Exhibit 10.4


 


PIER
1 IMPORTS, INC.


 


SUPPLEMENTAL
RETIREMENT PLAN


 


RESTATED
AS OF JANUARY 1, 2009


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE I —PURPOSE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II —DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Actuarial Equivalent

  	
   

  	
  1

  
	
  2.2

  	
   

  	
  Beneficiary

  	
   

  	
  1

  
	
  2.3

  	
   

  	
  Board

  	
   

  	
  1

  
	
  2.4

  	
   

  	
  Cause

  	
   

  	
  1

  
	
  2.5

  	
   

  	
  Change of Control of the Employer

  	
   

  	
  2

  
	
  2.6

  	
   

  	
  Code

  	
   

  	
  2

  
	
  2.7

  	
   

  	
  Committee

  	
   

  	
  2

  
	
  2.8

  	
   

  	
  Compensation

  	
   

  	
  2

  
	
  2.9

  	
   

  	
  Early Retirement Date

  	
   

  	
  2

  
	
  2.10

  	
   

  	
  Employer

  	
   

  	
  2

  
	
  2.11

  	
   

  	
  Good Reason

  	
   

  	
  3

  
	
  2.12

  	
   

  	
  Highest Average Compensation

  	
   

  	
  3

  
	
  2.13

  	
   

  	
  Normal Retirement Date

  	
   

  	
  3

  
	
  2.14

  	
   

  	
  Participant

  	
   

  	
  3

  
	
  2.15

  	
   

  	
  Pier 1

  	
   

  	
  3

  
	
  2.16

  	
   

  	
  Regulations

  	
   

  	
  3

  
	
  2.17

  	
   

  	
  Retirement

  	
   

  	
  3

  
	
  2.18

  	
   

  	
  Separation from Service

  	
   

  	
  4

  
	
  2.19

  	
   

  	
  Supplemental Retirement Benefit

  	
   

  	
  4

  
	
  2.20

  	
   

  	
  Target Amount

  	
   

  	
  4

  
	
  2.21

  	
   

  	
  Termination

  	
   

  	
  4

  
	
  2.22

  	
   

  	
  Total and Permanent Disability

  	
   

  	
  4

  
	
  2.23

  	
   

  	
  Years of Credited Service

  	
   

  	
  5

  
	
  2.24

  	
   

  	
  Years of Plan Participation

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III —PARTICIPATION AND VESTING

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Participation

  	
   

  	
  5

  
	
  3.2

  	
   

  	
  Supplemental Retirement Benefit Vesting

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV —SUPPLEMENTAL RETIREMENT
  BENEFITS

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Benefit

  	
   

  	
  6

  
	
  4.2

  	
   

  	
  Normal Retirement Benefit

  	
   

  	
  6

  
	
  4.3

  	
   

  	
  Early Retirement Benefit

  	
   

  	
  6

  
	
  4.4

  	
   

  	
  Change of Control Benefit

  	
   

  	
  6

  
	
  4.5

  	
   

  	
  Disability Retirement Benefit

  	
   

  	
  6

  
	
  4.6

  	
   

  	
  Termination Benefit

  	
   

  	
  7

  
	
  4.7

  	
   

  	
  Form of Benefit Payment

  	
   

  	
  7

  
	
  4.8

  	
   

  	
  Commencement of Payments

  	
   

  	
  7

  
	
  4.9

  	
   

  	
  Withholding; Payroll Taxes

  	
   

  	
  8

  
	
  4.10

  	
   

  	
  Payment to Guardian

  	
   

  	
  8

  
	
  4.11

  	
   

  	
  Major Medical and Hospitalization Insurance Coverage

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V — SURVIVOR BENEFITS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Death Prior to Commencement of Benefits

  	
   

  	
  9

  
	
  5.2

  	
   

  	
  Death After Commencement of Benefits

  	
   

  	
  10

  
						



 


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  5.3

  	
   

  	
  Suicide; Misrepresentation

  	
   

  	
  10

  
	
  5.4

  	
   

  	
  Effect of Payment

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI —BENEFICIARY DESIGNATION

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Death of Participant

  	
   

  	
  10

  
	
  6.2

  	
   

  	
  Amendments

  	
   

  	
  10

  
	
  6.3

  	
   

  	
  No Beneficiary Designation

  	
   

  	
  10

  
	
  6.4

  	
   

  	
  Effect of Payment

  	
   

  	
  11

  
	
  6.5

  	
   

  	
  Death of Beneficiary

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII —ADMINISTRATION

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Committee; Duties

  	
   

  	
  11

  
	
  7.2

  	
   

  	
  Agents

  	
   

  	
  11

  
	
  7.3

  	
   

  	
  Binding Effect of Decisions

  	
   

  	
  11

  
	
  7.4

  	
   

  	
  Indemnity of Committee

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII —CLAIMS PROCEDURE

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Claim

  	
   

  	
  11

  
	
  8.2

  	
   

  	
  Denial of Claim

  	
   

  	
  12

  
	
  8.3

  	
   

  	
  Review of Claim

  	
   

