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Exhibit 10.1

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February 19, 2018

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Cabell Lolmaugh

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Dear Cabby:

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We are delighted to offer you a new position at Tile Shop Holdings, Inc. (the
“Company”). This letter serves as an employment agreement to confirm the new
terms of your employment:

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Position:

 

Senior Vice President and Chief Operating Officer

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Start date:

 

February 19, 2018

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Status:

 

Full-time, Regular

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Reporting to:

 

You will report to the CEO, as the CEO will direct your day-to-day
responsibilities, and you will work closely with other senior officers of the
Company.

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Compensation:

 

Base salary (annualized) of $250,000, paid in accordance with the Company’s
normal payroll procedures.

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You should note that the Company may modify salaries and benefits from time to
time as its Board of Directors or the Compensation Committee thereof deems
necessary or appropriate, and all forms of compensation which are referred to in
this offer letter are subject to applicable withholding and payroll taxes.

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Cash Incentive Compensation:

 

The target cash incentive compensation opportunity will be between 0% and 100%
of your base salary, with a target of 50%, and receipt of such cash incentive
compensation will be based on achieving Company-wide goals and personal goals
and objectives, pro-rated for any partial year during which you are employed by
the Company.

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Benefits:

 

You will be eligible to receive the Company’s standard benefit package for
employees of your level.

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Equity Awards:

 

Subject to approval by the Company’s Board of Directors, you will be granted
equity awards with an aggregate value of $250,000, 50% of which will be
non-qualified stock options and 50% of which will be restricted stock. The
non-qualified stock options and restricted stock will vest evenly over a
four-year period and will otherwise be subject to the terms of the Company’s
2012 Omnibus Award Plan (the “Plan”) and the applicable award agreements entered
in connection with the awards. The non-qualified stock options will have a ten
year life upon issuance. The value of the non-qualified stock options and
restricted stock and the exercise price of the non-qualified stock options will
be determined at the close of business on February 22, 2018, the date of grant
of the awards.

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Vacation:

 

The most favorable of (i) 3 weeks or (ii) the then current Company vacation
policy applicable to you.

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Change in Control:

(A)

In the event of Change of Control (as defined in the Plan) of the Company, if
you are (1) not offered employment or continued employment by the Successor
Entity (as defined in the Plan) upon consummation of such Change of Control, or
(2) if prior to the first anniversary of such Change of Control, (a) you are
discharged by the Successor Entity other than for Cause (as defined in the Plan)
or (b) you resign from employment with the Successor Entity as a result of a
Constructive Termination (as defined below), all of your unvested stock options
will vest and become exercisable immediately prior to such Change of Control or
cessation of employment, as applicable.

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(B)

“Constructive Termination” will occur if you resign from your employment with
the Successor Entity within thirty (30) days following (1) a material reduction
in your annual base salary or job responsibility or (2) the relocation of your
principal office location to a facility or location located more than fifty (50)
miles from your principal office location on the date of the Change of Control.

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Severance:

(A)

If you are terminated without Severance Cause (as defined below) or resign for
Good Reason (as defined below), you will be entitled to receive an amount equal
to (1) your then-current base salary for a six-month period commencing with the
effective date of your termination of employment with the Company (the
“Severance Period”) and (2) an amount equal to six (6) times the monthly amount
that the Company paid for your participation in the Company’s health insurance
plan during the month immediately preceding your termination date. The foregoing
amounts will be payable pro rata over the Severance Period in accordance with
the Company’s normal payroll practices; provided, however, that the Company will
not make any severance payments unless and until (a) you execute and deliver to
the Company a general release in the form of Exhibit B hereto (the “Release”),
(b) such Release is executed and delivered to the Company within twenty-one (21)
days after your termination date and (c) all time periods for revoking the
Release have lapsed. If you are terminated during the month of December of any
calendar year and are owed severance hereunder, no severance payments will be
made prior to January 1st of the next calendar year and any amount that would
have otherwise been payable to you in December of the preceding calendar year
will be paid to you on the first date in January on which you would otherwise
be entitled to any payment. Following your termination date, all benefits
offered by the Company, including health insurance benefits, will cease. From
and after such date, you may elect to continue your participation in the
Company’s health insurance benefits at your expense pursuant to COBRA by
notifying the Company in the time specified in the COBRA notice you will be
provided and paying the monthly premium yourself. Notwithstanding the above, if
you are a “specified employee” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), then any amounts payable
to him during the first six (6) months and one day following the date of
termination that constitute nonqualified deferred compensation within the
meaning of Section 409A of the Code (as determined by the Company in its sole
discretion) will not be paid to you until the date that is six (6) months and
one day following such termination to the extent necessary to avoid adverse tax
consequences under Section 409A of the Code.

