Exhibit 10.1

 

TILE SHOP HOLDINGS, INC.

14000 Carlson Parkway

Plymouth, Minnesota 55441

 

September 19, 2013

 

Mr. Chris Homeister

26790 Noble Road

Excelsior, Minnesota 55331

 

Dear Chris:

 

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

 

Position:   Chief Operating Officer       Start date:  

October 1, 2013.

 

Status:   Full-time, Regular       Reporting to:   Bob Rucker      
Compensation:  

Base salary (annualized) of $300,000, which is $12,500 semi-monthly, paid in
accordance with the Company’s normal payroll procedures.

 

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 reduction to reflect applicable withholding and
payroll taxes.

      Bonus:  

For the 2014 calendar year and subsequent calendar years, and subject to
approval of the Compensation Committee, you will be eligible for an annual cash
bonus based on the Company achieving a target earnings level for 2014, as
determined by the Compensation Committee prior to the beginning of the 2014
calendar year (“earnings” as used herein will be determined by the Compensation
Committee and may include several factors or measures, such as Earnings Per
Share, Net Income or Adjusted EBITDA. Other factors may also be included in
establishing the bonus criteria).

 

The precise amount of the bonus (which can range from 0% to 100% of your base
salary) will be calculated by linear extrapolation for earnings achievement that
falls between 85% of the targeted earnings and 115% of the targeted earnings.
For example, if the Company’s actual earnings for 2014 is exactly equal to the
target, then your bonus would be 50% of your base salary (i.e., $150,000). If
the Company’s actual earnings for 2014 is 115% or more of the targeted amounts,
then your bonus would be 100% of your base salary (i.e., $300,000), but if the
Company’s actual earnings for 2014 is less than 85% of the target, then your
bonus would be $0.

 

 

 

 

   

For the remainder of 2013, your bonus arrangement will be determined on a basis
consistent with the preceding paragraph, pro-rated for the partial year during
which you are employed by the Company.

 

Bonus is expected to be paid by the end of February of the following year,
(following completion of the annual audit and the February Board of Directors
meeting).

      Benefits:   You will be eligible to receive the Company’s standard benefit
package for employees of your level. Beenfits include health insurance, dental
insurance, and 401(k) retiremenet plan (with Company matching contributions).  
    Responsibilities:   The Chief Executive Officer will outline your specific
duties, responsibilities, and performance expectations.      

Restricted Stock:

 

Subject to approval by the Company’s Board of Directors, you will be granted
50,000 restricted shares of the Company’s common stock. These shares are
restricted from resale and are subject to repurchase by the Company in the event
that you are no longer an employee of the Company. The repurchase price will be
equal to $0.0001 per share. The restrictions from resale and the Company’s
ability to repurchase the shares are eliminated as to 25% of the shares on each
of the first four anniversary dates of your first day of actual work on behalf
of the Company. .

      Stock Options:   Subject to approval by the Company’s Board of Directors,
you will be granted options to purchase 200,000 shares of the Company’s common
stock. The exercise price of the options will be the fair market value of the
Company’s common stock as of the date of grant.  It is expected that the grant
price will be the closing price of the common stock on the first day of
employment with the Company (expected to be October 1, 2013).  These options
will vest in equal installments over a four year period, and will otherwise be
subject to the terms of the Company’s 2012 Equity Award Plan (the “Plan”) and
your Incentive Stock Option Agreement entered into pursuant thereto.      

Change of Control:

 

 

In the event of Change of Control of the Company (as defined in the Plan), if
you are (a) not offered employment or continued employment by the Successor
Entity (as defined in the Plan) upon consummation of such Change of Control, or
(b) if prior to the first anniversary of such Change of Control, (i) you are
discharged by the Successor Entity other than for Cause (as defined in the Plan)
or (ii) you resign from your 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.

 

“Constructive Termination” will occur if you resign from your employment with
the Successor Entity within thirty (30) days following (i) a material reduction
in your annual base salary or job responsibility or (ii) 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.

 

2

 

 

    In the event of a Change of Control, the Employee shall, with respect to
this Option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 12 of the
Plan.       Severance:  

1.         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 (i) 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 (ii) 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 the 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 (x) you execute and deliver to the Company a general release prepared
but the Company which shall be in substantially the form of Exhibit A attached
hereto (the “Release”), (y) such Release is executed and delivered to the
Company within twenty-one (21) days after your receipt of the Release and (z)
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 you 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.

 

2.         “Severance Cause” will mean (i) 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;
(ii) conviction of, or plea of nolo contendre or guilty to, a felony; (iii) any
act of fraud, theft, embezzlement or other material dishonesty by you which
harmed the Company; (iv) 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 (v) 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.

 

3

 

 

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

 

If a copy of your Social Security Card is not already on file with the Company,
please provide the Company with your Social Security Card when you execute and
return this letter.  We will make a copy of your card and it will be kept in
your employee file for payroll purposes.

 

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.

 

The Company reserves the right to conduct background investigations and/or
reference checks on all of its potential employees. Your job offer, therefore,
is contingent upon a clearance of such a background investigation and/or
reference check, if any, to the satisfaction of the Company in its sole
discretion.

 

For purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in
the United States, if you have not already done so. Such documentation must be
provided to the Company within three (3) business days of your date of hire, or
our employment relationship with you may be terminated.

