EXHIBIT 9
STOCK PLEDGE AGREEMENT
Stock Pledge Agreement, dated as of March 1, 1996, made by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, individually and as Voting Trustee, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. Love (collectively, the "Pledgors") to
Klaussner Furniture Industries, Inc., a North Carolina corporation
(the "Secured Party").
In consideration of the premises, the mutual covenants, terms
and conditions herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgors hereby covenant and agree as follows:
1. Hypothecation and Pledge of Stock: Grant of Security
Interest. To secure payment and performance by Pledgors of (a)
their guaranty to Secured Party of even date herewith (the "JWI
Guaranty") of the Indebtedness as such term is defined in the JWI
Guaranty ("JWI Obligations"); and (b) Unconditional Guaranty dated
as of February 17, 1994 by Pledgors to the Secured Party, as
amended by Amendment To Unconditional Guaranty dated as of January
1, 1995 executed by Pledgors as further amended by Amendment To
Unconditional Guaranty dated March 1, 1996 (the "▇▇▇▇▇▇▇▇-New York
Guaranty") of the indebtedness as described in the ▇▇▇▇▇▇▇▇-New
York Guaranty (the "▇▇▇▇▇▇▇▇-New York Obligations") (the JWI
Obligations and ▇▇▇▇▇▇▇▇-New York Obligations are sometimes
hereinafter collectively referred to as the "Obligations"), each
Pledgor hereby pledges to Secured Party and grants to the Secured
Party a continuing first priority security interest in and to all
of
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his respective issued and outstanding shares of common stock, par
value $0.01 per share of ▇▇▇▇▇▇▇▇ Convertibles, Inc. (the "JCI
Common Stock"). The JWI Guaranty and the ▇▇▇▇▇▇▇▇-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 ▇▇▇▇▇▇▇▇ Warehousing, Inc. ("JWI"), a subsidiary of
▇▇▇▇ Enterprises, Inc. ("▇▇▇▇"), in which the Pledgors are either
the beneficial owners or of which they are creditors, which loan is
evidenced by a Note of even date herewith executed by JWI in favor
of Secured Party (the "JWI Note") and (b) pursuant to Amended and
Restated Promissory Note dated March 1, 1996, (the "▇▇▇▇▇▇▇▇-New
York Note"), Secured Party is further agreeing to an extension of
the terms of payment of the obligations of ▇▇▇▇▇▇▇▇-New York, Inc.
("▇▇▇▇▇▇▇▇-New York") to the Secured Party. All such shares of JCI
Common Stock are evidenced by the stock certificates and voting
trust certificates listed on Schedule A (the "Pledged Shares"), and
together with all additions thereto, substitutions and replacements
therefor and Proceeds (as hereinafter defined) of all of the
foregoing shall be hereinafter referred to as the "Pledged
Collateral". All Pledgors shall simultaneously herewith deliver to
the Secured Party, in form transferable by delivery, the
certificates and voting trust certificates representing the Pledged
Shares, accompanied by stock powers duly executed in blank, except
for the Street Shares, as hereinafter defined, subject to the terms
of paragraph 2(o) hereof, to be held by the Secured Party as
security as aforesaid, provided, however, that so long as no Event
of Default (as hereinafter defined) shall have occurred and be
continuing, Secured Party shall not
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transfer to or register in its name or any of the nominees any or
all of the Pledged Collateral.
As used herein, the term "Proceeds" shall have the meaning
assigned to it under Article 9 of the Uniform Commercial Code as in
effect in the State of North Carolina as the same may be amended
from time to time (the "UCC") and, to the extent not otherwise
included, shall include, but not be limited to, i) any and all
proceeds of any causes and rights of action or settlements thereof
payable to any Pledgor from time to time with respect to the
Pledged Collateral, and ii) any and all other amounts from time to
time paid or payable under or in connection with the Pledged
Collateral, and shall also include, without limitation, cash
dividends, any cash, other stock or property received in exchange
or in substitution for the Pledged Shares, distributions which may
be made on, or distributed in consequence of the ownership of, the
Pledged Shares, instruments or distributions of any kind issuable,
issued or received upon conversion of, in respect of, or in
exchange for any of the Pledged Shares, including, without
limitation, those arising from a stock dividend, stock split,
reclassification, reorganization, merger, consolidation, sale of
assets, or other exchange of securities or any dividends or other
distributions, warrants, options or other rights of any kind upon
or with respect to the Pledged Shares.
