EXHIBIT 8
STOCK PLEDGE AGREEMENT
Stock Pledge Agreement, dated as of March 1, 1996, made by
Xxxx Enterprises, Inc., Convertible Enterprises, Inc., Bright Star
Enterprises, Inc., and Xxxxxxxx Advertising, Inc. (collectively,
the "Pledgors") to Klaussner Furniture Industries, Inc., a North
Carolina corporation (the "Secured Party").
In consideration of the premises, the mutual covenants, terms
and conditions herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgors hereby covenant and agree as follows:
1. Hypothecation and Pledge of Stock: Grant of Security
Interest. To secure payment and performance by Pledgors of (a)
their guaranty to Secured Party of even date herewith (the "JWI
Guaranty") of the Indebtedness as such term is defined in the JWI
Guaranty ("JWI Obligations"); and (b) Continuing Guaranty Agreement
dated February 26, 1993 by Pledgors to the Secured Party, as
amended by Amendment To Continuing Guaranty Agreement dated
February 17, 1994, as further amended by Amendment To Continuing
Guaranty Agreement dated January 1, 1995, as further amended by
Amendment To Continuing Guaranty Agreement dated March 1, 1996,
executed by Pledgors (the "Xxxxxxxx-New York Guaranty") of the
indebtedness as described in the Xxxxxxxx-New York Guaranty (the
"Xxxxxxxx-New York Obligations"), each Pledgor hereby pledges to
Secured Party and grants to the Secured Party a continuing first
priority security interest in and to all of their respective issued
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and outstanding shares of common stock, $0.01 per share par value,
of Xxxxxxxx Convertibles, Inc. (the "JCI Common Stock"). The JWI
Guaranty and the Xxxxxxxx-New York Guaranty are hereinafter
sometimes collectively referred to as the "Guaranty". The
execution and delivery of this Stock Pledge Agreement is a
condition to (a) Secured Party lending the sum of $1,440,000 to
Xxxxxxxx Warehousing, Inc. ("JWI"), a subsidiary of Xxxx
Enterprises, Inc. ("Xxxx") and an affiliate of the other Pledgors,
which loan is evidenced by a Note of even date herewith executed by
JWI in favor of Secured Party (the "JWI Note") and (b) pursuant to
Amended and Restated Promissory Note dated March 1, 1996, (the
"Xxxxxxxx-New York Note"), Secured Party is further agreeing to an
extension of the terms of payment of the obligations of
Xxxxxxxx-New York, Inc. ("Xxxxxxxx-New York") to the Secured Party.
All such shares of JCI Common Stock are evidenced by the certificates
listed on Schedule A (the "Pledged Shares"), and together with all
additions thereto, substitutions and replacements therefor and
Proceeds (as hereinafter defined) of all of the foregoing shall be
hereinafter referred to as the "Pledged Collateral". All Pledgors
shall simultaneously herewith deliver to the Secured Party, in form
transferable by delivery, the certificates representing the Pledged
Shares, accompanied by stock powers duly executed in blank, except
for the Lost Shares, as hereinafter defined, subject to the terms
of paragraph 2(o) hereof, to be held by the Secured Party as
security as aforesaid, provided, however, that so long as no Event
of Default (as hereinafter defined) shall have occurred and be
continuing, Secured Party shall not transfer to or register in its
name or any of its nominees any or all of the Pledged Collateral.
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As used herein, the term "Proceeds" shall have the
meaning assigned to it under Article 9 of the Uniform Commercial
Code as in effect in the State of North Carolina as the same may be
amended from time to time (the "UCC") and, to the extent not
otherwise included, shall include, but not be limited to, i) any
and all proceeds of any causes and rights of action or settlements
thereof payable to any Pledgor from time to time with respect to
the Pledged Collateral, and ii) any and all other amounts from time
to time paid or payable under or in connection with the Pledged
Collateral, and shall also include, without limitation, cash
dividends, any cash, other stock or property received in exchange
or in substitution for the Pledged Shares, distributions which may
be made on, or distributed in consequence of the ownership of, the
Pledged Shares, instruments or distributions of any kind issuable,
issued or received upon conversion of, in respect of, or in
exchange for any of the Pledged Shares, including, without
limitation, those arising from a stock dividend, stock split,
reclassification, reorganization, merger, consolidation, sale of
assets, or other exchange of securities or any dividends or other
distributions, warrants, options or other rights of any kind upon
or with respect to the Pledged Shares.
2. Covenants and Agreements. Until the payment in full of
all of the JWI Obligations and Xxxxxxxx-New York Obligations
(collectively the "Obligations").
