Document:

Modification Agreement

 Exhibit 10.4 
 MODIFICATION AGREEMENT 
 (Long Form) 
 This Modification Agreement (“Agreement”) is made as of April 7, 2006 by Cost Plus, Inc., a California corporation
(“Borrower”), and Bank of America, National Association, a national banking association (“Bank”). 
 Factual Background 
 A. Under a loan agreement dated May 14, 2004 (the “Loan Agreement”), Bank agreed
to make a loan (the “Loan”) to Borrower. Capitalized terms used herein without definition have the meanings ascribed to them in the Loan Agreement. 
 B. The Loan is evidenced by (a) a Commercial Real Estate Loan Note dated May 14, 2004, made payable to Bank in the stated principal amount of $20,000,000.00 (the “Term Note”) and (b) a
Revolving Loan Note dated May 14, 2004, made payable to Bank in the stated principal amount of $20,000,000.00 (the “Revolving Note”). The Term Note and the Revolving Note are referred to individually as a
“Note” and collectively as “Notes”. The Notes are secured by a Deed of Trust dated May 14, 2004, executed by Borrower, as trustor, to PRLAP, Inc. as trustee, for the benefit of Bank as beneficiary. The Deed of
Trust was recorded on May 14, 2004 in the Clerk’s Office of the Circuit Court of Isle of Wight County, Virginia as Instrument No. 04000005663. The Deed of Trust encumbers certain Property located in Isle of Wight County, Virginia, as
more particularly therein described. 
 C. In connection with the Loan, Borrower executed an Environmental Indemnity Agreement
(“Borrower’s Unsecured Indemnity”). Borrower’s Unsecured Indemnity is not a Loan Document, as defined below. 
 D.
Cost Plus Management Services, Inc., a California corporation (“Management”), Cost Plus of Texas, a Texas corporation (“Texas”), and Cost Plus Marketing Services, Inc., a California corporation
(“Marketing”) (each of Management, Texas and Marketing being a “Guarantor” and collectively, “Guarantors”) have guaranteed Borrower’s obligations to Bank, each in accordance with a Guaranty
dated May 14, 2004. 
 E. Marketing has been merged into Management, with Management being the surviving corporation (“Guarantor
Merger”). 
 F. Each of the Guarantors executed an Environmental Indemnity Agreement dated May 14, 2004 (an “Indemnity
Agreement”), in connection with the Loan. In those Indemnity Agreements, the Guarantors, as indemnitors, agreed to indemnify Bank and certain other parties against certain environmental and other risks which may result from Bank’s
having made the Loan. 
 G. As used herein, the term “Loan Documents” means the Loan Agreement, the Notes, the Deed of
Trust, and any other documents executed in connection with the Loan, including those which evidence, guarantee, secure or modify the Loan, as any or all of them may have been amended to date. The Loan Documents, however, do not include
Borrower’s Unsecured Indemnity or the Indemnity Agreements. This Agreement is a Loan Document. 
  

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 H. As of the date of this Agreement, the outstanding principal balance of the Loan is $35,940,609.00 and
no funds remain available to be advanced thereunder. 
 E. Borrower and Bank now wish to modify the Loan as set forth below. 
 Agreement 
 Therefore, Borrower and
Bank agree as follows: 
 1. Modification of Loan Documents. The Loan Documents are hereby amended as follows: 
 (a) Borrower is entering into that certain Amendment to Credit Agreement dated as of April __, 2006, among Borrower, Bank as
Administrative Agent, and the Lenders named therein (the “Amendment”). The Amendment modifies portions of the negative covenants set forth in Article VII of that certain Credit Agreement dated November 10, 2004, Bank among Borrower,
as Administrative Agent and L/C Issuer, and the Lenders named therein (the “Credit Agreement”) with which Borrower is obligated to comply. Borrower acknowledges such modifications in the Amendment. Borrower further covenants to comply at
all times with the negative covenants set forth in Article VII of the Credit Agreement as modified by the Amendment and as the Credit Agreement may be further amended, renewed, extended or replaced from time to time. 
 (b) The number “$7,500,000.00” in Section 6.15 of the Loan Agreement is deleted and replaced with
“$15,000,000.00”. 
 (c) Section 6.16 of the Loan Agreement is amended and restated in full as follows:

