EXHIBIT 10.2
CREDIT CARD PROGRAM AGREEMENT
by and among
PIER 1 IMPORTS (U.S.), INC.,
and
CHASE BANK USA, N.A.
Dated as of August 30, 2006

 

--------------------------------------------------------------------------------

 

Table of Contents

              Page  
ARTICLE I DEFINITIONS
    1  
 
       
1.1 Generally
    1  
1.2 Miscellaneous
    11  
 
       
ARTICLE II ESTABLISHMENT OF THE PROGRAM
    11  
 
       
2.1 Credit Program
    11  
2.2 Exclusivity
    12  
 
       
ARTICLE III PROGRAM MANAGEMENT AND ADMINISTRATION
    12  
 
       
3.1 Program Objectives
    12  
3.2 Management Committee
    12  
3.3 Program Relationship Managers; Program Team
    17  
 
       
ARTICLE IV PROGRAM OPERATIONS
    18  
 
       
4.1 Operation of the Program
    18  
4.2 Certain Responsibilities of Pier 1
    18  
4.3 Certain Responsibilities of Bank
    19  
4.4 Ownership of Accounts; Account Documentation
    20  
4.5 Branding of Accounts/Credit Cards/Cardholder Documentation/Solicitation
Materials
    21  
4.6 Underwriting and Risk Management
    21  
4.7 Cardholder Terms
    21  
4.8 Internet Services
    22  
4.9 Interest Free Accounts
    23  
 
       
ARTICLE V MARKETING
    23  
 
       
5.1 Promotion of Program
    23  
5.2 Marketing Commitment
    23  
5.3 Communications with Cardholders
    24  
5.4 Additional Marketing Support
    25  
5.5 Approved Ancillary Products
    26  
5.6 Marketing Plan
    26  
 
       
ARTICLE VI CARDHOLDER INFORMATION
    27  
 
       
6.1 Customer Information
    27  
6.2 Cardholder Data
    28  
6.3 Pier 1 Shopper Data; Pier 1 Prospect Data
    30  
 
       
ARTICLE VII OPERATING STANDARDS
    32  
 
       
7.1 Reports
    32  
7.2 Servicing
    33  
7.3 Service Level Standards
    33  
7.4 Credit Systems
    34  

i

--------------------------------------------------------------------------------

 

              Page  
7.5 Systems Interface; Technical Support
    36  
 
       
ARTICLE VIII MERCHANT SERVICES
    36  
 
       
8.1 Transmittal and Authorization of Pier 1 Charge Transaction Data
    36  
8.2 POS Terminals
    37  
8.3 In-Store Payments
    37  
8.4 Settlement Procedures
    37  
8.5 Bank’s Right to Charge Back
    38  
8.6 Exercise of Chargeback
    38  
8.7 No Merchant Discount
    39  
 
       
ARTICLE IX PROGRAM ECONOMICS
    39  
 
       
9.1 Pier 1 Compensation
    39  
9.2 Dispute Resolution
    39  
 
       
ARTICLE X INTELLECTUAL PROPERTY
    39  
 
       
10.1 Pier 1 Licensed Marks
    39  
10.2 The Bank Licensed Marks
    41  
10.3 Intellectual Property
    42  
 
       
ARTICLE XI REPRESENTATIONS, WARRANTIES AND COVENANTS
    43  
 
       
11.1 General Representations and Warranties of Pier 1
    43  
11.2 General Representations and Warranties of the Bank
    45  
11.3 No other Representations or Warranties
    47  
11.4 General Covenants of Pier 1
    47  
11.5 General Covenants of the Bank
    49  
 
       
ARTICLE XII ACCESS, AUDIT AND DISPUTE RESOLUTION
    50  
 
       
12.1 Access Rights
    50  
12.2 Audit Rights
    51  
12.3 Accounting Dispute Resolution
    51  
12.4 Dispute Resolution
    52  
 
       
ARTICLE XIII CONFIDENTIALITY
    54  
 
       
13.1 General Confidentiality
    54  
13.2 Use and Disclosure of Confidential Information
    56  
13.3 Unauthorized Use or Disclosure of Confidential Information
    56  
13.4 Return or Destruction of Confidential Information
    56  
 
       
ARTICLE XIV EVENTS OF DEFAULT; RIGHTS AND REMEDIES
    57  
 
       
14.1 Events of Default
    57  
14.2 Defaults by Bank
    57  
14.3 Defaults by Pier 1
    58  
14.4 Remedies for Events of Default
    58  
 
       
ARTICLE XV TERM/TERMINATION
    59  
 
       
15.1 Term
    59  
15.2 Termination by Pier 1 Prior to the End of the Initial Term or a Renewal
Term
    59  

ii

--------------------------------------------------------------------------------

 

              Page  
15.3 Termination by Bank Prior to the End of the Initial Term or a Renewal Term
    60  
15.4 Automatic Termination
    60  
 
       
ARTICLE XVI EFFECTS OF TERMINATION
    60  
 
       
16.1 General Effects
    60  
16.2 Pier 1’s Option to Purchase the Program Assets
    61  
16.3 Rights of Bank if Purchase Option Not Exercised
    62  
 
       
ARTICLE XVII INDEMNIFICATION
    63  
 
       
17.1 Pier 1 Indemnification of Bank
    63  
17.2 Banks’ Indemnification of Pier 1
    64  
17.3 Procedures
    65  
17.4 Notice and Additional Rights and Limitations
    66  
 
       
ARTICLE XVIII MISCELLANEOUS
    66  
 
       
18.1 Precautionary Security Interest
    66  
18.2 Securitization, Participation or Pledge of Cardholder Indebtedness
    67  
18.3 Assignment
    67  
18.4 Sale or Transfer of Accounts
    67  
18.5 Subcontracting
    67  
18.6 Amendment
    67  
18.7 Non-Waiver
    67  
18.8 Severability
    68  
18.9 Waiver of Jury Trial and Venue
    68  
18.10 Governing Law; Compliance with Law
    68  
18.11 Specific Performance
    68  
18.12 Captions
    68  
18.13 Notices
    69  
18.14 Further Assurances
    69  
18.15 No Joint Venture
    69  
18.16 Press Releases
    69  
18.17 No Set-Off
    70  
18.18 Conflict of Interest
    70  
19.19 Third Parties
    70  
18.20 Force Majeure
    70  
18.21 Entire Agreement
    71  
18.22 Binding Effect
    71  
18.23 Counterparts/Facsimiles
    71  
18.24 Survival
    71  

iii

--------------------------------------------------------------------------------

 

CREDIT CARD PROGRAM AGREEMENT
     This Credit Card Program Agreement is made as of the 30th day of August,
2006, by and among Pier 1 Imports (U.S.), Inc., a Delaware corporation (“Pier
1”), and Chase Bank USA, N.A., a national bank (“Bank”).
RECITALS:
     WHEREAS, Pier 1 is engaged in, among other activities, operating retail
home furnishings stores;
     WHEREAS, concurrently with the execution of this Agreement, Pier 1 Assets,
Inc. (“Seller”) and Bank are entering a Purchase and Sale Agreement (the
“Purchase Agreement”) pursuant to which Bank shall purchase the stock of Pier 1
National Bank and certain gross receivables relating to Pier 1’s Credit Card
Business (which assets include within them certain Credit Card and payment plan
accounts and associated receivables (“Purchased Accounts”));
     WHEREAS, Pier 1 has requested that Bank establish a program pursuant to
which, following the Closing Date, Bank or its Affiliate shall issue Pier 1
Credit Cards (as hereinafter defined) in the Territory to be serviced, marketed
and promoted in accordance with the terms hereof; and
     WHEREAS, the Parties hereto agree that the goodwill associated with Pier 1
Licensed Marks (as hereinafter defined) contemplated for use hereunder is of
substantial value that is dependent upon the maintenance of high quality
services and appropriate use of the trademarks pursuant to this Agreement.
     NOW, THEREFORE, in consideration of the terms, conditions and mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
     1.1 Generally. The following terms shall have the following meanings when
used in this Agreement:
     “Account” means any account under which a purchase, cash advance,
convenience check or balance transfer transaction may be or has been made by or
to a Person (or any Person authorized by such Person) pursuant to a Cardholder
Agreement established pursuant to the terms of this Agreement or acquired
pursuant to the Purchase Agreement. For the avoidance of doubt, the term Account
shall include the Purchased Accounts.
     “Account Documentation” means, with respect to an Account, any and all
documentation relating to that Account, including Cardholder Documentation,
checks or other forms of payment with respect to an Account, notices to
Cardholders, adverse action notices, change of terms notices, other notices,
correspondence, memoranda, documents, stubs, instruments, certificates,
agreements, magnetic tapes, disks, hard copy formats or other computer-readable
data transmissions, any microfilm, electronic or other copy of any of the
foregoing, and any other

Credit Card Program Agreement — Page 1

--------------------------------------------------------------------------------

 

written, electronic or other records or materials of whatever form or nature,
including tangible and intangible information, arising from or relating or
pertaining to any of the foregoing to the extent related to the Program;
provided that Account Documentation shall not include Pier 1’s or any of its
Affiliates’ register tapes, invoices, sales or shipping slips, delivery or other
receipts or other indicia of the sale of Pier 1 Goods and Services, any reports,
analyses or other documentation prepared by Pier 1 or its Affiliates for use in
the retail business operated by Pier 1 and its Affiliates regardless of whether
derived in whole or in part from the Account Documentation.
     “Accountants” has the meaning set forth in Section 12.3 hereof.
     “Adverse Sales Development” has the meaning set forth in Schedule 11.4(i).
     “Affiliate” means, with respect to any Person, each Person that controls,
is controlled by, or is under common control with, such Person. For purposes of
this definition, “control” of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
     “Agreement” means this Program Agreement, together with all of its
schedules and exhibits, as modified, altered, supplemented, amended and/or
restated from time to time.
     “Applicable Law” means all applicable federal, state and local laws
(including common law), statutes, regulations, regulatory guidance, opinions and
interpretations of any Governmental Authority, binding determinations or
findings of any arbitrator, or orders or directives of any Governmental
Authority, as may be amended and in effect from time to time during the Term,
including (i) the Truth in Lending Act and Regulation Z; (ii) the Equal Credit
Opportunity Act and Regulation B; (iii) the Fair Debt Collection Practices Act;
(iv) the Fair Credit Reporting Act; (v) the Gramm-Leach-Bliley Act; (vii) the
USA PATRIOT Act; and (vii) the Unfair and Deceptive Trade Practices Act, and, in
each case, any implementing regulations or interpretations issued thereunder.
     “Applicable Order” means, with respect to any Person, a judgment,
injunction, writ, decree or order of any Governmental Authority, in each case
legally binding on that Person or on any material amount of its property.
     “Application” means the credit application that must be completed and
submitted in order to establish an Account (including any such application
submitted at the POS, by phone or via the Internet).
     “Approved Ancillary Products” means any Credit Card enhancement and other
products (other than Pier 1 Credit Cards) approved by the Management Committee
for offering under the Program from time to time.
     “Bank” has the meaning set forth in the preamble hereof.
     “Bank Designees” has the meaning set forth in Section 3.2(c) hereof.

Credit Card Program Agreement — Page 2

--------------------------------------------------------------------------------

 

     “Bank Event of Default” means the occurrence of any one of the events
listed in Section 14.2 hereof or an Event of Default where the Bank is the
defaulting Party.
     “Bank Licensed Marks” means the trademarks, tradenames, service marks,
logos and other proprietary designations of Bank listed on Schedule 1.1(a) and
licensed to Pier 1 under Section 10.2 hereof.
     “Bank Matters” has the meaning set forth in Section 3.2(g) hereof.
     “Bank Systems” means Systems owned, leased or licensed by and operated by
or on behalf of Bank or any of its Affiliates.
     “Bankruptcy Code” means Title 11 of the United States Code, as amended, or
any other applicable state or federal bankruptcy, insolvency, moratorium or
other similar law and all laws relating thereto.
     “Billing Cycle” means the interval of time between regular periodic Billing
Dates for an Account.
     “Billing Date” means, for any Account, the day as of when the Account is
billed.
     “Billing Statement” means a summary of Account credit and debit
transactions for a Billing Cycle including a descriptive statement covering
purchases, charges, past due account information and Loyalty Program
information.
     “Business Day” means any day, other than (i) a Saturday or Sunday, or
(ii) a day on which financial institutions in New York, Delaware, or Texas are
authorized by law to close; provided that for purposes of Sections 8.4 and 9.1,
“Business Day” shall exclude any day on which the Fedwire system is closed.
     “Cardholder” means any Person who has been issued a Pier 1 Credit Card
(including any guarantor of the Account related to such Pier 1 Credit Card) and
includes authorized user(s).
     “Cardholder Agreement” means the agreement between Bank and a Cardholder
(and any replacement of such agreement), governing the use of an Account,
together with any amendments, modifications or supplements that now or hereafter
may be made to such Cardholder Agreement (and any replacement of such
agreement).
     “Cardholder Data” means all personally identifiable information about a
Cardholder (A) received by or on behalf of Bank in connection with the
Cardholder’s application for use of a Pier 1 Credit Card Account or
(B) otherwise obtained by or on behalf of Bank in connection with the Program
for inclusion in its database of Cardholder information (including information
about a Cardholder purchased or licensed by Bank to the extent not prohibited by
the applicable purchase or license agreement), including all transaction and
experience information collected by or on behalf of Bank with regard to each
purchase charged by a Cardholder using his or her Pier 1 Credit Card or Account
(including Pier 1 Charge Transaction Data with respect to charges on Private
Label Accounts).

Credit Card Program Agreement — Page 3

--------------------------------------------------------------------------------

 

     “Cardholder Documentation” means, with respect to the Accounts, all
Applications, Cardholder Agreements, Pier 1 Credit Cards, Loyalty Cards and
Billing Statements relating to such Accounts.
     “Cardholder Indebtedness” means all amounts charged and owing to Bank by
Cardholders with respect to Accounts (including principal balances from
outstanding charges, charges for Approved Ancillary Products, finance charges,
NSF fees, late charges, pay-by-phone fees and any other fees and charges),
whether or not billed, less the amount of any credit balances owing by Bank to
Cardholders, including in respect of any payments and any credits associated
with returns of goods and/or services and other credits and adjustments, whether
or not billed.
     “Change of Control” means, with respect to Pier 1 or Bank, as the case may
be, (the “subject Person”), (i) a Person or group becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934
(except that a Person or group shall be deemed to own all securities it has the
right to acquire)), directly or indirectly, of more than fifty percent (50%) of
the total voting power of the subject Person, (ii) such subject Person merges,
consolidates, acquires, is acquired by, or otherwise combines with any other
Person in a transaction in which the subject Person is not the surviving entity
or which constitutes a “merger of equals”, it being understood that a subject
Person shall not be considered the “surviving entity” of a transaction if either
(A) the members of the Board of Directors of the subject Person immediately
prior to the transaction constitute less than a majority of the members of the
Board of Directors of the ultimate parent entity of the entity surviving or
resulting from the transaction or (B) the Persons who were beneficial owners of
the outstanding voting securities of the subject Person immediately prior to the
transaction beneficially own less than fifty percent (50%) of the total voting
power of the ultimate parent entity of the entity surviving or resulting from
the transaction, or (iii) the subject Person sells all or substantially all of
its assets to a Person that is not an Affiliate of the subject Person.
     “Closing” has the meaning set forth in the Purchase Agreement.
     “Closing Date” has the meaning set forth in the Purchase Agreement.
     “Comparable Partner Programs” means from time to time other major Credit
Card programs of Bank designated annually by the Management Committee that are
comparable to the Program in terms of program size, public profile and brand
image and that otherwise meet the criteria set forth on Schedule 1.1(b).
     “Competing Retail Programs” means from time to time major retailer Credit
Card programs other than the Program, whether or not Bank or any of its
Affiliates participate in such other programs as set forth on Schedule 1.1(h) as
the same may be amended from time to time by the Management Committee.
     “Competitive” has the meaning set forth on Schedule 1.1(i)
     “Confidential Information” has the meaning set forth in Section 13.1
hereof.

Credit Card Program Agreement — Page 4

--------------------------------------------------------------------------------

 

     “CPI” means the Consumer Price Index for All Urban Consumers (CPI-U) for
the U.S. City Average for All Items, as published by the United States
Department of Labor Bureau of Labor Statistics, or any successor organization.
     “Credit Card” has the meaning set forth in 12 CFR § 226.2(a)(15), as in
effect on the Closing Date. The term does not include: (i) any gift card;
(ii) any debit card, stored value card, electronic or digital cash card or any
other card that does not provide the holder thereof with the ability to obtain
credit other than through an overdraft line or similar feature; (iii) any
secured card, including any card secured by a lien on real or other property or
by a deposit; or (iv) any card issued to the holder of a securities brokerage
account that allows the holder to obtain credit through a margin account.
     “Credit Card Business” means the business relating to the ownership,
administration and management of the Accounts and Receivables (including the
extension of credit to Cardholders, the processing of transactions under the
Accounts and the servicing of the Accounts) and, following the Closing Date,
includes all activities relating to the Program established pursuant to this
Agreement.
     “Disclosing Party” has the meaning set forth in Section 13.1(d) hereof.
     “Event of Default” means the occurrence of any one of the events listed in
Section 14.1, 14.2, and 14.3 hereof.
     “Federal Funds Rate” means, for any day, the offered rate as reported in
the Wall Street Journal in the “Money Rates” section for reserves traded among
commercial banks for overnight use in amounts of 1 million dollars or more or,
if no such rate is published for a day, the rate published for the preceding
Business Day, calculated on a daily basis based on a 365 day year.
     “Fiscal Month” means each four (4) or five (5) week period designated by
Pier 1 as such on a Fiscal Year-reporting basis as reflected on Schedule 1.1(g)
hereto; provided that the Fiscal Month in which the Closing Date occurs shall be
deemed to begin on the Closing Date.
     “Fiscal Quarter” means each three (3) Fiscal Month period designated by
Pier 1 as such on a Fiscal Year-reporting basis as reflected on Schedule 1.1(g)
hereto; provided that the Fiscal Quarter in which the Closing Date occurs shall
be deemed to begin on the Closing Date.
     “Fiscal Year” means the fiscal year designated by Pier 1 as such setting
forth the fiscal year for Pier 1 on a 52/53 week fiscal year ending on the
Saturday closest to the last day of February as reflected on Schedule 1.1(g)
hereto; provided that the first Fiscal Year under the Program shall be the
period beginning on the Closing Date and ending on the Saturday closest to
February 28, 2007.
     “Force Majeure Event” has the meaning set forth in Section 18.19 hereof.
     “GAAP” means United States generally accepted accounting principles,
consistently applied.

Credit Card Program Agreement — Page 5

--------------------------------------------------------------------------------

 

     “Governmental Authority” means any federal, state or local domestic,
foreign or supranational governmental, regulatory or self-regulatory authority,
agency, court, tribunal, commission or other governmental, regulatory or
self-regulatory entity.
     “Indemnified Party” has the meaning set forth in Section 17.3(a) hereof.
     “Indemnifying Party” has the meaning set forth in Section 17.3(a) hereof.
     “Indirect Damages” has the meaning set forth in Section 17.4 hereof.
     “Initial Term” has the meaning set forth in Section 15.1 hereof.
     “Inserts” has the meaning set forth in Section 5.3 hereof.
     “In-Store Payment” means any payment on an Account made in a retail store
owned or operated by Pier 1 or any of its Affiliates by a Cardholder or a person
acting on behalf of a Cardholder.
     “Interim Period” has the meaning set forth in Section 5.6(a).
     “In-Touch” refers to Pier 1’s customer marketing program utilizing customer
contact information (emails and/or home address and phone number) to promote
special incentives, product information and advertising via direct mail
(catalog) and Internet (email).
     “Intellectual Property” means, on a worldwide basis, all intellectual
property, including (i) rights associated with works of authorship, including
copyrights, moral rights and mask-works; (ii) trademarks, service marks and
other source indicators and the goodwill associated therewith; (iii) trade
secret rights; (iv) patents, designs, algorithms and other industrial property
rights; (v) other intellectual and industrial property rights of every kind and
nature, however designated, whether arising by operation of law, contract,
license or otherwise; and (vi) applications, registrations, renewals,
extensions, continuations, divisions or reissues thereof now or hereafter in
force (including any rights in any of the foregoing).
     “Interchange Fees” means the interchange fees or interchange reimbursement
fees paid or payable to Bank in connection with Cardholder usage of the
Accounts.
     “Internet Services” has the meaning set forth in Section 4.8(a).
     “Joint Marketing Commitment” means the obligation of the Bank to fund the
amount per Fiscal Year set forth in Schedule 5.2 for the purposes set forth in
Section 5.2(a).
     “Joint Marketing Fund” has the meaning forth in Section 5.2(a).
     “Knowledge” means, with respect to any of Pier 1 or Bank, the actual
knowledge of the executive officers of the organization who have managerial
responsibility for the Program, after reasonable inquiry.

Credit Card Program Agreement — Page 6

--------------------------------------------------------------------------------

 

     “Licensee” means any Person in the Territory authorized by Pier 1 or any of
its Subsidiaries to operate in and sell Pier 1 Goods and Services in the
Territory from Pier 1 Channels under Pier 1 Licensed Marks, solely with respect
to such Person’s or any of its Subsidiaries’ operation in and sale of Pier 1
Goods and Services from Pier 1 Channels or under Pier 1 Licensed Marks.
     “Loyalty Card” means a card issued for the Program pursuant to any Loyalty
Program providing for access to an Account.
     “Loyalty Programs” means a long-term flexible marketing strategy designed
to produce profitable customer relationships by identifying and retaining
customers, increasing their purchase activity and establishing loyal
relationships with them through communication, recognition and rewards based on
their purchase activity.
     “Management Committee” has the meaning set forth in Section 3.2(a) hereof.
     “Manager” has the meaning set forth in Section 3.3(a) hereof.
     “Marketing Plan” means the document that outlines the objectives,
strategies and tactics of new account solicitation, usage and awareness programs
for the applicable Fiscal Year.
     “Material Adverse Effect” means: (a) with respect to the Program, the
Accounts or the Cardholder Indebtedness, respectively, a material adverse change
therein, or a material adverse effect thereon, taken as a whole, excluding any
effect or change attributable to or resulting from (i) economic, business or
financial conditions generally or events affecting the Credit Card services or
consumer credit business, the banking or financial services industry or the
retail store industry, to the extent such events or conditions do not have a
disproportionate effect on a Party relative to other entities operating
businesses similar to such Party, (ii) changes of Applicable Law, GAAP or
regulatory accounting principles after the date hereof; and (b) with respect to
a Party, a change or effect reasonably expected to impair materially or delay
materially the ability of such Party to perform timely its or their material
obligations under this Agreement or to consummate the transactions contemplated
thereby.
     “Measurement Period” means a twelve Fiscal Month period during the Initial
Term measured from the Closing Date and each anniversary thereof.
     “Merchant Discount” means a discount rate generally applied against
settlements due to merchants for transactions with respect to the use of a
Credit Card, which includes the Interchange Fees as well as any other
transaction fees.
     “Monthly Settlement Sheet” has the meaning set forth in Section 7.1(a)
hereof.
     “New Bank Mark” has the meaning set forth in Section 10.2(b) hereof.
     “New Pier 1 Mark” has the meaning set forth in Section 10.1(b) hereof.
     “Nominated Purchaser” has the meaning set forth in Section 16.2(a) hereof.

