EXHIBIT 10.4
EMPLOYMENT AGREEMENT
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This Employment Agreement, dated as of the 6th day of May, 1998, by and
between Cost Plus, Inc., a California corporation (the "Company"), and Xxxx
Xxxxxxx, the undersigned executive (the "Executive").
Recital
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The Company desires to retain the services of Executive, and Executive
desires to be employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
Now, therefore, in consideration of the foregoing recital and the
respective undertakings of the Company and Executive set forth below, the
Company and Executive agree as follows:
1. Employment.
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(a) Duties. The Company agrees to employ the Executive as Executive
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Vice President, Chief Administrative Officer, and Chief Financial Officer, and
the Executive agrees to perform such reasonable responsibilities and duties as
may be required of him by the Company provided, however, that the Board of
Directors of the Company (the "Board") shall have the right to revise such
responsibilities from time to time as the Board may deem appropriate. The
Executive shall carry out his duties and responsibilities hereunder in a
diligent and competent manner and shall devote his full business time, attention
and energy thereto.
(b) Employment At-Will. The Company and the Executive acknowledge and
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agree that the Executive's employment is at-will, as defined under applicable
law and may be terminated at any time, with or without Cause. 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 in
Section 3 of this Agreement.
2. Compensation and Benefits.
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(a) Base Compensation. The Company shall pay the Executive as
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compensation for his services a base salary at the annualized rate of $220,000.
Such salary shall be subject to applicable tax withholding and shall be paid
periodically in accordance with normal Company payroll practices. The annual
compensation specified in this Section 2, together with any increases in such
compensation that the Company may, in its sole discretion, grant from time to
time, is referred to in this Agreement as "Base Compensation."
(b) Bonus. Executive shall be eligible for a bonus of up to 35% of
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Executive's Base Compensation upon achievement of financial goals as determined
by the Board. All bonuses shall be paid in accordance with standard Company
policies. The bonus period shall begin with the Company's 1998 fiscal year and
the 1998 fiscal year bonus shall be payable in April, 1999 and based on
Executive's 1998 fiscal year salary.
(c) Executive Benefits. Executive shall be eligible to participate in
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the employee benefit plans which are available or which become available, in the
discretion of the Company, to other executives of the Company of a comparable
level, subject in each case to the generally applicable terms and conditions of
the plan or program in question and to the determination of any committee
administering such plan or program.
(d) Vacation. Executive shall be entitled to three weeks of vacation
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per year in accordance with the normal vacation policies of the Company.
(e) Stock Option. On the date hereof, the Company shall grant
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Executive an option (the "Option") to purchase 35,000 of the Company's Common
Stock. The per share exercise price for the Option shall be equal to the
per share fair market value of the Company's Common Stock on the date of grant.
The term of the Option shall be ten (10) years and the Option shall vest at a
rate of twenty-five percent (25%) per year on the anniversary of the grant date.
(f) Relocation Expenses. The Company shall reimburse Executive for
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Executive's relocation expenses in accordance with the Company's "Director and
Above Relocation Policy." In the event Executive voluntarily resigns from his
employment with the Company prior to the first anniversary of his employment,
Executive shall repay to the Company all reimbursed relocation costs.
3. Severance Payments.
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(a) Payments upon Termination. If the Executive's employment
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terminates as a result of an Involuntary Termination other than for Cause prior
to two (2) years from a date no later than June 15, 1998, and the Executive
signs a Release of Claims, then the Company shall pay Executive's Base
Compensation to the Executive for twelve (12) months after Executive's
termination of employment with each monthly installment payable on the last day
of such month.
(b) Benefits. In the event the Executive is entitled to severance
benefits pursuant to Section 3(a), then in addition to such severance benefits,
the Executive shall receive health, dental, long term disability and life
insurance coverage as provided to Executive immediately prior to the Executive's
termination (the "Company-Paid Coverage"). If such coverage included the
Executive's dependents immediately prior to the Executive's termination, such
dependents shall also be covered to the extent covered prior to Executive's
termination. Company-Paid Coverage shall continue until the earlier of
(i) twelve (12) months following termination in the case of a termination, or
(ii) the date the Executive becomes covered under another employer's group
health, dental or life insurance plan (to the extent covered under such
plans).
(c) Stock Options; Bonus. Executives shall not be entitled to receive
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any unvested stock options or partial bonus payments for an incomplete bonus
plan year.
(d) Miscellaneous. In addition, (i) the Company shall pay the
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Executive any unpaid base salary due for periods prior to the date of
Executive's termination; (ii) the Company shall pay the Executive all of the
Executive's accrued and unused vacation through the date of Executive's
termination; 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 termination. These payments shall be made
promptly upon termination and within the period of time mandated by applicable
law.
