Document:

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                                                                    EXHIBIT 10.1

                       CLEAR CHANNEL COMMUNICATIONS, INC.

                                      AND

                    THE BANK OF NEW YORK TRUST COMPANY, N.A.

                                   as Trustee

                                   ----------

                        TWENTIETH SUPPLEMENTAL INDENTURE

                           Dated as of March 21, 2006

                                       TO

                                SENIOR INDENTURE

                          Dated as of October 1, 1997

                                   ----------

                          6.25% Senior Notes due 2011

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                                                                               2

          Twentieth Supplemental Indenture, dated as of the 21st day of March
2006 (this "Twentieth Supplemental Indenture"), between Clear Channel
Communications, Inc., a corporation duly organized and existing under the laws
of the State of Texas (hereinafter sometimes referred to as the "Company") and
The Bank of New York Trust Company, N.A., a national association organized under
the laws of the United States, as trustee (hereinafter sometimes referred to as
the "Trustee") under the Indenture dated as of October 1, 1997, between the
Company and the The Bank of New York, an affiliate of the Trustee and the former
trustee of the Company (the "Indenture"); as set forth in Section 5.01 hereto
and except as otherwise set forth herein, all terms used and not defined herein
are used as defined in the Indenture.

          WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its Securities, to be issued from
time to time in series as might be determined by the Company under the
Indenture, in an unlimited aggregate principal amount which may be authenticated
and delivered thereunder as in the Indenture provided;

          WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its 6.25% Senior Notes due 2011 (said series being hereinafter referred to as
the "Notes"), the form of such Notes and the terms, provisions and conditions
thereof to be as provided in the Indenture and this Twentieth Supplemental
Indenture;

          WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of this Twentieth Supplemental Indenture,
and all requirements necessary to make this Twentieth Supplemental Indenture a
valid instrument, enforceable in accordance with its terms, and to make the
Notes, when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company have been performed and fulfilled,
and the execution and delivery of this Supplemental Indenture and the Notes have
been in all respects duly authorized.

          NOW, THEREFORE, in consideration of the purchase and acceptance of the
Notes by the holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form of the Notes and the terms, provisions and conditions
thereof, the Company covenants and agrees with the Trustee as follows:

                                   ARTICLE I

                    General Terms and Conditions of the Notes

          SECTION 1.01. (a) There shall be and is hereby authorized a series of
Securities designated the "6.25% Senior Notes due 2011", initially limited in
aggregate principal amount to $500,000,000. Without the consent of the Holders
of the Notes, the aggregate principal amount of the Notes, Notes may be
increased in the future, on the same terms and conditions and with the same
CUSIP number as the Notes. The Notes shall mature and the principal thereof
shall be due and payable, together with all accrued and unpaid interest thereon
on March 15, 2011.

          SECTION 1.02. The Notes shall be initially issued as Global
Securities. Principal and interest on the Notes issued in certificated form will
be payable, the transfer of such Notes will be registrable and such Notes will
be exchangeable for Notes, bearing identical terms and provisions at the office
or agency of the Company in the Borough of Manhattan, The City and State of New
York provided for that purpose and transfers of the Notes will also be
registrable at any of the Company's other offices or agencies as the Company may
maintain for

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                                                                               3

that purpose; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered holder at such address
as shall appear in the Security Register and that the payment of principal with
respect to the Notes will only be made upon surrender of the applicable Notes to
the Trustee.

          SECTION 1.03. Each Note will bear interest at the rate of 6.25% per
annum from March 21, 2006 until the principal thereof becomes due and payable,
payable (subject to the provisions of Article II) semi-annually in arrears on
September 15 and March 15 of each year (each, an "Interest Payment Date",
commencing on September 15, 2006), to the person in whose name such Note (or one
or more Predecessor Securities) are registered at the close of business on the
Regular Record Date for such interest installment, which, except as set forth
below, shall be September 1 or March 1 next preceding the Interest Payment Date
with respect to such interest installment. Any installment of interest not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holder of Notes on such Regular Record Date and may be paid to the
person in whose name such Notes (or one or more Predecessor Securities) are
registered at the close of business on a Special Record Date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof to be given
to the registered holders of the Notes, as applicable, not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.

          The amount of interest payable for any period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. In the event that
any date on which interest is payable on the Notes is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay).

          SECTION 1.04. The Notes are not entitled to any sinking fund.

          SECTION 1.05. Section 101 of the Indenture is hereby amended, solely
with respect to the Notes, by amending and restating the definition of
"Principal Property" as follows: "Principal Property" means any radio
broadcasting, television broadcasting or outdoor advertising property located in
the United States owned or leased by the Company or any Subsidiary, unless, in
the opinion of the Board of Directors of the Company, such properties are not in
the aggregate of material importance to the total business conducted by the
Company and its Subsidiaries as an entirety.

                                   ARTICLE II

                        Optional Redemption of the Notes

          SECTION 2.01. The Notes will be redeemable as a whole at any time or
in part from time to time, at the option of the Company, at a redemption price
equal to the greater of (i) 100% of the principal amount of such Notes and (ii)
the sum of the present values of the remaining scheduled payments of principal
and interest thereon from the redemption date to March 15, 2011, discounted to
the redemption date on a semiannual basis (assuming a 360 day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below) plus 25 basis
points, plus, in either case, any interest accrued but not paid to the date of
redemption. Notice of any redemption will be mailed at least 30 days but no more
than 60 days before the redemption date to each holder of the Notes to be
redeemed. Unless the Company defaults in payment of the

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                                                                               4

redemption price, on and after the redemption date interest will cease to accrue
on the Notes or portions thereof called for redemption. The Notes will not be
subject to any sinking fund provision.

          "Treasury Rate" means, with respect to any redemption date for the
Notes, (i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the maturity date, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month), or
(ii) if such release referred to in clause (i) (or any successor release) is not
published during the week preceding the calculation date or does not contain the
yields referred to above, the rate per year equal to the semiannual equivalent
yield maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date. The
Treasury Rate shall be calculated on the third Business Day preceding the
redemption date.

          "Comparable Treasury Issue" means the United States Treasury security
selected by an "Independent Investment Banker" as having a maturity comparable
to the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.

          "Independent Investment Banker" means, with respect to any redemption
date for the Notes, Banc of America Securities LLC and its successors or, if
such firm or any successor to such firm, as the case may be, is unwilling or
unable to select the Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the Trustee after
consultation with the Company.

          "Comparable Treasury Price" means, with respect to any redemption date
for the Notes, (i) the average of four Reference Treasury Dealer Quotations (as
defined below) for the redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all such
quotations obtained.

          "Reference Treasury Dealer" means Banc of America Securities LLC and
three other primary U.S. Government securities dealers in the United States
(each, a "Primary Treasury Dealer") appointed by the Trustee in consultation
with the Company. If any of the foregoing shall cease to be a Primary Treasury
Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

          "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
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                                                                               5

                                  ARTICLE III

                                  Form of Notes

          SECTION 3.01. The Notes and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

          THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE
HEREINAFTER REFERENCED. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

                       CLEAR CHANNEL COMMUNICATIONS, INC.
                      6.25% SENIOR NOTE DUE MARCH 15, 2011

REGISTERED                                                              $[_____]

NO. R-[_____]                                                      CUSIP [_____]

                                                                    ISIN [_____]

          CLEAR CHANNEL COMMUNICATIONS, INC., a corporation duly organized and
existing under the laws of the State of Texas (herein called the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to

                                   Cede & Co.

or registered assigns, the principal sum of $[ ] at the office or agency of the
Company in the Borough of Manhattan, The City of New York, on March 15, 2011 in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest on said principal sum semiannually on March 15 and September 15 of each
year, commencing September 15, 2006 (each an "Interest Payment Date"), at said
office or agency, in like coin or currency, at the rate per annum specified in
the title hereof, from March 15 and September 15, as the case may be, next
preceding the date of this Note to which interest on the Notes has been paid or
duly provided for (unless the date hereof is

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                                                                               6

the date to which interest on the Notes has been paid or duly provided for, in
which case from the date of this Note), or if no interest has been paid on the
Notes or duly provided for, from March 21, 2006 until payment of said principal
sum has been made or duly provided for.

Notwithstanding the foregoing, if the date hereof is after the 1st day of any
March or September and before the next succeeding September March 15 and
September 15, this Note shall bear interest from such March 15 or September 15,
as the case may be; provided, however, that if the Company shall default in the
payment of interest due on such March 15 or September 15, then this Note shall
bear interest from the next preceding March 15 or September 15 to which interest
on the Notes has been paid or duly provided for, or, if no interest has been
paid on the Notes or duly provided for, from March 21, 2006. The interest so
payable, and punctually paid or duly provided for, on any March 15 or September
15 will, except as provided in the Indenture dated as of October 1, 1997, as
supplemented to the date of this Note (herein called the "Indenture"), duly
executed and delivered by the Company and The Bank of New York Trust Company,
N.A., as Trustee (herein called the "Trustee"), be paid to the Person in whose
name this Note (or one or more Predecessor Securities) is registered at the
close of business on the next preceding March 1 or September 1, as the case may
be (herein called the "Regular Record Date"), whether or not a Business Day, and
may, at the option of the Company, be paid by check mailed to the registered
address of such Person. Any such interest which is payable, but is not so
punctually paid or duly provided for, shall forthwith cease to be payable to the
registered Holder on such Regular Record Date and may be paid either to the
Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of the Notes not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed and upon such notice as may be required by such exchange, if such manner
of payment shall be deemed practical by the Trustee, all as more fully provided
in the Indenture. Notwithstanding the foregoing, in the case of interest payable
at Stated Maturity, such interest shall be paid to the same Person to whom the
principal hereof is payable. Interest on the Notes will be computed on the basis
of a 360-day year consisting of twelve 30-day months.

          The Bank of New York Trust Company, N.A. will be the Paying Agent and
the Security Registrar with respect to the Notes. The Company reserves the right
at any time to vary or terminate the appointment of any Paying Agent or Security
Registrar, to appoint additional or other Paying Agents and other Security
Registrars which may include the Company, and to approve any change in the
office through which any Paying Agent or Security Registrar acts; provided that
there will at all times be a Paying Agent in The City of New York and there will
be no more than one Security Registrar for the Notes.

          This Note is one of the duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness (hereinafter called the "Securities")
of the Company, of the series hereinafter specified, all issued or to be issued
under and pursuant to the Indenture, to which Indenture and any other indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee and any agent of the Trustee, any Paying Agent, the Company and the
Holders of the Securities and the terms upon which the Securities are issued and
are to be authenticated and delivered.

          The Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions (if any), may be subject
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                                                                               7

to different covenants and Events of Default and may otherwise vary as provided
or permitted in the Indenture. This Note is one of the series of Securities of
the Company issued pursuant to the Indenture and designated as the 6.25% Senior
Notes due March 15, 2011 (herein called the "Notes").

          The Notes will be redeemable as a whole at any time or in part from
time to time, at the option of the Company, at a redemption price equal to the
greater of (i) 100% of the principal amount of such Notes and (ii) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon from the redemption date to March 15, 2011, discounted to the redemption
date on a semiannual basis (assuming a 360 day year consisting of twelve 30-day
months) at the Treasury Rate (as defined below) plus 25 basis points, plus, in
either case, any interest accrued but not paid to the date of redemption. Notice
of any redemption will be mailed at least 30 days but no more than 60 days
before the redemption date to each holder of the Notes to be redeemed. Unless
the Company defaults in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the Notes or portions thereof
called for redemption. The Notes will not be subject to any sinking fund
provision.

          "Treasury Rate" means, with respect to any redemption date for the
Notes, (i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the maturity date, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month), or
(ii) if such release referred to in clause (i) (or any successor release) is not
published during the week preceding the calculation date or does not contain the
yields referred to above, the rate per year equal to the semiannual equivalent
yield maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date. The
Treasury Rate shall be calculated on the third Business Day preceding the
redemption date.

          "Comparable Treasury Issue" means the United States Treasury security
selected by an "Independent Investment Banker" as having a maturity comparable
to the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.

          "Independent Investment Banker" means, with respect to any redemption
date for the Notes, Banc of America Securities LLC and its successors or, if
such firm or any successor to such firm, as the case may be, is unwilling or
unable to select the Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the Trustee after
consultation with the Company.

          "Comparable Treasury Price" means, with respect to any redemption date
for the Notes, (i) the average of four Reference Treasury Dealer Quotations (as
defined below) for the redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all such
quotations obtained.

<PAGE>

                                                                               8

          "Reference Treasury Dealer" means Banc of America Securities LLC and
three other primary U.S. government securities dealers in the United States
(each, a "Primary Treasury Dealer") appointed by the Trustee in consultation
with the Company. If any of the foregoing shall cease to be a Primary Treasury
Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

          "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.

          If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of all of the Notes may be declared due and payable in
the manner, with the effect and subject to the conditions provided in the
Indenture.

          The Indenture permits, with certain exceptions as therein provided,
the Company and the Trustee to enter into supplemental indentures to the
Indenture for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of modifying in any
manner the rights of the Holders of the Securities of each series under the
Indenture with the consent of the Holders of not less than a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected thereby on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults and their consequences with respect to such series under
the Indenture. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
here for or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note or such other Notes.

          No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, rate and respective times and in the coin or currency herein and in
the Indenture prescribed.

          As provided in the Indenture and subject to the satisfaction of
certain conditions therein set forth, including the deposit of certain trust
funds in trust, the Company shall be deemed to have paid and discharged the
entire indebtedness represented by, and the obligations under, the Securities of
any series and to have satisfied all the obligations (with certain exceptions)
under the Indenture relating to the Securities of such series.

          The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. Notes may be
exchanged for a like aggregate principal amount of Notes of other authorized
denominations at the office or agency of the Company in the Borough of
Manhattan, The City of New York, designated for such purpose or at any of the
Company's other offices or agencies as the Company may maintain for such purpose
and in the manner and subject to the limitations provided in the Indenture.

          Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York designated for such purpose or at any of the Company's other offices or
agencies as the Company may maintain for such purpose, a new Note or Notes of
authorized denominations for a like aggregate principal

<PAGE>

                                                                               9

amount will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Indenture.

          No charge shall be made for any such transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.

          The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note is overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.

          Unless otherwise defined herein, all terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.

          This Note shall be construed in accordance with and governed by the
laws of the State of New York.

          Unless the certificate of authentication hereon has been manually
executed by or on behalf of the Trustee under the Indenture, this Note shall not
be entitled to any benefits under the Indenture, or be valid or obligatory for
any purpose.

<PAGE>

                                                                              10

               IN WITNESS WHEREOF, CLEAR CHANNEL COMMUNICATIONS, INC. has caused
this Note to be duly executed.

                                        CLEAR CHANNEL COMMUNICATIONS INC.

                                        By:
                                            ------------------------------------
                                            Randall T. Mays
                                            President and Chief Financial
                                            Officer and Secretary

[Company Seal]                          Attest:
                                                --------------------------------
                                                Hamlet Newsom
                                                Assistant Secretary

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

               This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

                                        THE BANK OF NEW YORK TRUST COMPANY,
                                        N.A., as Trustee,

Dated:                                  by
       ------------------------------      -------------------------------------
                                           Authorized Signatory
<PAGE>

                                                                              11

                                  ABBREVIATIONS

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

     TEN COM--as tenants in common

     TEN ENT--as tenants by the entireties

     JT TEN-as joint tenants with right of survivorship and not as tenants in
     common

     UNIF GIFT MIN ACT-- ________ Custodian ___________
                          (Cust)              (Minor)

                         Under Uniform Gifts to Minors Act

                         _________________________________
                                      (State)

                    Additional abbreviations may also be used
                          though not in the above list.

