVERTIBLES, INC., :
Defendants, :
-and- :
JENNIFER CONVERTIBLES, INC., :
Nominal Defendant. :
<PAGE> 2
- ----------------------------------------x
- ----------------------------------------x
MYER OKUN DEFINED BENEFIT PENSION PLAN, : Civil Action No.
derivatively and on behalf of Jennifer CV-95-3162 (DRH)
Convertibles, Inc., :
Plaintiff, :
-against- :
JEROME I. SILVERMAN COMPANY and JEROME :
I. SILVERMAN,
:
Defendants,
:
-and-
:
JENNIFER CONVERTIBLES, INC.,
:
Nominal Defendant.
:
- ----------------------------------------x
OBJECTION TO PROPOSED
SETTLEMENT AND NOTICE
OF INTENTION TO APPEAR
Wexford Management, LLC (comprised of Wexford Special
Situations 1996, L.P., Wexford Special Situations 1996 Institutional, L.P. and
Wexford Special Situations 1996 Limited), Kenneth Grossman and family, Zachary
Goldwyn I.R.A., Anthony Pacchia and Amir Shaked (the "Objectors"), shareholders
of nominal defendant Jennifer Convertibles, Inc. ("Jennifer") through their
attorneys Coleman & Rhine LLP, hereby serve notice of their intention to appear
at the Settlement Hearing scheduled for April 15, 1997, pursuant to the Court
Order dated March 3, 1997, and interpose their objection to the proposed
settlement.
2
<PAGE> 3
INTRODUCTION
Objectors collectively hold approximately 350,000 shares of
common stock of Jennifer, equaling about 6% of the total shares outstanding.
Copies of Objectors' respective holdings are annexed as Exhibit A. Since 1987,
when Jennifer was formed and had its initial public offering, the three
individuals controlling Jennifer, defendants Harley J. Greenfield
("Greenfield"), Edward B. Seidner ("Seidner") and Fred J. Love ("Love")
(collectively, the "Controlling Directors"), have engaged in improper
self-dealing through a series of transactions between Jennifer and Jara
Enterprises, Inc., an affiliated private company, owned until recently in equal
shares by the Controlling Directors (the "Private Company").
During the ten years since Jennifer went public, it has grown
from a start-up venture with a handful of stores to the largest national seller
of sofabeds, with 160 stores (a number of which are licensed by Jennifer) and
$110,000,000 in revenue. However, due to the self-dealing and improprieties of
the Controlling Directors, and the acquiescence of the board of directors, the
Private Company and the Controlling Directors, rather than Jennifer or its
public shareholders, have been the principal beneficiaries of this growth.
The settlement proposal currently before this Court actually
contemplates continuing the self-dealing which prompted
3
<PAGE> 4
these lawsuits. The proposal not only fails to confer any benefit to Jennifer or
its public shareholders, but if it is approved by this Court, Jennifer's
financial mismanagement and the stock market's negative perception of its
management will continue unabated. Moreover, while Jennifer had never been
obligated to use the Private Company's services, the Proposed Settlement
contemplates binding Jennifer to unfavorable terms for at least two years.
Finally, there has been no discovery, no arms-length negotiations, and no
opportunity for Objectors to learn the details of the claims being released or
of the settlement process. Objectors have been stonewalled repeatedly in their
attempts to obtain copies of crucial documents.
The details of the improper self-dealing, as well as questionable
accounting practices engaged in by the Controlling Directors are contained in a
report prepared by a former Jennifer director, Michael Colnes (the "Colnes
Report")(1). The Colnes Report was prepared with the assistance of independent
legal counsel (Schulte, Roth & Zabel) and independent accountants (Ernst &
Young). The Colnes Report condemned the self-dealing and non-disclosed actions
of Greenfield, Seidner and Love, and
- --------
(1) The Colnes Report was designated as the Report of Independent
Counsel to the Board of Directors of Jennifer Convertibles, Inc. It was first
presented to the Board in summary fashion on December 2, 1994. On January 26,
1995, the final report was issued confirming the conclusions in the summary
report.
4
<PAGE> 5
concluded that Jennifer had meritorious claims against these three directors and
against the Private Company.
The Company's 1996 Annual Report on Form 10-K (the "1996
10-K") (at p. 19-20) stated that Colnes had "reviewed many significant related
party transactions and recommended to the Board that the Company assert claims
to recover damages for harm caused the Company." Objectors believe that the
Colnes Report is both lengthy and thorough in scope, but have been denied access
to it despite several requests to counsel on both sides of these derivative
actions.
Colnes resigned from Jennifer's Board of Directors (the
"Board") almost immediately after rendering the final version of his report. He
was replaced on the litigation committee by two new directors, Kevin Coyle and
Edward Bohn, who were the handpicked appointees of the very same Controlling
Directors that Colnes had investigated and had found to have engaged in
self-dealing and other wrongful conduct. Coyle and Bohn ultimately negotiated a
settlement of the derivative claims.(2)
On or about March 18, 1996, counsel to the parties in the
derivative actions executed a memorandum of understanding (the "1996
Memorandum") settling the lawsuits, despite the absence of any activity in the
derivative actions which had been
- --------
(2) The appointment of these directors has never been subjected to a
vote of Jennifer's shareholders since Jennifer has not held a shareholders
meeting since August, 1994.
5
<PAGE> 6
filed in December, 1994 and January, 1995. Appended to the 1996 Memorandum was a
proposed agreement between the Private Company and Jennifer which purported to
resolve all of the self-dealing issues and to "restructure" the interested party
relationships and arrangements then in existence. The terms of this agreement
and of the settlement reflected in the 1996 Memorandum were negotiated by the
so-called "independent" litigation committee comprised of directors Coyle and
Bohn (the "Independent Committee").