  	
  12

  
	
  8.4

  	
   

  	
  Final Decision

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX —TERMINATION, SUSPENSION OR
  AMENDMENT

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Amendment or Termination

  	
   

  	
  12

  
	
  9.2

  	
   

  	
  Successor Employer

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X —MISCELLANEOUS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Unsecured General Creditor

  	
   

  	
  13

  
	
  10.2

  	
   

  	
  Trust Fund

  	
   

  	
  13

  
	
  10.3

  	
   

  	
  Nonassignability

  	
   

  	
  13

  
	
  10.4

  	
   

  	
  Not a Contract of Employment

  	
   

  	
  13

  
	
  10.5

  	
   

  	
  Participant’s Cooperation

  	
   

  	
  13

  
	
  10.6

  	
   

  	
  Domestic Relations Order

  	
   

  	
  14

  
	
  10.7

  	
   

  	
  Captions

  	
   

  	
  14

  
	
  10.8

  	
   

  	
  Governing Law

  	
   

  	
  14

  
	
  10.9

  	
   

  	
  Validity

  	
   

  	
  14

  
	
  10.10

  	
   

  	
  Successors

  	
   

  	
  14

  
	
  10.11

  	
   

  	
  Notice

  	
   

  	
  14

  



 


ii

















 


PIER 1
IMPORTS, INC.


 


SUPPLEMENTAL
RETIREMENT PLAN


 


ARTICLE
I—PURPOSE


 


The purpose of
this Supplemental Retirement Plan (hereinafter referred to as the “Plan”) is to
provide supplemental retirement benefits for a select group of management or
highly compensated employees of Pier 1 Imports, Inc. It is intended that
the Plan will aid in retaining and attracting employees of exceptional ability
by providing such individuals with these benefits. This Plan was originally effective as of September 28,
1995, was restated effective as of December 5,
2002, was restated effective as of January 1, 2005, was amended effective
as of January 1, 2006, and now is restated effective January 1,
2009.  The purpose of this January 1,
2009 restatement is to cause the Plan to continue to comply with the
requirements of Sections 409A(a)(2), (3) and (4) of the Code and the
Regulations promulgated thereunder.  The
Plan is to be construed and interpreted in accordance with such purpose.  The accrual of benefits for Participants who
have terminated employment with the Employer will be governed by the provisions
of the Plan as in effect on the date of their termination.


 


ARTICLE
II—DEFINITIONS


 


For the
purposes of this Plan, the following terms shall have the meanings indicated
unless the context clearly indicates otherwise:


 


2.1          Actuarial Equivalent


 


“Actuarial
Equivalent” means equivalence in value between two (2) or more forms
and/or times of payment based on the applicable mortality table prescribed by
the Secretary of the United States Department of the Treasury (“Treasury”) or
his delegate in accordance with Internal Revenue Code Section 417(e)(3)(A)(ii),
and an interest rate equal to the twenty-four (24) month rolling average of the
Pension Benefit Guaranty Corporation interest rate for immediate annuities, as
published in Appendix B to Part 2619 of Title 29 of the Code of Federal
Regulations, or any successor or replacement rate (the “PBGC rate”), using the
current rate as of the beginning of the month in which the calculation is made
and the twenty-three (23) previous months.


 


2.2          Beneficiary


 


“Beneficiary”
means the person, persons or entity entitled under Article V to receive
Plan benefits after a Participant’s death.


 


2.3          Board


 


“Board” means
the Board of Directors of Pier 1 Imports, Inc.


 


2.4          Cause


 


“Cause” means
that the Participant:


 


(a)           Misappropriated,
has stolen or embezzled funds of the Employer; or


 


(b)           Committed
an act of deceit, fraud, or willful misconduct or otherwise acted in bad faith,
adverse to the best interests of the Employer.


 


1

















 


2.5          Change of Control of
the Employer


 


“Change of
Control of the Employer” shall be deemed to have occurred if:


 


(a)           Any “person” as defined in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934 (the “Act”)
becomes the “beneficial owner” (as defined in Rules 13(d)3 and 13(d)5 under the Act) of securities of Pier
1, representing thirty-five percent (35%) or more of the voting power of the
outstanding securities of Pier 1 having the right under ordinary circumstances
to vote at an election of the Board of Directors of Pier 1; or


 


(b)           There shall occur a change in the
composition of a majority of the Board of Directors within a two (2) year
period which change shall not have been affirmatively approved by a majority of
the Board of Directors as constituted immediately prior to the commencement of
such period; or


 


(c)           At any meeting of the stockholders of
Employer called for the purpose of electing directors, a majority of persons
nominated by the Board of Directors for election as directors shall fail to be
elected; and the transaction or
event described in (a), (b) or (c) above, whichever may have
occurred, also constitutes a “change in the ownership or effective control” of
the Employer within the meaning of Section 409A(a)(2)(v) of the Code
and the Regulations.


 


2.6          Code


 


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


 


2.7          Committee


 


“Committee”
means the Compensation Committee of Pier 1 or any other Committee chosen by the
Board.