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s), and
transfer(s) unto

_____________________________________

: __________________________________ :

: ______________________ :

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE:

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE:
________________________________________________________________________________

<PAGE>

                                                                              12

______________________________________________________ the within Note and all
rights thereunder, hereby irrevocably constituting and appointing
____________________________________________________ attorney to transfer said
Note on the books of the Company, with full power of substitution in the
premises.

Dated:
       ------------------------------   ----------------------------------------
                                        Signature Guaranty

-------------------------------------
              Signature                 Signatures must be guaranteed by an
                                        "eligible guarantor institution" meeting
(Signature must correspond with the     the requirements of the Registrar, which
name as written upon the face of the    requirements include membership or
within instrument in every              participation in the Security Transfer
particular, without alteration or       Agent Medallion Program ("STAMP") or
enlargement or any change whatever.)    such other "signature guarantee program"
                                        as may be determined by the Registrar in
                                        addition to, or in substitution for,
                                        STAMP, all in accordance with the
                                        Securities Exchange Act of 1934, as
                                        amended.

<PAGE>

                                                                              13

                                   ARTICLE IV

                             Original Issue of Notes

          SECTION 4.01. Notes in the aggregate principal amount equal to
$500,000,000 may, upon execution of this Twentieth Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said Notes
to or upon a Company Order.

                                    ARTICLE V

                            Miscellaneous Provisions

          SECTION 5.01. Except as otherwise expressly provided in this Twentieth
Supplemental Indenture or in the forms of the Notes or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said
forms of the Notes that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.

          SECTION 5.02. The Indenture, as supplemented by this Twentieth
Supplemental Indenture, is in all respects ratified and confirmed. This
Twentieth Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.

          SECTION 5.03. The recitals herein contained are made by the Company
and not by the Trustee, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representation as to the validity or
sufficiency of this Twentieth Supplemental Indenture.

          SECTION 5.04. This Twentieth Supplemental Indenture may be executed in
any number of counterparts each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

<PAGE>

                                                                              14

          IN WITNESS WHEREOF, the parties hereto have caused this Twentieth
Supplemental Indenture to be duly executed as of the day and year first above
written.

                                        CLEAR CHANNEL COMMUNICATIONS, INC.

                                        By /s/ Randall T. Mays
                                           -------------------------------------
                                        Name: Randall T. Mays
                                        Title: President and Chief Financial
                                               Officer and Secretary

                                        THE BANK OF NEW YORK TRUST COMPANY,
                                        N.A., as Trustee,

                                        By /s/ John Stohlmann
                                           -------------------------------------
                                        Name: John C. Stohlmann
                                        Title: Vice Presidentexv10w1

 

Exhibit
10. 1

	 	 	 	 	 	 	 
	DATED	 	 	 	2006
	 
	 
	 

	 	PIR TRADING, INC.
	 	 	(1	)
	 
	 	 	 	 	 	 
	 

	 	and	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	PIER 1 IMPORTS (U.S.), INC.
	 	 	(2	)
	 
	 	 	 	 	 	 
	 

	 	and	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	PALLI LIMITED
	 	 	(3	)
	 
	 	 	 	 	 	 
	 

	 	and	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	LAGERINN EHF
	 	 	(4	)
	 
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	AGREEMENT	 	 	 	 
	 

	 	for the sale and purchase of the entire issued share capital of	 	 	 	 
	 

	 	The Pier Retail Group Limited	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 

Heatons llp

Manchester

Tel: 0161 835 8010

Fax: 0161 835 8015

LAG3.1

 

 

CONTENTS

	 	 	 	 	 	 	 
	1	 	DEFINITIONS AND INTERPRETATION
	 	 	1	 
	2	 	SALE AND PURCHASE OF THE SHARES AND ASSIGNMENT OF INTERCOMPANY DEBT
	 	 	6	 
	3	 	CONSIDERATION
	 	 	7	 
	4	 	COMPLETION
	 	 	7	 
	5	 	2006 AUDITED ACCOUNTS
	 	 	10	 
	6	 	WARRANTIES
	 	 	10	 
	7	 	LIMITATION OF DEBT SELLER’S LIABILITY AND SELLER’S LIABILITY
	 	 	12	 
	8	 	PURCHASER’S AND PURCHASER’S GUARANTOR’S WARRANTIES AND PURCHASER’S GUARANTEE
	 	 	16	 
	9	 	RESTRICTIVE COVENANTS
	 	 	17	 
	10	 	ANNOUNCEMENTS AND CONFIDENTIALITY
	 	 	18	 
	11	 	FURTHER ASSURANCE
	 	 	19	 
	12	 	ASSIGNMENT
	 	 	20	 
	13	 	ENTIRE AGREEMENT
	 	 	20	 
	14	 	WAIVER, RIGHTS AND RELEASE
	 	 	20	 
	15	 	VARIATION
	 	 	21	 
	16	 	COSTS AND EXPENSES
	 	 	21	 
	17	 	SET OFF
	 	 	21	 
	18	 	NOTICES
	 	 	21	 
	19	 	COUNTERPARTS, LANGUAGE, INVALIDITY, COMPLETION
	 	 	22	 
	20	 	THIRD PARTY RIGHTS
	 	 	22	 
	21	 	GOVERNING LAW AND JURISDICTION
	 	 	22	 

SCHEDULES

	 	 	 	 	 	 	 
	1.	 	The Group
	 	 	24	 
	2.	 	Properties
	 	 	28	 
	3.	 	Registered Intellectual Property Rights
	 	 	36	 
	4.	 	The Warranties
	 	 	37	 
	5.	 	Completion Requirements
	 	 	48	 

AGREED FORM DOCUMENTS

	 	 	 
	1.	 	Accounts (included in the Disclosure Letter)

	2.	 	2006 Financial Statements

	3.	 	Co-existence Agreement

	4.	 	Deed of Assignment

	5.	 	Deed of Release

	6.	 	Debt Confirmation Deed

	7.	 	Index of Data Room Documents

	8.	 	Tax Deed

	9.	 	Director’s resignation letter

	10.	 	Press Release

	11.	 	Cover page of bundle to the Disclosure Letter

 

 

THIS AGREEMENT is dated                                                                                                                                                                                   2006

BETWEEN:

	(1)	 	PIR TRADING, INC. whose principal place of trading is at 100 Pier 1 Place, Fort Worth, Texas
76102, United States of America (the “Seller”);
	 
	(2)	 	PIER 1 IMPORTS (U.S.), INC. whose principal place of trading is at 100 Pier 1 Place, Fort
Worth, Texas 76102, United States of America (the “Debt Seller”);
	 
	(3)	 	PALLI LIMITED (registered number 5508898) whose registered office is at 4th Floor,
43-44 New Bond Street, London W1S 2SA (the “Purchaser”); and
	 
	(4)	 	LAGERINN EHF (registered in Iceland with the Register of Enterprises under 480793 – 2699)
whose registered office is situated at Sundaborg 7, 104 Reykjavik, Iceland (the “Purchaser’s
Guarantor”).

BACKGROUND

	(A)	 	The Company has an authorised share capital of £8,731,111 made up of 611,111 ordinary shares
of £1 each and 8,120,000 preference shares of £1 each, all of which are issued and fully paid
or credited as fully paid (the “Shares”).
	 
	(B)	 	Further particulars of the Company and its Subsidiaries at the date of this Agreement are set
out in Schedule 1.
	 
	(C)	 	The Seller has agreed to sell the Shares to the Purchaser and the Purchaser has agreed to
purchase the Shares on the terms of this Agreement.
	 
	(D)	 	The Debt Seller has agreed to sell the Intercompany Debt to the Purchaser and the Purchaser
has agreed to purchase the Intercompany Debt on the terms of this Agreement.
	 
	(E)	 	The Purchaser’s Guarantor is willing to guarantee the obligations of the Purchaser under this
Agreement and the other Transaction Documents.

IT IS AGREED AS FOLLOWS:

	1	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	In this Agreement the following words and expressions shall have the following meaning:

	 	 	 
	“2006 Audited Accounts”

	 	has the meaning set out in clause 5.2;
	 
	 	 
	“2006 Financial
Statements”

	 	means the draft financial statements of the Company
as at 25 February 2006 in the Agreed Form;
	 
	 	 
	“Accounts”

	 	the audited consolidated balance sheet of the Group
as at the Accounts Date and the audited
consolidated profit and loss account for the year
ended on that date for the Group including the
notes and directors’ report relating to them, a
copy of which is included in the

 

 

	 	 	 
	 

	 	Disclosure
Documents;
	 
	 	 
	“Accounts Date”

	 	26.02.05;
	 
	 	 
	“Accounting Standards”

	 	statements of standard accounting practice
(including financial reporting standards) adopted
or issued by the ASB;
	 
	 	 
	“Agreement”

	 	this Agreement including its recitals and the
schedules but not the Tax Deed;
	 
	 	 
	“Agreed Form”

	 	agreed and initialled by, or on behalf of, the
Seller and the Purchaser;
	 
	 	 
	“ASB”

	 	The Accounting Standards Board;
	 
	 	 
	“Auditors”

	 	Ernst & Young LLP, Apex Plaza, Reading, Berkshire
RG1 1YE;
	 
	 	 
	“Business Day”

	 	any day except a Saturday or Sunday on which banks
are generally open in London, New York and Fort
Worth for normal business;
	 
	 	 
	“Co-existence Agreement”

	 	the agreement of the same date as this Agreement
concerning brand co-existence in the Agreed Form;
	 
	 	 
	“Company”

	 	The Pier Retail Group Limited a company
incorporated and registered in England and Wales
with company number 2650000 whose registered office
is at 9-12 North Central 127 Milton Park, Abingdon,
Oxfordshire, OX14 4SA;
	 
	 	 
	“Completion”

	 	completion of the sale and purchase of the Shares
and assignment of the Intercompany Debt pursuant to
this Agreement;
	 
	 	 
	“Completion Date”

	 	the date of this Agreement;
	 
	 	 
	“Concession Properties”

	 	means those properties the subject of concession
agreements as briefly described in Part 2 of
Schedule 2;
	 
	 	 
	“Data Room Documents”

	 	the documents and information made available to the
Purchaser and/or its advisers in the data room
provided by IntraLinks prior to the signing of this
Agreement as referred to in the data room index in
the Agreed Form, which is annexed to the Disclosure
Letter;

2

 

	 	 	 
	“Debt Confirmation Deed”

	 	the debt confirmation deed in the Agreed Form
between the Debt Seller and certain of the Group
Companies;
	 
	 	 
	“Deed of Assignment”

	 	the deed of assignment in relation to the
Intercompany Debt, in the Agreed Form;
	 
	 	 
	“Deed of Release”

	 	the deed of release between the Debt Seller and
certain of the Group Companies in the Agreed Form;
	 
	 	 
	“Directors”

	 	the directors named in Schedule 1;
	 
	 	 
	“Disclosed”

	 	fairly disclosed to the Purchaser in any of the
Disclosure Documents;
	 
	 	 
	“Disclosure Documents”

	 	the Disclosure Letter (including the two identical
bundles of documents collated by or on behalf of
the Seller, the outside covers of each of which
have been signed for identification by or on behalf
of the Seller and the Purchaser) and the Data Room
Documents;
	 
	 	 
	“Disclosure Letter”

	 	the letter of the same date as this Agreement from
the Seller to the Purchaser;
	 
	 	 
	“Encumbrance”

	 	any (other than by virtue of this Agreement) right
to acquire, option, right of pre-emption, mortgage,
charge, pledge, lien, or other form of security or
encumbrance or security agreement and any agreement
to create any of the foregoing;
	 
	 	 
	“GAAP”

	 	generally accepted accounting principles and
practices in the United Kingdom including all
Accounting Standards, Financial Reporting Standards
and abstracts of the Urgent Issues Task Force of
the ASB;
	 
	 	 
	“Group”

	 	together the Company and the Subsidiaries and
“Group Company” shall be a reference to the Company
or any of the Subsidiaries as the case may be;
	 
	 	 
	“Indebtedness”

	 	in relation to the Group, all borrowings and
indebtedness in the nature of debt but excluding
trade creditors arising in the ordinary course of
business and off balance sheet finance
arrangements, lease purchase arrangement, contract
hire and/or hire purchase arrangements;
	 
	 	 
	“Intellectual Property

Rights”

	 	has the meaning given in paragraph 21 of Part 1 of
Schedule 4;
	 
	 	 
	“Intercompany Debt”

	 	the amount stipulated in the Deed of Assignment
owing by the Company to the Debt Seller immediately
prior to Completion being the aggregate amount of
all

3

 

	 	 	 
	 

	 	Indebtedness of whatever nature owing by the
Group Companies to the Debt Seller, immediately
prior to Completion;
	 
	 	 
	“Intercompany Debt
Consideration”

	 	the Provisional Intercompany Debt Consideration
after adjustment (if any) pursuant to clause 5;
	 
	 	 
	“Pension Schemes”

	 	agreements for the payment of any pensions,
allowances, lump sums or other like benefits on
retirement for the benefit of any present or former
director, officer or employee of the Group or for
the benefit of the dependents of any such persons;
	 
	 	 
	“Prohibited Area”

	 	the United Kingdom;
	 
	 	 
	“Properties”

	 	has the meaning given in paragraph 13 of Part 1 of
Schedule 4;
	 
	 	 
	“Provisional Cash

Consideration”

	 	the sum of £8,540,196 payable in cash on Completion
pursuant to clause 3;
	 
	 	 
	“Provisional

Intercompany Debt

Consideration”

	 	£8,540,195;
	 
	 	 
	"Purchaser’s Group”

	 	the Purchaser, all its subsidiary undertakings and
parent undertakings and all the other subsidiary
undertakings of each of its parent undertakings
(other than the Group Companies) at the relevant
time;
	 
	 	 
	“Purchaser’s Solicitors”

	 	Heatons LLP of Freetrade Exchange, 37 Peter Street,
Manchester, M2 5GB;
	 
	 	 
	“Seller’s Group”

	 	Pier 1 Imports, Inc. and all its subsidiary
undertakings (other than the Group Companies) at
the relevant time;
	 
	 	 
	“Seller’s Solicitors”

	 	Allen & Overy LLP of One New Change, London, EC4M
9QQ;
	 
	 	 
	“Subsidiary”

	 	a subsidiary of the Company details of which are
set out in Part 2 of Schedule 1 and “Subsidiaries”
shall be construed accordingly;
	 
	“Tax”

	 	(a) all forms of taxation and statutory,
governmental, state, federal, provincial, local
government or municipal charges, duties, imposts,
contributions, levies, withholdings or liabilities
in each case having the character of taxation
wherever chargeable and whether of the UK or any
other jurisdiction; and (b) any penalty, fine,
surcharge, interest, charges or costs payable in
connection with any taxation within (a)
above;

4

 

	 	 	 
	“Tax Authority”

	 	HM Revenue & Customs, Department of Social Security
and any other governmental or other authority
whatsoever competent to impose any Tax whether in
the United Kingdom or elsewhere;
	 
	 	 
	“Tax Deed”

	 	the deed of the same date as this Agreement,
containing certain taxation covenants given by the
Seller in the Agreed Form;
	 
	 	 
	“Tax Statute”

	 	any directive, statute, enactment, law or
regulation, wheresoever enacted or issued, coming
into force or entered into providing for or
imposing any Tax (and shall include orders,
regulations, instruments, bye-laws or other
subordinate legislation made under the relevant
statute or statutory provision, and any directive,
statute, enactment, law, order, regulation or
provision which amends, extends, consolidates or
replaces the same or which has been amended,
extended, consolidated or replaced by the same)
except to the extent that any such directive,
statute, enactment, law, regulation, order,
instrument, bye-law, subordinate legislation or
provision made or enacted after the date of this
Agreement would create or increase any liability of
the Seller under this Agreement or the Tax Deed;
	 
	 	 
	“Tax Warranties”

	 	the Warranties set out in Part 2 of Schedule 4;
	 
	 	 
	“Transaction Documents”

	 	this Agreement, the Tax Deed, the Deed of
Assignment, and the Co-existence Agreement;
	 
	 	 
	“UK Companies”

	 	together The Pier Retail Group Limited, The Pier
(Retail) Limited and Pier Direct Limited (and “UK
Company” shall be a reference to any of them as the
case may be);
	 
	 	 
	“Warranties”

	 	the warranties set out in clause 6.1 and Schedule 4;
	 
	 	 
	"Warranty Claim”

	 	a claim by the Purchaser the basis of which is that
a Warranty is, or is alleged to be, untrue or
inaccurate;
	 
	 	 
	“Working Capital

Reference Amount”

	 	£4,689,000.

