EXHIBIT 10.12
LEASE GUARANTEE
THIS LEASE GUARANTEE ("Guarantee") made and entered into as of this 30th
day of December, 1992, by and between PIER 1 IMPORTS, INC., a Delaware
corporation ("Pier 1"), CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor");
W I T N E S S E T H:
A. Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation, is
an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of CMEI. Lessor and Lessee have entered, as of the date hereof,
into a certain Master Building Lease (the "Master Building Lease"), as well
as a certain Master Ground Lease (the "Master Ground Lease"), each covering
thirteen (13) Parcels or Improvements listed on Exhibit "A-1" - "A-13" of
each and each providing for New Parcels or New Improvements (collectively,
the "Additional Properties") to be added thereto as provided for therein.
The Master Building Leases and the Master Ground Lease are sometimes
collectively referred to herein as the "Lease Agreements".
B. The Lease Agreements have been entered into by Lessor and Lessee with
respect to land and improvements, including any Additional Facilities, which
have been and are to be financed pursuant to the terms of a certain Loan
Agreement (the "Loan Agreement"), between Lessor and National Westminster
Bank Plc ("Lender"), of even date herewith in the aggregate sum of up to
$25,000,000. The term "Lender" shall also include any successor or assign of
Lender, including any participant in, or other holder of any interest in, any
of the Loans (as hereinafter defined). Pursuant to and subject to the terms
of the Loan Agreement, Lender has advanced or agreed to advance the aggregate
sum of $8,750,000 (the "Land Loan"), the payment of which is assured, in
part, by absolute assignments of the amounts payable under the Master Ground
Lease to Lender by Lessor, and the aggregate sum of $16,250,000 (the
"Building Loan"), the payment of which is assured, in part, by absolute
assignments of the amounts payable under the Master Building Leases to Lender
by Lessor. The outstanding balance of the Land Loan and the outstanding
balance of the Building Loan may be increased at a future date(s) pursuant to
any advance(s) by Lender of additional sums (the "Future Advance(s)") which
shall be allocated between the Land Loan and the Building Loan by written
agreement between the parties at the time such Future Advance(s) are made.
The proceeds of the Future Advance(s) shall be used for the acquisition of
additional properties that will be added to the Master Ground Lease and the
Master Building Lease, as "New Parcels" and "New Improvements", respectively,
as defined and provided for therein.
C. In consideration of the execution and delivery of the Lease Agreements
by Lessor to Lessee, and in recognition that the favorable financing terms
offered to Lessor by Lender have been passed through to Lessee through the
rental terms of the Lease Agreements, all of which are contingent upon the
delivery of this Lease Guarantee by Guarantor; and in recognition that (i) as
the indirect parent of Lessee, Pier 1; and (ii) as the direct parent of
Lessee, CMEI: will receive direct and material benefits from the delivery of
the Lease Agreements and the Loan Agreement and the consummation of the
transactions contemplated thereby, Guarantor desires to deliver this Lease
Guarantee to Lessor.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows:
1. Guarantee. For value received, and in consideration of Lessor
entering into the Lease Agreements with Lessee, Guarantor does hereby
unconditionally guarantee the full payment and performance when due, whether
at the stated due date, by acceleration or otherwise, of any and all rent,
indebtedness, obligations and other amounts of every kind, howsoever created,
arising, or evidenced, whether direct or indirect, absolute or contingent,
now or hereafter existing or owing to Lessor by Lessee pursuant to the Lease
Agreements, including, but without limitation, the payment of Net Rent,
Contingent Rent Payments, any other amounts owed to Lessor under the Lease
Agreements, and/or the purchase price for the respective properties covered
thereby in the event the Lessee exercises any purchase options and/or is
required to purchase the premises covered thereby under any of the Lease
Agreements, including, without limitation, any attorneys fees, court costs,
or other enforcement costs of any kind or nature, including those incurred
during pre-trial, trial or appellate levels (all such indebtedness and
obligations, including those with respect to the Additional Properties when
added to the coverage of the Lease Agreements, being hereinafter collectively
called the "Obligations"). Pier 1, as the indirect parent corporation of
Lessee, and CMEI, as the direct parent corporation of Lessee, jointly and
severally hereby agree that upon any default by Lessee in the payment or
performance of any of the Obligations when and as due, Guarantor will
forthwith pay and/or perform the same immediately upon demand and without
notice.
Guarantor acknowledges that at such time(s) as Additional Properties are
added to the Lease Agreements, each and every payment and performance
obligation (including increased rent) of Lessor under the Lease Agreements is
automatically guaranteed hereunder without the need of any confirmation and
without any notice to Guarantor. Upon request by Lender, Guarantor agrees to
confirm by supplement this Guarantee with respect to the Additional
Properties. Such a supplement would be executed by Guarantor and would
contain a reaffirmation of representations and warranties contained herein
and a confirmation that this Guarantee covers the Additional Properties as if
such Additional Properties had been included as of the date hereof. A
supplement, however, is not required for this Guarantee to cover each of the
Lease Agreements including those applicable to the Additional Properties when
such Additional Properties become subject to the respective Lease Agreements.
2. Guarantee Continuing, Absolute, Unlimited. This Guarantee is a
continuing, absolute and unlimited guarantee of payment and performance as
primary obligor and not as surety. This Guarantee shall apply to all
Obligations pursuant to the Lease Agreements, including those applicable to
the Additional Properties when such Additional Properties become subject to
the respective Lease Agreements, without limitation as to either amount or
period of time. The Obligations shall be conclusively presumed to have been
created in reliance on this Guarantee. Lessor shall not be required to
proceed first against Lessee or any other person, firm or corporation or
against any property securing any of the Obligations before resorting to
Guarantor for payment. This Guarantee shall be construed as a guarantee of
payment and performance without regard to the validity, regularity, or
enforceability of any of the Obligations or the rejection of the Lease
Agreements in bankruptcy, and notwithstanding any claim, defense (other than
payment by Guarantor) or right of set-off which Lessee or Guarantor may have
against Lessor, including any such claim, defense or right of set-off based
on any present or future law or order of any government (de jure or de
facto), or of any agency thereof or court of law purporting to reduce, amend
or otherwise affect any obligations of Lessee, or any other obligor, or to
vary any terms of payments, and without regard to any other circumstances
which might otherwise constitute a legal or equitable discharge of a surety
or a guarantor. Guarantor agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment to
Lessor of the Obligations or any part thereof is rescinded or must otherwise
be returned by Lessor upon the insolvency, bankruptcy or reorganization of
Lessee, or otherwise, as though such payment to Lessor had not been made.
3. Definitions. Unless otherwise indicated, capitalized terms used
herein and not defined below shall have the respective meanings given to them
in the Lease Agreements. In addition to the definitions provided in the
Lease Agreements, the following words and terms shall have the meanings
indicated below:
"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.
"Auditors" shall mean Price Waterhouse & Co., or other independent
certified public accountants selected by Guarantor and reasonably acceptable
to Lessor.
"Capitalized Lease Obligation" shall mean any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of Pier 1
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 (i) obligations of the United States
government due within one (1) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital resources in excess of $100,000,000) due within one year and payable
in U.S. dollars, (iii) commercial paper rated P-1 by Moody's Investors
Service, Inc. ("Moody's") or A-1 by Standard & Poor's Corporation ("Standard
and Poor's") and (iv) debt of any U.S. state or political subdivision thereof
that is rated A or better by Moody's or Standard & Poor's and that matures
within one (1) year.
"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, as determined in accordance with GAAP,
less Maintenance Capital Expenditures for Pier 1 on a Consolidated basis.
"Code" shall have the same meaning given that term in Section 6(i) hereof.
"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 Pier 1 and
its Subsidiaries as determined on a Consolidated basis in accordance with
GAAP.
"Consolidated Current Liabilities" shall mean the current liabilities of
Pier 1 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 Pier 1 less
all operating and non-operating expenses of Pier 1, including all write-downs
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 Pier 1 or any Subsidiary, any gains resulting
from the write-up of assets, any equity of Pier 1 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 Pier 1 or to another Subsidiary, or
any earnings of any Person acquired by Pier 1 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 Pier 1 and its
Subsidiaries as determined on a Consolidated basis in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean all assets of Pier 1 and its
Subsidiaries less Intangible Assets, Consolidated Current Liabilities, long
term liabilities (other than Funded Debt and Capitalized Lease Obligations)
and all deferrals of Pier 1 and its Subsidiaries.
"Consolidated Tangible Assets" shall mean all assets of Pier 1 and its
Subsidiaries less Intangible Assets.
"Consolidated Tangible Net Worth" shall mean the sum of the Consolidated
capital, surplus and retained earnings of Pier 1 less Intangible Assets of
Pier 1, determined in accordance with GAAP.
"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 Pier 1 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 the occurrence of any event which, with the lapse of
time, notice or otherwise, would constitute an event specified under Section
14(a) of this Guarantee.
"ERISA" shall have the meaning given in Section 6(j).
"FDIC" shall mean the Federal Deposit Insurance Corporation (or any
successor).
"Fixed Charges" shall mean, for Pier 1 and its Subsidiaries on a
consolidated basis, calculated for the preceding 12 calendar month period,
the sum of interest expense and payments under operating leases, determined
in accordance with GAAP.
