Document:

exv10w1

 

EXHIBIT 10.1

 

PURCHASE AND SALE AGREEMENT

AMONG

CHASE BANK USA, N.A.

AND

PIER 1 ASSETS, INC.

DATED AS OF AUGUST 30, 2006

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	2	 
	Section 1.1. Definitions of Certain Terms
	 	 	2	 
	Section 1.2. Interpretation
	 	 	11	 
	 
	 	 	 	 
	ARTICLE II CLOSING, PURCHASE AND SALE
	 	 	12	 
	Section 2.1. Purchase and Sale of the Purchased Assets
	 	 	12	 
	Section 2.2. Purchase Price; Purchase Price Adjustment; Allocation of Purchase Price
	 	 	12	 
	Section 2.3. The Closing
	 	 	13	 
	Section 2.4. Allocation of Purchase Price
	 	 	14	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARTIES
	 	 	14	 
	Section 3.1. Representations and Warranties of Seller
	 	 	14	 
	Section 3.2. Representations and Warranties of the Purchaser
	 	 	20	 
	Section 3.3. No Other Representations or Warranties; No Recourse
	 	 	23	 
	 
	 	 	 	 
	ARTICLE IV COVENANTS
	 	 	24	 
	Section 4.1. Conduct of Business
	 	 	24	 
	Section 4.2. Certain Changes
	 	 	24	 
	Section 4.3. Employees
	 	 	25	 
	Section 4.4. Access and Confidentiality
	 	 	25	 
	Section 4.5. Reasonable Best Efforts; Other Filings
	 	 	27	 
	Section 4.6. Additional Instruments
	 	 	27	 
	Section 4.7. Credit Card Marks; Branding
	 	 	28	 
	Section 4.8. Notice to Cardholders
	 	 	28	 
	Section 4.9. Cooperation in Obtaining Approval and Consents
	 	 	28	 
	Section 4.10. Post-Closing Access
	 	 	28	 
	Section 4.11. Cooperation in Litigation
	 	 	28	 
	Section 4.12. Preservation of and Access to Books and Records
	 	 	29	 
	Section 4.13. Bulk Sales Law
	 	 	29	 
	Section 4.14. Third-Party Consents
	 	 	29	 
	 
	 	 	 	 
	ARTICLE V CONDITIONS TO EFFECT THE PURCHASE
	 	 	30	 
	Section 5.1. Conditions to Each Party’s Obligations
	 	 	30	 
	Section 5.2. Conditions to Obligations of the Purchaser
	 	 	30	 
	Section 5.3. Conditions to Obligations of Seller
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VI TERMINATION
	 	 	31	 
	Section 6.1. Termination Prior to the Closing
	 	 	31	 
	Section 6.2. Effect of Termination
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VII TAX MATTERS
	 	 	32	 
	Section 7.1. Tax Indemnity
	 	 	32	 
	Section 7.2. Preparation and Filing of Tax Returns
	 	 	33	 
	Section 7.3. Time of Payment
	 	 	34	 

i

 

Table of Contents
(continued)

	 	 	 	 	 
	 	 	Page	 
	Section 7.4. Tax Refunds
	 	 	34	 
	Section 7.5. Tax Notice; Tax Controversies
	 	 	34	 
	Section 7.6. Cooperating and Controversies
	 	 	35	 
	Section 7.7. Survival
	 	 	36	 
	Section 7.8. Termination of Tax Sharing Agreements
	 	 	36	 
	Section 7.9. Exclusivity
	 	 	36	 
	Section 7.10. Section 338(h)(10) Election
	 	 	36	 
	Section 7.11. FIRPTA Certificates
	 	 	37	 
	Section 7.12. Agreements
	 	 	37	 
	 
	 	 	 	 
	ARTICLE VIII SURVIVAL; INDEMNIFICATION
	 	 	37	 
	Section 8.1. Survival
	 	 	37	 
	Section 8.2. Indemnification by the Seller
	 	 	37	 
	Section 8.3. Indemnification by the Purchaser
	 	 	38	 
	Section 8.4. Notice, Settlements and Other Matters
	 	 	38	 
	 
	 	 	 	 
	ARTICLE IX MISCELLANEOUS
	 	 	40	 
	Section 9.1. Notices
	 	 	40	 
	Section 9.2. Expenses and Certain Post-Closing Matters
	 	 	41	 
	Section 9.3. Successors and Assigns
	 	 	41	 
	Section 9.4. Entire Agreement; Amendment; Waiver
	 	 	42	 
	Section 9.5. Counterparts
	 	 	42	 
	Section 9.6. Governing Law
	 	 	42	 
	Section 9.7. Waiver of Jury Trial and Venue
	 	 	42	 
	Section 9.8. Severability
	 	 	42	 
	Section 9.9. No Petition
	 	 	43	 
	Section 9.10. Public Announcement
	 	 	43	 
	Section 9.11. Third-Party Beneficiaries
	 	 	43	 
	Section 9.12. Schedules
	 	 	43	 

ii

 

SCHEDULES

Schedule 1.1(a) — On-Going Contracts

Schedule 1.1(b) — Estimated Closing Statement

Schedule 1.1(c)(1) — Persons with actual knowledge – Seller

Schedule 1.1(c)(2) — Persons with actual knowledge – Purchaser

Schedule 1.1(d) — Master File

Schedule 1.1(e) — Purchase Price Schedule

Schedule 3.1(c) — Third Party Consents – Seller

Schedule 3.1(k) — Delinquency Aging Report

Schedule 3.1(m) — Tax Representation Exceptions

Schedule 3.1(s) — Pier 1 Bank Financial Information

Schedule 3.2(c) — Third Party Consents – Purchaser

Schedule 3.2(g) — Litigation

Schedule 4.2(a)(vi) — Seller Permitted Transfers

Schedule 4.2(b) — Seller Permitted Actions

Schedule 7.12 — Terminated Agreements

ANNEX A – Program Agreement

ANNEX B – Instrument of Assignment and Assumption

iii

 

     PURCHASE and SALE AGREEMENT, dated as of August 30, 2006 (this “Agreement”), among
Pier 1 Assets, Inc., a Delaware corporation (“Seller”) on the one hand, and Chase Bank USA,
N.A., a national banking association (the “Purchaser” and, collectively with Seller, the
“Parties”), on the other hand.

RECITALS

     WHEREAS, Pier 1 Imports, Inc., a Delaware corporation (“Pier 1 Imports”), is,
indirectly through certain of its subsidiaries, among other things, (i) engaged in the business of
selling merchandise through retail stores and by other means and (ii) indirectly through certain of
its subsidiaries, including Pier 1 National Bank, a national banking association (“Pier 1
Bank”), engaged in the Business (as defined herein);

     WHEREAS, pursuant to this Agreement, Seller desires to sell or cause to be sold to the
Purchaser, and the Purchaser desires to purchase the Gross Receivables and Pier 1 Bank Stock (as
defined herein) pursuant to the terms contained and in the manner described herein;

     WHEREAS, on the date hereof, Pier 1 Imports (U.S.), Inc., a Delaware corporation (“Pier 1
(U.S.)”) and the Purchaser are entering into a Program Agreement (the “Program
Agreement”) in the form attached hereto as Annex A, to become effective as of the Closing Date,
that provides for, among other things, the issuance of proprietary cards, the issuance of existing
and new credit related products, the processing and servicing of the related Accounts, and the
conduct of related marketing activities.

     NOW, THEREFORE, in consideration of the premises, and of the mutual representations and
agreements contained in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

Purchase and Sale Agreement — Page 1

 

ARTICLE I

DEFINITIONS

     Section 1.1. Definitions of Certain Terms.

     (a) In this Agreement, the following terms are used with the meanings assigned below:

     “Account Agreement” means an agreement (including related disclosure) between Pier 1
Bank and a Person or Persons under which Accounts are established and/or governing the terms and
conditions of an Account and Credit Cards are issued to or on behalf of such Person or Persons, as
such agreement may be amended, modified or otherwise changed from time to time (including pursuant
to change of terms notices or any debt cancellation agreements).

     “Accounts” means any Credit Card Account established pursuant to an Account Agreement
that exists and is owned by Pier 1 Bank as of the Cut-Off Time, including all Charged Off Accounts,
except where otherwise indicated.

     “Accrued Interest” with respect to each Account, shall mean, the aggregate amount of
all periodic finance charges that accrued on that Account as of the Cut-Off Time but had not been
posted to that Account at the Cut-Off Time, and that are actually posted to such Accounts
subsequent to the Cut-Off Time in accordance with the related Account Agreement.

     “Affiliate” means, with respect to any Person, each Person that controls, is
controlled by, or is under common control with, such Person. For purposes of this definition,
“control” of a Person means the possession, directly or indirectly, of the power to direct or cause
the direction of its management or policies, whether through the ownership of voting securities, by
contract or otherwise.

     “Ancillary Agreements” means the Program Agreement and the Instrument of Assignment
and Assumption.

     “Applicable Order” means, with respect to any Person, a judgment, injunction, writ,
decree or order of any Governmental Authority, in each case legally binding on that Person or on
any material amount of its property.

     “Approved Ancillary Products” has the meaning set forth in the Program Agreement.

     “Books and Records” means all of the existing books, records, original documents,
files, correspondence, books of account, Credit Card applications, agreements (including Account
Agreements), customer service and collection records, billing tapes, month-end tapes, papers,
statement forms, plastics, application forms and data maintained by or on behalf of (including by a
processor) Pier 1 Bank or any of its Affiliates, whether in hard copy or electronic format or any
other form in each case to the extent within Pier 1 Bank’s control and possession and used in the
Business, other than the Pier 1 Cardholder List, the Master File and other than Tax Returns or Tax
work papers. For the avoidance of doubt, the term “Books and Records” does not include any Pier 1
Shopper Data (to the extent not included in the Master File, Pier 1 Systems (as defined

Purchase and Sale Agreement — Page 2

 

in the Program Agreement)), any of the Seller’s minute books, stock ledgers, internal
accounting records or other corporate records and documents, or any proprietary information of any
third-party servicer or processor.

     “Business” means the Credit Card business relating to the Purchased Assets conducted
by Seller, Pier 1 Bank, and their Affiliates, including (A) the extension of credit to Cardholders,
the servicing of the Accounts, billings, collections, processing of Account transactions, the
administration of the Accounts and Gross Receivables and all aspects of the proprietary Credit Card
program relating to the Accounts and (B) the offering of any Approved Ancillary Products to
Cardholders but excluding all Employees.

     “Business Day” means any day, other than a Saturday or Sunday, on which both Seller
and the Purchaser are open for business at their respective U.S. headquarters.

     “Cardholder” means a Person or Persons to whom a Credit Card is or has been properly
issued by Pier 1 Bank and in whose name(s) an Account, in connection with which the Credit Card may
be used, has been established pursuant to a valid Account Agreement.

     “Cardholder List” means a list, as of the Cut-Off Time, of the names, addresses,
telephone numbers and taxpayer identification numbers and social security numbers of all
Cardholders and such other proprietary information with respect to the Accounts as and to the
extent maintained by Pier 1 Bank or any of its Affiliates.

     “Charged Off Accounts” means, collectively, all Credit Card Accounts that, as of the
Cut-Off Time, have been charged off or should have been charged off according to the applicable
Pier 1 Bank policies and procedures, which may include disputed Accounts, Accounts involving fraud,
lost or stolen credit devices or deceased credit card holders, and Accounts that have filed for
protection under the bankruptcy laws of the United States.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Consolidated Group” means an “affiliated group” as that term is defined pursuant to
section 1504(a)(1) and (a)(2) of the Code (or any similar provision of state, local or foreign law)
of corporations or entities that file Tax returns on a consolidated, unified, combined or group
basis.

     “Constituent Documents” means the articles of association, articles of incorporation,
certificate of incorporation, certificate of formation, by-laws, limited liability company
agreement, operating agreement or regulations, and/or other organizational documents, as
appropriate, of any Person.

     “Contract” means, with respect to any Person, any agreement, undertaking, contract,
promise, understanding, obligation, indenture, deed of trust or other instrument, document or
agreement by which that Person, or any amount of its properties or assets, is bound and/or subject.

     “Credit Card” means a proprietary or co-branded card issued by Pier 1 Bank that may be
used by the Cardholder or authorized user to purchase goods and services, obtain cash advances

Purchase and Sale Agreement — Page 3

 

or convenience checks and/or transfer balances through open-end revolving credit, commonly
known as a credit or charge card; provided, however, that the term does not include: (i) any gift
card; (ii) any debit card, smart card, stored value card, electronic or digital cash card or any
other card that does not provide the holder thereof with the ability to obtain credit other than
through an overdraft line or similar feature; (iii) any secured card, including any card secured by
a lien on real or other property or by a deposit; or (iv) any card issued to the holder of a
securities brokerage account that allows the holder to obtain credit through a margin account.

     “Credit Card Account” means any account under which a purchase, cash advance, credit
transaction, convenience check or transfer balance may be or has been made by a Cardholder by means
of a Credit Card, which is recorded as an Account on the computer system or internal processing
system of Pier 1 Bank or any of its Affiliates, or any third party processor used by Pier 1 Bank or
its Affiliates, and properly established pursuant to an Account Agreement.

     “Cut-Off Time” means 11:59 p.m. on the day immediately preceding the Closing Date.

     “Employees” mean all full-time and part-time employees of Pier 1 Bank (whether or not
on vacation, military leave, sick leave, maternity leave, disability or other leave of absence) who
are employed principally in connection with the Business, in their capacity as such.

     “Estimated Closing Payment” means the amount payable by the Purchaser on the Closing
Date in accordance with the Estimated Closing Statement.

     “Estimated Closing Statement” means a statement prepared by the Seller, substantially
in the form of Schedule 1.1(b), showing in reasonable detail the calculation and allocation of the
Estimated Closing Payment.

     “Excluded Liabilities” means the following Liabilities of Pier 1 Bank or Seller or any
of their respective Affiliates (or any of their respective predecessors), whether presently in
existence or arising hereafter:

     (1) all Liabilities of Pier 1 Bank or its Affiliates relating to the Employees prior to
the Closing;

     (2) all Liabilities related to, associated with or arising out of any action, claim,
suit or proceeding or otherwise arising out of or relating to the operation of the Business
or the Purchased Assets, prior to the Closing, whether such action, claim, suit or
proceeding is brought, or such Liability becomes payable, prior to, on or after the Closing;

     (3) all loan loss reserves, if any, maintained by Pier 1 Bank and its Affiliates in
respect of (i) the Accounts and (ii) the amounts owing in respect thereof from Cardholders;

     (4) all legal, accounting, brokerage and finder’s fees, if any, or other fees and
expenses incurred by the Seller in connection with this Agreement or the consummation of the
transactions contemplated hereby;

Purchase and Sale Agreement — Page 4

 

     (5) all Liabilities related to, associated with or arising out of any employee benefit
plans, programs, agreements or arrangements sponsored or maintained by Pier 1 Bank or its
Affiliates, or with respect to which Pier 1 Bank or its Affiliates have any obligation;

     (6) all Liabilities from Loyalty Programs (as defined in the Program Agreement) arising
out of all sales to Cardholders or authorized users of Accounts through the Cut-Off Time
date;

     (7) Liabilities relating to the operation of the Business or ownership of the Purchased
Assets prior to the Closing Date; and

     (8) Excluded Taxes.

“Excluded Taxes” means:

     (1) all Income Taxes owed by Seller or any of its Affiliates other than the Pier 1 Bank
for any period;

     (2) all Taxes relating to the Excluded Liabilities for any period;

     (3) all Taxes relating to the Purchased Assets, the Business, or Pier 1 Bank for any
Pre-Closing Tax Period;

     (4) all Taxes of Pier 1 Bank which are allocable, pursuant to Section 7.1(c), to the
portion of such period ending on the Closing Date;

     (5) all Taxes of Seller or any other Person (other than Pier 1 Bank) for which Pier 1
Bank may be liable by reason of being a member of a consolidated, combined, unitary or
affiliated group that includes Seller or such other Person prior to the Closing Date, by
reason of entering into a tax sharing, tax indemnity or similar agreement with the Seller or
such other Person prior to the Closing Date (other than this Agreement) or by reason of
transferee or successor liability arising in respect of a transaction undertaken prior to
the Closing Date;

     (6) Taxes imposed on Pier 1 Bank as a result of any breach of warranty or
misrepresentation under Section 3.1(m), or breach by Seller of any covenant relating to
Taxes;

     (7) Taxes solely attributable to the Section 338(h)(10) Election provided for in
Section 7.10; and

     (8) Pier 1 Bank Excluded Taxes.

     “Federal Funds Rate” means, for any day, the offered rate as reported in the Wall
Street Journal in the “Money Rates” section for reserves traded among commercial banks for
overnight use in amounts of 1 million dollars or more or, if no such rate is published for a day,
the rate published for the preceding Business Day, calculated on a daily basis based on a 365 day
year.

Purchase and Sale Agreement — Page 5

 

     “Final Closing Payment” means the amount calculated as a result of any adjustment to
the Estimated Closing Payment following the Closing in accordance with this Agreement.

     “Final Closing Statement” means a statement prepared by Seller substantially in the
form of Schedule 1.1(b), showing in reasonable detail the calculation by Seller of the Final
Closing Payment, based on the data available as of the Cut-Off Time.

     “Fiscal Month” has the meaning set forth in the Program Agreement.

     “GAAP” means generally accepted accounting principles in the United States.

     “Governmental Authority” means any domestic or foreign governmental, regulatory or
self-regulatory authority, agency, court, tribunal, commission or other governmental, regulatory or
self-regulatory entity exercising legislative, judicial, regulatory or administrative functions.

     “Gross Receivables” means amounts owing (net of credit balances) to Pier 1 Bank or its
Affiliates from Cardholders with respect to Accounts (including outstanding loans and other
extensions of credit, Accrued Interest and late charges, whether or not posted, and any other
accrued fees, charges and interest assessed on such Accounts, whether or not posted), including any
amounts owed attributable to a Charged Off Account.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.

     “Income Taxes” means all federal, state, local and foreign income Taxes or any similar
Taxes that are imposed on or measured by reference to gross or net income or receipts, and
franchise, net worth, capital or other doing business Taxes.

     “Instrument of Assignment and Assumption” means the Instrument of Assignment and
Assumption substantially in the form attached as Annex B, to be entered into at the Closing.

     “Intellectual Property Right” means any intellectual property right, including any
trademark, service mark or other source indicator and all goodwill associated therewith, invention,
patent, copyright, confidential or proprietary information (including trade secret and know-how)
and any registration or application for registration of any of the foregoing.

     “Knowledge” means, with respect to the Seller, the actual knowledge of the persons
named on Schedule 1.1(c)(1) hereto and, with respect to the Purchaser, the actual knowledge of the
persons named on Schedule 1.1(c)(2) hereto, in each case after reasonable inquiry.

     “Liability” means any debt, liability, commitment, obligation, claim or cause of
action of any kind whatsoever, whether due or to become due, known or unknown, accrued or fixed,
absolute or contingent, or otherwise.

     “Lien” means, with respect to any property, any lien, security interest, mortgage,
pledge, charge, encumbrance, adverse claim, reversion, reverter or restriction of any kind relating
to that property, of any nature whatsoever, whether consensual, statutory or otherwise including
the

Purchase and Sale Agreement — Page 6

 

interest of a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such property.

     “Master File” means the master file maintained by Pier 1 Bank and its Affiliates, or
their subcontractors, with respect to the Accounts, including identification and other Cardholder
data and Account information, the names and addresses of Cardholders with respect to the Accounts
and any and all Account adjustments made by or on behalf of the Seller in the form attached hereto
as Schedule 1.1(d).

     “Master Trust” means the Pier 1 Credit Card Master Trust.

     “Material Adverse Effect” means:

     (1) with respect to the Business, any effect that is materially adverse to the assets,
the results of operations or financial condition of the Business, taken as a whole,
excluding any effect attributable to or resulting from (a) economic, business or financial
conditions generally or events affecting the credit card services or consumer credit
business, the banking or financial services industry or the retail store industry to the
extent such events or conditions do not have a disproportionate effect on the Business
relative to other entities operating businesses similar to the Business, (b) financial
market conditions, including interest rates or changes therein, (c) changes in laws, GAAP or
regulatory accounting principles, (d) any action, omission, change, effect, circumstance or
condition contemplated by this Agreement or the Ancillary Agreements, or attributable to the
signing and announcement of this Agreement with the Purchaser, or the transactions
contemplated by this Agreement and the Ancillary Agreements, or (e) any action taken or not
taken at the request or direction of the other party or parties hereto; and/or

     (2) with respect to the Seller or the Purchaser, a material impairment of the ability
of the relevant Person or Persons to perform its or their material obligations under this
Agreement or the Ancillary Agreements on a timely basis.

     “On-Going Contracts” means the Contracts listed on Schedule 1.1(a).

     “Permissible Liens” means Liens (i) for Taxes, assessments and other governmental
charges or levies (1) not yet due or (2) which are being contested in good faith by appropriate
action and as to which adequate reserves for contested amounts have been set aside in accordance
with GAAP and as set forth on Schedule 3.1(m), or (ii) that will have lapsed or been terminated or
will lapse or terminate prior to the Closing.

     “Person” means any individual, corporation, company, unincorporated association,
business trust, trustee, executor, administrator or other legal personal representative however
designated or constituted, partnership, association, limited liability company, limited
partnership, joint venture, syndicate, sole proprietorship or similar organization (with or without
share capital), or any Governmental Authority.

     “Personal Information” means information owned by Pier 1 Bank about an identifiable
individual or other information that is subject to any Privacy Law.

Purchase and Sale Agreement — Page 7

 

     “Pier 1 Bank Assets” means all assets of Pier 1 Bank, including, without limitation,
the following:

     (1) the Accounts;

     (2) the applications for Accounts pending and solicitations for the Accounts
outstanding;

     (3) the Account Agreements for the Accounts;

     (4) the Cardholder List;

     (5) the Master File applicable to the Accounts;

     (6) all rights and obligations of Pier 1 Bank arising under the On-Going Contracts with
respect of periods on or after the Closing Date;

     (7) all cash and cash equivalents on hand and cash and cash equivalents in bank
accounts, as of the Cut-Off Time, maintained by Pier 1 Bank;

     (8) each Credit Card with respect to any Account;

     (9) the right to all Accrued Interest;

     (10) the Books and Records (if any);

     (11) all inventories and other goods and supplies in stock and used or held for use by
Pier 1 Bank and its Affiliates in connection with the Accounts, including plastics,
applications, and periodic statements;

     (12) all rights, claims, credits, causes of action or rights of set-off against third
parties relating principally to the assets listed in clauses (1) through (11) above;

     (13) the Transferred Intellectual Property; and

     (14) such additional assets, properties, and rights related to the foregoing as may be
acquired by Pier 1 Bank after the date hereof and prior to the Cut-Off Time.

     “Pier 1 Bank Excluded Taxes” means all taxes imposed on any member of an affiliated,
consolidated, combined or unitary group of which Pier 1 Bank is or was a member on or prior to the
Closing Date, including pursuant to Treasury Regulation Section 1.1502-6.

     “Pier 1 Bank Liabilities” means any Liabilities of Pier 1 Bank, whether incurred prior
to or after the Closing Date, other than the Excluded Liabilities.

     “Pier 1 Bank Stock” means all of the outstanding shares of common stock, par value
$10.00 per share, of Pier 1 Bank as of the Closing Date.

     “Pier 1 Licensed Marks” has the meaning set forth in the Program Agreement.

Purchase and Sale Agreement — Page 8

 

     “Pier 1 Shopper Data” has the meaning set forth in the Program Agreement.

     “Pooling and Servicing Agreement” means that certain Pooling and Servicing Agreement,
dated as of February 12, 1997, as amended and/or supplemented through the date of this Agreement
and as it may be further amended and/or supplemented through the Closing Date, including all series
supplements thereto, by and among Pier 1 Funding LLC, as transferor, Pier 1 Imports (U.S.), Inc., a
Delaware corporation, as servicer, and Wells Fargo Bank, National Association (successor by merger
to Wells Fargo Bank Minnesota, National Association), a national banking association, as trustee.

     “Post-Closing Tax Period” means any taxable period (or portion thereof) beginning
after the Closing Date.

     “Pre-Closing Tax Period” means any taxable period (or portion thereof) that ends
before or on the Closing Date.

     “Previously Disclosed” means, with respect to the Seller or the Purchaser, information
set forth in the Schedules, whether in response to an express informational requirement or as an
exception to one or more specified representations or covenants.

     “Privacy Law” means any Requirement of Law relating to the collection, use, storage
and/or disclosure of information about an identifiable individual.

     “Purchase Price” means the total purchase price payable in accordance with this
Agreement for the Purchased Assets, as finally determined in accordance with Section 2.2, and as
described and allocated on Schedule 1.1(e).

     “Requirement of Law” means, with respect to any Person, any law, ordinance, statute,
order, treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority,
in each case binding on that Person or its property.

     “Requisite Regulatory Approvals” means the consents, registrations, approvals, permits
or authorizations designated as such in Schedule 3.1(c) with respect to the Seller and Schedule
3.2(c) with respect to the Purchaser.

     “Straddle Period” means any taxable period beginning on or before and ending after the
Closing Date.

     “Subsidiary” when used with respect to any Person, means another Person where an
amount of the voting securities, or other voting ownership or voting partnership interests, of the
second Person sufficient to elect at least a majority of its board of directors or similar
governing body (or if there are not such voting interests, fifty percent (50%) or more of the
equity interest of which) is owned directly or indirectly by the first Person or by another
Subsidiary of the first Person.

     “Taxes” means any income, alternative or add-on minimum tax, gross receipts, sales,
use, transfer, gains, ad valorem, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax,
custom,

Purchase and Sale Agreement — Page 9

 

]

duty or other tax, governmental fee or other like assessment or charge, together with any
interest or any penalty, addition to tax or additional amount imposed by any Governmental Authority
responsible for the imposition of any such tax (domestic or foreign).

     “Tax Return” means any return, declaration, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules) including any information
return, claim for refund, amended return and declaration of estimated Tax.

     “Transferred Intellectual Property” means all rights of Pier 1 Bank to the Cardholder
List and the Master File, in each case, subject to the restrictions set forth in the Program
Agreement.

     “Treasury Regulations” means the final, temporary or proposed regulations promulgated
by the Treasury Department under the Code and any reference to a Treasury Regulation that is
amended, revised or otherwise superseded subsequent to the date hereof shall be interpreted as
referring to the Treasury Regulation prior to such change so as to achieve the result originally
intended by the Parties.

     Each of the following terms is defined in the section of this Agreement set forth opposite
such term:

	 	 	 	 	 
	Term	 	 	Section
	Accountant
	 	 	2.2	(c)
	Actions
	 	 	4.11	(a)
	Adjusted Allocation
	 	 	7.10	(b)
	Agreement
	 	 	Preamble
	Allocation
	 	 	7.10	(b)
	Allocation Statement
	 	 	2.4	(a)
	Annual Financial Information
	 	 	3.1	(s)
	Closing
	 	 	2.3	(a)
	Closing Date
	 	 	2.3	(a)
	Confidentiality Agreement
	 	 	4.3	(c)
	Consolidated Tax Returns
	 	 	7.2	(a)
	Credit Card Marks
	 	 	4.7
	Financial Information
	 	 	3.1	(s)
	Filing Party
	 	 	7.2	(c)
	Indemnified Party
	 	 	8.4	(a)
	Indemnifying Party
	 	 	8.4	(a)
	Interim Financial Information
	 	 	3.1	(s)
	Losses
	 	 	8.2
	Parties
	 	Preamble
	Pier 1 Bank
	 	Recitals
	Pier 1 Bank Stock
	 	 	3.1	(o)
	Pier 1 Imports
	 	Recitals
	Pier 1 (U.S.)
	 	Recitals
	Program Agreement
	 	Recitals
	Purchase
	 	 	2.3	(a)

Purchase and Sale Agreement — Page 10

 

	 	 	 	 	 
	Term	 	 	Section
	Purchased Assets
	 	 	2.1
	Purchaser
	 	Preamble
	SEC
	 	 	3.2	(k)
	Securities Act
	 	 	3.2	(l)
	Section 338(h)(10) Election
	 	 	7.10	(a)
	Seller
	 	Preamble
	Seller Consolidated Group Tax Claim
	 	 	7.5
	Seller Permits
	 	 	3.1	(r)
	Straddle Taxes
	 	 	7.1	(c)
	Tax Claim
	 	 	7.5
	Tax Indemnifying Party
	 	 	7.2	(d)
	Tax Package
	 	 	7.6	(c)
	Tax Sharing Agreements
	 	 	7.8

     Section 1.2. Interpretation.

     (a) In this Agreement, unless the context otherwise requires, references to:

     (i) the Preamble or the Recitals, Sections, Annexes or Schedules refer to the Preamble
or a Recital or Section of, or Annex or Schedule to, this Agreement;

     (ii) any Contract refers to the Contract as amended, modified, supplemented or replaced
from time to time prior to the date of this Agreement, or in a manner permitted by this
Agreement;

     (iii) any statute or regulation refers to the statute or regulation as amended,
modified, supplemented or replaced from time to time prior to the Closing Date (and, in the
case of statutes, include any rules and regulations promulgated under the statute) and to
any section of any statute or regulation include any successor to the section;

     (iv) any Governmental Authority including any successor to the Governmental Authority;
and

     (v) this Agreement are to this Agreement and the Schedules and annexes to it.

     (b) The table of contents and headings contained in this Agreement are for reference purposes
only and do not limit or otherwise affect any of the provisions of this Agreement.

     (c) Whenever the word “include,” “includes” or “including” is used in this Agreement, it shall
be deemed to be followed by the words “without limitation.”

     (d) This Agreement is the product of negotiation by the Parties having the assistance of
counsel and other advisers. It is the intention of the Parties that this Agreement not be
construed more strictly with regard to one party than with regard to any other.

Purchase and Sale Agreement — Page 11

 

     (e) Unless otherwise specified, time periods within or following which any payment is to be
made or act is to be done shall be calculated by excluding the day on which the period commences
and including the day on which the period ends and by extending the period to the next Business Day
following if the last day of the period is not a Business Day. Time is of the essence in the
performance of the Parties’ respective obligations hereunder.

ARTICLE II

CLOSING, PURCHASE AND SALE

     Section 2.1. Purchase and Sale of the Purchased Assets. On the terms and subject to
the conditions of this Agreement, at the Closing and effective from and after the Closing Date, the
Seller shall sell, convey, transfer and assign (or cause its Subsidiaries to sell, convey, transfer
and assign) to the Purchaser, free and clear of all Liens, except Permissible Liens, and the
Purchaser shall purchase, acquire and accept the Gross Receivables and Pier 1 Bank Stock (the
“Purchased Assets”).

     Section 2.2. Purchase Price; Purchase Price Adjustment.

     (a) On the second Business Day before the Closing, Seller shall deliver to the Purchaser the
Estimated Closing Statement reflecting the Seller’s good faith calculation of the Estimated Closing
Payment to be paid by the Purchaser at the Closing.

     (b) Within forty-five (45) days after the Closing, Seller shall deliver to the Purchaser the
Final Closing Statement prepared based on the information in the Master File and the balance sheet
of Pier 1 Bank, as of the Cut-Off Time, and copies of the Master File, as of the Cut-Off Time.

     (c) The Purchaser shall, within the later of forty-five (45) days after receipt of the Final
Closing Statement or ninety (90) days after Closing, advise the Seller in writing and in reasonable
detail if it believes that the Final Closing Statement did not accurately reflect the items
required to be included therein in accordance with the provisions of this Agreement and Schedule
1.1(b) hereto, in each case stating in reasonable detail the basis of its belief. In the event the
Purchaser delivers such an objection, the Seller and the Purchaser shall attempt in good faith to
resolve their differences. In the event all differences are not resolved within thirty (30) days
following receipt of Purchaser’s written objections, then the issues remaining unresolved shall be
determined by a nationally recognized accounting firm that is not the principal auditor of Seller
or the Purchaser; provided, however that if Seller and the Purchaser are unable to
select such other accounting firm within forty-five (45) days after delivery of written notice of a
disagreement, then Seller and the Purchaser shall each select a representative from one such firm,
even though such firm may not have been acceptable to the other, and those two individuals shall
select a third firm. The accounting firm or accountant so selected shall be referred to herein as
the “Accountant”. The Accountant shall deliver to Seller and the Purchaser, as promptly as
practicable and in any event within forty-five (45) days after its appointment, a written report
setting forth the resolution of each disputed matter and its determination of the Final Closing
Statement determined in accordance with the terms of this Agreement. The Accountant shall resolve
all disputed items in accordance with the provisions of this Agreement. In making its

Purchase and Sale Agreement — Page 12

 

determination, the Accountant may only consider those items and amounts as to which the
Purchaser and the Seller have disagreed within the time periods and on the grounds specified. The
Accountant’s determination shall be conclusive and binding on the Purchaser and the Seller to the
fullest extent permitted by applicable law absent manifest error and may be enforced in any court
having jurisdiction. The fees of the Accountant shall be shared by the Purchaser and the Seller in
proportion to the relative differences between their respective calculations of the Final Closing
Payment and the amount determined by the Accountant.

     (d) If the Estimated Closing Payment exceeds the Final Closing Payment, then Seller shall,
within five (5) Business Days after the Final Closing Payment has been finally determined pursuant
to Section 2.2(c), pay such excess by wire transfer of immediately available funds (in U.S.
dollars) to the Purchaser, together with interest on the foregoing amount for the period from and
including the Closing Date to but excluding the date of such payment at a rate per annum equal to
the Federal Funds Rate over a 365 day year. If the Estimated Closing Payment is less than the
Final Closing Payment, then the Purchaser shall, within five (5) Business Days after the Final
Closing Payment has been finally determined pursuant to Section 2.2(c), pay such deficiency by wire
transfer of immediately available funds (in U.S. dollars) to Seller together with interest on the
foregoing amount for the period from and including the Closing Date to but excluding the date of
such payment at a rate per annum equal to the Federal Funds Rate over a 365 day year. Each party
to this Agreement shall make available to the other Parties, and to the Accountant, its and its
accountants work papers (to the extent possible), schedules and other supporting data as may be
reasonably requested by such other Parties to enable them to verify the amounts set forth in the
Final Closing Statement.

     Section 2.3. The Closing.

     (a) The closing (the “Closing”) of the purchase and sale of the Purchased Assets (the
“Purchase”) shall take place at the offices of Winstead Sechrest & Minick P.C., 5400
Renaissance Tower, 1201 Elm Street, Dallas, Texas, or by facsimile transmission on the date
mutually agreed to by the Parties after all of the conditions set forth in Article V (other than
conditions relating solely to the delivery of documents to be dated the Closing Date) has been
satisfied or waived in accordance with the terms of this Agreement (the “Closing Date”);
provided, however, in no event will such date be prior to October 1, 2006 or later than the end of
the month during which the conditions set forth in Article V (other than conditions relating solely
to the delivery of documents to be dated the Closing Date) have been satisfied or waived in
accordance with the terms of this Agreement.

     (b) At the Closing, the Purchaser shall, and the Seller shall, deliver or cause to be
delivered to each other (i) instruments of sale, assignment, transfer and conveyance of the
Purchased Assets (which shall be the Instrument of Assignment and Assumption), (ii) stock
certificates representing the Pier 1 Bank Stock, and (iii) a receipt for the Estimated Closing
Payment.

     (c) At the Closing, the Purchaser shall pay the Estimated Closing Payment by wire transfer of
immediately available funds (in U.S. dollars) prior to 11:00 A.M. Eastern time on the Closing Date
to an account(s) specified by Seller at least three (3) Business Days prior to the Closing Date.

Purchase and Sale Agreement — Page 13

 

     (d) Following the Closing, Purchaser shall pay, by wire transfer of immediately available
funds (in U.S. dollars) to an account(s) specified by Seller in writing, the amounts specified on
Schedule 1.1(e) as being payable following the Closing at the times indicated on Schedule 1.1(e).

     Section 2.4. Allocation of Purchase Price.

     (a) The parties hereto agree to report the allocation of the total consideration among the
Purchased Assets in a manner consistent with Schedule 1.1(e) (the “Allocation Statement”)
and agree to act in accordance with the Allocation Statement in the preparation and filing of all
Tax Returns (including filing Form 8594 with their respective Federal income tax returns for the
taxable year that includes the Closing Date and any other forms or statements required by the Code,
Treasury Regulations, the Internal Revenue Service or any applicable state or local taxing
authority) and in the course of any Tax audit, Tax review or Tax litigation relating thereto;
provided that neither Seller or any of its Affiliates nor Purchaser or any of its
Affiliates will be obligated to litigate any challenge to such allocation of the Purchase Price by
a taxing authority.

