Schedule 13D Amendment No. 4

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SMUpx0r8eWNdE+zIjg3nZcno+VpnOmi/LoupWsvcnR0UEj/tr3xx4AZKHKbdMife p3k5B2vt34CBsSlJOi7onQ== 0001193125-07-083870.txt : 20070418 0001193125-07-083870.hdr.sgml : 20070418 20070418154049 ACCESSION NUMBER: 0001193125-07-083870 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20070418 DATE AS OF CHANGE: 20070418 GROUP MEMBERS: RED MOUNTAIN CAPITAL MANAGEMENT, INC. GROUP MEMBERS: RED MOUNTAIN CAPITAL PARTNERS II, L.P. GROUP MEMBERS: RED MOUNTAIN CAPITAL PARTNERS III, L.P. GROUP MEMBERS: RMCP GP LLC GROUP MEMBERS: WILLEM MESDAG SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COST PLUS INC/CA/ CENTRAL INDEX KEY: 0000798955 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700] IRS NUMBER: 941067973 STATE OF INCORPORATION: CA FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-45833 FILM NUMBER: 07773423 BUSINESS ADDRESS: STREET 1: 200 FOURTH STREET OAKLAND STREET 2: SEE ADDRESS LISTED ABOVE CITY: OAKLAND STATE: CA ZIP: 94607 BUSINESS PHONE: 5108937300 MAIL ADDRESS: STREET 1: 200 FOURTH STREET OAKLAND STREET 2: SEE ADDRESS LISTED ABOVE CITY: OAKLAND STATE: CA ZIP: 94607 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RED MOUNTAIN CAPITAL PARTNERS LLC CENTRAL INDEX KEY: 0001374588 IRS NUMBER: 731726370 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 10100 SANTA MONICA BOULEVARD, SUITE 925 CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: (310) 432-0207 MAIL ADDRESS: STREET 1: 10100 SANTA MONICA BOULEVARD, SUITE 925 CITY: LOS ANGELES STATE: CA ZIP: 90067 SC 13D/A 1 dsc13da.htm SCHEDULE 13D AMENDMENT NO. 4 Schedule 13D Amendment No. 4

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D/A

Under the Securities Exchange Act of 1934

(Amendment No. 4)*

COST PLUS, INC.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

221485105

(CUSIP Number)

Red Mountain Capital Partners LLC

Attn: Willem Mesdag

10100 Santa Monica Boulevard, Suite 925

Los Angeles, California 90067

Telephone (310) 432-0200

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

April 17, 2007

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. ¨

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 2 OF 11 PAGES


1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

	Red Mountain Capital Partners LLC 73-1726370
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS*

	AF (See Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		2,164,211 shares (See Item 5)
		8 SHARED VOTING POWER

		None (See Item 5)
		9 SOLE DISPOSITIVE POWER

		2,164,211 shares (See Item 5)
		10 SHARED DISPOSITIVE POWER

		None (See Item 5)


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	2,164,211 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	9.8% (See Item 5)
14.	TYPE OF REPORTING PERSON*

	OO – Limited Liability Company

*	See Instructions


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 3 OF 11 PAGES


1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

	Red Mountain Capital Partners II, L.P. 20-4117535
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS*

	WC (See Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		635,500 shares (See Item 5)
		8 SHARED VOTING POWER

		None (See Item 5)
		9 SOLE DISPOSITIVE POWER

		635,500 shares (See Item 5)
		10 SHARED DISPOSITIVE POWER

		None (See Item 5)


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	635,500 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	2.9% (See Item 5)
14.	TYPE OF REPORTING PERSON*

	PN – Limited Partnership

*	See Instructions


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 4 OF 11 PAGES


1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

	Red Mountain Capital Partners III, L.P. 20-5329858
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS*

	WC (See Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		1,528,711 shares (See Item 5)
		8 SHARED VOTING POWER

		None (See Item 5)
		9 SOLE DISPOSITIVE POWER

		1,528,711 shares (See Item 5)
		10 SHARED DISPOSITIVE POWER

		None (See Item 5)


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,528,711 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	6.9% (See Item 5)
14.	TYPE OF REPORTING PERSON*

	PN – Limited Partnership

*	See Instructions


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 5 OF 11 PAGES


1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

	RMCP GP LLC 20-4442412
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS*

	AF (See Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		2,164,211 shares (See Item 5)
		8 SHARED VOTING POWER

		None (See Item 5)
		9 SOLE DISPOSITIVE POWER

		2,164,211 shares (See Item 5)
		10 SHARED DISPOSITIVE POWER

		None (See Item 5)


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	2,164,211 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	9.8% (See Item 5)
14.	TYPE OF REPORTING PERSON*

	OO – Limited Liability Company

*	See Instructions


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 6 OF 11 PAGES


1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

	Red Mountain Capital Management, Inc. 13-4057186
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
	(a) ¨
	(b) x
3	SEC USE ONLY

