Document:

lulu-2014.05.04-EX 10.1

Exhibit 10.1
LULULEMON ATHLETICA INC.
 
AMENDED AND RESTATED 
EXECUTIVE BONUS PLAN  

Fiscal 2011 through Fiscal 2015
	
		
	PLAN TERM
	Five fiscal years beginning January 31, 2011

	 
	 

	PLAN EFFECTIVE DATE
	January 31, 2011

	 
	 

	PLAN YEAR
	lululemon’s fiscal year

PURPOSE 
		
	•
	The purpose of this Executive Bonus Plan (the “Plan”) is to increase stockholder value by providing an incentive for the achievement of goals that support the strategic plan of lululemon athletica inc. (the “Company”).

ELIGIBILITY 
		
	•
	The Plan is applicable for positions of executive vice president and above, and other senior officers of the Company as designated by the Compensation Committee of the Board of Directors (the “Participants”).

		
	•
	The CEO has the authority to recommend participants. The Compensation Committee has the sole authority to designate Participants.

		
	•
	Eligibility will cease upon termination of the Participant’s employment, withdrawal of designation by the Compensation Committee, transfer to a position compensated otherwise than as provided in the Plan, termination of the Plan by the Company, or if the Participant engages, directly or indirectly, in any activity which is competitive with any Company activity.

		
	•
	If a Participant changes from an eligible position to an ineligible position during the Plan Year, eligibility to participate will be at the discretion of the Compensation Committee.

TARGET BONUS
		
	•
	The target bonus shall be the amount that would be paid to the Participant under the Plan if 100% of Financial Performance Goals and 100% of Individual Performance Goals were met (the “Target Bonus”). 

		
	•
	The Target Bonus for each Participant shall be established by the Compensation Committee no later than ninety (90) days after the beginning of the Plan Year.

		
	•
	The Target Bonus may be established as a percentage of base cash salary, or according to another method established by the Compensation Committee. The amount of the Target Bonus earned by the Participant shall be based on the achievement of Financial Performance Goals and, if applicable, Individual Performance Goals.

 OBJECTIVE FINANCIAL PERFORMANCE GOALS 
		
	•
	The Compensation Committee shall select the Financial Performance Goals for each Participant no later than ninety (90) days after the beginning of the Plan Year and while the outcome is substantially uncertain.

		
	•
	The Compensation Committee may establish any special adjustments that will be applied in calculating whether the Financial Performance Goals have been met to factor out extraordinary items no later than ninety (90) days after the beginning of the Plan Year and while the outcome is substantially uncertain.

		
	•
	In accordance with Section 162(m) of the Internal Revenue Code, the Compensation Committee shall select one or more objective Financial Performance Goal measures from among Company Revenue, Earnings Per Share, Return on Capital, Sales Growth and Volume, Return on Assets, Return on Equity, Net Income, Operating Income, Economic Profit, Expense Reduction or Controllable Expenses, Profit Margin, Gross Margin, Total Shareholder Return, Stock Price, Inventory Turns, and/or Free Cash Flow for the Objective Performance Goals. 

		
	•
	The maximum performance level for each Financial Performance Goal is 200%.

		
	•
	80% of the Target Bonus will be based on achievement of the Financial Performance Goals.

INDIVIDUAL PERFORMANCE GOALS
		
	•
	The portion of the Target Bonus not determined by achievement of the Financial Performance Goals shall be determined by the Participant’s achievement of Individual Performance Goals.

		
	•
	Each Participant with Individual Performance Goals shall submit such Individual Performance Goals for approval by the Compensation Committee within ninety (90) days after the beginning of the Plan Year.

		
	•
	The maximum performance level for each Individual Performance Goal is 200%.

		
	•
	20% of the Target Bonus will be based on achievement of the Individual Performance Goals.

BONUS PAYOUT AND ELIGIBILITY 
		
	•
	The bonus payout for each Participant under the Plan is based on the achievement of the Financial Performance Goals and the Individual Performance Goals (the “Bonus Payout”). A Bonus Payout under the Plan is earned as of the end of the Plan Year and will be paid according to the Plan, if the Participant remains a Company employee through the date on which Bonus Payouts are made to Participants under the Plan, unless employment is terminated prior to the end of the Plan Year due to death or disability.

		
	•
	The Compensation Committee, in its discretion, may determine that the Bonus Payout for any Participant will be less than (but not greater than) the amount earned by such Participant under the Plan.

		
	•
	The maximum Bonus Payout for the achievement of Financial Performance Goals and the Individual Performance Goals is $3,500,000 to any one Participant in any plan year.