 “Unless the written consent of Lender is previously obtained, all or substantially all of the business assets of
Borrower or any Guarantor are sold, Borrower or any Guarantor is dissolved, or there occurs any change in the form of business entity through which Borrower or any Guarantor presently conducts its business other than as permitted under
Section 7.04 of the Credit Agreement.” 
 (d) The numbers “$5,000,000.00” and “$7,500,000.00” in
Section 6.17 of the Loan Agreement are each deleted and replaced with “$15,000,000.00” in each instance. 
 (e)
Section 8.17 of the Loan Agreement is amended and restated in full as follows: 
 8.17 Arbitration and Waiver of Jury
Trial. 
 (a) This paragraph concerns the resolution of any controversies or claims between the parties, whether arising
in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any renewals, extensions or modifications); or (ii) any document related to this agreement
(collectively a “Claim”). For the purposes of this arbitration provision only, the term “parties” shall include any 

  

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parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management or administration of any obligation described or evidenced by
this agreement. 
 (b) At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in
accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”). The Act will apply even though this agreement provides that it is governed by the law of a specified state. The arbitration will take place on an individual
basis without resort to any form of class action. 
 (c) Arbitration proceedings will be determined in accordance with the
Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of this paragraph. In the event of any inconsistency, the
terms of this paragraph shall control. If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, any party to this agreement may substitute another arbitration
organization with similar procedures to serve as the provider of arbitration. 
 (d) The arbitration shall be administered by
AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators. All arbitration hearings shall commence within
ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon
a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any
court having jurisdiction to be confirmed, judgment entered and enforced. 
 (e) The arbitrator(s) will give effect to
statutes of limitation in determining any Claim and may dismiss the arbitration on the basis that the Claim is barred. For purposes of the application of the statute of limitations, the service on AAA under applicable AAA rules of a notice of Claim
is the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s). The arbitrator(s) shall have the power to award legal fees pursuant to the
terms of this agreement. 
 (f) This paragraph does not limit the right of any party to: (i) exercise self-help remedies,
such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an
interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies. 
 (g) The procedure described above will not apply if the Claim, at the time of the proposed submission to arbitration, arises from or relates to an obligation to the Bank secured by real property. In this case, all of
the parties to this agreement must consent to submission of the Claim to arbitration. If both parties do not consent to arbitration, the Claim will be resolved 

  

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as follows: The parties will designate a referee (or a panel of referees) selected under the auspices of AAA in the same manner as arbitrators are selected
in AAA administered proceedings. The designated referee(s) will be appointed by a court as provided in California Code of Civil Procedure Section 638 and the following related sections. The referee (or presiding referee of the panel) will be an
active attorney or a retired judge. The award that results from the decision of the referee(s) will be entered as a judgment in the court that appointed the referee, in accordance with the provisions of California Code of Civil Procedure Sections
644 and 645. 
 (h) The filing of a court action is not intended to constitute a waiver of the right of any party, including
the suing party, thereafter to require submittal of the Claim to arbitration. 
 (i) By agreeing to binding arbitration, the
parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties
irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This provision is a material inducement for the parties entering into this agreement. 
 (f) The Guarantor Merger occurred without the prior written consent of Bank which is an Event of Default under Section 6.16 of the
Loan Agreement. Bank hereby waives such Event of Default and any resulting cross default under Section 6.17 of the Loan Agreement caused by the Guarantor Merger (the “Waived Defaults”). 
 (g) Secured Obligations. The Deed of Trust is modified to secure payment and performance of the Loan as amended to date, in
addition to all other “Secured Obligations” as therein defined. The foregoing notwithstanding, certain obligations continue to be excluded from the Secured Obligations, as provided in the Deed of Trust. 
 2. Conditions Precedent. Before this Agreement becomes effective and any party becomes obligated under it, all of the following conditions shall
have been satisfied at Borrower’s sole cost and expense in a manner acceptable to Bank in the exercise of Bank’s sole judgment: 
 (a) Bank shall have received such assurance as Bank may require that the validity and priority of the Deed of Trust have not been and will not be impaired by this Agreement or the transactions contemplated by it.

