EXHIBIT 10.4
[Execution Copy]
SIXTH AMENDMENT AGREEMENT
          This Sixth Amendment Agreement (“Amendment”) is executed as of the
19th day of September, 2005, by and among Pier 1 Funding, L.L.C., a Delaware
limited liability company, as transferor (the “Transferor”), Pier 1 Imports
(U.S.), Inc., a Delaware corporation, as servicer (the “Servicer”), and Wells
Fargo Bank, National Association (successor by merger to Wells Fargo Bank
Minnesota, National Association), a national banking association, as trustee
(the “Trustee”).
W I T N E S S E T H:
          WHEREAS, the Transferor, the Servicer and the Trustee executed the
Series 2001-1 Supplement dated as of September 4, 2001 (as heretofore amended,
the “Supplement”), to the Pooling and Servicing Agreement dated as of
February 12, 1997, among such parties (as heretofore amended, the “Agreement;”
unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to such terms in the Agreement or the Supplement, as
applicable); and
          WHEREAS, the parties hereto have agreed to amend further the
Supplement on the terms and conditions hereinafter set forth.
          NOW, THEREFORE, the parties hereto agree as follows:
          SECTION 1. Amendment of the Supplement. Effective on the date hereof
and subject to the satisfaction of the condition precedent set forth in
Section 2 below, the Supplement is hereby amended as follows:
     (a) The definition of “Class B Minimum Required Amount” set forth in
Section 1.2 of the Supplement is amended and restated in its entirety to read as
follows:
       “Class B Minimum Required Amount” shall mean, at any time of
determination, (a) if Pier 1 Imports’ Long-Term Issuer Credit Rating (Local
Currency) is at least BB by Standard & Poor’s and Pier 1 Imports’ corporate
family rating is at least Ba2 by Moody’s, the greater of (i) the quotient
obtained by dividing (A) 8.5% of the Class A Invested Amount at such time by
(B) 0.915, and (ii) the sum of (A) 3.0% of the Class A Purchase Limit at such
time and (B) 3.0% of the quotient obtained by dividing (1) 8.5% of the Class A
Purchase Limit at such time by (2) 0.915; (b) if Pier 1 Imports’ Long-Term
Issuer Credit Rating (Local Currency) is below BB by Standard & Poor’s or Pier 1
Imports’ corporate family rating is below Ba2 by Moody’s, the greater of (i) the
quotient obtained by dividing (A) 12.0% of the Class A Invested Amount at such
time by (B) 0.88, and (ii) the sum of (A) 3.0% of the Class A Purchase Limit at
such

 

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  time and (B) 3.0% of the quotient obtained by dividing (1) 12.0% of the
Class A Purchase Limit at such time by (2) 0.88.
     (b) Section 1.9(i) of the Supplement is amended and restated in its
entirety to read as follows:
       (i) a downgrade of Pier 1 Imports’ Long-Term Issuer Credit Rating (Local
Currency) to below B+ by Standard & Poor’s or a downgrade of Pier 1 Imports’
corporate family rating to below B1 by Moody’s or a withdrawal by Standard &
Poor’s of its rating of Pier 1 Imports’ Long-Term Issuer Credit Rating (Local
Currency) or a withdrawal by Moody’s of its rating of Pier 1 Imports’ corporate
family;
     (c) The Transferor hereby confirms that it is the sole Holder of the
Class B Certificates and covenants that it will not sell, assign or otherwise
transfer any Class B Certificate or an interest therein without the prior
written consent of the Administrative Agent.
     (d) If the Class B Minimum Required Amount is increased as a consequence of
Pier 1 Imports’ Long-Term Issuer Credit Rating (Local Currency) falling below BB
by Standard & Poor’s or Pier 1 Imports’ corporate family rating is below Ba2 by
Moody’s, then notwithstanding anything to the contrary in the Agreement or the
Supplement, the Transferor shall immediately take action to cause the Class B
Invested Amount to at least equal such increased Class B Minimum Required
Amount, as follows:
       (i) the maximum face amount of the outstanding Class B Certificates shall
be deemed automatically to have been increased ratably such that after giving
effect to such increase, the aggregate maximum face amount of the outstanding
Class B Certificates equals $13,636,364, it being understood that the Transferor
may surrender the Class B Certificates for replacement Class B Certificates
reflecting the correct maximum face amounts;
       (ii) if the Transferor Amount exceeds the Minimum Transferor Amount, the
Class B Invested Amount shall automatically be increased by an amount equal to
the lesser of (A) the excess of the increased Class B Minimum Required Amount
over the Class B Invested Amount and (B) the largest amount that will not result
in the Transferor Amount being less than the Minimum Transferor Amount, and the
Trustee, in accordance with written instructions from the Servicer, a copy of
which shall be delivered to the Administrative Agent, shall reflect such
increase in its books and records; and
       (iii) if after giving effect to the foregoing increase in the Class B
Invested Amount, if any, the increased Class B Minimum Required Amount still
exceeds the Class B Invested Amount, then the Trustee, in

