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EXHIBIT 10.3      CLAIRES STORES, INC. 2005 MANAGEMENT DEFERRED COMPENSATION PLAN




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CLAIRES STORES, INC.
2005 MANAGEMENT DEFERRED COMPENSATION PLAN WHEREAS, Claires Stores, Inc. desires to establish an unfunded deferred compensation
plan, effective as of February 4, 2005 (the Effective Date), which provides supplemental
retirement income benefits for a select group of management or highly compensated employees through
deferrals of salary and bonuses, and through discretionary company contributions under such plan.
As of the Effective Date, the Claires Stores, Inc. Management Deferred Compensation Plan shall be
frozen and no further contributions shall be made thereunder. NOW, THEREFORE, Claires Stores, Inc. hereby adopts and establishes the Claires Stores, Inc.
2005 Management Deferred Compensation Plan, the terms of which are hereinafter set forth. ARTICLE I
TITLE AND DEFINITIONS 1.1. Title. The name of this plan is the Claires Stores, Inc. 2005 Management Deferred Compensation
Plan. 1.2. Definitions. Whenever the following words and phrases are used in this Plan, with the first letter
capitalized, they shall have the meanings specified below. (a) Account or Accounts shall mean a Participants Deferral Account and/or Company
Contribution Account. (b) Beneficiary or Beneficiaries shall mean the person or persons, including a trustee,
personal representative or other fiduciary, last designated in writing by a Participant in
accordance with procedures established by the Committee to receive the benefits specified hereunder
in the event of the Participants death. No beneficiary designation shall become effective until it
is filed with the Committee. If there is no Beneficiary designation in effect, or if there is no
surviving designated Beneficiary, then the Participants surviving spouse shall be the Beneficiary.
If there is no surviving spouse to receive any benefits payable in accordance with the preceding
sentence, the duly appointed and currently acting personal representative of the Participants
estate shall be the Beneficiary. In any case where there is no such personal representative of the
Participants estate duly appointed and acting in that capacity within 90 days after the
Participants death (or such extended period as the Committee determines is reasonably necessary to
allow such personal representative to be appointed, but not to exceed 180 days after the
Participants death), then the Beneficiary or Beneficiaries shall be the person or persons who can
verify by affidavit or court order to the satisfaction of the Committee that such person or persons
are legally entitled to receive the benefits specified hereunder. In the event any amount is
payable under the Plan to a minor, payment shall not be made to the minor, but instead be paid (1)
to that persons living parent(s) to act as custodian, (2) if that persons parents are then
divorced, and one parent is the sole custodial parent, to such custodial parent, or (3) if no
parent of that person is then living, to a custodian selected by the Committee to hold the funds
for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in
which the minor resides. If no parent is living and the Committee decides not to select another
custodian to hold the funds for the minor, then payment shall be made to the duly appointed and
currently acting guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly 2




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appointed and currently acting within 60 days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of the minor. (c) Board shall mean the Board of Directors of Claires Stores, Inc. (d) Bonus shall mean any cash incentive or other compensation which is awarded by a Company
in its discretion to a Participant as remuneration in addition to the Participants Salary. Bonus
for purposes of the Plan shall be determined without regard to any reductions (1) for any salary
deferral contributions to a plan qualified under Section 125 or Section 401(k) of the Code or (2)
pursuant to any deferral election in accordance with Article III of the Plan. (e) Break-in-Service shall mean a continuous twelve (12) month period during which the
Participant is not an Employee, commencing on the date the Participant ceases to be an Employee.
For purposes of the preceding sentence, a Participant shall continue to be considered an Employee
during a leave of absence, but only if that leave of absence is approved by the Company. (f) Change of Control shall mean any of the following: (1) any one person, or more than one person acting as a group, acquires ownership of stock of
Claires Stores, Inc. that, together with stock held by such person or group, possesses more than
fifty percent (50%) of the total fair market value or total voting power of the stock of Claires
Stores, Inc.; provided, however, that if any one person, or more than one person acting as a group,
is considered to own more than fifty percent (50%) of the total fair market value or total voting
power of the stock of Claires Stores, Inc., the acquisition of additional stock by the same person
or persons will not be considered a Change in Control under this Plan. Notwithstanding the
foregoing, an increase in the percentage of stock of Claires Stores, Inc. owned by any one person,
or persons acting as a group, as a result of a transaction in which Claires Stores, Inc. acquires
its stock in exchange for property will be treated as an acquisition of stock of Claires Stores,
Inc. for purposes of this clause (1); (2) during any period of 12 consecutive months, individuals who at the beginning of such
period constituted the Board (together with any new or replacement directors whose election by the
Board, or whose nomination for election by Claires Stores, Inc.s shareholders, was approved by a
vote of at least a majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the directors then in office; or (3) any one person, or more than one person acting as a group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by the person or
persons) assets from Claires Stores, Inc., outside of the ordinary course of business, that have a
gross fair market value equal to or more than forty percent (40%) of the total gross fair market
value of all of the assets of Claires Stores, Inc. immediately prior to such acquisition or
acquisitions. For purposes of this Section 1(f)(3), gross fair market value means the value of
the assets of Claires Stores, Inc., or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets. Notwithstanding anything to the
contrary in this Plan, the following shall not be treated as a Change in Control under this Section
1.(f)(3): (i) a transfer of assets from Claires Stores, Inc. to a shareholder of
Claires
Stores, Inc. (determined immediately before the asset transfer); 3