 (b) Bank shall have received fully executed and, where appropriate, acknowledged originals of this Agreement, the attached
consents signed by each Guarantor and any other documents which Bank may require or request in accordance with this Agreement or the other Loan Documents. 
 (c) Bank shall have received reimbursement, in immediately available funds, of all costs and expenses incurred by Bank in connection with this Agreement, including legal fees and expenses of Bank’s counsel,
including the market value of services of in-house counsel. 
  

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 3. Borrower’s Representations and Warranties. Borrower represents and warrants to Bank as
follows: 
 (a) Recitals. The recitals set forth above in the Factual Background are true, accurate and correct.

 (b) Loan Documents. All representations and warranties made and given by Borrower in the Loan Documents and
Borrower’s Unsecured Indemnity are true, accurate and correct. 
 (c) No Default. Other than the Waived Defaults,
no Event of Default has occurred and is continuing, and no event has occurred and is continuing which, with notice or the passage of time or both, would be an Event of Default. 
 (d) Property. Borrower lawfully possesses and holds fee simple title to all of the Property which is real property, and the Deed of
Trust is a first and prior lien on that property. Borrower owns all of the Property which is personal property free and clear of any reservations of title and conditional sales contracts, and also of any security interests other than the Deed of
Trust, which is a first and prior lien on such property. There is no financing statement affecting the Property on file in California or Virginia except for financing statements in favor of Bank. 
 (e) Borrowing Entity. Borrower is a corporation having its chief executive office in the State of California. Borrower’s state
of incorporation is California and Borrower is validly existing under the laws of that State. There have been no changes in the legal structure of Borrower since the inception of the Loan. Borrower’s exact legal name is set forth in the first
paragraph of this Agreement. 
 (f) Financial Information. All financial information which has been and will be
delivered to Bank, including all information relating to the financial condition of Borrower or any shareholders, guarantor or the Property, fairly and accurately represents the financial condition being reported on, including all material
contingent liabilities. All such information was prepared in accordance with generally accepted accounting principles consistently applied, unless otherwise noted, and was in compliance with all government regulations that apply. Since the dates of
the financial information specified above, there has been no material adverse change in the business condition (financial or otherwise), operations, properties or prospects of Borrower or any other subject thereof. 
 4. WAIVER OF JURY TRIAL. BORROWER AND BANK WAIVE TRIAL BY JURY IN RESPECT OF ANY “CLAIM” AS DEFINED IN
SECTION 8.17 OF THE LOAN AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND BANK, AND BORROWER AND BANK HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY
TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN MODIFICATION. BORROWER AND BANK ARE EACH HEREBY 

  

