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 November 25, 1995
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 January 2, 1996
Common Stock, $1.00 par value 39,533,127
<PAGE>
<PAGE>
PART I
------
Item 1. Financial Statements.
PIER 1 IMPORTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
[CAPTION]
Three Months Ended Nine Months Ended
Nov. 26, Nov. 26,
Nov. 25, 1994 (as Nov. 25, 1994 (as
1995 (restated) 1995 * (restated)
-------- -------- -------- --------
[S] [C] [C] [C] [C]
Net sales $190,185 $165,761 $566,456 $512,650
Operating costs and expenses:
Cost of sales (including
buying and store occupancy) 111,614 99,664 343,989 310,969
Selling, general and
administrative expenses 59,252 51,146 163,046 151,770
Depreciation and amortization 4,270 4,008 12,608 11,788
-------- -------- -------- --------
175,136 154,818 519,643 474,527
-------- -------- -------- --------
Operating income 15,049 10,943 46,813 38,123
Nonoperating expenses:
Interest income (14) (701) (610) (1,425)
Interest expense 3,637 3,453 10,131 10,792
Investment (gains) losses(Note 2) (95) 5,749 16,463 11,445
Provision for Sunbelt Nursery
Group, Inc. defaults -- -- 14,000 --
Write-down of General Host
securities -- 7,543 -- 7,543
-------- -------- -------- --------
Income (loss) before income
taxes 11,521 (5,101) 6,829 9,768
Provision for income taxes 4,572 425 10,636 6,799
-------- -------- -------- --------
Net income (loss) $ 6,949 $ (5,526) $ (3,807) $ 2,969
======== ======== ======== ========
Net income (loss) per share:
Primary $.18 $(.14) $(.10) $.07
==== ===== ===== ====
Fully diluted $.17 $(.14) $(.10) $.07
==== ===== ===== ====
Average shares outstanding during
period, including common stock
equivalents:
Primary 39,700 39,683 39,721 39,642
====== ====== ====== ======
Fully diluted 45,224 46,247 45,241 46,208
====== ====== ====== ======
*Reflects restatements of the first and second quarters of fiscal 1996. See
Note 2.
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)
November 25, February 25,
1995 1995 (as
restated)
------------ ------------
ASSETS
Current assets:
Cash, including temporary investments of $475
and $42,536, respectively $ 13,488 $ 50,566
Accounts receivable, net 74,490 64,229
Inventories 234,913 200,968
Other current assets 34,269 34,325
-------- --------
Total current assets 357,160 350,088
Properties, net 104,636 105,618
Other assets 36,900 30,219
-------- --------
$498,696 $485,925
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term
debt $ 35,016 $ 2,638
Accounts payable and accrued liabilities 85,401 82,419
-------- --------
Total current liabilities 120,417 85,057
Long-term debt 139,982 154,432
Deferred income taxes 2,537 2,538
Other non-current liabilities 21,095 21,501
Stockholders' equity:
Common stock, $1.00 par, 200,000,000 shares
authorized, 39,877,000 and 37,826,000
issued, respectively 39,877 37,826
Paid-in capital 110,698 93,833
Retained earnings 69,359 94,516
Cumulative currency translation adjustments (1,214) (1,195)
Less - 373,000 and 162,000 common shares in
treasury, at cost, respectively (3,212) (1,477)
Less - subscriptions receivable and unearned
compensation (843) (1,106)
-------- --------
214,665 222,397
-------- --------
$498,696 $485,925
======== ========
The accompanying notes are an integral part of these financial statements.<PAGE>
<PAGE>
PIER 1 IMPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
November 25, November 26,
1995 1994 (as
restated)
Cash flow from operating activities: ------------ ------------
Net income (loss) $(3,807) $ 2,969
Adjustments to reconcile to net cash (used in)
provided by operating activities:
Depreciation and amortization 12,608 11,788
Deferred taxes and other 5,912 5,187
Provision for Sunbelt Nursery Group, Inc.
defaults 14,000 --
Write-down of General Host securities -- 7,543
Investment losses 16,463 11,445
Changes in cash from:
Inventories (33,945) 7,453
Accounts receivable and other current assets (10,836) (13,458)
Accounts payable and accrued expenses (4,527) (5,652)
Store-closing reserve (5,914) (2,144)
Other assets, liabilities and other, net (37) (923)
Net cash (used in) provided by ------- -------
operating activities (10,083) 24,208
------- -------
Cash flow from investing activities:
Capital expenditures (16,417) (14,004)
Proceeds from disposition of properties 255 238
Loan to Sunbelt Nursery Group, Inc. -- (9,600)
Proceeds from Sunbelt Nursery Group, Inc. -- 11,600
Investments in The Pier Retail Group, Ltd. (7,785) (1,593)
Investments (19,500) (12,500)
Proceeds from sale of investments 3,637 --
------- -------
Net cash used in investing activities (39,810) (25,859)
Cash flow from financing activities: ------- -------
Cash dividends (3,576) (3,009)
Retirement of long-term debt (14,750) (2,500)
Net borrowings under line of credit agreements 31,100 13,000
Proceeds from sales of capital stock, treasury
stock, and other, net 41 615
Net cash provided by financing ------- -------
activities 12,815 8,106
------- -------
Change in cash (37,078) 6,455
Cash at beginning of period 50,566 17,123
------- -------
Cash at end of period $13,488 $23,578
======= =======
The accompanying notes are an integral part of these financial statements.<PAGE>
<PAGE><TABLE>
PIER 1 IMPORTS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED NOVEMBER 25, 1995
(In thousands)
(Unaudited)
<CAPTION>
Cumulative Subscriptions
Currency Receivable and Total
Common Paid-in Retained Translation Treasury Unearned Stockholders'
Stock Capital Earnings Adjustments Stock Compensation Equity
------ ------- -------- ----------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance February 25, 1995 (as restated) $37,826 $ 93,833 $94,516 $(1,195) $(1,477) $(1,106) $222,397
Purchase of treasury stock (3,606) (3,606)
Restricted stock grant and amortization 7 44 (129) 263 185
Stock Purchase Plan, exercise of stock
options and other 166 560 365 2,000 3,091
Currency translation adjustments (19) (19)
Cash dividends, declared or paid (3,576) (3,576)
Five percent stock dividend 1,878 16,261 (18,139) 0
Net income (loss) (3,807) (3,807)
------- -------- ------- ------- ------- ------- --------
Balance November 25, 1995 $39,877 $110,698 $69,359 $(1,214) $(3,212) $ (843) $214,665
======= ======== ======= ======= ======= ======= ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
/TABLE
<PAGE>
<PAGE>
PIER 1 IMPORTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited financial statements should be read in
conjunction with the Form 10-K for the year ended February 25, 1995. An
amended Form 10-K will be filed for that year to incorporate restatements
required to properly reflect the investment losses described in Note 2.
All adjustments that are, in the opinion of management, necessary for a
fair statement of the financial position as of November 25, 1995, and the
results of operations and cash flows for the interim periods ended November
25, 1995 and November 26, 1994, as restated, have been made and consist
only of normal recurring adjustments except for the investment losses
described in Note 2. The results of operations for the three and nine
months ended November 25, 1995 and November 26, 1994 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 - Net income (loss) per share
Primary net income (loss) per share was determined by dividing net
income (loss) by the applicable average shares outstanding. Fully diluted
net income (loss) 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 (loss), interest and debt issue
costs, net of any applicable taxes, have been added back to net income to
reflect assumed conversions. The computation of fully diluted net income
(loss) per share for the three and nine months ended November 26, 1994 were
antidilutive; therefore, the amounts reported for primary and fully diluted
net income (loss) per share are the same.
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.
Three Months Ended Nine Months Ended
Nov. 26, Nov. 26,
Nov. 25, 1994 (as Nov. 25, 1994 (as
1995 restated) 1995 restated)
-------- -------- -------- --------
(in thousands except per share amounts)
Net income (loss) $6,949 $(5,526) $(3,807) $2,969
Assumed conversion of 6 7/8%
subordinated notes as of date of
issuance, April 1992:
Plus interest and debt issue
costs, net of tax 681 866 2,043 2,598
------ ------- ------- ------
Fully diluted net income (loss) $7,630 $(4,660) $(1,764) $5,567
====== ======= ======= ======
Average shares outstanding during
period, including common stock
equivalents:
Primary 39,700 39,683 39,721 39,642
Plus assumed exercise of stock
options 33 1 29 3
Plus assumed conversion of
6 7/8% subordinated notes
to common stock as of date
of issuance, April 1992 5,491 6,563 5,491 6,563
------ ------ ------ ------
Fully diluted 45,224 46,247 45,241 46,208
====== ====== ====== ======
Net income (loss) per share:
Primary $.18 $(.14) $(.10) $.07
==== ===== ===== ====
Fully diluted $.17 $(.14) $(.10) $.07
==== ===== ===== ====
Note 2 - Investment losses
In late December 1995, the Company was made aware of non-recurring
losses of approximately $19.3 million resulting from inappropriate and
substantial trading activities in a discretionary account by a financial
consultant retained to manage the Company's excess cash and short-term
investments. The Company maintained a relationship with the consultant
over the last nine years and provided funds under management that at one
time reached $22 million. In executing these trading transactions, the
consultant may have acted outside the scope of instructions from the
Company and improperly attributed transactions to the Company. These
transactions are recorded on statements the Company received from a
brokerage firm that executed the transactions purportedly in accordance
with the consultant's instructions. Management believes that these
statements represent the best evidence of the transactions that is
available to the Company at this time. As a result, the Company has
restated its financial statements to reflect the losses in the periods
indicated by the brokerage firm statements. The Company and the Special
Committee of the Board of Directors, which was established to investigate
the matter, are investigating the transactions and the surrounding
circumstances and attempting to obtain additional information to resolve
uncertainties which have arisen. The Company does not anticipate that its
investigation will lead to recognition of additional losses from such
trading activities. While it is possible that the findings of such efforts
may cause the Company to make adjustments in the future as the
uncertainties are resolved, any such adjustment which might result in
restatement of financial statements are not expected to result in any
additional net losses, but rather would reflect offsetting adjustments
among periods.
The table presented below summarizes the impact of these restatements
for each quarter of fiscal 1995 and the first two quarters of fiscal 1996.
These restatements indicate significant investment losses during the first
three quarters of each of the fiscal years ended February 26, 1994, and
February 25, 1995, and then a substantial recovery of such losses in the
fourth fiscal quarter of each of those years. The Company's recording of
the transactions from the brokerage firm statements produces no effect on
the financial statements as of and for the full year ended February 26,
1994. The effect on the financial statements as of and for the full year
ended February 25, 1995, is an additional loss of $2.8 million on net
income of $25 million before restatement. The effect on the financial
statements for the first and second quarters of fiscal 1996 is an
additional loss of $15.9 million and $0.6 million, respectively. The
Company has not recorded any tax benefit of these losses since the
realization of such benefit is uncertain at this time. At February 26,
1994, February 25, 1995, and November 25, 1995, the Company had no material
funds managed by the financial consultant. These amounts do not include
any possible conflicting claims which might arise involving the financial
consultant or other parties. Should such claims arise, they are expected
to be the subject of protracted legal proceedings.
After completion of its initial investigation, the Company may pursue
claims against various parties to seek recovery of all or a portion of the
losses. The Company has attempted to obtain additional information from
the financial consultant with respect to its purported trading
transactions, but the consultant has not cooperated with these efforts.
The ability of the Company to obtain such information, particularly at
dates that are relevant to the Company's financial reporting requirements,
is not ascertainable. The recorded losses have not been reduced by any
possible recoveries from such sources.
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(In thousands except per share amounts)
Fiscal 1995
- -----------
Net Income (Loss)
----------------------------------------------------
Nine Fiscal
Months Year
Three Months Ended ended ended
---------------------------------- Nov. 26, Feb. 25,
5/28/94 8/27/94 11/26/94 2/25/95 1994 1995
------- ------- -------- -------- -------- --------
Previously reported $ 5,535 $ 8,656 $ 223 $10,445 $ 14,414 $24,859
As restated 3,991 4,504 (5,526) 19,091 2,969 22,060
Restatement amount (1,544) (4,152) (5,749) 8,646 (11,445) (2,799)
Primary Net Income (Loss) Per Common Share
----------------------------------------------------
Nine Fiscal
Months Year
Three Months Ended ended ended
----------------------------------- Nov. 26, Feb. 25,
5/28/94 8/27/94 11/26/94 2/25/95 1994 1995
------- ------- -------- -------- -------- --------
Previously reported $ 0.14 $ 0.22 $ 0.01 $0.26 $ 0.36 $ 0.63
As restated $ 0.10 $ 0.11 $(0.14) $0.48 $ 0.07 $ 0.56
Restatement amount $(0.04) $(0.11) $(0.15) $0.22 $(0.29) $(0.07)
Investment Gains (Losses)
----------------------------------------------------
Nine Fiscal
Months Year
Three Months Ended ended ended
---------------------------------- Nov. 26, Feb. 25,
5/28/94 8/27/94 11/26/94 2/25/95 1994 1995
------- ------- -------- -------- -------- --------
Previously reported $ -- $ -- $ -- $ 138 $ -- $ 138
As restated (1,544) (4,152) (5,749) 8,646 (11,445) (2,799)
Restatement amount (1,544) (4,152) (5,749) 8,508 (11,445) (2,937)
Fiscal 1996
- -----------
Net Income (Loss)
------------------------------------------
Six Nine
Months Months
Three Months Ended ended ended
------------------------- Aug. 26, Nov. 25,
5/27/95 8/26/95 11/25/95 1995 1995
-------- ------- -------- -------- --------
Previously reported $ 6,235 $ (76) $ -- $ 6,159 $ --
As restated (10,078) (678) 6,949 (10,756) (3,807)
Restatement amount (16,313) (602) -- (16,915) --
Primary Net Income (Loss) Per Common Share
------------------------------------------
Six Nine
Months Months
Three Months Ended ended ended
------------------------- Aug. 26, Nov. 25,
5/27/95 8/26/95 11/25/95 1995 1995
-------- ------- -------- -------- --------
Previously reported $ 0.16 $ 0.00 $ -- $ 0.16 $ --
As restated $(0.25) $(0.02) $0.18 $(0.27) $(0.10)
Restatement amount $(0.41) $(0.02) $ -- $(0.43) $ --
Investment Gains (Losses)
------------------------------------------
Six Nine
Months Months
Three Months Ended ended ended
------------------------- Aug. 26, Nov. 25,
5/27/95 8/26/95 11/25/95 1995 1995
-------- ------- -------- -------- --------
Previously reported $ 357 $ -- $ -- $ 357 $ 357
As restated (15,956) (602) 95 (16,558) (16,463)
Restatement amount (16,313) (602) 95 (16,915) (16,820)
CONSOLIDATED BALANCE SHEET DATA
(In thousands)
Cash Advanced to Investment Manager at End of Period
----------------------------------------------------
Three Months Ended
----------------------------------------------------
5/28/94 8/27/94 11/26/94 2/25/95 5/27/95 8/26/95
-------- ------- -------- -------- -------- --------
Investment as previously
reported $7,500 $7,500 $12,500 $ -- $19,500 $19,500
Investment as restated 5,956 1,804 1,055 838 745 143
Note 3 - New credit facility
In December 1995 the Company obtained a three-year $65 million
competitive advance and revolving credit facility. This agreement contains
certain restrictive covenants requiring, among other things, the
maintenance of certain financial ratios (including debt to net worth, debt
to net cash flow, and current ratio), minimum tangible net worth, the
limitation of maximum levels of capital expenditures, and a limitation on
certain investments. The terms of the competitive advance and revolving
credit facility limit the amount of additional borrowings under the
facility and additional borrowings under other short-term facilities to an
aggregate amount approximating $78 million over the amount outstanding at
December 30, 1995.
Note 4 - Provision for Sunbelt Nursery Group, Inc. defaults
During the second quarter of fiscal 1996, the Company recorded a pre-
tax charge of $14 million, which represents the estimated cost to disengage
from its financial support of Sunbelt Nursery Group, Inc. ("Sunbelt").
This charge resulted from Sunbelt's default on 13 nursery store subleases
from the Company in April 1995. Sunbelt has also defaulted on three
nursery store leases guaranteed by the Company. The charge reflects the
Company's estimated losses resulting from the lease termination costs
associated with the 13 nursery stores and from the Company's guarantees of
other Sunbelt store leases.
As of December 30, 1995, the Company has disengaged from the
commitment associated with 1 of these stores at a cost approximating the
estimated amount. The Company continues to believe the leases can be
terminated at the estimated cost and thus, no further charge is warranted
at this time.
Note 5 - Litigation
On December 27, 1995, a derivative suit, entitled Harry Lewis v. Clark
A. Johnson et al., was filed by a shareholder on behalf of the Company in
the Delaware Chancery Court against each member of the Company's Board of
Directors. The complaint alleges that the Directors violated their
fiduciary duties to the Company and its shareholders by not adequately
supervising the officers, employees and agents of the Company who were
responsible for the trading activities that resulted in the $19.3 million
in losses. The suit seeks an accounting to the Company for the damages it
sustained.
On January 3, 1996, a second derivative suit, entitled John P.
McCarthy Profit Sharing Plan, et al. v. Clark A. Johnson et al., was filed
by a shareholder on behalf of the Company in the District Court of Tarrant
County, Texas against each member of the Board of Directors, two executive
officers of the Company and an outside financial consultant of the Company.
The complaint alleges that the Directors and executives of the Company
violated their duties to the Company and its shareholders by gross
mismanagement and waste of the Company's assets exceeding $34 million and
that the defendants engaged in conspiracy and fraud by concealing and
misrepresenting facts to the Company and its shareholders. The suit seeks
an award in the amount of all damages sustained by the Company.
<PAGE>
<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 $190.2
million and $566.5 million for the third quarter and nine-month periods of
fiscal 1996, increases of 14.7% and 10.5%, respectively, compared to the
same periods of fiscal 1995. The increase in sales for the third quarter
and nine-month periods of fiscal 1996 is primarily attributable to a same-
store sales increase of 8.5% and 4.3%, respectively, over the same period
of fiscal 1995 and an 8.1% increase in weighted average store count (which
is calculated based on the number of days a store is open during any given
period) at the end of the third quarter of fiscal 1996 compared to the same
period of fiscal 1995. The average number of customers per store week
increased approximately 7% in the third quarter of fiscal 1996 over the
same period of fiscal 1995 primarily due to the Company's national
television advertising campaign launched during the second quarter of
fiscal 1996. The increases in same-store sales for fiscal 1996 resulted
from a continued improvement in hard goods merchandise sales which include
furniture and decorative accessories, offset partially by slight decreases
in soft goods merchandise sales such as apparel and jewelry. Hard goods
and soft goods sales contributed approximately 92% and 8%, respectively, of
total sales for the nine-month period of fiscal 1996. Sales on the
Company's proprietary credit card were $136.8 million, or 24.1% of total
sales, during the first nine months of fiscal 1996, an increase of $41.3
million, or 43.3%, over the same period of fiscal 1995. The Company's U.S.
and Canadian store count aggregated 665 at the end of the fiscal 1996 third
quarter compared to 624 at the end of the fiscal 1995 third quarter.
Gross profit, after related buying and store occupancy costs,
expressed as a percentage of sales, increased 1.4% to 41.3% for the third
quarter of fiscal 1996 and was even at 39.3% for the nine-month period of
fiscal 1996 versus the same periods in fiscal 1995. The increase in the
fiscal 1996 third quarter is primarily due to a 0.9% improvement in
merchandise margins as a result of a change in the merchandise sales mix
and a decrease in clearance and promotional markdowns partially due to the
new television advertising campaign's increasing customer traffic in the
stores. Store occupancy costs, as a percentage of sales, decreased 0.5%
to 15.0% for the third quarter of fiscal 1996 and increased 0.2% to 15.0%
for the nine-month period of fiscal 1996 compared to the same periods of
fiscal 1995. The third quarter improvement is primarily due to higher
sales leveraging fixed rental rates partially offset by slightly higher
occupancy rates on 50 new stores opened in the first nine months of fiscal
1996 and incremental increases in floating rate lease payments linked to
LIBOR for approximately 55 store operating leases.
Selling, general and administrative expenses, including marketing,
expressed as a percentage of sales, increased 0.3% to 31.2% in the third
quarter of fiscal 1996 and decreased 0.8% to 28.8% for the first nine
months of fiscal 1996 versus the same periods of fiscal 1995. In total
dollars, expenses increased by $8.1 million during the third quarter of
fiscal 1996 and by $11.3 million during the first nine months of fiscal
1996 versus the comparable periods of fiscal 1995. The increase in
expenses for the third quarter of fiscal 1996 is primarily attributable to
a $2.9 million increase in payroll, which decreased 1.1% as a percentage of
sales, and a $1.9 million increase in marketing expenditures as a result of
the timing of the national television advertising campaign expenses, which
shifted expenditures from earlier in the 1996 fiscal year to the second and
third quarters of fiscal 1996. Expenses related to international ventures
in the third quarter of fiscal 1996 increased approximately $2.3 million
compared to the same quarter of fiscal 1995. Other increases in selling,
general and administrative expenses of $1.0 million during the third
quarter of fiscal 1996 were a result of changes in the timing of store
physical inventories and increases in other expenses that normally increase
with sales. The increase in selling, general and administrative expenses
for the nine-month period of fiscal 1996 is primarily due to a $5.4 million
increase in payroll, which decreased 0.9% as a percentage of sales, and a
$2.8 million increase in operating expenses (including supplies and store
services) which normally increase proportionately with sales. In addition,
net proprietary credit card costs increased $0.7 million due to higher
processing costs related to the increase in proprietary credit card sales;
however, these processing costs, as a percentage of proprietary credit card
sales, decreased to 3.8% for the first nine months of fiscal 1996 compared
to 5.0% for the same period of fiscal 1995. All other selling, general and
administrative expenses increased $2.4 million, primarily as a result of
increased expenses related to international ventures.
Net interest expense increased $0.9 million during the third quarter
and declined $0.2 million during the first nine months of fiscal 1996
versus the same periods in fiscal 1995. The increase in the third quarter
of fiscal 1996 is primarily due to higher net debt levels.
In late December 1995, the Company was made aware of non-recurring
losses of approximately $19.3 million resulting from inappropriate and
substantial trading activities in a discretionary account by a financial
consultant retained to manage the Company's excess cash and short-term
investments. Prior period financial statements will be restated to reflect
the losses based upon the information available to the Company at this
time. Approximately $16.5 million of the loss falls in the current year,
principally in the first quarter, and $2.8 million will be reflected in
fiscal 1995. See Note 2 to the financial statements for additional
information regarding the losses.
In July 1995, the Company entered into a settlement agreement with
Sunbelt Nursery Group, Inc. ("Sunbelt") concerning Sunbelt's default in
April 1995 on 13 nursery store subleases and three nursery store leases
guaranteed by the Company. During the second quarter of fiscal 1996, the
Company recorded a special charge of $14 million which represents the
estimated cost to disengage from its financial support of Sunbelt. The
charge reflects the Company's estimated losses resulting from the lease
termination costs associated with the 13 nursery stores and from the
Company's guarantees of other Sunbelt store leases.
The Company's income tax provisions for the first three quarters of
fiscal 1995 and fiscal 1996 do not reflect any tax benefit associated with
the investment losses described above. The Company's effective income tax
rate for U.S. operations in fiscal 1996, excluding the effect of the tax
treatment of the aforementioned investment losses, is estimated to be 40%
compared to 31% for fiscal 1995. The increase is primarily due to the
benefit of tax-favored foreign income last fiscal year and the tax benefit
from the sale of Sunbelt common stock recognized in fiscal 1995.
Operating income increased $4.1 million to $15.0 million during the
third quarter of fiscal 1996 and increased $8.7 million to $46.8 million
for the first nine months of fiscal 1996 versus the comparable periods of
fiscal 1995 due to higher sales, improved margins and other cost
efficiencies. Net income aggregated $6.9 million or $0.18 per share
(primary) for the third quarter of fiscal 1996 compared to a net loss of
$5.5 million or $0.14 per share (primary) for the same period of fiscal
1995. Net losses aggregated $3.8 million or $0.10 per share (primary) for
the first nine months of fiscal 1996 compared to net income of $3.0 million
or $0.07 per share (primary) for the same period of fiscal 1995.
Liquidity and Capital Resources
Cash, including temporary investments, aggregated $13.5 million at the
end of the fiscal 1996 third quarter compared to $50.6 million at fiscal
1995 year-end. The Company's current ratio at the end of the fiscal 1996
third quarter was 3.0 to 1 compared to 4.1 to 1 at fiscal 1995 year-end and
3.6 to 1 at the end of the fiscal 1995 third quarter. Total debt as a
percentage of total capitalization was 44.9% at the end of the fiscal 1996
third quarter, compared to 41.4% at fiscal 1995 year-end and 43.6% at the
end of the fiscal 1995 third quarter. The decrease in cash, including
temporary investments, and the change in ratios resulted primarily from
inventory additions in preparation for the upcoming Christmas selling
season coupled with the non-recurring cash investment losses recognized
during the preceding quarters of fiscal 1996 as discussed in Note 2. At
December 30, 1995, cash, including temporary investments, aggregated
approximately $42 million and is invested in A1P1 or AAA-rated instruments.
Net cash used in operating activities for the nine-month period of
fiscal 1996 was $10.1 million as compared to cash provided by operations of
$24.2 million in the same period the prior year. The $34.3 million
increase in cash used between periods was primarily a result of the timing
of inventory purchases. The Company ended fiscal 1994 with a relatively
high inventory of $219.6 million. By the end of November 1994, in spite of
seasonal purchases, the inventory had declined, generating cash of $7.5
million. From February of 1995 to November of 1995, inventories increased
from $201.0 million to $234.9 million as a result of seasonal purchases,
using cash of $33.9 million. The inventory build-up was in preparation for
expected Christmas sales; the strong Christmas selling season reduced
inventories by approximately $21 million during December 1995.
Net cash used in investing activities aggregated $39.8 million during
the nine-month period of fiscal 1996 compared to $25.9 million in the
corresponding period the prior year. Capital expenditures aggregated $16.4
million, an increase of $2.4 million over the corresponding prior year
period, partially as a result of increased store remodels. Advances to The
Pier Retail Group Limited were $7.8 million, an increase of $6.2 million
over the corresponding prior fiscal period, due to store expansion in
England and higher working capital requirements. The cash portion of the
investment losses as discussed above totalled $15.9 million.
Net cash provided by financing activities amounted to $12.8 million
during the nine-month period of fiscal 1996 compared to $8.1 million in the
corresponding period the prior year as net short-term borrowings increased
by $18.1 million and long-term debt retirements increased by $12.3 million.
At the end of the fiscal 1996 third quarter, $31.1 million was
outstanding in the form of short-term borrowings under lines of credit, and
an additional $59.5 million was committed under letters of credit. In
December 1995, the Company repaid these borrowings, allowed the related
short-term bank facilities to expire and replaced them in part with the $65
million competitive advance and revolving credit facility. As a result of
recognizing the $16.5 million non-recurring investment losses during fiscal
1996, the Company requested and received agreement of its lenders to
exclude the losses from calculation of certain restrictive covenants during
the current year to date. Management believes that the Company is in
compliance with the provisions of all loan agreements and lease guarantees.
Working capital requirements are provided by a newly obtained
(December 1995) three-year $65 million competitive advance and revolving
credit facility as well as other short-term (12-month) bank facilities
aggregating $120 million. These agreements contain various restrictive
covenants requiring, among other things, the maintenance of certain
financial ratios (including debt to net worth, debt to net cash flow, and
current ratio), minimum tangible net worth, the limitation of maximum
levels of capital expenditures, and a limitation on certain investments.
In December 1995, the Company purchased the 90% ownership interest in a
limited partnership previously held by unrelated third parties and in which
the Company held a 10% ownership interest. The partnership leases 33 Pier
1 stores to the Company. The aggregate purchase price paid by the Company
for the 90% ownership interest was approximately $40 million and was funded
through the competitive advance and revolving credit facility. The $40
million advanced under that credit facility is classified as long-term debt
due to its three-year term. The terms of the competitive advance and
revolving credit facility currently limit the amount of additional
borrowings under the facility and additional borrowings under the other
short-term facilities to an aggregate amount which at December 30, 1995,
approximates $78 million. In the opinion of management, the short-term
bank facilities will be timely renewed under substantially the same amount,
terms and conditions presently existing.
It is expected that these facilities and the Company's current cash
position will be sufficient to provide adequate liquidity to fund the
Company's expected operating needs, planned capital expenditures and
scheduled debt requirements for the remainder of fiscal 1996 and fiscal
1997.
In addition to its bank facilities, the Company had approximately $73
million at November 25, 1995 in unencumbered credit card receivables.
The Company's minimum operating lease commitments remaining for fiscal
1996 are $25 million, and the present value of total existing minimum
operating lease commitments is $364 million. The remaining portion of the
Company's new store development plan for fiscal 1996, which provided for
the opening of 50 new stores during the first nine months of fiscal 1996,
will be principally funded through operating leases. Final cash
requirements to fund the store-closing program instituted in fiscal 1994
are expected to be lease termination costs of approximately $5.9 million
for the remainder of fiscal 1996 and will be funded through working capital
and operations. During the first nine months of fiscal 1996, approximately
$5.9 million was expended and charged against the store closing reserve for
lease termination costs.
Cash requirements to fund the Company's previously established reserve
relating to the defaults by Sunbelt on subleases of stores leased by the
Company are being funded through working capital and operations and will
not have a significant impact on the Company's liquidity. As of the end of
the 1996 fiscal third quarter, approximately $0.2 million had been expended
and charged against the reserve.
The Company previously announced that, depending upon market
conditions, it may utilize a portion of its surplus cash to purchase up to
$25 million of the Company's 6 7/8% convertible notes in order to reduce
debt service costs and future earnings per share dilution. During the nine
months of fiscal 1996, the Company purchased $12.3 million of these notes,
leaving $62.8 million of the Company's convertible notes outstanding at the
end of the 1996 third fiscal quarter. In addition, in October 1995, the
Company announced that its Board of Directors authorized the purchase of up
to three million shares of the Company's common stock in open market or
private transactions from time to time depending on prevailing market
conditions and restrictive loan covenants permitting. An insignificant
number of shares has been repurchased.
During the nine months of fiscal 1996, the Company paid cash dividends
aggregating $.09 per share, distributed a 5% stock dividend and declared a
cash dividend of $.04 per share payable on February 26, 1996 to
shareholders of record on February 12, 1996. The Company currently expects
to continue paying modest cash dividends in the next fiscal year and
intends to retain most of its future earnings for expansion of the
Company's business.<PAGE>
<PAGE>
PART II
-------
Item 1. Legal Proceedings.
------------------
In December 1995, the Company announced non-recurring losses of
approximately $19.3 million resulting from inappropriate trading activities
in a discretionary account by a financial consultant retained to manage the
Company's excess cash and short-term investments. Upon being informed of
the losses, the Company's Board of Directors appointed a Special Committee
of the Company's outside Directors, which retained legal counsel and
independent accountants, to investigate the matter and report its findings
to the Board. The Company and the Special Committee of the Board of
Directors are actively investigating the circumstances of the losses and
the Company intends to pursue claims against various potential sources to
seek recovery of all or a portion of the losses.
On December 27, 1995, a derivative suit, entitled Harry Lewis v. Clark
A. Johnson et al., was filed by a shareholder on behalf of the Company in
the Delaware Chancery Court against each member of the Company's Board of
Directors. The complaint alleges that the Directors violated their
fiduciary duties to the Company and its shareholders by not adequately
supervising the officers, employees and agents of the Company who were
responsible for the trading activities that resulted in the $19.3 million
in losses. The suit seeks an accounting to the Company for the damages it
sustained.
On January 3, 1996, a second derivative suit, entitled John P.
McCarthy Profit Sharing Plan, et al. v. Clark A. Johnson et al., was filed
by a shareholder on behalf of the Company in the District Court of Tarrant
County, Texas against each member of the Board of Directors, two executive
officers of the Company and an outside financial consultant of the Company.
The complaint alleges that the Directors and executives of the Company
violated their duties to the Company and its shareholders by gross
mismanagement and waste of the Company's assets exceeding $34 million and
that the defendants engaged in conspiracy and fraud by concealing and
misrepresenting facts to the Company and its shareholders. The suit seeks
an award in the amount of all damages sustained by the Company.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits See Exhibit Index.
(b) Reports on Form 8-K None.<PAGE>
<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: January 16, 1996 By: /s/ Clark A. Johnson
---------------- ----------------------------------------
Clark A. Johnson, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
Date: January 16, 1996 /s/ Susan E. Barley
---------------- ----------------------------------------
Susan E. Barley, Vice President and
Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
10.1 Revolving Credit Agreement, dated December 15, 1995, among the
Company, certain of its subsidiaries, First Interstate Bank of
Texas, N.A., Bank One, Texas, N.A., NationsBank of Texas,
N.A., and Credit Lyonnais New York Branch.
10.12.1 Fourth Amendment to Lease Guarantee dated as of November 1,
1995 between the Company, Pier 1 Licensing, Inc., Pier 1
Assets, Inc., and Pier Set, Inc.
27 Financial Data Schedule for Nine-month Period Ended November
25, 1995
<PAGE>
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (the "Loan Agreement") is
entered into effective as of December 15, 1995 by and among PIER 1 IMPORTS,
INC., a Delaware corporation ("Borrower"), PIER 1 IMPORTS (U.S.), INC., PIER
1 ASSETS, INC., PIER 1 LICENSING, INC. and PIER LEASE, INC. (collectively,
the "Guarantors"), FIRST INTERSTATE BANK OF TEXAS, N.A., NATIONSBANK OF
TEXAS, N.A., BANK ONE, TEXAS, N. A., and CREDIT LYONNAIS NEW YORK BRANCH
(collectively the "Banks" and individually a "Bank") and FIRST INTERSTATE
BANK OF TEXAS, N.A., as agent for the Banks ("Agent").
W I T N E S S E T H:
WHEREAS, Borrower has requested Banks to provide it with a
revolving credit facility for working capital and for general corporate
purpose and to provide it with a letter of credit and banker's acceptance
facility to import and finance inventory; and
WHEREAS, Banks are willing to provide such facilities to
Borrower, upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other valuable consideration, the parties hereto do hereby
agree as follows:
ARTICLE I
DEFINITION OF TERMS
For the purposes of this Loan Agreement, unless the context
requires otherwise, the following terms shall have the respective meanings
assigned to them in this Article I below:
"Acceptance Agreement" shall mean an acceptance credit
agreement executed by Borrower and Agent substantially in the form of
Exhibit "L," either as originally executed or as it may from time to time be
supplemented, modified, amended, renewed or extended.
"Acceptance Date": Section 2.06(b).
"Acceptance Documents" shall mean the Acceptance Agreement,
together with such other documents as the Agent reasonably may require in
connection with the Bankers' Acceptance financing contemplated therein, each
such document to be executed by all Persons whose signatures are required
thereon, either as originally executed or as they may from time to time be
supplemented, modified, amended, renewed or extended.
"Acceptance Liability" shall mean, as of any date, the
aggregate face amount of all outstanding Bankers' Acceptances not yet
matured.
"Adjusted Base Rate" means, for any date, a rate per annum
(rounded upwards, if not already a whole multiple of 1/16 of 1%, to the next
higher 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect for such day
plus 1/2 of 1%. For purposes hereof, the term "Prime Rate" means, as of a
particular date, the rate of interest per annum quoted by Agent from time to
time as its prime commercial rate of interest, it being agreed that the
Prime Rate may not necessarily represent the lowest or best rate actually
charged to a customer. "Federal Funds Effective Rate" means, for any period,
a fluctuating interest rate per annum equal for each day during such period
to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for the day of such
transactions received by the Bank from three federal funds brokers of
recognized standing selected by it. Any change in the Adjusted Base Rate
due to a change in the Federal Funds Effective Rate shall be effective on
the effective date of such change in the Federal Funds Effective Rate. If
for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including, without limitation, the
inability or failure of the Agent to obtain sufficient bids or publications
in accordance with the terms hereof, the Adjusted Base Rate shall be the
Prime Rate until the circumstances giving rise to such inability no longer
exist.
"Adjusted CD Rate" shall, with respect to each Interest Period,
mean the quotient of (a) the CD Quoted Rate with respect to such Interest
Period divided by (b) the remainder of 1.00 minus sum of the CD Reserve
Requirement and the Assessment Rate in effect on such day.
"Adjusted Interbank Rate" shall, with respect to each Interest
Period, mean on any day thereof the quotient of (a) the Interbank Offered
Rate with respect to such Interest Period, divided by (b) the remainder of
1.00 minus the Eurodollar Reserve Requirement in effect on such day.
"Advance" shall have the meaning assigned to that term in
Section 2.01.
"Affiliate" of any designated Person means any Person that has
a relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common
control with the other, or holds or beneficially owns five percent (5%) or
more of any class of voting securities of the other. For this purpose,
"control" means the power, direct or indirect, of one Person to direct or
cause direction of the management and policies of another, whether by
contract, through voting securities or otherwise. Notwithstanding the
foregoing, no Person shall be deemed to be an Affiliate of another solely by
reason of such Person's being a participant in a joint operating group or
joint undivided ownership group.
"Aggregate Outstanding Loans" means, on any date of
determination thereof and without duplication, the sum of (a) the aggregate
principal amount of all Committed Loans hereunder plus (b) the Bid Rate Loan
Outstanding Balance.
"Applicable Fee" shall mean the per annum rate (calculated on
the basis of a 360 day year) set forth below for the fee or commission
indicated, determined by reference to the Funded Debt EBITDA Ratio for the
latest period for which the Funded Debt EBITDA Ratio is required to be
reported determined as of two (2) days after the later of the due date of or
the delivery to Agent of the Officer's Certificate required by Section 7.01:
Standby
Letter of Credit
Funded Debt Fee and
Banker's
EBITDA Ratio Facility Fee Letter of Credit Fee
Acceptance Commission
<= 3.5 .375% 1.00% 1.25%
<= 3.0 .25% .75% 1.00%
<= 2.5 .25% .625%
.875%
<= 2.0 .25% .50% .625%
"Applicable Margin" shall mean the per annum rate (calculated
on the basis of a 360 day year) set forth below for the interest rate
indicated, determined by reference to the Funded Debt EBITDA Ratio for the
latest period for which the Funded Debt EBITDA Ratio is required to be
reported determined as of two (2) days after the later of the due date of or
the delivery to Agent of the Officer's Certificate required by Section 7.01:
Funded Floating Base Eurodollar
Debt EBITDA Ratio Advances CD Advances
Advances
<= 3.5 .125%
1.50% 1.25%
<= 3.0 0% 1.25%
1.00%
<= 2.5 0% 1.175%
.875%
<= 2.0 0% 1.00%
.625%
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance
Fund classified as well capitalized and within supervisory subgroup "B" (or
a comparable successor assessment risk classification) within the meaning of
12 C.F.R. Sec. 327.3(d) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted automatically on and
as of the effective date of any change in the Assessment Rate.
