Exhibit 10.1

 

JEROME M. JESSUP

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of August 3, 2009, by
and between Coldwater Creek Inc., a Delaware corporation (the “Company”), and
Jerome M. Jessup (the “Executive”).

 

WHEREAS, the Company desires to employ the Executive as its Executive Vice
President, Creative Director, and the Executive desires to accept such
employment, on the terms set forth below.

 

Accordingly, the parties hereto agree as follows:

 

1.             Term.  The Company hereby employs the Executive, and the
Executive hereby accepts such employment for an initial term commencing as of
the date hereof and ending August 3, 2012, unless sooner terminated in
accordance with the provisions of Section 4 or Section 5, and which shall
automatically renew for an additional one year term unless six months advance
notice is given of non-renewal (the period during which the Executive is
employed hereunder being hereinafter referred to as the “Term”).

 

2.             Duties.  The Executive, in his capacity as Executive Vice
President, Creative Director shall faithfully perform for the Company the duties
of said office and shall perform such other duties of an executive, managerial
or administrative nature as shall be specified and designated from time to time
by the Chief Executive Officer or board of directors or similar governing body
of the Company (the “Board”) (including the performance of services for, and
serving on the Board of Directors of, any subsidiary or affiliate of the Company
without any additional compensation).  The Executive will be based at the
Company’s headquarters, presently located in Sandpoint, Idaho.  The Executive
shall devote substantially all of the Executive’s business time and effort to
the performance of the Executive’s duties hereunder, provided that in no event
shall this sentence prohibit the Executive from performing personal and
charitable activities and any other activities approved by the Chief Executive
Officer or the Board, so long as such activities do not materially and adversely
interfere with the Executive’s duties for the Company.

 

3.             Compensation.

 

3.1           Salary.  The Company shall pay the Executive during the Term a
base salary at the rate of $550,000 per annum (the “Annual Salary”), payable
semi-monthly and subject to regular deductions and withholdings as required by
law.  The Annual Salary may be increased annually by an amount as may be
approved by the Board or the Compensation Committee of the Board of Directors
(the “Compensation Committee”), and, upon such increase, the increased amount
shall thereafter be deemed to be the Annual Salary for purposes of this
Agreement.

 

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3.2           Hiring Bonus. The Executive will receive a hiring bonus (the
“Hiring Bonus”) paid in two installments in accordance with and subject to the
terms and conditions of this Section 3.2. The Company will pay the first
installment of such Hiring Bonus to the Executive in the amount of $162,200,
less applicable state and federal tax withholdings, on the first regular payroll
date following commencement of his employment with the Company. If the Executive
resigns without Good Reason (as such term is defined below) or the Company
terminates his employment for Cause (as such term is defined below), in either
case during the first twelve (12) months of his employment, the Executive will
be required to repay 100% of such first installment of the Hiring Bonus no later
than thirty (30) days following the Effective Date of the Termination set forth
in Section 5.1(c) or 5.1(d) below, as applicable. Provided that the Executive
remains in continuous service with the Company as its Executive Vice President,
Creative Director, the Company will pay to the Executive the second installment
of the Hiring Bonus in the amount of $152,100, less applicable federal and state
tax withholdings, on the first regular payroll date following the first
anniversary of continuous employment with the Company (i.e. the first Monday of
the fiscal third quarter of 2010).  If the Executive resigns without Good Reason
or the Company terminates his employment for Cause, in either case during the
first twelve (12) months of his employment, the Executive will forfeit any
rights to receive any portion of such second installment of the Hiring Bonus
upon any such termination of his employment.

 

3.3           Annual Bonus.  The Executive will be entitled to such bonuses as
may be authorized by the Board.  The Executive’s target bonus will be expressed
as a percentage of Annual Salary, provided, however, that Executive’s Annual
Bonus, if any, may be below, at, or above the target based upon the achievement
of individual and objective Company annual performance criteria established by
the Compensation Committee. Any Annual Bonus payable to the Executive hereunder
shall be paid no later than 2 ½ months following the fiscal year with respect to
which the bonus is earned.

 

3.4           Equity-Based Awards. The Executive may from time to time be
awarded such restricted stock units, stock options or other equity-based awards
as the Board or the Compensation Committee determines to be appropriate.

