Document:

Exhibit

Exhibit 10.3
LULULEMON ATHLETICA INC.
NOTICE OF GRANT OF RESTRICTED STOCK UNITS
The Participant has been granted an award of Restricted Stock Units (the “Award”) pursuant to the lululemon athletica inc. 2014 Equity Incentive Plan (the “Plan”) and the Restricted Stock Units Agreement attached hereto (the “Agreement”), as follows:
	
							
	Participant:
	________________________
	Employee ID:
	____________________

	Grant Date:
	________________________
	 
	Grant No.:
	____________________

	Target Number of Units:
	____________________, subject to adjustment as provided by the Agreement.

	Settlement Date:
	Except as otherwise provided in the Agreement or a separate written employment or other agreement between a Participating Company and the Participant, as soon as practicable on or after each Unit Vesting Date (or such other date on which the Award vests pursuant to Sections 4 or 7 of the Agreement), but in any event no later than seventy four (74) days following such date.  

	Vested Units:
	Except as provided in the Restricted Stock Units Agreement or a separate written employment or other agreement between a Participating Company and the Participant and provided that the Participant’s Service has not terminated prior to the applicable Unit Vesting Date set forth below, the percentage of the Total Number of Units which become Vested Units on each Unit Vesting Date Shall be as follows:

	 
	Unit Vesting Date
	Percentage of Total Number of Units Vesting:

	 
	[Insert vesting dates]
	[Insert vesting percentages]

	Recovery Policy:
	The Award is subject to the terms and conditions of the Company’s Policy for Recovery of Incentive-Based Compensation, as amended from time to time (the “Clawback Policy”).  

By their signatures below, the Company and the Participant agree that the Award is governed by this Notice and by the provisions of the Plan and the Agreement, both of which are made a part of this document.  The Participant acknowledges receipt of a copy of the Plan, the Agreement and the prospectus for the Plan, represents that the Participant has read and is familiar with the provisions of the Plan and the Agreement, and hereby accepts the Award subject to all of their terms and conditions.
	
		
	By:
	_________________

	 
	_________________

	 
	 

	LULULEMON ATHLETICA INC.

	 
	 

	Address:
	1818 Cornwall Avenue

	 
	Vancouver, British Columbia

	 
	Canada, V6J 1C7

	 
	 

	ATTACHMENTS:
	Restricted Stock Units Agreement

	 
	Policy for Recovery of Incentive-Based Compensation

    

LULULEMON ATHLETICA INC.
RESTRICTED STOCK UNITS AGREEMENT

lululemon athletica inc. has granted to the Participant named in the Notice of Grant of Restricted Stock Units (the “Grant Notice”) to which this Restricted Stock Units Agreement (the “Agreement”) is attached an Award consisting of Restricted Stock Units subject to the terms and conditions set forth in the Grant Notice and this Agreement.  The Award has been granted pursuant to the lululemon athletica inc. 2014 Equity Incentive Plan (the “Plan”), as amended to the Grant Date, the provisions of which are incorporated herein by reference.  By signing the Grant Notice, the Participant:  (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, the Plan, and a prospectus for the Plan (the “Plan Prospectus”) in the form most recently prepared in connection with the registration with the Securities and Exchange Commission of the shares issuable pursuant to the Plan, (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan, and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.1.
1.    DEFINITIONS AND CONSTRUCTION.
1.1    Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.
(a)    “Dividend Equivalent Units” mean additional Restricted Stock Units credited pursuant to the Dividend Equivalent Right described in Section 3.3.
(b)    “Units” means the Restricted Stock Units originally granted pursuant to the Award and the Dividend Equivalent Units credited pursuant to the Award, as both shall be adjusted from time to time pursuant to Section 8.
1.2    Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
2.    ADMINISTRATION.
All questions of interpretation concerning the Grant Notice, this Agreement and the Plan shall be determined by the Committee.  All determinations by the Committee shall be final and binding upon all persons having an interest in the Award.  Any executive officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided such executive officer has apparent authority with respect to such matter, right, obligation, or election.  The Company intends that the Award comply with, or be exempt from, Section 409A (including any amendments or replacements of such section), and the provisions of this Agreement shall be construed and administered in a manner consistent with this intent.
3.    THE AWARD.
3.1    Grant of Units.  On the Grant Date, the Participant shall acquire, subject to the provisions of this Agreement, the Total Number of Units set forth in the Grant Notice, subject to adjustment as provided in Section 3.3 and 8.  Each Unit represents a right to receive on a date determined in accordance with the Grant Notice and this Agreement one (1) share of Stock.
3.2    No Monetary Payment Required.  The Participant is not required to make any monetary payment (other than applicable tax withholding, if any) as a condition to receiving the Units or Stock issued upon settlement of the Units, the consideration for which shall be past Services actually rendered and/or future Services to be rendered to a Participating Company.  Notwithstanding the foregoing, if required by applicable law, the Participant 

shall furnish consideration in the form of cash or past Services having a value not less than the par value of the Stock issued upon settlement of the Units.
3.3    Dividend Equivalent Units.  This Agreement also constitutes the award of a Dividend Equivalent Right to the Participant.  On the date that the Company pays a cash dividend to holders of Stock generally, the Participant shall be credited with a number of additional whole Dividend Equivalent Units determined by dividing (a) the product of (i) the dollar amount of the cash dividend paid per share of Stock such date and (ii) the sum of the Total Number of Units and the number of Dividend Equivalent Units previously credited to the Participant pursuant to the Award and which have not been settled or forfeited as of such date, by (b) the Fair Market Value per share of Stock on such date.  Any resulting fractional Dividend Equivalent Units shall be rounded down to the nearest whole number.  Such additional Dividend Equivalent Units shall be subject to the same terms and conditions and shall be settled or forfeited in the same manner and at the same time as the Units originally subject to the Award with respect to which they have been credited.
4.    VESTING OF UNITS.
4.1    In General.  Except as provided by this Section 4 and Section 7, the Units shall vest and become Vested Units as provided in the Grant Notice.
4.2    Effect of Leave of Absence.  In the event that the Participant takes an approved leave or leaves of absence during the period beginning on the Grant Date and ending on the applicable Unit Vesting Date, the Units shall continue to vest during such leave or leaves of absence.  If the Participant fails to return to Service at the end of the approved leave period, then, except to the extent required by applicable law, the Participant’s Service shall be treated as having terminated on the last day of such approved leave.  
4.3    Termination for Any Reason Other Than Death or Disability.  In the event of the termination of the Participant’s Service for any reason other than Death or Disability (whether voluntary or involuntary and with or without Cause) prior to a Unit Vesting Date, the Participant shall, subject to applicable laws, forfeit and the Company shall automatically reacquire all of the unvested Units subject to the Award.  The Participant shall not be entitled to any payment for such forfeited Units. Termination of Service shall be deemed to be the last day of employment  (whether voluntary or involuntary and with or without Cause), and not during or as of the end of any period following such date during which the Participant is in receipt of, or entitled to receive, statutory, contractual or common law notice of termination or any compensation in lieu of such notice.
4.4    Termination by Reason of Death.  In the event of the death prior to any Unit Vesting Date, then on the date of such death unvested Units shall become Vested Units.
4.5    Termination by Reason of Disability.  In the event of the termination of the Participant’s Service by reason of Disability prior to any Unit Vesting Date, then on the date of such termination all unvested Units shall become Vested Units.
4.6    Forfeiture For Violations of Non-Compete and/or Non-Solicitation Agreements.  Notwithstanding anything above to the contrary, if, during the Participant’s Service, or following the Participant’s termination of Service, the Participant violates any provision contained in a written service or other agreement applicable to the Participant (or any other written policy of the Participating Company Group of general application) relating to the prohibition of the Participant from engaging in activities which would violate any legally enforceable non-compete or non-solicitation clause or rule prior to any Unit Vesting Date, then all of the Units shall be treated as unvested and forfeited as of the date on which such violation occurs.  In addition, effective  upon any violation described above, any Units which have become Vested Units during the Participant’s Service, or following the Participant’s termination of Service shall be forfeited by the Participant and any shares of Stock retained by such Participant shall be returned to the Company or, if the Participant no longer retains such shares because the Participant has disposed of the shares, then the Participant shall remit the Fair Market Value of the shares on the date the Participant disposed of them.

