<PAGE>
                                                                   EXHIBIT 10.18


                               PURCHASE AGREEMENT


         This Purchase Agreement ("AGREEMENT"), is made and entered into as of
the 16th day of August, 2001 ("EFFECTIVE DATE"), by and between John Hancock
Life Insurance Company (f/k/a John Hancock Mutual Life Insurance Company),
Investors Partner Life Insurance Company (f/k/a John Hancock Life Insurance
Company of America) (collectively, the "SELLER"), and Pier 1 Funding, L.L.C., a
Delaware limited liability company ("PURCHASER").

         WHEREAS:

         A. Pursuant to the Pooling and Servicing Agreement, dated as of
February 12, 1997 ("POOLING AND SERVICING AGREEMENT"), by and among Purchaser,
as Transferor, Pier 1 Imports (U.S.), Inc., a Delaware corporation, as Servicer,
and Wells Fargo Bank Minnesota, National Association (successor to The Chase
Manhattan Bank, successor to Chase Bank of Texas, N.A., successor to Texas
Commerce Bank National Association) ("TRUSTEE"), as supplemented by the Series
1997-1 Supplement, dated as of February 12, 1997 ("SUPPLEMENT"), by and among
Purchaser, as Transferor, Servicer and Trustee, Purchaser has the right to
purchase all or any of the Class A Asset-Backed Certificates, Series 1997-1
("CLASS A CERTIFICATES").

         B. The Purchaser desires to purchase, and the Seller desires to sell
all of the Class A Certificates owned by Seller.

         NOW THEREFORE this Agreement witnesses that for good and valuable
consideration, the receipt and sufficiency of which is acknowledged by the
parties hereto, the parties agree as follows:


1. SALE AND PURCHASE. Purchaser hereby agrees to purchase and Seller hereby
agrees to sell on the Closing Date all of the Class A Certificates owned by
Seller at a price equal to the Purchase (as defined below), and Seller hereby
agrees to present, convey and surrender all of its Class A Certificates to
Purchaser, on and subject to the terms and conditions as set forth in the
Pooling and Servicing Agreement, the Supplement and this Agreement.

         (a) PURCHASE PRICE. The purchase price ("PURCHASE PRICE") to be paid
for the Class A Certificates will be calculated in a manner intended to result
in a price on September 4, 2001 ("CLOSING DATE"), which provides the Seller with
a yield equivalent to the yield which the Seller would have realized had the
Seller not sold the Class A Certificates. The Purchase Price payable to the
Seller will equal the sum of the principal, accrued interest and premium, at the
reinvestment rate, and shall be illustrated in a format similar to EXHIBIT "A".
The reinvestment rate for this calculation will be the interpolated yield for
the then remaining average life of the Class A Certificates ("Remaining Life"),
determined by interpolating linearly between (I) the actively traded U.S.
Treasury security with the constant maturity closest to and greater than the
Remaining Life and (ii) the actively traded U.S. Treasury security with the
constant maturity closest to and less than the Remaining Life, as displayed on
the Bloomberg Page PX1 ("MONITOR") for the close of business on August 27, 2001.
See EXHIBIT "B" for an example of this Monitor.


<PAGE>


3. DELIVERY.

(a) Delivery of and payment for the Class A Certificates shall be made at the
office of the Trustee, at 11:00 a.m., Central Standard time, on the Closing
Date, or at such other place and time as shall be agreed upon by Purchaser and
Seller.

(b) On the Closing Date, payment shall be made to Seller in same-day funds by
wire transfer to such account or accounts as Seller shall specify prior to the
Closing Date or by such other means as the parties hereto agree prior to the
Closing Date.

(c) Upon presentation, surrender and delivery by the Seller of all Class A
Certificates owned by Seller, the Trustee will retire the Class A Certificates.


4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

5. LEGAL FEES. seller and Purchaser shall each pay their respective attorney's
fees.

6. ENTIRE AGREEMENT. This Agreement (including all exhibits hereto) contains the
entire agreement between Seller and Purchaser, and no oral statements or prior
written matter not specifically incorporated herein shall be of any force and
effect.

7. SEVERABILITY. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.

8. HEADINGS. The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation
of this Agreement.

9. TERMS. unless otherwise defined, capitalized terms used herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement and Supplement.

10. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original but all of such
counterparts shall together constitute one and the same instrument.


                           [SIGNATURE PAGE TO FOLLOW]


<PAGE>


IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date.