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AUTHORIZED TO FILE A COPY OF THIS SECTION 4 IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL. BORROWER FURTHER REPRESENTS
AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND
THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. 
 5. Incorporation. This Agreement shall form a part of each
Loan Document, and all references to a given Loan Document shall mean that document as hereby modified. 
 6. No Prejudice; Reservation of
Rights. This Agreement shall not prejudice any rights or remedies of Bank under the Loan Documents or Borrower’s Unsecured Indemnity. Bank reserves, without limitation, all rights which it has against any indemnitor, guarantor, or endorser
of the Note. 
 7. Reaffirmation; No Impairment; No Novation. Borrower hereby reaffirms all of its obligations under the Loan
Documents and Borrower’s Unsecured Indemnity. Except as specifically hereby amended, the Loan Documents and Borrower’s Unsecured Indemnity shall each remain unaffected by this Agreement and all such documents shall remain in full force and
effect. Nothing in this Agreement shall impair the lien of the Deed of Trust, which as hereby amended shall remain one deed of trust with one power of sale, creating a first lien encumbering the Property. The execution and delivery of this Agreement
shall not constitute a novation of the Loan. 
 8. Purpose and Effect of Bank’s Approval. Bank’s approval of any matter in
connection with the Loan shall be for the sole purpose of protecting Bank’s security and rights. No such approval shall result in a waiver of any default of Borrower other than the Waived Defaults. In no event shall Bank’s approval be a
representation of any kind with regard to the matter being approved. 
 9. Disclosure to Title Company. Without notice to or the
consent of Borrower, Bank may disclose to any title insurance company which insures any interest of Bank under the Deed of Trust (whether as primary insurer, coinsurer or reinsurer) any information, data or material in Bank’s possession
relating to Borrower, the Loan, the Improvements or the Property. 
 10. Further Assurances. Borrower agrees that immediately upon
Bank’s demand, Borrower shall execute and deliver to Bank, and shall cause any necessary third parties to execute and deliver to Bank, all documents and filings (including “account control agreements”), and shall otherwise take all
other actions that may be requested by Bank in order to maintain and provide to Bank a first-priority perfected security interest in all collateral, and Borrower hereby agrees to pay all fees and costs associated therewith, including the reasonable
fees and costs of Bank’s inside and outside counsel. 
 11. Integration. The Loan Documents, including this Agreement, and
Borrower’s Unsecured Indemnity: (a) integrate all the terms and conditions mentioned in or incidental to the 

  

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Loan Documents and Borrower’s Unsecured Indemnity; (b) supersede all oral negotiations and prior and other writings with respect to their subject
matter; and (c) are intended by the parties as the final expression of the agreement with respect to the terms and conditions set forth in those documents and as the complete and exclusive statement of the terms agreed to by the parties. If
there is any conflict between the terms, conditions and provisions of this Agreement and those of any other agreement or instrument, including any of the other Loan Documents or Borrower’s Unsecured Indemnity, the terms, conditions and
provisions of this Agreement shall prevail. 
 12. Miscellaneous. This Agreement and any attached consents or exhibits requiring
signatures may be executed in counterparts, and all counterparts shall constitute but one and the same document. If any court of competent jurisdiction determines any provision of this Agreement or any of the other Loan Documents or Borrower’s
Unsecured Indemnity to be invalid, illegal or unenforceable, that portion shall be deemed severed from the rest, which shall remain in full force and effect as though the invalid, illegal or unenforceable portion had never been a part of the Loan
Documents or Borrower’s Unsecured Indemnity. This Agreement shall be governed by the laws of the State of California, without regard to the choice of law rules of that State. As used herein, the word “include(s)” means
“includes(s), without limitation,” and the word “including” means “including, but not limited to.” 
  

									
	 Dated: April 7, 2006
	 		 	 BORROWER:

			
		 		 	 Cost Plus, Inc.,

		 		 	 a California corporation

				
		 		 	 By:
	 	 /s/ Jane Baughman

		 		 		 	 Name:
	 	 Jane Baughman

		 		 		 	 Title:
	 	 VP Treasurer

				
		 		 		 	 BANK:

				
		 		 		 	 BANK OF AMERICA, NATIONAL ASSOCIATION,

		 		 		 	 a national banking association

					
		 		 		 	 By:
	 	 /s/ Ronald J. Drobny

		 		 		 	 Name:
	 	 Ronald J. Drobny

		 		 		 	 Title:
	 	 Senior Vice President

  