(a) Each Pledgor shall defend its Pledged Collateral
against all claims and demands of all persons (other than the
Secured Party) at any time claiming the same or any interest
therein.
(b) At any time and from time to time, upon the
request of the
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Secured Party and at the sole expense of each Pledgor, each Pledgor
will promptly execute, deliver, file and record any and all such
further instruments and documents, and take such further action as
may be deemed necessary or desirable in the reasonable judgment of
the Secured Party to obtain, maintain, perfect and enforce the
security interest granted hereby and the rights, remedies and
powers hereunder, including, without limitation, the provision of
instruments and documents reasonably necessary to perfect the
security interest granted hereby under Article 9 of the UCC, and
the execution and delivery of one or more proxies and powers of
attorney (in addition to those granted herein). In connection
herewith, the Secured Party is hereby irrevocably authorized and
empowered as each Pledgor's attorney-in-fact, at its option (but
without any obligation of the Secured Party to do so), to make any
filings of UCC financing and continuation statements and to give
all other notices as it shall deem necessary with respect to the
Pledged Collateral, all of which may be done with or without the
signature of any Pledgor. Each Pledgor agrees that the foregoing
power constitutes a power coupled with an interest which shall
survive until the payment in full of all of the Obligations. Each
Pledgor agrees that a carbon, photographic or other reproduction of
this Stock Pledge Agreement is sufficient as a financing statement.
(c) No Pledgor will sell, encumber, transfer or
otherwise dispose of or hypothecate the Pledged Collateral or any
portion thereof nor sign, file or authorize the signing or filing
of any document effecting such act, except upon the prior written
consent of the Secured Party.
(d) Each Pledgor will notify the Secured Party of any
change in
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such Pledgor's mailing address.
(e) Pursuant to this Stock Pledge Agreement, each
Pledgor shall have delivered to Secured Party of all instruments,
securities and documents which are part of the Pledged Collateral,
appropriately endorsed to the Secured Party's order, or with
appropriate powers. Regardless of the form of such endorsement,
each Pledgor hereby waives presentment, demand, notice of dishonor,
protest, and notice of protest, and all other notices with respect
to any of the foregoing which would otherwise require the same.
(f) With respect to the Pledged Collateral, the Secured
Party shall not be under any duty to present, send or file any
claim or notices, perform any services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for any
insurance, or pay any taxes or other charges, make any demand, or
make any inquiry as to the nature or sufficiency of any payment
received by it, or take any action of any kind in connection with
the management thereof, and its only duty with respect thereto
shall be to exercise reasonable care in the custody and
preservation of the Pledged Collateral held hereunder.
(g) Pledgors will, upon the Secured Party's written
request, do, file, record, make, execute and deliver all such acts,
deeds, things, notices and instruments as may be reasonably
necessary or desirable to vest in and assure to the Secured Party
a continuing first priority security interest in and to the Pledged
Collateral and the enforcement of, and giving effect to, the
rights, remedies and powers hereunder.
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(h) Any additions to, accumulations of, substitutions
for, and proceeds of the Pledged Collateral in any form whatsoever
which shall come into the possession of any Pledgor shall be held
in trust for the Secured Party, and, upon receipt thereof, shall be
promptly delivered to the Secured Party as Pledged Collateral in
the form received together with such stock powers or other
documents as the Secured Party shall request in connection
therewith.
(i) The Secured Party, may at any time, and from time
to time, extend the time of payment or performance or renew, in
whole or in part, any of, or modify, compromise, waive, supplement
or otherwise change in any way, the Obligations as the Secured
Party may determine and all of the provisions and authorizations
contained herein shall continue to remain in full force and effect.
(j) The security interest granted under this Stock
Pledge Agreement constitutes and shall at all times constitute a
continuing first priority security interest in the Pledged
Collateral, and Pledgors represent that the Pledged Collateral is
free and clear of all liens, security interests or encumbrances of
any kind, except for the security interest created by this Stock
Pledge Agreement, and that each Pledgor is the owner of the shares
representing its portion of the Pledged Collateral.
(k) Each Pledgor as to itself and its Pledged
Collateral represents and warrants that as of the date hereof:
i) Pledgor has full power and authority to enter
into and perform its obligations under this Stock Pledge Agreement
and to pledge the Pledged Collateral to the Secured Party as
provided herein.