5.    SETTLEMENT OF THE AWARD.
5.1    Issuance of Stock.  Subject to the provisions of Section 5.3 below, the Company shall issue to the Participant on the Settlement Date with respect to each Vested Unit one (1) share of Stock.  Shares of Stock issued in settlement of Units shall be subject to any restrictions as may be required pursuant to Section 5.3, Section 6, or the Trading Compliance Policy.  
5.2    Beneficial Ownership of Shares of Stock; Certificate Registration.  The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all shares of Stock acquired by the Participant pursuant to the settlement of the Award.  Except as otherwise provided by this Section 5.2, a certificate for the shares of Stock as to which the Award is settled shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.  In addition, shares of Stock settled as a result of this Agreement may be held in book entry form.  
5.3    Restrictions on Grant of the Award and Issuance of Shares of Stock.  The grant of the Award and issuance of shares of Stock upon settlement of the Award shall be subject to compliance with all applicable requirements of federal, state law or foreign law with respect to such securities.  No share of Stock may be issued hereunder if the issuance of such shares would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations, including, without limitation, the requirements of any stock exchange or market system upon which the Stock may then be listed.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any shares of Stock subject to the Award shall relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority shall not have been obtained.  As a condition to the settlement of the Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.
5.4    Fractional Shares.  The Company shall not be required to issue fractional shares of Stock upon the settlement of the Award.  Any fractional share resulting from the determination of the number of Vested Units shall be rounded down to the nearest whole number.
6.    TAX MATTERS.
6.1    Responsibility for Taxes.  Notwithstanding any contrary provision of this Agreement, the Company shall have no obligation to process the settlement of the Award or to deliver Common Shares unless and until satisfactory arrangements (as determined by the Company) will have been made by Participant with respect to the payment of income, employment, social insurance, National Insurance Contributions, payroll tax, fringe benefit tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant including, without limitation, in connection with the grant, vesting or settlement of the Award, the subsequent sale of Common Shares acquired under the Plan and/or the receipt of any dividends on such Common Shares which the Company determines must be withheld (“Tax-Related Items”).  Participant authorizes the Company and/or the Affiliate to withhold any Tax-Related Items legally payable by Participant from his or her wages or other cash compensation paid to Participant by the Company and/or the Affiliate or from proceeds of the sale of Common Shares.  Further, if Participant is subject to tax in more than one jurisdiction between the date of Grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges and agrees that the Company and/or Affiliate employer, or former employer, as applicable, may be required to withhold or account for tax in more than one jurisdiction.  Regardless of any action of the Company or the Affiliate, Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Affiliate.  Participant further acknowledges that the Company and the Affiliate (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result.

6.2    Withholding in Shares.  Subject to applicable law, in the event the Participant has not satisfied the tax withholding obligations described in Section 6.1 in accordance with Section 6.1, the tax withholding obligations shall be satisfied in the following manner:
(a)    the Participant shall dispose of such portion of the Vested Units that represents rights to receive shares of Stock having a Fair Market Value equal to the Withholding Amount to the Company on the Settlement Date in consideration for cash in an amount equal to the Withholding Amount, and the full amount of such cash shall be withheld by the Company and remitted to the relevant taxing authority to satisfy the tax withholding obligations; and
(b)    the portion of the Vested Units not disposed of in accordance with Section 6.2(a) shall be settled in accordance with Section 5.1.
7.    CHANGE IN CONTROL.
7.1    Acceleration of Vesting Upon a Change in Control.  In the event of the consummation of a Change in Control prior to any Unit Vesting Date, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may assume or continue the Company’s rights and obligations with respect to outstanding Awards or substitute for outstanding Awards substantially equivalent rights with respect to the Acquiror’s stock.  For purposes of this Section 7.1, an Award shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, for each Unit subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock of the Company on the effective date of the Change in Control was entitled for each Unit subject to an Award.  In the event that the Acquiror elects not to assume, continue or substitute for the outstanding Awards in connection with a Change in Control, the vesting of 100% of the then unvested Units shall be accelerated in full and such Units shall be deemed Vested Units effective as of the date of the Change in Control, provided that the Participant’s Service has not terminated prior to the Change in Control.  In settlement of the Award, the Company shall issue to the Participant one (1) share of Stock for each Vested Unit determined in accordance with this Section 7.1.  The vesting of Units and settlement of the Award that was permissible solely by reason of this Section 7.1 shall be conditioned upon the consummation of the Change in Control.  Notwithstanding the foregoing, the Committee may, in its discretion, determine that upon a Change in Control, each Award outstanding immediately prior to the Change in Control shall be canceled in exchange for payment with respect to 100% of the Units which are subject to accelerated vesting in (a) cash, (b) stock of the Company or the Acquiror, or (c) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of stock in the Change in Control for each such Unit (subject to any required tax withholding).  Such payment shall be made as soon as practicable following the Change in Control.
7.2    Termination After Change in Control.  Notwithstanding anything in this Agreement to the contrary, if the Award is assumed or continued following a Change in Control, and if the Participant’s Service ceases as a result of a Termination After Change in Control (as defined below), the surviving Units shall become Vested Units and the Award shall be settled promptly following such event.  
(a)    “Termination After Change in Control” shall mean either of the following events occurring within two (2) years after a Change in Control:
(i)    Termination of the Participant’s Service with the Participating Company Group or such successor without Cause; or
(ii)    The Participant’s resignation for Good Reason (as defined below) within ninety (90) days of the Participant first becoming aware of the event constituting Good Reason provided the Participant has provided the Company (or its successor) notice of such condition and the opportunity to cure the event.  
Notwithstanding any provision herein to the contrary, Termination After Change in Control shall not include any termination of the Participant’s Service which (A) is for Cause; (B) is a result of the Participant’s voluntary termination of such relationship other than for Good Reason; or (C) occurs prior to the effectiveness of a Change in Control.

(b)     “Good Reason” shall mean any one or more of the following:
(i)    Without the Participant’s written consent, a material adverse change in the Participant’s duties and responsibilities as compared to the Participant’s duties and responsibilities immediately prior to the Change in Control;
(ii)    Without the Participant’s written consent, the relocation of the Participant’s principal place of Service to a location that is more than fifty (50) miles from the Participant’s principal place of Service immediately prior to the date of the Change in Control, or the imposition of travel requirements substantially more demanding of the Participant than such travel requirements existing immediately prior to the date of the Change in Control; or
(iii)    Any failure by the Participating Company Group (or its successor) to pay, or any material reduction by the applicable Participating Company Group of, (A) the Participant’s base salary in effect immediately prior to the date of the Change in Control (unless reductions comparable in amount and duration are concurrently made for all other similarly situated persons with responsibilities, organizational level and title comparable to the Participant’s), or (B) the Participant’s target bonus opportunity, if any, in effect immediately prior to the date of the Change in Control (subject to applicable performance requirements with respect to the actual amount of bonus compensation earned by the Participant).
8.    ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.
Subject to any required action by the stockholders of the Company and the requirements of Section 409A of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares, appropriate and proportionate adjustments shall be made in the number of Units subject to the Award and/or the number and kind of shares to be issued in settlement of the Award, in order to prevent dilution or enlargement of the Participant’s rights under the Award.  For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.”  Any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of the grant of Units acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all Units originally acquired hereunder.  Any fractional Unit or share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number.  Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.
9.    RIGHTS AS A STOCKHOLDER.
The Participant shall have no rights as a stockholder with respect to any shares of Stock which may be issued in settlement of this Award until the date of the issuance of a certificate for such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 8.
10.    LEGENDS.
The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Stock issued pursuant to this Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to this Award in the possession of the Participant in order to carry out the provisions of this Section.  

11.    COMPLIANCE WITH SECTION 409A.
It is intended that any election, payment or benefit which is made or provided pursuant to or in connection with this Award that may result in Section 409A Deferred Compensation shall comply in all respects with the applicable requirements of Section 409A (including applicable regulations or other administrative guidance thereunder, as determined by the Committee in good faith) to avoid the unfavorable tax consequences provided therein for non compliance.  In connection with effecting such compliance with Section 409A, the following shall apply:
11.1    Separation from Service; Required Delay in Payment to Specified Employee.  Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to this Agreement on account of the Participant’s termination of Service which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations issued pursuant to Section 409A of the Code (the “Section 409A Regulations”) shall be paid unless and until the Participant has incurred a “separation from service” within the meaning of the Section 409A Regulations.  Furthermore, to the extent that the Participant is a “specified employee” within the meaning of the Section 409A Regulations as of the date of the Participant’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of the Participant’s separation from service shall be paid to the Participant before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of the Participant’s separation from service or, if earlier, the date of the Participant’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.
11.2    Other Changes in Time of Payment.  Neither the Participant nor the Company shall take any action to accelerate or delay the payment of any benefits which constitute a “deferral of compensation” within the meaning of the Section 409A Regulations in any manner which would not be in compliance with the Section 409A Regulations.
11.3    Amendments to Comply with Section 409A; Indemnification.  Notwithstanding any other provision of this Agreement to the contrary, the Company is authorized to amend this Agreement, to void or amend any election made by the Participant under this Agreement and/or to delay the payment of any monies and/or provision of any benefits in such manner as may be determined by the Company, in its discretion, to be necessary or appropriate to comply with the Section 409A Regulations without prior notice to or consent of the Participant.  The Participant hereby releases and holds harmless the Company, its directors, officers and stockholders from any and all claims that may arise from or relate to any tax liability, penalties, interest, costs, fees or other liability incurred by the Participant in connection with the Award, including as a result of the application of Section 409A.
11.4    Advice of Independent Tax Advisor.  The Company has not obtained a tax ruling or other confirmation from the Internal Revenue Service with regard to the application of Section 409A to the Award, and the Company does not represent or warrant that this Agreement will avoid adverse tax consequences to the Participant, including as a result of the application of Section 409A to the Award.  The Participant hereby acknowledges that he or she has been advised to seek the advice of his or her own independent tax advisor prior to entering into this Agreement and is not relying upon any representations of the Company or any of its agents as to the effect of or the advisability of entering into this Agreement.
12.    SERVICE CONDITIONS.  In accepting the Award, the Participant acknowledges and agrees that:
(a)    Any notice period mandated under applicable law shall not be treated as Service for the purpose of determining the vesting of the Award; and the Participant’s right to vesting of Common Shares in settlement of the Award after termination of Service, if any, will be measured by the date of termination of the Participant’s active Service and will not be extended by any notice period mandated under applicable laws.  Subject to the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.
(b)    The Plan is established voluntarily by the Company.  It is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement.