"Assignment and Acceptance" shall have the meaning assigned to
that term in Section 12.10(a)(i).
"Bank Obligation" shall mean the obligations of Borrower and
Pier 1 Imports (U.S.), Inc. to the Agent and Banks, or any of them, however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, joint or several, or now or hereafter existing or due to become
due under or in connection with this Loan Agreement, the Notes or any other
Loan Documents.
"Banks" shall have the meaning assigned to that term in the
Preamble.
"Bankers' Acceptance" shall mean a draft drawn by Borrower or
Pier 1 Imports (U.S.), Inc. on, and accepted and discounted by, Agent or a
Bank pursuant to Section 2.06 and Section 2.07 of this Loan Agreement in the
standard form for bankers' acceptances of Agent or a Bank.
"Bankers Acceptance Bid" means any one or more offers by a Bank
to create a Banker's Acceptance of Borrower or Pier 1 Imports (U.S.), Inc.
"Bankers Acceptance Bid Request" means a request by Borrower
for Bankers' Acceptance Bids.
"Bankers' Acceptance Submission Deadline" shall have the
meaning assigned to that term in Section 2.07(b).
"Bid" means one or more offers by a Bank to make one or more
Bid Rate Loans, submitted to the Borrower no later than the relevant
Submission Deadline on a duly completed and executed form substantially
similar to Exhibit F-2, personally delivered or transmitted by telecopy to
the Borrower.
"Bid Notes" and "Bid Note" respectively mean (a) the promissory
notes of the Borrower, substantially in the form of Exhibit A-1, duly
completed, evidencing Bid Rate Loans to the Borrower by a Bank, and (b) a
single such promissory note.
"Bid Rate" means, relative to any Bid Rate Loan of any Bank,
the fixed rate of interest (expressed to the nearest 1/10,000 of 1%), in
each case offered by such Bank in its Bid offering to make such Bid Rate
Loan and accepted by Borrower.
"Bid Rate Bankers' Acceptance" shall mean a Bankers' Acceptance
accepted by a Bank pursuant to Section 2.07.
"Bid Rate Loan Acknowledgment" means an acknowledgment, duly
executed by a Responsible Officer of the Borrower's acceptance of a Bid
substantially in the form of Exhibit F-3.
"Bid Loan Outstanding Balance" means, at any time, the then
aggregate outstanding principal amount of all Bid Rate Loans.
"Bid Rate Loan" shall have the meaning assigned to that term in
Section 2.01(a).
"Bid Request" shall mean a request by Borrower for Bids in the
form of Exhibit F-1, submitted to the Banks by telecopy no later than the
time provided in Section 2.3(b).
"Borrowing" shall have the meaning assigned to that term in
Section 2.01(a).
"Borrowing Date" means the date on which a Borrowing is, or is
to be, consummated, as the context requires.
"Business Day" shall mean a day upon which business is
transacted by national banks in Fort Worth, Texas and New York, New York.
"CD Advance" shall mean any principal amount of a Note with
respect to which the interest rate is calculated by reference to the
Adjusted CD Rate for a particular Interest Period.
"CD Borrowing" shall mean CD Advances made by Banks hereunder
on any given day.
"CD Quoted Rate" shall mean, with respect to any Interest
Period, the rate of interest per annum determined by Agent (in accordance
with its customary practices) to be its market certificate of deposit rate
within one (1) Business Day prior to the first day of such Interest Period,
for the purchase at face value of a certificate of deposit from Agent in an
amount equal or comparable to the unpaid balance of the pertinent CD Advance
of such first day, and for a period of time equal or comparable to the
length of such Interest Period.
"CD Reserve Requirement" shall, on any day, mean that
percentage (expressed as a decimal fraction) which is in effect on such day,
as provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) for determining the maximum reserve
requirements (including without limitation, basic, supplemental, marginal
and emergency reserves) under Regulation D with respect to applicable time
deposits. Each determination by Agent of the CD Reserve Requirement shall,
in the absence of manifest error, be conclusive and binding.
"Capital Lease" shall mean, as of any date, any lease of
property, real or personal, which would be capitalized on a balance sheet of
the lessee prepared as of such date, in accordance with GAAP.
"Capital Lease Obligation" shall mean any rental obligation
which, under GAAP, is or will be required to be capitalized on the books of
the Borrower or any Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.
"Cash Equivalents" shall mean any investments permitted under
(i), (ii), (iii) or (iv) of the definition of Restricted Investments and
cash.
"Cash Flow Available for Fixed Charges" shall mean the sum of
Consolidated Net Income plus depreciation and amortization plus interest
expense plus taxes plus operating lease expense calculated on a rolling four
(4) quarter basis, as determined in accordance with GAAP, less Maintenance
Capital Expenditures for the Borrower on a Consolidated basis.
"Commercial Letter of Credit" shall mean any commercial letter
of credit issued by the Agent for the account of Borrower pursuant to
Section 2.05 hereof and the Letter of Credit Agreement, either as originally
issued or as the same may from time to time be supplemented, modified,
amended, renewed, or extended.
"Commercial Letter of Credit Liability" shall mean the
aggregate undrawn face amount of all outstanding Commercial Letters of
Credit.
"Committed Loans" shall have the meaning assigned to that term
in Section 2.01(a).
"Committed Note" and "Committed Notes" shall have the meaning
assigned to those terms in Section 2.01(a).
"Consequential Loss" shall, with respect to Borrower's payment
of all or any portion of the then-outstanding principal amount of the
Eurodollar Advance or CD Advance of any Bank on a day other than the last
day of the Interest Period related thereto, mean any loss, cost or expense
actually incurred by such Bank as a result of the timing of such payment or
in redepositing such principal amount, including the sum of (i) the interest
which, but for such payment, such Bank would have earned in respect of such
principal amount so paid, for the remainder of the Interest Period
applicable to such sum, reduced, if such Bank is able to redeposit such
principal amount so paid for the balance of such Interest Period, by the
interest earned by such Bank as a result of so redepositing such principal
amount plus (ii) any expense or penalty incurred by such Bank on
redepositing such principal amount.
"Consolidated" shall mean the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries.
References herein to a Person's Consolidated financial statements, financial
position, financial condition, liabilities, etc., refer to the consolidated
financial statements, financial position, financial condition, liabilities,
etc. of such Person and its properly consolidated subsidiaries.
"Consolidated Current Assets" shall mean the current assets of
the Borrower and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.
"Consolidated Current Liabilities" shall mean the current
liabilities of the Borrower and its Subsidiaries as determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Funded Debt" shall mean Funded Debt of the
Borrower and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.
"Consolidated Net Income" shall mean (i) for purposes of
calculating Cash Flow Available for Fixed Charges, Consolidated gross
revenues of the Borrower less all operating and non-operating expenses of
the Borrower, including all write-downs of assets (other than any non-
recurring, non-cash writedown of assets) and other charges of a proper
character (including, without limitation, current and deferred taxes on
income, provision for taxes on unremitted foreign earnings which are
included in gross revenues, and current additions to reserves), but not
including in gross revenues any gains (net of expenses and taxes applicable
thereto) in excess of losses resulting from the sale, conversion or other
disposition of capital assets (i.e., assets other than current assets), any
gains or losses arising from the acquisition of outstanding debt securities
of the Borrower or any Subsidiary, any gains resulting from the write-up of
assets, any equity of the Borrower or any Subsidiary in the undistributed
earnings of any Person which is not a Subsidiary, or any portion of the net
income of any Subsidiary which for any reason is unavailable for payment of
dividends to the Borrower or to another Subsidiary, or any earnings of any
Person acquired by the Borrower or any Subsidiary through purchase, merger,
consolidation or otherwise for any year prior to the year of acquisition,
merger or consolidation, or any deferred credits representing the excess of
any equity in any Subsidiary at the date of acquisition over the cost of
investment in such Subsidiary, all determined in accordance with GAAP, and
(ii) for all other purposes, net income of the Borrower and its Subsidiaries
as determined on a Consolidated basis in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean all of the assets
of the Borrower and its Subsidiaries less Intangible Assets, Consolidated
Current Liabilities, long term liabilities (other than Funded Debt and
Capitalized Lease Obligations) and all deferrals of the Borrower and its
Subsidiaries as determined on a Consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean the sum of Consolidated
capital, surplus and retained earnings of Borrower determined in accordance
with GAAP.
"Consolidated Tangible Assets" shall mean all assets of the
Borrower and its Subsidiaries less Intangible Assets as determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean the sum of the
Consolidated capital, surplus and retained earnings of the Borrower less
Intangible Assets of the Borrower, determined in accordance with GAAP.
"Controlled Group" shall mean (i) the controlled group of
corporations as defined in Section 1563 of the United States Internal
Revenue Code of 1986, as amended, or (ii) the group of trades or business
under common control as defined in Section 414(c) of the United States
Internal Revenue Code of 1986, as amended, of which Borrower is part or may
become a part.
"Conversion Date" shall have the meaning assigned to the term
in Section 2.02(c).
"Debt" shall mean with respect to any Person, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all obligations under leases which shall
have been or should be, in accordance with GAAP, recorded as Capitalized
Lease Obligations in respect of which such Person is liable as lessee, and
(iii) any other indebtedness required to be recorded on the Consolidated
financial statements of such Person in accordance with GAAP. Any changes in
GAAP requiring operating leases to be included as indebtedness in the
Consolidated financial statements of the Borrower will be effective, for
purposes of determining Debt hereunder, only for leases entered into or
renewed after the date of the required implementation of such changes in
GAAP.
"Default" shall mean any of the events specified in Section
9.01, whether or not any requirements described in such Section 9.01 in
connection with such event for the giving of notice, or the lapse of time,
or the happening of any further condition, event or act has been satisfied.
"Default Rate" shall mean the lesser of (a) the Prime Rate in
effect from day-to-day, plus five percent (5.0%), or (b) the Maximum Rate.
"Dollars" and the sign "$" shall mean lawful currency of the
United States of America.
"EBITDA" shall mean Net Income plus provision for income taxes
as defined by GAAP plus interest expenses, depreciation, amortization and
non-cash charges. If any changes in GAAP require operating leases to be
included as indebtedness in the Consolidated financial statements of the
Borrower, such operating lease expense otherwise required to be included as
interest expense shall nevertheless be treated as lease expense for purposes
of this computation.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, together with all regulations issued pursuant thereto.
"Eligible Assignee" shall have the meaning assigned to that
term in Section 12.10(a)(i).
"Environmental Claim" shall mean any written notice by any
Person alleging potential liability or responsibility for (a) any removal or
remedial action, including, without limitation, any clean-up, removal or
treatment of any Hazardous Material or any action to prevent or minimize the
release or movement of any Hazardous Materials through or in the air, soil,
surface water, ground water or other property, (b) damage to the
environment, or costs with respect thereto, or (c) personal injury
(including sickness, disease or death), resulting from or based upon (i) the
presence, release or movement (including sudden or nonsudden, accidental or
nonaccidental, leaks or spills) of any Hazardous Material at, in or from the
environment or any property, whether or not owned by the Borrower or its
Subsidiaries, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law or any permit issued to Borrower
or any of its Subsidiaries pursuant to any Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Sec. 9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. Sec. 1801 et
seq.), the Recourse Conservation and Recovery Act of 1976, as amended by the
Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. Sec. 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Sec. 1251 et seq.), the
Clean Air Act as amended by the Clean Air Act Amendments of 1990 (42 U.S.C.
Sec. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Sec. 2601 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. Sec. 651 et
seq.), as such laws have been or hereafter may be amended or supplemented,
and any and all analogous future federal, or present and future state or
local laws, and similar laws of jurisdictions other than the United States,
to which Borrower or any of its Subsidiaries or any of its or their
properties are subject.
"Eurodollar Advance" shall mean any principal amount under a
Note with respect to which the interest rate is calculated by reference to
the Adjusted Interbank Rate for a particular Interest Period.
"Eurodollar Borrowing" shall mean Eurodollar Advances made by
Banks hereunder on any given day.
"Eurodollar Business Day" shall mean a Business Day on which
dealings in Dollars are carried out in the London Interbank market.
"Eurodollar Reserve Requirement" shall, on any day, mean that
percentage (expressed as a decimal fraction) which is in effect on such day,
as provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the maximum reserve
requirements (including without limitation, basic, supplemental, marginal
and emergency reserves) under Regulation D with respect to "Eurocurrency
liabilities" as currently defined in Regulation D, or under any similar or
successor regulation with respect to Eurocurrency liabilities or
Eurocurrency funding. Each determination by Bank of the Eurodollar Reserve
Requirement shall, in the absence of manifest error, be conclusive and
binding.
"Event of Default" shall have the meaning assigned to it in
Article IX hereof.
"Excess Interest Amount" shall have the meaning assigned to
that term in Section 3.06.
"FDIC" shall mean the Federal Deposit Insurance Corporation (or
any successor thereby).
"Fixed Charges" shall mean the sum of interest expense and
payments under operating leases, as determined in accordance with GAAP, for
the Borrower and its Subsidiaries on a Consolidated basis.
"Floating Base Advance" shall mean any principal amount under a
Committed Note with respect to which the interest rate is calculated by
reference to the Adjusted Base Rate.
"Floating Base Borrowing" shall mean Floating Base Advances
made by Banks hereunder on any given day.
"Funded Debt" shall mean, at any time, the aggregate amount of
all interest bearing indebtedness for borrowed money, all obligations under
standby letters of credit (except for those standby letters of credit issued
in connection with City of Mansfield Industrial Development Corporation
Adjustable Convertible Extendable Securities - ACESsm (Pier 1 Imports-Texas,
Inc. Project), Series 1986, the City of St. Charles, Illinois Industrial
Development Revenue Bond Adjustable Convertible Extendable Securities -
ACESsm (Pier 1 Imports-Midwest, Inc. Project), Series 1986, and the Savannah
Port Authority Adjustable Convertible Extendable Securities - ACESsm (Pier 1
Imports-Southwest, Inc. Project), Series 1986.) and bankers acceptances and
all obligations under Capital Leases of Borrower and its Subsidiaries. Any
changes in GAAP requiring operating leases to be included as indebtedness in
the Consolidated financial statements of the Borrower will be effective, for
purposes of determining Funded Debt hereunder, only for leases entered into
or renewed after the date of the required implementation of such change in
GAAP; provided however, such indebtedness excluded from the definition of
Funded Debt under the preceding provision shall be excluded from Funded Debt
only to the extent of $75,000,000 of such indebtedness in the aggregate.
"Funded Debt EBITDA Ratio" shall mean, on any date, the ratio
of Funded Debt to EBITDA.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis, as set forth in the Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or in such other statements by such other entity as the Majority Banks
may approve, which are applicable as of the date in question. The requisite
that such principles be applied on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period. Unless otherwise
indicated herein, all accounting terms shall be defined according to GAAP.
"Governmental Authority" shall mean any municipal, state,
commonwealth, federal, foreign, territorial or other court, governmental
body, subdivision, agency, department, commission, board or bureau or
instrumentality.
"Guarantors" shall mean Pier 1 Imports (U.S.), Inc., a Delaware
corporation, Pier 1 Assets, Inc., a Delaware corporation, Pier 1 Licensing,
Inc., a Delaware corporation, and Pier Lease, Inc., a Delaware corporation.
"Guaranty" of any Person shall mean any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Guaranteed Debt of any other Person.
"Guaranty Agreement" shall mean the guaranty agreement executed
by the Guarantors, in the form of Exhibit B hereto, as the same may be
amended or supplemented from time to time.
"Guaranteed Debt" shall mean, with respect to any Person,
without duplication, all Debt of another Person referred to in clause (i),
(ii) or (iii) of the definition of "Debt" guaranteed directly or indirectly
in any manner by such Person or in effect guaranteed directly or indirectly
in any manner by such Person.
"Guarantor" shall mean any of the Guarantors.
"Hazardous Materials" shall mean those substances which are
regulated by or form the basis of liability under any Environmental Laws.
"Intangible Assets" shall mean goodwill, patents, trade names,
trademarks, copyrights, franchises, experimental expense, organizational
expense, unamortized debt discount and expense, the excess of cost of shares
acquired over book value of related assets and such other assets as are
properly classified as "intangible assets" in accordance with GAAP, but in
no event shall Intangible Assets include (i) current prepaid expenses of the
Borrower or its Subsidiaries or (ii) receivables of any kind of the Borrower
or its Subsidiaries.
"Interbank Offered Rate" shall mean, with respect to each
Interest Period, that rate of interest determined by Agent on the basis of
the offered rates for deposits in Dollars commencing on the first date of
such Interest Period which appear on the Reuters Screen LIBO Page as of
11:00 a.m., London time, on the day that is two (2) Eurodollar Business Days
preceding the first day of such Interest Period, such deposits being for a
period of time equal to or comparable to such Interest Period and in an
amount equal to or comparable to the principal amount of the Eurodollar
Advance to which such Interest Period relates. If at least two (2) such
offered rates appear on the Reuters Screen LIBO Page, the rate in respect to
the applicable Interest Period will be the arithmetic mean of such offered
rates. If fewer than two (2) offered rates appear, the Interbank Offered
Rate in respect of such Interest Period will be the rate determined by
Agent, on the date two (2) Eurodollar Business Days prior to the first day
of such Interest Period, for the offering (at approximately 11:00 a.m.
London time) to first class banks in the London Eurodollar Interbank market
of Dollars for deposit in immediately available funds for a period equal to
such Interest Period and in amounts similar to the principal amount of such
Eurodollar Advance. Agent shall notify Borrower of its determination of the
Interbank Offered Rate as soon as practicable following such determination.
Each determination of the Interbank Offered Rate by Agent shall, in the
absence of manifest error, be conclusive and binding.
"Interest Period" or "Loan Period" shall mean, with respect to
a Eurodollar Advance, CD Advance or a Bid Rate Loan, a period commencing:
(i) on the borrowing date of such Eurodollar
Advance , CD Advance or Bid Rate Loan made
pursuant to Section 2.02 or Section 2.03 of
this Loan Agreement; or
(ii) on the Conversion Date pertaining to such
Eurodollar Advance or CD Advance, if such
Eurodollar Advance or CD Advance is made
pursuant to a conversion as described in
Section 2.02(c) hereof; or
(iii) on the date of borrowing specified in the
Request for Advance in the case of a rollover
to a successive Interest Period,
and ending thirty (30), sixty (60) or ninety (90) days thereafter in the
case of a CD Advance or ending one (1), two (2) or three (3) months
thereafter in the case of a Eurodollar Advance, as Borrower shall elect in
accordance with Section 2.02(c) of this Loan Agreement or not less than
seven (7) days nor more than thirty (30) days thereafter (which final day
must be a Business Day) in the case of a Bid Rate Loan; provided, that:
(a) any Interest
Period which
would
otherwise end
on a day
which is not
a Business
Day (or in
the case of a
Eurodollar
Advance, a
Eurodollar
Business Day)
shall be
extended to
the next
succeeding
Business Day
or Eurodollar
Business Day
(as the case
may be)
unless, in
the case of a
Eurodollar
Advance, such
Eurodollar
Business Day
falls in
another
calendar
month in
which case
such Interest
Period shall
end on the
next
preceding
Eurodollar
Business Day;
(b) in the case
of a
Eurodollar
Advance, any
Interest
Period which
begins on the
last
Eurodollar
Business Day
of a calendar
month (or on
a day for
which there
is no
numerically
corresponding
day in the
calendar
month or at
the end of
such Interest
Period)
shall,
subject to
clause (A)
above, end on
the last
Eurodollar
Business Day
of a calendar
month; and
(c) if the
Interest
Period for
any
Eurodollar
Advance, CD
Advance or
Bid Rate Loan
would
otherwise end
after the
Termination
Date, such
Interest
Period shall
end on the
Termination
Date.
"Investment" shall mean any direct or indirect purchase or
other acquisition of, or a beneficial interest in, capital stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Debt or accounts receivable of
any other Person which are not current assets or do not arise from sales to
that other Person in the ordinary course of business.
"Law" shall mean all statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any Governmental
Authority.
"Letter of Credit" shall mean any Commercial Letter of Credit
and/or Standby Letter of Credit issued under the terms of this Loan
Agreement for the account of Borrower or for the account of Borrower for the
benefit of Pier 1 Imports (U.S.), Inc.
"Letter of Credit Agreement" shall mean a master letter of
credit agreement executed by Borrower and Agent, in the form of Exhibit "M,"
either as originally executed or as it may from time to time be
supplemented, modified, amended, renewed or extended.
"Letter of Credit Liability" shall mean the aggregate undrawn
face amount of all outstanding Letters of Credit, and shall include, without
limitation, all Commercial Letter of Credit Liability and all Standby Letter
of Credit Liability.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including without limitation, any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of public
notice under the Laws of any jurisdiction.
"Liquid Assets" shall mean cash, marketable securities,
commercial paper, bonds and obligations issued or guaranteed by the United
States of America or any agency or political subdivision thereof.
"Loans" shall mean the Revolving Credit Loans and the Bid Rate
Loans.
"Loan Documents" shall mean this Loan Agreement, the Notes
(including any renewals, extensions and refundings thereof), the Guaranty,
the Acceptance Agreement, the Letter of Credit Agreement and any agreements
or documents (and with respect to this Loan Agreement, and such other
agreements and documents, any amendments or supplements thereto or
modifications thereof) executed or delivered pursuant to the terms of this
Loan Agreement.
"Maintenance Capital Expenditures" shall mean, for any fiscal
quarter, an amount equal to the greater of (i) the product of $4,500.00
times the average number of retail stores of the Borrower on a Consolidated
basis open during the four immediately preceding fiscal quarters and (ii)
actual capital expenditures incurred by the Borrower on a Consolidated basis
during such fiscal quarter for the maintenance and improvement of its retail
stores (other than capital expenditures incurred in connection with new
store openings).
"Majority Banks" at the time any determination thereof is to be
made and for any specific purpose while no Event of Default is continuing
means Banks having Percentages aggregating at least 66-2/3% of the
Percentages of all Banks and while any Event of Default is continuing Banks
having at least 66-2/3% of all amounts of principal (whether or not mature
and currently payable) outstanding under the Notes.
"Material Adverse Effect" shall mean any act, circumstance, or
event that (i) causes or reasonably could be expected to cause an Event of
Default under this Loan Agreement, or (ii) is or reasonably could be
expected to be material and adverse to the financial condition or business
operations of the Borrower and its Subsidiaries on a consolidated basis.
"Maximum Offer" has the meaning assigned to that term in
Section 2.03(b).
"Maximum Rate" shall mean, on any day, the highest nonusurious
rate of interest (if any) permitted by applicable law on such day. Banks
hereby notify Borrower that, and disclose to Borrower that, for purposes of
Tex. Rev. Civ. Stat. Ann. Art. 5069-1.04, as it may from time to time be
amended, the "applicable rate ceiling" shall be the "indicated rate" ceiling
from time to time in effect as limited by Art. 5069-1.04(b); provided,
however, that to the extent permitted by applicable law, Banks reserve the
right to change the "applicable rate ceiling" from time to time by further
notice and disclosure to Borrower; and, provided further, that the "highest
nonusurious rate of interest permitted by applicable law" for purposes of
this Loan Agreement and the Notes shall not be limited to the applicable
rate ceiling under Article 5069-1.04 if federal laws or other state laws now
or hereafter in effect and applicable to this Loan Agreement and the Notes
(and the interest contracted for, charged and collected hereunder or
thereunder) shall permit a higher rate of interest.
"Maximum Request" shall have the meaning assigned to that term
in Section 2.03(a).
"Net Income" shall mean the net income of the applicable Person
excluding equity in earnings of nonconsolidated entities as determined in
accordance with GAAP.
"Notes" and "Note" respectively mean (a) the Committed Notes
and the Bid Notes and (b) a single such Note.
"Obligation" shall mean all present and future indebtedness,
obligations, and liabilities of Borrower to Banks, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Loan
Agreement or represented by the Notes, and all interest accruing thereon,
and reasonable attorneys' fees incurred in the enforcement or collection
thereof, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several or joint
and several; together with all indebtedness, obligations and liabilities of
Borrower evidenced or arising pursuant to any of the other Loan Documents,
and all renewals and extensions thereof, or part thereof.
"OECD" shall have the meaning assigned to that term in Section
12.10(a)(i).
"Officer's Certificate" shall mean a certificate signed in the
name of the Borrower by its Chief Executive Officer, President, one of its
Executive Vice Presidents, its Chief Financial Officer, one of its Vice
Presidents, or its Comptroller.
"Operating Lease Expense" shall mean all rental expenses of the
Borrower under operating leases.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and
any successor to all or any of the Pension Benefit Guaranty Corporation's
functions under ERISA.
"Percentage" when used with reference to any Bank at the time
any determination thereof is to be made means a fraction, expressed as a
percentage, the numerator of which shall be the amount of such Bank's
Revolving Commitment then in effect and the denominator of which shall be
the Total Commitment then in effect and if the Revolving Commitments have
been terminated, that percentage in effect immediately prior to such
termination.
"Permitted Liens" shall have the meaning assigned to that term
in Section 8.05.
"Person" shall mean and include an individual, partnership,
joint venture, corporation, trust, Governmental Authority, unincorporated
organization or government or any department, agency or political
subdivision thereof.
"Portion" has the meaning assigned to that term in Section
2.03(b).
"Plan" shall mean an employee benefit plan or other plan
maintained by borrower for employees of Borrower and any of its Subsidiaries
and/or and covered by Title IV of ERISA, or subject to the minimum funding
standards under Section 412 of the Internal Revenue Code of 1986, as
amended.
"Pro Rata Distribution Event" has the meaning assigned to that
term in Section 3.09(c).
"Quoted Rate" shall have the meaning assigned to that term in
Section 2.06(b).
"Register" shall have the meaning assigned to that term in
Section 12.10(c).
"Regulation U" shall mean Regulation U promulgated by the Board
of Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the Board
of Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any other
regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Regulatory Defect" shall mean (i) any failure of Borrower or
any of the Guarantors to comply with any of the rules, regulations and other
requirements as contemplated in Section 6.11 hereof which would have a
Material Adverse Effect, and/or (ii) any unfavorable examination report
shall be received by Borrower or any of the Guarantors from any regulatory
or similar Governmental Authority regarding any of the businesses or
activities in which the Borrower and Guarantors are engaged, if such report
would have a Material Adverse Effect.
"Regulatory Development" shall mean any or all of the
following: (i) any change in the law, regulation, or the interpretation
thereof by any Governmental Agency or other authority (whether or not having
the force of law); (ii) the application of any existing law, regulation, or
the interpretation thereof by any Governmental Agency or other authority
(whether or not having the force of law); and (iii) compliance by Agent or
Banks with any request or directive (whether or not having the force of law)
of any monetary or fiscal agency or authority.
"Reportable Event" means a reportable event" described in
Section 4043(b) of ERISA.
"Request for Bankers' Acceptance" shall mean a request by
Borrower for a Bankers' Acceptance.
"Request for Borrowing" shall have the meaning assigned to that
term in Section 2.02(a).
"Responsible Official" shall mean the chairman, president,
chief executive officer, chief operating officer, chief financial officer,
treasurer, controller, and the vice-president-finance of Borrower.
"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 from the date of
acquisition, (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 from the date of
acquisition, 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 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 ($10,000,000) in
the aggregate in any 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) any stock or securities
of Sunbelt Nursery Group, Inc. 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, (xiii) 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 any
fiscal year, (xiv) 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, (xv) 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 at any one time outstanding, (xvi)
all investments, guaranties, loans and advances in existence on the date
hereof, together with all renewals, extensions, rearrangements,
replacements, and substitutions thereof, and (xvii) all guaranties permitted
under Section 8.07 hereof.
"Restricted Payments" shall have the meaning assigned to that
term in Section 8.04.
"Revolving Commitment" shall have the meaning assigned to such
term in Section 2.01.
"Revolving Credit Loan" shall have the meaning assigned to that
term in Section 2.01 hereof.
"Revolving Credit Period" shall have the meaning assigned to
that term in Section 2.01(a).
"Secured Debt" shall mean all indebtedness for borrowed money,
including indebtedness evidenced by a bond, debenture, note or similar
document, which is secured by a lien on any assets of the Borrower or any
Subsidiary or any shares of stock or Debt of any Subsidiary.
"Significant Subsidiary" shall mean, at any time, any
Subsidiary of the Borrower which either (i) contributed during the most
recent fiscal year of the Borrower more than five percent (5%) of the
Consolidated gross revenues of the Borrower for such period, (ii)
contributed during the most recent fiscal year of the Borrower more than
five percent (5%) of the Consolidated Net Income of the Borrower for such
period or (iii) owns more than five percent (5%) of the fair market value of
the Consolidated Tangible Assets of the Borrower. Notwithstanding the
foregoing, if at any time all Subsidiaries of the Borrower not meeting the
above definition of "Significant Subsidiary" and taken in the aggregate
shall either (i) contribute during the most recent fiscal year of the
Borrower more than twenty-five percent (25%) of the Consolidated gross
revenues of the Borrower for such period, (ii) contribute during the most
fiscal year of the Borrower more than twenty-five (25%) of the Consolidated
Net Income of the Borrower for such period or (iii) own more than
twenty-five percent (25%) of the fair market value of the Consolidated
Tangible Assets of the Borrower, then so long as such situation continues
all Subsidiaries of the Borrower shall be deemed to be "Significant
Subsidiaries."
"Standby Letter of Credit" shall mean any standby letter of
credit issued by Agent pursuant to Section 2.05 hereof and the Letter of
Credit Agreement, either as originally issued or as the same may from time
to time be supplemented, modified, amended, renewed, or extended.
"Standby Letter of Credit Liability" shall mean the aggregate
undrawn face amount of all outstanding Standby Letters of Credit issued by
Agent pursuant to Section 2.05 of this Agreement.
"Submission Deadline" has the meaning assigned to that term in
Section 2.03(b).
"Subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than fifty percent (by number of
votes) of the Voting Stock shall be owned by such parent corporation and/or
one or more corporations which themselves have more than fifty percent (by
number of votes) of their Voting Stock owned by such parent corporation. As
used herein, the term "Subsidiary" shall also mean any "subsidiary" of the
Borrower.
"Taxes" shall mean all taxes, levies, assessments, fees,
withholdings or other charges at any time imposed by any Laws or
Governmental Authority.
"Termination Date" shall mean December 15, 1998.
"Total Commitment" shall mean $65,000,000.
"Transfer Notice" shall have the meaning assigned to that term
in Section 12.10(a)(ii).
"Voting Stock" shall mean, with respect to any Subsidiary, any
shares of any class of stock of such Subsidiary having general voting power
under ordinary circumstances to elect a majority of the Board of Directors
of such Subsidiary irrespective of whether at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency.
Other Definitional Provisions.
(a) All terms defined in this Loan Agreement shall
have the above-defined meanings when used in the Notes or any Loan
Documents, certificate, report or other document made or delivered pursuant
to this Loan Agreement, unless the context therein shall otherwise require.
(b) Defined terms used herein in the singular shall
import the plural and vice versa.
(c) The words "hereof," "herein," "hereunder" and
similar terms when used in this Loan Agreement shall refer to this Loan
Agreement as a whole and not to any particular provision of this Loan
Agreement.
(d) All financial and other accounting terms not
otherwise defined herein shall be defined and calculated in accordance with
GAAP consistently applied.
ARTICLE II
REVOLVING CREDIT LOAN; LETTER OF CREDIT
AND BANKERS' ACCEPTANCES
2.01. Revolving Credit Commitment.
(a) Committed Loans. Subject to the terms and
conditions of this Loan Agreement, each Bank severally and for itself
alone agrees to make from the date hereof through the Termination Date (the
"Revolving Credit Period"), revolving credit loans (Committed Loans") to
Borrower which shall not exceed at any one time outstanding the amount set
forth opposite its name below and its signature in this Loan Agreement, as
the same may be increased or decreased by assignment by such Bank pursuant
to Section 12.10 below (for each Bank, such amount is hereinafter referred
to as its "Revolving Commitment"):
Revolving
Banks Commitment
First Interstate Bank of Texas, N.A. $20,000,000
NationsBank of Texas, N.A. 20,000,000
Bank One, Texas, N.A. 15,000,000
Credit Lyonnais New York Branch 10,000,000
$65,000,000
No Bank shall be obligated to make any Advance if, immediately after giving
effect thereto, (i) the aggregate amount of (1) the principal amount of the
outstanding Revolving Credit Loans made to Borrower by such Bank plus (2)
such Bank's Percentage of the outstanding (x) Acceptance Liability and (y)
Letter of Credit Liability would exceed such Bank's Revolving Commitment, or
(ii) the aggregate amount of (1) Aggregate Outstanding Loans plus (2) the
Letter of Credit Liability plus (3) the Acceptance Liability would exceed
the Total Commitment.
Within the limits of this Section 2.01(a), during the Revolving Credit
Period, Borrower may borrow, prepay pursuant to Section 3.04 hereof and
reborrow under this Section 2.01(a); provided, however, the total number of
unpaid CD Borrowings and Eurodollar Borrowings shall not exceed four (4)
at any time. Each Borrowing pursuant to this Section 2.01 and Section 2.02
shall be funded ratably by Banks in proportion to their respective
Percentages. Each advance made by a Bank under Section 2.01(a) and
Section 2.02 is herein called an "Advance"; all Advances made by a Bank
hereunder are herein collectively called a "Revolving Credit Loan"; the
aggregate unpaid principal balance of all Advances made by Banks hereunder
are herein collectively called the "Revolving Credit Loans"; and the
combined Advances made by Banks on any given day are herein collectively
called a "Borrowing".
(b) Bid Rate Loans. Each Bank, severally and for itself alone, on the
terms and subject to the conditions hereinafter set forth, hereby agrees to
make loans (the Bid Rate Loans") to Borrower from time to time on and after
the date hereof and prior to the Termination Date in amounts equal to such
Bank's Bids which have been accepted as provided in Section 2.03(c). No
Bank shall be obligated to make any Bid. The aggregate principal amount of
Bid Rate Loans which the Borrower may request on any day shall not exceed an
amount which, when added (without duplication) to the sum of all other
Aggregate Outstanding Loans outstanding on such day (after giving effect to
the incurrence or repayment of any Aggregate Outstanding Loans on such day),
the Letter of Credit Liability and the Acceptance Liability would exceed the
Total Commitment.
2.02. Manner of Borrowing With Respect to Committed Loans.
(a) Request for Borrowing. Each request by Borrower to Agent for a
Borrowing under Section 2.01(a) hereof (a "Request for Borrowing") shall be
in writing and specify the aggregate amount of such requested Borrowing, the
Borrowing Date of such Borrowing, and, when the Request for Borrowing
specifies a Eurodollar Borrowing or a CD Borrowing, the Interest Period
which shall be applicable thereto; provided, however, that the aggregate
number of unpaid CD Borrowings and Eurodollar Borrowings shall not exceed
four (4) at any time. Borrower shall furnish to Bank the Request for
Borrowing by 11:00 A.M. (Fort Worth time) at least two (2) Eurodollar
Business Days prior to the requested Eurodollar Borrowing date (which must
be a Eurodollar Business Day), by 11:00 A.M. (Fort Worth time) at least one
(1) Business Day prior to the requested borrowing date (which must be a
Business Day) for a CD Borrowing and by at least 11:00 a.m. (Fort Worth
time) on the requested borrowing date (which must be a Business Day) for a
Floating Base Borrowing. Any written Request for Borrowing shall: (i) in
the case of a Floating Base Borrowing, be in the form attached hereto as
Exhibit "C," (ii) in the case of a CD Borrowing, be in the form attached
hereto as Exhibit "D," and (iii) in the case of a Eurodollar Borrowing, be
in the form attached hereto as Exhibit "E." Each Floating Base Borrowing
shall be in an aggregate principal amount of one hundred thousand dollars
($100,000.00) or any integral multiple of one hundred thousand dollars
($100,000.00). Each Eurodollar Borrowing and CD Borrowing shall be in an
amount of at least five hundred thousand dollars ($500,000.00) or any higher
integral multiple of $100,000.00.
Prior to making a Request for Borrowing, Borrower may (without
specifying whether the anticipated Borrowing shall be a Floating Base
Borrowing, CD Borrowing or Eurodollar Borrowing) request that Agent provide
Borrower with the most recent CD Quoted Rate and Interbank Offered Rate
available to Agent. Agent shall use its best efforts to provide such quoted
rates to Borrower on the date of such request.
Each Request for Borrowing shall be irrevocable and binding on
Borrower and, in respect of the Borrowing specified in such Request for
Borrowing, Borrower shall indemnify each Bank against any cost, loss or
expense incurred by any Bank as a result of any failure to fulfill, on or
before the date specified for such Borrowing, the conditions to such
Borrowing set forth herein, including without limitation, any cost, loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Bank to fund the Advance to be made by such Bank
as part of such Borrowing when such Borrowing, as a result of such failure,
is not made on such date.
(b) Funding. Each Bank shall, before 1:00 P.M. (Fort Worth time) on
the date of such Borrowing specified in the notice received from Agent
pursuant to Section 2.02(a), deposit such Bank's ratable portion of such
Borrowing in immediately available funds in an account with Agent specified
by Agent. Upon fulfillment of all applicable conditions set forth herein
and after receipt by Agent of such funds, Agent shall pay or deliver such
proceeds to or upon the order of Borrower at the principal office of Agent
in immediately available funds. The failure of any Bank to make any Advance
required to be made by it hereunder shall not relieve any other Bank of its
obligation to make its Advance hereunder. If any Bank shall wrongfully fail
or refuse to make an Advance (such Bank referred to herein as a Non-Funding
Bank" and the amount of such Advance referred to as the Advance
Deficiency"), all conditions to such Borrowing have been satisfied, and such
Borrowing is in compliance with Section 2.01:
(1) Agent will make available such funds as shall have been
received by it from the other Banks, in accordance with this Section
2.02(b):
(2) Within two (2) Business Days following such failure of Non-
Funding Bank, the other Banks shall make Advances to Borrower (pro rata
based on their respective Commitments without giving effect to Non-
Funding Banks Commitment) up to the aggregate amount of such Advance
Deficiency, but only to the extent that, after giving effect to such
Advances, the Revolving Credit Loans extended by such Banks do not
exceed their respective Commitments:
(3) Agent shall use good faith efforts to obtain one or more
banks, acceptable to Banks and Borrower, to replace the Non-Funding
Bank, but neither Agent nor any other Bank shall have any liability or
obligation whatsoever as a result of the failure to obtain a
replacement for the Non-Funding Bank; and
(4) Unless and until the Non-Funding Bank shall have cured any
Advance Deficiency; (i) the Non-Funding Bank's Percentage of any
facility fees paid by Borrower pursuant to Section 2.04 shall be paid
to the other Banks that are not Non-Funding Banks; and (ii) the other
Banks may recover and collect from any Non-Funding Banks any Advances
made by such Banks to fund any Advance Deficiency resulting from such
Non-Funding Bank's wrongful failure or refusal to make an Advance.
