Document:

Business Development Bank of Canada

Banque de développement du Canada

 

BDC

 

	GENERAL SECURITY AGREEMENT

 

THIS AGREEMENT dated September 27, 2013

 

BETWEEN:

 

LAKELAND PROTECTIVE REAL ESTATE INC.

 

			(the "Borrower")

 

AND:

 

BUSINESS DEVELOPMENT BANK OF CANADA, with a
branch office at 25 Main Street West, Suite 1900, Hamilton, Ontario L8P 1H1

 

(the "Bank")

 

1.            SECURITY INTEREST

(You, as the Borrower, will grant to the Bank a charge,
referred to as a security interest, over all personal property now held or in the future held or acquired by you. You will also
grant a charge, referred to as a floating charge, over your complete undertaking . These charges are the security the Bank will
hold in consideration of lending you funds or providing the credit facility to you.)

 

1.1          For consideration the Borrower hereby:

 

		(a)	mortgages and charges as a fixed and specific charge, and assigns and transfers to the Bank, and grants to the Bank a general
and continuing security interest in all of the Borrower's present and after acquired personal property including, without limitation:

 

		(i)	all office, trade, manufacturing and all other equipment and all goods, including, without limitation, machinery, tools, fixtures,
computers, furniture, furnishings, chattels, motor vehicles and other tangible personal property that is not Inventory, and all
parts, components, attachments, accessories, accessions, replacements, substitutions, additions and improvements to any of the
above (all of which is collectively called the "Equipment");

 

		(ii)	all inventory, including, without limitation, goods acquired or held for sale or lease or furnished or to be furnished under
contracts of rental or service, all raw materials, work in process, finished goods, returned goods, repossessed goods, all livestock
and their young after conception, all crops and timber, and all packaging materials, supplies and containers relating to or used
or consumed in connection with any of the foregoing (all of which is collectively called the "Inventory");

 

		(iii)	all debts, accounts, claims, demands, moneys and choses in action which now are, or which may at any time be, due or owing
to or owned by the Borrower and all books, records, documents, papers and electronically recorded data recording, evidencing or
relating to the debts, accounts, claims, demands, moneys and choses in action (all of which is collectively called the "Accounts");

 

General Security Agreement

Rev. May, 2008

 

    	 

    	 

    

 

		(iv)	all documents of title, chattel paper, instruments, securities and money, and all other personal property, of the Borrower
that is not Equipment, Inventory or Accounts;

 

		(v)	all patents, trade-marks, copyrights, industrial designs, plant breeder’s rights, integrated circuit topographies, trade-names,
goodwill, confidential information, trade secrets and know-how, including without limitation, environmental technology and bio-technology,
software and any registrations and applications for registration of the foregoing and all other intellectual and industrial property
of the Borrower (all of which is collectively called the “Intellectual Property”);

 

		(vi)	all the Borrower’s contractual rights, licenses and all other choses in action of every kind which now are, or which
may at any time be due or owing to or owned by the Borrower, and all other intangible property of the Borrower, that is not Accounts,
chattel paper, instruments, documents of title, Intellectual Property, securities or money;

 

		(vii)	the personal property described in Schedule “A” attached to this Agreement and all additions thereto and replacements
thereof; and

 

		(viii)	all proceeds of every nature and kind arising from the personal property referred to in this Security Agreement;

 

		(b)	grants to the Bank a general and continuing security interest and charges by way of a floating charge:

  

		(i)	all of the undertaking and assets of the Borrower, of every nature or kind and wherever situate, whether presently owned or
hereafter acquired, and all their proceeds, other than its assets and undertakings that are otherwise validly and effectively subject
to the charges and security interests in favour of the Bank created pursuant to this Clause 1.1.

 

1.2          The security interests, mortgages, transfers, assignments,
charges, grants and conveyances created pursuant to Clause 1.1 shall be collectively called the "Security Interests",
and the property subject to the Security Interests and all property, assets and undertaking charged, assigned or transferred or
secured by any instruments supplemental to or in implementation of this Security Agreement are collectively called the "Collateral".

 

1.3          The schedules, including definitions, form part of this
Security Agreement.

 

2.            EXCEPTIONS

(With few exceptions, all of your personal property
is subject to the security interests and charges described in Clause 1.1. Only the last day of any lease term and possibly your
consumer goods are excepted. Corporations do not hold consumer goods.)

 

2.1          The last day of the term created by any lease or agreement
is excepted out of any charge or the Security Interests but the Borrower shall stand possessed of the reversion and shall remain
upon trust to assign and dispose of it to any third party as the Bank shall direct.

 

2.2          All the Borrower’s consumer goods are excepted
out of the Security Interests.

 

		3.	ATTACHMENT

(Value or consideration has flowed between you and
the Bank and the Security Interests in your personal property are complete once you sign this Security Agreement.)

 

The Borrower agrees that the Security Interests
attach upon the signing of this Security Agreement (or in the case of after acquired property, upon the date of acquisition), that
value has been given, and that the Borrower has (or in the case of after acquired property, will have upon the date of acquisition)
rights in the Collateral and the Borrower confirms that there has been no agreement between the Borrower and the Bank to postpone
the time for attachment of the Security Interests and that it is the Borrower's understanding that the Bank intends the Security
Interests to attach at the same time.

 

General Security Agreement

Rev. May, 2008

 

    	Page 1

    	 

    

 

4.            PURCHASE MONEY SECURITY INTEREST

(To the extent that the Bank helps you acquire an
interest in any personal property, you grant a special security interest to the Bank over that personal property. The special security
interest is known as a "Purchase Money Security Interest".)

 

The Borrower acknowledges and agrees that
the Security Interests constitute and are intended to create Purchase Money Security Interests in Collateral to the extent that
moneys advanced by the Bank, including all future advances and re-advances, are used or are to be used, in whole or in part, to
purchase or otherwise to acquire rights in Collateral.

 

5.            OBLIGATIONS SECURED

(The Security Interests and charges you have granted
to the Bank secure all indebtedness and all obligations to the Bank.)

