-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UJEkVOQz6j1C73Gp2n+xMFlbZgBonGmQBY0LQbC85CKqyJAotyyJIJhziyB3Bujr MDHrKYlNSBZTmPBPxkUchw== 0000950127-06-000200.txt : 20060322 0000950127-06-000200.hdr.sgml : 20060322 20060322134721 ACCESSION NUMBER: 0000950127-06-000200 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20060322 DATE AS OF CHANGE: 20060322 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Jacobsen Jakup a Dul CENTRAL INDEX KEY: 0001339251 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 354-894-5910 MAIL ADDRESS: STREET 1: SUNDABORG 7 CITY: REYKJAVIK STATE: K6 ZIP: 104 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PIER 1 IMPORTS INC/DE CENTRAL INDEX KEY: 0000278130 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700] IRS NUMBER: 751729843 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-20038 FILM NUMBER: 06703197 BUSINESS ADDRESS: STREET 1: 100 PIER 1 PLACE CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8172526000 MAIL ADDRESS: STREET 1: 100 PIER 1 PLACE CITY: FORT WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: PIER 1 INC DATE OF NAME CHANGE: 19860921 FORMER COMPANY: FORMER CONFORMED NAME: PIER 1 IMPORTS INC/GA DATE OF NAME CHANGE: 19840729 FORMER COMPANY: FORMER CONFORMED NAME: NEWCORP INC DATE OF NAME CHANGE: 19800423 SC 13D 1 sch_13d.txt AMENDMENT 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 1) PIER 1 IMPORTS, Inc. -------------------- (Name of Issuer) Common Stock, $1.00 Par Value Per Share --------------------------------------- (Title of Class of Securities) 720279108 -------------- (CUSIP Number) with copies to: Jon Scheving Thorsteinsson John M. Reiss, Esq. David M. Barbash, Esq. Arev Gregory Pryor, Esq. Danika M. Haueisen, Esq. Bankastraeti 5 White & Case LLP Nixon Peabody LLP 101 Reykjavik 1155 Avenue of the Americas 437 Madison Avenue Republic of Iceland New York, NY 10036 New York, NY 10022 +44 7843 462247 (212) 819-8247 (212) 940-3121 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 20, 2006 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. ================================================================================ SCHEDULE 13D CUSIP No. 720279108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Jakup a Dul Jacobsen I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO (see Item 3) - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Denmark - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED 0 BY EACH REPORTING ------------------------------------------------------ PERSON WITH 8 SHARED VOTING POWER 8,594,200(1) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 8,594,200(1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,594,200(1) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.90% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- (1) Jakup a Dul Jacobsen may be deemed to be the beneficial owner of the shares of common stock of Pier 1 Imports, Inc. reported herein by Lagerinn ehf through his direct ownership of Lagerinn ehf. See Item 3. 2 SCHEDULE 13D CUSIP No. 720279108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Lagerinn ehf I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC, BK, OO (see Item 3) - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Republic of Iceland - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED 0 BY EACH REPORTING ------------------------------------------------------ PERSON WITH 8 SHARED VOTING POWER 8,594,200(1) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 8,594,200(1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,594,200(1) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.90% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- (1) Lagerinn ehf may be deemed to be the beneficial owner of the shares of common stock of Pier 1 Imports, Inc. through its direct ownership of certain shares of common stock and certain arrangements with Kaupthing Bank hf. See Item 3. 3 SCHEDULE 13D CUSIP No. 720279108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Kaupthing Bank hf. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC (see Item 3) - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Republic of Iceland - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED 0 BY EACH REPORTING ------------------------------------------------------ PERSON WITH 8 SHARED VOTING POWER 4,251,800(1) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 4,251,800(1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,251,800(1) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.90% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON BK - ------------------------------------------------------------------------------- (1) Kaupthing Bank hf. may be deemed to be the beneficial owner of the shares of common stock of Pier 1 Imports, Inc. through arrangements with Lagerinn ehf. Kaupthing Bank hf. hereby disclaims beneficial ownership of the shares of common stock of Pier 1 Imports, Inc. held by Lagerinn ehf other than pursuant to such arrangements. See Item 3. 4 The statement on Schedule 13D filed on February 6, 2006 (the "Schedule 13D"), relating to the common stock, $1.00 par value per share (the "Common Stock"), of Pier 1 Imports, Inc., a Delaware corporation (the "Issuer"), is hereby amended as set forth below by this Amendment No. 1 to the Schedule 13D. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Schedule 13D. ITEM 4. PURPOSE OF TRANSACTION Item 4 of the Schedule 13D is hereby amended and restated as follows: The acquisition of the Shares by the Reporting Persons is for investment purposes. On March 20, 2006, Palli Limited, a wholly owned subsidiary of Lagerinn, purchased all of the shares of The Pier Retail Group, Ltd., and its subsidiaries ("The Pier"), a subsidiary of the Issuer for GBP 1 pound sterling. In connection with such purchase, the Issuer assigned to Palli Limited various intercompany debts owing to the Issuer from The Pier for GBP 8,540,195, subject to a post-closing working capital adjustment, if any. The Pier consists of over 45 stores and concessions located in the United Kingdom and Ireland. The foregoing summary of The Pier transaction is qualified in its entirety by reference to the Purchase and Sale Agreement, a copy of which is filed as Exhibit F to this Statement. Lagerinn intends to monitor the Company's business, trading performance, operating results, financial position and prospects and may modify its plans in the future. In its capacity as a shareholder, Lagerinn has contacted and held discussions with members of the Company's management and may contact the Company's board of directors or management again in the future. Depending on market conditions, their continuing evaluation of the business and prospects of the Issuer and other factors, the Reporting Persons may dispose of or acquire additional securities of the Issuer. Except as otherwise described herein or as expressly stated below, no Reporting Person, and to the best knowledge of the Reporting Persons, none of the persons set forth on Schedule A, has any present plan or proposal that relates to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer; (d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; 5 (g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) Any action similar to any of those enumerated above. ITEM 6. CONTRACTS, AGREEMENTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The information set forth, or incorporated by reference, in Item 3 and Item 4 is hereby incorporated by this reference in this Item 6. Other than as described in this Statement, to the best knowledge of the Reporting Persons there are no contracts, arrangements, understandings or relationships among the Reporting Persons or the persons set forth on Schedule A, and between any such persons and any other person, with respect to any securities of the Issuer, including but not limited to, transfer and voting of any of the securities of the Issuer, joint ventures, loan or option arrangements, put or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies or a pledge or contingency the occurrence of which would give another person voting power or investment power over the securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Item 7 of the Schedule 13D is supplemented as follows: Exhibit No. Description - ----------- ------------------------------------------------------------------ A Agreement among Jacobsen, Lagerinn and Kaupthing, dated February 6, 2006 to file this Statement jointly on behalf of each of them.* B Agreement Concerning Swap Agreement On Equity, dated October 31, 2005 by and between Kaupthing and Lagerinn.* C Agreement Concern ing Swap Agreement On Equity, dated November 13, 2005 by and between Kaupthing and Lagerinn.* D Agreement Concerning Swap Agreement On Equity, dated December 9, 2005 by and between Kaupthing and Lagerinn.* E Committed Revolving Credit Facility, dated February 6, 2006 between Lagerinn and Landsbanki.* 6 F Sale and Purchase Agreement, dated March 20, 2006, by and among PIR Trading, Inc., Pier 1 Imports (U.S.), Inc., Palli Limited and Lagerinn ehf. * Previously filed with the Securities and Exchange Commission on February 6, 2006 as an exhibit to the Schedule 13D. 7 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: March 22, 2006 JAKUP A DUL JACOBSEN /s/ Jakup a Dul Jacobsen ----------------------------------------- LAGERINN EHF /s/ Sigurdur Berntsson ----------------------------------------- Name: Sigurdur Berntsson Title: Chief Financial Officer 8 KAUPTHING BANK HF. /s/ Hannes Frimann Hrolfsson ----------------------------------------- Name: Hannes Frimann Hrolfsson Title: Head of FX and Derivatives Sales Treasury of Kaupthing Bank Iceland /s/ Bjork Thorarinsdottir ----------------------------------------- Name: Bjork Thorarinsdottir Title: Deputy Managing Director Corporate Banking Treasury of Kaupthing Bank Iceland 9 EX-99.F 2 exh99_f.txt PURCHASE AND SALE AGREEMENT DATED 20 MARCH 2006 - -------------------------------------------------------------------------------- PIR TRADING, INC. (1) and PIER 1 IMPORTS (U.S.), INC. (2) and PALLI LIMITED (3) and LAGERINN EHF (4) --------------------------------------------------------------- AGREEMENT for the sale and purchase of the entire issued share capital of The Pier Retail Group Limited --------------------------------------------------------------- HEATONS LLP MANCHESTER Tel: 0161 835 8010 Fax: 0161 835 8015 LAG3.1 CONTENTS 1 DEFINITIONS AND INTERPRETATION............................................1 2 SALE AND PURCHASE OF THE SHARES AND ASSIGNMENT OF INTERCOMPANY DEBT.........................................................6 3 CONSIDERATION.............................................................7 4 COMPLETION................................................................7 5 2006 AUDITED ACCOUNTS....................................................10 6 WARRANTIES...............................................................10 7 LIMITATION OF DEBT SELLER'S LIABILITY AND SELLER'S LIABILITY.............12 8 PURCHASER'S AND PURCHASER'S GUARANTOR'S WARRANTIES AND PURCHASER'S GUARANTEE....................................................16 9 RESTRICTIVE COVENANTS....................................................17 10 ANNOUNCEMENTS AND CONFIDENTIALITY........................................18 11 FURTHER ASSURANCE........................................................19 12 ASSIGNMENT...............................................................20 13 ENTIRE AGREEMENT.........................................................20 14 WAIVER, RIGHTS AND RELEASE...............................................20 15 VARIATION................................................................21 16 COSTS AND EXPENSES.......................................................21 17 SET OFF..................................................................21 18 NOTICES..................................................................21 19 COUNTERPARTS, LANGUAGE, INVALIDITY, COMPLETION...........................22 20 THIRD PARTY RIGHTS.......................................................22 21 GOVERNING LAW AND JURISDICTION...........................................23 SCHEDULES 1. The Group................................................................24 2. Properties...............................................................28 3. Registered Intellectual Property Rights..................................37 4. The Warranties...........................................................38 5. Completion Requirements..................................................49 AGREED FORM DOCUMENTS 1. Accounts (included in the Disclosure Letter) 2. 