Exhibit 10.3

 

Guaranty Agreement

 

This Guaranty Agreement dated as of June 2, 2015 (this “Guaranty Agreement”), is
being entered into among each of the undersigned and each other person who shall
become a party hereto by execution of a Guaranty Joinder Agreement (each a
“Guarantor” and collectively the “Guarantors”) and Fifth Third Bank, an Ohio
banking corporation (“Fifth Third”), as Administrative Agent (in such capacity,
the “Administrative Agent”) for each of the Secured Parties (as defined in the
Credit Agreement referenced below). All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.

 

Recitals:

 

A.     Pursuant to a Credit Agreement dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Tile Shop Holdings, Inc., a Delaware corporation
(“Holdings”), The Tile Shop, LLC, a Delaware limited liability company (the
“Company”), Tile Shop Lending, Inc., a Delaware corporation (“Tile Shop Lending”
and together with the Company, the “Borrowers”), the Subsidiaries of the Company
from time to time party thereto, the Administrative Agent, Fifth Third as
L/C Issuer and Swing Line Lender, and the lenders now or hereafter party thereto
(the “Lenders”), the Lenders have agreed to provide to the Borrowers a term loan
facility and a revolving credit facility with a letter of credit sublimit and
swing line facility.

 

B.     Certain additional extensions of credit may be made from time to time for
the benefit of the Guarantors pursuant to certain Secured Cash Management
Agreements and Secured Hedge Agreements (each as defined in the Credit
Agreement).

 

C.     It is a condition precedent to the Secured Parties’ obligations to make
and maintain such extensions of credit that the Guarantors shall have executed
and delivered this Guaranty Agreement to the Administrative Agent.

 

D.     Each Guarantor is either (i) directly or indirectly, a U.S. Subsidiary of
Holdings or the Company or (ii) is the direct parent of the Company, and in each
case, will materially benefit from such extensions of credit.

 

In order to induce the Secured Parties to from time to time make and maintain
extensions of credit under the Credit Agreement and under the Secured Cash
Management Agreements and Secured Hedge Agreements, the parties hereto agree as
follows:

 

Section 1.

Guaranty.

 

Each Guarantor hereby jointly and severally, unconditionally, absolutely,
continually and irrevocably guarantees to the Administrative Agent for the
benefit of the Secured Parties the payment and performance in full of the
Guaranteed Liabilities (as defined below). For all purposes of this Guaranty
Agreement, “Guaranteed Liabilities” means: (a) each Borrower’s prompt payment in
full, when due or declared due and at all such times, of all Obligations and all
other amounts pursuant to the terms of the Credit Agreement, the Notes, and all
other Loan Documents heretofore, now or at any time or times hereafter owing,
arising, due or payable from any Borrower to any one or more of the Secured
Parties, including principal, interest, premiums and fees (including all fees
and expenses of counsel that are required to be reimbursed thereunder
(collectively, “Attorneys’ Costs”)); (b) each Loan Party’s prompt, full and
faithful performance, observance and discharge of each and every agreement,
undertaking, covenant and provision to be performed, observed or discharged by
such Loan Party under the Credit Agreement, the Notes and all other Loan
Documents; and (c) the prompt payment in full by each Loan Party, when due or
declared due and at all such times, of obligations and liabilities now or
hereafter arising under the Secured Cash Management Agreements and Secured Hedge
Agreements. The Guarantors’ obligations to the Secured Parties under this
Guaranty Agreement are hereinafter collectively referred to as the “Guarantors’
Obligations” and, with respect to each Guarantor individually, the “Guarantor’s
Obligations”. Notwithstanding the foregoing, (i) the liability of each Guarantor
that is a U.S. Subsidiary individually with respect to its Guarantor’s
Obligations shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law and (ii) the Guarantor’s Obligations with respect to
any Guaranty shall not include any Excluded Swap Obligations (as defined in the
Credit Agreement).

 

 

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Each Guarantor agrees that it is jointly and severally, directly and primarily
liable (subject to the limitation in the immediately preceding sentence) for the
Guaranteed Liabilities.

 

The Guarantors’ Obligations are secured by various Collateral Documents referred
to in the Credit Agreement, including without limitation the Security Agreement,
the Pledge Agreement and the Mortgages. The liability of the Guarantors under
this Guaranty Agreement is in addition to and shall be cumulative with all other
liabilities of the Guarantors after the date hereof to the Secured Parties as a
Guarantor of the Guaranteed Liabilities without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

 

The Secured Parties may at any time or from time to time release any Guarantor
from its obligations hereunder or effect any compromise with any Guarantor and
no such release or compromise shall in any manner impair or otherwise affect the
obligations hereunder of the other Guarantors. No release, compromise, or
discharge of any one or more of the Guarantors shall release, compromise or
discharge the obligations of the other Guarantors hereunder.

