FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended August 27, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from [ ] to [ ]
Commission File Number 1-7832
PIER 1 IMPORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1729843
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 Commerce Street, Suite 600, Fort Worth, Texas 76102
(Address of principal executive offices including zip code)
(817) 878-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ]. No [ ].
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Shares outstanding as of September 23,
1994
Common Stock, $1.00 par value 37,636,671
<PAGE>
<PAGE>
Item 1. Financial Statements.
PIER 1 IMPORTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
Aug. 27, Aug. 28, Aug. 27, Aug. 28,
1994 1993 1994 1993
-------- -------- -------- --------
Net sales $185,403 $181,441 $346,889 $340,034
Operating costs and expenses:
Cost of sales (including
buying and store occupancy) 115,170 115,607 211,305 212,510
Selling, general and
administrative expenses 50,436 47,235 100,624 94,333
Depreciation and amortization 3,927 3,932 7,780 7,626
-------- -------- -------- --------
169,533 166,774 319,709 314,469
-------- -------- -------- --------
Operating income 15,870 14,667 27,180 25,565
Interest income 419 706 724 1,340
Interest expense (3,735) (5,018) (7,339) (9,928)
-------- -------- -------- --------
Income before income taxes 12,554 10,355 20,565 16,977
Provision for income taxes 3,898 3,012 6,374 4,932
-------- -------- -------- --------
Net income $ 8,656 $ 7,343 $ 14,191 $ 12,045
======== ======== ======== ========
Earnings per share:
Primary $.23 $.20 $.38 $.32
==== ==== ==== ====
Fully diluted $.22 $.19 $.36 $.31
==== ==== ==== ====
Average shares outstanding during
period, including common stock
equivalents:
Primary 37,758 37,526 37,734 37,598
====== ====== ====== ======
Fully diluted 44,012 43,789 43,989 43,854
====== ====== ====== ======
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIER 1 IMPORTS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands except share data)
(Unaudited)
August 27, February 26,
1994 1994
---------- ------------
ASSETS
Current assets:
Cash, including temporary investments of $9,942
and $7,466, respectively $ 22,633 $ 17,123
Accounts receivable, net 60,101 51,722
Inventories 214,535 219,646
Other current assets 45,748 32,901
-------- --------
Total current assets 343,017 321,392
Property, net 109,372 111,510
Other assets 30,341 30,400
-------- --------
$482,730 $463,302
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term
debt $ 14,666 $ 2,639
Accounts payable and accrued liabilities 83,905 89,772
-------- --------
Total current liabilities 98,571 92,411
Long-term debt 142,763 145,231
Deferred income taxes 2,827 3,407
Other non-current liabilities 25,655 21,160
Stockholders' equity:
Common stock, $1.00 par, 100,000,000 shares
authorized, 37,709,000 and 37,617,000
outstanding, respectively 37,709 37,617
Paid-in capital 93,064 92,670
Retained earnings 88,907 76,597
Cumulative translation adjustments (958) (964)
Less - 108,000 and 98,000 common shares in
treasury, at cost, respectively (906) (884)
Less - subscriptions receivable and unearned
compensation (1,035) (1,369)
Less - unrealized loss on marketable equity
securities (3,867) (2,574)
-------- --------
212,914 201,093
-------- --------
$482,730 $463,302
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIER 1 IMPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
Aug. 27, Aug. 28,
1994 1993
-------- --------
Cash flow from operating activities:
Net income $14,191 $12,045
Adjustments to reconcile to net cash provided by/
(used in) operating activities:
Depreciation and amortization 7,780 7,626
Deferred taxes and other 5,280 2,222
Changes in cash from:
Inventories 3,916 (20,454)
Accounts receivable and other current assets (10,197) (18,193)
Accounts payable and accrued expenses (2,559) (237)
Other assets, liabilities and other, net (573) 33
------- -------
Net cash provided by/(used in) operating
activities 17,838 (16,958)
------- -------
Cash flow from investing activities:
Capital expenditures (8,041) (6,978)
Closed store lease terminations and other (1,094) --
(Payments)/proceeds from (purchases)/dispositions
of properties (573) 748
Purchase of Sunbelt Nursery Group, Inc. bank debt (9,600) --
Other investing activities (1,193) (4,189)
------- -------
Net cash used in investing activities (20,501) (10,419)
------- -------
Cash flow from financing activities:
Proceeds/(payments) from sales/(purchases) of
capital stock, treasury stock, and other 551 (434)
Cash dividends (1,878) (1,686)
Repayment of long-term debt (2,500) --
Net borrowings/(payments) under line of credit
agreements 12,000 (16,000)
Net cash provided by/(used in) financing
activities 8,173 (18,120)
------- -------
Change in cash 5,510 (45,497)
Cash at beginning of period 17,123 73,585
------- -------
Cash at end of period $22,633 $28,088
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
PIER 1 IMPORTS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED AUGUST 27, 1994
(In thousands)
(Unaudited)
<CAPTION>
Subscriptions Unrealized Loss
Cumulative Receivable and on Marketable Total
Common Paid-in Retained Translation Treasury Unearned Equity Stockholders'
Stock Capital Earnings Adjustments Stock Compensation Securities Equity
------ ------- -------- ----------- -------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance February 26,
1994 $37,617 $92,670 $76,597 $(964) $(884) $(1,369) $(2,574) $201,093
Purchase of treasury
stock (743) (743)
Restricted stock
grant and
amortization (2) (225) 334 107
Stock purchase
plan, exercise
of stock options
and other 92 396 (3) 946 1,431
Currency
translation
adjustments 6 6
Unrealized loss on
marketable equity
securities (1,293) (1,293)
Cash dividends,
declared or paid (1,878) (1,878)
Net income 14,191 14,191
------- ------- ------- ----- ----- ------- ------- --------
Balance August 27,
1994 $37,709 $93,064 $88,907 $(958) $(906) $(1,035) $(3,867) $212,914
======= ======= ======= ===== ===== ======= ======= ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
PIER 1 IMPORTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited financial statements should be read in
conjunction with the Annual Report on Form 10-K for the year ended February
26, 1994. All adjustments that are, in the opinion of management, necessary
for a fair statement of the financial position as of August 27, 1994, and the
results of operations and cash flows for the interim periods ended August 27,
1994 and August 28, 1993 have been made and consist only of normal recurring
adjustments. The results of operations for the three and six months ended
August 27, 1994 and August 28, 1993 are not indicative of results to be
expected for the fiscal year because of, among other things, seasonality
factors in the retail business.
Note 1 - Earnings per share
Primary earnings per share was determined by dividing net income by the
applicable average shares outstanding. Fully diluted earnings per share
amounts are similarly computed, but include the effect, when dilutive, of the
Company's potentially dilutive securities. To determine fully diluted net
income, interest and debt issue costs, net of any applicable taxes, have been
added back to net income to reflect assumed conversions.
Primary average shares include common shares outstanding and common
stock equivalents attributable to outstanding stock options. In addition to
common and common equivalent shares, fully diluted average shares include
common shares that would be issuable upon conversion of the Company's
convertible securities.
<PAGE>
Three Months Ended Six Months Ended
Aug. 27, Aug. 28, Aug. 27, Aug. 28,
1994 1993 1994 1993
-------- -------- -------- --------
(in thousands except per share amounts)
Net income $8,656 $7,343 $14,191 $12,045
Assumed conversion of 6 7/8%
subordinated notes as of date of
issuance, April 1992:
Plus interest and debt issue
costs, net of tax 839 853 1,678 1,705
------ ------ ------- -------
Fully diluted net income $9,495 $8,196 $15,869 $13,750
====== ====== ======= =======
Average shares outstanding during
period, including common stock
equivalents:
Primary 37,758 37,526 37,734 37,598
Plus assumed exercise of stock
options 4 13 5 6
Plus assumed conversion of 6 7/8%
subordinated notes to common
stock as of date of issuance,
April 1992 6,250 6,250 6,250 6,250
------ ------ ------ ------
Fully diluted 44,012 43,789 43,989 43,854
====== ====== ====== ======
Earnings per share:
Primary $.23 $.20 $.38 $.32
==== ==== ==== ====
Fully diluted $.22 $.19 $.36 $.31
==== ==== ==== ====
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Pier 1 Imports, Inc. ("the Company") recorded net sales of $185.4
million and $346.9 million for the second quarter and six-month periods of
fiscal year 1995, increases of 2.2% and 2.0%, respectively, compared to the
same periods in fiscal 1994. The percentage change in sales was adversely
affected by the elimination of the sales from 50 stores that are scheduled to
close under the store-closing program, which was established at the end of
fiscal 1994. Same-store sales increased 2.7% during the second quarter of
fiscal 1995 and 3.2% during the first half of fiscal 1995 compared to the
same periods in fiscal 1994. The increase in same-store sales during the
first half of 1995 over the corresponding prior year period resulted from an
increase of 11.4% in hard goods sales such as furniture and decorative
accessories, offset partially by a decline of 20.9% in soft goods sales that
include clothing, jewelry, and accessories. Hard goods and soft goods sales
contribute approximately 90% and 10% of total sales, respectively, for the
current period. The Company closed 16 of the 50 stores included in the
store-closing program and opened 14 stores in the first six months of fiscal
1995. Store count totalled 600 at the end of the second quarter of fiscal
1995 compared to 612 at the end of the same period a year ago.
