Exhibit 10.1

THIS PLAN SUPPORT AGREEMENT IS NOT AN OFFER OR ACCEPTANCE WITH RESPECT TO ANY
SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE
MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION
WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE
BANKRUPTCY CODE. NOTHING CONTAINED IN THIS PLAN SUPPORT AGREEMENT SHALL BE AN
ADMISSION OF FACT OR LIABILITY OR, UNTIL THE OCCURRENCE OF THE AGREEMENT
EFFECTIVE DATE ON THE TERMS DESCRIBED HEREIN, DEEMED BINDING ON ANY OF THE
PARTIES HERETO.

PLAN SUPPORT AGREEMENT

This PLAN SUPPORT AGREEMENT (including all exhibits, annexes, and schedules
hereto in accordance with Section 14.02, this “Agreement”) is made and entered
into as of February 16, 2020 (the “Execution Date”), by and among the following
parties (each of the following described in sub-clauses (i) through (ii) of this
preamble, collectively, the “Parties”):1

 

  i.

Pier 1 Imports, Inc. a company incorporated under the Laws of Delaware (“Pier
1”), and each of its direct subsidiaries listed on Exhibit A to this Agreement
that have executed and delivered counterpart signature pages to this Agreement
to counsel to the Consenting Term Lenders (the Entities in this clause (i),
collectively, the “Company Parties”); and

 

  ii.

the undersigned holders of Term Loan Claims that have executed and delivered
counterpart signature pages to this Agreement, a Joinder, or a Transfer
Agreement to counsel to the Company Parties (collectively, the “Consenting Term
Lenders”).

 

1 

Capitalized terms used but not defined in the preamble and recitals to this
Agreement have the meanings ascribed to them in Section 1.

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RECITALS

WHEREAS, the Company Parties and the Consenting Term Lenders have negotiated
certain transactions with respect to the Company Parties on the terms set forth
in this Agreement and as will be specified in a chapter 11 plan to be negotiated
as set forth herein (the “Plan”), and in the bidding procedures related to a
potential sale of assets, attached as Exhibit B hereto (as may be amended,
modified, waived, or supplemented in accordance herewith, the “Bidding
Procedures,” such transactions as described in this Agreement, the Plan, and the
Bidding Procedures the “Transactions”);

WHEREAS, the Company Parties intend to implement the Transactions, including
through the commencement of voluntary cases under chapter 11 of the Bankruptcy
Code in the Bankruptcy Court (the “Chapter 11 Cases”); and

WHEREAS, the Parties have agreed to take certain actions in support of the
Transactions on the terms and conditions set forth in this Agreement, the Plan,
and the Bidding Procedures;

NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each Party, intending to be legally bound hereby,
agrees as follows:

AGREEMENT

Section 1.    Definitions and Interpretation.

1.01.    Definitions. The following terms shall have the following definitions:

“Administrative Claims Cap” means the dollar amount of payments of
Administrative and Priority Claims (as defined in the Plan) the Consenting Term
Lenders will consent to be paid pursuant to the Plan.

“Agreement” has the meaning set forth in the preamble to this Agreement and, for
the avoidance of doubt, includes all the exhibits, annexes, and schedules hereto
in accordance with Section 14.02.

“Agreement Effective Date” means the date on which the conditions set forth in
Section 2 have been satisfied or waived by the appropriate Party or Parties in
accordance with this Agreement.

“Agreement Effective Period” means, with respect to a Party, the period from the
Agreement Effective Date to the Termination Date applicable to that Party.

“Alternative Transaction” means any transaction not described by this Agreement,
the Plan, and the Bidding Procedures proposed to the Company related to a debt
or operational restructuring of the Company by any party.

 

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“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§
101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court in which the
Chapter 11 Cases are commenced or another United States Bankruptcy Court with
jurisdiction over the Chapter 11 Cases.

“Bidding Procedures” has the meaning set forth in the recitals to this
Agreement.

“Business Day” means any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state of New York.

“Chapter 11 Cases” has the meaning set forth in the recitals to this Agreement.

“Claim” has the meaning ascribed to it in section 101(5) of the Bankruptcy Code.

“Company Parties” has the meaning set forth in the recitals to this Agreement.

“Confidentiality Agreement” means an executed confidentiality agreement or
confidentiality agreement provided for in the Term Loan Credit Agreement,
including with respect to the issuance of a “cleansing letter” or other public
disclosure, or disclosure to the “Private Side” lender site, as defined in the
Term Loan Credit Agreement, of material non-public information, in connection
with any proposed Transactions.

“Confirmation Order” means the confirmation order with respect to the Plan.

“Consenting Term Lenders” has the meaning set forth in the preamble to this
Agreement.

“Debtors” means the Company Parties that commence Chapter 11 Cases.

“Definitive Documents” means the documents listed in Section 3.01.

“Disclosure Statement” means the related disclosure statement with respect to
the Plan.

“Disclosure Statement Motion” means a motion filed with the Bankruptcy Court
seeking, among other relief, approval of (i) the Disclosure Statement, (ii) a
schedule of hearings related to the Plan confirmation process, and (iii) certain
notices related thereto, and granting related relief.

“Entity” shall have the meaning set forth in section 101(15) of the Bankruptcy
Code.

“Equitization Restructuring” means any Transaction whereby the New Pier 1
Interests are distributed to holders of existing Term Loan Claims pursuant to
the Plan.

“Equity Interests” means, collectively, the shares (or any class thereof),
common stock, preferred stock, limited liability company interests, and any
other equity, ownership, or profits

 

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interests of any Company Party, and options, warrants, rights, or other
securities or agreements to acquire or subscribe for, or which are convertible
into the shares (or any class thereof) of, common stock, preferred stock,
limited liability company interests, or other equity, ownership, or profits
interests of any Company Party (in each case whether or not arising under or in
connection with any employment agreement).

“Execution Date” has the meaning set forth in the preamble to this Agreement.

“First Day Pleadings” means the first-day pleadings that the Company Parties
determine are necessary or desirable to file.

“Interim Period DIP Budget” means that portion of the budget contemplated in the
DIP Documents covering the period of time between the Petition Date and
March 23, 2020.

“Law” means any federal, state, local, or foreign law (including common law),
statute, code, ordinance, rule, regulation, order, ruling, or judgment, in each
case, that is validly adopted, promulgated, issued, or entered by a governmental
authority of competent jurisdiction (including the Bankruptcy Court).

“Lender Election” means, in the event the Company Parties do not receive
Qualified Bids (as defined in the Bidding Procedures) greater than or equal in
value to the Reserve Price, the Required Consenting Term Lenders’ election to
pursue (a) an Equitization Restructuring and cancellation of the Auction (as
defined in the Bidding Procedures), or (b) an Auction as contemplated in
Section 4 of this Agreement.

“New Pier 1 Interests” means equity interests in Reorganized Pier 1.

“Parties” has the meaning set forth in the preamble to this Agreement.

“Permitted Transferee” means each transferee of any Term Loan Claims who meets
the requirements of Section 8.05.

“Petition Date” means the first date any of the Company Parties commences a
Chapter 11 Case.

“Plan” has the meaning set forth in the recitals to this Agreement.

“Plan Effective Date” means the occurrence of the effective date of the Plan
according to its terms.

“Plan Supplement” means the compilation of documents and forms of documents,
schedules, and exhibits to the Plan that will be filed by the Debtors with the
Bankruptcy Court.

“Qualified Marketmaker” means an entity that (a) holds itself out to the public
or the applicable private markets as standing ready in the ordinary course of
business to purchase from customers and sell to customers Company
Claims/Interests (or enter with customers into long and short positions in Term
Loan Claims), in its capacity as a dealer or market maker in Term Loan Claims
and (b) is, in fact, regularly in the business of making a market in claims
against issuers or borrowers (including debt securities or other debt).

 

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“Reorganized Pier 1” means the Company, as reorganized pursuant to and under the
Plan, or any successor thereto.

“Required Consenting Term Lenders” means, as of the relevant date, Consenting
Term Lenders holding more than 50.00% of the aggregate outstanding principal
amount of Term Loan Claims that are held by Consenting Term Lenders.

“Reserve Price” means the value, taking into account the Claims Estimation, at
which the Term Loan Lenders would receive a cash recovery of $104.7 million2
(i.e. 55 cents on the dollar) on account of the Term Loan Claims.

“Rules” means Rule 501(a)(1), (2), (3), and (7) of the Securities Act.

“Sale Transaction” means a sale of some or all of the Debtors’ assets in
accordance with the Bidding Procedures and Plan.