Credit Card Program Agreement — Page 7

--------------------------------------------------------------------------------

 

     “Operating Procedures” means the operating procedures for the Program in
effect from time to time in accordance with Section 4.1(b) hereof.
     “Parties” means the collective reference to Pier 1 and the Bank; and unless
the context otherwise requires, “Party” means either the collective reference to
Pier 1, on the one hand, or the Bank, on the other hand.
     “Period” has the meaning set forth in Schedule 4.9.
     “Person” means any individual, corporation, business trust, partnership,
association, limited liability company or similar organization, or any
Governmental Authority.
     “Pier 1” has the meaning set forth in the preamble hereof.
     “Pier 1 Channels” means (i) all retail establishments owned or operated by
Pier 1 or its Affiliates (including Licensee departments therein) in the United
States, (ii) all websites owned or operated by Pier 1 or its Affiliates or their
Licensees, and (iii) all mail order, catalog and other direct access media that
are owned or operated by Pier 1 or its Affiliates or their Licensees.
     “Pier 1 Charge Transaction Data” means the transaction information (in the
form of electronic information) with regard to an In-Store Payment or a charge
on an Account with respect to each purchase of Pier 1 Goods and Services or
Approved Ancillary Products by a Cardholder on credit and each return of Pier 1
Goods and Services or Approved Ancillary Products for credit.
     “Pier 1 Credit Card” means a Private Label Credit Card offered pursuant to
the terms of this Agreement;
     “Pier 1 Designees” has the meaning set forth in Section 3.2(c) hereof.
     “Pier 1 Event of Default” means the occurrence of any one of the events
listed in Section 14.3 hereof or an Event of Default where Pier 1 is the
defaulting Party.
     “Pier 1 Goods and Services” means the products and services sold, charged
or offered by or through Pier 1 Channels, including for personal, household, or
business purposes, and including accessories, delivery services, protection
agreements, gift cards, shipping and handling, and work or labor to be performed
for the benefit of customers of Pier 1 Channels.
     “Pier 1 Licensed Marks” means the trademarks, tradenames, service marks,
logos and other proprietary designations listed on Schedule 1.1(d) and licensed
to Bank under Section 10.1.
     “Pier 1 Matters” has the meaning set forth in Section 3.2(f) hereof.
     “Pier 1 Prospect List” has the meaning set forth in Section 6.3(b) hereof.
     “Pier 1 Shopper” means any Person who makes purchases of Pier 1 Goods and
Services or otherwise uses or accesses Pier 1 Channels.
Credit Card Program Agreement — Page 8

 

--------------------------------------------------------------------------------

 

     “Pier 1 Shopper Data” means all personally identifiable information
regarding a Pier 1 Shopper that is obtained by (or on behalf of) Pier 1 or any
of its Affiliates at any time (including prior to the date hereof), including
personally identifiable information obtained in connection with such Pier 1
Shopper making a purchase of Pier 1 Goods and Services, and including Pier 1’s
“In-Touch” customer data.
     “Pier 1 Systems” means Systems owned, leased or licensed by and operated
by, or on behalf of, Pier 1 or its Affiliates.
     “Pier 1 Transaction” means any purchase, in-store payment, exchange or
return of Pier 1 Goods and Services and/or approved Ancillary Products by a
Cardholder using an Account.
     “POS” means point of sale.
     “Previously Disclosed” has the meaning set forth in the Purchase Agreement.
     “Privacy Policy” means the privacy policy and associated disclosures to be
provided by Bank to Cardholders in connection with the Program.
     “Private Label Accounts” means the Accounts linked to Private Label Credit
Cards solely for the purpose of financing the purchase of Pier 1 Goods and
Services (and all fees and charges relating thereto) through any Pier 1 Channel.
     “Private Label Credit Card” means a Credit Card that bears a Pier 1
Licensed Mark and may be used solely to finance purchases of Pier 1 Goods and
Services through any Pier 1 Channel, including the Private Label Credit Cards
listed in Schedule 1.1(e). Each Private Label Credit Card is linked solely to a
Private Label Account.
     “Program” means the program established pursuant to this Agreement.
     “Program Assets” means the Accounts, Account Documentation, Cardholder
Data, Solicitation Materials and all Cardholder Indebtedness (whether held by
Bank or a third party).
     “Program Objectives” has the meaning set forth in Section 3.1 hereof.
     “Program Purchase Date” has the meaning set forth in Section 16.2(c)
hereof.
     “Program Website” has the meaning set forth in Section 4.8(a) hereof.
     “Promotional Balances” has the meaning set forth in Schedule 4.9.
     “Promotional Purchases” has the meaning set forth in Schedule 4.9.
     “Promotional Sales Amount” has the meaning set forth in Schedule 4.9.
     “Promotional Sales Fees” has the meaning set forth in Schedule 4.9.
     “Promotional Sales Plans” has the meaning set forth in Schedule 4.9.
Credit Card Program Agreement — Page 9

 

--------------------------------------------------------------------------------

 

     “Purchase Agreement” has the meaning set forth in the recitals hereof.
     “Purchased Accounts” has the meaning set forth in the recitals hereof.
     “Receiving Party” has the meaning set forth in Section 13.1(d) hereof.
     “Renewal Term” has the meaning set forth in Section 15.1 hereof.
     “Retail Merchants” has the meaning set forth in Section 8.1 hereof.
     “Revolving Promotional Balances” has the meaning set forth in Schedule 4.9.
     “Risk Management Policies” means the underwriting and risk management
policies, procedures and practices applicable to the Program and adopted in
accordance with the terms of this Agreement, including policies, procedures and
practices for credit and Account openings, transaction authorization,
collections, credit line assignment, increases and decreases, over-limit
decisions, Account closures, payment crediting and charge-offs.
     “Roll-to-Revolve Rate” has the meaning set forth in Schedule 4.9.
     “Second-Look Credit Card Program” has the meaning set forth in
Section 2.2(b) hereof.
     “Seller” has the meaning set forth in the recitals hereof.
     “Services” means the services required to be performed by Bank in
accordance with this Agreement, the Risk Management Policies and the Operating
Procedures, and any related servicing agreements.
     “Short Fiscal Year” means and refers to any Fiscal Year during the Term
having less than 12 Fiscal Months, excluding the Interim Period.
     “SLA” means each individual performance standard set forth on
Schedule 7.3(a).
     “Solicitation Materials” means documentation, materials, artwork and copy,
in any format or media (including television and radio), used to promote or
identify the Program to Cardholders and potential Cardholders, including direct
mail solicitation materials and coupons.
     “Subsidiary” when used with respect to any Person, means another Person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or similar governing body (or if there are not such voting interests,
more than fifty percent (50%) of the equity interest of which) is owned directly
or indirectly by such first Person or by another Subsidiary of such Person.
     “Systems” means software, databases, computers, systems and networks.
     “Systems Transition Date” has the meaning set forth in Section 7.4(a)
hereof.
     “Term” means the Initial Term and each Renewal Term.
Credit Card Program Agreement — Page 10

 

--------------------------------------------------------------------------------

 

     “Termination Period” means the period beginning on the earlier of the date
of expiration of this Agreement or the date of any notice of termination
pursuant to Article XV and ending on either (i) the date the Program Assets are
repurchased pursuant to Section 16.2, if Pier 1 or a Nominated Purchaser
purchases the Program Assets, or (ii) the date that either (A) Pier 1 delivers
written notice to Bank of their election not to purchase the Program Assets or
(B) the right of Pier 1 to purchase the Program Assets expires in accordance
with the terms of this Agreement.
     “Territory” means the United States.
     “Trademark Style Guide” means any rules governing the manner of usage of
trademarks, tradenames, service marks, logos and other proprietary designations.
     “Unapproved Matter” has the meaning set forth in Section 3.2(e)(ii)(B)
hereof.
       1.2 Miscellaneous.
     (a) As used herein: (1) all references to the plural number shall include
the singular number (and vice versa); (2) all references to “herein,”
“hereunder,” “hereof” or like words shall refer to this Agreement as a whole and
not to any particular section, subsection or clause contained in this Agreement;
(3) all references to “include,” “includes” or “including” shall be deemed to be
followed by the words “without limitation”; (4) unless specified as Business
Days or Fiscal Months, all references to days or months shall be deemed
references to calendar days or months; and (5) all references to “$” or
“dollars” shall be deemed references to United States dollars.
     (b) Any approvals and consents required under this Agreement shall not be
unreasonably withheld, unless such consent or approval may be made in the sole
discretion of a party.
ARTICLE II
ESTABLISHMENT OF THE PROGRAM
       2.1 Credit Program.
     (a) General. Beginning as of the Closing Date, Bank shall offer Pier 1
Credit Cards. Bank shall promptly open a new Account and issue a new Pier 1
Credit Card with respect to each Application approved in accordance with the
Risk Management Policies. To the extent approved in accordance with the terms of
this Agreement, the Program shall include and the Bank shall offer such other
Approved Ancillary Products and other payment products as shall be incorporated
in the Program in the future.
     (b) Notice to Cardholders. Substantially concurrently with the Closing
Date, Bank and Pier 1 shall prepare jointly a form or forms of notices to each
Cardholder to the effect that such Cardholder’s Account has been acquired by
Bank and, if applicable, also containing any change of terms notices with
respect to any change of terms that the Parties mutually agree to implement.
Such notice shall be in the form approved by both Parties, which approval will
not be unreasonably withheld or delayed, and will comply with all requirements
of Applicable Law. Bank shall issue new Private Label Credit
Credit Card Program Agreement — Page 11

 

--------------------------------------------------------------------------------

 

Cards in accordance with Schedule 2.1(b). The costs of preparation and mailings
of such notices and new Private Label Credit Cards shall be borne by Bank. The
mailings shall be made in such manner and at such time as Bank and Pier 1 may
mutually agree and in compliance with Applicable Law.
     2.2 Exclusivity. Pier 1 and Bank agree with respect to exclusivity as set
forth on Schedule 2.2.
ARTICLE III
PROGRAM MANAGEMENT AND ADMINISTRATION
     3.1 Program Objectives. In performing its responsibilities with respect to
the management and administration of the Program, each Party shall be guided by
the following Program objectives (the “Program Objectives”):
     (a) to enhance the experience of Pier 1 Shoppers;
     (b) to increase profits from retail sales of Pier 1;
     (c) to maintain or improve customer insight through data acquisition and
analysis;
     (d) to maximize Program economics while minimizing operational costs and
complexity;
     (e) to leverage the Program to identify existing and potential Pier 1
Shoppers, develop and deepen relationships with Pier 1 Shoppers and finance
retail sales growth;
     (f) to ensure that the Bank’s Program-related activities are at all times
conducted in a safe and sound manner and in accordance with Applicable Law; and
     (g) to increase the Pier 1 Credit Card’s share of Pier 1 retail sales.
     3.2 Management Committee.
     (a) Establishment of the Management Committee. Pier 1 and Bank hereby
establish a committee (the “Management Committee”) to oversee and review the
conduct of the Program pursuant to this Agreement and to perform any other
action that, pursuant to any express provision of this Agreement, requires its
action.
     (b) Subcommittees of the Management Committee. The Management Committee may
designate additional committees (which may include persons who are not members
of the Management Committee) with responsibility for overseeing and
administering specified aspects of the Program (e.g., marketing, underwriting
and risk management); provided, however, that approval of any matter expressly
required by this Agreement to be approved by the Management Committee shall not
be delegated to any subcommittee or other body.
Credit Card Program Agreement — Page 12

 

--------------------------------------------------------------------------------

 

     (c) Composition of the Management Committee. The Management Committee shall
consist of six (6) members, of whom three (3) members shall be nominated by Pier
1 (the “Pier 1 Designees”) and three (3) members shall be nominated by Bank (the
“Bank Designees”). The initial Pier 1 Designees and Bank Designees will be
designated prior to the Closing Date. Each Party shall designate its Manager to
serve as one of its designees on the Management Committee. Each Party shall at
all times have as one of its designees the Person with overall responsibility
for the performance of the Program within his or her respective corporate
organization, which in the case of Bank, shall be the Chief Financial Officer or
Chief Operating Officer of the private label Credit Card business of Bank. Bank
and Pier 1 may each substitute its designees to the Management Committee from
time to time so long as their designees continue to satisfy the above
requirements, provided that each Party shall provide the other Party with as
much prior notice of any such substitution as is reasonably practicable under
the circumstances.
     (d) Functions of the Management Committee. The Management Committee shall:
     (i) oversee Program marketing activities, including review and approval of
the Marketing Plan;
     (ii) review collection strategies and collection metrics;
     (iii) monitor activities of competitive programs and identify implications
of market trends;
     (iv) approve the use of any third party (e.g., subcontractor or outsourced
service provider), other than any Affiliate of Pier 1 or Bank, as the case may
be, to perform any of the obligations to be performed by Bank or Pier 1 under
the Program, in each case, except to the extent (x) subcontracted or outsourced
as of the Closing Date or (y) such subcontracted or outsourced service would not
involve direct contact between such third party and any Cardholder (i.e., in
person, via telephone or in writing) (z) other than subcontractors and
outsourcers that are used by the Bank for Comparable Partner Programs it being
agreed and understood that the subcontracting or outsourcing of such services
(which may include print shops and mail vendors) would be within the sole
discretion of the respective Party who elects to subcontract or outsource such
service;
     (v) evaluate and approve changes to any of the following:
     (A) offering of new Credit Cards or Approved Ancillary Products, other than
the products listed on Schedule 11.4(j), including co-branded credit cards or
other payment products;
     (B) changes to any Account terms, set forth on Schedule 4.7 and
Schedule 3.2(e) and material changes to any other Account terms;
Credit Card Program Agreement — Page 13

 

--------------------------------------------------------------------------------

 

     (C) Risk Management Policies other than changes made by the Bank with
respect to Comparable Partner Programs (which shall be submitted to the
Management Committee together with the expected pro forma effects of such
changes on the Program);
     (D) changes to the Operating Procedures; and
     (E) changes to the SLAs applicable to the Program;
     (vi) approve the design, but not the content, of Cardholder Documentation
and any changes thereto;
     (vii) review customer service, collections and other servicing performance
and reporting aspects of the Program against SLAs and other requirements of this
Agreement;
     (viii) review compliance with Applicable Law, the Risk Management Policies,
Operating Procedures and other Program operations and procedures;
     (ix) carry out such other tasks as are assigned to it by this Agreement or
jointly by the Parties;
     (x) pursuant to Section 12.4(b)(i)(B), resolve disputes that arise among
the Parties with regard to the Program from time to time; and
     (xi) adjust the Promotional Sales Fees as required by Schedule 4.9.
     (e) Proceedings of the Management Committee.
     (i) Meetings and Procedural Matters. The Management Committee shall meet
(in person or telephonically) not less frequently than monthly, provided that
unless otherwise agreed by all Management Committee members, not less than two
meeting per quarter shall be in person. In addition, any member of the
Management Committee may call a special meeting by delivery of at least five
(5) Business Days’ prior notice to all of the other members of the Management
Committee, which notice shall specify the purpose for such meeting. Except to
the extent expressly provided in this Agreement, the Management Committee (and
any subcommittee formed by it) shall determine the frequency, place (in the case
of meetings in person) and agenda for its meetings, the manner in which meetings
shall be called and all procedural matters relating to the conduct of meetings
and the approval of matters thereat.
     (ii) Actions.
     (A) Management Committee and subcommittee action shall be taken by majority
vote of the committee members constituting the full committee (including any
vacancies).
Credit Card Program Agreement — Page 14

 

--------------------------------------------------------------------------------

 

     (B) If a majority of the Management Committee members constituting the full
Management Committee (including any vacancies) fail to agree on any matter of
significance to the Program (an “Unapproved Matter”) within ten (10) Business
Days after the relevant initial vote (and in the case of a subcommittee vote,
the Management Committee has attempted to resolve such matter for at least ten
(10) Business Days after the relevant subcommittee vote and has failed to so),
then initially the Executive Vice President for Private Label of Bank and the
Executive Vice President — CFO of Pier 1 (or any other similarly ranking officer
of Bank or Pier 1, as the case may be, who is not a Management Committee member
and shall have been designated in writing by Pier 1 or Bank, as applicable, to
the other Party) shall in good faith attempt to resolve the matter. Any such
resolution by such senior officers shall be deemed to be the action and approval
of the Management Committee for purposes of this Agreement. If after ten
(10) Business Days, the Unapproved Matter remains unresolved by such senior
officers of Pier 1 and Bank, the failure to agree shall constitute a deadlock.
In the event of a deadlock, the final decision shall rest with Pier 1 in the
case of Pier 1 Matters and with Bank in the case of Bank Matters, each of which
shall, except as otherwise provided herein, exercise its discretion reasonably
and in good faith. If a deadlock should occur with respect to a matter that is
neither a Pier 1 Matter nor a Bank Matter, the matter shall be deemed rejected
by the Management Committee.
     (C) Notwithstanding the foregoing, no changes to the Account terms or any
other Program terms described in Section 3.2(d)(v) shall be made before the
Systems Transition Date without the approval by majority vote of the committee
members constituting the full Management Committee (including any vacancies);
provided, however, that if a Party concludes that such a change is required by
Applicable Law, such Party may make such change without regard to this clause
(C) if such Party would have final decision-making authority with respect to
such change following the Systems Transition Date. The Parties acknowledge and
agree that, after the Systems Transition Date, the changes to the Account terms
may be made as set forth on Schedule 3.2(e).
     (D) Notwithstanding anything to the contrary contained herein, Bank shall
not override any vote of Pier 1 Designees in a way that would result in any
aspect of the Program being more onerous or less beneficial to the Cardholders
or Pier 1 than Comparable Partner Programs unless (i) Bank’s position on the
issue is required by Applicable Law and (ii) Bank adopts, and certifies to Pier
1 that it has adopted, the same position with respect to each of its other
Comparable Partner Programs that are similarly impacted by such Applicable Law
or to which such Applicable Law could similarly be applied.
Credit Card Program Agreement — Page 15

 

--------------------------------------------------------------------------------

 

     (iii) Customer Service Disputes. If at any time there shall be a material
change in customer dispute patterns or volume, as evidenced by the monitoring
procedures set forth in the Operating Procedures, (A) Pier 1 shall call, and the
Parties shall attend, one or more Management Committee meetings to consider and
vote upon a plan to remediate such customer service or other disputes, (B) the
Parties shall negotiate in good faith for a period ending not less than ten (10)
days following the date of such meeting, to arrive at a mutually agreeable
remediation plan (or a shorter period if such a remediation plan is agreed to
prior to the 10th day), and (C) in the event such remediation plan is voted upon
and approved, the Parties shall promptly implement such plan. If such customer
service or other disputes remain uncured on the tenth (10th) day following the
implementation of such Management Committee-approved remediation plan or such
other date determined by the Management Committee as reasonably required to
implement such remediation plan, Pier 1 shall call, and the Parties shall
attend, one or more Management Committee meetings to consider and vote upon an
alternative plan to remediate such customer service or other disputes. In the
event that the Management Committee is unable to agree to a plan to remediate
such customer service or other disputes within the ten (10) days following any
meeting called by Pier 1 pursuant to this Section 3.2(e)(iii), it shall be
considered an Unapproved Matter.
     (f) Pier 1 Matters. In accordance with and subject to this Section 3.2,
Pier 1 shall have the ultimate decision making authority with respect to any
Unapproved Matters in respect of the following matters (the “Pier 1 Matters”):
     (i) Design, but not content, of the Cardholder Documentation and collateral
aesthetics; provided that changes to the design or content of Cardholder
Documentation (other than Billing Statements) that require a material increase
in production costs beyond the per unit cost in effect as of the Systems
Transition Date (as adjusted by CPI) shall not be adopted as a Pier 1 Matter but
shall require the approval of the Management Committee pursuant to
Section 3.2(e)(ii)(A) unless Pier 1 agrees to pay the cost of such increase;
     (ii) look, feel and content of Billing Statements taking into consideration
any limitations imposed by the system and Operating Procedures, except for
content that is deemed necessary or appropriate by Bank in light of legal or
regulatory requirements;
     (iii) the Marketing Plan and marketing and promotion of the Program
provided that such Marketing Plan and promotions do not require Bank to expend
any sum in excess of its financial commitments in this Agreement;
     (iv) any maintenance of, and improvements to, Pier 1 Systems used in
connection with the Program, and any capital expenditures of Pier 1 and its
Affiliates for maintenance of, and improvements to, Pier 1 Systems used in
connection with the Program;
Credit Card Program Agreement — Page 16

 

--------------------------------------------------------------------------------

 

     (v) the approval (in the sole discretion of Pier 1) of any new Credit Card
products, including co-branded credit cards, Approved Ancillary Products other
than those set forth in Schedule 11.4(j) or other products and services proposed
to be offered to Cardholders and, in each case, the approval of any compensation
payable to Pier 1 in respect thereof; provided, that the economic terms and
compensation arrangements related to such new products or services shall be
acceptable to both Parties;
     (vi) the design, implementation, modification or any changes to any terms
of any loyalty program provided that such changes would not result in a material
increase in cost to Bank; and
     (vii) communications and/or contacts with Cardholders (other than as
required to service the Accounts, comply with Applicable Law or as otherwise
provided in this Agreement), including use of telemarketing techniques utilized
by Bank.
     (g) Bank Matters. In accordance with and subject to this Section 3.2, Bank
shall have the ultimate decision making authority with respect to any Unapproved
Matters in respect of the matters set forth on Schedule 3.2(g) and the following
matters (the “Bank Matters”):
     (i) changes to Account terms required by Applicable Law;
     (ii) capital expenditures for maintenance of, and improvements to, the Bank
Systems used in connection with the Program;
     (iii) content of Cardholder Documentation and Solicitation Materials that
is dictated by Applicable Law; and
     (iv) compliance with Applicable Laws, including Operating Procedures and
other Program operations and procedures.
     3.3 Program Relationship Managers; Program Team.
     (a) Pier 1 and Bank shall each appoint one Program relationship manager
(each, a “Manager”). The Managers shall exercise day-to-day operational
oversight of the Program, subject to the actions and decisions of the Management
Committee, and coordinate the partnership efforts between Pier 1 and Bank, shall
report to the designees on the Management Committee of the Party appointing such
Manager and shall conduct their Program responsibilities in accordance with the
actions and decisions of the Management Committee. Pier 1 and Bank shall
endeavor to provide stability and continuity in the Manager positions and each
Party’s other Program personnel.
     (b) The initial Manager of Pier 1 is set forth in Schedule 3.3.
     (c) The initial Manager of Bank is set forth in Schedule 3.3. The Bank’s
Manager shall report directly to the Marketing Senior Director — Private Label
Card
Credit Card Program Agreement — Page 17

 

--------------------------------------------------------------------------------

 

