Document:

Exhibit 10.1

 

 

THIS DOCUMENT
CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES 

THAT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933

 

Administrative Regulations for the

Long-Term Incentive Compensation Program

under the United States Steel Corporation
2005 Stock Incentive Plan, as Amended and Restated

As amended by the Compensation &
Organization Committee

Effective May 28, 2013

 

		1.	Administration. The Compensation & Organization Committee (the “Committee”) shall administer
the Long-Term Incentive Compensation Program (the “Program”) under and pursuant to its authority as provided
in Section 3 of the United States Steel Corporation 2005 Stock Incentive Plan, as amended and restated (the “Plan”).

 

		A.	Delegation of Authority. The Committee may delegate to a designated individual (the “Stock Plan Officer”)
and to other Officer-Directors and the executive directly responsible for corporate human resources (collectively, the “Senior
Officers”) its duties under the Program subject to such conditions and limitations as the Committee shall prescribe,
except that only the Committee may designate and grant Awards to Participants. The Committee hereby delegates to the Stock Plan
Officer all authority necessary or desirable to administer the Program, including the authority to “consent” upon termination
and the authority to delegate all or any portion of the delegated authorities; provided, however, that such authority is limited
as follows: (i) only the Committee may (a) designate and grant Awards to Participants (provided that grants to non-executives
may be made through a delegated process to one or more Committee members from time to time under rules established by the Committee
in advance of such grants), (b) approve the vesting of Options, Restricted Stock, Restricted Stock Units or Performance Awards,
(c) adjust the number of Shares pursuant to Section 8 of the Plan, (d) approve or amend the form of Awards, (e) amend outstanding
Awards, (f) determine the Performance Goals, measures and other terms associated with Performance Awards or (g) modify or amend
these Administrative Regulations (the “Regulations”), including any appendices and schedules attached hereto, and (ii)
no delegate of the Stock Plan Officer’s authority may delegate his or her authority. Without limiting the foregoing, the
Stock Plan Officer is hereby directed to (x) administer Awards under the Plan, (y) determine whether any Participant has violated
any terms and conditions set forth in the Award Agreement so as to warrant cancellation of an Award and upon making such determination,
cancel such Award, and (z) maintain appropriate records and establish necessary procedures related to the Plan.

 

		B.	Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the
Plan. The terms “Stock Plan Officer” and “Committee” shall be read as being one and the same; provided,
however, the preceding (i) does not apply where necessary to give meaning to the terms, (ii) does not limit the authority of the
Committee or increase the authority of the Stock Plan Officer, and (iii) requires that the Stock Plan Officer have the requisite
authority (as defined above and/or pursuant to any current Committee resolution) in the context in which the term “Committee”
is used.

 

 

    	 

    	 

    

 

 

		C.	Compensation Consultant. The Committee may engage a compensation consultant to assess the competitiveness of various
target Award levels and advise the Committee.

 

		2.	Participation/Eligibility. All management employees of the Corporation, its Subsidiaries and affiliates are eligible
to participate in the Program upon designation by the Committee or Senior Officers (“Participants”).

 

		A.	Executive Management. Employees designated by the Committee to be Executive Management are hereby designated to be Participants.
Grants to individuals designated to be Executive Management must be approved by the Committee.

 

		B.	Rights. No Participant or other employee shall have any claim to be granted an Award under the Program, and nothing
contained in the Program or any Award Agreement shall confer upon any Participant any right to continue in the employ of the Corporation,
its Subsidiaries or affiliates or interfere in any way with the right of the Corporation, its Subsidiaries or affiliates to terminate
a Participant’s employment at any time.

 

		3.	Components of Long-Term Incentives. Award grants may be made in the following forms: Options, Restricted Stock,
Restricted Stock Units, Other Stock-Based Awards, and Performance Awards.

 

		4.	Options.

 

		A.	Award Grants/Grant Price. The Committee may grant Options to Participants. All Options will be nonstatutory stock options.
The exercise price per Share of the Options shall be no less than 100% of the Fair Market Value of the Shares on the date of grant
of the Option.

 

		B.	Term. Each Option shall state the period or periods of time during which it may be exercised, in whole or in part. The
term of an Option may not exceed ten years.

 

		C.	Vesting. Unless otherwise determined by the Committee, Option grants shall vest ratably over three years (1/3 on each
of the first, second and third grant date anniversaries), each such year to be considered a “Vesting Year”.

 

		D.	Exercise of Options.

 

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		(1)	Effective Date of Exercise. The date of exercise of an Option shall be the business day on which the notice of exercise
and payment for Shares being purchased are received by the Stock Plan Officer.

 

		(2)	Payment for Shares Purchased. Unless otherwise determined by the Committee, payment of the purchase price shall be made,
at the election of the Participant, in cash or by delivering Shares owned by the Participant or withholding of shares to be acquired
upon exercise in accordance with procedures established by the Stock Plan Officer and valued at Fair Market Value on the date of
exercise, or a combination thereof.