2006 Financial Statements 3. Co-existence Agreement 4. Deed of Assignment 5. Deed of Release 6. Debt Confirmation Deed 7. Index of Data Room Documents 8. Tax Deed 9. Director's resignation letter 10. Press Release 11. Cover page of bundle to the Disclosure Letter THIS AGREEMENT is dated 2006 BETWEEN: (1) PIR TRADING, INC. whose principal place of trading is at 100 Pier 1 Place, Fort Worth, Texas 76102, United States of America (the "Seller"); (2) PIER 1 IMPORTS (U.S.), INC. whose principal place of trading is at 100 Pier 1 Place, Fort Worth, Texas 76102, United States of America (the "Debt Seller"); (3) PALLI LIMITED (U.K. Id No.) whose registered office is at 4th Floor, 43-44 New Bond Street, London W1S 2SA (the "Purchaser"); and (4) LAGERINN EHF (Icelandic, Id No.) whose registered office is situated at Sundaborg 7, 104 Reykjavik, Iceland (the "Purchaser's Guarantor"). BACKGROUND (A) The Company has an authorised share capital of(pound)8,731,111 made up of 611,111 ordinary shares of(pound)1 each and 8,120,000 preference shares of(pound)1 each, all of which are issued and fully paid or credited as fully paid (the "Shares"). (B) Further particulars of the Company and its Subsidiaries at the date of this Agreement are set out in Schedule 1. (C) The Seller has agreed to sell the Shares to the Purchaser and the Purchaser has agreed to purchase the Shares on the terms of this Agreement. (D) The Debt Seller has agreed to sell the Intercompany Debt to the Purchaser and the Purchaser has agreed to purchase the Intercompany Debt on the terms of this Agreement. (E) The Purchaser's Guarantor is willing to guarantee the obligations of the Purchaser under this Agreement and the other Transaction Documents. IT IS AGREED AS FOLLOWS: 1 DEFINITIONS AND INTERPRETATION 1.1 In this Agreement the following words and expressions shall have the following meaning: "2006 Audited Accounts" has the meaning set out in clause 5.2; "2006 Financial Statements" means the draft financial statements of the Company as at 25 February 2006 in the Agreed Form; "Accounts" the audited consolidated balance sheet of the Group as at the Accounts Date and the audited consolidated profit and loss account for the year ended on that date for the Group including the notes and directors' report relating to them, a copy of which is included in the Disclosure Documents; "Accounts Date" 26.02.05; "Accounting Standards" statements of standard accounting practice (including financial reporting standards) adopted or issued by the ASB; "Agreement" this Agreement including its recitals and the schedules but not the Tax Deed; "Agreed Form" agreed and initialled by, or on behalf of, the Seller and the Purchaser; "ASB" The Accounting Standards Board; "Auditors" Ernst & Young LLP, Apex Plaza, Reading, Berkshire RG1 1YE; "Business Day" any day except a Saturday or Sunday on which banks are generally open in London, New York and Fort Worth for normal business; "Co-existence Agreement" the agreement of the same date as this Agreement concerning brand co-existence in the Agreed Form; "Company" The Pier Retail Group Limited a company incorporated and registered in England and Wales with company number 2650000 whose registered office is at 9-12 North Central 127 Milton Park, Abingdon, Oxfordshire, OX14 4SA; "Completion" completion of the sale and purchase of the Shares and assignment of the Intercompany Debt pursuant to this Agreement; "Completion Date" the date of this Agreement; "Concession Properties" means those properties the subject of concession agreements as briefly described in Part 2 of Schedule 2; "Data Room Documents" the documents and information made available to the Purchaser and/or its advisers in the data room provided by IntraLinks prior to the signing of this Agreement as referred to in the data room index in the Agreed Form, which is annexed to the Disclosure Letter; 2 "Debt Confirmation Deed" the debt confirmation deed in the Agreed Form between the Debt Seller and certain of the Group Companies; "Deed of Assignment" the deed of assignment in relation to the Intercompany Debt, in the Agreed Form; "Deed of Release" the deed of release between the Debt Seller and certain of the Group Companies in the Agreed Form; "Directors" the directors named in Schedule 1; "Disclosed" fairly disclosed to the Purchaser in any of the Disclosure Documents; "Disclosure Documents" the Disclosure Letter (including the two identical bundles of documents collated by or on behalf of the Seller, the outside covers of each of which have been signed for identification by or on behalf of the Seller and the Purchaser) and the Data Room Documents; "Disclosure Letter" the letter of the same date as this Agreement from the Seller to the Purchaser; "Encumbrance" any (other than by virtue of this Agreement) right to acquire, option, right of pre-emption, mortgage, charge, pledge, lien, or other form of security or encumbrance or security agreement and any agreement to create any of the foregoing; "GAAP" generally accepted accounting principles and practices in the United Kingdom including all Accounting Standards, Financial Reporting Standards and abstracts of the Urgent Issues Task Force of the ASB; "Group" together the Company and the Subsidiaries and "Group Company" shall be a reference to the Company or any of the Subsidiaries as the case may be; "Indebtedness" in relation to the Group, all borrowings and indebtedness in the nature of debt but excluding trade creditors arising in the ordinary course of business and off balance sheet finance arrangements, lease purchase arrangement, contract hire and/or hire purchase arrangements; "Intellectual Property has the meaning given in paragraph 21 of Rights" Part 1 of Schedule 4; "Intercompany Debt" the amount stipulated in the Deed of Assignment owing by the Company to the Debt Seller immediately prior to Completion being the aggregate amount of all 3 Indebtedness of whatever nature owing by the Group Companies to the Debt Seller, immediately prior to Completion; "Intercompany Debt the Provisional Intercompany Debt Consideration" Consideration after adjustment (if any) pursuant to clause 5; "Pension Schemes" agreements for the payment of any pensions, allowances, lump sums or other like benefits on retirement for the benefit of any present or former director, officer or employee of the Group or for the benefit of the dependents of any such persons; "Prohibited Area" the United Kingdom; "Properties" has the meaning given in paragraph 13 of Part 1 of Schedule 4; "Provisional Cash the sum of (pound)8,540,196 payable in cash Consideration" on Completion pursuant to clause 3; "Provisional Intercompany GBP 8,540,195; Debt Consideration" "Purchaser's Group" the Purchaser, all its subsidiary undertakings and parent undertakings and all the other subsidiary undertakings of each of its parent undertakings (other than the Group Companies) at the relevant time; "Purchaser's Solicitors" Heatons LLP of Freetrade Exchange, 37 Peter Street, Manchester, M2 5GB; "Seller's Group" Pier 1 Imports, Inc. and all its subsidiary undertakings (other than the Group Companies) at the relevant time; "Seller's Solicitors" Allen & Overy LLP of One New Change, London, EC4M 9QQ; "Subsidiary" a subsidiary of the Company details of which are set out in Part 2 of Schedule 1 and "Subsidiaries" shall be construed accordingly; "Tax" (a) all forms of taxation and statutory, governmental, state, federal, provincial, local government or municipal charges, duties, imposts, contributions, levies, withholdings or liabilities in each case having the character of taxation wherever chargeable and whether of the UK or any other jurisdiction; and (b) any penalty, fine, surcharge, interest, charges or costs payable in connection with any taxation within (a) above; 4 "Tax Authority" HM Revenue & Customs, Department of Social Security and any other governmental or other authority whatsoever competent to impose any Tax whether in the United Kingdom or elsewhere; "Tax Deed" the deed of the same date as this Agreement, containing certain taxation covenants given by the Seller in the Agreed Form; "Tax Statute" any directive, statute, enactment, law or regulation, wheresoever enacted or issued, coming into force or entered into providing for or imposing any Tax (and shall include orders, regulations, instruments, bye-laws or other subordinate legislation made under the relevant statute or statutory provision, and any directive, statute, enactment, law, order, regulation or provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same) except to the extent that any such directive, statute, enactment, law, regulation, order, instrument, bye-law, subordinate legislation or provision made or enacted after the date of this Agreement would create or increase any liability of the Seller under this Agreement or the Tax Deed; "Tax Warranties" the Warranties set out in Part 2 of Schedule 4; "Transaction Documents" this Agreement, the Tax Deed, the Deed of Assignment, and the Co-existence Agreement; "UK Companies" together The Pier Retail Group Limited, The Pier (Retail) Limited and Pier Direct Limited (and "UK Company" shall be a reference to any of them as the case may be); "Warranties" the warranties set out in clause 6.1 and Schedule 4; "Warranty Claim" a claim by the Purchaser the basis of which is that a Warranty is, or is alleged to be, untrue or inaccurate; "Working Capital Reference GBP 4,689,000. Amount" 1.2 The terms "holding company" and "subsidiary" shall have the meaning given to them in sections 736 and 736A of the CA 85. 1.3 The following references shall have the following meanings: "CA 85" means the Companies Act 1985; "CAA" means the Capital Allowances Act 2001;"FSMA 2000" means the Financial Services and Markets Act 2000; "LPA" means Law of Property (Miscellaneous Provisions) Act 1994; "TA 88" means Income and Corporation Taxes 5 Act 1988; "TCGA" means Taxation of Chargeable Gains Act 1992; "TMA" means Taxes Management Act 1970; "VAT" means Value Added Tax; "VATA" means Value Added Tax Act 1994. 1.4 "Control" in relation to a body corporate, means the power of a person to secure that the affairs of the body corporate are conducted in accordance with the wishes of that person (a) by means of the holding of shares, or the possession of voting power, in or in relation to that or any other body corporate or (b) by virtue of any powers conferred by the constitutional or corporate documents, or any other document, regulating that or any other body corporate. A "Change of Control" occurs if a person who Controls any body corporate ceases to do so or if another person acquires Control of it. 1.5 The table of contents and headings in this Agreement are inserted for convenience only and shall not affect its construction. 1.6 Expressions in the singular shall include the plural and references to any gender shall include all other genders. 1.7 References to persons shall include bodies corporate, unincorporated associations and partnerships. 1.8 References to the word "include" or "including" are to be construed without limitation. 1.9 Except where the context otherwise requires, references to recitals, schedules and clauses are to recitals and schedules to and clauses of this Agreement. Except where the context otherwise requires, references within a schedule to paragraphs are to paragraphs of that schedule. 1.10 References in this Agreement to any statute, statutory provision, EC Directive or treaty include a reference to that statute, statutory provision, EC Directive or treaty as amended, extended, consolidated or replaced from time to time (whether before or after the date of this Agreement) (and includes any subordinate legislation made under the relevant statute, statutory provision, EC Directive or treaty) except to the extent that any statute, statutory provision, EC Directive, treaty or subordinate legislation made, enacted, amended, extended, consolidated or replaced after the date of this Agreement would create or increase any liability of the Seller or the Debt Seller under this Agreement or the Tax Deed. 1.11 Any reference to writing or written includes faxes and any non-transitory form of visible reproduction or words (but not e-mail). 2 SALE AND PURCHASE OF THE SHARES AND ASSIGNMENT OF INTERCOMPANY DEBT 2.1 The Seller shall sell the Shares and the Purchaser shall purchase the Shares from the Seller with all rights attaching to them at the date of this Agreement. 2.2 The Shares are sold to the Purchaser with full title guarantee as defined in the LPA. 2.3 Title to and beneficial ownership of the Shares shall pass to the Purchaser on Completion. The Purchaser shall be entitled to receive all dividends and distributions declared, paid or made by the Company on or after the date of this Agreement. 6 2.4 The Purchaser shall not be obliged to complete the purchase of any of the Shares unless the purchase of all of the Shares is completed simultaneously. 2.5 The Seller waives any rights of pre-emption or other restrictions on transfer in respect of the Shares or any of them conferred on it under the articles of association of the Company or otherwise. 2.6 The Debt Seller shall assign to the Purchaser the benefit of the Intercompany Debt and the Purchaser shall accept the assignment of the Intercompany Debt at Completion pursuant to the Deed of Assignment. 2.7 Without prejudice to the rights of any member of the Seller's Group under any of the Transaction Documents, the Deed of Release and/or the Debt Confirmation Deed, the Seller on behalf of itself and each other member of the Seller's Group waives all and any claims against each Group Company which any member of the Seller's Group may have of whatsoever nature and which arose prior to the date of this Agreement. 3 CONSIDERATION 3.1 The consideration for the Shares shall be the sum of(pound)1 to be paid to the Seller in cash on Completion. 3.2 The consideration for the assignment of the Intercompany Debt shall be the Intercompany Debt Consideration of which the Provisional Intercompany Debt Consideration shall be paid by the Purchaser to the Debt Seller in accordance with clause 3.3.1. 3.3 The Intercompany Debt Consideration shall be paid by the Purchaser to the Debt Seller as follows: 3.3.1 (pound)8,540,195, being the Provisional Intercompany Debt Consideration, shall be paid in cash on Completion; and 3.3.2 that amount shall be subject to adjustment in accordance with clause 5. 4 COMPLETION 4.1 Completion shall take place at the Seller's Solicitors' offices immediately after the execution and exchange on the Completion Date. 4.2 At Completion: 4.2.1 the Seller shall comply with and perform all of its obligations listed in Schedule 5; 4.2.2 the Purchaser shall:- 4.2.2.1 pay the Provisional Cash Consideration by way of electronic transfer to the Seller's Solicitors who are irrevocably authorised to receive the same and whose receipt shall be an effective discharge of the Purchaser's obligation to pay such sum and the Purchaser shall not be concerned to see to the application or be answerable for the loss or misapplication of such sum; 7 4.2.2.2 deliver to the Seller a copy of the minutes of a meeting of the directors of the Purchaser authorising the execution by the Purchaser of this Agreement, the Tax Deed, the Deed of Assignment and the Co-existence Agreement and a copy of the minutes of the meeting of the directors of the Purchaser's Guarantor authorising the execution by the Purchaser's Guarantor of this Agreement; 4.2.2.3 deliver to the Seller a counterpart of the Tax Deed duly executed as a deed by the Purchaser; 4.2.2.4 deliver to the Seller a counterpart of the Deed of Assignment duly executed by the Purchaser; 4.2.2.5 deliver to the Seller a counterpart of the Co-existence Agreement duly executed by the Purchaser; and 4.2.2.6 deliver to the Seller a counterpart of the Disclosure Letter duly executed by the Purchaser. 