Services. The Bank’s Manager’s performance-based compensation shall be based
upon the Program Objectives and other specific annual targets and objectives set
by the Management Committee, including Program profitability targets. The
appointment of a new Manager by Bank is subject to the prior approval of Pier 1.
With respect to future Bank Manager candidates, Bank shall seek to propose
candidates with substantial Program relevant experience, including experience
with the retail store industry, comparable customer demographics and loyalty
programs.
     (d) Bank shall maintain a Program team having Competitive expertise and
experience. No member of the Bank’s Program team that dedicates a majority of
his or her time to the Program shall be reassigned to any program operated by
Bank or any of its Affiliates pursuant to any agreement or arrangement with any
restricted Competing Retail Programs designated annually by the Management
Committee and listed in Schedule 3.3(d), without the written approval of Pier 1,
in its sole discretion.
ARTICLE IV
PROGRAM OPERATIONS
     4.1 Operation of the Program.
     (a) Each of the Parties hereto, in all material respects, shall perform its
obligations under this Agreement (i) in compliance with the terms and conditions
of this Agreement, the Risk Management Policies, the Operating Procedures and
any other policies, procedures and practices adopted pursuant to this Agreement,
(ii) in good faith, (iii) in accordance with Applicable Law, and (iv) in a
manner consistent with the Program Objectives.
     (b) The initial Operating Procedures applicable to various aspects of the
operation of the Program shall be the operating procedures adopted by the
Parties prior to the Closing Date (which operating procedures shall be attached
hereto as Schedule 4.1(b) at the Closing). Thereafter, except for changes
required by Applicable Law, changes to such Operating Procedures shall only be
made with the approval of the Management Committee; provided that changes to the
Risk Management Policies may be made in accordance with Section 4.6 and
Article III. Except as expressly provided otherwise in this Agreement, Bank
shall use commercially reasonable efforts to ensure that the personnel and other
resources (including Systems and other technology resources) devoted by Bank to
the Program, in the aggregate, shall be Competitive.
     4.2 Certain Responsibilities of Pier 1.
     (a) In addition to its other obligations set forth elsewhere in this
Agreement, Pier 1 agrees that during the Term it shall, either itself or through
the Affiliate(s) to which it subcontracts the relevant functions:
     (i) solicit new Accounts through in-store instant credit procedures (in
accordance with this Agreement) and display Solicitation Materials (or
Applications) in Pier 1 Channels pursuant to the Marketing Plan;
Credit Card Program Agreement — Page 18

 

--------------------------------------------------------------------------------

 

     (ii) implement and administer the Marketing Plan in accordance with this
Agreement;
     (iii) receive In-Store Payments in accordance with Section 8.3 and
procedures that comply with Applicable Law, subject to reimbursement from Bank
for the processing of such payments as provided in this Agreement; and
     (iv) except as otherwise provided in this Agreement, at all times, at the
cost and expense of Pier 1, provide personnel and take such commercially
reasonable actions as are necessary to support interfaces with Bank systems with
respect to all functions, including but not limited to a system to accept and
transport applications at POS.
     4.3 Certain Responsibilities of Bank.
     (a) In addition to its other obligations set forth elsewhere in this
Agreement, Bank agrees that during the Term it shall:
     (i) extend credit (or cause one of its Affiliates to extend credit) on
newly originated and existing Accounts in accordance with the Risk Management
Policies and Operating Procedures;
     (ii) comply (and cause its applicable Affiliates to comply) with the terms
of the Cardholder Agreements, the Program Privacy Policies and all Cardholder
opt-outs;
     (iii) prepare, process and mail Cardholder Billing Statements, Inserts,
privacy policy notices, change in terms notices and other communications to
Cardholders and perform any other Services required to be performed pursuant to
this Agreement from time to time;
     (iv) provide procedure and process documentation with respect to Program
operations, including the use of any Bank Systems utilized in the Program to the
extent that the same are not Bank proprietary information or trade secrets;
     (v) to the fullest extent permitted by Applicable Law, the Privacy Policy,
and Bank’s or its Affiliate’s agreements with third parties, as reasonably
requested from time to time by Pier 1, provide aggregate transaction and
experience information about cardholders of Bank’s other Credit Card programs,
and assist Pier 1 and its Affiliates in using such information to develop
marketing plans for their businesses;
     (vi) to the extent permitted by Applicable Law, the Privacy Policy, Bank’s
or its Affiliate’s agreements with third parties, and Bank’s policies governing
Comparable Partner Programs as reasonably requested from time to time by Pier 1,
permit Pier 1 to solicit or offer Pier 1 Goods and Services to cardholders of
Bank’s and its Affiliates’ other Credit Card programs;
Credit Card Program Agreement — Page 19

 

--------------------------------------------------------------------------------

 

     (vii) maintain a System to process Applications, using the underwriting and
credit limit assignment policy set forth in the Risk Management Policies and the
Operating Procedures;
     (viii) maintain call centers in accordance with the terms of Schedule
4.3(a)(viii);
     (ix) provide Account monitoring services, including identifying
delinquencies, identifying collection efforts required, implementing credit-line
adjustments, over limit authorizations and Account deactivation or cancellation;
     (x) handle collection and recovery efforts in respect of Accounts;
     (xi) process remittances from Cardholders;
     (xii) produce and issue all new, replacement and reissued credit card
plates related to Pier 1 Credit Cards; and
     (xiii) upon reaching mutual agreement regarding appropriate payments to
Bank, Bank will provide and manage a non-payment specific Loyalty Program for
persons not having a Pier 1 Credit Card, which Loyalty Program will include,
among other terms, the terms described on Schedule 4.3(a)(xiii).
     4.4 Ownership of Accounts; Account Documentation.
     (a) Except to the extent of Pier 1’s ownership of Pier 1 Licensed Marks,
Bank shall be the sole and exclusive owner of all Accounts and Account
Documentation and shall have all rights, powers, and privileges with respect
thereto as such owner; provided that Bank shall exercise such rights consistent
with the provisions of this Agreement and Applicable Law. All purchases of Pier
1 Goods and Services in connection with the Accounts and the Cardholder
Indebtedness shall create the relationship of debtor and creditor between the
relevant Cardholder and Bank, respectively. Pier 1 acknowledges and agrees that
(i) they have no right, title or interest (except for their right, title and
interest in Pier 1 Licensed Marks and their option to purchase the Program
Assets under Section 16.2) in or to, any of the Accounts or Account
Documentation or any proceeds of the foregoing, and (ii) Bank extends credit
directly to Cardholders.
     (b) Except as expressly provided herein, Bank shall be entitled to
(i) receive all payments made by Cardholders on Accounts and (ii) retain for its
account all Cardholder Indebtedness and, subject to the terms of this Agreement,
all other fees and income authorized by the Cardholder Agreements and collected
with respect to the Accounts and Cardholder Indebtedness. Pier 1 and Bank shall
determine an appropriate allocation of any income from selling Approved
Ancillary Products as shall have been approved by the Management Committee in
connection with the approval of the offering of such Approved Ancillary
Products.
     (c) Bank shall fund all Cardholder Indebtedness on the Accounts.
Credit Card Program Agreement — Page 20

 

--------------------------------------------------------------------------------

 

     (d) Bank shall have the exclusive right to effect collection of Cardholder
Indebtedness and shall notify Cardholders to make payment directly to it in
accordance with its instructions; provided, however, that Bank will make all
collections for its account using the name of Bank, and may direct all checks to
be made payable to “Pier 1” or, with Pier 1 approval, another name combined with
the name Pier 1. Pier 1 grants to Bank a limited power of attorney (coupled with
an interest) to sign and endorse Pier 1’s name upon any form of payment that may
have been issued in Pier 1’s name in respect of any Account.
     (e) Notwithstanding the foregoing, Pier 1 may accept payments made with
respect to an Account in a Pier 1 store as provided in Section 8.3.
     4.5 Branding of Accounts/Credit Cards/Cardholder Documentation/Solicitation
Materials.
     (a) The Cardholder Documentation and the Solicitation Materials shall be in
the design and format proposed by Pier 1 and approved by the Management
Committee; provided that Bank shall be responsible for ensuring that the
Cardholder Documentation and the Solicitation Materials comply with Applicable
Law and for ensuring that the Solicitation Materials comply with the Cardholder
Documentation.
     (b) Bank shall be responsible for, and bear the cost of the design,
development and delivery (other than delivery at Pier 1 Channels) of the
Cardholder Documentation; provided that, to the extent that changes to the
design or format of Cardholder Documentation, as a result of a Pier 1 Matter,
result in the per unit cost of such Cardholder Documentation being greater than
the Bank’s average Cardholder Documentation costs, Pier 1 shall pay such cost
increase, provided that Bank shall first notify Pier 1 of any cost increase
before implementation.
     (c) Subject to section 4.3(a)(xiii), Bank shall issue a renewal Pier 1
Credit Card and/or Loyalty Card to each Cardholder in accordance with the terms
of any Loyalty Program at each scheduled Pier 1 Credit Card and/or Loyalty Card
renewal date (or earlier, at the direction of Pier 1, if the Cardholder
qualifies for an upgrade in any Loyalty Program).
     (d) Pier 1 Licensed Marks shall appear prominently on the face of Pier 1
Credit Cards. Pier 1 Credit Cards shall not bear Bank’s Licensed Marks;
provided, however, the Bank’s name will appear on the back of the card in order
to identify Bank as the credit provider under the Program, together with any
other disclosures required by Applicable Law.
     4.6 Underwriting and Risk Management. Pier 1 and Bank agree with respect to
underwriting and risk management as set forth on Schedule 4.6.
     4.7 Cardholder Terms.
     (a) The terms and conditions of all Purchased Accounts shall be the terms
and conditions applicable to the Account type immediately prior to the Closing
Date,
Credit Card Program Agreement — Page 21

 

--------------------------------------------------------------------------------

 

including the terms and conditions set forth on Schedule 4.7, provided that, the
Parties shall take such actions in accordance with this Agreement as may be
required to convert the Account terms and conditions specified in Schedule 4.7
to the new terms and conditions specified in Schedule 3.2(e) and on the date
specified in Schedule 3.2(e). Additional changes to the terms and conditions of
the Accounts may be made only in accordance with Article III.
     (b) The account numbers and BINs of all Purchased Accounts shall remain the
same after the Closing Date but shall change upon the Systems Transition Date or
such date new Accounts are issued and processed on Bank’s systems. If requested,
Bank shall support existing Account numbers until new numbers are issued and
trailing activity has ceased. Bank shall provide a translation table that will
show the correlation between existing and new Cardholder Account numbers.
     4.8 Internet Services.
     (a) Cardholder Website. Bank shall develop and maintain a Pier 1-branded
log on page for Cardholders and potential Cardholders to be effective as of the
Systems Transition Date, with the look and feel consistent with Pier 1’s
websites (“Program Website”). The Program log on page shall be accessed by means
of links from Pier 1’s websites and shall contain or otherwise be associated
with only such material and links as shall be agreed by the Management Committee
from time to time. Pier 1 will provide such links on (i) its home page, (ii) its
check-out page, and (iii) such other pages as the Management Committee shall
determine from time to time. The Program Website shall also include links back
to Pier 1’s websites, on the Program Website home page and such other pages as
the Management Committee shall determine from time to time. The Program Website
shall include the following functions, and such other functions as may be
approved by the Management Committee from time to time (the Program Website and
such functionality, collectively, the “Internet Services”).
     (i) Applications. The Program Website shall permit potential Cardholders to
access an Application, to complete and submit the Application online and receive
real-time approvals or pending status of such Application in accordance with the
Risk Management Policies and Operating Procedures. Without limiting the
foregoing, the Application function on the Program Website shall have at a
minimum all features and functionality available on websites for Comparable
Partner Programs as of the Systems Transition Date.
     (ii) Cardholder Customer Service. The Program Website shall permit
Cardholders to (A) view the Cardholder’s Account information and Billing
Statements (including any Loyalty Program information, Pier 1 Transaction
information, and all other information contained in such Billing Statement); and
(B) make payments on the Cardholder’s Account via automated clearing house
transfer or other payment mechanism.
Credit Card Program Agreement — Page 22

 

--------------------------------------------------------------------------------

 

     (b) Performance Standards. Bank shall provide the Internet Services
consistent with the SLAs set forth on Schedule 7.3(a) and in accordance with
industry standards.
     (c) Customer Privacy. Bank shall ensure that the Privacy Policy is clearly
and prominently posted on the pages of the Program Website.
     (d) Internet Services Representations and Warranties. Bank represents and
warrants as of the Systems Transition Date and during the Term of this Agreement
that:
     (i) the Program Website is solely under Bank’s control (subject to Pier 1’s
rights under this Agreement); and
     (ii) Bank has the license, right or privilege to use the hardware, software
and content acquired from third parties for use in the Internet Services, and
that it is the owner of all other hardware, software and content used in the
Internet Services and that neither the Internet Services as a whole, nor any
part thereof, infringes upon or violates any patent, copyright, trade secret,
trademark, invention, proprietary information, nondisclosure or other rights of
any third party.
     4.9 Promotional Sales Plans. Bank shall offer and support the interest
deferred plans listed in Schedule 4.9 (the “Promotional Sales Plans”) in
accordance with this Agreement on the terms provided in Schedule 4.9.
ARTICLE V
MARKETING
     5.1 Promotion of Program. In accordance with the Marketing Plan, Pier 1 and
Bank shall cooperate with each other and actively support and promote the
Program to both existing and potential Cardholders.
     5.2 Marketing Commitment.
     (a) Bank hereby agrees to credit a joint marketing fund maintained by Bank
(the “Joint Marketing Fund”) with an amount equal to the Joint Marketing
Commitment no later than (i) with respect to the Interim Period, the fifth (5th)
Business Day following the Closing Date, and (ii) with respect to each Fiscal
Year of the Term following the Interim Period, no later than the first (1st)
Business Day of such Fiscal Year. The Joint Marketing Commitment in any Short
Fiscal Year shall be prorated and credited based upon the number of Fiscal
Months in such Short Fiscal Year. The Joint Marketing Commitment shall be used
as set forth in the Marketing Plan and as otherwise directed by the Management
Committee from time to time. Pier 1 and Bank shall each provide to the other an
accounting of such Party’s and its Affiliates’ use of the Joint Marketing
Commitment in the prior Fiscal Month, and Bank shall reimburse Pier 1 for such
amounts used by Pier 1 and its Affiliates, and shall reduce the amount in the
Joint Marketing Fund by the amounts used by Bank and its Affiliates. Any amount
in the Joint Marketing Fund for the Interim Period or a given Fiscal Year that
is not spent in the Interim Period or the
Credit Card Program Agreement — Page 23

 

--------------------------------------------------------------------------------

 

given Fiscal Year shall remain available for use at the direction of the
Management Committee during the following year of the Initial or any Renewal
Term, it being understood that funds in the Joint Marketing Fund carried forward
from a prior Fiscal Year shall be deemed to be used first before funds
attributable to the current Fiscal Year.
     (b) Pier 1 agrees, at its expense, to offer Cardholders a value proposition
that in the aggregate: (i) is at least as valuable as the value proposition
offered by it to Pier 1 credit cardholders prior to the Closing Date and
(ii) shall at all times be materially better than the value proposition offered
under the Loyalty Program and any other rewards offered to Pier 1 consumer
customers who are not Cardholders.
     (c) During the Term, Pier 1 shall, at its expense, market the Program in a
manner and with a volume of activity consistent with its past practice.
     5.3 Communications with Cardholders.
     (a) Pier 1 Inserts. Pier 1 and its Affiliates shall have the priority with
respect to communicating with Cardholders, except for any message required by
Applicable Law, through use of inserts, fillers, and similar mechanisms (which
shall be included on all billing envelopes) (collectively, “Inserts”), including
Inserts selectively targeted for particular segments of Cardholders, in any and
all Billing Statements (including electronic Billing Statements) and envelopes,
subject to production requirements contained in the Operating Procedures and
Applicable Law. Except as otherwise provided in the Marketing Plan, and except
for Inserts required by Applicable Law (which shall be paid for by Bank), Pier 1
shall be responsible for the content of, and the cost of preparing and printing,
any such Inserts. If the insertion of Inserts in particular Billing Statements
would increase the postage costs for such Billing Statements, Pier 1 agrees to
either pay for the incremental postage cost or prioritize the use of Inserts to
avoid postage cost over-runs. Pier 1 shall retain all revenues they receive from
all Inserts (other than any Inserts promoting Pier 1 Credit Cards or Approved
Ancillary Products that Pier 1 may permit to be produced and distributed in
accordance with the Marketing Plan). Subject to Pier 1’s review, Bank may
communicate with Cardholders in the Inserts about the Program as necessary for
Bank to comply with its obligations under this Agreement.
     (b) Billing Statement Messages. Pier 1 and its Affiliates shall have the
exclusive right to use Billing Statement (including electronic Billing
Statement) messages and Billing Statement envelope (or electronic mail) messages
in each Billing Cycle to communicate with Cardholders, subject to production
requirements contained in the Operating Procedures and Applicable Law. Such
messages shall be included at no cost to Pier 1. Notwithstanding the foregoing,
any message required by Applicable Law or collections shall take precedence over
Pier 1’s and its Affiliates’ messages. Subject to Pier 1’s review, Bank may
communicate with Cardholders about the Program in the Billing Statements as
necessary for Bank to comply with its obligations under this Agreement.
Credit Card Program Agreement — Page 24

 

--------------------------------------------------------------------------------

 

     5.4 Additional Marketing Support.
     (a) As reasonably requested by Pier 1 from time to time, Bank shall perform
the following marketing functions with respect to the Pier 1 Credit Cards at no
cost or expense to Pier 1. Except as otherwise agreed herein, the Parties shall
mutually agree to the allocation of costs related to Bank marketing of Pier 1
Goods and Services:
     (i) subject to Applicable Law and any contractual prohibitions to which
Bank or its Affiliates are subject:
     (A) use Bank’s databases, analytic tools and market research and Bank’s
marketing support services to assist Pier 1 and its Affiliates in their
promotion of Pier 1 Channels, or the marketing and promotion of Pier 1 Goods and
Services or Pier 1 Credit Cards;
     (B) conduct mailings and other related marketing efforts on behalf of Pier
1 and its Affiliates, which may include marketing materials promoting the
Program and Pier 1 Credit Cards, Pier 1 Channels and/or Pier 1 Goods and
Services at Pier 1’s option, based upon the customer databases and customer
database analysis tools maintained by Bank and its Affiliates, including
nonpersonally identifiable transaction and experience data from Bank’s Credit
Card, and other customer databases; provided that (unless such amounts are paid
out of the Joint Marketing Fund pursuant to the Marketing Plan) Pier 1 shall be
responsible for all out-of-pocket expenses of all marketing materials and
mailing services at cost;
     (ii) provide such reasonable assistance to Pier 1 and its Affiliates as
Pier 1 may request in connection with the training of personnel of Pier 1 and
its Affiliates regarding the Program, including providing training materials
developed by Bank and approved by the Management Committee;
     (iii) collaborate with Pier 1 to identify and test marketing initiatives
(using Bank’s resources); provided that (unless such amounts are paid out of the
Joint Marketing Fund pursuant to the Marketing Plan) Pier 1 shall be responsible
for all out-of-pocket expenses of test marketing at cost requested in connection
with the Program; and
     (iv) provide models and modeling support, which may include Cardholder
attrition models, prospect marketing models and other tools designed to improve
Program performance.
     (b) Following the Closing Date, Bank shall, pursuant to the Marketing Plan,
retain a mutually agreed upon third party to conduct surveys of Cardholder
perception and satisfaction on a regular, periodic basis regarding Pier 1 Credit
Cards and the Program but in no event less frequently than annually. Such
surveys shall be in a form and employ reasonable methodologies developed in
consultation with Pier 1 and shall provide for a level of information reasonably
acceptable to Pier 1. Bank shall make
Credit Card Program Agreement — Page 25

 

--------------------------------------------------------------------------------

 

available to Pier 1 the results of such surveys as well as all associated work
papers promptly following completion thereof.
       5.5 Approved Ancillary Products. Except for the Approved Ancillary
Products and Pier 1 Credit Cards or those products set forth on
Schedule 11.4(j), Bank and its Affiliates shall not offer (except as directed by
Pier 1) any goods or services to Cardholders or through the Program. From time
to time, Bank may propose to solicit Cardholders for products or services other
than the foregoing. If the Management Committee agrees to permit such
solicitation, such solicitation shall only be permitted on the terms prescribed
by the Management Committee.
       5.6 Marketing Plan.
     (a) Following the date hereof Pier 1, in consultation with Bank, shall
develop a proposed Marketing Plan for (i) the period from the Closing Date to
the end of Pier 1’s current Fiscal Year (the “Interim Period”), and (ii) the
first full Fiscal Year of the Term. Within twenty (20) days after the Closing
Date, the Management Committee shall approve the Marketing Plan for the Interim
Period. Within ninety (90) days after the Closing Date, the Management Committee
shall approve the Marketing Plan for the first Fiscal Year. For each Fiscal Year
following the first Fiscal Year, Pier 1 shall develop, in consultation with
Bank, and on or before sixty (60) days following the commencement of such Fiscal
Year a Marketing Plan, subject to the approval of the Management Committee.
     (b) At least once per calendar year, the Management Committee shall
consider (to the extent such terms and conditions are publicly known or
otherwise known and not subject to any confidentiality obligations on the part
of either Party) features, terms, conditions and other aspects of other
Comparable Partner Programs and Competing Retail Programs in order to identify
marketplace developments for possible inclusion in the Program to ensure that
the Program remains Competitive. If the Management Committee determines that a
change to the Program may be appropriate, Bank shall develop a plan with respect
to implementation of such change, including the impact the proposed change would
have, if any, on the revenue share, and shall present such plan to the
Management Committee for its review and decision. The Management Committee shall
decide whether to test or launch any such Program changes for Cardholders or
potential Cardholders.
     (c) Each Marketing Plan shall outline, for each Pier 1 Channel, all
programs, to the extent established and mutually agreed upon by Pier 1 and Bank,
and shall include at least the following information for each program:
     (i) description of offer(s), cost per unit, expected response rate and
other performance projections with respect thereto;
     (ii) description of target audience;
     (iii) planned budget, specifying Bank’s share and Pier 1’s share, if any;
Credit Card Program Agreement — Page 26

 

--------------------------------------------------------------------------------

 

     (iv) distribution among Pier 1 Channels and types of Accounts; and
     (v) target implementation date (e.g., mailing dates, calling dates,
delivery dates).
     (d) Each Marketing Plan shall address development of Solicitation Materials
and Account Documentation; new Account acquisition strategies, including direct
mailing; preparation of unique collateral materials for Pier 1’s employees;
activation, retention and usage; statement design and messaging; advertising of
the Program; and such other marketing matters as the Parties shall agree to.
     (e) Each Marketing Plan shall specify which Party is responsible for each
Marketing Plan item and shall contain a budget specifying the Parties’ financial
responsibilities during the applicable Fiscal Year.
     (f) Any Marketing Plan may be modified or supplemented by the Parties from
time to time upon mutual agreement, provided such modifications or supplements,
as the case may be, are approved by the Management Committee.
     (g) To the extent practicable, all significant marketing initiatives
developed under this Agreement shall contain unique marketing source codes to
facilitate post-marketing research and analysis.
ARTICLE VI
CARDHOLDER INFORMATION
       6.1 Customer Information.
     (a) All sharing, use and disclosure of Cardholder Data and Pier 1 Shopper
Data under this Agreement shall be subject to the provisions of this Article VI.
The Parties acknowledge that the same or similar information may be contained in
the Cardholder Data, Pier 1 Shopper Data, and other data and that each such pool
of data shall therefore be considered separate information subject to the
specific provisions applicable to that data hereunder.
     (b) Pier 1 and Bank shall each maintain an information security program
that is designed to meet all requirements of Applicable Law, including, at a
minimum, maintenance of an information security program that is designed to:
(i) ensure the security and confidentiality of the Cardholder Data and Pier 1
Shopper Data; (ii) protect against any anticipated threats or hazards to the
security or integrity of the Cardholder Data and Pier 1 Shopper Data;
(iii) protect against unauthorized access to or use of the Cardholder Data and
Pier 1 Shopper Data, specifically including the use of data encryption or other
mutually agreed upon secure data transfer method for all Cardholder Data and
Pier 1 Shopper Data transferred between the Parties; and (iv) ensure the proper
disposal of Cardholder Data and Pier 1 Shopper Data. Additionally, such security
measures shall meet current industry standards and shall be at least as
protective as those used by each Party to protect its other confidential
customer information. Each Party shall use the same degree of care in protecting
the Cardholder Data and Pier 1 Shopper
Credit Card Program Agreement — Page 27