Gross profit, after related buying and store occupancy costs, as a
percentage of sales, increased by 1.6% to 37.9% for the second quarter and by
1.6% to 39.1% for the first half of fiscal 1995 compared to the same periods
of the prior year. The increases resulted primarily from lower store
occupancy costs and improved margins in the furniture departments partially
offset by promotional discounts. These occupancy costs as a percentage of
sales improved by 0.7% for the second quarter and by 0.8% for the six-month
period of fiscal 1995 compared to the same periods last year due primarily to
the elimination of the results of underperforming stores in the store-closing
program.
Selling, general, and administrative expenses, expressed as a percentage
of sales, increased by 1.2% to 27.2% in the second quarter of fiscal 1995 and
by 1.3% to 29.0% in the first half of fiscal 1995 versus fiscal 1994
comparable periods. In dollars, expenses increased $3.2 million during the
second quarter and $6.3 million during the six-month period of fiscal 1995
over the same periods in fiscal 1994. Fiscal 1995 second quarter expenses
increased primarily due to higher marketing costs and increased management
bonus accruals. The fiscal 1995 six-month period was also affected by these
increased costs offset partially by lower net credit card expenses and the
elimination of the results of stores in the store-closing program.
Interest expense declined $1.3 million during the second quarter and
$2.6 million during the first half of fiscal 1995 over the same periods in
fiscal 1994 due to lower effective rates.<PAGE>
The Company's effective tax rate for the six-month period of fiscal 1995
was 31.0% compared to 29.0% for the same period of fiscal 1994.
Operating income improved $1.2 million to $15.9 million during the
fiscal 1995 second quarter and improved $1.6 million to $27.2 million for the
first half of fiscal 1995 over the same periods in fiscal 1994 due to higher
sales and improved margins. Net income aggregated to $8.7 million or $.23
per share (primary) for the second quarter of fiscal 1995 compared to $7.3
million or $.20 per share (primary) for the second quarter of fiscal 1994.
For the six-month period of fiscal 1995, net income aggregated $14.2 million
or $.38 per share (primary) compared to $12.0 million or $.32 per share
(primary) for the six-month period of fiscal 1994.
Liquidity and Capital Resources
Cash provided by operating activities was $17.8 million during the first
half of fiscal 1995 compared to a $17.0 million use of cash by operating
activities during the same period in fiscal 1994. This was due primarily to
slower inventory growth planned in fiscal 1995, a slowing of the Pier 1
credit card receivable growth in the first half of fiscal 1995 compared to
fiscal 1994, and a net earnings improvement in fiscal 1995 over fiscal 1994.
Cash used in investing activities during the first half of fiscal 1995 was
$20.5 million compared to $10.4 million for the same period in fiscal 1994.
The $20.5 million primarily consisted of (i) $9.6 million in lines of credit
for Sunbelt Nursery Group, Inc. ("Sunbelt") which previously had been
guaranteed by the Company, (ii) capital expenditures for planned growth,
(iii) funds expended to implement the store-closing program and (iv)
franchise locations repurchased by the Company. Cash from financing
activities included $12 million of short-term borrowings in fiscal 1995
compared to a pay-down of short-term debt in fiscal 1994 of $16 million.
Additionally, the Company made a $2.5 million sinking fund payment on its
long-term debt in the second quarter of fiscal 1995.
During the first six months of fiscal 1995, the Company paid cash
dividends aggregating $0.05 per share. During the second quarter of fiscal
1995, the Board of Directors voted an increase in the quarterly cash dividend
to $0.03 per share from the previously paid $0.025 per share. This dividend
will be payable on November 16, 1994 to shareholders of record on November 2,
1994.
Cash requirements of the store-closing program are estimated to
aggregate $16 million in fiscal 1995 and will be funded through working
capital and operations. Through the first half of fiscal 1995, 16 stores
have been closed resulting in $1 million of cash expenditures for lease
terminations and operating losses. The store-closing reserve balance was $18
million at August 27, 1994, which reflects the cash expenditures discussed
above as well as $2 million of inventory and fixed asset write-offs and is
consistent with the Company's expectations for closings during the first half
of fiscal 1995. The majority of the remaining stores are planned to close
after this fiscal year's Christmas selling season. A total of 50 new stores
are planned for the 1995 fiscal year, of which 14 stores were opened during
the first half of fiscal 1995. Financing for new store land and building<PAGE>
costs will be provided by operating leases. Related inventory and fixtures
are estimated to cost approximately $14 million, which will be funded by
operations, working capital and bank lines of credit.
The minimum operating lease commitments for fiscal 1995 are $45 million,
and the present value of all existing minimum operating lease commitments is
$352 million.
Working capital requirements will continue to be provided by cash and
$168.5 million in short-term revolving lines of credit. Under these lines of
credit, $12 million was outstanding in the form of short-term borrowings and
an additional $48 million was committed under letters of credit at August 27,
1994. The Company's current ratio at the end of the second quarter of fiscal
1995 was 3.5 to 1 compared to 3.5 to 1 at fiscal year end 1994 and 4.2 to 1
at the second quarter of fiscal 1994.
In connection with the Company's sale of its investment in Sunbelt to
General Host Corporation, the Company has provided Sunbelt lines of credit
amounting to $11.6 million which were originally due April 28, 1994, and were
outstanding at August 27, 1994. To enable Sunbelt to raise funds to
refinance this debt, the Company has granted Sunbelt extensions of the credit
facility until October 15, 1994. In order to meet its repayment obligations,
Sunbelt has stated that it must obtain replacement financing. The Company
will continue to support Sunbelt in its efforts to refinance. The Company is
also committed and has provided Sunbelt $22.8 million of non-revolving store
development financing which expires in stages from October 1994 to October
1995, and the Company guarantees approximately $4.5 million of Sunbelt's
other store lease obligations.
<PAGE>
PART II
Item 2. Change in Securities.
The Board of Directors amended the Company's bylaws to require
advance notice of shareholder nominations for election to the Board
of Directors and shareholder proposals of business to be considered
at an annual meeting of shareholders.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits See Exhibit Index.
(b) Reports on Form 8-K None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIER 1 IMPORTS, INC. (Registrant)
Date: October 11, 1994 By: /s/ Clark A. Johnson
Clark A. Johnson, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
Date: October 11, 1994 /s/ Robert G. Herndon
Robert G. Herndon, Executive Vice
President and Chief Financial Officer
(Principal Financial Officer)
Date: October 11, 1994 /s/ Susan E. Barley
Susan E. Barley, Vice President and
Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
3(ii) Bylaws of Registrant, Restated as of
September 19, 1994
10.11.3 Fourth Amendment to Revolving Credit
Loan Agreement dated as of August 14,
1992, among Registrant, Pier 1 Imports
(U.S.), Inc. and Bank One, Texas, N.A.
10.13.1 Third Amendment to Lease Guarantee
dated as of December 30, 1992 between
Registrant and Pier Group, Inc.
10.14.1 Third Amendment to Lease Guarantee
dated as of December 30, 1992 between
Registrant, Pier 1 Imports (U.S.), Inc.
and Pier Group, Inc.
10.15.4 Third Extension Agreement dated
September 21, 1994 between Registrant,
Pier-SNG, Inc. and Sunbelt
27 Financial Data Schedule for Six-month
Period
(Restated as of September 19, 1994)
BYLAWS
OF
PIER 1 IMPORTS, INC.
ARTICLE I.
OFFICES
Section 1. The principal office shall be located in the City of Fort
Worth, County of Tarrant, State of Texas.
Section 2. The corporation may also have offices at such other places
within or without the State of Delaware as the Board of Directors may from
time to time determine, or as the business of the corporation may require.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of the shareholders shall be held at such place
within or without the State of Delaware as shall be specified in the notice
of the meeting or in a waiver thereof. If no place is specified in such
notice or waiver, then meetings may be held at the principal office of the
corporation in the State of Texas.
Section 2. An annual meeting of the shareholders, commencing in the
year 1987, shall be held on the date designated by the Board of Directors in
each year. At such meeting the shareholders entitled to vote thereat shall
elect a Board of Directors by a majority vote present in person or
represented by proxy, and may transact such other business as may properly be
brought before the meeting.
Section 3. Special meetings of the shareholders may be called by the
Board of Directors, the President or upon written request of the holders of
at least twenty-five percent (25%) of the outstanding common stock.
<PAGE>
<PAGE>
Section 4. Whenever shareholders are required or permitted to take any
action at a meeting, a written or printed notice stating the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the
Secretary, or the officer or person calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, and directed to the shareholder at his address as it appears on the
stock transfer books of the corporation.
Section 5. Business transacted at any special meeting shall be
confined to the purposes stated in the notice thereof.
Section 6. The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at meetings of
shareholders except as otherwise provided by statute, by the Certificate of
Incorporation or these Bylaws. If, however, a quorum shall not be present or
represented at any meeting of the shareholders, the shareholders present in
person, or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present and represented. At such adjourned meeting at which
a quorum shall be present or represented, any business may be transacted
which may have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
Section 7. The affirmative vote of the holders of a majority of the
shares entitled to vote and represented at a meeting at which a quorum is
present shall be the act of the shareholders, unless the vote of a greater
number is required by statute, by the Certificate of Incorporation or these
Bylaws.
Section 8. Each shareholder shall be entitled to one (1) vote of each
share of stock held by such shareholder, unless otherwise provided by the
Certificate of Incorporation or statute.