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(B)

“Severance Cause” will mean (1) willful misconduct in connection with your
employment or willful failure to perform your responsibilities in the best
interests of the Company, as determined by the Company’s Board of Directors; (2)
conviction of, or plea of nolo contendre or guilty to, a felony other than an
act involving a traffic related infraction; (3) any act of fraud, theft,
embezzlement or other material dishonesty by you which harmed the Company; (4)
intentional violation of a federal or state law or regulation applicable to the
Company’s business which violation was or is reasonably likely to be injurious
to the Company; or (5) repeated failure to perform your duties and obligations
of your position with the Company, which failure is not cured within thirty (30)
days after notice of such failure from the Company’s Board of Directors to you.

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(C)

“Good Reason” for your resignation will exist if you resign from your employment
with the Company as a result of (1) a material reduction in your annual base
salary or job responsibility or (2) the relocation of your principal office
location to a facility or location located more than fifty (50) miles from your
current principal office location.

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Please understand that your employment with the Company is for no specified
period and constitutes “at-will” employment. As a result, you are free to resign
at any time, for any reason or for no reason, with or without notice. Similarly,
the Company is free to conclude its employment relationship with you at any
time, with or without cause, and with or without notice.

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Like all Company employees of your level, you will be required, as a condition
of your employment with the Company, to sign the Company’s Nondisclosure,
Confidentiality, Assignment and Noncompetition Agreement, a copy of which is
attached hereto as Exhibit A (the “Non-Competition and Non-Disclosure
Agreement”).

You agree that, during the term of your employment with the Company, you will
not engage in any other employment, occupation, consulting or other business
activity directly related to the business in which the Company is now involved
or becomes involved during the term of your employment, nor will you engage in
any other activities that conflict with your obligations to the Company.

To indicate your acceptance of our offer, please sign and date the attached
Acceptance and Acknowledgement. This letter, along with the Company’s
Non-Competition and Non-Disclosure Agreement, set forth the terms of your
employment with the Company and supersede any prior representations or
agreements, whether written or oral. This letter may not be modified or amended
except by a written agreement, signed by an officer of the Company and by you.

Cabby, we are looking forward to your service in this new role and expect your
direct contributions to have a significant positive impact on the organization.

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Sincerely,

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TILE SHOP HOLDINGS, INC.

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/s/ Robert A. Rucker

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Robert A. Rucker, Chief Executive Officer

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ACCEPTANCE AND ACKNOWLEDGMENT

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I accept the offer of employment from the Company as Senior Vice President and
Chief Operating Officer as set forth in the letter employment agreement dated
February 19, 2018. I understand and acknowledge that my employment with the
Company is for no particular duration and is at-will, meaning that I, or the
Company, may terminate the employment relationship at any time, with or without
cause and with or without prior notice.

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I understand and agree that the terms and conditions set forth in the letter
employment agreement represent the entire agreement between the Company and me
superseding all prior negotiations and agreements, whether written or oral. I
understand that the terms and conditions described in the letter employment
agreement, along with the Company’s Non-Competition and Non-Disclosure Agreement
are the terms and conditions of my employment. No one other than an officer of
the Company is authorized to sign any employment or other agreement which
modifies the terms of the letter employment agreement and the Company’s
Non-Competition and Non-Disclosure Agreement, and any such modification must be
in writing and signed by such individual. I understand that the Company may
modify salary and benefits as well as other plans and programs from time to time
as its Board of Directors or the Compensation Committee thereof deems necessary
or appropriate

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Signature:/s/ Cabell Lolmaugh

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Printed Name:Cabell Lolmaugh

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Date:February 19, 2018

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EXHIBIT A

 

TILE SHOP HOLDINGS, inc.

NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT

 

THIS NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT
(this “Agreement”) is made this 19th day of February 2018, by and between Tile
Shop Holdings, Inc., a Delaware corporation and its subsidiaries (collectively
with any predecessors, successors, and assignees, the “Company”), and Cabell
Lolmaugh (“I” or “me”), to be effective on February 19, 2018.

