Exhibit 10.6

 

THE CONTAINER STORE GROUP, INC.

SENIOR EXECUTIVE INCENTIVE BONUS PLAN

 

1.              Purpose

 

This Senior Executive Incentive Bonus Plan (the “Bonus Plan”) is intended to
provide an incentive for superior work and to motivate eligible executives of
The Container Store Group, Inc. (the “Company”) and its subsidiaries toward even
higher achievement and business results, to tie their goals and interests to
those of the Company and its stockholders and to enable the Company to attract
and retain highly qualified executives. The Bonus Plan is for the benefit of
Covered Employees (as defined below).

 

2.              Administration

 

The Compensation Committee of the Board of Directors of the Company (the
“Compensation Committee”) shall have the sole discretion and authority to
administer and interpret the Bonus Plan.

 

3.              Eligibility and Participation

 

The Compensation Committee shall select the persons eligible to participate in
the Bonus Plan, which may include, without limitation, the executives of the
Company and its subsidiaries who are or, as determined in the sole discretion of
the Compensation Committee, may become, “covered employees” (as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)) of
the Company and its subsidiaries for the applicable taxable year of the Company
(such selected persons, the “Covered Employees”).

 

4.              Bonus Determinations

 

(a)           A Covered Employee may receive a bonus payment under the Bonus
Plan based upon the attainment of performance objectives which are established
by the Compensation Committee and relate to financial, operational or other
metrics with respect to the Company or any of its subsidiaries (the “Performance
Goals”), including but not limited to:  (i) net earnings or losses (either
before or after one or more of the following: (A) interest, (B) taxes, (C)
depreciation, (D) amortization; provided that any such adjustments shall be
consistent with the adjustments used in determining Consolidated EBITDA (as
defined in the Credit Agreement, entered into as of April 6, 2012, among the
Company, the Guarantors (as defined therein) party thereto, the Lenders (as
defined therein), JPMorgan Chase Bank, N.A., and the other parties thereto, as
amended from time to time); (ii) gross or net sales or revenue; (iii) revenue
growth or product revenue growth; (iv) net income (either before or after
taxes); (v) adjusted net income; (vi) operating income (either before or after
taxes); (vii) operating earnings or profit; (viii) pre- or after-tax income or
loss (before or after allocation of corporate overhead and bonus); (ix) cash
flow (including, but not limited to, operating cash flow and free cash flow);
(x) return on assets or net assets; (xi) return on capital; (xii) return on
stockholders’ equity; (xiii) total stockholder return; (xiv) return on sales;
(xv) gross or net profit or operating margin; (xvi) costs or reduction in costs;
(xvii) funds from operations; (xviii) expenses; (xix) working capital; (xx)
earnings or loss per share; (xxi) adjusted earnings per share; (xxii) price per
share of the Company’s common stock, $0.01 par value per share (“Common Stock”);
(xxiii) appreciation in and/or

 

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maintenance of the price of Common Stock or any other publicly-traded
securities; (xiv) economic value-added models or equivalent metrics;
(xxv) comparisons with various stock market indices; (xxvi) regulatory
achievements and compliance; (xxvii) implementation or completion of critical
projects; (xxviii) market share; (xxix) customer satisfaction; (xxx) customer
growth; (xxxi) employee satisfaction; (xxxii) recruiting and maintaining
personnel; (xxxiii) strategic partnerships or transactions (including
in-licensing and out-licensing of intellectual property; and establishing
relationships with commercial entities with respect to the marketing,
distribution and sale of the Company’s products); (xxxiv) supply chain
achievements (including establishing relationships with manufacturers or
suppliers of component materials and manufacturers of the Company’s products);
(xxxv) co-development, co-marketing, profit sharing, joint venture or other
similar arrangements; (xxxvi) financial ratios, including those measuring
liquidity, activity, profitability or leverage; (xxxvii) cost of capital or
assets under management; (xxxviii) financing and other capital raising
transactions (including sales of the Company’s equity or debt securities;
factoring transactions; sales or licenses of the Company’s assets, including its
intellectual property, whether in a particular jurisdiction or territory or
globally; or through partnering transactions); (xxxix) implementation,
completion or attainment of measurable objectives with respect to research,
development, manufacturing, commercialization, products or projects, production
volume levels, acquisitions and divestitures; and (xl) economic value, any of
which may be measured either in absolute terms or as compared to any incremental
increase or decrease in the results of a peer group or market performance
indicators or indices.

 

(b)           Except as otherwise set forth in this Section 4(b):  (i) any
bonuses paid to Covered Employees under the Bonus Plan shall be based upon
objectively determinable bonus formulas that tie such bonuses to one or more
performance objectives relating to the Performance Goals; (ii) bonus formulas
for Covered Employees shall be adopted in each performance period by the
Compensation Committee (generally, for performance periods of one year or more,
no later than 90 days after the commencement of the performance period to which
the Performance Goals relate); and (iii) no bonuses shall be paid to Covered
Employees unless and until the Compensation Committee makes a certification with
respect to the attainment of the performance objectives.  Notwithstanding the
foregoing, the Company may pay bonuses (including, without limitation,
discretionary bonuses) to Covered Employees under the Bonus Plan based upon such
other terms and conditions as the Compensation Committee may in its discretion
determine.