	1.2	 	The terms “holding company” and “subsidiary” shall have the meaning given to them in sections
736 and 736A of the CA 85.
	 
	1.3	 	The following references shall have the following meanings: “CA 85” means the Companies Act
1985; “CAA” means the Capital Allowances Act 2001;“FSMA 2000” means the Financial Services and
Markets Act 2000; “LPA” means Law of Property (Miscellaneous Provisions) Act 1994; “TA 88”
means Income and Corporation Taxes

5

 

	 	 	Act 1988; “TCGA” means Taxation of Chargeable Gains Act 1992; “TMA” means Taxes
Management Act 1970; “VAT” means Value Added Tax; “VATA” means Value Added Tax Act 1994.
	 
	1.4	 	“Control” in relation to a body corporate, means the power of a person to secure that the
affairs of the body corporate are conducted in accordance with the wishes of that person (a)
by means of the holding of shares, or the possession of voting power, in or in relation to
that or any other body corporate or (b) by virtue of any powers conferred by the
constitutional or corporate documents, or any other document, regulating that or any other
body corporate. A “Change of Control” occurs if a person who Controls any body corporate
ceases to do so or if another person acquires Control of it.
	 
	1.5	 	The table of contents and headings in this Agreement are inserted for convenience only and
shall not affect its construction.
	 
	1.6	 	Expressions in the singular shall include the plural and references to any gender shall
include all other genders.
	 
	1.7	 	References to persons shall include bodies corporate, unincorporated associations and
partnerships.
	 
	1.8	 	References to the word “include” or “including” are to be construed without limitation.
	 
	1.9	 	Except where the context otherwise requires, references to recitals, schedules and clauses
are to recitals and schedules to and clauses of this Agreement. Except where the context
otherwise requires, references within a schedule to paragraphs are to paragraphs of that
schedule.
	 
	1.10	 	References in this Agreement to any statute, statutory provision, EC Directive or treaty
include a reference to that statute, statutory provision, EC Directive or treaty as amended,
extended, consolidated or replaced from time to time (whether before or after the date of this
Agreement) (and includes any subordinate legislation made under the relevant statute,
statutory provision, EC Directive or treaty) except to the extent that any statute, statutory
provision, EC Directive, treaty or subordinate legislation made, enacted, amended, extended,
consolidated or replaced after the date of this Agreement would create or increase any
liability of the Seller or the Debt Seller under this Agreement or the Tax Deed.
	 
	1.11	 	Any reference to writing or written includes faxes and any non-transitory form of visible
reproduction or words (but not e-mail).
	 
	2	 	SALE AND PURCHASE OF THE SHARES AND ASSIGNMENT OF INTERCOMPANY DEBT
	 
	2.1	 	The Seller shall sell the Shares and the Purchaser shall purchase the Shares from the Seller
with all rights attaching to them at the date of this Agreement.
	 
	2.2	 	The Shares are sold to the Purchaser with full title guarantee as defined in the LPA.
	 
	2.3	 	Title to and beneficial ownership of the Shares shall pass to the Purchaser on Completion.
The Purchaser shall be entitled to receive all dividends and distributions declared, paid or
made by the Company on or after the date of this Agreement.

6

 

	2.4	 	The Purchaser shall not be obliged to complete the purchase of any of the Shares unless the
purchase of all of the Shares is completed simultaneously.
	 
	2.5	 	The Seller waives any rights of pre-emption or other restrictions on transfer in respect of
the Shares or any of them conferred on it under the articles of association of the Company or
otherwise.
	 
	2.6	 	The Debt Seller shall assign to the Purchaser the benefit of the Intercompany Debt and the
Purchaser shall accept the assignment of the Intercompany Debt at Completion pursuant to the
Deed of Assignment.
	 
	2.7	 	Without prejudice to the rights of any member of the Seller’s Group under any of the
Transaction Documents, the Deed of Release and/or the Debt Confirmation Deed, the Seller on
behalf of itself and each other member of the Seller’s Group waives all and any claims against
each Group Company which any member of the Seller’s Group may have of whatsoever nature and
which arose prior to the date of this Agreement.
	 
	3	 	CONSIDERATION
	 
	3.1	 	The consideration for the Shares shall be the sum of £1 to be paid to the Seller in cash on
Completion.
	 
	3.2	 	The consideration for the assignment of the Intercompany Debt shall be the Intercompany Debt
Consideration of which the Provisional Intercompany Debt Consideration shall be paid by the
Purchaser to the Debt Seller in accordance with clause 3.3.1.
	 
	3.3	 	The Intercompany Debt Consideration shall be paid by the Purchaser to the Debt Seller as
follows:

	 	3.3.1	 	£8,540,195, being the Provisional Intercompany Debt Consideration,
shall be paid in cash on Completion; and
	 
	 	3.3.2	 	that amount shall be subject to adjustment in accordance with clause
5.

	4	 	COMPLETION
	 
	4.1	 	Completion shall take place at the Seller’s Solicitors’ offices immediately after the
execution and exchange on the Completion Date.
	 
	4.2	 	At Completion:

	 	4.2.1	 	the Seller shall comply with and perform all of its obligations listed
in Schedule 5;
	 
	 	4.2.2	 	the Purchaser shall:-

	 	4.2.2.1	 	pay the Provisional Cash Consideration by way of electronic transfer
to the Seller’s Solicitors who are irrevocably authorised to receive
the same and whose receipt shall be an effective discharge of the
Purchaser’s obligation to pay such sum and the Purchaser shall not be
concerned to see to the application or be answerable for the loss or
misapplication of such sum;

7

 

	 	4.2.2.2	 	deliver to the Seller a copy of the minutes of a meeting of the
directors of the Purchaser authorising the execution by the Purchaser
of this Agreement, the Tax Deed, the Deed of Assignment and the
Co-existence Agreement and a copy of the minutes of the meeting of the
directors of the Purchaser’s Guarantor authorising the execution by the
Purchaser’s Guarantor of this Agreement;
	 
	 	4.2.2.3	 	deliver to the Seller a counterpart of the Tax Deed duly executed as
a deed by the Purchaser;
	 
	 	4.2.2.4	 	deliver to the Seller a counterpart of the Deed of Assignment duly
executed by the Purchaser;
	 
	 	4.2.2.5	 	deliver to the Seller a counterpart of the Co-existence Agreement
duly executed by the Purchaser; and
	 
	 	4.2.2.6	 	deliver to the Seller a counterpart of the Disclosure Letter duly
executed by the Purchaser.

	4.3	 	If on Completion the Seller or the Purchaser fails to comply with any of its obligations
under clause 4.2.1 or 4.2.2 (as applicable) then the other shall not be obliged to complete
this Agreement and may at its absolute discretion:-

	 	4.3.1	 	defer Completion to a date not more than 28 days after the Completion
Date in which case this clause 4.3 shall apply to Completion as so deferred;
	 
	 	4.3.2	 	proceed to Completion so far as practicable and without prejudice to
its rights under the Agreement; or
	 
	 	4.3.3	 	waive all or any of the defaulting party’s obligations under clause
4.2.1 or 4.2.2 (as applicable).

	4.4	 	The Seller shall procure that on Completion each Group Company is released from all
guarantees and indemnities given by that Group Company prior to the date of this Agreement in
respect of any liability or obligation of any member of the Seller’s Group and pending such
release the Seller shall indemnify that Group Company against all liabilities under the
guarantees and indemnities.
	 
	4.5	 	The Purchaser shall procure that as from Completion each member of the Seller’s Group is
released from all guarantees and indemnities which have been given by that member prior to the
date of this Agreement in respect of any liability or obligation of any Group Company, and
pending such release the Purchaser shall indemnify that member of the Seller’s Group against
all liabilities under those guarantees and indemnities.
	 
	4.6	 	Immediately following Completion the Seller shall, without delay send to the Purchaser, all
records, correspondence, documents, files, memoranda and other papers owned by any Group
Company which are in the Seller’s possession or direct control relating to the Group or
operations of the Group which are not kept at any of the Properties, provided that the Seller
shall be entitled to retain copies of any records, documentation and information which the
Seller would be entitled to request in accordance with the provisions of Clause 11.2.

8

 

	4.7	 	Within 10 days following Completion, the Seller will pay to the Purchaser:

	 	4.7.1	 	the amount of any payments due to be paid (before any deductions) to
Alison Richards, John Higgins, Fiona Robinson and Fiona Strang (together, the
“Bonus Employees") (being employees within the Group) by the Seller within 30 days
of Completion in accordance with the bonus letter agreements between the Seller and
each of the Bonus Employees dated 13 March 2006 and referred to in the Disclosure
Letter (the “Payments”); and
	 
	 	4.7.2	 	the amount of secondary Class I National Insurance contributions for
which the relevant Group Company employing each Bonus Employee will be liable as a
result of the Payments (the “Secondary NICs”).

	4.8	 	The Purchaser:

	 	4.8.1	 	within 10 days following receipt of payment from the Seller under
clause 4.7, will discharge the Seller’s liability to the Bonus Employees in respect
of the Payments, as agent of the Seller; and
	 
	 	4.8.2	 	will procure the payment to the relevant tax authority within the
required time period for the Payments (in the case of the amounts referred to in
sub-clause 4.8.2.1 as agent of the Seller), of the amount of:

	 	4.8.2.1	 	any income tax to be deducted under the PAYE system (and the amount
of any primary Class 1 National Insurance contributions payable) in
respect of the Payments; and
	 
	 	4.8.2.2	 	the Secondary NICs.

	4.9	For the avoidance of doubt, the Seller will have no further liability under this Agreement
and/or the Tax Deed or otherwise for any income tax to be deducted under the PAYE system,
primary Class 1 National Insurance contributions or secondary Class 1 National Insurance
contributions due in respect of the Payments.
	 
	4.10	The Seller agrees to indemnify the Purchaser (for itself and as trustee for each Group
Company) from and against any liability, claim, loss or cost (reasonably and properly
incurred) arising out of the exercise of any options granted by Pier 1 Imports, Inc. prior to
the date of this Agreement to any employee of any of the Group Companies over any shares in
Pier 1 Imports, Inc. provided that:

	 	4.10.1	 	the Purchaser shall (and shall procure that the Group Companies) use their
reasonable endeavours following the exercise of any such options to mitigate any
such liability, claim, loss or cost;
	 
	 	4.10.2	 	this indemnity shall not apply to the extent of any income tax under the PAYE
system and primary Class I National Insurance contributions in respect of the
exercise of any such option; and
	 
	 	4.10.3	 	no liability shall attach to the Seller under this clause 4.10 to the extent that
the same loss has been recovered under any other provision of this Agreement or the
Tax Deed (or vice versa) and accordingly, the Purchaser shall only recover once in
respect of the same loss.

9

 

	5	 	2006 AUDITED ACCOUNTS
	 
	5.1	 	As soon possible after Completion, the Purchaser shall procure that:

	 	5.1.1	 	the Company instructs the Auditors to undertake the audit of the 2006
Financial Statements applying the specific accounting principles, policies and
practices applied in the preparation of the Accounts on a basis consistent with the
audit of the Accounts; and
	 
	 	5.1.2	 	following completion of the audit, the board of directors of the
Company shall approve the resulting accounts as the statutory accounts of the
Company as at 25 February 2006 and that any two directors of the Company sign such
accounts.

	5.2	 	The accounts of the Company prepared and signed in accordance with clause 5.1 shall, once the
Auditors have signed their audit report on such accounts, be the “2006 Audited Accounts” and
the amount set out in the consolidated balance sheet included in those accounts as Net Current
Assets as at 25 February 2006 shall be the “Working Capital Amount”.
	 
	5.3	 	The Purchaser shall send a copy of the 2006 Audited Accounts to the Seller within five
Business Days of the audit report on those accounts being signed in accordance with clause
5.2.
	 
	5.4	 	If the Working Capital Amount is greater than the Working Capital Reference Amount, the
Purchaser shall pay an amount equal to that excess to the Debt Seller as an adjustment to the
Provisional Intercompany Debt Consideration. If the Working Capital Amount is less than the
Working Capital Reference Amount, the Debt Seller shall repay an amount equal to that
shortfall to the Purchaser as an adjustment to the Provisional Intercompany Debt
Consideration.
	 
	5.5	 	Any amount payable by the Debt Seller or the Purchaser (as applicable) in accordance with the
provisions of clause 5.4 shall (a) in the case of any amount to be paid by the Purchaser, be
paid within 10 Business Days after the date on which the audit report on the 2006 Audited
Accounts is signed, and (b) in the case of any amount to be repaid by the Debt Seller, be paid
within 10 Business Days following receipt by the Debt Seller of a copy of the 2006 Audited
Accounts from the Purchaser.
	 
	5.6	 	In the case of any amount payable in accordance with the provisions of clause 5.5, any
payment shall be made by the relevant party to the other party’s solicitors (being, the
Purchaser’s Solicitors or the Seller’s Solicitors, as applicable) who are irrevocably
authorised to receive the same and whose receipt shall be an effective discharge of (as
applicable) the Debt Seller’s or the Purchaser’s obligation to pay such amount. Any such
amount shall be paid by electronic transfer in immediately available funds.
	 
	6	 	WARRANTIES
	 
	6.1	 	The Seller warrants to the Purchaser that except as Disclosed each of the statements set out
in Schedule 4 is true and accurate. The Purchaser has entered into this Agreement and the
Deed of Assignment upon the basis of and in reliance upon the Warranties.
	 
	6.2	 	Without prejudice to Clause 13.3 the Purchaser acknowledges and agrees that:

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	 	6.2.1	 	the Warranties are the only representations, warranties or other
assurances of any kind given by or on behalf of the Seller and on which the
Purchaser may rely in entering into this Agreement;
	 
	 	6.2.2	 	no other statement, promise or forecast made by or on behalf of the
Seller may form the basis of, or be pleaded in connection with, any claim by the
Purchaser under or in connection with this Agreement; and
	 
	 	6.2.3	 	it does not have at the date of this Agreement actual knowledge of any
fact which is inconsistent with any of the Warranties or makes any of them untrue
or inaccurate.

