Exhibit 10.3.4

PLEDGE AGREEMENT

PLEDGE AGREEMENT (this “Agreement”), dated as of June 25, 2007, by and between
COST PLUS, INC., a California corporation (the “Pledgor”), and BANK OF AMERICA,
N.A., a national banking association, as collateral agent (in such capacity, the
“Collateral Agent”) for its own benefit and the benefit of the other Credit
Parties (as defined in the Credit Agreement referred to below), in consideration
of the mutual covenants contained herein and benefits to be derived herefrom.

WITNESSETH:

WHEREAS, reference is made to that certain Credit Agreement, dated as of
June 25, 2007 (as amended, modified, supplemented or restated and in effect from
time to time, the “Credit Agreement”), by and among (i) the Pledgor, for itself
and as agent (in such capacity, the “Lead Borrower”) for the other Borrowers
from time to time party thereto (collectively, with the Lead Borrower, the
“Borrowers”), (ii) the Borrowers, (iii) the Guarantors from time to time party
thereto, (iv) the Lenders from time to time party thereto (individually, a
“Lender” and, collectively, the “Lenders”), and (v) Bank of America, N.A., as
Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer,
pursuant to which the Lenders have agreed to make Loans to the Borrowers, and
the L/C Issuer has agreed to issue Letters of Credit for the account of the
Borrowers, upon the terms and subject to the conditions specified in the Credit
Agreement; and

WHEREAS, the obligations of the Lenders to make Loans and of the L/C Issuer to
issue Letters of Credit are each conditioned upon, among other things, the
execution and delivery by the Pledgor of (i) that certain Security Agreement,
dated as of June 25, 2007 (as amended, modified, supplemented or restated and in
effect from time to time, the “Security Agreement”), by and among the Pledgor,
the other Grantors (as defined therein) party thereto and the Collateral Agent,
pursuant to which the Pledgor and each other Grantor grants to the Collateral
Agent (for its own benefit and the benefit of the other Credit Parties) a
security interest in and to the Collateral (as defined herein), and (ii) an
agreement in the form hereof, pursuant to which the Pledgor grants to the
Collateral Agent (for its own benefit and the benefit of the other Credit
Parties) a security interest in and to the Pledged Collateral (as defined
herein), in order to secure the Secured Obligations (as defined herein).

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Pledgor and the Collateral Agent, on its own
behalf and on behalf of the other Credit Parties (and each of their respective
successors or assigns), hereby agree as follows:

 

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SECTION 1

Definitions

1.1 Generally. All references herein to the UCC shall mean the Uniform
Commercial Code as in effect from time to time in the State of New York;
provided, however, that if a term is defined in Article 9 of the UCC differently
than in another Article thereof, the term shall have the meaning set forth in
Article 9; provided further that, if by reason of mandatory provisions of law,
perfection, or the effect of perfection or non-perfection, of the security
interest in any Pledged Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or availability of such
remedy, as the case may be.

1.2 Definitions of Certain Terms Used Herein. Unless the context otherwise
requires, all capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement. In addition, as used herein, the
following terms shall have the following meanings:

“Agreement” shall have the meaning assigned to such term in the preamble to this
Agreement.

“Blue Sky Laws” shall have the meaning assigned to such term in Section 7.7 of
this Agreement.

“Borrowers” shall have the meaning assigned to such term in the preliminary
statement of this Agreement.

“Collateral” shall have the meaning assigned to such term in the Security
Agreement.

“Collateral Agent” shall have the meaning assigned to such term in the preamble
of this Agreement.

“Credit Agreement” shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

“Financing Statement” shall have the meaning assigned to such term in the
Security Agreement.

“Investment Property” shall have the meaning assigned to such term in the
Security Agreement.

“Lead Borrower” shall have the meaning assigned to such term in the preliminary
statement of this Agreement.

 

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“Lender” and “Lenders” shall have the meaning assigned to such terms in the
preliminary statement of this Agreement.

“Pledged Collateral” shall have the meaning assigned to such term in Section 2.5
of this Agreement.

“Pledged Securities” shall have the meaning assigned to such term in Section 2.1
of this Agreement.

“Pledgor” shall have the meaning assigned to such term in the preamble of this
Agreement.

“Secured Obligations” shall mean the “Obligations” (as defined in the Credit
Agreement); provided, however, that Obligations which constitute Other
Liabilities shall be Secured Obligations solely to the extent that there is
sufficient Pledged Collateral following satisfaction of the obligations
described in clause (a) of the definition of Obligations.

“Securities Act” shall have the meaning assigned to such term in Section 7.7 of
this Agreement.

“Security Agreement” shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

1.3 Rules of Interpretation. The rules of interpretation specified in Sections
1.02 through 1.06 of the Credit Agreement shall be applicable to this Agreement.

