Exhibit 10.12
THIRD AMENDED AND RESTATED
EMPLOYMENT SEVERANCE AGREEMENT
This Third Amended and Restated
Employment Severance Agreement (the “Agreement”) is
made and entered into effective as of April 1, 2009 (the
“Effective Date”), by and between Rayford K. Whitley
(the “Executive”) and Cost Plus, Inc. (the
“Company”).
R E C I T A L S
A. The Company desires to continue
retaining the services of the Executive, and the Executive desires
to be employed by the Company, on the terms and subject to the
conditions set forth in this Agreement.
B. The Board of Directors of the
Company (the “Board”) believes the Company should
provide the Executive with certain severance benefits should the
Executive’s employment with the Company terminate under
certain circumstances, such benefits to provide the Executive with
enhanced financial security and sufficient incentive and
encouragement to remain with the Company.
C. This Agreement amends and
restates the Second Amended and Restated Employment Severance
Agreement dated May 5, 2008 between the Company and the
Executive.
D. Certain capitalized terms used in
the Agreement are defined in Section 6 below.
AGREEMENT
In consideration of the mutual
covenants herein contained, and in consideration of the continuing
employment of the Executive by the Company, the Second Amended and
Restated Employment Severance Agreement is hereby amended and
restated in its entirety as set forth herein, and the parties agree
as follows:
1. Duties and Scope of
Employment . The Company shall continue to employ the Executive
in the position of Senior Vice President, Supply Chain with such
duties, responsibilities and compensation as in effect as of the
Effective Date. The Board and the Chief Executive Officer of the
Company shall have the right to revise such responsibilities and
compensation from time to time as the Board or the Chief Executive
Officer may deem necessary or appropriate. If any such revision
constitutes “Involuntary Termination” as defined in
Section 6 of this Agreement, the Executive shall be entitled
to benefits upon such Involuntary Termination as provided under
this Agreement.
2. At-Will Employment . The
Company and the Executive acknowledge that the Executive’s
employment is and shall continue to be at-will, as defined under
applicable law. If the Executive’s employment terminates for
any reason, the Executive shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by
this Agreement, or as may otherwise be available in accordance with
the Company’s established employee plans and practices or in
accordance with other agreements between the Company and the
Executive.
3. Severance and Change of
Control Benefits .
(a) Benefits upon Termination
Apart from a Change of Control . If, prior to a Change of
Control or more than twelve (12) months following a Change of
Control, the Executive’s employment terminates as a result of
an Involuntary Termination and the Executive signs and does not
revoke a Release of Claims in accordance with Section 3(g),
then the Executive shall receive the following severance
benefits:
(i) continued payments of the
Executive’s Base Compensation, less applicable withholding
and payable in accordance with the Company’s normal payroll
practices for twelve (12) months from the Termination
Date;
(ii) a pro-rata portion of the
Executive’s target fiscal year bonus, if any, under the
Company’s Management Incentive Plan in effect for the fiscal
year in which the Termination Date occurs. Such amount
(A) shall only be paid if, and to the extent, that the
relevant performance targets are achieved by the Company,
(B) shall be pro-rated for the period of time during the
fiscal year that the Executive was an employee of the Company, and
(C) shall be paid at the time bonuses for the completed fiscal
year are paid to other executives (but no later than the period of
time required to fit within the short-term deferral rule of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and the final regulations and any guidance
promulgated thereunder (“Section 409A”));
and
(iii) provided (A) the
Executive constitutes a qualified beneficiary, as defined in
Section 4980B(g)(1) of the Code, and (B) the Executive
elects continuation coverage pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”)
within the time period prescribed pursuant to COBRA, the Company
will reimburse the COBRA premiums for continued health (i.e.,
medical, dental and vision) coverage for Executive and
Executive’s eligible dependents for the period of time the
Executive is receiving severance payments under
Section 3(a)(i) of this Agreement or, if earlier, until the
Executive is eligible to be covered under another medical insurance
plan by a subsequent employer.
