PIR Pier 1 Imports Inc

On February 16, 2020, Pier 1 Imports, Inc. (“Pier 1”) and all of its subsidiaries (together with Pier 1, the “Debtors”) entered into a Plan Support Agreement (together with all exhibits and schedules thereto, the “PSA”) by and among the Debtors and certain term loan lenders (the “Consenting Term Lenders”) holding approximately sixty-four (64) percent of the term loans claims under Pier 1’s senior secured term loan facility (“Term Loan Facility”). Capitalized terms used but not otherwise defined in this Current Report on Form 8-K will have the meaning given to them in the PSA.

The PSA contemplates a chapter 11 process that includes the filing of a chapter 11 plan, an auction process for a potential sale of some, all, or substantially all of the Debtors’ assets, and provides for the possibility of an equitization restructuring under certain conditions. Pursuant to the PSA, the Consenting Term Lenders have agreed that: (i) should the Debtors receive a qualified bid greater than or equal in value to a Reserve Price, the Consenting Term Lenders will automatically consent to and support the sale of the Debtors’ assets (including a release and discharge of liens, encumbrances, and interests, subject to receipt of proceeds) or (ii) if no qualified bid’s value exceeds the Reserve Price, then the Consenting Term Lenders will elect to either (a) pursue an equitization restructuring or (b) proceed with an auction at which the Consenting Term Lenders may only credit bid up to the reserve price.

The PSA contains various milestones, including:

The PSA also provides that the Debtors may terminate the PSA and their obligations thereunder in the event that the Debtors determine that proceeding with any transaction contemplated by the PSA would be inconsistent with the exercise of their fiduciary duties, including consideration or pursuit of an alternative proposal.

The foregoing description of the PSA is not complete and is qualified in its entirety by reference to the full text of the PSA, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.

The proceeds of the DIP Facilities will be used, in part, to refinance in full the Debtors’ prepetition ABL credit facility and provide incremental liquidity for working capital and letters of credit, administrative costs, premiums and fees of the Chapter 11 Cases, for payment of court approved prepetition obligations and other such purposes consistent with the DIP Facilities and the budget or as otherwise approved by the agent and lenders.

The foregoing description of the DIP Facilities and DIP Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the final, executed DIP Credit Agreement, as approved by the Bankruptcy Court.

a condition to receiving the Retention Award, each Executive agreed that he or she will not, absent assumption of his or her employment agreement as part of the underlying chapter 11 case of Pier 1, file any claims in the underlying chapter 11 case of Pier 1 related to any severance obligations each such Executive may otherwise assert against Pier 1 for a termination of employment that occurs prior to the Retention Date.

The foregoing description of the Retention Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Retention Agreement, a copy of which is filed herewith as Exhibit 10.2 and is incorporated herein by reference.

Amendment to Non-Employee Director Compensation Plan

On February 12, 2020, the Board approved certain amendments to Pier 1’s Non-Employee Director Compensation Plan, with such amendments to be retroactively effective as of January 1, 2020 (as amended, the “Plan”). Pursuant to the Plan, each non-employee director will receive an annual cash retainer of $185,000, except that certain non-employee directors who are determined by the Board to be “disinterested directors” for purposes of the Plan will receive an annual cash retainer of $300,000. “Disinterested directors” will also receive an additional fee of $7,000 per day for providing certain special services. Non-employee directors who serve on the Restructuring Committee and are not “disinterested directors” will receive an additional annual cash retainer of $25,000 to compensate them for their service on the Restructuring Committee. The Plan, as amended, does not have an equity compensation component.

On January 6, 2020, Pier 1 filed a Current Report on Form 8-K (the “Original 8-K”) to report the election of Ms. Pamela Corrie and Mr. Steven Panagos to the Board. This Current Report on Form 8-K updates Item 5.02 of the Original 8-K to provide certain compensation information for each of Ms. Corrie and Mr. Panagos that was not determined at the time of the filing of the Original 8-K.

Ms. Corrie and Mr. Panagos have been determined by the board of directors to be “disinterested directors” for purposes of the Plan. Accordingly, each of Ms. Corrie and Mr. Panagos will receive an annual cash retainer of $300,000 and will be compensated $7,000 for each day they provide certain special services to the Debtors.

The foregoing description of the Plan is not complete and is qualified in its entirety by reference to the full text of the Plan, a copy of which is filed herewith as Exhibit 10.3 and is incorporated herein by reference.