         SELLER:                  JOHN HANCOCK LIFE
                                  INSURANCE COMPANY

                                  By: /s/ MARGARET STAPLETON
                                      ------------------------------------------
                                      Margaret Stapleton
                                      Vice President


                                  INVESTORS PARTNER LIFE
                                  INSURANCE COMPANY

                                  By: /s/ MARGARET STAPLETON
                                      ------------------------------------------
                                      Margaret Stapleton
                                      Vice President


         PURCHASER:               PIER 1 FUNDING, L.L.C., a Delaware
                                  limited liability company

                                  By:    PIER 1 IMPORTS (U.S.), INC.,
                                         a Delaware corporation, its sole member

                                         By: /s/ CHARLES H. TURNER
                                            ------------------------------------
                                            Charles H. Turner
                                            Senior Vice President and
                                            Chief Financial Officer



<PAGE>


                              REPURCHASE AGREEMENT


         This Repurchase Agreement ("AGREEMENT"), is made and entered into as of
the 20th day of August, 2001 ("EFFECTIVE DATE"), by and between Banco di Napoli
("SELLER"), and Pier 1 Funding, L.L.C., a Delaware limited liability company
("PURCHASER").


1. SALE AND PURCHASE. Pursuant to the Pooling and Servicing Agreement, dated as
of February 12, 1997 ("POOLING AND SERVICING AGREEMENT"), by and among
Purchaser, as Transferor, Pier 1 Imports (U.S.), Inc., a Delaware corporation,
as Servicer, and Wells Fargo Bank Minnesota, National Association (successor to
The Chase Manhattan Bank, successor to Chase Bank of Texas, N.A., successor to
Texas Commerce Bank National Association) ("TRUSTEE"), as supplemented by the
Series 1997-1 Supplement, dated as of February 12, 1997 ("SUPPLEMENT"), by and
among Purchaser, as Transferor, Servicer and Trustee, Purchaser hereby exercises
its option to repurchase all of the Class A Asset-Backed Certificates, Series
1997-1 ("CLASS A CERTIFICATES"), as created by the Supplement and issued
pursuant to the Pooling and Servicing Agreement, owned by Seller, which is one
of the Investor Certificateholders of such Class A Certificates, and Seller
hereby agrees to present, sell, convey and surrender all of its Class A
Certificates to Purchaser, on and subject to the terms and conditions as set
forth in the Pooling and Servicing Agreement, the Supplement and this Agreement.

2. PURCHASE PRICE AND CONSIDERATION.

         (b) The purchase price ("PURCHASE PRICE") to be paid for the Class A
Certificates will be calculated in a manner intended to result in a price on
September 4, 2001, which provides the Seller with a yield equivalent to the
yield which the Seller would have realized had the Seller not sold the Class A
Certificates. The Purchase Price payable to the Seller will equal the sum of the
principal, accrued interest and premium, as determined in a format similar to
EXHIBIT "A". The benchmark reinvestment rate for this calculation will be the
closing yield on the 6 1/4 % United States Treasury Note maturing on February
28, 2002, as displayed on the Bloomberg Government Yield Monitor ("MONITOR") for
the close of business on August 27, 2001. See EXHIBIT "B" for an example of this
Monitor.

         (c) Contemporaneously with the execution of this Agreement, Purchaser
hereby delivers to Seller a check in the amount of Ten Dollars and No/100
($10.00) ("CONSIDERATION"), which amount the parties bargained for and agreed to
as consideration for Seller's execution, delivery and performance of this
Agreement. This Consideration is in addition to and independent of any other
consideration or payment provided in this Agreement.

4. DELIVERY.

(d) Delivery of and payment for the Class A Certificates shall be made at the
office of the Trustee, at 11:00 a.m., Central Standard time, on the 4th day of
September, 2001, or at such other place and time as shall be agreed upon by
Purchaser and Seller ("FINAL PAYMENT DATE").


<PAGE>


(e) On the Final Payment Date, payment shall be made to Seller in same-day funds
by wire transfer to such account or accounts as Seller shall specify prior to
the Final Payment Date or by such other means as the parties hereto agree prior
to the Final Payment Date.

(f) Upon presentation, surrender and delivery by the Seller of all Class A
Certificates owned by Seller, the Trustee will retire the Class A Certificates.

4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

5. LEGAL FEES. seller and Purchaser shall each pay their respective attorney's
fees.

6. ENTIRE AGREEMENT. This Agreement (including all exhibits hereto) contains the
entire agreement between Seller and Purchaser, and no oral statements or prior
written matter not specifically incorporated herein shall be of any force and
effect.