 

This Security Agreement is in addition to
and not in substitution for any other security interest or charge now or in the future held by the Bank from the Borrower or from
any other person and shall be general and continuing security for the payment and performance of all indebtedness, liabilities
and obligations of the Borrower to the Bank (including interest thereon), whether incurred prior to, at the time of or after the
signing of this Security Agreement including extensions and renewals, and all other liabilities of the Borrower to the Bank, present
and future, absolute or contingent, joint or several, direct or indirect, matured or not, extended or renewed, wherever and however
incurred, including all advances on current or running account, future advances and re-advances of any loans or credit by the Bank
and the Borrower’s obligation and liability under any contract or guarantee now or in the future in existence whereby the
Borrower guarantees payment of the debts, liabilities and/or obligations of a third party to the Bank, and for the performance
of all obligations of the Borrower to the Bank, whether or not contained in this Security Agreement (all of which indebtedness,
liabilities and obligations are collectively called the "Obligations").

 

6.            REPRESENTATIONS AND WARRANTIES

(You state that you are able to legally grant this
Security Agreement to the Bank, it will be binding and the Collateral is not subject to any encumbrances that have not been approved
by the Bank. You own the Collateral and nothing prevents you from granting the Security Interests and charges in favour of the
Bank. The Bank will rely on all of the following representations and warranties.)

 

6.1          The Borrower represents and warrants to the Bank that:

 

		(a)	if a corporation, it is a corporation incorporated and organised and validly existing and in good standing under the laws of
the jurisdiction of its incorporation; it has the corporate power to own or lease its property and to carry on the business conducted
by it; it is qualified as a corporation to carry on the business conducted by it and to own or lease its property and is in good
standing under the laws of each jurisdiction in which the nature of its business or the property owned or leased by it makes such
qualification necessary; and the execution, delivery and performance of this Security Agreement are within its corporate powers,
have been authorised and do not contravene, violate or conflict with any law or the terms and provisions of its constating documents
or its by-laws or any shareholders agreement or any other agreement, indenture or undertaking to which the Borrower is a party
or by which it is bound;

 

		(b)	if it is a corporation, its name as set forth on page 1 of this Security Agreement is its full, true and correct name as stated
in its constating documents and if such name is in English, it does not have or use a French language form of its name or a combined
English language and French language form of its name and vice versa, and the Borrower has provided a written memorandum to the
Bank accurately setting forth all prior names under which the Borrower has operated;

 

		(c)	if it is a partnership, its name as set forth on page 1 is its full, true and correct, and where required or voluntarily registered
its registered, name; it is a partnership validly created and organised and validly existing under the laws of the jurisdiction
of its creation; it has the power to carry on the business conducted by it; it is qualified as a partnership to carry on the business
conducted by it and is in good standing under the laws of each jurisdiction in which the nature of its business makes such qualification
necessary; and the execution, delivery and performance of this Agreement are within its powers, have been authorised, and do not
contravene, violate or conflict with any law or the terms of its partnership agreement or any other agreement, indenture or undertaking
to which the Borrower is a party or by which it is bound, and a complete list of the names, addresses and (if individuals) the
dates of birth of the partners of the partnership are set forth on a Schedule attached to this Security Agreement;

 

General Security Agreement

Rev. May, 2008

 

    	Page 2

    	 

    

 

		(d)	if the Borrower is an individual, that individual's full name and address provided to the Bank are the individual's full and
correct name and address and the individual's date of birth as described on the individual's birth certificate a true copy of which
has been provided to the Bank or, if no birth certificate issued from any jurisdiction in Canada exists, as described on the documents
provided to the Bank is the individual's correct birth date;

 

		(e)	there is no litigation or governmental proceedings commenced or pending against or affecting the Collateral or the Borrower,
in which a decision adverse to the Borrower would constitute or result in a material adverse change in the business, operations,
properties or assets or in the condition, financial or otherwise, of the Borrower; and the Borrower agrees to promptly notify the
Bank of any such future litigation or governmental proceeding;

 

		(f)	it does not have any information or knowledge of any facts relating to its business, operations, property or assets or to its
condition, financial or otherwise, which it has not disclosed to the Bank in writing and which, if known to the Bank, might reasonably
be expected to deter the Bank from extending credit or advancing funds to the Borrower;

 

		(g)	it has good title and lawfully owns and possesses all presently held Collateral, free from all security interests, charges,
encumbrances, liens and claims, save only the Security Interests and the charges or security interests consented to in writing
by the Bank, and it has not granted any licenses in or of its Intellectual Property other than as disclosed and consented to by
the Bank;

 

		(h)	to the extent that any of the Collateral includes serial numbered goods and motor vehicles which require serial number registration
by virtue of the Act and its regulations including motor vehicles, trailers, manufactured homes, mobile homes, boats, outboard
motors for boats or aircraft, the Borrower has given the full and correct serial numbers and any Ministry of Transport designation
marks or other relevant licensing authority marks of all such Collateral to the Bank;

 

		(i)	the Collateral is and/or will be located at the place(s) described in Schedule “A” and will not be removed from
such location(s) without the prior written consent of the Bank;

 

		(j)	this Security Agreement is granted in accordance with resolutions of the directors (and of the shareholders as applicable)
of the Borrower, if the Borrower is a corporation, or, if the Borrower is a partnership, of the partners of the Borrower, and all
other requirements have been fulfilled to authorise and make the execution and delivery of this Security Agreement, and the performance
of the Borrower's obligations valid and there is no restriction contained in the constating documents of the Borrower or in any
shareholders agreement or partnership agreement which restricts the powers of the authorised signatories of the Borrower to borrow
money or give security; and

 

		(k)	the Borrower's place(s) of business and chief executive office have been correctly provided to the Bank.

 

7.            COVENANTS OF THE BORROWER

(The Security Interests and the Collateral must be
protected while the Security Agreement remains in effect. These covenants are your promises to the Bank describing how the Bank's
Security Interests will be attended to. You will also covenant to maintain accurate books and records and allow the Bank's inspection.
Your promises are found in the Security Agreement and Schedules.)