 

--------------------------------------------------------------------------------

 

Data against unauthorized disclosure as it accords to its own confidential
customer information, but in no event less than a reasonable standard of care.
In particular, Bank shall treat Pier 1 Shopper Data as if it were “customer
information” for purposes of the regulations above. In the event a Party becomes
aware of any unauthorized use of or access to Cardholder Data, such Party shall
immediately notify the other Party and shall cooperate with such other Party, as
reasonably requested or as required by Applicable Law, (x) to assess the nature
and scope of such incident, (y) to contain and control such incident to prevent
further unauthorized access to or use of Cardholder Data, and (z) to provide
prompt notice to affected Cardholders to the extent required by Applicable Law
or otherwise with the approval of the Management Committee. In the event Bank
becomes aware of any unauthorized use of or access to Pier 1 Shopper Data, Bank
shall immediately notify Pier 1 and shall cooperate with them, as they deem
necessary or as required by Applicable Law, (x) to assess the nature and scope
of such incident, (y) to contain and control such incident to prevent further
unauthorized access to or use of Pier 1 Shopper Data, and (z) to provide prompt
notice to affected Pier 1 Shoppers to the extent required by Applicable Law or
otherwise with the approval of the Management Committee. The cost and expenses
of any assessment, containment, control and such notice shall be borne solely by
the Party that experienced the unauthorized use of or access to Cardholder Data
or Pier 1 Shopper Data. The affected Party shall be reimbursed for any losses,
including fraud losses.
     (c) Pier 1 shall, subject to Applicable Law, promptly provide to Bank a
complete list of any Persons who (i) after the Closing Date, have requested to
be on Pier 1’s “do not call” list and/or (ii) have requested to be on “do not
mail” lists (or other similar lists), and Bank shall promptly comply with such
requests with respect to its solicitation of Pier 1 Credit Cards and Approved
Ancillary Products. Bank shall, subject to Applicable Law, promptly provide to
Pier 1 a complete list of any Cardholders who (i) after the Closing Date, have
requested to be on Bank’s “do not call” list and/or (ii) have requested to be on
“do not mail” lists (or other similar lists) in connection with their Cardholder
relationship with Bank and Pier 1 shall promptly comply with such requests with
respect to its solicitations.
       6.2 Cardholder Data.
     (a) As among the Parties hereto, the Cardholder Data shall be the property
of and exclusively owned by Bank.
     (b) The Program Privacy Policy applicable to the Cardholder Data is
attached as Schedule 6.2 hereto. Any modifications to the Program Privacy Policy
shall be approved by the Management Committee, provided that the Program Privacy
Policy shall comply with Applicable Law at all times.
     (c) Bank shall not use, or permit to be used, the Cardholder Data, except
as provided in this Section 6.2. Bank may use the Cardholder Data in compliance
with Applicable Law and the Program Privacy Policy solely (i) for purposes of
soliciting or marketing (in each case, solely as directed by Pier 1 or the
Management Committee) or servicing customers listed in the Cardholder Data for
Pier 1 Credit Cards, Approved
Credit Card Program Agreement — Page 28

 

--------------------------------------------------------------------------------

 

Ancillary Products, and any other products and services approved by the
Management Committee, (ii) as otherwise necessary to carry out its obligations
or exercise its rights hereunder, or (iii) as required by Applicable Law. Bank
has no rights to use the Cardholder Data for marketing purposes except as
expressly provided herein.
     (d) Bank shall not disclose, or permit to be disclosed, the Cardholder
Data, except as provided in this Section 6.2. Bank shall not, directly or
indirectly, sell or otherwise transfer any right in or to the Cardholder Data
other than to Pier 1 or any of its Affiliates, or to its Nominated Purchaser or
a successor of Bank by merger or acquisition. Bank may disclose the Cardholder
Data in compliance with Applicable Law and the Program Privacy Policy solely:
     (i) to its authorized subcontractors in connection with a permitted use of
such Cardholder Data under this Section 6.2, provided that each such authorized
subcontractor agrees in a written agreement satisfactory to Pier 1 and Bank to
maintain all such Cardholder Data as strictly confidential and not to use or
disclose such information to any Person other than Bank or Pier 1, except as
required by Applicable Law or any Governmental Authority (after giving Bank and
Pier 1 prior notice and an opportunity to defend against such disclosure);
provided, further, that each such authorized subcontractor maintains, and agrees
in writing to maintain, an information security program that is designed to meet
all requirements of Applicable Law, including, at a minimum, maintenance of an
information security program that is designed to: (w) ensure the security and
confidentiality of the Cardholder Data; (x) protect against any anticipated
threats or hazards to the security or integrity of the Cardholder Data;
(y) protect against unauthorized access to or use of the Cardholder Data; and
(z) ensure the proper disposal of Cardholder Data; and provided, further, that
each such authorized subcontractor agrees to notify promptly Bank and Pier 1 of
any unauthorized disclosure, use, or disposal of, or access to, Cardholder Data
and to cooperate with Bank and Pier 1 in any investigation thereof and remedial
action with respect thereto;
     (ii) to its Affiliates, and its and such Affiliates’ employees, attorneys
and accountants with a need to know such Cardholder Data in connection with a
permitted use of such Cardholder Data under this Section 6.2; provided that
(A) any such Person is bound by terms substantially similar to this Section 6.2
as a condition of employment or of access to Cardholder Data or by professional
obligations imposing comparable terms; and (B) Bank shall be responsible for the
compliance by each such Person with the terms of this Section 6.2;
     (iii) to any Governmental Authority with authority over Bank (A) in
connection with an examination of Bank; or (B) pursuant to a specific
requirement to provide such Cardholder Data by such Governmental Authority or
pursuant to compulsory legal process; provided that Bank seeks the protection of
confidential treatment for any disclosed Cardholder Data to the fullest extent
available under Applicable Law governing such disclosure, and with respect to
clause (B), to the extent permitted by Applicable Law, Bank (1) provides at
least
Credit Card Program Agreement — Page 29

 

--------------------------------------------------------------------------------

 

ten (10) Business Days’ prior notice of such proposed disclosure to Pier 1 if
reasonably possible under the circumstances, and (2) seeks to redact the
Cardholder Data to the fullest extent possible under Applicable Law governing
such disclosure; or
     (iv) to the extent permitted in the Risk Management Policies and Operating
Procedures, to any consumer reporting agency in accordance with the federal Fair
Credit Reporting Act.
     (e) Bank shall cooperate with Pier 1 to provide Pier 1 and its Affiliates
with the maximum ability permissible under Applicable Law and the Program
Privacy Policy to receive, use and disclose the Cardholder Data, including, as
necessary or appropriate, through use of consents or opt-out provisions, in each
case as directed by Pier 1. Without limiting the foregoing, Pier 1 and its
Affiliates may receive, use and disclose the Cardholder Data in compliance with
Applicable Law and the Program Privacy Policy (i) for purposes of promoting the
Program or promoting Pier 1 Goods and Services, (ii) as otherwise necessary to
carry out its obligations under this Agreement, and (iii) as otherwise permitted
by Applicable Law.
Notwithstanding the foregoing, no Party hereto shall be required to provide any
information on a personally identifiable basis if the provision of such
personally identifiable information would cause such Party to be considered a
“consumer reporting agency” for purposes of the Fair Credit Reporting Act.
     (f) With respect to the sharing, use and disclosure of the Cardholder Data
following the termination of this Agreement:
     (i) the rights and obligations of the Parties under this Section 6.2 shall
continue through any Termination Period; and
     (ii) if Pier 1 exercises its rights under Section 16.2, Bank shall transfer
its right, title and interest in the Cardholder Data to Pier 1 or its Nominated
Purchaser as part of such transaction, and Bank’s right to use and disclose the
Cardholder Data shall terminate upon the termination of the Termination Period.
       6.3 Pier 1 Shopper Data; Pier 1 Prospect Data.
     (a) Bank acknowledges that Pier 1 gathers information about purchasers of
Pier 1 Goods and Services and that Pier 1 and its Affiliates have rights to use
and disclose such information independent of whether such information also
constitutes Cardholder Data. As between Pier 1 and Bank, all Pier 1 Shopper Data
shall be owned exclusively by Pier 1. Bank acknowledges and agrees that it has
no proprietary interest in Pier 1 Shopper Data. To the extent Bank is the direct
recipient of such data, it shall provide such data to Pier 1 in such format and
at such times as shall be reasonably specified by Pier 1. Bank shall cooperate
in the maintenance of Pier 1 Shopper Data and other data, including by
incorporating in the Application and Cardholder Agreement provisions mutually
agreed to by the Parties pursuant to which applicants and Cardholders shall
agree that they are providing their identifying information and all updates
thereto and all
Credit Card Program Agreement — Page 30

 

--------------------------------------------------------------------------------

 

transaction data from Pier 1 Channels to both Bank and Pier 1 and its
Affiliates. For the avoidance of doubt, the following information shall be
deemed Pier 1 Shopper Data:
     (i) for any customer who has been approved for a Pier 1 Credit Card,
regardless of the channel through which such application was completed or
submitted the customer’s name, address, email address, and telephone number; and
     (ii) for any Cardholder, (1) the Cardholder’s name, address, email address,
and telephone number; (2) any reported change to any of the foregoing
information; and (3) Cardholder transaction and experience data in Pier 1
Channels at a detailed, line-item and SKU level that provides all detail
provided to Pier 1 and its Affiliates prior to the date of this Agreement.
     (b) Subject to compliance with Applicable Law, Pier 1’s privacy policies,
the Marketing Plan and such criteria (including format) as may be mutually
agreed to from time to time, during the Term, Pier 1 shall make available to
Bank a list of customers of Pier 1 and its Affiliates, including its “In-Touch”
customers, whom Pier 1 has determined are available to be solicited only for
Accounts under the Program (the “Pier 1 Prospect List”). As between Pier 1 and
Bank, Pier 1 Prospect List shall be owned exclusively by Pier 1. Bank
acknowledges and agrees that it has no proprietary interest in Pier 1 Prospect
List and will not use the Pier 1 Prospect List for any reason other than as set
forth in this Agreement.
     (c) Bank shall not use, or permit to be used, directly or indirectly, the
Pier 1 Shopper Data, except to transfer such data to Pier 1 to the extent
received by Bank. Bank shall not use, or permit to be used, Pier 1 Prospect List
except as provided in this Section 6.3(c). Bank may use Pier 1 Prospect List in
compliance with Applicable Law solely for purposes of soliciting customers
listed in Pier 1 Prospect List for Accounts or as required by Applicable Law.
     (d) Bank shall not disclose, or permit to be disclosed, Pier 1 Shopper Data
or Pier 1 Prospect List, except as provided in this Section 6.3. Bank shall not,
directly or indirectly, sell or otherwise transfer any right in or to Pier 1
Shopper Data or Pier 1 Prospect List (all such rights belonging exclusively to
Pier 1). Bank may disclose Pier 1 Shopper Data and Pier 1 Prospect List in
compliance with Applicable Law solely:
     (i) to its authorized subcontractors in connection with a permitted use of
such Pier 1 Shopper Data or Pier 1 Prospect List under this Section 6.3,
provided that each such authorized subcontractor agrees in writing to maintain
all such Pier 1 Shopper Data or Pier 1 Prospect List as strictly confidential in
a manner satisfactory to Pier 1 and not to use or disclose such information to
any Person other than Bank or Pier 1, except as required by Applicable Law or
any Governmental Authority (after giving Bank and Pier 1 prior notice and an
opportunity to defend against such disclosure); provided, further, that each
such authorized subcontractor maintains, and agrees in writing to maintain, an
information security program that is designed to meet all requirements of
Credit Card Program Agreement — Page 31

 

--------------------------------------------------------------------------------

 

Applicable Law, including, at a minimum, maintenance of an information security
program that is designed to: (w) ensure the security and confidentiality of Pier
1 Shopper Data and Pier 1 Prospect List; (x) protect against any anticipated
threats or hazards to the security or integrity of Pier 1 Shopper Data and Pier
1 Prospect List; (y) protect against unauthorized access to or use of Pier 1
Shopper Data and Pier 1 Prospect List; and (z) ensure the proper disposal of
Pier 1 Shopper Data and Pier 1 Prospect List; and provided, further, that each
such authorized subcontractor agrees to notify promptly Bank (and Bank shall
promptly notify Pier 1) of any unauthorized disclosure, use, or disposal of, or
access to, Pier 1 Shopper Data or Pier 1 Prospect List and to cooperate with the
Bank and Pier 1 in any investigation thereof and remedial action with respect
thereto;
     (ii) to its Affiliates, and its and such Affiliates’ employees, attorneys
and accountants, with a need to know Pier 1 Shopper Data or Pier 1 Prospect List
in connection with a permitted use of Pier 1 Shopper Data or Pier 1 Prospect
List under this Section 6.3; provided that (A) any such Person is bound by terms
substantially similar to this Section 6.3 as a condition of employment, of
access to Pier 1 Shopper Data or Pier 1 Prospect List or by professional
obligations imposing comparable terms; and (B) Bank shall be responsible for the
compliance by each such Person with the terms of this Section 6.3; or
     (iii) to any Governmental Authority with authority over Bank (A) in
connection with an examination of Bank; or (B) pursuant to a specific
requirement to provide Pier 1 Shopper Data or Pier 1 Prospect List by such
Governmental Authority or pursuant to compulsory legal process; provided that
Bank seeks the full protection of confidential treatment for any disclosed Pier
1 Shopper Data or Pier 1 Prospect List, as the case may be, to the extent
available under Applicable Law governing such disclosure, and with respect to
clause (B), to the extent permitted by Applicable Law, Bank (1) provides at
least ten (10) Business Days’ prior notice of such proposed disclosure to Pier 1
if reasonably possible under the circumstances, and (2) seeks to redact Pier 1
Shopper Data or Pier 1 Prospect List to the fullest extent possible under
Applicable Law governing such disclosure.
     (e) Upon the termination of this Agreement, without limiting Bank’s rights
and obligations with respect to the Cardholder Data pursuant to Section 16.3,
Bank’s rights to use and disclose Pier 1 Shopper Data and Pier 1 Prospect List
shall terminate. Promptly following such termination, Bank shall return or
destroy all Pier 1 Shopper Data and Pier 1 Prospect Lists and shall certify such
return or destruction to Pier 1 upon request excluding any archival copy
retained systemically as a function of the Bank’s disaster recovery process.
ARTICLE VII
OPERATING STANDARDS
     7.1 Reports. Within ten (10) Business Days after the end of each Fiscal
Month or such other time as may be agreed by the Parties with respect to
particular reports, Bank shall
Credit Card Program Agreement — Page 32

 

--------------------------------------------------------------------------------

 

provide to the Management Committee and Pier 1 the report specified in
Schedule 7.1 (which report shall be reported on a Fiscal Month, calendar month
or cycles-basis, as agreed upon by the parties), and such other reports as are
mutually agreed to by the Parties from time to time. The payment report shall be
known as a “Monthly Settlement Sheet”.
       7.2 Servicing.
     (a) Bank shall perform, or cause to be performed, all Services in all
material respects in accordance with the terms and conditions of this Agreement,
the Risk Management Policies and the Operating Procedures. Without limiting the
foregoing, Bank shall service the Accounts in compliance with Applicable Law, in
such a way as to not disparage or embarrass Pier 1 or its names, with a level of
service to Cardholders and with no less care and diligence than the degree of
care and diligence employed by Pier 1 prior to the Closing Date. In addition,
without limiting the foregoing, with respect to the Services to be performed by
Bank, Bank agrees that it shall perform such functions with no less care and
diligence than that degree of care and diligence employed by it in servicing the
Comparable Partner Programs.
     (b) Upon the Closing Date, Bank shall accept responsibility with respect to
the Services and, upon the Systems Transition Date, Bank shall be required to
meet the SLAs applicable to the Services set forth in Schedule 7.3(a) (as such
SLAs may be amended from time to time in accordance with this Agreement).
     (c) The Parties shall maintain records relating to their performance under
this Agreement in accordance with their respective record retention policies, as
the same may be amended from time-to-time.. Records may be kept in either paper
or electronic form. The Parties shall retrieve, reproduce and deliver to each
other any records reasonably requested from time to time by the other Party for
the purpose of providing customer assistance or resolving customer disputes.
     (d) Bank shall have the right to perform any portion of the Services
through one or more subservicers; provided that (i) any subservicer that is not
an Affiliate of Bank shall be subject to approval pursuant to Article III and
(ii) Bank shall remain fully responsible to Pier 1 for the portion of the
Services performed by any subservicer(s) (including its Affiliates).
Notwithstanding the foregoing, to the extent Bank subcontracts or outsources to
any third party any Services as of the date hereof, Bank may continue to
subcontract or outsource such Services to such third party (and Bank shall be
fully responsible for the performance of such subcontracted or outsourced
Services). Bank and Pier 1 further agree with respect to call center and
customer service functions as set forth on Schedule 7.2(d).
       7.3 Service Level Standards.
     (a) Bank shall perform the applicable Services in accordance with the SLAs
set forth on Schedule 7.3(a).
     (b) Bank shall report to Pier 1 monthly, in a mutually agreed upon format
and on a calendar month basis, Bank’s performance under each of the SLAs set
forth on
Credit Card Program Agreement — Page 33

 

--------------------------------------------------------------------------------

 

Schedule 7.3(a). If Bank fails to meet any SLA, Bank shall (i) immediately
report to the Management Committee the reasons for the SLA failure(s); and
(ii) promptly take any action reasonably necessary to correct and prevent
recurrence of such failure(s).
     (c) Throughout the Term, Bank shall maintain a disaster recovery and
business continuity plan that complies with Applicable Law and is consistent
with plans maintained for its Comparable Partner Programs. Bank shall be
prepared to and have the ability to implement such plan if necessary. Bank shall
provide Pier 1 with access to review such plan upon request. Bank shall test the
plan annually and shall promptly implement such plan upon the occurrence of a
disaster or business interruption. Bank shall be excused from its failure to
meet any applicable SLAs that result directly from the failure of any of Pier 1
Systems or a Force Majeure Event.
     (d) Bank and Pier 1 acknowledge that (i) Pier 1’s management is now and in
the future may be required under the Sarbanes-Oxley Act of 2002 and related
regulations (the “SOX Laws”) to, among other things, assess the effectiveness of
its internal controls over financial reporting and state in its annual report
whether such internal controls are effective, (ii) Pier 1’s independent auditors
are now and in the future may be required to evaluate the process used by
management to make such assessment to determine whether that process provides an
appropriate basis for management’s conclusions, and (iii) because Pier 1 and
Bank have entered into a significant transaction as described in this Agreement,
the controls used by Bank (including controls that restrict unauthorized access
to systems, data and programs) are relevant to Pier 1’s evaluation of its
controls. Having acknowledged the foregoing, and subject to the terms of this
Section 7.3(d), Bank agrees to cooperate with Pier 1 and its independent
auditors as reasonably necessary to facilitate Pier 1’s ability to comply with
its obligations under the SOX Law including by providing Pier 1 with an
opportunity to meet with Bank’s internal auditors and/or technology personnel to
obtain assurances regarding Bank’s internal controls and review a copy of any
relevant correspondence prepared by Bank’s internal auditors addressing Bank’s
SOX compliance, including, if applicable, any correspondence addressing any
corrective plan or action to be undertaken in response to any deficiencies. Bank
will promptly notify Pier 1 of any deficiency discovered with respect to Bank’s
internal controls that could reasonably be expected to have a significant impact
on the Program and, within sixty (60) days of such notice, provide to Pier 1 and
commence to implement a corrective plan to remedy such deficiencies. In the
event Bank obtains a SAS 70 Type II Audit in the future, Bank shall provide Pier
1 with a copy of such report and will deliver and commence to implement a
corrective plan within sixty (60) days if the SAS 70 Type II Audit reveals any
deficiencies.
       7.4 Credit Systems.
     (a) Pier 1 and Bank shall work together (including through a subcommittee
of the Management Committee formed for this purpose) to develop a mutually
agreeable plan relating to the credit systems, which shall include a conversion
plan designed to convert such data to the Bank Systems. Subject to the
satisfaction of each of the requirements set forth in Section 7.4(b), at such
time when both Pier 1 and Bank are satisfied with the terms of such conversion
plan and have concluded that such conversion
Credit Card Program Agreement — Page 34

 

--------------------------------------------------------------------------------

 

will further the Program Objectives and provide cost efficiencies and features
and functionality superior to those available to Pier 1, without an unacceptable
level of Program disruption, such conversion shall be implemented (the date of
any such conversion the “Systems Transition Date”). Bank shall bear all
out-of-pocket costs and expenses incurred by it or paid to third parties
associated with the Systems conversion.
     (b) The Parties acknowledge and agree that no Systems conversion shall
occur pursuant to Section 7.4(a) in absence of satisfaction of each of the
following requirements:
     (i) Bank shall ensure that all identified features and functionality
available on Pier 1’s credit processing/servicing systems prior to the Systems
Transition Date (including data gathering, interface capabilities with Pier 1’s
other Systems, Loyalty Program support and core systems/customer service
functionality) are available in a substantially similar manner on the Bank
Systems as of the Systems Transition Date;
     (ii) all existing credit data feeds used by Pier 1 or any of its Affiliates
in connection with the Credit Card Business or otherwise prior to the Closing
Date shall be available on the Bank Systems prior to the Systems Transition
Date; and all data feeds necessary to provide Pier 1 with the information
necessary to prepare the Monthly Settlement Sheets and Year-End Settlement
Sheets pursuant to Section 7.1 shall have been created prior to the Systems
Transition Date;
     (iii) Bank shall provide and the Bank Systems shall support the Internet
Services described in Section 4.8;
     (iv) if requested, Bank shall support existing Account numbers until new
numbers are issued and trailing activity has ceased. Bank shall provide a
translation table that will show the correlation between existing and new
Cardholder Account numbers;
     (v) without limiting the foregoing, the Bank Systems shall interface with
Pier 1 Systems that are not converted to Bank Systems in a manner reasonably
acceptable to Pier 1;
     (vi) Bank shall have a disaster recovery and business continuity plan
applicable to the Bank Systems as set forth in Section 7.3(c) and the Bank shall
be prepared to and have the ability to implement such plan if necessary;
     (vii) the Parties shall have identified and implemented all hardware and
other Systems changes necessary to ensure that the Bank Systems will be
compatible with those Pier 1 Systems that will interface with the Bank Systems,
including the POS Systems of Pier 1 and its Affiliates; and
     (viii) Bank shall provide procedures and process documentation to all
employees of Pier 1, its Subsidiaries and its Licensees who use the Bank
Systems.
Credit Card Program Agreement — Page 35

 

--------------------------------------------------------------------------------

 