“Securities Act” means the Securities Act of 1933, as amended.

“Term Loan” means loans outstanding under the Term Loan Credit Agreement.

“Term Loan Agent” means any administrative agent, collateral agent, or similar
Entity under the Term Loan, including any successors thereto.

“Term Loan Claims” means any Claim on account of the Term Loan.

“Term Loan Credit Agreement” means that certain Term Loan Credit Agreement,
dated April 30, 2014, between Pier 1 Imports (U.S.), Inc., as lead borrower, the
other facility guarantors party thereto, Wilmington Savings Fund Society, FSB,
as successor administrative agent, and certain financial institutions, as
lenders, as may be amended, supplemented, modified, refinanced, replaced, or
extended.

“Term Loan Credit Documentation” means collectively, the Term Loan Credit
Agreement and the other documents and instruments related thereto (including,
without limitation, the notes, guarantees, collateral documents, amendments, and
fee letters entered into in connection therewith).

“Term Loan Lenders” means the lenders to the Term Loan Credit Agreement.

“Termination Date” means the date on which termination of this Agreement as to a
Party is effective in accordance with Sections 11.01, 11.02, 11.03, or 11.04.

“Transactions” has the meaning set forth in the recitals to this Agreement.

 

 

2 

Note to Draft: Subject to ongoing review and discussions among Guggenheim and
FTI.

 

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“Transfer” means to sell, resell, reallocate, use, pledge, assign, transfer,
hypothecate, participate, donate or otherwise encumber or dispose of, directly
or indirectly (including through derivatives, options, swaps, pledges, forward
sales or other transactions).

“Transfer Agreement” means an executed form of the transfer agreement providing,
among other things, that a transferee is bound by the terms of this Agreement
and substantially in the form attached hereto as Exhibit C.

“Wind-Down Budget” shall have the meaning set forth in the Plan and be
reasonably acceptable to both the Company Parties and the Required Consenting
Term Lenders. For the avoidance of doubt, the Wind-Down Budget (and any
provisions in this Agreement with respect thereto) shall (i) only be of any
force and effect with respect to the actual costs associated with winding down
the Company’s chapter 11 estate, (2) shall be determined on the timeline set
forth herein, and (c) once in place, shall replace any then-existing applicable
13-week cash forecast.

1.02.    Interpretation. For purposes of this Agreement:

This Agreement is the product of negotiations among the Parties, and the
enforcement or interpretation hereof is to be interpreted in a neutral manner,
and any presumption with regard to interpretation for or against any Party by
reason of that Party having drafted or caused to be drafted this Agreement or
any portion hereof shall not be effective in regard to the interpretation
hereof.

(a)    in the appropriate context, each term, whether stated in the singular or
the plural, shall include both the singular and the plural, and pronouns stated
in the masculine, feminine, or neuter gender shall include the masculine,
feminine, and the neuter gender;

(b)    capitalized terms defined only in the plural or singular form shall
nonetheless have their defined meanings when used in the opposite form;

(c)    unless otherwise specified, any reference herein to a contract, lease,
instrument, release, indenture, or other agreement or document being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions;

(d)    unless otherwise specified, any reference herein to an existing document,
schedule, or exhibit shall mean such document, schedule, or exhibit, as it may
have been or may be amended, restated, supplemented, or otherwise modified from
time to time; provided that any capitalized terms herein which are defined with
reference to another agreement, are defined with reference to such other
agreement as of the date of this Agreement, without giving effect to any
termination of such other agreement or amendments to such capitalized terms in
any such other agreement following the date hereof;

(e)    unless otherwise specified, all references herein to “Sections” are
references to Sections of this Agreement;

 

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(f)    the words “herein,” “hereof,” and “hereto” refer to this Agreement in its
entirety rather than to any particular portion of this Agreement;

(g)    captions and headings to Sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the
interpretation of this Agreement;

(h)    references to “shareholders,” “directors,” and/or “officers” shall also
include “members” and/or “managers,” as applicable, as such terms are defined
under the applicable limited liability company Laws;

(i)    the use of “include” or “including” is without limitation, whether stated
or not;

(j)    the phrase “counsel to the Consenting Term Lenders” refers in this
Agreement to each counsel specified in Section 14.10 other than counsel to the
Company Parties; and

(k)    unless otherwise specified herein, the rules of construction set forth in
section 102 of the Bankruptcy Code shall apply.

Section 2.    Effectiveness of this Agreement. This Agreement shall become
effective and binding upon each of the Parties at 12:00 a.m., prevailing Eastern
Standard Time, on the Agreement Effective Date, which is the date on which all
the following conditions have been satisfied or waived in accordance with this
Agreement:

(a)    each of the Company Parties shall have executed and delivered counterpart
signature pages of this Agreement to counsel to each of the Parties; and

(b)    holders of at least sixty-three point eight (63.8) percent of the
aggregate outstanding principal amount of Term Loans shall have executed and
delivered counterpart signature pages of this Agreement.

Section 3.    Definitive Documents.

3.01.    The Definitive Documents governing the Transactions shall include the
following: (a) the Plan; (b) the Confirmation Order; (c) the Disclosure
Statement; (d) the order of the Bankruptcy Court approving the Disclosure
Statement and the other Solicitation Materials; (e) the First Day Pleadings and
all orders sought pursuant thereto; (f) the Plan Supplement, (g) any motion
seeking approval of the Company Parties’ incurrence of postpetition financing
and all agreements, documents, budgets, interim and final orders, and/or
amendments in connection therewith (collectively, the “DIP Documents” and the
budget(s) provided in the DIP Documents (and all amendments thereto), the “DIP
Budget”); (h) the Wind-Down Budget; and (i) any motion seeking approval of
bidding procedures and/or a sale of some or all of the Company Parties’ assets
and all agreements, documents, orders, and/or amendments in connection
therewith, including the Bidding Procedures, (collectively, the “Sale
Documents”).

3.02.    The Definitive Documents not executed or in a form attached to this
Agreement as of the Execution Date remain subject to negotiation and completion.
Upon completion, the Definitive Documents and every other document, deed,
agreement, filing, notification, letter or

 

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instrument related to the Transactions, or any amendments thereto, shall contain
terms, conditions, representations, warranties, and covenants consistent with
the terms of this Agreement, as they may be modified, amended, or supplemented
in accordance with Section 13. Further, the Definitive Documents not executed or
in a form attached to this Agreement as of the Execution Date (including, for
the avoidance of doubt, the DIP Documents and any and all updated budgets
related thereto) shall otherwise be in form and substance reasonably acceptable
to the Company Parties and the Required Consenting Term Lenders.

Section 4.    Milestones3

On and after the Agreement Effective Date, the Company Parties shall use
commercially reasonable efforts to implement the Transaction in accordance with
the following milestones (the “Milestones”), as applicable, unless extended or
waived in writing (which may be by electronic mail between applicable counsel)
by the Company Parties and the Required Consenting Term Lenders. For the
avoidance of doubt, nothing in these Milestones shall prevent the Debtors from
exercising their respective fiduciary duties under applicable law:

(a)    no later than 11:59 p.m. (prevailing Eastern time) on February 17, 2020,
the Company Parties shall have commenced the Chapter 11 Cases in the Bankruptcy
Court and shall have filed a motion for approval of the Bidding Procedures and
assumption of this Agreement, consistent in all respects with this Agreement;

(b)    no later than 11:59 p.m. (prevailing Eastern time) on February 18, 2020,
the Debtors will have sought first day relief and the Bankruptcy Court shall
have entered an order (i) providing interim approval of the applicable DIP
Documents, (ii) approving the Bidding Procedure and (iii) approving assumption
of this Agreement;

(c)    as soon as reasonably practicable, but in no event later than seven
(7) days after the Petition Date, the Company Parties shall have filed the Plan,
the Disclosure Statement, and the Disclosure Statement Motion, each in form and
substance reasonably acceptable to the Required Consenting Term Lenders;

(d)    as soon as reasonably practicable, but in no event later than March 13,
2020, the Bankruptcy Court shall have entered the final order approving the
applicable DIP Documents;

(e)    as soon as reasonably practicable, but in no event later than three
(3) Business Days prior to the first scheduled hearing on the Disclosure
Statement Motion, the Company Parties and the Required Consenting Term Lenders
shall agree to the Administrative Claims Cap4;

 

3 

The date of each Milestone provided for in this Section 4 shall be calculated in
accordance with Rule 9006 of the Federal Rules of Bankruptcy Procedure. Each
Milestone may be extended or modified by agreement (which may be via e-mail)
between counsel to the Company Parties and counsel to the Consenting Term
Lenders.