 

3.5           Benefits — In General.  The Executive shall be permitted during
the Term to participate in any group life, hospitalization or disability
insurance plans, health programs, pension and profit sharing plans and similar
benefits that may be available to other senior executives of the Company
generally, on the same terms as may be applicable to such other executives, in
each case to the extent that the Executive is eligible under the terms of such
plans or programs.

 

3.6           Personal Days.  During the Term, the Executive shall be entitled
to the number of personal days per year as may be prescribed from time to time
pursuant to the Company’s human resources policies.

 

3.7           Expenses.  The Company shall pay or reimburse the Executive for
all ordinary and reasonable out-of-pocket expenses actually incurred (and, in
the case of

 

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reimbursement, paid) by the Executive during the Term in the performance of the
Executive’s services under this Agreement, provided that the Executive submits
such expenses in accordance with the policies applicable to senior executives of
the Company generally.

 

4.             Termination upon Death or Disability.  If the Executive dies
during the Term, the obligations of the Company to or with respect to the
Executive shall terminate in their entirety except as otherwise provided under
this Section 4.  If the Executive becomes eligible for disability benefits under
the Company’s long-term disability plans and arrangements (or, if none apply,
would have been so eligible under the most recent plan or arrangement), the
Company shall have the right, to the extent permitted by law, to terminate the
employment of the Executive upon notice in writing to the Executive and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.

 

Upon death of the Executive or upon termination of the Executive’s employment by
virtue of disability the Executive (or the Executive’s estate or beneficiaries
in the case of the death of the Executive) shall have no right to receive any
compensation or benefit under this Agreement on and after the Effective Date of
the Termination (as defined below in this Section 4) other than the Annual
Salary earned and accrued under this Agreement prior to the Effective Date of
the Termination, a pro-rata bonus for the year of termination based on the
target and portion of year completed, and other benefits, including payment for
accrued but unused vacation, earned and accrued under this Agreement prior to
the Effective Date of the Termination (and reimbursement under this Agreement
for expenses incurred but not paid prior to the Effective Date of the
Termination).  In the event of termination by virtue of disability, in addition
to the foregoing, the Executive will also be entitled to monthly cash payments
equal to one twelfth (1/12th) of the Executive’s Annual Salary in effect on the
day of termination for a period of twelve (12) months. This Agreement shall
otherwise terminate upon the Effective Date of the Termination and there shall
be no further rights with respect to the Executive hereunder (except as provided
in Section 7.13).  For purposes of this Section 4, the “Effective Date of the
Termination” shall mean the date of death or the date on which a notice of
termination by virtue of disability is given by the Company or any later date
set forth in such notice of termination.

 

For the avoidance of doubt, the Executive acknowledges and agrees that the
payments set forth in this Section 4 constitute liquidated damages for
termination of his employment during the Term upon his death or by virtue of his
disability.

 

5.             Other Terminations of Employment.

 

5.1           Termination for Cause; Termination of Employment by the Executive
Without Good Reason.

 

(a)           For purposes of this Agreement, “Cause” shall mean:

 

(i)            the Executive’s commission of any felony;

 

(ii)           the Executive’s commission of an act of fraud, theft or
dishonesty;

 

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(iii)          the  continuing failure or habitual neglect by the Executive to
perform the Executive’s duties hereunder;

 

(iv)          any material violation of Company policy, including without
limitation, the Company’s Corporate Standards of Conduct;

 

(v)           any material violation by the Executive of Section 6 below; or

 

(vi)          the Executive’s material breach of this Agreement.

 

Notwithstanding the foregoing, if there exists (without regard to this sentence)
an event or condition that constitutes Cause under clause (iii), (iv), (v) or
(vi) above, the Executive shall have 30 days from the date written notice is
given by the Company of such event or condition to cure such event or condition
and, if the Executive does so, such event or condition shall not constitute
Cause hereunder.

