<PAGE>
 
                                                                    EXHIBIT 10.4

                                COST PLUS, INC.

                            1995 STOCK OPTION PLAN
                          (adopted November 1, 1995)
                          (Amended October 15, 1996)


     1.   Purpose.
          ------- 

          The purpose of this Plan is to strengthen Cost Plus, Inc., a
California corporation (the "Company"), by providing an incentive to selected
officers and other key employees and thereby encouraging them to devote their
abilities and industry to the success of the Company's business enterprise.  It
is intended that this purpose be achieved by extending to selected officers and
other key employees of the Company and its subsidiaries an added long-term
incentive for high levels of performance and unusual efforts through the grant
of options to purchase Common Stock of the Company.

     2.   Definitions.
          ----------- 

          For purposes of the Plan:

          2.1  "Affiliate" means (i) with respect to any Person which is not a
natural person, any other Person that directly or indirectly through one or more
intermediaries controls, or is controlled by or under common control with, such
Person; and (ii) with respect to any Person who is a natural person, any of the
following: (x) any spouse, parent, child, brother or sister of such Person or
any issue of the foregoing (as used in this definition, issue shall include
persons legally adopted into the line of descent), (y) a trust solely for the
benefit of such Person or any spouse, parent, child, brother or sister of such
Person or for the benefit of any issue of the foregoing or (z) any corporation
or partnership which is controlled by such Person, or by any spouse, parent,
child, brother or sister of such Person or by any issue of the foregoing.

          2.2  "Agreement" means the written agreement between the Company and
an Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.

          2.3  "Board" means the Board of Directors of the Company.

          2.4  "Cause," unless otherwise defined in the Agreement evidencing a
particular Option, means an Eligible Individual's (i) intentional failure to
perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) engaging in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries thereof which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (iv) willful
violation of any law, rule or regulation in connection with the performance of
duties (other than traffic violations or similar offenses).

                                      -1-
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          2.5  "Change in Capitalization" means any change in the Shares or
exchange of Shares for a different number or kind of shares or other securities
of the Company, by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, stock dividend, stock split or reverse
stock split.

          2.6  "Code" means the Internal Revenue Code of 1986, as amended.

          2.7  "Committee" means a committee, as described in Section 3.1,
appointed by the Board to administer the Plan and to perform the functions set
forth herein.

          2.8  "Company" means Cost Plus, Inc., a California corporation.

          2.9  "Controlling Shareholders" means Internationale Nederlanden
(U.S.) Capital Corporation and Pearl Street L.P., collectively.

          2.10  "Disability" means a physical or mental infirmity which impairs
the Optionee's ability to perform substantially his or her duties for a period
of one hundred eighty (180) consecutive days.

          2.11  "Eligible Individual" means any director, officer or employee of
the Company or a Subsidiary, or any consultant or advisor.

          2.12  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          2.13  "Fair Market Value" means on any date, (i) with respect to any
stock or other security (including, without limitation, the Shares) (a) if such
security is listed or admitted to trading on a national securities exchange or
the Nasdaq National Market of the National Association of Securities Dealers
Automated Quotation System, the closing price of such security (or the closing
bid, if no shares were reported, as quoted on such system or exchange or the
exchange with the greatest volume of trading in such security for the last
market trading day prior to the time of determination) as reported in the Wall
Street Journal or such other source as the Committee deems reliable, (b) if such
securities are not listed or admitted to trading, the arithmetic mean of the
closing bid price and the closing asked price on such date as quoted on such
other market in which such prices are regularly quoted, or (c) if there have
been no published bid or asked quotations with respect to such security on such
date, the Fair Market Value shall be the value established by the Committee in
good faith and, in the case of securities relating to an Incentive Stock Option,
in accordance with Section 422 of the Code, and (ii) with respect to all other
property and consideration, the value conclusively determined in good faith by
the Committee in its sole discretion.  Any determination made by the Committee
hereunder shall be final, binding and non-appealable.

          2.14  "First Vesting Date" means, (i) as to Options granted prior to
June 30, 1996, the earlier to occur of June 30, 1997 and the first anniversary
of the Company's Initial Public 

                                      -2-
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Offering, and (ii) as to each Option granted on or after June 30, 1996, the
first anniversary of the Grant Date for such Option.

          2.15  "Grant Date" means with respect to each Option, the Grant Date
as defined in the applicable Agreement.

          2.16  "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.

          2.17  "Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Shares on a fully diluted basis (a "5% Owner"), and any Person who is not an
Affiliate of a 5% Owner.

          2.18  "Initial Public Offering" means the consummation of the first
public offering of Shares pursuant to one or more effective registration
statements under the Securities Act (other than registrations on Form S-8 or
Form S-4 or any other registration statement used for a business combination or
any successor form to any such Forms) ("Registration Statements").

          2.19  "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.

          2.20  "Option" means an option to purchase Shares granted pursuant to
the Plan.

          2.21  "Optionee" means a person to whom an Option has been granted
under the Plan.

          2.22  "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

          2.23  "Own" or any derivation thereof means beneficial ownership as
defined in Rule 13d-3 promulgated under the Exchange Act.

          2.24  "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.

          2.25  "Per Share Option Price" means, with respect to each Option, the
per share exercise price with respect to such Option.

          2.26  "Person" means any natural person, corporation, partnership,
firm, association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.