 

		(a)	Overpayment in Shares. If the Fair Market Value of Shares delivered or withheld in payment of the purchase price exceeds
the purchase price, a certificate, or its equivalent, representing the whole number of excess Shares together with a check, or
its equivalent, representing the Fair Market Value of any excess partial Share shall be delivered to the Participant. In the case
of a Participant who is at the time of exercise subject to Section 16 of the Exchange Act, any portion of the exercise price representing
a fraction of a Share shall be paid by such Participant in cash or property other than Shares.

 

		(b)	Underpayment in Shares. If the Fair Market Value of Shares delivered or withheld in payment of the purchase price is
less than the purchase price, the difference shall be delivered by the Participant in cash immediately upon notification of such
difference.

 

		(c)	Requirements Relating to Previously Owned Shares. Shares delivered in payment of the purchase price shall be duly endorsed
for transfer to the Corporation. If Shares so delivered are not registered in the name of the Participant individually, the Participant
shall also provide evidence acceptable to the Stock Plan Officer that such Shares are beneficially owned by the Participant individually.

 

		E.	Post-Termination of Employment Exercise.

 

		(1)	Death and Disability. Unless otherwise determined by the Committee, all Options vest immediately upon the Participant’s
death during employment or termination of employment by reason of Disability. Vested options remain exercisable for three years
following the date of Death or termination of employment by reason of Disability, as applicable, or, if less, until the original
expiration date.

 

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		(a)	“Disability” shall be determined, for all purposes under the Program, by reference to Section 409A of the
Internal Revenue Code of 1986, as amended (“Section 409A”).

 

		(2)	Retirement and Termination with Consent. Unless otherwise determined by the Committee, a prorated number of the Options
scheduled to vest during the Vesting Year will vest, based upon the number of complete months worked during the Vesting Year in
which the Participant’s termination of employment occurs by reason of Retirement or Termination with Consent. The prorated
award will be calculated upon such termination and will vest at the next vesting date or, if earlier, immediately upon the Participant’s
death. The remaining unvested Option grants are forfeited immediately upon termination. Vested options remain exercisable for three
years following such termination or, if less, until the original expiration date.

 

		(a)	Example: If the 1/3 ratable vesting for Vesting Year 3 is 1000 shares for Award 1, 1000 shares for Award 2, and 1000 shares
for Award 3 and if the Participant terminates employment by reason of Retirement six months following the Award 3 grants, the Participant
is entitled to vesting of 1/2 of all grants that would have vested at the end of the Vesting Year during which he or she retires
(Vesting Year 3 in this example), or 1500 shares. This example focuses only on the shares that would vest during Vesting Year 3;
however, another 3000 shares would have vested in the aggregate following Vesting Years 1 and 2, for a total of 4500 shares vesting
under the Awards 1, 2 and 3. The 1500 shares would vest upon the next scheduled vesting date following termination. The post-termination
exercise period would be measured for three years following the date of termination, even though the final pro rata tranche does
not vest upon termination.

 

		(b)	“Retirement” shall mean, for all purposes under the Program, the applicable Participant’s termination
of employment after having satisfied the age, service and/or other requirements necessary to commence an immediate pension under
either: (i) the applicable defined benefit pension plan for the Participant’s home country, regardless of whether the Participant
is a participant in such pension plan, or (ii) in the case of a home country for which there is no applicable defined benefit plan,
the applicable local law or regulation; provided, however, such term does not include, unless the Committee consents with
knowledge of the specific facts, retirement under circumstances in which the Participant accepts employment with a company that
owns, or is owned by, a business that competes with the Corporation, or its Subsidiaries or affiliates. Further, to the extent
necessary under applicable local law, Retirement may have such other meaning adopted by the Committee
and set forth in the applicable Award Agreement.

 

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		(c)	“Termination” shall mean the applicable employee’s termination of employment other than by Retirement,
death or Disability.

 

		(d)	“Termination with Consent” shall mean Termination at any age with the consent of the Committee. Consent
shall be deemed to be given if the employee incurs a break in continuous service due to layoff or disability as defined under the
Corporation’s defined benefit pension plan, regardless of whether the employee is participating in such plan.

 

		(e)	“Termination without Consent” shall mean Termination at any age without the consent of the Committee.

 

		(3)	Termination without Consent and Termination for Cause. Unless otherwise determined by the Committee, vested and unvested
Options are forfeited if termination of employment is due to Termination without Consent or Termination for Cause.

 

		(4)	Termination in connection with a Change of Control. Notwithstanding the foregoing provisions of these Regulations, if
a Change of Control Termination occurs within two years following a Change of Control, then no Options shall have been, nor shall
any Options be, forfeited upon such termination; rather, all Options shall vest immediately upon the occurrence of the Change of
Control Termination. Such vested Options shall remain exercisable for the remainder of their respective terms. For purposes of
these regulations, a “Change of Control Termination” shall be a termination of a Participant following a Change of
Control that is (i) involuntarily for any reason other than Cause or (ii) in the case of a Participant who has been determined
by the Committee to be executive management prior to the time to the Change of Control, voluntarily for Good Reason.

