Document:

exv10w5

 

Exhibit 10.5

PIER 1 IMPORTS, INC.

SUPPLEMENTAL RETIREMENT PLAN

RESTATED AS OF JANUARY 1, 2005

 

 

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	 	2
	 
	 	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	 	3
	 
	 	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	 	Retirement	 	4
	 
	 	2.17	 	Separation from Service	 	4
	 
	 	2.18	 	Supplemental Retirement Benefit	 	4
	 
	 	2.19	 	Target Amount	 	4
	 
	 	2.20	 	Termination	 	4
	 
	 	2.21	 	Total and Permanent Disability	 	4
	 
	 	2.22	 	Years of Credited Service	 	5
	 
	 	2.23	 	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	 	9
	 
	 	5.3	 	Suicide; Misrepresentation	 	9

(i)

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	PAGE
	 
	 	5.4	 	Effect of Payment	 	9
	 
	 	 	 	 	 	 
	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	 	10
	 
	 	6.5	 	Death of Beneficiary	 	10
	 
	 	 	 	 	 	 
	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	 	11
	 
	 	8.3	 	Review of Claim	 	11
	 
	 	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	 	12
	 
	 	 	 	 	 	 
	 
	 	10.1	 	Unsecured General Creditor	 	12
	 
	 	10.2	 	Trust Fund	 	12
	 
	 	10.3	 	Nonassignability	 	13
	 
	 	10.4	 	Not a Contract of Employment	 	13
	 
	 	10.5	 	Participant’s Cooperation	 	13
	 
	 	10.6	 	Domestic Relations Order	 	13
	 
	 	10.7	 	Captions	 	13
	 
	 	10.8	 	Governing Law	 	13
	 
	 	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 and was restated effective as of
December 5, 2002. This restatement of the Plan shall only apply with respect to Participants who
are actively employed by the Employer after December 31, 2004. The prior provisions of the Plan as
in effect as of December 4, 2002 will continue to apply with respect to Participants who terminated
employment with the Employer prior to December 5, 2002 and the prior provisions of the Plan as in
effect as of December 31, 2004 will continue to apply with respect to Participants who terminated
employment with the Employer after December 4, 2002 and prior to January 1, 2005.

     The purpose of this January 1, 2005 restatement is to cause the Plan to comply with the
requirements of Sections 409A(a)(2), (3) and (4) of the Code. The Plan is to be construed and
interpreted in accordance with such purpose.

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 mortality table prescribed by the Secretary of the Treasury or his delegate
in accordance with Internal Revenue Code Section 412(l)(7)(C)(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.

PAGE 1 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

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.

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

PAGE 2 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

2.11 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.

PAGE 3 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

2.16 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 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.

2.17 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 Proposed Treasury
Regulation § 1.409A-1(h) (or the successor final regulation thereto). 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 Proposed Treasury
Regulation § 1.409A-1(h) (or the successor final regulation thereto), the Participant will be
deemed to have experienced a separation from service at the time and to the extent required under
Proposed Treasury Regulation § 1.409A-1(h) (or the successor final regulation thereto).

2.18 Supplemental Retirement Benefit

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

2.19 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).

2.20 Termination

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

2.21 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

PAGE 4 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

2.22 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.

2.23 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.

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	 	Vesting
	Participation	 	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 lass 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

PAGE 5 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

Retirement Benefit upon Retirement, Retirement based on a Change of Control of the
Employer, Separation from Service due to Total and Permanent Disability, or death.

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, Employer
shall pay to the Participant the monthly Supplemental Retirement Benefit calculated under Section
4.2 or 4.3, as applicable, except that Years of Credited Service shall continue to accrue from the
separation date to the Normal Retirement Date, or Early Retirement Date, as the case may be.

PAGE 6 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

4.6 Termination Benefit

     If a Participant has a Separation from Service prior to Retirement, death or Total and
Permanent Disability, 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. Notwithstanding the above,
whenever the lump sum equivalent of the benefit is $25,000 or less, 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). All payments shall be made as of the first day of the
month.

     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

PAGE 7 SUPPLEMENTAL RETIREMENT PLAN

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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
benefit coverage 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 coverage 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 coverage 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 coverage 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 major medical
coverage, 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.

     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

PAGE 8 SUPPLEMENTAL RETIREMENT PLAN

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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.

ARTICLE V—SURVIVOR BENEFITS

5.1 Death Prior to Commencement of Benefits

     (a) Death at or After Age 55. If a Participant dies after becoming eligible for
Retirement at an Early Retirement Date but prior to Retirement, Employer shall pay a
survivor benefit to the Participant’s Beneficiary equal to the Retirement benefit that would
have been provided had the Participant retired 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 the Early Retirement Date,
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.

     (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 all information necessary to calculate the benefit
amount has been received by Employer. All payments shall be made as of the first day of the
month.

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.

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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

     (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.

PAGE 10 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

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

PAGE 11 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

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,

PAGE 12 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

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.

PAGE 13 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005

 

 

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.

	 	 	 	 	 
	 	 	 
	Date: October 9, 2006 	By:  	/s/ Gregory S. Humenesky
 	 
	 	 	Gregory S. Humenesky 	 
	 	 	Executive Vice President, Human Resources 	 
	 

PAGE 14 SUPPLEMENTAL RETIREMENT PLAN

RESTATED JANUARY 1, 2005exv10w6

 

Exhibit 10.6

PIER 1 IMPORTS, INC.

SUPPLEMENTAL RETIREMENT PLAN

RESTATED AS OF JANUARY 1, 2005

AMENDMENT NO. 1

     This Amendment No. 1 is made to the Pier 1 Imports, Inc. Supplemental Retirement Plan Restated
as of January 1, 2005 (the “Plan”). This Amendment No. 1 is made effective January 1, 2006, by
Pier 1 Imports, Inc., a Delaware corporation (the “Company”);

     WHEREAS, the Company desires to amend the definition of “Actuarial Equivalent” set forth in
the Plan; and

     WHEREAS, pursuant to Section 9.1 of the Plan, the Board of Directors of the Company may amend
the Plan at any time, in whole or in part;

     NOW, THEREFORE, the Plan is hereby amended as follows:

	 	1.	 	Section 2.1 of the Plan is hereby amended by (i) adding the word “applicable”
before the word “mortality” in the second line, and (ii) deleting the wording
“412(1)(7)(C)(ii)” in the third line and replacing such wording with
“417(e)(3)(A)(ii)”.
	 
	 	2.	 	This Amendment No. 1 shall be effective January 1, 2006 with respect to Plan
participants actively employed on or after January 1, 2006, and shall not operate or
be construed to alter, modify or amend the Plan except as expressly set forth herein.
The terms and provision of the Plan, as expressly amended hereby, shall remain in full
force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be executed effective
January 1, 2006.

	 	 	 	 	 
	 	PIER 1 IMPORTS, INC.

 	 
	Date: October 9, 2006 	By:  	/s/ Gregory S. Humenesky
 	 
	 	 	Gregory S. Humenesky 	 
	 	 	Executive Vice President, Human Resources

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