"Funded Debt" shall mean, for Pier 1 on a Consolidated basis, Debt
(including Guaranteed Debt and current maturities of Funded Debt, as defined
herein) which (i) matures more than one (1) year from the date of
determination or matures within one (1) year from such date that is renewable
or extendable, at the option of the debtor, to a date more than one (1) year
from such date, or (ii) arises under a revolving credit or similar agreement
which obligates the lender or lenders to extend credit during a period of
more than one (1) year from such date; provided, however, that merchandise
letters of credit and bankers' acceptance and similar credit instruments
shall not be deemed to be Funded Debt unless they have a stated maturity of
more than one (1) year, notwithstanding that the debtor may have the option
to renew or extend such maturity.
"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 Lessor 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.
"Guarantee" shall mean this Lease Guarantee and all amendments,
modification, substitutions and ratification hereto.
"Guaranteed Debt" shall mean, with respect to any Person, without
duplication, any 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 each of CMEI and Pier 1.
"Intangible Assets" shall mean goodwill, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organization 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 Pier 1 or its
Subsidiaries or (ii) receivables of any kind of Pier 1 or its Subsidiaries.
"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 Tribunal.
"Lease Agreements" shall have the meaning given in Recital A hereof.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including without limitation, any agreement to
give or not 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.
"Litigation" shall mean any proceeding, claim, lawsuit, arbitration and/or
investigation conducted or threatened by or before any tribunal, including,
without limitation, proceedings, claims, lawsuits and/or investigations under
or pursuant to any environmental, occupational safety and health, antitrust,
unfair competition, securities, Tax or other Law, or under or pursuant to any
contract, agreement or other instrument; provided, however, that Litigation
shall not include any of the foregoing that is covered by adequate insurance.
"Maintenance Capital Expenditures" shall mean for any fiscal quarter, an
amount equal to the greater of (i) one-fourth (1/4) of the product of $4,500
times the average number of retail stores of Pier 1 and its Subsidiaries on a
consolidated basis open during the four immediately preceding fiscal quarters
and (ii) actual capital expenditures incurred by Pier 1 and its Subsidiaries
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).
"Material Adverse Effect" shall mean any act, circumstance or event that
(i) causes a Default (as hereinafter defined), or (ii) otherwise might be
material and adverse to the financial condition or business operations of
Pier 1 and its Subsidiaries on a consolidated basis, or (iii) could
materially adversely affect the ability of Pier 1 to perform under this
Guarantee.
"Net Earnings Available for Fixed Charges" shall mean, for Pier 1 and its
Subsidiaries on a consolidated basis, calculated for the preceding 12
calendar month period, the sum of net income determined in accordance with
GAAP, plus taxes, plus interest expense, plus operating lease expense
determined in accordance with GAAP, plus depreciation and amortization, and
minus Maintenance Capital Expenditures determined in accordance with GAAP.
"Net Income" or "net income" shall mean the net income of the applicable
Person or Persons before minority interests as determined in accordance with
GAAP.
"Officer's Certificate" shall mean a certificate signed in the name of
Guarantor by its Chief Executive Officer, President, one of its Executive
Vice Presidents, its Chief Financial Officer or its Controller.
"PBGC" shall have the meaning given in Section 6(j) hereof.
"Person" shall mean and include an individual, partnership, joint venture,
corporation, trust, Tribunal, unincorporated organization or government, or
any department, agency or political subdivision thereof.
"Plan" shall have the meaning given in Section 6(j) hereof.
"Property" shall mean all types of real, personal, tangible, intangible or
mixed property.
"Restricted Investments" shall mean any investments in or loans and
advances to, other Persons except (i) obligations of the United States
government due within one (1) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital resources in excess of $100 million) due within one (1) year and
payable in U.S. dollars, (iii) commercial paper rated P-1 by Moody's or A-1
by Standard & Poor's, (iv) debt of any state or political subdivision that is
rated A or better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) obligations or securities of a Subsidiary or a corporation
which immediately after such purchase or acquisition will be a Subsidiary,
(vi) stock or securities received in settlement of debts owing to Guarantor
or any Subsidiary not exceeding $5,000,000.00, including receivables arising
from the sale of goods and services in the ordinary course of business of
Guarantor and its Subsidiaries, (vii) travel or like advances to officers
and/or employees in the ordinary course of business and loans to officers
and/or employees made on or before May 24, 1991 for the purchase of capital
stock of Pier 1 (including the capitalization of up to one-half of the
accrued interest on such loans to officers and/or employees), with all such
travel or like advances and loans not exceeding $10,000,000.00 in the
aggregate, (viii) any stock or securities of Sunbelt owned on the date hereof
and (ix) any loans made or deemed to be made by Pier 1 to Sunbelt solely as
a result of Pier 1's payment of the Guaranteed Debt of Sunbelt guaranteed by
Pier 1, pursuant to the terms of the Sunbelt Debt Guarantee.
"Restricted Payment" shall have the meaning given in Section 8(c) hereof.
"Restrictive Agreement" shall mean any written agreement of Pier 1
delivered to the Lessor in connection with this Guarantee.
"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 Pier 1 or any Subsidiary or any shares
of stock or Debt of any Subsidiary.
"Senior Funded Debt" shall mean the Notes and Funded Debt which by its
terms is not subordinated in right of payment to the Notes. For the purposes
of this definition of Senior Funded Debt, the term "Notes" shall have the
meaning ascribed to that term in that certain Note Purchase Agreement dated
as of May 24, 1991 executed by and between Pier 1 and Teachers Insurance
Annuity Association of America as amended from time to time.
"Short Term Debt" means, for Pier 1, Consolidated Debt (including
Guaranteed Debt) which matures within one (1) year from the date of
determination thereof. Short Term Debt shall not include current maturities
of Funded Debt.
"Subsequent Holder" shall mean each or any Person which is a direct or
indirect transferee of any of the rights, interests and/or benefits of Lessor
under this Guarantee.
"Subsidiary" shall mean, as to any particular parent corporation, any
corporation in a related line of business 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 Pier 1.
"Sunbelt" shall mean Sunbelt Nursery Group, Inc., a Delaware corporation.
"Taxes " shall mean all taxes, assessments, fees or other charges at any
time imposed by any Laws or Tribunal.
"Tribunal " shall mean any municipal, state, commonwealth, federal,
foreign, territorial or other court, governmental body, subdivision, agency,
department, commission, board or bureau or instrumentality.
"Trigger Event " means either (i) an Environmental Event (as defined in
the Lease Agreements) or (ii) any failure by Pier 1 at any applicable time to
satisfy each of the financial test requirements set forth in Section 8 of
this Guarantee.
"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.
4. Guarantee Not Affected by Change in Security or Other Actions.
Lessor may, from time to time, without the consent of or notice to Guarantor,
take any or all of the following actions without impairing or affecting
Guarantor's obligations under this Guarantee or releasing or exonerating
Guarantor from any of its liabilities hereunder:
(a) retain or obtain a security interest in any property to secure any of
the Obligations or any obligation hereunder;
(b) retain or obtain the primary or secondary liability of any party or
parties, in addition to the undersigned corporation, with respect to any of
the Obligations;
(c) extend the time or change the manner, place or terms of payment of,
or renew or amend the Lease Agreements, any note or other instrument executed
in connection with or evidencing the Obligations or any part thereof, or
amend in any manner any agreement relating thereto, or include the New
Parcels or the New Improvements in the coverage of the Master Ground Lease or
of the Master Building Lease, respectively as defined and provided for
therein;
(d) release or compromise, in whole or in part, or accept full or partial
payment for, any of the Obligations hereby guaranteed, or any liability of
any nature of any other party or parties with respect to the Obligations or
any security therefor;
(e) subordinate the payment of all or any part of the Obligations to the
payment of any liability of Lessee to creditors of Lessee other than Lessor
or Guarantor;
(f) enforce Lessor's security interest, if any, in all or any properties
securing any of the Obligations or any obligations hereunder in order to
obtain full or partial payment of the Obligations then outstanding;
(g) release or fail to perfect, protect, or enforce Lessor's security
interest, if any, in all or any properties securing any of the Obligations or
any obligation hereunder, or permit any substitution or exchange for any such
property; and
(h) take or fail to take any other action of whatever kind or character
with respect to the Obligations, the Lease Agreements or any other document
or instrument, it being the intention of Guarantor that it shall remain
liable as primary obligor for the Obligations notwithstanding any act,
omission or thing which might, but for the provisions hereof, otherwise
operate as a legal or equitable discharge of any guarantor.
5. Waivers. Guarantor hereby expressly waives:
(a) notice of acceptance of this Guarantee;
(b) notice of the existence or incurrence of any or all of the
Obligations;
(c) presentment, demand, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest, and all other notices
whatsoever;
(d) any requirement that proceedings first be instituted by Lessor
against Lessee;
(e) all diligence in collection or protection of or realization upon
the Obligations or any part thereof, or any obligation hereunder, or any
collateral for any of the foregoing;
(f) any rights or defenses based on Lessor's election of remedies,
including any defense to Lessor's action to recover any deficiency after a
non-judicial sale;
(g) the occurrence of every other condition precedent to which
Guarantor might otherwise be entitled; and
(h) any right to require Lessor to marshal assets.
