UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
                                     FORM 10-K


[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
        EXCHANGE ACT OF 1934 [FEE REQUIRED]

                 For the fiscal year ended February 26, 1994.

                                     OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        For the transition period from ____________ to ______________

                        Commission File No. 1-7832

                               PIER 1 IMPORTS, INC.
            (Exact name of Registrant as specified in its charter)

          DELAWARE                                           75-1729843
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                           Identification No.)

   301 Commerce Street, Suite 600
          Fort Worth, Texas                                     76102
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:  (817) 878-8000

Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
       Title of each class                              on which registered
       
Common Stock, $1 par value                            New York Stock Exchange
11 1/2% Sub. Debentures Due 2003                      New York Stock Exchange
6 7/8% Convertible Sub. Notes Due 2002                New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

       Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  
Yes  [X]        No   [ ]
                                        
       Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Sec.229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [   ]

       As of May 4, 1994, there were 37,547,477 shares of Common Stock, $1.00
par value, outstanding, and the aggregate market value of the Common Stock of
Registrant held by non-affiliates was approximately $311 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

Location in Form 10-K                  Incorporated Document
Part III                               Proxy Statement for 1994 Annual Meeting

                                      PART I

Item 1.          Business.

        (a)      General Development of Business.

        From fiscal 1988 through fiscal 1994, Registrant, through its
subsidiary, Pier 1 Imports (U.S.), Inc. ("Pier 1"), expanded its specialty
retail operations from 350 retail stores to 636 stores.  In fiscal year 1994,
Registrant continued to execute its expansion plan by opening 48 new Pier 1
Imports stores, including one in Puerto Rico, and closed 17 stores.  The rate
of expansion for the fiscal year doubled the previous fiscal year rate when
Registrant opened 26 new Pier 1 Imports stores.  Throughout the fiscal year
Registrant continued its focus on cost efficiencies and expense controls. 
Subject to changes in the retail environment, availability of suitable store
sites and adequate financing, Registrant plans to open 45 - 50 new Pier 1
Imports stores in fiscal year 1995.

        Set forth below is a list by city of Pier 1-operated stores opened in
fiscal 1994:

Billings, MT                       1          Lancaster, OH                1
Boulder, CO                        1          Las Vegas, NV                1
Camp Hill, PA                      1          Lawrenceville, NJ            1
Cary, NC                           1          Lima, OH                     1
Cedar Rapids, IA                   1          Lynchburg, VA                1
Cheyenne, WY                       1          Mankato, MN                  1
Chula Vista, CA                    1          McAllen, TX                  1
Clarksville, TN                    1          Montgomery, AL               1
Colonial Heights, VA               1          New York, NY                 1
Columbus, OH                       1          Niles, OH                    1
Daytona Beach, FL                  1          Pacific Grove, CA            1
Elyria, OH                         1          Palm Desert, CA              1
Fairlawn, OH                       1          Palmdale, CA                 1
Fort Gratiot, MI                   1          Pineville, NC                1
Fort Myers, FL                     1          Poughkeepsie, NY             1
Fredericksburg, VA                 1          Rapid City, SD               1
Grand Forks, ND                    1          Raynham, MA                  1
Greenville, NC                     1          Roanoke, VA                  1
Hatillo, PR                        1          Salisbury, MD                1
Hickory, NC                        1          Vancouver, WA                1
Houston, TX                        1          Victor, NY                   1
Huntsville, AL                     1          Watertown, NY                1
Johnstown, PA                      1          Wichita Falls, TX            1
Joplin, MO                         1          Wilmington, NC               1


        Pier 1 maintains regional distribution center facilities in or near
Baltimore, Maryland; Columbus, Ohio; Chicago, Illinois; Fort Worth, Texas;
Los Angeles, California; Savannah, Georgia; and Montreal, Canada.

        Registrant has provided a special after-tax reserve of $16,507,000 to
provide for the closing of approximately 50 unprofitable stores and to adjust
the carrying value of the Registrant's holdings in General Host Corporation
("General Host") common stock.  The store closing provision reflects
anticipated costs associated with closing certain under performing stores
including estimated costs relating to leases, fixed assets, relocation,
inventory liquidation and losses from operations during interim period before
closings.  The adjustment to the carrying value of General Host common stock
is Registrant's estimate of the portion of the decline in the market value
that is other than temporary.

        In fiscal 1993, the Registrant invested in preference stock of The Pier
Retail Group Limited ("The Pier") located in the United Kingdom.  As of April
26, 1994, investment in and loans to The Pier aggregated $3.4 million, with
additional debt guarantees of approximately $4 million.  The Pier is a ten-
store retail operation that offers decorative home furnishings and related
items in a store setting similar to that operated by Pier 1.

        During fiscal 1994, Pier 1 became active in an arrangement to supply
Sears de Mexico with Pier 1 merchandise to be sold in certain Sears stores
throughout Mexico.   Presently two Sears stores in Mexico City offer Pier 1
merchandise.

        In April 1993, Registrant sold its 49.5% interest in Sunbelt Nursery
Group, Inc. ("Sunbelt") to General Host in exchange for 1,940,000 shares of
General Host common stock.  In connection with Registrant's sale, Registrant
agreed to make available up to $25 million of properties for lease (the
"Lease Commitment") to Sunbelt and to provide Sunbelt a $12 million credit
facility (the "Credit Facility") either in guarantees of Sunbelt indebtedness
or direct loans until April 28, 1994.  Sunbelt's repayment obligations under
this agreement are secured by General Host's pledge of 4.2 million shares of
Sunbelt common stock.  Additionally, Registrant guarantees approximately $4.5
million of Sunbelt's lease obligations.  Currently, $12 million in loans are
outstanding under the Credit Facility and $23 million of properties have been
leased to Sunbelt under the Lease Commitment.  These leases are required to
be refinanced by Sunbelt from September 1994 to October 1995.  If Sunbelt
defaults on refinancing these leases as the terms expire, Registrant will be
required to obtain other financing for such leases.

        During April 1994, Sunbelt sought an extension for repayment of loans
under the Credit Facility, and on April 25, 1994, Registrant and Sunbelt
entered into an Extension Agreement to extend the maturity of the Credit
Facility from April 28, 1994, to June 30, 1994.  Registrant granted the
extension to allow Sunbelt additional time to obtain new financing to replace
the Credit Facility.  If Sunbelt is unable to refinance the debt prior to
June 30, 1994, Sunbelt has reported that it would be unable to repay the debt
at maturity.  In such event, Sunbelt would be in default under the Credit
Facility as well as the Lease Commitment.  Sunbelt has also reported that
such a default could force it to consider legal proceedings to restructure
its obligations.

        In May 1994, Registrant waived Sunbelt's breach of certain covenants
relating to Sunbelt's failure to (i) timely deliver its annual report to
Registrant, (ii) satisfy the required current ratio, and (iii) timely provide
notice of such breaches.  The waiver expires on June 30, 1994.  In connection
with such waiver, Sunbelt agreed to not borrow additional funds under the
Credit Facility or Lease Commitment in excess of the amount outstanding at
the time the waiver was consummated.
                         
        (b)      Financial Information About Industry Segments.

        Registrant operates in one business segment consisting of the retail
sale of decorative home furnishings and related items.

        Financial information with respect to Registrant's business is found in
Registrant's Consolidated Financial Statements which are set forth in Item 8
herein.

        (c)      Narrative Description of Business.

        The specialty retail operations of Pier 1 consist of a chain of retail
stores operating in the United States, Canada, and Puerto Rico under the name
"Pier 1 Imports" and selling a wide variety of furniture, decorative home
furnishings, dining and kitchen goods, accessories and other specialty items
for the home, and distinctive casual clothing and fashion accessories.

        On February 26, 1994, Pier 1 operated 606 stores in 46 states of the
United States, the District of Columbia and Puerto Rico, and 30 stores in
four Canadian provinces as well as additional international operations in
England and Mexico.  It also had franchised 36 stores in 24 states.  The
company-operated Pier 1 stores average approximately 7,000 square feet in
size of retail selling space, and are generally located in strip shopping
centers or are freestanding units and are predominately located near or in
suburbs of metropolitan areas.  During fiscal 1994, net sales of Pier 1
totalled $685.4 million.  Pier 1 stores have their highest sales volumes
during November and December, reflecting the Christmas selling season.

        Pier 1 offers a diverse selection of products consisting of over 5,000
items.  While the broad categories of Pier 1's merchandise remain constant,
individual items within these product groupings change frequently in order to
meet the demands of customers.  The principal categories of merchandise
include the following:

        FURNITURE - This product group consists of furniture sold to be used on
patios and in sun rooms, living, dining and kitchen areas, and constituted
approximately 26.8%, 26.3% and 24.6% of the total retail sales of Pier 1 in
fiscal years 1994, 1993 and 1992, respectively.  These goods are mainly
imported from Taiwan, Hong Kong, China, the Philippines and Indonesia, and
are handcrafted from natural materials, including rattan, buri, willow, pine,
beech, rubber, and selected hardwoods and have either natural or painted
finishes.  This product group also includes metal furniture.

        DECORATIVE HOME FURNISHINGS - This product group constituted the
broadest category of merchandise in Pier 1's sales mix and contributed
approximately 24.4%, 23.7% and 23.9% to Pier 1's total retail sales in fiscal
years 1994, 1993 and 1992, respectively.  These items are imported from
approximately 40 countries and include brass, marble, and wood items, as well
as lamps, vases, dried and silk flowers, baskets, wall decorations and
numerous other decorative items, practically all of which are handcrafted
from natural materials.

        DINING AND KITCHEN GOODS - This product group is imported from India,
the Far East and Europe and include ceramics, dinnerware and other functional
and decorative items.  These goods accounted for approximately 14.1%, 14.1%
and 13.8% of the total retail sales of Pier 1 in fiscal years 1994, 1993 and
1992, respectively.

        TEXTILES - This product group consists of linen items, padding, custom
order fabrics as well as window coverings, bedspreads, and pillows of which
the majority of these items are produced from original designs created both
domestically and in India.  These goods accounted for approximately 13.5%,
13.9% and 14.9% of the total retail sales of Pier 1 in fiscal years 1994,
1993 and 1992, respectively.   

        CLOTHING, JEWELRY AND FASHION ACCESSORIES - This product group is
imported from India, Greece and Indonesia and accounted for approximately
12.1%, 14.4% and 15.4% of the total retail sales of Pier 1 in fiscal years
1994, 1993 and 1992 respectively.

        Merchandise offered for sale in Pier 1's stores largely consists of
items which require a significant degree of handcraftsmanship.  A majority of
the items is imported directly by Pier 1 from foreign suppliers.  Although
Pier 1 is not dependent on any particular supplier, it has enjoyed
long-standing relationships with many vendors.  During fiscal 1994, Pier 1
imported approximately 29% of its purchases from China, 19% from India, and
another 31% was imported from Indonesia, Japan, Thailand, the Philippines,
and Italy.  The remaining 21% was imported from various Asian, European,
Central American, South American and African countries or obtained from
United States manufacturers, wholesalers or importers.  In selecting the
source of a product, Pier 1  considers quality, dependability of delivery and
cost.  For the most part, the imported merchandise is handcrafted in cottage
industries and small factories.

        Pier 1 currently operates 7 regional distribution centers located in or
near Baltimore, Maryland; Los Angeles, California; Fort Worth, Texas;
Chicago, Illinois; Savannah, Georgia; Columbus, Ohio, and Montreal, Canada. 
Imported merchandise and a portion of domestic purchases are delivered to the
distribution centers, unpacked, and made available for shipment to the
various stores in the center's region.  The merchandise is then distributed
to the retail stores by company-operated trucks and contract carriers.  Due
to the time delays involved in procuring merchandise from foreign suppliers,
Pier 1 is required to maintain a significant amount of inventory in order to
be assured of a sufficient supply of products to its customers.  A stock of
regularly reordered items and temporary inventory surpluses have, from time
to time, been carried at the distribution centers.

        Pier 1 stores have no direct national competitors.  The major
competition arises at a local level from other retailers offering similar
lines of merchandise, such as small specialty sections of large department
stores, home furnishing stores, small specialty import stores and discount
stores.  Registrant believes Pier 1 enjoys a competitive edge over these
stores, due to its greater name awareness and the extent and variety of the
merchandise offered at Pier 1 stores.  While other competing stores may offer
a few items that change somewhat infrequently, Pier 1 offers over 5,000 items
of which approximately forty percent (40%), change each year.

        As a retailer of imported merchandise, Pier 1 is subject to certain
risks which typically do not affect retailers of domestically produced
merchandise, including the need to order merchandise from four to twelve
months in advance of delivery and to pay for such merchandise at such time as
it is loaded for transport to designated U.S. or Canadian destinations. 
Additionally, dock strikes, fluctuations in currency values and monetary
exchange rates, restrictions on the convertibility of the dollar and other
currencies, duties, taxes and other charges on imports, import quota systems
and other restrictions generally placed on foreign trade can affect the
price, delivery and availability of ordered merchandise.  The inability to
import products from certain countries or the imposition of significant
tariffs could have a material adverse effect on the results of operations of
Pier 1.

        In 1988, the Omnibus Trade and Competitiveness Act was signed into law. 
This legislation was enacted in response to a perceived decline in U.S.
global competitiveness and the continuing presence of unfair trade practices
that limit U.S. exporters' access to foreign markets.  Under the law, unfair
trade practices of countries around the world may be investigated by the
United States Trade Representative and such investigations may lead to
sanctions which could take the form of quotas or increased duties on imports
into the U.S.  

        On March 3, 1994, President Clinton signed an executive order re-
instituting a trade provision known as Super 301 which is designed to allow
negotiations before countries are designated as priority foreign countries. 
Priority foreign countries are the nations whose trade practices, if
corrected, would provide the greatest potential for expansion of U.S.
exports. The announcement did not designate any country or any practice.  The
current renewal of Super 301 will expire after two years.  The United States
may employ other measures to implement its international trade policies and
objectives, such as the withdrawal, selectively or entirely, of most favored
nation status ("MFN") to countries around the world which would cause import
duties to increase.  Presently, the President is considering the MFN status
of the Peoples Republic of China, which, if lost entirely, would cause
Registrant to source affected goods from other countries.  Any type of
sanction is likely to increase Registrant's import costs or limit the
availability of products purchased from sanctioned countries.  In such event,
Registrant will seek similar products from other countries.

        On April 14, 1994, the United States and more than 100 other countries
reached an agreement to reduce, over time, tariff and non-tariff barriers to
world trade in goods and services and to establish a new world trade
organization to replace the General Agreement on Tariffs and Trade next year. 
The United States must have congressional approval to be bound by the terms
of the agreement which was the culmination of seven years of negotiations. 
Any agreement which may reduce tariff and non-tariff barriers in
international trade is considered beneficial to Registrant's business in the
United States and around the world.  

        Pier 1 owns three federally registered service marks under which its
company-operated and franchised stores do business.  These registrations are
numbered 948,076  and 1,620,518 for the mark PIER 1 IMPORTS and 1,104,059 for
the mark PIER 1.

        On May 3, 1994, Pier 1 employed approximately 7,850 persons:  500 were
full time employees at Pier 1's home office, 3,900 were part time employees
in its retail stores and distribution centers and 3,450 were full time
employees in the stores and distribution centers.

        Registrant maintains one wholly owned foreign subsidiary, which is
incorporated under the laws of Hong Kong.  The foreign subsidiary manages
certain merchandise procurement, export and financial service functions for
Pier 1.


Item 2.          Properties.

        (a)      Properties of Registrant.

        As a holding company, Registrant does not own any physical property
materially important to the conduct of its business operations.  Registrant's
home office in Fort Worth, Texas is leased by Pier 1.

        (b)      Properties of Pier 1.

        Pier 1 leases certain properties consisting principally of retail
stores, warehouses and office space.  In July 1985, Pier 1 entered into a
lease agreement which currently provides 128,770 square feet of office space
in downtown Fort Worth for Registrant's home office.  Most of Pier 1's retail
store operations are conducted pursuant to leases which are classified as
operating leases, and at February 26, 1994, Pier 1's minimum operating lease
commitments for various stores and warehouses aggregated approximately $574
million.

        Pier 1 currently owns and leases distribution space of 
approximately 3 million square feet.  Additional space requirements could be
accommodated, if necessary, by leasing additional space.

        The following table shows the distribution by state of Pier 1 stores
operated by Pier 1 as of February 26, 1994, prior to the fiscal 1994
provision to close 50 unprofitable stores:

United States and Puerto Rico

Alabama                           4             Nebraska                 3
Arizona                           8             Nevada                   3
Arkansas                          2             New Hampshire            3
California                       88             New Jersey              17
Colorado                         14             New Mexico               2
Connecticut                      11             New York                36
Delaware                          2             North Carolina          11
District of Columbia              1             North Dakota             3
Florida                          37             Ohio                    34
Georgia                          17             Oklahoma                 6
Idaho                             1             Oregon                   5
Illinois                         38             Pennsylvania            21
Indiana                           9             Puerto Rico              1
Iowa                              3             Rhode Island             2
Kansas                            4             South Carolina           5
Kentucky                          6             South Dakota             1
Louisiana                         9             Tennessee               11
Maryland                         16             Texas                   49
Massachusetts                    19             Utah                     4
Michigan                         22             Virginia                21
Minnesota                        14             Washington              14
Mississippi                       2             West Virginia            1
Missouri                         12             Wisconsin               12
Montana                           1             Wyoming                  1


Canada

New Brunswick                     1
Nova Scotia                       2
Ontario                          18
Quebec                            9


        Warehouse properties that are owned or leased by Pier 1 are as follows:

                                                                Owned/Leased
Location                               Approx. Sq. Ft.          Facility 

Baltimore, Maryland                    634,186 sq. ft.          Leased
Columbus, Ohio                         527,127 sq. ft.          Leased
Chicago, Illinois                      297,552 sq. ft.          Owned
Fort Worth, Texas                      454,868 sq. ft.          Owned
Rancho Cucamonga, California           515,990 sq. ft.          Leased
Savannah, Georgia                      393,216 sq. ft.          Owned
Montreal, Quebec, Canada               105,489 sq. ft.          Leased


        Pier 1 participates in a limited partnership to provide for financing
and construction of Pier 1 retail stores.  As of May 1, 1994, the partnership
owned 33 retail store sites that are currently open and operating.  The
investment by the partnership in land and building approximated $44.3 million
as of the end of April 1994.  

        Registrant has agreements with unaffiliated groups to lease certain
stores and distribution center space.  These unaffiliated groups are
committed to make available up to $101.8 million for development or
acquisition of stores leased by Pier 1.  Presently, Registrant has used $99.5
million of that availability.  Agreements with these groups mature over the
next five years, and Registrant is continuously monitoring financial markets
to optimize renewal terms.  In connection with the financing of 38 stores by
these unaffiliated groups, Registrant has guaranteed the residual value of
these buildings at approximately $25 million at the end of the lease terms.


Item 3.          Legal Proceedings. 

        There are various claims, lawsuits, investigations and pending actions
against Registrant and its subsidiaries incident to the operation of their
businesses.  Liability, if any, associated with these matters is not
determinable at February 26, 1994.  While a certain number of the lawsuits
involve substantial amounts, it is the opinion of management, after
consultation with counsel, that the ultimate resolutions of such litigation
will not have a material adverse effect on Registrant's financial position.


Item 4.          Submission of Matters to a Vote of Security Holders.

        There were no matters submitted to a vote of Registrant's security
holders during the fourth quarter of Registrant's fiscal year.


                        Executive Officers of Registrant

        CLARK A. JOHNSON, age 63, is Chairman and Chief Executive Officer of
Registrant, is a member of the Executive Committee and since March 1983 has
been a Director of Registrant.  From May 1985 to August 1988, Mr. Johnson was
President and Chief Executive Officer of Registrant.  He currently serves as
a Director of Albertson's, Inc., InterTAN, Inc., The Actava Group Inc.,
Anacomp, Inc. and Heritage Media Corporation. 

        MARVIN J. GIROUARD, age 54, is President and Chief Operating Officer of
Registrant and has been a Director since August 1988.  From May 1985 until
August 1988, he served as Senior Vice President - Merchandising of Pier 1
Imports (U.S.), Inc., a wholly owned subsidiary of Registrant.  Additionally,
he serves as a Director of ENSERCH Corporation.

        ROBERT G. HERNDON, age 60, has been Executive Vice President of
Registrant since August 1988 and Chief Financial Officer of Registrant since
November 1985.  He served as Senior Vice President from November 1985 to
August 1988.  He currently serves as a director of The Leather Factory.

        J. RODNEY LAWRENCE, age 48, has been Senior Vice President of Legal
Affairs and Secretary of Registrant and Pier 1 since June 1992, and served as
Vice President of Legal Affairs and Secretary of Registrant from November
1985 to June 1992.

        E. MITCHELL WEATHERLY, age 46, has been Senior Vice President of Human
Resources of Registrant since June 1992 and served as Vice President of Human
Resources of Registrant from June 1989 and of Pier 1 from August 1985 to June
1992.

        JAMES R. TENER, age 45, has been Senior Vice President of Operations of
Registrant and Pier 1 since June 1992 and served as Vice President of
Operations of Pier 1 from December 1989 to June 1992.

        ADRIAN G. LONG, age 54, has been Senior Vice President of Merchandising
of Registrant and Pier 1 since June 1992 and served as Vice President of
Merchandising of Pier 1 from August 1988 to June 1992.

        PHIL E. SCHNEIDER, age 43, has been Senior Vice President of Marketing
of Registrant and Pier 1 since May 1993 and served as Vice President of
Advertising of Pier 1 from January 1988 to May 1993.

        The officers of Registrant, who are appointed by the Board of Directors,
hold office until their successors are elected and qualified, or until their
earlier death, resignation or removal.

        None of the above executive officers has any family relationship with
any other of such officers.  None of such officers was selected pursuant to
any arrangement or understanding between him and any other person.


                                 PART II


Item 5.          Market for Registrant's Common Equity and Related Stockholder
                 Matters.

MARKET PRICE AND DIVIDEND INFORMATION

                                       Market Price           Cash Dividends
Fiscal 1994                         High          Low            Per Share  
- - -----------                        ------        ------       --------------
First Quarter                      12 1/2        8 3/8            $0.020
Second Quarter                     10 1/8        8 1/4             0.025
Third Quarter                      11 1/4        8 1/8             0.025
Fourth Quarter                     10 7/8        8 3/8             0.025

Fiscal 1993
- - -----------
First Quarter                      11 5/8        8 5/8            $0.015
Second Quarter                      9 5/8        6 5/8             0.015
Third Quarter                      11 1/2        7 1/8             0.015
Fourth Quarter                     13 1/8       10                 0.020   

        Registrant's common stock is traded on the New York Stock Exchange.  As
of May 4, 1994, there were approximately 16,000 shareholders of Registrant's
common stock.

        Certain of Registrant's existing loan agreements limit specific payments
and distributions, including cash dividends, loans to shareholders and
purchases of treasury stock.  Generally Registrant may make "restricted
payments", as defined in the loan agreements, which include the payment of
cash dividends, up to an aggregate maximum of $10 million as of February 26,
1994.  Additionally, Registrant is required to maintain various other
financial ratios.  Registrant's Board of Directors currently expects to pay
modest cash dividends in fiscal 1995, but intends to retain most of the
future earnings for the expansion of Registrant's business.  A cash dividend
of $.025 per share was paid May 18, 1994.  Registrant's dividend policy will
depend upon the earnings, financial condition and capital needs of Registrant
and other factors deemed relevant by Registrant's Board of Directors.


Item 6.          Selected Financial Data.

