Document:

Exhibit 10.3

 

EMPLOYMENT AGREEMENT 

 

This Employment Agreement (the “Agreement”)
is made and entered into effective as of the Effective Date (as defined in Section 4 below) (the “Effective Date”),
by and between Greg Welsh (the “Employee”) and TranS1 Inc., a Delaware Corporation (the “Company”).

 

Employee has been employed by Baxano, Inc.,
(Baxano”) on an at-will basis. Pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as
of March 25, 2013, and entered into by and among the Company, RacerX Acquisition Corp., a wholly owned subsidiary of the Company,
Baxano, and certain Securityholder Representative(s), the Company will acquire all of the outstanding stock of Baxano, and Employee
will become employed by the Company following the Closing of such transaction. Unless otherwise defined herein, capitalized terms
used in this Agreement are defined in the Merger Agreement.

 

The Company desires to employ Employee as
a Vice President of Operations and provide Employee with benefits to which he or she would not otherwise be entitled, and
Employee desires to accept such employment on the terms set forth below.

 

WHEREAS, in consideration of the mutual
promises set forth below and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge,
the Company and Employee agree as follows:

 

1.          Employment.
The Company will continue to employ Employee and Employee accepts employment on the terms and conditions set forth in this Agreement.
Employee shall execute, as a condition of employment, the Company’s Employee Confidential and Proprietary Information Agreement.

 

2.          Nature
of Employment. Employee shall serve as Vice President of Operations and have such responsibilities and authority
as the Company may assign from time to time. Additionally, Employee agrees to perform such other duties consonant with those of
an executive at his/her level as the Company may set from time to time. Initially, Employee shall report to the President and CEO
of the company.

 

2.1           Employee
shall perform all duties and exercise all authority in accordance with, and otherwise comply with, all Company policies, procedures,
practices and directions.

 

2.2           Employee
shall devote all working time, best efforts, knowledge and experience to perform successfully his/her duties and advance the Company’s
and/or its Affiliates’ interests. During his/her employment, Employee shall not engage in any other business activities
of any nature whatsoever (including board memberships) for which he/she receives compensation without the Company’s prior
written consent; provided, however, this provision does not prohibit him/her from personally owning and trading in stocks, bonds,
securities, real estate, commodities or other investment properties for his/her own benefit which do not create actual or potential
conflicts of interest with the Company and/or its Affiliates. As used in this Agreement, “Affiliates” shall mean:
(i) any Company’s parent, subsidiary or related entity; and/or (ii) any entity directly or indirectly controlled or beneficially
owned in whole or part by the Company or Company’s parent, subsidiary or related entity.

  

    	 

    	 

    

 

2.3           Employee’s
base of operation shall be San Jose, California, subject to business travel as may be necessary in the performance of Employee’s
duties.

 

2.4           Change
of Control Severance Agreement with Baxano. The Change of Control Severance Agreement, executed by Employee and Baxano,
and dated as of August 1, 2011, is hereby terminated and extinguished, and the Company shall have no further obligations and Employee
shall have no further rights thereunder.

 

3.           Compensation.

 

3.1           Base
Salary. Employee’s annual rate of salary for all services rendered shall be $215,000 (less applicable withholdings),
payable in accordance with the Company’s policies, procedures and practices as they may exist from time to time. Employee’s
salary shall be reviewed in accordance with the Company’s policies, procedures and practices as they may exist from time
to time.

 

3.2           Bonus.
Employee will be eligible to earn a target bonus of up to 30% of his Base Salary, based upon achievement of Company and individual
goals that will be determined by the Company, and subject to the other terms specified by the Company, including in any written
bonus plan. Bonuses will be paid on or before March 15 of the year following the year during which performance is measured, except
as otherwise provided in Section 5.2 of this Agreement. To be eligible for a bonus for performance in any calendar year, except
as otherwise provided in Section 5.2 of this Agreement Employee must be employed on the date the bonus is paid in the subsequent
year. Employee shall be eligible for a full bonus for calendar year 2013, even though his/her employment did not commence hereunder
until after 2013 began. Subject to Section 5.2, Employee shall be eligible for a full bonus for calendar year 2014, even though
his/her employment may terminate prior to the end of such year.

 

3.3           Other
Benefits. Employee may participate in all medical, dental and disability insurance, 401(k), pension, personal leave and
other employee benefit plans and programs for which Employee is eligible, provided, however, that Employee’s participation
in benefit plans and programs is subject to the applicable terms, conditions and eligibility requirements of these plans and programs,
some of which are within the plan administrator’s discretion, as they may exist from time to time.