6. Representations and Warranties of Guarantor. Guarantor represents
and warrants to Lessor that:
(a) (i) Pier 1 has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and CMEI
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Georgia (ii) Guarantor has full
corporate power and authority to own and operate its properties and to
conduct its business as presently conducted, and full corporate power,
authority and legal right to execute, deliver and perform its obligations
under this Guarantee and any consent executed in connection herewith, and
(iii) is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction, including, without limitation, the State of
Texas, in which its ownership or leasing of properties or the conduct of its
business requires such qualification and where non-qualification, singularly
or in the aggregate, would materially adversely affect the financial
condition or creditworthiness of Guarantor, or would impair the ability of
Guarantor to perform its obligations under this Guarantee, (iii) (A) all of
the issued and outstanding voting stock of Lessee is owned by CMEI and (B)
all of the issued and outstanding voting stock of CMEI is owned by Pier 1;
free and clear from all liens, security interests, charges and encumbrances
whatsoever.
(b) This Guarantee has been duly authorized, executed and delivered by
Guarantor and is a legal, valid and binding obligation of Guarantor,
enforceable according to its terms (subject as to enforcement of remedies to
any applicable bankruptcy, reorganization, moratorium, or other Laws or
principles of equity affecting the enforcement of creditors' rights
generally).
(c) The execution, delivery and performance by Guarantor of this
Guarantee will not result in any violation of any term of the certificate of
incorporation or the by-laws of Guarantor, do not require stockholder
approval or the approval or consent of any trustee or holders of Debt of
Guarantor except such as have been obtained prior to the date hereof, and
will not conflict with or result in a breach of any terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien upon, any property or assets of Guarantor under, any indenture, mortgage
or other agreement or instrument to which Guarantor is a party or by which it
or any of its property is bound where breach or default, singly or in the
aggregate, could materially adversely affect the financial condition or
creditworthiness of Guarantor, or any existing applicable law, rule,
regulation, license, judgment, order or decree of any government,
governmental body or court having jurisdiction over Guarantor or any of its
activities or properties.
(d) There are no consents, licenses, orders, authorizations or approvals
of, or notices to or registrations with any governmental or public body or
authority which are required in connection with the valid execution, delivery
and performance of, this Guarantee by Guarantor that have not been obtained
or made, and any such consents, licenses, orders, authorizations, approvals,
notices and registrations that have been obtained or made are in full force
and effect.
(e) Except as disclosed in writing to Lessor by Guarantor concurrently
herewith, there is no action, suit, proceeding or investigation at law or in
equity by or before any court, governmental body, agency, commission or other
Tribunal now pending or, to the best knowledge of Guarantor after due
inquiry, threatened against or affecting Guarantor or any property or rights
of Guarantor as to which there is a significant possibility of an adverse
determination, and which if adversely determined, may have a Material Adverse
Effect on the financial condition or business of Guarantor or which, if
adversely determined could materially impair the ability of Guarantor to
perform its obligations under this Guarantee, and there is no action, suit,
proceeding or investigation at law or in equity by or before any court,
governmental body, agency, commission or other Tribunal now pending or, to
the best knowledge of Guarantor after due inquiry, threatened which questions
or would question the validity of this Guarantee with respect to Guarantor.
(f) Guarantor is not in default under or with respect to any agreement or
other instrument to which it is a party or by which it or its assets may be
bound which would have a Material Adverse Effect on the financial condition
of Guarantor or the ability of Guarantor to perform its obligations under
this Guarantee. Guarantor is not subject to or in default under any order,
award or decree of any court, arbitrator, or other governmental authority
binding upon or affecting it or by which any of its assets may be bound or
affected which would have a Material Adverse Effect on the ability of
Guarantor to carry on its business as presently conducted or to perform its
obligations under this Guarantee.
(g) Guarantor has filed or caused to be filed all tax returns which to
the knowledge of Guarantor are required to be filed, and has paid all Taxes
shown to be due and payable on said returns or on any assessments made
against it, except for (i) returns which have been appropriately extended and
(ii) Taxes, fees, assessments or other charges, the amount or validity of
which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of Guarantor.
(h) Pier 1 and each of its Subsidiaries are in compliance in all material
respects with the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Internal Revenue Code of 1986, as amended (the "Code"), and
the rules and regulations thereunder insofar as ERISA, the Code and such
rules and regulations relate to any employee benefit plan as defined in
Section 3(3) of ERISA. No employee pension benefit plan (as defined in
Section 3(2) of ERISA) maintained by Pier 1 or any of its Subsidiaries for
its employees and covered by ERISA (a Plan) had an accumulated funding
deficiency, within the meaning of said term under Section 302 of ERISA, as of
the last day of the most recent fiscal year of such plan, and neither Pier 1
nor any of its Subsidiaries has incurred with respect to any Plan any
liability to the Pension Benefit Guaranty Corporation ("PBGC") which is
material to the consolidated financial condition of Pier 1 or any of its
Subsidiaries. For the purpose of this paragraph, the term Subsidiary shall
include a Controlled Group of Corporations as that term is defined in Section
1563 of the Code or Section 4.001 of ERISA.
(i) The consolidated balance sheets of Pier 1 and its Subsidiaries as of
February 29, 1992 and the related consolidated statements of income and
retained earnings of Pier 1 and its Subsidiaries for the fiscal year then
ended, reported on by its Auditors, and the consolidated balance sheets of
Pier 1 and its Subsidiaries for the six month period ending August 29, 1992
and related consolidated statements of income and retained earnings of Pier 1
and its Subsidiaries for the period then ended fairly present the
consolidated financial Condition and the results of operations of Pier 1 and
its Subsidiaries for the periods ending on such date all in accordance with
GAAP, and since the dates thereof there has been no material adverse change
in such condition or operations.
7. Affirmative Covenants. Pier 1 covenants and agrees that, so long as
any part of the Obligations shall remain unpaid or Lessee shall have any
commitment or obligation under the Lease Agreements, including, with respect
to the Additional Properties, Pier 1 will, unless Lessor shall otherwise
consent in writing:
(a) Financial Statements. Deliver to the Lessor or any Subsequent
Holder, as appropriate, in duplicate:
(i) 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 Pier 1, and a
Consolidated balance sheet of Pier 1 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 Pier 1;
(ii) Annual Statements: as soon as practicable and in any event within
100 days after the end of each fiscal year, a Consolidated statement of
operations, and a Consolidated statement of changes in financial position of
Pier 1 for such year, and a Consolidated balance sheet of Pier 1 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 the Lessor or any Subsequent Holder,
together with an opinion by the Auditors, whose opinion shall (a) state that
such financial statements have been prepared in accordance with GAAP and
fairly present the Consolidated financial position of Pier 1 as of the date
thereof and the Consolidated results of their operations for the period
thereof, (b) state that their audit examination has included a review of the
terms of the Lease Agreements and this Guarantee as they relate to accounting
matters, and (c) state whether, in the course of their audit examination,
they obtained knowledge (and state whether they have knowledge of the
existence as of the date of such written statement) of any condition or event
which constitutes a Default or Event of Default, and if so, specifying the
nature and period of existence thereof (notwithstanding the foregoing, the
opinion of the Auditors need not contain the statements otherwise required by
clauses (b) and (c) of this subparagraph (ii) so long as Pier 1 is a
reporting company under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended);
(iii) SEC and Other Reports: promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and reports as it
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);
(iv) Audit Reports: promptly upon receipt thereof, a copy of each other
report submitted to Pier 1 or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of the
books of Pier 1 or any Subsidiary (other than any "management letters"
delivered to Guarantor by such accountants, which management letters shall
only be delivered to the Lessor or any Subsequent Holder upon such Person's
prior request);
(v) Other Notices: promptly upon the occurrence thereof, notice of any
of the following: (a) any condition or event which constitutes a Default,
Event of Default or Trigger Event, specifying the nature and period of
existence thereof, (b) that any Person has given any notice to Guarantor with
respect to a claimed Default or Event of Default, or (c) that any Person has
given any notice to Pier 1 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 $5,000,000 and, with
respect to any of such events specified in subdivisions (a), (b) or (c) above
of this clause (v), what action Pier 1 or such Subsidiary has taken, is
taking or proposes to take;
(vi) ERISA Events: promptly upon any officer of Guarantor obtaining
knowledge of the occurrence thereof, notice of the occurrence of any (a)
"reportable event", as such term is defined in section 4043 of ERISA, 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 Pier 1 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 PBGC with respect
thereto; provided that with respect to the occurrence of any "reportable
event" as to which the PBGC has waived the 30-day reporting requirement, such
written notice need be given only at such time as notice is given to the
PBGC; and
(vii) Requested Information: with reasonable promptness, such other
financial data or other data or information related to the business or
operations of Pier 1 or its Subsidiaries as the Lessor or any Subsequent
Holder may reasonably request. The Lessor agrees that the Lessor will not
intentionally disclose any information given to the Lessor by Pier 1 or any
of its Subsidiaries which is either propriety 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 the Lessor 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 Tribunal, (b) to the Lessor's
or any Subsequent Holder's auditors, attorneys or agents, or (c) to
purchasers or prospective purchasers of interests in the Obligations.
Together with each delivery of financial statements required by clause (i)
above, Pier 1 will deliver to the Lessor or any Subsequent Holder an
Officer's Certificate demonstrating (with computations in reasonable detail
where applicable) compliance by Pier 1 and its Subsidiaries with the
provisions of Sections 8(a), 8(b), 8(c), 8(d)(i)(g), 8(d)(ii), 8(d)(iii),
8(d)(iv), 8(d)(v), 8(d)(vi) and 8(d)(vii) and stating that there exists no
Event of Default or Default with respect thereto, or, if any such Event of
Default or Default exists under or with respect to such covenants, specifying
the nature and period of existence thereof and what action Pier 1 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 Pier 1 to use accounting principles for purposes of
determinations or computations under this Guarantee different than Pier 1
uses in its quarterly and annual financial statements, Pier 1 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 became applicable,
deliver to the Lessor or any Subsequent Holder 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 Event of
Default or Default, or, if they have obtained knowledge of any Event of
Default or Default, specifying the nature and period of existence thereof.