 

		F.	Adjustment upon Change of Control. The Adjustment provisions of Section 8.01 of the Plan shall apply in the event of
any Change of Control, such that the Options shall continue in adjusted and/or substituted form following the Change of Control.

 

		5.	Restricted Stock.

 

		A.	Restricted Stock Grants. The Committee may grant Restricted Stock to Participants. A Participant must endorse in blank
and return to the Corporation a stock power for each Restricted Stock grant.

 

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		B.	Restrictions. During the restriction period a Participant may not sell, transfer, assign, pledge or otherwise encumber
or dispose of Shares of the Restricted Stock. During the restriction period a Participant shall have all rights and privileges
of a stockholder, including the right to vote the Shares and to receive dividends, except as noted in the preceding sentence and
except that any dividends payable in stock shall be subject to the restrictions. At the expiration of the restriction period, a
stock certificate free of all restrictions for the number of Shares of Restricted Stock vested shall be registered in the name
of, and delivered to, the Participant or, subject to the termination provisions below, to the Participant’s estate.

 

		C.	Vesting. The Committee shall determine the restriction period, provided that (i) Restricted Stock grants which
are time-based shall vest ratably over a period of not less than three years (1/3 on each of the first, second and third grant
date anniversaries), each such year to be considered a “Vesting Year” and (ii) Restricted Stock grants which are performance-based
shall vest over a period of not less than one year.

 

		D.	Termination of Employment.

 

		(1)	Death and Disability. Unless otherwise determined by the Committee, all Shares of Restricted Stock vest immediately
upon the Participant’s death during employment or termination of employment by reason of Disability.

 

		(2)	Retirement and Termination with Consent. Unless otherwise determined by the Committee, a prorated number of the shares
of Restricted Stock scheduled to vest during the Vesting Year will vest, based upon the number of complete months worked during
the Vesting Year in which the Participant’s termination of employment occurs by reason of Retirement or Termination with
Consent. The prorated award will be calculated upon termination and will vest upon the date of termination. The remaining unvested
shares are forfeited immediately upon termination.

 

		(a)	Example: If the 1/3 ratable vesting for Vesting Year 3 is 1000 shares for Award 1, 1000 shares for Award 2, and 1000 shares
for Award 3 and if the Participant terminates employment by reason of Retirement six months following the Award 3 grants, the Participant
is entitled to vesting of 1/2 of all grants that would have vested at the end of the Vesting Year during which he or she retires
(Vesting Year 3 in this example), or 1500 shares. This example focuses only on the shares that would vest during Vesting Year 3;
however, another 3000 shares would have vested in the aggregate following Vesting Years 1 and 2, for a total of 4500 shares vesting
under the Awards 1, 2 and 3. The 1500 shares would vest upon the date of termination.

 

 

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		(3)	Termination without Consent and Termination for Cause. Unless otherwise determined by the Committee, unvested shares
of Restricted Stock are forfeited if termination of employment is due to Termination without Consent or Termination for Cause.

 

		E.	Change of Control. Notwithstanding the foregoing provisions of these Regulations, if a Change of Control Termination
occurs within two years following a Change of Control, then no shares of Restricted Stock shall have been, nor shall any shares
of Restricted Stock be, forfeited upon such termination; rather, all shares of Restricted Stock shall vest immediately upon the
occurrence of the Change of Control Termination.

 

		6.	Restricted Stock Units.

 

		A.	Restricted Stock Unit Grants. The Committee may grant Restricted Stock Units to Participants.

 

		B.	Restrictions. During the restriction period a Participant may not sell, transfer, assign, pledge or otherwise encumber
or dispose of the Restricted Stock Units. During the restriction period a Participant shall have none of the rights and privileges
of a stockholder, however, the Participant may be entitled to receive a payment (in cash or Shares) or credit equal to the cash
dividends paid on one Share for each Share represented by a Restricted Stock Unit held by such Participant (a “dividend equivalent”);
provided, however, the dividend equivalents shall not be paid to, or vested in, the Participant unless and to the extent the underlying
Restricted Stock Units are vested. Any dividend equivalent paid in Shares shall be paid in the form of additional whole and/or
fractional Restricted Stock Units, subject to the same restrictions and vesting conditions as the underlying Restricted Stock Units
and settled in the same manner. At the expiration of the restriction period, and in no event later than 2 1/2 months following
the end of the calendar year in which vesting occurs, a stock certificate free of all restrictions for the number of Shares equivalent
to the number of vested Restricted Stock Units (including any dividend equivalents, in the case of dividend equivalents paid in
Shares) shall be registered in the name of, and delivered to, the Participant or, subject to the termination provisions below,
to the Participant’s estate. In the case of dividend equivalents paid in cash, a cash payment will be made at the end of
the restriction period equal to the dividends paid on a number of Shares equivalent to the number of vested Restricted Stock Units.