 


2.8          Compensation


 


“Compensation”
for a calendar year means the sum of (i) the rate at which salary
is being paid to a Participant as of the last day of that calendar year, (ii) any
bonuses actually paid to a Participant during that calendar year excluding bonuses that were first payable
during and deferred from a previous calendar year and (iii) any bonuses
that were payable to a Participant during that calendar year which were
deferred for payment to a subsequent year.


 


2.9          Early Retirement Date


 


“Early
Retirement Date” means the first day of the month coincidental with or next
following the date on which a Participant has a Separation from Service, if the
date of such Separation from Service occurs on or after such Participant’s
attainment of age fifty-five (55) and completion of ten (10) Years of Plan
Participation.


 


2.10        Employer


 


“Employer”
means any of Pier 1, its subsidiaries, including
a trust directly or indirectly owned by Pier 1, and each of their
respective successors.


 


2

















 


2.11        Good Reason


 


“Good Reason”
means, without the written consent of the Participant:


 


(a)           A
reduction in the Participant’s base salary or a reduction in the Participant’s
benefits received from the Employer (other than in connection with an
across-the-board reduction in salaries and/or benefits for similarly situated
employees of the Employer or pursuant to the Employer’s standard retirement
policy), in each case as in effect immediately prior to a Change of Control; or


 


(b)           The relocation of the Participant’s
full-time office to a location greater than fifty (50) miles from the Employer’s
current corporate office; or


 


(c)           A reduction in the Participant’s
corporate title as in effect immediately prior to a Change of Control; or


 


(d)           The failure by the Employer to obtain
the assumption of this Plan by any successor as contemplated in this Plan.


 


2.12        Highest Average Compensation


 


“Highest
Average Compensation” means the sum of the Participant’s Compensation for his highest paid three (3) full
calendar years of employment with Employer prior to termination of employment
(whether or not such years are consecutive) divided by three (3); provided,
however, that if the Participant has been employed for less than three (3) full
calendar years, the “Highest Average Compensation” shall be determined by using
the sum of the Participant’s Compensation for his number of completed months of employment divided by the
number of his actual completed
months of employment multiplied by twelve (12).


 


2.13        Normal Retirement Date


 


“Normal
Retirement Date” means the first day of the month coincidental with or next
following the date on which a Participant has a Separation from Service, if the
date of such Separation from Service occurs on or after such Participant’s
attainment of age sixty-five (65).


 


2.14        Participant


 


“Participant”
means any individual who is participating or has participated in this Plan
pursuant to Article III.


 


2.15        Pier  1


 


“Pier 1” means
Pier 1 Imports, Inc., a Delaware corporation and its successors.


 


2.16        Regulations


 


“Regulations”
means the final regulations issued by the Treasury on April 10, 2007
regarding the application of Section 409A of the Code.


 


2.17        Retirement


 


Retirement”
means the Participant’s Normal Retirement Date or Early Retirement Date other
than by reason of death or Total and Permanent Disability. Retirement shall
also mean the date as of which a Participant has a Separation from Service
within twenty-four (24) months (or, if
less, any time of 


 


3

















 


termination restriction imposed
for purposes of Section 409A(a)(2)(A)(v) of the Code) of a Change of
Control of the Employer unless such separation is:


 


	
  (a)

  	
  By the Employer for Cause; or

  
	
   

  	
   

  
	
  (b)

  	
  Because of Total and Permanent
  Disability; or

  
	
   

  	
   

  
	
  (c)

  	
  Because of the Participant’s death; or

  
	
   

  	
   

  
	
  (d)

  	
  By the Participant other than:

  
	
   

  	
   

  
	
   

  	
  For Good Reason; or

  
	
   

  	
   

  
	
   

  	
  Upon the
  Participant’s voluntary separation from employment after his/her Normal
  Retirement Date or Early Retirement
  Date.

  



 


2.18        Separation
from Service


 


“Separation
from Service” of a Participant means a termination of the Participant’s
employment with the Employer provided that it constitutes a “separation from
service” under Section 1.409A-1(h) of the Regulations.  In the event that a Participant is not deemed
to have incurred a termination of employment with the Employer by virtue of a
military leave, sick leave or other bona fide leave of absence under Section 1.409A-1(h) of
the Regulations, the Participant will be deemed to have experienced a
separation from service at the time and to the extent required under Section 1.409A-1(h) of
the Regulations.


 


2.19        Supplemental
Retirement Benefit


 


“Supplemental
Retirement Benefit” means the benefit determined under Article IV of this
Plan.


 


2.20        Target Amount


 


“Target Amount”
means sixty percent (60%) of Highest Average Compensation multiplied by a
fraction, the numerator of which is the Participant’s actual Years of Credited
Service, not to exceed twenty (20), and the denominator of which is twenty
(20).


 


2.21        Termination


 


“Termination”
means a Participant’s Separation from Service for any reason other than
Retirement, death or Total and Permanent Disability.