     (b) The Allocation Statement will be prepared in accordance with Section 1060 of the Code and
the rules and regulations promulgated thereunder; provided that no amount shall be
allocated to any non-compete, non-hire, or non-solicitation covenant or agreement.

     (c) The parties will promptly inform one another of any challenge by any taxing authority to
any allocation made pursuant to this Section and agree to consult and keep one another informed
with respect to the status of, and any discussion, proposal or submission with respect to, such
challenge.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

     Section 3.1. Representations and Warranties of Seller. Except as Previously Disclosed
against a specific representation and warranty set forth in this Section 3.1, Seller represents and
warrants to the Purchaser as follows:

     (a) Existence and Authority. Pier 1 Bank is a national banking association, duly
organized, validly existing and in good standing under the laws of the United States of America.
Seller is duly organized, validly existing and in good standing under its jurisdiction of
organization. Seller, either directly or through its Subsidiaries, has the requisite power and
authority to convey or cause to be conveyed the Purchased Assets, and to carry on the Business as
currently conducted by Pier 1 Bank, and Pier 1 Bank is duly qualified to do business in each
jurisdiction where the operation of the Business conducted by it requires such qualification,
except for any failure to be so qualified that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Business.

     (b) Authorization and Validity. Seller has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement. The making,
execution, delivery and performance of this Agreement and each Ancillary Agreement and the
consummation by Seller of the transactions contemplated hereby and thereby have been, or will

Purchase and Sale Agreement — Page 14

 

be, duly authorized by Seller or its Affiliates by all necessary corporate action. This
Agreement has been duly executed and delivered by the Seller and each Ancillary Agreement has been,
or shall have been at the Closing Date, duly executed and delivered by Seller or its Affiliates
thereto. Assuming that this Agreement has been, and that the Ancillary Agreements have been or
shall be on or prior to the Closing Date, duly authorized, executed and delivered by the Purchaser,
this Agreement is, and the Ancillary Agreements are or shall be at the Closing Date, the legal,
valid and binding obligations of Seller and its Affiliates, enforceable against them in accordance
with their respective terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer and other laws affecting creditors’ rights generally and to
general equitable principles.

     (c) Governmental and Third-Party Consents. No notices, reports or other filings are
required to be made by the Seller with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Seller from, any Governmental Authority or any other
third party in connection with the execution, delivery or performance of this Agreement and the
Ancillary Agreements by the Seller or its Subsidiaries or the consummation by them of the
transactions contemplated by this Agreement or the Ancillary Agreements, except for (i) the
Requisite Regulatory Approvals, (ii) any required third party consents, and (iii) such other
notices, reports, filings, consents, registrations, approvals, permits or authorizations the
failure to obtain would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

     (d) No Conflicts. The execution, delivery and performance of this Agreement and the
Ancillary Agreements do not, and (subject to obtaining the Requisite Regulatory Approvals and other
Previously Disclosed governmental and third-party consents, registrations, approvals, permits and
authorizations referred to in Section 3.1(c)) the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements will not:

     (i) breach, violate, conflict with, or be prohibited by the Constituent Documents of
the Seller or Pier 1 Bank;

     (ii) breach, violate, conflict with, or be prohibited by any Requirement of Law or
Applicable Order applicable to the Seller or Pier 1 Bank;

     (iii) breach, violate, conflict with, be prohibited by, require any additional approval
under or result in a default under the terms, conditions or provisions of any of the
On-Going Contracts or any Contract of Pier 1 Bank, or give any third party the right to
terminate or cancel any right of Seller or Pier 1 Bank under any such Contract, or
accelerate the performance of its obligations thereunder; or

     (iv) result in the creation of any Lien on the Purchased Assets, other than Permissible
Liens;

except in each case described in clause (iii) or (iv), for any breach, violation, default,
termination, cancellation, acceleration or Lien that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Business.

Purchase and Sale Agreement — Page 15

 

     (e) Absence of Certain Changes. Since February 25, 2006, the Business has been
conducted in the ordinary course of business consistent with past practice and there has not been
(1) any material change in: (x) any financial accounting practices, policies or procedures (to the
extent any such change would be binding on or otherwise affect the Business or the Purchaser
following the Closing, and except for any change in accounting practices, polices and procedures
required by reason of a concurrent change in GAAP); (y) any collections, pricing, origination,
charge-off, re-aging, credit or underwriting practices, policies and procedures of Pier 1 Bank with
respect to the Accounts; or (z) the servicing practices, policies and procedures of Pier 1 Bank
with respect to the Gross Receivables, except in each case for any such changes after the date
hereof as approved in writing by the Purchaser, or (2) any event, occurrence, development,
circumstances or facts that have had a Material Adverse Effect on the Business.

     (f) Title to Properties; Encumbrances.

     (i) Seller, either directly or through its Subsidiaries, has good title to the
Purchased Assets, free and clear of all Liens, other than Permissible Liens.

     (ii) Pier 1 Bank has good title to or a valid leasehold interest in, or is licensed or
otherwise entitled to use, all of the Pier 1 Bank Assets, free and clear of all Liens, other
than Permissible Liens.

     (iii) Upon consummation of the transactions contemplated by this Agreement, at the
Closing, the Purchaser shall be vested with good and marketable title in and to the
Purchased Assets, free and clear of all Liens other than Permissible Liens. The Purchased
Assets and the rights of Seller under the On-Going Contracts, include as of the date hereof
or will include, as of the Closing Date, all the assets, properties, rights and interests
(including, without limitation, real property and tangible and intangible property)
reasonably necessary for the Purchaser to conduct the Business in all material respects as
currently conducted and as the same will be conducted on the Closing Date. Notwithstanding
the foregoing, Purchaser acknowledges and agrees that the Purchased Assets do not include or
encompass any proprietary trade secrets, trade information, know-how, knowledge, policies,
procedures, practices, modeling, analysis or information of a confidential or proprietary
nature owned or controlled by FACS Group, Inc.

     (g) Litigation. Seller has Previously Disclosed a list and a summary description of
each pending Action with respect to the Accounts pending as of the date hereof in which the Seller
or Pier 1 Bank is a named defendant. There are no Actions pending, in arbitration or before any
Governmental Authority, against Seller or its Subsidiaries, or to the Seller’s Knowledge,
threatened against Seller or its Subsidiaries, in each case that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Business.

     (h) Contracts. Each On-Going Contract is a valid, legal, binding agreement of the
Seller or Pier 1 Bank. The Seller has made available to the Purchaser true and complete copies of
all On-Going Contracts. Neither such Seller or Pier 1 Bank nor, to the Seller’s Knowledge, any
other party thereto is in default under the terms of any such On Going Contract, except for any
such failures to be valid and binding and such defaults as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Business. Neither

Purchase and Sale Agreement — Page 16

 

Seller nor Pier 1 Bank have received any written notice of termination, cancellation, breach
or default under any On-Going Contract.

     (i) Books and Records. All Books and Records of the Seller and its Affiliates
relating to the Business, the Master File and the Cardholder List have been maintained accurately
and in accordance with all Requirements of Law applicable to the Seller or Pier 1 Bank and the
Business in all material respects. No third party (other than Affiliates of Seller) has rights to
use or market the information contained in the Master File and Cardholder List.

     (j) Compliance with Laws. Except to the extent that a breach of any of the following
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Business:

     (i) since January 1, 2004, Seller and Pier 1 Bank have been in compliance with all
Requirements of Law relating to the Business and the Purchased Assets; and

     (ii) since January 1, 2004, Seller and Pier 1 Bank have not been subject to any capital
plan or supervisory agreement, cease-and-desist or similar order or directive or memorandum
of understanding between any of them and any Governmental Authority.

     (k) Accounts.

     (i) On the Closing Date, Pier 1 Bank will be the sole owner of and will have good title
to the Accounts, and Pier 1 (U.S.) or other Subsidiary of Seller will be the sole owner of
and have good title to the Gross Receivables on the Accounts. Upon the Closing, subject to
the filing of appropriate financing statements and all required continuations, amendments
and replacements thereof, all right, title and interest in and to the Accounts, and the
Gross Receivables on the Accounts shall vest or be vested in the Purchaser, free and clear
of all Liens other than Permissible Liens.

     (ii) To the Seller’s Knowledge, each Account Agreement relating to an Account (other
than any Account Agreement with respect to any Charged Off Account) is a valid and legally
binding obligation of each obligor thereunder, including any cosigner, guarantor or surety,
and is enforceable against such obligors in accordance with its terms, subject to (i) fraud
and other possible claims and defenses on disputed card transactions asserted by a
Cardholder, (ii) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws relating to or affecting creditors’ rights generally and the effect
of general equitable principles, and (iii) the Servicemembers Civil Relief Act. The terms
of the Account Agreements have not been waived (other than on a case-by-case basis as
reflected in the Books and Records in all material respects) or modified in any material
respect by Pier 1 Bank. No Account is secured by any collateral whatsoever. Pier 1 Bank
has not taken nor caused to be taken any action to impair the Purchaser’s rights in the
Accounts or to prevent the Purchaser from collecting any portion of the Gross Receivables.

     (iii) Each Account complies in all material respects with the applicable Account
Agreement.

Purchase and Sale Agreement — Page 17

 

     (iv) All Account applications have been taken and evaluated and applicants notified in
a manner that complied in all material respects with all applicable Requirements of Law.

     (v) All Accounts have been solicited, originated, created, evaluated, maintained and
serviced in compliance in all material respects with all applicable Requirements of Law.

     (vi) All notifications and disclosures made in connection with the Accounts complied in
all material respects with all applicable Requirements of Law.

     (vii) To the Knowledge of the Seller, each of the Gross Receivables arises from or in
connection with a bona fide sale transaction (including any amounts in respect of finance
charges, annual fees and other charges and fees assessed on the Accounts).

     (viii) To the Knowledge of the Seller, Schedule 3.1(k) will set forth, in all material
respects, a complete and accurate delinquency aging report of the Accounts as of the last
completed billing cycle prior to the Cut-Off Time.

     (l) Qualifications. Pier 1 Bank is licensed and qualified in all jurisdictions
necessary to conduct activities with respect to the Accounts in which it is engaged in accordance
with all applicable Requirements of Law, except where the failure to be so qualified would not
reasonably be expected to be, individually or in the aggregate, a Material Adverse Effect on the
Business or the Purchased Assets.

     (m) Taxes and Tax Returns. Except as Previously Disclosed or set forth on Schedule
3.1(m).

     (i) Seller and Pier 1 Bank have filed all material Tax Returns that they were required
to file (taking into account all applicable extensions) on or before the date hereof (in the
case of the Seller, solely to the extent of any Tax Returns related to the Business), and
all Taxes required to be shown on such Tax Returns have been timely paid.

     (ii) There are no pending or, to the Knowledge of the Seller, threatened actions or
proceedings for the assessment or collection of a material amount of Taxes with respect to
Pier 1 Bank, Seller or any current Affiliate, nor has Pier 1 Bank or any Affiliate thereof
received any notice or inquiry from any jurisdiction in which Pier 1 Bank does not currently
file Tax Returns to the effect that Pier 1 Bank may be subject to taxation by such
jurisdiction.

     (iii) To the Knowledge of Seller, there are no pending or threatened actions or
proceedings for the assessment or collection of a material amount of Taxes with respect to
any former Affiliate of Pier 1 Bank or Seller for any period during which such Person was an
Affiliate of Pier 1 Bank or Seller.

     (iv) There are no outstanding waivers or agreements extending the statute of limitation
or the period for assessment, reassessment or collection of any amount of Taxes to which
Seller or Pier 1 Bank may be subject or relating to the Purchased Assets

Purchase and Sale Agreement — Page 18

 

or the Business, and no power of attorney that is currently in force has been granted
with respect to any matter relating to Taxes that could affect Seller or Pier 1 Bank or
relating to the Purchased Assets or the Business.

     (v) There are no Liens for any Taxes upon any of the Purchased Assets other than
Permissible Liens.

     (vi) Seller and Pier 1 Bank have properly and timely withheld, collected and deposited
all Taxes that are required to be withheld, collected and deposited under all applicable
Requirements of Law.

     (vii) Neither Seller nor Pier 1 Bank (in relation to the Purchased Assets and the
Business) is doing business in or engaged in a trade or business in any jurisdiction in
which it has not filed all required material Tax Returns, and no notice or inquiry has been
received from any jurisdiction in which Tax Returns have not been filed by Seller or Pier 1
Bank (in respect of the Purchased Assets and the Business) to the effect that the filing of
Tax Returns may be required.

     (viii) Neither Seller nor Pier 1 Bank has been either a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for tax-free treatment under Section 355 of the Code (A) in
the two years prior to the date of this Agreement or (B) in a distribution that could
otherwise constitute part of a “plan” or a “series of related transactions” (within the
meaning of Section 355(e) of the Code) with the transactions contemplated by this Agreement.

     (ix) Neither Seller nor Pier 1 Bank has any “corporate acquisition indebtedness” within
the meaning of Section 279(b) of the Code.

     (x) Neither Seller nor Pier 1 Bank has participated in a “listed transaction” within
the meaning of Treasury Regulations Section 1.6011-4(c)(3)(i)(A).

     (xi) For state and local tax purposes, Pier 1 Bank has nexus only in Nebraska. Pier 1
Bank makes no separate income tax filings, but files in Nebraska as part of the Seller’s
unitary tax group. Pier 1 Bank is included in other Seller unitary tax group state income
tax returns as required as well as the Seller’s consolidated Federal income tax return.
Pier 1 Bank files no other income or other tax returns that have a material tax liability.

Notwithstanding any provision in this Agreement to the contrary, the only representations and
warranties made by Seller with respect to matters relating to Taxes shall be the representations
and warranties set forth in this Section 3.1(m), and this Agreement shall not be interpreted in any
manner that is contrary thereto.

     (n) No Brokers or Finders. Any liability incurred by Seller, Pier 1 Bank or their
Affiliates for any financial advisory fees, brokerage fees, commissions or finder’s fees directly
or indirectly in connection with this Agreement or the transactions contemplated hereby or by the
Ancillary Agreements shall be borne by Seller.

Purchase and Sale Agreement — Page 19

 

     (o) Pier 1 Bank. The authorized capital stock of Pier 1 Bank consists of 40,000
shares of common stock, par value $10.00 per share, of which 20,000 shares are issued and
outstanding. All of the issued and outstanding shares of Pier 1 Bank Stock are beneficially and
legally owned by Seller, free and clear of all Liens. All of the issued and outstanding shares of
Pier 1 Bank Stock are duly authorized, validly issued, fully paid and nonassessable. There are no
outstanding (i) securities convertible into or exchangeable for Pier 1 Bank Stock, (ii) options,
warrants, calls or other rights to purchase or subscribe for Pier 1 Bank Stock or (iii) contracts
of any kind to which Pier 1 Bank or any of its Affiliates is subject or bound requiring the
issuance after the date of this Agreement of (x) Pier 1 Bank Stock, (y) any convertible or
exchangeable security of the type referred to in clause (i) or (z) any options, warrants, calls or
rights of the type referred to in clause (ii). Pier 1 Bank does not own, directly or indirectly,
any equity interest or investment in any Person.

     (p) Intellectual Property. Seller, Pier 1 Bank and their Subsidiaries have not
granted any license or other right to any third party, except as may be contemplated in the
On-Going Contracts, to use the Transferred Intellectual Property (i) in connection with any Credit
Card program or (ii) that would violate any rights in the Transferred Intellectual Property granted
to the Purchaser pursuant to the Program Agreement.

     (q) Personal Information. (i) Seller and Pier 1 Bank, to the extent required by
Privacy Law, each have a written privacy policy which governs their respective collection, use and
disclosure of Personal Information and Seller and Pier 1 Bank are in compliance, in all material
respects, with their respective privacy policies; (ii) all required consents to the collection, use
or disclosure of Personal Information (and in particular, the information contained in the Master
File and Cardholders List) in connection with the conduct of the Business have been obtained in
accordance with Privacy Laws; and (iii) all required consents to the disclosure of Personal
Information (and in particular, the information contained in the Master File and Cardholders List)
to the Purchaser have been obtained in accordance with Privacy Laws.

     (r) Licenses and Permits. (a) All material licenses, franchises, permits,
certificates, approvals or other similar authorizations affecting, or relating to the Purchased
Assets or the conduct of the Business (the “Seller Permits”) are valid and in full force
and effect; and (b) none of Seller or Pier 1 Bank is in material default, and no condition exists
that with notice or lapse of time or otherwise would constitute a material default, under Seller
Permits.

     (s) Financial Statements. Schedule 3.1(s) sets forth (i) the balance sheet
and statement of operations for Pier 1 Bank at, or for the 12 months ended, February 25, 2006, (the
“Annual Financial Information”), and (ii) the statement of operations and a balance sheet
for Pier 1 Bank at, or for the three Fiscal Months ended May 27, 2006 (the “Interim Financial
Information” and together with the Annual Financial Information, the “Financial
Information”). The Annual Financial Information has been prepared on a basis consistent with
the audited consolidated financial statements of Pier 1 Imports.

     Section 3.2. Representations and Warranties of the Purchaser. Except as Previously
Disclosed, the Purchaser represents and warrants to the Seller as follows:

Purchase and Sale Agreement — Page 20

 

     (a) Existence and Authority. The Purchaser is a validly existing national banking
association, duly organized and in good standing under the laws of the United States of America,
and has the corporate power and authority to carry on its business as now conducted and to acquire
and operate Pier 1 Bank and the Business as currently conducted or as proposed to be conducted.

     (b) Authorization and Validity. The Purchaser has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement and each of the
Ancillary Agreements and the consummation by the Purchaser of the transactions contemplated hereby
and thereby to which it is a party. The making, execution, delivery and performance of this
Agreement and each Ancillary Agreement have been duly authorized by the Purchaser by all necessary
corporate action. This Agreement has been duly executed and delivered by the Purchaser and each
Ancillary Agreement has been or shall have been, at the Closing Date, duly executed and delivered
by the Purchaser. Assuming that this Agreement has been, and the Ancillary Agreements have been or
shall be on or prior to the Closing Date, duly authorized, executed and delivered by the Seller
party thereto, this Agreement is, and the Ancillary Agreements shall be at the Closing Date, the
legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer and other laws affecting creditors’ rights generally and to
general equitable principles.

     (c) Governmental and Third-Party Consents. No notices, reports or other filings are
required to be made by the Purchaser with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by the Purchaser from, any Governmental Authority or any
other third party in connection with the execution, delivery and performance of this Agreement and
the Ancillary Agreements by the Purchaser, as applicable, or the consummation by the Purchaser of
the transactions contemplated by this Agreement or the Ancillary Agreements, except for the
Requisite Regulatory Approvals and for such other notices, reports, filings, consents,
registrations, approvals, permits or authorizations the failure to obtain which would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the
Purchaser or on the Business following the Closing Date. The Purchaser has no reason to believe
that it will not be able to obtain the Requisite Regulatory Approvals on a timely basis.

     (d) No Conflicts. The execution, delivery and performance by the Purchaser of this
Agreement and the Ancillary Agreements do not, and (subject to obtaining the Requisite Regulatory
Approvals and the other Previously Disclosed governmental and third-party consents, registrations,
approvals, permits and authorizations referred to in Section 3.2(c)) the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements will not:

     (i) breach, violate, conflict with or be prohibited by the Purchaser’s Constituent
Documents;

     (ii) breach, violate, conflict with or be prohibited by any Requirement of Law or
Applicable Order applicable to the Purchaser; or

Purchase and Sale Agreement — Page 21

 

     (iii) breach, violate, conflict with, be prohibited by, require any additional approval
under or result in a default under the terms, conditions or provisions of any Contract of
the Purchaser, or give any third party the right to terminate or cancel any right of the
Purchaser, conflict with, be prohibited by, require any additional approval under any such
Contract, or accelerate the performance of its obligation thereunder;

except in each case described in clause (iii), for any breach, violation, default, termination,
cancellation, acceleration or Lien that would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Purchaser or on the Business following the
Closing Date.

     (e) Absence of Certain Changes. Since January 1, 2006, there has not been any change
in the financial condition or results of operations of the Purchaser that has had, individually or
in the aggregate, a Material Adverse Effect on the Purchaser or on the Business as of the Closing
Date.

     (f) Compliance with Laws. Except to the extent that a breach of any of the following
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Purchaser, or be expected to have on the Business a Material Adverse Effect, as of
the Closing Date:

     (i) Since January 1, 2004, the Purchaser is in compliance with all Requirements of Law
relating to its credit card business; and

     (ii) Since January 1, 2004, neither the Purchaser nor any of its Subsidiaries is
subject to any capital plan or supervisory agreement, cease-and-desist or similar order or
directive or memorandum of understanding between it and any Governmental Authority or issued
by any Governmental Authority, nor has any of them adopted any board resolutions at the
request of any Governmental Authority.

     (g) Servicing Qualifications. The Purchaser is licensed and qualified in all
jurisdictions necessary to service the Accounts in accordance with all applicable Requirements of
Law, except where the failure to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Purchaser or the Business or on
the ability of the Purchaser to perform its duties as servicer, under the Program Agreement
following the Closing Date.

     (h) Financing. The Purchaser has sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to pay the Estimated Closing Payment and the
Purchase Price as required by Section 2.3 and to timely pay any other amounts to be paid by it
under this Agreement.

     (i) Litigation. Except as described in the publicly filed prospectuses in connection
with the Chase Issuance Trust, there are no actions, suits, proceedings or claims pending, in
arbitration or before any Governmental Authority, to which the Purchaser or any of its Subsidiaries
is a served Party, or to the Purchaser’s Knowledge, threatened against Purchaser or any of its
Subsidiaries, in each case that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Purchaser or on the Business.

Purchase and Sale Agreement — Page 22

 

     (j) No Brokers or Finders. Any liability incurred by the Purchaser or its Affiliates
for any financial advisory fees, brokerage fees, commissions or finder’s fees directly or
indirectly in connection with this Agreement or the transactions contemplated hereby or by the
Ancillary Agreements shall be borne by the Purchaser.

     (k) Restricted Securities. The Purchaser understands that the shares of Pier 1 Bank
are “restricted securities” under applicable U.S. federal and state securities laws and that,
pursuant to such laws, Purchaser must hold those securities indefinitely unless they are registered
with the Securities and Exchange Commission (the “SEC”) and qualified by applicable state
Governmental Authorities or an exemption from such registration and qualification is available.

     (l) Investment Representation. The Purchaser is purchasing the Pier 1 Bank Stock for
its own account with the present intention of holding such securities for investment purposes and
not with a view to or for sale in connection with any public distribution of such securities in
violation of any federal or state securities laws. The Purchaser is an “accredited investor” as
defined in Regulation D promulgated by the SEC under the Securities Act of 1933, as amended (the
“Securities Act”). Purchaser understands the risks of the transactions contemplated hereby
and of ownership of the Pier 1 Bank Stock. Purchaser acknowledges that the Pier 1 Bank Stock has
not been registered under the Securities Act or any state or foreign securities laws and that the
Pier 1 Bank Stock may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of unless such sale, transfer, offer, pledge, hypothecation or other disposition
is pursuant to the terms of an effective registration statement under the Securities Act and
qualification under any applicable state or foreign securities laws or pursuant to an exemption
from registration under the Securities Act and any applicable state or foreign securities laws.

     Section 3.3. No Other Representations or Warranties; No Recourse. Except as expressly
set forth in this Article III or the Ancillary Agreements, neither the Seller nor the Purchaser
have made or make any other express or implied representations, or any express or implied warranty,
either written or oral, with respect to the Purchased Assets, Seller, the Business or the
Purchaser, respectively, or as to any other matter whatsoever. Except as otherwise expressly
provided herein or in any Ancillary Agreement, the sale of the Purchased Assets is without recourse
of any kind to Seller or its Affiliates or to the Purchaser or its Affiliates. To the extent this
Agreement or any Ancillary Agreements may allow Purchaser recourse with respect to any Affiliates
of Seller, Purchaser acknowledges and agrees, notwithstanding anything in this Agreement or the
Ancillary Agreements to the contrary, that Purchaser’s only recourse will be to Seller, and Seller
acknowledges and agrees that it will be solely responsible for any failure by its Affiliates to
fulfill their obligations as contemplated by this Agreement or the Ancillary Agreements, as
applicable. THE PURCHASER ACKNOWLEDGES THAT SELLER DISCLAIMS ALL WARRANTIES OTHER THAN THOSE
EXPRESSLY CONTAINED IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

Purchase and Sale Agreement — Page 23

 

ARTICLE IV

COVENANTS

     Section 4.1. Conduct of Business. Except as otherwise contemplated hereby or by the
Ancillary Agreements, and except for transactions in the ordinary course of business or those
necessary to unwind the securitization evidenced by the Pooling and Servicing Agreement, until the
Closing Date, Seller shall, and shall cause Pier 1 Bank to, conduct the Business or cause the
Business to be conducted in the ordinary course consistent with past practice. Without limiting
the generality of the foregoing, Seller shall (as it relates to the Business), and shall cause Pier
1 Bank to, use their respective reasonable best efforts to (i) preserve intact the business
organizations and relationships with third parties relating to the Business, (ii) to keep available
the services of required Employees until the Closing Date, (iii) to preserve beneficial
relationships with customers and Cardholders in connection with the Business, and (iv) follow
substantially the same procedures, practices and standards, in all material respects, including
collection practices and accounting practices for charge-offs and reserves, as in effect on the
date of this Agreement.

     Section 4.2. Certain Changes.

     (a) Without limiting Section 4.1, except as otherwise contemplated hereby or by the Ancillary
Agreements or as required by applicable Requirements of Law or necessary for the unwinding of the
securitization evidenced by the Pooling and Servicing Agreement, from the date of this Agreement
until the Closing Date without the prior written consent of the Purchaser (which consent shall not
be unreasonably withheld or delayed), Seller shall not, and shall cause Pier 1 Bank not to:

     (i) enter into, terminate, amend, renew, subject to any Lien, or otherwise modify any
On-Going Contract except in the ordinary course of the Business consistent with past
practice and only to the extent such entry, termination, amendment, or subjection would not
have or be reasonably expected to have, individually or in the aggregate, a Material Adverse
Effect on the Business or on the Purchased Assets;

     (ii) in connection with the Business, acquire a material amount of assets from any
other Person or all or substantially all of the assets of any Person, whether by merger,
asset purchase or otherwise, if, in either case, such assets would constitute Purchased
Assets;

     (iii) make any material change in: (x) any financial accounting practices, policies or
procedures (to the extent any such change would be binding on or otherwise affect the
Business or the Purchaser following the Closing, and except for any change in accounting
practices, polices and procedures required by reason of a concurrent change in GAAP); (y)
any collections, pricing, origination, charge-off, reaging, delinquency, recovery, posting,
credit or underwriting practices, risk management, servicing, policies and procedures or
method of assigning status codes with respect to the Accounts; or (z) the servicing
practices, policies and procedures of Pier 1 Bank with respect to the Gross Receivables;

Purchase and Sale Agreement — Page 24

 

     (iv) sell, lease or otherwise dispose of any of the Purchased Assets, except (1) in the
ordinary course of business, (2) pursuant to the terms of Contracts or commitments existing
as of the date of this Agreement and Previously Disclosed, (3) as otherwise Previously
Disclosed, or (4) to effectuate the conveyance of the Purchased Assets as contemplated by
this Agreement;

     (v) except in the ordinary course of business consistent with past practice, settle any
material claim, action or proceeding or waive any material rights or claims in respect of
the Business in a manner that would have a Material Adverse Effect on the Business or any of
the Purchased Assets after the Closing;

     (vi) except as described on Schedule 4.2(a)(vi), transfer any interest in, or subject
to any Lien, the Purchased Assets to any other Person other than, in the ordinary course of
business consistent with past practices, to a collection agency in respect of Charged Off
Accounts;

     (vii) agree with any Person or otherwise commit themselves to do any of the foregoing;
or

     (viii) with respect to the Purchased Assets, except as such matters relate to Excluded
Taxes that are income taxes and/or franchise taxes, (A) make or revoke any material Tax
election or change any method of Tax accounting; (B) enter into any settlement or compromise
of any material Tax liability; (C) file an amended Tax Return with respect to any material
Tax; (D) change any material Tax accounting period; (E) enter into any closing agreement
relating to any material Tax; (F) surrender any right to claim a material Tax refund.

     (b) Notwithstanding the foregoing, Seller and Purchaser acknowledge and agree that, prior to
or concurrently with the Closing, Seller and its Affiliates and Pier 1 Bank may terminate any
inter-company agreements in anticipation of Pier 1 Bank no longer being an Affiliate of Seller. In
addition, Seller and Purchaser acknowledge and agree that, prior to or concurrently with the
Closing, Seller and/or Pier 1 Bank may take the additional actions set forth on Schedule 4.2(b).

     Section 4.3. Employees. Seller shall cause Pier 1 Bank to terminate all Employees
effective as of the Closing Date.

     Section 4.4. Access and Confidentiality.

     (a) Until the Closing Date, upon reasonable prior notice and subject to applicable
Requirements of Law relating to the exchange of information, (i) Seller shall, and shall cause Pier
1 Bank to, permit the Purchaser and its authorized representatives to have reasonable access,
during regular business hours for purposes consistent with this Agreement, to the properties and
Books and Records relating to the Business, including the Master File and the Cardholder List, to
the extent that such access does not unduly interfere with the business of the Seller or Pier 1
Bank; provided that the Purchaser and such representatives comply with the confidentiality
obligations contained herein and in the Confidentiality Agreement (defined below); and (ii) Seller
and Pier 1 Bank or the Purchaser, as applicable, shall direct its respective employees,

Purchase and Sale Agreement — Page 25

 

agents and representatives and shall cause the employees, agents and representatives of its
respective Affiliates, to cooperate fully with the Purchaser or Seller, as the case may be, and its
respective representatives in accessing such items; provided, that, in each case, the Purchaser and
Seller, as applicable, and its respective representatives shall comply with the confidentiality
obligations contained herein, and provided, further, that the foregoing shall not (1) require the
Seller or Pier 1 Bank to permit any inspection, or to disclose any information, that in their
reasonable judgment is prohibited or would result in the disclosure of any proprietary information
or trade secrets of third parties (including FACS Group, Inc.) or trade secrets of the Seller or
its Affiliates unrelated to the Business or violate any obligations of the Seller or its Affiliates
to any third party with respect to confidentiality or (2) require any disclosure by the Seller or
its Affiliates that could, as a result of such disclosure, have the effect of causing the waiver of
any attorney-client privilege. After the Closing, Seller shall keep confidential all Personal
Information it disclosed to the Purchaser and all information relating to the Business and Pier 1
Bank, except information (other than Personal Information) which; (i) is part of the public domain;
(ii) becomes part of the public domain other than as a result of a breach of these provisions by
Seller; (iii) was received in good faith after Closing from an independent Person who was lawfully
in possession of the information free of any obligation of confidence; (iv) is released from the
provisions of this agreement by the written authorization of the Purchaser, or (v) is required to
be disclosed by an applicable Requirement of Law.

     (b) If this Agreement is terminated, each party, at its own expense, shall promptly deliver
(without retaining any copies) to the other party or (at their option) confirm in writing to the
other party that it has completely destroyed all information furnished to such party or its
representatives by the other party or any of their agents, employees or representatives in
connection with this Agreement, whether so obtained before or after the execution hereof, and all
analyses, compilations, forecasts, studies or other documents prepared by such party or its
representatives that contain or reflect any such information; provided, however, that the foregoing
shall not apply to summary analyses made by such party that such party is required to retain (i) as
part of the minutes of the proceedings of its board of directors or any committee thereof, or (ii)
to comply with applicable Requirements of Law. Notwithstanding the return or destruction of such
information by the receiving party and/or its agents, employees and representatives, the receiving
party and its agents, employees and representatives will continue to be bound by its obligations
hereunder and under the Confidentiality Agreement regarding the use and confidentiality of such
information.

     (c) In addition to the confidentiality arrangements contained herein, all information provided
or obtained in connection with the transactions contemplated by this Agreement and by the Ancillary
Agreements (including pursuant to clause (a) above) on or prior to the Closing Date shall be held
by the Purchaser in accordance with the Confidentiality Agreement, dated May 4, 2006 between the
Purchaser and Pier 1 Imports (the “Confidentiality Agreement”). In the event of a conflict
or inconsistency between the terms of this Agreement and the Confidentiality Agreement, the terms
of the Confidentiality Agreement shall govern.

     (d) The Parties agree that monetary damages would not be a sufficient remedy for any breach of
the foregoing provisions of this Section 4.4 and the provisions of the Confidentiality Agreement,
and that, in addition to all other remedies, each Party will be entitled to seek specific
performance and to seek injunctive or other equitable relief as a remedy for any

Purchase and Sale Agreement — Page 26

 

breach of the foregoing provisions of this Section 4.4 and the provisions of the
Confidentiality Agreement.

     (e) From the date hereof through the Closing Date, Seller shall provide to the Purchaser
portfolio statistical reports, as available.

     Section 4.5. Reasonable Best Efforts; Other Filings.

     (a) Subject to the terms and conditions of this Agreement, the Purchaser shall, and shall
cause its Subsidiaries to, and Seller shall, and shall cause its Subsidiaries, including Pier 1
Bank, to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable Requirements of Law, so as
to permit consummation of the transactions contemplated by this Agreement as promptly as reasonably
practicable and shall cooperate fully with each other to that end.

     (b) Without limiting the foregoing, the Parties shall use their reasonable best efforts to
obtain the Requisite Regulatory Approvals with respect to the Purchase to allow the Purchaser to
perform its obligations under the Program Agreement, in each case in time to permit the Closing
Date to occur on or before October 31, 2006. The Parties hereby agree, without any request or
demand by the other Parties, (i) to make all necessary filings related to the Requisite Regulatory
Approvals with respect to the Purchase no later than twenty-one (21) Business Days from the
execution and delivery of this Agreement, (ii) to supply as promptly as practicable to the
appropriate Governmental Authorities any additional information and documentary material that may
be requested in connection with the receipt of the Requisite Regulatory Approvals and (iii) to
prosecute actively all such filings and pursue the receipt of each Requisite Regulatory Approval
and the licenses, permits or other qualifications referred to in clause (ii) above.

     (c) Purchaser shall promptly notify Seller in writing, and Seller shall promptly notify
Purchaser in writing, upon (i) becoming aware of any order or decree or any complaint seeking an
order or decree restraining or enjoining the execution of any Ancillary Agreement or the
consummation of the transactions contemplated by this Agreement or any Ancillary Agreement, or (ii)
receiving any notice from any Governmental Authority of its intention to (A) institute a suit or
proceeding to restrain or enjoin the execution of any Ancillary Agreement or the consummation of
the transactions contemplated by this Agreement or any Ancillary Agreement, (B) nullify or render
ineffective this Agreement or the Ancillary Agreements if such transactions are consummated, or (C)
fail to issue or give any of the Requisite Regulatory Approvals.

     (d) Any filing fees under the HSR Act or any other domestic or foreign antitrust merger
control laws shall be borne by the Purchaser.

     Section 4.6. Additional Instruments. At the reasonable request of Seller, on the one
hand, or the Purchaser, on the other hand, at or after the Closing, the other Person shall promptly
execute and deliver, or cause to be executed and delivered, to the requesting party such
assignments, bills of sale, assumption agreements, consents and other similar instruments in
addition to those required by this Agreement, in form and substance reasonably satisfactory to the
requesting party, as may be reasonably necessary to carry out or implement any provision of this
Agreement or any Ancillary Agreement or to make effective the Purchase.

Purchase and Sale Agreement — Page 27

 

     Section 4.7. Credit Card Marks; Branding. It is expressly agreed that, except for the
license granted in the Program Agreement, the Purchaser is not purchasing or acquiring any right,
title or interest in the Pier 1 Licensed Marks or other trademarks, service marks, copyrights or
other Intellectual Property Rights of the Seller or its Affiliates or that the Seller and its
Affiliates have used prior to the date of this Agreement (or shall use or own thereafter) in
connection with the Accounts or the Business (collectively, the “Credit Card Marks”). The
Purchaser acknowledges that the Seller or its Affiliates own the Credit Card Marks and goodwill
related thereto and symbolized thereby.