4.3 If on Completion the Seller or the Purchaser fails to comply with any of its obligations under clause 4.2.1 or 4.2.2 (as applicable) then the other shall not be obliged to complete this Agreement and may at its absolute discretion:- 4.3.1 defer Completion to a date not more than 28 days after the Completion Date in which case this clause 4.3 shall apply to Completion as so deferred; 4.3.2 proceed to Completion so far as practicable and without prejudice to its rights under the Agreement; or 4.3.3 waive all or any of the defaulting party's obligations under clause 4.2.1 or 4.2.2 (as applicable). 4.4 The Seller shall procure that on Completion each Group Company is released from all guarantees and indemnities given by that Group Company prior to the date of this Agreement in respect of any liability or obligation of any member of the Seller's Group and pending such release the Seller shall indemnify that Group Company against all liabilities under the guarantees and indemnities. 4.5 The Purchaser shall procure that as from Completion each member of the Seller's Group is released from all guarantees and indemnities which have been given by that member prior to the date of this Agreement in respect of any liability or obligation of any Group Company, and pending such release the Purchaser shall indemnify that member of the Seller's Group against all liabilities under those guarantees and indemnities. 4.6 Immediately following Completion the Seller shall, without delay send to the Purchaser, all records, correspondence, documents, files, memoranda and other papers owned by any Group Company which are in the Seller's possession or direct control relating to the Group or operations of the Group which are not kept at any of the Properties, provided that the Seller shall be entitled to retain copies of any records, documentation and information which the Seller would be entitled to request in accordance with the provisions of Clause 11.2. 8 4.7 Within 10 days following Completion, the Seller will pay to the Purchaser: 4.7.1 the amount of any payments due to be paid (before any deductions) to Alison Richards, John Higgins, Fiona Robinson and Fiona Strang (together, the "Bonus Employees") (being employees within the Group) by the Seller within 30 days of Completion in accordance with the bonus letter agreements between the Seller and each of the Bonus Employees dated 13 March 2006 and referred to in the Disclosure Letter (the "Payments"); and 4.7.2 the amount of secondary Class I National Insurance contributions for which the relevant Group Company employing each Bonus Employee will be liable as a result of the Payments (the "Secondary NICs"). 4.8 The Purchaser: 4.8.1 within 10 days following receipt of payment from the Seller under clause 4.7, will discharge the Seller's liability to the Bonus Employees in respect of the Payments, as agent of the Seller; and 4.8.2 will procure the payment to the relevant tax authority within the required time period for the Payments (in the case of the amounts referred to in sub-clause 4.8.2.1 as agent of the Seller), of the amount of: 4.8.2.1 any income tax to be deducted under the PAYE system (and the amount of any primary Class 1 National Insurance contributions payable) in respect of the Payments; and 4.8.2.2 the Secondary NICs. 4.9 For the avoidance of doubt, the Seller will have no further liability under this Agreement and/or the Tax Deed or otherwise for any income tax to be deducted under the PAYE system, primary Class 1 National Insurance contributions or secondary Class 1 National Insurance contributions due in respect of the Payments. 4.10 The Seller agrees to indemnify the Purchaser (for itself and as trustee for each Group Company) from and against any liability, claim, loss or cost (reasonably and properly incurred) arising out of the exercise of any options granted by Pier 1 Imports, Inc. prior to the date of this Agreement to any employee of any of the Group Companies over any shares in Pier 1 Imports, Inc. provided that: 4.10.1 the Purchaser shall (and shall procure that the Group Companies) use their reasonable endeavours following the exercise of any such options to mitigate any such liability, claim, loss or cost; 4.10.2 this indemnity shall not apply to the extent of any income tax under the PAYE system and primary Class I National Insurance contributions in respect of the exercise of any such option; and 4.10.3 no liability shall attach to the Seller under this clause 4.10 to the extent that the same loss has been recovered under any other provision of this Agreement or the Tax Deed (or vice versa) and accordingly, the Purchaser shall only recover once in respect of the same loss. 9 5 2006 AUDITED ACCOUNTS 5.1 As soon possible after Completion, the Purchaser shall procure that: 5.1.1 the Company instructs the Auditors to undertake the audit of the 2006 Financial Statements applying the specific accounting principles, policies and practices applied in the preparation of the Accounts on a basis consistent with the audit of the Accounts; and 5.1.2 following completion of the audit, the board of directors of the Company shall approve the resulting accounts as the statutory accounts of the Company as at 25 February 2006 and that any two directors of the Company sign such accounts. 5.2 The accounts of the Company prepared and signed in accordance with clause 5.1 shall, once the Auditors have signed their audit report on such accounts, be the "2006 Audited Accounts" and the amount set out in the consolidated balance sheet included in those accounts as Net Current Assets as at 25 February 2006 shall be the "Working Capital Amount". 5.3 The Purchaser shall send a copy of the 2006 Audited Accounts to the Seller within five Business Days of the audit report on those accounts being signed in accordance with clause 5.2. 5.4 If the Working Capital Amount is greater than the Working Capital Reference Amount, the Purchaser shall pay an amount equal to that excess to the Debt Seller as an adjustment to the Provisional Intercompany Debt Consideration. If the Working Capital Amount is less than the Working Capital Reference Amount, the Debt Seller shall repay an amount equal to that shortfall to the Purchaser as an adjustment to the Provisional Intercompany Debt Consideration. 5.5 Any amount payable by the Debt Seller or the Purchaser (as applicable) in accordance with the provisions of clause 5.4 shall (a) in the case of any amount to be paid by the Purchaser, be paid within 10 Business Days after the date on which the audit report on the 2006 Audited Accounts is signed, and (b) in the case of any amount to be repaid by the Debt Seller, be paid within 10 Business Days following receipt by the Debt Seller of a copy of the 2006 Audited Accounts from the Purchaser. 5.6 In the case of any amount payable in accordance with the provisions of clause 5.5, any payment shall be made by the relevant party to the other party's solicitors (being, the Purchaser's Solicitors or the Seller's Solicitors, as applicable) who are irrevocably authorised to receive the same and whose receipt shall be an effective discharge of (as applicable) the Debt Seller's or the Purchaser's obligation to pay such amount. Any such amount shall be paid by electronic transfer in immediately available funds. 6 WARRANTIES 6.1 The Seller warrants to the Purchaser that except as Disclosed each of the statements set out in Schedule 4 is true and accurate. The Purchaser has entered into this Agreement and the Deed of Assignment upon the basis of and in reliance upon the Warranties. 6.2 Without prejudice to Clause 13.3 the Purchaser acknowledges and agrees that: 10 6.2.1 the Warranties are the only representations, warranties or other assurances of any kind given by or on behalf of the Seller and on which the Purchaser may rely in entering into this Agreement; 6.2.2 no other statement, promise or forecast made by or on behalf of the Seller may form the basis of, or be pleaded in connection with, any claim by the Purchaser under or in connection with this Agreement; and 6.2.3 it does not have at the date of this Agreement actual knowledge of any fact which is inconsistent with any of the Warranties or makes any of them untrue or inaccurate. 6.3 Clause 6.1 shall apply as if: 6.3.1 none of the Warranties, other than those set out in sub-paragraphs 3.5, 8.1 and paragraphs 13 and 15 of Schedule 4, relate in any way to the Properties or any of them; 6.3.2 none of the Warranties, other those that set out in sub-paragraphs 3.5 and 8.1, paragraph 15 and the Tax Warranties set out in Part 2 of Schedule 4, relate in any way to Tax; and 6.3.3 none of the Warranties, other than those set out in sub-paragraphs 3.5, 8.1 and paragraph 21 of Schedule 4, relate in any way to any Intellectual Property Right or any agreement or other arrangement in connection with any Intellectual Property Right. 6.4 Where any of the Warranties is made or given "so far as the Seller is aware" or "to the best of the Seller's knowledge, information or belief" or any similar expression, such Warranty shall be construed to refer to the actual knowledge of the Seller after making careful enquiry of Alison Richards and John Higgins and no other person. 6.5 The Seller agrees, in the absence of fraud, dishonesty or wilful concealment by or on behalf any Group Company or any of its employees or directors, to waive any and all rights or claims which it might otherwise have in respect of any misrepresentation, inaccuracy or omission in or from any information or advice supplied by any Group Company or its officers, employees or agents in connection with the giving of Warranties, the Tax Deed and/or the preparation of the Disclosure Letter and the Data Room Documents. 6.6 Each of the Warranties shall be separate and independent and save as expressly otherwise provided shall not be limited by reference to any other Warranty or by anything in this Agreement or the Tax Deed. 6.7 The rights of the Purchaser in respect of a breach of any of the Warranties shall not be affected by Completion. 6.8 Notwithstanding any of the other provisions of this Agreement the Warranties and any Warranty Claim shall be subject to the limitations and other provisions set out in clause 7. 6.9 Any payment made by the Seller in satisfaction of a Warranty Claim or in satisfaction of a claim by the Purchaser under the Tax Deed shall be deemed to be a reduction in the 11 Intercompany Debt Consideration. 7 LIMITATION OF DEBT SELLER'S LIABILITY AND SELLER'S LIABILITY 7.1 Notwithstanding any of the other provisions of this Agreement or the Tax Deed, the liability of the Seller in respect of claims under the Warranties or a claim under the Tax Deed shall be limited according to the provisions of this clause. 7.2 If the Purchaser or any Group Company becomes aware of a matter or circumstance which is likely to give rise to a Warranty Claim, the Purchaser shall give notice to the Seller specifying that matter or circumstance in reasonable detail (including, without limitation, the Purchaser's estimate, on a without prejudice basis, of the amount of such claim) as soon as reasonably practicable after it or the relevant Group Company (as the case may be) becomes aware of that matter or circumstance. The Seller shall not be liable for any losses in respect of a Warranty Claim to the extent that they are increased, or are not reduced, as a result of any failure by the Purchaser to give notice as contemplated by this paragraph. 7.3 The Seller shall not be liable under the Warranties to the extent that: 7.3.1 the facts which might result in a Warranty Claim or possible Warranty Claim were Disclosed; 7.3.2 the subject of the Warranty Claim is allowed or provided for or reserved or otherwise taken into account in the Accounts or the 2006 Audited Accounts or has been included in calculating creditors or deducted in calculating debtors in the Accounts or the 2006 Audited Accounts or to the extent such matter was specifically referred to in the notes to the Accounts or the 2006 Audited Balance Sheet; 7.3.3 the loss has been recovered under the Tax Deed; or 7.3.4 a Warranty Claim arises or is increased: 7.3.4.1 wholly or partly from a voluntary act or omission of any member of the Purchaser's Group after Completion which (a) is not in the ordinary course of business, (b) could reasonably have been avoided, and (c) which the Purchaser or any Group Company was aware would be likely to give rise to a Warranty Claim; or 7.3.4.2 wholly or partly from an act or omission compelled by law; or 7.3.4.3 as a result of any increase in rates of Tax since the Completion Date; or 7.3.4.4 wholly or partly as a result of the passing or coming into force of or any change in any enactment, law, regulation, directive or requirement or any practice of any government, government department or agency or regulatory body (including extra-statutory concessions of HM Revenue & Customs) after the Completion Date whether or not having retrospective effect; or 12 7.3.4.5 wholly or partly from any change after Completion of the date to which any Group Company makes up its accounts or in the bases, methods, principles or policies of accounting of any Group Company; or 7.3.4.6 wholly or partly from any failure or omission by any Group Company to make any valid claim, election, surrender or disclaimer, to give any valid notice or consent or to do any other thing under the provisions of any enactment or regulation relating to Tax after Completion, the making, giving or doing of which was taken into account in computing the provisions for Tax in the Accounts or in the 2006 Audited Accounts; or 7.3.4.7 any claim, election, surrender or disclaimer made or notice or consent given after Completion by any Group Company or any member of the Purchaser's Group under the provisions of any enactment or regulation relating to Tax other than any claim, election, surrender, disclaimer, notice or consent assumed to have been made, given or done in computing the amount of any allowance, provision or reserve in the Accounts or the 2006 Audited Accounts or which is made at the prior request of the Seller pursuant to its rights under the Tax Deed; or 7.3.4.8 wholly or partly from a cessation, or any change in the nature or conduct, of any trade carried on by any Group Company at Completion, being a cessation or change occurring on or after Completion. 