 


2.22        Total
and Permanent Disability


 


“Total
and Permanent Disability” means a Participant
(i) is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, or (ii) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an accident
and health plan covering employees of the Employer.  The Committee’s decision as to total and permanent disability will be
based upon medical reports and/or other evidence satisfactory to the Committee.


 


4

















 


2.23        Years of Credited
Service


 


“Years
of Credited Service” means the years of credited vesting service with the
Employer, determined in accordance with the provisions of the Pier 1 Associates’
401 (k) Plan, or any successor tax-qualified retirement plan.


 


2.24        Years
of Plan Participation


 


“Years
of Plan Participation” means the total number of full years in which a
Participant has participated in the Plan.


 


ARTICLE III—PARTICIPATION AND
VESTING


 


3.1                              Participation


 


Participation
in this Plan shall be limited to those employees of the Employer nominated by
the Chief Executive Officer of Pier 1 and approved by the Committee and by the
Board, and who elect to participate in this Plan by executing a Participation
Agreement in the form designated by the Committee.  Plan Participation Agreements may vary in
terms and provisions.  To the extent that
a Participant’s Plan Participation Agreement varies the terms of the Plan as
applied to that Participant, the terms of the Participation Agreement shall
control over the Plan.


 


3.2                              Supplemental Retirement Benefit Vesting


 


(a)           Vesting
Percentage.  Each Participant shall
become vested in a Supplemental Retirement Benefit based upon Years of Plan
Participation under the following schedule:


 


	
  Years of Plan

  Participation

  	
   

  	
  Vesting

  Percentage

  	
   

  
	
  Less than 1

  	
   

  	
  0

  	
  %

  
	
  1 but less
  than 2

  	
   

  	
  10

  	
   

  
	
  2 but less
  than 3

  	
   

  	
  20

  	
   

  
	
  3 but less
  than 4

  	
   

  	
  30

  	
   

  
	
  4 but less
  than 5

  	
   

  	
  40

  	
   

  
	
  5 but less
  than 6

  	
   

  	
  50

  	
   

  
	
  6 but less
  than 7

  	
   

  	
  60

  	
   

  
	
  7 but less
  than 8

  	
   

  	
  70

  	
   

  
	
  8 but less
  than 9

  	
   

  	
  80

  	
   

  
	
  9 but less
  than 10

  	
   

  	
  90

  	
   

  
	
  l0 or more

  	
   

  	
  100

  	
   

  



 


(b)           Conditions
for Immediate Vesting.  Regardless of a
Participant’s actual Years of Plan Participation, a Participant shall be one
hundred percent (100%) vested in a Supplemental Retirement Benefit upon
Retirement, Separation from Service due to Total and Permanent Disability, or
death.


 


5

















 


ARTICLE IV—SUPPLEMENTAL RETIREMENT BENEFITS


 


4.1                              Benefit


 


Upon
incurring a Separation from Service, a Participant shall receive a Supplemental
Retirement Benefit from this Plan which, along with the Participant’s benefits
from primary Social Security, shall equal approximately sixty percent (60%) of
the Participant’s Highest Average Compensation. The computation of said
Supplemental Retirement Benefit shall be made in accordance with the provisions
of Articles IV and V, as applicable, but in no event shall the amount of the
Supplemental Retirement Benefit paid annually to any Participant exceed five
hundred thousand dollars ($500,000.00). Notwithstanding the above, a
Participant who is terminated for Cause shall forfeit any right to receive
benefits under the Plan.


 


4.2                              Normal Retirement Benefit


 


Upon
a Normal Retirement Date, Employer shall pay to the Participant a monthly
Supplemental Retirement Benefit from this Plan equal to one-twelfth (1/12th) of
the following annual amounts:


 


(a)           The
Target Amount; less


 


(b)           The
Participant’s primary Social Security benefit payable at Retirement.


 


4.3                              Early Retirement Benefit


 


Upon
an Early Retirement Date but before his
Normal Retirement Date, Employer shall pay to the Participant the
monthly Supplemental Retirement Benefit calculated under Section 4.2 above
except:


 


(a)           The
Target Amount shall be reduced by five-twelfths percent (5/12%) for each full calendar  month by which the Participant’s Early Retirement Date
precedes the Participant’s attainment of age sixty-five (65); and


 


(b)           The
offset required by Subsection 4.2(b) shall be determined using the Social
Security Act in effect at Early Retirement Date and assuming zero (0) future
earnings from the Participant’s Early Retirement Date to the Participant’s
attainment of age sixty-five (65).


 


4.4                              Change of Control Benefit


 


If
a Participant has a Retirement event as a result of a Change of Control of the
Employer, Employer shall pay to the Participant the monthly Supplemental
Retirement Benefit calculated under Section 4.2 above except the offset
required by Subsection 4.2(b) shall be determined using the Social
Security Act in effect at the date of Retirement due to a Change of Control and assuming
zero (0) future earnings from the Participant’s Retirement date to the
Participant’s attainment of age sixty-five (65).