(b) Payment and Performance; Maintain Books and Reserves. Duly and
punctually pay and perform all of its covenants, agreements, debts, duties
and obligations in accordance with its terms. Guarantor 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.
(c) Inspection of Property. Permit any Person designated by the Lessor
or any Subsequent Holder, at the Lessor's or such Subsequent Holder's expense
and with reasonable notice to Guarantor, to visit and inspect any of the
properties of Guarantor and its Subsidiaries, to examine the corporate books
and financial records of Guarantor 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 Guarantor
and its Auditors, all at such reasonable times and as often as the Lessor or
such Subsequent Holder may reasonably request. The Lessor agrees that the
Lessor will keep confidential any proprietary or confidential information
given to the Lessor by Guarantor or its Subsidiaries upon the same terms and
conditions as agreed to with respect to information the Lessor has obtained
pursuant to Section 7(a)(vii) hereof.
(d) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all Laws applicable to
its business, such compliance to include, without limitation, paying before
the same become delinquent all Taxes 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 that Guarantor 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.
Guarantor 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 Guarantor 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.
Guarantor will promptly notify the Lessor or any Subsequent Holder if
Guarantor receives any notice, claim or demand from any governmental agency
which alleges that Guarantor 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.
(e) 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 each of 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(e) shall not prohibit any
transaction expressly permitted by Sections 8(d)(vi) and 8(d)(vii) of this
Guarantee.
(f) 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 any 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. Guarantor 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 Guarantor 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.
(g) Primary Business. Continue to conduct, and cause each of the
Subsidiaries to continue to conduct, substantially all of their 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, (i) specialty retail stores
offering primarily imported decorative home furnishings, accessories and
other specialty items for the home and casual clothing and fashion
accessories and (ii) specialty retail stores offering primarily nursery and
garden products).
(h) 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 Guarantor's
and/or such Subsidiary's business. In addition, Guarantor's Board of
Directors shall approve, pursuant to Delaware law and evidenced by a
resolution approved by the requisite number of such directors: (i) any
individual transaction between an Affiliate of Guarantor and Guarantor or any
Subsidiary for more than $1,000,000; and (ii) any such transactions involving
Guarantor and its Subsidiaries which in the aggregate exceed $10,000,000 for
any fiscal year of Guarantor.
(i) Further Assurances. Upon request of the Lessor, promptly cure any
defects in the creation, issuance, execution and delivery of this Guarantee
or in the Reimbursement Agreement. Each Guarantor, at its expense, will
further promptly execute and deliver to the Lessor upon request all such
other and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of Guarantor hereunder, or to
further evidence and more fully describe the obligations of such Guarantor
for the Obligations as primary obligor, or to correct any omissions herein,
or to more fully state the obligations set out herein.
(j) Insurance. Maintain, and cause each of its Subsidiaries to maintain,
insurance policies with respect to its Property and business in such amounts
and against such casualties and contingencies as is customary in its industry
or as may otherwise be required by the terms of any agreement applicable
thereto.
8. Negative Covenants. Guarantor covenants and agrees that, so long as
any part of the Obligations shall remain unpaid or Lessee shall have any
commitment or obligation under the Lease Agreements, including any commitment
or obligation with respect to the Additional Properties, it will not, and
will not permit any Subsidiary to (other than with respect to the
requirements hereof which are expressly applicable only to Pier 1 on a
consolidated basis), unless Lessor and Lender otherwise consent in writing:
(a) Current Ratio. Permit the ratio of Pier 1's Consolidated Current
Assets to its Consolidated Current Liabilities at any time to be less than
2.0:1.
(b) Consolidated Tangible Net Worth. Permit Pier 1's Consolidated
Tangible Net Worth at any time to be less than an amount equal to the sum of
(i) $160,000,000 plus (ii) 50% of the aggregate Consolidated Net Income of
Guarantor for the period commencing on February 29, 1992 (without deduction
for any net loss in any fiscal year ending after February 29, 1992) and
terminating at the end of the last fiscal quarter preceding the date of any
determination of Consolidated Tangible Net Worth.
(c) Limitation on Dividends, Acquisition of Stock and Restricted
Investments. Declare 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) which is payable more than 60 days after the date such declaration is
made, unless, at the time of such declaration, such dividend complied with
this Section 8(c). Guarantor covenants that it will not, and will not permit
any of its Subsidiaries to, pay or declare any dividend on any class of its
stock (other than stock dividends) or make any other distribution on account
of any class of its stock (other than dividends or distributions payable
solely in shares of its stock), or redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its stock, or make any Restricted
Investments (all of the foregoing being herein called "Restricted Payments")
if the aggregate amount of all such Restricted Payments, from and after
February 29, 1992, shall exceed the sum of (i) 50% of the aggregate
Consolidated Net Income of Guarantor for the period (taken as one accounting
period) commencing on February 29, 1992 and terminating at the end of the
last fiscal quarter preceding the date of such Restricted Payment (provided,
however, that in the case of any deficit in Consolidated Net Income in any
financial reporting period occurring either fully or partly within such
period, 100% of the amount of such deficit shall be subtracted from the
amount described in clause (i) above) plus (ii) the aggregate net cash
proceeds received from the issuance or sale, after February 29, 1992, of
capital stock of Guarantor, (provided, however, that for purposes of clause
(ii), such net cash proceeds shall be considered only for a period of one
calendar year commencing on the date such proceeds are received by Guarantor)
plus (iii) $10,000,000. Notwithstanding the foregoing, no Restricted Payment
shall be made unless, after giving effect thereto, no event of default shall
have occurred and be continuing. There shall not be included in the
limitation upon Restricted Payments (a) any dividends paid by any Subsidiary
of Guarantor to its corporate parent which is also a Subsidiary of Guarantor
or (b) to Guarantor.
(d) Lien, Debt and Other Restrictions. Guarantor covenants that it will
not, and will not permit any Subsidiary to:
(i) 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 Obligations, except, without double-counting,
(a) 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 Guarantor's or its Subsidiaries
good and marketable title to or use or enjoyment of the property or assets
burdened by such Liens,
(b) 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,
(c) 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 Guarantor or such Subsidiary, and (b) the aggregate amount
of Debt secured by such Lien shall not at any time exceed 75% of the fair
market value of such property,
(d) any Lien on any property acquired, constructed or improved by
Guarantor 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 75 % 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,
(e) Liens existing on the date hereof and disclosed to the Lessor in the
most recent financial statements described in clause 6(g) hereof,
(f) 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 Guarantor's or its Subsidiaries'
title to or use or enjoyment of the property or assets burdened by such
Liens,
(g) any Lien described in clauses (c), (d) or (e) 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
(h) 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 (h) at any time does
not at any time exceed five percent (5. 0 %) of Consolidated Net Tangible
Assets.
(ii) Funded Debt. Other than for the Guaranteed Debt by Pier 1 of
Sunbelt's Debt to (1) Standard Chartered Bank for a $5,000,000 line of credit
and (ii) Texas Commerce Bank, National Association for a $5,000,000 line of
credit (the "Sunbelt Debt Guarantee"), create, incur, assume or suffer to
come into existence any additional Funded Debt unless after giving effect
thereto (i) Senior Funded Debt is less than 50 % of Consolidated Net Tangible
Assets and (ii) all Funded Debt in the aggregate is less than 60% of
Consolidated Net Tangible Assets. With respect to Subsidiaries which are not
Guarantors, create, incur, assume or suffer to come into existence any
additional Funded Debt by such Subsidiaries unless after giving effect
thereto all Funded Debt by such Subsidiaries in the aggregate is less than
70% of Consolidated Net Tangible Assets of such Subsidiaries; provided
however, that as used in this paragraph 8(d)(ii), (A) prior to demand being
made upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the
term Funded Debt (individually and as used in the definition of Senior Funded
Debt) shall only include the Guaranteed Debt of Sunbelt to the extent the
aggregate amount of such Guaranteed Debt of Sunbelt exceeds the sum of
Sunbelt's cash and Cash Equivalents, and (B) from and after demand being made
upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the term
Funded Debt (individually and as used in the definition of Senior Funded
Debt) shall include such Guaranteed Debt of Sunbelt.
(iii) Short-Term Debt. Other than the Guaranteed Debt of Sunbelt's Debt
pursuant to the Sunbelt Debt Guarantee, create, incur, assume or suffer to
exist any Short-Term Debt, other than any Short-Term Debt which is incurred
in the ordinary course of business, provided that there shall be a period of
at least 45 consecutive days during each fiscal year in which such Short-Term
Debt is paid down to an amount that would have been permitted under Section
8(d)(ii) were such Short-Term Debt to be treated as Funded Debt; provided
however, that as used in this paragraph 8(d)(iii), (A) prior to demand being
made upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the
term Funded Debt (individually and as used in the definition of Short-Term
Debt) shall only include the Guaranteed Debt of Sunbelt to the extent the
aggregate amount of such Guaranteed Debt of Sunbelt exceeds the sum of
Sunbelt's cash and Cash Equivalents, and (B) from and after demand being made
upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the term
Funded Debt (individually and as used in the definition of Short-Term Debt)
shall include such Guaranteed Debt of Sunbelt.