BONUS PAYOUT CALCULATION 
		
	•
	Within ninety (90) days after the beginning of the Plan Year and while the outcome is substantially uncertain, the Compensation Committee shall review and approve for each Participant: the Target Bonus; the Financial Performance Goals; the Individual Performance Goals; and the relative weighting of the goals for the Plan Year. Those metrics will be used to calculate the Bonus Payout for each Participant. The Compensation Committee shall review the Bonus Payout calculation for each Participant.

BONUS PAYOUT PRORATIONS 
		
	•
	For any Company employee who meets eligibility criteria and becomes a Participant after the start of the Plan Year but before November 1st of that fiscal year, or whose employment with the Company is terminated prior to the end of the Plan Year because of disability or death, the Compensation Committee (1) shall prorate the Bonus Payout related to the Financial Performance Goals, and (2) in its discretion, may prorate the Bonus Payout related to Individual Performance Goals. If the Participant is on a leave of absence for a portion of the Plan Year, the Compensation Committee in its discretion may reduce the Participant’s Bonus Payout on a pro-rata basis.

		
	•
	The proration is based on the number of full months during which the Participant participated in the Plan during the Plan Year.  Credit is given for a full month if the Participant is eligible for 15 or more calendar days during that month.

		
	•
	If a Participant changes positions within the Company during the Plan Year, the Compensation Committee in its discretion may prorate the Participant’s Bonus Payout by the number of months in each position.

ADMINISTRATION 
COMPENSATION COMMITTEE RESPONSIBILITIES: 
		
	•
	Approve the Plan design, Financial Performance Goals, and Individual Performance Goals for each Participant. Determine and certify the achievement of the Financial Performance Goals and Individual Performance Goals. Approve the Bonus Payout calculation and Bonus Payout for each Participant.

		
	•
	In the event of a dispute regarding the Plan, the Participant may seek resolution through the CEO and the Compensation Committee.  All determinations by the Compensation Committee shall be final and conclusive.

2

BONUS PAYOUT ADMINISTRATION 
		
	•
	The Bonus Payout will be made as soon as administratively feasible and is expected to be within approximately seventy-five (75) days after the end of the Plan Year. No amount is due and owing to any Participant before the Compensation Committee has determined the Bonus Payout.

		
	•
	The Company will withhold amounts applicable to federal, state and local taxes, domestic or foreign, required by law or regulation.

CLAWBACK POLICY
		
	•
	All incentive compensation paid or awarded under the Plan on or after September 8, 2010 is subject to the terms and conditions of the Company’s Policy for Recoupment of Incentive Compensation (the “Clawback Policy”), as such policy may be amended from time to time.         

TERMINATION OF EMPLOYMENT 
		
	•
	The Plan is not a contract of employment for any period of time. Any Participant may resign or be terminated at any time for any or no reason. Employment and termination of employment are governed by the Company’s policies and any applicable employment agreement and not by the Plan.

REVISIONS TO THE PLAN 
		
	•
	The Plan will be reviewed by the CFO, CEO and the Compensation Committee on a periodic basis for revisions. The Company reserves the right at its discretion with or without notice, to review, change, amend or cancel the Plan, at any time.

As amended through March 19, 2014

3lulu-2014.05.04-EX 10.2

Exhibit 10.2

NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE
LULULEMON ATHLETICA INC. 2007 EQUITY INCENTIVE PLAN
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made between lululemon athletica inc. (the “Company”) and ______________ (the “Optionee”).
WHEREAS, the Company maintains the lululemon athletica inc. 2007 Equity Incentive Plan (the “Plan”) for the benefit of the employees of the Company and its Affiliates; and
WHEREAS, the Plan permits the award of Non-Qualified Stock Options to purchase Shares, subject to the terms of the Plan; and
WHEREAS, in connection with the Company’s employment of the Optionee, the Company desires to grant the Optionee Non-Qualified Stock Options under the Plan to compensate the Optionee and to further align the Optionee’s financial interests with those of the Company’s stockholders. 
NOW, THEREFORE, in consideration of these premises and the agreements set forth herein and intending to be legally bound hereby, the parties agree as follows:
1.Award of Option.  This Agreement evidences the grant to the Optionee of an option (the “Option”) to purchase ______________ Shares (the “Option Shares”).  Except as otherwise provided in a separate, written employment agreement between the Company or any Affiliate and the Optionee, this Option is subject to the terms set forth herein, and in all respects is subject to the terms and provisions of the Plan applicable to Non-Qualified Stock Options, which terms and provisions are incorporated herein by this reference.  Except as otherwise specified herein or unless the context herein requires otherwise, the terms defined in the Plan will have the same meanings herein. 
2.Nature of the Option.  The Option is intended to be a nonstatutory stock option and is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Internal Revenue Code (the “Code”), or to otherwise qualify for any special tax benefits to the Optionee.
3.Date of Grant; Term of Option.  The Option was approved by the Company’s Board of Directors to be effective on ______________ (the “Effective Date”) and may not be exercised later than the date that is seven (7) years after the Effective Date, subject to earlier termination in accordance with the Plan and this Agreement.
4.Option Exercise Price.  The per share exercise price of the Option is ______________ (the “Exercise Price”), which amount is intended to be not less than the Fair Market Value per Share on the Effective Date.
5.Exercise of Option.  The Option will become exercisable only in accordance with the terms and provisions of the Plan and this Agreement, as follows: 
(a)Right to Exercise.  The Option will become exercisable with respect to 25% of the Option Shares on each of the first, second, third and fourth anniversaries of the Effective Date, provided 