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accordance with written instructions from the Servicer, shall retain all
Collections in respect of Principal Receivables received on each day in the
Principal Account until such time as the amount on deposit therein at least
equals an amount (the “Special Reduction Amount”) that, when applied to reduce
the Class A Invested Amount, will cause the Class B Invested Amount to at least
equal the increased Class B Minimum Required Amount, whereupon, on the next
succeeding Distribution Date, the Trustee, pursuant to written instructions from
the Servicer, shall withdraw the Special Reduction Amount from the Principal
Account and deposit it into the Distribution Account, and the Paying Agent, on
such Distribution Date, shall pay the Special Reduction Amount ratably to the
Class A Certificateholders to reduce the Class A Invested Amount;
provided, however, that the Transferor may take such other steps to cause the
Class B Invested Amount to at least equal the increased Class B Minimum Required
Amount as may be approved in writing by the Administrative Agent.
Notwithstanding anything to the contrary in the Supplement, if within five
Business Days following the date of any reduction of Pier 1 Imports’ Long-Term
Issuer Credit Rating (Local Currency) below BB by Standard & Poor’s or Pier 1
Imports’ corporate family rating is below Ba2 by Moody’s, and the resulting
increase in the Class B Minimum Required Amount, the Class B Invested Amount
does not at least equal such increased Class B Minimum Required Amount, then
Series 2001-1 Certificateholders evidencing Undivided Interests aggregating more
than 50% of the Invested Amount of any class of this Series 2001-1, by notice
then given in writing to the Transferor, the Servicer and the Trustee, may
declare that a Series 2001-1 Pay Out Event has occurred as of the date of such
notice, it being understood that the Trustee shall in no event be required to
perform any obligation set forth herein, in the Agreement or in the Supplement
resulting from the occurrence of such Pay Out Event, unless the Trustee has
received such written notice. In addition, notwithstanding anything to the
contrary in the Supplement, if at any time the Class B Invested Amount is less
than the Class B Minimum Required Amount, no Principal Collections shall be paid
to the Holder of the Exchangeable Transferor Certificate as contemplated in
Section 4.18(c) of the Supplement, but rather shall be retained in the
Collection Account or the Principal Account for distribution as described in
clause (d)(iii) above or otherwise in accordance with the other terms of the
Supplement on the next succeeding Distribution Date.
     (e) Section 4.18(a) of the Supplement is amended and restated in its
entirety to read as follows:
       Notwithstanding anything to the contrary in the Agreement or this
Series Supplement, if at any time (i) the rating of Pier 1’s Long-Term Issuer
Credit Rating (Local Currency) shall be reduced below BB by Standard & Poor’s or
Pier 1 Imports’ corporate family rating shall be reduced below Ba2 by Moody’s or
withdrawn by Moody’s or Standard & Poor’s or (ii) any Insolvency Event shall
have occurred, the Transferor and