4 

For the avoidance of doubt, notwithstanding anything in this Agreement, the
Debtors’ professionals, and any professionals of the official committee of
unsecured creditors appointed in the Chapter 11 Cases, shall be required to file
retention papers and fee applications with the Bankruptcy Court, and the
Consenting Term Lenders reserve all rights to review and object to any such
retentions or payments in accordance with applicable laws.

 

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(f)    as soon as reasonably practicable, but in no event later than March 20,
2020, the Bankruptcy Court shall have entered the Disclosure Statement Order;

(g)    the Bid Deadline in the Bidding Procedures shall be no later than 5:00
p.m. (prevailing Eastern time) on March 23, 2020;

(h)    in the event that the Company Parties do not receive a Qualified Bid
greater than or equal in value to the Reserve Price, then no later than 11:59
p.m. (prevailing Eastern time) on the date that is four (4) Business Days
following the Bid Deadline, the Consenting Term Lenders shall notify the Company
Parties (via electronic mail through applicable counsel) of their Lender
Election;

(i)    if applicable, as soon as reasonably practicable, but in no event later
than March 31, 2020, the Auction shall have occurred;

(j)    as soon as reasonably practicable, but in no event later than five
(5) Business Days following selection of a Successful Bidder, the Company
Parties and the Required Consenting Term Lenders shall agree to a Wind-Down
Budget reasonably acceptable to the Required Consenting Term Lenders;

(k)    as soon as reasonably practicable, but in no event later than April 23,
2020, the Bankruptcy Court shall have entered the Confirmation Order;5 and

(l)    as soon as reasonably practicable, but in no event later than May 30,
2020, the Plan Effective Date shall have occurred.

Section 5.    Commitments of the Consenting Term Lenders.

5.01.    General Commitments, Forbearances, and Waivers.

(a)    During the Agreement Effective Period, each Consenting Term Lender agrees
(severally and not jointly), in respect of all its Term Loan Claims, to:

(i)    use its commercially reasonable efforts to support the Transaction and to
act in good faith and take all reasonable actions necessary to implement and
consummate the Transaction in accordance with the terms, conditions, and
applicable deadlines set forth in this Agreement, the Plan, and the Bidding
Procedures, as applicable;

(ii)    negotiate in good faith the applicable Definitive Documents and use its
commercially reasonable efforts to agree to the form and substance of such
Definitive Documents consistent with the terms of this Agreement;

 

5 

As soon as reasonably practicable after closing the Auction, the Debtors shall
finalize definitive documentation to implement the terms of the Successful Bid,
and, as applicable, cause such definitive documentation to be filed with the
Bankruptcy Court.

 

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(iii)    support the Transactions and vote and exercise any powers or rights
available to it (including in any board, shareholders’, or creditors’ meeting or
in any process requiring voting or approval to which they are legally entitled
to participate) in each case in favor of any matter requiring approval to the
extent necessary to implement the Transactions;

(iv)    direct the Term Loan Agent (in accordance with the Term Loan Credit
Documentation) to take all actions in furtherance of such Consenting Term
Lender’s respective obligations under this Agreement, and if the Term Loan Agent
takes any action inconsistent with a Party’s obligations under this Agreement,
such Party shall promptly direct such Term Loan Agent to cease and refrain from
taking any such action;

(v)    to the extent any legal or structural impediment arises that would
prevent, hinder, or delay the consummation of the Transactions contemplated
herein, take all steps reasonably necessary and desirable to address any such
impediment; provided that this Section 5.01(a)(v) shall not require any
Consenting Term Lender to take any action for which they will incur additional
out of pocket or legal expenses unless reimbursed by the Company Parties;

(vi)    use commercially reasonable efforts to cooperate with and assist the
Company Parties in obtaining additional support for the Transactions from the
Company Parties’ other stakeholders; provided that this Section 5.01(a)(vi)
shall not require any Consenting Term Lender to take any action for which they
will incur additional out of pocket or legal expenses unless reimbursed by the
Company Parties;

(vii)    use commercially reasonable efforts to oppose any party or person from
taking any actions contemplated in Section 5.02(b); provided that this
Section 5.01(a)(vii) shall not require any Consenting Term Lender to take any
action for which they will incur additional out of pocket or legal expenses
unless reimbursed by the Company Parties;

(viii)    give any notice, order, instruction, or direction to the Term Loan
Agent (in accordance with the Term Loan Credit Documentation) necessary to give
effect to the Transactions;

(ix)    use commercially reasonable efforts to obtain sixty-six and two-thirds
(66 2/3) percent of Term Loan Lenders to execute and deliver counterpart
signature pages to this Agreement; and

(x)    negotiate in good faith and use commercially reasonable efforts to
execute and implement the Definitive Documents that are consistent with this
Agreement to which it is required to be a party.

(b)    During the Agreement Effective Period, each Consenting Term Lender agrees
(severally and not jointly), in respect of all its Term Loan Claims, that it
shall not directly or indirectly:

(i)    object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Transactions;

 

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(ii)    direct the Term Loan Agent to take any action inconsistent with such
Consenting Term Lender’s respective obligations under this Agreement;

(iii)    file any motion, pleading, or other document with the Bankruptcy Court
or any other court (including any modifications or amendments thereof) that, in
whole or in part, is not materially consistent with this Agreement or the Plan;

(iv)    initiate, or have initiated on its behalf, any litigation or proceeding
of any kind with respect to the Chapter 11 Cases, this Agreement, or the other
Transactions contemplated herein against the Company Parties or the other
Parties other than to enforce this Agreement or any Definitive Document or as
otherwise permitted under this Agreement;

(v)    exercise, or direct any other person to exercise, any right or remedy for
the enforcement, collection, or recovery of any of Claims against or Interests
in the Company Parties

(vi)    exercise, or direct the Term Loan Agent to exercise, any rights pursuant
to section 363(k) of the Bankruptcy Code to credit bid an amount greater than
the Reserve Price at any Auction; or

(vii)    object to, delay, impede, or take any other action to interfere with
the Company Parties’ ownership and possession of their assets, wherever located,
or interfere with the automatic stay arising under section 362 of the Bankruptcy
Code.

5.02.    Commitments with Respect to Chapter 11 Cases.

(a)     During the Agreement Effective Period, each Consenting Term Lender that
is entitled to vote to accept or reject the Plan pursuant to its terms agrees
that it shall, subject to receipt by such Consenting Term Lender, whether before
or after the commencement of the Chapter 11 Cases, of the Solicitation
Materials:

(i)    vote each of its Term Loan Claims to accept the Plan by delivering its
duly executed and completed ballot accepting the Plan on a timely basis
following the commencement of the solicitation of the Plan and its actual
receipt of the Solicitation Materials and the ballot;

(ii)    support all the debtor and third-party releases, injunctions, discharge,
and exculpation provisions provided in the Plan;

(iii)    to the extent it is permitted to elect whether to opt out of the
releases set forth in the Plan, elect not to opt out of the releases set forth
in the Plan by timely delivering its duly executed and completed ballot(s)
indicating such election; and

(iv)    not change, withdraw, amend, or revoke (or cause to be changed,
withdrawn, amended, or revoked) any vote or election referred to in clauses
(i) through (iii) above.

(b)     During the Agreement Effective Period, each Consenting Term Lender, in
respect of each of its Term Loan Claims, will support, and will not directly or
indirectly object to, delay, impede, or take any other action to interfere with
any motion or other pleading or document filed by a Company Party in the
Bankruptcy Court that is contemplated by this Agreement.

 

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(c)     During the Agreement Effective Period, each Consenting Term Lender
(severally, and not jointly) agrees, in its own discretion, to support, and will
not directly or indirectly object to, delay, impede, or take any other action to
interfere with any action in furtherance of the Company Parties’ ordinary course
postpetition compensation and employee benefit, retention, or incentive programs
as long as such program is approved by any interim of the Bankruptcy Court and
the Company (i) complies with any caps set forth in such orders and
(ii) complies with the Interim Period DIP Budget with respect to such programs.
For the avoidance of doubt, any compensation and employee benefit, retention, or
incentive programs not authorized by an interim order of the Bankruptcy Court
shall not be implemented without the consent of the Required Consenting Term
Lenders (such consent not to be unreasonably withheld).