Section 9. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after eleven (11)
months from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock
itself or an interest in the corporation generally.
Section 10. The officer who has charge of the stock transfer books of
the corporation shall make, at least ten (10) days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and number of shares held by each, which list, for a period of not
less than ten (10) days prior to such meeting, shall be open for examination
at a place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held, and shall be subject to inspection by
any shareholder at any time during ordinary business hours for any purpose
germane to the meeting. Such list shall also be produced and kept open at
the time and place of the meeting, and shall be subject to the inspection of
any shareholder during the whole time of the meeting. The original stock
transfer books shall be the only evidence as to who are the shareholders
entitled to examine such list or transfer book or to vote in person or by
proxy at any meeting of shareholders.
Section 11. Nominations of persons for election to the Board of
Directors of the corporation and the proposal of business to be considered by
the shareholders may be made at an annual meeting of shareholders pursuant to
the corporation's notice of meeting (a) by or at the direction of the Board
of Directors or (b) by any shareholder of the corporation who is a
shareholder of record at the time of giving of notice provided for in this
Section, who shall be entitled to vote for the election of directors at the
meeting and who complies with the notice procedures set forth in this
Section.
For nominations or other business to be properly brought by a
shareholder before an annual meeting, the shareholder must have given timely
notice thereof in writing to the Secretary of the corporation, and such
business must be a proper subject for shareholder action under the Delaware
General Corporation Law. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the
corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that
in the event that the date of the annual meeting is advanced by more than 30
days or delayed by more than 60 days from such anniversary date, notice by
the shareholder to be timely must be so delivered not earlier than the 90th
day prior to such annual meeting and not later than the close of business on
the later of 60th day prior to such annual meeting or the 10th day following
the day on which public announcement of the date of such meeting is first
made; and provided further, however, that in the event that the number of
directors to be elected to the Board of Directors of the corporation shall be
increased from the number elected at the preceding annual or special meeting
and there shall have been no public announcement specifying the size of the
increased Board of Directors made by the corporation at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a
shareholder's notice shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if such notice
shall be delivered to the Secretary at the principal executive offices of the
corporation not later than the close of business on the 10th day following
the day on which such public announcement is first made by the corporation.
"Public announcement" as used herein shall mean disclosure in a press release
reported by the Dow Jones News Service or comparable national news service or
in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). A shareholder's
notice shall set forth (i) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, all information relating
to such person that is required to be disclosed in solicitations of proxies
for election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, including such person's written
consent to being named in the proxy statement as a nominee and to serving as
a director if elected; (ii) as to any other business that the shareholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (A) the
name and address of such shareholder, as they appear on the corporation's
books, and of such beneficial owner, and (B) the class and number of shares
of the corporation that are owned beneficially and of record by such
shareholder and such beneficial owner.
Only such persons who are nominated in accordance with the procedures
set forth in this Section shall be eligible for election as directors at any
meeting of shareholders. Only such business shall be conducted at a meeting
of shareholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Section. The chairman of the meeting
shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting shall have been made in
accordance with the procedures set forth in this Section and, if any proposed
nomination or business shall not be in compliance with this Section, to
declare that such defective nomination or proposal shall be disregarded.
Notwithstanding the foregoing provisions of this Section, a shareholder
shall also comply with all applicable requirements of the Exchange Act and
the rules and regulations thereunder with respect to the matters set forth in
this Section. Nothing in this Section shall affect any rights or
requirements of shareholders regarding the inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 12. Any action required by statute to be taken at any annual or
special meeting of the shareholders, or any action which may be taken at any
annual or special meeting of the shareholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the shareholders having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
ARTICLE III.
DIRECTORS
Section 1. The number of directors of the corporation shall be not
less than three (3) nor more than nine (9), as fixed from time to time by the
Board of Directors or the shareholders of this corporation. Directors may be
elected by a voice vote or by a show of hands unless a shareholder entitled
to vote objects, in which case written ballots shall be used. The directors
shall be elected at the annual meeting of the shareholders, except as
otherwise provided in these Bylaws, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
residents of the State of Delaware or shareholders of the corporation.
Section 2. Any director or the entire Board of Directors may be
removed with or without cause by the affirmative vote of the holders of a
majority of the shares entitled to vote at an election of directors.
Section 3. Any vacancy occurring in the Board of Directors and newly
created directorships resulting from any increase in the authorized number of
directors elected by all of the shareholders having the right to vote as a
single class may be filled by the affirmative vote of a majority of the
directors then in office, although less than a quorum of the Board of
Directors, or by a sole remaining director. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Section 4. If at any time, by reason of death or resignation or other
cause, a corporation shall have no directors in office, then any officer or
any shareholder or an executor, administrator, trustee or guardian of a
shareholder, or other fiduciary entrusted with like responsibility for the
person or estate of a shareholder, may call a special meeting of shareholders
in accordance with the provisions of the Certificate of Incorporation or
these Bylaws, or may apply to the Court of Chancery for a decree summarily
ordering an election as provided in the Delaware General Corporation Law.
Section 5. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a
majority of the whole Board of Directors (as constituted immediately prior to
any such increase), the Court of Chancery may, upon application of any
shareholder or shareholders holding at least ten percent (10%) of the total
number of the shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen
by the directors then in office as aforesaid, which election shall be
governed by the Delaware General Corporation Law.
Section 6. Unless otherwise provided in the Certificate of
Incorporation by these Bylaws, when one (1) or more directors shall resign
from the Board of Directors, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective, and each director so
chosen shall hold office for the unexpired term of his predecessor in office.
Section 7. The business and affairs of the corporation shall be
managed by or under the direction of its Board of Directors which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by
these Bylaws directed or required to be exercised or done by the
shareholders.
Section 8. The Board of Directors may hold its meetings and have an
office or offices within or without the State of Delaware.
Section 9. The annual meeting of the Board of Directors for the
purpose of electing officers and transacting such other business as may be
brought before the meeting shall be held each year immediately following the
annual meeting of shareholders. No notice of such meeting shall be necessary
in order legally to constitute the meeting, providing a quorum shall be
present.
Section 10. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 11. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors or the President, and shall be called
by the Secretary on the written request of two (2) directors. Written notice
of special meetings of the Board of Directors shall be given to each director
at least three (3) days before the date of the meeting. Notice by mail shall
be deemed to be given at the time when same shall be mailed, postage prepaid.
Notice to directors may also be given by telegram. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of
such meeting.
Section 12. A majority of the total number of directors shall
constitute a quorum for the transaction of business, and the act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless a greater number is
required by statute, the Certificate of Incorporation or elsewhere in these
Bylaws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 13. No contract or transaction between the corporation and one
(1) or more of its directors or officers, or between the corporation and any
other corporation, partnership, association or other organization in which
one (1) or more of its directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or participates in
the meeting of the Board of Directors or committee which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose if such interested director or officer complies with the
statutory disclosure requirements. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
Section 14. The Board of Directors may, by resolution passed by a
majority of the Board of Directors, designate one (1) or more committees,
each committee to consist of one (1) or more directors. The Board of
Directors may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a
committee, the member or members present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided by the resolution of the Board of Directors, or in these
Bylaws, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the
corporation, except as otherwise provided by statute.
Section 15. Any action required or permitted to be taken at a meeting
of the Board of Directors or any committee may be taken without a meeting if
a consent in writing, setting forth the action so taken, is signed by all the
members of the Board of Directors or committee, as the case may be, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors, or committee.
Section 16. Members of the Board of Directors or any committee may
participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in such a meeting shall
constitute presence in person at the meeting.
Section 17. The Board of Directors shall have the authority to fix the
compensation of directors.
ARTICLE IV.
NOTICES
Section 1. Whenever any notice is required to be given to any person
under the provisions of the statutes or of the Certificate of Incorporation
or of these Bylaws, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein shall be equivalent to the giving of such notice.
Section 2. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when a person attends a meeting for
the express purpose of objecting at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE V.
OFFICERS
Section 1. The officers of the corporation shall consist of a
President and a Secretary and may include a Chairman of the Board, one or
more Vice Presidents and a Treasurer, each of whom shall be elected by the
Board of Directors. Any number of offices may be held by the same person
unless the Certificate of Incorporation otherwise provides.
Section 2. The officers of the corporation shall be elected by the
Board of Directors in such manner and shall hold their offices for such terms
as are prescribed herein or determined by the Board of Directors.
Section 3. Such other officers and assistant officers and agents as
may be deemed necessary may be elected or appointed by the Board of
Directors.
Section 4. Any officer of the corporation may be removed at any time,
with or without cause, by the Board of Directors.
Section 5. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 6. Each officer of the corporation shall hold office until his
successor is elected and qualified or until his earlier resignation or
removal. Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors
or other governing body.
Chairman of the Board
Section 7. The Chairman of the Board, if one has been appointed, shall
perform such duties as may be delegated by the Board of Directors. The Board
of Directors may designate whether the Chairman of the Board, if such an
officer shall have been appointed, or the President, shall be the chief
executive officer of the corporation. In the absence of a contrary
designation, the President shall be the chief executive officer. The
Chairman of the Board, if one has been appointed, or the President shall
preside at all meetings of the shareholders and the Board of Directors.
President
Section 8. Unless the Board of Directors shall otherwise delegate such
duties, the President shall have general and active management of the
business of the corporation, and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The President shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed, and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent
of the corporation. The President shall have such powers and duties as
usually pertain to such office, except as the same may be modified by the
Board of Directors.