(c)    The grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if Awards have been granted repeatedly in the past.
(d)    All decisions with respect to future Award grants, if any, will be at the sole discretion of the Company.
(e)    The Participant’s participation in the Plan shall not create a right to further Service with the Company or an Affiliate and shall not interfere with the ability of with the Company or Affiliate to terminate the Participant’s Service at any time, with or without cause, subject to applicable laws.
(f)    The Participant is voluntarily participating in the Plan.
(g)    The Award is an extraordinary item that does not constitute compensation of any kind for Service of any kind rendered to the Company or Affiliate and which is outside the scope of the Participant’s employment contract, if any.
(h)    The Award is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
(i)    In the event that the Participant is not an employee of a the Company or Affiliate, the Award grant will not be interpreted to form an employment contract or relationship with such entity that does not otherwise exist.
(j)    The future value of the underlying Common Shares is unknown and cannot be predicted with certainty.  The value of the Common Shares may increase or decrease.
(k)    No claim or entitlement to compensation or damages arises from termination of the Award or diminution in value of the Award or Common Shares and the Participant irrevocably releases the Company and Affiliates from any such claim that may arise.  If, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived the Participant’s entitlement to pursue such a claim.
13.    DATA PRIVACY CONSENT.  The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this document by the Company for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.  The Participant understands that the Company holds certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Common Shares or directorships held in the Company, details of all Awards or any other entitlement to Common Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).  The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different including less stringent data privacy laws and protections than the Participant’s country.  The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative.  The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant may elect to deposit any Common Shares acquired pursuant to the Award.  The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan.  The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative.  The Participant understands, however, that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to 

participate in the Plan.  For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact the Participant’s local human resources representative.
14.    MISCELLANEOUS PROVISIONS.
14.1    Termination or Amendment.  The Committee may terminate or amend the Plan at any time.  No amendment or addition to this Agreement shall be effective unless in writing and, to the extent such amendment is necessary to comply with applicable law or government regulation (including, but not limited to Section 409A), may be made without the consent of the Participant.
14.2    Nontransferability of the Award.  Prior to the issuance of shares of Stock on the applicable Settlement Date, neither this Award nor any Units subject to this Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.
14.3    Further Instruments.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.
14.4    Binding Effect.  This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.
14.5    Delivery of Documents and Notices.  Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address shown below that party’s signature to the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.
(a)    Description of Electronic Delivery.  The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically.  In addition, the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time.  Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.
(b)    Consent to Electronic Delivery.  The Participant acknowledges that the Participant has read Section 14.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and Grant Notice, as described in Section 14.5(a).  The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing.  The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent to the electronic delivery of documents described in Section 14.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail.  Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 14.5(a).

14.6    Country-Specific Terms and Conditions.  Notwithstanding any other provision of this Agreement to the contrary, the Award shall be subject to the specific terms and conditions, if any, set forth in the Appendix to this Agreement which are applicable to the Participant’s country of residence, the provisions of which are incorporated in and constitute part of this Agreement.  Moreover, if the Participant relocates to one of the countries included in the Appendix, the specific terms and conditions applicable to such country will apply to the Award to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with applicable laws or facilitate the administration of the Plan or this Agreement.
14.7    Integrated Agreement.  The Grant Notice, this Agreement and the Plan, together with any employment, service or other agreement between the Participant and a Participating Company referring to the Award, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter other than those as set forth or provided for herein or therein.  To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.
14.8    Applicable Law.  This Agreement shall be governed by the laws of the State of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.
14.9    Counterparts.  The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

ADDITIONAL TERMS AND CONDITIONS OF
LULULEMON ATHLETICA INC.
RESTRICTED STOCK UNITS AGREEMENT
UNDER THE
LULULEMON ATHLETICA INC. 2014 EQUITY INCENTIVE PLAN

This Appendix includes additional terms and conditions that govern the Restricted Stock Units granted to the Participant under the Plan if the Participant resides in one of the countries listed below.  Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
The Participant understands and agrees that the Company strongly recommends that the Participant not rely on the information herein as the only source of information relating to the consequences of participation in the Plan because applicable rules and regulations regularly change, sometimes on a retroactive basis, and the information may be out of date at the time the Restricted Stock Units vests or the Shares are issued under the Plan.
The Participant further understands and agrees that if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working, transfer employment after grant of the Participant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to the Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.
AUSTRALIA
Notifications
Securities Law Information.
The offering of Restricted Stock Units and resale of Shares acquired under the Plan to a person or entity resident in Australia may be subject to disclosure requirements under Australian law.  The Participant should obtain legal advice regarding any applicable disclosure requirements prior to making any such offer.
Award Subject to tax deferred treatment in Australia. 
The Award is intended to receive tax deferred treatment under Subdivision 83A-C of the Income Tax Assessment Act 1997(Cth) of Australia.

Terms and Conditions
Australian Securities Laws.
If Participant acquires Shares under the Plan and resells them in Australia, he or she may be required to comply with certain Australian securities law disclosure requirements.
Foreign Exchange.
Participant acknowledges and agrees that it is the Participant’s sole responsibility to investigate and comply with any applicable exchange control laws in connection with the inflow of funds from the vesting of the Restricted Stock Units or subsequent sale of the Shares and any dividends (if any) and that the Participant shall be responsible for any reporting of inbound international fund transfers required under applicable law.  The Participant is advised to seek appropriate professional advice as to how the exchange control regulations apply to the Participant’s specific situation.

CHINA
Terms and Conditions
Mandatory Immediate Sale upon Vesting of Restricted Stock Units.
Notwithstanding any provisions in the Plan to the contrary, unless the Company determines otherwise the Shares shall be immediately sold upon vesting and settlement of the Award.  A broker, agent or other third party approved by the Company will immediately sell all of such Shares, use the proceeds to pay any applicable fees and/or taxes and remit the balance to the Participant in cash.
Notification
Special Administration in China.
The grant of the Award, and the Participant’s ability to receive Shares upon settlement of the Award shall all be contingent upon the Company or the Affiliate obtaining approval from SAFE for the related foreign exchange transaction and the establishment of a SAFE-approved bank account.  The receipt of funds by the Participant from the sale of the Shares and the conversion of those funds to the local currency must be approved by SAFE.  In order to comply with the SAFE regulations, the proceeds from the sale of the Shares must be repatriated into China through a SAFE-approved bank account set up and monitored by the Company.  The Participant may contact his or her local HR office for more details about the SAFE approved bank account.
FRANCE
Terms and Conditions
Awards Not Tax-Qualified.
The Award is not intended to be a tax-qualified or tax-preferred award, including without limitation, under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code.  The Participant is encouraged to consult with a personal tax advisor to understand the tax and social insurance implications of the Award.
Language Consent. 
By accepting the French Award, the Participant confirms having read and understood the documents relating to this grant (the Plan and the Agreement) which were provided in English language.  The Participant accepts the terms of those documents accordingly. The Participant confirms that the Participant has a good knowledge of the English language.
En acceptant l’Attribution, le Bénéficiaire confirme avoir lu et compris les documents relatifs à cette attribution (le Plan et ce Contrat) qui ont été fournis en langue anglaise. Le Bénéficiaire accepte les dispositions de ces documents en connaissance de cause. Etant précisé que le Titulaire a une bonne maîtrise de la langue anglaise.

Notifications
Securities Disclaimer.
The participation in the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Directive as implemented in France.
Foreign Asset/Account Information.
The Participant may hold Shares acquired upon vesting/settlement of the Award, any proceeds resulting from the sale of Shares or any dividends paid on such Shares outside of France, provided the Participant declares all foreign bank and brokerage accounts (including any accounts that were opened or closed during the tax year) with  his or her annual income tax return.  Failure to complete this reporting may trigger penalties for the Participant.  

GERMANY 
Notifications
Exchange Control Information.  If Participant remits proceeds in excess of €12,500 out of or into Germany, such cross-border payment must be reported monthly to the State Central Bank.  In the event that Participant makes or receives a payment in excess of this amount, Participant is responsible for obtaining the appropriate form from a German bank and complying with applicable reporting requirements.  In addition, Participant must also report on an annual basis in the unlikely event that Participant holds Shares exceeding 10% of the total voting capital of the Company. 
Securities Disclaimer.  The grant of Restricted Stock Units under the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Directive as implemented in Germany.