in each case that the Optionee remains continuously in Service with the Company or an Affiliate through the applicable anniversary.  For the purposes of this Agreement, “Service” means an Optionee’s employment or service with the Company or an Affiliate, whether in the capacity of an employee of the Company or an Affiliate, or as a Director or a Consultant.  An Optionee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service to the Company or an Affiliate or a change in the corporation for which the Optionee renders such Service, provided that there is no interruption or termination of the Optionee’s Service.  Furthermore, an Optionee’s Service shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company; provided, however, that if any such leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day following the commencement of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and instead shall be treated thereafter as a Non-Qualified Stock Option unless the Optionee’s right to return to Service is guaranteed by statute or contract.  The Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service (notwithstanding any statutory, contractual or common law period of notice of termination, or compensation in lieu of such notice, to which the Optionee may be entitled) or upon the corporation for which the Optionee performs Service ceasing to be an Affiliate (if other than the Company).  For greater certainty, the Optionee’s Service shall be deemed to have terminated on the date which any notice of termination of employment provided to the Optionee is stated to be effective (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and not during or as of the end of any period following such date during which the Optionee is in receipt of, or entitled to receive, statutory, contractual or common law notice of termination or any compensation in lieu of such notice.  Subject to the foregoing, the Board, in its discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination.
(b)Method of Exercise.  The Optionee may exercise the Option by providing written notice to the Company stating the election to exercise the Option.  Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company or such other person as may be designated by the Company, and shall be accompanied by payment of the Exercise Price and an amount equal to any required tax withholding.  Payment of the Exercise Price may be made in cash.  In addition, this Option may be exercised through means of a “net settlement,” whereby no Exercise Price will be due and where the number of Shares issued upon such exercise will be equal to: (A) the product of (i) the number of Option Shares as to which the Option is then being exercised, and (ii) the difference between (a) the then current Fair Market Value per Share and (b) the Exercise Price, divided by (B) the then current Fair Market Value per Share.  A number of Shares equal to the difference between the number of Option Shares as to which the Option is then being exercised and the number of Shares actually issued to the Optionee upon such net settlement will be deemed to have been retained by the Company in satisfaction of the Exercise Price.
(c)Share Legends.  Any certificate evidencing an Option Share will contain such legends as may be required or appropriate under any applicable stockholder agreement or stock purchase agreement, in addition to any other legend that may be required or appropriate under applicable law, the Plan or otherwise.
(d)Partial Exercise.  The Option may be exercised in whole or in part; provided, however, that any exercise may apply only with respect to a whole number of Option Shares.
(e)Restrictions on Exercise.  The Option may not be exercised, and any purported exercise will be void, if the issuance of the Option Shares upon such exercise would constitute a violation of any applicable federal or state securities laws, exchange listing requirements or other laws or regulations.  