	6.3	 	Clause 6.1 shall apply as if:

	 	6.3.1	 	none of the Warranties, other than those set out in sub-paragraphs
3.5, 8.1 and paragraphs 13 and 15 of Schedule 4, relate in any way to the
Properties or any of them;
	 
	 	6.3.2	 	none of the Warranties, other those that set out in sub-paragraphs 3.5
and 8.1, paragraph 15 and the Tax Warranties set out in Part 2 of Schedule 4,
relate in any way to Tax; and
	 
	 	6.3.3	 	none of the Warranties, other than those set out in sub-paragraphs
3.5, 8.1 and paragraph 21 of Schedule 4, relate in any way to any Intellectual
Property Right or any agreement or other arrangement in connection with any
Intellectual Property Right.

	6.4	 	Where any of the Warranties is made or given “so far as the Seller is aware” or “to the best
of the Seller’s knowledge, information or belief” or any similar expression, such Warranty
shall be construed to refer to the actual knowledge of the Seller after making careful enquiry
of Alison Richards and John Higgins and no other person.
	 
	6.5	 	The Seller agrees, in the absence of fraud, dishonesty or wilful concealment by or on behalf
any Group Company or any of its employees or directors, to waive any and all rights or claims
which it might otherwise have in respect of any misrepresentation, inaccuracy or omission in
or from any information or advice supplied by any Group Company or its officers, employees or
agents in connection with the giving of Warranties, the Tax Deed and/or the preparation of the
Disclosure Letter and the Data Room Documents.
	 
	6.6	 	Each of the Warranties shall be separate and independent and save as expressly otherwise
provided shall not be limited by reference to any other Warranty or by anything in this
Agreement or the Tax Deed.
	 
	6.7	 	The rights of the Purchaser in respect of a breach of any of the Warranties shall not be
affected by Completion.
	 
	6.8	 	Notwithstanding any of the other provisions of this Agreement the Warranties and any Warranty
Claim shall be subject to the limitations and other provisions set out in clause 7.
	 
	6.9	 	Any payment made by the Seller in satisfaction of a Warranty Claim or in satisfaction of a
claim by the Purchaser under the Tax Deed shall be deemed to be a reduction in the

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	 	 	Intercompany Debt Consideration.
	 
	7	 	LIMITATION OF DEBT SELLER’S LIABILITY AND SELLER’S LIABILITY
	 
	7.1	 	Notwithstanding any of the other provisions of this Agreement or the Tax Deed, the liability
of the Seller in respect of claims under the Warranties or a claim under the Tax Deed shall be
limited according to the provisions of this clause.
	 
	7.2	 	If the Purchaser or any Group Company becomes aware of a matter or circumstance which is
likely to give rise to a Warranty Claim, the Purchaser shall give notice to the Seller
specifying that matter or circumstance in reasonable detail (including, without limitation,
the Purchaser’s estimate, on a without prejudice basis, of the amount of such claim) as soon
as reasonably practicable after it or the relevant Group Company (as the case may be) becomes
aware of that matter or circumstance. The Seller shall not be liable for any losses in
respect of a Warranty Claim to the extent that they are increased, or are not reduced, as a
result of any failure by the Purchaser to give notice as contemplated by this paragraph.
	 
	7.3	 	The Seller shall not be liable under the Warranties to the extent that:

	 	7.3.1	 	the facts which might result in a Warranty Claim or possible Warranty
Claim were Disclosed;
	 
	 	7.3.2	 	the subject of the Warranty Claim is allowed or provided for or
reserved or otherwise taken into account in the Accounts or the 2006 Audited
Accounts or has been included in calculating creditors or deducted in calculating
debtors in the Accounts or the 2006 Audited Accounts or to the extent such matter
was specifically referred to in the notes to the Accounts or the 2006 Audited
Balance Sheet;
	 
	 	7.3.3	 	the loss has been recovered under the Tax Deed; or
	 
	 	7.3.4	 	a Warranty Claim arises or is increased:

	 	7.3.4.1	 	wholly or partly from a voluntary act or omission of any member of
the Purchaser’s Group after Completion which (a) is not in the ordinary
course of business, (b) could reasonably have been avoided, and (c)
which the Purchaser or any Group Company was aware would be likely to
give rise to a Warranty Claim; or
	 
	 	7.3.4.2	 	wholly or partly from an act or omission compelled by law; or
	 
	 	7.3.4.3	 	as a result of any increase in rates of Tax since the Completion
Date; or
	 
	 	7.3.4.4	 	wholly or partly as a result of the passing or coming into force of
or any change in any enactment, law, regulation, directive or
requirement or any practice of any government, government department or
agency or regulatory body (including extra-statutory concessions of HM
Revenue & Customs) after the Completion Date whether or not having
retrospective effect; or

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	 	7.3.4.5	 	wholly or partly from any change after Completion of the date to
which any Group Company makes up its accounts or in the bases, methods,
principles or policies of accounting of any Group Company; or
	 
	 	7.3.4.6	 	wholly or partly from any failure or omission by any Group Company
to make any valid claim, election, surrender or disclaimer, to give any
valid notice or consent or to do any other thing under the provisions
of any enactment or regulation relating to Tax after Completion, the
making, giving or doing of which was taken into account in computing
the provisions for Tax in the Accounts or in the 2006 Audited Accounts;
or
	 
	 	7.3.4.7	 	any claim, election, surrender or disclaimer made or notice or
consent given after Completion by any Group Company or any member of
the Purchaser’s Group under the provisions of any enactment or
regulation relating to Tax other than any claim, election, surrender,
disclaimer, notice or consent assumed to have been made, given or done
in computing the amount of any allowance, provision or reserve in the
Accounts or the 2006 Audited Accounts or which is made at the prior
request of the Seller pursuant to its rights under the Tax Deed; or
	 
	 	7.3.4.8	 	wholly or partly from a cessation, or any change in the nature or
conduct, of any trade carried on by any Group Company at Completion,
being a cessation or change occurring on or after Completion.

	7.4	 	The Seller shall not be liable in respect of any Warranty Claim or claim under the Tax Deed
unless the amount of damages or payment to which the Purchaser would, but for this
subparagraph, be entitled as a result of the Warranty Claim or such claim is at least £2,000.
	 
	7.5	 	If more than one Warranty Claim or claim under the Tax Deed arises from, or is caused by, the
same or substantially the same matter, matters, circumstance or circumstances, those Warranty
Claims or claims shall be aggregated for the purposes of subparagraph 7.4.
	 
	7.6	 	The liability of the Seller in respect of any Warranty Claim or a claim under the Tax Deed
shall not arise unless the amount of the Seller’s liability in respect of such Warranty Claim
or a claim under the Tax Deed when aggregated with the amount of the Seller’s liability in
respect of any other such Warranty Claim and/or a claim under the Tax Deed made against the
Seller exceeds £200,000 in which event the whole amount of the Seller’s liability in respect
of such Warranty Claim(s) or claim(s) under the Tax Deed (and not just the excess) shall be
recoverable subject to the other terms of this Agreement and/or the Tax Deed.
	 
	7.7	 	The liability of the Seller in respect of all Warranty Claims and claims under the Tax Deed
shall not when taken together exceed £4,000,000.
	 
	7.8	 	The liability of the Seller in respect of any Warranty Claim other than under the Tax
Warranties shall cease six months after Completion and the liability of the Seller in respect
of any claim under the Tax Warranties or any claim under the Tax Deed shall

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	 	 	cease on the sixth anniversary of Completion except in respect of any Warranty Claim of
which notice is given to the Seller as contemplated by clause 7.2 or in respect of a
claim under the Tax Deed of which notice is given to the Seller as contemplated by
clause 8.1 of the Tax Deed (in each case before the relevant date). The liability of
the Seller in respect of any Warranty Claim shall terminate if proceedings in respect of
it have not been commenced within six months after the giving of notice of that Warranty
Claim as contemplated by clause 7.2 unless that Warranty Claim arises as a result of, or
in connection with, a Third Party Claim (as defined in clause 7.10) and the Seller shall
have assumed conduct of that Third Party Claim in accordance with clause 7.10. The
liability of the Seller in respect of any claim under the Tax Deed shall terminate if
proceedings in respect of it have not been commenced within six months after the giving
of notice of that claim as contemplated by clause 8.1 of the Tax Deed unless the Seller
shall have assumed conduct of the claim as contemplated by clause 8.3 of the Tax Deed.
	 
	7.9	 	Nothing in clauses 7.4 to 7.8 (inclusive), applies to a Warranty Claim that arises as a
result of fraud by the Seller (which has been judicially determined) in respect of the
negotiation and preparation of this Agreement, the Tax Deed, the Deed of Assignment, the
Disclosure Letter and/or the Data Room Documents.
	 
	7.10	 	If a Warranty Claim arises as a result of, or in connection with, a liability or alleged
liability of a Group Company to a third party (a
“Third Party Claim”), then (without prejudice
to the provisions of the Tax Deed in relation to any matter which is the subject of a claim
under it) the Seller may, at any time before any final compromise or agreement, or expert
determination or non-appealable decision of a court or tribunal of competent jurisdiction, is
made in respect of the Third Party Claim or the Third Party Claim is otherwise disposed of,
give notice to the Purchaser that it elects to assume the conduct of any dispute, compromise,
defence or appeal of the Third Party Claim and of any incidental negotiations on the following
terms:

	 	7.10.1	 	the Seller shall indemnify the Purchaser and each relevant Group Company to the
Purchaser’s reasonable satisfaction against all liabilities, charges, costs and
expenses which they may incur in taking any such action as the Seller may request
pursuant to subparagraphs 7.10.2 and 7.10.3 below;
	 
	 	7.10.2	 	the Purchaser shall procure that each relevant Group Company at the cost of the
Seller makes available to the Seller on reasonable notice and at reasonable times
such persons and all such information as the Seller may reasonably request for
assessing, contesting, disputing, defending, appealing or compromising the Third
Party Claim;
	 
	 	7.10.3	 	the Purchaser shall procure that each relevant Group Company takes such action to
assess, contest, dispute, defend, appeal or compromise the Third Party Claim as the
Seller may request and does not make any admission of liability, agreement,
settlement or compromise in relation to the Third Party Claim without the prior
written approval of the Seller save where to do so would materially prejudice the
commercial interests of the Purchaser’s Group;
	 
	 	7.10.4	 	the Seller shall keep the Purchaser informed of the progress of the Third Party
Claim and provide the Purchaser with copies of all material documents and such
other information in its possession as may be requested by the Purchaser (acting
reasonably); and

14

 

	 	7.10.5	 	the Purchaser will be free to pay or settle any Third Party Claims on such terms
as the Purchaser reasonably considers appropriate (subject to the other provisions
of this clause 7) in the event that the Seller fails to comply in any material
respect with the provisions of clauses 7.10.1, 7.10.2 and 7.10.4.

	7.11	 	If a Warranty Claim arises as a result of, or in connection with, a Third Party Claim, the
Purchaser shall, until the earlier of such time as the Seller shall give any notice as
contemplated by clause 7.10 and such time as any final compromise or agreement, or expert
determination or non-appealable decision of a court or tribunal of competent jurisdiction, is
made in respect of the Third Party Claim or the Third Party Claim is otherwise finally
disposed of, keep, or procure that each relevant Group Company keeps, the Seller promptly
informed of the progress of the Third Party Claim and provide, or procure that each relevant
Group Company provides, the Seller with copies of all relevant documents and such other
information in the Purchaser’s or a Group Company’s possession as may be requested by the
Seller.
	 
	7.12	 	Nothing in clauses 7.10 or 7.11 shall require the provision by any person of any information
to the extent such provision would contravene any applicable law or regulation or would breach
any duty of confidentiality owed to any third party. If any information is provided by any
person (the “Provider”) to any other person (the
“Recipient”) pursuant to either of those
clauses:

	 	7.12.1	 	that information shall only be used by the Recipient in connection with the Third
Party Claim and clause 10 of this Agreement shall in all other respects apply to
that information; and
	 
	 	7.12.2	 	to the extent that information is privileged:

	 	7.12.2.1	 	no privilege shall be waived by reason of or as a result of its
being provided to the Recipient; and
	 
	 	7.12.2.2	 	if a third party requests disclosure by the Recipient in relation
to that information, if the Recipient is the Seller or the Purchaser,
the Recipient shall or, if the Recipient is a Group Company, the
Purchaser shall procure that the Recipient shall, promptly notify the
Provider and, to the extent it can do so, itself assert privilege in
opposition to that disclosure request.

	7.13	 	Nothing in this Agreement shall be deemed to relieve the Purchaser from any common law duty
to mitigate any loss or damage incurred by it as a result of any of the Warranties being
untrue or inaccurate.
	 
	7.14	 	No liability shall attach to the Seller in respect of a Warranty Claim to the extent that the
same loss has been recovered by the Purchaser under any other terms of this Agreement, the Tax
Deed or any other document entered into pursuant to this Agreement and accordingly the
Purchaser may only recover once in respect of the same loss.
	 
	7.15	 	If the matter or circumstance giving rise to a Warranty Claim is capable of remedy, the
Seller shall have no liability in respect of that Warranty Claim if the relevant matter or
circumstance is remedied within 30 days after the date on which the Seller is given notice as
contemplated by clause 7.2 in relation to that matter or circumstance. The

15

 

	 	 	Purchaser shall procure that the Seller is given the opportunity in that 30 day period
to remedy the relevant matter or circumstance and shall, without prejudice to clause
7.11, provide, and shall procure that each relevant Group Company shall provide, all
reasonable assistance to the Seller to remedy the relevant matter or circumstance.
	 
	7.16	 	Without prejudice to the Purchaser’s duty to mitigate any loss in respect of any of the
Warranties being untrue or inaccurate, if in respect of any matter which would otherwise give
rise to a Warranty Claim, any of the Group Companies is entitled to claim under any policy of
insurance the Purchaser shall procure that it shall use its reasonable endeavours to pursue
such recovery right and the amount of any insurance monies received by that Group Company
shall reduce pro tanto or extinguish that Warranty Claim provided always that the Purchaser
shall be under no obligation to recover from its insurers prior to recovery from the Seller in
respect of any such Warranty Claim.
	 
	7.17	 	If the Seller shall make any payment to the Purchaser in relation to any Warranty Claim and
the Purchaser (or any Group Company) subsequently receives from a third party (other than a
Group Company) any amount referable to the subject matter of the Warranty Claim, the Purchaser
shall, once it or any Group Company has received such amount, repay (after deducting the
reasonable costs and expenses of the Purchaser or any Group Company reasonably incurred in
recovering such amount and any Tax payable on it) to the Seller the lesser of:

	 	7.17.1	 	a sum equal to such amount; and
	 
	 	7.17.2	 	the amount previously paid by the Seller to the Purchaser in respect of such
Warranty Claim.

	7.18	 	The Debt Seller shall have no liability under the Warranties or the Tax Deed.
	 
	8	 	PURCHASER’S AND PURCHASER’S GUARANTOR’S WARRANTIES AND PURCHASER’S GUARANTEE
	 
	8.1	 	Each of the Purchaser and the Purchaser’s Guarantor warrants to the Seller and the Debt
Seller that:

	 	8.1.1	 	It has the power to execute and deliver this Agreement, and each of
the other Transaction Documents to which it is or will be a party, and to perform
its obligations under each of them and has taken all action necessary to authorise
such execution and delivery and the performance of such obligations;
	 
	 	8.1.2	 	this Agreement constitutes, and each of the other Transaction
Documents to which it is or will be a party will, when executed, constitute legal,
valid and binding obligations of the Purchaser and the Purchaser’s Guarantor, as
the case may be, in accordance with its terms;
	 
	 	8.1.3	 	the execution and delivery by the Purchaser or the Purchaser’s
Guarantor, as the case may be of this Agreement and of each of the other
Transaction Documents to which it is or will be a party and the performance of the
obligations of the Purchaser or the Purchaser’s Guarantor, as the case may be,
under it and each of them do not and will not conflict with or constitute a default
under any provision of:

16

 

	 	8.1.3.1	 	any agreement or instrument to which the Purchaser or the
Purchaser’s Guarantor is a party; or
	 
	 	8.1.3.2	 	the constitutional documents of the Purchaser or the Purchaser’s
Guarantor; or
	 
	 	8.1.3.3	 	any law, lien, lease, order, judgment, award, injunction, decree,
ordinance or regulation or any other restriction of any kind or
character by which the Purchaser or the Purchaser’s Guarantor is bound.