(d)     During the Agreement Effective Period, each in its own discretion each
Consenting Term Lender will support, and will not directly or indirectly object
to, delay, impede, or take any other action to interfere with, nor will any
Consenting Term Lender direct the Term Loan Agent to object to, delay, impede,
or take any action to interfere with, any DIP Document filed by any Company
Party in the Bankruptcy Court.

(e)    During the Agreement Effective Period:

(i)    If the Company Parties receive a Qualified Bid greater than or equal in
value to the Reserve Price, then the Consenting Term Lenders agree (severally
and not jointly), and agree to direct the Term Loan Agent (as applicable and in
accordance with the Term Loan Credit Documentation), with respect to any
Qualified Bid selected as the Successful Bid (as defined in the Bidding
Procedures) at Auction or with respect to another Transaction that constitutes
the end of the Debtors’ sale process, to (a) with respect to any and all liens,
encumbrances, and interests in the assets of the Company Parties, including all
Collateral (as defined in the Term Loan Credit Agreement), including on account
of the Term Loan Credit Documentation automatically release and discharge such
liens, encumbrances, and interests upon the closing of the Transaction, without
any further action of such Consenting Term Lender, provided that such liens,
encumbrances, and interests continue to attach to the proceeds of such
Transaction until such proceeds are distributed as provided for in the Plan;
(b) consent to the Sale Transaction pursuant to the Auction and Plan, and
(c) otherwise support, negotiate in good-faith, and implement such Sale
Transaction. The Consenting Lenders agree to direct the Term Loan Agent (in
accordance with the Term Loan Credit Documentation) to promptly execute and
deliver any instruments, documentation and agreement necessary or desirable or
reasonably requested by the Company Parties to evidence and confirm the release
of all such liens, encumbrances, interests and claims pursuant to the forgoing
Section 5.02(e)(i)(a).

(ii)    If the Successful Bidder at the Auction is not a Consenting Term Lender,
the Consenting Term Lenders agree (severally and not jointly), and agree to
direct the Term Loan Agent (as applicable and in accordance with the Term Loan
Credit Documentation), to: (a) with respect to any and all liens, encumbrances,
and interests in the assets of the Company Parties, including all Collateral (as
defined in the Term Loan Credit Agreement), including on

 

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account of the Term Loan Credit Documentation automatically release and
discharge, upon the closing of the Transaction, such liens, encumbrances, and
interests without any further action of such Consenting Term Lender, provided
that such liens, encumbrances, and interests continue to attach to the proceeds
of such Transaction until such proceeds are distributed as provided for in the
Plan; (b) consent to the Sale Transaction pursuant to the Auction and Plan; and
(c) otherwise support, negotiate in good-faith, and implement such Sale
Transaction. The Consenting Lenders agree to direct the Term Loan Agent (in
accordance with the Term Loan Credit Documentation) to promptly execute and
deliver any instruments, documentation and agreement necessary or desirable or
reasonably requested by the Company Parties to evidence and confirm the release
of all such liens, encumbrances, interests and claims pursuant to the forgoing
Section 5.02(e)(ii)(b).

(iii)    If the Consenting Term Lenders are the Successful Bidder at the
Auction, the Consenting Term Lenders and the Company Parties shall agree to
support and implement a Plan that, at the election of the Required Consenting
Term Lenders, provides for either (a) the liquidation of the Company pursuant to
the Plan or (b) an Equitization Restructuring. If a liquidation is pursued, ,
the Company Parties and the Required Consenting Term Lenders shall use
commercially reasonably efforts to promptly implement a value-maximizing
liquidation. For the avoidance of doubt, in such a scenario, the store closings
will be completed prior to the Plan Effective Date, but certain wind-down
activities and asset sales may occur after the Plan Effective Date pursuant to
any wind-down trust agreements, with proceeds and remaining cash to be
distributed pursuant to the Plan.

(iv)    The Consenting Term Lenders agree (severally and not jointly) to not
exercise, or direct the Term Loan Agent to exercise, any rights pursuant to
section 363(k) of the Bankruptcy Code to credit bid an amount greater than the
value of the Reserve Price at any Auction.

(v)    Each Consenting Term Lender will support, and will direct the Term Loan
Agent (in accordance with the Term Loan Credit Documentation) to support, the
Company Parties’ Transactions and will not object to, delay, impede, or take any
other action to interfere with entry of any Sale Document and/or consummation of
any Sale Transaction, provided that such Sale Transaction complies with the
Plan, the Bidding Procedures, and this Agreement.

(vi)    In determining whether any Qualified Bid reaches the Reserve Price, the
Company Parties and the Required Consenting Term Lenders shall work in good
faith to reach an agreement on estimates of Claims and any and all other
payments and obligations that are (i) required under the Plan or any other
Definitive Document, including but not limited to the Wind-Down Budget and
(ii) to be paid prior to the Term Loan Claims pursuant to the Plan, to the
extent unknown and not already estimated as part of the Administrative Claims
Cap, for the purpose of calculating the Reserve Price (collectively, the “Claims
Estimation”) and agree that such Claims Estimation shall be binding on the
Parties so long as this Agreement remains in effect.

(vii)    To the extent that the Consenting Term Lenders do not agree with the
Debtors’ selection of the Successful Bidder at the Auction, the Consenting Term
Lenders and the Company Parties agree to seek expedited relief from the
Bankruptcy Court to resolve the dispute

 

13

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with such relief to be heard by the Bankruptcy Court no later than five (5) days
after the conclusion of the Auction; provided that the Consenting Term Lenders
and Company Parties agree that any determination by the Bankruptcy Court shall
be binding on the Parties and shall not result in or cause the termination of
this Agreement or serve as a valid justification for breach of either Parties’
rights and obligations under this Agreement.

5.03.    Additional Provisions Regarding the Consenting Term Lenders’
Commitments.

  (i)    Notwithstanding anything contained in this Agreement, nothing in this
Agreement shall: (a) affect the ability of any Consenting Term Lender to consult
with any other Consenting Term Lender, the Company Parties, or any other party
in interest in the Chapter 11 Cases (including any official committee and the
United States Trustee), subject to all applicable Confidentiality Agreements;
(b) impair or waive the rights of any Consenting Term Lender to assert or raise
any objection permitted under this Agreement in connection with the
Transactions; and (c) prevent any Consenting Term Lender from enforcing this
Agreement or contesting whether any matter, fact, or thing is a breach of, or is
inconsistent with, this Agreement.

Section 6.    Commitments of the Company Parties.

6.01.    General Commitments, Forbearances, and Waivers.

(a)        Except as set forth in 6.03, during the Agreement Effective Period,
the Company Parties agree to:

    (i)    support and take all steps reasonably necessary and desirable to
consummate the Transactions in accordance with this Agreement including seeking
Court approval of this Agreement pursuant to the motion to approve Bidding
Procedures;

    (ii)    to the extent any legal or structural impediment arises that would
prevent, hinder, or delay the consummation of the Transactions contemplated
herein, take all steps reasonably necessary and desirable to address any such
impediment;

    (iii)    use commercially reasonable efforts to obtain any and all required
regulatory and/or third-party approvals for the Transactions;

    (iv)    negotiate the Definitive Documents in good faith, provide counsel
for the Consenting Term Lenders commercially reasonably time to review draft
copies of all Definitive Documents before filing, and use commercially
reasonable efforts to execute and deliver the Definitive Documents and any other
required agreements to effectuate and consummate the Transactions as
contemplated by this Agreement;

    (v)    use commercially reasonable efforts to seek additional support for
the Transactions from their other material stakeholders to the extent reasonably
prudent;

    (vi)    to the extent the Company becomes aware of any Alternative
Transaction, notify the Consenting Term Lenders within (1) Business Day.

 

14

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    (vii)    provide counsel and advisors for the Consenting Term Lenders, upon
reasonable advance notice to the Company Parties, timely and reasonable
responses to all diligence requests; provided that the Company Parties shall not
be required to distribute or share any documents that are or contain privileged
materials, are otherwise subject to work-product or other attorney-client
privilege, where applicable law restricts distribution, or is subject to
confidentiality obligations of the Company Parties that prevent distribution;
and

    (viii)    timely file a formal objection to any motion, application, or
adversary proceeding challenging the validity, enforceability, perfection, or
priority of, or seeking avoidance or subordination of, any portion of the Term
Loan Claims.

    (b)    Negative Commitments. Except as set forth in 6.03, during the
Agreement Effective Period, each of the Company Parties shall not directly or
indirectly:

    (i)     object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Transactions;

    (ii)     take any action that is inconsistent in any material respect with,
or is intended to frustrate or impede approval, implementation and consummation
of the Transactions described in, this Agreement or the Plan;

    (iii)     modify the Plan, in whole or in part, in a manner that is not
consistent with this Agreement in all material respects; or

    (iv)     file any motion, pleading, or Definitive Documents with the
Bankruptcy Court or any other court (including any modifications or amendments
thereof) that, in whole or in part, is not materially consistent with this
Agreement or the Plan.