Pier 1 Imports, Inc.
FINANCIAL SUMMARY (See Notes)
($ in millions except per share amounts)
10-Year Compound Annual Year Ended Growth --------------------------------------------------------------------------------------- Rate 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 ------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Summary of operations: Net sales 16.6% $685.4 629.2 586.7 562.7 516.9 414.6 327.2 262.3 203.9 173.5 147.3 Gross profit 15.7% $259.6 246.2 228.4 210.5 210.1 169.7 135.2 109.0 81.6 68.1 60.2 Selling, general and administrative expenses 16.2% $195.4 180.2 172.4 169.9 148.8 117.8 96.0 78.6 59.3 51.4 43.6 Depreciation and amortization 18.9% $15.8 15.1 15.0 14.3 13.1 10.0 7.9 5.5 3.5 2.8 2.8 Store-closing pro- vision and other $23.3 - - - - - - - - - - Interest expense, net 19.2% $16.8 15..0 16.3 12.3 9.7 10.0 8.1 3.6 3.6 3.0 2.9 Income before income taxes and equity in net income (loss) of subsidiary (2.6)% $8.4 35.9 30.5 14.0 38.5 31.9 23.2 21.3 15.2 10.9 10.9 Equity in net income (loss) of subsidiary $ - (3.6) 4.5 (2.4) - - - - - - - Net income for common stockholders 2.1% $5.9 23.0 26.3 6.3 25.3 21.6 15.8 12.0 8.6 5.9 4.8 Per common share data (adjusted for stock splits and dividends): Net income for common stockholders (1.7)% $0.16 0.62 0.71 0.17 0.67 0.67 0.49 0.39 0.32 0.23 0.19 Cash dividends declared $0.10 0.07 - 0.15 0.12 0.08 0.06 0.02 0.01 - - Stockholders' equity 16.4% $5.34 5.37 4.78 4.28 4.82 3.60 2.92 2.45 1.81 1.35 1.17 Other financial data: Working capital 19.5% $229.0 225.2 160.0 126.7 144.3 117.2 87.2 96.8 43.4 38.6 38.5 Current ratio 3.5 3.4 3.0 2.1 3.2 2.9 2.3 3.3 2.4 3.5 4.4 Total assets 21.3% $463.3 460.5 386.4 428.9 350.5 299.9 257.9 218.3 106.6 76.5 67.4 Long-term debt 18.4% $145.2 147.2 106.8 140.6 92.6 121.3 96.5 101.5 26.7 26.7 26.9 Stockholders' equity 21.2% $201.1 200.5 177.1 156.3 181.4 115.8 94.1 74.4 48.5 34.3 29.3 Weighted average number of shares outstanding and common share equivalents (millions) 4.2% 37.6 37.4 37.0 36.5 37.6 32.2 32.2 30.4 26.8 25.4 25.0 Effective tax rate 29.0% 25.9 28.3 35.8 33.7 31.5 30.8 43.7 43.2 46.0 51.2 Return on common stockholders' average equity 3.0% 12.2 15.8 3.7 17.0 20.6 18.8 19.5 20.8 18.6 22.5 Return on average total assets 1.3% 5.4 6.5 1.6 7.8 7.7 6.6 7.4 9.4 8.2 7.8 Pre-tax return on sales 1.2% 5.7 5.2 2.5 7.4 7.7 7.1 8.1 7.5 6.3 7.4 Note (1)--This financial summary is prepared on the basis of continuing operations after the distribution of the common shares of two subsidiaries to shareholders in December 1985, and before the tax benefits of operating loss carryforwards fully utilized in fiscal 1986. Note (2)--In fiscal 1994, the following calculations were without the impact of the store-closing provision and other: --10-year compound annual growth rate: Income before income taxes and equity in net income (loss) of subsidiary 11.2% Net income for common stockholders 16.7% Net income for common stockholders per common share 12.2% --Ratios on results from operations: Return on common stockholders' average equity 10.8% Pre-tax return on sales 4.6%
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. Pier 1 Imports, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations Pier 1 Imports, Inc. is North America's largest specialty retailer of decorative home furnishings, gifts and related items, with stores in 47 states, Puerto Rico and Canada, and additional international operations in England and Mexico. Registrant reported record sales of $685,393,000 for fiscal 1994 and net income of $5,933,000, or $.16 per share, after providing an after-tax special charge of $16,507,000 in the fourth quarter for closing approximately 50 unprofitable stores and adjusting the carrying value of General Host common stock. If the special charge had not been provided, net income for the year would have totalled $22,440,000, or $.60 per share, compared to $23,017,000, or $.62 per share, last year. Stores in operation at fiscal year-end aggregated 586 after removing stores to be closed. In early fiscal 1994, Registrant sold its interest in Sunbelt to General Host. Fiscal Years Ended February 26, 1994 and February 27, 1993 Net sales in fiscal 1994 grew $56.2 million or 8.9% over the prior year with same-store sales growth of 4.8%. Last year net total sales grew 7.3% and same-store sales grew 3.7%. Forty-eight (48) new stores opened during the year and 17 stores closed, before giving effect to the provision for the closing of 50 stores. Gross profit, after related buying and store occupancy costs, expressed as a percentage of net sales, declined 1.2% from 39.1% in fiscal 1993 to 37.9% in fiscal 1994. Store occupancy costs, expressed as a percentage of net sales, improved slightly due to higher sales volumes. The sales mix of furniture and decorative goods remained unchanged as a percentage of sales; however, promotional markdowns and other discounts caused reduced margins on these goods. Sales from clothing, jewelry and accessories compared to total sales declined, as did the gross profit rate due to additional promotional markdowns taken in fiscal 1994 compared with fiscal 1993. Selling, general and administrative expenses, including advertising, improved 0.1% to 28.5% as a percentage of sales in fiscal 1994 compared to 28.6% in fiscal 1993. In total dollars, expenses for fiscal 1994 increased $15.2 million over the prior year primarily due to 31 net new stores opened during the year (before giving effect to the provision for the closing of 50 stores), new point-of-sale register equipment installed in all stores, new selling programs introduced in stores, losses related to the earthquake in California and severe weather during fiscal 1994. The store-closing provision of $21.3 million and the $2.0 million adjustment to the carrying value of General Host common stock were special charges in fiscal 1994. The store-closing provision reflected the anticipated costs associated with closing certain underperforming stores. This provision includes estimated costs related to leases, fixed assets, relocation, inventory liquidation and losses from operations during the interim period before closings. The adjustment to the carrying value of General Host common stock is management's estimate of the portion of the decline in the market value that is other than temporary. Operating income declined $25.8 million to $25.1 million in fiscal 1994 from $50.9 million in the prior year, due to the special charges in fiscal 1994 and the gross profit rate decline from fiscal 1993. During fiscal 1994, cash was utilized to reduce short-term debt, fund inventory and fixtures for new store development, expand the Pier 1 credit card program, and pay dividends to shareholders. Due to lower interest income on declining cash balances, net interest expense increased $1.8 million in fiscal 1994 over the prior year. Registrant's effective income tax rate for fiscal 1994 increased to 29% compared to 25.9% in fiscal 1993, primarily due to an increase in the state tax effective rate. Registrant's equity in losses from Sunbelt was $3.6 million in fiscal 1993. In April 1993, Registrant completed the sale of its 49.5% interest in Sunbelt. Sunbelt's results were not included in Registrant's earnings during fiscal 1994. Net income for fiscal 1994 aggregated $5.9 million, or $.16 per share, compared to income of $23.0 million, or $.62 per share last year. Fiscal Years Ended February 27, 1993 and February 29, 1992 During fiscal 1993, net sales grew $42.6 million or 7.3% with same-store sales contributing 3.7% over fiscal 1992. Sales from stores opened in fiscal years 1993 and 1992 increased fiscal 1993 sales levels by 3.6% when compared to fiscal 1992. Twenty-six new stores (net 20) were opened during fiscal 1993. Gross profit, after related buying and store occupancy costs, expressed as a percentage of net sales, increased to 39.1% during fiscal 1993 from 38.9% in fiscal 1992. The improvement was the result of store occupancy costs which, as a percentage of sales, improved due to higher sales volumes. Merchandise gross margin in fiscal 1993 remained unchanged as a percentage of sales from fiscal 1992 due to a similar merchandise mix in both years, and, although promotional sales discounts increased in fiscal 1993 from a year ago, there was a reduction in the amount of clearance markdowns and shrinkage in fiscal 1993 versus fiscal 1992. Selling, general and administrative expenses, including advertising, improved 0.8% to 28.6% as a percentage of sales in fiscal 1993 compared to 29.4% in fiscal 1992. In total dollars, expenses for fiscal 1993 increased $7.7 million over the prior year, principally due to 20 net new stores in operation by the end of fiscal 1993. This increase resulted in higher payroll and store-related costs as well as increased catalog and other promotional advertising. These increased costs from fiscal 1992 were partially offset by expense control, favorable medical insurance claim experience, lower Pier 1 credit card expenses, the reduction in scope of the mid-year physical inventory counts, and decreased litigation costs. Operating income increased $9.9 million to $50.9 million in fiscal 1993 from $41 million a year earlier, mainly due to revenue growth from both new store openings and existing store sales and the reductions in controllable expenses. Net interest expense decreased $1.4 million during fiscal 1993 from fiscal 1992 due to a decline in Registrant's debt (net of cash) position and a slight decrease in Registrant's effective interest rate. During fiscal 1992, Registrant recorded a one-time gain of $5.9 million related to the sale of 50.5% of Sunbelt's common stock. Registrant's effective income tax rate for fiscal 1993 decreased to 25.9% from 28.3% due to the benefit of lower tax rates on income from foreign subsidiaries and tax-favored investment income. Registrant recorded equity in losses of Sunbelt during fiscal 1993 of $3.6 million compared to income of $4.5 million in fiscal 1992. During fiscal 1993, Registrant included only 49.5% of Sunbelt's earnings during an unprofitable year, compared to 100% in fiscal 1992 when Sunbelt experienced greater profits. Net income for fiscal 1993 of $23.0 million, or $.62 per share, was below last year's $26.3 million, or $.71 per share, as a result of Sunbelt's losses in fiscal 1993 and the gain on sale of Sunbelt stock in fiscal 1992. Liquidity and Capital Resources The sources of liquidity during the past three years have been earnings from operations, working capital changes, long-term borrowings, and the sale of 50.5% of Sunbelt stock in fiscal 1992. Primarily, these funds were utilized to reduce short-term debt, acquire property and equipment, finance the expansion of inventories and the Pier 1 credit card program, and pay dividends. During fiscal 1994, increases in inventory and capital expenditures were required to support the opening 48 new stores. Financing for new store land and building costs is provided by operating leases. Registrant's new store development plan for fiscal 1995 is approximately 50 stores. Inventory and fixtures for the development plan are estimated to cost approximately $15 million, which will be funded by operations, working capital and bank lines of credit. Cash requirements to close 50 stores in fiscal 1995 through the store-closing program are estimated to aggregate $16 million and will be funded through working capital and operations. New store construction funding is expected to be provided by operating leases. Registrant is expanding existing lease facilities and exploring additional financing opportunities currently available in the capital markets. In connection with leases for 38 stores executed in prior years, Registrant has guaranteed the residual building values at approximately $25 million. Minimum future operating lease commitments expected for fiscal 1995 aggregate to $86 million, and the present value of total existing operating lease commitments is $372 million. These commitments will be funded from operating cash flow. Working capital requirements are currently provided by cash, short-term revolving lines of credit, including bankers' acceptances and working capital loans, in an aggregate amount of approximately $165 million. Registrant's current ratio was 3.5 to 1 at the end of fiscal 1994 compared to 3.4 to 1 a year earlier. In connection with Registrant's sale of its Sunbelt investment to General Host, Registrant provided Sunbelt a line of credit aggregating $12 million, all of which was outstanding at February 26, 1994. In order for Sunbelt to meet repayment obligations under this line, Sunbelt must obtain replacement financing. To enable Sunbelt to raise these funds, Registrant has granted Sunbelt a temporary extension of the credit facility until June 30, 1994. Also, Registrant is committed to provide Sunbelt $25 million of non-revolving store development financing through April 1996. Registrant has arranged for a bank group to provide financing by which Registrant leases from an unaffiliated third party and subleases store sites to Sunbelt. Under this leasing facility, the leases are required to be refinanced by Sunbelt from September 1994 to October 1995. If Sunbelt defaults on refinancing these store leases as the terms expire, Registrant will be required to obtain other financing. Registrant expects financing of Sunbelt's store sites to remain at same or similar terms and conditions as are currently in place. In addition to the above, Registrant also guarantees approximately $4.5 million of Sunbelt store lease commitments. Registrant's line of credit and leasing commitments are collateralized by 4.2 million shares of Sunbelt's common stock. The Board of Directors anticipates a continuation of its current cash dividends to shareholders. In fiscal 1993, Registrant invested in preference stock of The Pier Retail Group Limited ("The Pier") located in the United Kingdom. Currently, investment in and loans to The Pier aggregate $3.4 million, with additional debt guarantees of approximately $4 million. The Pier is a ten-store retail operation that offers decorative home furnishings and related items in a store setting similar to that operated by Registrant. Registrant's inventory purchases are made almost entirely in U.S. dollars. To the extent purchases are made in foreign currencies, Registrant usually enters into forward exchange contracts when they are available in order to manage its exposure to foreign currency exchange fluctuations. Registrant believes the funds provided from operations, coupled with Registrant's cash position and available lines of credit, are more than sufficient to meet its foreseeable cash requirements. Impact of Inflation and Changing Prices Inflation has not had a significant impact on the operations of Registrant. Impact of New Accounting Standards The adoption of Financial Accounting Standards Board's Statements No. 114 and 115 is expected to have no impact on Registrant's results of operations. Item 8. Financial Statements and Supplementary Data. Index to Financial Statements Financial Statements: - - -------------------- Report of Independent Accountants Consolidated Statement of Operations for the Years ended February 26, 1994, February 27, 1993 and February 29, 1992 Consolidated Balance Sheet at February 26, 1994 and February 27, 1993 Consolidated Statement of Cash Flows for the years ended February 26, 1994, February 27, 1993 and February 29, 1992 Consolidated Statement of Stockholders' Equity for the years ended February 26, 1994, February 27, 1993 and February 29, 1992 Notes To Consolidated Financial Statements Financial Statement Schedules For the years Ended February 26, 1994, February 27, 1993 and February 29, 1992 II Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other Than Related Parties V Property, Plant and Equipment VI Accumulated Depreciation and Amortization of Property Plant and Equipment VIII Valuation and Qualifying Accounts and Reserves IX Short-Term Borrowings X Supplementary Income Statement Information All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Pier 1 Imports, Inc. REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Pier 1 Imports, Inc. In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Pier 1 Imports, Inc. and its subsidiaries at February 26, 1994 and February 27, 1993, and the results of their operations and their cash flows for each of the three years in the period ended February 26, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Registrant's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ Price Waterhouse - - -------------------- Fort Worth, Texas April 14, 1994 Pier 1 Imports, Inc. CONSOLIDATED STATEMENT OF OPERATIONS (in thousands except per share amounts)
Year Ended ---------------------------------------- 1994 1993 1992 -------- -------- -------- Net sales $685,393 $629,235 $586,659 Operating costs and expenses Cost of sales (including buying and store occupancy) 425,801 383,053 358,216 Selling, general and administrative expenses 195,444 180,218 172,478 Depreciation and amortization 15,771 15,097 15,006 Store-closing provision and other 23,250 -- -- -------- -------- -------- 660,266 578,368 545,700 -------- -------- -------- Operating income 25,127 50,867 40,959 Gain on sale of subsidiary stock -- -- 5,886 Interest expense, net 16,771 14,956 16,312 -------- -------- -------- Income before income taxes and equity in net income (loss) of subsidiary 8,356 35,911 30,533 Provision for income taxes 2,423 9,309 8,656 -------- -------- -------- Income before equity in net income (loss) of subsidiary 5,933 26,602 21,877 Equity in net income (loss) of subsidiary -- (3,585) 4,456 -------- -------- -------- Net income 5,933 23,017 26,333 Cumulative dividends on preferred stock -- -- 11 -------- -------- -------- Net income available to common stock- holders $ 5,933 $ 23,017 $ 26,322 ======== ======== ======== Net income per common share $.16 $.62 $.71 ==== ==== ==== The accompanying notes are an integral part of these financial statements. /TABLE Pier 1 Imports, Inc. CONSOLIDATED BALANCE SHEET (in thousands)
1994 1993 -------- -------- ASSETS Current assets: Cash, including temporary investments of $7,466 and $66,823, respectively $ 17,123 $ 73,585 Accounts receivable, net of allowance for doubtful accounts of $2,072 and $2,404, respectively 51,722 34,920 Inventories 219,646 189,593 Other current assets 32,901 20,038 -------- -------- Total current assets 321,392 318,136 Properties, net 111,510 108,011 Other assets 30,400 34,350 -------- -------- $463,302 $460,497 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 2,639 $ 33,139 Accounts payable and accrued liabilities 89,772 59,791 -------- -------- Total current liabilities 92,411 92,930 Long-term debt 145,231 147,246 Deferred income taxes 3,407 514 Other non-current liabilities 21,160 19,313 Stockholders' equity: Common stock, $1.00 par, 100,000,000 shares autho- rized, 37,617,000 and 37,607,000 outstanding, respectively 37,617 37,607 Paid-in capital 92,670 93,184 Retained earnings 76,597 74,413 Cumulative translation adjustments (964) (433) Less--98,000 and 263,000 common shares in treasury, at cost, respectively (884) (2,599) Less--subscriptions receivable and unearned compensation (1,369) (1,678) Less--unrealized loss on marketable equity securities (2,574) -- -------- -------- 201,093 200,494 Commitments and contingent liabilities -------- -------- $463,302 $460,497 ======== ======== The accompanying notes are an integral part of these financial statements. /TABLE Pier 1 Imports, Inc. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
Year Ended ---------------------------------- 1994 1993 1992 ------- ------- ------- Cash flow from operating activities: Net income $ 5,933 $23,017 $26,333 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 15,771 15,097 15,006 Deferred taxes and other (3,006) (764) 4,475 Equity in undistributed losses (earnings) of subsidiary -- 3,585 (4,456) Gain on sale of subsidiary stock -- -- (5,886) Store-closing provision and other 23,250 -- -- Change in cash from: Inventories (30,053) (8,201) 761 Accounts receivable and other current assets (17,550) (3,670) 1,054 Accounts payable and accrued expenses 10,103 446 7,557 Other assets, liabilities, and other, net 1,077 1,011 (13) Net cash provided by operating ------- ------- ------- activities 5,525 30,521 44,831 ------- ------- ------- Cash flow from investing activities: Capital expenditures (24,617) (12,619) (6,169) Proceeds from disposition of properties 791 159 14,076 Other investments (2,353) -- -- Net cash (used in)/provided by ------- ------- ------- investing activities (26,179) (12,460) 7,907 ------- ------- ------- Cash flow from financing activities: Cash dividends (3,560) (2,409) (11) Net proceeds/(repayments) from issuance of long-term debt -- 36,991 (35,394) Net (payments)/borrowings under line of credit agreements (33,000) 9,983 (46,000) Proceeds from subsidiary stock sale -- -- 18,072 Proceeds from sales of capital stock, treasury stock, and other 752 1,958 3,144 Net cash (used in)/provided by ------- ------- ------- financing activities (35,808) 46,523 (60,189) ------- ------- ------- Change in cash (56,462) 64,584 (7,451) Cash at beginning of year 73,585 9,001 16,452 ------- ------- ------- Cash at end of year $17,123 $73,585 $ 9,001 ======= ======= ======= The accompanying notes are an integral part of these financial statements. /TABLE Pier 1 Imports, Inc. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED FEBRUARY 26, 1994 (in thousands)
Subscriptions Cumulative Receivable Unrealized Loss Total Preferred Common Paid-in Retained Translation Treasury and Unearned on Marketable Stockholders' Stock Stock Capital Earnings Adjustments Stock Compensation Equity Securities Equity --------- ------ ------- -------- ----------- -------- ------------ ----------------- ------------- Balance March 2, 1991 $1,500 $36,156 $86,916 $41,133 $1,064 ($6,831) ($3,688) $ -- $156,250 Purchase of treasury stock -- -- -- -- -- (2,187) 893 -- (1,294) Restricted stock grant and amortization -- -- (37) -- -- (255) 535 -- 243 Adjust to Sunbelt fiscal year-end date -- -- -- (1,177) -- -- -- -- (1,177) Exercise of stock options and other -- (2) (1,363) (160) -- 4,722 -- -- 3,197 Currency translation adjustments -- -- -- -- (494) -- -- -- (494) Cash dividends -- -- -- (11) -- -- -- -- (11) Three percent stock dividend -- 1,071 9,098 (10,169) -- -- -- -- -- Retirement of preferred stock (1,500) -- (2,311) (2,105) -- -- -- -- (5,916) Net income -- -- -- 26,333 -- -- -- -- 26,333 ------ ------- ------- ------- ------ ------- ------ ------- -------- Balance February 29, 1992 -- 37,225 92,303 53,844 570 (4,551) (2,260) -- 177,131 Purchase of treasury stock -- -- -- -- -- (1,226) -- -- (1,226) Restricted stock grant and amortization -- -- (18) -- -- (511) 582 -- 53 Exercise of stock options and other -- 382 899 (39) -- 3,689 -- -- 4,931 Currency translation adjustments -- -- -- -- (1,003) -- -- -- (1,003) Cash dividends -- -- -- (2,409) -- -- -- -- (2,409) Net income -- -- -- 23,017 -- -- -- -- 23,017 ------ ------- ------- ------- ----- ------- ------ ------- -------- Balance February 27, 1993 -- 37,607 93,184 74,413 (433) (2,599) (1,678) -- 200,494 Purchase of treasury stock -- -- -- -- -- (1,545) -- -- (1,545) Restricted stock grant and amortization -- -- (62) -- -- 9 309 -- 256 Exercise of stock options and other -- 10 (452) (189) -- 3,251 -- -- 2,620 Currency translation adjustments -- -- -- -- (531) -- -- -- (531) Unrealized loss on marketable equity securities -- -- -- -- -- -- -- (2,574) (2,574) Cash dividends -- -- -- (3,560) -- -- -- -- (3,560) Net income -- -- -- 5,933 -- -- -- -- 5,933 ------ ------- ------- ------- ------- ------- ------- ------- -------- Balance February 26, 1994 $ -- $37,617 $92,670 $76,597 ($ 964) ($ 884) ($1,369) ($2,574) $201,093 ====== ======= ======= ======= ======= ======= ======= ======= ======== The accompanying notes are an integral part of these financial statements.
Pier 1 Imports, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Statement of significant accounting policies Basis of consolidation - The consolidated financial statements of Pier 1 Imports, Inc. and its consolidated subsidiaries include the accounts of all subsidiary companies. Material intercompany transactions and balances have been eliminated. Fiscal periods - Registrant utilizes 5-4-4 quarterly accounting periods with the fiscal year of 52 weeks ending on the Saturday nearest the last day of February. Fiscal 1994 ended February 26, 1994, fiscal 1993 ended February 27, 1993, and fiscal 1992 ended February 29, 1992. Cash and cash equivalents - Registrant considers all highly liquid investments with an original maturity date of three months or less to be cash equivalents. The effect of foreign currency exchange rate changes on cash is not material. Marketable equity securities - Registrant records marketable equity securities at the lower of cost or market. Unrealized gains and losses on non-current marketable equity securities and related income tax effects are accumulated and included as a separate component of stockholders' equity. Adjustments for any impairments in the value (based on market conditions) that are deemed to be other than temporary are included as a loss in the current year's operations. In fiscal 1994, General Host Corporation ("General Host") common stock was Registrant's only non-current marketable equity security. Translation of foreign currencies - Assets and liabilities are translated to U.S. dollars at fiscal year-end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the year. Translation adjustments are accumulated in a separate component of stockholders' equity. Inventories - Inventories are comprised primarily of finished merchandise and are stated at the lower of average cost or market; cost is determined principally on the first-in, first-out method. Properties, maintenance and repairs - Buildings, equipment, furniture and fixtures, and leasehold interests and improvements are carried at cost less accumulated depreciation. Depreciation is based on the straight-line method over estimated useful lives or lease terms, if shorter. Expenditures for maintenance, repairs and renewals which do not materially prolong the useful lives of the assets are charged to expense as incurred. In the case of disposals, assets and the related depreciation are removed from the accounts and the net amount, less proceeds from disposal, is credited or charged to income. Deferred costs - Certain costs associated with the acquisition of new proprietary credit card accounts are capitalized and amortized over the average life of an account. Preopening costs associated with new stores are capitalized and expensed over one year. Advertising costs - All advertising costs are expensed the first time the advertising takes place. Income taxes - Income tax expense for fiscal 1994 and 1993 is based on the liability method under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). See Note 9 for further description. SFAS 109 was issued in February 1992 and was adopted by Registrant in the fourth quarter retroactively to the beginning of the 1993 fiscal year. The adoption had no effect on Registrant's financial position or results of operations. Deferred federal income taxes, net of applicable foreign tax credits, are not provided on the undistributed earnings of foreign subsidiaries to the extent Registrant intends to permanently reinvest such earnings abroad. At February 26, 1994, such undistributed earnings aggregated $9.9 million. Earnings per share - Earnings per share during a period are computed on the weighted average number of common shares plus common stock equivalents outstanding and were 37,648,000, 37,359,000 and 37,023,000 for fiscal 1994, 1993 and 1992, respectively. Computation of weighted average shares outstanding for fiscal 1994, 1993 and 1992 includes common stock equivalents of 443,000, 595,000 and 590,000, respectively. The computation of weighted average number of shares for each year gives retroactive effect to the 2% stock dividend distributed May 15, 1991 and the 3% stock dividend distributed November 19, 1991. Fully diluted earnings per share is based on the assumed conversion of all of the 6-7/8% Convertible Subordinated Notes into common stock, whereby interest expense and debt issue costs, net of tax, on the 6- 7/8% Convertible Subordinated Notes is added back to net earnings. Fully diluted earnings per share resulted in less than 3% dilution of primary earnings per share for each of the three fiscal years ended February 26, 1994 and all periods presented with the exception of the first and second quarters of fiscal years 1994 and 1993. Note 2 - Proprietary credit card information Registrant's Preferred Customer Card is managed and administered by an unrelated third party. Credit card account origination costs of $976,000, $480,000 and $528,000 were deferred during fiscal years 1994, 1993 and 1992, respectively. Registrant is amortizing these costs over 36 months, which Registrant believes is the approximate average active life of an account. The credit cards have no expiration date and no annual fee for the use of the card. At February 26, 1994 and February 27, 1993, deferred costs, net of amortization, totalled $1,135,000 and $759,000, respectively. Concentrations of credit risk with respect to customer receivables are limited due to the large number of customers comprising Registrant's base and their dispersion across may different geographic areas of the country. Net credit card charges on Registrant's proprietary credit card accounts are netted against selling, general and administrative expenses. A summary of Registrant's credit card results for each of the three fiscal years ended February 26, 1994 follows (in thousands): 1994 1993 1992 ------- ------- ------- [S] [C] [C] [C] Costs: Processing fees $ 6,114 $ 5,049 $ 4,875 Bad debt expense 2,195 1,855 2,702 ------- ------- ------- 8,309 6,904 7,577 ------- ------- ------- Income: Finance charges 6,087 4,998 4,751 Insurance and other income 238 165 185 ------- ------- ------- 6,325 5,163 4,936 ------- ------- ------- Net credit card costs $ 1,984 $ 1,741 $ 2,641 ======= ======= ======= Pier 1 Preferred Card sales $98,625 $60,661 $48,998 ======= ======= ======= Net cost as a percent of credit sales 2.0% 2.9% 5.4% ==== ==== ==== Note 3 - Properties Properties are summarized as follows at February 26, 1994 and February 27, 1993 (in thousands): 1994 1993 ------ ------ Land $ 7,205 $ 7,204 Buildings 33,063 32,688 Equipment, furniture and fixtures 90,505 85,413 Leasehold interests and improvements 79,022 71,545 Construction in progress 190 214 -------- -------- 209,985 197,064 Less accumulated depreciation and amortization 98,475 89,053 -------- -------- Properties, net $111,510 $108,011 ======== ======== Note 4 - Accounts payable and accrued liabilities/Other non-current liabilities The following is a summary of accounts payable and accrued liabilities and other non-current liabilities at February 26, 1994 and February 27, 1993 (in thousands): 1994 1993 ------ ------ Trade accounts payable $27,937 $23,603 Accrued payroll and fringes 16,933 17,637 Accrued taxes, other than income 2,913 2,412 Accrued interest 3,397 3,560 Accrued real property tax 4,697 3,830 Store-closing provision 21,250 -- Other accrued liabilities and expenses 12,645 8,749 ------- ------- Accounts payable & accrued liabilities $89,772 $59,791 ======= ======= Accrued average rent $15,034 $13,531 Other non-current liabilities 6,126 5,782 ------- ------- Other non-current liabilities $21,160 $19,313 ======= ======= Note 5 - Store-closing provision and other The store-closing provision of $21.3 million and the $2.0 million adjustment to the carrying value of General Host common stock were special charges in fiscal 1994. The store-closing provision reflects the anticipated costs associated with closing certain underperforming stores. This provision includes estimated costs related to leases, fixed assets, relocation, inventory liquidation and losses from operations during the interim period before closings. The adjustment to the carrying value of General Host common stock is management's estimate of the portion of the decline in the market value that is other than temporary. Note 6 - Current and long-term debt Registrant has various lines of credit available which aggregate approximately $165 million. At year-end, approximately $41 million had been committed under various outstanding letters of credit issued primarily in conjunction with overseas merchandise procurements, leaving $124 million of available lines of credit. The lines may be used for borrowings through working capital loans, bankers' acceptances or letters of credit. The weighted average interest rate on short-term borrowings outstanding during the year was 4.0%. Long-term debt is summarized as follows (in thousands): 1994 1993 -------- -------- 11-1/2% subordinated debentures, net of original issue discount of $2,812 and $3,179, respectively $ 22,188 $ 21,821 Industrial revenue bonds 25,000 25,000 11% senior notes 25,000 25,000 6-7/8% convertible subordinated notes 75,000 75,000 Capital lease obligations 475 564 Other 207 -- -------- -------- 147,870 147,385 Less - portion due within one year 2,639 139 -------- -------- $145,231 $147,246 ======== ======== In July 1983, Registrant issued $25 million of 11-1/2% subordinated debentures. Interest is payable on January 15 and July 15. Mandatory annual $2.5 million sinking fund payments will commence in July 1994 and will continue until they mature in July 2003. The debentures are callable at any time at par plus accrued interest. In fiscal 1987, Registrant entered into industrial revenue development bond loan agreements aggregating $25 million which mature in the year 2026. Proceeds were used to construct three warehouse distribution facilities. These bonds are 7-day lower floater put bonds and interest rates float with the market rate for tax-exempt paper. Interest is payable monthly. In May 1991, Registrant issued $25 million of 11% senior notes due June 1, 2001. Annual principal reductions in the amount of $5 million are due beginning June 1, 1997. Interest is payable each June 1 and December 1. In April 1992, Registrant issued $75 million of 6-7/8% Convertible Subordinated Notes. These notes are convertible into shares of common stock of Registrant at $12.00 per share at any time at or prior to maturity which is April 1, 2002. The notes may be redeemed by Registrant at any time on or after April 1, 1995 in whole or in part, but redemption prior to the year 2000 would be at a premium. Interest on the notes is payable each April 1 and October 1. As of February 26, 1994, the fair value of long-term debt was $155.0 million compared to its recorded value of $147.9 million. The fair value of long-term debt was estimated based on the quoted market values for the same or similar debt issues, or rates currently available for debt with similar terms. There are no other significant assets or liabilities with a fair value different from the recorded value. Registrant has an interest rate hedging agreement on $100 million of notional principal with a commercial bank intended to limit Registrant's exposure to interest rate fluctuations on floating rate obligations. This agreement was designated as a hedge contract; therefore, the differential to be paid or received is recognized over the life of the agreement. The fair value of this hedging agreement was $2.2 million at year end and represented the estimated amount, which was obtained from counterparties, that Registrant would pay to terminate the agreement at February 26, 1994. Long-term debt matures as follows (in thousands): 1995 $ 2,639 1996 2,940 1997 2,566 1998 7,537 1999 7,500 Thereafter 124,688 -------- $147,870 ======== Registrant's loan agreements require that Registrant maintain certain financial ratios and limit specific payments and equity distributions including cash dividends, loans to shareholders and purchases of treasury stock. At year-end, the most restrictive of the agreements limits the aggregate of such payments to $10 million. Note 7 - Employee benefit plans In 1986, Registrant adopted a qualified, defined contribution employee retirement plan. Except for the initial enrollment period, all full- and part-time personnel who are at least 21 years old and who have been employed for six months are eligible to participate in the plan. Employees contributing from 1% to 5% of their compensation receive Registrant contributions of up to 3%. Registrant contributions to the plan were $1,114,000, $915,000 and $714,000 in fiscal 1994, 1993 and 1992, respectively. In addition, a non-qualified retirement savings plan is available for the purpose of providing deferred compensation for certain employees whose benefits under the qualified plan are limited under Section 401(k) of the Internal Revenue Code. Registrant maintains a Supplemental Executive Retirement Plan for certain of its executive officers. The plan provides that upon retirement, disability, death or other termination of employment a participant will receive annual benefits. Retirement benefits under the plan vest for each participant at the rate of 10% per year over 10 years of service. Registrant's accrued contributions to the plan were $765,000, $554,000 and $443,000 in fiscal 1994, 1993 and 1992, respectively. Note 8 - Matters concerning stockholders' equity Stock purchase plan - Substantially all employees and directors are eligible to participate in the Pier 1 Imports, Inc. Stock Purchase Plan under which Registrant's common stock is purchased on behalf of employees at market prices through regular payroll deductions. Each employee participant may contribute up to 10% of the eligible portions of annual compensation and directors may contribute a maximum equal to their monthly directors' fees. Registrant contributes from 10% to 100% of the participants' contributions, depending upon length of participation and date of entry into the plan. Approximately 268,000 shares were allocated to Stock Purchase Plan participants during fiscal 1994, all of which were purchased on the open market. Registrant's contributions to the Plan were $867,000, $841,000 and $830,000 in fiscal years 1994, 1993 and 1992, respectively. Restricted stock grant plans - In 1993 and 1992, Registrant issued 17,414 shares and 19,157 shares, respectively, of its common stock to key officers pursuant to a Management Restricted Stock Plan which provides for the issuance of up to 250,000 shares. The shares of restricted stock were awarded in conjunction with granting of stock options to those officers, with the number of shares awarded representing 25% of the number of stock options granted. The restricted stock will vest at the times and to the extent that 25% of such stock options have been exercised and the option shares have been held for two years. In 1991 Registrant issued 292,825 shares of its common stock to key officers pursuant to a Restricted Stock Grant Plan which provides for issuance of up to 500,000 shares. These shares vest and the cost of these shares will be expensed over a ten-year period of continued employment. Unvested shares are returned to the plan if employment is terminated for any reason. Stock option plans - In June 1989, Registrant adopted two stock option plans, the 1989 Employee Stock Option Plan and the 1989 Non-Employee Director Stock Option Plan. Options have been granted at the fair market value of shares on date of grant and may be granted to qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code or as non-qualified options. Registrant may grant options covering up to 1,500,000 and 150,000 shares of Registrant's common stock under the 1989 Employee Stock Option Plan and the 1989 Non-Employee Director Stock Option Plan, respectively. In 1990, the 1980 Stock Option Plan expired subject to outstanding granted options covering 589,871 shares at fiscal year-end 1994. A summary of stock option transactions related to the plans, adjusted for stock dividends, during the years ended February 26, 1994 and February 27, 1993, is as follows: Shares Option Prices --------- ------------- Outstanding at February 29, 1992 1,405,980 $3.16 - 12.30 Options granted 96,649 6.75 - 11.13 Options exercised (428,755) 3.20 - 12.30 Options cancelled or expired (157,376) 4.28 - 10.59 --------- ------------- Outstanding at February 27, 1993 916,498 3.16 - 12.30 Options granted 220,277 8.75 - 9.00 Options exercised (72,864) 3.16 - 8.00 Options cancelled or expired (12,189) 4.28 - 10.59 --------- ------------- Outstanding at February 26, 1994 1,051,722 $3.20 - 12.30 ========= ============= At February 26, 1994 and February 27, 1993 outstanding options covering 634,111 and 518,530 shares were exercisable and 832,385 and 1,040,473 shares were available for grant, respectively. Transactions with Intermark - Prior to June 1991, Intermark, Inc. ("Intermark") was the largest shareholder and exercised voting control of Registrant. On June 6, 1991, Intermark sold its shares of Registrant's common stock through a secondary public offering. On June 17, 1991, Registrant repurchased all shares of Registrant's preferred stock held by Intermark. In consideration of such repurchase, Registrant delivered to Intermark all shares of the preferred stock of a wholly owned subsidiary of Intermark that were owned by Registrant which had a stated value of $5.8 million on Registrant's balance sheet. The difference in the cost of the shares held by Registrant and the preferred shares held by Intermark reduced Registrant's capital by $4.4 million. Common stock dividend - On March 15, 1991 and November 19, 1991, Registrant announced stock dividends of 2% and 3%. Based on the closing price of Registrant's common stock at the date of each dividend, the market values of the shares distributed were approximately $4,005,000 and $10,169,000, respectively. Loans to officers - 1991 - In fiscal 1991, the Board of Directors approved the sale of 210,000 treasury shares of common stock to certain corporate officers in exchange for promissory notes of $892,500 which approximated fair market value. These notes were reflected as a reduction to stockholders' equity in 1991. In fiscal 1992, the Board of Directors authorized Registrant to accept approximately 77,600 common shares from these officers, at the current fair market value, in payment for the outstanding loan balances. Loans to officers - 1988 - The Board of Directors approved loans to certain corporate officers in 1988 to enable those officers to acquire Pier 1 common stock through open market purchases. These demand notes were unsecured, accrued interest at floating rates, and, if not demanded, would mature in 1997. In fiscal 1992, the Board of Directors authorized Registrant to accept approximately 112,600 common shares from certain of these officers at current market value, which together with cash payments, reduced the principal amount outstanding at February 26, 1994 to $776,000. Note 9 - Income taxes In fiscal 1993, Registrant adopted SFAS 109. Under SFAS 109, the deferred tax provision is determined under the liability method. Under this method, deferred tax assets and liabilities are recognized based on differences between financial statement and tax bases of assets and liabilities using presently enacted tax rates. Adoption of the statement had no effect on results of operations. The provision for income taxes consists of (in thousands): 1994 1993 1992 ------ ------ ------ Federal: Current $5,356 $8,875 $7,232 Deferred (4,966) (1,431) (153) State: Current 2,598 1,765 1,237 Deferred (1,127) (302) -- Foreign: Current 562 402 340 ------ ------ ------ $2,423 $9,309 $8,656 ====== ====== ====== Deferred tax liabilities (assets) at February 26, 1994 and February 27, 1993 are comprised of the following (in thousands): 1994 1993 -------- ------- Deferred tax liabilities: Depreciation $ 8,117 $ 5,938 Deferred store costs 4,697 3,947 Other 856 495 -------- ------- 13,670 10,380 -------- ------- Deferred tax assets: Inventory $ (24) $(1,087) Accrued average rent (6,126) (5,118) Accrued vacation/deferred compensation (2,494) (2,319) Deferred gain on sale/leaseback (1,493) (1,672) Bad debts (708) (850) Store-closing provision (8,454) -- Other (2,998) (817) -------- ------- (22,297) (11,863) -------- ------- $( 8,627) $(1,483) ======== ======= The difference between income taxes at the statutory federal income tax rate of 35 percent in fiscal 1994, 34 percent in fiscal 1993 and fiscal 1992, and income tax reported in the consolidated statement of operations is as follows (in thousands): 1994 1993 1992 ------ ------- ------- Tax at statutory federal tax rate $2,925 $12,208 $10,381 Tax treatment on sale of subsidiary stock (282) -- (2,312) State income taxes, net of federal benefit 856 966 816 Tax-favored investment income (284) (574) -- Targeted jobs tax credit (395) (332) (229) Foreign income taxed at lower rates (528) (2,959) -- Other, net 131 -- -- ------ -------- ------- $2,423 $ 9,309 $ 8,656 ====== ======== ======= Note 10 - Commitments and lease obligations Registrant leases certain property consisting principally of retail stores, warehouses and transportation equipment under leases expiring through the year 2012. Substantially all retail store locations are leased, for terms varying from 10 to 15 years with varying renewal options. Certain leases provide for additional rental payments based on a percentage of sales in excess of a specified base. Capital leases are recorded in Registrant's balance sheet as assets along with the related debt obligation. All other lease obligations are operating leases, and payments are reflected in Registrant's consolidated statement of operations as rental expense. The composition of capital leases reflected as assets in the accompanying consolidated balance sheet is as follows (in thousands): 1994 1993 ------ ------ Buildings $ 477 $ 477 Equipment, furniture and fixtures 538 538 ------ ------ 1,015 1,015 Less accumulated depreciation 827 738 ------ ------ $ 188 $ 277 ====== ====== At February 26, 1994, Registrant has the following minimum lease commitments in the years indicated (in thousands): Capital Operating Fiscal Year Leases Leases ----------- ------- --------- 1995 $285 $ 86,025 1996 205 83,125 1997 119 75,968 1998 87 69,372 1999 -- 57,618 Thereafter -- 201,629 ---- -------- Total lease commitments 696 $573,737 ======== Less imputed interest 221 ---- Present value of total capital lease obligations including current portion of $234 $475 ==== Present value of total operating lease commitments $372,000 ======== Rental expense incurred was $89,518,000, $85,511,000 and $81,042,000 including contingent rentals of $788,000, $821,000 and $559,000 based upon a percentage of sales and net of sublease incomes totalling $1,252,000, $870,000 and $836,000 in fiscal 1994, 1993 and 1992, respectively. Registrant has agreements with unaffiliated groups to lease certain stores and distribution center space. These unaffiliated groups are presently committed to make available up to $101.8 million for development or acquisition of stores leased by Registrant. Presently, Registrant has used $99.5 million of that availability. Agreements with these groups mature over the next five years, and Registrant's management is continuously monitoring financial markets to optimize renewal terms. In connection with the financing of 38 stores by these unaffiliated groups, Registrant has guaranteed the residual value of these buildings at approximately $25 million at the end of the lease terms. In fiscal 1993, Registrant invested in preference stock of The Pier Retail Group Limited ("The Pier"), located in the United Kingdom. Registrant guarantees approximately $4 million of debt for The Pier. Note 11 - Litigation There are various claims, lawsuits, investigations and pending actions against Registrant and its subsidiaries incident to the operations of its business. Liability, if any, associated with these matters is not determinable at February 26, 1994; however, Registrant considers them to be ordinary and routine in nature. While certain of the lawsuits involve substantial amounts, it is the opinion of management that the ultimate resolution of such litigation will not have a material adverse effect on Registrant's financial position. Note 12 - Cash flow information The following is supplemental cash flow information (in thousands): 1994 1993 1992 ------- ------- ------- Cash paid during the year for: Interest $20,445 $16,835 $14,033 Income taxes $17,732 $17,126 $ 4,439 Note 13 - Investment in Sunbelt Nursery Group, Inc. and subsequent event At fiscal year-end 1993, Registrant had a 49.5% ownership interest in Sunbelt. Registrant reported the results of Sunbelt using the equity method of accounting. Under such method, Registrant's share of net earnings (or losses) of Sunbelt was included as a separate item in the consolidated statement of operations. In April 1993, Registrant completed the sale of its 49.5% ownership interest in Sunbelt to General Host. Registrant received as compensation for the Sunbelt shares 1.9 million shares of General Host common stock, which represented approximately 9.7% of that company's outstanding common stock. In connection with Registrant's sale of its Sunbelt investment to General Host, Registrant provided Sunbelt a line of credit aggregating $12 million, all of which was outstanding at February 26, 1994. In order for Sunbelt to meet repayment obligations under this line, Sunbelt must obtain replacement financing. To enable Sunbelt to raise these funds, Registrant has granted Sunbelt a temporary extension of the credit facility until June 30, 1994. Also, Registrant is committed to provide Sunbelt $25 million of non-revolving store development financing through April 1996. Registrant has arranged for a bank group to provide the current financing by which Registrant leases from an unaffiliated third party and subleases store sites to Sunbelt. Under this leasing facility, the leases are required to be refinanced by Sunbelt from September 1994 to October 1995. If Sunbelt defaults on refinancing these store leases as the terms expire, Registrant will be required to obtain other financing. Registrant expects financing of Sunbelt's store sites to remain at same or similar terms and conditions as are currently in place. In addition to the above, Registrant also guarantees approximately $4.5 million of Sunbelt store lease commitments. Registrant's line of credit and leasing commitments are collateralized by 4.2 million shares of Sunbelt's common stock. Note 14 - Selected quarterly financial data (unaudited) Summarized quarterly financial data (in thousands of dollars except per share amounts) for the years ended February 26, 1994 and February 27, 1993 are set forth below: Three Months Ended ----------------------------------------------- Fiscal 1994 5/29/93 8/28/93 11/27/93 2/26/94 ----------- -------- -------- -------- -------- Net sales $158,593 $181,441 $163,457 $181,902 ======= ======= ======= ======= Gross profit $61,690 $65,834 $63,022 $69,046 ======= ======= ======= ======= Net income (loss) $4,702 $7,343 $4,042 ($10,154) ====== ====== ====== ======== Primary net income (loss) per common share(2) $.12 $.20 $.11 ($.27) ==== ==== ==== ===== Three Months Ended ----------------------------------------------- Fiscal 1993 5/30/92 8/29/92 11/28/92 2/27/93 ----------- -------- -------- -------- -------- Net sales $152,083 $166,416 $144,923 $165,813 ======== ======== ======== ======== Gross profit $59,732 $61,548 $56,655 $68,247 ======= ======= ======= ======= Net income(1) $8,055 $7,453 $2,247 $5,262 ====== ====== ====== ====== Primary net income per common share(2) $.22 $.20 $.06 $.14 ==== ==== ==== ==== (1) SFAS 109 was issued in February 1992 and was adopted by Registrant in the fourth quarter retroactively to the beginning of the 1993 fiscal year. The adoption had no effect on Registrant's financial position or results of operations. (2) Fully diluted earnings per share resulted in less than 3% dilution of primary earnings per share for both years and for all periods presented with the exception of a $.01 dilution in the first and second quarters of fiscal years 1994 and 1993. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of Registrant. Information required by this Item is incorporated herein by reference to the Sections entitled "Election of Directors" and "Certain Relationships and Related Transactions" set forth in Registrant's Proxy Statement for its 1994 Annual Meeting of Shareholders. The information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by reference to the Section entitled "Certain Relationships and Related Transactions" set forth in Registrant's Proxy Statement for its 1994 Annual Meeting of Shareholders. Item 11. Executive Compensation. The information required by this Item is incorporated herein by reference to the Section entitled "Executive Compensation" set forth in Registrant's Proxy Statement for its 1994 Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information required by this Item is incorporated herein by reference to the Sections entitled "Security Ownership of Management" set forth in Registrant's Proxy Statement for its 1994 Annual Meeting of Shareholders. Item 13. Certain Relationships and Related Transactions. The information required by this Item is incorporated herein by reference to the Section entitled "Certain Relationships and Related Transactions" set forth in Registrant's Proxy Statement for its 1994 Annual Meeting of Shareholders. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The following consolidated financial statements, schedules and exhibits are filed as part of this report. 1. Financial Statements * Report of Independent Accountants * Consolidated Statement of Operations for the years ended February 26, 1994, February 27, 1993 and February 29, 1992 * Consolidated Balance Sheet at February 26, 1994 and February 27, 1993 * Consolidated Statement of Cash Flows for the years ended February 26, 1994, February 27, 1993 and February 29, 1992 * Consolidated Statement of Stockholders' Equity for the years ended February 26, 1994, February 27, 1993 and February 29, 1992 2. Financial Statement Schedules Report of Independent Accountants II - Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other Than Related Parties V - Property, Plant and Equipment VI - Accumulated Depreciation and Amortization of Property, Plant and Equipment VIII - Valuation and Qualifying Accounts and Reserves IX - Short-Term Borrowings X - Supplementary Income Statement Information Schedules other than those referred to above have been omitted because they are not required or are not applicable or because the information required to be set forth therein either is not material or is included in the financial statements or notes thereto. (b) Reports on Form 8-K Not applicable (c) Exhibits See Exhibit Index. (d) Not applicable. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: PIER 1 IMPORTS, INC. May 23, 1994 By: /s/ Clark A. Johnson Clark A. Johnson, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities on May 23, 1994. Signature Title /s/ Robert G. Herndon Chief Financial Officer Robert G. Herndon /s/ Charles H. Turner Controller and Charles H. Turner Principal Accounting Officer /s/ Clark A. Johnson Chairman of the Board Clark A. Johnson of Directors /s/ Marvin J. Girouard Director Marvin J. Girouard /s/ Charles R. Scott Director Charles R. Scott /s/ Sally F. McKenzie Director Sally F. McKenzie /s/ James M. Hoak, Jr. Director James M. Hoak, Jr. /s/ Kenneth N. Pontikes Director Kenneth N. Pontikes SCHEDULE II PIER 1 IMPORTS, INC. AND CONSOLIDATED SUBSIDIARIES AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES (in thousands)
Deductions Balance at ----------------------- Balance at End of Period Beginning of Amounts Amounts ------------------------ Name of Debtor Period Additions Collected Written Off Current Noncurrent -------------- ------------ --------- --------- ----------- ------- ---------- Year ended February 26, 1994: - - ---------------------------- Clark A. Johnson $ 758 $ 18 $ -- $ -- $ -- $776(1) Triton Group, Ltd. 161 9 -- (170) -- --(2) Mellon/Pier 1 Properties, LP 6 38 (37) -- 7 --(5) Sunbelt Nursery Group, Inc. 3,105 1,576 (2,681) -- 2,000 --(7) Year ended February 27, 1993: - - ---------------------------- Clark A. Johnson $ 758 $ -- $ -- $ -- $ 758 $ --(1) Triton Group, Ltd. 128 108 (75) -- 161 --(3) Mellon/Pier 1 Properties, LP 156 84 (234) -- 6 --(5) Sunbelt Nursery Group, Inc. 1,039 3,884 (1,818) -- 3,105 --(6) Year ended February 29, 1992: - - ---------------------------- Clark A. Johnson $1,714 $ -- ($ 956) $ -- $ -- $758(1)(4) Marvin J. Girouard 1,110 -- (1,110) -- -- --(1)(4) J. Rodney Lawrence 103 -- (103) -- -- --(1) Robert G. Herndon 684 -- (684) -- -- --(1) E. Mitchell Weatherly 119 -- (119) -- -- --(1) Triton Group, Ltd. 155 -- (27) -- 27 101(3) Mellon/Pier 1 Properties, LP 311 478 (633) -- 156 --(5) Sunbelt Nursery Group, Inc. -- 1,039 -- -- 1,039 --(5) (1) Note is payable on demand, matures 12/31/97, and the interest is variable and calculated at 1/2% plus a variable short-term debt rate. Maturity date for fiscal 1993 and 1992 was January 8, 1994. (2) Due to bankruptcy filing, Triton receivables were written off in May 1993. (3) Principal and interest were payable in quarterly installments and interest accruals were based on the lesser of (a) 10% per annum or (b) the maximum lawful rate which may be contracted for, charged, taken, received by Payee in accordance with applicable law. (4) Unsecured promissory notes with a maturity date of 11/5/96 and interest rate of 9% were paid off early during fiscal 1992. (5) Non-interest bearing short-term receivable. (6) $3,000,000 of 1993 addition is portion of an unsecured promissory note due March 31, 1993. Interest is payable monthly and accrues at the lesser of (a) 8.5% per annum or (b) the maximum lawful rate which may be contracted for, charged, taken, received or reserved by Payee in accordance with applicable law. (7) Maturity date of the $2,000,000 was April 28, 1994; however, Registrant granted Sunbelt a temporary extension until June 30, 1994 in order for Sunbelt to obtain financing. Subsequent to February 26, 1994, Registrant purchased $10 million of Sunbelt's bank debt that was previously guaranteed by Registrant. These amounts are due and payable to Registrant on June 30, 1994.
SCHEDULE V PIER 1 IMPORTS, INC. AND CONSOLIDATED SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT (in thousands)
Balance at Retirements, Balance at Beginning of Sales and End of Period Additions, at Cost Other Period ------------ ------------------ ------------ ---------- Year ended February 26, 1994: - - ---------------------------- Land $ 7,204 $ 1 $ -- $ 7,205 Buildings 32,688 477 (102) 33,063 Equipment, furniture and fixtures 85,413 12,958 (7,866) 90,505 Leasehold interest and improvements 71,545 8,277 (800) 79,022 Construction in progress 214 -- (24) 190 -------- ------- -------- -------- $197,064 $21,713 ($ 8,792) $209,985 ======== ======= ======== ======== Year ended February 27, 1993: - - ---------------------------- Land $ 7,841 $ -- ($ 637) $ 7,204 Buildings 33,027 94 (433) 32,688 Equipment, furniture and fixtures 79,965 8,045 (2,597) 85,413 Leasehold interest and improvements 67,462 4,572 (489) 71,545 Construction in progress 259 -- (45) 214 -------- ------- ------- -------- $188,554 $12,711 ($4,201) $197,064 ======== ======= ======= ======== Year ended February 29, 1992: - - ---------------------------- Land $ 9,829 $ 1 ($ 1,989) $ 7,841 Buildings 39,909 384 (7,266) 33,027 Equipment, furniture and fixtures 79,397 4,948 (4,380) 79,965 Leasehold interest and improvements 65,548 2,684 (770) 67,462 Construction in progress 2,107 -- (1,848) 259 -------- ------- -------- -------- $196,790 $ 8,017 ($16,253)(1) $188,554 ======== ======= ======== ======== (1) Includes sale/leaseback of a distribution center which had a cost of $9,225. /TABLE SCHEDULE VI PIER 1 IMPORTS, INC. AND CONSOLIDATED SUBSIDIARIES ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (in thousands)
Balance at Retirements, Balance at Beginning of Additions Charged Sales and End of Period to Profit and Loss Other Period ------------ ------------------ ------------ ---------- Year ended February 26, 1994: - - ---------------------------- Buildings $ 5,565 $ 1,112 $ -- $ 6,677 Equipment, furniture and fixtures 54,021 10,792 (7,460) 57,353 Leasehold interest and improvements 29,467 5,655 (677) 34,445 ------- ------- ------ ------- $89,053 $17,559 ($8,137) $98,475 ======= ======= ====== ======= Year ended February 27, 1993: - - ---------------------------- Buildings $ 4,546 $ 1,109 ($ 90) $ 5,565 Equipment, furniture and fixtures 44,544 11,174 (1,697) 54,021 Leasehold interest and improvements 24,952 4,911 (396) 29,467 ------- ------- ------- ------- $74,042 $17,194 ($2,183) $89,053 ======= ======= ======= ======= Year ended February 29, 1992: - - ---------------------------- Buildings $ 4,080 $ 1,216 ($ 750) $ 4,546 Equipment, furniture and fixtures 35,030 10,857 (1,343) 44,544 Leasehold interest and improvements 20,287 5,320 (655) 24,952 ------- ------- ------ ------- $59,397 $17,393 ($2,748)(1) $74,042 ======= ======= ====== ======= (1) Includes sale/leaseback of a distribution center which has accumulated depreciation of $750 thousand at the date of sale. Note: Refer to Note 1 of the Notes to Consolidated Financial Statements for a description of Registrant's depreciation methods. /TABLE SCHEDULE VIII PIER 1 IMPORTS, INC. AND CONSOLIDATED SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands) RESERVE FOR DOUBTFUL ACCOUNTS -----------------------------
Year Ended ----------------------------------------------------- February 26, February 27, February 29, 1994 1993 1992 ------------ ------------ ------------ Balance at beginning of year $ 2,404 $ 3,185 $ 3,090 Additions charged to income 2,097 2,327 2,785 Balances written off, net of recoveries (2,429) (3,108) (2,690) ------- ------- ------- Balance at end of year $ 2,072 $ 2,404 $ 3,185 ======= ======= =======
SCHEDULE IX PIER 1 IMPORTS, INC. AND CONSOLIDATED SUBSIDIARIES SHORT-TERM BORROWINGS (in thousands)
Maximum Average Weighted Weighted Amount Amount Average Description Balance at Average Outstanding Outstanding Interest Rate of End of Interest During the During the During the Borrowings Period Rate Period Period Period (A) (B) (C) ----------- ---------- -------- ----------- ----------- ------------- February 26, 1994: - - ----------------- Banks $ -- -- $47,000 $23,242 4.01% February 27, 1993: - - ----------------- Banks $33,000 3.97% $36,000 $28,631 4.39% February 29, 1992: - - ----------------- Banks $23,000 4.82% $78,500 $48,714 6.69% (A) The weighted average interest rate on the ending balance is computed by dividing the actual interest expense on the year- end short-term debt by the short-term debt outstanding at year-end. (B) The average amount outstanding during the period is computed by dividing the total of daily outstanding balances by the number of days in the year. (C) The weighted average interest rate during the period is computed by dividing the actual short-term interest expense by the average short-term debt outstanding. /TABLE SCHEDULE X PIER 1 IMPORTS, INC. AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION (in thousands)
Year Ended ------------------------------------------------ February 26, February 27, February 29, 1994 1993 1992 ------------ ------------ ------------ Taxes, other than payroll and income taxes $14,070 $13,012 $10,865 Advertising costs 29,385 28,661 25,447 Registrant has no material royalties, depreciation and amortization of intangible assets, preoperating costs and similar deferrals; maintenance and repairs are immaterial.
EXHIBIT INDEX Exhibit No. Description Page No. 2.1 Stock Purchase Agreement (filed as Exhibit 1 to dated as of April 2, 1993 by Registrant's Statement on and between General Host Schedule 13-D dated April 2, Corporation and Registrant 1993 and incorporated herein by reference) 3.(i) Certificate of Incorporation (filed as Exhibit 3(a) to and Amendments thereto Registrant's Form 10-K for the fiscal year ended March 3, 1990 and incorporated herein by reference) 3.(ii) Bylaws of Registrant, (filed as Exhibit 3(b) to Restated as of September 16, Registrant's Form 10-K for 1991 the fiscal year ended February 28, 1993 and incorporated herein by reference) 4.1 Indenture, dated April 9, (filed as Exhibit 4(a) to 1992, between the Registrant Registrant's Form 10-K for and Ameritrust Texas the fiscal year ended National Association, as February 29, 1992 and Trustee, relating to 6- incorporated herein by 7/8% Convertible reference) Subordinated Notes Due 2002. As permitted by Item 601(b)(4)(iii) of Regulation S-K, Exhibit Number 4 omits instruments relating to issues of long-term debt of the Registrant and its subsidiaries, the total authorized principal amount of which for each issue does not exceed 10% of the consolidated total assets of the Registrant and its subsidiaries. The Registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. 10.1* Registrant's Amended and (filed as Exhibit 10(a) to Restated Stock Purchase Plan Registrant's Form 10-K for as of March 25, 1987 the fiscal year ended February 28, 1993 and incorporated herein by reference) 10.2.1 Lease Contract dated July 19, (filed as Exhibit 10(b) to 1985, between Pier 1 and Registrant's Form 10-K for City Center Development the fiscal year ended Co., together with the February 28, 1993 and First through Seventh incorporated herein by Amendments reference) 10.2.2 Eighth Amendment to Lease Contract dated as of September 1, 1993, between Pier 1 and City Center Development Co. 10.3* Form of Indemnity Agreement (filed as Exhibit 10(l) to between the Registrant and Registrant's Form 10-K for the directors and executive the fiscal year ended officers of the Registrant. February 29, 1992 and incorporated herein by reference) 10.4* Registrant's Supplemental (filed as Exhibit 10(d) to Executive Retirement Plan Registrant's Form 10-K for effective May 1, 1986, as the fiscal year ended amended February 28, 1993 and incorporated herein by reference) 10.5* Registrant's Benefit (filed as Exhibit 10(y) to Restoration Plan, effective Registrant's Form 10-K for April 1, 1990 the fiscal year ended March 2, 1991 and incorporated herein by reference) 10.6* Registrant's Restricted Stock (filed as Exhibit 10(p) to Plan effective March 5, 1990 the fiscal year ended March 3, 1990 and incorporated herein by reference) 10.7* Registrant's Management Restricted Stock Plan effective June 24, 1993 10.8* Registrant's 1989 Employee (filed as Exhibit 10(q) to Stock Option Plan, effective Registrant's Form 10-K for June 29, 1989 the fiscal year ended March 3, 1990 and incorporated herein by reference) 10.9* Registrant's 1989 (filed as Exhibit 10(r) to Non-Employee Director Stock Registrant's Form 10-K for Option Plan effective June the fiscal year ended March 29, 1989 3, 1990 and incorporated herein by reference) 10.10* Form of Post-Employment (filed as Exhibit 10(r) to Consulting Agreement between Registrant's Form 10-K for the Registrant and its the fiscal year ended executive officers February 29, 1992 and incorporated herein by reference) 10.11.1 Revolving Credit Loan (filed as Exhibit 10(j) to Agreement dated as of August Registrant's Form 10-K for 14, 1992, among Registrant, the fiscal year ended Pier 1 Imports (U.S.), Inc. February 28, 1993 and and Bank One, Texas, N.A. incorporated herein by reference) 10.11.2 First, Second and Third Amendments to Revolving Credit Loan Agreement dated as of August 14, 1992, among Registrant, Pier 1 Imports (U.S.), Inc. and Bank One, Texas, N.A. 10.12 Lease Guarantee dated as of December 30, 1992 among Registrant, Pier 1 Licensing, Inc. (successor in interest to CMEI, Inc.), and Pier Set, Inc., together with Supplements and First, Second and Third Amendments 10.13 Lease Guarantee dated as of December 30, 1992 between Registrant and Pier Group, Inc., together with First and Second Amendments 10.14 Lease Guarantee dated as of December 30, 1992 among Registrant, Pier 1 Imports (U.S.), Inc. and Pier Group, Inc., together with First and Second Amendments 10.15.1 Sunbelt Credit Facilities (filed as Exhibit 10.12 to Agreement dated as of April Sunbelt Nursery Group, Inc.'s 28, 1993 between Registrant Form 10-K for the fiscal year and Sunbelt ended January 31, 1993 and incorporated herein by reference) 10.15.2 Extension Agreement dated April 25, 1994, and Waiver Agreement dated May 12, 1994, among Registrant, Sunbelt and Pier-SNG, Inc. 10.16* Registrant's Senior Management Annual Bonus Plan 10.17* Registrant's Executive Bonus Plan 10.18* Registrant's Management Medical and Tax Benefit Plans 21 Roster of Subsidiaries of Registrant 23 Consent of independent accountants to the incorporation by reference of their reports regarding the financial statements filed herewith into (i) Registration Statement on Form S-8 (Reg. No. 33-9970) relating to Registrant's 1980 Stock Option Plan, (ii) Registration Statement on Form S-8 (Reg. No. 33-32166) relating to Registrant's 1989 Employee Stock Option Plan and 1989 Non-Employee Director Stock Option Plan and (iii) Registration Statement on Form S-8 (Reg. No. 33-50278) relating to Registrant's Employee Stock Purchase Plan. __________________ * Management Contracts and Compensatory Plans
                         EXHIBIT 10.2.2

                EIGHTH AMENDMENT TO LEASE CONTRACT
                         BY AND BETWEEN
                   CITY CENTER DEVELOPMENT CO.
                              AND
                   PIER 1 IMPORTS (U.S.), INC.


    This Eighth Amendment to Lease Contract ("Amendment") is made and entered
into to be effective as of the 1st day of September, 1993 ("Effective Date"),
by and between City Center Development Co., a Texas general partnership
("Landlord") and Pier 1 Imports (U.S.), Inc., a Delaware corporation
(successor in interest to Pier 1 Imports - Texas, Inc.) ("Tenant").
 
    WHEREAS, Landlord and Tenant entered into that certain Lease Contract
("Lease") dated July 19, 1985, covering certain office space on the 6th, 7th
and 8th floors of City Center Tower II ("Building") located at 301 Commerce
Street, Block 40, City Addition to the City of Fort Worth, Tarrant County,
Texas and on the ground floor of City Center Parking Garage, 201 Commerce
Street, Fort Worth, Texas; and

    WHEREAS, the Lease was subsequently amended as of October 29, 1985,
December 16, 1985, April 23, 1987, March 1, 1988, December 30, 1988, February
28, 1989, and August 1, 1990 (whereby, among other items, such amendments
provided that the Leased Premises were expanded to include space on the 5th
and 9th floors of the Building and space in the basement of the building
located at 201 Main Street, Fort Worth, Texas); and
 
    WHEREAS, Landlord and Tenant desire to further amend the Lease as
hereinafter provided.
 
    NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
amend the Lease as follows:

1.  Paragraph 36 of the Lease (as previously amended) is hereby further
amended to provide that from and after the Effective Date the Leased Premises
shall be increased in size by approximately twelve thousand six hundred
forty-four (12,644) square feet of Rentable Area located on the tenth (10th)
floor of the Building ("Expansion Space").  The Expansion Space shall consist
of (i) approximately ten thousand eight hundred seventy-eight (10,878) square
feet of Rentable Area on the tenth (10th) floor of the Building which shall
be leased to Tenant for a term commencing on the Effective Date and
terminating on the date the initial Term of the Lease terminates, as provided
in the Lease (as previously amended) ("Permanent Space"), and (ii)
approximately one thousand seven hundred sixty-six (1,766) square feet of
Rentable Area located on the tenth (10th) floor of the Building which shall
be leased to Tenant on a month-to-month basis ("Month-To-Month Space") and
either party hereto may terminate the Lease with respect to the
Month-To-Month Space only by delivering at least thirty (30) days' prior
written notice of such termination to the other party.  The Permanent Space
and the Month-To-Month Space are more particularly described on Exhibit "A"
attached hereto and incorporated herein by reference.
 
2.  Paragraph 2 of the Seventh Amendment to the Lease, which amends Paragraph
2 of the Third Amendment to the Lease, which amends Paragraph 4(a) of the
Lease, is further amended to provide that from and after the Effective Date,
as Base Rent for Tenant's lease of the Expansion Space (as provided in this
Amendment) Tenant shall pay to Landlord (at Landlord's office, without demand
and without deduction, abatement or set-off, except as otherwise expressly
provided for in Paragraph 7 or Paragraph 19 of the Lease) Seventeen and
No/l00 Dollars ($17.00) per square foot of Rentable Area contained within the
Expansion Space per year.  The Base Rent for the Expansion Space shall be
comprised of a Fixed Rent Component equal to Eleven and No/l00 Dollars
($11.00) and a Variable Maintenance Component equal to Six and No/100 Dollars
($6.00).  The Variable Maintenance Component shall be adjusted throughout the
Term in accordance with the terms of Paragraph 4(b) of the Lease; provided,
however, that such Variable Maintenance Component shall not increase in any
Lease Year by more than eight percent (8%) above the Variable Maintenance
Component for the previous Lease Year.

3.  Tenant may use the Expansion Space for general office purposes only and
for no other purposes without the prior written consent of Landlord.

4.  Paragraph 4 of the Seventh Amendment to the Lease is hereby modified to
provide that the Tenth Floor Expansion Space (as defined in the Seventh
Amendment to the Lease) consists of approximately nine thousand seven hundred
seventy (9,770) square feet of Rentable Area on the tenth (l0th) floor of the
Building.  It is agreed and acknowledged that the Tenth Floor Expansion Space
includes the Month-To-Month Space and Tenant may elect to permanently lease
the Month-To-Month Space pursuant to Tenant's expansion rights set forth in
the Lease (as previously amended), such election shall be governed by the
applicable terms and conditions specified in the Lease (as previously
amended).  At such time as Tenant elects to permanently lease the
Month-To-Month Space, the Lease will be amended to reflect the terms
governing such permanent lease of the Month-To-Month Space.  The Tenth Floor
Expansion Space, as modified by this Amendment, is more particularly
described on Exhibit "B" attached hereto and incorporated herein by
reference.

5.  Tenant Finish for the Permanent Space.  Landlord shall, at Tenant's sole
expense, construct and install certain improvements ("Tenant Improvements")
to the Permanent Space pursuant to mutually approved plans and
specifications; provided, however, Landlord shall provide Tenant with an
allowance in the amount of Fifteen and No/100 Dollars ($15.00) per square
foot of Rentable Area contained within the Permanent Space ("Allowance") to
be applied against the costs of constructing the Tenant Improvements,
including, without limitation, design fees, permit fees, and construction
costs. In the event the cost of constructing the Tenant Improvements is more
than the Allowance, Tenant shall be obligated to pay all such additional
cost.  Notwithstanding anything in the Lease (as previously amended) to the
contrary, Landlord shall have no other obligation to construct or install
improvements to the Permanent Space or to provide Tenant with any further
allowances, except the Refurbishment Allowance (as hereinafter defined), with
respect to the Permanent Space.
 
6.  Tenant Finish for the Month-To-Month Space.  Notwithstanding anything in
the Lease (as previously amended) to the contrary, Landlord shall have no
obligation to construct or install improvements to the Month-To-Month Space
and, except as specifically provided for herein, the lease of the
Month-To-Month Space as provided herein is made on an "AS-IS, WHERE-IS"
basis, and Tenant expressly acknowledges that, in consideration of the
agreements of Landlord herein, Landlord MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY
LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE OF THE MONTH-TO-MONTH SPACE.
 
7.  Refurbishment Allowance.  At such time as Tenant has leased the Permanent
Space for a total of sixty (60) months, Landlord shall provide Tenant with a
Refurbishment Allowance ("Refurbishment Allowance") in an amount equal to
Seven and 50/100 Dollars ($7.50) per square foot of Rentable Area within the
Permanent Space. All refurbishment work shall be done in accordance with the
applicable terms and conditions of the Lease, and in a manner reasonably
satisfactory to Landlord and Tenant.  Notwithstanding the foregoing, in the
event that the Lease is not renewed in accordance with the applicable terms
and conditions of Paragraph 37 of the Lease, Tenant shall pay to Landlord the
unamortized portion of the Refurbishment Allowance as of the termination of
the initial Term within thirty (30) days following Landlord's demand.  The
Refurbishment Allowance shall be amortized on a straight-line basis over the
period commencing on the date Landlord pays Tenant, or credits Tenant with,
such Refurbishment Allowance and ending on the date that is five years
thereafter.  Notwithstanding anything in the Lease (as previously amended) to
the contrary, Landlord shall have no other obligation to provide Tenant with
any refurbishment allowance (other than the Refurbishment Allowance described
in this Paragraph) in connection with the Permanent Space or the
Month-To-Month Space.
 
8.  All capitalized terms not otherwise defined herein shall have the meaning
assigned to such terms in the Lease.

9.  Except as specifically set forth herein, the Lease (as previously
amended) is hereby ratified and shall remain in full force and effect as
written.

    IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
this the _____ day of June, 1993, to be effective as of the Effective Date.


"LANDLORD"                                        "TENANT"

CITY CENTER DEVELOPMENT CO.,                      PIER 1 IMPORTS (U.S.), INC.,
a Texas general Partnership                       a Delaware corporation

By:     Its general partners,                     By: ________________________
    SID R. BASS, INC.,                            Name:_______________________
    THRU LINE INC.,                               Title:______________________
    KEYSTONE, INC.,
    LEE M. BASS                           

    By:______________________
    Name:____________________
    Title:___________________
                                  EXHIBIT 10.7

                               PIER 1 IMPORTS, INC.

                         MANAGEMENT RESTRICTED STOCK PLAN


        1.  Purpose.  The purpose of the Pier 1 Imports, Inc. Management
Restricted Stock Plan (the "Plan") is to further the growth and profitability
of the Company by offering incentives to those key management personnel, who
have the capacity for contributing in substantial measure toward the growth
and profitability of the Company and to attract and retain such key
employees.

        2.  Definitions.  For purposes of the Plan the following terms shall
have the indicated meanings unless otherwise expressly provided or unless the
context otherwise requires:

        "Award" means an award of Restricted Stock pursuant to the provisions of
the Plan.

        "Board" means the Board of Directors of the Company.
        
        "Committee" means Compensation Committee of the Board or the Committee
appointed by the Board to administer the Plan in accordance with Section 3
hereof.

        "Company" means Pier 1 Imports, Inc., a Delaware corporation.

        "Employee" means any individual employed by the Company or any
Subsidiary.

        "Grantee" means an Employee to whom an Award has been granted hereunder.

        "Permanent Disability" means permanent and total disability of the
Grantee, as determined by the Committee in its sole discretion and in
accordance with uniform and non-discriminatory standards adopted by the
Committee.

        "Restricted Stock" means the Shares awarded upon the terms and
conditions and subject to the restrictions set forth in Section 6.

        "Restricted Stock Agreement" means the agreement pursuant to which
Restricted Stock is issued in accordance with Section 6.

        "Retirement" means, in the case of an Employee, a Termination of
Employment by reason of the Employee's retirement at or after his or her
normal retirement date under the Company's Retirement plan.

       "Shares" means shares of Common Stock, par value $1.00 per share, of
the Company.

        "Subsidiary" means any corporation the majority of the outstanding
voting stock of which is owned, directly or indirectly, by the Company.

        "Termination of Employment" means  the time when the employee-employer
relationship between the Employee and the Company and its Subsidiaries is
terminated for any reason, including, but not limited to, a termination by
resignation, discharge, death, Permanent Disability, Retirement, or the
disaffiliation of a Subsidiary, but excluding any such termination where
there is a immediate reemployment by either the Company or one of its
Subsidiaries.

        3.       Administration of the Plan.  The Plan shall be administered by
the Committee, which shall consist of not fewer than two members of the Board,
who shall be appointed by and serve at the pleasure of the Board.  Each
member of the Committee shall be a "disinterested person" as that term is
defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended, or any successor provision.

        Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the Employees who are to participate in the Plan,
to determine the number of Shares to be subject to any Award and the time or
times at which Awards will be granted, to provide additional limitations in
any Awards that are not specifically set forth in the Plan, and to establish
other terms and conditions of each Award.  The Committee shall also have the
power to modify or amend the terms of any or all outstanding Awards in any
respect subject to the terms of the Plan, provided that no such amendment may
adversely affect the terms of a Grantee's Award without the Grantee's written
consent.  The Committee shall have complete authority to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan,
and to make all other determinations necessary or advisable in the
administration of the Plan, all of which determinations shall be final and
binding upon all persons having an interest in the Plan.  No member of the
Committee shall be personally liable for any action, determination, or
interpretation taken or made with respect to the Plan, unless such action,
determination, or interpretation constitutes criminal misconduct, gross
negligence or demonstrates bad faith, and all members of the Committee shall
be fully protected by the Company with respect to any such action,
determination or interpretation.

        4.  Plan Limitations; Stock Subject to the Plan.  The maximum number of
shares of Restricted Stock that may be issued or transferred under the Plan
shall be 250,000 shares of Restricted Stock, subject to adjustment pursuant
to the provisions of Section 10.  Any shares of Restricted Stock that have
been awarded under the Plan but later are forfeited or otherwise revert to
the Company pursuant to the provisions of an Award may again be issued as
Awards under the Plan.

        5.  Eligibility for Participation.  The Committee shall from time to
time in its absolute discretion select from among the Employees those persons
who, in the opinion of the Committee are in a position to contribute
materially to the growth and success of the Company.

        6.       Restricted Stock Awards. 

        (a)  Grant of Award. The Committee may, from time to time, grant Awards
to eligible Employees in conjunction with the granting of stock options
pursuant to a stock option plan of the Company.  Each Award shall be
evidenced by a Restricted Stock Agreement between the Company and the
Grantee, which Agreement shall contain terms prescribed by the Plan and such
other terms and conditions as the Committee may deem necessary or advisable. 
The purchase price of Restricted Stock awarded under the Plan shall not
exceed such amount as may be required for the issuance of such shares under
the jurisdiction of incorporation of the Company.  To the extent permissible
by law, the award of Restricted Stock shall be made in consideration of the
services of the Grantee.

        (b)  Restrictions.  Restricted Stock shall be subject to the following
restrictions:

        (i)  no Restricted Stock may be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of during such time as such Restricted
Stock is subject to the restrictions provided in this Section 6;

        (ii)  The restrictions with respect to the Restricted Stock shall lapse
in accordance with the provisions established by the Committee and set forth
in each Grantee's Restricted Stock Agreement.

        (iii) Each certificate issued with respect to Restricted Stock shall be
registered in the name of the Grantee and deposited, together with a stock
power duly executed in blank by the Grantee, with the Company or, if the
Committee so specifies, with a third party custodian or trustee, and shall
bear the following, or a similar, legend:

"The transferability of this certificate and the shares of Common Stock
represented hereby are subject to the terms, conditions and restrictions
(including forfeiture) contained in the Management Restricted Stock Plan of
Pier 1 Imports, Inc. and the Restricted Stock Agreement entered into between
the registered owner and Pier 1 Imports, Inc.  A copy of such Plan and
Agreement is on file in the offices of Pier 1 Imports, Inc., 301 Commerce
Street, 6th Floor, Fort Worth, Texas 76102."

        (c)  At the expiration of the restrictions provided herein and in the
Restricted Stock Agreement, the Company will cause a new certificate to be
delivered to the Grantee (or in the case of his death to his or her legal
representative, beneficiary or heir), free of any legend provided herein for
such number of Shares as to which such restrictions shall have lapsed;
provided, however, that the Company shall not be required to issue fractional
Shares.

        (d)  During the applicable period of restriction as to any Restricted
Stock, a Grantee shall be the record owner thereof and shall be entitled to
vote such Shares and receive all dividends and other distributions paid with
respect to such Shares; provided that if any such dividend or distribution is
paid in Shares, the Shares so received shall be subject to the same
restrictions as the Restricted Stock with respect to which such dividend or
distribution was paid.  The Committee may provide in the agreement such other
restrictions, terms or conditions with respect to the treatment and holding
of any shares, cash or other property that may be received as consideration
or in exchange for Restricted Stock.

        (e)  The Committee may accelerate the time at which the restrictions
will lapse or remove any restrictions whenever it may decide in its absolute
discretion that such action is in the best interests of the Company and not
adverse to the interests of the Grantee or his heirs or beneficiaries.

        7.  Effective Date of the Plan; Shareholder Approval.  The Plan shall
become effective upon the approval of the Plan, within 12 months of adoption
by the Board, by the holders of a majority of the Shares present or
represented by proxy and entitled to vote at a duly held meeting of the
shareholders of the Company.

        8.  Amendment of the Plan.  The Board may at any time and from time to
time modify or amend the Plan in any respect; provided, that without approval
of the shareholders of the Company the Board may not increase the maximum
number of shares of Restricted Stock that may be awarded under the Plan
(other than increases due to adjustments in accordance with Section 10),
materially modify the requirements as to eligibility for participation in the
Plan, or otherwise materially increase the benefits accruing to participants
under the Plan.  Any modification or amendment to the Plan shall not, without
the written consent of any Grantee, adversely affect the Grantee's rights
under an Award granted prior to such modification or amendment.

        9.  Termination of the Plan. The Plan shall terminate upon the granting
of Awards equalling the maximum number of Shares of Stock that may be awarded
under the Plan or upon a vote by the Board to terminate the Plan, and
thereafter the function of the Committee will be limited to the
administration of Restricted Stock Agreements.  Each Award shall remain in
effect until the restrictions on the Restricted Stock have lapsed or the
Restricted Stock shall revert to the Company in accordance with the terms
hereof.  No termination of the Plan shall, without the written consent of the
Grantee, adversely affect the rights or obligations under Awards previously
granted.

        10. Dilution and Other Adjustments.  In the event of any change in the
number of outstanding Shares by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization,
combination or exchange of shares, or other similar corporate change, the
Committee shall make such adjustments, if any, as in its sole discretion it
deems equitable in the aggregate number or kind of Restricted Stock or other
stock or securities which may be awarded pursuant to the Plan, and in the
terms and restrictions of each outstanding Award affected thereby.  Such
adjustments shall be conclusive and binding upon all parties concerned.

        11. Tax Withholding.  The Company shall deduct from each Grantee's
salary or wages, or, at the option of the Grantee, the Grantee shall pay to
the Company, the amount of any tax required by any governmental authority to
be withheld on account of an Award or the lapse of restrictions on Restricted
Stock.  The Committee may, in its sole discretion, permit a Grantee the right
to satisfy, in whole or in part, any tax withholding requirement resulting
from the lapse of restrictions by electing to require the Company to purchase
that number of unrestricted Shares designated by the Grantee at a price equal
to the closing price for Shares, as reported for consolidated transactions on
the New York Stock Exchange, on the date of lapse of restrictions, or if not
traded on such day on the next preceding day on which trading occurred.  The
Company shall not be required to deliver a certificate for any Shares as to
which restrictions shall have lapsed until all such taxes shall have been
paid by the Grantee or the person entitled thereto.  The Company shall have
the right, but not the obligation, to sell or withhold such number of Shares
distributable to the person entitled to such distribution as will provide
assets for payment of any tax so required to be paid by the Company for such
person unless, prior to such sale or withholding, such person shall have paid
to the Company the amount of such tax.  Any balance of the proceeds of such a
sale remaining after the payment of such taxes shall be paid over to such
person.  In making any such sale, the Company shall be deemed to be acting on
behalf and for the account of such person.

        12. Applicable Laws and Regulations.  The Company's obligation to issue
or deliver any Shares pursuant to an Award shall be subject to such
compliance as the Committee in its sole discretion deems necessary or
advisable with respect to the listing of such Shares  upon any securities
exchange, the registration or qualification of such Shares under any federal
or state law or the rulings or regulations of any governmental regulatory
body, or the obtaining of any approval or consent from any federal, state or
other governmental agency.

        13.  Employment Rights.  Nothing in the Plan or in any Restricted Stock
Agreement shall confer upon any Grantee the right to continue in the employ
of the Company or its Subsidiaries or shall interfere with or restrict in any
way the rights of the Grantee's employer to discharge the Grantee at any time
for any reason whatsoever, with or without cause.
                                                  EXHIBIT 10.11.2

                                                  FIRST AMENDMENT TO
                                          REVOLVING CREDIT LOAN AGREEMENT

        THIS FIRST AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT (this
"Amendment") is entered into as of July 31, 1993, by and among PIER 1
IMPORTS, INC., a Delaware corporation ("Pier 1"), Pier 1 Imports (U.S.),
Inc., a Delaware corporation ("U.S."), PIR Trading, Inc., a Delaware
corporation ("PIR") (Pier 1 U.S. and PIR being sometimes referred to herein
individually as a "Borrower" and collectively as "Borrowers"), and BANK ONE,
TEXAS, NATIONAL ASSOCIATION ("Bank").

        WHEREAS, Borrowers and Bank entered into that certain Revolving Loan
Agreement dated August 14, 1992 (as the same is hereby amended and as the
same may hereafter be amended from time to time, hereinafter referred to as
the "Agreement"); and

        WHEREAS, Borrowers and Bank now desire to modify the Agreement as
hereinafter provided; 

        NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrowers and Bank covenant and agree as follows:

                                                  ARTICLE I

                                                  Definitions

        Section 1.01             Definitions.  The terms used in this Amendment
to the extent not otherwise defined herein shall have the same meanings as in 
the Agreement.

                                                  ARTICLE II

                                                  Amendments

        Section 2.01  Amendment to Definition of "Termination Date."  Effective
as of the date hereof, the definition of "Termination  Date set forth in
Section 1.131 of the Agreement is hereby amended to read as follows:

        "1.131.          "Termination Date" shall mean September 30, 1993."

        Section 2.02  Amendment to Section 3.03 of the Agreement.  Effective as
of the date hereof, the reference to "July 31, 1993" set forth in Section
3.03 of the Agreement is hereby amended to read in its entirety as "September
30, 1993".