 

3.4         Stock
Options. 

 

3.4.1           Grant.
Subject to the approval by the Company’s Board of Directors of the terms described herein, and subject to shareholder
approval of any amendment that may be necessary or appropriate to the Company’s 2005 Stock Plan, as amended (the “Plan”)
to allow for such grant, Employee will be granted an option to purchase 60,000 shares of the Company’s Common Stock at an
exercise price equal to the fair market value per share of such stock on the date the Board of Directors approves the option grant
(the “Option Grant”). The Option Grant shall be made in the form of an incentive stock option, to the maximum extent
permitted by law, with the remainder of the grant automatically made in the form of nonqualified stock options.

 

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3.4.2           Vesting
Schedule; Exercise Terms. One-fourth (1/4th) of the shares subject to the Option Grant will vest on the first
anniversary of the Effective Date and an additional one-thirty-sixth (1/36th) of the remaining number of such unvested
shares will vest on the last day of each month thereafter, subject to Employee’s continued employment with the Company on
each such vesting date. In addition, as provided in Section 5.2, and conditioned upon compliance with Section 5.4, of this Agreement,
the vesting of all unvested stock options shall accelerate in the event the Company terminates Employee’s employment pursuant
to Section 4.1, the Company terminates under Section 4.2 (without Cause) or if Employee terminates his employment pursuant to Section
4.3.2 (Good Reason). The Option Grant shall be exercisable at any time up to the number of vested shares according to the vesting
schedule set forth in the preceding sentence. The term of the Option grant will be ten (10) years from the date of grant. Notwithstanding
the foregoing, the Option Grant provided for herein shall be contingent upon Employee’s execution of a standard incentive
stock option award agreement and shall in all respects be subject to, and governed by, the provisions of such award agreement and
the Plan.

 

3.5           Business
Expenses. Employee shall be reimbursed for reasonable and necessary expenses actually incurred by him/her in performing
services under this Agreement in accordance with and subject to the terms and conditions of the applicable Company reimbursement
policies, procedures and practices as they may exist from time to time. Expenses covered by this provision include but are not
limited to travel, entertainment, professional dues, subscriptions and dues, fees and expenses associated with membership in various
professional, business, and civic associations of which Employee’s participation is in the Company’s best interest.
All such reimbursements shall be made no later than March 15 of the year following the year in which the expenses were incurred.

 

3.6           Nothing
in this Agreement shall require the Company to create, continue or refrain from amending, modifying, revising or revoking any of
the plans, programs or benefits set forth in Sections 3.2 through 3.4. Any amendments, modifications, revisions and revocations
of these plans, programs or benefits shall apply to Employee.

 

3.7           If,
at any time during which Employee is receiving salary or post-termination payments from the Company, he/she receives payments on
account of mental or physical disability from any source, then the Company, at its discretion, may reduce his/her salary or post-termination
payments by the amount of such disability payments.

 

4.          Term
of Employment. The term of employment shall commence on the closing of the transaction contemplated by the Merger
Agreement (the “Effective Date”) and continue until terminated as set forth herein:

 

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4.1           The
term of employment will expire on the eighteenth (18th) monthly anniversary of the Effective Date, unless thirty (30)
days prior to such date, the Company provides Employee with written notice that the term will be renewed for a period of time to
be mutually agreed upon. The first eighteen (18) months of employment hereunder shall be referred to for purposes of Section 5.2
as the Initial Term.

 

4.2           The
Company may terminate the employment relationship without Cause (as defined below), at any time upon giving the Employee thirty
(30) days written notice. Similarly, the Employee may terminate the employment relationship without Good Reason (as defined below),
at any time upon giving the Company thirty (30) days written notice.

4.3           Employee’s
employment may also be terminated as follows:

 

4.3.1           The
Company shall have the right to terminate Employee’s employment immediately by written notice for Cause (as defined below).
As used in this Agreement, Cause shall mean: (i) Employee’s performance of Employee’s job in an unsatisfactory manner,
as determined by the Company; (ii) Employee’s material breach of any of the terms of this Agreement, including but not limited
to Section 2, or Employee’s material breach of any other agreement between Employee and the Company, including but not limited
to the Company’s Employee Confidential and Proprietary Information Agreement; (iii) Employee’s failure to comply with
Company policy, procedure, practice or direction by the Company; or (iv) Employee’s misconduct, gross negligence, dishonesty,
fraud, misappropriation, embezzlement, criminal behavior or conflict of interest or commission of a crime.