 

Section 2.

Payment.

 

If any Borrower shall default in payment or performance of any of the Guaranteed
Liabilities, whether principal, interest, premium, fees (including, but not
limited to, Attorneys’ Costs), or otherwise, when and as the same shall become
due, and after expiration of any applicable grace period, whether according to
the terms of the Credit Agreement, by acceleration, or otherwise, or upon the
occurrence and during the continuance of any Event of Default under the Credit
Agreement, then any or all of the Guarantors will, upon demand thereof by the
Administrative Agent, (i) fully pay to the Administrative Agent, for the benefit
of the Secured Parties, subject to any restriction on each Guarantor’s
Obligations set forth in Section 1 hereof, an amount equal to all the Guaranteed
Liabilities then due and owing or declared or deemed to be due and owing,
including for this purpose, in the event of any Event of Default under
Section 8.01(f) of the Credit Agreement (and irrespective of the applicability
of any restriction on acceleration or other action as against any other Loan
Party under any Debtor Relief Laws), the entire outstanding or accrued amount of
all Obligations, whether or not any one or more of the other Guarantors shall
then or thereafter pay any amount whatsoever in respect thereof or (ii) perform
such Guaranteed Liabilities, as applicable. For purposes of this Section 2, the
Guarantors acknowledge and agree that “Guaranteed Liabilities” shall be deemed
to include any amount (whether principal, interest, premium, fees) which would
have been accelerated in accordance with Section 8.02 of the Credit Agreement
but for the fact that such acceleration could be unenforceable or not allowable
under any Debtor Relief Law.

 

 
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Section 3.

Absolute Rights and Obligations.

 

This is a guaranty of payment and not of collection. The Guarantors’ Obligations
under this Guaranty Agreement shall be joint and several, absolute and
unconditional irrespective of, and each Guarantor hereby expressly waives, to
the extent permitted by law, any defense to its obligations under this Guaranty
Agreement and all Collateral Documents to which it is a party by reason of:

 

(a)     any lack of legality, validity or enforceability of the Credit
Agreement, of any of the Notes, of any other Loan Document, or of any other
agreement or instrument creating, providing security for, or otherwise relating
to any of the Guarantors’ Obligations, any of the Guaranteed Liabilities, or any
other guaranty of any of the Guaranteed Liabilities (the Loan Documents and all
such other agreements and instruments being collectively referred to as the
“Related Agreements”);

 

(b)     any action taken under any of the Related Agreements, any exercise of
any right or power therein conferred, any failure or omission to enforce any
right conferred thereby, or any waiver of any covenant or condition therein
provided;

 

(c)     any acceleration of the maturity of any of the Guaranteed Liabilities,
of the Guarantor’s Obligations of any other Guarantor, or of any other
obligations or liabilities of any Person under any of the Related Agreements;

 

(d)     any release, exchange, non-perfection, lapse in perfection, disposal,
deterioration in value, or impairment of any security for any of the Guaranteed
Liabilities, for any of the Guarantor’s Obligations of any Guarantor, or for any
other obligations or liabilities of any Person under any of the Related
Agreements;

 

(e)     any dissolution of any Borrower, any Guarantor or any other party to a
Related Agreement, or the combination or consolidation of any Borrower, any
Guarantor or any other party to a Related Agreement into or with another entity
or any transfer or disposition of any assets of any Borrower, any Guarantor or
any other party to a Related Agreement;

 

 
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(f)     any extension (including without limitation extensions of time for
payment), renewal, amendment, restructuring or restatement of, any acceptance of
late or partial payments under, or any change in the amount of any borrowings or
any credit facilities available under, the Credit Agreement, any of the Notes or
any other Loan Document or any other Related Agreement, in whole or in part;

 

(g)     the existence, addition, modification, termination, reduction or
impairment of value, or release of any other guaranty (or security therefor) of
the Guaranteed Liabilities (including without limitation the Guarantor’s
Obligations of any other Guarantor and obligations arising under any other
Guaranty or any other Loan Document now or hereafter in effect);

 

(h)     any waiver of, forbearance or indulgence under, or other consent to any
change in or departure from any term or provision contained in the Credit
Agreement, any other Loan Document or any other Related Agreement, including
without limitation any term pertaining to the payment or performance of any of
the Guaranteed Liabilities, any of the Guarantor’s Obligations of any other
Guarantor, or any of the obligations or liabilities of any party to any other
Related Agreement;

 

(i)     any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor or any other Loan Party) which might in any manner or
to any extent vary the risks of such Loan Party, or might otherwise constitute a
legal or equitable defense available to, or discharge of, a surety or a
guarantor, including without limitation any right to require or claim that
resort be had to any Borrower or any other Loan Party or to any collateral in
respect of the Guaranteed Liabilities or Guarantors’ Obligations.