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2. Covenants and Agreements. Until the termination of this
Stock Pledge Agreement as provided in paragraph 16 hereof:
(a) Each Pledgor shall defend his Pledged Collateral
against all claims and demands of all persons (other than the
Secured Party) at any time claiming the same or any interest
therein.
(b) At any time and from time to time, upon the request
of the Secured Party and at the sole expense of each Pledgor, each
Pledgor will promptly execute, deliver, file and record any and all
such further instruments and documents and take such further action
as may be deemed necessary or desirable in the reasonable judgment
of the Secured Party to obtain, maintain, perfect and enforce the
security interest granted hereby and the rights, remedies and
powers hereunder, including, without limitation, the provision of
instruments and documents reasonably necessary to perfect the
security interest granted hereby under Article 9 of the UCC, and
the execution and delivery of one or more proxies and powers of
attorney (in addition to those granted herein). In connection
herewith, the Secured Party is hereby irrevocably authorized and
empowered as each Pledgor's attorney-in-fact, at its option (but
without any obligation of the Secured Party to do so), to make any
filings of UCC financing and continuation statements and to give
all other notices as it shall deem necessary with respect to the
Pledged Collateral, all of which may be done with or without the
signature of any Pledgor. Each Pledgor agrees that the foregoing
power constitutes a power coupled with an interest which shall
survive until the termination of this Stock Pledge Agreement as
provided in paragraph 16 hereof. Each Pledgor
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agrees that a carbon, photographic or other reproduction of this
Stock Pledge Agreement is sufficient as a financing statement.
(c) No Pledgor will sell, encumber, transfer or
otherwise dispose of or hypothecate the Pledged Collateral or any
portion thereof nor sign, file or authorize the signing or filing
of any document effecting such act, except upon the prior written
consent of the Secured Party.
(d) Each Pledgor will notify the Secured Party of any
change in such Pledgor's mailing address.
(e) Pursuant to this Stock Pledge Agreement, each
Pledgor shall have delivered to Secured Party all instruments,
securities and documents which are part of the Pledged Collateral,
appropriately endorsed to the Secured Party's order, or with
appropriate powers. Regardless of the form of such endorsement,
each Pledgor hereby waives presentment, demand, notice of dishonor,
protest, and notice of protest, and all other notices with respect
to any of the foregoing which would otherwise require the same.
(f) With respect to the Pledged Collateral, the Secured
Party shall not be under any duty to present, send or file any
claim or notices, perform any services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for any
insurance, or pay any taxes or other charges, make any demand, or
make any inquiry as to the nature or sufficiency of any payment
received by it, or take any action of any kind in connection with
the management thereof, and its only duty with respect thereto
shall be to exercise reasonable care in the custody and
preservation of
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the Pledged Collateral held hereunder.
(g) Pledgors will, upon the Secured Party's written
request, do, file, record, make, execute and deliver all such acts,
deeds, things, notices and instruments as may be reasonably
necessary or desirable to vest in and assure to the Secured Party
a continuing first priority security interest in and to the Pledged
Collateral and the enforcement of, and giving effect to, the
rights, remedies and powers hereunder.
(h) Any additions to, accumulations of, substitutions
for, and proceeds of the Pledged Collateral in any form whatsoever
which shall come into the possession of any Pledgor shall be held
in trust for the Secured Party, and, upon receipt thereof, shall be
promptly delivered to the Secured Party as Pledged Collateral in
the form received together with such stock powers or other
documents as the Secured Party shall request in connection
therewith.
(i) The Secured Party, may at any time, and from time to
time, extend the time of payment or performance or renew, in whole
or in part, any of, or modify, compromise, waive, supplement or
otherwise change in any way, the Obligations as the Secured Party
may determine and all of the provisions and authorizations
contained herein shall continue to remain in full force and effect.
(j) The security interest granted under this Stock
Pledge Agreement constitutes and shall at all times constitute a
continuing first priority security interest in the Pledged
Collateral, and Pledgors represent that the Pledged Collateral is
free and clear of all liens, security interests or encumbrances of
any kind,
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except for the security interest created by this Stock Pledge
Agreement, and that each Pledgor is the owner of the shares
representing its portion of the Pledged Collateral.