 

		C.	Vesting. The Committee shall determine the restriction period, provided that (i) Restricted Stock Unit grants which
are time-based shall vest ratably over a period of not less than three years (1/3 on each of the first, second and third grant
date anniversaries), each such year to be considered a “Vesting Year” and (ii) Restricted Stock Unit grants which
are performance-based shall vest over a period of not less than one year.

 

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		D.	Termination of Employment.

 

		(1)	Death and Disability. Unless otherwise determined by the Committee, all Restricted Stock Units vest immediately upon
the Participant’s death during employment or termination of employment by reason of Disability.

 

		(2)	Retirement and Termination with Consent. Unless otherwise
                                                             determined by the Committee, a prorated number of the Restricted
                                                             Stock Units scheduled to vest during the Vesting Year will vest,
                                                             based upon the number of complete months worked during the Vesting
                                                             Year in which the Participant’s termination of employment occurs
                                                             by reason of Retirement, or Termination with Consent,
                                                             which is to be calculated upon termination and delivered, subject
                                                             to the following, upon termination.
                                                             In the case of any payment considered to be based upon
                                                             separation from service, and not compensation the Participant could
                                                             receive without separating from service, then such amounts may not
                                                             be paid until the first business day of the seventh month following
                                                             the date of Participant’s termination if Participant is a “specified
                                                             employee” under Section 409A of the Code upon his separation
                                                             from service. The remaining unvested shares are forfeited immediately
                                                             upon termination.

 

		(a)	Example: If the 1/3 ratable vesting for Vesting Year 3 is 1000 shares for Award 1, 1000 shares for Award 2, and 1000 shares
for Award 3 and if the Participant terminates employment by reason of Retirement six months following the Award 3 grants, the Participant
is entitled to vesting of 1/2 of all grants that would have vested at the end of the Vesting Year during which he or she retires
(Vesting Year 3 in this example), or 1500 shares. This example focuses only on the shares that would vest during Vesting Year 3;
however, another 3000 shares would have vested in the aggregate following Vesting Years 1 and 2, for a total of 4500 shares vesting
under the Awards 1, 2 and 3. The 1500 shares would vest upon the date of termination.

 

		(3)	Termination without Consent and Termination for Cause. Unless otherwise determined by the Committee, unvested Restricted
Stock Units are forfeited if termination of employment is due to Termination without Consent or Termination for Cause.

 

		E.	Change of Control. Notwithstanding the foregoing provisions of these Regulations, if a Change of Control Termination
occurs within 24 months following a Change of Control, then no Restricted Stock Units shall have been, nor shall any Restricted
Stock Units be, forfeited upon such termination; rather, all Restricted Stock Units shall vest immediately upon the occurrence
of the Change of Control Termination.

 

 

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7.Performance Awards.

 

		A.	Performance Periods. Each Performance Period will be approximately three years in length and may overlap with the Performance
Periods for the prior year and subsequent year Performance Award grants, if any. Each Performance Period will begin on the third
business day following the public release of the Corporation’s earnings for the first quarter of the calendar year during
which the Performance Period begins and shall end on the twelfth business day following the public release of the Corporation’s
earnings for the first quarter of the third calendar year succeeding the calendar year during which the Performance Period begins
(the approximate three year period is referred to herein as the “Performance Period”).

 

		B.	Performance Goal Establishment/Grant Mechanics. The Committee shall establish and approve the Performance Goal and the
relevant peer group (the “Peer Group”) for performance comparison purposes at the beginning of each Performance
Period. Unless otherwise determined by the Committee at the beginning of the relevant Performance Period, the Performance Goal
shall be based upon the total shareholder return performance measure, and the Corporation’s total shareholder return shall
be compared to the total shareholder return of the Peer Group for the Performance Period.

 

		C.	Performance Award Grants. At the beginning of each Performance Period, the Committee may grant Performance Awards to
Participants for such Performance Period and shall identify for such grants the amount which may be earned based upon the level
of achievement attained (the “Target” award, in the case of attainment of the target level of performance).

 

		D.	Performance Vesting.

 

		(1)	Payout Calculation. Payout shall be based upon the relative Annualized Total Shareholder Return (“Annualized
TSR”) over the Performance Period.

 

		(a)	Annualized TSR = ((Final Price + all dividends paid during the relevant Performance Period)/Initial Price)^(1/3)-1.

 

		(b)	Initial Price = the Average Measurement Period Price relative to the public release of earnings for first quarter of the calendar
year of grant.

 

		(c)	Final Price = the Average Measurement Period Price relative to the public release of earnings for the first quarter of the
third calendar year succeeding the year of grant.