The information being furnished in this Item 7.01 and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this report may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Pier 1 and the other Debtors may also make forward-looking statements in other reports filed with the United States Securities and Exchange Commission (“SEC”), in press releases, in presentations and in material delivered to Pier 1’s shareholders. Forward-looking statements provide current expectations of future events based on management’s assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant factors. These statements encompass information that does not directly relate to any historical or current fact and often may be identified with words such as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and other similar expressions.

Management’s expectations and assumptions regarding: risks and uncertainties relating to the Chapter 11 Cases, including but not limited to, Pier 1’s ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 Cases; the effects of the Chapter 11 Cases on Pier 1 and on the interests of various constituents; Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; the length of time the Debtors will operate under the Chapter 11 Cases; risks associated with third-party motions in the Chapter 11 Cases; the potential adverse effects of the Chapter 11 Cases on Pier 1’s liquidity or results of operations and increased legal and other professional costs necessary to execute the Debtors’ reorganization; Bankruptcy Court approval of the Debtors’ proposed debtor in possession financing; the conditions to which Pier 1’s debtor in possession financing is subject and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of the Debtors’ control; Pier 1’s ability to consummate sales of its assets and the terms and conditions of any such sales; the effectiveness of Pier 1’s marketing campaigns, merchandising and promotional strategies and customer databases; consumer spending patterns; inventory levels and values; the effectiveness of Pier 1’s relationships with, and operations of, its key suppliers; risks related to changes in U.S. policy related to imported merchandise, particularly with regard to the impact of tariffs on goods imported from China and strategies undertaken to mitigate such impact; changes in foreign currency values relative to the U.S. dollar; Pier 1’s ability to retain its senior management team; continued volatility in the price of Pier 1’s common stock; and other future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.

Additional risks and uncertainties that may affect the Debtors operations and performance include, among others: the failure by Pier 1 to identify, develop and successfully implement immediate action plans and longer-term strategic initiatives; the inability of Pier 1 to anticipate, identify and respond to changing customer trends and preferences for home décor and furniture and to identify, source, ship and deliver items of acceptable quality to its U.S. distribution and fulfillment centers, stores and customers at reasonable prices and rates in a timely fashion; risks related to outsourcing certain business processes to third-party vendors, including disruptions in business, cyber security threats and increased costs; an overall decline in the health of the U.S. economy and its impact on consumer confidence and spending; disruptions in Pier 1’s domestic supply chain or e-Commerce website; failure to successfully manage and execute Pier 1’s marketing initiatives; negative impacts from a failure to control merchandise returns and recalls; potential impairment charges on certain long-lived assets; Pier 1’s access to adequate operating cash flow, trade credit, borrowed funds and capital to fund its operations and pay its obligations as they become due, including the impact of continued deterioration of Pier 1’s financial performance or adverse

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trends or disruption in the global credit and equity markets; the highly competitive retail environment with companies offering similar specialty home merchandise; factors affecting consumer spending, including employment levels and disposable income, interest rates, consumer debt levels, fuel and transportation costs and other factors; an inability to operate in desirable locations at reasonable rental rates and to close underperforming stores at or before the completion of their lease terms; failure to attract, motivate and retain an effective management team or changes in the cost or availability of a suitable workforce; failure to successfully manage omni-channel operations; seasonal variations; increases in costs that are outside Pier 1’s control; adverse weather conditions and natural disasters; risks related to Pier 1’s dependence on technology in the operation of its business; failure to protect consumer data; failure to successfully implement new information technology systems and enhance existing systems; risks related to cybersecurity and e-Commerce related fraud; failure to maintain positive brand perception and recognition; risks related to imported merchandise including the health of global, national, regional, and local economies and their impact on vendors, manufacturers and merchandise; factors beyond Pier 1’s control, including general economic and market conditions, fluctuations in Pier 1’s financial condition or other factors that could affect the common stock price; risks related to actions by activist shareholders; regulatory and legal risks; and litigation risks.

Pier 1 assumes no obligation to update or otherwise revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied will not be realized. Additional information concerning these risks and uncertainties is contained in Pier 1’s Annual Report on Form 10-K for the fiscal year ended March 2, 2019, as filed with the SEC and in Pier 1’s other filings with the SEC.