                                      -3-
<PAGE>
 
          2.27  "Plan" means this Cost Plus, Inc. 1995 Stock Option Plan.

          2.28  "Pooling Period" means, with respect to a Pooling Transaction,
the period ending on the first date on which the combined entity resulting from
such Pooling Transaction publishes combined operating results for at least
thirty (30) days.

          2.29  "Pooling Transaction" means an acquisition of the Company in a
transaction which is treated as a "pooling of interests" under generally
accepted accounting principles.

          2.30  "Sale of the Company" means any of the following transactions
which are approved by the Board and the shareholders of the Company in
accordance with the Articles of Incorporation of the Company then in effect: (i)
the sale of all or substantially all of the assets of the Company determined on
a consolidated basis, (ii) the complete liquidation or dissolution of the
Company, or (iii) a merger, consolidation or reorganization involving the
Company (a "Business Combination"), unless the shareholders of the Company,
immediately before the Business Combina  tion, Own, directly or indirectly, at
least a majority of the combined voting power of the outstanding voting
securities of the corporation resulting from the Business Combination in
substantially the same proportions as their Ownership of the outstanding voting
securities immediately before such transaction.

          2.31  "Securities Act" means the Securities Act of 1933, as amended.

          2.32  "Shares" means the common stock, par value $.01 per share, of
the Company.

          2.33  "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.

          2.34  "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.

          2.35  "Ten-Percent Shareholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.

     3. Administration.
        -------------- 

          3.1  The Plan shall be administered as follows:

          (a) The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan.  The Committee shall keep minutes of its meetings.  Except as otherwise
provided in the Company's 

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<PAGE>
 
Articles of Incorporation or By-Laws, a quorum shall consist of not less than
two members of the Committee and a majority of a quorum may authorize any
action. Except as otherwise provided in the Company's Articles of Incorporation
or Bylaws, any decision or determination reduced to writing and signed by the
requisite number of the members of the Committee shall be as fully effective as
if made by the vote of the requisite number of members at a meeting duly called
and held.

          (b)  Procedure.
               --------- 

          (i) Multiple Administrative Bodies.  The Committee shall be composed
              ------------------------------                                  
of the Board or a committee of the Board.  The Plan may be administered by
different Committees with respect to different Optionees.

          (ii) Section 162(m).  To the extent that the Board determines it to be
               --------------                               
desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more Outside Directors.

          (iii) Rule 16b-3.  To the extent desirable to qualify transactions
                ----------                                     
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.

          (iv) Other Administration.  Other than as provided above, the Plan
               --------------------                                
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.

          (c) No member of the Committee shall be liable for any action, failure
to act, determination or interpretation made in good faith with respect to this
Plan or any transaction hereunder, except for liability arising from his or her
own willful misfeasance, gross negligence or reckless disregard of his or her
duties.  The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any action in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.

          3.2  Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:

          (a) to determine those Eligible Individuals to whom Options shall be
granted under the Plan and, subject to Section 5.2, the number of Shares subject
to each Option to be granted, to prescribe the terms and conditions (which need
not be identical) of each such Option, including the Fair Market Value on any
date, the Per Share Option Price for the Shares subject to each Option in
accordance with Section 5.3, and to make any 

                                      -5-
<PAGE>
 
amendment or modification to any Agreement, including the acceleration of
vesting, consistent with the terms of the Plan;

          (b) to construe and interpret the Plan and the Options granted
hereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with applicable law, including Rule 16b-3
under the Exchange Act and the Code to the extent applicable, and otherwise to
make the Plan fully effective. All decisions and determinations by the Committee
in the exercise of this power shall be final, binding and conclusive upon the
Company, its Subsidiaries, the Optionees, and all other persons having any
interest therein;

          (c) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee on an individual basis without constituting a
termination of employ  ment or service for purposes of the Plan;

          (d) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and

          (e) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the Company with
respect to the Plan.

     4.   Stock Subject to the Plan.
          ------------------------- 

          (a) The maximum number of Shares that may be made the subject of
Options granted under the Plan shall be 1,024,669 Shares (post split), less the
aggregate number of Shares from time to time (i) subject to options outstanding
under the Cost Plus, Inc. 1994 Stock Option Plan (the "1994 Option Plan") or
(ii) issued upon exercise of options granted under the 1994 Option Plan. Options
to be granted under the Plan shall be granted under the Form of Cost Plus, Inc.
1995 Stock Option Plan Incentive Stock Option Agreement attached as Exhibit A-1
                                                                    -----------
or Nonqualified Stock Option Agreement attached as Exhibit A-2, which forms of
                                                   -----------                
agreement may be modified or amended by the Committee from time to time so long
as any such modified or amended agreement is not inconsistent with any provision
of the Plan.

          (b) Upon a Change in Capitalization, the number of Shares set forth in
this Section 4 and in Section 5 shall be adjusted in number and kind pursuant to
Section 6.

          (c) Upon the granting of an Option, the number of Shares available for
the granting of further Options shall be reduced by the number of Shares in
respect of which the Option is granted.  Whenever any outstanding Option or
portion thereof expires, is canceled or is otherwise terminated for any reason
without having been exercised or payment having been made in respect thereof,
the Shares allocable to the expired, canceled or otherwise terminated portion of
the Option shall again be available for the granting of Options by the Committee
under the terms of the Plan.