HONG KONG
Notification
Securities Law Notice.
WARNING: The Restricted Stock Units and Shares issued upon settlement of the Restricted Stock Units do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company.  The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong.  Nor have the documents been reviewed by any regulatory authority in Hong Kong.  The Restricted Stock Units are intended only for the personal use of each eligible employee of the Company or its Subsidiaries and may not be distributed to any other person.  If the Participant is in any doubt about any of the contents of the Agreement, including these additional terms, or the Plan, the Participant should obtain independent professional advice.

Occupational Retirement Schemes Ordinance Alert.
The Company specifically intends that neither the Award nor the Plan will be considered or deemed an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).
Terms and Conditions
Sale of Shares
Any Shares  received at grant or vesting are accepted as a personal investment.  In the event that any portion of this Award vests within six months of the grant date, the Participant agrees that he or she will not offer to the public or otherwise dispose of the Shares acquired prior to the six-month anniversary of the grant date.

IRELAND
Notifications
Director Notification Requirement
If the Participant is a director, shadow director or secretary of an Irish Affiliate, the Participant is required to notify such Irish Affiliate in writing within five business days of (i) receiving or disposing of an interest in the Company (e.g., Award, shares of Stock, etc.), (ii) becoming aware of the event giving rise to the notification requirement, or (iii) becoming a director, shadow director or secretary of an Irish Affiliate if such an interest exists at the time.  This notification requirement also applies with respect to the interests of a spouse or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary, as the case may be).  

Securities Disclaimer
The participation in the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Directive as implemented in Ireland.

JAPAN
Notifications
Foreign Exchange
Under certain circumstance, Participant may be required to file a report with the Ministry of Finance if Participant intends to acquire Shares whose value exceeds a certain amount. The reporting, if required, is due within 20 days from the acquisition of the Shares. 
Participant is advised to seek appropriate professional advice as to how the exchange control regulations apply to his or her specific situation. Please note that laws and regulations change frequently and occasionally on a retroactive basis.

Foreign Asset/Account Reporting Information
Japanese residents holding assets outside of Japan with a total net fair market value exceeding ¥50,000,000 (as of December 31 each year) are required to comply with annual tax reporting obligations with respect to such assets.  Participant is advised to consult with a personal tax advisor to ensure that he or she is properly complying with applicable reporting requirements.
KOREA
Notifications
Exchange Control Notification  
If the Participant realizes US$500,000 or more from the Award, including from sales of the Shares, in a single transaction, he or she must repatriate the proceeds to Korea within eighteen months of the payment. Accordingly, the Participant is strongly encouraged to consult his or her personal legal advisor if the sum from the Award exceeds this threshold.
Foreign Assets Reporting Information
Korean residents must declare all foreign financial accounts (e.g., non-Korean bank accounts, brokerage accounts, etc.) to the Korean tax authority and file a report with respect to such accounts if the value of such accounts exceeds KRW 1 billion (or an equivalent amount in foreign currency).  The Participant should consult with his or her personal tax advisor to determine how to value his or her foreign accounts for purposes of this reporting requirement and whether he is she is required to file a report with respect to such accounts.
NEW ZEALAND
Notification
Securities Law Notice.
The Participant is being offered an opportunity to participate in the Plan.  In compliance with New Zealand securities law, the Participant is hereby notified that all documents related to the Plan have either been provided to the Participant or are available via website or hard copy.  
A copy of the above documents will be provided to the Participant, free of charge, on written request to the Company. 

The Participant is encouraged to read the provided materials carefully before making a decision whether to participate in the Plan.  When reading these materials, the Participant should note that all references to the exercise price are listed in U.S. dollars.  In addition, the Participant should consult a tax advisor for specific information concerning personal tax situation with regard to Plan participation. 
Warning.
If the Company runs into financial difficulties and is wound up, you will be paid only after all creditors and holders of preference shares have been paid. You may lose some or all of your investment.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors to make an informed decision.
The usual rules do not apply to this offer because it is made under an employee share option purchase scheme. 
As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment. 
You have a right, upon request, to receive from lululemon athletica inc., free of charge, a copy (or electronic copy) of the Company’s relevant financial statements for the most recently completed financial year and the auditor’s report.  The relevant financial statements are those of lululemon athletica inc. and its subsidiaries prepared in accordance with US GAAP for the most recently completed accounting period. Please address any such requests to lululemon athletica inc., Attn: HR, [1818 CORNWALL AVENUE, Vancouver, British Columbia V6J 1C7]
Ask questions, read all documents carefully, and seek independent financial advice before committing yourself.
Financial Information Notice
You have a right to receive the following financial information, free of charge, upon request:
		
	·
	A copy of the Company’s latest annual report prepared under any enactment or overseas law (if any); and

		
	·
	A copy of the Company’s relevant financial statements and either the auditor’s report on them or a statement that they are not audited.  

SINGAPORE
Notifications
Securities Law Information.  The grant of the Restricted Stock Units is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”).  The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.  Participant should note that the Restricted Stock Units are subject to section 257 of the SFA and Participant will not be able to make any subsequent sale in Singapore of the Shares acquired through the vesting of the Restricted Stock Units or any offer of such sale in Singapore unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.
Director Notification Obligation.  If Participant is a director, associate director or shadow director of a Singapore Affiliate, Participant is subject to certain notification requirements under the Singapore Companies Act.  Among these requirements is an obligation to notify the Singapore Affiliate in writing when Participant receives an interest (e.g., Restricted Stock Units or Shares) in the Company or any Affiliate.  In addition, Participant must notify the Singapore Affiliate when Participant sells Shares of the Company or any Affiliate (including when Participant sells Shares acquired through the vesting of Restricted Stock Units).  These notifications must be made within two business days of acquiring or disposing of any interest in the Company or any Affiliate.  In addition, a notification must be made of Participant’s interests in the Company or any Affiliate within two business days of becoming a director.

SWITZERLAND
Notifications
Securities Law Notification.  The grant of the Restricted Stock Units is considered a private offering  and therefore is not subject to securities registration in Switzerland.

UNITED KINGDOM
Terms and Conditions
Tax Reporting and Payment Liability.
The following provision supplements Section 6 of the Agreement:
The Participant agrees that the Company or the Employer may calculate the Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right the Participant may have to recover any overpayment from relevant U.K. tax authorities.  If payment or withholding of any income tax liability arising in connection with the Participant's participation in the Plan is not made by the Participant to the Employer within ninety (90) days of the event giving rise to such income tax liability or such other period specified in Section 222(1)(c) of the U.K.  Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), The Participant understands and agrees that the amount of any uncollected income tax will constitute a loan owed by the Participant to the Employer, effective on the Due Date.  The Participant understands and agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue and Customs, it will be immediately due and repayable by the Participant, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to in the Plan and/or this Agreement.  Notwithstanding the foregoing, the Participant understands and agrees that if they are a director or an executive officer of the Company (within the meaning of such terms for purposes of Section 13(k) of the Exchange Act), they will not be eligible for such a loan to cover the income tax liability.  In the event that the Participant is a director or executive officer and the income tax is not collected from or paid by the Participant by the Due Date, The Participant understands that the amount of any uncollected income tax will constitute an additional benefit to the Participant on which additional income tax and National Insurance Contributions will be payable.  The Participant understands and agrees that they will be responsible for reporting and paying any income tax due on this additional benefit directly to Her Majesty’s Revenue and Customs under the self-assessment regime and for reimbursing the Company or the Employer (as appropriate) for the value of any primary and (to the extent legally possible) secondary class 1 national insurance contributions due on this additional benefit which the Company or the Employer may recover from the Participant by any of the means referred to in the Plan and/or this Agreement.
Notwithstanding the foregoing, if Participant is an executive officer or director (as within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of the provision above will not apply.  In the event that Participant is an executive office or director and income tax is not collected from or paid by Participant by the Due Date, the amount of any uncollected income tax will constitute a benefit to Participant on which additional income tax and National Insurance Contributions (“NICs”) (including Employer's NICs, as defined below) may be payable.  Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company and/or the Employer (as appropriate) for the value of any NICs due on this additional benefit.
Notification
Securities Disclaimer.  Neither this Agreement nor Appendix is an approved prospectus for the purposes of section 85(1) of the Financial Services and Markets Act 2000 (“FSMA”) and no offer of transferable securities to the public (for the purposes of section 102B of FSMA) is being made in connection with the Plan.  The Plan and the Restricted 

Stock Units are exclusively available in the UK to bona fide employees and former employees and any other UK Affiliate.

TAIWAN
Notification
Securities Disclaimer.  Neither the Plan nor the Restricted Stock Units are registered in Taiwan with the Securities and Futures Bureau or subject to the securities laws of Taiwan.
 

 
UNITED ARAB EMIRATES
Notifications
Securities Law Information.
Participation in the Plan is being offered only to selected Participants and is in the nature of providing equity incentives to Participants in the United Arab Emirates.  The Plan and the Agreement are intended for distribution only to such Participants and must not be delivered to, or relied on by, any other person.  Prospective acquirers of the securities offered, including the Participant, should conduct their own due diligence on the securities. The Participants is encouraged to consult a legal or financial advisor if the Participants does not understand the contents of the Agreement or the Plan or any aspect of the Award.  
If the Participant  does not understand the contents of the Plan and the Agreement, the Participant should consult an authorized financial adviser.  The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan.  Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.

