Document:

exv10w56

 

EXHIBIT
10.56

2006 Incentive Compensation Awards, 2007 Base Salaries,

2007 Target Incentive Opportunity Percentages and

2007 Equity Awards for Named Executive Officers

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2007	 	 	 
	 	 	 	 	 	 	 	 	 	 	Target	 	2007	 
	 	 	2006	 	 	 	 	 	 	Incentive Award	 	Equity Awards	 
	 	 	Incentive	 	 	2007	 	 	Opportunity	 	Stock Options	 	 	Performance Units	 
	Named Executive Officer	 	Compensation	 	 	Base Salary	 	 	(% of base salary)	 	(#)	 	 	(#)	 
	Myron E. Ullman, III
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chairman of the Board and
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chief Executive Officer
	 	$	2,673,750	 	 	$	1,500,000	 	 	 	125	%	 	 	201,511	 	 	 	50,955	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert B. Cavanaugh
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Executive Vice President and
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chief Financial Officer
	 	$	723,575	 	 	$	690,000	 	 	 	60	%	 	 	34,005	 	 	 	8,599	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ken C. Hicks
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	President and
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chief Merchandising Officer
	 	$	1,072,932	 	 	$	840,000	 	 	 	75	%	 	 	75,567	 	 	 	19,108	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael T. Theilmann
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Executive Vice President,
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chief Human Resources and
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Administration Officer
	 	$	550,924	 	 	$	550,000	 	 	 	60	%	 	 	27,708	 	 	 	7,006	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Joanne L. Bober
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Executive Vice President,
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	General Counsel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	and Secretary
	 	$	412,049	 	 	$	500,000	 	 	 	50	%	 	 	20,151	 	 	 	5,096exv10w57

 

EXHIBIT 10.57

December 2006 Amendments to J. C. Penney Company, Inc. 2005 Equity Compensation Plan

          RESOLVED that the second paragraph of Section 6. (c) of the J. C. Penney Company, Inc. 2005
Equity Compensation Plan be, and it hereby is, deleted in its entirety, and the following
substituted therefore:

          “Fair market value” of the Common Stock on any date will be the closing price on such date as
reported in the composite transaction table covering transactions of New York Stock Exchange listed
securities, or if such Exchange is closed, or if the Common Stock does not trade on such date, the
closing price reported in the composite transaction table on the last trading date immediately
preceding such date, or such other amount as the Committee may ascertain reasonably to represent
such fair market value.

 

          RESOLVED that Section 17 of the J. C. Penney Company, Inc. 2005 Equity Compensation Plan be,
and it hereby is, deleted in its entirety, and the following substituted therefore:

17. Changes in Capitalization and Similar Changes. In the event of any change in the number of
shares of Common Stock outstanding, or the assumption and conversion of outstanding Awards, by
reason of a stock dividend, stock split, acquisition, recapitalization, reclassification, merger,
consolidation, combination or exchange of shares, spin-off, distribution to holders of Common Stock
(other than normal cash dividends), an equitable and proportionate adjustment shall be made to: (1)
the option price under each unexercised Stock Option; (2) the exercise price under each unexercised
SAR; and (3) the number and class of shares which may be issued on exercise of Stock Options and
SARs granted and for Stock Awards, including restricted stock units, and any remaining shares
reserved under the Plan. Any such adjustment with respect to ISOs shall also conform to the
requirements of Section 422 of the Code.<PAGE>

                                                                    EXHIBIT 10.1

                 SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

         This Settlement Agreement and Mutual General Release ("Agreement") is
made and entered into as of March 29, 2007 (the "Effective Date") by and between
Alexander W. Smith ("Smith") and The TJX Companies, Inc. ("TJX").

