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Exhibit
10.1
FOURTH AMENDED AND
RESTATED EMPLOYMENT SEVERANCE AGREEMENT
This Fourth Amended and
Restated Employment Severance Agreement (the
“Agreement”) is made and entered into effective as of
September 10, 2007 (the “Effective Date”), by and
between Jane Baughman (the “Employee”) and Cost Plus,
Inc. (the “Company”).
R E C I T A L
S
A. The Company desires to
retain the services of the Employee, and the Employee 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 Employee with certain severance benefits should the
Employee’s employment with the Company terminate under
certain circumstances, such benefits to provide the Employee with
enhanced financial security and sufficient incentive and
encouragement to remain with the Company.
C. This Agreement amends and
restates the Third Amended and Restated Employment Severance
Agreement dated May 25, 2007 between the Company and the
Employee.
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 Employee by the Company, the Third
Amended and Restated Employment Severance Agreement is hereby
amended and restated in its entirety as set forth herein, and the
parties further agree as follows:
1. Duties and Scope of
Employment . The Company shall employ the Employee in the
position of 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 Employee shall be entitled
to benefits upon such Involuntary Termination as provided under
this Agreement.
2. At-Will Employment
. The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be at-will, as
defined under applicable law. If the Employee’s employment
terminates for any reason, the Employee 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 Employee. 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 Employee is entitled to benefits under
Section 3(b) of this Agreement, if the Employee’s
employment terminates as a result of Involuntary Termination prior
to June 15, 2008 and the Employee signs and does not revoke a
Release of Claims, then the Company shall pay the Employee’s
Base Compensation on a salary continuation basis in accordance with
the Company’s normal payroll practices to the Employee for
twelve (12) months from the Termination Date. The Employee
shall not be entitled to receive any payments if Employee
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 Employee’s employment terminates as a result of
Involuntary Termination prior to June 15, 2008 and the
Employee signs and does not revoke a Release of Claims, then the
Company shall pay the Employee’s Base Compensation on a
salary continuation basis in accordance with the Company’s
normal payroll practices to the Employee for eighteen
(18) months from the Termination Date. The Employee shall not
be entitled to receive any payments if the Employee voluntarily
terminates employment other than as a result of an Involuntary
Termination.
(c) Stock Options;
Bonus . Unless otherwise provided in the Company’s stock
option plans or in the Employee’s stock option agreements,
the Employee shall not be entitled to acceleration of any unvested
stock options or partial bonus payments for an incomplete bonus
plan year upon the termination of the Employee’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
Employee’s employment, (i) the Company shall pay the
Employee any unpaid base salary due for periods prior to the
Termination Date; (ii) the Company shall pay the Employee all
of the Employee’s accrued and unused vacation through the
Termination Date; and (iii) following submission of proper
expense reports by the Employee, the Company shall reimburse the
Employee for all expenses reasonably and necessarily incurred by
the Employee 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.
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4. Limitation on
Payments .
(a) Code
Section 409A . Notwithstanding anything to the contrary in
this Agreement, if Employee is a “specified employee”
within the meaning of Section 409A of the Code and the final
regulations and any other guidance promulgated thereunder
(“Section 409A”) at the time of her termination, and
the severance payable to Employee, if any, pursuant to this
Agreement, when considered together with any other severance
payments or separation benefits which may be considered deferred
compensation under Section 409A (together, the “Deferred
Compensation Separation Benefits”) will not and could not
under any circumstances, regardless of when such termination
occurs, be paid in full by the fifteenth day of the third month of
the Company’s fiscal year following Employee’s
termination, then only that portion of the Deferred Compensation
Separation Benefits which do not exceed the Section 409A Limit
(as defined below) may be made within the first six (6) months
following Employee’s termination of employment in accordance
with the payment schedule applicable to each such payment or
benefit. For these purposes, each severance payment is hereby
designated as a separate payment and will not collectively be
treated as a single payment. Any portion of the Deferred
Compensation Separation Benefits in excess of the Section 409A
Limit shall accrue and, to the extent such portion of the Deferred
Compensation Separation Benefits would otherwise have been payable
within the first six (6) months following Employee’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 Employee’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.
This provision is 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 Employee 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 Employee under Section 409A.
(b) For purposes of this
Agreement, “Section 409A Limit” shall mean the lesser
of two (2) times: (i) Employee’s annualized
compensation based upon the annual rate of pay paid to Employee
during the Company’s taxable year preceding the
Company’s taxable year of Employee’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
Employee’s employment is terminated.
(c) Code
Section 280G . In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the
Employee (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
Employee’s severance benefits under Section 3(b) of this
Agreement shall be either:
(i) delivered in full,
or
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(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 Employee 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 Employee
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 Employee and the Company for all
purposes. For purposes of making the c
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