     Section 4.8. Notice to Cardholders.

     (a) Notice. Purchaser shall provide notice to the Cardholders in accordance with
Section 2.1(b) of the Program Agreement.

     (b) Communications. From and after the date of this Agreement and until the Closing,
Purchaser and its Affiliates shall not communicate with the Cardholders (whether by mail, by
telephone or otherwise) regarding the Business or their Accounts without the prior written consent
of Seller, which consent shall not be unreasonably withheld or delayed.

     Section 4.9. Cooperation in Obtaining Approval and Consents. Purchaser agrees to
cause one or more of its Affiliates to assume or to join as joint and several indemnitors, and
irrevocable and unconditional guarantors and sureties, of the obligations of the Purchaser to the
extent reasonably requested by any other party whose consent, approval or action is reasonably
required in connection with the transfer of the Purchased Assets.

     Section 4.10. Post-Closing Access. Purchaser shall, upon reasonable notice and
subject to applicable Requirements of Law relating to the exchange of information, afford to the
Seller, its Affiliates and their representatives reasonable access (including the right to copy),
without charge, during normal business hours, to the Purchased Assets, the Books and Records
relating thereto, and any Person who maintains or controls any of the foregoing for the Purchaser
or its Affiliates, all as may be reasonably requested by the Seller or any of its Affiliates in
order to enable the Seller to (i) prepare the Final Closing Statement and participate in the
resolution of any disputes relating thereto; (ii) permit the performance of any covenants required
to be performed under this Agreement and the Ancillary Agreements after the Closing Date; (iii)
permit the preparation of any Tax Return or other document required to be filed with any
Governmental Authority; and (iv) respond to any proceeding or to any claim made, or to any request
for information, by any Governmental Authority or any other Person not a party hereto (other than
an Affiliate of the Purchaser), including any Cardholder with respect to matters that may
constitute Excluded Liabilities.

     Section 4.11. Cooperation in Litigation.

     (a) Subject to Section 8.4, Seller and the Purchaser shall cooperate, to the extent reasonably
requested by the other, in the handling and disposition of any claim, action, suit, arbitration,
proceeding, investigation or regulatory inquiry (“Actions”), whether or not listed on the
Schedules and whether or not pending or threatened prior to the Closing that arise out of or are
related to any event or occurrence with respect to the Business prior to the Closing;
provided,

Purchase and Sale Agreement — Page 28

 

however, that the party ultimately responsible for discharging such Action shall have
the authority to take such actions as it deems necessary or advisable, in its sole discretion, to
discharge such Action, subject, however, to the provisions of this Agreement.

     (b) Seller shall be entitled to keep copies of all litigation filings, correspondence, Books
and Records and other documentation of any kind that Seller reasonably determines are necessary or
desirable in connection with the handling and disposition of the Actions by Seller and its
Affiliates.

     Section 4.12. Preservation of and Access to Books and Records. The Purchaser shall
preserve and keep all Books and Records of the Business which constitute a portion of the Purchased
Assets or are owned by Pier 1 Bank and all information relating to the accounting, business,
financial and Tax affairs of the Business that are in existence on the Closing Date but relate to
the Business prior to the Closing Date for a period of seven (7) years after the Closing Date, or
for any longer period (i) as may be required by any federal, state, local or foreign governmental
body or agency, (ii) as may be reasonably necessary with respect to the prosecution or defense of
any audit or other Action that is then pending or threatened, or (iii) that is equivalent to the
period established by any applicable statute of limitations (excluding any extension or waiver
thereof) with respect to matters pertaining to Taxes. For a period of four (4) years following the
seven (7) year period specified above, if the Purchaser wishes to destroy such records, the
Purchaser shall first provide Seller the opportunity to take possession of the same.

     Section 4.13. Bulk Sales Law. Purchaser hereby waives compliance by Seller, in
connection with the transactions contemplated hereby, with the provisions of any applicable bulk
sales law (including the Uniform Commercial Code Bulk Transfer provisions).

     Section 4.14. Third-Party Consents.

     (a) To the extent that any consent needed to assign to the Purchaser any On-Going Contract has
not been obtained on or prior to the Closing Date, this Agreement and any document delivered
pursuant hereto shall not constitute an assignment or attempted assignment thereof if such
assignment or attempted assignment would constitute a breach of such On-Going Contract or would
give rise to a valid right of termination thereof. If any such third-party consent shall not be
obtained on or prior to the Closing Date, then the Parties shall cooperate in entering into
alternative arrangements at the Closing Date pursuant to which the Purchaser would obtain
substantially all of the benefits and become responsible for substantially all of the obligations
under such On-Going Contract.

     (b) The Purchaser and Seller shall use commercially reasonable efforts (which for purposes of
this Section 4.14 shall not require any payment of money by Seller or the Purchaser, except as
agreed between them in writing) to seek any required consents to the assignment of the On-Going
Contracts which have not been obtained as of the Closing Date and promptly upon receipt of such
consents shall effect such assignments.

Purchase and Sale Agreement — Page 29

 

ARTICLE V

CONDITIONS TO EFFECT THE PURCHASE

     Section 5.1. Conditions to Each Party’s Obligations. The respective obligations of
Seller and the Purchaser to effect the Purchase are subject to the fulfillment or written waiver,
at or prior to the Closing Date, of the following conditions:

     (a) Governmental and Regulatory Approvals. All of the Requisite Regulatory Approvals
shall have been obtained and shall be in full force and effect and all waiting periods required by
law shall have expired or been terminated, and all other approvals or authorizations of, filings
and registrations with, and notifications to, all Governmental Authorities required to effect the
Purchase shall have been obtained and shall be in full force and effect, except to the extent that
the failure to obtain such an approval or authorization (other than a Requisite Regulatory
Approval) would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Business or on Seller.

     (b) Third Party Consents. The consents and approvals of the Persons set forth in
Schedule 3.1(c) and Schedule 3.2(c) with respect to the Closing shall have been obtained and shall
be in full force and effect, except to the extent that the failure to obtain such a consent or
approval would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Business, the Seller or the Purchaser.

     (c) No Injunction or Prohibition. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, by-law,
judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is
in effect and prohibits or makes illegal consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements.

     (d) Program Agreement. The Program Agreement shall have been duly executed and
delivered by the parties thereto.

     (e) Instrument of Assignment and Assumption. The Instrument of Assignment and
Assumption shall have been duly executed and delivered by the parties thereto.

     (f) Operating Procedures. Purchaser and Pier 1 (U.S.) shall have reached mutual
agreement with respect to the form and content of the initial Operating Procedures under the
Program Agreement.

     Section 5.2. Conditions to Obligations of the Purchaser. The obligations of the
Purchaser to effect the Purchase are subject to the fulfillment or waiver by it in writing, at or
prior to the Closing Date, of the following additional conditions:

     (a) Performance. Seller shall have performed in all material respects all of its
obligations, covenants and agreements set forth in this Agreement to the extent required to be
performed at or prior to the Closing Date.

Purchase and Sale Agreement — Page 30

 

     (b) Representations. The representations and warranties of Seller set forth in this
Agreement shall be true and correct as of the Closing Date (except that representations or
warranties that by their terms speak as of the date of this Agreement or some other date shall be
true and correct only as of such date), except to the extent that any failure to be so true and
correct (after excluding the effect of any Knowledge, Material Adverse Effect or other materiality
qualifier set forth in any such representation or warranty) would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Business following the
Closing Date.

     (c) Certificate. The Purchaser shall have received a certificate signed on the
Seller’s behalf by an executive officer of the Seller, dated the Closing Date, to the effect that
the conditions set forth in Sections 5.2(a) and 5.2(b) have been satisfied.

     Section 5.3. Conditions to Obligations of Seller. The obligations of the Seller to
effect the Purchase are subject to the fulfillment or waiver by it in writing, at or prior to the
Closing Date, of the following additional conditions:

     (a) Performance. The Purchaser shall have performed in all material respects all of
its obligations, covenants and agreements set forth in this Agreement to the extent required to be
performed at or prior to the Closing Date.

     (b) Representations. The representations and warranties of the Purchaser set forth in
this Agreement shall be true and correct as of the Closing Date (except that any representations or
warranties that by their terms speak as of the date of this Agreement or some other date shall be
true and correct only as of such date), except to the extent that any failure to be so true and
correct (after excluding the effect of any Knowledge, Material Adverse Effect or materiality
qualifier set forth in any such representation or warranty) would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Business following the
Closing Date.

     (c) Certificate. The Seller shall have received a certificate signed on the
Purchaser’s behalf by an executive officer of the Purchaser, dated the Closing Date, to the effect
that the conditions set forth in Sections 5.3(a) and 5.3(b) have been satisfied.

     (d) Termination of Securitization. The Seller shall have terminated, or caused to be
terminated, the Pooling and Servicing Agreement so that the Gross Receivables on the Accounts may
be transferred to Purchaser by Pier 1 (U.S.) or other designated Subsidiary of Seller.

ARTICLE VI

TERMINATION

     Section 6.1. Termination Prior to the Closing. This Agreement may be terminated at
any time before the Closing Date:

     (a) by the mutual written consent of the Parties hereto;

Purchase and Sale Agreement — Page 31

 

     (b) by either the Purchaser or Seller, if any Requisite Regulatory Approval or any other
approval of a Governmental Authority, the lack of which would result in the failure to satisfy the
condition set forth in Section 5.1(a), has been denied by the applicable Governmental Authority and
such denial has become final and nonappealable;

     (c) by either the Purchaser or Seller, if prior to the Closing, (i) any permanent injunction
or action by any Governmental Authority of competent jurisdiction prohibiting consummation of the
transactions contemplated by this Agreement or the Ancillary Agreements becomes final and
nonappealable; (ii) any law or regulation makes consummation of the transactions contemplated by
this Agreement or the Ancillary Agreements illegal or otherwise prohibited; or (iii) consummation
of the transactions contemplated by this Agreement or the Ancillary Agreements would violate any
nonappealable final order, decree or judgment of any Governmental Authority having competent
jurisdiction;

     (d) by either the Purchaser or Seller, if the Purchase is not consummated by January 31, 2007;
provided, however, that neither the Purchaser nor Seller may terminate this Agreement pursuant to
this Section 6.1(d) if such party’s breach of any representation, warranty or covenant contained
herein has been the cause of or resulted in the failure to consummate such transactions by such
date; or

     (e) by either the Purchaser or Seller, in the event of a breach or default in the performance
by the other party of any material representation, warranty, covenant or agreement of such other
party, which breach or default (i) would, individually or in the aggregate with all other uncured
breaches and defaults of such other party, constitute grounds for the conditions set forth in
Section 5.2(a) or (b) or Section 5.3(a) or (b), as the case may be, not to be satisfied at the
Closing Date, and (ii) has not been, or cannot be, cured within thirty (30) days after written
notice, describing such breach or default in reasonable detail, is given by the terminating party
to the breaching or defaulting party.

     Section 6.2. Effect of Termination. If this Agreement is terminated, it and the
Ancillary Agreements shall become void and of no further effect and no party hereto (or any of its
Affiliates, directors, officers, representatives or agents) shall have any liability or further
obligation to any other party to this Agreement, except (i) the representations set forth in
Sections 3.1(n) and 3.2(j), (k) and (l) and the obligations set forth in Sections 4.3(b)-(d), this
Section 6.2 and Article IX (other than Section 9.10 thereof) shall continue to apply following any
such termination, and (ii) termination of this Agreement shall not relieve any party of any
liability arising out of or resulting from any knowing, willful or intentional breach of this
Agreement by such party prior to such termination.

ARTICLE VII

TAX MATTERS

     Section 7.1. Tax Indemnity.

     (a) Seller shall be liable for and shall indemnify and hold harmless the Purchaser from and
against any and all Excluded Taxes and any expenses related thereto.

Purchase and Sale Agreement — Page 32

 

     (b) The Purchaser shall be liable for and indemnify and hold harmless Seller from and against
any and all Taxes and any expenses related thereto to the extent that such Taxes are (i) Taxes
relating to the Purchased Assets, the Business or the Pier 1 Bank Liabilities for any Post-Closing
Tax Period; (ii) Taxes of Pier 1 Bank for any Post-Closing Tax Period; or (iii) with respect to
Straddle Taxes, Taxes of Pier 1 Bank which are not allocable, pursuant to Section 7.1(c), to the
portion of such period ending on the Closing Date.

     (c) With respect to Taxes that are payable for a taxable period that begins before the Closing
Date and ends after the Closing Date (the “Straddle Taxes”), the portion of any such Tax
that is allocable to the Pre-Closing Tax Period shall be in the case of (i) Taxes imposed on a
periodic basis or otherwise measured by the level of any item deemed to be the amount of such Taxes
for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding period), multiplied by a fraction the numerator of which
is the number of calendar days in the period ending on the Closing Date and the denominator of
which is the number of calendar days in the entire period irrespective of the lien or assessment
date of such Taxes; and (ii) Taxes imposed on or measured by income, gross receipts, wages,
expenses or other similar periodic measures or imposed on sales, assignments or any other transfers
of any property deemed equal to the amount which would be payable if the taxable year ended with
the Closing Date (based on an interim closing of the books as of the Closing).

     (d) Notwithstanding any other provision in this Agreement to the contrary, to the extent
Seller or any of its Affiliates (other than Pier 1 Bank) had paid estimated Taxes that are
attributable to the income, gain, business or activities of Pier 1 Bank for any Post-Closing Tax
Period and prior to the Closing Date Seller has not been reimbursed for such expenses, Seller’s
liability for Taxes pursuant to this Agreement shall be reduced by the amount of such payments.

     Section 7.2. Preparation and Filing of Tax Returns.

     (a) Seller shall prepare, with respect to the Purchased Assets, and shall cause Pier 1 Bank to
prepare or cause to be prepared, in a manner consistent with past practice (but only to the extent
such past practices shall not, in the reasonable judgment of Seller, cause Seller or Pier 1 Bank to
incur any penalties or additional Taxes) and file or cause to be filed on a timely basis all (i)
Tax Returns with respect to the Purchased Assets and the Business and Pier 1 Bank for taxable years
or periods that end on or before the Closing Date and (ii) consolidated, unitary, combined or
similar Tax Returns (the “Consolidated Tax Returns”) that include Pier 1 Bank and Seller or
any of their Affiliates no matter when such taxable years end.

     (b) Except as provided in Section 7.2(a) hereof, the Purchaser shall prepare or cause to be
prepared and file or cause to be filed (at the expense of Purchaser) on a timely basis all other
Tax Returns with respect to the Business, Pier 1 Bank, the Purchased Assets and, subject to
Seller’s indemnity for Taxes as provided in Section 7.1(a) hereof, pay all Taxes reported as due on
such Tax Returns.

     (c) With respect to any Tax Return required to be filed or caused to be filed by Seller or the
Purchaser pursuant to Sections 7.2(a) and (b) hereof with respect to Pier 1 Bank (such party, the
“Filing Party”) and as to which an amount of Tax is allocable to the party that is not

Purchase and Sale Agreement — Page 33

 

the Filing Party (the “Tax Indemnifying Party”) pursuant to Section 7.1(a) or (b)
hereof, the Filing Party shall provide the Tax Indemnifying Party and its authorized
representatives with a copy of such completed Tax Return or in the case of a Consolidated Tax
Return, a pro forma Tax Return for Pier 1 Bank (prepared on a separate company basis) and a
statement certifying and setting forth the calculation of the amount of Tax shown on such Tax
Return that is allocable to such Tax Indemnifying Party, together with appropriate supporting
information and schedules at least thirty (30) Business Days prior to the due date (including any
extension thereof) for the filing of such Tax Return or Consolidated Tax Return, as the case may
be, and such tax Indemnifying Party and its authorized representatives shall have the right to
review and comment on such Tax Return and statement.

     Section 7.3. Time of Payment. Payment of any amounts due under this Article VII in
respect of Taxes shall be made: (i) except to the extent that a matter relating to Taxes is being
contested with a taxing authority, at least three (3) Business Days before the due date of the
applicable estimated or final Tax Return required to be filed by the Filing Party that reports a
tax liability for which a Tax Indemnifying Party is liable pursuant to this Agreement or (ii) with
respect to any matter relating to Taxes which is being contested with a taxing authority, within
three (3) Business Days after the following: (A) an agreement between Seller and the Purchaser
that an indemnity is payable, (B) a final determination having been made by a taxing authority; or
(C) except in the case of a matter that is being contested or shall be contested with a taxing
authority, an assessment of a Tax by a taxing authority. If liability under this Article VII is in
respect of an expense relating to the contest of a Tax matter, then payment of any amounts due
under this Article VII shall be made as of the time when the payment of the corresponding Tax is
due pursuant to the immediately preceding sentence.

     Section 7.4. Tax Refunds. Purchaser shall, if Seller so requests, cooperate with
Seller to file for and obtain any Tax refund or credit related to the Business or the Purchased
Assets or Pier 1 Bank that relates to any period ending on or before the Closing Date. If the
Purchaser at any time receives a Tax refund or credit described in the immediately preceding
sentence, the Purchaser shall promptly pay over such refund or the amount of such credit to the
Seller. Any Tax refunds or credits relating to Pier 1 Bank, the Purchased Assets, or the Business
with respect to a Straddle Period shall be equitably apportioned between the Purchaser, on the one
hand, and the Seller, on the other hand. The Purchaser and Seller agree to carry forward any net
operating loss, net capital loss, special deduction, or credit attributable to Pier 1 Bank for a
Post-Closing Tax Period when an election is available as an alternative to the carry back of such
item to a Pre-Closing Tax Period.

     Section 7.5. Tax Notice; Tax Controversies.

     (a) Seller and the Purchaser shall provide to each other written notice within ten (10) days
of receipt of any notice of deficiency, proposed adjustment, assessment, audit, examination or
other administrative or court proceeding, suit, dispute or other claim (a “Tax Claim”) in
which a taxing authority makes or proposes to make a Tax adjustment to the Purchaser, Pier 1 Bank
or Seller which, if determined adversely to the taxpayer would be grounds for indemnification under
this Article VII. Seller shall control any such proceeding to the extent such proceeding: (i)
involves a Consolidated Tax Return or any matter relating to a Consolidated Group of Seller (a
“Seller Consolidated Group Tax Claim”) or (ii) could adversely affect the Taxes of Seller
or any

Purchase and Sale Agreement — Page 34

 

of its Affiliates or could result in Seller being liable for any amount of Taxes or losses
related thereto, either under applicable Requirements of Law or pursuant to this Agreement, and the
Purchaser shall control all other proceedings; provided that, with respect to any such Tax
Claim (other than a Seller Consolidated Group Tax Claim), the party not controlling the proceeding
of such Tax Claim or its representative shall (to the extent permitted by applicable Requirements
of Law) have the right, at its expense, to participate in any such Tax Claim (other than a Seller
Consolidated Group Tax Claim). Other than with respect to a Seller Consolidated Group Tax Claim,
the Parties hereto agree that they shall not settle, compromise or agree to any Tax adjustment
which affects or could affect the other party’s Tax liability without the prior written consent of
the other party, which consent shall not be unreasonably delayed, conditioned or withheld;
provided, however, that such settlement or compromise shall not adversely affect
the Tax liability of Pier 1 Bank after the Closing Date.

     (b) Notwithstanding any other provision in this Agreement to the contrary, Seller shall
control the conduct of all Seller Consolidated Group Tax Claims that include Seller, and Seller
shall have sole discretion in administering any such claims including the right to settle such
claims without the consent of the Purchaser.

     Section 7.6. Cooperating and Controversies.

     (a) Seller and the Purchaser shall reasonably cooperate, and shall cause their respective
Affiliates, agents, auditors, representatives, officers and employees reasonably to cooperate, in
preparing and filing all Tax Returns of Pier 1 Bank (including amended returns and claims for
refund), including maintaining and making available to each other all records necessary in
connection with Taxes and with respect to any Tax Claim, which cooperation shall include but not be
limited to (i) providing all relevant information that is available to the Purchaser, Seller and/or
Pier 1 Bank, as the case may be, with respect to such Tax Claim; (ii) making personnel available at
reasonable times; and (iii) preparation of responses to requests for information; provided,
that the foregoing shall be done in a manner so as to not unreasonably interfere with the conduct
of business by the Purchaser, Seller or Pier 1 Bank, as the case may be. None of Seller, Pier 1
Bank and the Purchaser shall dispose of any Tax Returns, Tax schedules, Tax work papers or any
books or records of Pier 1 Bank unless it first offers in writing to the other party the right to
take possession of such materials at such other party’s sole expense and the other party fails to
accept such offer within fifteen (15) days of the offer being made if an offer is accepted and the
offeree fails to take possession within thirty (30) days of the date on which the offer is made.
Any information obtained under this Section 7.6 shall be kept confidential, except as may be
otherwise necessary in connection with the filing of Tax returns or claims for refund or with
respect to any Tax Claim.

     (b) Notwithstanding any other provision in this Agreement, the Purchaser shall have no right
to obtain any information with respect to or regarding the combined, consolidated, unified or group
Tax Returns that are filed by Seller and Seller’s Affiliates.

     (c) Within 180 days after the Closing Date, the Purchaser shall cause Pier 1 Bank to prepare
and provide to Seller a package of Tax information materials, including without limitation,
schedules and work papers (the “Tax Package”) required by Seller to enable Seller to
prepare and file all Tax Returns required to be prepared and filed by Seller pursuant to Section

Purchase and Sale Agreement — Page 35

 

7.2(a) hereof, and upon Seller’s reasonable request, the Purchaser shall provide to Seller any
additional information that may be requested by Seller. The Tax Package shall be prepared in good
faith in a manner consistent with past practice.

     Section 7.7. Survival. All agreements, covenants and indemnification matters
contained in this Article VII shall survive the Closing until sixty (60) days following the
expiration of the applicable statutory period of limitation.

     Section 7.8. Termination of Tax Sharing Agreements. As of the Closing Date, Seller
shall cause all Tax allocation, Tax sharing, Tax reimbursement and similar agreements and
arrangements (“Tax Sharing Agreements”) between Seller or any of its Affiliates, on the one
hand, and Pier 1 Bank on the other, to be extinguished and terminated with respect to Pier 1 Bank;
provided that such termination shall not excuse Pier 1 Bank from making all payments due to
Seller or any of its Affiliates (other than Pier 1 Bank) under such Tax Sharing Agreements as
determined as of the Closing Date (including all reasonable costs and expenses associated with
preparing the Tax Returns on which such income Taxes shall be reported ). The payment and
calculation of any payments due and owing with respect to the preceding sentence shall be made in a
time and manner consistent with past practice.

     Section 7.9. Exclusivity. Except as provided in Section 3.1(m) hereof with respect to
representations and warranties relating to Tax matters, notwithstanding any other provision in this
Agreement to the contrary, this Article VII shall control all matters relating to Taxes and any
claims, liabilities, damages, deficiencies, obligations, costs or expenses, penalties and
reasonable attorneys’ fees and disbursements related thereto.

     Section 7.10. Section 338(h)(10) Election.

     (a) The Purchaser and Seller shall join in making an election under Section 338(h)(10) for the
Code (or any identical or similar provisions under Requirements of Law) with respect to Pier 1 Bank
(the “Section 338(h)(10) Election”). The Purchaser and Seller agree to cooperate in all
respects for the purpose of the preparation and filing of the Section 338(h)(10) Election
(including the preparation of the Form 8023), and jointly filing an effective Section 338(h)(10)
Election prior to, at the time of and subsequent to the filing of such Section 338(h)(10) Election.

     (b) For purposes of making such Section 338(h)(10) Election, the Purchaser shall initially
determine the value of the tangible and intangible assets of Pier 1 Bank and shall within one
hundred twenty (120) days of the Closing Date provide Seller with an allocation of the Purchaser’s
“adjusted grossed-up basis” in the shares of Pier 1 Bank (within the meaning of the Treasury
Regulations under Section 338 of the Code, including Section 1.338(h)(10)-1 of the Treasury
Regulations) to such assets (the “Allocation”). If any adjustments to the Purchaser’s
“adjusted grossed-up basis” in the shares of Pier 1 Bank are necessary, the Purchaser shall provide
Seller with an allocation of the “adjusted grossed-up basis”, so adjusted, among the tangible and
intangible assets of Pier 1 Bank (the “Adjusted Allocation”). The Allocation and the
Adjusted Allocation, if any, shall be in writing and shall, subject to the last proviso of this
Section 7.10(b), be binding upon the Purchaser and Seller for purposes of allocating the “deemed
selling price” (within the meaning of the Treasury Regulations) among the assets of Pier 1 Bank;

Purchase and Sale Agreement — Page 36

 

provided that if Seller believes that all or a portion of the Allocation or the
adjusted Allocation is materially incorrect and the Purchaser and Seller cannot resolve their
disagreement within thirty (30) days after notification thereof by the objecting Seller to the
Purchaser, Seller and the Purchaser shall adopt their own respective Allocation for income tax
reporting.

     (c) Subject to the last proviso of Section 7.10(b), neither Seller nor the Purchaser shall
file any Tax Return, or take a position with a taxing authority, that is inconsistent with the
Allocation or the Adjusted Allocation that is applicable to Seller.

     (d) Purchaser and Seller recognize that part of the Purchase Price will be deferred over time
and will accordingly treat as interest for tax purposes a portion of the amount so deferred under
the principles of Code Section 1274 and the regulations thereunder.

     Section 7.11. FIRPTA Certificates. On or prior to each of the Closing Date, the
Purchaser shall have received from Seller a certificate in compliance with Treasury Regulation
Section 1.1445-2(b), certifying that such Seller is not a “foreign person” under Section 1445 of
the Code.

     Section 7.12. Agreements. Notwithstanding anything to the contrary contained
herein, all Liabilities and obligations between the Seller and any of its Affiliates (other than
Pier 1 Bank), on the one hand, and Pier 1 Bank, on the other hand, under the agreements referenced
in Schedule 7.12 shall cease and terminate as of the Closing Date and shall no longer be
enforceable.

ARTICLE VIII

SURVIVAL; INDEMNIFICATION

     Section 8.1. Survival.

     (a) The representations or warranties of the Parties in this Agreement shall survive the
Closing until the eighteen (18) month anniversary of the Closing Date; provided, however, that the
representations and warranties made pursuant to Sections 3.1(a), (b), (f), (k)(i), (k)(ii), and (n)
and Sections 3.2(a), (b), (f), (j), (k) and (l) shall survive indefinitely and the representations
and warranties made pursuant to Section 3.1(m) shall survive until the expiration of the applicable
statute of limitations.

     (b) No claim for indemnification pursuant to this Article VIII for breach of any
representation or warranty may be brought after the date on which such representation or warranty
no longer survives; provided, that if a written notice of a claim for indemnification is given to
the indemnifying party in accordance with Section 8.4(a) prior to the termination of the applicable
survival period, the indemnifying party’s obligation hereunder with respect to such indemnification
claim shall survive until such claim has been finally resolved.

     Section 8.2. Indemnification by the Seller. Subject to the provisions of this Article
VIII, after the Closing Date, Seller shall indemnify the Purchaser and its Affiliates and each of
their respective officers, directors, employees, agents and each of the successors and assigns of
the foregoing against, and agree to hold each of them harmless from, any and all

Purchase and Sale Agreement — Page 37

 

damage, disbursement, loss, liability, cost, claim, interest, award, judgment, penalty,
interest or expense (including reasonable expenses of investigation and reasonable attorneys’ fees
and expenses in connection with any action, suit or proceeding) (“Losses”) (including such
fees and expenses related to the enforcement of this Agreement) incurred or suffered by the
Purchaser or any of its Affiliates because of (1) any breach of a representation or warranty of
Seller contained in Section 3.1 determined without regard to any Knowledge, Material Adverse Effect
or materiality qualifier therein (except in the case of the representations and warranties set
forth in Sections 3.1(e)), (2) any breach of an agreement or covenant made by Seller in this
Agreement or in any certificate delivered pursuant to this Agreement, (3) any Excluded Liabilities,
(4) any Excluded Taxes, (5) the failure by Seller to comply with any applicable bulk sales laws
(notwithstanding the waiver contained in Section 4.13), or (6) except as reserved or reflected in
the Annual Financial Information or Interim Financial Information and subject to Section 3.1(e),
Seller’s operation of the Business prior to the Closing Date. Notwithstanding the foregoing,
Purchaser and its Affiliates shall not be entitled to indemnification pursuant to clause (1) of
this Section 8.2 (other than for breaches of Sections 3.1(a), (b), (f), (k)(i), (k)(ii), (m) and
(n) which shall not be subject to the following limitations): (a) for any Losses until the
aggregate amount of all Losses incurred or suffered by the Purchaser or any of its Affiliates
exceeds Five Hundred Thousand Dollars ($500,000), in which case the Purchaser and its Affiliates
shall be entitled to indemnification for the full amount of Losses in excess of such threshold; and
(b) for Losses, in the aggregate, incurred or suffered by the Purchaser or any of its Affiliates in
excess of one-half of the Purchase Price.

     Section 8.3. Indemnification by the Purchaser. Subject to the provisions of this
Article VIII, after the Closing Date, the Purchaser shall indemnify Seller and each of its
respective Affiliates and each of their respective officers, directors, employees, agents and each
of the successors and assigns of the foregoing against, and agree to hold each of them harmless
from, any and all Losses incurred or suffered by a Seller or any such Affiliate because of (1) any
breach of a representation or warranty of the Purchaser contained in Section 3.2 determined without
regard to any Knowledge, Material Adverse Effect or materiality qualifier therein, (2) any breach
of an agreement or covenant made by the Purchaser in this Agreement, (3) any Pier 1 Bank
Liabilities, (4) any Liability for Taxes of Pier 1 Bank other than Pier 1 Bank Excluded Taxes or
Taxes that constitute Excluded Liabilities or (5) the operation of the Business from and after the
Closing. Notwithstanding the foregoing, the Seller and its Affiliates shall not be entitled to
indemnity pursuant to clause (1) of this Section 8.3 (other than for breaches of Sections 3.2(a),
(b), (j), (k) and (l), which shall not be subject to the following limitations): (a) for any Losses
until the aggregate amount of all Losses incurred or suffered by the Seller or any of its
Affiliates exceeds Five Hundred Thousand Dollars ($500,000), in which case the Seller and its
Affiliates shall be entitled to indemnification for the full amount of Losses in excess of such
threshold; and (b) for Losses, in the aggregate, incurred or suffered by the Seller or its
Affiliates in excess of one-half of the Purchase Price.

     Section 8.4. Notice, Settlements and Other Matters.

     (a) A party seeking indemnification pursuant to Section 8.2 or Section 8.3 (an
“Indemnified Party”) must give prompt written notice to the party from whom such
indemnification is sought (the “Indemnifying Party”) of the assertion of any claim, or the
commencement of any action or proceeding, in respect of which indemnity may be sought

Purchase and Sale Agreement — Page 38

 

hereunder specifying in reasonable detail the individual items of the Losses in respect of
which indemnification is sought including the amount, the date each such item was paid, incurred or
properly accrued, and the specific details of the breach of representation, warranty or covenant or
other claim or matter to which such item is related. In the event that any third party claim is
made against the Indemnified Party and the Indemnified Party notifies the Indemnifying Party of the
commencement thereof, the Indemnifying Party may elect at any time to negotiate a settlement or a
compromise of such action or claim or to defend such action or claim, in each case at its sole cost
and expense (subject to the limitations set forth in Section 8.2, if the Seller is the Indemnifying
Party, or Section 8.3, if the Purchaser is the Indemnifying Party) and with its own counsel. If,
within thirty (30) days of receipt from an Indemnified Party of the notice referred to above, the
Indemnifying Party (i) advises the Indemnified Party in writing that it shall not elect to defend,
settle or otherwise compromise or pay such action or claim or (ii) fails to make such an election
in writing, the Indemnified Party may (subject to the Indemnifying Party’s continuing right of
election in the preceding sentence), at its option, defend, settle, compromise or pay such action
or claim; provided that any such settlement or compromise shall be permitted hereunder only with
the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld.
Unless and until the Indemnifying Party makes an election in accordance with this Section to
defend, settle, compromise or pay such action or claim, all of the Indemnified Party’s reasonable
costs arising out of the defense, settlement, compromise or payment thereof shall be Losses subject
to indemnification by the Indemnifying Party (subject to the provisions and limitations of Sections
8.2 and 8.3, as applicable). Each Indemnified Party shall make available to the Indemnifying Party
all information reasonably available to such Indemnified Party relating to such action or claim.
If the Indemnifying Party elects to defend any such action or claim, the Indemnified Party may
participate in such defense with counsel of its choice at the Indemnified Party’s sole cost and
expense.

     (b) The Indemnified Party shall have the right to reject any settlement proposed by the
Indemnifying Party if the Indemnified Party is not fully and unconditionally released from any
liability resulting from that claim or is required to pay any costs, expenses or damages to any
person as a result of the claim that are not covered by the indemnity provided herein. The
Indemnified Party shall not have the right to settle any third party claim without the written
consent of the Indemnifying Party if the Indemnifying Party is contesting such claim in good faith
and has assumed the defense of such claim from the Indemnified Party or if the period for
determining whether or not to assume the defense of such claim from the Indemnified Party has not
expired.

     (c) In calculating the amount of any Losses of an Indemnified Party under this Article VIII,
there shall be subtracted the amount of any (1) Tax benefits actually realized by the Indemnified
Party with respect to such Losses, (2) insurance proceeds and third-party payments actually
received by the Indemnified Party with respect to such Losses and (3) any merchant charge-backs
that would be permissible under the operating rules in effect at that time (whether or not such
charge-back was actually made), and there shall be added the amount of any related Tax costs or
other expenses. In the event that the Indemnifying Party reimburses the Indemnified Party for any
Losses prior to the realization or receipt of any proceeds, benefits, payments, charge-backs
contemplated by clauses (1), (2) or (3) above, the Indemnified Party shall remit to the
Indemnifying Party any such amounts that the Indemnified Party subsequently receives or realizes
with respect to such Losses (net of any related Tax costs or other expenses to

Purchase and Sale Agreement — Page 39

 

the extent such amounts were not previously taken into account). Upon the payment of any
claim hereunder, the Indemnifying Party shall be subrogated to the extent of such payment to the
rights of the Indemnified Party against any person with respect to the subject matter of such
claim.

     (d) Without limitation of their respective rights and obligations as set forth elsewhere in
this Article VIII, and subject to the procedures for indemnification claims set forth in this
Article VIII, the Indemnified Party shall act in good faith, shall use commercially reasonable
efforts to mitigate any Losses (including by seeking to fully realize or receive any proceeds,
benefits, payments, or charge-backs contemplated by clauses (1), (2) and (3) of Section 8.4(c)),
shall use similar discretion in the use of personnel and the incurring of expenses as the
Indemnified Party would use if it were engaged and acting entirely at its own cost and for its own
account, and shall consult regularly with the Indemnifying Party with respect to all its matters of
interest to the Indemnifying Party under this Article VIII.

     (e) All indemnity payments shall be treated as additional adjustments to the amount of the
total consideration paid for the Purchased Assets and the Business for all Tax purposes.

     (f) Notwithstanding anything to the contrary contained herein, the indemnification provided
for herein shall not cover, and in no event shall any party hereto be liable for, any indirect
damages, including consequential, incidental, exemplary or special damages, or punitive damages.

     (g) After the Closing Date, Article VII and this Article VIII shall constitute the Seller’s
and the Purchaser’s exclusive remedy for any of the matters addressed herein or other claim
arising out of or relating to this Agreement; provided, however, that this
provision shall not impair the ability of either party to obtain specific performance or other
equitable relief.

ARTICLE IX

MISCELLANEOUS

     Section 9.1. Notices. All notices and other communications by the Purchaser or the
Seller hereunder shall be in writing to the other party and shall be deemed to have been duly given
when delivered in person, when received via facsimile or overnight courier, or when posted by
United States registered or certified mail, with postage prepaid, addressed as follows:

     if to the Purchaser to:

201 North Walnut Street, Floor 15

Wilmington, DE 19801-2920

Attention: David Hoyt

Facsimile: (302) 282-1892

Purchase and Sale Agreement — Page 40

 

with a copy to:

201 North Walnut Street, Floor 10

Wilmington, DE 19801-2920

Attention: Robert Birnbaum

Facsimile: (302) 282-8361

     if to the Seller to:

c/o Pier 1 Assets, Inc.

100 Pier 1 Place

Fort Worth, Texas 76102

Attention: Michael A. Carter, Esq.