 

(b)           For purposes of this Agreement, “Good Reason” shall mean, unless
otherwise consented to by the Executive:

 

(i)            the material reduction of the Executive’s authority, duties and
responsibilities, or the assignment to the Executive of duties materially and
adversely inconsistent with the Executive’s position or positions with the
Company and its subsidiaries;

 

(ii)           a material reduction in Annual Salary of the Executive except in
connection with a reduction in compensation generally applicable to senior
management employees of the Company;

 

(iii)          a requirement by the Company that the Executive’s work location
be moved more than 50 miles from the Company’s principal place of business in
Sandpoint, Idaho; or

 

(iv)          the Company’s material and willful breach of this Agreement.

 

Notwithstanding the foregoing, if there exists (without regard to this sentence)
an event or condition that constitutes Good Reason, the Company shall have
thirty (30) days from the date on which the Executive gives the written notice
thereof to cure such event or condition (such notice to be given from the
Executive within ninety (90) days from the date the event or condition first
occurs) and, if the Company does so, such event or condition shall not
constitute Good Reason hereunder.  Further, an event or condition shall cease to
constitute Good Reason one hundred twenty (120) days after the event or
condition first occurs.

 

(c)           The Company may terminate the Executive’s employment for Cause and
such termination in and of itself shall not be, nor shall it be deemed to be, a
breach of

 

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this Agreement.  If the Company terminates the Executive for Cause, (i) the
Executive shall have no right to receive any compensation or benefit under this
Agreement on and after the Effective Date of the Termination (as defined below
in this Section 5.1(c)) other than Annual Salary and other benefits, including
payment for accrued but unused vacation (but excluding any bonuses) earned and
accrued under this Agreement prior to the Effective Date of the Termination (and
reimbursement under this Agreement for expenses incurred but not paid prior to
the Effective Date of the Termination), (ii) the provisions of Section 5.3 shall
apply and (iii) this Agreement shall otherwise terminate upon the Effective Date
of the Termination and the Executive shall have no further rights hereunder
(except as provided in Section 7.13).  For purposes of this Section 5.1(c), the
“Effective Date of the Termination” shall mean the date on which a notice of
termination is given by the Company or any later date set forth in such notice
of termination.

 

(d)           The Executive may terminate his employment without Good Reason. 
If the Executive terminates the Executive’s employment with the Company without
Good Reason: (i) the Executive shall have no right to receive any compensation
or benefit under this Agreement on and after the Effective Date of the
Termination (as defined below in this Section 5.1(d)) other than Annual Salary
and other benefits, including payment for accrued but unused vacation (but
excluding any bonuses) earned and accrued under this Agreement prior to the
Effective Date of the Termination (and reimbursement under this Agreement for
expenses incurred but not paid prior to the Effective Date of the Termination),
(ii) the provisions of Section 5.3 shall apply and (iii) this Agreement shall
otherwise terminate upon the Effective Date of the Termination and the Executive
shall have no further rights hereunder (except as provided in Section 7.13). 
For purposes of this Section 5.1(d), the “Effective Date of the Termination”
shall mean the date on which a notice of termination is given by the Executive
or any later date set forth in such notice of termination.

 

(e)           In the event the Executive or the Company elects not to renew this
Agreement pursuant to Section 1 above, (i) the Executive shall have no right to
receive any compensation or benefit under this Agreement on and after the
Effective Date of the Termination (as defined below in this Section  5.1(e))
other than Annual Salary earned and accrued under this Agreement prior to the
Effective Date of the Termination, any bonus for any prior years not yet paid,
any bonus earned with respect to the calendar year in which the Effective Date
of Termination occurred, and other benefits, including payment for accrued but
unused vacation, earned and accrued under this Agreement prior to the Effective
Date of the Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the Termination) and
(ii) this Agreement shall otherwise terminate upon the Effective Date of the
Termination and there shall be no further rights with respect to the Executive
hereunder (except as provided in Section 7.13).  For purposes of this
Section 5.1(e), the “Effective Date of the Termination” shall mean the date on
which a notice of non-renewal is given by the Executive or the Company, as
applicable, or any later date set forth in such notice of non-renewal.