 

It is the express purpose and intent of the parties hereto that this Guaranty
Agreement and the Guarantors’ Obligations hereunder and under each Guaranty
Joinder Agreement shall be absolute and unconditional under any and all
circumstances and shall not be discharged except by payment and performance as
herein provided.

 

Section 4.

Events of Default.

 

Without limiting the provisions of Section 2 hereof, in the event that there
shall occur and be continuing an Event of Default, then notwithstanding any
collateral or other security or credit support for the Guaranteed Liabilities,
at the Administrative Agent’s election and without notice thereof or demand
therefor, each of the Guaranteed Liabilities and the Guarantors’ Obligations
shall immediately be and become due and payable.

 

 
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Section 5.

Subordination.

 

Until this Guaranty Agreement is terminated in accordance with Section 21
hereof, each Guarantor hereby unconditionally subordinates all present and
future debts, liabilities or obligations now or hereafter owing to such
Guarantor (a) of any Borrower, to the payment in full of the Guaranteed
Liabilities, (b) of every other Guarantor (an “obligated guarantor”), to the
payment in full of the Guarantors’ Obligations of such obligated guarantor, and
(c) of each other Person now or hereafter constituting a Loan Party, to the
payment in full of the obligations of such Loan Party owing to any Secured Party
and arising under the Loan Documents or any Secured Cash Management Agreement or
Secured Hedge Agreement. All amounts due under such subordinated debts,
liabilities, or obligations shall, upon the occurrence and during the
continuance of an Event of Default, be collected and, upon request by the
Administrative Agent, paid over forthwith to the Administrative Agent for the
benefit of the Secured Parties on account of the Guaranteed Liabilities, the
Guarantors’ Obligations, or such other obligations, as applicable, and, after
such request and pending such payment, shall be held by such Guarantor as agent
and bailee of the Secured Parties separate and apart from all other funds,
property and accounts of such Guarantor.

 

Section 6.

Suits.

 

Each Guarantor from time to time shall pay to the Administrative Agent for the
benefit of the Secured Parties, on demand, at the Administrative Agent’s Office
or such other address as the Administrative Agent shall give notice of to such
Guarantor, the Guarantors’ Obligations as they become or are declared due, and
in the event such payment is not made forthwith, the Administrative Agent may
proceed to suit against any one or more or all of the Guarantors. At the
Administrative Agent’s election, one or more and successive or concurrent suits
may be brought hereon by the Administrative Agent against any one or more or all
of the Guarantors, whether or not suit has been commenced against any Borrower,
any other Guarantor, or any other Person and whether or not the Secured Parties
have taken or failed to take any other action to collect all or any portion of
the Guaranteed Liabilities or have taken or failed to take any actions against
any collateral securing payment or performance of all or any portion of the
Guaranteed Liabilities, and irrespective of any event, occurrence, or condition
described in Section 3 hereof.

 

Section 7.

Set-Off and Waiver.

 

Each Guarantor waives any right to assert against any Secured Party as a
defense, counterclaim, set-off, recoupment or cross claim in respect of its
Guarantor’s Obligations, any defense (legal or equitable) or other claim which
such Guarantor may now or at any time hereafter have against any Borrower or any
other Loan Party or any or all of the Secured Parties without waiving any
additional defenses, set-offs, counterclaims or other claims otherwise available
to such Guarantor. Each Guarantor agrees that each Secured Party shall have a
lien for all the Guarantor’s Obligations upon all deposits or deposit accounts,
of any kind, or any interest in any deposits or deposit accounts, now or
hereafter pledged, mortgaged, transferred or assigned to such Secured Party or
otherwise in the possession or control of such Secured Party for any purpose
(other than solely for safekeeping) for the account or benefit of such
Guarantor, including any balance of any deposit account or of any credit of such
Guarantor with the Secured Party, whether now existing or hereafter established,
and hereby authorizes each Secured Party from and after the occurrence of an
Event of Default at any time or times with or without prior notice to apply such
balances or any part thereof to such of the Guarantor’s Obligations to the
Secured Parties then due and in such amounts as provided for in the Credit
Agreement or otherwise as they may elect. The Guarantors agree that the
Guarantors shall be and remain jointly and severally liable for any deficiency
remaining after foreclosure or other realization on any lien or security
interest securing the Guarantors’ Obligations, whether or not the liability of
the Borrowers or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision. For the purposes of this Section 7, all
remittances and property shall be deemed to be in the possession of a Secured
Party as soon as the same may be put in transit to it by mail or carrier or by
other bailee.