7. SEVERABILITY. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.

8. HEADINGS. The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation
of this Agreement.

9. TERMS. unless otherwise defined, capitalized terms used herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement and Supplement.

11. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original but all of such
counterparts shall together constitute one and the same instrument.


                           [SIGNATURE PAGE TO FOLLOW]


<PAGE>


IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date.


         SELLER:                  BANCO DI NAPOLI

                                  By: /s/ FRANCESCO DIMARIO
                                     -------------------------------------------
                                     Francesco DiMario
                                     First Vice President



                                  By: /s/ ALEX GAJANO
                                     -------------------------------------------
                                     Alex Gajano
                                     First Vice President


         PURCHASER:               PIER 1 FUNDING, L.L.C., a Delaware
                                  limited liability company

                                  By:    PIER 1 IMPORTS (U.S.), INC.,
                                         a Delaware corporation, its sole member

                                         By: /s/ CHARLES H. TURNER
                                            ------------------------------------
                                            Charles H. Turner
                                            Senior Vice President and
                                            Chief Financial Officer



<PAGE>


                              REPURCHASE AGREEMENT


         This Repurchase Agreement (this "AGREEMENT"), is made and entered into
as of the 20th day of August, 2001 (the "EFFECTIVE DATE"), by and between
ALLSTATE INSURANCE COMPANY and ALLSTATE LIFE INSURANCE COMPANY (collectively,
the "SELLER"), and PIER 1 FUNDING, L.L.C., a Delaware limited liability company
(the "PURCHASER").

                                   WITNESSETH:

         WHEREAS, pursuant to the Pooling and Servicing Agreement, dated as of
February 12, 1997 (the "POOLING AND SERVICING AGREEMENT"), by and among
Purchaser, as Transferor, Pier 1 Imports (U.S.), Inc., a Delaware corporation,
as Servicer, and Wells Fargo Bank Minnesota, National Association (successor to
The Chase Manhattan Bank, successor by merger to Chase Bank of Texas, N.A.,
f/k/a Texas Commerce Bank National Association) (the "TRUSTEE"), as supplemented
by the Series 1997-1 Supplement, dated as of February 12, 1997 (the
"SUPPLEMENT"), by and among Purchaser, as Transferor, Servicer and Trustee,
Purchaser has the right to repurchase all or any of the Class A Asset-Backed
Certificates, Series 1997-1 (the "CLASS A CERTIFICATES");

         WHEREAS, the Purchaser desires to repurchase, and the Seller desires to
sell all of the Class A Certificates owned by Seller;

         NOW THEREFORE this Agreement witnesses that for good and valuable
consideration, the receipt and sufficiency of which is acknowledged by the
parties hereto, the parties agree as follows:


         1. DEFINED TERMS. unless otherwise defined herein, capitalized terms
used herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement and Supplement.

                  "BUSINESS DAY" shall mean any day other than (i) a Saturday or
         Sunday, or (ii) any other day on which national banking associations or
         state banking institutions in Houston and Fort Worth, Texas, Mason,
         Ohio or New York, New York are authorized or obligated by law,
         executive order or governmental decree to be closed.

                  "CALLED PRINCIPAL" shall mean, with respect to any Class A
         Certificate, the principal of such Class A Certificate that is to be
         prepaid.

                  "DISCOUNTED VALUE" shall mean, with respect to the Called
         Principal of any Class A Certificate, the amount obtained by
         discounting all Remaining Scheduled Payments from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Class A Certificates is payable) equal to the
         Reinvestment Yield with respect to such Called Principal.


<PAGE>


                  "MAKE-WHOLE AMOUNT" shall mean, with respect to any Class A
         Certificate, an amount equal to the excess, if any, of the Discounted
         Value of the Remaining Scheduled Payments with respect to the Called
         Principal of such Class A Certificate over the amount of such Called
         Principal; provided, however, that the Make-Whole Amount may in no
         event be less than zero.

                  "REINVESTMENT YIELD" shall mean, with respect to the Called
         Principal of any Class A Certificate, the yield to maturity implied by
         (i) the yields reported, as of 10:00 a.m. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as Government Yield Monitor
         (the "MONITOR") on the Bloomberg Service for actively traded U.S.
         Treasury securities having a maturity closest to the Remaining Average
         Life of such Called Principal as of such Settlement Date (See EXHIBIT
         "B" for an example of this Monitor), or (ii) if such yields are not
         reported as of such time or the yields reported as of such time are not
         ascertainable, the Treasury Constant Maturity Series Yields reported,
         for the latest day for which such yields have been so reported as of
         the second Business Day preceding the Settlement Date with respect to
         such Called Principal, in Federal Reserve Statistical Release H.15
         (519) (or any comparable successor publication) for actively traded
         U.S. Treasury securities having a constant maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date. Such implied yield will be determined, if necessary, by (a)
         converting U.S. Treasury bill quotations to bond-equivalent yields in
         accordance with accepted financial practice and (b) interpolating
         linearly between (1) the actively traded U.S. Treasury security with
         the duration closest to and greater than the Remaining Average Life and
         (2) the actively traded U.S. Treasury security with the duration
         closest to and less than the Remaining Average Life.