6.Effect of Termination of Service on Exercisability of Option.  Except as otherwise provided below, any portion of the Option that is not exercisable upon termination of Service will expire immediately and automatically upon such termination and any portion of an Option that is exercisable upon termination of Service will expire on the date it ceases to be exercisable in accordance with this Section 6.
(a)Termination for Cause.  If the Optionee’s Service is terminated for Cause:  (i) any Option held by the Optionee will immediately and automatically expire as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited and the Company will refund to the Optionee the Option exercise price paid for such Shares, if any.
(b)Termination by Reason of Retirement.  In the event of the termination of the Optionee’s Service by reason of Retirement, the Option will continue to vest and become exercisable for twelve months following the date of Retirement in accordance with the terms and provisions of the Plan and this Agreement as if the Optionee had continued in Service for a period of twelve months following the date of Retirement.  If the Optionee’s Service terminates by reason of Retirement, the Option may thereafter be exercised by the Optionee, to the extent it was exercisable at the time of such termination or becomes exercisable pursuant to the terms of this Section 6, for a period ending three years following the date of such termination (or, if sooner, on the last day of the stated term of the Option as provided in Section 3 of this Agreement).  For purposes of this Agreement, “Retirement” means an Optionee’s termination of Service (other than a termination for Cause) after the earlier of (i) the Optionee’s completion of twenty five (25) years of such Service or (ii) the date on which the Optionee reaches at least the age 55 and has completed at least ten (10) years of such Service.   
(c)Termination by Reason of Death.  If the Optionee’s Service terminates by reason of death, the Option may thereafter be exercised in full with respect to 100% of the Option Shares by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, as applicable for a period ending twelve months following the date of death (or, if sooner, on the last day of the stated term of the Option as provided in Section 3 of this Agreement).
(d)Termination by Reason of Disability.  If the Optionee’s Service terminates by reason of Disability, the Option may thereafter be exercised by the Optionee or his or her personal representative, to the extent it was exercisable at the time of termination, for a period ending twelve months following the date of termination (or, if sooner, on the last day of the stated term of such Option as provided in Section 3 of this Agreement).
(e)Other Termination.  If the Optionee’s Service terminates for any reason other than death, Disability, Retirement or Cause, any Option held by such Optionee may thereafter be exercised by the Optionee, to the extent it was exercisable at the time of such termination, for a period ending 90 days following the date of such termination (or, if sooner, on the last day of the stated term of the Option as provided in Section 3 of this Agreement).
(f)Forfeiture For Violations of Non-Compete and/or Non-Solicitation Agreements.  Notwithstanding anything in this Section 6 to the contrary, if, following the Optionee’s termination of Service, the Optionee violates any provision contained in a written service or other agreement applicable to the Optionee (or any other written Company policy of general application) relating to the prohibition of the Optionee from engaging in activities which would violate any legally enforceable non-compete or non-solicitation clause or rule, then the Option shall immediately become unexercisable and shall be forfeited in full effective as of the date of such violation.  In addition, effective  upon any violation described above, any exercise by the Optionee of the Option following the Optionee’s termination of Service shall be 

rescinded and the Optionee shall forfeit and return all shares received upon such exercise to the Company or, if the Optionee no longer retains such shares because the Optionee has disposed of the shares, then the Optionee shall remit the difference between the Fair Market Value of the shares on the date the Optionee disposed of them and the Grant Price for such shares.
7.Investment Representations.  The Optionee represents and warrants to the Company that: 
(a)unless the Option Shares have been registered under the Securities Act of 1933, as amended (the “Securities Act”), he or she is acquiring the Option (and upon exercise of the Option, will be acquiring the Option Shares) for investment for his or her own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof; 
(b)unless the Option Shares have been registered under the Securities Act, he or she has a preexisting personal or business relationship with the Company or one of its directors, officers or controlling persons and by reason of his or her business or financial experience, has, and could be reasonably assumed to have, the capacity to protect his or her interests in connection with the acquisition of this Option and the Option Shares;  
(c)he or she is an employee, executive officer, director or consultant of the Company or, unless resident in a Province of Canada other than British Columbia, an Affiliated Company, has the benefit of an exemption from the prospectus and registration requirements of applicable Canadian provincial securities laws; and
(d)the Optionee has voluntarily received this Option.
In addition, as a further condition to the exercise of the Option, the Company may require the Optionee to make any representation or warranty to the Company as may be required by or advisable under any applicable law or regulation.
8.Market Stand-Off.
(a)The Optionee hereby agrees that, in connection with any registration of securities under the Securities Act by the Company, the Optionee (and the Optionee’s permitted transferees, if any) shall not sell or otherwise transfer (including through short-sales, hedging, or similar transactions) any Option Shares during the period that the Board specifies (a “Holdback”); provided, however, that such period shall not exceed one hundred eighty (180) days (or other such period that the underwriters reasonably require) following the effective date of the applicable registration statement filed under the Securities Act (the “Market Stand-Off Period”).  Until the end of such Market Stand-Off Period, the Company may impose, with respect to any Shares held by the Optionee or his or her permitted transferee, stop-transfer instructions consistent with the foregoing restrictions.
(b)Optionee also agrees to be bound by any restriction agreed to by holders of not less than a majority of the then outstanding Shares (giving effect to the pro forma conversion of all outstanding preferred shares and other convertible securities and the pro forma exercise of all stock options, warrants and other rights, to the extent then exercisable).
(c)In addition, if any managing underwriter or book runner of any such offering or registration (the “Underwriter”) requests, the Optionee will execute and deliver to the Underwriter such documents, agreements, and instruments that the Underwriter shall reasonably require to enable the Underwriter to obtain the benefit of the Holdback during the Market Stand-Off Period.  In connection with the foregoing, the Optionee hereby appoints the Company’s Chief Executive Officer as the Optionee’s 