(k) Each Pledgor as to itself and its Pledged Collateral
represents and warrants that as of the date hereof:
i) The execution, delivery and performance of this
Stock Pledge Agreement by the Pledgor, and the pledge of the
Pledged Collateral hereunder do not and will not conflict with,
result in any violation of, or constitute any default under, a
provision of any contractual obligation of Pledgor or any law or
governmental regulation or court decree or order applicable to or
binding upon Pledgor. This Stock Pledge Agreement is the legal,
valid and binding obligation of the Pledgor, enforceable in
accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
ii) To the best of his knowledge, the JCI Common
Stock constituting Pledged Collateral is duly authorized and
validly issued, fully paid and nonassessable.
iii) Except as set forth in Schedule B annexed
hereto, none of the Pledged Shares (A) is subject to any option,
agreement or commitment pursuant to which any third party shall
have a right to acquire any interest therein; and/or (B) is or
shall become subject to a legend or agreement which would restrict
the transfer thereof by the Pledgor or the Secured Party.
(l) To the extent that any provision of this Stock
Pledge
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Agreement conflicts with any of the provisions of the Option
Agreements and Voting Trust Agreements described in Schedule B
hereof (collectively, the "Option and Voting Agreements"), the
provisions of this Stock Pledge Agreement shall govern. All of the
parties to the Option and Voting Agreements hereby consent to the
terms of this Stock Pledge Agreement and hereby waive and
subordinate to Secured Party any and all rights (including, without
limitation any notices to be given) each of such parties may have
with respect to the Option and Voting Agreements, and such Option
and Voting Agreements shall be deemed suspended and without any
force and effect until such time as this Stock Pledge Agreement is
terminated in accordance with paragraph 16 hereof, provided that
the Pledged Shares may be voted (subject to the terms of paragraph
5 and the other applicable provisions of this Stock Pledge
Agreement) in accordance with the Option and Voting Trust
Agreements until the occurrence and continuance of an Event of
Default, and provided further, however, that nothing contained
herein shall preclude the right of any optionee to exercise any
option to purchase any Pledged Shares under the Option and Voting
Agreements provided that such optionee either agrees to be bound as
a Pledgor subject to all of the terms of this Stock Pledge
Agreement and ratifies this Stock Pledge Agreement or executes a
new stock pledge agreement that refers to such Pledged Collateral
and is in the same form as this Stock Pledge Agreement. Without
limiting any of the foregoing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Voting
Trustee under Voting Trust Agreement dated October 15, 1986, as
amended, entered into among the Pledgors (the "Voting Trust
Agreement") hereby covenants and agrees that he has noted on his
books and records that all of the
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Pledged Shares subject to the Voting Trust Agreement are subject to
the terms and conditions of this Stock Pledge Agreement.
(m) The Pledgors recognize that the Secured Party may be
unable to effect a public sale of any or all the Pledged Collateral
by reason of certain prohibitions contained in the Securities Act
of 1933, as amended, and the Securities and Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, including
but not limited to Rule 144 of the Securities and Exchange
Commission (collectively the "Act"), and applicable state
securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such Pledged
Collateral for their own account for investment and not with a view
to the distribution or resale thereof. Pledgors agree that Secured
Party is authorized to impose any limitation and take all such acts
as Secured Party shall deem necessary to comply with the Act in
making any sale or other distribution of the Pledged Collateral.
Each Pledgor (at his own expense) shall use reasonable efforts to
cause ▇▇▇▇▇▇▇▇ Convertibles, Inc. ("JCI") to take all action and
execute all documents that Secured Party shall reasonably require
in order to comply with the Act in connection with the sale of any
of the Pledged Collateral after and during the continuance of an
Event of Default. Each Pledgor acknowledges that any such private
sale may result in prices and other terms less favorable than if
sold at public sales and agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
Secured Party shall be under no obligation to delay a sale of any
of the Pledged Collateral for the period
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of time necessary to permit any issuer of such Pledged Collateral
to register such Pledged Collateral for public sale under the Act,
or under applicable state securities laws, even if such issuer
would agree to do so.