                                                  ARTICLE III

                         Representations, Warranties, Ratification
                                          and Reaffirmation

        Section 3.01  Representations and Warranties.  Borrowers hereby
represent and warrant that: (i) the representations and warranties contained
in the Agreement and the other Loan Documents are true and correct on and as
of the date hereby as though made on and as of the date hereof, (ii) no event
has occurred and is continuing that constitutes an Event of Default or would
constitute an Event of Default but for the requirement of notice or lapse of
time or both, and (iii) there are no claims or offsets against, or defenses
or counterclaims to, the obligations of Borrowers under the Agreement or any
of the other Loan Documents (including without limitation, any defenses or
offsets resulting from or arising out of breach of contract or duty, the
amount of interest charged, collected or received on the Note heretofore, or
breach of any commitments or promises of any type).

        Section 3.02  Ratification.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and the other Loan Documents, but except as
expressly modified and superseded by this Amendment, the terms and provisions
of the Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect, Borrowers hereby agreeing that the
Agreement and the Loan Documents are and shall continue to be outstanding,
validly existing and enforceable in accordance with their respective terms.

        Section 3.03  Renewal Note.  Contemporaneously with the execution of
this Amendment, Pier 1 shall execute and deliver to Bank a Promissory Note of
even date herewith (the "Renewal Note"), payable to the order of Bank in the
original principal amount of $25,000,000.00  The Renewal Note shall be in the
renewal, extension and modification, but not extinguishment, of the Note. 
Effective as of the date hereof, each reference in the Agreement and the
other Loan Documents to the Note shall mean a reference to the Note as
renewed, extended and modified by the Renewal Note.

                                                  ARTICLE IV

                                              Miscellaneous

        Section 4.01  Reference to Agreement.  Each of the Loan Documents is
hereby amended so that any reference in the Loan Documents to the Agreement
shall mean a reference to the Agreement as amended hereby.

        Section 4.02  Guarantors.  Each of the undersigned Guarantors
acknowledges and agrees to the terms and provisions of this Amendment and
agrees that each Guaranty Agreement executed by such Guarantor shall not be
impaired hereby and shall remain in full force and effect.

        Section 4.03  Execution in Counterparts. This Amendment may be executed
simultaneously 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.

        Section 4.04  Governing Law.  This Amendment has been entered into in
Dallas County, Texas and shall be performable for all purposes in Dallas
County, Texas.  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.  Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Amendment; and venue in any such dispute shall be laid in Dallas County,
Texas.  

        Section 4.05  Parties Bound.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that Borrowers shall not assign any rights,
powers, duties or obligations hereunder.

        EXECUTED as of the date first above written.

                                          BORROWERS:

                                          PIER 1 IMPORTS, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIER 1 IMPORTS (U.S.), INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIR TRADING, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          GUARANTORS:

                                          a) Pier 1 Guarantors:

                                          CMEI, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIER 1 IMPORTS (U.S.), INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIR TRADING, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIR TRANSPORTATION, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________
        
                                          PIER 1 IMPORTS HOLDINGS, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          b) PIR Guarantors:

                                          PIER 1 IMPORTS, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          CMEI, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIER 1 IMPORTS (U.S.), INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________
        
                                          PIR TRANSPORTATION, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIER 1 IMPORTS HOLDINGS, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          c) U.S. Guarantors:

                                          PIER 1 IMPORTS, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          CMEI, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIR TRADING, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIR TRANSPORTATION, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          PIER 1 IMPORTS HOLDINGS, INC.

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                          BANK:

                                          BANK ONE, TEXAS, NATIONAL ASSOCIATION

                                          By:__________________________
                                          Name:________________________
                                          Title:_______________________

                                 SECOND AMENDMENT TO
                         REVOLVING CREDIT LOAN AGREEMENT


        THIS SECOND AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT (this
"Amendment") is entered into as of September 30, 1993, by and among PIER 1
IMPORTS, INC., a Delaware corporation ("Pier 1"), Pier 1 Imports (U.S.),
Inc., a Delaware corporation ("U.S."), PIR Trading, Inc., a Delaware
corporation ("PIR") (Pier 1, U.S. and PIR being sometimes referred to  herein
individually as a "Borrower" and collectively as "Borrowers"), and BANK ONE,
TEXAS, NATIONAL ASSOCIATION ("Bank").

        WHEREAS, Borrowers and Bank entered into that certain Revolving Loan
Agreement dated August 14, 1992 as amended by that certain First Amendment to
Revolving Credit Loan Agreement dated July 31, 1993 (as the same has been and
may hereafter be amended from time to time, as the "Agreement"); and

        WHEREAS, Borrowers and Bank now desire to modify the Agreement as
hereinafter provided;

        NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrowers and Bank covenant and agree as follows:

                                 ARTICLE I

                                 Definitions

        Section 1.01  Definitions. The terms used in this Amendment to the
extent not otherwise defined herein shall have the same meanings as in the
Agreement.


                                 ARTICLE II

                                 Amendments

        Section 2.01  Amendment to Definition of "Termination Date".  Effective
as  of the date hereof, the definition of "Termination Date" set forth in
Section 1.131 of the Agreement is hereby amended to read as follows:

                 "1.131. "Termination Date" shall mean January 30, 1994".

        Section 2.02  Amendment to Section 3.03 of the Agreement. Effective as
of the date hereof, the reference to "September 30, 1993" set forth in
Section 3.03 of the Agreement is hereby amended to read in its entirety as
"January 30, 1994".

        Section 2.03  Deletion of Certain Sections.  Effective as of the date
hereof, the following sections of the Agreement are hereby deleted in their
entirety: 1.18, 1.19, 1.20, 1.30, 1.31, 1.33, 1.36, 1.40, 1.48, 1.60, 1.62,
1.71, and 1.110.

        Section 2.04  Addition of New Definitions. Effective as of the date
hereof, the following definitions are hereby added to Article I of the
Agreement in alphabetical order:

        "1.18. "Capital Lease Obligation" shall mean any rental obligation
which, under GAAP, is or will be required to be capitalized on the books of
the Borrower or any Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in  accordance with such principles.

        1.19. "Cash & Equivalents" shall mean any investments permitted under
(i), (ii), (iii) or (iv) of the definition of Restricted Investments and
cash.

        1.20. "Cash Flow Available for Fixed Charges" shall mean the sum of
Consolidated Net Income plus depreciation and amortization plus interest
expense plus taxes plus operating lease expense, as determined in accordance
with GAAP, less Maintenance Capital Expenditures for the Borrower on a
Consolidated basis.

        1.30."Consolidated Current Assets" shall mean the current assets of the
Borrower and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.

        1.31. "Consolidated Current Liabilities" shall mean the current
liabilities of the Borrower and its Subsidiaries as determined on a
Consolidated basis in accordance with GAAP.

        1.33.  "Consolidated Net Income" shall mean (i) for purposes of
calculating Cash Flow Available for Fixed Charges, Consolidated gross
revenues of the Borrower less all operating and non-operating expenses of
Borrower, including all write-downs of assets and other charges of a proper
character (including, without limitation, current and deferred taxes on
income, provision for taxes on unremitted foreign earnings which are included
in gross revenues, and current additions to reserves), but not including in
gross revenues any gains (net of expenses and taxes applicable thereto) in
excess of losses resulting from the sale, conversion or other disposition of
capital assets (i.e., assets other than current assets), any gains or losses
arising from the acquisition of outstanding debt securities of the Borrower
or any Subsidiary, and gains resulting from the write-up of assets, any
equity of the Borrower or any Subsidiary in the undistributed earnings of any
Person which is not a Subsidiary, or any portion of the net.

        1.34A.  "Consolidated Net Worth" shall mean the sum of the Consolidated
capital, surplus and retained earnings of the Borrower determined in
accordance with GAAP.

        1.36. "Consolidated Tangible Net Worth" shall mean the sum of the
Consolidated capital, surplus and retained earnings of the Borrower less
Intangible Assets of the Borrower, determined in accordance with GAAP.

        1.40."Debt" shall mean with respect to any Person, (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services, (ii) all obligations under leases which shall have been
or should be, in accordance with GAAP, recorded as Capitalized Lease
Obligations in respect of which such Person is  liable as lessee, and (iii)
any other indebtedness required to be recorded on the Consolidated financial
statements of such Person in accordance with GAAP.  Any changes in GAAP
requiring operating leases to be included as-indebtedness in the Consolidated
financial statements of the Borrower will be effective, for purposes of
determining Debt hereunder, only for leases entered into or renewed after the
date of the required implementation of such changes in GAAP.

        1.48  "Fixed Charges" shall mean the sum of interest expense and
payments under operating leases, as determined in accordance with GAAP, for
the Borrower and its Subsidiaries on a consolidated basis.

        1.60.  "Intangible Assets" shall mean goodwill, patents, tradenames,
trademarks, copyrights, franchises, experimental expense, organizational
expense, unamortized debt discount and expense, the excess of cost of shares
acquired over book value of related assets and such other assets as are
properly classified as "intangible assets" in accordance with GAAP, but in no
event shall Intangible Assets include (i) current prepaid expenses of the
Borrower or its Subsidiaries or (ii) receivables of any kind of the Borrower
or its Subsidiaries.

        1.62. "Investment" shall mean any direct or indirect purchase or other
acquisition of, or a beneficial interest in, capital stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Debt or accounts receivable of any
other Person which are not current assets or do not arise from sales to that
other Person in the ordinary course of business.

        1.71.  "Maintenance Capital Expenditures" shall mean, for any fiscal
quarter, an amount equal to the greater of (i) the product of $4,500.00 times
the average number of retail stores of the Borrower on a Consolidated basis
open during the four immediately preceding fiscal quarters and (ii) actual
capital expenditures incurred by the Borrower on a Consolidated basis during
such fiscal quarter for the maintenance and improvement of its retail stores
(other than capital expenditures incurred in connection with new store
openings).

        1.110  "Restricted Investments" shall mean any investments in or loans
and advances to, other Persons except (i) obligations of the United States
government due within one (l) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital and surplus in excess of $100 million) due within one (1) year and
payable in U.S. dollars, (iii) commercial paper rated P-l by Moody's or A-l
by Standard & Poor's, (iv) debt of any state or political subdivision that is
rated A or better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) stock or securities received in settlement of debts owing to
the Borrower or any Subsidiary not exceeding $5,000,000.00, including
receivables arising from the sale of goods and services in the ordinary
course of business of the Borrower and its Subsidiaries, (vi) not more than
1,940,000 shares of the common stock of General Host Corporation, a New York
corporation, plus any additional shares which are received as a result of
stock dividends, stock split or combination of shares, recapitalization,
reclassification, merger or similar capital or corporate structure change, 
(vii) any loans or guaranties made by the Borrower or any of its Subsidiaries
to or for the benefit of Sunbelt or any of its Subsidiaries not exceeding an
aggregate principal amount of $12,000,000 at any one time outstanding, (viii)
any loan participation program(s) for a period not to exceed seven (7) days
with credit risk to companies with long-term debt rating by Standard & Poor's
or Moody's of not less than single A, (ix) any loans or guaranties made by
the Borrower or any of its Subsidiaries to or for the benefit of Pier Retail
Group Limited, a company organized under the laws of the United Kingdom, not
exceeding an aggregate principal amount of $6,500,000 at any one time
outstanding, and (x) any stock or securities of Sunbelt which the Borrower or
any of its Subsidiaries acquires through the exercise of its remedies with
respect to any lien or security interest held by Borrower or any of its
Subsidiaries on such stock or securities."

        Section 2.05  Amendment to Article VIII. Effective as of the date
hereof, Sections 8.01, 8.02, 8.03, 8.04(b), 8.04(e) and Section 8.05 are
hereby amended in their respective entirety to read as follows:

        "8.01. Current Ratio. Permit the ratio of its Consolidated Current
Assets to its Consolidated Current Liabilities at any time thereafter to be
less than 2.0:1."

        "8.02.  Consolidated Tangible Net Worth.  Permit its Consolidated
Tangible Net Worth at any time to be less than $180,000,000."

        "8.03."  Limitation on Dividends, Acquisition of Stock and Restricted
Investments. Declare any dividend on any class of its stock (other than stock
dividends) or any other distribution on account of any class of its stock
(other than dividends or distributions payable solely in shares of its stock)
which is payable more than 60 days after the date such declaration is made,
unless, at the time of such declaration, such dividend complied with this
Section 8.03. Borrower covenants that it will not, and will not permit any of
its Subsidiaries to, pay or declare any dividend on any class of its stock
(other than stock dividends) or make any other distribution on account of any
class of its stock (other than dividends or distributions payable solely in
shares of its stock) or redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its stock, or make any Restricted Investments (all
of the foregoing being herein called "Restricted Payments") if the aggregate
amount of all such Restricted Payments, from and after February 27, 1993
shall exceed forty million dollars ($40,000,000).  Notwithstanding the
foregoing, no Restricted Payments shall be made unless, after giving effect
thereto, no Event of Default shall have occurred and be continuing.  There
shall not be included in the limitation on Restricted Payments any dividends
paid by any Subsidiary of Borrower (a) to its corporate parent which is also
a Subsidiary of the Borrower, or (b) to a Borrower.

        8.04 "(b)Debt to Consolidated Net Worth - Permit the ratio of its total
Debt to its Consolidated Net Worth to exceed 1.6 to 1.0."

        8.04"(e)Maintenance of Fixed Charge Coverage - Permit the ratio of Cash
Flow Available for Fixed Charges to Fixed Charges, to be determined on the
last day of each fiscal quarter for the preceding 12 months, to be less than
1.25 to 1.0 for each of the fiscal quarters ending during the period from the
date of this Loan Agreement and for each fiscal quarter ending thereafter."

        "8.05  Investments.  Make or permit any of its Subsidiaries to make any
Investment, except (i) purchases of majority of the outstanding stock of any
corporation, (ii) Investments in Borrower, any of its Subsidiaries, or any
Person that is wholly-owned by Borrower and/or its Subsidiaries, not to
exceed in the aggregate twenty-five million dollars ($25,000,000) (iii)
Investments in Cash Equivalents or readily marketable securities having a
quoted market  value, (iv) Investments in Persons to the extent permitted by
Section 8.03 hereof, (v) Investments in any partnership, corporation or joint
venture the sole purposes of which is to obtain land and improvements used in
the ordinary course of business of Borrower or any of its Subsidiaries, which
Investments under this subsection (v) shall not exceed $75,000,000 in the
aggregate, (vi) loans or advances to employees in the ordinary course of
business that do not exceed $5,000,000 in the aggregate, (vii) any loans or
guaranties made by Borrower or any of its Subsidiaries to or for the benefit
of Sunbelt or any of its Subsidiaries not exceeding an aggregate principal
amount of $12,000,000 at any one time outstanding, (viii) any loans or
guaranties made by Borrower or any of its Subsidiaries to or for the benefit
of Pier Retail Group Limited not exceeding an aggregate principal amount of
$6,500,000 at any one time outstanding, (ix) any stock or securities of
Sunbelt which Borrower or any of its Subsidiaries acquires through
foreclosure of any lien or security interest held by Borrower or any of its
Subsidiaries on such stock or securities, and (x) loan participation programs
for a period not to exceed seven days with credit risk to companies with
long-term debt rating by Standard & Poor's or Moody's of not less than single
A."

                                 ARTICLE III

                 Representations, Warranties, Ratification and Reaffirmation

        Section 3.01  Representations and Warranties.  Borrowers hereby
represent and warrant that: (i) the representations and warranties contained
in the Agreement and the other Loan Documents are true and correct on and as
of the date hereof as though made on and as of the date hereof, (ii) no event
has occurred and is continuing that constitutes an Event of Default or would
constitute an Event of Default but for the requirement of notice or lapse of
time or both, and (iii) there are no claims or offsets against, or defenses
or counterclaims to, the obligations of Borrowers under the Agreement or any
of the other Loan Documents (including without limitation, any defenses or
offsets resulting from or arising out of breach of contract or duty, the
amount of interest charged, collected or received on the Note heretofore, or
breach of any commitments or promises of any type).

        Section 3.02  Ratification.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and the other Loan Documents, but except as
expressly modified and superseded by this Amendment, the terms and provisions
of the Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect, Borrowers hereby agreeing that the
Agreement and the Loan Documents are and shall continue to be outstanding,
validly existing and enforceable in accordance with their respective terms.

        Section 3.03 Renewal Note. Contemporaneously with the execution of this
Amendment, Pier 1 shall execute and deliver to Bank a Promissory Note of even
date herewith (the "Renewal Note"), payable to the order of Bank in the
original principal amount of $25,000,000.00. The Renewal Note shall be in
renewal, extension and modification, but not extinguishment, of the Note.
Effective as of the date hereof, each reference in the Agreement and the
other Loan Documents to the Note shall mean a reference to the Note as
renewed, extended and modified by the Renewal Note.

        Section 3.04  New Guarantor. Effective as of the date hereof, Pier 1
Assets, Inc., a Delaware corporation ("Assets") shall become a Pier
Guarantor, a PIR Guarantor and a U.S. Guarantor under the Agreement for all
purposes. Borrowers shall cause Assets to execute and deliver a guaranty
agreement in form and substance satisfactory to Bank, and such guaranty
agreement shall constitute a Pier 1 Guaranty Agreement, a U.S. Guaranty
Agreement and a PIR Guaranty Agreement for all purposes.

                                 ARTICLE IV
                                                                
                                 Miscellaneous

        Section 4.01  Reference to Agreement.  Each of the Loan Documents is
hereby amended so that any reference in the Loan Documents to the Agreement
shall mean a reference to the Agreement as amended hereby.

        Section 4.02  Guarantors.  Each of the undersigned Guarantors
acknowledges and agrees to the terms and provisions of this Amendment and
agrees that each Guaranty Agreement executed by such Guarantor shall not be
impaired hereby and shall remain in full force and effect.

        Section 4.03 Execution in Counterparts.  This Amendment may be executed
simultaneously 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.

        Section 4.04  Governing Law. This Amendment has been entered into in
Dallas County, Texas and shall be performable for all purposes in Dallas
County, Texas. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Amendment; and venue in any such dispute shall be laid in Dallas County,
Texas.

        Section 4.05  Parties Bound. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that Borrowers shall not assign any rights,
powers, duties or obligations hereunder.

        EXECUTED as of the date first above written.

                                          BORROWERS:

                                          PIER 1 IMPORTS, INC .

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 IMPORTS (U.S.), INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIR TRADING, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          GUARANTORS:

                                          a) Pier 1 Guarantors:

                                          PIER 1 LICENSING, INC., a 
                                          Delaware corporation as successor
                                          in interest by merger to CMEI, Inc. 
                                          and PIER 1 IMPORTS HOLDING, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 IMPORTS (U.S.), INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIR TRADING, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER LEASE, INC. F/K/A PIR
                                          TRANSPORTATION, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 ASSETS, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          b) PIR Guarantors:

                                          PIER 1 IMPORTS, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 LICENSING, INC., a Delaware
                                          corporation as successor in interest
                                          by merger to CMEI, Inc. and PIER 1
                                          IMPORTS HOLDING, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 IMPORTS (U.S.), INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER LEASE, INC. F/K/A PIR
                                          TRANSPORTATION, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 ASSETS, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          c) U.S. Guarantors:

                                          PIER 1 IMPORTS, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 LICENSING, INC., a Delaware
                                          corporation as successor in interest
                                          by merger to CMEI, Inc. and PIER 1
                                          IMPORTS HOLDING, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIR TRADING, INC. 

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER LEASE, INC. F/K/A PIR
                                          TRANSPORTATION, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          PIER 1 ASSETS, INC.

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________

                                          BANK:

                                          BANK ONE, TEXAS, NATIONAL ASSOCIATION

                                          By:________________________
                                          Name:______________________
                                          Title:_____________________


                             THIRD AMENDMENT TO
                         REVOLVING CREDIT LOAN AGREEMENT


        This THIRD AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT (this
"Amendment") is entered into as of January 30, 1994, by and among PIER 1
IMPORTS, INC., a Delaware corporation ("Pier 1"), Pier 1 Imports (U.S.),
Inc., a Delaware corporation ("U.S."), PIR Trading, Inc., a Delaware
corporation ("PIR") (Pier 1, U.S.  and PIR being sometimes referred to herein
individually as a "Borrower" and collectively as "Borrowers"), and BANK ONE,
TEXAS, NATIONAL ASSOCIATION ("Bank").

        WHEREAS, Borrowers and Bank entered into that certain Revolving Credit
Loan Agreement dated August 14, 1992 as amended by that certain First
Amendment to Revolving Credit Loan Agreement dated July 31, 1993, and by that
certain Second Amendment To Revolving Credit Loan Agreement (the "Second
Amendment") dated September 30, 1993 (together the "Agreement") relating to
credit facilities extended by Bank to Borrowers in the aggregate amount of
$35,000,000.00; and

        WHEREAS, Pier 1 and Bank entered into that certain Amended and Restated
Loan Agreement dated as of June 4, 1992, as amended by that certain First
Amendment to Amended and Restated Loan Agreement dated August 1, 1992, that
certain Second Amendment to Amended and Restated Loan Agreement dated August
1, 1993, and that certain Third Amendment to Amended and Restated Loan
Agreement dated October 1, 1993 (together the "Restated Agreement") relating
to a credit facility extended by Bank to Pier 1 in the principal amount of
$16,000,000.00; and

        WHEREAS, Borrowers and Bank now desire to modify the Agreement,
consolidate the credit facility governed by the Restated Agreement into an
extension and modification of the credit facilities governed by the
Agreement, and reduce the total of the consolidated credit facilities to
$50,000,000.00 as hereinafter provided;

        NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrowers and Bank covenant and agree as follows:

                                 ARTICLE I

                                 Definitions

        Section 1.01.  Definitions.  Except as expressly provided herein to the
contrary, the terms used in this Amendment, to the extent not otherwise
defined herein.  shall have the same meanings as in the Agreement.

                                 ARTICLE II

                                 Amendments

        Section 2.01.  Agreement Amendments.  Effective as of the date hereof,
the Agreement is hereby amended as follows:

(a)     Section 1.27 is amended to read as follows:

        "1.27 "Committed Sum" shall mean $50,000,000.00."

(b)     Section 1.131 is amended to read as follows:

        "1.131.  "Termination Date" shall mean August 30, 1994."

(c)     Section 3.01 is amended to provide that the Revolving Credit Note shall
be in the amount of $50,000,000.00.

(d)     Section 3.03 is amended to change the reference to "January 30, 1994" 
to "August 30, 1994".

(e)     Section 2.03 is amended to provide that issuance of Commercial Letters
of Credit shall not be limited by "the Commercial Letter of Credit Limit less
the aggregate amount of all Letter of Credit Disbursements to the extent not
reimbursed by PIR or U.S.", but rather shall be limited only by application
of the Borrowing Limit.

(f)     Section 2.05 is amended to provide that issuance of Standby Letters of
Credit shall not be limited by "the Standby Letters of Credit Limit less the
aggregate amount of all Letter of Credit Disbursements to the extent not
reimbursed by PIR or U.S.", but rather shall be limited only by application
of the Borrowing Limit.

(g)     Section 2.07 is amended to provide that acceptance of Time Drafts shall
not be limited by "the Banker's Acceptance Limit less the aggregate amount of
all Letter of Credit Disbursements to the extent not reimbursed by PIR or
U.S.", but rather shall be limited only by application of the Borrowing
Limit.

(h)     The second sentence in Section 2.02 is amended to provide in its
entirety as follows: "Pier 1 shall furnish to Bank the Request for Borrowing
not later than 11:00 a.m.  on the requested Negotiated Borrowing date (which
must be a Business Day) and prior to noon Fort Worth, Texas time on the
requested borrowing date (which must be a Business Day) for a Floating Prime
Borrowing."

                                 ARTICLE III

                                 Modification

        Section 3.01.  Consolidation and Renewal.  As of this date, the unpaid
principal balance of the Revolving Credit Promissory Note which evidences the
credit facility governed by the Restated Agreement, is $_________________.  
Contemporaneously with the execution of this Amendment, Pier 1 shall execute
and deliver to Bank a Promissory Note (the "New Note") of even date herewith,
payable to the order of Bank, in the stated principal amount of
$50,000,000.00.  The New Note shall include, inter alia, the renewal of the
unpaid principal balance, as of this date, of the above Revolving Credit
Promissory Note and the $_____________ unpaid principal balance of the
Renewal Note as defined in the Second Amendment.  The New Note shall be
governed exclusively by the Agreement, as hereby amended.


                                 ARTICLE IV

        Representations, Warranties, Ratification and Reaffirmation

        Section 4.01.  Representations and Warranties.  Borrowers hereby
represent and warrant that: (i) the representations and warranties contained
in the Agreement and the other Loan Documents are true and correct on and as
of the date hereof as though made on and as of the date hereof, (ii) no event
has occurred and is continuing that constitutes an Event of Default or would
constitute an Event of Default but for the requirement of notice or lapse of
time or both, and (iii) there are no claims or offsets against, or defenses
or counterclaims to, the obligations of Borrowers under the Agreement or any
of the other Loan Documents (including without limitation, any defenses or
offsets resulting from or arising out of breach of contract or duty, the
amount of interest charged, collected or received on the Note heretofore, or
breach of any commitments or promises of any type).

        Section 4.02. Ratification. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and the other Loan Documents, but except as
expressly modified and superseded by this Amendment, the terms and provisions
of the Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect, Borrowers hereby agreeing that the
Agreement and the Loan Documents are and shall continue to be outstanding,
validly existing and enforceable in accordance with their respective terms.

        Section 4.03. Note. Effective as of the date hereof, each reference in
the Agreement and the other Loan Documents to the Note shall mean a reference
to the Note as renewed, extended and modified by the New Note.


                                 ARTICLE V

                                 Miscellaneous

        Section 5.01.  Reference to Agreement.  Each of the Loan Documents is
hereby amended so that any reference in the Loan Documents to the Agreement
shall mean a reference to the Agreement as amended hereby.

        Section 5.02. Guarantors. Contemporaneously with the execution of this
Amendment, Borrowers will cause each of the Guarantors to respectively
execute new Guaranty Agreements in form and substance as required by Bank.

        Section 5.03.  Execution in Counterparts.  This Amendment may be
executed simultaneously 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.

        Section 5.04.  Governing Law.  This Amendment has been entered into in
Dallas County, Texas and shall be performable for all purposes in Dallas
County, Texas.  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.  Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Amendment; and venue in any such dispute shall be laid in Dallas County,
Texas.

        Section 5.05.  Parties Bound.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that Borrowers shall not assign any rights,
powers, duties or obligations hereunder.

 EXECUTED as of the date first above written.

                                 BORROWERS:

                                 PIER 1 IMPORTS, INC.


                                 By:________________________
                                 Name:______________________
                                 Title:_____________________

                                 PIER 1 IMPORTS (U.S.), INC.


                                 By:________________________
                                 Name:______________________
                                 Title:_____________________

                                 PIR TRADING, INC.


                                 By:________________________
                                 Name:______________________
                                 Title:_____________________

                                 BANK:

                                 BANK ONE, TEXAS, NATIONAL ASSOCIATION

                                 By:________________________
                                 Name:______________________
                                 Title:_____________________

                           EXHIBIT 10.12

                           LEASE GUARANTEE


    THIS LEASE GUARANTEE ("Guarantee") made and entered into as of this 30th
day of December, 1992, by and between PIER 1 IMPORTS, INC., a Delaware
corporation ("Pier 1"), CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor"); 

                            W I T N E S S E T H:

    A.  Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation, is
an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of CMEI.  Lessor and Lessee have entered, as of the date hereof,
into a certain Master Building Lease (the "Master Building Lease"), as well
as a certain Master Ground Lease (the "Master Ground Lease"), each covering
thirteen (13) Parcels or Improvements listed on Exhibit "A-1" - "A-13" of
each and each providing for New Parcels or New Improvements (collectively,
the "Additional Properties") to be added thereto as provided for therein. 
The Master Building Leases and the Master Ground Lease are sometimes
collectively referred to herein as the "Lease Agreements". 

    B.  The Lease Agreements have been entered into by Lessor and Lessee with
respect to land and improvements, including any Additional Facilities, which
have been and are to be financed pursuant to the terms of a certain Loan
Agreement (the "Loan Agreement"), between Lessor and National Westminster
Bank Plc ("Lender"), of even date herewith in the aggregate sum of up to
$25,000,000. The term "Lender" shall also include any successor or assign of
Lender, including any participant in, or other holder of any interest in, any
of the Loans (as hereinafter defined).  Pursuant to and subject to the terms
of the Loan Agreement, Lender has advanced or agreed to advance the aggregate
sum of $8,750,000 (the "Land Loan"), the payment of which is assured, in
part, by absolute assignments of the amounts payable under the Master Ground
Lease to Lender by Lessor, and the aggregate sum of $16,250,000 (the
"Building Loan"), the payment of which is assured, in part, by absolute
assignments of the amounts payable under the Master Building Leases to Lender
by Lessor.  The outstanding balance of the Land Loan and the outstanding
balance of the Building Loan may be increased at a future date(s) pursuant to
any advance(s) by Lender of additional sums (the "Future Advance(s)") which
shall be allocated between the Land Loan and the Building Loan by written
agreement between the parties at the time such Future Advance(s) are made. 
The proceeds of the Future Advance(s) shall be used for the acquisition of
additional properties that will be added to the Master Ground Lease and the
Master Building Lease, as "New Parcels" and "New Improvements", respectively,
as defined and provided for therein. 

    C.  In consideration of the execution and delivery of the Lease Agreements
by Lessor to Lessee, and in recognition that the favorable financing terms
offered to Lessor by Lender have been passed through to Lessee through the
rental terms of the Lease Agreements, all of which are contingent upon the
delivery of this Lease Guarantee by Guarantor; and in recognition that (i) as
the indirect parent of Lessee, Pier 1; and (ii) as the direct parent of
Lessee, CMEI: will receive direct and material benefits from the delivery of
the Lease Agreements and the Loan Agreement and the consummation of the
transactions contemplated thereby, Guarantor desires to deliver this Lease
Guarantee to Lessor. 

    NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows: 

    1.      Guarantee.  For value received, and in consideration of Lessor
entering into the Lease Agreements with Lessee, Guarantor does hereby
unconditionally guarantee the full payment and performance when due, whether
at the stated due date, by acceleration or otherwise, of any and all rent,
indebtedness, obligations and other amounts of every kind, howsoever created,
arising, or evidenced, whether direct or indirect, absolute or contingent,
now or hereafter existing or owing to Lessor by Lessee pursuant to the Lease
Agreements, including, but without limitation, the payment of Net Rent,
Contingent Rent Payments, any other amounts owed to Lessor under the Lease
Agreements, and/or the purchase price for the respective properties covered
thereby in the event the Lessee exercises any purchase options and/or is
required to purchase the premises covered thereby under any of the Lease
Agreements, including, without limitation, any attorneys fees, court costs,
or other enforcement costs of any kind or nature, including those incurred
during pre-trial, trial or appellate levels (all such indebtedness and
obligations, including those with respect to the Additional Properties when
added to the coverage of the Lease Agreements, being hereinafter collectively
called the "Obligations").  Pier 1, as the indirect parent corporation of
Lessee, and CMEI, as the direct parent corporation of Lessee, jointly and
severally hereby agree that upon any default by Lessee in the payment or
performance of any of the Obligations when and as due, Guarantor will
forthwith pay and/or perform the same immediately upon demand and without
notice.  

    Guarantor acknowledges that at such time(s) as Additional Properties are
added to the Lease Agreements, each and every payment and performance
obligation (including increased rent) of Lessor under the Lease Agreements is
automatically guaranteed hereunder without the need of any confirmation and
without any notice to Guarantor.  Upon request by Lender, Guarantor agrees to
confirm by supplement this Guarantee with respect to the Additional
Properties.  Such a supplement would be executed by Guarantor and would
contain a reaffirmation of representations and warranties contained herein
and a confirmation that this Guarantee covers the Additional Properties as if
such Additional Properties had been included as of the date hereof.  A
supplement, however, is not required for this Guarantee to cover each of the
Lease Agreements including those applicable to the Additional Properties when
such Additional Properties become subject to the respective Lease Agreements.

    2.      Guarantee Continuing, Absolute, Unlimited.  This Guarantee is a
continuing, absolute and unlimited guarantee of payment and performance as
primary obligor and not as surety.  This Guarantee shall apply to all
Obligations pursuant to the Lease Agreements, including those applicable to
the Additional Properties when such Additional Properties become subject to
the respective Lease Agreements, without limitation as to either amount or
period of time.  The Obligations shall be conclusively presumed to have been
created in reliance on this Guarantee.  Lessor shall not be required to
proceed first against Lessee or any other person, firm or corporation or
against any property securing any of the Obligations before resorting to
Guarantor for payment.  This Guarantee shall be construed as a guarantee of
payment and performance without regard to the validity, regularity, or
enforceability of any of the Obligations or the rejection of the Lease
Agreements in bankruptcy, and notwithstanding any claim, defense (other than
payment by Guarantor) or right of set-off which Lessee or Guarantor may have 
against Lessor, including any such claim, defense or right of set-off based
on any present or future law or order of any government (de jure or de
facto), or of any agency thereof or court of law purporting to reduce, amend
or otherwise affect any obligations of Lessee, or any other obligor, or to
vary any terms of payments, and without regard to any other circumstances
which might otherwise constitute a legal or equitable discharge of a surety
or a guarantor.  Guarantor agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment to
Lessor of the Obligations or any part thereof is rescinded or must otherwise
be returned by Lessor upon the insolvency, bankruptcy or reorganization of
Lessee, or otherwise, as though such payment to Lessor had not been made.  

    3.      Definitions. Unless otherwise indicated, capitalized terms used
herein and not defined below shall have the respective meanings given to them
in the Lease Agreements.  In addition to the definitions provided in the
Lease Agreements, the following words and terms shall have the meanings
indicated below: 

    "Affiliate" of any designated Person means any Person that has a
relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common
control with the other, or holds or beneficially owns five percent (5%) or
more of any class of voting securities of the other.  For this purpose,
"control" means the power, direct or indirect, of one Person to direct or
cause direction of the management and policies of another, whether by
contract, through voting securities or otherwise.  Notwithstanding the
foregoing, no Person shall be deemed to be an Affiliate of another solely by
reason of such Person's being a participant in a joint operating group or
joint undivided ownership group.

    "Auditors" shall mean Price Waterhouse & Co., or other independent
certified public accountants selected by Guarantor and reasonably acceptable
to Lessor. 

    "Capitalized Lease Obligation" shall mean any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of Pier 1
or any Subsidiary, taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with such principles.

    "Cash Equivalents" shall mean (i) obligations of the United States
government due within one (1) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital resources in excess of $100,000,000) due within one year and payable
in U.S. dollars, (iii) commercial paper rated P-1 by Moody's Investors
Service, Inc. ("Moody's") or A-1 by Standard & Poor's Corporation ("Standard
and Poor's") and (iv) debt of any U.S. state or political subdivision thereof
that is rated A or better by Moody's or Standard & Poor's and that matures
within one (1) year.

    "Cash Flow Available for Fixed Charges" shall mean the sum of Consolidated
Net Income plus depreciation and amortization plus interest expense plus
taxes plus operating lease expense, as determined in accordance with GAAP,
less Maintenance Capital Expenditures for Pier 1 on a Consolidated basis.

    "Code" shall have the same meaning given that term in Section 6(i) hereof.

    "Consolidated" shall mean the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries.  References herein to
a Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc., refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.

    "Consolidated Current Assets" shall mean the current assets of Pier 1 and
its Subsidiaries as determined on a Consolidated basis in accordance with
GAAP.

    "Consolidated Current Liabilities" shall mean the current liabilities of
Pier 1 and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.

    "Consolidated Net Income" shall mean (i) for purposes of calculating Cash
Flow Available for Fixed Charges, Consolidated gross revenues of Pier 1 less
all operating and non-operating expenses of Pier 1, including all write-downs
of assets and other charges of a proper character (including, without
limitation, current and deferred taxes on income, provision for taxes on
unremitted foreign earnings which are included in gross revenues, and current
additions to reserves), but not including in gross revenues any gains (net of
expenses and taxes applicable thereto) in excess of losses resulting from the
sale, conversion or other disposition of capital assets (i.e., assets other
than current assets), any gains or losses arising from the acquisition of
outstanding debt securities of Pier 1 or any Subsidiary, any gains resulting
from the write-up of assets, any equity of Pier 1 or any Subsidiary in the
undistributed earnings of any Person which is not a Subsidiary, or any
portion of the net income of any Subsidiary which for any reason is
unavailable for payment of dividends to Pier 1 or to another Subsidiary, or
any earnings of any Person acquired by Pier 1 or any Subsidiary through
purchase, merger, consolidation or otherwise for any year prior to the year
of acquisition, merger or consolidation, or any deferred credits representing
the excess of any equity in any Subsidiary at the date of acquisition over
the cost of investment in such Subsidiary, all determined in accordance with
GAAP, and (ii) for all other purposes, net income of Pier 1 and its
Subsidiaries as determined on a Consolidated basis in accordance with GAAP.

    "Consolidated Net Tangible Assets" shall mean all assets of Pier 1 and its
Subsidiaries less Intangible Assets, Consolidated Current Liabilities, long
term liabilities (other than Funded Debt and Capitalized Lease Obligations)
and all deferrals of Pier 1 and its Subsidiaries.

    "Consolidated Tangible Assets" shall mean all assets of Pier 1 and its
Subsidiaries less Intangible Assets.

    "Consolidated Tangible Net Worth" shall mean the sum of the Consolidated
capital, surplus and retained earnings of Pier 1 less Intangible Assets of
Pier 1, determined in accordance with GAAP.

    "Debt" shall mean with respect to any Person, (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) all obligations under leases which shall have been or should
be, in accordance with GAAP, recorded as Capitalized Lease Obligations in
respect of which such Person is liable as lessee, and (iii) any other
indebtedness required to be recorded on the Consolidated financial statements
of such Person in accordance with GAAP.  Any changes in GAAP requiring
operating leases to be included as indebtedness in the Consolidated financial
statements of Pier 1 will be effective, for purposes of determining Debt
hereunder, only for leases entered into or renewed after the date of the
required implementation of such changes in GAAP.

    "Default" shall mean the occurrence of any event which, with the lapse of
time, notice or otherwise, would constitute an event specified under Section
14(a) of this Guarantee.

    "ERISA" shall have the meaning given in Section 6(j).  

    "FDIC" shall mean the Federal Deposit Insurance Corporation (or any
successor).

    "Fixed Charges" shall mean, for Pier 1 and its Subsidiaries on a
consolidated basis, calculated for the preceding 12 calendar month period,
the sum of interest expense and payments under operating leases, determined
in accordance with GAAP. 

    "Funded Debt" shall mean, for Pier 1 on a Consolidated basis, Debt
(including Guaranteed Debt and current maturities of Funded Debt, as defined
herein) which (i) matures more than one (1) year from the date of
determination or matures within one (1) year from such date that is renewable
or extendable, at the option of the debtor, to a date more than one (1) year
from such date, or (ii) arises under a revolving credit or similar agreement
which obligates the lender or lenders to extend credit during a period of
more than one (1) year from such date; provided, however, that merchandise
letters of credit and bankers' acceptance and similar credit instruments
shall not be deemed to be Funded Debt unless they have a stated maturity of
more than one (1) year, notwithstanding that the debtor may have the option
to renew or extend such maturity.

    "GAAP" shall mean generally accepted accounting principles, applied on a
consistent basis, as set forth in the Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board and/or in such other
statements by such other entity as the Lessor may approve, which are
applicable as of the date in question.  The requisite that such principles be
applied on a consistent basis shall mean that the accounting principles
observed in a current period are comparable in all material respects to those
applied in a preceding period.  Unless otherwise indicated herein, all
accounting terms shall be defined according to GAAP.

    "Guarantee" shall mean this Lease Guarantee and all amendments,
modification, substitutions and ratification hereto.

    "Guaranteed Debt" shall mean, with respect to any Person, without
duplication, any Debt of another Person referred to in clause (i), (ii) or
(iii) of the definition of "Debt" guaranteed directly or indirectly in any
manner by such Person or in effect guaranteed directly or indirectly in any
manner by such Person.

    "Guarantor" shall mean each of CMEI and Pier 1.

    "Intangible Assets" shall mean goodwill, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, the excess of cost of shares acquired
over book value of related assets and such other assets as are properly
classified as intangible assets in accordance with GAAP, but in no event
shall Intangible Assets include (i) current prepaid expenses of Pier 1 or its
Subsidiaries or (ii) receivables of any kind of Pier 1 or its Subsidiaries. 

    "Investment" shall mean any direct or indirect purchase or other
acquisition of, or a beneficial interest in, capital stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Debt or accounts receivable of any
other Person which are not current assets or do not arise from sales to that
other Person in the ordinary course of business.

    "Law" shall mean all statutes, laws, ordinances, rules, regulations,
orders, writs, injunctions or decrees of any Tribunal. 

    "Lease Agreements" shall have the meaning given in Recital A hereof.  

    "Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including without limitation, any agreement to
give or not to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of public
notice under the Laws of any jurisdiction.

    "Litigation" shall mean any proceeding, claim, lawsuit, arbitration and/or
investigation conducted or threatened by or before any tribunal, including,
without limitation, proceedings, claims, lawsuits and/or investigations under
or pursuant to any environmental, occupational safety and health, antitrust,
unfair competition, securities, Tax or other Law, or under or pursuant to any
contract, agreement or other instrument; provided, however, that Litigation
shall not include any of the foregoing that is covered by adequate insurance. 

    "Maintenance Capital Expenditures" shall mean for any fiscal quarter, an
amount equal to the greater of (i) one-fourth (1/4) of the product of $4,500
times the average number of retail stores of Pier 1 and its Subsidiaries on a
consolidated basis open during the four immediately preceding fiscal quarters
and (ii) actual capital expenditures incurred by Pier 1 and its Subsidiaries
on a consolidated basis during such fiscal quarter for the maintenance and
improvement of its retail stores (other than capital expenditures incurred in
connection with new store openings).  

    "Material Adverse Effect" shall mean any act, circumstance or event that
(i) causes a Default (as hereinafter defined), or (ii) otherwise might be
material and adverse to the financial condition or business operations of
Pier 1 and its Subsidiaries on a consolidated basis, or (iii) could
materially adversely affect the ability of Pier 1 to perform under this
Guarantee.  

    "Net Earnings Available for Fixed Charges" shall mean, for Pier 1 and its
Subsidiaries on a consolidated basis, calculated for the preceding 12
calendar month period, the sum of net income determined in accordance with
GAAP, plus taxes, plus interest expense, plus operating lease expense
determined in accordance with GAAP, plus depreciation and amortization, and
minus Maintenance Capital Expenditures determined in accordance with GAAP. 

    "Net Income"  or "net income" shall mean the net income of the applicable
Person or Persons before minority interests as determined in accordance with
GAAP. 

    "Officer's Certificate" shall mean a certificate signed in the name of
Guarantor by its Chief Executive Officer, President, one of its Executive
Vice Presidents, its Chief Financial Officer or its Controller. 

    "PBGC" shall have the meaning given in Section 6(j) hereof.  

    "Person" shall mean and include an individual, partnership, joint venture,
corporation, trust, Tribunal, unincorporated organization or government, or
any department, agency or political subdivision thereof.  

    "Plan" shall have the meaning given in Section 6(j) hereof.  

    "Property" shall mean all types of real, personal, tangible, intangible or
mixed property.  

    "Restricted Investments" shall mean any investments in or loans and
advances to, other Persons except (i) obligations of the United States
government due within one (1) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital resources in excess of $100 million) due within one (1) year and
payable in U.S. dollars, (iii) commercial paper rated P-1 by Moody's or A-1
by Standard & Poor's, (iv) debt of any state or political subdivision that is
rated A or better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) obligations or securities of a Subsidiary or a corporation
which immediately after such purchase or acquisition will be a Subsidiary,
(vi) stock or securities received in settlement of debts owing to Guarantor
or any Subsidiary not exceeding $5,000,000.00, including receivables arising
from the sale of goods and services in the ordinary course of business of
Guarantor and its Subsidiaries, (vii) travel or like advances to officers
and/or employees in the ordinary course of business and loans to officers
and/or employees made on or before May 24, 1991 for the purchase of capital
stock of Pier 1 (including the capitalization of up to one-half of the
accrued interest on such loans to officers and/or employees), with all such
travel or like advances and loans not exceeding $10,000,000.00 in the
aggregate, (viii) any stock or securities of Sunbelt owned on the date hereof
and (ix)  any loans made or deemed to be made by Pier 1 to Sunbelt solely as
a result of Pier 1's payment of the Guaranteed Debt of Sunbelt guaranteed by
Pier 1, pursuant to the terms of the Sunbelt Debt Guarantee.

    "Restricted Payment" shall have the meaning given in Section 8(c) hereof. 


    "Restrictive Agreement" shall mean any written agreement of Pier 1
delivered to the Lessor in connection with this Guarantee.

    "Secured Debt" shall mean all indebtedness for borrowed money including
indebtedness evidenced by a bond, debenture, note or similar document, which
is secured by a lien on any assets of Pier 1 or any Subsidiary or any shares
of stock or Debt of any Subsidiary.

    "Senior Funded Debt" shall mean the Notes and Funded Debt which by its
terms is not subordinated in right of payment to the Notes.  For the purposes
of this definition of Senior Funded Debt, the term "Notes" shall have the
meaning ascribed to that term in that certain Note Purchase Agreement dated
as of May 24, 1991 executed by and between Pier 1 and Teachers Insurance
Annuity Association of America as amended from time to time.

    "Short Term Debt" means, for Pier 1, Consolidated Debt (including
Guaranteed Debt) which matures within one (1) year from the date of
determination thereof.  Short Term Debt shall not include current maturities
of Funded Debt.

    "Subsequent Holder" shall mean each or any Person which is a direct or
indirect transferee of any of the rights, interests and/or benefits of Lessor
under this Guarantee.

    "Subsidiary" shall mean, as to any particular parent corporation, any
corporation in a related line of business of which more than fifty percent
(by number of votes) of the Voting Stock shall be owned by such parent
corporation and/or one or more corporations which themselves have more than
fifty percent (by number of votes) of their Voting Stock owned by such parent
corporation.  As used herein, the term "Subsidiary" shall also mean any
"subsidiary" of Pier 1.

    "Sunbelt" shall mean Sunbelt Nursery Group, Inc., a Delaware corporation. 

    "Taxes " shall mean all taxes, assessments, fees or other charges at any
time imposed by any Laws or Tribunal. 

    "Tribunal " shall mean any municipal, state, commonwealth, federal,
foreign, territorial or other court, governmental body, subdivision, agency,
department, commission, board or bureau or instrumentality.  

    "Trigger Event " means either (i) an Environmental Event (as defined in
the Lease Agreements) or (ii) any failure by Pier 1 at any applicable time to
satisfy each of the financial test requirements set forth in Section 8 of
this Guarantee. 

    "Voting Stock" shall mean, with respect to any Subsidiary, any shares of
any class of stock of such Subsidiary having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
Subsidiary irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency.

    4.      Guarantee Not Affected by Change in Security or Other Actions. 
Lessor may, from time to time, without the consent of or notice to Guarantor,
take any or all of the following actions without impairing or affecting
Guarantor's obligations under this Guarantee or releasing or exonerating
Guarantor from any of its liabilities hereunder: 

    (a)  retain or obtain a security interest in any property to secure any of
the Obligations or any obligation hereunder; 

    (b)  retain or obtain the primary or secondary liability of any party or
parties, in addition to the undersigned corporation, with respect to any of
the Obligations; 

    (c)  extend the time or change the manner, place or terms of payment of,
or renew or amend the Lease Agreements, any note or other instrument executed
in connection with or evidencing the Obligations or any part thereof, or
amend in any manner any agreement relating thereto, or include the New
Parcels or the New Improvements in the coverage of the Master Ground Lease or
of the Master Building Lease, respectively as defined and provided for
therein; 

    (d)  release or compromise, in whole or in part, or accept full or partial
payment for, any of the Obligations hereby guaranteed, or any liability of
any nature of any other party or parties with respect to the Obligations or
any security therefor; 

    (e)  subordinate the payment of all or any part of the Obligations to the
payment of any liability of Lessee to creditors of Lessee other than Lessor
or Guarantor; 

    (f)  enforce Lessor's security interest, if any, in all or any properties
securing any of the Obligations or any obligations hereunder in order to
obtain full or partial payment of the Obligations then outstanding; 

    (g)  release or fail to perfect, protect, or enforce Lessor's security
interest, if any, in all or any properties securing any of the Obligations or
any obligation hereunder, or permit any substitution or exchange for any such
property; and 

    (h)  take or fail to take any other action of whatever kind or character
with respect to the Obligations, the Lease Agreements or any other document
or instrument, it being the intention of Guarantor that it shall remain
liable as primary obligor for the Obligations notwithstanding any act,
omission or thing which might, but for the provisions hereof, otherwise
operate as a legal or equitable discharge of any guarantor.  

    5.      Waivers.  Guarantor hereby expressly waives: 

        (a)  notice of acceptance of this Guarantee; 

        (b)  notice of the existence or incurrence of any or all of the
Obligations; 

        (c)  presentment, demand, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest, and all other notices
whatsoever; 

        (d)  any requirement that proceedings first be instituted by Lessor
against Lessee; 

        (e)  all diligence in collection or protection of or realization upon
the Obligations or any part thereof, or any obligation hereunder, or any
collateral for any of the foregoing; 

        (f)  any rights or defenses based on Lessor's election of remedies,
including any defense to Lessor's action to recover any deficiency after a
non-judicial sale; 

        (g)  the occurrence of every other condition precedent to which
Guarantor might otherwise be entitled; and 

        (h)  any right to require Lessor to marshal assets. 

    6.      Representations and Warranties of Guarantor.  Guarantor represents
and warrants to Lessor that: 

    (a)  (i) Pier 1 has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and CMEI
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Georgia (ii) Guarantor has full
corporate power and authority to own and operate its properties and to
conduct its business as presently conducted, and full corporate power,
authority and legal right to execute, deliver and perform its obligations
under this Guarantee and any consent executed in connection herewith, and
(iii) is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction, including, without limitation, the State of
Texas, in which its ownership or leasing of properties or the conduct of its
business requires such qualification and where non-qualification, singularly
or in the aggregate, would materially adversely affect the financial
condition or creditworthiness of Guarantor, or would impair the ability of
Guarantor to perform its obligations under this Guarantee, (iii) (A) all of
the issued and outstanding voting stock of Lessee is owned by CMEI and (B)
all of the issued and outstanding voting stock of CMEI is owned by Pier 1;
free and clear from all liens, security interests, charges and encumbrances
whatsoever. 

    (b)  This Guarantee has been duly authorized, executed and delivered by
Guarantor and is a legal, valid and binding obligation of Guarantor,
enforceable according to its terms (subject as to enforcement of remedies to
any applicable bankruptcy, reorganization, moratorium, or other Laws or
principles of equity affecting the enforcement of creditors' rights
generally).  

    (c)  The execution, delivery and performance by Guarantor of this
Guarantee will not result in any violation of any term of the certificate of
incorporation or the by-laws of Guarantor, do not require stockholder
approval or the approval or consent of any trustee or holders of Debt of
Guarantor except such as have been obtained prior to the date hereof, and
will not conflict with or result in a breach of any terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien upon, any property or assets of Guarantor under, any indenture, mortgage
or other agreement or instrument to which Guarantor is a party or by which it
or any of its property is bound where breach or default, singly or in the
aggregate, could materially adversely affect the financial condition or
creditworthiness of Guarantor, or any existing applicable law, rule,
regulation, license, judgment, order or decree of any government,
governmental body or court having jurisdiction over Guarantor or any of its
activities or properties.  

    (d)  There are no consents, licenses, orders, authorizations or approvals
of, or notices to or registrations with any governmental or public body or
authority which are required in connection with the valid execution, delivery
and performance of, this Guarantee by Guarantor that have not been obtained
or made, and any such consents, licenses, orders, authorizations, approvals,
notices and registrations that have been obtained or made are in full force
and effect.  

    (e)  Except as disclosed in writing to Lessor by Guarantor concurrently
herewith, there is no action, suit, proceeding or investigation at law or in
equity by or before any court, governmental body, agency, commission or other
Tribunal now pending or, to the best knowledge of Guarantor after due
inquiry, threatened against or affecting Guarantor or any property or rights
of Guarantor as to which there is a significant possibility of an adverse
determination, and which if adversely determined, may have a Material Adverse
Effect on the financial condition or business of Guarantor or which, if
adversely determined could materially impair the ability of Guarantor to
perform its obligations under this Guarantee, and there is no action, suit,
proceeding or investigation at law or in equity by or before any court,
governmental body, agency, commission or other Tribunal now pending or, to
the best knowledge of Guarantor after due inquiry, threatened which questions
or would question the validity of this Guarantee with respect to Guarantor. 

    (f)  Guarantor is not in default under or with respect to any agreement or
other instrument to which it is a party or by which it or its assets may be
bound which would have a Material Adverse Effect on the financial condition
of Guarantor or the ability of Guarantor to perform its obligations under
this Guarantee.  Guarantor is not subject to or in default under any order,
award or decree of any court, arbitrator, or other governmental authority
binding upon or affecting it or by which any of its assets may be bound or
affected which would have a Material Adverse Effect on the ability of
Guarantor to carry on its business as presently conducted or to perform its
obligations under this Guarantee. 

    (g)  Guarantor has filed or caused to be filed all tax returns which to
the knowledge of Guarantor are required to be filed, and has paid all Taxes
shown to be due and payable on said returns or on any assessments made
against it, except for (i) returns which have been appropriately extended and
(ii) Taxes, fees, assessments or other charges, the amount or validity of
which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of Guarantor.  