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(ii) a transfer of assets from Claires Stores, Inc. to an entity, fifty percent (50%)
or more of the total value or voting power of which is owned, directly or indirectly, by
Claires Stores, Inc.; (iii) a transfer of assets from Claires Stores, Inc. to a person, or more than one
person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of
the total value or voting power of all the outstanding stock of Claires Stores, Inc.; or (iv) a transfer of assets from Claires Stores, Inc. to an entity, at least fifty
percent (50%) of the total value or voting power of which is owned, directly or indirectly,
by a person described in (iii) above. (g) Code shall mean the Internal Revenue Code of 1986, as amended. (h) Committee shall mean the Committee appointed by the Board to administer the Plan in
accordance with Article VII. (i) Company shall mean (1) Claires Stores, Inc. and its successors or assigns, and (2) any
corporation, partnership, limited liability company or other entity which has a business or other
relationship with Claires Stores, Inc. and which, with the approval of the Committee, has elected
to participate in the Plan. (j) Company Contribution Amount shall mean an amount awarded by a Company pursuant to
Section 3.2 hereof. (k) Disability shall mean a permanent and total disability such that the Participant
is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to last for a continuous period of not less
than 12 months, as determined in a uniform and non-discriminatory manner by the Committee after
requiring medical examinations by a physician or reviewing any medical evidence which the Committee
considers necessary. (l) Effective Date shall mean February 4, 2005. (m) Eligible Employee shall mean any Employee who is (1) employed by the Company, (2)
designated by the Committee to be eligible to participate in the Plan, and (3) a member of a select
group of management or highly compensated employees of that Company within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, and any regulations relating thereto. (n) Employee shall mean any employee of (1) the Company or (2) any corporation, partnership,
limited liability company or other entity which has a business or other relationship with Claires
Stores, Inc. and which, with the approval of the Committee, has elected to participate in the Plan. (o) ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended. (p) Initial Election Period for an Eligible Employee shall mean (1) if the Employee is an
Eligible Employee as of the Effective Date, then February 4, 2005, or (2) if the employee is not an
Eligible Employee as of the Effective Date, the period ending 30 days after the date he or she is
designated by the Committee, in its sole discretion, as an Eligible Employee. 4




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(q) Interest Rate shall mean, for each Investment Alternative, an amount equal to the net
rate of gain or loss or appreciation or depreciation on the assets of such Investment Alternative. (r) Investment Alternative shall mean an investment alternative selected by the Committee
pursuant to Section 3.2(b) hereof. (s) Key Employee shall mean any Participant who is a key employee, as defined in Section
416(i) of the Code, of the Company. (t) Participant shall mean any Eligible Employee who becomes a Participant in accordance
with Section 2.1 hereof. (u) Payment Eligibility Date shall mean (1) with respect to a Participant who is not a Key
Employee, the first day of the first calendar quarter following the termination of the
Participants employment with the Company, or (2) with respect to a Participant who is a Key
Employee, the first day of the seventh month following the termination of the Participants
employment with the Company. (v) Plan shall mean the Claires Stores, Inc. 2005 Management Deferred Compensation Plan set
forth herein, now in effect, or as amended from time to time. (w) Plan Year shall mean the 12 consecutive month period beginning on January 1, provided,
however, that the first Plan Year shall be a short year beginning on February 4, 2005 and ending on
December 31, 2005. (x) Salary shall mean the Participants base salary paid by the Company. Salary for purposes
of the Plan shall be determined without regard to any reduction (1) for any salary deferral
contributions to a plan qualified under Section 125 or Section 401(k) of the Code or (2) pursuant
to any deferral election in accordance with Article III of the Plan. (y) Trust shall mean the trust referred to in Section 6.7 of the Plan. (z) Trustee shall mean the trustee of the Trust. (aa) Year of Service shall mean, with respect to a Participant, a period of twelve
consecutive months during which he or she is employed by the Company or its subsidiaries or
affiliates commencing on the date on which the Participant begins such employment, including months
prior to the time he or she was a Participant; provided, however, that if a
Participant had incurred a Break-in-Service and then becomes a Participant again, a Year of Service
with respect to such Participant shall mean a period of twelve consecutive months during which he
or she is employed by the Company or its subsidiaries or affiliates commencing as of the date of
the Participants reemployment. (bb) Eligible Year of Service shall mean, with respect to a Participant, a Year of
Service during which the Participant is an Eligible Employee. 5




