Document:

Exhibit

Exhibit 10.1
Execution Version

THIRD AMENDMENT

This Third Amendment (“Amendment”) dated as of April 28, 2016 (the “Third Amendment Effective Date”) is by and among Hi-Crush Partners LP, a Delaware limited partnership (the “Borrower”), the Lenders party hereto, and ZB, N.A. DBA Amegy Bank, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”). 
WHEREAS, the Borrower, the lenders from time to time party thereto (the “Lenders”), and ZB, N.A. DBA Amegy Bank, as Administrative Agent, as issuing lender, and as swing line lender, are parties to the Amended and Restated Credit Agreement dated as of April 28, 2014, as amended by Consent, Waiver and First Amendment dated as of October 21, 2014 and the Second Amendment dated as of November 5, 2015 (as amended, the “Credit Agreement”); 
WHEREAS, the parties hereto have agreed to make certain amendments to the Credit Agreement as provided for herein, subject to the conditions herein; and
NOW THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
Section 1.Defined Terms.  Unless otherwise defined in this Amendment, each capitalized term used in this Amendment has the meaning given such term in the Credit Agreement, as amended by this Amendment.
Section 2.    Amendments to the Credit Agreement.  
(a)    Section 1.1 of the Credit Agreement is hereby amended to include the following new defined terms in their appropriate alphabetical order:
“Covenant Cure Payment” has the meaning set forth in Section 7.7.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule. 

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) 

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any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent; 

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Equity Funding Date” means the date on which the Borrower shall have received Equity Issuance Proceeds from the Equity Issuance of Equity Interests of the Borrower (other than Disqualified Stock) on terms satisfactory to the Administrative Agent and in aggregate amount not less than $25,000,000 (determined prior to giving effect to the payment of all related underwriter fees and expenses, SEC and blue sky fees, printing costs, fees and expenses of accountants, lawyers and other professional advisors, and brokerage commissions).

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.   

“Equity Funding Event of Default” has the meaning set forth in Section 7.1(q).

“Third Amendment Effective Date” means April 28, 2016.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
(b)    The definition of “Commitment” in Section 1.1 of the Credit Agreement is hereby amended by replacing the last sentence of such definition as follows:
The aggregate Commitment on the Third Amendment Effective Date is $75,000,000.
(c)    The definition of “Defaulting Lender” in Section 1.1 of the Credit Agreement is hereby amended by: 
(i)    deleting the “or” before clause (e); 

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(ii)    inserting new clause (f) after clause (e) as follows: 
or (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-in Action.
(iii)    replacing the “clauses (a) through (e)” with “clauses (a) through (f)” in the final sentence of such definition. 
(d)    The definition of “Eurodollar Rate” in Section 1.1 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition: 
Notwithstanding the foregoing, if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
(e)    The definition of “Federal Funds Rate” in Section 1.1 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition:
Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
(f)    The proviso in Section 2.14(c)(i) of the Credit Agreement is hereby amended by replacing such proviso as follows:
; provided that, subject to Section 9.22, such reallocation shall not constitute a waiver or release of any claim the Borrower, the Administrative Agent, the Issuing Lender or any other Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender;
(g)    Section 3.2 of the Credit Agreement is hereby amended by adding new clauses (d) as follows:
(d)    From and after July 1, 2017, the Borrower and its Subsidiaries shall be in pro forma compliance with the financial covenant in Section 6.16 as of the most recently ended fiscal quarter after giving pro forma effect to such Advance or such increase, renewal or extension of such Letter of Credit (which calculation, for the avoidance of doubt, uses outstanding Debt on the date of such Advance or increase, renewal or extension of such Letter of Credit and EBITDA as of such fiscal quarter end) and the Borrower shall have delivered a pro forma compliance certificate setting forth a calculation of such compliance to the Administrative Agent with such supporting information that the Administrative Agent may request.
(h)    Section 6.9(c) of the Credit Agreement is hereby amended by replacing such clause in its entirety as follows:
(c)  the Borrower may make cash distributions to the holders of its Equity Interests from “Operating Surplus” (as such term is defined in the Partnership Agreement) calculated on a cumulative basis from August 21, 2012 through the date 

