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Exhibit
10.1
SIXTH AMENDED AND RESTATED
EMPLOYMENT SEVERANCE AGREEMENT
This Sixth Amended and
Restated Employment Severance Agreement (the
“Agreement”) is made and entered into effective as of
May 5, 2008 (the “Effective Date”), by and between
Joan S. Fujii (the “Executive”) and Cost Plus, Inc.
(the “Company”).
RECITALS
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 Fifth Amended and Restated Employment Severance
Agreement dated May 25, 2007 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 Fifth
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 Executive Vice President, Human Resources 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, 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, 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;
(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
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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.
(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
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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.
4. Limitations on
Payments .
(a) Code
Section 409A .
(i) 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 severance payable to the
Executive, if any, pursuant to this Agreement, together with any
other severance payments or separation benefits that are considered
deferred compensation under Section 409A (together, 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.
(ii) 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.
(iii) 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
Company’s taxable year preceding the Company’s taxable
year of the Executive’s termination of employment as
determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and
any Internal Revenue Service guidance issued with respect thereto;
or (ii) the maximum amount that may be taken into account
under a qualified plan pursuant to Section 401(a)(17) of the
Code for the year in which the Executive’s employment is
terminated.
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(iv) The foregoing provisions
are intended to comply with the requirements of Section 409A
so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted
to so comply. The Company and the Executive agree to work together
in good faith to consider amendments to this Agreement and to take
such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to the Executive under
Section 409A.
(b) Code
Section 280G . In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the
Executive (i) constitute “parachute payments”
within the meaning of Section 280G of the Code and
(ii) but for this Section 4(b), would be subject to the
excise tax imposed by Section 4999 of the Code, then the
Executive’s benefits under Section 3 of this Agreement
shall be either:
(i) delivered in full,
or
(ii) delivered as to such
lesser extent which would result in no portion of such severance
and other benefits being subject to excise tax under
Section 4999 of the Code,
whichever of the
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