                                      -6-
<PAGE>
 
          (d) The Board shall reserve for the purpose of the Plan, out of its
authorized but unissued Shares, 1,024,669 Shares (post split), less the
aggregate number of Shares from time to time (i) subject to options outstanding
under the 1994 Option Plan or (ii) issued upon exercise of options granted under
the 1994 Option Plan.

     5.   Option Grants for Eligible Individuals.
          -------------------------------------- 

          5.1  Authority of Committee.  Except as otherwise expressly provided
               ----------------------                                         
in this Plan, the Committee shall have full and final authority to select those
Eligible Individuals who will receive Options, the terms and conditions of which
shall be set forth in an Agreement; provided, however, that no person shall
                                    -----------------                      
receive any Incentive Stock Options unless he or she is an employee of the
Company, a Parent or a Subsidiary at the time the Incentive Stock Option is
granted.

          5.2  Eligibility.
               ----------- 

          (a) No Eligible Individual may be granted, in any fiscal year of the
Company, Options to purchase more than 265,322 Shares; provided that the
limitation set forth in this Section 5.2(a) shall only apply to Options granted
after the Company's Initial Public Offering.  If an Option is cancelled (other
than in connection with a Sale of the Company), the cancelled Option will be
counted against the limit set forth in this Section 5.2(a).  For this purpose,
if the exercise price of an Option is reduced, the transaction will be treated
as a cancellation of the Option and the grant of a new Option.

          (b) Each Option shall be designated in the Agreement as either an
Incentive Stock Option or a Nonqualified Stock Option.  However, notwithstanding
such designations, to the extent that the aggregate Fair Market Value:

          (i) of Shares subject to an Optionee's Incentive Stock Options granted
by the Company, any Parent or Subsidiary, which

          (ii) become exercisable for the first time during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options shall be treated as Nonqualified Stock Options. For purposes
of this Section 5.2(b), Incentive Stock Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.

          5.3  Option Exercise Price.  The Per Share Option Price for the Shares
               ---------------------                                            
to be issued pursuant to exercise of an Option shall be such price as is
determined by the Committee, but shall be subject to the following:

          (a) In the case of an Incentive Stock Option granted to an Eligible
Individual who, at the time of the grant of such Incentive Stock Option, is a
Ten-Percent 

                                      -7-
<PAGE>
 
Shareholder, the Per Share Option Price shall be no less than 110% of the Fair
Market Value per Share on the Grant Date.

          (b) In the case of an Incentive Stock Option granted to any Eligible
Individual other than a Ten-Percent Shareholder, the Per Share Option Price
shall be no less than 100% of the Fair Market Value per Share on the Grant Date.

          5.4  Duration of Options.
               ------------------- 

          (a) Maximum Duration.  Each Option granted hereunder shall be for a
              ----------------                                               
term of not more than ten (10) years from the date it is granted (five (5) years
in the case of an Incentive Stock Option granted to a Ten-Percent Shareholder).
The Committee may, subsequent to the granting of any Option, extend the term
thereof but in no event shall the term as so extended exceed the maximum term
provided for in the preceding sentence.

          (b)  Termination of Employment.
               ------------------------- 

          (i) Death, Disability or Retirement.  In the event the Optionee's
              -------------------------------                              
employment with or service as a consultant to or director of the Company  is
terminated as a result of Disability or death or the voluntary retirement of the
Optionee at or after age 65 (or age 55 with Company consent) ("Retirement") or
the Optionee dies within the thirty (30) day period described in Section
5.4(b)(iii) below, the Optionee or, in the case of the Optionee's death,
Optionee's legal representatives, may at any time within one (1) year after his
or her termination, exercise any Options then held by the Optionee to the
extent, but only to the extent, that such Options or portions thereof are
exercisable on the date of such termination, after which time such Options shall
terminate in full; provided, however, that if the employment of an Optionee is
terminated as a result of Disability that does not qualify as a "permanent and
total disability" as defined in Code Section 22(e)(3) and the regulations
thereunder, Incentive Stock Options held by the Optionee shall be treated as
Nonqualified Stock Options as of the date that is three (3) months and one (1)
day following such termination of employment.  Any portion of an Incentive Stock
Option granted to an Optionee which is not exercised within the three (3) month
period following the Optionee's Retirement shall thereafter cease to be an
Incentive Stock Option and shall be treated as a Nonqualified Stock Option.  In
the event of an Optionee's termination of employment due to death as described
in this Section, all Options held by the Optionee shall be exercisable, even as
to Shares previously unvested, by the legatee or legatees under the Optionee's
will, or by the Optionee's personal representatives or distributees and such
person or persons shall be substituted for the Optionee each time the Optionee
is referred to herein.  Notwithstanding anything else in this Section, the
Committee may, in its discretion, provide in the Agreement that any Options held
by Optionee on the date Optionee's employment with or service as a consultant or
director of the Company terminates as a result of Disability or Retirement shall
become fully vested and exercisable as of such termination date.

          (ii) Cause.  In the event Optionee's employment with or service as a
               -----                                             
consultant to or director of the Company is terminated for Cause, all Options
held by the Optionee 

                                      -8-
<PAGE>
 
shall terminate on the date of the Optionee's termination whether or not
exercisable.