         WHEREAS, Smith was formerly employed at TJX as Senior Executive Vice
President, Group President pursuant to a written employment agreement dated as
of April 5, 2005 (the "Employment Agreement") and resigned such employment
effective January 29, 2007; and

         WHEREAS, the Employment Agreement contains certain restrictive
covenants; and

         WHEREAS, Smith is currently employed as the President and Chief
Executive Officer of Pier 1 Imports, Inc. ("Pier 1"); and

         WHEREAS, TJX contends that Smith's employment with Pier 1 constitutes a
violation of the restrictive covenants of the Employment Agreement, and has
refused to pay certain amounts of Smith's compensation as a result; and

         WHEREAS Smith denies that his employment with Pier 1 constitutes a
violation of the restrictive covenants of the Employment Agreement; and

         WHEREAS, Smith and TJX desire to resolve, without further litigation or
adjudication, all asserted and potential claims arising out of or relating in
any way to Smith's former employment with TJX and Smith's current employment
with Pier 1;

         THEREFORE, in consideration of the mutual promises, conditions,
representations and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Smith and TJX agree as follows:

1.       Definitions.

         (a)      Any reference in this Agreement to "Smith" shall at all times
                  unless otherwise specified include, and this Agreement shall
                  cover, Alexander W. Smith, his heirs, administrators,
                  representatives, executors, legatees, successors, attorneys,
                  agents, and assigns, as well as anyone claiming by or through
                  him.

         (b)      Any reference in this Agreement to "TJX," including but not
                  limited to the reference to TJX in the General Release below,
                  shall at all times unless otherwise specified include, and
                  this Agreement shall cover, The TJX Companies, Inc., a
                  Delaware corporation with its principal place of business in
                  Framingham, Massachusetts, all of its parents, subsidiaries,
                  affiliates, predecessors, successors, assigns, all other legal
                  entities describing its organization or through which it
                  conducts business, and all of its current directors, officers,
                  employees, representatives, trustees, attorneys, agents,
                  insurers and assigns.

<PAGE>

         (c)      Any reference in this Agreement to "Pier 1" shall at all times
                  unless otherwise specified include Pier 1 Imports, Inc., a
                  Delaware corporation with its principal place of business in
                  Fort Worth, Texas, and all of its parents, subsidiaries,
                  affiliates, predecessors, successors, assigns, all other legal
                  entities describing its organization or through which it
                  conducts business, and all of its current directors, officers,
                  employees, representatives, trustees, attorneys, agents,
                  insurers and assigns.

2.       Monetary Payments from TJX.

         (a)      Acknowledgements. Smith and TJX acknowledge and agree that,
                  during his employment with TJX, Smith participated in TJX's
                  Management Incentive Plan ("MIP"), TJX's Long Range
                  Performance Incentive Plan ("LRPIP") and TJX's Supplemental
                  Executive Retirement Plan ("SERP"). Smith and TJX further
                  acknowledge and agree that, as of the date of his resignation
                  from TJX, Smith had accrued the following unpaid benefits
                  under those plans:

                  (i)      MIP -- $697,566.30

                  (ii)     LRPIP -- $373,746.24

                  (iii)    SERP -- $1,266,000.00

         (b)      Payment to Smith. Provided that Smith first executes this
                  Agreement, and subject to his full compliance with the terms
                  hereof, TJX agrees to pay Smith the gross amount of $175,000
                  less applicable withholding taxes (the "Settlement Payment"),
                  which Settlement Payment shall reflect payments to Smith as
                  follows:

                  (i)      MIP -- $0

                  (ii)     LRPIP -- $0

                  (iii)    SERP -- $175,000

                  The Settlement Payment shall be paid in two installments. The
                  first installment shall be in the gross amount of $100,000,
                  and shall be paid on or within ten days following July 29,
                  2007. The second installment shall be in the gross amount of
                  $75,000, and shall be paid on or before July 29, 2008. Each
                  installment of the Settlement Payment shall be paid in the
                  form of an electronic deposit to Smith's account, if
                  available, and if not shall be in the form of a check made
                  payable to "Alexander Smith" and shall be sent or delivered to
                  an address that Smith shall designate.

         (c)      Forfeiture of Additional Payments. Smith agrees and
                  acknowledges that the Settlement Payment shall represent full
                  and final satisfaction of any and all amounts that he may
                  claim are owed to him under the MIP, LRPIP and/or SERP, and
                  Smith fully and irrevocably forfeits any other or additional
                  amounts that he had accrued under the MIP, LRPIP and/or SERP
                  as of the date of his resignation from TJX.