(iv) Subsidiaries' Debt. Permit any Subsidiaries to create, incur,
assume or suffer to exist any additional Debt unless after giving effect
thereto, the aggregate amount of outstanding Debt of Pier 1's Subsidiaries is
less than 10% of Consolidated Net Tangible Assets.
(v) 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 12 months, to be less than (a)
1.3 to 1 for each of the fiscal quarters ending during the period from the
date of this Guarantee through February 27, 1993, and (b) 1.4 to 1 for each
fiscal quarter ending thereafter.
(vi) 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.
(vii) Merger and Consolidation. Merge or consolidate, provided, however,
that:
(a) Guarantor 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 Obligations in writing or Guarantor shall be the
continuing or surviving entity, (B) no Default or Event of Default shall have
occurred after giving effect to such merger or consolidation, and (C)
immediately after giving effect to such merger or consolidation Guarantor
could have incurred an additional $1.00 of Funded Debt pursuant to the
provisions of Section 8(d)(ii) hereof; and
(b) 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 Guarantor, (B) no Default or Event of
Default shall have occurred after giving effect to such merger or
consolidation, and (C) immediately after giving effect to such merger or
consolidation such Subsidiary could have incurred an additional $1.00 of
Funded Debt pursuant to the provisions of Section 8(d)(ii) hereof; and
(c) any Subsidiary may merge or consolidate with or into Guarantor or any
other Subsidiary so long as, in any such merger or consolidation involving
Guarantor, Guarantor shall be the surviving or continuing corporation.
(e) Investments. Make or permit any of its Subsidiaries to make any
Investment, except (i) purchases of a majority of the outstanding stock of
any corporation, (ii) Investments in Pier 1, any of its Subsidiaries, or any
Person that is wholly-owned by Pier 1 and/or its Subsidiaries, not to exceed
in the aggregate $25,000,000, (iii) Investments in Cash Equivalents or
readily marketable securities having a quoted market value, (iv) Investments
in Persons to the extent permitted by Section 8(c) hereof, (v) Investments in
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 Pier
1 or any of its Subsidiaries, which Investments under this subsection (v)
shall not exceed $75,000,000 in the aggregate, (vi) loans or advances to
employees in the ordinary course of business that do not exceed $5,000,000 in
the aggregate, and (vii) Investments in Sunbelt capital stock or Investments
which are loans made by Pier 1 to Sunbelt as a result of Pier 1's payment of
the Guaranteed Debt permitted under Section 8(g) hereof or are intercompany
advances, not exceeding $1,000,000.00, made by Pier 1 to Sunbelt in the
ordinary course of business, which advances are promptly repaid by Sunbelt.
(f) 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.
(g) 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 in existence on the date hereof, (ii) 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 Pier 1 (which appraisal, at
the Lessor's reasonable request and at Pier 1's expense, shall be promptly
updated, but such request shall not be made more often than once every 12
months), and (iii) Guaranteed Debt by Pier 1 or a Subsidiary on the
consolidated balance sheet of Pier 1 and its Subsidiaries; provided, however,
that in no event shall the aggregate amount of all consolidated Guaranteed
Debt (other than the Guaranteed Debt described in (iii) above) of Pier 1 and
its Subsidiaries exceed the Consolidated Tangible Net Worth.
(h) Management and Control. Permit any material change in the
management or control of Pier 1 or any of its Subsidiaries.
(i) Restrictive Agreement. Violate any provision of any Restrictive
Agreement.
9. Payments. Each payment by Guarantor to Lessor under this Guarantee
shall be made by transferring the amount thereof in immediately available
U.S. funds, without set-off or counterclaim.
10. Costs and Expenses. Guarantor hereby agrees to pay all reasonable
legal and other costs and expenses incurred by Lessor in seeking to protect
or enforce any of Lessor's rights or remedies with respect to the Obligations
and this Guarantee.
11. Subrogation.Guarantor shall not be subrogated, in whole or in part,
to Lessor's rights or those of any subsequent assignee or transferee of any
of the Obligations until all of the Obligations, including those with respect
to the Additional Properties, to Lessor and every such subsequent assignee or
transferee shall have been paid in full and all obligations and commitments
of whatever kind or character of Lessee under the Lease Agreements, including
those with respect to the Additional Properties, have been fully discharged
and satisfied.
12. No Waiver, Amendment. No delay on Lessor's part in the exercise of
any right or remedy shall operate as a waiver thereof, and no single or
partial exercise by Lessor of any right or remedy shall preclude the other or
further exercise thereof or the exercise of any other right or remedy. No
amendment or waiver of any provision of this Guarantee nor consent to any
departure by any Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by the Lessor, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
13. Parties; Successors and Assigns. This Guarantee shall inure to
the benefit of Lessor and Lessor's successors, assigns and transferees, and
shall be binding upon Guarantor and its respective successors and assigns.
Guarantor may not delegate any of its duties under this Guarantee without the
prior written consent of Lessor or any Person to whom Lessor has assigned
this Guarantee. Lessor may assign Lessor's rights and benefits under this
Guarantee to any Person, including, without limitation, to any financial
institution providing financing to Lessor. Upon any assignment by Lessor of
this Guarantee, and upon any subsequent assignment or assignments by Lessor's
assignee or future assignees, such assignee or future assignee shall succeed
to all of the rights, benefits, remedies and privileges of this Guarantee and
shall for all purposes hereof be deemed to be Lessor hereunder to the
exclusion of the assigning Lessor. Guarantor agrees to make such disclosures
and to take such action and execute such instruments as any such assignee or
future assignee may reasonably require to more fully protect, preserve and
assure to such assignee or future assignee all of the rights, benefits,
remedies and privileges provided hereby. In the event that Lessor or any
assignee hereof sells participations in any obligation secured by the Lease
Agreements, each such other participant shall have rights, benefits, remedies
and privileges to the same extent as are available to Lessor hereunder.
14. Acceleration Events.
(a) If any one or more of the following events shall occur:
(i) If an Event of Default shall occur under any Lease Agreement; or
(ii) If Guarantor shall fail to pay any part of the Obligations when
due; or
(iii) If any representations or warranties made by Guarantor herein
shall be false or misleading in any material respect on the date which
made; or
(iv) The Guarantor shall default in the due performance or observance
of any other material term or any covenant set forth in the Guarantee,
provided, that the default by a Guarantor of a covenant contained in Section
7 or 8 of the Guarantee (other than a payment of Restricted Payment in
violation of Section 8(c) or a breach of Sections 8(d)(vii) or 8(i) shall not
constitute an Event of Default unless such default shall remain unremedied
for a period of 30 days.
(v) Guarantor or any Subsidiary defaults in any payment of any other
obligation pursuant to a guaranty or 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 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 be due prior to any stated maturity, provided
that the aggregate amount of all such 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 $5,000,000; or
(vi) This Guarantee, the Lease Agreements, the Loan Agreement, or any
provision hereof or thereof at any time after its execution and delivery
shall for any reason cease to be valid and binding on the Guarantor or the
Lessee, as the case may be, or in full force and effect, or shall be declared
to be null and void, or the validity or enforceability of this Guarantee, or
the Lease Agreements shall be contested, any party thereto shall deny that it
has any or further liability or obligation thereunder; or
(vii) The Guarantor shall admit in writing its inability to pay its debts
as they mature or shall declare a moratorium on the payment of its debts or
apply for, consent to, or acquiesce in the appointment of a trustee or
receiver for itself or any part of its property, or shall take any action to
authorize or effect any of the foregoing; or in the absence of any such
application, consent, or acquiescence, a trustee or receiver shall be
appointed for it or for a substantial part of its property or revenues and
shall not be discharged within a period of 90 days; or all, or any
substantial part, of the property of the Company shall be condemned, seized,
or otherwise appropriated, or any bankruptcy, reorganization, debt
arrangement, or other proceeding under any bankruptcy or insolvency law or
any dissolution or liquidation proceeding shall be instituted by or against
the Company (or any action shall be taken to authorize or effect the
institution by it of any of the foregoing) and if instituted against it,
shall be consented to or acquiesced in by it, or shall not be dismissed
within a period of 90 days; or
(viii) There shall be commenced against the Guarantor any case,
proceeding, or other action seeking issuance of a warrant of attachment,
execution, distraint, or similar process against all or any substantial part
of its assets which results in the entry of an order for relief which shall
not have been vacated, discharged, stayed, or bonded pending appeal within 60
days from the entry thereof; or
(ix) If a Trigger Event shall occur;
then, a Default shall be deemed to exist hereunder and an Event of Default
shall be deemed to exist under each of the Lease Agreements. In any such
event, and in addition to all other rights and remedies at law and in equity
available to Lessor as a result of such event, Guarantor shall immediately
pay or cause to be paid to Lessor, without notice or demand, the amounts due
and payable to Lessor by Lessee under each Lease Agreement, either in respect
of the purchase of the Property covered thereby or as a Contingent Rent
Payment. All such payments shall be made directly to Lender in accordance
with the terms of the respective Lease Agreements and the assignments thereof
to Lender, copies of which have been supplied to Guarantor simultaneously
herewith. It is understood that any payments made by Guarantor to Lessor
under this Guarantee shall not release or discharge Guarantor from its
obligations hereunder until all of the Obligations have been fully and
finally paid to Lessor. All amounts payable by Guarantor hereunder shall be
credited against amounts otherwise payable by Lessee under the Lease
Agreements for the remainder of their respective terms, provided that if any
of the Lease Agreements have been terminated or if for any other reason
sufficient credits cannot be given to Lessee, then such payments shall
nevertheless be retained by Lessor hereunder and no further credits shall be
given to Lessee.