          (iii) Other Termination. If Optionee's employment with or service as a
                -----------------                                  
consultant to or director of the Company is terminated for any reason other than
Disability, death, Retirement or Cause (including the Optionee's ceasing to be
employed by or a consultant to or director of a Subsidiary or division of the
Company or any Subsidiary as a result of the sale of such Subsidiary or division
or an interest in such Subsidiary or division), the Optionee may at any time
within thirty (30) days after such termination, exercise any Options held by the
Optionee to the extent, but only to the extent, that such Options or portions
thereof are exercisable on the date of the termination, after which time such
Options shall terminate in full.

          5.5  Vesting.  Unless otherwise provided for by the Committee in an
               -------                                                       
Agreement and subject to Section 5.10, each Option shall become vested and
exercisable as to 25% of the aggregate number of Shares covered by the Option on
the First Vesting Date, and as to an additional 25% of the aggregate number of
Shares covered by the Option on each of the first, second and third
anniversaries of the First Vesting Date.  Any fractional number of Shares
resulting from the application of the vesting percentage shall be rounded to the
next higher whole number of Shares. To the extent not exercised, installments
shall accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date an Option expires or
terminates. Notwithstanding the foregoing (or any other provision to the
contrary contained in the Plan or any Agreement) all outstanding Options shall
immediately become fully (100%) vested and exercisable upon a Sale of the
Company.  In addition, the Committee may accelerate the exercisability of any
Option or portion thereof at any time.

          5.6  Modification.  No modification of an Option shall adversely alter
               ------------                                                     
or impair any rights or obligations under the Option without the Optionee's
consent.

          5.7  Nontransferability.  Unless otherwise provided by the Committee
               ------------------                                             
in an Agreement, no Option granted hereunder shall be transferable by the
Optionee to whom granted otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code.  An Option may be exercised during the lifetime of such Optionee only
by the Optionee or his or her guardian or legal representative.  The terms of
such Option shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Optionee.

          5.8  Method of Exercise.  The exercise of an Option shall be made only
               ------------------                                               
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted.  The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise by any one or a combination of the
following: (i) cash, (ii) check, (iii) transferring Shares to the Company upon
such terms and conditions as determined by the Committee or (iv) pursuant to a
cashless exercise providing for the exercise of the Option and sale of 

                                      -9-
<PAGE>
 
the underlying Shares by a designated broker and delivery of the Shares by the
Company to such broker. Cashless exercises shall be subject to such procedures
as may be established from time to time by the Committee in its sole discretion.
The Committee shall have discretion to determine at the time of grant of each
Option or at any later date (up to and including the date of exercise) the form
of payment acceptable in respect of the exercise of such Option. With respect to
the transfer of Shares to the Company as payment, in part or in whole, of the
exercise price (i) any Shares transferred to the Company as payment of the
purchase price under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option; and (ii) any Shares acquired
upon the exercise of an option must have been owned by the Optionee for more
than six months prior to such transfer. If requested by the Committee, the
Optionee shall deliver the Agreement evidencing the Option to the Secretary of
the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof)
shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest whole number of Shares.

          5.9  Rights of Optionees.  No Optionee shall be deemed for any purpose
               -------------------                                              
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered the Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a shareholder of record on the books
of the Company.  Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.

          5.1  Sale of Company.
               --------------- 

          (a)  In the event of a Sale of the Company, effective as of the date
of consummation of the transaction constituting the Sale of the Company, at the
election of the Company and, without any action by any Optionee:

          (A)(i) each outstanding Option shall become fully (100%) vested and
exercisable, (ii) each Option shall be deemed to have been exercised to the
extent it had not been exercised prior to that date, (iii) the Shares issuable
in connection with the deemed exercise of each Option shall be issued to and in
the name of the acquiror of the Company, if any, and (iv) in respect of each
Share issued in connection with the deemed exercise of an Option, the Optionee
shall receive a per Share payment equal to the number (or amount) and kind of
stock, securities, cash, property or other consideration that each holder of a
Share was entitled to receive in connection with the Sale of the Company,
reduced by the Per Share Option Price, or

          (B) each outstanding Option shall become fully (100%) vested and shall
simultaneously be terminated in exchange for a per share payment for each Share
then subject to such Option equal to the number (or amount) and kind of stock,
securities, cash, property or other consideration that each holder of a Share
was entitled to receive in connection with the Sale of the Company, reduced by
the Per Share Option Price, or

                                      -10-
<PAGE>
 
          (C) in the event of a Sale of the Company that is consummated pursuant
to a merger, consolidation or reorganization (a "Transaction"), each outstanding
Option shall become fully (100%) vested and exercisable, and the Plan and the
outstanding Options shall continue in effect in accordance with their respective
terms and each Optionee shall be entitled to receive in respect of each Share
subject to any outstanding Option, upon exercise of such Option, the same number
(or amount) and kind of stock, securities, cash, property or other consideration
that each holder of a Share was entitled to receive in connection with the
Transaction in respect of a Share.

          (b) In the event of a Sale of the Company, the Optionee shall sell his
or her Shares and, if shareholder approval of the transaction is required and if
the Company receives an opinion of an independent, nationally recognized
investment banking firm retained by the Board to the effect that the
consideration to be received in such Sale of the Company, as the case may be, is
fair to the shareholders of the Company, shall vote his or her Shares in favor
thereof, and waive any dissenters' rights, preemptive rights, appraisal rights
or similar rights, as the case may be.  (The fees and expenses incurred in
obtaining such opinion shall be borne by the Company.)

