Vice President, Human Resources Employment Agreement

EMPLOYMENT AGREEMENT


This Employment Agreement ("Agreement") is made and entered into as of February 28, 2005, by and between Pier 1 Imports, Inc., on behalf of the applicable wholly owned employing subsidiary (hereinafter "Pier 1") and Gregory S. Humenesky (the "Executive").


Pier 1 desires to retain the services of Executive as its Executive Vice President, Human Resources; and


Pier 1 and Executive wish to enter into this Agreement to set forth the terms and conditions of the employment relationship between Pier 1 and the Executive;


NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1. Term. The Executive's term of employment (the "Term") under this Agreement shall begin on February 28, 2005, and subject to earlier termination as provided for in Paragraph 5 of this Agreement, shall continue through and including February 29, 2008. As of February 29, 2008, if the parties do not agree in writing to renew this Agreement or to enter into a new written Agreement, the Term and the Executive's employment hereunder shall either immediately terminate, if either party so desires, or if the Executive's employment continues thereafter, it shall continue solely on an at-will basis such that either party may terminate the Executive's employment hereunder at any time for any reason.


2. Position and Duties. During the Term, the Executive shall be employed by Pier 1 as its Executive Vice President, Human Resources and shall report directly to Pier 1's Chief Executive Officer or such other officer to whom Executive Vice Presidents report. The Executive shall perform all duties incident to the position of Executive Vice President, Human Resources as well as any other duties as may be assigned from time to time by the Chief Executive Officer or his designee.


3. Exclusive Services and Best Efforts. During the Term, the Executive shall devote his best efforts, energies, and skills to the discharge of his duties and responsibilities attributable to his position, and to this end he shall devote his full time and attention exclusively to Pier 1's business and affairs, provided that, with the express written permission of Pier 1's Chief Executive Officer, the Executive may serve or participate in activities on behalf of non-profit entities. The Executive shall not engage in any other activity or own any other interest that may conflict with Pier 1's interests or that may interfere with his responsibilities to Pier 1 and the performance of his duties hereunder. The Executive shall not take personal advantage of any business opportunities that arise during the Term that may benefit Pier 1. The Executive shall promptly report all material facts regarding such opportunities to Pier 1's Chief Executive Officer. The Executive shall at all times abide by all Pier 1 Bylaws, policies, practices, procedures, and rules.


4. Base Salary. During the Term, Pier 1 shall pay the Executive a base salary at the rate of Two Hundred Seventy Thousand Dollars ($270,000) per year, less withholdings and deductions required by law (the "Base Salary"). The Base Salary shall be payable in equal installments at such payment intervals as are in accordance with Pier 1's standard payroll practices. The Executive's Base Salary may at the discretion of Pier 1 be adjusted higher during the Term after the Executive's performance is reviewed pursuant to Pier 1's customary annual performance reviews. It is anticipated that the Executive's first annual performance review will be conducted in April 2006.


5. Termination of Employment. The Term and the Executive's employment hereunder shall terminate upon the occurrence of any of the following:


a. Death or Disability. The Term shall immediately
terminate if the Executive dies or if because of the
Executive's illness, injury, or other disability, the
Executive is unable to perform the essential
functions of his job with or without reasonable
accommodations;


b. Without Cause. Pier 1 may terminate the Executive's
employment hereunder without "Cause" by providing the
Executive written notice of such termination and such
termination shall become effective immediately upon
providing such written notice;


c. With Cause. Pier 1 may immediately terminate the
Executive's employment hereunder with "Cause" upon
its providing the Executive written notice of the
reasons for the termination;


d. The Executive's Resignation Due to Pier 1's Breach.
The Executive may immediately resign his employment
hereunder by providing Pier 1 written notice of the
reasons for the resignation if Pier 1 commits any of
the following material breaches of this Agreement:


(i) Pier 1 fails to pay or reduces the
Executive's Base Salary;


(ii) Pier 1 fails to pay the Executive
the Special Bonus when due;


(iii) Pier 1 materially changes the
Executive's duties or
responsibilities that results in the
Executive not having duties and
responsibilities substantially
equivalent to or greater than those
exercised by the Executive
immediately prior to the change; or


(v) Pier 1 transfers the Executive to a
location outside Fort Worth, Texas.


e. The Executive's Resignation for Other than Pier 1's
Breach. The Executive may resign his employment
hereunder for any reason (other than for the reasons
specified in subparagraph 5.d.) by providing Pier 1
thirty (30) days' advance written notice of such
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