Document:

exv10w18w1

 

Exhibit 10.18.1

PIER 1 FUNDING, L.L.C.,

Transferor

PIER 1 IMPORTS (U.S.), INC.,

Servicer

and

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

Trustee

on behalf of the Certificateholders

 

SERIES 2001-1 SUPPLEMENT

Dated as of September 4, 2001

to

POOLING AND SERVICING AGREEMENT

Dated as of February 12, 1997

 

Class A Variable Funding Asset-Backed

Certificates, Series 2001-1

Class B Variable Funding Asset-Backed

Certificates, Series 2001-1

PIER 1 IMPORTS CREDIT CARD MASTER TRUST

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE	 	TITLE	 	 	 	PAGE	 
	SECTION 1.1	 	Designation	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.2	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.3	 	Reassignment and Transfer Terms	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.4	 	Delivery and Payment for the Series 2001-1 Certificates	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.5	 	Form of Delivery of Series 2001-1 Certificates	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.6	 	Article II of Agreement	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.7	 	Article IV of Agreement	 	 	14	 
	Section 4.7
	 	Rights of Series 2001-1 Certificateholders	 	 	14	 
	Section 4.8
	 	Collections and Allocation	 	 	15	 
	Section 4.9
	 	Determination of Monthly Interest for the Investor Certificates	 	 	16	 
	Section 4.10
	 	Determination of Monthly Principal	 	 	16	 
	Section 4.11
	 	Application of Funds on Deposit in the Collection Account for the	 	 	 	 
	 
	 	Certificates	 	 	17	 
	Section 4.12
	 	Coverage of Finance Charge Shortfalls for the Investor Certificates	 	 	21	 
	Section 4.13
	 	Payment of Certificate Interest	 	 	22	 
	Section 4.14
	 	Payment of Certificate Principal	 	 	22	 
	Section 4.15
	 	Investor Charge-Offs	 	 	23	 
	Section 4.16
	 	Shared Principal Collections	 	 	24	 
	Section 4.17
	 	Reallocated Class B Principal Collections	 	 	24	 
	Section 4.18
	 	Store Payment Notices and Enhancement	 	 	24	 
	Section 4.19
	 	Payment of Monthly Servicing Fee	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.8	 	Article V of the Agreement	 	 	26	 
	Section 5.1
	 	Distributions	 	 	26	 
	Section 5.2
	 	Daily Report and
Monthly Certificateholders’ Statement	 	 	27	 
	Section 5.3
	 	Continued Errors	 	 	29	 
	Section 5.4
	 	Obligations of Successor Servicer	 	 	29	 
	Section 5.5
	 	Indemnification	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.9	 	Series 2001-1 Pay Out Events	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.10	 	Article VI of the Agreement	 	 	32	 
	Section 6.15
	 	Additional Invested Amounts	 	 	32	 
	Section 6.16
	 	Decreases to the Invested Amount	 	 	33	 
	Section 6.17
	 	Additional Class B Invested Amounts	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.11	 	Legends on Investor Certificates	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.12	 	Reduction of Class B Invested Amount During the Revolving Period; Designation
of Class B Certificate Terms; Transfer and Sale of Class B Certificates	 	 	36	 
	 
	 	 	 	 	 	 	 	 

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	SECTION 1.13	 	Series 2001-1 Termination	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.14	 	Periodic Finance Charges and Other Fees	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.15	 	Ratification of Agreement	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.16	 	Counterparts	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.17	 	Governing Law	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	SECTION 1.18	 	Instructions in Writing	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	EXHIBITS
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	EXHIBIT A-1	 	Form of Class A Certificate	 	 	 	 
	EXHIBIT A-2	 	Form of Class B Certificate	 	 	 	 
	EXHIBIT B	 	Form of Monthly Certificateholders’ Statement	 	 	 	 
	EXHIBIT C	 	Investor Certification	 	 	 	 

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     SERIES 2001-1 SUPPLEMENT, dated as of September 4, 2001 (as amended, supplemented or otherwise
modified and in effect from time to time, this “Series Supplement”) by and among PIER 1
FUNDING, L.L.C., a Delaware limited liability company, as Transferor (the “Transferor”),
PIER 1 IMPORTS (U.S.), INC., a Delaware corporation (“Pier 1”), as Servicer (in such
capacity, the “Servicer”), and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States, as Trustee
(together with its successors in trust thereunder as provided in the Agreement referred to below,
the “Trustee”), under the Pooling and Servicing Agreement dated as of February 12, 1997 (as
amended, supplemented, or otherwise modified and in effect from time to time, including amendments
in this Series Supplement, the “Agreement”) among the Transferor, the Servicer and the
Trustee.

     Section 6.3 of the Agreement provides, among other things, that the Transferor and the Trustee
may at any time and from time to time enter into a supplement to the Agreement for the purpose of
authorizing the issuance by the Trustee to the Transferor, for execution and redelivery to the
Trustee for authentication, of one or more Series of Certificates.

     Pursuant to this Series Supplement, the Transferor and the Trustee shall create a new Series
of Investor Certificates and shall specify the Principal Terms thereof. The Investor Certificates
shall not be subordinated to any other Series.

     SECTION 1.1
Designation. There is hereby created a Series of Investor Certificates to be issued
pursuant to the Agreement and this Series Supplement to be known generally as the “Series
2001-1 Certificates.” The Series 2001-1 Certificates shall be issued in two Classes, which
shall be designated generally as the Class A Variable Funding Asset-Backed Certificates, Series
2001-1 (the “Class A Certificates”) and the Class B Variable Funding Asset-Backed
Certificates, Series 2001-1 (the “Class B Certificates”), each such Class bearing a
variable rate of interest and having an outstanding principal amount which may be increased or
decreased pursuant to Article VI of the Agreement. The Series 2001-1 Certificates shall be
included in a Group, which shall be designated as Group 1.

     SECTION
1.2 Definitions.

          (a) In the event that any term or provision contained herein shall conflict with or be
inconsistent with any provision contained in the Agreement, the terms and provisions of this Series
Supplement shall govern with respect to the Series 2001-1 Certificates. All Article, Section or
subsection references herein shall mean Article, Section or subsections of the Agreement, as
amended or supplemented by this Series Supplement, except as otherwise provided herein. All
capitalized terms not otherwise defined herein shall have the meanings assigned to them in the
Agreement. Each capitalized term defined herein shall relate only to Series 2001-1 and to no other
Series issued by the Trust.

 

 

     “Additional Class A Invested Amounts” shall have the meaning specified in
Section 6.15 of the Agreement.

     “Additional Class B Invested Amounts” shall have the meaning specified in
Section 6.17 of the Agreement.

     “Additional Interest” shall mean, at any time of determination, the sum of
Class A Additional Interest and Class B Additional Interest, if any.

     “Adjusted Discount Percentage” shall mean for any Monthly Period, the
percentage equivalent of a fraction, having as its numerator, the sum of the aggregate
Discount Option Receivables Collections for such Monthly Period and the aggregate Principal
Collections treated as Finance Charge Collections pursuant to Section 2.7(j) of the
Agreement for such Monthly Period, and as its denominator, the Weighted Average Principal
Receivables during such Monthly Period.

     “Administrative Agent” shall mean Morgan Guaranty Trust Company of New York, in
its capacity as Administrative Agent under the Certificate Purchase Agreement, and its
successors and assigns.

     “Amortization Period” shall mean the period commencing on the Amortization
Period Commencement Date and continuing to, but not including, the earlier to occur of (i)
the date of termination of the Trust pursuant to Section 12.1 of the Agreement and (ii) the
Series 2001-1 Termination Date.

     “Amortization Period Commencement Date” shall mean the earlier of (i) the
Commitment Expiration Date and (ii) the Pay Out Commencement Date.

     “Available Series 2001-1 Finance Charge Collections” shall have the meaning
specified in Section 4.11(a) of the Agreement.

     “Base Rate” shall mean, for any Monthly Period, the product of twelve and the
percentage equivalent of a fraction, the numerator of which is the sum of the Class A
Monthly Interest and Fees and the Monthly Servicing Fee for such Monthly Period, and the
denominator of which is the Weighted Average Invested Amount for such Monthly Period.

     “Carryover Class B Monthly Interest” shall mean on any Business Day in a
Monthly Period (i) any Class B Monthly Interest with respect to any Interest Accrual Period
beginning in a prior Monthly Period which has not previously been deposited in the Finance
Charge Account or paid on any previous Distribution Date plus (ii) any Class B
Additional Interest.

     “Certificate Purchase Agreement” shall mean that certain Certificate Purchase
Agreement, dated as of September 4, 2001, by and among Transferor and Administrative

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Agent,
and the Class A Purchasers (as such term is defined in the Certificate Purchase
Agreement), as the same may from time to time be amended, supplemented or otherwise
modified and in effect.

     “Change of Control” shall mean, with respect to any Person, any event or series
of events by which:

          (i) such Person merges or consolidates with or into another Person or the merger of
another Person with or into such Person, or the sale of all or substantially all the assets
of such Person to another Person, and, in the case of any such merger or consolidation, the
securities of such Person that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of such Person are changed into or
exchanged for cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other consideration,
securities of the surviving corporation that represent immediately after such transaction,
at least a majority of the aggregate voting power of the surviving corporation;

          (ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934) directly or indirectly, of the securities
representing more than 40% of the total voting power of such Person, except that such person
shall be deemed to have a beneficial ownership of all shares that such person has the right
to acquire, whether such right is exercisable immediately or only after the passage of time;

          (iii) individuals who, on the Closing Date, constitute the board of directors of such
Person (the “Incumbent Directors”) cease for any reason to constitute at least a majority of
the board of directors of such Person, provided that any person becoming a director
subsequent to the Closing Date whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then in office (either by a specific
vote or by approval of the proxy-statement of such Person in which such individual is named
as a nominee for director, without objection to such nomination) shall be an Incumbent
Director; provided, however, no individual elected or nominated as a director of such Person
initially as a result of an actual or threatened election contest with respect to directors
or any other actual or threatened solicitation of proxies or consents by or on behalf of any
person other than the board of directors of such Person shall be deemed to be an Incumbent
Director.

     “Class A Certificateholder” shall mean the Person in whose name a Class A
Certificate is registered in the Certificate Register.

     “Class A Certificateholders’ Interest” shall mean, on any date of
determination, the portion of the Series 2001-1 Certificateholders’ Interest evidenced by
the Class A Certificates.

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     “Class A Certificates” shall mean any of the certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit “A-1” attached hereto and incorporated herein by reference.

     “Class A Initial Invested Amount” shall mean $100,000,000.00.

     “Class A Invested Amount” shall mean, when used with respect to any Business
Day, an amount (not less than zero) equal to (w) the Class A Initial Invested Amount,
plus (x) the aggregate principal amount of any Additional Class A Invested Amounts
purchased by the Class A Certificateholders on or prior to such Business Day pursuant to
Section 6.15 of the Agreement, minus (y) the aggregate amount of principal payments
made to Class A Certificateholders prior to such Business Day, minus (z) the excess,
if any, of the aggregate amount of Class A Investor Charge-Offs for all prior Business Days
over Class A Investor Charge-Offs reimbursed pursuant to Section 4.11(a)(iv) of the
Agreement prior to such Business Day, including, without limitation, by application of
funds, pursuant to Sections 4.12(a) and (b) of the Agreement.

     “Class A Investor Charge-Off” shall have the meaning specified in Section
4.15(b) of the Agreement.

     “Class A Maximum Invested Amount” shall mean $100,000,000.

     “Class A Monthly Interest and Fees” shall have the meaning specified in the
Certificate Purchase Agreement.

     “Class A Monthly Principal” shall mean the monthly principal distributable in
respect of the Class A Certificates as calculated in accordance with Section 4.10(a) of the
Agreement.

     “Class A Percentage” shall mean, with respect to any day, a fraction the
numerator of which is the Class A Invested Amount on such day and the denominator of which
is the Invested Amount on such day.

     “Class A Projected Monthly Interest and Fees” shall have the meaning specified
in the Certificate Purchase Agreement.

     “Class A Required Amount” shall mean, with respect to any Distribution Date,
the amount, if any, by which the sum of (w) the Class A Monthly Interest and Fees for such
Distribution Date, (x) the aggregate unreimbursed Class A Investor Charge-Offs as of the end
of the related Monthly Period, before giving effect to funds allocated pursuant to Section
4.11(a)(iv), (y) the Class A Required Amount Percentage of the aggregate of the Investor
Default Amounts for each Business Day during the related Monthly Period, and (z) the Class A
Required Amount Percentage of the Monthly Servicing Fee for the related Monthly Period,
exceeds the sum of Available Series 2001-1 Finance Charge Collections, Transferor Finance
Charge Collections and Excess Finance Charge Collections on
each

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Business Day during the
related Monthly Period applied with respect
thereto and the amount available to be drawn under the Store Payment Enhancement, if
any, on such Distribution Date pursuant to Section 4.18 of the Agreement for application to
the amounts described in clauses (w) through (z) above.

     “Class A Required Amount Percentage” shall mean, with respect to any
Distribution Date, the percentage equivalent of a fraction the numerator of which is the
Weighted Average Class A Invested Amount for each day in the preceding Monthly Period and
the denominator of which is the Weighted Average Invested Amount for each day in the
preceding Monthly Period.

     “Class B Additional Interest” shall mean the additional interest, if any,
distributable in respect of the Class B Certificates as may be calculated pursuant to a
supplemental agreement entered into in accordance with Section 1.12 hereof.

     “Class B Certificate Rate” shall mean zero percent per annum;
provided, however, that such certificate may be increased pursuant to the
terms of a supplemental agreement entered into in accordance with Section 1.12 hereof.

     “Class B Certificateholder” shall mean the Person in whose name a Class B
Certificate is registered in the Certificate Register.

     “Class B Certificateholders’ Interest” shall mean, on any date of
determination, the portion of the Series 2001-1 Certificateholders’ Interest evidenced by
the Class B Certificates.

     “Class B Certificates” shall mean any of the certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit “A-2” attached hereto and incorporated herein by reference.

     “Class B Daily Principal Amount” shall have the meaning specified in Section
4.11(c)(iii) of the Agreement.

     “Class B Initial Invested Amount” shall mean $9,289,617.49.

     “Class B Invested Amount” shall mean, when used with respect to any Business
Day, an amount (not less than zero) equal to (i) the Class B Initial Invested Amount,
plus (ii) the aggregate principal amount of any Additional Class B Invested Amounts
pursuant to Section 6.17 of the Agreement, minus (iii) the aggregate amount of
principal payments made to Class B Certificateholders prior to such Business Day,
minus (iv) the aggregate amount of Class B Investor Charge-Offs for all prior
Business Days, minus (v) the aggregate amount of Reallocated Class B Principal
Collections for all prior Distribution Dates plus (vi) the sum of the aggregate
amount allocated to the Class B Certificates and applied on all prior Business Days pursuant
to Section 4.11(a)(v) of the Agreement,

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including, without limitation, by application of
funds pursuant to Sections 4.12(a) and (b) of the Agreement.

     “Class B Investor Charge-Offs” shall have the meaning specified in Section
4.15(a) of the Agreement.

     “Class B Minimum Required Amount” shall mean, at any time of determination, the
greater of (i) the quotient obtained by dividing (A) 8.5% of the Class A Invested Amount at
such time by (B) 0.915 and (ii) the sum of (A) 3.0% of the Class A Purchase Limit at such
time and (B) 3.0% of the quotient obtained by dividing (1) 8.5% of the Class A Purchase
Limit at such time by (2) 0.915; provided, however, that if the Class A Certificates have
been rated at least A by Standard & Poor’s and A2 by Moody’s, then the Class B Minimum
Required Amount shall be in such amount as Standard & Poor’s and Moody’s shall specify.

     “Class B Monthly Interest” shall mean the monthly interest, if any,
distributable in respect of the Class B Certificates as may be calculated pursuant to a
supplemental agreement entered into in accordance with Section 1.12 hereof.

     “Class B Monthly Principal” shall mean the monthly principal distributable in
respect of the Class B Certificates as calculated in accordance with Section 4.10(b) of the
Agreement.

     “Class B Percentage” shall mean, with respect to any day, a fraction the
numerator of which is the Class B Invested Amount on such day and the denominator of which
is the Invested Amount on such day.

     “Class B Principal Payment Commencement Date” shall mean the Distribution Date
on which the Class A Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 2001-1 Investor Certificates remaining after payments
have been made to the Class A Certificates on such Distribution Date, the Distribution Date
following the Distribution Date on which the Class A Invested Amount is paid in full.

     “Closing Date” shall mean September 4, 2001.

     “Commitment Expiration Date” shall have the meaning specified in the
Certificate Purchase Agreement.

     “Daily Report” shall have the meaning specified in Section 3.4(b) of the
Agreement.

     “Decrease Date” shall have the meaning specified in Section 6.16(a) of the
Agreement.

6

 

     “Dilution Ratio” shall mean, for any Monthly Period, the percentage equivalent
of a fraction, the numerator of which is the aggregate amount of reductions to all
Receivables as a result of non-cash credits and returns during such Monthly Period, and
the denominator of which is the Weighted Average Principal Receivables for such Monthly
Period.

     “Distribution Date” shall mean October 20, 2001, and the twentieth day of each
calendar month thereafter, or if such twentieth day is not a Business Day, the next
succeeding Business Day.

     “Early Amortization Period” shall mean the period commencing on the Pay Out
Commencement Date and ending on the earlier to occur of (i) the date of termination of the
Trust pursuant to Section 12.1 of the Agreement and (ii) the Series 2001-1 Termination Date.

     “Eligible Store Payment Enhancement Institution” shall mean (a) a depository
institution (which may be the Trustee or an Affiliate thereof) organized under the laws of
the United States or any one of the states thereof that at all times (i) has either (x) a
long-term unsecured debt rating of A2 or better by Moody’s or (y) a certificate of deposit
rating of P-1 by Moody’s; (ii) has either (x) a long-term unsecured debt rating of A or
better by Standard & Poor’s or (y) a certificate of deposit rating of A-1 or better by
Standard & Poor’s; and (iii) is a member of the Federal Deposit Insurance Corporation (or
any successor) or (b) any other institution that is acceptable to the Rating Agencies.

     “Enhancement” shall mean, with respect to the Class A Certificates, the
subordination of the Class B Invested Amount.

     “Excess Finance Charge Collections” shall mean, with respect to any Business
Day, as the context requires, either (x) the amount described in Section 4.11(a)(viii) of
the Agreement allocated to the Investor Certificates but available to cover shortfalls in
amounts paid from Total Finance Charge Collections for other Series, if any, or (y) the
aggregate amount of Total Finance Charge Collections allocable to other Series in excess of
the amounts necessary to make required payments with respect to such Series, if any, and
available to cover shortfalls with respect to the Investor Certificates.

     “Finance Charge Shortfall” shall have the meaning specified in Section 4.12(b)
of the Agreement.