          (c) Any sale of Shares by any Optionee in any Sale of the Company
shall be for the same consideration per share, on the same terms and subject to
the same conditions as the sale by the shareholders of the Company.

          (d) In any case, in the event of a Sale of the Company, the payment
made to each Optionee shall be further reduced by an amount equal to the
Optionee's proportionate share of the expenses of sale incurred by the
Controlling Shareholders in connection with the Sale of the Company.  In any
Sale of the Company, at the request of the Controlling Shareholders or the
Company, each Optionee shall execute and deliver a counterpart of an agreement
pursuant to which such Optionee agrees to sell its Shares in the Sale of the
Company, provided that such Optionee shall not be required to make, in
         --------                                                     
connection with such Sale of the Company, any representations and warranties
with respect to the Company or its business or with respect to any other
Optionee or selling shareholder.  In addition, each Optionee shall be
responsible for such Optionee's proportionate share of the expenses of sale
incurred by the selling shareholders in connection with the Sale of the Company
and the obligations and liabilities (including obligations and liabilities for
indemnification (including indemnification obligations and liabilities for (x)
breaches of representations and warranties made by the Company or any other
Optionee or selling shareholder with respect to the Company or its business, (y)
breaches of covenants and (z) other matters), amounts paid into escrow and post-
closing purchase price adjustments) incurred by the selling shareholders in
connection with the Sale of the Company; provided that (i) without the written
                                         --------                             
consent of such Optionee, the amount of such obligations and liabilities shall
not exceed the gross proceeds received by such Optionee in such Sale of the
Company (provided that to the extent the proceeds received by the Optionee in
        ---------                                                            
such Sale of the Company are reduced by the Per Share Option Price, the "gross
proceeds received by such Optionee" shall be deemed to mean the sum of such
proceeds plus the Per Share Option Price for purposes of this Plan) and (ii)
such Optionee shall not 

                                      -11-
<PAGE>
 
be responsible for the fraud of any other Optionee or selling shareholder or any
indemnification obligations and liabilities for breaches of representations and
warranties made by any other Optionee or selling shareholder with respect to
such other Optionee's or selling shareholder's ownership of and title to shares
of capital stock of the Company, organization and authority. In connection with
a Sale of the Company, and subject to Section 5.10(b) and Section 5.10(c)
hereof, each Optionee shall do and perform or cause to be done and performed all
further acts and things and shall execute and deliver all other agreements,
certificates, instruments and documents as the Company or the Controlling
Shareholders reasonably may request in connection with such Sale of the Company.

          (e) For all purposes of the Plan, the value of stock, securities,
property or other consideration shall be the Fair Market Value of such stock,
securities, property or other consideration as determined in accordance with
Section 2.13.

          (f) In the case of a Transaction which also constitutes a Pooling
Trans action, notwithstanding anything to the contrary contained in the Plan or
any Agreement, (i) to the extent not earlier exercised or terminated under this
Section 5.10, all Options outstanding on the date of the Transaction shall
remain exercisable until the date which is thirty (30) days after the last day
of the Pooling Period, whether or not the Optionee is then an employee of the
Company, but in no event beyond the stated term of the Option, and (ii) if the
Board determines after consultation with an independent accounting firm retained
by the Company (the "Independent Accountant") that it is reasonably necessary in
order to assure that the Pooling Transaction will qualify as such, the Committee
may provide, in its sole discretion and pursuant to the specific recommendations
of the Independent Accountant, that (A) all Options, or, in the alternative,
such Options held by Optionees specifically identified by the Committee, shall
not become immediately and fully exercisable on the date of the Transaction but
rather shall become immediately and fully exercisable on the date following the
last day of the Pooling Period, (B) the Optionees holding such Options shall be
required to surrender such Options (or any portion of such Options) for
cancellation in return for the consideration provided under this Section 5.10
only during the thirty (30) day period commencing on the date following the last
day of the Pooling Period, but in no event after the stated term of the Option,
and/or (C) the consideration specified above in this Section 5.10 shall be paid
in the form of cash, Shares or securities of a successor of the Company or a
combination of the foregoing, as designated by the Committee.

     6.  Adjustment Upon Changes in Capitalization.
         ----------------------------------------- 

          (a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the maximum
number and class of Shares or other stock or securities with respect to which
Options may be granted under the Plan, (ii) the maximum number of Shares with
respect to which Options may be granted to any Eligible Individual during the
term of the Plan, and (iii) the number and class of Shares or other stock or
securities which are subject to outstanding Options granted under the Plan, and
the purchase price therefor, if applicable.

                                      -12-
<PAGE>
 
          (b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.

          (c) If, by reason of a Change in Capitalization, an Optionee shall be
entitled to exercise an Option with respect to, new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Option prior to such
Change in Capitalization.

     7.  Termination and Amendment of the Plan.
         ------------------------------------- 

          The Plan shall terminate on the day preceding the tenth anniversary of
the date of its adoption by the Board and no Option may be granted thereafter.
The Board may sooner terminate the Plan and the Board may at any time and from
time to time amend, modify or suspend the Plan; provided, however, that, except
                                                -----------------              
with the consent of the Optionee, no such amendment, modification, suspension or
termination shall impair or adversely alter any Options theretofore granted
under the Plan, nor shall any amendment, modification, suspension or termination
deprive any Optionee of any Shares which he or she may have acquired through or
as a result of the Plan.  To the extent necessary and desirable to comply with
the Code or any other applicable laws, the Company shall obtain shareholder
approval of any amendment to the Plan.