In consideration of my engagement or continued engagement as an officer,
employee, director, advisor, partner, independent contractor or consultant of
the Company (an “Associate”), and for other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, I hereby agree as follows:

1.DEFINITIONS.

1.1.“Affiliate” means any direct or indirect subsidiary of the Company.

1.2.“Confidential Information” means any and all confidential and/or proprietary
knowledge, data or information concerning the business, business relationships
and financial affairs of the Company or its Affiliates whether or not in writing
and whether or not labeled or identified as confidential or proprietary. By way
of illustration, but not limitation, Confidential Information includes: (a)
Inventions and (b) research and development activities of the Company or its
Affiliates, services and marketing plans, business plans, budgets and
unpublished financial statements, licenses, prices and costs, customer and
supplier information and information disclosed to the Company or its Affiliates
or to me by third parties of a proprietary or confidential nature or under an
obligation of confidence. Confidential Information is contained in various
media, including without limitation, patent applications, computer programs in
object and/or source code, flow charts and other program documentation, manuals,
plans, drawings, designs, technical specifications, laboratory notebooks,
supplier and customer lists, internal financial data and other documents and
records of the Company or its Affiliates.

1.3.“Inventions” means all ideas, concepts, discoveries, inventions,
developments, improvements, formulations, products, processes, know-how,
designs, formulas, methods, developmental or experimental work, clinical data,
original works of authorship, software programs, software and systems
documentation, trade secrets, technical data, or licenses to use (whether or not
patentable or registrable under copyright or similar statutes), that are or were
made, conceived, devised, invented, developed or reduced to practice or tangible
medium by me, either alone or jointly with others (a) during any period that I
am an Associate of the Company, whether or not during normal working hours or on
the premises of the Company, which relate, directly or indirectly, to the
business of the Company or its Affiliates, (b) at the request of or for the
benefit of the Company during any period prior to my engagement as an Associate
of the Company which relate, directly or indirectly, to the business of the
Company or its Affiliates, or (c) which arise out of, or are incidental to, my
engagement as an Associate of the Company.

1.4.“Prior Inventions” means any inventions made, conceived, devised, invented,
developed or first reduced to practice by me, under my direction or jointly with
others prior to the date of this Agreement and which do not constitute
Inventions within the meaning of Section 1.3 above.

1.5.“Third Party Information” means any confidential or proprietary information
received by the Company or its Affiliates from third parties.

2.CONFIDENTIALITY.

2.1.Recognition of the Company’s Rights. I understand that the Company
continually obtains and develops valuable Confidential Information which may or
has become known to me in connection with my engagement as an Associate of the
Company. I acknowledge that all Confidential Information is and shall remain the
exclusive property of the Company or the third party providing such Confidential
Information to myself, the Company, or the Company’s Affiliates.

2.2.Nondisclosure of Confidential Information. I agree that during the term of
my engagement as an Associate of the Company and thereafter, I will hold in
strictest confidence and will not disclose, use, lecture upon, publish or
otherwise make available to any third party (other than personnel of the Company
or its Affiliates who need to know such information in connection with their
work for the Company), any Confidential Information of the Company, except as
such disclosure, use or publication may be required in connection with my work
for the Company, or as expressly authorized in writing by an executive officer
of the Company. I agree that I shall use such Confidential Information only in
the performance of my duties for the Company and in accordance with any Company
policies with respect to the protection of Confidential Information. I agree not
to use such Confidential Information for my own benefit or for the benefit of
any other person or business entity.

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2.3.Third Party Information. In addition, I understand that the Company has
received and in the future will receive Third Party Information subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
engagement as an Associate of the Company and thereafter, I will hold Third
Party Information in the strictest confidence and will not disclose to anyone
(other than personnel of the Company or its Affiliates who need to know such
information in connection with the performance of their duties for the Company)
or use any Third Party Information, except as such disclosure or use may be
required in connection with the performance of my duties for the Company, or as
expressly authorized in writing by an executive officer of the Company.

2.4.Exceptions. My obligations under Sections 2.2 and 2.3 hereof shall not apply
to the extent that certain Confidential Information: (a) is or becomes generally
known within the Company’s industry through no fault of mine; (b) was known to
me at the time it was disclosed as evidenced by my written records at the time
of disclosure; (c) is lawfully and in good faith made available to me by a third
party who did not derive it from the Company or the Company’s Affiliates and who
imposes no obligation of confidence to me, the Company, or the Company’s
Affiliates; or (d) is required to be disclosed by a governmental authority or by
order of a court of competent jurisdiction, provided that such disclosure is
subject to all applicable governmental or judicial protection available for like
material and reasonable advance notice is given to the Company.