 


4.5                              Disability Retirement Benefit


 


If a Participant has a Separation from Service due to
Total and Permanent Disability on or before the Participant’s attainment of age
fifty-five (55), Employer shall pay to the Participant the monthly Supplemental
Retirement Benefit calculated under Section 4.3, and the time period from
the separation date to the date the Participant would attain the age of
fifty-five (55) shall be included in the determination of Years of Credited
Service.  If a Participant has a
Separation from Service due to Total and Permanent Disability after the
Participant’s attainment of age fifty-five (55), Employer shall pay to the
Participant the monthly Supplemental Retirement Benefit calculated under Section 4.2,
and the time 


 


6

















 


period from the separation date
to the date the Participant would attain the age of sixty-five (65) shall be
included in the determination of Years of Credited Service.


 


4.6                              Termination Benefit


 


If
a Participant has a Separation from Service due to Termination, Employer shall
pay to the Participant the monthly Supplemental Retirement Benefit calculated
under Section 4.2 above except:


 


(a)           The
offset required by Subsection 4.2(b) shall be determined using the Social
Security Act in effect at Termination and assuming level earnings to the
Participant’s attainment of age sixty-five (65); and


 


(b)           The
benefit shall be multiplied by the vesting percentage provided in Section 3.2
above.


 


4.7                              Form of Benefit Payment


 


The Supplemental Retirement Benefit
determined under Article IV shall be paid in the basic form provided below
unless the Participant elects an alternative form in the form of payment designation.  Any alternative form shall be the Actuarial Equivalent of the basic form
of benefit payment.  The basic and
alternative forms of payments are as follows:


 


(a)           Basic
Form of Benefit Payment. A monthly single life annuity for the Participant’s
life.


 


(b)           Alternative
Forms of Benefit Payment.


 


(i)            A
monthly joint and survivor annuity with payment continued to the survivor at
one hundred percent (100%); or


 


(ii)           A monthly joint and survivor annuity with payment
continued to the survivor at fifty percent (50%) of the amount paid to the Participant.


 


A Participant desiring payment of his Plan benefit
in a form other than the basic form of payment described in (a) above must
elect the alternative form of payment he desires prior to the commencement of
the benefit payment.  Such election shall
be in writing and shall extend on a uniform basis to any Supplemental
Retirement Benefit paid under the Plan to the Participant.  A Participant may change his Plan Supplemental
Retirement Benefit payment form election and make a new election prior to
commencement of payment of his Plan benefits. 
At commencement of payment of a Participant’s Supplemental Retirement
Benefit, his form of payment election shall become irrevocable. Notwithstanding
the above, whenever the lump sum equivalent of the benefit is not greater than the applicable dollar amount
under Section 402(g)(1)(B) of the Code, the benefit shall be
paid in a lump sum.


 


4.8                              Commencement of Payments


 


Benefits
payable to a Participant under Sections 4.2, 4.3, 4.4 and 4.5 shall commence as
soon as practicable but not later than sixty (60) days after the date of the
Participant’s Separation from Service. Benefits payable to a Participant under Section 4.6
as a result of Termination shall commence on the first day of the month
coincidental with or next following the date on which the Participant attains
age sixty-five (65). In no event shall a Participant be permitted
directly or indirectly to designate the taxable year of commencement of payment
of benefits under the Plan. All payments shall be made as of the first
day of the month.


 


7
















 


Notwithstanding
this Section 4.8, in the case of any Participant who is a “key employee”
as such term is defined in Section 416(i) of the Code without regard
to paragraph (5) thereof, and with respect to any portion of such
Participant’s Plan benefit which would constitute compensation which is
deferred after December 31, 2004 for purposes of Section 409A of the
Code, no distribution may be made of any such portion from the Plan to such
Participant as a result of his Separation from Service before the date which is
six (6) months after the date of such Separation from Service (or, if
earlier, the date of death of the Participant following such Separation from
Service) unless such Separation from Service was by reason of any of the events
described in Sections 409A(a)(2)(A)(ii), (iii), (iv), (v) or (vi) of
the Code.  In the event of any such
payment deferral the periodic payment amount shall be determined as if its
payments commenced as originally provided under the Plan and the first payment
to the Participant shall include an amount equal to the sum of the periodic
payments which would have been paid to such Participant but for the payment
deferral mandated pursuant to Section 409A(a)(2)(B)(i) of the Code.


 


4.9                               Withholding; Payroll Taxes


 


To the extent required by
the law in effect at the time payments are made, the Employer shall withhold
from payments made hereunder any taxes required to be withheld from a
Participant’s wages by the federal, state or local government.


 


4.10                        Payment to Guardian


 


If a Plan benefit is payable
to a minor or a person declared incompetent or to a person incapable of
handling the disposition of property, the Committee may direct payment of such
Plan benefit to the guardian, legal representative or person having the care
and custody of such minor, incompetent or person. The Committee may require
proof of incompetence, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Committee and Employer from all liability with respect
to such benefit.