     8.  Non-Exclusivity of the Plan.
         --------------------------- 

          The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement
or as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such arrange
ments may be either applicable generally or only in specific cases.

     9.   Limitation of Liability.
          ----------------------- 

          As illustrative of the limitations of liability of the Company, but
not intended to be exhaustive thereof, nothing in the Plan shall be construed
to:

          (i) give any person any right to be granted an Option other than at
the sole discretion of the Committee;

          (ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;

          (iii) limit in any way the right of the Company to terminate the
employment of any 

                                      -13-
<PAGE>
 
person at any time; or

          (iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.


     10.  Regulations and Other Approvals: Governing Law.
          ---------------------------------------------- 

          10.1  Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of California without giving effect to conflicts of
law principles.

          10.2  The obligation of the Company to sell or deliver Shares with
respect to Options granted under the Plan shall be subject to all applicable
laws, rules, and regulations, including all applicable federal and state
securities laws and all applicable stock exchange rules, and the obtaining of
all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.

          10.3  It is intended that from and after the date that any class of
equity securities of the Company are registered under Section 12 of the Exchange
Act, the Plan shall be administered in compliance with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith.  Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.

          10.4  The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Indi  viduals granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.

          10.5  Each Option is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no such Options shall be granted or payment made or Shares issued, in
whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions other than as
acceptable to the Committee.

          10.6  Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent

                                      -14-
<PAGE>
 
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder and to the effect set forth in Section 14 of
the Agreement.  The certificates evidencing any of such Shares shall bear an
appropriate legend to reflect their status as restricted securities as
aforesaid.

     11.  Miscellaneous.
          ------------- 

          11.1  Multiple Agreements.  The terms of each Option may differ from
                -------------------                                           
other Options granted under the Plan at the same time, or at some other time.
The Committee may also grant more than one Option to a given Eligible Individual
during the term of the Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Eligible Individual.

          11.2  Withholding of Taxes.
                -------------------- 

          (a) At such times as an Optionee recognizes taxable income in
connection with the receipt of Shares, cash or other consideration hereunder (a
"Taxable Event"), the Optionee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the Taxable Event (the
"Withholding Taxes") prior to the issuance or the payment of such Shares, cash
or other consideration.  The Company shall have the right to deduct from any
payment of cash to an Optionee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes.  In satisfaction of the
obligation to pay Withholding Taxes to the Company, the Optionee may make a
written election (the "Tax Election"), which may be accepted or rejected in the
sole discretion of the Committee, to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Section 11.2 or impose such other
restrictions or limitations on Tax Elections as may be necessary to ensure that
the Tax Elections will be exempt transactions under Section 16(b) of the
Exchange Act, and (ii) permit Tax Elections to be made at such other times and
subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.

          (b) If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of 

                                      -15-
<PAGE>
 
written notice to the Company at its principal executive office.


     12.  Effective Date.
          -------------- 

          The Plan shall become effective upon its adoption by the Board of
Directors of the Company; provided that continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months after
the date the Plan is so adopted.  Such shareholder approval shall be obtained in
the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Shares are listed.

     13.  Termination of Existing Option Plan.
          ----------------------------------- 

          At such time as this Plan shall become effective and shall have been
approved by the shareholders as required by Section 12, the 1994 Stock Option
Plan shall terminate and the Shares allotted for stock option grants under the
1994 Option Plan, other than Shares that are the subject of outstanding options
granted under the 1994 Option Plan, and any Shares which become available due to
the forfeiture, expiration or other termination of any option, or portion
thereof, outstanding under the 1994 Option Plan, shall not be available for the
granting of any further options or other awards under the 1994 Option Plan or
any other option or stock incentive plan or arrangement of the Company.  Each
option outstanding under the 1994 Option Plan shall remain outstanding and shall
continue to be subject to the terms of the applicable agreement evidencing the
grant of such option and the terms of the 1994 Option Plan.

                                      -16-
<PAGE>
 
                                COST PLUS, INC.

                            1995 STOCK OPTION PLAN
                       INCENTIVE STOCK OPTION AGREEMENT


     THIS AGREEMENT is effective as of the 18th day of November, 1996  (the
"Grant Date"), between Cost Plus, Inc., a California corporation (the
"Company"), and 1 (the "Optionee").

     WHEREAS, the Company has adopted the Cost Plus, Inc. 1995 Stock Option Plan
(the "Plan") in order to provide additional incentive to selected officers,
employees, consultants and directors of the Company and its Subsidiaries; and

     WHEREAS, the Committee responsible for administration of the Plan has
determined to grant an Option to the Optionee as provided herein and the Company
and the Optionee hereby wish to establish the terms and conditions applicable to
the Option;

     NOW, THEREFORE, the parties hereto agree as follows:

     1.   Grant of Option.
          --------------- 

          1.1  Effective as of the Grant Date, the Company hereby grants to the
Optionee the right and option (the "Option") to purchase all or any part of an
aggregate of 2 whole Shares subject to, and in accordance with, the terms and
conditions set forth in this Agreement.