4	SOURCE OF FUNDS*

	AF (See Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		2,164,211 shares (See Item 5)
		8 SHARED VOTING POWER

		None (See Item 5)
		9 SOLE DISPOSITIVE POWER

		2,164,211 shares (See Item 5)
		10 SHARED DISPOSITIVE POWER

		None (See Item 5)


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	2,164,211 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	9.8% (See Item 5)
14.	TYPE OF REPORTING PERSON*

	CO – Corporation

*	See Instructions


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 7 OF 11 PAGES


1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

	Willem Mesdag
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
	(a) ¨
	(b) x
3	SEC USE ONLY

4	SOURCE OF FUNDS*

	AF (See Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	U.S. Citizen


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		2,164,211 shares (See Item 5)
		8 SHARED VOTING POWER

		None (See Item 5)
		9 SOLE DISPOSITIVE POWER

		2,164,211 shares (See Item 5)
		10 SHARED DISPOSITIVE POWER

		None (See Item 5)


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	2,164,211 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	9.8% (See Item 5)
14.	TYPE OF REPORTING PERSON*

	IN – Individual

*	See Instructions


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 8 OF 11 PAGES

This Amendment No. 4 amends and supplements the Schedule 13D filed with the Securities and Exchange Commission (the “SEC”) on September 18, 2006, as amended by Amendment No. 1 thereto, filed with the SEC on December 6, 2006, Amendment No. 2 thereto, filed with the SEC on December 22, 2006, and Amendment No. 3 thereto, filed with the SEC on January 8, 2007 (together, this “Schedule 13D”), by (i) Red Mountain Capital Partners LLC, a Delaware limited liability company (“RMCP LLC”), (ii) Red Mountain Capital Partners II, L.P., a Delaware limited partnership (“RMCP II”), (iii) Red Mountain Capital Partners III, L.P., a Delaware limited partnership (“RMCP III”), (iv) RMCP GP LLC, a Delaware limited liability company (“RMCP GP”), (v) Red Mountain Capital Management, Inc., a Delaware corporation (“RMCM”), and (vi) Willem Mesdag, a natural person and citizen of the United States of America, with respect to the common stock, par value $0.01 per share (the “Common Stock”), of Cost Plus, Inc., a California corporation (“Cost Plus”). RMCP LLC, RMCP II, RMCP III and RMCP GP are sometimes collectively referred to herein as “Red Mountain.” Red Mountain, RMCM and Mr. Mesdag are sometimes collectively referred to herein as the “Reporting Persons.” The filing of any amendment to this Schedule 13D (including the filing of this Amendment No. 4) shall not be construed to be an admission by the Reporting Persons that a material change has occurred in the facts set forth in this Schedule 13D or that such amendment is required under Rule 13d-2 of the Securities Exchange Act of 1934, as amended.

ITEM 6.

CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.

Item 6 of this Schedule 13D is hereby amended to include the following information:

The Reporting Persons and Cost Plus entered into a confidentiality and standstill agreement (the “Confidentiality and Standstill Agreement”) on April 17, 2007,⁽¹⁾ pursuant to which Cost Plus will provide the Reporting Persons with information about Cost Plus on a confidential basis. The Confidentiality and Standstill Agreement contains standstill provisions that prohibit the Reporting Persons from taking certain actions without Cost Plus’ prior written consent during the period beginning on the date of the Confidentiality and Standstill Agreement and ending on December 31, 2007. Such actions include (a) acquiring additional voting securities of Cost Plus, (b) soliciting proxies with respect to such securities, (c) seeking the nomination of any person to the board of directors of Cost Plus, (d) submitting a proposal for any extraordinary transaction involving Cost Plus, or (e) otherwise seeking to control or influence the management, board of directors or policies of Cost Plus.

The foregoing description of the Confidentiality and Standstill Agreement is a summary only and is qualified in its entirety by reference to the full text of the Confidentiality and Standstill Agreement, which is filed as Exhibit 2 to this Schedule 13D and is hereby incorporated herein by reference.

ITEM 7.

MATERIALS TO BE FILED AS EXHIBITS.

Item 7 of this Schedule 13D is hereby amended to include the following information:


Exhibit No.		Description of Exhibit
2		Confidentiality and Standstill Agreement, dated as of April 11, 2007, by and among Cost Plus and the Reporting Persons (filed herewith).

¹	Although the Confidentiality and Standstill Agreement is dated as of April 11, 2007, it was not executed and delivered until April 17, 2007.


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 9 OF 11 PAGES

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: April 18, 2007


RED MOUNTAIN CAPITAL PARTNERS LLC

	/s/ Willem Mesdag
By:	Willem Mesdag
Title:	Authorized Signatory

RED MOUNTAIN CAPITAL PARTNERS II, L.P.