                                      -2-
<PAGE>

         (d)      Tax Treatment.

                  (i)      Tax treatment. TJX shall withhold, report and remit
                           all required federal and state taxes from the
                           Settlement Payment, such that TJX will issue IRS
                           Forms W-2 to Smith reflecting the portion of the
                           Settlement Payment actually paid to Smith in a given
                           tax year (i.e., TJX will issue Smith a Form W-2 in
                           the amount of $100,000 for the tax year 2007, and TJX
                           will issue Smith a Form W-2 in the amount of $75,000
                           for the tax year 2008, provided that each of those
                           payments was made in those years). Each Form W-2 will
                           reflect applicable withholding taxes.

                  (ii)     No advice. Smith acknowledges that TJX has not
                           provided advice to him regarding the proper tax
                           treatment of the Settlement Payment or any payments
                           or benefits received by Smith in accordance with this
                           Agreement, and that he has been advised to consult
                           with his personal tax or financial advisor for such
                           advice.

                  (iii)    TJX may make all necessary tax-related filings. Smith
                           agrees that TJX shall be entitled to make any and all
                           filings regarding any payments or benefits made under
                           this Agreement with federal and/or state tax and
                           securities authorities which TJX, in its sole
                           discretion, determines are appropriate or required,
                           subject to the provisions of Paragraph 2(d)(i) above.

3.       Mutual General Releases.

         (a)      Except with respect to any rights, obligations or duties
                  arising out of this Agreement, and except with respect to any
                  rights of indemnity, including under any TJX policy, practice,
                  insurance policy, indemnity contract, corporate law, bylaw,
                  article of incorporation or otherwise, and in consideration of
                  the Settlement Payment as set forth in this Agreement and
                  other valuable consideration, Smith hereby releases and
                  discharges TJX and all of its present and former officers,
                  directors, partners, investors, stockholders, trustees,
                  attorneys, insurers, representatives, agents, employees and
                  employee benefit plans, and anyone acting for or on behalf of
                  any of the foregoing (collectively, the "TJX Releasees"), of
                  and from any and all complaints, charges, lawsuits and claims
                  for relief of any kind by Smith that he now has, ever had or
                  may have in the future against the TJX Releasees or any one of
                  them, whether known or unknown, arising out of any matter or
                  thing that has happened before the signing of this Agreement,
                  including but not limited to claims arising under common law
                  or statute, claims for breach of contract (including but not
                  limited to the Employment Agreement and any other contract,
                  agreement, plan, grant or other document relating to Smith's
                  former employment with TJX) and in tort (including but not
                  limited to claims for defamation, invasion of privacy,
                  intentional or negligent infliction of emotional distress and
                  claims for intentional interference with contractual or
                  advantageous relations), and claims arising under federal and
                  state labor laws, employment laws and laws prohibiting
                  discrimination on the basis of age, sex, race, national origin
                  or disability. The laws referred to in the preceding

                                      -3-
<PAGE>

                  sentence include but are not limited to Title VII of the Civil
                  Rights Act of 1964, the Employee Retirement Income Security
                  Act of 1974 ("ERISA"), the Equal Pay Act of 1963, the Age
                  Discrimination in Employment Act of 1967 ("ADEA"), the Fair
                  Labor Standards Act of 1938, the Americans with Disabilities
                  Act of 1990, the Rehabilitation Act of 1973, the Family and
                  Medical Leave Act of 1993, Chapters 149 through 154 of the
                  Massachusetts General Laws, the Massachusetts Civil Rights Act
                  and the Massachusetts Equal Rights Law, all as amended. It is
                  further expressly agreed and understood by Smith that the
                  release contained herein is a GENERAL RELEASE.