 

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		(d)	Average Measurement Period Price = The average of the Fair Market Values for each of the ten days during the ten business day
period beginning on the third business day following the public release of earnings for the first quarter of a calendar year.

 

		(e)	Stock prices may be determined using (a) any reputable online stock-quote service, such as Yahoo! Finance or Bloomberg, or
(b) the financial pages of The Wall Street Journal.

 

		(2)	Payout Basis. Payout will be based upon the Corporation’s calculated Annualized TSR compared to the statistical
Annualized TSR for the Peer Group (“Comparative TSR”) using the whole company ranking method (i.e., including
the Corporation within the array of companies for which TSR is compared). Awards will be evaluated based upon the following comparison:

 

		(a)	Comparative TSR = 30th percentile --> 50% of Target (the Threshold/Minimum Award).

 

		(b)	Comparative TSR = 60th percentile --> 100% of Target (the Target Award).

 

		(c)	Comparative TSR = 90th percentile and above --> 200% of Target (the Cap/Maximum Award).

 

		(d)	Interpolation will be used to determine actual awards for performance that correlates to an award between Minimum and Target
or Target and Maximum Award levels.

 

		(e)	In calculating the number of shares to be awarded, the Corporation’s relative TSR percentile shall be rounded to the
nearest hundredth of a percentile, rounding up if the thousandth’s place is 5 or more and truncating if the thousandth’s
place is 4 or less. The related payout rate also shall be calculated to the nearest hundredth’s place using the same rounding
procedure. Additionally, the calculated number of shares shall be rounded to the nearest whole share, rounding up if the fractional
share is 5 tenths or more and truncating the fractional share if it is less than 5 tenths.

 

		(f)	Award payout will follow the end of the Performance Period
                                                               (and in no event later than 21⁄2 months following
                                                               the end of the calendar year in which the Performance
                                                               Period ends, as provided in the Plan) and the Committee’s
                                                               written certification of achievement of Performance Goals, payable
                                                               in the form of Shares. In the case of any payment considered to
                                                               be based upon separation from service, and not compensation the
                                                               Participant could receive without separating from service, then
                                                               such amounts may not be paid until the first business day of the
                                                               seventh month following the date of Participant’s termination
                                                               if Participant is a “specified employee” under Section
                                                               409A of the Code upon his separation from service.

 

 

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		(3)	Peer Group Adjustments. At the commencement of the Performance Period, the Committee may determine that specific
                                                             guidance be considered in connection with possible adjustments to the Peer Group, to include U. S. Steel should the
                                                             circumstances arise, involved in the calculation of the Corporation’s comparative performance with respect to the
                                                             Performance Goal during the Performance Period. Any such determination will be in addition to, or will amend if it conflicts
                                                             with, the following guidelines, which will be used in connection with the calculation:

 

		(a)	If a Peer Group Company becomes bankrupt, the bankrupt company will remain in the Peer Group positioned at one level below
the lowest performing non-bankrupt Peer Group Company. In the case of multiple bankruptcies, the bankrupt companies will be positioned
below the non-bankrupt companies in chronological order by bankruptcy date with the first to be bankrupt at the bottom.

 

		(b)	If a Peer Group Company is acquired by another company or entity, including through a management buy-out or going-private transaction,
the acquired Peer Group Company will be removed from the Peer Group for the entire Performance Period; provided that if the acquired
company became bankrupt prior to its acquisition it shall be treated as provided in paragraph (a), above, or if it shall become
delisted according to paragraph (e), below, prior to its acquisition it shall be treated as provided in paragraph (e).

 

		(c)	If a Peer Group Company sells, spins-off, or disposes of a portion of its business, the selling Peer Group Company will remain
in the Peer Group for the Performance Period unless such disposition(s) results in the disposition of more than 50% of the company’s
total assets during the Performance Period.

 

		(d)	If a Peer Group Company acquires another company, the acquiring Peer Group Company will remain in the Peer Group for the Performance
Period.

 

		(e)	If a Peer Group Company is delisted from either the New York Stock Exchange (NYSE) or the National Association of Securities
Dealers Automated Quotations (NASDAQ) such that it is no longer listed on either exchange, such delisted Peer Group Company will
remain in the Peer Group positioned at one level below the lowest performing listed company and above the highest ranked bankrupt
Peer Group Company. In the case of multiple delistings, the delisted companies will be positioned below the listed and above the
bankrupt companies in chronological order by delisting date with the first to be delisted at the bottom of the delisted companies.
If a delisted company shall become bankrupt, it shall be treated as provided in paragraph (a), above. If a delisted company shall
be later acquired, it shall be treated as a delisted company under this paragraph. If a delisted company shall relist during the
Performance Period, it shall remain in its relative delisted position determined under this paragraph.

 

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		(f)	If the Corporation’s and/or any Peer Group Company’s stock splits, such company’s TSR performance will be
adjusted for the stock split so as not to give an advantage or disadvantage to such company by comparison to the other companies,
using the principles set forth in Section 8 of the Plan.