    (h)  Pier 1 and each of its Subsidiaries are in compliance in all material
respects with the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Internal Revenue Code of 1986, as amended (the "Code"), and
the rules and regulations thereunder insofar as ERISA, the Code and such
rules and regulations relate to any employee benefit plan as defined in
Section 3(3) of ERISA.  No employee pension benefit plan (as defined in
Section 3(2) of ERISA) maintained by Pier 1 or any of its Subsidiaries for
its employees and covered by ERISA (a Plan) had an accumulated funding
deficiency, within the meaning of said term under Section 302 of ERISA, as of
the last day of the most recent fiscal year of such plan, and neither Pier 1
nor any of its Subsidiaries has incurred with respect to any Plan any
liability to the Pension Benefit Guaranty Corporation ("PBGC") which is
material to the consolidated financial condition of Pier 1 or any of its
Subsidiaries.  For the purpose of this paragraph, the term Subsidiary shall
include a Controlled Group of Corporations as that term is defined in Section
1563 of the Code or Section 4.001 of ERISA. 

    (i)  The consolidated balance sheets of Pier 1 and its Subsidiaries as of
February 29, 1992 and the related consolidated statements of income and
retained earnings of Pier 1 and its Subsidiaries for the fiscal year then
ended, reported on by its Auditors, and the consolidated balance sheets of
Pier 1 and its Subsidiaries for the six month period ending August 29, 1992
and related consolidated statements of income and retained earnings of Pier 1
and its Subsidiaries for the period then ended fairly present the
consolidated financial Condition and the results of operations of Pier 1 and
its Subsidiaries for the periods ending on such date all in accordance with
GAAP, and since the dates thereof there has been no material adverse change
in such condition or operations.
  
    7.  Affirmative Covenants.  Pier 1 covenants and agrees that, so long as
any part of the Obligations shall remain unpaid or Lessee shall have any
commitment or obligation under the Lease Agreements, including, with respect
to the Additional Properties, Pier 1 will, unless Lessor shall otherwise
consent in writing: 

    (a)     Financial Statements.  Deliver to the Lessor or any Subsequent
Holder, as appropriate, in duplicate:

    (i)  Quarterly Statements:  as soon as practicable and in any event within
60 days after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, a Consolidated statement of operations, a
Consolidated statement of changes in financial position of Pier 1, and a
Consolidated balance sheet of Pier 1 as at the end of such quarterly period,
setting forth in each case in comparative form figures for the corresponding
period in the preceding fiscal year, all in reasonable detail and prepared by
an authorized financial officer of Pier 1;

    (ii)  Annual Statements:  as soon as practicable and in any event within
100 days after the end of each fiscal year, a Consolidated statement of
operations, and a Consolidated statement of changes in financial position of
Pier 1 for such year, and a Consolidated balance sheet of Pier 1 as at the
end of such year, setting forth in each case in comparative form
corresponding Consolidated figures from the preceding year, all in reasonable
detail and satisfactory in scope to the Lessor or any Subsequent Holder,
together with an opinion by the Auditors, whose opinion shall (a) state that
such financial statements have been prepared in accordance with GAAP and
fairly present the Consolidated financial position of Pier 1 as of the date
thereof and the Consolidated results of their operations for the period
thereof, (b) state that their audit examination has included a review of the
terms of the Lease Agreements and this Guarantee as they relate to accounting
matters, and (c) state whether, in the course of their audit examination,
they obtained knowledge (and state whether they have knowledge of the
existence as of the date of such written statement) of any condition or event
which constitutes a Default or Event of Default, and if so, specifying the
nature and period of existence thereof (notwithstanding the foregoing, the
opinion of the Auditors need not contain the statements otherwise required by
clauses (b) and (c) of this subparagraph (ii) so long as Pier 1 is a
reporting company under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended);

    (iii)  SEC and Other Reports:  promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and reports as it
shall send to its public security holders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission);

    (iv)  Audit Reports:  promptly upon receipt thereof, a copy of each other
report submitted to Pier 1 or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of the
books of Pier 1 or any Subsidiary (other than any "management letters"
delivered to Guarantor by such accountants, which management letters shall
only be delivered to the Lessor or any Subsequent Holder upon such Person's
prior request);

    (v)  Other Notices:  promptly upon the occurrence thereof, notice of any
of the following: (a) any condition or event which constitutes a Default,
Event of Default or Trigger Event, specifying the nature and period of
existence thereof, (b) that any Person has given any notice to Guarantor with
respect to a claimed Default or Event of Default, or (c) that any Person has
given any notice to Pier 1 or any Subsidiary or taken any other action with
respect to a claimed default or event of default with respect to any other
indebtedness which in the aggregate exceeds the sum of $5,000,000 and, with
respect to any of such events specified in subdivisions (a), (b) or (c) above
of this clause (v), what action Pier 1 or such Subsidiary has taken, is
taking or proposes to take;

    (vi)  ERISA Events:  promptly upon any officer of Guarantor obtaining
knowledge of the occurrence thereof, notice of the occurrence of any (a)
"reportable event", as such term is defined in section 4043 of ERISA, or (b)
"prohibited transaction", as such term is defined in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, specifying
the nature thereof, what action Pier 1 or its Subsidiary has taken, is taking
or proposes to take with respect thereto, and, when known, any action taken
or threatened by the Internal Revenue Service or the PBGC with respect
thereto; provided that with respect to the occurrence of any "reportable
event" as to which the PBGC has waived the 30-day reporting requirement, such
written notice need be given only at such time as notice is given to the
PBGC; and

    (vii)  Requested Information:  with reasonable promptness, such other
financial data or other data or information related to the business or
operations of Pier 1 or its Subsidiaries as the Lessor or any Subsequent
Holder may reasonably request. The Lessor agrees that the Lessor will not
intentionally disclose any information given to the Lessor by Pier 1 or any
of its Subsidiaries which is either propriety or confidential and which is
prominently marked as such, provided, however, that this restriction shall
not apply to information which has at the time in question entered the public
domain, nor will this restriction prohibit the Lessor from disclosing such
information (a) as is required to be disclosed by Law or by any order, rule
or regulation (whether valid or invalid) of any Tribunal, (b) to the Lessor's
or any Subsequent Holder's auditors, attorneys or agents, or (c) to
purchasers or prospective purchasers of interests in the Obligations.

Together with each delivery of financial statements required by clause (i)
above, Pier 1 will deliver to the Lessor or any Subsequent Holder an
Officer's Certificate demonstrating (with computations in reasonable detail
where applicable) compliance by Pier 1 and its Subsidiaries with the
provisions of Sections 8(a), 8(b), 8(c), 8(d)(i)(g), 8(d)(ii), 8(d)(iii),
8(d)(iv), 8(d)(v), 8(d)(vi) and 8(d)(vii) and stating that there exists no
Event of Default or Default with respect thereto, or, if any such Event of
Default or Default exists under or with respect to such covenants, specifying
the nature and period of existence thereof and what action Pier 1 proposes to
take with respect thereto.  By delivery of such Officer's Certificate, the
officer executing such certificate represents and warrants that the
statements made therein are based upon the level of investigation normally
and customarily taken by Treasurers or Chief Financial Officers of similarly
situated corporations of established reputation in performing their regular
duties.  In the event that a change(s) in GAAP related to the accounting for
leases requires Pier 1 to use accounting principles for purposes of
determinations or computations under this Guarantee different than Pier 1
uses in its quarterly and annual financial statements, Pier 1 will, together
with the delivery of financial statements required by clause (ii) above with
respect to the fiscal year in which such change(s) in GAAP became applicable,
deliver to the Lessor or any Subsequent Holder a certificate of such
accountants stating that, in making the audit necessary to the certification
of such financial statements, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any Event of
Default or Default, specifying the nature and period of existence thereof.

    (b)  Payment and Performance; Maintain Books and Reserves.  Duly and
punctually pay and perform all of its covenants, agreements, debts, duties
and obligations in accordance with its terms.  Guarantor will, and will cause
each of its Subsidiaries to, keep proper books of record and account and set
aside appropriate reserves, all in accordance with GAAP.

    (c)  Inspection of Property.  Permit any Person designated by the Lessor
or any Subsequent Holder, at the Lessor's or such Subsequent Holder's expense
and with reasonable notice to Guarantor, to visit and inspect any of the
properties of Guarantor and its Subsidiaries, to examine the corporate books
and financial records of Guarantor and its Subsidiaries and make copies
thereof or extracts therefrom and to discuss the affairs, finances and
accounts of any such corporations with officers and employees of Guarantor
and its Auditors, all at such reasonable times and as often as the Lessor or
such Subsequent Holder may reasonably request.  The Lessor agrees that the
Lessor will keep confidential any proprietary or confidential information
given to the Lessor by Guarantor or its Subsidiaries upon the same terms and
conditions as agreed to with respect to information the Lessor has obtained
pursuant to Section 7(a)(vii) hereof.

    (d)  Compliance with Laws, Etc.  Comply, and cause each of its
Subsidiaries to comply, in all material respects with all Laws applicable to
its business, such compliance to include, without limitation, paying before
the same become delinquent all Taxes imposed upon it or upon its property,
except to the extent contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with GAAP,
and provided that Guarantor or its Subsidiary, as the case may be, retains
good and marketable title to and the right to the use and enjoyment of its
properties or other assets which may be affected by any such contest. 
Guarantor will timely pay, and will cause its Subsidiaries to timely pay, all
payments due for labor, services and materials rendered or furnished in the
ordinary course of business which are secured by inchoate statutory Liens,
except to the extent contested in good faith by appropriate proceedings, and
provided that Guarantor or its Subsidiary, as the case may be, retains good
and marketable title to and the right to the use and enjoyment of its
properties or other assets which may be affected by any such contest. 
Guarantor will promptly notify the Lessor or any Subsequent Holder if
Guarantor receives any notice, claim or demand from any governmental agency
which alleges that Guarantor is in violation of any Laws or has failed to
comply with any order issued pursuant to any federal, state or local statute
regulating its operation and business, the result of which may have a
Material Adverse Effect.

    (e)  Maintenance of Existence and Qualifications.  Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, its corporate
existence and its rights and franchises in full force and effect and obtain
and maintain, and cause each of its Subsidiaries to obtain and maintain, all
permits and licenses necessary to the proper conduct of its business,
including without limitation qualifying to do business as a foreign
corporation in all states or jurisdictions where required by applicable Law. 
Notwithstanding the foregoing, this Section 7(e) shall not prohibit any
transaction expressly permitted by Sections 8(d)(vi) and 8(d)(vii) of this
Guarantee.

    (f)  Maintenance of Properties: Insurance. Maintain, preserve, protect,
and keep, and cause each of its Subsidiaries to maintain, preserve, protect
and keep, all property used or useful in the conduct of its business in good
condition and in compliance with all applicable Laws, and will from time to
time make any repairs, renewals and replacements needed to enable the
business and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.  Guarantor will, and will cause each
of its Subsidiaries to, carry and maintain in full force and effect at all
times with financially sound and reputable insurers (or, in an insurance fund
or by self-insurance authorized by the jurisdiction in which its operations
are carried on) insurance in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations of
established reputation engaged in the same or similar businesses and
similarly situated, and Guarantor and its Subsidiaries shall maintain
self-insurance only to the extent that a prudent corporation of established
reputation engaged in the same or similar businesses and similarly situated
would rely upon self-insurance.

    (g)  Primary Business.  Continue to conduct, and cause each of the
Subsidiaries to continue to conduct, substantially all of their operations in
the same primary businesses as those in which they currently operate (i.e.,
developing, owning and operating, in the United States and Canada and in
territories of the United States and Canada, (i) specialty retail stores
offering primarily imported decorative home furnishings, accessories and
other specialty items for the home and casual clothing and fashion
accessories and (ii) specialty retail stores offering primarily nursery and
garden products).

    (h)  Transactions with Affiliates.  Conduct and cause each Subsidiary to
conduct all of their respective transactions with any Affiliate on an arm's
length basis and pursuant to the reasonable requirements of Guarantor's
and/or such Subsidiary's business.  In addition, Guarantor's Board of
Directors shall approve, pursuant to Delaware law and evidenced by a
resolution approved by the requisite number of such directors: (i) any
individual transaction between an Affiliate of Guarantor and Guarantor or any
Subsidiary for more than $1,000,000; and (ii) any such transactions involving
Guarantor and its Subsidiaries which in the aggregate exceed $10,000,000 for
any fiscal year of Guarantor.

    (i)  Further Assurances.  Upon request of the Lessor, promptly cure any
defects in the creation, issuance, execution and delivery of this Guarantee
or in the Reimbursement Agreement.  Each Guarantor, at its expense, will
further promptly execute and deliver to the Lessor upon request all such
other and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of Guarantor hereunder, or to
further evidence and more fully describe the obligations of such Guarantor
for the Obligations as primary obligor, or to correct any omissions herein,
or to more fully state the obligations set out herein.

    (j)  Insurance.  Maintain, and cause each of its Subsidiaries to maintain,
insurance policies with respect to its Property and business in such amounts
and against such casualties and contingencies as is customary in its industry
or as may otherwise be required by the terms of any agreement applicable
thereto.  

    8.  Negative Covenants.  Guarantor covenants and agrees that, so long as
any part of the Obligations shall remain unpaid or Lessee shall have any
commitment or obligation under the Lease Agreements, including any commitment
or obligation with respect to the Additional Properties, it will not, and
will not permit any Subsidiary to (other than with respect to the
requirements hereof which are expressly applicable only to Pier 1 on a
consolidated basis), unless Lessor and Lender otherwise consent in writing: 

    (a)  Current Ratio.  Permit the ratio of Pier 1's Consolidated Current
Assets to its Consolidated Current Liabilities at any time to be less than
2.0:1.

    (b)  Consolidated Tangible Net Worth.  Permit Pier 1's Consolidated
Tangible Net Worth at any time to be less than an amount equal to the sum of
(i) $160,000,000 plus (ii) 50% of the aggregate Consolidated Net Income of
Guarantor for the period commencing on February 29, 1992 (without deduction
for any net loss in any fiscal year ending after February 29, 1992) and
terminating at the end of the last fiscal quarter preceding the date of any
determination of Consolidated Tangible Net Worth.

    (c)  Limitation on Dividends, Acquisition of Stock and Restricted
Investments.  Declare any dividend on any class of its stock (other than
stock dividends) or any other distribution on account of any class of its
stock (other than dividends or distributions payable solely in shares of its
stock) which is payable more than 60 days after the date such declaration is
made, unless, at the time of such declaration, such dividend complied with
this Section 8(c).  Guarantor covenants that it will not, and will not permit
any of its Subsidiaries to, pay or declare any dividend on any class of its
stock (other than stock dividends) or make any other distribution on account
of any class of its stock (other than dividends or distributions payable
solely in shares of its stock), or redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its stock, or make any Restricted
Investments (all of the foregoing being herein called "Restricted Payments")
if the aggregate amount of all such Restricted Payments, from and after
February 29, 1992, shall exceed the sum of (i) 50% of the aggregate
Consolidated Net Income of Guarantor for the period (taken as one accounting
period) commencing on February 29, 1992 and terminating at the end of the
last fiscal quarter preceding the date of such Restricted Payment (provided,
however, that in the case of any deficit in Consolidated Net Income in any
financial reporting period occurring either fully or partly within such
period, 100% of the amount of such deficit shall be subtracted from the
amount described in clause (i) above) plus (ii) the aggregate net cash
proceeds received from the issuance or sale, after February 29, 1992, of
capital stock of Guarantor, (provided, however, that for purposes of clause
(ii), such net cash proceeds shall be considered only for a period of one
calendar year commencing on the date such proceeds are received by Guarantor)
plus (iii) $10,000,000.  Notwithstanding the foregoing, no Restricted Payment
shall be made unless, after giving effect thereto, no event of default shall
have occurred and be continuing.  There shall not be included in the
limitation upon Restricted Payments (a) any dividends paid by any Subsidiary
of Guarantor to its corporate parent which is also a Subsidiary of Guarantor
or (b) to Guarantor.

    (d)  Lien, Debt and Other Restrictions.  Guarantor covenants that it will
not, and will not permit any Subsidiary to:

    (i)  Liens.  Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired, without equally
and ratably securing the Obligations, except, without double-counting,

    (a)  Liens for Taxes not yet due and delinquent or which are being
actively contested in good faith by appropriate proceedings, provided that
the existence of such Liens does not affect Guarantor's or its Subsidiaries
good and marketable title to or use or enjoyment of the property or assets
burdened by such Liens,

    (b)  other Liens arising in the ordinary course of its business or the
ownership of its property and assets (including easements and similar
encumbrances) which were not incurred in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the deferred
purchase price of property or assets, and which do not in the aggregate
materially interfere with the operation of its business and will not cause a
Material Adverse Effect,

    (c)  any Lien existing on any property of any corporation at the time it
becomes a Subsidiary, provided that (a) any such Lien shall not encumber any
other property of Guarantor or such Subsidiary, and (b) the aggregate amount
of Debt secured by such Lien shall not at any time exceed 75% of the fair
market value of such property,

    (d)  any Lien on any property acquired, constructed or improved by
Guarantor or a Subsidiary after the date hereof and created contemporaneously
with or within 12 months of such acquisition, completion of construction or
improvement to secure Debt assumed or incurred to finance up to 75 % of the
purchase price or cost of construction or improvement of such property, but
such Lien shall cover only the property so acquired or constructed and any
improvements thereto,

    (e)  Liens existing on the date hereof and disclosed to the Lessor in the
most recent financial statements described in clause 6(g) hereof,

    (f)  Liens arising in connection with court proceedings, provided the
execution of such Liens is effectively stayed and such Liens are contested in
good faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP, and provided further that the
existence of such Liens does not affect Guarantor's or its Subsidiaries'
title to or use or enjoyment of the property or assets burdened by such
Liens,

    (g)  any Lien described in clauses (c), (d) or (e) above resulting from
renewing, extending or refunding outstanding Secured Debt provided that the
principal amount of the Secured Debt secured thereby is not increased and the
Lien is not extended to any other property, and

    (h)  any other Liens incurred in connection with the borrowing of money or
any other Liens, provided that immediately thereafter the aggregate amount of
Debt secured by Liens incurred pursuant to this clause (h) at any time does
not at any time exceed five percent (5. 0 %) of Consolidated Net Tangible
Assets.

    (ii)    Funded Debt.  Other than for the Guaranteed Debt by Pier 1 of
Sunbelt's Debt to (1) Standard Chartered Bank for a $5,000,000 line of credit
and (ii) Texas Commerce Bank, National Association for a $5,000,000 line of
credit (the "Sunbelt Debt Guarantee"), create, incur, assume or suffer to
come into existence any additional Funded Debt unless after giving effect
thereto (i) Senior Funded Debt is less than 50 % of Consolidated Net Tangible
Assets and (ii) all Funded Debt in the aggregate is less than 60% of
Consolidated Net Tangible Assets.  With respect to Subsidiaries which are not
Guarantors, create, incur, assume or suffer to come into existence any
additional Funded Debt by such Subsidiaries unless after giving effect
thereto all Funded Debt by such Subsidiaries in the aggregate is less than
70% of Consolidated Net Tangible Assets of such Subsidiaries; provided
however, that as used in this paragraph 8(d)(ii), (A) prior to demand being
made upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the
term Funded Debt (individually and as used in the definition of Senior Funded
Debt) shall only include the Guaranteed Debt of Sunbelt to the extent the
aggregate amount of such Guaranteed Debt of Sunbelt exceeds the sum of
Sunbelt's cash and Cash Equivalents, and (B) from and after demand being made
upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the term
Funded Debt (individually and as used in the definition of Senior Funded
Debt) shall include such Guaranteed Debt of Sunbelt.

    (iii)  Short-Term Debt.  Other than the Guaranteed Debt of Sunbelt's Debt
pursuant to the Sunbelt Debt Guarantee, create, incur, assume or suffer to
exist any Short-Term Debt, other than any Short-Term Debt which is incurred
in the ordinary course of business, provided that there shall be a period of
at least 45 consecutive days during each fiscal year in which such Short-Term
Debt is paid down to an amount that would have been permitted under Section
8(d)(ii) were such Short-Term Debt to be treated as Funded Debt; provided
however, that as used in this paragraph 8(d)(iii), (A) prior to demand being
made upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the
term Funded Debt (individually and as used in the definition of Short-Term
Debt) shall only include the Guaranteed Debt of Sunbelt to the extent the
aggregate amount of such Guaranteed Debt of Sunbelt exceeds the sum of
Sunbelt's cash and Cash Equivalents, and (B) from and after demand being made
upon Pier 1 to pay its obligations under the Sunbelt Debt Guarantee, the term
Funded Debt (individually and as used in the definition of Short-Term Debt)
shall include such Guaranteed Debt of Sunbelt.

    (iv)  Subsidiaries' Debt.  Permit any Subsidiaries to create, incur,
assume or suffer to exist any additional Debt unless after giving effect
thereto, the aggregate amount of outstanding Debt of Pier 1's Subsidiaries is
less than 10% of Consolidated Net Tangible Assets.

    (v)  Maintenance of Fixed Charge Coverage.  Permit the ratio of Cash Flow
Available for Fixed Charges to Fixed Charges, to be determined on the last
day of each fiscal quarter for the preceding 12 months, to be less than (a)
1.3 to 1 for each of the fiscal quarters ending during the period from the
date of this Guarantee through February 27, 1993, and (b) 1.4 to 1 for each
fiscal quarter ending thereafter.

    (vi)  Limitation on Sale of Assets.  Other than sales in the ordinary
course of business, sell or otherwise dispose of in any fiscal year more than
10% of its Consolidated Tangible Assets or sell or otherwise dispose of any
of its Consolidated Tangible Assets for less than fair market value.

    (vii)  Merger and Consolidation.  Merge or consolidate, provided, however,
that:

    (a)  Guarantor may merge or consolidate with or into any other corporation
so long as (A) the successor corporation is a United States entity which
expressly assumes the Obligations in writing or Guarantor shall be the
continuing or surviving entity, (B) no Default or Event of Default shall have
occurred after giving effect to such merger or consolidation, and (C)
immediately after giving effect to such merger or consolidation Guarantor
could have incurred an additional $1.00 of Funded Debt pursuant to the
provisions of Section 8(d)(ii) hereof; and

    (b)  any Subsidiary may merge or consolidate with or into any other
corporation so long as, upon such merger or consolidation, (A) the successor
corporation becomes a Subsidiary of Guarantor, (B) no Default or Event of
Default shall have occurred after giving effect to such merger or
consolidation, and (C) immediately after giving effect to such merger or
consolidation such Subsidiary could have incurred an additional $1.00 of
Funded Debt pursuant to the provisions of Section 8(d)(ii) hereof; and

    (c)  any Subsidiary may merge or consolidate with or into Guarantor or any
other Subsidiary so long as, in any such merger or consolidation involving
Guarantor, Guarantor shall be the surviving or continuing corporation.

    (e)     Investments.  Make or permit any of its Subsidiaries to make any
Investment, except (i) purchases of a majority of the outstanding stock of
any corporation, (ii) Investments in Pier 1, any of its Subsidiaries, or any
Person that is wholly-owned by Pier 1 and/or its Subsidiaries, not to exceed
in the aggregate $25,000,000, (iii) Investments in Cash Equivalents or
readily marketable securities having a quoted market value, (iv) Investments
in Persons to the extent permitted by Section 8(c) hereof, (v) Investments in
any partnership, corporation or joint venture the sole purpose of which is to
obtain land and improvements used in the ordinary course of business of Pier
1 or any of its Subsidiaries, which Investments under this subsection (v)
shall not exceed $75,000,000 in the aggregate, (vi) loans or advances to
employees in the ordinary course of business that do not exceed $5,000,000 in
the aggregate, and (vii) Investments in Sunbelt capital stock or Investments
which are loans made by Pier 1 to Sunbelt as a result of Pier 1's payment of
the Guaranteed Debt permitted under Section 8(g) hereof or are intercompany
advances, not exceeding $1,000,000.00, made by Pier 1 to Sunbelt in the
ordinary course of business, which advances are promptly repaid by Sunbelt.

    (f)     Change in Nature of Business.  Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
conducted on the date hereof.

    (g)     Guaranteed Debt.Create, assume or suffer to exist, or permit any of
its Subsidiaries to create, assume or suffer to exist, any Guaranteed Debt
except (i) Guaranteed Debt in existence on the date hereof, (ii) Guaranteed
Debt that is secured by assets of the primary obligor having a fair market
value at least equal to the amount of such Guaranteed Debt, as determined by
an independent qualified appraiser selected by Pier 1 (which appraisal, at
the Lessor's reasonable request and at Pier 1's expense, shall be promptly
updated, but such request shall not be made more often than once every 12
months), and (iii) Guaranteed Debt by Pier 1 or a Subsidiary on the
consolidated balance sheet of Pier 1 and its Subsidiaries; provided, however,
that in no event shall the aggregate amount of all consolidated Guaranteed
Debt (other than the Guaranteed Debt described in (iii) above) of Pier 1 and
its Subsidiaries exceed the Consolidated Tangible Net Worth.

    (h)    Management and Control.  Permit any material change in the
management or control of Pier 1 or any of its Subsidiaries.

    (i)     Restrictive Agreement.  Violate any provision of any Restrictive
Agreement.

    9.      Payments.  Each payment by Guarantor to Lessor under this Guarantee
shall be made by transferring the amount thereof in immediately available
U.S. funds, without set-off or counterclaim.  

    10.     Costs and Expenses.  Guarantor hereby agrees to pay all reasonable
legal and other costs and expenses incurred by Lessor in seeking to protect
or enforce any of Lessor's rights or remedies with respect to the Obligations
and this Guarantee. 

    11.     Subrogation.Guarantor shall not be subrogated, in whole or in part,
to Lessor's rights or those of any subsequent assignee or transferee of any
of the Obligations until all of the Obligations, including those with respect
to the Additional Properties, to Lessor and every such subsequent assignee or
transferee shall have been paid in full and all obligations and commitments
of whatever kind or character of Lessee under the Lease Agreements, including
those with respect to the Additional Properties, have been fully discharged
and satisfied.  

    12.     No Waiver, Amendment.  No delay on Lessor's part in the exercise of
any right or remedy shall operate as a waiver thereof, and no single or
partial exercise by Lessor of any right or remedy shall preclude the other or
further exercise thereof or the exercise of any other right or remedy.  No
amendment or waiver of any provision of this Guarantee nor consent to any
departure by any Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by the Lessor, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.

        13.      Parties; Successors and Assigns. This Guarantee shall inure to
the benefit of Lessor and Lessor's successors, assigns and transferees, and 
shall be binding upon Guarantor and its respective successors and assigns. 
Guarantor may not delegate any of its duties under this Guarantee without the
prior written consent of Lessor or any Person to whom Lessor has assigned
this Guarantee.  Lessor may assign Lessor's rights and benefits under this
Guarantee to any Person, including, without limitation, to any financial
institution providing financing to Lessor.  Upon any assignment by Lessor of
this Guarantee, and upon any subsequent assignment or assignments by Lessor's
assignee or future assignees, such assignee or future assignee shall succeed
to all of the rights, benefits, remedies and privileges of this Guarantee and
shall for all purposes hereof be deemed to be Lessor hereunder to the
exclusion of the assigning Lessor.  Guarantor agrees to make such disclosures
and to take such action and execute such instruments as any such assignee or
future assignee may reasonably require to more fully protect, preserve and
assure to such assignee or future assignee all of the rights, benefits,
remedies and privileges provided hereby.  In the event that Lessor or any
assignee hereof sells participations in any obligation secured by the Lease
Agreements, each such other participant shall have rights, benefits, remedies
and privileges to the same extent as are available to Lessor hereunder.  

    14.     Acceleration Events. 

        (a)      If any one or more of the following events shall occur: 

        (i)  If an Event of Default shall occur under any Lease Agreement; or 

        (ii)  If Guarantor shall fail to pay any part of the Obligations when
due; or

        (iii)  If any representations or warranties made by Guarantor herein
shall be false or misleading in any material respect on the date which
made; or

        (iv)  The Guarantor shall default in the due performance or observance
of any other material term or any covenant set forth in the Guarantee,
provided, that the default by a Guarantor of a covenant contained in Section
7 or 8 of the Guarantee (other than a payment of Restricted Payment in
violation of Section 8(c) or a breach of Sections 8(d)(vii) or 8(i) shall not
constitute an Event of Default unless such default shall remain unremedied
for a period of 30 days.

        (v)  Guarantor or any Subsidiary defaults in any payment of any other
obligation pursuant to a guaranty or for money borrowed (or any capitalized
lease obligation, any obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage or
any obligation under notes payable or drafts accepted representing extensions
of credit) beyond any period of grace provided with respect thereto, or fails
to perform or observe any other agreement, term or condition contained in any
agreement under which any such obligation is created (or if any other event
thereunder or under any such agreement shall occur and be continuing) and the
effect of such failure or other event is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or holders)
to cause, such obligation to be due prior to any stated maturity, provided
that the aggregate amount of all such obligations as to which such a default
shall occur and be continuing or such a failure or other event causing or
permitting acceleration shall occur and be continuing exceeds $5,000,000; or

    (vi)  This Guarantee, the Lease Agreements, the Loan Agreement, or any
provision hereof or thereof at any time after its execution and delivery
shall for any reason cease to be valid and binding on the Guarantor or the
Lessee, as the case may be, or in full force and effect, or shall be declared
to be null and void, or the validity or enforceability of this Guarantee, or
the Lease Agreements shall be contested, any party thereto shall deny that it
has any or further liability or obligation thereunder; or

    (vii)  The Guarantor shall admit in writing its inability to pay its debts
as they mature or shall declare a moratorium on the payment of its debts or
apply for, consent to, or acquiesce in the appointment of a trustee or
receiver for itself or any part of its property, or shall take any action to
authorize or effect any of the foregoing; or in the absence of any such
application, consent, or acquiescence, a trustee or receiver shall be
appointed for it or for a substantial part of its property or revenues and
shall not be discharged within a period of 90 days; or all, or any
substantial part, of the property of the Company shall be condemned, seized,
or otherwise appropriated, or any bankruptcy, reorganization, debt
arrangement, or other proceeding under any bankruptcy or insolvency law or
any dissolution or liquidation proceeding shall be instituted by or against
the Company (or any action shall be taken to authorize or effect the
institution by it of any of the foregoing) and if instituted against it,
shall be consented to or acquiesced in by it, or shall not be dismissed
within a period of 90 days; or

    (viii)  There shall be commenced against the Guarantor any case,
proceeding, or other action seeking issuance of a warrant of attachment,
execution, distraint, or similar process against all or any substantial part
of its assets which results in the entry of an order for relief which shall
not have been vacated, discharged, stayed, or bonded pending appeal within 60
days from the entry thereof; or

    (ix)  If a Trigger Event shall occur;

then, a Default shall be deemed to exist hereunder and an Event of Default
shall be deemed to exist under each of the Lease Agreements.  In any such
event, and in addition to all other rights and remedies at law and in equity
available to Lessor as a result of such event, Guarantor shall immediately
pay or cause to be paid to Lessor, without notice or demand, the amounts due
and payable to Lessor by Lessee under each Lease Agreement, either in respect
of the purchase of the Property covered thereby or as a Contingent Rent
Payment.  All such payments shall be made directly to Lender in accordance
with the terms of the respective Lease Agreements and the assignments thereof
to Lender, copies of which have been supplied to Guarantor simultaneously
herewith.  It is understood that any payments made by Guarantor to Lessor
under this Guarantee shall not release or discharge Guarantor from its
obligations hereunder until all of the Obligations have been fully and
finally paid to Lessor.  All amounts payable by Guarantor hereunder shall be
credited against amounts otherwise payable by Lessee under the Lease
Agreements for the remainder of their respective terms, provided that if any
of the Lease Agreements have been terminated or if for any other reason
sufficient credits cannot be given to Lessee, then such payments shall
nevertheless be retained by Lessor hereunder and no further credits shall be
given to Lessee. 

    (b) Any payment made by Guarantor under this Section 14 shall be deemed to
be an agreed guarantee payment without regard to the status of any Lease
Agreement or Lessee's rights thereunder; and in no event and under no
circumstance shall any such payment be repayable or refundable to Guarantor
for any reason or under any circumstance, and Guarantor agrees to look solely
to Lessee under its limited right of subrogation for the recovery of any such
sum.  

    (c)  ALL AMOUNTS PAYABLE BY GUARANTOR UNDER THIS LEASE GUARANTEE ARE
PAYABLE WITHOUT OFFSET, COUNTERCLAIM OR DEDUCTION OF WHATEVER KIND AND ARE
NOT CONDITIONED UPON, AND CANNOT BE AFFECTED IN ANY WAY BY, ANY FUTURE EVENT,
OCCURRENCE OR ACTION BY ANY PARTY, AND GUARANTOR UNDERSTANDS AND AGREES THAT
ALL SUCH AMOUNTS SHALL BE PAYABLE NOTWITHSTANDING ANY FACT OR CIRCUMSTANCE
(INCLUDING, WITHOUT LIMITATION, THE BANKRUPTCY OF OR A SIMILAR EVENT
AFFECTING LESSEE) AT ANY TIME AFFECTING LESSEE OR ANY LEASE AGREEMENT,
WHETHER CAUSED OR CONTRIBUTED TO BY LESSEE, LESSOR OR ANY OTHER PARTY. 

    15.     Notices.  Any notice required to be delivered hereunder shall be
deemed delivered, whether actually received or not, forty- eight (48) hours
after such notice is deposited in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the
parties hereto or Lender, as applicable, at the respective addresses
specified below, or at such other address as they or the Lender may have
subsequently specified by written notice.  The addresses for notices to
Guarantor, Lessor, and Lender are as follows: 

    If to Lessor:    Pier Set, Inc. 
                     245 Park Avenue
                     New York, New York 10167
                     Attention:  James D. Price

    with a copy to:  Kelly, Hart, & Hallman 
                     201 Main Street, Suite 2500 
                     Fort Worth, Texas 76102 
                     Attention: Mark L. Hart, Jr., Esq. 

    If to Guarantor: Pier 1 Imports, Inc. 
                     301 Commerce Street, Suite 600 
                     Fort Worth, Texas 76161-0020 
                     Attention:  Robert G. Herndon

                     CMEI, Inc.
                     301 Commerce Street, Suite 600 
                     Fort Worth, Texas 76161-0020 
                     Attention:  Robert G. Herndon


    with a copy to:  Kelly, Hart, & Hallman 
                     201 Main Street, Suite 2500 
                     Fort Worth, Texas 76102 
                     Attention: Mark L. Hart, Jr., Esq. 

    If to Lender:    National Westminster Bank Plc
                     175 Water Street, 26th Floor
                     New York, NY 10038
                     Attention:  Eric J. Fellows

    with a copy to:  National Westminster Bank Plc
                     Texas Commerce Tower, suite 6070
                     600 Travis Street
                     Houston, Texas  77002
                     Attn:  Steven J. Krakoski

Notices sent by any other method (including facsimile transmission) shall be
deemed delivered when actually received by the addressee.  Any notice of
change of address shall be effective only upon actual receipt, regardless of
delivery method, and such new address shall be effective as to notices given
by the other parties commencing ten (10) days after such change of address
notice is received by such parties.  No party may establish an official
address for notice outside the continental United States. 

    16. Term.  This Guarantee is not limited to any particular period of time
but shall continue in full force and effect until all of the Obligations,
including those with respect to the Additional Properties, have been fully
and finally paid or have been otherwise discharged by Lessee, and Guarantor
shall not be released from any obligations or liability hereunder until such
full payment or discharge shall have occurred.  

    17.     Subordination.  All principal of and interest on all indebtedness,
liabilities, and obligations of Lessee to Guarantor (the Subordinated Debt),
whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, now or hereafter existing, due or to become
due to Guarantor, or held or to be held by Guarantor, whether created
directly or acquired by assignment or otherwise and whether evidenced by
written instrument or not, shall be and is hereby expressly subordinated to
the Obligations.  Guarantor agrees not to receive or accept any payment from
Lessee with respect to the Subordinated Debt if at such time either an Event
of Default (as defined in the Lease Agreements) has occurred and is
continuing or any of the Obligations are otherwise due and owing and unpaid;
and in the event Guarantor receives any payment on the Subordinated Debt in
violation of the foregoing, Guarantor will receive and hold any such payment
in trust for Lessor and forthwith turn such payment over to Lessor, in the
form received, to be applied to the Obligations. 

    18.     GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  THIS GUARANTEE IS
PERFORMABLE IN NEW YORK COUNTY, NEW YORK, AND GUARANTOR HEREBY WAIVES THE
RIGHT TO BE SUED ELSEWHERE. 

    19.     ENTIRE AGREEMENT.  THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES. 

    20.     Waiver of Jury Trial.To the extent permitted by applicable law, and
for the purpose of reducing the time and expense of litigation, Guarantor and
Lessor waive trial by jury in any action brought on, under, or by virtue of
this Guarantee. 

    21.     Joint and Several Liability.  The liability of Guarantor under this
Guarantee shall be joint and several.  A separate action may be brought and
prosecuted against Guarantor, whether or not action is brought against any
other person or whether or not any other person is joined in such action or
actions.  

    IN WITNESS WHEREOF, the parties hereto have caused this Lease Guarantee to
be executed by their respective officers thereunder duly authorized, as of
the date first written above.


                                     GUARANTOR:

                                     PIER 1 IMPORTS, INC.,
                                     a Delaware corporation
Attest:


                                     By:_______________________________
____________________                      Robert G. Herndon
Michael A. Carter                         Executive Vice President
Assistant Secretary

        [SEAL]

                                     CMEI, INC.,
                                     a Georgia corporation
Attest:

                                     By:_______________________________
____________________                      Robert G. Herndon
Michael A. Carter                         Executive Vice President
Assistant Secretary

        [SEAL]


                                     LESSOR:

                                     PIER SET, INC.,
                                     a Delaware corporation
Attest:


                                     By:_______________________________
____________________                         James D. Price                  
Michael A. Carter                            President
Assistant Secretary


        [SEAL]


ACCEPTED THIS 30th DAY OF 
DECEMBER, 1992.

LENDER:______________________

NATIONAL WESTMINSTER BANK Plc
    New York Branch


By:__________________________
Name: Eric J. Fellows
Title: Vice President


NATIONAL WESTMINSTER BANK Plc
    Nassau Branch


By:_________________________
Name: Eric J. Fellows
Title: Vice President

                     SUPPLEMENT TO LEASE GUARANTEE


    THIS SUPPLEMENT TO LEASE GUARANTEE is dated as of February 17, 1993 (this
"Supplement"), is made by and between PIER 1 IMPORTS, INC., a Delaware
corporation ("Pier 1"), CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor") and supplements that certain Lease
Guarantee (the "Guarantee") made and entered into as of the 30th day of
December, 1992, by and between Pier 1, CMEI and Lessor.  Terms used herein
and not otherwise defined shall have the meaning given to them in the
Guarantee. 

                             W I T N E S S E T H:

    A.      Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation,
is an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of CMEI.  Lessor and Lessee have entered, as of the date hereof,
into supplements (the "Lease Supplements") to each of the Master Building
Lease and the Master Ground Lease, which Lease Supplements add two Parcels
and the Improvements thereon listed on Exhibit "A-14"-"A-15" of each of the
Supplements to the Lease Agreements and hereto, as provided for therein.

    B.      Pursuant to and subject to the terms of a supplement to the Loan
Agreement, as amended,  (the "Loan Supplement") and the Loan Agreement,
Lender has advanced or agreed to advance the additional sum of $905,901 to
Lessor pursuant to the Land Loan by $905,601 and has advanced or agreed to
advance the additional sum of $1,633,573 to Lessor pursuant to the Building
Loan.  

    C.      In consideration of the execution and delivery of the Lease
Supplements by Lessor to Lessee, and in recognition that the favorable
financing terms offered to Lessor by Lender have been passed through to
Lessee through the rental terms of the Lease Agreements, all of which are
contingent upon the delivery of this Supplement by Guarantor; and in
recognition that (i) as the indirect parent of Lessee, Pier 1; and (ii) as
the direct parent of Lessee, CMEI: will receive direct and material benefits
from the delivery of the Lease Supplements and the Loan Supplement and the
consummation of the transactions contemplated thereby, Guarantor desires to
deliver this Supplement to Lessor. 

    NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows: 

    A.      The Leases shall for all purposes under the Guarantee include the
Leases as Supplemented by the Lease Supplements, and each provision of the
Guarantee, as supplemented by this Supplement, shall be applicable to such
Leases.  As supplemented hereby, each provision of the Guarantee shall be and
remains in full force and effect; and

    B.      this Supplement may be executed by the parties hereto in multiple
counterparts and each counterpart, when so executed, shall be deemed an
original, but all of which shall be considered as one agreement.  Further, in
making proof of this Supplement, it shall not be necessary to produce or
account for more than one such counterpart. 

    IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their respective officers thereunder duly authorized, as of the
date first written above.


                                     GUARANTOR:

                                     PIER 1 IMPORTS, INC.,
                                     a Delaware corporation
Attest:


                                     By:______________________________
_____________________                Name:____________________________
Michael A. Carter                    Title:___________________________
Assistant Secretary

        [SEAL]
    
                                     CMEI, INC.,
                                     a Georgia corporation
Attest:


                                     By:______________________________
_____________________                Name:____________________________
Michael A. Carter                         Executive Vice President
Assistant Secretary

        [SEAL]


                                     LESSOR:

                                     PIER SET, INC.,
                                     a Delaware corporation
Attest:


______________________               By:______________________________
Name:_________________                    James D. Price
Title:________________                    President



        [SEAL]


ACCEPTED AS OF THE 17TH DAY OF 
FEBRUARY, 1993.

LENDER:

NATIONAL WESTMINSTER BANK Plc
    New York Branch


By:_______________________
Name: Eric J. Fellows
Title: Vice President


NATIONAL WESTMINSTER BANK Plc
    Nassau Branch


By:_______________________
Name: Eric J. Fellows
Title: Vice President

                     FIRST AMENDMENT TO LEASE GUARANTEE


    THIS FIRST AMENDMENT (herein so called) is entered into as of April 15,
1993, among PIER 1 IMPORTS, INC., a Delaware corporation ("Pier 1"), CMEI,
INC., a Georgia corporation ("CMEI"), (Pier 1 and CMEI individually and
collectively called the "Guarantor") and PIER SET, INC., a Delaware
corporation ("Lessor").

    A.  Guarantor and Lessor entered into a Lease Guarantee dated as of
December 30, 1992 (the "Guarantee").

    B.  Guarantor has advised Lessor that Guarantor is planning to sell (the
"Sale") all of its stock in Sunbelt Nursery Group, Inc. ("Sunbelt") to a
wholly owned subsidiary of General Host Corporation, a New York corporation
("General Host"), in exchange for 1,940,000 shares of the common stock of
General Host.

    C.  Guarantor and Lessor, in order to provide for the accomplishment of
the above-described transaction, desire to amend the Guarantee in certain
respects as more fully set forth below.

    NOW, THEREFORE, for and in consideration of the premises and other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor and Lessor hereby agree as follows:

    1.      Unless otherwise specified herein, terms defined in the Guarantee
have the same meaning when used herein and all section references herein
refer to sections in the Guarantee.

    2.      Subsection (viii) of the definition of "Restricted Investments" in
Section 3 of the Guarantee is hereby amended to read in its entirety as
follows:

    (viii) not more than 1,940,000 shares of the common stock of General
    Host Corporation, a New York corporation, plus any additional shares
    which are received as a result of stock dividends, stock split or
    combination of shares, recapitalization, reclassification, merger or
    similar capital or corporate structure change,

    3.      Subsection (ix) of the definition of "Restricted Investments" in
Section 3 of the Guarantee is hereby amended to read in its entirety as
follows:

    (ix) any loans or guaranties made by Pier 1 or any of its subsidiaries
    to or for the benefit of Sunbelt or any of its Subsidiaries not
    exceeding an aggregate principal amount of $12,000,000 at any one time
    outstanding, provided that the maturity of any such loan or any
    indebtedness so guaranteed shall be no later than April 30, 1994, and
    provided further, that any remedies of Pier 1 or its Subsidiaries with
    respect thereto shall be diligently exercised,

    4.      New subsections (x) and (xi) of the definition of "Restricted
Investments" in Section 3 of the Guarantee are hereby added to read in their
entirety as follows:

    (x) any loans or guaranties made by Pier 1 or any of its Subsidiaries to
    or for the benefit of Pier Retail Group Limited, a company organized
    under the laws of the United Kingdom, not exceeding an aggregate
    principal amount of $6,500,000 at any one time outstanding, and (xi) any
    stock or securities of Sunbelt which Pier 1 or any of its Subsidiaries
    acquires through the exercise of its remedies with respect to any lien
    or security interest held by Pier 1 or any of its Subsidiaries on such
    stock or securities.

    5.      Section 8(d)(ii) of the Guarantee is hereby amended by deleting the
phrase "Other than for the Guaranteed Debt by Pier 1 of Sunbelt's Debt to (i)
Standard Chartered Bank for a line of credit in the amount of $5,000,000, and
(ii) Texas Commerce Bank, National Association for a line of credit in the
amount of $5,000,000 (the "Sunbelt Debt Guarantee")," appearing at the
beginning of said Section 8(d)(ii) and substituting the following in its
place:

    Other than for any Guaranteed Debt by Pier 1 or any of its Subsidiaries
    described in subsection (ix) of the definition of "Restricted
    Investments" in Section 3 hereof (the "Sunbelt Debt Guarantee"),

    6.      Section 8(e) of the Guarantee is hereby amended by deleting
subsection (vii) in its entirety and (C) adding new subsections (vii), (viii)
and (ix) to read in their entirety as follows:

    (vii) any loans or guaranties made by Pier 1 or any of its Subsidiaries
    to or for the benefit of Sunbelt or any of its Subsidiaries not
    exceeding an aggregate principal amount of $12,000,000 at any one time
    outstanding, provided that the maturity of any such loan or any
    indebtedness so guaranteed shall be no later than April 30, 1994, and
    provided further, that any remedies of Pier 1 or its Subsidiaries with
    respect thereto shall be diligently exercised, (viii) any loan or
    guaranties made by Pier 1 or any of its Subsidiaries to or for the
    benefit of Pier Retail Group Limited not exceeding an aggregate
    principal amount of $6,500,000 at any one time outstanding, (ix) any
    stock or securities of Sunbelt which Pier 1 or any of its Subsidiaries
    acquires through foreclosure of any lien or security interest held by
    Pier 1 or any of its Subsidiaries on such stock or securities, and

    7.      Section 8(g) of the Guarantee is hereby amended by deleting the 
word "and" before subsection (iv) of said Section 8(g) and adding new
subsections (v) and (vi) to read in their entirety as follows:

    , (v) the Sunbelt Debt Guarantee, and (vi) any Guaranteed Debt by Pier 1
    or any of its Subsidiaries described in subsection (x) of the definition
    of "Restricted Investment" in Section 3 hereof

    , and (vi) any Guaranteed Debt by Pier 1 or any of its Subsidiaries
    described in subsection (xi) of the definition of "Restricted
    Investment" in Section 3 hereof.

    8.      This First Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original.  In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.

    9.      The effectiveness of this First Amendment is subject to the
conditions precedent that (x) the Sale has been concluded and (y) the Lessor
shall have received Officers' Certificates, dated the date hereof, certifying
inter alia:

      (i)   a true and correct copy of resolutions adopted by the Board of
    Directors or Executive Committees of Guarantor;

     (ii)   the incumbency and specimen signatures of the Persons executing any
    documents on behalf of Guarantor;

    (iii)   the truth as of the date first written above of the representations
    and warranties made by Guarantor in the Guarantee, as amended hereby;
    and

     (iv)   the absence of the occurrence and continuance of any Default or
    Event of Default after giving effect to this First Amendment.

    10.     Except as amended by this First Amendment, the Guarantee is in full
force and effect.

    IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.


                         PIER 1 IMPORTS, INC.,
                         a Delaware corporation



                         By:_______________________________
                              Robert G. Herndon,
                              Executive Vice President


                         CMEI, INC.,
                         a Georgia corporation



                         By:________________________________
                              Robert G. Herndon,
                              Executive Vice President


                         PIER SET, INC.,
                         a Delaware corporation



                         By:_________________________________
                              James D. Price, President


AGREED TO AND ACCEPTED BY:

NATIONAL WESTMINSTER BANK Plc,
a bank registered in England


By:_______________________________
Name:_____________________________
Title:____________________________


                 SUPPLEMENT AND AMENDMENT TO LEASE GUARANTEE


    THIS SUPPLEMENT AND AMENDMENT TO LEASE GUARANTEE is dated as of August 31,
1993 (this "Supplement"), is made by and between PIER 1 IMPORTS, INC., a
Delaware corporation ("Pier 1"), Pier 1 Assets, Inc., a Delaware  corporation
("Assets"), Pier 1 Licensing, Inc. ("Licensing"), a Delaware Corporation and
successor by merger to CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor") and supplements and amends that certain
Lease Guarantee (the "Guarantee") made and entered into as of the 30th day of
December, 1992, by and between Pier 1, CMEI and Lessor.  Terms used herein
and not otherwise defined shall have the meaning given to them in the
Guarantee. 

                         W I T N E S S E T H:

    A.      Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation,
is an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of CMEI.  Lessor and Lessee have entered, as of the date hereof,
into supplements (the "Lease Supplements") to each of the Master Building
Lease and the Master Ground Lease, which Lease Supplements add two Parcels
and the Improvements thereon listed on Exhibit "A-16"-"A-18" of each of the
Supplements to the Lease Agreements and hereto, as provided for therein.

    B.      Pursuant to and subject to the terms of a supplement to the Loan
Agreement, as amended,  (the "Loan Supplement") and the Loan Agreement,
Lender has advanced or agreed to advance the additional sum of $ 1,519,464.88
to Lessor pursuant to the Land Loan and has advanced or agreed to advance the
additional sum of $2,055,636.12 to Lessor pursuant to the Building Loan.  
    
    C.      In consideration of the execution and delivery of the Lease
Supplements by Lessor to Lessee, and in recognition that the favorable
financing terms offered to Lessor by Lender have been passed through to
Lessee through the rental terms of the Lease Agreements, all of which are
contingent upon the delivery of this Supplement by Guarantor; and in
recognition that (i) as the indirect parent of Lessee, Pier 1; and (ii) as
the direct parent of Lessee, CMEI: will receive direct and material benefits
from the delivery of the Lease Supplements and the Loan Supplement and the
consummation of the transactions contemplated thereby, Guarantor desires to
deliver this Supplement to Lessor. 

    NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows: 

    A.      The Leases shall for all purposes under the Guarantee include the
Leases as Supplemented by the Lease Supplements, and each provision of the
Guarantee, as supplemented by this Supplement, shall be applicable to such
Leases.  As supplemented hereby, each provision of the Guarantee shall be and
remains in full force and effect;

    B.      Licensing and Assets shall be Guarantors for all purposes under the
Guarantee as supplemented and amended; and

    B.      this Supplement may be executed by the parties hereto in multiple
counterparts and each counterpart, when so executed, shall be deemed an
original, but all of which shall be considered as one agreement.  Further, in
making proof of this Supplement, it shall not be necessary to produce or
account for more than one such counterpart. 


    IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their respective officers thereunder duly authorized, as of the
date first written above.


                             GUARANTOR:

                             PIER 1 IMPORTS, INC.,
                             a Delaware corporation
Attest:


                             By:______________________________
______________________               Robert G. Herndon
Michael A. Carter                    Executive Vice President
Assistant Secretary

        [SEAL]


                             PIER 1 ASSETS, INC.,
                             a Delaware corporation
Attest:


                             By:______________________________
______________________               Robert G. Herndon
Michael A. Carter                    Executive Vice President
Assistant Secretary

        [SEAL]
                             PIER 1 LICENSING, INC.,
                             a Delaware Corporation and 
                             successor by merger to
                             CMEI, INC., a Georgia corporation
Attest:


                             By:______________________________
_______________________              Robert G. Herndon
Michael A. Carter                    Executive Vice President
Assistant Secretary

        [SEAL]

                             LESSOR:

                             PIER SET, INC.,
                             a Delaware corporation
Attest:


_____________________         By:______________________________
Michael A. Carter                    George R. Mihalko
Assistant Secretary                  Vice President
                     

        [SEAL]


ACCEPTED AS OF THE 31ST DAY
OF AUGUST, 1993.

LENDER:

NATIONAL WESTMINSTER BANK Plc
    New York Branch


By:___________________
Eric J. Fellows
Vice President


NATIONAL WESTMINSTER BANK Plc
    Nassau Branch


By:___________________
Eric J. Fellows
Vice President

                 SECOND AMENDMENT TO LEASE GUARANTEE


    This Second Amendment to Lease Guarantee (hereinafter referred to as "this
Amendment") is entered into as of the 25th day of February, 1994, among PIER
1 IMPORTS, INC., a Delaware corporation, and PIER 1 LICENSING, INC., a
Delaware corporation and successor by merger to CMEI, Inc. (Pier 1 Imports,
Inc., and Pier 1 Licensing, Inc. are hereinafter collectively referred to as
the "Guarantors" and individually referred to as a "Guarantor") and PIER SET,
INC., a Delaware corporation ("Lessor").

    WHEREAS, Guarantors and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, as heretofore supplemented
and/or amended, whereby the Guarantors guaranteed the full payment and
performance of a master ground lease and master building lease entered into
by Pier 1 Imports (U.S.), Inc., a Delaware corporation;

    WHEREAS, Guarantors and Lessor have agreed to amend the Lease Guarantee as
more fully set forth hereinafter;

    NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantors and the Lessor agree as follows:

    1.      Subsection (v) of Section 8(d) of the Lease Guarantee is hereby
amended to read in its entirety as follows:  

        (v)  Maintenance of Fixed Charge Coverage.  Permit the ratio of Cash
    Flow Available for Fixed Charges to Fixed Charges, to be determined on
    the last day of each fiscal quarter for the preceding 12 months, to be
    less than (a) 1.3 to 1 for each of the fiscal quarters ending during the
    period from the date of this Guaranty through February 27, 1993, (b) 1.4
    to 1 for each of the fiscal quarters ending during the period from
    February 28, 1993, through February 25, 1994, (c) 1.2 to 1 for each of
    the fiscal quarters ending during the period from February 26, 1994, to
    the fiscal quarter ending in November, 1994, and (d) 1.25 to 1 for each
    fiscal quarter ending thereafter.