         (b)      Except with respect to any rights, obligations or duties
                  arising out of this Agreement and the Employment Agreement (as
                  modified by Sections 5 and 8 of this Agreement), and in
                  consideration of Smith's General Release to the TJX Releasees
                  and other valuable consideration, TJX and anyone acting for or
                  on behalf of TJX, hereby release and discharge Smith of and
                  from any and all complaints, charges, lawsuits and claims for
                  relief of any kind that TJX now has, ever had or may have in
                  the future against Smith, whether known or unknown, arising
                  out of any matter or thing that has happened before the
                  signing of this Agreement, including but not limited to claims
                  arising out of Smith's former employment with TJX, Smith's
                  present employment with Pier 1, claims arising under common
                  law or statute, claims for breach of contract (including but
                  not limited to the Employment Agreement and any other
                  contract, agreement, plan, grant or other document relating to
                  Smith's former employment with TJX) and in tort (including but
                  not limited to claims for defamation, invasion of privacy,
                  intentional or negligent infliction of emotional distress and
                  claims for intentional interference with contractual or
                  advantageous relations). It is further expressly agreed and
                  understood by TJX that the release contained herein is a
                  GENERAL RELEASE.

4.       Covenants Not to Sue.

         (a)      Smith represents and warrants that he has not filed any
                  complaints, charges, demands for arbitration or mediation or
                  any other claims for relief (collectively, "Claims") against
                  the TJX Releasees, or any one of them, with any local, state
                  or federal court or administrative agency, any professional or
                  regulatory board, any arbitrator or mediator, or any other
                  agency or entity. To the extent of any such filing made by him
                  or purporting to have been made on his behalf, Smith agrees to
                  dismiss such Claims with prejudice and without costs. Smith
                  further warrants that he has not previously assigned or
                  transferred any Claims that are subject to the General Release
                  contained herein. Smith agrees and covenants not to sue or
                  bring any Claims against the TJX Releasees, or any one of
                  them, whether in court or in arbitration or mediation, with
                  respect to matters subject to the General Release contained
                  herein. Smith further agrees not to institute any claim,
                  charge, complaint or lawsuit to challenge the validity of the
                  General Release or the circumstances surrounding its
                  execution. In the event that Smith institutes any action
                  covered by this Paragraph, that action shall be dismissed upon
                  presentation of this Agreement.

                                      -4-
<PAGE>

         (b)      TJX represents and warrants that it has not filed any
                  complaints, charges, demands for arbitration or mediation, or
                  any other claims for relief (collectively, "Claims") against
                  Smith with any local, state or federal court or administrative
                  agency, any professional or regulatory board, any arbitrator
                  or mediator, or any other agency or entity. To the extent of
                  any such filing made by it or purporting to have been made on
                  its behalf, TJX agrees to dismiss such Claims with prejudice
                  and without costs. TJX further warrants that it has not
                  previously assigned or transferred any Claims that are subject
                  to the General Release contained herein. TJX agrees and
                  covenants not to sue or bring any Claims, whether in court or
                  in arbitration or mediation, against Smith with respect to
                  matters subject to the General Release contained herein. TJX
                  further agrees not to institute any claim, charge, complaint
                  or lawsuit to challenge the validity of the General Release or
                  the circumstances surrounding its execution. In the event that
                  TJX institutes any action covered by this Paragraph, that
                  action shall be dismissed upon presentation of this Agreement.

5.       Non-Competition, Non-Solicitation.

         (a)      Smith and TJX understand and agree that, Smith having
                  forfeited all accrued amounts under the MIP, LRPIP and SERP
                  (other than the Settlement Payment as set forth above), any
                  covenant not to compete to which TJX and Smith are or were
                  both parties, including but not limited to Section 8(b) of the
                  Employment Agreement, shall no longer have any force and
                  effect whatsoever with respect to Smith's employment at Pier
                  1. For purposes of clarity, it is expressly understood and
                  agreed between Smith and TJX that TJX fully and irrevocably
                  releases Smith from the restrictions of any such covenant not
                  to compete, including but not limited to that contained in
                  Section 8(b) of the Employment Agreement, with respect to
                  Smith's employment at Pier 1, and waives its right, both now
                  and at any time in the future, to bring any claim in any court
                  or file any demand for arbitration or mediation in which TJX
                  invokes or relies in any way on Section 8(b) of the Employment
                  Agreement, or any other covenant not to compete to which TJX
                  and Smith are or were both parties, to challenge Smith's
                  actions after January 29, 2007 in respect to his employment at
                  Pier 1, including but not limited to any challenge to Smith's
                  employment or activities with or on behalf of Pier 1 and
                  further including but not limited to any duties or functions
                  that Smith performed, performs or may perform for Pier 1 after
                  January 29, 2007, now and at any time in the future,
                  specifically including but not limited to any conduct that
                  occurs after the Effective Date of this Agreement. In the
                  event that TJX institutes any action covered by this Paragraph
                  5(a), that action shall be dismissed upon presentation of this
                  Agreement and TJX shall reimburse Smith for legal fees
                  incurred in obtaining such dismissal. Notwithstanding the
                  foregoing, it is agreed and understood that the restrictions
                  contained in Section 8 of the Employment Agreement shall
                  continue in full force and effect in accordance with their
                  terms in all circumstances and contexts other than with
                  respect to the application of Section 8(b) to Smith's
                  employment at Pier 1.