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of such distribution and after deducting therefrom all Covenant Cure Payments so long as (i) no Event of Default shall have occurred and be continuing, (ii) prior to the Q2 2017 Compliance Date, the Borrower and its Subsidiaries are in pro forma compliance with the financial covenants in Section 6.16 and 6.17 calculated (A) after giving effect to such payment, (B) assuming that the Leverage Ratio and Interest Coverage Ratio requirements for the fiscal quarter ending June 30, 2017 as set forth in Section 6.16 and 6.17 were applicable for the fiscal quarter ending immediately prior to the date such distribution is to be made, and (C) with “EBITDA” for the four-fiscal quarter period then ended being deemed equal to EBITDA for the last fiscal quarter multiplied by 4, (iii) from and after the Q2 2017 Compliance Date, the Borrower and its Subsidiaries are in pro forma compliance with the financial covenants in Section 6.16 and 6.17 after giving effect to such payment and as of the most recent fiscal quarter end for which financial statements have been delivered to the Administrative Agent, and (iv) the Equity Funding Date has occurred; and
(i)    Section 6.23 of the Credit Agreement is hereby amended by replacing such Section in its entirety as follows:
Section 6.23    EBITDA. For the fiscal quarter ending on March 31, 2017, Borrower shall not permit EBITDA for the two-fiscal quarter period then ended to be less than a negative $5,000,000.
(j)    Section 7.1 of the Credit Agreement is hereby amended by adding new clause (q) as follows: 
(q)    The Equity Funding Date has not occurred within 45 calendar days after the Third Amendment Effective Date (the “Equity Funding Event of Default”).
(k)    The Credit Agreement is hereby amended by inserting new Section 7.7 as follows:
Section 7.7    Borrower’s Right to Cure.  
(a)    Notwithstanding anything to the contrary contained in Section 7.1, in the event of any Event of Default under the covenants set forth in Section 6.16, Section 6.17 or Section 6.23, from the first day of the applicable fiscal quarter until the date on which financial statements are required to be delivered pursuant to Section 5.2(a) or (b) with respect to the applicable fiscal quarter hereunder, the Borrower may apply cash Equity Issuance Proceeds from an Equity Issuance of Equity Interests (other than Disqualified Stock) or cash equity contributions on account of Equity Interests (other than Disqualified Stock) and in an amount sufficient to bring Credit Parties into compliance with such provision and rounded up to the nearest $1,000,000 (a “Covenant Cure Payment” and such necessary minimum amount, the “Minimum Covenant Cure Amount”) in the manner set forth below in this Section 7.7.  Solely for purposes of calculating the covenants set forth in Section 6.16, Section 6.17 or Section 6.23 for a particular fiscal quarter end, the 

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Borrower may apply the Covenant Cure Payment to increase its consolidated EBITDA for such fiscal quarter (and such four quarter periods containing such applicable fiscal quarter end), so long as (A) the Borrower actually receives such Covenant Cure Payment no earlier than the first day of the applicable fiscal quarter and no later than the date on which the applicable financial statements for such fiscal quarter end are due hereunder, and no later than the date on which the applicable financial statements for such fiscal quarter are due hereunder, the Administrative Agent receives evidence of such Covenant Cure Payment receipt from the Borrower, (B) each Lender’s Commitment is reduced as provided in the following sentence, (C) on the date financial statements for the applicable fiscal quarter are due, the Borrower applies the proceeds of such Covenant Cure Payment as a prepayment of Advances (without the need for any notice of prepayment pursuant to Section 2.4(b) or otherwise) in an amount sufficient to cause the sum of (i) the Advances plus (ii) the Letter of Credit Exposure to not exceed the aggregate Commitments (after giving effect to the reduction required in the following sentence), and (D) the Equity Funding Event of Default has not occurred.  On the date financial statements for the applicable fiscal quarter are due, the Lenders’ Commitments shall be ratably and permanently reduced (without the need for any prior notice of reduction pursuant to Section 2.1(b) or otherwise) by the Minimum Covenant Cure Amount, with no obligation of the Lenders to reinstate such Commitments, and the applicable Commitment Fees shall thereafter be computed on the basis of the Commitments, as so reduced.  Subject to the terms set forth above and the terms in clauses (b) and (c) below, upon (x) application of the proceeds of such Covenant Cure Payment as provided in the immediately preceding sentence and (y) delivery of a Compliance Certificate executed by a Responsible Officer of the Borrower to the Administrative Agent reflecting compliance with Section 6.16, Section 6.17 or Section 6.23, as applicable, such Events of Default shall be deemed cured and waived and no longer in existence.
(b)    The Covenant Cure Payment shall only be taken into account when calculating EBITDA for purposes of the covenants contained in Section 6.16, Section 6.17 or Section 6.23 as of a particular fiscal quarter end (the “Cured Quarter”) and any subsequent calculations of such covenants which contain such Cured Quarter as part of its two-quarter period, three-quarter period, trailing twelve month period or trailing four-quarter period (the “Test Period”).  For the avoidance of doubt, the full amount of the Covenant Cure Payment (including any portion thereof that was necessary to round up to the nearest $1,000,000) shall be used in calculating the applicable covenant compliance as provided in this Section 7.7.  However, the amount of the Covenant Cure Payment itself shall not be multiplied in the manner provided in the last sentence of the definition of “EBITDA” regardless whether such calculation is for such Cured Quarter or any subsequent Test Period.  Therefore, with respect to the Test Periods for which EBITDA is annualized as provided for in the final sentence of the definition of “EBITDA”, (i) the Minimum Covenant Cure Amount necessary in order for the Borrower to be in compliance with the covenants contained in Section 6.16 or Section 6.17 shall be calculated after giving effect to 