(n) Secured Party acknowledges that all or part of the
Pledged Collateral may be or may become subject to Rule 144 of the
Securities and Exchange Commission as amended from time to time
("Rule 144"). Until the termination of this Stock Pledge Agreement
as provided in paragraph 16 hereof, and in the event of any sale of
the Pledged Collateral pursuant to Rule 144 made by the Pledgors
and consented to by the Secured Party, the Pledgors will furnish
the Secured Party with a copy of any Form 144 filed in respect of
such sale. The Pledgors will cooperate fully with the Secured
Party with respect to any sale by the Secured Party of any of the
Pledged Collateral, including full and complete compliance with all
requirements of Rule 144 and will give to the Secured Party all
information and will do all things necessary, including the
execution of all documents, forms, instruments, and other items, to
comply with Rule 144 and any and all other rules, regulations or
laws of the United States or the state necessary for the
unrestricted sale and/or transfer of the Pledged Collateral, and
will exercise their reasonable efforts to have JCI, upon the
request of the Secured Party, publicly disseminate all information
required to satisfy Rule 144. The Pledgors understand that the
pledge to Secured Party of the Pledged Collateral by the Pledgors
is a bona fide pledge and not intended by the Pledgors to result in
the satisfaction of the Obligations by the liquidation and sale of
the Pledged Collateral. The Pledgors agree to execute one or more
Forms 144 or any other form required to
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comply with Rule 144 at any time after the Secured Party's written
request with respect to the Pledged Collateral.
(o) Certain of the Pledged Shares identified in Schedule
A are in street name (the "Street Shares"). Pledgors covenant and
agree that all Street Shares shall be transferred to the Pledgors
identified as the beneficial owners of such Street Shares in
Schedule A and be received by Secured Party, together with
appropriate stock powers endorsed in blank, not later than April
15, 1996, which Street Shares shall be deemed Pledged Collateral.
3. Events of Default. Each of the following shall constitute
an "Event of Default" hereunder:
(a) The occurrence and continuance of any Event of
Default, as such term is defined in the JWI Note, and/or any
default by JWI in the payment of the JWI Obligations;
(b) The occurrence and continuance of any Event of
Default, as such term is defined in the ▇▇▇▇▇▇▇▇-New York Note,
and/or any default by ▇▇▇▇▇▇▇▇-New York in the payment of the
▇▇▇▇▇▇▇▇-New York Obligations;
(c) A default by any Pledgor under his Guaranty;
(d) Any representation or warranty made by Pledgor in
his Guaranty and/or in this Stock Pledge Agreement shall prove to
have been false or misleading in any material respect when made;
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(e) Pledgor fails to observe, perform or comply with any
term, provision, condition, covenant contained herein, and the same
is not cured within 30 days after receipt by Pledgor of written
notice thereof; or
(f) Any of ▇▇▇▇ ▇. Love or ▇▇▇▇, Convertible
Enterprises, Inc., Bright Star Enterprises, Inc., and ▇▇▇▇▇▇▇▇
Advertising, Inc. (collectively the "Corporate Guarantors"),
▇▇▇▇▇▇▇▇-New York, and/or JWI shall i) make an assignment for the
benefit of creditors, or ii) generally not be paying its debts not
subject to bona fide dispute as such debts become due, or iii)
admit in writing its inability to pay its debts as they become due,
or iv) file a voluntary petition in bankruptcy, or v) become
insolvent (however such insolvency shall be evidenced), or vi) file
any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute,
law or regulation of any jurisdiction, or vii) petition or apply to
any tribunal for any receiver, custodian or any trustee for any
substantial part of its property, or viii) seek, approve, consent
to or acquiesce in any such proceeding, or in the appointment of
any trustee, receiver, custodian, liquidator for it, or any
substantial part of its property or an order is entered appointing
any such trustee, receiver, custodian, or liquidator and such order
remains in effect and unstayed for 90 days, or ix) take any formal
action for the purpose of effecting any of the foregoing or looking
to the liquidation or dissolution of ▇▇▇▇ ▇. Love, any Corporate
Guarantor, ▇▇▇▇▇▇▇▇-New York, and/or JWI, unless such action has
been previously consented to in writing by the Secured Party after
adequate notice and opportunity to review such proposed action;
(g) An order for relief is entered under the United
States
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Bankruptcy laws or any other decree or order is entered by a court
having jurisdiction in the premises i) adjudging any of ▇▇▇▇ ▇.
Love, any Corporate Guarantor, ▇▇▇▇▇▇▇▇-New York, and/or JWI a
bankrupt or insolvent, or ii) approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect to any of ▇▇▇▇ ▇. Love, any Corporate
Guarantor, ▇▇▇▇▇▇▇▇-New York, and/or JWI under the United States
bankruptcy laws or any applicable law, or iii) appointing a
receiver, liquidator, assignee, trustee, custodian or sequestrator
(or other similar official) of any of ▇▇▇▇ ▇. Love, any Corporate
Guarantor, ▇▇▇▇▇▇▇▇-New York, and/or JWI or any substantial part of
the property of any of them, or iv) ordering the winding up or
liquidation of the affairs of any of ▇▇▇▇ ▇. Love, any Corporate
Guarantor, ▇▇▇▇▇▇▇▇-New York, and/or JWI and any such decree or
order continues unstayed and in effect for a period of 90 days.