 

5.2           Termination Without Cause; Termination for Good Reason.  The
Company may terminate the Executive’s employment at any time without Cause, for
any reason or no reason, and the Executive may terminate the Executive’s
employment with the Company

 

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for Good Reason.  If the Company or the Executive terminates the Executive’s
employment and such termination is not described in Section 4 or Section 5.1,
(i) the Executive shall have no right to receive any compensation or benefit
hereunder on and after the Effective Date of the Termination (as defined below
in this Section 5.2) other than Annual Salary earned and accrued under this
Agreement prior to the Effective Date of the Termination, any bonus for the
prior year not yet paid, a pro rata bonus for any pending bonus periods in the
current year (to the extent the performance goals for any such pending bonus
period are subsequently determined to have been achieved), the portion of the
Hiring Bonus not yet paid, and other benefits, including payment for accrued but
unused vacation, earned and accrued under this Agreement prior to the Effective
Date of the Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the Termination), (ii) the
Executive shall receive a cash payment equal to the Severance Payment (as
defined below in this Section 5.2) payable no later than 30 days after the
Effective Date of the Termination, (iii) all unvested equity awards held by the
Executive shall fully vest, provided, however, that if the equity awards are
subject to performance vesting requirements such vesting will only occur to the
extent the performance goals for any pending bonus period are subsequently
determined to have been achieved, (iv) the Executive shall continue to receive
health benefits for 12 months and (v) this Agreement shall otherwise terminate
upon the Effective Date of the Termination and the Executive shall have no
further rights hereunder (except as provided in Section 7.13).  Notwithstanding
the foregoing sentence, if the Company terminates Executive’s employment without
Cause or Executive terminates employment for Good Reason on or within 12 months
after a Change in Control,  the Executive shall have no right to receive any
compensation or benefit hereunder on and after the Effective Date of the
Termination (as defined below in this Section 5.2) other than (i) the Executive
shall receive his Annual Salary earned and accrued under this Agreement prior to
the Effective Date of the Termination, any bonus for the prior year not yet
paid, a pro rata bonus (at target level) for any pending bonus periods in the
current year and other benefits, including payment for accrued but unused
vacation, earned and accrued under this Agreement prior to the Effective Date of
the Termination (and reimbursement under this Agreement for expenses incurred
but not paid prior to the Effective Date of the Termination), (ii) the Executive
shall receive the applicable Severance Payment, payable no later than 30 days
after the Effective Date of the Termination (iii) the Executive shall receive
continuation of health benefits for 12 months, (iv) all unvested equity awards
held by the Executive shall fully vest and (v) this Agreement shall otherwise
terminate upon the Effective Date of the Termination and the Executive shall
have no further rights hereunder (except as provided in Section 7.13).  The
“Severance Payment” means one and one-half (1 1/2) times the Executive’s Annual
Salary in effect on the day of termination provided that, if the Effective Date
of Termination occurs within 365 days following the occurrence of a Change in
Control pursuant to the Company’s termination without Cause or the Executive’s
termination for Good Reason (as defined below in this Section 5.1(b)), the
Severance Payment means one and one-half (1 1/2) times the Executive’s Annual
Salary and annual bonus at target level in effect on the day of termination. 
For purposes of this Section 5.2, (i) the “Effective Date of the Termination”
shall mean the date of termination specified in the Company’s or the Executive’s
notice of termination, as applicable, and (ii) a “Change in Control” shall
mean:  (a)  the acquisition directly or indirectly by any person or related
group of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company prior
to the transaction) of beneficial ownership

 

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(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities; (b)  a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board; or (c) a sale
of all or substantially all of the assets of the Company to another person or
entity (other than a person or entity that directly or indirectly controls, is
controlled by, or is under common control with, the Company prior to the
transaction).

 

5.3           Nature of Payments.  For the avoidance of doubt, the Executive
acknowledges and agrees that the Company’s payment obligations set forth in this
Section 5 constitute liquidated damages for termination of the Executive’s
employment during the Term.

 

6.             Noncompetition.

 

6.1           Noncompetition.  The Executive agrees with the Company that,
during the Term of this Agreement and for twelve (12) months thereafter (the
“Non-Competition Restriction Period”), the Executive will not, directly or
indirectly (whether as an officer, director, employee, consultant, agent,
advisor, stockholder, partner, joint venturer, proprietor or otherwise) engage,
be engaged by or otherwise become interested in any direct competitor of the
Company or any of its subsidiaries (or any of their successors), as the
Company’s business is conducted or contemplated to be conducted during his
period of  employment with the Company.