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ii) The execution, delivery and performance of this
Stock Pledge Agreement by the Pledgor, and the pledge of the
Pledged Collateral hereunder do not and will not conflict with,
result in any violation of, or constitute any default under, a
provision of any contractual obligation of Pledgor or any law or
governmental regulation or court decree or order applicable to or
binding upon Pledgor. This Stock Pledge Agreement is the legal,
valid and binding obligation of the Pledgor, enforceable in
accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
iii) To the best of its knowledge, the JCI Common
Stock constituting Pledged Collateral is duly authorized and
validly issued, fully paid and nonassessable.
iv) Except as set forth in Schedule B annexed
hereto, none of the Pledged Shares (A) is subject to any option,
agreement or commitment pursuant to which any third party shall
have a right to acquire any interest therein; (B) is subject to any
restriction of any kind as provided in the Securities Act of 1933,
as amended and the Securities and Exchange Act of 1934, as amended,
and the regulations promulgated thereunder, including, but not
limited to Rule 144 of the Securities Exchange Commission
(collectively the "Act") and applicable state securities laws; (C)
is or shall become "control" or "restricted" stock as such terms
are used in the Act; and (D) is or shall become subject to a legend
or agreement which would restrict the transfer thereof by the
Pledgor or the Secured Party.
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(l) To the extent that any provision of this Stock
Pledge Agreement conflicts with any of the provisions of the Option
Agreements and Voting Trust Agreements described in Schedule B
hereof (collectively, the "Option and Voting Agreements"), the
provisions of this Stock Pledge Agreement shall govern. All of the
parties to the Option and Voting Agreements hereby consent to the
terms of this Stock Pledge Agreement, and hereby waive and
subordinate to Secured Party any and all rights (including, without
limitation any notices to be given) each of such parties may have
with respect to the Option and Voting Agreements and such Option
and Voting Agreements shall be deemed suspended and without any
force and effect until the payment in full of the Obligations,
provided that the Pledged Shares may be voted (subject to the terms
of paragraph 5 and the other applicable provisions of this Stock
Pledge Agreement) in accordance with the Option and Voting Trust
Agreements until the occurrence and continuance of an Event of
Default, provided further, however, that nothing contained herein
shall preclude the right of any optionee to exercise any option to
purchase to purchase any Pledged Shares under the Option and Voting
Agreements, provided that such optionee either agrees to be bound
as a Pledgor subject to all of the terms of this Stock Pledge
Agreement and ratifies this Stock Pledge Agreement or executes a
new stock pledge agreement that refers to such Pledged Collateral
and is in the same form as this Stock Pledge Agreement.
(m) The Pledgors recognize that the Secured Party may
be unable to effect a public sale of any or all the Pledged
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and the Securities
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and Exchange Act of 1934, as amended, and the regulations
promulgated thereunder, including but not limited to Rule 144 of
the Securities and Exchange Commission (collectively the "Act"),
and applicable state securities laws, but may be compelled to
resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to
acquire such Pledged Collateral for their own account for
investment and not with a view to the distribution or resale
thereof. Pledgors agree that Secured Party is authorized to impose
any limitation and take all such acts as Secured Party shall deem
necessary to comply with the Act in making any sale or other
distribution of the Pledged Collateral. Each Pledgor (at its own
expense) shall use reasonable efforts to cause Xxxxxxxx
Convertibles, Inc. ("JCI") to take all action and to execute all
documents that Secured Party shall reasonably require in order to
comply with the Act in connection with the sale of any of the
Pledged Collateral, after and during the continuance of an Event of
Default. Each Pledgor acknowledges that any such private sale may
result in prices and other terms less favorable than if sold at
public sales, and agrees that any such private sale shall be deemed
to have been made in a commercially reasonable manner. Secured
Party shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit any
issuer of such Pledged Collateral to register such Pledged
Collateral for public sale under the Act, or under applicable state
securities laws, even if such issuer would agree to do so.
(n) Secured Party acknowledges that all or part of the
Pledged Collateral may be or may become subject to Rule 144 of the
Securities and Exchange
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Commission as amended from time to time ("Rule 144"). Until the
payment in full of the Obligations, and in the event of any sale of
the Pledged Collateral pursuant to Rule 144 made by the Pledgors
and consented to by the Secured Party, the Pledgors will furnish
the Secured Party with a copy of any Form 144 filed in respect of
such sale. The Pledgors will cooperate fully with the Secured
Party with respect to any sale by the Secured Party of any of the
Pledged Collateral, including full and complete compliance with all
requirements of Rule 144 and will give to the Secured Party all
information and will do all things necessary, including the
execution of all documents, forms, instruments, and other items, to
comply with Rule 144 and any and all other rules, regulations or
laws of the United States or the state necessary for the
unrestricted sale and/or transfer of the Pledged Collateral, and
will exercise their reasonable efforts to have JCI, upon the
request of the Secured Party, publicly disseminate all information
required to satisfy Rule 144. The Pledgors understand that the
pledge to Secured Party of the Pledged Collateral by the Pledgors
is a bona fide pledge and not intended by the Pledgors to result in
the satisfaction of the Obligations by the liquidation and sale of
the Pledged Collateral. The Pledgors agree to execute one or more
Forms 144 or any other form required to comply with Rule 144 at any
time after the Secured Party's written request with respect to the
Pledged Collateral.