The Non-Funding Bank shall indemnify, defend and hold the Agent and
each of the Banks harmless from and against any and all losses, damages,
liabilities, or expenses (including, but not limited to, reasonable
attorney's fees and interest at the Adjusted Interbank Rate for funds
advanced by the Agent or any one of the Banks on account of the Non-Funding
Bank) which they may sustain or incur by reason of or in consequence of the
Non-Funding Bank's failure or refusal to abide by its obligations under the
Loan Documents. The Agent may set off against payments due to the Non-
Funding Bank under the terms of this Loan Agreement, for the claims of the
Agent and other Banks against the Non-Funding Bank.
Except to the limited extent provided in this Section 2.02(b), neither
Agent nor any Bank shall be responsible for the performance by any other
Bank of its obligations hereunder. In the event of any failure by a Bank to
made an Advance required hereunder, the other Banks may (but shall not be
required to) purchase (on a pro rata basis, according to their respective
Percentages) such Bank's Notes.
Unless the Agent shall have received notice from a Bank prior to the
date of any Borrowing that such Bank will not make available to the Agent
such Bank's ratable portion of such Borrowing, the Agent may assume that
such Bank has made such portion available to the Agent on the date of such
Borrowing in accordance with Section 2.02(b) and the Agent may, in reliance
upon such assumption, make available to or on behalf of Borrower on such
date a corresponding amount. If and to the extent such Bank shall not have
so made such ratable portion available to the Agent, such Bank severally
agrees to repay to the Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is
made available to or on behalf of Borrower until the date such amount is
repaid to the Agent at the rate per annum equal to the Federal Funds Rate.
If such Bank shall repay to the Agent such corresponding amount, such amount
so repaid shall constitute such Bank's Advance as part of such Borrowing
for purposes of this Agreement.
(c) Selection of Interest Option. Upon making a Request for Borrowing
under Section 2.02(a) hereof, Borrower shall advise Agent as to whether the
Borrowing shall be (i) a Eurodollar Borrowing, in which case Borrower shall
specify the applicable Interest Period therefor, or (ii) a CD Borrowing, in
which case the Borrower shall specify the applicable Interest Period
therefor, or (iii) a Floating Base Borrowing. At least two (2) Eurodollar
Business Days prior to the termination of each Interest Period with respect
to a Eurodollar Borrowing and at least one (1) Business Day prior to the
termination of each Interest Period with respect to a CD Advance, (unless
such termination occurs on the Termination Date) Borrower shall give Agent
written notice (the "Rollover Notice") of the interest option which shall be
applicable to such Borrowing upon the expiration of such Interest Period.
If Borrower shall specify that such Borrowing shall be a Eurodollar
Borrowing or a CD Borrowing, such Rollover Notice shall also specify the
length of the succeeding Interest Period selected by Borrower with respect
to such Borrowing. Each Rollover Notice shall be irrevocable and effective
upon notification thereof to Agent. If the required Rollover Notice shall
not have been timely received by Agent prior to the expiration of the
then-relevant Interest Period, then Borrower shall be deemed to have elected
to have such Borrowing be a Floating Base Borrowing. With respect to any
Floating Base Borrowing, Borrower shall have the right, on any Business Day
or Eurodollar Business Day, as the case may be (a "Conversion Date") to
convert such Floating Base Borrowing to a Eurodollar Borrowing or to a CD
Borrowing by giving Agent a Rollover Notice of such selection at least two
(2) Eurodollar Business Days (with respect to a Eurodollar Borrowing) and at
least one (1) Business Day (with respect to a CD Borrowing), prior to such
Conversion Date.
Notwithstanding anything to the contrary contained herein, Borrower
shall have no right to request a Eurodollar Borrowing or a CD Borrowing if
the interest rate applicable thereto under Section 3.02 hereof would exceed
the Maximum Rate in effect on the first day of the Interest Period
applicable to such Eurodollar Borrowing or CD Borrowing.
2.03. Procedures with Respect to Bid Rate Loans.
(a) Borrower may make Bid Requests to Banks by 9:00 A.M. (Fort Worth
time), at least one (1) Business Day prior to the proposed Borrowing Date
for one or more Bid Rate Loans. Each Bid Request shall be given by
telecopy, and shall specify (i) the proposed Borrowing Date, which shall be
a Business Day; (ii) the aggregate amount of the proposed Bid Rate Loans
(the "Maximum Request") which shall not (A) exceed an amount which, on the
proposed Borrowing Date, when added (without duplication) to the sum of all
other Aggregate Outstanding Loans on such date (after giving effect to the
incurrence or repayment of any Aggregate Outstanding Loans on such date) the
Letter of Credit Liability and the Acceptance Liability would exceed the
Total Commitment, or (B) be less than $1,000,000 or, for amounts in excess
thereof, an integral multiple of $100,000, (iii) the Loan Period(s) (up to
three (3) Loan Periods may be requested pursuant to each Bid Request)
therefor, and (iv) if more than one Loan Period is so specified, the
principal amount (not less than $1,000,000 or, for amounts in excess
thereof, an integral multiple of $100,000) allocable to each such Loan
Period.
(b) Each Bank in its discretion may (but is not obligated to) submit a
Bid or Bids to the Borrower not later than 9:00 A.M., Fort Worth time (or,
upon reasonable prior notice to the Banks, such other time as Borrower and
Banks may agree), on the proposed Borrowing Date specified in such Bid
Request (such 9:00 A.M. time (or agreed other time) being herein called the
"Submission Deadline"), by telecopy or in writing, and thereby irrevocably
offer to make all or any part (any such part referred to as a "Portion") of
any Bid Rate Loan described in the relevant Bid Request at a Bid Rate
specified therein in an aggregate principal amount of $1,000,000 and, for
amounts in excess thereof, an integral multiple of $100,000. Multiple Bids
may be delivered by any Bank. The aggregate Portions of Bid Rate Loans for
any or all Loan Periods offered by a Bank in its Bid may exceed the Maximum
Request contained in the relevant Bid Request; provided, that each Bid shall
set forth the maximum aggregate amount of the Bid Rate Loans offered thereby
which the Borrower may accept (the "Maximum Offer"), which Maximum Offer
shall not exceed the Maximum Request. If any proposed Bid arrives after the
Submission Deadline, contains qualifying or conditional language or omits
information required by the form of Exhibit F-2 or otherwise required by
this Agreement, the Borrower shall, as soon as is practical, attempt to
notify the Bank submitting such Bid thereof, whereupon such Bank may supply
such information if it is able to do so prior to the Submission Deadline,
but without otherwise modifying any Bid originally set forth therein.
(c) The Borrower shall, in its sole discretion but subject to
Section 2.03(d), irrevocably accept or reject any such complying Bid (or any
Portion offered by such Bid) not later than 11:00 A.M. (Fort Worth time), on
such day by notice to the Agent and the Banks by telephone (confirmed in
writing in the form of a Bid Rate Loan Acknowledgment promptly the same
day). If the Banks that have submitted Bids fail to receive notice from the
Borrower of its acceptance or rejection of any Bids at or prior to 11:00
A.M. (Fort Worth time), on such day, all such Bids shall be deemed to have
been rejected by the Borrower. Notification to each Bank whose Bid has been
accepted shall be in the form of a Bid Rate Loan Acknowledgment which shall
reflect the amount, maturity date and Bid Rate for each Bid Rate Loan.
(d) If the Borrower accepts a Portion of a proposed Bid Rate Loan for
a single Loan Period at the Bid Rate provided therefor in a Bank's Bid, such
Portion shall be in a principal amount of $1,000,000 (subject to such lesser
allocation as may be made pursuant to clause (d) below) or, for amounts in
excess thereof, an integral multiple of $100,000. The aggregate principal
amount of Bid Rate Loans accepted by the Borrower following Bids responding
to a Bid Request shall not exceed the Maximum Request. The aggregate
principal amount of Bid Rate Loans accepted by the Borrower pursuant to a
Bank's Bid shall not exceed the Maximum Offer therein contained. If the
Borrower accepts any Bid Rate Loans or Portion offered in any Bid, the
Borrower must accept Bids (and Bid Rate Loans and Portions thereby offered)
based exclusively upon the successively lowest Bid Rates within each Loan
Period and no other criteria. If two (2) or more Banks submit Bids with
identical Bid Rates for the same Loan Period and the Borrower accepts any
thereof, the Borrower shall, subject to the first three sentences of this
clause (d), accept all such Bids as nearly as possible in proportion to the
amounts of such Banks' respective Bids with identical Bid Rates for such
Loan Period; provided, that if the amount of Bid Rate Loans to be so
allocated is not sufficient to enable each such Bank to make such Bid Rate
Loan (or Portions thereof) in an aggregate principal amount of $1,000,000
or, for amounts in excess thereof, an integral multiple of $100,000, the
Borrower shall round the Bid Rate Loans (or Portions thereof) allocated to
such Bank or Banks as the Borrower shall select as necessary to a minimum of
$1,000,000 and the nearest multiple of $100,000.
(e) Not later than 1:00 P.M., Fort Worth time, on the relevant
Borrowing Date, each Bank whose Bid was accepted by the Borrower shall make
available to the Borrower, in immediately available funds, the proceeds of
such Bank's Bid Rate Loan(s) as the Borrower may from time to time instruct
the Bank in writing. Each Borrowing of Bid Rate Loans shall be on a
Business Day.
(f) The Agent and Banks may rely and act upon notice given by
telephone by individuals reasonably believed by the Agent and Banks to be
those individuals designated to the Agent by the Borrower in writing from
time to time to possess authority to give such notice, without waiting for
receipt of written confirmation thereof, and the Borrower hereby indemnifies
and holds harmless the Agent and each Bank and against any and all losses,
costs, expenses, damages, claims, actions and other proceedings relating to
such reliance, except for losses, costs, expenses, damages, claims, actions
and proceedings resulting from acts or omissions constituting gross
negligence or willful misconduct on the part of the Agent or any Bank. If a
written confirmation differs in any respect from the action taken by the
Agent or any Bank, the records of the Agent or such Bank shall govern absent
manifest error. On the same Business Day as the initial funding of any Bid
Rate Loan and on the same Business Day as any increase or decrease in the
outstanding principal amount of any Bid Rate Loan occurs, the Borrower shall
notify Agent of the principal amount of each such Bid Rate Loan.
2.04. Facility Fee. In consideration of the agreement of Banks to make
funds available to Borrower during the Revolving Credit Period, Borrower
agrees to pay to Agent, for the pro rata account of Banks, a nonrefundable
facility fee on January 2, 1996, on January 2, 1997 and on January 2, 1998
in an amount equal to the product of the Applicable Fee (calculated on the
basis of a 360 day year) in effect on such date multiplied by the Total
Commitment.
2.05. Letters of Credit.
(a) Subject to the terms and conditions hereof and satisfaction of the
conditions set forth in Section 5.01 and Section 5.03, on any Business Day,
from the date of execution hereof through the Termination Date, Agent shall
issue such Letters of Credit for the account of Borrower as Borrower may
request pursuant to the Letter of Credit Agreement; provided that, after
giving effect to any such Letter of Credit, the Standby Letter of Credit
Liability shall not exceed ten million dollars ($10,000,000). No Standby
Letter of Credit shall have a term in excess of one (1) year or have an
expiration date after the Termination Date.
(b) Each application for a Letter of Credit shall be submitted to
Agent pursuant to a Letter of Credit Agreement not later than 11:00 A.M.
(Fort Worth time) at least one (1) Business Day prior to the date of
requested issuance of the Letter of Credit. Upon each such application,
Borrower shall be deemed to have automatically made to Agent the following
representations and warranties:
(i) As of the date of issuance of the Letter of Credit requested,
each representation and warranty made by Borrower in this
Loan Agreement will, to the best knowledge of the Borrower,
be true and correct in all material respects, both
immediately before and after the issuance of the requested
Letter of Credit, as though such representations and
warranties were made on and as of such date; no change which
will have a Material Adverse Effect will have occurred in the
consolidated financial condition, results of operations, or
business of Borrower and its Subsidiaries, taken as a whole;
and there exists no Event of Default or event which with
notice or lapse of time or both, would constitute an Event of
Default.
(ii) Following the issuance of the requested Letter of Credit, the
sum of (a) the unpaid principal balance of the Notes, (b) the
Letter of Credit Liability and (c) the Acceptance Liability
shall not exceed the Total Commitment.
(c) Borrower shall pay to Agent, for the pro rata account of Banks, an
annual letter of credit fee in an amount equal to Applicable Fee (calculated
on a 360-day year basis) then in effect on the amount of each Letter of
Credit. Fees for Letters of Credit shall be payable at the time of
issuance. Agent shall debit the account of Borrower with Agent for the
amount of such fees.
(d) The issuance of any supplement, modification, amendment, renewal,
or extension to or of any Letter of Credit shall be treated in all respects
the same as the issuance of a new Letter of Credit.
(e) Each Bank shall and does hereby participate ratably with the Agent
in each Letter of Credit issued and outstanding hereunder to the extent of
its Percentage of the Letter of Credit Liability with respect to each such
Letter of Credit, and shall share in all rights and obligations resulting
therefrom, including, without limitation (i) the right to receive from the
Agent its Percentage of the Letter of Credit fee pursuant to Section 2.05(c)
hereof, (ii) the right to receive from the Agent its additional costs
pursuant to Section 2.05(g) hereof, and (iii) the obligation to pay the
beneficiary of any Letter of Credit its Percentage of the Letter of Credit
Liability of such Letter of Credit upon proper presentation to the Agent by
promptly delivering to the Agent when it receives notice of any payment by
the Agent to any beneficiary of any Letter of Credit in immediately
available funds, its Percentage thereof.
(f) Payment of Letter of Credit. In consideration for the issuance by
the Agent of the Letters of Credit, Borrower hereby authorizes, empowers,
and directs the Banks to disburse directly to the Agent, with notice to
Borrower, in immediately available funds an amount equal to each Bank's
Percentage of the face amount of each draft drawn under each Letter of
Credit plus all interest, costs, expenses, and fees due to Agent pursuant to
any Letter of Credit Agreement, which amounts shall be due and payable by
Banks to the Agent on the Business Day on which the Agent honors any such
draft or incurs or is owed any such interest, costs, expenses or fees. The
Agent will promptly notify Borrower of any disbursements made by Banks
pursuant to the terms hereof, provided that the failure to give such notice
will not affect the validity of the disbursement. Any such disbursement
made by Banks to the Agent on account of a Letter of Credit issued for the
account of Borrower or Pier 1 Imports (U.S.), Inc. shall be deemed to be a
Floating Base Advance and thus a Revolving Credit Loan pursuant to Section
2.01(a) hereof, and Borrower shall be deemed to have given to the Agent, in
accordance with the terms and conditions of Section 2.02(c), a Request for
Borrowing with respect thereto. Any such disbursement made by Banks to the
Agent on account of a Letter of Credit issued hereunder shall be a Floating
Base Advance. The Agent and Banks may conclusively rely on the Agent as to
the amount due the Agent by reason of any draft of a Letter of Credit or due
the Agent under any Letter of Credit Agreement.
(g) Increased Costs. Borrower shall pay to the Agent on demand
amounts sufficient to compensate the Agent and the Banks for any and all
costs resulting from any law or rule or regulation or any guideline or
request or in the interpretation thereof by any Governmental Authority,
central bank or comparable agency charged with the administration of such
law or rule or regulation or guideline or in GAAP or regulatory accounting
principles which directly or indirectly (i) impose or modify or deem
applicable any reserve, special deposit or similar requirement against
letters of credit issued by the Agent or imposed upon any Bank by virtue of
its participation arrangement provided in Section 2.05(e) hereof,
(ii) increase after the date of this Agreement the amount of capital
required or expected to be maintained or funded by the Agent or any Bank and
applicable to banks generally, or (iii) impose on the Agent or any Bank some
condition regarding this Loan Agreement or any Letter of Credit Agreement,
and the result of any event referred to in (i), (ii) or (iii) above shall be
to increase the cost to the Agent and Banks of issuing or maintaining the
Letter of Credit, or to increase the cost to a Bank of maintaining its
participation arrangement as provided in Section 2.05(e) hereof. In
addition, Borrower shall pay to the Agent on demand, amounts to compensate
Agent and the Banks for any additional costs resulting from any change after
the date hereof in any law or regulation or in the interpretation thereof by
any Government Authority charged with the administration of such law or
regulation or in GAAP or regulatory accounting principles, the effect of
which shall be to further increase the costs to the Agent of issuing or
maintaining the Letter of Credit or to further increase the cost to a Bank
of maintaining its participation arrangement as provided in Section 2.05(e)
hereof. A certificate as to such increased costs, which states the basis of
calculation thereof, submitted by the Agent or an affected Bank to the
Borrower shall be conclusive, absent manifest error, as to the amount
thereof. Such increase in cost shall, with respect to the Agent, be based
upon a reasonable allocation of the Agent's aggregate costs related to the
Letters of Credit and, with respect to each affected Bank be based upon the
actual cost incurred.
2.06. Bankers' Acceptances.
(a) Banks agree to extend credit on a revolving basis to Borrower
through the Termination Date by accepting and discounting such Bankers'
Acceptances as Borrower may request by a Request for Bankers' Acceptance
during such period; provided, however, that after accepting and discounting
any such Bankers' Acceptance the sum of (a) the Aggregate Outstanding Loans,
(b) the Acceptance Liability and (c) the Letter of Credit Liability shall
not exceed the Total Commitment.
Unless Agent otherwise consents in writing, the tenor of any
Bankers' Acceptance shall be not less than thirty (30) days or greater than
one hundred eighty (180) days. No Bankers' Acceptance shall have a maturity
date after the Termination Date. Each draft of Borrower shall comply with
the Acceptance Documents and shall be executed by the Borrower and presented
to Agent pursuant to such procedures as are provided for in the Acceptance
Documents. The face amount of any Bankers' Acceptance shall not be less
than two hundred fifty thousand dollars ($250,000). The creation date and
maturity date of each Bankers' Acceptance shall be a Business Day. In
addition, no Bankers' Acceptance will be created, accepted or discounted if
it is not to be used to finance the importation or exportation of goods or
the domestic shipment of goods.
(b) Borrower agrees to notify Agent, by telephone (confirmed by a
telecopy on the same Business Day of a Request for Bankers' Acceptance) no
later than 11:00 a.m. (Fort Worth time) at least one Business Day prior to
the date (an "Acceptance Date") upon which Borrower desires issuance or
acceptance of a Bankers' Acceptance. Each Request for Bankers' Acceptance
shall state in detail the amount and maturity of the requested Bankers'
Acceptance, shall describe the transaction to be financed by the creation of
such Banker's Acceptance, shall contain a description of the commodity being
purchased or shipped with the funds provided by such Bankers' Acceptance,
shall generally identify place of shipment from and the destination of the
commodity being purchased or shipped with such funds, and shall provide
instructions to the Agent for wiring the proceeds of such Bankers'
Acceptance. On the Acceptance Date, Agent shall quote to Borrower a rate
for discounting the Bankers' Acceptance which shall be equal to the sum of
(1) the banker's acceptance rate of Agent at such time as determined by
Agent and (2) the Applicable Fee (the Quoted Rate"). Upon receipt of the
Quoted Rate, the Borrower shall telecopy to Agent the applicable Request for
Bankers' Acceptance. Agent shall immediately provide the Borrower with a
telecopy confirmation of its Quoted Rate and the other terms of the
requested Bankers' Acceptance. Upon such confirmation, Agent shall proceed
to create, accept and discount such Banker's Acceptance on the Acceptance
Date in accordance with the terms hereof.
(c) Upon the acceptance by Agent of a Bankers' Acceptance, Agent shall
discount such Bankers' Acceptance by deducting from the face amount thereof
a discount determined by the per annum Quoted Rate, with such per annum rate
applied against the face amount of the Bankers' Acceptance for the tenor
thereof, and shall make such discounted amount available in immediately
available funds to the Borrower pursuant to instructions in the applicable
Request for Bankers' Acceptance. Agent may retain or rediscount, at its
election, any Bankers' Acceptance and the amount received by Agent upon
payment thereof at maturity or upon rediscounting shall be solely for the
account of Banks.
(d) If Borrower receives notice from Agent that a Bankers' Acceptance
shall have matured and Borrower does not promptly pay to Agent the face
amount of such Bankers' Acceptance, Agent shall pay the face amount of such
Bankers' Acceptance and such payment by Agent shall be treated as a Floating
Base Advance and thus a Revolving Credit Loan under the Notes and Borrower
shall be deemed to have given to the Agent, in accordance with the terms and
conditions of Section 2.02, a Request for Borrowing with respect thereto.
(e) If any Bankers' Acceptance is determined, subsequent to its
creation or discount, not to be "eligible" pursuant to paragraph 7 of
Section 13 of the Federal Reserve Act (12 U.S.C. Sec. 372), as amended from
time to time, as of the date of its creation, acceptance or discount, then
Borrower shall pay to Agent, within two (2) days after demand, an amount
equal to all costs, losses, and expenses, including, without limitation, any
costs, losses, or expenses related to reserve requirements under
Regulation D, premium rates imposed by the Federal Deposit Insurance
Corporation, or discount or rediscount rates, applicable to that ineligible
Bankers' Acceptance. If the costs and expenses of Agent with respect to
outstanding Bankers' Acceptances increase as a result of any Regulatory
Development, then Borrower shall pay to Agent, on demand, an amount equal to
the increase in such costs and expenses. All costs, losses, and expenses
referred to in this Section 2.06(e) shall be specified in certificates
provided to Borrower by Agent and shall not be subject to criticism by
Borrower absent manifest error.
(f) Borrower shall presign drafts for Bankers' Acceptances created on
its behalf, which shall be maintained in safekeeping by Agent for Borrower.
Each such draft shall have the face amount, issuance date, and maturity date
left blank, but shall have the name of Agent and the draft number inserted
and shall be executed manually in the name and on behalf of the applicable
Borrower by a Responsible Official thereof. All drafts for Borrower and for
Agent shall be numbered sequentially for ease of identification and
reference. Prior to accepting any draft, Agent shall hold such draft in
safekeeping on behalf of Borrower for disposition in the manner
hereinafter set forth. Agent, upon accepting any draft, shall
appropriately fill out the draft as to face amount, issuance date, maturity
date, commodity, and destination of the commodity to be shipped or purchased
with the proceeds, for which purpose Borrower hereby irrevocably appoints
Agent as its agent and attorney-in-fact. Such draft thereupon shall be
deemed to have been issued by Borrower as of the date of acceptance by
Agent. In connection with the issuance and completion of any draft, and the
acceptance thereof, Agent shall be entitled to rely on any instructions
received from any Responsible Official of Borrower.
(g) Each Bank shall and does hereby participate ratably with the Agent
in each Bankers Acceptance accepted or created by Agent hereunder to the
extent of its Percentage of the Acceptance Liability with respect to each
such Banker's Acceptance, and shall share in all rights and obligations
resulting therefrom, including, without limitation (i) the right to receive
from the Agent its Percentage of the Banker's Acceptance discount and fee
received by Agent pursuant to Section 2.06(c) hereof, (ii) the right to
receive from the Agent its additional costs pursuant to Section 2.06(h)
hereof, and (iii) the obligation to pay the Agent its Percentage of the
Acceptance Liability of such Banker's Acceptance.
(h) Increased Costs. Borrower shall pay to the Agent on demand
amounts sufficient to compensate the Agent and the Banks for any and all
costs resulting from any law or rule or regulation or any guideline or
request or in the interpretation thereof by any Governmental Authority,
central bank or comparable agency charged with the administration of such
law or rule or regulation or guideline or in GAAP or regulatory accounting
principles which directly or indirectly (i) impose or modify or deem
applicable any reserve, special deposit or similar requirement against
bankers acceptances created by the Agent or imposed upon any Bank by virtue
of its participation arrangement provided in Section 2.06(g) hereof,
(ii) increase after the date of this Loan Agreement the amount of capital
required or expected to be maintained or funded by the Agent or any Bank and
applicable to banks generally, or (iii) impose on the Agent or any Bank some
condition regarding this Loan Agreement or any Bankers Acceptance, and the
result of any event referred to in (i), (ii) or (iii) above shall be to
increase the cost to the Agent and Banks of issuing, accepting or
maintaining the Banker's Acceptance, or to increase the cost to a Bank of
maintaining its participation arrangement as provided in Section 2.06(g)
hereof. In addition, Borrower shall pay to the Agent on demand, amounts to
compensate Agent and the Banks for any additional costs resulting from any
change after the date hereof in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration of such law or regulation or in GAAP or regulatory accounting
principles, the effect of which shall be to further increase the costs to
the Agent of issuing, accepting or maintaining the Banker's Acceptance or to
further increase the cost to a Bank of maintaining its participation
arrangement as provided in Section 2.06(g) hereof. A certificate as to such
increased costs, which states the basis of calculation thereof, submitted by
the Agent or an affected Bank to the Borrower shall be conclusive, absent
manifest error, as to the amount thereof. Such increase in cost shall, with
respect to the Agent, be based upon a reasonable allocation of the Agent's
aggregate costs related to the Banker's Acceptance and, with respect to each
affected Bank be based upon the actual cost incurred.
2.07 Bid Rate Banker's Acceptance.
(a) The Borrower may make Bankers' Acceptance Bid Requests by 9:00
A.M. (Fort Worth time) at least one (1) Business Day prior to the proposed
Acceptance Date for one or more Bid Rate Bankers' Acceptance. Each Bankers'
Acceptance Bid Request shall be given by telecopy and shall specify (i) the
proposed Acceptance Date, which shall be a Business Day; (ii) the aggregate
amount of the proposed Bid Rate Bankers' Acceptance (the "Maximum Request")
which shall not (A) exceed an amount which, on the proposed Acceptance Date,
when added (without duplication) to the sum of all other Aggregate
Outstanding Loans on such date, the Letter of Credit Liability and the
Acceptance Liability (after giving effect to the issuance, acceptance or
creation of any Bankers' Acceptance on such date) would exceed the Total
Commitment, or (B) be less than $1,000,000 or, for amounts in excess
thereof, an integral multiple of $100,000, and (iii) the creation date,
tenor and maturity date of the Bid Rate Bankers' Acceptance.
(b) Each Bank in its discretion may (but is not obligated to) submit a
Bankers' Acceptance Bid or Bankers' Acceptance Bids to the Borrower not
later than 9:00 A.M., Fort Worth time (or, upon reasonable prior notice to
the Banks, such other time as Borrower and Banks may agree), on the proposed
Acceptance Date specified in such Bid Request (such 9:00 A.M. time (or
agreed other time) being herein called the "Bankers' Acceptance Submission
Deadline"), by telecopy or in writing, and thereby irrevocably offer to
issue or accept all or any Bid Rate Bankers' Acceptance described in the
relevant Bankers Acceptance Bid Request at a Bankers' Acceptance Bid Rate
specified therein. Multiple Bankers Acceptance Bids may be delivered to the
Borrower. If any proposed Bankers Acceptance Bid arrives after the Bankers'
Acceptance Submission Deadline, contains qualifying or conditional language
or omits information required by the Borrower or otherwise required by this
Agreement, the Borrower shall, as soon as is practical, attempt to notify
the Bank submitting such Banker's Acceptance Bid thereof, whereupon such
Bank may supply such information if it is able to do so prior to the
Banker's Acceptance Submission Deadline, but without otherwise modifying any
Bankers Acceptance Bid originally set forth therein.
(c) The Borrower shall, in its sole discretion, irrevocably accept or
reject any such complying Bankers Acceptance Bid not later than 11:00 A.M.
(Fort Worth time), on such day by notice to the Agent and such Bank by
telecopy (confirmed in writing promptly the same day). If the Bank fails to
receive notice from the Borrower of its acceptance or rejection of any
Bankers Acceptance Bids at or prior to 11:00 A.M. (Fort Worth time) on such
day, all such Bankers Acceptance Bids of such Bank shall be deemed to have
been rejected by the Borrower.
(d) The aggregate principal amount of Bid Rate Banker's Acceptance
accepted by the Borrower following Bankers Acceptance Bids responding to a
Bankers Acceptance Bid Request shall not exceed the Maximum Request. The
aggregate principal amount of Bid Rate Banker's Acceptance accepted by the
Borrower pursuant to a Bank's Bankers Acceptance Bid shall not exceed the
Maximum Offer therein contained.
(e) Not later than 1:00 P.M., Fort Worth time, on the relevant
Acceptance Date, each Bank whose Bankers Acceptance Bid was accepted by the
Borrower shall create and discount a Banker's Acceptance for Borrower.
(f) The Agent and Banks may rely and act upon notice given by
telephone by individuals reasonably believed by the Agent to be those
individuals designated to the Agent and Banks by the Borrower in writing
from time to time to possess authority to give such notice, without waiting
for receipt of written confirmation thereof, and the Borrower hereby
indemnifies and holds harmless the Agent and Banks from and against any and
all losses, costs, expenses, damages, claims, actions and other proceedings
relating to such reliance, except for losses, costs, expenses, damages,
claims, actions and proceedings resulting from acts or omissions
constituting gross negligence or willful misconduct on the part of the
Agent. If a written confirmation differs in any respect from the action
taken by the Agent, the records of the Agent and Banks shall govern absent
manifest error. On the same Business Day as the acceptance of any Bankers'
Acceptance and on the date of any payment by a Bank of a Bankers' Acceptance
the Borrower shall notify Agent of such acceptance and of such payment.
ARTICLE III
NOTE, INTEREST RATE AND NOTE PAYMENTS
3.01. Promissory Notes.
(a) Committed Notes. The Advances under Section 2.02(a) and
Section 2.02(b) hereof by a Bank shall be evidenced by a promissory note
(each a "Committed Note" and collectively, the "Committed Notes") of
Borrower, which Committed Note shall (i) be dated the date hereof, (ii) be
in the amount of such Bank's Revolving Credit Commitment, (iii) be payable
to the order of such Bank at the office of Agent, (iv) bear interest in
accordance with Section 3.02 hereof, and (v) be in the form of Exhibit "A"
attached hereto with blanks appropriately completed in conformity herewith.
Notwithstanding the principal amount of any Bank's Committed Note as stated
on the face thereof, the amount of principal actually owing on such
Committed Note at any given time shall be in the aggregate of all Advances
theretofore made to Borrower by such Bank hereunder, less all payments of
principal theretofore actually received hereunder by Bank. Each Bank is
authorized, but is not required, to endorse on the schedule attached to its
Committed Note appropriate notations evidencing the date and amount of each
Advance as well as the amount of each payment made by Borrower hereunder.
(b) Bid Notes. The Bid Rate Loans of each Bank shall be evidenced by
a Bid Note in the form of Exhibit A-1 in the principal amount of the
original Total Commitment. Notwithstanding the principal amount of any
Bank's Bid Note as stated on the face thereof, the amount of principal
actually owing on such Bid Note at any given time shall be in the aggregate
of all Bid Rate Loans theretofore made to Borrower by such Bank hereunder,
less all payments of principal theretofore actually received hereunder by
such Bank. Each Bank is authorized, but is not required, to endorse on the
schedule attached to its Bid Note appropriate notations evidencing the date
and amount of each Advance as well as the amount of each payment made by
Borrower hereunder.
3.02. Interest Rate. The unpaid principal of each Floating Base Advance
shall bear interest from the date of advance until paid at a rate per annum
which shall from day to day be equal to the lesser of (a) the Maximum Rate
or (b) the Adjusted Base Rate in effect from day to day plus the Applicable
Margin in effect on the date of such Borrowing.
The unpaid principal of each CD Advance shall bear interest from the
date of advance until paid at a rate per annum which shall from day to day
be equal to the lesser of (a) the Maximum Rate or (b) the sum of (i) the
Adjusted CD Rate for the Interest Period in effect on such date plus (ii)
the Applicable Margin in effect on the date of such Borrowing plus (iii) the
sum of the CD Reserve Requirement and the Assessment Rate in effect on date
of such Borrowing.
The unpaid principal of each Eurodollar Advance shall bear interest
from the date of advance until paid at a rate per annum which shall be equal
to the lesser of (a) the Maximum Rate or (b) the sum of the Adjusted
Interbank Rate for the applicable Interest Period, plus the Applicable
Margin in effect on the date of such Borrowing.
Upon and during the continuance of an Event of Default, all principal
of, and to the extent permitted by applicable law, interest on the Notes
shall bear interest at the Default Rate. Notwithstanding the foregoing, the
unpaid principal balance of the Notes shall bear interest as provided in
Section 3.06 hereof, upon the occurrence of the circumstances described in
such section.
3.03. Principal Payments on Notes. All unpaid principal of and accrued
interest upon the Committed Notes shall be due and payable on December 15,
1998, unless the Committed Notes are extended by notice, in writing, from
Bank, to Borrower.
3.04. Prepayments.
(a) Optional Prepayments. Borrower may, without premium or penalty,
prepay the principal of any Notes then outstanding, in whole or in part, at
any time or from time to time; provided, however, that (i) each prepayment
of less than the full outstanding principal balance of the Notes shall be in
an amount equal to one hundred thousand dollars ($100,000.00) or an integral
multiple thereof, and (ii) if Borrower shall prepay the principal of any
Eurodollar Advance or CD Advance on any date other than the last day of the
Interest Period applicable thereto, Borrower shall make the payments
required by Section 4.05 hereof.
(b) General Prepayment Provisions. Any prepayment of any Note
hereunder shall be (i) made together with interest accrued (through the date
of such prepayment) on the principal amount prepaid, and (ii) applied first
to accrued interest and then to principal.
3.05. Payment of Interest. Interest on the unpaid principal amount of
each Floating Base Advance under each Committed Note shall be due and
payable on the 15th day of each March, June, September and December, and
beginning March 15, 1996 and at maturity. Interest on the unpaid principal
amount of each Eurodollar Advance and CD Advance under each Committed Note
shall be due and payable on the last day of the applicable Interest Period.
3.06. Recapture Rate. If, on any interest payment date, Agent does not
receive interest on any Note computed (as if no Maximum Rate limitations
were applicable) at the applicable contract rate described herein, because
the applicable contract rate exceeds or has exceeded the Maximum Rate, then
Borrower shall, upon the written demand of Agent, pay to Agent, in addition
to interest otherwise required hereunder, on each interest payment date
thereafter, the Excess Interest Amount (hereinafter defined) calculated as
of such later interest payment date; provided, however, that in no event
shall Borrower be required to pay, for any appropriate computation period,
interest at a rate exceeding the Maximum Rate effective during such period.
The term "Excess Interest Amount" shall mean, on any date, with respect to
the Note, the amount by which (a) the amount of all interest which would
have accrued prior to such date on the principal of the Notes (had the
applicable contract rate(s) described herein at all times been in effect,
without limitation by the Maximum Rate) exceeds (b) the aggregate amount of
interest actually paid to Bank on the Note on or prior to such date.
3.07. Calculation of Interest Rates. Interest on each Advance shall be
calculated on the basis of the actual days elapsed in a year consisting of
360 days.
3.08. Manner and Application of Payments. All payments of principal of,
and interest on, the Notes shall be made by Borrower to Agent before 11:00
a.m. (Fort Worth time), in Federal or other immediately available funds at
Agent's principal banking office in Fort Worth. Should the principal of, or
any installment of the principal or interest on, any Note, become due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day. All payments made on the
Notes shall be credited, to the extent of the amount thereof, in the
following manner: (i) first, against the amount of interest accrued and
unpaid on the Notes as of the date of such payment; (ii) second, against all
principal (if any) due and owing on the Note as of the date of such payment;
(iii) third, as a prepayment of outstanding Floating Base Advances under the
Note; and (iv) fourth, as a prepayment of outstanding Eurodollar Advances
and CD Advances under the Note. Subject to the foregoing, payments and
prepayments of principal of the Note shall be applied to such outstanding
Floating Base Advances, Eurodollar Advances and CD Advances under the Notes
as Borrower shall select; provided, however, that Borrower shall select
Floating Base Advances, Eurodollar Advances and CD Advances to be repaid in
a manner designated to minimize the Consequential Loss, if any, resulting
from such payments; and provided further that, if Borrower shall fail to
select the Floating Base Advances, Eurodollar Advances and CD Advances to
which such payments are to be applied, or if an Event of Default has
occurred and is continuing at the time of such payment, then Bank shall
apply the payment first to Floating Base Advances and then to Eurodollar
Advances and CD Advances in the manner it shall deem appropriate.
3.09. Application of Certain Payments.
(a) Prior to the occurrence and continuation of a Pro Rata
Distribution Event, each payment of principal shall be applied to such of
the Loans as the Borrower shall direct by notice to be received by the Agent
on or before the date of such payment; provided, that any Loans of the
Borrower maturing the same day shall be paid pro rata among such Loans. The
Agent shall remit each such payment by the Borrower in accordance therewith.
Concurrently with each remittance to any Bank of its share of any such
payment, the Agent shall advise each Bank as to the application of such
payment.
(b) Following the occurrence and during the continuation of a Pro Rata
Distribution Event, the Agent and the Banks shall apply all collections and
recoveries of the Loans and the other Bank Obligations hereunder first, to
the payment of principal and interest on the outstanding Loans on a pro rata
basis to each Bank based on the respective amounts of principal and accrued
interest (whether or not mature and currently payable) outstanding under
each Bank's Notes, and second, to payment of the remaining outstanding Bank
Obligations on a pro rata basis to each Bank based on the respective
remaining amounts of such Bank Obligations owed to each Bank (whether or not
mature and currently payable).
(c) For purposes hereof, a Pro Rata Distribution Event" shall mean the
first to occur of (i) an Event of Default under Section 9.01(a), Section
9.01(h) or Section 9.01(i) or (ii) any other Event of Default if the
Majority Banks shall have notified the Agent of the occurrence of such Event
of Default and shall have instructed the Agent that payments shall be
applied as provided in Section 3.09(b) above. The Agent shall promptly
notify the Borrower and each Bank of the occurrence of a Pro Rata
Distribution Event.
(d) The Banks and Agent agree that if any distribution shall be made
by the Agent contrary to this section (whether because the Agent shall not,
at the time of distribution, have been aware of the occurrence of any Event
of Default or otherwise), the Banks shall cooperate with the Agent to
redistribute payments, collections or recoveries in accordance with this
section.