7.4 The Seller shall not be liable in respect of any Warranty Claim or claim under the Tax Deed unless the amount of damages or payment to which the Purchaser would, but for this subparagraph, be entitled as a result of the Warranty Claim or such claim is at least(pound)2,000. 7.5 If more than one Warranty Claim or claim under the Tax Deed arises from, or is caused by, the same or substantially the same matter, matters, circumstance or circumstances, those Warranty Claims or claims shall be aggregated for the purposes of subparagraph 7.4. 7.6 The liability of the Seller in respect of any Warranty Claim or a claim under the Tax Deed shall not arise unless the amount of the Seller's liability in respect of such Warranty Claim or a claim under the Tax Deed when aggregated with the amount of the Seller's liability in respect of any other such Warranty Claim and/or a claim under the Tax Deed made against the Seller exceeds (pound)200,000 in which event the whole amount of the Seller's liability in respect of such Warranty Claim(s) or claim(s) under the Tax Deed (and not just the excess) shall be recoverable subject to the other terms of this Agreement and/or the Tax Deed. 7.7 The liability of the Seller in respect of all Warranty Claims and claims under the Tax Deed shall not when taken together exceed (pound)4,000,000. 7.8 The liability of the Seller in respect of any Warranty Claim other than under the Tax Warranties shall cease six months after Completion and the liability of the Seller in respect of any claim under the Tax Warranties or any claim under the Tax Deed shall 13 cease on the sixth anniversary of Completion except in respect of any Warranty Claim of which notice is given to the Seller as contemplated by clause 7.2 or in respect of a claim under the Tax Deed of which notice is given to the Seller as contemplated by clause 8.1 of the Tax Deed (in each case before the relevant date). The liability of the Seller in respect of any Warranty Claim shall terminate if proceedings in respect of it have not been commenced within six months after the giving of notice of that Warranty Claim as contemplated by clause 7.2 unless that Warranty Claim arises as a result of, or in connection with, a Third Party Claim (as defined in clause 7.10) and the Seller shall have assumed conduct of that Third Party Claim in accordance with clause 7.10. The liability of the Seller in respect of any claim under the Tax Deed shall terminate if proceedings in respect of it have not been commenced within six months after the giving of notice of that claim as contemplated by clause 8.1 of the Tax Deed unless the Seller shall have assumed conduct of the claim as contemplated by clause 8.3 of the Tax Deed. 7.9 Nothing in clauses 7.4 to 7.8 (inclusive), applies to a Warranty Claim that arises as a result of fraud by the Seller (which has been judicially determined) in respect of the negotiation and preparation of this Agreement, the Tax Deed, the Deed of Assignment, the Disclosure Letter and/or the Data Room Documents. 7.10 If a Warranty Claim arises as a result of, or in connection with, a liability or alleged liability of a Group Company to a third party (a "Third Party Claim"), then (without prejudice to the provisions of the Tax Deed in relation to any matter which is the subject of a claim under it) the Seller may, at any time before any final compromise or agreement, or expert determination or non-appealable decision of a court or tribunal of competent jurisdiction, is made in respect of the Third Party Claim or the Third Party Claim is otherwise disposed of, give notice to the Purchaser that it elects to assume the conduct of any dispute, compromise, defence or appeal of the Third Party Claim and of any incidental negotiations on the following terms: 7.10.1 the Seller shall indemnify the Purchaser and each relevant Group Company to the Purchaser's reasonable satisfaction against all liabilities, charges, costs and expenses which they may incur in taking any such action as the Seller may request pursuant to subparagraphs 7.10.2 and 7.10.3 below; 7.10.2 the Purchaser shall procure that each relevant Group Company at the cost of the Seller makes available to the Seller on reasonable notice and at reasonable times such persons and all such information as the Seller may reasonably request for assessing, contesting, disputing, defending, appealing or compromising the Third Party Claim; 7.10.3 the Purchaser shall procure that each relevant Group Company takes such action to assess, contest, dispute, defend, appeal or compromise the Third Party Claim as the Seller may request and does not make any admission of liability, agreement, settlement or compromise in relation to the Third Party Claim without the prior written approval of the Seller save where to do so would materially prejudice the commercial interests of the Purchaser's Group; 7.10.4 the Seller shall keep the Purchaser informed of the progress of the Third Party Claim and provide the Purchaser with copies of all material documents and such other information in its possession as may be requested by the Purchaser (acting reasonably); and 14 7.10.5 the Purchaser will be free to pay or settle any Third Party Claims on such terms as the Purchaser reasonably considers appropriate (subject to the other provisions of this clause 7) in the event that the Seller fails to comply in any material respect with the provisions of clauses 7.10.1, 7.10.2 and 7.10.4. 7.11 If a Warranty Claim arises as a result of, or in connection with, a Third Party Claim, the Purchaser shall, until the earlier of such time as the Seller shall give any notice as contemplated by clause 7.10 and such time as any final compromise or agreement, or expert determination or non-appealable decision of a court or tribunal of competent jurisdiction, is made in respect of the Third Party Claim or the Third Party Claim is otherwise finally disposed of, keep, or procure that each relevant Group Company keeps, the Seller promptly informed of the progress of the Third Party Claim and provide, or procure that each relevant Group Company provides, the Seller with copies of all relevant documents and such other information in the Purchaser's or a Group Company's possession as may be requested by the Seller. 7.12 Nothing in clauses 7.10 or 7.11 shall require the provision by any person of any information to the extent such provision would contravene any applicable law or regulation or would breach any duty of confidentiality owed to any third party. If any information is provided by any person (the "Provider") to any other person (the "Recipient") pursuant to either of those clauses: 7.12.1 that information shall only be used by the Recipient in connection with the Third Party Claim and clause 10 of this Agreement shall in all other respects apply to that information; and 7.12.2 to the extent that information is privileged: 7.12.2.1 no privilege shall be waived by reason of or as a result of its being provided to the Recipient; and 7.12.2.2 if a third party requests disclosure by the Recipient in relation to that information, if the Recipient is the Seller or the Purchaser, the Recipient shall or, if the Recipient is a Group Company, the Purchaser shall procure that the Recipient shall, promptly notify the Provider and, to the extent it can do so, itself assert privilege in opposition to that disclosure request. 7.13 Nothing in this Agreement shall be deemed to relieve the Purchaser from any common law duty to mitigate any loss or damage incurred by it as a result of any of the Warranties being untrue or inaccurate. 7.14 No liability shall attach to the Seller in respect of a Warranty Claim to the extent that the same loss has been recovered by the Purchaser under any other terms of this Agreement, the Tax Deed or any other document entered into pursuant to this Agreement and accordingly the Purchaser may only recover once in respect of the same loss. 7.15 If the matter or circumstance giving rise to a Warranty Claim is capable of remedy, the Seller shall have no liability in respect of that Warranty Claim if the relevant matter or circumstance is remedied within 30 days after the date on which the Seller is given notice as contemplated by clause 7.2 in relation to that matter or circumstance. The 15 Purchaser shall procure that the Seller is given the opportunity in that 30 day period to remedy the relevant matter or circumstance and shall, without prejudice to clause 7.11, provide, and shall procure that each relevant Group Company shall provide, all reasonable assistance to the Seller to remedy the relevant matter or circumstance. 7.16 Without prejudice to the Purchaser's duty to mitigate any loss in respect of any of the Warranties being untrue or inaccurate, if in respect of any matter which would otherwise give rise to a Warranty Claim, any of the Group Companies is entitled to claim under any policy of insurance the Purchaser shall procure that it shall use its reasonable endeavours to pursue such recovery right and the amount of any insurance monies received by that Group Company shall reduce pro tanto or extinguish that Warranty Claim provided always that the Purchaser shall be under no obligation to recover from its insurers prior to recovery from the Seller in respect of any such Warranty Claim. 7.17 If the Seller shall make any payment to the Purchaser in relation to any Warranty Claim and the Purchaser (or any Group Company) subsequently receives from a third party (other than a Group Company) any amount referable to the subject matter of the Warranty Claim, the Purchaser shall, once it or any Group Company has received such amount, repay (after deducting the reasonable costs and expenses of the Purchaser or any Group Company reasonably incurred in recovering such amount and any Tax payable on it) to the Seller the lesser of: 7.17.1 a sum equal to such amount; and 7.17.2 the amount previously paid by the Seller to the Purchaser in respect of such Warranty Claim. 7.18 The Debt Seller shall have no liability under the Warranties or the Tax Deed. 8 PURCHASER'S AND PURCHASER'S GUARANTOR'S WARRANTIES AND PURCHASER'S GUARANTEE 8.1 Each of the Purchaser and the Purchaser's Guarantor warrants to the Seller and the Debt Seller that: 8.1.1 it has the power to execute and deliver this Agreement, and each of the other Transaction Documents to which it is or will be a party, and to perform its obligations under each of them and has taken all performance action necessary to authorise such execution and delivery and the of such obligations; 8.1.2 this Agreement constitutes, and each of the other Transaction Documents to which it is or will be a party will, when executed, constitute legal, valid and binding obligations of the Purchaser and the Purchaser's Guarantor, as the case may be, in accordance with its terms; 8.1.3 the execution and delivery by the Purchaser or the Purchaser's Guarantor, as the case may be of this Agreement and of each of the other Transaction Documents to which it is or will be a party and the performance of the obligations of the Purchaser or the Purchaser's Guarantor, as the case may be, under it and each of them do not and will not conflict with or constitute a default under any provision of: 16 8.1.3.1 any agreement or instrument to which the Purchaser or the Purchaser's Guarantor is a party; or 8.1.3.2 the constitutional documents of the Purchaser or the Purchaser's Guarantor; or 8.1.3.3 any law, lien, lease, order, judgment, award, injunction, decree, ordinance or regulation or any other restriction of any kind or character by which the Purchaser or the Purchaser's Guarantor is bound. 8.2 The Purchaser's Guarantor as primary obligator unconditionally and irrevocably guarantees by way of continuing guarantee to each of the Seller and of the Debt Seller the payment and performance when due of amounts payable by and obligations of the Purchaser under any of this Agreement and the other Transaction Documents. 8.3 The Purchaser's Guarantor's obligation under this clause: 8.3.1 constitute direct, primary and unconditional obligations to pay on demand by the Seller or the Debt Seller (as applicable) any sum which the Purchaser is liable to pay under this Agreement or any of the other Transaction Documents and to perform on demand any obligations of the Purchaser under this Agreement or any of the other Transaction Documents without requiring the Seller or the Debt Seller (as applicable) first to take steps against the Purchaser or any other person; and 8.3.2 shall not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation: 8.3.2.1 any time or indulgence granted to, or composition with, the Purchaser or any other person; or 8.3.2.2 the taking, variation, renewal or release of, or refusal or neglect to perfect or enforce any right, remedy or security against the Purchaser or any other person; or 8.3.2.3 any legal limitation, disability or other circumstance relating to the Purchaser or any unenforceability or invalidity of any obligation of the Purchaser under this Agreement or any other Transaction Document. 