     (c) Prior to the Systems Transition Date, the Parties shall agree on a
statement of work covering the development and testing of, and conversion to,
the Bank Systems.
     (d) Neither Party shall make any change to any of its Systems that would
render them incompatible in any way with the other Party’s or its Affiliates’
Systems or require the other Party or its Affiliates (or the Retail Merchants)
to make any change to any of their Systems (including any POS terminals) or
reduce or restrict interfacing or System feeds, in any such case without the
prior approval of the Management Committee.
       7.5 Systems Interface; Technical Support.
     (a) Required Interfaces.
     (i) Pier 1 and Bank shall identify, prior to the Closing Date, the Systems
interfaces required to be sustained among Pier 1 and Bank. Pier 1 and Bank shall
maintain such interfaces and cooperate in good faith with each other in
connection with any modifications to such interfaces as may be requested by
either Party from time to time.
     (ii) Each of Pier 1 and Bank agrees to maintain at its own expense its
respective Systems interfaces so that the operation of the Systems as a whole is
at all times no less functional than prior to the Closing Date. Bank and Pier 1
agree to provide sufficient personnel to support the Systems interfaces required
to be sustained between Pier 1 and Bank.
     (b) Additional Interfaces; Interface Modifications. All requests for new
interfaces, modifications to existing interfaces and terminations of existing
interfaces shall be presented to the Management Committee for approval. Upon
approval, the Parties shall work in good faith to establish the requested
interfaces or modify or terminate the existing interfaces, as applicable, on a
timely basis. Except as otherwise provided herein (including in Section 7.4),
all costs and expenses with respect to any new interface or interface
modification or termination shall be borne by the requesting Party, unless
otherwise determined by the Management Committee.
     (c) Secure Protocols. The Parties shall use secure protocols for the
transmission of data from Bank and its Affiliates, on the one hand, to Pier 1
and its Affiliates, on the other hand, and vice versa. This will include the use
of data encryption or another form of agreed-upon secure data transmission
method during transmission of all Cardholder Data and Pier 1 Shopper Data by
both Bank and Pier 1.
ARTICLE VIII
MERCHANT SERVICES
       8.1 Transmittal and Authorization of Pier 1 Charge Transaction Data. Pier
1 shall, and shall cause its Subsidiaries and Licensees (such Subsidiaries and
Licensees, together with Pier 1, the “Retail Merchants”) to, accept within the
United States Pier 1 Credit Cards for Pier 1 Goods and Services. The Retail
Merchants shall transmit Pier 1 Charge Transaction Data for
Credit Card Program Agreement — Page 36

 

--------------------------------------------------------------------------------

 

authorization of Pier 1 Transactions to Bank as provided in the Operating
Procedures. Bank shall authorize or decline Pier 1 Transactions on a real time
basis as provided in the Operating Procedures, including transactions involving
split-tender (i.e., a portion of the total transaction amount is billed to a
Pier 1 Credit Card and the remainder is paid through one or more other forms of
payment), transactions over the phone, on-line or hand keyed, as applicable, or
down-payments on Pier 1 Goods and Services for later delivery. If any Retail
Merchant is unable to obtain authorizations for Pier 1 Transactions for any
reason, such Retail Merchant may complete such Pier 1 Transactions as provided
in the Operating Procedures.
       8.2 POS Terminals. Pier 1 shall maintain POS terminals capable of
processing Pier 1 Credit Card and Account transactions as handled as of the
Closing Date. To the extent that Pier 1 is required by Bank to make changes to
any POS terminal (including hardware and software) in order to process Pier 1
Transactions and transmit Pier 1 Charge Transaction Data under this Agreement as
a result of any System conversion contemplated by Section 7.4 or any other
change or modification to any Bank System or a new Bank System approved by the
Management Committee, Bank shall pay the costs and expenses associated with such
changes.
       8.3 In-Store Payments. Pier 1 may accept In-Store Payments from
Cardholders on their Accounts in accordance with the Operating Procedures, the
Risk Management Policies and any procedures required under Applicable Law. Pier
1 shall, as necessary, provide proper endorsements on such items. If Pier 1
receives any In-Store Payments, Pier 1 shall, directly or through its
Affiliates, be deemed to hold such In-Store Payments in trust for Bank until
such Payments are either delivered to Bank or applied to reduce amounts payable
by Bank to Pier 1 pursuant to Section 8.4(b). Bank hereby grants to Pier 1 a
limited power of attorney (coupled with an interest) to sign and endorse Bank’s
name upon any form of payment that may have been issued in Bank’s name in
respect of any Account. Pier 1 and Bank shall jointly develop procedures in the
Operating Procedures with respect to the manner in which such In-Store Payments
shall be processed (it being understood that such procedures shall allow during
the Term for Pier 1 to accept In-Store Payments and provide for immediate credit
toward the applicable open-to-buy limits of the respective Account upon receipt
of an In-Store Payment, subject only to the Operating Procedures). Pier 1 shall
notify Bank upon receipt of In-Store Payments and Bank shall include Pier 1
Charge Transaction Data related to such In-Store Payments in the net settlement
in respect of the day immediately following such receipt on the same basis as
other Pier 1 Charge Transaction Data. Pier 1 shall issue receipts to Cardholders
for such payments in compliance with Applicable Law.
       8.4 Settlement Procedures.
     (a) Pier 1 shall transmit Pier 1 Charge Transaction Data to Bank in
accordance with the Operating Procedures on each day on which such Retail
Merchants are open for business, other than Sunday. If Pier 1 Charge Transaction
Data is received by Bank’s processing center on or before 7:00 a.m. (Central
time) on any Business Day on which Bank is open for business, Bank shall process
Pier 1 Charge Transaction Data and, in accordance with Section 9.1(a), initiate
a wire transfer of the payment in respect thereof before 1:00 p.m. (Central
time) on the same Business Day. If Pier 1 Charge Transaction Data is received
after 7:00 a.m. (Central time) on any Business Day Bank is open for business, or
at any time on a day other than a Business Day, Bank shall process
Credit Card Program Agreement — Page 37

 

--------------------------------------------------------------------------------

 

Pier 1 Charge Transaction Data for payment by 1:00 p.m. (Central time) on the
following Business Day.
     (b) Bank shall remit to Pier 1 for itself and the Retail Merchants, an
amount calculated in accordance with Schedule 8.4.
     (c) Pier 1 shall be responsible for allocating such remittances among the
Retail Merchants as appropriate and Bank shall have no responsibility or
liability in connection therewith (it being agreed that Bank has no obligation
to accept Pier 1 Charge Transaction Data directly from, or make remittances to,
any person other than Pier 1).
       8.5 Bank’s Right to Charge Back. Bank shall have the right to charge back
to Pier 1 the amount of any Cardholder Indebtedness, including Cardholder
Indebtedness incurred prior to the Closing Date with respect to Purchased
Accounts, relating to Pier 1 Charge Transaction Data if with respect to the
related Pier 1 Transaction:
     (a) The Cardholder refuses to pay the charge based on a dispute regarding
the quality, timely delivery, or non-receipt of Pier 1 Goods and Services
representing a valid defense to payment consistent with Applicable Law; provided
that any such refusal constitutes a bona fide claim presented by the Cardholder
in good faith in the reasonable opinion of Bank, after consultation with Pier 1;
     (b) The Cardholder refuses to pay the charge based on a claim of
unauthorized use of Pier 1 Credit Card at a Retail Merchant; provided that any
such refusal constitutes a bona fide claim presented by the Cardholder in good
faith in the reasonable opinion of Bank, after consultation with Pier 1;
     (c) The charge was not for a bona fide sale or delivery of Pier 1 Goods and
Services by or through a Pier 1 Channel;
     (d) The charge slip is a duplicate of a charge slip previously paid;
     (e) The price of Pier 1 Goods and Services shown on the charge slip differs
from the amount shown on the Cardholder’s copy of the charge slip, but only to
the extent of such difference;
     (f) The charge or Account arose from fraud of any employee or agent in a
Retail Merchant; or
     (g) The Cardholder refuses to pay the charge based on a dispute regarding
accuracy of the Pier 1 Charge Transaction Data or the charge slip is illegible
with respect to such Pier 1 Charge Transaction Data or is missing information in
any material respect.
       8.6 Exercise of Chargeback. If Bank exercises its right of chargeback,
Bank shall demand payment from Pier 1 for the full amount of such chargeback. In
the event of a chargeback pursuant to this Article VIII, upon payment in full of
the related amount by Pier 1, Bank shall immediately assign to Pier 1 or the
relevant Retail Merchant, without any representation, warranty or recourse,
(i) all right to payments of amounts charged back in
Credit Card Program Agreement — Page 38

 

--------------------------------------------------------------------------------

 

connection with such Cardholder charge, and (ii) any security interest granted
by Pier 1 under Section 18.1. Bank shall provide reasonable cooperation in any
effort by Pier 1 to collect the chargeback amount, including by executing and
delivering any document necessary or useful to such collection efforts.
       8.7 No Merchant Discount. None of Pier 1, its Affiliates or the Retail
Merchants shall be required to pay any Merchant Discount, other than as
described on Schedule 4.9, on any Pier 1 Transaction. The Parties shall directly
process Pier 1 Transactions such that the Retail Merchants do not incur any
merchant acquirer/processor or similar fees.
ARTICLE IX
PROGRAM ECONOMICS
       9.1 Pier 1 Compensation.
     (a) Payments.
     (i) Not later than 1:00 pm (Central time) on each Business Day, Bank shall
initiate payment to Pier 1 an amount equal to the amount set forth on Schedule
8.4 with respect to the Accounts.
     (ii) Not later than 1:00 p.m. (Central time) on the tenth (10th) Business
Day after the end of each Fiscal Month, Bank shall initiate payment to Pier 1 in
the amounts determined in accordance with Schedule 7.1(a) with respect to the
Accounts.
For the avoidance of doubt, any such payment shall not be deemed a waiver of, or
in any other way limit, a Party’s right to pursue any dispute with respect to
such payment in accordance with the terms of this Agreement and each of Bank or
Pier 1 may invoke the dispute resolution procedures set forth herein following
payment of such amounts.
     (b) Form of Payment. All payments pursuant to this Section 9.1 shall be
made by wire transfer of immediately available funds to an account designated in
writing by Pier 1 or Bank, as the case may be, unless otherwise agreed upon by
the Parties in writing.
       9.2 Dispute Resolution. Any disputes regarding the amounts owed under
this Agreement shall be resolved in accordance with Article XII.
ARTICLE X
INTELLECTUAL PROPERTY
       10.1 Pier 1 Licensed Marks.
     (a) Grant of License to Use Pier 1 Licensed Marks. Subject to the terms and
conditions of this Agreement, Pier 1, either directly or through its Affiliates,
hereby grants to Bank a non-exclusive, royalty-free, non-transferable right and
license to use Pier 1 Licensed Marks (i) with respect to the Program in the
Territory in connection with the
Credit Card Program Agreement — Page 39

 

--------------------------------------------------------------------------------

 

creation, establishment, marketing and administration of, and the provision of
services related to, the Program and (ii) in connection with any sale permitted
by this Agreement of the Accounts and Cardholder Indebtedness to third parties
for liquidation. All use of Pier 1 Licensed Marks shall be in accordance with
this Agreement and any Trademark Style Guide, if any, delivered by Pier 1 to
Bank from time to time. All uses of Pier 1 Licensed Marks shall require the
prior written approval of Pier 1. To the extent Bank delegates any of its rights
or obligations hereunder to any authorized Affiliate and/or authorized third
party in accordance with the terms and conditions of this Agreement, Bank may
sublicense its rights in Pier 1 Licensed Marks hereunder to such authorized
Person; provided that such Person shall agree to comply with all of the terms
and conditions of the use of Pier 1 Licensed Marks hereunder and Bank shall
remain liable for such Person’s failure to so comply. Except as expressly set
forth in this Section 10.1, the rights granted pursuant to this Section 10.1 are
solely for use of Bank and may not be sublicensed without the prior written
approval of Pier 1.
     (b) New Pier 1 Marks. If Pier 1 or any of its Affiliates adopts a
trademark, service mark or other source indicator that is a successor to a Pier
1 Licensed Mark or that Pier 1 or its Affiliates has otherwise elected to use in
connection with the Program but which is not listed on Schedule 1.1(d) hereto (a
“New Pier 1 Mark”), Bank may request that Pier 1 add such New Pier 1 Mark to
Schedule 1.1(d) hereto at no cost to Bank and license its use hereunder; Pier 1
shall not unreasonably fail to do so, and upon Pier 1’s written approval of the
addition of such New Pier 1 Mark, such New Pier 1 Mark shall be deemed added to
Schedule 1.1(d). If Pier 1 requires Bank to immediately use such New Pier 1 Mark
in lieu of one or more existing Pier 1 Licensed Marks, Pier 1 at its option may
either reimburse Bank for the cost of replacing all materials bearing the
existing Pier 1 Marks or permit simultaneous use of the materials bearing the
existing Pier 1 Marks and the New Pier 1 Marks.
     (c) Termination of License. Except to the extent otherwise provided in
Section 16.5, the license granted in this Section 10.1 shall terminate upon the
termination or expiration of this Agreement or, if the purchase option under
Section 16.2 is exercised, the Program Purchase Date. Upon termination of the
license granted in this Section 10.1, all rights in Pier 1 Licensed Marks
granted hereunder shall revert to Pier 1 or its Affiliates and Bank shall:
(i) discontinue immediately all use of Pier 1 Licensed Marks, or any of them,
and any colorable imitation thereof; and (ii) destroy all unused Pier 1 Credit
Cards, Applications, Account Documentation, Solicitation Materials, periodic
statements, materials, displays, advertising and sales literature and any other
items bearing any of Pier 1 Licensed Marks.
     (d) Ownership of Pier 1 Licensed Marks. Bank acknowledges that (i) Pier 1
Licensed Marks, all rights therein, and the goodwill associated therewith, are,
and shall remain, the exclusive property of Pier 1 or its Affiliates, (ii) it
shall take no action which shall adversely affect Pier 1 or its Affiliates’
exclusive ownership of Pier 1 Licensed Marks, or the goodwill associated with
Pier 1 Licensed Marks (it being understood that the collection of Accounts,
adverse action letters, and changes in terms of Accounts as required by
Applicable Law do not adversely affect goodwill, if done in accordance with the
terms of this Agreement), and (iii) any and all goodwill arising from use of
Pier 1
Credit Card Program Agreement — Page 40

 

--------------------------------------------------------------------------------

 

Licensed Marks by Bank shall inure to the benefit of Pier 1 or its Affiliates.
Nothing herein shall give Bank any proprietary interest in or to Pier 1 Licensed
Marks, except the right to use Pier 1 Licensed Marks in accordance with this
Agreement, and Bank shall not contest Pier 1 or its Affiliates’ title in and to
Pier 1 Licensed Marks.
     (e) Infringement by Third Parties. Bank shall use reasonable efforts to
notify Pier 1, in writing, promptly upon acquiring Knowledge of any infringing
use of any of Pier 1 Licensed Marks by any third party. If any of Pier 1
Licensed Marks is infringed, Pier 1 alone has the right, in its sole discretion,
to take whatever action it deems necessary to prevent such infringing use;
provided, however, that if Pier 1 or its Affiliates fail to take reasonable
steps to prevent infringement of Pier 1 Licensed Marks and such infringement has
an adverse effect upon the Program or the rights of Bank hereunder, Bank may
request that Pier 1 or its Affiliates take action necessary to alleviate such
adverse impact. Bank shall reasonably cooperate with and assist Pier 1 or its
Affiliates, at Pier 1’s expense, in the prosecution of those actions that Pier 1
or its Affiliates determines, in its sole discretion, are necessary or desirable
to prevent the infringing use of any of Pier 1 Licensed Marks.
       10.2 The Bank Licensed Marks.
     (a) Grant of License to Use the Bank Licensed Marks. Subject to the terms
and conditions of this Agreement, Bank hereby grants to Pier 1 a non-exclusive,
royalty-free, non-transferable right and license to use the Bank Licensed Marks
in the United States in connection with the creation, establishment, marketing
and administration of, and the provision of services related to, the Program.
All uses of the Bank Licensed Marks shall be in accordance with this Agreement
and any Trademark Style Guide, if any, delivered by Bank to Pier 1 from time to
time. All uses of the Bank Licensed Marks shall require the prior written
approval of Bank. To the extent Pier 1 delegates any of its rights or
obligations hereunder to any authorized Affiliate and/or authorized third party
in accordance with the terms and conditions of this Agreement, Pier 1 may
sublicense its rights in the Bank Licensed Marks hereunder to such authorized
Person; provided that such Person shall agree to comply with all of the terms
and conditions of the use of the Bank Licensed Marks hereunder and Pier 1 shall
remain liable for such Person’s failure to so comply. Except as expressly set
forth in this Section 10.2, the rights granted pursuant to this Section 10.2 are
solely for use of Pier 1 and may not be sublicensed without the prior written
approval of Bank.
     (b) New Bank Marks. If Bank adopts a trademark, service mark or other
source indicator that is not listed on Schedule 1.1(a) hereto (for purposes of
this Section 10.2, a “New Bank Mark”), Pier 1 may request that Bank add such New
Bank Mark to Schedule 1.1(a) hereto at no cost to Pier 1 and license its use
hereunder; Bank shall not unreasonably fail to do so, and upon Bank’s written
approval of the addition of such New Bank Mark, such New Bank Mark shall be
deemed added to Schedule 1.1(a).
     (c) Termination of License. The license granted in this Section 10.2 shall
terminate upon the termination or expiration of this Agreement or, if the
purchase option under Section 16.2 is exercised, three (3) months after the
closing date of the sale of the
Credit Card Program Agreement — Page 41

 

--------------------------------------------------------------------------------

 

Program Assets (“Program Purchase Date”). Upon the termination of the license
granted in this Section 10.2, all rights in the Bank Licensed Marks granted
hereunder shall revert to Bank and Pier 1 shall: (i) discontinue immediately all
use of the Bank Licensed Marks, or any of them, and any colorable imitation
thereof; and (ii) destroy all unused Pier 1 Credit Cards, Applications, Account
Documentation, Solicitation Materials, periodic statements, materials, displays,
advertising and sales literature and any other items, in each case, bearing any
of the Bank Licensed Marks.
     (d) Ownership of the Bank Licensed Marks. Pier 1 acknowledges that (i) the
Bank Licensed Marks, all rights therein, and the goodwill associated therewith,
are, and shall remain, the exclusive property of Bank, (ii) it shall take no
action which shall adversely affect Bank’s exclusive ownership of the Bank
Licensed Marks or the goodwill associated with the Bank Licensed Marks, and
(iii) any and all goodwill arising from use of the Bank Licensed Marks by Pier 1
shall inure to the benefit of Bank. Nothing herein shall give Pier 1 any
proprietary interest in or to the Bank Licensed Marks, except the right to use
the Bank Licensed Marks in accordance with this Agreement, and Pier 1 shall not
contest Bank’s title in and to the Bank Licensed Marks.
     (e) Infringement by Third Parties. Pier 1 shall use reasonable efforts to
notify Bank, in writing, promptly upon acquiring Knowledge of any infringing use
of any of the Bank Licensed Marks by any third party. If any of the Bank
Licensed Marks is infringed, Bank alone has the right, in its sole discretion,
to take whatever action it deems necessary to prevent such infringing use;
provided, however, that if Bank fails to take reasonable steps to prevent
infringement of the Bank Licensed Marks and such infringement has an adverse
effect upon the Program or the rights of Pier 1 hereunder, Pier 1 may request
that Bank take action necessary to alleviate such adverse impact. Pier 1 shall
reasonably cooperate with and assist Bank, at Bank’s expense, in the prosecution
of those actions that Bank determines, in its sole discretion, are necessary or
desirable to prevent the infringing use of any of the Bank Licensed Marks.
       10.3 Intellectual Property.
     (a) Independently-Owned Intellectual Property. Each Party shall continue to
own all of its Intellectual Property that existed as of the Closing Date. Each
Party also shall own all right, title and interest in the Intellectual Property
it develops or creates independently of the other Party during the Term.
     (b) Jointly-Owned Intellectual Property. Any proposal for the joint
development by the Parties of any new Intellectual Property for the Program
shall be approved of in advance by the Management Committee. Unless otherwise
agreed in writing by the Parties, the Management Committee shall also determine
in advance the respective rights of the Parties with respect to such new
Intellectual Property, and may determine that any such new Intellectual Property
jointly developed by Bank and Pier 1 in connection with the Program shall be
owned jointly and equally thereby (“Jointly Developed Intellectual Property”).
Any filings or other actions necessary to protect such Jointly Developed
Intellectual Property shall be filed jointly by Bank and Pier 1 and shall
identify both such Parties as the owners. Bank and Pier 1 shall cooperate fully,
and cause
Credit Card Program Agreement — Page 42

 

--------------------------------------------------------------------------------

 

their employees to cooperate fully, with each other in the filing of any such
filings or actions and, except as may be otherwise agreed by the Parties in
writing, shall share equally all costs and expenses relating to any such filings
or actions approved by the Parties. In the event that either Bank or Pier 1
declines to fund its portion of the costs incurred in connection with any such
filings or other actions, the other Party may proceed on its own with such
filings or other actions, and will own the resulting Intellectual Property.
     (c) Use of Jointly Developed Intellectual Property. During and after the
Term of this Agreement, each Party may use, license or otherwise exploit (or
permit others to do so) any Jointly Developed Intellectual Property referenced
herein solely at its own risk.
ARTICLE XI
REPRESENTATIONS, WARRANTIES AND COVENANTS
       11.1 General Representations and Warranties of Pier 1. Except as
Previously Disclosed, Pier 1 makes the following representations and warranties
to the Bank as of the date hereof, as of the Closing Date, and on each date that
Pier 1 submits to Bank Pier 1 Charge Transaction Data (except for
Section 11.1(d) which shall only be as of the date hereof and as of the Closing
Date):
     (a) Corporate Existence. Pier 1: (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation; (ii) is duly licensed or qualified to do business and is in good
standing as a foreign corporation in all jurisdictions in which the conduct of
its business or the activities in which it is engaged makes such licensing or
qualification necessary, except to the extent that its non-compliance would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Pier 1’s ability to perform its obligations hereunder; and
(iii) has all necessary licenses, permits, consents or approvals from or by, and
has made all necessary filings and registrations with, all governmental
authorities having jurisdiction, to the extent required for the ownership, lease
or conduct and operation of its business, except to the extent that the failure
to obtain such licenses, permits, consents or approvals or to make such filings
or registrations would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect upon Pier 1, the Program, the Accounts,
Cardholder Indebtedness or Pier 1’s ability to perform its obligations under
this Agreement.
     (b) Capacity; Authorization; Validity. Pier 1 has all necessary corporate
power and authority to (i) execute and enter into this Agreement, and
(ii) perform the obligations required of Pier 1 hereunder and the other
documents, instruments and agreements relating to the Program and this Agreement
executed by Pier 1 pursuant hereto. The execution and delivery by Pier 1 of this
Agreement and all documents, instruments and agreements executed and delivered
by Pier 1 pursuant hereto, and the consummation by Pier 1 of the transactions
specified herein, have been duly and validly authorized and approved by all
necessary corporate action of Pier 1. This Agreement (i) has been duly executed
and delivered by Pier 1, (ii) constitutes the valid and legally
Credit Card Program Agreement — Page 43

 