(o) Certain of the Pledged Shares identified in
Schedule A have been lost or misplaced (the "Lost Shares") and lost
certificate affidavits have been submitted by the appropriate
Pledgors to the transfer agent of JCI, and replacement certificates
for the Lost Shares (the "Replacement Certificates") have been
requested.
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Pledgers covenant and agree that Secured Party shall receive the
Replacement Certificates, together with appropriate stock powers
endorsed in blank, no later than April 1, 1996, which Replacement
Certificates shall be deemed Pledged Collateral.
3. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
(a) The occurrence and continuance of any Event of
Default, as such term is defined in the JWI Note, and/or any
default by JWI in the payment of the JWI Obligations;
(b) The occurrence and continuance of any Event of
Default, as such term is defined in the Xxxxxxxx-New York Note,
and/or any default by Xxxxxxxx-New York in the payment of the
Xxxxxxxx-New York Obligations;
(c) A default by any Pledg or under its Guaranty;
(d) Any representation or warranty made by Pledgor in
the Guaranty and/or in this Stock Pledge Agreement shall prove to
have been false or misleading in any material respect when made;
(e) A Pledgor fails to observe, perform or comply
with any term, provision, condition, or covenant contained herein,
and the same is not cured within 30 days after receipt by Pledgor
of written notice thereof; or
(f) Any Pledgor, Xxxx X. Love, Xxxxxxxx-New York,
and/or JWI shall i) make an assignment for the benefit of
creditors, or ii) is generally not be paying its debts not subject
to bona fide dispute as such debts become due, or iii) admit in
writing its inability to pay its debts as they become due, or iv)
file a voluntary petition
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in bankruptcy, or v) become insolvent (however such insolvency
shall be evidenced), or vi) file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment
of debt, liquidation or dissolution or similar relief under any
present or future statute, law or regulation of any jurisdiction,
or vii) petition or apply to any tribunal for any receiver,
custodian or any trustee for any substantial part of its property,
or viii) seek, approve, consent to or acquiesce in any such
proceeding, or in the appointment of any trustee, receiver,
custodian or liquidator for it, or any substantial part of its
property or an order is entered appointing any such trustee,
receiver or custodian, liquidator and such order remains in effect
and unstayed for 90 days, or ix) take any formal action for the
purpose of effecting any of the foregoing or looking to the
liquidation or dissolution of any Pledgor, Xxxx X. Love,
Xxxxxxxx-New York, and/or JWI, unless such action has been previously
consented to in writing by the Secured Party after adequate notice
and opportunity to review such proposed action;
(g) An order for relief is entered under the United
States Bankruptcy laws or any other decree or order is entered by
a court having jurisdiction in the premises i) adjudging any
Pledgor, Xxxx X. Love, Xxxxxxxx-New York, and/or JWI a bankrupt or
insolvent, or ii) approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect to any Pledgor, Xxxx X. Love, Xxxxxxxx-New York, and/or JWI
under the United States bankruptcy laws or any applicable law, or
iii) appointing a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of any
Pledgor, Xxxx X.
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Love, Xxxxxxxx-New York, and/or JWI or any substantial part of the
property of any of them, or iv) ordering the winding up or
liquidation of the affairs of any Pledgor, Xxxx X. Love,
Xxxxxxxx-New York, and/or JWI and any such decree or order continues
unstayed and in effect for a period of 90 days.
4. Rights and Powers of the Secured Party on Default.
(a) In General. After the occurrence and continuance of
an Event of Default, the Secured Party may proceed to enforce its
rights hereunder by suit in equity, action at law and/or other
appropriate proceedings, whether for payment or the specific
performance of any covenant or agreement contained in this Stock
Pledge Agreement. Without limiting the foregoing, upon the
occurrence and continuance of an Event of Default, the Secured
Party may, in its discretion (without any duty or obligation to do
so):
i) endorse as any Pledgor's agent any instruments
or securities pertaining to the Pledged Collateral;
ii) take control of Proceeds, including, if any,
stock received as dividends or by reason of stock splits, and use
cash Proceeds to reduce any part of the Obligations;
iii) take any action any Pledgor is required to
take or any other necessary action to obtain, preserve and enforce
this Stock Pledge Agreement, and maintain and preserve the Pledged
Collateral, without notice to such Pledgor (except as such notice
is expressly provided for hereunder or required by applicable law)
and add the costs of same to the Obligations;
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iv) release Pledged Collateral in its possession to
any Pledgor, temporarily or otherwise;
v) take control of funds generated by the Pledged
Collateral, such as cash dividends and use same to reduce any part
of the Obligations;
vi) vote any stock which is part of the Pledged
Collateral and give consents, waivers and ratifications in respect
of such shares;
vii) exercise all other rights in a commercially
reasonable manner which an owner of such Pledged Collateral may
exercise; and
viii) transfer any of the Pledged Collateral or
evidence thereof into its own name or that of its nominee and
receive the Proceeds therefrom and hold the same as security for
the Obligations, or apply the same thereto.
