Exhibit 10.4


 





TILE
SHOP HOLDINGS, Inc.


FORM OF STOCK RESTRICTION AGREEMENT


 


This Agreement (the “Agreement”)
is made this [_] day of [__], [202_] (the “Date of Grant”), by and between Tile Shop Holdings, Inc. (the “Company”),
a Delaware corporation with its principal place of business at 14000 Carlson Parkway, Plymouth, MN 55441 and [_____________], an individual
having an address at [__] (the “Stockholder”). Capitalized terms used but not otherwise defined herein shall have the meaning
ascribed to such terms in the Company’s 2021 Omnibus Equity Compensation Plan (the “Plan”). To the extent that any term
of this Agreement conflicts or is otherwise inconsistent with any term of the Plan, as amended from time to time, the terms of the Plan
shall take precedence and supersede any such conflict or inconsistent term contained herein.


 


WHEREAS, the Stockholder is,
on the date hereof, an Employee, Director or Consultant of the Company or a Subsidiary; and


 


WHEREAS, pursuant to the Plan,
the Company wishes to grant a restricted stock award to the Stockholder for [____] shares (the “Restricted Shares”) of common
stock, par value $0.0001 per share, of the Company (“Common Stock”).


 


NOW, THEREFORE, for valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Stockholder agree as follows:


 


1. Restricted Shares to
be Subject to Restriction. The Stockholder agrees that the Restricted Shares shall be subject to the risks of forfeiture set forth
in Section 2 of this Agreement, to the restrictions on transfer set forth in Section 4 of this Agreement, and to any additional provisions
of the Plan applicable to such Restricted Shares during the period that such risks of forfeiture and restrictions on transfer are applicable
(the “Restriction Period”).


 


2. Vesting.


 


a. The Restricted
Shares shall be forfeitable until the risks of forfeiture lapse according to the following schedule and the satisfaction of the other
conditions set forth in this Section 2(a) (subject to such rounding conventions as may be employed by the Company from time to time):


 


i. [One-third] of
the Restricted Shares shall vest on the [first] anniversary of the Date of Grant;


 


ii. [One-third] of
the Restricted Shares shall vest on the [second] anniversary of the Date of Grant; and


 


iii. [One-third] of
the Restricted Shares shall vest on the [third] anniversary of the Date of Grant;


 


provided,
in each case, that the Stockholder remains in continuous employment or other service with the Company or a Subsidiary (“Continuous
Service”) through each such vesting date.


 


b. Any Restricted
Shares as to which the risks of forfeiture have not lapsed shall be forfeited immediately if the Stockholder’s Continuous Service
terminates for any reason or no reason, with or without cause.


 


c.
Notwithstanding the foregoing provisions of this Section 2, in the event of a Change of Control during the Restriction Period, the
vesting schedule set forth in this Section 2 may be accelerated in whole or in part at the sole discretion of the Committee.


 






     


     


    

 


3. Stockholder Rights.
The Stockholder shall have all rights as a stockholder with respect to the Restricted Shares subject to forfeiture, including the right
to vote, except that, while any portion of the Restricted Shares remains unvested, [on each date (if any) that cash dividends are
paid to holders of Common Stock, the Company will credit the Stockholder with a whole number of additional Restricted Shares equal to
the quotient of (a) the number of unvested Restricted Shares held by the Stockholder as of the date of record for such cash dividend multiplied
by the per share cash dividend amount, divided by (b) the 30-trading day average of the closing price per share of Common Stock preceding
the cash dividend payment date (rounded down to the nearest whole share).  Any such additional Restricted Shares will be subject
to the same vesting conditions and transfer restrictions as the underlying Restricted Shares.] [any dividends paid with respect to the
unvested Restricted Shares shall be automatically deferred and accumulated by the Company in a notional bookkeeping account, and shall
be paid to the Stockholder in cash (without interest) only at such time(s) as the underlying Restricted Shares become vested in accordance
with this Agreement, with the Stockholder’s right to payment of any such dividends being subject to the same risk of forfeiture,
restrictions on transferability, and other terms of this Agreement as are the Restricted Shares with respect to which the dividends otherwise
were payable.] Further, any Shares received by the Stockholder in connection with any stock dividends or distributions payable with respect
to unvested Restricted Shares shall be subject to the same vesting conditions and transfer restrictions as the underlying Restricted Shares
and shall be subject to such adjustments as contemplated by Section 7 of this Agreement.


 


4. Restrictions on Transfer.
The Stockholder shall not, until the risks of forfeiture lapse, sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by
operation of law or otherwise, any of the Restricted Shares, or any interest therein, unless and until such are no longer subject to a
risk of forfeiture.


 


5. Effect of Prohibited
Transfer. The Company will not be required (a) to transfer on its books any Restricted Shares which have been sold or transferred
in violation of any of the provisions set forth in this Agreement, or (b) to treat as owner of such Restricted Shares, or to pay dividends
to, any transferee to whom any such Restricted Shares have been so sold or transferred.


 


6. Restrictive Legend.
Any certificates or book entries representing Restricted Shares subject to this Agreement shall bear a legend in substantially the following
form, in addition to any other legends that may be required under applicable federal or state securities laws:


 


“The shares represented by this
certificate are subject to a risk of forfeiture and restrictions on transfer set forth in a certain Stock Restriction Agreement between
the corporation and the registered owner of this certificate, a copy of which is available for inspection at the offices of the Secretary
of the corporation.”


 


7. Adjustments for Stock
Splits, Stock Dividends, etc. The number and kind of shares of Common Stock granted to the Stockholder pursuant to this Agreement
shall be subject to adjustment as provided in Section 16 of the Plan.


 


8. Severability. The
invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision
of this Agreement and each other provision of this Agreement will be severable and enforceable to the extent permitted by law.


 


9. Binding Effect.
This Agreement is binding upon and shall inure to the benefit of the Company and the Stockholder and their respective heirs, executors,
administrators, legal representatives, successors and assigns, as applicable, subject to the restrictions on transfer set forth in Section
4 herein.


 






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10. No Rights to Employment
or Other Service. Nothing contained in this Agreement is to be construed as giving the Stockholder any right to be retained, in any
position, as an Employee, Director or Consultant of the Company or a Subsidiary.


 


11. Notice. All notices
required or permitted hereunder must be in writing and are deemed effectively given upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail, postage prepaid, addressed to the other party to this Agreement at the address shown
above, or at such other address as one party will designate to the other in accordance with this Section 11.


 


12. Pronouns. Whenever
the context may require, any pronouns used in this Agreement are deemed to include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns are deemed to include the plural, and vice versa.


 


13. Entire Agreement.
This Agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, relating
to the subject matter of this Agreement.


 


14. Amendment. This
Agreement may be amended or modified only by a written instrument executed by both the Company and the Stockholder.


 


15. Governing Law.
This Agreement shall be construed and enforced in accordance with and governed by the General Corporation Law of the State of Delaware
as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to the principles of conflicts of laws thereof.


 


[SIGNATURE PAGE FOLLOWS]


 



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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the Date of Grant.


 


	 	TILE SHOP HOLDINGS, INC.
	 	 
	 	By:	 
	 	Name: Cabell H. Lolmaugh
	 	Title: Chief Executive Officer
	 	 
	 	STOCKHOLDER
	 	 
	 	 
	 	[___________________]