6.02.    Commitments with Respect to Chapter 11 Cases

    (i)    in determining whether any Qualified Bid reaches the Reserve Price,
the Company Parties and the Required Consenting Term Lenders shall work in good
faith to reach an agreement on the Claims Estimation for the purpose of
calculating the Reserve Price and agree that such Claims Estimation shall be
binding on the Parties so long as this Agreement remains in effect;

    (ii)    to the extent that the Required Consenting Term Lenders do not agree
with the Debtors’ selection of the Successful Bidder at the Auction, the
Consenting Term Lenders and the Company Parties agree to seek expedited relief
from the Bankruptcy Court to resolve the dispute with such relief to be heard by
the Bankruptcy Court no later than five (5) days after the conclusion of the
Auction; provided that the Consenting Term Lenders and Company Parties agree
that any determination by the Bankruptcy Court shall be binding on the Parties
and shall not result in or cause the termination of this Agreement or serve as a
valid justification for breach of either Parties’ rights and obligations under
this Agreement;

    (iii)    the Company Parties shall (i) provide counsel for the Consenting
Term Lenders a commercially reasonable opportunity to review draft copies of all
First Day Pleadings

 

15

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and, (ii) to the extent reasonably practicable, provide a commercially
reasonable opportunity to counsel to any Consenting Term Lenders materially
affected by such filing to review draft copies of other documents that the
Company Parties intend to file with Bankruptcy Court, as applicable;

(iv)    Financial Reporting. During the Agreement Effective Period, the Company
Parties agree to:

 

  (A)

provide counsel and advisors for the Consenting Term Lenders with any financial
reporting provided to the DIP Lenders with regard to compliance with the DIP
Budget (at the same time as such information is shared with the DIP Lenders);6

 

  (B)

provide counsel and advisors for the Consenting Term Lenders with an email on
the second Business Day of each week, up to the Bid Deadline, regarding outreach
to Potential Bidders (subject to applicable confidentiality provision);

 

  (C)

provide counsel and advisors for the Consenting Term Lenders with an email on
the fourth Business Day of each week including a tracker of the status of
going-out-of-business sales (with the understanding the reporting would cease if
the going-out-of-business sales are completed);

 

  (D)

provide counsel and advisors for the Consenting Term Lenders with an email on
the fourth Business Day of each week including mutually agreed key performance
indicators (including a comparison to the then-current business plan);

 

  (E)

provide counsel and advisors for the Consenting Term Lenders with an email on
the fourth Business Day of each week including mutually agreed information
associated with inventory receipts outlook;

 

  (F)

provide counsel and advisors for the Consenting Term Lenders with an email on
the fourth Business Day of each week including mutually agreed information on
actual and forecasted accounts payable balances;

 

  (G)

provide counsel and advisors for the Consenting Term Lenders with an email on
the fourth Business Day of each week including a report summarizing all new
purchase orders issued postpetition reflecting amount and target delivery date;
and

 

6 

To the extent not included in the financial reporting to the DIP Lenders,
provide counsel and advisors for the Consenting Term Lenders with an email each
Thursday including a rolling thirteen (13) week budget (“Rolling Budget”)
including (i) a rolling weekly inventory roll forward in support of each Rolling
Budget; (ii) a rolling accounts payable roll forward in support of each Rolling
Budget; and (iii) estimated Administrative and Priority Claims, subject to
satisfaction of covenants and reporting requirements in DIP Documents.

 

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  (H)

host a weekly call (whether hosted by the Company Parties or by the Company
Parties’ advisors) for counsel and advisors for the Consenting Term Lenders on
the first Business Day of each week to discuss questions related to the
foregoing, provided that any questions to be raised on the weekly call are
submitted in writing to the Company Parties’ advisors on the last business day
of the week prior to the weekly call.

6.03.    Additional Provisions Regarding Company Parties’ Commitments.

(i)    Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement shall require a Company Party or the board of directors, board of
managers, or similar governing body of a Company Party, after consulting with
counsel, to take any action or to refrain from taking any action with respect to
the Transactions to the extent taking or failing to take such action would be
inconsistent with applicable Law or its fiduciary obligations under applicable
Law, and any such action or inaction pursuant to this Section (i) shall not be
deemed to constitute a breach of this Agreement.

(ii)    Notwithstanding anything to the contrary in this Agreement (but subject
to Section (i)), each Company Party and their respective directors, officers,
employees, investment bankers, attorneys, accountants, consultants, and other
advisors or representatives shall have the rights to: (a) consider, respond to,
and facilitate alternative proposals; (b) provide access to non-public
information concerning any Company Party to any Entity or enter into
Confidentiality Agreements or nondisclosure agreements with any Entity;
(c) maintain or continue discussions or negotiations with respect to alternative
proposals; (d) otherwise cooperate with, assist, participate in, or facilitate
any inquiries, proposals, discussions, or negotiations of alternative proposals;
and (e) enter into or continue discussions or negotiations with holders of
Claims against or Equity Interests in a Company Party (including any Consenting
Term Lender), any other party in interest in the Chapter 11 Cases (including any
official committee and the United States Trustee), or any other Entity regarding
the Transactions or alternative proposals.

(iii)    Nothing in this Agreement shall: (a) impair or waive the rights of any
Company Party to assert or raise any objection permitted under this Agreement in
connection with the Transactions; or (b) prevent any Company Party from
enforcing this Agreement or contesting whether any matter, fact, or thing is a
breach of, or is inconsistent with, this Agreement.

Section 7.    Cooperation and Support

Each Party hereby covenants and agrees to cooperate with the other Parties in
good faith and shall coordinate their activities (to the extent practicable and
subject to the terms hereof) with respect to, (i) all matters relating to their
rights hereunder; (ii) all matters concerning the implementation of the Plan and
the Transactions; and (iii) the pursuit, approval and support of the
Transactions (including confirmation of the Plan). Furthermore, subject to the
terms hereof,

 

17

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each of the Parties shall take such action as may be reasonably necessary or
reasonably requested by the other Parties to carry out the purposes and intent
of this Agreement, or to effectuate the solicitation of the Plan and/or the
Transactions, including making and filing any required regulatory filings,
executing and delivering any other necessary agreements or instruments, and
voting any claims against or interests in the Company Parties in favor of the
Plan, and shall refrain from taking any action that would frustrate the purposes
and intent of this Agreement.

Section 8.    Transfer of Interests and Securities.

8.01.    During the Agreement Effective Period, no Consenting Term Lender shall
Transfer any ownership (including any beneficial ownership as defined in the
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in any Term
Loan Claims to any person, including any affiliated or unaffiliated person in
which it may hold a direct or indirect beneficial interest, unless the
transferee either (i) executes and delivers to counsel to the Company Parties,
at or before the time of the proposed Transfer, a Transfer Agreement or (ii) the
transferee is a Consenting Term Lender and the transferee provides notice of
such Transfer (including the amount and type of Company Claim/Interest
Transferred) to counsel to the Company Parties at or before the time of the
proposed Transfer. Notwithstanding the foregoing, compliance with this
Section 10.01 shall not be required with respect to the acquisition of an
indirect beneficial interest in a Consenting Term Lender’s Term Loan Claims by
an affiliate of such Consenting Term Lender.

8.02.    Upon compliance with the requirements of Section 8.01, the transferor
shall be deemed to relinquish its rights (and be released from its obligations)
under this Agreement to the extent of the rights and obligations in respect of
such transferred Term Loan Claims. Any Transfer in violation of Section 8.01
shall be void ab initio.

8.03.    This Agreement shall in no way be construed to preclude the Consenting
Term Lenders from acquiring additional Term Loan Claims; provided, however, that
(a) such additional Term Loan Claims shall automatically and immediately upon
acquisition by a Consenting Term Lender be deemed subject to the terms of this
Agreement (regardless of when or whether notice of such acquisition is given to
counsel to the Company Parties or counsel to the Consenting Term Lenders) and
(b) such Consenting Term Lender must provide notice of such acquisition
(including the amount and type of Company Claim/Interest acquired) to counsel to
the Company Parties promptly and, in any event, within five (5) Business Days of
such acquisition.