LULULEMON ATHLETICA INC.
POLICY FOR RECOVERY OF INCENTIVE-BASED COMPENSATION

In the event lululemon athletica inc. (the “Company”) determines it must prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the U. S. federal securities laws, the Company will seek to recover, at the direction of the Compensation Committee (the “Committee”) of the Board of Directors after it has reviewed the facts and circumstances that led to the requirement for the restatement and the costs and benefits of seeking recovery, the amount of erroneously awarded incentive-based compensation received by a covered officer during the three-year period immediately preceding the date on which the Company is required to prepare the restatement.  The Committee will determine in its discretion the amount, if any, the Company will seek to recover from such covered officer.  The Company may offset the recovery amount against current or future incentive-based and non-incentive-based compensation and through cancellation of unvested or vested equity awards.  In addition, the Committee may, to the extent permitted by law, take other remedial and recovery action, as determined by the Committee.  The recovery of erroneously awarded incentive-based compensation under this policy is in addition to any other right or remedy available to the Company.    

For purposes of this policy (i) the term “covered officer” means executive officers of the Company as defined under the Securities Exchange Act of 1934, as amended, and such other senior executives as may be determined by the Committee and (ii) the term “erroneously awarded incentive-based compensation” means the amount of incentive-based compensation received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the accounting restatement.  This policy extends to individuals who were covered officers on or after adoption of the policy but ceased being a covered officer before a restatement triggering recovery under this policy occurs.  

The Committee shall have full and final authority to make all determinations under this policy.  The Company shall take such action as it deems necessary or appropriate to implement this Policy, including requiring all covered officers to acknowledge the rights and powers of the Company and the Committee hereunder.

This policy shall be effective as of the date adopted by the Board of Directors as set forth below and shall apply to incentive-based compensation that is approved, awarded or granted on or after that date.  

                            	
	
	Adopted September 2, 2015

	Board of Directors

	lululemon athletica inc.LICENSE
AGREEMENT Between

AVALON
OIL & GAS, INC.

and

AFS
Holdings, Inc.

THIS
LICENSE AGREEMENT (the "Agreement") entered into effective May 10, 2017 (the "Effective Date") between Avalon
Oil & Gas, Inc., a Nevada corporation, with its principal office at 310 Fourth Avenue South, Suite 7000, Minneapolis, Minnesota
55415 hereinafter referred to as "LICENSOR") and AFS Holdings, Inc., a Nevada corporation, with its principal office
at 310 Fourth Avenue South, Suite 7000, Minneapolis, Minnesota 55415 (hereinafter referred to as "LICENSEE"). LICENSOR
AND LICENSEE are hereinafter collectively referred to as the "Parties" and each a "Party".

Effective
as of the date set out above, in consideration of the mutual covenants and premises contained herein, the receipt and sufficiency
of which are hereby acknowledged, LICENSOR and LICENSEE agree as follows: 

BACKGROUND

LICENSOR
has developed and owns certain trade secrets and technology for the Industrial Hemp industry made with European Cannabidiol that
is extracted from Legal Industrial Hemp (hereinafter, the "Licensed Technology"), identified at Exhibit A hereto, incorporated
herein and integrated herewith by this reference. LICENSEE desires to obtain rights to use the Licensed Technology for commercial
purposes and LICENSOR desires to grant certain rights and licenses in and to the Licensed Technology to LICENSEE, all in accordance
with the terms and conditions of this Agreement.

ARTICLE
1. DEFINITIONS

When
used in this Agreement, the capitalized terms listed below shall have the following meaning:

"Affiliate"
means a person or entity that directly or indirectly through one or more intermediaries ' controls, is controlled by, or is under
common control with, the person or entity specified. For purposes of this definition, "control" and cog-lates thereof
mean, with respect to an entity, the direct or indirect ownership of (a) at least fifty percent (50%) of the capital stock or
share capital entitled to vote for the election of directors of the entity; or (b) at least fifty percent (50%) of equity or voting
interests of the entity, or (c) the ability to otherwise direct the management and operations of the entity.

"Agreement"
or "License Agreement" means this Agreement, including all Exhibits attached to this Agreement.

"Content"
means all artwork, designs, images or other content displayed, illustrated or otherwise used on or in connection with LICENSOR's
websites or any websites of any of the LICENSOR Parties or otherwise used in connection with or in relation to the Licensed Materials
or any of them.

"Effective
Date" means the date set out on the opening paragraph of this Agreement.

"Field
of Use" means the herein contemplated and limited scope of uses of the Licensed Technology, as such uses may relate to the
Industrial Hemp Industry. The field of use shall consist of the Doc Rico product line.

"Final
Product" means a Licensed Good in the last stage of development by Licensee to which Licensee shall make only minor changes
and such changes will in no event result in a reduction in the quality of the Licensed Good.

"Grant"
means the granting of a License for the Field of Use in the Territory.

"Gross
Receipts" means the gross payments and other consideration accrued or received by LICENSEE for the sale or other disposition
of Licensed Products.

"Intellectual
Property" means all Trademarks, Patents, Marks, Works of Authorship, Trade Secrets, Software, Content and Proprietary Information
owned, licensed as LICENSEE or otherwise used by LICENSOR or any LICENSOR Party, in connection with or in relation to the Licensed
Materials or any of them, whether protected, created or arising under the laws of the United States or any other jurisdiction.

"Legal
Industrial Hemp" means hemp gown from certified seeds that contain less than 0.3 percent THC or hemp plants that contain
less than 0.3 percent THC.

"License
Year" shall mean the year between the Effective Date and the first anniversary of the Effective Date, and then between each
anniversary ofthe Effective Date, as long as this Agreement and the corresponding license hereunder are in effect.

"Licensed
Materials" means, collectively, the Licensed Products, Licensed Services and Licensed Technology, all limited in scope to
the Field of Use, together with all corresponding Intellectual Property.

"Licensed
Products" means products and process for application of products, the development, manufacture, use, or sale of which incorporate
or integrate the Licensed Technology, in whole or in part.

"Licensed
Services" means services, which utilize or involve the use of any of the Licensed Technology, or which make use of, involve
the use of, utilize or consume any Licensed Products.

"Licensed
Technology" means trade secrets and technology for the industrial hemp industry limited to the Doc Rico product line, as
set forth in attached Exhibit A, together with all corresponding Intellectual Property.

"Licensed
Territory" means World.

"Licensee
Party", or collectively "Licensee Parties", means any and all Affiliates, parents, subsidiaries, principals, officers,
directors, shareholders, agents, employees, representatives, successors and assigns of Licensee, in all circumstances excluding
Licensor.

 "Licensor
Party", or collectively "Licensor Parties", means any and all Affiliates, parents, subsidiaries, principals, officers,
directors, members, agents, employees, representatives, successors and assigns of Licensor, in all circumstances excluding Licensee.

 

"Marks"
means all trademarks (registered or common law marks), service marks, trade names, service names, brand names, trade dress rights,
logos, domain names, Internet URL addresses, corporate names, other words, names, symbols, devices, designs, logos, features,
descriptions and other designations, and combinations thereof, used to identify or distinguish a business, product, good, group
or service or to indicate a form of certification, and general intangibles of a like nature, together with the goodwill associated
with any of the foregoing, as well as all applications, registrations and renewals thereof, related to the Licensed Materials
or any of them.

"Patents"
means all patents and applications therefor, including continuations, continuations-inpart, reexaminations, or reissues of patent
applications and patents issuing thereon, related to the Licensed Materials or any of them.

"Proprietary
Information" means other sensitive information, technology and know-how uniquely in the possession of Licensor and/or any
of the Licensor Parties as of the date of this Agreement.

"Trade
Secrets" means all inventions, discoveries, concepts, ideas, research and development, know-how, formulae, compositions,
manufacturing and production processes and techniques, technical data, procedures, designs, drawings, specifications, databases,
business methods, other methods, machines and processes, marketing brands, ingredient combinations and compilations, and new uses
for any of the preceding items.

"Works
of Authorship" means all copyrights and registrations and applications therefor, and published and unpublished works of authorship,
including without limitation audiovisual works, collective works, computer programs, compilations, databases, derivative works,
literary works, mask works and sound recordings, related to the Licensed Materials or any of them.

ARTICLE
II. GRANT OF LICENSE

2.1
Grant of License. Subject to the terms and conditions of this Agreement, LICENSOR gants to LICENSEE, to the extent of the
Doc Rico product line sold and distributed within the Licensed Territory, a LICENSE under the Licensed Technology, to sell, re-sell,
offer for sale, import, put into use, as applicable, the Licensed Materials, in accordance with and subject to the terms and conditions
of this Agreement, and as contemplated in this Agreement.

