EXHIBIT 10.13.3
FOURTH AMENDMENT TO LEASE GUARANTEE
This Fourth Amendment to Lease Guarantee (hereinafter referred to as
"this Fourth Amendment") is entered into as of the 1st day of April, 1996,
among PIER 1 IMPORTS, INC., a Delaware corporation ("Guarantor"), PIER 1
IMPORTS (U.S.), INC., a Delaware corporation (Pier 1 Imports, Inc. and Pier 1
Imports (U.S.), Inc. are hereinafter collectively referred to as the
"Guarantors") and PIER GROUP, INC., a Delaware corporation ("Lessor").
WHEREAS, Guarantors and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, whereby Guarantors
guaranteed the full payment and performance when due of all rent,
indebtedness, and obligations now or hereafter existing or owing to Lessor
pursuant to lease agreements from time to time entered into with Pier Lease,
Inc., a Delaware corporation; and
WHEREAS, the Lease Guarantee was amended by a First Amendment to Lease
Guarantee dated as of April 28, 1993 (the "First Amendment"); and
WHEREAS, the Lease Guarantee was amended by a Second Amendment to Lease
Guarantee dated as of April 25, 1994 (the "Second Amendment"); and
WHEREAS, the Lease Guarantee was amended by a Third Amendment to Lease
Guarantee dated as of June 20, 1994 (the "Third Amendment"); and
WHEREAS, Guarantors and Lessor have agreed to amend the Lease Guarantee
as more fully set forth hereinafter.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantors and the Lessor agree as follows:
1. The definitions of "Cash Flow Available For Fixed Charges,"
"Consolidated Tangible Net Worth" and "Restricted Investments" in Section 3
of the Lease Guarantee are amended to read in their entirety as follows:
"Cash Flow Available For Fixed Charges" shall mean the sum of
Consolidated Net Income plus depreciation and amortization plus
interest expense plus taxes plus operating lease expense calculated
on a rolling four (4) quarter basis, as determined in accordance
with GAAP, less Maintenance Capital Expenditures for the Guarantor
on a Consolidated basis.
"Consolidated Tangible Net Worth" shall mean the sum of
consolidated capital, surplus and retained earnings of the Guarantor
less Intangible Assets of the Guarantor, determined in accordance with
GAAP.
"Restricted Investments" shall mean any investments in, guaranties
of, or loans and advances to Persons, except (i) Obligations of the
United States government due within one (1) year from the date of
acquisition, (ii) certificates of deposit (including Eurodollar
deposits) and bankers' acceptances (from commercial banks having capital
resources in excess of $100 million) due within one (1) year from the
date of acquisition, and payable in U.S. dollars, (iii) commercial paper
rated P-1 by Moody's or A-1 by Standard & Poor's; (iv) debt of any state
or political subdivision that is rated A or better by Moody's or
Standard & Poor's and that matures within one (1) year, (v) any loan
participation program(s) for a period not to exceed sixty (60) days with
credit risk to companies with long-term debt rating by Standard & Poor's
or Moody's of not less than single A, (vi) any stock purchases made on
behalf of the Pier 1 Imports ESOP which are transferred to the ESOP
within one (1) year, (vii) readily marketable securities having a quoted
market value, (viii) the sum of dividends and other distributions on
account of any class of its stock not exceeding ten million dollars
($10,000,000) in the aggregate in such fiscal year, (ix) purchases of a
majority of the outstanding stock of any corporation, (x) travel or like
advances to officers and/or employees and loans to officers and/or
employees for the purchase of capital stock of the Guarantor (including
the capitalization of up to one-half of the accrued interest on such
loans to officers and/or employees) with such travel or like advances
and loans not exceeding ten million dollars ($10,000,000) in the
aggregate in any fiscal year, (xi) stock or securities received in
settlement of debts owing to the Guarantor or any Subsidiary not
exceeding ten million dollars ($10,000,000) in such fiscal year
including receivables arising from the sale of goods and services in the