Vice President
Section 9. The Vice Presidents, in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence
or disability of the President, perform the duties and exercise the powers of
the President. They shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe or as the
President may from time to time delegate.
Secretary
Section 10. The Secretary or other officer appointed by the Board of
Directors shall attend meetings of the Board of Directors and shareholders,
and record all the proceedings of the meetings of the corporation and of the
Board of Directors in a book to be kept for that purpose. The Secretary
shall give, or cause to be given, notice of all meetings of the shareholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or President, under
whose supervision he shall be. He shall keep in safe custody the seal of the
corporation, and, when authorized by the Board of Directors, affix the same
to any instrument requiring it, and, when so affixed, it shall be attested by
his signature or by the signature of the Treasurer, an Assistant Secretary,
or an Assistant Treasurer.
Section 11. The Assistant Secretaries, in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence
or disability of the Secretary, perform the duties and exercise the power of
the Secretary. They shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe or as the
President may from time to time delegate.
Treasurer
Section 12. The Treasurer shall have the custody of the corporate funds
and securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
Section 13. The Treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors
at its regular meetings, or when the Board of Directors so requires, an
account of all his transactions as Treasurer, and of the financial condition
of the corporation. The Treasurer shall perform such other duties and have
such other authority and powers as the Board of Directors may from time to
time prescribe or as the President may from time to time delegate.
Section 14. If required by the Board of Directors, the Treasurer shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the corporation, in
case of his death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation.
Section 15. The Assistant Treasurers, in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence
or disability of the Treasurer, perform the duties and exercise the powers of
the Treasurer. They shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe or the
President may from time to time delegate.
ARTICLE VI.
CERTIFICATE FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates, provided that the Board of Directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes
or series of its stock shall be uncertificated shares. Any such resolution
shall not apply to shares represented by a certificate until such certificate
is surrendered to the corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation
by the Chairman or Vice Chairman of the Board of Directors, or the President
or Vice President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the corporation representing the
number of shares registered in certificate form.
Section 2. Any or all the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
Section 3. The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate therefore issued by it,
alleged to have been stolen or destroyed, and the corporation may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.
Section 4. Shares of stock of the corporation shall be transferred
only on the books of the corporation upon surrender to the corporation of the
certificate or certificates representing the shares to be transferred
accompanied by an assignment in writing of such shares properly executed by
the shareholder of record of his duly authorized attorney-in-fact and with
all taxes on the transfer having been paid. The corporation may refuse any
requested transfer until furnished evidence satisfactory to it that such
transfer is proper. Upon the surrender of a certificate for transfer of
stock, such certificate shall at once be conspicuously marked on its face
"Cancelled" and filed with the permanent stock records of the corporation.
The Board of Directors may make such additional rules concerning the
issuance, transfer and registration of stock and requirements regarding the
establishment of lost, destroyed or wrongfully taken stock certificates as it
deems appropriate.
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment
thereof, or to express consent in writing to corporate action without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance a record date,
which shall not be more than sixty (60) nor less then ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action. If no record date is fixed:
(a) The record date for determining
shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day
on which the meeting is held.
(b) The record date for determining
shareholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written
consent is expressed.
(c) The record date for determining
shareholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the
resolution relating thereto.
A determination of shareholders of record entitled to notice of or to vote at
a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive rights of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State
of Delaware.
Section 7. No shareholder shall have any preemptive right to subscribe
to an additional issue of stock or to any security convertible into such
stock unless, and except to the extent that, such right is expressly granted
in the Certificate of Incorporation.
ARTICLE VII.
GENERAL PROVISIONS
Section 1. The Board of Directors may declare and the corporation may
pay dividends upon the shares of its capital stock in cash, property, or
shares of the corporation's capital stock pursuant to statute and subject to
any restrictions contained in its Certificate of Incorporation. If the
dividend is to be paid in shares of the corporation's theretofore unissued
capital stock, the Board of Directors shall, by resolution, direct that there
be designated as capital in respect of such shares an amount which is not
less than the aggregate par value of par value shares being declared as a
dividend and, in the case of shares without par value being declared as a
dividend, such amount as shall be determined by the Board of Directors. No
such designation as capital shall be necessary if shares are being
distributed by the corporation pursuant to split-up or division of its stock
rather than as payment of a dividend declared payable in stock of the
corporation.
Section 2. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 3. The fiscal year of the corporation shall be fixed by
resolution by the Board of Directors.
Section 4. The corporate seal shall have inscribed thereon the name of
the corporation and may be in such form as the Board of Directors may
determine, and may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
Section 5. The corporation shall indemnify to the full extent
authorized by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he, his testator or intestate is or
was a director, officer or employee of the corporation or any predecessor of
the corporation or serves or served any other enterprise as a director,
officer or employee at the request of the corporation or any predecessor of
the corporation.
ARTICLE VIII.
AMENDMENTS
The power to alter, amend or repeal the Bylaws of the corporation or
adopt new Bylaws shall be vested in the Board of Directors of the
corporation.
FOURTH AMENDMENT TO
REVOLVING CREDIT LOAN AGREEMENT
This FOURTH AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT (this
"Amendment") is entered into as of August 30, 1994, by and among PIER 1
IMPORTS, INC., a Delaware corporation ("Pier 1"), PIER 1 IMPORTS (U.S.),
INC., a Delaware corporation ("U.S."), PIR TRADING, INC., a Delaware
corporation ("PIR") (Pier 1, U.S., and PIR being sometimes referred to herein
individually as a "Borrower" and collectively as "Borrowers"), and BANK ONE,
TEXAS, NATIONAL ASSOCIATION ("Bank").
WHEREAS, Borrowers and Bank entered into that certain Revolving Credit
Loan Agreement dated August 14, 1992 as amended by (i) that certain First
Amendment to Revolving Credit Loan Agreement dated July 31, 1993, (ii) that
certain Second Amendment to Revolving Credit Loan Agreement (the "Second
Amendment") dated September 30, 1993, and (iii) that certain Third Amendment
to Revolving Credit Loan Agreement dated January 20, 1994 (as the same has
been and may hereafter be amended from time to time, (the "Agreement")
relating to credit facilities extended by Bank to Borrowers in the aggregate
amount of $50,000,000.00; and
WHEREAS, Borrowers and Bank now desire to modify the Agreement, as
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
good valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, Borrowers and Bank covenant and agree as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. Except as expressly provided herein to the
contrary, the terms used in this Amendment, to the extent not otherwise
defined herein, shall have the same meanings as in the Agreement.
ARTICLE II
Amendments
Section 2.01 Amendment to Definition of Restricted Investments.
Effective as of the date hereof, the definition of "Restricted Investments"
set forth in Section 1.110 of the Agreement is hereby deleted in its entirety
and replaced with the following:
"1.110 'Restricted Investments' shall mean any investments in,
guaranties of, or loans and advances to Persons, except (i) Obligations
of the United States government due within one (1) year, (ii)
certificates of deposit (including Eurodollar deposits) and bankers'
acceptances (from commercial banks having capital resources in excess of
$100 million) due within one (1) year and payable in U.S. dollars, (iii)
commercial paper rated P-1 by Moody's or A-1 by Standard & Poor's; (iv)
debt of any state or political subdivision that is rated A or better by
Moody's or Standard & Poor's and that matures within one (1) year, (v)
any loan participation program(s) for a period not to exceed sixty (60)
days with credit risk to companies with long-term debt rating by
Standard & Poor's or Moody's of not less than single A, (vi) any stock
purchases made on behalf of the Pier 1 Imports ESOP which are
transferring to the ESOP within one (1) year, (vii) readily marketable
securities having a quoted market value, (viii) the sum of dividends and
other distributions on account of any class of its stock not exceeding
ten million dollars ($10,000,000) in the aggregate in such fiscal year,
(ix) purchases of a majority of the outstanding stock of any
corporation, (x) travel or like advances to officers and/or employees
and loans to officers and/or employees for the purchase of capital stock
of the Borrower (including the capitalization of up to one-half of the
accrued interest on such loans to officers and/or employees) with such
travel or like advances and loans not exceeding ten million dollars
($10,000,00) in the aggregate in such fiscal year, (xi) stock or
securities received in settlement of debts owing to the Borrower or any
Subsidiary not exceeding ten million dollars ($10,000,000) in such
fiscal year including receivables arising from the sale of goods and
services in the ordinary course of business of the Borrower and its
Subsidiaries, (xii) additional shares of General Host Corporation, a New
York corporation, which are received as a result of stock dividends,
stock split or combination of shares, recapitalization,
reclassification, merger or similar capital or corporate structure
change, (xiii) any stock or securities of Sunbelt which the Borrower or
any of its Subsidiaries acquires through the exercise of its remedies
with respect to any lien or security interest held by Borrower or any of
its Subsidiaries on such stock or securities, (xiv) any loans or
guaranties made by the Borrower or any of its Subsidiaries to or for the
benefit of Pier Retail Group Limited, a company organized under the laws
of the United Kingdom, not exceeding an aggregate principal amount of
five million dollars ($5,000,000) in such fiscal year, (xv) investments
in or loans and advances to Borrower, or any of its Subsidiaries, or any
Person that is wholly-owned by Borrower and/or its Subsidiaries, (xvi)
investments in or loans and advances to any partnership, corporation or
joint venture the sole purpose of which is to obtain land and
improvements used in the ordinary course of business of Borrower or any
of its Subsidiaries, which investments in or loans and advances to under
this subsection shall not exceed seventy-five million dollars
($75,000,000) in the aggregate in such fiscal year, (xvii) all
investments, guaranties, loans and advances in existence on the date
hereof, together with all renewals, extensions, rearrangements,
replacements, and substitutions thereof, and (xviii) all guaranties
permitted under Section 8.07 hereof."