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 GUARANTORS’ CONSENT 
 1. Cost Plus Management Services, Inc., a California corporation and successor by merger to Cost Plus Marketing Services, Inc., a California corporation, and Cost Plus of Texas, Inc., a Texas corporation (each a
“Guarantor”) each hereby consents to the terms, conditions and provisions of the foregoing Modification Agreement and the transactions contemplated by that agreement. Each Guarantor hereby reaffirms the full force and effectiveness
of its Guaranty Agreement dated May 14, 2004, (“Guaranty”) and each Guarantor reaffirms the full force and effectiveness of its Environmental Indemnity Agreement dated May 14, 2004 (“Indemnity”). In addition,
each Guarantor acknowledges that its obligations under the Guaranty and Indemnity are separate and distinct from those of Borrower on the Loan. 
 2. Each Guarantor agrees that Section 21 of its Guaranty is amended and restated as follows: 
 21.
Arbitration and Waiver of Jury Trial. 
 (a) This paragraph concerns the resolution of any controversies or claims between the
parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any renewals, extensions or modifications); or (ii) any document
related to this agreement (collectively a “Claim”). For the purposes of this arbitration provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of the Bank involved in the servicing,
management or administration of any obligation described or evidenced by this agreement. 
 (b) At the request of any party to
this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”). The Act will apply even though this agreement provides that it is governed by the law of a
specified state. The arbitration will take place on an individual basis without resort to any form of class action. 
 (c)
Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and
the terms of this paragraph. In the event of any inconsistency, the terms of this paragraph shall control. If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause,
any party to this agreement may substitute another arbitration organization with similar procedures to serve as the provider of arbitration. 
 (d) The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be
decided by three arbitrators. All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty
(30) days of the close of the hearing. However, 

  

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the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s)
shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be confirmed, judgment entered and enforced. 
 (e) The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may dismiss the arbitration on the basis
that the Claim is barred. For purposes of the application of the statute of limitations, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the arbitrator(s). The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement. 
 (f) This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff;
(ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not
limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies. 
 (g) The procedure described above will not apply if the Claim, at the time of the proposed submission to arbitration, arises from or relates to an obligation to the Bank secured by real property. In this case, all of the parties to this
agreement must consent to submission of the Claim to arbitration. If both parties do not consent to arbitration, the Claim will be resolved as follows: The parties will designate a referee (or a panel of referees) selected under the auspices of AAA
in the same manner as arbitrators are selected in AAA administered proceedings. The designated referee(s) will be appointed by a court as provided in California Code of Civil Procedure Section 638 and the following related sections. The referee
(or presiding referee of the panel) will be an active attorney or a retired judge. The award that results from the decision of the referee(s) will be entered as a judgment in the court that appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645. 
 (h) The filing of a court action is not intended to constitute a
waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration. 
 (i) By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit this agreement to arbitrate, to the
extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This provision is a material inducement for the parties entering into this agreement. 

 

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	 Dated: April 7, 2006
	 		 	 GUARANTOR:

			
		 		 	 Cost Plus Management Services, Inc.,

		 		 	 a California corporation

				
		 		 	 By:
	 	 /s/ Barry Feld

		 		 		 	 Name:
	 	 Barry Feld

		 		 		 	 Title:
	 	 CEO

				
		 		 		 	 Cost Plus of Texas, Inc.,

		 		 		 	 a Texas corporation

					
		 		 		 	 By:
	 	 /s/ Gerry Keith Biffle

		 		 		 	 Name:
	 	 Gerry Keith Biffle

		 		 		 	 Title:
	 	 President

  

 3Fourth Amended and Restated Employment Severance Agreement

 Exhibit 10.6 
 FOURTH AMENDED AND RESTATED EMPLOYMENT SEVERANCE AGREEMENT 
 This Fourth Amended and Restated
Employment Severance Agreement (the “Agreement”) is made and entered into effective as of 4-17-2006 (the “Effective Date”), by and between Mike Allen (the “Executive”) and Cost Plus, Inc. (the
“Company”). 
 R E C I T A L S 
 A. The Company desires to retain the services of the Executive, and the Executive desires to be employed by the Company, on the terms and subject to the conditions set forth in this Agreement. 
 B. The Board of Directors of the Company (the “Board”) believes the Company should provide the Executive with certain severance benefits should
the Executive’s employment with the Company terminate under certain circumstances, such benefits to provide the Executive with enhanced financial security and sufficient incentive and encouragement to remain with the Company. 
 C. This Agreement amends and restates the Third Amended and Restated Employment Severance Agreement dated April 29, 2005 between the Company and the
Executive. 
 D. Certain capitalized terms used in the Agreement are defined in Section 6 below. 
 AGREEMENT 
 In consideration of the
mutual covenants herein contained, and in consideration of the continuing employment of the Executive by the Company, the Third Amended and Restated Employment Severance Agreement is hereby amended and restated in its entirety as set forth herein,
and the parties further agree as follows: 
 1. Duties and Scope of Employment. The Company shall employ the Executive
in the position of Executive Vice President in charge of Stores with such duties, responsibilities and compensation as in effect as of the Effective Date. The Board and the Chief Executive Officer of the Company (the “CEO”) shall have the
right to revise such responsibilities and compensation from time to time as the Board or the CEO may deem necessary or appropriate. If any such revision constitutes “Involuntary Termination” as defined in Section 6(d) of this
Agreement, the Executive shall be entitled to benefits upon such Involuntary Termination as provided under this Agreement. 
 2. At-Will Employment. The Company and the Executive acknowledge that the Executive’s employment is and shall continue to be at-will, as defined under applicable law. If the Executive’s employment terminates for any reason,
the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be available in accordance with the Company’s established employee plans and practices
or in accordance with other agreements between the Company and the Executive. This 