     “Fixed/Floating Allocation Percentage” shall mean for any Business Day (i) with
respect to Principal Collections, the percentage equivalent of a fraction, the numerator of
which is the Invested Amount at the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the sum of the aggregate amount of Principal
Receivables in the Trust and the amount on deposit in the Excess Funding Account as of the
end of the preceding Business Day and (b) the sum of the numerators used to calculate the
investor allocation percentages with respect to Principal Receivables with respect to

7

 

all
Classes of all Series then outstanding on such Business Day as specified in the applicable
Supplements; and (ii) with respect to Finance Charge Collections on and after the Pay Out
Commencement Date, the percentage equivalent of a fraction, the numerator of which is the
Invested Amount at the end of the Business Day preceding the
Pay Out Commencement Date and the denominator of which is the greater of (a) the sum of
the aggregate amount of Principal Receivables in the Trust and the amount on deposit in the
Excess Funding Account as of the end of the preceding Business Day and (b) the sum of the
numerators used to calculate the investor allocation percentages with respect to Finance
Charge Collections with respect to all Classes of all Series then outstanding on such
Business Day.

     “Floating Allocation Percentage” shall mean, with respect to any Business Day,
the percentage equivalent of a fraction, numerator of which is the Invested Amount on such
Business Day and the denominator of which is the greater of (i) the sum of the amount of
Principal Receivables in the Trust and the amount on deposit in the Excess Funding Account
as of the end of the preceding Business Day and (ii) the sum of the numerators used to
calculate the Investor Percentages with respect to all Classes of all Series then
outstanding on such Business Day.

     “Group 1” shall mean the Series 2001-1 Certificates, which will be the only
Series in such Group.

     “Interest Accrual Period” shall mean, with respect to a Distribution Date, the
Monthly Period most recently ended prior to such Distribution Date, except that the Interest
Accrual Period with respect to the first Distribution Date will be the period commencing on
and including the Closing Date and ending on and including the last day of the Monthly
Period ending on or about September 30, 2001, and the Interest Accrual Period with respect
to the last Distribution Date will be the period commencing on and including the first day
of the Monthly Period most recently ended prior to such last Distribution Date.

     “Invested Amount” shall mean, when used with respect to any Business Day, an
amount equal to the sum of the Class A Invested Amount and the Class B Invested Amount, in
each case as of such Business Day.

     “Investor Certificateholder” shall mean the Holder of record on the Certificate
Register of an Investor Certificate of Series 2001-1.

     “Investor Certificates” shall mean the Class A Certificates and the Class B
Certificates; provided, however, that the Class B Certificates shall not be
considered to be Investor Certificates for purposes of any Tax Opinion or other opinion
relating to tax matters hereunder or under the Agreement for so long as they are held by the
Transferor.

     “Investor Charge-Offs” shall mean the sum of Class A Investor Charge-Offs and
Class B Investor Charge-Offs.

8

 

     “Investor Default Amount” shall mean, with respect to each Business Day, an
amount equal to the product of the Default Amount for such Business Day and the Floating
Allocation Percentage applicable for such Business Day.

     “Investor Percentage” shall mean for any Business Day, (a) with respect to
Receivables in Defaulted Accounts at any time, Finance Charge Collections prior to the Pay
Out Commencement Date or Principal Receivables during the Revolving Period, the Floating
Allocation Percentage and (b) with respect to Finance Charge Collections on and after the
Pay Out Commencement Date or Principal Receivables during the Amortization Period, the
Fixed/Floating Allocation Percentage.

     “Issuance Date” shall mean the Closing Date.

     “Monthly Certificateholders’ Statement” shall have the meaning specified in
Section 5.2(b).

     “Monthly Period” shall have the meaning specified in the Agreement, except that
the first Monthly Period with respect to the Investor Certificates shall begin on and
include the Closing Date and shall end on and include October 6, 2001.

     “Monthly Servicing Fee” shall mean for any Monthly Period, an amount equal to
the product of (i) one-twelfth, (ii) the Series Servicing Fee Percentage, and (iii) the
Weighted Average Invested Amount for such Monthly Period.

     “Pay Out Commencement Date” shall mean the earlier of the date on which (i) a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement or (ii) a
Series 2001-1 Pay Out Event is deemed to occur pursuant to Section 1.9 of this Series
Supplement.

     “Pay Out Event” shall mean either (i) a Trust Pay Out Event pursuant to Section
9.1 of the Agreement or (ii) a Series 2001-1 Pay Out Event pursuant to Section 1.9 of this
Series Supplement.

     “Periodic Rate” shall have the meaning specified in the Credit Card Agreement
applicable to each Account for determining the Periodic Finance Charges.

     “Portfolio Yield” shall mean for the Investor Certificates, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction, the numerator of which
is an amount equal to (i) the aggregate Available Series 2001-1 Finance Charge Collections
for such Monthly Period, calculated on a cash basis, minus (ii) the aggregate
Investor Default Amount for such Monthly Period, and the denominator of which is the
Weighted Average Invested Amount for such Monthly Period.

9

 

     “Principal Allocation Percentage” shall mean for Series 2001-1 (i) for each
Business Day during the Revolving Period, the Floating Allocation Percentage and (ii) for
each Business Day on and after the Amortization Period Commencement Date, the Fixed/Floating
Allocation Percentage.

     “Principal Payment Rate” shall mean, for any Monthly Period, the percentage
equivalent of a fraction having as its numerator, an amount equal to the aggregate amount
of Principal Collections for such Monthly Period, and as its denominator, is the
aggregate amount Weighted Average Principal Receivables in the Trust during such Monthly
Period.

     “Principal Shortfalls” shall mean on any Business Day (i) for Series 2001-1, on
or after the Amortization Period Commencement Date, the Invested Amount of the class then
receiving principal payments after the application of Principal Collections on such Business
Day or (ii) for any other Series the amounts specified as such in the Supplement for such
other Series.

     “Projected Monthly Servicing Fee” shall mean, for any date of determination for
any Monthly Period, an amount equal to the product of (i) one-twelfth
(1/12), (ii) the Series Servicing-Fee Percentage, and (iii) the sum of the Class A Maximum Invested Amount and the Class B Minimum Required
Amount determined assuming that the Class A Invested Amount equals the Class A Maximum
Invested Amount.

     “Reallocated Class B Principal Collections” shall have the meaning specified in
Section 4.17 of the Agreement.

     “Record Date” shall mean, with respect to any Distribution Date, the last
Business Day of the preceding Monthly Period.

     “Required Retained Transferor’s Percentage” shall mean 7.0%; provided,
however, that such percentage may be adjusted from time to time upon written notice from
the Transferor to the Trustee, if each Rating Agency initially contracted to rate the Class
A Certificates shall have been notified of such amendment and shall have provided notice to
the Administrative Agent and Trustee or the Servicer that such action would not result in a
reduction or withdrawal of its rating of the Class A Certificates and such action shall not,
as evidenced by a Tax Opinion, cause the Trust to be characterized for Federal income tax
purposes as an association or publicly traded partnership taxable as a corporation or
otherwise have any material adverse effect on the Federal income taxation of any outstanding
Series of Investor Certificates or any Certificate Owner, and only if the Administrative
Agent after receiving such notice from each Rating Agency provides written consent for such
adjustment.

10

 

     “Revolving Period” shall mean the period from and including the Closing Date
to, but not including, the earlier of (a) the Amortization Period Commencement Date and (b)
a period of 364 days from the Closing Date.

     “Series 2001-1” shall mean the Series of the Pier 1 Imports Credit Card Master
Trust represented by the Investor Certificates.

     “Series 2001-1 Certificateholder” shall mean the holder of record of any Series
2001-1 Investor Certificate.

     “Series 2001-1 Certificateholders’ Interest” shall have the meaning specified
in Section 4.7 of the Agreement.

     “Series 2001-1 Pay Out Event” shall have the meaning specified in Section 1.9
of this Series Supplement.

     “Series 2001-1 Termination Date” shall mean the earlier to occur of (i) the day
after the Distribution Date on which the Investor Certificates are paid in full and (ii) the
Distribution Date that is at least forty-eight (48) months following the Amortization Period
Commencement Date.

     “Series Servicing-Fee Percentage” shall mean 2.00% per annum.

     “Shared Principal Collections” shall mean, as the context requires, either (a)
the amount allocated to the Series 2001-1 Certificates, which are specified herein to be
treated as “Shared Principal Collections” and which may be applied to cover
principal shortfalls with respect to other outstanding Series in Group 1 or (b) the amounts
allocated to the investor certificates of other Series which the applicable Supplements for
such Series specify are to be treated as “Shared Principal Collections” and which
may be applied to cover Principal Shortfalls with respect to the Series 2001-1 Investor
Certificates.

     “Store Payment Enhancement” shall mean either (i) a stand-by letter of credit
in a face amount equal to the Store Payment Enhancement Required Amount, issued for the
account of the Transferor and for the benefit of the Trustee on behalf of the Class A
Certificateholders by an Eligible Store Payment Enhancement Institution or (ii) a segregated
cash collateral account with an initial balance equal to the Store Payment Enhancement
Required Amount established in the name of the Trustee with an Eligible Store Payment
Enhancement Institution, which in the case of either (i) or (ii) shall have been approved in
writing by the Administrative Agent.

     “Store Payment Enhancement Required Amount” shall mean as of the date that any
Store Payment Enhancement is implemented, an amount equal to the product of (i) 10%, (ii)
the average of the Principal Payments Rates for the twelve (12) most recently ended Monthly
Periods or if fewer than twelve (12) Monthly Periods shall have elapsed

11

 

since the Closing
Date, the highest Principal Payment Rate for any Monthly Period since the Closing Date and
such date on which such Store Payment Enhancement is implemented, and (iii) the Class A
Purchase Limit; provided, however, that if such Store Payment Enhancement is
established to replace an existing letter of credit or cash collateral account as a result
of the applicable financial institution ceasing to be an Eligible Store Payment Enhancement
Institution, the Store Payment Enhancement Required Amount with respect to such replacement
Store Payment Enhancement shall be, as applicable, the undrawn face amount of the letter of
credit being replaced or the balance in the cash collateral account being replaced.

     “Structured Investor Event” shall have the meaning specified in the Certificate
Purchase Agreement.

     “Total Finance Charge Collections” shall mean with respect to any Business Day
(a) prior to the Pay Out Commencement Date, the product of the Floating Allocation
Percentage for such Business Day and the amount of Finance Charge Collections for such
Business Day or (b) on and after the Pay Out Commencement Date, the product of the
Fixed/Floating Allocation Percentage for such Series and the amount of Finance Charge
Collections for such Business Day.

     “Transferor Finance Charge Collections” shall mean on any Business Day the
product of (i) the Finance Charge Collections, (ii) the Transferor’s Percentage and (iii)
the Series Allocation Percentage in each case for such Business Day.

     “Transferor Retained Class” shall mean the Class B Certificates, but only to
the extent that, and for so long as, the Transferor is the Holder of such Certificates.

     “Weighted Average Class A Invested Amount” shall mean, for any Monthly Period,
the quotient of (i) the sum of the Class A Invested Amount determined as of each day in that
Monthly Period, divided by (ii) the number of days in that Monthly Period.

     “Weighted Average Invested Amount” shall mean, for any Monthly Period, the
quotient of (i) the sum of the Invested Amount determined as of each day in that Monthly
Period, divided by (ii) the number of days in that Monthly Period.

     “Weighted Average Principal Receivables” shall mean, for any Monthly Period,
the quotient of (i) the sum of the aggregate amount of Principal Receivables in the Trust as
of each day in that Monthly Period, divided by (ii) the number of days in that Monthly
Period.

          (b) For so long as none of the outstanding Investor Certificates are rated at least A by
Standard & Poor’s and A2 by Moody’s, each reference in the Agreement or in the Receivables Purchase
Agreement to a requirement that the Rating Agency Condition be satisfied or that any approval,
confirmation, notice or consent of any Rating Agency be obtained or received, shall
be deemed also to be a requirement to obtain the approval or consent, as

12

 

applicable, of the
Administrative Agent. In addition, the Administrative Agent shall be deemed at all times to be a
Rating Agency for purposes of all notices and other communications delivered under the Agreement or
the Receivables Purchase Agreement, except to the extent that such notices or communications relate
solely to a Series other than Series 2001-1.

     SECTION 1.3 Reassignment and Transfer Terms.

          (a) The Investor Certificates shall be subject to repurchase and termination by the Servicer
at its option, in accordance with the terms specified in Section 12.2(a) of the Agreement, on any
Distribution Date on or after the Distribution Date on which the Invested Amount is reduced to an
amount less than or equal to 10% of the highest Invested Amount outstanding at anytime during the
Revolving Period. The deposit required in connection with any such termination and final
distribution shall be equal to the aggregate outstanding balance of the Series 2001-1 Certificates,
plus accrued and unpaid interest on the Series 2001-1 Certificates through the day prior to the
Distribution Date on which the final distribution occurs, plus all other amounts owing in respect
of the Series 2001-1 Certificates pursuant to the Agreement or the Certificate Purchase Agreement.

          (b) Each Class A Certificateholder and Class B Certificateholder, by accepting and holding a
Class A Certificate or a Class B Certificate, as applicable, or an interest therein, will be deemed
to have represented and warranted that it is not (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described
in Section 4975(e)(1) of the Code, (iii) a governmental plan, as defined in Section 3(32) of ERISA,
subject to any federal, state or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (iv) an entity whose underlying
assets include plan assets by reason of a plan’s investment in the entity or (v) a person investing
“plan assets” of any such plan (including for purposes of clauses (iv) and (v), any insurance
company general account, but excluding any entity registered under the Investment Company Act of
1940, as amended).

     SECTION 1.4 Delivery and Payment for the Series 2001-1 Certificates. The Transferor shall execute and deliver the
Series 2001-1 Certificates to the Trustee for authentication in accordance with Section 6.1 of the
Agreement. The Trustee shall deliver the Series 2001-1 Certificates to or upon the order of the
Transferor when authenticated in accordance with Section 6.2 of the Agreement.

     SECTION 1.5
Form of Delivery of Series 2001-1 Certificates. The Class A Certificates shall be delivered as Definitive Certificates as
provided in Sections 6.1, 6.2 and 6.10 of the Agreement and shall be substantially

13

 

in the form of
Exhibit “A-1” attached hereto. The Class B Certificates shall be delivered as Definitive
Certificates as provided in Sections 6.1, 6.2 and 6.10 of the Agreement and shall be substantially
in the form of Exhibit “A-2” attached hereto.

     SECTION
1.6
Article II of the Agreement. Section 2.7(j) of the Agreement shall be amended to read as
follows and shall be applicable only to the Investor Certificates:

          Section 2.7(j) Designated Receivables. The Transferor shall designate certain
Deferred Payment Plan Receivables to be treated as each having a Principal Receivable balance of
zero on each Business Day on which the aggregate principal balance of Deferred Payment Plan
Receivables exceeds 15% of the balance of the Aggregate Principal Receivables on such day (or
for any such day in February, June and October, the limit shall be 20%), such that following
such designation the Principal Receivables balance of all Deferred Payment Plan Receivables not so
designated shall not exceed 15% of the balance of the Aggregate Principal Receivables on such day
(or for any such day in February, June and October, the limit shall be 20%);
provided, however, that this 15% limit (or for any such day in February, June
and October, the limit shall be 20%) may be increased to 25% subject to satisfaction of the
Rating Agency Condition. The Transferor shall designate certain Foreign Receivables to be treated
as each having a Principal Receivable balance of zero on each Business Day on which the aggregate
Outstanding Balance of Foreign Receivables exceeds 1% of the aggregate Outstanding Balance of all
Receivables on such day, such that following such designation the Outstanding Balance of all
Foreign Receivables not so designated shall not exceed 1% of the aggregate Outstanding Balance of
all Receivables on such day. Receivables so designated by the Transferor will not be treated as
Eligible Receivables, their principal balances will not be credited toward the Aggregate Principal
Receivables in the Trust, and Collections with respect to such Receivables will be treated as
Finance Charge Collections.

     SECTION
1.7
Article IV of Agreement. Sections 4.1 through 4.6 of the Agreement shall read in their
entirety as provided in the Agreement. The remainder of Article IV of the Agreement shall read in
its entirety as follows and shall be applicable only to the Investor Certificates:

ARTICLE IV

RIGHTS OF CERTIFICATEHOLDERS AND

ALLOCATION AND APPLICATION OF COLLECTIONS

     Section
4.7
Rights of Series 2001-1 Certificateholders.
Each Investor Certificate shall represent a fractional Undivided Interest in the Trust, consisting
of the right to receive, to the extent necessary to make the

14

 

required payments with respect to such
Series 2001-1 Certificates at the times and in the amounts specified in this Agreement, (a) the
Floating Allocation Percentage and Fixed/Floating Allocation Percentage (as applicable from time to
time) of Collections received with respect to the Receivables and (b) funds allocable to the Series
2001-1 Certificates on deposit in the Collection Account, the Finance Charge Account, the Principal
Account, the Excess Funding Account, and the Distribution Account (for such Series, the “Series
2001-1 Certificateholders’ Interest”). The Class B Invested Amount shall be subordinated to
the Class A Certificates to the extent provided in this Article IV. The Exchangeable Transferor
Certificate shall not represent any interest in the Collection Account, the Finance Charge Account,
the Principal Account, the Excess Funding Account, or the Distribution Account, except as
specifically provided in this Article IV.

     Section
4.8
Collections and Allocation.

          (a) Collections. The Servicer will instruct the Trustee to apply all funds on deposit
in the Collection Account, the Finance Charge Account, the Principal Account, the Excess Funding
Account or the Distribution Account allocable to the Series 2001-1 Certificates as described in
this Article IV. The Servicer shall, prior to the close of business on any Date of Processing,
allocate to the Investor Certificateholders an amount equal to (x) Total Finance Charge Collections
on such Date of Processing and (y) an amount equal to the product of (i) the Principal Allocation
Percentage on such Date of Processing and (ii) the aggregate amount of Principal Collections on
such Date of Processing. In addition, on each Date of Processing, the Servicer shall allocate to
the Investor Certificateholders a portion of the Default Amount equal to the Investor Default
Amount.

          (b) Allocation of Collections. The Servicer shall allocate all Collections allocated
to the Series 2001-1 Certificates on the basis of the allocation of Finance Charge Collections and
Principal Collections specified in the Agreement.