2.5.Protection and Return of Confidential Information. I agree to exercise all
reasonable precautions to protect the integrity and confidentiality of
Confidential Information in my possession and not to remove any materials
containing Confidential Information from the premises of the Company, except to
the extent necessary in the performance of my duties for the Company or unless
expressly authorized in writing by an executive officer of the Company. Upon the
termination of my engagement as an Associate of the Company, or at any time upon
the Company’s request, I shall return immediately to the Company any and all
notes, memoranda, specifications, devices, formulas and documents, together with
copies thereof, and any other material containing or disclosing any Confidential
Information of the Company or Third Party Information then in my possession or
under my control.

3.ASSIGNMENT OF INVENTIONS.

3.1.Ownership of Inventions. I acknowledge that all Inventions already existing
at the date of this Agreement or which arise after the date of this Agreement,
belong to and are the absolute property of the Company and will not be used by
me for any purpose other than carrying out my duties as an Associate of the
Company.

3.2.Assignment of Inventions; Enforcement of Rights. Subject to Section 3.6, I
hereby assign and agree to assign in the future to the Company all of my right,
title and interest to any and all Inventions and any and all related patent
rights, copyrights and applications and registrations therefore. I also agree to
assign all my right, title and interest in and to any particular Inventions to a
third party as directed by the Company. During and after my engagement as an
Associate of the Company, I shall cooperate with the Company, at the Company’s
expense, in obtaining proprietary protection for the Inventions and I shall
execute all documents which the Company shall reasonably request in order to
perfect the Company’s rights in the Inventions. I hereby appoint the Company my
attorney to execute and deliver any such documents on my behalf in the event I
should fail or refuse to do so within a reasonable period following the
Company’s request. I understand that, to the extent this Agreement shall be
construed in accordance with the laws of any country or state which limits the
assignability to the Company of certain inventions, this Agreement shall be
interpreted not to apply to any such invention which a court rules or the
Company agrees is subject to such limitation.

3.3.Works for Hire. I acknowledge that all original works of authorship made by
me (solely or jointly with others) within the scope of my engagement as an
Associate of the Company or any prior engagement by the Company, which are
protectable by copyright are intended to be “works made for hire”, as that term
is defined in Section 101 of the United States Copyright Act of 1976 (the
“Act”), and shall be the property of the Company and the Company shall be the
sole author within the meaning of the Act. If the copyright to any such
copyrightable work shall not be the property of the Company by operation of law,
I will, without further consideration, assign to the Company all of my right,
title and interest in such copyrightable work and will cooperate with the
Company and its designees, at the Company’s expense, to secure, maintain and
defend for the Company’s benefit copyrights and any extensions and renewals
thereof on any and all such work. I hereby waive all claims to moral rights in
any Inventions.

3.4.Records. I agree to keep and maintain adequate and current records (in the
form of notes, sketches, drawings and in any other form that may be required by
the Company) of all Inventions made by me during the period of my engagement as
an Associate of the Company or any prior engagement by the Company, which
records shall be available to and remain the sole property of the Company at all
times.

3.5.Obligation to Keep Company Informed. During the period of my engagement as
an Associate of the Company, and for six (6) months after termination of my
engagement as an Associate of the Company, I agree to promptly disclose to the
Company fully and in writing all Inventions authored, conceived or reduced to
practice by me, either alone or jointly with others. In addition, I will
promptly disclose to the Company all patent applications filed by me or on my
behalf within a year after termination of my engagement as an Associate of the
Company.

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3.6.Prior Inventions. I further represent that the attached Schedule A contains
a complete list of all Prior Inventions. Such Prior Inventions are considered to
be my property or the property of third parties and are not assigned to the
Company hereunder. If there is no such Schedule A attached hereto, I represent
that there are no such Prior Inventions. If I am claiming any Prior Inventions
on Schedule A, I agree that, if in the course of my engagement as an Associate
of the Company or any prior engagement by the Company, I incorporate any Prior
Invention into a Company product, process or machine, the Company shall
automatically be granted and shall have a non-exclusive, royalty-free,
irrevocable, transferable, perpetual, world-wide license (with rights to
sublicense) to make, have made, modify, use and sell such Prior Invention as
part of, or in connection with, such product, process or machine.
Notwithstanding the foregoing, I agree that I will not incorporate, or permit to
be incorporated, Prior Inventions in any Company Inventions without the
Company’s prior written consent.