Fully a year after the 1996 Memorandum was signed, and once again with
no discovery or other proceedings in the derivative actions, a proposed
settlement has now been presented to the Court (the "Proposed Settlement")
consisting of seven separate agreements between Jennifer and the Private Company
(the "New Agreements"). The New Agreements are a studied exercise in obfuscation
and replace the single agreement appended to the 1996 Memorandum. Despite the
indecipherable complexity of these seven agreements, and the long interval of
time that elapsed since the 1996 Memorandum, Jennifer's public shareholders have
been provided with less than one month to object to the Proposed Settlement (3).
- --------
(3) The Court's March 3, 1997 Order required that the Notice of Hearing
be published no later than March 10, 1997. The notice was not published until
March 12, 1997, thereby reducing even further the time to review the Proposed
Settlement and prepare an (...continued)
6
<PAGE> 7
Moreover, any evaluation and/or objection to the Proposed
Settlement had to be based on a record that is devoid of any formal document or
deposition discovery. There has not even been any so-called "confirmatory"
discovery. Neither the members of the Independent Committee nor any persons
working on their behalf were ever deposed. Michael Colnes has not been deposed.
None of the defendants were deposed. In addition, Objectors -- representing
approximately 6% of the shares outstanding -- have been denied access to
relevant documents. These actions continue the pattern of the Controlling
Directors' preventing any details of the financial relationship between Jennifer
and the Private Company from ever being examined. In fact, Colnes and Jennifer's
own accounting firms were never provided access to the records of the Private
Company relating to its transactions with Jennifer.
The request to obtain the critical Colnes Report, upon which
the claims in the derivative actions were based, was denied by counsel. Yet, the
Proposed Settlement contemplates that all claims that were or could have been
raised pursuant to the Colnes
- ----------
(3) (...continued)
objection. As a result, Objectors obtained the consent from lead
counsel for both plaintiffs and defendants (and from the Court) to file any
objection on or before April 11, 1997. Counsel, however, conditioned their
consent on Objectors agreeing not to review or respond to the papers submitted
in support of the Proposed Settlement. We have not been served with defendants'
supporting papers and although we were served with derivative plaintiffs'
supporting papers on April 9, 1997, this objection does not respond to those
documents.
7
<PAGE> 8
Report are to be deemed res judicata. The Proposed Settlement also seeks to
release all matters referred to or discussed in (i) the draft complaint in a
proposed action entitled Zises, et al. v. Greenfield, et al. (S.D.N.Y.) dated
March 30, 1994, and (ii) the March 22, 1994 letter from Michael Colnes to Harley
Greenfield, neither of which have been provided to Objectors. Further, a request
to view a report purportedly refuting the conclusions of the Colnes Report was
met with the imposition of conditions that would render any review meaningless.
Finally, no report or documents have been provided detailing the methodology,
analysis and conclusions of the Independent Committee. Under these
circumstances, neither the Court nor Objectors have information sufficient to
make a reasoned analyses of the value, fairness or propriety of the Proposed
Settlement.
Therefore, on procedural grounds alone, the Proposed
Settlement cannot be approved. Moreover, based on what limited information is
available, the Proposed Settlement is neither fair, reasonable nor adequate on a
substantive basis, for at least the following reasons:
A) The Proposed Settlement consists of a series of
labyrinthine agreements which to the extent
decipherable merely serve to perpetuate and in
some cases exacerbate the self-dealing and over-
reaching by the Controlling Directors which, in
large part, prompted these lawsuits in the first
place. What little that can be understood from
the New Agreements reveals that:
8
<PAGE> 9
1) The New Agreements continue to shift
economic power away from Jennifer to the
Private Company, to the detriment of
Jennifer and its public shareholders;
2) The New Agreements require Jennifer to
continue utilizing the Private Company
for warehousing and related services and
pay exorbitant fees to the Private
Company. Under the New Agreements,
Jennifer will pay the Private Company
for warehousing and fabric protection at
the rate of 8.3% of sales until December
31, 1997, and at 7.2% of sales until
1999, at which time the Private Company
will begin to purchase these identical
services from Jennifer at the rate of 2%
plus a fee for fabric protection!
3) The New Agreements require Jennifer to
pay to the Private Company more for
fabric protection than it would pay to
outside entities or than it would have
to expend if it did this work on its
own. Moreover, the New Agreements
require Jennifer to pay on a percentage
of sales basis. This arrangement could
incentivize Jennifer to increase raw
dollar sales volume, thereby increasing
the Private Company's fees, while
generating smaller profits for Jennifer
because the additional sales generate
losses.
4) The New Agreements contain no assurance
that the Public Company will not
continue to subsidize the Private
Company's advertising expenditures. In
fiscal year 1996, advertising
expenditures by the Public Company
aggregated $12.3 million or 11.6% of
sales, an amount which Objectors believe
cannot be justified against industry
standards.
5) In fiscal years 1994-96, Jennifer wrote
off $7.3 million in receivables from the
Private Company. Under the New
9
<PAGE> 10
Agreement, the Private Company will only
reimburse the Public Company for $1.4
million of such receivables and do so over
seven years.
6) There is no rational basis advanced for
Jennifer being unable to either find
alternative warehouse facilities or
perform its own warehousing-related
services. Rather than correcting and
compensating for the past and preventing
recurrences in the future, the New
Agreements bind Jennifer to dealing with
the Private Company for at least an
additional two years. Whereas, Jennifer
had never before been obligated to
purchase services from the Private
Company.
7) The New Agreements, in particular the Offset
Agreements, essentially obligate Jennifer to
provide the Private Company with a
$1,000,000 interest free loan.