8.04.    This Section 10 shall not impose any obligation on any Company Party to
issue any “cleansing letter” or otherwise publicly disclose information for the
purpose of enabling a Consenting Term Lender to Transfer any of its Term Loan
Claims. Notwithstanding anything to the contrary herein, to the extent a Company
Party and another Party have entered into a Confidentiality Agreement, the terms
of such Confidentiality Agreement shall continue to apply and remain in full
force and effect according to its terms, and this Agreement does not supersede
any rights or obligations otherwise arising under such Confidentiality
Agreements.

 

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8.05.    Notwithstanding Section 8.01, a Qualified Marketmaker that acquires any
Term Loan Claims with the purpose and intent of acting as a Qualified
Marketmaker for such Term Loan Claims shall not be required to execute and
deliver a Transfer Agreement in respect of such Term Loan Claims if (a) such
Qualified Marketmaker subsequently transfers such Term Loan Claims (by purchase,
sale assignment, participation, or otherwise) within five (5) Business Days of
its acquisition to a transferee that is an entity that is not an affiliate,
affiliated fund, or affiliated entity with a common investment advisor; (b) the
transferee otherwise is a Permitted Transferee under Section 8.01; and (c) the
Transfer otherwise is a Permitted Transfer under Section 8.01. To the extent
that a Consenting Term Lender is acting in its capacity as a Qualified
Marketmaker, it may Transfer (by purchase, sale, assignment, participation, or
otherwise) any right, title or interests in Term Loan Claims that the Qualified
Marketmaker acquires from a holder of the Term Loan Claims who is not a
Consenting Term Lender without the requirement that the transferee be a
Permitted Transferee.

8.06.    Notwithstanding anything to the contrary in this Section 10, the
restrictions on Transfer set forth in this Section 10 shall not apply to the
grant of any liens or encumbrances on any claims and interests in favor of a
bank or broker-dealer holding custody of such claims and interests in the
ordinary course of business and which lien or encumbrance is released upon the
Transfer of such claims and interests.

Section 9.    Representations and Warranties of Consenting Term Lenders. Each
Consenting Term Lender severally, and not jointly, represents and warrants that,
as of the date such Consenting Term Lender executes and delivers this Agreement
and as of the Plan Effective Date:

(a)    it is the beneficial or record owner of the face amount of the Term Loan
Claims or is the nominee, investment manager, or advisor for beneficial holders
of the Term Loan Claims reflected in, and, having made reasonable inquiry, is
not the beneficial or record owner of any Term Loan Claims other than those
reflected in, such Consenting Term Lender’s signature page to this Agreement or
a Transfer Agreement, as applicable (as may be updated pursuant to Section 7);

(b)     it has the full power and authority to act on behalf of, vote and
consent to matters concerning, such Term Loan Claims;

(c)    such Term Loan Claims are free and clear of any pledge, lien, security
interest, charge, claim, equity, option, proxy, voting restriction, right of
first refusal, right of participation, or other limitation on disposition,
transfer, or encumbrances of any kind, that would adversely affect in any way
such Consenting Term Lender’s ability to perform any of its obligations under
this Agreement at the time such obligations are required to be performed; and

(d)    it has the full power to vote, approve changes to, and transfer all of
its Term Loan Claims referable to it as contemplated by this Agreement subject
to applicable Law.

 

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Section 10.    Mutual Representations, Warranties, and Covenants. Each of the
Parties represents, warrants, and covenants to each other Party, as of the date
such Party executed and delivers this Agreement, on the Plan Effective Date:

(a)    it is validly existing and in good standing under the Laws of the state
of its organization, and this Agreement is a legal, valid, and binding
obligation of such Party, enforceable against it in accordance with its terms,
except as enforcement may be limited by applicable Laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability;

(b)    except as expressly provided in this Agreement, the Plan, and the
Bankruptcy Code, no consent or approval is required by any other person or
entity in order for it to effectuate the Transactions contemplated by, and
perform its respective obligations under, this Agreement;

(c)    the entry into and performance by it of, and the transactions
contemplated by, this Agreement do not, and will not, conflict in any material
respect with any Law or regulation applicable to it or with any of its articles
of association, memorandum of association or other constitutional documents;

(d)    except as expressly provided in this Agreement, it has (or will have, at
the relevant time) all requisite corporate or other power and authority to enter
into, execute, and deliver this Agreement and to effectuate the Transactions
contemplated by, and perform its respective obligations under, this Agreement;
and

(e)    except as expressly provided by this Agreement, it is not party to any
restructuring or similar agreements or arrangements regarding the Company
Parties with the other Parties to this Agreement that have not been disclosed to
all Parties to this Agreement.

Section 11.    Termination Events.

11.01.    Consenting Term Lender Termination Events. This Agreement may be
terminated with respect to the Consenting Term Lenders, by the Required
Consenting Term Lenders, in each case, by the delivery to the Company Parties of
a written notice in accordance with Section 14.10 hereof upon the occurrence of
the following events:

(a)    the breach in any material respect by a Company Party of any of the
representations, warranties, or covenants of the Company Parties set forth in
this Agreement that (i) is adverse to the Consenting Term Lenders seeking
termination pursuant to this provision and (ii) remains uncured for one
(1) business day after such terminating Consenting Term Lenders transmit a
written notice in accordance with Section 14.10 hereof detailing any such
breach;

(b)    the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that (i) enjoins the consummation of a material portion of the
Transactions and (ii) remains in effect for twenty (20) Business Days after such
terminating Consenting Term Lenders transmit a written notice in accordance with
Section 14.10 hereof detailing any such issuance; provided that this termination
right may not be exercised by any Party that sought or requested such ruling or
order in contravention of any obligation set out in this Agreement;

 

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(c)    the Milestones set forth in Section 4 have not been achieved, extended,
or waived within one (1) Business Day after the date identified for completion
of such Milestone (as such date may be extended or waived);7

(d)    the Company Parties fail to abide by the Wind-Down Budget unless waived
by the Required Consenting Term Lenders by written notice in accordance with
Section 16.10 hereof; provided however that for the purposes of this section,
the Company Parties shall be entitled to a variance of [    ]% from the
Wind-Down Budget with respect to disbursements thereunder;

(e)    the Company Parties seek approval of DIP Documents to which the
Consenting Term Lenders have not consented;

(f)    the Company Parties enter into or seek approval of exit financing to
which the Consenting Term Lenders have not consented;

(g)    the Company Parties make any payments with respect to the Company
Parties’ compensation programs not contemplated by this Agreement without the
prior written consent of the Consenting Term Lenders;

(h)    the Company Parties enter into a material executory contract, lease, or
other arrangement outside of the ordinary course of business without the prior
written consent of the Consenting Term Lenders;

(i)    there is a default under any debtor-in-possession financing governed by
the DIP Documents;

(j)    the Company Parties withdraw the Plan or Disclosure Statement, file,
propose, or otherwise support any plan of reorganization or liquidation other
than the Plan, file any motion or pleading with the Bankruptcy Court that is not
consistent with this Agreement and such motion or pleading has not been
withdrawn prior to the earlier of (i) two (2) Business Days after the Company
Parties receive written notice in accordance with Section 16.10 hereof from the
Consenting Term Lenders that such motion or pleading is inconsistent with this
Agreement and (ii) entry of an order of the Bankruptcy Court approving such
motion or pleading;

(k)    the Bankruptcy Court grants relief that is inconsistent with this
Agreement in any materially adverse respect;

(l)    the Bankruptcy Court enters an order denying confirmation of the Plan and
the Company Parties are unable to obtain approval of the Plan within 15 Business
Days; or

(m)    the entry of an order by the Bankruptcy Court, or the filing of a motion
or application by any Company Party seeking an order (without the prior written
consent of the Required Consenting Term Lenders, not to be unreasonably
withheld), (i) converting one or

 

7 

For the avoidance of doubt, no Party may terminate this Agreement on account of
failure to satisfy a Milestone to the extent that such failure is caused by or
resulting from such Party’s own action (or failure to act).

 

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more of the Chapter 11 Cases of a Company Party to a case under chapter 7 of the
Bankruptcy Code, (ii) appointing an examiner with expanded powers beyond those
set forth in sections 1106(a)(3) and (4) of the Bankruptcy Code or a trustee in
one or more of the Chapter 11 Cases of a Company Party, or (iii) rejecting this
Agreement.