          (c) Payments to the Holder of the Exchangeable Transferor Certificate. On each
Business Day, the Servicer shall determine whether a Pay Out Event is deemed to have occurred with
respect to the Investor Certificates, and the Servicer shall allocate Collections in
accordance with the Daily Report with respect to such Business Day to the Holder of the
Exchangeable Transferor Certificate as follows:

          (i) For each Business Day (unless otherwise specified herein) with respect to the
Revolving Period, an amount equal to (x) the product of the Floating Allocation Percentage
and the amount of Principal Collections on such Business Day, minus (y) an amount
equal to the product of the Floating Allocation Percentage, the Class B Percentage and the
amount of Principal Collections on such Business Day (but in no event to exceed, when taken
together with other amounts on deposit in the Collection Account pursuant to this Section
4.8(c)(i)(y), the Class B Invested Amount), which amount shall be retained in the Collection
Account, minus (z) to the extent that any other

15

 

Series is outstanding and in its
Amortization Period, an amount not to exceed the portion of such Principal Collections
required to be applied as Shared Principal Collections with respect to the related
Distribution Date.

          (ii) For each Business Day with respect to the Amortization Period, the amount of
payments made to the Holder of the Exchangeable Transferor Certificate shall be determined
only as provided in Section 4.3(c) of the Agreement.

     Notwithstanding the foregoing and Section 4.3(c) of the Agreement, on each Business Day, the
Servicer shall apply Transferor Finance Charge Collections in accordance with Section 4.12(a) of
the Agreement.

     Notwithstanding the foregoing, amounts payable to the Holder of the Exchangeable Transferor
Certificate pursuant to Section 4.8(c)(i) of the Agreement shall instead be deposited in the Excess
Funding Account to the extent necessary to prevent the Transferor Amount from being less than the
Minimum Transferor Amount.

     The allocations to be made pursuant to this Section 4.8(c) also apply to deposits into the
Collection Account that are treated as Collections, including Adjustment Payments, payment of the
reassignment price pursuant to Sections 2.6 or 3.3 of the Agreement and proceeds from the sale,
disposition or liquidation of the Receivables pursuant to Sections 9.2, 10.1, 12.1 or 12.2 of the
Agreement and Section 1.3 of this Series Supplement. Such deposits to be treated as Collections
will be allocated as Finance Charge Receivables or Principal Receivables as provided in the
Agreement.

     Section
4.9
Determination of Monthly Interest for the Investor Certificates. The amount of monthly
interest allocable to the Class A Certificates of Series 2001-1 with respect to any Interest
Accrual Period shall be an amount equal to the Class A Monthly Interest and Fees for the related
Distribution Date.

     Section
4.10
Determination of Monthly Principal.

          (a) The amount of monthly principal (the “Class A Monthly Principal”) allocable to the
Class A Certificates on each Distribution Date following the Amortization Period Commencement Date
shall be equal to an amount calculated as follows: the sum of (i) an amount equal to (x) the
product of the Fixed/Floating Allocation Percentage and the aggregate amount of Principal
Collections with respect to the related Monthly Period minus (y) the aggregate amount of
Reallocated Class B Principal Collections for the related Monthly Period, (ii) any amount on
deposit in the Excess Funding Account allocated to the Investor Certificates on such Distribution
Date, and (iii) the amount allocated to the Class A Certificateholders pursuant to Sections

16

 

4.11(a)(iii), (iv) and (v) of the Agreement with respect to such Distribution Date;
provided, however, that for each Distribution Date, Class A Monthly Principal may
not exceed the Class A Invested Amount.

          (b) The amount of monthly principal (for Series 2001-1, the “Class B Monthly
Principal”) distributable from the Distribution Account with respect to the Class B
Certificates on each Distribution Date, beginning with the Class B Principal Payment Commencement
Date, shall be an amount equal to and calculated-as follows: the sum of (i) an amount equal to (x)
the product of the Fixed/Floating Allocation Percentage and the aggregate amount of Principal
Collections with respect to the related Monthly Period minus (y) the amount thereof paid to
the Class A Certificateholders pursuant to Section 4.14(a) of the Agreement, if any, and
minus (z) the aggregate amount of Reallocated Class B Principal Collections for the related
Monthly Period, (ii) any amount on deposit in the Excess Funding Account allocated to the Class B
Certificates on such Distribution Date, and (iii) the amount, if any, allocated to the Class B
Certificates pursuant to Sections 4.11(a)(iii) and (v) of the Agreement with respect to such
Distribution Date.

     Section
4.11
Application of Funds on Deposit in the Collection
Account for the Certificates.

          (a) On each Business Day, the Servicer shall deliver to the Trustee a Daily Report in which it
shall instruct the Trustee to withdraw, and the Trustee, acting in accordance with such
instructions, shall withdraw, to the extent of Total Finance Charge Collections (the “Available
Series 2001-1 Finance Charge Collections”), the amounts required to be withdrawn from the
Collection Account pursuant to Sections 4.11(a)(i) through 4.11(a)(viii) of the Agreement.

          (i) Class A Monthly Interest and Fees. On each Business Day during a Monthly
Period, the Trustee, acting in accordance with instructions from the Servicer,
shall transfer from the Collection Account into the Finance Charge Account for
distribution on the next Distribution Date to the Class A Certificateholders, to the extent
of the Available Series 2001-1 Finance Charge Collections for such Business Day, an amount
equal to the lesser of (x) the Available Series 2001-1 Finance Charge Collections and (y)
the excess of (1) the Class A Projected Monthly Interest and Fees over (2) any amounts with
respect thereto previously credited to the Finance Charge Account on any prior Business Day
during such Monthly Period.

          (ii) Investor Monthly Servicing. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall transfer from the Collection Account
into the Finance Charge Account for distribution on the next Distribution Date to the
Servicer, to the extent of any Available Series 2001-1 Finance Charge Collections for such
Business Day, remaining after giving effect to the

17

 

withdrawals pursuant to Section
4.11(a)(i) of the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 2001-1 Finance Charge Collections and (y) the excess of (1) the Projected
Monthly Servicing Fee plus any Monthly Servicing Fee previously due but unpaid with respect
to prior Monthly Periods over (2) any amounts with respect thereto previously credited to the Finance Charge Account on any prior Business Day during
such Monthly Period.

          (iii) Investor Default Amount. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the Collection Account,
to the extent of any Available Series 2001-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to Sections 4.11(a)(i) and (ii) of the Agreement,
an amount equal to the lesser of (x) any such remaining Available Series 2001-1 Finance
Charge Collections and (y) the sum of (1) the aggregate Investor Default Amount for such
Business Day plus (2) the unpaid Investor Default Amount for any previous Business
Day during such Monthly Period, which amount will (i) during the Revolving Period, be
treated as Shared Principal Collections, (ii) during the Amortization Period, on or prior to
the Class B Principal Payment Commencement Date, be deposited in the Principal Account for
payment to the Class A Certificateholders, and (iii) during the Amortization Period, on and
after the Class B Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class B Certificateholders.

          (iv) Reimbursement of Class A Investor Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall withdraw from the
Collection Account, to the extent of any Available Series 2001-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to Sections 4.11(a)(i) through
(iii) of the Agreement, an amount equal to the lesser of (x) any such remaining Available
Series 2001-1 Finance Charge Collections and (y) the unreimbursed Class A Investor
Charge-Offs, such amount to be treated as Shared Principal Collections during the Revolving
Period, and to the extent included in Class A Monthly Principal, deposited in the Principal
Account during the Amortization Period for distribution to the Class A Certificateholders on
the next Distribution Date.

          (v) Reimbursement of Class B Investor Charge-Offs and Reallocated Class B Principal
Collections. On each Business Day, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Collection Account, to the extent of any
Available Series 2001-1 Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to Sections 4.11(a)(i) through (iv) of the Agreement, an amount equal
to the lesser of (x) any such remaining Available Series 2001-1 Finance Charge Collections
and (y) the unreimbursed Class B Investor Charge-Offs and reductions of the Class B Invested
Amount due to Reallocated Class B Principal Collections, if any, such amount to be treated
as Shared Principal Collections during the Revolving Period, and deposited (i) in the
Principal Account during the Amortization Period for distribution to the Class A
Certificateholders, and (ii) on and after the Class B

18

 

Principal Payment Commencement Date,
in the Principal Account for payment to the Class B Certificateholders.

          (vi) Class B Monthly Interest. On each Business Day during a Monthly Period,
the Trustee, acting in accordance with instructions from the Servicer, shall transfer from
the Collection Account into the Finance Charge Account for distribution on the next
Distribution Date to the Class B Certificateholders, to the extent of any Available Series
2001-1 Finance Charge Collections remaining after giving effect to the withdrawal pursuant
to Sections 4.11(a)(i) through (v) of the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series 2001-1 Finance Charge Collections and (y) the excess of
(1) the sum of (A) the Class B Monthly Interest and (B) Carryover Class B Monthly Interest
over (2) any amounts with respect thereto previously credited to the Finance Charge Account
on any prior Business Day during such Monthly Period. Notwithstanding anything to the
contrary herein, Carryover Class B Monthly Interest shall be payable or distributable to
Class B Certificateholders only to the extent permitted by applicable law.

          (vii) Trustee’s Fees and Expenses. To the extent that the Servicer fails to
promptly pay either any amounts due and owing to the Trustee in its capacities as Paying
Agent or Trustee (but not as Successor Servicer) or any reasonable transition expenses
described in the last sentence of this subsection when due, the Trustee on each Business Day
during a Monthly Period shall transfer from the Collection Account into the Finance Charge
Account for Distribution on the next Distribution Date to the Trustee to the extent of any
Available Series 2001-1 Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to Sections 4.11(a)(i) through (vi) of the Agreement, an amount equal
to the lesser of (x) such remaining Available Series 2001-1 Finance Charge Collections and
(y) the excess of such amounts owing to the Trustee (up to a maximum for any Monthly Period
of one-twelfth (1/12) of the product of 0.50% and the Weighted Average Invested Amount
during the immediately preceding Monthly Period over (2) any amounts with respect thereto
previously credited to the Finance Charge Account on any previous Business Day during such
Monthly Period. Notwithstanding anything to the contrary, if the Trustee becomes Successor
Servicer, the Successor Servicer shall be entitled to receive the Monthly Servicing Fee as
compensation for its services with respect to each Monthly Period payable monthly on the
related Distribution Date. In addition, the Trustee, as Successor
Servicer shall be entitled to receive reasonable transition expenses, which shall be
payable as provided in the first sentence of this paragraph.

          (viii) Excess Finance Charge Collections. Any amounts remaining in the
Collection Account to the extent of any Available Series 2001-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to Sections 4.11(a)(i) through
(vii) of the Agreement, shall be treated as Excess Finance Charge Collections, and the
Servicer shall direct the Trustee in writing on each Business Day to withdraw such amounts
from the Collection Account and to first make such amounts available to pay to
Certificateholders of other Series in Group 1 to the extent of shortfalls,

19

 

if any, in
amounts payable to such certificateholders from Finance Charge Collections allocated to such
other Series, then to pay any unpaid commercially reasonable costs and expenses of a
Successor Servicer, if any, then to reserve for (or pay when due) any taxes and related
expenses anticipated by the Servicer to be payable by the Trust with respect to the related
Monthly Period or prior Monthly Periods and then pay any remaining Excess Finance Charge
Collections to the Transferor; provided, however, that on any Business Day
during any Early Amortization Period, the Trustee shall deposit any such remaining Available
Series 2001-1 Finance Charge Collections into the Finance Charge Account and shall add such
funds to the Available Series 2001-1 Finance Charge Collections on each subsequent Business
Day in such Monthly Period until the last Business Day of the related Monthly Period, when
the aggregate amount of such remaining Available Series 2001-1 Finance Charge Collections
shall be distributed as Excess Finance Charge Collections in accordance with this Section
4.11(a)(viii) of the Agreement.

          (b) For each Business Day during the Revolving Period Principal Collections on deposit in the
Collection Account pursuant to (i) Section 4.8(c)(i)(z) of the Agreement with respect to such
Business Day will be treated as Shared Principal Collections and applied, pursuant to the written
direction of the Servicer in the Daily Report for such Business Day, as provided in Section 4.4 of
the Agreement and (ii) Section 4.8 (c)(i)(y) of the Agreement shall be retained therein for
application, if necessary, as Reallocated Class B Principal Collections on the next succeeding
Distribution Date; provided, however, that (I) any amount retained in the
Collection Account for application as Reallocated Class B Principal Collections on the next
succeeding Distribution Date which amount is not to be so applied, shall, on the next succeeding
Determination Date, be treated as Shared Principal Collections and applied, pursuant to the written
direction of the Servicer in the Daily Report for such Business Day, as provided in Section 4.4 of
the Agreement and (II) if the Class B Minimum Required Amount is reduced in accordance with Section
1.12(a), the amount described in Sections 4.8(c)(i)(y) and (z) of the Agreement may be distributed
to the Class B Certificateholders in an amount not to exceed the amount of such reduction.

          (c) For each Business Day on and after the Amortization Period Commencement Date, Principal
Collections on deposit in the Collection Account with respect to such Business Day will be
distributed pursuant to the written direction of the Servicer in the Daily Report for such Business
Day in the following priority:

          (i) an amount equal to the sum of (w) an amount equal to (I) the product of the
Fixed/Floating Allocation Percentage, the Class A Percentage and the aggregate amount of
Principal Collections in the Collection Account at the end of the preceding Business Day,
(x) any amount on deposit in the Excess Funding Account allocated to the Investor
Certificates on such Business Day, (y) amounts to be paid pursuant to Sections 4.11(a)(iii),
(iv) and (v) of the Agreement on such Business Day, and (z) the amount of Shared Principal
Collections allocated to the Investor Certificates in accordance with Section 4.16 of the
Agreement on such Business Day, will be transferred to the Principal Account;

20

 

          (ii) an amount equal to the product of the Fixed/Floating Allocation Percentage, the
Class B Percentage and the aggregate amount of Principal Collections in the Collection
Account at the end of the preceding Business Day (but in no event to exceed, when taken
together with other amounts on deposit in the Collection Account pursuant to this Section
4.11(c)(ii), the Class B Invested Amount) shall be retained in the Collection Account for
application as Reallocated Class B Principal Collections as necessary on the next succeeding
Distribution Date; provided, however, that any amount so retained in the Collection Account
and not to be applied as Reallocated Class B Principal Collections on the next succeeding
Distribution Date, shall, on the next succeeding Determination Date be transferred to the
Principal Account;

          (iii) on and after the Class B Principal Payment Commencement Date, an amount equal to
the sum of (w) an amount equal to the product of the Fixed/Floating Allocation Percentage
and the aggregate amount of Principal Collections in the Collection Account at the end of
the preceding Business Day (minus the amount thereof paid to the Class A
Certificateholders pursuant to Section 4 .14(a) of the Agreement, if any), (x) any amount on
deposit in the Excess Funding Account allocated to the Class B Certificates on such Business
Day, (y) the amount, if any, allocated to be paid to the Class B Certificates pursuant to
Sections 4.11(a)(iii) and (v) of the Agreement with respect to such Business Day and (z) the
amount of Shared Principal Collections allocated to the Investor Certificates in accordance
with Section 4.16 of the Agreement on such Business Day (such sum, the “Class B Daily
Principal Amount”) will be transferred to the Principal Account; and

          (iv) an amount equal to the balance of any Principal Collections remaining on deposit
in the Collection Account will be treated as Shared Principal Collections and applied as
provided in Section 4.4 of the Agreement; provided that with respect to the amount
distributable pursuant to clauses (i) and (iii) above, Shared Principal Collections shall be
available to make such distributions only to the extent of the Shared Principal Collections
allocated to the Investor Certificates.

     Section
4.12
Coverage of Finance Charge Shortfalls for the Investor Certificates.

          (a) To the extent that any amounts are on deposit in the Excess Funding Account on any
Business Day, the Servicer shall apply Transferor Finance Charge Collections in an amount equal to
the excess of (x) the product of (a) the Base Rate and (b) the product of (i) the amount on deposit
in the Excess Funding Account and (ii) the number of days elapsed since the previous Business Day
divided by the actual number of days in such year over (y) the aggregate amount of all
earnings since the previous Business Day available from the Cash Equivalents in which funds on
deposit in the Excess Funding Account are invested, in the manner specified for

21

 

application of
Available Series 2001-1 Finance Charge Collections in Section 4.11(a)(i) through (vi) of the
Agreement.

          (b) To the extent that on any Business Day payments are being made pursuant to any of Sections
4.11(a)(i) through (vi) of the Agreement, respectively, and, after giving effect to amounts applied
pursuant to Sections 4.11(a)(i) through (vi) and 4.12 (a) of the Agreement, the full amount to be
paid pursuant to any such section receiving payments on such Business Day is not paid in full on
such Business Day, the Servicer shall apply all or a portion of the Excess Finance Charge
Collections of other Series in Group 1 with respect to such Business Day allocable to the Investor
Certificates pursuant to Section 4.5 of the Agreement in an amount not to exceed the excess of the
full amount to be paid pursuant to the applicable section over the amount applied with respect
thereto from Available Series 2001-1 Finance Charge Collections and Transferor Finance Charge
Collections pursuant to Section 4.12(a) on such Business Day (the “Finance Charge
Shortfall”).

     Section
4.13
Payment of Certificate Interest. On each Transfer Date, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Monthly
Certificateholders’ Statement, shall withdraw from the Finance Charge Account an amount equal to
the amount on deposit in the Finance Charge Account with respect to the prior Monthly Period
allocable to the Investor Certificates, less the excess, if any, of the Class A Projected Monthly
Interest and Fees for the related Distribution Date over the Class A Monthly Interest and Fees for
the related Distribution Date and deposit such amount in the Distribution Account. Any amount
remaining on deposit in the Finance Charge Account with respect to the prior Monthly Period after
giving effect to such withdrawal, shall be allocated to cover any shortfalls in amounts allocated
in respect of such Monthly Period pursuant to Sections 4.11(a)(ii) through (vii) (in
that order or priority) and otherwise shall be treated as Excess Finance Charge Collections in
respect of such Monthly Period pursuant to Section 4.11(a)(viii). On each Distribution Date, the
Paying Agent shall pay in accordance with Section 5.1 of the Agreement to (x) the Class A
Certificateholders from the Distribution Account out of the amount deposited into the Distribution
Account on the related Transfer Date the Class A Monthly Interest and Fees, and (y) the Class B
Certificateholders from the Distribution Account that portion of the amount deposited into the
Distribution Account arising from allocations pursuant to Section 4.11(a)(vi) of the Agreement in
respect of the related Monthly Period.

     Section
4.14
Payment of Certificate Principal.

          (a) On the Transfer Date preceding each Distribution Date following the Monthly Period in
which the Amortization Period Commencement Date occurs until the Class A Invested Amount is paid in
full, the Trustee, acting in accordance with instructions from the Servicer set forth in the
Monthly Certificateholders’ Statement, shall withdraw from the Principal Account and deposit in the
Distribution Account an amount equal to the lesser of (i) the Class A

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Monthly Principal and (ii)
the amount on deposit in the Principal Account (other than any investment earnings on such amounts)
allocable to the Investor Certificates. On each such Distribution Date, the Paying Agent shall pay
in accordance with Section 5.1 of the Agreement to the Class A
Certificateholders from the
Distribution Account such amount deposited into the Distribution Account on the related Transfer
Date.