(e) Unless Agent shall have received notice from Borrower prior to the
date on which any payment is due to Banks hereunder that Borrower will not
make such payment in full, Agent may assume that Borrower have made such
payment in full to Agent on such date and Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent Borrower shall
not have so made such payment in full to Agent, each Bank shall repay to
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to Agent, at the
Federal Funds Rate.
3.10. Lending Office. Each Bank may (a) designate its principal
office or a foreign branch, subsidiary or affiliate of such Bank as its
lending office (and the office to whose accounts payments are to be
credited) for any Eurodollar Advance, (b) designate its principal office or
a domestic branch, subsidiary or affiliate as its lending office (and the
office to whose accounts payments are to be credited) for any CD Advance or
Floating Base Advance and (c) change its lending offices from time to time
by notice to Agent and Borrower; provided, however, no Bank shall designate
a foreign branch without the consent of Borrower if such designation would
subject interest payments hereunder to withholding for Taxes. In such
event, such Bank shall continue to hold the Note evidencing its loans for
the benefit and account of such foreign branch, subsidiary or affiliate.
Each Bank shall be entitled to fund all or any portion of its Revolving
Credit Loan in any manner that it deems appropriate, but for the purposes of
this Agreement such Bank shall, regardless of such Bank's actual means of
funding, be deemed to have funded its Loan in accordance with the interest
option from time to time selected by Borrower for such Borrowing.
3.11. Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with Section 3.08, free and clear of and
without deduction for any and all present or future Taxes, excluding taxes
imposed on the income, and franchise taxes imposed on any Bank, by the
jurisdiction under the laws of which such Bank is organized or is or should
be qualified to do business or any political subdivision thereof and, Taxes
imposed on the income and franchise taxes imposed on Bank by the
jurisdiction of the lending office of such Bank or any political subdivision
thereof. If Borrower shall be required by law to deduct any Taxes (i.e.,
Taxes for which Borrower is responsible under the preceding sentence) from
or in respect of any sum payable hereunder or under the Note to such Bank,
(i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 3.09) such Bank receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay
the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Loan
Documents from the execution, delivery, or registration of, or otherwise
with respect to, this Agreement or the other Loan Documents (hereinafter
referred to as "Other Taxes").
(c) Borrower will indemnify each Bank for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 3.09) paid by Bank
or any liability (including penalties and interest) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within
thirty (30) days from the date such Bank makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes,
Borrower will furnish to Agent, at its address referred to in Section 12.02,
the original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 3.09 shall survive the payment in full of the Obligation.
(f) Each Bank agrees to use good faith efforts to carry out its
obligations under this Loan Agreement in such a way as to reduce the amount
of Taxes attributable to the Revolving Credit Loan, including the use of a
different lending office, as long as in the good faith opinion of such Bank
such actions would not adversely affect it.
3.12. Availability of Funds. Unless Borrower or a Bank, as the
case may be, notifies the Agent prior to the date on which it is scheduled
to make payment to the Agent of (a) in the case of a Bank, the proceeds of a
Loan or (b) in the case of Borrower, a payment of principal, interest or
fees to the Agent for the account of Banks, that it does not intend to make
such payment, the Agent may assume that such payment has been made. The
Agent may, but shall not be obligated to, to make the amount of such payment
available to the intended recipient in reliance upon such assumption. If
such Bank or Borrower, as the case may be, has not in fact made such payment
to the Agent, the recipient of such payment shall, on demand by the Agent,
repay to the Agent the amount so made available together with interest
thereon in respect of such day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (i) in the case of payment by a
Bank, the Federal Funds Rate for such day or (ii) in the case of payment by
Borrower, the applicable interest rate otherwise payable by the Borrower in
respect of such Loan.
ARTICLE IV
SPECIAL PROVISIONS FOR EURODOLLAR LOANS AND CD LOANS
4.01. Inadequacy of Loan Pricing. If with respect to an Interest Period
for any Eurodollar Borrowing or CD Borrowing, Agent determines that, (a)
with respect to any CD Advance, no timely quotations of the applicable rate
are offered by Agent for its certificates of deposit as contemplated herein;
or (b) with respect to any Eurodollar Advance, by reason of circumstances
affecting the Interbank Eurodollar market generally, deposits in Dollars (in
the applicable amounts) are not being offered or will not be offered to
Agent in the Interbank Eurodollar market for such Interest Period, then
Agent shall forthwith give notice thereof to Borrower, whereupon until Agent
notifies Borrower that the circumstances giving rise to such suspension no
longer exist, (a) the obligation of Banks to make CD Advances or Eurodollar
Advances, as the case may be, shall be suspended and (b) Borrower shall
either (i) repay in full the then-outstanding principal amount of such
Advances, together with accrued interest thereon on the last day of the then
current Interest Period applicable to such Advances, or (ii) convert such
Advances to Floating Base Advances (or, if such Advances are Eurodollar
Advances, convert them to CD Advances, and vice versa, unless prohibited
hereunder) in accordance with Section 2.02(c) of this Loan Agreement on the
last day of the then-current Interest Period applicable to each such
Advance.
4.02. Illegality. If, after the date of this Loan Agreement, the
adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank to make, maintain or fund its CD Advances or
Eurodollar Advances, such Bank shall so notify Agent, and Agent shall
forthwith give notice thereof to Banks and Borrower. With respect to
Eurodollar Advances, before giving any notice pursuant to this Section 4.02,
such Bank shall designate a different Eurodollar lending office if such
designation will avoid the need for giving such notice and will not be
otherwise disadvantageous to any material extent to such Bank (as determined
in good faith by such Bank). Upon receipt of such notice, Borrower shall
either (i) repay in full the then outstanding principal amount of the CD
Advance or Eurodollar Advance, as the case may be, together with accrued
interest thereon, or (ii) convert such Advance to a Floating Base Advance
(or, if such Advance is a CD Advance, convert it to a Eurodollar Advance,
and vice versa, unless such would be prohibited hereunder), on either (a)
the last day of the then current Interest Period applicable to such Advance
if Bank may lawfully continue to maintain and fund such Advance to such day
or (b) immediately if Bank may not lawfully continue to fund and maintain
such Advance to such day.
4.03. Increased Costs. With respect to any Advances, if any
Governmental Authority, central bank or other comparable authority, shall at
any time after the date of this Loan Agreement impose, modify or deem
applicable any taxation, required level of reserves (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System but excluding any reserve requirement included in the Eurodollar
Reserve Requirement or CD Reserve Requirement of such Bank), deposits,
insurance or capital (including any allocation of capital requirements or
conditions), or special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Bank, or
shall impose on any Bank (or its Eurodollar lending office) or the Interbank
Eurodollar market any other condition affecting its Advances, its Note, or
its obligation to make Advances; and the result of any of the foregoing is
to increase the cost to such Bank of making or maintaining such Advances, or
to reduce the amount (which increased cost or reduced amount are not
otherwise reflected in an increase in the Adjusted CD Rate or the Adjusted
Interbank Rate, as the case may be) of any sum received or receivable by
such Bank under this Agreement or its Note by an amount deemed by such Bank
to be material; then, within five (5) days after demand by such Bank
Borrower shall pay to such Bank, such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. Agent will
promptly notify Borrower of any event of which it has knowledge, occurring
after the date hereof, which will entitle any Bank to compensation pursuant
to this Section 4.03. A certificate of a Bank claiming compensation under
this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. With
respect to CD Advances and Eurodollar Advances, if any Bank demands
compensation under this section, then Borrower may at any time, upon at
least five (5) Business Days' prior notice to such Bank, either (i) repay in
full the then outstanding Advances, together with accrued interest thereon
to the date of prepayment or (ii) convert such Advances to Floating Base
Advances (or, if such Advances are CD Advances, convert them to Eurodollar
Advances, and vice versa, unless prohibited hereunder) in accordance with
the provisions of this Loan Agreement; provided, however, that Borrower
shall be liable for any Consequential Loss arising pursuant to such actions.
Nothing herein shall be construed so as to operate to require any Bank to
pay any interest, fees, costs or changes greater than is permitted by
applicable law.
4.04. Effect on Interest Options. If notice has been given pursuant to
Section 4.02 requiring any Advances to be repaid or converted, then unless
and until such Bank notifies Borrower that the circumstances giving rise to
such repayment no longer apply, all Advances shall be Floating Base Advances
(or, if CD Advances were required to be repaid or converted, Eurodollar
Advances, and vice versa, unless prohibited hereunder). If such Bank
notifies Borrower that the circumstances giving rise to such repayment no
longer apply, Borrower may thereafter select Advances to be of the type
which had been required to be repaid or converted in accordance with Section
2.02(c) of this Loan Agreement.
4.05. Payments Not At End of Interest Period. If Borrower makes any
payment of principal with respect to any CD Borrowing or Eurodollar
Borrowing on any day other than the last day of an Interest Period
applicable to such Borrowing, then Borrower shall reimburse Agent and each
Bank on demand the Consequential Loss incurred by it as a result of the
timing of such payment. A certificate of Agent setting forth the basis for
the determination of the amount of Consequential Loss shall be delivered to
Borrower by Agent and shall, in the absence of manifest error, be conclusive
and binding. Any conversion of a CD Borrowing or Eurodollar Borrowing to a
Floating Base Borrowing on any day other than the last day of the Interest
Period for such CD Borrowing or Eurodollar Borrowing shall be deemed a
payment for purposes of this section.
ARTICLE V
CONDITIONS PRECEDENT
5.01. Initial Advances. The obligation of each Bank to make the
Revolving Credit Loans herein provided for or the initial Advances
thereunder and the obligations of Agent to issue or any Bank to participate
in any Letter of Credit under this Agreement or to create or any Bank to
participate in any Bankers' Acceptances hereunder are subject to the
condition precedent that, on or before the date of such Advance, the
issuance of any Letter of Credit or the creation of any Bankers' Acceptance,
Agent shall have received each of the following, all in form satisfactory to
Agent and Banks:
(a) Committed Notes. A duly executed promissory note, drawn to the
order of each Bank, in the form of Exhibit"A" attached hereto with
appropriate insertions.
(b) Guaranty Agreement. The Guaranty Agreement executed by each of
the Guarantors.
(c) Hazard Insurance. Comprehensive public liability insurance and
hazard insurance policies.
(d) Articles of Incorporation of Borrower. A copy of the Articles of
Incorporation of Borrower and all amendments thereto.
(e) Bylaws of Borrower. A certified copy of the bylaws of Borrower.
(f) Resolutions of Borrower. Resolutions of Borrower authorizing the
execution of this Loan Agreement and the other Loan Documents duly adopted
by the Board of Directors of Borrower and accompanied by a certificate of
the Secretary of Borrower stating that such resolutions are true and
correct, have not been altered or repealed and are in full force and effect.
(g) Incumbency Certificate of Borrower. An incumbency certificate
with respect to Borrower executed by the appropriate officers of Borrower.
(h) Good Standing Certificates of Borrower. A current certificate of
existence and good standing from the State of Delaware and a current
certificate of existence and good standing and of payment of franchise taxes
from the State of Texas.
(i) Authority to Transact Business. Certificates evidencing the
authority of Borrower to conduct or transact business in all jurisdictions
in which Borrower conducts or transacts business.
(j) Articles of Incorporation and Bylaws of the Guarantors. A copy of
the Articles of Incorporation and Bylaws of each of the Guarantors and all
amendments thereto.
(k) Resolutions of Each Guarantor. Resolutions of each one of the
Guarantors approving the execution of the Guaranty Agreement duly adopted by
the Board of Directors of each of such Guarantors and accompanied by a
certificate of the Secretary of each of such Guarantors stating that such
resolutions are true and correct, have not been altered or repealed and are
in full force and effect.
(l) Incumbency Certificates of Guarantors. An incumbency certificate
with respect to each Guarantor executed by the appropriate officers of each
such Guarantor.
(m) Good Standing Certificate of Each Guarantor. A current
certificate of good standing from the state of incorporation of each
Guarantor and from all jurisdictions in which each Guarantor conducts
business.
(n) Agent Fee Agreement. An agent fee agreement between Borrower and
Agent.
(o) Opinion of Counsel. An executed opinion of counsel to Borrower
and each of the Guarantors.
5.02. All Advances. The obligations of each Bank to make any Advance
under this Loan Agreement (including the initial Advance) shall be subject
to the following conditions precedent:
(a) No Defaults. As of the date of the making of such Advance, there
exists no Event of Default or event which with notice or lapse of time or
both could constitute an Event of Default.
(b) Compliance with Loan Agreement. Borrower shall have performed and
complied in all material respects with all agreements and conditions
contained herein which are required to be performed or complied with by
Borrower before or at the date of such Advance.
(c) Request for Borrowing. In the case of any Borrowing, Agent shall
have received from Borrower a Request for Borrowing by telephonic notice or
in the form of either Exhibit "C", Exhibit "D" or Exhibit "E" attached
hereto, dated as of the date of such Advance and signed by an authorized
officer of Borrower, all of the statements of which shall be true and
correct, certifying that, as of the date thereof, (i) all of the
representations and warranties of Borrower contained in this Loan Agreement
and each of the Loan Documents executed by Borrower are true and correct,
(ii) no event has occurred and is continuing, or would result from the
Advance, which constitutes an Event of Default or which, with the lapse of
time or giving of notice or both, would constitute an Event of Default, and
(iii) such other facts as Agent may reasonably request.
(d) No Material Adverse Change. As of the date of making such
Advance, no Material Adverse Effect has occurred in the business or
financial condition of the Borrower and its Subsidiaries on a Consolidated
basis.
(e) Representations and Warranties. The representations and
warranties contained in Article VI (other than the representations and
warranties contained in the last clause of Section 6.07) hereof shall be
true in all material respects on the date of making of such Advance, with
the same force and effect as though made on and as of that date.
(f) Bankruptcy Proceedings. No proceeding or case under the United
States Bankruptcy Code shall have been commenced by or against Borrower, any
Guarantor or any Subsidiary.
5.03 Letters of Credit and Banker's Acceptances. The obligations of
Agent to issue and of any Bank to participate in any Letter of Credit under
this Agreement (including the initial Letter of Credit issued hereunder) or
to create and of any Bank to participate in any Banker's Acceptance
hereunder (including the initial Bankers' Acceptance created hereunder)
shall be subject to the following conditions precedent:
(a) No Defaults. As of the date of the issuance of such Letter of
Credit or the creation of any Banker's Acceptance, there exists no Event of
Default or event which with notice or lapse of time or both could constitute
an Event of Default.
(b) Compliance with Loan Agreement. Borrower shall have performed and
complied in all material respects with all agreements and conditions
contained herein and in the Loan Documents which are required to be
performed or complied with Borrower before or at the date of issuance of
such Letter of Credit or Banker's Acceptance.
(c) Letter of Credit Agreement. In the case of each request for the
issuance of a Letter of Credit, Agent shall have received from Borrower a
Letter of Credit Agreement.
(d) Acceptance Agreement. In the case of each request for a Banker's
Acceptance, Agent shall have received from Borrower an Acceptance Agreement.
(e) No Material Adverse Change. As of the date of issuance of such
Letter of Credit or the creation of any Banker's Acceptance, no change has
occurred in the business or financial condition of the Borrower and its
Subsidiaries on a Consolidated basis which causes or could cause a Material
Adverse Effect.
(f) Representations and Warranties. The representations and
warranties contained in Article VI (other than the representations and
warranties contained in the last clause of Section 6.07) hereof shall be
true in all material respects on the date of issuance of the Letter of
Credit or the creation of any Banker's Acceptance, with the same force and
effect as though made on and as of that date.
(g) Bankruptcy Proceedings. No proceeding or case under the United
States Bankruptcy Code shall have been commenced by or against Borrower, any
Guarantor or any Subsidiary.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce Banks to make the Revolving Credit Loans and to induce Agent
to issue the Letters of Credit and to create the Banker's Acceptances,
Borrower represents and warrants to Agent and Banks that:
6.01. Organization and Good Standing of Borrower. Borrower is a
corporation duly organized and existing in good standing under the laws of
the state of its incorporation, is duly qualified as a foreign corporation
and in good standing in all states in which the failure to so qualify would
have a Material Adverse Effect and has the corporate power and authority to
own its properties and assets and to transact the business in which it is
engaged and is or will be qualified in those states wherein it will transact
business in the future and where the failure to so qualify would have a
Material Adverse Effect.
6.02. Organization and Good Standing of the Guarantors. Each of the
Guarantors is a corporation duly organized and existing in good standing
under the laws of the state of its incorporation, is duly qualified as a
foreign corporation and in good standing in all states in which the failure
to so qualify would have a Material Adverse Effect and has the corporate
power and authority to own its properties and assets and to transact the
business in which it is engaged and is or will be qualified in those states
wherein it will transact business in the future and where the failure to so
qualify would have a Material Adverse Effect.
6.03. Authorization and Power. Borrower has the corporate power and
requisite authority to execute, deliver and perform this Loan Agreement and
the other Loan Documents to be executed by Borrower; Borrower is duly
authorized to, and has taken all corporate action necessary to authorize
such Borrower to, execute, deliver and perform this Loan Agreement, the
Notes and such other Loan Documents and is and will continue to be duly
authorized to perform this Loan Agreement, the Notes and such other Loan
Documents. Each of the Guarantors has the corporate power and requisite
authority to execute, deliver and perform the Guaranty Agreement.
6.04. No Conflicts or Consents. Neither the execution and delivery of
this Loan Agreement, the Notes, the Guaranty Agreement or the other Loan
Documents, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with
the terms and provisions thereof, will contravene or materially conflict
with any provision of law, statute or regulation to which Borrower or any of
the Guarantors is subject or any judgment, license, order or permit
applicable to Borrower or any of the Guarantors, or any indenture, loan
agreement, mortgage, deed of trust, or other agreement or instrument to
which Borrower or any of the Guarantors is a party or by which Borrower or
any of the Guarantors may be bound, or to which Borrower or any of the
Guarantors may be subject, or violate any provision of the Charter or Bylaws
of Borrower or any of the Guarantors. No consent, approval, authorization
or order of any court or governmental authority or third party is required
in connection with the execution and delivery by Borrower or any of the
Guarantors of the Loan Documents or to consummate the transactions
contemplated hereby or thereby.
6.05. Enforceable Obligations. This Loan Agreement, the Notes, the
Guaranty Agreement and the other Loan Documents are the legal and binding
obligations of the corporation executing such Loan Documents, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement
of creditors' rights.
6.06. No Liens. Except for Permitted Liens, all of the properties and
assets of Borrower and Guarantors are free and clear of all mortgages,
liens, encumbrances and other adverse claims of any nature, and such
corporation has and will have good and marketable title to such properties
and assets.
6.07. Financial Condition. Borrower has delivered to Agent copies of
the balance sheet of Borrower as of August 26, 1995, and the related
consolidated statements of income, stockholders' equity and changes in
financial position for the period ended such date; such financial statements
are true and correct in all material respects, fairly present the
Consolidated financial condition of Borrower and its Subsidiaries as of such
date and have been prepared in accordance with GAAP applied on a basis
consistent with that of prior periods except for the exclusion of footnotes
and normal adjustments; as of the date hereof, there are no obligations,
liabilities or indebtedness (including contingent and indirect liabilities
and obligations or unusual forward or long-term commitments) of Borrower and
its Subsidiaries which are (separately or in the aggregate) material and are
not reflected in such financial statements; no changes having a Material
Adverse Effect have occurred in the financial condition or business of
Borrower since August 26, 1995.
6.08. Full Disclosure. There is no material fact that Borrower has not
disclosed to Banks which could have a Material Adverse Effect on the
properties business, prospects or condition (financial or otherwise) of
Borrower or any of the Guarantors. Neither the financial statements
referred to in Section 6.07 hereof, nor any certificate or statement
delivered herewith or heretofore by Borrower to Agent in connection with
negotiations of this Loan Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary to keep the
statements contained herein or therein from being misleading in any material
respect.
6.09. No Default. No event has occurred and is continuing which
constitutes an Event of Default or which, with the lapse of time or giving
of notice or both, would constitute an Event of Default.
6.10. No Litigation. Except as described in Exhibit G attached hereto,
there are no actions, suits or legal, equitable, arbitration or
administrative proceedings pending, or to the knowledge of Borrower
threatened, against Borrower or any of the Guarantors that would, if
adversely determined, have a Material Adverse Effect.
6.11 Regulatory Defects. As of the date hereof, Borrower has advised
each Bank, in writing, of all Regulatory Defects of which Borrower has been
advised or has knowledge.
6.12. Use of Proceeds; Margin Stock. The proceeds of the Revolving
Credit Loan will be used by the Borrower solely for the purposes specified
in the preamble. None of such proceeds will be used for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U or G of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221 and
207), or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry a margin stock or for any other
purpose which might constitute this transaction a "purpose credit" within
the meaning of such Regulation U or G. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
margin stocks. Neither Borrower nor any Person acting on behalf of Borrower
has taken or will take any action which might cause any of the Loan
Documents, including this Agreement, to violate Regulations G, T, U or X or
any other regulations of the Board of Governors of the Federal Reserve
System or to violate Section 7 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or as the same
may hereinafter be in effect. Borrower does not own any "margin stock"
except for that described in the financial statements referred to in
Section 6.07 hereof and, as of the date hereof, the aggregate value of all
"margin stock" owned by Borrower and its Subsidiaries does not exceed 25% of
the aggregate value of all of the assets of Borrower and its Subsidiaries.
6.13. Taxes. Except as previously disclosed to each Bank, all tax
returns required to be filed by the Borrower and its Subsidiaries in any
jurisdiction have been filed or will be filed prior to the date on which the
tax payable with respect to such return will become delinquent and all taxes
(including mortgage recording taxes), assessments, fees and other
governmental charges upon Borrower or any Subsidiary or upon any of its or
their properties, income or franchises have been paid prior to the time that
such taxes could give rise to a lien thereon. To the best of Borrower's
knowledge, there is no proposed tax assessment against Borrower and there is
no basis for such assessment.
6.14. Principal Office, Etc. The principal office, chief executive
office and principal place of business of Borrower is at 301 Commerce
Street, Fort Worth, Tarrant County, Texas 76102, and Borrower maintains its
principal records and books at such address.
6.15. ERISA. (a) No Reportable Event has occurred and is continuing
with respect to any Plan; (b) PBGC has not instituted proceedings to
terminate any Plan; (c) neither the Borrower, any member of the Controlled
Group, nor of duly-appointed administrator of a Plan (i) has incurred any
liability to PBGC with respect to any Plan other than for premiums not yet
due or payable or (ii) has instituted or intends to institute proceedings to
terminate any Plan under Section 4041 or 4041A of ERISA or withdraw from any
Multi-Employer Pension Plan (as that term is defined in Section 3(37) of
ERISA); and (d) each Plan of Borrower have been maintained and funded in all
material respects in accordance with its terms and with all provisions of
ERISA applicable thereto.
6.16. Compliance with Law. Except as described on Exhibit H, Borrower
and each of the Guarantors are in compliance in all material respects with
all laws (including all Environmental Laws), rules, regulations,
ordinances, orders and decrees which are applicable to Borrower, the
Guarantors or any of their respective properties or business, the failure to
comply with which could have a Material Adverse Effect. Neither Borrower nor
any Subsidiary has been notified by any Governmental Authority that Borrower
or any Subsidiary has failed to comply with any such laws, rules,
regulations, orders or decrees, the failure to comply with which would
result in a Material Adverse Effect, nor has Borrower or any Subsidiary been
notified of any Environmental Claim except as described in Exhibit I.
6.17. Government Regulation. Neither Borrower nor any of the Guarantors
are subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Investment Company Act of 1940, the
Interstate Commerce Act (as any of the preceding acts have been amended), or
any other law (other than Regulation X) which regulates the incurring by
Borrower or any of its Subsidiaries of indebtedness, including but not
limited to laws relating to common contract carriers or the sale of
electricity, gas, steam, water, or other public utility services.
6.18. Insider. Borrower is not, and no Person having "control" (as that
term is defined in 12 U.S.C. Sec.375(b)(5) or in regulations promulgated
pursuant thereto) of Borrower is, an "executive officer", "director", or
"person who directly or indirectly or in concert with one or more persons
owns, controls, or has the power to vote more than 10% of any class of
voting securities" (as those terms are defined in 12 U.S.C. Sec. 375(b) or
in regulations promulgated pursuant thereto) of any Bank, of a bank holding
company of which any Bank is a subsidiary, or of any subsidiary of a bank
holding company of which any Bank is a subsidiary, or of any bank at which
any Bank maintains a correspondent account, or of any bank which maintains a
correspondent account with any Bank.
6.19. Subsidiaries. Borrower directly owns all of the capital stock of
Pier 1 Assets, Inc.; Pier 1 Assets, Inc. directly owns all of the capital
stock of Pier 1 Licensing, Inc.; Pier 1 Licensing, Inc. directly owns all of
the capital stock of Pier 1 Imports (U.S.), Inc.; and Pier 1 Imports (U.S.),
Inc. directly owns all of the capital stock of Pier Lease, Inc., in each
case free and clear from all liens, security interests, charges and
encumbrances.
6.20. Environmental Matters. Except as described in Exhibit "I"
attached hereto, none of the properties of Borrower or its Subsidiaries has
been used at any time during their ownership to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce,
process, or in any manner deal with Hazardous Materials. Except as
described in Exhibit "I" attached hereto, there are no past, pending or, to
the best of Borrower's knowledge, threatened or potential Environmental
Claims against Borrower or any of its Subsidiaries or with respect to any
properties owned or controlled by Borrower or any of its Subsidiaries.
Except as described in Exhibit "I" attached hereto, there are no underground
storage tanks located on any of the properties owned or controlled by
Borrower or any of its Subsidiaries and, to Borrower's best knowledge, there
never have been any underground storage tanks located on any of the
properties owned or controlled by Borrower or any of its Subsidiaries, and
the Borrower has received no actual (as contrasted with constructive)
notification of any Environmental Claims relating to any property contiguous
to any property owned or controlled by Borrower or any of its Subsidiaries.
6.21. Representations and Warranties. Each Request for Advance shall
constitute, without the necessity of specifically containing a written
statement, a representation and warranty by Borrower that no Event of
Default exists and that all representations and warranties contained in this
Article VI (other than in the last clause of Section 6.07) or in any other
Loan Document are true and correct at and as of the date the Advance is to
be made.
6.22. Survival of Representations, Etc. All representations and
warranties made herein are true and correct when made by Borrower and shall
survive delivery of the Notes, the making of the Revolving Credit Loan, the
issuance of each Letter of Credit and the creation of each Bankers'
Acceptance and any investigation at any time made by or on behalf of Agent
or Banks shall not diminish any Bank's right to rely thereon.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until payment in full of the Notes and the Obligation, Borrower agrees
and covenants that Borrower will (unless Majority Banks shall otherwise
consent in writing):
7.01. Financial Statements. Deliver to Agent four (4) copies of each of
the following:
(a) Quarterly Statements: as soon as practicable and in any event
within 60 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, a Consolidated statement of
operations, a Consolidated statement of changes in financial position of the
Borrower, and a Consolidated balance sheet of the Borrower as at the end of
such quarterly period, setting forth in each case in comparative form
figures for the corresponding period in the preceding fiscal year, all in
reasonable detail and prepared by an authorized financial officer of the
Borrower;
(b) Annual Statements: as soon as practicable and in any event within
120 days after the end of each fiscal year, a Consolidated statement of
operations, and a Consolidated statement of changes in financial position of
the Borrower for such year, and a Consolidated balance sheet of the Borrower
as at the end of such year, setting forth in each case in comparative form
corresponding Consolidated figures from the preceding year, all in
reasonable detail and satisfactory in scope to Banks, together with an
opinion by independent public accountants of recognized standing selected by
the Borrower and satisfactory to Majority Banks, whose opinion shall state
that such financial statements have been prepared in accordance with GAAP
and fairly present the Consolidated financial position of the Borrower as of
the date thereof and the Consolidated results of their operations for the
period thereof;
(c) SEC and Other Reports: promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and reports as
Borrower shall send to its public security holders and copies of all
registration statements (without exhibits) and all reports which it files
with the Securities and Exchange Commission (or any governmental body or
agency succeeding to the functions of the Securities and Exchange
Commission);
(d) Audit Reports: promptly upon receipt thereof, a copy of each
other report submitted to the Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Borrower or any Subsidiary (other than any
"management letters" delivered to the Borrower by such accountants, which
management letters shall only be delivered to Agent upon Agent's prior
request);
(e) Other Notices: promptly upon the occurrence thereof, notice of
any of the following: (a) the occurrence of any condition or event which
constitutes a Default or an Event of Default, specifying the nature and
period of existence thereof, (b) that any Person has given any notice to the
Borrower with respect to a claimed Default or Event of Default, or (c) that
any Person has given any notice to the Borrower or any Subsidiary or taken
any other action with respect to a claimed default or event of default with
respect to any other indebtedness which in the aggregate exceeds the sum of
three million dollars ($3,000,000) and, with respect to any of such events
specified in subdivisions (a), (b) or (c) above of this Section 7.01(e),
what action the Borrower or such Subsidiary has taken, is taking or proposes
to take;
(f) ERISA Events: promptly upon any officer of the Borrower obtaining
knowledge of the occurrence thereof, notice of the occurrence of any
(a) Reportable Event, or (b) "prohibited transaction," as such term is
defined in Section 4975 of the Code, in connection with any Plan or any
trust created thereunder, specifying the nature thereof, what action the
Borrower or its Subsidiary has taken, is taking or proposes to take with
respect thereto, and, when known, any action taken or threatened by the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect thereto; provided that with respect to the occurrence of any
"reportable event" as to which the Pension Benefit Guaranty Corporation has
waived the 30-day reporting requirement, such written notice need be given
only at such time as notice is given to the Pension Benefit Guaranty
Corporation; and
(g) Requested Information: with reasonable promptness, such other
financial data or other data or information related to the business or
operations of the Borrower or its Subsidiaries as Agent or any Bank may
reasonably request. Agent and Banks agree that Banks will not intentionally
disclose any information given to any Bank by the Borrower or any of its
Subsidiaries which is either proprietary or confidential and which is
prominently marked as such; provided, however, that this restriction shall
not apply to information which has at the time in question entered the
public domain, nor will this restriction prohibit any Bank from disclosing
such information (a) as is required to be disclosed by Law or by any order,
rule or regulation (whether valid or invalid) of any Governmental Authority,
(b) to any Bank's auditors, attorneys, agents or Affiliates, or (c) to
purchasers or prospective purchasers or assignees of interests in the Loan
Agreement or the Obligations.
Together with each delivery of financial statements required by Section
7.01(a) above, the Borrower will deliver to Agent an Officer's Certificate
demonstrating (with computations in reasonable detail) compliance by the
Borrower and its Subsidiaries with the provisions of Sections 8.01, 8.02,
8.03, 8.04, 8.05(b), 8.05(c), 8.05(d), 8.05(e) and 8.05(f) and stating that
there exists no Default or Event of Default with respect to such covenants
or otherwise under this Loan Agreement or, if any Default or Event of
Default exists with respect to such covenants or under this Loan Agreement,
specifying the nature and period of existence thereof and what action the
Borrower proposes to take with respect thereto. Together with each delivery
of financial statements required by Section 7.01(b) above, the Borrower will
deliver to Agent an Officer's Certificate of the Treasurer or Chief
Financial Officer of Borrower demonstrating (with computations in reasonable
detail) compliance by the Borrower and its Subsidiaries with the provisions
of Sections 8.01, 8.02, 8.03, 8.04, 8.05(b), 8.05(c), 8.05(d), 8.05(e) and
8.05(f) and stating that there exists no Default or Event of Default with
respect thereto or otherwise under this Loan Agreement or, if any Default or
Event of Default exists with respect thereto or under this Loan Agreement,
specifying the nature and period of existence thereof and what action the
Borrower proposes to take with respect thereto. By delivery of such
Officer's Certificate, the officer executing such certificate represents and
warrants that the statements made therein are based upon the level of
investigation normally and customarily taken by Treasurers or Chief
Financial Officers of similarly situated corporations of established
reputation in performing their regular duties. In the event that a
change(s) in GAAP related to the accounting for leases requires the Borrower
to use accounting principles for purposes of determinations or computations
under this Loan Agreement different than the Borrower uses in its quarterly
and annual financial statements, the Borrower will, together with the
delivery of financial statements required by clause (ii) above with respect
to the fiscal year in which such change(s) in GAAP become applicable,
deliver to Agent a certificate of such accountants stating that, in making
the audit necessary to the certification of such financial statements, they
have obtained no knowledge of any Default or Event of Default, or, if they
have obtained knowledge of any Default or Event of Default, specifying the
nature and period of existence thereof.
7.02. Payment of Obligations; Maintain Books and Reserves. Duly and
punctually pay the Obligation in accordance with the terms of this Loan
Agreement. Borrower will, and will cause each of its Subsidiaries to, keep
proper books of record and account and set aside appropriate reserves, all
in accordance with GAAP.
7.03. Inspection of Property. Permit any Person designated by Agent or
any Bank, at Banks' expense and with reasonable notice to the Borrower, to
visit and inspect any of the properties of the Borrower and its
Subsidiaries, to examine the corporate books and financial records of the
Borrower and its Subsidiaries and make copies thereof or extracts therefrom
and to discuss the affairs, finances and accounts of any such corporations
with officers and employees of the Borrower and its independent public
accountants, all at such reasonable times and as often as such Bank may
reasonably request. Agent and Banks agree that Banks will keep confidential
any proprietary or confidential information given to Banks by the Borrower
or its Subsidiaries upon the same terms and conditions as agreed to with
respect to information Bank has obtained pursuant to Section 7.01(g) hereof.
7.04. Compliance with Laws, Etc. Comply and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders applicable to its business, such compliance to
include, without limitation, paying before the same become delinquent all
taxes, assessments, and governmental charges imposed upon it or upon its
property, except to the extent contested in good faith by appropriate
proceedings and for which adequate reserves have been established in
accordance with GAAP, and provided by Borrower or its Subsidiary, as the
case may be, retains good and marketable title to and the right to use and
enjoyment of its properties or other assets which may be affected by any
such contest. Borrower will timely pay and will cause its Subsidiaries to
timely pay, all payments due for labor, services and materials rendered or
furnished in the ordinary course of business which are secured by inchoate
statutory Liens, except to the extent contested in good faith by appropriate
proceedings, and provided that the Borrower or its Subsidiary, as the case
may be, retains good and marketable title to and the right to the use and
enjoyment of its properties or other assets which may be affected by any
such contest. Borrower will promptly notify Agent if the Borrower receives
any notice, claim or demand from any governmental agency which alleges that
the Borrower is in violation of any Laws or has failed to comply with any
order issued pursuant to any federal, state or local statute regulating its
operation and business, the result of which may have a Material Adverse
Effect.
7.05. Maintenance of Existence and Qualifications. Maintain and
preserve and cause each of its Subsidiaries to maintain and preserve its
corporate existence and its rights and franchises in full force and effect
and obtain and maintain and cause its Subsidiaries to obtain and maintain
all permits and licenses necessary to the proper conduct of its business,
including without limitation qualifying to do business as a foreign
corporation in all states or jurisdictions where required by applicable Law.
Notwithstanding the foregoing, this Section 7.05 shall not prohibit any
transaction expressly permitted by Section 8.05(f) of this Loan Agreement.
7.06. Maintenance of Properties; Insurance. Maintain, preserve,
protect, and keep and cause each of its Subsidiaries to maintain, preserve,
protect and keep, all property used or useful in the conduct of its business
in good condition and in compliance with all applicable Laws, and will from
time to time make all repairs, renewals and replacements needed to enable
the business and operations carried on in connection therewith to be
promptly and advantageously conducted at all times. Borrower will, and will
cause each of its Subsidiaries, to carry and maintain in full force and
effect at all times with financially sound and reputable insurers (or, in an
insurance fund or by self-insurance authorized by the jurisdiction in which
its operations are carried on) insurance in such amounts (and with
co-insurance and deductibles) as such insurance is usually carried by
corporations of established reputation engaged in the same or similar
businesses and similarly situated, and the Borrower and its Subsidiaries
shall maintain self-insurance only to the extent that a prudent corporation
of established reputation engaged in the same or similar businesses and
similarly situated would rely upon self-insurance.
7.07. Primary Business. Continue to conduct and cause each of its
Subsidiaries to continue to conduct substantially all of their respective
operations in the same primary businesses as those in which they currently
operate (i.e., developing, owning and operating, in the United States and
Canada and in territories of the United States and Canada, specialty retail
stores offering primarily imported decorative home furnishings, accessories
and other specialty items for the home and casual clothing and fashion
accessories.
7.08. Yield Maintenance. If at any time after the date hereof, and from
time to time, any Bank determines that the adoption or modification of any
applicable law, rule or regulation regarding taxation, such Bank's required
levels of reserves, deposits, insurance or capital (including any allocation
of capital requirements or conditions), or similar requirements, or any
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation,
administration or compliance of such Bank with any of such requirements, has
or would have the effect of (1) materially increasing such Bank's costs
relating to the obligation hereunder, or (2) reducing the yield or rate of
return of Bank on the Obligation hereunder to a level below that which such
Bank could have achieved but for the adoption or modification of any such
requirements, Borrower shall, within fifteen (15) days of any request by
such Bank, pay to such Bank such additional amounts as (in the Bank's sole
judgment, after good faith and reasonable computation) will compensate such
Bank. No failure by any Bank to immediately demand payment of any
additional amounts payable hereunder shall constitute a waiver of such
Bank's right to demand payment of such amounts at any subsequent time.
Nothing herein contained shall be construed or so operate as to require
Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law.
7.09. Transactions With Affiliates. Conduct and cause each Subsidiary
to conduct all of their respective transactions with any Affiliate on an
arm's length basis and pursuant to the reasonable requirements of Borrower's
and/or such Subsidiary's business.
7.10. Compliance with Loan Documents. Borrower and its Subsidiaries
will promptly comply in all material respects with any and all covenants and
provisions of this Loan Agreement, the Notes, the Guaranty Agreement and all
other of the Loan Documents.
7.11. Compliance with Material Agreements. Borrower will comply with
all material agreements, indentures, mortgages or documents binding on it or
affecting its properties or business where the failure to so comply would
have a Material Adverse Effect.
7.12. Operations and Properties. Borrower will act prudently and in
accordance with customary industry standards in managing or operating its
assets, properties, business and investments; Borrower will keep in good
working order and condition, ordinary wear and tear excepted, all of their
respective assets and properties which are necessary to the conduct of its
business.