9 RESTRICTIVE COVENANTS 9.1 As further consideration for the Purchaser agreeing to purchase the Shares on the terms contained in this Agreement and with the intent of assuring to the Purchaser the full benefit and value of the goodwill and connections of the business of the Group, the Seller covenants with the Purchaser, that it shall not, and shall procure that each member of the Seller's Group shall not, without the prior written consent of the Purchaser:- 9.1.1 for 18 months after Completion, carry on, or be concerned or interested in any way within the Prohibited Area in any retail business which is in any 17 way in competition with the business of the Group as carried on at the date of this Agreement; or 9.1.2 save in response to an unsolicited request from any such person or in response to a bona fide recruitment advertisement, for 18 months after Completion offer employment to or offer to conclude any contract of services with an employee of a Group Company holding an executive or managerial post or entice or endeavour to entice any such employee toterminate his/her employment with a Group Company provided always that this clause 9.1.2 shall only apply in relation to persons who were employed by a Group Company at Completion and who were still so employed immediately prior to the relevant breach of this clause 9.1.2. 9.2 Each undertaking contained in this clause 9.1 shall be read and construed independently of the other undertakings and shall be an entirely separate and severable undertaking. 9.3 Clause 9.1 shall not prevent the Seller or any member of the Seller's Group from holding for investment purposes only any units of an authorised unit trust and/or up to 29.9% of any class of the issued share or loan capital of any company traded on a recognised investment exchange (as defined in the FSMA 2000). 9.4 The covenants in this clause apply to actions carried out by the Seller in any capacity and whether directly or indirectly, or jointly with any other person or corporate entity. 9.5 Nothing in this clause 9 shall prohibit the Seller or any other member of the Seller's Group from (a) carrying on any business via its website at www.pier1.com or any other website permitted under the Co-existence Agreement (or otherwise responding to or satisfying any customer order not solicited from within the United Kingdom) or (b) from acquiring within the Prohibited Area any goods intended for use or sale in the business of any member of the Seller's Group carried on from outside the Prohibited Area. 9.6 Whilst the undertakings in clause 9.1 are considered by the parties to be reasonable in all the circumstances, if any one or more should for any reason be held to be invalid but would have been held to be valid if part of the wording was deleted, then the above undertakings shall apply with the minimum modifications necessary to make them valid and effective. 9.7 Notwithstanding any of the other provisions of this clause 9, clause 9.1 shall cease to apply if there shall be a Change of Control of Pier 1 Imports, Inc. or if Pier 1 Imports, Inc. should be a party to any merger or any form of business contribution. 10 ANNOUNCEMENTS AND CONFIDENTIALITY 10.1 Subject to clause 10.3 and except as required by law or by any legal or regulatory authority, no announcements, circulars or other communications concerning the transactions referred to in this Agreement or any ancillary matter shall be made unless in a form agreed between the Seller and the Purchaser. 10.2 Subject to clause 10.3 each party shall (without limit in time) keep and procure the confidentiality of all information belonging to the other party which it has obtained as a result of the negotiations leading to and the entering into of this Agreement and shall 18 not directly or indirectly reveal, report, publish, disclose or transfer or use information belonging to the other party for its own or any other purposes. 10.3 The restrictions on announcements, circulars and other communications and obligations of confidentiality in this clause 10 shall not apply where the information is in the public domain other than as a result of a breach of the obligations of confidentiality under this clause 10 or to the extent that any disclosure of information:- 10.3.1 is expressly permitted by this Agreement or the Tax Deed or required for the proper performance of this Agreement or the Tax Deed (or the enforcement or defence of any claim under this Agreement or the Tax Deed); or 10.3.2 is made with the prior consent in writing of the party to whose affairs such information relates; or 10.3.3 is made: 10.3.3.1 in compliance with any requirement of law; 10.3.3.2 in compliance with a requirement (regardless of the timing of that requirement) of the New York Stock Exchange and/or the US Securities and Exchange Commission; 10.3.3.3 in a Form 8-K, 10-Q, 10-K, a proxy statement, or notice of annual meeting of shareholders filed by Pier 1 Imports, Inc. or a Schedule 13D or an amendment thereto filed by the Purchaser's Guarantor or any of its shareholders or affiliates to report or disclose the Completion of the transactions contemplated by this Agreement pursuant to applicable United States federal securities laws; 10.3.3.4 in compliance with any applicable regulatory authority to which the party is subject; or 10.3.3.5 in order to obtain tax or other clearances or consents from the HM Revenue & Customs or other relevant taxing or regulatory authorities. 10.4 The restrictions contained in this clause 10 shall continue to apply after Completion without limit in time. 10.5 Press releases of each of the Seller and the Purchaser in the Agreed Form relating to the transaction which is the subject of this Agreement have been agreed between the Seller and the Purchaser upon the execution and exchange of this Agreement, for issue following Completion. 11 FURTHER ASSURANCE 11.1 Each of the Purchaser and the Seller will (at its own expense) promptly execute and deliver all such documents, and do all such things, as the other may from time to time 19 reasonably require for the purpose of giving full effect to the provisions of this Agreement, the Tax Deed and the Deed of Assignment. 11.2 Notwithstanding any other provision of this Agreement, following Completion the Purchaser shall provide as soon as practicable and shall procure that each of the Group Companies provide as soon as practicable, copies of such records, information and documentation relating to the administration, business and/or operations of the Group Companies prior to Completion as may reasonably be requested by the Seller or any other member of the Seller's Group in connection with any matters relating to the operation or administration of the Seller's Group including, but not limited to, tax, accounting, legal, regulatory or any other matters. Furthermore, the Purchaser undertakes to and to procure that each of the Group Companies retain all such records, information and documentation and not to destroy any of them without the prior consent of the Seller (such consent not to be unreasonably withheld or delayed). 11.3 The Purchaser undertakes that it will procure that each Group Company will not become insolvent, stop payment of or be unable to pay its debts within the meaning of the Insolvency Act 1986 or otherwise cease to carry on business as a going concern, for at least one year following the date of the signing of the audit opinion in respect of the 2006 Audited Accounts (as contemplated by clause 5.2). 12 ASSIGNMENT No party, may assign the benefit of its rights under this Agreement, the Tax Deed or the Deed of Assignment whether absolutely or by way of security or deal in any way with any interest it has under this Agreement, the Tax Deed or the Deed of Assignment without the prior written consent of the Seller and the Purchaser. 13 ENTIRE AGREEMENT 13.1 This Agreement together with the Transaction Documents constitute the whole and only agreement between the parties relating to the transactions contemplated by the Transaction Documents and supersede and extinguish any drafts, agreements, undertakings, representations, warranties and arrangements of any nature whatsoever, made before the entering into of this Agreement whether or not in writing, between any of the parties. 13.2 Each party acknowledges that in agreeing to enter into this Agreement and the other Transaction Documents it has not relied on any representation, warranty, collateral contract or other assurance (except those repeated in this Agreement) made by or on behalf of any other party before the entering into of this Agreement. Each party waives all rights and remedies which, but for this subclause, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance. 13.3 Nothing in this Agreement or in any other Transaction Document shall be read or construed as excluding any liability or remedy as a result of fraud. 14 WAIVER, RIGHTS AND RELEASE 14.1 Any waiver of any right, power or remedy under this Agreement or the Tax Deed must 20 be in writing and will only apply to the person to whom the waiver is addressed and for the circumstances for which it is given. 14.2 Subject to any express limitation in this Agreement or the Tax Deed, no failure to exercise or delay in exercising any right or remedy provided under this Agreement or the Tax Deed constitutes a waiver of such right or remedy or will prevent any future exercise in whole or in part thereof. 14.3 Subject to any express limitation in this Agreement or the Tax Deed, no single or partial exercise of any right or remedy under this Agreement or the Tax Deed shall preclude or restrict the further exercise of any such right or remedy. 15 VARIATION No variation to this Agreement or the Tax Deed shall be of any effect unless it is agreed in writing and signed by the Seller and the Purchaser. 16 COSTS AND EXPENSES Save as otherwise stated in this Agreement or the Tax Deed, each party shall pay its own costs and expenses in relation to the negotiation, preparation, execution and carrying into effect of this Agreement and the other Transaction Documents. 17 SET OFF All payments to be made under this Agreement and/or the Tax Deed shall be made in full without any set-off or counterclaim and free from any deduction or withholding save as may be required by law. 18 NOTICES 18.1 All notices given under this Agreement or the Tax Deed shall, unless expressly provided otherwise, be in writing. Notices shall either be delivered by hand or sent by first class pre-paid post or by airmail (if overseas) or sent by fax. Delivery by courier shall be regarded as delivery by hand. 18.2 Notices shall be sent to the address or the fax number set out below and shall be marked for the attention of the relevant person named in clause 18.4 below. 18.3 Any notice to be given under this Agreement or the Tax Deed shall be deemed to have been properly given if it is given in accordance with this clause 18. 18.4 The addresses for service of notice are:- Seller and/or the Debt Seller - address as set on page 1 of this Agreement, fax number 001 817 334 0191. For the attention of the Group Counsel's Office, with a copy to Allen & Overy LLP, One New Change London EC4M 9QQ, fax number: 0207 330 9999. For the attention of: Ian Stanley. Purchaser and/or the Purchaser's Guarantor - C/O Lagerinn ehf, Sundaborg 7, 104 Reykjavik, fax number: +354-533-1082 . For the attention of Sigurour Berntsson. 21 Or, in each case, at such other address or to such other fax number or personnel as may be notified to the other parties in writing in accordance with this clause. 18.5 A notice under this Agreement or the Tax Deed shall be deemed to have been served: 18.5.1 if delivered by hand in accordance with this clause at the time of delivery; 18.5.2 if sent by first class pre-paid post in accordance with this clause two clear Business Days after the time of posting or, if sent by airmail in accordance with this clause, five clear Business Days after such time; 18.5.3 if sent by fax to the number referred to in clause 18.4, at the time of completion of transmission by the sender. If a notice is deemed delivered outside normal business hours (being 9.30am to 5.30pm on a Business Day) under the preceding provisions of this clause then it shall be deemed to have been delivered at 9.30am on the next Business Day. 18.6 In proving service, it shall be sufficient to show that delivery by hand was made or that the envelope containing the communication was properly addressed and posted as a first class pre-paid letter (or, if overseas, by airmail) or that the fax was despatched and a confirmatory report received, in each case in accordance with this clause. 19 COUNTERPARTS, LANGUAGE, INVALIDITY, COMPLETION 19.1 This Agreement and the Tax Deed may be executed in any number of counterparts and by any of the parties on different counterparts, but shall not be effective until each party has executed at least one counterpart. Each counterpart shall constitute an original of this Agreement (or the Tax Deed, as the case may be) but all the counterparts shall together constitute one and the same Agreement (or the Tax Deed as the case may be). 19.2 This Agreement is written in the English language, which shall prevail in the event of any translation. 19.3 Each of the provisions of this Agreement and the Tax Deed is severable. If any provision is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, the legality, validity or enforceability in that jurisdiction of the remaining provisions of this Agreement (or the Tax Deed, as the case may be) shall not in any way be affected or impaired thereby. 19.4 This Agreement together with the other Transaction Documents shall, to the extent that they remain to be performed, continue in full force and effect notwithstanding Completion. 20 THIRD PARTY RIGHTS The terms of each of this Agreement, the Tax Deed and the Deed of Assignment may only be enforced by the parties to each such document and no person who is not such a party may enforce any of the terms of that document under the Contracts (Rights of Third Parties) Act 1999. 