                  "REMAINING AVERAGE LIFE" shall mean, with respect to any
         Called Principal, the number of years (calculated to the nearest
         one-twelfth year) obtained by dividing (i) such Called Principal into
         (ii) the sum of the products obtained by multiplying (a) the principal
         component of each Remaining Scheduled Payment with respect to such
         Called Principal by (b) the number of years (calculated to the nearest
         one-twelfth year) that will elapse between the Settlement Date with
         respect to such Called Principal and the scheduled due date of such
         Remaining Scheduled Payment.

                  "REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
         Called Principal of any Class A Certificate, all payments of such
         Called Principal and interest thereon that would be due after the
         Settlement Date with respect to such Called Principal if no payment of
         such Called Principal were made prior to its scheduled due date,
         provided that if such Settlement Date is not a date on which interest
         payments are due to be made under the terms of the Class A
         Certificates, then the amount of the next succeeding scheduled interest
         payment will be reduced by the amount of interest accrued to such
         Settlement Date and required to be paid on such Settlement Date.

                  "SETTLEMENT DATE" shall mean, with respect to the Called
         Principal of any Class A Certificate, September 4, 2001, or such other
         date on which the Called Principal is to be prepaid.


<PAGE>


         2. SALE AND PURCHASE. Purchaser hereby agrees to repurchase and Seller
hereby agrees to sell on the Settlement Date all of the Class A Certificates
owned by Seller at a price equal to the Purchase Price (as defined below), and
Seller hereby agrees to present, convey and surrender all of its Class A
Certificates to Purchaser, on and subject to the terms and conditions as set
forth in the Pooling and Servicing Agreement, the Supplement and this Agreement.

         3. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") to be paid
for the Class A Certificates will be calculated in a manner intended to result
in a price which provides the Seller with a yield equivalent to the yield which
the Seller would have realized had the Seller not sold the Class A Certificates.
The Purchase Price payable to the Seller will equal the sum of the principal,
accrued interest and Make-Whole Amount, as determined in a format similar to
EXHIBIT "A".


         4. DELIVERY.

              (g) Delivery of and payment for the Class A Certificates shall be
made at the office of the Trustee, at 11:00 a.m. (Central Standard time) on the
Settlement Date, or at such other place and time as shall be agreed upon by
Purchaser and Seller.

              (h) On the Settlement Date, payment shall be made to Seller in
same-day funds by wire transfer to such account or accounts as Seller shall
specify prior to the Settlement Date or by such other means as the parties
hereto agree prior to the Settlement Date.

              (i) Upon presentation, surrender and delivery by the Seller of all
Class A Certificates owned by Seller, the Trustee will retire the Class A
Certificates.


         5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         6. LEGAL FEES. seller and Purchaser shall each pay their respective
attorney's fees.

         7. ENTIRE AGREEMENT. This Agreement (including all exhibits hereto)
contains the entire agreement between Seller and Purchaser, and no oral
statements or prior written matter not specifically incorporated herein shall be
of any force and effect.

         8. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.


<PAGE>


         9. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of this Agreement.

         10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original but
all of such counterparts shall together constitute one and the same instrument.

         IN WITNESS WHEREOF, this Agreement is executed as of the Effective
Date.


                  SELLER:         ALLSTATE INSURANCE COMPANY


                                  By: /s/ MARJORIE L. ANDERSON
                                     -------------------------------------------
                                     Marjorie L. Anderson


                                  ALLSTATE LIFE INSURANCE COMPANY


                                  By: /s/ MARJORIE L. ANDERSON
                                     -------------------------------------------
                                     Marjorie L. Anderson



                  PURCHASER:      PIER 1 FUNDING, L.L.C.,
                                  a Delaware limited liability company

                                  By:    PIER 1 IMPORTS (U.S.), INC.,
                                         a Delaware corporation,
                                         its sole member

                                         By: /s/ CHARLES H. TURNER
                                            ------------------------------------
                                            Charles H. Turner
                                            Senior Vice President and
                                            Chief Financial Officer