SECTION 2

Pledge

As security for the payment or performance, as the case may be, in full of the
Secured Obligations, the Pledgor hereby transfers, grants, bargains, sells,
conveys, hypothecates, pledges sets over and delivers unto the Collateral Agent,
its successors and assigns, for its own benefit and the benefit of the other
Credit Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for its own benefit and the benefit of the other Credit Parties, a
security interest in all of the Pledgor’s right, title and interest in, to and
under:

2.1 all shares of capital stock, limited liability company membership interests
and other Equity Interests owned by the Pledgor, including in each entity
designated as an “Issuer” on Schedule I hereto, and any shares of capital stock,
limited liability company membership interests or other Equity Interests
obtained in the future by the Pledgor, and the stock certificates or other
security certificates (as defined in the UCC) representing all such shares,
membership interests or other Equity Interests; provided that no shares of
capital stock, limited liability company membership interests or other Equity
Interests with respect to any CFC shall be now or hereafter required to be
pledged hereunder by the Pledgor (the “Pledged Securities”);

 

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2.2 all other Investment Property that may be delivered to, and held by, the
Collateral Agent pursuant to the terms hereof;

2.3 subject to Section 6, all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed or
distributable, in respect of, or in exchange for, the Pledged Securities and
other Investment Property referred to in clauses 2.1 and 2.2 above;

2.4 subject to Section 6, all rights and privileges of the Pledgor with respect
to the Pledged Securities and other Investment Property referred to in
clauses 2.1, 2.2, and 2.3 above; and

2.5 all proceeds of any of the foregoing (the items referred to in clauses 2.1
through 2.4 being collectively referred to as the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for its own benefit and
the benefit of the other Credit Parties, until (i) the Commitments have expired
or been terminated, (ii) all of the Secured Obligations have been paid in full
in cash or otherwise satisfied, (iii) all L/C Obligations have been reduced to
zero (or fully cash collateralized in a manner reasonably satisfactory to the
L/C Issuer and the Administrative Agent), and (iv) the L/C Issuer has no further
obligation to issue Letters of Credit under the Credit Agreement; subject,
however, to the terms, covenants and conditions hereinafter set forth.

Upon delivery to the Collateral Agent pursuant to Section 3 of this Agreement,
(a) all stock certificates or other securities now or hereafter included in the
Pledged Securities shall be accompanied by stock powers duly executed in blank
or other instruments of transfer reasonably satisfactory to the Collateral Agent
and by such other instruments and documents as the Collateral Agent may
reasonably request, and (b) all other Investment Property comprising part of the
Pledged Collateral shall be accompanied by proper instruments of assignment duly
executed by the Pledgor and such other instruments or documents as the
Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the Pledged Securities theretofore
and then being pledged hereunder, which schedule shall be attached hereto as
Schedule I and made a part hereof. Each schedule so delivered shall supersede
any prior schedules so delivered.

 

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SECTION 3

Delivery of the Pledged Collateral

3.1 On or before the Closing Date, the Pledgor shall deliver or cause to be
delivered to the Collateral Agent any and all Pledged Securities, any and all
Investment Property, and any and all original certificates or other instruments
or documents representing the Pledged Collateral.

3.2 After the Closing Date, promptly upon the Pledgor’s acquiring any Pledged
Securities, and any original certificates or other instruments or documents
representing such Pledged Securities, the Pledgor shall deliver or cause to be
delivered to the Collateral Agent such Pledged Securities.

3.3 The Pledgor hereby irrevocably authorizes the Collateral Agent, at any time
and from time to time, to file in any appropriate filing office, wherever
located, any Financing Statement describing the Pledged Collateral that contains
any information required by the UCC of the applicable jurisdiction for the
sufficiency or filing office acceptance of any Financing Statement. The Pledgor
also authorizes the Collateral Agent to take any and all actions required by any
applicable Law to perfect and protect the security interest granted hereunder.
The Pledgor shall provide the Collateral Agent with any information the
Collateral Agent shall reasonably request in connection with any of the
foregoing.

SECTION 4

Representations, Warranties and Covenants

The Pledgor hereby represents, warrants and covenants, as to itself and the
Pledged Collateral pledged by it hereunder, to and with the Collateral Agent
that:

4.1 the Pledged Securities represent that percentage of the issued and
outstanding shares of each class of the capital stock or other Equity Interest
of the Issuer with respect thereto as set forth on Schedule I;

4.2 except for the security interest granted hereunder, and except as otherwise
permitted in the Credit Agreement and the other Loan Documents, the Pledgor
(i) is and will at all times continue to be the direct owner, beneficially and
of record, of the Pledged Securities indicated on Schedule I, (ii) holds the
Pledged Collateral free and clear of all Liens, other than Permitted
Encumbrances specified in clauses (a), (e), (i), (k) and (l) of the definition
thereof, (iii) will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in, or other Lien on, the
Pledged Collateral, other than pursuant hereto and other than Permitted
Encumbrances specified in clauses (a), (e), (i), (k) and (l) of the definition
thereof, and (iv) other than as permitted in Section 6, will cause any and all
distributions in cash or in kind made on the Pledged Collateral to be forthwith
deposited with the Collateral Agent and pledged or assigned hereunder;

 