 


4.11                        Major Medical and Hospitalization Insurance Coverage


 


If a Participant has a
Separation from Service due to
Retirement or Total and Permanent Disability, such Participant (for himself and
his dependents) shall have the right to medical reimbursement benefits to be
provided by the Employer until the death of the Participant; provided however,
that if the Participant is survived by a spouse, such spouse shall have the
right to continued medical reimbursement benefits for a period of thirty-six
(36) months from the Employer on the same basis as the Participant would have
had if he had survived.  Such benefits
shall be comparable to the Employer-provided major medical and hospitalization
insurance coverage, if any, made available generally to the Employer’s active
employees and their dependents.  Such
benefits will only be provided if the Participant pays, or reimburses the
Employer for, a portion of the total premium for such major medical coverage
equal to the amount such Participant would have been required to pay, or
reimburse the Employer, had he been covered as an active employee of the
Employer.  Premium payments or
reimbursements required to be paid by a Participant pursuant to this Section 4.11
shall be made by the Participant at such times and in such form as the Employer
shall establish pursuant to reasonable payment methods.


 


Upon
Termination of a Participant, such Participant (for the Participant and
the Participant’s dependents) shall have the right to participate, during the
fifteen (15) years immediately after the date such Participant attains age
sixty-five (65), in the Employer provided medical reimbursement benefits, if
any, made available generally to the Employer’s active employees and their
dependents; provided, however, that such Participant pays, or reimburses
the Employer for, the total premium (i.e., Employer and employee portions) for
such major medical coverage at
such times as the Employer’s
active employees pay their respective contributions
for such major medical coverage.


 


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Notwithstanding
the foregoing but to the extent and only to the extent required by Section 409A(a)(2)(B)(i) of
the Code, in the case of any Participant who is a “key employee” as such term
is defined in Section 416(i) of the Code without regard to paragraph (5) thereof,
medical benefit coverage and/or medical benefit payments may not be provided
and/or paid to such Participant as a result of his Separation from Service
before the date which is six (6) months after the date of such Separation
from Service (or, if earlier, the date of death of the Participant following
such Separation from Service) unless such Separation from Service was by reason
of any of the events described in Sections 409A(a)(2)(A)(ii), (iii), (iv), (v) or
(vi) of the Code.  Should the
restriction described in this Paragraph be required to be imposed and become
applicable with respect to a Participant, upon the lapse of the six (6) month
deferral restriction, medical coverage and/or medical benefit payments shall be
made retroactively available to such Participant (for the Participant and the
Participant’s dependents) to the date that they otherwise would have been
available under this Section 4.11 and on the basis as contemplated by this
Section 4.11.


 


Medical
reimbursement benefits provided pursuant to this Section 4.11 shall be
subject to the following rules:


 


(a)           The reimbursement arrangement provides an objectively
determinable and nondiscretionary definition of the expenses that are eligible
for reimbursement under such arrangement;


 


(b)           The reimbursement arrangement provides an objective and
specifically prescribed period during which such reimbursements will be
provided (which can be the lifetime of the employee or former employee);


 


(c)           The amount of reimbursable expenses for one year cannot
affect the amount of reimbursable expenses for another year (i.e., carryovers
of unused expense amounts are impermissible);


 


(d)           The reimbursements under the arrangement are made no later
than the last day of the taxable year following the year in which the
reimbursable expense was incurred; and


 


(e)           The participant’s right to a reimbursement may not be
subject to liquidation or exchange.


 


ARTICLE V— SURVIVOR BENEFITS


 


5.1                               Death Prior to Commencement of Benefits


 


(a)           Death at or After
Age 55. If a Participant dies after attainment of age fifty-five (55) and
completion of ten (10) Years of Plan Participation but prior to a
Separation of Service, Employer shall pay a survivor benefit to the Participant’s
Beneficiary equal to the Retirement benefit that would have been provided had
the Participant had a Separation from Service by reason of
Retirement on the day before the Participant’s death with a fifty percent (50%)
joint and survivor annuity form.


 


(b)           Death Prior to Age
55. If a Participant dies prior to attainment of age fifty-five (55) and
completion of ten (10) Years of Plan Participation but prior to a
Separation of Service, Employer shall pay a survivor benefit to the Participant’s
Beneficiary equal to the Termination benefit that would have been provided had
the Participant elected a fifty percent (50%) joint and survivor annuity form,
had a Separation from Service on the date prior to his death and survived
until the age of sixty-five (65).


 


(c)           Time of Payment. Any
benefits payable to a Beneficiary under this section shall commence as soon as
practicable after the appropriate application for benefits has been made but
not later than sixty (60) days after the date of the Participant’s death. In no event
shall a Participant or Beneficiary be permitted to directly or indirectly
designate the taxable year of commencement of payment of death benefits under
the Plan. All payments shall be made as of the first day of the month.


 


9

















 


5.2                               Death After Commencement of Benefits


 


If a Participant dies after
benefit payments have commenced under Article IV, a survivor benefit shall
be paid to the Participant’s Beneficiary only if, and to the extent, provided
for by the form of payment under which the Participant was receiving a
Supplemental Retirement Benefit, pursuant to Section 4.7.