22 21 GOVERNING LAW AND JURISDICTION 21.1 This Agreement and the Tax Deed shall be governed by and construed in accordance with English law. 21.2 This Agreement and the Tax Deed shall be subject to the exclusive jurisdiction of the Courts of England and Wales. AS WITNESS the hands of the parties or their duly authorised representatives on the date first appearing at the head of this Agreement. 23 SCHEDULE 1 THE GROUP PART 1 THE COMPANY Place and Date of Incorporation: United Kingdom 30.09.1991 Registered Number: [U.K. Id No.] Registered Address: 9-12 North Central 127, Milton Park, Abingdon, Oxfordshire, OX14 4SA Authorised Share Capital: (pound)8,731,111 divided into 611,111 ordinary shares and 8,120,000 preference shares, all of(pound)1 each Issued Share Capital: (pound)8,731,111 divided into 611,111 ordinary shares and 8,120,000 preference shares, all of(pound)1 each Directors: Michael Arthur Carter Marvin James Girouard Alison Hazel Richards Charles Hawthorne Turner IV Secretary: John Francis Higgins Auditors: Ernst & Young LLP Bankers: HSBC Bank plc Accounting Reference Date: 26 February 24 PART 2 THE SUBSIDIARIES The Pier (Retail) Limited Place and Date of Incorporation: United Kingdom 13.09.1988 Registered Number: [U.K. Id No.] Registered Address: 9-12 North Central 127, Milton Park, Abingdon, Oxfordshire, OX14 4SA Authorised Share Capital: (pound)400,000 divided into 400,000 ordinary shares of(pound)1 each Issued Share Capital: (pound)200,000 divided into 200,000 ordinary shares of(pound)1 each Directors: Michael Arthur Carter Marvin James Girouard Alison Hazel Richards Charles Hawthorne Turner IV John Francis Higgins Secretary: John Francis Higgins Auditors: Ernst & Young LLP Bankers: HSBC Bank plc Accounting Reference Date: 26 February 25 PART 2 THE SUBSIDIARIES Pier Direct Limited Place and Date of Incorporation: United Kingdom 07.04.1992 Registered Number: [U.K. Id No.] Registered Address: 9-12 North Central 127, Milton Park, Abingdon, Oxfordshire, OX14 4SA Authorised Share Capital: (pound)1,000 divided into 1,000 ordinary shares of(pound)1 each Issued Share Capital: (pound)2 divided into 2 ordinary shares of(pound)1 each Directors: Michael Arthur Carter Marvin James Girouard Alison Hazel Richards Charles Hawthorne Turner IV Secretary: John Francis Higgins Auditors: N/A Bankers: N/A Accounting Reference Date: 01 March 26 PART 2 THE SUBSIDIARIES The Pier (Retail) Ireland Limited Place and Date of Incorporation: Republic of Ireland 04.11.2003 Registered Number: [Irish Id No.] Registered Address: 2 Harbourmaster Place, International Financial Services Centre, Dublin 1, Ireland Authorised Share Capital: (euro)1,000 divided into 1,000 ordinary shares of(euro)1 each Issued Share Capital: (euro)1,000 divided into 1,000 ordinary shares of(euro)1 each Directors: Michael Arthur Carter Marvin James Girouard Alison Hazel Richards Charles Hawthorne Turner IV Secretary: John Francis Higgins Auditors: Ernst & Young LLP Bankers: HSBC Bank plc Accounting Reference Date: 26 February 27 SCHEDULE 2 PART 1 PROPERTIES
CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 1.Ground Floor and basement 23 April 1992 25 March 2002 (pound)349,500 Novoquote Ltd (1) 20 years (less 5 200 and 203 Tottenham The Pier (Retail) days) from 25 Court Road, Limited (2) March 1992 London W1T 7PL 2.Unit C, Broadway Corner, Only Agreement for 24 June 2002 (pound)125,000 Parties to the Bromley, Kent BR1 1LW lease provided with Agreement for Lease: form of agreed lease (1) Scottish Mutual attached. Assurance Plc (2) The Pier (Retail) Ltd (3) The Pier Retail Group Ltd (Surety) and dated 27 March 1997 3.Units S2 and S3 18 April 1997 1 August 2002 (pound)169,750 The Norwich Union Life 25 years from 1 The Bentall Centre Insurance Society August 1992 Kingston upon Thames (1) The Pier (Retail) KT1 1TR Limited (2) The Pier Retail Group Limited (3) (Surety) 4.Unit UG16 and Unit UG17 25 November 1997 1 March 2003 (pound)113,000 The Norwich Union Life 25 years from together with Storage and Pensions Ltd 1 March 1993 Area B8 The Galleries, (1) The Pier (Retail) Bristol BS4 7SL Ltd (2) The Pier Retail Group Limited (Surety)
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CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 5.The premises intended to 24 August 1993 24 June 2003 (pound)118,000 Royal Life Insurance 24 June 1993 - be known as Unit MS5 on Ltd 28 September 2012 the lower and middle (1) The Pier (Retail) levels of the Pavilions Ltd (2) The Pier Shopping Centre, High St. Retail Group Ltd Birmingham (Surety) 6.Ground Floor 91-95 and 4 October 1993 4 October 2003 (pound)332,500 Pearl Assurance PLC 20 years from 4 85-95 basement Kings Road, (1) The Pier (Retail) October 1993 Chelsea, London SW3 Ltd (2) The Pier Retail Group Ltd (3) (Surety) 7.The Ground Floor of no.'s 7 April 1994 (pound)87,500 Hanningtons Ltd 20 years from 29 16 and 17 and parts of (1) The Pier (Retail) September 1993 the first and second Ltd (2) floors of no.'s 16,17, (NB A referee's 17A, 18 and 19 North St. award has just Brighton, East Sussex increased the rent to (pound)130,000) 8.Unit Numbers MSU1 and 11 October 1995 25 December (pound)193,000 Record hold Ltd (1) 25 year from 25 MSU2 and stock unit No. 2005 The Pier (Retail) Ltd December 1993 MSU2 of the Queens Arcade (2) The Pier Retail Cardiff Group Ltd (3) (Surety) 9.6a Tunsgate Square, 11 September 1995 29 September (pound)90,000 Lynton Plc (1) The 20 years from Guildford GU1 3QZ 2000 Pier (Retail) Ltd (2) 11 September 1995 10.Unit 218, Centre Court 14 August 1986 24 June 2000 (pound)92,095 The Standard Life 15 years from Shopping Centre, Assurance Company (1) 24 June 1995 Wimbledon, London The Pier (Retail) Ltd SW19 8YA (2)
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CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 11.18-19 together with the 19 January 1996 29 September (pound)84,600 The Prudential 15 years from basement and sub- 2000 Assurance Company Ltd 25 December 1995 basement of 20, The (1) The Pier (Retail) Arcade, Bournemouth, Ltd (2) Dorset BH1 2AF 12.Basement Ground and 1st Registered 3 May 14 November (pound)325,000 The Scottish Life 24 November 1995 to floor of 147 Buchanan 1996 2003 Assurance Co. (1) The 23 November 2020 Street, Glasgow G1 2JX Pier (Retail) Ltd (2) continuing on a month by month basis thereafter until terminated by 1 month's prior notice) 13.Unit 10, Ground, 1st and Registered 5 October (pound)118,568.72 Jarlaw the Academy Ltd 15 years from 2 June 2nd floors of The 1998 (1) The Pier (Retail) 1998 to 1 June 2013 Academy, Belmont Street, Ltd (2) Aberdeen AB10 1LB 14.Unit 76, 77, 78 and 78a, 20 November 2003 3 August 2003 (pound)200,000 The Trafford Centre 2 August 2003 to The Trafford Centre, (in addition Ltd (1) The Pier 2 August 2018 Manchester M17 8AR (pound)10,200 is (Retail) Ltd (2) paid quarterly on account of estimated urnover) 15.2, 3, 4 and 5 Theatre 13 August 1998 (pound)89,904 Britel Fund Trustees 13 August 1998 to Walk, The Headrow Ltd (1) The Pier 12 August 2013 Shopping Centre, The (Retail) Ltd (2) Headrow, Leeds West Yorkshire LS1 6JE 16.Unit 87 (239-240) The 13 December 1999 24 June 2003 (pound)150,000 Dusco (UK) Ltd (1) 15 years and One Victoria Centre, The Pier (Retail) Ltd quarter from 24 June Nottingham NG1 8QT (2) 1998 16.A Storage Unit 284 13 December 1999 24 June 2003 (pound)5,000 Dusco (UK) Ltd (1) 15 years and One Victoria Centre The Pier (Retail) Ltd quarter from 24 June Nottingham NG1 8QT (2) 1998
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CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 17.EVU006 Upper Level, 14 May 1999 (pound)178,450.52 Blueco Ltd (1) The 15 years from Wintergarden, Bluewater, (in addition Pier (Retail) Ltd (2) 25 December 1998 Stone DA9 9SF (pound)3,718 is paid quarterly on account of estimated turnover) 18.Unit Lower Ground Level 2 April 2001 (pound)200,000 Oracle Shopping Centre 15 years from & Riverside Level Ltd (1) Oracle 24 June 1999 Holybrook Walk, The Nominees Ltd (2) The Oracle, Reading, Pier (Retail) Ltd (3) Berkshire RG1 2AQ The Pier Retail Group Ltd (4) (Surety) 18A Storage Reading Unit 2 April 2001 (pound)1,960 Oracle Shopping Centre Expires 23 June 2014 for Unit L30 at Ltd (1) Oracle Nominees Riverside level in the Ltd (2) The Pier Oracle (Retail) Ltd (3) The Pier Retail Group Ltd (4) (Surety) 19. Level 1 & 2 Eldon 6 November 2000 (pound)50,000 Capital and Regional 15 years expiring Gardens Shopping Retail (Northern) Ltd 28 September 2015 Centre, Percy Street, (1) The Pier (Retail) Newcastle Upon Tyne, Ltd (2) Tyne & Wear NE1 7RA 20.19-25 Pepper Row and 24 March 2000 (pound)115,000 The Equitable Life 15 years from Paddock Row, Grosvenor Assurance Society (1) 25 December 1999 Shopping Centre, (NB rent review The Pier (Retail) Ltd Chester CH1 1EA just been (2) The Pier Retail agreed at Group Ltd (3) has (pound)140,000) (Surety) 20.A Unit 17 Paddock Row 14 August 2003 (pound)45,000 Mall Nominee One Ltd The lease is co- Grosvenor Shopping and Mall Nominee Two terminous with the Centre, Chester Ltd (1) The Pier lease of 19-25 (Retail) Ltd (2) The Pepper Road Pier Retail Group Ltd (3)
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CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 21.Unit 3 104 George Street, Registered (pound)150,000 Pearl (Castle St./ 15 years and 25-33 Castle Street 5 September 2001 George St.) Ltd. (1) Edinburgh EH2 3DF (NB A Calderbank The Pier (Retail) Ltd offer to (2) increase the rent to (pound)215,000 has just been agreed) 22.Unit 65/66 Festival 24 October 2003 N/A (pound)142,137 Grosvenor Basingstoke From 29 September Place, Upper Ground Properties Ltd and 2003 to 29 February Floor, Basingstoke, Grosvenor Basingstoke 2004 amended in a Hampshire RG21 7LJ Management Ltd (1) deed of The Pier (Retail) Ltd rectification 20 (2) April 2004 to 5 years from 1 March 2004 23.Unit U78B Upper Mall, 12 May 2004 N/A (pound)210,000 Chelsfield MH 10 years commencing Merry Hill Shopping Investments Ltd (1) 17 October 2003 Centre, Brierley Hill, The Pier (Retail) Ltd West Midlands DY5 1SS (2) The Pier Retail Group Ltd (3) (Surety) 24.Units 1 and 1a 29 September N/A (pound)105,000 Serput Nominee 11 Ltd 15 years ending 70 Queen's Road, Clifton, and Serput Nominee 12 28 September 2018 Bristol BS8 1QU 2003 Ltd (1) The Pier (Retail) Ltd (2) 24A (Storage, Clifton) Unit 10 January 1985 (pound)8,000 Johnsons Central Expires 13 February 2 Part Basement, 70 Retail Ltd (1) J 2008 Queens Road, Clifton, Hepworth & Son plc (2) Bristol B58 1QU
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CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 25.Unit LSU5 Centrale 15 November 2004 N/A (pound)160,000 St. Martin Property 15 years from Shopping Centre, Croydon, Investments Ltd (1) 23 September 2003 Surrey CR0 1TY The Pier (Retail) Ltd (2) Pier Retail Group Ltd (3) (Surety) 26.Unit 1.268/1.269 and 27 January 2005 N/A (pound)190,000 CSC Metrocentre Ltd 15 years and One Mezzanine 24 Redpath Way, (1) The Pier (Retail) quarter to 28 Metro Centre, Gateshead, Ltd (2) Pier Retail September 2019 Tyne & Wear NE11 9HX Group Ltd (3) (Surety) 27.Unit 3, 2-14 Fitzroy Undated N/A (pound)175,000 The Master or keeper 15 years plus Street, and fellows and broken quarter Cambridge CB1 1EW Scholars of Jesus expiring College Cambridge (1) 24 March 2020 The Pier (Retail) Ltd (2) 28.Unit 32, Fishergate Walk, 1 August 2005 N/A (pound)130,000 The Nominee One Ltd 10 years from The Mall, St George, and Mall Nominee Two 1 August 2005 Preston PR1 2TU Ltd (1) The Pier (Retail) Ltd (2) The Pier Retail Group Ltd (3) (Surety) 29.401 Chapelfield Plain, Agreement for N/A (pound)163,500 Parties to Agreement Chapelfield, Norwich lease dated for Lease: NR2 1SZ 19 August 2004 Lend Lease Norwich Ltd (1) The Chapelfield Partnership (2) The Pier (Retail) Ltd (3) 30.North 9, 10, 11 & 12 26 May 2005 N/A (pound)173,000 MEPC Milton Park Ltd 1 January 2005 to Central 127 Milton Park (1) The Pier (Retail) 23 June 2017 (9 and 11 First Floor, Ltd (2) 10 and 12 ground)
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CURRENT BASE RENT/RACK RENT EXCLUDING PAYMENTS IN RESPECT OF TURNOVER FOR DATE OF THE CURRENT CURRENT RENT TURNOVER PROPERTY DATE OF LEASE MEMORANDA PERIOD PARTIES TERM - --------------------------- -------------------- -------------- ----------------- ---------------------- -------------------- 31.Unit 170 12 July 2002 N/A (pound)525,000 MEPC Milton Park Ltd 15 years from Milton Park (1) The Pier (Retail) 24 June 2002 Abingdon Ltd (2) 32.Unit 173 Undated N/A (pound)310,200 Mastercase Service and Expiry Milton Park Distribution Ltd (1) 25 February 2008 Abingdon The Pier (Retail) Ltd (2) 33.Unit 167 (B) 18 August 2004 N/A (pound)12,800 MEPC Milton Park 24 June 2005 to 25 (West) Milton Park, Limited (1) The Pier December 2005 Abingdon (Retail) Ltd (2) 34.Unit 167 (B) 27 October 2005 N/A (pound)18,000 MEPC Milton Park No.1 1 July 2005 to 25 (East) Milton Park Ltd and MEPC Milton December 2005 Abingdon Park No.2 Ltd (1) The Pier (Retail) Ltd (2) 35.2nd floor 27 September 2005 N/A (pound)10,500 Joan M.Leasor (1) The 5 years from 27 Goodge Place Pier (Retail) Ltd (2) September 2005 London WIT 4SF