2.2
Ownership of Intellcctual Property. Except as expressly granted by LICENSOR to LICENSEE herein, all rights and entitlements,
whether now existing or that may hereafter come into existence, are reserved to LICENSOR. Specifically, all Intellectual Property
comprising part of the Licensed Materials shall at all times remain the exclusive property of LICENSOR, the applicable LICENSOR
Party or the applicable LICENSOR thereof, as appropriate, subject to the license provided hereunder, and any right of LICENSEE
thereto shall be solely as expressly set forth in this Agreement. LICENSOR also reserves the right to license the intellectual
property as described in Exhibit A.

2.3
Assignment and Sub-License. LICENSEE may assign its license under this Agreement, license or sub-license any of the Licensed
Materials and Intellectual Property, or any other rights granted under this Agreement, while this Agreement is in effect. LICENSOR
shall be consulted 30 days prior to any assignment or sub-license any of the Licensed Materials and Intellectual Property, or
any other rights granted under this Agreement and shall have the right to approve or deny any assignment or sub-license, while
this Agreement is in effect and consent shall not be unreasonably withheld.

ARTICLE
III. DILIGENCE AND COMMERCIALIZATION

3.1
Diligence and Commercialization. Throughout the term of this Agreement, LICENSEE shall use commercially reasonable efforts
to bring Licensed Products and Licensed Services, in the Field of Use, to market.

3.2
Financial Capability. At all times during the term of this license, LICENSEE shall maintain the financial capability to
comply with Section 3.1, above.

ARTICLE
IV. CONSIDERATION FOR LICENSE AND ROYALTIES

4.1
Initial License Fee. In addition to all other amounts due to LICENSOR under this Article IV, LICENSOR, in consideration
of entering into this Agreement, shall receive from LICENSEE license fee of Two Hundred Thousand Dollars ($200,000) which shall
be paid within six (6) months of the Effective Date of this Agreement.

4.2
Royalty. In addition, the LICENSEE shall pay to LICENSOR an annual royalty in the amount of six percent (6%) of the
Gross Receipts received by LICENSEE in the previous License Year or Twenty-Five Thousand Dollars ($25,000), whichever
is greater. Within ninety (90) days after the end of each License Year, LICENSEE shall submit to LICENSOR payment of the royalty
for the previous year, together with a summary accounting of the Gross Receipts forming the basis of the payment. Within ninety
(90) days after any earlier termination of this Agreement, LICENSEE shall submit to LICENSOR payment of the royalty corresponding
to six percent (6%) of the Gross Receipts received by LICENSEE between the last anniversary of the Effective Date and the date
of termination, together with a summary accounting of the Gross Receipts forming the basis of the payment.

ARTICLE
V. REPORTS AND PAYMENTS

5.1
Quarterly Reports. Not later than the last day of each February, May, August, and November during the term of this Agreement,
LICENSEE shall deliver to LICENSOR a written report stating for the quarterly period ended the last days of the preceding December,
March, June, and September, respectively:

	(a)		for
                                         Licensed Products, the number of units sold;

	(b)		for
                                         Licensed Services, a description of the services provided; and

	(c)		Gross
                                         Receipts for such quarter.

5.2
Initial Report. Not later than 180 Days, after the Effective Date of this Agreement, LICENSEE shall deliver to LICENSOR
a written report stating the licensing and marketing strategy of any of the Licensed Materials and Intellectual Property, or any
other rights granted under this Agreement.

ARTICLE
VI. RECORDS

6.1
Records of Operations and Audit. LICENSEE shall keep full and accurate records containing particulars that may be necessary
for the purpose of verifying the quality of the Licensed Materials, including longevity of success in its use. 

6.2
Review of Records. During normal business hours, and with at least ten (10) business days advance written notice, LICENSOR
or any authorized designee thereof, including LICENSOR's auditor(s), accountant(s) and attorney(s), may visit any LICENSEE's premises,
office, facility, business and other site(s) as reasonably needed to review, inspect and audit LICENSEE's books, records and operations
in order to monitor LICENSEE's performance under this Agreement, including without limitation LICENSEE's use and utilization of
the Licensed Materials and Intellectual Property comprising part thereof and documentation of Gross Receipts therefor, provided
such review, inspection and audit does not unreasonably interfere with the business, operations or affairs of LICENSEE. Should
any review, inspection or audit reveal any underpayment of royalties under Section 4.2, above, LICENSEE shall immediately pay
the amount of such underpayment with interest at the rate of ten percent (10.00%) per annum.

ARTICLE
VII. MAINTENANCE/LICENSE SURVIVAL

7.1
Maintenance of Licensed Materials. The maintenance of the Licensed Materials shall be the primary responsibility of and
controlled by LICENSOR, who shall keep LICENSEE informed as to material developments with respect to the Licensed Materials, it
being understood and agreed that all updated Licensed Materials, Licensed Products and Licensed Technology, together with all
corresponding Intellectual Property, automatically shall be subject to the license hereunder. LICENSOR shall provide updated details
to commemorate the Licensed Materials that are the subject ofthis license and also the process for producing and applying the
technology that is subject to this license. LICENSOR FURTHER AGREES TO PLACE THE LICENSED MATERIALS AND INTELLECTUAL PROPERTY
AND THE ALSO THE PROCESS FOR PRODUCING THE LICENSED MATERIALS AND INTELLECTUAL PROPERTY IN ESCROW WITH A MUTUALLY AGREED THIRD
PARTY.

ARTICLE
VIII. INFRINGEMENT

8.1
Each party shall promptly give written notice to the other party of: (i) any suspected infringement of any Intellectual Property
comprising part of the Licensed Materials; (ii) the threat of or filing of any declaratory judgment action by a third party alleging
the invalidity, unenforceability, or non-infringement of the Licensed Materials.

8.2
LICENSEE shall have the first right (but not the obligation) to notify an entity or individual allegedly infringing upon any of
the Intellectual Property and initiate legal proceedings to abate the infringement of any Licensed Materials within LICENSEE'S
Field of Use. LICENSOR agrees to join as a party plaintiff in any such lawsuit initiated by LICENSEE, if reasonably requested
to do so by LICENSEE, with all costs, attorneys' fees, and expenses of LICENSOR to be paid by LICENSEE. Should LICENSEE elect
not to institute such an action to enforce the Intellectual Property rights against infringement within LICENSEE's Field of Use
within ninety (90) day after receipt of written notice from LICENSOR of LICENSOR's intention to bring suit for such infringement,
LICENSOR shall have the right (but not the obligation) at its own expense to take those steps on behalf of itself and LICENSEE,
provided that LICENSEE shall have the right to participate at its own expense in any action brought by LICENSOR.

ARTICLE
IX. CONFIDENTIALITY

In
connection with this Agreement and the license hereunder, LICENSOR and LICENSEE, each as the "Disclosing Party" with
respect to the Licensed Materials and Intellectual Property comprising part thereof, will provide to the other, as the "Recipient",
and such Recipient will receive or become privy to, certain Confidential Information that is deemed to be highly proprietary and
valuable. As a result, this Agreement, and each Party's duties and obligations hereunder, is conditioned upon this Article IX.

9.1
Definition of Confidential Information. For the purpose of this Article IX, "Confidential Information" shall
include all information, whether written or oral, that is prepared, uniquely known and/or provided by the Disclosing Party, and/or
any affiliate, parent, subsidiary, principal, member, officer, director, employee, agent, representative, successor or assign
of the Disclosing Party that is not the Recipient (collectively, the "Disclosing Party Affiliates", and each a "Disclosing
Party Affiliate"), in relation to the Licensed Materials and Intellectual property comprising part thereof, that is not readily
available to the public. "Confidential Information" shall be clearly marked as such.

9.2
Authorized Use of Confidential Information. The Recipient shall: (a) use the Disclosing Party's Confidential Information
only for the purposes expressly set forth in this Agreement; (b) exercise at least the same degree of care and protection with
respect to the Disclosing Party's Confidential Information that the Recipient would exercise with respect to its own confidential,
sensitive, privileged and/or proprietary information, which in no event shall be less than the highest level of care for the industry
(c) take all precautions necessary to ensure that the Disclosing Party's Confidential Information shall not be, or permitted to
be, shown, copied or disclosed to other parties, except as expressly provided in this Agreement.

9.3
Ownership of Confidential Information. All Disclosing Party Confidential Information, including reproductions thereof,
shall be deemed to be and remain the exclusive property of the Disclosing Party, and except to the extent provided under the license,
no rights of any kind in and to any of the Confidential Information are transferred to the Recipient, any Recipient Party or any
third party hereunder.