4.OTHER AGREEMENTS.

4.1.No Conflicting Obligations. I hereby represent to the Company that, except
as identified on Schedule B, I am not bound by any agreement or any other
previous or existing business relationship which conflicts with or prevents the
full performance of my duties and obligations to the Company (including my
duties and obligations under this or any other agreement with the Company)
during my engagement as an Associate of the Company. I agree I will not enter
into, any agreement either written or oral that conflicts with this Agreement.

4.2.No Improper Use of Information of Prior Employers or Others. I understand
that the Company does not desire to acquire from me any trade secrets, know-how
or confidential business information I may have acquired from others. Therefore,
I agree during my engagement as an Associate of the Company, I will not
improperly use or disclose any proprietary information or trade secrets of any
former or concurrent employer, or any other person or entity with whom I have an
agreement or to whom I owe a duty to keep such information in confidence. Those
persons or entities with whom I have such agreements or to whom I owe such a
duty are identified on Schedule B.

5.NON-COMPETITION. I agree that while I am engaged as an Associate of the
Company and for a period of one (1) year after termination or cessation of such
engagement for any reason, I shall not, without the Company’s prior written
consent, directly or indirectly, as a principal, employee, consultant, partner,
or stockholder of, or in any other capacity with, any business enterprise (other
than in my capacity as a holder of not more than 1% of the combined voting power
of the outstanding stock of a publicly held company) (a) engage in direct or
indirect competition with the Company or its Affiliates, (b) conduct a business
of the type or character engaged in by the Company or its Affiliates at the time
of termination or cessation of my engagement as an Associate of the Company, or
(c) develop products or services competitive with those of the Company or its
Affiliates.

6.GENERAL NON-SOLICITATION. I agree that while I am engaged as an Associate of
the Company and for a period of one (1) year after termination or cessation of
such engagement for any reason, I shall not solicit, divert or take away, or
attempt to divert or take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, of the
Company or its Affiliates which were contacted, solicited or served by me while
I was engaged as an Associate of the Company or any Affiliate.

7.NON-SOLICITATION OF EMPLOYEES AND CONSULTANTS. I agree that while I am engaged
as an Associate of the Company and for a period of one (1) year after
termination or cessation of such engagement for any reason, I shall not directly
or indirectly hire, recruit, or solicit any employee, independent contractor or
consultant of the Company or its Affiliates, or induce or attempt to induce any
employee independent contractor or consultant of the Company or its Affiliates
to discontinue his or her relationship with the Company or its Affiliates.

8.NOTICE OF SUBSEQUENT EMPLOYMENT OR ENGAGEMENT. I shall, for a period of one
(1) year after the termination or cessation of my engagement as an Associate of
the Company, notify the Company of any change of address, and of any subsequent
employment or engagement (stating the name and address of the employer and the
nature of the position) or any other business activity.

9.GENERAL.

9.1.Assignment; Successors and Assigns. This Agreement may not be assigned by
either party except that the Company may assign this Agreement to any Affiliate
or in connection with the merger, consolidation or sale of all or substantially
all of its business or assets. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
other legal representatives and, to the extent that any assignment hereof is
permitted hereunder, their assignees.

9.2.Entire Agreement. The obligations pursuant to Sections 2 and 3 of this
Agreement shall apply to any time during which I was previously engaged as an
Associate of the Company, or am in the future engaged as an Associate of the
Company or any Affiliate if no other agreement governs nondisclosure and
assignment of inventions during such period. This Agreement supersedes all prior
agreements, written or oral, with respect to the subject matter of this
Agreement.

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9.3.Severability. In the event that any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions of this Agreement, and all other provisions shall
remain in full force and effect. If any of the provisions of this Agreement is
held to be excessively broad, it shall be reformed and construed by limiting and
reducing it so as to be enforceable to the maximum extent permitted by law. I
agree that should I violate any obligation imposed on me in this Agreement, I
shall continue to be bound by the obligation until a period equal to the term of
such obligation without violation of such obligation.

9.4.Amendments and Waivers. No modification of or amendment to this Agreement,
nor any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. No delay or omission by the
Company in exercising any right under this Agreement will operate as a waiver of
that or any other right. A waiver or consent given by the Company on any
occasion if effective only in that instance and will not be construed as a bar
to or waiver of any right on any other occasion.