         (b)      For the avoidance of doubt and for the purpose of clarifying
                  Smith's continuing obligations under Section 8(a) of the
                  Employment Agreement, for a period beginning

                                      -5-
<PAGE>

                  on the Effective Date of this Agreement and ending on January
                  29, 2009, Smith shall not, and shall not direct Pier 1 or any
                  other individual or entity to, directly or indirectly
                  (including as a partner, shareholder, joint venturer or other
                  investor), other than as excepted herein or with the written
                  consent of TJX:

                  (i)      Hire, offer to hire, attempt to hire or assist in the
                           hiring of, any Protected Person as an employee,
                           director, consultant, advisor or other service
                           provider;

                  (ii)     Recommend any Protected Person for employment or
                           service engagement with any person or entity other
                           than TJX, except that Smith may provide employment
                           references given in the ordinary course of business
                           for any Protected Person;

                  (iii)    Solicit as an employee, director, consultant, advisor
                           or other service provider any Protected Person, or
                           seek to persuade, induce or encourage any Protected
                           Person to discontinue employment or service as a
                           director, consultant, advisor or other service
                           provider with TJX, or recommend to any Protected
                           Person any employment or engagement other than with
                           TJX, except that Smith may provide employment
                           references given in the ordinary course of business
                           for any Protected Person;

                  (iv)     Accept services (whether for compensation or
                           otherwise) from any Protected Person which are
                           similar in nature to the services provided by the
                           Protected Person to TJX in his or her capacity as an
                           employee, director, consultant, advisor or other
                           service provider; or

                  (v)      Participate with any other person or entity in any of
                           the foregoing activities.

         (c)      For purposes of this Paragraph 5, a Protected Person is a
                  person who, between July 29, 2006 and January 29, 2007
                  inclusive, was employed or is employed by TJX either in a
                  position of (i) Assistant Vice President or higher, or (ii) in
                  a salaried position in any merchandising group with a salary
                  in excess of $50,000 per year. As to (I) each Protected Person
                  to whom the foregoing applies, (II) each subcategory of
                  Protected Person, as defined above, (III) each limitation on
                  (A) employment or other engagement, (B) solicitation and (C)
                  unsolicited acceptance of services, of each Protected Person
                  and (IV) each month of the period during which the provisions
                  of Paragraph 5(b) apply to each of the foregoing, the
                  provisions set forth in Paragraph 5(b) shall be deemed to be
                  separate and independent agreements. In the event of
                  unenforceability of any one or more such agreement(s), such
                  unenforceable agreement(s) shall be deemed automatically
                  reformed in order to allow for the greatest degree of
                  enforceability authorized by law or, if no such reformation is
                  possible, deleted from the provisions hereof entirely, and
                  such reformation or deletion shall not affect the
                  enforceability of any other provision of this subsection or
                  any other term of this Agreement.