B) The Proposed Settlement contains no prophylactic
measures designed to prevent future recurrences of
the self-dealing and hidden transactions undertaken
by the Controlling Directors who still remain on both
sides of these transactions.
C) The Proposed Settlement contemplates no payment
from any defendant to Jennifer for the harm they
caused the company.
In sum, based on the limited information available to
Objectors, the Proposed Settlement in these minimally litigated derivative
actions appears to be a sham. Rather than correcting past misdeeds and
benefiting Jennifer, the Proposed Settlement merely perpetuates the pattern of
self-dealing, binding Jennifer to oppressive terms for at least two years at the
expense of its public shareholders.
10
<PAGE> 11
STATEMENT OF FACTS(4)
Jennifer is the owner and licensor of the largest group of
sofabed specialty retail stores in the United States. There are over 100
Jennifer Convertible stores throughout the country. Jennifer also operates
"Jennifer Leather" and "Elegant Living" stores. As of August 31, 1996, 50 of the
Jennifer Convertible stores and 36 Jennifer Leather stores were owned by
Jennifer, and 79 were owned by third parties and operated under licenses from
Jennifer. An additional 21 Jennifer Convertible stores not owned or licensed by
Jennifer operate in New York. These New York stores are owned by the Private
Company, which in turn has been owned by the Controlling Directors. These New
York stores are still operated, in many respects, in conjunction with the
company-owned and licensed stores.
Jennifer was incorporated in 1986 and was granted the
exclusive license to use, sublicense and franchise the use of the trademark
"Jennifer Convertible." The three defendants -- Greenfield, Love and Seidner --
who owned the Private Company, controlled Jennifer. Initially, when the Private
Company had substantially more stores and larger sales volume than Jennifer, the
Private Company supported Jennifer under a warehousing and purchasing agreement
providing Jennifer with access to the
- --------
(4) This section is based on various public filings, the complaints in
these derivative actions, and on the settlement documents.
11
<PAGE> 12
Private Company's warehousing and distribution facilities and services and
permitting Jennifer, for a fee, to take advantage of the Private Company's
infrastructure and purchasing power. However, the claimed economic
justifications for using the Private Company's facilities clearly no longer
exist. Today, Jennifer, the public company owns or licenses approximately 160
stores compared to only 21 stores owned by the Private Company.
Indeed, Jennifer confirms that while it may have once lacked
the financial wherewithal to provide its own warehousing and related services,
it is now able to do so. The 1996 10-K (at p. 43), in Greenfield's name stated:
. . . . the Company has not had, until
recently, the financing to open its own
warehouse or the inclination to use such
financing to open warehouses instead of
stores.
The problematic relationship between Jennifer and the Private
Company publicly came to light in 1994. The financial statements included in a
number of Jennifer's quarterly reports issued in 1994 were materially overstated
by virtue of defendants' failure to report accurately the true relationship with
the Private Company. Moreover, the Controlling Directors chose to disregard the
fact that at least 22 of the stores from which Jennifer was receiving royalties
in exchange for the use of the Jennifer Convertible trademark had significant
operating losses and that Jennifer was required to have its financial
12
<PAGE> 13
statements reflect the losses suffered by these limited partnership licensees.
These losses were having, or threatened to have, a material adverse financial
impact on Jennifer. Defendants also knew that Jennifer was not adequately
reserved for bad debts. As a result of these material misstatements in public
filings, Jennifer became the target of numerous federal securities class actions
and a formal investigation by the Securities and Exchange Commission. (See 1996
10-K at p. F-24.)
These improper accounting practices also precipitated the
appointment of a committee to fully investigate the various related party
transactions and relationships. Michael Colnes became a committee of one. The
investigation, with the assistance of independent counsel and accountants,
focused on Jennifer's inappropriate accounting practices, and more importantly
on the long history of self-dealing, over-reaching and hidden transactions by
the Controlling Directors, and the resulting substantial damages suffered by
Jennifer.
The Colnes Report concluded that Jennifer had meritorious
claims against the Controlling Directors, against the Private Company and
against the Private Company's accountants. The report condemned the action of
the directors and recommended that the Board commence litigation on behalf of
Jennifer. The Board refused, which was not unexpected in light of the control
exercised by the three Controlling Directors. The Board's
13
<PAGE> 14
decision, as well as the Controlling Directors' refusal to provide Colnes with
access to the Private Company's financial records, forced Colnes to resign. A
copy of Colnes resignation letter, dated February 9, 1995 is annexed as Exhibit
B.(5)
Instead of following the recommendations of the Colnes Report,
the Controlling Directors commissioned its own report, the "Ten Eyck Report."
The Ten Eyck Report predictably concluded that the Colnes Report was without
merit.(6) One of the conclusions of the Colnes Report, as reported in the 1996
10-K (at p. 44), was that Colnes had been denied access to the books and records
of the Private Company. See also Exhibit B. This is not surprising in light of
the declination of Jennifer's third accounting firm Richard A. Eisner and Co. to
render an unqualified opinion, because "the Private Company was unable to
provide documentation for transactions performed by the Private Company on
behalf of [Jennifer]." (Id. at p. F-1.) Indeed, the only persons who have ever
been provided access to the Private
- --------
(5) We were able to obtain a copy of this letter solely because it was
appended to a public filing.
(6) As noted above, Objectors have been denied any reasonable access to
the so-called Ten Eyck report. Objectors were told by counsel to Jennifer that
only Objector Grossman, and no one else, including specifically Objector Shaked,
could review the report and that no notes could be taken. In addition, viewing a
response, without access to the document to which it is responding (i.e., the
Colnes Report) is like debating an empty chair. Counsel's actions in this regard
are sophomoric and puzzling.