           Senior Vice President and Secretary

Facsimile: (817) 252-7319

with a copy to:

Winstead Sechrest & Minick P.C.

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

Attention: Bruce A. Cheatham, Esq.

Facsimile: (214) 745-5390

     Notices and other communications may also be sent to such other address or addresses as the
Purchaser or the Seller may from time to time designate by notice as provided herein, except that
notices of change of address shall be effective only upon receipt.

     Section 9.2. Expenses and Certain Post-Closing Matters.

     (a) Except as otherwise provided herein, all legal and any other third-party costs and
expenses incurred in connection herewith and the transactions contemplated by this Agreement and
the Ancillary Agreements shall be paid by the party incurring such expenses, except that all fees
or other amounts payable to any Governmental Authority in connection with the HSR Act shall be paid
by Purchaser.

     (b) Collection efforts and related expenses on the Accounts made or incurred by the Seller
prior to the Closing Date shall be the responsibility of the Seller, and all monies paid or
otherwise collected thereon prior to the Closing Date (and all monies paid or otherwise collected
on Charged Off Accounts prior to the Closing Date) shall be retained by the Seller.

     (c) Seller shall pay to the Purchaser, as soon practicable following receipt thereof, any
payments or other proceeds that constitute Purchased Assets and are received after the Closing by
Seller or any of its Affiliates (other than pursuant to this Agreement).

     Section 9.3. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and permitted assigns. This

Purchase and Sale Agreement — Page 41

 

Agreement and the rights and obligations hereunder may not be assigned by any party to any
Person without the prior written consent of the other Party hereto, and any purported assignment
without such consent shall be void.

     Section 9.4. Entire Agreement; Amendment; Waiver. This Agreement and the Ancillary
Agreements, including the annexes and schedules hereto and thereto, embody the entire agreement of
the Parties hereto with respect to the subject matter hereof and supersede all prior agreements
with respect thereto, other than the Confidentiality Agreement. No representation, warranty,
inducement, promise, understanding or condition not set forth in this Agreement (or the other
documents referred to in the preceding sentence) has been made or relied on by any party in
entering into this Agreement. This Agreement may be amended, and any provision hereof waived, but
only in writing signed by the party against whom such amendment or waiver is sought to be enforced.

     Section 9.5. Counterparts. This Agreement may be executed in two or more counterparts
any of which may be delivered by facsimile transmission and all of which shall together constitute
one and the same instrument.

     Section 9.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made and to be performed
within such State, and the obligations, rights and remedies of the Parties hereunder shall be
determined in accordance with such laws.

     Section 9.7. Waiver of Jury Trial and Venue.

     (a) Each party hereto hereby waives all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement.

     (b) Each party hereto hereby irrevocably submits to the jurisdiction of the United States
District Court of Delaware or, if such federal jurisdiction is unavailable, in the state courts of
the State of Delaware over any action arising out of this Agreement, and each party hereto hereby
irrevocably waives any objection which such party may now or hereafter have to the laying of
improper venue or forum non conveniens. Each party hereto agrees that a judgment in any such
action or proceeding may be enforced in other jurisdictions by suit on the judgment or in any
manner provided by law. Any and all service of process and any other notice in any such suit,
action or proceeding with respect to this Agreement shall be effective against any party hereto if
given as provided herein.

     Section 9.8. Severability. In case any one or more of the provisions contained herein
shall be invalid, illegal or unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby, and this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision or portion of any provision had never been contained herein and
there had been contained herein instead such valid, legal and enforceable provisions as would most
nearly accomplish the intent and purpose of such invalid, illegal or unenforceable provision.

Purchase and Sale Agreement — Page 42

 

     Section 9.9. No Petition. Purchaser covenants and agrees that it shall not, prior to
the date that is one year and one day after the final payment of any series of investor
certificates or any other series issued by the Master Trust, acquiesce, petition or otherwise
invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case
against Pier 1 Funding LLC or the Master Trust under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of Pier 1 Funding LLC or the Master Trust or any substantial part of its
property or ordering the winding up or liquidation of the affairs of Pier 1 Funding LLC or the
Master Trust.

     Section 9.10. Public Announcement. Except for any notice which is required by law or
regulation, each of the Purchaser, on the one hand, and Seller, on the other hand, agrees that it
shall not issue a press release or make any other public statement with respect to the transactions
contemplated by this Agreement or the Ancillary Agreements without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed. Each of the Purchaser, on the
one hand, and Seller, on the other hand, agrees, if possible, to notify and consult with the other
at least twenty-four (24) hours in advance of filing any notice required by law or regulation.
Notwithstanding the preceding, however, press releases that do not name the other Party will not
require such approval. The foregoing notwithstanding, it is understood that neither Party shall be
required to obtain any prior consent, but shall consult with each other to the extent practicable,
with regard to (a) filings, press releases and other announcements as may be required by applicable
law or the applicable rules and regulations of any Governmental Authority or stock exchange and (b)
publications prepared solely by and for employees of any Party, or their respective Affiliates.

     Section 9.11. Third-Party Beneficiaries. Nothing in this Agreement, expressed or
implied, shall confer on any person, other than the Parties hereto and Pier 1 Bank or their
respective successors and permitted assigns, any rights, remedies, obligations or liabilities.

     Section 9.12. Schedules. The Schedules to this Agreement set forth, among other
things, items the disclosure of which is required under this Agreement either in response to an
express disclosure requirement contained in a provision of this Agreement or as an exception to one
or more of the representations or covenants contained in this Agreement; provided that the mere
inclusion of an item in a Schedule as an exception to a representation shall not be considered an
admission by the disclosing party that such item (or any non-disclosed item or information of
comparable or greater significance) represents a material exception or fact, event or circumstance
or that such item has had or is reasonably expected to result in a Material Adverse Effect with
respect to the disclosing party or the Business.

[Remainder of Page Intentionally Left Blank]

Purchase and Sale Agreement — Page 43

 

     IN WITNESS WHEREOF, this Agreement has been executed on behalf of each of the Parties hereto
as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	CHASE BANK USA, N.A.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	David Hoyt
	 

	 	 	 	Title:
	 	Senior Director
	 
	 	 	 	 	 	 
	 	 	PIER 1 ASSETS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Charles H. Turner
	 

	 	 	 	Title:
	 	Executive Vice President,
Chief Financial Officer and
Treasurer

Purchase and Sale Agreement — Page 44

 

 

Purchase and Sale Agreement — Page 1exv10w2

 

EXHIBIT 10.2

CREDIT CARD PROGRAM AGREEMENT

by and among

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

and

CHASE BANK USA, N.A.

Dated as of August 30, 2006

 

 

Table of Contents

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

i

 

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

ii

 

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

iii

 

CREDIT CARD PROGRAM AGREEMENT

     This Credit Card Program Agreement is made as of the 30th day of August, 2006, by and among
Pier 1 Imports (U.S.), Inc., a Delaware corporation (“Pier 1”), and Chase Bank USA, N.A., a
national bank (“Bank”).

RECITALS:

     WHEREAS, Pier 1 is engaged in, among other activities, operating retail home furnishings
stores;

     WHEREAS, concurrently with the execution of this Agreement, Pier 1 Assets, Inc. (“Seller”) and
Bank are entering a Purchase and Sale Agreement (the “Purchase Agreement”) pursuant to which Bank
shall purchase the stock of Pier 1 National Bank and certain gross receivables relating to Pier 1’s
Credit Card Business (which assets include within them certain Credit Card and payment plan
accounts and associated receivables (“Purchased Accounts”));

     WHEREAS, Pier 1 has requested that Bank establish a program pursuant to which, following the
Closing Date, Bank or its Affiliate shall issue Pier 1 Credit Cards (as hereinafter defined) in the
Territory to be serviced, marketed and promoted in accordance with the terms hereof; and

     WHEREAS, the Parties hereto agree that the goodwill associated with Pier 1 Licensed Marks (as
hereinafter defined) contemplated for use hereunder is of substantial value that is dependent upon
the maintenance of high quality services and appropriate use of the trademarks pursuant to this
Agreement.

     NOW, THEREFORE, in consideration of the terms, conditions and mutual covenants contained
herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Generally. The following terms shall have the following meanings when used in
this Agreement:

     “Account” means any account under which a purchase, cash advance, convenience check or balance
transfer transaction may be or has been made by or to a Person (or any Person authorized by such
Person) pursuant to a Cardholder Agreement established pursuant to the terms of this Agreement or
acquired pursuant to the Purchase Agreement. For the avoidance of doubt, the term Account shall
include the Purchased Accounts.

     “Account Documentation” means, with respect to an Account, any and all documentation relating
to that Account, including Cardholder Documentation, checks or other forms of payment with respect
to an Account, notices to Cardholders, adverse action notices, change of terms notices, other
notices, correspondence, memoranda, documents, stubs, instruments, certificates, agreements,
magnetic tapes, disks, hard copy formats or other computer-readable data transmissions, any
microfilm, electronic or other copy of any of the foregoing, and any other

Credit Card Program Agreement — Page 1

 

written, electronic or other records or materials of whatever form or nature, including
tangible and intangible information, arising from or relating or pertaining to any of the foregoing
to the extent related to the Program; provided that Account Documentation shall not include Pier
1’s or any of its Affiliates’ register tapes, invoices, sales or shipping slips, delivery or other
receipts or other indicia of the sale of Pier 1 Goods and Services, any reports, analyses or other
documentation prepared by Pier 1 or its Affiliates for use in the retail business operated by Pier
1 and its Affiliates regardless of whether derived in whole or in part from the Account
Documentation.

     “Accountants” has the meaning set forth in Section 12.3 hereof.

     “Adverse Sales Development” has the meaning set forth in Schedule 11.4(i).

     “Affiliate” means, with respect to any Person, each Person that controls, is controlled by, or
is under common control with, such Person. For purposes of this definition, “control” of a Person
means the possession, directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by contract or
otherwise.

     “Agreement” means this Program Agreement, together with all of its schedules and exhibits, as
modified, altered, supplemented, amended and/or restated from time to time.

     “Applicable Law” means all applicable federal, state and local laws (including common law),
statutes, regulations, regulatory guidance, opinions and interpretations of any Governmental
Authority, binding determinations or findings of any arbitrator, or orders or directives of any
Governmental Authority, as may be amended and in effect from time to time during the Term,
including (i) the Truth in Lending Act and Regulation Z; (ii) the Equal Credit Opportunity Act and
Regulation B; (iii) the Fair Debt Collection Practices Act; (iv) the Fair Credit Reporting Act; (v)
the Gramm-Leach-Bliley Act; (vii) the USA PATRIOT Act; and (vii) the Unfair and Deceptive Trade
Practices Act, and, in each case, any implementing regulations or interpretations issued
thereunder.

     “Applicable Order” means, with respect to any Person, a judgment, injunction, writ, decree or
order of any Governmental Authority, in each case legally binding on that Person or on any material
amount of its property.

     “Application” means the credit application that must be completed and submitted in order to
establish an Account (including any such application submitted at the POS, by phone or via the
Internet).

     “Approved Ancillary Products” means any Credit Card enhancement and other products (other than
Pier 1 Credit Cards) approved by the Management Committee for offering under the Program from time
to time.

     “Bank” has the meaning set forth in the preamble hereof.

     “Bank Designees” has the meaning set forth in Section 3.2(c) hereof.

Credit Card Program Agreement — Page 2

 

     “Bank Event of Default” means the occurrence of any one of the events listed in Section 14.2
hereof or an Event of Default where the Bank is the defaulting Party.

     “Bank Licensed Marks” means the trademarks, tradenames, service marks, logos and other
proprietary designations of Bank listed on Schedule 1.1(a) and licensed to Pier 1 under
Section 10.2 hereof.

     “Bank Matters” has the meaning set forth in Section 3.2(g) hereof.

     “Bank Systems” means Systems owned, leased or licensed by and operated by or on behalf of Bank
or any of its Affiliates.

     “Bankruptcy Code” means Title 11 of the United States Code, as amended, or any other
applicable state or federal bankruptcy, insolvency, moratorium or other similar law and all laws
relating thereto.

     “Billing Cycle” means the interval of time between regular periodic Billing Dates for an
Account.

     “Billing Date” means, for any Account, the day as of when the Account is billed.

     “Billing Statement” means a summary of Account credit and debit transactions for a Billing
Cycle including a descriptive statement covering purchases, charges, past due account information
and Loyalty Program information.

     “Business Day” means any day, other than (i) a Saturday or Sunday, or (ii) a day on which
financial institutions in New York, Delaware, or Texas are authorized by law to close; provided
that for purposes of Sections 8.4 and 9.1, “Business Day” shall exclude any day on which the
Fedwire system is closed.

     “Cardholder” means any Person who has been issued a Pier 1 Credit Card (including any
guarantor of the Account related to such Pier 1 Credit Card) and includes authorized user(s).

     “Cardholder Agreement” means the agreement between Bank and a Cardholder (and any replacement
of such agreement), governing the use of an Account, together with any amendments, modifications or
supplements that now or hereafter may be made to such Cardholder Agreement (and any replacement of
such agreement).

     “Cardholder Data” means all personally identifiable information about a Cardholder (A)
received by or on behalf of Bank in connection with the Cardholder’s application for use of a Pier
1 Credit Card Account or (B) otherwise obtained by or on behalf of Bank in connection with the
Program for inclusion in its database of Cardholder information (including information about a
Cardholder purchased or licensed by Bank to the extent not prohibited by the applicable purchase or
license agreement), including all transaction and experience information collected by or on behalf
of Bank with regard to each purchase charged by a Cardholder using his or her Pier 1 Credit Card or
Account (including Pier 1 Charge Transaction Data with respect to charges on Private Label
Accounts).

Credit Card Program Agreement — Page 3

 

     “Cardholder Documentation” means, with respect to the Accounts, all Applications, Cardholder
Agreements, Pier 1 Credit Cards, Loyalty Cards and Billing Statements relating to such Accounts.

     “Cardholder Indebtedness” means all amounts charged and owing to Bank by Cardholders with
respect to Accounts (including principal balances from outstanding charges, charges for Approved
Ancillary Products, finance charges, NSF fees, late charges, pay-by-phone fees and any other fees
and charges), whether or not billed, less the amount of any credit balances owing by Bank to
Cardholders, including in respect of any payments and any credits associated with returns of goods
and/or services and other credits and adjustments, whether or not billed.

     “Change of Control” means, with respect to Pier 1 or Bank, as the case may be, (the “subject
Person”), (i) a Person or group becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934 (except that a Person or group shall be deemed to own all
securities it has the right to acquire)), directly or indirectly, of more than fifty percent (50%)
of the total voting power of the subject Person, (ii) such subject Person merges, consolidates,
acquires, is acquired by, or otherwise combines with any other Person in a transaction in which the
subject Person is not the surviving entity or which constitutes a “merger of equals”, it being
understood that a subject Person shall not be considered the “surviving entity” of a transaction if
either (A) the members of the Board of Directors of the subject Person immediately prior to the
transaction constitute less than a majority of the members of the Board of Directors of the
ultimate parent entity of the entity surviving or resulting from the transaction or (B) the Persons
who were beneficial owners of the outstanding voting securities of the subject Person immediately
prior to the transaction beneficially own less than fifty percent (50%) of the total voting power
of the ultimate parent entity of the entity surviving or resulting from the transaction, or (iii)
the subject Person sells all or substantially all of its assets to a Person that is not an
Affiliate of the subject Person.

     “Closing” has the meaning set forth in the Purchase Agreement.

     “Closing Date” has the meaning set forth in the Purchase Agreement.

     “Comparable Partner Programs” means from time to time other major Credit Card programs of Bank
designated annually by the Management Committee that are comparable to the Program in terms of
program size, public profile and brand image and that otherwise meet the criteria set forth on
Schedule 1.1(b).

     “Competing Retail Programs” means from time to time major retailer Credit Card programs other
than the Program, whether or not Bank or any of its Affiliates participate in such other programs
as set forth on Schedule 1.1(h) as the same may be amended from time to time by the
Management Committee.

     “Competitive” has the meaning set forth on Schedule 1.1(i)

     “Confidential Information” has the meaning set forth in Section 13.1 hereof.

Credit Card Program Agreement — Page 4

 

     “CPI” means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average
for All Items, as published by the United States Department of Labor Bureau of Labor Statistics, or
any successor organization.

     “Credit Card” has the meaning set forth in 12 CFR § 226.2(a)(15), as in effect on the Closing
Date. The term does not include: (i) any gift card; (ii) any debit card, stored value card,
electronic or digital cash card or any other card that does not provide the holder thereof with the
ability to obtain credit other than through an overdraft line or similar feature; (iii) any secured
card, including any card secured by a lien on real or other property or by a deposit; or (iv) any
card issued to the holder of a securities brokerage account that allows the holder to obtain credit
through a margin account.

     “Credit Card Business” means the business relating to the ownership, administration and
management of the Accounts and Receivables (including the extension of credit to Cardholders, the
processing of transactions under the Accounts and the servicing of the Accounts) and, following the
Closing Date, includes all activities relating to the Program established pursuant to this
Agreement.

     “Disclosing Party” has the meaning set forth in Section 13.1(d) hereof.

     “Event of Default” means the occurrence of any one of the events listed in Section 14.1, 14.2,
and 14.3 hereof.

     “Federal Funds Rate” means, for any day, the offered rate as reported in the Wall Street
Journal in the “Money Rates” section for reserves traded among commercial banks for overnight use
in amounts of 1 million dollars or more or, if no such rate is published for a day, the rate
published for the preceding Business Day, calculated on a daily basis based on a 365 day year.

     “Fiscal Month” means each four (4) or five (5) week period designated by Pier 1 as such on a
Fiscal Year-reporting basis as reflected on Schedule 1.1(g) hereto; provided that the
Fiscal Month in which the Closing Date occurs shall be deemed to begin on the Closing Date.

     “Fiscal Quarter” means each three (3) Fiscal Month period designated by Pier 1 as such on a
Fiscal Year-reporting basis as reflected on Schedule 1.1(g) hereto; provided that the
Fiscal Quarter in which the Closing Date occurs shall be deemed to begin on the Closing Date.

     “Fiscal Year” means the fiscal year designated by Pier 1 as such setting forth the fiscal year
for Pier 1 on a 52/53 week fiscal year ending on the Saturday closest to the last day of February
as reflected on Schedule 1.1(g) hereto; provided that the first Fiscal Year under the
Program shall be the period beginning on the Closing Date and ending on the Saturday closest to
February 28, 2007.

     “Force Majeure Event” has the meaning set forth in Section 18.19 hereof.

     “GAAP” means United States generally accepted accounting principles, consistently applied.

Credit Card Program Agreement — Page 5

 

     “Governmental Authority” means any federal, state or local domestic, foreign or supranational
governmental, regulatory or self-regulatory authority, agency, court, tribunal, commission or other
governmental, regulatory or self-regulatory entity.

     “Indemnified Party” has the meaning set forth in Section 17.3(a) hereof.

     “Indemnifying Party” has the meaning set forth in Section 17.3(a) hereof.

     “Indirect Damages” has the meaning set forth in Section 17.4 hereof.

     “Initial Term” has the meaning set forth in Section 15.1 hereof.

     “Inserts” has the meaning set forth in Section 5.3 hereof.

     “In-Store Payment” means any payment on an Account made in a retail store owned or operated by
Pier 1 or any of its Affiliates by a Cardholder or a person acting on behalf of a Cardholder.

     “Interim Period” has the meaning set forth in Section 5.6(a).

     “In-Touch” refers to Pier 1’s customer marketing program utilizing customer contact
information (emails and/or home address and phone number) to promote special incentives, product
information and advertising via direct mail (catalog) and Internet (email).

     “Intellectual Property” means, on a worldwide basis, all intellectual property, including (i)
rights associated with works of authorship, including copyrights, moral rights and mask-works; (ii)
trademarks, service marks and other source indicators and the goodwill associated therewith; (iii)
trade secret rights; (iv) patents, designs, algorithms and other industrial property rights; (v)
other intellectual and industrial property rights of every kind and nature, however designated,
whether arising by operation of law, contract, license or otherwise; and (vi) applications,
registrations, renewals, extensions, continuations, divisions or reissues thereof now or hereafter
in force (including any rights in any of the foregoing).

     “Interchange Fees” means the interchange fees or interchange reimbursement fees paid or
payable to Bank in connection with Cardholder usage of the Accounts.

     “Internet Services” has the meaning set forth in Section 4.8(a).

     “Joint Marketing Commitment” means the obligation of the Bank to fund the amount per Fiscal
Year set forth in Schedule 5.2 for the purposes set forth in Section 5.2(a).

     “Joint Marketing Fund” has the meaning forth in Section 5.2(a).

     “Knowledge” means, with respect to any of Pier 1 or Bank, the actual knowledge of the
executive officers of the organization who have managerial responsibility for the Program, after
reasonable inquiry.

Credit Card Program Agreement — Page 6

 

     “Licensee” means any Person in the Territory authorized by Pier 1 or any of its Subsidiaries
to operate in and sell Pier 1 Goods and Services in the Territory from Pier 1 Channels under Pier 1
Licensed Marks, solely with respect to such Person’s or any of its Subsidiaries’ operation in and
sale of Pier 1 Goods and Services from Pier 1 Channels or under Pier 1 Licensed Marks.

     “Loyalty Card” means a card issued for the Program pursuant to any Loyalty Program providing
for access to an Account.

     “Loyalty Programs” means a long-term flexible marketing strategy designed to produce
profitable customer relationships by identifying and retaining customers, increasing their purchase
activity and establishing loyal relationships with them through communication, recognition and
rewards based on their purchase activity.

     “Management Committee” has the meaning set forth in Section 3.2(a) hereof.

     “Manager” has the meaning set forth in Section 3.3(a) hereof.

     “Marketing Plan” means the document that outlines the objectives, strategies and tactics of
new account solicitation, usage and awareness programs for the applicable Fiscal Year.

     “Material Adverse Effect” means: (a) with respect to the Program, the Accounts or the
Cardholder Indebtedness, respectively, a material adverse change therein, or a material adverse
effect thereon, taken as a whole, excluding any effect or change attributable to or resulting from
(i) economic, business or financial conditions generally or events affecting the Credit Card
services or consumer credit business, the banking or financial services industry or the retail
store industry, to the extent such events or conditions do not have a disproportionate effect on a
Party relative to other entities operating businesses similar to such Party, (ii) changes of
Applicable Law, GAAP or regulatory accounting principles after the date hereof; and (b) with
respect to a Party, a change or effect reasonably expected to impair materially or delay materially
the ability of such Party to perform timely its or their material obligations under this Agreement
or to consummate the transactions contemplated thereby.

     “Measurement Period” means a twelve Fiscal Month period during the Initial Term measured from
the Closing Date and each anniversary thereof.

     “Merchant Discount” means a discount rate generally applied against settlements due to
merchants for transactions with respect to the use of a Credit Card, which includes the Interchange
Fees as well as any other transaction fees.

     “Monthly Settlement Sheet” has the meaning set forth in Section 7.1(a) hereof.

     “New Bank Mark” has the meaning set forth in Section 10.2(b) hereof.

     “New Pier 1 Mark” has the meaning set forth in Section 10.1(b) hereof.

     “Nominated Purchaser” has the meaning set forth in Section 16.2(a) hereof.

Credit Card Program Agreement — Page 7

 

     “Operating Procedures” means the operating procedures for the Program in effect from time to
time in accordance with Section 4.1(b) hereof.

     “Parties” means the collective reference to Pier 1 and the Bank; and unless the context
otherwise requires, “Party” means either the collective reference to Pier 1, on the one hand, or
the Bank, on the other hand.

     “Period” has the meaning set forth in Schedule 4.9.

     “Person” means any individual, corporation, business trust, partnership, association, limited
liability company or similar organization, or any Governmental Authority.

     “Pier 1” has the meaning set forth in the preamble hereof.

     “Pier 1 Channels” means (i) all retail establishments owned or operated by Pier 1 or its
Affiliates (including Licensee departments therein) in the United States, (ii) all websites owned
or operated by Pier 1 or its Affiliates or their Licensees, and (iii) all mail order, catalog and
other direct access media that are owned or operated by Pier 1 or its Affiliates or their
Licensees.

     “Pier 1 Charge Transaction Data” means the transaction information (in the form of electronic
information) with regard to an In-Store Payment or a charge on an Account with respect to each
purchase of Pier 1 Goods and Services or Approved Ancillary Products by a Cardholder on credit and
each return of Pier 1 Goods and Services or Approved Ancillary Products for credit.

     “Pier 1 Credit Card” means a Private Label Credit Card offered pursuant to the terms of this
Agreement;

     “Pier 1 Designees” has the meaning set forth in Section 3.2(c) hereof.

     “Pier 1 Event of Default” means the occurrence of any one of the events listed in Section 14.3
hereof or an Event of Default where Pier 1 is the defaulting Party.

     “Pier 1 Goods and Services” means the products and services sold, charged or offered by or
through Pier 1 Channels, including for personal, household, or business purposes, and including
accessories, delivery services, protection agreements, gift cards, shipping and handling, and work
or labor to be performed for the benefit of customers of Pier 1 Channels.

     “Pier 1 Licensed Marks” means the trademarks, tradenames, service marks, logos and other
proprietary designations listed on Schedule 1.1(d) and licensed to Bank under Section 10.1.

     “Pier 1 Matters” has the meaning set forth in Section 3.2(f) hereof.

     “Pier 1 Prospect List” has the meaning set forth in Section 6.3(b) hereof.

     “Pier 1 Shopper” means any Person who makes purchases of Pier 1 Goods and Services or
otherwise uses or accesses Pier 1 Channels.

Credit Card Program Agreement — Page 8

 

 

     “Pier 1 Shopper Data” means all personally identifiable information regarding a Pier 1 Shopper
that is obtained by (or on behalf of) Pier 1 or any of its Affiliates at any time (including prior
to the date hereof), including personally identifiable information obtained in connection with such
Pier 1 Shopper making a purchase of Pier 1 Goods and Services, and including Pier 1’s “In-Touch”
customer data.

     “Pier 1 Systems” means Systems owned, leased or licensed by and operated by, or on behalf of,
Pier 1 or its Affiliates.

     “Pier 1 Transaction” means any purchase, in-store payment, exchange or return of Pier 1 Goods
and Services and/or approved Ancillary Products by a Cardholder using an Account.

     “POS” means point of sale.

     “Previously Disclosed” has the meaning set forth in the Purchase Agreement.

     “Privacy Policy” means the privacy policy and associated disclosures to be provided by Bank to
Cardholders in connection with the Program.

     “Private Label Accounts” means the Accounts linked to Private Label Credit Cards solely for
the purpose of financing the purchase of Pier 1 Goods and Services (and all fees and charges
relating thereto) through any Pier 1 Channel.

     “Private Label Credit Card” means a Credit Card that bears a Pier 1 Licensed Mark and may be
used solely to finance purchases of Pier 1 Goods and Services through any Pier 1 Channel, including
the Private Label Credit Cards listed in Schedule 1.1(e). Each Private Label Credit Card
is linked solely to a Private Label Account.

     “Program” means the program established pursuant to this Agreement.

     “Program Assets” means the Accounts, Account Documentation, Cardholder Data, Solicitation
Materials and all Cardholder Indebtedness (whether held by Bank or a third party).

     “Program Objectives” has the meaning set forth in Section 3.1 hereof.

     “Program Purchase Date” has the meaning set forth in Section 16.2(c) hereof.

     “Program Website” has the meaning set forth in Section 4.8(a) hereof.

     “Promotional Balances” has the meaning set forth in Schedule 4.9.

     “Promotional Purchases” has the meaning set forth in Schedule 4.9.

     “Promotional Sales Amount” has the meaning set forth in Schedule 4.9.

     “Promotional Sales Fees” has the meaning set forth in Schedule 4.9.

     “Promotional Sales Plans” has the meaning set forth in Schedule 4.9.

Credit Card Program Agreement — Page 9

 

 

     “Purchase Agreement” has the meaning set forth in the recitals hereof.

     “Purchased Accounts” has the meaning set forth in the recitals hereof.

     “Receiving Party” has the meaning set forth in Section 13.1(d) hereof.

     “Renewal Term” has the meaning set forth in Section 15.1 hereof.

     “Retail Merchants” has the meaning set forth in Section 8.1 hereof.

     “Revolving Promotional Balances” has the meaning set forth in Schedule 4.9.

     “Risk Management Policies” means the underwriting and risk management policies, procedures and
practices applicable to the Program and adopted in accordance with the terms of this Agreement,
including policies, procedures and practices for credit and Account openings, transaction
authorization, collections, credit line assignment, increases and decreases, over-limit decisions,
Account closures, payment crediting and charge-offs.

     “Roll-to-Revolve Rate” has the meaning set forth in Schedule 4.9.

     “Second-Look Credit Card Program” has the meaning set forth in Section 2.2(b) hereof.

     “Seller” has the meaning set forth in the recitals hereof.

     “Services” means the services required to be performed by Bank in accordance with this
Agreement, the Risk Management Policies and the Operating Procedures, and any related servicing
agreements.

     “Short Fiscal Year” means and refers to any Fiscal Year during the Term having less than 12
Fiscal Months, excluding the Interim Period.

     “SLA” means each individual performance standard set forth on Schedule 7.3(a).

     “Solicitation Materials” means documentation, materials, artwork and copy, in any format or
media (including television and radio), used to promote or identify the Program to Cardholders and
potential Cardholders, including direct mail solicitation materials and coupons.

     “Subsidiary” when used with respect to any Person, means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of which is sufficient to
elect at least a majority of its board of directors or similar governing body (or if there are not
such voting interests, more than fifty percent (50%) of the equity interest of which) is owned
directly or indirectly by such first Person or by another Subsidiary of such Person.

     “Systems” means software, databases, computers, systems and networks.

     “Systems Transition Date” has the meaning set forth in Section 7.4(a) hereof.

     “Term” means the Initial Term and each Renewal Term.

Credit Card Program Agreement — Page 10

 

 

     “Termination Period” means the period beginning on the earlier of the date of expiration of
this Agreement or the date of any notice of termination pursuant to Article XV and ending on either
(i) the date the Program Assets are repurchased pursuant to Section 16.2, if Pier 1 or a Nominated
Purchaser purchases the Program Assets, or (ii) the date that either (A) Pier 1 delivers written
notice to Bank of their election not to purchase the Program Assets or (B) the right of Pier 1 to
purchase the Program Assets expires in accordance with the terms of this Agreement.

     “Territory” means the United States.

     “Trademark Style Guide” means any rules governing the manner of usage of trademarks,
tradenames, service marks, logos and other proprietary designations.

     “Unapproved Matter” has the meaning set forth in Section 3.2(e)(ii)(B) hereof.

       1.2 Miscellaneous.

     (a) As used herein: (1) all references to the plural number shall include the singular
number (and vice versa); (2) all references to “herein,” “hereunder,” “hereof” or like words
shall refer to this Agreement as a whole and not to any particular section, subsection or
clause contained in this Agreement; (3) all references to “include,” “includes” or
“including” shall be deemed to be followed by the words “without limitation”; (4) unless
specified as Business Days or Fiscal Months, all references to days or months shall be
deemed references to calendar days or months; and (5) all references to “$” or “dollars”
shall be deemed references to United States dollars.

     (b) Any approvals and consents required under this Agreement shall not be unreasonably
withheld, unless such consent or approval may be made in the sole discretion of a party.

ARTICLE II

ESTABLISHMENT OF THE PROGRAM

       2.1 Credit Program.

     (a) General. Beginning as of the Closing Date, Bank shall offer Pier 1 Credit
Cards. Bank shall promptly open a new Account and issue a new Pier 1 Credit Card with
respect to each Application approved in accordance with the Risk Management Policies. To
the extent approved in accordance with the terms of this Agreement, the Program shall
include and the Bank shall offer such other Approved Ancillary Products and other payment
products as shall be incorporated in the Program in the future.

     (b) Notice to Cardholders. Substantially concurrently with the Closing Date,
Bank and Pier 1 shall prepare jointly a form or forms of notices to each Cardholder to the
effect that such Cardholder’s Account has been acquired by Bank and, if applicable, also
containing any change of terms notices with respect to any change of terms that the Parties
mutually agree to implement. Such notice shall be in the form approved by both Parties,
which approval will not be unreasonably withheld or delayed, and will comply with all
requirements of Applicable Law. Bank shall issue new Private Label Credit

Credit Card Program Agreement — Page 11

 

 

Cards in accordance with Schedule 2.1(b). The costs of preparation and
mailings of such notices and new Private Label Credit Cards shall be borne by Bank. The
mailings shall be made in such manner and at such time as Bank and Pier 1 may mutually agree
and in compliance with Applicable Law.

     2.2 Exclusivity. Pier 1 and Bank agree with respect to exclusivity as set forth on
Schedule 2.2.

ARTICLE III

PROGRAM MANAGEMENT AND ADMINISTRATION

     3.1 Program Objectives. In performing its responsibilities with respect to the
management and administration of the Program, each Party shall be guided by the following Program
objectives (the “Program Objectives”):

     (a) to enhance the experience of Pier 1 Shoppers;

     (b) to increase profits from retail sales of Pier 1;

     (c) to maintain or improve customer insight through data acquisition and analysis;

     (d) to maximize Program economics while minimizing operational costs and complexity;

     (e) to leverage the Program to identify existing and potential Pier 1 Shoppers, develop
and deepen relationships with Pier 1 Shoppers and finance retail sales growth;

     (f) to ensure that the Bank’s Program-related activities are at all times conducted in
a safe and sound manner and in accordance with Applicable Law; and

     (g) to increase the Pier 1 Credit Card’s share of Pier 1 retail sales.

     3.2 Management Committee.

     (a) Establishment of the Management Committee. Pier 1 and Bank hereby
establish a committee (the “Management Committee”) to oversee and review the conduct of the
Program pursuant to this Agreement and to perform any other action that, pursuant to any
express provision of this Agreement, requires its action.

     (b) Subcommittees of the Management Committee. The Management Committee may
designate additional committees (which may include persons who are not members of the
Management Committee) with responsibility for overseeing and administering specified aspects
of the Program (e.g., marketing, underwriting and risk management); provided, however, that
approval of any matter expressly required by this Agreement to be approved by the Management
Committee shall not be delegated to any subcommittee or other body.

Credit Card Program Agreement — Page 12

 

 

     (c) Composition of the Management Committee. The Management Committee shall
consist of six (6) members, of whom three (3) members shall be nominated by Pier 1 (the
“Pier 1 Designees”) and three (3) members shall be nominated by Bank (the “Bank Designees”).
The initial Pier 1 Designees and Bank Designees will be designated prior to the Closing
Date. Each Party shall designate its Manager to serve as one of its designees on the
Management Committee. Each Party shall at all times have as one of its designees the Person
with overall responsibility for the performance of the Program within his or her respective
corporate organization, which in the case of Bank, shall be the Chief Financial Officer or
Chief Operating Officer of the private label Credit Card business of Bank. Bank and Pier 1
may each substitute its designees to the Management Committee from time to time so long as
their designees continue to satisfy the above requirements, provided that each Party shall
provide the other Party with as much prior notice of any such substitution as is reasonably
practicable under the circumstances.

     (d) Functions of the Management Committee. The Management Committee shall:

     (i) oversee Program marketing activities, including review and approval of the
Marketing Plan;

     (ii) review collection strategies and collection metrics;

     (iii) monitor activities of competitive programs and identify implications of
market trends;

     (iv) approve the use of any third party (e.g., subcontractor or outsourced
service provider), other than any Affiliate of Pier 1 or Bank, as the case may be,
to perform any of the obligations to be performed by Bank or Pier 1 under the
Program, in each case, except to the extent (x) subcontracted or outsourced as of
the Closing Date or (y) such subcontracted or outsourced service would not involve
direct contact between such third party and any Cardholder (i.e., in person, via
telephone or in writing) (z) other than subcontractors and outsourcers that are used
by the Bank for Comparable Partner Programs it being agreed and understood that the
subcontracting or outsourcing of such services (which may include print shops and
mail vendors) would be within the sole discretion of the respective Party who elects
to subcontract or outsource such service;

     (v) evaluate and approve changes to any of the following:

     (A) offering of new Credit Cards or Approved Ancillary Products, other
than the products listed on Schedule 11.4(j), including co-branded credit
cards or other payment products;

     (B) changes to any Account terms, set forth on Schedule 4.7
and Schedule 3.2(e) and material changes to any other Account
terms;

Credit Card Program Agreement — Page 13

 

 

     (C) Risk Management Policies other than changes made by the Bank with
respect to Comparable Partner Programs (which shall be submitted to the
Management Committee together with the expected pro forma effects of such
changes on the Program);

     (D) changes to the Operating Procedures; and

     (E) changes to the SLAs applicable to the Program;

     (vi) approve the design, but not the content, of Cardholder Documentation and
any changes thereto;

     (vii) review customer service, collections and other servicing performance and
reporting aspects of the Program against SLAs and other requirements of this
Agreement;

     (viii) review compliance with Applicable Law, the Risk Management Policies,
Operating Procedures and other Program operations and procedures;

     (ix) carry out such other tasks as are assigned to it by this Agreement or
jointly by the Parties;

     (x) pursuant to Section 12.4(b)(i)(B), resolve disputes that arise among the
Parties with regard to the Program from time to time; and

     (xi) adjust the Promotional Sales Fees as required by Schedule 4.9.