(b) Any payment made by Guarantor under this Section 14 shall be deemed to
be an agreed guarantee payment without regard to the status of any Lease
Agreement or Lessee's rights thereunder; and in no event and under no
circumstance shall any such payment be repayable or refundable to Guarantor
for any reason or under any circumstance, and Guarantor agrees to look solely
to Lessee under its limited right of subrogation for the recovery of any such
sum.
(c) ALL AMOUNTS PAYABLE BY GUARANTOR UNDER THIS LEASE GUARANTEE ARE
PAYABLE WITHOUT OFFSET, COUNTERCLAIM OR DEDUCTION OF WHATEVER KIND AND ARE
NOT CONDITIONED UPON, AND CANNOT BE AFFECTED IN ANY WAY BY, ANY FUTURE EVENT,
OCCURRENCE OR ACTION BY ANY PARTY, AND GUARANTOR UNDERSTANDS AND AGREES THAT
ALL SUCH AMOUNTS SHALL BE PAYABLE NOTWITHSTANDING ANY FACT OR CIRCUMSTANCE
(INCLUDING, WITHOUT LIMITATION, THE BANKRUPTCY OF OR A SIMILAR EVENT
AFFECTING LESSEE) AT ANY TIME AFFECTING LESSEE OR ANY LEASE AGREEMENT,
WHETHER CAUSED OR CONTRIBUTED TO BY LESSEE, LESSOR OR ANY OTHER PARTY.
15. Notices. Any notice required to be delivered hereunder shall be
deemed delivered, whether actually received or not, forty- eight (48) hours
after such notice is deposited in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the
parties hereto or Lender, as applicable, at the respective addresses
specified below, or at such other address as they or the Lender may have
subsequently specified by written notice. The addresses for notices to
Guarantor, Lessor, and Lender are as follows:
If to Lessor: Pier Set, Inc.
245 Park Avenue
New York, New York 10167
Attention: James D. Price
with a copy to: Kelly, Hart, & Hallman
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Attention: Mark L. Hart, Jr., Esq.
If to Guarantor: Pier 1 Imports, Inc.
301 Commerce Street, Suite 600
Fort Worth, Texas 76161-0020
Attention: Robert G. Herndon
CMEI, Inc.
301 Commerce Street, Suite 600
Fort Worth, Texas 76161-0020
Attention: Robert G. Herndon
with a copy to: Kelly, Hart, & Hallman
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Attention: Mark L. Hart, Jr., Esq.
If to Lender: National Westminster Bank Plc
175 Water Street, 26th Floor
New York, NY 10038
Attention: Eric J. Fellows
with a copy to: National Westminster Bank Plc
Texas Commerce Tower, suite 6070
600 Travis Street
Houston, Texas 77002
Attn: Steven J. Krakoski
Notices sent by any other method (including facsimile transmission) shall be
deemed delivered when actually received by the addressee. Any notice of
change of address shall be effective only upon actual receipt, regardless of
delivery method, and such new address shall be effective as to notices given
by the other parties commencing ten (10) days after such change of address
notice is received by such parties. No party may establish an official
address for notice outside the continental United States.
16. Term. This Guarantee is not limited to any particular period of time
but shall continue in full force and effect until all of the Obligations,
including those with respect to the Additional Properties, have been fully
and finally paid or have been otherwise discharged by Lessee, and Guarantor
shall not be released from any obligations or liability hereunder until such
full payment or discharge shall have occurred.
17. Subordination. All principal of and interest on all indebtedness,
liabilities, and obligations of Lessee to Guarantor (the Subordinated Debt),
whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, now or hereafter existing, due or to become
due to Guarantor, or held or to be held by Guarantor, whether created
directly or acquired by assignment or otherwise and whether evidenced by
written instrument or not, shall be and is hereby expressly subordinated to
the Obligations. Guarantor agrees not to receive or accept any payment from
Lessee with respect to the Subordinated Debt if at such time either an Event
of Default (as defined in the Lease Agreements) has occurred and is
continuing or any of the Obligations are otherwise due and owing and unpaid;
and in the event Guarantor receives any payment on the Subordinated Debt in
violation of the foregoing, Guarantor will receive and hold any such payment
in trust for Lessor and forthwith turn such payment over to Lessor, in the
form received, to be applied to the Obligations.
18. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THIS GUARANTEE IS
PERFORMABLE IN NEW YORK COUNTY, NEW YORK, AND GUARANTOR HEREBY WAIVES THE
RIGHT TO BE SUED ELSEWHERE.
19. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
20. Waiver of Jury Trial.To the extent permitted by applicable law, and
for the purpose of reducing the time and expense of litigation, Guarantor and
Lessor waive trial by jury in any action brought on, under, or by virtue of
this Guarantee.
21. Joint and Several Liability. The liability of Guarantor under this
Guarantee shall be joint and several. A separate action may be brought and
prosecuted against Guarantor, whether or not action is brought against any
other person or whether or not any other person is joined in such action or
actions.
IN WITNESS WHEREOF, the parties hereto have caused this Lease Guarantee to
be executed by their respective officers thereunder duly authorized, as of
the date first written above.
GUARANTOR:
PIER 1 IMPORTS, INC.,
a Delaware corporation
Attest:
By:_______________________________
____________________ Robert G. Herndon
Michael A. Carter Executive Vice President
Assistant Secretary
[SEAL]
CMEI, INC.,
a Georgia corporation
Attest:
By:_______________________________
____________________ Robert G. Herndon
Michael A. Carter Executive Vice President
Assistant Secretary
[SEAL]
LESSOR:
PIER SET, INC.,
a Delaware corporation
Attest:
By:_______________________________
____________________ James D. Price
Michael A. Carter President
Assistant Secretary
[SEAL]
ACCEPTED THIS 30th DAY OF
DECEMBER, 1992.
LENDER:______________________
NATIONAL WESTMINSTER BANK Plc
New York Branch
By:__________________________
Name: Eric J. Fellows
Title: Vice President
NATIONAL WESTMINSTER BANK Plc
Nassau Branch
By:_________________________
Name: Eric J. Fellows
Title: Vice President
SUPPLEMENT TO LEASE GUARANTEE
THIS SUPPLEMENT TO LEASE GUARANTEE is dated as of February 17, 1993 (this
"Supplement"), is made by and between PIER 1 IMPORTS, INC., a Delaware
corporation ("Pier 1"), CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor") and supplements that certain Lease
Guarantee (the "Guarantee") made and entered into as of the 30th day of
December, 1992, by and between Pier 1, CMEI and Lessor. Terms used herein
and not otherwise defined shall have the meaning given to them in the
Guarantee.
W I T N E S S E T H:
A. Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation,
is an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of CMEI. Lessor and Lessee have entered, as of the date hereof,
into supplements (the "Lease Supplements") to each of the Master Building
Lease and the Master Ground Lease, which Lease Supplements add two Parcels
and the Improvements thereon listed on Exhibit "A-14"-"A-15" of each of the
Supplements to the Lease Agreements and hereto, as provided for therein.
B. Pursuant to and subject to the terms of a supplement to the Loan
Agreement, as amended, (the "Loan Supplement") and the Loan Agreement,
Lender has advanced or agreed to advance the additional sum of $905,901 to
Lessor pursuant to the Land Loan by $905,601 and has advanced or agreed to
advance the additional sum of $1,633,573 to Lessor pursuant to the Building
Loan.
C. In consideration of the execution and delivery of the Lease
Supplements by Lessor to Lessee, and in recognition that the favorable
financing terms offered to Lessor by Lender have been passed through to
Lessee through the rental terms of the Lease Agreements, all of which are
contingent upon the delivery of this Supplement by Guarantor; and in
recognition that (i) as the indirect parent of Lessee, Pier 1; and (ii) as
the direct parent of Lessee, CMEI: will receive direct and material benefits
from the delivery of the Lease Supplements and the Loan Supplement and the
consummation of the transactions contemplated thereby, Guarantor desires to
deliver this Supplement to Lessor.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows:
A. The Leases shall for all purposes under the Guarantee include the
Leases as Supplemented by the Lease Supplements, and each provision of the
Guarantee, as supplemented by this Supplement, shall be applicable to such
Leases. As supplemented hereby, each provision of the Guarantee shall be and
remains in full force and effect; and
B. this Supplement 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 of this Supplement, it shall not be necessary to produce or
account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their respective officers thereunder duly authorized, as of the
date first written above.
GUARANTOR:
PIER 1 IMPORTS, INC.,
a Delaware corporation
Attest:
By:______________________________
_____________________ Name:____________________________
Michael A. Carter Title:___________________________
Assistant Secretary
[SEAL]
CMEI, INC.,
a Georgia corporation
Attest:
By:______________________________
_____________________ Name:____________________________
Michael A. Carter Executive Vice President
Assistant Secretary
[SEAL]
LESSOR:
PIER SET, INC.,
a Delaware corporation
Attest:
______________________ By:______________________________
Name:_________________ James D. Price
Title:________________ President
[SEAL]
ACCEPTED AS OF THE 17TH DAY OF
FEBRUARY, 1993.