	8.2	 	The Purchaser’s Guarantor as primary obligator unconditionally and irrevocably guarantees by
way of continuing guarantee to each of the Seller and of the Debt Seller the payment and
performance when due of amounts payable by and obligations of the Purchaser under any of this
Agreement and the other Transaction Documents.
	 
	8.3	 	The Purchaser’s Guarantor’s obligation under this clause:

	 	8.3.1	 	constitute direct, primary and unconditional obligations to pay on
demand by the Seller or the Debt Seller (as applicable) any sum which the Purchaser
is liable to pay under this Agreement or any of the other Transaction Documents and
to perform on demand any obligations of the Purchaser under this Agreement or any
of the other Transaction Documents without requiring the Seller or the Debt Seller
(as applicable) first to take steps against the Purchaser or any other person; and
	 
	 	8.3.2	 	shall not be affected by any matter or thing which but for this
provision might operate to affect or prejudice those obligations, including without
limitation:

	 	8.3.2.1	 	any time or indulgence granted to, or composition with, the
Purchaser or any other person; or
	 
	 	8.3.2.2	 	the taking, variation, renewal or release of, or refusal or neglect
to perfect or enforce any right, remedy or security against the
Purchaser or any other person; or
	 
	 	8.3.2.3	 	any legal limitation, disability or other circumstance relating to
the Purchaser or any unenforceability or invalidity of any obligation
of the Purchaser under this Agreement or any other Transaction
Document.

	9	 	RESTRICTIVE COVENANTS
	 
	9.1	 	As further consideration for the Purchaser agreeing to purchase the Shares on the terms
contained in this Agreement and with the intent of assuring to the Purchaser the full benefit
and value of the goodwill and connections of the business of the Group, the Seller covenants
with the Purchaser, that it shall not, and shall procure that each member of the Seller’s
Group shall not, without the prior written consent of the Purchaser:-

	 	9.1.1	 	for 18 months after Completion, carry on, or be concerned or
interested in any way within the Prohibited Area in any retail business which is in
any

17

 

	 	 	 	way in competition with the business of the Group as carried on at the date
of this Agreement; or
	 
	 	9.1.2	 	save in response to an unsolicited request from any such person or in
response to a bona fide recruitment advertisement, for 18 months after Completion
offer employment to or offer to conclude any contract of services with an employee
of a Group Company holding an executive or managerial post or entice or endeavour
to entice any such employee to terminate his/her employment with a Group Company
provided always that this clause 9.1.2 shall only apply in relation to persons who
were employed by a Group Company at Completion and who were still so employed
immediately prior to the relevant breach of this clause 9.1.2.

	9.2	 	Each undertaking contained in this clause 9.1 shall be read and construed independently of
the other undertakings and shall be an entirely separate and severable undertaking.
	 
	9.3	 	Clause 9.1 shall not prevent the Seller or any member of the Seller’s Group from holding for
investment purposes only any units of an authorised unit trust and/or up to 29.9% of any class
of the issued share or loan capital of any company traded on a recognised investment exchange
(as defined in the FSMA 2000).
	 
	9.4	 	The covenants in this clause apply to actions carried out by the Seller in any capacity and
whether directly or indirectly, or jointly with any other person or corporate entity.
	 
	9.5	 	Nothing in this clause 9 shall prohibit the Seller or any other member of the Seller’s Group
from (a) carrying on any business via its website at
www.pier1.com or any other website
permitted under the Co-existence Agreement (or otherwise responding to or satisfying any
customer order not solicited from within the United Kingdom) or (b) from acquiring within the
Prohibited Area any goods intended for use or sale in the business of any member of the
Seller’s Group carried on from outside the Prohibited Area.
	 
	9.6	 	Whilst the undertakings in clause 9.1 are considered by the parties to be reasonable in all
the circumstances, if any one or more should for any reason be held to be invalid but would
have been held to be valid if part of the wording was deleted, then the above undertakings
shall apply with the minimum modifications necessary to make them valid and effective.
	 
	9.7	 	Notwithstanding any of the other provisions of this clause 9, clause 9.1 shall cease to apply
if there shall be a Change of Control of Pier 1 Imports, Inc. or if Pier 1 Imports, Inc.
should be a party to any merger or any form of business contribution.
	 
	10	 	ANNOUNCEMENTS AND CONFIDENTIALITY
	 
	10.1	 	Subject to clause 10.3 and except as required by law or by any legal or regulatory authority,
no announcements, circulars or other communications concerning the transactions referred to in
this Agreement or any ancillary matter shall be made unless in a form agreed between the
Seller and the Purchaser.
	 
	10.2	 	Subject to clause 10.3 each party shall (without limit in time) keep and procure the
confidentiality of all information belonging to the other party which it has obtained as a
result of the negotiations leading to and the entering into of this Agreement and shall

18

 

	 	 	not directly or indirectly reveal, report, publish, disclose or transfer or use
information belonging to the other party for its own or any other purposes.
	 
	10.3	 	The restrictions on announcements, circulars and other communications and obligations of
confidentiality in this clause 10 shall not apply where the information is in the public
domain other than as a result of a breach of the obligations of confidentiality under this
clause 10 or to the extent that any disclosure of information:-

	 	10.3.1	 	is expressly permitted by this Agreement or the Tax Deed or required for the
proper performance of this Agreement or the Tax Deed (or the enforcement or defence
of any claim under this Agreement or the Tax Deed); or
	 
	 	10.3.2	 	is made with the prior consent in writing of the party to whose affairs such
information relates; or
	 
	 	10.3.3	 	is made:

	 	10.3.3.1	 	in compliance with any requirement of law;
	 
	 	10.3.3.2	 	in compliance with a requirement (regardless of the timing of that
requirement) of the New York Stock Exchange and/or the US Securities
and Exchange Commission;
	 
	 	10.3.3.3	 	in a Form 8-K, 10-Q, 10-K, a proxy statement, or notice of annual
meeting of shareholders filed by Pier 1 Imports, Inc. or a Schedule 13D
or an amendment thereto filed by the Purchaser’s Guarantor or any of
its shareholders or affiliates to report or disclose the Completion of
the transactions contemplated by this Agreement pursuant to applicable
United States federal securities laws;
	 
	 	10.3.3.4	 	in compliance with any applicable regulatory authority to which the
party is subject; or
	 
	 	10.3.3.5	 	in order to obtain tax or other clearances or consents from the HM
Revenue & Customs or other relevant taxing or regulatory authorities.

	10.4	 	The restrictions contained in this clause 10 shall continue to apply after Completion without
limit in time.
	 
	10.5	 	Press releases of each of the Seller and the Purchaser in the Agreed Form relating to the
transaction which is the subject of this Agreement have been agreed between the Seller and the
Purchaser upon the execution and exchange of this Agreement, for issue following Completion.
	 
	11	 	FURTHER ASSURANCE
	 
	11.1	 	Each of the Purchaser and the Seller will (at its own expense) promptly execute and deliver
all such documents, and do all such things, as the other may from time to time

19

 

	 	 	reasonably require for the purpose of giving full effect to the provisions of this
Agreement, the Tax Deed and the Deed of Assignment.
	 
	11.2	 	Notwithstanding any other provision of this Agreement, following Completion the Purchaser
shall provide as soon as practicable and shall procure that each of the Group Companies
provide as soon as practicable, copies of such records, information and documentation relating
to the administration, business and/or operations of the Group Companies prior to Completion
as may reasonably be requested by the Seller or any other member of the Seller’s Group in
connection with any matters relating to the operation or administration of the Seller’s Group
including, but not limited to, tax, accounting, legal, regulatory or any other matters.
Furthermore, the Purchaser undertakes to and to procure that each of the Group Companies
retain all such records, information and documentation and not to destroy any of them without
the prior consent of the Seller (such consent not to be unreasonably withheld or delayed).
	 
	11.3	 	The Purchaser undertakes that it will procure that each Group Company will not become
insolvent, stop payment of or be unable to pay its debts within the meaning of the Insolvency
Act 1986 or otherwise cease to carry on business as a going concern, for at least one year
following the date of the signing of the audit opinion in respect of the 2006 Audited Accounts
(as contemplated by clause 5.2).
	 
	12	 	ASSIGNMENT
	 
	 	 	No party, may assign the benefit of its rights under this Agreement, the Tax Deed or the
Deed of Assignment whether absolutely or by way of security or deal in any way with any
interest it has under this Agreement, the Tax Deed or the Deed of Assignment without the
prior written consent of the Seller and the Purchaser.
	 
	13	 	ENTIRE AGREEMENT
	 
	13.1	 	This Agreement together with the Transaction Documents constitute the whole and only
agreement between the parties relating to the transactions contemplated by the Transaction
Documents and supersede and extinguish any drafts, agreements, undertakings, representations,
warranties and arrangements of any nature whatsoever, made before the entering into of this
Agreement whether or not in writing, between any of the parties.
	 
	13.2	 	Each party acknowledges that in agreeing to enter into this Agreement and the other
Transaction Documents it has not relied on any representation, warranty, collateral contract
or other assurance (except those repeated in this Agreement) made by or on behalf of any other
party before the entering into of this Agreement. Each party waives all rights and remedies
which, but for this subclause, might otherwise be available to it in respect of any such
representation, warranty, collateral contract or other assurance.
	 
	13.3	 	Nothing in this Agreement or in any other Transaction Document shall be read or construed as
excluding any liability or remedy as a result of fraud.
	 
	14	 	WAIVER, RIGHTS AND RELEASE
	 
	14.1	 	Any waiver of any right, power or remedy under this Agreement or the Tax Deed must

20

 

	 	 	be in writing and will only apply to the person to whom the waiver is addressed and for
the circumstances for which it is given.
	 
	14.2	 	Subject to any express limitation in this Agreement or the Tax Deed, no failure to exercise
or delay in exercising any right or remedy provided under this Agreement or the Tax Deed
constitutes a waiver of such right or remedy or will prevent any future exercise in whole or
in part thereof.
	 
	14.3	 	Subject to any express limitation in this Agreement or the Tax Deed, no single or partial
exercise of any right or remedy under this Agreement or the Tax Deed shall preclude or
restrict the further exercise of any such right or remedy.
	 
	15	 	VARIATION
	 
	 	 	No variation to this Agreement or the Tax Deed shall be of any effect unless it is
agreed in writing and signed by the Seller and the Purchaser.
	 
	16	 	COSTS AND EXPENSES
	 
	 	 	Save as otherwise stated in this Agreement or the Tax Deed, each party shall pay its own
costs and expenses in relation to the negotiation, preparation, execution and carrying
into effect of this Agreement and the other Transaction Documents.
	 
	17	 	SET OFF
	 
	 	 	All payments to be made under this Agreement and/or the Tax Deed shall be made in full
without any set-off or counterclaim and free from any deduction or withholding save as
may be required by law.
	 
	18	 	NOTICES
	 
	18.1	 	All notices given under this Agreement or the Tax Deed shall, unless expressly provided
otherwise, be in writing. Notices shall either be delivered by hand or sent by first class
pre-paid post or by airmail (if overseas) or sent by fax. Delivery by courier shall be
regarded as delivery by hand.
	 
	18.2	 	Notices shall be sent to the address or the fax number set out below and shall be marked for
the attention of the relevant person named in clause 18.4 below.
	 
	18.3	 	Any notice to be given under this Agreement or the Tax Deed shall be deemed to have been
properly given if it is given in accordance with this clause 18.
	 
	18.4	 	The addresses for service of notice are:-

	 	 	Seller and/or the Debt Seller – address as set on page 1 of this Agreement, fax number
001 817 334 0191. For the attention of the Group Counsel’s Office,
	 
	 	 	with a copy to Allen & Overy LLP, One New Change London EC4M 9QQ, fax number: 0207 330
9999. For the attention of: Ian Stanley.
	 
	 	 	Purchaser and/or the Purchaser’s Guarantor – C/O Lagerinn ehf, Sundaborg 7, 104
Reykjavik, fax number: +354-533-1082 . For the attention of Sigurður Berntsson.

21

 

	 	 	Or, in each case, at such other address or to such other fax number or personnel as
may be notified to the other parties in writing in accordance with this clause.

	18.5	 	A notice under this Agreement or the Tax Deed shall be deemed to have been served:

	 	 	18.5.1 if delivered by hand in accordance with this clause at the time of delivery;
	 
	 	 	18.5.2 if sent by first class pre-paid post in accordance with this clause two clear
Business Days after the time of posting or, if sent by airmail in accordance with
this clause, five clear Business Days after such time;
	 
	 	 	18.5.3 if sent by fax to the number referred to in clause 18.4, at the time of
completion of transmission by the sender.
	 
	 	 	If a notice is deemed delivered outside normal business hours (being 9.30am to 5.30pm on
a Business Day) under the preceding provisions of this clause then it shall be deemed to
have been delivered at 9.30am on the next Business Day.

	18.6	 	In proving service, it shall be sufficient to show that delivery by hand was made or that the
envelope containing the communication was properly addressed and posted as a first class
pre-paid letter (or, if overseas, by airmail) or that the fax was despatched and a
confirmatory report received, in each case in accordance with this clause.
	 
	19	 	COUNTERPARTS, LANGUAGE, INVALIDITY, COMPLETION
	 
	19.1	 	This Agreement and the Tax Deed may be executed in any number of counterparts and by any of
the parties on different counterparts, but shall not be effective until each party has
executed at least one counterpart. Each counterpart shall constitute an original of this
Agreement (or the Tax Deed, as the case may be) but all the counterparts shall together
constitute one and the same Agreement (or the Tax Deed as the case may be).
	 
	19.2	 	This Agreement is written in the English language, which shall prevail in the event of any
translation.
	 
	19.3	 	Each of the provisions of this Agreement and the Tax Deed is severable. If any provision is
or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction,
the legality, validity or enforceability in that jurisdiction of the remaining provisions of
this Agreement (or the Tax Deed, as the case may be) shall not in any way be affected or
impaired thereby.
	 
	19.4	 	This Agreement together with the other Transaction Documents shall, to the extent that they
remain to be performed, continue in full force and effect notwithstanding Completion.
	 
	20	 	THIRD PARTY RIGHTS
	 
	 	 	The terms of each of this Agreement, the Tax Deed and the Deed of Assignment may only
be enforced by the parties to each such document and no person who is not such a party
may enforce any of the terms of that document under the Contracts (Rights of Third
Parties) Act 1999.
	 
	21	 	GOVERNING LAW AND JURISDICTION

22

 

	21.1	 	This Agreement and the Tax Deed shall be governed by and construed in accordance with English
law.
	 
	21.2	 	This Agreement and the Tax Deed shall be subject to the exclusive jurisdiction of the Courts
of England and Wales.
	 
	AS WITNESS the hands of the parties or their duly authorised representatives on the date first
appearing at the head of this Agreement.