 

7.1          The Borrower covenants with the Bank that while this
Security Agreement remains in effect the Borrower will:

 

		(a)	promptly pay and satisfy the Obligations as they become due or are demanded;

 

		(b)	defend the title to the Collateral for the Bank’s benefit, against the claims and demands of all persons;

 

		(c)	fully and effectually maintain and ensure that the Security Interests are and continue to be valid and effective;

 

General Security Agreement

Rev. May, 2008

 

    	Page 3

    	 

    

 

		(d)	maintain the Collateral in good condition and repair and provide adequate storage facilities to protect the Collateral and
not permit the value of the Collateral to be impaired;

 

		(e)	observe and conform to all valid requirements of any governmental authority relative to any of the Collateral and all covenants,
terms and conditions upon or under which the Collateral is held;

 

		(f)	forthwith pay and satisfy:

 

		(i)	all taxes, assessments, rates, duties, levies, government fees, claims and dues lawfully levied, assessed or imposed upon it
or the Collateral when due, unless the Borrower shall in good faith contest its obligations so to pay and shall furnish to the
Bank such security as the Bank may require;

 

		(ii)	all security interests, charges, encumbrances, liens and claims which rank or could rank in priority to, or on an equal basis
with, any of the Security Interests; and

 

		(iii)	all fees from time to time chargeable by the Bank arising out of any term of the commitment letter between the Bank and the
Borrower including, without limitation, inspection, administration and returned cheque handling fees;

 

		(g)	forthwith pay and satisfy all costs, charges, expenses and legal fees and disbursements (on a solicitor and its own client
basis) which may be incurred by the Bank in connection with granting loans or credit to the Borrower, including for:

 

		(i)	inspecting the Collateral;

 

		(ii)	negotiating, preparing, perfecting, registering or renewing the registration of this Security Agreement and the Security Interests,
any Financing or Financing Change Statement, any modification or amending agreement and other documents relating to the Borrower's
obligations, whether or not relating to this Security Agreement;

 

		(iii)	complying with any disclosure requirements under the Act;

 

		(iv)	investigating title to the Collateral;

 

		(v)	taking, recovering, keeping possession and disposing of the Collateral;

 

		(vi)	maintaining the Collateral in good repair, storing the Collateral and preparing the Collateral for disposition;

 

		(vii)	any inspection, appraisal, investigation or environmental audit of the Collateral and the cost of any environmental rehabilitation,
treatment, removal or repair necessary to protect, preserve or remedy the Collateral including any fine or penalty the Bank becomes
obligated to pay by reason of any statute, order or direction of competent authority;

 

		(viii)	all other actions and proceedings taken to preserve the Collateral, enforce this Security Agreement and of any other security
interest held by the Bank as security for the Obligations, protect the Bank from liability in connection with the Security Interests
or assist the Bank in its loan and credit granting or realization of the Security Interest, including any actions under the Bankruptcy
and Insolvency Act (Canada) and all remuneration of any Receiver (as defined in Article 15 hereof) or appointed pursuant
to the Bankruptcy and Insolvency Act (Canada);

 

		(ix)	any sums the Bank pays as fines, or as clean up costs because of contamination of or from your assets. Further, you will indemnify
the Bank and its employees and agents from any liability or costs incurred including legal defense costs. Your obligation under
this paragraph continues even after the Obligations are repaid and this agreement is terminated.

 

General Security Agreement

Rev. May, 2008

 

    	Page 4

    	 

    

 

		(h)	at the Bank's request, execute and deliver further documents and instruments and do all acts as the Bank in its absolute discretion
requires to confirm, register and perfect, and maintain the registration and perfection of, the Security Interests;

 

		(i)	notify the Bank promptly of:

 

		(i)	any change in the information contained in this Security Agreement relating to the Borrower, its business or the Collateral,
including, without limitation, any change of name or address (including any change of trade name, proprietor or partner) and any
change in the present location of any Collateral;

 

		(ii)	the details of any material acquisition of Collateral, including the acquisition of any motor vehicles, trailers, manufactured
homes, boats or aircraft;

 

		(iii)	any material loss or damage to the Collateral;

 

		(iv)	any material default by any account debtor in the payment or other performance of its obligations to the Borrower respecting
any Accounts;

 

		(v)	any claims against the Borrower including claims in respect of the Intellectual Property or of any actions taken by the Borrower
to defend the registration of or the validity of or any infringement of the Intellectual Property;

 

		(vi)	the return to or repossession by the Borrower of Collateral that was disposed of by the Borrower; and

 

		(vii)	all additional places of business and any changes in its place(s) of business or chief executive office;

 

		(j)	prevent the Collateral, other than Inventory sold, leased, or otherwise disposed of as permitted by this Security Agreement,
from being or becoming an accession to property not covered by this Security Agreement;

 

		(k)	carry on and conduct its business and undertaking in a proper and businesslike manner so as to preserve and protect the Collateral
and the earnings, income, rents, issues and profits of the Collateral, including maintenance of proper and accurate books of account
and records;

 

		(l)	permit the Bank and its representatives, at all reasonable times, access to the Collateral including all of the Borrower's
property, assets and undertakings and to all its books of account and records for the purpose of inspection and the taking of extracts
and copies, whether at the Borrower’s premises or otherwise, and the Borrower will render all assistance necessary;

 

		(m)	observe and perform all its obligations under:

 

		(i)	leases, licences, undertakings, and any other agreements to which it is a party;

 

		(ii)	any statute or regulation, federal, provincial, territorial, or municipal, to which it is subject;

 

		(n)	deliver to the Bank from time to time promptly upon request:

 

		(i)	any documents of title, instruments, securities and chattel paper constituting, representing or relating to the Collateral;

 

		(ii)	all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings
relating to the Collateral to allow the Bank to inspect, audit or copy them;

 

		(iii)	all financial statements prepared by or for the Borrower regarding the Borrower's business;

 

General Security Agreement

Rev. May, 2008

 

    	Page 5

    	 

    

 

		(iv)	such information concerning the Collateral, the Borrower and the Borrower's business and affairs as the Bank may reasonably
require;

 

		(o)	with respect to the Intellectual Property, take all necessary steps and initiate all necessary proceedings, to maintain the
registration or recording of the Intellectual Property, to defend the Intellectual Property from infringement and to prevent any
licensed or permitted user from doing anything that may invalidate or otherwise impair the Intellectual Property;

 

		(p)	with respect to copyright forming part of the Intellectual Property, provide to the Bank waivers of the moral rights thereto
executed by all contributors or authors of the copyrighted work;

 

		(q)	receive and hold in trust on behalf of and for the benefit of the Bank all proceeds from the sale or other disposition of any
Collateral;

 

		(r)	consent to the Bank contacting and making enquiries of the Borrower’s lessors, as well as municipal or other government
officials or assessors; and

 

		(s)	observe and perform the additional covenants and agreements set out in any schedules to this Security Agreement.