After the occurrence and continuance of an Event of
Default, the Secured Party may, but shall be under no duty or
obligation to, demand, collect, receipt for, settle, compromise,
adjust, xxx for, foreclose, or realize upon the Pledged Collateral,
in its own name or in the name of Pledgor, as the Secured Party may
reasonably determine. The cost of such collection and enforcement,
including reasonable attorneys' fees and expenses, shall be borne
by all Pledgors, whether the same is incurred by the Secured Party,
or an agent or representative thereof, or by any Pledgor. If paid
by the Secured Party, such payment shall become a part of the
Obligations. The foregoing rights and powers of the Secured Party
shall be in addition to, and not a limitation upon, any rights and
powers of the Secured Party given by law, custom, elsewhere by this
Stock Pledge Agreement or otherwise.
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(b) Power of Sale; Enforcement. In case an Event of
Default shall have occurred and be continuing, the Secured Party,
personally or by agents or representatives,
i) may to the extent permitted by law, including
any federal or state laws governing the sales of securities, grant
options to purchase or sell at one or more sales, all or any part
of the Pledged Collateral, such sale or other disposition to be
made at the discretion of the Secured Party at one or more private
sales or to the highest bidder at public auction at such place or
places, at such time or times, and upon such terms as may be
commercially reasonable, including, without limitation, credit, as
the Secured Party may fix and specify in the notice of sale or
other disposition to be given as herein provided or as may be
required by law. The Secured Party shall be under no obligation to
delay the sale of any of the Pledged Collateral for the period of
time necessary to permit registration of such securities for public
sale under the Act or under applicable state securities laws;
ii) may proceed to protect and enforce the rights
of the Secured Party under this Stock Pledge Agreement by suit,
whether for specific performance of any covenant herein contained,
or in aid of the execution of any power herein granted, or for the
foreclosure of or other realization upon the security interest
provided in this Stock Pledge Agreement and the sale of the Pledged
Collateral under the judgment or decree of a court of competent
jurisdiction, or for the enforcement of any other right, as the
Secured Party in its sole discretion shall determine; and
iii) may exercise any and all of the rights and
remedies of
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a secured party after default under the UCC (subject to applicable
securities laws) as well as all other rights and remedies possessed
by the Secured Party under this Stock Pledge Agreement, at law, in
equity or otherwise.
(c) Notice of Sale or other Disposition. If notice of
any sale or other disposition of all or any part of the Pledged
Collateral is required by law to be given, each Pledgor agrees that
a notice sent to it at least 20 days before the time of any
intended public sale, or of the time after which any private sale
or other disposition of the Pledged Collateral is to be made, shall
be reasonable notice of such sale or other disposition.
(d) Delivery to Purchaser. Upon the completion of any
sale or other disposition of all or any part of the Pledged
Collateral under this paragraph 4, full title and right of
possession to such Pledged Collateral shall pass to such purchaser
or purchasers forthwith upon the completion of such sale without
any action required on the part of any Pledgor. Nevertheless, if
so requested by the Secured Party or by any purchaser, each Pledgor
shall confirm any such sale or transfer by executing and delivering
to such purchaser all proper instruments of conveyance and transfer
and releases as may be designated in any such request.
(e) Application of Proceeds. The proceeds of any sale
of the Pledged Collateral or any part thereof under this paragraph
4, together with any other sums then held by the Secured Party as
part of the Pledged Collateral, shall be, applied by Secured Party
in the following order: a) first, to the payment of all reasonable
costs and expenses, including reasonable attorneys' fees, incurred
by Secured Party in
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enforcing its remedies hereunder or under the JWI Note,
Xxxxxxxx-New York Note and/or Guaranty, b) second, to the payment
of the JWI Obligations, c) third, to the payment of the
Xxxxxxxx-New York Obligations, d) fourth, to the payment of any
other amounts, if any, owing to Secured Party in connection with
the Obligations, and e) fifth, to the extent any surplus remains,
the surplus shall be paid to Pledgors jointly. Pledgors shall be
liable to the Secured Party for any deficiency between the
outstanding amount of the Obligations and the amount of cash
proceeds realized. Secured Party shall account in writing to each
Pledgor for the proceeds of any sale or other disposition of Pledged
Collateral received by Secured Party.