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ARTICLE II
ELIGIBILITY AND PARTICIPATION 2.1. Eligibility. An Employee shall be eligible to participate in the Plan as of the later of: (a) February 4,
2005, if the Employee is an Eligible Employee as of that date, or (b) the date on which the
Employee becomes an Eligible Employee. 2.2. Participation. An Eligible Employee shall become a Participant in the Plan by (1) electing to defer a portion
of his or her Salary and/or Bonus in accordance with Section 3.1 hereof, and (2) completing a life
insurance application. ARTICLE III
DEFERRAL ELECTIONS AND
COMPANY CONTRIBUTIONS 3.1. Elections to Defer Salary and/or Bonus. (a) Initial Election Period. Each Participant who is an Eligible Employee may elect to
defer receipt of his or her Salary and/or Bonus by filing with the Committee an election that
conforms to the requirements of this Section 3.1, on a form provided by the Committee (the
Participant Election and Enrollment Form), no later than the last day of his or her Initial
Election Period. (b) General Rule. The amount of Salary and/or Bonus which an Eligible Employee may
elect to defer is as follows: (1) Any whole-number percentage or flat dollar amount of Salary; and/or (2) Any whole-number percentage or flat dollar amount of Bonus. (c) Minimum Deferrals. The minimum aggregate amount that may be deferred by an
Eligible Employee during a Plan Year is $5,000 (the Minimum Annual Deferral); provided,
however, with respect to those Eligible Employees who become Participants in the Plan after
the first day of a Plan Year, the Minimum Annual Deferral may be pro rated as determined by the
Committee in a fair and uniform manner based upon the number of months of participation in the Plan
during such Plan Year. Such minimum may be satisfied by deferring Salary and/or Bonus payable for
services rendered for such Plan Year (even though such Bonus may not be paid until the next Plan
Year). Accordingly, if no Salary is deferred for a Plan Year and the total amount of the Bonus
elected to be deferred with respect to that Plan Year is in fact less than the applicable minimum
amount for that Plan Year, then no portion of Bonus shall be deferred. (d) Effect of Initial Election. An election to defer Salary during an Initial
Election Period shall be effective with respect to Salary earned during the first pay period
beginning after the end of the Initial Election Period. Notwithstanding anything to the contrary
in this Plan, for the first Plan Year only, an Eligible Employee may elect no later than the end of
the Initial Election Period to defer any Bonus which is subsequently awarded in the discretion of a
Company during the first Plan Year. 6




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(e) Duration of Salary Deferral Election. Any Salary deferral election made under
subsection (a) or subsection (g) of this Section 3.1 shall be irrevocable and shall apply only to
the Salary payable with respect to services performed during the Plan Year for which the election
is made; provided, that no amount of Salary shall be deferred for any month for which the
Participant is paid less than 100% of his or her Salary as a result of the Participants short-term
disability or Company-approved leave of absence. For each subsequent Plan Year, an Eligible
Employee may make a new election, subject to the limitations set forth in this Section 3. 1, to
defer a percentage of his or her Salary. Such election shall be on a form provided by the
Committee and shall be made on or before the December 15 preceding the Plan Year for which the
election is to apply. (f) Duration of Bonus Deferral Election. Any Bonus deferral election made under
paragraph (a) or paragraph (g) of this Section 3.1 shall be irrevocable and shall apply only to the
Bonus payable with respect to services performed during the Plan Year for which the election is
made. For each subsequent Plan Year, an Eligible Employee may make a new election, subject to the
limitations set forth in this Section 3. 1, to defer a percentage of his or her Bonus. Such
election shall be on a form provided by the Committee and shall be made on or before the December
15 preceding the Plan Year for which the election is to apply. (g) Elections Other Than Elections During the Initial Election Period. Subject to the
minimum deferral requirement of paragraph (c) above, any Eligible Employee who fails to elect to
defer Salary or Bonus during his or her Initial Election Period may subsequently elect to do so by
filing an election, on a form provided by the Committee, to defer Salary and/or Bonus as described
in subsection (b) above. An election to defer Salary and/or Bonus must be filed on or before
December 15 and will be effective for Salary earned during pay periods beginning after the
following January 1 and the Bonus paid with respect to services performed in the Plan Year
beginning on the following January 1. 3.2. Company Contribution Amounts. (a) For each Plan Year, the Company may, but is not required to, contribute on behalf of each
Participant who is an Eligible Employee as of the Contribution Date (as defined in subsection
4.2(a) hereof) an amount equal to a certain percentage of the Participants Salary for such Plan
Year. The determination of whether, and what percentage or amount, to so award for a Plan Year
shall be determined by the Company. Notwithstanding the foregoing, the following shall apply: (1) For each Plan Year, the Company may contribute on behalf of each Eligible Employee who is
a Participant an amount equal to a certain percentage of such Participants Salary payable for the
period in which he or she is a Participant in the Plan during such Plan Year, where such percentage
may be based upon such Participants Eligible Years of Service with the Company as of the first day
of such Plan Year in accordance with the following table: Eligible Years of Service as of first day of Plan Year
    
    Contribution Percentageless than 1
    
    
    2
    %1 or more but less than 2
    
    
    3
    %2 or more but less than 3
    
    
    4
    %3 or more
    
    
    5
    %
 (2) With respect to a Participant who incurs a Break-in-Service with the Company or its
subsidiaries or affiliates, in the event that he or she becomes a Participant in the Plan again,
such Participant shall be considered a New Participant for purposes of subsection 3.2(a) hereof. 7