 

 
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Section 8.

Waiver of Notice; Subrogation.

 

(a)     Each Guarantor hereby waives to the extent permitted by law notice of
the following events or occurrences: (i) acceptance of this Guaranty Agreement;
(ii) the Lenders’ heretofore, now or from time to time hereafter making Loans
and issuing Letters of Credit and otherwise loaning monies or giving or
extending credit to or for the benefit of any Borrower or any other Loan Party,
or otherwise entering into arrangements with any Loan Party giving rise to
Guaranteed Liabilities, whether pursuant to the Credit Agreement or the Notes or
any other Loan Document or Related Agreement or any amendments, modifications,
or supplements thereto, or replacements or extensions thereof;
(iii) presentment, demand, default, non-payment, partial payment and protest;
and (iv) any other event, condition, or occurrence described in Section 3
hereof. Each Guarantor agrees that each Secured Party may heretofore, now or at
any time hereafter do any or all of the foregoing in such manner, upon such
terms and at such times as each Secured Party, in its sole and absolute
discretion, deems advisable, without in any way or respect impairing, affecting,
reducing or releasing such Guarantor from its Guarantor’s Obligations, and each
Guarantor hereby consents to each and all of the foregoing events or
occurrences.

 

(b)     Each Guarantor hereby agrees that payment or performance by such
Guarantor of its Guarantor’s Obligations under this Guaranty Agreement may be
enforced by the Administrative Agent on behalf of the Secured Parties upon
demand by the Administrative Agent to such Guarantor without the Administrative
Agent being required, such Guarantor expressly waiving to the extent permitted
by law any right it may have to require the Administrative Agent, to
(i) prosecute collection or seek to enforce or resort to any remedies against
any Borrower or any other Guarantor or any other guarantor of the Guaranteed
Liabilities, or (ii) seek to enforce or resort to any remedies with respect to
any security interests, Liens or encumbrances granted to the Administrative
Agent or any Lender or other party to a Related Agreement by any Borrower, any
other Guarantor or any other Person on account of the Guaranteed Liabilities or
any guaranty thereof, it being expressly understood, acknowledged and agreed to
by such Guarantor that demand under this Guaranty Agreement may be made by the
Administrative Agent, and the provisions hereof enforced by the Administrative
Agent, effective as of the first date any Event of Default occurs and is
continuing under the Credit Agreement.

 

 
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(c)     Each Guarantor further agrees that with respect to this Guaranty
Agreement, such Guarantor shall not exercise any of its rights of subrogation,
reimbursement, contribution, indemnity or recourse to security for the
Guaranteed Liabilities until 93 days immediately following the Facility
Termination Date shall have elapsed without the filing or commencement, by or
against any Loan Party, of any state or federal action, suit, petition or
proceeding seeking any reorganization, liquidation or other relief or
arrangement in respect of creditors of, or the appointment of a receiver,
liquidator, trustee or conservator in respect to, such Loan Party or its assets.
If an amount shall be paid to any Guarantor on account of such rights at any
time prior to termination of this Guaranty Agreement in accordance with the
provisions of Section 21 hereof, such amount shall be held in trust for the
benefit of the Secured Parties and shall forthwith be paid to the Administrative
Agent, for the benefit of the Secured Parties, to be credited and applied upon
the Guarantors’ Obligations, whether matured or unmatured, in accordance with
the terms of the Credit Agreement or otherwise as the Secured Parties may elect.
The agreements in this subsection shall survive repayment of all of the
Guarantors’ Obligations, the termination or expiration of this Guaranty
Agreement in any manner, including but not limited to termination in accordance
with Section 21 hereof, and occurrence of the Facility Termination Date.

 

Section 9.

Effectiveness; Enforceability.

 

This Guaranty Agreement shall be effective as of the date first above written
and shall continue in full force and effect until termination in accordance with
Section 21 hereof. Any claim or claims that the Secured Parties may at any time
hereafter have against a Guarantor under this Guaranty Agreement may be asserted
by the Administrative Agent on behalf of the Secured Parties by written notice
directed to such Guarantor in accordance with Section 23 hereof.

 

Section 10.

Representations and Warranties.

 

Each Guarantor warrants and represents to the Administrative Agent, for the
benefit of the Secured Parties, that (a) it is duly authorized to execute and
deliver this Guaranty Agreement (or the Guaranty Joinder Agreement to which it
is a party, as applicable), and to perform its obligations under this Guaranty
Agreement; (b) this Guaranty Agreement (or the Guaranty Joinder Agreement to
which it is a party, as applicable) has been duly executed and delivered on
behalf of such Guarantor by its duly authorized representatives; (c) this
Guaranty Agreement (and any Guaranty Joinder Agreement to which such Guarantor
is a party) is legal, valid, binding and enforceable against such Guarantor in
accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and by general equitable principles; (d) such
Guarantor’s execution, delivery and performance of this Guaranty Agreement (and
any Guaranty Joinder Agreement to which such Guarantor is a party) do not
violate or constitute a breach of (i) any of its Organization Documents,
(ii) any agreement or instrument to which such Guarantor is a party, or
(iii) any Law to which it or its properties or operations is subject; and (e) it
is Solvent.