 

7.2          Any amounts required to be paid to the Bank by the Borrower
under this Clause 7 shall be immediately payable with interest at the highest rate borne by any of the Obligations until all amounts
have been paid.

 

7.3          This Security Agreement shall remain in effect until
it has been terminated by the Bank by notice of termination to the Borrower and all registrations relating to the Security Agreement
have been discharged.

 

8.            INSURANCE

(It is your obligation to thoroughly insure the Collateral
in order to protect your interests and those of the Bank. You will follow the specific requirements of the insurance coverage described
in this Clause.)

 

8.1          The Borrower covenants that while this Security Agreement
is in effect the Borrower shall:

 

		(a)	maintain or cause to be maintained insurance on the Collateral with a reputable insurer, of kinds, for amounts and payable
to such person or persons, all as the Bank may require, and in particular maintain insurance on the Collateral to its full insurable
value against loss or damage by fire and all other risks of damage, including an extended coverage endorsement and in the case
of motor vehicles, insurance against theft;

 

		(b)	cause the insurance policy or policies required by this Security Agreement to be assigned to the Bank, including a standard
mortgage clause or a mortgage endorsement, as the Bank may require;

 

		(c)	pay all premiums respecting such insurance, and deliver all policies to the Bank, if it so requires.

 

8.2          If proceeds of any required insurance becomes payable,
the Bank may, in its absolute discretion, apply these proceeds to the Obligations as the Bank sees fit or release any insurance
proceeds to the Borrower to repair, replace or rebuild, but any release of insurance proceeds to the Borrower shall not operate
as a payment on account of the Obligations or in any way affect this Security Agreement or the Security Interests.

 

8.3          The Borrower will forthwith, on the happening of loss
or damage to the Collateral, notify the Bank and furnish to the Bank at the Borrower's expense any necessary proof and do any necessary
act to enable the Bank

to obtain payment of the insurance proceeds, but nothing shall
limit the Bank's right to submit to the insurer a proof of loss on its own behalf.

 

8.4          The Borrower hereby authorizes and directs the insurer
under any required policy of insurance to include the name of the Bank as loss payee on any policy of insurance and on any cheque
or draft which may be issued respecting a claim settlement under and by virtue of such insurance, and the production by the Bank
to any insurer of a notarial or certified copy of this Security Agreement (notarized or certified by a notary public or solicitor)
shall be the insurer's complete authority for so doing.

 

General Security Agreement

Rev. May, 2008

 

    	Page 6

    	 

    

 

8.5          If the Borrower fails to maintain insurance as required,
the Bank may, but shall not be obliged to, maintain or effect such insurance coverage, or so much insurance coverage as the Bank
may wish to maintain.

 

9.            OTHER PROHIBITIONS

(You agree to not encumber your property so as to
interfere with the security interests or charges granted to the Bank and you will not dispose of any of the Collateral except inventory
disposed of in the ordinary course of your business.)

 

Without the prior written consent of the
Bank the Borrower will not:

 

		(a)	create or permit to exist any security interest in, charge, encumbrance or lien over, or claim against any of its property,
assets, undertakings including without limitation the Collateral which ranks or could in any event rank in priority to or on an
equal basis with any of the Security Interests created by this Security Agreement;

 

		(b)	grant, sell, or otherwise assign any of its chattel paper or any of the Collateral except only Inventory that is disposed of
in accordance with Clause 10.2; or

 

		(c)	where the Borrower is a corporation

 

(i) repay or reduce any shareholders
loans or other debts due to its shareholders; or

 

(ii)change its name, merge
with or amalgamate with any other entity;

 

10.          RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL

(You will preserve and protect all of the Collateral
and not dispose of it without the consent of the Bank. Any sales or other disposition will result in you holding the proceeds in
trust for the Bank. Your responsibilities towards the Collateral and any trust proceeds are important to the Bank.)

 

10.1        Except as provided by this Security Agreement, without
the Bank’s prior written consent the Borrower will not:

 

		(a)	sell, lease, license or otherwise dispose of the Collateral;

 

		(b)	release, surrender or abandon possession of the Collateral; or

 

		(c)	move or transfer the Collateral from the jurisdictions in which the Security Interests have been perfected.

 

10.2         Provided that the Borrower is not in default under this
Security Agreement, the Borrower may lease, sell, license, consign or otherwise deal with items of Inventory only in the ordinary
course of its business and for the purposes of carrying on its business.

 

10.3         Any disposition of any Collateral, excepting sales of
Inventory in the ordinary course, shall result in the Borrower holding the proceeds in trust for and on behalf of the Bank and
subject to the Bank’s exclusive direction and control. Nothing restricts the Bank’s rights to attach, seize or otherwise
enforce its Security Interests in any Collateral sold or disposed, unless it is sold or disposed with the Bank’s prior written
consent.

 

11.          PERFORMANCE OF OBLIGATIONS

(If you do not strictly do all those things that you
have agreed to do in this Security Agreement, the Bank may perform those obligations but you will be required to pay for them.)

 

If the Borrower fails to perform its covenants
and agreements under this Security Agreement, the Bank may, but shall not be obliged to, perform any or all of such covenants and
agreements without prejudice to any other rights and remedies of the Bank, and any payments made and any costs, charges, expenses
and legal fees and disbursements (on a solicitor and its own client basis) incurred by the Bank shall be immediately payable by
the Borrower to the Bank with interest at the highest rate borne by any of the Obligations and shall be secured by the Security
Interests, until all such amounts have been paid.

 

General Security Agreement

Rev. May, 2008

 

    	Page 7

    	 

    

 

12.          ACCOUNTS

(Any dealing with the Collateral that results in an
account being created, or proceeds arising, is of particular importance to the Bank. The account, or proceeds, acts in substitution
for the Collateral that has been sold, usually inventory. You will protect the account or proceeds in favour of the Bank.)