7.13. Books and Records; Access. Upon prior written notice, Borrower
will give any representative of Agent and Banks access during all business
hours to, and permit such representative to examine, copy or make excerpts
from, any and all books, records and documents in the possession of Borrower
and relating to its affairs, and to inspect any of the properties of
Borrower. Borrower will maintain complete and accurate books and records of
its transactions in accordance with good accounting practices.
7.14. Additional Information. Borrower shall promptly furnish to any
Bank, at its request, such additional financial or other information
concerning assets, liabilities, operations and transactions of Borrower or
any Subsidiary as any Bank may from time to time reasonably request.
7.15. Guaranty of Additional Subsidiary Corporations. Borrower shall
cause each Significant Subsidiary formed after the date of this Loan
Agreement to execute a guaranty of payment of the Obligation in form
satisfactory to Agent within ten (10) days after the date of formation of
such Subsidiary.
7.16. Further Assurances. Upon request of the Agent or any Bank,
promptly cure any defects in the creation, issuance, execution and delivery
of this Loan Agreement or in the Loan Documents. Borrower, at its expense,
will further promptly execute and deliver to Agent or any Bank upon request
all such other and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and agreements of
Borrower hereunder, or to further evidence and more fully describe the
obligations of Borrower hereunder, or to correct any omissions herein, or to
more fully state the obligations set out herein.
ARTICLE VIII
NEGATIVE COVENANTS
Until full payment of the Notes and the Obligation or any of the Loan
Documents, Borrower covenants and agrees that neither Borrower nor any of
its Subsidiaries will, unless Majority Banks otherwise consent in writing:
8.01. Funded Debt EBITDA Ratio. Permits its Funded Debt EBITDA Ratio to
be greater than 3.5 to 1.0 at any time.
8.02. Current Ratio. Permit the ratio of its Consolidated Current
Assets to its Consolidated Current Liabilities to be less than 2.0 to 1.0 at
any time.
8.03. 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) two
hundred million dollars ($200,000,000) plus (ii) 50% of the aggregate
Consolidated Net Income for the period commencing after February 25, 1995
(without deduction for any net loss in any fiscal year ending after February
25, 1995) and terminating at the end of the last fiscal quarter preceding
the date of any determination of Consolidated Tangible Net Worth.
8.04. 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 or declare any dividend after the occurrence
of an Event of Default. 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.
8.05. Lien, Debt and Other Restrictions. Borrower covenants that it
will not, and will not permit any Subsidiary to:
(a) Liens. Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired, without equally
and ratably securing the Obligation, except without double-counting, any of
the following (the "Permitted Liens"):
(i) Liens for Taxes, not yet due and delinquent or which are
being actively contested in good faith by appropriate
proceedings, provided that the existence of such Liens does
not affect the Borrower's or its Subsidiaries' good and
marketable title to or use or enjoyment of the property or
assets burdened by such Liens,
(ii) other Liens arising in the ordinary course of its business or
the ownership of its property and assets (including easements
and similar encumbrances) which were not incurred in
connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase
price of property or assets, and which do not in the
aggregate materially interfere with the operation of its
business and will not cause a Material Adverse Effect,
(iii) any Lien existing on any property of any corporation at the
time it becomes a Subsidiary, provided that (a) any such Lien
shall not encumber any other property of the Borrower or such
Subsidiary, and (b) the aggregate amount of Debt secured by
such Lien shall not at any time exceed 100% of the fair
market value of such property, and
(iv) any Lien on any property acquired, constructed or improved by
the Borrower or a Subsidiary after the date hereof and
created contemporaneously with or within 12 months of such
acquisition, completion of construction or improvement to
secure Debt assumed or incurred to finance up to 100% of the
purchase price or cost of construction or improvement of such
property, but such Lien shall cover only the property so
acquired or constructed and any improvements thereto, and
(v) Liens existing on the date hereof and disclosed in the most
recent financial statements described in Section 6.07 hereof,
and
(vi) Liens arising in connection with court proceedings, provided
the execution of such Liens is effectively stayed and such
Liens are contested in good faith by appropriate proceedings
and for which adequate reserves have been established in
accordance with GAAP, and provided further that the existence
of such Liens does not affect the Borrower's or its
Subsidiaries' title to or use or enjoyment of the property or
assets burdened by such Liens, and
(vii) any Lien described in clauses (iii), (iv) or (v) above
resulting from renewing, extending or refunding outstanding
Secured Debt provided that the principal amount of the
Secured Debt secured thereby is not increased and the Lien is
not extended to any other property, and
(viii) any other Liens incurred in connection with the borrowing of
money or any other Liens, provided that immediately
thereafter the aggregate amount of Debt secured by Liens
incurred pursuant to this clause (viii) at any time does not
at any time exceed five percent (5.0%) of Consolidated Net
Tangible Assets.
(b) Funded Debt to Consolidated Tangible Net Worth - Permit the ratio
of its Funded Debt to Consolidated Tangible Net Worth to exceed 1.4 to 1.0.
(c) Subsidiaries' Debt -- Create, incur, assume or suffer to exist any
additional Debt unless after giving effect thereto, the aggregate amount of
outstanding Debt of the Borrower's Subsidiaries is less than 10% of
Consolidated Net Tangible Assets.
(d) Maintenance of Fixed Charge Coverage -- Permit the ratio of Cash
Flow Available for Fixed Charges to Fixed Charges to be determined on the
last day of each fiscal quarter for the preceding four (4) quarters to be
less than 1.25 to 1.0 for each of the fiscal quarters ending during the
period from the date of this Loan Agreement.
(e) Limitation on Sale of Assets -- Other than sales in the ordinary
course of business, sell or otherwise dispose of in any fiscal year more
than 10% of its Consolidated Tangible Assets or sell or otherwise dispose of
any of its Consolidated Tangible Assets for less than fair market value.
(f) Merger and Consolidation -- Merge or consolidate, provided,
however, that:
(i) the Borrower may merge or consolidate with or into any other
corporation so long as (A) the successor corporation is a
United States entity which expressly assumes the Obligation
in writing or the Borrower shall be the continuing or
surviving entity, and (B) no Default or Event of Default
shall have occurred after giving effect to such merger or
consolidation, and
(ii) any Subsidiary may merge or consolidate with or into any
other corporation so long as, upon such merger or
consolidation, (A) the successor corporation becomes a
Subsidiary of the Borrower, and (B) no Default or Event of
Default shall have occurred after giving effect to such
merger or consolidation, and
(iii) any Subsidiary may merge or consolidate with or into the
Borrower or any other Subsidiary so long as, in any such
merger or consolidation involving the Borrower, the Borrower
shall be the surviving or continuing corporation.
8.06. Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
conducted on the date hereof.
8.07. Guaranteed Debt. Create, assume or suffer to exist, or permit any
of its Subsidiaries to create, assume or suffer to exist, any Guaranteed
Debt except (i) Guaranteed Debt relating to this Loan Agreement, (ii)
Guaranteed Debt in existence on the date hereof, (iii) Guaranteed Debt that
is secured by assets of the primary obligor having a fair market value at
least equal to the amount of such Guaranteed Debt, as determined by an
independent qualified appraiser selected by Borrower (which appraisal, at
Agent's reasonable request and at Borrower's expense, shall be promptly
updated, but such request shall not be made more often than once every 12
months), (iv) Guaranteed Debt by Borrower or a Subsidiary on the
consolidated balance sheet of Borrower and its Subsidiaries, and (v) any
Guaranteed Debt by Borrower or any of its Subsidiaries described in
Subsection (xiii) of the definition of "Restricted Investments" in Article I
hereof; provided, however, that in no event shall the aggregate amount of
all consolidated Guaranteed Debt (other than the Guaranteed Debt described
in (iv) above) of Borrower and its Subsidiaries exceed the Consolidated
Tangible Net Worth.
8.08. Management and Control. Permit any material change in the
management or control of Borrower or any of its Subsidiaries.
8.09. Strict Compliance. If any action or failure to act by Borrower
violates any covenant or obligations of Borrower contained herein, then such
violation shall not be excused by the fact that such action or failure to
act would otherwise be required or permitted by any covenant (or exception
to any covenant) other than the covenant violated.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES UPON EVENT OF DEFAULT
9.01. Events of Default. An "Event of Default" shall exist if any one
or more of the following events (herein collectively called "Events of
Default") shall occur and be continuing:
(a) Borrower shall fail to pay when due any principal of, or interest
on any Note, the Obligation, or any other fee or payment due hereunder or
under any of the Loan Documents; or
(b) Borrower or any Subsidiary defaults in any payment on any other
obligation for money borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property whether
or not secured by a purchase money mortgage or any obligation under notes
payable or drafts accepted representing extensions of credit) beyond any
period of grace provided with respect thereto, or Borrower or any Subsidiary
fails to perform or observe any other agreement, term or condition contained
in any agreement under which any such obligation is created (or if any other
event thereunder or under any such agreement shall occur and be continuing)
and the effect of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such holder
or holders) to cause, such obligation to become due prior to any stated
maturity, provided that the aggregate amount of all obligations as to which
such a default shall occur and be continuing or such a failure or other
event causing or permitting acceleration shall occur and be continuing
exceeds five million dollars ($5,000,000); or
(c) any representation or warranty made by Borrower herein or in any
writing furnished in connection with or pursuant to this Agreement shall be
false or misleading in any material respect on the date as of which made, or
any representation or warranty made by any Guarantor in the Guaranty
Agreement or in any writing furnished in connection with or pursuant to the
Guaranty Agreement shall be false or misleading in any material respect on
the date as of which made; or
(d) Borrower fails to perform or observe any agreement contained in
Sections 8.04, 8.05(a), 8.05(b), 8.05(c), 8.05(d), 8.05(e), 8.05(f), 8.06,
8.07 or 8.08 and such failure to perform or observe becomes known to any
officer of Borrower; or
(e) Borrower fails to perform or observe any agreement contained in
Sections 8.01, 8.02 or 8.03 and such failure to perform or observe becomes
known to any officer of Borrower and continues for 30 days thereafter; or
(f) Borrower fails to perform or observe any other covenant or
obligation contained in this Agreement, or any Guarantor fails to perform or
observe any covenant, or obligation contained in the Guaranty Agreement, and
such failure (other than the failure of any Guarantor to make any payments
required by the Guaranty Agreement, in which case there shall be no grace
period) shall not be remedied within 45 days after such failure to perform
or observe such covenant or obligation; or
(g) Borrower or any Subsidiary makes an assignment for the benefit of
creditors or is generally not paying its debts as such debts become due; or
(h) any decree or order for relief in respect of Borrower or any
Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called the
"Bankruptcy Law"), of any jurisdiction, federal or state; or
(i) Borrower or any Subsidiary petitions or applies to any
Governmental Authority for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of Borrower or any Subsidiary, or of any substantial part of the
assets of Borrower or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
relating to Borrower or any Subsidiary under the Bankruptcy Law of any other
jurisdiction; or
(j) any such petition or application is filed, or any such proceedings
are commenced, against Borrower or any Subsidiary and Borrower or such
Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is entered appointing
any such trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order, judgment or
decree remains unstayed and in effect for more than 30 days; or
(k) any order, judgment or decree is entered in any proceedings
against Borrower decreeing the dissolution of Borrower and such order,
judgment or decree remains unstayed and in effect for more than 60 days; or
(l) any order, judgment or decree is entered in any proceedings
against Borrower or any Subsidiary decreeing a split-up of Borrower or such
Subsidiary which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Subsidiary whose
assets represent a substantial part, of the Consolidated assets of Borrower
(determined in accordance with GAAP) or which requires the divestiture of
assets), or stock of a Subsidiary, which shall have contributed a
substantial part of the Consolidated Net Income of Borrower (determined in
accordance with GAAP) for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed and in effect for
more than 60 days); or
(m) final judgments (excluding any final judgments as to which
Borrower's maximum liability not fully covered by insurance, and which in
the aggregate amount outstanding, are less than $10,000,000) is rendered
against Borrower or any Subsidiary and, within 60 days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal,
or within 60 days after the expiration of any such stay, such judgment is
not discharged; or
(n) the Guaranty Agreement is set aside, deemed unlawful or
unenforceable, voided or otherwise terminated with respect to any Guarantor
without the written consent of Bank; or
(o) there shall occur any change in the condition (financial or
otherwise) of Borrower or any of its Subsidiaries which has a Material
Adverse Effect; or
(p) Default shall occur under any indebtedness for borrowed money
issued, assumed or guaranteed by Borrower or any Subsidiary or under any
indenture, agreement or other instrument under which the same may be issued.
9.02. Remedies Upon Event of Default. If an Event of Default shall have
occurred and be continuing, then Agent shall, at the request of Majority
Banks, exercise any one or more of the following rights and remedies, and
any other Remedies in any of the Loan Documents (a) terminate the Revolving
Commitments of Banks hereunder, (b) declare the principal of, and all
interest then accrued on, the Notes and any other liabilities hereunder or
under any other Loan Documents to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, notice of default, notice of acceleration or notice of intention to
accelerate or other notice of any kind all of which Borrower hereby
expressly waives, anything contained herein or in the Notes to the contrary
notwithstanding, (c) refuse to make any additional Advances under the Notes,
(d) refuse to issue any additional Letters of Credit and Bankers'
Acceptances, (e) reduce any claim to judgment, and/or (f) without notice of
default or demand, pursue and enforce any of Banks' rights and remedies
under the Loan Documents or otherwise provided under or pursuant to any
applicable law or agreement; provided however, that if any Event of Default
specified in Section 9.01(h) or Section 9.01(i) hereof shall occur, the
principal of, and all interest on, the Notes and other obligations and
liabilities hereunder or under any other Loan Documents shall thereupon
become due and payable concurrently therewith, without any action by Agent
or Banks, or any of them, and without presentment, demand, notice of
default, notice of acceleration, or of intention to accelerate or other
notice of any kind, all of which Borrower hereby expressly waives.
9.03. Performance by Agent. Should Borrower fail to perform in any
material respect any covenant, duty or agreement contained herein or in any
of the Loan Documents, Agent or Banks may, at their option, perform or
attempt to perform such covenant, duty or agreement on behalf of the
Borrower following written notice to such Borrower of such intention to
perform. In such event, Borrower shall, at the request of Agent or Banks,
promptly pay any amount reasonably expended by Agent or Banks in performance
or attempted performance to Agent at its principal office in Fort Worth,
Texas, together with interest therein at the Default Rate from the date of
such expenditure until paid. Notwithstanding the foregoing, it is expressly
understood that Agent and Banks assume no liability or responsibility
(except liability attributable to the gross negligence or willful misconduct
of Agent) for the performance of any duties of Borrower hereunder or under
any of the Loan Documents or other control over the management and affairs
of the Borrower.
9.04. Remedies Cumulative. All covenants, conditions, provisions,
warranties, indemnities and other undertakings of Borrower contained in this
Agreement, or in any document referred to herein or in any agreement
supplementary hereto or in any of the Loan Documents shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions or agreements of Borrower contained herein. The
failure or delay of Agent or Banks to exercise or enforce any rights, liens,
powers or remedies hereunder or under any of the aforesaid agreements or
other documents against any security shall not operate as a waiver of such
liens, rights, powers and remedies, but all such rights, powers and remedies
shall continue in full force and effect until the loans evidenced by the
Notes and all other Obligations of Borrower to Banks shall have been fully
satisfied, and all rights, liens, powers and remedies herein provided for
are cumulative and none are exclusive.
ARTICLE X
ARBITRATION PROGRAM
10.01. Binding Arbitration. Upon the demand of any party, whether
made before or after the institution of any judicial proceeding, any Dispute
(as defined below) shall be resolved by binding arbitration in accordance
with the terms of this Arbitration Program. A "Dispute" shall include any
action, dispute, claim, or controversy of any kind (e.g., whether in
contract or in tort, statutory or common law, legal or equitable, or
otherwise) now existing or hereafter arising between the parties in any way
arising out of, pertaining to or in connection with this Loan Agreement or
the Loan Documents. Any party to this Arbitration Program may, by summary
proceedings (e.g., a plea in abatement or motion to stay further
proceedings), bring any action in court to compel arbitration of any
Disputes. Any party who fails or refuses to submit to binding arbitration
following a lawful demand by the opposing party shall bear all costs and
expenses incurred by the opposing party in compelling arbitration of any
Dispute. The parties agree that by engaging in activities with or involving
each other as described above, they are participating in transactions
involving interstate commerce. THE PARTIES UNDERSTAND THAT PURSUANT TO THIS
ARBITRATION PROGRAM, DISPUTES SUBMITTED TO ARBITRATION WILL NOT BE DECIDED
THROUGH LITIGATION IN FEDERAL OR STATE COURTS BEFORE A JUDGE OR JURY.
10.02. Governing Rules. All Disputes between the parties shall be
resolved by binding arbitration administered by the American Arbitration
Association (the "AAA") in accordance with the Commercial Arbitration Rules
of the AAA, the Federal Arbitration Act (Title 9 of the United States Code)
and to the extent the foregoing are inapplicable, unenforceable or invalid,
the laws of the State of Texas. In the event of any inconsistency between
this Arbitration Program and such rules and statutes, this Arbitration
Program shall control. Judgment upon any award rendered hereunder may be
entered in any court having jurisdiction; provided, however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank
of the protections afforded to it under 12 U.S.C. Sec. 91 or Texas Banking
Code Art. 342-609.
10.03. No Waiver; Preservation of Remedies; Multiple Parties. No
provision of, nor the exercise of any rights under, this Arbitration Program
shall limit the right of any party, during any Dispute to seek, use, and
employ ancillary or preliminary remedies, judicial or otherwise, for the
purpose of realizing upon, preserving, protecting, foreclosing or proceeding
under forcible entry and detainer for possession of any real or personal
property, and any such action shall not be deemed an election of remedies.
Such rights shall include, without limitation, rights and remedies relating
to (1) foreclosing against any real or personal property collateral or other
security, (2) exercising self-help remedies including set off rights or
(3) obtaining provisional or ancillary remedies such as injunctive relief,
sequestration, attachment, garnishment, or the appointment of a receiver
from a court having jurisdiction. Such rights can be exercised at any time
except to the extent such action is contrary to a final award or decision in
any arbitration proceeding. The institution and maintenance of an action
for judicial relief or pursuit of provisional or ancillary remedies or
exercise of self-help remedies shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the Dispute to arbitration nor
render inapplicable the compulsory arbitration provisions hereof. In
Disputes involving indebtedness or other monetary obligations, each party
agrees that the other party may proceed against all liable persons, jointly
and severally, or against one or more of them, less than all, without
impairing rights against other liable persons. No party shall be required
to join the principal obligor or any other liable persons (e.g., sureties or
guarantors) in any proceeding against a particular person. A party may
release or settle with one or more liable persons as the party deems fit
without releasing or impairing rights to proceed against any persons not so
released.
10.04. Arbitrator Powers and Qualifications; Awards; Modification or
Vacation of Award. Arbitrators are empowered to resolve Disputes by summary
rulings. Arbitrators shall resolve all Disputes in accordance with the
applicable substantive law. All statutes of limitation applicable to any
Dispute shall apply to any proceeding in accordance with this Arbitration
Program. Any arbitrator selected shall be required to be a practicing
attorney licensed to practice law in the State of Texas and shall be
required to be experienced and knowledgeable in the substantive laws
applicable to the subject matter of the Dispute. With respect to a Dispute
in which the claims or amounts in controversy do not exceed $1,000,000, a
single arbitrator shall be chosen and shall resolve the Dispute by rendering
an award not to exceed $1,000,000, including all damages of any kind
whatsoever, including costs, fees and expenses. A Dispute involving claims
or amounts in controversy exceeding $1,000,000 shall be decided by a
majority vote of a panel of three arbitrators (an "Arbitration Panel"), the
determination of any two of the three arbitrators constituting the
determination of the Arbitration Panel, provided, however, that all three
Arbitrators on the Arbitration Panel must actively participate in all
hearings and deliberations. Arbitrators including any Arbitration Panel,
may grant any remedy or relief deemed just and equitable and within the
scope of this Arbitration Program and may also grant such ancillary relief
as is necessary to make effective any award. Arbitrators shall be empowered
to impose sanctions and to take such other actions as they deem necessary to
the same extent a judge could pursuant to the Federal Rules of Civil
Procedure, the Texas Rules of Civil Procedure and applicable law.
Arbitrators and Arbitration Panels shall be required to make specific,
written findings of fact and conclusions of law. The determination of an
Arbitrator or Arbitration Panel shall be binding on all parties and shall
not be subject to further review or appeal except as otherwise allowed by
applicable law.
10.05. Other Matters and Miscellaneous. To the maximum extent
practicable, the AAA, the Arbitrator (or the Arbitration Panel, as
appropriate) and the parties shall take any action necessary to require that
an arbitration proceeding hereunder be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings hereunder shall
be conducted in the State of Texas at a location selected by the Arbitrator.
With respect to any Dispute, each party agrees that all discovery activities
shall be expressly limited to matters directly relevant to the Dispute and
any Arbitrator, Arbitration Panel and the AAA shall be required to fully
enforce this requirement. This Arbitration Program constitutes the entire
agreement of the parties with respect to its subject matter and supersedes
all prior discussions, arrangements, negotiations, and other communications
on dispute resolution. The provisions of this Arbitration Program shall
survive any termination, amendment, or expiration of the Loan Documents,
unless the parties otherwise expressly agree in writing. To the extent
permitted by applicable law, Arbitrators, including any Arbitration Panel,
shall have the power to award recovery of all costs and fees (including
attorneys' fees, administrative fees, and arbitrators' fees) to the
prevailing party. This Arbitration Program may be amended, changed, or
modified only by the express provisions of a writing which specifically
refers to this Arbitration Program and which is signed by all the parties
hereto. If any term, covenant, condition, or provision of this Arbitration
Program is found to be unlawful, invalid or unenforceable, such illegality
or invalidity or unenforceability shall not affect the legality, validity,
or enforceability of the remaining parts of this Arbitration Program, and
all such remaining parts hereof shall be valid and enforceable and have full
force and effect as if the illegal, invalid, or unenforceable part had not
been included. Each party agrees to keep all Disputes and arbitration
proceedings strictly confidential, except for disclosures of information
required in the ordinary course of business of the parties or by applicable
law or regulation.
ARTICLE XI
THE AGENT
11.01. Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes Agent to take such action on its behalf and to
exercise such powers under the Loan Documents as are delegated to Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. With respect to its Revolving Commitment, the Advances made by it
and the Notes issued to it, Agent shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though
it were not Agent; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include the Agent in its capacity as a Bank. The Agent
and its affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with,
Borrower, and any Person which may do business with Borrower, all as if
Agent were not Agent hereunder and without any duty to account therefor to
Banks.
11.02. Note Holders. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with
it signed by such payee and in form satisfactory to Agent.
11.03. Consultation with Counsel. Banks agree that Agent may consult
with legal counsel selected by it and shall not be liable for any action
taken or suffered in good faith by them in accordance with the advice of
such counsel.
11.04. Documents. Agent shall not be under a duty to examine or pass
upon the validity, effectiveness, enforceability, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and Agent shall be entitled to
assume that the same are valid, effective, enforceable and genuine and what
they purport to be.
11.05. Resignation or Removal of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign
at any time by giving written notice thereof to Banks and Borrower and the
Agent may be removed at any time with or without cause by Majority Banks.
Upon any such resignation or removal and prior to the occurrence of an Event
of Default with the approval of Borrower (which approval shall not be
unreasonably withheld or delayed), Majority Banks shall have the right to
appoint a successor Agent. If no successor Agent shall have been so
appointed by Majority Banks and shall have accepted such appointment within
30 days after the retiring Agent's giving of notice of resignation or
Majority Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions
of this Article 11 shall continue in effect for its benefit in respect to
any actions taken or omitted to be taken by it while it was acting as Agent.
11.06. Responsibility of Agent. It is expressly understood and agreed
that the obligations of Agent under the Loan Documents are only those
expressly set forth in the Loan Documents and that Agent shall be entitled
to assume that no Event of Default or event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default has occurred
and is continuing, unless Agent has actual knowledge of such fact or has
received notice from a Bank that such Bank considers that an Event of
Default or such event has occurred and is continuing and specifying the
nature thereof. Agent shall furnish to each of Banks within five (5)
Business Days receipt copies of the documents, statements and reports
furnished to Agent pursuant to Section 7.01. Banks recognize and agree,
that for purposes of Section 2.02(b) hereof, Agent shall not be required to
determine independently whether the conditions described in Sections
5.02(a), (b), (c), (d) and (e) have been satisfied and, in disbursing funds
to Borrower, may rely fully upon statements contained in the relevant
Request for Borrowing. Neither Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted to be taken by it
under or in connection with the Loan Documents, except for its own gross
negligence or willful misconduct. Agent shall incur no liability under or
in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or parties, or with
respect to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which may seem to it to be necessary or
desirable in the premises.
The relationship between Agent and each of the Banks is only that of
agent and principal and has no fiduciary aspects, and Agent's duties
hereunder are acknowledged to be only ministerial and not involving the
exercise of discretion on its part. Nothing in this Loan Agreement or
elsewhere contained shall be construed to impose on Agent any duties or
responsibilities other than those for which express provision is herein
made. In performing its duties and functions hereunder, Agent does not
assume and shall not be deemed to have assumed, and hereby expressly
disclaims, any obligation or responsibility toward or any relationship of
agency or trust with or for, Borrower. As to any matters not expressly
provided for by this Loan Agreement (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of Majority Banks and such
instructions shall be binding upon all Banks and all holders of Notes;
provided, however, that Agent shall not be required to take any action which
exposes Agent to personal liability or which is contrary to this Loan
Agreement or applicable law.
11.07. Notices of Event of Default. In the event that Agent shall
have acquired actual knowledge of any Event of Default or of an event which,
with the giving of notice or the lapse of time, or both, would constitute an
Event of Default, Agent shall promptly give written notice thereof to the
other Banks.
11.08. Independent Investigation. Each of the Banks severally
represents and warrants to Agent that it has made its own independent
investigation and assessment of the financial condition and affairs of
Borrower in connection with the making and continuation of its participation
in the Loans hereunder and has not relied exclusively on any information
provided to such Bank by Agent in connection herewith, and each Bank
represents, warrants and undertakes to Agent that it shall continue to make
its own independent appraisal of the creditworthiness of Borrower while the
Loans are outstanding or its commitment hereunder is in force.
11.09. Indemnification. Banks agree to indemnify Agent (to the extent
not reimbursed by Borrower), ratably according to the proportion that the
respective principal amounts of the Note held by each of them bears to the
sum of the aggregate principal amount of the Notes, from and against any and
all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Agent in
any way relating to or arising out of the Loan Documents or any action taken
or omitted by Agent under the Loan Documents, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct.
11.10. Benefit of Article XI. The agreements contained in this
Article XI are solely for the benefit of Agent and the Banks, and are not
for the benefit of, or to be relied upon by, Borrower, or any third party.
11.11. Not a Loan to Agent; No Duty to Repurchase. No amount paid by
any Bank hereunder shall be considered a loan to Agent. Agent shall have no
obligation to repurchase any interest from any Bank.
11.12. Amendments, Waivers, etc. Agent may enter into any amendment
or modification of, or may waive compliance with the terms of, any of the
Loan Documents with the written direction of the Majority Banks; provided
that the consent of all Banks shall be required before Agent may take or
omit to take any action under any of the Loan Documents directly affecting
(a) the extension of the maturity of or the postponement of the payment of
any portion of the principal of or interest on any Bank Obligation, (b) the
extension, postponement or waiver of any fees, (c) a reduction of or
increase in the principal amount of or rate of interest payable on any Bank
Obligation or any fees related thereto, (d) any increase in the amount of
any Letter of Credit or Bankers Acceptance issued or created by Agent on
behalf of Banks or any extension of the expiration or maturity date of any
Letter of Credit or Bankers Acceptance issued or created by Agent on behalf
of Banks, or (e) the release of Borrower or any of the Guarantors. Nor
shall any of the following occur without the consent of all Banks: (a) any
amendment to the definition of Majority Banks, or (b) any amendment to this
Section 11.12. The Revolving Commitment of a Bank shall not be increased
without the consent of such Bank. If any Bank is unwilling to consent to
any amendment or modification of, or waiver of compliance with, the Loan
Agreement (where the consent of such Bank is required), the consenting
Majority Banks shall have the right, but not the obligation, to repurchase
such Bank's Percentage of the Bank Obligation at such time for a purchase
price equal to the amount of the Bank Obligation owing to such Bank.
11.13. Bank's Representations. Each Bank represents and warrants to
Agent and the other Banks that: (a) it is engaged in the business of
entering into commercial lending transactions (including transactions of the
nature contemplated herein) and can bear the economic risk related to the
same; and (b) it does not consider the obligations hereunder to constitute
the "purchase" or "sale" of a "security" within the meaning of any federal
or state securities statute or law, or any rule or regulation under any of
the foregoing.
ARTICLE XII
MISCELLANEOUS
12.01. Waiver. No failure to exercise, and no delay in exercising, on
the part of Agent or Banks, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other
further exercise thereof or the exercise of any other right. The rights of
Agent and Banks hereunder and under the Loan Documents shall be in addition
to all other rights provided by law. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same,
similar or other instances without such notice or demand.
12.02. Notices. Any notices or other communications required or
permitted to be given by this Loan Agreement or any of the Loan Documents
must be given in writing and personally delivered, sent by telecopy or telex
(answerback received) or mailed by prepaid certified or registered mail,
return receipt requested, to the party to whom such notice or communication
is directed at the address of such party as follows:
Borrower: Pier 1 Imports, Inc.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
Attn: Chief Financial Officer
Telex: No. 2033955
FAX No. (817) 332-5727
Agent: First Interstate Bank of Texas, N.A.
309 West Seventh Street
Fort Worth, Texas 76102
Attn: Robin Hamilton
FAX No. (817) 885-1110
Any such notice or other communication shall be deemed to have been given on
the date it is personally delivered or sent by telecopy or telex as
aforesaid or, if mailed, on the second day after it is mailed as aforesaid
(whether actually received or not). Any party may change its address for
purposes of this Agreement by giving notice of such change to all other
parties pursuant to this Section 12.02.
12.03. Payment of Expenses. Borrower agrees to pay all costs and
expenses of Agent and Banks (including, without limitation, the reasonable
attorneys' fees of each Bank's outside legal counsel) incurred by Agent in
connection with the preservation and enforcement of Agent's and Banks'
rights under this Loan Agreement, the Notes, and/or the other Loan
Documents, and all reasonable costs and expenses of Agent (including without
limitation the reasonable fees and expenses of Agent's outside legal
counsel) in connection with the negotiation, preparation, execution and
delivery of this Loan Agreement, the Notes, and the other Loan Documents and
any and all amendments, modifications and supplements thereof or thereto.
12.04. Maximum Interest Rate. Regardless of any provisions contained in
this Loan Agreement, the Notes or in any of the other Loan Documents, Banks
shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the
Maximum Rate, and, in the event any Bank ever receives, collects or applies
as interest any such excess, such amount which would be excessive interest
shall be deemed to be a partial prepayment of principal and treated
hereunder as such, and, if the principal balance of the Note is paid in
full, any remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the Maximum Rate, Borrower and Banks shall, to the
maximum extent permitted by applicable law, (i) characterize any
nonprincipal payments (other than payments which are expressly designated as
interest payments hereunder) as an expense, fee, or premium, rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and
(iii) amortize, prorate, allocate and spread, in equal parts, the total
amount of interest throughout the entire contemplated term of the
indebtedness so that interest paid by Borrower does not exceed the Maximum
Rate; provided that, if a Note is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for
the actual period of existence thereof exceeds the Maximum Rate, the
affected Bank shall refund to Borrower the amount of such excess or credit
the amount of such excess against the principal amount of the Note and, in
such event, Banks shall not be subject to the penalties provided by any laws
for contracting for, charging, taking, reserving or receiving interest in
excess of the Maximum Rate.
12.05. Indemnity. Borrower shall indemnify Agent and each Bank and each
respective Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and
all losses, liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise out of
or result from (i) this Loan Agreement or any actual or proposed use by the
Borrower of the proceeds of any extension of credit by Bank hereunder or
breach by the Borrower of this Loan Agreement or any other documents
executed in connection with this Loan Agreement or (ii) any investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to the foregoing, and the Borrower shall reimburse
Agent and each Bank and each Affiliate thereof and their respective
directors, officers, employees and agents, upon demand for any expenses
(including legal fees) reasonably incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Persons to be indemnified. Promptly after receipt
by Agent of notice of the commencement of any investigation, litigation or
proceeding in respect of which indemnity may be sought from the Borrower
under this Section 12.05, Agent will notify the Borrower in writing of the
commencement thereof. Subject to the provision hereinafter stated, the
Borrower shall be entitled to participate in, and may, if it so elects, upon
delivery to Agent of a written undertaking by the Borrower in form and
substance acceptable to the Agent that the Borrower will not contest the
rights of the Agent and Banks to indemnification in connection with such
investigation, litigation or proceeding, maintain or assume the defense of
any such investigation, litigation or proceeding (including the employment
of counsel, who shall be counsel satisfactory to Agent involved therein,
whether or not as a party), and the payment of expenses thereof. If the
defense of such investigation, litigation or proceeding is assumed by the
Borrower, Agent shall have the right to employ separate counsel and to
participate in the defense thereof but the fees and expenses of such counsel
shall not be at the expense of the Borrower unless the employment of such
counsel has been specifically authorized in writing by the Borrower.
Notwithstanding the forgoing, the Agent shall at any time have the right to
employ counsel to represent Agent and Banks in any such investigation,
litigation or proceeding if, in the reasonable judgment of the Agent, such
is advisable, in which event the fees and expenses of such separate counsel
shall be borne by the Borrower, it being understood, however, that the
Borrower shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the reasonable fees and expenses of more than one separate firm of
attorneys for all indemnified parties. The Borrower shall not be liable to
indemnify any Person for any settlement of such action affected without the
Borrower's consent. Without limiting any provision of this Loan Agreement,
it is the express intention of the parties hereto that each Person to be
indemnified hereunder or thereunder shall be indemnified and held harmless
against any and all losses, liabilities, claims or damages arising out of or
resulting from the ordinary, sole or contributory negligence of such Person.
Without prejudice to the survival of any other obligations of the Borrower
hereunder and the Notes, the obligations of the Borrower under this
Section 12.05 shall survive the termination of this Loan Agreement and/or
the payment or assignment of the Notes.
12.06. Amendments. This Loan Agreement and the other Loan Documents may
be amended only by an instrument in writing executed by the party, or an
authorized officer of the party, against whom such amendment is sought to be
enforced.
12.07. Governing Law. This Loan Agreement has been prepared, is being
executed and delivered, and is intended to be performed in Tarrant County,
Texas, and the substantive laws of such state and the applicable federal
laws of the United States of America shall govern the validity,
construction, enforcement and interpretation of this Loan Agreement and all
of the other Loan Documents, and all suits thereon shall be brought in
Tarrant County, Texas.
12.08. Invalid Provisions. If any provision of any Loan Document is held
to be illegal, invalid or unenforceable under present or future laws during
the term of this Loan Agreement, such provision shall be fully severable;
such Loan Document shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of such Loan
Document; and the remaining provisions of such Loan Document shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from such Loan Document.
Furthermore, in lieu of each such illegal, invalid or unenforceable
provision shall be added as part of such Loan Document a provision mutually
agreeable to Borrower and Majority Banks as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable. In the event Borrower and Majority Banks are unable
to agree upon a provision to be added to the Loan Document within a period
of ten (10) Business Days after a provision of the Loan Document is held to
be illegal, invalid or unenforceable, then a provision reasonably acceptable
to Majority Banks as similar in terms to the illegal, invalid or
unenforceable provision as is possible and be legal, valid and enforceable
shall be added automatically to such Loan Document. In either case, the
effective date of the added provision shall be the date upon which the prior
provision was held to be illegal, invalid or unenforceable.
12.09. Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Loan Agreement.
12.10. Participation Agreements and Assignments. (a)(i) Subject to
Section 12.10(a)(ii), each Bank may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Loan Agreement
(including, without limitation, all or a portion of its Revolving
Commitment, the Aggregate Outstanding Loans owing to it and the Notes held
by it) and the other Loan Documents; provided, however, that (A) no such
assignment shall be made except to an Affiliate unless such assignment and
assignee have been approved by the Agent and, so long as no Events of
Default exists, the Borrower, such approvals not to be unreasonably
withheld, (B) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations of the assignor under this
Loan Agreement and the other Loan Documents, and no assignment shall be made
unless it covers a pro rata share of all rights and obligations of such
assignor under this Loan Agreement and the other Loan Documents, (C) the
amount of the Commitment of the assigning Bank being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance substantially in the form of Exhibit J (hereinafter referred to
as the "Assignment and Acceptance") with respect to such assignment) shall,
unless otherwise agreed to by the Agent, in no event be less than
$10,000,000 or, if less, the entirety of its Commitment and shall be an
integral multiple of $1,000,000, (D) each such assignment shall be to an
Eligible Assignee (defined below), (E) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in
the Register (defined below), an Assignment and Acceptance, together with
any Note subject to such assignment and (F) Agent receives a fee from the
assignor in the amount of $2,500. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each
Assignment and Acceptance, (1) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations under the Loan
Documents have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank under the Loan
Documents, (2) the assigning Bank thereunder shall, to the extent that
rights and obligations under the Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Loan Agreement, such Bank
shall cease to be a party hereto), and (3) Section 2.01(a) shall be deemed
to have been automatically amended to reflect the revised Commitments. As
used herein, "Eligible Assignee" shall mean (a) any Bank or any Affiliate of
any Bank; (b) a commercial bank organized under the laws of the United
States, or any state thereof, and having total assets in excess of
$1,000,000,000 and having deposits rated in either of the two highest
generic letter rating categories (without regard to subcategories) from
either Standard & Poor's Corporation or Moody's Investors Service, Inc.; (c)
a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development
("OECD"), or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting
through a branch or agency located in the country in which it is organized
or another country which is also a member of the OECD; (d) the central bank
of any country which is a member of the OECD; and (e) any other financial
institution approved by the Agent.
(ii) In the event any Bank desires to transfer all or any portion of
its rights and obligations under the Loan Documents, it shall give the
Borrower and the Agent prior written notice of the identity of such
transferee and the terms and conditions of such transfer (a "Transfer
Notice"). So long as no Event of Default has occurred and is continuing,
the Borrower may, no later than ten (10) days following receipt of such
Transfer Notice, designate an alternative transferee and such Bank shall
thereupon be obligated to sell the interests specified in such Transfer
Notice to such alternative transferee, subject to the following: (A) such
transfer shall be made on the same terms and conditions outlined in such
Transfer Notice, (B) such transfer shall otherwise comply with the terms and
conditions of the Loan Documents (including Section 12.10(a)(i), and (c)
such alternative transferee must be an Eligible Assignee approved by the
Agent. If the Borrower shall fail to designate an alternative transferee
within such ten (10) day period, such Bank shall, subject to compliance with
the other terms and provisions hereof, be free to consummate the transfer
described in such Transfer Notice.