          (b) On the Transfer Date preceding the Class B Principal Payment Commencement Date and each
Distribution Date thereafter, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Monthly Certificateholders’ Statement, shall withdraw from the Principal Account
and deposit in the Distribution Account an amount equal to the lesser of the Class B Invested
Amount and the amount on deposit in the Principal Account allocable to the Investor Certificates.
On the Class B Principal Payment Commencement Date, after the payment of any principal amounts to
the Class A Certificates on such day, and on each Distribution Date thereafter until the Class B
Invested Amount is paid in full, the Paying Agent shall pay in accordance with Section 5.1 of the
Agreement to the Class B Certificateholders from the Distribution Account such amount deposited
into the Distribution Account on the related Transfer Date.

     Section
4.15
Investor Charge-Offs.

          (a) If, on any Determination Date, the aggregate Investor Default Amount, if any, in the
preceding Monthly Period exceeded the Available Series 2001-1 Finance Charge Collections applied to
the payment thereof pursuant to Section 4.11(a)(iii) of the Agreement and the amount of Transferor
Finance Charge Collections allocated thereto pursuant to Section 4.12 of the Agreement, the Class B
Invested Amount will be reduced by the amount by which the aggregate Investor Default Amount
exceeds the amount applied with respect thereto during such preceding Monthly Period (the
“Class B Investor Charge-Offs”).

          (b) In the event that the amount of such excess applied against the Class B Invested Amount is
greater than the Class B Invested Amount, the Class B Invested Amount will be reduced to zero and
the Class A Invested Amount will be reduced by the amount of any remaining excess, but not more
than the sum of the aggregate Investor Default Amount for such Monthly Period (a “Class A
Investor Charge-Off”). To the extent that on any subsequent
Business Day there is a positive balance of Available Series 2001-1 Finance Charge Collections
after giving effect to Sections 4.11(a)(i) through (iii) of the Agreement, the Servicer will apply
such Finance Charge Collections as provided in Section 4.11(a)(iv) of the Agreement to reimburse
the aggregate amount of Class A Investor Charge-Offs not previously reimbursed, up to the amount so
available.

          (c) To the extent that on any Determination Date there is a positive balance of the Available
Series 2001-1 Finance Charge Collections after giving effect to allocations and distributions
pursuant to Sections 4.11(a)(i) through (iv) of the Agreement, the Servicer will apply such excess
Available Series 2001-1 Finance Charge Collections as provided in Section

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4.11(a)(v) of the
Agreement to reimburse the aggregate amount of Class B Investor Charge-Offs not previously
reimbursed, up to the amount so available.

     Section
4.16
Shared Principal Collections. Principal Collections and other amounts
originally allocated to the Series 2001-1 Certificates that constitute Shared Principal Collections
as described in clause (I) of the definition thereof shall be applied on each Business Day in
accordance with the provisions of Section 4.4 of the Agreement. Shared Principal Collections
allocated to the Investor Certificates for any Business Day with respect to the Amortization Period
shall mean an amount equal to the product of (x) Shared Principal Collections for all Series for
such Business Day and (y) a fraction, the numerator of which is the Principal Shortfall for the
Investor Certificates for such Business Day and the denominator of which is the aggregate amount of
Principal Shortfalls for all Series for such Business Day.

     Section
4.17
Reallocated Class B Principal Collections.
On each Determination Date, the Servicer will determine the Class A Required Amount. On each
Determination Date on which there is a positive Class A Required Amount, the Servicer will
allocate, or cause the Trustee to apply, an amount equal to the lesser of (i) the Principal
Collections retained in the Collection Account as contemplated in Section 4.8(c)(i)(y) or
4.11(c)(ii) of the Agreement, as applicable, and (ii) the Class A Required Amount for the preceding
Monthly Period (such amount being “Reallocated Class B Principal Collections”) and on each
Transfer Date the Servicer shall apply the Principal Collections set aside as contemplated in
Section 4.8(c)(i)(y) or 4.11(c)(ii) of the Agreement, as applicable, up to the amount of
Reallocated Class B Principal Collections to the components of the Class A Required Amount in the
same priority as amounts are applied to such components from Available Series 2001-1 Finance Charge
Collections pursuant to Section 4.11(a) of the Agreement.

     Section
4.18
Store Payment Notices and Enhancement.

          (a) Notwithstanding anything to the contrary in the Agreement or this Series Supplement, if at
any time (i) the rating of Pier 1’s long-term unsecured debt shall be either reduced below Ba2 by
Moody’s or BB by Standard & Poor’s or withdrawn by Moody’s or Standard & Poor’s or (ii) any
Insolvency Event shall have occurred, the Transferor and the Servicer shall, within two (2)
Business Days following the occurrence of such event, instruct each retail outlet to which payments
by Obligors in respect of Receivables may be made to segregate such payments from other funds held
by such retail outlet and to remit such payments, within two (2) days following receipt thereof,
directly to the Collection Account; provided, however, that the Transferor and the
Servicer shall not be obligated to so instruct such retail

24

 

outlets if prior to the date such
instructions are required to be given, a letter of credit or cash collateral account meeting the
applicable requirements specified in the definition of Store Payment Enhancement shall have been
issued or established, as applicable, for the benefit of the Trustee on behalf of the Class A
Certificateholders; provided, further, that if any institution that has issued such
a letter of credit or with which such a cash collateral account is maintained shall cease to be an
Eligible Store Payment Enhancement Institution, then within thirty (30) days after becoming aware
of such fact the Transferor and the Servicer shall either (i) replace such letter of credit or cash
collateral account with a new letter of credit or cash collateral account meeting the applicable
requirements specified in the definition of Store Payment Enhancement or (ii) instruct each retail
outlet to which payments by Obligors in respect of Receivables are made to segregate such payments
from other funds held by such retail outlet and to remit such payments, within two (2) days
following receipt thereof, directly to the Collection Account.

     (b) If any Store Payment Enhancement is outstanding and the Class A Required Amount,
determined without giving effect to any amount available to be drawn under such Store Payment
Enhancement, is greater than zero, then the Trustee shall draw under such Store Payment Enhancement
in an amount equal to the lesser of (i) the amount available to be drawn under such Store Payment
Enhancement and (ii) the amount of the Class A Required Amount, determined without giving effect to
any amount available to be drawn under such Store Payment Enhancement, and the Trustee shall apply
the proceeds of such draw to the components of the Class A Required Amount (as so determined) in
the same priority as amounts are applied to such components from Available Series 2001-1 Finance
Charge Collections pursuant to Section 4.11(a) of the Agreement.

     Section
4.19
Payment of Monthly Servicing Fee. On each Transfer Date, the
Trustee, acting in accordance with instructions from the Servicer set forth in the Monthly
Certificateholders’ Statement, shall withdraw from the Finance Charge Account an amount equal to
the amount on deposit in the Finance Charge Account with respect to the prior Monthly Period
allocable to the payment of the Monthly Servicing Fee, less the excess, if any, of the Projected
Monthly Servicing Fee for such prior Monthly Period (plus any Monthly Servicing Fee previously due
but not paid with respect to prior Monthly Periods) over the
Monthly Servicing Fee for such prior Monthly Period (plus any Monthly Servicing Fee
previously due but not paid with respect to prior Monthly Periods) and distribute such amount to
the Servicer. Any amount remaining on deposit in the Finance Charge Account with respect to the
prior Monthly Period after giving effect to such withdrawal, shall be allocated to cover any
shortfalls in amounts allocated in respect of such Monthly Period pursuant to Sections 4.11(a)(iii)
through (vii) (in that order or priority) and otherwise shall be treated as Excess Finance Charge
Collections in respect of such Monthly Period pursuant to Section 4.11(a)(viii).

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     SECTION
1.8
Article V of the Agreement. Article V of the Agreement shall read in its entirety as
follows and shall be applicable only to the Investor Certificates:

ARTICLE V

DISTRIBUTIONS AND REPORTS TO INVESTOR

CERTIFICATEHOLDERS

     Section 5.1
Distributions.

          (a) On each Distribution Date, the Paying Agent shall distribute (in accordance with the
Settlement Statement delivered by the Servicer to the Trustee pursuant to Section 3.4(c) of the
Agreement) to each Class A Certificateholder of record on the preceding Record Date (other than as
provided in Section 12.2 of the Agreement respecting a final distribution) such Certificateholder’s
pro rata share (based on the aggregate Undivided Interests represented by Class A
Certificates held by such Certificateholder) of amounts on deposit in the Distribution Account as
are payable to the Class A Certificateholders pursuant to Sections 4.13 and 4.14 of the Agreement
by wire transfer of immediately available funds, at the expense of the Servicer, to an account or
accounts designated by such Class A Certificateholder by written notice given to the Paying Agent
not less than five (5) Business Days prior to the related Distribution Date; provided,
however, that the final payment in retirement of the Class A Certificates will be made only
upon presentation and surrender of the Class A Certificates at the office or offices specified in
the notice of such final distribution delivered by the Trustee pursuant to Section 12.3 of the
Agreement.

          (b) On each Distribution Date, the Paying Agent shall distribute (in accordance with the
Settlement Statement delivered by the Servicer to the Trustee pursuant to Section 3.4(c) of the
Agreement) to each Class B Certificateholder of record on the preceding Record Date (other than as
provided in Section 12.2 of the Agreement respecting a final distribution) such Certificateholder’s
pro rata share (based on the aggregate Undivided Interests represented by Class B
Certificates held by such Certificateholder) of amounts on deposit in the Distribution Account as
are payable to the Class B Certificateholders pursuant to Sections 4.13 and 4.14 of the Agreement
by check mailed to each Class B Certificateholder at such
Certificateholder’s address as it appears on the Certificate Register or, in the case of Class
B Certificateholders holding Class B Certificates evidencing Undivided Interest aggregating not
less than 80% of the Invested Amount, by wire transfer, at the expense of such Class B
Certificateholder, to an account or accounts designated by such Class B Certificateholder by
written notice given to the Paying Agent not less than five days prior to the related Distribution
Date; provided, however, that the final payment in retirement of the Class B Certificate
will be made only upon presentation and surrender of the Class B Certificates at the office or
offices specified in the notice of such final distribution delivered by the Trustee pursuant to
Section 12.2 of the Agreement.

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     Section
5.2
Daily Report
and Monthly Certificateholders’ Statement.

          (a)
Daily Report. On each Business Day, the Servicer shall
prepare a completed Daily Report in a form mutually agreed upon by the
Servicer, Trustee and Administrative Agent and deliver such report to the Trustee and
Administrative Agent pursuant to Section 3.4(b) of the Agreement.

          (b) Monthly Certificateholders’ Statement. On each Distribution Date, the Servicer
shall prepare the Monthly Certificateholders’ Statement and deliver such statement to the Trustee
and the Administrative Agent on the preceding Determination Date setting forth the following
information (which, in the case of (i), (ii) and (iii) below, shall be stated on the basis of an
original principal amount of $1,000 per Certificate and, in the case of (viii), (ix) and (x), shall
be stated on an aggregate basis and on the basis of an original principal amount of $1,000 per
Certificate):

          (i) the total amount distributed;

          (ii) the amount of such distribution allocable to principal on the Investor
Certificates;

          (iii) the amount of such distribution allocable to interest on the Investor
Certificates;

          (iv) the amount of Principal Collections received in the Collection Account during the
related Monthly Period and allocated in respect of the Class A Certificates and the Class B
Certificates, respectively;

          (v) the amount of Total Finance Charge Collections processed during the related Monthly
Period and allocated in respect of the Class A Certificates and the Class B Certificates,
respectively;

          (vi) the aggregate amount of Principal Receivables, the Invested Amount, the Class A
Invested Amount and the Class B Invested Amount, the Floating Allocation Percentage and,
during the Amortization Period, the Fixed/Floating Allocation Percentage with respect to
Principal Receivables and, on and after the Pay Out Commencement Date, Finance Charge
Receivables in the Trust as of the end of the day on the Record Date;

          (vii) the aggregate outstanding balance of Accounts which are 30, 60, 90, 120, 150 and
180 days contractually delinquent as of the end of the day on the Record Date;

27

 

          (viii) the aggregate Investor Default Amount for the related Monthly Period;

          (ix) the aggregate amount of Class A Investor Charge-Offs and Class B Investor
Charge-Offs for the related Monthly Period;

          (x) the aggregate amount of the Monthly Servicing Fee for the related Monthly Period;

          (xi) the amount of Reallocated Class B Principal Collections as of the last day of the
preceding Monthly Period;

          (xii) the Dilution Ratio as of the last Business Day of the related Monthly Period;

          (xiii) the average of the Portfolio Yields for the related Monthly Period and two prior
Monthly Periods and the Base Rate; and

          (xiv) the amount of Store Payment Enhancement and draws thereunder.

          (c) Annual Certificateholders’ Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 2002, the Trustee shall distribute to each Person who
at any time during the preceding calendar year was a Series 2001-1 Certificateholder, a statement
prepared by the Servicer containing the information required to be contained in the regular monthly
report to Series 2001-1 Certificateholders, as set forth in sub-clauses (i), (ii) and (iii) above,
aggregated for such calendar year or the applicable portion thereof during which such Person was a
Series 2001-1 Certificateholder, together with such other customary information (consistent with
the treatment of the Certificates as debt) as the Trustee or the Servicer deems necessary or
desirable to enable the Series 2001-1 Certificateholders to prepare their tax returns. Such
obligations of the Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any requirements of the
Internal Revenue Code as from time to time in effect.

          (d) The Paying Agent may make available, via the Paying Agent’s Internet Website, the Monthly
Certificateholder’s Statement required to be forwarded to
Certificateholders under subsection (b) hereof and the statement required to be forwarded to
Certificateholders under subsection (c) hereof and, with the consent or at the direction of the
Transferor, such other information regarding the Certificates and/or the Receivables, but only with
the use of a password provided by the Paying Agent or its agent to such Person upon receipt by the
Paying Agent and the Trustee from such Person of a certification in the form of Exhibit
“C”; provided, however, that the Paying Agent or its agent shall provide such
password to the parties to this Series Supplement without requiring such certification. Neither
the Paying Agent nor the Trustee will make any representation or warranties as to the accuracy or
completeness of such documents and will assume no responsibility therefor. The Paying Agent’s
Internet Website shall be initially located at “www.ABSNet.net” or at such other address as shall
be specified by

28

 

the Trustee from time to time in writing to the Certificateholders. In connection
with providing access to the Paying Agent’s Internet Website, the Trustee may require registration
and the acceptance of a disclaimer. Neither the Paying Agent nor the Trustee shall be liable for
the dissemination of information in accordance with this Series Supplement.

     Section 5.3
Continued Errors. Section 10.2(e). The Trustee, as Successor Servicer, is authorized to
accept and rely on all of the accounting, records (including computer records) and work of the
prior Servicer relating to the Receivables without any audit or other examination thereof, unless
failing to perform such audit or examination thereof would result in a gross negligent act or
willful misconduct of such Trustee, as Successor Servicer, and the Trustee as Successor Servicer
shall have no duty, responsibility, obligation or liability for the acts and omissions of the prior
Servicer. If any error, inaccuracy or omission exists in any of the work of the preceding Servicer
and such error, inaccuracy or omission makes it materially more difficult to service or should
materially contribute to the Trustee as Successor Servicer making or continuing any such error,
inaccuracy or omission, then the Trustee as Successor Servicer shall have no duty or responsibility
for such continued error, inaccuracy or omission; provided, however, that the Successor Servicer
agrees to use its best efforts to reconstruct and reconcile such data as is commercially reasonable
to correct such error, inaccuracy or omission and to prevent any future errors, inaccuracies or
omissions. The Successor Servicer shall be entitled to recover its costs thereby expended from
amounts available in the Collection Account, but only after amounts are distributed pursuant to the
related Supplement.

     Section
5.4
Obligations of Successor Servicer.

          (a) The Successor Servicer, if Wells Fargo Bank Minnesota, National Association (“Wells
Fargo”), shall have (i) no liability with respect to any obligation which was required to be
performed by the terminated Servicer prior to the date that the Successor Servicer becomes the
Servicer or any claim of a third party prior to the date that the Successor Servicer becomes the
Servicer or any claim of any third party based on any alleged action or inaction of the terminated
Servicer, (ii) no obligation to perform any repurchase or advancing obligations, if any, of the
Servicer, (iii) no obligation to pay any taxes required to be paid by the Servicer, (iv)
no obligation to pay any of the fees and expenses of any other party involved in this
transaction and, (v) no liability or obligation with respect to any Servicer indemnification
obligations of any prior servicer including the original servicer.

          (b) Notwithstanding anything in the Agreement to the contrary, if the Trustee becomes the
Successor Servicer, the Successor Servicer may resign from the obligations and duties imposed on it
at any time provided that no such resignation shall become effective until another Successor
Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with
the Agreement.

29

 

     Section 5.5
Indemnification. Each of the Transferor and the Servicer agrees to indemnify Wells Fargo
in all of its capacities under either the Agreement or this Series Supplement, including, but not
limited to its duties as Trustee, Paying Agent or Successor Servicer (should Wells Fargo be
appointed as Successor Servicer under the Agreement), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements which may at any time (including, without limitation, after termination of the
Agreement or this Series Supplement) be imposed on, incurred by or asserted against Wells Fargo in
any way relating to or arising out of the Agreement, this Series Supplement or otherwise out of any
other document or transaction undertaken in connection therewith or herewith or any action taken or
omitted to be taken by Wells Fargo under or in connection with any of the foregoing;
provided, however, that the Transferor and the Servicer shall not be liable for the
payment of any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Wells Fargo’s gross
negligence or willful misconduct.