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4.3 except in compliance with the Credit Agreement, the Pledgor will not consent
to or approve the issuance of (a) any additional shares of any class of capital
stock of any Issuer of the Pledged Securities, or the issuance of any membership
interests or other Equity Interests in any such Person, (b) any securities
convertible voluntarily by the holder thereof or automatically upon the
occurrence or nonoccurrence of any event or condition into, or exchangeable for,
any such shares, membership interests or other Equity Interests, or (c) any
warrants, options, rights, or other commitments entitling any person to purchase
or otherwise acquire any such shares, membership interests or other Equity
Interests;

4.4 the Pledgor (i) has the power and authority to pledge the Pledged Collateral
in the manner hereby done or contemplated and (ii) will defend its title or
interest thereto or therein against any and all Liens (other than Permitted
Encumbrances specified in clauses (a), (e), (i), (k) and (l) of the definition
thereof), however arising, of all Persons whomsoever;

4.5 except for consents or approvals already obtained, no consent of any other
Person (including stockholders or creditors of the Pledgor), and no consent or
approval of any Governmental Authority or any securities exchange, was or is
necessary to the validity of the pledge effected hereby or to the disposition of
the Pledged Collateral upon an Event of Default in accordance with the terms of
this Agreement and the Security Agreement;

4.6 by virtue of the execution and delivery by the Pledgor of this Agreement,
and the delivery by the Pledgor to the Collateral Agent, of the stock
certificates or other certificates or documents representing or evidencing the
Pledged Collateral in accordance with the terms of this Agreement, the
Collateral Agent will obtain a valid and perfected first Lien upon, and security
interest in, the Pledged Collateral as security for the payment and performance
of the Secured Obligations;

4.7 all of the Pledged Securities set forth on Schedule I have been duly
authorized and validly issued and, to the extent applicable, are fully paid and
nonassessable; and

4.8 all information set forth herein relating to the Pledged Collateral is
accurate and complete in all material respects as of the date hereof.

SECTION 5

Registration in Nominee Name; Copies of Notices

Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent, on its own behalf and on behalf of the other Credit Parties,
shall have the right (in its reasonable discretion) to hold the Pledged
Securities in its own name as pledgee, the name of its nominee (as pledgee or as
sub-agent) or the name of the Pledgor, endorsed or assigned in blank

 

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or in favor of the Collateral Agent. The Pledgor will promptly give to the
Collateral Agent copies of any notices or other communications received by it
with respect to Pledged Securities registered in the name of the Pledgor.

SECTION 6

Voting Rights; Dividends and Interest, Etc.

6.1 Unless and until an Event of Default has occurred and is continuing, the
Pledgor shall be entitled to exercise any and all voting and/or other consensual
rights and powers inuring to an owner of the Pledged Securities or any part
thereof to the extent, and only to the extent, that such rights are exercised
for any purpose consistent with, and not otherwise in violation of, the terms
and conditions of this Agreement, the Credit Agreement, the other Loan Documents
and applicable Law; provided, however, that the Pledgor will not be entitled to
exercise any such right if the result thereof could reasonably be expected to
materially and adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Credit Parties under this
Agreement, the Credit Agreement or any other Loan Document or the ability of the
Credit Parties to exercise the same.

6.2 Unless and until a Default or an Event of Default has occurred and is
continuing, the Pledgor shall be entitled to receive and retain any and all cash
dividends or other cash distributions paid on the Pledged Collateral (provided,
however, that, after the occurrence and during the continuance of a Cash
Dominion Event, the Pledgor shall cause all such cash dividends or other cash
distributions to be deposited into the Concentration Account in accordance with
the provisions of Section 6.13 of the Credit Agreement) to the extent, and only
to the extent, that such cash dividends or other cash distributions are
permitted by, and otherwise paid in accordance with, the terms and conditions of
this Agreement, the Credit Agreement, the other Loan Documents and applicable
Law. All noncash dividends, and all dividends paid or payable in cash or
otherwise in connection with a partial or total liquidation or dissolution,
return of capital, capital surplus or paid-in surplus, and all other
distributions (other than dividends and distributions referred to in the
preceding sentence) made on or in respect of the Pledged Collateral, whether
paid or payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification of the outstanding capital stock, membership
interests or other Equity Interests of the Issuer of any Pledged Securities or
received in exchange for Pledged Securities or any part thereof, or in
redemption thereof, or as a result of any merger, amalgamation, arrangement,
consolidation, acquisition or other exchange of assets to which such Issuer may
be a party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by the Pledgor, to the extent required to be paid to the
Collateral Agent pursuant to the terms of the Credit Agreement or the other Loan
Documents, shall not be commingled by the Pledgor with any of its other funds or
property but shall be held separate and apart therefrom, shall be held in trust
for the benefit of the Collateral Agent and shall be forthwith delivered to the
Collateral Agent, in the same form as so received (with any necessary
endorsement).