PART 2 - CONCESSION PROPERTIES CONCESSIONAIRE PROPERTY - -------------- --------------------------------------------------------------- Debenhams The Pier at Debenhams, 36 Prospect Street, Hull, East Yorkshire Debenhams The Pier at Debenhams Market Place, Romford, Essex Debenhams The Pier at Debenhams Market Street, Manchester Debenhams The Pier at Debenhams The Parade, Swindon, Wiltshire Debenhams The Pier at Debenhams Eastgate Centre, Basildon, Essex Debenhams The Pier at Debenhams 44-46 Palmerston Road, Southsea 34 CONCESSIONAIRE PROPERTY - -------------- --------------------------------------------------------------- Debenhams The Pier at Debenhams Queens Buildings, Southampton, Hampshire Debenhams The Pier at Debenhams 2 The Moor, Sheffield Debenhams The Pier at Debenhams The Potteries Shopping Centre, Lamb St. Hanley, Stoke on Trent Debenhams The Pier at Debenhams Clapham Junction, London Debenhams The Pier at Debenhams 334-348 Oxford St., London Debenhams The Pier at Debenhams Royal Parade, Plymouth, Devon Homebase The Pier at Homebase, Almonvale South Retail Park, Livingston, West Lothian Homebase The Pier at Homebase, Meols Cop Retail park, Meols Cop Road, Southport, Merseyside Roches The Pier at Roches, Blanchardstown Centre Blanchardstown, Dublin Roches The Pier at Roches, Henry Street, Dublin, Eire 35 SCHEDULE 3 REGISTERED INTELLECTUAL PROPERTY RIGHTS REGISTERED COUNTRY OF TRADE MARK CLASS(ES) NUMBER REGISTRATION FILING DATE - ---------- ------------- --------------- ----------------- ------------- PIER 20 1116416 UK 25.06.1979 THE PIER 16, 18, 20, 2016131B UK 31.03.1995 21, 24, 27, 28, 35, 36 THE PIER 20, 21, 24, 227496 IRELAND 10.04.2003 35 36 SCHEDULE 4 THE WARRANTIES PART 1 GENERAL WARRANTIES 1 Disclosure and Information 1.1 The information set out in Schedules 1 and 2 is true and accurate. 2 The Seller 2.1 Each of the Seller and the Debt Seller has full power to enter into and perform this Agreement and the other Transaction Documents to which each is a party. 2.2 This Agreement and the other Transaction Documents to which the Seller and the Debt Sellers are a party constitute (or will when executed constitute), valid, legal and binding obligations on the Seller and/or the Debt Seller (as the case may be) in accordance with their terms. 2.3 The Seller is the sole, legal and beneficial owner of the Shares and is entitled to sell and transfer the Shares to the Purchaser on the terms set out in this Agreement. 2.4 The Seller and the Debt Seller are not insolvent nor unable to pay their debts within the meaning of the Insolvency Act or any other analogous statute applicable to either of them in any other jurisdiction. 3 The Company 3.1 No Group Company: 3.1.1 holds or beneficially owns, or has agreed to acquire any shares, debentures or other securities of any other body corporate (whether incorporated in the United Kingdom or elsewhere) other than the Subsidiaries; 3.1.2 is or has agreed to become a member of any partnership, joint venture, consortium or other unincorporated association (other than a recognised trade association); 3.1.3 has a branch, place of business or substantial assets outside the United Kingdom and the Republic of Ireland or any permanent establishment (as that expression is defined in any relevant Order in Council made pursuant to section 788, TA 88) in any country outside the United Kingdom or the Republic of Ireland. 3.2 No Group Company has received written notice from any governmental or regulatory body that it is in violation of, or in default with respect to, any law or regulation where such violation or default would have a material adverse effect on the assets or financial position of the Group. 37 3.3 No Group Company carries on business under any name other than its corporate name or the "The Pier" or "Pier". 3.4 No Group Company has granted a power of attorney which remains in force. 3.5 So far as the Seller is aware, each Group Company is conducting and has at all material times within the five years prior to the date of this Agreement conducted its business in accordance with all applicable laws and regulations of the country in which it is incorporated and/or conducts business, excluding any breach of law or regulation which is or was not material in the context of the business of the Group. 4 INSOLVENCY 4.1 So far as the Seller is aware, no Group Company is insolvent nor unable to pay its debts within the meaning of the Insolvency Act 1986. 4.2 So far as the Seller is aware, no step has been taken to initiate any process by or under which: 4.2.1 some or all of the creditors of any Group Company accept, by agreement or in pursuance of a court order, an amount less than the sums owing to them in satisfaction of those sums with a view to preventing the dissolution of any Group Company; or 4.2.2 a person is appointed to manage the affairs, business and assets of any Group Company on behalf of the Company's creditors; or 4.2.3 the holder of a charge over any Group Company's assets is appointed to control the business and assets of such Group Company. 4.3 In relation to any Group Company: 4.3.1 no administrator has been appointed; 4.3.2 no documents have been filed with the court for the appointment of an administrator; and 4.3.3 no Group Company has received written notice of any intention to appoint an administrator in respect of that Group Company. 4.4 No Group Company has received written notice that any process has been initiated which would lead to the Company being dissolved and its assets being distributed among the relevant company's creditors, shareholders or other contributors. 5 THE SHARES 5.1 The Shares constitute the whole of the allotted and issued share capital of the Company and are fully paid. 5.2 The Shares and the issued shares of each Group Company are free from any Encumbrance. 5.3 No Group Company has at any time in the last five years: 38 5.3.1 repaid, redeemed or purchased (or agreed to repay, redeem or purchase) any of its own shares, or otherwise reduced (or agreed to reduce) its issued share capital or any class of it or capitalised (or agreed to capitalise) in the form of shares, debentures or other securities or in paying up any amounts unpaid on any shares, debentures or other securities, any profits or reserves of any class or description or passed (or agreed to pass) any resolution to do so; or 5.3.2 directly or indirectly provided any financial assistance for the purpose of the acquisition of shares in the Company or for the purpose of reducing or discharging any liability incurred in such an acquisition, pursuant to sections 155, CA 85. 5.4 No right has been granted to any person which remains outstanding to require any Group Company to issue any share capital and no Encumbrance has been created in favour of any person in respect of any unissued shares or other unissued securities of any Group Company. 5.5 No commitment has been given by any Group Company to create an Encumbrance in respect of the Shares or the issued shares of any of the Subsidiaries (or any unissued shares or other unissued securities of the Company or any of its Subsidiaries) or for any of them to issue any share capital and no person has claimed any rights in connection with any of those things where such claim remains outstanding. 6 SUBSIDIARIES 6.1 The Subsidiaries are the only subsidiaries of the Company. 6.2 The particulars of the Subsidiaries set out in Schedule 1 are true and accurate. 6.3 The Company and/or one of the Subsidiaries is the legal and beneficial owner of the shares in each of the Subsidiaries. 6.4 The shares in the Subsidiaries are free from all Encumbrances. 6.5 The issued shares of each of the Subsidiaries are fully paid up. 7 CONSTITUTIONAL AND CORPORATE DOCUMENTS 7.1 The copy of the memorandum and articles of association of the Company in the Disclosure Documents is true and complete. 7.2 Each Group Company has at all times carried on its business and affairs in all respects in accordance with its memorandum and articles of association. 7.3 So far as the Seller is aware, the Company has not received a written notice or allegation that any of the register of members or statutory books of the Company are incorrect or should be rectified. 8 ACCOUNTS 8.1 The Accounts: 8.1.1 have been prepared in accordance with the Companies Act and GAAP; and 39 8.1.2 show a true and fair view of the state of affairs of the Company at the Accounts Date and of the profit and losses of the Company for the financial period to which the Accounts relate. 8.2 The Accounts have been filed in accordance with the requirements of the Companies Act. 9 FINANCIAL AND OTHER RECORDS 9.1 No Group Company has received any written notice that any of the accounts, books, ledgers and other financial records of the Company have not been properly maintained or do not contain accurate records of all matters required to be entered in them by the Companies Act. 9.2 All such accounts, books, ledgers and records are in the possession or under the control of the Company or one of the Subsidiaries. 9.3 All material records and information recorded, stored, maintained, operated, or held by any means (including any electronic, mechanical or photographic process, whether computerised or not) which belong to the Company are under its control or the control of one of the Subsidiaries. 9.4 Details of the terms of all outstanding bank and other loan facilities made available to the Group Companies (excluding any trade credit arrangements in the ordinary course of the business of the Group) have been provided to the Purchaser in the Disclosure Documents. 9.5 No Group Company has any indebtedness owed to any bank or other financial institution which is outstanding at the date of this Agreement. 10 POSITION SINCE 25 FEBRUARY 2006 Since 25 February 2006, the Company: 10.1 has carried on its business in the ordinary course and as a going concern; 10.2 has not declared, made or paid any dividend and no loan capital of the Company has been repaid in whole or in part or has become due ; 10.3 has not made any change to the remuneration, terms of employment, emoluments or pension benefits of any present or former director, officer or employee of the Company who on the Accounts Date was entitled to remuneration in excess of (pound)75,000 per annum; 10.4 has not appointed or employed any additional director, officer or employee entitled to remuneration in excess of (pound)75,000; 10.5 has not entered into contracts involving capital expenditure in an amount exceeding(pound)80,000 in the aggregate other than in the ordinary course of business; 10.6 has not borrowed or raised any money or entered into any financial facility (except such borrowings from bankers as are within the amount of any overdraft facility which was available to the Company at 25 February 2006) or since 25 February 2006 40 received any notice from any banker that such banker wishes to renegotiate any overdraft facility available to the Company at 25 February 2006; and 10.7 has not made any change to its accounting reference date. 11 FINANCE 11.1 No guarantee, mortgage, charge, pledge, lien, assignment or other security agreement which is outstanding has been given by or entered into by the Company in respect of borrowings of the Company. 11.2 The total amount borrowed by the Company does not exceed any limitations on the borrowing powers contained: 11.2.1 in the memorandum and articles of association of the Company; or 11.2.2 in any debenture or other deed or document binding on the Company. 11.3 There are no debts owing to the Company other than debts that have arisen in the ordinary course of business. 11.4 So far as the Seller is aware, the Company has not given or entered into any guarantee, mortgage, charge, pledge, lien, assignment or other security agreement which is outstanding in respect of the indebtedness, or for the default in the performance of any obligation, of any person not being a Group Company. 11.5 So far as the Seller is aware, the Company is not subject to any arrangement for receipt or repayment of any grant, subsidy or financial assistance from any government department or other body. 12 TRANSACTIONS WITH THE SELLER, DIRECTORS AND CONNECTED PERSONS 12.1 Upon execution and exchange of the Debt Confirmation Deed, the Deed of Release and Deed of Assignment there will be no outstanding indebtedness between any Group Company and any member of the Seller's Group. 13 THE PROPERTIES 13.1 In this Agreement these definitions apply: "PREVIOUSLY-OWNED LAND AND BUILDINGS": land and/or buildings that has, at any time before the date of this Agreement, been owned (under whatever tenure) and/or occupied and/or used by the Company but is either no longer owned, occupied or used by the Company, or is owned, occupied or used by the Company but pursuant to a different lease, licence, transfer or conveyance. "PROPERTIES": the land and buildings short particulars of which are set out in Part 1 of Schedule 2 and Property means each and every one of them and any part or parts of them. 13.2 The Properties and the Concession Properties are the only land and buildings owned, used or occupied by any Group Company. The Sellers are not aware of any matter or circumstance which threatens the use and occupation of the Properties for their existing use which would be material in the context of the Group taken as a whole. 41 There are no material and current disputes with landlords in relation to non-compliance with the provisions of leases of the Properties. 13.3 There are no current arrears of rent and other sums due to the landlord under the leases of the Properties. 13.4 The information contained within Schedule 2 in relation to the current rents (but without in all cases completing rent review memoranda to document those rents) and rent review dates is true and accurate and not misleading. 13.5 So far as the Seller is aware the Company does not have any right of ownership, right of use, option, right of first refusal or contractual obligation to purchase, or any other legal or equitable right affecting any land and buildings other than the Properties and the Concession Properties. 13.6 So far as the Seller is aware neither the Company nor any company that is a Subsidiary has any actual or contingent liability in respect of Previously-owned Land and Buildings. 14 INSURANCE 14.1 Summary particulars of the insurance policies maintained by the Group (excluding any policies where the Group participates under a policy provided for the Seller's Group and the Group), as set out in the Disclosure Documents, are accurate in all material respects. 14.2 There are no outstanding claims under, or in respect of the validity of, any of the insurance policies which are material in the context of the business of the Group as a whole. 