    2.      Except as herein specifically amended and modified the Lease
Guarantee is unchanged and continues in full force and effect.  

    3.      Each Guarantor hereby consents and agrees to this Amendment and 
each Guarantor hereby confirms and ratifies the Lease Guarantee's existence
and each and every term, condition, and covenant therein contained, to the
same extent and as though the same were set forth herein in full.

    4.    This Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original.  In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.

    5.    The Lease Guarantee, this Amendment, and all other amendments and/or
supplements, constitute a "Loan Agreement" as defined in Section 26.02(a) of
the Texas Business and Commerce Code, represent the final and entire
agreement and understanding among the Guarantors and the Lessor relating to
the subject matter hereof and thereof, supersede all prior proposals,
agreements and understandings relating to the subject matter and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.  There are no unwritten oral agreements among the
parties.

    IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective offices thereunto duly authorized, as of the
date first written above.


                             GUARANTORS:

                             PIER 1 IMPORTS, INC.



                             By:_______________________________
                                  Robert G. Herndon,
                                  Executive Vice President


                             PIER 1 LICENSING, INC.



                             By:________________________________
                                  Robert G. Herndon,
                                  Executive Vice President


                             LESSOR:

                             PIER SET, INC.



                             By:_________________________________
                                  James D. Price, President

                     SUPPLEMENT TO LEASE GUARANTEE


    THIS SUPPLEMENT TO LEASE GUARANTEE is dated as of March 23, 1994 (this
"Supplement"), is made by and between PIER 1 IMPORTS, INC., a Delaware
corporation ("Pier 1"), Pier 1 Assets, Inc., a Delaware  corporation
("Assets"), Pier 1 Licensing, Inc. ("Licensing"), a Delaware Corporation and
successor by merger to CMEI, Inc., a Georgia Corporation
("CMEI")(individually and collectively, the "Guarantor"), and PIER SET, INC.,
a Delaware corporation ("Lessor") and supplements that certain Lease
Guarantee (the "Guarantee") made and entered into as of the 30th day of
December, 1992, by and between Pier 1, CMEI and Lessor as heretofore
supplemented and amended.  Terms used herein and not otherwise defined shall
have the meaning given to them in the Guarantee. 

                         W I T N E S S E T H:

    A.      Pier 1 Imports (U.S.), Inc. (the "Lessee"), a Delaware corporation,
is an indirect wholly-owned subsidiary of Pier 1 and a direct, wholly owned
Subsidiary of Licensing.  Lessor and Lessee have entered, as of the date
hereof, into supplements (the "Lease Supplements") to each of the Master
Building Lease and the Master Ground Lease, which Lease Supplements add two
Parcels and the Improvements thereon listed on Exhibit "A-19"-"A-20" of each
of the Supplements to the Lease Agreements and hereto, as provided for
therein.

    B.      Pursuant to and subject to the terms of a supplement to the Loan
Agreement, as amended,  (the "Loan Supplement") and the Loan Agreement,
Lender has advanced or agreed to advance the additional sum of $641,272.69 to
Lessor pursuant to the Land Loan and has advanced or agreed to advance the
additional sum of $1,321,771.06 to Lessor pursuant to the Building Loan.  
    
    C.      In consideration of the execution and delivery of the Lease
Supplements by Lessor to Lessee, and in recognition that the favorable
financing terms offered to Lessor by Lender have been passed through to
Lessee through the rental terms of the Lease Agreements, all of which are
contingent upon the delivery of this Supplement by Guarantor; and in
recognition that (i) as the indirect parent of Lessee, Pier 1; and (ii) as
the direct parent of Lessee, Licensing: will receive direct and material
benefits from the delivery of the Lease Supplements and the Loan Supplement
and the consummation of the transactions contemplated thereby, Guarantor
desires to deliver this Supplement to Lessor. 

    NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows: 

    A.      The Leases shall for all purposes under the Guarantee include the
Leases as Supplemented by the Lease Supplements, and each provision of the
Guarantee, as supplemented by this Supplement, shall be applicable to such
Leases.  As supplemented hereby, each provision of the Guarantee shall be and
remains in full force and effect;

    B.      this Supplement may be executed by the parties hereto in multiple
counterparts and each counterpart, when so executed, shall be deemed an
original, but all of which shall be considered as one agreement.  Further, in
making proof of this Supplement, it shall not be necessary to produce or
account for more than one such counterpart. 


    IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their respective officers thereunder duly authorized, as of the
date first written above.


                                          GUARANTOR:

                                          PIER 1 IMPORTS, INC.,
                                          a Delaware corporation
Attest:


                                          By:_____________________________
____________________                         J. Rodney Lawrence
Michael A. Carter                            Senior Vice President
Assistant Secretary

        [SEAL]


                                          PIER 1 ASSETS, INC.,
                                          a Delaware corporation
Attest:


                                          By:_____________________________
____________________                         J. Rodney Lawrence
Michael A. Carter                            Senior Vice President
Assistant Secretary

        [SEAL]

                                          PIER 1 LICENSING, INC.,
                                          a Delaware Corporation and 
                                          successor by merger to
                                          CMEI, INC., a Georgia corporation
Attest:


                                          By:______________________________
____________________                         J. Rodney Lawrence
Michael A. Carter                            Senior Vice President
Assistant Secretary

        [SEAL]
                                          LESSOR:

                                          PIER SET, INC.,
                                          a Delaware corporation
Attest:

____________________                      By:_____________________________
Michael A. Carter                             James D. Price
Assistant Secretary                           President
                     

        [SEAL]


ACCEPTED AS OF THE 23RD DAY
OF MARCH, 1994.

LENDER:

NATIONAL WESTMINSTER BANK Plc
    New York Branch


By:_____________________
Eric J. Fellows
Vice President


NATIONAL WESTMINSTER BANK Plc
    Nassau Branch


By:____________________
Eric J. Fellows
Vice President

                     Third Amendment to Lease Guarantee


    This Third Amendment to Lease Guarantee ("Amendment") is hereby made, as
of the date hereof, to that certain Lease Guarantee (the "Lease Guarantee"),
dated as of December 30, 1992, as heretofore supplemented, by and between
PIER 1 IMPORTS, INC., a Delaware Corporation ("Pier 1"), CMEI, Inc., a
Georgia Corporation ("CMEI"), and PIER SET, INC., a Delaware corporation
("Lessor").  Terms used herein and not otherwise defined shall have the
meaning given to them in the Lease Guarantee.

    The parties hereto agree that from and after the date hereof, Pier 1
Assets, Inc., a Delaware corporation ("Assets"), shall be a party to the
Lease Guarantee, and that each reference to the "Guarantor" therein shall
include Assets; that each reference in the Lease Guarantee to CMEI shall mean
Pier 1 Licensing, Inc., a Delaware corporation and successor by merger to
CMEI, Inc., a Georgia corporation ("Licensing"); and that each reference to
the indirect parent or owner of Lessee shall also mean and include Assets.

    The parties hereto further agree that the Lease Guarantee shall be amended
by amending and restating the definition of "Intangible Assets" in its
entirety as follows:

        ""Intangible Assets" shall mean goodwill, patents, trade names,
    trademarks, copyrights, franchises, experimental expense, organization
    expense, unamortized debt issue cost, the excess of cost of shares
    acquired over book value of related assets and such other assets as are
    properly classified as intangible assets in accordance with GAAP, but in
    no event shall Intangible Assets include (i) current prepaid expenses of
    Pier 1 or its Subsidiaries or (ii) receivables of any kind of Pier 1 or
    its Subsidiaries." 

    The parties hereto further agree that the definition of "Master Building
Lease" and "Master Ground Lease" in the Lease Agreement shall also mean and
include any renewal, extension and restatement of, and amendment or
modification to, the same.

    The parties hereto further agree that Section 5 of the Lease Guarantee
shall be and is amended with respect to the address for notices to Guarantor
by adding below the address for Licensing the following:

            "and

            Pier 1 Assets, Inc.
            % Pier 1 Imports, Inc.
            301 Commerce Street, Suite 600
            Fort Worth, Texas  76161-0020
            Attention:  Chief Financial Officer"

    As amended hereby, the Lease Guarantee remains in full force and effect in
all respects.
 
    This Amendment may be executed by the parties hereto in multiple
counterparts and each counterpart, when so executed, shall be deemed an
original, but all of which shall be considered as one agreement.  Further, in
making proof hereof, it shall not be necessary to produce or account for more
than one such counterpart.

    Dated to be effective as of the 28th day of February, 1994. 

                                     PIER SET, INC., a Delaware corporation
ATTEST:

_____________________________        By:______________________________
Name:________________________               James D. Price
Title:_______________________               Title: President


        [SEAL]


ATTEST:                              PIER 1 IMPORTS, INC,, a Delaware 
                                     corporation


_____________________________        By:________________________________
Name:________________________        Name:______________________________
Title:_______________________        Title:_____________________________


        [SEAL]


ATTEST:                              PIER 1 LICENSING, INC., a Delaware 
                                     corporation 


____________________________         By:_________________________________
Name:_______________________         Name:_______________________________
Title:______________________         Title:______________________________


        [SEAL]


ATTEST:                              PIER 1 ASSETS, INC., a Delaware 
                                     corporation 


____________________________          By:________________________________
Name:_______________________          Name:______________________________
Title:______________________          Title:_____________________________


        [SEAL]
                           EXHIBIT 10.13

                          LEASE GUARANTEE


    THIS LEASE GUARANTEE is made and entered into this 30th day of December
1992 between PIER l IMPORTS, INC., a Delaware corporation (the "Guarantor"),
and PIER GROUP, INC., a Delaware corporation ("Lessor").

    WHEREAS, Lessor has entered into and will continue to enter into lease
agreements (collectively, the "Lease Agreements," whether now or hereafter in
effect), from time to time with Pier 1 Imports (U.S.), Inc., a Delaware
corporation and wholly-owned subsidiary of Guarantor, and with Wolfe Nursery,
Inc., a Delaware corporation and an affiliate of Guarantor, (hereinafter
referred to as the "Lessee"); and

    WHEREAS, the Lease Agreements have been and will be entered into by Lessor
and Lessee with respect to land and improvements which have been and are to
be financed or refinance pursuant to the terms of a certain Restated
Revolving Credit Agreement dated December 30, 1992 (the "Credit Agreement")
among Lessor, the Banks (as defined herein) and First Interstate Bank of
Texas, N.A., as agent; and

    WHEREAS, in consideration of Lessor entering into Lease Agreements from
time to time with Lessee, Guarantor has agreed to guarantee the full payment
and performance when due of all rent, indebtedness, and obligations now or
hereafter existing or owing to Lestor by any Lessee pursuant to the Lease
Agreements.

    NOW, THEREFORE, for and in consideration of the mutual  covenants herein
contained, Lessor and Lessee hereby agree as follows

    1.      Guarantee.  For value received, and in consideration of Lessor
entering into Lease Agreements from time to time (whether now or hereafter in
effect) with Lessee, Guarantor does hereby unconditionally guarantee the full
payment and performance when due, whether at the stated due date, by
acceleration or otherwise, of any and all rent, indebtedness, obligations and
other amounts of every kind, howsoever created, arising, or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing
or owing to Lessor by any Lessee pursuant to the Lease Agreements (all such
indebtedness and obligations being hereinafter collectively called the
"Obligations").   Guarantor hereby agrees that upon any default by the Lessee
in the payment or performance of any of the Obligations when and as due, the
Guarantor will forthwith pay and/or perform the same immediately upon demand
and without notice.

    2.      Guarantee Continuing, Absolute, Unlimited.  This Guarantee is a
continuing, absolute and unlimited Guarantee of payment as primary obligor
and not as surety.  This Guarantee shall apply to all Obligations pursuant to
the Lease Agreements, without limitation as to either amount or period of
time.  The Obligations shall be conclusively presumed to have been created in
reliance on this Guarantee.  Lessor shall not be required to proceed first
against the Lessee or any other person, firm or corporation or against any
property securing any of the Obligations before resorting to the Guarantor
for payment.  This Guarantee shall be construed as a guarantee of payment and
performance without regard to the validity, regularity, or enforceability of
any of the Obligations or the rejection of the Lease Agreements in
bankruptcy, and notwithstanding any claim, defense (other than payment by the
Guarantor) or right of set-off which the Lessee or the Guarantor may have
against Lessor, including any such claim, defense or right of set-off based
on any present or future law or order of any government (de jure or de
facto), or of any agency thereof or court of law purporting to reduce, amend
or otherwise affect any obligations of the Lessee, or any other obligor, or
to vary any terms of payments, and without regard to any other circumstances
which might otherwise constitute a legal or equitable discharge of a surety
or a guarantor.  The Guarantor agrees that this Guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment to
Lessor of the Obligations or any part thereof is rescinded or must otherwise
be returned by Lessor upon the insolvency, bankruptcy or reorganization of
the Lessee, or otherwise, as though such payment to Lessor had not been made.

    3.      Definitions.  Unless otherwise indicated, capitalized terms used
herein and not defined below shall have the respective meanings given to them
in the Lease Agreements.  In addition to the definitions provided in the
Lease Agreements, the following words and terms shall have the meanings
indicated below:

    "Affiliate" of any designated Person means any Person that has a
relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common
control with the other, or holds or beneficially owns five percent (5%) or
more of any class of voting securities of the other.  For this purpose,
"control" means the power, direct or indirect, of one Person to direct or
cause direction of the management and policies of another, whether by
contract, through voting securities or otherwise.  Notwithstanding the
foregoing, no Person shall be deemed to be an Affiliate of another solely by
reason of such Person's being a participant in a joint operating group or
joint undivided ownership group.

    "Agent" shall mean First Interstate Bank of Texas, N.A., a national
banking association, or any successor agent under the Credit Agreement.

    "Banks" shall mean First Interstate Bank of Texas, N.A.  and the other
banks named in Section 2.01 of the Credit Agreement, as such Credit Agreement
may be amended, modified or supplemented from time to time.  "Bank" shall
mean any of such Banks.

    "Capitalized Lease Obligations" shall mean any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of the
Guarantor or any Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.

    "Cash Equivalents" shall mean any investments permitted under (i), (ii),
(iii), or (iv) of the definition of Restricted Investments and cash.

    "Cash Flow Available for Fixed Charges" shall mean the sum of Consolidated
Net Income plus depreciation and amortization plus interest expense plus
taxes plus operating lease expense, as determined in accordance with GAAP,
less Maintenance Capital Expenditures for the Guarantor on a Consolidated
basis.

    "Code" shall mean the Internal Revenue Code of 1986, as amended.

    "Consolidated" shall mean the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries.  References herein to
a Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc., refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc.  of such Person
and its properly consolidated subsidiaries.

    "Consolidated Current Assets" shall mean the current assets of the
Guarantor and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.

    "Consolidated Current Liabilities" shall mean the current liabilities of
the Guarantor and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.

    "Consolidated Funded Debt" shall mean Funded Debt of the Guarantor and its
Subsidiaries.

    "Consolidated Net Income" shall mean (i) for purposes of calculating Cash
Flow Available for Fixed Charges, Consolidated gross revenues of the
Guarantor less all operating and non-operating expenses of the Guarantor,
including all write-downs of assets and other charges of a proper character
(including, without limitation, current and deferred taxes on income,
provision for taxes on unremitted foreign earnings which are included in
gross revenues, and current additions to reserves), but not including in
gross revenues any gains (net of expenses and taxes applicable thereto) in
excess of losses resulting from the sale, conversion or other disposition of
capital assets (i.e., assets other than current assets), any gains or losses
arising from the acquisition of outstanding debt securities of the Guarantor
or any Subsidiary, any gains resulting from the write-up of assets, any
equity of the Guarantor or any Subsidiary in the undistributed earnings of
any Perscn which is not a Subsidiary, or any portion of the net income of any
Subsidiary which for any reason is unavailable for payment of dividends to
the Guarantor or to another Subsidiary, or any earnings of any Person
acquired by the Guarantor or any Subsidiary through purchase, merger,
consolidation or otherwise for any year prior to the year of acquisition,
merger or consolidation, or any deferred credits representing the excess of
any equity in any Subsidiary at the date of acquisition over the cost of
investment in such Subsidiary, all determined in accordance with GAAP, and
(ii) for all other purposes, net income of the Guarantor and its Subsidiaries
as determined on a Consolidated basis in accordance with GAAP.

    "Consolidated Net Tangible Assets" shall mean all of the assets of the
Guarantor and its Subsidiaries less Intangible Assets, Consolidated Current
Liabilities, long term liabilities (other than Funded Debt and Capitalized
Lease Obligations) and all deferrals of the Guarantor and its Subsidiaries.

    "Consolidated Tangible Assets" shall mean all of the assets of Guarantor
and its Subsidiaries less Intangible Assets.

    "Consolidated Tangible Net Worth" shall mean the sum of consolidated
capital, surplus, and retained earnings of the Guarantor less Intangible
Assets of the Guarantor, determined in accordance with GAAP.

    "Credit Agreement" shall mean that certain Restated Revolving Credit
Agreement of even date herewith between Pier Group, Inc., Agent and the
Banks.

    "Debt" shall mean with respect to any Person, (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) all obligations under leases which shall have been or should
be, in accordance with GAAP, recorded as Capitalized Lease Obligations in
respect of which such Person is liable as lessee, and (iii) any other
indebtedness required to be recorded on the Consolidated financial statements
of such Person in accordance with GAAP.  Any changes in GAAP requiring
operating leases to be included as indebtedness in the Consolidated financial
statements of the Guarantor will be effective, for purposes of determining
Debt hereunder, only for leases entered into or renewed after the date of the
required implementation of such changes in GAAP.

    "Default" means the occurrence of any event which, with the lapse of time,
notice or otherwise, would constitute an event specified under Section 14(a)
of this Guarantee or (ii) constitute a default or an event of default under
any instrument securing or evidencing any Debt of the Guarantor or any of its
Subsidiaries.

    "Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C.  Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Recourse Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. Section 651 et seq.), as such laws have been or hereafter may
be amended or supplemented, and any and all analogous future federal, or
present and future state or local laws, and similar laws of jurisdictions
other than the United States, to which Guarantor or any of its Subsidiaries
or any of its or their properties are subject.

    "ERISA" shall have the meaning given in Section 6(h) hereof.

    "FDIC" shall mean the Federal Deposit Insurance Corporation (or any
successor).

    "Fixed Charges" means the sum of payments under operating leases and
interest during the preceding 12-month period, as determined in accordance
with GAAP, for the Guarantor and its Subsidiaries on a Consolidated basis.

    "Funded Debt" shall mean, for Guarantor on a Consolidated basis, Debt
(including Guaranteed Debt and current maturities of "Funded Debt," as
defined herein) which (i) matures more than one (1) year from the date of its
determination or matures within one year from such date but is renewable or
extendable, at the option of the debtor, to a date more than one year from
such date, or (ii) arises under a revolving credit or similar agreement which
obligates the lender or lenders to extend credit during a period of more than
one year from such date; provided, however, that merchandise letters of
credit and bankers acceptances and similar credit instruments shall not be
deemed to be "Funded Debt" unless they have a stated maturity of more than
one (1) year, notwithstanding that the debtor may have the option to renew or
extend such maturity.

    "GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Account Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to circumstances as of the
date of determination.

    "Guarantee" shall mean this Lease Guarantee and all amendments,
modification, substitutions, and ratifications hereto.

    "Guaranteed Debt" shall mean, with respect to any Person, without
duplication, all Debt of another Person referred to in clause (i), (ii) or
(iii) of the definition of "Debt" guaranteed directly or indirectly in any
manner by such Person or in effect guaranteed directly or indirectly in any
manner by such Person.

    "Guarantor" shall mean Pier 1 Imports, Inc., a Delaware corporation.

    "Intangible Assets" shall mean goodwill, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organizational expense,
unamortized debt discount and expense, the excess of cost of shares acquired
over book value of related assets and such other assets as are properly
classified as "intangible assets" in accordance with GAAP, but in no event
shall Intangible Assets include (i) current prepaid expenses of the Guarantor
or its Subsidiaries or (ii) receivables of any kind of the Guarantor or its
Subsidiaries.

    "Interest Expense" of a Person means interest payable on Indebtedness for
each fiscal quarter.

    "Investment" shall mean any direct or indirect purchase or other
acquisition of, or a beneficial interest in, capital stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Debt or accounts receivable of any
other Person which are not current assets or do not arise from sales to that
other Person in the ordinary course of business.

    "Investment Securities" shall mean (i) U.S. government obligations, (ii)
obligations, debentures, notes or other evidences of indebtedness issued or
guaranteed by any agency or instrumentality of the United States of America
acting pursuant to authority granted by the Congress of the United States of
America, (iii) Federal funds, unsecured certificates of deposit, time
deposits and banker's acceptances (in each case, having maturities not in
excess of one year) of any bank the short-term unsecured debt obligations of
which are rated by Standard & Poors Corporation in the highest category for
short-term obligations, and (iv) certificates of deposit and time deposits
which are fully insured as to principal and interest by the Federal Deposit
Insurance Corporation.

    "Law" shall mean all statutes, laws, ordinances, rules, regulations,
orders, writs, injunctions or decrees of any Tribunal.

    "Lease Agreements" shall have the meaning given in Section 1 hereof.

    "Lessee" shall have the meaning given in Section 1 hereof.

    "Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including without limitation, any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction.

    "Maintenance Capital Expenditures" shall mean, for any fiscal quarter, an
amount equal to the greater of (i) the product of four thousand five hundred
($4,500.00) times the average number of retail stores of the Guarantor on a
Consolidated basis open during the four immediately preceding fiscal quarters
or (ii) actual capital expenditures incurred by the Guarantor on a
Consolidated basis during such fiscal quarter for the maintenance and
improvement of its retail stores (other than capital expenditures incurred in
connection with new store openings).

    "Material Adverse Effect" shall mean any act, circumstance, or event that
(i) causes or reasonably could be expected to cause a Default under this
Guarantee or an Event of Default under the Credit Agreement, or (ii) is or
might be material and adverse to the financial condition or business
operations of the Guarantor and its Subsidiaries on a consolidated basis.

    "Obligations" shall have the meaning given in Section 1 hereof.

    "Officer's Certificate" shall mean a certificate signed in the name of
Guarantor by its Chief Executive Officer, President, one of its Executive
Vice Presidents, its Chief Financial Officer, or its Comptroller.

    "Operating Cash Flow" of a Person means the Consolidated Net Income from
continuing operations of such Person, determined in accordance with GAAP, for
the four fiscal quarters immediately preceding the date of determination,
prior to the payment or provision for payment of state and federal taxes,
plus (i) depreciation, (ii) amortization, and (iii) interest payable on
Indebtedness for the four fiscal quarters immediately preceding the date of
determination.

    "Operating Lease Expense" shall mean all rental expenses of the Guarantor
relating to real estate, but specifically excluding any rental expense of the
Guarantor relating to equipment.

    "PBGC" shall have the meaning given in Section 6(i) hereof.

    "Person" shall mean an individual, partnership, joint venture,
corporation, trust, Tribunal, unincorporated organization or government or
any department, agency or political subdivision thereof.

    "Plan" shall have the meaning given in Section 6(i) hereof.

    "Restricted Investments" shall mean any investments in or loans and
advances to, other Persons except (i) obligations of the United States
government due within one (1) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital resources in excess of $100 million) due within one (1) year and
payable in U.S. dollars, (iii) commercial paper rated P-l by Moody's or A-l
by Standard & Poor's, (iv) debt of any state or political subdivision that is
rated A or better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) obligations or securities of a Subsidiary or a corporation
which immediately after such purchase or acquisition will be a Subsidiary,
(vi) stock or securities received in settlement of debts owing to the
Guarantor or any Subsidiary not exceeding $5,000,000.00, including
receivables arising from the sale of goods and services in the ordinary
course of business of the Guarantor and its Subsidiaries, (vii) travel or
like advances to officers and/or employees in the ordinary course of business
and loans to officers and/or employees made on or before May 24, 1991 for the
purchase of capital stock of the Guarantor (including the capitalization of
up to one-half of the accrued interest on such loans to officers and/or
employees), with all such travel or like advances and loans not exceeding
$10,000,000.00 in the aggregate, (viii) any stock or securities of Sunbelt
(but no permission is hereby granted for the acquisition by the Guarantor of
any additional stock or securities shares of Sunbelt), (ix) any loans made or
deemed to be made by the Guarantor to Sunbelt as a result of the Guarantor's
payment of any portion of the Guaranteed Debt of Sunbelt guaranteed by the
Sunbelt Debt Guarantee and (x) any loan participation program(s) for a period
not to exceed seven (7) days with credit risk to companies with long-term
debt rating by Standard Poor's of Moody's if not less than single A.

    "Restricted Payment" shall have the meaning given ln Section 8(c) hereof.

    "Secured Debt" shall mean all indebtedness for borrowed money, including
indebtedness evidenced by a bond, debenture, note or similar document, which
is secured by a lien on any assets of the Guarantor or any Subsidiary or any
shares of stock or Debt of any Subsidiary.

    "Senior Funded Debt" shall mean the Notes and Funded Debt which by its
terms is not subordinated in right of payment to the Notes.  For the purposes
of this definition of Senior Funded Debt, the term "Notes" shall have the
meaning ascribed to that term in the Teachers Agreement.

    "Short Term Debt" means, for the Guarantor on a Consolidated basis, Debt
(including Guaranteed Debt) which matures within one (1) year from the date
of determination thereof.  Short Term Debt shall not include current
maturities of Funded Debt.

    "Significant Subsidiary" shall mean, at any time, any Subsidiary of the
Guarantor which either (i) contributed during the most recent fiscal year of
the Guarantor more than five percent (5%) of the Consolidated gross revenues
of the Guarantor for such period, (ii) contributed during the most recent
fiscal year of the Guarantor more than five percent (5%) of the Consolidated
Net Income of the Guarantor for such period or (iii) owns more than five
percent (5%) of the fair market value of the Consolidated Tangible Assets of
the Guarantor.  Notwithstanding the foregoing, if at any time all
Subsidiaries of the Guarantor not meeting the above definition of
"Significant Subsidiary" and taken in the aggregate shall either (i)
contribute during the most recent fiscal year of the Guarantor more than
twenty-five percent (25%) of the Consolidated gross revenues of the Guarantor
for such period, (ii) contribute during the most recent fiscal year of the
Guarantor more than twenty-five (25%) of the Consolidated Net Income of the
Guarantor for such period or (iii) own more than twenty-five percent (25%) of
the fair market value of the Consolidated Tangible Assets of the Guarantor,
then so long as such situation continues all Subsidiaries of the Guarantor
shall be deemed to be "Significant Subsidiaries."

    "Subsequent Holder" shall mean the Agent, for the benefit of Agent and
Banks, or any of the Agent's Subsidiaries or other Affiliates which is a
direct or indirect transferee of the rights, interests and/or benefits of the
Lessor under this Guarantee.

    "Subsidiary" shall mean, as to any particular parent corporation, any
corporation more than fifty percent (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations
which themselves have more than fifty percent (by number of votes) of their
Voting Stock owned by such parent corporation.  As used herein, the term
"Subsidiary" shall mean a "subsidiary" of Guarantor.

    "Sunbelt" shall mean Sunbelt Nursery Group, Inc., a Delaware corporation.

    "Taxes" shall mean all taxes, assessments, fees and other charges at any
time imposed by any Laws or Tribunal.

    "Teachers Agreement" shall mean that certain Note Purchase Agreement dated
as of May 24, 1991 executed by and between the Guarantor and Teachers
Insurance Annuity Association of America, as amended from time to time,
pursuant to which the Guarantor has issued the Notes referred to in the
definition of Senior Funded Debt contained herein.

    "Total Costs" shall mean the sum of the amounts paid by Lessor and not
reimbursed by Lessee, as of the applicable date as set forth in and defined
as "the Total Cost" in the Lease Agreements.

    "Tribunal" shall mean any municipal, state, commonwealth, federal,
foreign, territorial or other court, governmental body, subdivision, agency,
department, commission, hoard or bureau or instrumentality.

    "Voting Stock" shall mean, with respect to any Subsidiary, any shares of
any class of stock of such Subsidiary having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
Subsidiary irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency.

    "Wolfe" shall mean Wolfe Nursery, Inc., a Delaware corporation.

    4.      Guarantee Not Affected by Change in Security or Other Actions. 
Lessor may, from time to time, without the consent of or notice to the
Guarantor, take any or all of the following actions without impairing or
affecting the Guarantors' obligations under this Guarantee or releasing or
exonerating the Guarantor from any liability hereunder:

    (a) retain or obtain a security interest ln any property to secure any of
the Obligations or any obligation hereunder:

    (b) retain or obtain the primary or secondary liability of any party or
parties, in addition to the undersigned Guarantor, with respect to any of the
Obligations;

    (c) extend the time or change the manner, place or terms of payment of, or
renew or amend the Lease Agreements, any note or other instrument executed in
connection with or evidencing the Obligations or any part thereof, or amend
in any manner any agreement relating thereto;

    (d) release or compromise, in whole or in part, or accept full or partial
payment for, any of the Obligations hereby guaranteed, or any liability of
any nature of any other party or parties with respect to the Obligations or
any security therefor;

    (e) subordinate the payment of all or any part of the Obligations to the
payment of any liability of the Lessee to creditors of the Lessee other than
Lessor or the Guarantor;

    (f) enforce Lessor's security interest, if any, in all or any properties
securing any of the Obligations or any obligations hereunder in order to
obtain full or partial payment of the Obligations then outstanding;

    (g) release or fail to perfect, protect, or enforce Lessor's security
interest, if any, in all or any properties securing any of the Obligations or
any obligation hereunder, or permit any substitution or exchange for any such
property; and

    (h) take or fail to take any other action of whatever kind or character
with respect to the Obligations, the Lease Agreements or any other document
or instrument, it being the intention of the Guarantor that it shall remain
liable as primary obligor for the Obligations notwithstanding any act,
omission or thing which might, but for the provisions hereof, otherwise
operate as a legal or equitable discharge of any guarantor.

    5.  Waivers.  The Guarantor hereby expressly waives:

    (a) notice of acceptance of this Guarantee;

    (b) notice of the existence or incurrence of any or all of the
Obligations;

    (c) presentment, demand, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest, and all other notices
whatsoever;

    (d) any requirement that proceedings first be instituted by Lessor against
the Lessee;

    (e) all diligence in collection or protection of or realization upon the
Obligations or any part thereof, or any obligation hereunder, or any
collateral for any of the foregoing;

    (f) any rights or defenses based on the Lessor's election of remedies,
including any defense to the Lessor's action to recover any deficiency after
a non-judicial sale;

    (g) the occurrence of every other condition precedent to which the
undersigned Guarantor might otherwise be entitled; and 

    (h) any right to require Lessor to marshal assets.

    6.      Representations, Warranties and Agreements of the Guarantor.  The
Guarantor represents and warrants to Lessor and any Subsequent Holder that:

    (a) The Guarantor (i) has been duly incorporated and are validly existing
as a corporation in good standing under the laws of the State of Delaware,
(ii) has full corporate power and authority to own and operate its properties
and to conduct its business as presently conducted, and full corporate power,
authority and legal right to execute, deliver and perform its obligations
under this Guarantee and any consent executed in connection herewith, (iii)
is duly qualified to do business as a foreign corporation in good standing in
each jurisdiction, including, without limitation, the State of Texas, in
which its ownership or leasing of properties or the conduct of its business
requires such qualification and where non-qualification, singly or in the
aggregate, would materially adversely affect the financial condition or
creditworthiness of the Guarantor, or would impair the ability of the
Guarantor to perform its obligations under this Guarantee, and (iv) all of
the issued and outstanding voting stock of Pier 1 Imports (U.S.), Inc.  is
owned by CMEI, Inc., a Georgia corporation, all the issued and outstanding
stock of which is owned by Guarantor.

    (b) This Guarantee has been duly authorized, executed and delivered by the
Guarantor and is a legal, valid and binding obligation of the Guarantor,
enforceable according to its terms.

    (c) The execution, delivery and performance by the Guarantor of this
Guarantee will not result in any violation of any term of the certificate of
incorporation or the bylaws of the Guarantor, do not require stockholder
approval or the approval or consent of any trustee or holders of Debt of the
Guarantor except such as have been obtained prior to the date hereof, and
will not conflict with or result in a breach of any terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
Lien upon, any property or assets of the Guarantor under, any indenture,
mortgage or other agreement or instrument to which the Guarantor is a party
or by which it or any of its property is bound where breach or default,
singly or in the aggregate, could have a Material Adverse Effect or violate
any existing applicable Law, or any judgment, order or decree of any Tribunal
having jurisdiction over the Guarantor or any of its activities or
properties.

    (d) There are no consents, licenses, orders, authorizations or approvals
of, or notices to or registrations with any Tribunal or other Person which
are required in connection with the valid execution, delivery and performance
of, this Guarantee that have not been obtained or made, and any such
consents, licenses, orders, authorizations, approvals, notices and
registrations that have been obtained or made are in full force and effect.

    (e) Except as disclosed in writing to Lessor by the Guarantor concurrently
herewith, there is no action, suit, proceeding or investigation at law or in
equity by or before any court, governmental body, agency, commission or other
Tribunal now pending or, to the best knowledge of the Guarantor after due
inquiry, threatened against or affecting the Guarantor or any property or
rights of the Guarantor as to which there is a significant possibility of an
adverse determination, and which if adversely determined, may have a Material
Adverse Effect or which, if adversely determined could materially impair the
ability of the Guarantor to perform its obligations under this Guarantee, and
there is no action, suit, proceeding or investigation at law or in equity by
or before any court, governmental body, agency, commission or other Tribunal
now pending or, to the best knowledge of the Guarantor after due inquiry,
threatened which questions or would question the validity of this Guarantee.

    (f) The consolidated balance sheets of the Guarantor and its Subsidiaries
as of February 28, 1992 and the related consolidated statements of income and
retained earnings of the Guarantor and its Subsidiaries for the fiscal year
then ended, reported on by its independent public accountants, and the
consolidated balance sheets of the Guarantor and its Subsidiaries for the
three-month period ending August 29, 1992 and related consolidated statements
of income and retained earnings of the Guarantor and its Subsidiaries for the
period then ended fairly present the consolidated financial condition and the
results of operations of the Guarantor and its Subsidiaries for the periods
ending on such date all in accordance with GAAP, and since the dates thereof
there has been no material adverse change in such condition or operations.

    (g) The Guarantor is not in default under or with respect to any agreement
or other instrument to which it is party or by which it or its assets may be
bound which could have a Material Adverse Effect.  The Guarantor is not
subject to or in default under any order, award or decree of any court,
arbitrator, or other governmental authority binding upon or affecting it or
by which any of its assets may be bound or affected which could have a
Material Adverse Effect.

    (h) The Guarantor has filed or caused to be filed all tax returns which to
the knowledge of the Guarantor is required to be filed, and have paid all
Taxes shown to be due and payable on said returns or on any assessments made
against it, except for (i) returns which have been appropriately extended and
(ii) Taxes, the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Guarantor, as the
case may be.

    (i) The Guarantor and each of its Subsidiaries are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code, and the rules and regulations thereunder
insofar as ERISA, the Code and such rules and regulations relate to any
employee benefit plan as defined in Section 3(3) of ERISA.  No employee
benefit plan (as defined in Section 3(2) of ERISA) maintained by the
Guarantor or any of its Subsidiaries for its employees and covered by ERISA
(a "Plan") had an "accumulated funding deficiency," within the meaning of
said term under Section 302 of ERISA, as of the last day of the most recent
fiscal year of such Plan, and neither the Guarantor nor any Subsidiary has
incurred with respect to any Plan any liability to the Pension Benefit
Guaranty Corporation ("PBGC") which is material to the consolidated financial
condition of the Guarantor or any Subsidiary.  For the purpose of this
paragraph, the term "Subsidiary" shall include a Controlled Group of
Corporations as that term is defined in Section 1563 of the Code or Section
4.001 of ERISA.

    (j) The financial statements of the Guarantor and its Subsidiaries
furnished to the Lessor on or before the date hereof have been prepared in
accordance with GAAP and fairly present the financial condition of the
Guarantor as of the date thereof.  Since the date of such financial
statements there has been no material adverse change in the financial
condition or business of the Guarantor which-would impair the ability of the
Guarantor to perform its obligations hereunder.

    7.      Affirmative Covenants.  The Guarantor covenants and agrees that, so
long as any part of the Obligations shall remain unpaid or the Lessee shall
have any commitment or obligation under the Lease Agreements, the Guarantor
will, unless Lessor shall otherwise consent in writing:

    (a) Financial Statements.  Deliver to the Lessor or any Subsequent Holder,
as appropriate, in duplicate:

        (i) Quarterly Statements:  as soon as practicable and in any event
within 60 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, a Consolidated statement of
operations, a Consolidated statement of changes in financial position of the
Guarantor, and a Consolidated balance sheet of the Guarantor as at the end of
such quarterly period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year, all in reasonable
detail and prepared by an authorized financial officer of the Guarantor.

        (ii) Annual Statements: as soon as practicable and in any event within
100 days after the end of each fiscal year, a Consolidated statement of
operations, and a Consolidated statement of changes in financial position of
the Guarantor for such year, and a Consolidated balance sheet of the
Guarantor as at the end of such year, setting forth in each case in
comparative form corresponding Consolidated figures from the preceding year,
all in reasonable detail and satisfactory in scope to Lessor or any
Subsequent Holder, together with an opinion by independent public accountants
of recognized standing selected by the Guarantor, whose opinion shall (a)
state that such financial statements have been prepared in accordance with
GAAP and fairly present the Consolidated financial position of the Guarantor
as of the date thereof and the Consolidated results of their operations for
the period thereof, (b) state that their audit examination has included a
review of the terms of this Guarantee as it relates to accounting matters,
and (c) state whether, in the course of their audit examination, they
obtained knowledge (and state whether they have knowledge of the existence as
of the date of such written statement) of any condition or event which
constitutes a Default, and if so, specifying the nature and period of
existence thereof (notwithstanding the foregoing, the opinion of the
Guarantor's independent public accountants need not contain the statements
otherwise required by clauses (b) and (c) of this subparagraph (ii) so long
as the Guarantor is a reporting company under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended);

        (iii)SEC and Other Reports: promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and reports as
Guarantor shall send to its public security holders and copies of all
registration statements (without exhibits) and all reports which it files
with the Securities and Exchange Commission (or any governmental body or
agency succeeding to the functions of the Securities and Exchange
Commission);

        (iv) Audit Reports: promptly upon receipt thereof, a copy of each other
report submitted to the Guarantor or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Guarantor or any Subsidiary (other than any
"management letters" delivered to the Guarantor by such accountants, which
management letters shall only be delivered to Lessor or any Subsequent Holder
upon such Person's prior request);

        (v) Other Notices: promptly upon the occurrence thereof, notice of any
of the following: (a) the occurrence of any condition or event which
constitutes a Default or an Event of Default, specifying the nature and
period of existence thereof, (b) that any Person has given any notice to the
Guarantor or any Subsidiary or taken any action with respect to a claimed
Default, or (c) that any Person has given any notice to the Guarantor or any
Subsidiary or taken any other action with respect to a claimed default or
event of default with respect to any other indebtedness which in the
aggregate exceeds the sum of three million dollars ($3,000,000) and, with
respect to any of such events specified in subdivisions (a), (b) or (c) above
of this clause (v), what action the Guarantor or such Subsidiary has taken,
is taking or proposes to take;

        (vi) ERISA Events: promptly upon any officer of the Guarantor obtaining
knowledge of the occurrence thereof, notice of the occurrence of any (a)
"reportable event," as such term is defined in section 4043 of ERISA, or (b)
"prohibited transaction," as such term is defined in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, specifying
the nature thereof, what action the Guarantor or its Subsidiary has taken, is
taking or proposes to take with respect thereto, and, when known, any action
taken or threatened by the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect thereto; provided that with respect to the
occurrence of any "reportable event" as to which the Pension Benefit Guaranty
Corporation has waived the 30-day reporting requirement, such written notice
need be given only at such time as notice is given to the Pension Benefit
Guaranty Corporation; and with reasonable promptness, such other financial
data or other data or information related to the business or operations of
the Guarantor or its Subsidiaries as the Lessor or any Subsequent Holder may
reasonably request.  The Lessor agrees that Lessor or any Subsequent Holder
will not intentionally disclose any information given to Lessor by the
Guarantor or any of its Subsidiaries which is either proprietary or
confidential and which is prominently marked as such; provided, however, that
this restriction shall not apply to information which has at the time in
question entered the public domain, nor will this restriction prohibit Lessor
or any Subsequent Holder from disclosing such information (a) as is required
to be disclosed by Law or by any order, rule or regulation (whether valid or
invalid) of any Tribunal, (b) to Lessor's or any Subsequent Holder's
auditors, examiners, attorneys, or agents, or (c) to purchasers or
prospective purchasers or assignees of interests in the Obligations.

    Together with each delivery of financial statements required by clause (i)
above, the Guarantor will deliver to Lessor or any Subsequent Holder an
Officer's Certificate demonstrating (with computations in reasonable detail)
compliance by the Guarantor and its Subsidiaries with the provisions of
Sections 8(a), 8(b), 8(c), 8(d)(i)(g), 8(d)(ii), 8(d)(iii), 8(d)(iv) 8(d)(v),
8(d)(vi), and 8(d)(vii) and stating that there exists no Default with respect
to such covenants or otherwise under this Guarantee or, if any Default exists
with respect to such covenants or under this Guarantee, specifying the nature
and period of existence thereof and what action the Guarantor promises to
take with respect thereto.  Together with each delivery of financial
statements required by clause (ii) above, the Guarantor will deliver to the
Lessor or any Subsequent Holder an Officer's Certificate of the Treasurer or
Chief Financial Officer of Guarantor demonstrating (with computations in
reasonable detail) compliance by the Guarantor and its Subsidiaries with the
provisions of Sections 8(a), 8(b), 8(c), 8(d)(i)(g), 8(d)(ii), 8(d)(iii),
8(d)(iv) 8(d)(v), 8(d)(vi), and 8(d)(vii) and stating that there exists no
Default with respect thereto or otherwise under this Guarantee or, if any
Default exists with respect thereto or under this Guarantee, specifying the
nature and period of existence thereof and what action the Guarantor proposes
to take with respect thereto.  By delivery of such Officer's Certificate, the
officer executing such certificate represents and warrants that the
statements made therein are based upon the level of investigation normally
and customarily taken by Treasurers or Chief Financial Officers of similarly
situated corporations of established reputation in performing their regular
duties.  In the event that a change(s) in GAAP related to the accounting for
leases requires the Guarantor to use accounting principles for purposes of
determinations or computations under this Guarantee different than the
Guarantor uses in its quarterly and annual financial statements, the
Guarantor will, together with the delivery of financial statements required
by clause (ii) above with respect to the fiscal year in which such change(s)
in GAAP become applicable, deliver to the Lessor and any Subsequent Holder a
certificate of such accountants stating that, in making the audit necessary
to the certification of such financial statements, they have obtained no
knowledge of any Default, or, if they have obtained knowledge of any Default,
specifying the nature and period of existence thereof.

    (b) Payment of Obligations; Maintain Books and Reserves.  Duly and
punctually pay the Obligations and duly and punctually perform all of its
covenants, agreements, debts, duties and obligations in accordance with the
terms of this Guarantee.  Guarantor will, and will cause each of its
Subsidiaries to, keep proper books of record and account and set aside
appropriate reserves, all in accordance with GAAP.

    (c) Inspection of Property.  Permit any Person designated by Lessor or any
Subsequent Holder, at the Lessor's or such Subsequent Holder's expense and
with reasonable notice to the Guarantor, to visit and inspect any of the
properties of the Guarantor and its Subsidiaries, to examine the corporate
books and financial records of the Guarantor and its Subsidiaries and make
copies thereof or extracts therefrom and to discuss the affairs, finances and
accounts of any such corporations with officers and employees of the
Guarantor and its independent public accountants, all at such reasonable
times and as often as Lessor or any Subsequent Holder may reasonably request. 
Lessor agrees that Lessor will keep confidential any proprietary or
confidential information given to Lessor by the Guarantor or its Subsidiaries
upon the same terms and conditions as agreed to with respect to information
Lessor has obtained pursuant to Section 7(a)(vii) hereof.

    (d) Compliance with Laws, Etc. Comply and cause each of its Subsidiaries
to comply, in all material respects with all applicable laws, rules,
regulations and orders applicable to its business, such compliance to
include, without limitation, paying before the same become delinquent all
taxes, assessments, and governmental charges imposed upon it or upon its
property, except to the extent contested in good faith by appropriate
proceedings and for which adequate reserves have been established in
accordance with GAAP, and provided that Guarantor or its Subsidiary, as the
case may be, retains good and marketable title to and the right to use and
enjoyment of its properties or other assets which may be affected by any such
contest.  Guarantor will timely pay and will cause its Subsidiaries to timely
pay, all payments due for labor, services and materials rendered or furnished
in -he ordinary course of business which are secured by inchoate statutory
Liens, except to the extent contested in good faith by appropriate
proceedings, and provided that the Guarantor or its Subsidiary, as the case
may be, retains good and marketable title to and the right to the use and
enjoyment of its properties or other assets which may be affected by any such
contest.  Guarantor will promptly notify the Lessor or any Subsequent Holder
if the Guarantor receives any notice, claim or demand from any governmental
agency which alleges that the Guarantor is in violation of any Laws or has
failed to comply with any order issued pursuant to any federal, state or
local statute regulating its operation and business, the result of which may
have a Material Adverse Effect.

    (e) Maintenance of Existence and Qualifications.  Maintain and preserve
and cause each of its Subsidiaries to maintain and preserve its corporate
existence and its rights and franchises in full force and effect and obtain
and maintain and cause its Subsidiaries to obtain and maintain all permits
and licenses necessary to the proper conduct of its business, including
without limitation qualifying to do business as a foreign corporation in all
states or jurisdictions where required by applicable Law.  Notwithstanding
the foregoing, this Section 7(e) shall not prohibit any transaction expressly
permitted by Section 8(d)(vi) and Section 8(d)(vii) of this Guarantee.  

    (f) Maintenance of Properties; Insurance.  Maintain, preserve, protect,
and keep and cause each of its Subsidiaries to maintain, preserve, protect
and keep, all property used or useful in the conduct of its business in good
condition and in compliance with all applicable Laws, and will from time to
time make all repairs, renewal's and replacements needed to enable the
business and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.  Guarantor will, and will cause each
of its Subsidiaries, to carry and maintain in full force and effect at all
times with financially sound and reputable insurers (or, in an insurance fund
or by self-insurance authorized by the jurisdiction in which its operations
are carried on) insurance in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations of
established reputation engaged in the same or similar businesses and
similarly situated, and the Guarantor and its Subsidiaries shall maintain
self-insurance only to the extent that a prudent corporation of established
reputation engaged in the same or similar businesses and similarly situated
would rely upon self-insurance.

    (g) Primary Business.  Continue to conduct, and cause each of its
Subsidiaries to continue to conduct, substantially all of their respective
operations in the same primary businesses as those in which they currently
operate (i.e., developing, owning and operating, in the United States and
Canada and in territories of the United States and Canada, (i) specialty
retail stores offering primarily imported decorative home furnishings,
accessories and other specialty items for the home and casual clothing and
fashion accessories and (ii) retail stores offering primarily nursery and
garden products).

    (h) Transactions With Affiliates.  Conduct and cause each Subsidiary to
conduct all of their respective transactions with any Affiliate on an arm's
length basis and pursuant to the reasonable requirements of Guarantor's
and/or such Subsidiary's business.

    (i) Compliance with Material Agreements.  Guarantor will comply with all
material agreements, indentures, mortgages or documents binding on it or
affecting its properties or business where the failure to so comply would
have a Material Advertise Effect.

    (j) Operations and Properties.  Guarantor will act prudently and in
accordance with customary industry standards in managing or operating its
respective assets, properties, business and investments; Guarantor will keep
in good working order and condition, ordinary wear and tear excepted, all of
its respective assets and properties which are necessary to the conduct of
its business.

    (k) Books and Records; Access.  Upon prior written notice, Guarantor will
give any representative of Lessor access during all business hours to, and
permit such representative to examine, copy or make excerpts from, any and
all books, records and documents in the possession of the Guarantor and
relating to its affairs, and to inspect any of the properties of the
Guarantor.  Guarantor will maintain complete and accurate books and records
of its transactions in accordance with good accounting practices.

    (l) Additional Guaranty Agreement.  If the Guarantor merges or
consolidates with any entity which is owned or controlled by a corporation
organized or incorporated in a jurisdiction outside of the United States of
America (an "Offshore Company") or becomes a Subsidiary of an Offshore
Company as a result of a reorganization or acquisition, Guarantor shall cause
such Offshore Company to execute and deliver to Lessor and any Subsequent
Holder, at the expense of the Guarantor, a lease guarantee in the form of
this Lease Guarantee and an opinion of counsel in form satisfactory to Lessor
or any Subsequent Holder at the time of such merger, consolidation,
reorganization or acquisition.

    (m) Additional Information.  Guarantor shall promptly furnish to Lessor
and any Subsequent Holder, at Lessor's request, such additional financial or
other information concerning assets, liabilities, operations and transactions
of Guarantor or any Subsidiary as Lessor or any Subsequent Holder may from
time to time reasonably request.

    (n) Further Assurances.  Upon request of the Lessor, promptly cure upon
request of Lessor any defects in the creation, issuance, execution and
delivery of this Guarantee or in the Lease Agreements.  Guarantor, at its
expense, will further promptly execute and deliver to Lessor upon request all
such other and further documents, agreements and instruments in compliance
with or accomplishment of the covenants and agreements of Guarantor
hereunder, or to further evidence and more fully describe the obligations of
the Guarantor for the Obligations as primary obligor or to correct any
omissions herein, or to more fully state the obligations set out herein.

    8.      Negative Covenants.The Guarantor covenants and agrees that, so long
as any part of the Obligations shall remain unpaid or the Lessee shall have
any commitment or obligation under the Lease Agreements, neither the
Guarantor nor any of its Subsidiaries will, unless Lessor or any Subsequent
Holder otherwise consents in writing:

    (a) Current Ratio.  Permit the ratio of its Consolidated Current Assets to
its Consolidated Current Liabilities at any time thereafter to be less than
2.0:1.

    (b) Consolidated Tangible Net Worth.  Permit its Consolidated Tangible Net
Worth at any time to be less than an amount equal to the sum of (i) one
hundred sixty million dollars ($160,000,000) plus (ii) 50% of the aggregate
Consolidated Net Income of the Guarantor for the period commencing on
February 29, 1992 (without deduction for any net loss in any fiscal year
ending after February 29, 1992) and terminating at the end of the last fiscal
quarter preceding the date of any determination of Consolidated Tangible Net
Worth.

    (c) Limitation on Dividends, Acquisition of Stock and Restricted
Investments.  Declare any dividend on any class of its stock (other than
stock dividends) or any other distribution on account of any class of its
stock (other than dividends or distributions payable solely in shares of its
stock) which is payable more than 60 days after the date such declaration is
made, unless, at the time of such declaration, such dividend complied with
this Section 8(c).  Guarantor covenants that it will not, and will not permit
any of its Subsidiaries to, pay or declare any dividend on any class of its
stock (other than stock dividends) or make any other distribution on account
of any class of its stock (other than dividends or distributions payable
solely in shares of its stock), or redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its stock, or make any Restricted
Investments (all of the foregoing being herein called "Restricted Payments")
if the aggregate amount of all such Restricted Payments, from and after
February 29, 1992, shall exceed the sum of (i) fifty percent (50%) of the
aggregate Consolidated Net Income of the Guarantor for the period (taken as
one accounting period) commencing on February 29, 1992 and terminating at the
end of the last fiscal quarter preceding the date of such Restricted Payment
(provided, however, that in the case of any deficit in Consolidated Net
Income in any financial reporting period occurring either fully or partly
within such period, 100% of the amount of such deficit shall be subtracted
from the amount described in clause (i) above)  plus (ii) the aggregate net
cash proceeds received from the issuance or sale, after February 29, 1992, of
capital stock of the Guarantor (provided, however, that for purposes of
clause (ii), such net cash proceeds shall be considered only for a period of
one calendar year commencing on the date such proceeds are received by the
Guarantor) plus (iii) ten million dollars ($10,000,000).  Notwithstanding the
foregoing, no Restricted Payment shall be made unless, after giving effect
thereto, no Default shall have occurred and be continuing.  There shall not
be included in the limitation upon Restricted Payments (a) any dividends paid
by any Subsidiary of the Guarantor to its corporate parent which is also a
Subsidiary of the Guarantor or (b) to the Guarantor.