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the annualization of EBITDA provided for in the final sentence of the definition of “EBITDA”1 and (ii) Leverage Ratio and Interest Coverage Ratio shall be calculated by first annualizing actual EBITDA figures for such Test Period then adding the amount of all Covenant Cure Payments, if any, applied during such Test Period.
(c)    The parties hereby acknowledge and agree that this Section 7.7 may not be relied on for purposes of calculating any financial ratios or other conditions or compliances other than the financial covenant set forth in Section Section 6.16, Section 6.17 or Section 6.23, as applicable, and shall not result in any adjustment to any amounts (including any increase in “Operating Surplus” that is permitted to be distributed under Section 6.9) other than the amount of the consolidated EBITDA referred to in Section 7.7(a) above for purposes of determining the Borrower’s compliance with Section 6.16, Section 6.17 or Section 6.23, as applicable. 
(l)    The Credit Agreement is hereby amended by (i) renumbering Section 9.22 and Section 9.23 as Section 9.23 and Section 9.24, respectively, and (ii) inserting new Section 9.22 as follows:
Section 9.22    Acknowledgment and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Credit Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)    the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b)    the effects of any Bail-in Action on any such liability, including, if applicable:
(i)    a reduction in full or in part or cancellation of any such liability;
1For illustrative purposes only, if EBITDA for the quarter ending June 30, 2017 is equal to $500,000, then after giving effect to the last sentence of EBITDA, EBITDA for the four-fiscal quarter period ending June 30, 2017 is deemed to be $2,000,000 for purposes of the Leverage Ratio and Interest Coverage Ratio.  If EBITDA is required to be $3,000,000 for the four fiscal quarters ending June 30, 2017 in order for the Borrower to be in compliance with the Leverage Ratio and Interest Coverage Ratio covenants, then the Covenant Cure Payment shall be equal to or greater than $1,000,000. 

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(ii)    a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or
(iii)    the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
(m)    The Credit Agreement is hereby amended by replacing Schedule II (Commitments, Contact Information) in its entirety with Schedule II attached hereto.
(n)    The Credit Agreement is hereby amended by replacing Exhibit B (Form of Compliance Certificate) in its entirety with Exhibit B attached hereto.
(o)    The Credit Agreement is hereby amended by replacing Exhibit D (Form of Notice of Borrowing) in its entirety with Exhibit D attached hereto.
Section 3.    Decrease of the Commitments.  As of the Third Amendment Effective Date, the aggregate Commitments shall be decreased to $75,000,000.  Upon the effectiveness of this Amendment pursuant to Section 4 below, each Lender’s Commitment shall be the Commitment set forth on Schedule II attached hereto.  The commitment fees provided for in Section 2.6(a) of the Credit Agreement shall hereafter be computed on the basis of the aggregate Commitments as so decreased. 
Section 4.    Conditions to Effectiveness.  This Amendment shall become effective on the Third Amendment Effective Date upon the occurrence of the following conditions precedent:
(a)    Documentation.  The Administrative Agent shall have received the following, each in form and substance satisfactory to the Administrative Agent:
(i)    this Amendment duly executed by the Borrower, the Administrative Agent and the Majority Lenders (calculated in accordance with the Commitments set forth on Schedule II attached hereto), and the Acknowledgment and Reaffirmation attached hereto duly executed by each of the Guarantors; and
(ii)    a Revolving Note payable to each Lender in the amount of such Lender’s Commitment, as amended hereby.
(b)    Prepayment of Revolving Advances.  On the Amendment Effective Date, the Borrower shall have made the prepayment of the Revolving Advances, if any, required pursuant to Section 2.4(c)(i) of the Credit Agreement as a result of the reduction of the Commitments pursuant to this Amendment.

