DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT ("Agreement") dated as of the
__th day of __________, 1997, between Pier 1 Services Company, a Delaware
business trust (the "Company"), and ______________ ("Employee").
WHEREAS, Employee is currently employed by the Company;
WHEREAS, Employee's services will continue to be of substantial
value to the Company; and
WHEREAS, the Company and Employee mutually desire to enter into
an agreement providing for the deferral of payment of certain of Employee's
compensation for services rendered during any fiscal year of the Company.
NOW, THEREFORE, it is agreed as follows:
1. Definitions. The following terms when used in this
Agreement shall have the respective meanings set forth below unless their
context clearly indicates otherwise:
A. "Compensation" means the amount of any compensation (including
taxable benefits) payable by the Company to, or accruing to the
benefit of, Employee for federal income tax purposes, which is
taxable to Employee with respect to any tax year of the Company.
B. "Deferral Account" means an appropriate bookkeeping account or
record maintained by the Company for the sole purpose of measuring
and determining the amounts, if any, to be paid to Employee pursuant
to this Agreement with respect to Deferred Amounts. The Deferral
Account shall not constitute or be treated as an escrow or trust
fund of any kind, and Employee shall not be entitled to any amounts
from the Deferred Account except as provided in this Agreement.
C. "Deferral Date" means any date as of which a Deferred Amount (as
hereinafter defined) of compensation otherwise payable by the
Company to, or accruing to the benefit of, Employee shall be
deferred pursuant to the terms of this Agreement.
D. "Deferred Amount" means, either:
(i) the amount of Compensation (excluding salary and cash
reimbursements) which, when combined with all Compensation
(excluding salary and cash reimbursements) previously paid to
or accrued to the benefit of Employee with respect to such tax
year, exceeds the difference of (I) the Section 162(m) Maximum
Amount, minus (II) the lesser of (a) the sum of the annual
taxable gross salary of Employee plus annual taxable cash
reimbursements payable to Employee plus taxable benefits
accruable for the benefit of Employee with respect to such tax
year and (b) the Section 162(m) Maximum Amount, or
(ii) if elected by Employee prior to the first day of a Company's
tax year, the amount of Compensation which, when combined with
all Compensation previously paid to or accrued to the benefit
of Employee with respect to such tax year, exceeds the Section
162(m) Maximum Amount.
With respect to the Company's 1998 fiscal year, Deferred Amount may
include only Compensation relating to services rendered by, or
accruing to the benefit of, Employee subsequent to __________, 1997.
E. "Section 162(m) Maximum Amount" means $1,000,000 (or such other
amount of remuneration specified in any amendment or successor
provision to Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder).
2. Compensation Deferrals. If at any time and from time to time a
Deferred Amount of compensation shall be payable by the Company to, or accrue
to the benefit of, Employee, the Deferred Amount shall, in lieu of being then
paid to Employee, be deferred to later payment by the Company to Employee in
accordance with the terms of this Agreement. As of each Deferral Date
throughout the term of this Agreement, Employee's Deferral Account shall be
credited with an amount equal to the Deferred Amount. In the case of the
lapsing of restrictions relating to restricted stock which constitute a
Deferred Amount, the shares of common stock as to which restrictions lapse
shall be credited to Employee's Deferral Account, and all subsequent
dividends and other distributions with respect to such shares, whether in
cash, securities or other property, shall, in lieu of being distributed to
Employee, be credited to Employee's Deferral Account at the time of any such
distribution.
3. Interest Credit. The Deferral Account shall be credited on the
payment date provided in Paragraph 4 with interest on Deferred Amounts
(consisting of cash) from the respective Deferral Dates to the payment date.
The interest rate(s) to determine such interest shall be the same interest
rate(s) applicable to the relevant periods of time as shall be applicable to
employee contributions under the Company's Benefit Restoration Plan, and if
the Benefit Restoration Plan shall cease to be in effect, then at such
interest rate(s) as shall be established from time to time by the
Compensation Committee of the Board of Directors of the Company. No interest
shall be credited to Deferred Amounts consisting of shares of stock or other
property, as dividends and other distributions, if any, credited to the
Deferred Account with respect to shares of stock or other property shall
constitute the only earnings with respect to such non-cash property.
4. Payment of Amounts Credited to Deferral Amount. The Company shall
distribute to Employee or, if applicable, his estate all amounts previously
credited to his Deferral Account on the first day of the month following the
90th day after the retirement or death of Employee or other termination of
Employee's employment with the Company.
5. Amounts Due Not to be Funded. The Company's liability to pay
deferred compensation pursuant to this Agreement shall constitute an
unfunded, unsecured liability of the Company to make payments in accordance
with the provisions hereof. Neither Employee nor any person claiming under
Employee shall have any security or other interest in any assets of the
Company by virtue of this Agreement. Nothing contained in this Agreement and
no action taken pursuant to the provisions hereof shall create or be
construed to create a trust of any kind.
6. No Assignment. The right of Employee or any other person claiming
under Employee to payments or other benefits under this Agreement may not be
assigned, transferred, pledged, anticipated, commuted or encumbered, nor
shall said benefits or payments be subject to seizure for payment of any
debts or judgment of Employee or any person claiming through or under
Employee or be transferable by operation of law in advance of payment
hereunder.
7. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company, its successor and assigns and Employee and his
heirs, executors, administrators and legal representatives.
8. Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Company to discharge Employee or
restrict the right of Employee to terminate his employment.
9. Nature of Agreement. The benefits herein provided are in addition
to, and not in lieu of, any other deferred compensation or retirement
arrangement pursuant to which the Company may have made provisions for
Employee, and no such arrangement shall affect or be affected by the
provisions of this Agreement. Nothing contained in this Agreement shall be
construed to alter, abridge or in any manner affect the rights and privileges
of Employee to participate in any pension, thrift, profit sharing, stock
bonus, annuity or similar plan that the Company may now or hereafter
maintain.
10. Modification of Agreement. This Agreement cannot be amended or
modified except by written agreement duly executed by both the Company and
Employee.
11. Termination of Agreement. This Agreement shall automatically
terminate, and no further Deferral Amounts shall thereafter be credited to
Employee's Deferral Account upon the first to occur of (i) the date
Employee's employment with the Company terminates for any reason whatsoever
or (ii) unless otherwise mutually agreed between the Company and Employee,
the first day of the Company's next fiscal year following the date written
notice is delivered by either the Company or Employee to the other, stating
that the party delivering the notice has elected to terminate this Agreement;
provided, however, that any such termination shall in no way affect the
obligation of the Company to pay to Employee the amounts credited to his
Deferral Account in accordance with Paragraph 4 or to credit his Deferral
Account in accordance with paragraph 3.
12. Withholding of Tax. Notwithstanding any provision in this
Agreement to the contrary, the Company is authorized to withhold from any
amounts payable hereunder to Employee any tax required to be withheld by the
federal or any state or local government. For purposes of Paragraph 4
hereof, any amounts so withheld shall be deemed to have been paid to
Employee.
13. Governing Law. This Agreement shall be construed in accordance
with and be governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
PIER 1 SERVICES COMPANY
By: PIER 1 HOLDINGS, INC.,
Managing Trustee
By ____________________
EMPLOYEE:
___________________________
