AMENDMENT NO. 3 TO

WAREHOUSE AGREEMENT

This Amendment No. 3 to the Warehouse Agreement is made effective as of August 27, 2005 by and among JENNIFER CONVERTIBLES, INC., a Delaware corporation (“JCI”), JENNIFER WAREHOUSING, INC., a Delaware corporation and a wholly-owned subsidiary of JCI (“New Warehousing”), and JARA ENTERPRISES, INC., a New York corporation ("Jara").

RECITALS:

            A.        Reference is made to that certain Warehouse Agreement, executed