 

 
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Section 11.

Expenses and Indemnity.

 

Each Guarantor agrees to be jointly and severally liable for the payment of all
reasonable fees and expenses, including Attorneys’ Costs, incurred by any
Secured Party in connection with the enforcement of this Guaranty Agreement,
whether or not suit be brought. Without limitation of any other obligations of
any Guarantor or remedies of the Administrative Agent or any Secured Party under
this Guaranty Agreement, each Guarantor shall, to the fullest extent permitted
by Law, indemnify, defend and save and hold harmless the Administrative Agent
and each Secured Party from and against, and shall pay on demand, any and all
damages, losses, liabilities and expenses (including Attorneys’ Costs) that may
be suffered or incurred by the Administrative Agent or such Secured Party in
connection with or as a result of any failure of any Guarantors’ Obligations to
be the legal, valid and binding obligations of any Borrower or any applicable
Loan Party enforceable against such Borrower or such applicable Loan Party in
accordance with their terms. The obligations of each Guarantor under this
paragraph shall survive the payment in full of the Guarantors’ Obligations and
termination of this Guaranty Agreement.

 

Section 12.

Reinstatement.

 

Each Guarantor agrees that this Guaranty Agreement shall continue to be
effective or be reinstated, as the case may be, at any time payment received by
any Secured Party in respect of any Guaranteed Liabilities is rescinded or must
be restored for any reason, or is repaid by any Secured Party in whole or in
part in good faith settlement of any pending or threatened avoidance claim.

 

Section 13.

Attorney-in-Fact.

 

To the extent permitted by Law, each Guarantor hereby appoints the
Administrative Agent, for the benefit of the Secured Parties, as such
Guarantor’s attorney-in-fact for the purposes of carrying out the provisions of
this Guaranty Agreement and taking any action and executing any instrument which
the Administrative Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is coupled with an interest and is
irrevocable; provided, that the Administrative Agent shall have and may exercise
rights under this power of attorney only upon the occurrence and during the
continuance of an Event of Default.

 

 
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Section 14.

Reliance.

 

Each Guarantor represents and warrants to the Administrative Agent, for the
benefit of the Secured Parties, that: (a) such Guarantor has adequate means to
obtain on a continuing basis (i) from the Borrowers, information concerning the
Loan Parties and the Loan Parties’ financial condition and affairs and (ii) from
other reliable sources, such other information as it deems material in deciding
to provide this Guaranty Agreement and any Guaranty Joinder Agreement (“Other
Information”), and has full and complete access to the Loan Parties’ books and
records and to such Other Information; (b) such Guarantor is not relying on any
Secured Party or its or their employees, directors, agents or other
representatives or Affiliates, to provide any such information, now or in the
future; (c) such Guarantor has been furnished with and reviewed the terms of the
Credit Agreement and such other Loan Documents and Related Agreements as it has
requested, is executing this Guaranty Agreement (or the Guaranty Joinder
Agreement to which it is a party, as applicable) freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty Agreement (and any Guaranty Joinder Agreement); (d) such Guarantor has
relied solely on the Guarantor’s own independent investigation, appraisal and
analysis of the Borrowers and the other Loan Parties, such Persons’ financial
condition and affairs, the Other Information, and such other matters as it deems
material in deciding to provide this Guaranty Agreement (and any Guaranty
Joinder Agreement) and is fully aware of the same; and (e) such Guarantor has
not depended or relied on any Secured Party or its or their employees,
directors, agents or other representatives or Affiliates, for any information
whatsoever concerning any Borrower or any Borrower’s financial condition and
affairs or any other matters material to such Guarantor’s decision to provide
this Guaranty Agreement (and any Guaranty Joinder Agreement), or for any
counseling, guidance, or special consideration or any promise therefor with
respect to such decision. Each Guarantor agrees that no Secured Party has any
duty or responsibility whatsoever, now or in the future, to provide to such
Guarantor any information concerning any Borrower or any other Loan Party or
such Persons’ financial condition and affairs, or any Other Information, other
than as expressly provided herein, and that, if such Guarantor receives any such
information from any Secured Party or its or their employees, directors, agents
or other representatives or Affiliates, such Guarantor will independently verify
the information and will not rely on any Secured Party or its or their
employees, directors, agents or other representatives or Affiliates, with
respect to such information.