Section 2.02 Amendment to Definition of Termination Date. Effective as
of the date hereof, the definition of "Termination Date" set forth in Section
1.131 of the Agreement is hereby deleted in its entirety and replaced with
the following:
"1.131 'Termination Date' shall mean August 30, 1995."
Section 2.03 Amendment to Section 3.03. Effective as of the date
hereof, Section 3.03 of the Agreement is hereby amended by deleting the
reference to "August 30, 1994" and replacing it with a reference to "August
30, 1995."
Section 2.04 Amendment to Section 8.03 Effective as of the date
hereof, Section 8.03 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"8.03 Limitation on Dividends, Acquisition of Stock and Restricted
Investments. Make during any fiscal year any Restricted Investment or
pay any dividend on any class of its stock (other than stock dividends)
or any other distribution on account of any class of its stock (other
than dividends or distributions payable solely in shares of its stock),
all of the foregoing being herein called "Restricted Payments", if the
sum of such Restricted Payments exceeds thirty million dollars
($30,000,000) in the aggregate in such fiscal year. Notwithstanding the
foregoing, no Restricted Payment, other than dividends already declared,
shall be made if as a result of giving effect thereto, an Event of
Default shall have occurred and be continuing. All dividends and
distributions declared must be payable within ninety (90) days of the
date of such declaration."
Section 2.05 Amendment to Section 8.04(e). Effective as of the date
hereof, Section 8.04(e) of the Agreement is hereby deleted and replaced with
the following:
"(e) Maintenance of Fixed Charge Coverage - For the fiscal quarter
ending May 29, 1994 through the fiscal quarter ending November 26, 1994,
permit the ratio of Cash Flow Available for Fixed Charges to Fixed
Charges to be less than 1.20 to 1.0. For the fiscal quarter beginning
November 27, 1994 and for each fiscal quarter thereafter during the term
hereof, permit the ratio of Cash Flow Available for Fixed Charges to
Fixed Charges to be less than 1.25 to 1.0. The calculations specified
above shall be made as of the last day of the relevant fiscal quarter."
ARTICLE III
Note
Section 3.01 Note. Contemporaneously with the execution of this
Amendment, Borrower shall execute and deliver to Bank a promissory note of
even date hereof (the "Renewal Note") in the stated principal amount of
$50,000,000.00. Effective as of the date hereof, each reference in the Loan
Agreement and the other Loan Documents to the Note shall be a reference to
the Renewal Note.
ARTICLE IV
Representations, Warranties, Ratification and Reaffirmation
Section 4.01 Representations and Warranties. Borrowers hereby represent
and warrant that: (i) the representations and warranties contained in the
Agreement and the other Loan Documents are true and correct on and as of the
dated hereof as though made on and as of the date hereof, (ii) no event has
occurred and is continuing that constitutes an Event of Default or would
constitute an Event of Default but for the requirement of notice or lapse of
time or both, and (iii) there are no claims or offsets against, or defenses
or counterclaims to, the obligations of Borrowers under the Agreement or any
of the other Loan Documents (including without limitation, any defenses or
offsets resulting from or arising out of breach of contract or duty, the
amount of interest charged, collected or received on the Note heretofore, or
breach of any commitments or promises of any type).
Section 4.02 Ratification. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and the other Loan Documents, but except as
expressly modified and superseded by this Agreement, the terms and provisions
of the Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect, Borrowers hereby agreeing that the
Agreement and the Loan Documents are and shall continue to be outstanding,
validly existing and enforceable in accordance with their respective terms.
ARTICLE V
Miscellaneous
Section 5.01 Reference to Agreement. Each of the Loan Documents is
hereby amended so that any reference in the Loan Documents to the Agreement
shall mean a reference to the Agreement as amended hereby.
Section 5.02 Guarantors. Each of the undersigned Guarantors consents
and agrees to the terms and provisions of this Amendment and agrees that the
Guaranty Agreements executed by the undersigned Guarantors in favor of Bank
are and shall remain in full force and effect.
Section 5.03. Execution in Counterparts. This Amendment may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
Section 5.04. Governing Law. This Amendment has been entered into in
Dallas County, Texas and shall be performable for all purposes in Dallas
County, Texas. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Amendment.
Section 5.05. Parties Bound. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that Borrowers shall not assign any rights,
powers, duties or obligations hereunder.
Section 5.06 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
BORROWERS:
PIER 1 IMPORTS, INC.
By:___________________________________
Name:
Title:
PIER 1 IMPORTS (U.S.), INC.
By:___________________________________
Name:
Title:
PIR TRADING, INC.
By:___________________________________
Name:
Title:
GUARANTORS:
a) Pier 1 Guarantors:
PIER 1 LICENSING, INC., a Delaware
corporation as successor in interest by
merger to CMEI, INC. and PIER 1 IMPORTS
HOLDING, INC.
By:___________________________________
Name:
Title:
PIER 1 IMPORTS (U.S.), INC.
By:___________________________________
Name:
Title:
PIR TRADING, INC.
By:___________________________________
Name:
Title:
PIER LEASE, INC. F/K/A PIR TRANSPORTATION,
INC.
By:___________________________________
Name:
Title:
PIER 1 ASSETS, INC.
By:___________________________________
Name:
Title:
b) PIR Guarantors:
PIER 1 IMPORTS, INC.
By:___________________________________
Name:
Title:
PIER 1 LICENSING, INC., a Delaware
corporation as successor in interest by
merger to CMEI, INC. and PIER 1 IMPORTS
HOLDING, INC.
By:___________________________________
Name:
Title:
PIER 1 IMPORTS (U.S.), INC.
By:___________________________________
Name:
Title:
PIER LEASE, INC. F/K/A PIR
TRANSPORTATION, INC.
By:___________________________________
Name:
Title:
PIER 1 ASSETS, INC.
By:___________________________________
Name:
Title:
c) U.S. Guarantors:
PIER 1 IMPORTS, INC.
By:___________________________________
Name:
Title:
PIER 1 LICENSING, INC., a Delaware
corporation as successor in interest by
merger to CMEI, INC. and PIER 1 IMPORTS
HOLDING, INC.
By:___________________________________
Name:
Title:
PIR TRADING, INC.
By:___________________________________
Name:
Title:
PIER LEASE, INC. F/K/A PIR
TRANSPORTATION, INC.
By:___________________________________
Name:
Title:
PIER 1 ASSETS, INC.
By:___________________________________
Name:
Title:
BANK:
BANK ONE, TEXAS,
NATIONAL ASSOCIATION
By:___________________________________
Name:
Title:
THIRD AMENDMENT TO LEASE GUARANTEE
This Third Amendment to Lease Guarantee (hereinafter referred to as
"this Third Amendment") is entered into as of the 20th day of June, 1994,
between PIER 1 IMPORTS, INC. a Delaware corporation (the "Guarantor") and
PIER GROUP, INC., a Delaware corporation ("Lessor").
WHEREAS, Guarantor and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, whereby Guarantor guaranteed
the full payment and performance when due of all rent, indebtedness, and
obligations now or hereafter existing or owing to Lessor pursuant to lease
agreements from time to time entered into with Pier Lease, Inc., a Delaware
corporation, and with Pier 1 Imports (U.S.), Inc., a Delaware corporation;
and
WHEREAS, the Lease Guarantee was amended by a First Amendment to Lease
Guarantee dated as of April 28, 1993 (the "First Amendment"); and
WHEREAS, the Lease Guarantee was amended by a Second Amendment to Lease
Guarantee dated as of April 25, 1994 (the "Second Amendment"); and
WHEREAS, Guarantor and Lessor have agreed to amend the Lease Guarantee
as more fully set forth hereinafter.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantor and the Lessor agree as follows:
1. Section 2 of the Lease Guarantee is amended to read in its entirety
as follows:
2. Guarantee Continuing, Absolute, Unlimited. This Guarantee is a
continuing, absolute and unlimited Guarantee of payment as primary obligor
and not as surety. This Guarantee shall apply to all Obligations pursuant to
the Lease Agreements, without limitation as to either amount or period of
time. The Obligations shall be conclusively presumed to have been created
in reliance on this Guarantee. Lessor shall not be required to proceed first
against the Lessee or any other person, firm or corporation or against any
property securing any of the Obligations before resorting to the Guarantor
for payment. This Guarantee shall be construed as a guarantee of payment and
performance without regard to the validity, regularity, or enforceability of
any of the Obligations, the rejection of any of the Lease Agreements in
bankruptcy, or the termination or cancellation of any of the Lease Agreements
for any reason and notwithstanding any claim, defense (other than payment by
the Guarantor) or right of set-off which the Lessee or the Guarantor may have
against Lessor, including any such claim, defense or right of set-off based
on any present or future law or order of any government (de jure or de
facto), or of any agency thereof or court of law purporting to reduce, amend
or otherwise affect any obligations of the Lessee, or any other obligor, or
to vary any terms of payments, and without regard to any other circumstances
which might otherwise constitute a legal or equitable discharge of a surety
or a guarantor. The Guarantor agrees that this Guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment to
Lessor of the Obligations or any part thereof is rescinded or must otherwise
be returned by Lessor upon the insolvency, bankruptcy or reorganization of
the Lessee, or otherwise, as though such payment to Lessor had not been made.