4. Rights and Powers of the Secured Party on Default.
(a) In General. After the occurrence and continuance of
an Event of Default, the Secured Party may proceed to enforce its
rights hereunder by suit in equity, action at law and/or other
appropriate proceedings, whether for payment or the specific
performance of any covenant or agreement contained in this Stock
Pledge Agreement. Without limiting the foregoing, upon the
occurrence and continuance of an Event of Default, the Secured
Party may, in its discretion (without any duty or obligation to do
so):
i) endorse as any Pledgor's agent any instruments
or securities pertaining to the Pledged Collateral;
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ii) take control of Proceeds, including, if any,
stock received as dividends or by reason of stock splits, and use
cash Proceeds to reduce any part of the Obligations;
iii) take any action any Pledgor is required to
take or any other necessary action to obtain, preserve and enforce
this Stock Pledge Agreement, and maintain and preserve the Pledged
Collateral, without notice to such Pledgor (except as such notice
is expressly provided for hereunder or required by applicable law)
and add the costs of same to the Obligations;
iv) release Pledged Collateral in its possession to
any Pledgor, temporarily or otherwise;
v) take control of funds generated by the Pledged
Collateral, such as cash dividends and use same to reduce any part
of the Obligations;
vi) vote any stock which is part of the Pledged
Collateral and give consents, waivers and ratifications in respect
of such shares;
vii) exercise all other rights in a commercially
reasonable manner which an owner of such Pledged Collateral may
exercise; and
viii) transfer any of the Pledged Collateral or
evidence thereof into its own name or that of its nominee and
receive the Proceeds therefrom and hold the same as security for
the Obligations, or apply the same thereto.
After the occurrence and continuance of an Event of
Default, the Secured Party may, but shall be under no duty or
obligation to, demand, collect, receipt for, settle, compromise,
adjust, ▇▇▇ for, foreclose, or realize upon the Pledged
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Collateral, in its own name or in the name of Pledgor, as the
Secured Party may reasonably determine. The cost of such
collection and enforcement, including reasonable attorneys' fees
and expenses, shall be borne by all Pledgors, whether the same is
incurred by the Secured Party, or an agent or representative
thereof, or by any Pledgor. If paid by the Secured Party, such
payment shall become a part of the Obligations. The foregoing
rights and powers of the Secured Party shall be in addition to, and
not a limitation upon, any rights and powers of the Secured Party
given by law, custom, elsewhere by this Stock Pledge Agreement or
otherwise.
(b) Power of Sale; Enforcement. In case an Event of
Default shall have occurred and be continuing, the Secured Party,
personally or by agents or representatives,
i) may to the extent permitted by law, including
any federal or state laws governing the sales of securities, grant
options to purchase or sell at one or more sales, all or any part
of the Pledged Collateral, such sale or other disposition to be
made at the discretion of the Secured Party at one or more private
sales or to the highest bidder at public auction at such place or
places, at such time or times, and upon such terms as may be
commercially reasonable, including, without limitation, credit, as
the Secured Party may fix and specify in the notice of sale or
other disposition to be given as herein provided or as may be
required by law. The Secured Party shall be under no obligation to
delay the sale of any of the Pledged Collateral for the period of
time necessary to permit registration of such securities for public
sale under the Act or under applicable state securities laws;
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ii) may proceed to protect and enforce the rights
of the Secured Party under this Stock Pledge Agreement by suit,
whether for specific performance of any covenant herein contained,
or in aid of the execution of any power herein granted, or for the
foreclosure of or other realization upon the security interest
provided in this Stock Pledge Agreement and the sale of the Pledged
Collateral under the judgment or decree of a court of competent
jurisdiction, or for the enforcement of any other right, as the
Secured Party in its sole discretion shall determine; and
iii) may exercise any and all of the rights and
remedies of a secured party after default under the UCC (subject to
applicable securities laws), as well as all other rights and
remedies possessed by the Secured Party under this Stock Pledge
Agreement, at law, in equity or otherwise.
(c) Notice of Sale or other Disposition. If notice of
any sale or other disposition of all or any part of the Pledged
Collateral is required by law to be given, each Pledgor agrees that
a notice sent to it at least 20 days before the time of any
intended public sale, or of the time after which any private sale
or other disposition of the Pledged Collateral is to be made, shall
be reasonable notice of such sale or other disposition.