 

Section 15.

Rules of Interpretation.

 

The rules of interpretation contained in Section 1.02 of the Credit Agreement
shall be applicable to this Guaranty Agreement and each Guaranty Joinder
Agreement and are hereby incorporated by reference. All representations and
warranties contained herein shall survive the delivery of documents and any
extension of credit referred to herein or guaranteed hereby.

 

Section 16.

Entire Agreement.

 

This Guaranty Agreement and each Guaranty Joinder Agreement, together with the
Credit Agreement and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements, understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Except as provided in Section 21, neither this Guaranty Agreement nor
any Guaranty Joinder Agreement nor any portion or provision hereof or thereof
may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than as provided in the
Credit Agreement.

 

 
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Section 17.

Binding Agreement; Assignment.

 

This Guaranty Agreement, each Guaranty Joinder Agreement and the terms,
covenants and conditions hereof and thereof, shall be binding upon and inure to
the benefit of the parties hereto and thereto, and to their respective heirs,
legal representatives, successors and assigns; provided, however, that no
Guarantor shall be permitted to assign any of its rights, powers, duties or
obligations under this Guaranty Agreement, any Guaranty Joinder Agreement or any
other interest herein or therein except as expressly permitted herein or in the
Credit Agreement. Without limiting the generality of the foregoing sentence of
this Section 17, any Lender may assign to one or more Persons, or grant to one
or more Persons participations in or to, all or any part of its rights and
obligations under the Credit Agreement (to the extent permitted by the Credit
Agreement); and to the extent of any such assignment or participation such other
Person shall, to the fullest extent permitted by law, thereupon become vested
with all the benefits in respect thereof granted to such Lender herein or
otherwise, subject however, to the provisions of the Credit Agreement, including
Article IX thereof (concerning the Administrative Agent) and Section 10.06
thereof concerning assignments and participations. All references herein to the
Administrative Agent shall include any successor thereof.

 

Section 18.

Secured Cash Management Agreements and Secured Hedging Agreements.

 

No Secured Party (other than the Administrative Agent) that obtains the benefit
of this Guaranty Agreement shall have any right to notice of any action or to
consent to, direct or object to any action hereunder (including the release,
impairment or modification of any Guarantors’ Obligations or security therefor)
other than in its capacity as a Lender and, in such case, only to the extent
expressly provided in the Loan Documents. Notwithstanding any other provision of
this Guaranty Agreement to the contrary, the Administrative Agent shall only be
required to verify the payment of, or that other satisfactory arrangement have
been made with respect to, the Secured Obligations arising under Secured Cash
Management Agreements and Secured Hedge Agreements to the extent the
Administrative Agent has received written notice of such Obligations, together
with such supporting documentation as it may request, from the applicable Cash
Management Bank or Hedge Bank, as the case may be. Each Secured Party not a
party to the Credit Agreement that obtains the benefit of this Guaranty
Agreement shall be deemed to have acknowledged and accepted the appointment of
the Administrative Agent pursuant to the terms of the Credit Agreement, and that
with respect to the actions and omissions of the Administrative Agent hereunder
or otherwise relating hereto that do or may affect such Secured Party, the
Administrative Agent and each of its Related Parties shall be entitled to all
the rights, benefits and immunities conferred under Article IX of the Credit
Agreement.

 

Section 19.

Severability.

 

If any provision of this Guaranty Agreement is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Guaranty Agreement shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the generality of the foregoing, any
invalidity or unenforceability against any Guarantor of any provision or
application of this Guaranty Agreement shall not affect the validity or
enforceability of the provisions or application of this Guaranty Agreement as
against the other Guarantors.

 

 
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Section 20.

Counterparts.

 

This Guaranty Agreement may be executed in any number of counterparts each of
which when so executed and delivered shall be deemed an original, and it shall
not be necessary in making proof of this Guaranty Agreement to produce or
account for more than one such counterpart executed by the Guarantors against
whom enforcement is sought. Without limiting the foregoing provisions of this
Section 20, the provisions of Section 10.10 of the Credit Agreement shall be
applicable to this Guaranty Agreement.

 

Section 21.

Termination.

 

Subject to reinstatement pursuant to Section 12 hereof, this Guaranty Agreement
and each Guaranty Joinder Agreement, and all of the Guarantors’ Obligations
hereunder (excluding those Guarantors’ obligations relating to Guaranteed
Liabilities that expressly survive such termination) shall terminate on the
Facility Termination Date.

 

Section 22.

Remedies Cumulative; Late Payments.