LENDER:
NATIONAL WESTMINSTER BANK Plc
New York Branch
By:_______________________
Name: Eric J. Fellows
Title: Vice President
NATIONAL WESTMINSTER BANK Plc
Nassau Branch
By:_______________________
Name: Eric J. Fellows
Title: Vice President
FIRST AMENDMENT TO LEASE GUARANTEE
THIS FIRST AMENDMENT (herein so called) is entered into as of April 15,
1993, among PIER 1 IMPORTS, INC., a Delaware corporation ("Pier 1"), CMEI,
INC., a Georgia corporation ("CMEI"), (Pier 1 and CMEI individually and
collectively called the "Guarantor") and PIER SET, INC., a Delaware
corporation ("Lessor").
A. Guarantor and Lessor entered into a Lease Guarantee dated as of
December 30, 1992 (the "Guarantee").
B. Guarantor has advised Lessor that Guarantor is planning to sell (the
"Sale") all of its stock in Sunbelt Nursery Group, Inc. ("Sunbelt") to a
wholly owned subsidiary of General Host Corporation, a New York corporation
("General Host"), in exchange for 1,940,000 shares of the common stock of
General Host.
C. Guarantor and Lessor, in order to provide for the accomplishment of
the above-described transaction, desire to amend the Guarantee in certain
respects as more fully set forth below.
NOW, THEREFORE, for and in consideration of the premises and other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor and Lessor hereby agree as follows:
1. Unless otherwise specified herein, terms defined in the Guarantee
have the same meaning when used herein and all section references herein
refer to sections in the Guarantee.
2. Subsection (viii) of the definition of "Restricted Investments" in
Section 3 of the Guarantee is hereby amended to read in its entirety as
follows:
(viii) not more than 1,940,000 shares of the common stock of General
Host Corporation, a New York corporation, plus any additional shares
which are received as a result of stock dividends, stock split or
combination of shares, recapitalization, reclassification, merger or
similar capital or corporate structure change,
3. Subsection (ix) of the definition of "Restricted Investments" in
Section 3 of the Guarantee is hereby amended to read in its entirety as
follows:
(ix) any loans or guaranties made by Pier 1 or any of its subsidiaries
to or for the benefit of Sunbelt or any of its Subsidiaries not
exceeding an aggregate principal amount of $12,000,000 at any one time
outstanding, provided that the maturity of any such loan or any
indebtedness so guaranteed shall be no later than April 30, 1994, and
provided further, that any remedies of Pier 1 or its Subsidiaries with
respect thereto shall be diligently exercised,
4. New subsections (x) and (xi) of the definition of "Restricted
Investments" in Section 3 of the Guarantee are hereby added to read in their
entirety as follows:
(x) any loans or guaranties made by Pier 1 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 $6,500,000 at any one time outstanding, and (xi) any
stock or securities of Sunbelt which Pier 1 or any of its Subsidiaries
acquires through the exercise of its remedies with respect to any lien
or security interest held by Pier 1 or any of its Subsidiaries on such
stock or securities.
5. Section 8(d)(ii) of the Guarantee is hereby amended by deleting the
phrase "Other than for the Guaranteed Debt by Pier 1 of Sunbelt's Debt to (i)
Standard Chartered Bank for a line of credit in the amount of $5,000,000, and
(ii) Texas Commerce Bank, National Association for a line of credit in the
amount of $5,000,000 (the "Sunbelt Debt Guarantee")," appearing at the
beginning of said Section 8(d)(ii) and substituting the following in its
place:
Other than for any Guaranteed Debt by Pier 1 or any of its Subsidiaries
described in subsection (ix) of the definition of "Restricted
Investments" in Section 3 hereof (the "Sunbelt Debt Guarantee"),
6. Section 8(e) of the Guarantee is hereby amended by deleting
subsection (vii) in its entirety and (C) adding new subsections (vii), (viii)
and (ix) to read in their entirety as follows:
(vii) any loans or guaranties made by Pier 1 or any of its Subsidiaries
to or for the benefit of Sunbelt or any of its Subsidiaries not
exceeding an aggregate principal amount of $12,000,000 at any one time
outstanding, provided that the maturity of any such loan or any
indebtedness so guaranteed shall be no later than April 30, 1994, and
provided further, that any remedies of Pier 1 or its Subsidiaries with
respect thereto shall be diligently exercised, (viii) any loan or
guaranties made by Pier 1 or any of its Subsidiaries to or for the
benefit of Pier Retail Group Limited not exceeding an aggregate
principal amount of $6,500,000 at any one time outstanding, (ix) any
stock or securities of Sunbelt which Pier 1 or any of its Subsidiaries
acquires through foreclosure of any lien or security interest held by
Pier 1 or any of its Subsidiaries on such stock or securities, and
7. Section 8(g) of the Guarantee is hereby amended by deleting the
word "and" before subsection (iv) of said Section 8(g) and adding new
subsections (v) and (vi) to read in their entirety as follows:
, (v) the Sunbelt Debt Guarantee, and (vi) any Guaranteed Debt by Pier 1
or any of its Subsidiaries described in subsection (x) of the definition
of "Restricted Investment" in Section 3 hereof
, and (vi) any Guaranteed Debt by Pier 1 or any of its Subsidiaries
described in subsection (xi) of the definition of "Restricted
Investment" in Section 3 hereof.
8. This First Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original. In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.
9. The effectiveness of this First Amendment is subject to the
conditions precedent that (x) the Sale has been concluded and (y) the Lessor
shall have received Officers' Certificates, dated the date hereof, certifying
inter alia:
(i) a true and correct copy of resolutions adopted by the Board of
Directors or Executive Committees of Guarantor;
(ii) the incumbency and specimen signatures of the Persons executing any
documents on behalf of Guarantor;
(iii) the truth as of the date first written above of the representations
and warranties made by Guarantor in the Guarantee, as amended hereby;
and
(iv) the absence of the occurrence and continuance of any Default or
Event of Default after giving effect to this First Amendment.
10. Except as amended by this First Amendment, the Guarantee is in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
PIER 1 IMPORTS, INC.,
a Delaware corporation
By:_______________________________
Robert G. Herndon,
Executive Vice President
CMEI, INC.,
a Georgia corporation
By:________________________________
Robert G. Herndon,
Executive Vice President
PIER SET, INC.,
a Delaware corporation
By:_________________________________
James D. Price, President
AGREED TO AND ACCEPTED BY:
NATIONAL WESTMINSTER BANK Plc,
a bank registered in England
By:_______________________________
Name:_____________________________
Title:____________________________
SUPPLEMENT AND AMENDMENT TO LEASE GUARANTEE
THIS SUPPLEMENT AND AMENDMENT TO LEASE GUARANTEE is dated as of August 31,
1993 (this "Supplement"), is made by and between PIER 1 IMPORTS, INC., a
Delaware corporation ("Pier 1"), Pier 1 Assets, Inc., a Delaware corporation
("Assets"), Pier 1 Licensing, Inc. ("Licensing"), a Delaware Corporation and
successor by merger to CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor") and supplements and amends that certain
Lease Guarantee (the "Guarantee") made and entered into as of the 30th day of
December, 1992, by and between Pier 1, CMEI and Lessor. Terms used herein
and not otherwise defined shall have the meaning given to them in the
Guarantee.
W I T N E S S E T H:
A. Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation,
is an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of CMEI. Lessor and Lessee have entered, as of the date hereof,
into supplements (the "Lease Supplements") to each of the Master Building
Lease and the Master Ground Lease, which Lease Supplements add two Parcels
and the Improvements thereon listed on Exhibit "A-16"-"A-18" of each of the
Supplements to the Lease Agreements and hereto, as provided for therein.
B. Pursuant to and subject to the terms of a supplement to the Loan
Agreement, as amended, (the "Loan Supplement") and the Loan Agreement,
Lender has advanced or agreed to advance the additional sum of $ 1,519,464.88
to Lessor pursuant to the Land Loan and has advanced or agreed to advance the
additional sum of $2,055,636.12 to Lessor pursuant to the Building Loan.
C. In consideration of the execution and delivery of the Lease
Supplements by Lessor to Lessee, and in recognition that the favorable
financing terms offered to Lessor by Lender have been passed through to
Lessee through the rental terms of the Lease Agreements, all of which are
contingent upon the delivery of this Supplement by Guarantor; and in
recognition that (i) as the indirect parent of Lessee, Pier 1; and (ii) as
the direct parent of Lessee, CMEI: will receive direct and material benefits
from the delivery of the Lease Supplements and the Loan Supplement and the
consummation of the transactions contemplated thereby, Guarantor desires to
deliver this Supplement to Lessor.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows:
A. The Leases shall for all purposes under the Guarantee include the
Leases as Supplemented by the Lease Supplements, and each provision of the
Guarantee, as supplemented by this Supplement, shall be applicable to such
Leases. As supplemented hereby, each provision of the Guarantee shall be and
remains in full force and effect;
B. Licensing and Assets shall be Guarantors for all purposes under the
Guarantee as supplemented and amended; and
B. this Supplement 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 of this Supplement, it shall not be necessary to produce or
account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their respective officers thereunder duly authorized, as of the
date first written above.
GUARANTOR:
PIER 1 IMPORTS, INC.,
a Delaware corporation
Attest:
By:______________________________
______________________ Robert G. Herndon
Michael A. Carter Executive Vice President
Assistant Secretary
[SEAL]
PIER 1 ASSETS, INC.,
a Delaware corporation
Attest:
By:______________________________
______________________ Robert G. Herndon
Michael A. Carter Executive Vice President
Assistant Secretary
[SEAL]
PIER 1 LICENSING, INC.,
a Delaware Corporation and
successor by merger to
CMEI, INC., a Georgia corporation
Attest:
By:______________________________
_______________________ Robert G. Herndon
Michael A. Carter Executive Vice President
Assistant Secretary
[SEAL]
LESSOR:
PIER SET, INC.,
a Delaware corporation
Attest:
_____________________ By:______________________________
Michael A. Carter George R. Mihalko
Assistant Secretary Vice President
[SEAL]
ACCEPTED AS OF THE 31ST DAY
OF AUGUST, 1993.