 

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6.3 Upon the occurrence and during the continuance of a Default or an Event of
Default, all rights of the Pledgor to dividends or other cash distributions that
the Pledgor is authorized to receive pursuant to Section 6.2 above shall cease,
and all such rights shall thereupon become vested in the Collateral Agent, which
shall have the sole and exclusive right and authority to receive and retain such
dividends or other cash distributions. All dividends or other cash distributions
received by the Pledgor contrary to the provisions of this Section 6.3 shall be
held in trust for the benefit of the Collateral Agent, shall be segregated from
other property or funds of the Pledgor and shall be forthwith delivered to the
Concentration Account in accordance with the provisions of Section 6.13 of the
Credit Agreement in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of this Section 6.3 shall be
applied in accordance with the provisions of Section 8. After all Events of
Default have been cured or waived in writing by the Collateral Agent, the
Pledgor will have the right to receive the dividends or other cash distributions
that it would otherwise be entitled to receive pursuant to the terms of
Section 6.2 above.

6.4 Upon the occurrence and during the continuance of an Event of Default, all
rights of the Pledgor to exercise the voting and consensual rights and powers it
is entitled to exercise pursuant to Section 6.1 shall cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to exercise such voting and consensual rights
and powers; provided that the Collateral Agent shall have the right from time to
time following and during the continuance of an Event of Default to permit the
Pledgor to exercise such rights. After all Events of Default have been cured or
waived in writing by the Collateral Agent, the Pledgor will have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of Section 6.1.

SECTION 7

Remedies upon Default

Upon the occurrence and during the continuance of an Event of Default, it is
agreed that the Collateral Agent shall have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the UCC or other applicable Law.
The rights and remedies of the Collateral Agent shall include, without
limitation, the right to take any or all of the following actions at the same or
different times:

7.1 The Collateral Agent may sell or otherwise dispose of all or any part of the
Pledged Collateral, at public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. Each purchaser at any such sale shall
hold the property sold absolutely, free from any claim or right on the part of
the Pledgor.

 

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7.2 The Collateral Agent shall give the Pledgor at least ten (10) days’ prior
written notice, by authenticated record, of the Collateral Agent’s intention to
make any sale of the Pledged Collateral. Such notice, (i) in the case of a
public sale, shall state the date, time and place for such sale, (ii) in the
case of a sale at a broker’s board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Pledged Collateral, or portion thereof, will first be offered for sale at such
board or exchange, and (iii) in the case of a private sale, shall state the date
after which any private sale or other disposition of the Pledged Collateral
shall be made. The Pledgor agrees that such written notice shall satisfy all
requirements for notice to the Pledgor which are imposed under the UCC with
respect to the exercise of the Collateral Agent’s rights and remedies upon
default. The Collateral Agent shall not be obligated to make any sale or other
disposition of any Pledged Collateral if it shall determine not to do so,
regardless of the fact that notice of sale or other disposition of such Pledged
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.

7.3 Any public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and state in
the notice of such sale.

7.4 At any public (or, to the extent permitted by applicable Law, private) sale
made pursuant to this Section 7, the Collateral Agent or any other Credit Party
may bid for or purchase, free (to the extent permitted by applicable Law) from
any right of redemption, stay, valuation or appraisal on the part of the
Pledgor, the Pledged Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to the
Collateral Agent or such other Credit Party from the Pledgor on account of the
Secured Obligations as a credit against the purchase price, and the Collateral
Agent or such other Credit Party may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to the
Pledgor therefor.

7.5 For purposes hereof, a written agreement to purchase the Pledged Collateral
or any portion thereof shall be treated as a sale thereof. The Collateral Agent
shall be free to carry out such sale pursuant to such agreement and the Pledgor
shall not be entitled to the return of the Pledged Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Secured Obligations paid in full.

7.6 As an alternative to exercising the power of sale herein conferred upon it,
the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose upon the Pledged Collateral and to sell the Pledged Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.

 

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7.7 The Pledgor recognizes that (a) the Collateral Agent may be unable to effect
a public sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, 15 U.S.C. §77 (as amended
and in effect, the “Securities Act”) or the Securities laws of various states
(the “Blue Sky Laws”), but may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof, (b) that
private sales so made may be at prices and upon other terms less favorable to
the seller than if the Pledged Collateral were sold at public sales, (c) that
neither the Collateral Agent nor any other Credit Party has any obligation to
delay sale of any of the Pledged Collateral for the period of time necessary to
permit the Pledged Collateral to be registered for public sale under the
Securities Act or the Blue Sky Laws, and (d) that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.

7.8 To the extent permitted by applicable Law, the Pledgor hereby waives all
rights of redemption, stay, valuation and appraisal which the Pledgor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted. In dealing with or disposing of the Pledged Collateral or
any part thereof, neither the Collateral Agent nor any other Credit Party shall
be required to give priority or preference to any item of Pledged Collateral or
otherwise to marshal assets or to take possession or sell any Pledged Collateral
with judicial process.