 
Agreement shall remain in effect until the earlier of (i) the date that all obligations of the parties hereunder have been satisfied or (ii) the
date upon which this Agreement terminates by consent of the parties hereto. 
 3. Severance Benefits. 
 (a) Benefits upon Termination. Unless the Executive is entitled to benefits under Section 3(b) of this Agreement, if the
Executive’s employment terminates as a result of Involuntary Termination prior to June 15, 2007 and the Executive signs and does not revoke a Release of Claims, then the Company shall pay the Executive’s Base Compensation on a salary
continuation basis in accordance with the Company’s normal payroll practices to the Executive for twelve (12) months from the Termination Date. The Executive shall not be entitled to receive any payments if the Executive voluntarily
terminates employment other than as a result of an Involuntary Termination. 
 (b) Benefits upon Termination After a Change
of Control. If after a Change of Control the Executive’s employment terminates as a result of Involuntary Termination prior to June 15, 2007 and the Executive signs and does not revoke a Release of Claims, then the Company shall pay
the Executive’s Base Compensation on a salary continuation basis in accordance with the Company’s normal payroll practices to the Executive for eighteen (18) months from the Termination Date. The Executive shall not be entitled to
receive any payments if the Executive voluntarily terminates employment other than as a result of an Involuntary Termination. 
 (c) Stock Options. Unless otherwise provided in the Company’s stock option plans or in the Executive’s stock option agreements, the Executive shall not be entitled to acceleration of any unvested stock options upon the
termination of the Executive’s employment for any reason, including an Involuntary Termination. 
 (d)
Miscellaneous. In addition to the benefits described in Section 3(a) or Section 3(b) of this Agreement, upon the termination of the Executive’s employment, (i) the Company shall pay the Executive any unpaid base salary due
for periods prior to the Termination Date; (ii) the Company shall pay the Executive all of the Executive’s accrued and unused vacation through the Termination Date; (iii) following submission of proper expense reports by the
Executive, the Company shall reimburse the Executive for all expenses reasonably and necessarily incurred by the Executive in connection with the business of the Company prior to the Termination Date; and (iv) if benefits will be paid under
Section 3(a) or Section 3(b) of this Agreement, the Company shall pay the Executive a pro-rata portion of his fiscal year bonus, if any, under the Company’s Management Incentive Plan in effect for the fiscal year in which the
Termination Date occurs. Such amount shall be paid at the time bonuses for the completed fiscal year are paid to other executives (but no later than the period of time required to fit within the short-term deferral rule of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”)), shall be pro-rated for the period of time during the fiscal year that the Executive was an employee of the Company and shall only be paid if, and to the extent, that the relevant
performance targets have been achieved by the Company. Except for any bonus payment under clause (iv) of the preceding sentence, these 

  

