Confidentiality and Standstill Agreement
Exhibit 2
CUSIP No. 000000000
COST PLUS WORLD MARKET
Cost Plus, Inc.
000 0xx Xxxxxx
Xxxxxxx, XX 00000
Tel: (000) 000-0000
xxx.xxxxxxxxxxxxxxxxxxx.xxx
Cost Plus, Inc.
000 0xx Xxxxxx
Xxxxxxx, XX 00000
Tel: (000) 000-0000
xxx.xxxxxxxxxxxxxxxxxxx.xxx
Xx. Xxxxxx X. Xxxxxxxx
Xxxxxxxx Investments Holdings LLC
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Xxxxxxxx Investments Holdings LLC
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Xxxxxxxx Investments Holdings LLC
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
January 7, 2009
Gentlemen:
As you know, Xxxxxxxx Investments Holdings LLC (“SIH”) filed a second Amendment to Schedule
13D with the Securities and Exchange Commission on December 5, 2008, concerning the beneficial
ownership by Xxxxxx X. Xxxxxxxx and SIH (collectively, the “Receiving Party”) of shares of common
stock, par value $0.01 per share (the “Common Stock”), of Cost Plus, Inc., a California corporation
(the “Disclosing Party”). As you also know, the Disclosing Party has entered into an Amended and
Restated Preferred Shares Rights Agreement, dated as of June 24, 2008, by and between the
Disclosing Party and Computershare Trust Company, N.A. (the “Rights Agreement”). In response to the
Receiving Party’s request, the Disclosing Party has agreed to and expects to deliver to the
Receiving Party, following the execution and delivery of this letter agreement by the Receiving
Party, certain information about its properties, employees, finances, businesses and operations
that has previously been prepared, in the ordinary course.
In consideration of the mutual promises and covenants herein contained, and other
consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
Subject to the approval by the Disclosing Party’s Board of Directors (“Board of Directors”),
as well as the terms and conditions of the Rights Agreement, the Disclosing Party agrees to exempt
the Receiving Party from the definition of Acquiring Person (as such term is defined in Section
1(a) of the Rights Agreement) in the Rights Agreement such that the Receiving Party’s beneficial
ownership of up to and including 19.9% of the amount of the issued and outstanding Common Stock
shall not constitute a Triggering Event (as such term is defined in Section 1(qq) of the Rights
Agreement) in the Rights Agreement.
All information (i) about the Disclosing Party and (ii) about any third party (which
information was provided to the Disclosing Party subject to an applicable confidentiality
obligation to such third party), furnished by the Disclosing Party or its Representatives (as
defined below) to the Receiving Party, whether furnished before or after the date hereof, and
regardless of the manner in which it is furnished, is referred to in this letter agreement as
“Proprietary Information.” Proprietary Information
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shall not include, however, information which (i) is or becomes generally available to the public
other than as a result of a disclosure by the Receiving Party in violation of this letter
agreement; (ii) was available to the Receiving Party on a nonconfidential basis prior to its
disclosure by the Disclosing Party or its Representatives; (iii) becomes available to the Receiving
Party on a nonconfidential basis from a person other than the Disclosing Party or its
Representatives who is, to the Receiving Party’s knowledge, not otherwise bound by a
confidentiality agreement with the Disclosing Party or any or its Representatives, or is otherwise
not under an obligation to the Disclosing Party or any of its Representatives not to transmit the
information to the Receiving Party; or (iv) was independently developed by the Receiving Party
without reference to or use of the Proprietary Information. For purposes of this letter agreement,
(i) “Representative” shall mean, as to any person, its directors, officers, employees, agents and
advisors (including, without limitation, financial advisors, attorneys and accountants); and (ii)
“person” shall be broadly interpreted to include, without limitation, any corporation, company,
partnership, other entity or individual.