 


5.3                               Suicide; Misrepresentation


 


No benefit shall be paid to
a surviving spouse if the Participant’s death occurs as a result of suicide
during the twelve (12) calendar months beginning with the calendar month
following commencement of participation in this Plan. The Committee may deny
payment if death occurs within twelve (12) months beginning with the calendar
month following commencement of participation in this Plan or if the
Participant has made a material misrepresentation in any form or document
provided by the Participant to or for the benefit of Employer.


 


5.4                               Effect of Payment


 


Payment to the surviving
spouse shall completely discharge Employer’s obligations under this Plan.


 


ARTICLE VI—BENEFICIARY DESIGNATION


 


6.1                               Death of Participant


 


Each Participant shall have
the right, at any time, to designate any person or persons as his Beneficiary
or Beneficiaries (both primary and contingent) to whom payment under this Plan
shall be paid in the event of death prior to complete distribution to the
Participant of the benefits due under the Plan. Each Beneficiary designation
shall be in a written form prescribed by the Committee and will be effective
only when filed with the Committee during the Participant’s lifetime. If a
Participant’s Compensation is community property, any Beneficiary designation
shall be valid or effective only as permitted under applicable law.


 


6.2                               Amendments


 


Any Beneficiary designation
may be changed by a Participant without the consent of any designated
Beneficiary by the filing of a new Beneficiary designation with the Committee.
The filing of a new Beneficiary designation form will cancel all Beneficiary
designations previously filed.


 


6.3                               No Beneficiary Designation


 


If any Participant fails to
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant predeceases the Participant, the
Committee, in its discretion, shall direct the Employer to distribute such
Participant’s benefits (or the balance thereof) as follows:


 


(a)           To the Participant’s
surviving spouse, if any; or


 


(b)           If the Participant
shall have no surviving spouse, then to the Participants children in equal
shares, by right of representation; or


 


10

















 


(c)           If the Participant
shall have no surviving spouse or children, then to the Participants estate.


 


6.4                               Effect of Payment


 


Payment to the Beneficiary
shall completely discharge Employer’s obligations under this Plan.


 


6.5                               Death of Beneficiary


 


Following commencement of
payment of Plan benefits, if the Beneficiary designated by a deceased
Participant dies before receiving complete distribution of the benefits, the
Committee shall direct the Employer to distribute the balance of such benefits:


 


(a)           As designated by the
Beneficiary in accordance with the provisions in Section 6.1 above; or


 


(b)           If the Beneficiary
shall not have made such designation, then to the Beneficiary’s estate.


 


ARTICLE VII—ADMINISTRATION


 


7.1                               Committee; Duties


 


This Plan shall be
administered by the Committee.  Members
of the Committee may be Participants under this Plan.


 


7.2                               Agents


 


The Committee may appoint an
individual to be the Committee’s agent with respect to the day-to-day
administration of the Plan.  In addition,
the Committee may, from time to time, employ other agents and delegate to them
such administrative duties as it sees fit, and may from time to time consult
with counsel who may be counsel to the Employer.


 


7.3                               Binding Effect of Decisions


 


The decision or action of
the Committee with respect to any question arising out of or in connection with
the administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and binding upon all persons
having any interest in the Plan.


 


7.4                               Indemnity of Committee


 


The Company shall indemnify
and hold harmless the members of the Committee against any and all claims,
loss, damage, expense or liability arising from any action or failure to act
with respect to this Plan, except in the case of gross negligence or willful
misconduct by the Committee.


 


ARTICLE VIII—CLAIMS PROCEDURE


 


8.1                               Claim


 


Any person claiming a
benefit, requesting an interpretation or ruling under the Plan, or requesting
information under the Plan shall present the request in writing to the
Committee which shall respond in writing as soon as practicable.


 


11

















 


8.2                               Denial of Claim


 


If the claim or request is
denied, the written notice of denial shall be made within ninety (90) days
of the date of receipt of such claim or request by the Committee and shall
state:


 


(a)           The reason for denial, with
specific reference to the Plan provisions on which the denial is based.


 


(b)           A description of any
additional material or information required and an explanation of why it is
necessary.


 


(c)           An explanation of the Plan’s
claims review procedure.


 


8.3                               Review of Claim


 


Any person whose claim or
request is denied or who has not received a response within ninety (90) days
may request review by notice given in writing to the Committee within sixty
(60) days of receiving a response or one hundred fifty (150) days from the date
the claim was received by the Committee. 
The claim or request shall be reviewed by the Committee who may, but
shall not be required to, grant the claimant a hearing.  On review, the claimant may have representation,
examine pertinent documents, and submit issues and comments in writing.


 


8.4                               Final Decision


 


The decision on review shall
normally be made within sixty (60) days after the Committee’s receipt of a
request for review.  If an extension of
time is required for a hearing or other special circumstances, the claimant
shall be notified and the time shall be one hundred twenty (120) days after the
Committee’s receipt of a request for review. 
The decision shall be in writing and shall state the reason and the relevant
Plan provisions.  All decisions on review
shall be final and bind all parties concerned.