(b) By executing and delivering an Assignment and Acceptance
substantially in the form of Exhibit I, the assigning Bank thereunder and
the assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Loan Agreement or any other instrument or document furnished
pursuant hereto, (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the Borrower
of any of its obligations under this Loan Agreement or any other instrument
or document furnished pursuant hereto; (iii) such assignee confirms that it
has received a copy of this Loan Agreement and the other Loan Documents,
together with copies of the financial statements referred to in Section 6.07
and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon
any of the Banks (including such assigning Bank) and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Loan
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action on its
behalf and to exercise such powers under this Loan Agreement and the other
Loan Documents as are delegated to such Person by the terms thereof,
together with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all
of the obligations which by the terms of this Loan Agreement and the other
Loan Documents are required to be performed by it as a Bank.
(c) The Agent shall maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the
names and addresses of the Banks and the Commitment of, and principal amount
of the Notes owing to, each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower and each of the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Loan Agreement. The Register shall be available for
inspection by the Borrower or any of the Banks at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee,
together with any Note subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Exhibit J hereto and satisfies all other requirements set forth in
this Section 12.10, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower and the other Banks. Within five (5)
Business Days after its receipt of such notice, the Borrower, at their own
expense, shall execute and deliver to the Agent, in exchange for the
surrendered Note, a new Note to the order of such Eligible Assignee in an
amount corresponding to the Commitment assumed by such Eligible Assignee
pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note to the order of the assigning
Bank in an amount corresponding to the Commitment retained by it hereunder.
Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form prescribed by Exhibit J hereto.
(e) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Loan Agreement and the other Loan Documents (including, without limitation,
all or a portion of its Commitment and the Notes owing to it); provided,
however, that (i) such Bank's obligations under this Loan Agreement
(including, without limitation, its Commitment to the Borrower hereunder)
and the other Loan Documents shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and the participating banks or other entities shall not be
considered a "Bank" for purposes of the Loan Documents, (iii) the
participating banks or other entities shall be entitled to the cost
protection provision contained in Section 4.03 and Section 4.05, in each
case to the same extent that the Bank from which such participating bank or
other entity acquired its participations would be entitled to the benefit of
such cost protection provisions and (iv) the Borrower and the other Banks
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Loan Agreement and the other
Loan Documents, and such Bank shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Loan Agreement
(other than amendments, modifications or waivers with respect to the amounts
of any fees payable hereunder or the amount of principal of or the rate at
which interest is payable on the Notes, or the dates fixed for payments of
principal or interest on the Notes).
(f) Any Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 12.10,
disclose to the assignee or participant or proposed assignee or participant,
any information relating to the Borrower furnished to such Bank by or on
behalf of the Borrower; provided that prior to any such disclosure, each
such assignee or participant or proposed assignee or participant shall agree
(subject to customary exceptions) to preserve the confidentiality of any
confidential information relating to the Borrower received from such Bank.
(g) The obligations of the Banks in this Loan Agreement, the Notes and
any other Loan Documents shall not be assignable or transferable by Borrower
and any purported assignment or transfer shall, as to the Agent and Banks,
be of no force and effect.
12.11. Article 15.10(b). Borrower and Banks hereby agree that, except
for Article 15.10(b) thereof, the provisions of Charter 15 of Title 79 of
the Revised Civil Statutes of Texas, 1925, as amended (regulating certain
revolving credit loans and revolving triparty accounts) shall not apply to
the Loan Documents.
12.12. Survival. All representations and warranties made by Borrower
herein shall survive delivery of the Notes and the making of the Revolving
Credit Loan.
12.13. No Third Party Beneficiary. The parties do not intend the
benefits of this Loan Agreement to inure to any third party, nor shall this
Loan Agreement be construed to make or render Agent or Banks liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, or for debts or claims accruing to any such
persons against Borrower. Notwithstanding anything contained herein or in
the Notes, or in any other Loan Document, or any conduct or course of
conduct by any or all of the parties hereto, before or after signing this
Loan Agreement or any of the other Loan Documents, neither this Loan
Agreement nor any other Loan Document shall be construed as creating any
right, claim or cause of action against Agent or Banks, or any of their
respective officers, directors, agents or employees, in favor of any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, nor to any other person or entity other than
Borrower.
12.14. Counterparts. This Loan Agreement may be executed in multiple
counterparts, each of which shall constitute an original.
12.15. Final Agreement. THIS WRITTEN AGREEMENT (INCLUDING THE EXHIBITS
AND SCHEDULES HERETO), THE NOTE AND THE OTHER LOAN DOCUMENTS CONSTITUTE A
"LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND
COMMERCE CODE, REPRESENT THE FINAL AND ENTIRE AGREEMENT AND UNDERSTANDING
AMONG THE BORROWER AND THE BANK RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF, SUPERSEDE ALL PRIOR PROPOSALS, AGREEMENTS AND UNDERSTANDINGS
RELATING SUCH 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.
EXECUTED to be effective as of the day and year first above written
PIER 1 IMPORTS, INC., a Delaware
corporation
By: _________________________
Robert G. Herndon,
Executive Vice President
BORROWER
PIER 1 IMPORTS (U.S.), INC., a Delaware
corporation
By: _________________________
Robert G. Herndon,
Executive Vice President
PIER 1 ASSETS, INC., a Delaware
corporation
By: _________________________
Robert G. Herndon,
Executive Vice President
PIER 1 LICENSING, INC., a Delaware
corporation
By: _________________________
Robert G. Herndon,
Executive Vice President
PIER LEASE, INC., a Delaware
corporation
By: _________________________
Robert G. Herndon,
Executive Vice President
GUARANTORS
Revolving Commitment: FIRST INTERSTATE BANK OF TEXAS, N.A.
$20,000,000
By:___________________________________
Robin Hamilton, Vice President
Revolving Commitment: NATIONSBANK OF TEXAS, N.A.
$20,000,000
By:___________________________________
Todd Shipley, Senior Vice President
Revolving Commitment: BANK ONE, TEXAS, N.A.
$15,000,000
By:___________________________________
David Williams, Vice President
Revolving Commitment: CREDIT LYONNAIS NEW YORK BRANCH
$10,000,000
By:___________________________________
Robert Ivosevich, Senior Vice President
BANKS
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:___________________________________
Robin Hamilton, Vice President
AGENT
<PAGE>
EXHIBIT "A"
COMMITTED NOTE
$__________________ December 15, 1995
FOR VALUE RECEIVED, the undersigned, PIER 1 IMPORTS, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _______________________ (the "Bank"), the principal sum of
__________________ MILLION DOLLARS ($___,000,000.00), or such lesser
aggregate amount of Advances as may be made pursuant to Bank's Revolving
Commitment, which principal shall be payable as provided in Sections 3.01,
3.03, 3.04, 3.06, 3.07, 3.08 and 3.09 of the Loan Agreement, together with
the interest on the unpaid principal balance of each Advance from the date
made until maturity, which interest shall be determined at the varying rates
per annum, and shall be payable as provided in Sections 3.02, 3.05, 3.06,
3.07, 3.08 and 3.09 of the Loan Agreement. Payments of both principal and
interest herein shall be made to Agent's account at 309 West Seventh Street,
Fort Worth, Texas, in lawful money of the United States of America and in
immediately available funds.
The Advances made by Bank to Borrower pursuant to the Loan Agreement
and all payments of the principal thereof and interest thereon may be noted
by Bank on the Loan and Payment Transaction Schedule attached hereto, or on
a continuation of such schedule attached hereto or similar computer
generated payment schedule; provided, however, that the failure of Bank to
make any such notation or any error in making such notation shall not limit
or otherwise affect the obligations of Borrower hereunder or under the Loan
Agreement.
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Loan Agreement") by and among
Borrower, Guarantors, Banks and First Interstate Bank of Texas, N.A., as
Agent, dated as of December 15, 1995, and is a "Committed Note" referred to
therein. Reference is hereby made to the Loan Agreement for a statement of
the repayment rights and obligations of Borrower, for a statement of the
events upon which the maturity of this Note may be accelerated and for a
statement of the Arbitration Program.
Each capitalized term used herein shall have the same meaning assigned
to it in the Loan Agreement, unless the context hereof otherwise requires or
provides.
Borrower agrees to pay all costs and expenses of Bank incurred in the
collection of this Note, including but not limited to court costs and
reasonable attorneys' fees and all other costs and expenses described in
Section 12.03 of the Loan Agreement.
Borrower and each surety, endorser, guarantor and any other party now
or hereafter liable for payment of any sums of money payable on this Note,
jointly and severally waive presentment and demand for payment, protest,
notice of protest and nonpayment, notice of intent to accelerate, notice of
acceleration and all other notices, filing of suit and diligence in
collecting this Note or enforcing any security with respect to same, and
agree that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or in any indulgences,
or by any release, substitution or change in any security for the payment of
this Note, and hereby consent to any and all renewals, extensions,
indulgences, releases or changes, regardless of the number of such renewals,
extensions, indulgences, releases or changes.
Regardless of any provision contained in this Note, the Loan Agreement
or any other document executed or delivered in connection therewith, neither
Bank nor any holder hereof shall be deemed to have contracted for or be
entitled to receive, collect or apply as interest (including any fee, charge
or amount which is not denominated as "interest" but is legally deemed to be
interest under applicable law) on this Note, the Loan Agreement, the Loan
Documents or otherwise, any amount in excess of the Maximum Rate, and, in
the event that Bank or any holder hereof ever receives, collects or applies
as interest any such excess, such amount which would be excessive interest
shall be applied to the reduction of the unpaid principal balance of this
Note, and, if the principal balance of this Note is paid in full, any
remaining excess shall forthwith be paid to Borrower. In determining
whether or not the interest paid or payable under any specific contingency
exceeds the Maximum Rate, Borrower, Bank and any other holder hereof shall,
to the maximum extent permitted under applicable law, (i) characterize any
non-principal payment (other than payments which are expressly designated as
interest payments hereunder) as an expense or fee rather than as interest,
(ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread the total amount of interest
throughout the entire contemplated term of this Note so that the interest
rate is uniform throughout the entire term; provided that, if this Note is
finally paid and performed in full prior to the end of the full contemplated
term hereof, and if the interest received for the actual period of existence
thereof exceeds the Maximum Rate, Bank or any holder hereof shall refund to
Borrower the amount of such excess, or credit the amount of such excess
against the principal amount of this Note and, in such event, neither Bank
nor any other holder shall be subject to any penalties provided by any laws
for contracting for, charging, taking, reserving or receiving interest in
excess of the Maximum Rate.
This Note is being executed and delivered, and is intended to be
performed in the State of Texas. Except to the extent that the laws of the
United States may apply to the terms hereof, the substantive laws of the
State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note.
PIER 1 IMPORTS, INC.
By:___________________________________
Robert G. Herndon,
Executive Vice President
<PAGE>
LOAN AND PAYMENT
TRANSACTION SCHEDULE
attached to and made a part of a Note
dated December 15, 1995, executed by Pier 1 Imports, Inc.
Amount Unpaid
Initials
Amount Amount of of Principal of
Person
of Amount of Principal Interest Balance
Making
Date Advance Principal Repaid Paid of Note
Notation
<PAGE>
EXHIBIT "A-1"
BID NOTE
$__________________ December ___, 1995
FOR VALUE RECEIVED, the undersigned, PIER 1 IMPORTS, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _______________________ (the "Bank"), the principal sum of
__________________ MILLION DOLLARS ($___,000,000.00), or, if less, the then
aggregate unpaid principal amount of the Bid Rate Loans (as defined in the
Loan Agreement) as may be borrowed by Borrower from Bank under the Loan
Agreement. Borrower promises to pay interest on the unpaid principal amount
of the Bid Loans evidenced by this Note from time to time outstanding at the
rates per annum and at the times which shall be determined in accordance
with the provisions of the Loan Agreement. Payments of both principal and
interest herein shall be made to ________________ Bank at
_________________________________________________ in lawful money of the
United States of America and in immediately available funds.
The Advances made by Bank to Borrower pursuant to the Loan Agreement
and all payments of the principal thereof and interest thereon may be noted
by Bank on the Loan and Payment Transaction Schedule attached hereto, or on
a continuation of such schedule attached hereto or similar computer
generated payment schedule; provided, however, that the failure of Bank to
make any such notation or any error in making such notation shall not limit
or otherwise affect the obligations of Borrower hereunder or under the Loan
Agreement.
This Note has been executed and delivered pursuant to the terms of
that certain Revolving Credit Agreement (the "Loan Agreement") by and among
Borrower, Guarantors, Banks and First Interstate Bank of Texas, N.A., as
Agent, dated as of December 15, 1995, and is a "Bid Note" referred to
therein. Reference is hereby made to the Loan Agreement for a statement of
the repayment rights and obligations of Borrower and for a statement of the
events upon which the maturity of this Note may be accelerated.
Each capitalized term used herein shall have the same meaning
assigned to it in the Loan Agreement, unless the context hereof otherwise
requires or provides.
Borrower agrees to pay all costs and expenses of Bank incurred in the
collection of this Note, including but not limited to court costs and
reasonable attorneys' fees and all other costs and expenses described in
Section 12.03 of the Loan Agreement.
Borrower and each surety, endorser, guarantor and any other party now
or hereafter liable for payment of any sums of money payable on this Note,
jointly and severally waive presentment and demand for payment, protest,
notice of protest and nonpayment, notice of intent to accelerate, notice of
acceleration and all other notices, filing of suit and diligence in
collecting this Note or enforcing any security with respect to same, and
agree that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or in any indulgences,
or by any release, substitution or change in any security for the payment of
this Note, and hereby consent to any and all renewals, extensions,
indulgences, releases or changes, regardless of the number of such renewals,
extensions, indulgences, releases or changes.
Regardless of any provision contained in this Note, the Loan
Agreement or any other document executed or delivered in connection
therewith, neither Bank nor any holder hereof shall be deemed to have
contracted for or be entitled to receive, collect or apply as interest
(including any fee, charge or amount which is not denominated as "interest"
but is legally deemed to be interest under applicable law) on this Note, the
Loan Agreement, the Loan Documents or otherwise, any amount in excess of the
Maximum Rate, and, in the event that Bank or any holder hereof ever
receives, collects or applies as interest any such excess, such amount which
would be excessive interest shall be applied to the reduction of the unpaid
principal balance of this Note, and, if the principal balance of this Note
is paid in full, any remaining excess shall forthwith be paid to Borrower.
In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Rate, Borrower, Bank and any other
holder hereof shall, to the maximum extent permitted under applicable law,
(i) characterize any non-principal payment (other than payments which are
expressly designated as interest payments hereunder) as an expense or fee
rather than as interest, (ii) exclude voluntary prepayments and the effect
thereof, and (iii) amortize, prorate, allocate and spread the total amount
of interest throughout the entire contemplated term of this Note so that the
interest rate is uniform throughout the entire term; provided that, if this
Note is finally paid and performed in full prior to the end of the full
contemplated term hereof, and if the interest received for the actual period
of existence thereof exceeds the Maximum Rate, Bank or any holder hereof
shall refund to Borrower the amount of such excess, or credit the amount of
such excess against the principal amount of this Note and, in such event,
neither Bank nor any other holder shall be subject to any penalties provided
by any laws for contracting for, charging, taking, reserving or receiving
interest in excess of the Maximum Rate.
This Note is being executed and delivered, and is intended to be
performed in the State of Texas. Except to the extent that the laws of the
United States may apply to the terms hereof, the substantive laws of the
State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note.
PIER 1 IMPORTS, INC.
By:__________________________
Robert G. Herndon,
Executive Vice President
<PAGE>
LOAN AND PAYMENT
TRANSACTION SCHEDULE
attached to and made a part of a Bid Note
dated December ___, 1995, executed by Pier 1 Imports, Inc.
Amount Unpaid Initials
Amount Amount of of Principal of Person
of Amount of Principal Interest Balance Making
Date Advance Principal Repaid Paid of Note Notation
<PAGE>
EXHIBIT "B"
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is dated as of the 15th day of December, 1995,
by PIER 1 IMPORTS (U.S.), INC., a Delaware corporation, PIER 1 ASSETS, INC.,
a Delaware corporation, PIER 1 LICENSING, INC., a Delaware corporation, and
PIER LEASE, INC. , a Delaware corporation (collectively, "Guarantors"), in
favor of FIRST INTERSTATE BANK OF TEXAS, N.A. as agent for the benefit of
Banks (the "Agent").
WITNESSETH:
WHEREAS, pursuant to a Revolving Credit Agreement of even date herewith
between Pier 1 Imports, Inc., a Delaware corporation (the "Company"), and
Banks (the "Credit Agreement"), the Agent and Banks agreed to make Revolving
Credit Loans to the Company and have agreed to issue Letters of Credit and
to create Banker's Acceptance for the account of Company; and
WHEREAS, it is a condition precedent to the obligation of the Banks to
make any such Revolving Credit Loans, to issue the Letters of Credit and to
create the Bankers Acceptances that the Guarantors guaranty repayment
thereof upon the terms and conditions set forth herein; and
WHEREAS, Guarantors desire to induce the Banks to make such Revolving
Credit Loans, to issue the Letters of Credit and to create the Banker's
Acceptance, which may reasonably be expected to benefit, directly or
indirectly, each Guarantor.
NOW, THEREFORE, in consideration of the foregoing and for other
valuable consideration hereby acknowledged, Guarantors agree for the benefit
of the Banks as follows:
A. DEFINITIONS.
1. Definitions. Unless otherwise defined in this Guaranty, terms
used herein shall have the meanings set forth in the Credit Agreement.
2. Additional Definitions. In addition to the definitions set forth
in the Credit Agreement, the following terms shall have the following
meanings:
"Adjusted Net Worth" shall mean, with respect to any Guarantor as of
the date of determination, (a) the value of the assets of such Guarantor as
of such date, minus (b) all liabilities of such Guarantor, contingent or
otherwise, as of such date (excluding such Guarantor's liability hereunder),
as such concepts are determined in accordance with applicable laws governing
determinations of the insolvency of debtors.
"Guaranteed Amount" shall mean, (a) the Obligation, and all renewals,
extensions, increases, modifications or rearrangements thereof, plus (b) all
costs incurred by Agent and the Banks to obtain, preserve, defend and
enforce this Guaranty and other Loan Documents, collect the Obligation, and
maintain, preserve, collect and enforce any security relating to this
Guaranty or any Guaranteed Amount, including without limitation taxes,
insurance premiums, attorneys' fees and legal expenses, and expenses of
sale.
"Maximum Guaranteed Amount" shall mean, with respect to any Guarantor
as of the date of determination, the greater of (a) the amount of any
Guaranteed Amount used to make a Valuable Transfer to such Guarantor, and
(b) the greater of 95% of the Guarantor's Adjusted Net Worth (i) at the date
hereof (if appropriate under applicable Law), (ii) at the time the
Guaranteed Amount was incurred, and (iii) on the date of enforcement hereof
(which shall be deemed to be the date of commencement of a proceeding
described in Section 9.01(h) or Section 9.01(i) of the Credit Agreement, if
applicable).
"Valuable Transfer" shall mean, with respect to any Guarantor, (a) all
loans, advances or capital contributions made to such Guarantor with
proceeds of any Guaranteed Amount, (b) the acquisition from such Guarantor
or retirement by such Guarantor with proceeds of any Guaranteed Amount of
debt securities or other obligations of such Guarantor, (c) the acquisition
by such Guarantor of all property acquired with proceeds of any Guaranteed
Amount, and transferred, absolutely and not as collateral, to such
Guarantor, to the extent of the fair market value thereof, and (d) the
acquisition from such Guarantor with proceeds of any Guaranteed Amount of
equity securities of such Guarantor.
B. GUARANTY
1. Guaranty. Each Guarantor hereby jointly and severally guarantees
absolutely and unconditionally to Agent and the Banks the due performance of
all terms and conditions of the Credit Agreement and other Loan Documents,
and the prompt and full payment when due of the Guaranteed Amount.
Notwithstanding anything herein or in any other Loan Documents to the
contrary, the maximum liability of each Guarantor hereunder shall in no
event exceed such Guarantor's Maximum Guaranteed Amount. Each Guarantor
agrees that the Guaranteed Amount may at any time exceed the aggregate
Maximum Guaranteed Amount of all Guarantors combined, without affecting or
impairing the obligation of any Guarantor hereunder.
2. Payment Obligation. If an Event of Default shall occur, and
following any notices required under the Credit Agreement, each Guarantor
shall, on demand, pay the Guaranteed Amount to Agent at its address set
forth in the Credit Agreement in immediately available funds. It shall not
be necessary for the Agent, in order to enforce such payment by any
Guarantor, to institute suit or exhaust its rights and remedies against the
Company, any other Guarantor or any other Person, including others liable to
pay any Guaranteed Amount, or to enforce its rights and remedies against any
security ever given to secure payment thereof.
3. Complete Waiver of Subrogation. (a) Notwithstanding any payment
or payments made by any Guarantor hereunder, or any set-off or application
by Agent or the Banks of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the Agent or Banks or of
such Guarantor against the Company to recover the amount of any payment made
by such Guarantor to the Banks hereunder by way of subrogation,
reimbursement, contribution, indemnity, or otherwise arising by contract or
operation of law, and no Guarantor shall have any right of recourse to or
any claim against assets or property of the Company, whether or not the
Obligation of the Company has been satisfied, all of such rights being
herein expressly waived by all Guarantors. Each Guarantor agrees not to
seek contribution from any other Guarantor until all of the Guaranteed
amount shall have been paid in full. If any amount shall nevertheless be
paid to a Guarantor by the Company or another Guarantor, such amount shall
be held in trust for the benefit of the Agent and Banks and shall forthwith
be paid to the Agent to be credited and applied to the Guaranteed Amount,
whether matured or unmatured. The provisions of this paragraph shall
survive the termination of this Guaranty, and any satisfaction and discharge
of the Company by virtue of any payment, court order or any federal or state
law. (b) Notwithstanding the provisions of the preceding clause (a), each
Guarantor shall have and be entitled to (i) all rights of subrogation
otherwise provided by Law in respect of any payment it may make or be
obligated to make under this Guaranty and (ii) all claims it would have
against the Company or any other Guarantor in the absence of the preceding
clause (a), and to assert and enforce same, in each case on and after, but
at no time prior to, the date (the "Subrogation Trigger Date") which is 400
days after the date on which the Obligation has been paid in full and the
Commitment terminated, if and only if (x) no Default or Event of Default of
the type described in Section 9.01(h) or Section 9.01(i) of the Credit
Agreement with respect to the Company or any other Guarantor has existed at
any time on and after the date of this Guaranty to and including the
Subrogation Trigger Date and (y) the existence of the Guarantor's rights
under this clause (b) would not make the Guarantor a creditor (as defined in
the Bankruptcy Code) of the Company or any other Guarantor in any
insolvency, bankruptcy, reorganization or similar proceeding commenced on or
prior to the Subrogation Trigger Date.
C. TERMS OF GUARANTY
1. Continuing Guaranty. Each Guarantor agrees that the Guaranteed
Amount and Loan Documents may be extended or renewed, and the Revolving
Credit Loan repaid and reborrowed in whole or in part, without notice to or
assent by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Amount or Loan Documents, or any repayment and reborrowing of the Revolving
Credit Loan. Each Guarantor waives notice of acceptance of this Guaranty,
presentation, demand, protest, notice of protest for nonpayment, diligence
in bringing suits against any Person liable on any Guaranteed Amount, and
any other notices or defenses of any kind. The obligations of each
Guarantor under this Guaranty shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms
hereof under any circumstances whatsoever, including without limitation:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Amount, including any
reduction or termination of the Commitment;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights with respect to, any
direct or indirect security for any Guaranteed Amount, including the
release of any Guarantor or other Person liable on any Guaranteed
Amount;
(d) any change in the corporate existence, structure or ownership
of the Company or any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Company, any
Guarantor or any of their assets;
(e) the existence of any claim, defense, set-off or other rights
or remedies which the Company or any Guarantor may have at any time
against the Company, the Banks, any other Guarantor or any other
Person, whether in connection with this Guaranty, the Loan Documents,
the transactions contemplated thereby or any other transactions;
(f) any invalidity or unenforceability for any reason of the
Credit Agreement or other Loan Documents, or any provision of Law
purporting to prohibit the payment or performance by the Company or any
Guarantor of the Guaranteed Amount or Loan Documents, or of any other
obligation to the Agent or Banks; or
(g) any other circumstances or happening whatsoever, whether or
not similar to any of the foregoing.
2. Payments With Respect to Guaranteed Amount. Each payment on the
Guaranteed Amount shall be deemed to have been made by the Company unless
express written notice is given to the Agent at the time of such payment
that such payment is made by a specific Guarantor.
3. Effect of Debtor Relief Laws. If after receipt of any payment of,
or proceeds of any security applied (or intended to be applied) to the
payment of all or any part of the Guaranteed Amount, the Agent or any Bank
is for any reason compelled to surrender or voluntarily surrenders, such
payment or proceeds to any Person, (a) because such payment or application
of proceeds is or may be avoided, invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, fraudulent
conveyance, impermissible set-off or a diversion of trust funds; or (b) for
any other reason, including without limitation (i) any judgment, decree or
order of any court or administrative body having jurisdiction over the Agent
or any Bank or its properties, or (ii) any settlement or compromise of any
such claim effected by any Bank with any such claimant (including the
Company), then the Guaranteed Amount or part thereof intended to be
satisfied shall be reinstated and continue and this Guaranty shall continue
in full force as if such payment or proceeds have not been received,
notwithstanding any revocation thereof or the cancellation of the Notes or
any other instrument evidencing any Guaranteed Amount or otherwise; and each
Guarantor shall be liable to pay such Bank, and hereby does indemnify,
jointly and severally, said Bank and hold it harmless for, the amount of
such payment or proceeds so surrendered and all expenses (including
reasonable attorneys' fees, court costs and expenses attributable thereto)
incurred by such Bank in the defense of any claim made against it that any
payment or proceeds received by the Bank in respect of all or part of the
Guaranteed Amount must be surrendered. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Company by virtue of any payment, court order or any
federal or state law.
D. REPRESENTATIONS AND COVENANTS
1. Representations and Warranties. Each Guarantor hereby represents
and warrants that all representations and warranties set forth in Article VI
of the Credit Agreement with respect to it are true and correct as of the
date hereof, and are incorporated herein by reference.
2. Covenants. Each Guarantor hereby jointly and severally expressly
assumes, confirms and agrees to perform, observe and be bound by all
conditions and covenants set forth in the Credit Agreement, to the extent
applicable to it, as if it were a signatory thereto.
E. GENERAL
1. Parties Bound. This Guaranty is for the benefit of the Agent and
Banks, and their respective successors and assigns, and in the event of an
assignment by any Guaranteed Amount, the rights and benefits hereunder, to
the extent applicable to the Guaranteed Amount so assigned, shall be
automatically transferred therewith. This Guaranty is binding not only on
each Guarantor, but on each of their successors and assigns.
2. Modification and Amendment. No modification, consent, amendment
or waiver of any provision of this Guaranty, nor consent to any departure by
any Guarantor therefrom, shall be effective unless the same shall be in
writing and signed by the Agent, and then shall be effective only in the
specific instance and for the purpose for which given.
3. Waiver. No delay or omission by the Agent or Banks in exercising
any right or remedy hereunder shall impair any such right or remedy or be
construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such right or remedy preclude other or
further exercise thereof, or the exercise of any other right or remedy
hereunder.
4. Cumulative Rights. If any Guarantor is or becomes liable for any
indebtedness owing by the Company to any Bank by endorsement or otherwise
than under this Guaranty, such liability shall not be in any manner impaired
or affected hereby, and the rights or remedies of the Agent and Banks
hereunder shall be cumulative of all other rights or remedies that the Agent
and Banks may ever have against the Guarantors. The exercise by the Agent
or the Banks of any rights or remedies hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other rights or remedies. Without limitation of
the foregoing, it is specifically understood and agreed that this Guaranty
is given by each Guarantor as an additional guaranty to any and all other
guaranties heretofore or hereafter executed and delivered to the Agent by
any Guarantor, and nothing herein shall ever be deemed to replace or be in
lieu of any other of such previous or subsequent guaranties.
5. Interest; Limitations of Law. All agreements between each
Guarantor and the Agent and Banks, whether now existing or hereafter arising
and whether written or oral, are expressly limited so that in no contingency
or event whatsoever, whether by reason of acceleration of payment of any of
the Guaranteed Amount or otherwise, shall the amount paid or agreed to be
paid to any Bank for the use, forbearance or detention of funds advanced
pursuant to any Loan Documents or for the performance or payment of any
covenant or obligation contained in any Loan Documents exceed the maximum
amount permitted by applicable law. If from any circumstance whatsoever,
fulfillment of any provision of any Loan Documents, at the time performance
of such provision shall be due, shall involve transcending the limit of
validity prescribed by applicable law, then, ipso facto, the obligation to
be fulfilled shall be reduced to the limit of such validity, and if from any
circumstance Bank shall ever receive anything of value deemed excess
interest by applicable law, an amount equal to any such excess interest
shall be applied to the reduction of the principal amount owing under the
Loan Documents, and not to the payment of interest, or if such excess
interest exceeds the unpaid principal balance, such excess interest shall be
promptly refunded to the Company or Guarantor, as applicable. All sums paid
or agreed to be paid for the use, forbearance or detention of any funds
advanced pursuant to the Loan Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full term of this Agreement until payment in full, so that the rate of
interest on account of the Guaranteed Amount is uniform throughout the term
hereof.
6. Subordination. Each Guarantor hereby expressly agrees that any
obligation of the Company to any Guarantor is expressly subordinate to the
right of the Agent and Banks to payment and performance by the Company of
the Guaranteed Amount and Loan Documents, and that the Agent and Banks shall
be entitled to such full payment and performance prior to the exercise by
any Guarantor of any rights, including realization upon any security, to
enforce the payment or performance of any obligation that the Company may
owe to any Guarantor; provided that, Guarantors shall be entitled to receive
payments from the Company with respect to such obligations if at the time of
such payment no Default or Event of Default exists or would exist
immediately after giving effect to any such payment.
7. Costs and Expenses. Each Guarantor agrees, jointly and severally,
to pay to the Agent all costs and expenses (including court costs and
attorneys' fees) incurred by the Agent and the Banks in the enforcement of
this Guaranty and all other Loan Documents.
8. Notices. Unless otherwise provided herein, all notices, requests,
consents and demands shall be in writing and shall be personally delivered,
sent by telecopy of telex (answerback received), or mailed, by certified
mail, postage prepaid, to the following addresses:
(a) If to the Agent:
First Interstate Bank of Texas, N.A.
309 West Seventh Street, Suite 1100
Fort Worth, Texas 76102
Attention: Robin Hamilton
(b) If to any Guarantor:
[Name of Guarantor]
c/o Pier 1 Imports, Inc.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
Attention: Chief Financial Officer
or to such other address as any party may designate in written notice to the
other parties. All notices, requests, consents and demands hereunder will
be effective when so personally delivered or sent by telecopy of telex, or
two days after being so mailed.
9. Counterparts. This Guaranty may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument. In making proof of this Guaranty, it shall not be necessary to
produce or account for any counterpart other than one signed by the party
against which enforcement is sought.
10. Governing Law. This Guaranty shall be deemed a contract made in
Fort Worth, Texas, and shall be construed and governed by the laws of Texas
and the United States of America. Without excluding any other jurisdiction,
each Guarantor hereby agrees that the courts of Texas and federal courts
sitting in Texas will have jurisdiction over proceedings in connection
herewith.
11. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AND ENTIRE
AGREEMENT AND UNDERSTANDING AMONG THE AGENT, THE COMPANY AND THE GUARANTORS
RELATING TO THE SUBJECT MATTER HEREOF, SUPERSEDES ALL PRIOR PROPOSALS,
AGREEMENTS AND UNDERSTANDINGS RELATING TO SUCH 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, each Guarantor has executed this Guaranty as of the
date first set forth above.
PIER 1 IMPORTS (U.S.), INC.
By:__________________________________
Robert G. Herndon, Executive
Vice President
PIER 1 ASSETS, INC.
By:__________________________________
Robert G. Herndon, Executive
Vice President
PIER 1 LICENSING, INC.
By:__________________________________
Robert G. Herndon, Executive
Vice President
PIER LEASE, INC.
By:__________________________________
Robert G. Herndon, Executive
Vice President
<PAGE>
EXHIBIT "A"
COMMITTED NOTE
$____________________ December 15, 1995
FOR VALUE RECEIVED, the undersigned, PIER 1 IMPORTS, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _______________________(the "Bank"), the principal sum of
_________________________, or such lesser aggregate amount of Advances as
may be made pursuant to Bank's Revolving Commitment, which principal shall
be payable as provided in Sections 3.01, 3.03, 3.04, 3.06, 3.07, 3.08 and
3.09 of the Loan Agreement, together with the interest on the unpaid
principal balance of each Advance from the date made until maturity, which
interest shall be determined at the varying rates per annum, and shall be
payable as provided in Sections 3.02, 3.05, 3.06, 3.07, 3.08 and 3.09 of the
Loan Agreement. Payments of both principal and interest herein shall be
made to Agent's account at 309 West Seventh Street, Fort Worth, Texas, in
lawful money of the United States of America and in immediately available
funds.
The Advances made by Bank to Borrower pursuant to the Loan Agreement
and all payments of the principal thereof and interest thereon may be noted
by Bank on the Loan and Payment Transaction Schedule attached hereto, or on
a continuation of such schedule attached hereto or similar computer
generated payment schedule; provided, however, that the failure of Bank to
make any such notation or any error in making such notation shall not limit
or otherwise affect the obligations of Borrower hereunder or under the Loan
Agreement.
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Loan Agreement") by and among
Borrower, Guarantors, Banks and First Interstate Bank of Texas, N.A., as
Agent, dated as of December 15, 1995, and is a "Committed Note" referred to
therein. Reference is hereby made to the Loan Agreement for a statement of
the repayment rights and obligations of Borrower, for a statement of the
events upon which the maturity of this Note may be accelerated and for a
statement of the Arbitration Program.
Each capitalized term used herein shall have the same meaning assigned
to it in the Loan Agreement, unless the context hereof otherwise requires or
provides.
Borrower agrees to pay all costs and expenses of Bank incurred in the
collection of this Note, including but not limited to court costs and
reasonable attorneys' fees and all other costs and expenses described in
Section 12.03 of the Loan Agreement.
Borrower and each surety, endorser, guarantor and any other party now
or hereafter liable for payment of any sums of money payable on this Note,
jointly and severally waive presentment and demand for payment, protest,
notice of protest and nonpayment, notice of intent to accelerate, notice of
acceleration and all other notices, filing of suit and diligence in
collecting this Note or enforcing any security with respect to same, and
agree that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or in any indulgences,
or by any release, substitution or change in any security for the payment of
this Note, and hereby consent to any and all renewals, extensions,
indulgences, releases or changes, regardless of the number of such renewals,
extensions, indulgences, releases or changes.
Regardless of any provision contained in this Note, the Loan Agreement
or any other document executed or delivered in connection therewith, neither
Bank nor any holder hereof shall be deemed to have contracted for or be
entitled to receive, collect or apply as interest (including any fee, charge
or amount which is not denominated as "interest" but is legally deemed to be
interest under applicable law) on this Note, the Loan Agreement, the Loan
Documents or otherwise, any amount in excess of the Maximum Rate, and, in
the event that Bank or any holder hereof ever receives, collects or applies
as interest any such excess, such amount which would be excessive interest
shall be applied to the reduction of the unpaid principal balance of this
Note, and, if the principal balance of this Note is paid in full, any
remaining excess shall forthwith be paid to Borrower. In determining
whether or not the interest paid or payable under any specific contingency
exceeds the Maximum Rate, Borrower, Bank and any other holder hereof shall,
to the maximum extent permitted under applicable law, (i) characterize any
non-principal payment (other than payments which are expressly designated as
interest payments hereunder) as an expense or fee rather than as interest,
(ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread the total amount of interest
throughout the entire contemplated term of this Note so that the interest
rate is uniform throughout the entire term; provided that, if this Note is
finally paid and performed in full prior to the end of the full contemplated
term hereof, and if the interest received for the actual period of existence
thereof exceeds the Maximum Rate, Bank or any holder hereof shall refund to
Borrower the amount of such excess, or credit the amount of such excess
against the principal amount of this Note and, in such event, neither Bank
nor any other holder shall be subject to any penalties provided by any laws
for contracting for, charging, taking, reserving or receiving interest in
excess of the Maximum Rate.
This Note is being executed and delivered, and is intended to be
performed in the State of Texas. Except to the extent that the laws of the
United States may apply to the terms hereof, the substantive laws of the
State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note.
PIER 1 IMPORTS, INC.
By: ________________________________________
Robert G. Herndon,
Executive Vice President
<PAGE>
LOAN AND PAYMENT
TRANSACTION SCHEDULE
attached to and made a part of a Note
dated December 15, 1995, executed by Pier 1 Imports, Inc.
Amount Unpaid Initials
Amount Amount of of Principal of Person
of Amount of Principal Interest Balance Making
Date Advance Principal Repaid Paid of Note Notation
<PAGE>
EXHIBIT "B"
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is dated as of the 15th day of December, 1995,
by PIER 1 IMPORTS (U.S.), INC., a Delaware corporation, PIER 1 ASSETS, INC.,
a Delaware corporation, PIER 1 LICENSING, INC., a Delaware corporation, and
PIER LEASE, INC. , a Delaware corporation (individually, a "Guarantor" and
collectively, the "Guarantors"), in favor of FIRST INTERSTATE BANK OF TEXAS,
N.A. as agent for the benefit of Banks (the "Agent").
WITNESSETH:
WHEREAS, pursuant to a Revolving Credit Agreement of even date herewith
among Pier 1 Imports, Inc., a Delaware corporation (the "Company"), the
Guarantors, Banks and Agent (the "Credit Agreement"), the Agent and Banks
agreed to make Revolving Credit Loans to the Company and have agreed to
issue Letters of Credit and to create Banker's Acceptance for the account of
Company; and
WHEREAS, it is a condition precedent to the obligation of the Banks to
make any such Revolving Credit Loans, to issue the Letters of Credit and to
create the Bankers Acceptances that the Guarantors guaranty repayment
thereof upon the terms and conditions set forth herein; and
WHEREAS, Guarantors desire to induce the Banks to make such Revolving
Credit Loans, to issue the Letters of Credit and to create the Banker's
Acceptance, which may reasonably be expected to benefit, directly or
indirectly, each Guarantor.