ARTICLE
X. LIMITED WARRANTY, MERCHANTABILITY AND EXCLUSION OF WARRANTIES

 

10.1
Each Party warrants to the other that it has the right and power to enter into this Agreement, that the person signing on behalf
of such Party is duly authorized to do so and to bind such Party in doing so, that all required consents and approvals necessary
for such Party to enter into this Agreement and be bound by it have been duly provided and obtained, and that all terms of this
Agreement are binding and enforceable upon such Party. LICENSOR represents, in good faith and to the best of its knowledge, that
there are not, as of the date of the Effective Date, any claims, demands, suits, or judgments against LICENSOR that in any manner
would or might impair or interfere with LICENSOR's performance under this Agreement or with the license granted hereunder. LICENSOR
does not warrant the content contained in the Licensed Materials are fully functional or feasible or that they will be error free
or that any defects in any Licensed Materials will be corrected. LICENSOR makes no representation whatsoever with regard to the
scope or commercial potential or profitability or income of or from the Licensed Materials or that such Licensed Materials may
be exploited by LICENSEE without infringing any rights of any other party. LICENSOR makes no covenant either to defend any infringement
charge by a third party or to institute action against infringers of any Licensed Materials or Intellectual Property except as
set forth in Article VIll, above. LICENSOR does not warrant that the Licensed Materials will meet LICENSEE's or any of LICENSEE's
customers' specific requirements. LICENSEE warrants that it has made its own evaluation of the capabilities, safety, utility,
and commercial application of the Licensed Materials.

10.2
LICENSEE shall indemnify, hold harmless, and defend (and pay any and all other expenses and attorney's fees, in connection therewith)
LICENSOR and its officers, directors, agents, and employees, from and against any and all liability, loss, claims, and/or actions
arising out of any alleged defect in any Licensed Good despite LICENSOR's approval thereof, and any claim by a third party resulting
from LICENSEE's breach or alleged breach of any term or condition of this Agreement.

10.3
Without limiting the foregoing, LICENSOR does not warrant the confidentiality of any of the Intellectual Property (although it
presently believes it to be confidential in all material respects).

10.4
LICENSEE acknowledges and agrees that LICENSOR exercises no control over, and accepts no responsibility for, compliance by LICENSEE
or any LICENSEE Party with any law or regulation applicable to them or to their use and utilization of the Licensed Materials
or Intellectual Property.

ACCORDINGLY,
THE LICENSED MATERIALS ARE PROVIDED "AS IS." EXCEPT AS EXPRESSLY PROVIDED ABOVE, LICENSOR MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND WITH RESPECT TO THE LICENSED TECHNOLOGY, AND LICENSEE EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER IMPLIED WARRANTIES WITH RESPECT TO THE CAPABILITIES, SAFETY, UTILITY, OR COMMERCIAL
APPLICATION OF THE LICENSED MATERIALS. There are no OTHER warranties OF LICENSOR, either express or implied, and any and all such
warranties are hereby disclaimed and negated knowingly and voluntarily by LICENSEE. No oral or written information or advice given
by LICENSOR or ANY LICENSOR PARTY shall create any warranty to LICENSEE.

ARTICLE
XI. TERM AND TERMINATION

11.1
Term. Unless otherwise extended in by mutual agreement of the Parties or terminated as set forth in this Article XI, this
Agreement will remain valid and in force from the Effective Date through the date that is TEN YEARS from the date of the first
sale of a Licensed Product or provision of a Licensed Service by or through LICENSEE (the "Initial Tenn"). LICENSEE
shall have the right to extend this license agreement for a single additional term of FIVE YEARS, upon at least ninety (90) days
advance notice to LICENSOR prior to expiration of the Initial Term, as long as the LICENSEE is in compliance with this license
agreement.

 

11.2
Termination by LICENSEE. LICENSEE shall have the right to terminate this Agreement at any time, upon ninety (90) days prior
written notice, without cause and for any reason. If LICENSEE terminates this Agreement under this provision, LICENSOR shall not
be under any obligation to return any portion of the consideration paid by LICENSEE to LICENSOR, and LICENSEE shall owe and pay
LICENSOR, within ninety (90) days after such termination, all further amounts due and owing under Article IV, above.

11.3
Termination by LICENSOR. In the event of material breach of this Agreement by LICENSEE, LICENSOR may at any time provide
written notice to LICENSEE of such material breach. If LICENSEE fails to cure the identified material breach within ninety (90)
days after the date of the notice, LICENSOR may by written notice given to LICENSEE terminate this Agreement. A "material
breach" of this Agreement for purposes of this Section 1 1.3 shall include the following: (a) failure to make the reports,
sustain the records and allow the reviews, inspections and audits required under Articles V and VI of this Agreement accurately
and on time; (b) failure to make the payments or deliveries required under Articles IV, VI or VIII of this Agreement accurately
and on time; and (c) any use or utilization of any Intellectual Property in any way that is contrary to the terms and conditions
set forth in this Agreement.

 

11.4
LICENSEE's Financial Condition. LICENSEE shall immediately notify LICENSOR in writing of its intent to: (a) liquidate and/or
cease to carry on its business, and/or take any steps to materially reduce its business, operations or affairs, (b) become "insolvent"
(as such term is defined in the United States Bankruptcy Code, as amended from time to time), (c) make any arrangement or assignment
for the benefit of creditors; (d) suffer distress of execution to be levied or threatened on any of its properties; or (e) voluntarily
seek, consent to or acquiesce in the benefits of any bankruptcy or similar debtor-relief laws within thirty (30) days of such
action. Upon receipt of such notice, LICENSOR may, at its sole option, terminate this Agreement without prejudice to any other
remedy to which LICENSOR may be entitled at law or in equity or elsewhere under this Agreement, by giving written notice of termination
to LICENSEE.

11.5
Effect of Termination on Assignments and Sub-Licenses. Upon termination of this Agreement, any assignments or sub-licenses
granted under Section 12.1, shall survive, provided that: (a) at the time of such termination, the assignee or sub-licensee is
not in material default under the terms of this Agreement, as applied to such assignee or sub-licensee; (b) under such assignment
or sub-license, the duties and obligations of LICENSOR to the assignee or sub-licensee under the assignment or sub-license shall
not under any circumstances become greater than the duties and obligations of LICENSOR under this Agreement; and, (c) upon request
by LICENSOR, each such assignee and sub-licensee shall promptly agree in writing to render to LICENSOR any performance, including
the payment of money that would otherwise be due from LICENSEE under this Agreement and which shall remain similarly due from
such assignee or sub-licensee, after the termination and to be bound by the applicable terms of this Agreement.

11.6
Effect of Termination on LICENSEE. At such time as this Agreement is terminated for any reason whatsoever, or else at such
time as the term(s) of this Agreement expire, LICENSEE shall: (a) return, or at LICENSOR's direction destroy, all plans, drawings,
papers, notes, writings and other documents, samples, organisms, biological materials and models pertaining to the Licensed Materials,
retaining no copies, and shall refrain from using or publishing any portion thereof; (b) cease manufacturing, processing, producing,
using, or selling Licensed Products and cease providing Licensed Services; provided, however, that LICENSEE may continue to sell
in the ordinary course of business for a period of three (3) months reasonable quantities of Licensed Products that are fully
manufactured and in LICENSEE's normal inventory at the date of termination if (i) all monetary obligations of LICENSEE to LICENSOR
have been satisfied, and (ii) royalties on such sales are paid to LICENSOR in the amounts and in the manner provided in this Agreement;
(c) otherwise cease making any use of any of the Licensed Materials; (d) continue to comply with all requirements in this Agreement
that survive expiration or earlier termination of this Agreement; (e) not at any time thereafter purport to be a licensee, franchisee,
affiliate or independent contractor of or otherwise associated with LICENSOR; (f) not use or utilize any recommendation or reference
provided as a result of its performance as LICENSEE in relation to this Agreement; (g) provide financial reports pursuant to Article
V and pay any amounts due under Article IV through the date of termination; (h) make records available for final review, inspection
or audit within thirty (30) days of such termination, pursuant to Section 6.3; and (i) . Nothing herein shall be construed to
release either party of any obligation that matured prior to the effective date of such termination.

ARTICLE
XII. ASSIGNMENT

12.1
Assignment. This Agreement shall be binding upon and shall inure to the benefit of the legal representatives and assigns
of LICENSOR and LICENSEE.

ARTICLE
XIII. MISCELLANEOUS

13.1
Export Controls. LICENSEE acknowledges that LICENSOR is subject to United States laws and regulations controlling the export
of technical data, computer software, laboratory prototypes, and other commodities and that LICENSOR's obligations under this
Agreement are contingent upon compliance with applicable United States export laws and regulations. The transfer of technical
data and commodities may require a license from the applicable agency or agencies of the United States government or written assurances
by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without the prior approval of certain
United States agencies. LICENSOR neither represents that an export license shall not be required nor that, if required, such export
license shall issue.

13.2
Initial Negotiation to Settle Dispute. The Parties, and each of them, wish to avoid disputes relating to or arising out
of this Agreement. In the event of any dispute, claim, question, difference or perceived problem (collectively, a "Dispute"),
each Party pledges to give written notice to the other Party to seek first an amicable resolution without regard to litigation.
In the event of a Dispute arising out of or relating to this Agreement, any rights, duties or obligations hereunder, or any breach
hereof, the Parties shall consult and negotiate with each other, in good faith and understanding of their mutual interests and
use their best endeavors to reach a just and equitable resolution of such Dispute, reasonably satisfactory to all Parties.