ordinary course of business of the Guarantor and its Subsidiaries, (xii)
any stock or securities of Sunbelt Nursery Group, Inc. which the
Guarantor or any of its Subsidiaries acquires through the exercise of
its remedies with respect to any lien or security interest held by
Guarantor or any of its Subsidiaries on such stock or securities, (xiii)
any loans or guaranties made by the Guarantor or any of its Subsidiaries
to or for the benefit of Pier Retail Group Limited, a company organized
under the laws of the United Kingdom, not exceeding an aggregate
principal amount of five million dollars ($5,000,000) in any fiscal
year, (xiv) investments in or loans and advances to Guarantor, or any of
it Subsidiaries, or any Person that is wholly-owned by Guarantor and/or
its Subsidiaries, (xv) investments in or loans and advances to any
partnership, corporation or joint venture the sole purpose of which is
to obtain land and improvements used in the ordinary course of business
of Guarantor or any of its Subsidiaries, which investments in or loans
and advances to under this subsection shall not exceed seventy-five
million dollars ($75,000,000) in the aggregate at any one time
outstanding, (xvi) all investments, guaranties, loans and advances in
existence on the date hereof, together with all renewals, extensions,
rearrangements, replacements, and substitutions thereof, and (xvii) all
guaranties permitted under Section 8(g) hereof.
2. The following definitions of EBITDA, Funded Debt and Funded Debt
EBITDA Ratio are added to Section 3 of the Lease Guarantee which shall read
in their entirety as follows:
"EBITDA" shall mean Net Income plus provision for income taxes
as defined by GAAP plus interest expenses, depreciation,
amortization and non-cash charges. If any changes in GAAP require
operating leases to be included as indebtedness in the Consolidated
financial statements of the Guarantor, such operating lease expense
otherwise required to be included as interest expense shall
nevertheless be treated as lease expense for purposes of this
computation.
"Funded Debt" shall mean, at any time, the aggregate amount of
all interest bearing indebtedness for borrowed money, all
obligations under standby letters of credit (except for those
standby letters of credit issued in connection with City of
Mansfield Industrial Development Corporation Adjustable Convertible
Extendable Securities - ACESsm (Pier 1 Imports-Texas, Inc.
Project), Series 1986, the City of St. Charles, Illinois Industrial
Development Revenue Bond Adjustable Convertible Extendable
Securities - ACESsm (Pier 1 Imports-Midwest, Inc. Project), Series
1986, and the Savannah Port Authority Adjustable Convertible
Extendable Securities - ACESsm (Pier 1 Imports-Southwest, Inc.
Project), Series 1986.) and bankers acceptances and all obligations
under Capital Leases of Guarantor and its Subsidiaries. Any
changes in GAAP requiring operating leases to be included as
indebtedness in the Consolidated financial statements of the
Guarantor will be effective, for purposes of determining Funded
Debt hereunder, only for leases entered into or renewed after the
date of the required implementation of such change in GAAP;
provided however, such indebtedness excluded from the definition of
Funded Debt under the preceding provision shall be excluded from
Funded Debt only to the extent of $75,000,000 of such indebtedness
in the aggregate.
"Funded Debt EBITDA Ratio" shall mean, on any date, the ratio
of Funded Debt to EBITDA.
3. Section 8(b) of the Lease Guarantee is hereby amended to read in
its entirety as follows:
(b) Consolidated Tangible Net Worth. Permit its Consolidated
Tangible Net Worth at any time to be less than an amount equal to
the sum of (i) two hundred million dollars ($200,000,000) plus (ii)
50% of the aggregate Consolidated Net Income of the Guarantor for
the period commencing after February 25, 1995 (without deduction
for any net loss in any fiscal year ending after February 25, 1995)
and terminating at the end of the last fiscal quarter preceding the
date of any determination of Consolidated Tangible Net Worth.