NOW, THEREFORE, in consideration of the foregoing and for other
valuable consideration hereby acknowledged, Guarantors agree for the benefit
of the Banks as follows:
A. DEFINITIONS.
1. Definitions. Unless otherwise defined in this Guaranty, terms
used herein shall have the meanings set forth in the Credit Agreement.
2. Additional Definitions. In addition to the definitions set forth
in the Credit Agreement, the following terms shall have the following
meanings:
"Adjusted Net Worth" shall mean, with respect to any Guarantor as of
the date of determination, (a) the value of the assets of such Guarantor as
of such date, minus (b) all liabilities of such Guarantor, contingent or
otherwise, as of such date (excluding such Guarantor's liability hereunder),
as such concepts are determined in accordance with applicable laws governing
determinations of the insolvency of debtors.
"Guaranteed Amount" shall mean, (a) the Obligation, and all renewals,
extensions, increases, modifications or rearrangements thereof, plus (b) all
costs incurred by Agent and the Banks to obtain, preserve, defend and
enforce this Guaranty and other Loan Documents, collect the Obligation, and
maintain, preserve, collect and enforce any security relating to this
Guaranty or any Guaranteed Amount, including without limitation taxes,
insurance premiums, attorneys' fees and legal expenses, and expenses of
sale.
"Maximum Guaranteed Amount" shall mean, with respect to any Guarantor
as of the date of determination, the greater of (a) the amount of any
Guaranteed Amount used to make a Valuable Transfer to such Guarantor, and
(b) the greater of 95% of the Guarantor's Adjusted Net Worth (i) at the date
hereof (if appropriate under applicable Law), (ii) at the time the
Guaranteed Amount was incurred, and (iii) on the date of enforcement hereof
(which shall be deemed to be the date of commencement of a proceeding
described in Section 9.01(h) or Section 9.01(i) of the Credit Agreement, if
applicable).
"Valuable Transfer" shall mean, with respect to any Guarantor, (a) all
loans, advances or capital contributions made to such Guarantor with
proceeds of any Guaranteed Amount, (b) the acquisition from such Guarantor
or retirement by such Guarantor with proceeds of any Guaranteed Amount of
debt securities or other obligations of such Guarantor, (c) the acquisition
by such Guarantor of all property acquired with proceeds of any Guaranteed
Amount, and transferred, absolutely and not as collateral, to such
Guarantor, to the extent of the fair market value thereof, and (d) the
acquisition from such Guarantor with proceeds of any Guaranteed Amount of
equity securities of such Guarantor.
B. GUARANTY
1. Guaranty. Each Guarantor hereby jointly and severally guarantees
absolutely and unconditionally to Agent and the Banks the due performance of
all terms and conditions of the Credit Agreement and other Loan Documents,
and the prompt and full payment when due of the Guaranteed Amount.
Notwithstanding anything herein or in any other Loan Documents to the
contrary, the maximum liability of each Guarantor hereunder shall in no
event exceed such Guarantor's Maximum Guaranteed Amount. Each Guarantor
agrees that the Guaranteed Amount may at any time exceed the aggregate
Maximum Guaranteed Amount of all Guarantors combined, without affecting or
impairing the obligation of any Guarantor hereunder.
2. Payment Obligation. If an Event of Default shall occur, and
following any notices required under the Credit Agreement, each Guarantor
shall, on demand, pay the Guaranteed Amount to Agent at its address set
forth in the Credit Agreement in immediately available funds. It shall not
be necessary for the Agent, in order to enforce such payment by any
Guarantor, to institute suit or exhaust its rights and remedies against the
Company, any other Guarantor or any other Person, including others liable to
pay any Guaranteed Amount, or to enforce its rights and remedies against any
security ever given to secure payment thereof.
3. Complete Waiver of Subrogation. (a) Notwithstanding any payment
or payments made by any Guarantor hereunder, or any set-off or application
by Agent or the Banks of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the Agent or Banks or of
such Guarantor against the Company to recover the amount of any payment made
by such Guarantor to the Banks hereunder by way of subrogation,
reimbursement, contribution, indemnity, or otherwise arising by contract or
operation of law, and no Guarantor shall have any right of recourse to or
any claim against assets or property of the Company, whether or not the
Obligation of the Company has been satisfied, all of such rights being
herein expressly waived by all Guarantors. Each Guarantor agrees not to
seek contribution from any other Guarantor until all of the Guaranteed
amount shall have been paid in full. If any amount shall nevertheless be
paid to a Guarantor by the Company or another Guarantor, such amount shall
be held in trust for the benefit of the Agent and Banks and shall forthwith
be paid to the Agent to be credited and applied to the Guaranteed Amount,
whether matured or unmatured. The provisions of this paragraph shall
survive the termination of this Guaranty, and any satisfaction and discharge
of the Company by virtue of any payment, court order or any federal or state
law. (b) Notwithstanding the provisions of the preceding clause (a), each
Guarantor shall have and be entitled to (i) all rights of subrogation
otherwise provided by Law in respect of any payment it may make or be
obligated to make under this Guaranty and (ii) all claims it would have
against the Company or any other Guarantor in the absence of the preceding
clause (a), and to assert and enforce same, in each case on and after, but
at no time prior to, the date (the "Subrogation Trigger Date") which is 400
days after the date on which the Obligation has been paid in full and the
Commitment terminated, if and only if (x) no Default or Event of Default of
the type described in Section 9.01(h) or Section 9.01(i) of the Credit
Agreement with respect to the Company or any other Guarantor has existed at
any time on and after the date of this Guaranty to and including the
Subrogation Trigger Date and (y) the existence of the Guarantor's rights
under this clause (b) would not make the Guarantor a creditor (as defined in
the Bankruptcy Code) of the Company or any other Guarantor in any
insolvency, bankruptcy, reorganization or similar proceeding commenced on or
prior to the Subrogation Trigger Date.
C. TERMS OF GUARANTY
1. Continuing Guaranty. Each Guarantor agrees that the Guaranteed
Amount and Loan Documents may be extended or renewed, and the Revolving
Credit Loan repaid and reborrowed in whole or in part, without notice to or
assent by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Amount or Loan Documents, or any repayment and reborrowing of the Revolving
Credit Loan. Each Guarantor waives notice of acceptance of this Guaranty,
presentation, demand, protest, notice of protest for nonpayment, diligence
in bringing suits against any Person liable on any Guaranteed Amount, and
any other notices or defenses of any kind. The obligations of each
Guarantor under this Guaranty shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms
hereof under any circumstances whatsoever, including without limitation:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Amount, including any
reduction or termination of the Commitment;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights with respect to, any
direct or indirect security for any Guaranteed Amount, including the
release of any Guarantor or other Person liable on any Guaranteed
Amount;
(d) any change in the corporate existence, structure or ownership
of the Company or any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Company, any
Guarantor or any of their assets;
(e) the existence of any claim, defense, set-off or other rights
or remedies which the Company or any Guarantor may have at any time
against the Company, the Banks, any other Guarantor or any other
Person, whether in connection with this Guaranty, the Loan Documents,
the transactions contemplated thereby or any other transactions;
(f) any invalidity or unenforceability for any reason of the
Credit Agreement or other Loan Documents, or any provision of Law
purporting to prohibit the payment or performance by the Company or any
Guarantor of the Guaranteed Amount or Loan Documents, or of any other
obligation to the Agent or Banks; or
(g) any other circumstances or happening whatsoever, whether or
not similar to any of the foregoing.
2. Payments With Respect to Guaranteed Amount. Each payment on the
Guaranteed Amount shall be deemed to have been made by the Company unless
express written notice is given to the Agent at the time of such payment
that such payment is made by a specific Guarantor.
3. Effect of Debtor Relief Laws. If after receipt of any payment of,
or proceeds of any security applied (or intended to be applied) to the
payment of all or any part of the Guaranteed Amount, the Agent or any Bank
is for any reason compelled to surrender or voluntarily surrenders, such
payment or proceeds to any Person, (a) because such payment or application
of proceeds is or may be avoided, invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, fraudulent
conveyance, impermissible set-off or a diversion of trust funds; or (b) for
any other reason, including without limitation (i) any judgment, decree or
order of any court or administrative body having jurisdiction over the Agent
or any Bank or its properties, or (ii) any settlement or compromise of any
such claim effected by any Bank with any such claimant (including the
Company), then the Guaranteed Amount or part thereof intended to be
satisfied shall be reinstated and continue and this Guaranty shall continue
in full force as if such payment or proceeds have not been received,
notwithstanding any revocation thereof or the cancellation of the Notes or
any other instrument evidencing any Guaranteed Amount or otherwise; and each
Guarantor shall be liable to pay such Bank, and hereby does indemnify,
jointly and severally, said Bank and hold it harmless for, the amount of
such payment or proceeds so surrendered and all expenses (including
reasonable attorneys' fees, court costs and expenses attributable thereto)
incurred by such Bank in the defense of any claim made against it that any
payment or proceeds received by the Bank in respect of all or part of the
Guaranteed Amount must be surrendered. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Company by virtue of any payment, court order or any
federal or state law.
D. REPRESENTATIONS AND COVENANTS
1. Representations and Warranties. Each Guarantor hereby represents
and warrants that all representations and warranties set forth in Article VI
of the Credit Agreement with respect to it are true and correct as of the
date hereof, and are incorporated herein by reference.
2. Covenants. Each Guarantor hereby jointly and severally expressly
assumes, confirms and agrees to perform, observe and be bound by all
conditions and covenants set forth in the Credit Agreement, to the extent
applicable to it, as if it were a signatory thereto.
E. GENERAL
1. Parties Bound. This Guaranty is for the benefit of the Agent and
Banks, and their respective successors and assigns, and in the event of an
assignment by any Guaranteed Amount, the rights and benefits hereunder, to
the extent applicable to the Guaranteed Amount so assigned, shall be
automatically transferred therewith. This Guaranty is binding not only on
each Guarantor, but on each of their successors and assigns.
2. Modification and Amendment. No modification, consent, amendment
or waiver of any provision of this Guaranty, nor consent to any departure by
any Guarantor therefrom, shall be effective unless the same shall be in
writing and signed by the Agent, and then shall be effective only in the
specific instance and for the purpose for which given.
3. Waiver. No delay or omission by the Agent or Banks in exercising
any right or remedy hereunder shall impair any such right or remedy or be
construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such right or remedy preclude other or
further exercise thereof, or the exercise of any other right or remedy
hereunder.
4. Cumulative Rights. If any Guarantor is or becomes liable for any
indebtedness owing by the Company to any Bank by endorsement or otherwise
than under this Guaranty, such liability shall not be in any manner impaired
or affected hereby, and the rights or remedies of the Agent and Banks
hereunder shall be cumulative of all other rights or remedies that the Agent
and Banks may ever have against the Guarantors. The exercise by the Agent
or the Banks of any rights or remedies hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other rights or remedies. Without limitation of
the foregoing, it is specifically understood and agreed that this Guaranty
is given by each Guarantor as an additional guaranty to any and all other
guaranties heretofore or hereafter executed and delivered to the Agent by
any Guarantor, and nothing herein shall ever be deemed to replace or be in
lieu of any other of such previous or subsequent guaranties.
5. Interest; Limitations of Law. All agreements between each
Guarantor and the Agent and Banks, whether now existing or hereafter arising
and whether written or oral, are expressly limited so that in no contingency
or event whatsoever, whether by reason of acceleration of payment of any of
the Guaranteed Amount or otherwise, shall the amount paid or agreed to be
paid to any Bank for the use, forbearance or detention of funds advanced
pursuant to any Loan Documents or for the performance or payment of any
covenant or obligation contained in any Loan Documents exceed the maximum
amount permitted by applicable law. If from any circumstance whatsoever,
fulfillment of any provision of any Loan Documents, at the time performance
of such provision shall be due, shall involve transcending the limit of
validity prescribed by applicable law, then, ipso facto, the obligation to
be fulfilled shall be reduced to the limit of such validity, and if from any
circumstance Bank shall ever receive anything of value deemed excess
interest by applicable law, an amount equal to any such excess interest
shall be applied to the reduction of the principal amount owing under the
Loan Documents, and not to the payment of interest, or if such excess
interest exceeds the unpaid principal balance, such excess interest shall be
promptly refunded to the Company or Guarantor, as applicable. All sums paid
or agreed to be paid for the use, forbearance or detention of any funds
advanced pursuant to the Loan Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full term of this Agreement until payment in full, so that the rate of
interest on account of the Guaranteed Amount is uniform throughout the term
hereof.
6. Subordination. Each Guarantor hereby expressly agrees that any
obligation of the Company to any Guarantor is expressly subordinate to the
right of the Agent and Banks to payment and performance by the Company of
the Guaranteed Amount and Loan Documents, and that the Agent and Banks shall
be entitled to such full payment and performance prior to the exercise by
any Guarantor of any rights, including realization upon any security, to
enforce the payment or performance of any obligation that the Company may
owe to any Guarantor; provided that, Guarantors shall be entitled to receive
payments from the Company with respect to such obligations if at the time of
such payment no Default or Event of Default exists or would exist
immediately after giving effect to any such payment.
7. Costs and Expenses. Each Guarantor agrees, jointly and severally,
to pay to the Agent all costs and expenses (including court costs and
attorneys' fees) incurred by the Agent and the Banks in the enforcement of
this Guaranty and all other Loan Documents.
8. Notices. Unless otherwise provided herein, all notices, requests,
consents and demands shall be in writing and shall be personally delivered,
sent by telecopy of telex (answerback received), or mailed, by certified
mail, postage prepaid, to the following addresses:
(a) If to the Agent:
First Interstate Bank of Texas, N.A.
309 West Seventh Street, Suite 1100
Fort Worth, Texas 76102
Attention: Robin Hamilton
(b) If to any Guarantor:
[Name of Guarantor]
c/o Pier 1 Imports, Inc.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
Attention: Chief Financial Officer
or to such other address as any party may designate in written notice to the
other parties. All notices, requests, consents and demands hereunder will
be effective when so personally delivered or sent by telecopy of telex, or
two days after being so mailed.
9. Counterparts. This Guaranty may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument. In making proof of this Guaranty, it shall not be necessary to
produce or account for any counterpart other than one signed by the party
against which enforcement is sought.
10. Governing Law. This Guaranty shall be deemed a contract made in
Fort Worth, Texas, and shall be construed and governed by the laws of Texas
and the United States of America. Without excluding any other jurisdiction,
each Guarantor hereby agrees that the courts of Texas and federal courts
sitting in Texas will have jurisdiction over proceedings in connection
herewith.
11. Arbitration Program. This Guaranty is subject to the terms of the
Arbitration Program contained in the Credit Agreement.
12. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AND ENTIRE
AGREEMENT AND UNDERSTANDING AMONG THE AGENT, THE COMPANY AND THE GUARANTORS
RELATING TO THE SUBJECT MATTER HEREOF, SUPERSEDES ALL PRIOR PROPOSALS,
AGREEMENTS AND UNDERSTANDINGS RELATING TO SUCH 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, each Guarantor has executed this Guaranty as of the
date first set forth above.
PIER 1 IMPORTS (U.S.), INC.
By:___________________________
Robert G. Herndon,
Executive Vice President
PIER 1 ASSETS, INC.
By:___________________________
Robert G. Herndon,
Executive Vice President
PIER 1 LICENSING, INC.
By:___________________________
Robert G. Herndon,
Executive Vice President
PIER LEASE, INC.
By:___________________________
Robert G. Herndon,
Executive Vice President
<PAGE>
EXHIBIT "C"
REQUEST FOR BORROWING - FLOATING BASE BORROWING
Date: _____________________
First Interstate Bank of Texas, N.A.
309 West Seventh Street
Fort Worth, Texas 76102
Re: Request For Floating Base Borrowing
This Request for Borrowing has been prepared and is being delivered to
Agent pursuant to Section 2.02(a) and Section 5.02(c) of that certain
Revolving Credit Agreement ("Loan Agreement") dated as of December 15, 1995
by and between Pier 1 Imports, Inc., a Delaware corporation ("Borrower"),
the Guarantors, the various financial institutions party thereto, and First
Interstate Bank of Texas, N.A. ("Agent"). Capitalized terms shall have the
meanings assigned to them in the Loan Agreement unless otherwise provided
herein or the context hereof otherwise requires.
On this date the undersigned does hereby request that Banks make
Floating Base Advances (i) in the aggregate principal amount of
$_____________ (such amount shall be in an integral multiple of $100,000.00
unless such Advances would exhaust the Total Commitment in which case, such
amount may be in an amount of the unused portion of the Total Commitment)
(ii) on ___________________, 199___ .
The undersigned (in his representative capacity and not in his
individual capacity) hereby represents and warrants to Agent and Banks that
all of the representations and warranties contained in Article VI of the
Loan Agreement (except the last clause of Section 6.07) are true and correct
in all material respects as of the date hereof, with the same force and
effect as if made on the date hereof, and that no Event of Default or
condition, event or act which with the giving of notice or lapse of time, or
both, would constitute an Event of Default exists and is continuing on this
date, unless noted below (if such a condition, event or act is so noted,
there shall also be noted below the nature, period of existence thereof and
the action which the Borrower is taking or proposes to take with respect
thereto):
PIER 1 IMPORTS, INC.
By:___________________________
Name:____________________
Title:___________________
<PAGE>
EXHIBIT "D"
REQUEST FOR BORROWING - CD BORROWING
Date: ___________________
First Interstate Bank of Texas, N.A.
309 West Seventh Street
Fort Worth, Texas 76102
Re: Request for CD Borrowing
This Request for Borrowing has been prepared and is being delivered to
Agent pursuant to Section 2.02(a) and Section 5.02(c) of that certain
Revolving Credit Agreement ("Loan Agreement") dated as of December 15,
1995, by and among Pier 1 Imports, Inc., a Delaware corporation
("Borrower"), the Guarantors, the various financial institutions party
thereto (the Banks"), and First Interstate Bank of Texas, N.A. ("Agent").
Capitalized terms shall have the meanings assigned to them in the Loan
Agreement unless otherwise provided herein or the context hereof otherwise
requires. (Check applicable box below).
[For New Advances] On this date the undersigned does hereby request that
Banks make CD Advances (i) in the aggregate principal amount of
$______________________ (such amount shall be in an integral multiple of
$100,000.00), (ii) for the following Interest Period _____________________
(thirty (30), sixty (60) or ninety (90) days), (iii) on
_______________________, 199____ (which date shall be at least one (1)
Business Day after the date on which this Request for Borrowing shall be
submitted to Agent). After taking into account the Borrowing requested
hereby, the total number of unpaid CD Borrowings and Eurodollar Borrowings
does not exceed four (4).
[For New Advances] On this date the undersigned does hereby request a CD
Borrowing (i) in the aggregate principal amount of $____________________
(such amount shall be in an integral multiple of $100,000.00), (ii) for the
following Interest Period __________ (thirty (30), sixty (60) or ninety (90)
days), (iii) on _________________, 199___ (which date shall be at least one
(1) Business Day after the date on which this Request for Borrowing shall be
submitted to Agent). After taking into account the Borrowing requested
hereby, the total number of unpaid CD Borrowings and Eurodollar Borrowings
does not exceed four (4). This Request for Borrowing shall serve as a
Rollover Notice under Section 2.02(c) of the Loan Agreement, with respect to
the CD Borrowing made on _______________, 199_____ ("Prior Advance"). This
Rollover Notice is being submitted at least one (1) Business Day (if the
Prior Borrowing was a CD Borrowing) or two (2) Eurodollar Business Days (if
the Prior Borrowing was a Eurodollar Borrowing) prior to the termination of
the Interest Period for the Prior Borrowing.
The undersigned (in this representative capacity and not in his
individual capacity) hereby represents and warrants to Agent and Banks that
all of the representations and warranties contained in Article VI of the
Loan Agreement (except the last clause of Section 6.07) are true and correct
in all material respects as of the date hereof, with the same force and
effect as if made on the date hereof, and that no Event of Default or
condition, event or act which with the giving of notice or lapse of time or
both, would constitute an Event of Default, exists and is continuing on this
date, unless noted below (if such a condition, event or act is so noted,
there shall also be noted below the nature, period of existence thereof and
the action which the Borrower is taking, or proposes to take with respect
thereto):
PIER 1 IMPORTS, INC.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT "E"
REQUEST FOR BORROWING - EURODOLLAR BORROWING
Date: ____________________
First Interstate Bank of Texas, N.A.
309 West Seventh Street
Fort Worth, Texas 76102
Re: Request For Eurodollar Borrowing
This Request for Borrowing has been prepared and is being delivered to
Agent pursuant to Section 2.02(a) and Section 5.02(c) of that certain
Revolving Credit Agreement ("Loan Agreement") dated as of December 15, 1995,
by and between Pier 1 Imports, Inc., a Delaware corporation ("Borrower"),
the Guarantors, the various financial institutions party thereto (Banks"),
and First Interstate Bank of Texas, N.A. ("Agent"). Capitalized terms shall
have the meanings assigned to them in the Loan Agreement unless otherwise
provided herein or the context hereof otherwise requires. (Check applicable
box below.)
[ ] [For New Borrowings] On this date the undersigned does hereby request
that Banks make a Eurodollar Advances (i) in the aggregate principal amount
of $___________ (such amount shall be in an integral multiple of
$100,000.00), (ii) for the following Interest Period _______________ (one
(1) two (2) or three (3) months), (iii) on __________________, 199___ (which
date shall be at least two (2) Eurodollar Business Days after the date on
which this Request for Borrowing shall be submitted to Agent). After taking
into account the Borrowing requested hereby, the total number of unpaid CD
Borrowings and Eurodollar Borrowings does not exceed four (4).
[ ] [For Rollover Notices] On this date the undersigned does hereby
request a Eurodollar Borrowing (i) in the aggregate principal amount of
$____________ (such amount shall be in an integral multiple of $100,000.00),
(ii) for the following Interest Period ____________ (one (1) two (2) or
three (3) months), (iii) on _______________, 199___ (which date shall be at
least two (2) Eurodollar Business Days after the date on which this Request
for Borrowing shall be submitted to Agent). After taking into account the
Borrowing requested hereby, the total number of unpaid CD Borrowings and
Eurodollar Borrowings does not exceed four (4). This Request for Borrowing
shall serve as a Rollover Notice under Section 2.02(c) of the Loan
Agreement, with respect to the (CD or Eurodollar) Borrowing made on
_____________, 199____ ("Prior Borrowing"). This Rollover Notice is being
submitted at least one (1) Business Day (if the Prior Borrowing was a CD
Borrowing) and at least two (2) Eurodollar Business Days (if the Prior
Borrowing was a Eurodollar Borrowing) prior to the termination of the
Interest Period for the Prior Borrowing.
The undersigned (in his representative capacity and not in his
individual capacity) hereby represents and warrants to Agent and Banks that
all of the representations and warranties contained in Article VI of the
Loan Agreement (except the last clause of Section 6.07) are true and correct
in all material respects as of the date hereof, with the same force and
effect as if made on the date hereof, and that no Event of Default or
condition, event or act which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, exists and is continuing on this
date, unless noted below (if such a condition, event or act is so noted,
there shall also be noted below the nature, period of existence thereof and
the action which the Borrower is taking, or proposes to take with respect
thereto):
PIER 1 IMPORTS, INC.
By:_______________________________
Name:________________________
Title:_______________________
<PAGE>
EXHIBIT F-1
BID REQUEST (BID RATE LOANS)
___________________________________
___________________________________
___________________________________
Attention: ___________________
Facsimile: (___) _____________
This instrument constitutes a Bid Request under, and as defined by, the
Revolving Credit Agreement dated as of December 15, 1995 (as amended or
modified and in effect from time to time, the "Loan Agreement") among the
undersigned Pier 1 Imports, Inc. (the"Borrower"), the Guarantors, the
various financial institutions party thereto, and First Interstate Bank of
Texas, N.A., as Agent. Capitalized terms shall have the meanings set forth
in the Loan Agreement unless otherwise provided herein or the context hereof
requires otherwise.
The Borrower hereby requests Bid Rate Loan(s), subject to the terms of
the Loan Agreement, as follows:
(a) Borrowing Date (which is a Business Day):
_______________________, 19___.(1)
(b) Aggregate principal amount of Bid Rate Loans requested:
$_______________ (Maximum Request").(2)
(c) Number of Bid Rate Loans requested and principal amounts thereof:
____________ Bid Rate Loans in the amounts of $_____________,
$__________ and $______________, respectively.
(d) Loan Period(s) and its/their maturity date(s):
- ----------------
(1) At least one (1) Business Day after the delivery of this Bid
Request.
(2) Subject to the terms of the Loan Agreement, a minimum of
$1,000,000 and, for amounts in excess thereof, an integral multiple of
$100,000.
Principal Amount(3) Maturity Date(4) Loan Period
- ----------------------------------------------------------------------------
- ---
$ Days
- ----------------------------------------------------------------------------
- ---
$ Days
- ----------------------------------------------------------------------------
- ---
$ Days
- ----------------------------------------------------------------------------
- ---
The Borrower hereby represents and warrants that immediately following
the making of the Bid Rate Loan(s) requested above:
(1) the aggregate principal amount of all outstanding Committed Loans
will be $_____________;
(2) the aggregate principal amount of all outstanding Bid Rate Loans
will be $___________;
(3) the sum of items (1) and (2) above will be $____________, which is
equal to or less than the Total Commitment of $____________.
The Borrower hereby expressly confirms the representations and
warranties deemed to be made by operation of Section 5.02(e) of the Loan
Agreement.
The Borrower agrees that if prior to the time of the Bid Rate Loan
related hereto, any matter certified to, confirmed, represented or warranted
herein by it will not be true and correct at such time as if then made, it
will immediately so notify the Agent.
- ------------------
(3) Subject to the terms of the Loan Agreement, a minimum of
$1,000,000 and for amounts in excess thereof, an integral multiple of
$100,000.
(4) For each Loan Period, no earlier than seven (7) days after the
Borrowing Date requested herein, and no later than the earlier of (a)_______
(_________) days after such Borrowing Date, and (b) the Termination Date.
IN WITNESS WHEREOF, the Borrower has caused this Bid Request to be
executed and delivered by its duly authorized officer this ___ day of
____________, 199___.
PIER 1 IMPORTS, INC.
By:___________________________________________
Name:____________________________________
Title:__________________________________
<PAGE>
EXHIBIT F-2
BID
FROM
_______________________(1)
(Contact Person: _______________________________)
(Telephone No.: __________________________________)
Pier 1 Imports, Inc.
301 Commerce Street
Fort Worth, Texas 76102
Attention: __________________
Facsimile: (___) ___________
This instrument constitutes an irrevocable Bid for a Bid Rate Loan
under, and as defined by, the Revolving Credit Agreement dated as of
December 15, 1995 (as amended or modified and in effect from time to time,
the"Loan Agreement" among Pier 1 Imports, Inc., a Delaware corporation (the
"Borrower"), the various financial institutions (including the undersigned
(the"Bank")) party thereto, and First Interstate Bank of Texas, N.A., as
Agent. Capitalized terms shall have the meanings assigned to them in the
Loan Agreement unless otherwise provided herein or the context hereof
requires otherwise.
(1) The Borrower's related Bid Request inviting this Bid has requested
Bid Rate Loan(s), subject to the terms of the Loan Agreement, in the
aggregate principal amount of $______________ ("Maximum Request") with a
Borrowing Date of ______________, 19___.
(2) The Bank hereby offers to make the following Bid Rate Loan(s) on
the Borrowing Date provided that the Borrower accept bids for such Loans up
to $___________(2)
- -------------
(1) Name of Bank Submitting Bid
(2) A minimum of $1,000,000, and for amounts in excess thereof, an
integral multiple of $100,000, not exceeding the amount in (1).
Principal Amount(3) Maturity Date
of Loan Period Bid Rate(4)
- ----------------------------------------------------------------------------
- -
$ Days
- ----------------------------------------------------------------------------
- -
$ Days
- ----------------------------------------------------------------------------
- -
$ Days
- ----------------------------------------------------------------------------
- -
(3) The Bank acknowledges that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Loan
Agreement, irrevocably obligate(s) the Bank to make the Bid Rate Loan(s) for
which any offer(s) are accepted by the Borrower, in whole or in part, in
accordance with the terms of the Loan Agreement.
Dated: _________________, 19___ ______________________________________(5)
By:___________________________________________
_
Name:_____________________________________
Title:____________________________________
- -----------------
(3) A minimum of $1,000,000 and, for amounts in excess thereof, an
integral multiple of $100,000 for each Bid Rate (i.e., Portion) for each
Loan Period.
(4) Insert the rate of interest per annum (expressed to the nearest
1/10,000 of 1%). The interest rates shall be inserted in order of
increasing value.
(5) Name of Bank submitting Bid.
<PAGE>
EXHIBIT F-3
BID RATE LOAN ACKNOWLEDGMENT
_______________________________
_______________________________
_______________________________
Attention: __________________
Facsimile: (___) _________
This instrument constitutes a Bid Rate Loan Acknowledgment under, and
as defined by, the Revolving Credit Agreement dated as of December ___, 1995
(as amended or modified and in effect from time to time, the "Loan
Agreement") among Pier 1 Imports, Inc. (the "Borrower"), the Guarantors, the
various financial institutions party thereto, and First Interstate Bank of
Texas, N.A., as Agent. Capitalized terms not otherwise expressly defined
herein shall have the meanings set forth in the Loan Agreement unless
otherwise provided herein or the context hereof otherwise requires.
Pursuant to Section 2.03(c) of the Loan Agreement, the Borrower hereby
confirms its [acceptance of the Bid] [acceptance of a Portion of the Bid]
dated ___________, 19___, for the Bid Rate Loan to take place on __________,
19___, on the following terms:
A. Bid Rate Loan.
1. Principal Amount of
Bid Rate Loan $_____________________________________
__
2. Bid Rate Loan
Maturity Date ________________________________,
19___
3. Amount of, and Bid Rate
for, each Portion
[Bidding Bank] $_______________ at _______%
[Bidding Bank] $_______________ at _______%
[Bidding Bank] $_______________ at _______%
B. Bid Rate Loan.
1. Principal Amount of
Bid Rate Loan $_____________________________________
___
2. Bid Rate Loan
Maturity date ___________________________________,
19___
3. Amount of, and Bid Rate
for, each Portion
[Bidding Bank] $_______________ at _______%
[Bidding Bank] $_______________ at _______%
[Bidding Bank] $_______________ at _______%
C. Bid Rate Loan.
1. Principal Amount of
Bid Rate Loan $_____________________________________
___
2. Bid Rate Loan
Maturity date ___________________________________,
19___
3. Amount of, and Bid Rate
for, each Portion
[Bidding Bank] $_______________ at _______%
[Bidding Bank] $_______________ at _______%
[Bidding Bank] $_______________ at _______%
The Borrower hereby confirms to Bank that the above-described Bid or
Portion(s) thereof, were accepted or rejected in accordance with Section
2.03(c) of the Loan Agreement.
The Borrower hereby further certifies and warrants that at the time
hereof the applicable conditions precedent under Section 5.02 have been
satisfied.
The undersigned hereby confirms that the proposed Bid Rate Loan is to
be made available to it in accordance with Section 2.03(e) of the Loan
Agreement.
The Borrower hereby represents and warrants that immediately following
the making of the Bid Rate Loan(s):
(1) the aggregate principal amount of all outstanding Committed Loans
will be $______________;
(2) the aggregate principal amount of all outstanding Bid Rate Loans
will be $_______________;
(3) the sum of items (1) and (2) above will be $_____________, which
is equal to or less than the Total Commitment of $_____________.
Except to the extent, if any, that prior to the time of the Bid Rate
Loan related hereto the Agent has received written notice to the contrary
from the Borrower, each matter certified to in the Bid Request related
hereto shall be deemed once again to be certified as true and correct at the
date of such Borrowing as if then made.
The Borrower has caused this Bid Rate Loan Acknowledgment to be
executed and delivered, and the certification and warranties contained
herein to be made, by its Responsible Officer this ____ day of
__________________, 199__.
PIER 1 IMPORTS, INC.
By:___________________________________________
_
Name:______________________________________
Title:_______________________________________
<PAGE>
EXHIBIT "G"
TO REVOLVING CREDIT AGREEMENT
BETWEEN PIER 1 IMPORTS, INC., ET AL AND
FIRST INTERSTATE BANK OF TEXAS, N.A., ET AL
None
<PAGE>
EXHIBIT H"
TO REVOLVING CREDIT AGREEMENT
BETWEEN PIER 1 IMPORTS, INC., ET AL, AND
FIRST INTERSTATE BANK OF TEXAS, N.A., ET AL
<PAGE>
EXHIBIT "I"
TO REVOLVING CREDIT AGREEMENT
BETWEEN PIER 1 IMPORTS, INC., ET AL, AND
FIRST INTERSTATE BANK OF TEXAS, N.A., ET AL
Distribution centers used by Pier 1 Imports (U.S.), Inc., either as owner
or tenant, located in Fort Worth, Texas, Los Angeles, California, Chicago,
Illinois, Savannah, Georgia, Columbus, Ohio, and two locations in Baltimore,
Maryland, contain underground storage tanks.
<PAGE>
EXHIBIT J"
ASSIGNMENT AND ACCEPTANCE
Dated: ______________, 19_____
Reference is made to the Revolving Credit Agreement dated as of December
15, 1995 (as amended from time to time, the "Loan Agreement") among PIER 1
IMPORTS, INC. a Delaware corporation, (the "Borrower"), the Guarantors, the
Banks named therein, and FIRST INTERSTATE BANK OF TEXAS, N.A., as Agent.
Capitalized terms not otherwise defined herein shall have the meanings
specified in the Loan Agreement.
_____________, acting as one of the Banks referred to in the Loan
Agreement (the "Assignor"), and ____________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and
to a portion of the Assignor's rights and obligations as of the date hereof
under the Loan Agreement and the other Loan Documents sufficient to give the
Assignee the percentage interest specified in Section 1 of Schedule 1 hereto
of all outstanding rights and obligations under the Loan Agreement and the
other Loan Documents. Such sale and assignment shall [include] [exclude] a
proportionate share of the loan facility fee previously paid to Assignor
pursuant to Section 2.04 of the Loan Agreement, [the amounts of such
proportionate shares being specified in Section 2 of Schedule 1 hereto].
After giving effect to such sale and assignment, the respective Commitments of
and amounts of the Loans owing to the Assignor and the Assignee will be as set
forth in Section 3 of Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it (a) is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim and (b) to its knowledge
(1) there exists no Event of Default, or event which with the giving of notice
or the passage of time or both, would constitute and Event of Default and (2)
it has not waived any material provision of any Loan Document; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made by another Person in or in
connection with the Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Person or the performance or
observance by the Borrower or any other Person of any of its obligations under
the Loan Documents or any other instrument or document furnished pursuant
thereto; and (iv) will deliver the Note issued to it pursuant to the Credit
Agreement to the Agent concurrently with the presentation hereof to the Agent
for acceptance and requests that, upon receipt of such Note, the Agent shall
exchange such Note for a new Note [new Notes] payable to the order of the
Assignee in an amount equal to the Commitment assumed by the Assignee pursuant
hereto [and the Assignor in an amount equal to the Commitment retained by the
Assignor under the Loan Agreement, respectively], as specified in Section 4 of
Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Loan
Agreement and the other Loan Documents, together with copies of the financial
statements referred to in Section 7.01 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it
will, independently and without reliance upon the Assignor or any other of the
Banks and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action on its
behalf and to exercise such powers under the Loan Agreement and the other Loan
Documents as are delegated to such Person by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Loan Agreement and the other Loan Documents are required to be
performed by it as a Bank; and (vi) specifies as its domestic lending office
(and address for notices) and Eurodollar lending office the offices set forth
in Section 5 of Schedule 1 hereto; and (vii) represents that it is either (y)
a corporation organized under the laws of the United States, a state thereof
or the Distinct of Columbia or (z) presently entitled to complete exemption
from United States withholding tax imposed on or with respect to any payments,
including fees, to be made to it pursuant to the Loan Agreement (A) under an
applicable provision of a tax convention or treaty to which the United States
is a party or (B) because it is acting through a branch, agency or office in
the United States and any payment to be received by it under the Loan
Agreement is effectively connected with a trade or business in the United
States.
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for the approval
of [the Borrower] the Agent and acceptance by the Agent, and the effective
date of this Assignment and Acceptance (the "Effective Date") shall be the
date on which such approval and acceptance has occurred.
5. Upon the Effective Date, (i) the Assignee shall be a party to the
Loan Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Agreement.
6. From and after the Effective Date, the Agent shall make all payments
under the Loan Agreement and the other Loan Documents in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
and fundings under the Loan Agreement and the other Loan Documents for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Texas (without giving effect to
the conflict of law principles thereof) and applicable federal law. This
Assignment and Acceptance may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same instrument. This
Assignment and Acceptance shall be binding upon and inure to the benefit of
the Assignor and the Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized effective as of the date first above written.
Attachments: ASSIGNOR:
Schedule 1
_________________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
ASSIGNEE:
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
Approved this ____ day of _____________________, 199__.
PIER 1 IMPORTS, INC.
By:_______________________________________
Name:___________________________________
Title:__________________________________
FIRST INTERSTATE BANK OF TEXAS, N.A., as
Agent
By:_______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
SCHEDULE
to
Assignment and Acceptance
Dated _____________, 199____.
Section 1.
Percentage Interest acquired by Assignee ________________
relative to all Banks
Section 2.
1. Assignee's proportionate share of loan
origination fee previously paid to Assignor
pursuant to Section 2.04 of the Loan Agreement:
$_______________
Section 3.
1. Assignee's Acquired Interest.
Assignee's Commitment: $_________________________
Aggregate outstanding principal
amount of Loans owing to the Assignee: $____________________
2. Assignor's Retained Interest.
Assignor's Commitment: $_________________________
Aggregate outstanding principal
amount of Loans owing to the Assignor: $____________________
Section 4.
1. A Note payable to the order of the Assignee in the principal amount of
$________.
2. A Note payable to the order of the Assignor in the principal amount of
$______.
Section 5.
Domestic Lending Office Eurodollar Lending Office
________________________ ______________________
________________________ ______________________
________________________ ______________________
<PAGE>
Exhibit "L"
ACCEPTANCE CREDIT AGREEMENT
First Interstate Bank of Texas, N.A.