(f) Secured Party May Purchase; Purchaser May Apply
Obligations Toward Purchase. At any sale or other disposition
hereunder, the Secured Party may bid for and purchase the Pledged
Collateral offered for sale, and, upon compliance with the terms of
sale or other disposition, may hold, retain and dispose of such
Pledged Collateral in a manner consistent with applicable law. At
any sale or other disposition, the Secured Party shall be entitled,
for the purpose of making payment for the Pledged Collateral
purchased, to apply any part of the Obligations due and payable to
it as a credit against the purchase price of such Pledged
Collateral. Notwithstanding the foregoing, Pledgors shall remain
jointly and severally liable for any deficiency remaining with
respect to the Obligations.
(g) Registration. Upon the occurrence and continuance
of an Event of Default, (A) any or all shares of capital stock
constituting the Pledged Collateral may be registered in the name
of the Secured Party or its nominee, as the
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Secured Party shall, in its discretion, decide; and (B) the Secured
Party or such nominee, in its sole discretion, may thereafter,
without notice, exercise all voting and other shareholder rights
with respect to the Pledged Collateral at any meetings thereof, and
exercise any and all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining to any shares
of the Pledged Collateral as if the Secured Party or such nominee
were the absolute owner thereof, including, without limitation, the
right to exchange, at the Secured Party's or such nominee's
discretion, any and all of the Pledged Collateral. In connection
therewith, the Secured Party or such nominee may deposit and
deliver any or all of the capital stock constituting the Pledged
Collateral with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions
as the Secured Party or its nominee may determine, all without
liability, except for fraud, gross negligence or willful misconduct
and except to account for property actually received by it, but the
Secured Party or its nominee shall have no obligation or duty to
exercise any of the aforesaid rights, privileges or options, and
shall not be responsible for any failure to do so or delay in so
doing.
5. Voting and Other Rights. Unless an Event of Default has
occurred and is continuing, each Pledgor shall be entitled to
exercise any and all voting and all other rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with, or in violation of any provision of, this Stock
Pledge Agreement. Any cash dividends received by any of Pledgors
shall be received in trust for Secured Party and promptly remitted
to Secured Party as Pledged Collateral in the form
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received.
6. No Segregation of Moneys; No Interest. No moneys
received by the Secured Party need be segregated in any manner
except to the extent required by law, and any such moneys may be
deposited in a money market account in the name of Secured Party
under such general conditions as may be prescribed by law
applicable to the Secured Party, and any interest earned thereon
shall be deemed part of the Pledged Collateral, and the Secured
Party shall not be liable for any interest thereon.
7. Notices. Except as otherwise specifically provided
herein, all notices, requests, consents, demands, waivers and other
communications hereunder and all statements, reports, documents,
certificates and papers to be delivered hereunder shall be given to
the respective parties hereto in writing and shall be delivered in
person with receipt acknowledged or sent by registered or certified
mail return receipt requested, postage prepaid, or by telecopy and
confirmed by the telecopy answerback to the address set forth
herein under the signature line of such party.
8. No Assignment. The Secured Party may not assign or
otherwise transfer its rights under this Stock Pledge Agreement or
any interest herein except to any affiliate or subsidiary of the
Secured Party.
9. Applicable Law; Severability. This Stock Pledge
Agreement shall be construed in accordance with, and governed by,
all of the provisions of the UCC and by the other internal laws of
the State of North Carolina, without regard to conflicts of law.
Whenever possible, each provision of this Stock Pledge Agreement
19
shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Stock Pledge
Agreement shall be prohibited by or invalid under the applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Stock Pledge
Agreement.
10. Paragraph Titles. The paragraph titles contained in this
Stock Pledge Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties.
11. Waiver; Entire Agreement. The Secured Party's failure,
at any time or times hereafter, to require strict compliance with
or performance by each Pledgor of any provision of this Stock
Pledge Agreement or to fail to exercise, or delay in exercising any
right or remedy hereunder, shall not waive, affect or diminish any
right of the Secured Party thereafter to demand strict compliance
therewith and performance thereby. Any suspension or waiver by the
Secured Party of an Event of Default under this Stock Pledge
Agreement shall not suspend, waive or affect any other Event of
Default under this Stock Pledge Agreement, whether the same is
prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements,
warranties, covenants and representations of each Pledgor contained
in this Stock Pledge Agreement, and no Event of Default by any
Pledgor under this Stock Pledge Agreement shall be deemed to have
been suspended or waived by the Secured Party unless such
suspension or waiver is in writing and signed by an officer of the
Secured Party, specifying such suspension or
20
waiver. This Stock Pledge Agreement constitutes the entire
agreement with respect to the subject matter hereof, and supersedes
all prior agreements, whether oral or written, among the parties
with respect to the subject matter hereof, and may not be modified
or amended except in a document signed by all Pledgors and the
Secured Party.