Subject to the immediately succeeding paragraph, unless otherwise agreed to in writing by the
Disclosing Party, the Receiving Party (i) except as required by law, shall keep all Proprietary
Information confidential and shall not disclose or reveal any Proprietary Information to any person
(other than to any Representative of any Affiliate, provided that such Representative shall keep
confidential all Proprietary Information that is so disclosed or revealed to him or her in
accordance with the Receiving Party’s confidentiality obligations hereunder with respect to such
Proprietary Information); (ii) shall not use Proprietary Information for any purpose other than in
connection with its evaluation of the Disclosing Party; and (iii) except as required by law, shall
not disclose to any person the fact that Proprietary Information has been made available to the
Receiving Party. The Receiving Party and the Affiliates shall be responsible for any breach of the
terms of this letter agreement by the Receiving Party or any Representative of any Affiliate.
In the event that the Receiving Party or any Affiliate is requested pursuant to, or required
by, applicable law or regulation (including, without limitation, any rule, regulation or policy
statement of any national securities exchange, market or automated quotation system on which any of
the Receiving Party’s securities are listed or quoted) or by legal process to disclose any
Proprietary Information, the Receiving Party shall provide the Disclosing Party with prompt notice
of such request or requirement in order to enable the Disclosing Party (i) to seek an appropriate
protective order or other remedy, (ii) to consult with the Receiving Party with respect to the
Disclosing Party’s taking steps to resist or narrow the scope of such request or legal process or
(iii) to waive compliance, in whole or in part, with the terms of this letter agreement. In the
event that such protective order or other remedy is not timely sought or obtained, or the
Disclosing Party waives compliance, in whole or in part, with the terms of this letter agreement,
the Receiving Party shall use commercially reasonable efforts to disclose only that portion of the
Proprietary Information which is legally required to be disclosed and to ensure that all
Proprietary Information that is so disclosed will be accorded confidential treatment. In the event
that the Receiving Party shall have complied, in all material respects, with the provisions of this
paragraph, such disclosure may be made by the Receiving Party without any liability hereunder.
Further, the Receiving Party agrees that during any time period that the Receiving Party
beneficially owns, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and
Rule 13d-3 thereunder (or any comparable or successor law or regulation) in excess of 14.9% of the
amount of the issued and outstanding Common Stock, neither the Receiving Party nor any other person
affiliated with the Receiving Party shall:
(a) make, or in any way participate, directly or indirectly, in any “solicitation” of
“proxies” to vote (as such terms are used in the rules of the Securities and Exchange Commission
CUSIP No. 000000000
(“SEC”)), or seek to advise or influence any person or entity with respect to the voting of any
voting securities of the Disclosing Party;
(b) nominate or seek to nominate, directly or indirectly, any person to the Board of
Directors;
(c) otherwise act or seek to control or influence the management, Board of Directors or
policies of the Disclosing Party;
(d) take any action that could reasonably be expected to require the Disclosing Party to make
a public announcement regarding the possibility of any of the events described in clauses (a)
through (c) above; or
(e) request the Disclosing Party or any of its representatives, directly or indirectly, to
amend or waive any provision of this paragraph.
The Receiving Party also agrees that during any time period that the Receiving Party
beneficially owns, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and
Rule 13d-3 thereunder (or any comparable or successor law or regulation) in excess of 14.9% of the
amount of the issued and outstanding Common Stock (the Common Stock owned by the Receiving Party
above 14.9%, the “Excess Shares”), the Receiving Party and any other person affiliated with the
Receiving Party shall vote any and all Excess Shares in the same proportion as the votes cast by
all other voting shareholders of the Disclosing Party.
To the extent that any Proprietary Information may include material subject to the
attorney-client privilege, work product doctrine or any other applicable privilege concerning
pending or threatened legal proceedings or governmental investigations, the parties understand and
agree that they have a commonality of interest with respect to such matters and it is their desire,
intention and mutual understanding that the sharing of such material is not intended to, and shall
not, waive or diminish in any way the confidentiality of such material or its continued protection
under the attorney-client privilege, work product doctrine or other applicable privilege. All
Proprietary Information provided by the Disclosing Party that is entitled to protection under the
attorney-client privilege, work product doctrine or other applicable privilege shall remain
entitled to such protection under these privileges, this letter agreement, and under the joint
defense doctrine. Nothing in this letter agreement obligates the Disclosing Party to reveal
material subject to the attorney-client privilege, work product doctrine or any other applicable
privilege.