     SECTION
1.9
Series 2001-1 Pay Out Events. If any one of the following events shall occur with
respect to the Investor Certificates:

          (a) failure on the part of the Transferor (i) to make any payment or deposit required to be
made by the Transferor by the terms of the Agreement, on or before the date occurring five (5) days
after the date such payment or deposit is required to be made or (ii) duly to observe or perform in
any material respect any covenants or agreements of the Transferor set forth in the Agreement,
which failure has a material adverse effect on the Series 2001-1 Certificateholders and which
continues unremedied for a period of thirty (30) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the Transferor by the
Trustee, or to the Transferor and the Trustee by Series 2001-1 Certificateholders evidencing
Undivided Interests aggregating not less than 50% of the Invested Amount of this Series 2001-1, and
continues to affect materially and adversely the interests of the Series 2001-1 Certificateholders
for such period;

          (b) any representation or warranty made by the Transferor in the Agreement, or any information
contained in a computer file or microfiche list required to be delivered by the
Transferor pursuant to Section 2.1 or 2.9 of the Agreement, (i) shall prove to have been
incorrect in any material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of thirty (30) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the Transferor by the
Trustee, or to the Transferor and the Trustee by Series 2001-1 Certificateholders evidencing
Undivided Interests aggregating more than 50% of the Invested Amount of this Series 2001-1, and
(ii) as a result of which the interests of the Series 2001-1 Certificateholders are materially and
adversely affected and continue to be materially and adversely affected for such period;

30

 

          (c) the average of the Portfolio Yields for any three (3) consecutive Monthly Periods shall be
less than the average of the Base Rates for such three (3) Monthly Periods; the average of the
Portfolio Yields for the first two (2) Monthly Periods following the Closing Date shall be less
than the average of the Base Rates for such two (2) Monthly Periods; or the Portfolio Yield for the
first Monthly Period following the Closing Date shall be less than the Base Rate for such Monthly
Period;

          (d) the sum of the amount of Principal Receivables in the Trust and the amounts on deposit in
the Excess Funding Account shall be less than the Minimum Aggregate Principal Receivables and the
Transferor shall fail to convey sufficient Receivables arising under Additional Accounts or other
eligible assets within the time period specified in Section 2.9(a) of the Agreement;

          (e) any Servicer Default shall occur;

          (f) the average of the Adjusted Discount Percentages for any three (3) consecutive Monthly
Periods shall exceed 2.0% and the average of the Principal Payment Rates for such three (3) Monthly
Periods shall be less than 12.0%; the average of the Adjusted Discount Percentages for the first
two (2) Monthly Periods following the Closing Date shall exceed 2.0% and the average of the
Principal Payment Rates for such two (2) Monthly Periods shall be less than 12.0%; or the Adjusted
Discount Percentage for the first Monthly Period following the Closing Date shall exceed 2.0% and
the Principal Payment Rate for such Monthly Period shall be less than 12.0%;

          (g) the average of Dilution Ratios for any three (3) consecutive Monthly Periods, the average
of the Dilution Ratios for the first two (2) Monthly Periods following the Closing Date or the
Dilution Ratio for the first Monthly Period following the Closing Date shall exceed 3.5%;

          (h) a Structured Investor Event shall have occurred;

          (i) a downgrade of Pier 1’s senior unsecured debt rating to below BB or Ba2 by Standard &
Poor’s, Moody’s or Fitch;

          (j) a Change of Control shall have occurred with respect to Pier 1 Imports, Inc., a Delaware
corporation (“Pier 1 Imports”) or any of the Transferor, [Servicer, or Pier 1 National Bank
] shall cease to be wholly-owned, directly or indirectly, by Pier 1 Imports;

          (k) the amount on deposit in the Excess Funding Account shall at any time exceed an amount
equal to 5% of the aggregate amount of Principal Receivables in the Trust at such time;

     then, in the case of any event described in subparagraph (a), (b), or (e), after the
applicable grace period set forth in such subparagraphs, either the Trustee or Series 2001-1
Certificateholders evidencing Undivided Interests
aggregating more than 50% of the Invested

31

 

Amount
of any class of this Series 2001-1 by notice then given in writing to the Transferor and the
Servicer (and to the Trustee if given by the Certificateholders) may declare that a pay out event
(a “Series 2001-1 Pay Out Event”) has occurred as of the date of such notice, and in the
case of any event described in subparagraphs (c) or (d), a Series 2001-1 Pay Out Event shall occur
without any notice or other action on the part of the Trustee or the Series 2001-1
Certificateholders immediately upon the occurrence of such event.

     SECTION
1.10
Article VI of the Agreement. Article VI (except for Section 6.1 through 6.14
thereof) shall read in its entirety as follows and shall be applicable only to the Series 2001-1
Certificates.

ARTICLE VI

THE CERTIFICATES

     Section
6.15
Additional Invested Amounts. The Class A Certificateholder(s) agree, by
acceptance of the Class A Certificates, that the Transferor may from time to time, prior to the
Amortization Period Commencement Date, direct (subject to the terms and conditions of the
Certificate Purchase Agreement) that such Class A Certificateholder(s) acquire on any Business Day
additional Undivided Interests in the Trust in specified amounts (such amounts, the “Additional
Class A Invested Amounts”); provided, however, that in no event shall the Class
A Invested Amount be increased above the Class A Maximum Invested Amount. The sum of the
Additional Class A Invested Amounts and the Additional Class B Invested Amounts on any Business Day
shall not exceed an amount equal to the excess of the aggregate amount of Principal Receivables
over the greater of (a) the sum of (i) the aggregate invested amount of each Series then
outstanding as of such day including the Class A Certificates and the Class B Certificates (prior
to the addition of such Additional Class A Invested Amounts and the related Additional Class B
Invested Amounts ) minus amounts on deposit in the Principal Account for any Series, if
any, and (ii) the Minimum Transferor Amount as of such Business Day or (b) the Minimum Aggregate
Principal Receivables on such Business Day. The Class A Certificateholder(s) shall acquire such
Additional Class A Invested Amount, only if the Class B Invested Amount following the acquisition
of such Additional Class A Invested Amount shall be at least equal to the Class B Minimum Required
Amount (including increases to the Class B Invested Amount pursuant to
Section 6.17 of the Agreement). At the time of the acquisition of such Additional Class A
Invested Amount, such Class A Certificateholder(s) shall pay an amount equal to the Additional
Class A Invested Amount to the Trustee and, in consideration of such payment of the Additional
Class A Invested Amount, the Servicer shall appropriately note such Additional Class A Invested
Amount (and the increased Class A Invested Amount) on the next succeeding Servicer’ report and
direct the Trustee in writing to pay to the Transferor an amount equal to the proceeds thereof.

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     The purchase of any Additional Class A Invested Amount shall be in an aggregate principal
amount that is not less than $1,000,000 or integral multiples of $250,000 in excess thereof.

     In consideration of the Class A Certificateholders’ payment of the Additional Class A Invested
Amount, the Servicer shall appropriately note such Additional Class A Invested Amount (and the
increased Class A Invested Amount) on the next succeeding Monthly Servicer Report. Each Class A
Certificateholder shall and is hereby authorized to record on the grid attached to its Class A
Certificate (or at such Class A Certificateholder’s option, in its internal books and records) the
date and amount of any Additional Class A Invested Amount purchased by it, and each repayment
thereof.

     Section 6.16 Decreases to the Invested Amount.

          (a) On any Business Day, upon at least two (2) Business Days’ prior written notice from the
Servicer on behalf of the Trust (each such day, a “Decrease Date”) to the Administrative
Agent and the Trustee, the Invested Amount may be reduced through the distribution to the
Administrative Agent (for distribution to the applicable Class A Certificateholders ratably in
accordance with their respective beneficial interests in the Class A Invested Amount) and to the
Class B Certificateholders of up to the Class A Percentage and the Class B Percentage,
respectively, of the amount otherwise payable to the Holder of the Exchangeable Transferor
Certificate pursuant to Section 4.8 (c)(i) of the Agreement; provided, however,
that notwithstanding anything herein to the contrary, no reduction in the Class B Invested Amount
pursuant to this Section 6.16(a) shall be effected if after giving effect thereto, the Class B
Invested Amount would be less than the Class B Minimum Required Amount.

          (b) Notwithstanding the foregoing, unless otherwise agreed to by the Administrative Agent, if
the aggregate amount of any such decrease allocable to the Class A Invested Amount is less than
$1,000,000, the amount otherwise distributable to the Series 2001-1 Certificateholders shall be
deposited into the Distribution Account and shall remain in such account until such time as the
aggregate amount deposited therein in respect of decreases in the Class A Invested Amount shall
equal $1,000,000 (or, if the Class A Invested Amount is less than $1,000,000, such lesser
outstanding amount), at which time the entire amount in such accounts shall be distributed to the
applicable Series 2001-1 Certificateholders.

     Section 6.17 Additional Class B Invested Amounts.

     On any Business Day while any Series 2001-1 Certificates are outstanding, the Transferor may
elect to increase the Class B Invested Amount (such additional amounts referred to hereinafter as
the “Additional Class B Invested Amounts”) by written notice to the Trustee on such date
which notice shall specify the effective date and the amount of such increase in the

33

 

Class B Invested Amount; provided, however, that if such an increase in the Class B
Invested Amount would cause a Pay Out Event to occur, then the amount of the increase in the Class
B Invested Amount shall be limited on such Business Day to the maximum increase in the Class B
Invested Amount that may be obtained without causing a Pay Out Event to occur; and provided
further, that no such increase in the Class B Invested Amount shall be permitted under this
Section 6.17 unless: (i) after giving effect to the proposed increase in Class B Invested Amount
the Transferor Amount shall equal or exceed the Minimum Transferor Amount and (ii) such increase in
the Class B Invested Amount shall be made concurrently with a increase in the Class A Invested
Amount pursuant to Section 6.15 of the Agreement.

     SECTION 1.11 Legends on Investor Certificates.

          (a) Each Class A Certificate will bear legends substantially in the following form:

     EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF PIER 1 FUNDING, L.L.C. AND THE
TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) A GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S INVESTMENT IN THE ENTITY OR (V) A
PERSON INVESTING “PLAN ASSETS” OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF CLAUSES (IV) AND
(V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).

     THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED, NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED ON OR THROUGH (I) AN “ESTABLISHED SECURITIES MARKET” WITHIN THE MEANING OF SECTION 7704(b)(1) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTERMARKET OR AN INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS OR (II) A “SECONDARY MARKET” WITHIN THE MEANING
OF SECTION 7704(b)(2) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER INCLUDING A MARKET WHEREIN INTERESTS IN THE CLASS B CERTIFICATES ARE REGULARLY QUOTED BY
ANY PERSON MAKING A MARKET IN SUCH INTERESTS AND A MARKET WHEREIN ANY PERSON REGULARLY MAKES
AVAILABLE BID OR OFFER

34

 

QUOTES WITH RESPECT TO INTERESTS IN THE CLASS B CERTIFICATES AND STANDS
READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.

     THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES OR “BLUE SKY” LAWS, AND MAY NOT BE OFFERED OR
SOLD TO OR FOR THE ACCOUNT OR BENEFIT OF ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ACQUISITION HEREOF, THE HOLDER (1) AGREES THAT IT WILL NOT RE-SELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO THE TRANSFEROR, (B) TO A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT, OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
PROVISIONS OF ANY STATE SECURITIES OR “BLUE SKY” LAWS OF THE UNITED STATES OR OTHER JURISDICTION OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND IN ACCORDANCE WITH THE
PROVISIONS OF THE SERIES 2001-1 SUPPLEMENT; AND (2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

          (b) Each Class B Certificate will bear legends substantially in the following form:

     EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF PIER 1 FUNDING, L.L.C. AND THE
TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) A GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF ,ERISA OR SECTION 4975 OF THE CODE, (IV)
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S INVESTMENT IN THE
ENTITY OR (V) A PERSON INVESTING “PLAN ASSETS” OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF
CLAUSES (IV) AND (V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).

35

 

     THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED, NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED ON OR THROUGH (I) AN “ESTABLISHED SECURITIES MARKET” WITHIN THE
MEANING OF SECTION 7704(b)(1) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL REGULATION
THEREUNDER, INCLUDING,

     WITHOUT LIMITATION, AN OVER-THE-COUNTER MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS OR (II) A “SECONDARY MARKET” WITHIN THE
MEANING OF SECTION 7704(b)(2) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER INCLUDING A MARKET WHEREIN INTERESTS IN THE CLASS B CERTIFICATES ARE REGULARLY QUOTED BY
ANY PERSON MAKING A MARKET IN SUCH INTERESTS AND A MARKET WHEREIN ANY PERSON REGULARLY MAKES
AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO INTERESTS IN THE CLASS B CERTIFICATES AND STANDS
READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.

     THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES OR “BLUE SKY” LAWS OF THE UNITED STATES OR OTHER
JURISDICTION. NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE SECURITIES ACT
AND ANY APPLICABLE PROVISIONS OF ANY STATE SECURITIES OR “BLUE SKY” LAWS OF THE UNITED STATES OR
OTHER JURISDICTION OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND IN
ACCORDANCE WITH THE PROVISIONS OF THE SERIES 2001-1 SUPPLEMENT.

     SECTION 1.12 Reduction of Class B Minimum Required Amount During the Revolving Period; Designation of Class B Certificate
Terms; Transfer and Sale of Class B Certificates.

          (a) The Class B Minimum Required Amount may be reduced during the Revolving Period,
provided that (i) the Rating Agency Condition shall have been satisfied with respect to
such reduction and (ii) the Transferor shall have delivered to the Trustee an Officer’s Certificate
stating that the Transferor reasonably believes that such reduction will not, based on the facts
known to such officer at the time of such certification, cause a Pay Out Event or any event that,
after the giving of notice or the lapse of time or both, would constitute a Pay Out Event.

36

 

          (b) The Transferor may at any time, without the consent of the Investor Certificateholders,
(i) sell or transfer all or a portion of the Class B Certificates and (ii) in connection with any
such sale or transfer, enter into a supplemental agreement with the Trustee pursuant to which the
Transferor and the Trustee may amend the Class B Certificate Rate, set forth the amount of monthly
interest due Class B Certificateholders (the “Class B Interest”), provide for the payment
of additional amounts (the “Class B Additional Interest”) with respect to any shortfall
(the “Class B Interest Shortfall”) in payments of such Class B Interest and provide for
such other provisions with respect to the Class B Certificates as may be specified in such
supplemental agreement, provided that in each such case (A) the Transferor shall have given
notice to the Trustee, the Servicer and the Rating Agencies of such proposed sale or transfer of
the Class B Certificates and such supplemental agreement at least five (5) Business Days prior to
the consummation of such sale or transfer and the execution of such proposed supplemental
agreement; (B) the Rating Agency Condition shall have been satisfied; (C) no Pay Out Event shall
have occurred prior to the consummation of such proposed sale or transfer of Class B Certificates
or the execution of such supplemental agreement; (D) the Administrative Agent shall have consented
thereto; (E) the Transferor shall have delivered an Officer’s Certificate, dated the date of the
consummation of such sale or transfer and the effectiveness of such supplemental agreement, to the
effect that, in the reasonable belief of the Transferor, such action will not, based on the facts
known to such officer at the time of such certification, cause a Pay Out Event to occur with
respect to any Series, and (F) the Transferor will have delivered a Tax opinion, dated the date of
such certificate with respect to such action; provided, further, as a condition to
the sale or transfer of all or a portion of the Class B Certificates the transferee shall be
required to agree not to institute against, or join any other Person in instituting against, the
Trust, the Transferor or the Structured Investor (as such term is defined in the Certificate
Purchase Agreement) any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year
and one day after all Investor Certificates are paid in full.

     SECTION 1.13 Series 2001-1 Termination. The right of the Series 2001-1 Certificateholders to
receive payments from the Trust will terminate on the first Business Day following the Series
2001-1 Termination Date.

     SECTION 1.14 Periodic Finance Charges and Other Fees. The
Transferor hereby agrees that, except as otherwise required by any Requirement of Law, or as is
deemed by the Transferor to be necessary in order for the Transferor to maintain its credit card
business, based upon a good faith assessment by the Transferor, in its sole discretion, of the
nature of the competition in the credit card business, it shall not at any time reduce the Periodic
Finance Charges assessed on any Receivable or other fees on any Account if, as a result of such
reduction, the Transferor’s reasonable expectation of the Portfolio Yield as of such date would be
less than the Base Rate.

37

 

     SECTION 1.15 Ratification of Agreement. As supplemented by this Series Supplement, the Agreement
is in all respects ratified and confirmed and the Agreement as so supplemented by this Series
Supplement shall be read, taken, and construed as one and the same instrument.

     SECTION 1.16 Counterparts. This Series Supplement may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.

     SECTION 1.17 GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     SECTION 1.18 Instructions in Writing. All instructions given by the Servicer to the Trustee pursuant
to this Series Supplement shall be in writing, and may be included in a Daily Report or Settlement
Statement.

     [signature page to follow]

38

 

\

     IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have caused this Series
2001-1 Supplement to be duly executed by their respective officers as of the day and year first
above written.

	 	 	 	 	 
	TRANSFEROR:	 	PIER 1 FUNDING, L.L.C.,
	 	 	a Delaware limited liability company,

as Transferor
	 
	 	 	 	 
	 

	 	By:
 

	 

	 	 	 	J. Rodney Lawrence,
	 

	 	 	 	Senior Vice President
	 
	 	 	 	 
	SERVICER:	 	PIER 1 IMPORTS (U.S.), INC.,
	 	 	a Delaware corporation,

as Servicer
	 
	 	 	 	 
	 

	 	By:
 

	 

	 	 	 	J. Rodney Lawrence,
	 

	 	 	 	Senior Vice President
	 
	 	 	 	 
	TRUSTEE:	 	WELLS FARGO BANK MINNESOTA,
	 	 	NATIONAL ASSOCIATION, as Trustee
	 
	 	 	 	 
	 

	 	By:
 

	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

39

 

EXHIBIT
“A-1”

[FORM OF CLASS A INVESTOR CERTIFICATE]

     EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF PIER 1 FUNDING, L.L.C. AND THE
TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) A GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S INVESTMENT IN THE ENTITY OR (V) A
PERSON INVESTING “PLAN ASSETS” OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF CLAUSES (IV) AND
(V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).

     THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES OR “BLUE SKY” LAWS, AND MAY NOT HE OFFERED OR
SOLD TO OR FOR THE ACCOUNT OR BENEFIT OF ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ACQUISITION HEREOF, THE HOLDER (1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO THE TRANSFEROR, (H) TO A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT, OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
PROVISIONS OF ANY STATE SECURITIES OR “BLUE SKY” LAWS OF THE UNITED STATES OR OTHER JURISDICTION OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND IN ACCORDANCE WITH THE
PROVISIONS OF THE SERIES 2001-1 SUPPLEMENT; AND (2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

	 	 	 	 	 
	 

	 	No.                                        
	 	$                                        

Exhibit “A-1”, Page 1

 

PIER 1 IMPORTS CREDIT CARD MASTER TRUST

CLASS A VARIABLE FUNDING ASSET-BACKED CERTIFICATE, SERIES 2001-1

     Evidencing a fractional undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business from a portfolio of
consumer revolving credit card accounts generated or to be generated by Pier 1 Imports (U.S.),
Inc., a Delaware corporation (“Pier 1”), and certain other assets and interests
contemplated by the Pooling and Servicing Agreement described below.

     (Not an interest in or a recourse obligation of Pier 1 Funding, L.L.C., a Delaware limited
liability company (“Funding”), Pier 1, or any affiliate of either of them.)

     This certifies that                                                              (the “Certificateholder”) is the registered owner of a fractional
undivided interest in the Pier 1 Imports Credit Card Master Trust (the “Trust”) issued
pursuant to the Pooling and Servicing Agreement, dated as of February 12, 1997 (the
“Agreement”; such term to include any amendment or Supplement thereto) by and between
Funding, as Transferor (the “Transferor”), Pier 1, as Servicer (in such capacity, the
“Servicer”), and Wells Fargo Bank Minnesota, National Association, as Trustee (the
“Trustee”), and the Series 2001-1 Supplement, dated as of September 4, 2001 (the
“Series Supplement”), among the Transferor, the Servicer and the Trustee. The corpus of
the Trust consists of all of the Transferor’s right, title, and interest in, to, and under the
Trust Property (as defined in the Agreement).