(b) Benefits upon Termination in
Connection with a Change of Control . If, on or within twelve
(12) months after a Change of Control, the Executive’s
employment terminates as a result of an Involuntary Termination and
the Executive signs and does not revoke a Release of Claims in
accordance with Section 3(g), then the Executive shall receive
the following severance benefits:
(i) a lump sum amount equal to one
and a half (1.5) times the sum of the Executive’s annual
Base Compensation and target fiscal year bonus under the
Company’s Management Incentive Plan in effect for the fiscal
year in which the Termination Date occurs, less applicable
withholding and payable within thirty (30) days after the
Termination Date;
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(ii) a pro-rata portion of the
Executive’s target fiscal year bonus, if any, under the
Company’s Management Incentive Plan in effect for the fiscal
year in which the Termination Date occurs. Such amount
(A) shall only be paid if, and to the extent, that the
relevant performance targets are achieved by the Company,
(B) shall be pro-rated for the period of time during the
fiscal year that the Executive was an employee of the Company, and
(C) shall be paid at the time bonuses for the completed fiscal
year are paid to other executives (but no later than the period of
time required to fit within the short-term deferral rule of
Section 409A); and
(iii) provided (A) the
Executive constitutes a qualified beneficiary, as defined in
Section 4980B(g)(1) of the Code, and (B) the Executive
elects continuation coverage pursuant to COBRA within the time
period prescribed pursuant to COBRA, the Company will reimburse the
COBRA premiums for continued health (i.e., medical, dental and
vision) coverage for the Executive and the Executive’s
eligible dependents for eighteen (18) months or, if earlier,
until Executive is eligible to be covered under another medical
insurance plan by a subsequent employer.
(c) Equity Award Acceleration
.
(i) Change of Control . In
the event of a Change of Control that occurs while the Executive
remains an employee of the Company, (A) the Executive will
fully vest in and have the right to exercise all his or her
outstanding options and stock appreciation rights, (B) all
restrictions on restricted stock and restricted stock units will
lapse, and, (C) with respect to all awards with
performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at 100% of target levels and all
other terms and conditions met, pro-rated to reflect the amount of
time the Executive was an employee of the Company during the
applicable performance period.
(ii) Termination . Unless
otherwise provided in the Company’s equity award plans or in
the Executive’s equity award agreements, the Executive shall
not be entitled to acceleration of any unvested equity awards upon
the termination of the Executive’s employment for any reason,
including an Involuntary Termination.
(d) Voluntary Resignation;
Termination for Cause . If the Executive’s employment
with the Company terminates other than as a result of an
Involuntary Termination, then the Executive will not be entitled to
receive severance or other benefits except for those (if any) as
may then be established under the Company’s then existing
severance and benefits plans and practices or pursuant to other
written agreements with the Company.
(e) Disability; Death . If
the Company terminates the Executive’s employment as a result
of the Executive’s Disability, or the Executive’s
employment terminates due to his or her death, then the Executive
will not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the
Company’s then existing written severance and benefits plans
and practices or pursuant to other written agreements with the
Company.
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(f) Miscellaneous . Upon the
termination of the Executive’s employment for any reason,
(i) the Company shall pay the Executive any unpaid base salary
due for periods prior to the Termination Date; (ii) the
Company shall pay the Executive all of the Executive’s
accrued and unused vacation through the Termination Date; and
(iii) following submission of proper expense reports by the
Executive, the Company shall reimburse the Executive for all
expenses reasonably and necessarily incurred by the Executive in
connection with the business of the Company prior to the
Termination Date. These payments shall be made promptly upon
termination and within the period of time mandated by applicable
law.
(g) Release of Claims . The
receipt of any severance payments and benefits pursuant to this
Agreement will be subject to the Executive signing and not revoking
a Release of Claims which becomes effective and irrevocable within
sixty (60) days following the Executive’s employment
termination date or such earlier date as required by the Release of
Claims (such deadline, the “Release Deadline”). No
severance benefits pursuant to this Agreement will be paid or
provided until the Release of Claims becomes effective and
irrevocable. If the Release of Claims does not become effective by
the Release Deadline, the Executive will forfeit all rights to
severance payments and benefits under this Agreement.