     (e) Proceedings of the Management Committee.

     (i) Meetings and Procedural Matters. The Management Committee shall
meet (in person or telephonically) not less frequently than monthly, provided that
unless otherwise agreed by all Management Committee members, not less than two
meeting per quarter shall be in person. In addition, any member of the Management
Committee may call a special meeting by delivery of at least five (5) Business Days’
prior notice to all of the other members of the Management Committee, which notice
shall specify the purpose for such meeting. Except to the extent expressly provided
in this Agreement, the Management Committee (and any subcommittee formed by it)
shall determine the frequency, place (in the case of meetings in person) and agenda
for its meetings, the manner in which meetings shall be called and all procedural
matters relating to the conduct of meetings and the approval of matters thereat.

     (ii) Actions.

     (A) Management Committee and subcommittee action shall be taken by
majority vote of the committee members constituting the full committee
(including any vacancies).

Credit Card Program Agreement — Page 14

 

 

     (B) If a majority of the Management Committee members constituting the
full Management Committee (including any vacancies) fail to agree on any
matter of significance to the Program (an “Unapproved Matter”) within ten
(10) Business Days after the relevant initial vote (and in the case of a
subcommittee vote, the Management Committee has attempted to resolve such
matter for at least ten (10) Business Days after the relevant subcommittee
vote and has failed to so), then initially the Executive Vice President for
Private Label of Bank and the Executive Vice President — CFO of Pier 1 (or
any other similarly ranking officer of Bank or Pier 1, as the case may be,
who is not a Management Committee member and shall have been designated in
writing by Pier 1 or Bank, as applicable, to the other Party) shall in good
faith attempt to resolve the matter. Any such resolution by such senior
officers shall be deemed to be the action and approval of the Management
Committee for purposes of this Agreement. If after ten (10) Business Days,
the Unapproved Matter remains unresolved by such senior officers of Pier 1
and Bank, the failure to agree shall constitute a deadlock. In the event of
a deadlock, the final decision shall rest with Pier 1 in the case of Pier 1
Matters and with Bank in the case of Bank Matters, each of which shall,
except as otherwise provided herein, exercise its discretion reasonably and
in good faith. If a deadlock should occur with respect to a matter that is
neither a Pier 1 Matter nor a Bank Matter, the matter shall be deemed
rejected by the Management Committee.

     (C) Notwithstanding the foregoing, no changes to the Account terms or
any other Program terms described in Section 3.2(d)(v) shall be made before
the Systems Transition Date without the approval by majority vote of the
committee members constituting the full Management Committee (including any
vacancies); provided, however, that if a Party concludes that such a change
is required by Applicable Law, such Party may make such change without
regard to this clause (C) if such Party would have final decision-making
authority with respect to such change following the Systems Transition Date.
The Parties acknowledge and agree that, after the Systems Transition Date,
the changes to the Account terms may be made as set forth on Schedule
3.2(e).

     (D) Notwithstanding anything to the contrary contained herein, Bank
shall not override any vote of Pier 1 Designees in a way that would result
in any aspect of the Program being more onerous or less beneficial to the
Cardholders or Pier 1 than Comparable Partner Programs unless (i) Bank’s
position on the issue is required by Applicable Law and (ii) Bank adopts,
and certifies to Pier 1 that it has adopted, the same position with respect
to each of its other Comparable Partner Programs that are similarly impacted
by such Applicable Law or to which such Applicable Law could similarly be
applied.

Credit Card Program Agreement — Page 15

 

 

     (iii) Customer Service Disputes. If at any time there shall be a
material change in customer dispute patterns or volume, as evidenced by the
monitoring procedures set forth in the Operating Procedures, (A) Pier 1 shall call,
and the Parties shall attend, one or more Management Committee meetings to consider
and vote upon a plan to remediate such customer service or other disputes, (B) the
Parties shall negotiate in good faith for a period ending not less than ten (10)
days following the date of such meeting, to arrive at a mutually agreeable
remediation plan (or a shorter period if such a remediation plan is agreed to prior
to the 10th day), and (C) in the event such remediation plan is voted upon and
approved, the Parties shall promptly implement such plan. If such customer service
or other disputes remain uncured on the tenth (10th) day following the
implementation of such Management Committee-approved remediation plan or such other
date determined by the Management Committee as reasonably required to implement such
remediation plan, Pier 1 shall call, and the Parties shall attend, one or more
Management Committee meetings to consider and vote upon an alternative plan to
remediate such customer service or other disputes. In the event that the Management
Committee is unable to agree to a plan to remediate such customer service or other
disputes within the ten (10) days following any meeting called by Pier 1 pursuant to
this Section 3.2(e)(iii), it shall be considered an Unapproved Matter.

     (f) Pier 1 Matters. In accordance with and subject to this Section 3.2, Pier 1
shall have the ultimate decision making authority with respect to any Unapproved Matters in
respect of the following matters (the “Pier 1 Matters”):

     (i) Design, but not content, of the Cardholder Documentation and collateral
aesthetics; provided that changes to the design or content of Cardholder
Documentation (other than Billing Statements) that require a material increase in
production costs beyond the per unit cost in effect as of the Systems Transition
Date (as adjusted by CPI) shall not be adopted as a Pier 1 Matter but shall require
the approval of the Management Committee pursuant to Section 3.2(e)(ii)(A) unless
Pier 1 agrees to pay the cost of such increase;

     (ii) look, feel and content of Billing Statements taking into consideration any
limitations imposed by the system and Operating Procedures, except for content that
is deemed necessary or appropriate by Bank in light of legal or regulatory
requirements;

     (iii) the Marketing Plan and marketing and promotion of the Program provided
that such Marketing Plan and promotions do not require Bank to expend any sum in
excess of its financial commitments in this Agreement;

     (iv) any maintenance of, and improvements to, Pier 1 Systems used in connection
with the Program, and any capital expenditures of Pier 1 and its Affiliates for
maintenance of, and improvements to, Pier 1 Systems used in connection with the
Program;

Credit Card Program Agreement — Page 16

 

 

     (v) the approval (in the sole discretion of Pier 1) of any new Credit Card
products, including co-branded credit cards, Approved Ancillary Products other than
those set forth in Schedule 11.4(j) or other products and services proposed
to be offered to Cardholders and, in each case, the approval of any compensation
payable to Pier 1 in respect thereof; provided, that the economic terms and
compensation arrangements related to such new products or services shall be
acceptable to both Parties;

     (vi) the design, implementation, modification or any changes to any terms of
any loyalty program provided that such changes would not result in a material
increase in cost to Bank; and

     (vii) communications and/or contacts with Cardholders (other than as required
to service the Accounts, comply with Applicable Law or as otherwise provided in this
Agreement), including use of telemarketing techniques utilized by Bank.

     (g) Bank Matters. In accordance with and subject to this Section 3.2, Bank
shall have the ultimate decision making authority with respect to any Unapproved Matters in
respect of the matters set forth on Schedule 3.2(g) and the following matters (the
“Bank Matters”):

     (i) changes to Account terms required by Applicable Law;

     (ii) capital expenditures for maintenance of, and improvements to, the Bank
Systems used in connection with the Program;

     (iii) content of Cardholder Documentation and Solicitation Materials that is
dictated by Applicable Law; and

     (iv) compliance with Applicable Laws, including Operating Procedures and other
Program operations and procedures.

     3.3 Program Relationship Managers; Program Team.

     (a) Pier 1 and Bank shall each appoint one Program relationship manager (each, a
“Manager”). The Managers shall exercise day-to-day operational oversight of the Program,
subject to the actions and decisions of the Management Committee, and coordinate the
partnership efforts between Pier 1 and Bank, shall report to the designees on the Management
Committee of the Party appointing such Manager and shall conduct their Program
responsibilities in accordance with the actions and decisions of the Management Committee.
Pier 1 and Bank shall endeavor to provide stability and continuity in the Manager positions
and each Party’s other Program personnel.

     (b) The initial Manager of Pier 1 is set forth in Schedule 3.3.

     (c) The initial Manager of Bank is set forth in Schedule 3.3. The Bank’s
Manager shall report directly to the Marketing Senior Director — Private Label Card

Credit Card Program Agreement — Page 17

 

 

Services. The Bank’s Manager’s performance-based compensation shall be based upon the
Program Objectives and other specific annual targets and objectives set by the Management
Committee, including Program profitability targets. The appointment of a new Manager by
Bank is subject to the prior approval of Pier 1. With respect to future Bank Manager
candidates, Bank shall seek to propose candidates with substantial Program relevant
experience, including experience with the retail store industry, comparable customer
demographics and loyalty programs.

     (d) Bank shall maintain a Program team having Competitive expertise and experience. No
member of the Bank’s Program team that dedicates a majority of his or her time to the
Program shall be reassigned to any program operated by Bank or any of its Affiliates
pursuant to any agreement or arrangement with any restricted Competing Retail Programs
designated annually by the Management Committee and listed in Schedule 3.3(d),
without the written approval of Pier 1, in its sole discretion.

ARTICLE IV

PROGRAM OPERATIONS

     4.1 Operation of the Program.

     (a) Each of the Parties hereto, in all material respects, shall perform its obligations
under this Agreement (i) in compliance with the terms and conditions of this Agreement, the
Risk Management Policies, the Operating Procedures and any other policies, procedures and
practices adopted pursuant to this Agreement, (ii) in good faith, (iii) in accordance with
Applicable Law, and (iv) in a manner consistent with the Program Objectives.

     (b) The initial Operating Procedures applicable to various aspects of the operation of
the Program shall be the operating procedures adopted by the Parties prior to the Closing
Date (which operating procedures shall be attached hereto as Schedule 4.1(b) at the
Closing). Thereafter, except for changes required by Applicable Law, changes to such
Operating Procedures shall only be made with the approval of the Management Committee;
provided that changes to the Risk Management Policies may be made in accordance with Section
4.6 and Article III. Except as expressly provided otherwise in this Agreement, Bank shall
use commercially reasonable efforts to ensure that the personnel and other resources
(including Systems and other technology resources) devoted by Bank to the Program, in the
aggregate, shall be Competitive.

     4.2 Certain Responsibilities of Pier 1.

     (a) In addition to its other obligations set forth elsewhere in this Agreement, Pier 1
agrees that during the Term it shall, either itself or through the Affiliate(s) to which it
subcontracts the relevant functions:

     (i) solicit new Accounts through in-store instant credit procedures (in
accordance with this Agreement) and display Solicitation Materials (or Applications)
in Pier 1 Channels pursuant to the Marketing Plan;

Credit Card Program Agreement — Page 18

 

 

     (ii) implement and administer the Marketing Plan in accordance with this
Agreement;

     (iii) receive In-Store Payments in accordance with Section 8.3 and procedures
that comply with Applicable Law, subject to reimbursement from Bank for the
processing of such payments as provided in this Agreement; and

     (iv) except as otherwise provided in this Agreement, at all times, at the cost
and expense of Pier 1, provide personnel and take such commercially reasonable
actions as are necessary to support interfaces with Bank systems with respect to all
functions, including but not limited to a system to accept and transport
applications at POS.

     4.3 Certain Responsibilities of Bank.

     (a) In addition to its other obligations set forth elsewhere in this Agreement, Bank
agrees that during the Term it shall:

     (i) extend credit (or cause one of its Affiliates to extend credit) on newly
originated and existing Accounts in accordance with the Risk Management Policies and
Operating Procedures;

     (ii) comply (and cause its applicable Affiliates to comply) with the terms of
the Cardholder Agreements, the Program Privacy Policies and all Cardholder opt-outs;

     (iii) prepare, process and mail Cardholder Billing Statements, Inserts, privacy
policy notices, change in terms notices and other communications to Cardholders and
perform any other Services required to be performed pursuant to this Agreement from
time to time;

     (iv) provide procedure and process documentation with respect to Program
operations, including the use of any Bank Systems utilized in the Program to the
extent that the same are not Bank proprietary information or trade secrets;

     (v) to the fullest extent permitted by Applicable Law, the Privacy Policy, and
Bank’s or its Affiliate’s agreements with third parties, as reasonably requested
from time to time by Pier 1, provide aggregate transaction and experience
information about cardholders of Bank’s other Credit Card programs, and assist Pier
1 and its Affiliates in using such information to develop marketing plans for their
businesses;

     (vi) to the extent permitted by Applicable Law, the Privacy Policy, Bank’s or
its Affiliate’s agreements with third parties, and Bank’s policies governing
Comparable Partner Programs as reasonably requested from time to time by Pier 1,
permit Pier 1 to solicit or offer Pier 1 Goods and Services to cardholders of Bank’s
and its Affiliates’ other Credit Card programs;

Credit Card Program Agreement — Page 19

 

 

     (vii) maintain a System to process Applications, using the underwriting and
credit limit assignment policy set forth in the Risk Management Policies and the
Operating Procedures;

     (viii) maintain call centers in accordance with the terms of Schedule
4.3(a)(viii);

     (ix) provide Account monitoring services, including identifying delinquencies,
identifying collection efforts required, implementing credit-line adjustments, over
limit authorizations and Account deactivation or cancellation;

     (x) handle collection and recovery efforts in respect of Accounts;

     (xi) process remittances from Cardholders;

     (xii) produce and issue all new, replacement and reissued credit card plates
related to Pier 1 Credit Cards; and

     (xiii) upon reaching mutual agreement regarding appropriate payments to Bank,
Bank will provide and manage a non-payment specific Loyalty Program for persons not
having a Pier 1 Credit Card, which Loyalty Program will include, among other terms,
the terms described on Schedule 4.3(a)(xiii).

     4.4 Ownership of Accounts; Account Documentation.

     (a) Except to the extent of Pier 1’s ownership of Pier 1 Licensed Marks, Bank shall be
the sole and exclusive owner of all Accounts and Account Documentation and shall have all
rights, powers, and privileges with respect thereto as such owner; provided that Bank shall
exercise such rights consistent with the provisions of this Agreement and Applicable Law.
All purchases of Pier 1 Goods and Services in connection with the Accounts and the
Cardholder Indebtedness shall create the relationship of debtor and creditor between the
relevant Cardholder and Bank, respectively. Pier 1 acknowledges and agrees that (i) they
have no right, title or interest (except for their right, title and interest in Pier 1
Licensed Marks and their option to purchase the Program Assets under Section 16.2) in or to,
any of the Accounts or Account Documentation or any proceeds of the foregoing, and (ii) Bank
extends credit directly to Cardholders.

     (b) Except as expressly provided herein, Bank shall be entitled to (i) receive all
payments made by Cardholders on Accounts and (ii) retain for its account all Cardholder
Indebtedness and, subject to the terms of this Agreement, all other fees and income
authorized by the Cardholder Agreements and collected with respect to the Accounts and
Cardholder Indebtedness. Pier 1 and Bank shall determine an appropriate allocation of any
income from selling Approved Ancillary Products as shall have been approved by the
Management Committee in connection with the approval of the offering of such Approved
Ancillary Products.

     (c) Bank shall fund all Cardholder Indebtedness on the Accounts.

Credit Card Program Agreement — Page 20

 

 

     (d) Bank shall have the exclusive right to effect collection of Cardholder Indebtedness
and shall notify Cardholders to make payment directly to it in accordance with its
instructions; provided, however, that Bank will make all collections for its account using
the name of Bank, and may direct all checks to be made payable to “Pier 1” or, with Pier 1
approval, another name combined with the name Pier 1. Pier 1 grants to Bank a limited power
of attorney (coupled with an interest) to sign and endorse Pier 1’s name upon any form of
payment that may have been issued in Pier 1’s name in respect of any Account.

     (e) Notwithstanding the foregoing, Pier 1 may accept payments made with respect to an
Account in a Pier 1 store as provided in Section 8.3.

     4.5 Branding of Accounts/Credit Cards/Cardholder Documentation/Solicitation
Materials.

     (a) The Cardholder Documentation and the Solicitation Materials shall be in the design
and format proposed by Pier 1 and approved by the Management Committee; provided that Bank
shall be responsible for ensuring that the Cardholder Documentation and the Solicitation
Materials comply with Applicable Law and for ensuring that the Solicitation Materials comply
with the Cardholder Documentation.

     (b) Bank shall be responsible for, and bear the cost of the design, development and
delivery (other than delivery at Pier 1 Channels) of the Cardholder Documentation; provided
that, to the extent that changes to the design or format of Cardholder Documentation, as a
result of a Pier 1 Matter, result in the per unit cost of such Cardholder Documentation
being greater than the Bank’s average Cardholder Documentation costs, Pier 1 shall pay such
cost increase, provided that Bank shall first notify Pier 1 of any cost increase before
implementation.

     (c) Subject to section 4.3(a)(xiii), Bank shall issue a renewal Pier 1 Credit Card
and/or Loyalty Card to each Cardholder in accordance with the terms of any Loyalty Program
at each scheduled Pier 1 Credit Card and/or Loyalty Card renewal date (or earlier, at the
direction of Pier 1, if the Cardholder qualifies for an upgrade in any Loyalty Program).

     (d) Pier 1 Licensed Marks shall appear prominently on the face of Pier 1 Credit Cards.
Pier 1 Credit Cards shall not bear Bank’s Licensed Marks; provided, however, the Bank’s name
will appear on the back of the card in order to identify Bank as the credit provider under
the Program, together with any other disclosures required by Applicable Law.

     4.6 Underwriting and Risk Management. Pier 1 and Bank agree with respect to
underwriting and risk management as set forth on Schedule 4.6.

     4.7 Cardholder Terms.

     (a) The terms and conditions of all Purchased Accounts shall be the terms and
conditions applicable to the Account type immediately prior to the Closing Date,

Credit Card Program Agreement — Page 21

 

 

including the terms and conditions set forth on Schedule 4.7, provided that,
the Parties shall take such actions in accordance with this Agreement as may be required to
convert the Account terms and conditions specified in Schedule 4.7 to the new terms
and conditions specified in Schedule 3.2(e) and on the date specified in
Schedule 3.2(e). Additional changes to the terms and conditions of the Accounts may
be made only in accordance with Article III.

     (b) The account numbers and BINs of all Purchased Accounts shall remain the same after
the Closing Date but shall change upon the Systems Transition Date or such date new Accounts
are issued and processed on Bank’s systems. If requested, Bank shall support existing
Account numbers until new numbers are issued and trailing activity has ceased. Bank shall
provide a translation table that will show the correlation between existing and new
Cardholder Account numbers.

     4.8 Internet Services.

     (a) Cardholder Website. Bank shall develop and maintain a Pier 1-branded log
on page for Cardholders and potential Cardholders to be effective as of the Systems
Transition Date, with the look and feel consistent with Pier 1’s websites (“Program
Website”). The Program log on page shall be accessed by means of links from Pier 1’s
websites and shall contain or otherwise be associated with only such material and links as
shall be agreed by the Management Committee from time to time. Pier 1 will provide such
links on (i) its home page, (ii) its check-out page, and (iii) such other pages as the
Management Committee shall determine from time to time. The Program Website shall also
include links back to Pier 1’s websites, on the Program Website home page and such other
pages as the Management Committee shall determine from time to time. The Program Website
shall include the following functions, and such other functions as may be approved by the
Management Committee from time to time (the Program Website and such functionality,
collectively, the “Internet Services”).

     (i) Applications. The Program Website shall permit potential
Cardholders to access an Application, to complete and submit the Application online
and receive real-time approvals or pending status of such Application in accordance
with the Risk Management Policies and Operating Procedures. Without limiting the
foregoing, the Application function on the Program Website shall have at a minimum
all features and functionality available on websites for Comparable Partner Programs
as of the Systems Transition Date.

     (ii) Cardholder Customer Service. The Program Website shall permit
Cardholders to (A) view the Cardholder’s Account information and Billing Statements
(including any Loyalty Program information, Pier 1 Transaction information, and all
other information contained in such Billing Statement); and (B) make payments on the
Cardholder’s Account via automated clearing house transfer or other payment
mechanism.

Credit Card Program Agreement — Page 22

 

 

     (b) Performance Standards. Bank shall provide the Internet Services consistent
with the SLAs set forth on Schedule 7.3(a) and in accordance with industry
standards.

     (c) Customer Privacy. Bank shall ensure that the Privacy Policy is clearly and
prominently posted on the pages of the Program Website.

     (d) Internet Services Representations and Warranties. Bank represents and
warrants as of the Systems Transition Date and during the Term of this Agreement that:

     (i) the Program Website is solely under Bank’s control (subject to Pier 1’s
rights under this Agreement); and

     (ii) Bank has the license, right or privilege to use the hardware, software and
content acquired from third parties for use in the Internet Services, and that it is
the owner of all other hardware, software and content used in the Internet Services
and that neither the Internet Services as a whole, nor any part thereof, infringes
upon or violates any patent, copyright, trade secret, trademark, invention,
proprietary information, nondisclosure or other rights of any third party.

     4.9 Promotional Sales Plans. Bank shall offer and support the interest deferred
plans listed in Schedule 4.9 (the “Promotional Sales Plans”) in accordance with this
Agreement on the terms provided in Schedule 4.9.

ARTICLE V

MARKETING

     5.1 Promotion of Program. In accordance with the Marketing Plan, Pier 1 and Bank
shall cooperate with each other and actively support and promote the Program to both existing and
potential Cardholders.

     5.2 Marketing Commitment.

     (a) Bank hereby agrees to credit a joint marketing fund maintained by Bank (the “Joint
Marketing Fund”) with an amount equal to the Joint Marketing Commitment no later than (i)
with respect to the Interim Period, the fifth (5th) Business Day following the
Closing Date, and (ii) with respect to each Fiscal Year of the Term following the Interim
Period, no later than the first (1st) Business Day of such Fiscal Year. The Joint
Marketing Commitment in any Short Fiscal Year shall be prorated and credited based upon the
number of Fiscal Months in such Short Fiscal Year. The Joint Marketing Commitment shall be
used as set forth in the Marketing Plan and as otherwise directed by the Management
Committee from time to time. Pier 1 and Bank shall each provide to the other an accounting
of such Party’s and its Affiliates’ use of the Joint Marketing Commitment in the prior
Fiscal Month, and Bank shall reimburse Pier 1 for such amounts used by Pier 1 and its
Affiliates, and shall reduce the amount in the Joint Marketing Fund by the amounts used by
Bank and its Affiliates. Any amount in the Joint Marketing Fund for the Interim Period or a
given Fiscal Year that is not spent in the Interim Period or the

Credit Card Program Agreement — Page 23

 

 

given Fiscal Year shall remain available for use at the direction of the Management
Committee during the following year of the Initial or any Renewal Term, it being understood
that funds in the Joint Marketing Fund carried forward from a prior Fiscal Year shall be
deemed to be used first before funds attributable to the current Fiscal Year.

     (b) Pier 1 agrees, at its expense, to offer Cardholders a value proposition that in the
aggregate: (i) is at least as valuable as the value proposition offered by it to Pier 1
credit cardholders prior to the Closing Date and (ii) shall at all times be materially
better than the value proposition offered under the Loyalty Program and any other rewards
offered to Pier 1 consumer customers who are not Cardholders.

     (c) During the Term, Pier 1 shall, at its expense, market the Program in a manner and
with a volume of activity consistent with its past practice.

     5.3 Communications with Cardholders.

     (a) Pier 1 Inserts. Pier 1 and its Affiliates shall have the priority with
respect to communicating with Cardholders, except for any message required by Applicable
Law, through use of inserts, fillers, and similar mechanisms (which shall be included on all
billing envelopes) (collectively, “Inserts”), including Inserts selectively targeted for
particular segments of Cardholders, in any and all Billing Statements (including electronic
Billing Statements) and envelopes, subject to production requirements contained in the
Operating Procedures and Applicable Law. Except as otherwise provided in the Marketing
Plan, and except for Inserts required by Applicable Law (which shall be paid for by Bank),
Pier 1 shall be responsible for the content of, and the cost of preparing and printing, any
such Inserts. If the insertion of Inserts in particular Billing Statements would increase
the postage costs for such Billing Statements, Pier 1 agrees to either pay for the
incremental postage cost or prioritize the use of Inserts to avoid postage cost over-runs.
Pier 1 shall retain all revenues they receive from all Inserts (other than any Inserts
promoting Pier 1 Credit Cards or Approved Ancillary Products that Pier 1 may permit to be
produced and distributed in accordance with the Marketing Plan). Subject to Pier 1’s
review, Bank may communicate with Cardholders in the Inserts about the Program as necessary
for Bank to comply with its obligations under this Agreement.

     (b) Billing Statement Messages. Pier 1 and its Affiliates shall have the
exclusive right to use Billing Statement (including electronic Billing Statement) messages
and Billing Statement envelope (or electronic mail) messages in each Billing Cycle to
communicate with Cardholders, subject to production requirements contained in the Operating
Procedures and Applicable Law. Such messages shall be included at no cost to Pier 1.
Notwithstanding the foregoing, any message required by Applicable Law or collections shall
take precedence over Pier 1’s and its Affiliates’ messages. Subject to Pier 1’s review,
Bank may communicate with Cardholders about the Program in the Billing Statements as
necessary for Bank to comply with its obligations under this Agreement.

Credit Card Program Agreement — Page 24

 

 

     5.4 Additional Marketing Support.

     (a) As reasonably requested by Pier 1 from time to time, Bank shall perform the
following marketing functions with respect to the Pier 1 Credit Cards at no cost or expense
to Pier 1. Except as otherwise agreed herein, the Parties shall mutually agree to the
allocation of costs related to Bank marketing of Pier 1 Goods and Services:

     (i) subject to Applicable Law and any contractual prohibitions to which Bank or
its Affiliates are subject:

     (A) use Bank’s databases, analytic tools and market research and Bank’s
marketing support services to assist Pier 1 and its Affiliates in their
promotion of Pier 1 Channels, or the marketing and promotion of Pier 1 Goods
and Services or Pier 1 Credit Cards;

     (B) conduct mailings and other related marketing efforts on behalf of
Pier 1 and its Affiliates, which may include marketing materials promoting
the Program and Pier 1 Credit Cards, Pier 1 Channels and/or Pier 1 Goods and
Services at Pier 1’s option, based upon the customer databases and customer
database analysis tools maintained by Bank and its Affiliates, including
nonpersonally identifiable transaction and experience data from Bank’s
Credit Card, and other customer databases; provided that (unless such
amounts are paid out of the Joint Marketing Fund pursuant to the Marketing
Plan) Pier 1 shall be responsible for all out-of-pocket expenses of all
marketing materials and mailing services at cost;

     (ii) provide such reasonable assistance to Pier 1 and its Affiliates as Pier 1
may request in connection with the training of personnel of Pier 1 and its
Affiliates regarding the Program, including providing training materials developed
by Bank and approved by the Management Committee;

     (iii) collaborate with Pier 1 to identify and test marketing initiatives (using
Bank’s resources); provided that (unless such amounts are paid out of the Joint
Marketing Fund pursuant to the Marketing Plan) Pier 1 shall be responsible for all
out-of-pocket expenses of test marketing at cost requested in connection with the
Program; and

     (iv) provide models and modeling support, which may include Cardholder
attrition models, prospect marketing models and other tools designed to improve
Program performance.

     (b) Following the Closing Date, Bank shall, pursuant to the Marketing Plan, retain a
mutually agreed upon third party to conduct surveys of Cardholder perception and
satisfaction on a regular, periodic basis regarding Pier 1 Credit Cards and the Program but
in no event less frequently than annually. Such surveys shall be in a form and employ
reasonable methodologies developed in consultation with Pier 1 and shall provide for a level
of information reasonably acceptable to Pier 1. Bank shall make

Credit Card Program Agreement — Page 25

 

 

available to Pier 1 the results of such surveys as well as all associated work papers
promptly following completion thereof.

       5.5 Approved Ancillary Products. Except for the Approved Ancillary Products and
Pier 1 Credit Cards or those products set forth on Schedule 11.4(j), Bank and its
Affiliates shall not offer (except as directed by Pier 1) any goods or services to Cardholders or
through the Program. From time to time, Bank may propose to solicit Cardholders for products or
services other than the foregoing. If the Management Committee agrees to permit such
solicitation, such solicitation shall only be permitted on the terms prescribed by the Management
Committee.

       5.6 Marketing Plan.

     (a) Following the date hereof Pier 1, in consultation with Bank, shall develop a
proposed Marketing Plan for (i) the period from the Closing Date to the end of Pier 1’s
current Fiscal Year (the “Interim Period”), and (ii) the first full Fiscal Year of the Term.
Within twenty (20) days after the Closing Date, the Management Committee shall approve the
Marketing Plan for the Interim Period. Within ninety (90) days after the Closing Date, the
Management Committee shall approve the Marketing Plan for the first Fiscal Year. For each
Fiscal Year following the first Fiscal Year, Pier 1 shall develop, in consultation with
Bank, and on or before sixty (60) days following the commencement of such Fiscal Year a
Marketing Plan, subject to the approval of the Management Committee.

     (b) At least once per calendar year, the Management Committee shall consider (to the
extent such terms and conditions are publicly known or otherwise known and not subject to
any confidentiality obligations on the part of either Party) features, terms, conditions and
other aspects of other Comparable Partner Programs and Competing Retail Programs in order to
identify marketplace developments for possible inclusion in the Program to ensure that the
Program remains Competitive. If the Management Committee determines that a change to the
Program may be appropriate, Bank shall develop a plan with respect to implementation of such
change, including the impact the proposed change would have, if any, on the revenue share,
and shall present such plan to the Management Committee for its review and decision. The
Management Committee shall decide whether to test or launch any such Program changes for
Cardholders or potential Cardholders.

     (c) Each Marketing Plan shall outline, for each Pier 1 Channel, all programs, to the
extent established and mutually agreed upon by Pier 1 and Bank, and shall include at least
the following information for each program:

     (i) description of offer(s), cost per unit, expected response rate and other
performance projections with respect thereto;

     (ii) description of target audience;

     (iii) planned budget, specifying Bank’s share and Pier 1’s share, if any;

Credit Card Program Agreement — Page 26

 

 

     (iv) distribution among Pier 1 Channels and types of Accounts; and

     (v) target implementation date (e.g., mailing dates, calling dates, delivery
dates).

     (d) Each Marketing Plan shall address development of Solicitation Materials and Account
Documentation; new Account acquisition strategies, including direct mailing; preparation of
unique collateral materials for Pier 1’s employees; activation, retention and usage;
statement design and messaging; advertising of the Program; and such other marketing matters
as the Parties shall agree to.

     (e) Each Marketing Plan shall specify which Party is responsible for each Marketing
Plan item and shall contain a budget specifying the Parties’ financial responsibilities
during the applicable Fiscal Year.

     (f) Any Marketing Plan may be modified or supplemented by the Parties from time to time
upon mutual agreement, provided such modifications or supplements, as the case may be, are
approved by the Management Committee.

     (g) To the extent practicable, all significant marketing initiatives developed under
this Agreement shall contain unique marketing source codes to facilitate post-marketing
research and analysis.

ARTICLE VI

CARDHOLDER INFORMATION

       6.1 Customer Information.

     (a) All sharing, use and disclosure of Cardholder Data and Pier 1 Shopper Data under
this Agreement shall be subject to the provisions of this Article VI. The Parties
acknowledge that the same or similar information may be contained in the Cardholder Data,
Pier 1 Shopper Data, and other data and that each such pool of data shall therefore be
considered separate information subject to the specific provisions applicable to that data
hereunder.

     (b) Pier 1 and Bank shall each maintain an information security program that is
designed to meet all requirements of Applicable Law, including, at a minimum, maintenance of
an information security program that is designed to: (i) ensure the security and
confidentiality of the Cardholder Data and Pier 1 Shopper Data; (ii) protect against any
anticipated threats or hazards to the security or integrity of the Cardholder Data and Pier
1 Shopper Data; (iii) protect against unauthorized access to or use of the Cardholder Data
and Pier 1 Shopper Data, specifically including the use of data encryption or other mutually
agreed upon secure data transfer method for all Cardholder Data and Pier 1 Shopper Data
transferred between the Parties; and (iv) ensure the proper disposal of Cardholder Data and
Pier 1 Shopper Data. Additionally, such security measures shall meet current industry
standards and shall be at least as protective as those used by each Party to protect its
other confidential customer information. Each Party shall use the same degree of care in
protecting the Cardholder Data and Pier 1 Shopper

Credit Card Program Agreement — Page 27

 

 

Data against unauthorized disclosure as it accords to its own confidential customer
information, but in no event less than a reasonable standard of care. In particular, Bank
shall treat Pier 1 Shopper Data as if it were “customer information” for purposes of the
regulations above. In the event a Party becomes aware of any unauthorized use of or access
to Cardholder Data, such Party shall immediately notify the other Party and shall cooperate
with such other Party, as reasonably requested or as required by Applicable Law, (x) to
assess the nature and scope of such incident, (y) to contain and control such incident to
prevent further unauthorized access to or use of Cardholder Data, and (z) to provide prompt
notice to affected Cardholders to the extent required by Applicable Law or otherwise with
the approval of the Management Committee. In the event Bank becomes aware of any
unauthorized use of or access to Pier 1 Shopper Data, Bank shall immediately notify Pier 1
and shall cooperate with them, as they deem necessary or as required by Applicable Law, (x)
to assess the nature and scope of such incident, (y) to contain and control such incident to
prevent further unauthorized access to or use of Pier 1 Shopper Data, and (z) to provide
prompt notice to affected Pier 1 Shoppers to the extent required by Applicable Law or
otherwise with the approval of the Management Committee. The cost and expenses of any
assessment, containment, control and such notice shall be borne solely by the Party that
experienced the unauthorized use of or access to Cardholder Data or Pier 1 Shopper Data.
The affected Party shall be reimbursed for any losses, including fraud losses.

     (c) Pier 1 shall, subject to Applicable Law, promptly provide to Bank a complete list
of any Persons who (i) after the Closing Date, have requested to be on Pier 1’s “do not
call” list and/or (ii) have requested to be on “do not mail” lists (or other similar lists),
and Bank shall promptly comply with such requests with respect to its solicitation of Pier 1
Credit Cards and Approved Ancillary Products. Bank shall, subject to Applicable Law,
promptly provide to Pier 1 a complete list of any Cardholders who (i) after the Closing
Date, have requested to be on Bank’s “do not call” list and/or (ii) have requested to be on
“do not mail” lists (or other similar lists) in connection with their Cardholder
relationship with Bank and Pier 1 shall promptly comply with such requests with respect to
its solicitations.

       6.2 Cardholder Data.

     (a) As among the Parties hereto, the Cardholder Data shall be the property of and
exclusively owned by Bank.

     (b) The Program Privacy Policy applicable to the Cardholder Data is attached as
Schedule 6.2 hereto. Any modifications to the Program Privacy Policy shall be
approved by the Management Committee, provided that the Program Privacy Policy shall comply
with Applicable Law at all times.

     (c) Bank shall not use, or permit to be used, the Cardholder Data, except as provided
in this Section 6.2. Bank may use the Cardholder Data in compliance with Applicable Law and
the Program Privacy Policy solely (i) for purposes of soliciting or marketing (in each case,
solely as directed by Pier 1 or the Management Committee) or servicing customers listed in
the Cardholder Data for Pier 1 Credit Cards, Approved

Credit Card Program Agreement — Page 28

 

 

Ancillary Products, and any other products and services approved by the Management
Committee, (ii) as otherwise necessary to carry out its obligations or exercise its rights
hereunder, or (iii) as required by Applicable Law. Bank has no rights to use the Cardholder
Data for marketing purposes except as expressly provided herein.