 

6.2           Reasonable and Necessary Restrictions.  The Executive acknowledges
that the restrictions, prohibitions and other provisions hereof, including,
without limitation the Restriction Period, are reasonable, fair and equitable in
terms of duration, scope and geographic area, are necessary to protect the
legitimate business interests of the Company and are a material inducement to
the Company to enter into this Agreement.

 

6.3           Forfeiture of Severance Payments.  In the event the Executive
breaches any provision of Section 6.1, in addition to any other remedies that
the Company may have at law or in equity, the Executive shall promptly reimburse
the Company for any Severance Payments received from, or payable by, the Company
and any amounts paid to the Executive pursuant to Section 3.2.  In addition, the
Company shall be entitled in its sole discretion to offset all or any portion of
the amount of any unpaid reimbursements against any amount owed by the Company
to the Executive.

 

7.             Other Provisions.

 

7.1           Specific Performance.  The Executive acknowledges that the
obligations undertaken by such Executive pursuant to Section 6  of this
Agreement are unique and that the Company likely will have no adequate remedy at
law if the Executive shall fail to perform any of

 

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such Executive’s obligations hereunder, and the Executive therefore confirms
that the Company’s right to specific performance of the terms of Section 6 of
this Agreement is essential to protect the rights and interests of the Company. 
Accordingly, in addition to any other remedies that the Company may have at law
or in equity, the Company shall have the right to have all obligations,
covenants, agreements and other provisions of Section 6 of this Agreement
specifically performed by the Executive, and the Company shall have the right to
obtain preliminary and permanent injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement by
the Executive.  The Executive hereby acknowledges and warrants that he will be
fully able to earn a livelihood for himself and his dependents if these
covenants are specifically enforced against him.  The Executive hereby further
acknowledges and agrees that the Company shall not be required to post bond as a
condition to obtaining or exercising such remedies, and the Executive hereby
waives any such requirement or condition.

 

7.2           Severability.  The Executive acknowledges and agrees that the
Executive has had an opportunity to seek advice of counsel in connection with
this Agreement.  If it is determined that any of the provisions of this
Agreement, or any part thereof, is invalid or unenforceable, the remainder of
the provisions of this Agreement shall not thereby be affected and shall be
given full affect, without regard to the invalid portions.

 

7.3           Attorneys’ Fees.  In the event of any legal proceeding relating to
this Agreement or any term or provision thereof, the losing party shall be
responsible to pay or reimburse the prevailing party for all reasonable
attorneys’ fees incurred by the prevailing party in connection with such
proceeding.

 

7.4           Notices.  All notices, requests, demands, claims, and other
communications hereunder shall be in writing.  Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered (i) two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) when received if it is sent by facsimile
communication during normal business hours on a business day or one business day
after it is sent by facsimile and received if sent other than during business
hours on a business day, (iii) one business day after it is sent via a reputable
overnight courier service, charges prepaid, or (iv) when received if it is
delivered by hand, in each case to the intended recipient as set forth below:

 

(i)            if to the Executive, to the address set forth in the records of
the Company; and

 

(ii)           if to the Company,

 

Coldwater Creek Inc.

One Coldwater Creek Drive

Sandpoint, Idaho 83864

Attention:  Chief Executive Officer

Facsimile:  [                      ]

 

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Any such person may by notice given in accordance with this Section to the other
parties hereto designate another address or person for receipt by such person of
notices hereunder.

 

7.5           Entire Agreement.  This Agreement, and the Coldwater Creek Inc. 
Confidentiality and Intellectual Property Agreement and Agreement for
Non-Solicitation or Recruitment, the offer letter between the Executive and the
Company dated as of [July     ], 2009 (the “Offer Letter”) contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with the Company or its
subsidiaries (or any predecessor of either); provided, however, that to the
extent that there any inconsistencies between the provisions of this Agreement
and the provisions of the Offer Letter the provisions of this Agreement shall
govern and supersede any such inconsistent provisions.

 

7.6           Waivers and Amendments.  This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance.  No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.

 

7.7           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF IDAHO WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

 

7.8           Assignment.  This Agreement, and the Executive’s rights and
obligations hereunder, may not be assigned by the Executive; any purported
assignment by the Executive in violation hereof shall be null and void.  In the
event of any Change in Control, the Company may assign this Agreement and its
rights hereunder.