P.O. Box 3326
Houston, Texas 77253
Attention: International Banking Department
Gentlemen:
From time to time we shall deliver to you, for acceptance at your option,
drafts drawn on you by us at a maximum of six (6) months' sight (each such
draft delivered to you for acceptance being herein called a "Draft"), the
aggregate face amount of accepted and outstanding Drafts not to exceed at any
time the lesser of (i) $____________________, and (ii) such limitations on
extensions of credit which are set forth in that certain
___________________________________ ___________________________ dated
________________________, 19____, between you and us, as the same has
heretofore been, and may hereafter be, amended, supplemented, or otherwise
modified from time to time (the "Credit Agreement"). Simultaneously with such
delivery we shall deliver to you a duly executed and completed transmittal
letter in a form satisfactory to you.
We hereby request you to accept and discount each Draft (all such Drafts
which are accepted being herein called a "Credit"), in your discretion in each
instance, and in consideration of your so doing we hereby warrant and agree as
follows:
1. Credit. We warrant that: (a) each Credit will arise from one of
more transactions which either (i) arise out of the current shipment of goods
between countries or within the United States, or (ii) arise out of the
storage within the United States of goods under contract of or expected to
move into the channels of trade within a reasonable time and that are secured
throughout their life by a warehouse receipt or similar document conveying
title to the underlying goods; (b) the proceeds of the sale of any such goods
will forthwith be applied in liquidation of such Credit; (c) the total amount
of each Credit shall at no time exceed the lesser of (i) the market value of
such goods or (ii) the amount contracted for in any bona fide transaction
(other than a transaction between us and our agent(s) with respect to such
goods; and (d) the undersigned shall have, or with the proceeds of each Credit
will forthwith obtain, god title, free of all liens and claims, other than
your interest hereunder to the documents and goods not delivered to you and
any proceeds thereof, in trust for you as property on the understanding that
upon your request, the undersigned shall surrender any such documents, goods
or proceeds thereof, in whatever form they may be, to you to be applied, dealt
with or disposed of as hereinafter provided. Each delivery by us of Drafts
for acceptance hereunder shall be accompanied by such information as you may
require concerning such Drafts and the transaction(s) to which they relate.
2. Discount; Commission; Interest. In discounting each Draft
hereunder, you may deduct a discount, computed on the face amount of such
Draft for the period from the date of discount until maturity, at a rate equal
to the sum of (a) your then-current discount rate for bankers' acceptances
plus (b) such commission rate as you may reasonably establish, but not to
exceed the maximum rate of non-usurious interest or discount allowed by law.
We shall pay to you the face amount of each such Draft on demand but in any
event and without demand in federal funds on its maturity date (or in clearing
house funds not later than one business day prior to maturity). In addition
we shall pay to you, on demand, (A) interest, at such rates as you may
reasonably establish (but not to exceed the maximum rate of non-usurious
interest or discount allowed by law), on the face amount of each Draft from
maturity until payment by us of such face amount, and (B) all liabilities,
charges and expenses (including reasonable attorneys' fees and legal expenses)
paid or incurred by you in connection with each Draft or this Agreement or the
enforcement of either of them. All discount, commission and interest charges
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days unless such basis shall result in a usurious rate of
interest or discount, in which event it shall be computed on the basis of a
year of 365 or 366 days, as the case may be. All amounts payable by us under
this Agreement shall be paid at your above address and may at your discretion
be charged by you to any deposits or other funds then or thereafter held by
you for your account or otherwise owing by you to us.
3. Interest. Notwithstanding anything to the contrary herein or in any
other agreement entered into in connection herewith, (i) the aggregate of all
considerations which constitute interest under law applicable to you that is
contracted for, taken, reserved, charged or received in connection with this
Agreement or the Drafts shall under no circumstance exceed the maximum amount
allowed by such applicable law and any excess shall be refunded by you to us;
and (ii) in the event that our obligation to pay to you the amount of any
draft is accelerated or demanded for any reason prior to the maturity of such
draft, then such consideration that constitutes interest under law applicable
to you may never include more than the maximum amount allowed by such
applicable law and any excess shall be refunded by you to us.
4. Bills of Lading; Insurance; Other Documents. We agree that you and
any of your correspondents may receive and accept as "bills of lading" under
the Credits, any documents issued or purporting to be issued by or on behalf
of any carrier which acknowledge receipt of property for transportation,
whatever the specific provisions of such documents, and that the date of each
such document shall be deemed the date of shipment of the property mentioned
therein; and that you may receive and accept as documents of insurance either
insurance policies or insurance certificates. You may receive and accept as
sufficient and controlling the description of the property contained in the
invoice, and may receive and accept bills of lading, insurance and other
documents, however variant in description from that contained in the invoice.
You and any of your correspondents may receive and accept bills of lading
containing stamped, written or typewritten provisions thereon, whether or not
signed or initialed, and you and any of your correspondents may assume
conclusively that the same were placed with authority on the bill of lading at
the time of its signing and issuance by the steamship company or carrier or
any agent thereof.
5. Default; Remedies. If we shall fail to pay, when due, any amount
payable hereunder and you are unable to extend a Revolving Loan (as defined in
the Credit Agreement) in cash, in accordance with the terms and restrictions
of the Credit Agreement, to satisfy such payment obligation or with respect to
any other Liabilities or to perform any other obligation to you, or if we or
any of our property shall become subject to an order of any court or any other
legal process or restraint or to any adverse claim that you shall deem
material, or if you shall feel insecure for any reason whatsoever, such event
shall constitute a Default hereunder. Upon Default you may, at your sole
discretion and without notice to us, exercise any or all rights and remedies
available to you hereunder, under any other agreement or instrument evidencing
or relating to any of the Liabilities or Collateral, or under applicable law.
Without limiting the foregoing, upon Default you may, to the fullest extent
permitted by applicable law, without presentment, demand, notice of intent to
accelerate, notice of acceleration, notice of dishonor or other notice,
protest, advertisement, hearing or process of law of any kind, (a) enter upon
any premises where any of the Collateral may be located and take possession of
and remove such Collateral, (b) sell any or all of the Collateral, free of all
rights and claims of the undersigned therein and thereto, at any public or
private sale or broker's board, (c) bid for and purchase any or all private
sale or broker's board, (c) bid for any purchase any or all of the Collateral
at any such sale or broker's board, (d) apply any of the Collateral to the
payment of expenses in connection with the Collateral and the enforcement of
this Agreement, including reasonable attorneys' fees and legal expenses, and
apply any balance thereof toward the payment of such of the Liabilities, and
in such order of application, as you may elect. If any notification by you of
intended disposition of any of the Collateral is required by law, such
notification, if mailed, shall be deemed reasonably and properly given if
mailed at least five (5) days before such disposition, postage prepaid,
addressed to us in accordance with paragraph 15 hereof.
6. Goods; Documents; Proceeds. We warrant that, at the time of
delivery to you of each Draft, we shall have, or with the proceeds of such
Draft will obtain, good and free title to the goods and documents involved in
the transaction(s) to which such Draft related, and we agree that we shall
hold such goods and documents, or any proceeds thereof, in trust for you as
your property, and we shall deliver to you on request such goods and
documents, and any proceeds thereof, in whatever form they may be, to be
applied to the payments of the Liabilities.
7. Correspondent. In the event that you shall utilize the services of
any correspondent in connection with any transaction relating to this
agreement or any Draft, or if any other bank shall in any manner participate
in any such transaction, each such correspondent or other bank shall, subject
only to your rights hereunder, have all of your rights and remedies hereunder,
and, if you shall have selected such correspondent or bank with ordinary care,
you shall have no responsibility or liability to us for any acts or omissions
of any such correspondent or bank.
8. Responsibility; Etc. Neither you nor your correspondents shall be
responsible for the existence, character, quality, quantity, condition,
packing, value, or delivery of the property purporting to be represented by
documents; any difference in character, quality, quantity, condition, or value
of the property from that expressed in documents; the validity, sufficiency,
or genuineness of documents, even if such documents should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged; the time,
place, manner or order in which shipment is made; partial or incomplete
shipment, or failure or omission to ship any or all of the property to which
the Credits relate; the character, adequacy, validity, or genuineness of any
insurance; the solvency or responsibility of any insurer, or for any other
risk in connection with insurance, any deviation from instructions, delay,
default or fraud by the shipper or anyone else in connection with the property
or the shipping or storage thereof; the solvency, responsibility or
relationship to the property of any party issuing any documents in connection
with the property; delay in arrival or failure to arrive of either the
property or any of the documents relating thereto; delay in giving or failure
to give notice of arrival or any other notice; any breach of contract between
the shippers, vendors, consignees or buyers and the undersigned; compliance
with our circumstances resulting from any laws, customs and regulations which
may be effective in countries of negotiation or payment of the Credits;
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, wireless or otherwise, whether or not
they be in cipher. Nor shall you be responsible for any act, error, neglect
or default, omission, insolvency or failure in the business of any of your
correspondents or for any refusal by you or any of your correspondents to pay
or honor drafts drawn under the Credits because of any applicable law, decree
or edict, legal or illegal, of any governmental agency now or hereafter in
force, or for any other matter beyond your control; and none of the above
shall affect, impair, or prevent the vesting of any of your rights or powers
hereunder, or our obligations hereunder. In furtherance and extension and not
in limitation of the specific provisions herebefore set forth, we agree that
any action taken by you or by any of your corespondents under or in connection
with the Credits or the relative documents or property, if taken in good
faith, shall be binding on the undersigned and shall not put you or your
correspondents under any resulting liability to the undersigned and the
undersigned makes like agreement as to any inaction or omission, unless in
breach of good faith. The undersigned further agrees to defend, indemnify,
and hold you harmless from any and all losses, claims, demands, expenses, and
liabilities (including attorney's fees), actions, or suits which may arise
against you, or any of your correspondents, by reason of any action taken
pursuant to this agreement.
9. Licenses and Permits; Taxes; Insurance; Liens; Etc. We shall take
all actions, including, but not limited to obtaining all licenses and permits,
complying with all applicable laws and regulations, and paying all taxes,
duties, levies, fees and shipping and warehouse costs, necessary in order to
effect the timely and orderly completion of the transaction(s) to which the
Drafts relate. We shall keep all goods constituting Collateral adequately
covered by insurance satisfactory to you, issued by companies satisfactory to
you, and at your request we shall assign the policies or certificates of
insurance to you or make the loss or adjustment payable to you. We shall
furnish to you such certificates or other evidence with respect to any of the
foregoing as you may request. We shall keep the Collateral free from all
other liens and claims and shall, at any time or from time to time upon your
request, execute and deliver to you such further security agreements,
financing statements and other documents (and pay the costs of filing or
recording the same in all public offices deemed necessary by you), and do such
other acts and things, all as you may require in order to perfect and maintain
a valid security interest in the Collateral (free of all other liens and
claims) to secure the payment of the Liabilities.
10. Indemnity. Except for your liability on any Draft arising by virtue
of your acceptance thereof and except for any liability resulting from your
own gross negligence or willful misconduct, you shall have no responsibility
for, and we shall indemnify you against and hold you harmless from each and
every claim, demand, liability, loss, costs or expense to which you may be
subjected or which you may incur arising out of any transaction or contract to
which any Draft relates, or any goods or documents involved therein or any act
or omission by you in connection with any of the foregoing or otherwise
hereunder.
11. Cancellation. This Agreement shall continue in full force and
effect until cancellation by either party upon ________ days written notice to
the other party; provided, however, notwithstanding any cancellation of this
Agreement, this Agreement shall continue to apply to any Drafts accepted by
you prior to the effective date of such cancellation and to all Liabilities
existing at such date whether or not then due and payable.
12. Assignability. You may assign or transfer this Agreement, or any
instrument evidencing our obligations hereunder or on any Draft, and any of
your interest in any of the Collateral, and may deliver the same to any
transferee, who shall thereupon become vested with all of your rights and
remedies with respect to any of the foregoing, and you shall thereafter be
relieved and discharged from any and all responsibility and liability with
respect thereto. We shall not transfer any rights or duties under this
Agreement without your prior written consent.
13. Waiver. No delay on your part in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
you of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy. You shall not be deemed to have
waived any of your rights hereunder unless you or your duly authorized agent
shall have signed an express waiver thereof in writing. No such waiver shall,
unless expressly stated herein, be effective as to any transaction or event
which occurs subsequent to the date of such waiver, nor as to any continuance
of any breach.
14. Notices. Any notice to you hereunder or in connection herewith
shall be addressed as above and be effective when received by you. Any notice
to us shall be effective when given or sent by mail, cable, telephone or
otherwise to us at the most recent address or telephone number which may from
time to time appear with respect to us on your records, with the same effect
as if the same were actually delivered to and received by us in person. The
term "notice" when used in this Agreement shall include any request, demand or
other communication.
15. Successor and Assigns; Etc. This Agreement shall be binding upon us
and our respective heirs, successors and assigns and shall inure to the
benefit of you and your successors and assigns. Our obligations hereunder,
and your rights and remedies provided for herein (each of which you may,
except as expressly otherwise specified herein, exercise at any time and from
time to time) shall be in addition to and not in limitation of, those provided
by law or in any other instrument or agreement relating to any of the
Liabilities or Collateral.
16. Governing Law. THIS AGREEMENT AND EACH OF THE DRAFTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
EXCEPT TO THE EXTENT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA MAY
APPLY.
17. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent
of the prohibition or invalidity without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.
Dated as of this _______ day of ________________________, 19______.
______________________________________________________________
By: ________________________________________________________
(Authorized Signature)
Agreed to and Approved by:
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: _____________________________________
<PAGE>
First Interstate Bank of Texas, N.A.
P.O. Box 3326
Houston, Texas 77253
Gentlemen:
This letter shall be construed as an addendum ("Addendum") to that
Acceptance Credit Agreement ("Agreement") dated ____________________________
, 19________, between ourselves and First Interstate Bank of Texas, N.A., of
Houston, Texas, and the terms and conditions set forth herein shall by this
reference be considered as fully incorporated in this Agreement.
RECITALS.
From time to time we are required in the ordinary course of our business
to deliver to you Drafts for acceptance on relatively short notice and we wish
to establish procedures to facilitate the reasonably prompt delivery of Drafts
and acceptance of Drafts upon instructions forwarded by us in writing, by
telephone, photocopies, telecopies or facsimiles, or our computer generated
requests (herein called the "Instructions").
CONSTRUCTION; DEFINITIONS.
When in conflict with the provisions of the Agreement, the provisions as
set forth in this Addendum shall govern the Agreement. Capitalized terms used
but not defined herein have the respective meanings assigned thereto in the
Agreement.
OPERATION.
1. We shall provide you with blank pre-signed Drafts in the form of
Exhibit A attached hereto.
2. We shall give you Instructions not later than 11:30 a.m. Houston,
Texas, time on the day we desire the Draft(s) to be completed and
accepted ("Acceptance(s)"), providing you with the following
information:
a. Amount(s)
b. Tenor of draft(s)
c. General description of goods to be imported or exported
d. Country of origin
e. Country of destination
We hereby authorize and direct you to complete the blank pre-signed
Drafts and accept such completed Drafts upon your receipt of the
Instructions (containing the above information).
3. Those individuals designated on Exhibit B attached hereto are
authorized to (i) issue Instructions and (ii) to act pursuant to
Instructions and the Agreement and this Addendum; and you shall be
entitled to rely on any Instructions purported to be given by any of
such individuals until the manager of your International Department
has received written revocation of an individual's authority to act.
4. We shall provide you with follow-up confirmation of all
Instructions, on a transmittal letter in the form of Exhibit C
attached hereto, no later than the business day following the date
of the Acceptance(s).
RESPONSIBILITY.
You shall be entitled to rely and act upon any Instructions without
making independent inquiry. You shall be entitled to rely upon and act upon
the Instructions to create Acceptances and we shall be bound thereby. Once
you have acted on Instructions, we shall be unconditionally and absolutely
estopped from denying (a) the authenticity and validity of any such
transaction so acted upon by you once you have taken the action requested in
such Instructions and (b) our liability and responsibility therefor. We agree
to indemnify and hold you, your parent company, subsidiaries and affiliates,
and your and their directors, officers, employees, attorneys and agents,
harmless from any and all claims, damages, losses, liability, costs and
expenses (including reasonable attorneys' fees) which may arise, directly or
indirectly, out of or in connection with (i) your acceptance of any
Instructions such as provided herein, (ii) your acting upon any such
Instructions, and (iii) all Drafts or Acceptances. You, your parent company,
subsidiaries and affiliates, and your and their directors, officers,
employees, attorneys and agents shall be under no liability to us or any of
our subsidiaries or affiliates for any action or failure to act, taken or
suffered, except for your or their own gross negligence or willful misconduct.
You, your parent company, subsidiaries and affiliates, and your and their
directors, officers, employees, attorneys and agents, shall not be responsible
in any respect for inaccuracies, errors, omissions, interruptions, or delays
in transmission or delivery of any message which may arise out of or be
created by equipment failure and we agree that all directions, Instructions
and correspondence relating to Drafts and Acceptances are to be sent at our
risk.
CANCELLATION.
This Addendum shall continue in full force and effect concurrently with
and shall terminate on the date of cancellation of the Agreement to which it
relates; provided, however, this Addendum may be amended, modified, or
cancelled independently of the Agreement; provided further that this Addendum
may not be amended or modified except in writing signed by the parties hereto;
provided further that this Addendum may be cancelled by either party upon
_____ days written notice to the other party; provided, however,
notwithstanding any cancellation of the Addendum, this Addendum and the
relevant Agreement shall continue to apply to any drafts accepted by you prior
to the effective date of such cancellation and to all Liabilities existing at
such date whether or not then due and payable.
GOVERNING LAWS.
THIS ADDENDUM AND EACH OF THE DRAFTS SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT
THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA MAY APPLY.
__________________________________
By:_______________________________
Title:
ACCEPTED:
FIRST INTERSTATE BANK
OF TEXAS, N.A.
By:________________________
<PAGE>
Exhibit "B"
First Interstate Bank of Texas, N.A.
P.O. Box 3326
Houston, Texas 77253
Re: Authorized Personnel
Gentlemen:
The below listed individuals are authorized to give instructions by
telephone to create Banker's Acceptances on behalf of our firm. You shall be
entitled to rely on instructions given by any individual identifying
himself/herself as a person whose name appears below:
Name Title
__________________________________
By:_______________________________
Title:
<PAGE>
CONFIRMATION TRANSMITTAL LETTER
TO: First Interstate Bank of Texas, N.A.
P.O. Box 650291
Dallas, Texas 75265-0291
Attn: International Banking Department
Gentlemen:
Pursuant and subject to the Acceptance Credit Agreement dated
_______________, 19__ and that certain Addendum thereto dated
________________, 19__, this is to confirm our telephone/Fax instructions to
you on _________________, 19__, requesting you to create and discount the
following Banker's Acceptance(s):
Date<PAGE>
Amount<PAGE>
All-In
Rate<PAGE>
Tenor
(Days)<PAGE>
Maturity
Date<PAGE>
<PAGE>
<PAGE>
covering shipment(s) of:
Goods<PAGE>
From<PAGE>
To<PAGE>
B/L
Date<PAGE>
Invoice
Value (US)<PAGE>
<PAGE>
<PAGE>
We hereby confirm all warranties and agreements concerning such Banker's
Acceptance(s) and the transactions to which they relate made by us in the
aforesaid Acceptance Credit Agreement and Addendum.
In discounting each Banker's Acceptance you were instructed to pay the
discounted proceeds to:
At maturity of each Banker's Acceptance, please charge our account number
________ with you.
Dated: __________________, 19__
By:__________________________________
<PAGE>
Exhibit "M"
CONTINUING LETTER OF CREDIT AGREEMENT
THIS AGREEMENT is made as of the _____ day of _____________, 19__ between
____________ (herein called the "Company"), and FIRST INTERSTATE BANK OF
TEXAS, N.A., a Texas banking corporation (herein called the "Bank").
R E C I T A L S
A. From time to time the Company is required in the ordinary course of its
business to obtain on relatively short notice certain Letters of Credit
("Credits" and individually a "Credit"), and amendments thereto and
extensions thereof, in favor of its suppliers, and it wishes to establish
procedures to facilitate the reasonably prompt issuance, amendment and
extension of Credits by the Bank upon instructions transmitted to the
Bank by means of the Company's computer generated, or properly
authenticated original or telefax requests pursuant to procedures
established by and between the Bank and Company (herein collectively
called an "Application"). Original or telefax requests must be submitted
to the Bank on the Bank's standard application and agreement from (shown
as Exhibits B-1 and B-2 attached hereto as hereinafter defined).
B. The Bank will issue Credits, amendments thereto and extensions thereof,
at the request of the Company upon receipt of and in accordance with an
Application, subject to the terms and conditions herein set forth and the
terms and conditions of any other written agreements with the Company.
In consideration of the foregoing recitals, the mutual covenants and
agreements hereafter contained and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged hereby, the parties hereto
agree as follows, intending to be legally bound:
1. The Letters of Credit. Upon receipt of the Company's Application, but in
the Bank's sole discretion, the Bank shall issue Credits for the account
of the Company provided that the Company shall be primarily obligated to
pay amounts owing in respect of each such Credit. Such obligation to pay
shall be in form and substance satisfactory to the Bank.
2. Company's Application. The Company hereby authorizes the Bank to issue
Credits, amendments thereto and extensions thereof upon receipt of an
Application as to the amount, the beneficiary and the terms communicated
to (and received by) the Bank from Company by means of an Application.
Any such request communicated to the Bank by Company must be authorized
by a person as shown on the List of Authorized Persons included as
Exhibit "A" attached hereto. For each application sent by telefax,
Company agrees to forward the original signed application marked
"CONFIRMATION OF TELEFAX" to the Bank not later than the third (3rd)
business day after the telefax transmittal date.
3. Company's Covenants. Regardless of the form of an application used by
the Company as to each Credit issued hereunder or pursuant hereto, the
Company, so long as such Credit remains outstanding and the Company's
obligations in respect thereof have not been fully, finally and
indefeasibly paid, the Company shall be bound by the terms and conditions
of the Bank's "Application and Agreement for Commercial Letter of Credit"
(shown as Exhibit B-1 attached hereto), or Bank's Application for
Irrevocable Standby Letter of Credit" (shown as Exhibit B-2 attached
hereto) whichever shall apply, which terms and conditions are
incorporated herein by this reference as though fully set forth herein
and constitute legal, valid, binding and enforceable obligations of the
Company. In the event of an actual conflict in the terms and provisions
of this Agreement and Exhibit B-1 or Exhibit B-2 hereto, the terms and
provisions of this Agreement shall control.
4. Responsibility. The Bank shall be entitled to rely, and act, upon any
Application without making independent inquiry. The Bank shall be
entitled to rely upon an act upon the Application to issue a Credit or
any amendment thereto or extension thereof, and the Company shall be
bound thereby. Once the Bank has acted upon an Application, the Company
shall be unconditionally and absolutely estopped from denying (a) the
authenticity and validity of any such transaction so acted upon by the
Bank once the Bank has taken the action requested in such Application,
and (b) the Company's liability and responsibility therefor. The Company
agrees to indemnify and hold the Bank harmless from any and all claims,
damages, losses, liability, costs and expenses (including reasonable
attorneys' fees) which may arise, directly or indirectly, out of or in
connection with (i) the Bank's acceptance of any such Application as
provided herein, (ii) its acting upon any such Application, and (iii) all
Credits. The Bank, its directors, officers, employees, and agents shall
be under no liability to the Company or any of their suppliers for any
action or failure to act, taken or suffered, except for its or their own
gross negligence or willful misconduct. IN NO EVENT SHALL THE BANK BE
LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, PUNITIVE OR INCIDENTAL
DAMAGES. The Bank shall not be responsible for delays in transmission or
delivery of any message which may arise out of or be created by equipment
failure. All directions, Applications and correspondence relating to
Credits which are sent at Company's request are sent at Company's risk.
5. Change of Time Limits. A change in the original time limit or any other
terms originally specified in the Credits, at the Bank's sole option,
upon application of the Company, may be granted by the Bank's
correspondents, whereupon all the terms hereof shall continue in full
force and effect in accordance with such change without releasing any
party to such Credits hereto or any party upon any acceptance made
hereunder.
6. Uniform Customs and Practice for Documentary Credits of the International
Chamber of Commerce. Any Credit or instruction of the Company, in the
discretion of the Bank or its correspondents, may be made subject to and
interpreted by them in accordance with the "Uniform Customs and Practice
for Documentary Credits" of the International Chamber of Commerce, as
adopted or amended from time to time, or any other rules, regulations or
customs prevailing at the place where any Credit or instruction of the
Company is available or the drafts are drawn or negotiated.
7. Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties' respective successors and assigns, except that the
Company may not assign its rights, duties, obligations or benefits
hereunder.
8. Severability. In the case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be in any way affected thereby and
such invalid, illegal or unenforceable provision shall be deemed to be
stricken herefrom.
9. Governing Laws; Authorization. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
Texas, except to the extent that the federal laws of the United States of
America may apply. Those individuals designated on Exhibit "A" attached
hereto are authorized to transmit Applications on behalf of Company and
to act pursuant to Applications and this Agreement, and the Bank shall be
entitled to rely thereon until the Bank has received written revocation
of a person's authority to act.
10. Cancellations. This Agreement and Exhibits "A", "B-1", and "C" hereto
shall remain in full force and effect until canceled by either party upon
ten (10) business days written notice to the other party; however, such
cancellation in no way shall affect this Agreement, the terms and
conditions herein or in Exhibit "A", "B-1", "B-2" or "C" contained herein
in respect of any Credits then outstanding or the obligations and
liabilities therefore incurred hereunder or thereunder, whether or not
then due or payable.
11. Jurisdiction and Venue. The Bank may enforce any claim arising out of
this Agreement in the courts of the State of Texas or the United States
District Courts located in the State of Texas. For the purpose of any
action or proceeding instituted in the courts of or located in the State
of Texas, with respect to any such claim, the Company hereby irrevocably
and unconditionally accepts for itself and in respect of its property and
submits to the nonexclusive jurisdiction of the courts of the State of
Texas and the United States District Courts located in the State of
Texas. The Company irrevocably designates the following individual, with
offices on the date hereof as designated, to receive for and on behalf of
the Company, service of process in Texas:
___________________________
___________________________
___________________________
___________________________
12. Increased Costs/Capital Adequacy. If after the date hereof, the Bank
shall have determined that (a) the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, of (b) compliance by the
Bank with any direction, requirement or request (whether or not having
the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of (1) increasing the
cost of issuing, maintaining, confirming or participating in Letter of
Credit, or (2) reducing the Bank's rate of return on its capital to a
level below that which it could have achieved but for such change or
compliance (taking into account the Bank's policies regarding capital
adequacy), then from time to time, beginning with transactions occurring
on or after a date fifteen (15) days after written notice from the Bank
to Company, the Company shall pay to the Bank such additional amounts as
will compensate the Bank for such costs or reduction, as the case may be.
13. Fees. Unless otherwise agreed upon by Bank in writing, Company shall pay
to Bank, on or before the due dates specified by Bank, the fees set forth
for International Banking Services in accordance with the fee schedule
attached hereto as Exhibit "C" and made a part hereof, as the same may be
amended from time to time. Any amount due and owing from Company
hereunder shall bear interest from the due date thereof as such lawful
rate as Bank shall determine.
14. NOTICE AND ACKNOWLEDGMENT OF NO ORAL AGREEMENTS. THIS DOCUMENT AND ALL
OTHER DOCUMENTS RELATING TO THIS EXTENSION OF CREDIT CONSTITUTE A WRITTEN
CREDIT AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS EXTENSION OF CREDIT.
AS WITNESS, the hands of the parties or their duly authorized representatives,
the date and year first above written.
____________________________________
By:_________________________________
Title:________________________________
- THE COMPANY -
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:_________________________________
Title:________________________________
- THE BANK -
Exhibits:
A: Authorized Signatures
B-1: Application and Agreement for Commercial Letter of Credit
B-2: Application and Agreement for Standby Letter of Credit
C: Schedule of Fees for International Banking Services
<PAGE>
EXHIBIT "A"
Date:_______________, 19____
First Interstate Bank of Texas, N.A.
1445 Ross Avenue
Dallas, Texas 75202
Re: Continuing Letter of Credit Agreement dated ____________, 19__.
Gentlemen:
In accordance with the provisions of the above referenced Continuing
Letter of Credit Agreement, following is a list of persons authorized to sign
applications, amendments, or extensions thereof, and give facsimile
instructions for the issuance, amending, or extension of letters of credit
issued by yourselves for our account. You are hereby specifically authorized
to rely upon the original and/or facsimile signature of each of the
individuals as shown below. This list is effective immediately and shall
remain in effect until we notify you otherwise in writing.
LIST OF AUTHORIZED PERSONS
TYPED NAME<PAGE>
TITLE SPECIMEN SIGNATURE <PAGE>
Sincerely yours,
____________________________________
____________________________________
(Typed Name of Authorized Signer)
____________________________________
(Title)
____________________________________
(Signature of Authorized Signer)
<PAGE>
APPLICATION AND AGREEMENT FOR COMMERCIAL LETTER OF CREDIT
Please issue an irrevocable letter of credit substantially in accordance with
this application and transmit it as indicated below (by"X"). In issuing the
Credit you are expressly authorized to make such changes from the terms herein
below set forth as you, in your sole discretion, may deem advisable provided
that no such changes shall vary the principal terms hereof.
[ ] Through your correspondent for delivery to the beneficiary by
[ ] Airmail [ ] Brief Cable [ ] Full Cable
[ ] To us for transmission to the beneficiary
[ ] Directly to the beneficiary
[ ] Transferable
ADVISING BANK: For Account of
BENEFICIARY: Up to Aggregate AMOUNT of:
EXPIRY DATE (In country of the
beneficiary unless otherwise
indicated):
To be available by draft(s)
Drawn at [ ] Sight [ ] _______ Days Sight [ ] ______ Days date (Draft(s)
dated same as bill of lading date)
Drawn on FIRST INTERSTATE BANK OF TEXAS, N.A., ___________________% of
invoice value
or
Drawn on __________________________________________________________
(Overseas bank if credit in foreign currency) for _________% of invoice value.
Indicating the number of this credit and the name of the issuing bank.
For drafts on term basis, discount charges for account of: [ ]
Beneficiary [ ] Applicant.
When accompanied by the following documents (at least in duplicate unless
otherwise specified, and you may, at your option, waive presentation of
draft(s):
DOCUMENTS REQUIRED AS CHECKED (X).
[ ] Commercial Invoice: Original and _____ copies.
[ ] Customs Invoice: Original and ______ copies.
[ ] Negotiable insurance policy or certificate, in duplicate, for CIF
value, plus _____%, covering [ ] ALL RISKS,
[ ] WAR RISKS, [ ] S.R.C.C.
CLEAN TRANSPORT DOCUMENT AS CHECKED (X) - Full set of originals unless
otherwise indicated [ ] on-Board Marine Bill of Lading, [ ] Air Waybill.
[ ] Truck, [ ] Rail, [ ] Barge, [ ] Postal Receipt, [ ] Other
__________________________________________________________
Consigned to/To the Order of ______________________________________
Marked/Notify _____________________________________________________
Marked Freight, [ ] Paid [ ] Collect _________________
Dated latest: ___________________________________________
(Latest shipment date)
[ ] Packing List [ ] Certificate of Origin [ ] Certificate of Weight
[ ] Other _________________________________________________________
_________________________________________________________
_________________________________________________________
COVERING: Merchandise described in the invoice(s) as (specify commodity
in general terms only, omitting non-essential details):
Invoices must substantially include the above description, but only general
description of the commodity will be required in remaining documents. You
will not be responsible for descriptive matter included in any document
additional to the description so required for such document.
Unless otherwise stated herein, you may authorize the negotiating/paying bank
to forward all documents in a single mailing.
Documents must be presented to negotiating or paying bank within [ ] _______
days [ ] 21 days after date of issuance of the document evidencing shipment as
specified above, but in no event later than expiry date above.
Insurance effected by [ ] Shipper [ ] Applicant with ________________________
(Name of company writing
insurance)
Terms: [ ] FAS [ ] FOB [ ] CFR [ ] CIF [ ] FCA [ ] EXW [ ] CIP
[ ] OTHER _______________________________________
(Name of port or city)
SHIPMENT/DISPATCH/TAKING
IN CHARGE FROM/AT
TRANSPORTATION TO:
PARTIAL SHIPMENTS [ ] ALLOWED [ ] NOT ALLOWED
TRANSSHIPMENTS [ ] ALLOWED [ ] NOT ALLOWED
Unless otherwise instructed, documents will be forwarded to us in one
airmail.
The obligations hereunder are (check one) ( ) secured ( ) unsecured
except as noted on reverse. If no selection is indicated, the obligations
hereunder are secured. To the extent allowed by law, the parties hereto agree
to be bound by the terms of the following notice:
THIS WRITTEN AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS DELIVERED IN
CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Please date and sign below. If two or more parties are applicants, all such
applicants should sign below and the name and address of the "Account Party"
and the "Designated Party" should be completed below. Such should also be
completed if a single applicant (other than a bank) is neither the account
party nor the designated party. If a bank is requesting issuance of the
credit, the bank should sign as applicant and its customer should sign as the
"Account Party" and the bank should be designated as the "designated Party,"
in addition to being the Applicant. All signatures should be executed on the
original of this Agreement.
The undersigned ("Applicants") jointly and severally agree as provided above
and as follows on the reverse hereof, and acknowledge that the terms and
conditions on the reverse hereof, including the Agreement for Binding
Arbitration, are incorporated herein by reference as though set out in full.
Dated, Executed and Effective this _____ day of ___________________, 19_____.
_____________________________________ _____________________________________
Applicant (full Company Name) Account Party or Applicant
<PAGE>
APPLICATION AND AGREEMENT FOR
IRREVOCABLE STANDBY LETTER OF CREDIT
Please issue an irrevocable letter of credit substantially in accordance with
this application and transmit it as indicated below (by"X"). In issuing the
Credit, you are expressly authorized to make such changes from the terms
herein below set forth as you, in your sole discretion, may deem advisable
provided that no such changes shall vary the principal terms hereof.
[ ] Through your correspondent for delivery to the beneficiary by
[ ] Airmail [ ] Brief Cable [ ] Full Cable
[ ] To us for transmission to the beneficiary
[ ] Directly to the beneficiary
[ ] TRANSFERABLE
______________________________________________________________________________
This part for bank use only unless you designate advising bank
FOR THE ACCOUNT OF:
BENEFICIARY: AMOUNT:
In figures:
In Words:
EXPIRY DATE
Place of Expiry: Counters of First
Interstate Bank of Texas, N.A. at the
above address unless otherwise
specifically indicated.
____________________________________________________________________________
___
Gentlemen:
We hereby establish in your favor our irrevocable Standby Letter of
Credit No. ________________ which is available for negotiation of your draft
at sight, drawn on
_______________________________________________________________ bearing the
clause: "Drawn under and accompanied by the original of the letter of credit
and: _______________________________________________________________ Dated
__________________________."
Unless otherwise instructed, documents will be forwarded to us in one
airmail.
The obligations hereunder are (check one) ( ) secured ( ) unsecured
except as noted on reverse. If no selection is indicated, the obligations
hereunder are secured. To the extent allowed by law, the parties hereto agree
to be bound by the terms of the following notice:
THIS WRITTEN AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS DELIVERED IN
CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Please date and sign below. If two or more parties are applicants, all such
applicants should sign below and the name and address of the "Account Party"
and the "Designated Party" should be completed below. Such should also be
completed if a single applicant (other than a bank) is neither the account
party nor the designated party. If a bank is requesting issuance of the
credit, the bank should sign as aplicant and its customer should sign as the
"Account Party" and the bank should be designated as the "designated Party",
in addition to being the Applicant. All signatures should be executed on the
original of this Agreement.
The undersigned ("Applicants") jointly and severally agree as provided above
and as follows on the reverse hereof, and acknowledge that the terms and
conditions on the reverse hereof, including the Agreement for Binding
Arbitration, are incorporated herein by reference as though set out in full.
Dated, Executed and Effective this __________ day of
_________________________, 19____.
_____________________________________
_______________________________________
Applicant Account Party or Applicant
(Full Company Name if applicable) (Full Company Name if applicable)
EXHIBIT 10.12.1
Fourth Amendment to Lease Guarantee
This Fourth Amendment to Lease Guarantee ("Amendment") is hereby made, as
of the date hereof, to that certain Lease Guarantee (the "Lease Guarantee"),
dated as of December 30, 1992, as heretofore supplemented, by and between Pier
1 Imports, Inc., a Delaware corporation ("Pier 1"), Pier 1 Licensing, Inc., a
Delaware corporation, Pier 1 Assets, Inc., a Delaware corporation, and Pier
Set, Inc., a Delaware corporation ("Lessor"). Terms used herein and not
otherwise defined shall have the meaning given to them in the Lease Guarantee.
The parties hereto agree that from and after the date hereof, Paragraph
8(c) of the Guaranty shall be amended by amending and restating the last
sentence thereof in its entirety to read as follows:
"There shall not be included in the limitation upon Restricted Payments
(a) any dividends paid by any Subsidiary of Guarantor (1) to its corporate
parent which is also a Subsidiary of Pier 1 or (2) to Guarantor or (b) the
purchase by Guarantor of its stock during the period from 30 September 1995 to
29 February 1996 for an aggregate purchase price not in excess of $8,000,000."
As amended hereby, the Lease Guarantee remains in full force and effect
in all respects.
This Amendment may be executed by the parties hereto in multiple
counterparts and each counterpart, when so executed, shall be deemed an
original, but all of which shall be considered as one agreement. Further, in
making proof hereof, its all not be necessary to produce or account for more
than one such counterpart.
Dated to be effective as of the 1st day of November, 1995.
Pier Set, Inc., a Delaware corporation
Attest:
___________________________ By:__________________________
Name: Eileen M. McBride James D. Price
Title: Secretary President
<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.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-02-1996
<PERIOD-END> NOV-25-1995
<CASH> 13,488
<SECURITIES> 0
<RECEIVABLES> 78,564
<ALLOWANCES> 4,074
<INVENTORY> 234,913
<CURRENT-ASSETS> 357,160
<PP&E> 225,594
<DEPRECIATION> 120,958
<TOTAL-ASSETS> 498,696
<CURRENT-LIABILITIES> 120,417
<BONDS> 139,982
<COMMON> 39,877
0
0
<OTHER-SE> 174,788
<TOTAL-LIABILITY-AND-EQUITY> 498,696
<SALES> 566,456
<TOTAL-REVENUES> 566,456
<CGS> 343,989
<TOTAL-COSTS> 519,643
<OTHER-EXPENSES> 30,463
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,131
<INCOME-PRETAX> 6,829
<INCOME-TAX> 10,636
<INCOME-CONTINUING> (3,807)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,807)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