12. Waiver; Consent to Amendments. The liability of each
Pledgor hereunder and with respect to the Pledged Collateral shall
be in no way affected or impaired by any waiver, amendment,
extension or other modification of any of the Obligations or by any
acceptance by the Secured Party of any direct or indirect security
for any indebtedness, liability or obligation of each Pledgor or
JWI or Xxxxxxxx-New York to the Secured Party, or by any failure,
delay, neglect or omission by the Secured Party to realize upon or
perfect any such security, indebtedness, liability or obligation,
or by any direct or indirect collateral security therefor, or by
the bankruptcy, reorganization or insolvency of, or by any other
proceeding for the relief of debtors commenced against any Pledgor
or JWI or Xxxxxxxx-New York.
13. Rights Cumulative. The rights and remedies of the
Secured Party under the Guaranty and this Stock Pledge Agreement
shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have, and no failure or delay by the
Secured Party in exercising any right shall operate as a waiver of
it, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other
power or right.
14. Power of Attorney. Each Pledgor hereby makes,
constitutes and
21
appoints the Secured Party as its true and lawful attorney-in-fact
in his name, place and xxxxx in any way, and to do any act, which
each Pledgor could so do or act, with respect to the following
matters, with full and unqualified authority to delegate any and
all of the following powers to any person or persons whom the
Secured Party shall select to do the following acts as each
Pledgor's attorney-in-fact, provided, however, that so long as no
Event of Default shall have occurred and be continuing, Secured
Party shall not exercise such power of attorney:
To take in its own name or in the name of any Pledgor,
all action which the Secured Party may deem necessary or desirable
to perfect or otherwise protect, perfect and maintain the liens
created under, and to obtain the benefits of, this Stock Pledge
Agreement, and to otherwise protect and preserve the Pledged
Collateral, including, without limitation, the signing of any UCC
or other type of financing statements, any security agreements,
mortgages, deeds of trust and amendments to any of the foregoing;
to endorse any notes, checks, drafts, money orders or other
instruments of payment (including payments payable under or in
respect of any policy of insurance) in respect of the Pledged
Collateral that may come into possession of the Secured Party; to
execute and deliver all agreements, instruments, papers,
certificates, powers and other documents and chattel paper relating
to the Pledged Collateral; to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or
placed on or threatened against the Pledged Collateral; to demand,
collect, receipt for, compromise, settle and xxx for monies due in
respect of the Pledged Collateral; to execute any proof of claim,
subrogation receipt and any other document
22
required by any insurance company as a condition to or otherwise in
connection with payment under any policy of insurance; to cancel,
assign or surrender any such policies; and to execute and file in
the name of and on behalf of Pledgor any one or more Forms 144 or
any other form required to comply with Rule 144; and, generally, to
do, at the option of the Secured Party and at the expense of the
Pledgors, at any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect, preserve and
realize upon the Pledged Collateral and the Secured Party's lien
thereon in order to effect the intent of this Stock Pledge
Agreement, all as fully and effectually as each Pledgor might or
could do.
This power of attorney is a power coupled with an
interest and shall continue until the payment in full of the
Obligations.
15. Consent to Jurisdiction. Each Pledgor irrevocably
consents that any legal action or proceeding against it under,
arising out of or in any manner relating to, this Stock Pledge
Agreement or any other documents executed and delivered in
connection herewith or therewith, may be brought in any court of
the State of North Carolina located within Xxxxxxxx, North Carolina
or in the United States District Courts for the Middle District of
North Carolina or the United States Court of Appeals for the Fourth
Circuit and each Pledgor waives trial by jury with respect to such
legal action or proceeding. Each Pledgor, by the execution and
delivery of this Stock Pledge Agreement, expressly and irrevocably
consents and submits to the personal jurisdiction of any such court
in any such action or proceeding. Each Pledgor further irrevocably
consents to the service of any complaint, summons, notice or other
process relating
23
to any such action or proceeding by delivery thereof to it at the
address set forth herein for each Pledgor. Each Pledgor hereby
expressly and irrevocably waives any claim or defense in any such
action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens. Each Pledgor
shall not be entitled in any such action or proceeding to assert
any defense given or allowed under the laws of any jurisdiction
other than the State of North Carolina unless such defense is also
given or allowed by the laws of the State of North Carolina.