9.5.Employment. I understand that this Agreement does not constitute a contract
of employment or create an obligation on the part of the Company to continue my
employment (if any) with the Company. I understand that my employment (if any)
is “at will” and that my obligations under this Agreement shall not be affected
by any change in my position, title or function with, or compensation, by the
Company. Any subsequent change or changes in my duties, salary or compensation
will not affect the validity or scope of this Agreement.

9.6.Legal and Equitable Remedies. I acknowledge that (a) the business of the
Company and its Affiliates is global in scope and its services may be marketed
and sold throughout the world; (b) the Company and its Affiliates compete with
other businesses that are or could be located in any part of the world; (c) the
Company has required that I make the covenants contained in this Agreement as a
condition to my engagement as an Associate of the Company; and (d) the
restrictions contained in this Agreement are necessary for the protection of the
business and goodwill of the Company and its Affiliates and are reasonable for
such purpose. I agree that any breach of this Agreement by me will cause
irreparable damage to the Company and its Affiliates and that in the event of
such breach, the Company shall be entitled, in addition to monetary damages and
to any other remedies available to the Company under this Agreement and at law,
to equitable relief, including injunctive relief, and to payment by myself of
all costs incurred by the Company in enforcing of the provisions of this
Agreement, including reasonable attorneys’ fees. I agree that should I violate
any obligation imposed on me in this Agreement, I shall continue to be bound by
the obligation until a period equal to the term of such obligation has expired
without violation of such obligation.

9.7.Governing Law. This Agreement shall be construed as a sealed instrument and
shall in all events and for all purposes be governed by, and construed in
accordance with, the laws of the State of Delaware without regard to any choice
of law principle that would dictate the application of the laws of another
jurisdiction. Any action, suit or other legal proceeding which I may commence to
resolve any matter arising under or relating to any provision of this Agreement
shall be commenced only in a court of the State of Delaware (or, if appropriate,
a federal court located within the State of Delaware), and I hereby consent to
the jurisdiction of such court with respect to any action, suit or proceeding
commenced in such court by the Company.

[Next Page is Signature Page]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written as an instrument under seal.

 

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ASSOCIATE

 

 

 

 

 

/s/ Cabell Lolmaugh

 

Cabell Lolmaugh

 

 

 

 

 

TILE SHOP HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Robert A. Rucker

 

Name:

  Robert A. Rucker

 

Title:

  Chief Executive Officer

 

 

 

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Schedule A

 

List all Prior Inventions

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None

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Schedule B

 

List any and all Conflicted Obligations

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None

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EXHIBIT B

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WAIVER OF CLAIMS AND GENERAL RELEASE

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This Waiver of Claims and General Release (the “Release”) is to confirm that the
undersigned’s at-will employment with Tile Shop Holdings, Inc. (the “Company”)
is terminated effective as of ________________ (the “Termination Date”).
Effective as of the Termination Date, by execution of this Release, the
undersigned (“you”) hereby relinquish all authority you have to act on behalf of
the Company and any of its subsidiaries.

Please read this Release carefully. To help you understand the Release and your
rights as a terminated employee, you are advised to consult with your attorney
before signing it.

Consistent with the provisions of that certain Employment Agreement by and
between you and the Company dated as of February 19, 2018 (the “Employment
Agreement”), the Company will provide you with severance pay pursuant to the
terms of the Employment Agreement. In consideration for the severance payments
and other good and valuable consideration set forth in the Employment Agreement,
you hereby agree as follows:

1. Release. You hereby release and forever discharge the Company and each of its
past and present officers, directors, employees, agents, advisors, consultants,
successors and assigns from any and all claims and liabilities of any nature by
you including, but not limited to, all actions, causes of actions, suits, debts,
sums of money, attorneys’ fees, costs, accounts, covenants, controversies,
agreements, promises, damages, claims, grievances, arbitrations, and demands
whatsoever, known or unknown, at law or in equity, by contract (express or
implied), tort, pursuant to statute, or otherwise, that you now have, ever have
had or will ever have based on, by reason of, or arising out of, any event,
occurrence, action, inaction, transition or thing of any kind or nature
occurring prior to or on the effective date of this Release. Without limiting
the generality of the above, you specifically release and discharge any and all
claims and causes of action arising, directly or indirectly, from your
employment at the Company, arising under applicable state, federal and local
law, including but not limited to the Employee Retirement Income Security Act of
1974 (except as to claims pertaining to vested benefits under employee benefit
plan(s) of the Company), Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal Pay Act, the Rehabilitation
Act, the Americans With Disabilities Act, and any other law, statute, ordinance,
rule, regulation, decision or order pertaining to employment or pertaining to
discrimination on the basis of age, alienage, race, color, creed, gender,
national origin, religion, physical or mental disability, marital status,
citizenship, sexual orientation , non-work activities or any other protected
class or conduct. Payment of any amounts and the provision of any benefits
provided for in this Release do not signify any admission of wrongdoing by the
Company or any of its affiliates.