By:	RMCP GP LLC, its general partner

		/s/ Willem Mesdag
	By:	Willem Mesdag
	Title:	Authorized Signatory

RED MOUNTAIN CAPITAL PARTNERS III, L.P.

By:	RMCP GP LLC, its general partner

		/s/ Willem Mesdag
	By:	Willem Mesdag
	Title:	Authorized Signatory

RMCP GP LLC

	/s/ Willem Mesdag
By:	Willem Mesdag
Title:	Authorized Signatory


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 10 OF 11 PAGES


RED MOUNTAIN CAPITAL MANAGEMENT, INC.

		/s/ Willem Mesdag
By:		Willem Mesdag
Title:		President

WILLEM MESDAG

/s/ Willem Mesdag


CUSIP No. 221485105		SCHEDULE 13D/A		PAGE 11 OF 11 PAGES

EXHIBIT INDEX


Exhibit No.		Description of Exhibit
1		Joint Filing Agreement, dated as of September 18, 2006, by and among the Reporting Persons (incorporated by reference to Exhibit 1 to the Schedule 13D filed by the Reporting Persons with the SEC on September 18, 2006).

2		Confidentiality and Standstill Agreement, dated as of April 11, 2007, by and among Cost Plus and the Reporting Persons (filed herewith).

EX-2 2 dex2.htm CONFIDENTIALITY AND STANDSTILL AGREEMENT, DATED AS OF APRIL 11, 2007 Confidentiality and Standstill Agreement, dated as of April 11, 2007

Exhibit 2

April 11, 2007

Willem Mesdag

Red Mountain Capital Partners LLC

10100 Santa Monica Boulevard, Suite 925

Los Angeles, CA 90067

Re: Confidentiality Agreement

Dear Mr. Mesdag:

As you know, Red Mountain Capital Partners LLC, a Delaware limited liability company, Red Mountain Capital Partners II, L.P., a Delaware limited partnership, Red Mountain Capital Partners III, L.P., a Delaware limited partnership, RMCP GP LLC, a Delaware limited liability company, Red Mountain Capital Management, Inc., a Delaware corporation (collectively, the “Affiliates”), and Willem Mesdag, a natural person and citizen of the United States of America (the “Receiving Party”), filed a Schedule 13D with the Securities and Exchange Commission on September 18, 2006, concerning the beneficial ownership of the Receiving Party of shares of common stock, $0.01 par value per share, of Cost Plus, Inc., a California corporation (the “Disclosing Party”). Amendments to the Schedule 13D were filed on December 6, 2006, December 22, 2006 and January 8, 2007. 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 is currently available.

All information (i) about the Disclosing Party or (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 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 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 his 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.

For a period commencing with the date of this letter agreement and ending on December 31, 2007, or on such later date agreed upon in writing by the parties, neither the Receiving Party nor any of the Affiliates nor any other person affiliated with the Receiving Party shall, without the prior written consent of the Disclosing Party or its board of directors, directly or indirectly:

(a) acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any additional voting securities or direct or indirect rights to acquire any voting securities of the Disclosing Party or any subsidiary thereof, or of any successor to or person in control of the Disclosing Party, or any assets of the Disclosing Party or any subsidiary or division thereof or of any such successor or controlling person;

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(b) 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 (“SEC”)), or seek to advise or influence any person or entity with respect to the voting of any voting securities of the Disclosing Party;

(d) make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any extraordinary transaction involving the Disclosing Party or any of its securities or assets;

(e) form, join or in any way participate in a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with any of the foregoing;

(f) otherwise act or seek to control or influence the management, Board of Directors or policies of the Disclosing Party;

(g) 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 (e) above; or

(h) request the Disclosing Party or any of its Representatives, directly or indirectly, to amend or waive any provision of this paragraph.

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.

-3-

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) in the Receiving Party’s possession or in the possession of any Representative of the Receiving Party or any Affiliate.

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.

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. This letter agreement shall terminate automatically on December 31, 2007, or on such later date agreed upon in writing by the parties, and neither the Receiving Party nor any other person shall have any obligation hereunder from and after such termination.

Please confirm your agreement with the foregoing by signing and returning to the undersigned the duplicate copy of this letter enclosed herewith.

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Cost Plus, Inc.

By:		/s/ Barry J. Feld
		Barry J. Feld, Chief Executive Officer

ACCEPTED AND AGREED as of the date first written above:

WILLEM MESDAG, on behalf of himself and as director, officer

or managing member of Red Mountain Capital Partners LLC,

Red Mountain Capital Partners II, L.P., Red Mountain

Capital Partners III, L.P., RMCP GP LLC, and Red Mountain

Capital Management, Inc.


By:		/s/ Willem Mesdag
		Willem Mesdag

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