2. The definition of "Restricted Investments" in Section 3 of the Lease
Guarantee is amended to read in its entirety as follows:
"Restricted Investments" shall mean any investments in, guaranties
of, or loans and advances to Persons, except (i) Obligations of the
United States government due within one (1) year, (ii) certificates
of deposit (including Eurodollar deposits) and bankers' acceptances
(from commercial banks having capital resources in excess of $100
million) due within one (1) year and payable in U.S. dollars, (iii)
commercial paper rated P-1 by Moody's or A-1 by Standard & Poor's;
(iv) debt of any state or political subdivision that is rated A or
better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) any loan participation program(s) for a period not to
exceed sixty (60) days with credit risk to companies with long-term
debt rating by Standard & Poor's or Moody's of not less than single
A, (vi) any stock purchases made on behalf of the Pier 1 Imports
ESOP which are transferred to the ESOP within one (1) year, (vii)
readily marketable securities having a quoted market value, (viii)
the sum of dividends and other distributions on account of any class
of its stock not exceeding ten million dollars ($10,000,000) in the
aggregate in such fiscal year, (ix) purchases of majority of the
outstanding stock of any corporation, (x) travel or like advances to
officers and/or employees and loans to officers and/or employees for
the purchase of capital stock of the Guarantor (including the
capitalization of up to one-half of the accrued interest on such
loans to officers and /or employees) with such travel or like
advances and loans not exceeding ten million dollars ($10,000,000)
in the aggregate in such fiscal year, (xi) stock or securities
received in settlement of debts owing to the Guarantor or any
Subsidiary not exceeding ten million dollars ($10,000,000) in such
fiscal year including receivables arising from the sale of goods and
services in the ordinary course of business of the Guarantor and its
Subsidiaries, (xii) additional shares of General Host Corporation, a
New York corporation, which are received as a result of stock
dividends, stock split or combination of shares, recapitalization,
reclassification, merger or similar capital or corporate
structure change, (xiii) any stock or securities of Sunbelt which
the Guarantor or any of its Subsidiaries acquires through the
exercise of its remedies with respect to any lien or security
interest held by guarantor or any of its Subsidiaries on such stock
or securities, (xiv) any loans or guaranties made by the Guarantor
or any of its Subsidiaries to or for the benefit of Pier Retail
Group Limited, a company organized under the laws of the United
Kingdom, not exceeding an aggregate principal amount of five million
dollars ($5,000,000) in such fiscal year, (xv) investments in or
loans and advances to Guarantor, or any of its Subsidiaries, or any
Person that is wholly-owned by Guarantor and/or its Subsidiaries,
(xvi) investments in or loans and advances to any partnership,
corporation or joint venture the sole purpose of which is to obtain
land and improvements used in the ordinary course of business of
Guarantor or any of its Subsidiaries, which investments in or loans
and advances to under this subsection shall not exceed seventy-five
million dollars ($75,000,000) in the aggregate in such fiscal year,
(xvii) all investments, guaranties, loans and advances in existence
on the date hereof, together with all renewals, extensions,
rearrangements, replacements, and substitutions thereof, and (xviii)
all guaranties permitted under Section 8(g) hereof.
3. Section 8(b) and section 8(c) of the Lease Guarantee are hereby
amended to read in their entirety as follows:
(b) Consolidated Tangible Net Worth. Permit its Consolidated
Tangible Net Worth at any time to be less than an amount equal to
the sum of (i) one hundred ninety million dollars ($190,000,000)
plus (ii) 50% of the aggregate Consolidated Net Income of the
guarantor for the period commencing after February 26, 1994
(without deduction for any net loss in any fiscal year ending after
February 26, 1994) and terminating at the end of the last fiscal
quarter preceding the date of any determination of Consolidated
Tangible Net Worth.
(c) Limitation on Dividends, Acquisition of Stock and
Restricted Investments. Make during any fiscal year any Restricted
Investment or pay any dividend on any class of its stock (other
than stock dividends) or any other distribution on account of any
class of its stock (other than dividends or distributions payable
solely in shares of its stock), all of the foregoing being herein
called "Restricted Payments", if the sum of such Restricted
Payments exceeds thirty million dollars ($30,000,000) in the
aggregate in such fiscal year. Notwithstanding the foregoing, no
Restricted Payment, other than dividends already declared, shall be
made if as a result of giving effect thereto, an Event of Default
shall have occurred and be continuing. All dividends and
distributions declared must be payable within ninety (90) days of
the date of such declaration.
4. Section 8(d)(ii) of the Lease Guarantee is hereby amended to read
in its entirety as follows:
(ii) Debt To Tangible Net Worth. Permit the ratio of Debt to
Consolidated Tangible Net Worth to exceed 1.60 to 1.0.
5. Section 8(e) of the Lease Guarantee is deleted in its entirety.
6. Except as herein specifically amended and modified above, the Lease
Guarantee, First Amendment and the Second Amendment are unchanged and shall
continue in full force and effect.
7. Guarantor hereby consents and agrees to this Third Amendment and
the Guarantor hereby confirms and ratifies the Lease Guarantee, the First
Amendment and the Second Amendment and each and every term, condition, and
covenant therein contained to the same extent and as though the same were set
forth herein in full.
8. This Third Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original. In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.
9. This Third Amendment to Lease Guarantee shall be binding upon and
inure to the benefit of the parties and their successors and assignees.
10. THE LEASE GUARANTEE, THE FIRST AMENDMENT, THE SECOND AMENDMENT AND
THIS THIRD AMENDMENT CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.01(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, REPRESENT THE FINAL AND
ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE GUARANTOR AND THE LESSOR
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF, SUPERSEDE ALL PRIOR
PROPOSALS, AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be executed by their respective officers thereunto duly authorized, as of
the date first written above.
GUARANTOR:
PIER 1 IMPORTS, INC.
By:__________________________________
Robert G. Herndon,
Executive Vice President
LESSOR:
PIER GROUP, INC.
By:__________________________________
George R. Mihalko, President
Agreed and Accepted
as of the date above written:
FIRST INTERSTATE BANK
OF TEXAS, N.A., as Agent
By:________________________________
Robin Hamilton, Vice President
THIRD AMENDMENT TO LEASE GUARANTEE
This Third Amendment to Lease Guarantee (hereinafter referred to as
"this Third Amendment") is entered into as of the 20th day of June, 1994,
among PIER 1 IMPORTS, INC. a Delaware corporation ("Guarantor"), PIER 1
IMPORTS (U.S.), INC., a Delaware corporation (Pier 1 Imports, Inc. and Pier 1
Imports (U.S.), Inc. are hereinafter collectively referred to as the
"Guarantors") and PIER GROUP, INC., a Delaware corporation ("Lessor").
WHEREAS, Guarantors and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, whereby Guarantors
guaranteed the full payment and performance when due of all rent,
indebtedness, and obligations now or hereafter existing or owing to Lessor
pursuant to lease agreements from time to time entered into with Pier Lease,
Inc., a Delaware corporation; and
WHEREAS, the Lease Guarantee was amended by a First Amendment to Lease
Guarantee dated as of April 28, 1993 (the "First Amendment"); and
WHEREAS, the Lease Guarantee was amended by a Second Amendment to Lease
Guarantee dated as of April 25, 1994 (the "Second Amendment"); and
WHEREAS, Guarantors and Lessor have agreed to amend the Lease Guarantee
as more fully set forth hereinafter.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantors and the Lessor agree as follows:
1. Section 2 of the Lease Guarantee is amended to read in its entirety
as follows:
2. Guarantee Continuing, Absolute, Unlimited. This Guarantee is a
continuing, absolute and unlimited Guarantee of payment as primary obligor
and not as surety. This Guarantee shall apply to all Obligations pursuant to
the Lease Agreements, without limitation as to either amount or period of
time. The Obligations shall be conclusively presumed to have been created
in reliance on this Guarantee. Lessor shall not be required to proceed first
against the Lessee or any other person, firm or corporation or against any
property securing any of the Obligations before resorting to the Guarantors
or either of them for payment. This Guarantee shall be construed as a
guarantee of payment and performance without regard to the validity,
regularity, or enforceability of any of the Obligations, the rejection of any
of the Lease Agreements in bankruptcy, or the termination or cancellation of
any of the Lease Agreements for any reason and notwithstanding any claim,
defense (other than payment by the Guarantor) or right of set-off which the
Lessee or the Guarantors (or either of them) may have against Lessor,
including any such claim, defense or right of set-off based on any present or
future law or order of any government (de jure or de facto), or of any agency
thereof or court of law purporting to reduce, amend or otherwise affect any
obligations of the Lessee, or any other obligor, or to vary any terms of
payments, and without regard to any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or a guarantor. Each
of the Guarantors agrees that this Guarantee shall continue to be effective
or be reinstated, as the case may be, if at any time payment to Lessor of the
Obligations or any part thereof is rescinded or must otherwise be returned by
Lessor upon the insolvency, bankruptcy or reorganization of the Lessee, or
otherwise, as though such payment to Lessor had not been made.