You also agree that if you file, or there is filed on your behalf, a charge,
complaint, or action, the payment and benefits described in this Release are in
complete satisfaction of any and all claims in connection with such charge,
complaint, or action and you waive, and agree not to take, any award of money or
other damages from such charge, complaint, or action.

By signing this Release you are not releasing or waiving (a) any vested interest
you may have in any employee retirement plan (as defined in ERISA Section 3(2))
by virtue of your employment with the Company; (b) any rights or claims that may
arise after the Effective Date; (c) the post-employment payment and benefits
described in the third paragraph of this Release; (d) the right to institute
legal action for the purpose of enforcing the provisions of this Release; (e)
the right to apply for state unemployment compensation benefits; (f) any right
you may have to workers’ compensation benefits; (g) any rights you may have
under COBRA; (h) the right to file a charge or complaint with a governmental
agency such as the Equal Employment Opportunity Commission (“EEOC”), the
National Labor Relations Board (“NLRB”), the Occupational Safety and Health
Administration (“OSHA”), the Securities and Exchange Commission (“SEC”) or any
other federal, state or local governmental agency, subject to the preceding
paragraph of this Section 1; (i) the right to communicate with, testify, assist,
or participate in an investigation, hearing, or proceeding conducted by, the
EEOC, NLRB, OSHA, SEC, or other governmental agency; (j) the right to receive
and retain a monetary award from a government-administered whistleblower award
program for providing information directly to a governmental agency; and (k) any
rights of indemnification or contribution afforded you by the Indemnification
Agreement, dated February __, 2018 between you and the Company, by statute or by
common law, including any insurance coverage maintained by or on behalf of the
Company.

2. Opportunity to Consider. You have been advised that you have twenty-one (21)
days from the date on which you received this Release to consider whether you
wish to sign it. The date on which you received this Release is accurately
reflected in Section 10 below

3. Opportunity to Rescind. You may cancel this Release as to the release of
claims arising under the Minnesota Human Rights Act within fifteen (15) days
after signing it and as to the release of claims arising under the Age
Discrimination in Employment Act within seven (7) days of signing it. The
Release will not become effective or enforceable until both rescission periods
have passed. If you decide to rescind the Release you must mail or hand deliver
the notice of rescission to: Robert A. Rucker, Chief Executive Officer, Tile
Shop Holdings, Inc., 14000 Carlson Parkway, Plymouth MN 55441. If you mail the
notice of rescission, the notice must be postmarked within the fifteen (15) or
seven (7) day period, as applicable, and must be sent via certified mail, return
receipt requested,

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as addressed above. If you exercise the right to rescind under this Section 3,
all other provisions of the Release shall immediately be null and void and you
will not receive severance pay as described in the Employment Agreement or
otherwise.

4. Confidentiality of this Release. You agree that you shall keep the terms of
this Release strictly confidential and not disclose, directly or indirectly, any
information concerning them to any third party, with the exception of your
spouse (if you have a spouse), and financial or legal advisors, provided that
they agree to keep such information confidential as set forth herein and not
disclose it to others, and except as may be required by court order or legal
process.

5. Enforcement. The parties agree that any legal proceeding brought to enforce
the provisions of this Release may be brought only in the courts of the State of
Minnesota or the federal courts located in Minnesota and each party hereby
consents to the jurisdiction of such courts.

6. Severability. If any of the terms of this Release shall be held to be invalid
and unenforceable, other than the release of claims provided in Section 1, and
cannot be rewritten or interpreted by the court to be valid, enforceable and to
meet the intent of the parties expressed herein, then the remaining terms of
this Release are severable and shall not be affected thereby. In the event any
aspect of the release of claims in Section 1 is held to be invalid or
unenforceable in any respect, the remaining provisions of this Release shall be
voidable at the option of the Company and you agree to return any payments made
and benefits provided by the Company except that nothing in this Release shall
be construed as permitting the Company to obligate or require tender back of any
payments or benefits provided in exchange for Employee’s release of ADEA claims.