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(b) A Company may, but is not required to, for any Plan Year award to any Eligible Employee or
Eligible Employees an additional percentage of his or her Salary or other amount. The determination
of whether, and what percentage or amount, to so award for a Plan Year shall be determined by the
Company and need not be uniform among Participants. (c) Any contributions made by the Company on behalf of a Participant pursuant to this Section
3.2 shall be considered Company Contribution Amounts. 3.3. Investment Elections. (a) For each Plan Year, the Participant shall designate the Investment Alternatives in which
amounts credited to the Participants Account with respect to such Plan Year will be deemed to be
invested for purposes of determining the amount of earnings to be credited to the Participants
Accounts. The Investment Alternatives from which the Participant shall make such designation shall
be selected by the Committee. The designation shall be made on a form provided to the Participant
by the Committee. The Committee may from time to time eliminate or add new Investment Alternatives
and shall communicate any eliminations or additions to Participants. In making the designation pursuant to this Section 3.3, the Participant may specify that all
or any multiple of the aggregate of amounts deferred and Company Contribution Amounts (in
whole-number percentages) be deemed to be invested in an Investment Alternative. Effective as of
the end of any calendar month, a Participant may change the designation made under this Section 3.3
by filing an election, on a form provided by the Committee, at least 5 days prior to the end of any
calendar month. Any change of designation shall specify that all or any multiple of the aggregate
amounts covered by the designation being changed (in whole-number percentages) be deemed to be
invested in another Investment Alternative. If a Participant fails to elect an Investment
Alternative under this Section 3.3, he or she shall be deemed to have elected an Investment
Alternative designated by the Committee on the Investment Election designation form provided to the
Participant. The Committee may adopt such further rules applicable to a Participants designation
or change of designation of Investment Alternatives. (b) The Committee may, but is not required to, direct the Trustee to invest amounts credited
to the Participants Accounts in accordance with the Investment Alternative designations of the
Participant. ARTICLE IV
ACCOUNTS 4.1. Deferral Account. The Committee shall establish and maintain a Deferral Account for each Participant under the
Plan. Each Participants Deferral Account shall be further divided into separate subaccounts (Fund
Subaccounts), each of which corresponds to an Investment Alternative elected by the Participant
pursuant to Section 3.3(a). A Participants Deferral Account shall be credited as follows: (a) As of the last day of each month (or as soon thereafter as is administratively feasible)
the Committee shall credit the Fund Subaccounts of the Participants Deferral Account with an
amount equal to Salary deferred by the Participant during each pay period ending in that month in
accordance with the Participants election under Section 3.3(a); that is, the portion of the
Participants deferred Salary that the Participant has elected to be deemed to be invested in a
certain type of fund shall be credited to the Fund Subaccount corresponding to that Investment
Alternative; 8




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(b) As of the last day of the month (or as soon thereafter as is administratively feasible)
coincident with or next following the date on which the Bonus or partial Bonus would have been
paid, the Committee shall credit the Fund Subaccounts of the Participants Deferral Account with an
amount equal to the portion of the Bonus deferred by the Participants election under Section
3.3(a); that is, the portion of the Participants deferred Bonus that the Participant has elected
to be deemed to be invested in a particular Investment Alternative shall be credited to the Fund
Subaccount corresponding to that Investment Alternative; and (c) As of the last day of each month (or such additional day or days as the Committee may
direct) each Fund Subaccount of a Participants Deferral Account shall be credited with earnings or
losses or appreciation or depreciation in an amount equal to that determined by multiplying the
balance credited to such Fund Subaccount as of the last day of the previous month by the net
investment return for the Investment Alternative selected by the Participant pursuant to Section
3.3(a). 4.2. Company Contribution Account. The Committee shall establish and maintain a Company Contribution Account for each Participant
under the Plan. Each Participants Company Contribution Account shall be further divided into
separate Fund Subaccounts, each of which corresponds to an Investment Alternative elected by the
Participant pursuant to Section 3.3(a). A Participants Company Contribution Account shall be
credited as follows: (a) As of the last day of each month (or soon thereafter as is administratively feasible) (the
Contribution Date), the Committee shall credit the Fund Subaccounts of the Participants Company
Contribution Account with an amount equal to the Company Contribution Amount, if any, applicable to
that Participant pursuant to Section 3.3(a); that is, the portion of the Company Contribution
Amount, if any, which the Participant elected to be deemed to be invested in a certain type of
Investment Alternative shall be credited to the corresponding Fund Subaccount; and (b) As of the last day of each month (or such additional day or days as the Committee may
direct), each Fund Subaccount of a Participants Company Contribution Account shall be credited
with earnings or losses or appreciation or depreciation in an amount equal to that determined by
multiplying the balance credited to such Fund Subaccount as of the last day of the previous month
by the net investment return for the corresponding Investment Alternative selected by the
Participant pursuant to Section 3.3(a). ARTICLE V
VESTING 5.1. Deferral Account. Subject to Section 6.6, a Participants Deferral Account shall be 100% vested at all times. 5.2. Company Contribution Account. Subject to Section 6.6, a Participants Company Contribution Account shall be 100% vested at
all times. 9