     (d) Bank shall not disclose, or permit to be disclosed, the Cardholder Data, except as
provided in this Section 6.2. Bank shall not, directly or indirectly, sell or otherwise
transfer any right in or to the Cardholder Data other than to Pier 1 or any of its
Affiliates, or to its Nominated Purchaser or a successor of Bank by merger or acquisition.
Bank may disclose the Cardholder Data in compliance with Applicable Law and the Program
Privacy Policy solely:

     (i) to its authorized subcontractors in connection with a permitted use of such
Cardholder Data under this Section 6.2, provided that each such authorized
subcontractor agrees in a written agreement satisfactory to Pier 1 and Bank to
maintain all such Cardholder Data as strictly confidential and not to use or
disclose such information to any Person other than Bank or Pier 1, except as
required by Applicable Law or any Governmental Authority (after giving Bank and Pier
1 prior notice and an opportunity to defend against such disclosure); provided,
further, that each such authorized subcontractor maintains, and agrees in writing to
maintain, an information security program that is designed to meet all requirements
of Applicable Law, including, at a minimum, maintenance of an information security
program that is designed to: (w) ensure the security and confidentiality of the
Cardholder Data; (x) protect against any anticipated threats or hazards to the
security or integrity of the Cardholder Data; (y) protect against unauthorized
access to or use of the Cardholder Data; and (z) ensure the proper disposal of
Cardholder Data; and provided, further, that each such authorized subcontractor
agrees to notify promptly Bank and Pier 1 of any unauthorized disclosure, use, or
disposal of, or access to, Cardholder Data and to cooperate with Bank and Pier 1 in
any investigation thereof and remedial action with respect thereto;

     (ii) to its Affiliates, and its and such Affiliates’ employees, attorneys and
accountants with a need to know such Cardholder Data in connection with a permitted
use of such Cardholder Data under this Section 6.2; provided that (A) any such
Person is bound by terms substantially similar to this Section 6.2 as a condition of
employment or of access to Cardholder Data or by professional obligations imposing
comparable terms; and (B) Bank shall be responsible for the compliance by each such
Person with the terms of this Section 6.2;

     (iii) to any Governmental Authority with authority over Bank (A) in connection
with an examination of Bank; or (B) pursuant to a specific requirement to provide
such Cardholder Data by such Governmental Authority or pursuant to compulsory legal
process; provided that Bank seeks the protection of confidential treatment for any
disclosed Cardholder Data to the fullest extent available under Applicable Law
governing such disclosure, and with respect to clause (B), to the extent permitted
by Applicable Law, Bank (1) provides at least

Credit Card Program Agreement — Page 29

 

 

ten (10) Business Days’ prior notice of such proposed disclosure to Pier 1 if
reasonably possible under the circumstances, and (2) seeks to redact the Cardholder
Data to the fullest extent possible under Applicable Law governing such disclosure;
or

     (iv) to the extent permitted in the Risk Management Policies and Operating
Procedures, to any consumer reporting agency in accordance with the federal Fair
Credit Reporting Act.

     (e) Bank shall cooperate with Pier 1 to provide Pier 1 and its Affiliates with the
maximum ability permissible under Applicable Law and the Program Privacy Policy to receive,
use and disclose the Cardholder Data, including, as necessary or appropriate, through use of
consents or opt-out provisions, in each case as directed by Pier 1. Without limiting the
foregoing, Pier 1 and its Affiliates may receive, use and disclose the Cardholder Data in
compliance with Applicable Law and the Program Privacy Policy (i) for purposes of promoting
the Program or promoting Pier 1 Goods and Services, (ii) as otherwise necessary to carry out
its obligations under this Agreement, and (iii) as otherwise permitted by Applicable Law.

Notwithstanding the foregoing, no Party hereto shall be required to provide any information
on a personally identifiable basis if the provision of such personally identifiable
information would cause such Party to be considered a “consumer reporting agency” for
purposes of the Fair Credit Reporting Act.

     (f) With respect to the sharing, use and disclosure of the Cardholder Data following
the termination of this Agreement:

     (i) the rights and obligations of the Parties under this Section 6.2 shall
continue through any Termination Period; and

     (ii) if Pier 1 exercises its rights under Section 16.2, Bank shall transfer its
right, title and interest in the Cardholder Data to Pier 1 or its Nominated
Purchaser as part of such transaction, and Bank’s right to use and disclose the
Cardholder Data shall terminate upon the termination of the Termination Period.

       6.3 Pier 1 Shopper Data; Pier 1 Prospect Data.

     (a) Bank acknowledges that Pier 1 gathers information about purchasers of Pier 1 Goods
and Services and that Pier 1 and its Affiliates have rights to use and disclose such
information independent of whether such information also constitutes Cardholder Data. As
between Pier 1 and Bank, all Pier 1 Shopper Data shall be owned exclusively by Pier 1. Bank
acknowledges and agrees that it has no proprietary interest in Pier 1 Shopper Data. To the
extent Bank is the direct recipient of such data, it shall provide such data to Pier 1 in
such format and at such times as shall be reasonably specified by Pier 1. Bank shall
cooperate in the maintenance of Pier 1 Shopper Data and other data, including by
incorporating in the Application and Cardholder Agreement provisions mutually agreed to by
the Parties pursuant to which applicants and Cardholders shall agree that they are providing
their identifying information and all updates thereto and all

Credit Card Program Agreement — Page 30

 

 

transaction data from Pier 1 Channels to both Bank and Pier 1 and its Affiliates. For
the avoidance of doubt, the following information shall be deemed Pier 1 Shopper Data:

     (i) for any customer who has been approved for a Pier 1 Credit Card, regardless
of the channel through which such application was completed or submitted the
customer’s name, address, email address, and telephone number; and

     (ii) for any Cardholder, (1) the Cardholder’s name, address, email address, and
telephone number; (2) any reported change to any of the foregoing information; and
(3) Cardholder transaction and experience data in Pier 1 Channels at a detailed,
line-item and SKU level that provides all detail provided to Pier 1 and its
Affiliates prior to the date of this Agreement.

     (b) Subject to compliance with Applicable Law, Pier 1’s privacy policies, the Marketing
Plan and such criteria (including format) as may be mutually agreed to from time to time,
during the Term, Pier 1 shall make available to Bank a list of customers of Pier 1 and its
Affiliates, including its “In-Touch” customers, whom Pier 1 has determined are available to
be solicited only for Accounts under the Program (the “Pier 1 Prospect List”). As between
Pier 1 and Bank, Pier 1 Prospect List shall be owned exclusively by Pier 1. Bank
acknowledges and agrees that it has no proprietary interest in Pier 1 Prospect List and will
not use the Pier 1 Prospect List for any reason other than as set forth in this Agreement.

     (c) Bank shall not use, or permit to be used, directly or indirectly, the Pier 1
Shopper Data, except to transfer such data to Pier 1 to the extent received by Bank. Bank
shall not use, or permit to be used, Pier 1 Prospect List except as provided in this Section
6.3(c). Bank may use Pier 1 Prospect List in compliance with Applicable Law solely for
purposes of soliciting customers listed in Pier 1 Prospect List for Accounts or as required
by Applicable Law.

     (d) Bank shall not disclose, or permit to be disclosed, Pier 1 Shopper Data or Pier 1
Prospect List, except as provided in this Section 6.3. Bank shall not, directly or
indirectly, sell or otherwise transfer any right in or to Pier 1 Shopper Data or Pier 1
Prospect List (all such rights belonging exclusively to Pier 1). Bank may disclose Pier 1
Shopper Data and Pier 1 Prospect List in compliance with Applicable Law solely:

     (i) to its authorized subcontractors in connection with a permitted use of such
Pier 1 Shopper Data or Pier 1 Prospect List under this Section 6.3, provided that
each such authorized subcontractor agrees in writing to maintain all such Pier 1
Shopper Data or Pier 1 Prospect List as strictly confidential in a manner
satisfactory to Pier 1 and not to use or disclose such information to any Person
other than Bank or Pier 1, except as required by Applicable Law or any Governmental
Authority (after giving Bank and Pier 1 prior notice and an opportunity to defend
against such disclosure); provided, further, that each such authorized subcontractor
maintains, and agrees in writing to maintain, an information security program that
is designed to meet all requirements of

Credit Card Program Agreement — Page 31

 

 

Applicable Law, including, at a minimum, maintenance of an information security
program that is designed to: (w) ensure the security and confidentiality of Pier 1
Shopper Data and Pier 1 Prospect List; (x) protect against any anticipated threats
or hazards to the security or integrity of Pier 1 Shopper Data and Pier 1 Prospect
List; (y) protect against unauthorized access to or use of Pier 1 Shopper Data and
Pier 1 Prospect List; and (z) ensure the proper disposal of Pier 1 Shopper Data and
Pier 1 Prospect List; and provided, further, that each such authorized subcontractor
agrees to notify promptly Bank (and Bank shall promptly notify Pier 1) of any
unauthorized disclosure, use, or disposal of, or access to, Pier 1 Shopper Data or
Pier 1 Prospect List and to cooperate with the Bank and Pier 1 in any investigation
thereof and remedial action with respect thereto;

     (ii) to its Affiliates, and its and such Affiliates’ employees, attorneys and
accountants, with a need to know Pier 1 Shopper Data or Pier 1 Prospect List in
connection with a permitted use of Pier 1 Shopper Data or Pier 1 Prospect List under
this Section 6.3; provided that (A) any such Person is bound by terms substantially
similar to this Section 6.3 as a condition of employment, of access to Pier 1
Shopper Data or Pier 1 Prospect List or by professional obligations imposing
comparable terms; and (B) Bank shall be responsible for the compliance by each such
Person with the terms of this Section 6.3; or

     (iii) to any Governmental Authority with authority over Bank (A) in connection
with an examination of Bank; or (B) pursuant to a specific requirement to provide
Pier 1 Shopper Data or Pier 1 Prospect List by such Governmental Authority or
pursuant to compulsory legal process; provided that Bank seeks the full protection
of confidential treatment for any disclosed Pier 1 Shopper Data or Pier 1 Prospect
List, as the case may be, to the extent available under Applicable Law governing
such disclosure, and with respect to clause (B), to the extent permitted by
Applicable Law, Bank (1) provides at least ten (10) Business Days’ prior notice of
such proposed disclosure to Pier 1 if reasonably possible under the circumstances,
and (2) seeks to redact Pier 1 Shopper Data or Pier 1 Prospect List to the fullest
extent possible under Applicable Law governing such disclosure.

     (e) Upon the termination of this Agreement, without limiting Bank’s rights and
obligations with respect to the Cardholder Data pursuant to Section 16.3, Bank’s rights to
use and disclose Pier 1 Shopper Data and Pier 1 Prospect List shall terminate. Promptly
following such termination, Bank shall return or destroy all Pier 1 Shopper Data and Pier 1
Prospect Lists and shall certify such return or destruction to Pier 1 upon request excluding
any archival copy retained systemically as a function of the Bank’s disaster recovery
process.

ARTICLE VII

OPERATING STANDARDS

     7.1 Reports. Within ten (10) Business Days after the end of each Fiscal Month or
such other time as may be agreed by the Parties with respect to particular reports, Bank shall

Credit Card Program Agreement — Page 32

 

 

provide to the Management Committee and Pier 1 the report specified in Schedule 7.1
(which report shall be reported on a Fiscal Month, calendar month or cycles-basis, as agreed upon
by the parties), and such other reports as are mutually agreed to by the Parties from time to
time. The payment report shall be known as a “Monthly Settlement Sheet”.

       7.2 Servicing.

     (a) Bank shall perform, or cause to be performed, all Services in all material respects
in accordance with the terms and conditions of this Agreement, the Risk Management Policies
and the Operating Procedures. Without limiting the foregoing, Bank shall service the
Accounts in compliance with Applicable Law, in such a way as to not disparage or embarrass
Pier 1 or its names, with a level of service to Cardholders and with no less care and
diligence than the degree of care and diligence employed by Pier 1 prior to the Closing
Date. In addition, without limiting the foregoing, with respect to the Services to be
performed by Bank, Bank agrees that it shall perform such functions with no less care and
diligence than that degree of care and diligence employed by it in servicing the Comparable
Partner Programs.

     (b) Upon the Closing Date, Bank shall accept responsibility with respect to the
Services and, upon the Systems Transition Date, Bank shall be required to meet the SLAs
applicable to the Services set forth in Schedule 7.3(a) (as such SLAs may be amended
from time to time in accordance with this Agreement).

     (c) The Parties shall maintain records relating to their performance under this
Agreement in accordance with their respective record retention policies, as the same may be
amended from time-to-time.. Records may be kept in either paper or electronic form. The
Parties shall retrieve, reproduce and deliver to each other any records reasonably requested
from time to time by the other Party for the purpose of providing customer assistance or
resolving customer disputes.

     (d) Bank shall have the right to perform any portion of the Services through one or
more subservicers; provided that (i) any subservicer that is not an Affiliate of Bank shall
be subject to approval pursuant to Article III and (ii) Bank shall remain fully responsible
to Pier 1 for the portion of the Services performed by any subservicer(s) (including its
Affiliates). Notwithstanding the foregoing, to the extent Bank subcontracts or outsources
to any third party any Services as of the date hereof, Bank may continue to subcontract or
outsource such Services to such third party (and Bank shall be fully responsible for the
performance of such subcontracted or outsourced Services). Bank and Pier 1 further agree
with respect to call center and customer service functions as set forth on Schedule
7.2(d).

       7.3 Service Level Standards.

     (a) Bank shall perform the applicable Services in accordance with the SLAs set forth on
Schedule 7.3(a).

     (b) Bank shall report to Pier 1 monthly, in a mutually agreed upon format and on a
calendar month basis, Bank’s performance under each of the SLAs set forth on

Credit Card Program Agreement — Page 33

 

 

Schedule 7.3(a). If Bank fails to meet any SLA, Bank shall (i) immediately
report to the Management Committee the reasons for the SLA failure(s); and (ii) promptly
take any action reasonably necessary to correct and prevent recurrence of such failure(s).

     (c) Throughout the Term, Bank shall maintain a disaster recovery and business
continuity plan that complies with Applicable Law and is consistent with plans maintained
for its Comparable Partner Programs. Bank shall be prepared to and have the ability to
implement such plan if necessary. Bank shall provide Pier 1 with access to review such plan
upon request. Bank shall test the plan annually and shall promptly implement such plan upon
the occurrence of a disaster or business interruption. Bank shall be excused from its
failure to meet any applicable SLAs that result directly from the failure of any of Pier 1
Systems or a Force Majeure Event.

     (d) Bank and Pier 1 acknowledge that (i) Pier 1’s management is now and in the future
may be required under the Sarbanes-Oxley Act of 2002 and related regulations (the “SOX
Laws”) to, among other things, assess the effectiveness of its internal controls over
financial reporting and state in its annual report whether such internal controls are
effective, (ii) Pier 1’s independent auditors are now and in the future may be required to
evaluate the process used by management to make such assessment to determine whether that
process provides an appropriate basis for management’s conclusions, and (iii) because Pier 1
and Bank have entered into a significant transaction as described in this Agreement, the
controls used by Bank (including controls that restrict unauthorized access to systems, data
and programs) are relevant to Pier 1’s evaluation of its controls. Having acknowledged the
foregoing, and subject to the terms of this Section 7.3(d), Bank agrees to cooperate with
Pier 1 and its independent auditors as reasonably necessary to facilitate Pier 1’s ability
to comply with its obligations under the SOX Law including by providing Pier 1 with an
opportunity to meet with Bank’s internal auditors and/or technology personnel to obtain
assurances regarding Bank’s internal controls and review a copy of any relevant
correspondence prepared by Bank’s internal auditors addressing Bank’s SOX compliance,
including, if applicable, any correspondence addressing any corrective plan or action to be
undertaken in response to any deficiencies. Bank will promptly notify Pier 1 of any
deficiency discovered with respect to Bank’s internal controls that could reasonably be
expected to have a significant impact on the Program and, within sixty (60) days of such
notice, provide to Pier 1 and commence to implement a corrective plan to remedy such
deficiencies. In the event Bank obtains a SAS 70 Type II Audit in the future, Bank shall
provide Pier 1 with a copy of such report and will deliver and commence to implement a
corrective plan within sixty (60) days if the SAS 70 Type II Audit reveals any deficiencies.

       7.4 Credit Systems.

     (a) Pier 1 and Bank shall work together (including through a subcommittee of the
Management Committee formed for this purpose) to develop a mutually agreeable plan relating
to the credit systems, which shall include a conversion plan designed to convert such data
to the Bank Systems. Subject to the satisfaction of each of the requirements set forth in
Section 7.4(b), at such time when both Pier 1 and Bank are satisfied with the terms of such
conversion plan and have concluded that such conversion

Credit Card Program Agreement — Page 34

 

 

will further the Program Objectives and provide cost efficiencies and features and
functionality superior to those available to Pier 1, without an unacceptable level of
Program disruption, such conversion shall be implemented (the date of any such conversion
the “Systems Transition Date”). Bank shall bear all out-of-pocket costs and expenses
incurred by it or paid to third parties associated with the Systems conversion.

     (b) The Parties acknowledge and agree that no Systems conversion shall occur pursuant
to Section 7.4(a) in absence of satisfaction of each of the following requirements:

     (i) Bank shall ensure that all identified features and functionality available
on Pier 1’s credit processing/servicing systems prior to the Systems Transition Date
(including data gathering, interface capabilities with Pier 1’s other Systems,
Loyalty Program support and core systems/customer service functionality) are
available in a substantially similar manner on the Bank Systems as of the Systems
Transition Date;

     (ii) all existing credit data feeds used by Pier 1 or any of its Affiliates in
connection with the Credit Card Business or otherwise prior to the Closing Date
shall be available on the Bank Systems prior to the Systems Transition Date; and all
data feeds necessary to provide Pier 1 with the information necessary to prepare the
Monthly Settlement Sheets and Year-End Settlement Sheets pursuant to Section 7.1
shall have been created prior to the Systems Transition Date;

     (iii) Bank shall provide and the Bank Systems shall support the Internet
Services described in Section 4.8;

     (iv) if requested, Bank shall support existing Account numbers until new
numbers are issued and trailing activity has ceased. Bank shall provide a
translation table that will show the correlation between existing and new Cardholder
Account numbers;

     (v) without limiting the foregoing, the Bank Systems shall interface with Pier
1 Systems that are not converted to Bank Systems in a manner reasonably acceptable
to Pier 1;

     (vi) Bank shall have a disaster recovery and business continuity plan
applicable to the Bank Systems as set forth in Section 7.3(c) and the Bank shall be
prepared to and have the ability to implement such plan if necessary;

     (vii) the Parties shall have identified and implemented all hardware and other
Systems changes necessary to ensure that the Bank Systems will be compatible with
those Pier 1 Systems that will interface with the Bank Systems, including the POS
Systems of Pier 1 and its Affiliates; and

     (viii) Bank shall provide procedures and process documentation to all employees
of Pier 1, its Subsidiaries and its Licensees who use the Bank Systems.

Credit Card Program Agreement — Page 35

 

 

     (c) Prior to the Systems Transition Date, the Parties shall agree on a statement of
work covering the development and testing of, and conversion to, the Bank Systems.

     (d) Neither Party shall make any change to any of its Systems that would render them
incompatible in any way with the other Party’s or its Affiliates’ Systems or require the
other Party or its Affiliates (or the Retail Merchants) to make any change to any of their
Systems (including any POS terminals) or reduce or restrict interfacing or System feeds, in
any such case without the prior approval of the Management Committee.

       7.5 Systems Interface; Technical Support.

     (a) Required Interfaces.

     (i) Pier 1 and Bank shall identify, prior to the Closing Date, the Systems
interfaces required to be sustained among Pier 1 and Bank. Pier 1 and Bank shall
maintain such interfaces and cooperate in good faith with each other in connection
with any modifications to such interfaces as may be requested by either Party from
time to time.

     (ii) Each of Pier 1 and Bank agrees to maintain at its own expense its
respective Systems interfaces so that the operation of the Systems as a whole is at
all times no less functional than prior to the Closing Date. Bank and Pier 1 agree
to provide sufficient personnel to support the Systems interfaces required to be
sustained between Pier 1 and Bank.

     (b) Additional Interfaces; Interface Modifications. All requests for new
interfaces, modifications to existing interfaces and terminations of existing interfaces
shall be presented to the Management Committee for approval. Upon approval, the Parties
shall work in good faith to establish the requested interfaces or modify or terminate the
existing interfaces, as applicable, on a timely basis. Except as otherwise provided herein
(including in Section 7.4), all costs and expenses with respect to any new interface or
interface modification or termination shall be borne by the requesting Party, unless
otherwise determined by the Management Committee.

     (c) Secure Protocols. The Parties shall use secure protocols for the
transmission of data from Bank and its Affiliates, on the one hand, to Pier 1 and its
Affiliates, on the other hand, and vice versa. This will include the use of data encryption
or another form of agreed-upon secure data transmission method during transmission of all
Cardholder Data and Pier 1 Shopper Data by both Bank and Pier 1.

ARTICLE VIII

MERCHANT SERVICES

       8.1 Transmittal and Authorization of Pier 1 Charge Transaction Data. Pier 1 shall,
and shall cause its Subsidiaries and Licensees (such Subsidiaries and Licensees, together with
Pier 1, the “Retail Merchants”) to, accept within the United States Pier 1 Credit Cards for Pier
1 Goods and Services. The Retail Merchants shall transmit Pier 1 Charge Transaction Data for

Credit Card Program Agreement — Page 36

 

 

authorization of Pier 1 Transactions to Bank as provided in the Operating Procedures. Bank
shall authorize or decline Pier 1 Transactions on a real time basis as provided in the Operating
Procedures, including transactions involving split-tender (i.e., a portion of the total
transaction amount is billed to a Pier 1 Credit Card and the remainder is paid through one or
more other forms of payment), transactions over the phone, on-line or hand keyed, as applicable,
or down-payments on Pier 1 Goods and Services for later delivery. If any Retail Merchant is
unable to obtain authorizations for Pier 1 Transactions for any reason, such Retail Merchant may
complete such Pier 1 Transactions as provided in the Operating Procedures.

       8.2 POS Terminals. Pier 1 shall maintain POS terminals capable of processing Pier 1
Credit Card and Account transactions as handled as of the Closing Date. To the extent that Pier
1 is required by Bank to make changes to any POS terminal (including hardware and software) in
order to process Pier 1 Transactions and transmit Pier 1 Charge Transaction Data under this
Agreement as a result of any System conversion contemplated by Section 7.4 or any other change or
modification to any Bank System or a new Bank System approved by the Management Committee, Bank
shall pay the costs and expenses associated with such changes.

       8.3 In-Store Payments. Pier 1 may accept In-Store Payments from Cardholders on
their Accounts in accordance with the Operating Procedures, the Risk Management Policies and any
procedures required under Applicable Law. Pier 1 shall, as necessary, provide proper
endorsements on such items. If Pier 1 receives any In-Store Payments, Pier 1 shall, directly or
through its Affiliates, be deemed to hold such In-Store Payments in trust for Bank until such
Payments are either delivered to Bank or applied to reduce amounts payable by Bank to Pier 1
pursuant to Section 8.4(b). Bank hereby grants to Pier 1 a limited power of attorney (coupled
with an interest) to sign and endorse Bank’s name upon any form of payment that may have been
issued in Bank’s name in respect of any Account. Pier 1 and Bank shall jointly develop
procedures in the Operating Procedures with respect to the manner in which such In-Store Payments
shall be processed (it being understood that such procedures shall allow during the Term for Pier
1 to accept In-Store Payments and provide for immediate credit toward the applicable open-to-buy
limits of the respective Account upon receipt of an In-Store Payment, subject only to the
Operating Procedures). Pier 1 shall notify Bank upon receipt of In-Store Payments and Bank shall
include Pier 1 Charge Transaction Data related to such In-Store Payments in the net settlement in
respect of the day immediately following such receipt on the same basis as other Pier 1 Charge
Transaction Data. Pier 1 shall issue receipts to Cardholders for such payments in compliance
with Applicable Law.

       8.4 Settlement Procedures.

     (a) Pier 1 shall transmit Pier 1 Charge Transaction Data to Bank in accordance with the
Operating Procedures on each day on which such Retail Merchants are open for business, other
than Sunday. If Pier 1 Charge Transaction Data is received by Bank’s processing center on
or before 7:00 a.m. (Central time) on any Business Day on which Bank is open for business,
Bank shall process Pier 1 Charge Transaction Data and, in accordance with Section 9.1(a),
initiate a wire transfer of the payment in respect thereof before 1:00 p.m. (Central time)
on the same Business Day. If Pier 1 Charge Transaction Data is received after 7:00 a.m.
(Central time) on any Business Day Bank is open for business, or at any time on a day other
than a Business Day, Bank shall process

Credit Card Program Agreement — Page 37

 

 

Pier 1 Charge Transaction Data for payment by 1:00 p.m. (Central time) on the following
Business Day.

     (b) Bank shall remit to Pier 1 for itself and the Retail Merchants, an amount
calculated in accordance with Schedule 8.4.

     (c) Pier 1 shall be responsible for allocating such remittances among the Retail
Merchants as appropriate and Bank shall have no responsibility or liability in connection
therewith (it being agreed that Bank has no obligation to accept Pier 1 Charge Transaction
Data directly from, or make remittances to, any person other than Pier 1).

       8.5 Bank’s Right to Charge Back. Bank shall have the right to charge back to Pier 1
the amount of any Cardholder Indebtedness, including Cardholder Indebtedness incurred prior to
the Closing Date with respect to Purchased Accounts, relating to Pier 1 Charge Transaction Data
if with respect to the related Pier 1 Transaction:

     (a) The Cardholder refuses to pay the charge based on a dispute regarding the quality,
timely delivery, or non-receipt of Pier 1 Goods and Services representing a valid defense to
payment consistent with Applicable Law; provided that any such refusal constitutes a bona
fide claim presented by the Cardholder in good faith in the reasonable opinion of Bank,
after consultation with Pier 1;

     (b) The Cardholder refuses to pay the charge based on a claim of unauthorized use of
Pier 1 Credit Card at a Retail Merchant; provided that any such refusal constitutes a bona
fide claim presented by the Cardholder in good faith in the reasonable opinion of Bank,
after consultation with Pier 1;

     (c) The charge was not for a bona fide sale or delivery of Pier 1 Goods and Services by
or through a Pier 1 Channel;

     (d) The charge slip is a duplicate of a charge slip previously paid;

     (e) The price of Pier 1 Goods and Services shown on the charge slip differs from the
amount shown on the Cardholder’s copy of the charge slip, but only to the extent of such
difference;

     (f) The charge or Account arose from fraud of any employee or agent in a Retail
Merchant; or

     (g) The Cardholder refuses to pay the charge based on a dispute regarding accuracy of
the Pier 1 Charge Transaction Data or the charge slip is illegible with respect to such Pier
1 Charge Transaction Data or is missing information in any material respect.

       8.6 Exercise of Chargeback. If Bank exercises its right of chargeback, Bank shall
demand payment from Pier 1 for the full amount of such chargeback. In the event of a chargeback
pursuant to this Article VIII, upon payment in full of the related amount by Pier 1, Bank shall
immediately assign to Pier 1 or the relevant Retail Merchant, without any representation,
warranty or recourse, (i) all right to payments of amounts charged back in

Credit Card Program Agreement — Page 38

 

 

connection with such Cardholder charge, and (ii) any security interest granted by Pier 1
under Section 18.1. Bank shall provide reasonable cooperation in any effort by Pier 1 to collect
the chargeback amount, including by executing and delivering any document necessary or useful to
such collection efforts.

       8.7 No Merchant Discount. None of Pier 1, its Affiliates or the Retail Merchants
shall be required to pay any Merchant Discount, other than as described on Schedule 4.9,
on any Pier 1 Transaction. The Parties shall directly process Pier 1 Transactions such that the
Retail Merchants do not incur any merchant acquirer/processor or similar fees.

ARTICLE IX

PROGRAM ECONOMICS

       9.1 Pier 1 Compensation.

     (a) Payments.

     (i) Not later than 1:00 pm (Central time) on each Business Day, Bank shall
initiate payment to Pier 1 an amount equal to the amount set forth on Schedule
8.4 with respect to the Accounts.

     (ii) Not later than 1:00 p.m. (Central time) on the tenth (10th) Business Day
after the end of each Fiscal Month, Bank shall initiate payment to Pier 1 in the
amounts determined in accordance with Schedule 7.1(a) with respect to the
Accounts.

For the avoidance of doubt, any such payment shall not be deemed a waiver of, or in any
other way limit, a Party’s right to pursue any dispute with respect to such payment in
accordance with the terms of this Agreement and each of Bank or Pier 1 may invoke the
dispute resolution procedures set forth herein following payment of such amounts.

     (b) Form of Payment. All payments pursuant to this Section 9.1 shall be made
by wire transfer of immediately available funds to an account designated in writing by Pier
1 or Bank, as the case may be, unless otherwise agreed upon by the Parties in writing.

       9.2 Dispute Resolution. Any disputes regarding the amounts owed under this
Agreement shall be resolved in accordance with Article XII.

ARTICLE X

INTELLECTUAL PROPERTY

       10.1 Pier 1 Licensed Marks.

     (a) Grant of License to Use Pier 1 Licensed Marks. Subject to the terms and
conditions of this Agreement, Pier 1, either directly or through its Affiliates, hereby
grants to Bank a non-exclusive, royalty-free, non-transferable right and license to use Pier
1 Licensed Marks (i) with respect to the Program in the Territory in connection with the

Credit Card Program Agreement — Page 39

 

 

creation, establishment, marketing and administration of, and the provision of services
related to, the Program and (ii) in connection with any sale permitted by this Agreement of
the Accounts and Cardholder Indebtedness to third parties for liquidation. All use of Pier
1 Licensed Marks shall be in accordance with this Agreement and any Trademark Style Guide,
if any, delivered by Pier 1 to Bank from time to time. All uses of Pier 1 Licensed Marks
shall require the prior written approval of Pier 1. To the extent Bank delegates any of its
rights or obligations hereunder to any authorized Affiliate and/or authorized third party in
accordance with the terms and conditions of this Agreement, Bank may sublicense its rights
in Pier 1 Licensed Marks hereunder to such authorized Person; provided that such Person
shall agree to comply with all of the terms and conditions of the use of Pier 1 Licensed
Marks hereunder and Bank shall remain liable for such Person’s failure to so comply. Except
as expressly set forth in this Section 10.1, the rights granted pursuant to this Section
10.1 are solely for use of Bank and may not be sublicensed without the prior written
approval of Pier 1.

     (b) New Pier 1 Marks. If Pier 1 or any of its Affiliates adopts a trademark,
service mark or other source indicator that is a successor to a Pier 1 Licensed Mark or that
Pier 1 or its Affiliates has otherwise elected to use in connection with the Program but
which is not listed on Schedule 1.1(d) hereto (a “New Pier 1 Mark”), Bank may
request that Pier 1 add such New Pier 1 Mark to Schedule 1.1(d) hereto at no cost to
Bank and license its use hereunder; Pier 1 shall not unreasonably fail to do so, and upon
Pier 1’s written approval of the addition of such New Pier 1 Mark, such New Pier 1 Mark
shall be deemed added to Schedule 1.1(d). If Pier 1 requires Bank to immediately
use such New Pier 1 Mark in lieu of one or more existing Pier 1 Licensed Marks, Pier 1 at
its option may either reimburse Bank for the cost of replacing all materials bearing the
existing Pier 1 Marks or permit simultaneous use of the materials bearing the existing Pier
1 Marks and the New Pier 1 Marks.

     (c) Termination of License. Except to the extent otherwise provided in Section
16.5, the license granted in this Section 10.1 shall terminate upon the termination or
expiration of this Agreement or, if the purchase option under Section 16.2 is exercised, the
Program Purchase Date. Upon termination of the license granted in this Section 10.1, all
rights in Pier 1 Licensed Marks granted hereunder shall revert to Pier 1 or its Affiliates
and Bank shall: (i) discontinue immediately all use of Pier 1 Licensed Marks, or any of
them, and any colorable imitation thereof; and (ii) destroy all unused Pier 1 Credit Cards,
Applications, Account Documentation, Solicitation Materials, periodic statements, materials,
displays, advertising and sales literature and any other items bearing any of Pier 1
Licensed Marks.

     (d) Ownership of Pier 1 Licensed Marks. Bank acknowledges that (i) Pier 1
Licensed Marks, all rights therein, and the goodwill associated therewith, are, and shall
remain, the exclusive property of Pier 1 or its Affiliates, (ii) it shall take no action
which shall adversely affect Pier 1 or its Affiliates’ exclusive ownership of Pier 1
Licensed Marks, or the goodwill associated with Pier 1 Licensed Marks (it being understood
that the collection of Accounts, adverse action letters, and changes in terms of Accounts as
required by Applicable Law do not adversely affect goodwill, if done in accordance with the
terms of this Agreement), and (iii) any and all goodwill arising from use of Pier 1

Credit Card Program Agreement — Page 40

 

 

Licensed Marks by Bank shall inure to the benefit of Pier 1 or its Affiliates. Nothing
herein shall give Bank any proprietary interest in or to Pier 1 Licensed Marks, except the
right to use Pier 1 Licensed Marks in accordance with this Agreement, and Bank shall not
contest Pier 1 or its Affiliates’ title in and to Pier 1 Licensed Marks.

     (e) Infringement by Third Parties. Bank shall use reasonable efforts to notify
Pier 1, in writing, promptly upon acquiring Knowledge of any infringing use of any of Pier 1
Licensed Marks by any third party. If any of Pier 1 Licensed Marks is infringed, Pier 1
alone has the right, in its sole discretion, to take whatever action it deems necessary to
prevent such infringing use; provided, however, that if Pier 1 or its Affiliates fail to
take reasonable steps to prevent infringement of Pier 1 Licensed Marks and such infringement
has an adverse effect upon the Program or the rights of Bank hereunder, Bank may request
that Pier 1 or its Affiliates take action necessary to alleviate such adverse impact. Bank
shall reasonably cooperate with and assist Pier 1 or its Affiliates, at Pier 1’s expense, in
the prosecution of those actions that Pier 1 or its Affiliates determines, in its sole
discretion, are necessary or desirable to prevent the infringing use of any of Pier 1
Licensed Marks.

       10.2 The Bank Licensed Marks.

     (a) Grant of License to Use the Bank Licensed Marks. Subject to the terms and
conditions of this Agreement, Bank hereby grants to Pier 1 a non-exclusive, royalty-free,
non-transferable right and license to use the Bank Licensed Marks in the United States in
connection with the creation, establishment, marketing and administration of, and the
provision of services related to, the Program. All uses of the Bank Licensed Marks shall be
in accordance with this Agreement and any Trademark Style Guide, if any, delivered by Bank
to Pier 1 from time to time. All uses of the Bank Licensed Marks shall require the prior
written approval of Bank. To the extent Pier 1 delegates any of its rights or obligations
hereunder to any authorized Affiliate and/or authorized third party in accordance with the
terms and conditions of this Agreement, Pier 1 may sublicense its rights in the Bank
Licensed Marks hereunder to such authorized Person; provided that such Person shall agree to
comply with all of the terms and conditions of the use of the Bank Licensed Marks hereunder
and Pier 1 shall remain liable for such Person’s failure to so comply. Except as expressly
set forth in this Section 10.2, the rights granted pursuant to this Section 10.2 are solely
for use of Pier 1 and may not be sublicensed without the prior written approval of Bank.

     (b) New Bank Marks. If Bank adopts a trademark, service mark or other source
indicator that is not listed on Schedule 1.1(a) hereto (for purposes of this Section
10.2, a “New Bank Mark”), Pier 1 may request that Bank add such New Bank Mark to
Schedule 1.1(a) hereto at no cost to Pier 1 and license its use hereunder; Bank
shall not unreasonably fail to do so, and upon Bank’s written approval of the addition of
such New Bank Mark, such New Bank Mark shall be deemed added to Schedule 1.1(a).

     (c) Termination of License. The license granted in this Section 10.2 shall
terminate upon the termination or expiration of this Agreement or, if the purchase option
under Section 16.2 is exercised, three (3) months after the closing date of the sale of the

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Program Assets (“Program Purchase Date”). Upon the termination of the license granted
in this Section 10.2, all rights in the Bank Licensed Marks granted hereunder shall revert
to Bank and Pier 1 shall: (i) discontinue immediately all use of the Bank Licensed Marks, or
any of them, and any colorable imitation thereof; and (ii) destroy all unused Pier 1 Credit
Cards, Applications, Account Documentation, Solicitation Materials, periodic statements,
materials, displays, advertising and sales literature and any other items, in each case,
bearing any of the Bank Licensed Marks.