 

(c)           The payment of a bonus to a Covered Employee with respect to a
performance period shall be conditioned upon the Covered Employee’s employment
by the Company on the last day of the performance period; provided, however,
that the Compensation Committee may make exceptions to this requirement, in its
sole discretion, including, without limitation, in the case of a Covered
Employee’s termination of employment, retirement, death or disability or such
payments may be made in accordance with employment contracts in place.

 

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5.              Forfeiture and Claw-Back Provisions

 

The Compensation Committee may provide that any bonuses paid under the Bonus
Plan shall be subject to the provisions of any claw-back policy implemented by
the Company, including, without limitation, any claw-back policy adopted to
comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and any rules, regulations or interpretations thereunder, to the
extent set forth in such claw-back policy.

 

6.              Other Provisions

 

(a)           Neither the establishment of the Bonus Plan nor the selection of
any individual as a Covered Employee shall give any individual any right to be
retained in the employ of the Company or any subsidiary thereof, or any right
whatsoever under the Bonus Plan other than to receive bonus payments awarded by
the Compensation Committee.

 

(b)           No member of the Board of Directors of the Company or the
Compensation Committee shall be liable to any individual in respect of the Bonus
Plan for any act or omission of such member, any other member, or any officer,
agent or employee of the Company or any of its subsidiaries.

 

(c)           The Company and its subsidiaries shall withhold such amounts as
may be required by federal, state or local law from all bonus payments under the
Bonus Plan.

 

(d)           To the extent not preempted by federal law, the Bonus Plan shall
be governed and construed in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof or any
other jurisdiction.

 

(e)           The Bonus Plan is intended to meet the requirements of
Section 409A of the Code and will be interpreted and construed in accordance
with Section 409A of the Code and Department of Treasury Regulations and other
interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the Effective Date. 
Unless otherwise determined by the Compensation Committee, each bonus under the
Bonus Plan shall be paid (i) subject to the applicable Covered Employee’s
continued employment through the date of payment of such bonus or (ii) in the
calendar year immediately following the calendar year in which the applicable
performance period ends (or otherwise in compliance with Section 409A of the
Code).  Notwithstanding any provision of the Bonus Plan to the contrary, in the
event that following the Effective Date the Company determines that any
provision of the Bonus Plan could otherwise cause any person to be subject to
the penalty taxes imposed under Section 409A of the Code, the Company may adopt
such amendments to the Bonus Plan or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that the Company determines are necessary or appropriate to
comply with the requirements of Section 409A of the Code and related Department
of Treasury guidance and thereby avoid the application of any penalty taxes
under Section 409A of the Code.  Notwithstanding anything herein to the
contrary, in no event shall any liability for failure to comply with the
requirements of Section 409A of the Code be transferred from a Covered Employee
or any other person to the Company or any of its affiliates, employees or agents
pursuant to the terms of the Bonus Plan or otherwise.

 

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7.              Amendment and Termination

 

The Company reserves the right to amend or terminate the Bonus Plan at any time
in its sole discretion.  Any amendments to the Bonus Plan shall require
stockholder approval only to the extent required by any applicable law, rule or
regulation.

 

8.              Stockholder Approval

 

No bonuses shall be paid under the Bonus Plan unless and until the Company’s
stockholders shall have approved the Bonus Plan.  The Bonus Plan will be
submitted for the approval of the Company’s stockholders after the initial
adoption of the Bonus Plan by the Board of Directors of the Company.

 

9.              Term of Bonus Plan

 

The Bonus Plan shall become effective as of the day immediately prior to the
first date upon which Common Stock is listed (or approved for listing) upon
notice of issuance on any securities exchange or designated (or approved for
designation) upon notice of issuance as a national market security on an
interdealer quotation system (the “Effective Date”).  The Bonus Plan shall
expire on the earliest to occur of:  (a) the first material modification of the
Bonus Plan (as defined in Treasury Regulation Section 1.162-27(h)(1)(iii));
(b) the first meeting of the Company’s stockholders at which members of the
Board of Directors of the Company are to be elected that occurs after the close
of the third calendar year following the calendar year in which occurred the
first registration of an equity security of the Company under Section 12 of the
Securities Exchange Act of 1934, as amended; or (c) such other date required by
Section 162(m) of the Code, and the rules, regulations and interpretations
thereunder (including without limitation Treasury Regulation
Section 1.162-27(f)(2)).  The Bonus Plan is intended to be subject to the relief
set forth in Treasury Regulation Section 1.162-27(f)(1) and shall be interpreted
accordingly.

 

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I hereby certify that the Bonus Plan was duly authorized, approved and adopted
by the Board of Directors of The Container Store Group, Inc. as of October 16,
2013, effective as of the Effective Date.

 

I hereby certify that the Bonus Plan was approved by the stockholders of The
Container Store Group, Inc. as of October 31, 2013.

 

Executed on this 6th day of November, 2013.

 

 

/s/ Jodi Taylor

 

 

 

Corporate Secretary

 

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