14
<PAGE> 15
Company's financial documents are the Controlling Directors and persons retained
by them to act on behalf of the Controlling Directors, and not on Jennifer's
behalf. There is little doubt that the Controlling Directors for years have
assiduously worked to prevent disclosure of the details of their self-dealing.
Indeed, Objectors have learned that most of Jennifer's accounting functions had
been performed by defendant Jerome Silverman's accounting firm, the Private
Company's accountants.
The Controlling Directors also appointed Coyle and Bohn as
directors. They replaced Colnes and became the Independent Committee. This
so-called Independent Committee, whose independence has never been tested
through discovery, then proceeded to discount any value to the meritorious
claims against the Private Company and the Controlling Directors described in
the Colnes Report, and negotiated the agreement appended to the 1996 Memorandum.
That agreement was ultimately transformed into the labyrinthine seven agreements
which are the basis of the 1997 Proposed Settlement. Of course, during the more
than one-year period since the 1996 Memorandum was signed, the self-dealing and
over-reaching by the Controlling Directors continued unabated.(7)
- --------
(7) In fiscal 1996, Objectors estimate that overcharging for
warehousing and fabric protection services amounted to at least $5 million and
the advertising subsidy amounted to an additional $2 million. As such,
shareholders were short-changed at least $7 million, or over $1.00 of earnings
per share. Under current stock market valuations, this earnings per share would
have translated into a stock price of at least $10 vs. the current $2 price.
15
<PAGE> 16
Moreover, according to the 1996 10-K (at p. 26), Jennifer -- presumably as part
of the settlement -- established a "monitoring committee" to oversee the
inter-company transactions. One of the three members of the committee, Bernard
Wincig, has been counsel to the Private Company since 1980.
THE PROPOSED SETTLEMENT
The Proposed Settlement, submitted to the Court for approval a
full year after the 1996 Memorandum was signed, consists of a series of seven
separate agreements summarized as follows(8):
A) (Warehouse Services):
Until December 31, 1997, Jennifer will pay the
Private Company for all services under the warehousing
agreement 8.3% of the retail sales prices, less the costs of
certain services that will be assumed by
- --------
(8) The New Agreements are a measured attempt at obfuscation. They are
lengthy, extremely difficult to decipher, and contain inexplicable terms that
are unnecessarily obtuse. Since the New Agreements themselves are cryptic, and
we believe purposely so, this summary is from Jennifer's Form 10-Q for the
quarter ending November, 1996. Further review of the New Agreements is required
to reach a full understanding of their terms and the benefits, if any, bestowed
on Jennifer, as well as to determine how such confusing agreements could result
from "arms-length" negotiations. As proof of the complexity of these agreements,
the summary itself consumes six pages of this Objection!
16
<PAGE> 17
Jennifer previously provided by the Private Company, but no
lower than 7.2% of sales. For 1998, the fee will be 7.2%. Upon
the effective date, Jennifer will no longer pay the Private
Company separately for "fabric protection" services. Jennifer
has also agreed to pay an additional warehouse fee during the
calendar year 1996 if the total retail sales of Jennifer are
less than an agreed-upon amount. Jennifer will pay the Private
Company $65,000 for each million dollar shortfall in annual
sales. Jennifer has also agreed to pay a re-delivery fee to
the Private Company of 3% of selling price for customer
deliveries that have to be redelivered to customers under
certain circumstances. In 1997 and 1998, if an annual sales
level of $140 million (this number was apparently subsequently
adjusted to $106 million) is achieved, the Private Company
will pay back 50% of previous shortfall payments in each of
such years. To the extent the shortfall is not so repaid in
full, starting on January 1, 1999, the
17
<PAGE> 18
Private Company will repay the balance of the
shortfall over seven years without interest.
B) (Assignment of Real Property Interests
of Warehouses):
Effective January 1, 1999, the Private
Company and/or its affiliates will transfer
to Jennifer all real property interests in
the various warehouses serving the business
along with the leasehold interests subject to
mortgages and other security agreements.
C) (Warehouse Services to the Private
Company):
Commencing January 1, 1999, Jennifer
will provide the Private Company all
warehousing services for 2% of the Private
Company's delivered retail selling prices,
plus a fee for "fabric protection" services.
D) (Freight Charges):
Jennifer will continue to pay all freight charges
(for inventory delivered to warehouses) through December 31,
1998, based upon an agreed schedule with the Private Company.
18
<PAGE> 19
E) (Assignment of Interest in Certain
Limited Partnerships and Other Corporate
Licensee):
The Private Company will purchase the interests of
the limited partnerships known as LP III, LP IV and LP V
(these limited partnerships of which Jennifer is the General
Partner, operate and own a number of licensed stores) and the
equity interest of the shareholders of S.F.H.C. [i.e., South
Florida Holding Corp., another licensee of Jennifer] and
assign these interests to Jennifer. Jennifer, in turn, will
release the limited partners and the shareholders, officers
and directors of S.F.H.C. from all claims and/or obligations
owed to Jennifer. F) (Inter-Company Accounts):
The Private Company will pay Jennifer under the
offset agreement $1,400,000 in resolution of certain
inter-company account balances(9) as of August 26, 1995 at
$17,000 per month [over 84 months] to be applied
- --------
(9) This obligation appears on the books of Jennifer as being in an
amount in excess of $7 million.
19
<PAGE> 20
toward principal and interest at 6%, until
repaid.
G) (License of Computer Programs):
Commencing January 1, 1999, the Private
Company will license Jennifer to use and
change the Private Company's computer
programs without fee. Jennifer will also
assume the obligations and personnel of the
Computer Department, presently maintained by
the Private Company.
H) (Warranty and Fabric Protection):
Jennifer will be responsible for any
claims for breach of warranty relating to
"fabric protection" in connection with sales
by both Jennifer and the Private Company.