 

Notwithstanding any other provision of this
Security Agreement, the Bank may collect, realize, sell or otherwise deal with all or a portion of the Accounts in such manner,
upon such terms and conditions and at any time, whether before or after default, as may seem to it advisable, and without notice
to the Borrower, except in the case of disposition after default and then subject to the applicable provisions of the Act, if any.
All forms of payment received by the Borrower in payment of any Account, or as proceeds, shall be subject to the Security Interests
and shall be received and held by the Borrower in trust for the Bank.

 

13.          APPROPRIATION OF PAYMENTS

(The Bank has the right to determine how funds it
receives will be applied in relation to your loan facility.)

 

Any and all payments made respecting the
Obligations and monies realized from any Security Interests (including monies collected in accordance with or realized on any enforcement
of this Security Agreement) may be applied to such part or parts of the Obligations as the Bank sees fit, and the Bank may at any
time change any appropriation as the Bank sees fit.

 

14.          DEFAULT

(You must comply with the payment and other obligations
that you have made in favour of the Bank. You must also strictly satisfy the covenants and agreements that you have made in this
Security Agreement. Failure to do so will be considered a default and the Bank will consider its legal remedies and possibly pursue
them. This Clause defines the defaults and outlines your obligations.)

 

14.1        Unless waived by the Bank, the Borrower shall be in
default under this Security Agreement and shall be deemed to be in default under all other agreements between the Borrower and
the Bank in any of the following events:

 

		(a)	the Borrower defaults, or threatens to default, in payments when due of any of the Obligations; or

 

		(b)	the Borrower is in breach of, or threatens to breach, any term, condition, obligation or covenant made by it to or with the
Bank, or any representation or warranty of the Borrower to the Bank is untrue or ceases to be accurate, whether or not contained
in this Security Agreement; or

 

		(c)	the Borrower or a guarantor of the Borrower declares itself to be insolvent or admits in writing its inability to pay its debts
generally as they become due, or makes an assignment for the benefit of its creditors, is declared bankrupt, makes a proposal or
otherwise takes advantage of any provisions for relief under the Bankruptcy and Insolvency Act (Canada), the Companies
Creditors' Arrangement Act (Canada) or similar legislation in any jurisdiction, or makes an authorized assignment; or

 

		(d)	a receiver, manager, receiver and manager or receiver-manager of all or a part of the Collateral is appointed; or

 

		(e)	an order is made or a resolution is passed for the winding up of the Borrower or a guarantor of the Borrower; or

 

		(f)	the Borrower or a guarantor of the Borrower ceases or threatens to cease to carry on all or a substantial part of its business
or makes or threatens to make a sale of all or substantially all of its assets; or

 

		(g)	distress or execution is levied or issued against all or any part of the Collateral; or

 

		(h)	if the Borrower is a corporation and any member or shareholder:

 

		(i)	commences an action against the Borrower; or

 

		(ii)	gives a notice of dissent to the Borrower in accordance with the provisions of any governing legislation; or

 

General Security Agreement

Rev. May, 2008

 

    	Page 8

    	 

    

 

		(i)	if the Borrower is a corporation and its voting control changes without the Bank's prior written consent; or

 

		(j)	the Borrower uses any monies advanced to it by the Bank for any purpose other than as agreed upon by the Bank; or

 

		(k)	without the Bank’s prior written consent, the Borrower creates or permits to exist any security interest, charge, encumbrance,
lien or claim against any of the Collateral which ranks or could in any event rank in priority to or on an equal basis with any
of the Security Interests; or

 

		(l)	the holder of any other security interest, charge, encumbrance, lien or claim against any of the Collateral does anything to
enforce or realize on such security interest, charge, encumbrance, lien or claim; or

 

		(m)	the Borrower enters into an amalgamation, a merger or other similar arrangement with any other person without the Bank's prior
written consent or, if the Borrower is a corporation, it is continued or registered in a different jurisdiction without the Bank's
prior written consent; or

 

		(n)	the Bank in good faith and on commercially reasonable grounds believes that the prospect of payment or performance of any of
the Obligations is impaired or that any of the Collateral is or is about to be placed in jeopardy or removed from the jurisdiction
in which this Security Agreement has been registered; or

 

		(o)	the lessor under any lease to the Borrower of any real or personal property takes any steps to or threatens to terminate such
lease or otherwise exercise any of its remedies under such lease as a result of any default by the Borrower; or

 

		(p)	the Borrower causes or allows hazardous materials to be brought upon any lands or premises occupied by the Borrower or to be
incorporated into any of its assets, or the Borrower causes, permits, or fails to remedy any environmental contamination upon,
in or under any of its lands or assets, or fails to comply with any abatement or remediation order given by a responsible authority;
or

 

		(q)	any permit, license, certification, quota or order granted to or held by the Borrower is cancelled, revoked or reduced, as
the case may be, or any order against the Borrower is enforced, preventing the business of the Borrower from being carried on for
more than 5 days or materially adversely changing the condition (financial or otherwise) of the Borrower’s business; or

 

		(r)	if an individual, the Borrower dies or is declared incompetent by a court of competent jurisdiction.

 

15.          ENFORCEMENT

(If a default occurs, the Bank has numerous remedies
and legal rights, including enforcement of the Security Agreement according to this Clause. You also have rights, provided by the
Personal Property Security Act and the common law in your jurisdiction.)