7.9 To the fullest extent permitted by applicable Law, the Pledgor hereby
expressly waives any and all rights or defenses arising by reason of (i) any
“one-action” or “anti-deficiency” law which would otherwise prevent the
Collateral Agent or any other Credit Party from bringing any action, including,
without limitation, any claim for a deficiency, or exercising any other right or
remedy (including, without limitation, any right of set-off), against the
Pledgor before or after the Collateral Agent’s or such Credit Party’s
commencement or completion of any foreclosure action, whether judicially, by
exercise of power of sale or otherwise, or (ii) any other applicable Law which
in any other way would otherwise require any election of remedies by the
Collateral Agent or any Credit Party. Nothing contained herein shall prevent the
Collateral Agent and/or any other Credit Party from exercising any and all
rights and remedies available to such Credit Party pursuant to any Loan Document
and that the exercise of any of such rights and remedies shall not constitute a
legal or equitable discharge of the Pledgor. WITHOUT LIMITING THE GENERALITY OF
ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, THE PLEDGOR
HEREBY ABSOLUTELY, KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY WAIVES, ANY AND ALL
BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF
CALIFORNIA CIVIL CODE SECTIONS 2787 TO 2856 INCLUSIVE, AND 2899 AND 3433,
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c, 580d, 726, UNION
BANK V. GRADSKY OR SUBSEQUENT JUDICIAL DECISIONS ARISING OUT OF OR RELATED TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 726, 580A, 580B OR 580D, AND CHAPTER
2 OF TITLE 14 OF PART 4 OF DIVISION 3 OF THE CALIFORNIA CIVIL CODE AND
CALIFORNIA COMMERCIAL CODE SECTIONS 3116, 3118, 3119, 3419, 3605, 9504 AND 9507.

 

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SECTION 8

Application of Proceeds of Sale

After the occurrence and during the continuance of an Event of Default and
acceleration of the Secured Obligations, the Collateral Agent shall apply the
proceeds of any collection or sale of the Pledged Collateral, as well as any
Pledged Collateral consisting of cash, in accordance with Section 8.03 of the
Credit Agreement.

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale or other disposition of the Pledged Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the purchase money by the
Collateral Agent or of the officer making the sale or other disposition shall be
a sufficient discharge to the purchaser or purchasers of the Pledged Collateral
so sold or otherwise disposed of and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

SECTION 9

Registration, Etc.

If the Collateral Agent reasonably determines that it is necessary to sell any
of the Pledged Securities at a public sale, the Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, the
Pledgor will, at any time and from time to time, upon the written request of the
Collateral Agent, use commercially reasonable efforts to take or to cause the
issuer of such Pledged Securities to take such action and prepare, distribute
and/or file such documents, as are required or advisable in the reasonable
opinion of counsel for the Collateral Agent to permit the public sale of such
Pledged Securities. Without limiting or duplicating any of its other
indemnification obligations under the Credit Agreement, the Security Agreement
or the other Loan Documents, the Pledgor agrees to indemnify, defend and hold
harmless the Collateral Agent, each other Credit Party, any underwriter, and
their respective officers, directors, Affiliates and controlling Persons from
and against all loss, liability, expenses, costs of counsel (including the
reasonable fees and expenses of legal counsel to the Collateral Agent), and
claims (including the reasonable costs of investigation) that any of them may
incur insofar as such loss, liability, expense or claim arises out of, or is
based upon, any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused

 

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by any untrue statement or omission based upon information furnished in writing
to the Pledgor or the issuer of such Pledged Securities by the Collateral Agent
or any other Credit Party expressly for use therein. The Pledgor further agrees,
upon such written request referred to above, to use commercially reasonable
efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Securities Act, Blue Sky Laws or other securities laws of such states as may be
requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations. The Pledgor will
bear all costs and expenses of carrying out its obligations under this
Section 9. The Pledgor acknowledges that there is no adequate remedy at law for
failure by it to comply with the provisions of this Section 9 and that such
failure would not be adequately compensable in damages, and therefore agrees
that its agreements contained in this Section 9 may be specifically enforced.

SECTION 10

Further Assurances

The Pledgor agrees to do such further acts and things, and to execute and
deliver such additional conveyances, assignments, agreements and instruments, as
the Collateral Agent may at any time reasonably request in connection with the
administration and enforcement of this Agreement or with respect to the Pledged
Collateral or any part thereof or in order better to assure and confirm unto the
Collateral Agent its rights and remedies hereunder.

SECTION 11

Intent

This Agreement is being executed and delivered by the Pledgor for the purpose of
confirming the grant of the security interest of the Collateral Agent in the
Pledged Collateral. It is intended that the security interest granted pursuant
to this Agreement is granted as a supplement to, and not in limitation of, the
security interest granted to the Collateral Agent, for its own benefit and the
benefit of the other Credit Parties, under the Security Agreement. All
provisions of the Security Agreement (including, without limitation, the rights,
remedies, powers, privileges and discretions of the Collateral Agent thereunder)
shall apply to the Pledged Collateral. In the event of a conflict between this
Agreement and the Security Agreement, the terms of this Agreement shall control
with respect to the Pledged Collateral and the terms of the Security Agreement
shall control with respect to all other Collateral.