I) (Amounts Due From Officers of S.F.H.C.
of $1,200,000):
The Private Company will assume and pay $1,200,000 of
the debt of the officers of S.F.H.C. This amount will be paid
to Jennifer in 84 equal monthly installments, without
interest, beginning January 1, 1999.
20
<PAGE> 21
J) (Offset Agreements):
On November 1, 1995 and March 1, 1996,
Jennifer and the Private Company entered into offset
agreements. Such offset agreements permit the two companies to
offset their current obligations to each other for merchandise
purchases, warehouses fees, fabric protection fees and
freight. The Settlement Agreement contemplates that amounts
owing in excess of $1,000,000 at any time will be paid in
cash. As part of the offset agreement, the Private Company
agreed to assume certain liabilities owed to Jennifer by the
Unconsolidated Licensees.
K) (Royalties):
The Unconsolidated Licensees will pay to Jennifer any
royalties owed under the offset agreement. The Private Company
will pay royalties owed of $100,000 for stores that the
Unconsolidated Licensees have closed commencing January 1,
1999 in 84 equal monthly installments without interest.
21
<PAGE> 22
L) (Agreement of Sale of Inwood, New York
Warehouse):
On June 30, 1996, the Private Company
sold the Inwood, New York warehouse which has
been the principal warehouse in the
distribution system. In connection with this
sale, Jennifer will receive from the Private
Company payments of $25,000 per month for 84
months commencing January 1, 1999. Effective
December 1, 1996, the warehouse fee will be
reduced to 7.2% of the retail sales prices
and fabric protection revenue collected from
customers.
M) (Subordination)
Subject to court approval of the Settlement
Agreement, Messrs. Greenfield and Seidner have agreed to
subordinate, until January 1, 1999, their right to receive
payments in respect of the $10,273,000 owed to them by the
Private Company, if the Private Company is in default in the
payment of any cash obligation to Jennifer arising after
August 7, 1996 after giving effect to any offsets as between
Messrs. Greenfield and
22
<PAGE> 23
Seidner and the Private Company. Such
subordination does not apply to any
distribution in respect of a disposition of
substantially all of the assets of the
Private Company.
Despite the extraordinary complexity of the terms of
the new inter-company agreements comprising the Proposed Settlement, derivative
plaintiffs' counsel has conducted no formal discovery to determine the fairness
of the Proposed Settlement or the process engaged in to reach this Proposed
Settlement. Although additional documents and further analysis are required to
gain a complete understanding of the economic effect to Jennifer of the Proposed
Settlement, on its face it appears to do nothing more than continue the very
activities that were alleged in the derivative actions to constitute
self-dealing and breaches of fiduciary duties.(10) Indeed, a number of terms
- --------
(10) Public filings indicate that in exchange for their interests in
the Private Company, the Private Company issued two $5,000,000 promissory notes
to Greenfield and Seidner, respectively. Obviously, this does very little to
diminish their personal interest in continuing to benefit the Private Company at
the expense of Jennifer. They must ensure receipt of interest -- reported as
$360,000 each per year -- and the principal of the notes. The 1996 10-K
acknowledges that Greenfield and Seidner "retain a substantial economic interest
in the Private Company." (at p. F-14-15). Again, no discovery was undertaken by
derivative counsel relating to this transfer of interest, the circumstances
surrounding Greenfield and Seidner's remaining interests in the Private Company
and the relationship they still have with Fred J. Love, who now owns the Private
Company, was one (...continued)
23
<PAGE> 24
are more favorable to the Private Company than under the previous relationship,
at least as disclosed in public filings. The proponents of the Proposed
Settlement have mentioned to Objectors that they have secured a fairness opinion
concerning the Proposed Settlement. Any such fairness opinion, if one exists,
has also not been the subject of any discovery. Moreover, no report issued by
the Independent Committee detailing its methodology, analysis and conclusions
has been provided or tested through discovery. The only document received by
Objectors was not provided until April 9, 1997, and merely provides a value on
the licensed stores to be transferred to Jennifer.
On March 12, 1997, Objectors saw the notice of settlement
printed in the Wall Street Journal. Objectors attempted to obtain more
information concerning the Proposed Settlement, but were rebuffed. Objectors
then retained counsel to aid in the investigation and to advise on the decision
of whether to object to the Proposed Settlement. Counsel contacted Martin Stein,
Esq., of Phillips, Salman & Stein, Jennifer's attorneys in these derivative
actions, to obtain various documents, including the Colnes Report. Mr. Stein
refused. Lee Squitieri, Esq., of Abbey, Gardy & Squitieri, derivative
24
- ---------
(10)(...continued)
of the Controlling Directors of Jennifer, who still owns a substantial number of
shares in Jennifer, and who is also Greenfield's brother-in-law.
<PAGE> 25
plaintiffs' lead counsel, agreed to meet with Objectors and counsel concerning
the Proposed Settlement. Unfortunately, because of his unavailability, he was
unable to schedule a meeting until March 24. Mr. Squitieri indicated that he
would not provide any documents because they had been obtained pursuant to a
Confidentiality Stipulation. Objectors' counsel's request to meet with the
members of the Independent Committee was also refused. Almost every request for
documents has either been flatly refused or would only be provided subject to
conditions making review fruitless.
In sum, the entire process -- beginning with the events
prompting the Colnes Report, the request itself, to the appointment of the
Independent Committee whose actions are the exclusive basis for derivative
plaintiffs' counsel supporting the Proposed Settlement, to the assessment of the
Colnes Report, to the actual negotiation process, through the execution of the
New Agreements -- has been shrouded in secrecy. As a result, Objectors have been
effectively stonewalled in their effort to obtain the information necessary to
properly and independently, evaluate the terms of the Proposed Settlement.