11.02.    Company Party Termination Events. Any Company Party may terminate this
Agreement as to all Parties upon prior written notice to all Parties in
accordance with Section 14.10 hereof upon the occurrence of any of the following
events:

(a)    the breach in any material respect by one or more of the Consenting Term
Lenders of any provision set forth in this Agreement that remains uncured for a
period of one (1) Business Day after the receipt by the Consenting Term Lenders
of notice of such breach, including:

(i)    Any direct or indirect objection, delay, impediment, or other action
taken by a Consenting Term Lender against any action in furtherance of the
Company Parties’ employee compensation programs that are otherwise consistent
with this Agreement;

(ii)    Any direct or indirect objection, delay, impediment, or other action
taken by a Consenting Term Lender or Term Loan Agent against any DIP Document
filed by any Company Party in the Bankruptcy Court;

(iii)    Any direct or indirect objection, delay, impediment, or other action
taken by a Consenting Term Lender or Term Loan Agent opposing entry of any Sale
Document and/or consummation of any Sale Transaction, provided that such Sale
Transaction complies with this Agreement, the Plan, and the Bidding Procedures;
or

(iv)    The failure of the Consenting Term Lenders to negotiate in good faith,
support, and implement a Sale Transaction if the Reserve Price is triggered or
such Sale Transaction is occurring pursuant to the Lender Election.

(b)    the Milestones set forth in Section 4 have not been achieved, extended,
or waived within one (1) Business Days after the date identified for completion
of such Milestone (as such date may be extended or waived);8

(c)    the board of directors, board of managers, or such similar governing body
of any Company Party determines, after consulting with counsel, (i) that
proceeding with any of the Transactions would be inconsistent with the exercise
of its fiduciary duties or applicable Law or (ii) in the exercise of its
fiduciary duties, to pursue an Alternative Transaction;

(d)    the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that (i) enjoins the consummation of a material portion of the
Transactions and (ii) remains in effect for thirty (30) Business Days after such
terminating Company Party transmits a written notice in accordance

 

 

8 

For the avoidance of doubt, no Party may terminate this Agreement on account of
failure to satisfy a Milestone to the extent that such failure is caused by or
resulting from such Party’s own action (or failure to act).

 

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with Section 14.10 hereof detailing any such issuance; provided that this
termination right shall not apply to or be exercised by any Company Party that
sought or requested such ruling or order in contravention of any obligation or
restriction set out in this Agreement; or

(e)    the Bankruptcy Court enters an order denying confirmation of the Plan.

11.03.    Mutual Termination. This Agreement, and the obligations of all Parties
hereunder, may be terminated by mutual written agreement among all the
following: (a) the Required Consenting Term Lenders; and (b) each Company Party.

11.04.    Automatic Termination. This Agreement shall terminate automatically
without any further required action or notice immediately after the Plan
Effective Date.

11.05.    Effect of Termination. Upon the occurrence of a Termination Date as to
a Party, this Agreement shall be of no further force and effect as to such Party
and each Party subject to such termination shall be released from its
commitments, undertakings, and agreements under or related to this Agreement and
shall have the rights and remedies that it would have had, had it not entered
into this Agreement, and shall be entitled to take all actions, whether with
respect to the Transactions or otherwise, that it would have been entitled to
take had it not entered into this Agreement, including with respect to any and
all Claims or causes of action. Upon the occurrence of a Termination Date prior
to the Confirmation Order being entered by a Bankruptcy Court, any and all
consents or ballots tendered by the Parties subject to such termination before a
Termination Date shall be deemed, for all purposes, to be null and void from the
first instance and shall not be considered or otherwise used in any manner by
the Parties in connection with the Transactions and this Agreement or otherwise;
provided, however, that any Consenting Term Lender withdrawing or changing its
vote pursuant to this Section 11.05 shall promptly provide written notice of
such withdrawal or change to each other Party to this Agreement and, if such
withdrawal or change occurs on or after the Petition Date, file notice of such
withdrawal or change with the Bankruptcy Court. Nothing in this Agreement shall
be construed as prohibiting a Company Party or any of the Consenting Term
Lenders from contesting whether any such termination is in accordance with its
terms or to seek enforcement of any rights under this Agreement that arose or
existed before a Termination Date. Except as expressly provided in this
Agreement, nothing herein is intended to, or does, in any manner waive, limit,
impair, or restrict (a) any right of any Company Party or the ability of any
Company Party to protect and reserve its rights (including rights under this
Agreement), remedies, and interests, including its claims against any Consenting
Term Lender, and (b) any right of any Consenting Term Lender, or the ability of
any Consenting Term Lender, to protect and preserve its rights (including rights
under this Agreement), remedies, and interests, including its claims against any
Company Party or Consenting Term Lender. No purported termination of this
Agreement shall be effective under this Section 11.05 or otherwise if the Party
seeking to terminate this Agreement is in material breach of this Agreement,
except a termination pursuant to Section 11.02(c) or Section 11.02(e). Nothing
in this Section 11.05 shall restrict any Company Party’s right to terminate this
Agreement in accordance with Section 11.02(c).

Section 12.    Fees and Expenses. For as long as the Agreement is in full force
and effect and the Consenting Term Lenders are not in default pursuant to its
terms, and in accordance with and

 

23

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subject to the DIP Documents (which orders shall provide for the payment of all
of the fees and expenses described in this Agreement), the Company Parties shall
pay or reimburse when due all reasonable and documented fees (incurred prior to
or after the Petition Date) of the following: Brown Rudnick LLP (“Brown
Rudnick”) as primary counsel, one local counsel, and FTI Consulting (“FTI”) as
financial advisor, for all Consenting Term Lenders; in addition to the fees and
expenses (including attorneys’ fees) of the Term Loan Agent. The Company
Parties’ payment of fees and expenses owing to Brown Rudnick and FTI shall be in
accordance with all applicable engagement letters executed between the Parties.

Section 13.    Amendments and Waivers.

(a)    This Agreement may not be modified, amended, or supplemented, and no
condition or requirement of this Agreement may be waived, in any manner except
in accordance with this Section 13.

(b)    This Agreement may be modified, amended, or supplemented, or a condition
or requirement of this Agreement may be waived, in a writing signed by: (i) each
Company Party and (ii) the Required Consenting Term Lenders, solely with respect
to any modification, amendment, waiver or supplement that materially and
adversely affects the rights of such Parties and unless otherwise specified in
this Agreement; provided, however, that any waiver, modification, amendment, or
supplement that materially adversely affects the economic recoveries or
treatment of any Consenting Term Lender may not be made without the prior
written consent of each such adversely affected Consenting Term Lender.

(c)    Any proposed modification, amendment, waiver or supplement that does not
comply with this Section 13 shall be ineffective and void ab initio.

(d)    The waiver by any Party of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such
breach or as a waiver of any other or subsequent breach. No failure on the part
of any Party to exercise, and no delay in exercising, any right, power or remedy
under this Agreement shall operate as a waiver of any such right, power or
remedy or any provision of this Agreement, nor shall any single or partial
exercise of such right, power or remedy by such Party preclude any other or
further exercise of such right, power or remedy or the exercise of any other
right, power or remedy. All remedies under this Agreement are cumulative and are
not exclusive of any other remedies provided by Law.

Section 14.    Miscellaneous.

14.01.    Acknowledgement. Notwithstanding any other provision herein, this
Agreement is not and shall not be deemed to be an offer with respect to any
securities or solicitation of votes for the acceptance of a plan of
reorganization for purposes of sections 1125 and 1126 of the Bankruptcy Code or
otherwise. Any such offer or solicitation will be made only in compliance with
all applicable securities Laws, provisions of the Bankruptcy Code, and/or other
applicable Law.

 

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14.02.    Exhibits Incorporated by Reference; Conflicts. Each of the exhibits,
annexes, signatures pages, and schedules attached hereto is expressly
incorporated herein and made a part of this Agreement, and all references to
this Agreement shall include such exhibits, annexes, and schedules. In the event
of any inconsistency between this Agreement (without reference to the exhibits,
annexes, and schedules hereto) and the exhibits, annexes, and schedules hereto,
this Agreement (without reference to the exhibits, annexes, and schedules
thereto) shall govern.

14.03.    Further Assurances. Subject to the other terms of this Agreement, the
Parties agree to execute and deliver such other instruments and perform such
acts, in addition to the matters herein specified, as may be reasonably
appropriate or necessary, or as may be required by order of the Bankruptcy
Court, from time to time, to effectuate the Transactions, as applicable.

14.04.    Complete Agreement. Except as otherwise explicitly provided herein,
this Agreement constitutes the entire agreement among the Parties with respect
to the subject matter hereof and supersedes all prior agreements, oral or
written, among the Parties with respect thereto, other than any Confidentiality
Agreement.