SECTION 12

Termination; Release of Pledged Collateral

12.1 Any Lien upon any Pledged Collateral will be released automatically if the
Pledged Collateral constitutes property being sold, transferred or disposed of
in a Permitted

 

-12-

--------------------------------------------------------------------------------

Disposition upon receipt by the Collateral Agent of the Net Proceeds thereof to
the extent required by the Credit Agreement. Upon at least two (2) Business
Days’ prior written request by the Pledgor, the Collateral Agent shall execute
such documents as may be necessary to evidence the release of the Liens upon any
Pledged Collateral described in this Section 12.1; provided, however, that
(i) the Collateral Agent shall not be required to execute any such document on
terms which, in its reasonable opinion, would, under applicable Law, expose the
Collateral Agent to liability or create any obligation or entail any adverse
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Secured Obligations or any Liens (other than those expressly being released)
upon (or obligations of the Pledgor in respect of) all interests retained by the
Pledgor, including, without limitation, the Proceeds of any sale, all of which
shall continue to constitute part of the Pledged Collateral.

12.2 Except for those provisions which expressly survive the termination
thereof, this Agreement and the security interest granted herein shall terminate
when (i) the Commitments have expired or been terminated, (ii) all of the
Secured Obligations have been paid in full in cash or otherwise satisfied,
(iii) all L/C Obligations have been reduced to zero (or fully cash
collateralized in a manner reasonably satisfactory to the L/C Issuer and the
Administrative Agent), and (iv) the L/C Issuer has no further obligation to
issue Letters of Credit under the Credit Agreement, at which time the Collateral
Agent shall return all Pledged Collateral to the Pledgor and execute and deliver
to the Pledgor, at the Pledgor’s expense, all UCC termination statements,
releases and similar documents that the Pledgor shall reasonably request to
evidence such termination; provided, however, that the Credit Agreement, this
Agreement, and the security interest granted herein shall be reinstated if at
any time payment, or any part thereof, of any Secured Obligation is rescinded or
must otherwise be restored by any Credit Party upon the bankruptcy or
reorganization of the Pledgor. Any execution and delivery of termination
statements, releases or other documents pursuant to this Section 12.2 shall be
without recourse to, or warranty by, the Collateral Agent or any other Credit
Party.

SECTION 13

Governing Law

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

[SIGNATURE PAGE FOLLOWS]

 

-13-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

PLEDGOR:     COST PLUS, INC.     By:  

/s/ Tom Willardson

    Name:   Thomas D. Willardson     Title:   Executive Vice President and CFO

 

COLLATERAL AGENT:     BANK OF AMERICA, N.A.     By:  

/s/ Stephen Garvin

    Name:   Stephen Garvin     Title:   Managing Director

Signature Page to Pledge Agreement

--------------------------------------------------------------------------------

SCHEDULE I

Pledged Securities

None of the issuers has any authorized, issued or outstanding shares of its
capital stock of any class or any commitments to issue any shares of its capital
stock of any class or any securities convertible into or exchangeable for any
shares of its capital stock of any class except as otherwise stated in this
Schedule I.

 

Issuer

  

Record Owner

  

Class of Shares

  

Number of

Shares held

by Record

Owner

  

Number of

Issued and
Outstanding

Shares

  

Percentage of

Shares held

by Record

Owner

 

Cost Plus of Texas, Inc.

  

Cost Plus, Inc.

  

Common Stock

   100    100    100 %

Cost Plus of Idaho, Inc.

  

Cost Plus, Inc.

  

Common Stock

   100    100    100 %

Cost Plus Management Services, Inc.

  

Cost Plus, Inc.

  

Common Stock

   1,000    1,000    100 %

Cost Plus of California, Inc.

  

Cost Plus, Inc.

  

Common Stock

   1,000    1,000    100 %

Cost Plus Imports, Inc.

  

Cost Plus, Inc.

  

Common Stock

   500    500    100 %

Schedule I to Pledge Agreement

--------------------------------------------------------------------------------

Security Agreement

SCHEDULE 3.05

Bailees, Warehouseman, Etc.

 

1. Accretive, 229 Hollie Drive, Martinsville, VA 24112 – Warehouseman

 

2. UPS Supply Chain Solutions, 1930 Bishop Lane, Suite 200, Louisville, KY 40218
– Customs Broker

--------------------------------------------------------------------------------

Security Agreement

SCHEDULE 3.06

Consignments

 

1. None

--------------------------------------------------------------------------------

Security Agreement

SCHEDULE 3.07

Commercial Tort Claims

 

1. None.

--------------------------------------------------------------------------------

Security Agreement

SCHEDULE 3.08

Instruments and Chattel Paper

 

1. None.

--------------------------------------------------------------------------------

Security Agreement

SCHEDULE 3.09

Securities Accounts and Commodity Accounts

 

BANK NAME

  

A/C DESCRIPTION

  

ACCOUNT NO.