 

		(4)	Discretion. Notwithstanding any language to the contrary in outstanding or future grant forms, the Committee retains
no discretion to reduce any Performance Award to an amount below the amount that would be payable as a result of performance measured
against the Performance Goals.

 

		(5)	Termination of Employment.

 

		(a)	Death and Disability. Unless otherwise determined by the Committee, a prorated value of the Performance Award will vest
based upon the date of death during employment or termination of employment by reason of Disability during the Performance Period
in accordance with the following schedule, to be calculated and delivered at the end of the relevant Performance Period, provided
that the relevant performance goals are achieved.

 

	Date of Death or Termination for Disability	 	 	% Vested	 
	 	 	 	 	 
	Prior to 1⁄3 completion of Performance Period	 	 	0	%
	 	 	 	 	 
	On or after 1⁄3 and before 2⁄3 completion of Performance Period	 	 	50	%
	 	 	 	 	 
	On or after 2⁄3 completion of Performance Period	 	 	100	%

 

		(b)	Retirement
                                                                                                 and Termination with Consent.
                                                                                                 Unless otherwise determined by
                                                                                                 the Committee, a prorated value
                                                                                                 of the Performance Award will
                                                                                                 vest based upon the number of
                                                                                                 complete months worked during
                                                                                                 the Performance Period, in the
                                                                                                 event of a Participant’s
                                                                                                 termination of employment by
                                                                                                 reason of Retirement, or Termination
                                                                                                 with Consent, to be calculated
                                                                                                 and delivered at the end of the
                                                                                                 relevant Performance Period,
                                                                                                 provided that the relevant performance
                                                                                                 goals are achieved. In the case
                                                                                                 of any payment considered to
                                                                                                 be based upon separation from
                                                                                                 service, and not compensation
                                                                                                 the Participant could receive
                                                                                                 without separating from service,
                                                                                                 then such amounts may not be
                                                                                                 paid until the first business
                                                                                                 day of the seventh month following
                                                                                                 the date of Participant’s
                                                                                                 termination if Participant is
                                                                                                 a “specified employee”
                                                                                                 under Section 409A of the Code
                                                                                                 upon his separation from service.

 

		(i)	Example: If the Target number of Shares is 1000 shares for Performance Period 1 Awards, 1000 shares for Performance Period
2 Awards, and 1000 shares for Performance Period 3 Awards and if the Participant terminates employment by reason of Retirement
six months following the first day of Performance Period 3, the Participant is entitled to vesting of 5/6’s of the Performance
Period 1 awards, 1⁄2 of the Performance Period 2 awards, and 1/6 of the Performance Period 3 awards (or 1500 shares), subject
to the Committee’s determination of the payout basis for each Performance Period. That is, the above example assumes that
the Committee had determined the Performance Goals had been met at least to the 100% of Target level and that the payout basis
was 100% of Target for each period.

 

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		(c)	Termination without Consent and Termination for Cause. Unless otherwise determined by the Committee, Performance Awards
will be forfeited immediately if a Participant’s termination of employment is due to Termination without Consent or Termination
for Cause.

 

		(6)	Change of Control. Notwithstanding the foregoing provisions of the Regulations, if a Change
of Control occurs, (i) the Performance Period shall automatically end, (ii) the actual performance level for the abbreviated
Performance Period shall be measured against the established Performance Goals, the performance criteria shall be deemed satisfied
only to the extent that actual performance was achieved (the result is the “Achieved Performance Award”), and the balance
of the Performance Award, if any, shall be forfeited, and (iii) the Achieved Performance Award shall remain subject to forfeiture
until the third anniversary of the date of grant of the Performance Award if the Participant terminates employment after the Change
of Control but before the third anniversary of the date of grant; provided, however, that (i) if a Change of Control Termination
occurs within two years following a Change of Control, then the Achieved Performance Award shall not be forfeited upon such termination;
rather, the Achieved Performance Award shall vest immediately upon the Change of Control Termination, (ii) if a Termination by
reason of death or Disability occurs, then the Achieved Performance Award shall not be forfeited upon such death or Disability;
rather, the Performance Award shall vest immediately upon the Participant’s death during employment or termination of employment
by reason of Disability; and (iii) if a Termination by reason of Retirement or Termination with Consent occurs, then a prorated
portion of the Achieved Performance Award will vest, based upon the number of complete months worked during the original Performance
Period in relation to the number of whole months in the original Performance Period and the remainder shall be forfeited.

 

		(a)	Price. In the event of a Change of Control, the final price for purposes of determining the Annualized TSR shall be
determined based on the closing price of the business day immediately preceding the closing date of the Change of Control.

 

		(b)	Original Performance Period. In the event of a Change of Control, the original Performance Period shall be deemed to
end on the third anniversary of the date of grant of the Performance Award.