(e) Voluntary Resignation; Termination for Cause. If the Executive's
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employment terminates by reason of Executive's voluntary resignation or if the
Executive is terminated for Cause, the Executive shall not be entitled to
receive severance payments or other benefits under this Section 3.
(f) Death or Disability. If the Executive's employment terminates as a
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result of his death or disability, neither the Executive or, in the case of
death, Executive's beneficiary or estate, shall be entitled to any compensation,
severance payments, or any other benefits under this Section 3; provided,
however, that if Executive's employment terminates as a result of his
disability, Executive shall be entitled to severance and other benefits pursuant
to this Section 3 until Executive begins receiving payments pursuant to the
Company's long term disability policy described above in Section 3(b). Upon
commencement of such long term disability payments, Executive shall not be
entitled to any further severance, compensation, or other benefits including
those under this Section 3.
4. Covenants Not to Compete and Not to Solicit.
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(a) Until the Executive has received all Severance Payments as
provided in Section 3, upon the termination of the Executive's employment with
the Company for any reason, the Executive agrees that he shall not, on his own
behalf, or as owner, manager, advisor, principal, agent, partner, consultant,
director, officer, stockholder or employee of any business entity, or otherwise
participate in the development or provision of goods or services which are
directly or indirectly competitive with goods or services provided (or proposed
to be provided) by the Company without the express written authorization of the
Company. The foregoing covenant shall not be deemed to prohibit Executive from
acquiring an investment not more than one percent of the capital stock of a
competing business, whose stock is traded on a national securities exchange or
through the automated quotation system of a registered securities association.
(b) Until the later of (i) five years after the date of this Agreement
or (ii) one year after termination of Executive's employment, upon the
termination of Executive's employment with the Company for any reason, the
Executive agrees that he shall not either directly or indirectly
solicit, induce, attempt to hire, recruit, encourage, take away, hire any
employee of the Company or cause an employee to leave their employment either
for Executive or for any other entity or person.
(c) The Executive represents that his (i) is familiar with the
foregoing covenants not to compete and not to solicit, and (ii) is fully aware
of his obligations hereunder, including, without limitation, the reasonableness
of the length of time, scope and geographic coverage of these covenants.
5. Confidential Information.
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(a) Company Information. Executive agrees at all times during the
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term of Executive's employment and thereafter, to hold in strictest confidence,
and not to use, except for the benefit of the Company, or to disclose to any
person, firm or corporation without written authorization of the Board of
Directors of the Company, any Confidential Information of the Company. Executive
understands that "Confidential Information" means any Company proprietary
information, trade secrets or know-how, including, but not limited to, market
research, product plans, products, services, customer lists and customers
(including, but not limited to, customers of the Company to whom Executive
becomes acquainted during the term of Executive's employment), markets,
developments, marketing, finances or other business information disclosed to
Executive by the Company either directly or indirectly in writing, orally or by
drawings or observation of parts or equipment. Executive further understands
that Confidential Information does not include any of the foregoing items which
has become publicly known and made generally available through no wrongful act
of Executive or of others who were under confidentiality obligations as to the
item or items involved.
(b) Third Party Information. Executive recognizes that the Company has
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received and in the future will receive from third parties their confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in carrying out
Executive's work for the Company consistent with the Company's agreement with
such third party.
6. Definitions. As used herein, the terms
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(a) Cause. "Cause" means the Executive's termination only upon:
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(i) Executive has engaged in willful and material misconduct,
including wilful and material failure to perform his duties as an officer or
employee of the Company or a material breach of this Agreement and has failed to
"cure" such default within thirty (30) days after receipt of written notice of
default from the Company;
(ii) The commission of an act of fraud or embezzlement which
results in loss, damage or injury to the Company, whether directly or
indirectly;
(iii) Executive's use of narcotics, liquor or illicit drugs has
had a
detrimental effect on the performance of his employment responsibilities, as
determined by the Company's Board of Directors;
(iv) Executive's violation of Sections 4 or 5 of this
Agreement;
(v) The arrest, indictment or filing of charges relating to
a felony or misdemeanor, either in connection with the performance of the
Executive's obligations to the Company or which shall adversely affect the
Executive's ability to perform such obligations;
(vi) Gross negligence, dishonesty, breach of fiduciary duty
or material breach of the terms of the Agreement or any other agreement in favor
of the Company;
(vii) The commission of an act which constitutes unfair
competition with the Company or which induces any customer of the Company to
break a contract with the Company.
