Exhibit 10.1

 
[On Company Letterhead]
 

 
Retention Award
 

_______________________
 

 
_______________________
 
_______________________
 

 
Dear ___________,
 
As a very valued and key member of the Pier 1 Imports senior executive team and
as one whose continued leadership will be especially critical during the
transition to a new CEO, I am delighted and pleased to inform you that the Board
of Directors on ____________approved a cash award to you of $_____ under the
terms and conditions outlined in the attached appendix.
 
On behalf of the Board of Directors, congratulations and thank you, not only for
your past contributions, but for what you will surely contribute to the future
success of our beloved Company.
 
Regards,
 

 
Alex Smith
 

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APPENDIX TO RETENTION AWARD

The retention award described in this letter (the “Award”) will be paid in a
cash lump sum, subject to applicable federal, state, and local tax and other
payroll withholding within fifteen (15) days following ____________ (the
“Payment Date”) if (i) you remain employed by Pier 1 Imports, Inc. (the
“Company”) or an Affiliate through the Payment Date, or (ii) your employment is
terminated by the Company or an Affiliate prior to the Payment Date without
Cause, or (iii) you resign for Good Reason prior to the Payment Date.

For purposes of this Award agreement, the term:

“Affiliate” means any entity which is controlling, controlled by, or under
common control with the Company.

“Cause” means the occurrence of any of the following events:
 
(a)            refusal by you to follow a lawful direction of any superior
officer of the Company or an Affiliate, provided the direction is not materially
inconsistent with the duties or responsibilities of your position;
 
(b)            performance deficiencies which are communicated to you in writing
as part of performance reviews and/or other written communications from any
superior officer of the Company or an Affiliate;
 
(c)            willful misconduct or reckless disregard by you of your duties or
of the interest or property of the Company or its Affiliates;
 
(d)            any act by you of fraud against, material misappropriation from,
or significant dishonesty to either the Company or an Affiliate; or
 
(e)            conviction by you of a felony.

“Good Reason” means the occurrence of all of the events listed in either (a) or
(b) below:
 
(a)            a material diminution of your responsibilities as modified by the
Company or an Affiliate from time to time hereafter, such that you would no
longer have responsibilities substantially equivalent to those of similarly
situated employees at companies with similar revenues and market capitalization;
provided that you give written notice to the Company of the facts and
circumstances constituting such material diminution within ten (10) days
following the occurrence of such event; the Company (or Affiliate) fails to
remedy such material diminution within ten (10) days following your written
notice of such event; and you terminate your employment within ten (10) days
following the Company’s or Affiliate’s failure to remedy such material
diminution; or
 
(b)            the Company or an Affiliate materially reduces your base salary
without your consent, unless the reduction is applied equally, expressed as a
percentage of base salaries, to all similarly situated employees; provided that
you give written notice to the Company within ten (10) days following your
receipt of the notice of reduction in base salary of your objection to the
reduction; the Company or Affiliate fails to rescind the notice of reduction
within ten (10) days following your written notice; and you terminate your
employment within ten (10) days following the Company’s or Affiliate’s failure
to rescind the notice.

This Award shall not be construed as giving you the right to be retained in the
service of the Company or an Affiliate. You shall remain subject to discharge to
the same extent as if the Award had never been granted.

                 Pier 1 Imports, Inc.

                 By: ______________________________
                 Gregory S. Humenesky, EVP Human Resources

                 AGREED AND ACCEPTED

                 _________________________________
                 (Name)