(d) Delivery to Purchaser. Upon the completion of any
sale or other disposition of all or any part of the Pledged
Collateral under this paragraph 4, full title and right of
possession to such Pledged Collateral shall pass to such purchaser
or purchasers forthwith upon the completion of such sale without
any action required on the part of any Pledgor. Nevertheless, if
so requested by the Secured Party or by any
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purchaser, each Pledgor shall confirm any such sale or transfer by
executing and delivering to such purchaser all proper instruments
of conveyance and transfer and releases as may be designated in any
such request.
(e) Application of Proceeds. The proceeds of any sale
of the Pledged Collateral or any part thereof under this paragraph
4, together with any other sums then held by the Secured Party as
part of the Pledged Collateral, shall be, applied by Secured Party
in the following order: a) first, to the payment of all reasonable
costs and expenses, including reasonable attorneys' fees, incurred
by Secured Party in enforcing its remedies hereunder or under the
JWI Note, ▇▇▇▇▇▇▇▇-New York Note, and/or Guaranty, b) second, to
the payment of the JWI Obligations, c) third, to the payment of the
▇▇▇▇▇▇▇▇-New York Obligations, d) fourth, to the payment of any
other amounts, if any, owing, to Secured Party in connection with
the Obligations, and e) fifth, to the extent any surplus remains,
the surplus shall be paid to Pledgors jointly. Pledgors shall be
liable to the Secured Party for any deficiency between the
outstanding amount of the Obligations and the amount of cash
proceeds realized. Secured Party shall account in writing to each
Pledgor for the proceeds of any sale or other disposition of
Pledged Collateral receIved by Secured Party.
(f) Secured Party May Purchase; Purchaser May Apply
Obligations Toward Purchase. At any sale or other disposition
hereunder, the Secured Party may bid for and purchase the Pledged
Collateral offered for sale, and, upon compliance with the terms of
sale or other disposition, may hold, retain and dispose of such
Pledged Collateral in a manner consistent with applicable law. At
any sale or
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other disposition, the Secured Party shall be entitled, for the
purpose of making payment for the Pledged Collateral purchased, to
apply any part of the Obligations due and payable to it as a credit
against the purchase price of such Pledged Collateral.
Notwithstanding the foregoing, Pledgors shall remain jointly and
severally liable for any deficiency remaining with respect to the
Obligations.
(g) Registration. Upon the occurrence and continuance
of an Event of Default, (A) any or all shares of capital stock
constituting the Pledged Collateral may be registered in the name
of the Secured Party or its nominee, as the Secured Party shall, in
its discretion, decide; and (B) the Secured Party or such nominee,
in its sole discretion, may thereafter, without notice, exercise
all voting and other shareholder rights with respect to the Pledged
Collateral at any meetings thereof, and exercise any and all rights
of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged
Collateral as if the Secured Party or such nominee were the
absolute owner thereof, including, without limitation, the right to
exchange, at the Secured Party's or such nominee's discretion, any
and all of the Pledged Collateral. In connection therewith, the
Secured Party or such nominee may deposit and deliver any or all of
the capital stock constituting the Pledged Collateral with any
committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Secured
Party or its nominee may determine, all without liability, except
for fraud, gross negligence or willful misconduct and except to
account for property actually received by it, but the Secured Party
or its nominee shall have no obligation or duty to exercise any of
the
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aforesaid rights, privileges or options, and shall not be
responsible for any failure to do so or delay in so doing.
5. Voting and Other Rights. Unless an Event of Default has
occurred and is continuing, each Pledgor shall be entitled to
exercise any and all voting and all other rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with, or in violation of any provision of, this Stock
Pledge Agreement. Any cash dividends received by any of Pledgors
shall be received in trust for Secured Party and promptly remitted
to Secured Party as Pledged Collateral in the form received.
6. No Segregation of Moneys; No Interest. No moneys received
by the Secured Party need be segregated in any manner except to the
extent required by law, and any such moneys may be deposited in a
money market account in the name of the Secured Party under such
general conditions as may be prescribed by law applicable to the
Secured Party, and any interest earned thereon shall be deemed part
of the Pledged Collateral, and the Secured Party shall not be
liable for any interest thereon.