2. The definition of "Restricted Investments" in Section 3 of the Lease
Guarantee is amended to read in its entirety as follows:
"Restricted Investments" shall mean any investments in, guaranties
of, or loans and advances to Persons, except (i) Obligations of the
United States government due within one (1) year, (ii) certificates
of deposit (including Eurodollar deposits) and bankers' acceptances
(from commercial banks having capital resources in excess of $100
million) due within one (1) year and payable in U.S. dollars, (iii)
commercial paper rated P-1 by Moody's or A-1 by Standard & Poor's;
(iv) debt of any state or political subdivision that is rated A or
better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) any loan participation program(s) for a period not to
exceed sixty (60) days with credit risk to companies with long-term
debt rating by Standard & Poor's or Moody's of not less than single
A, (vi) any stock purchases made on behalf of the Pier 1 Imports
ESOP which are transferred to the ESOP within one (1) year, (vii)
readily marketable securities having a quoted market value, (viii)
the sum of dividends and other distributions on account of any class
of its stock not exceeding ten million dollars ($10,000,000) in the
aggregate in such fiscal year, (ix) purchases of majority of the
outstanding stock of any corporation, (x) travel or like advances to
officers and/or employees and loans to officers and/or employees for
the purchase of capital stock of the Guarantor (including the
capitalization of up to one-half of the accrued interest on such
loans to officers and /or employees) with such travel or like
advances and loans not exceeding ten million dollars ($10,000,000)
in the aggregate in such fiscal year, (xi) stock or securities
received in settlement of debts owing to the Guarantor or any
Subsidiary not exceeding ten million dollars ($10,000,000) in such
fiscal year including receivables arising from the sale of goods and
services in the ordinary course of business of the Guarantor and its
Subsidiaries, (xii) additional shares of General Host Corporation, a
New York corporation, which are received as a result of stock
dividends, stock split or combination of shares, recapitalization,
reclassification, merger or similar capital or corporate
structure change, (xiii) any stock or securities of Sunbelt which
the Guarantor or any of its Subsidiaries acquires through the
exercise of its remedies with respect to any lien or security
interest held by Guarantor or any of its Subsidiaries on such stock
or securities, (xiv) any loans or guaranties made by the Guarantor
or any of its Subsidiaries to or for the benefit of Pier Retail
Group Limited, a company organized under the laws of the United
Kingdom, not exceeding an aggregate principal amount of five million
dollars ($5,000,000) in such fiscal year, (xv) investments in or
loans and advances to Guarantor, or any of its Subsidiaries, or any
Person that is wholly-owned by Guarantor and/or its Subsidiaries,
(xvi) investments in or loans and advances to any partnership,
corporation or joint venture the sole purpose of which is to obtain
land and improvements used in the ordinary course of business of
Guarantor or any of its Subsidiaries, which investments in or loans
and advances to under this subsection shall not exceed seventy-five
million dollars ($75,000,000) in the aggregate in such fiscal year,
(xvii) all investments, guaranties, loans and advances in existence
on the date hereof, together with all renewals, extensions,
rearrangements, replacements, and substitutions thereof, and (xviii)
all guaranties permitted under Section 8(g) hereof.
3. Section 8(b) and section 8(c) of the Lease Guarantee are hereby
amended to read in their entirety as follows:
(b) Consolidated Tangible Net Worth. Permit its Consolidated
Tangible Net Worth at any time to be less than an amount equal to
the sum of (i) one hundred ninety million dollars ($190,000,000)
plus (ii) 50% of the aggregate Consolidated Net Income of the
Guarantor for the period commencing after February 26, 1994 (without
deduction for any net loss in any fiscal year ending after February
26, 1994) and terminating at the end of the last fiscal quarter
preceding the date of any determination of Consolidated Tangible Net
Worth.
(c) Limitation on Dividends, Acquisition of Stock and Restricted
Investments. Make during any fiscal year any Restricted Investment
or pay any dividend on any class of its stock (other than stock
dividends) or any other distribution on account of any class of its
stock (other than dividends or distributions payable solely in
shares of its stock), all of the foregoing being herein called
"Restricted Payments", if the sum of such Restricted Payments
exceeds thirty million dollars ($30,000,000) in the aggregate in
such fiscal year. Notwithstanding the foregoing, no Restricted
Payment, other than dividends already declared, shall be made if as
a result of giving effect thereto, an Event of Default shall have
occurred and be continuing. All dividends and distributions
declared must be payable within ninety (90) days of the date of such
declaration.
4. Section 8(d)(ii) of the Lease Guarantee is hereby amended to read in
its entirety as follows:
(ii) Debt To Tangible Net Worth. Permit the ratio of Debt to
Consolidated Tangible Net Worth to exceed 1.60 to 1.0.
5. Section 8(e) of the Lease Guarantee is deleted in its entirety.
6. Except as herein specifically amended and modified above, the Lease
Guarantee, the First Amendment and the Second Amendment are unchanged and
shall continue in full force and effect.
7. Each Guarantor hereby consents and agrees to this Third Amendment
and each Guarantor hereby confirms and ratifies the Lease Guarantee, the
First Amendment and the Second Amendment and each and every term, condition,
and covenant therein contained to the same extent and as though the same were
set forth herein in full.
8. This Third Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original. In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.
9. This Third Amendment to Lease Guarantee shall be binding upon and
inure to the benefit of the parties and their successors and assignees.
10. THE LEASE GUARANTEE, THE FIRST AMENDMENT, THE SECOND AMENDMENT AND
THIS THIRD AMENDMENT CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.01(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, REPRESENT THE FINAL AND
ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE GUARANTORS AND THE LESSOR
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF, SUPERSEDE ALL PRIOR
PROPOSALS, AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be executed by their respective officers thereunto duly authorized, as of
the date first written above.
GUARANTORS:
PIER 1 IMPORTS, INC.
By:__________________________________
Robert G. Herndon,
Executive Vice President
PIER 1 IMPORTS (U.S.), INC.
By:__________________________________
Robert G. Herndon,
Executive Vice President
LESSOR:
PIER GROUP, INC.
By:__________________________________
George R. Mihalko, President
Agreed and Accepted
as of the date above written:
FIRST INTERSTATE BANK
OF TEXAS, N.A., as Agent
By:________________________________
Robin Hamilton, Vice President
f-0024327.01
[DESCRIPTION] THIRD EXTENSION AGREEMENT
THIRD EXTENSION AGREEMENT
This Third Extension Agreement (this "Agreement"), entered into on
September 21, 1994, by and between Sunbelt Nursery Group, Inc., a Delaware
corporation ("Borrower"), and Pier 1 Imports, Inc., a Delaware corporation
("Pier 1"), and Pier-SNG, Inc., a Delaware corporation ("Pier-SNG" and,
collectively with Pier 1, sometimes referred to as "Lender").
RECITALS
A. The parties hereto have previously entered into that certain
Extension Agreement, dated April 25, 1994 (the "First Extension") and the
Second Extension Agreement, dated June 29, 1994 (the "Second Extension"),
providing for the extension of the date of the maturity (the "Maturity Date")
of the Credit Agreement and of the Notes (as such terms are defined in the
First Extension).
B. The Maturity Date of the Credit Agreement and of the Notes, as so
extended, is currently September 21, 1994.
C. Borrower is attempting to refinance (the "New Financing") its
obligations under the Credit Agreement and the Notes, and to facilitate the
New Financing, Borrower has requested that Lender amend the Credit Agreement
and the Notes to further extend the maturities thereof as herein provided.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the meanings defined for such terms in the First Extension.
2. Extension and Consideration. The Maturity Date shall be extended
to October 15, 1994. The Maturity Date of Borrower's 8% promissory note
dated June 29, 1994, in the principal amount of $100,000, given as
consideration for the Second Extension Agreement, shall be extended to
October 15, 1994.
3. Amendments of the Credit Agreement and the Notes.
(a) Amendment of the Credit Agreement. The definition "Termination
Date" in Section 1.1 of the Credit Agreement is, effective as of the date of
this Agreement (the "Effective Date"), hereby replaced in its entirety as
follows:
"Termination Date" shall mean October 15, 1994, or the earlier date
of termination in whole of the Commitment pursuant to Sections 2.7 or
6.2.
(b) Amendment of the TCB Note. The definition "Original Termination
Date" in Section 1.1 of the TCB Facility is, effective as of the Effective
Date, hereby replaced in its entirety as follows:
"Original Termination Date" shall mean October 15, 1994.
(c) Amendment to the Standard Chartered Note. The definition
"Termination Date" in Section 1.1 of the SCB Facility is, effective as of the
Effective Date, hereby replaced in its entirety as follows:
"Termination Date" shall mean October 15, 1994, or the earlier
date of termination in whole of the Commitment pursuant to Sections 2.7
or 6.2.
(d) Payment of Accrued Interest. The Notes and Credit Agreement are
hereby amended so as to provide for Borrower's delivery to Lender of the
following interest payments thereunder:
(i) Accrued interest on the Revolving Credit
Balance as provided for under the Notes
and Credit Agreement ("Accrued Interest")
for the month of September 1994 shall be
payable to Lender on or before September
30, 1994;
(ii) Accrued Interest from October 1, 1994, to
October 15, 1994, shall be payable to
Lender on or before October 15, 1994.
(e) Forgiveness of Certain Indebtedness. In the event Borrower
repays to Lender on or before the Maturity Date an amount equal to the
Revolving Credit Balance less the sum of $220,000 (being the amount of
consideration paid by Borrower under the First Extension and the Second
Extension), Lender shall forgive the amount payable under Borrower's
promissory note referred to in Section 2 hereof.