 

15.1        Upon any default under this Security Agreement the Bank
may declare any or all of the Obligations whether or not payable on demand to become immediately due and payable and the Security
Interests will immediately become enforceable. To enforce and realize on the Security Interests the Bank may take any action permitted
by law or in equity as it may deem expedient and in particular, without limitation, the Bank may do any of the following:

 

		(a)	appoint by instrument a receiver, manager, receiver and manager or receiver-manager (the "Receiver") of all or any
part of the Collateral, with or without bond as the Bank may determine, and in its absolute discretion remove such Receiver and
appoint another in its stead;

 

		(b)	enter upon any of the Borrower’s premises at any time and take possession of the Collateral with power to exclude the
Borrower, its agents and its servants, without becoming liable as a mortgagee in possession;

 

		(c)	preserve, protect and maintain the Collateral and make such replacements and repairs and additions to the Collateral as the
Bank deems advisable;

 

General Security Agreement

Rev. May, 2008

 

    	Page 9

    	 

    

 

		(d)	dispose of all or part of the Collateral, whether by public or private sale or lease or otherwise, in such manner, at such
price as can be reasonably obtained and on such terms as to credit and with such conditions of sale and stipulations as to title
or conveyance or evidence of title or otherwise as to the Bank may seem reasonable, provided that if any sale, lease or other disposition
is on credit the Borrower will not be entitled to be credited with the proceeds of any such sale, lease or other disposition until
the monies are actually received;

 

		(e)	register assignments of the Intellectual Property, and use sell, assign, license or sub-license any of the Intellectual Property;
and

 

		(f)	exercise all of the rights and remedies of a secured party under the Act and any other applicable laws.

 

15.2        A Receiver appointed pursuant to this Security Agreement
insofar as responsibility for its actions is concerned shall be the agent of the Borrower and not of the Bank and, to the extent
permitted by law or to such lesser extent permitted by its appointment, shall have all the powers of the Bank under this Security
Agreement, and in addition shall have power to:

 

		(a)	carry on the Borrower’s business and for such purpose from time to time to borrow money either secured or unsecured,
and if secured by granting a security interest on the Collateral, such security interest may rank before or on an equal basis with
or behind any of the Security Interests and if it does not so specify such security interest shall rank in priority to the Security
Interests; and

 

		(b)	make an assignment for the benefit of the Borrower's creditors or a proposal on behalf of the Borrower under the Bankruptcy
and Insolvency Act (Canada); and

 

		(c)	commence, continue or defend proceedings in the name of the Receiver or in the name of the Borrower for the purpose of protecting,
seizing, collecting, realizing or obtaining possession of or payment for the Collateral; and

 

		(d)	make any arrangement or compromise that the Receiver deems expedient.

 

15.3        Subject to the claims, if any, of the creditors of the
Borrower ranking in priority to this Security Agreement, all amounts realized from the disposition of the Collateral pursuant to
this Security Agreement will be applied as the Bank, in its absolute discretion and to the full extent permitted by law, may direct
as follows:

 

		(a)	in payment of all costs, charges and expenses (including legal fees and disbursements on a solicitor and its own client basis)
incurred by the Bank respecting or incidental to:

 

		(i)	the exercise by the Bank of the rights and powers granted to it by this Security Agreement; and

 

		(ii)	the appointment of the Receiver and the exercise by the Receiver of the powers granted to it by this Security Agreement, including
the Receiver's reasonable remuneration and all outgoings properly payable by the Receiver;

 

		(b)	in or toward payment to the Bank of all principal and other monies (except interest) due in respect of the Obligations;

 

		(c)	in or toward payment to the Bank of all interest remaining unpaid respecting the Obligations; and

 

		(d)	in payment to those parties entitled thereto under the Act.

 

16.          GENERAL PROVISIONS PROTECTING THE BANK

(You have granted this Security Agreement to the Bank
in consideration by the Bank advancing funds or providing credit or a credit facility to you. The Bank will not be responsible
for debts or liabilities that may arise except to the extent that it agrees to be responsible or liable in this Security Agreement.
If enforcement becomes necessary, the Bank will act in good faith and in a commercially reasonable manner.)

 

General Security Agreement

Rev. May, 2008

 

    	Page 10

    	 

    

 

16.1          To the full extent permitted by law, the Bank shall
not be liable for any debts contracted by it during enforcement of this Security Agreement, for damages to persons or property
or for salaries or non-fulfilment of contracts during any period when the Bank shall manage the Collateral upon entry or seizure,
nor shall the Bank be liable to account as a mortgagee in possession or for anything except actual receipts or be liable for any
loss on realization or for any default or omission for which a mortgagee in possession may be liable. The Bank shall not be bound
to do, observe or perform or to see to the observance or performance by the Borrower of any obligations or covenants imposed upon
the Borrower nor shall the Bank, in the case of securities, instruments or chattel paper, be obliged to preserve rights against
other persons, nor shall the Bank be obliged to keep any of the Collateral identifiable. To the full extent permitted by law, the
Borrower waives any provision of law permitted to be waived by it which imposes greater obligations upon the Bank than described
above.

 

16.2          Neither the Bank nor any Receiver appointed by it shall
be liable or accountable for any failure to seize, collect, realize, sell or obtain payments for the Collateral nor shall they
be bound to institute proceedings for the purposes of seizing, collecting, realizing or obtaining payment or possession of the
Collateral or the preserving of any right of the Bank, the Borrower or any other party respecting the Collateral. The Bank shall
also not be liable for any misconduct, negligence, misfeasance by the Bank, the Receiver or any employee or agent of the Bank or
the Receiver, or for the exercise of the rights and remedies conferred upon the Bank or the Receiver by this Security Agreement.

 

16.3          The Bank or any Receiver appointed by it may grant extensions
of time and other indulgences, take and give securities, accept compromises, grant releases and discharges, release any part of
the Collateral to third parties and otherwise deal with the debtors of the Borrower, co-obligants, guarantors and others and with
the Collateral and other securities as the Bank may see fit without liability to the Bank and without prejudice to the Bank’s
rights respecting the Obligations or the Bank's right to hold and realize the Collateral.

 

16.4          The Bank in its sole discretion may realize upon any
other security provided by the Borrower in any order or concurrently with the realization under this Security Agreement whether
such security is held by it at the date of this Security Agreement or is provided at any time in the future. No realization or
exercise of any power or right under this Security Agreement or under any other security shall prejudice any further realization
or exercise until all Obligations have been fully paid and satisfied.

 

16.5          Any right of the Bank and any obligation of the Borrower
arising under any other agreements between the Bank and the Borrower shall survive the signing, registration and advancement of
any money under this Security Agreement, and no merger respecting any such right or obligation shall occur by reason of this Security
Agreement. The obligation, if any, of the Borrower to pay legal fees, a commitment fee, a standby fee or administration fees, under
the terms of the Bank's commitment letter with the Borrower shall survive the signing and registration of this Security Agreement
and the Bank’s advancement of any money to the Borrower and any legal fees, commitment fees, standby fees or administration
fees owing by the Borrower shall be secured by the Collateral.