 

4.3.2           Employee
may terminate Employee’s employment for “Good Reason,” which shall mean the occurrence of one or more of the
following events, without Employee’s express written consent: (i) a material diminution in Employee’s position or responsibilities
with the Company in effect immediately prior to such assignment, (ii) a substantial reduction in Employee's
compensation (including benefits) other than as part of a Company-wide reduction in compensation or benefits, (iii) the
relocation of the Employee to a facility or a location more than 30 miles from the Employee’s then present location, (iv)
failure of the company to obtain the assumption of this Agreement by any successor, or (v) the material breach by the Company of
any material provision of this Agreement. Provided, however, that in order to terminate for Good Reason under this section,
the Employee must provide the Company with written notice of the grounds constituting Good Reason within thirty (30) days of the
initial actions or inactions of the Company giving rise to such Good Reason; and the Employee must terminate his or her employment
within thirty (30) days of the Company’s failure to cure such grounds. Employee acknowledges and agrees that his or her employment
under this Agreement, and the terms herein, do not constitute Good Cause under the Change of Control Severance Agreement between
Employee and Baxano, dated as of August 1, 2011.

 

4.4           This
Agreement shall terminate upon the termination of the employment relationship. Regardless of the reason for the termination of
this Agreement or of Employee’s employment, Employee shall continue to be bound by the Company’s Employee Confidential
and Proprietary Information Agreement.

 

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5.           Compensation
and Benefits Upon a Termination.

 

5.1           The
Company’s obligation to compensate Employee ceases on the effective termination date except as to: (i) amounts due at that
time; and (ii) any compensation and/or benefits to which he/she may be entitled to receive pursuant to Sections 5.2 and 5.4.

 

5.2           In
the event that the Company terminates Employee’s employment as the result of the Company failing to give notice of renewal
under Section 4.1, if the Company terminates Employee’s employment pursuant to Section 4.2 (without Cause) or if Employee
terminates his or her employment pursuant to Section 4.3.2 (Good Reason), then the Company shall: (a) pay Employee amounts due
on the effective termination date; and (b) subject to Employee’s compliance with the Company’s Employee Confidential
and Proprietary Information Agreement, and subject to Section 5.4, (i) pay Employee severance pay (“Severance Pay”)
in an amount equal to twelve (12) months of his/her then current monthly Base Salary, or the Base Salary that would have been due
Employee had he remained employed until the end of the Initial Term under Section 4.1 of this Agreement, whichever amount is greater
(the number of months used to calculate Severance Pay shall be referred to herein as the “Severance Period”), (ii)
reimburse Employee for the actual additional costs incurred by Employee (“Benefit Continuation”) for continued coverage
for the Severance Period under the Company’s group health, medical and dental benefit plans under COBRA (if available), at
the same level as Employee participated as of termination date, (iii) accelerate the vesting of any unvested stock options granted
pursuant to Section 3.4 of this Agreement or any other unvested stock options granted at a later date (unless such acceleration
is prohibited by the terms of such later stock option grant or agreement or under the terms of the Plan in existence at the time
such grant is made), and ,pay Employee the Bonus that Employee would have earned for the full 2014 calendar year, had he remained
employed through the payment date, with the Company having the discretion to determine the amount of such Bonus. Severance Pay
under Section 5.2 (b)(i) shall be payable in a lump sum (less applicable withholdings) within twenty (20) days following the date
on which the release of claims executed by Employee pursuant to Section 5.4 of this Agreement
becomes effective and non-revocable, but in no event later than ninety (90) days following termination from employment; provided,
however, that if the 90th day falls in the calendar year following the year during which the termination occurred, then
the lump sum payment will be paid in such subsequent calendar year. Reimbursements for Benefit Continuation under Section
5.2(b)(ii) shall be made on a monthly basis, but in no event later than sixty (60) days after such expenses are incurred. The Bonus,
if any, due Employee under Section 5.2 (b)(iv) for the 2014 performance year shall be paid in lump sum (less applicable withholdings)
on the date when other employees are paid their bonuses for such performance year, but not later than March 31, 2015. Employee
shall not be entitled to a cash payment or other benefit in lieu of reimbursements for the actual additional costs of COBRA premiums.
The amount of expenses eligible for reimbursement during any year shall not be affected by the amount of expenses eligible for
reimbursement in any other year. Employee shall bear full responsibility for applying for, paying for, and submitting reimbursement
requests for COBRA coverage and nothing herein shall constitute a guarantee of COBRA continuation coverage or benefits or a guarantee
of eligibility for health or dental insurance coverage.