14.05.    GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM. THIS
AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH
STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. Each
Party hereto agrees that it shall bring any action or proceeding in respect of
any claim arising out of or related to this Agreement, to the extent possible,
in the Bankruptcy Court (and if the Chapter 11 Cases are not filed, in the
courts of New York State), and solely in connection with claims arising under
this Agreement: (a) irrevocably submits to the exclusive jurisdiction of the
Bankruptcy Court; (b) waives any objection to laying venue in any such action or
proceeding in the Bankruptcy Court; and (c) waives any objection that the
Bankruptcy Court is an inconvenient forum or does not have jurisdiction over any
Party hereto.

14.06.    TRIAL BY JURY WAIVER. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

14.07.    Execution of Agreement. This Agreement may be executed and delivered
in any number of counterparts and by way of electronic signature and delivery,
each such counterpart, when executed and delivered, shall be deemed an original,
and all of which together shall constitute the same agreement. Except as
expressly provided in this Agreement, each individual executing this Agreement
on behalf of a Party has been duly authorized and empowered to execute and
deliver this Agreement on behalf of said Party.

14.08.    Rules of Construction. This Agreement is the product of negotiations
among the Company Parties and the Consenting Term Lenders, and in the
enforcement or interpretation hereof, is to be interpreted in a neutral manner,
and any presumption with regard to interpretation

 

25

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for or against any Party by reason of that Party having drafted or caused to be
drafted this Agreement, or any portion hereof, shall not be effective in regard
to the interpretation hereof. The Company Parties and the Consenting Term
Lenders were each represented by counsel during the negotiations and drafting of
this Agreement and continue to be represented by counsel.

14.09.    Successors and Assigns; Third Parties. This Agreement is intended to
bind and inure to the benefit of the Parties and their respective successors and
permitted assigns, as applicable. There are no third party beneficiaries under
this Agreement, and the rights or obligations of any Party under this Agreement
may not be assigned, delegated, or transferred to any other person or entity.

14.10.    Notices. All notices hereunder shall be deemed given if in writing and
delivered, by electronic mail, courier, or registered or certified mail (return
receipt requested), to the following addresses (or at such other addresses as
shall be specified by like notice):

 

  (a)

if to a Company Party, to:

Pier 1 Imports, Inc.

Attention: Ray McKown

E-mail address: grmckown@pier1.com

with copies to:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attention: Joshua A. Sussberg, P.C. and Emily Geier

E-mail address: joshua.sussberg@kirkland.com

                           emily.geier@kirkland.com

and

Kirkland & Ellis LLP

655 Fifteenth Street, N.W.

Washington, D.C. 20005

Attention: AnnElyse Scarlett Gains

E-mail address: annelyse.gains@kirkland.com

and

Kirkland & Ellis LLP

300 North LaSalle

Chicago, Illinois 60611

Attention: Joshua Altman

E-mail address: josh.altman@kirkland.com

 

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  (b)

if to a Consenting Term Lender, to:

Brown Rudnick LLP

7 Times Square

New York, New York 10036

Attention: Robert J. Stark

E-mail address: rstark@brownrudnick.com

and

Brown Rudnick LLP

One Financial Center

Boston, Massachusetts 02111

Attention: Sharon I. Dwoskin

E-mail address: sdwoskin@brownrudnick.com

Any notice given by delivery, mail, or courier shall be effective when received.

14.11.    Independent Due Diligence and Decision Making. Each Consenting Term
Lender hereby confirms that its decision to execute this Agreement has been
based upon its independent investigation of the operations, businesses,
financial and other conditions, and prospects of the Company Parties.

14.12.    Enforceability of Agreement. Each of the Parties to the extent
enforceable waives any right to assert that the exercise of termination rights
under this Agreement is subject to the automatic stay provisions of the
Bankruptcy Code, and expressly stipulates and consents hereunder to the
prospective modification of the automatic stay provisions of the Bankruptcy Code
for purposes of exercising termination rights under this Agreement, to the
extent the Bankruptcy Court determines that such relief is required.

14.13.    Waiver. If the Transactions are not consummated, or if this Agreement
is terminated for any reason, the Parties fully reserve any and all their
rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules
of evidence, this Agreement and all negotiations relating hereto shall not be
admissible into evidence in any proceeding other than a proceeding to enforce
its terms or the payment of damages to which a Party may be entitled under this
Agreement.

14.14.    Specific Performance. It is understood and agreed by the Parties that
money damages may be an insufficient remedy for any breach of this Agreement by
any Party, and each non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief (without the posting of any
bond and without proof of actual damages) as a remedy of any such breach,
including an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.

 

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14.15.    Several, Not Joint, Claims. Except where otherwise specified, the
agreements, representations, warranties, and obligations of the Parties under
this Agreement are, in all respects, several and not joint.

14.16.    Severability and Construction. If any provision of this Agreement
shall be held by a court of competent jurisdiction to be illegal, invalid, or
unenforceable, the remaining provisions shall remain in full force and effect if
essential terms and conditions of this Agreement for each Party remain valid,
binding, and enforceable.

14.17.    Remedies Cumulative. All rights, powers, and remedies provided under
this Agreement or otherwise available in respect hereof at Law or in equity
shall be cumulative and not alternative, and the exercise of any right, power,
or remedy thereof by any Party shall not preclude the simultaneous or later
exercise of any other such right, power, or remedy by such Party.

14.18.    Capacities of Consenting Term Lenders. Each Consenting Term Lender has
entered into this agreement on account of all Term Loan Claims that it holds
(directly or through discretionary accounts that it manages or advises) and,
except where otherwise specified in this Agreement, shall take or refrain from
taking all actions that it is obligated to take or refrain from taking under
this Agreement with respect to all such Term Loan Claims.

14.19.    Email Consents. Where a written consent, acceptance, approval, or
waiver is required pursuant to or contemplated by this Agreement, pursuant to
Section 3.02, Section 13, or otherwise, including a written approval by the
Company Parties or the Required Consenting Term Lenders, such written consent,
acceptance, approval, or waiver shall be deemed to have occurred if, by
agreement between counsel to the Parties submitting and receiving such consent,
acceptance, approval, or waiver, it is conveyed in writing (including electronic
mail) between each such counsel without representations or warranties of any
kind on behalf of such counsel.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year first above written.

 

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Company Parties’ Signature Page to

the Plan Support Agreement

PIER 1 IMPORTS, INC.

PIER 1 IMPORTS (U.S.) INC.

PIER 1 HOLDINGS, INC.

PIER 1 ASSETS, INC.

PIER 1 LICENSING, INC.

PIER 1 SERVICES COMPANY

PIER 1 VALUE SERVICES, LLC

 

By:

 

/s/ Robert J. Riesbeck

Name: Robert J. Riesbeck

Authorized Signatory

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Consenting Term Lender Signature Page to

the Plan Support Agreement

[CONSENTING TERM LENDER]

 

Signature:

 

 

Name:

Title:

Address:

E-mail address(es):

 

Aggregate Amounts Beneficially Owned or Managed on Account of:   Term Loan  
Revolving Loan  

Equity Interests

 

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EXHIBIT A

Company Parties

Pier 1 Imports, Inc.

Pier 1 Assets, Inc.

Pier 1 Licensing, Inc.

Pier 1 Imports Holdings, Inc.

Pier 1 Services Company

Pier 1 Imports (U.S.), Inc.

Pier 1 Value Services, LLC

PIR Trading, Inc.

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EXHIBIT B

Bidding Procedures

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Exhibit C

Provision for Transfer Agreement

The undersigned (“Transferee”) hereby acknowledges that it has read and
understands the Plan Support Agreement, dated as of                  (the
“Agreement”),1 by and among Pier 1 Imports, Inc. and its affiliates and
subsidiaries bound thereto and the Consenting Term Lenders, including the
transferor to the Transferee of any Term Loan Claims (each such transferor, a
“Transferor”), and agrees to be bound by the terms and conditions thereof to the
extent the Transferor was thereby bound, and shall be deemed a “Consenting Term
Lender” under the terms of the Agreement.

The Transferee specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of the Transfer, including the agreement to be bound by the vote of
the Transferor if such vote was cast before the effectiveness of the Transfer
discussed herein.

Date Executed:

 

Signature:  

 

Name:   Title:  

Address:

E-mail address(es):

 

Aggregate Amounts Beneficially Owned or Managed on Account of: Term Loan  
Revolving Loan   Equity Interests  

 

1 

Capitalized terms used but not otherwise defined herein shall having the meaning
ascribed to such terms in the Agreement.