                                      -6-
<PAGE>

         (d)      Notwithstanding the foregoing, it shall not be a violation or
                  breach of this Agreement:

                  (i)      If a Protected Person is solicited, hired, contracted
                           or otherwise engaged by Pier 1 inadvertently (defined
                           to mean without actual knowledge by Smith) and as to
                           such action (I) Smith receives no objection from TJX
                           within 30 days of TJX learning of such action; or
                           (II) after written notice of objection from TJX, the
                           employment relationship in issue does not go forward,
                           is not continued, or the matter is otherwise cured to
                           the satisfaction of TJX;

                  (ii)     For consent to be sought from TJX to perform any act
                           that may otherwise constitute a violation of
                           Paragraph 5(b);

                  (iii)    For Smith to engage in any activity described in
                           Paragraph 5(b) above with any Protected Person who is
                           not employed or otherwise engaged with TJX as of the
                           date of first contact initiated by Smith and/or Pier
                           1, provided that (A) the termination or cessation of
                           such Protected Person's employment or service as a
                           director, consultant, advisor or other service
                           provider with TJX was effectuated for a good faith,
                           bona fide reason and was not intended to be a sham or
                           artifice to avoid the restrictions contained in this
                           Agreement; and (B) such Protected Person held a good
                           faith, bona fide position as an employee, director,
                           consultant, advisor or other service provider with
                           any entity other than Pier 1 subsequent to such
                           Protected Person's employment with TJX; or

                  (iv)     For Smith to contact or otherwise communicate with
                           any Protected Person on a social basis, so long as
                           Smith shall not engage in any of the prohibited
                           activities described in Paragraph 5(b) above in the
                           course of such contact or communication.

         (e)      Nothing in this Agreement shall be construed to require
                  contractually Pier 1 to take any action, or refrain from
                  taking any action, whatsoever.

6.       Nonadmissions. It is understood and agreed by Smith and TJX that this
         Agreement effects the settlement of claims that are denied and
         disputed, and that nothing contained herein nor the fact that this
         Agreement has been executed shall constitute or be construed as an
         admission by any Party of any kind of liability, or as an admission of
         any violation by any Party of any federal or state law, statute,
         policy, rule or regulation or common law obligation or of any
         wrongdoing whatsoever. Each Party hereto denies liability of any kind
         to any other Party, and by entering into this Agreement intends merely
         to avoid further litigation, arbitration, dispute or mediation.

7.       Breach. Smith and TJX agree that in the event that one Party breaches
         any part or parts of this Agreement, legal proceedings subject to and
         consistent with the provisions of Paragraph 12 hereof may be instituted
         against that Party for breach of contract. In the event that a Party
         institutes such legal proceedings for breach of this Agreement, it is
         agreed that

                                      -7-
<PAGE>

         the sole remedy available to said party shall be enforcement of the
         terms of this Agreement and/or a claim for damages resulting from a
         breach of this Agreement, including, but not limited to, the costs and
         attorneys' fees associated with bringing an action for enforcement of
         this Agreement; but under no circumstances shall Smith or TJX be
         entitled to revive, reassert or assert any claims that they have
         released or abandoned under this Agreement. Notwithstanding the
         foregoing, and in addition to any other remedies to which it may be
         entitled, it is agreed that, if Smith should violate any part or parts
         of this Agreement, he shall immediately forfeit and disgorge to TJX the
         Settlement Payment paid to him pursuant to Paragraph 2(b) hereof, and
         TJX shall be entitled to withhold any portion of the Settlement Payment
         not previously paid to Smith; provided, however, that any disputes
         concerning violation and/or forfeiture will ultimately be considered
         and decided by an arbitrator pursuant to Paragraph 12 of this
         Agreement.

8.       Entire Agreement. This Agreement contains and constitutes the entire
         understanding and agreement between Smith and TJX with respect to the
         matters which are the subject of this Agreement, and it supersedes and
         cancels all prior and contemporaneous negotiations, agreements,
         commitments, communications, and understandings, written or oral,
         between Smith and TJX, with the exception of the provisions of Sections
         8 and 13 of the Employment Agreement, which shall continue in full
         force and effect except as otherwise provided in Section 5 of this
         Agreement. In entering into this Agreement, no Party is relying upon
         any promise, inducement or representation other than those set forth in
         this Agreement.

9.       Amendment. This Agreement shall be binding upon Smith and TJX and may
         not be released, discharged, abandoned, supplemented, amended, changed,
         or modified in any manner, orally or otherwise, except by an instrument
         in writing of concurrent or subsequent date, signed by Smith and a duly
         authorized officer or representative of TJX.