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(c)    Payment of Fees.  On or prior to the Amendment Effective Date, the Borrower shall have paid the fees set forth in the fee letter dated as of April 28, 2016 between the Borrower and the Administrative Agent and all reasonable and documented out-of-pocket costs and expenses which have been invoiced and are payable pursuant to Section 9.1 of the Credit Agreement.
Section 5.    Representations and Warranties.  The Borrower hereby represents and warrants that after giving effect hereto:
(a)    the representations and warranties of the Credit Parties contained in the Credit Documents are true and correct in all material respects on and as of the date hereof, other than those representations and warranties that expressly relate solely to a specific earlier date, which shall remain true and correct in all material respects as of such earlier date; 
(b)    no Default or Event of Default has occurred and is continuing; and
(c)    EBITDA for the six month period ending March 31, 2016 was no less than $2,000,000.
Section 6.    Effect of Amendment.
(a)    The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender, the Issuing Lender, the Swing Line Lender or the Administrative Agent under any of the Credit Documents, nor, except as expressly provided herein, constitute a waiver or amendment of any provision of any of the Credit Documents.
(b)    Upon and after the execution of this Amendment by each of the parties hereto, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified hereby.
(c)    This Amendment is a Credit Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof.
(d)    Except as specifically modified above, the Credit Agreement and the other Credit Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.
Section 7.    RELEASE:  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower hereby, for itself and its successors and assigns, fully and without reserve, releases, acquits, and forever discharges each Secured Party, its respective successors and assigns, officers, directors, employees, representatives, trustees, attorneys, agents and affiliates (collectively the "Released Parties" and individually a "Released Party") from any and all actions, claims, demands, causes of 

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action, judgments, executions, suits, debts, liabilities, costs, damages, expenses or other obligations of any kind and nature whatsoever, direct and/or indirect, at law or in equity, whether now existing or hereafter asserted, whether absolute or contingent, whether due or to become due, whether disputed or undisputed, whether  known or unknown (INCLUDING, WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the "Released Claims"), for or because of any matters or things occurring, existing or actions done, omitted to be done, or suffered to be done by any of the Released Parties, in each case, on or prior to the Third Amendment Effective Date and are in any way directly or indirectly arising out of or in any way connected to any of this Amendment, the Credit Agreement, any other Credit Document, or any of the transactions contemplated hereby or thereby (collectively, the "Released Matters").  The Borrower, by execution hereof, hereby acknowledges and agrees that the agreements in this Section 7 are intended to cover and be in full satisfaction for all or any alleged injuries or damages arising in connection with the Released Matters herein compromised and settled.  The Borrower hereby further agrees that it will not sue any Released Party on the basis of any Released Claim released, remised and discharged by the Credit Parties pursuant to this Section 7.  In entering into this Amendment, the Borrower has consulted with, and has been represented by, legal counsel and expressly disclaim any reliance on any representations, acts or omissions by any of the Released Parties and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth herein do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity hereof.  The provisions of this Section 7 shall survive the termination of this Amendment, the Credit Agreement and the other Credit Documents and payment in full of the Obligations.
Section 8.    Governing Law.  THIS AMENDMENT SHALL BE DEEMED A CONTRACT UNDER, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 9.    Counterparts.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Transmission by facsimile or other electronic means of an executed counterpart of this Amendment shall be deemed to constitute due and sufficient delivery of such counterpart.
THIS AMENDMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN.  ADDITIONALLY, THIS AMENDMENT AND THE OTHER CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