 

16.6           In the event that the Bank registers a notice of assignment
of Intellectual Property the Borrower shall be responsible for and shall indemnify the Bank against all maintenance and renewal
costs in respect thereof, and any costs of initiating or defending litigation, together with all costs, liabilities and damages
related thereto.

 

16.7          Notwithstanding any taking of possession of the Collateral,
or any other action which the Bank or the Receiver may take, the Borrower now covenants and agrees with the Bank that if the money
realized upon any disposition of the Collateral is insufficient to pay and satisfy the whole of the Obligations due to the Bank
at the time of such disposition, the Borrower shall immediately pay to the Bank an amount equal to the deficiency between the amount
of the Obligations and the sum of money realized upon the disposition of the Collateral, and the Borrower agrees that the Bank
may bring action against the Borrower for payment of the deficiency, notwithstanding any defects or irregularities of the Bank
or the Receiver in enforcing its rights under this Security Agreement.

 

		17.	APPOINTMENT OF ATTORNEY

(You appoint the Bank your attorney
for specific matters.)

 

The Borrower hereby irrevocably appoints
the Bank or the Receiver, as the case may be, with full power of substitution, as the attorney of the Borrower for and in the name
of the Borrower to do, make, sign, endorse or execute under seal or otherwise all deeds, documents, transfers, cheques, instruments,
demands, assignments, assurances or consents that the Borrower is obliged to sign, endorse or execute and generally to use the
name of the Borrower and to do everything necessary or incidental to the exercise of all or any of the powers conferred on the
Bank, or the Receiver, as the case may be, pursuant to this Security Agreement. This grant and authority shall continue and survive
any mental infirmity or legal incapacity of the Borrower subsequent to the execution hereof.

 

General Security Agreement

Rev. May, 2008

 

    	Page 11

    	 

    

 

18.          CONSOLIDATION 

(Should you wish to redeem the Security Interest,
the Bank may require you to also pay other obligations to it before discharging its Security Interests.)

 

For the purposes of the laws of all jurisdictions
in Canada, the doctrine of consolidation applies to this Security Agreement.

 

19.          NO OBLIGATION TO ADVANCE

(The Bank determines, in the end, whether any advances
or further advances under the loan facility will be made.)

 

Neither the preparation and execution of
this Security Agreement nor the perfection of the Security Interests or the advance of any monies by the Bank shall bind the Bank
to make any advance or loan or further advance or loan, or extend any time for payment of any indebtedness or liability of the
Borrower to the Bank.

 

		20.	WAIVER

(Indulgences granted by the Bank
should not be taken for granted.)

 

The Bank may permit the Borrower to remedy
any default without waiving the default so remedied. The Bank may from time to time and at any time partially or completely waive
any right, benefit or default under this Security Agreement but such waiver shall not be a bar to or a waiver of any such right,
benefit or default thereafter, or of any other right, benefit or default under this Security Agreement. No waiver shall be effective
unless it is in writing and signed by the Bank. No delay or omission on the part of the Bank in exercising any right shall operate
as a waiver of such right or any other right.

 

21.          NOTICE

(This Clause describes how the various notices referred
to in this Security Agreement may be given.)

 

Notice may be given to either party by prepaid
mail or delivered to the party for whom it is intended, at the principal address of such party provided in this Security Agreement
or at such other address as may be given in writing by one party to the other, and any notice if mailed shall be deemed to have
been given at the expiration of three business days after mailing and if delivered, on delivery.

 

		22.	EXTENSIONS

(Your duties and responsibilities to the Bank remain
in place regardless of any concerns you may have about the loan facility or the Bank's actions.)

 

The Bank may grant extensions of time and
other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges,
refrain from perfecting or maintaining perfection of security interests, and otherwise deal with the Borrower, the Borrower’s
account debtors, sureties and others and with the Collateral and other security interests as the Bank may see fit without prejudice
to the Borrower’s liability or the Bank's right to hold and realize on the Security Interests.

 

		23.	NO MERGER

(Except as agreed upon in the Security Agreement or
another contract specifically discussing this point, this Security Agreement is an independent obligation on your part.)

 

This Security Agreement shall not create
any merger or discharge of any of the Obligations, or any assignment, transfer, guarantee, lien, contract, promissory note, bill
of exchange or security interest of any form held or which may be held by the Bank now or in the future from the Borrower or from
any other person. The taking of a judgement respecting any of the Obligations will not operate as a merger of any of the covenants
contained in this Security Agreement.

 

		24.	RIGHTS CUMULATIVE

(This Agreement describes some rights and remedies
of the Bank. The Bank also is entitled to rely on all other rights and remedies available to it in law and in any other agreements
it has entered into with you.)

 

General Security Agreement

Rev. May, 2008

 

    	Page 12

    	 

    

 

The Bank’s rights and remedies set
out in this Security Agreement, and in any other security agreement held by the Bank from the Borrower or any other person to secure
payment and performance of the Obligations, are cumulative and no right or remedy contained in this Security Agreement or any other
security agreements is intended to be exclusive but each will be in addition to every other right or remedy now or hereafter existing
at law, in equity or by statute, or pursuant to any other agreement between the Borrower and the Bank that may be in effect from
time to time.

 

		25.	ASSIGNMENT

(Should the Bank assign or transfer or otherwise deal
with this Security Agreement on its own behalf, you agree that the Security Agreement shall remain binding and effective upon you.)

 

The Bank may, without notice to the Borrower,
at any time assign or transfer, or grant a security interest in, all or any of the Obligations, this Security Agreement and the
Security Interests. The Borrower agrees that the assignee, transferee or secured party, as the case may be, shall have all of the
Bank's rights and remedies under this Security Agreement and the Borrower will not assert as a defence, counterclaim, right of
set-off or otherwise any claim which it now has or may acquire in the future against the Bank in respect of any claim made or any
action commenced by such assignee, transferee or secured party, as the case may be, and will pay the assigned Obligations to the
assignee, transferee or secured party, as the case may be, as the said Obligations become due.