 


ARTICLE IX—TERMINATION, SUSPENSION OR
AMENDMENT


 


9.1                               Amendment or Termination


 


The Board may, in its sole
discretion, amend or terminate this Plan at any time, in whole or in part;
provided, however, that no such amendment or termination shall adversely affect
the benefits of Participants which have vested in accordance with Section 3.2
above prior to such action, the benefits of any Participant who has had a Separation
from Service, or the benefits of any Beneficiary of a Participant who has died;
provided further, however, that the amendment or termination of this Plan shall
not alter in any manner the timing or form of benefit payments under this Plan.


 


9.2                               Successor Employer


 


The provisions of this Plan
shall be binding upon and inure to the benefit of any successor or assign of
the Employer. If a successor Employer amends or terminates this Plan, no such
amendment or termination shall adversely affect the benefits of Participants
which have vested in accordance with Section 3.2 above prior to such
action, the benefits of any Participant who has previously retired, or the
benefits of any Beneficiary of a Participant who has previously died.


 


12

















 


ARTICLE X—MISCELLANEOUS


 


10.1                        Unsecured General Creditor


 


Benefits to be provided
under this Plan are unfunded obligations of the Employer. Participants and
their Beneficiaries, heirs, successors, and assigns shall have no secured
interest or claim in any property or assets of Employer, nor shall they be
Beneficiaries of, or have any rights, claims or interests in any life insurance
policies, annuity contracts or the proceeds therefrom owned or which may be
acquired by Employer (“Policies”). Except as provided in Section 10.2,
such Policies or other assets of Employer shall not be held under any trust for
the benefit of Participants, their Beneficiaries, heirs, successors or assigns,
or be considered in any way as collateral security for the fulfilling of the
obligations of Employer under this Plan.


 


10.2                        Trust Fund


 


Employer shall be
responsible for the payment of all benefits provided under the Plan. At its
discretion, Employer may establish one (1) or more trusts, with such
trustees as the Board may approve, for the purpose of providing for the payment
of such benefits. Although such a trust shall be irrevocable, its assets shall
be held for payment of all Employer’s general creditors in the event of
insolvency. To the extent any benefits provided under the Plan are paid from
any such trust, Employer shall have no further obligation to pay them. If not
paid from the trust, such benefits shall remain the obligation of
Employer.  In no event shall any provision of this Plan be interpreted to provide or
of any trust established pursuant to this Section 10.2 provide or be
interpreted to provide that any assets of the Employer (whether placed in trust
or not) will become restricted to the provision of benefits under the Plan in
connection with a change in the Employer’s financial health and in no event
will any assets of the Employer, in fact, be so restricted.


 


10.3                        Nonassignability


 


Neither a Participant nor
any other person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part
thereof. No part of the amounts payable shall, prior to actual payment, be
subject to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law in the event of a Participant’s or any
other person’s bankruptcy or insolvency.


 


10.4                        Not a Contract of Employment


 


The terms and conditions of
this Plan shall not be deemed to constitute a contract of employment between
Employer and the Participant, and the Participant (or his Beneficiary) shall
have no rights against the Employer except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of Employer or to interfere
with the right of Employer to discipline or discharge him at any time.


 


10.5                        Participant’s Cooperation


 


A Participant will cooperate
with Employer by furnishing any and all information requested by Employer in
order to facilitate the payment of benefits hereunder, and by taking such
physical examinations and such other action as may be requested by Employer.


 


13

















 


10.6        Domestic Relations Orders


 


All
or any portion of a Participant’s Plan benefit will be paid to an individual
other than such Participant pursuant to and in accordance with the provisions
of a domestic relations order but only if such domestic relations order
satisfies all of the requirements to be a “qualified domestic relations order”
within the meaning of Section 414(p) of the Code and only if the
timing of payment or payments under the order comply with the distribution
timing requirements of Section 409A of the Code.


 


10.7        Captions


 


The captions of the
articles, sections and paragraphs of this Plan are for convenience only and
shall not control or affect the meaning or construction of any of its
provisions.


 


10.8        Governing Law


 


The provisions of this Plan
shall be construed and interpreted according to the laws of the State of
Delaware.


 


10.9        Validity


 


In case any provision of
this Plan shall be illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal and invalid provision had never been
inserted herein.


 


10.10      Successors


 


The provisions of this Plan
shall bind and inure to the benefit of Employer and its successors and assigns.
The term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise acquire all or substantially all of the business and assets of
Employer, and successors of any such corporation or other business entity.


 


10.11      Notice


 


Any notice or filing
required or permitted to be given to the Committee under the Plan shall be
sufficient if in writing and hand delivered, or sent by registered or certified
mail, to any member of the Committee, the President of the Employer, or the
Employer’s Statutory Agent.  Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of three (3) days following the date shown on the postmark or on the
receipt for registration or certification.


 


	
   

  	
  PIER 1 IMPORTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gregory S. Humenesky

  
	
   

  	
   

  	
  Executive Vice President, Human
  Resources

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  December                       ,
  2008

  



 


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