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THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first above written.
BORROWER:
HI-CRUSH PARTNERS LP

By: Hi-Crush GP LLC, its general partner

By: /s/ Laura Fulton
Name:  Laura C. Fulton
Title:  Chief Financial Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

ADMINISTRATIVE AGENT/LENDERS:
ZB, N.A. DBA AMEGY BANK, in its capacity as Administrative Agent, Issuing Lender, Swing Line Lender, and a Lender
By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

BARCLAYS BANK PLC, 
as a Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

MORGAN STANLEY BANK, N.A., 
as a Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

IBERIABANK, 
as a Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

REGIONS BANK, 
as a Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

UBS AG, STAMFORD BRANCH, 
as a Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

ORIGIN BANK (f/k/a Community Trust Bank), as a
Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

BANK OF AMERICA, N.A., 
as a Lender

By: /s/ Authorized Person
Name: Authorized Person
Title: Authorized Officer

Signature Page to Third Amendment to Amended and Restated Credit Agreement
Hi-Crush Partners LP

ACKNOWLEDGMENT AND REAFFIRMATION

Each of the undersigned (each a “Guarantor” and collectively the “Guarantors”) hereby (a) acknowledges receipt of a copy of the foregoing Third Amendment dated as of April 28, 2016 (the “Amendment”) among Hi-Crush Partners, a Delaware limited partnership (the “Borrower”), the lenders party thereto, and ZB, N.A. DBA Amegy Bank, as administrative agent (in such capacity, the “Administrative Agent”) and (b) ratifies, confirms, and acknowledges that its obligations under the Amended and Restated Guaranty Agreement dated as of April 28, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”; capitalized terms used herein and not specifically defined herein have the meaning provided in the Guaranty) are in full force and effect and that each Guarantor continues to unconditionally and irrevocably, jointly and severally, guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of all of the Guaranteed Obligations, as such Guaranteed Obligations may have been amended by the Amendment.  Each Guarantor hereby acknowledges that its execution and delivery of this Acknowledgment and Reaffirmation do not indicate or establish an approval or consent requirement by the Guarantors in connection with the execution and delivery of amendments to the Credit Agreement or any of the other Credit Documents (as defined in the Credit Agreement referred to in the Guaranty).  

RELEASE:  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby, for itself and its successors and assigns, fully and without reserve, releases, acquits, and forever discharges each Secured Party, its respective successors and assigns, officers, directors, employees, representatives, trustees, attorneys, agents and affiliates (collectively the "Released Parties" and individually a "Released Party") from any and all actions, claims, demands, causes of action, judgments, executions, suits, debts, liabilities, costs, damages, expenses or other obligations of any kind and nature whatsoever, direct and/or indirect, at law or in equity, whether now existing or hereafter asserted, whether absolute or contingent, whether due or to become due, whether disputed or undisputed, whether  known or unknown (INCLUDING, WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the "Released Claims"), for or because of any matters or things occurring, existing or actions done, omitted to be done, or suffered to be done by any of the Released Parties, in each case, on or prior to the Third Amendment Effective Date (as defined in the Third Amendment) and are in any way directly or indirectly arising out of or in any way connected to any of the Third Amendment, the Credit Agreement, any other Credit Document (including this Acknowledgment and Reaffirmation), or any of the transactions contemplated hereby or thereby (collectively, the "Released Matters").  Each Guarantor, by execution hereof, hereby acknowledges and agrees that the agreements in this paragraph are intended to cover and be in full satisfaction for all or any alleged injuries or damages arising in connection with the Released Matters herein compromised and settled.  The Borrower hereby further agrees that it will not sue any Released Party on the basis of any Released Claim released, remised and discharged by the Credit Parties pursuant to this paragraph.  In entering into the agreements set forth in this Acknowledgment and Reaffirmation, the Borrower has consulted with, and 

has been represented by, legal counsel and expressly disclaim any reliance on any representations, acts or omissions by any of the Released Parties and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth herein do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity hereof.  The provisions of this paragraph shall survive the termination of this Acknowledgment and Reaffirmation, the Third Amendment, the Credit Agreement and the other Credit Documents and payment in full of the Obligations.

