Exhibit 10.6

PIER 1 IMPORTS, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

May 2, 2017

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made effective
and entered into as of May 2, 2017, by and between PIER 1 IMPORTS, INC., a
Delaware corporation (the “Company”), and Alasdair B. James (the “Optionee”).

WHEREAS, this Option (as defined below) is granted as an employment inducement
award under New York Stock Exchange Listing Rule 303A.08, and not under any
Company stockholder-approved stock incentive plan; and

WHEREAS, the Compensation Committee (the “Committee”) of the Board of Directors
of the Company (the “Board”) has determined that the Optionee be granted this
Option for the number of shares and upon the terms set forth below;

NOW, THEREFORE, the Company and the Optionee hereby agree as follows:

1. Grant of Option. The Company hereby grants to the Optionee an Option (the
“Option”), subject to the execution of this Option Agreement, on the Date of
Grant (as defined below) to purchase from the Company upon the terms and
conditions hereinafter set forth 33,749 shares (the “Option Shares”) of the
Company’s Common Stock, par value $0.001 per share (the “Common Stock”).

2. Date of Grant. This Option is granted to Optionee on May 2, 2017 (the “Date
of Grant”).

3. Exercise Price. The exercise price is $6.68 for each of the Option Shares
(the “Exercise Price”).

4. Expiration Date: The expiration date of this Option is May 2, 2027 (the
“Expiration Date”).

5. Vesting of Option; Exercisability. This Option shall become vested and
exercisable as to 25% of the Option Shares respectively on the third and fourth
anniversaries of the Date of Grant, and as to 50% of the Option Shares on the
fifth anniversary of the Date of Grant, provided that Optionee is employed by
the Company on each vesting date (unless it is sooner terminated as hereinafter
provided). This Option shall be exercisable in full or in part and shall remain
exercisable until the Expiration Date (unless it is sooner terminated as
hereinafter provided), at which time this Option shall expire.

6. Corporate Change. Notwithstanding the vesting schedule set forth in Section 5
above, the vesting of Option Shares shall be accelerated and occur in full upon
(i) a Corporate Change (as defined in the Pier 1 Imports, Inc. 2015 Stock
Incentive Plan (the “Stock Plan”)) AND (ii) the occurrence of one of the
following: (a) the Option is not assumed by the surviving or acquiring entity or
otherwise equitably converted or substituted in connection with the Corporate
Change, or (b) the Option is assumed by the surviving or acquiring entity or
otherwise equitably converted or substituted in connection with a Corporate
Change and the termination of

 

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Optionee’s employment by the Company (or the surviving or acquiring entity)
without Cause or Optionee’s resignation for Good Reason (as such capitalized
terms are defined in the Executive Severance Agreement between the Company and
Optionee, dated March 30, 2017) occurs within one year after the effective date
of the Corporate Change.

7. Exercise of Option. Notice of the exercise of this Option or any portion
thereof shall be given to the Company, or any other employee of the Company or
an affiliate who is designated by the Company to accept such notices on its
behalf, specifying the number of shares for which it is exercised; provided,
that no partial exercise of this Option may be for fewer than 100 shares unless
the remaining shares purchasable are fewer than 100 shares.

 

  (a) Exercise Price and Delivery of Shares. Payment of the Exercise Price may
be satisfied in full at the time the Option is exercised through a “net”
exercise,” whereby the Company shall withhold from the shares deliverable upon
exercise of the Option a number of shares having a Fair Market Value (as defined
in the Stock Plan) as of the last trading day preceding the date of exercise
equal to the exercise price, and shall issue or transfer to the Optionee the
number of shares of Common Stock to which he is entitled, net of shares to be
withheld to satisfy the exercise price as specified in this subsection (a) and
the tax withholding requirements as specified in subsection (b) below.

 

  (b) Tax Withholding. The Company has the authority and the right to deduct or
withhold, or require the Optionee to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes (including Optionee’s FICA
obligation) required by law to be withheld with respect to any taxable event
arising as a result of the exercise of the Option. Unless otherwise determined
by the Committee, the withholding requirement will be satisfied by withholding
Option Shares otherwise deliverable to the Optionee upon exercise of the Option
a number of shares having a Fair Market Value as of the last trading day
preceding the date of exercise equal to the amount required to be withheld for
tax purposes.

 

  (c) Automatic Exercise. If the closing price of the Company’s Common Stock
exceeds the Exercise Price of the Option on the last trading day prior to the
Expiration Date, any outstanding and unexercised portion of the Option, if any,
shall be automatically exercised without further action or notice by the Company
or the Optionee (an “Automatic Exercise”), and the Company shall issue or
transfer to the Optionee the number of shares of Common Stock to which he is
entitled based on such Automatic Exercise, net of shares to be withheld by the
Company to satisfy the exercise price and the tax withholding requirements as
specified above.

8. Termination of Option. The term of the Option is for a period of ten
(10) years, expiring at 5:00 p.m., Central Time, on the Expiration Date. To the
extent not previously exercised, the Option will terminate prior to the
Expiration Date upon the earliest to occur of the following circumstances:

 

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  (a) Three (3) months after the date of Optionee’s termination of employment
with the Company for any reason other than (i) for Cause (as previously
defined), or (ii) by reason of Optionee’s death or disability.