attorney-in-fact, with full power of substitution, to execute and deliver all documents, agreements and instruments to be executed and delivered by the Optionee, and to take all actions to be taken by the Optionee in each case in connection with effecting any Holdback.
9.Non-Transferability of Option.  The Option may not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent or distribution.  During the Optionee’s lifetime, the Option is exercisable only by the Optionee.  Subject to the foregoing and the terms of the Plan, the terms of the Option will be binding upon the executors, administrators and heirs of the Optionee.
10.Tax Consequences.  The Optionee has reviewed with the Optionee’s own tax advisors the federal, state, local and foreign tax consequences of the Option.  The Optionee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents or affiliates.  The Optionee understands that he or she (and not the Company) will be responsible for his or her own tax liabilities arising in connection with this award or the transactions contemplated by this Agreement.
11.Modification and Amendment.  The Option granted hereunder is intended to be exempt from the application of Section 409A of the Code.  Notwithstanding the foregoing, the Optionee hereby agrees that the Company may, without the consent of the Optionee, modify or amend the terms of the Option in any manner it deems reasonably necessary in its discretion, to cause this Option to be exempt from the application of Section 409A of the Code.  For avoidance of doubt, however, the Company makes no representation or warranty regarding the tax treatment of this Option or the transactions contemplated by this Agreement and assumes no obligation to take any action to cause this Option or such transactions to be subject to any particular tax treatment.
12.The Clawback Policy.  The Optionee has received a copy of the Company’s Policy for Recoupment of Incentive Compensation (the “Clawback Policy”), a copy of which is attached hereto, has read the Clawback Policy and is familiar with its terms, and hereby accepts the Option subject to the terms and provisions of the Clawback Policy, as amended from time to time.
13.No Continuation of Service.  Neither the Plan nor this Option will confer upon the Optionee any right to continue in the Service of the Company or any of its Affiliates, or limit in any respect the right of the Company or its Affiliates to discharge the Optionee at any time, with or without Cause and with or without notice.
14.The Plan.  The Optionee has received a copy of the Plan (a copy of which is attached hereto), has read the Plan and is familiar with its terms, and hereby accepts the Option subject to the terms and provisions of the Plan, as amended from time to time.  Pursuant to the Plan, the Board is authorized to interpret the Plan and to adopt rules and regulations not inconsistent with the Plan as it deems appropriate.  The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board with respect to questions arising under the Plan or this Award Agreement.
15.Entire Agreement.  This Agreement, together with the Plan, other exhibits attached thereto or hereto, and any employment, service or other agreement with the Optionee and the Company or any Affiliate referring to this Option, represents the entire agreement between the parties and supersedes any and all prior or contemporaneous discussions, understandings or any agreements of any nature, written or otherwise, relating to the subject matter hereof.
16.Governing Law.  This Agreement will be construed in accordance with the laws of the State of Delaware, without regard to the application of the principles of conflicts of laws.

17.Execution.  This Agreement may be executed, including execution by facsimile signature, in one or more counterparts, each of which will be deemed an original, and all of which together shall be deemed to be one and the same instrument.

lululemon athletica inc.

_______________________
Chief Financial Officer

LULULEMON ATHLETICA INC.

POLICY FOR RECOUPMENT OF INCENTIVE COMPENSATION

In the event lululemon athletica inc. (the “Company”) determines it must restate its financial results as reported in a Form 10-K, Form 10-Q or other report filed with the Securities and Exchange Commission to correct an accounting error due to material noncompliance with any financial reporting requirement under the U. S. federal securities laws within three (3) years after the date of the first public issuance or filing of such financial results, the Company will seek to recover, at the direction of the Management Development and 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, incentive compensation awarded or paid to a covered officer whose intentional misconduct caused or contributed to the need for the restatement for a fiscal period if a lower award or payment would have been made to such covered officer based upon the restated financial results.  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 recoupment amount against current or future incentive and non-incentive 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 recoupment of incentive compensation under this policy is in addition to any other right or remedy available to the Company.    

For purposes of this policy, the term “covered officer” shall mean 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.  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 recoupment 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 compensation that is approved, awarded or granted on or after that date.  

Adopted September 8, 2010
Board of Directors
lululemon athletica inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00232-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00232-of-00352.parquet"}]]