13.3
Mediation. In the event the parties hereto do not settle a Dispute as provided in Section 14.2, above, within a period
of thirty (30) days after a Party first provides written notice of such Dispute, then such Dispute shall be submitted to a mutually
acceptable mediator located in the Philadelphia metropolitan area prior to any arbitration or other action. The mediator's fees
and expenses shall be shared equally by the Parties, who agree to exercise their best efforts in good faith to resolve all Disputes
in mediation. Mediation begins on the date one Party sends written notice to the other requesting mediation and presenting in
the notice the matter to be mediated. The mediation shall conclude when both Parties sign an agreement that resolves the subject
of the mediation. If no agreement is reached within ninety (90) calendar days after the date of the original written notice of
the Dispute, the mediation is considered unsuccessful.

13.4
Arbitration. In the event the Parties hereto do not settle a Dispute as provided in Section 13.2 or Section 13.3, above,
then such Dispute shall be referred to arbitration adjudicated by a private arbitrator mutually ageeable to the Parties. In the
event the Parties cannot mutually agree on an arbitrator, then each shall appoint an arbitrator, the two appointed arbitrators
will select a third arbitrator, and the arbitration will be conducted by a panel of three (3) arbitrators, or in the alternative
the Parties may agree to have the presiding judge of the Philadelphia County Superior Court appoint an arbitrator. The arbitration
shall be conducted in Philadelphia County, and such proceeding and the arbitration award shall be in compliance with the laws
referenced in Section 14.9, below. The arbitration award shall be binding and may be enforced in any court of competent jurisdiction
in the United States. The prevailing Party in any arbitration or other proceedings arising out of or related to this Agreement
shall be reimbursed by the other Party for all costs and expenses incurred in such proceedings, including reasonable attorneys'
fees.

15.5
Legal Compliance. LICENSEE shall comply with all laws and regulations relating to the manufacture, processing, production,
use, sale, or distribution of Licensed Products, and the provision of Licensed Services, as applicable. LICENSEE shall not take
any action that would cause LICENSOR or LICENSEE to violate any laws and regulations.

15.6
Independent Contractor. LICENSEE's relationship to LICENSOR shall be that of an independent LICENSEE only. LICENSEE shall
not be the agent of LICENSOR and shall have no authority to act for or on behalf of LICENSOR in any matter. Persons retained by
LICENSEE as employees or agents shall not by reason thereof be deemed to be employees or agents of LICENSOR. LICENSEE shall not
in any way act or hold itself out as an agent or franchisee of LICENSOR. LICENSEE shall have no power to incur any obligations
of any kind on behalf of LICENSOR by virtue of this Agreement, except as expressly set forth in this Agreement.

15.7
Place of Execution. This Agreement and any subsequent modifications or amendments hereto shall be deemed to have been executed
in the State of Minnesota, U.S.A.

15.8 Governing
Law. This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the parties
hereunder, shall be construed under and governed by the laws of the State of Minnesota and the United States of
America.

15.9
Entire Agreement. This Agreement constitutes the entire agreement between LICENSOR and LICENSEE with respect to the subject
matter hereof, and subject to any more restrictive prior confidentiality or non-disclosure agreement between LICENSOR and LICENSEE,
this Agreement supersedes all previous agreements by and between LICENSOR and LICENSEE or their predecessors, as well as all proposals,
oral or written, and all prior negotiations, conversations or discussions between the parties related to the subject matter of
this Agreement. The Parties acknowledge that they have not been induced to enter into the Agreement by any representations or
statements, oral or written, not expressly contained herein.

15.10
Amendment. This Agreement shall not be modified, amended or terminated except as herein provided or except by another agreement
in writing executed by the Parties hereto.

15.11 Severability.
All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that
they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render
this Agreement illegal, invalid or unenforceable. If any provision or portion of any provision of this Agreement
not essential to the commercial purpose of this Agreement shall be held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, it is the intention of the Parties that the remaining provisions or portions thereof shall constitute
their agreement with respect to the subject matter hereof, and all such remaining provisions or portions thereof shall remain
in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this
Agreement shall be replaced by a valid provision that will implement the commercial purpose of the illegal, invalid or
unenforceable provision. In the event that any provision essential to the commercial purpose of this Agreement is held to be
illegal, invalid or unenforceable and cannot be replaced by a valid provision that will implement the commercial purpose of
this Agreement, this Agreement and the rights granted herein shall terminate.

15.12 Force
Majeure. Any delays in, or failure of, performance of any party to this Agreement shall not constitute default
hereunder, or give rise to any claim for damages, if and to the extent caused by occurrences beyond the reasonable control of
the party affected, including, but not limited to, acts of God, strikes or other work stoppages; civil disturbances, fires,
floods, explosions, riots, war, rebellion, sabotage, acts of governmental authority or failure of governmental authority to
issue licenses or approvals that may be required. Any nonperformance or delay of LICENSEE subject to this Section 15.12 that
is in excess of one hundred eighty (180) days will constitute a material breach of this Agreement under Section
12.3.

15.13
Injunctive Relief. Both Parties to this Agreement recognize and agree that a breach of any of all of the provisions of
Articles II and IX of this Agreement will constitute immediate and irreparable harm to each Party's valuable business relations,
for which damages cannot be readily calculated and for which damages and other remedies at law constitute an inadequate remedy.
In the event either Party attempts or threatens to violate its obligations under such Articles Il or IX, above, the other Party
shall have, in addition to any other remedies available to it, the right to injunctive relief enjoining any further breaches by
the violating Party.

15.14
Survival. The rights, remedies, agreements, obligations and covenants of the Parties contained in or made pursuant to this
Agreement which by their terms or clear intent extend beyond the expiration or earlier termination of the Agreement will survive
the expiration or earlier termination of this Agreement and will remain in full force and effect.

15.15
Counterparts. This Agreement may be executed simultaneously, including without limitation via electronic signature, affirmation
and/or confirmation, in two (2) or more counterparts, and each such counterpart will be deemed an original hereof, but all such
counterparts together will constitute one and the same instrument.

15.16 No
Waiver. No failure or delay by either Party to take any action or assert any right or remedy hereunder or to
enforce strict compliance with any provision hereof will be deemed to be a waiver of, or estoppel with respect to, such
right, remedy or noncompliance in the event of the continuation or repetition of the circumstances giving rise to such right,
remedy or noncompliance. No waiver shall be effective unless given in a duly executed written instrument. The failure of any
Party to claim damages or to terminate this Agreement by reason of the breach of any of the provisions hereof by any other
party shall not stop the Party not in default from thereafter claiming damages or terminating this Agreement by reason of any
subsequent breach of any of the same or other provisions hereof.

15.17
Headings. The Section titles and headings used in this Agreement are for convenience only. They are not to be construed
as a part of this Agreement, and they in no way define, limit or amplify the provisions of this Agreement,

ARTICLE
XV. NOTICES

16.1
Notices. All notices and other communications shall be hand delivered, sent by private overnight mail service, sent by
registered or certified U.S. mail, postage prepaid, return receipt requested, or sent by verifiable electronic mail, and addressed
to the party to receive such notice or other communication at the address given below, or such other address as may hereafter
be designated by notice in writing:

Ifto
LICENSOR:

Kent
Rodriguez

President

Avalon
Oil & Gas, Inc.

310
Fourth Avenue South, Suite 7000

Minneapolis,
Minnesota 55415

E-Mail:
k.rodriguez@avalonoilinc.com

If
to LICENSEE:

Kent
Rodriguez

President

AFS
Holdings, Inc.

310
Fourth Avenue South, Suite 7000

Minneapolis,
Minnesota 55415

E-Mail:
k.rodliguez@avalonoilinc.com

Such
notices or other communications shall be effective upon receipt by an employee, agent or representative of the receiving Party
authorized to receive notices or other communications sent or delivered in the manner set forth above. The contact information
for such notices and other communications may be changed by providing notice thereof as provided in this Article XV.

IN
WITNESS WHEREOF, LICENSOR and LICENSEE have caused this Agreement to be signed by their duly authorized representatives, under
seal, as of the day and year indicated above.

	Date: 05/10/2017	 	Date: 05/10/2017
	 	 	 
	LICENSOR:	 	LICENSEE:
	 	 	 
	Avalon
        Oil & Gas, Inc

        a
        Nevada Corporation
	 	AFS
        Holdings, Inc.

        a
        Nevada Corporation

	 	 	 
	/s/
    Kent Rodriguez	 	/s/
    Kent Rodriguez
	By: Kent Rodriguez, President	 	By: Kent Rodriguez, President

 

    	 	1	 

     

    

 

EXHIBIT
A LICENSED TECHNOLOGY

A
propriety organic set of products made with European Cannabidiol extracted from legal industrial hemp, limited to the Doc Rico
product line:

Doc
Rico Topical CBD & Frankincense Pain Relief Balm

Doc
Rico Detoxifying Charcoal Lavender Face & Body Soap

Doc
Rico Detoxifying Charcoal Patchouli Face & Body Soap

Doc
Rico Relaxing Lavender Mint Aromatherapy Lip Balm Doc Rico 'Rich' Hemp Oil w/Full Spectrum CBD, Citrus Flavor

Doc
Rico Hand & Body Lotion

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