 

		8.	Forfeiture
                                                                                             and Repayment. The
                                                                                             Committee may determine that any
                                                                                             Award under this Program shall be
                                                                                             forfeited and/or any value received
                                                                                             from the Award shall be repaid to
                                                                                             the Corporation pursuant to any recoupment
                                                                                             policies, rules or regulations in
                                                                                             effect at the time the Award is granted.

 

 

 

    	13Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE
AGREEMENT (the “Agreement”), dated and made effective as of May 24, 2013, is entered into by and between
Nabron International, Inc., a Bahamas company (“Seller”),
and TILE SHOP HOLDINGS, INC., a corporation incorporated and existing under the laws of Delaware (“Company”).

 

WITNESSETH

 

WHEREAS Seller
is the registered holder of 14,832,282 shares of Company Common Stock, par value $0.0001 per share (“the Common Stock”),
and

 

WHEREAS Seller
desires to sell to Company, and Company desires to purchase from Seller, certain shares of the Common Stock under the terms and
conditions set forth in this Agreement.

 

NOW, THEREFORE,
in consideration of the mutual covenants and provisions contained herein, the parties hereto hereby agree as follows:

 

1.           Sale of
Shares.   Seller hereby agrees to sell, assign, transfer and convey to Company at the Closing
all of its rights, title and interest in and to such number of shares of Common Stock (the “Shares”) as is determined
by dividing Forty-Six Million Dollars (USD $46,000,000) (the “Purchase Price”) by the per share proceeds to
the selling stockholders (public offering price minus underwriters’ discount) in the proposed secondary public offering to
be conducted pursuant to a Registration Statement on Form S-1 expected to be initially filed by Company on or about May 24, 2013
(the “Secondary Offering”), in which Secondary Offering Seller intends to participate as a selling stockholder.
Company hereby agrees to purchase at the Closing the Shares from Seller, in consideration of the Purchase Price. This sale
and purchase of the Shares shall be subject to the terms and conditions, and will be made in reliance upon the representations
and warranties, set forth in this Agreement.

 

2.           Payment
of Purchase Price.   In consideration for the transfer of the Shares from Seller to Company pursuant to Section 1,
Company shall pay the Purchase Price to Seller at the Closing (as defined in Section 5 below) by electronic funds transfer
to a bank account designated by Seller prior to the Closing.

 

3.           Seller’s
Representations and Warranties.   Seller represents and warrants to Company
as follows:

 

(a)       Seller is the
registered holder of the Shares;

 

(b)       the Shares are
free of any and all liens, pledges, mortgages, charges, security interests and encumbrances of any kind, other than encumbrances
imposed by any lock-up agreement entered into by Seller in connection with the Secondary Offering;

 

    	 

    	 

    

 

(c)       Seller has full
power, right and authority to enter into and perform its obligations hereunder, and upon Seller’s execution and delivery
of this Agreement, this Agreement will constitute the legal, valid, and binding obligations of Seller, enforceable against Seller
in accordance with the terms hereof;

 

(d)       Seller has had
access to all information regarding Company and its present and prospective business, assets, liabilities and financial condition
that Seller reasonably considers important in making the decision to sell the Shares, and, to the extent that such information
has not been publicly disclosed, agrees to maintain the confidentiality of such information and not to engage in market transactions
in the Company’s securities on the basis of such information; provided, however that the foregoing shall not prohibit the
sale of Common Stock by the Seller in the Secondary Offering; and

 

(e)       Seller is a sophisticated
entity or individual familiar with transactions similar to those contemplated by this Agreement, has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits and risks of such transactions, has evaluated the
merits and risks of selling the Shares on the terms set forth in this Agreement, and is willing to bear such risks.

 

4.           Company’s
Representations and Warranties.   Company represents and warrants to Seller
as follows:

 

(a)       Company’s
board of directors has (i) determined that this Agreement and the consummation of the transaction contemplated by this Agreement
are fair and in the best interests of Company’s stockholders and (ii) approved the execution and delivery of this Agreement
and the transaction contemplated hereby; and

 

(b)       Company has full
power, right and authority to enter into and perform its obligations hereunder, and upon Company’s execution and delivery
of this Agreement, this Agreement will constitute the legal, valid, and binding obligations of Company, enforceable against Company
in accordance with the terms hereof.

 

5.           Closing.
  The closing of the transaction under Sections 1 and 2 hereunder (the “Closing”) shall take place
on the fifth (5th) business day following the closing of the Secondary Offering, at Fredrikson & Byron, P.A., 200
South 6th Street, Suite 4000, Minneapolis, Minnesota 55402.

 

6.           Closing
Deliveries.   At the Closing, (a) Company shall pay the Purchase Price to Seller by wire transfer in immediately available
funds in United States Dollars (all wire transfer fees to be borne by Company), and (b) Seller shall deliver, or caused to be delivered,
to Company the original certificate(s) representing the Shares.