This Acknowledgment and Reaffirmation shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas without regard to conflicts of laws principles.

THIS ACKNOWLEDGMENT AND REAFFIRMATION AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN.  ADDITIONALLY, THIS AMENDMENT AND THE OTHER CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.

HI-CRUSH WYEVILLE LLC
HI-CRUSH CHAMBERS LLC
HI-CRUSH OPERATING LLC
HI-CRUSH RAILROAD LLC
D & I SILICA, LLC.
HI-CRUSH FINANCE CORP.
HI-CRUSH AUGUSTA ACQUISITION CO. LLC
HI-CRUSH AUGUSTA LLC
HI-CRUSH CANADA INC.

Each By: /s/ Laura Fulton
Name: Laura C. Fulton
Title: Chief Financial Officer

SCHEDULE II
Commitments, Contact Information
	
		
	ADMINISTRATIVE AGENT/ISSUING LENDER/SWING LINE LENDER

	ZB, N.A. DBA Amegy Bank
	Address for Notices:   4400 Post Oak Parkway
                                     Houston, Texas 77027
Attn:                            Special Processing: Dana Chargois
Telephone:                  (713) 232-6395
Facsimile:                   (713) 693-7467
Email:                         special.processing@amegybank.com

With a copy to:            4400 Post Oak Parkway
                                      Houston, Texas 77027
Attn:                             Wendy Schneider
Telephone:                   (713) 232-1564
Facsimile:                    (713) 693-7467
Email:                          wendy.schneider@amegybank.com

With a copy to:            4400 Post Oak Parkway
                                      Houston, Texas 77027
Attn:                             Brad Ellis
Telephone:                   (713) 232-1212
Facsimile:                    (713) 693-7467
Email:                          Brad.Ellis@amegybank.com

	CREDIT PARTIES

	Borrower/Guarantors

	Address for Notices:   Three Riverway, Suite 1350
                                      Houston, TX 77056
Attn:                             Laura C. Fulton
Telephone:                   (713) 980-6200
Facsimile:                    (713) 980-6202

	
		
	Lender
	Commitment

	ZB, N.A. DBA Amegy Bank
	$13,500,000

	Barclays Bank PLC
	$10,875,000

	Morgan Stanley Bank, N.A.
	$10,875,000

	IBERIABANK
	$10,125,000

	Regions Bank
	$9,375,000

	UBS AG, Stamford Branch
	$6,750,000

	Origin Bank
	$6,750,000

	Bank of America, N.A.
	$6,750,000

	Total:
	$75,000,000.00

EXHIBIT B
Form of Compliance Certificate

See attached.

EXHIBIT D
Form of Notice of Borrowing

See attached.Exhibit 101

		
			Exhibit 10.1
		

		
			﻿
		

		
			TILE SHOP HOLDINGS, INC.
		

		
			14000 Carlson Parkway
		

		
			Plymouth, Minnesota 55441
		

		
			 
		

		
			January 28, 2016
		

		
			﻿
		

		
			Lynda Stout
		

		
			PO Box 79048
		

		
			Charlotte, NC 28271
		

		
			﻿
		

		
			Dear Lynda:
		

		
			﻿
		

		
			I am 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:

					
					
						Senior Vice President – Retail Stores

				
	
					
						﻿

					
					
						 

				
	
					
						Start date:

					
					
						February 29, 2016

				
	
					
						﻿

					
					
						 

				
	
					
						Status:

					
					
						Full-time, Regular

				
	
					
						﻿

					
					
						 

				
	
					
						Reporting to:

					
					
						Chris Homeister, CEO

				
	
					
						﻿

					
					
						 

				
	
					
						Compensation:

					
					
						Base salary (annualized) of $310,000, 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 applicable withholding and payroll taxes.

				
	
					
						Bonus:

					
					
						The Bonus opportunity would be 50% of pay and it would be based on achieving Company-wide goals and personal goals and objectives, pro-rated for the partial year during which you are employed by the Company.

				
	
					
						﻿

					
					
						 

				
	
					
						Benefits:

					
					
						You will be eligible to receive the Company’s standard benefit package for employees of your level.