ARGUMENT
THE PROPOSED SETTLEMENT
SHOULD NOT BE APPROVED
The burden of proving that a Proposed Settlement is
fair and adequate in light of the interests of all of the parties
25
<PAGE> 26
falls squarely on its proponents. A settlement will not be approved if it is:
a) unfair to some of the parties;
b) not the result of arms-length negotiation; or
c) not based on sufficient information.
7C C. Wright, A. Miller & M. Kane, Federal Practice & Procedure
Section 1839 (1986). Here, the proponents of the Proposed Settlement
cannot meet their burden on any of these grounds.
A. Neither the Court Nor Objectors Have
Sufficient Information to Determine the
Fairness of the Proposed Settlement.
There has been no discovery as to the fairness of the Proposed
Settlement. Moreover, there has been no formal document discovery on any issues.
There have been no depositions taken of anyone, including the Controlling
Directors, Michael Colnes, or the Independent Committee. The complaints have not
been answered. The Colnes Report has not been made available to Objectors or
their counsel or, for that matter, to the Court. Under these circumstances, this
Court cannot possibly approve the Proposed Settlement at this time.
A court must never rubber-stamp a derivative action settlement
proposal. Seigal v. Merrick, 590 F.2d 35, 38 (2d Cir. 1978). Thus, in passing on
the settlement of a derivative suit, this Court must have apprised itself of all
facts necessary for an intelligent and objective assessment of the probabilities
of
26
<PAGE> 27
ultimate success should the claim be litigated. Saylor v. Lindsley, 456 F.2d
896, 904 (2d Cir. 1972); Krasner v. Dreyfus Corp., 500 F. Supp. 36, 44-45
(S.D.N.Y. 1980) (Court refuses to approve settlement in light of lack of
evidence as to the best possible recovery and the probable recovery); Fricke v.
Daylin, Inc., 66 F.R.D. 90, 97 (E.D.N.Y. 1975) ("At the very least, the district
court must possess sufficient evidentiary facts to show the fairness of the
proposed settlement"). Without the benefit of any substantive discovery, this
Court's ability to fully assess the merits of the claim, review how the
settlement was reached, and properly protect the interests of the public
shareholders, is impossible.
Moreover, Objectors are entitled to a reasonable opportunity
to engage in discovery, especially in light of the failure of derivative
plaintiffs' counsel to do so. In Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975),
the Third Circuit reversed the district court's approval of a class and
derivative action settlement which was reached soon after discovery commenced.
The court found that the objector was not afforded an adequate opportunity to
test by discovery the strengths and weaknesses of the proposed settlement. Id.
at 157. Accord Saylor v. Basted, 78 F.R.D. 150, 153 (S.D.N.Y. 1978).
Here, Objectors have not been afforded any opportunity to test
the Proposed Settlement and weigh it against the
27
<PAGE> 28
potential recovery. Nor have they been able to review the merits of the claims
being released. All requests for documents have been refused. Interview requests
have been denied. The New Agreements are purposely obscure. Objectors have not
been provided with a copy of any "fairness opinion," or any reports relating to
the methodology, analyses and conclusions of the Independent Committee. Nor has
the independence of Bohn and Coyle ever been tested through discovery. Finally,
the only persons who have ever been provided access to the books of the Private
Company are the Controlling Directors or persons they retained.
Before this Court approves the Proposed Settlement, it must be
satisfied that it has been presented with sufficient information. Since
derivative plaintiffs' counsel has declined to conduct any discovery whatsoever,
Objectors should be afforded the opportunity to conduct discovery and present to
the Court the evidence required to adequately evaluate the settlement on a
properly developed record. See Joy v. North, 692 F.2d 880, 893 (2d Cir. 1992)
("We simply do not understand the argument that derivative actions may be
routinely dismissed on the basis of secret documents. [T]he committee must
disclose to the court and the parties not only its report but all underlying
data."), cert. denied, 103 S.Ct. 1498 (1983); In re Par Pharmaceutical, Inc.
Derivative Litig., 750 F. Supp. 641, 647 (S.D.N.Y. 1990) (Court
28
<PAGE> 29
refuses to grant special litigation committee's motion to dismiss derivative
action where "the Committee has yet failed to document in any manner its
procedures, reasoning or conclusions."); Peller v. The Southern Co., 707 F.
Supp. 525, 529 (N.D. Ga. 1988) (Lack of independent committee's good faith found
where the committee relied on counsel to outline and conduct all interviews and
then prepare interview summaries that contain "privileged information" in order
to insulate its investigation from scrutiny.), aff'd, 911 F.2d 1532 (11th Cir.
1990).
B. The Settlement Did Not Result From
Arms-Length Negotiations.
A settlement that does not result from true, arms-length
negotiation will not be approved. Here, derivative plaintiffs' counsel did not
participate in any of the negotiations concerning the Proposed Settlement. The
deal was struck by the so-called "independent directors" and was presented to
derivative counsel as a fait accompli. Since the independence of these directors
was never tested, and since derivative plaintiffs' counsel, who is supposed to
protect Jennifer and its public shareholders, did not meaningfully participate
in the negotiations, the question that remains unanswered is who was and is
protecting the interests of Jennifer's public shareholders?
If the Court is not satisfied that the terms of the Proposed
Settlement resulted from arms-length negotiations, by persons uninterested in
the outcome, then approval will be
29
<PAGE> 30
withheld, irrespective of the fairness of the terms. See Clark v. Lomas &
Nettleton Financial Corp., 625 F.2d 49, 54 (5th Cir. 1980), cert. denied, 450
U.S. 1029 (1981); In re Oracle Secs. Litig., 829 F. Supp. 1176, 1186-1190 (N.D.