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ARTICLE VI
DISTRIBUTIONS 6.1. Distribution of Benefits. (a) Termination of Employment due to Retirement. In the case of a Participant whose
employment with the Company is terminated after attainment of age 55 or completion of 10 Years of
Service, the vested portion of his or her Accounts shall be paid to the Participant (and after his
or her death to his or her Beneficiary) in one of the following forms as elected by the Participant
on such forms as designated by the Committee during this applicable election period(s) as set forth
in Section 3.1 hereof: (1) a lump sum distribution payable on the Participants Payment Eligibility Date (or as soon
thereafter as is administratively feasible), or (2) substantially equal quarterly installments from five (5) to fifteen (15) years beginning
on the Participants Payment Eligibility Date (or as soon thereafter as is administratively
feasible). In the absence of the Participant making a distribution election, or in the absence of an
effective distribution election, the default form of payment shall be a lump sum distribution. Notwithstanding this subsection, if the value of the vested portion of the Participants
Accounts as of the last day of the month immediately preceding the Payment Eligibility Date is
$10,000 or less, then such vested portion shall automatically be distributed in the form of a lump
sum payment on the Participants Payment Eligibility Date (or as soon thereafter as is
administratively feasible). The Participants Accounts shall continue to be credited with earnings
pursuant to Section 4.1 of the Plan until all vested amounts credited to his or her Accounts under
the Plan have been distributed. For all purposes under this Plan, a Participant shall not be considered terminated from
employment if the Participant remains employed by another Company or by a member of the Companys
controlled group of corporations (within the meaning of Section 414(b) of the Code but by
substituting more than 50 percent for at least 80 percent each place it appears in such
section, Section 1563(a) of the Code and the regulations under either such section) or by a member
of a group of trades or businesses which are under common control (within the meaning of Section
414(c) of the Code but by substituting more than 50 percent for at least 80 percent each place
it appears in such section, Section 1563(a) of the Code and the regulations under either such
section) which includes the Company which last employed the Participant. However, if the
Participant is employed by an entity which is a member of a group described in the preceding
sentence and such entity ceases to be a member of such group as a result of a sale or other
reorganization, such sale or other reorganization shall be treated as a termination of employment
unless immediately following such event and without any break in employment the Participant is
employed by a Company or another entity which is a member of a group described in the preceding
sentence which includes a Company and such entity assumes liability for the payment of benefits of
the Participant. (b) Termination of Employment for Reasons other than Retirement, Disability or Death.
In the case of a Participant who terminates employment with the Company prior to either the
attainment of age 55 or completion of 10 Years of Service, and for reasons other than Disability or
death, the vested portion of the Participants Accounts shall be paid to the Participant in the
form of a cash lump sum 10




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distribution on the Participants Payment Eligibility Date (or as soon thereafter as is
administratively feasible). (c) Disability. In the case of a Participant whose employment with the Company is
terminated on account of the Participants Disability (the Disability Termination), the vested
portion of his or her Accounts shall be paid to the Participant (and after his or her death to his
or her Beneficiary), in one of the forms provided in Section 6.1(a) hereof, as elected by the
Participant on such forms as designated by the Committee during this applicable election period(s)
as set forth in Section 3.1 hereof, as soon as administratively practicable after the date of the
Participants Disability Termination. In the absence of the Participant making a distribution election, or in the absence of an
effective distribution election, the default form of payment shall be a lump sum distribution. Notwithstanding this subsection, if the value of the vested portion of the Participants
Accounts as of the last day of the month immediately preceding the date of the Participants
Disability Termination is $10,000 or less, then such vested portion shall automatically be
distributed in the form of a lump sum payment on the date of the Participants Disability
Termination (or as soon thereafter as is administratively feasible). The Participants Accounts
shall continue to be credited with earnings pursuant to Section 4.1 of the Plan until all vested
amounts credited to his or her Accounts under the Plan have been distributed. (d) Death. (1) In the case of a Participant who dies while employed by the Company, amounts credited to
the Participants Accounts shall be paid to the Participants Beneficiary in a lump sum as soon as
administratively feasible following the death of the Participant. In addition, in the event that a
life insurance policy (the Policy) was purchased by the Company or the Trust insuring the life of
the Participant, the Participants designated beneficiary shall be paid, in a lump sum, a death
benefit in an amount equal to $250,000 (the Death Benefit) as soon as is administratively
feasible after the death of the Participant. The Participant shall have the right to designate and
change such beneficiary (which need not be his or her Beneficiary) at any time on a form provided
by and filed with the insurance carrier. If no such form is on file with the insurance carrier,
the Death Benefit shall be paid to the Beneficiary. Notwithstanding the foregoing, the Death
Benefit payable under this paragraph (1) shall only be paid if the insurance carrier agrees that
the Participant is insurable and shall be subject to all terms and conditions set forth in the
applicable Policy. Notwithstanding anything to the contrary herein or in any other document, the
Company shall not have any obligation to pay the Participant or his or her beneficiary the Death
Benefit described in this paragraph (1); the Death Benefit due pursuant to this paragraph (1) shall
be payable solely from the proceeds of the Policy, if any. Furthermore, the Company is not
obligated to maintain the Policy and no Death Benefit shall be payable hereunder if the Company has
discontinued the Policy for the Participant. In addition, no Policy shall be allocated to any
Account hereunder. (2) If a Participant dies after terminating employment with the Company but prior to receiving
the entire amount of his or her Accounts hereunder, the balance shall be paid to the Participants
Beneficiary in the form of a lump sum as soon as is administratively practicable following the
death of the Participant. (e) Change in Payment Election. A Participant whose employment with a Company has
not been terminated may change his or her form of payment applicable to the portion of the amounts
credited to his or her Accounts attributable to one or more Plan Years to one of the payment forms
permitted by the Plan; provided, however, that the election shall not become effective until the
first day of the Plan 11