In the event that the Disclosing Party, in its sole discretion, requests, the Receiving Party
shall, upon the Disclosing Party’s written request, promptly deliver to the Disclosing Party all
Proprietary Information, and, at the Receiving Party’s election, return or destroy (provided that
any such destruction shall be certified by the Receiving Party) all copies, reproductions,
summaries, analyses or extracts thereof or based thereon (whether in hard-copy form or on
intangible media, such as electronic mail or computer files) (collectively, “Notes”) in the
Receiving Party’s possession or in the possession of any Representative of the Receiving Party or
any Affiliate. Upon the return or the destruction of the Proprietary Information, the Receiving
Party, if the Receiving Party so desires, may retain in the files of the Receiving Party’s general
counsel, for archival purposes only, one copy of all materials returned or destroyed as a record of
the materials disclosed. Notwithstanding the foregoing, the Receiving Party and its Representatives
(i) may retain copies of the Proprietary Information and/or Notes to the extent that such retention
is required to demonstrate compliance with applicable law, rule, regulation or professional
standards, or to comply with a bona fide document retention policy, provided, however, that any
such information so retained shall be held in compliance with the terms of this letter agreement
and (ii) shall,
CUSIP No. 000000000
to the extent that (i) above is inapplicable to Proprietary Information and/or Notes that are
electronically stored, destroy such electronically stored Proprietary Information and/or Notes only
to the extent that it is reasonably practical to do so.
The Receiving Party acknowledges that neither the Disclosing Party nor its Representatives nor
any of the officers, directors, employees, agents or controlling persons of such Representatives
makes any express or implied representation or warranty as to the Proprietary Information.
The Receiving Party is aware of the restrictions imposed by the United States securities laws
on the purchase or sale of securities by any person who has received material, non-public
information from the issuer of such securities and on the communication of such information to any
other person when it is reasonably foreseeable that such other person is likely to purchase or sell
such securities in reliance upon such information. Notwithstanding the foregoing, the Disclosing
Party acknowledges that certain of the Receiving Party’s Representatives trade securities and
nothing in this letter agreement shall restrict the ability of such Representatives to trade
securities, other than applicable securities laws and, with respect to those of the Receiving
Party’s Representatives who are also the Receiving Party’s affiliates who the Receiving Party has
made aware of this letter agreement or who have otherwise received Proprietary Information, the
standstill provision as described above. The Disclosing Party acknowledges that the Receiving
Party is affiliated with a registered securities broker-dealer and that registered representatives
of the Receiving Party’s affiliated broker-dealer who have not been informed of, or provided with,
the Proprietary Information or of any material non-public information of the Disclosing Party may
trade in the securities of the Disclosing Party for their own accounts or the accounts of their
customers in the ordinary course of business.
Without prejudice to the rights and remedies otherwise available to either party hereto, the
Disclosing Party shall be entitled to equitable relief by way of injunction or otherwise if the
Receiving Party or any of the Affiliates or any other affiliates of the Receiving Party breach or
threaten to breach any of the provisions of this letter agreement.
It is further understood and agreed that no failure or delay by any party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
right, power or privilege hereunder.
This letter agreement shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its principles or rules regarding conflicts of laws,
other than such principles directing application of California law. Each party hereby consents to
the institution and resolution of any action or proceeding of any kind or nature with respect to or
arising out of this agreement brought by any party hereto in the federal or state courts located
within the State of California.
This letter agreement contains the entire agreement between the parties hereto concerning
confidentiality of the Proprietary Information, and no modification of this letter agreement or
waiver of the terms and conditions hereof shall be binding upon any party hereto, unless approved
in writing by each such party.
CUSIP No. 000000000
Please confirm your agreement with the foregoing by signing and returning to the undersigned
the duplicate copy of this letter agreement enclosed herewith.
| COST PLUS, INC. |
||||
| By: | /s/ Xxxxx X. Xxxx | |||
| Xxxxx X. Xxxx, Chief Executive Officer | ||||
ACCEPTED AND AGREED as of the date first written above:
XXXXXX X. XXXXXXXX, on behalf of himself and as President and owner of Xxxxxxxx Investments
Holdings LLC
By:
|
/s/ Xxxxxx X. Xxxxxxxx | |||