(b) Involuntary Termination. "Involuntary Termination" shall mean:
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(i) Termination by the Company of Executive's employment
with the Company for any reason other than Cause;
(ii) A reduction in Executive's Base Compensation (not
including bonus) other than such reduction which is part of, and generally
consistent with, a general reduction of officer salaries;
(iii) A reduction by the Company in the kind or level of
employee benefits (other that salary and bonus) to which Executive is entitled
immediately prior to such reduction with the result that Executive's overall
benefits package (other than salary and bonus) is substantially reduced (other
than any such reduction applicable to officers of the Company generally);
(iv) Any material breach by the Company of any material
provision of this Agreement which continues uncured for 30 days following notice
thereof;
(v) A reduction in the Executive's scope of responsibilities
(c) Release of Claims. "Release of Claims" shall mean a waiver by
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Executive of all claims, causes of action and obligations against the Company or
its employees relating to Executive's employment in a form acceptable to the
Company. Such Release of Claims shall not release the Company from its
obligations, under the Amended and Restated Indemnification Agreement between
Executive and the Company.
(7) Prior Agreements. Executive represents that Executive has not entered
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into any agreements, understandings, or arrangements with any person or entity
which would be breached by Executive as a result of, or that would in any way
preclude or prohibit Executive from entering
into his Agreement with the Company or performing any of the duties and
responsibilities provided for in this Agreement.
8. Conflicting Employment. Executive agrees that, during the term of
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Executive's employment with the Company, Executive will not engage in any other
employment, occupation, consulting or other business activity directly related
to the business in which the Company is now involved or becomes involved during
the term of Executive's employment, nor will Executive engage in any other
activities that conflict with Executive's obligations to the Company.
9. Returning Company Documents. Executive agrees that, at the time of
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leaving the employ of the Company, Executive will deliver to the Company (and
will not keep in Executive's possession, recreate or deliver to anyone else) any
and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by Executive
pursuant to Executive's employment with the Company or otherwise belonging to
the Company, its successors or assigns.
10. Notices. Any notice, report or other communication required or
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permitted to be given hereunder shall be in writing to both parties and shall be
deemed given on the date of delivery, if delivered, or three days after mailing,
if mailed first-class mail, postage prepaid, to the following addresses:
If to the Executive, at the address set forth below the Executive's
signature at the end hereof.
If to the Company:
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
or to such other address as any party hereto may designate by notice given as
herein provided.
11. Governing Law. This Employment Agreement shall be governed by and
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construed and enforced in accordance with the internal substantive laws, and not
the choice of law rules of California.
12. Amendments. This Employment Agreement shall not be changed or
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modified in whole or in part except by an instrument in writing signed by each
party hereto.
13. Severability. The invalidity or unenforceability of any provision
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or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
14. Successors.
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(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Executive's Successors. The terms of this Agreement and all rights
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of the Executive hereunder shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successor, heirs, distributees, devisees or legatees.
15. Entire Agreement. Except with respect to specific provisions of any
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prior agreement between the Executive and the Company relating to the
Executive's agreement not to compete with the Company or solicit the Company's
employees, this Agreement shall supersede and replace all prior agreements or
understandings relating to the subject matter hereof, and no agreement,
representations or understandings (whether oral or written or whether express
or implied) which are not expressly set forth in this Agreement have been made
or entered into by either party with respect to the relevant matter hereof.
16. Mediation. Executive and the Company agree that any dispute or
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controversy arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach or
termination thereof, shall first be submitted to mediation. The mediation shall
be conducted within 45 days of Executive notifying the Company of a dispute or
controversy regarding this Agreement or Executive's employment relationship with
the Company. Unless otherwise provided for by law, the Company and Executive
shall each pay half the costs and expenses of the mediation.
17. Arbitration.
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(a) In the event that mediation pursuant to Section 16 fails to resolve
a dispute or controversy, Executive and the Company agree that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof, shall be finally settled by binding arbitration to be held
in Oakland, California under the National Rules for the Resolution of Employment
Disputes supplemented by the Supplemental Procedures for Large Complex Disputes,
of the American Arbitration Association as then in effect (the "Rules"). The
parties shall be entitled to conduct discovery pursuant to the California Code
of Civil Procedure. The arbitrator may regulate the timing and sequence of such
discovery and shall decide any discovery disputes or controversies between the
Company. The arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to rules of conflicts of law.
(c) Unless otherwise provided for by law, the Company and the
Executive shall each pay half of the costs and expenses of such arbitration.
(d) Executive has read and understands this section, which discusses
arbitration. Executive understands that by signing this agreement, Executive
agrees to submit any claims arising out of, relating to, or in connection with
this agreement, or the interpretation, validity, construction, performance,
breach or termination thereof to binding arbitration, and that this arbitration
clause constitutes a waiver of Executive's right to a jury trial and relates to
the resolution of all disputes relating to all aspects of the Employer/Employee
relationship.
18. Counterparts. This Employment Agreement may be executed in several
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counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
19. Effect of Headings. The section headings herein are for convenience
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only and shall not affect the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.
COMPANY: COST PLUS, INC.
/s/ XXXXXX X. XXXXX
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By
CHAIRMAN, CEO, AND PRESIDENT
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Title
EXECUTIVE: /s/ XXXX X. XXXXXXX 5/6/98
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XXXX XXXXXXX