(f) Amendment of the Notes and Credit Agreement. Notwithstanding any
provision in the Notes or the Credit Agreement to the contrary, Borrower
shall not have the right to obtain any additional extensions of credit under
the Notes or the Credit Agreement.
4. Waiver. Lender hereby waives until the Maturity Date any
default, breach, violation or event of default under the Credit Agreement,
the TCB Facility or the SCB Facility, and the Notes issued thereunder,
including any cross default(s) arising under (A) Section 6.1(c) of the Credit
Agreement and (B) Section 6.1(d) of each of the TCB Facility and the SCB
Facility, and the Notes issued thereunder, resulting from the failure of
Borrower to satisfy the current ratio requirement set forth in Section
4.1(k)(iv) of each of the TCB Facility and the SCB Facility, and the failure
to timely deliver notice of such defaults required by Section 4.1(k)(iv) of
each of the Credit Agreement, the TCB Facility and the SCB Facility.
5. Representations and Warranties. (a) To induce Lender to enter
into this Agreement, Borrower hereby represents and warrants to Lender that
(i) Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
and authority to perform its obligations under this Agreement, (ii) the
execution, delivery and performance of this Agreement have been duly
authorized by all requisite action on the part of Borrower and do not and
will not violate the certificate of incorporation or bylaws of Borrower or
any other agreement to which Borrower is a party, or any law, rule or
regulation, or any order of any court, governmental authority or arbitrator
by which it or any of its properties is bound and (iii) Borrower will apply
the net proceeds of the New Financing to repay the Revolving Credit Balance.
(b) Lender hereby represents and warrants to Borrower that (i)
Pier-SNG is the sole owner of the notes and is successor in interest to the
respective banks under the SCB Facility and the TCB Facility with full power
and authorization to amend such facilities, (ii) each of Pier 1 and Pier-SNG
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power and authority
to perform its obligations under this Agreement and (iii) the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action on the part of Pier 1 or Pier-SNG and do not and will not
violate the certificate of incorporation or bylaws of Pier 1 or Pier-SNG or
any other agreement to which either Pier 1 or Pier-SNG is a party, or any
law, rule or regulation, or any order of any court governmental authority or
arbitrator by which they or any of their properties is bound.
6. Covenants. Notwithstanding any provisions to the contrary
contained in the Credit Agreement, Borrower hereby covenants and agrees that
it will perform, observe and comply with each of the following covenants:
(a) Weekly Financial Report. Borrower shall provide to Lender
by 2:00 p.m., Fort Worth, Texas time, on the second business day of each week
a financial report for Borrower for the previous week containing income,
expense and cashflow information. All such reports shall be prepared in
accordance with sound accounting principles consistently applied and shall be
certified by the chief executive officer or the chief financial officer of
Borrower to be true and correct to the best of such person's knowledge.
(b) Other Indebtedness. Borrower shall not, and shall not
suffer its subsidiaries to, repay any indebtedness owing to any parent,
affiliate or controlling person of Borrower prior to repayment in full of the
Revolving Credit Agreement.
7. Ratification of Loan Documents. Borrower hereby acknowledges and
agrees that the Credit Agreement, the Notes, and all guarantees thereof and
security interests granted in connection therewith in favor of Lender shall
remain in full force and effect and binding on the respective parties
thereto, enforceable in accordance with their respective terms. Except as
provided herein, Borrower hereby ratifies and confirms the Notes and Credit
Agreement and all of its obligations thereunder.
8. No Obligation of Lender. Except as provided herein, Lender shall
have no further obligation whatsoever to extend the maturity of the Notes or
Credit Agreement, waive any Event of Default or defer any payment. Borrower
hereby acknowledges and understands that upon the maturity of the Notes or
Credit Agreement, as extended hereby, Lender shall have the right to proceed
to exercise any and all rights and remedies to which it is entitled, which
may include foreclosure on any collateral securing the Notes and the Credit
Agreement and the institution of legal proceedings.
9. No Implied Waivers. No failure or delay on the part of Lender in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement, the Credit Agreement, the Notes or any
document related thereto shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under this
Agreement, the Notes or the Credit Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
10. Expenses of lender. Borrower agrees to pay on demand all
reasonable costs and expenses incurred by Lender in connection with the
preparation, negotiation, execution and administration of this Agreement, and
all reasonable costs and expenses incurred by Lender in connection with the
enforcement or preservation of any rights or remedies under this Agreement,
the Credit Agreement or the Notes, including without limitation the
reasonable fees and expenses of Lender's legal counsel.
11. Indemnification. Section 2.16 of the Credit Agreement is
applicable to this Agreement.
12. Survival of Representations and Warranties. All representations
and warranties made in this Agreement shall survive the execution and
delivery of this Agreement, and no investigation by Lender or any closing
shall affect the representations and warranties or the right of Lender to
rely upon them.
13. Review and Construction of Documents. Borrower hereby
acknowledges, and represents and warrants to Lender, that (i) Borrower has
had the opportunity to consult with legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel,
(ii) Borrower has reviewed this Agreement and fully understands the effects
thereof and all terms and provisions contained therein, and (iii) Borrower
has executed this Agreement of its own free will and volition.
14. Entire Agreement; Amendment. This agreement embodies the final,
entire agreement between the parties hereto regarding the maturity extensions
granted herein and supersedes any and all prior commitments, representations
and understandings, whether written or oral, relating to the subject matter
hereof. The provisions of this Agreement may be amended or waived only by an
instrument in writing signed by the partes hereto. The Notes, Credit
Agreement and related documents, including but not limited to the Loan Papers
(as defined in the Credit Agreement), continue to evidence the agreement of
the parties with respect to the subject matter thereof.
15. Notices. All notices, requests, demands and other communications
under this Agreement shall be given in accordance with the provisions of the
Loan Papers (as defined in the Credit Agreement).
16. Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, successors and assigns, provided that Borrower
may not assign any rights or obligations under this Agreement without the
prior written consent of Lender.
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
18. Interpretation. Wherever the context hereof shall so require,
the singular shall include the plural, the masculine gender shall include the
feminine gender and the neuter and vice versa. The headings, captions and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.
19. Severability. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
20. Counterparts. This Agreement may be executed and delivered in
any number of counterparts, and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
one and the same instrument.
21. Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
instruments and documents, and to do all other acts and things, as may be
reasonably necessary or advisable to carry out the intents and purposes of
this Agreement.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as
of the day and year first above written.
SUNBELT NURSERY GROUP, INC.
By: __________________________
Title: _______________________
PIER 1 IMPORTS, INC.
By: __________________________
Title: _______________________
PIER-SNG, INC.
By: __________________________
Title: _______________________
<PAGE>
To induce Lender to enter into the foregoing Agreement, each of the
undersigned consent and agree (a) to the execution and delivery of the
foregoing Agreement, (b) that such Agreement shall in no way release,
diminish, impair, reduce or otherwise adversely affect any obligations,
guarantees or assurances heretofore granted by each of the undersigned to
Pier 1 or Pier-SNG, which shall each continue to be in full force and effect.
Each of the undersigned parties waive notice of acceptance of this Agreement
by Lender, which Agreement shall be binding upon each of the undersigned and
the successors and assigns of each of the undersigned and shall inure to the
benefit of Lender and their successors and assigns. It is understood that
SNG Acquisition, Inc. is not guaranteeing the performance of Borrower under
Borrower's $100,000 promissory note constituting the Consideration for the
Second Extension.
SNG ACQUISITION COMPANY, INC.
By: _______________________________
Title: ____________________________
WOLFE NURSERY GROUP, INC.
By: ______________________________
Title: ___________________________
TIP TOP NURSERIES, INC.
By: ______________________________
Title: ___________________________
HOUSTON PATIO & GARDEN CENTERS, INC.
By: ______________________________
Title: ___________________________
GREEN BROS. NURSERY, INC.
By: ______________________________
Title: ___________________________
SUNBELT MANAGEMENT SERVICES, INC.
By: ______________________________
Title: ___________________________
NURSERYLAND GARDEN CENTERS, INC.
By: ______________________________
Title: ___________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED STATEMENT OF OPERATIONS AND BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE DATA
INCLUDED FOR THE INTERIM YEAR TO DATE PERIOD IS PROVIDED ON A CONDENSED BASIS
IN A MANNER SIMILAR TO THE INTERIM INFORMATION IN THE FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-25-1995
<PERIOD-END> AUG-27-1994
<CASH> 12,691
<SECURITIES> 9,942
<RECEIVABLES> 60,101
<ALLOWANCES> 0
<INVENTORY> 214,535
<CURRENT-ASSETS> 343,017
<PP&E> 109,372
<DEPRECIATION> 0
<TOTAL-ASSETS> 482,730
<CURRENT-LIABILITIES> 98,571
<BONDS> 142,763
<COMMON> 37,709
0
0
<OTHER-SE> 175,205
<TOTAL-LIABILITY-AND-EQUITY> 482,730
<SALES> 346,889
<TOTAL-REVENUES> 346,889
<CGS> 211,305
<TOTAL-COSTS> 319,709
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,339
<INCOME-PRETAX> 20,565
<INCOME-TAX> 6,374
<INCOME-CONTINUING> 14,191
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,191
<EPS-PRIMARY> .38
<EPS-DILUTED> .36
</TABLE>