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Year immediately following the twelve month period commencing on the date in which the change
in election is made pursuant to this subsection 6.1(d). Notwithstanding the foregoing, a
Participants payment election with respect to a given Plan Year may not be changed after payment
of that portion of the Account has been made or has begun. 6.2. Unforeseeable Emergency Withdrawals (Hardship Withdrawals) (a) Upon the written request of a Participant and in the event the Committee determines that
an unforeseeable emergency has occurred with respect to the Participant, the Participant may
elect to receive a partial or full payment from the Plan in accordance with subsection 6.2(b)
hereof. For these purposes, an unforeseeable emergency means an unanticipated emergency, such as
a sudden and unexpected illness or accident of the Participant or his or her dependent (as defined
in Section 152(a) of the Code), or loss of the Participants property due to casualty, that is
caused by an event beyond the control of the Participant and would result in a severe financial
hardship if the distribution were not permitted. The need to pay a Participants childs tuition
to college and the desire to purchase a home shall not be considered unforeseeable emergencies. (b) Payment under this Section 6.2 may be made only to the extent reasonably needed to satisfy
the emergency need, and may not be made to the extent such hardship is or may be relieved: (1)
through reimbursement or compensation by insurance or otherwise; (2) by liquidation of the
Participants assets to the extent that the liquidation of such assets would not itself cause
severe financial hardship or (3) by cessation of deferrals of Salary and/or Bonus under the Plan. (c) Distribution pursuant to this Section 6.2 of less than the Participants entire Account
balances shall be made pro rata from the Fund Subaccounts of his or her Accounts according to the
balances in such Fund Subaccounts. Subject to the foregoing, payment of any amount with respect to
which a Participant has filed a request under this Section 6.2 shall be made as soon as is
administratively feasible after approval of such request by the Committee. 6.3. Scheduled Early Distributions (a) On the initial election form (the Form), the Participant may make an election to receive
a payment, either as a lump sum or in the form of quarterly installments payable over a period of
two (2) to five (5) years (the Early Distribution Options), of all or a portion of his or her
Accounts paid on a future date (the In-Service Distribution Date) while still employed, provided
the In-Service Distribution Date selected is at least 2 years from the date that the election form
applicable to such Plan Year is received by the Committee. This election shall apply to the Salary
and/or Bonus deferred for the Plan Year specified by the Participant on his or her Form and the
earnings credited thereto until the In-Service Distribution Date. A Participant may elect a
different In-Service Distribution Date for the Salary and/or Bonus deferred for each Plan Year. (b) The In-Service Distribution Date elected by the Participant pursuant to this Section 6.3
may be deferred by at least five (5) years, by filing with the Committee written notice at least
one year prior to the In-Service Distribution Date elected; provided, however, an In-Service
Distribution Date may not be deferred a second time without the approval by the Committee. (c) A Participant whose employment with a Company has not been terminated may change his or
her form of payment, applicable to that portion of his or her Accounts that has been selected by
the Participant to be distributed at a certain In-Service Distribution Date, to one of the payment
forms set forth in Section 6.3(a) hereof; provided, however, that the election must be made at
least twelve (12) months prior to the In-Service Distribution Date to which it relates.
Notwithstanding the foregoing, a 12




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Participants payment election with respect to a given Plan Year may not be changed after
payment of that portion of the Account has been made or has begun. (d) A distribution pursuant to this Section 6.3 shall be made as soon as administratively
practicable after the In-Service Distribution Date, and any distribution of less than the
Participants entire Account balances shall be made pro rata from the Fund Subaccounts according to
the balances in such Fund Subaccounts. Notwithstanding the foregoing, if a Participant terminates
employment with a Company for any reason prior to the date on which a payment is scheduled to be
made pursuant to this Section 6.3, the Participants entire Account balances will be paid pursuant
to the provisions of Section 6.1. 6.4. Change of Control. In the event of a Change of Control, the full amount of the Participants Accounts shall be
distributed to the Participant as soon as administratively practicable following the Change of
Control. 6.5. Inability to Locate Participant. In the event that the Committee is unable to locate a Participant or Beneficiary within two
years following the Participants Payment Eligibility Date, the amount allocated to the
Participants Accounts shall be forfeited. If, after such forfeiture, the Participant or
Beneficiary later claims such benefit, such benefit shall be reinstated without interest or
earnings. 6.6. Trust. (a) Claires Stores, Inc. shall establish a Trust which may be used to pay for benefits
arising under this Plan. (b) The Committee shall direct the Trustee to pay for benefits of the Participant or his or
her Beneficiary at the time and in the amount described in this Article VI. In the event the
amounts held under the Trust which are attributable to contributions made by or on behalf of the
Company are not sufficient to provide the full amount payable to the Participant or Beneficiary,
such Company shall pay for the remainder of such amount at the time set forth in Article VI. ARTICLE VII
ADMINISTRATION 7.1. Committee. A committee shall be appointed by, and serve at the pleasure of, the Board. The number of
members comprising the Committee shall be determined by the Board which may from time to time vary
the number of members. A member of the Committee may resign by delivering a written notice of
resignation to the Board. The Board may remove any member by delivering a certified copy of its
resolution of removal to such member. Vacancies in the membership of the Committee shall be filled
promptly by the Board. 7.2. Committee Action. The Committee shall act at meetings by affirmative vote of a majority of the members of the
Committee. Any action permitted to be taken at a meeting may be taken without a meeting if, prior
to such action, a written consent to the action is signed by all members of the Committee and such
written 13