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the Servicer shall, within two (2) Business Days following the occurrence of
such event, instruct each retail outlet to which payments by Obligors in respect
of Receivables may be made to segregate such payments from other funds held by
such retail outlet and to remit such payments, within two (2) days following
receipt thereof, directly to the Collection Account; provided, however, that the
Transferor and the Servicer shall not be obligated to so instruct such retail
outlets if prior to the date such instructions are required to be given, a
letter of credit or cash collateral account meeting the applicable requirements
specified in the definition of Store Payment Enhancement shall have been issued
or established, as applicable, for the benefit of the Trustee on behalf of the
Class A Certificateholders; provided, further, that if any institution that has
issued such a letter of credit or with which such a cash collateral account is
maintained shall cease to be an Eligible Store Payment Enhancement Institution,
then within thirty (30) days after becoming aware of such fact the Transferor
and the Servicer shall either (i) replace such letter of credit or cash
collateral account with a new letter of credit or cash collateral account
meeting the applicable requirements specified in the definition of Store Payment
Enhancement or (ii) instruct each retail outlet to which payments by Obligors in
respect of Receivables are made to segregate such payments from other funds held
by such retail outlet and to remit such payments, within two (2) days following
receipt thereof, directly to the Collection Account.
                    SECTION 2. Condition Precedent. This Amendment shall become
effective as of the date hereof upon the execution of this Amendment by all of
the parties hereto and the execution and delivery of the Consent to Amendment to
Supplement attached hereto.
                    SECTION 3. Miscellaneous.
                    3.1 Ratification. As amended hereby, the Supplement is in
all respects ratified and confirmed and the Supplement as so supplemented by
this Amendment shall be read, taken and construed as one and the same
instrument.
                    3.2 Representation and Warranty. Each of the Transferor and
the Servicer represents and warrants that this Amendment has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws affecting creditors’
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
                    3.3 Governing Law; Parties; Severability. This Amendment
shall be governed by and construed in accordance with the laws and decisions (as
opposed to the conflicts of law provisions) of the State of New York. Whenever
in this Amendment there is a reference made to any of the parties hereto, such
reference shall also be a reference to the successors and assigns of such party,
including, without limitation, any debtor-in-possession or trustee. The
provisions of

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this Amendment shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties hereto. Whenever possible, each provision
of this Amendment shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Amendment.
          3.4 Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

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

              PIER 1 FUNDING, L.L.C.,        Transferor
 
  By    
 
            Name:     Title:
 
            PIER 1 IMPORTS (U.S.), INC.,        Servicer
 
       
 
  By    
 
            Name:     Title:
 
            WELLS FARGO BANK, NATIONAL ASSOCIATION     (successor by merger to
Wells Fargo Bank     Minnesota, National Association),        Trustee
 
       
 
  By    
 
            Name:     Title:

[Consent to Amendment to Supplement Attached]

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CONSENT TO AMENDMENT TO SUPPLEMENT
          The undersigned, constituting the Majority Investors under and as
defined in the Certificate Purchase Agreement dated as of September 4, 2001 (as
heretofore amended, the “Purchase Agreement”), among Pier 1 Funding, L.L.C., as
the transferor, Pier 1 Imports (U.S.), Inc., as the servicer, the Class A
Purchasers named therein and JPMorgan Chase Bank, N.A. (as successor to Morgan
Guaranty Trust Company of New York), as the administrative agent, hereby consent
to the terms and conditions of the Sixth Amendment Agreement dated as of
September 19, 2005, among Pier 1 Funding, L.L.C., as transferor, Pier 1 Imports
(U.S.), Inc., as servicer, and Wells Fargo Bank, National Association (successor
by merger to Wells Fargo Bank Minnesota, National Association), as trustee,
relating to the Series 2001-1 Supplement dated as of September 4, 2001, as
heretofore amended, among the same parties.

              PARK AVENUE RECEIVABLES COMPANY, LLC (as     successor to Delaware
Funding Company, LLC), as     the sole Structured Investor
 
            By JPMorgan Chase Bank, N.A., as attorney-in-fact
 
       
 
       
 
  By:    
 
       
 
      Name:
 
      Title:
 
            JPMORGAN CHASE BANK, N.A., as the sole     Committed Investor
 
       
 
  By:    
 
       
 
      Name:
 
      Title:

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