    (d) Lien, Debt and Other Restrictions.  Guarantor covenants that it will
not, and will not permit any Subsidiary to:

        (i) Liens.  Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired, except without
double-counting, any of the following (the "Permitted Liens"):

    (a) Liens for Taxes, not yet due and delinquent or which are being
actively contested in good faith by appropriate proceedings, provided that
the existence of such Liens does not affect the Guarantor's or its
Subsidiaries' good and marketable title to or use or enjoyment of the
property or assets burdened by such Liens,

    (b) other Liens arising in the ordinary course of its business or the
ownership of its property and assets (including easements and similar
encumbrances) which were not incurred in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the deferred
purchase price of property or assets, and which do not in the aggregate
materially interfere with the operation of its business and will not cause a
Material Adverse Effect,

    (c) any Lien existing on any property of any corporation at the time it
becomes a Subsidiary, provided that (a) any such Lien shall not encumber any
other property of the Guarantor or such Subsidiary, and (b) the aggregate
amount of Debt secured by such Lien shall not at any time exceed 75 of the
fair market value of such property,

    (d) any Lien on any property acquired, constructed or improved by the
Guarantor or a Subsidiary after the date hereof and created contemporaneously
with or within 12 months of such acquisition, completion of construction or
improvement to secure Debt assumed or incurred to finance up to 75% of the
purchase price or cost of construction or improvement of such property, but
such Lien shall cover only the property so acquired or constructed and any
improvements thereto, and

    (e) Liens existing on the date hereof and disclosed in the most recent
financial statements described in Section 6(f) hereof,

    (f) Liens arising in connection with court proceedings, provided the
execution of such Liens is effectively stayed and such Liens are contested in
good faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP, and provided further that the
existence of such Liens does not affect the Guarantor's or its Subsidiaries'
title to or use or enjoyment of the property or assets burdened by such
Liens,

    (g) any Lien described in clauses (c), (d) or (e) above resulting from
renewing, extending or refunding outstanding Secured Debt provided that the
principal amount of the Secured Debt secured thereby is not increased and the
Lien is not extended to any other property, and

    (h) any other Liens incurred in connection with the borrowing of money or
any other Liens, provided that immediately thereafter the aggregate amount of
Debt secured by Liens incurred pursuant to this clause (h) does not at any
time exceed five percent (5.0%) of Consolidated Net Tangible Assets.

        (ii) Funded Debt -- Other than for the Guaranteed Debt by the Guarantor
of Sunbelt's Debt to (i) Standard Chartered Bank under a line of credit in
the amount of $5,OO0,000 and (ii) Texas Commerce Bank, National Association
under a line of credit in the amount of $5,000,000 (the "Sunbelt Debt
Guarantee"), create, incur, assume or suffer to come into existence any
additional Funded Debt unless after giving effect thereto (i) Senior Funded
Debt is less than 50% of Consolidated Net Tangible Assets and (ii) all Funded
Debt in the aggregate is less than sixty percent (60%) of Consolidated Net
Tangible Assets.  With respect to Subsidiaries which are not Guarantor,
create, incur, assume or suffer to come into existence any additional Funded
Debt by such Subsidiaries unless after giving effect thereto all Funded Debt
by such Subsidiaries in the aggregate is less than 70% of Consolidated Net
Tangible Assets of such Subsidiaries.  As used in this paragraph 8(ii), (A)
prior to demand being made upon the Guarantor to pay its obligations under
the Sunbelt Debt Guarantee, the term Funded Debt (individually and as used in
the definition of Senior Funded Debt) shall only include the Guaranteed Debt
of Sunbelt to the extent the aggregate amount of such Guaranteed Debt of
Sunbelt exceeds the sum of Sunbelt's Cash Equivalents, and (B) from and after
demand being made upon the Guarantor to pay its obligations under the Sunbelt
Debt Guarantee, the term Funded Debt (individually and as used in the
definition of Senior Funded Debt) shall include such Guaranteed Debt of
Sunbelt.

        (iii) Short-Term Debt -- Other than for the Sunbelt Debt Guarantee,
create, incur, assume or suffer to exist any Short-Term Debt, other than any
Short-Term Debt which is incurred in the ordinary course of business,
provided that there shall be a period of at least 45 consecutive days during
each fiscal year in which such Short-Term Debt is paid down to an amount that
would have been permitted under Section 8(d)(ii) were such Short-Term Debt to
be treated as Funded Debt; provided, however, that as used in this paragraph
8(d)(iii), (A) prior to demand being made upon the Guarantor to pay its
obligations under the Sunbelt Debt Guarantee, the term Funded Debt
(individually and as used in the definition of Short-Term Debt) shall only
include the Guaranteed Debt of Sunbelt to the extent the aggregate amount of
such Guaranteed Debt of Sunbelt exceeds the sum of Sunbelt's Cash
Equivalents, and (B) from and after demand being made upon the Guarantor to
pay its obligations under the Sunbelt Debt Guarantee, the term Funded Debt
(individually and as used in the definition of Short-Term Debt) shall include
such Guaranteed Debt of Sunbelt.

        (iv) Subsidiaries' Debt -- Create, incur, assume or suffer to exist any
additional Debt unless after giving effect thereto, the aggregate amount of
outstanding Debt of the Guarantor's Subsidiaries is less than 10% of
Consolidated Net Tangible Assets.

        (v) Maintenance of Fixed Charge Coverage -Permit the ratio of Cash Flow
Available for Fixed Charges to Fixed Charges, to be determined on the last
day of each fiscal quarter for the preceding 12 months, to be less than (i)
1.3 to 1 for each of the fiscal quarters ending during the period from the
date of this Guarantee through February 27, 1993, and (ii) 1.4 to 1 for each
fiscal quarter ending thereafter.

        (vi) Limitation on Sale of Assets -- Other than (i) sales in the
ordinary course of business, and (ii) the sale by the Guarantor and/or
Sunbelt Nursery Group, Inc.  of any of the capital stock of Sunbelt (provided
the net proceeds of any such sale of stock owned by the Guarantor are used to
pay down the Guarantor's bank debt which is pari passu in terms of right to
payment with the Obligations), sell or otherwise dispose of in any fiscal
year more than 10% of its Consolidated Tangible Assets or sell or otherwise
dispose of any of its Consolidated Tangible Assets for less than fair market
value.

        (vii) Merger and Consolidation -- Merge or consolidate, provided,
however, that:

            (a) the Guarantor may merge or consolidate with or into any other
corporation so long as (A) the successor corporation is a United States
entity which expressly assumes the Obligation in writing or the Guarantor
shall be the continuing or surviving entity, (B) no Default shall have
occurred after giving effect to such merger or consolidation, and (C)
immediately after giving effect to such merger or consolidation the Guarantor
could have incurred an additional $1.00 of Funded Debt pursuant to the
provisions of Section 8(d)(ii) hereof, and

            (b) any Subsidiary may merge or consolidate with or into any other
corporation so long as, upon such merger or consolidation, (A) the successor
corporation becomes a Subsidiary of the Guarantor, (B) no Default shall have
occurred after giving effect to such merger or consolidation, and (C)
immediately after giving effect to such merger or consolidation such
Subsidiary could have incurred an additional $1.00 of Funded Debt pursuant to
the provisions of Section 8(d)(ii) hereof, and

            (c) any Subsidiary may merge or consolidate with or into the
Guarantor or any other Subsidiary so long as, in any such merger or
consolidation involving the Guarantor, the Guarantor shall be the surviving
or continuing corporation.

    (e) Investments.  Make or permit any of its Subsidiaries to make any
Investment, except (i) purchases of majority of the outstanding stock of any
corporation, (ii) Investments in Guarantor, any of its Subsidiaries, or any
Person that is wholly-owned by Guarantor and/or its Subsidiaries, not to
exceed in the aggregate twenty-five million dollars ($25,000,000) (iii)
Investments in Cash Equivalents or readily marketable securities having a
quoted market value, (iv) Investments in Persons to the extent permitted by
Section 8(c) hereof, (v) Investments in any partnership, corporation or joint
venture the sole purpose of which is to obtain land and improvements used in
the ordinary course of business of Guarantor or any of its Subsidiaries,
which Investments under this subsection (v) shall not exceed $75,000,000 in
the aggregate (vi) loans or advances to employees in the ordinary course of
business that do not exceed $5,000,000 in the aggregate, (vii) Investments in
Sunbelt capital stock or which are loans made by the Guarantor to Sunbelt as
a result of the Guarantor's payment of the Guaranteed Debt permitted under
Section 8(g) hereof or are intercompany advances, not exceeding
$1,000,000.00, made by the Guarantor to Sunbelt in the ordinary course of
business, which advances are promptly repaid by Sunbelt, and (viii) loan
participation programs for a period not to exceed seven days with credit risk
to companies with long-term debt rating by Standard & Poor's or Moody's of
not less than single A.

    (f) Chance in Nature of Business.  Make, or permit any of its Subsidiaries
to make, any material change in the nature of its business as conducted on
the date hereof.

    (g) Guaranteed Debt.  Create, assume or suffer to exist or permit any of
its Subsidiaries to create, suffer or exist any Guaranteed Debt except (i)
Guaranteed Debt in existence on the date hereof, (ii) Guaranteed Debt that is
secured by assets of the primary obligor having a fair market value at least
equal to the amount of such Guaranteed Debt, as determined by an independent
qualified appraiser selected by Guarantor (which appraisal, at Lessor's or
any Subsequent Holder's reasonable request and at Lessor's expense, shall be
promptly updated, but such request shall not be made more often than once
every 12 months), and (iii) Guaranteed Debt of Guarantor or a Subsidiary on
the consolidated balance sheet of Guarantor and its Subsidiaries; Provided,
however, that in no event shall the aggregate amount of all consolidated
Guaranteed Debt (other than the Guaranteed Debt described in (iii) above) of
Guarantor and its Subsidiaries exceed the Consolidated Tangible Net Worth,
and (iv) the Sunbelt Debt Guarantee.

    (h) Management and Control.  Permit any material change in the Guarantor's
management or control of any of its Subsidiaries.

    9.      Payments.  Each payment by the Guarantor to Lessor under this
Guarantee shall be made by transferring the amount thereof in immediately
available U.S. funds without set-off or counterclaim.  Any and all payments
by the Guarantor hereunder shall be made free and clear and without deduction
for any and all present or future Taxes, excluding, in the case of Lessor,
any Subsequent Holder and each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
Lessor, any Subsequent Holder, or such Bank (as the case may be) is organized
or is or should be qualified to do business or any subdivision thereof, and
in the case of each Subsequent Holder and each Bank, Taxes imposed on such
Subsequent Holder's or such Bank's income by the jurisdiction of such
Subsequent Holder's or Bank's lending office or any political subdivision
thereof.  If Guarantor shall be required to deduct any Taxes (i.e., Taxes for
which Guarantor is responsible under the preceding sentence) from or in
respect of any sum hereunder (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 9) such Subsequent
Holder and each such Bank receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Guarantor shall make such
deductions and (iii) Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

    10.     Costs and Expenses.  The Guarantor hereby agrees to pay all
reasonable legal and other costs and expenses incurred by Lessor in seeking
to protect or enforce any of Lessor's rights or remedies with respect to the
Obligations or this Guarantee.

    11.     Subrogation.  The Guarantor shall not be subrogated, in whole or in
part, to Lessor's rights or those of any subsequent assignee or transferee of
any of the Obligations until 367 days after all the Obligations to Lessor and
every such subsequent assignee or transferee shall have been paid in full and
all obligations and commitments of whatever kind or character of the Lessee
under the Lease Agreements have been fully discharged and satisfied.

    12.     No Waiver. No delay on Lessor's part in the exercise of any right 
or remedy shall operate as a waiver thereof, and no single or partial
exercise by Lessor of any right or remedy shall preclude the other or further
exercise thereof or the exercise of any other right or remedy.

    13.     Parties; Successors and Assigns.  This Guarantee shall inure to the
benefit of Lessor and Lessor's successors, assigns or transferees, and shall
be binding upon the Guarantor and its successors and assigns.  The Guarantor
may not delegate any of its duties under this Guarantee without the prior
written consent of Lessor or any Person to whom Lessor has assigned this
Guarantee.  Lessor may assign Lessor's rights and benefits under this
Guarantee to any Person, including, without limitation, to any financial
institution providing financing to Lessor.  Upon any assignment by Lessor of
this Guarantee, and upon any subsequent assignment or assignments by Lessor's
assignee or future assignees, such assignee or future assignee shall succeed
to all of the rights, benefits, remedies and privileges of this Guarantee and
shall for all purposes hereof be deemed to be "Lessor" hereunder to the
exclusion of the assigning Lessor.  Guarantor agrees to make such disclosures
and to take such action and execute such instruments as any such assignee or
future assignee may reasonably require to more fully protect, preserve and
assure to such assignee or future assignee all of the rights, benefits,
remedies and privileges provided hereby.  In the event that Lessor or any
assignee hereof sells participations in any obligation secured by the Lease
Agreements to other lenders, each such other lender shall have rights,
benefits, remedies and privileges to the same extent as are available to
Lessor hereunder.

    14.     Acceleration Events.

    (a) If any one or more of the following events shall occur:

        (i) If an Event of Default shall occur under any Lease Agreement; or

        (ii) If an Event of Default shall occur under the Credit Agreement; or

        (iii) If Guarantor shall fail to pay any part of the Obligations when
due; or

        (iv) If any representations or warranties made by Guarantor herein 
shall be false or misleading in any material respect on the date made; or

        (v) If there shall be a default in the performance or observance of any
other term, covenant or condition contained in this Guarantee (other than a
default described in subparagraph (iii) above), which default shall continue
for more than thirty (30) days; or

        (vi) If an "Event of Default," as defined and provided in (a) the
Teachers Agreement, or (b) that certain Revolving Credit Loan Agreement dated
as of July 7, 1992 between Guarantor and First Interstate Bank of Texas,
N.A., or (c) that certain Revolving Credit Loan Agreement dated July 7, 1992
between Guarantor and Texas Commerce Bank, National Association, (d) that
certain Revolving Credit Loan Agreement dated July 7, 1992, between Guarantor
and National Westminster Bank, Plc, or (e) in any renewals, extensions,
amendments, modifications, replacements, and substitutions of any of the
foregoing, shall occur and be continuing for any reason whatsoever;

        (vii) Guarantor or any Subsidiary defaults in any payment on any other
obligation for money borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property whether
or not secured by a purchase money mortgage or any obligation under notes
payable or drafts accepted representing extensions of credit) beyond any
period of grace provided with respect thereto, or Guarantor or any Subsidiary
fails to perform or observe any other agreement, term or condition contained
in any agreement under which any such obligation is created (or if any other
event thereunder or under any such agreement shall occur and be continuing)
and the effect of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such holder
or holders) to cause, such obligation to become due prior to any stated
maturity, provided that the aggregate amount of all obligations as to which
such a default shall occur and be continuing or such a failure or other event
causing or permitting acceleration shall occur and be continuing exceeds five
million dollars ($5,000,000); then, and in any such event, and in addition to
all other rights and remedies at law and in equity available to Lessor and
the Agent and Banks (as defined in the Credit Agreement) as a result of such
event, Guarantor shall at the election of the Agent or Majority Banks (as
defined in the Credit Agreement) immediately pay to the Agent, for the
account of Banks, without notice or demand, an amount equal to the sum of (a)
the Total Costs outstanding and not reimbursed with respect to all properties
covered by all Lease Agreements then in effect, (b) accrued and unpaid
interest thereon at the Applicable Rate as set forth in the Lease Agreements,
and (c) all other amounts not included within the term Total Cost (as defined
in the Lease Agreements) which are then due and payable under the Lease
Agreements.  All amounts paid by Guarantor to the Agent under this Section 14
shall be immediately deposited in the Collection Account established pursuant
to Section 2.02 of the Absolute Assignment of Rents, Income and Leases, dated
December 30, 1992 (the "Absolute Assignment") executed by Lessor to the
Agent, and shall be invested, withdrawn and paid in accordance with the
provisions of such Absolute Assignment.  It is understood that any payments
made by Guarantor to Lessor under this Guarantee shall not release or
discharge Guarantor from its obligations hereunder until all of the
Obligations have been fully and finally paid to Lessor.  All amounts payable
by Guarantor hereunder shall be credited against amounts otherwise payable by
Lessee under the Lease Agreements for the remainder of their respective
terms, provided that if any of the Lease Agreements have been terminated or
if for any other reason sufficient credits cannot be given to Lessee, then
such payments shall nevertheless be retained and applied pursuant to the
Absolute Assignment and no further credits shall be given to Lessee.

    (b) Guarantor acknowledges that the execution and delivery of this
Guarantee was an express condition to the extension by the Banks of the
credit facility to Lessor pursuant to the Credit Agreement, and that such
credit facility has enabled Guarantor to open additional stores and expand
its business in furtherance of its business plan.  Guarantor further
acknowledges that this Guarantee has been pledged as additional collateral to
the Agent, for the benefit of Agent and Banks, pursuant to the Credit
Agreement and that the covenants of Guarantor contained in this Section 14
have been required by the Banks as separate and distinct covenants in
addition to the guarantee of the Lease Agreements contained herein. 
Accordingly, any payment made by Guarantor under this Section 14 shall be
deemed to be an agreed guarantee payment without regard to the status of any
Lease Agreement or Lessee's rights or obligations thereunder; and in no event
and under no circumstance shall any such payment be repayable or refundable
to Guarantor for any reason or under any circumstance, and Guarantor agrees
to look solely to Lessee under its limited right to subrogation for the
recovery of any such sum.

    (c) ALL AMOUNTS PAYABLE BY GUARANTOR UNDER THIS LEASE GUARANTEE ARE
PAYABLE WITHOUT OFFSET, COUNTERCLAIM OR DEDUCTION OF WHATEVER KIND AND ARE
NOT CONDITIONED UPON, AND CANNOT BE AFFECTED IN ANY WAY BY ANY FUTURE EVENT,
OCCURRENCE OR ACTION BY ANY PARTY, AND GUARANTOR UNDERSTANDS AND AGREES THAT
ALL SUCH AMOUNTS SHALL BE PAYABLE NOTWITHSTANDING ANY FACT OR CIRCUMSTANCE
(INCLUDING WITHOUT LIMITATION THE BANKRUPTCY OF OR A SIMILAR EVENT AFFECTING
LESSEE) AT ANY TIME AFFECTING LESSEE OR ANY LEASE AGREEMENT, WHETHER CAUSED
OR CONTRIBUTED TO BY LESSEE, LESSOR OR ANY OTHER PARTY.

    15.     Arbitration Program.

    (a) Binding Arbitration.  Upon the demand of any party, whether made
before or after the institution of any judicial proceeding, any Dispute (as
defined below) shall be resolved by binding arbitration in accordance with
the terms of this Arbitration Program.  A "Dispute" shall include any action,
dispute, claim, or controversy of any kind (e.g., whether in contract or in
tort, statutory or common law, legal or equitable, or otherwise) now existing
or hereafter arising between the parties in any way arising out of,
pertaining to or in connection with (1) the agreement, document or instrument
to which this Arbitration Program is attached or in which it is referred to
or any related agreements, documents, or instruments (the "Documents"), (2)
all past, present or future loans, notes instruments, drafts, credits,
accounts, deposit accounts, safe deposit boxes, safekeeping agreements,
guarantees, letters of credit, goods or services, or other transactions,
contracts or agreements of any kind whatsoever, (3) any past, present or
future incidents, omissions, acts, practices, or occurrences causing injury
to either party whereby the other party or its agents, employees, or
representatives may be liable, in whole or in part, or (4) any aspect of the
past, present or future relationships of the parties including any agency,
independent contractor or employment relationship but excluding claims for
workers' compensation and unemployment benefits ("Relationship"), Any party
to this Arbitration Program may, by summary proceedings (e.g., a plea in
abatement or motion to stay further proceedings), bring any action in court
to compel arbitration of any Disputes.  Any party who fails or refuses to
submit to binding arbitration following a lawful demand by the opposing party
shall bear all costs and expenses incurred by the opposing party in
compelling arbitration of any Dispute.  The parties agree that by engaging in
activities with or involving each other as described above, they are
participating in transactions involving interstate commerce.

    (b) Governing Rules.  All Disputes between the parties shall be resolved
by binding arbitration administered by the American Arbitration Association
(the "AAA") in accordance with, and in the following priority: (1) the terms
of this Arbitration Program, (2) the Commercial Arbitration Rules of the AAA,
(3) the Federal Arbitration Act (Title 9 of the United States Code) and (4)
to the extent the foregoing are inapplicable, unenforceable or invalid, the
laws of the State of Texas.  The validity and enforceability of this
Arbitration Program shall be determined in accordance with this same order of
priority.  In the event of any inconsistency between this Arbitration Program
and such rules and statutes, this Arbitration Program shall control. 
Judgment upon any award rendered hereunder may be entered in any court having
jurisdiction; provided, however, that nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C.  91 or Texas Banking Code Art.  342-609.

    (c) No Waiver; Preservation of Remedies; Multiple Parties.  No provision
of, nor the exercise of any rights under, this Arbitration Program shall
limit the right of any party, during any Dispute to seek, use, and employ
ancillary or preliminary remedies, judicial or otherwise, for the purpose of
realizing upon, preserving, protecting, foreclosing or proceeding under
forcible entry and detainer for possession of any real or personal property,
and any such action shall not be deemed an election of remedies.  Such rights
shall include, without limitation, rights and remedies relating to (1)
foreclosing against any real or personal property collateral or other
security by the exercise of a power of sale under a deed of trust, mortgage,
or other security agreement or instrument, or applicable law, (2) exercising
self-help remedies (including setoff rights) or (3) obtaining provisional or
ancillary remedies such as injunctive relief, sequestration, attachment,
garnishment, or the appointment of a receiver from a court having
jurisdiction.  Such rights can be exercised at any time except to the extent
such action is contrary to a final award or decision in any arbitration
proceeding.  The institution and maintenance of an action for judicial relief
or pursuit of provisional or ancillary remedies or exercise of self-help
remedies shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the Dispute to arbitration nor render inapplicable
the compulsory arbitration provisions hereof.  In Disputes involving
indebtedness or other monetary obligations, each party agrees that the other
party may proceed against all liable persons, jointly and severally, or
against one or more of them, less than all, without impairing rights against
other liable persons.  Nor shall a party be required to join the principal
obligor or any other liable persons (e.g., sureties or guarantors) in any
proceeding against a particular person.  A party may release or settle with
one or more liable persons as the party deems fit without releasing or
impairing rights to proceed against any persons not so released.

    (d) Statute of Limitations.  All statutes of limitation shall apply to any
proceeding in accordance with this Arbitration Program.

    (e) Arbitrator Powers and Qualifications; Awards; Modification or Vacation
of Award.  Arbitrators are empowered to resolve Disputes by summary rulings
substantially similar to summary judgments and motions to dismiss. 
Arbitrators shall resolve all Disputes in accordance with the applicable
substantive law.  Any arbitrator selected shall be required to be a
practicing attorney licensed to practice law in the State of Texas and shall
be required to be experienced and knowledgeable in the substantive laws
applicable to the subject matter of the Dispute.  With respect to a Dispute
in which the claims or amounts in controversy do not exceed $1,000,000, a
single arbitrator shall be chosen and shall resolve the Dispute.  In such
case, the arbitrator shall be required to make specific, written findings of
fact, and shall have authority to render an award up to but not to exceed
$1,000,000, including all damages of any kind whatsoever, including costs,
fees and expenses.  A Dispute involving claims or amounts in controversy
exceeding $1,000,000 shall be decided by a majority vote of a panel of three
arbitrators (an "Arbitration Panel"), the determination of any two of the
three arbitrators constituting the determination of the Arbitration Panel,
provided, however, that all three Arbitrators on the Arbitration Panel must
actively participate in all hearings and deliberations.  Arbitrators,
including any Arbitration Panel, may grant any remedy or relief deemed just
and equitable and within the scope of this Arbitration Program and may also
grant such ancillary relief as is necessary to make effective any award. 
Arbitration Panels shall be required to make specific, written findings of
fact and conclusions of law, and in such proceedings before an Arbitration
Panel only, the parties shall have the additional right to seek vacation or
modification of any award of an Arbitration Panel that is based in whole, or
in part, on an incorrect or erroneous ruling of law by appeal to a Federal or
State Court of Appeals, following the entry of judgment on the award in
Federal or State District Court, as appropriate.  For these purposes, the
award and judgment entered by the Federal or State District Court shall be
considered to be the same as the award and judgment of the Arbitration Panel. 
All requirements applicable to appeals from any Federal or State District
Court judgment shall be applicable to appeals from judgments entered on
decisions rendered by Arbitration Panels.  The Appellate Courts shall have
the power and authority to vacate or modify an award based upon a
determination that there has been an incorrect or erroneous ruling of law. 
The Appellate Court shall also have the power to reverse and/or remand the
decision of an Arbitration Panel.  Subject to the foregoing, the
determination of an Arbitrator or Arbitration Panel shall be binding on all
parties and shall not be subject to further review or appeal except as
otherwise allowed by applicable law.

    (f) Other Matters and Miscellaneous.  To the maximum extent practicable,
the AAA, the Arbitrator (or the Arbitration Panel, as appropriate) and the
parties shall take any action necessary to require that an arbitration
proceeding hereunder be concluded within 180 days of the filing of the
Dispute with the AAA.  Arbitration proceedings hereunder shall be conducted
at one of the following locations in the State of Texas agreed to in writing
by the parties or, in the absence of such agreement, selected by the AAA: (1)
Austin; (2) Dallas; (3) Fort Worth; (4) Houston; or (5) San Antonio. 
Arbitrators shall be empowered to impose sanctions and to take such other
actions as they deem necessary to the same extent a judge could do pursuant
to the Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure
and applicable law.  With respect to any Dispute, each party agrees that all
discovery activities shall be expressly limited to matters directly relevant
to the Dispute and any Arbitrator, Arbitration Panel and the AAA shall be
required to fully enforce this requirement.  This Arbitration Program
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior discussions, arrangements, negotiations, and
other communications on dispute resolution.  The provisions of this
Arbitration Program shall survive any termination, amendment, or expiration
of the Documents or the Relationship, unless the parties otherwise expressly
agree in writing.  To the extent permitted by applicable law, Arbitrators,
including any Arbitration Panel, shall have the power to award recovery of
all costs and fees (including attorneys' fees, administrative fees, and
arbitrators' fees) to the prevailing party.  This Arbitration Program may be
amended, changed, or modified only by the express provisions of a writing
which specifically refers to this Arbitration Program and which is signed by
all the parties hereto.  If any term, covenant, condition, or provision of
this Arbitration Program is found to be unlawful, invalid or unenforceable,
such illegality or invalidity or unenforceability shall not affect the
legality, validity, or enforceability of the remaining parts of this
Arbitration Program, and all such remaining parts hereof shall be valid and
enforceable and have full force and effect as if the illegal, invalid, or
unenforceable part had not been included.  The captions or headings in this
Arbitration Program are for convenience of reference only and are not
intended to constitute any part of the body or text of this Arbitration
Program.  Each party agrees to keep all Disputes and arbitration proceedings
strictly confidential, except for disclosures of information required in the
ordinary course of business of the parties or by applicable law or
regulation.  To the maximum extent permitted by law, this Arbitration Program
modifies and supersedes any and all prior agreements for arbitration between
the parties.

    16.     Notices.   All notices, demands and other communications between
Lessor and the Guarantor under this Guarantee shall be in writing, which may
include cable, telex or telecopy) and shall be delivered or sent to the
address or telex number shown below, or to such other address, telex or
telecopy number as either of us may be written notice to the other have
designated for such purpose.  Any such notice, demand or other communication
shall not be effective until actually received.

If to Lessee:            Pier Group, Inc.
                         c/o Bear Stearns
                         245 Park Avenue
                         New York, New York 10167
                         Attention: James D.  Price

If to the Guarantor:     Pier 1 Imports, Inc.  
                         301 Commerce Street, Suite 600 
                         Fort Worth, Texas 76102 
                         Attention: Robert G.  Herndon,
                         Executive Vice President and CFO
                         Telex: 203955 
                         Telecopier: 817-332-5727 
                         Telephone: 817-878-8000

    17.  Term.   This Guarantee is not limited to any particular period of
time but shall continue in full force and effect until all of the Obligations
have been fully and finally paid or have been otherwise discharged by Lessor,
and the Guarantor shall not be released from any obligations or liability
hereunder until such full payment or discharge shall have occurred.

    18.     Governing Law. This Guarantee shall be governed by and construed in
accordance with the laws of the State of Texas.  This Guarantee is
performable in Tarrant County, Texas, and the Guarantor hereby waive the
right to be sued elsewhere.

    19.     FINAL AGREEMENT.  THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER THEREOF AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
                             GUARANTOR:

                             PIER 1 IMPORTS, INC.

                             By:____________________
                                Robert G.  Herndon,
                                Executive Vice President

                             LESSOR:

                             PIER GROUP, INC.

                             By:____________________
                                Robert G.  Herndon,
                                President

Agreed and Accepted as of 
the date first above written:

ASSIGNEE:

FIRST INTERSTATE BANK OF 
 TEXAS, N.A., as Agent


By:____________________
   Terry R.  Dallas,
   Senior Vice President

                                 FIRST AMENDMENT
                                       TO
                                 LEASE GUARANTEE


    This First Amendment to Lease Guarantee is made effective as of April 28,
1993 by and between Pier 1 Imports, Inc., a Delaware corporation, (the
"Guarantor"), and Pier Group, Inc., a Delaware corporation ("Lessor").

    WHEREAS, the Guarantor and Lessor entered into that certain Lease
Guarantee dated December 30, 1992 (the "Lease Guarantee") relating to leases
between Lessor and Pier Imports (U.S.), Inc., and leases between Lessor and
Wolfe Nursery, Inc.; and

    WHEREAS, Guarantor has sold (the "Sale") all of its capital stock in
Sunbelt Nursery Group, Inc. to a wholly-owned subsidiary of General Host
Corporation, a New York corporation ("General Host") in exchange for
1,940,000 shares of common stock of General Host; and

    WHEREAS, the parties desire to amend the Lease Guarantee in certain
respects to take into account the terms of the Sale and the Credit Facilities
Agreement dated April 28, 1993 between Pier 1 Imports, Inc. and Sunbelt
Nursery Group, Inc. executed in connection therewith.

    NOW, THEREFORE, for and in consideration of and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor and Lessor hereby agree as follows:

                                 1.

    Unless otherwise specified herein, terms defined in the Lease Guarantee
shall have the same meaning when used herein and all section references refer
to sections in the Lease Guarantee.

                                 2.

    The first paragraph on the first page of the Lease Guarantee is amended to
read in its entirety as follows:

        WHEREAS, Lessor has entered into and will continue to enter into
    lease agreements (collectively, the "Lease Agreements," whether now or
    hereafter in effect), from time to time with Pier 1 Import (U.S.), Inc.,
    a Delaware corporation and wholly-owned subsidiary of Guarantor and with
    Pier Lease, Inc., a Delaware corporation and an affiliate of Guarantor
    (each of which is hereinafter referred to as the "Lessee"); and

                                 3.

    The definitions of "Lessee" and "Restricted Investments" in Section 3 of
the Lease Guarantee are amended to read in their entirety as follows:

        "Lessee" shall mean Pier 1 Imports (U.S.), Inc., a Delaware
    corporation, or Pier Lease, Inc., a Delaware corporation.

        "Restricted Investments" shall mean any investments in or loans and
    advances to, other Persons except (i) obligations of the United States
    government due within one (1) year, (ii) certificates of deposit
    (including Eurodollar deposits) and bankers' acceptances (from commercial
    banks having capital resources in excess of $100 million) due within one
    (1) year and payable in U.S. dollars, (iii) commercial paper rated P-l by
    Moody's or A-l by Standard & Poor's, (iv) debt of any state or political
    subdivision that is rated A or better by Moody's or Standard' & Poor's and
    that matures within one (1) year, (v) obligations or securities of a
    Subsidiary or a corporation which immediately after such purchase or
    acquisition will be a Subsidiary, (vi) stock or securities received in
    settlement of debts owing to the Guarantor or any Subsidiary not exceeding
    $5,000,000.00, including receivables arising from the sale of goods and
    services in the ordinary course of business of the Guarantor and its
    Subsidiaries, (vii) travel or like advances to officers and/or employees
    in the ordinary course of business and loans to officers and/or employees
    made on or before May 24, 1991 for the purchase of capital stock of the
    Guarantor (including the capitalization of up to one-half of the accrued
    interest on such loans to officers and/or employees), with all such travel
    or like advances and loans not exceeding $10,000,000.00 in the aggregate,
    (viii) not more than 1,940,000 shares of the common stock of General Host
    Corporation, a New York corporation, plus any additional shares which are
    received as a result of stock dividends, stock split or combination of
    shares, recapitalization, reclassification, merger or similar capital or
    corporate structure change, (ix) any loans or guaranties made by the
    Guarantor or any of its Subsidiaries to or for the benefit of Sunbelt or
    any of its Subsidiaries not exceeding an aggregate principal amount of
    $12,000,000 at any one time outstanding, (x) any loan participation
    program(s) for a period not to exceed seven (7) days with credit risk to
    companies with long-term debt rating by Standard & Poor's or Moody's of
    not less than single A, (xi) any loans or guaranties made by the Guarantor
    or any of its Subsidiaries to or for the benefit of Pier Retail Group
    Limited, a company organized under the laws of the United Kingdom, not
    exceeding an aggregate principal amount of $6,500,000 at any one time
    outstanding, and (xii) any stock or securities of Sunbelt which the
    Guarantor or any of its Subsidiaries acquires through the exercise of its
    remedies with respect to any lien or security interest held by Guarantor
    or any of its Subsidiaries on such stock or securities.

                                 4.

    Section 8(d)(ii) of the Lease Guarantee is amended to read in its entirety
as follows:

        (ii) Funded Debt -- Other than for the Guaranteed Debt by the
    Guarantor or any of its Subsidiaries described in subsection (ix) of the
    definition of "Restricted Investments" in Section 3 hereof (the "Sunbelt
    Debt Guarantee"), create, incur, assume or suffer to come into existence
    any additional Funded Debt unless after giving effect thereto (i) Senior
    Funded Debt is less than 50% of Consolidated Net Tangible Assets and
    (ii) all Funded Debt in the aggregate is less than sixty percent (60%)
    of Consolidated Net Tangible Assets. With respect to Subsidiaries which
    are not Guarantors, create, incur, assume or suffer to come into
    existence any additional Funded Debt by such Subsidiaries unless after
    giving effect thereto all Funded Debt by such Subsidiaries in the
    aggregate is less than 70% of Consolidated Net Tangible Assets of such
    Subsidiaries. As used in this paragraph 8(ii), (A) prior to demand being
    made upon the Guarantor to pay its obligations under the Sunbelt Debt
    Guarantee, the term Funded Debt (individually and as used in the
    definition of Senior Funded Debt) shall only include the Guaranteed Debt
    of Sunbelt to the extent the aggregate amount of such Guaranteed Debt of
    Sunbelt exceeds the sum of Sunbelt's Cash Equivalents, and (B) from and
    after demand being made upon the Guarantor to pay its obligations under
    the Sunbelt Debt Guarantee, the term Funded Debt (individually and as
    used in the definition of Senior Funded Debt) shall include such
    Guaranteed Debt of Sunbelt.

                                     5.

    Section 8(e) of the Lease Guarantee is amended to read in its entirety as
follows:

        (e) Investments. Make or permit any of its Subsidiaries to make any
    Investment, except (i) purchases of majority of the outstanding stock of
    any corporation, (ii) Investments in Guarantor, any of its Subsidiaries,
    or any Person that is wholly-owned by Guarantor and/or its Subsidiaries,
    not to exceed in the aggregate twenty-five million dollars ($25,000,000)
    (iii) Investments in Cash Equivalents or readily marketable securities
    having a quoted market value, (iv) Investments in Persons to the extent
    permitted by Section 8(c) hereof, (v) Investments in any partnership,
    corporation or joint venture the sole purpose of which is to obtain land
    and improvements used in the ordinary course of business of Guarantor or
    any of its Subsidiaries, which Investments under this subsection (v)
    shall not exceed $75,000,000 in the aggregate, (vi) loans or advances to
    employees in the ordinary course of business that do not exceed
    $5,000,000 in the aggregate, (vii) any loan or guaranties made by
    Guarantor or any of its Subsidiaries to or for the benefit of Sunbelt or
    any of its Subsidiaries not exceeding an aggregate principal amount of
    $12,000,000 at any one time outstanding, (viii) any loans or guaranties
    made by Guarantor or any of its Subsidiaries to or for the benefit of
    Pier Retail Group Limited not exceeding an aggregate principal amount of
    $6,500,000 at any one time outstanding, (ix) any stock or securities of
    Sunbelt which Guarantor or any of it Subsidiaries acquires through
    foreclosure of any lien or security interest held by Guarantor or any of
    its Subsidiaries on such stock or securities, and (x) loan participation
    programs for a period not to exceed seven days with credit risk to
    companies with long-term debt rating by Standard Poor's or Moody's of
    not less than single A.

                                     6.

    Section 8(g) of the Lease Guarantee is amended to read in its entirety as
follows:

        (g) Guaranteed Debt. Create, assume or suffer to exist or permit any
    of its Subsidiaries to create, suffer or exist any Guaranteed Debt
    except (i) Guaranteed Debt in existence on the date hereof, (ii)
    Guaranteed Debt that is secured by assets of the primary obligor having
    a fair market value at least equal to the amount of such Guaranteed
    Debt, as determined by an independent qualified appraiser selected by
    Guarantor (which appraisal, at Lessor's or any Subsequent Holder's
    reasonable request and at Lessor's expense, shall be promptly updated,
    but such request shall not be made more often than once every 12
    months), and (iii) Guaranteed Debt of Guarantor or a Subsidiary on the
    consolidated balance sheet of Guarantor and its Subsidiaries; provided,
    however, that in no event shall the aggregate amount of all consolidated
    Guaranteed Debt (other than the Guaranteed Debt described in (iii)
    above) of Guarantor and its Subsidiaries exceed the Consolidated
    Tangible Net Worth, (iv) the Sunbelt Debt Guarantee and (v) any
    Guaranteed Debt by Guarantor or any of its Subsidiaries described in
    subsection (xi) of the definition of "Restricted Investments" in Section
    3 hereof.

                                     7.

    The effectiveness of this First Amendment is subject to the conditions
precedent that the Lessor shall have received Officers' Certificates, dated
the date hereof, certifying inter alia:

            (a) a true and correct copy of the resolutions adopted by the
        Board of Directors or Executive Committees of Guarantor;

            (b) the incumbency and specimen signatures of the Persons
        executing any documents on behalf of each of the Guarantors;

            (c) the truth as of the date first written above of the
        representations and warranties made by Guarantors in the Lease
        Guarantee, as amended hereby; and

            (d) the absence of the occurrence and continuance of any Default
        or Event of Default after giving effect to this First Amendment.

                                     8.

    Except as amended above, the Lease Guarantee is ratified and confirmed and
shall remain in full force and effect.

                                     9.

    This First Amendment to Lease Guarantee shall be binding upon and inure to
the benefit of the parties and their successors and assigns.

                                     10.

    THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
RELATING TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

    IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Lease Guarantee to be executed by their respective officers thereunto duly
authorized, as of the date first written above.

                                          GUARANTOR:

                                          PIER 1 IMPORTS, INC.


                                          By:_____________________
                                             Robert G. Herndon,
                                             Executive Vice President


Agreed and Accepted as of
the date first above written:

ASSIGNEE:

FIRST INTERSTATE BANK OF
  TEXAS, N.A., as Agent


By:_______________________
   Terry R. Dallas,
   Senior Vice President

                 SECOND AMENDMENT TO LEASE GUARANTEE


    This Second Amendment to Lease Guarantee (hereinafter referred to as "this
Amendment") is entered into as of the 25th day of February, 1994, among PIER
1 IMPORTS, INC., a Delaware corporation (the "Guarantor") and PIER GROUP,
INC., a Delaware corporation ("Lessor").

    WHEREAS, Guarantor and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, whereby Guarantor guaranteed
the full payment and performance when due of all rent, indebtedness, and
obligations now or hereafter existing or owing to Lessor pursuant to lease
agreements from time to time entered into by Pier Lease, Inc., a Delaware
corporation, and by Pier 1 Imports (U.S.), Inc., a Delaware corporation;

    WHEREAS, the Lease Guarantee was amended by a First Amendment to Lease
Guarantee dated as of April 28, 1993 (the "First Amendment");

    WHEREAS, Guarantor and Lessor have agreed to amend the Lease Guarantee as
more fully set forth hereinafter;

    NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantor and the Lessor agree as follows:

    1.      Subsection (v) of Section 8(d) of the Lease Guarantee is hereby
amended to read as follows:  

        (v)      Maintenance of Fixed Charge Coverage -- Permit the ratio of 
Cash Flow Available for Fixed Charges to Fixed Charges, to be determined on the
last day of each fiscal quarter for the preceding 12 months, to be less than
(i) 1.3 to 1 for each of the fiscal quarters ending during the period from
the date of this Guarantee through February 27, 1993, (ii) 1.4 to 1 for each
of the fiscal quarters ending during the period from February 28, 1993,
through February 25, 1994, (iii) 1.2 to 1 for each of the fiscal quarters
ending during the period from February 26, 1994, to November 30, 1994, and
(iv) 1.25 to 1 for each fiscal quarter ending thereafter.

    2.      Except as herein specifically amended and modified the Lease
Guarantee and First Amendment is unchanged and continues in full force and
effect.  

    3.      Guarantor hereby consents and agrees to this Amendment and the
Guarantor hereby confirms and ratifies the Lease Guarantee's and First
Amendment's existence and each and every term, condition, and covenant
therein contained, to the same extent and as though the same were set forth
herein in full.

    4.    This Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original.  In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.

    5.      The Lease Guarantee, First Amendment and this Amendment constitute
a "Loan Agreement" as defined in Section 26.02(a) of the Texas Business and
Commerce Code, represent the final and entire agreement and understanding
among the Guarantor and the Lessor relating to the subject matter hereof and
thereof, supersede all prior proposals, agreements and understandings
relating to the subject matter and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties.  There
are no unwritten oral agreements among the parties.

    IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first written above.

                                     GUARANTOR:

                                     PIER 1 IMPORTS, INC.



                                     By:___________________________
                                        Robert G. Herndon,
                                        Executive Vice President

                                     LESSOR:

                                     PIER GROUP, INC.



                                     By:___________________________
                                        George R. Mihalko, President

AGREED AND ACCEPTED as of the date first above written:


                                     ASSIGNEE:

                                     FIRST INTERSTATE BANK OF TEXAS, N.A., 
                                     as Agent


                                     By:___________________________
                                     Name:_________________________
                                     Title:________________________

                               EXHIBIT 10.14

                               LEASE GUARANTEE


    THIS LEASE GUARANTEE is made and entered into this 30th day of December
1992 between PIER l IMPORTS, INC., a Delaware corporation (the "Guarantor"),
and PIER l IMPORTS (U.S.), INC., a Delaware corporation (Pier 1 Imports, Inc.
and Pier l Imports (U.S.), Inc. are hereinafter collectively referred to as
the "Guarantors") and PIER GROUP, INC., a Delaware corporation ("Lessor").

    WHEREAS, Lessor has entered into and will continue to enter into lease
agreements (collectively, the "Lease Agreements," whether now or hereafter in
effect), from time to time with Wolfe Nursery, Inc., a Delaware corporation
and an affiliate of Guarantor, (hereinafter referred to as the "Lessee"); and

    WHEREAS, the Lease Agreements have been and will be entered into by Lessor
and Lessee with respect to land and improvements which have been and are to
be financed or refinance pursuant to the terms of a certain Restated
Revolving Credit Agreement dated December 30, 1992 (the "Credit Agreement")
among Lessor, the Banks (as defined herein) and First Interstate Bank of
Texas, N.A., as agent; and

    WHEREAS, in consideration of Lessor entering into Lease Agreements from
time to time with Lessee, Guarantor has agreed to guarantee the full payment
and performance when due of all rent, indebtedness, and obligations now or
hereafter existing or owing to Lestor by any Lessee pursuant to the Lease
Agreements.

    NOW, THEREFORE, for and in consideration of the mutual  covenants herein
contained, Lessor and Lessee hereby agree as follows

    1.  Guarantee for value received, and in consideration of Lessor entering
into Lease Agreements from time to time (whether now or hereafter in effect)
with Lessee, Guarantors do hereby jointly, severally and unconditionally
guarantee the full payment and performance when due, whether at the stated
due date, by acceleration or otherwise, of any and all rent, indebtedness,
obligations and other amounts of every kind, howsoever created, arising, or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing or owing to Lessor by any Lessee pursuant to the Lease
Agreements (all such indebtedness and obligations being hereinafter
collectively called the "Obligations").   Guarantors hereby agree that upon
any default by the Lessee in the payment or performance of any of the
Obligations when and as due, the Guarantors will forthwith pay and/or perform
the same immediately upon demand and without notice.

    2.  Guarantee, Continuing, Absolute, Unlimited.  This Guarantee is a
continuing, absolute and unlimited Guarantee of payment as primary obligor
and not as surety.  This Guarantee shall apply to all Obligations pursuant to
the Lease Agreements, without limitation as to either amount or period of
time.  The Obligations shall be conclusively presumed to have been created in
reliance on this Guarantee.  Lessor shall not be required to proceed first
against the Lessee or any other person, firm or corporation or against any
property securing any of the Obligations before resorting to the Guarantors
or either of them for payment.  This Guarantee shall be construed as a
guarantee of payment and performance without regard to the validity,
regularity, or enforceability of any of the Obligations or the rejection of
the Lease Agreements in bankruptcy, and notwithstanding any claim, defense
(other than payment by the Guarantor) or right of set-off which the Lessee or
either of the Guarantors may have against Lessor, including any such claim,
defense or right of set-off based on any present or future law or order of
any government (de jure or de facto), or of any agency thereof or court of
law purporting to reduce, amend or otherwise affect any obligations of the
Lessee, or any other obligor, or to vary any terms of payments, and without
regard to any other circumstances which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor.  The Guarantors agree that
this Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time payment to Lessor of the Obligations or any part
thereof is rescinded or must otherwise be returned by Lessor upon the
insolvency, bankruptcy or reorganization of the Lessee, or otherwise, as
though such payment to Lessor had not been made.

    3.  Definitions.  Unless otherwise indicated, capitalized terms used
herein and not defined below shall have the respective meanings given to them
in the Lease Agreements.  In addition to the definitions provided in the
Lease Agreements, the following words and terms shall have the meanings
indicated below:

    "Affiliate" of any designated Person means any Person that has a
relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common
control with the other, or holds or beneficially owns five percent (5%) or
more of any class of voting securities of the other.  For this purpose,
"control" means the power, direct or indirect, of one Person to direct or
cause direction of the management and policies of another, whether by
contract, through voting securities or otherwise.  Notwithstanding the
foregoing, no Person shall be deemed to be an Affiliate of another solely by
reason of such Person's being a participant in a joint operating group or
joint undivided ownership group.

    "Agent" shall mean First Interstate Bank of Texas, N.A., a national
banking association, or any successor agent under the Credit Agreement.

    "Banks" shall mean First Interstate Bank of Texas, N.A.  and the other
banks named in Section 2.01 of the Credit Agreement, as such Credit Agreement
may be amended, modified or supplemented from time to time.  "Bank" shall
mean any of such Banks.

    "Capitalized Lease Obligations" shall mean any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of the
Guarantor or any Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.

    "Cash Equivalents" shall mean any investments permitted under (i), (ii),
(iii), or (iv) of the definition of Restricted Investments and cash.

    "Cash Flow Available for Fixed Charges" shall mean the sum of Consolidated
Net Income plus depreciation and amortization plus interest expense plus
taxes plus operating lease expense, as determined in accordance with GAAP,
less Maintenance Capital Expenditures for the Guarantor on a Consolidated
basis.

    "Code" shall mean the Internal Revenue Code of 1986, as amended.

    "Consolidated" shall mean the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries.  References herein to
a Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc., refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc.  of such Person
and its properly consolidated subsidiaries.

    "Consolidated Current Assets" shall mean the current assets of the
Guarantor and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.

    "Consolidated Current Liabilities" shall mean the current liabilities of
the Guarantor and its Subsidiaries as determined on a Consolidated basis in
accordance with GAAP.

    "Consolidated Funded Debt" shall mean Funded Debt of the Guarantor and its
Subsidiaries.

    "Consolidated Net Income" shall mean (i) for purposes of calculating Cash
Flow Available for Fixed Charges, Consolidated gross revenues of the
Guarantor less all operating and non-operating expenses of the Guarantor,
including all write-downs of assets and other charges of a proper character
(including, without limitation, current and deferred taxes on income,
provision for taxes on unremitted foreign earnings which are included in
gross revenues, and current additions to reserves), but not including in
gross revenues any gains (net of expenses and taxes applicable thereto) in
excess of losses resulting from the sale, conversion or other disposition of
capital assets (i.e., assets other than current assets), any gains or losses
arising from the acquisition of outstanding debt securities of the Guarantor
or any Subsidiary, any gains resulting from the write-up of assets, any
equity of the Guarantor or any Subsidiary in the undistributed earnings of
any Perscn which is not a Subsidiary, or any portion of the net income of any
Subsidiary which for any reason is unavailable for payment of dividends to
the Guarantor or to another Subsidiary, or any earnings of any Person
acquired by the Guarantor or any Subsidiary through purchase, merger,
consolidation or otherwise for any year prior to the year of acquisition,
merger or consolidation, or any deferred credits representing the excess of
any equity in any Subsidiary at the date of acquisition over the cost of
investment in such Subsidiary, all determined in accordance with GAAP, and
(ii) for all other purposes, net income of the Guarantor and its Subsidiaries
as determined on a Consolidated basis in accordance with GAAP.

    "Consolidated Net Tangible Assets" shall mean all of the assets of the
Guarantor and its Subsidiaries less Intangible Assets, Consolidated Current
Liabilities, long term liabilities (other than Funded Debt and Capitalized
Lease Obligations) and all deferrals of the Guarantor and its Subsidiaries.

    "Consolidated Tangible Assets" shall mean all of the assets of Guarantor
and its Subsidiaries less Intangible Assets.

    "Consolidated Tangible Net Worth" shall mean the sum of consolidated
capital, surplus, and retained earnings of the Guarantor less Intangible
Assets of the Guarantor, determined in accordance with GAAP.

    "Credit Agreement" shall mean that certain Restated Revolving Credit
Agreement of even date herewith between Pier Group, Inc., Agent and the
Banks.

    "Debt" shall mean with respect to any Person, (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) all obligations under leases which shall have been or should
be, in accordance with GAAP, recorded as Capitalized Lease Obligations in
respect of which such Person is liable as lessee, and (iii) any other
indebtedness required to be recorded on the Consolidated financial statements
of such Person in accordance with GAAP.  Any changes in GAAP requiring
operating leases to be included as indebtedness in the Consolidated financial
statements of the Guarantor will be effective, for purposes of determining
Debt hereunder, only for leases entered into or renewed after the date of the
required implementation of such changes in GAAP.

    "Default" means the occurrence of any event which, with the lapse of time,
notice or otherwise, would constitute an event specified under Section 14(a)
of this Guarantee or (ii) constitute a default or an event of default under
any instrument securing or evidencing any Debt of the Guarantor or any of its
Subsidiaries.

    "Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C.  Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Recourse Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. Section 651 et seq.), as such laws have been or hereafter may
be amended or supplemented, and any and all analogous future federal, or
present and future state or local laws, and similar laws of jurisdictions
other than the United States, to which Guarantor or any of its Subsidiaries
or any of its or their properties are subject.

    "ERISA" shall have the meaning given in Section 6(h) hereof.

    "FDIC" shall mean the Federal Deposit Insurance Corporation (or any
successor).

    "Fixed Charges" means the sum of payments under operating leases and
interest during the preceding 12-month period, as determined in accordance
with GAAP, for the Guarantor and its Subsidiaries on a Consolidated basis.

    "Funded Debt" shall mean, for Guarantor on a Consolidated basis, Debt
(including Guaranteed Debt and current maturities of "Funded Debt," as
defined herein) which (i) matures more than one (1) year from the date of its
determination or matures within one year from such date but is renewable or
extendable, at the option of the debtor, to a date more than one year from
such date, or (ii) arises under a revolving credit or similar agreement which
obligates the lender or lenders to extend credit during a period of more than
one year from such date; provided, however, that merchandise letters of
credit and bankers acceptances and similar credit instruments shall not be
deemed to be "Funded Debt" unless they have a stated maturity of more than
one (1) year, notwithstanding that the debtor may have the option to renew or
extend such maturity.

    "GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Account Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to circumstances as of the
date of determination.

    "Guarantee" shall mean this Lease Guarantee and all amendments,
modification, substitutions, and ratifications hereto.

    "Guaranteed Debt" shall mean, with respect to any Person, without
duplication, all Debt of another Person referred to in clause (i), (ii) or
(iii) of the definition of "Debt" guaranteed directly or indirectly in any
manner by such Person or in effect guaranteed directly or indirectly in any
manner by such Person.

    "Guarantor" shall mean Pier 1 Imports, Inc., a Delaware corporation.

    "Guarantors" shall mean Pier 1 Imports, Inc. and Pier 1 Imports (U.S.),
Inc., a Delaware corporation.

    "Intangible Assets" shall mean goodwill, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organizational expense,
unamortized debt discount and expense, the excess of cost of shares acquired
over book value of related assets and such other assets as are properly
classified as "intangible assets" in accordance with GAAP, but in no event
shall Intangible Assets include (i) current prepaid expenses of the Guarantor
or its Subsidiaries or (ii) receivables of any kind of the Guarantor or its
Subsidiaries.

    "Interest Expense" of a Person means interest payable on Indebtedness for
each fiscal quarter.

    "Investment" shall mean any direct or indirect purchase or other
acquisition of, or a beneficial interest in, capital stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Debt or accounts receivable of any
other Person which are not current assets or do not arise from sales to that
other Person in the ordinary course of business.

    "Investment Securities" shall mean (i) U.S. government obligations, (ii)
obligations, debentures, notes or other evidences of indebtedness issued or
guaranteed by any agency or instrumentality of the United States of America
acting pursuant to authority granted by the Congress of the United States of
America, (iii) Federal funds, unsecured certificates of deposit, time
deposits and banker's acceptances (in each case, having maturities not in
excess of one year) of any bank the short-term unsecured debt obligations of
which are rated by Standard & Poors Corporation in the highest category for
short-term obligations, and (iv) certificates of deposit and time deposits
which are fully insured as to principal and interest by the Federal Deposit
Insurance Corporation.