				
	
					
						﻿

					
					
						 

				
	
					
						Stock Options:

					
					
						Subject to approval by the Company’s Board of Directors, you will be granted options to purchase 100,000 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. These options will vest over a five-year period and will otherwise be subject to the terms of the Company’s 2012 Equity Award Plan (the “Plan”) and your Stock Option Agreement entered into pursuant thereto. The options will vest evenly over the course of 5 years at 20% per year. The options will have a 7-year life upon issuance.

				
	
					
						﻿

					
					
						 

				
	
					
						Vacation:

					
					
						3 weeks

				
	
					
						﻿

					
					
						 

				
	
					
						Technology:

					
					
						A laptop, tablet, and cell phone of your choosing will be issued on your start date.

				
	
					
						﻿

					
					
						 

				
	
					
						Re-Location Expenses:

					
					
						The Company will reimburse re-location related expenses directly to you. For large expenditures, please have them pre-approved by me first. At your election, the company will pay these expenses directly to a vendor of your choosing that will assist you in your move.

				
	
					
						﻿

					
					
						 

				

		

		

		 

 

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						﻿

					
					
						It is the expectation of the company that your permanent move to the Twin Cities will be completed 3 months following your start date.

				

		
			﻿
		

		
			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.
		

		
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			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. This offer of employment is valid for consideration by the candidate until Friday, January 29, 2016.
		

		
			﻿
		

		
			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.
		

		
			﻿
		

		
			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.
		

		
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			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 A (the “Non-Competition and Non-Disclosure Agreement”).
		

		
			﻿
		

		
			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 an Officer of the Company and by you.
		

		
			﻿
		

		
			Lynda, I am looking forward to your arrival and expect your direct contributions to have a significant positive impact on the organization.
		

		
			﻿
		

		
			Kindest personal regards,
		

		
			﻿
		

		
			/s/ Chris Homeister
		

		
			﻿
		

		
			Chris Homeister, Chief Executive Officer
		

		
			TILE SHOP HOLDINGS, INC.
		

		

		

		 

 

		
		

		
			TILE SHOP HOLDINGS, INC.
		

		
			14000 Carlson Parkway
		

		
			Plymouth, Minnesota 55441
		

		
			﻿
		

		
			﻿
		

		
			ACCEPTANCE AND ACKNOWLEDGMENT
		

		
			﻿
		

		
			I accept the offer of employment from the Company as set forth in the offer letter dated January 28, 2016.  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.
		

		
			﻿
		

		
			I understand and agree that the terms and conditions set forth in the offer letter represent the entire agreement between the Company and me superseding all prior negotiations and agreements, whether written or oral.  I understand 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.  No one other than an Officer of the Company 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 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/ Lynda W. Stout
		

		
			﻿
		

		
			Printed Name:Lynda Stout
		

		
			﻿
		

		
			Date:January 28, 2016
		

		

		

		 

 

		
		

		
			EXHIBIT A
		

		
			 
		

		
			TILE SHOP HOLDINGS, inc.
		

		
			NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT
		

		
			 
		

		
			THIS NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT (this “Agreement”) is made this the 21st day of January 2016, by and between Tile Shop Holdings, Inc., a Delaware corporation and its subsidiaries (collectively with any predecessors, successors, and assignees, the “Company”), and Lynda Stout (“I” or “me”), to be effective on (the “Effective Date”).
		

		
			 
		

		
			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 therefore. 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.
		

		

		

		 

 

		 
		

		
			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]
		

		
			 
		

		
			 
		

		
			 
		

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

		
			 
		

			
					
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						EMPLOYEE

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						/s/ Lynda W. Stout

					
					
						 

				
	
					
						 

					
					
						Lynda Stout

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						TILE SHOP HOLDINGS, INC.

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ Chris Homeister

					
					
						 

				
	
					
						 

					
					
						Name:

					
					
						  Chris Homeister

					
					
						 

				
	
					
						 

					
					
						Title:

					
					
						  Chief Executive Officer

					
					
						 

				

		
			 
		

		
			 
		

		

		

		 

 

		
		

		
			Schedule A
		

		
			 
		

		
			List all Prior Inventions
		

		

		

		 

 

		
		

		
			Schedule B
		

		
			 
		

		
			List any and all Conflicted Obligations
		

		
			  
		

		
			 
		

		
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