15 LITIGATION AND INVESTIGATIONS 15.1 So far as the Seller is aware, the Company is not engaged in any litigation, administrative, mediation or arbitration proceedings (except for debt collection in the normal course of business) which is material to the business of the Group. 15.2 The Seller has not received any written notice that the Company is the subject of any outstanding investigation, inquiry or enforcement proceedings by any governmental, administrative or regulatory body. 15.3 No such proceedings, investigation or inquiry as are mentioned in paragraph 15.1 or 15.2 have been notified to the Seller and the Seller is not aware of any circumstances likely to give rise to any such proceedings, investigation or inquiry. 16 CONTRACTS 16.1 In this Agreement this definition applies: "MATERIAL CONTRACT": an agreement to which the Company is a party or is bound by and which is of material importance to the business or profits of the Group other than any agreement relating to the Properties or the Concession Properties. 16.2 Except for the agreements and arrangements Disclosed, the Company is not a party to or subject to any agreement which: 42 16.2.1 is a Material Contract which is not in the ordinary course of business of the Company; or 16.2.2 is a Material Contract which may be terminated as a result of any Change of Control of the Company. 17 LICENCES AND CONSENTS 17.1 So far as the Seller is aware, each Group Company has all necessary licences, consents, permits and authorities necessary to carry on its business now carried on by it in the places and in the manner is which that business is now carried on, all of which are valid and subsisting. 17.2 So far as the Seller is aware, no Group Company has received written notice that it is at the date of this agreement materially in default under any licence, consent, permit or authority which is material to the business or operations of the Group. 18 CONSEQUENCE OF ACQUISITION OF SHARES BY PURCHASER The acquisition of the Shares by the Purchaser or compliance with the terms of this Agreement do not entitle anyone to receive from the Company any finder's fee, brokerage or other commission in connection with the purchase of the Shares by the Purchaser. 19 EMPLOYEES 19.1 In this Agreement these definitions apply: "EMPLOYEE": any person employed by a Group Company; "REPRESENTATIVE BODY" means any trade union or works council representing any workers of any Group Company; and trade union has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992; "WORKER": has the same meaning as in section 230 of the Employment Rights Act 1996. 19.2 The names of each person who is a Director of each of the Group Companies are set out in Schedule 1. 19.3 The Seller has Disclosed to the Purchaser the following particulars for each Employee: 19.3.1 their job title and department; 19.3.2 their base salary and summary details of any contractual benefits and privileges provided; 19.3.3 the commencement date of their contract and the date on which their continuous service began; 19.3.4 the type of contract (whether full or part-time or other). 19.4 All contracts of employment for all Employees are terminable on three months' notice or less by either the relevant Group Company or relevant Employee. 43 19.5 No Employees are currently on secondment, maternity, paternity or adoption leave. 19.6 No notice is outstanding to terminate the contract of employment of any Director (whether given by the Group Company or by the Director) and, so far as the Seller is aware, no material dispute is outstanding between: 19.6.1 any Group Company and a material number or category of its current or former Employees relating to their employment or its termination; or 19.6.2 the Company and a material number or category of any of its current or former Workers relating to their contract or its termination. 19.7 So far as the Seller is aware, the acquisition of the Shares by the Purchaser or compliance with the terms of this Agreement will not enable any Directors or senior Employees of any Group Company to terminate their employment or receive any payment or other benefit from any Group Company. 19.8 Except as Disclosed, so far as the Seller is aware, no Group Company is involved in any material industrial or trade dispute or negotiation regarding a claim with any Representative Body and is not aware of anything that would be likely to give rise to such a dispute or claim. 19.9 Particulars of all material workforce agreements reached under the Trade Union and Labour Relations (Consolidation) Act 1992 and all collective bargaining or procedural or other agreements or arrangements with any Representative Body that relate to any employees of any Group Company are contained in the Disclosure Letter. 19.10 No commitment has been given by any member of the Seller's Group in connection with the issue of any share capital in any Group Company to any Employee. 20 PENSION SCHEMES 20.1 The Disclosure Documents contain summary particulars of all Pension Schemes of each Group Company and no Group Company is under an obligation (legally binding or otherwise) to provide pensions, gratuities, superannuation allowance or other "relevant benefits" as defined in section 612(1) of the 1988 Taxes Act, to or for any past or present officer or employee of the Company or his dependants nor does it contribute to any scheme or arrangement for the provision of any other retirement, pension or death benefit except in respect of the Pension Schemes referred to in the Disclosure Documents. 21 INTELLECTUAL PROPERTY 21.1 In this Agreement this definition applies: "INTELLECTUAL PROPERTY RIGHTS": (i) copyright, patents, database rights and rights in trade marks, designs, know-how and confidential information (whether registered or unregistered), (ii) applications for registration, and rights to apply for registration, of any of the foregoing rights and (iii) all other intellectual property rights and equivalent or similar forms of protection existing anywhere in the world. 21.2 Particulars are set out in Schedule 3 of all registered Intellectual Property Rights (including applications for such rights) owned or used by the Company. 44 21.3 Pier 1 Licensing, Inc. is the registered proprietor of (or applicant for) the Intellectual Property Rights set out in Schedule 3 and has not granted any rights in respect thereof save for the licences dated 30 June 1997 and 13 January 1997. 21.4 The Company does not require any Intellectual Property Rights other than those identified in Schedule 3 in order to carry on its business as carried on at the date of this Agreement-. 21.5 In respect of the Intellectual Property Rights set out in Schedule 3: 21.5.1 all application and renewal fees required for the maintenance or protection of such rights have been paid; 21.5.2 so far as the Seller is aware, there are no claims, disputes or proceedings, pending or threatened, in relation to the ownership or use of such rights. 21.6 So far as the Seller is aware, there has been no, and is no current, material infringement by any third party of any Intellectual Property Rights set out in Schedule 3. 21.7 So far as the Seller is aware, the carrying on of the business of the Group as carried on at the date of this Agreement using the Intellectual Property Rights set out in Schedule 3 does not infringe the Intellectual Property Rights of any third party. PART 2 TAX WARRANTIES 22 COMPLIANCE AND GENERAL 22.1 All notices, returns (including any land transaction returns), reports, accounts, computations, statements, assessments and registrations and any other necessary information submitted by the Group Companies to any Tax Authority for the purposes of Tax have been made on a proper basis, punctually submitted, were accurate and complete when supplied and remain accurate and complete in all material respects and none of the above is, or so far as the Seller is aware is likely to be, the subject of any material dispute with any Tax Authority. 22.2 All Tax which the Group Companies are liable to pay prior to Completion has been so paid. 22.3 No Group Company has within the period of twelve months ending on the Completion Date of this Agreement paid or become liable to pay any penalty, fine, surcharge or interest charged by virtue of the provisions of the TMA or any other Tax Statute. 22.4 So far as the Seller is aware, the Group Companies have sufficient records relating to past events to permit accurate calculation of the Tax liability or relief which would arise upon a disposal or realisation on Completion of each asset owned by the Group Companies at the Accounts Date or acquired by the Group Companies since that date but before Completion. 45 23 FOREIGN ISSUES 23.1 The Group Companies have and have for the last seven years (or, if later, since their date of incorporation) been resident for Tax purposes only in the jurisdiction in which they were incorporated and have never had a permanent establishment in any other jurisdiction. 24 GROUPS 24.1 No UK Company has within the last six years been a member of any group of companies for the purposes of s.170 TCGA any member of which was resident in the UK for UK tax purposes other than the UK Companies. 25 CLOSE COMPANIES 25.1 No UK Company has within the last three years been a close investment-holding company as defined in section 13A, TA 88. 26 VAT 26.1 Each Group Company is a taxable person duly registered for the purposes of VAT. 26.2 Each Group Company has complied with all statutory provisions, rules, regulations, orders and directions in respect of VAT and has promptly submitted accurate returns. Each Group Company maintains full and accurate VAT records, has never been subject to any interest, forfeiture, surcharge or penalty nor been given any notice under sections 59 or 64, VATA nor been given a warning within section 76(2), VATA nor has any Group Company been required to give security under paragraph 4 of Schedule 11, VATA. 26.3 Each Group Company is not and has not been for VAT purposes a member of any group of companies and no act or transaction has been effected in consequence whereof each Group Company is or may be held liable for any VAT arising from supplies made by another company and no direction has been given nor will be given by H M Revenue & Customs under Schedule 9A, VATA as a result of which any Group Company would be treated for the purposes of VAT as a member of a group. 26.4 For the purposes of paragraph 3(7) of Schedule 10 VATA, the UK Companies or their relevant associates have exercised the election to waive exemption from VAT (pursuant to paragraph 2 of Schedule 10 VATA) only in so far as detailed (as having been the subject of such an election) in the Disclosure Documents: and 26.4.1 all things necessary for the election to have effect have been done and in particular any notification and information required by paragraph 3(6) of Schedule 10 VATA 1994 has been given and any permission required by paragraph 3(9) of Schedule 10 VATA has been properly obtained; and 26.4.2 no election has or will be disapplied or rendered ineffective by virtue of the application of the provisions of paragraph 2 (3AA) of Schedule 10 VATA. 26.5 No UK Company owns any assets which are capital items subject to the capital goods scheme under Part XV of the VAT Regulations 1995. 46 26.6 No UK Company has made any claim for bad debt relief under section 36, VATA which remains outstanding. 27 STAMP DUTY AND STAMP DUTY LAND TAX 27.1 All stampable documents to which any Group Company is a party have been duly stamped or stamped with a particular stamp denoting that no stamp duty is chargeable. 27.2 Neither entering into this Agreement nor Completion will result in the withdrawal of any stamp duty or stamp duty land tax relief granted on or before Completion which will affect any Group Company. 47 SCHEDULE 5 COMPLETION REQUIREMENTS SELLER'S OBLIGATIONS 1 On Completion, the Seller shall deliver or procure the delivery to the Purchaser or its representatives of: 1.1 The Debt Confirmation Deed, the Deed of Release and the Deed Assignment duly executed by the Debt Seller (and forms 403a in respect of any security over any assets of any Group Company granted to the Debt Seller); 1.2 The Tax Deed duly executed as a deed by the Seller; 1.3 Transfers of the Shares duly executed by the registered holders in favour of the Purchaser; 1.4 The relevant share certificates for the Shares in the names of the registered holders or an indemnity for any lost certificates; 1.5 In respect of each UK Company: 1.5.1 the statutory registers and minute books; 1.5.2 common seal (if any); 1.5.3 the certificate of incorporation; and 1.5.4 any certificates of incorporation on change of name; 1.6 The written resignations in the Agreed Form of M J Girouard, C H Turner and M A Carter as Directors of the Group Companies such resignations to take effect from Completion; 1.7 The Co-existence Agreement duly executed by the Seller, Pier 1 Licensing, Inc. and the Company; and 1.8 Minutes of the board meetings held under paragraph 2 of this Schedule. 2 On Completion, the Seller shall cause a board meeting of each Group Company to be held at which the matters mentioned below will take place: 2.1 In the case of the Company only, a resolution to register the transfers of Shares will be passed, subject to the transfers being stamped at the cost of the Purchaser; 2.2 Sigurour Berntsson, Jakup a Dul Jacobsen and Jonathan Eeles shall be appointed additional directors; and 2.3 The resignations referred to in paragraphs 1.6 above shall be tendered and accepted so as to take effect at the close of the meeting. 48 SIGNED by ---------------------------------------- PIR TRADING, INC. SIGNED by ---------------------------------------- PIER 1 IMPORTS (U.S.), Inc. SIGNED by ---------------------------------------- PALLI LIMITED SIGNED by ---------------------------------------- LAGERINN ehf acting by its attorney 49 -----END PRIVACY-ENHANCED MESSAGE-----