     This Certificate does not purport to summarize the Agreement and reference is made to the
Agreement for information with respect to the interests, rights, benefits, obligations, proceeds,
and duties evidenced hereby and the rights, duties, and obligations of the Trustee. A copy of the
Agreement may be requested in writing from the Trustee at Wells Fargo Bank Minnesota, National
Association, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate
Trust Officer. Unless otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement. This certificate is one of a class of a series of
Certificates entitled “Class A Variable Funding Asset-Backed Certificates, Series 2001-1” (the
“Class A Certificates”), each of which represents a fractional undivided interest in the
Trust, and is issued under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement, as amended from time to time, the Certificateholder by virtue of the acceptance
hereof assents and by which the Certificateholder is bound.

     The Transferor has structured the Agreement, the Class A Certificates and the Class B Variable
Funding Asset-Backed Certificates, Series 2001-1 (the “Class B Certificates,” and together
with the Class A Certificates, the “Investor Certificates”) with the intention that the
Investor Certificates will be characterized under applicable tax law as either (x) indebtedness or
(y) equity interests in a partnership (other than a publicly traded partnership taxable as a
corporation).

Exhibit “A-1”, Page 2

 

     On any Business Day, the Class A Invested Amount may be reduced through distributions made in
accordance with Section 6.16 of the Series Supplement.

     The Transferor may from time to time prior to the Amortization Period Commencement Date,
direct (subject to the terms and conditions of the Series Supplement and the Certificate Purchase
Agreement) that the Class A Certificateholders acquire on any Business Day additional Undivided
Interests of the Trust in specified amounts; provided however, that in no event shall the Class
Invested Amount be increased above the Class A Maximum Invested Amount.

     Interest will accrue on the unpaid principal amount of the Class A Certificates at a rate
determined pursuant to Section 2.03 of the Certificate Purchase Agreement, dated as of September 4,
2001 (the “Certificate Purchase Agreement”), and, except as otherwise provided in the
Agreement, will be distributed to Class A Certificateholders on the 20th day of each month (or, if
such day is not a Business Day, on the next succeeding Business Day) (each a “Distribution
Date”), commencing October 20, 2001.

     Interest for any Distribution Date will include accrued interest at rate determined pursuant
to the Certificate Purchase Agreement during the Monthly Period most recently ended prior to such
Distribution Date (the “Interest Accrual Period”), except that the Interest Accrual Period
with respect to the first Distribution Date will be the period commencing on and including
September 4, 2001 (the “Closing Date”), and ending on and including the last day of the
Monthly Period ending on or about October 6, 2001, and the Interest Accrual Period with respect to
the last Distribution Date will be the period commencing on and including the first day of the
Monthly Period most recently ended prior to such last Distribution Date and ending on but excluding
such last Distribution date. Interest for any Distribution Date due but not paid on any
Distribution Date will be due and payable on the next succeeding Distribution Date together with,
to the extent permitted by applicable law, additional interest on such amount at 2.00% plus the
Prime Rate, as determined in the Certificate Purchase Agreement, from and including the due date
thereof to but excluding the date such interest is actually paid.

     “Class A Invested Amount” shall mean, when used with respect to any Business Day, an
amount (not less than zero) equal to (w) the Class A Initial Invested Amount, plus (x) the
aggregate principal amount of any Additional Class A Invested Amounts purchased by the Class A
Certificateholders on or prior to such Business Day pursuant to Section 6.15 of the Agreement,
minus (y) the aggregate amount of principal payments made to Class A Certificateholders
prior to such Business Day, minus (z) the excess, if any, of the aggregate amount of Class
A Investor Charge-Offs for all prior Business Days over Class A Investor Charge-Offs reimbursed
pursuant to Section 4.11(a)(iv) of the Agreement prior to such Business Day, including, without
limitation, by application of funds, pursuant to Sections 4.12(a) and (b) of the Agreement.

     Subject to the Agreement, payments of principal on the Class A Certificates are limited to the
unpaid Class A Invested Amount, which may be less than the unpaid balance of the Class A
Certificates pursuant to the terms of the Agreement. After the Distribution Date that is at least
forty-eight (48) months following the Amortization Period Commencement Date neither the Trust nor
the Transferor will have any further obligation to distribute principal or interest on the

Exhibit “A-1”, Page 3

 

Class A
Certificates. In the event that the Class A Invested Amount is greater than zero on the
Distribution Date that is at least forty-eight (48) months following the Amortization Period
Commencement Date, the Trustee will sell or cause to be sold, to the extent necessary, an
amount of interests in the Receivables or certain of the Receivables up to 110% of the Class A
Invested Amount and the Class B Invested Amount at the close of business on such date (but not more
than the total amount of Receivables allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders in final payment of the Class A Certificates and then to
the Class B Certificateholders in final payment of the Class B Certificates.

     IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly executed under its
official seal.

	 	 	 	 	 
	 	PIER 1 FUNDING, L.L.C.,

a Delaware limited liability company,

as Transferor

 	 
	 	By:  	 	 
	 	 	J. Rodney Lawrence, 	 
	 	 	Senior Vice President 	 
	 

CERTIFICATE OF AUTHENTICATION

     This is one of the Class A Certificates referred to in the aforementioned Pooling and
Servicing Agreement.

	 	 	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA,
	 	 	NATIONAL ASSOCIATION, as Trustee
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 

	 	 	 	 

Exhibit “A-1”, Page 4

 

SCHEDULE
“A-1”

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal	 
	Date	 	Advance	 	 	Payment	 	 	Outstanding	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 

Exhibit “A-1”, Page 5

 

EXHIBIT
“A-2”

[FORM OF CLASS B INVESTOR CERTIFICATE]

     EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF PIER 1 FUNDING, L.L.C. AND THE
TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) A GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S INVESTMENT IN THE ENTITY OR (V) A
PERSON INVESTING “PLAN ASSETS” OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF CLAUSES (IV) AND
(V), ANY INSURANCE COMPANY GENERAL ACCOUNT, HUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).

     THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED, NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED ON OR THROUGH (I) AN “ESTABLISHED SECURITIES MARKET” WITHIN THE
MEANING OF SECTION 7704(b)(1) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL REGULATION
THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER MARKET OR AN INTERDEALER QUOTATION
SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS OR (II) A “SECONDARY MARKET”
WITHIN THE MEANING OF SECTION 7704(b)(2) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY
REGULATION THEREUNDER INCLUDING A MARKET WHEREIN INTERESTS IN THE CLASS B CERTIFICATES ARE
REGULARLY QUOTED BY ANY PERSON MAKING A MARKET IN SUCH INTERESTS AND A MARKET WHEREIN ANY PERSON
REGULARLY MAKES AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO INTERESTS IN THE CLASS B CERTIFICATES
AND STANDS READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF
OTHERS.

     THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES OR “BLUE SKY” LAWS OF THE UNITED STATES OR OTHER
JURISDICTION. NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE SECURITIES ACT
AND ANY APPLICABLE PROVISIONS OF ANY STATE SECURITIES OR “BLUE SKY” LAWS OF THE UNITED

Exhibit “A-2”, Page 1

 

STATES OR
OTHER JURISDICTION OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND IN ACCORDANCE WITH THE PROVISIONS OF THE SERIES 2001-1
SUPPLEMENT.

	 	 	 	 	 
	 

	 	No.                                        
	 	$                                        

PIER 1 IMPORTS CREDIT CARD MASTER TRUST

CLASS B VARIABLE FUNDING ASSET-BACKED CERTIFICATE, SERIES 2001-1

     Evidencing a fractional undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business from a portfolio of
consumer revolving credit card accounts generated or to be generated by Pier 1 Imports (U.S.),
Inc., a Delaware corporation (“Pier 1”) and certain other assets and interests contemplated
by the Pooling and Servicing Agreement described below.

     (Not an interest in or a recourse obligation of Pier 1 Funding, L.L.C., a Delaware limited
liability company (“Funding”), Pier 1, or any affiliate of either of them.)

     This certifies that                                          (the “Certificateholder”) is the registered owner of a fractional
undivided interest in the Pier 1 Imports Credit Card Master Trust (the “Trust”) issued
pursuant to the Pooling and Servicing Agreement, dated as of February 12, 1997 (the
“Agreement”; such term to include any amendment or Supplement thereto) by and between
Funding, as Transferor (the “Transferor”), Pier 1, as Servicer (in such capacity, the
“Servicer”), and Wells Fargo Bank Minnesota, National Association, as Trustee (the
“Trustee”), and the Series 2001-1 Supplement, dated as of September 4, 2001 (the
“Series Supplement”), among the Transferor, the Servicer and the Trustee. The corpus of
the Trust consists of all of the Transferor’s right, title, and interest in, to, and under the
Trust Property (as defined in the Agreement).

     This Certificate does not purport to summarize the Agreement and reference is made to the
Agreement for information with respect to the interests, rights, benefits, obligations, proceeds,
and duties evidenced hereby and the rights, duties, and obligations of the Trustee. A copy of the
Agreement may be requested in writing from the Trustee at Wells Fargo Bank Minnesota, National
Association, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate
Trust Officer. Unless otherwise defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement. This Certificate is one of a series of Certificates
entitled “Class B Variable Funding Asset-Backed Certificates, Series 2001-1” (the “Class B
Certificates”), each of which represents a fractional undivided interest in the Trust, and is
issued under and is subject to the terms, provisions, and conditions of the Agreement, to which
Agreement, as amended from time to time, the Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.

Exhibit “A-2”, Page 2

 

     The Transferor has structured the Agreement, the Class B Certificates and the Class A Variable
Funding Asset-Backed Certificates (the “Class A Certificates,” and together with the Class
B Certificates, the “Investor Certificates”) with the intention that the Investor
Certificates will be characterized under applicable tax law as either (x) indebtedness or (y) equity
interests in a partnership (other than a publicly traded partnership taxable as a corporation).

     On any Business Day while any Series 2001-1 Certificates are outstanding, the Transferor may
elect to increase the Class B Invested Amount by written notice to the Trustee on such Business
Day; provided, however, that such increase in the Class B Invested Amount shall not cause a Pay Out
Event and that such increase shall be made concurrently with an increase in the Class A Invested
Amount.

     Principal payments may be made to Class B Certificateholders, during the Revolving Period as
provided in Section 6.16 of the Series Supplement.

     Interest will accrue on the unpaid principal amount of the Class B Certificates at a per annum
rate initially equal to zero percent per annum (the “Class B Certificate Rate”) and, except
as otherwise provided in the Agreement, will be distributed to Class B Certificateholders on the
20th day of each month (or, if such day is not a Business Day, on the next succeeding Business Day)
(each a “Distribution Date”), commencing October 20, 2001.

     Interest for any Distribution Date will include accrued interest at the Class B Certificate
Rate during the Monthly Period most recently ended prior to such Distribution Date, except that the
Interest Accrual Period with respect to the first Distribution Date will be the period commencing
on and including the September 4, 2001 (the “Closing Date”), and ending on and including
the last day of the Monthly Period ending on or about October 6, 2001, and the Interest Accrual
Period with respect to the last Distribution Date will be the period commencing on and including
the first day of the Monthly Period most recently ended prior to such last Distribution Date and
ending on but excluding such last Distribution Date.

     “Class B Invested Amount” shall mean, when used with respect to any Business Day, an
amount (not less than zero) equal to (i) the Class B Initial Invested Amount, plus (ii) the
aggregate principal amount of any Additional Class B Invested Amounts pursuant to Section 6.17 of
the Agreement, minus (iii) the aggregate amount of principal payments made to Class B
Certificateholders prior to such Business Day, minus (iv) the aggregate amount of Class B
Investor Charge-Offs for all prior Business Days, minus (v) the aggregate amount of
Reallocated Class B Principal Collections for all prior Distribution Dates plus (vi) the
sum of the aggregate amount allocated to the Class B Certificates and applied on all prior Business
Days pursuant to Section 4.11(a)(v) of the Agreement, including, without limitation, by application
of funds pursuant to Sections 4.12(a) and (b) of the Agreement.

     Subject to the Agreement, payments of principal on the Class B Certificates are limited to the
unpaid Class B Invested Amount, which may be less than the unpaid balance of the Class B
Certificates pursuant to the terms of the Agreement. After the Distribution Date that is at least
forty-eight (48) months following the Amortization Period Commencement Date neither the

Exhibit “A-2”, Page 3

 

Trust nor
the Transferor will have any further obligation to distribute principal or interest on the Class B
Certificates. In the event that the Class B Invested Amount is greater than zero on the
Distribution Date that is at least forty-eight (48) months following the Amortization Period
Commencement Date, the Trustee will sell or cause to be sold, to the extent necessary, an amount of interests in the Receivables or certain of the Receivables up to 110% of the Class A
Invested Amount and the Class B Invested Amount at the close of business on such date (but not more
than the total amount of Receivables allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders in final payment of the Class A Certificates and then to
the Class B Certificateholders in final payment of the Class B Certificates.

     Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the
Agreement, or be valid for any purpose.

     IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly executed under its
official seal.

	 	 	 	 	 
	 	PIER 1 FUNDING, L.L.C.,

a Delaware limited liability company,

as Transferor

 	 
	 	By:  	 	 
	 	 	J. Rodney Lawrence, 	 
	 	 	Senior Vice President 	 
	 

CERTIFICATE OF AUTHENTICATION

     This is one of the Class B Certificates referred to in the aforementioned Pooling and
Servicing Agreement.

	 	 	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA,
	 	 	NATIONAL ASSOCIATION, as Trustee
	 
	 	 	 	 
	 

	 	By:
 

Exhibit “A-2”, Page 4

 

	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 

	 	 	 	 

Exhibit “A-2”, Page 5

 

SCHEDULE
“A-2”

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal	 
	Date	 	Advance	 	 	Payment	 	 	Outstanding	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 

Exhibit “A-2”, Page 6

 

EXHIBIT B

PIER 1 FUNDING, L.L.C.

PIER 1 IMPORTS CREDIT CARD MASTER TRUST

MONTHLY CERTIFICATEHOLDERS’ STATEMENT

For the month of                                         ,                     per $1,000 original principal amount per Certificate:

	 	 	 	 	 	 	 	 	 
	 	 	5.2(b)(i)	 	Total Distribution to Certificateholders	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(ii)	 	Total Distribution of Principal to Certificateholders	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(iii)	 	Total Distribution of Interest to Certificateholders	 	                    

Totals for the month of                                         ,                     :

	 	 	 	 	 	 	 	 	 
	 	 	5.2(b)(iv)	 	Principal Collected and Allocated to the:	 	 
	 

	 	 	 	 	 	Class A Certificates
	 	                    
	 

	 	 	 	 	 	Class B Certificates
	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(v)	 	Finance Charges Collected and Allocated to the:	 	 
	 

	 	 	 	 	 	Class A Certificates
	 	                    
	 

	 	 	 	 	 	Class B Certificates
	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(xi)	 	Reallocated Class B Principal Collections	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(xii)	 	Dilution Ratio	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(xiv)	 	Store Payment Enhancement Draws	 	                    

As of the                                         ,                      month-end:

	 	 	 	 	 	 	 	 	 
	 	 	5.2(b)(vi)	 	Aggregate Principal Receivables	 	                    
	 

	 	 	 	 	 	Invested Amount
	 	                    
	 

	 	 	 	 	 	Class A Invested Amount
	 	                    
	 

	 	 	 	 	 	Class B Invested Amount
	 	                    
	 

	 	 	 	 	 	Floating Allocation Percentage
	 	                    
	 

	 	 	 	 	 	Fixed/Floating Allocation Percentage
	 	                    

Exhibit “B”, Page 1

 

	 	 	 	 	 	 	 	 	 
	 	 	5.2(b)(vii)	 	Aggregate Outstanding Balance of Accounts:	 	 
	 

	 	 	 	 	 	30 Days Contractually Delinquent
	 	                    
	 

	 	 	 	 	 	60 Days Contractually Delinquent
	 	                    
	 

	 	 	 	 	 	90 Days Contractually Delinquent
	 	                    
	 

	 	 	 	 	 	120 Days Contractually Delinquent
	 	                    
	 

	 	 	 	 	 	150 Days Contractually Delinquent
	 	                    
	 

	 	 	 	 	 	180 Days Contractually Delinquent
	 	                    
	 

	 	 	 	 	 	 	 	 
	 	 	5.2(b)(xiii)	 	Series Portfolio Yield for Current Period	 	                    
	 	 	 	 	3-month Average of Portfolio Yields	 	                    
	 	 	 	 	Series Base Rate	 	                    

For the month of                                         ,                     , per $1,000 original principal amount per Certificate and in aggregate:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Per $1,000 Orig. Amt:
	 	Aggregate
	 

	 	5.2(b)(viii)
	 	Investor Default Amount
	 	                    
	 	                    
	 

	 	 	 	 	 	 	 	 
	 

	 	5.2(b)(ix)
	 	Class A Investor Charge-Offs
	 	                    
	 	                    
	 

	 	 	 	Class B Investor Charge-Offs
	 	                    
	 	                    
	 

	 	 	 	 	 	 	 	 
	 

	 	5.2(b)(x)
	 	Monthly Servicing Fee
	 	                    
	 	                    

	 	 	 	 	 
	 	PIER 1 IMPORTS (U.S.), INC., 

a Delaware corporation,

as Servicer

 	 
	 	By:  	 	 
	 	 	J. Rodney Lawrence, 	 
	 	 	Senior Vice President 	 
	 

Exhibit “B”, Page 2

 

EXHIBIT C

INVESTOR CERTIFICATION

Date:                                        

Wells Fargo Bank Minnesota, National Association

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

			
	Attention:	 	Corporate Trust Services — Asset-Backed Administration

Pier 1 Imports Credit Card Master Trust

     In accordance with Section 5.02(c) of the Series Supplement (the “Series Supplement”),
with respect to the Series 2001-1 Certificates (the “Certificates”), the undersigned hereby
certifies and agrees as follows:

     1. The undersigned is a beneficial owner of $                     in principal balance of the Certificates.

     2. The undersigned is requesting a password for access to certain information (the
“Information”) on the Paying Agent’s website.

     3. In consideration of the Paying Agent’s disclosure to the undersigned of the
Information, or the password in connection therewith, the undersigned will keep the
Information confidential (except from such outside persons as are assisting it in connection
with the related Certificates, from its accountants and attorneys, and otherwise from such
governmental or banking authorities or agencies to which the undersigned is subject), and
such Information will not, without the prior written consent of the Paying Agent and the
Trustee, be otherwise disclosed by the undersigned or by its officers, directors, partners,
employees, agents or representatives (collectively, the “Representatives”) in any
manner whatsoever, in whole or in part.