 

  (b) One (1) year after the date of Optionee’s termination of employment with
the Company by reason of Optionee’s disability.

 

  (c) One (1) year after the date of Optionee’s death, if Optionee dies while
employed or during the three-month period described in subsection (a) above and
before the Option otherwise expires (upon Optionee’s death, the Option may be
exercised by Optionee’s estate or other designated beneficiary).

 

  (d) Immediately upon the date of Optionee’s termination of employment by the
Company for Cause (as previously defined).

If Optionee or his or her beneficiary exercises the Option after termination of
employment with the Company, the Option may be exercised only with respect to
the Option Shares that were otherwise vested as of Optionee’s termination of
employment.

9. Not an Incentive Stock Option. No portion of this Option is intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and shall be so construed.

10. Incorporation of Plan and Agreement to Terms. The Option is granted as an
employment inducement award under New York Stock Exchange Listing Rule 303A.08,
and not under any Company stockholder-approved stock incentive plan.
Notwithstanding the foregoing, the Option shall be subject to the terms and
conditions of the Stock Plan as if the Option had been granted under the Stock
Plan, and the terms and conditions of the Stock Plan are hereby incorporated
into this Agreement to the extent such terms are not inconsistent with those
herein. Capitalized terms not otherwise defined herein shall have the same
meanings set forth for such terms in the Stock Plan. By accepting the Option,
Optionee shall be deemed to have agreed to the terms and conditions of this
Agreement and the Stock Plan.

11. Subdivision or Consolidation of Shares; Stock Dividends; and
Recapitalizations. Whenever, prior to the earlier of (i) the Expiration Date or
(ii) the termination of the Option pursuant to Section 8 hereof, the Company
shall effect a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend on Common Stock without receipt of consideration by
the Company, the number of shares of Common Stock covered by this Option (i) in
the event of an increase in the number of outstanding shares, shall be
proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares, shall be proportionately reduced, and the purchase price per
share shall be proportionately increased. Any fractional share resulting from
such adjustment shall be rounded up to the next whole share. If the Company
recapitalizes, reclassifies its capital stock, or otherwise changes its capital
structure (a “recapitalization”), the number and class of shares of Common Stock
covered by this Option shall be adjusted so that this Option shall thereafter
cover the number and class of shares of stock and securities to which Optionee
would have been entitled pursuant to the terms of the recapitalization if,
immediately prior to the recapitalization, Optionee had been the holder of
record of the number of shares of Common Stock then covered by this Option.

 

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12. Registration of Shares. The Company shall use reasonable commercial efforts
to register the Option Shares to be issued upon the exercise of this Option
under the Securities Act of 1933 on a Registration Statement on Form S-8, or
such other form as the Company may deem appropriate, as soon as reasonably
practicable following the date of this Agreement.

13. Non-Assignability of Option. This Option shall not be transferable by the
Optionee otherwise than by will or the laws of descent and distribution. During
the Optionee’s lifetime, this Option shall be exercisable only by the Optionee
or by his guardian or legal representative. This Option shall not be subject to
execution, attachment or similar process.

14. Compliance with Laws. The obligation of the Company to sell and issue Option
Shares pursuant to this Option is subject to such compliance as the Company
deems necessary or advisable with federal and state laws, rules and regulations
applying to the authorization, issuance, sale or listing of securities.

15. No Rights as Stockholder. The Optionee shall have no rights as a stockholder
of the Company, including any voting rights or any claim to dividends with
respect to any Option Shares until such Option Shares are issued to the Optionee
by the Company pursuant to an exercise of the Option.

16. Notices. Any notice to be provided hereunder shall be in writing and
addressed to the Company at the Company’s principal executive offices or to the
Optionee at their address shown on the Company’s records, or such other address
provided to the Company by the Optionee in accordance herewith. Notice shall be
given by hand delivery, overnight courier service, facsimile transmission
(promptly confirmed in writing), or certified mail (postage prepaid, return
receipt requested). Notices given by hand delivery, overnight courier or
facsimile transmission shall be deemed given upon delivery and notices given by
mail shall be deemed given on the earlier of three days after deposit in the
U.S. mail or on the first date delivery is refused.

17. Entire Agreement. This Agreement, together with the documents incorporated
herein by reference, represents the entire agreement between the parties with
respect to the subject matter hereof and this Agreement may not be modified by
any oral or written agreement unless same is in writing, signed by both parties
and has been approved by the Committee.

18. Governing Law. This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to the
principles of conflict of laws.

19. Successors and Assigns. This Option shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns.

 

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20. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Non-Qualified Stock
Option Agreement on the date first above written.

 

COMPANY:   OPTIONEE: Pier 1 Imports, Inc.   By:  

/s/ Gregory S. Humenesky

 

/s/ Alasdair B. James

  Gregory S. Humenesky   Alasdair B. James   Executive VP—Human Resources  
President and CEO

 

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