 

5.3           If
the Company terminates Employee’s employment as provided in Section 4.3.1 (for Cause) or if the Employee terminates his/her
employment after the Company has provided notice of renewal pursuant to Section 4.1, or Employee terminates his/her employment
pursuant to Section 4.2 (without Good Reason), then the Company’s sole obligation shall be to pay Employee amounts due on
the effective termination date and any other obligations due under Section 5.5.

  

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5.4           Notwithstanding
any provision of this Agreement to the contrary, the Company’s obligation to provide the payments under Section 5.2 is conditioned
upon Employee’s execution of an enforceable release of claims under this Section 5.4 and his/her compliance with the Company’s
Employee Confidential and Proprietary Information Agreement. If Employee chooses not to execute such a release or fails to comply
with these Sections, then the Company’s obligation to compensate him/her ceases on the effective termination date except
as to amounts due at the time. The release of claims shall be provided to Employee within fifteen (15) days of his/her separation
from service and Employee must execute it within the time period specified in the release (which shall not be longer than forty-five
(45) days from the date of receipt). Such release shall not be effective until any applicable revocation period has expired.

 

5.5           Upon
the termination of the Employee’s employment for any reason, the Company shall (i) pay the Employee any unpaid base
salary due for periods prior to the termination date; (ii)  pay the Employee all of the Employee’s accrued and unused
vacation through the termination date; and (iii) following submission of proper expense reports by the Employee, reimburse
the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company
prior to the termination date. These payments shall be made promptly upon termination and within the period of time mandated by
applicable law. Other than as set forth in this Agreement, Employee is not entitled to receive any compensation or benefits upon
his/her termination except as otherwise required by law; or as otherwise required by any employee benefit plan in which he/she
participates. Moreover, the terms and conditions afforded Employee under this Agreement are in lieu of any severance benefits to
which he/she otherwise might be entitled pursuant to any severance plan, policy and practice of the Company and or its Affiliates.
Nothing in this Agreement, however, is intended to waive or supplant any death, disability, retirement, 401(k) or pension benefits
to which he/she may be entitled under employee benefit plans in which he/she participates.

 

6.          Employee
Representation. Employee represents and warrants that his or her employment and obligations under this Agreement will not:
(i) breach any duty or obligation he or she owes to another or (ii) violate any law, recognized ethics standard or recognized business
custom.

 

7.          Notice.
Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In
the case of the Employee, mailed notices shall be addressed to the Employee at the home address that the Employee most recently
communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of its Chief Employee Officer or the Director of Human Resources.

 

8.          Waiver
of Breach. The Company’s or Employee’s waiver of any breach of a provision of this Agreement shall not waive
any subsequent breach by the other party.

 

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9.          Entire
Agreement. Except as expressly provided in this Agreement, this Agreement: (i) supersedes all other understandings and
agreements, oral or written, between the parties with respect to the subject matter of this Agreement; and (ii) constitutes the
sole agreement between the parties with respect to this subject matter. Each party acknowledges that: (A) no representations, inducements,
promises or agreements, oral or written, have been made by any party or by anyone acting on behalf of any party, which are not
embodied in this Agreement; and (B) no agreement, statement or promise not contained in this Agreement shall be valid. No change
or modification of this Agreement shall be valid or binding upon the parties unless such change or modification is in writing and
is signed by the parties.

 

10.         Severability.
If a court of competent jurisdiction holds that any provision or sub-part thereof contained in this Agreement is invalid, illegal
or unenforceable, that invalidity, illegality or unenforceability shall not affect any other provision in this Agreement.

 

11.         Parties
Bound. The terms, provisions, covenants and agreements contained in this Agreement shall apply to, be binding upon and
inure to the benefit of the Company’s successors and assigns. The Company, at its discretion, may assign this Agreement to
Affiliates or to its successors or assigns. Because this Agreement is personal to Employee, Employee may not assign this Agreement.

 

12.          Governing Law. This
Agreement and the employment relationship created by it shall be governed by North Carolina law without giving effect to North
Carolina choice of law provisions. The parties hereby consent to jurisdiction in North Carolina for the purpose of any litigation
relating to this Agreement and agree that any litigation by or involving them relating to this Agreement shall be conducted in
the courts of Wake County, North Carolina or the federal courts of the United States for the Eastern District of North Carolina.