Notwithstanding any timing of payment provision in Section 3,
in the event severance payments provided under Section 3(a) or
Section 3(b) would be considered Deferred Compensation
Separation Benefits (as defined in Section 4(a) below), then
the following timing of payments will apply to such Deferred
Compensation Separation Benefits, in each case subject to any delay
in payment required by the provisions of Section 4(a) (and
provided the Release of Claims becomes effective and
irrevocable):
(i) If the Release Deadline is on or
before December 10 of the calendar year in which the
Executive’s “separation from service” (within the
meaning of Section 409A) occurs, any portion of the severance
payments or benefits provided under Section 3(a) or
Section 3(b) that would be considered Deferred Compensation
Separation Benefits will be paid to the Executive on or before
December 31 of that calendar year or such later time as
required by (A) the payment schedule applicable to each
payment or benefit as set forth in Section 3, or (B) if
applicable, Section 4(a) of this Agreement. The first payment
will include all amounts due to Executive that would have been paid
to the Executive had payment commenced on the date the Executive
terminated employment; and
(ii) If the Release Deadline is
after December 10 of the calendar year in which the
Executive’s “separation from service” (within the
meaning of Section 409A) occurs, any portion of the severance
payments or benefits provided under Section 3(a) or
Section 3(b) that would be considered Deferred Compensation
Separation Benefits will be paid on the first payroll date to occur
during the calendar year following the calendar year in which such
separation of service occurs or such later time as required by
(A) the payment schedule applicable to each payment or benefit
as set forth in Section 3, (B) the Release Deadline, or
(C) if applicable, Section 4(a) of this Agreement. The
first payment will include all amounts due to the Executive that
would have been paid to the Executive had payment commenced on the
date the Executive terminated employment.
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4. Limitations on Payments
.
(a) Code Section 409A
.
(i) Notwithstanding anything to the
contrary in this Agreement, no severance payments or benefits
payable to the Executive, if any, pursuant to this Agreement that,
when considered together with any other severance payments or
separation benefits that are considered deferred compensation under
Section 409A (together, the “Deferred Compensation
Separation Benefits”) will be payable until the Executive has
a “separation from service” within the meaning of
Section 409A. Similarly, no severance payable to the
Executive, if any, pursuant to this Agreement that otherwise would
be exempt from Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9) will be payable until the Executive has
a “separation from service” within the meaning of
Section 409A.
(ii) Notwithstanding anything to the
contrary in this Agreement, if the Executive is a “specified
employee” within the meaning of Section 409A at the time
of the Executive’s termination (other than due to death),
then the Deferred Compensation Separation Benefits that are payable
within the first six (6) months following the
Executive’s termination of employment will become payable on
the first payroll date that occurs on or after the date six
(6) months and one (1) day following the date of the
Executive’s termination of employment. All subsequent
Deferred Compensation Separation Benefits, if any, will be payable
in accordance with the payment schedule applicable to each payment
or benefit. Notwithstanding anything herein to the contrary, if the
Executive dies following his or her termination but prior to the
six (6) month anniversary of his or her termination, then any
payments delayed in accordance with this paragraph will be payable
in a lump sum as soon as administratively practicable after the
date of the Executive’s death and all other Deferred
Compensation Separation Benefits will be payable in accordance with
the payment schedule applicable to each payment or benefit. Each
payment and benefit payable under this Agreement is intended to
constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.
(iii) Any amount paid under this
Agreement that satisfies the requirements of the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of
the Treasury Regulations shall not constitute Deferred Compensation
Separation Benefits for purposes of clause
(i) above.
(iv) Any amount paid under this
Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that
do not exceed the Section 409A Limit shall not constitute
Deferred Compensation Separation Benefits for purposes of clause
(i) above. For purposes of this Agreement, “Section 409A
Limit” shall mean the lesser of two (2) times:
(i) the Executive’s annualized compensation based upon
the annual rate of pay paid to the Executive during the
Executive’s taxable year preceding the Executive’s
taxable year of the Executive’s termination of employment as
determined under Treasury Regulation
Section 1.409A-1(b)(9)(iii)(A)(1) and any Inter