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consent is filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself or herself as a
Participant. The chairman or chairwoman any other member or members of the Committee designated by
the chairman or chairwoman may execute any certificate or other written direction on behalf of the
Committee. 7.3. Powers and Duties of the Committee. The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan
in accordance with its terms, shall be charged with the general administration of the Plan, and
shall have all powers necessary to accomplish its purposes, including, but not by way of
limitation, the following: (a) To select Investment Alternatives in accordance with Section 3.3(b) hereof; (b) To construe and interpret the terms and provisions of this Plan, and to make all factual
determinations relevant to the Plan; (c) To compute and certify to the amount and kind of benefits payable to Participants and
their Beneficiaries; (d) To maintain all records that may be necessary for the administration of the Plan; (e) To provide for the disclosure of all information and the filing or provision of all
reports and statements to Participants, Beneficiaries or governmental agencies as shall be required
by law; (f) To make and publish such rules and procedures for the administration of the Plan as are
not inconsistent with the terms hereof; (g) To appoint a plan administrator or any other agent, and to delegate to such administrator
or agent such powers and duties in connection with the administration of the Plan as the Committee
may from time to time prescribe; (h) To direct and instruct the Trustee to the extent the Company is authorized or required to
do so under any document; and (i) To take all actions set forth in this Plan document. In no event shall the Committee take any action under this Plan that shall constitute an
acceleration of the time or schedule of any payment hereunder, except to the extent permitted under
Section 409A of the Code and the regulations thereunder. 7.4. Construction and Interpretation. The Committee shall have full discretion to construe and interpret the terms and provisions of
this Plan, which interpretation or construction shall be final and binding on all parties,
including but not limited to the Company and any Participant or Beneficiary. The Committee shall
administer such terms and provisions in a uniform and nondiscriminatory manner and in full
accordance with any and all laws applicable to the Plan. 14




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7.5. Information. To enable the Committee to perform its functions, the Company shall supply full and timely
information to the Committee on all matters relating to the Salary and/or Bonus of all
Participants, their death or other cause of termination of employment, and such other pertinent
facts as the Committee may require. 7.6. Compensation, Expenses and Indemnity. (a) The members of the Committee shall serve without compensation for their services
hereunder. (b) The Committee is authorized at the expense of the Company to employ such legal
counsel and other agents as it may deem advisable to assist in the performance of its duties
hereunder. Expenses and fees in connection with the administration of the Plan shall be paid by the
Company. (c) To the extent permitted by applicable law, the Company shall indemnify and save harmless
the Committee and each member thereof, the Board of Directors and any delegate of the Committee who
is an employee of the Company against any and all expenses, liabilities and claims, including legal
fees to defend against such liabilities and claims arising out of their discharge in good faith of
responsibilities under or incident to the Plan, other than expenses and liabilities arising out of
willful misconduct. This indemnity shall not preclude such further indemnities as may be available
under insurance purchased by the Company or provided by the Company under any bylaw, agreement or
otherwise, as such indemnities are permitted under state law. 7.7. Periodic Statements. Under procedures established by the Committee, a Participant shall receive a statement with
respect to such Participants Accounts as of each March 31, June 30, September 30 and December 31,
or as of such additional day or days as the Committee in its discretion shall determine. 7.8. Disputes. (a) A person who believes that he or she is being denied a benefit to which he or she is
entitled under the Plan (hereinafter referred to as Claimant) may file a written request for such
benefit with the Committee, setting forth his or her claim. (b) Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be
forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The
Committee may, however, extend the reply period for an additional ninety (90) days for special
circumstances. If the claim is denied in whole or in part, the Committee shall inform the Claimant in
writing, using language calculated to be understood by the Claimant, setting forth: (1) the
specific reason or reasons for such denial; (2) the specific reference to pertinent provisions of
the Plan on which such denial is based; (3) a description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation why such material or such
information is necessary; (4) appropriate information as to the steps to be taken if the Claimant
wishes to submit the claim for review; and (5) the time limits for requesting a review under
subsection (c). 15