--------------------------------------------------------------------------------

 

binding obligation of Pier 1, and (iii) is enforceable in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization,
receivership or other laws affecting the rights of creditors generally and by
general equity principles including those respecting the availability of
specific performance).
     (c) Conflicts; Defaults; Etc. The execution, delivery and performance of
this Agreement by Pier 1, its compliance with the terms hereof, and consummation
of the transactions specified herein will not (i) conflict with, violate, result
in the breach of, constitute an event which would, or with the lapse of time or
action by a third party or both would, result in a default under, or accelerate
the performance required by, the terms of any contract, instrument or agreement
to which Pier 1 is a party or by which it is bound, or to which any of the
assets of Pier 1 or any of its Subsidiaries are subject; (ii) conflict with or
violate the articles of incorporation or by-laws, or any other equivalent
organizational document(s), of Pier 1; (iii) breach or violate any Applicable
Law or Applicable Order, in each case, applicable to Pier 1; (iv) require the
consent or approval of any other party to any contract, instrument or commitment
to which Pier 1 is a party or by which it is bound; or (v) require any filing
with, notice to, consent or approval of, or any other action to be taken with
respect to, any Governmental Authority, except, in the cases of clauses (i) and
(iii)-(v), for such conflicts, breaches, defaults, violations or failures to
obtain such consents or approvals or make or obtain such filings, notices,
consents and approvals as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect upon Pier 1, the Program, the
Accounts, Cardholder Indebtedness or Pier 1’s ability to perform it’s
obligations under this Agreement.
     (d) No Litigation. No action, claim, litigation, proceeding, arbitration or
investigation is pending or, to the Knowledge of Pier 1, threatened against Pier
1 or any of its Subsidiaries, at law, in equity or otherwise, by or before any
Governmental Authority, to which Pier 1 or any of its Subsidiaries is a served
party, which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect upon the Program, the Accounts, Cardholder
Indebtedness or Pier 1’s ability to perform its obligations under this
Agreement.
     (e) Compliance with Laws. Except to the extent that any of the following
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect upon the Program or the ability of Pier 1 to perform its
obligations under this Agreement, Pier 1 is in compliance with all requirements
of Applicable Law relating to the Credit Card Business and neither of Pier 1 nor
any of its Subsidiaries is subject to any order, directive or restriction of any
kind issued by any Governmental Authority that restricts in any respect its
ability to perform its obligations under the Program.
     (f) Insurance. Pier 1 maintains insurance policies with respect to its
properties under such terms and conditions as are (i) commercially reasonable
and available from time to time and (ii) customary for similarly situated
Persons engaged in similar business, except in each case for insurance which a
failure to maintain would not reasonable be expected to have a Material Adverse
Effect on the ability of Pier 1 to perform its obligations under this Agreement.
Credit Card Program Agreement — Page 44

 

--------------------------------------------------------------------------------

 

     (g) Pier 1 Licensed Marks. Pier 1 has the right, power and authority to
grant the rights to use Pier 1 Licensed Marks expressly granted herein.
     (h) No Defaults. Pier 1 is not in default with respect to any material
contract, agreement, lease, or other instrument, except for defaults, which
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect upon the Program, the Accounts, the Cardholder
Indebtedness, or Pier 1.
     (i) Title to Goods. In no case shall any of the Cardholder Indebtedness
arising from the sale of Pier 1 Goods and Services include any sales of products
to which Pier 1 has not acquired title at the time of sale.
       11.2 General Representations and Warranties of the Bank. Except as
Previously Disclosed, the Bank hereby makes the following representations and
warranties to Pier 1, each and all of which shall survive the execution and
delivery of this Agreement, and each and all of which shall be deemed to be
restated and remade with the same force and effect on each day of the Term
(except for Section 11.2(d) which shall only be as of the date hereof and as of
the Closing Date):
     (a) Corporate Existence. Bank: (i) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation; and
(ii) is duly licensed or qualified to do business and is in good standing as a
foreign entity in all jurisdictions in which the conduct of the its business or
the activities in which it is engaged, or proposes to engage pursuant to this
Agreement, makes such licensing or qualification necessary, except to the extent
that its non-compliance would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect upon the Bank, the Program, the
Accounts, Cardholder Indebtedness or the Bank’s ability to perform its
obligations under this Agreement. The Bank has all necessary licenses, permits,
consents or approvals from or by, and have made all necessary filings and
registrations with, all governmental authorities having jurisdiction, to the
extent required for the ownership, lease or conduct and operation of their
businesses and the Credit Card Business pursuant to this Agreement, except to
the extent that the failure to obtain such licenses, permits, consents or
approvals or to make such filings or registrations would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
upon the Bank, the Program, the Accounts, Cardholder Indebtedness or the Bank’s
ability to perform its obligations under this Agreement.
     (b) Capacity; Authorization; Validity. Bank has all necessary corporate or
similar power and authority to (i) execute and enter into this Agreement, and
(ii) perform the obligations required of the Bank hereunder and the other
documents, instruments and agreements relating to the Program and this Agreement
executed by the Bank pursuant hereto. The execution and delivery by the Bank of
this Agreement and all documents, instruments and agreements executed and
delivered by the Bank pursuant hereto, and the consummation by the Bank of the
transactions specified herein, have been duly and validly authorized and
approved by all necessary corporate or similar actions of the Bank. This
Agreement (i) has been duly executed and delivered by the Bank, (ii) constitutes
the valid and legally binding obligation of the Bank, and (iii) is enforceable
in accordance
Credit Card Program Agreement — Page 45

 

--------------------------------------------------------------------------------

 

with its terms (subject to applicable bankruptcy, insolvency, reorganization,
receivership or other laws affecting the rights of creditors generally and by
general equity principles including those respecting the availability of
specific performance).
     (c) Conflicts; Defaults; Etc. The execution, delivery and performance of
this Agreement by the Bank, its compliance with the terms hereof, and the
consummation of the transactions specified herein will not (i) conflict with,
violate, result in the breach of, constitute an event which would, or with the
lapse of time or action by a third party or both would, result in a default
under, or accelerate the performance required by, the terms of any contract,
instrument or agreement to which any of Bank or any of its Subsidiaries is a
Party or by which they are bound, or to which any of the assets of Bank or any
of its Subsidiaries are subject; (ii) conflict with or violate the articles of
incorporation or by-laws, or any other equivalent organizational document(s), of
the Bank; (iii) breach or violate any Applicable Law or Applicable Order, in
each case, applicable to the Bank; (iv) require the consent or approval of any
other Party to any contract, instrument or commitment to which Bank is a Party
or by which it is bound; or (v) require any filing with, notice to, consent or
approval of, or any other action to be taken with respect to, any Governmental
Authority, except, in the cases of clauses (i) and (iii)-(v), for such
conflicts, breaches, defaults, violations or failures to obtain such consents or
approvals or make or obtain such filings, notices, consents and approvals as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect upon the Bank, the Program, the Accounts, Cardholder
Indebtedness or the ability of the Bank to perform their obligations under this
Agreement.
     (d) No Litigation. Except as described in the publicly filed prospectuses
in connection with the Chase Issuance Trust, no action, claim, litigation,
proceeding, arbitration or investigation is pending or, to the Knowledge of
Bank, threatened against Bank or any of its Subsidiaries, at law, in equity or
otherwise, by or before any Governmental Authority, to which Bank or any of its
Subsidiaries is a served Party, which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect upon the Bank, the
Program, the Accounts, Cardholder Indebtedness or the ability of the Bank to
perform its obligations under this Agreement.
     (e) Compliance with Laws.
     (i) Except to the extent that any of the following would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
upon the Program or the ability of the Bank to perform its obligations under
this Agreement,
     (A) Bank is in material compliance with all Applicable Law relating to
their Credit Card business; and
     (B) Bank or any of its Subsidiaries is not subject to any capital plan or
supervisory agreement, cease-and-desist or similar order or directive or
memorandum of understanding between it and any Governmental Authority or issued
by any Governmental Authority, nor
Credit Card Program Agreement — Page 46

 

--------------------------------------------------------------------------------

 

has any of them adopted any board resolutions at the request of any Governmental
Authority.
     (ii) Bank or any of its Subsidiaries is not subject to any order, directive
or restriction of any kind issued by any Governmental Authority that restricts
in any respect its operation of their Credit Card business; and the Bank is not
aware of any fact or circumstance that would in any way materially delay or
impede their ability to perform all of its obligations under the Program.
     (f) Servicing Qualifications. Bank is licensed and qualified in all
jurisdictions necessary to service the Accounts in accordance with all
Applicable Laws, except where the failure to be so qualified would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the ability of the Bank to perform its obligations under this
Agreement. Bank has all necessary facilities, equipment, supplies and such other
resources as are reasonably necessary to provide any Services. During the Term,
Bank maintains internal controls in the manner and scope described in
Schedule 11.2(f) or controls that are substantially similar.
     (g) Bank Licensed Marks. Bank has the right, power and authority to grant
the rights to use the Bank Licensed Marks expressly granted herein.
     (h) Books and Records. All books and records of the Bank and its
Subsidiaries related to their Credit Card business have been maintained
accurately and in accordance with all requirements of Applicable Law applicable
to Bank and its Credit Card business, except for any instances of inaccuracy or
noncompliance that would not reasonably be expected to have a Material Adverse
Effect on the ability of the Bank to perform their obligations under this
Agreement.
     (i) Insurance. Bank maintains insurance policies with respect to their
properties under such terms and conditions as are (i) commercially reasonable
and available from time to time and (ii) customary for similarly situated
Persons engaged in similar business, except in each case for insurance which a
failure to maintain would not reasonable be expected to have a Material Adverse
Effect on the ability of the Bank to perform its obligations under this
Agreement.
       11.3 No other Representations or Warranties. Except as expressly set
forth in Sections 11.1 and 11.2, neither Bank nor Pier 1 has made or makes any
other express or implied representations, or any express or implied warranty,
either written or oral, with respect to the Credit Card Business, the Program,
the Bank or Pier 1, or as to any other matter whatsoever.
       11.4 General Covenants of Pier 1.
     (a) Litigation. Pier 1 promptly shall notify Bank in writing if it receives
written notice of any litigation that, if adversely determined, would reasonably
be expected to have a Material Adverse Effect on the Program, the Accounts in
the aggregate or Pier 1’s ability to perform its obligations hereunder.
Credit Card Program Agreement — Page 47

 

--------------------------------------------------------------------------------

 

     (b) Reports and Notices. Pier 1 shall provide Bank with a facsimile notice
specifying the nature of any Pier 1 Event of Default, or any event which, with
the giving of notice or passage of time or both, would constitute a Pier 1 Event
of Default, or any development or other information which is likely to have a
Material Adverse Effect on the Program, the Accounts, Cardholder Indebtedness or
Pier 1’s ability to perform its obligations pursuant to this Agreement. Notices
pursuant to this Section 11.4(b) relating to Pier 1 Events of Default shall be
provided within two (2) Business Days after Pier 1 has Knowledge of the
existence of such default. Notices relating to all other events or developments
described in this Section 11.4(b) shall be provided (i) promptly after any of
Pier 1 has Knowledge of the existence of such event or development if such event
or development has already occurred, and (ii) with respect to events or
developments that have yet to occur, as early as reasonably practicable under
the circumstances. Any notice provided under this Section shall be confirmed in
writing to Bank within five (5) Business Days after the transmission of the
initial notice.
     (c) Applicable Law/Operating Procedures. Pier 1 shall at all times during
the Term comply in all material respects with Applicable Law affecting its
obligations under this Agreement and the Operating Procedures.
     (d) Disputes with Cardholders. Pier 1 shall cooperate with Bank in a timely
manner (but in no event less promptly than required by Applicable Law) to
resolve all disputes with Cardholders.
     (e) Financial Statements. If at any time during the Term, Pier 1 Imports,
Inc. does not publicly file periodic reports with the Securities and Exchange
Commission, Pier 1 Imports, Inc. shall provide to Bank (i) its audited
consolidated annual financial statements within 90 days of the end of each
Fiscal Year, and (ii) its unaudited consolidated quarterly financial statements
within 60 days of the end of each Fiscal Quarter. Such statements shall include
the consolidated balance sheet, income statement and statement of cash flows,
all prepared in accordance with GAAP applied on a consistent basis (except for
normal year end adjustments and the absence of footnotes on the quarterly
statements).
     (f) Books and Records. Pier 1 shall keep adequate records and books of
account with respect to its activities in connection with the Program, in which
proper entries reflecting all of Pier 1’s financial transactions are made in
accordance with GAAP.
     (g) Program Support. Pier 1 shall not take any action that Bank reasonably
concludes is materially inconsistent with the Program Objectives or otherwise
materially adversely affects the Program or Bank’s relations with the
Cardholders in any material respect. Bank acknowledges and agrees that in the
event Pier 1 takes actions in connection with the operation of its business that
result in an Adverse Sales Development, any such actions will be governed by
Section 11.4(i) and not Section 11.4(g).
     (h) Account Covenants. Until the expiration or termination of the Program,
Pier 1 covenants to do the following with respect to the Accounts:
Credit Card Program Agreement — Page 48

 

--------------------------------------------------------------------------------

 

     (i) maintain a policy for the exchange and return of goods and adjustments
for services rendered or not rendered that is communicated in accordance with
Applicable Law and shall promptly deliver applicable Pier 1 Charge Transaction
Data to the Cardholder and include credit for such returns or adjustments in the
Pier 1 Charge Transaction Data in accordance with the terms of this Agreement
and the Operating Procedures; and
     (ii) comply with all warranties, if any, with respect to all Pier 1 Goods
and Services.
     (i) Adverse Sales Development. Bank’s sole remedy with respect to a decline
in sales resulting from an Adverse Sales Development, other than as a result of
a breach of this Agreement by Pier 1 except for a breach of section 11.4(g),
shall be for Pier 1 to pay to Bank the amount as calculated in accordance with
Schedule 11.4(i) and otherwise on the terms set forth on Schedule 11.4(i).
Except as qualified by the preceding sentence, Bank shall not be deemed to have
waived any of its rights with respect to claims other than claims related to the
decline in sales.
     (j) Solicitation of Pier 1 Customers. Subject to compliance with (i)
Applicable Law, (ii) Pier 1’s or its Affiliates’ agreements with third parties,
(iii) Pier 1’s privacy policies, (iv) the other terms and conditions of this
Agreement, and (v) such criteria as may be mutually agreed upon; Pier 1 may
agree to permit Bank from time to time during the Term to solicit or offer
Approved Ancillary Products to Cardholders and other Pier 1 customers, including
“In-Touch” customers, whom Pier 1 has determined are available to be solicited
by Bank if the Parties reach mutual agreement with respect to the compensation
payable to Pier 1 for such solicitation or offer. Notwithstanding the foregoing,
Bank may, without prior approval and additional compensation to Pier 1 with
respect to any sales, solicit Cardholders for the products listed in Schedule
11.4(j).
       11.5 General Covenants of the Bank.
     (a) Litigation. Bank shall notify Pier 1 in writing if it receives written
notice of any litigation that, if adversely determined, would reasonably be
expected to have a Material Adverse Effect on the Program, the Accounts in the
aggregate, the Cardholder Indebtedness, or Bank’s ability to perform its
obligations hereunder.
     (b) Reports and Notices. Bank shall provide Pier 1 with a facsimile notice
specifying the nature of any Bank Event of Default, or any event which, with the
giving of notice or passage of time or both, would constitute a Bank Event of
Default, or any development or other information which is likely to have a
Material Adverse Effect on the Program, the Accounts, the Cardholder
Indebtedness or Bank’s ability to perform its obligations pursuant to this
Agreement. Notice pursuant to this Section 11.5(b) relating to Bank Events of
Default shall be provided within two (2) Business Days after Bank has Knowledge
of the existence of such default. Notices relating to all other events or
developments described in this Section 11.5(b) shall be provided (i) promptly
after Bank obtains Knowledge of the existence of such event or development if
such event or development has already occurred, and (ii) with respect to events
or developments that
Credit Card Program Agreement — Page 49

 

--------------------------------------------------------------------------------

 

have yet to occur, as early as reasonably practicable under the circumstances.
Any notice produced under this section shall be confirmed in writing to Pier 1
within five (5) Business Days after transmission of the initial notice.
     (c) Applicable Law/Operating Procedures. Bank shall at all times during the
Term comply in all material respects with Applicable Law affecting their
obligations under this Agreement and the Operating Procedures. Bank shall at all
times during the Term maintain a federal bank charter and continue its existence
as a bank under the laws of the United States.
     (d) Books and Records. Bank shall keep adequate records and books of
account with respect to the Accounts and Cardholder Indebtedness in which proper
entries, reflecting all of the financial transactions relating to the Program,
are made in accordance with GAAP and the requirements of this Agreement. The
Bank shall keep adequate records and books of account with respect to their
activities, in which proper entries reflecting all of the financial transactions
are made in accordance with GAAP.
     (e) Servicing Qualifications. Bank shall at all times during the Term
remain licensed and qualified in all jurisdictions necessary to service the
Accounts in accordance with all Applicable Laws, except where the failure to be
so qualified would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the ability of the Bank to perform its
obligations under this Agreement. Bank shall at all times during the Term
maintain the necessary facilities, equipment, supplies and such other resources
in good working order as are reasonably necessary to provide any Services
required to be provided by it pursuant to Section 7.2 in accordance with the
SLAs set forth in Schedule 7.3(a).
     (f) Program Support. Bank shall not take any action that Pier 1 reasonably
concludes is materially inconsistent with the Program Objectives or otherwise
materially adversely affects the Program or Pier 1’s retail business or
relations with its customers in any material respect.
     (g) Disputes with Cardholders. Bank shall cooperate with Pier 1 in a timely
manner (but in no event less promptly than required by Applicable Law) to
resolve all disputes with Cardholders.
ARTICLE XII
ACCESS, AUDIT AND DISPUTE RESOLUTION
       12.1 Access Rights. Each Party shall permit the other Party and its
representatives and regulators to visit its facilities related to the Program
during normal business hours with reasonable advance notice. The reviewing Party
shall employ such reasonable procedures and methods as are necessary and
appropriate in the circumstances, minimizing interference to the extent
practicable with the reviewed Party’s normal business operations. The reviewed
Party shall use commercially reasonable efforts to facilitate the reviewing
Party’s review, including making reasonably available such personnel of the
reviewed Party and its service providers to assist the reviewing Party and its
representatives as reasonably requested. Each Party shall
Credit Card Program Agreement — Page 50

 

--------------------------------------------------------------------------------

 

also permit the other Party and its representatives and regulators to review
(during normal business hours) and, upon reasonable advance notice, obtain
copies of the books and records relating to the Program; provided that neither
Party shall be required to provide access to records to the extent that (a) such
access is prohibited by Applicable Law, (b) such records are legally privileged,
(c) such records are company planning documents of such Party or any of its
Affiliates, operating budgets, management reviews or employee records, (d) such
records relate to other customers of, or credit programs operated by, Bank or
Pier 1 (except as may be necessary or appropriate in connection with any
consideration of the terms and conditions of Comparable Partner Programs and
Competing Retail Programs as contemplated by this Agreement to the extent such
terms and conditions are publicly known or otherwise known and not subject to
any confidentiality obligations on the part of either Party) or (e) such records
relate to other customers or operations of such Party other than the Program or
to personnel records not normally disclosed in connection with audits.
       12.2 Audit Rights. Twice per year or at any time that a Party disputes
the amount of any monies owed by either Party to the other hereunder, such
Party, at its sole cost and expense and upon ten (10 ) Business Days prior
notice to the other Party, may conduct an audit of those of the other Party’s
financial and operational records that are under the control and/or direction of
the audited Party and relate to the Program or can be reasonably segregated.
Such audit shall be conducted during normal business hours in accordance with
generally accepted auditing standards and the auditing Party shall employ such
reasonable procedures and methods as are necessary and appropriate in the
circumstances, minimizing interference to the extent practicable with the
audited Party’s normal business operations. The audited Party shall use
commercially reasonable efforts to facilitate the auditing Party’s review,
including making reasonably available such personnel of the audited Party and
its service providers to assist the auditing Party and its representatives as
reasonably requested. The audited Party shall deliver any document or instrument
necessary for the auditing Party to obtain such records from any Person
maintaining records for the audited Party and shall maintain records pursuant to
its regular record retention policies. For purposes of this provision, the
audited Party also shall be required to provide records relating to the Program
held by Persons performing services in connection with the Program at the
auditing Party’s reasonable request. Notwithstanding the generality of the
foregoing, the audited Party shall not be required to provide access to records
to the extent that (a) such access is prohibited by Applicable Law, (b) such
records are legally privileged, (c) such records are company planning documents
of such Party or any of its Affiliates, operating budgets, management reviews or
employee records, (d) such records relate to other customers of, or credit
programs operated by, Bank or Pier 1 (except as may be necessary or appropriate
in connection with any consideration of the terms and conditions of Comparable
Partner Programs and Competing Retail Programs as contemplated by this Agreement
to the extent such terms and conditions are publicly known or otherwise known
and not subject to any confidentiality obligations on the part of either Party)
or (e) such records relate to other customers or operations of such Party other
than the Program or to personnel records not normally disclosed in connection
with audits.
       12.3 Accounting Dispute Resolution.
     (a) Any dispute with respect to amounts of $1 million or less due or
payable under this Agreement or other calculations hereunder of amounts of
$1 million or less
Credit Card Program Agreement — Page 51

 

--------------------------------------------------------------------------------

 

between the Parties arising out of or relating to this Agreement shall be
resolved as provided in this Section 12.3. The Parties agree to attempt in good
faith to resolve any such disputes. Except with respect to any indemnification
claim arising under Article XVI, which shall not be subject to the procedures of
this Section 12.3, in the event the Parties are unable to resolve any such
dispute, after negotiating in good faith for a period of not less than ten
(10) Business Days, either Party may request a nationally recognized firm of
independent accountants mutually agreeable to the Parties (the “Accountants”) to
reconcile any amounts in dispute; provided, however, that the Accountants’
determination shall be limited to the amount disputed by the Parties and in no
event shall such determination provide for a payment to any Party higher than
the amount claimed by the Party to be owed to such Party. Any such request shall
be in writing and shall specify with particularity the disputed amounts being
submitted for determination. Each Party agrees to promptly and in good faith
take all necessary action to designate the Accountants no later than ten (10)
Business Days after a request that such a designation be made. The Parties shall
cooperate fully in assisting the Accountants in their review, including by
providing the Accountants full access to all files, books and records (including
work papers of internal accountants of the Parties) relevant thereto and
providing such other information as the Accountants may reasonably request in
connection with any such review. Notwithstanding the generality of the
foregoing, the Parties shall not be required to provide the Accountants with
access to records to the extent that (i) such access is prohibited by Applicable
Law, (ii) such records are legally privileged or (iii) such records relate to
other customers of, or credit programs operated by, the Party (except as may be
necessary or appropriate in connection with any consideration of the terms and
conditions of Comparable Partner Programs and Competing Retail Programs as
contemplated by this Agreement to the extent such terms and conditions are
publicly known or otherwise known and not subject to any confidentiality
obligations on the part of either Party). In the event the determination made by
the Accountants requires either Party to make payment to the other Party of any
additional amount, such Party shall make such payment no later than five
(5) Business Days following receipt from the Accountants of written notice to
the Parties of such determination plus interest at the Federal Funds Rate on any
such amount due computed from and including the date such amount should have
been paid through and excluding the date of payment. If any payment due under
this Section 12.3 is not made within five (5) Business Days, Bank may set off
such amount against moneys owed to Pier 1 by Bank, other than the proceeds from
the sale of Pier 1 Goods and Services. The fees and expenses of such Accountants
arising out of such reviews shall be borne by the Parties in proportion to the
relative difference between their respective claims regarding the amount in
dispute and the amount determined by the Accountants. The determination of the
Accountants shall be final and binding on the Parties subject to the correction
of obvious errors.
       12.4 Dispute Resolution.
     (a) Generally. Any dispute among the Parties arising out of or relating to
this Agreement, including with respect to the interpretation of any provision of
this Agreement and with respect to the performance by Pier 1 or Bank hereunder
that is not otherwise required to be submitted for resolution under Section 12.3
shall be resolved as
Credit Card Program Agreement — Page 52

 