Bank of America    BofA Securities/Treasury Reserves    345 Montgomery Street   
   San Francisco, CA 94104-1898       Contacts:       Maria (Mimi) Drew      
Phone: (415)       Fax: (415) 622-1878       La-Yona Rauls       Phone:
1-800-227-3630       Fax: (415) 622-3934      

--------------------------------------------------------------------------------

Security Agreement

SCHEDULE 3.10

Electronic Chattel Paper and Transferable Records

 

1. None.

--------------------------------------------------------------------------------

Intellectual Property Security Agreement

EXHIBIT A

Copyrights and Copyright Licenses

 

1. None

--------------------------------------------------------------------------------

Intellectual Property Security Agreement

EXHIBIT B

Patents and Patent Licenses

 

1. None

--------------------------------------------------------------------------------

Intellectual Property Security Agreement

EXHIBIT C

Trademarks and Trademark Licenses

 

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

1.    AAKU (Class 33)    Cost Plus Management Services, Inc.   
Reg. No. 2,698,586    3/18/2003 2.    Asian Passage (Class 29)   
Cost Plus Management Services, Inc.    Reg. No. 2,730,163    6/24/2003 3.   
Asian Passage (Class 30)    Cost Plus Management Services, Inc.    Reg. No.
2,730,162    6/24/2003 4.    Atacama Design (Class 33)   
Cost Plus Management Services, Inc.    Reg. No. 2,753,175    8/19/2003 5.   
Atacama Logo (Class 33)    Cost Plus Management Services, Inc.    Reg. No.
2,750,490    8/12/2003 6.    Castello Del Lago (Class 29)   
Cost Plus Management Services, Inc.    Reg. No. 2,913,446    12/21/2004 7.   
Castello Del Lago (Class 30)    Cost Plus Management Services, Inc.    Reg. No.
2,769,585    9/30/2003

--------------------------------------------------------------------------------

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

8.    Cost Plus (Class 42)    Cost Plus Management Services, Inc.    Reg. No.
1,067,459    6/7/1977 9.    Cost Plus (Class 42)    Cost Plus Management
Services, Inc.    Reg. No. 1,068,346    6/21/1977 10.    Cost Plus World Market
& Star Design (Class 42)    Cost Plus Management Services, Inc.    Reg. No.
2,080,865    7/22/1997 11.    Crandall Brooks (Class 33)    Cost Plus Management
Services, Inc.    Reg. No. 2,672,744    1/7/2003 12.    Credo Int. (Class 30)   
Cost Plus Management Services, Inc.    Reg. No. 2,778,666    10/28/2003 13.   
Crossroads (Class 30)    Cost Plus Management Services, Inc.    Reg. No.
2,901,896    11/9/2004 14.    Crossroads – (Class 30)    Cost Plus Management
Services, Inc.    Reg. No. 51430 (State of CA)    8/7/73 15.    Crossroads Int.
(Class 30)    Cost Plus Management Services, Inc.    Reg. No. 1,800,975   
10/26/93 16.    Donaletta and Design (Ribbon & Wheat) (Class 30)    Cost Plus
Management Services, Inc.    Reg. No. 2,743,660    7/29/2003 17.    Electric
Reindeer (Class 33)    Cost Plus Management Services, Inc.    Reg. No. 2,353,526
   5/30/2000

--------------------------------------------------------------------------------

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

18.    Electric Reindeer Logo Only (Class 33)    Cost Plus Management Services,
Inc.    Reg. No. 2,742,101    7/29/2003 19.    Marche du Monde (Class 3)    Cost
Plus Management Services, Inc.    App. No. 78/758,180 (as of 3/16/07)   
11/21/2005 20.    Marche du Monde (Class 29)    Cost Plus Management Services,
Inc.    Reg. No. 2,725,419    6/10/2003 21.    Marche du Monde (Class 32)   
Cost Plus Management Services, Inc.    Reg. No. 2,712,774    5/6/2003 22.   
Marche du Monde & Design (Hazelnut) (Class 30)    Cost Plus Management Services,
Inc.    Reg. No. 2,729,966    6/24/2003 23.    Market Classics Int. (Class 29)
   Cost Plus Management Services, Inc.    Reg. No. 2,689,306    2/18/2003 24.   
Market Classics Int. (Class 30)    Cost Plus Management Services, Inc.    Reg.
No. 2,976,603    7/26/2005 25.    Maui Morning Int. (Class 30)    Cost Plus
Management Services, Inc.    Reg. No. 2,646,841    11/5/2002 26.    Mercado Del
Mundo (Class 29)    Cost Plus Management Services, Inc.    Reg. No. 2,438,049   
3/27/2001 27.    Mercado Del Mundo (Class 30)    Cost Plus Management Services,
Inc.    Reg. No. 2,679,350    1/28/2003