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payments shall be made promptly upon termination and within the period of time mandated by applicable law. 
 4. Limitations on Payments. 
 (a) Code Section 409A. If the Company reasonably determines that Section 409A will result in the imposition of additional tax to an earlier payment of the severance and other benefits provided in this
Agreement or otherwise payable to the Executive, then the first six (6) months of the Executive’s severance benefits under Section 3 of this Agreement will accrue during the six (6)-month period following the Executive’s
termination and will become payable in a lump sum payment on the date that is six (6) months and one (1) day following the date of the Executive’s termination of employment. The remaining severance benefits will be payable as provided
in Section 3 of this Agreement. 
 (b) Code Section 280G. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section 4, would be subject to the excise tax
imposed by Section 4999 of the Code, then the Executive’s severance benefits under Section 3(b) of this Agreement shall be either: 
 (i) delivered in full, or 
 (ii) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax under Section 4999 of the Code, 
 whichever of the foregoing amounts, taking into
account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the Code, results in the receipt by the Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding
that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 4 shall be made in writing by
the Company’s independent public accountants immediately prior to Change of Control (the “Accountants”), whose determination shall be conclusive and binding upon the Executive and the Company for all purposes. For purposes of making
the calculations required by this Section 4, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and
4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations contemplated by this Section 4. 
 5.
Non-Solicitation. In consideration for the mutual agreements as set forth herein, the Executive agrees that the Executive shall not, at any time, within twelve (12) months following termination of the Executive’s employment with the
Company for any reason, directly or 

  

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indirectly solicit the employment or other services of any individual who at that time shall be or within the prior twelve (12) months shall have been
an employee of the Company. 
 6. Definition of Terms. The following terms referred to in this Agreement shall have the
following meanings: 
 (a) Base Compensation. “Base Compensation” means the Executive’s monthly base
salary paid by the Company for services performed calculated as the average base salary for the six (6) months completed prior to the Termination Date. If the Executive has not been employed by the Company for six (6) complete months prior
to the Termination Date, Base Compensation shall be calculated as the average base salary for the period of the Executive’s employment. 
 (b) Cause. “Cause” means the Executive’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
the Executive’s personal enrichment or (iv) willful violation of any material law, rule or regulation in connection with the performance of duties. 
 (c) Change of Control. “Change of Control” means the consummation of any of the following events: 
 (i) The acquisition by any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than the
Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of the “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; 
 (ii) A change in the composition of the Board of Directors of the Company occurring within a two (2)-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the
Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual not otherwise an Incumbent Director whose election or
nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); 
 (iii) A merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the approval by the 

  

 4 

 
stockholders of the Company of a plan of complete liquidation of the Company or of an agreement for the sale or disposition by the Company of all or
substantially all the Company’s assets; 
 (iv) The sale of all or substantially all of the assets of the Company
determined on a consolidated basis; or 
 (v) The complete liquidation or dissolution of the Company. 
 (d) Involuntary Termination. “Involuntary Termination” means: 
 (i) termination of the Executive’s employment by the Company for any reason other than Cause; 
 (ii) a material reduction in the Executive’s salary, other than any such reduction which is part of, and generally consistent with,
a general reduction of officer salaries; 
 (iii) a material reduction by the Company in the kind or level of employee
benefits (other than salary and bonus) to which the Executive is entitled immediately prior to such reduction with the result that the Executive’s overall benefits package (other than salary and bonus) is substantially reduced (other than any
such reduction applicable to officers of the Company generally); 
 (iv) any material breach by the Company of any material
provision of this Agreement which continues uncured for thirty (30) days following notice thereof; or 
 (v) a material
reduction in the Executive’s titles, duties, responsibilities, or authority; 
 provided that none of the foregoing shall constitute
Involuntary Termination to the extent the Executive has agreed thereto. Any purported Involuntary Termination pursuant to Section 6(d)(ii) through 6(d)(v) will not be effective until the Executive has delivered to the Company a written
explanation which describes the basis for the Executive’s belief that the Executive should be permitted to terminate his employment and have it treated as an Involuntary Termination and the Company has been given thirty (30) days to cure
any curable violation. 
 (e) Release of Claims. “Release of Claims” shall mean a waiver by the Executive, in
a form satisfactory to the Company, of all employment-related obligations of and claims and causes of action against the Company. 
 (f) Termination Date. “Termination Date” shall mean the date on which an event that would constitute Involuntary Termination occurs, or the later of (i) the date on which a notice of termination is given, or
(ii) the date (which shall not be more than thirty (30) days after the giving of such notice) specified in such notice. 
 (g) Management Incentive Plan. “Management Incentive Plan” shall mean the Company’s bonus program, as implemented by the Company’s board of directors from 