Nothing in this paragraph shall affect or impair in any manner or
to any extent the right of the Secured Party to commence legal
proceedings relating to this Stock Pledge Agreement against any
Pledgor in any jurisdiction or to serve process in any manner
permitted by law.
16. Termination. Upon the payment in full of all of the
Obligations, this Stock Pledge Agreement and the security interest
granted hereby will terminate, all rights to the Pledged Collateral
shall revert to the Pledgors and the Secured Party will promptly
return the Pledged Collateral to each Pledgor. The Secured Party
shall execute and deliver to each Pledgor such documents as Pledgor
shall reasonably request to evidence termination of this Stock
Pledge Agreement and the security interest granted herein, which
documents shall be prepared at Pledgor's sole cost and expense.
17. This Stock Pledge Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which Counterparts shall
together constitute one and the same
24
instrument.
IN WITNESS WHEREOF, the Pledgors have caused this Stock Pledge
Agreement to be duly executed as of the date first above written.
XXXX ENTERPRISES, INC.
By:/S/Xxxx X. Love
Title:President
Address:
Telecopier No.
CONVERTIBLE ENTERPRISES, INC.
By:/S/Xxxx X. Love
Title:President
Address:
Telecopier No.
BRIGHT STAR ENTERPRISES, INC.
By:/S/Xxxx X. Love
Title:President
Address:
Telecopier No.
26
XXXXXXXX ADVERTISING, INC.
By:/S/Xxxx X. Love
Title:President
Address:
Telecopier No.
CONSENTED TO:
/S/Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx,
As Voting Trustee and Optionee
/S/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx,
As Optionee
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.,
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
By:/S/Xxxxxx X. Xxxxxxxx
Title:Senior Vice President
Telecopier No.
27
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of XXXX ENTERPRISES, INC., the corporation described in and which
executed the foregoing instrument; and (s)he signed (her) his name
thereto by order of the Board of Directors of said corporation, and
duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
28
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of CONVERTIBLE ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
29
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of BRIGHT STAR ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
30
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of XXXXXXXX ADVERTISING, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
31
SCHEDULE A
1) Xxxx Enterprises, Inc.
Ctf. No. Date Issued Shares
JCC 673 08/25/88 50,000 (Lost put in for
replacement)
JCC 907 04/10/88 7,650
JCC 1191 02/05/91 8,670
2) Convertible Enterprises, Inc.
Ctf. No. Date Issued Shares
JCC 674 08/25/88 75,000 (Lost put in for
replacement)
JCC 908 04/10/89 22,950
JCC 931 06/19/89 19,278
JCC 970 09/15/89 98,701
3) Bright Star Enterprises, Inc.
Ctf. No. Date Issued Shares
JCC 675 08/25/88 25,000 (Lost put in for
replacement)
4) Xxxxxxxx Advertising, Inc.
Ctf. No. Date Issued Shares
JCC 2946 01/19/96 36,000
32
SCHEDULE B
1. THE OPTION AGREEMENT dated November 7, 1994, by and between
Xxxx Enterprises, Inc., a New York Corporation, and Xxxxxx
X. Xxxxxxxxxx.
2. THE OPTION AGREEMENT dated November 7, 1994, by and between
Convertible Enterprises, Inc., a New York Corporation, and
Xxxxxx X. Xxxxxxxxxx.
3. THE OPTION AGREEMENT dated November 7, 1994, by and between
Bright Star Enterprises, Inc., a New York Corporation, and
Xxxxxx X. Xxxxxxxxxx.
4. THE OPTION AGREEMENT dated November 7, 1994, by and between
Xxxxxxxx Advertising, Inc., a New York Corporation, and
Xxxxxx X. Xxxxxxxxxx.
5. THE OPTION AGREEMENT dated November 7, 1994, by and between
Xxxx Enterprises, Inc., a New York Corporation, and Xxxxxx
X. Xxxxxxx.
6. THE OPTION AGREEMENT dated November 7, 1994, by and between
Convertible Enterprises, Inc., a New York Corporation, and
Xxxxxx X. Xxxxxxx.
7. THE OPTION AGREEMENT dated November 7, 1994, by and between
Bright Star Enterprises, Inc., a New York Corporation, and
Xxxxxx X. Xxxxxxx.
8. THE OPTION AGREEMENT dated November 7, 1994, by and between
Xxxxxxxx Advertising, Inc., a New York Corporation, and
Xxxxxx X. Xxxxxxx.
33
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