10.      Validity. Smith and TJX agree that each provision of this Agreement,
         other than the General Release and Covenant Not to Sue provisions, is
         severable, and should any such provision be determined by a court of
         competent jurisdiction, arbitrator or administrative agency to be
         illegal or invalid, the validity of the remaining provisions shall not
         be affected and the illegal or invalid provisions shall be deemed not
         to be a part of this Agreement.

11.      Governing Law. This Agreement shall be governed by and construed in
         accordance with the laws of the Commonwealth of Massachusetts without
         regard to conflict of laws provisions.

12.      Arbitration. In the event that there is any claim or dispute arising
         out of or relating to this Agreement, or the breach thereof, and Smith
         and TJX shall not have resolved such claim or dispute within sixty (60)
         days after written notice from one Party to the other setting forth the
         nature of such claim or dispute, then such claim or dispute shall be
         settled exclusively by binding arbitration in Boston, Massachusetts in
         accordance with the Employment Arbitration Rules and Mediation
         Procedures of the American Arbitration Association ("Rules") by an
         arbitrator mutually agreed upon by Smith and TJX or, in the absence of
         such agreement, by an arbitrator selected according to the Rules.
         Notwithstanding the foregoing, if either Smith or TJX shall request,
         such arbitration shall be conducted by a panel of three

                                      -8-
<PAGE>

         arbitrators, one selected by Smith, one selected by TJX and the third
         selected by agreement of the first two or, in the absence of such
         agreement, in accordance with the Rules. The prevailing party in any
         arbitration hereunder shall be entitled to an award of its costs and
         attorney's fees. Judgment upon the award rendered by such arbitrator(s)
         shall be entered in any court having jurisdiction thereof upon the
         application of either Party. Smith and TJX understand and agree that
         this arbitration clause does not bind Pier 1 to any such arbitration.

13.      Captions and Headings. Captions and headings used herein are inserted
         for convenience, do not constitute a part of this Agreement, and shall
         not be admissible for the purpose of proving the intent of Smith and
         TJX.

14.      No Strict Construction. The language used in this Agreement is the
         language chosen by Smith and TJX to express their mutual intent, and no
         rule of strict construction will be applied against either Party.

15.      Execution in Counterparts. This Agreement may be executed in two or
         more duplicate counterparts, each of which shall be treated as an
         original, but all of which together shall constitute one and the same
         instrument, and in pleading or proving any provision of this Agreement,
         it shall not be necessary to produce more than one such counterpart.
         For the convenience of Smith and TJX, facsimile and pdf signatures
         shall be accepted as originals.

16.      Waiver. No waiver of any provision of this Agreement, or the breach
         thereof, shall be deemed a waiver or breach of any other provision.

17.      Representations. Smith represents and acknowledges that:

         (a)      He has been advised to consult an attorney and has done so
                  prior to executing this Agreement. This representation does
                  not waive his right to rely upon the attorney/client privilege
                  with respect to the subject matter and substance of his
                  consultations with his attorney.

                  He has been given at least twenty-one (21) days to consider
                  this Agreement, that he has seven (7) days from the date he
                  executes this Agreement in which to revoke it, and that this
                  Agreement will not be effective or enforceable until after the
                  seven-day revocation period ends without revocation by him.
                  Revocation can be made by delivery of a written notice of
                  revocation to counsel for TJX by midnight on or before the
                  seventh day after Smith signs the Agreement.

         (b)      He has carefully read this Agreement, fully understands its
                  terms, their meaning, and their effect upon his rights and the
                  duties hereby undertaken by him; understands the final and
                  binding effect of this Agreement; freely and voluntarily
                  assents to all the terms and conditions hereof; and signs the
                  same as his own free act with the full intent of releasing the
                  TJX Releasees from all claims released herein.

                                      -9-
<PAGE>

         Intending to be legally bound, Smith and TJX have set their hands and
seals to this Agreement as of the date written above.

The TJX Companies, Inc.                          Alexander W. Smith

By: /s/ Ann McCauley                         By: /s/ Alexander W. Smith
    ---------------------------------            -----------------------------
    Ann McCauley                                 Alexander W. Smith
    Executive Vice President and
    General Counsel
    The TJX Companies, Inc.

                                      -10-

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