--------------------------------------------------------------------------------

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

28.    Mercado Del Mundo (Class 32)    Cost Plus Management Services, Inc.   
Reg. No. 2,678,918    1/21/2003 29.    Praline Perk (Class 30)    Cost Plus
Management Services, Inc.    Reg. No. 2, 727,734    6/17/2003 30.    Seacliff
(Class 33)    Cost Plus Management Services, Inc.    Reg. No. 2,740, 607   
7/22/2003 31.    Seacliff Design Only (Bird) (Class 33)    Cost Plus Management
Services, Inc.    Reg. No. 2,753, 178    8/19/2003 32.    Soiree Int. (Class 29)
   Cost Plus Management Services, Inc.    Reg. No. 2,730,769    6/24/2003 33.   
Tales of the Sip (Class 35)    Cost Plus Management Services, Inc.   
App. No. 77/002,065 (as of 3/16/07)    9/19/2006 34.    Texas Turtle (Class 30)
   Cost Plus Management Services, Inc.    Reg. No. 2,487,252    9/11/2001 35.   
The Big Sipper (Class 35)    Cost Plus Management Services, Inc.    App. No.
77/002,081 (as of 3/16/07)    9/19/2006 36.    Villa Vitale (Class 33)    Cost
Plus Management Services, Inc.    Reg. No. 2,846,714    5/25/2004

--------------------------------------------------------------------------------

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

37.    World Market (Classes 3, 4, 8, 11, 14, 16, 20, 21, 24, 27, 28, 29, 30,
32, & 35)    Cost Plus Management Services, Inc.    Reg. No. 2,556,914   
4/2/2002 38.    World Market & (Classes 16 & 30)    Cost Plus Management
Services, Inc.    Reg. No. 1,977,800    6/4/96 39.    World Market & Globe
Design (Class 29)    Cost Plus Management Services, Inc.    Reg. No. 2,389,561
   9/26/00 40.   

World Market & Globe Design Int.

(Class 30)

   Cost Plus Management Services, Inc.    Reg. No. 2,326,779    3/7/00 41.   
World Market Inc. (Class 3)    Cost Plus Management Services, Inc.    Reg. No.
2,415,202    12/26/2000 42.    World Market Inc. (Class 4)    Cost Plus
Management Services, Inc.    Reg. No. 2,613,029    8/27/2002 43.    World Market
Inc. (Class 8)    Cost Plus Management Services, Inc.    Reg. No. 2,422,740   
1/23/2001 44.    World Market Inc. (Class 9)    Cost Plus Management Services,
Inc.    Reg. No. 2,955,107    5/24/2005 45.    World Market Inc. (Class 11)   
Cost Plus Management Services, Inc.    Reg. No. 2,556,540    4/2/2002

--------------------------------------------------------------------------------

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

46.    World Market Inc. (Class 14)    Cost Plus Management Services, Inc.   
Reg. No. 2,582,756    6/18/2002 47.    World Market Inc. (Class 16)    Cost Plus
Management Services, Inc.    Reg. No. 2,477,108    8/14/2001 48.    World Market
Inc. (Class 20)    Cost Plus Management Services, Inc.    Reg. No. 2,675,831   
1/21/2003 49.    World Market Inc. (Class 21)    Cost Plus Management Services,
Inc.    Reg. No. 2,415,201    12/26/2000 50.    World Market Inc. (Class 24)   
Cost Plus Management Services, Inc.    Reg. No. 2,422,739    1/23/2001 51.   
World Market Inc. (Class 27)    Cost Plus Management Services, Inc.    Reg. No.
2,559,368    4/9/2002 52.    World Market Inc. (Class 28)    Cost Plus
Management Services, Inc.    Reg. No. 2,422,738    1/23/2001 53.    World Market
Inc. (Class 29)    Cost Plus Management Services, Inc.    Reg. No. 2,438,006   
3/27/2001 54.    World Market Inc. (Class 30)    Cost Plus Management Services,
Inc.    Reg. No. 2,422,735    1/23/2001 55.    World Market Inc. (Class 32)   
Cost Plus Management Services, Inc.    Reg. No. 2,347,302    5/2/2000

--------------------------------------------------------------------------------

TAB   

TRADEMARK NAME

  

REG. OWNER

  

REGISTRATION NO. /

APPLICATION NO.

  

REG. DATE/

APP. DATE

56.    World Market Inc. (Class 33)    Cost Plus Management Services, Inc.   
App. No. 78/352,453 (as of 3/16/07)    1/15/04 57.    World Market Inc. (Class
35)    Cost Plus Management Services, Inc.    Reg. No. 2,418,723    1/9/2001 58.
   World Market Inc. (Class 43)    Cost Plus Management Services, Inc.    Reg.
No. 2,840,285    5/11/2004 59.    Zinfatuation (Stylized) (Class 33)    Cost
Plus Management Services, Inc.    App. No. 77/021,697 (as of 3/16/07)   
10/16/2006

--------------------------------------------------------------------------------

Pledge Agreement

SCHEDULE I

Pledged Securities

 

    

Legal Name

  

Jurisdiction of incorporation

  

Certificate Nos.

  

Shares Owned

1.    Cost Plus of Texas, Inc.    Texas    1    100 2.    Cost Plus of Idaho,
Inc.    Idaho    1    100 3.    Cost Plus Management Services, Inc.   
California    1    1,000 4.    Cost-Plus of California, Inc.    Delaware    2   
1,000 5.    Cost-Plus Imports California, Inc.    Delaware    2    500