     4. The undersigned will not use or disclose the Information in any manner which could
result in a violation of any provision of the Securities Act of 1933, as amended (the
“Securities Act”), or the Securities Exchange Act of 1934, as amended, or would
require registration of any Certificate pursuant to Section 5 of the Securities Act.

     5. The undersigned shall be fully liable for any breach of this agreement by itself or
any of its Representatives and shall indemnify the Transferor, the Servicer, the Paying
Agent and the Trustee for any loss, liability or expense incurred thereby with respect to
any such breach by the undersigned or any of its Representatives.

 

 

     6. Capitalized terms used by not defined herein shall have the respective meanings
assigned thereto in the Series Supplement.

     In Witness Whereof, the undersigned has caused its name to be signed hereby by its
duly authorized officer, as of the day and year written above.

	 	 	 	 	 	 	 
	 	 	 
	 	 	Beneficial Owner
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 	 	 	 	 
	 	 	Company:
	 

	 	 	 	 	 	 
	 

	 	Phone:	 	 	 	 
	 	 	 	 	 

4

 

[Execution Copy]

FIRST AMENDMENT AGREEMENT

     This First Amendment Agreement (“Amendment”) is executed as of the 3rd day of
September, 2002, by and among Pier 1 Funding, L.L.C., a Delaware limited liability company, as
transferor (the “Transferor”), Pier 1 Imports (U.S.), Inc., a Delaware corporation, as servicer
(the “Servicer”), and Wells Fargo Bank Minnesota, National Association, a national banking
association, as trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Transferor, the Servicer and the Trustee executed the Series 2001-1 Supplement
dated as of September 4, 2001 (the “Supplement”), to the Pooling and Servicing Agreement dated as
of February 12, 1997, among such parties (as heretofore amended, the “Agreement;” unless otherwise
defined herein, capitalized terms used herein shall have the meanings assigned to such terms in the
Agreement or the 2001-1 Supplement, as applicable); and

     WHEREAS, the parties hereto have agreed to amend further the 2001-1 Supplement on the terms
and conditions hereinafter set forth.

     NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Amendment of the 2001-1 Supplement. Effective on the date hereof and
subject to the satisfaction of the condition precedent set forth in Section 2 below, the 2001-1
Supplement is hereby amended as follows:

     (a) The definition of “Revolving Period” set forth in Section 1.2 of the 2002-1
Supplement is hereby deleted in its entirety and the folloiwng is substituted in its place the
following:

     “Revolving Period” shall mean the period from and including the Closing
Date to, but not including, the Amortization Period Commencement Date.

     (b) In connection with the reports to be delivered to the Administrative Agent pursuant to
Section 5.2 of the 2001-1 Supplement, the Servicer hereby agrees and covenants that in addition to
the delivery to the Administrative Agent of physical copies of such reports executed on behalf of
the Servicer, the Servicer will forward copies of such reports to the Administrative Agent by
electronic transmission to the applicable address of the Administrative Agent for notices by
electronic transmission set forth in Section 7.11 of the Certficate Purchase Agreement or to such
other address as the Administrative Agent may specify to the Servicer from time to time.

     SECTION 2. Condition Precedent. This Amendment shall become effective as of the date
hereof upon the execution of this Amendment by all of the parties hereto and the execution and
delivery of the Consent to Amendment to Supplement attached hereto.

5

 

     SECTION 3. Miscellaneous.

     3.1 Ratification. As amended hereby, the 2001-1 Supplement is in all respects
ratified and confirmed and the 2001-1 Supplement as so supplemented by this Amendment shall be
read, taken and construed as one and the same instrument.

     3.2 Representation and Warranty. Each of the Transferor and the Servicer represents
and warrants that this Amendment has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether such enforceability is considered in a proceeding at
law or in equity).

     3.3 Governing Law; Parties; Severability. This Amendment shall be governed by and
construed in accordance with the laws and decisions (as opposed to the conflicts of law provisions)
of the State of New York. Whenever in this Amendment there is a reference made to any of the
parties hereto, such reference shall also be a reference to the successors and assigns of such
party, including, without limitation, any debtor-in-possession or trustee. The provisions of this
Amendment shall be binding upon and shall inure to the benefit of the successors and assigns of the
parties hereto. Whenever possible, each provision of this Amendment shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Amendment.

     3.4 Counterparts. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument.

6

 

     IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have caused this Amendment to
be fully executed by their respective officers as of the day and year first above written.

	 	 	 	 	 
	 	 	PIER 1 FUNDING, L.L.C.,
	 

	 	 	 	Transferor
	 
	 	 	 	 
	 	 	By
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	PIER 1 IMPORTS (U.S.), INC.,
	 

	 	 	 	Servicer
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
	 

	 	 	 	Trustee
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:

[Consent to Amendment to Supplement Attached]

7

 

CONSENT TO AMENDMENT TO SUPPLEMENT

     The undersigned, constituting the Majority Investors under and as defined in the Certificate
Purchase Agreement dated as of September 4, 2001 (as heretofore amended, the “Purchase Agreement”),
among Pier 1 Funding, L.L.C., as the transferor, Pier 1 Imports (U.S.), Inc., as the servicer, the
Class A Purchasers named therein and JPMorgan Chase Bank (as successor to Morgan Guaranty Trust
Company of New York), as the administrative agent, hereby consent to the terms and conditions of
the First Amendment Agreement dated as of September 3, 2002, among Pier 1 Funding, L.L.C., as
transferor, Pier 1 Imports (U.S.), Inc., as servicer, and Wells Fargo Bank Minnesota, National
Association, as trustee, relating to the Series 2001-1 Supplement dated as of September 4, 2001,
among the same parties.

	 	 	 	 	 
	 	 	DELAWARE FUNDING CORPORATION, as 
the sole
Structured Investor
	 
	 	 	 	 
	 	 	By JPMorgan Chase Bank, as attorney-in-fact
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, as the sole
 Committed
Investor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

8

 

[Execution Copy]

SECOND AMENDMENT AGREEMENT

     This Second Amendment Agreement (“Amendment”) is executed as of the 17th day of
June, 2003, by and among Pier 1 Funding, L.L.C., a Delaware limited liability company, as
transferor (the “Transferor”), Pier 1 Imports (U.S.), Inc., a Delaware corporation, as servicer
(the “Servicer”), and Wells Fargo Bank Minnesota, National Association, a national banking
association, as trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Transferor, the Servicer and the Trustee executed the Series 2001-1 Supplement
dated as of September 4, 2001 (as heretofore amended, the “Supplement”), to the Pooling and
Servicing Agreement dated as of February 12, 1997, among such parties (as heretofore amended, the
“Agreement;” unless otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to such terms in the Agreement or the Supplement, as applicable); and

     WHEREAS, the parties hereto have agreed to amend further the Supplement on the terms and
conditions hereinafter set forth.

              NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Amendment of the Supplement. Effective on the date hereof and subject to
the satisfaction of the condition precedent set forth in Section 2 below, the Supplement is hereby
amended as follows:

     (a) The definition of “Structured Investor Event” set forth in Section
1.2 of the Supplement is hereby deleted in its entirety.

     (b) Section 1.9 of the Supplement is amended by deleting subsection (h)
thereof in its entirety and substituting the its place the followng: “(h)
[Reserved];”

     SECTION 2. Condition Precedent. This Amendment shall become effective as of the date
hereof upon the execution of this Amendment by all of the parties hereto and the execution and
delivery of the Consent to Amendment to Supplement attached hereto.

     SECTION 3. Miscellaneous.

     3.1 Ratification. As amended hereby, the Supplement is in all respects ratified and
confirmed and the Supplement as so supplemented by this Amendment shall be read, taken and
construed as one and the same instrument.

     3.2 Representation and Warranty. Each of the Transferor and the Servicer represents
and warrants that this Amendment has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization,

9

 

fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether such enforceability is considered in a proceeding at
law or in equity).

     3.3 Governing Law; Parties; Severability. This Amendment shall be governed by and
construed in accordance with the laws and decisions (as opposed to the conflicts of law provisions)
of the State of New York. Whenever in this Amendment there is a reference made to any of the
parties hereto, such reference shall also be a reference to the successors and assigns of such
party, including, without limitation, any debtor-in-possession or trustee. The provisions of this
Amendment shall be binding upon and shall inure to the benefit of the successors and assigns of the
parties hereto. Whenever possible, each provision of this Amendment shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Amendment.

     3.4 Counterparts. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument.

10

 

     IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have caused this Amendment to
be fully executed by their respective officers as of the day and year first above written.

	 	 	 	 	 
	 	 	PIER 1 FUNDING, L.L.C.,
	 

	 	 	 	Transferor
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	PIER 1 IMPORTS (U.S.), INC.,
	 

	 	 	 	Servicer
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
	 

	 	 	 	Trustee
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:

[Consent to Amendment to Supplement Attached]

11

 

CONSENT TO AMENDMENT TO SUPPLEMENT

     The undersigned, constituting the Majority Investors under and as defined in the Certificate
Purchase Agreement dated as of September 4, 2001 (as heretofore amended, the “Purchase Agreement”),
among Pier 1 Funding, L.L.C., as the transferor, Pier 1 Imports (U.S.), Inc., as the servicer, the
Class A Purchasers named therein and JPMorgan Chase Bank (as successor to Morgan Guaranty Trust
Company of New York), as the administrative agent, hereby consent to the terms and conditions of
the Second Amendment Agreement dated as of June 17, 2003, among Pier 1 Funding, L.L.C., as
transferor, Pier 1 Imports (U.S.), Inc., as servicer, and Wells Fargo Bank Minnesota, National
Association, as trustee, relating to the Series 2001-1 Supplement dated as of September 4, 2001, as
heretofore amended, among the same parties.

	 	 	 	 	 
	 	 	DELAWARE FUNDING CORPORATION, as 
the sole
Structured Investor
	 
	 	 	 	 
	 	 	By JPMorgan Chase Bank, as attorney-in-fact
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, as the sole 
Committed
Investor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

12

 

[Execution Copy]

THIRD AMENDMENT AGREEMENT

     This Third Amendment Agreement (“Amendment”) is executed as of the 31st day of
August, 2004, by and among Pier 1 Funding, L.L.C., a Delaware limited liability company, as
transferor (the “Transferor”), Pier 1 Imports (U.S.), Inc., a Delaware corporation, as servicer
(the “Servicer”), and Wells Fargo Bank, National Association (successor by merger to Wells Fargo
Bank Minnesota, National Association), a national banking association, as trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Transferor, the Servicer and the Trustee executed the Series 2001-1 Supplement
dated as of September 4, 2001 (as heretofore amended, the “Supplement”), to the Pooling and
Servicing Agreement dated as of February 12, 1997, among such parties (as heretofore amended, the
“Agreement;” unless otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to such terms in the Agreement or the Supplement, as applicable); and

     WHEREAS, the parties hereto have agreed to amend further the Supplement on the terms and
conditions hereinafter set forth.

             NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Amendment of the Supplement. Effective on the date hereof and subject to
the satisfaction of the condition precedent set forth in Section 2 below, the Supplement is hereby
amended as follows:

     (a) The following new definition is added to Section 1.2 of the Supplement in
proper alphabetical order:

     “Pier 1 Imports” shall mean Pier 1 Imports, Inc., a Delaware
corporation.

     (b) Section 1.9 of the Supplement is amended by amending and restating in
their entirety subsections (i) and (j) thereof to read as follows:

     (i) a downgrade of Pier 1 Imports’ senior unsecured debt rating to
below BB or Ba2 by Standard & Poor’s, Moody’s or Fitch;

     (j) a Change of Control shall have occurred with respect to Pier
1 Imports, or any of the Transferor, the Servicer or Pier 1 National Bank
shall cease to be wholly-owned, directly or indirectly, by Pier 1 Imports;
or

     SECTION 2. Condition Precedent. This Amendment shall become effective as of the date
hereof upon the execution of this Amendment by all of the parties hereto and the execution and
delivery of the Consent to Amendment to Supplement attached hereto.

13

 

     SECTION 3. Miscellaneous.

     3.1 Ratification. As amended hereby, the Supplement is in all respects ratified and
confirmed and the Supplement as so supplemented by this Amendment shall be read, taken and
construed as one and the same instrument.

     3.2 Representation and Warranty. Each of the Transferor and the Servicer represents
and warrants that this Amendment has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether such enforceability is considered in a proceeding at
law or in equity).

     3.3 Governing Law; Parties; Severability. This Amendment shall be governed by and
construed in accordance with the laws and decisions (as opposed to the conflicts of law provisions)
of the State of New York. Whenever in this Amendment there is a reference made to any of the
parties hereto, such reference shall also be a reference to the successors and assigns of such
party, including, without limitation, any debtor-in-possession or trustee. The provisions of this
Amendment shall be binding upon and shall inure to the benefit of the successors and assigns of the
parties hereto. Whenever possible, each provision of this Amendment shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Amendment.

     3.4 Counterparts. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument.

14

 

     IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have caused this Amendment to
be fully executed by their respective officers as of the day and year first above written.

	 	 	 	 	 
	 	 	PIER 1 FUNDING, L.L.C.,
	 

	 	 	 	Transferor
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	PIER 1 IMPORTS (U.S.), INC.,
	 

	 	 	 	Servicer
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
(successor by merger to Wells Fargo Bank

Minnesota, National Association),
	 

	 	 	 	Trustee
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:

[Consent to Amendment to Supplement Attached]

15

 

CONSENT TO AMENDMENT TO SUPPLEMENT

     The undersigned, constituting the Majority Investors under and as defined in the Certificate
Purchase Agreement dated as of September 4, 2001 (as heretofore amended, the “Purchase Agreement”),
among Pier 1 Funding, L.L.C., as the transferor, Pier 1 Imports (U.S.), Inc., as the servicer, the
Class A Purchasers named therein and JPMorgan Chase Bank (as successor to Morgan Guaranty Trust
Company of New York), as the administrative agent, hereby consent to the terms and conditions of
the Third Amendment Agreement dated as of August 31, 2004, among Pier 1 Funding, L.L.C., as
transferor, Pier 1 Imports (U.S.), Inc., as servicer, and Wells Fargo Bank, National Association
(successor by merger to Wells Fargo Bank Minnesota, National Association), as trustee, relating to
the Series 2001-1 Supplement dated as of September 4, 2001, as heretofore amended, among the same
parties.

	 	 	 	 	 
	 	 	DELAWARE FUNDING COMPANY, LLC (as successor to
Delaware Funding Corporation), as the sole
Structured Investor
	 
	 	 	 	 
	 

	 	By:
	 	JPMorgan Chase Bank, as attorney-in-fact for

Delaware Funding Company, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, as the sole 
Committed
Investor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

16

 

[Execution Copy]

FOURTH AMENDMENT AGREEMENT

     This Fourth Amendment Agreement (this “Amendment”) is executed as of the 22nd day of February,
2005, by and among Pier 1 Funding, LLC, a Delaware limited liability company, as transferor (the
“Transferor”), Pier 1 Imports (U.S.), Inc., a Delaware corporation, as servicer (the “Servicer”),
and Wells Fargo Bank, National Association (successor by merger to Wells Fargo Bank Minnesota,
National Association), a national banking association, as trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Transferor, the Servicer and the Trustee executed the Series 2001-1 Supplement
dated as of September 4, 2001 (as heretofore amended, the “Supplement”), to the Pooling and
Servicing Agreement dated as of February 12, 1997, among such parties (as heretofore amended, the
“Agreement;” unless otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to such terms in the Agreement or the Supplement, as applicable); and

     WHEREAS, the parties hereto have agreed to amend further the Supplement on the terms and
conditions hereinafter set forth.

             NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Amendment of the Supplement. Effective on the date hereof and subject to
the satisfaction of the condition precedent set forth in Section 2 below, the Supplement is hereby
amended as follows:

     (a) The following new definitions are added to Section 1.2 of the Supplement
in proper alphabetical order:

     “Eligible Deferred Payment Plan Receivable” shall mean any
Deferred Payment Plan Receivable that is not an Ineligible Deferred Payment
Plan Receivable.

     “Ineligible Deferred Payment Plan Receivable” shall mean
any Deferred Payment Plan Receivable that by its terms (i) permits the
deferral of current payments of principal for a period of more than three
monthly billing cycles after the end of the applicable promotional period
(which promotional period shall be a period of no more than eight
consecutive weeks), (ii) permits the deferral of current payments of
interest for more than 12 monthly billing cycles or (iii) permits the
deferral of current payments of interest for up to 12 monthly billing cycles
but does not require minimum monthly payments (following the expiration of
any permitted deferral period with respect to current payments of principal)
of at least 5% of the original outstanding principal balance thereof.

17

 

     (b) Section 1.6 of the Supplement is amended by amending and restating in its
entirety Section 2.7(j) of the Agreement set forth therein to read as follows:

     Section 2.7(j) Designated Receivables. The Transferor shall
designate all Ineligible Deferred Payment Plan Receivables outstanding from
time to time as each having a Principal Receivable balance of zero. The
Transferor shall designate certain Eligible Deferred Payment Plan
Receivables to be treated as each having a Principal Receivable balance of
zero on each Business Day on which the aggregate principal balance of
Eligible Deferred Payment Plan Receivables exceeds 25% (or on any Business
Day in February, June or October, 30%) of the balance of the Aggregate
Principal Receivables on such day, such that following such designation the
Principal Receivables balance of all Eligible Deferred Payment Plan
Receivables not so designated shall not exceed 25% (or on any Business Day
in February, June or October, 30%) of the balance of the Aggregate Principal
Receivables on such day. The Transferor shall designate certain Foreign
Receivables to be treated as each having a Principal Receivable balance of
zero on each Business Day on which the aggregate Outstanding Balance of
Foreign Receivables exceeds 1% of the aggregate Outstanding Balance of all
Receivables on such day, such that following such designation the
Outstanding Balance of all Foreign Receivables not so designated shall not
exceed 1% of the aggregate Outstanding Balance of all Receivables on such
day. Receivables designated by the Transferor as having a Principal
Receivable balance of zero pursuant to this Section 2.7(j) will not be
treated as Eligible Receivables, their principal balances will not be
credited toward the Aggregate Principal Receivables in the Trust, and
Collections with respect to such Receivables will be treated as Finance
Charge Collections.

     (c) Section 1.9 of the Supplement is amended by amending and restating all of
the provisions thereof immediately following subparagraph (k), to read as follows:

     then, after the applicable grace period set forth in such
subparagraphs, either the Trustee or Series 2001-1 Certificateholders
evidencing Undivided Interests aggregating more than 50% of the Invested
Amount of any class of this Series 2001-1 by notice then given in writing to
the Transferor and the Servicer (and to the Trustee if given by the
Certificateholders) may declare that a pay out event (a “Series 2001-1
Pay Out Event”) has occurred as of the date of such notice.