 

    	 

    	 

    

 

7.           Indemnification.
  After the Closing, Seller, on the one hand, and Company, on the other
hand (each, an “Indemnitor”), shall indemnify and hold harmless the other party hereto and its respective directors,
officers, and employees (collectively, the “Indemnitees”) from and against all causes of action, claims, losses,
liabilities, costs and expenses (including interest, penalties and reasonable legal fees, but excluding any lost profits, indirect,
consequential, special or punitive damages) (“Losses”) suffered or incurred by the Indemnitees based upon, arising
out of, or in connection with, any breach of any representation and warranties or covenants of the Indemnitor under this Agreement.
Each party’s right of indemnification under this Section 7 shall be the sole remedy that may be sought by the
Indemnitee to the Indemnitor, and all other remedies available under law, equity or otherwise shall be excluded. If any claim is
asserted or action or proceeding commenced or threatened by a third party against an Indemnitee that
would reasonably be expected to give rise to a claim for indemnification by such Indemnitee against
the Indemnitor pursuant to this Section 7 (each, a “Third Party Claim”), the Indemnitee
shall promptly notify the Indemnitor in writing of such asserted, commenced or threatened Third Party Claim (with reasonable
specificity of the nature of the claim), the amount of the claim (to the extent then known), and the basis for indemnification
hereunder; provided that the failure to provide such notice as provided herein will not relieve the Indemnitor of its obligations
hereunder except to the extent such failure actually prejudices in any significant respect the Indemnitor hereunder. The Indemnitor
shall be entitled to participate in the defense of such Third Party Claim giving rise to such claim for indemnification at the
Indemnitor’s sole cost and expense. The party controlling the defense of a Third Party Claim (the “Controlling Party”)
will not consent to the entry of any judgment, or enter into any settlement, compromise, discharge or plea of no contest, with
respect to such Third Party Claim, without the prior written consent of the other Party (the “Non-Controlling Party”),
which consent shall not unreasonably be withheld or delayed, and the Non-Controlling Party shall not be liable under this Section
7 for any Losses resulting from the Controlling Party consenting to the entry of any judgment, or entering into any settlement,
compromise, discharge, or plea of no contest, with respect to such Third Party Claim, without such consent.

 

8.           Further
Assurances.   Each party hereto shall take such additional actions that the other party hereto reasonably requests to effectuate,
record, evidence or perfect the transfer of the Shares from Seller to Company pursuant to this Agreement or to otherwise effectuate
or consummate the transaction contemplated hereby. 

 

9.           Entire
Agreement.   This Agreement and all instruments and agreements executed in connection herewith constitute the entire agreement
of the parties hereto with respect to the subject matter hereof.

 

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

 

(a)       This Agreement shall
be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to conflicts of laws
principles. Any legal action by or against Seller or Company relating to this Agreement shall be instituted and determined exclusively
in the federal courts located in the State of Minnesota, to the jurisdiction of which each party hereby expressly and unconditionally
and irrevocably agrees to submit. Each of the parties hereby irrevocably waives, and agrees not to assert as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (i) any claim that it is not personally subject to the
jurisdiction of the above named court for any reason, (ii) any claim that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such court (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by the
applicable law, any claim that (1) the suit, action or proceeding in such court is brought in an inconvenient forum, (2) the venue
of such suit, action or proceeding is improper or (3) this Agreement, or the subject matter hereof, may not be enforced in or by
such courts.

 

    	 

    	 

    

 

(b)       EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY.

 

11.          Waiver.  
No waiver of a right under this Agreement shall constitute a waiver of any other rights of the same or other provisions of this
Agreement.

 

12.          Survival.  
All representations and warranties made herein shall survive the execution and delivery of this Agreement and the consummation
of the transaction contemplated hereby for twelve months after the Closing.

 

13.          Counterparts.
  This Agreement may be executed in separate counterparts, each of which, when so executed, is deemed to be an original and
both of which, when taken together, constitute but one and the same agreement.

 

14.          Termination.  
If the Secondary Offering does not close by June 15, 2013, then the Closing will not occur and this Agreement will terminate
and be of no further force or effect.

 

[Signature Page
Follows]

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement on the date first written above.

 

	 	SELLER:	 
	 	 	 
	 	NABRON INTERNATIONAL, INC.	 
	 	 	 	 
	 	By: 	/s/ Raymond Long Sing Tang	 
	 	 	/s/ Louise Mary Garbarino	 
	 	Name:	Raymond Long Sing Tang	 
	 	 	Louise Mary Garbarino	 
	 	Title:	Authorized Signatures	 
	 	 	 	 
	 	COMPANY:	 
	 	 	 
	 	TILE SHOP HOLDINGS, INC.	 
	 	 	 	 
	 	 	 	 
	 	By:  	/s/ Timothy C. Clayton	 
	 	Name:	Timothy C. Clayton	 
	 	Title:  	Chief Financial Officer

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