 

13.         Section
409A of the Internal Revenue Code.

 

13.1         Notwithstanding
anything to the contrary in this Agreement, if   the Employee is a “specified employee” within the meaning of
Section 409A at the time of the Employee’s termination (other than due to death), then the severance payable to the
Employee, if any, pursuant to this Agreement, together with any other severance payments or separation benefits that are considered
deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”), that are
payable within the first six (6) months following the Employee’s termination of employment will become payable on the
first payroll date that occurs on or after the date six (6) months and one (1) day following the date of the Employee’s
termination of employment. All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with
the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if the Employee dies
following the Employee’s termination but prior to the six (6) month anniversary of the Employee’s termination,
then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable
after the date of the Employee’s death and all other Deferred Compensation Separation Benefits will be payable in accordance
with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended
to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

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13.2         Any
amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4)
of the Treasury Regulations shall not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above.

 

13.3         Any
amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant
to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that do not exceed the Section 409A Limit shall not constitute
Deferred Compensation Separation Benefits for purposes of clause (i) above. For purposes of this Agreement, “Section
409A Limit” shall mean the lesser of two (2) times: (i) the Employee’s annualized compensation based upon
the annual rate of pay paid to the Employee during the Company’s taxable year preceding the Company’s taxable year
of the Employee’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal
Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified
plan pursuant to Section 401(a)(17) of the Code for the year in which the Employee’s employment is terminated.

 

13.4         The
foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and
benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein
will be interpreted to so comply. The Company and the Employee agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional
tax or income recognition prior to actual payment to the Employee under Section 409A. The parties intend that the provisions
of this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations thereunder (collectively, “Section 409A”) and all provisions of this Agreement shall be
construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. If any provision of
this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Executive to incur any
additional tax or interest under Section 409A, the Company shall, upon the specific request of Executive, use its reasonable
business efforts to in good faith reform such provision to comply with Code Section 409A; provided, that to the maximum
extent practicable, the original intent and economic benefit to Executive and the Company of the applicable provision shall be
maintained, and the Company shall have no obligation to make any changes that could create any additional economic cost or loss
of benefit to the Company. The Company shall timely use its reasonable business efforts to amend any plans and programs in which
Executive participates to bring it in compliance with Section 409A. Notwithstanding the foregoing, the Company shall have no liability
with regard to any failure to comply with Section 409A so long as it has acted in good faith with regard to compliance therewith.

 

14.         Counterparts.
This Agreement may be executed in counterparts, each of which shall be an original, with the same effect as if the signatures affixed
thereto were upon the same instrument.

 

15.         Company
Approval. This Agreement is subject to approval by the Company and its Board of Directors, and it shall not be valid until
and unless it is so approved.

 

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, each of the parties
has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 

	COMPANY:	TRANS1 INC.
	 	 	 
	 	By:	/s/ Ken Reali
	 	Name:	Ken Reali
	 	Title:	President & CEO
	 	 	 
	Greg Welsh	By:	/s/ Greg Welsh
	 	Name:	Greg Welsh
	 	Title:	VP Operations

 

 

    	9Exhibit 10.15

AMENDED
AND RESTATED

Amendment
No. 1

to
the

Tile
Shop Holdings, Inc. 2012 Equity Award Plan

 

This Amendment No.
1 dated effective February 14, 2013 is an amendment to that certain 2012 Equity Award Plan of Tile Shop Holdings, Inc., a Delaware
corporation (the “Company”), dated June 24, 2012 (the “Original Plan”).

 

1.           Amendment
to Title of the Original Plan. The title of the Original Plan shall be deleted in its entirety and replaced with “Tile
Shop Holdings, Inc. 2012 Omnibus Award Plan.”

  

2.           Amendment
to Section 1(a) of the Original Plan. The reference in Section 1(a) of the Original Plan that reads “The Tile Shop Holdings,
Inc. 2012 Equity Award Plan (the ‘Plan’)” shall be deleted in its entirety and replaced with “The Tile
Shop Holdings, Inc. 2012 Omnibus Award Plan (the ‘Plan’)”.

  

3.           Amendment
to Section 2(c) of the Original Plan. Section 2(c) shall be deleted in its entirety and replaced with the following:

  

“(c)          ‘Award’
means a grant of Options, Restricted Stock, or a Performance Award.”

  

4.           Addition
of Section 2(aa) to the Original Plan. A new Section 2(aa) shall be added to the Original Plan which reads as follows:

  

“(aa)         ‘Performance
Award’ means any grant pursuant to Section 14 hereof of an Award, which value, if any, shall be paid to a Participant
by delivery of cash upon achievement of such Performance Goals during the Performance Period as the Committee shall establish at
the time of such grant or thereafter.”