23

 

SCHEDULE 1

The Group

Part 1

The Company

	 	 	 	 	 
	Place and Date of Incorporation:

	 	United Kingdom 30.09.1991

	 
	 	 	 	 
	Registered Number:

	 	2650000	 	 
	 
	 	 	 	 
	Registered Address:

	 	9-12 North Central 127, Milton Park,
Abingdon, Oxfordshire, OX14 4SA

	 
	 	 	 	 
	Authorised Share Capital:

	 	£8,731,111 divided into 611,111 ordinary
shares and 8,120,000 preference shares,
all of £1 each

	 
	 	 	 	 
	Issued Share Capital:

	 	£8,731,111 divided into 611,111 ordinary
shares and 8,120,000 preference shares,
all of £1 each

	 
	 	 	 	 
	Directors:

	 	Michael Arthur Carter

	 

	 	Marvin James Girouard

	 

	 	Alison Hazel Richards

	 

	 	Charles Hawthorne Turner IV

	 
	 	 	 	 
	Secretary:

	 	John Francis Higgins

	 
	 	 	 	 
	Auditors:

	 	Ernst & Young LLP

	 
	 	 	 	 
	Bankers:

	 	HSBC Bank plc

	 
	 	 	 	 
	Accounting Reference Date:

	 	26 February

24

 

Part 2

The Subsidiaries

The Pier (Retail) Limited

	 	 	 	 	 
	Place and Date of Incorporation:

	 	United Kingdom 13.09.1988

	 
	 	 	 	 
	Registered Number:

	 	2295588	 	 
	 
	 	 	 	 
	Registered Address:

	 	9-12 North Central 127, Milton Park, Abingdon,
Oxfordshire, OX14 4SA

	 
	 	 	 	 
	Authorised Share Capital:

	 	£400,000 divided into 400,000 ordinary shares of £1 each

	 
	 	 	 	 
	Issued Share Capital:

	 	£200,000 divided into 200,000 ordinary shares of £1 each

	 
	 	 	 	 
	Directors:

	 	Michael Arthur Carter

	 

	 	Marvin James Girouard

	 

	 	Alison Hazel Richards

	 

	 	Charles Hawthorne Turner IV

	 

	 	John Francis Higgins

	 
	 	 	 	 
	Secretary:

	 	John Francis Higgins

	 
	 	 	 	 
	Auditors:

	 	Ernst & Young LLP

	 
	 	 	 	 
	Bankers:

	 	HSBC Bank plc

	 
	 	 	 	 
	Accounting Reference Date:

	 	26 February

25

 

Part 2

The Subsidiaries

Pier Direct Limited

	 	 	 	 	 
	Place and Date of Incorporation:

	 	United Kingdom 07.04.1992

	 
	 	 	 	 
	Registered Number:

	 	2704568	 	 
	 
	 	 	 	 
	Registered Address:

	 	9-12 North Central 127, Milton Park, Abingdon,
Oxfordshire, OX14 4SA

	 
	 	 	 	 
	Authorised Share Capital:

	 	£1,000 divided into 1,000 ordinary shares of £1 each

	 
	 	 	 	 
	Issued Share Capital:

	 	£2 divided into 2 ordinary shares of £1 each

	 
	 	 	 	 
	Directors:

	 	Michael Arthur Carter

	 

	 	Marvin James Girouard

	 

	 	Alison Hazel Richards

	 

	 	Charles Hawthorne Turner IV

	 
	 	 	 	 
	Secretary:

	 	John Francis Higgins

	 
	 	 	 	 
	Auditors:

	 	N/A	 	 
	 
	 	 	 	 
	Bankers:

	 	N/A	 	 
	 
	 	 	 	 
	Accounting Reference Date:

	 	01 March

26

 

Part 2

The Subsidiaries

The Pier (Retail) Ireland Limited

	 	 	 
	Place and Date of Incorporation:

	 	Republic of Ireland 04.11.2003 
	 
	 	 
	Registered Number:

	 	377640 
	 
	 	 
	Registered Address:

	 	2 Harbourmaster Place, International Financial
Services Centre, Dublin 1, Ireland 
	 
	 	 
	Authorised Share Capital:

	 	€1,000 divided into 1,000 ordinary shares of €1 each 
	 
	 	 
	Issued Share Capital:

	 	€1,000 divided into 1,000 ordinary shares of €1 each 
	 
	 	 
	Directors:

	 	Michael Arthur Carter
	 

	 	Marvin James Girouard
	 

	 	Alison Hazel Richards
	 

	 	Charles Hawthorne Turner IV
	 
	 	 
	Secretary:

	 	John Francis Higgins
	 
	 	 
	Auditors:

	 	Ernst & Young LLP
	 
	 	 
	Bankers:

	 	HSBC Bank plc
	 
	 	 
	Accounting Reference Date:

	 	26 February

27

 

SCHEDULE 2

Part 1

Properties

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	1.  Ground Floor and basement
200 and 203 Tottenham Court
Road, London W1T 7PL

	 	23 April 1992
	 	25 March 2002
	 	£349,500
	 	Novoquote Ltd (1)

The Pier (Retail) Limited (2)
	 	20 years (less 5 days) from
25 March 1992
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2.  Unit C, Broadway Corner,
Bromley, Kent BR1 1LW

	 	Only Agreement for lease provided with
form of agreed
lease attached.
	 	24 June 2002
	 	£125,000
	 	Parties to the Agreement for Lease:

(1) Scottish Mutual Assurance Plc

(2) The Pier (Retail) Ltd

(3) The Pier Retail Group Ltd 
(Surety) and dated
27 March 1997	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3.
 Units S2 and S3
The Bentall Centre
Kingston upon Thames KT1
1TR

	 	18 April 1997
	 	1 August 2002
	 	£169,750
	 	The Norwich Union Life Insurance Society (1)
The Pier (Retail) Limited (2)
The Pier Retail Group Limited (3) (Surety)
	 	25 years from 1 August
1992
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4.
 Unit UG16 and Unit UG17
together with Storage Area B8

	 	25 November 1997
	 	1 March 2003
	 	£113,000
	 	The Norwich Union Life and Pensions Ltd (1)
	 	25 years from 1 March 1993
	 	 

28

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	The Galleries, Bristol BS4 7SL

	 	 	 	 	 	 	 	The Pier (Retail) Ltd
(2) The Pier Retail Group Limited (Surety)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5.
 The premises intended to be
known as Unit MS5 on the
lower and middle levels of the
Pavilions Shopping Centre, High St. Birmingham

	 	24 August 1993
	 	24 June 2003
	 	£118,000
	 	Royal Life Insurance Ltd (1)
The Pier (Retail) Ltd

(2) 
The Pier Retail Group Ltd (Surety)
	 	24 June 1993 –
28 September 2012
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6.
 Ground Floor 91-95 and 85-95
basement Kings Road, Chelsea,
London SW3

	 	4 October 1993
	 	4 October 2003
	 	£332,500
	 	Pearl Assurance PLC (1)

The Pier (Retail) Ltd (2)

The Pier Retail Group Ltd (3)
(Surety)
	 	20 years from 4 October
1993
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7.
 The Ground Floor of no.’s 16
and 17 and parts of the first
and second floors of no.’s
16,17, 17A, 18 and 19 North St.
Brighton, East Sussex

	 	7 April 1994
	 	 	 	£87,500

(NB A
referee’s
award has just
increased the
rent to
£130,000)
	 	Hanningtons Ltd (1)

The Pier (Retail )Ltd (2)
	 	20 years from
29 September 1993
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8.  Unit Numbers MSU1 and MSU2
and stock unit No. MSU2 of the
Queens Arcade Cardiff

	 	11 October 1995
	 	25 December 2005
	 	£193,000
	 	Record hold Ltd (1)

The Pier (Retail) Ltd (2)

The Pier Retail Group Ltd (3)
(Surety)
	 	25 year from 25 December
1993
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9.  6a Tunsgate Square, Guildford
GU1 3QZ

	 	11 September 1995
	 	29 September 2000
	 	£90,000
	 	Lynton Plc (1)

The Pier (Retail) Ltd (2)
	 	20 years from
11 September 1995
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10. Unit 218, Centre Court
Shopping Centre, Wimbledon,
London SW19 8YA

	 	14 August 1986
	 	24 June 2000
	 	£92,095
	 	The Standard Life Assurance Company (1)

The Pier (Retail) Ltd (2)
	 	15 years from 24 June 1995
	 	 

29

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	11. 18-19 together with the
basement and sub-basement of
20, The Arcade, Bournemouth,
Dorset BH1 2AF

	 	19 January 1996
	 	29 September 2000
	 	£84,600
	 	The Prudential Assurance Company Ltd (1)

The Pier (Retail) Ltd (2)
	 	15 years from 25 December 1995
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12. Basement Ground and 1st floor
of 147 Buchanan Street,
Glasgow G1 2JX

	 	Registered 3 May 1996
	 	14 November 2003
	 	£325,000
	 	The Scottish Life Assurance Co.
(1)

The Pier (Retail) Ltd (2)
	 	24 November 1995 to
23 November 2020
continuing on a month by
month basis thereafter until
terminated by 1 month’s
prior notice)
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	13. Unit 10, Ground, 1st and 2nd
floors of The Academy,
Belmont Street, Aberdeen AB10
1LB

	 	Registered 5 October 1998
	 	 	 	£118,568.72
	 	Jarlaw the Academy Ltd (1)

The Pier (Retail) Ltd (2)
	 	15 years from 2 June 1998
to 1 June 2013
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	14. Unit 76, 77, 78 and 78a, The
Trafford Centre, Manchester
M17 8AR

	 	20 November 2003
	 	3 August 2003
	 	£200,000

(in addition
£10,200 is
paid quarterly
on account of
estimated
turnover)
	 	The Trafford Centre Ltd (1)

The Pier (Retail) Ltd (2)
	 	2 August 2003 to 2 August
2018
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	15. 2, 3, 4 and 5 Theatre Walk,
The Headrow Shopping Centre,
The Headrow, Leeds West
Yorkshire LS1 6JE

	 	13 August 1998
	 	 	 	£89,904
	 	Britel Fund Trustees Ltd (1)

The Pier (Retail) Ltd (2)
	 	13 August 1998 to
12 August 2013
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	16. Unit 87 (239-240) The Victoria
Centre, Nottingham NG1 8QT

	 	13 December 1999
	 	24 June 2003
	 	£150,000
	 	Dusco (UK) Ltd (1)

The Pier (Retail) Ltd (2)
	 	15 years and One quarter
from 24 June 1998
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	16.A Storage Unit 284 Victoria
Centre Nottingham NG1 8QT

	 	13 December 1999
	 	24 June 2003
	 	£5,000
	 	Dusco (UK) Ltd (1)

The Pier (Retail) Ltd (2)
	 	15 years and One quarter
from 24 June 1998
	 	 

30

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	17. EVU006 Upper Level,
Wintergarden, Bluewater, Stone
DA9 9SF

	 	14 May 1999
	 	 	 	£178,450.52

(in addition
£3,718 is paid
quarterly on
account of
estimated
turnover)
	 	Blueco Ltd (1)

The Pier (Retail) Ltd (2)
	 	15 years from 25 December
1998
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	18. Unit Lower Ground Level &
Riverside Level Holybrook Walk,
The Oracle, Reading, Berkshire
RG1 2AQ

	 	2 April 2001
	 	 	 	£200,000
	 	Oracle Shopping Centre Ltd (1)

Oracle Nominees Ltd (2)

The Pier (Retail) Ltd (3)

The Pier Retail Group Ltd (4) (Surety)

	 	15 years from 24 June 1999
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	18A Storage Reading Unit

for Unit L30 at Riverside level

in the Oracle

	 	2 April 2001
	 	 	 	£1,960
	 	Oracle Shopping Centre Ltd (1)

Oracle Nominees Ltd (2)

The Pier (Retail) Ltd (3)

The Pier Retail Group Ltd (4) (Surety)
	 	Expires 23 June 2014
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	19. Level 1 & 2 Eldon Gardens
Shopping Centre, Percy Street,
Newcastle Upon Tyne, Tyne &
Wear NE1 7RA

	 	6 November 2000
	 	 	 	£50,000
	 	Capital and Regional Retail (Northern) Ltd (1)
The Pier (Retail) Ltd (2)
	 	15 years expiring
28 September 2015
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	20. 19-25 Pepper Row and Paddock
Row, Grosvenor Shopping
Centre, Chester CH1 1EA

	 	24 March 2000
	 	 	 	£115,000

(NB rent

review has

just been

agreed at

£140,000)
	 	The Equitable Life Assurance Society (1)
The Pier (Retail) Ltd (2)
The Pier Retail Group Ltd (3)
(Surety)
	 	15 years from 25 December
1999
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	20.A Unit 17 Paddock Row
Grosvenor Shopping Centre,
Chester

	 	14 August 2003
	 	 	 	£45,000
	 	Mall Nominee One Ltd and Mall Nominee Two Ltd (1)

The Pier (Retail) Ltd (2)

The Pier Retail Group Ltd (3)
	 	The lease is co-terminous
with the lease of 19-25
Pepper Road
	 	 

31

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	21. Unit 3 104 George Street, and
25-33 Castle Street Edinburgh
EH2 3DF

	 	Registered 5 September 2001
	 	 	 	£150,000

(NB A
Calderbank
offer to
increase the
rent to
£215,000 has
just been
agreed)
	 	Pearl (Castle St./George St.) Ltd.
(1)

The Pier (Retail) Ltd (2)
	 	15 years
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	22. Unit 65/66 Festival Place,
Upper Ground Floor,
Basingstoke, Hampshire RG21
7LJ

	 	24 October 2003
	 	N/A
	 	£142,137
	 	Grosvenor Basingstoke Properties Ltd and Grosvenor
Basingstoke Management Ltd (1)
The Pier (Retail) Ltd (2)
	 	From 29 September 2003
to 29 February 2004
amended in a deed of
rectification 20 April 2004
to 5 years from 1 March
2004
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	23. Unit U78B Upper Mall, Merry
Hill Shopping Centre, Brierley
Hill, West Midlands DY5 1SS

	 	12 May 2004
	 	N/A
	 	£210,000
	 	Chelsfield MH Investments Ltd (1)

The Pier (Retail) Ltd (2)

The Pier Retail Group Ltd (3) (Surety)
	 	10 years commencing
17 October 2003
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	24. Units 1 and 1a
70 Queen’s Road, Clifton,
Bristol BS8 1QU

	 	29 September 2003

	 	N/A
	 	£105,000
	 	Serput Nominee 11 Ltd and Serput Nominee 12
Ltd (1)

The Pier (Retail) Ltd (2)

	 	15 years ending
28 September 2018

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	24A (Storage, Clifton) Unit 2 Part

Basement, 70 Queens Road,

Clifton, Bristol B58 1QU

	 	10 January

 1985	 	 	 	£8,000
	 	Johnsons Central Retail Ltd (1) 

J Hepworth & Son plc (2)	 	Expires 13 February 2008	 	 	 	 

32

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	25. Unit LSU5 Centrale Shopping
Centre, Croydon, Surrey CR0
1TY

	 	15 November 2004
	 	N/A
	 	£160,000
	 	St. Martin Property Investments Ltd (1)

The Pier (Retail) Ltd (2)

Pier Retail Group Ltd (3)

(Surety)
	 	15 years from 23
September 2003
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	26. Unit 1.268/1.269 and Mezzanine
24 Redpath Way, Metro Centre,
Gateshead, Tyne & Wear NE11
9HX

	 	27 January 2005
	 	N/A
	 	£190,000
	 	CSC Metrocentre Ltd (1)

The Pier (Retail) Ltd (2)

Pier Retail Group Ltd (3)

(Surety)
	 	15 years and One quarter
to 28 September 2019
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	27. Unit 3, 2-14 Fitzroy Street,
Cambridge CB1 1EW