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(c) Within sixty (60) days after the receipt by the Claimant of the written opinion described
above, the Claimant may make a request in writing for review of the determination of the Committee.
Such request must be addressed to the Committee. The Claimant or his or her duly authorized
representative may, but need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee. If the Claimant does not request a review within such
sixty (60) day period, he or she shall be barred and stopped from challenging the Committees
determination. (d) Within sixty (60) days after the Committees receipt of a request for review, the
Committee shall review the request after considering all materials presented by the Claimant. The
Committee will inform the Claimant in writing, in a manner calculated to be understood by the
Claimant, of its decision setting forth the specific reasons for the decision and containing
specific references to the pertinent provisions of the Plan on which the decision is based. If
special circumstances require that the sixty (60) day time period be extended, the Committee will
so notify the Claimant and will render the decision as soon as possible, but no later than one
hundred twenty (120) days after receipt of the request for review. ARTICLE VIII
MISCELLANEOUS 8.1. Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, claims, or interest in any specific property or assets of the Company or the
Trust. Any and all of the Companys assets and the Trust assets which are attributable to amounts
paid into the Trust by the Company shall be, and remain, the general unpledged, unrestricted assets
of the Company, which shall be subject to the claims of the Companys general creditors. The
Companys obligation under the Plan shall be merely that of an unfunded and unsecured promise of
the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall
be no greater than those of unsecured general creditors. It is the intention of the Company that
the Plan (and the Trust described in Section 6.6) be unfunded for purposes of the Code and for
purposes of Title I of ERISA. 8.2. No Guarantee of Benefits. Nothing contained in this Plan shall constitute a guaranty by the Company or any other entity
that the assets of the Company will be sufficient to pay any benefit hereunder. 8.3. Restriction Against Assignment. The Committee shall direct payment of all amounts payable hereunder only to the person or
persons designated by the Plan and not to any other person. No part of a Participants Accounts
shall be liable for the debts, contracts, or engagements of any Participant, his or her
Beneficiary, or successors in interest, nor shall a Participants Accounts be subject to execution
by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any
Participant, Beneficiary or successor in interest have any right to alienate, anticipate, sell,
transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner
whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or
purports to anticipate, alienate, sell, transfer, commute, assign, pledge, encumber or charge any
distribution or payment from the Plan, voluntarily or involuntarily, the Committee, in its
discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of
such Participant, Beneficiary or successor in interest in such manner as the Committee shall
direct. 16




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8.4. Withholding. Each individual There shall be deducted from each payment made under the Plan or any other
compensation payable to the Participant or Beneficiary all taxes which are required to be withheld
by a Company in respect to such payment. The Company shall have the right to reduce any payment (or
compensation), and the Committee shall have the right to direct reduction of any payment, by the
amount of cash sufficient to provide the amount of said taxes. 8.5. Notice of Address. Each individual entitled to a benefit under the Plan must file with the Company, in writing,
his or her post office address and each change of post office address which occurs between the date
of his or her termination of employment with the Company and the date he or she ceases to be a
Participant. Any communication, statement or notice addressed to such individual at his or her
latest reported office address will be binding upon him or her for all purposes of the Plan and
neither the Committee nor the Company shall be obliged to search for or ascertain his or her
whereabouts. 8.6. Notices. Any notice required or permitted to be given hereunder to a Participant or Beneficiary will be
properly given if delivered or mailed, postage prepaid, to the Participant or Beneficiary at his or
her last post office address as shown on the Companys records. Any notice to the Committee or the
Company shall be properly given or filed upon receipt by the Committee or the Company at such
address as may be specified from time to time by the Committee. 8.7. Employer-Employee Relationship. The establishment of this Plan shall not be construed as conferring any legal or other rights
upon any Employee or any individual for a continuation of employment, nor shall it interfere with
the rights of the Company to discharge any Employee or otherwise act with relation to him or her. 8.8. Amendment, Modification, Suspension or Termination. The Committee may amend, modify, suspend or terminate the Plan in whole or in part, except
that no amendment, modification, suspension or termination shall have any retroactive effect to
reduce any amounts allocated to a Participants Accounts. In the event that this Plan is
terminated, the amounts allocated to a Participants Accounts (regardless of whether such amounts
had become vested) shall be distributed to the Participant or, in the event of his or her death,
his or her Beneficiary in a lump sum within thirty (30) days following the date of termination. 8.9. Governing Law. This Plan shall be construed, governed and administered in accordance with applicable
provisions of ERISA and, to the extent not preempted by applicable federal law, the laws of the
State of Florida. 8.10. Receipt or Release. Any payment to a Participant or the Participants Beneficiary in accordance with the
provisions of the Plan shall to the extent thereof, be in full satisfaction of all claims arising
under, or with respect to, the Plan against the Committee and the Company. The Committee may
require such Participant or Beneficiary, as a condition precedent to such payment, to execute a
receipt and release to such effect. 17




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IN WITNESS WHEREOF, Claires Stores, Inc. has caused the Plan to be executed on this 4th day
of February, 2005. CLAIRES STORES, INC.By:
    /s/ Joseph A. DelfalcoName:
    Joseph A. DeFalco, Jr.Title:
    Vice President - Human Resources 18