  

5.           Addition
of Section 2(bb) to the Original Plan. A new Section 2(bb) shall be added to the Original Plan which reads as follows:

  

“(bb)         ‘Performance
Period’ means the period, established at the time any Performance Award is granted or at any time thereafter, during which
any Performance Goals specified by the Committee with respect to such Performance Award are to be measured.”

  

    	 

    	 

    

 

6.           Amendment
to Section 6(a) of the Original Plan. Section 6(a) shall be deleted in its entirety and replaced with the following:

 

“(a)          Plan Reserve. Subject
to adjustment as provided in Section 12, an aggregate of 2,500,000 Shares are reserved for issuance under the Plan. On January
1 of each year beginning after the Effective Date and ending on February 14, 2013, an additional number of Shares shall become
available for issuance under the Plan equal to the lesser of: (i) 2,500,000 Shares; (ii) six percent (6%) of the number of Shares
issued and outstanding (on an as-converted basis) as of the immediately preceding December 31; and (iii) another amount determined
by the Board; provided, however, after February 14, 2013 the adjustment provided in this sentence shall be eliminated. Subject
to Section 6(b) and Section 12(a), all Shares reserved for issuance under the Plan may be issued as Incentive Stock Options.”

 

7.           Amendment
to Section 6(c) of the Original Plan. Section 6(c) shall be deleted in its entirety and replaced with the following:

  

“(c)          Limitation
on Awards During a Calendar Year. Notwithstanding any provision in the Plan to the contrary, and subject to Section 12(a),
the maximum number of Shares with respect to one or more Awards that may be granted to (or where the value of the Award is based
on the Fair Market Value of the Shares, is with respect to) any one Participant during any calendar year shall be 2,000,000. Further,
in no event shall the amount paid in any calendar year to any one Participant under a Performance Award granted pursuant to Section
14 exceed the greater of (i) $5,000,000, or (ii) 300% of the Participant’s base salary in effect as of the beginning of the
applicable Performance Period.”

  

8.           Addition
of Section 14 to the Original Plan. A new Section 14 shall be added to the Original Plan which reads as follows:

 

“14.         Performance Awards. Each
Performance Award granted pursuant to this Section 14 shall be evidenced by a written performance award agreement (the “Performance
Award Agreement”). The Performance Award Agreement shall be in such form as may be approved from time to time by the Committee
and may vary from Participant to Participant; provided, however, that each Participant and each Performance Award Agreement shall
comply with and be subject to the following terms and conditions:

  

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(a)          Awards.
Performance Awards may be granted to any Participant in the Plan. Performance Awards shall consist of monetary awards which may
be earned or become vested in whole or in part if the Company or the Participant achieves certain Performance Goals established
by the Committee over a specified Performance Period.

  

(b)          Performance Objectives, Performance
Period and Payment. The Performance Award Agreement shall set forth:

  

(i)           the dollar value of each Performance Award;

   

(ii)          one or more Performance Goals established by the Committee;

 

(iii)         the
Performance Period over which Performance Award may be earned or may become vested;

 

(iv)         the extent to which partial achievement
of the Performance Goals may result in a payment of the Performance Award, as determined by the Committee; and

 

(v)          the
date upon which payment of Performance Award will be made and the extent to which such payment may be deferred.

  

(c)          Withholding Taxes. The Company
or its Affiliates shall be entitled to withhold and deduct from any payments made in connection with the Performance Award, or
from any other future payments made to the Participant, all legally required amounts necessary to satisfy any and all withholding
and employment-related taxes attributable to the Participant’s Performance Award.

  

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(d)          Nontransferability. No Performance
Award shall be transferable, in whole or in part, by the Participant, other than by will or by the laws of descent and distribution.
If the Participant shall attempt any transfer of any Performance Award granted under the Plan, such transfer shall be void and
the Performance Award shall terminate.

 

(e)          Other Provisions. The Performance
Award Agreement authorized under this Section 14 shall contain such other provisions as the Committee shall deem advisable.

  

9.          Except
as otherwise amended or modified herein, all other provisions of the Original Plan shall remain in full force and effect.

 

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IN WITNESS WHEREOF,
the Company has executed this document effective as of the 14th day of February, 2013.

  

	 	TILE SHOP HOLDINGS, INC.
	 	 
	 	By	/s/ Timothy C. Clayton
	 	    Its	Chief Financial Officer

  

    	- 5 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00218-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00218-of-00352.parquet"}]]