     (d) Ownership of the Bank Licensed Marks. Pier 1 acknowledges that (i) the
Bank Licensed Marks, all rights therein, and the goodwill associated therewith, are, and
shall remain, the exclusive property of Bank, (ii) it shall take no action which shall
adversely affect Bank’s exclusive ownership of the Bank Licensed Marks or the goodwill
associated with the Bank Licensed Marks, and (iii) any and all goodwill arising from use of
the Bank Licensed Marks by Pier 1 shall inure to the benefit of Bank. Nothing herein shall
give Pier 1 any proprietary interest in or to the Bank Licensed Marks, except the right to
use the Bank Licensed Marks in accordance with this Agreement, and Pier 1 shall not contest
Bank’s title in and to the Bank Licensed Marks.

     (e) Infringement by Third Parties. Pier 1 shall use reasonable efforts to
notify Bank, in writing, promptly upon acquiring Knowledge of any infringing use of any of
the Bank Licensed Marks by any third party. If any of the Bank Licensed Marks is infringed,
Bank alone has the right, in its sole discretion, to take whatever action it deems necessary
to prevent such infringing use; provided, however, that if Bank fails to take reasonable
steps to prevent infringement of the Bank Licensed Marks and such infringement has an
adverse effect upon the Program or the rights of Pier 1 hereunder, Pier 1 may request that
Bank take action necessary to alleviate such adverse impact. Pier 1 shall reasonably
cooperate with and assist Bank, at Bank’s expense, in the prosecution of those actions that
Bank determines, in its sole discretion, are necessary or desirable to prevent the
infringing use of any of the Bank Licensed Marks.

       10.3 Intellectual Property.

     (a) Independently-Owned Intellectual Property. Each Party shall continue to
own all of its Intellectual Property that existed as of the Closing Date. Each Party also
shall own all right, title and interest in the Intellectual Property it develops or creates
independently of the other Party during the Term.

     (b) Jointly-Owned Intellectual Property. Any proposal for the joint
development by the Parties of any new Intellectual Property for the Program shall be
approved of in advance by the Management Committee. Unless otherwise agreed in writing by
the Parties, the Management Committee shall also determine in advance the respective rights
of the Parties with respect to such new Intellectual Property, and may determine that any
such new Intellectual Property jointly developed by Bank and Pier 1 in connection with the
Program shall be owned jointly and equally thereby (“Jointly Developed Intellectual
Property”). Any filings or other actions necessary to protect such Jointly Developed
Intellectual Property shall be filed jointly by Bank and Pier 1 and shall identify both such
Parties as the owners. Bank and Pier 1 shall cooperate fully, and cause

Credit Card Program Agreement — Page 42

 

 

their employees to cooperate fully, with each other in the filing of any such filings
or actions and, except as may be otherwise agreed by the Parties in writing, shall share
equally all costs and expenses relating to any such filings or actions approved by the
Parties. In the event that either Bank or Pier 1 declines to fund its portion of the costs
incurred in connection with any such filings or other actions, the other Party may proceed
on its own with such filings or other actions, and will own the resulting Intellectual
Property.

     (c) Use of Jointly Developed Intellectual Property. During and after the Term
of this Agreement, each Party may use, license or otherwise exploit (or permit others to do
so) any Jointly Developed Intellectual Property referenced herein solely at its own risk.

ARTICLE XI

REPRESENTATIONS, WARRANTIES AND COVENANTS

       11.1 General Representations and Warranties of Pier 1. Except as Previously
Disclosed, Pier 1 makes the following representations and warranties to the Bank as of the date
hereof, as of the Closing Date, and on each date that Pier 1 submits to Bank Pier 1 Charge
Transaction Data (except for Section 11.1(d) which shall only be as of the date hereof and as of
the Closing Date):

     (a) Corporate Existence. Pier 1: (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation; (ii)
is duly licensed or qualified to do business and is in good standing as a foreign
corporation in all jurisdictions in which the conduct of its business or the activities in
which it is engaged makes such licensing or qualification necessary, except to the extent
that its non-compliance would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Pier 1’s ability to perform its obligations
hereunder; and (iii) has all necessary licenses, permits, consents or approvals from or by,
and has made all necessary filings and registrations with, all governmental authorities
having jurisdiction, to the extent required for the ownership, lease or conduct and
operation of its business, except to the extent that the failure to obtain such licenses,
permits, consents or approvals or to make such filings or registrations would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect upon Pier
1, the Program, the Accounts, Cardholder Indebtedness or Pier 1’s ability to perform its
obligations under this Agreement.

     (b) Capacity; Authorization; Validity. Pier 1 has all necessary corporate
power and authority to (i) execute and enter into this Agreement, and (ii) perform the
obligations required of Pier 1 hereunder and the other documents, instruments and agreements
relating to the Program and this Agreement executed by Pier 1 pursuant hereto. The
execution and delivery by Pier 1 of this Agreement and all documents, instruments and
agreements executed and delivered by Pier 1 pursuant hereto, and the consummation by Pier 1
of the transactions specified herein, have been duly and validly authorized and approved by
all necessary corporate action of Pier 1. This Agreement (i) has been duly executed and
delivered by Pier 1, (ii) constitutes the valid and legally

Credit Card Program Agreement — Page 43

 

 

binding obligation of Pier 1, and (iii) is enforceable in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, receivership or other laws
affecting the rights of creditors generally and by general equity principles including those
respecting the availability of specific performance).

     (c) Conflicts; Defaults; Etc. The execution, delivery and performance of this
Agreement by Pier 1, its compliance with the terms hereof, and consummation of the
transactions specified herein will not (i) conflict with, violate, result in the breach of,
constitute an event which would, or with the lapse of time or action by a third party or
both would, result in a default under, or accelerate the performance required by, the terms
of any contract, instrument or agreement to which Pier 1 is a party or by which it is bound,
or to which any of the assets of Pier 1 or any of its Subsidiaries are subject; (ii)
conflict with or violate the articles of incorporation or by-laws, or any other equivalent
organizational document(s), of Pier 1; (iii) breach or violate any Applicable Law or
Applicable Order, in each case, applicable to Pier 1; (iv) require the consent or approval
of any other party to any contract, instrument or commitment to which Pier 1 is a party or
by which it is bound; or (v) require any filing with, notice to, consent or approval of, or
any other action to be taken with respect to, any Governmental Authority, except, in the
cases of clauses (i) and (iii)-(v), for such conflicts, breaches, defaults, violations or
failures to obtain such consents or approvals or make or obtain such filings, notices,
consents and approvals as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect upon Pier 1, the Program, the Accounts, Cardholder
Indebtedness or Pier 1’s ability to perform it’s obligations under this Agreement.

     (d) No Litigation. No action, claim, litigation, proceeding, arbitration or
investigation is pending or, to the Knowledge of Pier 1, threatened against Pier 1 or any of
its Subsidiaries, at law, in equity or otherwise, by or before any Governmental Authority,
to which Pier 1 or any of its Subsidiaries is a served party, which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect upon the
Program, the Accounts, Cardholder Indebtedness or Pier 1’s ability to perform its
obligations under this Agreement.

     (e) Compliance with Laws. Except to the extent that any of the following would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect upon the Program or the ability of Pier 1 to perform its obligations under this
Agreement, Pier 1 is in compliance with all requirements of Applicable Law relating to the
Credit Card Business and neither of Pier 1 nor any of its Subsidiaries is subject to any
order, directive or restriction of any kind issued by any Governmental Authority that
restricts in any respect its ability to perform its obligations under the Program.

     (f) Insurance. Pier 1 maintains insurance policies with respect to its
properties under such terms and conditions as are (i) commercially reasonable and available
from time to time and (ii) customary for similarly situated Persons engaged in similar
business, except in each case for insurance which a failure to maintain would not reasonable
be expected to have a Material Adverse Effect on the ability of Pier 1 to perform its
obligations under this Agreement.

Credit Card Program Agreement — Page 44

 

 

     (g) Pier 1 Licensed Marks. Pier 1 has the right, power and authority to grant
the rights to use Pier 1 Licensed Marks expressly granted herein.

     (h) No Defaults. Pier 1 is not in default with respect to any material
contract, agreement, lease, or other instrument, except for defaults, which would not be
reasonably expected to have, individually or in the aggregate, a Material Adverse Effect
upon the Program, the Accounts, the Cardholder Indebtedness, or Pier 1.

     (i) Title to Goods. In no case shall any of the Cardholder Indebtedness
arising from the sale of Pier 1 Goods and Services include any sales of products to which
Pier 1 has not acquired title at the time of sale.

       11.2 General Representations and Warranties of the Bank. Except as Previously
Disclosed, the Bank hereby makes the following representations and warranties to Pier 1, each and
all of which shall survive the execution and delivery of this Agreement, and each and all of
which shall be deemed to be restated and remade with the same force and effect on each day of the
Term (except for Section 11.2(d) which shall only be as of the date hereof and as of the Closing
Date):

     (a) Corporate Existence. Bank: (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation; and (ii) is duly
licensed or qualified to do business and is in good standing as a foreign entity in all
jurisdictions in which the conduct of the its business or the activities in which it is
engaged, or proposes to engage pursuant to this Agreement, makes such licensing or
qualification necessary, except to the extent that its non-compliance would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect upon the
Bank, the Program, the Accounts, Cardholder Indebtedness or the Bank’s ability to perform
its obligations under this Agreement. The Bank has all necessary licenses, permits,
consents or approvals from or by, and have made all necessary filings and registrations
with, all governmental authorities having jurisdiction, to the extent required for the
ownership, lease or conduct and operation of their businesses and the Credit Card Business
pursuant to this Agreement, except to the extent that the failure to obtain such licenses,
permits, consents or approvals or to make such filings or registrations would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect upon the
Bank, the Program, the Accounts, Cardholder Indebtedness or the Bank’s ability to perform
its obligations under this Agreement.

     (b) Capacity; Authorization; Validity. Bank has all necessary corporate or
similar power and authority to (i) execute and enter into this Agreement, and (ii) perform
the obligations required of the Bank hereunder and the other documents, instruments and
agreements relating to the Program and this Agreement executed by the Bank pursuant hereto.
The execution and delivery by the Bank of this Agreement and all documents, instruments and
agreements executed and delivered by the Bank pursuant hereto, and the consummation by the
Bank of the transactions specified herein, have been duly and validly authorized and
approved by all necessary corporate or similar actions of the Bank. This Agreement (i) has
been duly executed and delivered by the Bank, (ii) constitutes the valid and legally binding
obligation of the Bank, and (iii) is enforceable in accordance

Credit Card Program Agreement — Page 45

 

 

with its terms (subject to applicable bankruptcy, insolvency, reorganization,
receivership or other laws affecting the rights of creditors generally and by general equity
principles including those respecting the availability of specific performance).

     (c) Conflicts; Defaults; Etc. The execution, delivery and performance of this
Agreement by the Bank, its compliance with the terms hereof, and the consummation of the
transactions specified herein will not (i) conflict with, violate, result in the breach of,
constitute an event which would, or with the lapse of time or action by a third party or
both would, result in a default under, or accelerate the performance required by, the terms
of any contract, instrument or agreement to which any of Bank or any of its Subsidiaries is
a Party or by which they are bound, or to which any of the assets of Bank or any of its
Subsidiaries are subject; (ii) conflict with or violate the articles of incorporation or
by-laws, or any other equivalent organizational document(s), of the Bank; (iii) breach or
violate any Applicable Law or Applicable Order, in each case, applicable to the Bank; (iv)
require the consent or approval of any other Party to any contract, instrument or commitment
to which Bank is a Party or by which it is bound; or (v) require any filing with, notice to,
consent or approval of, or any other action to be taken with respect to, any Governmental
Authority, except, in the cases of clauses (i) and (iii)-(v), for such conflicts, breaches,
defaults, violations or failures to obtain such consents or approvals or make or obtain such
filings, notices, consents and approvals as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect upon the Bank, the Program, the
Accounts, Cardholder Indebtedness or the ability of the Bank to perform their obligations
under this Agreement.

     (d) No Litigation. Except as described in the publicly filed prospectuses in
connection with the Chase Issuance Trust, no action, claim, litigation, proceeding,
arbitration or investigation is pending or, to the Knowledge of Bank, threatened against
Bank or any of its Subsidiaries, at law, in equity or otherwise, by or before any
Governmental Authority, to which Bank or any of its Subsidiaries is a served Party, which
would reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect upon the Bank, the Program, the Accounts, Cardholder Indebtedness or the ability of
the Bank to perform its obligations under this Agreement.

     (e) Compliance with Laws.

     (i) Except to the extent that any of the following would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect upon
the Program or the ability of the Bank to perform its obligations under this
Agreement,

     (A) Bank is in material compliance with all Applicable Law relating to
their Credit Card business; and

     (B) Bank or any of its Subsidiaries is not subject to any capital plan
or supervisory agreement, cease-and-desist or similar order or directive or
memorandum of understanding between it and any Governmental Authority or
issued by any Governmental Authority, nor

Credit Card Program Agreement — Page 46

 

 

has any of them adopted any board resolutions at the request of any
Governmental Authority.

     (ii) Bank or any of its Subsidiaries is not subject to any order, directive or
restriction of any kind issued by any Governmental Authority that restricts in any
respect its operation of their Credit Card business; and the Bank is not aware of
any fact or circumstance that would in any way materially delay or impede their
ability to perform all of its obligations under the Program.

     (f) Servicing Qualifications. Bank is licensed and qualified in all
jurisdictions necessary to service the Accounts in accordance with all Applicable Laws,
except where the failure to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the ability of the Bank to
perform its obligations under this Agreement. Bank has all necessary facilities, equipment,
supplies and such other resources as are reasonably necessary to provide any Services.
During the Term, Bank maintains internal controls in the manner and scope described in
Schedule 11.2(f) or controls that are substantially similar.

     (g) Bank Licensed Marks. Bank has the right, power and authority to grant the
rights to use the Bank Licensed Marks expressly granted herein.

     (h) Books and Records. All books and records of the Bank and its Subsidiaries
related to their Credit Card business have been maintained accurately and in accordance with
all requirements of Applicable Law applicable to Bank and its Credit Card business, except
for any instances of inaccuracy or noncompliance that would not reasonably be expected to
have a Material Adverse Effect on the ability of the Bank to perform their obligations under
this Agreement.

     (i) Insurance. Bank maintains insurance policies with respect to their
properties under such terms and conditions as are (i) commercially reasonable and available
from time to time and (ii) customary for similarly situated Persons engaged in similar
business, except in each case for insurance which a failure to maintain would not reasonable
be expected to have a Material Adverse Effect on the ability of the Bank to perform its
obligations under this Agreement.

       11.3 No other Representations or Warranties. Except as expressly set forth in
Sections 11.1 and 11.2, neither Bank nor Pier 1 has made or makes any other express or implied
representations, or any express or implied warranty, either written or oral, with respect to the
Credit Card Business, the Program, the Bank or Pier 1, or as to any other matter whatsoever.

       11.4 General Covenants of Pier 1.

     (a) Litigation. Pier 1 promptly shall notify Bank in writing if it receives
written notice of any litigation that, if adversely determined, would reasonably be expected
to have a Material Adverse Effect on the Program, the Accounts in the aggregate or Pier 1’s
ability to perform its obligations hereunder.

Credit Card Program Agreement — Page 47

 

 

     (b) Reports and Notices. Pier 1 shall provide Bank with a facsimile notice
specifying the nature of any Pier 1 Event of Default, or any event which, with the giving of
notice or passage of time or both, would constitute a Pier 1 Event of Default, or any
development or other information which is likely to have a Material Adverse Effect on the
Program, the Accounts, Cardholder Indebtedness or Pier 1’s ability to perform its
obligations pursuant to this Agreement. Notices pursuant to this Section 11.4(b) relating
to Pier 1 Events of Default shall be provided within two (2) Business Days after Pier 1 has
Knowledge of the existence of such default. Notices relating to all other events or
developments described in this Section 11.4(b) shall be provided (i) promptly after any of
Pier 1 has Knowledge of the existence of such event or development if such event or
development has already occurred, and (ii) with respect to events or developments that have
yet to occur, as early as reasonably practicable under the circumstances. Any notice
provided under this Section shall be confirmed in writing to Bank within five (5) Business
Days after the transmission of the initial notice.

     (c) Applicable Law/Operating Procedures. Pier 1 shall at all times during the
Term comply in all material respects with Applicable Law affecting its obligations under
this Agreement and the Operating Procedures.

     (d) Disputes with Cardholders. Pier 1 shall cooperate with Bank in a timely
manner (but in no event less promptly than required by Applicable Law) to resolve all
disputes with Cardholders.

     (e) Financial Statements. If at any time during the Term, Pier 1 Imports, Inc.
does not publicly file periodic reports with the Securities and Exchange Commission, Pier 1
Imports, Inc. shall provide to Bank (i) its audited consolidated annual financial statements
within 90 days of the end of each Fiscal Year, and (ii) its unaudited consolidated quarterly
financial statements within 60 days of the end of each Fiscal Quarter. Such statements
shall include the consolidated balance sheet, income statement and statement of cash flows,
all prepared in accordance with GAAP applied on a consistent basis (except for normal year
end adjustments and the absence of footnotes on the quarterly statements).

     (f) Books and Records. Pier 1 shall keep adequate records and books of account
with respect to its activities in connection with the Program, in which proper entries
reflecting all of Pier 1’s financial transactions are made in accordance with GAAP.

     (g) Program Support. Pier 1 shall not take any action that Bank reasonably
concludes is materially inconsistent with the Program Objectives or otherwise materially
adversely affects the Program or Bank’s relations with the Cardholders in any material
respect. Bank acknowledges and agrees that in the event Pier 1 takes actions in connection
with the operation of its business that result in an Adverse Sales Development, any such
actions will be governed by Section 11.4(i) and not Section 11.4(g).

     (h) Account Covenants. Until the expiration or termination of the Program,
Pier 1 covenants to do the following with respect to the Accounts:

Credit Card Program Agreement — Page 48

 

 

     (i) maintain a policy for the exchange and return of goods and adjustments for
services rendered or not rendered that is communicated in accordance with Applicable
Law and shall promptly deliver applicable Pier 1 Charge Transaction Data to the
Cardholder and include credit for such returns or adjustments in the Pier 1 Charge
Transaction Data in accordance with the terms of this Agreement and the Operating
Procedures; and

     (ii) comply with all warranties, if any, with respect to all Pier 1 Goods and
Services.

     (i) Adverse Sales Development. Bank’s sole remedy with respect to a decline in
sales resulting from an Adverse Sales Development, other than as a result of a breach of
this Agreement by Pier 1 except for a breach of section 11.4(g), shall be for Pier 1 to pay
to Bank the amount as calculated in accordance with Schedule 11.4(i) and otherwise
on the terms set forth on Schedule 11.4(i). Except as qualified by the preceding
sentence, Bank shall not be deemed to have waived any of its rights with respect to claims
other than claims related to the decline in sales.

     (j) Solicitation of Pier 1 Customers. Subject to compliance with (i)
Applicable Law, (ii) Pier 1’s or its Affiliates’ agreements with third parties, (iii) Pier
1’s privacy policies, (iv) the other terms and conditions of this Agreement, and (v) such
criteria as may be mutually agreed upon; Pier 1 may agree to permit Bank from time to time
during the Term to solicit or offer Approved Ancillary Products to Cardholders and other
Pier 1 customers, including “In-Touch” customers, whom Pier 1 has determined are available
to be solicited by Bank if the Parties reach mutual agreement with respect to the
compensation payable to Pier 1 for such solicitation or offer. Notwithstanding the
foregoing, Bank may, without prior approval and additional compensation to Pier 1 with
respect to any sales, solicit Cardholders for the products listed in Schedule
11.4(j).

       11.5 General Covenants of the Bank.

     (a) Litigation. Bank shall notify Pier 1 in writing if it receives written
notice of any litigation that, if adversely determined, would reasonably be expected to have
a Material Adverse Effect on the Program, the Accounts in the aggregate, the Cardholder
Indebtedness, or Bank’s ability to perform its obligations hereunder.

     (b) Reports and Notices. Bank shall provide Pier 1 with a facsimile notice
specifying the nature of any Bank Event of Default, or any event which, with the giving of
notice or passage of time or both, would constitute a Bank Event of Default, or any
development or other information which is likely to have a Material Adverse Effect on the
Program, the Accounts, the Cardholder Indebtedness or Bank’s ability to perform its
obligations pursuant to this Agreement. Notice pursuant to this Section 11.5(b) relating to
Bank Events of Default shall be provided within two (2) Business Days after Bank has
Knowledge of the existence of such default. Notices relating to all other events or
developments described in this Section 11.5(b) shall be provided (i) promptly after Bank
obtains Knowledge of the existence of such event or development if such event or development
has already occurred, and (ii) with respect to events or developments that

Credit Card Program Agreement — Page 49

 

 

have yet to occur, as early as reasonably practicable under the circumstances. Any
notice produced under this section shall be confirmed in writing to Pier 1 within five (5)
Business Days after transmission of the initial notice.

     (c) Applicable Law/Operating Procedures. Bank shall at all times during the
Term comply in all material respects with Applicable Law affecting their obligations under
this Agreement and the Operating Procedures. Bank shall at all times during the Term
maintain a federal bank charter and continue its existence as a bank under the laws of the
United States.

     (d) Books and Records. Bank shall keep adequate records and books of account
with respect to the Accounts and Cardholder Indebtedness in which proper entries, reflecting
all of the financial transactions relating to the Program, are made in accordance with GAAP
and the requirements of this Agreement. The Bank shall keep adequate records and books of
account with respect to their activities, in which proper entries reflecting all of the
financial transactions are made in accordance with GAAP.

     (e) Servicing Qualifications. Bank shall at all times during the Term remain
licensed and qualified in all jurisdictions necessary to service the Accounts in accordance
with all Applicable Laws, except where the failure to be so qualified would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect on the
ability of the Bank to perform its obligations under this Agreement. Bank shall at all
times during the Term maintain the necessary facilities, equipment, supplies and such other
resources in good working order as are reasonably necessary to provide any Services required
to be provided by it pursuant to Section 7.2 in accordance with the SLAs set forth in
Schedule 7.3(a).

     (f) Program Support. Bank shall not take any action that Pier 1 reasonably
concludes is materially inconsistent with the Program Objectives or otherwise materially
adversely affects the Program or Pier 1’s retail business or relations with its customers in
any material respect.

     (g) Disputes with Cardholders. Bank shall cooperate with Pier 1 in a timely
manner (but in no event less promptly than required by Applicable Law) to resolve all
disputes with Cardholders.

ARTICLE XII

ACCESS, AUDIT AND DISPUTE RESOLUTION

       12.1 Access Rights. Each Party shall permit the other Party and its representatives
and regulators to visit its facilities related to the Program during normal business hours with
reasonable advance notice. The reviewing Party shall employ such reasonable procedures and
methods as are necessary and appropriate in the circumstances, minimizing interference to the
extent practicable with the reviewed Party’s normal business operations. The reviewed Party
shall use commercially reasonable efforts to facilitate the reviewing Party’s review, including
making reasonably available such personnel of the reviewed Party and its service providers to
assist the reviewing Party and its representatives as reasonably requested. Each Party shall

Credit Card Program Agreement — Page 50

 

 

also permit the other Party and its representatives and regulators to review (during normal
business hours) and, upon reasonable advance notice, obtain copies of the books and records
relating to the Program; provided that neither Party shall be required to provide access to
records to the extent that (a) such access is prohibited by Applicable Law, (b) such records are
legally privileged, (c) such records are company planning documents of such Party or any of its
Affiliates, operating budgets, management reviews or employee records, (d) such records relate to
other customers of, or credit programs operated by, Bank or Pier 1 (except as may be necessary or
appropriate in connection with any consideration of the terms and conditions of Comparable
Partner Programs and Competing Retail Programs as contemplated by this Agreement to the extent
such terms and conditions are publicly known or otherwise known and not subject to any
confidentiality obligations on the part of either Party) or (e) such records relate to other
customers or operations of such Party other than the Program or to personnel records not normally
disclosed in connection with audits.

       12.2 Audit Rights. Twice per year or at any time that a Party disputes the amount
of any monies owed by either Party to the other hereunder, such Party, at its sole cost and
expense and upon ten (10 ) Business Days prior notice to the other Party, may conduct an audit of
those of the other Party’s financial and operational records that are under the control and/or
direction of the audited Party and relate to the Program or can be reasonably segregated. Such
audit shall be conducted during normal business hours in accordance with generally accepted
auditing standards and the auditing Party shall employ such reasonable procedures and methods as
are necessary and appropriate in the circumstances, minimizing interference to the extent
practicable with the audited Party’s normal business operations. The audited Party shall use
commercially reasonable efforts to facilitate the auditing Party’s review, including making
reasonably available such personnel of the audited Party and its service providers to assist the
auditing Party and its representatives as reasonably requested. The audited Party shall deliver
any document or instrument necessary for the auditing Party to obtain such records from any
Person maintaining records for the audited Party and shall maintain records pursuant to its
regular record retention policies. For purposes of this provision, the audited Party also shall
be required to provide records relating to the Program held by Persons performing services in
connection with the Program at the auditing Party’s reasonable request. Notwithstanding the
generality of the foregoing, the audited Party shall not be required to provide access to records
to the extent that (a) such access is prohibited by Applicable Law, (b) such records are legally
privileged, (c) such records are company planning documents of such Party or any of its
Affiliates, operating budgets, management reviews or employee records, (d) such records relate to
other customers of, or credit programs operated by, Bank or Pier 1 (except as may be necessary or
appropriate in connection with any consideration of the terms and conditions of Comparable
Partner Programs and Competing Retail Programs as contemplated by this Agreement to the extent
such terms and conditions are publicly known or otherwise known and not subject to any
confidentiality obligations on the part of either Party) or (e) such records relate to other
customers or operations of such Party other than the Program or to personnel records not normally
disclosed in connection with audits.

       12.3 Accounting Dispute Resolution.

     (a) Any dispute with respect to amounts of $1 million or less due or payable under this
Agreement or other calculations hereunder of amounts of $1 million or less

Credit Card Program Agreement — Page 51

 

 

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

       12.4 Dispute Resolution.

     (a) Generally. Any dispute among the Parties arising out of or relating to
this Agreement, including with respect to the interpretation of any provision of this
Agreement and with respect to the performance by Pier 1 or Bank hereunder that is not
otherwise required to be submitted for resolution under Section 12.3 shall be resolved as

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provided in this Section 12.4; provided, however, that this provision shall not limit
either Party’s right to obtain any provisional or other remedy, including, without
limitation, specific performance or injunctive relief from any court of competent
jurisdiction, as may be necessary, in the aggrieved Party’s sole discretion, to protect its
rights under this Agreement. This Section 12.4 does not apply to disputes among the
Management Committee members with respect to decisions expressly allocated to the Management
Committee pursuant to this Agreement (other than matters submitted to the Management
Committee pursuant to the dispute resolution procedure referred to in Section
12.4(b)(i)(B)). Such disputes shall be resolved in accordance with Section 3.2.

     (b) Informal Dispute Resolution.

     (i) Prior to the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their dispute informally, as follows:

     (A) Managers. Upon the written request of either Party
containing a short statement as to the nature of the dispute and the
requesting Party’s position with respect thereto, the Managers shall meet
for the purpose of negotiating in good faith to seek resolution of such
dispute.

     (B) Management Committee. If, after a period of five (5)
Business Days, the Managers are unable to resolve the dispute to the
satisfaction of Pier 1 and Bank, the dispute shall be brought before the
Management Committee in accordance with Section 3.2(e); provided, however,
if the Management Committee cannot resolve the dispute within five (5)
Business Days, the dispute shall not be considered an Unapproved Matter.

     (C) Appointment of Representatives. If, after a period of five
(5) Business Days, the Management Committee is unable to resolve the dispute
to the satisfaction of both Pier 1 and Bank, each Party shall appoint a
designated knowledgeable, responsible representative who is one of the top
five highest executives in the Credit Card division of Bank and one of the
top five executives of Pier 1 and who does not devote substantially all of
his or her time to performance under this Agreement, whose task it will be
to meet for the purpose of negotiating in good faith to seek resolution of
the dispute.

With respect to clauses (A), (B) and (C) above, discussions, documents and
correspondence exchanged among the Managers and representatives, or
submitted to the Management Committee for purposes of these negotiations,
shall be treated as Confidential Information developed for purposes of
settlement, exempt from discovery and production, which shall not be
admissible in any lawsuit without the concurrence of the Parties. Documents
identified in or provided with such communications, which were not prepared
for the purposes of the negotiations, are not so

Credit Card Program Agreement — Page 53

 

 

exempted and may, if otherwise admissible, be admitted in evidence in any
lawsuit.

     (ii) Formal proceedings for the resolution of the dispute shall not be
commenced until the earlier of:

     (A) either of the designated representatives concludes in good faith
that amicable resolution through continued negotiation of the dispute does
not appear likely and so states in a notice to the other designated
representative or in a joint declaration signed by each of them; or

     (B) twenty (20) Business Days after the appointment of designated
representatives pursuant to Section 12.4(b)(i)(C) above (it being understood
that this period shall be deemed to run notwithstanding any claim that the
process described in this Section 12.4 was not followed or completed).

     (iii) This Section 12.4 shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal proceedings earlier than
provided in clause (ii) above, to avoid the expiration of any applicable limitations
period or to preserve a superior position with respect to other creditors.

ARTICLE XIII

CONFIDENTIALITY

       13.1 General Confidentiality.

     (a) For purposes of this Agreement, “Confidential Information” means any of the
following: (i) information that is provided by or on behalf of either Pier 1 or Bank to the
other Party or its agents in connection with the Program (including information provided
prior to the date hereof or the Closing Date); (ii) information about Pier 1 or Bank or
their respective Affiliates, or their respective businesses or employees, that is otherwise
obtained by the other Party in connection with the Program, in each case including: (A)
information concerning marketing plans, objectives and financial results; (B) information
regarding business systems, methods, processes, financing data, programs and products; (C)
information regarding any products offered or proposed to be offered under the Program or
the manner of offering of any such products; (D) information unrelated to the Program
obtained by Pier 1 or Bank in connection with this Agreement, including by accessing or
being present at the business location of the other Party; and (E) proprietary technical
information, including source codes, or other proprietary information developed in
connection with the Program; (iii) the terms and conditions of this Agreement; and (iv) the
Marketing Plan. The provisions of this Article XIII governing Confidential Information
shall not govern Cardholder Data, Pier 1 Shopper Data or the Pier 1 Prospect List, which
shall be governed by the provisions of Article VI.

     (b) The restrictions on disclosure of Confidential Information under this Article XIII
shall not apply to information received or obtained by Pier 1 or Bank, as the

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case may be, that: (i) is or becomes generally available to the public other than as a
result of disclosure in breach of this Agreement or any other confidentiality obligations;
(ii) is lawfully received on a non-confidential basis from a third party authorized to
disclose such information without restriction and without breach of this Agreement; (iii) is
contained in, or is capable of being discovered through examination of, publicly available
records or products; (iv) is required to be disclosed by Applicable Law; provided that the
Party subject to such Applicable Law shall use reasonable efforts to avoid such disclosure
and notify the other Party of any such use or requirement prior to disclosure of any
Confidential Information obtained from the other Party in order to afford such other Party
an opportunity to seek a protective order to prevent or limit disclosure of the Confidential
Information to third Parties; provided, further, that such information shall be disclosed
only to the extent required by such Applicable Law and shall otherwise remain Confidential
Information; or (v) is developed by Pier 1 or Bank, as the case may be, without the use of
any proprietary, non-public information provided by the other Party under, or otherwise made
available to such Party as a result of, this Agreement. Nothing herein shall be construed
to permit the Receiving Party (as defined below) to disclose to any third party any
Confidential Information that the Receiving Party is required to keep confidential under
Applicable Law.

     (c) The terms and conditions of this Agreement and the Marketing Plan and all of the
items referred to in clauses (A) through (E) of Section 13.1(a) shall each be the
Confidential Information of Pier 1 and/or Bank, as applicable, and each of the Parties to
this Agreement shall be deemed to be a Receiving Party of each of them; provided, however,
that the terms of this Agreement may be filed by either Party with any Governmental
Authority (including public filings with the Securities and Exchange Commission) to the
extent required by Applicable Law.

     (d) If Pier 1, on the one hand, or Bank, on the other hand, receives Confidential
Information of the other Party (“Receiving Party”), the Receiving Party shall do the
following with respect to the Confidential Information of the other Party (“Disclosing
Party”): (i) keep the Confidential Information of the Disclosing Party secure and
confidential; (ii) treat all Confidential Information of the Disclosing Party with the same
degree of care as it accords its own Confidential Information, but in no event less than a
reasonable degree of care; and (iii) implement and maintain commercially reasonable
physical, electronic, administrative and procedural security measures, including
commercially reasonable authentication, access controls, virus protection and intrusion
detection practices and procedures.

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       13.2 Use and Disclosure of Confidential Information.

     (a) Each Receiving Party shall use and disclose the Confidential Information of the
Disclosing Party only for the purpose of performing its obligations or enforcing its rights
with respect to the Program or as otherwise expressly permitted by this Agreement, and shall
not accumulate in any way or make use of such Confidential Information for any other
purpose.

     (b) Each Receiving Party shall: (i) limit access to the Disclosing Party’s Confidential
Information to those employees, authorized agents, vendors, consultants, service providers,
accountants, advisors and subcontractors who have a reasonable need to access such
Confidential Information in connection with the Program, the sale of Program Assets or other
assets of Pier 1 and its Affiliates or the establishment of a new Credit Card or other
program or arrangement for Pier 1, in each case in accordance with the terms of this
Agreement, and (ii) ensure that any Person with access to the Disclosing Party’s
Confidential Information agrees to be bound by a confidentiality agreement containing the
restrictions set forth in this Article XIII.

       13.3 Unauthorized Use or Disclosure of Confidential Information. Each Receiving
Party agrees that any unauthorized use or disclosure of Confidential Information of the
Disclosing Party might cause immediate and irreparable harm to the Disclosing Party for which
money damages might not constitute an adequate remedy. In that event, the Receiving Party agrees
that injunctive relief may be warranted in addition to any other remedies the Disclosing Party
may have. In addition, the Receiving Party agrees promptly to advise the Disclosing Party by
telephone and in writing via facsimile of any security breach that may have compromised any
Confidential Information or of any unauthorized misappropriation, disclosure or use by any Person
of the Confidential Information of the Disclosing Party which may come to its attention, and to
take all steps at its own expense reasonably requested by the Disclosing Party to limit, stop or
otherwise remedy such breach, misappropriation, disclosure or use.

       13.4 Return or Destruction of Confidential Information. Upon the termination or
expiration of this Agreement, the Receiving Party shall comply with the Disclosing Party’s
reasonable instructions regarding the disposition of the Disclosing Party’s Confidential
Information, which may include return of any and all the Disclosing Party’s Confidential
Information (including any electronic or paper copies, reproductions, extracts or summaries
thereof) but excluding any archival copy retained systemically as a function of the Receiving
Party’s disaster recovery process or material provided to the Receiving Party’s (i) board of
directors (or that of its ultimate parent corporation) or (ii) regulators.; provided, however,
that the Receiving Party in possession of tangible property containing the Disclosing Party’s
Confidential Information may retain one archived copy of such material, subject to the terms of
this Agreement, which may be used solely for regulatory purposes and may not be used for any
other purpose. Such compliance shall be certified in writing, including a statement that no
copies of Confidential Information have been kept, except as necessary for regulatory purposes.

Credit Card Program Agreement — Page 56

 

 

ARTICLE XIV

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

       14.1 Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an Event of Default by a Party hereunder:

     (a) Such Party shall fail to perform, satisfy or comply with any obligation, condition,
covenant or other provision contained in this Agreement, and (i) except as set forth in
Section 14.2 or 14.3, such failure shall remain unremedied for a period of thirty (30) days
after the other Party shall have given written notice thereof specifying the nature of such
failure in reasonable detail, provided that if such failure cannot be cured in a
commercially reasonable manner within such time, such failure shall not constitute an Event
of Default if the defaulting Party shall have initiated and diligently pursued a cure within
such time and such cure is completed within ninety (90) days from the date of written notice
regarding such failure, or (ii) such failure shall either have a Material Adverse Effect on
the licensed marks of the non-defaulting Party, or materially diminish the economic value of
the Program to the non-defaulting Party.