     SECTION 2. Condition Precedent. This Amendment shall become effective as of the date
hereof upon the execution of this Amendment by all of the parties hereto and the execution and
delivery of the Consent to Amendment to Supplement attached hereto.

     SECTION 3. Miscellaneous.

     3.1 Ratification. As amended hereby, the Supplement is in all respects ratified and

18

 

confirmed and the Supplement as so supplemented by this Amendment shall be read, taken and
construed as one and the same instrument.

     3.2 Representation and Warranty. Each of the Transferor and the Servicer represents
and warrants that this Amendment has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether such enforceability is considered in a proceeding at
law or in equity).

     3.3 Governing Law; Parties; Severability. This Amendment shall be governed by and
construed in accordance with the laws and decisions (as opposed to the conflicts of law provisions)
of the State of New York. Whenever in this Amendment there is a reference made to any of the
parties hereto, such reference shall also be a reference to the successors and assigns of such
party, including, without limitation, any debtor-in-possession or trustee. The provisions of this
Amendment shall be binding upon and shall inure to the benefit of the successors and assigns of the
parties hereto. Whenever possible, each provision of this Amendment shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Amendment.

     3.4 Counterparts. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument.

19

 

     IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have caused this Amendment to
be fully executed by their respective officers as of the day and year first above written.

	 	 	 	 	 
	 	 	PIER 1 FUNDING, LLC,
	 

	 	 	 	Transferor
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	PIER 1 IMPORTS (U.S.), INC.,
	 

	 	 	 	Servicer
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
(successor by merger to Wells Fargo Bank

Minnesota, National Association),
	 

	 	 	 	Trustee
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:

Title:

[Consent to Amendment to Supplement Attached]

20

 

CONSENT TO AMENDMENT TO SUPPLEMENT

     The undersigned, constituting the Majority Investors under and as defined in the Certificate
Purchase Agreement dated as of September 4, 2001 (as heretofore amended, the “Purchase Agreement”),
among Pier 1 Funding, LLC, as the transferor, Pier 1 Imports (U.S.), Inc., as the servicer, the
Class A Purchasers named therein and JPMorgan Chase Bank, N.A. (as successor to Morgan Guaranty
Trust Company of New York), as the administrative agent, hereby consent to the terms and conditions
of the Fourth Amendment Agreement dated as of February 22, 2005, among Pier 1 Funding, LLC, as
transferor, Pier 1 Imports (U.S.), Inc., as servicer, and Wells Fargo Bank, National Association
(successor by merger to Wells Fargo Bank Minnesota, National Association), as trustee, relating to
the Series 2001-1 Supplement dated as of September 4, 2001, as heretofore amended, among the same
parties.

	 	 	 	 	 
	 	 	DELAWARE FUNDING
COMPANY, LLC (as 
successor to
Delaware Funding Corporation), as 
the sole
Structured Investor
	 
	 	 	 	 
	 	 	By JPMorgan Chase Bank, N.A., as attorney-in-fact
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK,
N.A. as the sole 
Committed
Investor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

Exhibit “C”, Page 1exv10w27

 

Exhibit 10.27

March 22, 2006

STRICTLY CONFIDENTIAL

Mr. Howard Brill

Chief Executive Officer

Global Employment Solutions, Inc.

9090 Ridgeline Blvd., Suite 205

Littleton CO 80129

Dear Mr. Brill:

     This letter (the “Agreement”) constitutes the agreement between Global Employment
Solutions, Inc. (the “Company”) and Rodman & Renshaw, LLC (“Rodman”) that Rodman
shall serve as the exclusive placement agent for the Company, on a “best efforts” basis, in
connection with the proposed offer and private placement (the “Offering”) by the Company of
securities of the Company (the “Securities”). The closing of the Offering may occur
simultaneously with the Company’s or it’s subsidiary’s combination through merger or reverse merger
with a publicly traded company to be determined by the parties hereto (a “Merger”). Rodman shall be
authorized to utilize sub-placement agents in its discretion. The Offering and any related
transactions are hereinafter referred to as the “Transaction”.

     A. Fees and Expenses. In connection with the Services described above, the Company
shall pay to Rodman the following compensation:

          1. Placement Agent’s Fee. The Company shall pay to Rodman a cash placement fee (the
“Placement Agent’s Fee”) equal to 4.11% of the aggregate purchase price paid by each
purchaser of Securities that are placed in the Offering, The Placement Agent’s Fee will be
deducted at the closing of the Merger(the “Closing”) from the gross proceeds of the
Securities sold.

          2. Warrants. As additional compensation, the Company shall issue to Rodman or its
designees, warrants (the “Warrants”) to purchase that number of shares of common stock of
the Company (“Shares”) equal to 5% of the aggregate number of Shares placed in the Offering,
plus any Shares issuable upon exercise of any convertible Securities sold in the Offering. The
Warrants shall have the same terms, including exercise price and registration rights as the
warrants issued to the Convertible Note investors (“Investors”) in the Offering. If no
warrants are issued to Investors, the Warrants shall have the terms equivalent to those of any
other convertible securities issued to Investors, and if no convertible securities are issued, the
Warrants shall have an exercise price equal to the price at which Shares are issued to Investors,
an exercise period of five years and registration rights for the Shares underlying the Warrants
equivalent to those granted with respect to the Shares.

          3. Expenses. In addition to any fees payable to Rodman hereunder and regardless of
whether an Offering is consummated, the Company hereby agrees to reimburse Rodman, within ten days
after written request therefor, for all reasonable travel and other out-of-pocket expenses incurred
in connection with Rodman’s engagement, including the reasonable fees and expenses of Rodman’s
counsel.

1

 

Such reimbursement shall be limited to $25,000 without prior written approval by the Company.

     B. No-Shop. Until the Offering contemplated hereby is completed, but no later than
one hundred eighty (180) days from the date hereof (the “No-Shop Period”), the Company
agrees that without the prior written approval of Rodman, it will not, and will not permit any of
its employees, agents or representatives, directly or indirectly, to solicit, encourage, initiate,
enter into, continue or participate in any negotiations or discussions with, or provide any
information to, any third party concerning any public or private offering or other financing or
capital-raising transaction of any kind, including but not limited to a “SPAC”, a “PIPE”, a merger
with a public company, or an initial public offering of securities.

     C. Term and Termination of Engagement. Except as set forth below, the term (the
“Term”) of Rodman’s engagement will begin on the date hereof and end on the earlier of the
consummation of the Merger or 15 days after receipt by either party hereto of written notice of
termination; provided that no such notice may be given by the Company during the No-Shop Period.
Notwithstanding any such expiration or termination, Paragraphs D through N shall survive and remain
in full force and effect and be binding on the parties hereto.

     D. Fee Tail. Rodman shall be entitled to a Placement Agent’s Fee and Warrants,
calculated in the manner provided in Paragraphs A(1)(i) and A(2)(i), with respect to any subsequent
public or private offering or other financing or capital-raising transaction of any kind
(“Subsequent Financing”) to the extent that such financing or capital is provided to the
Company or to any Affiliate thereof, by investors whom Rodman had introduced, directly or
indirectly, to the Company during the Term if such Subsequent Financing is consummated at any time
within (i) the 18-month period following the consummation of the Offering and (ii), if no Offering
shall have been consummated during the Term, the 18-month period following the expiration or
termination of this Agreement (the “Tail Period”). During the Tail Period, neither the
Company nor any Affiliate of the Company shall engage in any transaction with a publicly traded
“shell” corporation identified during the No-Shop Period. An “Affiliate” of an entity shall mean
any individual or entity controlling, controlled by or under common control with such entity and
any officer, director, employee, stockholder, partner, member or agent of such entity.

     E. Future Transactions. If, at any time during the Term, or within the 24-month
period following consummation of any Offering during the Term, the Company or any of its
subsidiaries decides to raise funds by means of a public offering or a private placement of equity
or debt securities using an underwriter or placement agent, Rodman (or any affiliate designated by
Rodman) shall have the right to act as an underwriter, initial purchaser or placement agent for
such financing, and Rodman shall receive at least 30% of any fees and reimbursed expenses earned by
the underwriters and agents retained in connection with the transactions referred to in this
Paragraph E. If Rodman or one of its affiliates decides to accept any such engagement, the
agreement governing such engagement will contain, among other things, provisions for customary fees
for transactions of similar size and nature and the provisions of this Agreement, including
indemnification, which are appropriate to such a transaction.

     F. Use of Information. The Company will furnish Rodman such written information as
Rodman reasonably requests in connection with the performance of its services hereunder. The
Company understands, acknowledges and agrees that, in performing its services hereunder, Rodman
will use and rely entirely upon such information as well as publicly available information
regarding the Company and other potential parties to an Offering and that Rodman does not assume
responsibility for independent verification of the accuracy or completeness of any information,
whether publicly available or otherwise furnished to it, concerning the Company or otherwise
relevant to an Offering, including, without

2

 

limitation, any financial information, forecasts or projections considered by Rodman in connection
with the provision of its services.

     G. Confidentiality. In the event of the consummation or public announcement of any
Offering, Rodman shall have the right to disclose its participation in such Offering, including,
without limitation, the placement at its cost of “tombstone” advertisements in financial and other
newspapers and journals. The parties hereto have executed a confidentiality agreement which will
survive the execution of this Agreement.

     H. Securities Matters. The Company shall be responsible for any and all compliance
with the securities laws applicable to it, including Regulation D and the Securities Act of 1933,
and Rule 506 promulgated thereunder, and unless otherwise agreed in writing, all state securities
(“blue sky”) laws. Rodman agrees to cooperate with counsel to the Company in that regard.

     I. Indemnity.

          1. In connection with the Company’s engagement of Rodman as placement agent, the Company
hereby agrees to indemnify and hold harmless Rodman and its Affiliates, and the respective
controlling persons, directors, officers, shareholders, agents and employees of any of the
foregoing (collectively the “Indemnified Persons”), from and against any and all claims,
actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses
incurred by any of them (including the reasonable fees and expenses of counsel), (collectively a
“Claim”), which are (A) related to or arise out of (i) any actions taken or omitted to be
taken (including any untrue statements made or any statements omitted to be made) by the Company,
or (ii) any actions taken or omitted to be taken by any Indemnified Person in connection with the
Company’s engagement of Rodman, or (B) otherwise relate to or arise out of Rodman’s activities on
the Company’s behalf under Rodman’s engagement, and the Company shall reimburse any Indemnified
Person for all expenses (including the reasonable fees and expenses of counsel) incurred by such
Indemnified Person in connection with investigating, preparing or defending any such claim, action,
suit or proceeding, whether or not in connection with pending or threatened litigation in which any
Indemnified Person is a party. The Company will not, however, be responsible for any Claim, which
is finally judicially determined to have resulted from the gross negligence or willful misconduct
of any person seeking indemnification for such Claim. The Company further agrees that no
Indemnified Person shall have any liability to the Company for or in connection with the Company’s
engagement of Rodman except for any Claim incurred by the Company as a result of such Indemnified
Person’s gross negligence or willful misconduct.

          2. The Company further agrees that it will not, without the prior written consent of Rodman,
settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in
respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is
an actual or potential party to such Claim), unless such settlement, compromise or consent includes
an unconditional, irrevocable release of each Indemnified Person from any and all liability arising
out of such Claim.

          3. Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion
or institution of any Claim with respect to which indemnification is being sought hereunder, such
Indemnified Person shall notify the Company in writing of such complaint or of such assertion or
institution but failure to so notify the Company shall not relieve the Company from any obligation
it may have hereunder, except and only to the extent such failure results in the forfeiture by the
Company of

3

 

substantial rights and defenses. If the Company so elects or is requested by such
Indemnified Person, the Company will assume the defense of such Claim, including the employment of
counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably
determines that having common counsel would present such counsel with a conflict of interest or if
the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and
legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to those available to
the Company, then such Indemnified Person may employ its own separate counsel to represent or
defend him, her or it in any such Claim and the Company shall pay the reasonable fees and expenses
of such counsel. Notwithstanding anything herein to the contrary, if the Company fails timely or
diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified
Party shall have the right, but not the obligation, to defend, contest, compromise, settle, assert
crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified
by the Company therefor, including without limitation, for the reasonable fees and expenses of its
counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof. In
addition, with respect to any Claim in which the Company assumes the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain his, her or its own counsel
therefor at his, her or its own expense.

          4. Rodman agrees that it will indemnify and hold harmless the Company and each of its
directors and officers, against any liability or loss whatsoever (including, but not limited to,
any and all legal fees and other expenses) to which the Company or any such director or officer may
be subject solely as a result of statements made in the Company’s disclosure documents based solely
upon information supplied by Rodman to the Company in writing or based upon the gross negligence or
willful misconduct of Rodman or any of its employees or agents in acting as placement agent for the
offering and sale hereunder.

          5. The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held
by a court to be unavailable for any reason then (whether or not Rodman is the Indemnified Person),
the Company and Rodman shall contribute to the Claim for which such indemnity is held unavailable
in such proportion as is appropriate to reflect the relative benefits to the Company, on the one
hand, and Rodman on the other, in connection with Rodman’s engagement referred to above, subject to
the limitation that in no event shall the amount of Rodman’s contribution to such Claim exceed the
amount of fees actually received by Rodman from the Company pursuant to Rodman’s engagement. The
Company hereby agrees that the relative benefits to the Company, on the one hand, and Rodman on the
other, with respect to Rodman’s engagement shall be deemed to be in the same proportion as (a) the
total value paid or proposed to be paid or received by the Company or its stockholders as the case
may be, pursuant to the Offering (whether or not consummated) for which Rodman is engaged to render
services bears to (b) the fee paid or proposed to be paid to Rodman in connection with such
engagement.

          6. The Company’s indemnity, reimbursement and contribution obligations under this Agreement
(a) shall be in addition to, and shall in no way limit or otherwise adversely affect any rights
that any Indemnified Party may have at law or at equity and (b) shall be effective whether or
not the Company is at fault in any way.

     J. Limitation of Engagement to the Company. The Company acknowledges that Rodman has
been retained only by the Company, that Rodman is providing services hereunder as an independent
contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of
Rodman

4

 

is not deemed to be on behalf of, and is not intended to confer rights upon, any
shareholder, owner or partner of the Company or any other person not a party hereto as against
Rodman or any of its affiliates, or any of its or their respective officers, directors, controlling
persons (within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act
of 1934), employees or agents. Unless otherwise expressly agreed in writing by Rodman, no one
other than the Company is authorized to rely upon this Agreement or any other statements or conduct
of Rodman, and no one other than the Company is intended to be a beneficiary of this Agreement.
The Company acknowledges that any recommendation or advice, written or oral, given by Rodman to the
Company in connection with Rodman’s engagement is intended solely for the benefit and use of the
Company’s management and directors in considering a possible Offering, and any such recommendation
or advice is not on behalf of, and shall not confer any rights or remedies upon, any other person
or be used or relied upon for any other purpose. Rodman shall not have the authority to make any
commitment binding on the Company. The Company, in its sole discretion, shall have the right to
reject any investor introduced to it by Rodman.

     K. Limitation of Rodman’s Liability to the Company. Rodman and the Company further
agree that neither Rodman nor any of its affiliates or any of its their respective officers,
directors, controlling persons (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act of 1934), employees or agents shall have any liability to the Company, its security
holders or creditors, or any person asserting claims on behalf of or in the right of the Company
(whether direct or indirect, in contract, tort, for an act of negligence or otherwise) for any
losses, fees, damages, liabilities, costs, expenses or equitable relief arising out of or relating
to this Agreement or the Services rendered hereunder, except for losses, fees, damages,
liabilities, costs or expenses that arise out of or are based on any action of or failure to act by
Rodman and that are finally judicially determined to have resulted solely from the gross negligence
or willful misconduct of Rodman.

     L. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be fully performed
therein. Any disputes which arise under this Agreement, even after the termination of this
Agreement, will be heard only in the state or federal courts located in the City of New York, State
of New York. The parties hereto expressly agree to submit themselves to the jurisdiction of the
foregoing courts in the City of New York, State of New York. The parties hereto expressly waive
any rights they may have to contest the jurisdiction, venue or authority of any court sitting in
the City and State of New York. In the event of the bringing of any action, or suit by a party
hereto against the other party hereto, arising out of or relating to this Agreement, the party in
whose favor the final judgment or award shall be entered shall be entitled to have and recover from
the other party the costs and expenses incurred in connection therewith, including its reasonable
attorneys’ fees.

M. Notices. All notices hereunder will be in writing and sent by certified mail, hand
delivery, overnight delivery or telefax, if sent to Rodman, to Rodman & Renshaw, LLC, 1270 Avenue
of the Americas, 16th Floor, New York, NY 10020, Attention: Thomas Pinou, Telefax number (212)
356-0536, with a copy to Morse Zelnik Rose & Lander, LLP, 405 Park Avenue New York, NY 100022,
Telefax number (212) 838-9190, Attention: Kenneth Rose, Esq., and if sent to the Company, will be
mailed, delivered or telefaxed and confirmed to Global Employment Solutions, Inc., 9090 Ridgeline
Blvd., Suite 205 Littleton CO 80129, Telefax number, Attention: Mr. Howard Brill, Chief Executive Officer with a
copy to Brownstein Hyatt & Farber P.C.,410 17th Street, Denver, CO 80202, Telefax
number (303) 223-1111, Attention: Jeff Knetsch, Esq. Notices sent by certified mail shall be
deemed received five days thereafter, notices sent by hand delivery or overnight delivery shall be
deemed received on the date of the relevant written record of receipt, and notices delivered by
telefax shall be deemed received as of the date and time printed thereon by the telefax machine.

5

 

     N. Miscellaneous. This Agreement shall not be modified or amended except in writing
signed by Rodman and the Company. This Agreement shall be binding upon and inure to the benefit of
both Rodman and the Company and their respective assigns, successors, and legal representatives.
This Agreement constitutes the entire agreement of Rodman and the Company with respect to the
subject matter hereof and supersedes any prior agreements. If any provision of this Agreement is
determined to be invalid or unenforceable in any respect, such determination will not affect such
provision in any other respect, and the remainder of the Agreement shall remain in full force and
effect. This Agreement may be executed in counterparts (including facsimile counterparts), each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

* The next page is the signature page. *

6

 

     In acknowledgment that the foregoing correctly sets forth the understanding reached by Rodman
and the Company, please sign in the space provided below, whereupon this letter shall constitute a
binding Agreement as of the date indicated above.

Very truly yours,

RODMAN & RENSHAW, LLC

By ___/s/ John Borer ___

Name: John J. Borer III

Title: Senior Managing Director

Accepted and Agreed:

Global Employment Solutions, Inc.

By ___/s/ Howard Brill___

Name: Howard Brill

Title: Chief Executive Officer

7

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