	 	Undated
	 	N/A
	 	£175,000
	 	The Master or keeper and fellows
and Scholars of Jesus College
Cambridge (1)

The Pier (Retail) Ltd (2)
	 	15 years plus broken
quarter expiring 24 March
2020
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	28. Unit 32, Fishergate Walk, The
Mall, St George, Preston PR1
2TU

	 	1 August 2005
	 	N/A
	 	£130,000
	 	The Nominee One Ltd and Mall Nominee Two Ltd
(1)

The Pier (Retail) Ltd (2)

The Pier Retail Group Ltd (3)
(Surety)
	 	10 years from 1 August
2005
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	29. 401 Chapelfield Plain, Chapelfield, Norwich NR2 1SZ

	 	Agreement for lease dated 19 August 2004
	 	N/A
	 	£163,500	 	Parties to Agreement for Lease:

Lend Lease Norwich Ltd (1)

The Chapelfield Partnership (2)

The Pier (Retail) Ltd (3)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	30. North 9, 10, 11 & 12 Central 127

Milton Park 

(9 and 11 First Floor, 10 and 12 ground)

	 	26 May 2005
	 	N/A
	 	£173,000
	 	MEPC Milton Park Ltd (1)

The Pier (Retail) Ltd (2)
	 	1 January 2005 to 23 June
2017
	 	 

33

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Base	 	 	 	 	 	 
	 	 	 	 	 	 	Rent/Rack	 	 	 	 	 	 
	 	 	 	 	 	 	Rent	 	 	 	 	 	 
	 	 	 	 	 	 	excluding	 	 	 	 	 	 
	 	 	 	 	 	 	payments in	 	 	 	 	 	 
	 	 	 	 	 	 	respect of	 	 	 	 	 	 
	 	 	 	 	 	 	turnover for	 	 	 	 	 	 
	 	 	 	 	Date of	 	the current	 	 	 	 	 	 
	 	 	 	 	current rent	 	turnover	 	 	 	 	 	 
	Property	 	Date of Lease	 	memoranda	 	period	 	Parties	 	Term	 	 
	31. Unit 170

Milton Park

Abingdon

	 	12 July 2002
	 	N/A
	 	£525,000
	 	MEPC Milton Park Ltd (1)

The Pier (Retail) Ltd (2)
	 	15 years from 24 June 2002
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	32. Unit 173

Milton Park

Abingdon

	 	Undated
	 	N/A
	 	£310,200
	 	Mastercase Service and Distribution Ltd (1)

The Pier (Retail) Ltd (2)
	 	Expiry 25 February 2008
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	33. Unit 167 (B)

(West) Milton Park, Abingdon

	 	18 August 2004
	 	N/A
	 	£12,800
	 	MEPC Milton Park Limited (1)

The Pier (Retail) Ltd (2)
	 	24 June 2005 to
25 December 2005
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	34. Unit 167 (B)

(East) Milton Park Abingdon

	 	27 October 2005
	 	N/A
	 	£18,000
	 	MEPC Milton Park No.1 Ltd and MEPC
Milton Park No.2 Ltd (1)

The Pier (Retail) Ltd (2)
	 	1 July 2005 to
25 December 2005
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	35. 2nd floor

Goodge Place

London WIT 4SF

	 	27 September 2005
	 	N/A
	 	£10,500
	 	Joan M.Leasor (1)

The Pier (Retail) Ltd (2)
	 	5 years from 27 September
2005
	 	 

Part 2 – Concession Properties

	 	 	 
	Concessionaire	 	Property
	Debenhams

	 	The Pier at Debenhams, 36 Prospect Street, Hull, East Yorkshire
	 
	 	 
	Debenhams

	 	The Pier at Debenhams Market Place, Romford, Essex
	 
	 	 
	Debenhams

	 	The Pier at Debenhams Market Street, Manchester
	 
	 	 
	Debenhams

	 	The Pier at Debenhams The Parade, Swindon, Wiltshire
	 
	 	 
	Debenhams

	 	The Pier at Debenhams Eastgate Centre, Basildon, Essex
	 
	 	 
	Debenhams

	 	The Pier at Debenhams 44-46 Palmerston Road, Southsea

34

 

	 	 	 
	Concessionaire	 	Property
	Debenhams

	 	The Pier at Debenhams Queens Buildings, Southampton, Hampshire
	 
	 	 
	Debenhams

	 	The Pier at Debenhams 2 The Moor, Sheffield
	 
	 	 
	Debenhams

	 	The Pier at Debenhams The Potteries Shopping Centre, Lamb St.
Hanley, Stoke on Trent
	 
	 	 
	Debenhams

	 	The Pier at Debenhams Clapham Junction, London
	 
	 	 
	Debenhams

	 	The Pier at Debenhams 334-348 Oxford St., London
	 
	 	 
	Debenhams

	 	The Pier at Debenhams Royal Parade, Plymouth, Devon
	 
	 	 
	Homebase

	 	The Pier at Homebase, Almonvale South Retail Park, Livingston,

West Lothian
	 
	 	 
	Homebase

	 	The Pier at Homebase, Meols Cop Retail park, Meols Cop Road,

Southport, Merseyside
	 
	 	 
	Roches

	 	The Pier at Roches, Blanchardstown Centre Blanchardstown, Dublin
	 
	 	 
	Roches

	 	The Pier at Roches, Henry Street, Dublin, Eire

35

 

SCHEDULE 3

Registered Intellectual Property Rights

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REGISTERED	 	 	 	 	 	 	 	 	 	COUNTRY OF	 	 
	TRADE MARK	 	CLASS(ES)	 	NUMBER	 	REGISTRATION	 	FILING DATE
	PIER

	 	20	 	 	 	 	1116416	 	 	UK
	 	 	25.06.1979	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	THE PIER

	 	16, 18, 20, 21, 24,
27, 28, 35, 36	 	 	 	 	2016131B	 	 	UK
	 	 	31.03.1995	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	THE PIER

	 	20, 21, 24, 35	 	 	 	 	227496	 	 	IRELAND
	 	 	10.04.2003	 

36

 

SCHEDULE 4

The Warranties

Part 1

General Warranties

	1	 	Disclosure and Information
	 
	1.1	 	The information set out in Schedules 1 and 2 is true and accurate.

	 
	2	 	The Seller
	 
	2.1	 	Each of the Seller and the Debt Seller has full power to enter into and perform this
Agreement and the other Transaction Documents to which each is a party.
	 
	2.2	 	This Agreement and the other Transaction Documents to which the Seller and the Debt Sellers
are a party constitute (or will when executed constitute), valid, legal and binding
obligations on the Seller and/or the Debt Seller (as the case may be) in accordance with their
terms.
	 
	2.3	 	The Seller is the sole, legal and beneficial owner of the Shares and is entitled to sell and
transfer the Shares to the Purchaser on the terms set out in this Agreement.
	 
	2.4	 	The Seller and the Debt Seller are not insolvent nor unable to pay their debts within the
meaning of the Insolvency Act or any other analogous statute applicable to either of them in
any other jurisdiction.
	 
	3	 	The Company
	 
	3.1	 	No Group Company:

	 	3.1.1	 	holds or beneficially owns, or has agreed to acquire any shares,
debentures or other securities of any other body corporate (whether incorporated in
the United Kingdom or elsewhere) other than the Subsidiaries;
	 
	 	3.1.2	 	is or has agreed to become a member of any partnership, joint venture,
consortium or other unincorporated association (other than a recognised trade
association);
	 
	 	3.1.3	 	has a branch, place of business or substantial assets outside the
United Kingdom and the Republic of Ireland or any permanent establishment (as that
expression is defined in any relevant Order in Council made pursuant to section
788, TA 88) in any country outside the United Kingdom or the Republic of Ireland.

	3.2	 	No Group Company has received written notice from any governmental or regulatory body that it
is in violation of, or in default with respect to, any law or regulation where such violation
or default would have a material adverse effect on the assets or financial position of the
Group.

37

 

	3.3	 	No Group Company carries on business under any name other than its corporate name or the “The
Pier” or “Pier”.
	 
	3.4	 	No Group Company has granted a power of attorney which remains in force.
	 
	3.5	 	So far as the Seller is aware, each Group Company is conducting and has at all material times
within the five years prior to the date of this Agreement conducted its business in accordance
with all applicable laws and regulations of the country in which it is incorporated and/or
conducts business, excluding any breach of law or regulation which is or was not material in
the context of the business of the Group.
	 
	4	 	Insolvency
	 
	4.1	 	So far as the Seller is aware, no Group Company is insolvent nor unable to pay its debts
within the meaning of the Insolvency Act 1986.
	 
	4.2	 	So far as the Seller is aware, no step has been taken to initiate any process by or under
which:

	 	4.2.1	 	some or all of the creditors of any Group Company accept, by agreement
or in pursuance of a court order, an amount less than the sums owing to them in
satisfaction of those sums with a view to preventing the dissolution of any Group
Company; or
	 
	 	4.2.2	 	a person is appointed to manage the affairs, business and assets of
any Group Company on behalf of the Company’s creditors; or
	 
	 	4.2.3	 	the holder of a charge over any Group Company’s assets is appointed to
control the business and assets of such Group Company.

	4.3	 	In relation to any Group Company:

	 	4.3.1	 	no administrator has been appointed;
	 
	 	4.3.2	 	no documents have been filed with the court for the appointment of an
administrator; and
	 
	 	4.3.3	 	no Group Company has received written notice of any intention to
appoint an administrator in respect of that Group Company.

	4.4	 	No Group Company has received written notice that any process has been initiated which would
lead to the Company being dissolved and its assets being distributed among the relevant
company’s creditors, shareholders or other contributors.
	 
	5	 	The Shares
	 
	5.1	 	The Shares constitute the whole of the allotted and issued share capital of the Company and
are fully paid.
	 
	5.2	 	The Shares and the issued shares of each Group Company are free from any Encumbrance.
	 
	5.3	 	No Group Company has at any time in the last five years:

38

 

	 	5.3.1	 	repaid, redeemed or purchased (or agreed to repay, redeem or purchase)
any of its own shares, or otherwise reduced (or agreed to reduce) its issued share
capital or any class of it or capitalised (or agreed to capitalise) in the form of
 shares, debentures or other securities or in paying up any amounts unpaid on any
 shares, debentures or other securities, any profits or reserves of any class or
description or passed (or agreed to pass) any resolution to do so; or
	 
	 	5.3.2	 	directly or indirectly provided any financial assistance for the
purpose of the acquisition of shares in the Company or for the purpose of reducing
or discharging any liability incurred in such an acquisition, pursuant to sections
155, CA 85.

	5.4	 	No right has been granted to any person which remains outstanding to require any Group
Company to issue any share capital and no Encumbrance has been created in favour of any person
in respect of any unissued shares or other unissued securities of any Group Company.
	 
	5.5	 	No commitment has been given by any Group Company to create an Encumbrance in respect of the
Shares or the issued shares of any of the Subsidiaries (or any unissued shares or other
unissued securities of the Company or any of its Subsidiaries) or for any of them to issue any
share capital and no person has claimed any rights in connection with any of those things
where such claim remains outstanding.
	 
	6	 	Subsidiaries
	 
	6.1	 	The Subsidiaries are the only subsidiaries of the Company.
	 
	6.2	 	The particulars of the Subsidiaries set out in Schedule 1 are true and accurate.
	 
	6.3	 	The Company and/or one of the Subsidiaries is the legal and beneficial owner of the shares in
each of the Subsidiaries.
	 
	6.4	 	The shares in the Subsidiaries are free from all Encumbrances.
	 
	6.5	 	The issued shares of each of the Subsidiaries are fully paid up.
	 
	7	 	Constitutional and Corporate Documents
	 
	7.1	 	The copy of the memorandum and articles of association of the Company in the Disclosure
Documents is true and complete.
	 
	7.2	 	Each Group Company has at all times carried on its business and affairs in all respects in
accordance with its memorandum and articles of association.
	 
	7.3	 	So far as the Seller is aware, the Company has not received a written notice or allegation
that any of the register of members or statutory books of the Company are incorrect or should
be rectified.
	 
	8	 	Accounts
	 
	8.1	 	The Accounts:

	 	8.1.1	 	have been prepared in accordance with the Companies Act and GAAP; and

39

 

	 	 	8.1.2 show a true and fair view of the state of affairs of the Company at
the Accounts Date and of the profit and losses of
         the Company for the financial
period to which the Accounts relate.

	8.2	 	The Accounts have been filed in accordance with the requirements of the Companies Act.
	 
	9	 	Financial and other records
	 
	9.1	 	No Group Company has received any written notice that any of the accounts, books, ledgers and
other financial records of the Company have not been properly maintained or do not contain
accurate records of all matters required to be entered in them by the Companies Act.
	 
	9.2	 	All such accounts, books, ledgers and records are in the possession or under the control of
the Company or one of the Subsidiaries.
	 
	9.3	 	All material records and information recorded, stored, maintained, operated, or held by any
means (including any electronic, mechanical or photographic process, whether computerised or
not) which belong to the Company are under its control or the control of one of the
Subsidiaries.
	 
	9.4	 	Details of the terms of all outstanding bank and other loan facilities made available to the
Group Companies (excluding any trade credit arrangements in the ordinary course of the
business of the Group) have been provided to the Purchaser in the Disclosure Documents.
	 
	9.5	 	No Group Company has any indebtedness owed to any bank or other financial institution which
is outstanding at the date of this Agreement.
	 
	10	 	Position since 25 February 2006
	 
	 	 	Since 25 February 2006, the Company:

	 
	10.1	 	has carried on its business in the ordinary course and as a going concern;
	 
	10.2	 	has not declared, made or paid any dividend and no loan capital of the Company has been
repaid in whole or in part or has become due ;
	 
	10.3	 	has not made any change to the remuneration, terms of employment, emoluments or pension
benefits of any present or former director, officer or employee of the Company who on the
Accounts Date was entitled to remuneration in excess of £75,000 per annum;
	 
	10.4	 	has not appointed or employed any additional director, officer or employee entitled to
remuneration in excess of £75,000;
	 
	10.5	 	has not entered into contracts involving capital expenditure in an amount exceeding £80,000
in the aggregate other than in the ordinary course of business;
	 
	10.6	 	has not borrowed or raised any money or entered into any financial facility (except such
borrowings from bankers as are within the amount of any overdraft facility which was available
to the Company at 25 February 2006) or since 25 February 2006

40

 

	 	 	received any notice from any banker that such banker wishes to renegotiate any
overdraft facility available to the Company at 25 February 2006; and
	 
	10.7	 	has not made any change to its accounting reference date.
	 
	11	 	Finance
	 
	11.1	 	No guarantee, mortgage, charge, pledge, lien, assignment or other security agreement which is
outstanding has been given by or entered into by the Company in respect of borrowings of the
Company.
	 
	11.2	 	The total amount borrowed by the Company does not exceed any limitations on the borrowing
powers contained:

	 	11.2.1	 	in the memorandum and articles of association of the Company; or
	 
	 	11.2.2	 	in any debenture or other deed or document binding on the Company.

	11.3	 	There are no debts owing to the Company other than debts that have arisen in the ordinary
course of business.
	 
	11.4	 	So far as the Seller is aware, the Company has not given or entered into any guarantee,
mortgage, charge, pledge, lien, assignment or other security agreement which is outstanding in
respect of the indebtedness, or for the default in the performance of any obligation, of any
person not being a Group Company.
	 
	11.5	 	So far as the Seller is aware, the Company is not subject to any arrangement for receipt or
repayment of any grant, subsidy or financial assistance from any government department or
other body.
	 