Cal. 1993).
Delaware law provides for a two-part test to determine whether
to approve an independent committee's decision to compromise a derivative suit:
First, the Court should inquire into the independence and good
faith of the committee and the bases supporting its
conclusions. Limited discovery may be ordered to facilitate
such inquiries. The corporation should have the burden of
proving independence, good faith and a reasonable
investigation, rather than presuming independence, good faith
and reasonableness. If the Court determines either that the
committee is not independent or has not shown reasonable bases
for its conclusions, or if the Court is not satisfied for
other reasons relating to the process, including but not
limited to the good faith of the committee, the Court shall
deny the corporation's motion. If, however the Court is
satisfied under Rule 56 standards that the committee was
independent and showed reasonable bases for good faith
findings and recommendations, the Court may proceed, in its
discretion, to the second step. The second step provides, we
believe, the essential key in striking the balance between
legitimate corporate claims as expressed in a derivative
stockholder suit and a corporation's best interests as
expressed by an independent investigating committee. The Court
should determine, applying its own independent business
judgment, whether the motion should be granted.
30
<PAGE> 31
Zapata Corp. v. Maldonado, 430 A.2d 779, 788-89 (Del. 1981) (Involving a motion
to dismiss a derivative action recommended by a litigation committee).
Thus, the first step is to examine the independence and good
faith of the committee, keeping in mind "that directors are passing judgment on
fellow directors in the same corporation and fellow directors, in this instance,
who designated them to serve both as directors and committee members." Id. at
787. Of course, in the instant case the situation is even more attenuated
because these directors are not only passing judgment on the Controlling
Directors who appointed them, but the shareholders have never been given the
opportunity to vote on the propriety of appointing these directors, with all the
attendant necessary disclosures.
Although the Delaware Supreme Court has held that there is no
single test for director independence, courts analyze all influences on a
director's performance, especially in relation to the challenged decision, and
evaluate that director's actual ability to render an independent judgment. See
Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1167 (Del. 1995) (the
"actual person" test requires an independent judicial determination regarding
the materiality of the actual director's self-interest); Pogostin v. Rice, 480
A.2d 619, 624 (Del. 1984) (Directorial interest exists whenever divided
loyalties are
31
<PAGE> 32
present, and the "question of independence flows from an analysis of . . . the
influences upon the directors' performance generally, and more specifically in
respect to the challenged transaction.")
The circumstances surrounding the appointment of Bohn and
Coyle, including their appointment by the Controlling Directors, leads to at
least a question as to their independence. At the very least, derivative
plaintiffs' counsel should have undertaken discovery as to the independence and
good-faith of the committee. Such an investigation was especially compelling
here, because the shareholders of Jennifer never had the opportunity to confirm
their appointment through an election, as the Controlling Directors have not
seen fit to hold a shareholders meeting for three years. Moreover, there has
been little public disclosure concerning these two directors.
The process by which Bohn and Coyle reached their decision to
compromise claims found to be meritorious by a former independent director,
independent counsel and independent accountants is also relevant to their own
independence and good- faith. See In Re Par Pharmaceutical, Inc. Derivative
Litig., 750 F. Supp. 641, 647-648 (S.D.N.Y. 1990); Zapata Corp. v. Maldonado,
430 A.2d 779, 789 (Del. 1980); cf. Cinerama Inc. v. Technicolor, Inc., 663 A.2d
1156, 1174-75 (Del. 1995) (Courts can properly consider a director's reliance on
special legal counsel and on a
32
<PAGE> 33
financial advisor). Thus, derivative plaintiffs' counsel was obligated to
conduct discovery concerning the process leading to the Proposed Settlement. For
example, did the committee employ truly independent financial advisors? Did the
committee employ truly independent legal counsel? What is the basis for any
fairness opinion? What prompted the substantial lapse of time between the 1996
Memorandum and the current Proposed Settlement? None of these questions were
asked, let alone answered, during the course of this litigation. For these
reasons alone, the Proposed Settlement should not be approved.
C. The Proposed Settlement Is Unfair To
Jennifer And Its Public Shareholders.
From what little information has been made available to
Objectors, it appears that the New Agreements comprising the Proposed
Settlement, not only fail to provide a substantial benefit to Jennifer and its
public shareholders, but continue the course of abusive self-dealing which
prompted these derivative actions to be filed in the first place. The terms of
the New Agreements actually appear less favorable to Jennifer than the prior
arrangements disclosed publicly. Rather than requiring the self-dealing
Controlling Directors to pay restitution to Jennifer, the Proposed Settlement
binds Jennifer to the Private Company for at least two years, and bars any
additional or future claims from ever being asserted. Further, there also are no
prophylactic measures included in the Proposed Settlement to
33
<PAGE> 34
prevent similar future conduct by the Controlling Directors. In sum, the
Controlling Directors lose nothing and gain more favorable terms in their
self-dealing.
In addressing an application to approve a settlement pursuant
to Rule 23.1, which will bind absent and non-assenting shareholders, the Court
must determine if the proposal is fair, reasonable and adequate. Goldsholl v.
Shapiro, 417 F. Supp. 1291 (S.D.N.Y. 1976). The burden is on the proponents to
show that a proposed settlement meets this standard. Maher v. Zapata, 714 F.2d
436, 454 (5th Cir. 1983); Fricke v. Daylin, Inc., 66 F.R.D. 90, 97 (E.D.N.Y.
1975). In all cases of settlement approval, the Court is called upon to balance
the likelihood of recovery in the action against the benefits of the compromise.