 

All remedies hereunder are cumulative and are not exclusive of any other rights
and remedies of the Administrative Agent or any other Secured Party provided by
law or under the Credit Agreement, the other Loan Documents or other applicable
agreements or instruments. The making of the Loans and other credit extensions
pursuant to the Credit Agreement and other Related Agreements shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon each Guarantor’s guaranty of the Guaranteed Liabilities pursuant to the
terms hereof. Any amounts not paid when due under this Guaranty Agreement shall
bear interest at the Default Rate.

 

Section 23.

Notices.

 

Any notice required or permitted hereunder or under any Guaranty Joinder
Agreement shall be given, (a) with respect to each Guarantor, at the address of
the Company indicated in Schedule 10.02 of the Credit Agreement and (b) with
respect to the Administrative Agent or any other Secured Party, at the
Administrative Agent’s address indicated in Schedule 10.02 of the Credit
Agreement. All such addresses may be modified, and all such notices shall be
given and shall be effective, as provided in Section 10.02 of the Credit
Agreement for the giving and effectiveness of notices and modifications of
addresses thereunder.

 

 
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Section 24.

Joinder.

 

Each Person that shall at any time execute and deliver to the Administrative
Agent a Guaranty Joinder Agreement substantially in the form attached as
Exhibit A hereto shall thereupon irrevocably, absolutely and unconditionally
become a party hereto and obligated hereunder as a Guarantor, and all references
herein and in the other Loan Documents to the Guarantors or to the parties to
this Guaranty Agreement shall be deemed to include such Person as a Guarantor
hereunder.

 

Section 25.

Governing Law; Jurisdiction; Etc.

 

(a)     This Guaranty Agreement and each Guaranty Joinder Agreement shall be
governed by, and construed in accordance with, the law of the State of New York.

 

(b)     Each Party hereto irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the courts of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Guaranty Agreement
or any Guaranty Joinder Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State Court or, to the fullest extent permitted by
applicable Law, in such federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Nothing in this Guaranty Agreement or any Guaranty Joinder
Agreement shall affect any right that the Administrative Agent or any Secured
Party may otherwise have to bring any action or proceeding relating to this
Guaranty Agreement or any Guaranty Joinder Agreement against any Guarantor or
its properties in the courts of any jurisdiction.

 

(c)     Each Party hereto irrevocably and unconditionally waives, to the fullest
extent permitted by applicable Law, any objection that it may now or hereafter
have to the laying of venue of any action or proceeding arising out of or
relating to this Guaranty Agreement or any Guaranty Joinder Agreement in any
court referred to in paragraph (b) of this Section. Each of the Parties hereto
hereby irrevocably waives, to the fullest extent permitted by applicable Law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

(d)     Each Party hereto irrevocably consents to service of process in the
manner provided for notices in Section 23. Nothing in this Guaranty Agreement
will affect the right of any party hereto to serve process in any other manner
permitted by applicable Law.

 

 
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Section 26.

Waiver of Jury Trial.

 

Each Party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable Law, any right it may have to a trial by jury in any legal proceeding
directly or indirectly arising out of or relating to this Guaranty Agreement or
any Guaranty Joinder Agreement or the transactions contemplated hereby or
thereby (whether based on contract, tort or any other theory). Each party hereto
(a) certifies that no representative, agent or attorney of any other person has
represented, expressly or otherwise, that such other person would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
Guaranty Agreement or any Guaranty Joinder Agreement by, among other things, the
mutual waivers and certifications in this Section.

 

[Signature pages follow]

 

 
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In Witness Whereof, the parties hereto have duly executed and delivered this
Guaranty Agreement as of the day and year first written above.

 

 

GUARANTORS:

 

 

 

 

 

 

TILE SHOP HOLDINGS, INC.

 

          By: /s/ Kirk Geadelmann       Name: Kirk Geadelmann       Title:  
Chief Financial Officer                     THE TILE SHOP, LLC                  
  By: /s/ Kirk Geadelmann       Name: Kirk Geadelmann       Title:   Chief
Financial Officer                     TILE SHOP LENDING, INC.                  
  By: /s/ Kirk Geadelmann       Name: Kirk Geadelmann       Title:   President  
                    THE TILE SHOP OF MICHIGAN, LLC                     By: /s/
Kirk Geadelmann       Name: Kirk Geadelmann       Title:   Chief Financial
Officer  

 

 
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Administrative Agent:

 

Fifth Third Bank,
     as Administrative Agent

 

 

 

 

 

 

 

 

 

 

By:

/s/ Nicholas J. Lachapelle

 

 

 

Name: Nicholas J. Lachapelle

 

 

 

Title: Vice President

 

 

 
S-2

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Exhibit A

Form of Guaranty Joinder Agreement

Guaranty Joinder Agreement

 

This Guaranty Joinder Agreement dated as of                        ,
20     (this “Guaranty Joinder Agreement”), is made by
_______________________________, a ________________ (the “Joining Guarantor”),
in favor of Fifth Third Bank (“Fifth Third”), in its capacity as Administrative
Agent (the “Administrative Agent”) for the Secured Parties (as defined in the
Guaranty Agreement referenced below; all capitalized terms used but not defined
herein shall have the meanings provided therefor in such Guaranty Agreement).