	12	 	Transactions with the Seller, Directors and Connected Persons
	 
	12.1	 	Upon execution and exchange of the Debt Confirmation Deed, the Deed of Release and Deed of
Assignment there will be no outstanding indebtedness between any Group Company and any member
of the Seller’s Group.
	 
	13	 	The Properties
	 
	13.1	 	In this Agreement these definitions apply:
	 
	 	 	“Previously-owned Land and Buildings”: land and/or buildings that has, at any time
before the date of this Agreement, been owned (under whatever tenure) and/or occupied
and/or used by the Company but is either no longer owned, occupied or used by the
Company, or is owned, occupied or used by the Company but pursuant to a different lease,
licence, transfer or conveyance.
	 
	 	 	“Properties”: the land and buildings short particulars of which are set out in Part 1 of
Schedule 2 and Property means each and every one of them and any part or parts of them.
	 
	13.2	 	The Properties and the Concession Properties are the only land and buildings owned, used or
occupied by any Group Company. The Sellers are not aware of any matter or circumstance which
threatens the use and occupation of the Properties for their existing use which would be
material in the context of the Group taken as a whole.

41

 

	 	 	There are no material and current disputes with landlords in relation to non-compliance
with the provisions of leases of the Properties.
	 
	13.3	 	There are no current arrears of rent and other sums due to the landlord under the leases of
the Properties.
	 
	13.4	 	The information contained within Schedule 2 in relation to the current rents (but without in
all cases completing rent review memoranda to document those rents) and rent review dates is
true and accurate and not misleading.
	 
	13.5	 	So far as the Seller is aware the Company does not have any right of ownership, right of use,
option, right of first refusal or contractual obligation to purchase, or any other legal or
equitable right affecting any land and buildings other than the
Properties and the
Concession Properties.
	 
	13.6	 	So far as the Seller is aware neither the Company nor any company that is a Subsidiary has
any actual or contingent liability in respect of Previously-owned Land and Buildings.
	 
	14	 	Insurance
	 
	14.1	 	Summary particulars of the insurance policies maintained by the Group (excluding any policies
where the Group participates under a policy provided for the Seller’s Group and the Group), as
set out in the Disclosure Documents, are accurate in all material respects.
	 
	14.2	 	There are no outstanding claims under, or in respect of the validity of, any of the insurance
policies which are material in the context of the business of the Group as a whole.
	 
	15	 	Litigation and Investigations
	 
	15.1	 	So far as the Seller is aware, the Company is not engaged in any litigation, administrative,
mediation or arbitration proceedings (except for debt collection in the normal course of
business) which is material to the business of the Group.
	 
	15.2	 	The Seller has not received any written notice that the Company is the subject of any
outstanding investigation, inquiry or enforcement proceedings by any governmental,
administrative or regulatory body.
	 
	15.3	 	No such proceedings, investigation or inquiry as are mentioned in paragraph 15.1 or 15.2 have
been notified to the Seller and the Seller is not aware of any circumstances likely to give
rise to any such proceedings, investigation or inquiry.
	 
	16	 	Contracts
	 
	16.1	 	In this Agreement this definition applies:
	 
	 	 	“Material Contract”: an agreement to which the Company is a party or is bound by and
which is of material importance to the business or profits of the Group other than any
agreement relating to the Properties or the Concession Properties.
	 
	16.2	 	Except for the agreements and arrangements Disclosed, the Company is not a party to or
subject to any agreement which:

42

 

	 	16.2.1	 	is a Material Contract which is not in the ordinary course of business of the
Company; or

	 	16.2.2	 	is a Material Contract which may be terminated as a result of any Change of
Control of the Company.

	17	 	Licences and Consents
	 
	17.1	 	So far as the Seller is aware, each Group Company has all necessary licences, consents,
permits and authorities necessary to carry on its business now carried on by it in the places
and in the manner is which that business is now carried on, all of which are valid and
subsisting.
	 
	17.2	 	So far as the Seller is aware, no Group Company has received written notice that it is at
the date of this agreement materially in default under any licence, consent, permit or
authority which is material to the business or operations of the Group.
	 
	18	 	Consequence of acquisition of Shares by Purchaser
	 
	 	 	The acquisition of the Shares by the Purchaser or compliance with the terms of this
Agreement do not entitle anyone to receive from the Company any finder’s fee, brokerage
or other commission in connection with the purchase of the Shares by the Purchaser.
	 
	19	 	Employees
	 
	19.1	 	In this Agreement these definitions apply:
	 
	 	 	“Employee”: any person employed by a Group Company;
	 
	 	 	“Representative Body” means any trade union or works council representing any workers of
any Group Company; and trade union has the same meaning as in the Trade Union and Labour
Relations (Consolidation) Act 1992;
	 
	 	 	“Worker”: has the same meaning as in section 230 of the Employment Rights Act 1996.
	 
	19.2	 	The names of each person who is a Director of each of the Group Companies are set out in
Schedule 1.
	 
	19.3	 	The Seller has Disclosed to the Purchaser the following particulars for each Employee:

	 	19.3.1	 	their job title and department;
	 
	 	19.3.2	 	their base salary and summary details of any contractual benefits and privileges
provided;
	 
	 	19.3.3	 	the commencement date of their contract and the date on which their continuous
service began;
	 
	 	19.3.4	 	the type of contract (whether full or part-time or other).

	19.4	 	All contracts of employment for all Employees are terminable on three months’ notice or less
by either the relevant Group Company or relevant Employee.

43

 

	19.5	 	No Employees are currently on secondment, maternity, paternity or adoption leave.
	 
	19.6	 	No notice is outstanding to terminate the contract of employment of any Director (whether
given by the Group Company or by the Director) and, so far as the Seller is aware, no material
dispute is outstanding between:

	 	19.6.1	 	any Group Company and a material number or category of its current or former
Employees relating to their employment or its termination; or
	 
	 	19.6.2	 	the Company and a material number or category of any of its current or former
Workers relating to their contract or its termination.

	19.7	 	So far as the Seller is aware, the acquisition of the Shares by the Purchaser or compliance
with the terms of this Agreement will not enable any Directors or senior Employees of any
Group Company to terminate their employment or receive any payment or other benefit from any
Group Company.
	 
	19.8	 	Except as Disclosed, so far as the Seller is aware, no Group Company is involved in any
material industrial or trade dispute or negotiation regarding a claim with any Representative
Body and is not aware of anything that would be likely to give rise to such a dispute or
claim.
	 
	19.9	 	Particulars of all material workforce agreements reached under the Trade Union and Labour
Relations (Consolidation) Act 1992 and all collective bargaining or procedural or other
agreements or arrangements with any Representative Body that relate to any employees of any
Group Company are contained in the Disclosure Letter.
	 
	19.10	 	No commitment has been given by any member of the Seller’s Group in connection with the
issue of any share capital in any Group Company to any Employee.
	 
	20	 	Pension Schemes
	 
	20.1	 	The Disclosure Documents contain summary particulars of all Pension Schemes of each Group
Company and no Group Company is under an obligation (legally binding or otherwise) to provide
pensions, gratuities, superannuation allowance or other “relevant benefits” as defined in
section 612(1) of the 1988 Taxes Act, to or for any past or present officer or employee of the
Company or his dependants nor does it contribute to any scheme or arrangement for the
provision of any other retirement, pension or death benefit except in respect of the Pension
Schemes referred to in the Disclosure Documents.
	 
	21	 	Intellectual Property
	 
	21.1	 	In this Agreement this definition applies:
	 
	 	 	“Intellectual Property Rights”: (i) copyright, patents, database rights and rights in
trade marks, designs, know-how and confidential information (whether registered or
unregistered), (ii) applications for registration, and rights to apply for registration,
of any of the foregoing rights and (iii) all other intellectual property rights and
equivalent or similar forms of protection existing anywhere in the world.
	 
	21.2	 	Particulars are set out in Schedule 3 of all registered Intellectual Property Rights
(including applications for such rights) owned or used by the Company.

44

 

	21.3	 	Pier 1 Licensing, Inc. is the registered proprietor of (or applicant for) the Intellectual
Property Rights set out in Schedule 3 and has not granted any rights in respect thereof save
for the licences dated 30 June 1997 and 13 January 1997.
	 
	21.4	 	The Company does not require any Intellectual Property Rights other than those identified in
Schedule 3 in order to carry on its business as carried on at the date of this Agreement-.
	 
	21.5	 	In respect of the Intellectual Property Rights set out in Schedule 3:

	 	21.5.1	 	all application and renewal fees required for the maintenance or protection of
such rights have been paid;
	 
	 	21.5.2	 	so far as the Seller is aware, there are no claims, disputes or proceedings,
pending or threatened, in relation to the ownership or use of such rights.

	21.6	 	So far as the Seller is aware, there has been no, and is no current, material infringement by
any third party of any Intellectual Property Rights set out in Schedule 3.
	 
	21.7	 	So far as the Seller is aware, the carrying on of the business of the Group as carried on at
the date of this Agreement using the Intellectual Property Rights set out in Schedule 3 does
not infringe the Intellectual Property Rights of any third party.

Part 2

Tax Warranties

	22	 	Compliance and General
	 
	22.1	 	All notices, returns (including any land transaction returns), reports, accounts,
computations, statements, assessments and registrations and any other necessary information
submitted by the Group Companies to any Tax Authority for the purposes of Tax have been made
on a proper basis, punctually submitted, were accurate and complete when supplied and remain
accurate and complete in all material respects and none of the above is, or so far as the
Seller is aware is likely to be, the subject of any material dispute with any Tax Authority.
	 
	22.2	 	All Tax which the Group Companies are liable to pay prior to Completion has been so paid.
	 
	22.3	 	No Group Company has within the period of twelve months ending on the Completion Date of this
Agreement paid or become liable to pay any penalty, fine, surcharge or interest charged by
virtue of the provisions of the TMA or any other Tax Statute.
	 
	22.4	 	So far as the Seller is aware, the Group Companies have sufficient records relating to past
events to permit accurate calculation of the Tax liability or relief which would arise upon a
disposal or realisation on Completion of each asset owned by the Group Companies at the
Accounts Date or acquired by the Group Companies since that date but before Completion.

45

 

	23	 	Foreign Issues
	 
	23.1	 	The Group Companies have and have for the last seven years (or, if later, since their date of
incorporation) been resident for Tax purposes only in the jurisdiction in which they were
incorporated and have never had a permanent establishment in any other jurisdiction.
	 
	24	 	Groups
	 
	24.1	 	No UK Company has within the last six years been a member of any group of companies for the
purposes of s.170 TCGA any member of which was resident in the UK for UK tax purposes other
than the UK Companies.
	 
	25	 	Close companies
	 
	25.1	 	No UK Company has within the last three years been a close investment-holding company as
defined in section 13A, TA 88.
	 
	26	 	VAT
	 
	26.1	 	Each Group Company is a taxable person duly registered for the purposes of VAT.
	 
	26.2	 	Each Group Company has complied with all statutory provisions, rules, regulations, orders and
directions in respect of VAT and has promptly submitted accurate returns. Each Group Company
maintains full and accurate VAT records, has never been subject to any interest, forfeiture,
surcharge or penalty nor been given any notice under sections 59 or 64, VATA nor been given a
warning within section 76(2), VATA nor has any Group Company been required to give security
under paragraph 4 of Schedule 11, VATA.
	 
	26.3	 	Each Group Company is not and has not been for VAT purposes a member of any group of
companies and no act or transaction has been effected in consequence whereof each Group
Company is or may be held liable for any VAT arising from supplies made by another company and
no direction has been given nor will be given by H M Revenue & Customs under Schedule 9A, VATA
as a result of which any Group Company would be treated for the purposes of VAT as a member of
a group.
	 
	26.4	 	For the purposes of paragraph 3(7) of Schedule 10 VATA, the UK Companies or their relevant
associates have exercised the election to waive exemption from VAT (pursuant to paragraph 2 of
Schedule 10 VATA) only in so far as detailed (as having been the subject of such an election)
in the Disclosure Documents: and

	 	26.4.1	 	all things necessary for the election to have effect have been done and in
particular any notification and information required by paragraph 3(6) of Schedule
10 VATA 1994 has been given and any permission required by paragraph 3(9) of
Schedule 10 VATA has been properly obtained; and
	 
	 	26.4.2	 	no election has or will be disapplied or rendered ineffective by virtue of the
application of the provisions of paragraph 2 (3AA) of Schedule 10 VATA.

	26.5	 	No UK Company owns any assets which are capital items subject to the capital goods scheme
under Part XV of the VAT Regulations 1995.

46

 

	26.6	 	No UK Company has made any claim for bad debt relief under section 36, VATA which remains
outstanding.
	 
	27	 	Stamp duty and stamp duty land tax
	 
	27.1	 	All stampable documents to which any Group Company is a party have been duly stamped or
stamped with a particular stamp denoting that no stamp duty is chargeable.
	 
	27.2	 	Neither entering into this Agreement nor Completion will result in the withdrawal of any
stamp duty or stamp duty land tax relief granted on or before Completion which will affect any
Group Company.

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SCHEDULE 5

Completion Requirements

Seller’s Obligations

	1	 	On Completion, the Seller shall deliver or procure the delivery to the Purchaser or its
representatives of:
	 
	1.1	 	The Debt Confirmation Deed, the Deed of Release and the Deed Assignment duly executed by the
Debt Seller (and forms 403a in respect of any security over any assets of any Group Company
granted to the Debt Seller);
	 
	1.2	 	The Tax Deed duly executed as a deed by the Seller;
	 
	1.3	 	Transfers of the Shares duly executed by the registered holders in favour of the Purchaser;
	 
	1.4	 	The relevant share certificates for the Shares in the names of the registered holders or an
indemnity for any lost certificates;
	 
	1.5	 	In respect of each UK Company:

	 	1.5.1	 	the statutory registers and minute books;
	 
	 	1.5.2	 	common seal (if any);
	 
	 	1.5.3	 	the certificate of incorporation; and
	 
	 	1.5.4	 	any certificates of incorporation on change of name;

	1.6	 	The written resignations in the Agreed Form of M J Girouard, C H Turner and M A Carter as
Directors of the Group Companies such resignations to take effect from Completion;
	 
	1.7	 	The Co-existence Agreement duly executed by the Seller, Pier 1 Licensing, Inc. and the
Company; and
	 
	1.8	 	Minutes of the board meetings held under paragraph 2 of this Schedule.
	 
	2	 	On Completion, the Seller shall cause a board meeting of each Group Company to be held at
which the matters mentioned below will take place:
	 
	2.1	 	In the case of the Company only, a resolution to register the transfers of Shares will be
passed, subject to the transfers being stamped at the cost of the Purchaser;
	 
	2.2	 	Sigurður Berntsson, Jákup á Dul Jacobsen and Jonathan Eeles shall be appointed additional
directors; and
	 
	2.3	 	The resignations referred to in paragraphs 1.6 above shall be tendered and accepted so as to
take effect at the close of the meeting.

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	SIGNED by
	 	 	 	 
	 

	 	 

	 	 
	PIR TRADING, INC.
	 	 	 	 
	 
	 	 	 	 
	SIGNED by
	 	 	 	 
	PIER 1 IMPORTS (U.S.), Inc.

	 	 

	 	 
	 
	 	 	 	 
	SIGNED by
	 	 	 	 
	PALLI LIMITED

	 	 

	 	 
	 
	 	 	 	 
	SIGNED by
	 	 	 	 
	 

	 	 

	 	 
	LAGERINN ehf
	 	 	 	 
	acting by its attorney
	 	 	 	 

49

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