    "Law" shall mean all statutes, laws, ordinances, rules, regulations,
orders, writs, injunctions or decrees of any Tribunal.

    "Lease Agreements" shall have the meaning given in Section 1 hereof.

    "Lessee" shall have the meaning given in Section 1 hereof.

    "Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including without limitation, any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction.

    "Maintenance Capital Expenditures" shall mean, for any fiscal quarter, an
amount equal to the greater of (i) the product of four thousand five hundred
($4,500.00) times the average number of retail stores of the Guarantor on a
Consolidated basis open during the four immediately preceding fiscal quarters
or (ii) actual capital expenditures incurred by the Guarantor on a
Consolidated basis during such fiscal quarter for the maintenance and
improvement of its retail stores (other than capital expenditures incurred in
connection with new store openings).

    "Material Adverse Effect" shall mean any act, circumstance, or event that
(i) causes or reasonably could be expected to cause a Default under this
Guarantee or an Event of Default under the Credit Agreement, or (ii) is or
might be material and adverse to the financial condition or business
operations of the Guarantor and its Subsidiaries on a consolidated basis.

    "Obligations" shall have the meaning given in Section 1 hereof.

    "Officer's Certificate" shall mean a certificate signed in the name of
Guarantor by its Chief Executive Officer, President, one of its Executive
Vice Presidents, its Chief Financial Officer, or its Comptroller.

    "Operating Cash Flow" of a Person means the Consolidated Net Income from
continuing operations of such Person, determined in accordance with GAAP, for
the four fiscal quarters immediately preceding the date of determination,
prior to the payment or provision for payment of state and federal taxes,
plus (i) depreciation, (ii) amortization, and (iii) interest payable on
Indebtedness for the four fiscal quarters immediately preceding the date of
determination.

    "Operating Lease Expense" shall mean all rental expenses of the Guarantor
relating to real estate, but specifically excluding any rental expense of the
Guarantor relating to equipment.

    "PBGC" shall have the meaning given in Section 6(i) hereof.

    "Person" shall mean an individual, partnership, joint venture,
corporation, trust, Tribunal, unincorporated organization or government or
any department, agency or political subdivision thereof.

    "Plan" shall have the meaning given in Section 6(i) hereof.

    "Restricted Investments" shall mean any investments in or loans and
advances to, other Persons except (i) obligations of the United States
government due within one (1) year, (ii) certificates of deposit (including
Eurodollar deposits) and bankers' acceptances (from commercial banks having
capital resources in excess of $100 million) due within one (1) year and
payable in U.S. dollars, (iii) commercial paper rated P-l by Moody's or A-l
by Standard & Poor's, (iv) debt of any state or political subdivision that is
rated A or better by Moody's or Standard & Poor's and that matures within one
(1) year, (v) obligations or securities of a Subsidiary or a corporation
which immediately after such purchase or acquisition will be a Subsidiary,
(vi) stock or securities received in settlement of debts owing to the
Guarantor or any Subsidiary not exceeding $5,000,000.00, including
receivables arising from the sale of goods and services in the ordinary
course of business of the Guarantor and its Subsidiaries, (vii) travel or
like advances to officers and/or employees in the ordinary course of business
and loans to officers and/or employees made on or before May 24, 1991 for the
purchase of capital stock of the Guarantor (including the capitalization of
up to one-half of the accrued interest on such loans to officers and/or
employees), with all such travel or like advances and loans not exceeding
$10,000,000.00 in the aggregate, (viii) any stock or securities of Sunbelt
(but no permission is hereby granted for the acquisition by the Guarantor of
any additional stock or securities shares of Sunbelt), (ix) any loans made or
deemed to be made by the Guarantor to Sunbelt as a result of the Guarantor's
payment of any portion of the Guaranteed Debt of Sunbelt guaranteed by the
Sunbelt Debt Guarantee and (x) any loan participation program(s) for a period
not to exceed seven (7) days with credit risk to companies with long-term
debt rating by Standard Poor's of Moody's if not less than single A.

    "Restricted Payment" shall have the meaning given ln Section 8(c) hereof.

    "Secured Debt" shall mean all indebtedness for borrowed money, including
indebtedness evidenced by a bond, debenture, note or similar document, which
is secured by a lien on any assets of the Guarantor or any Subsidiary or any
shares of stock or Debt of any Subsidiary.

    "Senior Funded Debt" shall mean the Notes and Funded Debt which by its
terms is not subordinated in right of payment to the Notes.  For the purposes
of this definition of Senior Funded Debt, the term "Notes" shall have the
meaning ascribed to that term in the Teachers Agreement.

    "Short Term Debt" means, for the Guarantor on a Consolidated basis, Debt
(including Guaranteed Debt) which matures within one (1) year from the date
of determination thereof.  Short Term Debt shall not include current
maturities of Funded Debt.

    "Significant Subsidiary" shall mean, at any time, any Subsidiary of the
Guarantor which either (i) contributed during the most recent fiscal year of
the Guarantor more than five percent (5%) of the Consolidated gross revenues
of the Guarantor for such period, (ii) contributed during the most recent
fiscal year of the Guarantor more than five percent (5%) of the Consolidated
Net Income of the Guarantor for such period or (iii) owns more than five
percent (5%) of the fair market value of the Consolidated Tangible Assets of
the Guarantor.  Notwithstanding the foregoing, if at any time all
Subsidiaries of the Guarantor not meeting the above definition of
"Significant Subsidiary" and taken in the aggregate shall either (i)
contribute during the most recent fiscal year of the Guarantor more than
twenty-five percent (25%) of the Consolidated gross revenues of the Guarantor
for such period, (ii) contribute during the most recent fiscal year of the
Guarantor more than twenty-five (25%) of the Consolidated Net Income of the
Guarantor for such period or (iii) own more than twenty-five percent (25%) of
the fair market value of the Consolidated Tangible Assets of the Guarantor,
then so long as such situation continues all Subsidiaries of the Guarantor
shall be deemed to be "Significant Subsidiaries."

    "Subsequent Holder" shall mean the Agent, for the benefit of Agent and
Banks, or any of the Agent's Subsidiaries or other Affiliates which is a
direct or indirect transferee of the rights, interests and/or benefits of the
Lessor under this Guarantee.

    "Subsidiary" shall mean, as to any particular parent corporation, any
corporation more than fifty percent (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations
which themselves have more than fifty percent (by number of votes) of their
Voting Stock owned by such parent corporation.  As used herein, the term
"Subsidiary" shall mean a "subsidiary" of Guarantor.

    "Sunbelt" shall mean Sunbelt Nursery Group, Inc., a Delaware corporation.

    "Taxes" shall mean all taxes, assessments, fees and other charges at any
time imposed by any Laws or Tribunal.

    "Teachers Agreement" shall mean that certain Note Purchase Agreement dated
as of May 24, 1991 executed by and between the Guarantor and Teachers
Insurance Annuity Association of America, as amended from time to time,
pursuant to which the Guarantor has issued the Notes referred to in the
definition of Senior Funded Debt contained herein.

    "Total Costs" shall mean the sum of the amounts paid by Lessor and not
reimbursed by Lessee, as of the applicable date as set forth in and defined
as "the Total Cost" in the Lease Agreements.

    "Tribunal" shall mean any municipal, state, commonwealth, federal,
foreign, territorial or other court, governmental body, subdivision, agency,
department, commission, hoard or bureau or instrumentality.

    "Voting Stock" shall mean, with respect to any Subsidiary, any shares of
any class of stock of such Subsidiary having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
Subsidiary irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency.

    "Wolfe" shall mean Wolfe Nursery, Inc., a Delaware corporation.

    4.  Guarantee Not Affected by Change in Security or Other Actions.  Lessor
may, from time to time, without the consent of or notice to either of the
Guarantors, take any or all of the following actions without impairing or
affecting the Guarantors' obligations under this Guarantee or releasing or
exonerating either of the Guarantors from any liability hereunder:

    (a) retain or obtain a security interest ln any property to secure any of
the Obligations or any obligation hereunder:

    (b) retain or obtain the primary or secondary liability of any party or
parties, in addition to the undersigned Guarantor, with respect to any of the
Obligations;

    (c) extend the time or change the manner, place or terms of payment of, or
renew or amend the Lease Agreements, any note or other instrument executed in
connection with or evidencing the Obligations or any part thereof, or amend
in any manner any agreement relating thereto;

    (d) release or compromise, in whole or in part, or accept full or partial
payment for, any of the Obligations hereby guaranteed, or any liability of
any nature of any other party or parties with respect to the Obligations or
any security therefor;

    (e) subordinate the payment of all or any part of the Obligations to the
payment of any liability of the Lessee to creditors of the Lessee other than
Lessor or the Guarantor;

    (f) enforce Lessor's security interest, if any, in all or any properties
securing any of the Obligations or any obligations hereunder in order to
obtain full or partial payment of the Obligations then outstanding;

    (g) release or fail to perfect, protect, or enforce Lessor's security
interest, if any, in all or any properties securing any of the Obligations or
any obligation hereunder, or permit any substitution or exchange for any such
property; and

    (h) take or fail to take any other action of whatever kind or character
with respect to the Obligations, the Lease Agreements or any other document
or instrument, it being the intention of each of the Guarantors that it shall
remain liable as primary obligor for the Obligations notwithstanding any act,
omission or thing which might, but for the provisions hereof, otherwise
operate as a legal or equitable discharge of any guarantor.

    5.  Waivers.  The Guarantors hereby expressly waive:

    (a) notice of acceptance of this Guarantee;

    (b) notice of the existence or incurrence of any or all of the
Obligations;

    (c) presentment, demand, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest, and all other notices
whatsoever;

    (d) any requirement that proceedings first be instituted by Lessor against
the Lessee;

    (e) all diligence in collection or protection of or realization upon the
Obligations or any part thereof, or any obligation hereunder, or any
collateral for any of the foregoing;

    (f) any rights or defenses based on the Lessor's election of remedies,
including any defense to the Lessor's action to recover any deficiency after
a non-judicial sale;

    (g) the occurrence of every other condition precedent to which either of
the undersigned Guarantors might otherwise be entitled; and 

    (h) any right to require Lessor to marshal assets.

    6.      Representations, Warranties and Agreements of the Guarantor.  The
Guarantor represents and warrants to Lessor and any Subsequent Holder that:

    (a) The Guarantors (i) have been duly incorporated and are validly
existing as a corporation in good standing under the laws of the State of
Delaware, (ii) have full corporate power and authority to own and operate
their respective properties and to conduct its business as presently
conducted, and full corporate power, authority and legal right to execute,
deliver and perform its obligations under this Guarantee and any consent
executed in connection herewith, (iii) are duly qualified to do business as a
foreign corporation in good standing in each jurisdiction, including, without
limitation, the State of Texas, in which its ownership or leasing of
properties or the conduct of its business requires such qualification and
where non-qualification, singly or in the aggregate, would materially
adversely affect the financial condition or creditworthiness of either of the
Guarantors, or would impair the ability of either of the Guarantors to
perform its obligations under this Guarantee, and (iv) all of the issued and
outstanding voting stock of Pier 1 Imports (U.S.), Inc.  is owned by CMEI,
Inc., a Georgia corporation, all the issued and outstanding stock of which is
owned by Guarantor.

    (b) This Guarantee has been duly authorized, executed and delivered by
each of the Guarantors and is a legal, valid and binding obligation of each
of the Guarantors, enforceable according to its terms.

    (c) The execution, delivery and performance by the Guarantors of this
Guarantee will not result in any violation of any term of the certificate of
incorporation or the bylaws of either of the Guarantors, do not require
stockholder approval or the approval or consent of any trustee or holders of
Debt of either of the Guarantors except such as have been obtained prior to
the date hereof, and will not conflict with or result in a breach of any
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any Lien upon, any property or assets of the
Guarantor under, any indenture, mortgage or other agreement or instrument to
which either of the Guarantors is a party or by which it or any of its
property is bound where breach or default, singly or in the aggregate, could
have a Material Adverse Effect or violate any existing applicable Law, or any
judgment, order or decree of any Tribunal having jurisdiction over the
Guarantor or any of its activities or properties.

    (d) There are no consents, licenses, orders, authorizations or approvals
of, or notices to or registrations with any Tribunal or other Person which
are required in connection with the valid execution, delivery and performance
of, this Guarantee that have not been obtained or made, and any such
consents, licenses, orders, authorizations, approvals, notices and
registrations that have been obtained or made are in full force and effect.

    (e) Except as disclosed in writing to Lessor by the Guarantors
concurrently herewith, there is no action, suit, proceeding or investigation
at law or in equity by or before any court, governmental body, agency,
commission or other Tribunal now pending or, to the best knowledge of the
Guarantors after due inquiry, threatened against or affecting either of the
Guarantors or any property or rights of either of the Guarantor as to which
there is a significant possibility of an adverse determination, and which if
adversely determined, may have a Material Adverse Effect or which, if
adversely determined could materially impair the ability of either of the
Guarantors to perform its obligations under this Guarantee, and there is no
action, suit, proceeding or investigation at law or in equity by or before
any court, governmental body, agency, commission or other Tribunal now
pending or, to the best knowledge of the Guarantor after due inquiry,
threatened which questions or would question the validity of this Guarantee.

    (f) The consolidated balance sheets of the Guarantor and its Subsidiaries
as of February 28, 1992 and the related consolidated statements of income and
retained earnings of the Guarantor and its Subsidiaries for the fiscal year
then ended, reported on by its independent public accountants, and the
consolidated balance sheets of the Guarantor and its Subsidiaries for the
three-month period ending August 29, 1992 and related consolidated statements
of income and retained earnings of the Guarantor and its Subsidiaries for the
period then ended fairly present the consolidated financial condition and the
results of operations of the Guarantor and its Subsidiaries for the periods
ending on such date all in accordance with GAAP, and since the dates thereof
there has been no material adverse change in such condition or operations.

    (g) Neither of the Guarantors is in default under or with respect to any
agreement or other instrument to which it is party or by which it or its
assets may be bound which could have a Material Adverse Effect.  Neither of
the Guarantors is subject to or in default under any order, award or decree
of any court, arbitrator, or other governmental authority binding upon or
affecting it or by which any of its assets may be bound or affected which
could have a Material Adverse Effect.

    (h) The Guarantors have filed or caused to be filed all tax returns which
to the knowledge of each of the Guarantors are required to be filed, and has
paid all Taxes shown to be due and payable on said returns or on any
assessments made against it, except for (i) returns which have been
appropriately extended and (ii) Taxes, the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Guarantor, as the case may be.

    (i) The Guarantors and each of their Subsidiaries are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code, and the rules and regulations thereunder
insofar as ERISA, the Code and such rules and regulations relate to any
employee benefit plan as defined in Section 3(3) of ERISA.  No employee
benefit plan (as defined in Section 3(2) of ERISA) maintained by the
Guarantor or any of its Subsidiaries for its employees and covered by ERISA
(a "Plan") had an "accumulated funding deficiency," within the meaning of
said term under Section 302 of ERISA, as of the last day of the most recent
fiscal year of such Plan, and neither the Guarantor nor any Subsidiary has
incurred with respect to any Plan any liability to the Pension Benefit
Guaranty Corporation ("PBGC") which is material to the consolidated financial
condition of the Guarantor or any Subsidiary.  For the purpose of this
paragraph, the term "Subsidiary" shall include a Controlled Group of
Corporations as that term is defined in Section 1563 of the Code or Section
4.001 of ERISA.

    (j) The financial statements of the Guarantor and its Subsidiaries
furnished to the Lessor on or before the date hereof have been prepared in
accordance with GAAP and fairly present the financial condition of the
Guarantor as of the date thereof.  Since the date of such financial
statements there has been no material adverse change in the financial
condition or business of the Guarantor which-would impair the ability of the
Guarantor to perform its obligations hereunder.

    7.      Affirmative Covenants. The Guarantor covenants and agrees that, so
long as any part of the Obligations shall remain unpaid or the Lessee shall
have any commitment or obligation under the Lease Agreements, the Guarantor
will, unless Lessor shall otherwise consent in writing:

    (a) Financial Statements.  Deliver to the Lessor or any Subsequent Holder,
as appropriate, in duplicate:

        (i) Quarterly Statements:  as soon as practicable and in any event
within 60 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, a Consolidated statement of
operations, a Consolidated statement of changes in financial position of the
Guarantor, and a Consolidated balance sheet of the Guarantor as at the end of
such quarterly period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year, all in reasonable
detail and prepared by an authorized financial officer of the Guarantor.

        (ii) Annual Statements: as soon as practicable and in any event within
100 days after the end of each fiscal year, a Consolidated statement of
operations, and a Consolidated statement of changes in financial position of
the Guarantor for such year, and a Consolidated balance sheet of the
Guarantor as at the end of such year, setting forth in each case in
comparative form corresponding Consolidated figures from the preceding year,
all in reasonable detail and satisfactory in scope to Lessor or any
Subsequent Holder, together with an opinion by independent public accountants
of recognized standing selected by the Guarantor, whose opinion shall (a)
state that such financial statements have been prepared in accordance with
GAAP and fairly present the Consolidated financial position of the Guarantor
as of the date thereof and the Consolidated results of their operations for
the period thereof, (b) state that their audit examination has included a
review of the terms of this Guarantee as it relates to accounting matters,
and (c) state whether, in the course of their audit examination, they
obtained knowledge (and state whether they have knowledge of the existence as
of the date of such written statement) of any condition or event which
constitutes a Default, and if so, specifying the nature and period of
existence thereof (notwithstanding the foregoing, the opinion of the
Guarantor's independent public accountants need not contain the statements
otherwise required by clauses (b) and (c) of this subparagraph (ii) so long
as the Guarantor is a reporting company under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended);

        (iii) SEC and Other Reports: promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and reports as
Guarantor shall send to its public security holders and copies of all
registration statements (without exhibits) and all reports which it files
with the Securities and Exchange Commission (or any governmental body or
agency succeeding to the functions of the Securities and Exchange
Commission);

        (iv) Audit Reports: promptly upon receipt thereof, a copy of each other
report submitted to the Guarantor or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Guarantor or any Subsidiary (other than any
"management letters" delivered to the Guarantor by such accountants, which
management letters shall only be delivered to Lessor or any Subsequent Holder
upon such Person's prior request);

        (v) Other Notices: promptly upon the occurrence thereof, notice of any
of the following: (a) the occurrence of any condition or event which
constitutes a Default or an Event of Default, specifying the nature and
period of existence thereof, (b) that any Person has given any notice to the
Guarantor or any Subsidiary or taken any action with respect to a claimed
Default, or (c) that any Person has given any notice to the Guarantor or any
Subsidiary or taken any other action with respect to a claimed default or
event of default with respect to any other indebtedness which in the
aggregate exceeds the sum of three million dollars ($3,000,000) and, with
respect to any of such events specified in subdivisions (a), (b) or (c) above
of this clause (v), what action the Guarantor or such Subsidiary has taken,
is taking or proposes to take;

        (vi) ERISA Events: promptly upon any officer of the Guarantor obtaining
knowledge of the occurrence thereof, notice of the occurrence of any (a)
"reportable event," as such term is defined in section 4043 of ERISA, or (b)
"prohibited transaction," as such term is defined in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, specifying
the nature thereof, what action the Guarantor or its Subsidiary has taken, is
taking or proposes to take with respect thereto, and, when known, any action
taken or threatened by the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect thereto; provided that with respect to the
occurrence of any "reportable event" as to which the Pension Benefit Guaranty
Corporation has waived the 30-day reporting requirement, such written notice
need be given only at such time as notice is given to the Pension Benefit
Guaranty Corporation; and with reasonable promptness, such other financial
data or other data or information related to the business or operations of
the Guarantor or its Subsidiaries as the Lessor or any Subsequent Holder may
reasonably request.  The Lessor agrees that Lessor or any Subsequent Holder
will not intentionally disclose any information given to Lessor by the
Guarantor or any of its Subsidiaries which is either proprietary or
confidential and which is prominently marked as such; provided, however, that
this restriction shall not apply to information which has at the time in
question entered the public domain, nor will this restriction prohibit Lessor
or any Subsequent Holder from disclosing such information (a) as is required
to be disclosed by Law or by any order, rule or regulation (whether valid or
invalid) of any Tribunal, (b) to Lessor's or any Subsequent Holder's
auditors, examiners, attorneys, or agents, or (c) to purchasers or
prospective purchasers or assignees of interests in the Obligations.

    Together with each delivery of financial statements required by clause (i)
above, the Guarantor will deliver to Lessor or any Subsequent Holder an
Officer's Certificate demonstrating (with computations in reasonable detail)
compliance by the Guarantor and its Subsidiaries with the provisions of
Sections 8(a), 8(b), 8(c), 8(d)(i)(g), 8(d)(ii), 8(d)(iii), 8(d)(iv) 8(d)(v),
8(d)(vi), and 8(d)(vii) and stating that there exists no Default with respect
to such covenants or otherwise under this Guarantee or, if any Default exists
with respect to such covenants or under this Guarantee, specifying the nature
and period of existence thereof and what action the Guarantor promises to
take with respect thereto.  Together with each delivery of financial
statements required by clause (ii) above, the Guarantor will deliver to the
Lessor or any Subsequent Holder an Officer's Certificate of the Treasurer or
Chief Financial Officer of Guarantor demonstrating (with computations in
reasonable detail) compliance by the Guarantor and its Subsidiaries with the
provisions of Sections 8(a), 8(b), 8(c), 8(d)(i)(g), 8(d)(ii), 8(d)(iii),
8(d)(iv) 8(d)(v), 8(d)(vi), and 8(d)(vii) and stating that there exists no
Default with respect thereto or otherwise under this Guarantee or, if any
Default exists with respect thereto or under this Guarantee, specifying the
nature and period of existence thereof and what action the Guarantor proposes
to take with respect thereto.  By delivery of such Officer's Certificate, the
officer executing such certificate represents and warrants that the
statements made therein are based upon the level of investigation normally
and customarily taken by Treasurers or Chief Financial Officers of similarly
situated corporations of established reputation in performing their regular
duties.  In the event that a change(s) in GAAP related to the accounting for
leases requires the Guarantor to use accounting principles for purposes of
determinations or computations under this Guarantee different than the
Guarantor uses in its quarterly and annual financial statements, the
Guarantor will, together with the delivery of financial statements required
by clause (ii) above with respect to the fiscal year in which such change(s)
in GAAP become applicable, deliver to the Lessor and any Subsequent Holder a
certificate of such accountants stating that, in making the audit necessary
to the certification of such financial statements, they have obtained no
knowledge of any Default, or, if they have obtained knowledge of any Default,
specifying the nature and period of existence thereof.

    (b) Payment of Obligations; Maintain Books and Reserves.  Duly and
punctually pay the Obligations and duly and punctually perform all of its
covenants, agreements, debts, duties and obligations in accordance with the
terms of this Guarantee.  Guarantor will, and will cause each of its
Subsidiaries to, keep proper books of record and account and set aside
appropriate reserves, all in accordance with GAAP.

    (c) Inspection of Property.  Permit any Person designated by Lessor or any
Subsequent Holder, at the Lessor's or such Subsequent Holder's expense and
with reasonable notice to the Guarantor, to visit and inspect any of the
properties of the Guarantor and its Subsidiaries, to examine the corporate
books and financial records of the Guarantor and its Subsidiaries and make
copies thereof or extracts therefrom and to discuss the affairs, finances and
accounts of any such corporations with officers and employees of the
Guarantor and its independent public accountants, all at such reasonable
times and as often as Lessor or any Subsequent Holder may reasonably request. 
Lessor agrees that Lessor will keep confidential any proprietary or
confidential information given to Lessor by the Guarantor or its Subsidiaries
upon the same terms and conditions as agreed to with respect to information
Lessor has obtained pursuant to Section 7(a)(vii) hereof.

    (d) Compliance with Laws, Etc.  Comply and cause each of its Subsidiaries
to comply, in all material respects with all applicable laws, rules,
regulations and orders applicable to its business, such compliance to
include, without limitation, paying before the same become delinquent all
taxes, assessments, and governmental charges imposed upon it or upon its
property, except to the extent contested in good faith by appropriate
proceedings and for which adequate reserves have been established in
accordance with GAAP, and provided that Guarantor or its Subsidiary, as the
case may be, retains good and marketable title to and the right to use and
enjoyment of its properties or other assets which may be affected by any such
contest.  Guarantor will timely pay and will cause its Subsidiaries to timely
pay, all payments due for labor, services and materials rendered or furnished
in -he ordinary course of business which are secured by inchoate statutory
Liens, except to the extent contested in good faith by appropriate
proceedings, and provided that the Guarantor or its Subsidiary, as the case
may be, retains good and marketable title to and the right to the use and
enjoyment of its properties or other assets which may be affected by any such
contest.  Guarantor will promptly notify the Lessor or any Subsequent Holder
if the Guarantor receives any notice, claim or demand from any governmental
agency which alleges that the Guarantor is in violation of any Laws or has
failed to comply with any order issued pursuant to any federal, state or
local statute regulating its operation and business, the result of which may
have a Material Adverse Effect.

    (e) Maintenance of Existence and Qualifications.  Maintain and preserve
and cause each of its Subsidiaries to maintain and preserve its corporate
existence and its rights and franchises in full force and effect and obtain
and maintain and cause its Subsidiaries to obtain and maintain all permits
and licenses necessary to the proper conduct of its business, including
without limitation qualifying to do business as a foreign corporation in all
states or jurisdictions where required by applicable Law.  Notwithstanding
the foregoing, this Section 7(e) shall not prohibit any transaction expressly
permitted by Section 8(d)(vi) and Section 8(d)(vii) of this Guarantee.  

    (f) Maintenance of Properties; Insurance.  Maintain, preserve, protect,
and keep and cause each of its Subsidiaries to maintain, preserve, protect
and keep, all property used or useful in the conduct of its business in good
condition and in compliance with all applicable Laws, and will from time to
time make all repairs, renewal's and replacements needed to enable the
business and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.  Guarantor will, and will cause each
of its Subsidiaries, to carry and maintain in full force and effect at all
times with financially sound and reputable insurers (or, in an insurance fund
or by self-insurance authorized by the jurisdiction in which its operations
are carried on) insurance in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations of
established reputation engaged in the same or similar businesses and
similarly situated, and the Guarantor and its Subsidiaries shall maintain
self-insurance only to the extent that a prudent corporation of established
reputation engaged in the same or similar businesses and similarly situated
would rely upon self-insurance.

    (g) Primary Business.  Continue to conduct, and cause each of its
Subsidiaries to continue to conduct, substantially all of their respective
operations in the same primary businesses as those in which they currently
operate (i.e., developing, owning and operating, in the United States and
Canada and in territories of the United States and Canada, (i) specialty
retail stores offering primarily imported decorative home furnishings,
accessories and other specialty items for the home and casual clothing and
fashion accessories and (ii) retail stores offering primarily nursery and
garden products).

    (h) Transactions With Affiliates.  Conduct and cause each Subsidiary to
conduct all of their respective transactions with any Affiliate on an arm's
length basis and pursuant to the reasonable requirements of Guarantor's
and/or such Subsidiary's business.

    (i) Compliance with Material Agreements.  Guarantor will comply with all
material agreements, indentures, mortgages or documents binding on it or
affecting its properties or business where the failure to so comply would
have a Material Advertise Effect.

    (j) Operations and Properties.  Guarantors will act prudently and in
accordance with customary industry standards in managing or operating their
respective assets, properties, business and investments; Guarantors will keep
in good working order and condition, ordinary wear and tear excepted, all of
their respective assets and properties which are necessary to the conduct of
its business.

    (k) Books and Records; Access.  Upon prior written notice, Guarantors will
give any representative of Lessor access during all business hours to, and
permit such representative to examine, copy or make excerpts from, any and
all books, records and documents in the possession of the Guarantors and
relating to its affairs, and to inspect any of the properties of the
Guarantors.  Guarantors will maintain complete and accurate books and records
of its transactions in accordance with good accounting practices.

    (1) Additional Guaranty Agreement.  If either of the Guarantors merges or
consolidates with any entity which is owned or controlled by a corporation
organized or incorporated in a jurisdiction outside of the United States of
America (an "Offshore Company") or becomes a Subsidiary of an Offshore
Company as a result of a reorganization or acquisition, Guarantors shall
cause such Offshore Company to execute and deliver to Lessor and any
Subsequent Holder, at the expense of the Guarantors, a lease guarantee in the
form of this Lease Guarantee and an opinion of counsel in form satisfactory
to Lessor or any Subsequent Holder at the time of such merger, consolidation,
reorganization or acquisition.

    (m) Additional Information.  Guarantors shall promptly furnish to Lessor
and any Subsequent Holder, at Lessor's request, such additional financial or
other information concerning assets, liabilities, operations and transactions
of Guarantor or any Subsidiary as Lessor or any Subsequent Holder may from
time to time reasonably request.

    (n) Further Assurances.  Upon request of the Lessor, promptly cure upon
request of Lessor any defects in the creation, issuance, execution and
delivery of this Guarantee or in the Lease Agreements.  Guarantors, at their
expense, will further promptly execute and deliver to Lessor upon request all
such other and further documents, agreements and instruments in compliance
with or accomplishment of the covenants and agreements of Guarantors
hereunder, or to further evidence and more fully describe the obligations of
the Guarantors for the Obligations as primary obligor or to correct any
omissions herein, or to more fully state the obligations set out herein.

    8.      Negative Covenants.The Guarantor covenants and agrees that, so long
as any part of the Obligations shall remain unpaid or the Lessee shall have
any commitment or obligation under the Lease Agreements, neither the
Guarantor nor any of its Subsidiaries will, unless Lessor or any Subsequent
Holder otherwise consents in writing:

    (a) Current Ratio.  Permit the ratio of its Consolidated Current Assets to
its Consolidated Current Liabilities at any time thereafter to be less than
2.0:1.

    (b) Consolidated Tangible Net Worth.  Permit its Consolidated Tangible Net
Worth at any time to be less than an amount equal to the sum of (i) one
hundred sixty million dollars ($160,000,000) plus (ii) 50% of the aggregate
Consolidated Net Income of the Guarantor for the period commencing on
February 29, 1992 (without deduction for any net loss in any fiscal year
ending after February 29, 1992) and terminating at the end of the last fiscal
quarter preceding the date of any determination of Consolidated Tangible Net
Worth.

    (c) Limitation on Dividends, Acquisition of Stock and Restricted
Investments.  Declare any dividend on any class of its stock (other than
stock dividends) or any other distribution on account of any class of its
stock (other than dividends or distributions payable solely in shares of its
stock) which is payable more than 60 days after the date such declaration is
made, unless, at the time of such declaration, such dividend complied with
this Section 8(c).  Guarantor covenants that it will not, and will not permit
any of its Subsidiaries to, pay or declare any dividend on any class of its
stock (other than stock dividends) or make any other distribution on account
of any class of its stock (other than dividends or distributions payable
solely in shares of its stock), or redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its stock, or make any Restricted
Investments (all of the foregoing being herein called "Restricted Payments")
if the aggregate amount of all such Restricted Payments, from and after
February 29, 1992, shall exceed the sum of (i) fifty percent (50%) of the
aggregate Consolidated Net Income of the Guarantor for the period (taken as
one accounting period) commencing on February 29, 1992 and terminating at the
end of the last fiscal quarter preceding the date of such Restricted Payment
(provided, however, that in the case of any deficit in Consolidated Net
Income in any financial reporting period occurring either fully or partly
within such period, 100% of the amount of such deficit shall be subtracted
from the amount described in clause (i) above)  plus (ii) the aggregate net
cash proceeds received from the issuance or sale, after February 29, 1992, of
capital stock of the Guarantor (provided, however, that for purposes of
clause (ii), such net cash proceeds shall be considered only for a period of
one calendar year commencing on the date such proceeds are received by the
Guarantor) plus (iii) ten million dollars ($10,000,000).  Notwithstanding the
foregoing, no Restricted Payment shall be made unless, after giving effect
thereto, no Default shall have occurred and be continuing.  There shall not
be included in the limitation upon Restricted Payments (a) any dividends paid
by any Subsidiary of the Guarantor to its corporate parent which is also a
Subsidiary of the Guarantor or (b) to the Guarantor.

    (d) Lien, Debt and Other Restrictions.  Guarantor covenants that it will
not, and will not permit any Subsidiary to:

        (i) Liens.  Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired, except without
double-counting, any of the following (the "Permitted Liens"):

    (a) Liens for Taxes, not yet due and delinquent or which are being
actively contested in good faith by appropriate proceedings, provided that
the existence of such Liens does not affect the Guarantor's or its
Subsidiaries' good and marketable title to or use or enjoyment of the
property or assets burdened by such Liens,

    (b) other Liens arising in the ordinary course of its business or the
ownership of its property and assets (including easements and similar
encumbrances) which were not incurred in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the deferred
purchase price of property or assets, and which do not in the aggregate
materially interfere with the operation of its business and will not cause a
Material Adverse Effect,

    (c) any Lien existing on any property of any corporation at the time it
becomes a Subsidiary, provided that (a) any such Lien shall not encumber any
other property of the Guarantor or such Subsidiary, and (b) the aggregate
amount of Debt secured by such Lien shall not at any time exceed 75 of the
fair market value of such property,

    (d) any Lien on any property acquired, constructed or improved by the
Guarantor or a Subsidiary after the date hereof and created contemporaneously
with or within 12 months of such acquisition, completion of construction or
improvement to secure Debt assumed or incurred to finance up to 75% of the
purchase price or cost of construction or improvement of such property, but
such Lien shall cover only the property so acquired or constructed and any
improvements thereto, and

    (e) Liens existing on the date hereof and disclosed in the most recent
financial statements described in Section 6(f) hereof,

    (f) Liens arising in connection with court proceedings, provided the
execution of such Liens is effectively stayed and such Liens are contested in
good faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP, and provided further that the
existence of such Liens does not affect the Guarantor's or its Subsidiaries'
title to or use or enjoyment of the property or assets burdened by such
Liens,

    (g) any Lien described in clauses (c), (d) or (e) above resulting from
renewing, extending or refunding outstanding Secured Debt provided that the
principal amount of the Secured Debt secured thereby is not increased and the
Lien is not extended to any other property, and

    (h) any other Liens incurred in connection with the borrowing of money or
any other Liens, provided that immediately thereafter the aggregate amount of
Debt secured by Liens incurred pursuant to this clause (h) does not at any
time exceed five percent (5.0%) of Consolidated Net Tangible Assets.

        (ii) Funded Debt -- Other than for the Guaranteed Debt by the Guarantor
of Sunbelt's Debt to (i) Standard Chartered Bank under a line of credit in
the amount of $5,OO0,000 and (ii) Texas Commerce Bank, National Association
under a line of credit in the amount of $5,000,000 (the "Sunbelt Debt
Guarantee"), create, incur, assume or suffer to come into existence any
additional Funded Debt unless after giving effect thereto (i) Senior Funded
Debt is less than 50% of Consolidated Net Tangible Assets and (ii) all Funded
Debt in the aggregate is less than sixty percent (60%) of Consolidated Net
Tangible Assets.  With respect to Subsidiaries which are not Guarantors,
create, incur, assume or suffer to come into existence any additional Funded
Debt by such Subsidiaries unless after giving effect thereto all Funded Debt
by such Subsidiaries in the aggregate is less than 70% of Consolidated Net
Tangible Assets of such Subsidiaries.  As used in this paragraph 8(ii), (A)
prior to demand being made upon the Guarantor to pay its obligations under
the Sunbelt Debt Guarantee, the term Funded Debt (individually and as used in
the definition of Senior Funded Debt) shall only include the Guaranteed Debt
of Sunbelt to the extent the aggregate amount of such Guaranteed Debt of
Sunbelt exceeds the sum of Sunbelt's Cash Equivalents, and (B) from and after
demand being made upon the Guarantor to pay its obligations under the Sunbelt
Debt Guarantee, the term Funded Debt (individually and as used in the
definition of Senior Funded Debt) shall include such Guaranteed Debt of
Sunbelt.

        (iii) Short-Term Debt -- Other than for the Sunbelt Debt Guarantee,
create, incur, assume or suffer to exist any Short-Term Debt, other than any
Short-Term Debt which is incurred in the ordinary course of business,
provided that there shall be a period of at least 45 consecutive days during
each fiscal year in which such Short-Term Debt is paid down to an amount that
would have been permitted under Section 8(d)(ii) were such Short-Term Debt to
be treated as Funded Debt; provided, however, that as used in this paragraph
8(d)(iii), (A) prior to demand being made upon the Guarantor to pay its
obligations under the Sunbelt Debt Guarantee, the term Funded Debt
(individually and as used in the definition of Short-Term Debt) shall only
include the Guaranteed Debt of Sunbelt to the extent the aggregate amount of
such Guaranteed Debt of Sunbelt exceeds the sum of Sunbelt's Cash
Equivalents, and (B) from and after demand being made upon the Guarantor to
pay its obligations under the Sunbelt Debt Guarantee, the term Funded Debt
(individually and as used in the definition of Short-Term Debt) shall include
such Guaranteed Debt of Sunbelt.

        (iv) Subsidiaries' Debt -- Create, incur, assume or suffer to exist any
additional Debt unless after giving effect thereto, the aggregate amount of
outstanding Debt of the Guarantor's Subsidiaries is less than 10% of
Consolidated Net Tangible Assets.

        (v) Maintenance of Fixed Charge Coverage -Permit the ratio of Cash Flow
Available for Fixed Charges to Fixed Charges, to be determined on the last
day of each fiscal quarter for the preceding 12 months, to be less than (i)
1.3 to 1 for each of the fiscal quarters ending during the period from the
date of this Guarantee through February 27, 1993, and (ii) 1.4 to 1 for each
fiscal quarter ending thereafter.

        (vi) Limitation on Sale of Assets -- Other than (i) sales in the
ordinary course of business, and (ii) the sale by the Guarantor and/or
Sunbelt Nursery Group, Inc.  of any of the capital stock of Sunbelt (provided
the net proceeds of any such sale of stock owned by the Guarantor are used to
pay down the Guarantor's bank debt which is pari passu in terms of right to
payment with the Obligations), sell or otherwise dispose of in any fiscal
year more than 10% of its Consolidated Tangible Assets or sell or otherwise
dispose of any of its Consolidated Tangible Assets for less than fair market
value.

        (vii) Merger and Consolidation -- Merge or consolidate, provided,
however, that:

            (a) the Guarantor may merge or consolidate with or into any other
corporation so long as (A) the successor corporation is a United States
entity which expressly assumes the Obligation in writing or the Guarantor
shall be the continuing or surviving entity, (B) no Default shall have
occurred after giving effect to such merger or consolidation, and (C)
immediately after giving effect to such merger or consolidation the Guarantor
could have incurred an additional $1.00 of Funded Debt pursuant to the
provisions of Section 8(d)(ii) hereof, and

            (b) any Subsidiary may merge or consolidate with or into any other
corporation so long as, upon such merger or consolidation, (A) the successor
corporation becomes a Subsidiary of the Guarantor, (B) no Default shall have
occurred after giving effect to such merger or consolidation, and (C)
immediately after giving effect to such merger or consolidation such
Subsidiary could have incurred an additional $1.00 of Funded Debt pursuant to
the provisions of Section 8(d)(ii) hereof, and

            (c) any Subsidiary may merge or consolidate with or into the
Guarantor or any other Subsidiary so long as, in any such merger or
consolidation involving the Guarantor, the Guarantor shall be the surviving
or continuing corporation.

    (e) Investments.  Make or permit any of its Subsidiaries to make any
Investment, except (i) purchases of majority of the outstanding stock of any
corporation, (ii) Investments in Guarantor, any of its Subsidiaries, or any
Person that is wholly-owned by Guarantor and/or its Subsidiaries, not to
exceed in the aggregate twenty-five million dollars ($25,000,000) (iii)
Investments in Cash Equivalents or readily marketable securities having a
quoted market value, (iv) Investments in Persons to the extent permitted by
Section 8(c) hereof, (v) Investments in any partnership, corporation or joint
venture the sole purpose of which is to obtain land and improvements used in
the ordinary course of business of Guarantor or any of its Subsidiaries,
which Investments under this subsection (v) shall not exceed $75,000,000 in
the aggregate (vi) loans or advances to employees in the ordinary course of
business that do not exceed $5,000,000 in the aggregate, (vii) Investments in
Sunbelt capital stock or which are loans made by the Guarantor to Sunbelt as
a result of the Guarantor's payment of the Guaranteed Debt permitted under
Section 8(g) hereof or are intercompany advances, not exceeding
$1,000,000.00, made by the Guarantor to Sunbelt in the ordinary course of
business, which advances are promptly repaid by Sunbelt, and (viii) loan
participation programs for a period not to exceed seven days with credit risk
to companies with long-term debt rating by Standard & Poor's or Moody's of
not less than single A.

    (f) Chance in Nature of Business.  Make, or permit any of its Subsidiaries
to make, any material change in the nature of its business as conducted on
the date hereof.

    (g) Guaranteed Debt.  Create, assume or suffer to exist or permit any of
its Subsidiaries to create, suffer or exist any Guaranteed Debt except (i)
Guaranteed Debt in existence on the date hereof, (ii) Guaranteed Debt that is
secured by assets of the primary obligor having a fair market value at least
equal to the amount of such Guaranteed Debt, as determined by an independent
qualified appraiser selected by Guarantor (which appraisal, at Lessor's or
any Subsequent Holder's reasonable request and at Lessor's expense, shall be
promptly updated, but such request shall not be made more often than once
every 12 months), and (iii) Guaranteed Debt of Guarantor or a Subsidiary on
the consolidated balance sheet of Guarantor and its Subsidiaries; Provided,
however, that in no event shall the aggregate amount of all consolidated
Guaranteed Debt (other than the Guaranteed Debt described in (iii) above) of
Guarantor and its Subsidiaries exceed the Consolidated Tangible Net Worth,
and (iv) the Sunbelt Debt Guarantee.

    (h) Management and Control.  Permit any material change in the Guarantor's
management or control of any of its Subsidiaries.

    9.      Payments.  Each payment by each Guarantor to Lessor under this
Guarantee shall be made by transferring the amount thereof in immediately
available U.S.  funds without set-off or counterclaim.  Any and all payments
by each of the Guarantors hereunder shall be made free and clear and without
deduction for any and all present or future Taxes, excluding, in the case of
Lessor, any Subsequent Holder and each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
Lessor, any Subsequent Holder, or such Bank (as the case may be) is organized
or is or should be qualified to do business or any subdivision thereof, and
in the case of each Subsequent Holder and each Bank, Taxes imposed on such
Subsequent Holder's or such Bank's income by the jurisdiction of such
Subsequent Holder's or Bank's lending office or any political subdivision
thereof.  If Guarantor shall be required to deduct any Taxes (i.e., Taxes for
which Guarantor is responsible under the preceding sentence) from or in
respect of any sum hereunder (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 9) such Subsequent
Holder and each such Bank receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Guarantor shall make such
deductions and (iii) Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

    10.     Costs and Expenses.  The Guarantors hereby -agree to pay all
reasonable legal and other costs and expenses incurred by Lessor in seeking
to protect or enforce any of Lessor's rights or remedies with respect to the
Obligations or this Guarantee.

    11.     Subrogation.  Each of the Guarantors shall not be subrogated, in
whole or in part, to Lessor's rights or those of any subsequent assignee or
transferee of any of the Obligations until 367 days after all the Obligations
to Lessor and every such subsequent assignee or transferee shall have been
paid in full and all obligations and commitments of whatever kind or
character of the Lessee under the Lease Agreements have been fully discharged
and satisfied.

    12.     No Waiver, No delay on Lessor's part in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise
by Lessor of any right or remedy shall preclude the other or further exercise
thereof or the exercise of any other right or remedy.

    13.     Parties; Successors and Assigns.  This Guarantee shall inure to the
benefit of Lessor and Lessor's successors, assigns or transferees, and shall
be binding upon the Guarantor and its successors and assigns.  The Guarantor
may not delegate any of its duties under this Guarantee without the prior
written consent of Lessor or any Person to whom Lessor has assigned this
Guarantee.  Lessor may assign Lessor's rights and benefits under this
Guarantee to any Person, including, without limitation, to any financial
institution providing financing to Lessor.  Upon any assignment by Lessor of
this Guarantee, and upon any subsequent assignment or assignments by Lessor's
assignee or future assignees, such assignee or future assignee shall succeed
to all of the rights, benefits, remedies and privileges of this Guarantee and
shall for all purposes hereof be deemed to be "Lessor" hereunder to the
exclusion of the assigning Lessor.  Guarantor agrees to make such disclosures
and to take such action and execute such instruments as any such assignee or
future assignee may reasonably require to more fully protect, preserve and
assure to such assignee or future assignee all of the rights, benefits,
remedies and privileges provided hereby.  In the event that Lessor or any
assignee hereof sells participations in any obligation secured by the Lease
Agreements to other lenders, each such other lender shall have rights,
benefits, remedies and privileges to the same extent as are available to
Lessor hereunder.

    14.     Acceleration Events.

    (a) If any one or more of the following events shall occur:

        (i) If an Event of Default shall occur under any Lease Agreement; or

        (ii) If an Event of Default shall occur under the Credit Agreement; or

        (iii) If Guarantor shall fail to pay any part of the Obligations when
due; or

        (iv) If any representations or warranties made by Guarantor herein 
shall be false or misleading in any material respect on the date made; or

        (v) If there shall be a default in the performance or observance of any
other term, covenant or condition contained in this Guarantee (other than a
default described in subparagraph (iii) above), which default shall continue
for more than thirty (30) days; or

        (vi) If an "Event of Default," as defined and provided in (a) the
Teachers Agreement, or (b) that certain Revolving Credit Loan Agreement dated
as of July 7, 1992 between Guarantor and First Interstate Bank of Texas,
N.A., or (c) that certain Revolving Credit Loan Agreement dated July 7, 1992
between Guarantor and Texas Commerce Bank, National Association, (d) that
certain Revolving Credit Loan Agreement dated July 7, 1992, between Guarantor
and National Westminster Bank, Plc, or (e) in any renewals, extensions,
amendments, modifications, replacements, and substitutions of any of the
foregoing, shall occur and be continuing for any reason whatsoever;

        (vii) Guarantor or any Subsidiary defaults in any payment on any other
obligation for money borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property whether
or not secured by a purchase money mortgage or any obligation under notes
payable or drafts accepted representing extensions of credit) beyond any
period of grace provided with respect thereto, or Guarantor or any Subsidiary
fails to perform or observe any other agreement, term or condition contained
in any agreement under which any such obligation is created (or if any other
event thereunder or under any such agreement shall occur and be continuing)
and the effect of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such holder
or holders) to cause, such obligation to become due prior to any stated
maturity, provided that the aggregate amount of all obligations as to which
such a default shall occur and be continuing or such a failure or other event
causing or permitting acceleration shall occur and be continuing exceeds five
million dollars ($5,000,000); then, and in any such event, and in addition to
all other rights and remedies at law and in equity available to Lessor and
the Agent and Banks (as defined in the Credit Agreement) as a result of such
event, Guarantor shall at the election of the Agent or Majority Banks (as
defined in the Credit Agreement) immediately pay to the Agent, for the
account of Banks, without notice or demand, an amount equal to the sum of (a)
the Total Costs outstanding and not reimbursed with respect to all properties
covered by all Lease Agreements then in effect, (b) accrued and unpaid
interest thereon at the Applicable Rate as set forth in the Lease Agreements,
and (c) all other amounts not included within the term Total Cost (as defined
in the Lease Agreements) which are then due and payable under the Lease
Agreements.  All amounts paid by Guarantor to the Agent under this Section 14
shall be immediately deposited in the Collection Account established pursuant
to Section 2.02 of the Absolute Assignment of Rents, Income and Leases, dated
December 30, 1992 (the "Absolute Assignment") executed by Lessor to the
Agent, and shall be invested, withdrawn and paid in accordance with the
provisions of such Absolute Assignment.  It is understood that any payments
made by Guarantor to Lessor under this Guarantee shall not release or
discharge Guarantor from its obligations hereunder until all of the
Obligations have been fully and finally paid to Lessor.  All amounts payable
by Guarantor hereunder shall be credited against amounts otherwise payable by
Lessee under the Lease Agreements for the remainder of their respective
terms, provided that if any of the Lease Agreements have been terminated or
if for any other reason sufficient credits cannot be given to Lessee, then
such payments shall nevertheless be retained and applied pursuant to the
Absolute Assignment and no further credits shall be given to Lessee.

    (b) Guarantor acknowledges that the execution and delivery of this
Guarantee was an express condition to the extension by the Banks of the
credit facility to Lessor pursuant to the Credit Agreement, and that such
credit facility has enabled Guarantor to open additional stores and expand
its business in furtherance of its business plan.  Guarantor further
acknowledges that this Guarantee has been pledged as additional collateral to
the Agent, for the benefit of Agent and Banks, pursuant to the Credit
Agreement and that the covenants of Guarantor contained in this Section 14
have been required by the Banks as separate and distinct covenants in
addition to the guarantee of the Lease Agreements contained herein. 
Accordingly, any payment made by Guarantor under this Section 14 shall be
deemed to be an agreed guarantee payment without regard to the status of any
Lease Agreement or Lessee's rights or obligations thereunder; and in no event
and under no circumstance shall any such payment be repayable or refundable
to Guarantor for any reason or under any circumstance, and Guarantor agrees
to look solely to Lessee under its limited right to subrogation for the
recovery of any such sum.

    (c) ALL AMOUNTS PAYABLE BY GUARANTOR UNDER THIS LEASE GUARANTEE ARE
PAYABLE WITHOUT OFFSET, COUNTERCLAIM OR DEDUCTION OF WHATEVER KIND AND ARE
NOT CONDITIONED UPON, AND CANNOT BE AFFECTED IN ANY WAY BY ANY FUTURE EVENT,
OCCURRENCE OR ACTION BY ANY PARTY, AND GUARANTOR UNDERSTANDS AND AGREES THAT
ALL SUCH AMOUNTS SHALL BE PAYABLE NOTWITHSTANDING ANY FACT OR CIRCUMSTANCE
(INCLUDING WITHOUT LIMITATION THE BANKRUPTCY OF OR A SIMILAR EVENT AFFECTING
LESSEE) AT ANY TIME AFFECTING LESSEE OR ANY LEASE AGREEMENT, WHETHER CAUSED
OR CONTRIBUTED TO BY LESSEE, LESSOR OR ANY OTHER PARTY.

    15.     Arbitration Program.

    (a) Binding Arbitration.  Upon the demand of any party, whether made
before or after the institution of any judicial proceeding, any Dispute (as
defined below) shall be resolved by binding arbitration in accordance with
the terms of this Arbitration Program.  A "Dispute" shall include any action,
dispute, claim, or controversy of any kind (e.g., whether in contract or in
tort, statutory or common law, legal or equitable, or otherwise) now existing
or hereafter arising between the parties in any way arising out of,
pertaining to or in connection with (1) the agreement, document or instrument
to which this Arbitration Program is attached or in which it is referred to
or any related agreements, documents, or instruments (the "Documents"), (2)
all past, present or future loans, notes instruments, drafts, credits,
accounts, deposit accounts, safe deposit boxes, safekeeping agreements,
guarantees, letters of credit, goods or services, or other transactions,
contracts or agreements of any kind whatsoever, (3) any past, present or
future incidents, omissions, acts, practices, or occurrences causing injury
to either party whereby the other party or its agents, employees, or
representatives may be liable, in whole or in part, or (4) any aspect of the
past, present or future relationships of the parties including any agency,
independent contractor or employment relationship but excluding claims for
workers' compensation and unemployment benefits ("Relationship"), Any party
to this Arbitration Program may, by summary proceedings (e.g., a plea in
abatement or motion to stay further proceedings), bring any action in court
to compel arbitration of any Disputes.  Any party who fails or refuses to
submit to binding arbitration following a lawful demand by the opposing party
shall bear all costs and expenses incurred by the opposing party in
compelling arbitration of any Dispute.  The parties agree that by engaging in
activities with or involving each other as described above, they are
participating in transactions involving interstate commerce.

    (b) Governing Rules.  All Disputes between the parties shall be resolved
by binding arbitration administered by the American Arbitration Association
(the "AAA") in accordance with, and in the following priority: (1) the terms
of this Arbitration Program, (2) the Commercial Arbitration Rules of the AAA,
(3) the Federal Arbitration Act (Title 9 of the United States Code) and (4)
to the extent the foregoing are inapplicable, unenforceable or invalid, the
laws of the State of Texas.  The validity and enforceability of this
Arbitration Program shall be determined in accordance with this same order of
priority.  In the event of any inconsistency between this Arbitration Program
and such rules and statutes, this Arbitration Program shall control. 
Judgment upon any award rendered hereunder may be entered in any court having
jurisdiction; provided, however, that nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C.  91 or Texas Banking Code Art.  342-609.