4. Section 8(d)(ii) and Section 8(d)(v) of the Lease Guarantee are
hereby amended to read in their entirety as follows:
(ii) Funded Debt to Consolidated Tangible Net Worth. Permit
the ratio of Funded Debt to Consolidated Tangible Net Worth to
exceed 1.40 to 1.0 at any time.
***
(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
four (4) quarters to be less than 1.25 to 1.0 at any time. For
purposes of this calculation, the $14,000,000 before tax, non-cash
charge attributable to the write-down of the Guarantor's investment
in Sunbelt Nursery Group, Inc. shall be added back to Consolidated
Net Income on an after-tax basis and investment losses in the
aggregate amount of $16,915,000 during the first and second
quarters of 1996 shall be added back in computing Consolidated Net
Income.
5. Section 8(g) of the Lease Guarantee is amended to read in its
entirety as follows:
(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 Guarantor (which appraisal, at
Lessor's or any Subsequent Holder's reasonable request and at
Lessor's expense, shall be promptly updated, but such request shall
not be made more often than once every 12 months), (iii) Guaranteed
Debt by Guarantor or a Subsidiary on the consolidated balance sheet
of Guarantor and its Subsidiaries, and (iv) any Guaranteed Debt by
Guarantor or any of its Subsidiaries described in Subsection (xiii)
of the definition of "Restricted Investments" in Section 3 hereof;
provided, however, that in no event shall the aggregate amount of
all consolidated Guaranteed Debt (other than the Guaranteed Debt
described in (iv) above) of Guarantor and its Subsidiaries exceed
the Consolidated Tangible Net Worth.
6. A new Section 8(i) is added to the Lease Guarantee which shall read
in its entirety as follows:
(i) Funded Debt EBITDA Ratio. Permit its Funded Debt EBITDA
Ratio to be greater than 3.5 to 1.0 at any time.
7. Except as herein specifically amended and modified above, the Lease
Guarantee, the First Amendment, the Second Amendment and the Third Amendment
are unchanged and shall continue in full force and effect.
8. Each Guarantor hereby consents and agrees to this Fourth Amendment
and each Guarantor hereby confirms and ratifies the Lease Guarantee, the
First Amendment, the Second Amendment and the Third Amendment and each and
every term, condition, and covenant therein contained to the same extent and
as though the same were set forth herein in full.
9. The parties to this Fourth Amendment agree to be bound by the terms
and provisions of the current Arbitration Program of First Interstate Bank of
Texas, N.A. which is incorporated by reference herein and is acknowledged as
received by the parties pursuant to which any and all disputes shall be
resolved by mandatory binding arbitration upon the request of any party.
10. This Fourth 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.
11. This Fourth Amendment to Lease Guarantee shall be binding upon and
inure to the benefit of the parties and their successors and assignees.
12. THE LEASE GUARANTEE, THE FIRST AMENDMENT, THE SECOND AMENDMENT, THE
THIRD AMENDMENT AND THIS FOURTH AMENDMENT CONSTITUTE A "LOAN AGREEMENT" AS
DEFINED IN SECTION 26.01(A) OF THE TEXAS BUSINESS AND COMMERCE CODE,
REPRESENT THE FINAL AND ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE
GUARANTORS AND THE LESSOR RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF,
SUPERSEDE ALL PRIOR PROPOSALS, AGREEMENTS AND UNDERSTANDINGS RELATING TO THE
SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment
to be executed by their respective officers thereunto duly authorized, as of
the date first written above.
GUARANTORS:
PIER 1 IMPORTS, INC.
By:
Clark A. Johnson, Chairman of the Board
and Chief Executive Officer
PIER 1 IMPORTS (U.S.), INC.
By:
Clark A. Johnson, Chairman of the Board
and Chief Executive Officer
LESSOR:
PIER GROUP, INC.
BY:
Charles L. Horn, President
Agreed and Accepted as
of the date above written:
FIRST INTERSTATE BANK
OF TEXAS, N.A., as Agent
By:
Robin Hamilton, Vice President