 

Recitals:

 

A.     Tile Shop Holdings, Inc., a Delaware corporation (“Holdings”), The Tile
Shop, LLC, a Delaware limited liability company (the “Company”), Tile Shop
Lending, Inc., a Delaware corporation (“Tile Shop Lending” and together with the
Company, the “Borrowers”) the Subsidiaries of the Company from time to time
party thereto, the Administrative Agent, Fifth Third, as L/C Issuer and Swing
Line Lender, and the lenders now or hereafter party thereto (the “Lenders”) are
party to a Credit Agreement dated as of June 2, 2015 (as in effect on the date
hereof, the “Credit Agreement”).

 

B.     The Borrowers and certain of their respective Affiliates are party to a
Guaranty Agreement dated as of June 2, 2015 (as in effect on the date hereof,
the “Guaranty Agreement”).

 

C.     The Joining Guarantor is a Subsidiary of Holdings or the Company and is
required by the terms of the Credit Agreement to be joined as a party to the
Guaranty Agreement as a Guarantor (as defined in the Guaranty Agreement).

 

D.     The Joining Guarantor will materially benefit directly or indirectly from
the making and maintenance of the extensions of credit made from time to time
under the Credit Agreement, Secured Cash Management Agreements and Secured Hedge
Agreements.

 

In order to induce the Secured Parties to from time to time make and maintain
extensions of credit under the Credit Agreement, Secured Cash Management
Agreements and Secured Hedge Agreements, the Joining Guarantor hereby agrees as
follows:

 

Section 1.

Joinder.

 

The Joining Guarantor hereby irrevocably, absolutely and unconditionally becomes
a party to the Guaranty Agreement as a Guarantor and bound by all the terms,
conditions, obligations, liabilities and undertakings of each Guarantor or to
which each Guarantor is subject thereunder, including without limitation the
joint and several, unconditional, absolute, continuing and irrevocable guarantee
to the Administrative Agent for the benefit of the Secured Parties of the
payment and performance in full of the Guaranteed Liabilities (as defined in the
Guaranty Agreement) whether now existing or hereafter arising, all with the same
force and effect as if the Joining Guarantor were a signatory to the Guaranty
Agreement.

 

 

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Section 2.

Affirmations.

 

The Joining Guarantor hereby acknowledges and reaffirms as of the date hereof
with respect to itself, its properties and its affairs each of the waivers,
representations, warranties, acknowledgements and certifications applicable to
any Guarantor contained in the Guaranty Agreement.

 

Section 3.

Severability.

 

If any provision of this Guaranty Joinder Agreement is held to be illegal,
invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Guaranty Joinder Agreement shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations
to replace the illegal, invalid or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the illegal, invalid or unenforceable provisions. The invalidity of a provision
in a particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

Section 4.

Counterparts.

 

This Guaranty Joinder Agreement may be executed in any number of counterparts
each of which when so executed and delivered shall be deemed an original, and it
shall not be necessary in making proof of this Guaranty Joinder Agreement to
produce or account for more than one such counterpart executed by the Joining
Guarantor. Without limiting the foregoing provisions of this Section 4, the
provisions of Section 10.10 of the Credit Agreement shall be applicable to this
Guaranty Joinder Agreement.

 

Section 5.

Delivery.

 

The Joining Guarantor hereby irrevocably waives notice of acceptance of this
Guaranty Joinder Agreement and acknowledges that the Guaranteed Liabilities are
and shall be deemed to be incurred, and credit extensions under the Loan
Documents, Secured Cash Management Agreements and Secured Hedge Agreements made
and maintained, in reliance on this Guaranty Joinder Agreement and the Joining
Guarantor’s joinder as a party to the Guaranty Agreement as herein provided.

 

Section 6.

Governing Law; Jurisdiction; Waiver of Jury Trial; Etc.

 

The provisions of Sections 25 and 26 of the Guaranty Agreement are hereby
incorporated by reference as if fully set forth herein.

 

[Signature page follows.]

 

 
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In Witness Whereof, the Joining Guarantor has duly executed and delivered this
Guaranty Joinder Agreement as of the day and year first written above.

 

 

JOINING GUARANTOR:

 

           

 

 

 

 

 

 

 

 

 

By:

/s/ 

 

 

 

Name:

 

 

    Title:    

 

 

 

 

 

 

A-3