LENDER:
NATIONAL WESTMINSTER BANK Plc
New York Branch
By:___________________
Eric J. Fellows
Vice President
NATIONAL WESTMINSTER BANK Plc
Nassau Branch
By:___________________
Eric J. Fellows
Vice President
SECOND AMENDMENT TO LEASE GUARANTEE
This Second Amendment to Lease Guarantee (hereinafter referred to as "this
Amendment") is entered into as of the 25th day of February, 1994, among PIER
1 IMPORTS, INC., a Delaware corporation, and PIER 1 LICENSING, INC., a
Delaware corporation and successor by merger to CMEI, Inc. (Pier 1 Imports,
Inc., and Pier 1 Licensing, Inc. are hereinafter collectively referred to as
the "Guarantors" and individually referred to as a "Guarantor") and PIER SET,
INC., a Delaware corporation ("Lessor").
WHEREAS, Guarantors and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, as heretofore supplemented
and/or amended, whereby the Guarantors guaranteed the full payment and
performance of a master ground lease and master building lease entered into
by Pier 1 Imports (U.S.), Inc., a Delaware corporation;
WHEREAS, Guarantors and Lessor have agreed to amend the Lease Guarantee as
more fully set forth hereinafter;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantors and the Lessor agree as follows:
1. Subsection (v) of Section 8(d) of the Lease Guarantee is hereby
amended to read in its entirety as follows:
(v) 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 12 months, to be
less than (a) 1.3 to 1 for each of the fiscal quarters ending during the
period from the date of this Guaranty through February 27, 1993, (b) 1.4
to 1 for each of the fiscal quarters ending during the period from
February 28, 1993, through February 25, 1994, (c) 1.2 to 1 for each of
the fiscal quarters ending during the period from February 26, 1994, to
the fiscal quarter ending in November, 1994, and (d) 1.25 to 1 for each
fiscal quarter ending thereafter.
2. Except as herein specifically amended and modified the Lease
Guarantee is unchanged and continues in full force and effect.
3. Each Guarantor hereby consents and agrees to this Amendment and
each Guarantor hereby confirms and ratifies the Lease Guarantee's existence
and each and every term, condition, and covenant therein contained, to the
same extent and as though the same were set forth herein in full.
4. This Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original. In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.
5. The Lease Guarantee, this Amendment, and all other amendments and/or
supplements, 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 Guarantors and the Lessor relating to
the subject matter hereof and thereof, supersede all prior proposals,
agreements and understandings relating to the subject matter and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements among the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective offices thereunto duly authorized, as of the
date first written above.
GUARANTORS:
PIER 1 IMPORTS, INC.
By:_______________________________
Robert G. Herndon,
Executive Vice President
PIER 1 LICENSING, INC.
By:________________________________
Robert G. Herndon,
Executive Vice President
LESSOR:
PIER SET, INC.
By:_________________________________
James D. Price, President
SUPPLEMENT TO LEASE GUARANTEE
THIS SUPPLEMENT TO LEASE GUARANTEE is dated as of March 23, 1994 (this
"Supplement"), is made by and between PIER 1 IMPORTS, INC., a Delaware
corporation ("Pier 1"), Pier 1 Assets, Inc., a Delaware corporation
("Assets"), Pier 1 Licensing, Inc. ("Licensing"), a Delaware Corporation and
successor by merger to CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor") and supplements that certain Lease
Guarantee (the "Guarantee") made and entered into as of the 30th day of
December, 1992, by and between Pier 1, CMEI and Lessor as heretofore
supplemented and amended. Terms used herein and not otherwise defined shall
have the meaning given to them in the Guarantee.
W I T N E S S E T H:
A. Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation,
is an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of Licensing. Lessor and Lessee have entered, as of the date
hereof, into supplements (the "Lease Supplements") to each of the Master
Building Lease and the Master Ground Lease, which Lease Supplements add two
Parcels and the Improvements thereon listed on Exhibit "A-19"-"A-20" of each
of the Supplements to the Lease Agreements and hereto, as provided for
therein.
B. Pursuant to and subject to the terms of a supplement to the Loan
Agreement, as amended, (the "Loan Supplement") and the Loan Agreement,
Lender has advanced or agreed to advance the additional sum of $641,272.69 to
Lessor pursuant to the Land Loan and has advanced or agreed to advance the
additional sum of $1,321,771.06 to Lessor pursuant to the Building Loan.
C. In consideration of the execution and delivery of the Lease
Supplements by Lessor to Lessee, and in recognition that the favorable
financing terms offered to Lessor by Lender have been passed through to
Lessee through the rental terms of the Lease Agreements, all of which are
contingent upon the delivery of this Supplement by Guarantor; and in
recognition that (i) as the indirect parent of Lessee, Pier 1; and (ii) as
the direct parent of Lessee, Licensing: will receive direct and material
benefits from the delivery of the Lease Supplements and the Loan Supplement
and the consummation of the transactions contemplated thereby, Guarantor
desires to deliver this Supplement to Lessor.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows:
A. The Leases shall for all purposes under the Guarantee include the
Leases as Supplemented by the Lease Supplements, and each provision of the
Guarantee, as supplemented by this Supplement, shall be applicable to such
Leases. As supplemented hereby, each provision of the Guarantee shall be and
remains in full force and effect;
B. this Supplement 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 of this Supplement, it shall not be necessary to produce or
account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their respective officers thereunder duly authorized, as of the
date first written above.
GUARANTOR:
PIER 1 IMPORTS, INC.,
a Delaware corporation
Attest:
By:_____________________________
____________________ J. Rodney Lawrence
Michael A. Carter Senior Vice President
Assistant Secretary
[SEAL]
PIER 1 ASSETS, INC.,
a Delaware corporation
Attest:
By:_____________________________
____________________ J. Rodney Lawrence
Michael A. Carter Senior Vice President
Assistant Secretary
[SEAL]
PIER 1 LICENSING, INC.,
a Delaware Corporation and
successor by merger to
CMEI, INC., a Georgia corporation
Attest:
By:______________________________
____________________ J. Rodney Lawrence
Michael A. Carter Senior Vice President
Assistant Secretary
[SEAL]
LESSOR:
PIER SET, INC.,
a Delaware corporation
Attest:
____________________ By:_____________________________
Michael A. Carter James D. Price
Assistant Secretary President
[SEAL]
ACCEPTED AS OF THE 23RD DAY
OF MARCH, 1994.
LENDER:
NATIONAL WESTMINSTER BANK Plc
New York Branch
By:_____________________
Eric J. Fellows
Vice President
NATIONAL WESTMINSTER BANK Plc
Nassau Branch
By:____________________
Eric J. Fellows
Vice President
Third Amendment to Lease Guarantee
This Third 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"), CMEI, Inc., a
Georgia Corporation ("CMEI"), 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, Pier 1
Assets, Inc., a Delaware corporation ("Assets"), shall be a party to the
Lease Guarantee, and that each reference to the "Guarantor" therein shall
include Assets; that each reference in the Lease Guarantee to CMEI shall mean
Pier 1 Licensing, Inc., a Delaware corporation and successor by merger to
CMEI, Inc., a Georgia corporation ("Licensing"); and that each reference to
the indirect parent or owner of Lessee shall also mean and include Assets.
The parties hereto further agree that the Lease Guarantee shall be amended
by amending and restating the definition of "Intangible Assets" in its
entirety as follows:
""Intangible Assets" shall mean goodwill, patents, trade names,
trademarks, copyrights, franchises, experimental expense, organization
expense, unamortized debt issue cost, 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
Pier 1 or its Subsidiaries or (ii) receivables of any kind of Pier 1 or
its Subsidiaries."
The parties hereto further agree that the definition of "Master Building
Lease" and "Master Ground Lease" in the Lease Agreement shall also mean and
include any renewal, extension and restatement of, and amendment or
modification to, the same.
The parties hereto further agree that Section 5 of the Lease Guarantee
shall be and is amended with respect to the address for notices to Guarantor
by adding below the address for Licensing the following:
"and
Pier 1 Assets, Inc.
% Pier 1 Imports, Inc.
301 Commerce Street, Suite 600
Fort Worth, Texas 76161-0020
Attention: Chief Financial Officer"
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, it shall not be necessary to produce or account for more
than one such counterpart.
Dated to be effective as of the 28th day of February, 1994.
PIER SET, INC., a Delaware corporation
ATTEST:
_____________________________ By:______________________________
Name:________________________ James D. Price
Title:_______________________ Title: President
[SEAL]
ATTEST: PIER 1 IMPORTS, INC,, a Delaware
corporation
_____________________________ By:________________________________
Name:________________________ Name:______________________________
Title:_______________________ Title:_____________________________
[SEAL]
ATTEST: PIER 1 LICENSING, INC., a Delaware
corporation
____________________________ By:_________________________________
Name:_______________________ Name:_______________________________
Title:______________________ Title:______________________________
[SEAL]
ATTEST: PIER 1 ASSETS, INC., a Delaware
corporation
____________________________ By:________________________________
Name:_______________________ Name:______________________________
Title:______________________ Title:_____________________________
[SEAL]