Exhibit 10.1

                                 PIER 1 IMPORTS

                          Supplemental Retirement Plan

                             PARTICIPATION AGREEMENT

This Participation Agreement ("Agreement") is made and entered into as of this
________ day of November, 2007, by and between Pier 1 Imports, Inc. ("Pier 1")
and Alexander W. Smith (the "Participant"). Except as otherwise set forth
herein, this Agreement is subject to all of the terms of the Pier 1 Imports,
Inc. Supplemental Retirement Plan restated as of January 1, 2005 (the "Plan").
All terms used in this Agreement, unless specifically defined herein, have the
same meanings attributed to them in the Plan. The Committee and the Board have
approved the Participant as a Plan Participant. The Participant elects to
participate in the Plan. Pier 1 and the Participant agree to the following terms
and conditions:

A.       Notwithstanding the terms of the Plan, the Participant's (i) Years of
         Credited Service shall be deemed to be an additional 6.67 as of
         February 19, 2007, and (ii) Years of Plan Participation shall be deemed
         to be 10.

B.       The $500,000.00 cap set forth in Subsection 4.1 of the Plan shall not
         apply to the Participant.

C.       The Plan provides that the Supplemental Retirement Benefit shall be
         paid in a monthly single life annuity for the Participant's life unless
         an alternate form of payment is elected. Notwithstanding the terms of
         the Plan, the Participant shall be entitled to elect in writing that
         the Supplemental Retirement Benefit be paid in a lump sum. The
         Participant hereby elects to receive benefits from the Plan in the
         following form payable at the time or commencing payment at the time
         specified in the Plan:

         [_]       A lump sum.

         [_]       A monthly joint and survivor annuity with payment continued
                   to the survivor* at one hundred percent (100%).

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

                   * The "survivor" is the "Beneficiary" as defined in the Plan.

         The payment election made pursuant to this paragraph C shall be
         irrevocable following Participant's initial execution of this Agreement
         except that the Participant may by written notice to Pier 1 change such
         election to another form of payment allowed under the Plan (a "Change
         Election") subject to the following conditions:

                    (i)       The Change Election will not take effect until at
                              least 12 months after the date on which the
                              election is made;

                    (ii)      If the Change Election relates to a payment other
                              than a payment on account of disability or death
                              (as such terms are defined under the regulations
                              promulgated pursuant to Section 409A of the Code),
                              the payment or commencement of payment will be
                              deferred for a period of 5 years after the date
                              such payment or commencement of payment is
                              originally scheduled to occur; and


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                    (iii)     If the Change Election relates to a payment which
                              is defined as a payment at a specified time or
                              pursuant to a fixed schedule under the regulations
                              promulgated pursuant to Section 409A of the Code,
                              the Change Election may not be made less than 12
                              months before the date the payment was originally
                              scheduled to be paid or, if applicable, was
                              originally scheduled to commence payment.

D.       If the Participant elects a lump sum payment in paragraph C above, then
         the lump sum payment shall be the Actuarial Equivalent of the basic
         form of benefit payment of the Supplemental Retirement Benefit
         determined under Article IV of the Plan.


Participant:


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Alexander W. Smith                               Date


Pier 1 Imports, Inc.

By:
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                                                 Date
Its:
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Printed name:
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