--------------------------------------------------------------------------------

 

provided in this Section 12.4; provided, however, that this provision shall not
limit either Party’s right to obtain any provisional or other remedy, including,
without limitation, specific performance or injunctive relief from any court of
competent jurisdiction, as may be necessary, in the aggrieved Party’s sole
discretion, to protect its rights under this Agreement. This Section 12.4 does
not apply to disputes among the Management Committee members with respect to
decisions expressly allocated to the Management Committee pursuant to this
Agreement (other than matters submitted to the Management Committee pursuant to
the dispute resolution procedure referred to in Section 12.4(b)(i)(B)). Such
disputes shall be resolved in accordance with Section 3.2.
     (b) Informal Dispute Resolution.
     (i) Prior to the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their dispute informally, as follows:
     (A) Managers. Upon the written request of either Party containing a short
statement as to the nature of the dispute and the requesting Party’s position
with respect thereto, the Managers shall meet for the purpose of negotiating in
good faith to seek resolution of such dispute.
     (B) Management Committee. If, after a period of five (5) Business Days, the
Managers are unable to resolve the dispute to the satisfaction of Pier 1 and
Bank, the dispute shall be brought before the Management Committee in accordance
with Section 3.2(e); provided, however, if the Management Committee cannot
resolve the dispute within five (5) Business Days, the dispute shall not be
considered an Unapproved Matter.
     (C) Appointment of Representatives. If, after a period of five (5) Business
Days, the Management Committee is unable to resolve the dispute to the
satisfaction of both Pier 1 and Bank, each Party shall appoint a designated
knowledgeable, responsible representative who is one of the top five highest
executives in the Credit Card division of Bank and one of the top five
executives of Pier 1 and who does not devote substantially all of his or her
time to performance under this Agreement, whose task it will be to meet for the
purpose of negotiating in good faith to seek resolution of the dispute.
With respect to clauses (A), (B) and (C) above, discussions, documents and
correspondence exchanged among the Managers and representatives, or submitted to
the Management Committee for purposes of these negotiations, shall be treated as
Confidential Information developed for purposes of settlement, exempt from
discovery and production, which shall not be admissible in any lawsuit without
the concurrence of the Parties. Documents identified in or provided with such
communications, which were not prepared for the purposes of the negotiations,
are not so
Credit Card Program Agreement — Page 53

 

--------------------------------------------------------------------------------

 

exempted and may, if otherwise admissible, be admitted in evidence in any
lawsuit.
     (ii) Formal proceedings for the resolution of the dispute shall not be
commenced until the earlier of:
     (A) either of the designated representatives concludes in good faith that
amicable resolution through continued negotiation of the dispute does not appear
likely and so states in a notice to the other designated representative or in a
joint declaration signed by each of them; or
     (B) twenty (20) Business Days after the appointment of designated
representatives pursuant to Section 12.4(b)(i)(C) above (it being understood
that this period shall be deemed to run notwithstanding any claim that the
process described in this Section 12.4 was not followed or completed).
     (iii) This Section 12.4 shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal proceedings earlier
than provided in clause (ii) above, to avoid the expiration of any applicable
limitations period or to preserve a superior position with respect to other
creditors.
ARTICLE XIII
CONFIDENTIALITY
       13.1 General Confidentiality.
     (a) For purposes of this Agreement, “Confidential Information” means any of
the following: (i) information that is provided by or on behalf of either Pier 1
or Bank to the other Party or its agents in connection with the Program
(including information provided prior to the date hereof or the Closing Date);
(ii) information about Pier 1 or Bank or their respective Affiliates, or their
respective businesses or employees, that is otherwise obtained by the other
Party in connection with the Program, in each case including: (A) information
concerning marketing plans, objectives and financial results; (B) information
regarding business systems, methods, processes, financing data, programs and
products; (C) information regarding any products offered or proposed to be
offered under the Program or the manner of offering of any such products;
(D) information unrelated to the Program obtained by Pier 1 or Bank in
connection with this Agreement, including by accessing or being present at the
business location of the other Party; and (E) proprietary technical information,
including source codes, or other proprietary information developed in connection
with the Program; (iii) the terms and conditions of this Agreement; and (iv) the
Marketing Plan. The provisions of this Article XIII governing Confidential
Information shall not govern Cardholder Data, Pier 1 Shopper Data or the Pier 1
Prospect List, which shall be governed by the provisions of Article VI.
     (b) The restrictions on disclosure of Confidential Information under this
Article XIII shall not apply to information received or obtained by Pier 1 or
Bank, as the
Credit Card Program Agreement — Page 54

 

--------------------------------------------------------------------------------

 

case may be, that: (i) is or becomes generally available to the public other
than as a result of disclosure in breach of this Agreement or any other
confidentiality obligations; (ii) is lawfully received on a non-confidential
basis from a third party authorized to disclose such information without
restriction and without breach of this Agreement; (iii) is contained in, or is
capable of being discovered through examination of, publicly available records
or products; (iv) is required to be disclosed by Applicable Law; provided that
the Party subject to such Applicable Law shall use reasonable efforts to avoid
such disclosure and notify the other Party of any such use or requirement prior
to disclosure of any Confidential Information obtained from the other Party in
order to afford such other Party an opportunity to seek a protective order to
prevent or limit disclosure of the Confidential Information to third Parties;
provided, further, that such information shall be disclosed only to the extent
required by such Applicable Law and shall otherwise remain Confidential
Information; or (v) is developed by Pier 1 or Bank, as the case may be, without
the use of any proprietary, non-public information provided by the other Party
under, or otherwise made available to such Party as a result of, this Agreement.
Nothing herein shall be construed to permit the Receiving Party (as defined
below) to disclose to any third party any Confidential Information that the
Receiving Party is required to keep confidential under Applicable Law.
     (c) The terms and conditions of this Agreement and the Marketing Plan and
all of the items referred to in clauses (A) through (E) of Section 13.1(a) shall
each be the Confidential Information of Pier 1 and/or Bank, as applicable, and
each of the Parties to this Agreement shall be deemed to be a Receiving Party of
each of them; provided, however, that the terms of this Agreement may be filed
by either Party with any Governmental Authority (including public filings with
the Securities and Exchange Commission) to the extent required by Applicable
Law.
     (d) If Pier 1, on the one hand, or Bank, on the other hand, receives
Confidential Information of the other Party (“Receiving Party”), the Receiving
Party shall do the following with respect to the Confidential Information of the
other Party (“Disclosing Party”): (i) keep the Confidential Information of the
Disclosing Party secure and confidential; (ii) treat all Confidential
Information of the Disclosing Party with the same degree of care as it accords
its own Confidential Information, but in no event less than a reasonable degree
of care; and (iii) implement and maintain commercially reasonable physical,
electronic, administrative and procedural security measures, including
commercially reasonable authentication, access controls, virus protection and
intrusion detection practices and procedures.
Credit Card Program Agreement — Page 55

 

--------------------------------------------------------------------------------

 

       13.2 Use and Disclosure of Confidential Information.
     (a) Each Receiving Party shall use and disclose the Confidential
Information of the Disclosing Party only for the purpose of performing its
obligations or enforcing its rights with respect to the Program or as otherwise
expressly permitted by this Agreement, and shall not accumulate in any way or
make use of such Confidential Information for any other purpose.
     (b) Each Receiving Party shall: (i) limit access to the Disclosing Party’s
Confidential Information to those employees, authorized agents, vendors,
consultants, service providers, accountants, advisors and subcontractors who
have a reasonable need to access such Confidential Information in connection
with the Program, the sale of Program Assets or other assets of Pier 1 and its
Affiliates or the establishment of a new Credit Card or other program or
arrangement for Pier 1, in each case in accordance with the terms of this
Agreement, and (ii) ensure that any Person with access to the Disclosing Party’s
Confidential Information agrees to be bound by a confidentiality agreement
containing the restrictions set forth in this Article XIII.
       13.3 Unauthorized Use or Disclosure of Confidential Information. Each
Receiving Party agrees that any unauthorized use or disclosure of Confidential
Information of the Disclosing Party might cause immediate and irreparable harm
to the Disclosing Party for which money damages might not constitute an adequate
remedy. In that event, the Receiving Party agrees that injunctive relief may be
warranted in addition to any other remedies the Disclosing Party may have. In
addition, the Receiving Party agrees promptly to advise the Disclosing Party by
telephone and in writing via facsimile of any security breach that may have
compromised any Confidential Information or of any unauthorized
misappropriation, disclosure or use by any Person of the Confidential
Information of the Disclosing Party which may come to its attention, and to take
all steps at its own expense reasonably requested by the Disclosing Party to
limit, stop or otherwise remedy such breach, misappropriation, disclosure or
use.
       13.4 Return or Destruction of Confidential Information. Upon the
termination or expiration of this Agreement, the Receiving Party shall comply
with the Disclosing Party’s reasonable instructions regarding the disposition of
the Disclosing Party’s Confidential Information, which may include return of any
and all the Disclosing Party’s Confidential Information (including any
electronic or paper copies, reproductions, extracts or summaries thereof) but
excluding any archival copy retained systemically as a function of the Receiving
Party’s disaster recovery process or material provided to the Receiving Party’s
(i) board of directors (or that of its ultimate parent corporation) or
(ii) regulators.; provided, however, that the Receiving Party in possession of
tangible property containing the Disclosing Party’s Confidential Information may
retain one archived copy of such material, subject to the terms of this
Agreement, which may be used solely for regulatory purposes and may not be used
for any other purpose. Such compliance shall be certified in writing, including
a statement that no copies of Confidential Information have been kept, except as
necessary for regulatory purposes.
Credit Card Program Agreement — Page 56

 

--------------------------------------------------------------------------------

 

ARTICLE XIV
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
       14.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an Event
of Default by a Party hereunder:
     (a) Such Party shall fail to perform, satisfy or comply with any
obligation, condition, covenant or other provision contained in this Agreement,
and (i) except as set forth in Section 14.2 or 14.3, such failure shall remain
unremedied for a period of thirty (30) days after the other Party shall have
given written notice thereof specifying the nature of such failure in reasonable
detail, provided that if such failure cannot be cured in a commercially
reasonable manner within such time, such failure shall not constitute an Event
of Default if the defaulting Party shall have initiated and diligently pursued a
cure within such time and such cure is completed within ninety (90) days from
the date of written notice regarding such failure, or (ii) such failure shall
either have a Material Adverse Effect on the licensed marks of the
non-defaulting Party, or materially diminish the economic value of the Program
to the non-defaulting Party.
     (b) Any representation or warranty by such Party contained in this
Agreement shall not be true and correct in any material respect as of the date
when made, and (i) the Party making such representation or warranty shall fail
to cure the event giving rise to such breach within thirty (30) days after the
other Party shall have given written notice thereof specifying the nature of
such breach in reasonable detail, provided that if such failure cannot be cured
in a commercially reasonable manner within such time, such breach shall not
constitute an Event of Default if the defaulting Party shall have initiated a
cure within such time and such cure is completed within ninety (90) days from
the date of written notice regarding such breach, or (ii) such failure shall
either have a Material Adverse Effect on the Program or the licensed marks of
the non-defaulting Party or materially diminish the economic value of the
Program to the non-defaulting Party.
       14.2 Defaults by Bank. The occurrence of any one or more of the events
set forth on Schedule 14.2 or the following events (regardless of the reason
therefor) shall constitute an Event of Default by Bank hereunder:
     (a) Bank shall fail to settle Pier 1 Charge Transaction Data and make
payment in full therefor within two (2) Business Days after such settlement
payment is due pursuant to Section 8.4.
     (b) Bank shall fail to make payment in full of any amount set forth on a
Monthly Settlement Sheet within ten (10) Business days of when due and payable.
     (c) Bank shall fail to make payment in full of any other amount due from
Bank to Pier 1 within five (5) Business Days of when due and payable.
     (d) Bank shall no longer be solvent or shall fail generally to pay its
debts as they become due or there shall be a substantial cessation of Bank’s
regular course of business.
Credit Card Program Agreement — Page 57

 

--------------------------------------------------------------------------------

 

     (e) Any regulatory authority having jurisdiction over Bank shall order the
appointment of a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Bank, as the case may be, or of any
substantial part of its properties, or order the winding-up or liquidation of
the affairs of the Bank, and such order shall not be vacated, discharged, stayed
or bonded within sixty (60) days from the date of entry thereof.
     (f) Bank shall (i) consent to the institution of proceedings specified in
paragraph (e) above or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of such entity or of any substantial part of its properties, or
(ii) take corporate or similar action in furtherance of any such action.
       14.3 Defaults by Pier 1. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an Event
of Default by Pier 1 hereunder:
     (a) Pier 1 shall fail to make payment in full of any amount set forth on a
Monthly Settlement Sheet within ten (10) Business Days of when due and payable.
     (b) Pier 1 shall fail to make payment in full of any other amount due from
Pier 1 to Bank within five (5) Business Days of when due and payable.
     (c) A petition under the U.S. Bankruptcy Code or similar law shall be filed
against Pier 1 and not be dismissed within sixty (60) days.
     (d) A decree or order by a court having jurisdiction (i) for relief in
respect of Pier 1 pursuant to the Bankruptcy Code or any other applicable
bankruptcy or other similar law, (ii) for appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of Pier 1 or
of any substantial part of its properties, or (iii) ordering the winding-up or
liquidation of the affairs of Pier 1 shall, in any such case be entered, and
shall not be vacated, discharged, stayed or bonded within sixty (60) days from
the date of entry thereof.
     (e) Pier 1 shall (i) file a petition seeking relief pursuant to the
Bankruptcy Code or any other applicable bankruptcy or other similar law,
(ii) consent to the institution of proceedings pursuant thereto or to the filing
of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Pier 1 or any substantial part of its properties, or (iii) take
corporate or similar action in furtherance of any such action.
       14.4 Remedies for Events of Default. In addition to any other rights or
remedies available to the Parties at law or in equity, upon the occurrence of an
Event of Default pursuant to Section 14.1, 14.2 or 14.3, the non-defaulting
Party shall be entitled to collect from the defaulting Party any amount
indisputably in default plus interest based on the Federal Funds Rate.
Credit Card Program Agreement — Page 58

 

--------------------------------------------------------------------------------

 

ARTICLE XV
TERM/TERMINATION
       15.1 Term. This Agreement shall continue in full force and effect for ten
(10) years from the Closing Date (the “Initial Term”). The Agreement shall be
renewed by mutual agreement of the Parties for successive terms of three
(3) years each (each, a “Renewal Term”) at least six (6) months prior to the
expiration of the Initial Term or current Renewal Term, as the case may be. If
the Parties do not agree to renew the Agreement at least six (6) months prior to
the expiration of the Initial Term or the current Renewal Term, as the case may
be, the Agreement shall automatically terminate at the end of the Initial Term
or current Renewal Term, as the case may be.
       15.2 Termination by Pier 1 Prior to the End of the Initial Term or a
Renewal Term. Pier 1 may terminate this Agreement upon written notice prior to
the end of the Initial Term or any Renewal Term:
     (a) after the occurrence of a Bank Event of Default;
     (b) upon thirty (30) days prior written notice if (i) there is a Change of
Control of Bank or (ii) one or more Persons that is not an Affiliate of Bank on
the date of this Agreement acquires a direct or indirect controlling interest in
Bank or any other Person conducting a substantial part of the Credit Card
business conducted within the corporate group of Bank or such corporate group
otherwise disposes of or terminates a substantial part of such Credit Card
business;
     (c) upon thirty (30) days prior written notice following a Change of
Control of Pier 1 if the other party to the business combination transaction
which resulted in or constituted such Change of Control issues, offers or
otherwise provides (either itself or through Affiliates) or is party to any
contractual arrangement with any other Person to issue, offer or otherwise
provide, any Credit Card in the United States;
     (d) upon thirty (30) days prior written notice if there is a change in
Applicable Law which reduces in any material respect the ability of Pier 1 or
any of its Affiliates to gain access to, or to use, any Cardholder Data, Pier 1
Shopper Data or Pier 1 Charge Transaction Data below the level of access and use
permitted under Applicable Law immediately prior to the date of this Agreement
and such decrease in Pier 1’s ability to access or use such Cardholder Data,
Pier 1 Shopper Data, or Pier 1 Charge Transaction Data results in a material
reduction in Pier 1’s then existing promotion of Pier 1 Goods and Services,
unless such reduction in access would be incapable of being eliminated or
mitigated if Pier 1 were to terminate this Agreement and/or repurchase the
Program Assets (either for itself and its Affiliates or in order to enter into
alternative program arrangements with a third party other than Bank); provided,
however, that prior to delivering a notice of termination pursuant to this
Section 15.2, Pier 1 shall engage in good faith negotiations with Bank to modify
the Program in a way that would preserve at least the same level of access and
use of such data for the benefit of Pier 1 and its Affiliates following the
relevant change in Applicable Law as was permissible prior to the date of this
Agreement, such negotiations not to terminate (in the absence of an
Credit Card Program Agreement — Page 59

 

--------------------------------------------------------------------------------

 

agreement between the Parties on any modification) earlier than thirty (30) days
after the earlier of (i) the date on which one of the Parties delivers a notice
to the other that the relevant change in Applicable Law is likely to occur or
(ii) the date on which the relevant change in Applicable Law takes effect; or
     (e) upon thirty (30) days prior written notice if there have been more than
three (3) Unapproved Matters except Pier 1 Matters within the last twelve
(12) Fiscal Months that are anticipated to be material to the economics of the
Program or the Pier 1 brand, provided that if the Management Committee votes on
an identical matter more than one time and fails to reach agreement on such
identical matter without any change in the circumstances surrounding such
matter, for purposes of this Section 15.2(e), such matter will only count as one
(1) Unapproved Matter.
       15.3 Termination by Bank Prior to the End of the Initial Term or a
Renewal Term. Bank may terminate this Agreement upon written notice prior to the
end of the Initial Term or any Renewal Term after the occurrence of a Pier 1
Event of Default.
       15.4 Automatic Termination. Upon termination of the Purchase Agreement
without the occurrence of the Closing, this Agreement shall automatically
terminate and shall be null and void.
ARTICLE XVI
EFFECTS OF TERMINATION
       16.1 General Effects.
     (a) All solicitations, marketing and advertising of the Program, other than
acceptance of applications through Pier 1 Channels in the ordinary course of
business consistent with past practice, shall cease upon the expiration or
termination of this Agreement, except as the Parties may otherwise mutually
agree, provided that the Parties shall continue to operate the Program in
accordance with the terms of this Agreement and service the Accounts in good
faith and in the ordinary course of their respective businesses, subject to the
terms of this Agreement, until the provisions of Section 16.2 are satisfied. The
Parties shall cooperate to ensure the orderly wind-down or transfer of the
Program.
     (b) Upon the satisfaction of the provisions of Section 16.2, all
obligations of the Parties under this Agreement shall cease, except that the
provisions specified in Section 18.24 shall survive.
     (c) If this Agreement terminates for any reason set forth in Section 15.2
or 15.3 other than 15.2 (a), Pier 1 shall pay to Bank the applicable amount
indicated in Schedule 16.1, which amount may be set-off by Pier 1 against any
sums which may then be due and owing from Bank to Pier 1.
Credit Card Program Agreement — Page 60

 

--------------------------------------------------------------------------------

 

       16.2 Pier 1’s Option to Purchase the Program Assets.
     (a) If this Agreement expires or is terminated by either Party for whatever
reason, Pier 1 has the option to purchase, or arrange the purchase by a third
party nominated by Pier 1 (a “Nominated Purchaser”), of the Program Assets from
Bank.
     (b) The purchase option given by Section 16.2(a) is exercisable by Pier 1
or the Nominated Purchaser serving notice on Bank no later than sixty (60) days
after the receipt of the information with respect to the Program Assets required
to be delivered by Bank pursuant to Section 16.2(e); provided, however, that
Pier 1 shall request such information with respect to the Program Assets within
twenty (20) days following either (i) the date on which the Parties’ right to
agree to renew the Agreement pursuant to Section 15.1 has expired without such
renewal having occurred or (ii) the date any Party receives written notice of
the exercise of the other Party’s termination rights pursuant to Article XV.
     (c) If such purchase option is exercised, Pier 1 or the Nominated Purchaser
must complete the purchase of the Program Assets within one hundred eighty
(180) days after the notice has been given pursuant to Section 16.2(b);
provided, that if, in connection with the purchase of the Program Assets by a
Nominated Purchaser, any required regulatory approvals or rating agency consents
are not received within one hundred eighty (180) days after notice has been
given pursuant to Section 16.2(b), Pier 1 shall complete the purchase of the
Program Assets on behalf of the Nominated Purchaser within two hundred seventy
(270) days after notice has been given pursuant to Section 16.2(b). The date of
the completion of any purchase under this Section 16.2(c) shall be the “Program
Purchase Date.”
     (d) The purchase price for the Program Assets shall be as determined in
accordance with Schedule 16.2(d).
     (e) The Parties shall use commercially reasonable efforts to minimize
transaction costs and Bank shall provide Pier 1 and the Nominated Purchaser and
their respective representatives reasonable access to the records and accounts
relating to the Program Assets for the purpose of conducting due diligence
investigations to determine whether they wish to purchase the Program Assets and
shall provide as soon as reasonably practicable (but in no event more than
fifteen (15) days) following a request therefor from Pier 1 or its Nominated
Purchaser a master file of the Accounts (which shall include data for at least
the twelve (12) month period preceding the month in which the master file is
requested and shall be updated upon request of Pier 1); provided, however, that
Bank shall be entitled to require any Nominated Purchaser to enter into
customary confidentiality arrangements before providing it with such access. The
Parties shall promptly negotiate in good faith and execute a purchase agreement
for the Program Assets to be repurchased, which shall contain terms and
conditions substantially similar to those in the Purchase Agreement (if
applicable). Bank shall provide reasonable assistance in connection with the
conversion of the Program Assets to the Systems of Pier 1 or the Nominated
Purchaser, including provision of interim services in accordance with the
provisions of this Agreement until such conversion occurs; provided, however,
that
Credit Card Program Agreement — Page 61

 

--------------------------------------------------------------------------------

 

Bank shall not be obligated to provide such interim services for more than
(i) two hundred seventy (270) days after notice has been given pursuant to
Section 16.2(b) in connection with a purchase of the Program Assets by a
Nominated Purchaser or (ii) one year after the execution date of the purchase
agreement with respect to the repurchase of the Program Assets by Pier 1 subject
to a reasonable servicing fee. The Parties shall not unreasonably withhold or
delay execution of such purchase agreement or any other documents necessary to
effectuate such sale. The Parties shall use reasonable efforts to ensure that
the Program Purchase Date occurs as promptly as reasonably practicable following
the execution of such purchase agreement.
       16.3 Rights of Bank if Purchase Option Not Exercised.
     (a) If this Agreement expires or is terminated and Pier 1 gives written
notice that it shall not exercise their option referred to in Section 16.2 or
otherwise fails to exercise its option within the time period specified in
Section 16.2, Pier 1 shall have no further rights whatsoever in the Program
Assets. In such event, Bank shall have the right in its sole discretion on or
after the expiration or termination of this Agreement to:
     (i) issue to Cardholders a replacement or substitute Credit Card (which
card must not bear any Pier 1 Licensed Marks or any other trademarks or source
indicators confusingly similar thereto) with such characteristics as Bank
considers appropriate (the cost of card re-design and re-issue being borne by
Bank); provided that the replacement or substitute Credit Card shall not be
issued in cooperation with any Competing Retail Program; provided, further, that
Pier 1 shall be permitted to add an enclosure to the last two (2) Billing
Statements to the effect that the Program has been terminated subject to Bank
review and approval;
     (ii) subject to Applicable Law, notify Cardholders that Bank shall cease
providing credit under the Accounts and require repayment of all amounts
outstanding on all Accounts until all associated receivables have been repaid;
     (iii) sell the Accounts and associated receivables to a third party
purchaser, other than a Competing Retail Program, selected by Bank at a price
agreed between Bank and the purchaser; or
     (iv) any combination of (i), (ii) and (iii).
     (b) Notwithstanding the foregoing, in no event shall Bank use or disclose
or permit any of its Affiliates to use or disclose the Cardholder Data, Pier 1
Shopper Data or the Pier 1 Prospect List to market or promote a Credit Card or
ancillary product together with any retailer.
     (c) Within sixty (60) days after Pier 1 give written notice that they shall
not exercise their option referred to in Section 16.2 or after the time period
for Pier 1 to exercise such option shall have expired, Bank shall no longer use
any of Pier 1 Licensed Marks (or any other trademarks or source indicators
confusingly similar thereto) and must rebrand Pier 1 Credit Cards; provided that
thereafter Bank may continue to use Pier
Credit Card Program Agreement — Page 62