          1.2  The Option is intended to qualify as an Incentive Stock Option to
the maximum extent permissible under Section 422 of the Code (and the
regulations promulgated thereunder); provided, however, that nothing in this
                                     --------  -------                      
Agreement shall be interpreted as a representation, guarantee or other
undertaking on the part of the Company that the Option is or will be determined
to be an Incentive Stock Option.  To the extent that the Option does not qualify
as an Incentive Stock Option with respect to any Share(s) covered by the Option,
the Option shall be a Nonqualified Stock Option with respect to such Share(s).

          1.3  This Agreement shall be construed in accordance and consistent
with, and subject to, the terms of the Plan (the provisions of which are
incorporated herein by reference); and, except as otherwise expressly set forth
herein, the capitalized terms used in this Agreement shall have the same
definitions as set forth in the Plan.

     2.   Purchase Price.
          -------------- 

          The price at which the Optionee shall be entitled to purchase Shares
upon the exercise of the Option shall be $18.125 per Share (the "Per Share
Option Price").

     3.   Duration of Option.
          ------------------ 

<PAGE>
 
          The Option shall be exercisable to the extent and in the manner
provided herein for a period of ten (10) years from the Grant Date (the
"Exercise Term"); provided, however, that the Option may be earlier terminated
                  -----------------                                           
as provided herein.

     4.   Exercisability of Option.
          ------------------------ 

          Except as otherwise provided herein, and subject to the continued
provision by Optionee of services to the Company, its Parent, or any Subsidiary,
the Option shall become vested and exercisable as to one-third of the aggregate
number of Shares covered by the Option each year on the anniversary of the grant
date.  Any fractional number of Shares resulting from the application of this
fraction shall be rounded to the next higher whole number of Shares.  To the
extent not exercised, installments shall accumulate and be exercisable, in whole
or in part, at any time after becoming exercisable, but not later than the date
the Option expires or terminates. Notwithstanding the foregoing (or any other
provision of this Agreement to the contrary) the Option shall immediately become
fully (100%) vested and exercisable upon a Sale of the Company, subject to the
continued provision by Optionee of services to the Company, its Parent or any
Subsidiary as of the date of such transaction.

     5.   Manner of Exercise and Payment.
          ------------------------------ 

          5.1  Subject to the terms and conditions of this Agreement and the
Plan, the Option may be exercised by delivery of written notice to the Company,
at its principal executive office.  Such notice shall state that the Optionee is
electing to exercise the Option and the number of Shares in respect of which the
Option is being exercised and shall be signed by the person or persons
exercising the Option.  If requested by the Committee, such person or persons
shall (i) deliver this Agreement to the Secretary of the Company who shall
endorse thereon a notation of such exercise and (ii) provide satisfactory proof
as to the right of such person or persons to exercise the Option.

          5.2  The notice of exercise described above shall be accompanied by
(a) either (i) payment of the full purchase price for the Shares in respect of
which the Option is being exercised, in cash, by check or, at the sole
discretion of the Committee, by transferring Shares to the Company having a Fair
Market Value on the day preceding the date of exercise equal to the cash amount
for which such Shares are substituted or instructions from the Optionee to the
Company directing the Company to deliver a specified number of Shares directly
to a designated broker or dealer pursuant to a cashless exercise election which
is made in accordance with such requirements and procedures as are acceptable to
the Committee in its sole discretion, (b) full payment of all applicable
Withholding Taxes.  Any Shares acquired by the Optionee pursuant to the exercise
of an option may not be transferred in satisfaction of the exercise price in
respect of the exercise of any portion of the Option unless such Shares have
been held by the Optionee for at least six (6) months prior to such transfer.

          5.3  Upon receipt of the notice of exercise and the required payment
relating to the Shares in respect of which the Option is being exercised and
other required documentation, the 

                                      -2-
<PAGE>
 
Company shall, subject to the Plan and this Agreement, take such action as may
be necessary to effect the transfer to the Optionee of the number of Shares as
to which such exercise was effective.

          5.4  The Optionee shall not be deemed to be the holder of or to have
any of the rights of a holder with respect to, any Shares subject to the Option
until (i) the Option shall have been exercised pursuant to the terms of this
Agreement and the Optionee shall have paid the full purchase price for the
number of Shares in respect of which the Option was exercised, (ii) the Company
shall have issued and delivered the Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company, whereupon the Optionee shall have full voting and other
ownership rights with respect to such Shares.

     6.   Termination of Employment.
          ------------------------- 

          6.1  Death, Disability or Retirement.  In the event the employment of
               -------------------------------                                 
the Optionee is terminated as a result of Disability or death or the voluntary
retirement of the Optionee at or after age 65 (or age 55 with Company consent)
("Retirement") or the Optionee dies within the thirty (30) day period described
in Section 6.3 below, the Optionee may at any time within one (1) year after
such termination of employment, exercise the Option to the extent, but only to
the extent, that the Option or portion thereof was exercisable on the date of
such termination of employment, after which time the Option shall terminate in
full.  Any portion of the Option which is not exercised within the three (3)
month period following the Optionee's Retirement shall thereafter cease to be
eligible for treatment as an Incentive Stock Option and shall be treated as a
Nonqualified Stock Option.  In the event of the Optionee's death, the Option
shall be exercisable, to the extent provided in the Plan and this Agreement, by
the legatee or legatees under the Optionee's will, or by the Optionee's personal
representatives or distributees and such person or persons shall be substituted
for the Optionee each time the Optionee is referred to herein.