  

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time to time and pursuant to which the Executive may receive incentive-based compensation at fiscal year end. 
 7. Confidentiality. The Executive acknowledges that during the course of the Executive’s employment, the Executive will have
produced and/or have access to confidential information, records, notebooks, data, formula, specifications, trade secrets, customer lists and secret inventions, and processes of the Company and its affiliated companies. Therefore, during or
subsequent to the Executive’s employment by the Company, the Executive agrees to hold in confidence and not directly or indirectly to disclose or use or copy or make lists of any such information, except to the extent authorized by the Company
in writing. All records, files, drawings, documents, equipment, and the like, or copies thereof, relating to the Company’s business, or the business of an affiliated company, which the Executive shall prepare, or use, or come into contact with,
shall be and remain the sole property of the Company, or of an affiliated company, and shall not be removed from the Company’s or the affiliated company’s premises without its written consent, and shall be promptly returned to the Company
upon termination of employment with the Company. 
 8. Successors. 
 (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business
and/or assets which executes and delivers the assumption agreement pursuant to this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. 
 (b) Executive’s Successors. The terms of this Agreement and all rights of the Executive hereunder shall inure to the benefit
of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 
 9. Notice. 
 (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Executive, mailed notices shall be addressed to the Executive at the home address that the Executive most recently communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its CEO. 
  

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 (b) Notice of Termination. Any termination by the Company for Cause or by the
Executive as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with Section 9(a) of this Agreement. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which
shall be not more than thirty (30) days after the giving of such notice). The failure by the Executive to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing the Executive’s rights hereunder. 
 10. Miscellaneous Provisions. 
 (a) Non-Disparagement. The Executive
agrees to refrain from any defamation, libel or slander of the Company and its respective officers, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations, and
assigns or tortious interference with the contracts and relationships of the Company and its respective officers, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns. The Executive acknowledges and agrees that any breach of this paragraph shall constitute a material breach of the Agreement and shall entitle the Company immediately to recover all consideration paid under
this Agreement, including, but not limited to the consideration described in Section 3. 
 (b) No Duty to
Mitigate. The Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Executive may receive from any other source. 
 (c) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. 
 (d) Whole Agreement. No agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. 
 (e) Severance Provisions in Other Agreements. The Executive acknowledges and
agrees that the severance provisions set forth in this Agreement shall supersede any such provisions in any other agreement entered into between the Executive and the Company. 
 (f) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of
the State of California. 
  

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 (g) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. 
 (h) No Assignment of Benefits. The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any action in violation of this subsection shall be void. 
 (i) Employment Taxes. All payments made pursuant to this Agreement will be subject to withholding of applicable income and
employment taxes. 
 (j) Code Section 409A. This Agreement will be deemed amended to the extent necessary to avoid
imposition of any additional tax or income recognition prior to actual payment to the Executive under Section 409A of the Code and any temporary, proposed or final Treasury Regulations and guidance promulgated thereunder and the parties agree
to cooperate with each other and to take reasonably necessary steps in this regard. 
 (k) Assignment by the Company.
The Company may assign its rights under this Agreement to an affiliate, and an affiliate may assign its rights under this Agreement to another affiliate of the Company or to the Company; provided, however, that no assignment shall be made if the net
worth of the assignee is less than the net worth of the Company at the time of assignment. In the case of any such assignment, the term “Company” when used in a section of this Agreement shall mean the corporation that actually employs the
Executive. 
 (l) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same instrument. 
 IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. 
  

									
	COMPANY:	 		 	COST PLUS, INC.
				
		 		 	 By
	 	/s/ Barry Feld
		 		 		 	Title	 	CEO
				
	EXECUTIVE:	 		 		 	/s/ Mike Allen
		 		 		 		 	Mike Allen

  

 8

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