     (b) Any representation or warranty by such Party contained in this Agreement shall not
be true and correct in any material respect as of the date when made, and (i) the Party
making such representation or warranty shall fail to cure the event giving rise to such
breach within thirty (30) days after the other Party shall have given written notice thereof
specifying the nature of such breach in reasonable detail, provided that if such failure
cannot be cured in a commercially reasonable manner within such time, such breach shall not
constitute an Event of Default if the defaulting Party shall have initiated a cure within
such time and such cure is completed within ninety (90) days from the date of written notice
regarding such breach, or (ii) such failure shall either have a Material Adverse Effect on
the Program or the licensed marks of the non-defaulting Party or materially diminish the
economic value of the Program to the non-defaulting Party.

       14.2 Defaults by Bank. The occurrence of any one or more of the events set forth on
Schedule 14.2 or the following events (regardless of the reason therefor) shall
constitute an Event of Default by Bank hereunder:

     (a) Bank shall fail to settle Pier 1 Charge Transaction Data and make payment in full
therefor within two (2) Business Days after such settlement payment is due pursuant to
Section 8.4.

     (b) Bank shall fail to make payment in full of any amount set forth on a Monthly
Settlement Sheet within ten (10) Business days of when due and payable.

     (c) Bank shall fail to make payment in full of any other amount due from Bank to Pier 1
within five (5) Business Days of when due and payable.

     (d) Bank shall no longer be solvent or shall fail generally to pay its debts as they
become due or there shall be a substantial cessation of Bank’s regular course of business.

Credit Card Program Agreement — Page 57

 

 

     (e) Any regulatory authority having jurisdiction over Bank shall order the appointment
of a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Bank, as the case may be, or of any substantial part of its properties, or
order the winding-up or liquidation of the affairs of the Bank, and such order shall not be
vacated, discharged, stayed or bonded within sixty (60) days from the date of entry thereof.

     (f) Bank shall (i) consent to the institution of proceedings specified in paragraph (e)
above or to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of such entity or of any substantial
part of its properties, or (ii) take corporate or similar action in furtherance of any such
action.

       14.3 Defaults by Pier 1. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an Event of Default by Pier 1 hereunder:

     (a) Pier 1 shall fail to make payment in full of any amount set forth on a Monthly
Settlement Sheet within ten (10) Business Days of when due and payable.

     (b) Pier 1 shall fail to make payment in full of any other amount due from Pier 1 to
Bank within five (5) Business Days of when due and payable.

     (c) A petition under the U.S. Bankruptcy Code or similar law shall be filed against
Pier 1 and not be dismissed within sixty (60) days.

     (d) A decree or order by a court having jurisdiction (i) for relief in respect of Pier
1 pursuant to the Bankruptcy Code or any other applicable bankruptcy or other similar law,
(ii) for appointment of a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of Pier 1 or of any substantial part of its properties, or (iii)
ordering the winding-up or liquidation of the affairs of Pier 1 shall, in any such case be
entered, and shall not be vacated, discharged, stayed or bonded within sixty (60) days from
the date of entry thereof.

     (e) Pier 1 shall (i) file a petition seeking relief pursuant to the Bankruptcy Code or
any other applicable bankruptcy or other similar law, (ii) consent to the institution of
proceedings pursuant thereto or to the filing of any such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of Pier 1 or any substantial part of its properties, or (iii) take
corporate or similar action in furtherance of any such action.

       14.4 Remedies for Events of Default. In addition to any other rights or remedies
available to the Parties at law or in equity, upon the occurrence of an Event of Default pursuant
to Section 14.1, 14.2 or 14.3, the non-defaulting Party shall be entitled to collect from the
defaulting Party any amount indisputably in default plus interest based on the Federal Funds
Rate.

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ARTICLE XV

TERM/TERMINATION

       15.1 Term. This Agreement shall continue in full force and effect for ten (10)
years from the Closing Date (the “Initial Term”). The Agreement shall be renewed by mutual
agreement of the Parties for successive terms of three (3) years each (each, a “Renewal Term”) at
least six (6) months prior to the expiration of the Initial Term or current Renewal Term, as the
case may be. If the Parties do not agree to renew the Agreement at least six (6) months prior to
the expiration of the Initial Term or the current Renewal Term, as the case may be, the Agreement
shall automatically terminate at the end of the Initial Term or current Renewal Term, as the case
may be.

       15.2 Termination by Pier 1 Prior to the End of the Initial Term or a Renewal Term.
Pier 1 may terminate this Agreement upon written notice prior to the end of the Initial Term or
any Renewal Term:

     (a) after the occurrence of a Bank Event of Default;

     (b) upon thirty (30) days prior written notice if (i) there is a Change of Control of
Bank or (ii) one or more Persons that is not an Affiliate of Bank on the date of this
Agreement acquires a direct or indirect controlling interest in Bank or any other Person
conducting a substantial part of the Credit Card business conducted within the corporate
group of Bank or such corporate group otherwise disposes of or terminates a substantial part
of such Credit Card business;

     (c) upon thirty (30) days prior written notice following a Change of Control of Pier 1
if the other party to the business combination transaction which resulted in or constituted
such Change of Control issues, offers or otherwise provides (either itself or through
Affiliates) or is party to any contractual arrangement with any other Person to issue, offer
or otherwise provide, any Credit Card in the United States;

     (d) upon thirty (30) days prior written notice if there is a change in Applicable Law
which reduces in any material respect the ability of Pier 1 or any of its Affiliates to gain
access to, or to use, any Cardholder Data, Pier 1 Shopper Data or Pier 1 Charge Transaction
Data below the level of access and use permitted under Applicable Law immediately prior to
the date of this Agreement and such decrease in Pier 1’s ability to access or use such
Cardholder Data, Pier 1 Shopper Data, or Pier 1 Charge Transaction Data results in a
material reduction in Pier 1’s then existing promotion of Pier 1 Goods and Services, unless
such reduction in access would be incapable of being eliminated or mitigated if Pier 1 were
to terminate this Agreement and/or repurchase the Program Assets (either for itself and its
Affiliates or in order to enter into alternative program arrangements with a third party
other than Bank); provided, however, that prior to delivering a notice of termination
pursuant to this Section 15.2, Pier 1 shall engage in good faith negotiations with Bank to
modify the Program in a way that would preserve at least the same level of access and use of
such data for the benefit of Pier 1 and its Affiliates following the relevant change in
Applicable Law as was permissible prior to the date of this Agreement, such negotiations not
to terminate (in the absence of an

Credit Card Program Agreement — Page 59

 

 

agreement between the Parties on any modification) earlier than thirty (30) days after
the earlier of (i) the date on which one of the Parties delivers a notice to the other that
the relevant change in Applicable Law is likely to occur or (ii) the date on which the
relevant change in Applicable Law takes effect; or

     (e) upon thirty (30) days prior written notice if there have been more than three (3)
Unapproved Matters except Pier 1 Matters within the last twelve (12) Fiscal Months that are
anticipated to be material to the economics of the Program or the Pier 1 brand, provided
that if the Management Committee votes on an identical matter more than one time and fails
to reach agreement on such identical matter without any change in the circumstances
surrounding such matter, for purposes of this Section 15.2(e), such matter will only count
as one (1) Unapproved Matter.

       15.3 Termination by Bank Prior to the End of the Initial Term or a Renewal Term.
Bank may terminate this Agreement upon written notice prior to the end of the Initial Term or any
Renewal Term after the occurrence of a Pier 1 Event of Default.

       15.4 Automatic Termination. Upon termination of the Purchase Agreement without the
occurrence of the Closing, this Agreement shall automatically terminate and shall be null and
void.

ARTICLE XVI

EFFECTS OF TERMINATION

       16.1 General Effects.

     (a) All solicitations, marketing and advertising of the Program, other than acceptance
of applications through Pier 1 Channels in the ordinary course of business consistent with
past practice, shall cease upon the expiration or termination of this Agreement, except as
the Parties may otherwise mutually agree, provided that the Parties shall continue to
operate the Program in accordance with the terms of this Agreement and service the Accounts
in good faith and in the ordinary course of their respective businesses, subject to the
terms of this Agreement, until the provisions of Section 16.2 are satisfied. The Parties
shall cooperate to ensure the orderly wind-down or transfer of the Program.

     (b) Upon the satisfaction of the provisions of Section 16.2, all obligations of the
Parties under this Agreement shall cease, except that the provisions specified in Section
18.24 shall survive.

     (c) If this Agreement terminates for any reason set forth in Section 15.2 or 15.3 other
than 15.2 (a), Pier 1 shall pay to Bank the applicable amount indicated in Schedule
16.1, which amount may be set-off by Pier 1 against any sums which may then be due and
owing from Bank to Pier 1.

Credit Card Program Agreement — Page 60

 

 

       16.2 Pier 1’s Option to Purchase the Program Assets.

     (a) If this Agreement expires or is terminated by either Party for whatever reason,
Pier 1 has the option to purchase, or arrange the purchase by a third party nominated by
Pier 1 (a “Nominated Purchaser”), of the Program Assets from Bank.

     (b) The purchase option given by Section 16.2(a) is exercisable by Pier 1 or the
Nominated Purchaser serving notice on Bank no later than sixty (60) days after the receipt
of the information with respect to the Program Assets required to be delivered by Bank
pursuant to Section 16.2(e); provided, however, that Pier 1 shall request such information
with respect to the Program Assets within twenty (20) days following either (i) the date on
which the Parties’ right to agree to renew the Agreement pursuant to Section 15.1 has
expired without such renewal having occurred or (ii) the date any Party receives written
notice of the exercise of the other Party’s termination rights pursuant to Article XV.

     (c) If such purchase option is exercised, Pier 1 or the Nominated Purchaser must
complete the purchase of the Program Assets within one hundred eighty (180) days after the
notice has been given pursuant to Section 16.2(b); provided, that if, in connection with the
purchase of the Program Assets by a Nominated Purchaser, any required regulatory approvals
or rating agency consents are not received within one hundred eighty (180) days after notice
has been given pursuant to Section 16.2(b), Pier 1 shall complete the purchase of the
Program Assets on behalf of the Nominated Purchaser within two hundred seventy (270) days
after notice has been given pursuant to Section 16.2(b). The date of the completion of any
purchase under this Section 16.2(c) shall be the “Program Purchase Date.”

     (d) The purchase price for the Program Assets shall be as determined in accordance with
Schedule 16.2(d).

     (e) The Parties shall use commercially reasonable efforts to minimize transaction costs
and Bank shall provide Pier 1 and the Nominated Purchaser and their respective
representatives reasonable access to the records and accounts relating to the Program Assets
for the purpose of conducting due diligence investigations to determine whether they wish to
purchase the Program Assets and shall provide as soon as reasonably practicable (but in no
event more than fifteen (15) days) following a request therefor from Pier 1 or its Nominated
Purchaser a master file of the Accounts (which shall include data for at least the twelve
(12) month period preceding the month in which the master file is requested and shall be
updated upon request of Pier 1); provided, however, that Bank shall be entitled to require
any Nominated Purchaser to enter into customary confidentiality arrangements before
providing it with such access. The Parties shall promptly negotiate in good faith and
execute a purchase agreement for the Program Assets to be repurchased, which shall contain
terms and conditions substantially similar to those in the Purchase Agreement (if
applicable). Bank shall provide reasonable assistance in connection with the conversion of
the Program Assets to the Systems of Pier 1 or the Nominated Purchaser, including provision
of interim services in accordance with the provisions of this Agreement until such
conversion occurs; provided, however, that

Credit Card Program Agreement — Page 61

 

 

Bank shall not be obligated to provide such interim services for more than (i) two
hundred seventy (270) days after notice has been given pursuant to Section 16.2(b) in
connection with a purchase of the Program Assets by a Nominated Purchaser or (ii) one year
after the execution date of the purchase agreement with respect to the repurchase of the
Program Assets by Pier 1 subject to a reasonable servicing fee. The Parties shall not
unreasonably withhold or delay execution of such purchase agreement or any other documents
necessary to effectuate such sale. The Parties shall use reasonable efforts to ensure that
the Program Purchase Date occurs as promptly as reasonably practicable following the
execution of such purchase agreement.

       16.3 Rights of Bank if Purchase Option Not Exercised.

     (a) If this Agreement expires or is terminated and Pier 1 gives written notice that it
shall not exercise their option referred to in Section 16.2 or otherwise fails to exercise
its option within the time period specified in Section 16.2, Pier 1 shall have no further
rights whatsoever in the Program Assets. In such event, Bank shall have the right in its
sole discretion on or after the expiration or termination of this Agreement to:

     (i) issue to Cardholders a replacement or substitute Credit Card (which card
must not bear any Pier 1 Licensed Marks or any other trademarks or source indicators
confusingly similar thereto) with such characteristics as Bank considers appropriate
(the cost of card re-design and re-issue being borne by Bank); provided that the
replacement or substitute Credit Card shall not be issued in cooperation with any
Competing Retail Program; provided, further, that Pier 1 shall be permitted to add
an enclosure to the last two (2) Billing Statements to the effect that the Program
has been terminated subject to Bank review and approval;

     (ii) subject to Applicable Law, notify Cardholders that Bank shall cease
providing credit under the Accounts and require repayment of all amounts outstanding
on all Accounts until all associated receivables have been repaid;

     (iii) sell the Accounts and associated receivables to a third party purchaser,
other than a Competing Retail Program, selected by Bank at a price agreed between
Bank and the purchaser; or

     (iv) any combination of (i), (ii) and (iii).

     (b) Notwithstanding the foregoing, in no event shall Bank use or disclose or permit any
of its Affiliates to use or disclose the Cardholder Data, Pier 1 Shopper Data or the Pier 1
Prospect List to market or promote a Credit Card or ancillary product together with any
retailer.

     (c) Within sixty (60) days after Pier 1 give written notice that they shall not
exercise their option referred to in Section 16.2 or after the time period for Pier 1 to
exercise such option shall have expired, Bank shall no longer use any of Pier 1 Licensed
Marks (or any other trademarks or source indicators confusingly similar thereto) and must
rebrand Pier 1 Credit Cards; provided that thereafter Bank may continue to use Pier

Credit Card Program Agreement — Page 62

 

 

1 Licensed Marks solely to the extent necessary to identify the Accounts in connection
with the billing and collection thereof and as otherwise required by Applicable Law.

ARTICLE XVII

INDEMNIFICATION

       17.1 Pier 1 Indemnification of Bank. From and after the Closing Date, Pier 1 shall
indemnify and hold harmless Bank, its Affiliates, and their respective officers, directors and
employees from and against and in respect of any and all losses, liabilities, damages, costs and
expenses of whatever nature, including reasonable attorneys’ fees and expenses, which are caused
or incurred by, result from, arise out of or relate to:

     (a) any Retail Merchant’s negligence or recklessness or willful misconduct (including
acts and omissions) relating to the Program;

     (b) any breach by Pier 1 of any of the material terms, covenants, representations,
warranties or other provisions contained in this Agreement;

     (c) any actions or omissions by Bank taken or not taken at Pier 1’s written request or
direction pursuant to this Agreement except where Bank would have been otherwise required to
take such action (or refrain from acting) absent the request or direction of Pier 1;

     (d) dishonest or fraudulent acts by a Retail Merchant, or any of its agents or
employees, in connection with the Program (except to the extent of any amount charged back
pursuant to Section 8.5);

     (e) any failure by the Retail Merchants to satisfy any of their obligations to third
parties with respect to the sale by them to such third parties of Pier 1 Goods and Services;

     (f) any Solicitation Materials distributed by Pier 1 and not (i) approved by the
Management Committee or (ii) provided by Bank;

     (g) any claim, suit or proceeding by any third party arising out of the failure of a
Retail Merchant to comply with Applicable Law in connection with the Program or the
Operating Procedures, unless such failure was the result of any action taken or not taken by
such Retail Merchant at the written request or direction of Bank;

     (h) Pier 1’s Inserts or Billing Statement messages;

     (i) allegations by a third party that the use of Pier 1 Licensed Marks constitutes
infringement of any Intellectual Property right of such third party;

     (j) the quality or workmanship of Pier 1 Goods and Services, the compliance of Pier 1
Goods and Services with Applicable Law, and product liability or warranty claims relating
directly to such Pier 1 Goods and Services;

Credit Card Program Agreement — Page 63

 

 

     (k) any third party claim arising out of or in connection with personal injury suffered
at a Pier 1 location ; and

     (l) Pier 1 Matters that are not approved by the Management Committee.

       17.2 Bank’s Indemnification of Pier 1. From and after the Closing Date, the Bank
shall indemnify and hold harmless Pier 1, its Affiliates and their respective officers, directors
and employees from and against and in respect of any and all losses, liabilities, damages, costs
and expenses of whatever nature, including reasonable attorneys’ fees and expenses, which are
caused or incurred by, result from, arise out of or relate to:

     (a) Bank’s or its Affiliate’s negligence or recklessness or willful misconduct
(including acts and omissions) relating to the Program;

     (b) any breach by Bank or any of its Affiliates, employees or agents of any of the
material terms, covenants, representations, warranties or other provisions contained in this
Agreement or any Cardholder Agreement;

     (c) any actions or omissions by Pier 1 or its Affiliates taken or not taken at the
Bank’s written request or direction pursuant to this Agreement, except where Pier 1 would
have been otherwise required to take such action (or refrain from acting) absent the request
or direction of Bank;

     (d) dishonest or fraudulent acts by Bank, or any of its Affiliates, agents or
employees, in connection with the Program;

     (e) any failure by the Bank to satisfy any of its obligations to (i) Cardholders with
respect to the Program or the Accounts, whether pursuant to the Cardholder Agreements or
otherwise or (ii) any other third parties in connection with its provision of other products
and services to such third parties;

     (f) any Account Documentation and Solicitation Materials approved by the Management
Committee and used by Pier 1 in that form and in accordance with Bank’s instructions and/or
the Operating Procedures that fails to comply with Applicable Law, other than any content in
the Solicitation Materials that primarily relates to Loyalty Programs and was included in
the Solicitation Materials in the form provided by Pier 1 without any input from Bank with
respect to Applicable Law;

     (g) any claim, suit or proceeding by any third party arising out of the failure of the
Bank to comply with Applicable Law in connection with the Program or the Operating
Procedures unless such failure was the result of any action taken or not taken by the Bank
at the specific written request or direction of Pier 1;

     (h) Bank’s Inserts or Billing Statement messages;

     (i) allegations by a third party that the use of the Bank Licensed Marks constitutes
infringement of any Intellectual Property right of such third party; and

Credit Card Program Agreement — Page 64

 

 

     (j) Bank Matters not approved by the Management Committee.

       17.3 Procedures.

     (a) In case any claim is made, or any suit or action is commenced, against a Person
entitled to indemnification under this Article XVII (the “Indemnified Party”) in respect of
which indemnification may be sought by it under this Article XVII, the Indemnified Party
shall promptly give the other Party (the “Indemnifying Party”) notice thereof and the
Indemnifying Party shall be entitled to participate in the defense thereof and, with prior
written notice to the Indemnified Party given not later than twenty (20) days after the
delivery of the applicable notice from the Indemnified Party, to assume, at the Indemnifying
Party’s expense, the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party. After notice from the Indemnifying Party to such Indemnified Party of
its election so to assume the defense thereof, except as set forth in Section 17.3(b), the
Indemnifying Party shall not be liable to such Indemnified Party under this Section for any
attorneys’ fees or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, other than reasonable costs of investigation.

     (b) The Indemnified Party shall have the right to employ its own counsel if the
Indemnifying Party elects to assume such defense, but the fees and expenses of such counsel
shall be at the Indemnified Party’s expense, unless (i) the employment of such counsel has
been authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has not
employed counsel to take charge of the defense within twenty (20) days after delivery of the
applicable notice or, having elected to assume such defense, thereafter ceases its defense
of such action, or (iii) the Indemnified Party has reasonably concluded that there may be
defenses available to it which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the right to direct
the defense of such action on behalf of the Indemnified Party), in any of which events the
attorneys’ fees and expenses of counsel to the Indemnified Party shall be borne by the
Indemnifying Party.

     (c) The Indemnifying Party shall promptly notify the Indemnified Party if the
Indemnifying Party desires not to assume, or participate in, the defense of any such claim,
suit or action.

     (d) The Indemnified Party or Indemnifying Party may at any time notify the other of its
intention to settle or compromise any claim, suit or action against the Indemnified Party in
respect of which payments may be sought by the Indemnified Party hereunder, and (i) the
Indemnifying Party may settle or compromise any such claim, suit or action solely for the
payment of money damages for which the Indemnified Party will be fully indemnified
hereunder, but shall not agree to any other settlement or compromise without the prior
written consent of the Indemnified Party, which consent shall not be unreasonably withheld
(it being agreed that any failure of an Indemnified Party to consent to any settlement or
compromise involving relief other than monetary damages shall not be deemed to be
unreasonably withheld), and (ii) the Indemnified Party may settle or compromise any such
claim, suit or action solely for an amount not exceeding

Credit Card Program Agreement — Page 65

 

 

One Thousand Dollars ($1,000), but shall not settle or compromise any other matter
without the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.

       17.4 Notice and Additional Rights and Limitations.

     (a) If an Indemnified Party fails to give prompt notice of any claim being made or any
suit or action being commenced in respect of which indemnification under this Article XVII
may be sought, such failure shall not limit the liability of the Indemnifying Party;
provided, however, that this provision shall not be deemed to limit the Indemnifying Party’s
rights to recover from the Indemnified Party for any loss, cost or expense which it can
establish resulted from such failure to give prompt notice.

     (b) This Article XVII shall govern the obligations of the Parties with respect to the
subject matter hereof but shall not be deemed to limit the rights that either Party might
otherwise have at law or in equity. The indemnification provided in this Article XVIII
shall not cover, and in no event shall any Party be liable to the other Party for, any
indirect, consequential, incidental, exemplary, punitive or special damages or lost profits
or revenues (“Indirect Damages”) claimed by the Indemnified Party, except that the
indemnification provided for herein shall cover Indirect Damages for: (i) infringement,
violation or misappropriation of Intellectual Property; (ii) gross negligence or
recklessness or willful misconduct relating to the Program; or (iii) any breach of any
obligations relating to Cardholder Data, Pier 1 Shopper Data, the Pier 1 Prospect List and
Confidential Information.

     (c) Without limiting their respective rights set forth elsewhere in this Article XVII,
and subject to the procedures for indemnification, any Indemnified Party will act in good
faith, will use commercially reasonable efforts to mitigate any losses, will render to the
Indemnifying Party such assistance as the Indemnifying Party may reasonably require in order
to ensure a prompt and adequate defense to any suit, claim, or proceeding, and shall consult
regularly with the Indemnifying Party regarding the conduct of any proceeding or the taking
of any action for which indemnification may be sought.

ARTICLE XVIII

MISCELLANEOUS

       18.1 Precautionary Security Interest. Pier 1 and Bank agree that this Agreement
contemplates the extension of credit by Bank to Cardholders and that Pier 1’s submission of Pier
1 Charge Transaction Data to Bank shall constitute assignment by Pier 1 of any and all right,
title and interest in such Pier 1 Charge Transaction Data and the Cardholder Indebtedness
reflected therein. Nothing herein is intended to provide for the direct extension of credit to
Pier 1 by Bank. However, as a precaution in the unlikely event that any person asserts that
Article 9 of the UCC applies or may apply to the transactions contemplated hereby, and to secure
Pier 1’s payment of and performance of all obligations of Pier 1 to Bank, Pier 1 hereby grants to
Bank a first priority present and continuing security interest in and to the following, whether
now existing or hereafter created or acquired: (i) all Accounts, Cardholder Indebtedness, Account
Documentation and Pier 1 Charge Transaction Data, and (ii) all proceeds of the

Credit Card Program Agreement — Page 66

 

 

Cardholder Indebtedness. In addition, Pier 1 agrees to take any reasonable action requested
by Bank, at Bank’s expense, to establish the first lien and perfected status of such security
interest. Upon the termination or expiration of this Agreement, Bank shall execute such releases
and file such notices as Pier 1 may request to evidence the termination of the security interest
provided for in this Section 18.1. Pier 1 represents no security interest or signed financing
statement exists in favor of any third party covering any of the assets in which Bank is granted
a security interest, other than a security interest or financing statement that has lapsed or
been terminated or will lapse or terminate before the Closing.

     18.2 Securitization, Participation or Pledge of Cardholder Indebtedness. Pier 1 and
Bank agree with respect to securitizations, participations or pledges of Cardholder Indebtedness
as set forth on Schedule 18.2.

     18.3 Assignment. Pier 1, on the one hand, and the Bank, on the other hand, shall
not assign this Agreement or any of its rights hereunder without the prior written consent of the
other Party, except to the extent the Cardholder Indebtedness is securitized as permitted
pursuant to Section 18.2 . Notwithstanding the forgoing, Pier 1, on the one hand, and Bank, on
the other hand, may assign its rights and obligations hereunder to any entity which is a
successor to all or substantially all of its assets and business via merger or consolidation,
purchase of assets, or otherwise.

     18.4 Sale or Transfer of Accounts. Bank shall not sell or transfer in whole or in
part any Accounts; provided, however, that this Section 18.4 shall not restrict the ability of
Bank to securitize, participate or pledge the Cardholder Indebtedness pursuant to Section 18.2.
Bank may from time to time propose to Pier 1 the terms under which it desires to sell any Pier 1
Accounts that have been written-off in accordance with the Risk Management Policies, including
the payments proposed to be made to Pier 1 and Bank in connection with any such sale. Pier 1
shall consider any such proposal in good faith but shall be entitled to accept or reject any such
proposal in its sole discretion.

     18.5 Subcontracting. Except as approved by the Management Committee, it is
understood and agreed that, in fulfilling its obligations under this Agreement, no Person other
than a Party hereto or its Affiliates may perform such Party’s functions; provided that, to the
extent a Party is not required to obtain Management Committee approval under Section 3.2(d)(iv)
to outsource or subcontract a service, the Parties and their Affiliates may subcontract or
outsource such service to such third party. Each Party hereto shall be responsible for functions
performed by such Affiliates or other Persons to the same extent the Party would be responsible
if it performed such functions itself.

     18.6 Amendment. Except as provided herein, this Agreement may not be amended except
by a written instrument signed by each of the Bank and Pier 1.

     18.7 Non-Waiver. No delay by a Party hereto in exercising any of its rights
hereunder, or partial or single exercise of such rights, shall operate as a waiver of that or any
other right. The exercise of one or more of a Party’s rights hereunder shall not be a waiver of,
or preclude the exercise of, any rights or remedies available to such Party under this Agreement
or in law or at equity.

Credit Card Program Agreement — Page 67

 

 

       18.8 Severability. In case any one or more of the provisions contained herein shall
be invalid, illegal or unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby, and this Agreement shall be reformed, construed and enforced as if such
invalid, illegal or unenforceable provision or portion of any provision had never been contained
herein and there had been contained herein instead such valid, legal and enforceable provisions
as would most nearly accomplish the intent and purpose of such invalid, illegal or unenforceable
provision.

       18.9 Waiver of Jury Trial and Venue.

     (a) Each Party hereby waives all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement.

     (b) Each Party hereto hereby irrevocably submits to the jurisdiction of the United
States District Court of Delaware or, if such federal jurisdiction is unavailable, in the
state courts of the State of Delaware over any action arising out of this Agreement, and
each Party hereto hereby irrevocably waives any objection which such Party may now or
hereafter have to the laying of improper venue or forum non conveniens. Each Party hereto
agrees that a judgment in any such action or proceeding may be enforced in other
jurisdictions by suit on the judgment or in any manner provided by law. Any and all service
of process and any other notice in any such suit, action or proceeding with respect to this
Agreement shall be effective against any Party hereto if given as provided herein.

       18.10 Governing Law; Compliance with Law.

     (a) This Agreement and all rights and obligations hereunder, including matters of
construction, validity and performance, shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made to be performed within
such State and applicable federal law.

     (b) Each Party shall comply in all material respects with Applicable Law in connection
with its activities and the exercise of its rights and performance of its obligations
hereunder.

       18.11 Specific Performance. The Parties agree that money damages would not be a
sufficient remedy for any breach of Article VI, X or XIII or the failure of a Party to perform
any of its material obligations hereunder, and that, in addition to all other remedies, each
Party will be entitled to seek specific performance and to seek injunctive or other equitable
relief as a remedy for any such breach or failure to perform its material obligations hereunder.
Each Party waives any requirements for the securing or posting of any bond in connection with
such remedy.

       18.12 Captions. Captions of the articles and sections of this Agreement are for
convenient reference only and are not intended as a summary of such articles or sections and do
not affect, limit, modify or construe the contents thereof.

Credit Card Program Agreement — Page 68

 

 

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

	 	 	 	 	 
	 

	 	If to Pier 1:
	 	100 Pier 1 Place
	 

	 	 	 	Ft. Worth, Texas 76102
	 

	 	 	 	Attn: Michael A. Carter, Esq.
	 

	 	 	 	Fax: (817) 252-7319
	 
	 	 	 	 
	 

	 	With a copy to (which shall not constitute notice):
	 	Winstead Sechrest & Minick P.C.
	 

	 	 	 	5400 Renaissance Tower
	 

	 	 	 	Dallas, Texas 75270
	 

	 	 	 	Attn: Bruce A. Cheatham, Esq.
	 

	 	 	 	Fax: (214) 745-5390
	 
	 	 	 	 
	 

	 	If to the Bank:
	 	Chase Bank USA, N.A.
	 

	 	 	 	201 North Walnut Street
	 

	 	 	 	3 Christina Center
	 

	 	 	 	Wilmington, DE. 19801
	 

	 	 	 	Attention: Finance Senior Director
	 
	 	 	 	 
	 

	 	With a copy to (which shall not constitute notice):
	 	Chase Bank USA, N.A.
	 

	 	 	 	201 North Walnut Street
	 

	 	 	 	3 Christina Center
	 

	 	 	 	Wilmington, DE. 19801
	 

	 	 	 	Attention: General Counsel — Card Services

     18.14 Further Assurances. Pier 1 and Bank agree to produce or execute such other
documents or agreements as may be necessary or desirable for the execution and implementation of
this Agreement and the consummation of the transactions specified herein and to take all such
further action as the other Party may reasonably request in order to give evidence to the
consummation of the transactions specified herein.

     18.15 No Joint Venture. Nothing contained in this Agreement shall be deemed or
construed by the Parties or any third party to create the relationship of principal and agent,
partnership, joint venture or of any association between Pier 1 and the Bank, and no act of
either Party shall be deemed to create any such relationship. Pier 1 and Bank each agree to such
further actions as the other may request to evidence and affirm the non-existence of any such
relationship.

     18.16 Press Releases. Except for any notice which is required by Applicable Law,
each of the Bank (and its Affiliates), on the one hand, and Pier 1 (and its Affiliates), on the
other hand, agrees that it shall not issue a press release or make any other public statement
with respect to the transactions contemplated by this Agreement without the prior written

Credit Card Program Agreement — Page 69

 

 

consent of the other, which consent shall not be unreasonably withheld or delayed. Each of
the Bank (and its Affiliates), on the one hand, and Pier 1 (and its Affiliates), on the other
hand, agrees, if possible, to notify and consult with the other at least twenty-four (24) hours
in advance of filing any notice required by Applicable Law. Notwithstanding the preceding,
however, press releases that do not name the other Party will not require such approval. The
foregoing notwithstanding, it is understood that neither Party shall be required to obtain any
prior consent, but shall consult with each other to the extent practicable, with regard to (a)
filings, press releases and other announcements as may be required by Applicable Law or the
applicable rules and regulations of any stock exchange and (b) publications prepared solely by
and for employees of any Party, or their respective Affiliates.

     18.17 No Set-Off. Except as otherwise provided in this Agreement, Pier 1 and the
Bank agree that each Party has waived any right to set-off, combine, consolidate or otherwise
appropriate and apply (i) any assets of the other Party held by the Party, or (ii) indebtedness
or other liabilities at any time owing by the Party to the other Party, as the case may be,
against or on account of any obligations owed by the other Party under this Agreement.

     18.18 Third Parties . There are no third-party beneficiaries to this Agreement.
Except for the Indemnified Parties with respect to indemnity claims pursuant to Article XVII, the
Parties do not intend: (i) the benefits of this Agreement to inure to any third party; or (ii)
any rights, claims or causes of action against a Party to be created in favor of any person or
entity other than the other Party.

     18.19 Force Majeure. If performance of any service or obligation under this
Agreement is prevented, restricted, delayed or interfered with by reason of labor disputes,
strikes, acts of God, floods, lightning, severe weather, shortages of materials, rationing,
utility or communication failures, earthquakes, war, revolution, civil commotion, acts of public
enemies, terrorist attacks, blockade, embargo or any law, order, proclamation, regulation,
ordinance, demand or requirement having legal effect of any government or any judicial authority
or representative of any such government, or any other act whatsoever, whether similar or
dissimilar to those referred to in this clause, which are beyond the reasonable control of a
Party and could not have been prevented by reasonable precautions, (each, a “Force Majeure
Event”) then such Party shall be excused from such performance to the extent of and during the
period of such Force Majeure Event. A Party excused from performance pursuant to this Section
18.19 shall exercise all reasonable efforts to continue to perform its obligations hereunder,
including by implementing its disaster recovery and business continuity plan as provided in
Section 7.3(c), and shall thereafter continue with reasonable due diligence and good faith to
remedy its inability to so perform except that nothing herein shall obligate either Party to
settle a strike or other labor dispute when it does not wish to do so. Notwithstanding the
foregoing, if a condition constituting a Force Majeure Event with respect to the Bank, on the one
hand, or Pier 1, on the other hand, exists for more than thirty (30) consecutive days (or five
(5) days in the case of any payment obligation) and such Party is unable to perform a material
obligation (which shall be deemed to include any payment obligation pursuant to Article VIII or
Article IX) under this Agreement due to such Force Majeure Event, then the other Party shall have
the right to terminate this Agreement upon written notice to the Party subject to such Force
Majeure Event; provided, however, that (i) prior to delivering written

Credit Card Program Agreement — Page 70

 

 

notice of termination in respect of such Force Majeure Event, the Party seeking to terminate
this Agreement shall call, and the Parties shall attend at least one Management Committee meeting
to consider and vote upon a plan to outsource the material obligation that such Party is unable
to perform and (ii) in the event such outsourcing arrangement is agreed to, the Parties shall
promptly implement such arrangement and this Agreement may not be terminated unless such Force
Majeure Event continues on the fifteenth (15th) day following approval of such outsourcing
arrangement.

     18.20 Entire Agreement. This Agreement, together with the Schedules hereto which
are expressly incorporated herein by reference, supersedes any other agreement, whether written
or oral, that may have been made or entered into by Pier 1 and Bank (or by any officer or
employee of any such Parties) relating to the matters specified herein, and constitutes the
entire agreement by the Parties related to the matters specified herein or therein.

     18.21 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective successors and permitted assigns. This
Agreement is the product of negotiation by the Parties having the assistance of counsel and other
advisers. It is the intention of the Parties that this Agreement not be construed more strictly
with regard to one Party than with regard to the other.

     18.22 Counterparts/Facsimiles. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument, but in making
proof of this Agreement, it shall not be necessary to produce or account for more than one such
counterpart. Any facsimile of an executed counterpart shall be deemed an original.

     18.23 Survival. Upon the expiration or termination of this Agreement, the Parties
shall have the rights and remedies described herein. Upon such expiration or termination, all
obligations of the Parties under this Agreement shall cease, except that the obligations of the
Parties pursuant to Article VI (Cardholder Information), Section 8.5 (Bank Right to Charge Back),
Article X (Intellectual Property), Article XII (Access, Audit and Dispute Resolution), Article
XIII (Confidentiality), Article XVI (Effects of Termination), Article XVII (Indemnification),
Section 18.1 (Precautionary Security Interest), Section 18.9 (Waiver of Jury Trial and Venue) and
Section 18.10 (Governing Law; Compliance with Law) shall survive the expiration or termination of
this Agreement.

[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]

Credit Card Program Agreement — Page 71

 

 

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

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

	 	By:	 	 	 	 
	 

	 	 	 	 

Charles H. Turner
	 	 
	 

	 	 	 	Executive Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	CHASE BANK USA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

David Hoty
	 	 
	 

	 	 	 	Senior Director	 	 

Credit Card Program Agreement — Page 72

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