 

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 B (the “Non-Competition and Non-Disclosure
Agreement”) before your first day of work.

 

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 the Chief Executive Officer of the
Company and by you.

 

Sincerely,

 

TILE SHOP HOLDINGS, INC.

 

/s/ Robert A. Rucker

Robert A. Rucker

Chief Executive Officer and President

 

 

4

 

 

ACCEPTANCE AND ACKNOWLEDGMENT

 

I accept the offer of employment from the Company as set forth in the offer
letter dated September 19, 2013. 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. Additionally, I acknowledge that
the Company reserves the right to conduct background investigations and/or
reference checks on all of its potential employees, and that my job offer,
therefore, is contingent upon a clearance of such a background investigation
and/or reference check, if any, and proof of my eligibility to work in the U.S.
These investigations will be completed by the start date of employment,
contemplated to be October 1, 2013.

 

I understand and agree that the terms and conditions set forth in the offer
letter along with the Company’s Non-Competition and Non-Disclosure Agreement,
represent the entire agreement between the Company and me superseding all prior
negotiations and agreements, whether written or oral and that the terms and
conditions described in the offer letter, along with the Company’s
Non-Competition and Non-Disclosure Agreement are the terms and conditions of my
employment. By signing below I confirm that I signed the Company’s
Non-Competition and Non-Disclosure Agreement before my first day of employment.
No one other than the Company’s Chief Executive Officer is authorized to sign
any employment or other agreement which modifies the terms of the offer letter
and the Company’s Non-Competition and Non-Disclosure Agreement, and any such
modification must be in writing and signed by either 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.

 

Signature: /s/ Chris Homeister         Printed Name: Chris Homeister        
Date: September 20 , 2013  

  

5

 

 

EXHIBIT A

 

WAIVER OF CLAIMS AND GENERAL RELEASE

 

 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_______, 201_ (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.

 

 Consistent with the provisions of that certain Offer Letter Agreement by and
between you and the Company dated as of September 10, 2013 (the “Offer Letter
Agreement”), the Company will provide you with severance pay pursuant to the
terms of the Offer Letter Agreement. In consideration for the severance payments
and other good and valuable consideration set forth in the Offer Letter
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.

 

 The foregoing shall not restrict you from instituting any proceeding to enforce
the Company's obligations to you under this Release or to challenge the
validity, or the knowing and voluntary nature, of this Release. This Release
does not apply to claims and rights that arise after the date you sign it, any
claims that cannot be waived by law, and any claims for accrued vested benefits
in accordance with the terms of the plans governing such benefits and applicable
law. Nothing herein is intended to, or shall, preclude you from filing a charge
with any appropriate federal, state, or local government agency and/or
cooperating with said agency in any investigation. You, however, explicitly
waive any right to file a personal lawsuit and/or receive monetary damages that
the agency may recover against each of the parties released in Paragraph 1
above, without regard as to who brought any said complaint or charge.

 

2.          Opportunity to Consider. You have been advised that you have
twenty-one (21) days from the date on which you received this Agreement to
consider whether you wish to sign it. The date on which you received this
Release is accurately reflected in Paragraph 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 and
President or his successor, 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, as addressed above.
If you exercise the right to rescind under this Paragraph, all other provisions
of the Release shall immediately be null and void and you will not receive
severance pay as described in the Offer Letter 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.          Breach. You agree that all of the payments and benefits provided for
in the Offer Letter Agreement are subject to termination, reduction or
cancellation in the event of your material breach of this Release and that you
will return any payments and benefits you have received if you materially breach
this Release.

 

6.          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.

 

7.          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
Paragraph 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 Paragraph 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.

 

8.          Miscellaneous. This Release and the Severance 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.

 

9.          Representations. You affirm that the consideration for signing this
Release is described in the Offer Letter 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.

 

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.

 

10.         Date of Receipt. You acknowledge that you received this Release on
_____, 20___, 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.

 

[Next Page is Signature Page]

 

 

 

 

EMPLOYEE   TILE SHOP HOLDINGS, INC.           By:   Name:   Name:       Title:  
        Date Signed:   Date Signed:  

  

 

 

 

EXHIBIT B

 

TILE SHOP HOLDINGS, inc.

NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT

 

THIS NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT
(this “Agreement”) is made this 1st day of October, 2013, by and between Tile
Shop Holdings, Inc., a Delaware corporation and its subsidiaries (collectively
with any predecessors, successors, and assignees, the “Company”), and Chris
Homeister (“I” or “me”).

 

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.

 

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 therefor. 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.

 

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. For purposes of this section, the business activities, products and
services of the Company are defined to be those associated with a specialty
retailer of manufactured and natural stone tiles, setting and maintenance
materials, and related accessories.

 

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.

 

 

 

 

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] 

 

 

 

 

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

 

  ASSOCIATE       /s/ Chris Homeister   Chris Homeister       TILE SHOP
HOLDINGS, INC.         By: /s/ Robert A. Rucker   Name: Robert A. Rucker  
Title: Chief Executive Officer and President

  

 

 

 

Schedule A

 

Prior Inventions

 

None.

 

 

 

 

Schedule B

 

No Conflicting Obligations

 

No exceptions.