Seigal v. Merrick, 590 F.2d 35, 38 & n.2 (2d Cir. 1978); Goldsholl v. Shapiro,
417 F. Supp. 1291 (S.D.N.Y. 1976); Fricke v. Daylin, Inc., 66 F.R.D. 90, 97
(E.D.N.Y. 1975). "The Court is, in a sense, a third party to the settlement
negotiations; a participant whose task it is to insure the protection of all
stockholders of the corporation." Goldsholl, 417 F. Supp. at 1296. Thus, even if
the proponents can establish that Bohn and Coyle were independent and acted in
good-faith in reaching the settlement agreement, the Proposed Settlement should
still not be approved because the Court is obligated to independently assess
whether their decision to compromise adequately protects the
34
<PAGE> 35
interests of the corporation and its shareholders. Peller v. The Southern Co.,
707 F. Supp. 525. 527 (N.D. Ga. 1988), aff'd, 911 F.2d 1532 (11th Cir. 1990);
Zapata Corp. v. Maldonado, 430 A.2d 779, 788-89 (Del. 1981); In re Maxxam, Inc.,
659 A.2d 760, 767 (Del. Ch. 1995); Accord Joy v. North, 692 F.2d. 880, 891 (2d
Cir. 1982) (Connecticut law), cert. denied, 103 S.Ct. 1498 (1983).
In addition to the absence of a qualitative and probing
assessment of the merits and value of the released claims, any benefits of the
Proposed Settlement claimed by its proponents are illusory. Jennifer no longer
needs to rely on the Private Company. Whatever justifications may have existed
for these inter-company transactions in 1986, at the time Jennifer was created,
they are no longer present. In 1986, it was at least arguable that in order to
avoid expending capital to develop an infrastructure, Jennifer should employ
many of the Private Company's facilities. Today, Jennifer dwarfs the Private
Company economically and has done so for a number of years. It no longer makes
financial sense to continue to rely on the Private Company's facilities,
because, in essence, Jennifer is simply transferring the benefits derived from
its size (i.e., economies of scale and the power of buying in volume) from its
public shareholders to the smaller Private Company. It is frankly ludicrous for
Jennifer, the larger public company to pay its substantially smaller affiliated
Private Company for these
35
<PAGE> 36
services. And it is disingenuous to bind Jennifer to terms less favorable than
it previously enjoyed, and try to pass it off as part of a favorable settlement.
Moreover, the public shareholders of Jennifer are harmed by
the continuation of the self-dealing. The value of their shares is deflated by
the perception in the trading market that Jennifer remains dominated by the
Controlling Directors who place their own interests above those of its public
shareholders and that the Proposed Settlement merely maintains the status quo.
Allowing the self-dealing and hidden transactions to continue will only serve to
deflate the shareholders' equity.
The proponents of the Proposed Settlement will likely cite to
the transfer to Jennifer of a number of limited partnerships and South Florida
Holding Corp. ("S.F.H.C."), all of which currently own licensed stores, as
providing a substantial benefit to Jennifer. This benefit is illusory, and in
any event, has nothing to do with these derivative actions. First, the limited
partnerships and S.F.H.C. are licensed by Jennifer not the Private Company. The
Private Company is not related to these entities. Thus, the transfer of the
interests, first to the Private Company who will then, in turn, transfer them to
Jennifer appears to be designed solely to make it appear that a benefit is being
received from the Private Company to Jennifer. Secondly, Jennifer is already the
General Partner in each of these limited
36
<PAGE> 37
partnerships. Third, Jennifer is receiving an income stream based on royalties
from the limited partnerships, so any "benefit" must be reduced by the loss of
that income. Fourth, Jennifer is providing stock warrants to the limited
partners in exchange for the interests. Fifth, Jennifer is releasing all claims
it has against these entities. Sixth, at least two years ago, Jennifer announced
that it was going to buy back and operate its licensed stores. Thus, tying the
transfer into the Proposed Settlement is a disingenuous attempt to add "value"
to the settlement where none exists.
The chances of a substantial recovery in these derivative
actions, on the other hand, appear to be very real even without having reviewed
the Colnes Report. While one can expect the proponents of the Proposed
Settlement to employ the tired, usual boilerplate rhetoric about the uncertainty
of any recovery, the costs of litigation, and that the law favors the settlement
of disputes, the derivative actions assert real claims of substantial
self-dealing, hidden transactions, and public misrepresentations. These claims
were found meritorious by the only truly independent persons in this entire
episode, i) Michael Colnes, a former outside, independent director, ii) Schulte,
Roth & Zabel, and iii) Ernst & Young. In any event, there simply is not enough
information available for the Court or Objectors to properly weigh the
likelihood and amount of a recovery should
37
<PAGE> 38
these actions be fully litigated against the benefit from the Proposed
Settlement.
CONCLUSION
The Proposed Settlement attempts to create an illusion
of benefit to Jennifer where none exists. To the contrary, the
Proposed Settlement represents a continuation of the over-
reaching and unfair self-dealing which prompted the filing of the
derivative actions in the first place. At the same time, the
proponents of the Proposed Settlement seek to keep secret the
process by which the Proposed Settlement was reached and deny
access to documents and other information to those who wish to
scrutinize the Proposed Settlement and the claims sought to be
released. Under these circumstances and for all of the foregoing
reasons, the Proposed Settlement should not be approved pursuant
to Fed. R. Civ. P. 23.1.
Dated: New York, New York
April 11, 1997
COLEMAN & RHINE LLP
By: /s/ Howard I. Rhine
------------------------
Howard I. Rhine (HIR-1961)
Attorneys for Objectors
Wexford Management, LLC
Kenneth Grossman, Zachary
Goldwyn I.R.A., Anthony
Pacchia and Amir Shaked
1120 Avenue of the Americas
New York, New York 10036
(212) 840-3330
Of Counsel:
Bruce S. Coleman
Mark S. Pomerantz
38