 

7.9           Withholding.  The Company shall be entitled to withhold from any
payments or deemed payments any amount of withholding required by law.  No other
taxes, fees, impositions, duties or other charges or offsets of any kind shall
be deducted or withheld from amounts payable hereunder, unless otherwise
required by law.

 

7.10         No Duty to Mitigate.  The Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise, nor will any payments hereunder be
subject to offset in the event the Executive does mitigate.

 

7.11         Binding Effect.  This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, permitted assigns,
heirs, executors and legal representatives.

 

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7.12         Counterparts.  This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original but all such counterparts together shall constitute one and the same
instrument.  Each counterpart may consist of two copies hereof each signed by
one of the parties hereto.

 

7.13         Survival.  Anything contained in this Agreement to the contrary
notwithstanding, the provisions of Sections 4 through 6 (to the extent necessary
to effectuate the post-termination obligations set forth therein) and of
Section 7 shall survive termination of this Agreement and any termination of the
Executive’s employment hereunder.

 

7.14         Existing Agreements.  The Executive represents to the Company that
the Executive is not subject or a party to any employment or consulting
agreement, non-competition covenant or other agreement, covenant or
understanding which might prohibit the Executive from executing this Agreement
or limit the Executive’s ability to fulfill the Executive’s responsibilities
hereunder.

 

7.15         Headings.  The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.

 

7.16         Section 409A of the Internal Revenue Code.

 

(a)           Anything in this Agreement to the contrary notwithstanding, if
(A) on the date of termination of Executive’s employment with the Company or a
Subsidiary, any of the Company’s stock is publicly traded on an established
securities market or otherwise (within the meaning of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”))
and (B) as a result of such termination, the Executive would receive any payment
that, absent the application of this Section 7.16, would be subject to interest
and additional tax imposed pursuant to Section 409A(a) of the Code as a result
of the application of Section 409A(a)(2)(B)(i) of the Code, then no such payment
shall be payable prior to the date that is the earliest of (1) 6 months after
the Executive’s termination date, (2) the Executive’s death or (3) such other
date as will cause such payment not to be subject to such interest and
additional tax.

 

(b)           It is the intention of the parties that payments or benefits
payable under this Agreement not be subject to the additional tax imposed
pursuant to Section 409A of the Code (“409A”).  To the extent such potential
payments or benefits could become subject to such Section, the parties shall
cooperate to amend this Agreement with the goal of giving the Executive the
economic benefits described herein in a manner that does not result in such tax
being imposed.

 

(c)           Except as otherwise provided under this Agreement, all
reimbursements to the Executive shall be paid as promptly as practical and in
any event not later than the last day of the calendar year in which the expenses
are incurred, and the amount of the expenses eligible for reimbursement during
any calendar year will not affect the amount of expenses eligible for
reimbursement in any other calendar year.  With respect to payments under this
Agreement, for purposes of 409A, each severance payment and COBRA continuation
reimbursement payment

 

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will be considered one of a series of separate payments, and the Executive’s
termination date will be treated as the Executive’s separation from service as
defined under 409A.

 

(d)           Amounts payable under this Agreement following the Executive’s
termination of employment, other than those expressly payable on a deferred or
installment basis, will be paid as promptly as practical after such a
termination of employment and, in any event, within 2 ½ months after the end of
the year in which employment terminates.

 

7.17         Certain Definitions.  For purposes of this Agreement:

 

(a)           an “affiliate” of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, and includes subsidiaries.

 

(b)           A “business day” means the period from 9:00 am to 5:00 pm on any
weekday that is not a banking holiday in New York City, New York.

 

(c)           A “person” means an individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization,
including any court, administrative agency or commission or other governmental
authority.

 

(d)           A “subsidiary” of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests or no board of
directors or other governing body, 50% or more of the equity interests of which)
is owned directly or indirectly by such first person.

 

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IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and
year first above written.

 

 

 

COLDWATER CREEK INC.

 

 

 

By:

/s/ Daniel Griesemer

 

Name:

Daniel Griesemer

 

Title:

President and Chief Executive Officer

 

 

 

 

 

 

 

/s/ Jerome Jessup

 

JEROME M. JESSUP

 

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