          6.2  Cause.  In the event the employment of the Optionee is terminated
               -----                                                            
for Cause, the Option shall terminate on the date of the Optionee's termination
of employment whether or not exercisable.

          6.3  Other Termination of Employment.  If the employment of the
               -------------------------------                           
Optionee is terminated for any reason other than Disability, death, Retirement
or Cause (including the Optionee's ceasing to be employed by a Subsidiary or
division of the Company or any Subsidiary as a result of the sale of such
Subsidiary or division or an interest in such Subsidiary or division), the
Optionee may at any time within thirty (30) days after such termination of
employment, exercise the Option to the extent, but only to the extent, that the
Option or portion thereof was exercisable on the date of the termination of
employment, after which time the Option shall terminate in full.

     7.   Nontransferability.
          ------------------ 

          The Option shall not be transferable other than by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined in the Code.  During the 

                                      -3-
<PAGE>
 
lifetime of the Optionee, the Option shall be exercisable only by the Optionee,
except in the case of an Option transferred pursuant to a qualified domestic
relations order.

     8.   No Right to Continued Employment.
          -------------------------------- 

          Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Optionee any right with respect to continuance of
employment by the Company or any Subsidiary, nor shall this Agreement or the
Plan interfere in any way with the right of the Company or any Subsidiary to
terminate the Optionee's employment at any time.

     9.   Change in Company's Capitalization.
          ---------------------------------- 

          In the event of a Change in Capitalization, the Committee shall make
appropriate adjustments to the number and class of Shares or other stock or
securities subject to the Option and the purchase price for such Shares or other
stock or securities.  The Committee's adjustment shall be made in accordance
with the provisions of Section 6 of the Plan and shall be final and binding for
all purposes of the Plan and this Agreement.

     10.  Taxation.
          -------- 

          10.1  Disqualifying Disposition.  If the Optionee makes a disposition,
                -------------------------                                       
within the meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to the Optionee pursuant to his
exercise of that portion of the Option designated as an Incentive Stock Option
within the two-year period commencing on the day after the Grant Date or within
the one-year period commencing on the day after the date of transfer of such
Share or Shares to the Optionee pursuant to such exercise, the Optionee shall,
within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Secretary of the Company, and immediately
deliver to the Company the amount of any applicable withholding taxes under
Federal, state and local law.

          10.2  Withholding.  The Company shall have the right to deduct from
                -----------
any distribution of cash to the Optionee an amount equal to the federal, state
and local income taxes and other amounts as may be required by law to be
withheld (the "Withholding Taxes") with respect to the Option. If the Optionee
is entitled to receive Shares upon exercise of that portion of the Option which
is a Nonqualified Stock Option, the Optionee shall pay the Withholding Taxes to
the Company in cash prior to the issuance of such Shares. In satisfaction of the
Withholding Taxes, the Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the Shares issuable to him or her upon
exercise of the Option, having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes.

     11.  Optionee Bound by the Plan.
          -------------------------- 

                                      -4-
<PAGE>
 
          The Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by all the terms and provisions thereof.

     12.  Modification of Agreement.
          ------------------------- 

          This Agreement may be modified, amended, suspended or terminated, and
any terms or conditions may be waived, but only by a written instrument executed
by the parties hereto.

     13.  Severability.
          ------------ 

          Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.

     14.  Governing Law.
          ------------- 

          The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without
giving effect to the conflicts of laws principles thereof.

     15.  Successors in Interest.
          ---------------------- 

          This Agreement shall inure to the benefit of and be binding upon any
successor to the Company.  This Agreement shall inure to the benefit of the
Optionee's legal representatives. All obligations imposed upon the Optionee and
all rights granted to the Company under this Agreement shall be final, binding
and conclusive upon the Optionee's heirs, executors, administrators and
successors.

     16.  Resolution of Disputes.
          ---------------------- 

          Any dispute or disagreement which may arise under, or as a result of,
or in any way relate to, the interpretation, construction or application of this
Agreement shall be determined by the Committee.  Any determination made
hereunder shall be final, binding and conclusive on the Optionee and Company for
all purposes.

     17.  No Assignment.
          ------------- 

          Except as otherwise provided herein, the rights of the Optionee
hereunder may not be assigned or otherwise transferred to any other party.

     18.  Entire Agreement.
          ---------------- 

                                      -5-
<PAGE>
 
          This Agreement and the Plan constitute the entire agreement, and
supersede all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.

     19.  Execution and Delivery by Spouse.
          -------------------------------- 

          If an Optionee resides in a community property state, any provision
hereunder which requires such Optionee to execute and deliver any agreement,
certificate, instrument or document shall be deemed to also require such
Optionee's spouse to execute and deliver such agreement, certificate, instrument
or document.

     By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Agreement.  Optionee has reviewed the
Plan and this Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Agreement and fully understands all
provisions of the Plan and Agreement.  Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions relating to the Plan and Agreement.  Optionee further agrees
to notify the Company upon any change in the residence address indicated below.


COST PLUS, INC.                          OPTIONEE


By:
    --------------------------            --------------------------

Title:                                    Address:
       --------------------------         
                                          -------------------------- 

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

                                      -6-