    (c) No Waiver; Preservation of Remedies; Multiple Parties.  No provision
of, nor the exercise of any rights under, this Arbitration Program shall
limit the right of any party, during any Dispute to seek, use, and employ
ancillary or preliminary remedies, judicial or otherwise, for the purpose of
realizing upon, preserving, protecting, foreclosing or proceeding under
forcible entry and detainer for possession of any real or personal property,
and any such action shall not be deemed an election of remedies.  Such rights
shall include, without limitation, rights and remedies relating to (1)
foreclosing against any real or personal property collateral or other
security by the exercise of a power of sale under a deed of trust, mortgage,
or other security agreement or instrument, or applicable law, (2) exercising
self-help remedies (including setoff rights) or (3) obtaining provisional or
ancillary remedies such as injunctive relief, sequestration, attachment,
garnishment, or the appointment of a receiver from a court having
jurisdiction.  Such rights can be exercised at any time except to the extent
such action is contrary to a final award or decision in any arbitration
proceeding.  The institution and maintenance of an action for judicial relief
or pursuit of provisional or ancillary remedies or exercise of self-help
remedies shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the Dispute to arbitration nor render inapplicable
the compulsory arbitration provisions hereof.  In Disputes involving
indebtedness or other monetary obligations, each party agrees that the other
party may proceed against all liable persons, jointly and severally, or
against one or more of them, less than all, without impairing rights against
other liable persons.  Nor shall a party be required to join the principal
obligor or any other liable persons (e.g., sureties or guarantors) in any
proceeding against a particular person.  A party may release or settle with
one or more liable persons as the party deems fit without releasing or
impairing rights to proceed against any persons not so released.

    (d) Statute of Limitations.  All statutes of limitation shall apply to any
proceeding in accordance with this Arbitration Program.

    (e) Arbitrator Powers and Qualifications; Awards; Modification or Vacation
of Award.  Arbitrators are empowered to resolve Disputes by summary rulings
substantially similar to summary judgments and motions to dismiss. 
Arbitrators shall resolve all Disputes in accordance with the applicable
substantive law.  Any arbitrator selected shall be required to be a
practicing attorney licensed to practice law in the State of Texas and shall
be required to be experienced and knowledgeable in the substantive laws
applicable to the subject matter of the Dispute.  With respect to a Dispute
in which the claims or amounts in controversy do not exceed $1,000,000, a
single arbitrator shall be chosen and shall resolve the Dispute.  In such
case, the arbitrator shall be required to make specific, written findings of
fact, and shall have authority to render an award up to but not to exceed
$1,000,000, including all damages of any kind whatsoever, including costs,
fees and expenses.  A Dispute involving claims or amounts in controversy
exceeding $1,000,000 shall be decided by a majority vote of a panel of three
arbitrators (an "Arbitration Panel"), the determination of any two of the
three arbitrators constituting the determination of the Arbitration Panel,
provided, however, that all three Arbitrators on the Arbitration Panel must
actively participate in all hearings and deliberations.  Arbitrators,
including any Arbitration Panel, may grant any remedy or relief deemed just
and equitable and within the scope of this Arbitration Program and may also
grant such ancillary relief as is necessary to make effective any award. 
Arbitration Panels shall be required to make specific, written findings of
fact and conclusions of law, and in such proceedings before an Arbitration
Panel only, the parties shall have the additional right to seek vacation or
modification of any award of an Arbitration Panel that is based in whole, or
in part, on an incorrect or erroneous ruling of law by appeal to a Federal or
State Court of Appeals, following the entry of judgment on the award in
Federal or State District Court, as appropriate.  For these purposes, the
award and judgment entered by the Federal or State District Court shall be
considered to be the same as the award and judgment of the Arbitration Panel. 
All requirements applicable to appeals from any Federal or State District
Court judgment shall be applicable to appeals from judgments entered on
decisions rendered by Arbitration Panels.  The Appellate Courts shall have
the power and authority to vacate or modify an award based upon a
determination that there has been an incorrect or erroneous ruling of law. 
The Appellate Court shall also have the power to reverse and/or remand the
decision of an Arbitration Panel.  Subject to the foregoing, the
determination of an Arbitrator or Arbitration Panel shall be binding on all
parties and shall not be subject to further review or appeal except as
otherwise allowed by applicable law.

    (f) Other Matters and Miscellaneous.  To the maximum extent practicable,
the AAA, the Arbitrator (or the Arbitration Panel, as appropriate) and the
parties shall take any action necessary to require that an arbitration
proceeding hereunder be concluded within 180 days of the filing of the
Dispute with the AAA.  Arbitration proceedings hereunder shall be conducted
at one of the following locations in the State of Texas agreed to in writing
by the parties or, in the absence of such agreement, selected by the AAA: (1)
Austin; (2) Dallas; (3) Fort Worth; (4) Houston; or (5) San Antonio. 
Arbitrators shall be empowered to impose sanctions and to take such other
actions as they deem necessary to the same extent a judge could do pursuant
to the Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure
and applicable law.  With respect to any Dispute, each party agrees that all
discovery activities shall be expressly limited to matters directly relevant
to the Dispute and any Arbitrator, Arbitration Panel and the AAA shall be
required to fully enforce this requirement.  This Arbitration Program
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior discussions, arrangements, negotiations, and
other communications on dispute resolution.  The provisions of this
Arbitration Program shall survive any termination, amendment, or expiration
of the Documents or the Relationship, unless the parties otherwise expressly
agree in writing.  To the extent permitted by applicable law, Arbitrators,
including any Arbitration Panel, shall have the power to award recovery of
all costs and fees (including attorneys' fees, administrative fees, and
arbitrators' fees) to the prevailing party.  This Arbitration Program may be
amended, changed, or modified only by the express provisions of a writing
which specifically refers to this Arbitration Program and which is signed by
all the parties hereto.  If any term, covenant, condition, or provision of
this Arbitration Program is found to be unlawful, invalid or unenforceable,
such illegality or invalidity or unenforceability shall not affect the
legality, validity, or enforceability of the remaining parts of this
Arbitration Program, and all such remaining parts hereof shall be valid and
enforceable and have full force and effect as if the illegal, invalid, or
unenforceable part had not been included.  The captions or headings in this
Arbitration Program are for convenience of reference only and are not
intended to constitute any part of the body or text of this Arbitration
Program.  Each party agrees to keep all Disputes and arbitration proceedings
strictly confidential, except for disclosures of information required in the
ordinary course of business of the parties or by applicable law or
regulation.  To the maximum extent permitted by law, this Arbitration Program
modifies and supersedes any and all prior agreements for arbitration between
the parties.

    16.     Notices.   All notices, demands and other communications between
Lessor and the Guarantor under this Guarantee shall be in writing, which may
include cable, telex or telecopy) and shall be delivered or sent to the
address or telex number shown below, or to such other address, telex or
telecopy number as either of us may be written notice to the other have
designated for such purpose.  Any such notice, demand or other communication
shall not be effective until actually received.

If to Lessee:            Pier Group, Inc.
                         c/o Bear Stearns
                         245 Park Avenue
                         New York, New York 10167
                         Attention: James D.  Price

If to the Guarantors:    Pier 1 Imports, Inc.  
                         301 Commerce Street, Suite 600 
                         Fort Worth, Texas 76102 
                         Attention: Robert G.  Herndon,
                         Executive Vice President and CFO
                         Telex: 203955 
                         Telecopier: 817-332-5727 
                         Telephone: 817-878-8000

                         Pier 1 Imports (U.S.), Inc.
                         301 Commerce Street, Suite 600
                         Fort Worth, Texas 76102
                         Attention: Robert G.  Herndon,
                         Executive Vice President and CFO
                         Telex: 203955
                         Telecopier: 817-332-5727
                         Telephone: 817-878-8000

    17.  Term.   This Guarantee is not limited to any particular period of
time but shall continue in full force and effect until all of the Obligations
have been fully and finally paid or have been otherwise discharged by Lessor,
and the Guarantors shall not be released from any obligations or liability
hereunder until such full payment or discharge shall have occurred.

    18.     Governing Law. This Guarantee shall be governed by and construed in
accordance with the laws of the State of Texas.  This Guarantee is
performable in Tarrant County, Texas, and each of the Guarantors hereby waive
the right to be sued elsewhere.

    19.     FINAL AGREEMENT.  THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER THEREOF AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
                             GUARANTORS:

                             PIER 1 IMPORTS, INC.


                             By:____________________
                                Robert G.  Herndon,
                                Executive Vice President

                             PIER 1 IMPORTS (U.S.), INC.


                             By:____________________
                                Robert G.  Herndon,
                                Executive Vice President


                             LESSOR:

                             PIER GROUP, INC.


                             By:____________________
                                Robert G.  Herndon,
                                President

Agreed and Accepted as of 
the date first above written:

ASSIGNEE:

FIRST INTERSTATE BANK OF 
 TEXAS, N.A., as Agent


By:____________________
   Terry R.  Dallas,
   Senior Vice President

                          FIRST AMENDMENT
                               TO
                          LEASE GUARANTEE


    This First Amendment to Lease Guarantee is made effective as of April 28,
1993 by and between Pier 1 Imports, Inc., a Delaware corporation, and Pier 1
Imports (U.S.), Inc. (hereinafter collectively referred to as the 
"Guarantor"), and Pier Group, Inc., a Delaware corporation ("Lessor").

    WHEREAS, the Guarantor and Lessor entered into that certain Lease
Guarantee dated December 30, 1992 (the "Lease Guarantee") relating to leases
between Lessor and Pier Imports (U.S.), Inc., and leases between Lessor and
Wolfe Nursery, Inc.; and

    WHEREAS, Guarantor has sold (the "Sale") all of its capital stock in
Sunbelt Nursery Group, Inc. to a wholly-owned subsidiary of General Host
Corporation, a New York corporation ("General Host") in exchange for
1,940,000 shares of common stock of General Host; and

    WHEREAS, the parties desire to amend the Lease Guarantee in certain
respects to take into account the terms of the Sale and the Credit Facilities
Agreement dated April 28, 1993 between Pier 1 Imports, Inc. and Sunbelt
Nursery Group, Inc. executed in connection therewith.

    NOW, THEREFORE, for and in consideration of and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor and Lessor hereby agree as follows:

                                 1.

    Unless otherwise specified herein, terms defined in the Lease Guarantee
shall have the same meaning when used herein and all section references refer
to sections in the Lease Guarantee.

                                 2.

    The first paragraph on the first page of the Lease Guarantee is amended to
read in its entirety as follows:

        WHEREAS, Lessor has entered into and will continue to enter into
    lease agreements (collectively, the "Lease Agreements," whether now or
    hereafter in effect), from time to time with Pier Lease, Inc., a
    Delaware corporation and an affiliate of Guarantor (hereinafter referred
    to as the "Lessee"); and

                                 3.

    The definitions of "Lessee" and "Restricted Investments" in Section 3 of
the Lease Guarantee are amended to read in their entirety as follows:
    
    "Lessee" shall mean Pier Lease, Inc., a Delaware corporation, and its
successors and assigns.

        "Restricted Investments" shall mean any investments in or loans and
    advances to, other Persons except (i) obligations of the United States
    government due within one (1) year, (ii) certificates of deposit
    (including Eurodollar deposits) and bankers' acceptances (from commercial
    banks having capital resources in excess of $100 million) due within one
    (1) year and payable in U.S. dollars, (iii) commercial paper rated P-l by
    Moody's or A-l by Standard & Poor's, (iv) debt of any state or political
    subdivision that is rated A or better by Moody's or Standard' & Poor's and
    that matures within one (1) year, (v) obligations or securities of a
    Subsidiary or a corporation which immediately after such purchase or
    acquisition will be a Subsidiary, (vi) stock or securities received in
    settlement of debts owing to the Guarantor or any Subsidiary not exceeding
    $5,000,000.00, including receivables arising from the sale of goods and
    services in the ordinary course of business of the Guarantor and its
    Subsidiaries, (vii) travel or like advances to officers and/or employees
    in the ordinary course of business and loans to officers and/or employees
    made on or before May 24, 1991 for the purchase of capital stock of the
    Guarantor (including the capitalization of up to one-half of the accrued
    interest on such loans to officers and/or employees), with all such travel
    or like advances and loans not exceeding $10,000,000.00 in the aggregate,
    (viii) not more than 1,940,000 shares of the common stock of General Host
    Corporation, a New York corporation, plus any additional shares which are
    received as a result of stock dividends, stock split or combination of
    shares, recapitalization, reclassification, merger or similar capital or
    corporate structure change, (ix) any loans or guaranties made by the
    Guarantor or any of its Subsidiaries to or for the benefit of Sunbelt or
    any of its Subsidiaries not exceeding an aggregate principal amount of
    $12,000,000 at any one time outstanding, (x) any loan participation
    program(s) for a period not to exceed seven (7) days with credit risk to
    companies with long-term debt rating by Standard & Poor's or Moody's of
    not less than single A, (xi) any loans or guaranties made by the Guarantor
    or any of its Subsidiaries to or for the benefit of Pier Retail Group
    Limited, a company organized under the laws of the United Kingdom, not
    exceeding an aggregate principal amount of $6,500,000 at any one time
    outstanding, and (xii) any stock or securities of Sunbelt which the
    Guarantor or any of its Subsidiaries acquires through the exercise of its
    remedies with respect to any lien or security interest held by Guarantor
    or any of its Subsidiaries on such stock or securities.

                                 4.

    Section 8(d)(ii) of the Lease Guarantee is amended to read in its entirety
as follows:

        (ii) Funded Debt -- Other than for the Guaranteed Debt by the
    Guarantor or any of its Subsidiaries described in subsection (ix) of the
    definition of "Restricted Investments" in Section 3 hereof (the "Sunbelt
    Debt Guarantee"), create, incur, assume or suffer to come into existence
    any additional Funded Debt unless after giving effect thereto (i) Senior
    Funded Debt is less than 50% of Consolidated Net Tangible Assets and
    (ii) all Funded Debt in the aggregate is less than sixty percent (60%)
    of Consolidated Net Tangible Assets. With respect to Subsidiaries which
    are not Guarantors, create, incur, assume or suffer to come into
    existence any additional Funded Debt by such Subsidiaries unless after
    giving effect thereto all Funded Debt by such Subsidiaries in the
    aggregate is less than 70% of Consolidated Net Tangible Assets of such
    Subsidiaries. As used in this paragraph 8(ii), (A) prior to demand being
    made upon the Guarantor to pay its obligations under the Sunbelt Debt
    Guarantee, the term Funded Debt (individually and as used in the
    definition of Senior Funded Debt) shall only include the Guaranteed Debt
    of Sunbelt to the extent the aggregate amount of such Guaranteed Debt of
    Sunbelt exceeds the sum of Sunbelt's Cash Equivalents, and (B) from and
    after demand being made upon the Guarantor to pay its obligations under
    the Sunbelt Debt Guarantee, the term Funded Debt (individually and as
    used in the definition of Senior Funded Debt) shall include such
    Guaranteed Debt of Sunbelt.

                                 5.

    Section 8(e) of the Lease Guarantee is amended to read in its entirety as
follows:

        (e) Investments. Make or permit any of its Subsidiaries to make any
    Investment, except (i) purchases of majority of the outstanding stock of
    any corporation, (ii) Investments in Guarantor, any of its Subsidiaries,
    or any Person that is wholly-owned by Guarantor and/or its Subsidiaries,
    not to exceed in the aggregate twenty-five million dollars ($25,000,000)
    (iii) Investments in Cash Equivalents or readily marketable securities
    having a quoted market value, (iv) Investments in Persons to the extent
    permitted by Section 8(c) hereof, (v) Investments in any partnership,
    corporation or joint venture the sole purpose of which is to obtain land
    and improvements used in the ordinary course of business of Guarantor or
    any of its Subsidiaries, which Investments under this subsection (v)
    shall not exceed $75,000,000 in the aggregate, (vi) loans or advances to
    employees in the ordinary course of business that do not exceed
    $5,000,000 in the aggregate, (vii) any loan or guaranties made by
    Guarantor or any of its Subsidiaries to or for the benefit of Sunbelt or
    any of its Subsidiaries not exceeding an aggregate principal amount of
    $12,000,000 at any one time outstanding, (viii) any loans or guaranties
    made by Guarantor or any of its Subsidiaries to or for the benefit of
    Pier Retail Group Limited not exceeding an aggregate principal amount of
    $6,500,000 at any one time outstanding, (ix) any stock or securities of
    Sunbelt which Guarantor or any of it Subsidiaries acquires through
    foreclosure of any lien or security interest held by Guarantor or any of
    its Subsidiaries on such stock or securities, and (x) loan participation
    programs for a period not to exceed seven days with credit risk to
    companies with long-term debt rating by Standard Poor's or Moody's of
    not less than single A.

                                 6.

    Section 8(g) of the Lease Guarantee is amended to read in its entirety as
follows:

        (g) Guaranteed Debt. Create, assume or suffer to exist or permit any
    of its Subsidiaries to create, suffer or exist any Guaranteed Debt
    except (i) Guaranteed Debt in existence on the date hereof, (ii)
    Guaranteed Debt that is secured by assets of the primary obligor having
    a fair market value at least equal to the amount of such Guaranteed
    Debt, as determined by an independent qualified appraiser selected by
    Guarantor (which appraisal, at Lessor's or any Subsequent Holder's
    reasonable request and at Lessor's expense, shall be promptly updated,
    but such request shall not be made more often than once every 12
    months), and (iii) Guaranteed Debt of Guarantor or a Subsidiary on the
    consolidated balance sheet of Guarantor and its Subsidiaries; provided,
    however, that in no event shall the aggregate amount of all consolidated
    Guaranteed Debt (other than the Guaranteed Debt described in (iii)
    above) of Guarantor and its Subsidiaries exceed the Consolidated
    Tangible Net Worth, (iv) the Sunbelt Debt Guarantee and (v) any
    Guaranteed Debt by Guarantor or any of its Subsidiaries described in
    subsection (xi) of the definition of "Restricted Investments" in Section
    3 hereof.

                                 7.

    The effectiveness of this First Amendment is subject to the conditions
precedent that the Lessor shall have received Officers' Certificates, dated
the date hereof, certifying inter alia:

            (a) a true and correct copy of the resolutions adopted by the
        Board of Directors or Executive Committees of Guarantor;

            (b) the incumbency and specimen signatures of the Persons
        executing any documents on behalf of each of the Guarantors;

            (c) the truth as of the date first written above of the
        representations and warranties made by Guarantors in the Lease
        Guarantee, as amended hereby; and

            (d) the absence of the occurrence and continuance of any Default
        or Event of Default after giving effect to this First Amendment.

                                 8.

    Except as amended above, the Lease Guarantee is ratified and confirmed and
shall remain in full force and effect.

                                 9.

    This First Amendment to Lease Guarantee shall be binding upon and inure to
the benefit of the parties and their successors and assigns.

                                 10.

    THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
RELATING TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

    IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Lease Guarantee to be executed by their respective officers thereunto duly
authorized, as of the date first written above.

                                          GUARANTOR:

                                          PIER 1 IMPORTS, INC.


                                          By:_____________________
                                              Robert G. Herndon,
                                              Executive Vice President

                                          PIER 1 IMPORTS (U.S.), INC.


                                          By:_____________________
                                              Robert G. Herndon,
                                              Executive Vice President

                                          LESSOR:

                                          PIER GROUP, INC.


                                          By:_____________________
                                             George Mihalko,
                                             President

Agreed and Accepted as of
the date first above written:

ASSIGNEE:

FIRST INTERSTATE BANK OF
  TEXAS, N.A., as Agent


By:_______________________
   Terry R. Dallas,
   Senior Vice President

                     SECOND AMENDMENT TO LEASE GUARANTEE

    This Second Amendment to Lease Guarantee (hereinafter referred to as "this
Amendment") is entered into as of the 25th day of February, 1994, among PIER
1 IMPORTS, INC., a Delaware corporation, and PIER 1 IMPORTS (U.S.), INC., a
Delaware corporation, (Pier 1 Imports, Inc. and Pier 1 Imports (U.S.), Inc.
are hereinafter collectively referred to as the "Guarantors" and individually
referred to as a "Guarantor") and PIER GROUP, INC., a Delaware corporation
("Lessor").

    WHEREAS, Guarantors and Lessor previously entered into a Lease Guarantee
(the "Lease Guarantee") dated December 30, 1992, whereby Guarantors
guaranteed the full payment and performance when due of all rent,
indebtedness, and obligations now or hereafter existing or owing to Lessor
pursuant to lease agreements from time to time entered into by Pier Lease,
Inc., a Delaware corporation;

    WHEREAS, the Lease Guarantee was amended by a First Amendment to Lease
Guarantee dated as of April 28, 1993 (the "First Amendment");

    WHEREAS, Guarantors and Lessor have agreed to amend the Lease Guarantee as
more fully set forth hereinafter;

    NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantors and the Lessor agree as follows:

    1.      Subsection (v) of Section 8(d) of the Lease Guarantee is hereby
amended to read as follows:  

        (v)  Maintenance of Fixed Charge Coverage -- Permit the ratio of Cash
    Flow Available for Fixed Charges to Fixed Charges, to be determined on
    the last day of each fiscal quarter for the preceding 12 months, to be
    less than (i) 1.3 to 1 for each of the fiscal quarters ending during the
    period from the date of this Guarantee through February 27, 1993, (ii)
    1.4 to 1 for each of the fiscal quarters ending during the period from
    February 28, 1993, through February 25, 1994, (iii) 1.2 to 1 for each of
    the fiscal quarters ending during the period from February 26, 1994, to
    November 30, 1994, and (iv) 1.25 to 1 for each fiscal quarter ending
    thereafter.

    2.      Except as herein specifically amended and modified the Lease
Guarantee and First Amendment is unchanged and continues in full force and
effect.  

    3.      Each Guarantor hereby consents and agrees to this Amendment and 
each Guarantor hereby confirms and ratifies the Lease Guarantee's and First
Amendment's existence and each and every term, condition, and covenant
therein contained, to the same extent and as though the same were set forth
herein in full.

    4.    This Amendment may be executed in a number of identical
counterparts, each of which shall be deemed an original.  In making proof of
this instrument, it shall not be necessary for any party to account for all
counterparts, and it shall be sufficient for any party to produce but one
such counterpart.

    5.      The Lease Guarantee, First Amendment and this Amendment constitute 
a "Loan Agreement" as defined in Section 26.02(a) of the Texas Business and
Commerce Code, represent the final and entire agreement and understanding
among the Guarantors and the Lessor relating to the subject matter hereof and
thereof, supersede all prior proposals, agreements and understandings
relating to the subject matter and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties.  There
are no unwritten oral agreements among the parties.

    IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first written above.

                                     GUARANTORS:

                                     PIER 1 IMPORTS, INC.


                                     By:__________________________
                                           Robert G. Herndon,
                                           Executive Vice President

                                     PIER 1 IMPORTS (U.S.), INC.


                                     By:___________________________
																																								Robert G. Herndon,
                                        Executive Vice President


                                     LESSOR:

                                     PIER GROUP, INC.


                                     By:___________________________
                                        George R. Mihalko, President

AGREED AND ACCEPTED as of the date first above written:

                                     ASSIGNEE:

                                     FIRST INTERSTATE BANK OF TEXAS, N.A., 
                                     as Agent


                                     By:___________________________
                                     Name:_________________________
                                     Title:________________________

                             EXHIBIT 10.15.2

                            EXTENSION AGREEMENT

    This Extension Agreement (this "Agreement"), entered into on April 25,
1994, by and between Sunbelt Nursery Group, Inc., a Delaware corporation
("Borrower"), and Pier 1 Imports, Inc., a Delaware corporation ("Pier 1"),
and Pier-SNG, Inc., a Delaware corporation ("Pier-SNG" and, collectively with
Pier 1, sometimes referred to as "Lender").

                              RECITALS

    A.      Borrower and Pier 1 entered into that certain Credit Facilities
Agreement dated as of April 28, 1993 (such Credit Facilities Agreement, as
the same has been amended, supplemented, waived or otherwise modified from
time to time, the "Credit Agreement") pursuant to which Pier 1 extended
credit to or for the benefit of Borrower in the form of a revolving credit
facility, a real estate leasing facility and Pier 1 guaranties of Borrower
indebtedness on the terms and conditions set forth in the Credit Agreement.

    B.      Pursuant to the Credit Agreement, Pier 1 guaranteed payment of
Borrower's note obligation to Texas Commerce Bank National Association, as
successor by merger to Texas Commerce Bank, National Association (the "TCB
Note"), and the Borrower's note obligation to Standard Chartered Bank (the
"Standard Chartered Note") in the approximate aggregate principal amount of
$9.715 million (the TCB Note and the Standard Chartered Note, sometimes
collectively referred to as the "Notes").

    C.      In April 1994, Pier-SNG acquired the Notes.

    D.      In addition to the amounts owed in connection with the Notes,
Borrower owes an additional principal amount of approximately $2 million to
Pier 1 pursuant to notes issued under the Credit Agreement (the aggregate
principal amount owed under the Notes and pursuant to the Credit Agreement,
together with all accrued, unpaid interest thereon and all fees and expenses
from time to time related thereto, sometimes collectively referred to as the
"Revolving Credit Balance").

    E.      The maturity date of the Credit Agreement and of the Standard
Chartered Note is April 28, 1994, and the maturity date for the TCB Note is
April 25, 1994.

    F.      Borrower is attempting to refinance (the "New Financing") the
Revolving Credit Balance.  To facilitate the New Financing, Borrower has
requested that Lender amend the Credit Agreement and the Notes to extend the
maturities thereof as herein provided.

    NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:

    1.      Extension Consideration.  In consideration of Lender's Agreement to
extend the maturity of the Notes and Credit Agreement through and including
June 30, 1994 as herein provided, Borrower shall, contemporaneously with the
execution of this Agreement, pay to Lender the sum of $120,000 in cash or
immediately available funds (the "Consideration").

    2.      Amendments of the Credit Agreement and the Notes.

    (a)  Amendment of the Credit Agreement.  The definition "Termination Date"
in Section 1.1 of the Credit Agreement is, effective as of the date of this
Agreement and Lenders's receipt of the Consideration ("Effective Date"),
hereby replaced in its entirety as follows:

    "Termination Date" shall mean (i) June 30, 1994, or the earlier date of
termination in whole of the Commitment pursuant to Sections 2.7 or 6.2

    (b)  Amendment of the TCB Note.  The definition "Original Termination
Date" in Section 1.1 of that certain Revolving Credit Facility Agreement (the
"TCB Facility") dated as of December 30, 1991, as amended, between Borrower
and Texas Commerce Bank, National Association, as predecessor in interest to
Pier-SNG, is, effective as of the Effective Date, hereby replaced in its
entirety as follows:

    "Original Termination Date" shall mean (i) June 30, 1994.

    (c)  Amendment to the Standard Chartered Note.  The definition
"Termination Date" in Section 1.1 of that certain Revolving Credit Facility
Agreement (the "SCB Facility") dated as of January 31, 1992, as amended,
between Borrower and Standard Chartered Bank, as predecessor in interest to
Pier-SNG, is, effective as of the Effective Date, hereby replaced in its
entirety as follows:

    "Termination  Date" shall mean (i) June 30, 1994, or the earlier date of
termination in the whole of the Commitment pursuant to Sections 2.7 or 6.2.

    (d)  Payment of Accrued Interest.  The Notes and Credit Agreement are
hereby amended so as to provide for Borrower's delivery to Lender of the
following interest payments thereunder:

        i)  Accrued Interest on the Revolving Credit Balance as provided for
under the Notes and Credit Agreement ("Accrued Interest") for the month of
April 1994 shall be payable to Lender on or before April 30, 1994;

        ii)  Accrued Interest for the month of May 1994 shall be payable to
Lender on or before May 31, 1994; and 

        iii) Accrued Interest for the month of June 1994 shall be payable to
Lender on or before June 30, 1994.

    (e)  Forgiveness of Certain Indebtedness. In the event Borrower repays to
Lender an amount equal to the Revolving Credit Balance less the sum of
$120,000, Lender shall, irrespective of the date of such repayment, forgive
the remaining $120,000 Revolving Credit Balance.

    (f)  Amendment of the Notes and Credit Agreement.  Notwithstanding any
provision in the Notes or the Credit Agreement to the contrary, Borrower
shall not have the right to obtain any additional extensions of credit under
the Notes or Credit Agreement.

    3.      Representations and Warranties. (a) To induce Lender to enter into
this Agreement, Borrower hereby represents and warrants to Lender that (i)
Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
and authority to perform its obligations under this Agreement, (ii) the
execution, delivery and performance of this Agreement have been duly
authorized by all requisite action on the part of Borrower and do not and
will not violate the certificate of incorporation or bylaws of Borrower or
any other agreement to which Borrower is a party, or any law, rule or
regulation, or any order of any court, governmental authority or arbitrator
by which it or any of its properties is bound and (iii) Borrower will apply
the net proceeds of the New Financing to repay the Revolving Credit Balance.

    (b)  Lender hereby represents and warrants to Borrower that (i) Pier-SNG
is the sole owner of the Notes and is successor in interest to the respective
banks under the SCB Facility and the TCB Facility with full power and
authority to amend such facilities, (ii) each of Pier 1 and Pier-SNG is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to
perform its obligations under this Agreement and (iii) the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action on the part of Pier 1 or Pier-SNG and do not and will not
violate the certificate of incorporation or bylaws of Pier 1 or Pier-SNG or
any other agreement to which either Pier 1 or Pier-SNG is a party, or any
law, rule or regulation, or any order of any court, governmental authority or
arbitrator by which they or any of their properties is bound.

    4.      Covenants. Notwithstanding any provisions to the contrary contained
in the Credit Agreement, Borrower hereby covenants and agrees that it will
perform, observe and comply with each of the following covenants:

    (a)  Weekly Financial Report. Borrower shall provide to Lender by 2:00
p.m., Fort Worth, Texas time on the second business day of each week,
beginning May 3, 1994, a financial report for Borrower for the previous week
containing income, expense and cash flow information.  All such reports shall
be prepared in accordance with sound accounting principles consistently
applied and shall be certified by the chief executive officer or the chief
financial officer of Borrower to be true and correct to the best of such
person's knowledge.

    (b)  Other Indebtedness.  Borrower shall not, and shall not suffer its
subsidiaries to, repay any indebtedness owing to any parent, affiliate or
controlling person prior to repayment in full of the Revolving Credit
Agreement.

    5.      Ratification of Loan Documents.  Borrower hereby acknowledges and
agrees that the Credit Agreement, the Notes, and all guarantees thereof and
security interests granted in connection therewith in favor of Lender shall
remain in full force and effect and binding on the respective parties
thereto, enforceable in accordance with their respective terms. Except as
provided herein, Borrower hereby ratifies and confirms the Notes and Credit
Agreement and all of its obligations thereunder.

    6.      No Obligation of Lender.  Except as provided herein, Lender shall
have no further obligation whatsoever to extend the maturity of the Notes or
Credit Agreement, waive any Events of Default or defer any payments. 
Borrower hereby acknowledges and understands that upon the maturity of the
Notes or Credit Agreement, as extended hereby, Lender shall have the right to
proceed to exercise any or all rights and remedies to which it is entitled,
which may include foreclosure on any collateral securing the Notes and Credit
Agreement and the institution of legal proceedings.

    7.      No Implied Waivers.  No failure or delay on the part of Lender in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement, the Credit Agreement, the Notes or any
document related thereto shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under this
Agreement, the Notes and the Credit Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege;
provided, however, that any waiver currently in effect with respect to the
Credit Agreement or the Notes shall remain in full force and effect through
the extended maturity dates.

    8.      Expenses of Lender. Borrower agrees to pay on demand all reasonable
costs and expenses incurred by Lender in connection with the preparation,
negotiation, execution and administration of this Agreement, and all
reasonable costs and expenses incurred by Lender in connection with the
enforcement or preservation of any rights or remedies under this Agreement,
the Credit Agreement or the Notes, including without limitation the
reasonable fees and expenses of Lender's legal counsel.

    9.      Indemnification. Section 2.16 of the Credit Agreement is applicable
to this Agreement.

    10.     Survival of Representations and Warranties. All representations and
warranties made in this Agreement shall survive the execution and delivery of
this Agreement, and no investigation by Lender or any closing shall affect
the representations and warranties or the right of Lender to rely upon them.

    11.     Review and Construction of Documents. Borrower hereby acknowledges,
and represents and warrants to Lender, that (i) Borrower has had the
opportunity to consult with legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel, (ii)
Borrower has reviewed this Agreement and fully understands the effects
thereof and all terms and provisions contained therein, and (iii) Borrower
has executed this Agreement of its own free will and volition.

    12.     Entire Agreement; Amendment. This agreement embodies the final,
entire agreement between the parties hereto regarding the maturity extensions
granted herein and supersedes any and all prior commitments, representations
and understandings, whether written or oral, relating to the subject matter
hereof.  The provisions of this Agreement may be amended or waived only by an
instrument in writing signed by the parties hereto.  The Notes, Credit
Agreement and related documents, including but not limited to the Loan Papers
(as defined in the Credit Agreement), continue to evidence the agreement of
the parties with respect to the subject matter thereof.

    13.     Notices. All notices, requests, demands and other communications
under this Agreement shall be given in accordance with the provisions of the
Loan Papers (as defined in the Credit Agreement).

    14.     Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and assigns, provided that Borrower may not
assign any rights or obligations under this Agreement without prior written
consent of Lender.

    15.     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.

    16.     Interpretation. Wherever the context hereof shall so require, the
singular shall include the plural, the masculine gender shall include the
feminine gender and the neuter and vice versa.  The headings, captions and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of the Agreement.

    17.     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 provisions hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.

    18.     Counterparts. This Agreement may be executed and delivered in any
number of counterparts, and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
one and the same instrument.

    19.     Further Assurances.  Each party to this Agreement agrees to execute,
acknowledge, deliver, file and record such further certificates, instruments
and documents, and to do all other acts and things, as may be reasonably
necessary or advisable to carry out the intents and purposes of this
Agreement.

    IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the day and year first above written.

                                 SUNBELT NURSERY GROUP, INC.

                                 By: _____________________________
                                 Title:___________________________


                                 PIER 1 IMPORTS, INC.

                                 By: _____________________________
                                 Title:___________________________



                                 PIER-SNG, INC.

                                 By: _____________________________
                                 Title:___________________________


    To induce Lender to enter into the foregoing Agreement, each of the
undersigned consent and agree (a) to the execution and delivery of the
foregoing Agreement, (b) that such agreement shall in no way release,
diminish, impair, reduce or otherwise adversely affect any obligations,
guarantees or assurances heretofore granted by each of the undersigned to
Lender, which shall each continue to be in full force and effect.  Each of
the undersigned parties waive notice of acceptance of this Agreement by
Lender, which Agreement shall be binding upon each of the undersigned and the
successors and assigns of each of the undersigned and shall inure to the
benefit of Lender and their successors and assigns.

                                 WOLFE NURSERY, INC.

                                 By: _____________________________
                                 Title:___________________________


                                 TIP TOP NURSERIES, INC.

                                 By: _____________________________
                                 Title:___________________________


                                 HOUSTON PATIO & GARDEN CENTERS, INC.

                                 By: _____________________________
                                 Title:___________________________


                                 GREEN BROS. NURSERY, INC.

                                 By: _____________________________
                                 Title:___________________________


                                 SUNBELT MANAGEMENT SERVICES, INC.

                                 By: _____________________________
                                 Title:___________________________


                                 NURSERYLAND GARDEN CENTERS, INC.

                                 By: _____________________________
                                 Title:___________________________





                            WAIVER AGREEMENT


    This Agreement (this "Agreement"), entered into as of May 12, 1994, by and
between Sunbelt Nursery Group, Inc., a Delaware corporation ("Borrower"), and
Pier 1 Imports, Inc., a Delaware corporation ("Pier 1"), and Pier-SNG, Inc.,
a Delaware corporation ("Pier-SNG" and, collectively with Pier 1, sometimes
referred to as "Lender"), relates to the following four agreements, as
amended, supplemented, waived, extended or otherwise modified from time to
time, and to the notes issued pursuant to (i), (ii) and (iii) below: (i)
Revolving Credit Facility Agreement dated as of December 30, 1991, between
Borrower and Texas Commerce Bank National Association as successor by merger
to Texas Commerce Bank, National Association (the "TCB Agreement"), (ii)
Revolving Credit Facility Agreement dated as of January 31, 1992 between
Borrower and Standard Chartered Bank (the "SCB Agreement"); (iii) Credit
Facilities Agreement dated as of April 28, 1993 between Borrower and Pier 1
(the "Pier 1 Agreement," and collectively with the TCB Agreement and the SCB
Agreement, the "Credit Agreements"); and (iv) Extension Agreement dated as of
April 25, 1994 by and between Borrower and Pier 1 and Pier-SNG (the
"Extension Agreement").

                             RECITALS

    A.      Borrower and Pier 1 entered into the Pier 1 Agreement pursuant to
which Pier 1 extended credit to or for the benefit of Borrower in the form of
a revolving credit facility, a real estate leasing facility and Pier 1
guaranties of Borrower indebtedness on the terms and conditions set forth in
the Pier 1 Agreement.

    B.      Pursuant to the Pier 1 Agreement, Pier 1 guaranteed payment of
Borrower's note obligations under the TCB Agreement and the SCB Agreement.

    C.      In April 1994, Pier-SNG acquired the notes issued pursuant to the 
TCB Agreement and the SCB Agreement.

    D.      Lender and Borrower entered into that certain Extension Agreement
dated as of April 25, 1994 and relating to the Credit Agreements.

    E.      Borrower has requested that Lender (i) waive certain provisions of
the Credit Agreements and the Extension Agreement and (ii) forbear with
respect to the provisions so waived, and Lender is willing to so waive and
forbear on the terms and conditions hereof.

                             AGREEMENT

    NOW, THEREFORE, in consideration of the mutual premises contained herein,
the parties hereto agree as follows:

    1.  Waiver.  Lender hereby waives until July 1, 1994 any default, breach,
violation or event of default existing as of the date hereof under any of the
Credit Agreements (and the notes issued thereunder) or the Extension
Agreement (including any cross default(s) arising under (A) Section 6.1(c) of
each of the Credit Agreements (and the notes issued thereunder) and (B)
Section 6.1(d) of each of the TCB Agreement and the SCB Agreement (and the
notes issued thereunder), resulting  from the failure of Borrower to (i)
satisfy the current ratio requirement set forth in Section 4.1(f) of each of
the TCB Agreement and the SCB Agreement; (ii) deliver the annual report of
the Borrower within the period required by Section 4.1(k)(i) of each of the
Pier 1 Agreement and the TCB Agreement and (iii) timely deliver the notice
required by Section 4.1(k)(iv) of each of the Credit Agreements with respect
to the foregoing items (i) and (ii).  With respect to matters arising as a
result of or from the matters described above, Lender hereby agrees to
forbear from exercising its rights and remedies under the Credit Agreements
(and the notes issued thereunder) until July 1, 1994.

    2.  Delivery of Annual Report.  The Borrower hereby covenants to deliver
to Lender its Annual Report on Form 10-K for the fiscal year ended January
31, 1994 as soon as such report is available.

    3.  Amendment of the Pier 1 Agreement.  Effective as of the date hereof,
Borrower shall not have the right to obtain extensions of credit under the
Pier 1 Agreement in excess of amounts outstanding thereunder as of the date
hereof.

    4.  Status of the Credit Agreements.  This Agreement is limited solely for
the purpose and to the extent expressly set forth herein, and nothing herein
contained or implied shall constitute a waiver or amendment of any other term
or condition of the Credit Agreements or of any right, power or remedy of
Lender with respect thereto.

    5.  Counterparts.  This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing such a
counterpart.

    6.  Construction.  This 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 thereunder.

    IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date first written above.


                                 SUNBELT NURSERY GROUP, INC.


                                 By: ________________________
                                 Title: _____________________

                                 PIER 1 IMPORTS, INC.


                                 By: ________________________
                                 Title: _____________________


                                 PIER-SNG, INC.


                                 By: ________________________
                                 Title: _____________________

    To induce Lender to enter into the foregoing Agreement, each of the
undersigned consent and agree (i) to the execution and delivery of the
foregoing Agreement, (ii) that such agreement shall in no way release,
diminish, impair, reduce or otherwise adversely affect any obligations,
guarantees or assurances heretofore granted by each of the undersigned to
Lender, which shall each continue to be in full force and effect.  Each of
the undersigned parties waive notice of acceptance of this Agreement by
Lender, which Agreement shall be binding upon each of the undersigned and the
successors and assigns of each of the undersigned and shall inure to the
benefit of Lender and their successors and assigns.

                                 WOLFE NURSERY, INC.


                                 By: ________________________
                                 Title: _____________________

                                 TIP TOP NURSERIES, INC.


                                 By: ________________________
                                 Title: _____________________


                                 HOUSTON PATIO & GARDEN CENTERS, INC.


                                 By: ________________________
                                 Title: _____________________


                                 GREEN BROS. NURSERY, INC.


                                 By: ________________________
                                 Title: _____________________


                                 SUNBELT MANAGEMENT SERVICES, INC.


                                 By: ________________________
                                 Title: _____________________


                                 NURSERYLAND GARDEN CENTERS, INC.


                                 By: ________________________
                                 Title: _____________________
                                 EXHIBIT 10.16

                               PIER 1 IMPORTS, INC.

                     SENIOR MANAGEMENT ANNUAL BONUS PLAN
                 For the Fiscal Year Ending February 25, 1995


    1.      Purpose. The purpose of the Pier 1 Imports, Inc. Senior Management
Annual Bonus Plan (the "Plan") is to encourage superior performance and
reward senior management of the Company for effective service as measured by
total shareholder return of the Company relative to a peer group of specialty
retail companies as specifically set forth below.  The opportunities for
compensation under the Plan are further intended to strengthen the ability of
the Company to retain and attract the senior management upon which continued
growth and profitability of the Company depend.

    2.      Definitions. For purposes of the Plan, the following terms shall 
have the meanings set forth below unless otherwise expressly provided or
unless the context otherwise requires:

    "Committee" means the Compensation Committee of the Board of Directors of
the Company.

    "Company" means Pier 1 Imports, Inc., a Delaware corporation.

    "CEO" means the Chief Executive Officer of the Company.

    "CFO" means the Chief Financial Officer of the Company.

    "COO" means the Chief Operating Officer of the Company.

    "Participant" means each of the CEO, COO and CFO.

    "Peer Group" means the group of companies provided in Section 5(c) hereof.

    "Target Year" means the fiscal year of the Company for which awards are
determined under the Plan.

    "Total Shareholder Return" of a company for a year means a fraction,
expressed as a percentage, in which (A) the numerator of the fraction is the
sum (which can be a negative amount) of (i) the price of the publicly traded
common stock of the company at the end of the year minus the price of such
stock at the end of the prior year, plus (ii) the total value (at the time of
payment) of all dividends and other distributions (other than dividends and
distributions consisting of shares of common stock of such company) actually
paid during the year with respect to a single share of common stock, and (B)
the denominator of the fraction is the price of the common stock at the end
of the prior year.  The price of the common stock at the end of the prior
year shall be adjusted to reflect stock dividends, stock splits, combinations
of shares and similar changes to the company's capital structure during the
year.  For purposes of these calculations, the year for each company shall be
the Target Year.  The price of the common stock of a company shall be
determined as the average of the closing prices, as reported for composite
transactions, of such common stock during the 10 consecutive days in which
such common stock was publicly traded ending on the last day of the Target
Year or the year preceding the Target Year, as appropriate.

    3.      Administration.  The Plan shall be administered by the Committee,
which shall have the power to interpret the Plan and to make all other
determinations necessary or advisable for the administration of the Plan.

    4.      Participation.  Each Participant shall participate in the Plan 
during each Target Year that the Participant is employed in such capacity by
the Company.  If a Participant ceases to be employed by the Company for any
reason prior to the end of a Target Year, such Participant's participation in
the Plan will terminate, and such Participant will be ineligible to receive
any compensation under the Plan for such Target Year.

    5.      Awards.

        (a)  Annual awards under the Plan shall be based on Total Shareholder
Return of the Company's Common Stock for the Target Year compared with Total
Shareholder Return for each of the companies constituting the Peer Group.  No
awards shall be payable under the Plan to the extent that consolidated net
income (after inclusion of awards hereunder) of the Company shall be less
than zero.

        (b)  In order to determine awards for each Participant, the Company
shall be ranked relative to each of the Peer Group companies in accordance
with Total Shareholder Return for the Target Year.  After the Company's rank
has been established within the Peer Group, the amount of the award for each
Participant shall equal the portion of such Participant's base salary during
the Target Year that is equal to the percent of such Participant's base
salary listed opposite the Company's ranked position in the table set forth
on Exhibit A attached hereto.

        (c)  The Peer Group shall consist of the high-growth specialty retail
companies listed on Exhibit B attached hereto.  In the event that during a
Target Year one or more of the companies comprising the Peer Group shall
dissolve, merge, consolidate, cease to be publicly traded or are no longer
appropriate for comparison in the Peer Group, as determined by the Committee
in its discretion, then such company or companies shall be automatically
deleted from the Peer Group and for each company deleted a company listed
under "Alternate companies" on Exhibit B shall, in the order listed, replace
such deleted company.  If the number of companies in the Peer Group that
dissolve, merge, consolidate, cease to be publicly traded or are no longer
appropriate for comparison in the Peer Group, as determined by the Committee
in its discretion, shall be greater than the number listed as "Alternate
companies" on Exhibit B, then the Committee shall select additional companies
for replacement or make such other changes to the Plan that the Committee in
its discretion deems appropriate.  The Committee may, in its discretion prior
to the commencement of a Target Year, delete, add or substitute companies in
the Peer Group when in the judgment of the Committee such changes to the Peer
Group advance the purposes of the Plan.

    6.      Certification and Payment of Awards.  As soon as practicable after
the end of a Target Year, the independent certified public accountants for
the Company shall report to the Committee the amount of the awards for the
Participants, along with supporting data for such determination.  After
review of such information, and upon determination that the awards conform to
the provisions of the Plan, the Committee shall certify that the awards
conform to the Plan.  After such certification, the Company shall pay such
awards in cash to the appropriate Participants.

    7.      Effective Date; Shareholder Approval. The Plan shall be effective 
as of the beginning of the Company's fiscal year ending February 25, 1995;
provided that prior to the completion of such fiscal year, the Plan shall be
approved by the holders of a majority of the shares of Company Common Stock
present or represented by proxy and voting on the Plan at a duly held meeting
of the shareholders of the Company.

    8.      Amendment of the Plan. The Committee may from time to time modify 
or amend the Plan in any respect and make reasonable interpretations of the
Plan to take into account extraordinary or unusual items or events that
affect the purposes of the Plan; provided that any material amendments
regarding eligible Participants, the terms of the performance goals or the
maximum amounts of compensation payable under the Plan shall be approved by
the shareholders of the Company prior to any payments to Participants under
the amended Plan.

    9.      Termination of the Plan.  The Board of Directors of the Company may
terminate the Plan prior to the commencement of any fiscal year to which the
Plan would otherwise apply.

    10.     Employment Rights.  Nothing in the Plan shall confer upon any
Participant the right to continue in the employ of the Company or its
subsidiaries or shall interfere with or restrict in any way the rights of the
Participant's employer to discharge the Participant at anytime for any reason
whatsoever, with or without cause.


                                 EXHIBIT A




                                                  Bonus as % of Base Salary
                      Ranked Position
  Award Level         of the Company              CEO       COO       CFO
                      and Peer Group

  Maximum                Highest                  125%      110%      100%
                            2                     100%      90%       85%
                            3                     100%      90%       85%
                            4                     100%      90%       85%
                            5                     75%       70%       60%
                            6                     75%       70%       60%
                            7                     75%       70%       60%
                            8                     75%       70%       60%
                            9                     40%       36%       32%
                            10                    40%       36%       32%  
                            11                    40%       36%       32%
  Threshold                 12                    40%       36%       32%
                            13                    No Bonus Paid
                            14                    No Bonus Paid
                            15                    No Bonus Paid         
                          Lowest

                            EXHIBIT B



The Peer Group shall be comprised of the following companies:  

  The Bombay Company, Inc. 
  Charming Shoppes, Inc. 
  Dayton Hudson Corporation
  Dillard Department Stores, Inc.
  Duty Free International, Inc.
  Fabri-Centers of America, Inc.
  The Gap, Inc.
  The Home Depot, Inc.
  The Limited, Inc.
  Michaels Stores, Inc.
  Nordstrom Inc.
  The Sherwin-Williams Company
  Toys "R" Us, Inc.
  Wal-Mart Stores, Inc. 
  Walgreen Co.  




Alternate companies:

  Heilig-Meyers Company
  Lands' End, Inc.
  Price/Costco, Inc.
                                   EXHIBIT 10.17

                               EXECUTIVE BONUS PLAN

[Date]



301 Commerce Street
Suite 600
Fort Worth, Texas  76102

Dear:

I would like to advise you of the details of Pier 1 Imports' FY ___ Incentive
Plan for [Corporate Vice Presidents - Key Management].  Your challenge, as
key member of the management team, is to contribute toward greater profits,
increased sales and improved operating efficiencies.

We surveyed several comparable retailers when developing this year's plan.  I
am confident our plan's incentive targets and profitability measurements are
competitive with other retailers.  The basic plan design remains the same
with one improvement.  Beginning with the FY ___ plan, the threshold will be
determined by averaging the pretax profit achieved in the last three years. 
This new method for establishing a threshold will provide an objective
approach to determining a starting point each year.

The pretax profit measurement for the FY ___ plan excludes items extraneous
from normal Pier 1 operating income such as Sunbelt, General Host and The
Pier, and unusual or special gains or charges such as losses or reserves for
closing unprofitable stores.

The FY ___ plan threshold is $___________, an average of the pretax profit
achieved in FY ___, FY ___ and FY 9___.  The plan will pay ___% of target
incentives when the FY ___ pretax profit level reaches $___________ or 10%
above this threshold.

Your FY ___ incentive target is based on your job grade and is expressed as a
percentage of base salary.  We have established incentive targets with the
expectation that both superior individual performance and planned corporate
financial results will be achieved.  Your personal annualized incentive
target for FY ___ is _____% of your base salary.  You must be actively
employed by Pier 1 Imports (U.S.), Inc. as of the last day of FY ___ to be
eligible for an incentive payment.  Final individual amounts may be more or
less than the target depending on the actual overall corporate financial
results.  A performance rating of at least "fully competent" is required to
be eligible for the full target percent.

The plan will pay ___% of target incentives when the FY ___ pretax profit
plan, $_________, is met.  This plan allows Vice Presidents to achieve up to
150% [Key Management - 125%] of their target incentive depending on FY ___
pretax profit.  To do so will take a great team effort!  Attached is an
incentive projection that illustrates how the plan works.  As you can see,
higher pretax earnings mean greater incentive awards.

Please sign this letter and return it to Mitch Weatherly, Senior Vice
President of Human Resources, to acknowledge that you have read and
thoroughly understand this plan and the conditions precedent upon your
receipt of any incentive payments.

Sincerely, 


Marvin J. Girouard
President 



__________________________                        ________________
Receipt Acknowledged                              Date
                             EXHIBIT 10.18

              INDEMNIFICATION OF KEY CORPORATE OFFICERS
                MEDICAL, DENTAL, AND RELATED EXPENSES

    I.      Plan Participants:

    The group covered includes the President, Chief Executive Officer, Chief
Financial Officer and Senior Vice Presidents.

    II.     Type of Plan:

    An indemnification will be paid to each member of the covered group at the
end of each fiscal year.  This payment will be equal to the verified medical,
dental, and related costs incurred by plan participants and their dependents
during the fiscal year.  Additionally, applicable taxes on these payments
will be paid by Pier 1.

    III.    Expenses Covered:

        1. For all matters presently covered by the Pier 1 group medical plan,
the indemnification plan will reimburse for deductibles and co-payments
required under the group medical plan.

        2. All reasonable and customary dental expenses not solely cosmetic in
nature, including 100% of all procedures not covered by the group dental plan
and reimbursement for deductibles and co-payments required under the group
dental plan for those procedures covered under the group dental plan.

        3. Eye examinations, lenses and contact lenses (no frames).

        4. Annual physical examinations.

        5. For prescribed drugs and medicines, the plan will reimburse for
deductibles and co-payments required under the group medical plan.

    IV.     Maximum Benefit:

    The maximum indemnification (payment + "grossed up" taxes) for each
executive will not exceed $7500.

    V.      Effective Date of Changes to Plan:

        March 1, 1987

    VI.     Administration:

    Advances against the annual indemnifications may be paid as frequently as
monthly.

    At the end of the fiscal year, each plan participant will present
documents (medical bills, prescription drug receipts, etc.) in a prescribed
reporting format verifying their total covered expenses to the plan
custodian.  The plan custodian will communicate the prescribed reporting
format.  The plan custodian will verify expenses and issue the participant a
check equal to the difference between the verified expenses and the advances
already issued.  If the advances are greater than the verified expenses, the
participant will then immediately reimburse the company the difference.

    Payments made under this plan are considered ordinary income and will be
reported to the IRS as such.

    VII.    Plan Custodian:

    The plan custodian is the Chief Financial Officer or his designee.



            TAX PREPARATION AND FINANCIAL PLANNING BENEFIT


    Benefit:  Company reimbursement for tax preparation and financial and
estate planning.

    Participant:  Pier 1 Imports Senior Vice Presidents and above.

    Benefit Amount: Up to 1 1/2% of the officer's base salary per year.

    Administration: Participant may make a claim by submitting an expense
statement with receipts for services rendered to the payroll department.

    Taxes:  The individual is responsible.


                                        EXHIBIT 21

                           ROSTER OF SUBSIDIARIES OF REGISTRANT


       Pier 1 Assets, Inc., a Delaware corporation

               Pier 1 Licensing, a Delaware corporation

                       Pier 1 Imports (U.S.), Inc., a Delaware corporation

                                Pier Lease, Inc., a Delaware corporation

                                Pier-HWH, Inc., a Delaware corporation

                                Pier-SNG, Inc., a Delaware corporation

                                PIR Trading, Inc., a Delaware corporation

                                     Pier International Limited, a Hong Kong
                                        private company
                                       EXHIBIT 23

                           CONSENT OF INDEPENDENT ACCOUNTANTS



       We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-9970, 33-32166 and 33-50278) of Pier 1
Imports, Inc. of our report dated April 14, 1994, appearing in Item 8 of this
Form 10-K.


/s/ Price Waterhouse

PRICE WATERHOUSE

Fort Worth, Texas
May 23, 1994