Exhibit 10.10
EMPLOYMENT SEVERANCE
AGREEMENT
This Employment Severance Agreement
(the “Agreement”) is made and entered into effective as
of 4-17-06 (the “Effective Date”), by and between
Thomas D. Willardson (the “Executive”) and Cost Plus,
Inc. (the “Company”).
RECITALS
A. Cost Plus desires to retain the
services of the Executive, and the Executive desires to be employed
by Cost Plus, 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. Certain capitalized terms used in
the Agreement are defined in Section 6 below.
AGREEMENT
In consideration of the mutual
covenants herein contained, the parties agree as
follows:
1. Duties and Scope of
Employment . The Company shall employ the Executive in the
position of Executive Vice President and Chief Financial Officer,
with such duties, responsibilities and compensation as in effect as
of the Effective Date. The Board and the Chief Executive Officer of
the Company (the “CEO”) shall have the right to revise
such responsibilities and compensation from time to time as the
Board or the CEO may deem necessary or appropriate. If any such
revision constitutes “Involuntary Termination” as
defined in Section 6(d) 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. This Agreement shall remain in effect until the earlier
of (i) the date that all obligations of the parties hereunder
have been satisfied or (ii) the date upon which this Agreement
terminates by consent of the parties hereto.
3. Severance Benefits
.
(a) Benefits upon Termination
. Unless the Executive is entitled to benefits under
Section 3(b) of this Agreement, if the Executive’s
employment terminates as a result
of Involuntary Termination prior to
June 15, 2007 and the Executive signs and does not revoke a
Release of Claims, then the Company shall pay the Executive’s
Base Compensation on a salary continuation basis in accordance with
the Company’s normal payroll practices to the Executive for
twelve (12) months from the Termination Date. The Executive
shall not be entitled to receive any payments if the Executive
voluntarily terminates employment other than as a result of an
Involuntary Termination.
(b) Benefits upon Termination
After a Change of Control . If after a Change of Control the
Executive’s employment terminates as a result of Involuntary
Termination prior to June 15, 2007 and the Executive signs and
does not revoke a Release of Claims, then the Company shall pay the
Executive’s Base Compensation on a salary continuation basis
in accordance with the Company’s normal payroll practices to
the Executive for eighteen (18) months from the Termination
Date. The Executive shall not be entitled to receive any payments
if the Executive voluntarily terminates employment other than as a
result of an Involuntary Termination.
(c) Stock Options . Unless
otherwise provided in the Company’s stock option plans or in
the Executive’s stock option agreements, the Executive shall
not be entitled to acceleration of any unvested stock options upon
the termination of the Executive’s employment for any reason,
including an Involuntary Termination.
(d) Miscellaneous . In
addition to the benefits described in Section 3(a) or
Section 3(b) of this Agreement, upon the termination of the
Executive’s employment, (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; (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; and (iv) if benefits will be paid under
Section 3(a) or Section 3(b) of this Agreement, the
Company shall pay the Executive a pro-rata portion of his 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 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”)), shall be pro-rated for
the period of time during the fiscal year that the Executive was an
employee of the Company and shall only be paid if, and to the
extent, that the relevant performance targets have been achieved by
the Company. Except for any bonus payment under clause (iv) of
the preceding sentence, these payments shall be made promptly upon
termination and within the period of time mandated by applicable
law.
-2-
4. Limitation on Payments
.
(a) Code Section 409A .
If the Company reasonably determines that Section 409A will
result in the imposition of additional tax to an earlier payment of
the severance and other benefits provided in this Agreement or
otherwise payable to the Executive, then the first six
(6) months of the Executive’s severance benefits under
Section 3 of this Agreement will accrue during the six
(6)-month period following the Executive’s termination and
will become payable in a lump sum payment on the date that is six
(6) months and one (1) day following the date of the
Executive’s termination of employment. The remaining
severance benefits will be payable as provided in Section 3 of
this Agreement.
(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, would be subject to the excise tax imposed by
Section 4999 of the Code, then the Executive’s severance
benefits under Section 3(b) 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 benefits
being subject to excise tax under Section 4999 of the
Code,
whichever of the foregoing amounts,
taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999 of the Code,
results in the receipt by the Executive on an after-tax basis, of
the greatest amount of severance benefits, notwithstanding that all
or some portion of such severance benefits may be taxable under
Section 4999 of the Code. Unless the Company and the Executive
otherwise agree in writing, any determination required under this
Section 4 shall be made in writing by the Company’s
independent public accountants immediately prior to Change of
Control (the “Accountants”), whose determination shall
be conclusive and binding upon the Executive and the Company for
all purposes. For purposes of making the calculations required by
this Section 4, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and
the Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 4.
5. Non-Solicitation . In
consideration for the mutual agreements as set forth herein, the
Executive agrees that the Executive shall not, at any time, within
twelve (12) months following termination of the
Executive’s employment with the Company for any reason,
directly or indirectly solicit the employment or other services of
any individual who at that time shall be or within the prior twelve
(12) months shall have been an employee of the
Company.
-3-
6. Definition of Terms . The
following terms referred to in this Agreement shall have the
following meanings:
(a) Base Compensation .
“Base Compensation” means the Executive’s monthly
base salary paid by the Company for services per