 

--------------------------------------------------------------------------------

 

1 Licensed Marks solely to the extent necessary to identify the Accounts in
connection with the billing and collection thereof and as otherwise required by
Applicable Law.
ARTICLE XVII
INDEMNIFICATION
       17.1 Pier 1 Indemnification of Bank. From and after the Closing Date,
Pier 1 shall indemnify and hold harmless Bank, its Affiliates, and their
respective officers, directors and employees from and against and in respect of
any and all losses, liabilities, damages, costs and expenses of whatever nature,
including reasonable attorneys’ fees and expenses, which are caused or incurred
by, result from, arise out of or relate to:
     (a) any Retail Merchant’s negligence or recklessness or willful misconduct
(including acts and omissions) relating to the Program;
     (b) any breach by Pier 1 of any of the material terms, covenants,
representations, warranties or other provisions contained in this Agreement;
     (c) any actions or omissions by Bank taken or not taken at Pier 1’s written
request or direction pursuant to this Agreement except where Bank would have
been otherwise required to take such action (or refrain from acting) absent the
request or direction of Pier 1;
     (d) dishonest or fraudulent acts by a Retail Merchant, or any of its agents
or employees, in connection with the Program (except to the extent of any amount
charged back pursuant to Section 8.5);
     (e) any failure by the Retail Merchants to satisfy any of their obligations
to third parties with respect to the sale by them to such third parties of Pier
1 Goods and Services;
     (f) any Solicitation Materials distributed by Pier 1 and not (i) approved
by the Management Committee or (ii) provided by Bank;
     (g) any claim, suit or proceeding by any third party arising out of the
failure of a Retail Merchant to comply with Applicable Law in connection with
the Program or the Operating Procedures, unless such failure was the result of
any action taken or not taken by such Retail Merchant at the written request or
direction of Bank;
     (h) Pier 1’s Inserts or Billing Statement messages;
     (i) allegations by a third party that the use of Pier 1 Licensed Marks
constitutes infringement of any Intellectual Property right of such third party;
     (j) the quality or workmanship of Pier 1 Goods and Services, the compliance
of Pier 1 Goods and Services with Applicable Law, and product liability or
warranty claims relating directly to such Pier 1 Goods and Services;
Credit Card Program Agreement — Page 63

 

--------------------------------------------------------------------------------

 

     (k) any third party claim arising out of or in connection with personal
injury suffered at a Pier 1 location ; and
     (l) Pier 1 Matters that are not approved by the Management Committee.
       17.2 Bank’s Indemnification of Pier 1. From and after the Closing Date,
the Bank shall indemnify and hold harmless Pier 1, its Affiliates and their
respective officers, directors and employees from and against and in respect of
any and all losses, liabilities, damages, costs and expenses of whatever nature,
including reasonable attorneys’ fees and expenses, which are caused or incurred
by, result from, arise out of or relate to:
     (a) Bank’s or its Affiliate’s negligence or recklessness or willful
misconduct (including acts and omissions) relating to the Program;
     (b) any breach by Bank or any of its Affiliates, employees or agents of any
of the material terms, covenants, representations, warranties or other
provisions contained in this Agreement or any Cardholder Agreement;
     (c) any actions or omissions by Pier 1 or its Affiliates taken or not taken
at the Bank’s written request or direction pursuant to this Agreement, except
where Pier 1 would have been otherwise required to take such action (or refrain
from acting) absent the request or direction of Bank;
     (d) dishonest or fraudulent acts by Bank, or any of its Affiliates, agents
or employees, in connection with the Program;
     (e) any failure by the Bank to satisfy any of its obligations to
(i) Cardholders with respect to the Program or the Accounts, whether pursuant to
the Cardholder Agreements or otherwise or (ii) any other third parties in
connection with its provision of other products and services to such third
parties;
     (f) any Account Documentation and Solicitation Materials approved by the
Management Committee and used by Pier 1 in that form and in accordance with
Bank’s instructions and/or the Operating Procedures that fails to comply with
Applicable Law, other than any content in the Solicitation Materials that
primarily relates to Loyalty Programs and was included in the Solicitation
Materials in the form provided by Pier 1 without any input from Bank with
respect to Applicable Law;
     (g) any claim, suit or proceeding by any third party arising out of the
failure of the Bank to comply with Applicable Law in connection with the Program
or the Operating Procedures unless such failure was the result of any action
taken or not taken by the Bank at the specific written request or direction of
Pier 1;
     (h) Bank’s Inserts or Billing Statement messages;
     (i) allegations by a third party that the use of the Bank Licensed Marks
constitutes infringement of any Intellectual Property right of such third party;
and
Credit Card Program Agreement — Page 64

 

--------------------------------------------------------------------------------

 

     (j) Bank Matters not approved by the Management Committee.
       17.3 Procedures.
     (a) In case any claim is made, or any suit or action is commenced, against
a Person entitled to indemnification under this Article XVII (the “Indemnified
Party”) in respect of which indemnification may be sought by it under this
Article XVII, the Indemnified Party shall promptly give the other Party (the
“Indemnifying Party”) notice thereof and the Indemnifying Party shall be
entitled to participate in the defense thereof and, with prior written notice to
the Indemnified Party given not later than twenty (20) days after the delivery
of the applicable notice from the Indemnified Party, to assume, at the
Indemnifying Party’s expense, the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party. After notice from the Indemnifying Party
to such Indemnified Party of its election so to assume the defense thereof,
except as set forth in Section 17.3(b), the Indemnifying Party shall not be
liable to such Indemnified Party under this Section for any attorneys’ fees or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof, other than reasonable costs of investigation.
     (b) The Indemnified Party shall have the right to employ its own counsel if
the Indemnifying Party elects to assume such defense, but the fees and expenses
of such counsel shall be at the Indemnified Party’s expense, unless (i) the
employment of such counsel has been authorized in writing by the Indemnifying
Party, (ii) the Indemnifying Party has not employed counsel to take charge of
the defense within twenty (20) days after delivery of the applicable notice or,
having elected to assume such defense, thereafter ceases its defense of such
action, or (iii) the Indemnified Party has reasonably concluded that there may
be defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to direct the defense of such action on behalf of the
Indemnified Party), in any of which events the attorneys’ fees and expenses of
counsel to the Indemnified Party shall be borne by the Indemnifying Party.
     (c) The Indemnifying Party shall promptly notify the Indemnified Party if
the Indemnifying Party desires not to assume, or participate in, the defense of
any such claim, suit or action.
     (d) The Indemnified Party or Indemnifying Party may at any time notify the
other of its intention to settle or compromise any claim, suit or action against
the Indemnified Party in respect of which payments may be sought by the
Indemnified Party hereunder, and (i) the Indemnifying Party may settle or
compromise any such claim, suit or action solely for the payment of money
damages for which the Indemnified Party will be fully indemnified hereunder, but
shall not agree to any other settlement or compromise without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld (it being agreed that any failure of an Indemnified Party to consent to
any settlement or compromise involving relief other than monetary damages shall
not be deemed to be unreasonably withheld), and (ii) the Indemnified Party may
settle or compromise any such claim, suit or action solely for an amount not
exceeding
Credit Card Program Agreement — Page 65

 

--------------------------------------------------------------------------------

 

One Thousand Dollars ($1,000), but shall not settle or compromise any other
matter without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
       17.4 Notice and Additional Rights and Limitations.
     (a) If an Indemnified Party fails to give prompt notice of any claim being
made or any suit or action being commenced in respect of which indemnification
under this Article XVII may be sought, such failure shall not limit the
liability of the Indemnifying Party; provided, however, that this provision
shall not be deemed to limit the Indemnifying Party’s rights to recover from the
Indemnified Party for any loss, cost or expense which it can establish resulted
from such failure to give prompt notice.
     (b) This Article XVII shall govern the obligations of the Parties with
respect to the subject matter hereof but shall not be deemed to limit the rights
that either Party might otherwise have at law or in equity. The indemnification
provided in this Article XVIII shall not cover, and in no event shall any Party
be liable to the other Party for, any indirect, consequential, incidental,
exemplary, punitive or special damages or lost profits or revenues (“Indirect
Damages”) claimed by the Indemnified Party, except that the indemnification
provided for herein shall cover Indirect Damages for: (i) infringement,
violation or misappropriation of Intellectual Property; (ii) gross negligence or
recklessness or willful misconduct relating to the Program; or (iii) any breach
of any obligations relating to Cardholder Data, Pier 1 Shopper Data, the Pier 1
Prospect List and Confidential Information.
     (c) Without limiting their respective rights set forth elsewhere in this
Article XVII, and subject to the procedures for indemnification, any Indemnified
Party will act in good faith, will use commercially reasonable efforts to
mitigate any losses, will render to the Indemnifying Party such assistance as
the Indemnifying Party may reasonably require in order to ensure a prompt and
adequate defense to any suit, claim, or proceeding, and shall consult regularly
with the Indemnifying Party regarding the conduct of any proceeding or the
taking of any action for which indemnification may be sought.
ARTICLE XVIII
MISCELLANEOUS
       18.1 Precautionary Security Interest. Pier 1 and Bank agree that this
Agreement contemplates the extension of credit by Bank to Cardholders and that
Pier 1’s submission of Pier 1 Charge Transaction Data to Bank shall constitute
assignment by Pier 1 of any and all right, title and interest in such Pier 1
Charge Transaction Data and the Cardholder Indebtedness reflected therein.
Nothing herein is intended to provide for the direct extension of credit to Pier
1 by Bank. However, as a precaution in the unlikely event that any person
asserts that Article 9 of the UCC applies or may apply to the transactions
contemplated hereby, and to secure Pier 1’s payment of and performance of all
obligations of Pier 1 to Bank, Pier 1 hereby grants to Bank a first priority
present and continuing security interest in and to the following, whether now
existing or hereafter created or acquired: (i) all Accounts, Cardholder
Indebtedness, Account Documentation and Pier 1 Charge Transaction Data, and
(ii) all proceeds of the
Credit Card Program Agreement — Page 66

 

--------------------------------------------------------------------------------

 

Cardholder Indebtedness. In addition, Pier 1 agrees to take any reasonable
action requested by Bank, at Bank’s expense, to establish the first lien and
perfected status of such security interest. Upon the termination or expiration
of this Agreement, Bank shall execute such releases and file such notices as
Pier 1 may request to evidence the termination of the security interest provided
for in this Section 18.1. Pier 1 represents no security interest or signed
financing statement exists in favor of any third party covering any of the
assets in which Bank is granted a security interest, other than a security
interest or financing statement that has lapsed or been terminated or will lapse
or terminate before the Closing.
     18.2 Securitization, Participation or Pledge of Cardholder Indebtedness.
Pier 1 and Bank agree with respect to securitizations, participations or pledges
of Cardholder Indebtedness as set forth on Schedule 18.2.
     18.3 Assignment. Pier 1, on the one hand, and the Bank, on the other hand,
shall not assign this Agreement or any of its rights hereunder without the prior
written consent of the other Party, except to the extent the Cardholder
Indebtedness is securitized as permitted pursuant to Section 18.2 .
Notwithstanding the forgoing, Pier 1, on the one hand, and Bank, on the other
hand, may assign its rights and obligations hereunder to any entity which is a
successor to all or substantially all of its assets and business via merger or
consolidation, purchase of assets, or otherwise.
     18.4 Sale or Transfer of Accounts. Bank shall not sell or transfer in whole
or in part any Accounts; provided, however, that this Section 18.4 shall not
restrict the ability of Bank to securitize, participate or pledge the Cardholder
Indebtedness pursuant to Section 18.2. Bank may from time to time propose to
Pier 1 the terms under which it desires to sell any Pier 1 Accounts that have
been written-off in accordance with the Risk Management Policies, including the
payments proposed to be made to Pier 1 and Bank in connection with any such
sale. Pier 1 shall consider any such proposal in good faith but shall be
entitled to accept or reject any such proposal in its sole discretion.
     18.5 Subcontracting. Except as approved by the Management Committee, it is
understood and agreed that, in fulfilling its obligations under this Agreement,
no Person other than a Party hereto or its Affiliates may perform such Party’s
functions; provided that, to the extent a Party is not required to obtain
Management Committee approval under Section 3.2(d)(iv) to outsource or
subcontract a service, the Parties and their Affiliates may subcontract or
outsource such service to such third party. Each Party hereto shall be
responsible for functions performed by such Affiliates or other Persons to the
same extent the Party would be responsible if it performed such functions
itself.
     18.6 Amendment. Except as provided herein, this Agreement may not be
amended except by a written instrument signed by each of the Bank and Pier 1.
     18.7 Non-Waiver. No delay by a Party hereto in exercising any of its rights
hereunder, or partial or single exercise of such rights, shall operate as a
waiver of that or any other right. The exercise of one or more of a Party’s
rights hereunder shall not be a waiver of, or preclude the exercise of, any
rights or remedies available to such Party under this Agreement or in law or at
equity.
Credit Card Program Agreement — Page 67

 

--------------------------------------------------------------------------------

 

       18.8 Severability. In case any one or more of the provisions contained
herein shall be invalid, illegal or unenforceable in any respect under any law,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, and this Agreement
shall be reformed, construed and enforced as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein and there had been contained herein instead such valid, legal and
enforceable provisions as would most nearly accomplish the intent and purpose of
such invalid, illegal or unenforceable provision.
       18.9 Waiver of Jury Trial and Venue.
     (a) Each Party hereby waives all right to trial by jury in any action or
proceeding to enforce or defend any rights under this Agreement.
     (b) Each Party hereto hereby irrevocably submits to the jurisdiction of the
United States District Court of Delaware or, if such federal jurisdiction is
unavailable, in the state courts of the State of Delaware over any action
arising out of this Agreement, and each Party hereto hereby irrevocably waives
any objection which such Party may now or hereafter have to the laying of
improper venue or forum non conveniens. Each Party hereto agrees that a judgment
in any such action or proceeding may be enforced in other jurisdictions by suit
on the judgment or in any manner provided by law. Any and all service of process
and any other notice in any such suit, action or proceeding with respect to this
Agreement shall be effective against any Party hereto if given as provided
herein.
       18.10 Governing Law; Compliance with Law.
     (a) This Agreement and all rights and obligations hereunder, including
matters of construction, validity and performance, shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made to be performed within such State and applicable federal law.
     (b) Each Party shall comply in all material respects with Applicable Law in
connection with its activities and the exercise of its rights and performance of
its obligations hereunder.
       18.11 Specific Performance. The Parties agree that money damages would
not be a sufficient remedy for any breach of Article VI, X or XIII or the
failure of a Party to perform any of its material obligations hereunder, and
that, in addition to all other remedies, each Party will be entitled to seek
specific performance and to seek injunctive or other equitable relief as a
remedy for any such breach or failure to perform its material obligations
hereunder. Each Party waives any requirements for the securing or posting of any
bond in connection with such remedy.
       18.12 Captions. Captions of the articles and sections of this Agreement
are for convenient reference only and are not intended as a summary of such
articles or sections and do not affect, limit, modify or construe the contents
thereof.
Credit Card Program Agreement — Page 68

 

--------------------------------------------------------------------------------

 

     18.13 Notices. Any notice, approval, acceptance or consent required or
permitted under this Agreement shall be in writing to the other Party and shall
be deemed to have been duly given when delivered in person or, if sent by United
States registered or certified mail, with postage prepaid, or by a nationally
recognized overnight delivery service, when received, addressed as follows:

         
 
  If to Pier 1:   100 Pier 1 Place
 
      Ft. Worth, Texas 76102
 
      Attn: Michael A. Carter, Esq.
 
      Fax: (817) 252-7319
 
       
 
  With a copy to (which shall not constitute notice):   Winstead Sechrest &
Minick P.C.
 
      5400 Renaissance Tower
 
      Dallas, Texas 75270
 
      Attn: Bruce A. Cheatham, Esq.
 
      Fax: (214) 745-5390
 
       
 
  If to the Bank:   Chase Bank USA, N.A.
 
      201 North Walnut Street
 
      3 Christina Center
 
      Wilmington, DE. 19801
 
      Attention: Finance Senior Director
 
       
 
  With a copy to (which shall not constitute notice):   Chase Bank USA, N.A.
 
      201 North Walnut Street
 
      3 Christina Center
 
      Wilmington, DE. 19801
 
      Attention: General Counsel — Card Services

     18.14 Further Assurances. Pier 1 and Bank agree to produce or execute such
other documents or agreements as may be necessary or desirable for the execution
and implementation of this Agreement and the consummation of the transactions
specified herein and to take all such further action as the other Party may
reasonably request in order to give evidence to the consummation of the
transactions specified herein.
     18.15 No Joint Venture. Nothing contained in this Agreement shall be deemed
or construed by the Parties or any third party to create the relationship of
principal and agent, partnership, joint venture or of any association between
Pier 1 and the Bank, and no act of either Party shall be deemed to create any
such relationship. Pier 1 and Bank each agree to such further actions as the
other may request to evidence and affirm the non-existence of any such
relationship.
     18.16 Press Releases. Except for any notice which is required by Applicable
Law, each of the Bank (and its Affiliates), on the one hand, and Pier 1 (and its
Affiliates), on the other hand, agrees that it shall not issue a press release
or make any other public statement with respect to the transactions contemplated
by this Agreement without the prior written
Credit Card Program Agreement — Page 69

 

--------------------------------------------------------------------------------

 

consent of the other, which consent shall not be unreasonably withheld or
delayed. Each of the Bank (and its Affiliates), on the one hand, and Pier 1 (and
its Affiliates), on the other hand, agrees, if possible, to notify and consult
with the other at least twenty-four (24) hours in advance of filing any notice
required by Applicable Law. Notwithstanding the preceding, however, press
releases that do not name the other Party will not require such approval. The
foregoing notwithstanding, it is understood that neither Party shall be required
to obtain any prior consent, but shall consult with each other to the extent
practicable, with regard to (a) filings, press releases and other announcements
as may be required by Applicable Law or the applicable rules and regulations of
any stock exchange and (b) publications prepared solely by and for employees of
any Party, or their respective Affiliates.
     18.17 No Set-Off. Except as otherwise provided in this Agreement, Pier 1
and the Bank agree that each Party has waived any right to set-off, combine,
consolidate or otherwise appropriate and apply (i) any assets of the other Party
held by the Party, or (ii) indebtedness or other liabilities at any time owing
by the Party to the other Party, as the case may be, against or on account of
any obligations owed by the other Party under this Agreement.
     18.18 Third Parties . There are no third-party beneficiaries to this
Agreement. Except for the Indemnified Parties with respect to indemnity claims
pursuant to Article XVII, the Parties do not intend: (i) the benefits of this
Agreement to inure to any third party; or (ii) any rights, claims or causes of
action against a Party to be created in favor of any person or entity other than
the other Party.
     18.19 Force Majeure. If performance of any service or obligation under this
Agreement is prevented, restricted, delayed or interfered with by reason of
labor disputes, strikes, acts of God, floods, lightning, severe weather,
shortages of materials, rationing, utility or communication failures,
earthquakes, war, revolution, civil commotion, acts of public enemies, terrorist
attacks, blockade, embargo or any law, order, proclamation, regulation,
ordinance, demand or requirement having legal effect of any government or any
judicial authority or representative of any such government, or any other act
whatsoever, whether similar or dissimilar to those referred to in this clause,
which are beyond the reasonable control of a Party and could not have been
prevented by reasonable precautions, (each, a “Force Majeure Event”) then such
Party shall be excused from such performance to the extent of and during the
period of such Force Majeure Event. A Party excused from performance pursuant to
this Section 18.19 shall exercise all reasonable efforts to continue to perform
its obligations hereunder, including by implementing its disaster recovery and
business continuity plan as provided in Section 7.3(c), and shall thereafter
continue with reasonable due diligence and good faith to remedy its inability to
so perform except that nothing herein shall obligate either Party to settle a
strike or other labor dispute when it does not wish to do so. Notwithstanding
the foregoing, if a condition constituting a Force Majeure Event with respect to
the Bank, on the one hand, or Pier 1, on the other hand, exists for more than
thirty (30) consecutive days (or five (5) days in the case of any payment
obligation) and such Party is unable to perform a material obligation (which
shall be deemed to include any payment obligation pursuant to Article VIII or
Article IX) under this Agreement due to such Force Majeure Event, then the other
Party shall have the right to terminate this Agreement upon written notice to
the Party subject to such Force Majeure Event; provided, however, that (i) prior
to delivering written
Credit Card Program Agreement — Page 70

 

--------------------------------------------------------------------------------

 

notice of termination in respect of such Force Majeure Event, the Party seeking
to terminate this Agreement shall call, and the Parties shall attend at least
one Management Committee meeting to consider and vote upon a plan to outsource
the material obligation that such Party is unable to perform and (ii) in the
event such outsourcing arrangement is agreed to, the Parties shall promptly
implement such arrangement and this Agreement may not be terminated unless such
Force Majeure Event continues on the fifteenth (15th) day following approval of
such outsourcing arrangement.
     18.20 Entire Agreement. This Agreement, together with the Schedules hereto
which are expressly incorporated herein by reference, supersedes any other
agreement, whether written or oral, that may have been made or entered into by
Pier 1 and Bank (or by any officer or employee of any such Parties) relating to
the matters specified herein, and constitutes the entire agreement by the
Parties related to the matters specified herein or therein.
     18.21 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the Parties hereto and their respective successors and
permitted assigns. This Agreement is the product of negotiation by the Parties
having the assistance of counsel and other advisers. It is the intention of the
Parties that this Agreement not be construed more strictly with regard to one
Party than with regard to the other.
     18.22 Counterparts/Facsimiles. This Agreement may be executed in any number
of counterparts, all of which together shall constitute one and the same
instrument, but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart. Any facsimile of an
executed counterpart shall be deemed an original.
     18.23 Survival. Upon the expiration or termination of this Agreement, the
Parties shall have the rights and remedies described herein. Upon such
expiration or termination, all obligations of the Parties under this Agreement
shall cease, except that the obligations of the Parties pursuant to Article VI
(Cardholder Information), Section 8.5 (Bank Right to Charge Back), Article X
(Intellectual Property), Article XII (Access, Audit and Dispute Resolution),
Article XIII (Confidentiality), Article XVI (Effects of Termination),
Article XVII (Indemnification), Section 18.1 (Precautionary Security Interest),
Section 18.9 (Waiver of Jury Trial and Venue) and Section 18.10 (Governing Law;
Compliance with Law) shall survive the expiration or termination of this
Agreement.
[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]
Credit Card Program Agreement — Page 71

 

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed as of the date first above written.

                  PIER 1 IMPORTS (U.S.), INC.    
 
           
 
  By:        
 
     
 
Charles H. Turner    
 
      Executive Vice President and Chief Financial Officer    
 
                CHASE BANK USA, N.A.    
 
           
 
  By:        
 
     
 
David Hoty    
 
      Senior Director    

Credit Card Program Agreement — Page 72