7. Notices. Except as otherwise specifically provided
herein, all notices, requests, consents, demands, waivers and other
communications hereunder and all statements, reports, documents,
certificates and papers to be delivered hereunder shall be given to
the respective parties hereto in writing and shall be delivered in
person with receipt acknowledged or sent by registered or certified
mail return receipt requested, postage prepaid.
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8. No Assignment. The Secured Party may not assign or
otherwise transfer its rights under this Stock Pledge Agreement or
any interest herein except to any affiliate or subsidiary of the
Secured Party.
9. Applicable Law; Severability. This Stock Pledge Agreement
shall be construed in accordance with, and governed by, all of the
provisions of the UCC and by the other internal laws of the State
of North Carolina, without regard to conflicts of law. Whenever
possible, each provision of this Stock Pledge Agreement shall be
interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Stock Pledge Agreement
shall be prohibited by or invalid under the applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Stock Pledge
Agreement.
10. Paragraph Titles. The paragraph titles contained in this
Stock Pledge Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties.
11. Waiver; Entire Agreement. The Secured Party's failure,
at any time or times hereafter, to require strict compliance with
or performance by each Pledgor of any provision of this Stock
Pledge Agreement or to fail to exercise, or delay in exercising any
right or remedy hereunder, shall not waive, affect or diminish any
right of the Secured Party thereafter to demand strict compliance
therewith and performance thereby. Any suspension or waiver by the
Secured Party of an Event of Default under this Stock Pledge
Agreement shall not suspend, waive or affect any
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other Event of Default under this Stock Pledge Agreement, whether
the same is prior or subsequent thereto and whether of the same or
of a different kind or character. None of the undertakings,
agreements, warranties, covenants and representations of each
Pledgor contained in this Stock Pledge Agreement, and no Event of
Default by any Pledgor under this Stock Pledge Agreement shall be
deemed to have been suspended or waived by the Secured Party unless
such suspension or waiver is in writing and signed by an officer of
the Secured Party, specifying such suspension or waiver. This
Stock Pledge Agreement constitutes the entire agreement with
respect to the subject matter hereof, and supersedes all prior
agreements, whether oral or written, among the parties with respect
to the subject matter hereof, and may not be modified or amended
except in a document signed by all Pledgors and the Secured Party.
12. Waiver; Consent to Amendments. The liability of each
Pledgor hereunder and with respect to the Pledged Collateral shall
be in no way affected or impaired by any waiver, amendment,
extension or other modification of any of the Obligations or by any
acceptance by the Secured Party of any direct or indirect security
for any indebtedness, liability or obligation of each Pledgor or
JWI or ▇▇▇▇▇▇▇▇-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 ▇▇▇▇▇▇▇▇-New York.
21
13. Rights Cumulative. The rights and remedies of the
Secured Party under the Guaranty and this Stock Pledge Agreement
shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have, and no failure or delay by the
Secured Party in exercising any right shall operate as a waiver of
it, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other
power or right.
14. Power of Attorney. Each Pledgor hereby makes,
constitutes and appoints the Secured Party as its true and lawful
attorney-in-fact in his name, place and ▇▇▇▇▇ in any way, and to do
any act, which each Pledgor could so do or act, with respect to the
following matters, with full and unqualified authority to delegate
any and all of the following powers to any person or persons whom
the Secured Party shall select to do the following acts as each
Pledgor's attorney-in-fact, provided, however, that so long as no
Event of Default shall have occurred and be continuing, Secured
Party agrees that it shall not exercise such power of attorney:
To take in its own name or in the name of any Pledgor,
all action which the Secured Party may deem necessary or desirable
to perfect or otherwise protect, perfect and maintain the liens
created under, and to obtain the benefits of, this Stock Pledge
Agreement, and to otherwise protect and preserve the Pledged
Collateral, including, without limitation, the signing of any UCC
or other type of financing statements, any security agreements,
mortgages, deeds of trust and amendments to any of the foregoing;
to endorse any notes, checks, drafts, money orders or other
instruments of payment (including payments payable under or in
respect of any policy
22
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 ▇▇▇ for monies due in respect of the Pledged
Collateral; to execute any proof of claim, subrogation receipt and
any other document required by any insurance company as a condition
to or otherwise in connection with payment under any policy of
insurance; to cancel, assign or surrender any such policies to
execute; and file in the name of an on behalf of Pledgor any one or
more Forms 144 or any other form required to comply with Rule 144;
and, generally, to do, at the option of the Secured Party and at
the expense of the Pledgors, at any time, or from time to time, all
acts and things which the Secured Party deems necessary to protect,
preserve and realize upon the Pledged Collateral and the Secured
Party's lien thereon in order to effect the intent of this Stock
Pledge Agreement, all as fully and effectually as each Pledgor
might or could do.