 

		26.	SATISFACTION AND DISCHARGE

(Until this Security Agreement is terminated and any
registrations relating to it are discharged, the Security Agreement will remain effective even though the indebtedness to the Bank
may have been paid.)

 

Any partial payment or satisfaction of the
Obligations, or any ceasing by the Borrower to be indebted to the Bank shall not be a redemption or discharge of this Security
Agreement. The Borrower shall be entitled to a release and discharge of this Security Agreement upon full payment and satisfaction
of all Obligations, and upon written request by the Borrower and, subject to applicable law, payment to the Bank of an administrative
fee to be fixed by the Bank and payment of all costs, charges, expenses and legal fees and disbursements (on a solicitor and his
own client basis) incurred by the Bank in connection with the Obligations and such release and discharge. The Borrower shall, subject
to applicable law, pay an administrative fee, to be fixed by the Bank, for the preparation or execution of any full or partial
release or discharge by the Bank of any security it holds, of the Borrower, or of any guarantor or covenantor with respect to any
Obligations.

 

		27.	ENVIRONMENT

 

The Borrower represents and agrees that:

 

		(a)	it operates and will continue to operate in conformity with all applicable environmental laws, regulations, standards, codes,
ordinances and other requirements of any jurisdiction in which it carries on business and will ensure its staff is trained as required
for that purpose;

 

		(b)	it has an environmental emergency response plan and all officers and employees are familiar with that plan and their duties
under it;

 

		(c)	it possesses and will maintain all environmental licences, permits and other governmental approvals as may be necessary to
conduct its business and maintain the Collateral;

 

		(d)	there has been no complaint, prosecution, investigation or proceeding, environmental or otherwise, respecting the Borrower's
business or assets including without limitation the Collateral;

 

		(f)	it will advise the Bank immediately upon becoming aware of any environmental problems relating to its business or the Collateral;

 

		(g)	it will provide the Bank with copies of all communications with environmental officials and all environmental studies or assessments
prepared for the Borrower and it consents to the Bank contacting and making enquiries of environmental officials or assessors;

 

General Security Agreement

Rev. May, 2008

 

    	Page 13

    	 

    

 

		(h)	it will from time to time when requested by the Bank provide to the Bank evidence of its full compliance with the Borrower's
obligations in this Clause 27.

 

		28.	ENUREMENT

 

This Security Agreement shall enure to the
benefit of the Bank and its successors and assigns, and shall be binding upon the Borrowers and its heirs, executors, administrators,
successors and any assigns permitted by the Bank, as the case may be.

 

		29.	INTERPRETATION

 

		29.1	In this Security Agreement:

 

		(a)	"Collateral" has the meaning set out in Clause 1 and any reference to the Collateral shall, unless the context otherwise
requires, be deemed to be a reference to the Collateral in whole or in part;

 

		(b)	"the Act" means the Personal Property Security Act of the province in which the branch of the Bank is located,
as described on page 1 of this Security Agreement, and all regulations under the Act, as amended from time to time.

 

29.2        Words and expressions used in this Security Agreement
that have been defined in the Act shall be interpreted in accordance with their respective meanings given in the Act unless otherwise
defined in this Security Agreement or unless the context otherwise requires.

 

29.3        The invalidity or unenforceability of the whole or any
part of any clause of this Security Agreement shall not affect the validity or enforceability of any other clause or the remainder
of such clause of this Security Agreement.

 

29.4        The headings used in this Security Agreement have been
inserted for convenience of reference only and shall not define, limit, alter or enlarge the meaning of any provision of this Security
Agreement.

 

29.5        This Security Agreement shall be governed by the laws
of the province referred to in subclause 29.1(b). For enforcement purposes, the Borrower hereby attorns to the jurisdiction of
the courts and laws of any province, state, territory or country in which the Bank enforces its rights and remedies hereunder.

 

30.          COPY OF AGREEMENT AND FINANCING STATEMENT

 

The Borrower:

 

		(a)	acknowledges receiving a copy of this Security Agreement; and

 

		(b)	if the Act so permits, waives all rights to receive from the Bank a copy of any financing statement or financing change statement
filed, or any verification statement or other document received at any time respecting this Security Agreement.

 

		31.	TIME

 

Time shall in all respects be of the essence.

 

		32.	INDEPENDENT ADVICE

 

The Borrower acknowledges having received,
or having had the opportunity to receive, independent legal and accounting advice respecting this Security Agreement and its effect.

 

		33.	PARENTHETICAL COMMENTS

 

The Borrower acknowledges and agrees that
the comments in parentheses are intended to provide a brief but not thorough indication of the intent of the legal provisions that
follow in each subsequent clause, and do not form part of this Security Agreement.

 

General Security Agreement

Rev. May, 2008

 

    	Page 14

    	 

    

 

		34.	THE COMMITMENT LETTER

 

The Bank has extended an offer of financing
or a commitment letter to the Borrower relating to the loan facilities secured by this Security Agreement. The Borrower acknowledges
and agrees that in the event of any discrepancy between any term of this Security Agreement and any term of the commitment letter,
the terms of the commitment letter shall apply and take precedence over the terms of this Security Agreement.

 

IN WITNESS WHEREOF the Borrower has hereunto set his
hand and seal or has affixed its corporate seal duly attested by the hand(s) of its proper officer(s) in that behalf, on the day
and year first above written.

 

	 	 	LAKELAND PROTECTIVE REAL ESTATE INC.
	(Witness)	 	(Borrower)
	 	 	 	 
	 	 	Per:  	/s/ Gary Pokrassa
	 	 	 	Gary Pokrassa, CFO
	 	 	 	 
	 	 	I have authority to bind the Corporation

 

General Security Agreement

Rev. May, 2008

 

    	Page 15

    	 

    

 

SCHEDULE “A”

 

Subclause 1.1(a):

 

		1.	the following specific items, even though they may be included within the descriptions of Collateral (insert description by
item or kind):

 

 

		2.	the following serial numbered goods:

 

	 	Serial No. (re  motor vehicles & trailers, etc.)	Year	Make and Model

  

		3.	Location(s) of the Collateral:

 

59 Bury Court, Brantford, Ontario N3S 0A9

 

General Security Agreement

Rev. May, 2008

 

    	Page 16Exhibit 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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}]]