August 9, 1996
Jennifer Convertibles, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Subject to the terms and conditions set forth below, I hereby agree to
subordinate the payment of any and all amounts now due and owing, or which may,
prior to January 1, 1999, become currently due and owing, to me by ▇▇▇▇
Enterprises Inc. (the "Debtor") pursuant to certain Promissory Notes, dated
November 7, 1994, in the principal amount of $5,136,602 (the "Subordinated
Indebtedness") to the payment in full of all cash debts which may become
currently due and owing by the Debtor to you prior to January 1, 1999 pursuant
to the Definitive Agreements contemplated by the Settlement Agreement dated
March ___, 1996 between Jennifer Convertibles, Inc. ("▇▇▇▇▇▇▇▇") and the Debtor
(the "Senior Indebtedness").
Subject to the court approvals and execution of the mutual releases upon
which the Settlement Agreement is dependent, so long as Debtor is in default on
any payment due and owing to you under the Senior Indebtedness after giving
effect to the Offset Agreement, I agree not (a) to accept any payment of
principal or interest in whole or in part in respect of the Subordinated
Indebtedness that is now due and owing, or that becomes due and owing prior to
January 1, 1999; and (b) to discount, sell, transfer, assign, pledge,
hypothecate or otherwise encumber the same. This agreement shall not be
applicable to any offset by the Debtor of any indebtedness owing by me to the
Debtor prior to the date hereof.
▇▇▇▇▇▇▇▇ Convertibles, Inc.
August , 1996
Page 2
For purpose of this agreement, you shall declare a default only by a
majority vote of the members of the ▇▇▇▇▇▇▇▇ Board of Directors, with written
notice thereof to me and to the Debtor. In the event of a dispute between us
over the fact or amount of any such default, the Debtor shall deposit all funds
otherwise due to me into an interest bearing escrow account with a financial
institution upon which you and I shall agree. Such funds shall remain in such
account until the matter is resolved by agreement or by arbitration as set forth
below.
I further agree that upon any distribution of all or substantially all
of the assets of the Debtor prior to January 1, 1999, whether by reason of sale,
extension, composition, reorganization, liquidation, dissolution, arrangement,
bankruptcy, receivership, assignment for the benefit of creditors on
foreclosure, you shall be entitled to receive payment in full of the Senior
Indebtedness prior to the payment of any part of the Subordinated Indebtedness.
Nothing herein shall be deemed or construed to alter in any respect any
subordination agreement involving the Subordinated indebtedness between me and
any person or entity other than you.
This agreement shall expire on January 1, 1999, except for the
arbitration provisions hereinbelow set forth.
This agreement cannot be changed or terminated orally and shall be
binding upon my heirs, executors, administrators, successors and assigns and
shall inure to the benefit of your successors and assigns.
All questions as to the interpretation of this agreement shall be
resolved in accordance with the laws of the State of New York. All disputes
arising under or in connection with, or relating to, this agreement shall be
resolved by arbitration in New York City under the auspices of the American
Arbitration Association.
▇▇▇▇▇▇▇▇ Convertibles, Inc.
August , 1996
Page 3
Notice of the acceptance of this agreement or consent thereto is hereby
waived.
This will also confirm that this agreement is being given to you by me
solely as an accommodation to you and is not in any respect being given to you
as consideration for execution of the Settlement Agreement by you or by the
Debtor.
Please signify your agreement to and acknowledgement of the matters set
forth above, including the matters set forth in the immediately preceding
sentence, by signing a copy of this letter in the space provided below and
returning it to me.
Very truly yours,
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Convertibles, Inc.
August , 1996
Page 4
Agreed to and Acknowledged:
JENNIFER CONVERTIBLES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
_______________________
Debtor hereby acknowledges notice of the foregoing subordination and
agrees to be bound by all of the terms, provisions and conditions thereof. The
amount of Subordinated Indebtedness stated therein is hereby acknowledged to be
due and owing as of the date hereof.
▇▇▇▇ ENTERPRISES INC.
By: _________________________
▇▇▇▇▇▇▇▇ Convertibles, Inc.
August , 1996
Page 4
Agreed to and Acknowledged:
JENNIFER CONVERTIBLES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
_______________________
Debtor hereby acknowledges notice of the foregoing subordination and
agrees to be bound by all of the terms, provisions and conditions thereof. The
amount of Subordinated Indebtedness stated therein is hereby acknowledged to be
due and owing as of the date hereof.
▇▇▇▇ ENTERPRISES INC.
By: _________________________