This power of attorney is a power coupled with an
interest and irrevocable and shall continue until the termination
of the Stock Pledge Agreement in accordance with paragraph 16
hereof.
15. Consent to Jurisdiction. Each Pledgor irrevocably
consents that any legal action or proceeding against him under,
arising out of or in any manner relating to, this Stock Pledge
Agreement or any other documents executed and
23
delivered in connection herewith or therewith, may be brought in
any court of the State of North Carolina located within ▇▇▇▇▇▇▇▇,
North Carolina or in the United States District Court for the
Middle District of North Carolina or the United States Court of
Appeals for the Fourth Circuit, and each Pledgor waives trial by
jury with respect to such legal action or proceeding. Each
Pledgor, by the execution and delivery of this Stock Pledge
Agreement, expressly and irrevocably consents and submits to the
personal jurisdiction of any such court in any such action or
proceeding. Each Pledgor further irrevocably consents to the
service of any complaint, summons, notice or other process relating
to any such action or proceeding by delivery thereof to it at the
address set forth herein for each Pledgor. Each Pledgor hereby
expressly and irrevocably waives any claim or defense in any such
action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens. Each Pledgor
shall not be entitled in any such action or proceeding to assert
any defense given or allowed under the laws of any jurisdiction
other than the State of North Carolina unless such defense is also
given or allowed by the laws of the State of North Carolina.
Nothing in this paragraph shall affect or impair in any manner or
to any extent the right of the Secured Party to commence
legal proceedings relating to this Stock Pledge Agreement against
any Pledgor in any jurisdiction or to serve process in any manner
permitted by law.
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16. Termination. Upon the payment in full of the ▇▇▇▇▇▇▇▇-
New York Obligations, this Stock Pledge Agreement and the security
interest granted hereby will terminate, all rights to the Pledged
Collateral shall revert to the Pledgors and the Secured Party will
promptly return the Pledged Collateral to each Pledgor. The
Secured Party shall execute and deliver to each Pledgor such
documents as Pledgor shall reasonably request to evidence
termination of this Stock Pledge Agreement and the security
interest granted herein, which documents shall be prepared at
Pledgor's sole cost and expense.
17. This Stock Pledge Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the Pledgors have caused this Stock Pledge
Agreement to be duly executed as of the date first above written.
/S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Individually and as Voting Trustee
Residence Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
/S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Residence Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
25
/S/▇▇▇▇ ▇. Love
▇▇▇▇ ▇. LOVE
Residence Address:
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
26
CONSENTED TO:
/S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
As Optionee
/S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
As Optionee
ACCEPTED:
KLAUSSNER FURNITURE INDUSTRIES, INC.,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By:/S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Senior Vice President
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ to me known, and known to me to be the person described
in and who executed the foregoing instrument, and he duly
acknowledged that he executed the same.
/S/▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public
28
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ to me known, and known to me to be the person described
in and who executed the foregoing instrument, and he duly
acknowledged that he executed the same.
/S/▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public
29
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came ▇▇▇▇
▇. Love to me known, and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged
that he executed the same.
/S/▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public
30
SCHEDULE A
Number Name Voting
of of Stock Trust No.
Registered Beneficiarial Certificate Date Certificate of
Owner Owner Number Issued Number Shares
Harley J. ▇▇▇▇ ▇. Love JCC 683 8/29/88 #1 242,083
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇. JCC 681 8/29/88 #2 250,833
Greenfield ▇▇▇▇▇▇▇
Street ▇▇▇▇▇▇ ▇. Awaiting 4,000
Name ▇▇▇▇▇▇▇ Transfer
Harley J. Harley J. JCC 700 8/29/88 241,458
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Harley J. Awaiting 4,000
Name Greenfield Transfer
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SCHEDULE B
1. THE OPTION AGREEMENT dated November 7, 1994, by and between
▇▇▇▇ ▇. Love and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
2. THE OPTION AGREEMENT dated November 7, 1994, by and between
▇▇▇▇ ▇. Love and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
3. THE STOCK PLEDGE AND SECURITY AGREEMENT dated November 7,
1994, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. Love.
4. VOTING TRUST AGREEMENT dated October 15, 1986 as amended, by
and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇
▇. Love.
32