7. Miscellaneous. This Release and the Employment Agreement constitutes the
entire agreement between the parties about or relating to your termination of
employment with the Company, or the Company's obligations to you with respect to
your termination and fully supersedes any and all prior agreements or
understandings between the parties.

8. Representations. You affirm that the consideration for signing this Release
is described in the Employment Agreement as referenced herein and that no other
promises or agreements of any kind have been made to or with you by any person
or entity whatsoever to cause you to sign this Release, and that you fully
understand the meaning and intent of this instrument. You agree that at all
times during your employment you were properly compensated for all hours you
worked, that you received all benefits and leave to which you were entitled, and
that you suffered no work related accident, illness or injury. You agree that
you will not disparage the Company in any way, nor will you make any public
comments or communications which tend to cast the Company, its owners,
directors, officers or employees in a negative light. The Company agrees that
none of the Company’s officers, owners, directors or management employees will
disparage you in any way, nor will the Company’s officers, owners, directors or
management employees make any public comments or communications which tend to
cast you in a negative light.

You also affirm that you are the legal party in interest in this Release, with
legal title to all rights and claims asserted and hereby released; that you have
not filed for bankruptcy or assigned or transferred any rights against the
Company to any other person or entity; and that you have returned to the Company
all of its property in your possession or control, including but not limited to,
all documents and materials, whether on computer disc, hard drive, or other
form, and all copies thereof which in any way relate to the business of the
Company. You further affirm that you have fully complied with the Tile Shop
Holdings, Inc. Nondisclosure, Confidentiality, Assignment and Noncompetition
Agreement that you signed before beginning employment with the Company.

9. Section 409A and Taxes Generally. This Release is intended to comply with
Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations, notices and other guidance of general applicability issued
thereunder (collectively, “Section 409A”) or an exemption thereunder, and shall
be construed and administered in accordance with Section 409A. Notwithstanding
any other provision of this Release, payments provided under this Release may
only be made upon an event and in a manner that complies with Section 409A or an
applicable exemption. Any payments under this Release that may be excluded from
Section 409A, either as separation pay due to an involuntary separation from
service or as a short-term deferral, shall be excluded from Section 409A to the
maximum extent possible. For purposes of Section 409A, each installment payment
provided under this Release shall be treated as a separate payment. Any payments
to be made under this Release upon a termination of employment shall only be
made if such termination of employment constitutes a “separation from service”
under Section 409A. Notwithstanding the foregoing, Company makes no
representations that the payments and benefits provided under this Release
comply with Section 409A and in no event shall Company be liable for all or any
portion of any taxes, penalties, interest or other expenses that may be incurred
by you on account of non-compliance with Section 409A.

Notwithstanding any other provision of this Release, if at the time of your
termination of employment, you are a “specified Executive” within the meaning of
Section 409A(a)(2)(B)(i) and determined in accordance with Section 409A, any
payments and benefits provided under this Release that constitute “nonqualified
deferred compensation” subject to Section 409A that are provided to you on
account of your separation from service shall not be paid until the first
payroll date to occur following the six (6) month anniversary of your
termination date (“Specified Executive Payment Date”). The aggregate amount of
any payments that would otherwise have been made during such six (6) month
period shall be paid in a lump sum on the Specified Executive Payment Date,
without interest, and thereafter, any remaining payments shall be paid without
delay in accordance with their original schedule. If you die during the six (6)
month period, any delayed payments shall be paid to your estate in a lump sum
upon your death.

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10. Date of Receipt. You acknowledge that you received this Release on
________________, that you have carefully read this Release, voluntarily agree
to all of its terms and conditions, understand its contents and the final and
binding effect of this Release, and that you have signed the same as your own
free act with the full intent of releasing the Company from all claims you may
have against it.

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EMPLOYEE

 

 TILE SHOP HOLDINGS

 

 

 

 

 

 

﻿

 

 

Name: Cabell Lolmaugh

 

Name: Robert A. Rucker

 

 

 

 

 

 Title: Chief Executive Officer

﻿

 

 

Date Signed:

 

 Date Signed:

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﻿

  

 

﻿

﻿

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